Exhibit
10.1


 


Drilling
Agreement


 


between


 


Zion
Oil & Gas, Inc.


(“Operator”)


 


and


 


S.C.
Daflog S.R.L.


(“Contractor”)


 




     


     


    


 


	Table of Contents	 	 
	 	 	 
	Clause

    Number	 	Heading	 	Page
	 	 	 	 	 
	1.	 	Definitions	 	 3
	2.	 	Further
    Wells	 	 4
	3.	 	Further
    Assurances and Headings	 	 5
	4.	 	Work
    to be Done, Location, Depth and Commencement Date.	 	 5
	5.	 	Labour,
    Equipment, Materials, Special Tools, Supplies and Services	 	 5
	6.	 	Sums
    Payable to Contractor	 	 6
	7.	 	Time
    of Payment	 	 7
	8.	 	Stoppage
    of Work	 	 8
	9.	 	Right
    of Operator in Event of Default by Contractor	 	 8
	10.	 	Casing
    Program	 	 8
	11.	 	Drilling
    methods and practices	 	 9
	12.	 	Coring
    and cuttings	 	10
	13.	 	Reports
    to be furnished by Contractor	 	10
	14.	 	Insurance
    and indemnity	 	10
	15.	 	Taxes
    and Claims	 	14
	15A	 	Value
    Added Tax	 	15
	16.	 	Responsibilities
    and indemnity for loss of or damage to equipment or hole	 	15
	17.	 	Independent
    Contractor Relationship	 	17
	18.	 	Compliance
    with Laws	 	17
	19.	 	Force
    Majeure	 	18
	20.	 	Information
    Confidential	 	18
	21.	 	Ingress
    and Egress to Location	 	19
	22.	 	Conflicts
    and Waivers	 	19
	23.	 	Term	 	19
	24.	 	Assignment
    and Sub-Letting	 	20
	25.	 	Notices	 	21
	26.	 	Governing
    Law	 	21
	27.	 	Patents
    and Licences	 	21
	28.	 	Safety,
    Health and Welfare	 	21
	28A.	 	Environmental
    Protection	 	23
	29.	 	Safety	 	24
	30.	 	Right
    of Audit	 	25
	31.	 	Amicable
    Settlement and Arbitration	 	25
	32.	 	Not
    used	 	26
	33.	 	Suspension
    of Operations	 	26


 


	Annexure
    I :   Drilling Order	 	28
	Annexure
    II :  Rig and Rate Schedule	 	39
	Annexure
    III : Drilling Program	 	41
	Annexure
    IV : Rig Equipment Inventory	 	46
	Annexure
    V :  Insurance Policy	 	57
	Annexure
    VI : Rig Acceptance Test	 	60


 






     


     


    

 






Drilling
Agreement


 


This
Agreement made as of the 6th day of October 2016 (“Signing Date”)


 


Between


 


Zion
Oil & Gas, Inc., a Delaware corporation exploring for oil and gas in Israel, whose principal place of business is at 12655
North Central Expressway, Suite 1000, Dallas, Texas 75243 (“Operator” and/or “Zion”)


 


and


 


S.C.
DAFLOG S.R.L., a trading company incorporated and functioning according to Romanian laws, whose registered office is at 17
Garii Street, Mediaş, Sibiu county, Romania, with fiscal code RO 16418795, represented by Mr. Emanuel Popescu, in his capacity
as General Manager, and its Israeli Branch (“Contractor”).


 


WHEREAS
Operator is the owner of certain interests on properties on which it desires to have a well or wells drilled, deepened
and/or completed in search of oil or gas and has requested Contractor to provide services for this purpose;


 


WHEREAS
SC DAFORA S.A., a trading company incorporated and functioning in insolvency according to Romanian laws, (“Dafora”),
whose registered office is at Str. Garii de Marfuri 17 551010 Medias, Romania, is the owner of certain oil or gas well drilling
equipment, including, but not limited to, Rig F-400 as referenced in Annexure IV, of which certain components are currently located
in the State of Israel, and represents that it has adequate equipment in good working order and fully trained personnel capable
of efficiently operating such equipment and represents that such equipment and personnel when contracted as provided for hereunder
to Operator shall be able to provide such drilling services limited to the provisions and according to Contract No. 991 dated
October 6th 2016 exclusively for and on behalf of Operator in accordance with Good Oil Field Practice (hereinafter
defined), relevant laws and as hereinafter provided; and


 


WHEREAS
Dafora represents that it has the legal right under all applicable laws to enter into, and it has entered into, Contract No. 991
dated October 6th 2016 with Contractor, by which the Rig (hereinafter defined), related equipment and personnel identified
and described in the Annexures attached hereto shall be and is exclusively leased, rented or otherwise made available to and timely
delivered to Contractor to enable it to perform and fulfill each and all of its obligations herein for the benefit of Zion limited
to the provisions and according to Contract No. 991 dated October 6th 2016 and as a potential third party beneficiary
of the present Contract.


 


NOW
IT IS HEREBY MUTUALLY AGREED as follows:


 


		1.	Definitions



 


		1.1	“Agreement"
                                         means this Agreement including the Annexures I, II, III, IV, V and VI.



 


		1.2	"Contract
                                         Drilling Depth" – as detailed under the Drilling Program;



 


		1.3	“Drilling
                                         Order” means the document annexed hereto as Annexure I.



 


		1.4	“Drilling
                                         Program” means the drilling program annexed hereto as Annexure III.



 


		1.5	“Option
                                         Drilling Program” means a program referred to in clause 2 which has been executed
                                         by both parties.



 






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		1.6	"Good
                                         Oil Field Practice" means the practices, methods and acts engaged in by professional
                                         and experienced producers of oil and natural gas in established producing regions internationally,
                                         that would be expected to accomplish the desired result in a manner consistent with law,
                                         regulation, reliability, safety, environmental protection, economy and expedition. Good
                                         Oil Field Practice is not intended to be limited to the optimum practice or method to
                                         the exclusion of all others, but rather to be a spectrum of reasonable industry practices,
                                         methods and acts, and includes, when referenced to operational matters, taking all the
                                         professional steps to:



 


		(a)	provide
                                         adequate and appropriate materials, resources and supplies to meet the needs of the operation,
                                         the Drilling Program and anticipated abnormal conditions;



 


		(b)	provide
                                         sufficient operating personnel who are experienced and trained to operate the equipment
                                         properly, efficiently and taking appropriate account of manufacturers’ guidelines
                                         and specifications and are capable of responding to abnormal conditions; The contractor
                                         is responsible to obtain any certifications and/or authorizations required by any state
                                         authority in regard to the operating personnel.



 


		(c)	conduct
                                         preventative, routine and non-routine maintenance and repairs on a basis aimed at achieving
                                         the Drilling Program and reliable long-term and safe operation taking account of manufacturers’
                                         recommendations by knowledgeable, trained and experienced personnel utilising appropriate
                                         equipment, tools and procedures;



 


		(d)	conduct
                                         appropriate monitoring and testing to check that equipment is functioning as designed
                                         and that equipment will function properly under both normal and abnormal conditions;
                                         and



 


		(e)	operate
                                         equipment in a manner safe to workers, the general public, the environment, plant and
                                         equipment and with regard to defined limitations.



 


		1.7	The
                                         “Indemnified Persons” means Operator and any joint venture participant
                                         with Operator in any venture or joint venture for which Contractor is performing services.



 


		1.8	“Net
                                         Cost” means only the cost incurred and paid directly by Contractor and shall
                                         exclude any profit to or overhead of Contractor. In determining the Net Cost on any item
                                         Contractor shall take advantage of all available cash trade and other discounts, sales
                                         tax exemptions, allowances, refunds and commissions.



 


		1.9	“Rig
                                         and Rate Schedule” means the document annexed hereto as Annexure II and
                                         includes any amendment to that document agreed to by the parties.



 


		1.10	“Rig”
                                         or “Drilling Rig” means the rig specified in Annexures II and IV.



 


		1.11	“Services”
                                         mean the services to be undertaken by Contractor pursuant to this Agreement.



 


		1.12	“Mobilization
                                         Date” means the day on which the first loads of the Rig Equipment are loaded
                                         onto trucks and depart the Contractor’s commissioning base in Israel, for transport
                                         to the Operator’s first drilling location in Israel.



 


		2.	Term
                                         & Further Wells



 


		2.1	The
                                         term of this Agreement shall be for one well with up to two optional wells at the sole
                                         discretion of the Operator. Prior to the execution of an option well, Operator shall
                                         present a drilling plan (the “Option Drilling Program”) with no less than
                                         thirty (30) days notice prior to the exercise of the Option Drilling Program. Such Option
                                         Drilling Program shall set forth the location, the depth to be drilled, specifications
                                         and all other necessary and relevant conditions under which the well or wells are to
                                         be drilled and completed.



 


		2.2	Such
                                         Option Drilling Program, if approved by Contractor, shall then become a part of this
                                         Agreement and shall govern and control the drilling and completing of the additional
                                         well or wells by Contractor for Operator.



 






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		2.3	Contractor
                                         shall not refuse to execute an Option Drilling Program, provided that Option Drilling
                                         Program is provided to Contractor a minimum of 30 days prior to the rig being released
                                         from the last well provided in the Drilling. Subject to clause 18 of Annexure I, Operator
                                         has the option to require up to a maximum of two (2) additional wells under the same
                                         terms and conditions as this Agreement.



 


		3.	Further
                                         Assurances and Headings



 


		3.1	Each
                                         party shall perform the acts and execute and deliver the documents and give the assurances
                                         necessary to give effect to the provisions of this Agreement.



 


		3.2	The
                                         paragraph headings shall not be considered in interpreting the text of this Agreement.



 


		4.	Work
                                         to be Done, Location, Depth and Commencement Date.



 


		4.1	Contractor
                                         agrees to drill and complete the designated wells at the site in accordance with Good
                                         Oil Field Practice and all the provisions of this Agreement.



 


		4.2	All
                                         work performed by Contractor shall be on the basis stipulated in the Drilling Order,
                                         the Drilling Program and any Option Drilling Program which upon execution thereof is
                                         made a part hereof. Unless otherwise provided, this shall include drilling, coring and
                                         reaming of cored hole and all other work performed on order of Operator.



 


		5.	Labour,
                                         Equipment, Materials, Special Tools, Supplies and Services



 


		5.1	Contractor
                                         shall furnish and use the drilling rig and equipment described in the Drilling Order.



 


		5.2	All
                                         labour, equipment, materials, special tools, supplies and services necessary or proper
                                         for the operation or maintenance of Contractor’s rig and equipment and the drilling
                                         and completion of the well or wells shall be furnished at the well site or sites by the
                                         party designated in the relevant section of the Drilling Order.



 


		5.3	If
                                         Operator requests Contractor to provide certain labour, equipment, materials, special
                                         tools, supplies or services which it is the responsibility of Operator to provide as
                                         set out in the Drilling Order and Contractor agrees to provide the same, Contractor shall
                                         be reimbursed by Operator for Contractor’s actual landed cost of providing such
                                         requested equipment or services (as appropriate) at the well site or sites plus ten (10)
                                         percent and ownership of such equipment shall pass to Operator upon reimbursement of
                                         this cost. For providing additional casual and roustabout labour in addition to what
                                         is outlined in Annex II, Contractor’s actual landed cost at well site plus ten
                                         (10) percent shall apply.



 


		5.4	Upon
                                         termination of this Agreement, Contractor shall return to Operator any of Operator’s
                                         goods, chattels or equipment which are at that time in Contractor’s possession
                                         in the same condition which they were in when received, reasonable wear and tear excepted.



 


		5.5	Operator
                                         may at any time require Contractor to increase or decrease the number of Contractor’s
                                         personnel used for the work or change the equipment used for the work and the relevant
                                         rates provided therefore shall be adjusted hereunder.



 


		5.6	Contractor
                                         shall nominate in writing one or more of its personnel as Contractor’s representative
                                         who shall be in charge of Contractor’s personnel and activities and who shall have
                                         full authority on behalf of Contractor to resolve all day to day matters which arise
                                         between Operator and Contractor. Changes to Contractor’s representative shall be
                                         notified to Operator in writing a minimum of seven (7) days prior to when such changes
                                         are to be made.



 


		5.7	Contractor
                                         shall remove and replace in a reasonable time any of Contractor’s personnel if
                                         Operator can show reasonable grounds for such a request and if Operator so requests in
                                         writing.



 






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		5.8	Contractor
                                         shall be responsible at its own cost for maintaining adequate stock levels of Contractor’s
                                         items and replenishing the same as necessary. The provisions of Subclause 5.3 above shall
                                         apply accordingly.



 


		5.9	Should
                                         Contractor have fewer personnel on the Rig at any time than the number specified as the
                                         minimum in the Drilling Order, as amended under the provisions of Subclause 5.5 above,
                                         then Contractor shall give Operator short manning credits as provided in Subclause 17(d)
                                         of the Drilling Order.



 


		5.10	Providing
                                         Personnel



 


Contractor
shall have its personnel available at the proper drilling location or at a mutually agreed place ready to conduct operations hereunder
provided that both Parties shall work together to obtain all visas, work permits and all other government authorization or documentation
required in connection with the entry to, presence at and/or exit of Contractor’s Personnel from the Country of Operating
Area [Israel] ("Permits"). Except as hereinafter provided, Contractor shall bear the costs related thereof, and
Contractor shall be solely responsible for and shall meet all costs incurred in connection with all other matters relating thereto,
including but not limited to the legal fees and bank commissions resulting from the bank guarantees required to obtain the work
permits. Subject to prior notice to and approval by Operator, Operator agrees to provide the bank guarantees as required by the
Ministry of Labor, in connection with such work permits. Contractor cannot be held responsible for any delay of receiving the
work permits after submitting the required documents to the Operator, if such documents are submitted in a timely manner. Unless
otherwise agreed by both parties in writing beforehand, the Drilling Rig will not be mobilized or rigged up on Meged 8 until the
work permits for the required personnel are in place.


 


		6.	Sums
                                         Payable to Contractor



 


		6.1	Subject
                                         to all of the other provisions of this Agreement, Operator agrees to pay Contractor for
                                         the work performed, services rendered and the materials, equipment and supplies furnished
                                         by Contractor as set out in this clause 6. Fifty (50) percent of the lump sum for
                                         the Rig Commissioning specified in Annexure I shall be paid by the Operator to the Contractor
                                         within five (5) business days of receiving the Contractor’s confirmation, via a
                                         bill of lading and confirmed ship manifest, of the Rig Equipment that is being shipped
                                         from Romania to the rig commissioning site. Receipt of an original copy of the Bill of
                                         Lading, detailing shipment departure for Israel, will be accepted by the Operator as
                                         receipt of the above mentioned Contractor’s confirmation. The remaining fifty (50)
                                         percent of the Rig Commissioning Fee shall be paid by the Operator to the Contractor
                                         within five (5) working days after the Rig has completed the Rig Acceptance Test on the
                                         first well to be drilled.



 


For
work performed on a day work basis, the day work rate per twenty-four (24) hour day shall be as set out in the Rig and Rate Schedule.


 


		6.2	If
                                         it is necessary to shut down the Rig for repairs while Contractor is performing work
                                         on a day work basis, Contractor shall be allowed compensation in the manner set out in
                                         clause 17(b) of the Drilling Order.



 


		6.3	When
                                         the Rig is shut down although in readiness to resume operations and Contractor is awaiting
                                         orders of Operator or materials, services or other items which Operator is obliged to
                                         furnish, Operator agrees to pay Contractor the stand-by rate specified in section 2.E
                                         or 2.F of the Rig and Rates Schedule, as applicable.



 


		6.4	The
                                         term “day work” as used in this Agreement refers to the work Contractor is
                                         to perform at the stipulated sum per day (one day = 24 working hours). Unless otherwise
                                         provided herein or in the Drilling Order, this shall include drilling, coring and reaming
                                         of cored hole, drill stem testing, electric logging or similar operations and all other
                                         work performed on order of Operator until Operator releases the Rig.



 






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		6.5	The
                                         term “Shabbat Rate” as used in this Agreement refers to the time that work
                                         is suspended in observance of the weekly Jewish Shabbat, other Holy Days and Yom Kippur.
                                         Shabbat Rate shall commence 2 hours before the commencement time of Shabbat and will
                                         terminate 2 hours after the end time of Shabbat as published for the Tel Aviv area in
                                         the Jerusalem Post.



 


		6.6	For
                                         day work comprising less than a twenty-four (24) hour day Contractor shall be paid the
                                         proper fractional part of the amount specified in the Rig and Rate Schedule for a twenty-four
                                         (24) hour day. In determining the fractional part of the day fractional parts of hours
                                         will be rounded to the nearest whole half-hour.



 


		6.7	Notwithstanding
                                         any other provision of this Agreement, Operator shall not be liable to pay Contractor
                                         any amount whatsoever during any period of delay which may arise from the absence from
                                         the site of operations of any article of equipment, personnel, materials or of any services
                                         which under the provisions of this Agreement are to be furnished by Contractor. If events
                                         outside of Contractor’s control, such as force majeure events, prohibit proper
                                         fulfilment by Contractor of its obligations under this Agreement, Force Majeure, as defined
                                         in this agreement, shall govern ongoing obligations of the Parties.



 


		6.8	Operator
                                         shall pay Contractor the Rig Commissioning and Demobilization fees referenced in Subclauses
                                         17(j) and 17(k) of the Drilling Order.



 


		6.9	The
                                         rates set out in the Rig and Rate Schedule are subject to escalation in accordance with
                                         clause 18 of the Drilling Order.



 


		7.	Time
                                         of Payment



 


		7.1	Subject
                                         to compliance by Contractor with all the terms and conditions of this Agreement, Operator
                                         agrees to make the payment to Contractor as set out in this clause 7.



 


		7.2	Payment
                                         shall be due and payable by Operator of the amount of Contractor’s invoice within
                                         thirty (30) days of receipt of Contractor’s invoice covering the work performed
                                         and Services rendered by Contractor in accordance with the relevant provisions of this
                                         Agreement. Invoices shall be submitted by Contractor within ten (10) days of the end
                                         of the preceding month. Invoices are to have adequate documentation including logs, timesheets
                                         and other relevant records signed by Operator’s Representative, where applicable,
                                         and are to show the appropriate address and other relevant details for payment. Operator
                                         has the right to question invoices and require the correction of errors for up to one
                                         (1) year after this Agreement is terminated (this provision complements the audit rights
                                         specified in this Agreement). Interest shall be payable on overdue invoices at five (5)
                                         percent per annum.



 


			



		(a)	If
                                         Operator in good faith disputes any item or part of an item shown on an invoice, then
                                         Operator may withhold payment of such amount, provided that Operator shall within twenty
                                         (20) working days from the receipt of Contractor’s invoice give Contractor written
                                         notice of the dispute in details.



 


		(b)	Upon
                                         receipt of the notice of the dispute, Contractor will within three (3) working days,
                                         provide such information as Operator will require to verify the invoice.



 


		(c)	Within
                                         three (3) working day of the receipt of the information referred to in clause 7.2(b),
                                         the parties will communicate with each other in a bona fide attempt to resolve the dispute
                                         prior to the due date for the payment of the invoice.



 


		(d)	If
                                         the dispute is resolved in favour of Operator, then Contractor will issue an amended
                                         invoice within a further two (2) working days, and the Operator will pay that invoice
                                         in full.



 


		(e)	When
                                         the dispute is resolved, whether by agreement or otherwise, the disputed amount will
                                         be adjusted and payment made to give effect to the adjustment within five (5) working
                                         days.



 






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		8.	Stoppage
                                         of Work



 


Operator
shall have the right to direct the stoppage of work at any time prior to reaching the depths specified in the Drilling Order.
Operator shall have the further right to require any well to be completed or abandoned at any depth in any stratum within the
Contract Drilling Depth. As soon as practicably possible after the receipt of instructions from Operator, Contactor will discontinue
the drilling of any well and abandon or complete the same as Operator may direct. A stoppage of work under this clause does not
of itself constitute a termination of this Agreement.


 


Operator
shall not be liable to Contractor for any loss of anticipated profits or damages for or on account of, or arising out of, any
stoppage of work in accordance with the provisions of this clause 8. Contractor shall only be paid for services performed up to
the date of the stoppage of work and, for the subsequent period when work is thus suspended, with Standby with Crew Rate unless
otherwise specified in writing by the Operator.


 


		9.	Right
                                         of Operator in Event of Default by Contractor



 






In
the event that Operator is dissatisfied on reasonable grounds with the performance of Contractor, Operator shall give Contractor
at least seven (7) days written notice specifying in detail the matter complained of and, if the case, providing relevant documents
in order for the Contractor to take all required steps to remedy the problem.


 


Should
Contractor without reasonable cause fail or refuse to take all required steps to remedy the matters complained of within the time
afforded to Contractor in such written notice or fail or refuse to continue thereafter to diligently proceed with such remedy
so as to complete the remedy within the notice period, Operator shall have the right to terminate this Agreement.


 


In
the event that any well drilled does or in Operator’s opinion is likely to blowout, catch fire, or in any manner get out
of control, Operator may if it so elects, assume complete control and supervision of all work required to prevent such blowout
or fire or associated with bringing said well under control or of putting out such fire and for that purpose Operator shall have
the use of all of Contractor’s facilities, equipment and personnel at the well giving necessary instructions to the Contractor.


 


		9.1	During
                                         times when either Contractor or Operator is engaged in bringing a well under control
                                         or in putting out a fire Contractor shall be entitled to compensation for work done hereunder
                                         at the relevant day rates included in Annexure II: Rig and Rate Schedule.



 


		10.	Casing
                                         Program



 


		10.1	The
                                         casing program shall be supplied to Contractor as provided in section 10 of the Drilling
                                         Order. The planned setting depth of each string of casing, the amount of cement and the
                                         process to be used in cementing shall be specified by Operator at the time of each casing
                                         setting. If Operator requires a variation in the casing program requiring the use of
                                         additional handling tools, same will be furnished by Operator at Operator’s expense.



 


		10.2	Contractor
                                         shall run all strings of casing and shall be compensated therefore at rates as specified
                                         in clause 17(a) of the Drilling Order.



 


		10.3	Contractor
                                         shall be under no liability to Operator (other than when there is gross negligence or
                                         willful misconduct on the part of Contractor its employees, agents or subcontractors)
                                         for loss or damage resulting from casing joints being knocked off in the hole as a result
                                         of defective pipe, faulty casing seat, faulty cementing or operating practice directed
                                         by Operator or its designated representative during the running of casing.



 






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		11.	Drilling
                                         methods and practices



 


		11.1	Subject
                                         to all specific obligations and requirements laid down in Subclause 6.1 above having
                                         been duly satisfied by the Operator, Contractor agrees to perform all work to be conducted
                                         by it under the terms of this Agreement with due diligence and care and in a good and
                                         workmanlike manner and in accordance with Good Oil Field Practice. Contractor shall comply
                                         with all current Israeli laws, regulations and governmental directions, approvals and
                                         authorisations covering Contractor’s operation of the Rig and equipment and personnel.
                                         Contractor shall maintain at all times, at the drill site, list of contractor personnel
                                         and documents as required by law.



 


Contractor
represents that the Rig will be capable of drilling to the depth specified in the Rig and Rate Schedule. Any drill pipe, drill
collars or substitutes in excess of that furnished by Contractor specified in the relevant section of the Rig Equipment Inventory
(Annexure IV) shall be supplied by Operator.


 


All
drill pipe supplied by the Contractor under this Agreement shall be of Premium grade as specified under API RP7G and certified
independent pipe inspection company.


 


		11.2	Contractor
                                         agrees to maintain the drilling fluid system in a manner satisfactory to Operator. The
                                         drilling fluid shall be maintained in accordance with specifications set out in the Drilling
                                         Order.



 


		11.3	Contractor
                                         agrees to save and label samples of such formations as Operator may require. Contractor
                                         agrees to promptly notify Operator whenever any oil and/or gas bearing formation is found.



 


		11.4	Contractor
                                         agrees that every effort will be made to drill a straight hole and that it will make
                                         diligent efforts to maintain any deviation within the allowable limits in the specifications
                                         described in section 12 of the Drilling Order. All drilling will be conducted in accordance
                                         with Good Oil Field Practice. Contractor agrees to take such deviation measurements as
                                         are reasonable or as may be reasonably required by Operator.



 


		11.5	In
                                         the event of any difficulty arising which precludes either drilling ahead under reasonably
                                         normal procedures or the performance of any other operations planned for the well, Contractor
                                         may suspend the work in progress whilst exerting reasonable efforts consistent with Good
                                         Oil Field Practice, to overcome the difficulty, and in such event Contractor shall immediately
                                         notify the Operator's representative of the difficulty.



 


		11.6	Subject
                                         to the provisions of clause 9, Contractor shall be solely responsible for the operation
                                         of the Rig and equipment including, without limitation, supervising moving operations
                                         and positioning the Rig at locations as required by Operator as well as such operations
                                         at the drill site as may be necessary or desirable for the safety of the drilling. Operations
                                         under this Agreement, other than Rig moves will be performed on a twenty-four (24) hour
                                         per day basis.



 


		11.7	Contractor
                                         shall comply with all instructions of Operator consistent with the provisions of this
                                         Agreement and Good Oil Field Practice including without limitation drilling, well control,
                                         environmental and safety instructions. Such instructions shall, if Contractor so requires,
                                         be confirmed in writing by the authorised representative of Operator. However, Operator
                                         shall not issue any instructions which would be inconsistent with Good Oil Field Practice.



 






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		12.	Coring
                                         and cuttings



 


		12.1	Contractor
                                         agrees to take cores as requested by Operator under section 13 of the Drilling Order.
                                         All coring shall be paid for at applicable rates. Operator is to furnish containers for
                                         the cores.



 


		12.2	Rotary
                                         cuttings will be sampled by Contractor as and when required by Operator who will furnish
                                         containers for the same.



 


		13.	Reports
                                         to be furnished by Contractor



 


		13.1	Contractor
                                         shall keep and furnish to Operator a daily drilling report in English showing depth of
                                         the hole and such other data as may be required by Operator. Drilling report forms shall
                                         be furnished or specified by Operator but otherwise Contractor shall use the standard
                                         IADC form of Contractor’s Report.



 


		13.2	Accident
                                         Reporting – see Section 29 “Safety”



 


		13.3	Delivery
                                         dockets covering any materials or supplies furnished by Operator or furnished by suppliers
                                         for which Operator is obliged to reimburse Contractor shall be handed over as received
                                         with the daily drilling report. The quantity, description and condition of materials
                                         and supplies so furnished shall be verified and checked by Contractor, and such delivery
                                         dockets shall be properly certified as to receipt by Contractor’s designated representative.



 


		13.4	All
                                         labour, materials, special tools, supplies or services furnished by Contractor for which
                                         Operator is obliged to reimburse Contractor shall be recorded as provided on the daily
                                         drilling report and/or individual dockets which must be approved by Operator’s
                                         on-site representative. Payment shall be made only in respect of items so recorded. Contractor
                                         will be under no obligation to take over Operator’s surplus items on completion
                                         of operations.



 


		14	RESPONSIBILITY
                                         FOR LOSS OR DAMAGE, INSURANCE, INDEMNITY AND RELEASE OF LIABILITY



 


	14.1	Contractor shall assume liability at all times for damage
to or destruction of Contractor's surface equipment, regardless of when or how such damage or destruction occurs, and Contractor
shall release Operator and /or Kibbutz Sde Eliyahu or anyone on the kibbutz behalf of any liability for any such loss, except
loss or damage under the provisions of Paragraph 10 or Subparagraph 14.3.




 


	14.2	Contractor shall release Operator and /or Kibbutz Sde
Eliyahu or anyone on the kibbutz behalf of any liability for, and shall protect, defend and indemnify Operator from and against
all claims, demands, and causes of action of every kind and character, without limit and without regard to the cause or causes
thereof or the negligence of any party or parties, arising in connection herewith in favor of Contractor's employees or Contractor's
subcontractors of any tier (inclusive of any agent or consultant engaged by Contractor) or their employees, or Contractor's invitees,
on account of bodily injury or death. Contractor's indemnity under this Paragraph shall be without regard to and without any right
to contribution from any insurance maintained by Operator pursuant to Paragraph 14.




 


	14.3 	Notwithstanding anything to the contrary contained herein,
it is understood and agreed by and between Contractor and Operator that the responsibility for pollution or contamination shall
be as follows:




 


Except
as otherwise provided herein, Contractor shall assume all responsibility for, including control and removal of, and shall protect,
defend and indemnify Operator from and against all claims, demands and causes of action of every kind and character arising from
pollution or contamination, which originates above the surface of the land or water including but not limited to spills of fuels,
lubricants, motor oils, pipe dope, paints, solvents, ballast, bilge and garbage. Contractor shall release Operator and its suppliers,
contractors and subcontractors of any tier of any liability for the foregoing.


 






    	10 | Page



     


    

 


		14.4	Contractor
                                         shall at all times during the term of this Agreement effect and maintain through a duly
                                         licensed and reputable insurance company, subject to approval by Operator which approval
                                         will not be unreasonably withheld, the insurance coverage described below and as may
                                         be additionally required in Exhibit
                                         V, at Contractor’s own cost and expense and require
                                         all sub-contractors to maintain similar cover with limits not less than those set forth
                                         and name Operator as an additional insured on such policies. Copies of the certificates
                                         of insurance shall be provided prior to the spud date.



 


	(a)	Employers Liability




 


Employers
Liability with the limits as described in Exhibit V per occurrence and in the aggregate.


 


Workers
Compensation with a minimum limit of $1,000,000 (USD one million) per person with a $2,000,000 (USD two million) aggregate for
employees of foreign jurisdiction.


 


	(b)	Compulsory Third Party Bodily Injury




 


Compulsory
Third Party Bodily Injury Insurance covering registered motor vehicles as required by law for all registered vehicles engaged
under this Agreement.


 


	(c) 	Automobile Bodily Injury and Property Damage Liability




 


Automobile
Bodily Injury Gap and Property Damage Liability insurance covering all motor vehicles engaged under this Agreement with an overall
limit of $5,000,000 (USD five million) per occurrence and in the aggregate per vehicle.


 


	(d)	Public Liability




 


Public
Liability insurance with an overall limit of $5,000,000 (USD five million) per occurrence and in the aggregate covering death,
bodily injury, damage to property arising out of the operations covered by, or not otherwise described in this Agreement and accidental,
negligent or intentional environmental damage.


 


	(e)	General Property




 


General
Property insurance covering all risks of physical loss of or damage covering all the equipment owned by the Contractor or in his
care, custody or control at full reinstatement value including machinery breakdown.


 


This
policy shall also cover expenses incurred in the removal of debris of the property covered.


 


	14.5	The
                                         Contractor is obligated to include in any contractual agreements with subcontractors
                                         and/or other service providers with connection to all services under this agreement,
                                         a clause stating that all service providers will obtain the appropriate insurance coverage
                                         for their activities, as set forth in Clause 14 and 14.4 above, for as long as they are
                                         under contract with the Contractor and with regards to their Professional Liability,
                                         for any other period, after their working relationship with the Contractor has ended,
                                         and as long as they have liability and/or until the end of the limitation period. For
                                         the avoidance of any doubt, the sole responsibility for the obtaining and/or lack of
                                         the appropriate insurance coverage of the other above mentioned service providers, rests
                                         on the Contractor.



 






    	11 | Page



     


    

 


	14.6	The
                                         insurance coverage referred to in clause 14.4(c), (d) and (e) shall be obtained in the
                                         Contractor's name and shall contain a "Waiver of Subrogation Clause" stating
                                         that the insurer waives all rights of subrogation against the Operator and directors,
                                         officers and employees of Operator and Contractor in respect of which the work under
                                         this Agreement relates, provided that this “Waiver of Subrogation” will not
                                         apply in the event of any of the above mentioned persons’ willful misconduct, gross
                                         negligence or breach of any relevant rules or regulations. In the liability insurance
                                         coverage, (clauses 14.4(a), (c), (d)) the Indemnified Persons shall be added to the name
                                         of the insured subject to a "Cross Liability Clause" stipulating that the insurance
                                         coverage shall apply as if a separate policy had been issued to each insured.



 


The
insurance policies under this Agreement shall be exclusive to the Drilling Operations and the Optional Drilling Operations referenced
in clause 2 hereunder and shall not cover any other Drilling activities of Contractor in Israel.


 


		14.7	Contractor
                                         shall prior to commencing the work forward to Operator certificates of insurance or other
                                         evidence of insurance coverage all in a form satisfactory to Operator confirming that
                                         all of the required insurance policies are in force. As per Operators request, Contractor
                                         shall deliver to Operator copies of all the policies referred to in clause 14.



 


		14.8	The
                                         effecting and keeping in force of insurance as required by this clause 14 shall not in
                                         any way limit the liabilities, responsibilities and obligations of Contractor under other
                                         provisions of this Agreement.



 


		14.9	If
                                         Contractor fails to effect or keep in force any of the insurance coverage which it is
                                         required by this Agreement to effect, Operator may effect and keep in force such insurance
                                         and pay such premiums as may be necessary for that purpose and may recover as a debt
                                         from Contractor the amount so paid or Operator may refuse payment of any sum due to Contractor
                                         until satisfied that such insurance has been effected.



 


		14.10	If
                                         Contractor becomes aware that any insurance policy which it holds for the purposes of
                                         this Agreement will be cancelled or changed, then Contractor will immediately notify
                                         the Operator of that cancellation or change together with full details of the cancellation
                                         or change and immediately act to restore such coverage.



 


		14.11	The
                                         policies specified in clause 14 shall include a provision stating they are primary and
                                         take precedence over any insurance affected by the Operator or on his behalf.



 


		14.12	Contractor
                                         shall give immediate written notice to Operator of any accident or damage likely to form
                                         the subject of an insurance claim and shall give all information and assistance in respect
                                         thereof that Operator may reasonably request.



 


		14.13	In
                                         the event that any demand and/or claim is made to Contractor, it shall promptly notify
                                         the Operator and convey any information pertaining to such demand and/or claim and the
                                         alleged cause for such demand and/or claim. If such demand and/or claim may also be brought
                                         against Operator and/or the Indemnified Person (together with Contractor and/or separately),
                                         then Contractor shall not negotiate, pay, settle, admit or repudiate any insurance claim
                                         in relation to the insurance coverage required hereunder without the written consent
                                         of Operator (which consent shall not be unreasonably withheld), and Contractor shall
                                         permit Operator and any Indemnified Person to take proceedings in the name of Contractor
                                         to recover compensation or secure an indemnity from any third party in respect of any
                                         of the matters covered by the said required insurance coverage. In any event Contractor
                                         shall not negotiate, pay, settle, admit or repudiate any insurance claim in relation
                                         to insurance coverage required hereunder unless any and all demands and claims regarding
                                         the cause for such demand and/or claim are simultaneously and unconditionally waived,
                                         in writing, against Operator and the Indemnified Person.



 






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		14.14	Contractor
                                         hereby indemnifies the Indemnified Persons and Kibbutz Sde Eliyahu and agrees to hold
                                         and save them all harmless from and to keep them all indemnified against all actions,
                                         proceedings, suits, claims, demands, damages, losses, costs, charges and expenses arising
                                         in any way related to this Agreement in respect of:



 


		a)	injury
                                         to or death of any subcontractor of Contractor or any employee or agent of Contractor
                                         or of any of its subcontractors or damage to or destruction of property of any such person,
                                         corporation or firm howsoever caused except to the extent that such damage arises directly
                                         as a result of an action of an Indemnified Person as a result of an Indemnified Person’s
                                         willful misconduct or gross negligence;



 


		b)	damage
                                         to or destruction of any materials or equipment furnished by Contractor hereunder or
                                         any other materials or equipment owned by or rented to Contractor howsoever caused except
                                         to the extent that such damage arises directly as a result of gross negligence or willful
                                         misconduct of Indemnified Persons, and except as otherwise provided in Clause 16;



 


		c)	injury
                                         to or death of any other person or damage to or destruction of any other property (including
                                         but not limited to employees of the Indemnified Persons and property of the Indemnified
                                         Persons) in any way sustained or alleged to have been sustained except to the extent
                                         that such damage arises directly as a result of an action of an Indemnified Person as
                                         a result of an Indemnified Person’s willful misconduct or gross negligence; and



 


		d)	liability,
                                         damages, claims, demands, costs, charges, losses and expenses of whatsoever nature including
                                         fines or sanctions imposed by government authorities resulting from failure on the part
                                         of Contractor or its subcontractors to comply with Clauses 11, 18, 28, 28A or 29 or from
                                         gross negligence or willful misconduct by Contractor its employees, agents or subcontractors.



 


		14.15	Notwithstanding
                                         any contrary provisions of this Agreement, Contractor will not be responsible for injury,
                                         death or property damage to the extent caused directly by gross negligence or willful
                                         misconduct of an Indemnified Person or their employees.



 


		14.16	Unless
                                         otherwise specifically provided herein, Sub-clause 14.12 shall not affect any rights
                                         which Operator may have under applicable Israeli law.



 


		14.17	Operator
                                         agrees to indemnify and hold Contractor harmless against claims for damages as follows:



 


		(a)	claims
                                         resulting from failure of Operator to obtain valid permits where required under this
                                         Agreement; and



 


		(b)	to
                                         the extent that those claims arise directly as a result of gross negligence or willful
                                         misconduct of Operator.



 


		14.18	Subject
                                         to the provisions of sub-clause 14.12 above and unless otherwise mentioned elsewhere
                                         in this agreement, Operator shall indemnify Contractor and hold it harmless against all
                                         civil liability arising from damage to productive formation, damage to or loss of oil
                                         or gas or other underground damage or from the use of radioactive material or damage
                                         to or loss of the hole itself except where it can be established that Contractor or any
                                         person and/or entity on its behalf acted or failed to act in a manner establishing gross
                                         negligence and/or willful misconduct and that such damage arose as a result of the same.



 


		14.19	Subject
                                         to the provisions of sub-clause 14.12 above, Operator shall indemnify, defend and hold
                                         harmless Contractor from and against all civil liability for any loss or damage resulting
                                         from fire, blowout, cratering or any other loss of control of the hole during or subsequent
                                         to the conduct of operations except where it can be established that Contractor or any
                                         person and/or entity on its behalf acted or failed to act in a manner establishing gross
                                         negligence and/or willful misconduct and that such damage arose as a result of the same.



 






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		14.20	Contractor
                                         hereby indemnifies the Israeli Ministry of Defense and agrees to hold and save them harmless
                                         from and to keep them indemnified against all actions, proceedings, suits, claims, demands,
                                         damages, losses, costs, charges and expenses arising in any way related to this Agreement
                                         in respect of:



 


		a)	injury
                                         to or death of any subcontractor of Contractor or any employee or agent of Contractor
                                         or of any of its subcontractors or damage to or destruction of property of any such person,
                                         corporation or firm howsoever caused;



 


		b)	damage
                                         to or destruction of any materials or equipment furnished by Contractor hereunder or
                                         any other materials or equipment owned by or rented to Contractor howsoever caused.



 


		c)	Without
                                         derogating from the above, the insurance coverage referred to in clauses 14.1(c), (d)
                                         and (e) shall contain a “Waiver of Subrogation Clause” stating that the insurer
                                         waives all rights of subrogation against the Israeli Ministry of Defense.



 


The
requirements of this Contract as to insurance are not intended to and shall not in any manner limit or qualify the liabilities
and obligations of Contractor under this Contract. Notwithstanding the foregoing, the Parties acknowledge and agree than any and
all coverage, indemnification or other requirements herein shall be subject to applicable law.


 


	15.	Taxes and Claims




 


		15.1	Unless
                                         otherwise expressly provided herein, Operator shall not be liable to pay or reimburse
                                         Contractor in respect of taxes and Contractor shall indemnify and keep indemnified Operator
                                         and any other Indemnified Persons from and against any liability for their taxes.



 


Notwithstanding
anything herein contained, Operator shall not be liable to Contractor for any sum which would otherwise be payable to Contractor
that Operator has withheld from payment or paid to the person or authority entitled thereto in accordance with any law or regulation.
For the purpose of this Sub clause 15.1 the production of any notice of payment, receipt or any duplicate or facsimile thereof
shall be conclusive proof of such payment as between Operator and Contractor.


 


Whenever
necessary, the Contractor shall notify in writing the Operator, and the Operator shall procure as a result of such notification
that all reasonable steps are taken and all reasonable assistance is given to the Contractor for the purpose of obtaining all
necessary documents in Israel which are required under the relevant jurisdiction of the Contractor in order to apply and enjoy
the benefit of the fiscal credit in accordance with the favourable taxation treatment instituted under the applicable double taxation
treaties (e.g. tax residency certificates).


 


		15.2	Contractor
                                         agrees to reimburse Operator on written demand accompanied by relevant supporting documents
                                         for all such taxes or governmental charges which Operator may be required to pay on account
                                         of employees and/or equipment of Contractor or its sub-contractors. Contractor agrees
                                         to furnish Operator with the information required to enable it to make the necessary
                                         reports and to pay such taxes or charges. At its option Operator is authorised to deduct
                                         based on relevant supporting documents all sums so paid for such taxes and governmental
                                         charges from such amounts as may be or become due to Contractor hereunder.



 


		15.3	Contractor
                                         agrees to the extent expressly required under the applicable jurisdiction, to pay all
                                         claims for labour, materials, services and supplies furnished by Contractor hereunder
                                         (other than labour, materials, services or supplies to be paid for by Operator) and agrees
                                         to allow to the extent permitted by the relevant laws and regulations no lien or charge
                                         to be fixed upon any licence, authority or lease of any well or the land on which any
                                         well is to be drilled or other property of Operator.



 


Contractor
agrees to indemnify, protect and hold Operator harmless from and against all such claims and liens.


 






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		15.4	In
                                         the event that the Contractor shall receive a claim (or claims) in connection with its
                                         activities in Israel hereunder (labour, materials, equipment, services or supplies or
                                         for injuries to any person or persons or property not covered by insurance) while payments
                                         are owed by Operator to Contractor and Operator deems on reasonable and properly justified
                                         grounds communicated in writing to the Contractor, that such claim(s) may affect the
                                         Operator then Operator may set-off from future payments to Contractor any or all owed
                                         amounts until such time all such claims are satisfied (at which time all such amounts
                                         set aside shall be promptly paid to Contractor).



 


	15A	Value Added Tax




 


		15A.1	Notwithstanding
                                         clause 15.1, the Operator must pay to the Contractor, to the extent required under the
                                         relevant laws and regulations, any amount which is payable by the Contractor on account
                                         of value added tax or any other like tax ("VAT") as a consequence of
                                         any supply made to the Operator under this Agreement ("VAT Amount").



 


		15A.2	Such
                                         VAT Amount will be payable, to the extent required under the relevant laws and regulations,
                                         at the same time and in the same manner as payment of the amount upon which the VAT Amount
                                         is calculated. The obligation of a party to pay any VAT Amount will be conditional
                                         upon such party receiving a tax invoice from the party making the relevant supply. The
                                         party making such supply must do all things reasonably requested by the recipient of
                                         such supply to enable the recipient of such supply to obtain any input tax credit to
                                         which it is entitled.



 


		15A.3	If
                                         at any time an adjustment is made as between the Contractor and the relevant taxing authority
                                         of an amount paid on account of VAT on any supply made to the Operator under this Agreement,
                                         a corresponding adjustment must be made as between the Contractor and the Operator and
                                         any payments required to give effect to the adjustment must be made. If the Contractor
                                         is entitled to an adjustment by way of refund, the Contractor must notify the Operator
                                         and apply for the refund if requested to do so by the Operator.



 


		15A.4	If
                                         the Operator makes any supply to the Contractor as a consequence of any matter arising
                                         under or in connection with this Agreement, the Contractor must pay to the Operator,
                                         to the extent required under the relevant laws and regulations, an amount equal to any
                                         VAT payable in relation to that supply such that any consideration for the supply available
                                         to the Operator remains the same whether VAT applies or not and the obligations imposed
                                         under sub-clauses 15A.1-15A.3 will be read as applying to the Contractor.



 


		15A.5	Despite
                                         any other provision of this Agreement, if either party is required to reimburse to the
                                         other any cost, expense or other amount (or part) that the other party has incurred in
                                         connection with this Agreement, the amount to be reimbursed must be reduced by the amount
                                         of VAT included, to the extent required under the relevant laws and regulations, in such
                                         cost, expense or other amount and which has been incurred by the party being reimbursed.



 


		15A.6	The
                                         parties agree, for the avoidance of doubt, that any sum payable or amount to be used
                                         in the calculation of a sum payable expressed elsewhere in this Agreement has been determined
                                         without regard to, and does not include, amounts to be added on under this clause on
                                         account of VAT.



 


	16.	Responsibilities and indemnity for loss of or damage
to equipment or hole




 


		16.1	Contractor
                                         shall be liable at all times for damage to or destruction of Contractor’s surface
                                         equipment including all drilling tools, machinery and appliances for use above the surface,
                                         and for any other type of equipment including in-hole equipment when such in-hole equipment
                                         is above the surface regardless of when or how such damage or destruction occurs. Operator
                                         shall be under no liability to reimburse Contractor for any loss, except loss or damage
                                         caused by gross negligence or willful acts or omissions of Operator or Operator’s
                                         agents, servants or employees.



 






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		16.2	All
                                         machinery, tools, materials and equipment furnished by Operator shall, at the completion
                                         or abandonment of the well, be returned to Operator in as good condition as when received
                                         by Contractor, ordinary wear and tear excepted. Contractor shall not be liable to Operator
                                         for any loss or damage to such equipment, except that due to the negligence or willful
                                         misconduct of or material breach of this Agreement by Contractor its agents, representatives,
                                         employees, or subcontractors.



 


		16.3	In
                                         the event that the hole is lost or damaged while Contractor is working only on a day
                                         work basis or as the result of work performed on a day work basis, and provided that
                                         such work was at all times performed in accordance with Good Oil Field Practice and there
                                         was no gross negligence or willful misconduct on the part of Contractor, its employees,
                                         agents or subcontractors, Operator shall be responsible for such loss or damage to the
                                         hole.



 


		16.4	Except
                                         where otherwise provided herein, Contractor shall indemnify and hold the Indemnified
                                         Persons harmless from and against all claims, actions, proceedings, damages, demands,
                                         losses, charges, costs and expenses arising out of the loss of or damage to any of Contractor’s
                                         property or property in which it has an interest or that of its contractors, sub-contractors,
                                         employees, invitees or agents howsoever arising and howsoever caused except to the extent
                                         that such damage is caused directly by the gross negligence or willful misconduct of
                                         an Indemnified Person, except that:



 


		(a)	Operator
                                         shall to the extent that Contractor’s insurance does not compensate Contractor
                                         therefore, be responsible at all times for damage to or destruction of Contractor’s
                                         equipment caused by exposure to unusually and unexpected corrosive substances not provided
                                         for in this Agreement which are introduced into the completion fluids from sub-surface
                                         formations or the use of corrosive additives in the fluid.



 


		(b)	Operator
                                         shall to the extent Contractor’s insurance does not compensate Contractor therefore
                                         be responsible for any damage to or loss of Contractor’s drilling string and down
                                         hole tools, and shall reimburse Contractor the full landed replacement cost of the item
                                         or items at site less straight line depreciation of 10% (ten per cent) per year based
                                         on the price and date originally paid for lost item(s).



 


This
compensation shall not apply if the loss or damage is a direct result of a failure of Contractor’s surface equipment. In
such case Operator will not be liable for any costs as defined in this sub-clause.


 


		(c)	In
                                         the event that Operator elects to use an oil base mud and/or introduce oil into the mud
                                         system at any time, then prior to commencement of such operations Contractor and Operator
                                         shall, upon Contractor's request, mutually agree upon a basis by which the day rate shall
                                         be increased during such operations and/or Contractor shall be fully reimbursed for the
                                         damage to or loss of Contractor’s equipment as a result of such operations.



 


		(d)	If
                                         Operator elects to pressure test Contractor’s annular blowout equipment in excess
                                         of the manufacturer’s recommended closing pressures and procedures, then the cost
                                         to replace the blowout prevention equipment and associated parts damaged during the continuance
                                         of this Agreement as a result of this testing programme will be at the expense of Operator.



 


		(e)	Where
                                         Operator's Drilling Program stipulates the use of air or air/mist as a circulating medium
                                         or unusually low pH drilling fluids or fluids with an unusually corrosive content Contractor
                                         shall be additionally reimbursed at rates to be mutually agreed. Cost of repair of equipment
                                         so damaged or replacement of equipment so damaged beyond repair shall be at Operator’s
                                         expense to the extent Contractor’s insurance does not compensate Contractor therefore
                                         unless otherwise stipulated in the Drilling Order.



 






    	16 | Page



     


    

 


		16.5	Operator
                                         agrees to observe drill stem design operating limits and recommended practices contained
                                         in API Bulletin RP7G, and these will not be exceeded during the course of operations.
                                         If Operator elects to exceed these limits or depart from these practices, Operator agrees
                                         to accept full responsibility for loss or damage to the drill stem (including any excessive
                                         wear, deterioration or fatigue damage) and will properly compensate Contractor for same
                                         in accordance with Clause 16.4(b).



 


		16.6	Operator
                                         shall be liable for the cost of regaining control of any uncontrolled well. During such
                                         time as is taken in regaining control of any well, Contractor shall be paid the applicable
                                         rates as herein specified unless Operator notifies Contractor on reasonable grounds that
                                         the circumstances arise out of or in connection with any failure by the Contractor to
                                         perform the work in accordance with Good Oil Field Practice, any material breach by Contractor
                                         of this Agreement or negligence or willful misconduct of Contractor, its employees agents
                                         or sub-contractors in which event if Operator establishes the breach of this Agreement,
                                         negligence or willful misconduct alleged in its notice under this Clause 16.6, Contractor
                                         shall promptly repay all amounts paid by Operators under this Clause 16.6.



 


		16.7	Contractor
                                         agrees to visually inspect all material furnished by Operator before using same and to
                                         notify Operator of apparent defects therein. Contractor shall not be liable for any loss
                                         or damage resulting from the use of materials furnished by Operator unless the loss or
                                         damage is caused by any failure by the Contractor to perform the work in accordance with
                                         Good Oil Field Practice, by any negligence, willful misconduct of or breach of this Agreement
                                         by Contractor its employees, agents or subcontractors.



 


	17.	Independent Contractor Relationship




 


		17.1	Contractor
                                         shall be an independent contractor with respect to performance of all work hereunder,
                                         and neither Contractor nor anyone employed by Contractor shall be deemed for any purpose
                                         to be the employee, agent, servant or representative of Operator in the performance of
                                         any work or service or any part thereof in any manner dealt with hereunder. Contractor
                                         shall pay all the taxes, fees and all other payments as per the provisions of this Agreement
                                         and in accordance with the governing law. Operator shall have no direction or control
                                         of Contractor or its employees and agents except as mentioned in this Agreement. The
                                         work contemplated herein shall be such as to meet the approval of Operator and be subject
                                         to the general right of inspection herein provided for Operator to secure the satisfactory
                                         completion thereof.



 


		17.2	The
                                         actual performance and supervision of all work hereunder shall be by Contractor, however
                                         Operator’s designated representative shall have unlimited access to the site of
                                         any well to determine whether work is being performed by Contractor in accordance with
                                         Operator’s reasonable instructions and with all the provisions of this Agreement
                                         and the Drilling Order. Such representative shall be empowered to act for Operator in
                                         all matters relating to Contractor’s performance of the work being undertaken.



 


For
avoidance of doubt in the event that Contractor deems instruction provided hereunder as unreasonable, then Contractor shall immediately
notify Operator and explain the reasoning for Contractor's disagreement. In the event that Operator persists on said instructions,
Operator shall provide the instructions in writing, and Contractor must abide by the same. The above notwithstanding, Contractor
shall not abide by instructions which may result in imminent bodily damage to any person.


 


	18.	Compliance with Laws




 


In
the performance of its obligations under this Agreement, Contractor will comply with all laws decrees and regulations of the State
of Israel and with all applicable rules, regulations, decrees, licenses, permits, approvals, authorisations, conditions and requirements
of government authorities, agencies and statutory bodies having jurisdiction over any well site, Operator, Contractor or any matter
in connection with the work under this Agreement and will ensure compliance therewith by Contractor’s employees and agents
engaged in the work under this Agreement and by all subcontractors performing any part of such work. It is specifically noted
that noise compliance is a sensitive issue and will be rigidly enforced when operating near houses or public buildings.


 


Without
limiting the generality of this clause Contractor shall comply with the terms of all permits and approvals (if any) annexed to
this Agreement.


 



    	17 | Page



     


    

 





	19.	Force Majeure




 


		19.1	Except
                                         as otherwise provided in this clause 19, each party to this Agreement shall be excused
                                         from complying with the terms of this Agreement (other than the failure to pay any money
                                         due and payable hereunder) if and for so long as such compliance is materially hindered
                                         or prevented by riots, strikes (which are widespread and not limited to the oil and gas
                                         drilling industry or any other specific industry), wars against countries (declared or
                                         undeclared), dispositions or order of government authority, acts of God, inability to
                                         obtain equipment, supplies or fuel which is reasonably beyond the control of the affected
                                         party, such causes being herein sometimes called “Force Majeure”. If any
                                         failure to comply is caused by a Government law, rule, regulation, disposition or order
                                         as aforesaid and the affected party is operating with Good Oil Field Practice in the
                                         relevant area of operation and is using all possible endeavours to comply with such law,
                                         rule, regulation, disposition or order, that matter shall be deemed beyond the control
                                         of the affected party.



 


In
the event that either party hereto is rendered unable (wholly or in part) to carry out its obligations because of a Force Majeure
event under this Agreement, it is agreed that such party shall give notice and details of Force Majeure in writing to the other
party as promptly as possible after its occurrence. In such cases the obligations of the parties shall be suspended during the
continuance of such inability. During periods of suspension Operator shall not incur any liability to make any payment whatsoever
to Contractor with the exception of the payments referred to in Clauses 19.2 and 19.3. The Operator and the Contractor will do
all within their power to fulfil their obligations according to this agreement as soon as the Force Majeure will end.


 


		19.2	During
                                         the continuance of any period of suspension by reason of Force Majeure declared in accordance
                                         with Clause 19.1 hereof, Operator shall pay to Contractor the appropriate daily standby
                                         rate (with or without crew); provided, however, that the daily rate payable pursuant
                                         to this Clause for any period of suspension in excess of fourteen (14) days per well
                                         shall be reduced to nil (zero).



 


		19.3	Operator
                                         shall be liable for reasonable additional costs incurred by Contractor in transporting
                                         Contractor’s personnel from and to the site if it is necessary to enter into extraordinary
                                         transportation arrangements, in order to overcome a Force Majeure.



 


		19.4	Any
                                         Party may terminate this agreement by notice to the other where an event of Force Majeure
                                         has caused the suspension of this Agreement for a continuous period of twenty (20) calendar
                                         days or more. Termination pursuant to this clause shall not prejudice rights of parties
                                         accrued prior to such termination.



 


	20.	Information Confidential




 


Contractor
shall keep secret and confidential and shall not disclose to any third party without the prior written consent of Operator any
information, data testing, surveying specifications, reports, accounts or other documents or information obtained in the course
of drilling operations or as a consequence of this Agreement, and the Contractor is aware of the obligations the Operator, as
a public company, has, and will therefore take or cause to be taken all precautions as may be necessary to maintain secrecy and
confidentiality and prevent disclosure. The obligations of the parties under this Clause 20 shall survive the termination
of this Agreement and shall be enforceable at any time in law or in equity.


 






    	18 | Page



     


    

 


	21.	Ingress and Egress to Location




 


		21.1	Operator
                                         shall secure to Contractor rights of ingress and egress to and from the site on which
                                         any well is to be drilled, Operator shall advise Contractor of any limitations or restrictions
                                         affecting ingress and egress, and Contractor shall abide by and shall have its servants,
                                         agents, employees and sub-contractors abide by such limitations or restrictions. Should
                                         Contractor be unreasonably denied free access to any site for any reason not within the
                                         reasonable control of Contractor, time lost by such denial shall be paid for at an applicable
                                         rate in keeping with the stage of operations at the time in accordance with this Agreement.



 


		21.2	Operator
                                         shall prepare and maintain drilling locations with, inter alia access roads, fencing,
                                         sewage, drainage, water supply and adequate space (as relevant) so as to enable Contractor
                                         to install and operate properly the drilling rig at the drilling locations. Operator
                                         agrees at all times to maintain the access road and location in such a condition that
                                         will give free access and movement to and from the drilling site to an ordinarily equipped
                                         highway type vehicle carrying loads which comply with appropriate regulations. If Contractor
                                         is required to use bulldozers, tractors or any other specialised transportation equipment
                                         for the movement of necessary personnel, machinery or equipment over access roads or
                                         on the drilling location, then Operator shall furnish them at Operator’s expense
                                         without cost to Contractor.



 


		21.3	Operator
                                         shall prepare a sound location capable of properly supporting the Rig and shall install
                                         a suitable conductor pipe program adequate to prevent soil and subsoil wash out. If the
                                         knowledge of the location and access routes to the location of drilling operations assumes
                                         relevance and is within the knowledge of either party, such party shall advise the other
                                         of any known sub-surface conditions or obstructions (including but not limited to mines,
                                         caverns, sink holes, streams, pipelines, power lines and telephone lines) which might
                                         be encountered while en route to the location or during operations under this Agreement.
                                         In the event of sub-surface related loss or damage to the rig, its associated equipment,
                                         or personnel resulting there from, such knowing party shall without regard to other provisions
                                         of this Agreement reimburse the other party to the extent not covered by such other party’s
                                         insurance for all such loss or damage including payment of standby rates during repair
                                         or demobilization if applicable.



 


	22.	Conflicts and Waivers




 


		22.1	In
                                         the event that there is a conflict between the provisions of this Agreement and any papers
                                         or documents which may have been executed or passed between the parties in connection
                                         with the subject matter of this Agreement, the provisions of this Agreement shall prevail.



 


If
there is a conflict between the provisions of the main body of this Agreement and those of its Annexures, the following order
of precedence shall apply:


 


		(a)	The
                                         Drilling Order and/or the Rig and Rate Schedule shall prevail;



 


		(b)	The
                                         stipulations of the main body of this Agreement shall supersede over all other annexures
                                         other than those stipulated under sub-clause 22.1(a) above and Annexure or Exhibit V;



 


		22.2	None
                                         of the requirements of this Agreement shall be waived by either party unless the same
                                         is done in writing and duly executed by both parties.



 


		22.3	This
                                         Agreement supersedes and replaces any oral or written communication, negotiation and/or
                                         agreement made between the parties relating to the subject matter of this Agreement.



 


	23.	Term




 


		23.1	The
                                         parties shall be bound by this Agreement until termination in accordance with its terms.



 






    	19 | Page



     


    

 


		23.2	Subject
                                         to Clause 23.1 this Agreement shall terminate on the first to happen of the following
                                         events:



 


		(a)	immediately
                                         if the Rig becomes a total effective or constructive loss; or



 


		(b)	the
                                         Services are completed on any Well being drilled under this Agreement with regard to
                                         such Well.



 


		(c)	If
                                         Contractor fails to commence Daily Rate activities on the first well hereunder within
                                         five (5) days from the date by which the Company accepts the rig on the MJ#1 location
                                         and all acceptance tests as referenced in Annexure VI have been approved by a Company
                                         representative, provided however that all conditions and obligations laid down in Subclause
                                         6.1 above have been duly, timely and completely satisfied/discharged by the Operator,
                                         the Contractor shall pay to Operator as agreed upon compensation the sum of two hundred
                                         and fifty thousand dollars (USD 250,000) in addition to a return of any Rig Commissioning
                                         or Mobilization payments made to date, without any requirement from Operator to demonstrate
                                         damages. The parties attest that said amount reflects to the best of their understanding
                                         the entire amount of damages to Operator as foreseen by the parties at the time of this
                                         Agreement.



 


		(d)	At
                                         Operator's will in the event that Operator is dissatisfied with Contractor's performance
                                         and/or in the event that Contractor is in breach of the essential obligations undertaken
                                         under this Agreement which shall include, inter alia, performance of any of Contractor's
                                         undertakings hereunder in a manner that contravenes Good Oil Field Practice and Contractor
                                         fails to remedy such breach within 14 days from receipt of Operator’s notice.



 


		23.3	Notwithstanding
                                         Clauses 23.2(b), 23.2(c) and/or 23.2(d), Operator shall have the right to terminate this
                                         Agreement at any time, upon written notice to Contractor, however, such termination shall
                                         be subject to payment as following:



 


		(a)	If
                                         termination is more than 30 days prior to the mobilization date of the Contractor’s
                                         equipment, then compensation to Contractor shall be in the agreed amount as included
                                         in Clause 2 of Annexure II, Rig and Rate Schedule;



 


		(b)	If
                                         termination is less than 30 days prior to the mobilization date of the Contractor’s
                                         equipment, then compensation to Contractor shall be in the agreed amount as included
                                         in Clause 2 of Annexure II, Rig and Rate Schedule;



 


		23.4	Notwithstanding
                                         any early termination of this Agreement, the parties shall continue to be bound by the
                                         provisions of this Agreement that reasonably require some further action or forbearance
                                         by either party.



 


	24.	Assignment and Sub-Letting




 


		24.1	Operator
                                         may employ other contractors to perform any of the operations or services to be provided
                                         or performed by it under this Agreement. Contractor may not assign this Agreement or
                                         any of the work or other obligation to be performed under it without the prior written
                                         approval of Operator. Upon written notice and approval of the Operator, the Contractor
                                         may assign this Agreement to any of its affiliates, the Operator’s consent to such
                                         assignment not being unreasonably withheld, conditioned or delayed. If Contractor shall
                                         cause any part of the Services hereunder to be performed by an affiliate, Contractor
                                         shall remain liable for all of its obligations hereunder. Under no circumstances shall
                                         any affiliate, or its agents, servants, or employees be considered employees of Operator.



 


		24.2	In
                                         the event of a permitted assignment, this Agreement shall inure to the benefit of and
                                         be binding upon the successors and assigns of the assigning party and assignment does
                                         not extend the term of this Agreement.



 


		24.3	The
                                         Contractor agrees that if for any reason the Operator wishes to allow another operator
                                         a working window in the work scope of this Agreement, the Contractor will co-operate
                                         with this other operator with regards to financial and working issues associated with
                                         the other operator’s program. However, it is fully understood by the Contractor
                                         that the Operator shall have no responsibility or liability whatsoever for any services
                                         provided by the Contractor to another operator during the provision of any such services.



 






    	20 | Page



     


    

 


	25.	Notices




 


Any
notice shall be deemed to have been properly given and delivered to the party to which it was directed if it is delivered in person,
sent by confirmed or read receipt email, sent by pre-paid registered mail or by facsimile to such party at the address specified
in this Agreement or to such other person and /or address as such party or its designated representative may notify the other
party in writing. If any notice is given by pre-paid registered mail such notice shall not be effective until three (3) days after
it has been mailed. If any notice is given by facsimile it shall be deemed to be received immediately after the time at which
it was successfully sent.


 


	26.	Governing Law




 


This
Agreement shall be governed by the laws of the State of Israel.


 


The
parties shall attempt to resolve any unresolved dispute arising herefrom or in connection hereto by arbitration pursuant to Clause
31.


 


	27.	Patents and Licences




 


In
addition to the indemnifying provisions contained in this Agreement, Contractor represents and warrants that the use or construction
of any and all tools and equipment furnished by Contractor and used in the work provided for in this Agreement does not infringe
any licence or patent which has been issued or applied for and Contractor agrees to indemnify and hold Operator harmless from
any and all claims, demands and causes of action of every kind and character in favour of or made by any patentee, licensee or
claimant of any right or priority to any such tool or equipment or the use or construction thereof which may result from or arise
out of the furnishing or use of any such tool or equipment by Contractor in connection with the work under this Agreement.


 


	28.	Safety, Health and Welfare




 


		28.1	Contractor
                                         shall ensure that the Israeli law in respect to Safety, Health and Welfare are
                                         fulfilled, including the provisions of the Organization of Labor Inspection Law-1954
                                         and the Safety at Work Ordinance -1970 and that Contractor’s employees shall adhere
                                         to the Operator’s HSE plan.



 


The
Contractor shall ensure that all Contractor’s employees at the site are adequately and physically suitable to perform their
duties irrespective of the location or environment.


 


Contractor
shall in respect of each person employed or engaged by Contractor ensure so far as is practicable that that person, while at work,
is safe from injury and risks to health and in particular:


 


		(a)	shall
                                         provide and maintain so far as is reasonably practicable:



 


		(i)	a
                                         safe working environment;



 


		(ii)	safe
                                         systems of work;



 


		(iii)	plant
                                         and substances in a safe condition.



 


		(b)	shall
                                         provide facilities which comply with all legal requirements and conform with the requirements
                                         of Good Oil Field Practice.



 






    	21 | Page



     


    

 


		(c)	shall
                                         provide such information, instruction, training and supervision as are reasonably necessary
                                         to ensure that each employee is properly trained in the use of equipment and aware of
                                         all relevant risks to health.



 


		(d)	shall
                                         monitor the health and welfare of all employees in its employment insofar that monitoring
                                         is relevant to the prevention of work related injuries.



 


		(e)	Make
                                         sure all necessary Contractor employees have current IWCP or Well Cap well control certificates
                                         as appropriate to the position which the employee holds.



 


		(f)	Fully
                                         comply with the Safety Work Regulations ( Working at Heights ) 2007



  


		28.2	Contractor
                                         shall take all measures necessary or proper to provide safe working conditions and procedures
                                         during the carrying out of any drilling or other operations pursuant to this Agreement.



 


		28.3	Contactor
                                         shall provide a suitable experienced full-time Safety and Training Officer, acceptable
                                         to Operator to supervise the occupational health and safety performance of the Contractor's
                                         personnel. Contractor shall submit a summary of each Safety and Training Officer’s
                                         training and oilfield experience for Operator’s approval before each Safety and
                                         Training Officer first goes out to Rig.



 


The
Safety and Training Officer shall perform the following duties under the direction of Contractor’s tool pusher:


 


		(a)	actively
                                         participate in the pre-spud meeting; observe methods of work and occupational health
                                         and safety procedures in the work place and correct unsafe and/or inefficient work procedures;



 


		(b)	observe
                                         and train inexperienced crewman where necessary;



 


		(c)	conduct
                                         training lectures for Contractor’s employees on site;



 


		(d)	inspect
                                         equipment for suitability and safe operating condition;



 


		(e)	prepare
                                         and submit a report to Contractor for transmission to Operator which specified the activities
                                         performed by Contactor’s Safety and Training Officer and which contains any recommendations
                                         made for increasing safety and improving occupational health and efficiency in the work
                                         place.



 


The
Safety and Training Officer shall spend the majority of his or her working time around the rig and the rig floor and shall not
be used as a labourer or replacement worker.


 


The
Safety and Training Officer shall be provided by the Contractor in addition to the minimum full rig crew detailed in section 5
of the Rig and Rate Schedule at no additional cost to Operator.


 


		28.4	Contactor
                                         shall at all times give due consideration to the interest of property owners and occupiers
                                         wherever involved and all carry out the work in a manner causing the least possible inconvenience
                                         and injury to those owners and occupiers, and to the environment and the ecology. Contactor
                                         shall properly protect the property of Operator and others at the site or adjacent to
                                         the work.



 


		28.5	Both
                                         parties shall take all steps to prevent accidents or injuries to employees and other
                                         persons or damage to property and shall provide and maintain so far as practicable for
                                         their respective employees a working environment that is safe and which does not expose
                                         them to unreasonable risks to health.



 


		28.6	Contractor
                                         will comply with the reasonable requirements of Operator with respect to Occupational
                                         Health Safety and Environment.



 






    	22 | Page



     


    

 


28A.Environmental
Protection


 


		28A.1	Contractor
                                         acknowledges Operator’s commitment to conduct its operations in a manner which
                                         complies with all relevant approvals, authorisations and environmental protection and
                                         pollution control legislation of Israel and also ensures that such operations do not
                                         cause environmental damage or pollution.



 


Contractor
agrees to perform the work under this Agreement in a manner consistent with Good Oil Field Practice and in such a way as to avoid
(or where some environmental damage or pollution is unavoidable, minimise) environmental damage or pollution.


 


	28A.2	(a)	Prior to commencing
    the work under this Agreement, Contractor shall review and familiarise itself with all relevant approvals, authorisations
    and environmental guidelines and reports submitted to it by Operator.




 


		(b)	Contractor
                                         shall comply with and shall ensure that its employees, agents and subcontractors comply
                                         with the conditions, requirements and guidelines referred to in Clause 28A.2(a) throughout
                                         the term of this Agreement to the extent that the same are applicable to the work under
                                         this Agreement.



 


		28A.3	If
                                         during Contractor’s performance of the work under this Agreement, Operator is of
                                         the reasonable opinion supported by relevant written documents and/or factual background
                                         that Contractor is either not performing such work in compliance with all applicable
                                         environmental protection laws, rules and regulations, approvals, authorisations and conditions
                                         issued or imposed by relevant state or local governments and all environmental guidelines
                                         and procedures furnished by Operator to Contractor from time to time or is conducting
                                         the work in such a way as to endanger the environment or in such a way as to risk being
                                         in breach of any laws, rules or regulations, approvals, authorisations or conditions
                                         relevant to the performance of the work, then Operator shall notify Contractor in writing
                                         of the breach involved, and Contractor shall forthwith rectify the breach so notified.



 


		28A.4	In
                                         the event that Contractor does not rectify a breach notified in accordance with Clause
                                         28A.3 within 48 hours of the said notification, or an earlier period if so ordered by
                                         any Governmental and/or municipal authority and/or any court order, Operator may direct
                                         Contractor to suspend the work under this Agreement until such time as Contractor satisfies
                                         Operator that such work will be resumed in conformity with all applicable environmental
                                         protection provisions.



 


		28A.5	During
                                         periods of suspension referred to in Clause 28A due to environmental cause, Operator
                                         shall not be required to make any payment whatsoever to Contractor and in the event that
                                         Contractor fails to rectify the breach, or if Contractor’s performance of such
                                         work has involved recurring breaches of environmental protection provisions, then Operator
                                         may terminate this Agreement immediately and shall pay Contractor for work performed
                                         in addition to any costs to which the contract allows to be rebilled to Operator, up
                                         to the date of suspension but without prejudice to any entitlement of Operator to damages
                                         or any indemnity provided in this Agreement.



 


		28A.6	Contractor
                                         shall not allow any tank waste, oil, drilling cuttings, hazardous chemicals, radioactive
                                         material or other pollutants to be discharged or allowed to escape from materials brought
                                         onto Operator’s site by Contractor or its subcontractors or from materials under
                                         Contractor’s or any of its subcontractors’ control. Contractor shall notify
                                         Operator immediately of any act of pollution or potentially polluting event. For each
                                         and every such event Contractor shall deliver a completed report to Operator forthwith.
                                         Notwithstanding any other provision of this Agreement, Contractor shall, at its own expense,
                                         clean up any pollution from its equipment or subcontractor’s equipment.



 






    	23 | Page



     


    




 


29.
Safety


 


		29.1	Contractor
                                         shall take all measures necessary or proper to provide safe working conditions and procedures
                                         for the performance of the Services. Contractor shall comply with relevant Israeli regulations
                                         and any other Codes of Practice and Regulations insofar as they can be applied.



 


		29.2	Contractor
                                         shall not permit smoking or any open flame in any area within 45 metres of wellbore.
                                         No welding operations during the course of drilling or completion operations are to be
                                         undertaken within 45 metres of wellbore without prior authorisation from the Operator’s
                                         Representative and only after all appropriate precautions have been taken.



 


		29.3	If
                                         during performance of the Services Operator’s Representative is of the opinion
                                         that Contractor is either:



 


		(i)	not
                                         conducting the Services in compliance with Operator’s or Contractor’s Safety
                                         Procedures all applicable safety rules and regulations imposed by law and all safety
                                         rules and procedures furnished by Operator to Contractor from time to time; or



 


		(ii)	is
                                         conducting the Services in such a way as to endanger the safety of Contractor’s
                                         personnel or visitors or Operator’s contractor’s personnel or visitors as
                                         well as operator's plant, equipment or materials,



 


then
Operator’s Representative shall notify Contractor in writing of the breach of safety involved, and Contractor shall immediately
rectify that breach of safety so notified.


 


		29.4	In
                                         the event that Contractor does not rectify the breach of safety notified in accordance
                                         with Clause 29.3, Operator’s Representative may direct Contractor to suspend the
                                         Services until such time as Contractor satisfies Operator’s Representative that
                                         the Services will be resumed in conformity with all applicable safety rules, regulations,
                                         laws and procedures. Operator may terminate this Agreement immediately and shall pay
                                         Contractor for work performed in addition to any costs which the contract allows to be
                                         rebilled to Operator, up to the date of suspension but without prejudice to any entitlement
                                         of Operator to damages or any indemnity provided in this Agreement.



 


		29.5	During
                                         periods of suspension referred to in Clause 29.4 above, Operator shall not incur any
                                         liability to make any payment whatsoever to Contractor.



 


		29.6	Contractor
                                         shall ensure that all of its sub-contractors, agents and employees wear protective clothing
                                         and other apparel which conforms with the Israeli Standards and all relevant Acts and
                                         Regulations.



 


Contractor
shall ensure that notices and warning signs are displayed and maintained in accordance with relevant statutory requirements.


 


Each
person present at the site shall comply with Operator’s Occupational Health and Safety Policy and shall at all times:


 


		(a)	Wear
                                         a hard hat of a type approved by the relevant authorities in hard hat areas, as designated.



 


		(b)	Wear
                                         appropriate safety clothing and safety footwear.



 


		(c)	Wear
                                         eye protection and other apparel for hazardous operations as required by any statutory
                                         instrument of a standard approved by the relevant authorities.



 


		29.7	All
                                         first aid provisions shall comply with all relevant statutory Acts and Regulations of
                                         the State of Israel. Contractor shall ensure that sufficient members of its staff are
                                         trained to administer first aid. Contractor shall supply and maintain first aid equipment
                                         and facilities appropriate for the number of employees engaged in the work and the types
                                         of work being performed.



 






    	24 | Page



     


    

 


		29.8	Contractor
                                         shall ensure that all equipment and machinery engaged in performing the Services is safe
                                         for its intended use and shall install all necessary barriers, guard rails and other
                                         safety devices necessary for the safe performance of the Services. Operator retains the
                                         right to monitor, inspect or audit work systems, machinery and equipment used by Contractor
                                         to perform the work and to stop any work which it considers to be unsafe or environmentally
                                         damaging. Unless otherwise approved in writing by Operator’s Representative, Contractor
                                         shall remain responsible for and shall rectify any work system, machinery or equipment
                                         at its own expense where such action is required under this Clause.



 


		29.9	Contractor
                                         agrees to maintain well control equipment in good operating condition at all times and
                                         shall use all reasonable endeavours to control and prevent fires and/or blowouts and
                                         to protect the hole, personnel and Operator’s equipment.



 


Operational
checks on the Blowout Preventer equipment shall be made by the Contractor in accordance with procedures described in the Drilling
Program and as directed by Operator’s Representative. In any event such checks shall be carried out by Contractor before
drilling out from under surface casing on each well and thereafter as directed by Operator’s Representative. All Blowout
Preventers shall be of the type size and pressure rating as agreed with Operator.


 


		29.10	Contractor
                                         shall immediately report to Operator’s Representative and directly to Operator’s
                                         Drilling Manager any death or serious injury to any person resulting from an accident
                                         or event on the well site.



 


All
accidents must be recorded in accordance with relevant legislation. All accidents should have a first incident report filled out
and delivered to Operator within 24 hours. Depending on severity of incident and risk taken, a root cause analysis should be performed
by Contractor and signed off on by Operator as deemed necessary by Operator.


 


Contractor
shall ensure that current copies of the Regulations under the Petroleum Act, Occupational Health Safety and Welfare Act and Joint
Code of Environmental Practice are available at the well site at all times.


 


30.
Right of Audit


 


		30.1	Operator’s
                                         duly authorised representatives shall have access at all reasonable times during the
                                         continuance of this Agreement and for a period of two (2) years thereafter to all of
                                         Contractor’s and its subcontractor’s and agent’s personnel books, records,
                                         correspondence, instructions, plans, drawings, receipts, vouchers and memoranda of every
                                         description pertaining to the work under this Agreement for the purpose of auditing and
                                         verifying that the charges presented by Contractor to Operator for payment are in accordance
                                         with this Agreement. Operator’s representatives shall have the right to copy any
                                         of the aforesaid documents. Contractor shall preserve and shall cause its sub-contractors
                                         and agents to preserve all the aforesaid documents for a period of two (2) years after
                                         the completion and acceptance or termination of the work.



 


		30.2	Contractor
                                         shall ensure that any subcontract entered into by the Contractor and/or agent retained
                                         in relation with the performance of the Services confers upon Operator the same audit
                                         rights in relation to such subcontractor and/or agent as are conferred upon Operator
                                         by Clause 30.1.



 


31.
Amicable Settlement and Arbitration


 


		31.1	Any
                                         and all contractual or other disputes or claims arising out of or in connection with
                                         this Agreement, including but not limited to any questions regarding its existence, performance,
                                         breach, validity or termination thereof (the “Dispute”)
                                         shall be resolved by amicable discussions between the parties whenever possible.



 






    	25 | Page



     


    

 


		31.2	In
                                         the event of a Dispute, either party shall serve a written notice upon the other party
                                         (the “Dispute
                                         Notice”) proposing that the parties seek to resolve
                                         the Dispute by amicable negotiation. 



 


		31.3	If
                                         a Dispute is not amicably settled within 30 (thirty) days as of the receipt of the Dispute
                                         Notice, the parties shall seek to resolve such Dispute by negotiation between their representatives.
                                         The representative of each party, who has the authority to negotiate the settlement of
                                         a Dispute for a party, shall either participate by phone conferences or meet at a mutually
                                         acceptable time and place to exchange relevant information in an attempt to resolve the
                                         Dispute. In the case of any dispute or matter under this Agreement referred explicitly
                                         and directly to this Clause 31.3, such agreed decision of both the representatives of
                                         the parties shall be final. 



 


		31.4	Without
                                         prejudice to either party’s rights under the applicable laws to follow a summary
                                         judgment procedure before the courts of law in order to obtain payment of amounts of
                                         money which are not disputed by the other party (for example, payment summons procedures),
                                         if a Dispute is not amicably settled within 60 (sixty) days as of the receipt of the
                                         Dispute Notice, such Dispute shall at the request of either party, to the exclusion of
                                         the ordinary courts be referred to and finally resolved through arbitration under Israeli
                                         Rules of Arbitration by three (3) arbitrators, unless agreed differently by parties.



 


		31.5	The
                                         place of arbitration shall be Tel Aviv, Israel. The language of arbitration shall be
                                         English, including oral hearings, written evidence and correspondence. The award of the
                                         arbitrators will be final, binding and enforceable for both parties. 



 


		31.6	The
                                         Dispute shall be decided solely by the arbitrators (including the allocation of any costs),
                                         and any award rendered by the arbitrator or arbitrators shall be final and binding upon
                                         the parties and may if necessary be enforced by any court having jurisdiction or application
                                         may be made to such court for a judicial acceptance of the award and an order of enforcement,
                                         as the case may be.



 


		31.7	The
                                         provisions of this Agreement relating to arbitration shall continue in force notwithstanding
                                         the termination of this Agreement. 



 


32.
Not used


 


33.
Suspension of Operations


 


		33.1	Operator
                                         may at any time suspend operations under this Agreement for such period of time as it
                                         may desire by giving to Contractor a two (2) day period notice in writing to that effect.



 


		33.2	At
                                         any time following the giving of such notice by Operator but prior to the suspension
                                         of operations, Operator may rescind the notice, and in that event Contractor shall continue
                                         the drilling or other operations under this Agreement as if the said notice had not been
                                         given by Operator.



 


		33.3	Following
                                         receipt by Contractor of a notice under Clause 33.1, Contractor may within a period of
                                         ten (10) days request Operator to exercise its powers to terminate this Agreement under
                                         Clause 23, and if Operator agrees, the said notice shall be treated as if it were a notice
                                         given by Operator pursuant to the provisions of Clause 23.



 


		33.4	At
                                         any time during the period of suspension Operator may give to Contractor a further notice
                                         in writing requiring Contractor to resume drilling and other operations under the terms
                                         of this Agreement.



 


		33.5	During
                                         the period of suspension the rights, duties and obligations of the parties shall be suspended
                                         for such period of time as the period of suspension shall operate and without limiting
                                         the generality of the foregoing, Operator shall not be liable for any payments which
                                         might otherwise have been payable under this Agreement except for those stipulated under
                                         Sections 17 (n) and 17 (o) of Annexure I to this Agreement as well as any other reasonable
                                         payments relating to expenses necessarily incurred in demobilising the crews at the start
                                         of the suspension period and remobilising the crews on resumption of operations hereunder



 


--The
rest of this page is left intentionally blank --


 




 






    	26 | Page



     


    

 


Executed
as an Agreement on the Signing Date.


  


	Signed
    for and on behalf of	 	Signed
    for and on behalf of
	Zion
    Oil & Gas, Inc.	 	S.C.
    Daflog SRL 
	by
    its duly authorised representative	 	by
    its duly authorised representative
	in
    the presence of:	 	in
    the presence of:
	 	 	 
	/s/
    John M. Brown	 	/s/
    Pocean Cristina
	Signature
    of witness	 	Signature
    of witness
	 	 	 
	/s/
    John M. Brown	 	/s/
    Pocean Cristina
	Name
    of witness	 	Name
    of witness
	 	 	 
	/s/
    Dustin L. Guinn	 	/s/
    Emanuel Popescu
		 	
	 	 	 
	Dustin
                                         L. Guinn, President & COO 

          

        S.C.
        Dafora S.A., as designated subcontractor, hereby confirms the statements and representations set forth in the recitals
        on page 3 hereinabove limited to the provisions and according to Contract No. 991 dated October 6th
        2016. 
	 	Emanuel
                                         Popescu, Director General

        Name
        of authorised representative

	 	 	Signed
                                         for and on behalf of

                                                         S.C.
                                         Dafora S.A.

                                                         by
                                         its duly authorised representative

                                                         in
                                         the presence of: 

	 	 	 
	/s/
    Peter Egon Dorner,  	
	/s/
    Gheorghe Calburean
	Senior
    Partner, Judicial Administrator CITR	 	Signature
    of authorised representative
	 	 	
	

        Signed
        for and on behalf of

        CITR
        (Transylvania House of Insolvency) 
	

        )

        )
	
	by
    its duly authorised representative	)	/s/
    Gheorghe Calburean
	in
    the presence of:	)	 Gheorghe
    Calburean, Special Administrator


 


 



    	27 | Page



     


    

 




Annexure
I: Drilling Order


 


Description
of Work and Site of Wells


 


		1.	Commencement
                                         Date
	 	 	 



		2.	Not
                                         Used
	 	 	 



		3.	Number
                                         of Wells
	 	 	 



		4.	Depth
	 	 	 



		5.	Not
                                         Used
	 	 	 



		6.	Completion
                                         of Wells
	 	 	 



		7.	Drilling
                                         Rig and Equipment to be furnished by Contractor



 


		7.1.	The
                                         Drilling Rig



 


This
shall be in accordance with the detailed Rig Equipment Inventory attached as Annexure IV. The rig shall be capable of drilling
up to depth specified in the Rig and Rate Schedule and to carry out the required Drilling Program.


 


		7.2.	Transport
                                         Equipment and Motor Vehicles



 


TBA


 


		7.3.	Camp
                                         and Equipment



 


TBA


 


		7.4.	Personnel
                                         to be furnished by Contractor



 


All
personnel and supervision necessary to satisfactorily operate the Rig on a twenty-four (24) hours a day six (6) days a week basis
shall be furnished by Contractor as detailed in Section 4.0 of the Rig and Rate Schedule. Reference Clause 6.6 of the Agreement.


 


		8.	Not
                                         Used



 






    	28 | Page



     


    

 


		9.	Labour,
                                         Equipment & Services to be provided at the Well Site or Sites



All
machinery, equipment, tools, materials, supplies, instruments, services and labour listed in the following numbered items shall,
subject to the other provisions of this Agreement, be furnished as and when necessary by and/or at the expense of the party hereto
designated by “X” in the appropriate column as follows:


  


	 	 	Supplied by	Expense of
	 	 	Contractor	Operator	Contractor	Operator
	  9.1	All personnel and supervision necessary to operate the drilling rig, equipment and services on a 24 hour 7 days-a week basis. 	
         

        X
	 	
         

        X
	 
	  9.2	a)
        Transport of all Contractor’s personnel from point of hire to drill site and return.	X	 	X	 
	 	b)
        Transports of all Contractor’s personnel for rest leave away from drilling location. 	X	 	X	 
	 	c)
        Transport of crew to drilling rig.	X	 	X	 
	 	d)
        All transportation equipment for Contractor’s Toolpusher on drilling Location.	X	 	X	 
	 	e)
        Utility forklift of 6 tonne capacity for use on or around drilling location while drilling. Forklift to be equipped with pallet forks, single point lifting frame and bucket attachments. 	X	 	X	 
	  9.3	Rat hole & mouse hole drilled and cased.	X	 	X	 
	  9.4	Conductor pipe.	 	X	 	X
	  9.5	a)
        Flow pipe and risers.	X	 	X	 
	 	b)
        Lines.	X	 	X	 
	  9.6	Rig matting boards.	X	 	X	 
	  9.7	a)
        Electricity supply for drilling rig and accessories and Operator’s building (240 volt 50 cycle single phase 7.5kVA)	X	 	X	 
	 	b)
        Electric light fixtures and bulbs	X	 	X	 
	 	c)
        Electricity supply for mud logging units 440V, 3 phase, 50/60 cycle, 15 kVA.  Maximum spiking limitation + 40 volts. 	X	 	X	 
	  9.8	a)
        Fuel storage.	X	 	X	 
	 	b)
        Maintaining Rig fuel supply.	X	X	X	X
	  9.9	Mud storage in addition to suction pits as per Rig Equipment Inventory.	X	 	X	 
	  9.10	Cleaning solvents for Contractors Equipment.	X	 	X	 



 






    	29 | Page



     


    

 


	 	 	Supplied by	Expense of
	 	 	Contractor	Operator	Contractor	Operator
	  9.11	Soft rope, rags, etc.	X	 	X	 
	  9.12	a)
        Fishing tools (taps, jars, overshots, junk baskets, magnets) necessary to fish for all Contractor supplied drill pipe and
    drill collars.	X	 	X	 
	 	b)
        Replacement and repair of Contractor’s down the hole tools damaged as a result of  fishing (see also Clauses 14 and 16. 	 	X	 	X  
	  9.13	Rig Maintenance.	X	 	X	 
	  9.14	Drill pipe casing protectors.	 	X	 	X
	  9.15	Drill pipe wipers.	X	 	X	 
	  9.16	Casing and tubing tools (tongs, power tongs, casing spider, elevator and slips) for 13-3/8”, 9-5/8”, 7”, 5-1/2” casing/tubing.	 	X	 	X
	  9.17	Automatic Drilling Time Recorder 5 Pen.	X	 	X	 
	  9.18	Welding for Contractor's; operations and equipment, excluding high pressure welding	X	 	X	 
	  9.19	a)
        Furnish and maintain adequate roadway to location, right of way, including rights of way for fuel and water lines, river crossings, gates and cattle guards.	 	
        X

         
	 	X
	 	b)
        Stake location, clear and grade location, and provide turnaround including surfacing when necessary.	 	X	 	X
	  9.20	Site preparation including digging of waste pit and grading location	 	X	 	X
	  9.21	Excavation, if necessary, for mud suction pit or tank.	 	X	 	X
	  9.22	Radio and/or telephone at rig for communication with Contractor’s base.	X	 	X	 
	  9.23	Permanent or special radio and/or telephone installation, for Operator’s use	 	X	 	X
	  9.24	
        Clean Up:

        a)
        Contractor’s supplies and rubbish..
	
         

        X
	 	
         

        X
	 
	 	b)
        Operator’s supplies and rubbish. Sump, pits and site	 	X	 	X



 






    	30 | Page



     


    

 


	 	 	Supplied by	Expense of
	 	 	Contractor	Operator	Contractor	Operator
	  9.25	All tubular goods, hangers packers, etc in connection with formation, testing and flow testing.	 	X	 	X
	  9.26	Casing, shoes, float collars, basket, scratchers, centralisers and other permanent casing accessories.	 	
        X

         
	 	X
	  9.27	Wellhead connections and all equipment to be installed in or on well or on the premises for use in connection with drilling, testing, completion and operation of well.	 	X	 	X    
	  9.28	Crossover spools from Operator’s wellhead equipment to Contractor’s BOP.	X	 	X	 
	  9.29	a)
        Cement.	 	X	 	X
	 	b)
        Cementing Services.	 	X	 	X
	  9.30	Materials or service for any permanent installation which will remain part of well.	 	X	 	X
	  9.31	Water Storage pits (earthen).	 	X	 	X
	  9.32	a)
        Rig water supple to within 60 metres of cellar (includes Dam).	 	X	 	X
	 	b)
        Potable camp water supply delivered	 	X	 	X
	  9.33	a)
        Incidental maintenance water lines within 60 metres of cellar.	X	 	X	 
	 	b)
        Water pit pump.	X	 	X	 
	  9.34	Water well pump, if necessary.	 	X	 	X
	  9.35	Fuel for water pump and miscellaneous Operator usage at Contractor’s invoice price with no premium for handling.	 	X	 	X    
	  9.36	Operations and incidental maintenance of water well pump, water lines and water well air compressor outside 60 metres of the wellhead.	 	X	 	X
	  9.37	a)
        Oil and greases for rig and associated equipment.	X	 	X	 
	 	b)
        Oil and greases for Contractor’s oilfield vehicles including lease truck and/or forklift truck.	
        X

         
	 	X	 
	 	c)
        Oil and greases for Contractor’s crew cars	X	 	X	 



 






    	31 | Page



     


    

 


	 	 	Supplied by	Expense of
	 	 	Contractor	Operator	Contractor	Operator
	  9.38	Mud and chemicals.	 	X	 	X
	  9.39	Fuel oil for oil base or oil emulsion muds.	
        X

        (Operator’s
	
        X

        Option)
	 	X
	  9.40	Disposal of Drilling fluid.	 	X	 	X
	  9.41	Lost circulation materials.	 	X	 	X
	  9.42	
        Mud storage for special muds other than specified in well
programmes. Tarpaulin cover for mud stocks.
	 	X	 	X
	  9.43	
        Casing or tubing thread lubricant,

         
	
        X

        (Operator’s
	
        X

        Option)
	 	X 
	  9.44	
        Transportation at day work rates, of Contractors’ drilling
        equipment to site or between sites,

         
	 	(Mutual option)	 	X
	  9.45	
        Demobilization of Contractor’s drilling equipment and rig
        from the site at Agreement completion,

         
	X	 	 	X (per terms of Agreement)
	  9.46	a)
        Pit level recorder.	 	X 	 	X 
	 	b)
        Flowshow.	 	X	 	X
	  9.47	a)
        Stabilisers for production hole.	 	X	 	X
	 	b)
        Stabilisers for surface hole.	 	X	 	X
	 	c)
        Near bit reamer for production hole.	 	X	 	X
	 	d)
        Shock Sub.	 	X	 	X
	 	e)
        Replacement parts for above (a), (b), (c) & (d).	 	X	 	X
	  9.48	Drilling bits.	 	X	 	X
	  9.49	Core barrel and associated equipment.	 	X	 	X
	 	Conventional diamond or PDC core heads.	 	X	 	X
	 	Replacement parts for coring equipment.	 	X	 	X



 






    	32 | Page



     


    

 


	 	 	Supplied by	Expense of
	 	 	Contractor	Operator	Contractor	Operator
	  9.50	Special fishing tools and services.	 	X	 	X
	  9.51	Formation testing, hydraulic fracturing, acidising and other related services.	 	X	 	X
	  9.52	Test tanks with pipe and fitting.	 	X	 	X
	  9.53	Separator with pipe and fittings.	 	X	 	X
	  9.54	Additional labour if needed to connect and disconnect test tanks and separator.	 	X	 	X
	  9.55	Additional labour if needed to connect and disconnect and clean test tank and separator.	 	X	 	X
	  9.56	Gun or jet perforating services.	 	X	 	X
	  9.57	Explosives and shooting devices.	 	X	 	X
	  9.58	Mud logging services.	X	 	 	X
	  9.59	Sidewall coring services. 	 	X	 	X
	  9.60	Oilfield Body Gin Pole Truck and suitable equivalent for rigging-up and rigging-down, load out:	 Not
Applicable



	  9.61	Local transportation of Contractor’s equipment for maintenance only.	X	 	X	 
	  9.63	Handling of Operators equipment and materials at the well site other than in accordance with 9.62 (a), (b) or (c).	X	 	X	 
	  9.64	a)
        Electric and Gamma-Neutron Logging Services.	 	X	 	X
	 	b)
        Directional, calliper and other special services (other than Totco type directional survey).	 	X	 	X
	  9.65	Swab rubbers, swab mandrel and supplies for 3-1/2” 2-3/8” and 2” tubing (as and when considered necessary by Operator, notice thereof to be given to Contractor).	X	 	 	X
	  9.66	Repairs to tools rented by Contractor at Operator’s request.	X	 	 	X
	  9.67	Overtime paid to non-staff drilling personnel working in excess of normal working hours in any one day while engaged in cementing, running casing, lost circulation jobs, etc.	X	 	 	X
	  9.68	Roustabout labour in accordance with Clause 8(d) of this Drilling Order to handle Operator’s supplies, materials and equipment, etc.	X	 	X	 



 






    	33 | Page



     


    

 


	 	 	Supplied by	Expense of
	 	 	Contractor	Operator	Contractor	Operator
	  9.69	Provision of road transportation to move Contractor’s personnel, spare parts and perishables (as per Drilling Order).	X	 	X	 
	  9.70	Provision of road transportation to move Operator’s personnel, spare parts, material or equipment.  	 	X	 	X
	  9.71	Corrosion rings.	X	 	X	 
	  9.72	a)
        Oxygen and hydrogen sulphide scavenging chemicals.	 	X	 	X
	 	b)
        Equipment for efficient injection of chemicals.	X	X	 	X
	  9.73	
        Drill pipe and drill collar and subs inspection in accord with API
        RP7G – IADC classification standards by approved inspection service (including full-length ultrasonic):

        a)
        Prior to commencement of work on the first well in this Agreement.
	X	 	X	 
	 	b)
        Thereafter before each subsequent well for drill collars, subs and associated handling equipment and before every second well for drill pipe.	X	 	X	 
	 	c) 
        More frequently than in (a) and (b) above if requested by Operator.	 	X	 	X
	  9.74	Mud Engineer, if required (but Contractor will carry out routine mud testing and treatment).	 	X	 	X
	  9.75	Any geological services.	 	X	 	X
	  9.76	Directional drilling equipment.	 	X	 	X
	  9.77	Any drill pipe and drill collars, kellys or subs in addition to those furnished by Contractor under Section 8 of Drilling Order including required handling tools (additional to 9.16 of this Annexure).	
        X

        (Operator’s option)
	X 	 	X
	  9.78	Stab valve (Ball type).	X	 	X	 
	  9.79	
        Blowout Preventer Test Equipment.

        a) 
        Cup tester.
	X	 	X	 
	 	b) 
        Cup tester rubbers (new).	X	 	 	X



 






    	34 | Page



     


    

 


	 	 	Supplied by	Expense of
	 	 	Contractor	Operator	Contractor	Operator
	  9.80	
        Shaker screens as specified by Operator.

        (after first set will be charged to Operator)
	X	 	 	X
	  9.81	Deviation Survey instrument (Dual Shot Plus Spare Clock).	X	 	X	 
	  9.82	Torque gauges for drill collar make up and.	X	 	X	 
	  9.83	First Aid Equipment and trained First Aid person. 	X	 	X	 
	  9.84	Welding and cutting services for welding bottom joints of casing, guide shoe, float collar and in connection with landing casing and installing of wellhead equipment.	X	 	X	 
	  9.85	High Pressure welding services as required by Operator.	 	X	 	X


 


	10.	Casing and cementing program




 


As
directed by Operator and set out in Drilling Program


 


	11.	Mud program




 


	12.	Straight hole specifications




 


	13.	Proposed coring program




 


As
required by Operator.


 


	14.	Proposed wire line surveys




 


As
per Operator’s Drilling Program.


 


	15.	Proposed fluid production test




 


If
required by Operator, however it is not planned to test the wells with the drilling rig.


 


	16	Designated representative




 


	17.	Payments to Contractor




 





	 	a)	Except as hereinafter provided, for all work performed on a day work basis, with a full crew, as herein defined, Contractor shall be paid at a rate for each twenty-four (24) hour day with effect from the spud in date of the first well until termination of the Agreement as detailed in Sections 2.C and 2.D of the Rig and Rates Schedule.


 






    	35 | Page



     


    

 


	 	b)	The Repair Rate per section 2.D of the Rig and Rate Schedule, will be payable for all periods when the Rig is not operating and Contractor is conducting repairs on the Rig.


 


Provided however that:


 


	 	(i)	For repairs in relation to which Operator gives notice on reasonable grounds and properly documented that the repairs are necessary as a result of the gross negligence, willful misconduct or breach of this Agreement by Contractor, its employees, agents or subcontractors:


 


	 	(A)	Operator shall if Contractor disputes Operator’s notice, pay Contractor 50% of all sums which would have otherwise been payable by Operator to Contractor hereunder; and


 


	 	(B)	If Operator establishes pursuant to a final ruling delivered by the arbitrator, the breach of this Agreement, negligence or willful misconduct alleged in its notice under this section 17(b)(i) of the Drilling Order, Contractor shall promptly repay all amounts paid by Operator under subparagraph (A) of this section 17(b)(i);


 


	 	(ii)	Should the repair period total more than eight (8) hours on any one occasion or more than eighteen (18) hours cumulatively in any calendar month, prorated as necessary for partial months, all costs incurred in excess of this period will be paid by Contractor without further charge to Operator hereunder;


 


	 	(iii)	Contractor is required
    to keep the Rig at all times in good operating condition at its own expense, but in the event of repairs being necessary,
    Contractor will use diligence in effecting such repairs, replacements or maintenance in a good and workmanlike manner and
    will familiarise itself with the location of rentable replacements for Contractor's items.
	 	 	 
	 	 	Daily Rig greasing and
    lubricating time shall not be classified as "repair time" and Contractor will be reimbursed for no more than a 1⁄2
    hour per day at the rate prevailing at the time these services are conducted. Contractor shall advise Operator’s Representative
    of intended maintenance schedule prior to such maintenance being commenced.
	 	 	 
	 	 	For convenience of tracking
    and invoicing, the repair rate for the first calendar month is to be pro-rata the monthly time allowance as detailed in clause
    17(b)(ii) above, then the full monthly repair rate allowance can be applied thereafter. The same pro-rata allowance also to
    be applied to the last period of services performed under this Agreement.


  


	 	c)	The standby rates per Sections 2.E and 2.F of Rig and Rate Schedule will be payable:


 


	 	(i)	During any period of delay when Contractor is unable to proceed with Drilling because of heavily stormy weather, or any act or omission of Operator including, without limitation, the failure of any of Operator’s items, or the failure of Operator to issue instructions, Operator provided items or Operator services; or


 


	 	(ii)	From the moment Contractor could have spudded, after all pre-spud inspections and endurance tests were completed and signed off by both Parties, in a well had it not been delayed by Operator until the day rate with pipe first becomes payable.


 


	 	d)	A full drilling crew shall consist of (26) twenty-six men.


 


For each man the crew is short, Contractor's day rates
shall be reduced by the daily rate of pay for such a man for the relevant classification of worker. This will not apply to the
standby without crew rate or the repair rate which will reduce in accordance with the Agreement.


 


Drilling rates are based on Contractor providing the
following minimum full rig crew on site detailed in section 3 of the Rig and Rate Schedule.


 


A full tour crew is detailed in Clause 3 of the Rig
and Rate Schedule (and inclusive table of personnel).


 






    	36 | Page



     


    

 


	 	e)	Camp Services


 


The Contractor will provide camp and messing services
or other accommodations as required for Contractor’s own personnel and sub-contractors.


 


	 	(f)	Day Rate Payments.


 


Day rate payments on any well to
be drilled under this Agreement will commence immediately after Contractor has mobilised and assembled the Rig and Personnel on
the first or subsequent Operator’s locations and the Rig Acceptance Test as detailed in Annexure VI has been completed and
signed off by the Operator’s representative.


 


Day rate payments on any well to
be drilled under this Agreement will cease immediately after all the Contractor’s drill pipe and BOP’s have been laid
down and the mud tanks cleaned.


 


	 	(g)	Not Applicable


 


	 	(h)	Payment to Contractor for rig moves shall be on the basis that Contractor shall move between locations (Inter-Wells) at rates per Annexure II of the Rig and Rates Schedule for distances up to 40 km. This rate shall include rig rates, crews and all trucking and associated equipment expenses.


 


For distances in excess of 40 km, the rate shall be negotiated
prior to move.


  


	 	(i)	Not used.




 






    	37 | Page



     


    

 


	 	(j)	Rig Commissioning




 


Contractor shall be paid a flat lump sum to:


 


- fully assemble the rig at the Contractor’s maintenance
facility in Israel, function test all mechanical, electrical and the mud systems and inspection test all load points, including
but not limited to the mast, by a certified independent inspection company as approved by the Operator.


 


Contractor further undertakes without any further charge
to the Operator, to transport the Rig and all equipment detailed in the Rig Equipment Inventory to the first drilling location
in Israel, position the Rig and rig up to commence drilling on the first location as per Section 2.A of the Rig and Rates Schedule.


 


Commencement of payments to Contractor per this Drilling
Order Sections 17(a) to 17(i) will be from the date upon which Contractor is rigged up, Rig Acceptance Test is completed and the
rig and personnel are ready to spud the first well pursuant to this Agreement.


 


	 	(k)	Demobilization




 


Upon termination of this Agreement, and unless otherwise
agreed in writing by the parties, Contractor shall be entitled to a flat lump sum payment to remove its Rig and equipment out of
the area of operations as per Section 2.B of the Rig and Rates Schedule. Unless agreed in writing by both parties beforehand, Contractor’s
equipment must be fully removed from the Operator’s last site of services under this Agreement within thirty (30) days of
cessation of day rate operations on that well. If for any event, the Rig is not removed from the location within 30 days, the Operator,
at its sole discretion, may elect to remove the Rig and related equipment to another location of the Operator’s choosing.
In the event that the Operator removes the Rig, it shall offset any cost it may incur against the demobilization fee in Annex II.
Contractor shall indemnify and hold Operator harmless from and against any and all claims, damages, costs and/or expenses that
may result from such Rig removal or occur to Contractor’s Rig and/or equipment during this period.


  


	 	(l)	Not Used




  


	 	(m)	Miscellaneous Equipment provided by Contractor as described in Section 6.0 of the Rig and Rates Schedule will be charged at rates detailed in that Section in accordance with Section 9 of the Drilling Order.


 


	 	(n)	If the operation of this Agreement is suspended by the Operator pursuant to the provisions of Clause 33, the Operator shall:


 


	 	(aa)	pay to Contractor following the commencement of the period of suspension and until operations are resumed or Agreement is terminated in accordance with the provisions of Clause 33 thereunder, the Standby Rate (with Crew) set out in Section 2.F of the Rig and Rates Schedule and all other costs and expenses incurred by the Contractor pursuant to the provisions of Clause 33 of the Agreement;


 


	 	(o)	If following such suspension Operator gives notice to Contractor requiring Contractor to resume operations under this Agreement, Contractor shall do so in accordance with any conditions set out in the notice and Operator shall:


 


	 	(aa)	pay to Contractor for a period of thirty-six (36) hours only:


 


the Standby Rate (with crew) set
out in Section 2.E of the Rig and Rates Schedule.


 





	  

                            

                            
	(p)	The payments under sections 17(n) and (o) of the Drilling Order shall be in addition to the payment due to Contractor under Section 3 of the Rig and Rates Schedule to move the Rig to the site of the first well to be drilled following the re-commencement of operations after the periods of suspension, provided that if the reason for the suspension is established by Operator to be negligence, willful misconduct or breach of this Agreement by Contractor, its employees, agents or subcontractors, then Contractor shall promptly repay to Operator all monies paid pursuant to section 17(n) and (o) of the Drilling Order.


 


	 	(q)	Rig Move Between Wells of the Operator if Option Drilling Program has been executed, Contractor shall be paid a flat lump sum
to:




 


- dis-assemble the Rig at the completion of day rate Services
on an existing well of the Operator


 


- transport Rig and all equipment detailed in the Rig
Equipment Inventory to the next drilling location as advised by the Operator


 


- and position the Rig and rig up to commence drilling
on the location as per Section 2.A of the Rig and Rates Schedule.


 


Commencement of payments to Contractor per this Drilling
Order Sections 17(a) to 17(j) will be from the date upon which Contractor is rigged up, Rig Acceptance Test is completed and the
rig and personnel are ready to spud any such subsequent well pursuant to this Agreement.


  


	18.	Escalation of Rates


  


All of the rates of payment set out in this Agreement will remain
fixed for a period of one (1) year from the commencement of day rate operations on the first well under this Agreement, however
such rates and payments for a well on which day rate operations have commenced prior to the above anniversary date will not be
subject to adjustment until the completion of that well.






    	38 | Page



     


    

 




Annexure
II: Rig and Rate Schedule


 


	
        Rig Commissioning 

         
	 	USD 384,000 if rigged up on Meged 8 prior to mobilization to MJ#1. USD319,000 if only rigged up on MJ#1.
	 	 	 
	Mobilisation To First Well of the Operator	 	(included in Rig Commissioning)
	 	 	 
	Move between wells of the Operator	 	
        $100,000 if on same location.

	 	 	 
	Cancellation by Operator more than 30 days prior to mobilization	 	
        USD 250,000

         

	 	 	 
	Cancellation by Operator less than 30 days prior to Mobilisation Date	 	USD 250,000 + incurred mobilisation freight expenses + incurred freight demobilisation expenses back to point of origin for equipment that was shipped to Israel for MJ#1 well.


 


Demobilisation at Completion:


	 	a)	To Point of Origin (Romania)	USD 350,000 , which will be directly set off by any mobilization fee paid by a new Operator
	 	 	 	 
	 	b)	Directly to another Operator	
        USD 270,000 (if in Israel), which will be directly set off
by any mobilization fee paid by new Operator

	 	 	 	 
	 	c)	To dry-stack in Israel (at Contractors own site)	USD 270,000


 


	Operating Daily Rate	 	USD 23,340
	Repair Rate	 	USD 21,000
	Standby with Crew	 	USD 19,839
	Standby without Crew 
Shabbat Rate	 	USD 17,505 
USD 19,839
	Camp/billeting	 	Not Applicable
	Excess Meal Cost	 	Not Applicable
	Excess Bed Cost	 	Not Applicable







    	39 | Page



     


    




		2.	Personnel
                                         to be furnished by Contractor



 


	Drilling Personnel	 	On Duty	 	 	Off Duty	 	Assigned Total	 	Position
 Daily Cost
	 
	Project Manager	 	 	1	 	 	 	0	 	 	1	 	 	     	 
	Safety Officer	 	 	1	 	 	 	1	 	 	2	 	 	    	 
	Senior (day)Toolpusher	 	 	1	 	 	 	1	 	 	2	 	 	 	 
	Night Toolpusher	 	 	1	 	 	 	1	 	 	2	 	 	 	 
	Driller	 	 	2	 	 	 	2	 	 	4	 	 	 	 
	Assistant Driller	 	 	2	 	 	 	2	 	 	4	 	 	 	 
	Derrickman	 	 	2	 	 	 	2	 	 	4	 	 	 	 
	Floorman	 	 	8	 	 	 	8	 	 	16	 	 	 	 
	Chief Electrician	 	 	1	 	 	 	1	 	 	2	 	 	 	 
	Electrician	 	 	2	 	 	 	2	 	 	4	 	 	 	 
	Chief Mechanic	 	 	1	 	 	 	1	 	 	2	 	 	 	 
	Mechanic	 	 	3	 	 	 	3	 	 	6	 	 	 	 
	Welder	 	 	1	 	 	 	1	 	 	2	 	 	 	 
	TOTAL	 	 	26	 	 	 	25	 	 	51	 	 	 	 



 


Personnel
crew changes are to be regulated so that no personnel is onsite longer than 8 weeks without a minimum 2 weeks break.


 


The
Senior Toolpusher, Night Toolpusher, drillers and assistant drillers must have valid and current well control certificates issued
by IWCP or Well-Cap.


 


3.            Transport/Materials
Handling Equipment Rates


 


	 	A.	Forklift
    per hour	Not
    Applicable
	 	B.	Pole
    Truck per hour	Not
    Applicable




 


4.            Miscellaneous
equipment provided by Contractor


 


	 	A.	To
    be Included as Applicable







 






    	40 | Page



     


    

 


Annexure
III: Drilling Program


 


Drilling
Program Management Summary





Well Information Summary


 





	Well
    Name:	Megiddo-Jezreel
    #1(“MJ1”)
	License:	Megiddo-Jezreel
    License 401
	Operator:	Zion
    Oil & Gas, Inc.
	Ground
    Elevation:	-187
    meters
	Surface
    Coordinates:	X
    = 248546.9468
	 	Y
    = 703.770.4468
	 	Latitude
    32o 25’ 39.62" N
	 	Longitude
    35o 30’ 48.88" E
	Seismic
    Line:	Shot
    Point 292 on Seismic line ZI-5128
	Planned
    Total Depth:	TVD
    4500 meters
	Objective
    Formations:	1)
    Cretaceous (Yagur Fm.) between 1700 and 1900 meters TVD 
	 	2)
    Cretaceous (Hatira Fm.) between 2250 and 2370 meters TVD.
	 	3)
    Mid to Late Jurassic (Haifa Fm.) between 2470 and 2800 meters TVD.
	 	4)
    Lower Jurassic (Qeren / Nirim Fm.) between 3010 and 4270 meters TVD.
	 	5)
    Triassic (Mohilla Fm.) between 4270 and 4500 meters TVD.
	 	 
	Coring
    requirements:	Rotary
    sidewall cores optional
	Deviation:	None,
                                         a pendulum BHA will be run on each hole section to maintain a straight hole and to avoid
                                         doglegs



 


Casing
Program Summary


 


	Hole size	 	Depth	 	OD	 	 	Weight	 	 	Grade	 	 	Coupling	 	TOC	 	 	Comments
	26”	 	 	300m	 	 	24”	 	 	 	171.9 ppf	 	 	 	X-52 LP	 	 	Welded	 	 	Surf	 	 	Contingent casing
	22”	 	 	580m	 	 	18-5/8” @1638

meters	 	 	 	87.5 ppf	 	 	 	K-55	 	 	Butt	 	 	Surf	 	 	Surface casing
	14-3/4”	 	 	1700m	 	 	13-3/8”	 	 	 	68.0 ppf	 	 	 	N-80	 	 	Butt	 	 	500m		 	Intermediate casing
	12-1/4”	 	 	2800m	 	 	9-5/8”	 	 	 	47.0 ppf	 	 	 	L-80 	 	 	LTC	 	 	2500	 	 	Intermediate Liner
	8-1/2”	 	 	4500m	 	 	7”	 	 	 	26.0/ 29.0 ppf	 	 	 	L-80 / P-110	 	 	LTC / Butt	 	 	2700	 	 	Production Liner



 



    	41 | Page



     


    

  


Mud
Program Summary


 


	Hole size	 	Mud type	 	 	Density	 
	26” and 22”	 	Low Solids Non-Dispersed (“LSND”)	 	 	8.4 – 8.5 ppg	 
	17-1/2”	 	LSND with PAC	 	 	8.4 – 8.7 ppg	 
	12-1/4”	 	LSND with PAC	 	 	8.7 – 9.2 ppg	 
	8-1/2”	 	LSND with polymers, calcium carbonate	 	 	9.5 – 10.0 ppg	 



 


Logging
Program Summary


 


	Hole size	 	Proposed Logs
	26”	 	SP, Gamma Ray, Dual Laterolog, Caliper
	22”	 	SP, Gamma Ray, Dual Laterolog, Caliper
	17-1/2”	 	Dual Laterolog, SP, Gamma Ray, Caliper
	 	 	Compensated Neutron/Lithology-Density
	 	 	Compensated Sonic
	12-1/4”	 	Dual Laterolog, SP, Gamma Ray, Caliper
	 	 	High Resolution Induction  (optional)
	 	 	Nuclear Magnetic Resonance (optional)
	 	 	Micro-Spherically Focused Resistivity
	 	 	Compensated Neutron/Lithology-Density
	 	 	Di-pole Sonic (optional)
	 	 	Formation Imaging Tool with dipmeter (optional)
	 	 	VSP
	8-1/2”	 	Dual Laterolog, SP, Gamma Ray, Caliper
	 	 	High Resolution Induction (optional)
	 	 	Nuclear Magnetic Resonance  (Optional)-
	 	 	Micro-Spherically Focused Resistivity
	 	 	Compensated Neutron/Lithology-Density
	 	 	Di-pole Sonic
	 	 	Formation Imaging Tool with dipmeter
	 	 	VSP



 






    	42 | Page



     


    

 


Possible
Drilling Problems


 


	Hole size	 	Problem
	26”	 	Loss of circulation or artesian flow, high torque in fractured rocks, sloughing volcanics, hole cleaning, washouts
	22”	 	Loss of circulation or artesian flow, high torque in fractured rocks, hole cleaning, washouts
	17-1/2”	 	Loss of circulation or artesian flow, high torque in fractured rocks
	12-1/4”	 	Seepage, minor loss of circulation, CO2, chert beds, high torque
	8-1/2”	 	Seepage, minor loss of circulation, CO2, chert beds, high torque



 


Proposed
Bit Program


 


	No.
	 	 	Size
 (in.)
	 	Type	 	Out
 (m)
	 	 	Drld
 (m)
	 	 	Time
 (hrs)
	 	 	ROP
 (m/hr)
	 	 	WOB
 (Mtn)
	 	RPM	 	 	Remarks	 
	 	1	 	 	 	26	 	 	GTX-20    	 	 	300	 	 	 	270	 	 	 	90	 	 	 	3.0	 	 	15-30	 	 	50-80	 	 	 	(IADC
515)	 
	 	2	 	 	 	22	 	 	GTX-C11H	 	 	580	 	 	 	280	 	 	 	70	 	 	 	4.0	 	 	15-30	 	 	50-80	 	 	 	(IADC 435)	 
	 	3	 	 	 	17-1/2	 	 	GTX-G20	 	 	860	 	 	 	280	 	 	 	73.5	 	 	 	3.8	 	 	15-30	 	 	50-80	 	 	 	(IADC 515)	 
	 	4	 	 	 	17-1/2	 	 	GTX-G33	 	 	1140	 	 	 	280	 	 	 	80	 	 	 	3.5	 	 	15-30	 	 	50-80	 	 	 	(IADC 535)	 
	 	5	 	 	 	17-1/2	 	 	GTX-G33	 	 	1420	 	 	 	280	 	 	 	80	 	 	 	3.5	 	 	15-30	 	 	50-80	 	 	 	(IADC 535)	 
	 	6	 	 	 	17-1/2	 	 	GTX-G33	 	 	1700	 	 	 	280	 	 	 	80	 	 	 	3.5	 	 	15-30	 	 	50-80	 	 	 	(IADC 535)	 
	 	7	 	 	 	12-1/4	 	 	GTX-G20H	 	 	1980	 	 	 	280	 	 	 	56	 	 	 	5.0	 	 	15-25	 	 	70-90	 	 	 	(IADC 515)	 
	 	8	 	 	 	12-1/4	 	 	GTX-G20H	 	 	2260	 	 	 	280	 	 	 	56	 	 	 	5.0	 	 	15-25	 	 	70-90	 	 	 	(IADC 517)	 
	 	9	 	 	 	12-1/4	 	 	GX-38CH	 	 	2440	 	 	 	180	 	 	 	52	 	 	 	3.5	 	 	15-25	 	 	70-90	 	 	 	(IADC 517) 	 
	 	10	 	 	 	12-1/4	 	 	GX-38CH	 	 	2620	 	 	 	180	 	 	 	52	 	 	 	3.5	 	 	15-25	 	 	70-90	 	 	 	(IADC 547) 	 
	 	11	 	 	 	12-1/4	 	 	GX-38CH	 	 	2800	 	 	 	180	 	 	 	52	 	 	 	3.5	 	 	15-25	 	 	70-90	 	 	 	(IADC 547)	 
	 	12	 	 	 	8-1/2	 	 	GX-38CH	 	 	2980	 	 	 	180	 	 	 	52	 	 	 	3.5	 	 	15-22	 	 	70-90	 	 	 	(IADC 547)	 
	 	13	 	 	 	8-1/2	 	 	GX-38CH	 	 	3160	 	 	 	180	 	 	 	52	 	 	 	3.5	 	 	15-22	 	 	70-90	 	 	 	(IADC 547)	 
	 	14	 	 	 	8-1/2	 	 	GX-38CH	 	 	3340	 	 	 	180	 	 	 	52	 	 	 	3.5	 	 	15-22	 	 	70-90	 	 	 	(IADC 547)	 
	 	15	 	 	 	8-1/2	 	 	GX-38CH	 	 	3520	 	 	 	180	 	 	 	52	 	 	 	3.5	 	 	15-22	 	 	70-90	 	 	 	(IADC 547)	 
	 	16	 	 	 	8-1/2	 	 	HC408Z	 	 	3870	 	 	 	350	 	 	 	70	 	 	 	5.0	 	 	10-18	 	 	90-120	 	 	 	(IADC M433)	 
	 	17	 	 	 	8-1/2	 	 	HC408Z	 	 	4220	 	 	 	350	 	 	 	70	 	 	 	5.0	 	 	10-18	 	 	90-120	 	 	 	(IADC M433)	 
	 	18	 	 	 	8-1/2	 	 	HC408Z	 	 	4500	 	 	 	350	 	 	 	70	 	 	 	5.0	 	 	10-18	 	 	90-120	 	 	 	(IADC M433)	 



 



    	43 | Page



     


    

 


Estimated
Pore and Fracture Pressures


 





 



    	44 | Page



     


    

  


Anticipated
Well Lithology


Megiddo
-Jezreel #1 PROPOSED SCHEMATIC


 


 


 



    	45 | Page



     


    

 


Annexure
IV: Rig Equipment Inventory


 


F 400-DEC - EQUIPMENT LIST


  


	REF	 	EQUIPMENT DESCRIPTION	 	OFFERED
	 	 	 	 	 
	1	 	RIG DATA	 	 
	1.1	 	Rig name and type	 	Dafora Rig #16/ F400 DEC
	1.2	 	Year of Construction/ Last Major Refurbishment & TPI	 	1989/ 2013
	1.3	 	Loads required to move Rig and Rig 	 	59
	1.4	 	Hook load capacity (tonnes)	 	400
	1.5	 	Recommended Drilling depth range (5.1/2" / 4.1/2" DP)	 	 5,000 - 7,000 m
	 	 	 	 	 
	2	 	RIG STORAGE CAPABILITIES	 	 
	2.1	 	Liquid mud (m3)	 	315
	2.2	 	Waste oil (m3)	 	2
	2.4	 	Pipe racks (for 9 5/8" casing) (m)	 	2500
	 	 	 	 	 
	3	 	DRAWWORKS	 	 
	3.1	 	Make	 	UPETROM
	3.2	 	Type	 	TF-44-E
	3.3	 	Max. intake power (HP)	 	3,000
	3.4	 	Number of speeds 	 	 4 + 2 reverse
	3.5	 	Max. single pull line capacity (tonnes)	 	 44 w/ 12 lines; 38 w/ 10 lines
	3.6	 	Hoisting drum grooved for line OD (in inch)	 	35 mm (1-3/8")
	3.7	 	Drilling line guide (type)	 	UPETROM
	3.8	 	Make-up cathead (make)	 	UPETROM
	3.9	 	Break-out cathead (make)	 	UPETROM
	3.10	 	Low drum clutch (type)	 	AD-2  950
	3.11	 	Low drum clutch torque capacity (kgf)	 	2,900
	3.12	 	High drum clutch (type)	 	AVB 1120x300
	3.13	 	High drum clutch torque capacity (kgf)	 	17,550
	3.14	 	Brake (type)	 	BULL WHEEL BRAKE BAND
	3.15	 	Electromagnetic brake (make/type)	 	UPETROM/ FE 1400
	3.16	 	Torque capacity at 50 RPM (daNm)	 	7,000
	3.17	 	Brakes cooling system capacity (m3)	 	18
	3.18	 	Cooling fluid	 	water
	3.19	 	Automatic drilling control (type)	 	DAAS
	3.20	 	Crown-O-matic device (type)	 	UPETROM
	3.21	 	Quantity of drilling engines installed	 	2
	3.22	 	Drilling engines make	 	ELECTROPUTERE  CRAIOVA
	3.23	 	Drilling engines type	 	MCF 850 
	3.24	 	Engines rated power (HP)	 	1140 each










 






    	46 | Page



     


    

 





	4	 	MAST	 	 
	4.1	 	Make	 	UPETROM
	4.2	 	Type	 	MA 400-2
	4.3	 	Total height from rig floor (m)	 	44
	4.4	 	Total height from ground level (m)	 	50.9
	4.5	 	Max. hookload capacity (tonnes)	 	400 w 12 lines
	4.6	 	Racking capacity 4.1/2" / 5.1/2" DP, triple stands (m)	 	9,000/ 7,200
	 	 	 	 	 
	5	 	CROWN BLOCK	 	 
	5.1	 	Make	 	 UPETROM
	5.2	 	API rated capacity (tonnes)	 	500
	5.3	 	Number of sheaves	 	7
	5.4	 	Sheaves grooved for OD line	 	35 mm (1-3/8")
	 	 	 	 	 
	6	 	SUBSTRUCTURE	 	 
	6.1	 	Make and type	 	UPETROM
	6.2	 	Rig floor dimension (m x m)	 	11.2 x 10.9
	6.3	 	Rig floor set-back capacity (tonnes)	 	250
	6.4	 	Rig floor rotary cap. (tonnes)	 	400
	6.5	 	Rig floor height (m)	 	6.9
	6.6	 	Clear height to rotary beams (m)	 	5.5
	 	 	 	 	 
	7	 	TRAVELLING BLOCK	 	 
	7.1	 	Make	 	6-35-MC-500
	7.2	 	Type	 	UPETROM
	7.3	 	Rated capacity (tons)	 	500
	7.4	 	Number of sheaves	 	6
	7.5	 	Sheaves grooved for OD line	 	35 mm (1-3/8")
	 	 	 	 	 
	8	 	HOOK BLOCK	 	 
	8.1	 	Make	 	 UPETROM
	8.2	 	Type	 	 Integral with travelling block
	8.3	 	Rated capacity (tonnes)	 	500
	 	 	 	 	 
	9	 	UTILITY AIR WINCHES	 	 
	9.1	 	Quantity	 	3
	9.2	 	Type	 	 1 x TP3000; 2 x TP1200
	9.3	 	Rated capacity (tonnes)	 	1 x 3; 2 x 1.2
	9.4	 	Installation site 	 	 Rig floor, catwalk end; monkeyboard




 






    	47 | Page



     


    

 





	10	 	DRILLING LINE	 	 
	10.1	 	Make	 	Mechel
	10.2	 	size	 	35 mm (1-3/8")
	10.3	 	Type	 	Seal 6x19
	10.4	 	Breaking strength (tonnes)	 	45
	 	 	 	 	 
	11	 	DEADLINE ANCHOR	 	 
	11.1	 	Make	 	NATIONAL
	11.2	 	Type	 	131T 
	11.3	 	Rated static capacity (kN)	 	333.61
	11.4	 	With OD drilling line 	 	35 mm (1-3/8")
	 	 	 	 	 
	12	 	AIR NAVIGATIONAL MARKINGS	 	Derrick top blinking red light 
	 	 	 	 	 
	13	 	ROTARY TABLE	 	 
	13.1	 	Make	 	UPETROM
	13.2	 	Type	 	MRL 275
	13.3	 	Rated capacity (tonnes)	 	500
	13.4	 	Max. opening	 	27-1/2"
	13.5	 	Driven by	 	Cardan shaft
	13.6	 	Motor (make)	 	ELECTROPUTERE CRAIOVA
	13.7	 	Type	 	MCF 850
	13.9	 	Continuous power (HP)	 	1140
	 	 	 	 	 
	14	 	MASTER BUSHING	 	 
	14.1	 	Make	 	UPETROM
	14.2	 	Type	 	27-1/2"
	14.3	 	Insert bowl size for all casing sizes	 	yes
	 	 	 	 	 
	15	 	SWIVEL	 	 
	15.1	 	Make	 	UPETROM
	15.2	 	Type	 	CH400
	15.3	 	Rated static capacity (tonnes)	 	400
	15.4	 	Working pressure (bar)	 	350
	 	 	 	 	 
	16	 	TOP DRIVE	 	 
	16.1	 	Make	 	TESCO Corp.
	16.2	 	Type	 	500 HCI 750 Hydraulic
	16.3	 	Rated power (HP)	 	750
	16.4	 	Rated capacity (tonnes)	 	500
	16.5	 	Working pressure (bar)	 	350
	16.6	 	Max. drilling torque (lb-ft)	 	29,476
	16.7	 	Max. break out torque (daNm)	 	33,687
	16.8	 	Max. make up torque	 	29,476
	16.9	 	Max. speed (RPM)	 	180
	16.10	 	Power unit engine	 	1 x CAT 3412 V12
	16.11	 	Power unit pumps (number installed)	 	4
	16.12	 	Power unit pumps max. pressure (PSI)	 	4,000




 






    	48 | Page



     


    

 





	17	 	MUD PUMP NO: 1	 	 
	17.1	 	Make	 	UPETROM
	17.2	 	Type 	 	Triplex 3PN1300
	17.3	 	Rated power (HP)	 	1300
	17.4	 	Max. WP (bar)	 	350
	17.5	 	Fluid end type	 	SIMPLE ACTION
	17.6	 	Pulsation dampeners type	 	AP-350
	17.7	 	Reset relief valve	 	UPETROM
	17.8	 	Stroke counter (make)	 	Martin Decker
	17.9	 	Powered by electric engines (make)	 	ELECTROPUTERE CRAIOVA
	17.10	 	Number of engines installed	 	2
	17.11	 	Type	 	MCF 550 KW
	17.12	 	Engines output power (HP)	 	737 each
	17.13	 	Supercharging pump (make)	 	UPSS Botosani
	17.14	 	Powered by electric engine (HP)	 	40
	 	 	 	 	 
	18	 	MUD PUMP NO. 2	 	 
	18.1	 	Make	 	UPETROM
	18.2	 	Type 	 	Triplex 3PN1300
	18.3	 	Rated power (HP)	 	1300
	18.4	 	Max. WP (bar)	 	350
	18.5	 	Fluid end type	 	SIMPLE ACTION
	18.6	 	Pulsation dampeners type	 	AP-350
	18.7	 	Reset relief valve	 	UPETROM
	18.8	 	Stroke counter (make)	 	Martin Decker
	18.9	 	Powered by electric engines (make)	 	ELECTROPUTERE CRAIOVA
	18.10	 	Number of engines installed	 	2
	18.11	 	Type	 	MCF 550 KW
	18.12	 	Engines output power (HP)	 	737 each
	18.13	 	Supercharging pump (make)	 	UPSS Botosani
	18.14	 	Powered by electric engine (HP)	 	40
	 	 	 	 	 
	19	 	MUD PUMP NO. 3	 	 
	19.1	 	Make	 	UPETROM
	19.2	 	Type 	 	Triplex 3PN1000
	19.3	 	Rated power (HP)	 	1000
	19.4	 	Max. WP (bar)	 	350
	19.5	 	Fluid end type	 	SIMPLE ACTION
	19.6	 	Pulsation dampeners type	 	AP-350
	19.7	 	Reset relief valve	 	UPETROM
	19.8	 	Stroke counter (make)	 	Martin Decker
	19.9	 	Powered by electric engines (make)	 	ELECTROPUTERE CRAIOVA
	19.10	 	Number of engines installed	 	1
	19.11	 	Type	 	MCF 850 KW
	19.12	 	Engine output power (HP)	 	1080
	19.13	 	Supercharging pump (make)	 	UPSS Botosani
	19.14	 	Powered by electric engine (HP)	 	40




 






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	20	 	MUD PUMP SUCTION LINES	 	 
	20.1	 	Mud suction lines (No.)	 	3
	20.2	 	Size (in inch)	 	10
	20.3	 	Suction line dampeners (No.)	 	3
	20.4	 	Suction line dampeners (Make)	 	 UPETROM
	 	 	 	 	 
	21	 	MUD DISCHARGE LINES (each pump has separate line)	 	 
	21.1	 	Numbers	 	3
	21.2	 	Size (inch)	 	4
	21.3	 	Flexible line section (type)	 	 JUMPING HOSE
	21.4	 	Working pressure (bar)	 	350
	 	 	 	 	 
	22	 	STAND PIPE MANIFOLD	 	 
	22.1	 	Connection ends (type)	 	 4”LP
	22.2	 	Valves (type)	 	 CAMEROON
	22.3	 	Inside diameter and W.P. (inch x bar)	 	 4’’ X 350 bar
	 	 	 	 	 
	23	 	STAND PIPE	 	 
	23.1	 	How many	 	 DOUBLE
	23.2	 	Length (m)	 	16
	23.3	 	Inside diameter and WP (inch x bar)	 	 4’’ X 350 bar
	 	 	 	 	 
	24	 	ROTARY HOSE / CIRCULATING HOSE	 	 
	24.1	 	Number	 	2
	24.2	 	Rotary hoses make/size	 	Continental Phoenix / 3-1/2"
	24.3	 	Length (m)	 	22
	24.4	 	Pressure (bar)	 	350
	 	 	 	 	 
	25	 	DIESEL ENGINE GENERATOR SETS 	 	 
	25.1	 	Number	 	3
	25.2	 	Diesel engines make	 	CATERPILLAR
	25.3	 	Diesel engine type	 	CAT 3512B DITA SCAC
	25.4	 	Maximum
continuous power (KW)	 	1,090
	25.5	 	At speed of (RPM)	 	1,500




 






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	26	 	AC
GENERATORS	 	 
	26.1	 	Number	 	3
	26.2	 	Make	 	CATERPILLAR
	26.3	 	Type	 	SR4B
	26.4	 	Maximum continuous power (KW)	 	1,090
	26.5	 	Power factor	 	0.7
	26.6	 	Output (Volts)	 	600
	26.7	 	Frequency (Hertz)	 	50
	26.8	 	At speed of (RPM)	 	1,500
	 	 		 	 
	27	 	SCR CONVERSION SYSTEM 	 	 
	27.1	 	Make	 	ICPE ACTEL Bucharest
	27.2	 	SCR Type	 	 SCRN 3*850 / 4*550
	27.3	 	SCR No.	 	1
	27.4	 	Maximum continuous power (kW)	 	4,550
	27.5	 	Output (Volts)	 	690
	 	 	 	 	 
	28	 	EMERGENCY GENERATOR	 	 
	28.1	 	Make	 	 CATTERPILLAR
	28.2	 	Number of units	 	1
	28.3	 	Type	 	 GEP500
	28.4	 	Max. continuous power (KW)	 	500
	28.5	 	Output voltage (Volts)	 	400
	28.6	 	Frequency (Hz)	 	50
	 	 	 	 	 
	29	 	AIR COMPRESSORS 	 	 
	29.1	 	Make	 	INGERSOLL RAND
	29.2	 	Number installed	 	2
	29.3	 	Type(s)	 	RAND 37kW
	29.4	 	Max.
flow rate (m3/min)	 	6,5
	29.5	 	Air pressure service	 	10
	 	 		 	 
	30	 	AIR SPARE TANKS	 	 
	30.1	 	Type	 	GPA8 
	30.2	 	Volume (m3)	 	8
	 	 	 	 	 
	31	 	MUD TANKS GENERAL	 	 
	31.1	 	Total
mud tanks installed (No.)	 	5
	31.2	 	Total mud system capacity (m3)	 	315
	31.3	 	Total usable volume (m3) 	 	270




 






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	32	 	Mud tank No. 1 - capacity (m3)	 	45
	32.1	 	Used for:	 	shakers tank
	32.2	 	Electrical agitators (No.)	 	1
	32.3	 	Electrical agitators (make and type)	 	Neptun SA / 2NB16-VO5
	32.4	 	Powered by electric motor (HP)	 	10
	 	 	 	 	 
	33	 	Mud tank No. 2 - capacity (m3)	 	60
	33.1	 	Used for:	 	cleaning tank
	33.2	 	Electrical agitators (No.)	 	3
	33.3	 	Electrical agitators (make and type)	 	Neptun SA / 2NB16-VO5
	33.4	 	Powered
by electric motor (in HP)	 	10
	 	 	 	 	 
	34	 	Mud
tank No. 3 - capacity (m3)	 	70
	34.1	 	Used for:	 	mud tank
	34.2	 	Electrical agitators (No.)	 	3
	34.3	 	Electrical agitators (make and type)	 	Neptun SA / 2NB16-VO5
	34.4	 	Powered
by electric motor (in HP)	 	10
	34.5	 	Bottom guns (No.)	 	3
	 	 	 	 	 
	35	 	Mud tank No. 4 - capacity (m3)	 	70
	35.1	 	Used for:	 	mud tank
	35.2	 	Electrical agitators (No.)	 	3
	35.3	 	Electrical agitators (make and type)	 	Neptun SA / 2NB16-VO5
	35.4	 	Powered by electric motor (in HP)	 	10
	35.5	 	Bottom guns (No.)	 	3
	 	 	 	 	 
	36	 	Mud tank No. 5 - capacity (m3)	 	70
	36.1	 	Used for:	 	reserve tank
	36.2	 	Electrical agitators (No.)	 	3
	36.3	 	Electrical agitators (make and type)	 	Neptun SA / 2NB16-VO5
	36.4	 	Powered by electric motor (in HP)	 	10
	36.5	 	Bottom guns (No.)	 	3
	 	 	 	 	 
	37	 	MIXING PUMPS (No)	 	2
	37.1	 	Make	 	UPSS Botosani
	37.2	 	Type	 	BPG150
	37.3	 	Driven by motor (type)	 	electric
	37.4	 	Motor (HP)	 	100
	 	 	 	 	 
	38	 	SHALE SHAKER	 	 
	38.1	 	Number of Shakers	 	3
	38.2	 	Make	 	MI SWACO 
	38.3	 	Type	 	ALS II
	38.4	 	Screens
(make)	 	 MI SWACO




 






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	39	 	MUDCLEANER	 	 
	39.1	 	Make	 	SWACO
	39.2	 	Type	 	2-12/6T4 ALS II
	39.3	 	Number of cones and size (No. x inch)	 	D-silter 12 cones x4" / D-sander 2 cones x12"
	39.4	 	Centrifugal pump (make)	 	AVERSA BUCURESTI
	39.5	 	Type	 	AG 150
	39.6	 	Number installed	 	2
	39.7	 	Driven
by electric engine (HP)	 	100
	 	 		 	 
	40	 	VACUUM DEGASSER 	 	 
	40.1	 	Type	 	 Upetrom
	40.2	 	Gas discharge line running to	 	 Out of site
	40.3	 	Mud rate (l/s)	 	53
	40.4	 	Gas rate (m3/ min)	 	1.6
	40.5	 	Charging pump capacity (m3/h)	 	200
	40.6	 	Vacuum pump capacity (m3)	 	100
	 	 		 	 
	41	 	MUD GAS SEPARATOR (POOR BOY)	 	 
	41.1	 	Size OD / height (m)	 	0.8 / 7.5
	41.2	 	Gas vent line running to	 	up to mast ODS
	41.3	 	Mudleg height (m)	 	3.3
	41.4	 	Vent line size (inch)	 	8
	41.5	 	Mud discharge line size (inch)	 	8
	41.6	 	Feeding line size (inch)	 	4
	41.7	 	Trip tank (capacity-m3)	 	12
	41.8	 	Level indicator visible from driller's site	 	yes
	41.9	 	Feeding pump (type)	 	 AG150
	41.10	 	Mud pit level indicator (make)	 	UZTEL
	41.11	 	Indicator (type)	 	 RULLER
	 	 	 	 	 
	42	 	DRILLING CONSOLE	 	 
	42.1	 	Make	 	 MARTIN DECKER
	42.2	 	Type	 	AWE6K 
	42.3	 	WEIGHT INDICATOR	 	 
	42.4	 	Make	 	MARTIN DECKER
	42.5	 	Type	 	 E
	42.6	 	Dead-line load	 	 YES
	42.7	 	MUD PUMP PRESSURE GAUGES	 	 
	42.8	 	Make	 	MARTIN DECKER
	42.9	 	Type	 	 GM6A - 255
	42.10	 	Pressure range (bar)	 	350
	42.11	 	ROTARY SPEED TACHOMETER	 	 
	42.12	 	Make	 	MARTIN DECKER
	42.13	 	Reading range (RPM)	 	 0-200 
	42.14	 	TONG TORQUE INDICATOR	 	 
	42.15	 	Make	 	MARTIN DECKER
	42.16	 	Type	 	H6DP
	42.17	 	reading range (lb)	 	 0-11000 
	42.18	 	MUD PUMP STROKE INDICATOR	 	 
	42.19	 	Quantity (No.)	 	2
	42.20	 	Make	 	MARTIN DECKER


 



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	43	 	DRILL.
PARAMETER RECORDER	 	 
	43.1	 	Make	 	 MARTIN DECKER
	43.2	 	Model (type)	 	SIX PENS
	43.3	 	Parameter
recorded-WOB	 	 YES
	43.4	 	Parameter
recorded-ROP	 	 YES
	43.5	 	Parameter
recorded-RPM	 	 YES
	43.6	 	Parameter
recorded-SPM 1/SPM 2	 	 YES
	43.7	 	Parameter
recorded-Pump pressure	 	 YES
	 	 	 	 	 
	44	 	WATER
PUMPS	 	 
	44.1	 	No.
	 	2
	44.2	 	Make	 	 UPSS BOTOSANI
	44.3	 	Type	 	 CERNA
	44.4	 	Driven
by (type)	 	 ELECTRIC ENGINE
	44.5	 	Rated
power (HP)	 	10
	 	 	 	 	 
	45	 	MISCELLANEOUS	 	 
	45.1	 	Warehouse
(No.)	 	2
	45.2	 	Workshop
(No.)	 	2
	45.3	 	Muster point tent	 	1
	 	 	 	 	 
	46	 	COMPENSATION UNIT	 	 
	46.1	 	Voltage	 	690 - 720 V / AC
	46.2	 	Frequency (Hz)	 	50
	 	 	 	 	 
	47	 	WIRELINE UNIT	 	 
	47.1	 	Make 	 	NOV 
	47.2	 	Wireline OD / length (mm / m)	 	2.3 / 7,620 
	47.3	 	Max speed (m/min)	 	365
	47.4	 	Max pull (kg)	 	650
	 	 	 	 	 
	48	 	SURVEY UNIT	 	 
	48.1	 	Make	 	MD TOTCO
	 	 	 	 	 
	49	 	PROPOSED DRILL STRING	 	Quantity (no.)
	49.1	 	5
1/4" Square Kelly	 	 
	49.2	 	Kelly
spinner	 	 
	49.3	 	5 1/4" high torque kelly bushing	 	 
	49.4	 	5 1/4" kelly Cock	 	 
	49.5	 	9 1/2" DC 	 	12
	49.6	 	8" DC	 	18
	49.7	 	6 1/2" DC	 	24
	49.8	 	5 1/2" HW DP	 	12
	49.9	 	5" DP	 	475
	49.10	 	Subs	 	30


 



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	50	 	BOP stack	 	 
	50.1	 	21 1/4“ 2M annular	 	1
	50.2	 	20 3/4" 3M double ram preventer	 	1
	 	 	Rams - blind, 5"	 	1
	 	 	Side outlets for kill/choke connections - 4 1/16" 3M flanges + 2.1/16 3M	 	1
	50.3	 	20 3/4" 3M single ram	 	1
	50.4	 	Side outlets for kill/choke connections - 4 1/16" 3M flanges + 2.1/16 3M	 	1
	50.5	 	13 5/8" 5M annular preventer	 	 
	50.6	 	13 5/8" 5M double ram	 	 
	50.7	 	13 5/8" 10M single ram	 	 
	50.8	 	Manual gate valves, 4.1/16" 5M, 2.1/16" 5M	 	4
	50.9	 	HCR valve, 4.1/16" 5M, 2.1/16" 5M	 	2
	50.10	 	Check valve, 2.1/16" 5M	 	1
	50.11	 	Kill hoses, 3" 5M	 	2
	 	 	 	 	 
	51	 	SPOOLS & ADAPTORS	 	 
	51.1	 	Spacer spool, 21 1/4" 2M - 20.3/4" 3M	 	1
	51.2	 	Spacer spool, 20 3/4" 3M	 	2
	51.3	 	Mud cross, 20 3/4" 3M	 	1
	 	 	Side outlets for kill/choke connections - 4 1/16" 3M flanges, 2.1/16" 3M	 	1
	51.4	 	Spacer spool 15 5/8" 5M x 13 5/8 10M	 	1
	51.5	 	DSA 13 5/8" X 13 5/8 X 5M	 	1
	51.6	 	DSA 13 5/8" X 13 5/8 X 10M	 	1
	 	 	 	 	 
	52	 	CHOKE MANIFOLD & ACCUMULATOR	 	 
	52.1	 	3" 10M choke manifold with 1 manual and 1 hydraulic choke	 	1
	52.2	 	1 drillers remote hydraulic choke control panel	 	1
	52.3	 	Accumulator, 6 station koomey unit, API sized for BOP's	 	1
	 	 	 	 	 
	53	 	KILL MANIFOLD 	 	 
	53.1	 	2.1/16'
10M kill manifold	 	1


 



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	54	 	PROPOSED DRILLING TOOLS	 	 
	54.1	 	1 set DDs and 1 set SDDs rotary tongs	 	2
	54.2	 	1 Bloom& Voss SSW10 pipe spinner	 	1
	54.3	 	1 EZ torque, 100,000 ft-lb capacity	 	1
	54.4	 	1 mud bucket for 3 1/2" and 5" drill pipe	 	1
	54.5	 	1 basket complete with all crossovers, lift subs for all tubulars	 	1
	54.6	 	Elevators for all sizes requested	 	2 for each size
	54.7	 	Drill collar slips for all sizes requested	 	2 for each size
	54.8	 	Drill pipe slips for all sizes requested	 	2 for each size
	54.9	 	Safety clamps for all sizes requested	 	2 for each size
	 	 	 	 	 
	55	 	PROPOSED FISHING TOOLS	 	 
	55.1	 	Reverse Circulation Junk Basket 17 1/2"	 	1
	55.2	 	Reverse Circulation Junk Basket 11"	 	1
	55.3	 	Reverse Circulation Junk Basket 7. 7/8"	 	1
	55.4	 	Safety Joint 8"	 	1
	55.5	 	Safety Joint 6.1/4"	 	1
	55.6	 	Overshot 11.3/4"	 	1
	55.7	 	Overshot 7.7/8"	 	1
	55.8	 	Fishing Magnet 7"	 	1
	55.9	 	Fishing Magnet 5.1/2"	 	1


 



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ANNEXURE
V - INSURANCE POLICY


EXHIBIT
“V”


ADDITIONAL
INSURANCE REQUIREMENTS


 


Insurance
Carried by the Contractor


 


		1.	During
                                         the life of this Contract, Contractor shall at Contractor's expense maintain, with an
                                         insurance company or companies, approved by Operator who are authorized to do business
                                         in Israel or who have a rating of at least A- by S&P or equivalent, insurance coverage
                                         of the kind and in the amount set forth herein, insuring the liabilities specifically
                                         assumed by Contractor in Paragraph 14 of this Contract. Contractor shall procure from
                                         the company or companies writing said insurance a certificate or certificates that said
                                         insurance is in full force and effect and that the same shall not be cancelled or materially
                                         changed without ninety (90) days prior written notice to Operator and the Petroleum Commissioner.
                                         The insurance shall be endorsed to provide that the Insurers waive their right of subrogation
                                         against Operator, Operator's associated and/or related and/or affiliated and/or subsidiary
                                         companies or corporations, firms or organizations and/or their respective shareholders
                                         and/or directors and/or officers and/or employees and/or servants and/or representatives
                                         and/or agents for their respective rights and interests and other parties designated
                                         by Operator, including any party the Operator may be obligated to indemnify for waiving
                                         such right of subrogation, the State of Israel and any of its authorities. The waiver
                                         of subrogation shall exclude security companies, engineers and inspectors not employed
                                         by Operator and/or whoever caused the damage with wilful intent. The Contractor will
                                         endorse the polices to include The State of Israel and the Commissioner as additional
                                         insureds. The policies shall include a provision according to which noncompliance with
                                         the duties imposed upon the insured and/or a breach of any of the policies conditions
                                         in good faith will not prejudice the rights of the Operator and/or the other additional
                                         insured parties to receive indemnity. All per the new Israeli Ministry of Infrastructure
                                         Energy and Water guidelines (SEP 2014 and after).



 


		2.	Employer’s
                                         Liability Insurance with limits of NIS 20,000,000 any one employee and NIS 20,000,000
                                         per occurrence and in the aggregate. The insurance shall be extended to indemnify the
                                         Operator and/or any person and/or entity which the Operator has written obligation to
                                         indemnify and/or the Additional Insured Parties and/or any party acting on their behalf
                                         in the event that they are construed to be the employer of the employees of Contractor.



 


		3.	Third
                                         Party Liability Insurance with limits of NIS 20,000,000 any one occurrence and in
                                         the aggregate. The Operator's and/or the Additional Insured Parties property shall be
                                         considered as third party and no limitation will apply regarding property being worked
                                         upon and/or in the possession and/or care and/or control and/or custody of Contractor
                                         excluding the part specifically worked upon.



 


		4.	Property
                                         Insurance on an "All Risks Basis" or "fire extended" (including
                                         burglary up to NIS 20,000,000, natural disaster, malicious damage) to cover all property
                                         brought to the drilling site by Contractor or anyone on its behalf, on a full reinstatement
                                         basis. The Insurance as herein required shall cover transit risks including loading and
                                         unloading. The Contractor will be entitled not to arrange this insurance regarding earthquake
                                         peril. In case that the Contractor will not arrange a cover for earthquake peril he will
                                         exempt the Operator and/or the State of Israel and/or Israel Land Administration (if
                                         applicable) for any loss to damage due to earthquake. The Contractor hereby releases
                                         Kibbutz Sde Eliyahu and /or anyone on its behalf from any and all liability, and finally
                                         and irrevocably waives any claim from any of the above, in respect of any loss or damage
                                         for which it is, or would have been, entitled to indemnity pursuant to the above Property
                                         Insurances, were it not for the deductibles specified in the policy (or its failure to
                                         obtain and maintain valid Property Insurances), provided that such waiver shall not apply
                                         to those who caused the damage maliciously.



 






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		5.	Compulsory
                                         Third Party Bodily Injury Insurance covering registered motor vehicles (including
                                         owned, hired, leased, non-owned or rental equipment) as required by law for all registered
                                         vehicles engaged under this Contract, Property Damage Liability not less than NIS 500,000
                                         per vehicle, Comprehensive automobile insurance covering all motor vehicles engaged under
                                         this agreement and all risk- heavy mechanical equipment insurance.



 


		6.	Compulsory
                                         Motor Insurance covering registered motor vehicles (including owned, hired, leased,
                                         non-owned or rental equipment) as required by law for all registered vehicles engaged
                                         under this Contract, Auto Third Party Property Damage Liability not less than NIS 100,000
                                         per vehicle, Comprehensive automobile insurance covering all motor vehicles engaged under
                                         this agreement and all risk- heavy mechanical equipment insurance.



 


		7.	General
                                         Conditions: The wordings of the policies mentioned above, other than the policies mention
                                         on clause 4, shall not be inferior to the policy wordings known as “BIT 2012”
                                         or any other wordings replacing them.



 


		8.	The
                                         policies mentioned in clauses 2-5 above shall include the Operator and/or Operator's
                                         employees and/or managers and/or any person and/or entity which the Operator, or any
                                         one on its behalf, has written obligation to include and/or the Additional Insured Parties
                                         as additional insured parties, subject to a cross liability clause.



 


		9.	The
                                         policies mentioned above shall include a waiver of subrogation against Operator and/or
                                         any person and/or entity which Operator, and/ or Operator's employees and/or managers/
                                         directors have written obligation to waive any rights of recourse or claim against it
                                         and/or Additional Insured Parties including any person acting on their behalf, excluding
                                         security companies not employed by Operator and/or whoever caused the damage with willful
                                         intent.



 


		10.	The
                                         policies mentioned above shall include a provision according to which they shall not
                                         be cancelled or materially changed during the period of the insurance without the insurer
                                         providing the Operator and/or the Additional Insured Parties ninety (90) days prior written
                                         notice by registered mail.



 


		11.	The
                                         policies mentioned above shall include a provision according to which noncompliance with
                                         the duties imposed upon the insured in good faith and/or a breach of any of the policies
                                         conditions in good faith will not prejudice the rights of the Operator and/or Additional
                                         Insured Parties to receive indemnity.



 


		12.	Contractor
                                         undertakes to make payments to the National Insurance Institute (Bituach Leumi) in respect
                                         of all workers employed and ensure that all vehicles used in the project are covered
                                         under a valid mandatory Third Party Liability insurance (bodily injury caused by the
                                         use of motor vehicles) as required under law.



 



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		13.	Additional
                                         Insurance Requirements



 


Additional
Insured’s to be added to Contractor policies:


 


		●	Zion
                                         Oil & Gas, Inc. and its ISR branch.
	 	 	 
		●	State
                                         of Israel
	 	 	 
		●	Ministry
                                         of Energy- MOIEW
	 	 	 
		●	Ministry
                                         of Environment -MOEP
	 	 	 
		●	ILA
                                         (Israel Lands Authority)
	 	 	 
		●	Kibbutz
                                         Sde Eliyahu
	 	 	 
		●	Kibbutz
                                         Tirat Zvi



 


Operator’s
Insurance


 


		1.	Operator’s
                                         Extra Expense (OEE) insurance, including Control of Well insurance, in an amount not
                                         less than $10 million dollars.



 


		2.	Employer’s
                                         Liability Insurance with limits of USD 1,000,000 any one employee and USD 1,000,000 per
                                         occurrence and USD 5,000,000 in the aggregate.



 


		3.	Third
                                         Party Insurance with limits of USD 5,000,000 any one occurrence and in the aggregate.



 



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Annexure VI: Rig
Acceptance Test


 


LAND
RIG AND PLATFORM RIG


 


	Objective:	To
                                         inform the Rig Management and Staff of the upcoming survey and tests to be conducted.
                                         This includes planning of these activities to the mutual benefit of our client and the
                                         rig owner (by combining certain inspections with major PM tasks which are due) and without
                                         disturbing the ongoing operations for the rig’s present client.



 


The
following list includes most of the items that we would expect to be performed by the rig crew with oversight and review by Zion
management and/or 3rd part representatives.


 


5.0           Drilling
Equipment


 


05.1         Drawworks:


 


	●	Prepare
                                         to open the front cover of the drawworks for a drum & brake systems inspection.
	●	Prepare
                                         to open the gearbox for an intrusive inspection of the transmission.
	●	Prepare
                                         and test the crown-o-matic, floor saver devices and anti-collision systems.
	●	Provide
                                         the following documents:



 


		-	Major
                                         overhaul reports.
		-	NDT
                                         inspection reports



 


05.2.1       Rotary Table:


 


	●	Prepare
                                         to remove the top cover to inspect the rotary table, drive systems and gear box.
	●	Prepare
                                         to remove the master bushing for inspection.
	●	Provide
                                         the following documents:



 


		-	Major
                                         overhaul reports.
		-	NDT
                                         inspection reports.



 


05.3         
Top drive:


 


	●	Prepare
                                         to remove the inspection cover to inspect the bull gear.
	●	Prepare
                                         to open the DC electric drive motor for inspection.
	●	Prepare
                                         to test the lubrication oil & purge air alarms on the top drive and control panels.
	●	Provide
                                         the following documents:



 


		-	Major
                                         overhaul reports.
		-	Main
                                         shaft removal for inspection reports.
		-	NDT
                                         inspection reports.
		-	Six
                                         monthly inspection reports (API RP 8B).
		-	Top
                                         drive DROPS survey.
		-	Verify
                                         that all top drive safety alerts & bulletins have been actioned where applicable.



 


05.4         
Swivel:


 


	●	Prepare
                                         for access to the swivel for a visual inspection.
	●	Provide
                                         the following documents:



 


		-	Two
                                         year disassembly and internal inspection report (API RP 8B, Sect 5.3.3).
		-	Thrust
                                         bearing clearances.
		-	NDT
                                         inspection reports.



 


05.7        
Crown block:


 


	●	Prepare
                                         for access to carry out a visual inspection.
	●	Prepare
                                         to carry out a wobble test on the sheaves should it be required.
	●	Provide
                                         the following documents:



 


		-	Major
                                         overhaul reports.
		-	Certification
                                         for the hang off lines.
		-	NDT
                                         inspection reports.



 






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05.8         
Travelling block:


 


	●	Prepare
                                         for access to carry out a visual inspection.
	●	Provide
                                         the following documents:



 


		-	Major
                                         overhaul.
		-	NDT
                                         inspection reports.



 


05.9
         Hook:


 


	●	Prepare
                                         for access to carry out a visual inspection.
	●	Provide
                                         the following documents:



 


		-	Link
                                         ear inspection 6 monthly and 5 yearly (API RP 8B section 5 table 1).
		-	NDT
                                         inspection reports.



 


Drilling
instruments:


 


		-	Test
                                         all alarms.
		-	Purge
                                         air alarm.
		-	Elmagco
                                         brake alarms.



 


05.10:
      Drilling instrumentation:


 


	●	Testing
                                         of all alarms including purge air alarm and brake alarm.
	●	Provide
                                         the following documents:



 


		-	Calibration
                                         record of the weight indicator.
		-	Calibration
                                         records of the critical instruments.
		-	NDT
                                         inspection report of the dead line anchor.



 


05.11
       Derrick:


 


	●	Prepare
                                         for access to carry out a visual inspection.
	●	Provide
                                         the following documents:



 


		-	Certification
                                         for the raising wire ropes.
		-	Procedure
                                         for raising the mast.
		-	NDT
                                         inspection reports.
		-	“DROPS”
                                         survey.



 


05.12       Casing stabbing board:


 


	●	Prepare
                                         and function test all the safety devices.
	●	Provide
                                         the following documents:



 


		-	Certification
                                         for the wire rope
		-	Certification
                                         of load test.
		-	NDT
                                         inspection reports.



 


05.13
       Tuggers and sheaves:


 


	●	Provide
                                         the following documents:



 


		-	Wire
                                         rope certification.
		-	Last
                                         NDT inspection.



 


05.13.1    Man riding winches & sheaves:


 


	●	Prepare
                                         to function test all safety devices.
	●	Provide
                                         the following documents:



 


		-	Certification
                                         of the wire ropes.
		-	Certification
                                         for man riding.
		-	NDT
                                         inspection reports.



 


05.14
      Survey Line:


 


	●	Prepare
                                         to function test and a visual inspection.



 


05.15:     
Pipe spinning wrench:


 


	●	Prepare
                                         to function test and a visual inspection
	●	Provide
                                         the following documents:



 


		-	NDT
                                         inspection reports.



 






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05.17.8:
   Finger board:


 


	●	Prepare
                                         to function test and a visual inspection.
	●	Provide
                                         the following documents:



 


		-	“DROPS”
                                         survey.
		-	NDT
                                         inspection reports.



 


05.18:      
Iron roughneck:


 


	●	Prepare
                                         to function test and a visual inspection.
	●	Provide
                                         the following documents:



 


		-	NDT
                                         inspection reports.



 


Racking
system:Full function test and audit NDT inspection records.


 


05.19:
     Pipe racking system:


 


	●	Prepare
                                         to function test and a visual inspection.
	●	Provide
                                         the following documents:



 


		-	Last
                                         NDT inspection.



 


06
           Mud Systems:


 


06.1
        Mud pumps:


 


	●	Prepare
                                         for load and/or endurance test.
	●	Prepare
                                         to open the power end of a mud pump for inspection.
	●	Prepare
                                         to open the fluid ends of a mud pump for inspection.
	●	Prepare
                                         to open a suction and discharge strainers for inspection.
	●	Provide
                                         the following documents:



 


		-	Major
                                         overhaul reports.
		-	Hydrostatic
                                         pressure tests of the pulsation dampers.
		-	Wall
                                         thickness checks of the pulsation dampers.
		-	Calibration
                                         and certification of the PRV’s (pressure relief valves).
		-	NDT
                                         inspection reports.



 


06.2
        Shale shakers:


 


	●	Visual
                                         inspection
	●	Prepare
                                         to carry out a function test.



 


06.3        
Mud cleaner:


 


	●	Visual
                                         inspection
	●	Prepare
                                         to carry out a function test.



 


06.4
        Desilter:


 


	●	Visual
                                         inspection
	●	Prepare
                                         to carry out a function test.



 


06.5
        Desander:


 


	●	Visual
                                         inspection
	●	Prepare
                                         to carry out a function test.



 


06.6
        Degasser:


 


	●	Visual
                                         inspection
	●	Prepare
                                         to carry out a function test.



 


06.8
        Mud agitators:


 


	●	Visual
                                         inspection
	●	Prepare
                                         to carry out a function test.



 






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Centrifugal
pumps:Visual inspection as per checklist.


Trip
tanks:Visual inspection as per checklist.


 


06.9        
Mud mixing systems:


 


	●	Prepare
                                         to open several mud pits for internal inspection.



 


06.10
        Standpipe manifold.


 


	●	Prepare
                                         to open several valves for inspection.
	●	Prepare
                                         to test several valves.
	●	Provide
                                         the following documents:



 


		-	Wall
                                         thickness reports.
		-	Pressure
                                         test reports.
		-	Calibration
                                         of the pressure gauges.
		-	Inspection
                                         report of the rotary and cement hoses.
		-	Certification
                                         for the rotary and cement hose.



 


06.10.1   
Cement manifold:


 


	●	Provide
                                         the following documents:



 


		-	Wall
                                         thickness reports.
		-	Pressure
                                         test reports.
		-	Calibration
                                         of the pressure gauges.



 


07
           Well Control Equipment


 


07.1
        Ram type preventers:


 


	●	Prepare
                                         to open the ram preventers for internal inspection.
	●	Prepare
                                         to take wear measurements
	●	Prepare
                                         to carry out random function testing.
	●	Prepare
                                         to function test the ram locks.
	●	Prepare
                                         to pressure-test the operating systems (open and closing sides) to maximum operating
                                         pressure.
	●	Provide
                                         the following documents:



 


		-	Three
                                         to five yearly major service report (API RP53).
		-	Elastomers
                                         components changes out dates.
		-	Pressure
                                         test reports.
		-	API
                                         certification.
		-	Hose
                                         certification.
		-	Verify
                                         the suitability for use with H2s.
		-	NDT
                                         inspection reports of the pistons, hubs, bonnet bolts and ram blocks.



 


07.2.1
     Annular type preventers:


 


	●	Prepare
                                         to open the annular preventer for internal inspection.
	●	Prepare
                                         to carry out function tests.
	●	Prepare
                                         to pressure-test the operating system to 1,500 psi on open and close sides
	●	Provide
                                         the following documents:



 


		-	Three
                                         to five yearly major service report (API RP53).
		-	Record
                                         of when the element was changed out.
		-	Pressure
                                         test reports.
		-	Hose
                                         certification.
		-	Verify
                                         the suitability for use with H2s.



 






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07.3
        Gate valves:


 


	●	Prepare
                                         to function test several valves.
	●	Prepare
                                         to pressure-test the fail-safe operations and test the fail-safe function.
	●	Prepare
                                         to open several valves for inspection.
	●	Provide
                                         the following documents:



 


		-	Three
                                         to five yearly major service report (API RP53).
		-	Wall
                                         thickness reports.
		-	Pressure
                                         test reports.



 


	Cameron-type
    clamps:	To
    be MPI-inspected as per Cameron Product Alert of 19 May 1989 if this has never been done and the equipment has reached the
    limits.
	 	 
	Diverter
    system:	Visual
    inspection + testing control system and valves.




 


07.4.1
     Choke manifold:


 


	●	Prepare
                                         to function test several valves.
	●	Prepare
                                         to flush lines
	●	Prepare
                                         to open a valve for inspection.
	●	Prepare
                                         to open both remote chokes.
	●	Provide
                                         the following documents:



 


		-	Wall
                                         thickness reports.
		-	Pressure
                                         test reports.
		-	Calibration
                                         of the pressure gauges.



 


07.4.1.1   Coflex hoses:


 


	●	Provide
                                         the following documents:



 


		-	Hose
                                         Installation date.
		-	Hose
                                         certification.
		-	External
                                         and internal borescope inspection reports according to OEM.
		-	Pressure
                                         test reports.






 


07.4.2
     Mud gas separator:


 


	●	Prepare
                                         to open the mud gas separator for inspection.
	●	Provide
                                         the following documents:



 


		-	Wall
                                         thickness reports.
		-	Hydrostatic
                                         pressure test.
		-	NDT
                                         inspection reports.



 


07.4.4      
Choke control:


 


	●	Prepare
                                         to carry out function tests.
	●	Prepare
                                         to carry out function tests from the remote panels.
	●	Prepare
                                         to test the back-up systems.



 


07.7        
Surface hydraulic BOP control:


 


	●	Prepare
                                         to carry out function tests.
	●	Prepare
                                         to carry out an accumulator pre-charge test.
	●	Prepare
                                         to carry out an accumulator capacity test.
	●	Prepare
                                         to test the backup systems, safety devices and alarms.
	●	Provide
                                         the following documents:



 


		-	Hydrostatic
                                         pressure tests of accumulators (Every 10 years).
		-	Certification
                                         and calibration of the pressure PRV’s (Pressure relief valves).
		-	Calibration
                                         of the critical gauges (to within 1%).



 






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Engine
Room Equipment


 


	Main
    and camp engines:	Test
    alarms/shutdowns
	 	Test
    remote shutdown from drill floor, etc.
	 	Run
    on load.
	 	 
	Emergency
    generator:	 
	 	Test
    alternative start system. Check alarms.
	 	 
	Air
    compressors:	Service,
    high-pressure, start-air and cold-start compressors to be run under load.
	 	 
	Electrical
    Equipment	 
	 	 
	Main
    alternators:	Visual
    inspection.
	 	 
	Emergency
    alternator:	Internal
    inspection.  Megger test.
	 	 
	DC
    motors:	Visual
    inspection.
	 	 
	AC
    motors:	Spot
    check megger readings.  Fire pumps, ballast pumps.  BOP control triplex pump, etc.
	 	 
	Transformers:	Visual
    inspection.
	 	 
	Elmagco
    brake:	Megger-test
    each individual coil.
	 	 
	 	Battery
    back-up system, voltage drop test.
	 	 
	Fire,
    gas and H2S alarms:	Spot
    checks.
	 	 
	Pressurization
    alarms:	Function
    test.


 


Warehouse


 


BOP
rubber goods.Verify that they are OEM-manufactured or OEM-approved.


 


Records


 


	●	MPI
                                         lifting gear
	●	Stabbing
                                         board wire certification and installation dates
	●	BOP
                                         certification
	●	Coflex
                                         (choke and kill) hoses certification and inspection reports.
	●	High-pressure
                                         mud hoses certification
	●	Rotary
                                         hoses certification
	●	Check
                                         inspection records of:



 


		-	drill
                                         string
		-	Subs
		-	fishing
                                         tools
		-	drilling
                                         tools
		-	MPI:
                                         drawworks brakes, deadline anchor, travelling block, crown block, IBOP, swivel, hook,
                                         Top Drive shaft, IBOP, tongs, slips, elevators, elevator links, tong back-up posts, BOP
                                         lifting gear, BOP stress points



 


	●	Emergency
                                         procedures manual
	●	Operations
                                         manual
	●	Wall
                                         thickness survey:



 


		-	High-pressure
                                         mud and cement lines



 






    	65 | Page



     


    

 


	●	Mud
                                         pump daily record book.
	●	Maintenance
                                         records:



 


		-	Top
                                         Drive; also check bulletins.
		-	Travelling
                                         block, crown block, drawworks, rig specific brake.
		-	Mud
                                         pumps, swivel, Well control equipment.
		-	Main
                                         engines.
		-	Pressure
                                         relief valves inventory.
		-	Lubrication
                                         oil samples of engines, swivel, TDS, mud pumps, etc.









 






    	66 | Page



     


    

 


Safety


 


All
systems and alarms will be tested, all inspection reports and certification of the equipment and system will be reviewed.


 


	Fire
    detection systems:	 	Location
    and layout of sensors will be evaluated. System and alarms will be function-tested (if applicable).
	 	 	 
	CO2
    systems:	 	System
    will be inspected and alarms and ventilation shut-downs tested. Inspection reports will be evaluated (if applicable).
	 	 	 
	Fixed
    fire-fighting systems:	 	Inspection
    of fire-fighting stations, Halon, CO2, foam systems, deluge systems and sprinkler systems and to be function-tested (if applicable).
    Function test of fire pumps and emergency fire pump.
	 	 	 
	Portable
    extinguishers:	 	Evaluation
    of location number, type and inspection procedures of all extinguishers and fire-fighting equipment.
	 	 	 
	Gas
    detection system:	 	Evaluation
    of location and number of sensors for H2S and CH detection. Systems and alarm levels will be function-tested.
	 	 	 
	Drilling
    facilities:	 	General
    safety of drilling equipment, safety equipment in mixing areas. Remote shut-downs. Hazardous zones, chemical storage and handling
    etc. will be evaluated.
	 	 	 
	General
    safety items:	 	Availability
    of safety signs and procedures. Personal protection gear, and drills. Testing of remote-control stations and evaluation of
    gas bottles and systems.
	 	 	 
	Emergency
    procedures:	 	Evaluation
    of all written procedures covering emergency situations and the contractor policy regarding these emergencies. Test of PA
    and alarm systems.
	 	 	 
	Lifting
    and handling:	 	Evaluation
    of lifting-gear inspection reports. Inspection if proper and sound lifting gear is used on the rig.
	 	 	 
	Accommodation:	 	Layout
    and cleanliness of accommodation. Fire protection and safety equipment in accommodation, galley and stores.
	 	 	 
	Work
    permits:	 	Evaluation
    of permit-to-work system with lock-out and tag-out procedures.


 


	“I
        will bless those who bless you, And I will curse him who curses you; And in you all the families of the earth shall be
        blessed.”

                                                                                          

        Genesis
        12:3



 


 


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