[Conformed to Polish executed version] AGREEMENT NO. PL/012216736/05-0030/DH/HB For the Sale of Natural Gas between FX ENERGY POLAND Sp. z o.o. and POLSKIE GÓRNICTWO NAFTOWE I GAZOWNICTWO S.A. This Agreement was signed on 8 December 2005 in Warsaw between: FX ENERGY POLAND Sp. z o.o.with its registered office in Warsaw, at ul. Chalubinskiego 8, 00-613 Warsaw, entered in the Companies Register of the National Court Register by the District Court in Warsaw, XIX Commercial Division of the National Court Register under number KRS No. 0000052459 NIP 521-27-51-481, REGON 012659847, hereinafter referred to as the Seller or a Party, represented by Zbigniew Tatys and Jerzy Maciolek, members of the Management Board and, Polskie Górnictwo Naftowe i Gazownictwo Spólka Akcyjnawith its registered office in Warsaw at ul. Krucza 6/14, entered in the Companies Register of the National Court Register by the District Court in Warsaw, XIX Commercial Division of the National Court Register under number KRS 0000059492, NIP 525-000-80-28, REGON 012216736-00027, hereinafter referred to as the Purchaser or a Party, represented by: 1. Tomasz Jaskolski  Director of the Production Department 2. Grzegorz Jazwinski  Diector of the Controlling Department 3. Slawomir Nesterowicz  Deputy Director of the Commercial Department Whereas: A.On 27 October 2005 theJoint Operating Agreement(defined below) was executed between CalEnergy Resources Poland Sp. z o.o., Polskie Górnictwo Naftowe i Gazownictwo Spólka Akcyjna and FX Energy Poland; B.TheSellerholds a 24.5% interest in the rights and obligations related to theGZA, including title to 24.5% of the gas produced from in theZaniemysl Fieldresulting from its 24.5% interest in the mining usufruct covering theGZA; C.ThePurchaserwishes to purchase all gas that theSelleris able to deliver from the Zaniemysl Field. ThePartiesacting in their best faith and with reasonable diligence negotiated thisAgreementand undertake to comply with its provisions. I GENERAL PROVISIONS AND DEFINTIONS §  1 1.1.
        ThisAgreementgoverns the relationship between thePartiesin connection with the sale of theGas(as defined below) by theSellerto thePurchaser,including their rights and duties, their liability for non-compliance with the terms of thisAgreement, as well as the technical conditions of delivery and acceptance of theGas.
    1.2
        The following Appendices constitute integral parts of thisAgreement:
 (a)
        Appendix No. 1 - Technical conditions ofGasdelivery to thePurchaser;
 (b)
        Appendix No. 2  a certified copy of the Confidentiality Agreement of 24.02.2005.
 In case of any inconsistency between the main body of thisAgreementand the Appendices, the provisions of the main body shall prevail. §  2 2.1
        In thisAgreement, and in any appendices or annexes thereto, the following capitalized terms shall have the following meanings:
 1/
        Contract Day- a period starting at 10:00 p.m. of any given calendar day and ending at 10:00 p.m. of the following calendar day;
 2/
        Business Day- any day other than Saturday or a statutory holiday in Poland;
 3/
        Gas- a mix of hydrocarbons and non-flammable gaseous components including methane and nitrogen as main components, prepared for transportation by pipeline and conforming to the parameters specified in §8 and in Appendix No. 1, or accepted by thePurchaserin spite of non-compliance with those parameters;
 4/
        Operating Committee- the committee established and empowered to make decisions regarding mining operations in theGZApursuant to theJoint Operating Agreement;
 5/
        Contract Month- a period starting at 10:00 p.m. of the last day of the month directly preceding the given calendar month, and ending at 10:00 p.m. of the last day of the given calendar month, provided that the firstContract Monthshall commence at 10:00 p.m. of the last day of theCommissioning Periodand shall continue until the end of the same calendar month;
 6/
        Delivery Period- the period commencing on theProduction Commencement Dayand ending theProduction Closure Day;
 7/
        Operator- the party appointed as the operator of theGreater Zaniemysl Areapursuant to theJoint Operating Agreement;
 8/
        Planned Maintenance Work- renovation, construction, maintenance and modernization work:
 (a)
        conducted by thePurchaserin theGas Network, which affect thePurchasers ability to take theGasat theDelivery Point;
 (b)
        conducted by theOperatoror theSellerin theDelivery System, which affect theSellers ability to deliver theGasto theDelivery Point(SellersPlannedMaintenance Workshall include, without limitation, any periodical gas field tests);
 9/
        Greater Zaniemysl Area (GZA)- the area described in Appendix No. 1, within which theGaswill be produced from theZaniemysl Fieldpursuant to theJoint Operating Agreement;
 10/
        Delivery Point- the outlet flange at the exit from theGas Station;
  2    11/
        Contract Year- a period starting at 10:00 p.m. of the last day of any calendar year and ending at 10:00 p.m. of the last day of the following calendar year, provided that:
 (a)
        the firstContract Yearshall commence at 10:00 p.m. on the last day of theCommissioning Periodand shall continue until 10:00 pm on last day of the same calendar year;
 (b)
        if thisAgreementterminates on any day other than December 31, the last Contract Year shall end at 10:00 p.m. on the last day of effectiveness of theAgreement;
 12/
        Gas Station- the installations located within theGZA, including theMetering System,used to control, measure and distribute the stream of theGas, together with any ancillary equipment, owned by the parties to theJoint Operating Agreementand operated by theOperator;
 13/
        Delivery System- installations used for the purposes of producing, processing, compressing, testing, measuring and delivering theGasto theDelivery Point, including, without limitation, theGas Station;
 14/
        Gas Network- gas pipelines together with gas stations, metering systems and compression facilities owned by thePurchaser, connected and working together, necessary for the transmission of theGasdelivered hereunder to the Krobia hub;
 15/
        Metering System- gas meters and other metering devices, as well as the systems connecting those devices, described in Appendix No. 1, used to measure the quantity of theGasdelivered and taken at theDelivery Point, owned in accordance with theJoint Operating Agreementby the parties thereto;
 16/
        Agreement- this agreement, together with any future changes, modifications and supplements, which can be made in accordance herewith;
 17/
        Production Closure Day- means theContract Dayon which production from theZaniemysl Fieldis permanently ceased, as determined by theOperating Committeein accordance with theJoint Operating Agreement;
 18/
        Zaniemysl Field- means the gas field located in the vicinity of Zaniemysl in Wielkopolskie Voivodship in Poland owned jointly by theSeller, Polskie Górnictwo Naftowe i Gazownictwo Spólka Akcyjna and CalEnergy Resources Poland Sp. z o.o., described in more detail in Appendix No. 1;
 19/
        Delivery Commencement Day- theContract Dayon which theSellerdelivers theGasto theDelivery Pointfor the first time;
 20/
        Production Commencement Day- means theContract Day, no later than 30 days following theDelivery Commencement Day, which is notified by theSellerto thePurchaseras the day on which regular deliveries of theGashereunder shall commence;
 21/
        Joint Operating Agreement- means the Mining Users Operating Agreement Covering the Greater Zaniemysl Area dated 27 October 2005, between Polskie Gornictwo Naftowe i Gazownictwo S.A., FX Energy Poland Sp. z o.o. and CalEnergy Resources Poland Sp. z o.o.;
 22/
        Commissioning Period- means the period commencing on theDelivery Commencement Dayand ending on theContract Dayimmediately preceding theProduction Commencement Day;
  3    23/
        Force Majeure- is defined in §18 below;
 24/
        Annual Contract Quantity (ACQ)- the maximum quantity of theGasoffered by theSellerto thePurchaserin the relevant Contract Year, specified in accordance with Section 5.2 below;
 25/
        Daily Contract Quantity (DCQ)- the maximum quantity of theGaswhich thePurchasercan nominate for delivery hereunder in anyContract Day, calculated by dividing theACQby the number of days in which delivery of theGasis planned in the relevantContract Year(i.e. after deducting days of thePlannedMaintenance Work);
 26/
        Daily Nominated Quantity(DNQ)- the quantity of theGasnominated by thePurchaserfor delivery in the givenContract Dayin accordance with Section 6.1 below;
 27/
        Outstanding Quantity (OQ)- the quantity of theGasnot taken by thePurchaserin breach of its take-or-pay obligations hereunder, calculated in accordance with Section 7.1 below;
 28/
        Minimum Annual Contract Quantity (MACQ)- the quantity of the Gas specified in accordance with Section 6.3 below;
 29/
        Affiliate- means with respect to aParty, any entity which directly or indirectly controls thatParty, or is controlled by thatParty, or which is directly or indirectly controlled by an entity which controls thatParty. Control means:
 (a)
        the ownership of more than fifty (50) per cent of the voting rights in a general meeting or its equivalent of another entity;
 (b)
        the power to direct the management and policies of another entity, whether through the ownership of voting securities, by contract or otherwise;
 30/
        Concession means jointly a mining license and mining usufruct authorizing the commercial production of natural gas from theZaniemysl Field(including an exploration concession, to the extent such concession authorizes production), granted to theSelleror theOperator,including any extension or replacement thereof;
 31/
        Breach means failure to perform or improper performance by aPartyof one or more of its obligations hereunder;
 32/
        Normal Cubic Meter (Nm3)- means the amount of gas required to fill a space of one cubic metre with an absolute pressure of one hundred and one decimal three two five kilopascals (101.325 kPa) and at thermodynamic temperature of 273.15 K; unless expressly stated otherwise, all quantities of theGasreferred to herein or specified hereunder shall be expressed inNm3.
 33/
        Annual Statement is defined in §13 below;
 34/
        Monthly Statement is defined in §13 below;
 35/
        Quality Specification the chemical parameters of theGasspecified in Appendix No. 1;
 36/
        Total Field Daily Nomination is defined in Section 6.4 below;
  4    37/
        Connecting Pipeline means the part of theGas Networkused for the transmission of theGasfrom theDelivery Pointto the point of connection to the national gas grid located at the Dzonek-Krobia gas pipeline, described in more detail in Appendix No. 1.
 2.2
        All units of measurement used herein are units of the SI system in accordance with the Law on Measurements dated 11 May 2001 (Dz. U. No. 63, Item 636).
 II CONTRACT TERM, CONDITIONS PRECEDENT AND COMMISSIONING PERIOD §  3 3.1
        Pursuant to thisAgreement,theSellershall supply and sell theGasand thePurchasershall buy and take the delivery of theGas,commencing on theDelivery Commencement Dayuntil theProduction Closure Day, provided that no obligations to supply or take theGasshall continue following:
 (a)
        the termination of thisAgreementin accordance with its terms; or
 (b)
        the expiration or termination of theConcession.
 3.2
        TheDelivery Commencement Dayshall not occur unless and until each of the following conditions precedent is fulfilled:
 (a)
        theSelleror theOperator, as applicable, obtains all permits and approvals from public authorities required to produce and sell theGashereunder, including, without limitation, theConcession, and all permits required to construct and operate theDelivery System;
 (b)
        theSelleror theOperator, as applicable, constructs and brings into operation theDelivery System;
 (c)
        thePurchaserobtains all permits and approvals from public authorities required to purchase, produce and sell theGashereunder, including, without limitation, all permits required to construct and operate theConnecting Pipeline;
 (d)
        thePurchaserconstructs and brings into operation theConnecting Pipeline.
 TheSellershall use its best efforts to ensure that the conditions in letters (a) and (b) above are satisfied no later than by July 1, 2006. ThePurchasershall use its best efforts to ensure that the conditions in letters (c) and (d) above are satisfied no later than by July 1, 2006. TheSellerand thePurchasershall promptly notify each other upon becoming aware that a condition which it is required to satisfy, as provided above, has been satisfied or becomes incapable of being satisfied.  3.3
        If theDelivery Commencement Daydoes not occur by 30 September, 2006 thePartiesshall meet as soon as practicable thereafter to discuss the situation and agree as to the continuation of thisAgreement. If they cannot reach a consensus and theDelivery Commencement Daydoes not occur by 30 November 2006, eitherPartyshall have the right to terminate thisAgreementforthwith at any time thereafter, prior to theDelivery Commencement Day, by written notice to the other, unless the otherPartydemonstrates that it has acted with due care to cause the conditions precedent for which it is responsible pursuant to Section 3.2 to be fulfilled.
  5    3.4
        In case of aForce Majeureoccurring before theDelivery Commencement Day, theDelivery Commencement Dayand theProduction Commencement Dayshall be deferred by a period equal to the duration of theForce Majeureevent.
 3.5
        In case of aForce Majeureoccurring during theCommissioning Period, theProduction Commencement Dayshall be deferred by a period equal to the duration of theForce Majeureevent.
 §  4 4.1
        During theCommissioning Period, thePurchasershall make reasonable efforts to take all theGasoffered by theSellerand theSellershall act diligently to deliver theGasin such quantities as thePurchasershall require.
 4.2
        During theCommissioning PeriodtheSellershall not be liable to thePurchaserfor any failure to supply any specific quantities of theGas, and thePurchasershall not be liable for any failure to take any specific quantities of theGasoffered. All other provisions of thisAgreementshall apply to theGasdelivered during theCommissioning Period.
 III QUANTITIES, PARTIES OBLIGATIONS §  5 5.1
        TheSelleroffers to thePurchaserall of theGasproduced from theZaniemysl Field(other than anyGasused for operations under theJoint Operating Agreement, including re-injection for pressure maintenance,Gaslifting and power generation) to which theSelleris entitled.
 5.2
        TheSellershall make reasonable efforts to cause theOperatorto determine the maximum permitted lifting of gas from theZaniemysl Fieldin the forthcomingContract Yearin accordance with the applicable Polish regulations,referred to in Section 22.1 (b) and attached hereto as Exhibit B to Appendix No. 1 and with good petroleum industry practices, no latter than 30 days prior to theProduction Commencement Dayin the case of the firstContract Year,and no later than 4 months prior to the beginning of
each subsequentContract Year. As soon as practicable following that determination, but in any event no later than 20 days prior to theProduction Commencement Dayin the firstContract Yearand no later than 3 months prior to the beginning of each subsequentContract YeartheSellershall notify thePurchaserin writing of theAnnual Contract Quantityand theDaily Contract Quantityin the forthcomingContract Year. TheAnnual Contract Quantityand theDaily Contract Quantityshall be calculated taking into account thePlanned Maintenance Work.
 §  6 6.1
        ThePurchasershall notify theDaily Nominated Quantities(DNQ) to theSellerin writing in accordance with the nomination procedures specified in Appendix No. 1.
 6.2
        ThePurchasershall make reasonable efforts to take all of theGasoffered by theSeller, without prejudice to Section 6.3 below.
 6.3
        Subject to Section 7.1 below, in eachContract Year, thePurchasershall take from theSellerat least theMinimum Annual Contract Quantity (MACQ)equal to 17,000,000Nm3(seventeen millionNormal Cubic Meters) of theGas,provided that:
 (a)
        in anyContract Yearwhere theACQis lower than 19,800,000Nm3, theMACQshall equal 80% of theACQ;
  6    (b)
        in anyContract Yearshorter than 365Contract DaystheMACQshall be decreased pro rata to the difference between 365 and the number ofContract Daysin such aContract Year.
 6.4
        ThePurchasershall issue field-wide nominations for its total requirements for theGasfrom theZaniemysl Fieldin respect of anyContract Day(a Total Field Daily Nomination) and the nomination for theSellerfor suchContract Dayshall be calculated as a share of the applicableTotal Field Daily Nominationin the proportion that theSellers participating interest share in theJoint Operating Agreementbears to the aggregate of all participating interest shares in theJoint Operating Agreement.
 6.5
        The share of theSellerin any and all under-deliveries, over-deliveries ofGasor deliveries of non-specification gas from theZaniemysl Fieldshall be determined in the same proportion as calculated for theSellerpursuant to and in accordance with Section 6.4 above.
 6.6
        If the annual average gross calorific value of gas delivered from theZaniemysl Fieldin anyContract Yearand specified in theAnnual Statementdiffers by at least 1% from 31.07 MJ/Nm3, then theMinimum Annual Contract Quantityfor theContract Yearcovered by suchAnnual Statementshall be calculated in accordance with the following formula:
 MACQ(t) = (MACQ(u) *31.07 MJ/Nm3/GCV Where: MACQ(t)  adjustedMinimum Annual Contract Quantity (MACQ)for the givenContract Year(t) MACQ(u)Minimum Annual Contract Quantity (MACQ)for the givenContract Year(t), specified in accordance with Section 6.3 GCV- annual average gross calorific value of theGasdelivered from theZaniemysl Fieldin theContract Year(t) and specified in theAnnual Statement,expressed in MJ/Nm3. IV GUARANTEED TAKE §  7 7.1
        ThePurchasershall be liable to theSellerfor failure to fulfil its obligation under Section 6.3 above if in anyContract Yearthe amount of theGasactually taken by thePurchaseris lower than theMinimum Annual Contract Quantityminus the sum of all quantities of theGasduring thatContract Yearthat:
 (a)
        were not delivered to thePurchaseras a result of rejection by thePurchaserof non-conforming gas pursuant to Section 9.2; or
 (b)
        were not delivered to or taken by reason ofForce Majeureaffecting theSelleror thePurchaser;
 and the resulting quantity of theGasnot taken inBreachof Section 6.3 shall constitute theOutstanding Quantity (OQ).  7    7.2
        ThePurchasershall pay theSellerfor the quantity of theGasconstituting theOutstanding Quantityan amount equal to 50 % (fifty percent) of theGas Priceapplicable to theGasdelivered on the lastContract Dayof theContract Yearwithin which the failure referred to in Section 7.1 above took place.
 7.3
        TheSellershall issue an accounting note (nota ksiegowa) for the amount payable pursuant to Section 7.2 above within 3 (three) days after issuing theAnnual Statementfor theContract Yearand the said amount shall be payable within 14 (fourteen) calendar days after issuing the note.
 7.4
        ThePurchasershall be entitled to take theOutstanding Quantityduring 5 (five)Contract Yearsfollowing theContract Yearin which theOutstanding Quantityoccurred, subject to thePurchaserfirst having taken during theContract Yearan amount ofGasat least equal to the applicableMinimum Annual Contract Quantityminus the sum of all quantities ofGasthat were
not delivered or taken during theContract Yearby reason ofForce Majeureaffecting theSelleror thePurchaser.Outstanding Quantitiesoccurring in differentContract Yearsshall be taken by thePurchaseron a first-in-first-out basis.
 7.5
        If thePurchaserdoes not take any portion of theOutstanding Quantitieswithin the time stated in Section 7.4 above, or if thePurchaserdoes not take any portion of theOutstanding Quantitieswithin theDelivery Period, then thePurchasershall cease to have any rights or claims in respect thereof.
 7.6
        If thePurchasertakes anyOutstanding Quantitiesin aContract Year, then theSellers invoice for theContract Monthin which any part of theOutstanding Quantityis first taken, and invoices for the remainingContract Months, if any, of thatContract Year, shall specify, among others:
 (a)
        the gross amount due which shall be the product of the entire quantity of theGasactually taken during thatContract Monthand the then applicableGas Price;
 (b)
        the amount already paid by thePurchaserto theSellerin respect of the relevant portion of theOutstanding Quantitypursuant to Section 7.2 above;
 (c)
        the net amount payable by thePurchaserbeing the difference between the amount specified under letter (a) above and the amount specified under letter (b) above.
 V QUALITY OF GAS. NON-SPECIFICATION GAS §  8 8.1
        The pressure of theGasat theDelivery Pointshall be no lower than 5.5 MPa and no greater than 6.5 MPa . The minimum gross calorific value of theGasdelivered shall be no lower than 30 MJ/m3.
 8.2
        TheGasdelivered hereunder shall conform to theQuality Specificationdetailed in Appendix No. 1.
 §  9 9.1
        If the gas supplied by theSellerat theDelivery Pointdoes not conform to theQuality Specificationor the parameters specified in Section 8.1 above, theSellershall make reasonable efforts to cause theOperatortonotify thePurchaserand theSellerthereof as soon as possible and shall provide themwith all known details regarding the quality of the non-conforming gas and the expected timing of the
non-compliance. If thePurchaserbecomes aware of delivery of non-conforming gas, it shall notify theSellerthereof as soon as possible.
  8    9.2
        ThePurchasershall have the right to reject the delivery of any gas non-conforming to theQuality Specificationor the parameters specified in Section 8.1 above, and the quantity of gas so rejected by thePurchasershall be deemed to constitute a quantity non-delivered. Any such rejection by thePurchasershall be immediately notified by thePurchaserto theSellerin writing.
 9.3
        If thePurchaseraccepts gas which does not conform to theQuality Specificationor the parameters specified in Section 8.1 above, such gas shall be considered to beGashereunder and theSellershall grant thePurchasera discount in an amount to be agreed upon between thePartiesin a separate document within three (3) months following the notice referred to in Section 9.1. If thePartiesdo not reach agreement within the said period, the dispute shall be resolved pursuant to §24, and the last day
of the period referred to above shall be deemed to constitute the date of invitation to negotiations referred to in Section 24.1. Unless thePartiesagree otherwise, pending the agreement and, if applicable, dispute resolution, regarding the discount, thePurchasershall pay to theSellerfor allGasdelivered at a price equal to 90% of theGas Price, provided that if the discount finally agreed upon or established as a result of the dispute resolution is different than 10%, thePurchasershall pay to theSellerthe resulting underpayment, or theSellershall reimburse to thePurchaserthe resulting overpayment, as applicable, within one month, with interest calculated at a rate equal to one-month WIBOR. For the avoidance of doubt, as soon asGasis brought to conformity with theQuality Specification, payment for suchGasshall be made in accordance with § 14, § 15 and §16 hereof.
 9.4
        If the quality of the gas delivered continues to be non-conforming to theQuality Specificationor the parameters specified in Section 8.1 above and is being rejected by thePurchaserfor a period longer than 2Contract Days,thePartiesshall meet and negotiate in good faith to agree, as promptly as possible, on such necessary modifications to theQuality Specificationand other provisions hereof as to allow the continued performance of thisAgreement.
 VI DELIVERY POINT §  10 10.1
        All theGasshall be delivered by theSellerto, and taken by thePurchaserat, theDelivery Point.
 10.2
        At theDelivery Point:
 (a)
        the title to theGas;
 (b)
        the benefits and burdens related to the title to theGas;
 (c)
        the risk of loss or quality deterioration of theGas;
 (d)
        all risks related to the physical and chemical properties of theGas;
 shall pass from theSellerto thePurchaser. 10.3
        Appendix No. 1 includes a description and a chart showing the layout of theGas Stationincluding theMetering Systemand theDelivery Point.Appendix No. 1 specifies the methods and procedures for taking measurements of the quantity, quality, temperature and pressure of theGasdelivered and taken. All issues related to the measurement of the quantity and pressure of theGaswhich are not specifically addressed in Appendix No. 1 shall be governed by the company standards of thePurchaserMEASUREMENTS OF GASEOUS FUELS, (4000 series),
listed in Appendix No. 1 and attached thereto as Exhibit A.
  9    10.4
        ThePurchasershall have the right to be present, at its own expense, during the installation, reading, cleaning, replacement, fixing, inspection, examination, verification, calibration or regulation of theMetering System.
 VII MEASURING. DISPUTES REGARDING QUANTITY OR QUALITY §  11 11.1
        TheSellershall make reasonable efforts to cause theOperatorto install theMetering Systemat the expense of the Seller and other parties to theJoint Operating Agreementand to maintain it in good working order and condition. TheSellershall make reasonable efforts to cause theOperatorto check theMetering Systemand verify its accuracy no less than once every three months, or more frequently if required by the applicable regulations. TheSellermake
reasonable efforts to cause theOperatorto notify thePurchaserof any planned checks or verification at least 3 (three) days in advance.
 11.2
        If any component of theMetering Systemis found to be malfunctioning, theSellershall make reasonable efforts to cause theOperatorto repair or replace that component as soon as possible, and theMonthly Statementscovering the period since the previous checking and verification (and, if applicable, the relevantAnnual Statement) shall be adjusted in accordance with the rules set forth in Appendix No. 1, as soon as possible.
 11.3
        Based on the adjustedMonthly Statement(s) and, if applicable, theAnnual Statement, theSellershall correct its invoices covering the relevant periods within 5 days of the adjustment, and any resulting differences in the amounts payable shall be the settled within 30 days of the adjustment.
 11.4
        Malfunction of theMetering Systemreferred to in Section 11.2 above can only occur in a situation where inaccuracies in the reading of the metering equipment exceed the permitted margins specified in Appendix No. 1 or in Exhibit A thereto, or the equipment is out of service.
 11.5
        ThePurchasermay request additional checks and verification of the accuracy of theMetering Systemat any time. If the checks and verification do not reveal any malfunction that exceeds the permitted margins specified in Appendix No. 1 or in Exhibit A thereto, or that the equipment is out of service, theSellers costs related to the checks and verification shall be paid by thePurchaser, otherwise, they shall be paid theSeller.
 §  12 12.1
        In case of a dispute concerning the quantity or quality of theGasdelivered, verifying measurements shall be taken by anad hocCommission consisting of an equal number, but no more than two, of representatives of each of thePurchaserand theSeller.
 12.2
        If the measurements taken by the Commission referred to in Section 12.1 above, reveal errors in excess of the permitted margins, then the settlement shall be conducted according to the rules specified in Appendix No. 1. If metering equipment is dismantled to conduct the tests referred to above, the cost of dismantling, testing and reinstalling, as well as the cost of installation of substitute metering equipment shall be covered by thePartywhose objections have not been confirmed by the tests results.
  10    12.3
        If the Commission does not agree on a common position within one (1) month from the day of the commencement of the work referred to in Section 12.1 above, then the dispute shall be resolved through an expertise performed by the Petroleum Mining Institute (Instytut Górnictwa Naftowego i Gazownictwa -IGNiG) in Krakow or another scientific institution agreed upon by theParties. The cost of the analysis shall be covered by thePartywhose objections have not been confirmed.
 §  13 13.1
        Information concerning the quantity and quality parameters of theGassold shall be compiled in the form of statements covering:
 (a)
        everyContract Month (Monthly Statements); and
 (b)
        everyContract Year(Annual Statements)
 13.2.
        Monthly Statementsshall be made by theSellerbased on daily reports prepared according to the guidelines contained in Appendix No. 1, within two (2)Business Daysafter the end of theContract Monthin which the delivery occurred.AnnualStatementsshall be made by theSellerbased on the data contained in the relevantMonthly Statementswithin five (5)Business Daysafter the end of theContract
Yearin which the delivery occurred.
 13.3
        Monthly Statementsshall include the following information:
 (a)
        theDaily Nominated Quantitiesfor eachContract Dayof theContract Month;
 (b)
        the quantities of theGasdelivered by theSellerto thePurchaserfor eachContract Dayof theContract Month;
 (c)
        the average gross calorific value of theGasdelivered during theContract Month, calculated in accordance with Appendix No. 1;
 (d)
        the cumulative quantity of theGasdelivered by theSellerto thePurchaserduring theContract Yearin which theContract Monthfalls;
 (e)
        the portion (if any) of theOutstanding Quantityincluded in the quantity of theGasdelivered to thePurchaserin theContract Month;
 (f)
        the quantities (if any) of theGasnot delivered or not taken during theContract Monthas a result of (separately for each reason):
 -Force Majeure; -Planned Maintenance Work; - rejection of non-conforming gas pursuant to Section 9.2 above; (g)
        theGas Pricein respect of theGasdelivered in theContract Month;
 (h)
        the balance (if any) of theOutstanding Quantityremaining at the end of theContract Month;
 (i)
        details of any other charges that arise under thisAgreement; and
 (j)
        the total amount payable by thePurchaserto theSeller.
 13.4
        AnyAnnual Statementshall include the information, as required in Section 13.3 above with respect to theMonthly Statementsfor the lastContract Monthof theContract Year,and shall in addition specify:
 (a)
        theOutstanding Quantity(if any) occurred for thatContract Year;
  11    (b)
        theGas Pricepayable in respect of theOutstanding Quantityoccurring for thatContract Year;and
 (c)
        the annual average gross calorific value of theGasdelivered from theZaniemysl Fieldduring theContract Year, calculated in accordance with Appendix No. 1.
 13.5
        If thePurchaserdisputes any quantity or amount in aMonthly StatementorAnnual Statement, it shall notify theSeller, providing the details of the disputed items, within seven (7)Business Daysfollowing the receipt thereof. In such an event, thePartiesshall communicate immediately and shall attempt to resolve the dispute within three (3)Business Days.
 13.6
        If thePartiesdo not reach an agreement within the time specified in Section 13.5 above, any dispute concerning the quantity or quality of theGasdelivered shall be resolved in accordance with Section 12.3 above, and any other dispute shall be resolved in accordance with §24 below.
 VIII PRICE §  14 14.1
        Subject to other provisions hereof, thePurchasershall pay theGas Price (PGU)for all theGasdelivered and taken.
 14.2
        TheGas Priceas of 14 July 2005 for theGashaving the gross calorific value of 31.07 MJ/Nm3equals:
 PGU(0)= 280.13 PLN/1000 Nm3 14.3
        TheGas Priceshall be adjusted from time to time by reference to changes in the published price at which thePurchasersells natural gas as similar as possible to theGas,to its customers, occurring after the date specified in Section 14.2. Reference shall be made to the fuel price alone, not including any use of grid (transmission) or administration (subscription) charges. As of 14 July 2005, the relevant reference gas was the GZ-41.5 (group Lw) gas having the gross calorific value of 32.8 MJ/Nm3, and the reference price according to thePurchasers published tariff
was 400 PLN/1000Nm3.
 14.4
        As long as thePurchaserhas a published gas tariff including price for the GZ-41.5 gas, theGas Priceshall be adjusted with any change of such GZ-41.5 tariff price, as of the beginning of theContract Monthimmediately following the effective date of any such change, according to the following formula:
  PGU(t) = PGU(t-1) * [PT(t)/ PT(t-1)] Where: PGU(t) Gas Pricepayable forGasdelivered in theContract Month(t)following the effective date of the tariff price change and in allContract Monthsthereafter until a subsequent tariff change (provided that in case of the first adjustment following the execution of thisAgreement: PGU(t-1) = PGU(0)); PGU(t-1) Gas Priceapplicable in theContract Monthimmediately preceding theContract Month(t); PT(t)  price of GZ-41.5 gas according to thePurchasers tariff effective as of the first day of theContract Month;  12    PT(t-1)  price of GZ-41.5 gas according to thePurchasers tariff immediately preceding the tariff being in effect as of the first day of theContract Month(provided that in case of the first adjustment following the execution of thisAgreement: PT(t-1) = 400 PLN/1000Nm3).
 The foregoing rules regardingGas Priceadjustment shall also apply,mutatis mutandis, to any change of thePurchasers tariff occurring between 14 July 2005, and theProduction Commencement Day. 14.5
        Should thePurchasercease to have a published tariff including price for the GZ-41.5 gas, or should the structure of the tariff prices and fees change to the extent that the original economic equilibrium between the Parties would be distorted, thePartiesshall meet immediately upon the request of either of them and shall negotiate in good faith a change in theGas Priceadjustment formula, so as to fairly reflect the principle stated in Section 14.3 above.
 14.6
        If the actual gross calorific value of theGasdelivered is different than 31.07 MJ/Nm3, then theGas Priceshall be adjusted according to the following formula:
 PGU(C) = (PGU(t) * GCV)/ 31.07 MJ/Nm3 Where: PGU(C) Gas Pricepayable for theGasdelivered in theContract Month, adjusted for actual calorific value PGU(t) Gas Pricecalculated in accordance with Sections 14.3-14.4 above GCV- average gross calorific value of theGasdelivered in theContract Month, calculated in accordance with Appendix No. 1, expressed in MJ/Nm3. 14.7
        Numbers used in the calculation of theGas Priceshall be rounded up or down to the fifth (5) decimal place inclusive, and the resultingPGUvalues shall be rounded up or down to the second (2) decimal place. Numbers shall be rounded down if the digit subject to rounding is in the range between 0 and 4 inclusive, and shall be rounded up if the digit subject to rounding is in the range between 5 and 9.
 14.8
        TheGas Priceand all other amounts stated herein are net of the VAT, excise, any similar tax or public charges. ThePurchasershall pay to theSeller(or to the relevant tax administration, if so required by the applicable regulations) all amounts due in respect of the VAT and any other taxes or public charges imposed with respect to the delivery and sale of theGashereunder.
 14.9
        Without prejudice to Section 14.8 above, theSellershall pay and shall be responsible for the payment of all taxes or any other public charges imposed in respect of the recovery, production, processing, transportation, supply or sale of theGasto theDelivery Point, and thePurchasershall pay and shall be responsible for the payment of all taxes or any other public charges which are charged or imposed in respect of theGasdownstream of theDelivery Point.
 14.10
        AllDaily Nominated QuantitiesofGasin excess of theDCQshall, if delivered, be paid for by thePurchaserat the prevailingGas Pricedue hereunder, provided always that:
 (a)
        theSellershall be under only a reasonable endeavours obligation to cause such quantities ofGasto be delivered;
 (b)
        theSellershall not incur any liability, cost or charge to thePurchaserin respect of such quantities ofGasthat are not delivered on anyContract Day; and
  13    (c)
        theMaximum Annual Contract Quantityshall not be reduced by the amount of any quantities of suchGasthat are not delivered on anyContract Day.
 IX INVOICING AND PAYMENTS §  15 15.1
        Invoices shall be issued within seven  (7) days after the end of eachContract Monthbased on theMonthly Statements,and taking into account any adjustments thereto which may have been agreed upon by theParties.
 15.2
        The amounts due shall be paid by wire transfer from the bank account of thePurchaserto the bank account notified in writing by theSellerby the 30th calendar day following the end of theContract Monthof delivery.
 15.3
        Each of thePartiesrepresents to the other that it is a VAT payer.
 15.4
        ThePurchaserauthorizes theSellerto issue invoices without thePurchasers signature.
 §  16 16.1
        Payment shall be deemed to be made on the date of crediting the bank account of the recipient.
 16.2
        If any of thePartiesdefaults in its payment obligations hereunder, it shall pay the other interest on the amount in default at a rate equal to the statutory rate established pursuant to Article 359 of the Polish Civil Code, calculated for each day of the default. If the statutory rate ceases to be published, the applicable rate shall be agreed upon by thePartiesin an annex hereto. Interest for default shall be payable against an accounting note.
 16.3
        ThePartiesshall notify to each other of any changes in the description or the number of their respective bank accounts, and their notice shall specify both the former and the current account details. APartywhich defaults in these obligations shall indemnify the other for all losses resulting from the default.
 §  17 17.1
        Any complaints regarding invoices must be made in writing within ten (10)Business Daysafter receipt.
 17.2
        If the complaint refers to a manifest error (e.g. a mathematical error), then thePartyreceiving the invoice shall be authorized to calculate the correct amount and pay such correct amount only within the time specified in Section 15.2, provided that it gives the issuingParty, no later than on the date of payment, a written notice explaining its calculation. The latterPartyshall issue a correction invoice, without any delay after agreeing the correct amount with the former.
 17.3
        If anyPartydisputes an invoice for reasons other than those stated in Section 17.2, it shall pay the undisputed amount, if any, within the time specified in Section 15.2 and shall undertake steps aimed at the resolution of the dispute in accordance with §12 or §24 hereof, depending on the nature of the dispute.
 17.4
        Neither any complaint concerning an invoice other than with respect to an issue referred to in Section 17.2 above, nor the occurrence of any dispute referred to in Section 17.3 above, shall release aPartyfrom its duty to timely pay any amounts due.
 17.5
        The provisions of this Chapter IX shall also apply,mutatis mutandis, to payment against, and complaints concerning, accounting notes.
  14    X FORCE MAJEURE §  18 18.1
        Subject to Section 18.3 below, neitherPartyshall be liable hereunder for failure to perform its obligations if it can prove that:
 (a)
        the failure has been caused by an extraordinary, external event independent of its will, hereinafter called an event ofForce Majeure;
 (b)
        it could not, upon entering into thisAgreement,in spite of acting with reasonable diligence, foresee the occurrence of the event or its consequences affecting the performance of theAgreement;
 (c)
        it could not, in spite of acting with reasonable diligence, either avoid or overcome the event or its consequences.
 18.2
        ThePartieshereby undertake to provide each other with a written and documented notice in writing regarding the occurrence of aForce Majeureevent, as soon as possible after they become aware thereof, and to make all efforts to bring theForce Majeurecircumstances to an end, or to minimize their effects.
 18.3
        The occurrence of aForce Majeuredoes not excuse thePurchaserpaying any amounts due or taking anyGasin the period preceding the occurrence, or payment for anyGasrepresenting partial take by thePurchaserduring the occurrence ofForce Majeure.
 18.4
        If an event or series of events (alone or in combination) ofForce Majeureoccur, and continue for a period in excess of one hundred and eighty (180) consecutive days, and the effect of such events is to reduce the ability of theSellerto deliver or thePurchaserto take theDCQby more than fifty (50) per cent on average during that period, then theSellerand thePurchasershall meet to agree on any amendments to the terms of thisAgreementto enable them to perform theAgreementdespite the existence ofForce Majeure. If thePartiesdo not reach agreement within thirty (30) days, the dispute shall be resolved pursuant to §24, provided that eitherPartymay request the arbitration panel to consider termination of theAgreement.
 XI PLANNED MAINTENANCE WORK § 19 19.1
        In anyContract Yeareach of thePartiesshall be entitled to conduct thePlannedMaintenance Work, provided that the aggregate duration of thePlanned Maintenance Workshall not exceed 14 (fourteen)Contract Daysin anyContract Year.
 19.2
        ThePartiesundertake to make all efforts to coordinate the timing of their respectivePlanned Maintenance Workwith each other and with theOperatorso that theirPlannedMaintenance Workis conducted on the same days to the extent possible. In any event, eachPartyshall notify the other of itsPlanned Maintenance Workschedule prior to the end of the precedingContract Year.
 19.3
        In addition, thePartiesshall inform each other in writing of the date of the commencement of anyPlanned Maintenance Work, no less than 14 (fourteen) calendar days in advance.
  15    19.4
        During the period ofPlanned Maintenance Work, each Party shall have the right to interrupt or decrease the delivery or take of theGas,as applicable.
 XII TERMINATION § 20 20.1
        TheAgreementshall terminate:
 (a)
        on theProduction ClosureDay;
 (b)
        on the effective date of termination notice if theAgreementis terminated pursuant to §21 below;
 (c)
        upon notice of eitherPartyif theConcessionexpires or is terminated and is not replaced or its lack is not otherwise remedied within six months; or
 (d)
        as specified in Section 3.3.
 20.2
        Termination of theAgreementshall be without prejudice to anyPartys receivables, rights or remedies claims based hereon, and shall not affect any obligations which are expressly stated to survive termination.
 § 21 21.1
        If any of the following circumstances occur:
 (a)
        aPartyfails to pay to the other an amount due unless reasonably disputed and payable hereunder if the default continues for at least 30 days and the amount in default is at least equal to 10% of the relevantAnnual Contract Quantitymultiplied by theGas Priceapplicable as of the first day of thatContract Year
 (b)
        aPartybecomes insolvent, or enters into arrangements with its creditors pursuant to the laws governing bankruptcy and composition proceedings, or enters into liquidation.
 (c)
        theSellersells anyGasfrom theZaniemysl Fieldto a third party without thePurchasers consent, provided that thePurchasercomplies with its obligations hereunder and is not affected by Force Majeure
 the otherPartymay terminate thisAgreementpursuant to Section 21.2 below. 21.2
        ThePartyentitled to terminate theAgreementfor reasons specified in Section 21.1 above, shall give the other a reasoned and properly documented written notice specifying the reasons and date of termination of theAgreement. The termination date cannot be earlier than 30 days after delivery of the notice to the otherParty. ThePartyproviding the other with a notice of termination shall be entitled to immediately suspend the delivery or take of theGas, as applicable. During the notice period thePartiesshall attempt to remedy the reasons and effects of the termination event. If these efforts are unsuccessful or if they cannot be successful for objective reasons, theAgreementshall terminate on the day specified in the notice, or on such other day as thePartiesmay agree.
 21.3
        In the event of termination for reasons specified in Section 21.1, thePartywho has committed theBreachreferred to in Section 21.1 shall pay the other liquidated damages in the amount equal to three times of the value of theMACQfor theContract Yearpreceding theContract Yearin which the termination occurs, calculated pursuant to theGas Price PGU(t).applicable as at the date of termination.
  16    21.4
        In the event of termination of theAgreement, amounts payable by thePurchaserin respect of theOutstanding Quantitiesshall become payable as of the termination day, and thePurchasershall have no right to take theOutstanding Quantitiesof theGaspursuant to Section 7.4. If termination occurs as a result of aBreachby theSeller, then the amounts paid by thePurchaserin respect ofOutstanding Quantitiesshall be credited against thePurchasers liabilities hereunder which are due and payable as of the date of termination.
 XIII FINAL PROVISIONS §  22 22.1
        In addition to theAgreement, relationships between theSellerand thePurchasershall be governed by:
 (a)
        The Geological and Mining Law of 4 February 1994 (Dz. U. No. 27, Item 96, as amended);
 (b)
        The Ordinance of the Minister of the Economy dated 28 June 2002 concerning health and safety at work, operations management and specialised fire protection in mining establishments extracting minerals through wells (Dz.U. No. 109, Item 961);
 (c)
        The Ordinance of the Minister of the Economy dated 11 August 2000 concerning inspections conducted by energy enterprises (Dz. U. No. 75, Item 866);
 (d)
        The Civil Code dated 23 April 1964 (Dz. U. No. 16, Item 93, as amended);
 (e)
        The Law on Measurements of 11 May 2001 (Dz.U. No. 63, Item 636);
 22.2
        If, as a result of an extraordinary change of technical, economic or legal circumstances, the performance hereof would become unduly difficult or threaten to cause glaring losses to aPartyorParties, which could not be foreseen upon entering into thisAgreement, eitherPartymay request that the terms of thisAgreementbe adjusted to the changed circumstances within three months from submission of a reasoned written request to the otherParty, and thePartiesshall make best efforts to adjust theAgreementin accordance with the request. If thePartiesdo not reach agreement within the said period, the dispute shall be resolved pursuant to §24, provided that eitherPartymay request the arbitration panel to consider termination of theAgreementif it believes that theAgreementcannot be modified without disrupting the original economic equilibrium between theParties.
 22.3
        Should any individual provisions of thisAgreementbecome void by operation of law, the validity of the other provisions of theAgreementshall not be affected thereby. ThePartiesundertake to negotiate in good faith to replace the void provisions with new ones, to preserve the economic objectives of theAgreementand the original intent of theParties.
 22.4
        ThePartiesacknowledge that theDelivery Systemshall be owned and operated under theJoint Operating Agreement. Wherever thisAgreementobliges theSellerto undertake any action or incur any expenses with respect theMetering Systemor any other component of theDelivery System, it is understood that the action is to be undertaken and the expense incurred by all parties to theJoint Operating Agreementin accordance with their interests therein, and both
theSellerand thePurchaseras parties to theJoint Operating Agreementshall make all efforts to procure the necessary steps to be undertaken.
 §  23 23.1
        Non-performance or improper performance by aPartyof its duties hereunder may entitle the otherPartyto liquidated damages where provided for in thisAgreement.
  17    23.2
        Subject to Section 23.3, neitherPartymay claim compensation (for aBreach) in excess of the liquidated damages specified herein.
 23.3
        If no liquidated damages are prescribed herein with respect to a givenBreachresulting from a default by eitherParty,the otherPartycan claim compensation for documented loss resulting directly from suchBreach, excluding loss of profit. In any event, the aggregate liability of eitherPartyin respect of all such events ofBreach(otherthan a default of any express payment obligations, including the obligations specified in Section 7.2) occurring in anyContract
Yearshall be limited to 5% of the relevantAnnual Contract Quantitymultiplied by theGas Priceapplicable as of the first day of thatContract Year.
 23.4
        To the extent aBreachby theSelleris caused by non-performance or improper performance by theOperatorof its duties under theJoint Operating Agreement, theSellers liability hereunder shall be limited in the same way as theOperators liability vis-à-vis theSellerunder theJoint Operating Agreement, provided that if thePurchaserceases to be theOperator, any reduction of the scope of liability of theOperatorunder theJoint Operating Agreementshall be ineffective for the purposes hereof, unless such a change is approved by thePurchaser.
 23.5
        Notwithstanding any other provision in this Agreement to the contrary, as long as thePurchaseror itsAffiliateremains theOperator,theSellershall be free from liability for aBreachhereunder to the extent it can demonstrate that theBreachwas caused by action or omission of theOperator.
 23.6
        For the avoidance of doubt, theSellershall not be liable for non-delivery ofGasor improper quality of theGasdelivered, if the same results from geological conditions.
 §  24 24.1
        ThePartiesshall attempt to resolve all disputes arising out of or in connection with thisAgreementby direct negotiations. If thePartiesdo not resolve the dispute within three (3) months from the delivery of eitherPartys invitation to negotiations to the other, the dispute shall be resolved by arbitration under the UNCITRAL Arbitration Rules then in force upon notice by anyPartyto the otherParty.
 24.2
        The arbitral tribunal shall consist of three arbitrators. EachPartyto the dispute shall appoint one arbitrator. The two arbitrators appointed by thePartiesshall by agreement appoint the third arbitrator. In default of an agreement within fourteen (14) days onePartyto the dispute may require the appointment of the third arbitrator, in which case the third arbitrator shall be appointed by the President of the Polish Arbitration Association (Prezes Polskiego Stowarzyszenia S1downictwa Polubownego).
 24.3
        The venue of arbitration proceedings shall be Warsaw. The decision of the arbitral tribunal, and, in the case of difference among the arbitrators the decision of the majority, shall be final and binding upon thePartiesto the dispute.
 24.4
        The existence of any dispute shall not excuse eitherPartys performance of its obligations hereunder.
 24.5
        The provisions of this §24 shall survive the termination of thisAgreement.
 24.6
        If thePartiesagree on any interpretation of thisAgreement,such an interpretation shall become binding thereon upon its signature by allParties.
  18    § 25 25.1
        Any transfer to a third party of the rights and obligations arising hereunder without the consent of the otherPartyshall be null and void, unless permitted under the provisions below.
 25.2
        Any sale proceeds or other monetary receivables accruing hereunder shall be freely assignable.
 25.3
        EitherPartyshall be entitled, without the prior consent of the other, to assign, pledge or establish another security interest in all or any of their rights, interests, benefits and obligations under thisAgreementto a bank or another financial institution to secure the payment of any indebtedness incurred or to be incurred.
 25.4
        TheSellermay transfer its rights and obligations hereunder to anAffiliateor any other party which becomes the assignee of its interest in theJoint Operating Agreementin accordance with the terms thereof, pro rata to the interest in theJoint Operating Agreementso assigned.
 25.5
        ThePurchasermay transfer its rights and obligations hereunder to anAffiliateor any other party, subject to Section 25.6.
 25.6
        ThePartytransferring its rights and obligations shall not be released from its obligations under theAgreementunless and until the transferee takes over (subject always to the otherPartyconsent, which shall not be unreasonably withheld), by way of a written instrument, all obligations arising under thisAgreementin relation to the otherParty.
 §26 ThisAgreement,all information regarding any disputes in connection herewith, and all information provided by thePartiesto each other hereunder, shall be subject to theConfidentiality Agreementattached hereto as Appendix No.2, provided that nothing in theConfidentiality Agreementor herein shall be interpreted to restrict anyPartys rights to arbitrate or enforce arbitration awards. § 27 27.1
        Except as otherwise specifically provided, all notices authorized or required between thePartiesby any of the provisions of thisAgreement, shall be in writing, in Polish or in English, and delivered in person or by registered mail or by courier service with confirmed delivery, or r by any electronic means of transmitting written communications which provides written confirmation of completed transmission. The originating notice given under any provision of thisAgreementshall be deemed delivered only when received by thePartyto whom such notice is directed, and the time for thatPartyto
deliver any notice in response to such originating notice shall run from the date the originating notice is received. Any communications shall be delivered to the following addresses of the Parties (or such other address as thePartyconcerned may communicate to the other in accordance herewith):
 Purchaser:
        Polskie Gornictwo Naftowe i Gazownictwo S.A.
 ul. Krucza 6/14 00-537 Warsaw, Poland Attention: Director of Commercial Department Phone:  +48 22 691 79 28 Fax:  +48 22 691 83 77 Seller:
        FX Energy Poland Sp. z o.o.
 Ul. Chalubinskiego 8 00-613 Warsaw,Poland Attention: Zbigniew Tatys, Country Manager Phone:  +48 22 6306633 Fax:  +48 22 6306632  19    With copy to: FX Energy, Inc. 3006 Highland Drive # 206 Salt Lake City Utah 84106 USA Attention: Clay Newton Phone: +1 801 486 5555 Fax:
        +1 801 486 5575
 27.2
        Any amendment to the provisions of thisAgreementmust be in the form of a written annex or shall otherwise be null and void.
 27.3
        ThisAgreementconstitutes the full understanding between thePartiesand supersedes all their prior negotiations, correspondence or agreements regarding the sale of gas from theZaniemysl Fieldwithin the scope covered hereby.
 27.4
        ThisAgreementand the Appendices hereto are executed in two identical counterparts, one for each of theParties.
 SELLER
        PURCHASER[Two illegible signatures]
        [Name stamps and illegible signatures of S3awomir Nesterowicz, Tomasz Jaskólski and Grzegorz JawiÑski]
  APPENDIX NO. 1 TECHNICAL CONDITIONS FOR DELIVERY OF GAS TO THE PURCHASER 1. DEFINITION OF GZA Greater Zaniemysl Area  an area identified by the following geographical coordinates: Eastern longitude
        Northern latitude1
        17°05 ́26.2
        52°07 ́00.82
        17°10 ́46.5
        52°11 ́17.03
        17°20 ́11.0
        52°07 ́02.04
        17°22 ́49.5
        52°06 ́34.45
        17°21 ́28.0
        52°02 ́43.56
        17°15 ́47.4
        52°02 ́34.67
        17°13 ́35.1
        52°03 ́01.38
        17°11 ́17.0
        52°03 ́49.89
        17°08 ́55.9
        52°04 ́40.1
 Natural gas will be produced from the Zaniemysl Field pursuant to the Joint Operating Agreement. 2. DEFINITION OF THE ZANIEMYSL FIELD Zaniemysl Field  means the gas field located on the Wielkopolska Plain, Gmina Zaniemysl, Wielkopolskie Voivodeship, in the vicinity of Srem, Zaniemysl and Ksiaz Wielkopolski, developed through the Zaniemysl-3 well, with the following geographical coordinates: Eastern longitude
        Northern latitude17°10 ́53
        52°06 ́18
   20    3. DESCRIPTION and schematic of the GAS STATION with its METERING SYSTEM and DELIVERY POINT The Gas Station will contain the following equipment: 
        DN100 inlet and outlet  pipelines;
 
        FG-WS type filter-separator manufactured by GAZOMET Rawicz;
 
        U-2 type metering system with turbine type gas meters manufactured by CAMMON £ód;
 
        Control and metering equipment manufactured by KFM W3oc3awek;
 
        Electronic devices manufactured by EMERSON Warszawa and PLUM Bia3ystok;
 
        Gas moisture content measurement equipment manufactured by AMETEK, with a sample collector; and
 
        Shutdown valves manufactured by GAZOMET Rawicz.
 The schematic showing the gas station layout is attached hereto. 4. METHODS and PROCEDURES FOR MEASURING QUANTITY and QUALITY (including pressure and temperature) OF SUPPLIED GAS The quantity of the gas delivered and taken by the Operator will be measured at the Gas Station in accordance with the terms of the PGNiG S.A. Company Standards, series ZN-G 4001-4010: 2001 Gas flow at the delivery metering station will be measured by turbine type gas meters in a U-2 metering system arrangement, with two metering lines, one of which will be an operating line and the other a control line. The control meter line is in series with the operating metering line and its capacity set in such a way to enable it to control the operating line. If the operating line needs to be shut down temporarily, then the control metering line will serve as the sole backup metering line for that period. The turbine gas meters will be supported by the following electronic devices: 
        3051T absolute pressure transmitter  manufactured by FISHER-ROSEMOUNT;
 
        Pt100 resistance temperature sensors with 3144P processors manufactured by FISHER-ROSEMOUNT; and
 
        MacMAT II microcomputer gas volume converters manufactured by PLUM Bia3ystok.
 Turbine type gas meters will be fitted with low frequency (LF) and high frequency (HF) impulse transmitters. Metering signals converting Gas volumes from the MacMAT II micro-computer gas volume converter will be transmitted via an RS link to the facilities control system. Gas moisture content will be measured by a 3050-OLV gas moisture analyser manufactured by AMETEK. Metering signals from the gas moisture analyser will be transmitted via an RS link to the facilities control system. The sampling system feeding gas into the gas moisture content analyser is to be installed at the outlet of the metering system. Data between OG Zaniemysl and OC Kaleje will be transmitted by fibre-optical cable and by GPRS transmission to KGZ Radlin. Measurement of Gas quality at the point of delivery: a) Content of hydrocarbons, nitrogen and other chemical compounds or elements  not less than once in a Contract Month; b) hydrogen sulphide content  yearly; c) carbon dioxide content  every six months; d) mercury vapour content  every two months;  21    e) dust content  twice yearly  once in summer and once in the winter; f) total sulphur content  no less than once in a year; g) water dew-point determination  continuous measurement; h) hydrocarbon dew-point determination  measurement once a year in the winter period; i) gross calorific value  assigning the gross calorific value to tranches of gas export - no less than once in a Contract Month; j) net calorific value - assigning net calorific value to tranches of gas export - no less than once in a Contract Month; and k) Wobbe number - assigning Wobbe number to tranches of gas export - no less than once in a Contract Month. 5. RULES FOR ADJUSTMENT OF MONTHLY STATEMENTS / ANNUAL STATEMENT IN THE CASE OF A MALFUNCTION OF THE METERING SYSTEM 5.1. If the operating metering line needs to be shutdown temporarily, its function is taken over by the control (backup) metering line. 5.2. Inspection of the Metering System is carried out in accordance with PGNiG S.A. Company Standard No. ZN-G-4003:2001, no less than once every three months at a time agreed between the metering personnel of both Parties. 5.3. Regarding the requirements and procedures applicable to the method of metering and the operation and control of the Metering System. Where these are not specified in the Agreement or this Appendix, the Parties will follow the appropriate PGNiG S.A. Company Standards No. ZN-G-4001 to 4010:2001. 5.4. If an inspection of the operating gas meter readings shows that the difference between readings of the operating gas metering line and the control gas metering line exceeds 2.0% of the determined hourly volume, both gas meters must be checked: In the event of: 
        a malfunction of only the control gas metering system, operation and monthly settlement proceeds as normal;
 
        a malfunction of the operating gas metering system, while the control metering system is proven to work correctly, the readings of the control metering system will be used for accounting purposes, with an appropriate readings adjustment being made for the period between the time when the malfunction of the operating metering system arose and the time when the readings of the control metering system was first used for accounting purposes.
 5.5. During the period when such a fault is evident in the operating gas metering system the erroneous readings of Gas volumes will be adjusted by: 
        calculating the average error of the operating gas meter during this period across the metering range;
 
        calculating the correction factor resulting from the average error of the operating gas meter; and
 
        calculating the adjusted Gas volume.
 5.6. In the case of uncertainty as to when the error commenced, then half of the period from the last reading approved by the Parties by way of signing the monthly statement will be deemed to be the period for which the adjustment is required. 5.7 If one of the Parties to the Agreement voices objections with respect to metering accuracy, and the checking of the Metering System proves that the objection to be legitimate, an adjustment shall be made from the date the inaccuracy is reported until the date the causes of the erroneous metering is eliminated.  22    6. GUIDELINES FOR THE PREPARATION OF DAILY REPORTS FOR INPUT TO THE MONTHLY AND ANNUAL STATEMENTS 6.1 Information on daily gas delivery volumes will be sent through a dispatcher and additionally by fibre-optical cable between OG Zaniemysl and OC Kaleje, and by GPRS transmission to KGZ Radlin. POGC will provide its partners with access to the electronic volumetric transmission data network. Each party will pay for its own telemetry access costs. Daily and monthly reports will be made available by the Operator through the aforementioned network in the form of electronic information summaries. Daily and monthly reports, and corrections of monthly reports, if any, shall be made by the Operator. 6.2 A daily report will specify: 
        The volume of gas taken, and converted by reference to normal conditions, for each hour plus a summary for the Contract Day,
 
        Average hourly pressure and temperature figures.
 6.3. Reports with a temporary settlement adjustment (if applicable) for a metering system malfunction will be implemented directly in the electronic volume converter or in a computer equipped with specialist software based on data from the converter. A monthly report will specify: 
        for individual days of the month:
 1.
        gas pressure and temperature (minimum, maximum and average daily figures); and
 2.
        daily gas volumes before correction (based on the gas meter) and after any correction for normal conditions (based on the converter)
 
        monthly average:
 1.
        gas pressure and temperature;
 
        monthly gas volumes totalled from daily figures:
 1.
        gas volume before any correction (based on the gas meter) and after any correction for normal conditions (based on the converter);
 2.
        adjustments (if applicable) for metering system malfunctions; and
 3.
        monthly delivery plans.
 Daily and monthly reports shall constitute the basis for making the Monthly Statement. The Operator shall provide the monthly report on the first business day following the end of each month, so as to enable the Seller to make a Monthly Statement within the period prescribed, i.e. within two Business Days after the end of the Contract Month in which the delivery has occurred. 7. DESCRIPTION OF THE GAS NETWORK CONNECTING THE DELIVERY POINT TO THE EXISTING DRZONEK-KLEKA GAS PIPELINE Gas from the Zaniemysl facilities station will be transmitted over an approximate 12 km high-pressure Kaleje-Mchy pipeline to the transmission system of OGP Gaz-System, Poznan Branch. The gas pipeline will be utilisedto transmit low-methane natural gas (class Lw), produced in the Kaleje and Zaniemysl fields, to the existing DN 200/250 Drzonek-Kleka system pipeline. The basic gas pipeline: specification is DN 250; PN 8,4 MPa; the projected pipeline throughput capacity will be in the range of 30  80 thousand m3/h. The connection of the Kaleje-Mchy gas pipeline to the existing Drzonek Kleka system pipeline will be made at Mchy, where a high-pressure metering station will be constructed in accordance with transmission regulations issued by the Regional Transmission Branch (ROP) Poznan; the metering station will have a capacity Qnom = 30 thousand m3/h (Maximum Operating Pressure MOP=8.4 MPa, min. input pressure = 6.2 MPa, min. output pressure = 6.2 MPa), and will be fitted with: 
        Isolation valves upstream of the inlet and downstream of the outlet system connection ;
 
        Input and output block and bleed systems;
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        Filter-separator system; and
 
        Metering system.
 8. GAS QUANTITY NOMINATION/ORDERING PROCEDURES The Purchaser shall notify the Daily Nominated Quantities (DNQ) to the Seller and the Operator no less than 24 hours before the beginning of the Contract Day for which the DNQ is specified. If the Purchaser agrees with the Seller and the Operator rules for nominating the quantity of the gas taken in a more detailed manner than is specified in §6 of the Agreement or herein, such procedures, as agreed between the Parties and the Operator, will become an attachment to this Appendix 1. In the event of a conflict between the rules and the provisions of the Agreement, the provisions of the Agreement will prevail. 9. CALCULATION OF MONTHLY AVERAGE GROSS CALORIFIC VALUE OF THE GAS The calorific value for natural gas leaving the field shall be determined no less than once in a Contract Month. The Gross calorific value will be determined by a laboratory certified by the Polish Certification Center. If more than one measurement of the Gross calorific value is made in a Contract Month, then the average Gross calorific value shall be calculated as the mathematical average of all of the measurements taken. Annual average Gross calorific value shall be calculated as the mathematical average of the monthly average figures. 10. GAS QUALITY SPECIFICATION Gas supplied by the Seller shall conform to the requirements concerning the quality of gas transmitted under high pressure through the gas transmission system in accordance with the following standards: PN-C-04752 November 2002 Natural gas  quality of gas in the transmission system and PN-C-04753 December 2002 Natural gas  quality of gas supplied to customers from the distribution network (to the extent the standard PN-C-04752 refers to standard PN-C-04753 for the Lw class of gas). [A chart showing the gas station layout is attached]  APPENDIX NO. 2 CONFIDENTIALITY AGREEMENT OF 24 FEBRUARY 2005  24