Exhibit 10.2





 


PRODUCTION SHARING
AGREEMENT FOR OIL

EXPLORATION AND EXPLOITATION


 


Between


 


THE GOVERNMENT
OF THE REPUBLIC OF BENIN


 


And


 


THE
COMPANY: ELEPHANT OIL LTD


 


CONCERNING 


 


BLOC
B


 






    


    


    

 


TABLE OF CONTENTS



 




	PREAMBLE	3
	ARTICLE 1:	DEFINITIONS	4
	ARTICLE 2:	SUBJECT-MATTER OF THE CONTRACT	9
	ARTICLE 3:	CONTRACT VALIDITY PERIOD	10
	ARTICLE 5:	SURFACE AREA RETROCESSIONS	13
	ARTICLE 7:	TECHNICAL AND BUDGETARY MANAGEMENT COMMITTEE	14
	ARTICLE 8:	ANNUAL WORK PROGRAMME, BUDGETS AND REPORTS	15
	ARTICLE 9:	DECLARATION OF COMMERCIAL DISCOVERY AND DESIGNATION
    OF THE DEVELOPMENT ZONE	18
	ARTICLE 10:	EXCLUSIVE RISKY OPERATIONS	20
	ARTICLE 11:	GOVERNMENT PARTICIPATION	21
	ARTICLE 12:	ROYALTIES, COST RECOVERY & PRODUCTION SHARING	21
	ARTICLE 13:	MEETING THE NATIONAL CONSUMPTION NEEDS	22
	ARTICLE 14:	APPLICABLE TAX SYSTEM	23
	ARTICLE 15:	MEASUREMENT, PROVISION, EVALUATION AND SALE OF HYDROCARBONS	25
	ARTICLE 16:	NATURAL GAS	27
	ARTICLE 17:	DAMAGES, ABANDONMENT, ENVIRONMENTAL PROTECTION AND SECURITY	29
	ARTICLE 18:	FOREIGN EXCHANGE ARRANGEMENTS	32
	ARTICLE 19:	LOCAL CONTENT, SOCIAL PROGRAMMES AND SIGNING BONUS	33
	ARTICLE 21:	CONFIDENTIAL NATURE OF THE DATA	35
	ARTICLE 22:	ASSIGNMENT OF RIGHTS	36
	ARTICLE 23:	FORCE MAJEURE	37
	ARTICLE 24:	ARBITRATION AND EXPERTISE	38
	ARTICLE 25:	CANCELLATION	39
	ARTICLE 27:	NOTIFICATION	41
	ARTICLE 28:	APPLICABLE LEGISLATION, STABILISATION AND COMPENSATION	42
	ARTICLE 30:	GUARANTEES FROM PARENT COMPANIES	44
	ARTICLE 31:	FINAL PROVISIONS	45


 






    Page 2 of 77


    


    

 


PREAMBLE


 


WHEREAS: 


 


In accordance with
Law No. 2006-18 of 17 October 2006 constituting the Oil Code of the Republic of Benin, the exploration, research, exploitation, holding,
transport, transit and trade of Hydrocarbons on the territory and in the territorial waters of the Republic of Benin and the continental
shelf adjacent thereto shall be subject to the provisions of the aforesaid law, which furthermore stipulates that deposits of liquid
and gaseous Hydrocarbons belong to the State and constitute transferable minerals.


 


In accordance with
Article 15, the Government may undertake any oil operation alone or in association with private capitals. It may undertake any prospecting
operation without the authorization set out in article 5 of this Oil Code.


 


It may issue to
any public service or enterprise enjoying legal entity status, an oil title or a provisional authorization to exploit or prospect as
set out in articles 5, 6, 7 and 8 of the Oil Code.


 


In accordance with
Article 20, no person may acquire the hydrocarbons research permit or permit H if they do not show the necessary technical capacities
and financial base to undertake the research activities and if they do not subscribe to the commitment to allocate a minimum appropriate
financial effort to research during the validity period of the permit.


 


A minimum works
programme, a training programme for national employees, the income tax system and the financial effort agreed upon should be defined
in the oil contract.


 


In accordance with
Article 11, Elephant Oil Ltd must establish a subsidiary domiciled at its headquarters in the Republic of Benin, which, from its date
of registration, shall replace Elephant Oil Ltd in its rights and obligations for the conduct of Oil Operations without any other authorisation
being necessary.


 


In accordance with
the Oil Code in effect in the Republic of Benin, the parties wish to enter into this Contract, under the form of a production-sharing
agreement for oil exploration and exploitation.


 


The Government
of the Republic of Benin has decided to enter into this contract with the company:


 


ELEPHANT OIL LTD


 


The undersigned
parties, represented by:


 


on the one hand,
Mr. Barthélémy Dahoga KASSA,


 


The Minister of
Energy, Oil and Mining Research, Water and Development of Sustainable Energy.


 


And


 


on the other hand
by Mr. Matthew LOFGRAN,


 


President of ELEPHANT
OIL LTD


 


Hereby agree to
the following:


 


 






    Page 3 of 77


    


    

 


ARTICLE 1:
DEFINITIONS


 


The following terms
appearing in the Contract shall be defined as follows unless otherwise expressly indicated or unless otherwise agreed upon by both parties.
The definitions shall be the same whether the terms are used in the singular or plural form.




 


		1.1	“Affiliate”
                                            or “Affiliated Company” shall mean a company or any other enterprise
                                            that controls one or several enterprises that comprise the Contractor, or that is controlled
                                            by one or several enterprises that comprise the Contractor, or that is controlled by an enterprise
                                            that controls the Contractor. Controlling shall mean to directly or indirectly hold more
                                            than fifty percent (50%) of the shares comprising the capital of the controlled company,
                                            thus conferring to the enterprise holding the control, the majority of the voting rights
                                            in the controlled company.



 


		1.2	“Calendar
                                            Year” shall mean a period of twelve (12) consecutive months starting on the first
                                            of January and ending the thirty-first of the following December.



 


		1.3	“Contract
                                            Year” shall mean a period of twelve (12) consecutive months from the Effective
                                            Date of the Contract or the anniversary date of its signature.



 


		1.4	“Appendix”
                                            shall mean an appendix attached to the Contract and forming an integral part of the Contract.
                                            In case of non-conformity or a conflict between the Contract and one of its appendixes, the
                                            provisions of the Contract shall prevail.



 


		1.5	“Accounting
                                            Appendix” shall mean the accounting procedures and formalities set out in Appendix
                                            “D”.



 


		1.6	“Article”
                                            shall mean any numbered provision of the Contract, including all its sub-clauses, unless
                                            it is expressly indicated that it is an article of the Code.



 


		1.7	“Barrel”
                                            shall mean a US Barrel, a quantity or unit of Oil measurement equivalent to 158.5556 litres.



 


		1.8	“BLOC”
                                            is defined as the area defined by the geographic coordinates and map found in Appendix B.
                                            



 


		1.9	“Available
                                            Crude” shall mean the remaining quantity of the Total Production of the Crude extracted
                                            in the Contract Region after deducting losses related to Oil Operations and the Tax on Oil
                                            Production in accordance with Article 12.1 of this Contract.



 


		1.10	“Crude
                                            Profit” or “Oil Profit” shall mean the remaining Crude Oil every year
                                            after deducting the Oil Cost.



 


		1.11	“Budget”
                                            shall mean the financial estimate of all oil activities in an Annual Works Programme.



 






    Page 4 of 77


    


    

 


		1.12	“Code”
                                            shall mean the law No. 2006-18 of 17 October 2006 relating to the Oil Code in the Republic
                                            of Benin.



 


		1.13	“Contractor”
                                            shall mean Elephant Oil Ltd and its subsidiary, which will be created pursuant to Article
                                            11 of the Oil Code, as well as its successors and/or any transferee enjoying any of its rights
                                            in accordance with the Contract, the transfer of which shall be in conformity with Article
                                            22.



 


		1.14	“Contract”
                                            shall mean this document in its original version, duly signed including its Appendixes and
                                            any amendment that the Parties may sign subsequently.



 


		1.15	“Production
                                            Costs” shall mean the costs and fees caused by the Production Operations not including
                                            the new investments made during this phase. These costs also include the exportation costs
                                            of Hydrocarbons as well as the maintenance and abandonment costs of the oil installations.



 


		1.16	“Oil
                                            Costs” shall mean all costs and fees related to Oil Operations in accordance with
                                            the Contract and set out in the Accounting Appendix.



 


		1.17	“Exploration
                                            Costs” shall mean the costs and fees related to Exploration operations.



 


		1.18	“Development
                                            Costs” shall mean the costs and fees related to the Development Operations.



 


		1.19	“Cost-Stop”
                                            shall mean the Crude intended for the recovery of the Oil Costs.



 


		1.20	“Starting
                                            Date of the Commercial Production” shall mean the date of first delivery of Hydrocarbons
                                            in commercial quantities to the delivery point in Benin.



 


		1.21	“Effective
                                            Date” shall mean the date on which this Contract is signed by the duly authorized
                                            representatives of both Parties.



 


		1.22	“Discovery”
                                            shall mean the detection of Hydrocarbons from a reservoir or geological structure where such
                                            Hydrocarbons were not previously identified, leading to Oil Operations in accordance with
                                            the Contract, and when these Hydrocarbons are made recoverable on the surface through conventional
                                            methods used in the international oil industry.



 


		1.23	“Commercial
                                            Discovery” shall mean a Hydrocarbon Discovery reserves following Exploration Operations
                                            that is deemed commercial in accordance with the provisions of Article 9.



 


		1.24	“Foreign
                                            currency” shall mean any foreign currency that may be exchanged freely and generally
                                            accepted by the international banking system.



 


		1.25	“Dollars”
                                            shall mean the official currency of the United States of America.



 


		1.26	“F
                                            CFA” is the official currency in the Republic of Benin.



 


		1.27	“Data”
                                            shall mean any document, report and information of a technical, economic or scientific nature
                                            concerning the Contract Region.



 


		1.28	“Expatriate
                                            Employee” shall mean an employee of the Contractor or of a sub-contractor who has
                                            been recruited as such and assigned to the Oil Operations in Benin.



 


		1.29	“State”
                                            shall mean the Republic of Benin, its Government, its administrative structures and all political
                                            subdivisions and institutions.



 






    Page 5 of 77


    


    

 


		1.30	“Exploration”
                                            shall mean the planning, implementation and evaluation of any type of geological, geophysical,
                                            geochemical studies and others as well as drilling Exploration Wells for the purpose of a
                                            Hydrocarbon Discovery.



 


		1.31	“Exploitation’’
                                            shall mean the operation consisting of extracting Hydrocarbon substances for disposal for
                                            utilitarian purposes.



 


		1.32	“Associated
                                            Gas” shall mean the Gas extracted from a well along with Crude Oil.



 


		1.33	“Natural
                                            Gas” shall mean Hydrocarbons in their gaseous state in normal conditions of atmospheric
                                            pressure and temperature, including, without any limitation, wet gas, dry gas, casing head
                                            gas and any gaseous hydrocarbon, including residual gas after liquid condensation or extraction,
                                            but does not include the said extracted condensates or liquids.



 


		1.34	“Non-Associated
                                            Gas” shall mean the Natural Gas that is exploited in parallel with the Crude Oil
                                            or that exists in parallel with Crude Oil that cannot be produced commercially whereas the
                                            said Natural Gas is produced commercially.



 


		1.35	“Gas
                                            Deposit” shall mean one or several Natural Gas accumulations superposed vertically
                                            in the Contract Region and having an established commercial value in accordance with Best
                                            Practices.



 


		1.36	“Oil
                                            Deposit” shall mean an accumulation of Crude Oil, or multiple vertically superposed
                                            accumulations of Crude Oil in the Contract Region and having an established commercial value
                                            in accordance with Best Practices.



 


		1.37	“Government”
                                            shall mean the organ grouping together all the Ministers of the State. In this Contract,
                                            it shall mean the Government of the Republic of Benin, its representatives or proxies.



 


		1.38	“Hydrocarbons”
                                            shall mean Crude Oil and/or Natural Gas.



 


		1.39	“Working
                                            Day” shall mean all working days from Monday to Friday except for days declared
                                            totally or partially non-working days in Cotonou, Benin by the appropriate governmental authorities.



 


		1.40	“Minister”
                                            shall mean the Minister in charge of Hydrocarbons in the Republic of Benin.



 


		1.41	“Exploration
                                            Operations” shall mean operations undertaken in accordance with the Contract to
                                            discover Hydrocarbon accumulations and to evaluate the extent and volume of these accumulations,
                                            the characteristics of the Reservoirs and their probable behaviour during production. The
                                            Exploration Operations shall include geological, geophysical and geochemical research, studies,
                                            drilling, deepening, abandonment or conditioning of wells and their evaluation as well as
                                            any related operations.



 


		1.42	“Development
                                            Operations” shall mean all operations undertaken in accordance with the General
                                            Development Programme in order to exploit
                                            Hydrocarbon accumulations in the sub-soil of the Development Zones. These operations shall
                                            include:



 


		●	Drilling,
                                            conditioning and sampling of development wells, drilling and conditioning of wells to inject
                                            gas or water; 



 


		●	The
                                            installation of gathering pipelines, separators, reservoirs, pumps, artificial loaders and
                                            other production and injection facilities required to produce, treat and transport the Hydrocarbons
                                            up to the earth-based or offshore Hydrocarbon storage facilities or gas treatment facilities;
                                            and



 






    Page 6 of 77


    


    

 


		●	The
                                            installation of pipes inside or outside the Contract Region to the storage or delivery points,
                                            the construction of these facilities to stock Crude Oil or treat the Gas and all related
                                            operations that are not explicitly mentioned in this document but that are needed for the
                                            development and production of these Hydrocarbon accumulations and for the delivery of Crude
                                            Oil and/or gas to the Delivery Point, in accordance with Best Practices.



 


		1.43	“Oil
                                            Operations” shall mean all operations authorized by the Contract and that are related
                                            to exploration, development, production, separation and treatment, storage, transportation
                                            and selling or transferring of Hydrocarbons up to the exportation point or to the Delivery
                                            Point agreed upon in Benin or to the delivery point in a refinery in Benin in accordance
                                            with the Contract; they shall cover the treatment operations of the Natural Gas but shall
                                            not include refining operations of the Crude Oil.



 


		1.44	“Production
                                            Operations” shall mean operations undertaken to produce Hydrocarbons in the Contract
                                            Region such as extraction, injection, stimulation, treatment, storage, transportation to
                                            the delivery point(s), loading, including exportation of those Hydrocarbons, as well as the
                                            maintenance and abandonment of the required facilities.



 


		1.45	“Parties”
                                            shall mean the Government and the Contractor.



 



		1.46	“Crude
                                            Oil” shall mean the crude mineral oil, asphalt, ozokerite and all other types of
                                            Hydrocarbons and bitumen, solid or liquid, in the natural state or obtained from the Natural
                                            Gas by condensation, separation or extraction.



 


		1.47	“Delivery
                                            Point” shall mean the Terminal Point of the Pipelines downstream from the storage
                                            facilities from which the Oil or the Gas is delivered to be exported. The location of the
                                            Delivery Point shall be agreed upon by both Parties.



 


		1.48	“Commercial
                                            Production” shall mean the quantity of Crude Oil or Natural Gas or both, likely
                                            to be delivered to the Delivery Point in accordance with a regular production and sales programme.



 


		1.49	“Total
                                            Crude Oil Production” shall mean the quantity of Crude extracted from the Contract
                                            Region after extracting the water, foreign substances and after deducting the quantities
                                            used for Oil Operations.



 


		1.50	“Work
                                            Programme” shall mean all plans developed every year to carry out the Oil Operations.



 


		1.51	“General
                                            Development Programme” shall mean a plan established for the development of an
                                            Oil Deposit or a Gas Deposit agreed upon by the Parties.



 



		1.52	“Appraisal
                                            Well” shall mean a well, different from an exploration well, drilled to assess
                                            the commercial viability of a geological trap where Hydrocarbons have been discovered.



 


		1.53	“Exploration
                                            Wells” shall mean any well drilled as part of the Exploration Operations including
                                            dried wells and discovery wells.



 


		1.54	“Development
                                            Wells” shall mean a well drilled in order to produce Hydrocarbons from a known
                                            Reservoir assessed and tested, to maintain and increase production, or to speed up the extraction,
                                            including production and injection wells.



 


		1.55	“Contract
                                            Region” shall mean the entire geographical area defined by the perimeter, the coordinates
                                            of which appear in Appendix “A” and that are represented on the map in Appendix
                                            “B”, except any part for which the Contractor has, from time to time, abandoned
                                            or renounced its rights in accordance with the Contract. In case of non-compliance or conflict
                                            between Appendix “A” and Appendix “B”, Appendix “A” shall
                                            prevail.



 






    Page 7 of 77


    


    

 


		1.56	“Best
                                            Practices” shall mean all good, healthy, economic and efficient practices generally
                                            accepted in the international oil industry.



 


		1.57	“Reservoir”
                                            shall mean the subsoil rock containing Hydrocarbon in its voidages and having a common pressure
                                            system in its dimensions.



 


		1.58	“SOBEH”
                                            is a national company with the mission of holding, managing and investing in any way whatsoever
                                            on behalf of the Government or on its own behalf directly or indirectly in all activities
                                            associated with the research, exploitation, commercialisation of crude oil, refining operations
                                            and all activities directly related to the activities indicated above;



 


		1.59	“Basement”
                                            shall mean eruptive, metamorphic or other rocks that, based on their nature and according
                                            to widely accepted knowledge in the international oil industry, cannot contain Hydrocarbon
                                            deposits on the one hand, and on the other hand, impenetrable rock substances such as salt
                                            and clay domes as well as any other rock rendering the continuation of drilling activities
                                            impracticable or economically unjustifiable using modern drilling technology normally used
                                            in the international oil industry.



 


		1.60	“Sub-Contractor”
                                            shall mean any individual or legal entity the Contractor uses to provide services pursuant
                                            to the Contract.



 


		1.61	“London
                                            Inter-Bank Offered Rate (LIBOR)” shall mean the closing interest rate for deposits
                                            in dollars at six (6) months on the London Interbank market and published by the London branch
                                            of “The Bank of America” or by any other bank agreed upon by the Parties, the
                                            day in question or the immediate preceding bank day if the day in question is not a working
                                            bank day in London.



 


		1.62	“Interest
                                            rate of the Contract” shall mean the “LIBOR rate” plus one percent.



 


		1.63	“Oil
                                            Production Tax” shall mean the Royalty (proportional mining royalty) as defined
                                            in the Code and shall not be less than 8 % of the Total Crude Oil Production.





 


		1.64	“Test”
                                            refers to any operation intended to evaluate the capacity of a zone to produce Hydrocarbons
                                            using MDT and/or DST tools.



 


		1.65	“Quarter”
                                            shall mean a period of three (3) consecutive months to be counted respectively from 1 January
                                            , 1 April , 1 July and 1 October of each Calendar Year.



 


		1.66	“Sales
                                            to Third Parties” shall mean sales of Hydrocarbon products in the Contract Region
                                            and meeting the following requirements:



 


		(a)	The
                                            price agreed upon shall be the only consideration for the sale;



 


		(b)	The
                                            sales conditions shall not be subject to any commercial relationship other than the one created
                                            by the Sales Agreement itself between the seller and the buyer or any of their Affiliates;



 


		(c)	Neither
                                            the seller nor any of its Affiliates shall have a direct or indirect interest in the sale
                                            or future transfer of the Hydrocarbons or in any derivative product;



 


		(d)	These
                                            sales shall not entail any processing agreement or barter or exchange agreement.



 






    Page 8 of 77


    


    

 


		1.67	“Development
                                            Zone” shall mean the portion of the Contract Region that, according to the available
                                            seismic information and data on the wells, is reasonably qualified to cover the horizontal
                                            span of Hydrocarbon accumulation constituting a Commercial Discovery and designated as such
                                            in an approved Global Development Programme. The Development Zone shall comprise the depth
                                            corresponding to the assessed and tested reservoirs between the surface and the basement.



 


ARTICLE 2:
SUBJECT-MATTER OF THE CONTRACT


 


		2.1	By this
                                            Contract, the Government shall give to the Contractor the exclusive right to undertake Oil
                                            Operations in the Contract Region in order to exploit, develop and produce Hydrocarbons in
                                            that region, in accordance with the provisions of the Oil Code and the Contract, in compliance
                                            with the laws and regulations in force in the Republic of Benin. The Government shall implement
                                            all necessary administrative procedures so as to allow the Contractor to enjoy its rights
                                            and to perform its duties.



 


		2.2	In accordance
                                            with article 20 of the Oil Code, the Contractor declares that it possesses the necessary
                                            technical and financial capacities and agrees to undertake all of the Oil Operations in accordance
                                            with this Contract and Best Practices.



 


		2.3	With
                                            regard to the Bloc, once a General Development Programme concerning a Hydrocarbons Discovery
                                            is approved in the shortest deadlines, in accordance with the terms of the Contract, the
                                            Contractor shall enjoy the full rights to conduct the Development and Production Operations
                                            and shall hold the benefit of these economic activities in usufruct provided that the obligations
                                            of the Contract and the Code are respected.



 


		2.4	The
                                            Contractor shall be bound to supply all necessary technical, financial, human and economic
                                            resources for the Oil Operations. Subject to the proportional interest of the Government,
                                            which the Contractor accepts under a portage arrangement, all costs and outlays incurred
                                            through the Oil Operations shall be the responsibility of the Contractor who shall support
                                            them exclusively. Moreover, the Contractor shall act as the technical, financial and economic
                                            manager of the Oil Operations during the exploratory period.



 


		2.5	The
                                            Minister in charge of Hydrocarbons in his capacity as the Representative of the Government,
                                            shall be in charge of supervising the Oil Operations to ensure that the Contractor is performing
                                            his duties in accordance with the Contract. The Minister shall carry out this duty at any
                                            moment through its technical services, which include the General Directorate of Hydrocarbons
                                            and other Fossil Fuels. The Contractor is required to facilitate the access of the representatives
                                            of the Minister to its data and facilities to allow them to accomplish their missions through
                                            the operational fund set up by the Companies.



 






    Page 9 of 77


    


    

 


ARTICLE 3:
CONTRACT VALIDITY PERIOD


 


		3.1	Effective
                                            Date



 


The Contract
shall be effective from its date of signing by the Minister in charge of Hydrocarbons and shall end at the expiry date indicated below,
subject to the provisions of Article 25 relating to termination.


 


		3.2	Validity
                                            Period 



 


		3.2.1	The
                                            duration of the Contract shall be divided into two periods: an exploration period and an
                                            exploitation period.



 


		3.2.2	The
                                            exploration period shall comprise an initial phase of three (03) years, with two (02) possible
                                            extension phases of three (03) years each. These extensions shall be granted provided that
                                            the Contractor has fully respected its working, retrocession and expense obligations and
                                            other significant obligations related to the preceding phase.



 


		3.2.3	Subject
                                            to fulfilling all of the obligations related to the ongoing phase, the Contractor may request
                                            in writing to the Minister to move on to the next phase (first or second extension phase)
                                            at least sixty (60) calendar days before the end of the said phase. If this request is not
                                            made on time and if a Commercial Discovery has not been made, the Contract shall end at the
                                            end of the phase in question of the exploration period.



 


		3.2.4	Subject
                                            to the provisions relating to termination and in case no Hydrocarbon Discovery has been made
                                            during the exploration period, the Contract shall expire at the end of that period.



 


If
at least one (1) Commercial Discovery has been made before the end of the exploration period, the Contract shall remain in force with
regard to the corresponding Development Zones.


 


		3.2.5	In
                                            case of Commercial Hydrocarbon Discovery, the Government shall automatically grant to the
                                            Contractor at its request an exploitation permit covering the Development Zone, the perimeter
                                            of which has been approved in the context of a General Development Programme in accordance
                                            with the provisions of Article 9. The duration of the exploitation permit during which the
                                            Contractor shall be authorized to ensure the production of each discovered Oil Deposit or
                                            Gas Deposit shall be fixed at twenty five (25) years from the date the discovery is declared
                                            to be a Commercial Discovery in accordance with the provisions of Article 9 of the Contract.



 


Over
the duration of the Contract, the Contractor may retrocede one or several Development Zones, object of an exploitation permit subject
to the approval of the Minister.


 


		3.2.6	If
                                            after the expiration of the exploitation period defined above, commercial exploitation is
                                            still possible, the Contractor may be authorized at its request, to continue the exploitation
                                            for an additional period of ten (10) years, if it has fulfilled all the contractual obligations
                                            during the preceding exploitation period.



 






    Page 10 of 77


    


    

 


		3.2.7	When
                                            the last exploitation permit given to the Contractor expires, the rights and obligations
                                            defined in this Contract shall be null and void.



 


		3.2.8	To
                                            be granted an exploitation authorization, the Contractor shall submit to the Government a
                                            precise delimitation of the required perimeter in such a way that it covers the entire presumed
                                            surface area of the discovered Deposit.



 


		3.2.9	If,
                                            during the works subsequent to the discovery it appears that the deposit has a greater surface
                                            area than initially planned in accordance with the previous paragraph, the Government shall
                                            grant to the Contractor in the context of the exploitation authorization already given, the
                                            additional surface area in such a way that all the deposits are covered, on condition that
                                            the above-mentioned extension be an integral part of the Contract Region as it is defined
                                            during the said modification. If the said additional surface area is outside the Contract
                                            Region, the Government shall give to the Contractor this additional surface area if it is
                                            not the object of mining rights already given to a third party or a request for such rights.









 


ARTICLE
4: OWNERSHIP OF ASSETS, DATA AND HYDROCARBONS


 


		4.1	Ownership
                                            of assets



 



		4.1.1	The
                                            land shall become Government property as soon as they are acquired by the Contractor. The
                                            Minister must cooperate in taking all the steps in favour of the Contractor and at the written
                                            request of the latter, to obtain licenses, permits, surface rights, utilities, rights to
                                            have access and leave the Contract Region freely, utilisation of waters and any other type
                                            of utilities on any land or water body of public or private utility, to allow the Contractor
                                            to achieve the Oil Operations on the Benin territory, in accordance with the laws in force
                                            in the country.



 


		4.1.2	Without
                                            prejudice to the above-mentioned provisions, the ownership of the moveable and non-moveable
                                            assets acquired by the Contractor and belonging to it/her for the Oil Operations, shall be
                                            automatically transferred from the Contractor to the Government as soon as their cost has
                                            been totally depreciated by the Contractor, who continues to use it for production needs
                                            or, otherwise, at the end of the Contract. When the Contract expires, the Contractor shall
                                            be required to give back to the Benin Government, through the Minister and exempt of any
                                            tax, the ownership of lands, buildings, installations, accessories and permanent equipments
                                            that it has acquired to undertake the Oil Operations. After that, the Contractor shall be
                                            free of any obligation, including obligations stemming from abandonment procedures and rehabilitation
                                            of the environment with regard to the said assets if the activities of the field were to
                                            continue. During the validity period of the Contract, the Contractor shall be bound to conserve
                                            and preserve in good state the moveable and non-moveable assets acquired to conduct the Operations.



 






    Page 11 of 77


    


    

 


		4.1.3	The
                                            ownership of rented assets or leased moveable assets and the intellectual property belonging
                                            to sub-contractors or Affiliates and the intellectual property of belonging to other third
                                            parties shall be kept by the said sub-contractors, affiliates or third parties.



 


		4.1.4	Over
                                            the duration of the Contract, the Contractor shall be authorized to use and enjoy all moveable
                                            and non-moveable assets acquired for the Oil Operations in accordance with the Contract.
                                            The Contractor shall be authorized to hand over or sell the said assets if they are no longer
                                            necessary for Oil Operations. Profits made from selling these assets shall be allocated as
                                            follows:



 


		●	If
                                            the ownership of the said assets has been transferred to the Government, the product must
                                            be paid to the latter;



 


		●	The
                                            Contractor shall keep these revenues if the assets have not been depreciated; 



 


		●	In
                                            case of partial depreciation, the revenue corresponding to the proportion of the depreciation
                                            shall be paid to the Government. 



 


The disposal or
transfer of moveable or non-moveable assets during the period of validity of the Contract must be authorised in advanced by the Minister.


 


		4.2	Ownership
                                            of the Data 



 


The
Government shall be the owner of all geological, geophysical and geochemical information and data related to drilling, engineering, registrations
and production and of all other data, samples, logs, cores, bands, maps, interpretations, reports and any other support or information
obtained during the Oil Operations. However, the Contractor shall be authorized to keep this information, free of charge and use it for
Oil Operations subject to obligations related to its confidential nature.


 


The
Government shall give the Contractor access to all existing technical, operational, accounting and financial information, among others,
from the Effective Date of the Contract. It is understood that the Contractor shall treat this data and information confidentially in
accordance with Article 21 of this Contract.


 


		4.3	Ownership
                                            of the Hydrocarbons 



 


All
Hydrocarbons contained in the Reservoirs of the sub-soil of the Contract Region or produced in the Contract Region shall be the property
of the Government, in accordance with the Code and the Constitution of the Republic of Benin. The Contract shall not give to the Contractor
any ownership rights over the Crude Oil and/or Gas extracted from the Contract Region, which will continue to be the property of the
Government until they are measured at the Delivery Point. The rights of ownership of the Contractor over the Crude Oil and/or Gas in
accordance with the provisions of the Contract shall be given to it at the appropriate Delivery Point.


 




    Page 12 of 77


    


    

 


ARTICLE
5: SURFACE AREA RETROCESSIONS


 


		5.1	At the
                                            end of each phase of the exploration period and provided that the Contractor has met all
                                            the obligations related to that phase, if the latter decides to continue the Oil Operations
                                            in the Contract Region, it shall be bound to retrocede 25% of the Region covered by the phase
                                            upon each renewal.



 


		5.2	The
                                            Regions retroceded by the Contractor shall be one block and of simple geometric form in order
                                            to allow the execution of Oil Operations by other entities. The Contractor must notify the
                                            Minister of the Region(s) that it wishes to give up in writing within no more than sixty
                                            (60) days before the end of the considered period by including a map showing the geographical
                                            location and giving the coordinates of the connection point of the boundary lines. In the
                                            thirty (30) days following the date of notification, the Minister must let the Contractor
                                            know his decision who must abide by it.



 


		5.3	From
                                            the expiry date of the Contract, the Contractor is considered to have given up all the Contract
                                            Region to the Government, which retrocedes it to SOBEH.



 


		5.4	Two
                                            months after each retrocession, the Contractor must submit a report to the Minister on the
                                            surface areas given back and give him all documents and files concerning them and the installations
                                            that are there, with the possibility of making copies of the said documents and files subject
                                            to respecting the clauses of confidentiality.



 


ARTICLE
6: OBLIGATIONS RELATED TO EXPLORATION WORKS


 


		6.1	Minimum
                                            work obligations



 



		6.1.1	The Contractor shall start the
Oil Operations from the Effective Date of this Contract. To this effect, it shall notify to the Minister the nominal composition of the
team in charge of conducting and implementing the Contract in Benin as well as the major terms of its agreement with its partner(s).



 


		6.1.2	During
                                            the initial phase of the exploration period of three (03) years maximum, the Contractor agrees
                                            to implement the following minimum work programme:



 


 v Year 1 






 


		-	Retreatment
                                            and reinterpretation of all existing seismic lines on the bloc as well as all other exploration
                                            works;



 


		-	Retreatment
                                            and reinterpretation of the aerial geophysical data of FUGRO;



 


 


 v Years 2 & 3






 


		-	Acquisition,
                                            treatment and interpretation of at least 250km of seismic 2D lines or the equivalent in 3D
                                            seismic lines and 50km2 of 3D seismic lines;



 


The investments of this phase will amount
to up to two million (2,000,000) US dollars.


 


		6.1.3	During
                                            the first extension phase of three (03) years, the Contractor must at least
                                            complete the following works:



 


Year 1: Additional geophysical
work and;


 


Years
2 and 3: Development of the programme; drilling of at least two (02) exploratory wells and assessments of the drilled wills.


 


		6.1.4	During
                                            the first extension phase of three (03) years,
                                            the Contractor should at least complete the following works:



 


Year 1: Additional
geophysical work;


 


Years
2 and 3: Development of the programme and drilling of at least two (02) exploratory wells; assessments of the drilled wills and development
programme, as necessary.


 








    Page 13 of 77


    


    

 


		6.2	Minimum
                                            well depth



 


		6.2.1.	Each
                                            of the aforesaid Exploration Wells must be drilled to the minimum depth or a lesser depth
                                            if the Minister so authorises in accordance with this Article or if drilling is justifiably
                                            interrupted for one of the following reasons:



 


		(a)	the
                                            economic base is reached at a lesser depth than the stipulated minimum contractual depth;



 


		(b)	it
                                            would be clearly dangerous to continue drilling due to abnormal pressure in the formation;



 


		(c)	hard
                                            rocky formations are reached which render it impossible to continue drilling with the appropriate
                                            equipment; or



 


		(d)	formations
                                            containing Hydrocarbons are discovered, which require the installation of protective casings,
                                            excluding the possibility of reaching the minimum contractual depth.



 


		6.2.2.	For
                                            the purposes of Article 6.2.1, the term economic base refers to any layer in
                                            which and below which the geological structure or the physical characteristics of the rock
                                            sequences does not have the properties necessary for the accumulation of Hydrocarbons in
                                            commercial quantities, which also corresponds to the maximum depth at which any accumulation
                                            of this type may be reasonably expected to be found.



 


		6.2	Cessation
                                            of Drilling 



 


Except
in situations in which a prudent operator would immediately cease all drilling operations, the Contractor must obtain approval from the
Minister in charge of Hydrocarbons before beginning, interrupting or ceasing all drilling. The Minister shall respond within seventy-two
hours of this request. This authorisation may not be refused or delayed without justification, provided that the Minister has been provided
the necessary information to allow him to make a decision with full knowledge of the case.


 


		6.3	Replacement
                                            Wells



 


If a
mandatory Exploration well is abandoned due to insurmountable technical problems such as those described in Articles 6.2.1(b), (c) and
(d) and if at the time of this abandonment, the Exploration Costs associated with this Well are greater than or equal to the amount of
the mandatory exploration well, the Contractor shall be considered to have fulfilled its minimum work obligations in this case with regard
to this Well for the period concerned.


 


If a
mandatory Exploration Well is abandoned due to insurmountable technical problems and if at the time of this abandonment, the Exploration
Costs corresponding to this Well are less than the amount of the mandatory exploration well, the Contractor shall then have the option
to either:


 


		(a)	drill
                                            a replacement Exploration Well in the same location or another location to be established
                                            by mutual agreement with the Minister in charge of Hydrocarbons;



 


		(b)	or
                                            to pay the Minister an amount equal to the difference between the amount allocated for the
                                            drilling of the exploration well and the amount of Exploration Costs actually incurred with
                                            regard to this Exploration Well.



 


ARTICLE
7: TECHNICAL AND BUDGETARY MANAGEMENT COMMITTEE


 


		7.1	Within
                                            ninety (90) days of the date of signing of the Contract, the Parties shall establish a joint
                                            committee for technical and budgetary management comprised of representatives of the Minister
                                            in charge of Hydrocarbons and the contracting Parties. The number of representatives of each
                                            party is established by mutual agreement. A representative of the Minister will chair the
                                            Management Committee. A representative of the oil company will act as its secretary. It will
                                            include a sub-committee:



 


The
technical management sub-committee shall meet twice per year: in May and in November.


 


The duties
of this sub-committee shall include the assessment of the technical works to be performed by the contracting Parties. The tasks of this
sub-committee shall be in preparation for those of the budget committee. The various topics addressed by the technical management sub-committee
shall include the important events recorded since the last session, the production and behaviour of the fields, activities performed
and the programme of works.


 


		7.2	Once
                                            per year, the contracting Parties shall meet to make a technical presentation of the Operations,
                                            examine the budget and validate the previous budget.



 






    Page 14 of 77


    


    

 


ARTICLE
8: ANNUAL WORK PROGRAMME, BUDGETS AND REPORTS


 


		8.1	Presentation
                                            of the Annual Work Programme and Budgets



 


Within
ninety (90) days following the Effective Date of the Contract, the Contractor must prepare the first Work Programme and its budget. If
the Effective Date of the Contract falls on the first day of the month of July or before, the first Programme and its budget shall be
prepared for the rest of the corresponding calendar year. If the Effective Date of the Contract falls after the first of July, this first
Programme and its budget shall be prepared for the ongoing calendar year and for the next calendar year. The Contractor must submit the
Work Programme and its budget for the Minister’s approval.

 


Subject
to the provisions above, at the latest on the 30th of October of each calendar year, the Contractor must prepare a Work Programme and
a budget for the next calendar year and must submit them for the Minister’s approval.


 


The Work
Programme submitted for the Calendar Year during which a Commercial Discovery is made must be modified by the Contractor within sixty
(60) days following the date of approval of the General Development Programme in order to comply with the latter.

 


		8.2	Form
                                            and approval of the Annual Work Programme and Budgets



 


This
Annual Work Programme and corresponding Budget shall present the various Exploration, Development and Production Operations separately,
as applicable.


 


Each
Annual Work Programme shall at least include the work to be performed during the period in question to execute the minimum work programme,
the Development Programme or the Production Programme.


 


The Annual
Work Programme and the corresponding Budgets are submitted for the approval of the Minister in charge of Hydrocarbons. This approval
must be provided within the month of December.


 


The sections
of the Annual Work Programme and Budgets regarding which the Minister in charge of Hydrocarbons does not request any amendment or modification
shall be considered approved and must be executed by the Contractor within the indicated period, provided that they can be performed
separately.


 


As for
the sections of the Annual Work Programme and Budgets regarding which the Minister in charge of Hydrocarbons proposes an amendment or
modification, the approval date of the Annual Work Programme or corresponding Annual Budget shall be the date on which the Minister in
charge of Hydrocarbons and the Contractor reach the aforesaid reciprocal agreement.



 


If the
Minister and the Contractor do not reach an agreement regarding the amendments and modifications proposed by the Minister before the
end of the Calendar Year during which the Annual Work Plan and corresponding Annual Budget were submitted, the Contractor shall continue
its operations in accordance with the last Annual Work Plan and corresponding Budget approved by the Minister in charge of Hydrocarbons
until a reciprocal agreement is reached or a decision is made by an expert, if either Party decides to submit the dispute for an expert
opinion in accordance with the provisions of Article 24.2.




 






    Page 15 of 77


    


    

 





The exploration
and exploitation periods or as applicable the additional production period shall not include any time spent requesting an expert opinion,
including the time-frame associated with this procedure.


 


		8.3.	Execution
                                            of the Oil Operations



 


		8.3.1	For
                                            the duration of the Contract, the Contractor shall directly perform the exploration and exploitation
                                            activities in the Contract Region. To better carry out these activities, it shall be authorized
                                            to use specialized Sub-contractors. However, the Contractor shall keep the monitoring and
                                            the general accountability of the operations or activities undertaken.



 


		8.3.2	The
                                            Contractor must speedily carry out the Oil Operations in accordance with Best Practices,
                                            while taking into account the local conditions as well as other special conditions in the
                                            Contract Region.



 


		8.3.1	The
                                            Contractor must inform the Minister in advance of all significant and planned Oil Operations
                                            such as geological or geophysical research and the start up of well drilling activities.
                                            The Contractor must also inform the Minister in writing about any drilling suspension or
                                            abandonment of wells within twenty four (24) hours.



 


		8.4	Budget
                                            Overruns



 


		8.4.1	The
                                            Minister in charge of Hydrocarbons and the Contractor acknowledge that the technical results
                                            obtained as work progresses or certain unforeseen situational changes which may occur may
                                            justify modifications to an approved Annual Work Programme and corresponding Budget. As necessary,
                                            the Contractor shall inform the Minister in charge of Hydrocarbons of the planned modifications
                                            as soon as possible. These modifications shall be submitted for the review and approval of
                                            the Minister within sixty (60) days following receipt of such notification. If the Minister
                                            in charge of Hydrocarbons neither approves or rejects these planned modifications within
                                            this sixty (60)-day period, this failure to act shall be understood as approval of the aforesaid
                                            modifications.



 


		8.4.3	If
                                            the Contractor reasonably believes that the Annual Budget has been exceeded, the Contractor
                                            must notify the Minister in charge of Hydrocarbons in a timely manner and provide the latter
                                            with a detailed and justified description of such overages.



 


		8.4.4	The
                                            limits established in Article 8.4 shall not prejudice the right of the Contractor to incur
                                            expenses in case of emergency requiring immediate intervention pursuant to Article 8.5.



 


		8.4.5	Except
                                            as indicated otherwise in Article 8.5, if the Contractor incurs an expense for which the
                                            programme and budget have not been approved in the context of an Annual Work Programme and
                                            a corresponding Annual Budget or any amendment thereto approved by the Minister in charge
                                            of Hydrocarbons, this expense shall not be recoverable by the Contractor as Oil Costs.



 


		8.5.	Emergency
                                            or Accident



 


		8.5.1	In
                                            case of emergency or accident requiring immediate intervention, the Contractor shall take
                                            all prudent and necessary measures in accordance with best practices in the oil industry
                                            to protect its interests and those of the Government as well as the property, life and health
                                            of other Persons, the environment and the safety of the Oil Operations. The Contractor shall
                                            inform the Minister in charge of Hydrocarbons of this emergency or this accident as quickly
                                            as possible.



 


		8.5.2.1	All
                                            costs incurred by the Contractor as a result of emergencies shall be recoverable as Oil Costs
                                            in accordance with this Contract. Notwithstanding the foregoing, none of the costs incurred
                                            by the Contractor which result from the gross negligence or wilful misconduct of the Contractor,
                                            its subcontractors or any Person acting on their behalf shall not be recovery as Oil Costs.



 






    Page 16 of 77


    


    

 


		8.6	Reports 



 


		8.6.1	In
                                            the context of this Contract, the Contractor shall prepare and update all the registers related
                                            to the Oil Operations in the Contract Region.



 


		8.6.2	Subject
                                            to its general rights and obligations, the Contractor shall:



 


		a.	Record
                                            in original version or reproducible of good quality, or if any, on magnetic recording medium
                                            and/or electronic medium, any geological, geophysical, geochemical or well information and
                                            any data related to the Contract Region and acquired by the Contractor.



 


		b.	Keep
                                            all files containing the details related to the following aspects:



 


		i.	Drilling:
                                            the work per se, deepening, production tests, closing up or abandonment of wells;



 


		ii.	The
                                            geological formations the wells went through;



 


		iii.	Well
                                            casings and any modification of the said casings;



 


		iv.	All
                                            Hydrocarbons, water and other minerals of economic interest or dangerous substances encountered;



 


		v.	The
                                            zones in which geological or geophysical activities were undertaken.



 


		8.6.3	The
                                            well logs, maps, magnetic or electronic bands, cores and samples and other geological, geophysical
                                            and geochemical information obtained by the Contractor during the Oil Operations shall be
                                            the property of the Government and shall be turned over to the Government as soon as they
                                            are obtained or prepared, although the Contractor shall be entitled to retain copies of the
                                            aforesaid documents and files, subject to compliance with the confidentiality clauses.



 


		8.6.4	In
                                            performing its contractual obligations, unless otherwise agreed upon by the Parties, the
                                            Contractor may:



 


		1.	Keep
                                            copies of the material that comprise the Data over the duration of the Contract;



 


		2.	Keep
                                            for the necessary duration of the Oil Operations, with the approval of the Government, the
                                            original Data, provided that the said Data is reproducible and that copies have been submitted
                                            to the Minister in charge of Hydrocarbons;



 


		3.	Export
                                            for laboratory treatment, examinations or analyses and for one year duration, samples and
                                            any materials comprising the oil data, on condition that samples of equivalent size and quality
                                            or, when such Data may be reproduced, copies of equivalent quality are submitted to the Minister.





 


		8.6.5	The
                                            Contractor should regularly inform the Minister about the major developments in the context
                                            of the Oil Operations and give him the available information (data, reports, evaluations
                                            and interpretations) related to the Oil Operations.



 


Moreover,
the Contractor must:


 


		a)	Establish
                                            daily drilling and exploitation reports as part of its activities;



 






    Page 17 of 77


    


    

 


		b)	Prepare
                                            and submit to the Minister a monthly production report within a deadline of thirty (30) days
                                            following the end of the month concerned and that shall include a description of the activities
                                            covered during the said month;




 


		c)	Prepare
                                            and submit to the Minister a quarterly report during the exploration and exploitation period
                                            within a deadline of thirty (30) days following the end of each Calendar Quarter, and that
                                            shall include a description of the activities covered during the said quarter along with
                                            the plans and maps showing the sites where the described works have been undertaken.
	 	 	 



		d)	Prepare
                                            and submit to the Minister an annual report within two (2) months of the end of each Calendar
                                            Year, which integrates and develops the revised quarterly reports if necessary for the Calendar
                                            Year in question.
	 	 	 



		e)	All
                                            monthly, quarterly and annual exploration and exploitation reports produced by the Contractor
                                            shall be written in French and addressed to the Minister in charge of Hydrocarbons.
	 	 	 



		f)	Failure
                                            to product two quarterly activity reports shall be considered a breach of the Contract.



 


		g)	Failure
                                            to produce quarterly activity reports for one year shall be considered as serious misconduct
                                            stemming from deliberate negligence.





 


		h)	At the
                                            end of each year, the Contractor shall have sixty (60) days to submit its annual activities
                                            and budget report. If at the end of this period, no report has been received by the Government,
                                            notification shall be sent to the Contractor, who shall have sixty (60) days to make the
                                            necessary corrections. After this period, if no positive reaction on the part of the Contractor
                                            is noted, the Contract shall be considered terminated and notice shall be given to the Contractor.









 


ARTICLE
9: DECLARATION OF COMMERCIAL DISCOVERY AND DESIGNATION OF THE DEVELOPMENT ZONE


 


		9.1	As soon
                                            as a Hydrocarbon Discovery is made in the Contract Region, the Contractor must immediately
                                            inform the Minister and the provisions of this Article shall be applied. After the Hydrocarbon
                                            Discovery and within the thirty (30) days following the said Discovery, the Contractor shall
                                            submit to the Minister an initial Discovery report.



 


At the
latest in the two (2) months following the Discovery, the Contractor shall submit to the Minister a detailed report on the Discovery,
indicating, if necessary, whether or not this discovery has been evaluated. If the Contractor deems that the Discovery is worth evaluating,
the report must include an evaluation programme and a schedule of activities in order to implement an adequate and effective evaluation.
The Contractor must properly complete the evaluation programme submitted to the Minister during the exploration period in accordance
with the evaluation programme and the approved schedule of activities. Notwithstanding all of the provisions of Article 9, provided that
the Contractor has fulfilled its obligation to drill exploration wells as indicated in Article 6, it shall be entitled to receive a Development
Zone which includes the predefined Development Zone.


 


		9.2	At the
                                            latest ninety (90) days following the end of the evaluation programme, the Contractor must
                                            submit for the assessment of the Minister a detailed evaluation report justifying the commercial
                                            viability of the proposed Development Zone. This report must include:



 


		-	The description
                                            of the Development Zone, namely the structural configuration, the physical properties and
                                            the span of the reservoir rocks, the surface areas, the layer and the depth of the productive
                                            zones;
	 	 	 



		-	An estimation
                                            of the initial oil reserves and gas that can be recovered, the characteristics of the recuperation,
                                            the expected yield of production per reservoir;



 


		-	An estimate
                                            of the number of necessary wells for an efficient drainage of the reserves, the characteristics
                                            of the fluids present, in the case of the Crude Oil its density, the sulphur, sediment and
                                            water content, as well as the yield characteristics of the product;
	 	 	 



		-	The expected
                                            economic projections and cash flow.



 






    Page 18 of 77


    


    

 


		9.3	The
                                            Contractor should declare in the report if it deems that the Discovery is commercially viable,
                                            and in this case it shall have the right to develop it and produce the Hydrocarbons in accordance
                                            with the provisions of this Contract. However, the Minister shall support as much as possible
                                            the establishment of non-existent facilities for the production and testing of all early
                                            production wells. This Government support shall include, if possible, assistance to obtain
                                            and access existing installations or obtain the necessary onshore land in the immediate vicinity
                                            of the pipeline.



 


		9.4	In the
                                            thirty (30) days following the presentation of the report in which the Contractor shall communicate
                                            to the Minister its opinion that its Discovery is commercially viable, the latter shall notify
                                            in writing the Contractor of his approval and the date of approval of the Minister shall
                                            be the “Commercial Discovery Date”. If at the end of this deadline of thirty
                                            (30) days, the Minister does not notify in writing the approval mentioned, the Commercial
                                            Discovery Date shall be the date following the deadline of the thirty (30) days mentioned
                                            above. The Minister shall then grant the Contractor the exploitation permit if it applies
                                            for it.



 


		9.5	If the
                                            Contractor deems that the Discovery is not commercially viable, it should communicate to
                                            the Minister the reasons for its decision. If the Minister questions the basis of the technical
                                            or economic analysis of the Contractor on the non commercial character of the Discovery,
                                            or if for any other reason he deems that the Discovery could be developed economically by
                                            the Contractor in accordance with the clauses and conditions of the Contract, then the Minister
                                            should, in the sixty (60) days if he wishes, submit the question of the commercial viability
                                            to an expert in compliance with the Contract. If the Expert confirms that the Discovery is
                                            a commercial one, the Contractor may, in the thirty (30) days following the date of receipt
                                            of the decision of the Expert, declare that the Discovery is a Commercial Discovery in accordance
                                            with the provisions of the Contract and the date of declaration shall become the Commercial
                                            Discovery Date. In this case, the Minister shall have the right to develop the Discovery
                                            Zone and produce Hydrocarbons in accordance with the provisions related to exclusive-risk
                                            operations. The Contract shall remain valid for the remaining part of the Contract Region.



 


		9.6	In the
                                            ninety (90) days following the Commercial Discovery Date, the Contractor should submit to
                                            the Minister a General Development Programme indicating:



 


		(a)	The
                                            proposed Development Zone;



 


		(b)	The
                                            Development operations to be undertaken, including any additional delineation of the Development
                                            Zone and the method to develop the Associated Gas, if any;



 


		(c)	The
                                            plans of the Contractor concerning well drilling and conditioning, the new production, storage,
                                            transportation and deliver installations required for Hydrocarbon production. The plans must
                                            include the following information:



 


		(i)	The
                                            expected number of Development wells and their positioning;



 


		(ii)	Precisions
                                            about the production equipment and storage infrastructures;



 


		(iii)	The
                                            delivery points of the Crude Oil and Natural Gas; and



 


		(iv)	The
                                            details of any other technical equipment necessary for the Oil Operations.



 


		(v)	The
                                            production projections of Crude Oil and Natural Gas from estimated Oil or Gas deposits, and
                                            the estimated commercial life of the said deposits;



 


		(d)	The
                                            estimations of the costs of equipment and current expenditures;



 


		(e)	The
                                            economic feasibility studies done by the Contractor and possibly the other methods mapped
                                            out for the development of the Discovery by taking into account:



 


		(i)	Its
                                            location;



 


		(ii)	Any
                                            relevant meteorological condition;



 


		(iii)	The
                                            expected investment costs and current expenditures; and



 


		(iv)	Any
                                            other necessary information for its evaluation.



 


		(f)	The
                                            security measures to be adopted during the Development and Production Operations, including
                                            emergency procedures;



 


		(g)	Measures
                                            to be adopted for environmental protection;



 


		(h)	The
                                            unforeseen events that may affect the capacity of the Contractor in implementing the General
                                            Development Programme.



 


		9.7	The
                                            General Development Programme proposed by the Contractor shall be prepared in compliance
                                            with engineering principles, economy principles and Best Practices. It must also be designed
                                            with a view to ensuring the optimal recuperation of Hydrocarbons in the Development Zone
                                            and to prevent wasting them.



 


		9.8	The
                                            General Development Programme of the Contractor may be revised by the Minister who shall
                                            give his approval if he deems that it has been prepared in compliance with the provisions
                                            above. If the Minister deems that the General Development Programme presented by the Contractor
                                            was not prepared in accordance with those provisions, he shall propose amendments and the
                                            Contractor may, in response, modify it. If within the ninety (90) days following the date
                                            of presentation of the Programme, the Minister and the Contractor do not reach an agreement
                                            with regard to the said Programme, the matters on which they disagree must be submitted to
                                            an expert who shall take a decision. In case of disagreement and resorting to an expert,
                                            the exploitation period of twenty-five (25) years shall not include the time used to call
                                            for an expert (including the time for the appeal procedure).








 




    Page 19 of 77


    


    

 


		9.9	During the Development and Production Operations, the Contractor may propose additions or revisions to the General Development Programme. It must then submit them to the Minister for consideration and approval, in accordance with the procedures contained in clause 9.8 if within ninety (90) days of the date of submission of the additions or revisions to the General Development Programme, the Minister and the Contractor do not reach an agreement with regard to the aforesaid additions and revisions, the matter or matters on which they disagree must be submitted to an expert, pursuant to the procedure specified in clause 9.8, and the twenty-five (25) year exploitation period shall not take into account the period of this procedure.

                                                                                 

		9.10	If
                                            the Contractor wishes to finance the Development Operations with funds coming from banks
                                            or other funding sources, the Minister shall support the Contractor by supplying all information
                                            that the banks or funding sources may reasonably require, provided that the Minister does
                                            not assume any additional obligations of any kind to that effect, financial or otherwise.




 


ARTICLE
10: EXCLUSIVE RISKY OPERATIONS


 


		10.1	In
                                            case the Minister, during the exploitation period, wishes to test additional reservoirs of
                                            a well at the agreed level, or deepen the well and test the reservoirs that are deeper than
                                            that final level, the Government shall have the right, subject to the stipulations provided
                                            in Clause 10.4, to ask by notification to the Contractor to test some additional reservoirs
                                            or to continue drilling and to test some new reservoirs, at the exclusive risks of the Government.
                                            The Government shall notify the Contractor as soon as possible before or during drilling,
                                            but in no case after the Contractor has started the completion or abandonment activities
                                            of the well.



 


		10.2	If
                                            during the exploration period, the Parties do not agree on the Government recommendation
                                            to drill additional exploitation wells, the Minister shall have the right, after the initial
                                            period, to ask the Contractor to drill in the Contract Region at the exclusive risks and
                                            cost of the Government one (1) exploitation well provided that this Operation does not delay,
                                            hamper or disturb the exploitation and evaluation activities of the Contractor. In that case,
                                            the Minister shall have a maximum deadline of six (6) months to submit to the Contractor
                                            a report on establishing the said well specifying the drilling details as well as the financial
                                            plan of the operation he is pre-financing.



 


		10.3	If
                                            the operations described in clauses 9.3, 10.1 or 10.2 lead to a Discovery or a Commercial
                                            Discovery, the Government shall have the right, at its exclusive expenses, risks and benefits,
                                            to appreciate the said Discovery and/or to develop and produce oil from the reservoir corresponding
                                            to that Discovery. The Contractor shall notify in writing to the Minister, before starting
                                            the commercial production of the oil reservoir discovered in the context of the said exclusive-risk
                                            operations, if it wishes to support future operations for the development and/or production
                                            of the said oil reservoir, in compliance with the terms of this Contract. In that case, the
                                            Contractor shall pay in cash or in kind to the Government in addition to hundred percent
                                            (100%) of the exploitation costs and, if any, capital exploitation costs incurred by the
                                            Government in the context of the exclusive-risk operations and corresponding to the discovered
                                            oil reservoir, an additional amount equalling three hundred percent (300%) of the said exploitation
                                            and capital costs.



 


		10.4	The
                                            conditions to undertake exclusive-risk operations shall be the following:



 


		(a)	The
                                            production tests of additional layers or the penetration and the production tests of deeper
                                            layers or drilling additional exploration wells, must be technically feasible;



 


		(b)	Deepening
                                            a well as part of exclusive-risk operations may not take place when the well has already
                                            gone through producing reservoirs;



 


		(c)	No
                                            exclusive-risk exploration well shall be drilled in an exploitation zone, nor on the site
                                            of a Commercial Discovery;



 


		(d)	The
                                            Minister may hire a third party to undertake the exclusive-risk operations referred to above.
                                            However, the Minister shall not recruit a third party to these ends without having previously
                                            offered to the Contractor the right of pre-emption for the execution in its name the said
                                            exclusive-risk operations in conditions similar to those which should be acceptable to that
                                            third party. In case the Contractor does not accept to undertake those operations notified
                                            by the Minister, the latter shall have the liberty to hire the third party provided that
                                            this third party respects the conditionality clauses related to the reports, data and information
                                            kept or prepared by the Contractor and received by that third party as part of this article
                                            or Article 9 and in accordance with Article 21.



 





    Page 20 of 77


    


    




 


ARTICLE
11: GOVERNMENT PARTICIPATION


 


		11.1	The
                                            Government has the option to acquire a maximum interest of 10% in the rights and obligations
                                            of the Contractor regarding a commercial discovery.



 


		11.2	The
                                            Government must exercise its participation option by written notification to the Contractor
                                            within the ninety (90) days following the date of commercial declaration by the Contractor.
                                            For lack of submitting a written notification during this deadline of ninety (90) days, the
                                            option shall be considered as denied.



 


		11.3	If the
                                            Government exercises its option of participation in accordance with Article 11.1, the Contractor
                                            shall give up to the Government the share claimed. To this effect, the Contractor shall propose
                                            a draft convention to the Minister in charge of Hydrocarbons for consideration. This convention
                                            shall specify the terms of the Government’s participation.



 


		11.4	The
                                            Government participation shall be effective from the date of receipt by the Contractor of
                                            the written notification set out in article 11.2.



 


		11.5	If
                                            the Government exercises its participation option, the Minister shall enter into an operational
                                            agreement with the Contractor in accordance with the standards of International Oil Operations,
                                            which shall govern the rights and obligations of the Parties.











 


ARTICLE
12: ROYALTIES, COST RECOVERY & PRODUCTION SHARING


 


ROYALTIES


 


		12.1	The
                                            Contractor shall pay royalties to the Government at a rate of 12.5% of the total available
                                            production excluding losses regarding the Oil Operations for oil starting with the first
                                            barrels produced. The remaining quantity of the crude oil shall be referred to as ‘‘Available
                                            Crude’’. This rate is negotiable for the condensate In case of discovery of gas,
                                            both Parties shall come together to define the royalties as well as the sharing proportion
                                            for the gas.





 


RECOVERY OF OIL COSTS


 


		12.2	After
                                            deducting the Royalties, the exploiting Contractor shall be entitled to a maximum of seventy
                                            percent (70%) of the remaining Total Available Production of Crude Oil for the oil every
                                            Calendar Year as the recovery of Oil Costs (Oil Costs Recovery Share).



 


		12.3	Subject
                                            to the provisions related to participation, the Contractor shall assume and pay all Oil Costs
                                            incurred in executing the Oil Operations and shall recover the said costs according to the
                                            modalities defined in the Accounting Appendix D.



 


		12.4	The
                                            costs directly attributable to the development and production of non-associated Gas shall
                                            be the subject matter of a specific agreement in accordance with the provisions of this Contract.



 


The costs
shall be recovered as follows:


 


		(a)	All
                                            Production Costs shall be recovered totally in the Year in which they were incurred;



 


		(b)	The
                                            Exploitation Costs shall be recovered from the Year the first commercial production started
                                            in the Contract Region;



 


		(c)	The
                                            development investments shall be depreciated over five (5) years from the Year the first
                                            production started;



 


		(d)	Investments
                                            related to the exploitation phase shall be depreciated over five (5) Years from the date
                                            they were undertaken;



 



		(e)	However,
                                            when the total production reaches the profitable limit as defined in clause 12.7 below, the
                                            Parties shall consult each other to agree on a decision. This consultation shall take place
                                            in the thirty (30) days from the date the Minister in charge of Hydrocarbons receives the
                                            written notification of the Contractor.


 



		12.5	When
                                            the recoverable Oil Costs of a given Year exceed the value of the Crude Cost Recovery (“Cost–Oil”)
                                            available that year, the recovery of the surplus shall be carried forward to the following
                                            Years.



 






    Page 21 of 77


    


    




SHARING OF OIL
PROFITS


 


		12.6	Every
                                            Year, the remaining Available Crude after deducting the recoverable Oil Costs called hereinafter
                                            ‘‘Oil Profit’’ or ‘‘Crude-Profit’’ shall
                                            be shared between the Government and the Contractor according to the percentages below:



 


		a)	For
                                            oil 



 


	
    Share of Daily Production

    
	 	
     Share of the State
	 	Share of the Contractor 
	Regardless of the production level	 	50%	 	50%





 


After
recovery of the oil costs, the Parties shall come together to define a new sharing formula


 


		b)	For
                                            the condensate (to be negotiated in case of discovery)



 


		12.7	The
                                            Parties shall agree that if the Profitable Limit of a deposit is going to be reached, (that
                                            is if the Oil Costs incurred by the Contractor exceed the oil monetary flow received from
                                            selling the production in such a way that it leads to stopping prematurely the production
                                            of this deposit), they shall consult each other and examine the amendments to be made to
                                            the provisions of this Contract, namely cost recovery and production-sharing in order to
                                            extend the life of the deposit.









 


ARTICLE
13: MEETING THE NATIONAL CONSUMPTION NEEDS


 


		13.1	Following
                                            the start-up of the Production Operations, the Government shall have the right to purchase
                                            and the Contractor the obligation to sell, in a determined Delivery Point, an equivalent
                                            volume of Hydrocarbons in the form of Crude or refined products or equivalent gas as agreed
                                            upon between the Parties, equivalent to a maximum of fifty percent (50%) of the share of
                                            the Oil Profit accruing to the Contractor in order to meet Benin’s internal demand.
                                            The transfer of the Oil shall be done in this context in accordance with the provisions of
                                            clause 15.5.



 


		13.2	If
                                            in a deadline that shall not exceed sixty (60) days from the Hydrocarbons delivery date,
                                            the Government does not pay the bill, the Contractor may request to be paid by deduction
                                            from the Oil Profit of the Government.



 


		13.3	With
                                            regard to the Crude Oil, the obligation for the Contractor to sell shall be based on the
                                            principle according to which all Crude Oil producers or exporters in Benin, including the
                                            Government, shall bring at any moment and proportionally a portion of their production to
                                            meet the national consumption needs. To take advantage of his acquisition rights, the Minister
                                            should give a written notice of six (06) months to the Contractor, indicating the volume
                                            of the Crude Oil of the Oil Profit of the Contractor that shall be acquired during the six
                                            (06) calendar months following the above-mentioned notice. The monthly variation of that
                                            volume shall not exceed a margin of more or less than ten percent (10%).



 




		13.4	If
                                            in case of Force Majeure, other contractors or the Government are not able to contribute
                                            proportionally to meeting the national needs, and if as a consequence the volume of participation
                                            of the Contractor and other contractors to the national market demand must be increased,
                                            the Contractor shall sell the required additional quantities in accordance with the above-mentioned
                                            clauses and conditions until the case of force majeure is resolved and until the contribution
                                            meant to cover proportionally the national market demand is re-established. This additional
                                            obligation shall not include the volumes of production that are already the subject-matter
                                            of an exportation contract, the loading period of which is fixed within the forty (40) working
                                            days following the date on which the Contractor receives the notification of the Minister
                                            related to the case of force majeure.



 


		13.5	With
                                            regard to the Natural Gas, the obligation of the Contractor to sell must be established by
                                            taking into account the criteria used to meet the national market demand stipulated above
                                            and by taking into account a Natural Gas price determined in accordance with this Contract.



 


		13.6	All
                                            payments made as part of the Contractor’s Hydrocarbons sales to the Government in accordance
                                            with the provisions of this Article must be in dollars and through bank transfer in favour
                                            of the bank account designated by the Contractor outside Benin in a deadline of thirty (30)
                                            days from the date of delivery to the Delivery Point of the Hydrocarbons purchased by the
                                            Government.



 






    Page 22 of 77


    


    

 


ARTICLE
14: APPLICABLE TAX SYSTEM


 


		14.1	Over
                                            the life of the Contract and in accordance with the legislation in force in the Republic
                                            of Benin, the Contractor shall be subject to the tax system commonly applied to enterprises
                                            in general and to oil activities in particular.



 


		14.2	The
                                            Contractor shall be bound to pay in accordance with the Benin Tax Code all of the taxes and
                                            dues to which he shall be subject namely the Income Tax, which shall not exceed 45%
                                            of the taxable profit.



 


		14.3	It
                                            shall be understood that pursuant to Article 14.2, the Minister shall ask to deduct from
                                            the Oil Profit of the Government under article 12.6, an amount corresponding to the Income
                                            Tax and to the Export Tax provided for in the Oil Code. He shall request that to this effect
                                            the said tax be paid on behalf of the Contractor and issue to him the related receipts. The
                                            same shall apply to the Export Tax. In that case, the portion of the Oil Profit belonging
                                            to the Contractor as set out in article 12.6 shall be considered net of tax and shall not
                                            be subject to any tax whatsoever. In other words, the Contractor shall be free of all tax
                                            obligations that are, by definition, included in the Oil Profit received by the Government
                                            and in the Tax on Oil Production also received by the Government.



 


The
Minister shall send the receipts by official correspondence justifying the payment of the taxes, duties and dues to which the Contractor
is subject.


 


		14.4	The
                                            Contractor, its sub-contractors and service providers shall be exempt from the charges and
                                            customs duties, including Road Tax, on the capital equipment, products, exploitation and
                                            exploration materials and drilling machines and equipment (including the Rig or the drillship
                                            and all similar equipment), the platforms and production installations and spare parts imported
                                            in the context of the Oil Operations.



 


However,
the goods, products, equipment, exploration and exploitation materials and all drilling machines and equipments (including the Rig or
the drillship and all similar equipment), the platforms and production installations and spare parts likely to be re-exported at the
end of their use shall be subject to the exceptional temporary admission system in accordance with current the provisions governing this
matter.


 



    Page 23 of 77


    


    

 


		14.5	The
                                            Contractor, its subcontractors and its service providers are also exempt from taxes, duties
                                            and indirect dues, including the Value-Added Tax (VAT) with regard to the oil exploration
                                            and exploitation activities and all other related activities.



 


The
Contractor, its subcontractors and its non-resident service providers are also exempt, with regard to the oil exploration and exploitation
activities and all other related activities, from:


 


		a.	The
                                            License during the entire exploratory period and for five (5) years of oil exploitation;



 


		b.	the
                                            Employer’s Contribution on Salaries (E.C.S.);



 


		c.	Superficiary
                                            royalties provided in the Code.


 


		14.6	Expatriate
                                            personnel employed by the Contractor, its subcontractors and service providers benefit from:



 


		-	Exemption
                                            from the Progressive Tax on Salaries and Wages (PTSW);



 


		-	During
                                            the first six (06) months of settlement of their settlement in Benin, an exemption of customs
                                            duties and taxes and Road Tax on personal effects being used.


 


One
vehicle per household may also be imported in temporary admission.


 


		14.7	The
                                            Government shall be ready to consider any amendment to the tax clauses that the Contractor
                                            may ask at any time, provided that:



 


		(a)	Such
                                            modifications do not have a negative incidence on the overall economic gains and other benefits
                                            that the Government shall draw from the Operations; and



 


		(b)	The
                                            only reason for proposing such modifications shall be to allow any person making the Contractor
                                            or to any other Affiliated Company to obtain in another country a tax credit related to the
                                            paid taxes in the Republic of Benin.



 


		14.8	The
                                            Contractor shall be bound to pay to the Government the revenues as part of duties and taxes
                                            provided in this Contract through a national structure. The designation of the national structure
                                            in question shall take place within the one hundred and eighty (180) days following the Effective
                                            Date.



 


		14.9	The
                                            Government shall issue within the thirty (30) days following the payment date a receipt in
                                            the name of the Contractor relating to the said payment.



 



    Page 24 of 77


    


    

 


ARTICLE
15: MEASUREMENT, PROVISION, EVALUATION AND SALE OF HYDROCARBONS


 


		15.1	The
                                            Contractor must measure all Crude Oil and Natural Gas produced in the Contract Region in
                                            accordance with Best Practices. The Contractor must keep complete and precise registers of
                                            all measurements of the Hydrocarbons produced in the Contract Region after extracting the
                                            water and its foreign bodies, then all tradable Hydrocarbons; that shall allow calculating
                                            the difference to determine the quantities used for the Operations and the unavoidable losses.
                                            The representatives of the Minister must have access to these registers and measures.



 


		15.2	The
                                            Minister shall have the right to test all measures, measuring equipment, the graphs and any
                                            other measuring or testing and information material.



 


		15.3	If,
                                            following an examination or a test, it appears that the measuring equipment is not functioning,
                                            that they are damaged or incorrectly set, the Contractor must fix them or do the necessary
                                            adjustments immediately and meet the costs.



 


		15.4	If
                                            within a reasonable deadline that shall not exceed thirty (30) days the Contractor does not
                                            assume that obligation, the Minister may take the appropriate measures to make the said equipment
                                            operational or adjusted and may bill the Contractor for the cost of that operation at the
                                            interest rate of the Contract plus 1%. If, according to the Minister, the error caused by
                                            the bad adjustment or any other fault of measuring equipment seems to be the reason of big
                                            difference in measuring the production, the Parties shall consult each other to take the
                                            appropriate measures. In case of disagreement, the question may be submitted to an expert
                                            who shall determine if it is appropriate to do a retroactive adjustment of the production
                                            figures. If the Contractor considers that it is necessary to replace some measuring devices
                                            or instruments, it must inform the Minister for approval and give to the representatives
                                            of the Minister the chance to be present during the operation and to take part in it.



 


		15.5	In
                                            the context of this Contract, the price of the Crude Oil for each quarter shall be the weighted
                                            average FOB prices received by the Contractor for selling to third parties different from
                                            the Parties during the corresponding quarter.



 






    Page 25 of 77


    


    

 


		15.6	If
                                            in a given quarter the Contractor does not sell at least forty percent (40%) of the total
                                            Crude Oil production of the Contract Region to third parties different from the Parties,
                                            the price of the Crude Oil for that quarter shall be the weighted average of FOB prices fixed
                                            in comparison with the price of the Crude Oil on the international market in view of the
                                            quality, density and transport differentials.



 


		15.7	In
                                            case of lack of an agreement between the parties within the fifteen (15) days following the
                                            end of the Quarter involved, awaiting the opinion of an expert, the agreed selling price
                                            for the preceding Quarter shall apply provisionally subject to the retroactive adjustments
                                            that could be necessary after the expertise. Resorting to an expert provided in this article
                                            shall apply in a deadline that shall not exceed thirty (30) days after the end of the Quarter
                                            involved.



 


		15.8	In
                                            the context of this Contract, the price of the Natural Gas sold in the Benin national market
                                            shall be the price received by the Contractor for selling to third parties. Taking into account
                                            the fact that in Benin the gas market is not highly developed, the Government should assist
                                            the Contractor if possible to find possible gas consumers and to negotiate reasonable selling
                                            prices. The price of Natural Gas applicable to the gas sold to a Benin public enterprise
                                            or to an organization which social capital and voting right is the direct or indirect property
                                            of the Government, shall be agreed upon by the Parties, since this price should reflect the
                                            commercial value of the source of energy that the sold gas is supposed to replace, in accordance
                                            with the modern technology generally used and by taking into account the cost of the produced
                                            gas. The price applicable to Natural Gas exportation shall be the price received by the Contractor
                                            in the context of selling to third parties, subject to the same conditions governing normally
                                            selling Crude Oil.



 


		15.9	The
                                            Contractor shall have the right to possess, load, transport and export freely the Hydrocarbons
                                            that belong to it by virtue of the Contract. The Minister may ask the Contractor to sell
                                            all or part of the oil belonging to the Government in accordance with article 12 and in the
                                            market conditions set out in Article 15.5, provided that the Parties have agreed on the provisions
                                            relating to commercialization.



 


		15.10	At
                                            the latest sixty (60) days before the Commercial Production starts in each Development Zone,
                                            and afterwards at the beginning of each Quarter, the Contractor must prepare and submit to
                                            the Minister a prevision indicating the total quantity of Hydrocarbons that, according to
                                            it, will be produced during the next four (4) Quarters in the corresponding Development Zone,
                                            from a production rate determined by mutual agreement to optimise the recuperation of the
                                            Hydrocarbons in the Development Zone in accordance with Best Practices. Each Quarter, the
                                            Contractor must make reasonable efforts to produce the quantity of Hydrocarbons it has planned
                                            to produce. The Contractor shall be authorized to use, free of charge, the quantities of
                                            Hydrocarbons produced in the Contract Region, at the natural state or treated, necessary
                                            to undertake the Oil Operations (including Operations to load the Gas) in accordance with
                                            Best Practices. Regardless of the quantity of Hydrocarbons used for this purpose, they shall
                                            not be considered part of the Commercial Production.



 



    Page 26 of 77


    


    

 


ARTICLE
16: NATURAL GAS


 


		16.1	The
                                            Benin national market enjoys a preferential acquisition right of the Natural Gas produced
                                            in any Development Zone and not used for Oil Operations in accordance with this Article,
                                            provided that the commercial proposals offered are not less favourable than those in which
                                            the gas in question may be exported. Natural Gas not sold on the national market may be exported.



 


		16.2	In
                                            case of a discovery of a commercial gas accumulation, a gas purchase contract (a “Take
                                            or Pay” Contract) should be discussed between the Government and the Contractor in
                                            the shortest deadline. In case the direct generation of energy seems to be more profitable
                                            for both Parties, they shall meet to fix the conditions.



 


Associated Natural
Gas


 


		16.3	In
                                            case of a Crude Oil Discovery that the Contractor deems commercially viable in accordance
                                            with this Contract and that the Discovery contains Associated Gas, the Contractor should
                                            indicate in its evaluation report if it considers that the estimated production of Associated
                                            Gas will exceed the quantities of Associated Gas required for the additional Production Operations
                                            and if the declared surplus Associated Gas can be produced in commercial quantities. If the
                                            Contractor declares that this Associated Gas does exist and can be produced in commercial
                                            quantities, it shall indicate in the General Development Programme prepared for the Hydrocarbon
                                            Discovery, the details related to the collection, treatment, compression and transportation
                                            installations required to exploit the surplus Associated Gas for commercialization as well
                                            as the related costs.



 


		16.4	Within
                                            ninety (90) days following the date of presentation of the General Development Programme,
                                            the Minister may notify to the Contractor that either he or any other Benin public enterprise
                                            designated by him would like to have the surplus Associated Gas on the national market.



 


		16.5	If
                                            the Contractor decides to participate in accordance with the above-mentioned provisions:



 


		(a)	it
                                            shall build collection, treatment, compression, transport and storage facilities required
                                            for the production and delivery to the Delivery Point of the surplus Associated Gas in accordance
                                            with the specifications of the General Development Programme;



 


		(b)	The
                                            price of the Associated Natural Gas shall be the price of the Natural Gas determined in accordance
                                            with this Contract.



 


		16.6	If
                                            the Contractor decides not to participate, it must deliver to the Minister, or to the Benin
                                            public enterprise designated to that effect by the Minister, in a delivery point designated
                                            as an “exit port”, and at its own expense, which shall be considered as recoverable
                                            costs, all produced surplus quantities of Associated Gas produced.



 






    Page 27 of 77


    


    

 


		16.7	Subject
                                            to the provisions related to environmental protection, the Contractor may burn all unused
                                            surplus Associated Gas.



 


Non-Associated
Gas


 


		16.8	In
                                            case of a Discovery of Non-Associated Gas in the Contract Region, the Contractor must present
                                            a report in accordance with the prescriptions of this Contract. If the Contractor considers
                                            that the Discovery is worth evaluating, it must evaluate, with an estimation of the reserves,
                                            the production potential, as well as the economic viability. In that report, the Contractor
                                            should also declare if the Discovery is commercially viable. If the Contractor considers
                                            that the Discovery of the Non-Associated Gas is not worth evaluating, the provisions related
                                            to the Crude Oil shall be applied mutatis mutandis.



 


		16.9	If
                                            the Contractor considers that the Discovery can be commercially viable, the Minister shall
                                            assist it in evaluating the demand for gas on the national market as well as in the transformation
                                            and commercialisation activities required to distribute it to end-users of the said market.
                                            At the same time, the Contractor shall be free to assess the viability of the exportation
                                            of the Gas. Within the Calendar Year that follows the date of presentation of the detailed
                                            evaluation report of the Contractor, the parties should meet to decide if the outlets and
                                            the other factors justify its development and production for the national market and/or if
                                            it is considered that this market is not sufficiently big and that the Gas should be exported.



 


		16.10	If
                                            the Contractor considers that the development of the Non-Associated Gas Discovery is justified,
                                            it must present to the Minister a General Development Programme of the said Discovery and
                                            the provisions related to the commercial discovery and those to the Government participation
                                            shall be applicable to the development and production of the said Gas as in the case of Crude
                                            Oil. If the Contractor considers that the Discovery of Non-Associated Gas is not justified,
                                            then the provisions related to Crude Oil shall be applied mutatis mutandis to the development
                                            and production of the said Gas.



 


		16.11	If
                                            it is determined that the Discovery of the Non-Associated Gas cannot be used on the national
                                            market while the Contractor considers that the Discovery of the Non-Associated Gas could
                                            be commercially viable for exportation, the Contractor shall have all the liberty to develop
                                            the Gas Deposit provided it presents to the Minister a General Development Programme. If
                                            the Contractor starts the Development Operations for exportation, the Minister shall take
                                            all necessary provisions to ease the construction of the appropriate facilities. Provisions
                                            related to the Commercial Discovery and to the Government participation shall be applicable
                                            mutatis mutandis to the development and production of the said Non-Associated Gas as in the
                                            case of Crude Oil. Once the Contractor has started the Development Operations for exportation,
                                            the right given to the Contractor to export by virtue of this Article shall remain in force
                                            during the whole period.



 


		16.12	In
                                            the context of this Contract, the price of the Non-Associated Gas produced by a Gas Deposit
                                            meant to be used in Benin shall correspond to the price of the Natural Gas determined in
                                            accordance with the provisions of this Contract.



 


		16.13	In
                                            accordance with security norms and environmental protection, the Contractor shall have the
                                            right, after approval by the Minister, to build gas separation facilities in order to produce
                                            liquid gas and condensate.



 






    Page 28 of 77


    


    

 


ARTICLE
17: DAMAGES, ABANDONMENT, ENVIRONMENTAL PROTECTION AND SECURITY


 


		17.1	The
                                            Contractor shall be responsible for all damages and prejudices that its operations may cause
                                            to particular people or to the Government. The Contractor shall be bound to protect the Government
                                            against any damage for which it may be responsible through its activities undertaken by virtue
                                            of this Contract or through any related operation or activity. To that end, the responsibility
                                            against any claim and obligation stemming from death, accidents or damages caused by its
                                            activities, including those undertaken by virtue of this Contract, or the non-compliance
                                            of the Contractor with the rules and regulations in force in Benin. This Contract shall have
                                            no effect on the rights that third parties may claim against the Contractor by virtue of
                                            the laws in force in Benin.




 


		17.2	The
                                            Parties recognize that by their nature, the Oil Operations may produce an ecological imbalance
                                            in the Contract Region because of environmental pollution. Therefore, by implementing the
                                            Contract, the Contractor must adopt the necessary measures to prevent or minimize soil, atmosphere
                                            and water pollution, and take care so that the pollution will not harm the flora or the fauna
                                            and, in general, prevent any thing that could materially damage the environment. If the Contractor
                                            cannot prevent environmental pollution in accordance with the Constitution and Environmental
                                            Framework Act of Benin, it should take the appropriate measures to minimize its effects in
                                            accordance with the international norms. These measures must be communicated to the Minister
                                            for approval.



 


		17.3	To
                                            minimize or eliminate pollution, the Contractor must use appropriate technical measures approved
                                            by the Minister.



 


		17.4	The
                                            Contractor shall be responsible for damages caused to third parties following the environmental
                                            pollution provoked by its Oil Operations.




 


		17.5	The
                                            Contractor shall commit himself/herself to call for specialists in the field to study the
                                            possible incidence of Oil Operations on the environment. That study should be on:



 


		(a)	The
                                            state of the environment and the existing pollution level in the Contract Region and the
                                            neighbouring regions before the Oil Operations;



 


		(b)	The
                                            incidence that the Oil Operations may have on that environment.



 


The
study mentioned in paragraph (a) must be carried out in two phases:


 


		(1)	A
                                            preliminary study submitted by the Contractor to the Minister before the seismic survey of
                                            the Contract Region and



 


		(2)	The
                                            definitive study applicable to all the exploration period and that should be presented to
                                            the Minister before drilling the first well. The study mentioned in paragraph (b) must be
                                            carried out and submitted to the Minister at least ninety (90) days before drilling the said
                                            wells.



 


		17.6	The
                                            above-mentioned studies should include the measures used to eliminate or minimize, among
                                            others, the hereunder mentioned wastes as well as the way to neutralize them:



 


		(a)	Drilling
                                            mud and Hydrocarbons from the tests, completion, conditioning and abandonment of wells;



 


		(b)	Solvents,
                                            lubricants and other products used during the operations;



 


		(c)	Organic
                                            waste, rubbish and unusable products in the workplaces and camps.



 






    Page 29 of 77


    


    

 


		17.7	The
                                            Contractor must conceive and build its facilities and endeavour to minimize the environmental
                                            pollution and adopt, among others, the following measures on the drilling and exploitation
                                            equipment sites:



 


		(a)	Drainage
                                            systems/recuperation of overflowing Crude Oil and other derivatives and polluted waters;



 


		(b)	Waste
                                            management system.



 


		17.8	The
                                            Contractor shall commit himself/herself to include the provisions of this Article in all
                                            contracts negotiated with third parties and related to the Oil Operations.



 


		17.9	If
                                            the Contractor does not comply with the provisions of this Article and the Crude Oil or any
                                            other product overflows into the soil, the sea floor or into the sea, or if the activities
                                            of the Contractor cause another form of pollution or, in any other way, contaminate water
                                            supply points or plant or animal life, the Contractor should immediately take all appropriate
                                            measures consistent with Best Practices to control the pollution, clean all overflowing Crude
                                            Oil or any other product, or fix as completely as possible any damage caused.



 


		17.10	If,
                                            as a direct consequence of gross or deliberate negligence of the Contractor, there is an
                                            overflowing or a pollution, the cost of the activities to control, clean and repair shall
                                            be supported by the Contractor and shall not be considered as Oil Costs in accordance with
                                            this Contract.



 


		17.11	In
                                            case of a danger likely to affect the environment, the Contractor should immediately notify
                                            it to the Minister and take the measures set out in the emergency measures adopted by the
                                            Parties in compliance with Best Practices.



 


		17.12	At
                                            any time, the Contractor may return or abandon any part of the Contractual Zone or any Well
                                            not included in a Field, subject to prior notice of three (3) months to the Minister in charge
                                            of Hydrocarbons, provided that the Contractor has fulfilled all of its obligations pursuant
                                            to this Contract and has provided the Minister with detailed information on the status of
                                            any Deposit and the facilities and equipment located in this zone, in addition to any plan
                                            for the removal or dismantling of these facilities and equipment, including all technical
                                            and financial information. All abandonment operations must be carried out in accordance with
                                            the Law on Hydrocarbons.



 


		17.13	The
                                            abandonment of a Field by the Contractor and the corresponding abandonment plant shall require
                                            the prior approval of the Minister in charge of Hydrocarbons in accordance with the Law on
                                            Hydrocarbons. The Contractor shall prepare and submit to the Minister an abandonment plan
                                            for all Wells, facilities and equipment, the restoration of the land and the continuation
                                            of the Oil Operations, as applicable, in accordance with the Law on Hydrocarbons.



 


		17.14	Unless
                                            the Minister in charge of Hydrocarbons decides to retain the facilities and equipment in
                                            order to continue the Oil Operations in accordance with Article 17.17, the Contractor shall
                                            be obligated to fully abandon all of the Fields of the Contractual Zone before the end of
                                            the Exploration Period or any Extension Period, as applicable.



 


		17.15	Upon
                                            receipt by the Minister of the notification indicated in Article 17.12 or the abandonment
                                            of any Field, the Minister shall be entitled to resume any Discovery or any Field which the
                                            Contractor intends to abandon. If the Minister does not communicate its intention to resume
                                            the Oil Operations within three (3) months following receipt of the relevant notification,
                                            he shall be considered to have decided not to do so.



 






    Page 30 of 77


    


    

 


		17.16	In
                                            order to proceed with the abandonment of a Field, the Contractor shall contribute amounts
                                            to a Reserve Fund consistent with the estimated costs of the abandonment in accordance with
                                            the approved abandonment plan. The implementation period as well as the method of payment
                                            of the Reserve Fund shall be defined by mutual agreement between the Minister and the Contractor.



 


		17.17	If
                                            the Minister chooses to retain the facilities and equipment to continue the Oil Operations
                                            after the departure of the Contractor, the Reserve Fund thus established and the interests
                                            associated therewith shall be provided to the Minister to cover the subsequent abandonment.
                                            The Contractor shall be released for any other abandonment obligation regarding these facilities
                                            and equipment.



 


		17.18	The
                                            Contractor must take the necessary measures in accordance with Best Practices to properly
                                            and safely carry out the activities provided for in the Contract and must comply with the
                                            legal and regulatory provisions of Benin, including regulations concerning labour, environmental
                                            protection, health and safety. The Contractor must refrain from any action that endangers
                                            the health or safety of persons.



 


		17.19	The
                                            Minister shall have the right to inspect all sites, buildings and installations in the Contract
                                            Region. To have access to the sites, the Minister must inform the Contractor in advance.



 


		17.20	The
                                            Contractor should see to the safe and effective treatment of the water and residual oil and
                                            to the plugging of the wells before abandoning them.



 


		17.21	The
                                            Contractor should cement and abandon all production wells in accordance with common oil practices,
                                            when they stop producing within the Bloc.



 


		17.22	The
                                            Contractor should dismantle and remove in accordance with the procedure of abandonment in
                                            the Appendix all the platforms it may have installed in the Contract Region.



 


		17.23	The
                                            Contractor should rehabilitate the site in agreement with the Government at the end of the
                                            Contract or when the production of the Bloc stops (see provisional budget for site rehabilitation
                                            and consideration of the environmental factor). Dismantling, removing or abandoning the installations
                                            put up by the Contractor shall be done in compliance with the norms of the oil industry commonly
                                            respected in the Gulf of Mexico. On the contrary, the submarine installations or others should
                                            be in such a state as to ensure that they shall not be an obstacle to navigation.



 


		17.24	The
                                            Contractor shall leave all pipelines and installations free of oil at the end of the Contract
                                            in accordance with common oil practices.



 


		17.25	The
                                            Government shall explicitly agree that the Contractor shall not have any responsibility for
                                            abandonment or environmental rehabilitation other than the one explicitly stipulated in this
                                            Contract.



 


		17.26	Any
                                            amendment to this agreement on abandonment shall be agreed upon by both Parties.



 


		17.27	In
                                            case some laws or regulations in force related to the environment on the date of signature
                                            of the Contract change in such a way that they modify noticeably the economic balance of
                                            the Contract, the Parties shall refer to the provisions of Article 27.2.



 






    Page 31 of 77


    


    

 




 


ARTICLE
18: FOREIGN EXCHANGE ARRANGEMENTS


 


In the context
of the regulations in force in Benin, the Minister shall guarantee that during the life of the Contract, the Contractor and non-Beninese
sub-contractors shall be authorized to:


 


		(a)	Pay
                                            in foreign currency, totally or partially, salaries, reimbursements and other compensations;



 


		(b)	Open,
                                            keep and use bank accounts in foreign currency in the Republic of Benin and abroad and accounts
                                            in local currency in the Republic of Benin;



 


		(c)	Pay
                                            directly abroad, in foreign currency, foreign sub-contractors for the acquisition of capital
                                            goods and services related to the Oil Operations;



 


		(d)	Receive,
                                            transfer and keep abroad and posses freely all funds including, among others, all payments
                                            received for the exportation of Hydrocarbons and all payments received from the Government;



 


		(e)	Obtain
                                            from abroad all loans necessary for the Oil Operations;



 


		(f)	Purchase
                                            the local currencies necessary for the Oil Operations and convert into foreign currency all
                                            local currencies exceeding immediate local needs in the certified banks or exchange offices;



 


		(g)	Transfer
                                            abroad all foreign currencies exceeding the local needs of the Contractor. The rights given
                                            to the Contractor and to the Sub-contractors in this Article shall also be applicable to
                                            their foreign employees.



 






    Page 32 of 77


    


    

 


ARTICLE
19: LOCAL CONTENT, SOCIAL PROGRAMMES AND SIGNING BONUS


 


PRIORITY GIVEN
TO BENINESE COMPANIES


 


		19.1	With
                                            regard to selecting Sub-contractors to carry out the Oil Operations, the Contractor must
                                            give preference to Beninese Sub-contractors to the extent that they are competitive as far
                                            as quality, cost and technical capacity to carry out the activities within the established
                                            activity schedules.



 


EMPLOYMENT AND
TRAINING


 


		19.2	Starting
                                            from the effective date, the Contractor shall give hiring priority to Beninese personnel
                                            possessing the adequate qualifications at all levels of its organisation in accordance with
                                            Labour Legislation in the Republic of Benin.



 


		19.3	According
                                            to the employees’ skills, the contractor shall train or contribute to the training
                                            of said personnel to enable them to acquire the necessary qualifications for any position
                                            related to the Oil Operations. Using expatriate personnel is subject to prior authorisation
                                            of the Minister in charge of Hydrocarbons.



 


		19.4	Within
                                            three (3) months following the Effective Date of the Contract, the Contractor must notify
                                            the Minister of the allocation of an annual amount equal to one hundred thousand US Dollars
                                            ($100,000), which must be spent by the Contractor during the Exploration Phase for the
                                            training of the Minister’s oil sector officials.



 


		19.5	The
                                            aforesaid costs shall be recoverable as Oil Costs in accordance with the provisions of this
                                            Contract.



 


		19.6	The
                                            unused training funds shall be paid to the Government upon termination or expiration of the
                                            Contract.



 


SUPPORT FUND
FOR THE PROMOTION OF THE HYDROCARBON SECTOR


 


		19.7	The
                                            Government shall define and implement the oil activities promotion policy through the support
                                            fund for the Hydrocarbon sector.



 





		19.8	The Contractor agrees to contribute to this fund with an annual donation of one hundred thousand US
Dollars ($100,000). However, it may directly finance a promotion activity selected by the Minister in charge of Hydrocarbons using
this fund.



 


COMMUNITY DEVELOPMENT
FUND


 


		19.9	The Contractor shall be willing to contribute to the development of Benin communities through funding
community development projects that the Government shall submit to it. For this purpose, it must provide annual notification of its annual
donation of one hundred thousand US Dollars ($100,000) for the exploratory phase.



  


		19.10	The
                                            unused portion of the community development fund shall be paid to the Government upon termination
                                            or expiration of the Contract.



 


		19.11	The
                                            three funds will be renegotiated for the production phase.



 









    Page 33 of 77


    


    

 



SIGNING BONUS


 


		19.12	The
                                            company ELEPHANT OIL LTD has endorsed the airborne radiometric, magnetic and gravimetric
                                            surveys performed by FUGRO for an amount of two million, five hundred eighteen thousand,
                                            two hundred fifty ($2,518,250) US dollars. This contribution shall be paid in two instalments:



 



 


		●	The
                                            first instalment of five hundred eighteen thousand, two hundred fifty US dollars ($518,250)
                                            paid 30 days after signing the Contract;



 


		●	The
                                            second instalment of an amount of two million ($2,000,000) US dollars paid 30 days after
                                            payment of the first instalment.



 


The contribution of the company ELEPHANT
OIL LTD to the airborne radiometric, magnetic and gravimetric surveys does not constitute a recoverable cost.


 


ARTICLE
20: ACCOUNTING


 


		20.1	The
                                            Contractor must keep accounting records, as well as all financial information, books and
                                            records concerning the Oil Operations in national currency in the form required by the applicable
                                            Beninese Legislation.



 


		20.2	Accounting
                                            procedures to be applied by the Contractor shall be those set out in the Accounting Appendix
                                            D.



 


		20.3	The
                                            audited accounts of the Contractor must be submitted to the Minister for approval at the
                                            latest three (3) months following the end of the Calendar Year.



 


		20.4	The
                                            Minister may, by giving a notice to the Contractor, at the latest six (6) months following
                                            the submission date of the financial accounts, submit all the financial accounts of the Contractor
                                            relating to the Calendar Year in question to be audited by an international firm of chartered
                                            accountants designated by both parties. The Government shall bear the costs of that audit.



 


		20.5	Unless
                                            the Parties reach a mutual agreement, the Minister may submit all objections related to the
                                            accounts of the Contractor to an expert decision. Before deciding on an objection submitted,
                                            the expert must take into consideration the results of the financial audits carried out in
                                            accordance with the provisions of this Article. If the objection of the Minister is not submitted
                                            to an expert within the twelve (12) months following his receipt of the accounts, the objection
                                            in question shall be null and void. If the objection of the Minister is validated by the
                                            expert, the Contractor must rectify the accounts in question and meet the costs related to
                                            the audit and expertise irrespective of the provisions above.



 






    Page 34 of 77


    


    

 


ARTICLE
21: CONFIDENTIAL NATURE OF THE DATA


 


		21.1	All
                                            reports, data and information obtained or prepared by the Contractor, inasmuch as they relate
                                            to all or part of the Contract Region, shall be the entire property of the Beninese Government
                                            and shall be treated confidentially. Each party shall promise not to disclose them without
                                            first informing the other Party to:



 


		(a)	An
                                            affiliated company or a Sub-contractor of the Contractor;



 


		(b)	A
                                            financial institution for the purposes of a loan, a broker, or a legal or financial adviser;



 


		(c)	A
                                            stock market;



 


		(d)	Any
                                            potential transferee pursuant to Article 22 below.



 


		21.2	This
                                            clause shall not prevent the Minister from communicating certain information to any governmental
                                            entity and to credible persons interested in acquiring exploration and exploitation rights
                                            of Hydrocarbons in Benin.



 


		21.3	All
                                            reports, data and information communicated by the Minister or the Contractor to a third party
                                            in accordance with the provisions above, shall be in compliance with agreements, the terms
                                            of which shall guarantee that such data, information or reports shall be treated as strictly
                                            confidential by the receiver.



 


		21.4	The
                                            reports, data and information related to the Contract Region, and considered as important
                                            by the Minister for the implementation of an exploration programme by a third party in a
                                            neighbouring zone, may be communicated to it by the Minister. In return, the Contractor may
                                            have access to the data, information and reports obtained by the said third party concerning
                                            an adjoining zone of comparable exploratory interest. The confidentiality clauses shall apply
                                            to that third party.



 


		21.5	All
                                            reports, data and information, including interpretations and evaluations related to any surface
                                            area that is no longer part of the Contract Region following retrocession of surface or expiration
                                            of this Contract, shall be treated by the Contractor in strict confidentiality for a period
                                            of five (5) years following the date when the said area stopped being an integral part of
                                            the Contract Region or from the expiry date of this Contract.



 


		21.6	Any
                                            violation of the Confidentiality Clauses under this Article shall be punished according to
                                            the regulations in force in Benin regarding disclosure of professional secrets.



 


		21.7	Any
                                            news publication initiated by the Contractor and relating to the results of the operations
                                            undertaken in the frame of this Contract shall be subject to prior authorization from the
                                            Minister.



 






    Page 35 of 77


    


    

 


ARTICLE
22: ASSIGNMENT OF RIGHTS


 


		22.1	The
                                            Parties may assign all or part of their rights and obligations arising from this Contract.
                                            If the Contractor intends to assign or transfer its rights in whole or in part in accordance
                                            with the Contract, it must immediately submit a written request for authorisation to the
                                            Minister, unless the transfer shall be made to an Affiliate, in which case it must notify
                                            the Minister in writing of its intention to transfer sixty (60) days before the effective
                                            date or at a later date agreed upon with the Minister, after which the transfer shall become
                                            effective without the need for authorisation from the Minister. Any request should specify
                                            the name, address and any appropriate information about the technical and financial capacities
                                            of the assignee. Within thirty days (30) following the receipt of the request, the Minister
                                            must decide whether or not to approve the proposed transfer. Any disagreement of the Minister
                                            must be based on reasonable causes related to technical and financial capacities of the proposed
                                            assignee.



 


		22.2	If one
                                            of the Parties does a partial assignment of its rights and obligations arising from this
                                            Contract, the assignee shall be responsible, alone and jointly, for the guarantees, responsibilities
                                            and obligations of the assignor. If the assignment is total, the assignee shall be responsible
                                            alone for the said obligations and guarantees. Any assignee must adhere to the bank guarantees
                                            and give a guarantee to its parent company, if any, as required by this Contract.



 






    Page 36 of 77


    


    

 


ARTICLE
23: FORCE MAJEURE


 


		23.1	The
                                            Parties shall not be held accountable for any default or delay in fulfilling their obligations
                                            arising from this Contract if this default is due to a case of Force Majeure.



 


		23.2	Any
                                            action or event that is beyond the reasonable control of the Parties and which prevents them
                                            indefinitely or temporarily from fulfilling their obligations by virtue of the Contract shall
                                            be considered a case of Force Majeure. Therefore, the Force Majeure occurrence shall include
                                            but not be limited to the following cases: war or similar situations, embargoes, blockades,
                                            earthquakes, floods, fire, strike or lock-out, terrorist act, riots, and acts of state.



 


		23.3	The
                                            Party that shall put forward the case of Force Majeure should:



 


		a)	Inform
                                            as soon as possible the other Party by all means and confirm by registered mail with acknowledgement
                                            of receipt by describing precisely the event;



 


		b)	Take,
                                            if possible, all appropriate and legal measures to eliminate the cause of Force Majeure;



 


		c)	Inform
                                            the other Party in the same forms as soon as the Force Majeure has been eliminated and resume
                                            the execution of the contractual obligations.



 


		23.4	If the
                                            case of Force Majeure lasts for more than three (3) months, the Parties to the Contract shall
                                            meet to determine the appropriate actions to undertake.



 


		23.5	It shall
                                            be agreed that if for reasons of Force Majeure, one Party is unable to fulfil an obligation
                                            or exercise a right, then, in accordance with the Contract, the deadline given to fulfil
                                            the obligation or exercise the right, including any obligation or any subsequent right, shall
                                            be extended for a period equal to the duration of the Force Majeure.



 






    Page 37 of 77


    


    

 


ARTICLE
24: ARBITRATION AND EXPERTISE


 


		24.1	Arbitration
                                            



 


		24.1.1	Subject
                                            to the provisions above related to the expertise, any conflict or complaint related to a
                                            question or operation relating to the Contract, including among others, any dispute or complaint
                                            related to its validity, its interpretation, its implementation or omission of the obligations
                                            that it shall entail and that cannot be solved amicably between the Parties, should be settled
                                            with prejudice and exclusively through arbitration on the initiative of either Party.



 


		24.1.2	The
                                            arbitration procedure shall be enacted by three (3) arbitrators in accordance with the rules
                                            of conciliation and arbitration of the International Centre for Settlement of Investment
                                            Disputes (ICSID) of the World Bank Group. The Parties agree to respect the decisions of the
                                            arbitration tribunal.



 


		24.1.3	Unless
                                            the Parties otherwise decide by mutual agreement in writing, the third arbitrator designated
                                            as indicated above must not be a Benin national or a person having the same nationality as
                                            the Contractor.



 


		24.1.4	For
                                            any arbitration procedure in accordance with this Article:



 


		a)	The
                                            procedure must take place in Paris (France), unless otherwise decided by the Parties by mutual
                                            agreement;



 


		b)	French
                                            shall be the official language in any respect, and



 


		c)	The
                                            decision of the majority of the arbitrators shall be imposed on the Parties.



 


		24.2	Expertise



 


		24.2.1	Any
                                            Party wishing to submit a matter for the decision of an expert in compliance with a provision
                                            of the Contract that provides for that procedure, including the Accounting Appendix, or any
                                            other that the Parties shall decide to submit by mutual agreement for the decision of an
                                            expert under this Article, should notify it to the other Party. This notification must include
                                            a list of at least three (3) proposed experts. The other Party should respond to that notification
                                            within thirty (30) days following the date of receipt either by accepting one (1) of the
                                            proposed experts or by proposing at least three (3) others. In this last case, the Party
                                            that presented the initial notification shall have thirty (30) days to accept one (1) or
                                            reject all of the experts proposed by the other Party. Non-notification shall constitute
                                            a rejection of the proposed experts.



 


		24.2.2	If
                                            the Parties do not reach an agreement in selecting an expert within the sixty (60) days following
                                            the date of the first notification by virtue of the paragraph above, any of the parties may
                                            ask the Technical Expert Centre of the International Chamber of Commerce (ICC), based in
                                            Paris, to designate an expert in accordance with its regulations.



 


		24.2.3	If
                                            the expert agreed upon by the Parties or designated in accordance with the above-mentioned
                                            provisions declines the request of the Parties, dies or, for any other reason, is in the
                                            impossibility to act as an expert, the Parties must meet immediately to designate another
                                            expert to replace it. If the parties do not reach an agreement within thirty (30) days following
                                            the date it has been established that the first expert could not act, any of the Parties
                                            may ask the Technical Expert Centre of the ICC to designate another one in accordance with
                                            its regulations.



 


		24.2.4	The
                                            Parties shall be bound to cooperate with the expert as much as possible and each Party must
                                            ensure the cooperation of its Affiliates. The Parties should ensure the accessibility of
                                            the data and information the Parties or their Affiliates can give and that, according to
                                            the expert, could contribute to its decision. The representatives of the Parties shall have
                                            the right to consult the expert and to give it written information, but the expert can impose
                                            reasonable limits to this right. It shall be free to evaluate if a document or information
                                            submitted for its assessment is justified or relevant.



 


		24.2.5	All
                                            costs related to the selection and use of the expert shall be financed jointly and equally
                                            by the Parties.



 


		24.2.6	Any
                                            decision taken by the expert in accordance with this Article by virtue of a provision of
                                            the Contract that explicitly provides for this procedure shall be final and binding on the
                                            Parties. No Party shall submit an issue decided by an expert to an arbitration procedure
                                            as provided in this Contract. By mutual agreement among the Parties, issues submitted to
                                            the decision of an expert may be the object of an ultimate and final decision through arbitration,
                                            if the Parties agree to do so when submitting the issue to an expert.



 






    Page 38 of 77


    


    

 


ARTICLE
25: CANCELLATION


 


		25.1	CANCELLATION
                                            BY THE STATE OR BY THE CONTRACTOR



 


		25.1.1	Notwithstanding
                                            any other action provided for herein, this Contract may be terminated by the Minister in
                                            charge of Hydrocarbons without damages to the Contractor for any of the following reasons:



 


		a)	any
                                            significant breach by the Contractor of any provision contained in this Contractor or the
                                            Law on Hydrocarbons that is not corrected within 30 days after notification and which is
                                            not attributable to an action or omission of the Government or any Person representing the
                                            Government;



 


		b)	a
                                            delay of over three (3) months by the Contractor in making any payment owed to the Government
                                            which is not corrected and which is not attributable to an action or omission of the Government
                                            or any Person representing the Government;



 


		c)	the
                                            interruption of Development works in a Field for six (6) consecutive months, except when
                                            such interruptions:



 


		(i)	has
                                            been approved in advance by the Minister in charge of Hydrocarbons; or



 


		(ii)	is
                                            the result of an action or omission of the Government or any Person representing the Government;
                                            or



 


		(iii)	is
                                            the result of Force Majeure occurrence;



 


		d)	when,
                                            after Production of a Field is begun, its exploitation is interrupted for at least three
                                            (3) consecutive months, without the prior authorisation of the Minister unless this interruption
                                            (i) is due to an action or omission of the Government or any Person representing the Government
                                            or (ii) is the result of a force majeure occurrence;



 


		e)	when
                                            the Contractor does not comply with an arbitration judgement within the required time-frame
                                            in accordance with the provisions of Article 24, provided that this non-compliance is not
                                            attributable to an action or omission of the Government or any Person representing the Government;



 


		f)	a
                                            breach of this Contract resulting from illegal operations or operations in violation of national
                                            or international law (not attributable to an action or omission of the Government or a Person
                                            representing the Government);



 


		g)	if
                                            the contractor:



 


		●	decides
                                            not to extend the Initial Exploration Period and no Commercial Discovery has been declared
                                            by the Contractor during this period;



 


		●	decides
                                            to extend the Initial Exploration Period and no Commercial Discovery has been declared by
                                            the Contractor during an Extension Period or an additional extension thereof;



 


		●	is
                                            declared bankrupt or begins court-ordered liquidation as a result of its financial insolvency
                                            or has made legal or financial arrangements with its creditors as a result of its insolvency,
                                            unless the Contractor is able to provide the Government with a new financial guarantee acceptable
                                            to the Minister in charge of Hydrocarbons, at his absolute discretion, which shall guarantee
                                            the capacity of this Party to fulfil its obligations arising from this Contract.


 


		25.1.2	During
                                            the exploitation period, the Contractor may terminate the Contract by written notice to the
                                            Minister at least sixty (60) days before the date of termination, provided that the Contractor
                                            has fulfilled all of its contractual obligations, tax obligations and obligations arising
                                            from the corresponding Annual Work Programme.



 


		25.1.3	If
                                            the Contract is terminated in accordance with this Article, the Contractor shall have the
                                            right to remove and export all goods it has used and the title of ownership of which has
                                            not been transferred, partially or totally, subject to paying all debts due to the Government.
                                            The Contractor shall lose all other rights related to the Contract. It shall not be released
                                            from any of the obligations it may have contracted before the effective date of termination,
                                            whether they derive from the said termination or are the object of the termination.



 


		25.1.4	If
                                            the Contractor challenges any of the events provided in this Article or affirms that one
                                            of these events happened but it has remedied it, the Contractor may appeal to an arbitration
                                            procedure or the decision of an expert within thirty (30) days following the date of receipt
                                            of the termination notification from the Minister.



 


		25.1.5	Before
                                            leaving the Contract Region following a termination, the Contractor should make sure that
                                            all the wells are left in good state in accordance with Best Practices.



 


		25.1.6	The
                                            termination of the Contract takes place without any prejudice to any other right that, in
                                            compliance with the Contract, could have been established in favour of the Parties before
                                            the said termination.



 


		25.2	Notification
                                            of Termination and grace period



 


		25.2.1	The
                                            Minister in charge of Hydrocarbons shall declare this Contract terminated after sending a
                                            formal notification to the Contractor by any means that leaves a written record requesting
                                            that it remedy the situation or failure within 15 days of receipt of this notice with regard
                                            to payments or within 60 days of receipt of this notice for all other situations.



 


		25.2.2	If
                                            the Contractor does not comply with this notification within the required period or does
                                            not demonstrate within fifteen (15) Days or sixty (60) days that it has began and shall continue
                                            diligently and promptly to remedy the situation or failure in question, the Minister may
                                            automatically terminate this Contract.



 




    Page 39 of 77


    


    

 


ARTICLE
26: BANK GUARANTEE


 


		26.1	To fulfil
                                            its minimum work obligations to the reasonable satisfaction of the Government, the Contractor
                                            must submit an irrevocable bank guarantee of one million ($1,000,000) US Dollars within ninety
                                            (90) days of the Effective Date.



 


		26.2	Failing
                                            to present the bank guarantee within the required deadline shall be a violation of the provisions
                                            of the Contract and shall lead de facto to its termination by the Minister in accordance
                                            with the provisions relating to termination.



 


		26.3	The
                                            payable amount in compliance with the above-mentioned bank guarantee shall be gradually reduced
                                            in as much as the minimum work obligations for the year involved are well performed. For
                                            the purpose of this reduction, the Contractor may at any moment submit to the approval of
                                            the Minister a declaration showing the level at which the work obligations have been performed.
                                            This approval should intervene in reasonable deadlines.



 


		26.4	To make
                                            effective the above-mentioned deduction, the Minister should notify his approval of the bank
                                            guarantee to the issuing bank within a deadline of thirty (30) days from the date of receipt
                                            of the Contractor’s request.



 


		26.5	If the
                                            Contractor considers that the above-mentioned approval of the Minister has unjustifiably
                                            delayed or if the Minister considers that the Contractor has not performed a minimum work
                                            obligation satisfactorily in accordance with Best Practices, any one of the Parties may submit
                                            the matter for the decision of an expert.



 


		26.6	The
                                            guarantees to be presented by the Contractor in accordance with this Article must be approved
                                            by the Minister. The Contractor must submit to the Minister the original documents of the
                                            guarantees so that he can check and preserve them.



 






    Page 40 of 77


    


    

 


ARTICLE
27: NOTIFICATION


 


		27.1	To
                                            be considered valid, any communication or notification relating to the Contract must be presented
                                            on a working day or received by registered mail, telegraph, telex or fax addressed to the
                                            receiver to the following addresses:



 


The Government:


 


Represented by the Minister of Energy,
Oil and Mining Research, Water and Development of Sustainable Energy


 


04 P.O. Box: 1412


 


Cotonou (Republic of Benin)


 


Fax (229) 21 31 35 46


 


The Contractor:


 


...........................................................


 


...........................................................


 


...........................................................


 


..........................................................


 


		27.2	The
                                            Parties shall have the right to change their address for the purpose of the provisions of
                                            notification and communication by notifying it in writing to the other Party at least five
                                            (5) days before the effective date of change.



 






    Page 41 of 77


    


    

 


ARTICLE
28: APPLICABLE LEGISLATION, STABILISATION AND COMPENSATION


 


		28.1	This
                                            Contract shall be governed and interpreted in accordance with the laws and regulations in
                                            force in the republic of Benin.



 


		28.2	If
                                            the laws and regulations in force in Benin at the date of signature and applicable to the
                                            implementation or interpretation of the Contract or to the economic rights of the Parties
                                            are amended in a way to modify noticeably the existing economic balance between the Parties
                                            at the date of signature, they should meet to discuss any amendment that, by mutual agreement,
                                            shall restore the said balance. Any amendment adopted by mutual agreement by the Parties
                                            should take into account the most likely technical and commercial parameters in case of future
                                            development of the Hydrocarbons. If the parties do not agree on the parameters to be used
                                            for these calculations, or on the amendments that should restore the existing economic balance
                                            at the date of signature, the disagreements must be submitted for decision by an expert.



 


If
the laws of Benin are modified and therefore reduce the benefits or advantages of the contracting party, the terms of the Contract shall
be modified in order to balance the economic benefits of the contracting Party as they were on the Date of Signing of the Contract.


 


		28.3	If,
                                            in the Code or the regulation in force in Benin, there is no appropriate rule for the disagreement
                                            related to the Contract, the customs and practices of the international oil industry and
                                            the principles of law applicable in the field in the oil countries shall be used.



 


		28.4	The
                                            Parties agree that the Government shall bear the consequences of contractual, legal and financial
                                            commitments vis-à-vis the third parties, as well as any conflict and damages occurring
                                            for the duration of the Contract.



 






    Page 42 of 77


    


    

 


ARTICLE
29: INFRASTRUCTURE


 


		29.1	The
                                            Government shall make things easier for the Contractor to undertake the Oil Operations, use
                                            any roads, storage tanks and other storage and treatment structures, quays and other loading
                                            and exportation structures, railroads, pipelines and other existing transportation infrastructures
                                            in Benin and that are not used exclusively for other activities including other oil activities.



 


		29.2	The
                                            Contractor shall pay the rights of passage and other reasonable fees for using such infrastructures
                                            in accordance with the regulations in force in Benin. The costs incurred in this context
                                            shall be considered as Oil Costs and may be recovered by the Contractor but shall not exceed
                                            those paid by the public in general or other parties in the same situation as the Contractor.



 






    Page 43 of 77


    


    

 


ARTICLE
30: GUARANTEES FROM PARENT COMPANIES


 


The
Contractor shall agree to produce on the Effective Date of the Contract a letter from the Parent Companies guaranteeing the performances
of ELEPHANT OIL LTD for all obligations described or referred to in the Contract.


 






    Page 44 of 77


    


    

 


ARTICLE
31: FINAL PROVISIONS


 


		31.1	If on
                                            one or more occasions, the Ministry or the Contractor fails to put forward or to underline
                                            the fulfilment of one of the provisions of the Contract, this shall not be interpreted as
                                            a renunciation of the future application of the provision or right in question.



 


		31.2	All
                                            matters that are not expressly set out in this Contract shall be governed by the Code and
                                            the other laws and regulations of the Republic of Benin.



 


		31.3	If a
                                            provision of the Contract is declared null or invalid for any reason whatsoever, that shall
                                            not mean that the Contract or any of its provisions may be declared null or void, unless
                                            the Contract or its other provisions are concerned by that nullity.



 


		31.4	The
                                            Contract cannot be modified without the unmistakable and written consent of the Parties,
                                            but the Minister may, however, extend the period, during which the Contractor should perform
                                            well any obligation incumbent on it, or both Parties may exercise freely, implicitly or explicitly
                                            any right conferred to them by virtue of this Contract.



 


		31.5	The
                                            titles used in the Contract shall serve only to make it understandable and shall not be interpreted
                                            as bearing a particular meaning.



 


		31.6	Any
                                            reference in the singular shall include the plural and vice-versa.



 


		31.7	Any
                                            reference to gender shall include both genders.



 


		31.8	The
                                            Contract constitutes the full agreement of the Parties and shall replace all results of agreements
                                            and negotiations completed between the Parties before the date of signature.



 


		31.9	The
                                            Contract, once signed by both Parties, shall be published in the Official Gazette of the
                                            Republic of Benin and everywhere the need shall arise.



 


		31.10	This
                                            Contract is signed in two (2) originals.



 


Drafted
in Cotonou on 


 


	For the Government 

    of the Republic of Benin 
	 	For the Contractor
    

     

	 

    The Minister
    of Energy, Oil and Mining Research, Water and Development of Renewable Energy

     

    Barthélémy
    Dahoga KASSA 
	 	 

    President
    of ELEPHANT OIL LTD

     

     

    Matthew
    LOFGRAN



 






    Page 45 of 77


    


    

 


APPENDIXES


 






    Page 46 of 77


    


    

 


APPENDIXES


 


APPENDIX A: COORDINATES
OF THE CONTRACT REGION


 


APPENDIX B: MAP
OF THE CONTRACT REGION


 


APPENDIX C: BANK
GUARANTEE


 


APPENDIX D: ACCOUNTING
APPENDIX


 


APPENDIX E: ABANDONMENT
PROCEDURE


 






    Page 47 of 77


    


    

 


APPENDIX “A”


 


COORDINATES
OF THE CONTRACT REGION 


 


		Ø	BLOC
                                            B = 4590 Km2



 





	BLOCS	POINTS	LONGITUDE	LATITUDE	AREA
	 	 	degree	Min	Dry	degree	Min	Dry	Km2
	B	C’	2	20	0	6	52	0	4590
	D’	1	37	20	6	52	0
	HDD:
    	1	38	0	6	14	0
	CC	2	20	0	6	21	0


 






    Page 48 of 77


    


    

 


APPENDIX B 


 





  






    Page 49 of 77


    


    

 


APPENDIX “C”


 


BANK GUARANTEE
TEMPLATE


 


The Minister of Energy, Oil
and Mining Research, Water, and Development of Renewable Energy


 


COTONOU


 


Dear Sir/Madam,



 


This guarantee
shall be based on the Oil Exploration and Exploitation Contract in the Republic of Benin, between the Minister of Mines, Energy and Water
of the Republic of Benin, representing the Benin Government (henceforth designated the Minister), and .........................................................
(henceforth designated the Contractor), signed on ______________ of the year ____________, (henceforth designated the Contract).


 


In accordance with
Article 26 of the Contract, the Contractor shall be bound to give to the Minister a bank guarantee in order to ensure the performance
of its obligations related to the minimum works planned during the exploration period in compliance with Article 6 of the Contract.


 


The Bank ________________________,
hereby declares to be joint and several guarantor of the Contractor before the Minister for up to _____________________________________________________________________________
(_________________________________) US dollars to ensure the good performance, by the Contractor, of the minimum work obligations set
out in Article 6 of the Contract.


 


The obligation
which the Bank shall assume __________________________ under this guarantee shall be limited to paying to the Minister the amount requested
in its payment request, provided it does not exceed the normal amount of the bank guarantee on the date the bank payment request is submitted,
after deduction from the initial amount of the amount of the reduction authorisations issued by the Minister and received by the Bank
in accordance with the provisions of section 4 of this guarantee.


 


1-
This bank guarantee shall be several, irrevocable, unconditional and automatically enforceable. It shall be payable within the specified
deadlines, upon presentation of a notarized letter addressed by the Minister to the Bank and requesting the payment of an amount not
exceeding the amount in force in the bank guarantee declaring that the Contractor has not performed its minimal work obligations in accordance
with the provisions of the Contract, and accompanying the said letter, by way of sole complaint and justification, of a certified copy
before notary of the notarized letter addressed by the Minister to the Contractor indicating to him his intention to make effective the
bank guarantee.


 


This
notarized letter of the Minister to the Contractor must be submitted to the latter at least fifteen (15) calendar days before the date
on which the Minister presents the claim for payment to the Bank.


 






    Page 50 of 77


    


    

 


2-
The amount of this bank guarantee must be reduced each time the Bank __________________ receives from the Minister a letter indicating
that the Contractor has performed part of its minimum work obligations in accordance with the Contract. The reductions shall be made
according to the following procedures, amounts and conditions:


 


		a)	With
                                            regard to the performance of the seismic works: each kilometre of seismic survey performed
                                            and interpreted, up to ......km, representing the minimal work obligations: _____________________________
                                            ( ______________ ) US dollars;



 


		b)	With
                                            regard to exploration drillings: each compulsory exploration well duly drilled up to a geological
                                            age target of the Lower Cretaceous age or basement ( ___________________ ) US dollars.



 


3-
The Contractor must present the application for reduction to the Minister who, in accordance with the stipulations of the Contract,
should authorize them speedily and in writing within the deadlines provided in Article 26 of the Contract, not sending a notification
of the said authorization to the Contractor. This authorization must specify the amount of the reduction to be made in accordance with
the above-mentioned paragraphs.


 


4-
After receipt of the above-mentioned notification of the Minister, the Bank ___________________________ must immediately reduce the
amount of the bank guarantee in the proportion indicated and must inform the Minister about that reduction in writing.


 


It
shall not be necessary to establish a new guarantee document with the reduced amount; the initial document shall be considered valid
for the indicated amount.


 


5-
The bank guarantee shall expire at the latest _______________ ( ___________________________ ) calendar years and ( _____________________
) working days (in accordance with the definitions of the Contract) from the date this Contract has been signed, that is _____________________,
unless before that date the Bank ______________ and the Contractor assume all their responsibilities related to this guarantee; in that
case this bank guarantee shall be annulled on the date of the above-mentioned letter of the Minister.


 


From
the expiry or cancellation date, no claim shall be presented on account of this bank guarantee, and the Bank ___________________________
and the Contractor shall be entirely divested of any responsibility or obligation on account of this guarantee.


 


Respectfully,


 


The
Bank _________________________________


 






    Page 51 of 77


    


    

 


APPENDIX “D”



 


ACCOUNTING APPENDIX


 


ACCOUNTING AND
FINANCIAL PROCEDURES


 


This Appendix shall
be attached and shall be part of the Exploration and Exploitation Contract.


 


Dated


 


_______________________________________________


 


Between the Government
of the Republic of Benin,


 


ELEPHANT OIL
INTERNATIONAL 


 


and


 


The xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx


 









    Page 52 of 77


    


    

 


TABLE OF CONTENTS



 





		 	PAGES
	CHAPTER 1:	General Provisions	54
	CHAPTER 2:	Classifications, distribution of costs and expenditures	56
	CHAPTER 3:	Cost recovery method of the Contractor	60
	CHAPTER 4:	Inventory and valuation of assets	66
	CHAPTER 5:	Activity report during the Exploitation Period	66
	CHAPTER 6:	Production Report	68
	CHAPTER 7:	Report on the value of production	69
	CHAPTER 8:	Report on recoverable costs	70
	CHAPTER 9:	Statements of expenses and revenues	71
	CHAPTER 10:	Annual report	72
	CHAPTER 11:	Annual budget	73
	CHAPTER 12:	Forecasts and long-term plans	74
	CHAPTER 13:	Accounting & financial review procedures	75
	CHAPTER 14:	Disagreement with the Contract	76


 






    Page 53 of 77


    


    

 


CHAPTER 1: GENERAL
PROVISIONS


 


The
main objective of this Appendix shall be to establish the accounting rules and procedures used to determine the investments, expenditures,
operating costs and revenues of the Contractor.


 


		1.1	Definitions
                                            



 


The terms used
in this Appendix shall have the same meaning as in the Contract.


 


		1.2	The
                                            reports the Contractor should present:



 


		a)	Within
                                            thirty days (30) following the Effective Date, the Contractor shall submit for the approval
                                            of the Minister the outlines of a draft accounting procedures and operational records. These
                                            procedures should comply with the standards in force in Benin and compatible with those of
                                            the International Oil Industry. Within the sixty (60) days following the receipt of the above-mentioned
                                            documents, the Minister should either approve them or request their revision. Within a deadline
                                            of ninety (90) days following the approval by the Minister, the Contractor, based on the
                                            recommendations made, will fine-tune the accounting manuals and procedures that shall be
                                            in force over the life of the Contract.



 


		b)	The
                                            reports related to the Oil Operations that the Contractor should produce regularly shall
                                            be those stipulated in the Contract, the Appendix and those that shall form later the subject-matter
                                            of an agreement between the Parties or that may be required by Benin legislation.



 


		1.3	Accounting
                                            System



 


The accounting
system of the Oil Operations shall be prepared by the Contractor in accordance with the provisions of the Contract and the National Accounting
System. The Full Cost Accounting method (FCA) shall be used.


 






    Page 54 of 77


    


    

 


		1.4	Languages
                                            and units of account to be used:



 


		a)	The
                                            accounts shall be kept in Benin local currency. The metric unit and the Barrels shall be
                                            the measures concerned by this Appendix. French shall be the language used.



 


		b)	The
                                            rules of accounting and financial procedures shall aim at preventing the Minister and the
                                            Contractor from experiencing gains or losses through exchange at the expense or profit of
                                            either of the Parties. However, in case of a gain or loss on exchange, it shall be credited
                                            or debited from the accounts under this Contract.



 


		c)	The
                                            revenues and expenditures in CFA Franc or in US dollars shall be converted from the CFA Franc
                                            into US Dollar and from the US dollar into CFA franc based on the average between the exchange
                                            rate as sold and the exchange rate as purchased of the currencies in question, as published
                                            the last day of the preceding month by specialized journals of Central Bank of the West African
                                            States (BCEAO) or the IMF.



 


		d)	If
                                            an increase or decrease – isolated or cumulative -, of ten percent (10 %) or more takes
                                            place in the exchange rates between the CFA franc and the US Dollar, during any month, the
                                            exchange rate to be used shall be the following:



 


		e)	For
                                            the period going from the first day of the month until the day such increase or decrease
                                            takes place for the first time, the average of the official exchange rates as purchased and
                                            as sold between the US dollar and the CFA Franc as published the last day of the preceding
                                            month;



 


		f)	For
                                            the period going from the day when this increase or this decrease takes place for the first
                                            time until the end of the Month, the average rate of the official exchange rates as purchased
                                            and as sold between the US dollar and the CFA Franc as published the day when such increase
                                            or decrease takes place.



 


		1.5	Payments
                                            



 


		a)	All
                                            payments between the Parties, unless otherwise agreed upon, will be made in accordance with
                                            the Contract and through a bank to be designated by both Parties.



 


		b)	All
                                            the amounts owed by one of the Parties, by virtue of the Contract during any one Calendar
                                            Month, shall be subject at the time of payment, for any day of the Month following the deadline,
                                            to a compound daily interest corresponding to the rate of the Contract + 1%.






 






    Page 55 of 77


    


    

 


CHAPTER 2: CLASSIFICATIONS,
DISTRIBUTION OF COSTS & EXPENDITURES


 


All
expenditures related to the Oil Operations shall be classified and distributed as follows:


 


		2.1	Exploration
                                            Costs shall comprise all direct costs and indirect expenses incurred for Oil Exploration
                                            in the Contract Region, before obtaining the Exploration Permit, namely:



 


		a)	Geophysical,
                                            geochemical, paleontological, geological, topographic and seismic surveys and their respective
                                            interpretations.



 


		b)	The
                                            drilling and core boring of Exploration and Evaluation Wells, provided they are not transformed
                                            into Development Wells.



 


		c)	The
                                            labour and materials used to drill the above-mentioned Exploration Wells including the associated
                                            services.



 


		d)	Facilities
                                            used exclusively to this end, including access roads.



 


		e)	Costs
                                            of services related to operations as described in Section 2.4 of this Chapter and agreed
                                            upon between the Minister and the Contractor.



 


		f)	Administrative
                                            and general expenditures related to the Exploration Operation as described in Section 2.5
                                            of this Chapter, and agreed upon between the Minister and the Contractor.



 


		g)	Any
                                            other contractual costs incurred before the beginning of the commercial production and that
                                            was not set out in Section 2.2.



 






    Page 56 of 77


    


    

 



		2.2	Production
                                            development investments comprising all expenditures incurred during Development and Production
                                            Operations, namely:



 


		a)	Drilling
                                            of Production Wells from a reservoir already discovered, whether they are dried up or in
                                            production.



 


		b)	Completion
                                            of wells for production.



 


		c)	Intangible
                                            costs for drilling such as labour, consumables and costs relating to drilling and deepening
                                            wells for production.



 


		d)	Costs
                                            of development facilities such as pipelines, flexible, production and processing units, wellhead
                                            and bottom hole equipments, assisted recovery systems, drilling platforms, facilities for
                                            storage of Hydrocarbons, terminals and dykes for exportation, ports and their facilities
                                            and access roads for production activities.



 


		e)	Costs
                                            of services relating to Production Operations described in Section 2.4 of this Chapter and
                                            as agreed upon between the Minister and the Contractor.



 


		f)	Administrative
                                            and general expenditures related to the operations described in Section 2.5 of this Chapter
                                            and agreed upon between the Minister and the Contractor.



 


		g)	Any
                                            other Development costs incurred before the beginning of Commercial Production.



 






    Page 57 of 77


    


    

 


		2.3	Operating
                                            Costs comprising expenditures incurred to run the Field, after the start up of the commercial
                                            production. These include:
	 	 	 



		●	Cost
                                            of electrical power supplies to run the Wells.





 


		●	Maintenance
                                            and repair costs of machines, equipments and installations.





 


		●	Processing,
                                            transport and storage costs of Crude Oil or Gas.





 


		●	Costs
                                            of the production control laboratory.





 


		●	Ground,
                                            sea and air transportation fees for equipment and staff.





 


		●	Costs
                                            related to security, protection and surveillance.





 


		●	Well
                                            reconditioning costs.





 


		●	Insurance
                                            and certification costs.





 


		2.4	Service
                                            costs representing the direct or indirect expenditures for support services for Oil Operations,
                                            namely warehouses, dykes, ships, vehicles, rolling stock, air transport, security and fire
                                            fighting stations, workshops, water systems and sewers, power plants, housing, recreational
                                            and community facilities as well as furniture, tools and equipment used for those activities.
                                            Service costs for one Calendar Year comprising all of the costs incurred in the Year in question
                                            for hiring, purchasing and/or constructing such installations as well as the annual costs
                                            incurred for their maintenance and operation. All of the service costs shall be properly
                                            shared as stipulated above.



 






    Page 58 of 77


    


    

 


		2.5	Administrative
                                            and general expenditures abroad including:



 


		a)	All
                                            administrative and general expenditures of the Headquarters and offices including personnel
                                            costs;
	 	 	 



		b)	Costs
                                            of services rendered by the Headquarters outside Benin.



 


All
administrative and general expenditures, distributed as stipulated above, shall be defined each month of a Calendar Year by a percentage
of accumulated Oil Costs during the said Calendar Year according to the following scale:


 


	 	From 0 to 10,000,000
    dollars	-	3 %
	 	 	 	 
	 	next 10,000,000 dollars	-	2 %
	 	 	 	 
	 	more than 20,000,000 dollars	-	1 %






 






    Page 59 of 77


    


    

 


CHAPTER 3: COST
RECOVERY METHOD OF THE CONTRACTOR


 


By
virtue of the provisions of the Contract, the Contractor should bear all costs and expenditures related to the Oil Operations. These
costs and expenditures shall be recovered by the Contractor according to the following provisions:


 


		3.1	Costs
                                            recoverable without the approval of the Minister relating to works previously planned by
                                            the Contractor and approved by the Minister in accordance with the provisions of the Contract.



 


They
shall include: exploration costs, development costs, operating costs, costs of services and administrative and general expenditures described
respectively in sections 2.1; 2.2; 2.3; 2.4 and 2.5 above.


 


		a)	Personnel
                                            



 


Costs
related to the employees of the Contractor assigned to Benin and directly employed temporarily or permanently in the context of the Oil
Operations shall be considered under the following conditions:


 


		(i)	The
                                            complete costs of wages and salaries;



 


		(ii)	Reasonable
                                            costs incurred by the Contractor for leave, illness, disability benefits, living and housing
                                            allowance, travel, bonuses and other benefits generally applicable to wages and salaries
                                            deductible as direct costs in the context of this Appendix, as well as the proportional costs
                                            for benefits of employees such as, among others, life insurance and health insurance, corporate
                                            insurance, hospitalization, retirement, bonuses and other similar benefits.



 


		(iii)	Expenditures
                                            or contributions made on account of taxes imposed on the said employees by a public authority;



 


		(iv)	Transport
                                            fees of employees, equipment, materials and elements necessary for the Oil Operations.



 


		(v)	Costs
                                            incurred by the Contractor to relocate employees to or from the Contract Region or in its
                                            vicinity, whether they are assigned permanently or temporarily to the Oil Operations.



 


When
an employee is assigned to activities other than the Oil Operations, the relocation costs should be charged according to rigorous accounting
principles that are widely accepted.


 


The
relocation, travel costs of employees and their family, moving personnel effects of employees and of their family and any other expenses
in compliance with the practices of the oil industry.


 


The
relocation costs from the Contract Region or its vicinity to another foreign location shall not be recoverable unless if this foreign
site is a habitual residence area of the employees.


 


		b)	Offices,
                                            equipment and other facilities:



 


		(i)	Costs
                                            incurred by using offices, outbuildings, camps, warehouses, housing and other facilities
                                            of the Contractor in Benin and used directly for the Oil Services. If these installations
                                            are used for operations other than the Oil Operations and it is not possible to define the
                                            expenditures as direct expenditures related to the Oil Operations for which the service is
                                            rendered, the costs should be systematically and reasonably charged to the installations
                                            to which the service has been rendered.



 


		(ii)	Costs
                                            incurred through the acquisition, hiring, installation, exploitation, repairs and maintenance
                                            of communication systems, including radio and microwave installations used directly for the
                                            operations.



 






    Page 60 of 77


    


    

 


		c)	Performance
                                            of Services



 


		i)	Costs
                                            and expenditures incurred using Consultants on account of technical services and those of
                                            any other nature directly related to the Oil Operations, including but not limited to, laboratory
                                            analyses, industrial designs, geophysical and geological interpretations, engineering and
                                            data processing obtained from external sources.



 


		ii)	Amounts
                                            charged for services rendered by the affiliates should be competitive with the costs of services
                                            of the same quality by a third party.



 


		d)	Contractor’s
                                            material and equipments



 


For
the evaluation of material and equipment provided by the Contractor based on its own inventory or that of its Affiliates, the values
’‘A’’, ’‘B’’, ’‘C’’ should be considered depending on the situation,
since the surplus on the correct price on the Benin national market is not known:


 


		-	New Material
                                            and Equipment (Category ’‘A’’)



 


New
materials and equipment shall be evaluated at the price of the corresponding commercial invoice increased by additional import costs,
if any, and by other costs generally accepted by accounting techniques and practices.


 


		-	Used materials
                                            and equipments (Category ’‘B and ’‘C’’) shall be considered
                                            used without needing to be restored; these materials and equipment shall be evaluated at
                                            seventy-five percent (75%) of the price of the new materials and equipment.



 


Equipment
and materials shall be considered category ’‘C’’ when they can be used for their initial function after they
have been restored appropriately. These equipment and materials shall be evaluated at fifty percent (50%) of the price of the new equipment
and materials.


 






    Page 61 of 77


    


    

 


		e)	Acquisition
                                            of goods and equipments



 


		i)	The cost
                                            of acquisition of goods and equipment from third parties shall include customs fees, transport
                                            fees, loading and unloading fees, fees for purchasing procedures, customs import and export
                                            duties, fees to obtain licenses and costs of equipment and goods lost during transit and
                                            which are not covered by an insurance company. The accumulation of excess stocks must be
                                            minimized, taking into account the place of the sources of supply and the time necessary
                                            to receive the goods and equipment at remote locations.



 


		ii)	Any material
                                            bought by the Contractor in the context of the Oil Operations shall be inspected at the Government’s
                                            request before using them in accordance with applicable regulations.



 


		iii)	Since
                                            the Contractor does not guarantee the material beyond the guarantee offered by the supplier
                                            or the manufacturer, any money received by the Contractor from the suppliers, manufacturers
                                            or their representatives to compensate damaged materials or equipment shall be credited to
                                            the Contractor’s accounts at the end of the Contract and shall be deducted from recoverable
                                            costs.



 






    Page 62 of 77


    


    

 


		f)	Insurance
                                            costs



 


These
shall be costs incurred by the Contractor or by an Affiliate Company to obtain a competitive insurance policy in the context of the Oil
Operations on a competitive basis.


 


		g)	Training
                                            costs



 


These
shall be expenditures incurred by the Contractor for training its employees and for any necessary training under the Contract.


 


		h)	Rental
                                            charges in accordance with Article 4 of the Contract



 


		3.2	Recoverable
                                            costs subject to the Minister’s approval 



 


These
include:


 


		a)	Research
                                            and development fees for new equipment, materials and techniques meant for Oil exploration,
                                            development and production and that are not included in the work programme approved by the
                                            Minister.



 


		b)	Costs
                                            and expenditures not mentioned in this Appendix and that are incurred in the context of the
                                            execution of the Oil Operations.



 






    Page 63 of 77


    


    

 


		c)	Interests
                                            charged on loans taken by the Contractor to fund the oil operations. Any interest rate in
                                            compliance with the international financial market and agreed upon by the parties shall be
                                            recoverable.



 


		d)	Rents,
                                            expenses and other taxes:



 


Rents,
except those associated with the residences of the Contractor, taxes, contributions, duties, dues and all taxes and charges collected
by the Government for Oil Operations and paid directly or indirectly by the Contractor in accordance with the provisions of the Contract.


 


		e)	Costs
                                            and losses resulting from events that are not covered by the insurance policies as defined
                                            in the Contract, only in the case where the said costs and losses might be the exclusive
                                            result of a default or gross negligence of the Contractor or an Affiliated Company or one
                                            of its sub-contractors.



 


		f)	Legal
                                            costs and expenses related to the Oil Operations.



 


		3.3	Non-recoverable
                                            costs.



 


These
include:


 


		a)	Fines,
                                            additional charges and readjustments for late payment of dues and taxes in force in the country
                                            or adjustments for incorrect payment of those dues and taxes provided such delays or incorrect
                                            payments are attributable to the Contractor.



 






    Page 64 of 77


    


    

 


		b)	Import
                                            duties for goods and equipment that are not necessary for the Oil Operations and for housing
                                            non-essential staff.



 


		c)	All
                                            costs and expenses incurred before the Effective Date.



 


		d)	Expenditures
                                            on account of supplier credit interests.



 


		e)	Amounts
                                            paid for non-performance of the obligations of the Contract.



 


		f)	Expenses
                                            associated with badly executed operations due to a gross technical default of the Contractor
                                            or its sub-contractors.



 


		g)	Costs
                                            and expenses of any bank guarantee related to the Contract.



 



		h)	Donations
                                            in general.



 


		i)	Costs
                                            of inventory in case the rights of the Contractor are transferred by virtue of the Contract.



 


		j)	Costs
                                            of inventory in case the rights of the Contractor are transferred by virtue of the Contract.



 


		k)	Marketing
                                            service costs of the Crude Oil and its transportation beyond the delivery point.



 


		l)	Costs
                                            of expert reports and arbitration set out in the Contract.



 


		m)	Additional
                                            amount of 300% related to Operations under exclusive risks.



 


		n)	Commissions
                                            paid by the Contractor to intermediaries.



 


		o)	Costs
                                            and expenses without accounting evidence.



 


		p)	Costs
                                            and expenses for goods or services exceeding the international market price for comparable
                                            goods and services used in West Africa at the time of their acquisition, if circumstances
                                            do not justify such extra costs.



 






    Page 65 of 77


    


    

 


CHAPTER
4: INVENTORY AND VALUATION OF ASSETS


 


		4.1	The
                                            Contractor must keep the records of the movable and immovable property used in the Oil Operations
                                            in accordance with standard accounting practices of the country and the International Oil
                                            Industry.



 


		4.2	At reasonable
                                            intervals, but at least once a Year concerning moveable property and at least every three
                                            (3) years for fixed assets, the Contractor shall perform an inventory of the assets covered
                                            by the Contract. At least thirty (30) days in advance, the Contractor shall communicate in
                                            writing to the Minister its intention to perform the said inventory; the Minister shall be
                                            present by representation during this inventory. The Contractor shall clearly show the principles
                                            used as a basis to value the stocks.



 


		4.3	The Minister
                                            may request information from the Contractor on its assets whenever he deems it necessary.



 






    Page 66 of 77


    


    

 


CHAPTER 5: ACTIVITIES
REPORT DURING THE EXPLORATION PERIOD 


 


		5.1	During
                                            the Exploration Period, the Contractor should prepare an activity report for each quarter
                                            that shall include:



 


		●	The
                                            detailed description list of activities accomplished during the said quarter. This report
                                            shall be supported by plans, maps, geological sections and any other data indicating the
                                            level of accomplishment of the works. 



 


		●	Costs
                                            related to the various above-mentioned activities. 



 


		5.2	The
                                            activity report shall be submitted to the Minister for approval within thirty (30) days following
                                            the end of the quarter covered.



 






    Page 67 of 77


    


    

 


CHAPTER 6: PRODUCTION
REPORT


 


		6.1	Once
                                            the commercial production begins in the Contract Region, the Contractor should prepare for
                                            each Quarter a production report that shall include namely for each exploitation zone the
                                            following data:



 


		a)	The
                                            quantity of the Crude Oil produced and collected during the Quarter.



 


		b)	The
                                            quantity of the Crude Oil used for Oil Operations during the Quarter.



 


		c)	The
                                            quantity of available Crude Oil at the end of the Quarter in question.



 


		d)	Parameters
                                            and performances of the reservoir, records of core loggings and well tests and their interpretations,
                                            analyses of produced fluids.



 


		6.2	The
                                            production report of each Quarter shall be submitted to the Minister for approval within
                                            thirty (30) days following the end of the Quarter covered.



 






    Page 68 of 77


    


    

 


CHAPTER 7: REPORT
ON THE VALUE OF PRODUCTION


 


		7.1	Each
                                            Quarter, the Contractor should prepare a report on the precise determinations of the market
                                            value of the Crude Oil produced and collected after deducting losses associated with the
                                            Oil Operations. This report shall include the following data:



 


		a)	The
                                            quantities sold and prices obtained by the Contractor as a result of selling the Crude Oil
                                            to third parties during the Quarter in question.



 


		b)	The
                                            information the Contractor has concerning the prices of Crude produced by the major producers
                                            and exporting countries including contractual prices, reductions and discounts as well as
                                            the prices obtained on the ’’SPOT’’ markets.



 


		c)	The
                                            report on the value of production shall be submitted to the Minister for approval within
                                            the (30) days following the Quarter involved.



 






    Page 69 of 77


    


    

 


CHAPTER 8:
REPORT ON RECOVERABLE COSTS


 


		8.1	The
                                            Contractor should prepare for each semester a report on the recoverable costs, which shall
                                            include the following information:



 


		a)	Recoverable
                                            oil costs of the previous Quarter carried-over, if any.



 


		b)	Recoverable
                                            Oil Costs of the quarter in question.



 


		c)	Total
                                            amount of the recoverable Oil Costs of the Quarter in question indicated in the above paragraph.



 


		d)	Quantity
                                            and total value of the Crude Oil determined by the Contractor to recover the Oil Costs during
                                            the Quarter involved.



 


		e)	Oil
                                            Costs recovered during the Quarter involved.



 


		f)	The
                                            cumulated total amount of recovered oil costs up to the end of the Quarter covered.



 


		g)	The
                                            amount of recoverable Oil Costs to be carried over to the next Calendar Quarter.



 


		8.2	The
                                            report of recoverable costs of each quarter shall be submitted to the Minister for approval
                                            within three (03) months following the end of each semester.



 


		8.3	Notwithstanding
                                            the obligation to keep accounting records in CFA Franc, the Contractor shall keep a separate
                                            account in US dollars for the determination of the Gross Recovery [costs].



 






    Page 70 of 77


    


    

 


CHAPTER 9: STATEMENTS
OF EXPENSES AND REVENUES 


 


		9.1	The
                                            Contractor should prepare for each Quarter a statement of expenses and revenues made in the
                                            context of the Contract. This statement shall make a distinction between the Exploration
                                            Costs, capital investments, development and exploitation costs and the Operating Costs, and
                                            will identify the main expenditure headings corresponding to these categories. It will include:



 


		a)	The
                                            real expenditures and revenues of the Quarter covered.



 


		b)	The
                                            cumulated expenses and revenues for the budget of the Year covered.



 


		c)	The
                                            last forecast of the cumulated expenses for the end of the Year.



 


		d)	The
                                            gaps between the budget estimate, the achievements and their explanation.



 


		9.2	The statement
                                            of expenditures and revenues of each Quarter shall be submitted to the Minister for approval
                                            within the thirty (30) days following the end of the Quarter covered.



 






    Page 71 of 77


    


    

 


CHAPTER
10: ANNUAL REPORT


 


The
Contractor should prepare an annual report that shall summarise the information related to production, cost recovery, revenues and expenses.
This report shall be based on the actual quantities of the Oil produced and incurred fees. From this report, any necessary adjustment
shall be made to payments to the Parties pursuant to the Contract. The annual report for each Calendar Year shall be submitted to the
Minister for approval within sixty (60) days following the end of the said Year.


 






    Page 72 of 77


    


    

 


CHAPTER 11:
ANNUAL BUDGET 


 


		11.1	The
                                            Contractor should prepare an Annual Budget that shall make the distinction between Exploration
                                            Costs, Development and Exploitation Capital Investments and Operating Costs by showing the
                                            following:



 


		a)	Expenditures
                                            and revenues forecast for the Budget Year in accordance with the Contract.



 


		b)	Accumulation
                                            of expenditures and revenues up to the end of the said Budget Year.



 


		c)	Programme
                                            showing the most important headings for development and exploitation capital investments
                                            for the said Budget Year.



 


		d)	For
                                            a budgetary item and provided that the approved General Work Programme is respected, the
                                            Contractor may initiate expenditures up to ten percent (10%) of the said item and justify
                                            the said expenditures. When this limit is exceeded, the Contractor shall take all the appropriate
                                            measures to inform the Minister and justify any surplus of expenditures within thirty (30)
                                            days following its implementation.



 


		11.2	The
                                            Annual Budget shall be submitted to the Minister within a deadline of ninety (90) days before
                                            the beginning of the Year except for the first Contract Year where the said Budget shall
                                            be submitted within a deadline of thirty (30) days following the Effective Date of the Contract.



 






    Page 73 of 77


    


    

 


CHAPTER
12: FORECASTS AND LONG-TERM PLANS


 


The
Contractor should prepare and submit to the Minister the following two (2) long-term plans:


 


		12.1	Exploration
                                            Programme



 


During
the Exploration Phases, the Contractor shall prepare an Exploration Programme for each phase from the Effective Date of the Contract,
a programme which shall contain the following information:


 


		a)	Estimates
                                            of the Exploration costs showing the expenditures for each Year covered by the programme.



 


		b)	Details
                                            of seismic operations for each Year



 


		c)	Details
                                            of drilling activities planned for each Year.



 


		d)	Details
                                            of utilization and infrastructure needs for each Year.



 


The
exploration programme shall be reviewed every year. The Contractor shall prepare and submit to the Minister, the first exploration programme
within sixty (60) days following the Effective Date of the Contract. It shall do the same every year, within a period of forty-five (45)
days, before the end of the Calendar Year.


 


		12.2	Development
                                            Forecasts 



 


The
Contractor should prepare three-year Development Forecasts beginning the first day of January following the date the first evaluation
programme was approved by the Ministry. The Contractor shall thus prepare and submit to the Minister the revised development forecasts
at least forty-five (45) days before each Calendar Year, as long as required by the Contract or by mutual agreement between the parties.


 


		12.3	Change
                                            in the Programmes and Forecasts 



 


The
Minister and the Contractor shall agree that the details of the Exploration Programme and Development Forecasts may need some changes
based on certain circumstances and results obtained. In this spirit, a review of the said programme and forecasts may be carried out
annually.


 






    Page 74 of 77


    


    

 


CHAPTER
13: ACCOUNTING REVISION & FINANCING PROCEDURES 


 


The
terms of accounting and financial procedures may be amended by mutual agreement between the Parties. Amendments shall be through written
documents specifying the date on which they shall become effective.


 






    Page 75 of 77


    


    

 


CHAPTER
14: DISAGREEMENTS WITH THE CONTRACT


 


In
case of discrepancy between the terms of this Appendix and those of the Contract, the terms of the Contract shall prevail.


 






    Page 76 of 77


    


    

 


APPENDIX “E’’



 


ABANDONMENT
PROCEDURE 


 


The
procedure to dismantle offshore installations shall indicate the following steps to be followed to remove the structures from waters
of 85 to 150 feet (26m to 46m) deep.


 


		I.	MOBILIZATION



 


		1.	Obtain
                                            all approvals and authorizations relating to the abandonment of the installations and throwing
                                            the structures in a deep water site.



 


		2.	Plug
                                            and abandon each well. Cut the conductor of each well 15 feet below the dredge level.



 


		3.	Empty
                                            all hydrocarbons from the flasks or reservoirs and wash any surface pipes, discharge lines
                                            and oil pipelines with water.



 


		II.	DISMANTLING



 


		1.	Disconnect
                                            and remove mobile equipment and installations.



 


		2.	Cut
                                            the feet and move the deck of the structure.



 


		3.	Cut
                                            the feet below the dredge level and move the skirt of the structure.



 


		4.	Leave
                                            the skirt in the appropriate depth of water or take it onshore to a designated location.



 






    Page 77 of 77