Exhibit
10.7  RISK SERVICES AGREEMENT  BETWEEN   Sociedade Nacional de Combustíveis de Angola
- Empresa Pública (Sonangol, E.P.)  and  CIE Angola Block 9 Ltd.  Sonangol Pesquisa e Produção, S.A.  Nazaki Oil and Gáz, S.A. and   Alper Oil, Lda   in the  Area of Block 9/09


TABLE
OF CONTENTS  Article
  
  PageArticle 1 (Definitions)
  2Article 2 (Annexes to the Agreement)
  9Article 3 (Object of the Agreement)
  9Article 4 (Nature of the relationship between
  the Parties)
  10Article 5 (Duration of the Agreement)
  10Article 6 (Exploration Period)
  10Article 7 (Production Period)
  12Article 8 (Operator)
  13Article 9 (Petroleum Operations Procedures
  Document)
  14Article 10 (Payment from Sonangol to Contractor
  and production allowance)
  14Article 11 (Petroleum Operations costs and
  expenses)
  17Article 12 (Lifting and disposal of Crude Oil)
  17Article 13 (Conduct of Petroleum Operations)
  18Article 14 (Work obligations during the
  Exploration Period)
  20Article 15 (Exploration Work Plans and Budgets)
  23Article 16 (Commercial Discovery)
  23Article 17 (General Development and Production
  Plan)
  24Article 18 (Development and Production Work
  Programs and Budgets)
  25Article 19 (Lifting Schedule)
  25Article 20 (Guarantees)
  26Article 21 (Bonus and contributions)
  27Article 22 (Conservation of Petroleum and
  prevention of loss)
  29Article 23 (Records, reports and inspection)
  30Article 24 (Contractors obligation to purchase
  Sonangols Petroleum)
  31Article 25 (Other rights and obligations
  related to Crude Oil disposal)
  32Article 26 (Unitization and joint Development)
  32Article 27 (Transfer and abandonment of assets)
  33Article 28 (Natural Gas)
  34Article 29 (Operations for Sonangols account -
  sole risk)
  34Article 30 (Operating Committee)
  38Article 31 (Ownership of assets)
  41Article 32 (Property and confidentiality of
  data)
  41Article 33 (Responsibility for losses and
  damages)
  43Article 34 (Petroleum Operations risk
  management)
  43Article 35 (Recruitment, integration and
  training of Angolan personnel)
  44Article 36 (Double taxation and change of
  circumstances)
  45Article 37 (Assignment)
  45Article 38 (Termination of the Agreement)
  47Article 39 (Confidentiality of the Agreement)
  49Article 40 (Dispute Resolution)
  49Article 41 (Force Majeure)
  50Article 42 (Applicable Law)
  51Article 43 (Language)
  51Article 44 (Offices and service of notice)
  51Article 45 (Captions and headings)
  52Article 46 (Effectiveness)
  52Annex A - Description
  of the Contract Area
  54Annex B . Map of the Contract
  Area
  55Annex C - Accounting
  and Financial Procedures
  56Annex D - Corporate
  Guarantee
  71Annex E - Financial
  Guarantee
  73  i


THIS AGREEMENT IS ENTERED INTO
BETWEEN:  on the one part:  Sociedade Nacional de Combustíveis de
Angola - Empresa Pública (Sonangol, E.P.), hereinafter referred to as Sonangol, a company with headquarters in
Luanda, Republic of Angola, created in accordance with Decree n°. 52/76, of 9 June 1976;  and, on the other part:  CIE Angola Block 9 Ltd., a company organized and existing under
the laws of Cayman Islands, hereinafter referred to as Cobalt, with offices and legal
representatives in Luanda, Republic of Angola; and  Sonangol Pesquisa e Produção, S.A., hereinafter referred to as Sonangol P&P, a company with
headquarters in Luanda, Republic of Angola, created in accordance with
Resolution 4/91, of 6 December 1991, from the Standing Committee of the
Council of Ministers;  Nazaki Oil and Gáz, S.A., a company organized and existing under
the laws of Angola, hereinafter referred to as Nazaki, with offices and legal representatives in Luanda,
Republic of Angola; and  Alper Oil, Lda, a company organized and existing under
the laws of Angola, hereinafter referred to as Alper, with offices and legal representatives in Luanda,
Republic of Angola.  Recitals  WHEREAS, through the Concession Decree-Law No 15/09,
of June 11, the Government of the Republic of Angola, in accordance with the
Petroleum Activities Law (Law Nr. 10/04, of November 12), has granted Sonangol
an exclusive concession for the exercise of the mining rights for Exploration,
Development and Production of liquid and gaseous hydrocarbons in the concession
area of Block 9/09;  WHEREAS, under Concession Decree-Law No 15/09,
of June 11, the Government has authorized Sonangol to enter into a Risk
Services Agreement for Block 9/09;  WHEREAS, Sonangol, with a view to carrying out
the Petroleum Operations necessary to duly exercise such rights and in
compliance with the obligations deriving from the Concession  1


TRANSLATION  Decree-Law, wishes to sign a Risk Services Agreement
with Contractor;  WHEREAS, the Government, through the Decree No 3/10
of January 21 has, pursuant Article 45.1(a) of the Petroleum
Activities Tax Law, established the production allowance for the Block;  WHEREAS, Sonangol, on the one hand, and
Contractor, on the other hand, have agreed that this Agreement is the Risk
Services Agreement mentioned above and will regulate their mutual rights and
obligations in the execution of said Petroleum Operations.  NOW, therefore, Sonangol, on the one hand, and Contractor
on the other hand, agree as follows:  Article 1 (Definitions)  For the purposes of this Agreement, and unless
otherwise expressly stated in the text, the words and expressions used herein
shall have the following meaning, it being understood that reference to the
singular includes reference to the plural and vice versa:  1.Affiliate means:  (a)a company or any other entity in which any of the
Parties holds, either directly or indirectly, the absolute majority of the
votes in the shareholders meeting or is the holder of more than fifty percent
(50%) of the rights and interests which confer the power of management of that
company or entity, or has the power of management and control over such company
or entity; or  (i)ttttttt  (b)a company or any other entity which directly or
indirectly holds the absolute majority of votes at the shareholders meeting or
equivalent corporate body of any of the Parties or holds the power of
management and control over any of the Parties; or  (c)a company or any other entity in which either the
absolute majority of votes in the respective shareholders meeting or the
rights and interests which confer the power of management of said company or
entity are, either  2


directly or indirectly,
held by a company or any other entity which directly or indirectly holds the absolute
majority of votes at the shareholders meeting or equivalent corporate body of
any of the Parties or holds the power of management and control over any of the
Parties.  2.Agreement or the Agreement means this Risk
Services Agreement executed between Sonangol and Contractor, including its
Annexes.  3.Angola means the Republic of Angola.  4.Angolan Training Decree means Decree n°. 17/09, of June
26, regarding the training of Angolan nationals by foreign corporations.  5.Appraisal means the activity carried out after the
discovery of a Petroleum deposit to better define the parameters of the deposit
and determine its commerciality, including namely:  (a)drilling of Appraisal Wells and running depth tests;  (b)collecting special geological samples and reservoir
fluids;  (c)running supplementary studies and acquisition of
geophysical and other data, as well as the processing of same data.  6.Appraisal Well means a Well drilled following a
Commercial Well to delineate the physical extent of the accumulation penetrated
by such Commercial Well, and to estimate the accumulation reserves and probable
Production rates.  7.Approved Work Plan and Budget means either the
Exploration Work Plan and Budget or the Development and Production Work Plan
and Budget transmitted to Sonangol under Article 30.12, or approved by the
Operating Committee under Article 30.11, as relevant.  8.Associated Natural Gas means Natural Gas which
exists in a reservoir in solution with Crude Oil and includes what is commonly
known as gas cap gas which overlies and is in contact with Crude Oil.  9.Barrel means the unit of measure for liquids
corresponding to forty-two (42) United States gallons of Crude Oil, net of
basic sediment and water and corrected to a temperature of sixty degrees
Fahrenheit (60°F).  3


10.Commercial Discovery means the discovery of a
Petroleum deposit judged by Contractor to be worth developing in accordance
with the provisions of the Agreement.  11.Commercial Well means the first Well on any
geological structure which after testing in accordance with sound and accepted
industry Production practices, and verified by Sonangol, is found through
analysis of test results to be capable of producing, from a single reservoir
not less than an average rate of five (5) thousand Barrels of Crude Oil
per day.  Contractor shall have the right to request to Sonangol
that a Well which is within the aforesaid criteria is not to be deemed a
Commercial Well. To exercise this right, Contractor shall timely provide
Sonangol information which would evidence that in the particular circumstances
of such Well the same should not be deemed a Commercial Well.  Among other factors, consideration shall be given to
porosity, permeability, reservoir pressure, Crude Oil saturation and the
reservoir recoverable reserves.  Contractor has the option to declare a Well a
Commercial Well at a producing rate below that one set forth above where
Contractor is of the opinion that the accumulation may produce sufficient Crude
Oil to recover the costs and make a reasonable return.  12.Concession Decree-Law means Decree-Law n°. 15/09, of
June 11, approved by the Council of Ministers as it was published in the Diário
da República de Angola n°.107, I Series, of June 11 2009.  13.Contract Area means on the Effective Date the area
described in Annex A and shown on the map in Annex B, and thereafter the whole
or any part of such area in respect of which Contractor continues to have rights
and obligations under this Agreement.  14.Contract Year means the period, and successive
periods, of twelve (12) consecutive Months according to the Gregorian Calendar
beginning on the Effective Date of this Agreement.  15.Contractor means Cobalt, Nazaki, Sonangol P&P
and Alper and their possible assignees under Article 37 designated
collectively except as otherwise provided  4


herein. The participating
interests of the entities constituting Contractor on the Effective Date are:  1.
  
  CIE Angola Block 9 Ltd:
  
  40
  %2.
  
  Nazaki:
  
  30
  %3.
  
  Sonangol P&P:
  
  20
  %4.
  
  Alper:
  
  10
  %  16.Crude Oil means a mixture of liquid hydrocarbons
produced from the Contract Area which is in a liquid state at the wellhead or
in the separator under normal conditions of pressure and temperature, including
distillates and condensates, as well as liquids extracted from the Natural Gas.  17.Customs Duties means all charges, contributions or
fees established in the respective customs tariffs schedules which are
applicable to merchandise imported or exported through customs, including those
levied in accordance with the Petroleum Activities Customs Law.  18.Development means the activity carried out in a
Development Area after the declaration of a Commercial Discovery. Said activity
shall include, but not be limited to:  (a)geophysical, geological and reservoir studies and
surveys;  (b)drilling of producing and injection Wells;  (c)design, construction, installation, connection and
initial testing of equipment, pipelines, systems, facilities, plants, and
related activities necessary to produce and operate said Wells, to take, save,
treat, handle, store, transport and deliver Petroleum, and to undertake
repressuring, recycling and other secondary or tertiary recovery projects.  19.Development Area means the extent of the whole area,
within the Contract Area, capable of production from the deposit or deposits
identified in a Commercial Discovery and defined by agreement between Sonangol
and Contractor after said Commercial Discovery.  5


20.Development Well means a Well drilled for the
purpose of producing or enhancing Production of Petroleum from a Commercial
Discovery, and includes the Appraisal Wells which have been completed as
production or injection Wells.  21.Effective Date means the first day of the Month
following the Month in which this Agreement is signed by Sonangol and
Contractor.  22.Exploration shall include, but not be limited to,
namely, such geological, geochemical and geophysical surveys and studies,
aerial surveys and others as may be included in Approved Work Plans and Budget,
and the drilling of such shot holes, core holes, stratigraphic tests, Wells for
the discovery of Petroleum, and other related holes and Wells including
Appraisal Wells which have not been completed as production or injection Wells.  23.Exploration Period means the period defined in Article 6.  24.Exploration Well means a Well drilled for the
purpose of discovering Petroleum, including Appraisal Wells to the extent
permitted by Article 16.  25.Fiscal Year means a period of twelve (12)
consecutive Months according to the Gregorian Calendar which coincides with the
Civil Year and relative to which the presentation of fiscal declarations is
required under the fiscal or commercial laws of Angola.  26.Force Majeure means the concept defined in Article 41
of this Agreement.  27.General Development and Production Plan has the
meaning attributed to it in Article 17.  28.Government means the Government of the Republic of
Angola.  29.Initial Exploration Phase means the period of four (4) Contract
Years commencing on the Effective Date of the Agreement, as defined in Article 6.  30.Joint Account means the set of accounts kept by
Operator to record all receipts, expenditures and other operations which, under
the terms of the Agreement, shall be shared between the entities constituting
Contractor in proportion to their participating interests.  31.Law means the legislation in force in the Republic
of Angola.  6


32.Lifting Schedule means the planned program of Crude
Oil liftings by each Party approved by the Operating Committee.  33.Market Price means the price determined for the
valuation of the Crude Oil produced from the Contract Area as established in
accordance with Article 6 of the Petroleum Activities Tax Law.  34.Month means a calendar month pursuant to the
Gregorian Calendar.  35.National Concessionaire means Sonangol as the
titleholder of the mining rights of Exploration, Development and Production of
liquid and gaseous hydrocarbons in the Contract Area.  36.Natural Gas means any hydrocarbons produced from the
Contract Area which at a pressure of 14.7 psi and a temperature of sixty
degrees Fahrenheit (60°F) are in a gaseous state at the wellhead, and includes
both Associated and Non-Associated Natural Gas, and all of its constituent
elements produced from any Well in the Contract Area and all non-hydrocarbon
substances therein. Such term shall include residue gas.  37.Non-Associated Natural Gas means that part of
Natural Gas which is not Associated Natural Gas.  38.Operating Committee means the entity referred to in Article 30.  39.Operator is the entity referred to in Article 8.  40.Optional Exploration Phase means the additional
period of three (3) Contract Years after the Initial Exploration Phase
pursuant to Article 6.  41.Parties means Sonangol and Contractor.  42.Party means either Sonangol or Contractor as Parties
to this Agreement.  43.Petroleum means Crude Oil, Natural Gas and all other
hydrocarbon substances that may be found in and extracted, or otherwise
obtained and saved from the Contract Area.  44.Petroleum Activities Law means Law n°. 10/04, of 12 November 2004.  45.Petroleum Activities Customs Law means Law n°.
11/04, of 12 November 2004.  7


46.Petroleum Activities Insurance Decree means Decree
n°. 39/01, of 22 June 2001.  47.Petroleum Activities Tax Law means Law n°. 13/04, of
24 December 2004.  48.Petroleum Operations means the activities of
Exploration, Appraisal, Development and Production which constitute the object
of the Agreement.  49.Petroleum Operations Procedures Document is the
document referred to in Article 9.  50.Phase means the Initial Exploration Phase or the
Optional Exploration Phase, as the case may be.  51.Production means the set of activities intended to
Petroleum extraction, including, but not be limited to, the running, servicing,
maintenance and repair of completed wells and of the equipment, pipelines,
systems, facilities and plants completed during development, including all
activities related to planning, scheduling, controlling, measuring, testing and
carrying out the flow, gathering, treating, storing and dispatching of
Petroleum from the underground Petroleum reservoirs to the designated exporting
or lifting location, as well as operations for abandonment of facilities and
Petroleum deposits and related activities.  52.Production Period means the period defined in Article 7.  53.Production Plan means the planned profile of Crude
Oil output in Barrels per day approved by the Operating Committee in
conjunction with the Development and Production Work Plan and Budget for each
Development Area, according to Article 18.  54.Quarter means a period of three (3) consecutive
Months starting with the first day of January, April, July or October of
each Civil Year.  55.Serious Fault shall mean inadequate performance by
the Operator that substantially violates the technical rules generally
accepted in the international petroleum industry and/or the obligations under
this Agreement and the Law.  56.Sonangol is Sociedade Nacional de Combustíveis de
Angola, Empresa Pública (Sonangol, E.P.), an Angolan State Company.  57.State means the State of the Republic of Angola.  58.Well means a hole drilled into the earth for the
purpose of locating, evaluating, producing or enhancing production of
Petroleum.  8


59.Work Plan and Budget means either an Exploration
Work Plan and Budget or a Development and Production Work Plan and Budget.  60.Year or Civil Year means a period of twelve (12)
consecutive Months according to the Gregorian Calendar beginning on January 1
and ending on December 31.  Article 2 (Annexes
to the Agreement)  1.The present Agreement is complemented by the following
Annexes which form an integral part of it:  (a)Annex A - Description of the Contract Area;  (b)Annex B - Map of the Contract Area;  (c)Annex C - Accounting and Financial Procedures;  (d)Annex D - Corporate Guarantee; and  (e)Annex E - Financial Guarantee.  2.In the event of discrepancy between the content or the
form of Annexes A and B referred to in paragraph 1, Annex A shall prevail.  3.In the event of discrepancy between the content or the
form of the Annexes referred to in paragraph 1 and the Agreement, the
provisions of the Agreement shall prevail.  Article 3 (Object
of the Agreement)  1.The object of this Agreement is the definition, in
accordance with Law Nr. 10/04 of November 12, and other applicable legislation,
of the contractual relationship in the form of the Risk Services Agreement
between Sonangol and Contractor for carrying out the Petroleum Operations.  2.The Parties specifically acknowledge that the terms of
this Agreement represent their sale and express intent, to the exclusion of any
other intent.  9


Article 4 (Nature
of the relationship between the Parties)  This Agreement shall not be construed as creating
between the Parties any entity with a separate juridical personality, or a
corporation, or a civil society, a joint venture or partnership (conta em
participação).  Article 5 (Duration
of the Agreement)  1.This Agreement shall continue to be in force until the
end of the last Production Period or, in case there is no Production Period in
the Contract Area, until the end of the Exploration Period, unless prior to
that date anything occurs that in the terms of the Law or the applicable
provisions of the Agreement constitutes cause for its termination or for
termination of the concession.  2.The extension of the Exploration or Production Periods
referred to in the preceding paragraph beyond the terms provided for in Article 6
and Article 7 respectively shall be submitted by Sonangol to the
Government under Article 12 of the Petroleum Activities Law.  3.At the end of the Exploration Period, Contractor shall
terminate its activities in all areas within the Contract Area which are not at
such time part of a Development Area(s); and, except as otherwise provided
herein, from that time this Agreement shall no longer have any application to
any portion of the Contract Area not then part of a Development Area.  Article 6 (Exploration
Period)  1.Pursuant to the Concession Decree-Law, an Initial
Exploration Phase of four (4) Contract Years shall start from the
Effective Date. One (1) successive extension of three (3) Contract
Years (the Optional Exploration Phase) may follow the Initial Exploration
Phase, provided that Contractor notifies Sonangol in writing of such extension,
at least thirty (30) days before the end of the Initial Exploration Phase, and
if, unless otherwise agreed by Sonangol, Contractor has fulfilled its
obligations in respect of such Phase.  10


2.The Agreement shall be terminated if no Commercial
Discovery has been made in the Contract Area by the end of the Initial
Exploration Phase or the Optional Exploration Phase, should that be the case.
However, the Exploration Period may be extended for six (6) Months for the
completion of drilling and testing of any Well actually being drilled or tested
at the end of the fourth (4th) and/or
seventh (7th) Contract Year, as the case may be.  3.Should any of the said Wells be a Commercial Well,
Contractor shall be given sufficient time, as mutually agreed, not exceeding
twelve (12) Months, or such longer period as agreed by Sonangol, following the
completion of drilling and testing of the Commercial Well to do Appraisal work.
Should this work result in a Commercial Discovery then a Development Area shall
be granted pursuant to Article 7.  4.In the event Contractor fails to complete all
Exploration Wells foreseen in Article14 during the Initial Exploration
Phase, Contractor shall elect one of the following options:  (a)Complete the remaining Exploration Well(s) in a
six (6) Month extension of the Initial Exploration Phase and forego the
option to enter into the Optional Exploration Phase;  (b)Decide to enter into the Optional Exploration Phase
being, however, required to complete the Wells related to the Initial
Exploration Phase and to drill the Wells related to the Optional Exploration
Phase.  5.Operations for the sole account of Sonangol conducted
under Article 29 hereof shall not extend the Exploration Period nor affect
the term of the Agreement, it being understood that:  (a)to the extent that such operations do not conflict
with Contractors obligations or obstruct, interfere with or delay any
Petroleum Operations or any existing work plans (including any Approved Work
Plan and Budget), Contractor shall complete any work undertaken at Sonangols
sole risk and expense even though the Exploration Period may have expired;  (b)Contractors completion of the works referred to in
the previous subparagraph shall not extend Contractors Exploration Period or
Agreement term, except as in the case of Contractor exercising the option right
mentioned in Article 29.3 hereof;  11


(c)during the period Contractor is completing the works
referred to in subparagraph (a), Contractor shall be given authorization to
continue such sole risk operations and shall be entitled to all benefits
available to Contractor pursuant to the Agreement as if the term thereof had
not terminated.  Article 7 (Production
Period)  1.Following each Commercial Discovery, the extent of the
whole area within the Contract Area capable of Production from the deposit or
deposits identified in the Well that originated the Commercial Discovery and
its related Appraisal Wells, if any, shall be agreed upon by Sonangol and
Contractor. Each agreed area shall then be converted automatically into a Development
Area effective from the date of Commercial Discovery.  Without prejudice to paragraph 2 hereof, there shall
be a Production Period for each Development Area which shall be twenty (20)
Years from the date of Commercial Discovery in said Development Area. In the
event of Commercial Discoveries in deposits which underlie and overlie each
other, such deposits shall constitute a single Development Area, and such area
shall be defined or redefined as necessary, within the boundaries of the
Contract Area, to incorporate all underlying and overlying deposits.  2.Unless otherwise agreed by Sonangol, any Development
Area is considered automatically terminated and, except as otherwise provided
in the Agreement, the rights and obligations in said Area are considered
terminated if within forty-two (42) Months from the date of Commercial
Discovery in said Development Area the first lifting of Crude Oil from said
Development Area has not been done as part of a regular program of lifting in
accordance with the Lifting Schedule.  No later than twelve (12) Months before the end of the
Production Period, Contractor may request that Sonangol apply for an extension
of the Production Period under Article 5.2. If Sonangol is not opposed to
said request, it shall discuss the terms and conditions of the extension of the
Production Period with Contractor and submit said terms and conditions to the
supervising Ministry along with the application to be presented under the
Petroleum Activities Law.  12


Article 8 (Operator)  1.Contractor has the exclusive responsibility for
executing the Petroleum Operations, except as provided in Article 29.  2.Under the Concession Decree-Law, Cobalt is the
Operator which carries out Petroleum Operations on a no profit, no loss basis
on behalf of Contractor within the Contract Area. Change of operator shall
require the prior approval of the Ministry of Petroleum following a proposal
from Sonangol.  3.Any agreement among the Contractor companies regarding
or regulating the Operators conduct in relation to this Agreement shall be
submitted to Sonangol for comment prior to execution thereof.  4.The Operator will be subject to all of the specific
obligations provided for in this Agreement, the Concession Decree-Law and other
applicable legislation and, under the general authority of the Operating
Committee, shall have the exclusive control and administration of the Petroleum
Operations.  5.The Operator shall be the only entity which, on behalf
of Contractor and within the limits defined by the Operating Committee, may
execute contracts, incur expenses, agree to expense commitments and implement
other actions in connection with the conduct of Petroleum Operations.  6.In the event of the occurrence of any of the
following, Sonangol can require Contractor to immediately propose another
Contractor company as Operator:  (a)if the Operator, by action or omission, commits a
Serious Fault in carrying out its obligations and if this fault is not remedied
to the satisfaction of Sonangol within a period of twenty-eight (28) days with
effect from the date of receipt by the Operator of written notice issued by
Sonangol requesting the Operator to remedy such fault (or within a greater
period of time if so specified in the notice, or as agreed later by Sonangol);  (b)if sentence has been passed in court declaring the
bankruptcy, liquidation or dissolution of the Operator, or if, in the court
action taken in order to obtain such declaration, any injunction has been granted
or any interim judicial ruling has been made, which prevents Operator from
fulfilling its obligations under the Agreement;  13


(c)if the Operator undertakes the legal procedures
established to prevent bankruptcy or without just cause ceases payment to
creditors;  (d)if the Operator terminates or if there is strong
evidence that it intends to terminate its activities or a significant portion
thereof, and, as a result, fails to fulfill its obligations under the
Agreement. If said strong evidence that the Operator intends to terminate its
activities exists, the Operator shall be given a period of fifteen (15) days
with effect from the date of receipt by the Operator of written notice issued
by Sonangol, or such greater period of time if so specified in the notice, in
which to refute such strong evidence to the satisfaction of Sonangol.  7.If Contractor, in accordance with paragraph 6, does
not comply with the obligation to propose another Operator from among its
members within thirty (30) days from the date when Sonangol gave notice to
Contractor, Sonangol may freely propose one of the other Contractor entities as
Operator or a third party entity selected by Sonangol, if none of those accept
such role.  8.Contractor must accept the Operator appointed by the
Ministry of Petroleum, otherwise it shall be in serious breach of this
Agreement.  Article 9 (Petroleum
Operations Procedures Document)  Sonangol and Contractor may sign a Petroleum
Operations Procedures Document which will regulate and interpret the contents
of this Agreement, which shall be in accordance with the provisions of this
Agreement and the Law.  Article 10 (Payment
from Sonangol to Contractor and production allowance)  1.All quantities of Petroleum produced and extracted
under this Contract are the property of Sonangol and shall revert to it
entirely.  2.Sonangol shall allocate to Contractor, and Contractor
has the right to receive, the percentage of gross production of Petroleum,
specified in Article 10.3 as payment in kind for the performance by
Contractor for services under this Agreement on behalf of Sonangol.  14


3.In any Quarter the percentage of Petroleum from the
Contract Area that Sonangol shall allocate in kind to Contractor, as well as
the production allowance applicable pursuant Article 45.1(a) of the
Petroleum Activities Tax Law and established in the Decree 3/10 of January 21,
shall be determined by reference to the after tax nominal rate of return
achieved by Contractor at the end of the precedent Quarter in the Contract Area
as follows:  Contractors
  rate of return for the
  Contract Area
  
  Contractor
  payment in kind - %
  
  Production
  allowance - %less than 10%
  
  95
  
  95from 10% to less than 15%
  
  90
  
  85from 15% to less than 20%
  
  85
  
  75from 20% to less than 30%
  
  80
  
  65from 30% to less than 40%
  
  77
  
  6040% or more
  
  72
  
  55  4.Contractors rate of return shall be determined at the
end of each Quarter after the date of Commercial Discovery on the basis of the
accumulated compounded net cash flow for the Contract Area, using the following
procedure:  (a)Contractors net cash flow computed in U.S. dollars
for the Contract Area for each Quarter is:  (i)the value received and actually lifted by Contractor
for all Crude Oil from the Contract Area in that Quarter at the Market Price;  (ii)minus Petroleum Production Tax, Petroleum Income Tax
and Petroleum Transaction Tax;  (iii)minus all expenditures incurred in respect the Contract
Area.  15


(b)Contractors net cash flow for each Quarter are
compounded and accumulated according with the following formula:  ACNCF (Current Quarter) =  (100% + DQ)  --------------- x ACNCF (Previous Quarter) + NCF
(Current Quarter)  100%  where:  ACNCF
  = accumulated compounded net cash flowNCF
  = net cash flowDC
  = quarterly compound rate (in percent).  The formula will be calculated using quarterly
compound rates (in percent) of 2,41%, 3,56%, 4,66%, 6,78% and 8,78% which
correspond to annual compound rates (DA) of 10%, 15%, 20%, 30% and 40%,
respectively, as referred to in previous paragraph.  5.The Contractor rate of return in any given Quarter
shall be deemed to be between the largest DA which yields a positive or zero
ACNCF and the smallest DA which causes the ACNCF to be negative.  6.The payment to Contractor and the calculation of the
production allowance in a given Quarter shall be in accordance with the table
in paragraph 3 above using the Contractor Groups rate of return as per this
article in the preceding Quarter.  7.It is possible for the Contractor rate of return to
decline as a result of negative cash flow in a Quarter with the consequence
that the payment to Contractor and the calculation of the production allowance
would increase in the subsequent Quarter.  8.Pending finalization of accounts, the payment to
Contractor and the calculation of the production allowance shall be calculated
on the basis of provisional estimates, if necessary, of deemed rate of return
as approved by Sonangol. Adjustments shall be subsequently effected in
accordance with the procedure to be established by agreement between Sonangol
and the Contractor.  16


Article 11 (Petroleum
Operations costs and expenses)  Except as otherwise provided for in this Agreement,
the costs and expenses incurred in the Petroleum Operations, as well as any
losses and risks derived therefrom, shall accrue to or be borne by Contractor,
and Sonangol shall not be responsible to bear or repay any of the aforesaid
costs, expenses and risks.  Article 12 (Lifting
and disposal of Crude Oil)  1.Each of the Parties (and, as for Contractor, each
entity constituting it) has the right and the obligation to lift in accordance
with the Lifting Schedule and the procedures and regulations foreseen in the
following paragraphs of this Article, its respective Crude Oil entitlements.  2.Each of the entities constituting Contractor shall
have the right to proceed separately to the commercialization, lifting and
export of the Crude Oil to which it is entitled under this Agreement.  3.Twelve (12) Months prior to the scheduled initial
export of Crude Oil from each Development Area, Sonangol shall submit to Contractor
proposed procedures and related operating regulations covering the scheduling
and lifting of Crude Oil and any other Petroleum produced from such Development
Area(s). The procedures and regulations shall be consistent with the terms of
this Agreement and shall comprehend the subjects necessary for efficient and
equitable operations including, but not limited to, rights of the Parties,
notification time, maximum and minimum quantities, duration of storage,
scheduling, conservation, spillage, liabilities of the Parties, throughput fees
and penalties, over and underlifting, safety and emergency procedures and any
other matters that may be agreed between the Parties.  4.Contractor shall within thirty (30) days after
Sonangols submission as referred to in the preceding paragraph, submit its
comments on, and recommend any revisions to the proposed procedures and
regulations. Sonangol shall analyze these comments and recommendations and the
Parties shall, within sixty (60) days after Contractors said submission, agree
on such procedures and regulations.  (i)In any event, the agreed lifting procedures and
regulations, as provided in the previous paragraph, shall always comply with
the Law,  17


(ii)In the case of more than one (1) quality of Crude
Oil in the Contract Area, Sonangol and Contractor shall, unless they mutually
agree that the Crude Oil should be commingled, lift each Crude Oil qualities in
proportion to their respective total liftings from the Contract Area. In
determining these proportions any Petroleum belonging to Sonangol as a result
of operations for Songangols account under Article 29 shall be excluded.  Article 13 (Conduct
of Petroleum Operations)  1.With due observance of legal and contractual
provisions and subject to the decisions of the Operating Committee, Contractor,
through the Operator, shall act in the common interest of the Parties and shall
undertake the execution of the work inherent in Petroleum Operations in
accordance with the Law and the professional rules and standards which are
generally accepted in the international petroleum industry.  2.Contractor, through the Operator, shall carry out the
work inherent in Petroleum Operations in an efficient, diligent and conscientious
manner and shall execute the Work Plans and Budgets under the best economic and
technical conditions and in accordance with the Law and the professional rules and
standards which are generally accepted in the international petroleum industry.  3.In performing the Petroleum Operations, Contractor,
through the Operator, shall use the most appropriate technology and management
experience, including its own technology, such as patents, know-how and other
secret technology, insofar as this is permitted by applicable laws and
agreements.  4.Contractor, through the Operator, and its
subcontractors shall:  (a)contract local contractors, as long as their services
are similar in quality and availability to those available on the international
market and the prices of their services, when subject to the same tax charges,
are no more than ten percent (10%) higher compared to the prices charged by
foreign contractors for identical services;  (b)acquire materials, equipment, machinery and consumable
goods of national production, insofar as their quantity, quality and delivery
dates are similar to those of such materials, equipment, machinery and
consumable  18


goods available on the international market.
However, such obligation does not apply in those cases in which the local
prices for such goods are more than ten percent (10%) higher compared to the
prices for imported goods, before charging Customs Duties but after the
respective costs for transportation and insurance have been included.  5.Contractor,
through the Operator, shall seek competitive bids for any work to be performed
pursuant to an Approved Work Plan and Budget if such work is budgeted to exceed
two hundred and fifty thousand U.S. dollars (U.S.$250,000). When reviewing such
bids, Contractor shall select out of the bids which are acceptable to
Contractor for technical and other operational reasons, the bid with the lowest
cost. This decision shall be subject to conformity with the Law, the provisions
of paragraph 4 above and, after the first Commercial Discovery, the approval of
the Operating Committee.  6.Operator
shall entrust the management of Petroleum Operations in Angola to a technically
competent General Manager and Assistant General Manager. The names of such
General Manager and Assistant General Manager shall, upon appointment, be given
to Sonangol. The General Manager and, in his absence, the Assistant General
Manager, shall be entrusted with sufficient powers to carry out immediately and
comply with all lawful written directions given to them by Sonangol or the
Government or its or their representatives or any lawful regulations gazetted
or hereafter to be gazetted which are applicable to the Petroleum Operations.  7.Except as is
appropriate for the economic and efficient processing of data and laboratory
studies thereon in specialized centres outside Angola, geological and
geophysical studies as well as any other studies related to the performance of
this Agreement, shall be preferentially made in Angola.  8.In the case
of an emergency in the course of the Petroleum Operations requiring an
immediate action, Contractor, through the Operator, is authorized to take all
actions that it deems necessary for the protection of human life, the interests
of the Parties and the environment, and shall promptly inform Sonangol of all
actions so taken.  9.Subject to
Articles 20 and 33, any obligations which are to be observed and performed by
Contractor shall, if Contractor comprises more than one entity, be joint and
several obligations.  19


10.Without prejudice to the provisions of Article 35,
the Operator shall have the right to staff the Petroleum Operations with those
whom it believes are necessary for efficient administration and operation
without the imposition of citizenship or residency requirements.  11.Sonangol shall provide reasonable
assistance to Contractor in obtaining visas, permits and other documents
required to enter Angola and residency and work licenses required in connection
with the performance of Petroleum Operations. Contractor shall notify Sonangol
reasonably in advance of the time necessary for receipt of such permits and
licenses and Sonangol shall take steps to arrange for all such permits and
licenses to be issued on a timely basis by the appropriate authorities.  Article 14
(Work obligations during the Exploration Period)  1.During the Initial Exploration Phase
Contractor shall perform a seismic program covering 1,000 Km2of 3D
long-offset seismic, with an offset that varies between eight (8) kilometers
and ten (10) kilometers. If Sonangol so agrees, part or all of such
obligation may be fulfilled through the acquisition of existing seismic.  2.During the Initial Exploration Phase
Contractor shall drill, to geological horizons defined in the Approved Work
Plan and Budget, three (3) Exploration Wells in three (3) different
prospects, one of which (subject to paragraph 4) shall have a pre-salt
objective.  3.In the event Contractor elects to extend
the Exploration Period into the Optional Exploration Phase, Contractor shall be
required to drill, to geological horizons defined in the Approved Work Plan and
Budget, two (2) Exploration Wells, one of which (subject to paragraph 4)
shall have a pre-salt objective.  4.4. In the event Contractor exceeds the
minimum work obligations described in the preceding paragraphs during the
Initial Exploration Phase, then such excess shall be credited against the
minimum work obligations for the Optional Exploration Phase. In the event that,
prior to any Commercial Discovery, Contractor elects to drill more than one
Exploration Well with a pre-salt objective, such additional pre-salt
Exploration Well shall constitute one of the Exploration Wells which Contractor
is required to drill pursuant to paragraph 2 or 3 (as the case may be) and the
drilling of such additional  20


pre-salt
Exploration Well shall satisfy the obligation of Contractor to drill one
Exploration Well of any kind.  5.Without prejudice to paragraph 4 of Article 6,
in the event Contractor fails to satisfy the minimum work obligations referred
to in this Article within the deadlines specified in Article 6,
Contractor shall be deemed, unless otherwise agreed by Sonangol, to have
voluntarily terminated activities and withdrawn from all of the Contract Area
not already converted into a Development Area(s).  6.If Contractor withdraws from all of the
Contract Area before performing the seismic program undertaken by it under this
Article, Contractor shall be obligated to pay Sonangol an amount equal to
fifteen million U.S. Dollars (US$15,000,000) less fifteen thousand U.S. Dollars
(US$15,000) for each Km2of
the seismic program concluded before said withdrawal.  7.If Contractor withdraws from all of the
Contract Area before drilling the minimum number of Exploration Wells
undertaken by it under this Article, Contractor shall be obligated to pay
Sonangol an amount equal to thirty seven million five hundred thousand U.S.
Dollars (U.S.$37,500,000) if the pre-salt Exploration Well is not so drilled,
and an amount equal to seventeen million five hundred thousand U.S. Dollars
(U.S.$17,500,000) for each of the other two (2) Exploration Wells not so
drilled.  8.Contractor shall be required to incur the
following minimum Exploration Expenditures:  (a)Initial Exploration Phase  eighty seven million five
hundred thousand U.S. Dollars (U.S.$87,500,000);  (b)Optional Exploration Phase  fifty five million U.S.
Dollars (U.S.$55,000,000).  9.If Contractor fulfils the minimum work
obligations referred to in paragraphs 2, and 3 of this Article relating to
each phase of the Exploration Period, then Contractor shall be considered as
having fulfilled the minimum Exploration Expenditures set forth in the previous
paragraph.  10.Each Exploration Well referred to in this
Article shall test all productive horizons agreed to by Sonangol and
Contractor, unless diligent test efforts consistent with sound and normal oil
industry practices indicate that it is technically impracticable to reach
and/or test any such horizons.  21


11.During the drilling of Wells under this
Agreement, Contractor shall keep Sonangol informed of the progress of each
Well, its proposals for testing and the results of such tests, and if Sonangol
so requests, shall test any additional prospective zones within the agreed Well
depth provided that such tests shall be consistent with professional rules and
standards which are generally accepted in the international petroleum industry and
not interfere with the safety and efficiency of the Petroleum Operations
planned by Contractor. Such tests shall be at Contractors expense and shall be
credited towards fulfilling the mandatory work program.  12.If any obligatory Exploration Well is abandoned
due to technical difficulties and, at the time of such abandonment, the
Exploration Expenditures for such Well have equaled or exceeded thirty seven
million five hundred thousand U.S. dollars (U.S.$37,500,000) if such Well is a
Well with a pre-salt objective, or seventeen million five hundred thousand U.S.
dollars (U.S.$17,500,000) in the case of any other Well, for all purposes of
this Agreement Contractor shall be considered to have fulfilled the work
requirement in respect of one (1) Exploration Well and all costs of the
Exploration Well shall be considered part of the Exploration Expenditures set
forth in paragraphs 7 and 8 of this Article. If any obligatory Exploration Well
is abandoned due to technical difficulties, and if at the time of such
abandonment the Exploration Expenditures for such Well are less than thirty
seven million five hundred thousand U.S. dollars (U.S.$37,500,000) if such Well
is a Well with a pre-salt objective, or seventeen million five hundred thousand
U.S. dollars (U.S.$17,500,000) in the case of any other Well, then Contractor
shall have the option either to:  (a)drill a substitute Well at the same or another
location in which case the Exploration Expenditures for both the original Well
and the substitute Well shall be credited against Contractors minimum
Exploration Expenditures set forth in paragraphs 7 and 8 of this Article; or  (b)pay Sonangol an amount equal to the difference between
(i) thirty seven million five hundred thousand U.S. dollars
(U.S.$37,500,000) if such Well is a Well with a pre-salt objective, or
seventeen million five hundred thousand U.S. dollars (U.S.$17,500,000) in the
case of any other Well, and (ii) the amount of Exploration Expenditures
actually spent in connection with such Well.  13.In this case, for all purposes of the
Agreement, Contractor shall be considered to have fulfilled the work obligation
in respect of one (1) Exploration Well and the total amount of thirty
seven million five hundred thousand U.S. dollars (U.S.$37,500,000) if  22


such Well is a
Well with a pre-salt objective, or seventeen million five hundred thousand U.S.
dollars (U.S.$17,500,000) in the case of any other Well, shall be considered
part of the minimum Exploration Expenditures set forth in paragraphs 7 and 8 of
this Article.  Article 15
(Exploration Work Plans and Budgets)  1.Within one (1) Month of the
Effective Date and thereafter at least three (3) Months prior to the
beginning of each Contract Year during the Exploration Period or at such other
times as may mutually be agreed to by Sonangol and Contractor, Contractor shall
prepare in reasonable detail an Exploration Work Plan and Budget for the
Contract Area setting forth the Exploration operations which Contractor
proposes to carry out during the first Contract Year and during the ensuing
Contract Year respectively.  2.During the Exploration Period such Work
Plan and Budget shall cover and be in accordance with the minimum work
obligations of Contractor under Article 14.  3.The Exploration Work Plan and Budget
shall be submitted to the Operating Committee for review, advice or approval as
the case may be, in accordance with Article 30, and carried out by
Contractor after approval by the Ministry of Petroleum under Article 58 of
the Petroleum Activities Law.  4.The Operating Committee shall coordinate,
supervise and control the execution of the Approved Exploration Work Plans and
Budgets, as well as verify if the same is carried out within budget expenditure
limits, or any revisions which have been made thereto.  Article 16
(Commercial Discovery)  1.Contractor shall inform Sonangol within
thirty (30) days of the end of the drilling and testing of an Exploration Well,
the results of the final tests of the Well and whether such a Well is
commercial or not. The date of this advice is the date of the declaration of
the Commercial Well, should such well exist.  23


2.After the declaration of a Commercial
Well, Contractor may undertake the Appraisal of the discovery by drilling one
or more Appraisal Wells to determine whether such discovery can be classified
as a Commercial Discovery.  3.Unless otherwise agreed by Sonangol, not
later than six (6) Months after the completion of the second Appraisal
Well, or twenty-four (24) Months after the declaration of the Commercial Well,
whichever is earlier, Contractor shall give written notice to Sonangol
indicating whether the discovery is considered commercial or not. If Contractor
declares it a Commercial Discovery, Contractor shall proceed to develop it
under the Petroleum Activities Law. The date of Commercial Discovery shall be
the date on which Contractor informs Sonangol in writing of the existence of
said Discovery.  4.If the period allowable for declaration
of a Commercial Discovery extends beyond the Exploration Period, a provisional
Development Area shall be established for such period as necessary to complete
the Appraisal as per paragraphs 0 and 0 above. The provisional Development Area
shall be of the shape and size which encompasses the geological feature or
features which would constitute the potential Commercial Discovery. Such
provisional Development Area shall be agreed by Sonangol in writing.  5.Any Commercial Well shall count towards
fulfilling the work and expenditure obligations provided for in Article 14,
but the Appraisal Well(s) that have been drilled following the discovery
of a Commercial Well shall not count towards such obligations.  6.There shall be no more than one (1) Commercial
Well in each Development Area that counts towards such work obligations; and it
shall be the first Commercial Well in that Development Area.  7.Contractor has the right to declare a
Commercial Discovery without first having drilled a Commercial Well or Wells.  Article 17
(General Development and Production Plan)  Within ninety (90) days of the date of a Commercial
Discovery, Contractor shall prepare and submit to Sonangol a draft General
Development and Production Plan, which shall be analyzed and discussed by the
Parties in order to be agreed and submitted by Sonangol to  24


the Ministry of Petroleum within three (3) Months
of the date of the Commercial Discovery or within any longer period which may
be granted by the Ministry of Petroleum.  Article 18
(Development and Production Work Programs and Budgets)  1.From the date of approval of the plan
referred to in Article 17, and thenceforth by the fifteenth (15th) of August of each Year (or by any other date
which may be agreed) thereafter, Contractor shall prepare in accordance with
professional rules and standards generally accepted in the international
petroleum industry a draft annual Production Plan, a draft Exploration and
Production Work Plan and Budget (if applicable) and a draft Development and
Production Work Plan and Budget for the following Civil Year and may, from time
to time, propose to Sonangol that it submit amendments to the approved Work
Plans and Budgets to the consideration of the Ministry of Petroleum.  2.The draft Development and Production Work
Plan and Budget and the draft Production Plan referred to in the previous
paragraph shall be prepared on the basis of the approved General Development
and Production Plan and any subsequent amendments to the same.  3.The draft Production Plan and the draft
Development and Production Work Plan and Budget shall be approved in writing by
the Operating Committee and shall be submitted by Sonangol to the Ministry of
Petroleum for approval under the Petroleum Activities Law.  4.Contractor is authorized and hereby
undertakes to execute, under the supervision and control of the Operating
Committee, and within the limits of the budgeted expenses, the approved
Development and Production Work Plans and Budgets, together with any revised
versions of the same.  Article 19
(Lifting Schedule)  1.The Operating Committee shall approve a
Lifting Schedule, not later than ninety (90) days prior to January 1 and July 1
of each Civil Year following the commencement of Production under the approved
Production Plan, and furnish in writing to Sonangol and Contractor a forecast
setting out the total quantity of Petroleum that the  25


Operating Committee
estimates can be produced, saved, transported and lifted hereunder during each
of the next four (4) Quarters in accordance with sound practices generally
accepted in the international petroleum industry.  2.Contractor shall endeavour to produce in
each Quarter the quantity of Petroleum forecast in the Production Plan.  3.The Crude Oil shall be run to storage
tanks built, maintained and operated by Contractor offshore, and shall be
metered or otherwise measured as required to meet the purposes of this Agreement
and the Law.  Article 20
(Guarantees)  1.The minimum Exploration work obligations
shall be secured by financial guarantees substantially in the form as set out
in Annex E.  2.The financial guarantees referred to in
the previous paragraph shall be given by each member of Contractor (excluding
Sonangol P&P and Alper but not their assignees), in proportion to the
payment obligations assumed by such member under this Agreement and the
financing agreements executed between such members of Contractor, Sonangol
P&P and Alper and may only be reduced and drawn in such proportions and
otherwise in accordance with this Article 20. Such guarantees shall be
provided not later than thirty (30) days after the execution of this Agreement,
in respect of the minimum work obligations of the Initial Exploration Phase, or
thirty (30) days after the start of the Optional Exploration Phase of the
Exploration Period, in respect of the minimum work obligations of said Phase.  3.The total amount of the financial
guarantees shall in each Phase be equal to thirty seven million five hundred
thousand U.S. dollars (U.S.$37,500,000) for each of the obligatory pre-salt
Exploration Wells set forth in Article 14, and equal to seventeen million
five hundred thousand U.S. dollars (U.S.$17,500,000) for each of the other
obligatory Exploration Wells set forth in Article 14.  4.With respect to the Initial Exploration
Phase, the total amount of the financial guarantees shall be increased by
fifteen million U.S. dollars (U.S.$15,000,000) for the mandatory seismic
program provided for in Article 14.1.  26


5.Subject to paragraph 7 of this Article,
in the Initial Exploration Phase the total amount of the financial guarantees
shall be reduced by the amount of fifteen million U.S. dollars
(U.S.$15,000,000) when the mandatory seismic program has been concluded.  6.Subject to paragraph 7 of this Article,
the financial guarantees shall also be reduced by the amount of thirty seven
million five hundred thousand U.S. dollars (U.S. $37,500,000) when the drilling
of each of the obligatory pre-salt Exploration Wells for each Phase of the
Exploration Period is finished, and by the amount of seventeen million five
hundred thousand U.S. dollars (U.S. $17,500,000) when the drilling of each of
the other obligatory Exploration Wells for each Phase of the Exploration Period
is finished.  7.If, during any Year of any of the Phases
of the Exploration Period, Contractor is deemed to have relinquished, as
provided in Article 14.5, all of the Contract Area not converted to a
Development Area(s), Contractor shall forfeit the full amount of the financial
guarantee, reduced as provided for in paragraphs 5 and 6 of this Article.  8.Each of the entities comprising Contractor,
with the exception of Sonangol P&P and Alper, shall also provide Sonangol,
if so required by the latter, with a corporate guarantee substantially in the
form shown in Annex D hereof or such other form as may be agreed between
Sonangol and each of such entities, not later than sixty (60) days after the
date of execution of this Agreement.  9.The obligations and liabilities under
this Article 20 of the entities constituting Contractor shall be several
and not joint.  Article 21
(Bonus and contributions)  1.The signature bonus in respect of this
Agreement is four million US Dollars (US$4,000,000). Cobalt has paid such
signature bonus and Nazaki shall reimburse to Cobalt within thirty (30) days
after the date of signature of this Agreement the amount of one million five
hundred thousand US Dollars (US$1,500,000).  2.The contributions for social projects and
academic scholarships referred to below must be paid to Sonangol by Contractor
(excluding Sonangol P&P and Alper but not their assignees), in proportion
to the payment obligations assumed by such member under this Agreement and the
financing agreements executed between such members of Contractor, Sonangol
P&P and Alper:  27


(a)within thirty (30) days after the date of signature of
this Agreement:  (i)an amount of one million US dollars
(US$1,000,000); and  (ii)such additional amount, not exceeding one
million two hundred and fifty thousand US dollars (US$1,250,000), as Sonangol
may have notified to Contractor as being the total cost of five (5) academic
scholarships (each with a duration of no more than five (5) years) to be
awarded by Sonangol for the overseas education of Angolan nationals;  (b)in respect of each Commercial Discovery within the
Contract Area:  (i)within thirty (30) days after the date of
declaration by Contractor of such Commercial Discovery in accordance with Article 16.3,
an amount of one million US dollars (US$1,000,000);  (ii)within thirty (30) days after the date on
which the Ministry of Petroleum gives final written approval of the General
Development and Production Plan in respect of such Commercial Discovery in
accordance with Article 17, an amount of five million US dollars
(US$5,000,000);  (c)within thirty (30) days after the date on which the
first lifting by Contractor of Crude Oil from the Contract Area occurs, and
then each subsequent Contract Year, on the anniversary of such first lifting,
until the Contract Year in which production by Contractor of Crude Oil from the
Contract Area ceases, an amount of three million US dollars (US$3,000,000);  (d)within thirty (30) days after the date on which the
first lifting by Contractor of Crude Oil from the Contract Area occurs, an
amount, not exceeding two million five hundred thousand US dollars (US$2,500,000),
as Sonangol may have notified to Contractor as being the total cost of ten (10) academic
scholarships (each with a duration of no more than five (5) years) to be
awarded by Sonangol for the overseas education of Angolan nationals.  3.All contributions for social projects
payable by Contractor pursuant to Article 21.2 shall be paid to such bank
account of and in the name of Sonangol as Sonangol may notify to the Operator
not less than fourteen (14) days prior to the date on which such payment is due
to be made.  28


4.All social projects and scholarship
programs for the purposes of which any amounts paid by Contractor pursuant to Article 21.2
are used shall be administered by Sonangol in compliance with the requirements
of all applicable laws and regulations.  Article 22
(Conservation of Petroleum and prevention of loss)  1.Contractor shall adopt all those measures
which are necessary and appropriate and consistent with the technology
generally in use in the international petroleum industry to prevent loss or
waste of Petroleum above or under the ground in any form during Exploration,
Development, Production, gathering and distributing, storage or Petroleum
transportation operations.  2.Upon completion of the drilling of a
producing Development Well, Contractor shall inform Sonangol of the time when
the Well will be tested and shall subsequently inform Sonangol of the resulting
estimated production rate of the Well within fifteen (15) days after the
conclusion of such tests.  3.Petroleum shall not be produced from multiple
independent oil productive zones simultaneously through one string of tubing,
except with the prior approval of Sonangol.  4.Contractor shall record data regarding
the quantities of Crude Oil, Natural Gas and water produced monthly from each
Development Area, which shall be sent to Sonangol within thirty (30) days after
the end of the Month reported on.  5.Daily or weekly statistics and reports
regarding the Production from the Contract Area shall be made available by
Contractor at convenient time for examination by authorized representatives of
Sonangol.  6.Daily drilling records and graphic logs
of Wells shall show the quantity and type of cement and the quantity of any
other materials used in the Well for the purposes of protecting Crude Oil, Natural
Gas or fresh water bearing strata.  7.Any substantial change of mechanical
equipment associated with the Well after its completion shall be subject to the
approval of Sonangol.  29


Article 23
(Records, reports and inspection)  1.Contractor shall prepare and, at all
times while this Agreement is in force, maintain accurate and current records
of its activities and operations in the Contract Area and shall keep all
information of a technical, economic, accounting or any other nature, developed
for the conduct of Petroleum Operations. Such records shall be organized in
such a way as to allow for the prompt and complete ascertainment of costs and
expenditures.  2.The records and information referred to
in the previous paragraph shall be kept at Operators office in Luanda.  3.Sonangol, in exercising its activities
under the terms of this Agreement, shall have the right to free access, upon
prior notice to Contractor, to all data referred to in paragraph 1 above.
Contractor shall deliver to Sonangol, in accordance with applicable regulations
or as Sonangol may reasonably request, information and data concerning
activities and operations under this Agreement. In addition, Contractor shall
provide Sonangol with copies of any and all data related to the Contract Area,
including, but not limited to, geological and geophysical reports, logs and
Well surveys, information and interpretation of such data and other information
in Contractors possession.  4.Contractor shall save and keep in the
best condition possible a representative portion of each sample of cores and
cuttings taken from Wells as well as samples of all fluids taken from
Exploration Wells, and deliver same to Sonangol or its representatives in the
manner directed by Sonangol.  5.All samples acquired by Contractor for
its own purposes shall be considered available for inspection at any convenient
time by Sonangol or its representatives.  6.Contractor shall keep the aforementioned
samples for a period of thirty-six (36) Months or, if before the end of such
period, Contractor withdraws from the Contract Area, then until the date of
withdrawal. Up to three (3) Months before the end of the aforementioned
period, Contractor shall request instructions from Sonangol as to the
destination for such samples. If Contractor does not receive instructions from
Sonangol by the end of such three (3) Month period then Contractor is
relieved of its responsibility to keep such samples.  30


7.If it is necessary to export any rock
samples outside Angola, Contractor shall deliver samples equivalent in size and
quality to Sonangol before such exportation. Sonangol, if it so decides, may
relieve Contractor of said obligation.  8.Originals of records and data can be
exported only with the permission of Sonangol. The original magnetic tapes and
any other data which must be processed or analyzed outside Angola may be
exported only if a comparable record and data is maintained in Angola. Such
exports shall be repatriated to Angola on the understanding that they belong to
Sonangol. Copies of the referred records and data may be exported at any time
and under the terms of the Law.  9.Subject to any other provisions of this
Agreement, Contractor shall permit Sonangols duly authorized representatives
and employees to have full and free access to the Contract Area at all
convenient times with the right to observe the Petroleum Operations being
conducted and to inspect all assets, records and data kept by Contractor.
Sonangols representatives and employees, in exercising the aforementioned
rights, shall not interfere with Contractors Petroleum Operations. Contractor
shall grant to said Sonangols representatives and employees the same
facilities in the camp as those afforded to its own employees of similar
professional rank.  10.Without prejudice to Article 33.2,
Sonangol is responsible for any claims of their representatives or employees
resulting from the exercise of the rights granted under this Article. Sonangol
is also responsible and shall indemnify Contractor against all damages and
claims resulting from the gross negligence or willful misconduct of any of
Sonangols representatives or employees while performing their activities in
the Contract Area, in Contractors offices or in other Contractors facilities
directly related to the Petroleum Operations.  Article 24
(Contractors obligation to purchase Sonangols Petroleum)  1.Sonangol shall have the right to require
Contractor to purchase any part of Sonangols share of production under normal
commercial terms and conditions in the international petroleum industry and at
the Market Price in force at the time the Crude Oil is lifted as established in
the Petroleum Activities Tax Law.  31


2.The right referred to in the preceding
paragraph shall be exercised in accordance with the following rules:  (a)no later than six (6) Months prior to the start
of a Quarter, Sonangol shall give written notice to Contractor that it requires
Contractor to purchase a specified quantity of Crude Oil to be lifted
progressively over a period of two (2) consecutive Quarters;  (b)Contractors obligation to purchase Crude Oil from
Sonangol will continue mutatis mutandis from Quarter to Quarter after the
initial two (2) consecutive Quarters until and unless Sonangol gives
Contractor written notice of termination which, subject to the above mentioned
minimum period, shall take effect six (6) Months after the end of the
Quarter in which such written notice was given.  Article 25
(Other rights and obligations related to Crude Oil disposal)  1.Sonangol shall have the right upon six (6) Months
prior written notice to buy from Contractor Crude Oil from the Contract Area
equivalent in value to the Petroleum Income Tax due by Contractor to the
Ministry of Finance. The referred purchase of Crude Oil by Sonangol shall be at
the Market Price applicable to such Crude Oil. Sonangol shall provide
Contractor with not less than three (3) Months advance written notice of
its intention to cease to exercise its right under this paragraph.  2.Payment by Sonangol to Contractor for
each purchase of Crude Oil pursuant to the provisions of paragraph 1 above
shall be made not later than two (2) working days before the due date of
payment by Contractor of the relevant amount of Petroleum Income Tax due and
payable by Contractor to the Ministry of Finance. Any unpaid amount, plus
interest as specified in Annex C to this Agreement, shall be paid in kind to
Contractor by Sonangol out of its next Crude Oil entitlement, valued at the
Market Price applicable to such Crude Oil.  Article 26
(Unitization and joint Development)  1.The rules on unitization and joint
development are contained in Article 64 of the Petroleum Activities Law.  32


2.Any joint Development and Production
carried out under this Article shall not prejudice the provisions of Article 28
and Article 30.2(e) and Article 30.11(b).  3.In the event that a unitization process
affects the whole or part of an obligation which Contractor must fulfill within
a certain time period under the Agreement, such time period shall be extended
by the time elapsed between Sonangols written notice under paragraphs 1 and 2
above and the date of mutual agreement on the plan of the related joint
Development. This extension shall not be more than twelve (12) Months, or such
longer period as agreed by Sonangol.  Article 27
(Transfer and abandonment of assets)  1.Within sixty (60) days of termination of
the Agreement or the date of abandonment of any part of the Contract Area,
Contractor must hand over to Sonangol, in a good state of repair and operation,
and in accordance with a plan approved by Sonangol, all of the infrastructures,
equipment and all Wells which, within the area to which the expiry,
cancellation or relinquishment refers, are in production or are capable of
producing, or are being used, or may be used, in injection, together with all
casing, piping, surface or sub-surface equipment and facilities acquired by
Contractor for the conduct of Petroleum Operations, except those as are being
used for Petroleum Operations elsewhere in the Contract Area.  2.If Sonangol so requires, Contractor shall
proceed to correctly abandon the Well or Wells in accordance with Articles 75.4
and 75.5 of the Petroleum Activities Law.  3.The requirement provided for in the
previous paragraph shall be made by Sonangol no later than one hundred and
eighty (180) days before the termination of the Agreement or the estimated date
of abandonment of any part of the Contract Area.  4.If the request referred to in paragraph 2
above is made, Sonangol shall make the required funds available to Contractor
from the amounts paid to Sonangol pursuant to Article 3(e) of Annex
C. In the event the amounts paid by Contractor are insufficient to cover the
abandonment costs, Sonangol and Contractor shall agree on the method of
covering the additional costs.  5.After having carried out the abandonment
of the Wells and related assets, or in the case of Sonangol requesting such
abandonment and not placing at the disposal of Contractor the funds referred to
in paragraph 4, or after Contractor carries out the  33


handing over of
the equipment and Wells to Sonangol under the terms of paragraph 1, Contractor
will have no further liability in relation to the same, except in cases of
gross negligence or willful misconduct and, without prejudice to the provisions
of the Agreement still in force after the termination of the Agreement,
Sonangol shall indemnify and defend Contractor in case of any claims related to
such Wells and assets.  Article 28
(Natural Gas)  1.Contractor shall have the right to use in
the Petroleum Operations, Associated Natural Gas produced from the Development
Areas.  2.Associated Natural Gas surplus to the
requirements defined in the preceding paragraph shall be made available free to
Sonangol in Angola, wherever Sonangol so determines. If Sonangol so elects and
if possible, Sonangol shall give notice in writing to Contractor prior to the
final approval of the General Development and Production Plan in connection
with such Associated Natural Gas. Pipeline costs and the costs of
transportation of such Associated Natural Gas shall be considered costs of
Petroleum Operations for the purposes of the Petroleum Activities Tax Law.  3.If Non-Associated Natural Gas is
discovered within the Contract Area. Sonangol will have the exclusive right to
appraise, develop and produce such Non-Associated Natural Gas for its own
account and risk under conditions to be mutually agreed with Contractor. If
Sonangol so determines and if agreed to by Contractor within a time period
specified by Sonangol, the discovery of Non-Associated Natural Gas shall be
developed jointly by Sonangol or one of its Affiliates and Contractor.  Article 29
(Operations for Sonangols account - sole risk)  1.Operations which may be the object of a
sole risk notice from Sonangol under this Article shall be those
involving:  (a)penetration and testing geological horizons deeper
than those proposed by Contractor to the Operating Committee in any Exploration
Well being drilled which has not encountered Petroleum, provided the Operator
has not commenced the approved operations to complete or abandon such Well;  34


(b)penetration and testing geological horizons deeper
than those proposed by Contractor to the Operating Committee in any Exploration
Well being drilled which has encountered Petroleum, provided that in respect to
such Well the Operating Committee has agreed that Sonangol may undertake the
sole risk operations, and the Operator has not commenced the approved operations
to complete or abandon such Well;  (c)the drilling of an Exploration Well other than an
Appraisal Well, provided that not more than two (2) such Wells may be
drilled in any Year;  (d)the drilling of an Appraisal Well which is a direct
result from a successful Exploration Well, whether or not such Exploration Well
was drilled as part of a sole risk operation;  (e)the Development of any discovery which is a direct
result from a successful Exploration Well and/or Appraisal Well sole risk
operation which Contractor has not elected to undertake under paragraph 3 of
this Article;  (f)the Development of a Petroleum deposit discovered by a
successful Exploration Well and/or Appraisal Well carried out by Contractor as
part of a work plan approved by the Operating Committee, if thirty-six (36)
Months have elapsed since such successful Well was completed and Contractor has
not commenced the Development of such deposit.  2.Except as to those described under
paragraphs 1(a) and 1(b), none of the operations described in paragraph 1
of this Article may be the object of a sole risk notice from Sonangol
until after the operation has been proposed in complete form to the Operating
Committee and has been rejected by the Operating Committee. To be in complete
form as mentioned above, the proposal for conducting any of the above
mentioned operations presented by Sonangol shall contain appropriate
information such as location, depth, target geological objective, timing of
operation, and where appropriate, details concerning any Development plan, as
well as other relevant data.  3.If the conditions referred to in
paragraph 2 have been met, Sonangol may, as to any operation described in
paragraph 1, give a written sole risk notice to Contractor and the latter shall
have the following periods of time, from the date of receipt of such sole risk
notice within which to notify Sonangol whether or not it elects to undertake
such proposed operation by including it as a part of the Petroleum Operations:  35


(a)as to any operations described in paragraphs 1(a) and
1(b), seven (7) days or until commencement of the deepening operations,
whichever occurs last;  (b)as to any operations described in paragraphs 1(c) and
1(d), three (3) Months;  (c)as to any operations described in paragraphs 1(e) and
1(f), six (6) Months.  4.If Contractor elects to include as part
of the Petroleum Operations the operation described in the sole risk notice
within the appropriate periods described in paragraph 3 above, such operation
shall be carried out by the Operator within the framework of the Petroleum
Operations under this Agreement, as a part of the current Work Plan and Budget
which shall be considered as revised accordingly.  5.If Contractor elects not to undertake the
operation described in the sole risk notice, subject to the provisions of
paragraph 6 below, the operation for the account of Sonangol shall be carried
out promptly and diligently by Contractor at Sonangols sole risk and expense, provided
that such operation may only be carried out if it does not conflict or cause
hindrance to Contractors obligations or any operation, or delay existing work
plans, including any Approved Work Plan and Budget. With respect to operations
referred to in paragraphs 1(c) and 1(d) such operations shall begin
as soon as a suitable rig is available in Angola. Sonangol and Contractor shall
agree on a method whereby Sonangol shall provide all necessary funds to
Operator to undertake and pay for the operations carried out at Sonangols sole
risk and expense.  6.Sonangol shall elect to have the
operations carried out at Sonangols sole risk and expense referred to in
paragraphs 1(e) and 1(f) carried out either by itself, by Contractor
for a mutually agreed fee or by any third party entity contracted to that
effect by Sonangol, provided that such operations may be carried out only if
they will not conflict with or cause hindrance to Contractors obligations or
any Petroleum Operations, or delay existing work plans, including the Approved
Work Plan and Budget. Before entering into any agreement with a third party for
the aforementioned purpose, Sonangol shall notify Contractor in writing of such
proposed agreement. Contractor shall have forty-five (45) days after the
receipt of the aforementioned notification to decide if it exercises its right
of first refusal with respect to the proposed agreement and to perform the sole
risk operations under the same terms and conditions proposed by the third
party.  36


7.If Sonangol wishes to use in the sole
risk operations assets which are used in the Petroleum Operations, it shall
give written notice to the Operating Committee stating what assets it wishes to
use, provided that the utilization of such assets may not prejudice the
Approved Work Plans and Budgets.  8.If, in accordance with the provisions of
paragraph 4, Contractor decides to undertake any works as foreseen in paragraph
1(d), it shall pay Sonangol in cash and within thirty (30) days of the date in
which it exercises such right, an amount equal to all of the costs incurred by
Sonangol in the relevant sole risk operations conducted in accordance with
paragraphs 1(a), 1(b) and 1(c) which directly led to the works foreseen
in paragraph 1(d).  9.In addition to the amount referred to in
the preceding paragraph, Sonangol will also be entitled to receive from
Contractor an additional payment equal to two hundred percent (200%) of the
costs referred to in paragraph 8. Such additional payment shall be made in cash
and within ninety (90) days of the date on which Contractor exercises its right
referred to in the preceding paragraph.  10.If, in accordance with the provisions of
paragraph 4, Contractor decides to undertake any works foreseen in paragraph
1(e), it shall pay Sonangol in cash, within thirty (30) days of the date in
which it exercises such right, an amount equivalent to the value of total costs
incurred by Sonangol in the sole risk operations which directly led to the
works foreseen in paragraph 1(e), less any payment made in accordance with
paragraph 8 above.  11.If the operations described in paragraphs
1(e) and 1(f) are conducted at Sonangols sole risk and expense,
Sonangol shall receive one hundred percent (100%) of the Petroleum produced
from the deposit developed under such terms.  12.The Petroleum received by Sonangol under
paragraph 11 shall be valued at the Market Price calculated under the Petroleum
Activities Tax Law.  37


Article 30
(Operating Committee)  1.The Operating Committee is the body
through which the Parties coordinate and supervise the Petroleum Operations and
shall be established within thirty (30) days of the Effective Date.  2.The Operating Committee has, among
others, the following functions:  (a)to establish policies for the Petroleum Operations and
to define, for this purpose, procedures and guidelines as it may deem
necessary;  (b)to review and, except as provided in paragraph 12,
approve all Contractors proposals on Work Plans and Budgets (including the
location of Wells and facilities), the General Development and Production Plan,
Production Plans and Lifting Schedules;  (c)to verify and supervise the accounting of costs,
expenses and expenditures and the conformity of the operating and accounting
records with the rules established in this Agreement, in Annex C hereof,
in the Petroleum Activities Tax Law, and in other applicable legislation;  (d)to establish technical and other committees whenever
it deems necessary;  (e)in general, to review and, except as otherwise
provided in this Agreement, to decide upon all matters which are relevant to
the execution of this Agreement, it being understood, however, that in all
events the right to declare a Commercial Discovery is reserved exclusively to
Contractor.  3.The Operating Committee shall obey the
clauses of this Agreement and it cannot decide on matters that by Law or this
Agreement are the exclusive responsibility of the National Concessionaire or
Contractor.  4.The Operating Committee shall be composed
of four (4) members, two (2) of whom shall be appointed by Sonangol.
The other two (2) members shall be appointed by Contractor. The Operating
Committee meetings cannot take place unless at least three (3) of its
members are present.  5.The Operating Committee shall be headed
by a Chairman who shall be appointed by Sonangol from among its representatives
and who shall be responsible for the following functions:  38


(a)to
coordinate and orient all the Operating Committees activities;  (b)to chair the
meetings and to notify the Parties of the timing and location of such meetings,
it being understood that the Operating Committee shall meet whenever requested
by any Party;  (c)to establish
the agenda of the meetings, which shall include all matters which the Parties
have asked to be discussed;  (d)to convey to
each Party all decisions of the Operating Committee, within five (5) working
days after the meetings;  (e)to request
from Operator any information and to make recommendations that have been
requested by any member of the Operating Committee, as well as to request from
Contractor any advice and studies whose execution has been approved by the
Operating Committee;  (f)to request
from technical and other committees any information, recommendations and
studies that he has been asked to obtain by any member of the Operating
Committee;  (g)to convey to
the Parties all information and data provided to him by the Operator for this
effect.  6.In the case
of an impediment to the Chairman of the Operating Committee, the work of any
meeting will be chaired by one of the other members appointed by him for the
effect.  7.At the
request of any of the Parties, the Operating Committee shall prepare and
approve, according to paragraph 11(c) of this Article, its internal
regulations, which shall comply with the rules established in this
Agreement.  8.At the
Operating Committee meetings decisions shall only be made on matters included
on the respective agenda, unless, with all members of the Operating Committee
present, they agree to make decisions on any matter not so included on the
agenda.  9.Each member
of the Operating Committee shall have one (1) vote and the Chairman shall
in addition have a tie breaking vote.  39


10.Except as
provided for in paragraph 11, the decisions of the Operating Committee are
taken by simple majority of the votes present or represented, it being
understood that any member may be represented by written and duly signed proxy
held by another member.  11.Unanimous
approval of the Operating Committee shall be required for:  (a)approval of,
and any revision to proposed Exploration Work Plans and Budgets prepared after
the first Commercial Discovery;  (b)approval of,
and any revision to the proposed General Development and Production Plan, the
Production Plan, Lifting Schedule and Development and Production Work Plans and
Budgets;  (c)establishment
of rules of procedure for the Operating Committee;  (d)establishment
of a management policy for the carrying out of responsibilities outlined in
paragraph 2 of this Article, namely the procedures and guidelines as per
paragraph 2(a) above.  12.Prior to the
time of declaration of the first Commercial Discovery, the Operating Committee
shall review and give such advice as it deems appropriate with respect to the
matters referred to in paragraph 2(e) of
this Article and with respect to Contractors proposals on Exploration
Work Plans and Budgets (including the location of Wells and facilities).
Following such review, Contractor shall make such revision of the Exploration
Work Plans and Budgets as Contractor deems appropriate and shall transmit same
Work Plans and Budgets to Sonangol, so that they may be submitted to approval
of the Ministry of Petroleum under the Petroleum Activities law.  13.The General
Development and Production Plan, the Development and Production Work Plans and
Budget, together with the Production Plans approved by the Operating Committee,
shall be sent by the same to Sonangol, for submission to the Ministry of
Petroleum for approval under the Petroleum Activities Law.  14.Minutes
shall be made of every meeting of the Operating Committee and they shall be
written in the appropriate record book and signed by all members.  15.The draft of
the minutes shall be prepared, if possible, within two (2) working days of
the meeting being held and copies of it shall be sent to the Parties within the
following five (5) working days, and their approval shall be deemed
granted if no  40


objection is raised within ten (10) working days
of the date of receipt of the draft minutes.  Article 31 (Ownership of assets)  1.Physical
assets purchased by Contractor for the implementation of the Work Plans and
Budgets become the property of Sonangol when purchased in Angola or, if
purchased abroad, when landed in Angola. Such physical assets should be used in
Petroleum Operations, provided, however, Contractor is not obligated to make
any payments for the use of such physical assets during the term of this
Agreement. This provision shall not apply to equipment leased from and
belonging to third parties or any entity comprising Contractor.  2.During the
term of this Agreement, Contractor shall be entitled to full use in the
Contract Area, as well as in any other area approved by Sonangol, of all fixed
and movable assets acquired for use in the Petroleum Operations without charge
to Contractor. Any of Sonangols assets which Contractor agrees have become
surplus to Contractors then current and/or future needs in the Contract Area
may be removed and used by Sonangol outside the Contract Area, without any
effect on the tax treatment available to Contractor. Any of Sonangols assets
other than those considered by Contractor to be superfluous shall not be
disposed of by Sonangol except with agreement of Contractor so long as this
Agreement is in force.  Article 32 (Property and
confidentiality of data)  1.All
information of a technical nature developed through the conduct of the
Petroleum Operations shall be the property of Sonangol. Notwithstanding the
above, and without prejudice to the provisions of the following paragraphs,
Contractor shall have the right to use and copy, free of charge, such
information for internal purposes.  2.Unless
otherwise agreed by Sonangol and Contractor, while this Agreement remains in
force, all technical, economic, accounting or any other information, including,
without limitation, reports, maps, logs, records and other data developed
through the conduct of Petroleum Operations, shall be held strictly
confidential and shall not be disclosed by any Party without the prior written
consent of the other Party hereto;  41


provided, however, that either Party may, without such
approval, disclose the aforementioned data:  (a)to any
Affiliate or potential assignee of such Party upon such Affiliate or potential
assignee giving a similar undertaking of confidentiality;  (b)in
connection with the arranging of financing or of a corporate re-organization
upon obtaining a similar undertaking of confidentiality;  (c)to the
extent required by any applicable taw, regulation or rule (including,
without limitation, any regulation or rule of any regulatory agency,
securities commission or securities exchange on which the securities of such
Party or of any such Partys Affiliates are listed);  (d)to
employees, consultants, contractors or other third parties as necessary in
connection with Petroleum Operations upon obtaining a similar undertaking of
confidentiality.  3.The
obligation of confidentiality of the information referred to in paragraph 2
above shall continue for ten (10) Years after the termination of the
Agreement or such other period as agreed to in writing between the Parties.  4.In the event
that any entity constituting Contractor ceases to hold an interest under this
Agreement, such entity will continue to be bound by the provisions of this
Article.  5.To obtain
offers for new Petroleum Exploration and Production agreements, Sonangol may,
upon obtaining the prior written agreement of Contractor, disclose to third
parties geophysical and geological data and information, and other technical
data (the age of which is not less than one (1) Year) or Contractors
reports and interpretations (the age of which is not less than five (5) Years)
with respect to that part or parts of the Contract Area adjacent to the area of
such new offers.  6.The
confidentiality obligation contained in this Article shall not apply to
any information that has entered the public domain by any means that is both
lawful and does not involve a breach of this Article.  42


Article 33 (Responsibility for
losses and damages)  1.Contractor,
in its capacity as the entity responsible for the execution of the Petroleum
Operations within the Contract Area, shall be liable to third parties to the
extent provided under the Law for any losses and damage it may cause to them in
conducting the Petroleum Operations and shall indemnify and defend Sonangol
with respect thereto, provided that Sonangol has given timely notice of the
claims and opportunity to defend.  2.Contractor
is also liable, under the terms of the Law, for losses and damage which, in
conducting the Petroleum Operations, it may cause to the State and, in case of
Contractors gross negligence or willful misconduct or Serious Fault, to Sonangol.  3.The
provisions of the preceding paragraphs 1 and 2 do not apply to losses and
damage caused during Petroleum Operations for account and risk of Sonangol, for
which Sonangol shall indemnify and defend Contractor, and in relation to which
Contractor shall only be liable for such losses and damage caused by its gross
negligence or willful misconduct or Serious Fault.  4.Subject to Article
20 if Contractor comprises more than one (1) entity, the liability of such
entities hereunder is joint and several.  Article 34 (Petroleum Operations
risk management)  1.Contractor
shall comply with what is established in Decree Nr. 39/01, of June 22, in the
respective regulations contained therein and the relevant Angolan legislation,
in respect of management of the risks of Petroleum Operations.  2.Management
of the risks to which persons, assets and income from Petroleum Operations are
exposed shall include all the activities referred to in Decree Nr. 39/01, of
June 22, and other activities which Sonangol and Contractor may agree to
include to ensure an adequate financial protection.  3.In relation
to the risks relating to Petroleum Operations, Contractor shall take out and
maintain insurance contracts in accordance with the specifications and
conditions which may be approved by Sonangol.  43


4.Contractor
shall carry out, in cooperation with Sonangol, all the risk management
activities provided for in the mentioned Decree Nr. 39/01, of June 22, in
accordance with the instructions, rules and procedures approved by
Sonangol.  Article 35 (Recruitment,
integration and training of Angolan personnel)  1.Contractor
shall comply with what is established in Law-Decree Nr. 17/09, of June 26 and
the regulations, as well as applicable legislation regarding the recruitment,
integration and training of Angolan personnel.  2.In planned,
systematic and various ways and in accordance with the provisions of this
Article, Contractor shall train all its Angolan personnel directly or
indirectly involved in the Petroleum Operations for the purpose of improving
their knowledge and professional qualification in order that the Angolan
personnel gradually reach the level of knowledge and professional qualification
held by Contractors foreign workers.  3.Such
training shall also include the transfer of the knowledge of petroleum
technology and the necessary management experience so as to enable the Angolan
personnel to use the most advanced and appropriate technology in use in the
Petroleum Operations, including proprietary and patented technology, know how
and other confidential technology, to the extent permitted by applicable laws
and agreements, subject to appropriate confidentiality agreements.  4.Besides
other duties provided for in the Law, the recruitment, integration and training
of Contractors Angolan personnel shall be included in three (3) Year
plans. In this respect, Contractor undertakes, notably, to:  (a)prepare a
draft of the initial plan and submit it to Sonangol within four (4) Months
of the Effective Date;  (b)prepare a
proposal for implementation of the plan and submit it to Sonangol within one (1) Month
of the approval of such plan by the Ministry of Petroleum;  (c)implement
the approved plan in accordance with the directives of the Ministry of
Petroleum and Sonangol, Contractor being able, in this regard and with the
approval of Sonangol, to contract outside specialists not  44


associated
with Contractor to proceed with the implementation of specific aspects of the
subject plan.  5.Contractor
agrees to require in its contracts with subcontractors who work for Contractor
for a period of more than one (1) Year, compliance with requirements for
the training of work crews, to which requirements such subcontractors are
subject by operation of current law. Contractor further agrees to monitor
compliance with the aforementioned obligations.  6.Contractor
shall be responsible for the training costs of Angolan personnel it employs,
such costs being deductible in calculating the taxable income of Contractor.
Costs incurred by Contractor for training programs for Sonangol personnel will
be borne in a manner to be agreed upon by Sonangol and Contractor.  Article 36 (Double taxation and
change of circumstances)  1.In order to
avoid the international double taxation of Contractors income, Sonangol shall
favourably consider any amendments or revisions to this Agreement that
Contractor may propose as long as those amendments or revisions do not impact
on Sonangol or Angolas economic benefits and other benefits resulting from the
Agreement.  2.Without
prejudice to the other rights and obligations of the Parties under this
Agreement, if any change in the provisions of any Law, decree or regulation in
force in the Republic of Angola occurs subsequent to the signing of this
Agreement which adversely affects the obligations, rights and benefits
hereunder, then the Parties shall agree on such amendments to this Agreement as
are necessary to restore the rights, obligations and forecasted benefits that
would have accrued to the Parties if such change in Law, decree or regulation
had not occurred.  Article 37 (Assignment)  1.In
accordance with the Law, each of the entities constituting Contractor may
assign part or all of its rights, privileges, duties and obligations under this
Agreement to an Affiliate or, upon obtaining prior authorization from the
Ministry of Petroleum, to a non-Affiliate.  45


2.Any third
party assignees shall become holders of the rights and obligations deriving
from this Agreement and the Law.  3.In the case
of assignment to an Affiliate of the assignor, the latter and the assignee
shall remain jointly and severally liable for strict compliance with the
obligations of Contractor set forth in this Agreement and relevant legislation.  4.The legal
documents required to effect any assignment in accordance with the provisions
of this Article must indicate the participating interest which the third
party assignee will have in the Agreement and shall be submitted for the prior
approval of Sonangol.  5.In any of
the cases foreseen in this Article, the obligations of the assignor which
should have been fulfilled under the terms of this Agreement and the applicable
legislation at the date the request for the assignment is made, must have been
fully complied with.  6.Sonangol has
the right of first refusal to acquire the participating interest that any
member of Contractor intends to assign to a non-Affiliate, which right should
be exercised pursuant to the following procedures:  (a)the
assigning company shall notify Sonangol of the price and other essential terms
and conditions of the proposed assignment and the identity of the prospective
assignee;  (b)within
thirty (30) days after receipt of the notification referred to in the preceding
subparagraph, Sonangol shall notify the assigning company whether Sonangol
elects to exercise the right of first refusal;  (c)if Sonangol
does not exercise the right of first refusal by failing to give the
notification referred to in the preceding subparagraph, then Sonangol shall be
deemed to have waived the right of first refusal in respect of such assignment;  (d)if Sonangol
exercises the right of first refusal by giving the notification referred to in
paragraph 6(b) of this Article, then Sonangol and the assigning company shall
execute the assignment under the terms and conditions contained in the
notification referred to in paragraph 6(a) of this Article.  46


7.In the event
of Sonangol not exercising the right of first refusal referred to in the
preceding paragraph, such right shall pass to the associates of Sonangol which
enjoy the status of national company as provided for in Article 31.3 of the
Petroleum Activities Law, and shall be exercised, duly adapted, under the terms
of the procedures set forth in the sub-paragraphs of the preceding paragraph.  8.Except as
otherwise expressly provided in this Agreement, upon completion of an
assignment made by one of the entities constituting Contractor to a
non-Affiliate, such assignor shall have no further rights or obligations with
respect to the part of the participating interest so assigned.  Article 38 (Termination of the
Agreement)  1.Subject to
the provisions of the general law and of any contractual clause, Sonangol may
terminate this Agreement if Contractor:  (a)interrupts
Production for a period of more than ninety (90) days with no cause or
justification acceptable under normal international petroleum industry
practice;  (b)continuously
refuses with no justification to comply with the Law;  (c)intentionally
submits false information to the Government or to Sonangol;  (d)discloses
confidential information related to the Petroleum Operations without having
previously obtained the necessary authorization thereto if such disclosure
causes prejudice to Sonangol or the State;  (e)assigns any
part of its interests hereunder in breach of the rules provided for in Article
37;  (f)is declared
bankrupt by a court of competent jurisdiction;  (g)does not
comply with any final decision resulting from an arbitration process conducted
under the terms of the Agreement, after all adequate appeals are exhausted;  (h)does not
fulfill a substantial part of its duties and obligations resulting from the
Law, the Concession Decree-Law and from this Agreement;  47


(i)intentionally
extracts or produces any mineral which is not covered by the object of this
Agreement, unless such extraction or production is expressly authorized or
unavoidable as a result of operations carried out in accordance with accepted
international petroleum industry practice.  2.Sonangol may
also terminate the Agreement if the majority of the share capital of any entity
constituting Contractor is transferred to a non-Affiliate third party without
having obtained prior authorization from Sonangol.  3.If Sonangol
considers that one of the aforesaid causes exists to terminate this Agreement,
it shall notify Contractor in writing in order for it, within a period of
ninety (90) days, to remedy such cause. The said notification shall be
delivered by the official method foreseen in the Law, and by recorded delivery
which shall be signed by the entity to which it is addressed. If, for any
reason, this procedure is impossible, due to a change of address which has not
been notified pursuant to this Agreement, publication of the notice in one of the
most read daily newspapers in Luanda shall be considered to be as valid as if
delivered. If, after the end of the ninety (90) day notice period such cause
has not been remedied or removed, or if agreement has not been reached on a
plan to remedy or remove the cause, this Agreement may be terminated in
accordance with the provisions mentioned above.  4.The
termination of the Agreement envisaged in this Article shall occur without
prejudice to any rights which may have accrued to the Party which has invoked
it in relation to the other Party, in accordance with this Agreement, the
Concession Decree-Law or the Law.  5.If any of
the entities constituting Contractor, but not all of them, gives Sonangol due
cause to terminate this Agreement pursuant to the provisions of paragraph 1 or 2
above, then such termination shall take place only with respect to such entity
or entities and the rights and obligations that such entity or entities hold
under this Agreement, except as provided in the preceding paragraph, shall
revert freely to Sonangol if the other members of the Contractor do not acquire
the participating interest of the entity to whom Sonangol has terminate this
Agreement pursuant this Article.  48


Article 39 (Confidentiality of the Agreement)  1.Sonangol and
Contractor agree to maintain the confidentiality of this Agreement; provided,
however, either Party may, without the approval of the other Party, disclose
this Agreement:  (a)to any
Affiliate or potential assignee of such Party upon such Affiliate or potential
assignee giving a similar undertaking of confidentiality;  (b)in
connection with the arranging of financing or of a corporate reorganization
upon obtaining a similar undertaking of confidentiality;  (c)to the
extent required by any applicable Law, Decree or regulation (including, without
limitation, any requirement or rule of any regulatory agency, securities
commission or securities exchange on which the securities of such Party may be
listed);  (d)to
employees, contractors, consultants and other third parties as necessary in
connection with the execution of Petroleum Operations upon obtaining a similar
undertaking of confidentiality.  Article 40 (Dispute Resolution)  1.Any
disputes, differences or claims arising out of this Agreement or relating
thereto, or relating to the interpretation, breach, termination or invalidation
of the same, shall be resolved by agreement of the Parties on the basis of
principles of good faith and equity or fair balance of Parties interests.  2.If the
disputes, differences or claims referred to in the preceding paragraph cannot
be resolved amicably, they shall be finally and exclusively settled by
arbitration, in accordance with the UNCITRAL Rules of Arbitration of 1976
as existing on the Effective Date. The number of arbitrators shall be three
(3). One (1) arbitrator shall be appointed by Sonangol, one (1) by
Contractor (acting jointly) and the third arbitrator, who shall be Chairman of
the Arbitration Tribunal, shall be jointly appointed by Sonangol and
Contractor... If an arbitrator is not appointed within thirty (30) days of the
notice from Sonangol or the Contractor is sent to the other Party requesting
that the appointment be made, then such arbitrator shall be appointed by the
President of the International Chamber of Commerce of Paris.  49


3.The
arbitration tribunal shall decide according to Angolan substantive law.  4.The
arbitration tribunal shall be seated in Luanda and shall apply Angolan law and
the language of the arbitration shall be Portuguese. The tribunal will make all
best efforts to render a final award within a year of its appointment, although
a failure to do so will not invalidate any award rendered thereafter.  5.The Parties
agree that this arbitration clause is an explicit waiver of any immunity from
or against the validity and enforcement of any award or of any judgment
thereon, and any such award shall be final and binding and enforceable against
any Party in any court having jurisdiction in accordance with its laws.  Article 41 (Force Majeure)  1.Non-performance
or delay in performance by Sonangol or Contractor, or both of them, of any of
the contractual obligations, except an obligation to pay money, shall be
excused if, and to the extent that, such non-performance or delay is caused by
Force Majeure.  2.If the Force
Majeure restrains only temporarily the performance of a contractual obligation
or the exercise of a right subject to a time limit, the time given in this
Agreement for the performance of such obligation or the exercise of such right
and for the performance or exercise of any right or obligation dependent
thereon, and, if relevant, the term of the Agreement, shall be suspended until
the restoration of the status quo
prior to the occurrence of the event(s) constituting Force Majeure, it
being understood, however, that such suspension shall apply only with respect
to the parts of the Contract Area which have been affected.  3.Force
Majeure, for the purposes of this Article, shall be any occurrence which is
unforeseeable, unavoidable and beyond the reasonable control of the Party
claiming to be affected by such event, such as, and without limitation, state
of war, either declared or not, rebellions or mutinies, natural catastrophes,
fires, earthquakes, communications cuts and unavoidable accidents.  4.The Party
which understands that it may claim a situation of Force Majeure shall
immediately serve notice to the other Party, and shall use all reasonable
efforts to correct the situation of Force Majeure as soon as possible.  50


Article 42 (Applicable Law)  This Agreement shall be governed by and
construed in accordance with Angolan substantive law.  Article 43 (Language)  This Agreement has been prepared and signed
in the Portuguese language which shall be the only official version for the
purpose of establishing the rights and obligations of the Parties.  Article 44 (Offices and service of notice)  1.Sonangol and
Operator shall maintain offices in Luanda, Republic of Angola, where
communications and notices foreseen in this Agreement must be validly served.  2.Sonangols
office for the purpose of serving notice is:  Rua Raínha Ginga, Nr. 29-32, 20thfloor
Luanda República de Angola
Fax: 244-222-391915  3.Operators
office for the purpose of serving notice is:  CFRA Advogados
Associados Rua 1° Congresso do MPLA
Edificio CIF Lunada One - 15thfloor
Luanda
República de Angola Fax: 244-222-399187  4.Sonangol and
Contractor shall communicate to each other in writing and with reasonable
notice any change of their offices referred to in the preceding paragraphs, if
such occurs.  51


Article 45 (Captions and headings)  Captions and headings are included in this
Agreement for the sole purpose of systematization and shall have no
interpretative value.   Article 46 (Effectiveness)  This Agreement shall come into effect on the
Effective Date.  52


IN WITNESS
WHEREOF, the Parties hereto have signed this
Agreement in the Portuguese language in Luanda, this 24thday of February 2010.  Sociedade
Nacional de Combustíveis de Angola - Empresa Pública (Sonangol, E.P.)  Represented
  by:
  /s/
  Manuel D. VicenteManuel
  D. VicenteCIE
  Angola Block 9 Ltd.Represented
  by:
  /s/
  Samuel H. GillespieSamuel
  H. GillespieSonangol
  Pesquisa e Produção, S.A.Represented
  by:
  /s/
  Gaspar MartinsGaspar
  MartinsRepresented by:
  /s/ Domingos Lima ViegasDomingos Lima Viegas  Nazaki
  Oil and Gáz, S.A.Represented
  by:
  /s/
  Zandre CamposZandre
  CamposAlper
  Oil, LdaRepresented by:
  /s/ Alberto da Fonseca
  AbrantesAlberto da Fonseca
  Abrantes  Represented by:
  /s/ Antonio Do Nasimento
  PegadoAntonio Do Nasimento
  Pegado   53


Annex A - Description of the Contract Area  The present Annex is an integral part of the
Agreement.  The area represented in Annex B is delimited
by the lines defined through points 1 to 4 and is included in the following
perimeter:  Starting at
the point of interception of the Parallel 10° 45 00 S and the Meridian 13° 20
00 E, having the point 1 with the coordinates of Latitude 10° 45 00 S and
Longitude 13° 20 00 E.  From this point
moving in to the East, following the Parallel 10° 45 00 S until its
interception with the Meridian 13° 44 30 E taking into account the average
sea level, having point 2 with the coordinates of Latitude 10° 45 00 S and
Longitude 13° 44 30 E.  From this point
moving South, following the line of the coast until interception with the
Parallel 11° 35 00 S and the Meridian 13° 46 20 E taking into account the
average sea level, having point 3 with the coordinates of Latitude 11° 35 00
S and Longitude 13° 46 20 E.  From this
point moving West, following the Parallel 11° 35 00 S until interception with
the Meridian 13 20 00 E, having point 4 with the coordinates of Latitude 11°
35 00 S and Longitude 13° 20 00 E.  Finally, from this point moving North until
reaching point 1.  The above coordinates identified are made
with reference to the Datum of Camacupa in the elipsoid of Clark, 1880.  54


Annex B . Map of the Contract Area    55


Annex C - Accounting and Financial Procedures  The present Annex is an integral part of the
Risk Services Agreement dated February 24, 2010 signed between Sonangol, as one
Party, and Cobalt, Sonangol P&P, Nazaki and Alper as the other Party, as
referred to in Article 2 of said Agreement.  Article 1 (General provisions)  1.1Definitions  The terms used in this Annex shall have the same meaning given to them
in the Agreement.  1.2Purpose,
cost duplication and accounting records  (a)The purpose
of the Accounting and Financial Procedures is to establish some of the rules and
principles that, under the Petroleum Activities Tax Law, should be contractually
agreed upon, setting forth equitable methods for determining the expenditures
and revenues of the Petroleum Operations in accordance with the Petroleum
Operations Information System (SIOP), approved under the Joint Executive
Decree n°. 7/88, of March 26, 1988 (as amended) and generally accepted
accounting principles.  (b)It is the
Parties intention that there shall not be any duplication of any deductible
fiscal cost.  (c)Each of the
entities of which Contractor is made up has the responsibility of keeping its
own accounting records for the purpose of satisfying all legal requirements and
justifying tax returns or any other accounting reports requested by any
government authority or Sonangol in respect of the Petroleum Operations.  (d)In order to
permit each entity of which Contractor is comprised to keep such accounting
records, Operator shall prepare the Joint Account in such a manner as to permit
the entities in question to satisfy any legal and contractual obligations to
which they are bound.  56


1.3Units and
exchange rates  (a)The
measurements required under this Annex will be made in metric units and in
Barrels.  (b)All the
accounting books, results, charts, accounting reports and correspondence shall
be written up in Portuguese language and registered in local currency as
required by Law.  (c)If necessary
for the internal use of Contractor, the referred accounting books, charts of
results, and accounting reports and correspondence may also be written up in
other languages, currencies and units of measurement after obtaining the prior
approval of Sonangol.  (d)Exchange
rate fluctuations shall not constitute any gain or loss either for Sonangol or
Contractor.  (e)Operator
shall supply Sonangol with a description of the procedures adopted for the
calculation of the exchange rate differences, as well as the respective
policies for protection from exchange rate fluctuations.  (f)Gains and
losses, realized or unrealized, as a result of foreign exchange fluctuations
will be registered individually and separately in the Joint Account, under
their own heading.  (g)Operator
shall supply Sonangol with a statement taken from the accounting records in
respect of the foreign exchange rate differences calculated each Quarter no
later than twenty-one (21) days after the end of the Quarter in question.  (h)Sonangol,
within thirty (30) days of receipt of the statement referred to in the previous
sub-paragraph, shall notify Operator of its position in respect of the amounts
of foreign exchange rate differences accepted as being recoverable.  (i)The amounts
received and expenses incurred in local currency or in United States dollars
shall be converted from local currency into United States dollars or United
States dollars into local currency at the buying and selling rates published by
the Banco Nacional de Angola on the last working day of the Month prior to the
Month in which the amounts were  57


received or paid, or the buying and selling
rates of any other working day as agreed by the Parties.  (j)The costs of
depreciation and amortization will be translated or converted at the exchange
rate prevailing on the date of purchase of the original asset.  1.4Payments  (a)All payments
between the Parties under the Agreement shall be made in United States dollars
or in other currencies as agreed by the Parties, to a bank account designated
by the Party to which payment is due.  (b)Any payments
required under the Agreement or derived from the same, principally premiums,
rents and penalties for non-compliance with the minimum work program, as well
as any payments due to Contractor arising from Sonangols Crude Oil purchase
rights, shall be made within thirty (30) days of the end of the Month during
which the payment obligation was incurred.  (c)If one of
the Parties has not in due time paid the sums due under the Agreement to the
other Party, payment of interest shall be added to such sums due for each day
such sums are overdue at an annual rate equal to the London Inter Bank Offered
Rate (LIBOR) for six (6) Months, as quoted at 11.00 a.m. London time
on the first working day of each Month that this sum is overdue by the London
office of Bank of America, plus two (2) percentage points.  1.5Financial
and operational audit and Sonangols rights of inspection:  (a)The
accounting records maintained by Contractor shall be audited on an annual basis
by an international independent auditing company selected by Sonangol.  The inspection shall be carried out by the auditors pursuant to
generally accepted auditing principles.  (b)Contractor
shall supply all records, documents and explanations requested by the auditors
and allow them to carry out the checks considered necessary within the scope of
their work.  58


(c)A copy of
each audit report shall be given to the Ministry of Finance, to Sonangol and to
each entity of which Contractor is comprised within six (6) Months of the
end of the respective Year in which the audit was carried out.  (d)In addition
to the provisions of sub-paragraph (a) above, Sonangol will have the
permanent right, either on its own or through third parties, and upon giving
reasonable notice to Contractor, to carry out operational inspections or audits
considered to be necessary in respect of facilities, studies, accounts,
records, documents, contracts, goods or assets of any kind in such a manner as
to verify compliance with the contractual provisions and the Law. The costs of
such an audit will be borne by Sonangol.  (e)When
carrying out the audits referred to in this Article, the auditors may inspect
and check, upon reasonable notice having been given by Sonangol to Contractor,
all expenditures and revenues connected with Petroleum Operations, such as
accounting books, accounting entries, inventories, vouchers, payment slips,
invoices, contracts or subcontracts of any kind related to the Agreement and
any other documents, correspondence and records of Contractor necessary for
auditing and checking expenditures and revenues.  (f)In addition,
the auditors have the right, in respect of such inspections and audits, to
visit and examine, provided that they give reasonable notice, all locations,
installations, houses, warehouses and offices of Contractor in Angola and/or
any other location provided that they are used for the Petroleum Operations,
including visits to the personnel working on these operations.  (g)The costs of
the examination and inspection of records located outside Angola without
Sonangols authorization will be borne by Contractor and are not fiscally
recoverable.  (h)All
accounting records, sales statements, books and accounts connected with the
Petroleum Operations will be accepted as true and accurate after a period of
twenty-four (24) Months from the end of the Fiscal Year to which they relate,
unless within this same period, Sonangol or any member of Contractor express
any objection to them in writing.  59


(i)Sonangol may
extend the twenty-four (24) Month period by an additional twelve (12) Month
period upon providing Contractor with written notice of such extension not
later than sixty (60) days prior to the end of the initial twenty-four (24)
Month period.  (j)Notwithstanding
the possibility of the period of twenty-four (24) Months referred to in the
previous subparagraph having expired, if there is any evidence that Operator is
guilty of gross negligence or willful misconduct or serious Fault in conducting
the Petroleum Operations during the expired periods, Sonangol will have the
right to carry out additional audits in respect of such periods.  (k)All
adjustments required as a result of the audits referred to in this Article,
when agreed and approved by the Operating Committee, shall be promptly made in
the Joint Account.  (l)If any
disputes between Sonangol and Contractor in respect of the audits carried out
still remain, these cases of dispute will be entrusted for the purposes of
resolution to an international and independent audit company agreed between the
Parties.  (m)If any of
the Parties disagree with the resolution put forward by the aforementioned
international and independent audit company, the dissenting Party shall notify
the other Party for the case in dispute to be resolved under Article 40 of
the Agreement.  (n)Notwithstanding
the provisions of this Article, all documents herein referred to shall be
available for inspection by Sonangol for five (5) Years after the date of
their being drawn up.  (o)This Article will
neither take the place of nor lessen the legal obligations of Contractor
arising from Angolan fiscal and commercial legislation.  Article 2 (Expenditures and revenues of Contractor)  2.1The
expenditures incurred in respect of the Petroleum Operations shall be debited
to the Joint Account in accordance with the principles set out in the Petroleum
Activities Tax Law, the Agreement and this Annex.  60


2.2Each member
of Contractor will comply with the accounting procedure for its share of Crude Oil
exports and the respective revenues shall not be credited to the Joint Account.  2.3The
expenditures shall be classified in accordance with the Petroleum Operations
Information System (SIOP) and will be deductible under Article 10 of the
Agreement.  2.4The services
of and fees for the technical/administrative assistance provided by the
Affiliates of Operator or of Sonangol in respect of the Petroleum Operations
shall meet the following conditions for the purposes of their eligibility as
expenses imputable to the Joint Account:  (a)The
categories of technical/administrative services provided by the Affiliates of
Operator or of Sonangol for the running and carrying out of the Petroleum
Operations, are as follows:  (i)Exploration  ·study of the
soil and setting up of drilling equipment;  ·planning of
seismic acquisition;  ·seismic
processing and interpretation;  ·geophysical
analyses;  ·geological
and geochemical studies;  ·rock and
fluid studies;  ·thermodynamic
analyses;  ·interpretation
of diagraphics;  ·reservoir
analysis and studies;  ·health,
safety and environmental technical audits;  ·ocean
current measurements;  ·environmental
studies.  61


(ii)Development  ·studies of
the subsurface for the purpose of determining the best manner of recovering
hydrocarbons, 2D and 3D geophysics, production geology, modeling and simulation
of deposits as an integral part of economic reservoir exploitation and
conservation;  ·architectural
and engineering studies for the purpose of preparing the file on the
preliminary project and the file on the basic engineering involved;  ·project
management;  ·water and
gas injection studies;  ·specific
studies for the purpose of enhanced recovery and cost control;  ·improvement
of drilling and completion methods and equipment;  ·safety
procedures program;  ·health,
safety and environmental technical audits;  ·environmental
studies.  (iii)Production  ·analysis of
fluids produced;  ·optimization
studies;  ·improvement
and control of equipment;  ·lifting
schedule studies;  ·corrosion
control program and studies;  ·health,
safety and environmental technical audits;  ·environmental
studies.  62


(iv)Administration
and services  ·provision of
data processing services;  ·maintenance
program and inventory control evaluation and studies.  (b)The above
referred list is exhaustive and may only be altered with the approval of
Sonangol.  (c)In relation
to each Fiscal Year, such services shall be set out under their own heading as
an integral part of the Work Plans and Budgets in the Petroleum Operations
Procedures Document, when signed between Sonangol and Contractor under Article 9
of the Agreement.  (d)At the time
of the presentation of the Work Plans and Budgets, Operator shall also submit
for the approval of Sonangol the estimate of the applicable tariffs for the
budgeted Year, as well as the number of hours and purpose of each work order.  (e)Those
services, once budgeted, will be subject to specific work orders which shall be
previously approved by Sonangol at the request of Operator, either by means of
a global Master Order for each field or individually, on a case by case
basis.  (f)These work
orders shall contain an estimate of the number of hours necessary for the
carrying out of the services, a reasonable description of the services desired,
the professional ranking of the workers required to perform them and the agreed
tariffs.  (g)Whenever the
actual costs which have been incurred and invoiced are more than ten percent
(10%) or ten thousand United States dollars (U.S.$10.000.00) higher, whichever
is greater, than those budgeted, the deductibility of the difference will be
submitted to Sonangol for approval.  (h)For each
approved work order, the reference to the technical reports shall be attached
to the respective invoice and the technical report shall be filed by Operator
in Angola. The tariffs and the Partys or its Affiliates debts relating to work
orders shall be certified annually by an  63


independent
auditor, to confirm whether or not they include any element of profit or loss.  (i)The approval
for individual services whose budgeted worth is equal to or more than thirty
thousand United States dollars (U.S.$30,000.00) is only definitive in respect
of each of these services if Sonangol does not put forward any objections
within a period of forty (40) days from the date of receipt of the request made
by Operator.  (j)The approval
for individual services whose budgeted worth is less than thirty thousand
United States dollars (U.S. $30,000.00) is implicit, with, however, the
Operator proceeding according to the description provided in sub-paragraph (h) above.  (k)With respect
to unforeseen services which, for such reason, are not set out in the Approved
Work Plans and Budgets, such services can only be ordered by Operator after
approval has been granted by Sonangol, irrespective of their estimated cost.  (l)In respect
of all the technical and administrative services provided by the Affiliates of
Operator not covered by this Article 2.4, an annual global price (forfait) of one percent (1%) is hereby agreed and levied on
direct Exploration expenditures incurred during the Exploration Period.  (m)The services
which are remunerated by the annual global price fixed in sub-paragraph (l) above
shall include, but are not limited to, purchases and traffic; human resources
management; market consultancy, negotiations; revisions and supervision of
contracts; banks; invoicing; credits; accounts; general services;
communications; methods; internal procedures and controls; technological
advances resulting from scientific research in diverse fields; insurance and legal
assistance;, assistance to personalities; assistance to agents undergoing
training and safety of operations.  (n)Expenditures
incurred on personnel and associated costs in respect of the personnel of the
Affiliates of Operator or of Sonangol employed on the Petroleum Operations for
short and long-term periods are not included in the technical and
administrative assistance services set out  64


in this Article 2.4
and may be deductible as personnel expenditures under the terms set out in the
Petroleum Activities Tax Law.  (o)Other
services provided by the Affiliates of Operator and Affiliates of Sonangol
shall be charged at prices which are not higher than the most favourable prices
charged by third parties for similar services.  2.5Expenditures
incurred on materials for Petroleum Operations shall meet the following
conditions for the purposes of their eligibility as expenses imputable to the
Joint Account  (a)The amount
of such expenditures shall not be greater than the prices generally in force on
the open market for impartial arms-length transactions for materials and
equipment of the same quality available at the time, with due consideration of
freight and other similar costs.  (b)The materials
and equipment necessary for the Petroleum Operations may also be acquired from
Sonangol and its Affiliates and/or any entity constituting Contractor and their
Affiliates, under the following conditions:  (i)The new
materials and equipment, classified as category A, shall be invoiced at the
vendors lowest price or at the international price in force.  This amount shall not be
greater than the prices generally in force in normal arms-length sales
transactions on the open market.  (ii)Used
materials and equipment which are in good condition and which can be reused
without the need for repair shall be considered as category B and charged at
seventy-five percent (75%) of the current price of the material and equipment
set out in sub-paragraph b(i).  (iii)Materials
and equipment which cannot be considered as category B but which:  (A)after
general repair may be used for its original purpose as good second hand
materials and equipment;  65


(B)may be used
for its original purpose but for which its repair is not recommendable,  shall be classified as
category C and charged at fifty percent (50%) of the current price of material
and equipment set out in sub-paragraph b(i).  (iv)An amount
compatible with their use will be attributed to materials and equipment which
cannot be classified as category B or C.  (v)When the use
of materials and equipment is temporary and their application on the Petroleum
Operations does not justify the reduction in price under the terms indicated in
sub-paragraphs b(i) and b(ii), they will be debited on the basis of their
utilization.  (c)Insofar as
it is necessary for the purposes of the prudent, efficient and economic conduct
of the Petroleum Operations, materials and equipment for use on the Petroleum
Operations shall only be purchased or supplied on the basis of a foreseeable
and reasonable use and any excessive accumulation of stock shall be avoided.  (d)In the case
of materials and equipment supplied by Sonangol and its Affiliates and/or any
entity constituting Contractor and their Affiliates, they will not guarantee
such materials and equipment beyond the guarantee of the supplier or
manufacturer of such materials and equipment and in the case of defective
materials and equipment, any adjustments received by Sonangol and its
Affiliates and/or any entity constituting Contractor and their Affiliates from
suppliers or from manufacturers, shall be credited to the Joint Account
pursuant to the provisions of the Petroleum Activities Tax Law.  Article 3 (Calculation and accounting rules for abandonment costs)  For
the purposes of deductibility under the terms of point III of item (d) of
number 2 of Article 23 of the Petroleum Activities Tax Law, the calculation and
accounting of the abandonment costs shall be made according to the terms set
forth in the following sub-paragraphs:  66


(a)no later
than ninety (90) days before the beginning of the Year for which Operator
forecasts that the cumulative production of the Contract Area will lead to a
situation in which the recoverable reserves at the end of the Year in question
represent less than:  (i)fifty
percent (50%) of the declared recoverable reserves under fifty (50) million
Barrels;  or  (ii)thirty
percent (30%) of the declared recoverable reserves above fifty (50) million
Barrels but not more than one hundred (100) million Barrels;  or  (iii)twenty-five percent
(25%) of the declared recoverable reserves above one hundred (100 million)
Barrels,  Operator shall provide
Sonangol with a technical study for the alternative possibilities of
abandonment and its best calculations of the estimated abandonment costs of the
Contract Area for approval purposes;  (b)the estimate
referred in the previous sub-paragraph shall be up-to-date and inflated by
reference to the estimated date for the execution of the abandonment operations
in the Contract Area;  (c)following
the approval of Sonangol and commencing in the Year referred to in
sub-paragraph (a) above, Operator shall calculate the deductible
abandonment costs quarterly using the method of the production unit, in
accordance with the following formula:  67


Quarterly production
  (MMBBLS)
  X
  Total approved abandonment costs minus the amounts paid Declared
  recoverable reserves (MMBBLS) minus the cumulative Production up to beginning
  of the Quarter (MMBBLS)
  =
  Abandonment costs quarterly recoverable pursuant to subparagraph(e) below  
 (d)the amount
calculated under sub-paragraph (c) above shall be imputed to the
expenditures for the Contract Area in accordance with the Petroleum Activities
Tax Law;  (e)an amount
which is equivalent to the amount calculated in accordance with sub-paragraph (c) above
shall be paid by Contractor to Sonangol not later than thirty (30) days after
the end of the Quarter in question;  (f)no later
than ninety (90) days before the beginning of each subsequent Year, Contractor
may submit to Sonangol a revised estimate of the abandonment costs and declared
recoverable reserves which, once approved by Sonangol, shall be used in the
ensuing Year for the purposes of calculating the recoverable abandonment costs
under sub-paragraphs (c) and (e) above.  Article 4 (Rules on strategic materials reserves)  The materials classified by Operator as
strategic spare parts, which constitute a security stock for guaranteeing the
satisfactory carrying out of the Petroleum Operations, will be imputed to the
Petroleum Operations in accordance with the following conditions:  (a)Operator
shall submit to Sonangol a list of the materials classified as strategic spare
parts, for the purposes of the approval of the respective classification;  (b)The
materials referred to in the previous sub-paragraph shall be registered in the
accounts at the time of their acquisition under their own  68


sub-heading of Stock as set out in Article 23.2(f) of
the Petroleum Activities Tax Law;  (c)Their
imputation for deductibility established under the Petroleum Activities Tax Law
shall be made on the basis of their specific use for replacement or after four (4) Years
starting from the Year of acquisition, whichever occurs earlier;  (d)In the case
of the imputation referred to in sub-paragraph (c) above where four (4) Years
starting from the Year of acquisition have elapsed, such imputation in respect
of materials not used on the Petroleum Operations shall only be made with the prior
and timely approval of Sonangol.  Article 5 (Registration and evaluation of assets)  5.1Contractor
shall keep detailed records of assets in use on the Petroleum Operations, in
accordance with the standard practices of Exploration and Production activity
in the international petroleum industry and shall provide Sonangol with a full
and detailed annual report on these assets under the Petroleum Operations
Information System (SIOP).  5.2At
reasonable intervals and at least once a Year, a full inventory of assets in
use on the Petroleum Operations shall be made by Contractor under the
Agreement.  Contractor shall notify Sonangol thirty (30) days in advance of its
intention to carry out the inventory in order for Sonangol to be in a position
to exercise its right to be represented at the time of the carrying out of the
inventory.  5.3The
inventory procedures established by Contractor shall be notified to Sonangol at
the same time as Contractor notifies Sonangol of its intention to carry out the
inventories so that that any recommendations which Sonangol considers necessary
in connection with the carrying out of inventories on assets belonging to it
can be taken into account in these procedures.  5.4Special
inventories may be carried out at the request of the assignor where an
assignment takes place under the Agreement, provided that the costs of carrying
out the inventory are borne by such assignor.  69


Article 6 (Reports)  Contractor shall prepare and submit to
Sonangol the financial, statistical, technical and personnel reports in
accordance with the procedures set out in the Petroleum Operations Information
System (SIOP).  Article 7 (Revision of accounting and financial procedures)  The provisions set out in this Annex may be
amended by mutual agreement of Sonangol and Contractor, provided that such
amendments do not contravene the provisions of the Petroleum Operations
Information System (SIOP). Amendments shall be made in writing and shall
mention the date upon which they become effective.  Article 8 (Contractual conflicts)  In the case of any conflict between the
provisions set out in this Annex and the provisions set out in the Agreement,
the provisions of the Agreement shall prevail.  70


Annex D - Corporate Guarantee  This Annex is an integral part of the Risk
Services Agreement (the Agreement) dated February 24, 2010, entered into by
Sonangol, as one Party, and Cobalt, Nazaki, Sonangol P&P and Alper, as the
other Party, as provided in Article 2 of the Agreement.  To
Sociedade Nacional de Combustíveis de Angola
- Empresa Pública (Sonangol, E.P.)Rua Raínha Ginga, 29-32, 20th floorLuanda
Angola  ,
(Parent Company) represented by
                          
hereby declares that
                                
(Local Company) is an Affiliate of the
Parent Company.  Parent Company is fully aware of the content
of the Risk Services Agreement for Block 9 (the Agreement)
entered into by Sociedade Nacional de Combustíveis de Angola  Empresa Pública
(Sonangol, E.P.) (Sonangol) and
the Local Company and others, and of the Concession Decree-Law of the Council
of Ministers which approved the Agreement, the provisions of which it acknowledges
and accepts.  Parent Company unconditionally guarantees to
Sonangol the full and prompt fulfillment of the obligations assumed under the
Agreement by Local Company, and its Affiliated successors or Affiliated
assignees, waiving all benefits or rights which may, under the Law, in any
manner, limit, restrict or annul its obligations under this Guarantee.  This Guarantee will not be reduced or in any
manner affected by any delay or failure of Sonangol to enforce its rights, nor
by bankruptcy or dissolution of Local Company.  This Guarantee constitutes an integral part
of the Agreement entered into by Sonangol and Local Company and others, as
stated and referred to in Article 20 of the said Agreement.  If Local Company should fail in fulfilling
any of its obligations under the Agreement, and if Sonangol shall have
communicated in writing to Local Company such failure and the latter has not
remedied or taken the necessary steps to remedy such failures or deficiencies,
within a reasonable period of time, considering the nature of such failures or
deficiencies, then Sonangol may demand of Parent Company the fulfillment of
such obligations in default.  71


Sonangols demand must be made by letter
delivered to Parent Company which shall include a description of Local Companys
unfulfilled obligations and a statement of the amount to be paid or the actions
to be taken by Parent Company as a consequence of such default.  Any disputes arising under this Guarantee shall
be settled in accordance with the arbitration provisions contained in the
Agreement.  Parent
  CompanyBy:Name:Title:   Agreed:   Sociedade
  Nacional de Combustíveis de Angola - Empresa Pública (500a0901, E.P.)By:Name:Title:  72


Annex E - Financial Guarantee  This Annex is an integral part of the Risk
Services Agreement dated February 24, 2010, entered into by Sociedade Nacional
de Combustíveis de Angola - Empresa Pública - (Sonangol, E.P.), as one Party,
and by
                    ,
as the other Party, as provided in Article 2 of the Agreement.  To
Sociedade Nacional de Combustíveis de Angola
- Empresa Pública - (Sonangol, E.P.)Rua Raínha Ginga, 29-32, 20th floorLuanda
Angola  We the undersigned
                  
(Bank), whose registered office is
located at
                    ,
represented by
                          ,
hereby issue our irrevocable standby Letter of Credit Nr.
             as
follows:  We hereby authorize you to draw on us, for
the account of
                        ,
with head office in                               
(Company) up to an aggregate amount of
[          ] million U.S.
Dollars (USD
                  )
in accordance with the conditions herein stipulated.  1.Any drafts
issued pursuant to this Letter of Credit shall be accepted to the extent that
Company has failed to comply with its obligations in respect of the Initial
Exploration Phase as provided in Article 14, paragraphs 1 and/or  7, of the Risk Services Agreement for Block 9
dated
                
2009 between yourselves and Company (the Agreement),
which Initial Exploration Phase expires on
                  ,
(unless it is extended) as provided in Article 6, paragraph 1, of the Agreement.  2.Any
withdrawals under this Letter of Credit shall be made prior to
              
by signed drafts drawn on
                
branch and shall be accompanied by Sonangol E.P.s written statement certifying
that:  (a)Company has
failed to perform its aforementioned obligations for which Sonangol has not
previously drawn under this Letter of Credit;  (b)the amount
of the claim represents the obligation which Contractor has failed to perform
as specified in Article 14 of the Agreement; and  (c)Company has
not paid to Sonangol the amount claimed.  73


3.Any
withdrawal under this Letter of Credit must also be accompanied by copy of a
letter from Sonangol, E.P. to Company including:  (a)a
description of the unfulfilled obligations and the amount to be paid by Company
as a consequence of such default;  (b)a statement
of Sonangols intention to draw on the Letter of Credit once thirty (30) days
have elapsed from the date of receipt of the letter;  (c)acknowledgment
by Company of receipt of the notification.  4.This Letter
of Credit shall be reduced as provided in Articles 20.5 and 20.6 of the
Agreement.  Each of such reductions is to be evidenced by written statement to be
submitted by Company to Bank which statement shall indicate that Sonangol, E.P.
has approved the amount of the reduction being requested.  5.This Letter
of Credit shall become effective on
                ,
and expire on           , or
at such earlier time as the total of the authorized reductions equal the
original amount guaranteed hereunder or when the obligations referred to above
have been fulfilled, whichever first occurs.  6.All
documents will be submitted to
                      -
branch which shall make the corresponding payments when and if the terms and
conditions stipulated in this Letter of Credit have been totally satisfied.  7.This Letter
of Credit is subject to the Uniform Customs and Practice for Documentary
Credits, International Chamber of Commerce Publication No. 600.  This Letter of Credit shall be governed and interpreted in accordance
with
                
law and is subject to the exclusive jurisdiction of the courts of             .  We hereby undertake to Sonangol, E.P. that
all drafts under and in compliance with the terms of this Letter of Credit will
be duly honored if issued and presented for payment on or before the expiration
date, as provided in paragraph 5 of this Letter of Credit.  Bank  74