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                                                                   EXHIBIT 10.14

EMPRESA COLOMBIANA
DE PETROLEOS
ECOPETROL                                          "CAJARO" ASSOCIATION CONTRACT

                              ASSOCIATION CONTRACT

ASSOCIATE      :   HARKEN DE COLOMBIA LIMITED
SECTOR         :   CAJARO
EFFECTIVE DATE :   February 18, 2002
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The contracting parties, as such: on one Part, the Empresa Colombiana de
Petroleos hereinafter referred to as ECOPETROL, an industrial and commercial
State-owned enterprise authorized by law 165 of 1948, actually ruled by its
by-laws, reformed by Decrees 1209 of June 15, 1994 and 2933 of December 10,
1997, with head office in Bogota, D.C., represented by ALBERTO CALDERON ZULETA,
of legal age, bearer of citizenship card No. 19'248.238 issued in Bogota, based
in Bogota, D.C., who states: 1. That in his capacity as President of ECOPETROL,
acts in representation of this Company, and 2. That for the execution of this
contract he has been authorized by the Board of Directors of ECOPETROL, as
witnessed in Minutes No. 2264 of December 14, 2001, and on the other hand HARKEN
DE COLOMBIA LIMITED, company organized pursuant to the laws of the Caiman
Islands, with a branch established in Colombia and with head offices in Bogota,
D.C., pursuant to Public Deed No. 406 of February 19, 1993, executed in Notary
Eleven (11) of Bogota, represented by GABRIEL GUSTAVO CANO VELASQUEZ, of legal
age, Colombian citizen, bearer of citizenship card number 8'265.559, who
declares: 1. That in his capacity as the Main Legal Representative he acts as
the representative HARKEN DE COLOMBIA LIMITED, 2. That to execute this contract
he is fully authorized as per the Certificate of Incorporation and Legal
Representation issued by the Chamber of commerce of Bogota, D.C., and 3. That
THE ASSOCIATE assures to have the financial capacity, technical competence and
the professional abilities necessary to execute the activities to which this
contract refers to.

Under the above conditions, ECOPETROL and THE ASSOCIATE declare that they have
entered into the contract contained in the following Clauses:

                         CHAPTER I - GENERAL PROVISIONS

CLAUSE 1 - OBJECT OF THIS CONTRACT

1.1       The object of this contract is the exploration of the Contract Area
          and the exploitation of such nationally owned hydrocarbons that may be
          found therein, described in Annex A that is part of this contract.

1.2       Pursuant to Article 1o. of Decree 2310 of 1974, the exploration and
          exploitation of nationally owned hydrocarbons are entrusted to
          ECOPETROL, company that may, directly or under contracts with Private
          Parties, carry out such activities. Based on such provision mentioned,
          ECOPETROL has agreed with THE ASSOCIATE to explore the Contract Area
          and to exploit such Hydrocarbons as may be found therein, under the
          terms and conditions set
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          forth in herein, in Annex "A", Annex "B" (Operating Agreement) and
          Annex "C" (Lineaments for the Preparation of the Development Plan)
          that make part of this contract.

1.3       Without prejudice of the provisions hereunder, it is understood that
          THE ASSOCIATE shall have the same rights and obligations in respect to
          the Hydrocarbons produced in the contract area and to its share of the
          same as are assigned under the Colombian Laws to anyone exploiting
          nationally owned Hydrocarbons in this country.

1.4       ECOPETROL and THE ASSOCIATE agree to carry out the exploration and
          exploitation operations within the terms of this contract in the
          Contract Area, that they shall share between themselves the costs and
          risks thereof in the proportion and under the terms set forth in this
          contract and that the Hydrocarbons produced shall belong to each Party
          pursuant to the proportions set forth in this contract.

CLAUSE 2 - APPLICATION OF THE CONTRACT

This contract applies to the Contract Area, identified, and the boundaries of
which are described in Clause 3 and Annex A of this contract, or to such portion
thereof, when areas have been restituted pursuant to this contract.

CLAUSE 3 -CONTRACT AREA

The area Contract comprises thirty four thousand one hundred and ninety five
(34.195) hectares with seven thousand fifty eight (7.058) square meters and is
located within the municipal jurisdiction of Mani in the department of Casanare.
The cartographic information was taken from the Political Map of Colombia,
digital file of the I.G.A.C., on scale 1:1'500.000.

This area is described on Annex "A" that is part of this contract.

Paragraph 1. - Whenever a person files a claim pretending to be the owner of the
property of the subsurface Hydrocarbons in the Contract Area, ECOPETROL shall
handle the case and assume the obligations required.

Paragraph 2.- In the case in which part of the Contract Area extends over the
areas that are or that have been reserved and declared to be within a system of
National Parks, THE ASSOCIATE is obliged to obey the conditions ruled by the
corresponding authorities, without it being considered that this contract has
been modified and without there being a right to make any claim against
ECOPETROL, pursuant to that agreed on in Clause 30 (numeral 30.2) of this
contract.

CLAUSE 4 - DEFINITIONS

For the purpose of this contract, the terms mentioned hereinafter, shall have
the following meaning:

4.1       Contract Area: Is the land described in Clause 3 hereinabove, and
          described in Annex "A" of this contract.
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4.2       Field: Such portion of the Contract Area in which there are one or
          more structures and/or stratigraphic traps totally or partially
          overlaid, with one or more productive Reservoirs or that the capacity
          to produce Hydrocarbons in commercial amounts has been verified. Such
          reservoirs may be found vertically and/or laterally separated by
          geological barriers or impervious stratums, or both.

4.3       Commercial Field: Is the field accepted by ECOPETROL able to produce
          Hydrocarbons in economically exploitable quantity and quality, in one
          or more of the Production Objectives defined by ECOPETROL at the time
          of acceptance of the commerciality, without prejudice that during the
          exploitation phase other Production Objectives may be found.

4.4       Gas Field : Is such that based on the information supplied by THE
          ASSOCIATE, is classified by ECOPETROL as a Non Associated Natural Gas
          Producer (or free natural gas) in the definition of its commerciality
          .

4.5       Executive Committee: Is the body established within thirty (30) days
          following the acceptance of the first Commercial Field, to supervise,
          control and approve all the operations and actions that are carried
          out during the term of the contract.

4.6       Direct Exploration Costs: Are the monetary expenses reasonably
          incurred in by THE ASSOCIATE through the acquisition of seismic and
          the drilling of Exploratory Wells, as well as for the locations,
          termination, equipment and testing of such wells. The Direct
          Exploration Costs do not include administrative or technical support
          from the head office or central offices of the Company.

4.7       Joint Account: Are the records to be kept by means of books of
          accounts pursuant to the Colombian laws, for crediting or debiting the
          Parties for their share in the Joint Account of each Commercial Field.

4.8       Budget Execution: Are the resources actually committed and/or spent in
          each of the programs and projects approved for a given calendar year.

4.9       Structure: It is the geometrical form with geological closing
          (anticlinal, synclinal, etc.) that present the formations in which
          fluid accumulations are found.

4.10      Effective Date: It is the day in which the sixty (60) calendar day
          period expires, as from the date of this contract is signed, as of
          which all the terms agreed upon therein shall be counted,
          independently from the date of approval of the contract by the
          Ministry of Mines and Energy.

4.11      Cash Flow: It is constituted by the movement of monies (income and
          disbursements) to be made by the Joint Account in order to meet the
          different obligations Contracted by the Operator for the normal
          progress of the operations.

4.12      Associate Natural Gas: Mixture of light Hydrocarbons in a gaseous
          state or in solution in the Reservoir and that is produced jointly
          with liquid hydrocarbons.

4.13      Non Associated Natural Gas (Production of): Are those Hydrocarbons
          produced in a gaseous state on surface and reported to standard
          conditions, with average values
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          (pondered by production), of initial relation Gas/Oil greater than
          15.000 standard cubic feet of gas per barrel of liquid Hydrocarbon and
          one molar composition of heptane plus (C7 +) less than 4.0%.

4.14      Direct Expenses: Are all expenditures payable by the Joint Account for
          payments of personnel directly engaged in the Company, purchase of
          materials and supplies, contracting of services with third parties and
          other general expenses required by the Joint Operation in the normal
          performance of its activities.

4.15      Indirect Expenses: Are those expenditures payable by the Joint Account
          for technical and/or administrative support, which the operator with
          his own organization, gives to the joint operation.

4.16      Commercial Interest Rate: When referring to pesos, it shall be the
          current interest rate at the time of the delay; in dealing with
          dollars of the United States of America, it shall be the prime rate
          fixed by the LIBOR (London Interbank Borrowing Offered Rate), three
          (3) months for dollar deposits, increased by four percentage points
          (LIBOR +4%).

4.17      Interest in the Operation: Is the share in the obligations and rights
          acquired by each party in the exploration and exploitation of the
          Contract Area.

4.18      Development Investment: The sums of money invested in goods and
          equipment capitalized assets for the joint operations in a Commercial
          Field upon acceptance of the existence by the parties.

4.19      Hydrocarbons: All organic compounds constituted mainly by the natural
          mixture of carbon and hydrogen as well those substances that accompany
          them or that are derived from them with the exception of helium and
          strange gases.

4.20      Gaseous Hydrocarbons: All Hydrocarbons produced in a gaseous state in
          surface and reported to standard conditions (1. absolute pressure
          atmosphere and a temperature of 60(0)F.)

4.21      Liquid Hydrocarbons: Crude and condensed oil and those produced in
          such state as a result of the gas treatment when required, reported to
          standard conditions.

4.22      Production Objectives: Are the reservoirs located in the commercial
          field discovered and tested as commercial producers.

4.23      Joint Operation: The activities and work performed or in the process
          of being performed, on behalf of the parties and on their own account.

4.24      Operator: The person designated by the parties to directly carry out,
          on their behalf, and without representing them, the operations
          necessary to explore and exploit the Hydrocarbons found in the
          Contract Area.

4.25      Parties: On the Effective Date, ECOPETROL and THE ASSOCIATE.
          Subsequently and at any time, ECOPETROL on the one hand, and THE
          ASSOCIATE and/or its assignees on the other.
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4.26      Exploration Period: The time available to THE ASSOCIATE for complying
          with the obligations set forth in Clause 5 of this contract, which
          shall not exceed six (6) years as from the Effective Date, except in
          the cases contemplated in Clauses 5 (numeral 5.4), 9 (numeral 9.3) and
          34.

4.27      Exploitation Period: The time elapsing from the end of the exploration
          period, or that of retention when necessary, to the end of this
          contract.

4.28      Retention Period: The time required by THE ASSOCIATE and granted by
          ECOPETROL to being the exploitation period of each gas field
          discovered in the Contract Area, that due to its particular conditions
          is not able to be developed in a short term, requiring an additional
          term for the execution of feasibility studies, of construction of
          infrastructure and/or marketing development.

4.29      Development Plan: Is the guide document to perform technical,
          efficient and economical exploitation operations of each field and
          shall contain, among other aspects, the development strategy, the
          environmental considerations, the activities to be developed, the
          Production forecasts for short and medium term, an estimate of the
          investment and expenses for the following five years and specifically,
          a description of the projects, the operations program and the Budget
          for the remaining of the present year or of the following year, as is
          the case. The lineaments for this development plan are described in
          Annex "C" that is part of this contract.

4.30      Exploration Well: Any well designated as such by THE ASSOCIATE to be
          drilled or deepened on its behalf, in the Contract Area in search of
          new reservoirs or to verify the extension of a reservoir or to
          determine the stratigraphy of an area. For the fulfillment of the
          obligations contemplated in Clause 5 of this contract, the
          corresponding drilling well shall be previously classified between
          ECOPETROL and THE ASSOCIATE.

4.31      Discovery Well: Is that exploration well in which the existence of one
          or more reservoirs is discovered or confirmed and that may require
          subsequent evaluation to determine whether such reservoir or
          reservoirs may be commercially exploited.

4.32      Exploitation Well (or of Development): Any well previously scheduled
          as such by the Executive Committee for the production of Hydrocarbons
          discovered in the objectives of production in the area of each
          commercial field.

4.33      Budget: The basic planning instrument whereby the resources are
          allocated for specific projects to be applied within a calendar year
          or part of a year, in order to achieve the goals and objectives
          proposed by THE ASSOCIATE or by the Operator.

4.34      Extensive Production Tests: The operations performed in one or more
          producing Exploration Wells, to evaluate the production and behavior
          conditions of the reservoir with temporary production installations.

4.35      Reimbursement: Is the payment of fifty percent (50%) of the Direct
          Exploration Costs incurred in by THE ASSOCIATE.
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4.36      Exploration Operations. The operations performed by THE ASSOCIATE as
          related to the search and discovery of Hydrocarbons within the
          Contract Area.

4.37      Reservoir: All rocks under the surface where Hydrocarbons in their
          porous space are accumulated, under production or that has the
          capacity to produce Hydrocarbons and that behaves as an independent
          unit as far as its petrophysical and fluid properties and that has a
          common pressure system throughout its entire extension.

                            CHAPTER II - EXPLORATION

CLAUSE 5 - TERMS AND CONDITIONS

5.1       THE ASSOCIATE is committed to carry out the exploration operations
          pursuant to the regulations and modern practices commonly accepted and
          in use by the international oil industry and to fulfill the legal and
          regulatory provisions in force. The exploration period shall be
          divided in three (3) phases, the first with a duration of twelve (12)
          months, the second phase with a duration of twelve (12) months and the
          third phase with a duration of twelve (12) months. The first phase
          begins on the Effective Date and the following on the calendar day
          immediately following the conclusion of the previous phase.

          During the exploration period, THE ASSOCIATE is obliged to carry out,
          as a minimum, the following exploration operations: during the first
          phase, THE ASSOCIATE must carry out the drilling of one (1)
          Exploration Well until reaching the formations that can produce
          Hydrocarbons in the Contract Area. With this well, the exploratory
          obligation corresponding to the fifth year of the exploration period
          of the Bocachico Association Contract is fulfilled.

          At the end of the first phase, THE ASSOCIATE shall have the option to
          resign from the Association Contract, provided having previously
          complied with the exploratory commitments agreed on for the present
          phase.

          During the second phase, THE ASSOCIATE must carry out the drilling of
          one (1) exploration well until reaching the formations that may
          produce Hydrocarbons in the Contract Area.

          At the end of the second phase, THE ASSOCIATE shall have the option to
          resign from the Association Contract provided having previously
          fulfilled the exploratory commitments agreed on for the present phase.

          During the third phase, THE ASSOCIATE shall drill one (1) Exploratory
          Well to depth so as to reach the formations capable of producing
          Hydrocarbons in the Contract Area.

          At the expiration of the exploration period, the contract shall end if
          the extension thereof has not been requested and authorized pursuant
          to Numeral 5.2 of this Clause, or if a field has not been discovered.
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5.2       If THE ASSOCIATE has satisfactorily complied with the obligations
          stipulated in Clause 5.1, ECOPETROL, at the request of THE ASSOCIATE,
          shall annually extend the exploration period, up to three (3)
          additional years, for such purpose, THE ASSOCIATE must inform its
          intention to continue with the exploration in the Contract block with
          an anticipation not lower than ninety (90) days of the date of
          termination of the Exploration Period, accompanying such request with
          the proposal of the Exploration Operations Program to be performed
          during each extension period. Within ninety (90) days following the
          date of receipt of the request of THE ASSOCIATE in ECOPETROL, the
          PARTIES shall be able to agree on the Exploration Operations Programs
          to be performed during such extensions. If no agreement is reached,
          THE ASSOCIATE is obliged to carry out as a minimum, Exploration
          Operations in the Contract Area, consisting in the drilling of one (1)
          Exploration Well per year. At the end of each of the extensions, which
          duration is one year, THE ASSOCIATE, shall have the option to resign
          from the Association Contract having previously fulfilled the
          exploratory commitment agreed on for each of them.

5.3       At its judgment, and at its own cost and risk, THE ASSOCIATE may
          perform additional Exploration Operations to those agreed on for the
          Phase or Stage of the Exploration Period under development. However,
          if THE ASSOCIATE wishes to have such additional Exploration Work
          accredited to the fulfillment of the exploratory commitments of the
          following phase or stage of the Exploration Period, it must request
          ECOPETROL to issue the corresponding approval. If the request is
          accepted by ECOPETROL, it shall determine the form and amount in which
          the transfer of the mentioned commitments is to be made.

5.4       If at the end of the six (6) year Exploration Period, THE ASSOCIATE
          has drilled one or several Discovery Wells that show the possible
          existence of a Commercial Field, previous written request by THE
          ASSOCIATE, ECOPETROL may authorize the extension of the Exploration
          Period for the time necessary, that shall not exceed two (2) years, so
          that THE ASSOCIATE may have the opportunity to prove the existence of
          such Commercial Field. To bring into effect that herein set forth,
          before finishing the Exploration Period and simultaneously with the
          request, THE ASSOCIATE must provide ECOPETROL with the maps and other
          descriptions of the area considered as capable of producing
          Hydrocarbons, the Exploration Operations program and other operations
          that THE ASSOCIATE plans to carry out and the budget to carry out such
          work at its own cost and risk, to determine the extension of the
          Reservoir or Reservoirs discovered and to show the existence of a
          Commercial Field, without prejudice of that established in Clause 8.
          To give application to the partial restituted of the areas during this
          extension of the Exploration Period, THE ASSOCIATE shall retain the
          area that is the largest between fifty percent (50%) of the Contract
          Area and the area it considers capable of producing Hydrocarbons plus
          its zone of reserve of two and a half (2.5) kilometers wide around the
          previous one, within the limits of the Contract Area. If the
          operations program proposed adjusts to the international standards and
          has the object to show the commerciality of the discovered Reservoirs
          within the term established, ECOPETROL shall issue its authorization
          for the execution of this program.

5.5       During the life of this contract and observing that established in
          Clause 7 of the same, THE ASSOCIATE may carry out the Exploration
          Operations in the areas it keeps pursuant to Clause 8 and THE
          ASSOCIATE shall be the only one responsible for the risks and costs of
          these activities, and, therefore, it shall have the complete and
          exclusive control of such activities without the maximum duration of
          the contract being modified for such cause.
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CLAUSE 6 - SUPPLY OF INFORMATION DURING THE EXPLORATION

6.1       ECOPETROL shall supply THE ASSOCIATE, whenever the latter may so
          request, with any information in its possession within the Contract
          Area. The costs of reproduction and supply of such information shall
          be charged to THE ASSOCIATE.

6.2       During the Exploration Period, THE ASSOCIATE shall give ECOPETROL, as
          it is obtained and pursuant to ECOPETROL' s manual on information
          supply, all the geological and geophysical information, cores,
          magnetic tapes edited, processed seismic sections and all the
          information on the field supporting it, magnetic and gravimetric
          profiles, all in reproducible originals, copies of the geophysical
          reports, reproducible originals of all well logs drilled by THE
          ASOCIATE, including a final composite graph for each well and copies
          of the final drilling report that includes the analyses of core
          samples, the results of production tests and any other information
          related to the drilling, survey or interpretation of any nature done
          by THE ASSOCIATE for the Contract Area without any type of
          limitations. ECOPETROL is entitled to, at any time and by the
          procedures it considers appropriate, to witness all the operations and
          verify all information previously mentioned.

6.3       The Parties agree that all geological, geophysical and engineering
          information obtained from the Contract Area in force during the
          development of this contract is confidential during the three (3)
          years following the date of acquisition or up to the termination of
          the contract, whatever happens first. The information made known is,
          but is not limited to seismic information, of potential methods, of
          remote sensors and geochemical, with its corresponding supports,
          surface and subsurface cartography, well reports, electric logs,
          formation tests, biostratigraphic, petrophysical and fluid analyses,
          and production background. Regardless of the confidentiality herein
          established, the Parties agree that in each case they may interchange
          with companies that are or not associated with ECOPETROL. It is
          understood that that agreed to herein shall take place without
          prejudice of the obligation to supply the Ministry of Mines and Energy
          with all information requested by it pursuant to the legal and
          Reglementary provisions in force. Nevertheless, it is understood and
          thus agreed, that the Parties may at their own discretion supply the
          information required by their affiliates, consultants, contractors,
          financial entities and that are required by the competent authorities
          with jurisdiction on the Parties or their affiliates, or by
          regulations of any stock markets in which the stocks of the Parties or
          corporations related are registered.

6.4       Within the ninety (90) days following the date of termination of the
          drilling operations of each Exploration Well, THE ASSOCIATE shall
          inform ECOPETROL in writing of the condition of the corresponding
          well, its classification as to the results obtained (dry or discovery)
          and the type of fluids produced, if it is the case.

CLAUSE 7 - BUDGET AND EXPLORATION PROGRAMS

Observing that established in this contract, THE ASSOCIATE is obliged to prepare
the programs, the chronogram of activities to be developed and the Budget to be
executed in a short term (the following calendar year) and the vision for the
following two (2) years with an estimated Budget, to carry out the exploration
in the Contract Area. Such vision, programs, chronograms and Budgets
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shall be presented for the first time to ECOPETROL, within the sixty (60) days
following the date of the signing of this contract, and subsequently, December
fifteen (15) of each year, the latest.

Every semester THE ASSOCIATE shall present a technical and financial report to
ECOPETROL, including the different exploratory activities performed, and the
perspectives of the area based on the information obtained, the Budget assigned
and the exploration costs incurred in up to the time of the presentation of the
report, commenting in each case the causes that originated the main deviations
presented. Upon request by ECOPETROL, THE ASSOCIATE shall supply the necessary
explanations to the report, in meetings programmed for such purposed. The
information presented by THE ASSOCIATE in the reports and the explanations to
which the present Clause refers to, shall in any case be understood as accepted
by ECOPETROL. The financial information shall be subject to auditing by of
ECOPETROL pursuant to that established in Clause 22 of Annex "B" (Operating
Agreement) of this contract.

CLAUSE 8 - RESTITUTION OF AREAS

8.1       Upon termination of the First Phase of three years of the Exploration
          Period or of such extensions thereof obtained by THE ASSOCIATE
          pursuant to Clause 5 (numeral 5.2), if a Commercial Field has been
          discovered and accepted by ECOPETROL in the Contract Area, said area
          shall be reduced to fifty percent (50%); two (2) years later the area
          shall be reduced to an extension equal to fifty percent (50%) of the
          remaining Contract Area and two (2) years later such area shall be
          reduced to the area of the Commercial Field or Fields under production
          or development plus one reserve zone of two and a half (2.5)
          kilometers wide surrounding each Commercial Field, and this shall be
          the only part of the Contract Area that shall be subject to the terms
          of this contract. Within the areas retained by THE ASSOCIATE pursuant
          to the present numeral, the Commercial Fields discovered shall be
          included.

8.2       Notwithstanding the obligation to relinquish the areas referred to in
          Clause 8 (numeral 8.1), THE ASSOCIATE is not obliged to return the
          Commercial Fields that are under development or production, or in a
          Retention Period, including the reserve zones of two and a half (2.5)
          kilometers wide that surround such areas, except in the case in which
          by motives attributable to THE ASSOCIATE, the development or
          production operations are suspended continuously for more than one
          year without just cause, case in which such Commercial Fields shall be
          restituted to ECOPETROL, terminating the contract for said areas or
          part of the area. These stipulations are also applicable to the fields
          exploited under the modality of Sole Risk.

          Paragraph: To show just cause, THE ASSOCIATE must present to ECOPETROL
          the reasons and fundaments of the same for its acceptance.

8.3       Retention Period: If THE ASSOCIATE has achieved the discovery of a Gas
          Field and presents a request for commerciality for such Field pursuant
          to that established in Clause 9 numeral 9.1, simultaneously with such
          application it may request ECOPETROL to issue a Retention Period,
          fully justifying the reasons to obtain such period.
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8.3.1     The Retention Period must be requested by THE ASSOCIATE and granted by
          ECOPETROL previous to the date in which the last restitution of areas
          to which numeral 8.1 of this clause refers to. In the case in which
          the Retention Period is granted, it is understood that the term set
          forth in Clause 9 (numeral 9.1) for ECOPETROL to speak out with
          respect to the acceptance or not of the existence of the Commercial
          Gas Field shall be postponed for the same term of the Retention
          Period.

8.3.2     The Retention Period may not exceed four (4) years. If the term
          initially granted as a Retention Period is insufficient, ECOPETROL,
          previous written and duly justified request by THE ASSOCIATE, may
          extend the Retention Period for an additional term, without having the
          sum of the initial retention period and its extensions exceed four (4)
          years. The Retention Period applies exclusively to the Gas Field area
          that ECOPETROL determines as capable of producing Hydrocarbons,
          including the reserve zone of two and a half (2.5) kilometers wide
          surrounding such area.

                           CHAPTER III - EXPLOITATION

CLAUSE 9- TERMS AND CONDITIONS

9.1       To initiate the Joint Operation hereunder, it is considered that the
          exploitation operations start on the date the Parties accept the
          existence of the first Commercial Field or upon compliance with the
          provisions of Clause 9 (numeral 9.5). The existence of a Commercial
          Field shall be determined by the drilling, by THE ASSOCIATE, within
          the proposed Commercial field of a number of Exploration Wells
          sufficiently to reasonably define the area and commerciality of the
          field capable of producing Hydrocarbons. If after evaluating the
          results obtained from the Discovery Wells, THE ASSOCIATE considers
          that it has discovered a possible Commercial Field, it must inform
          ECOPETROL in writing, supplying all the surveys on which this
          conclusion and the corresponding Development Plan are based on.
          ECOPETROL within the term of ninety (90) days as of the date in which
          THE ASSOCIATE turns in all the back-up information and makes a
          technical presentation to ECOPETROL, must accept or object the
          existence of the Commercial Field. ECOPETROL may request any
          additional information considered necessary within thirty (30) days
          following the date of submission of the first back-up information.

9.2       Should ECOPETROL accept the existence of the Commercial Field, it
          shall, in this sense, notify THE ASSOCIATE within the term established
          in Clause 9 (numeral 9.1) specifying the area and the Production
          Objectives in the Commercial Field, and shall start to participate,
          under the terms of this contract, in the exploitation of the
          Commercial Field discovered by THE ASSOCIATE.

9.2.1     ECOPETROL shall reimburse THE ASSOCIATE for fifty percent (50%) of the
          Direct Exploration Costs carried out by THE ASSOCIATE on its own
          account and risk within the Contract Area previous to the date of
          acceptance of the commerciality by ECOPETROL of each new Commercial
          Field discovered, pursuant to numeral 9.1 of the present Clause and
          that have not been previously charged to an other Field.

9.2.2     The amount of such costs shall be determined in dollars of the United
          States of America, taking as a reference the date in which THE
          ASSOCIATE made such disbursements;
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          therefore, the costs incurred in Colombian pesos shall be liquidated
          at the market exchange rate in effect on such date, certified by the
          Superintendencia Bancaria or by the corresponding entity.

          Paragraph: Once the amount of the Direct Exploration Costs to be
          reimbursed in dollars of the United States of America is defined, this
          value shall be updated on a monthly basis pursuant to the average
          consumer index price of the industrialized countries, as of the date
          of its disbursement, to constant dollars on the date in which
          ECOPETROL begins the Reimbursement in the manner described on the
          Operating Agreement (Annex B) of this contract. The balances to be
          reimbursed shall be equally updated up to the date in which ECOPETROL
          fully reimburses its participation in the corresponding Commercial
          Field.

9.2.3     The Reimbursement of the Direct Exploration Costs, pursuant to that
          established on Clause 9 (numerals 9.2.1) shall be made by ECOPETROL to
          THE ASSOCIATE, as of the moment in which the Field is put in
          production by the Operator, with the amount in dollars equivalent to
          fifty percent (50%) of its direct participation in the total
          production of the respective field, after deducting the corresponding
          percentage from the royalties.

          Paragraph: If concerning a Commercial Gas Field, such reimbursement
          shall be made by ECOPETROL to THE ASSOCIATE, as of the moment in which
          the Field is put under production by the Operator, with the amount in
          dollars equivalent to one hundred percent (100%) of its direct
          participation in the total production of such Field, after deducting
          the corresponding percentage from the royalties.

9.3       If with the information supplied ECOPETROL cannot accept the existence
          of a Commercial Field to which Clause 9 (numeral 9.1) refers to, it
          may advise THE ASSOCIATE about the presentation and execution of a
          program for additional operations to demonstrate the existence of a
          commercial field, operations that will be carried out at the risk and
          cost of THE ASSOCIATE that may not require a term longer than two (2)
          years for its execution, and if it is the case, the Exploration Period
          for the Contract Area shall be extended automatically for a term equal
          to that already agreed on between the Parties, as necessary to execute
          the additional work in this Clause, but without prejudice of that
          stated with relation to the reduction of areas in Clause 8 (numeral
          8.1). THE ASSOCIATE may present and execute a work program that meets
          the objective required or submit for expert analysis the requirement
          of additional information, pursuant to Clause 28 of this contract. In
          the event that the definition of the expert analysis is favorable to
          ECOPETROL, THE ASSOCIATE must fulfill the requirements and once again
          submit the studies of commerciality and the revised Development Plan
          to ECOPETROL for its consideration. In the event that the definition
          of the expert analysis is favorable to THE ASSOCIATE, it is understood
          that ECOPETROL has the necessary information and as a consequence, the
          term of ninety (90) days to which clause 9.1 refers to, to accept or
          to object the existence of a Commercial Field shall begin on the date
          in which ECOPETROL receives the report from the experts.

9.4       If, after the completion of the additional work or the disagreement
          solved by the expert analysis to which the previous numeral refers to,
          ECOPETROL accepts the existence of the Commercial Field to which
          Clause 9 (numeral 9.1) refers to, it will start to participate in the
          development operations of the field above mentioned in the terms
          established in this contract and shall reimburse THE ASSOCIATE as set
          forth in Clause 9 (numerals 9.2.2 and
<PAGE>

                                                                              12

          9.2.3) for fifty percent (50%) of the cost of the additional work
          requested and referred to in Clause 9 (numeral 9.3) and the work
          executed shall become the property of the Joint Account.

9.5       Modality of Sole Risk: If ECOPETROL does not accept the existence of a
          Commercial Field, after having performed the additional work referred
          to in Clause 9 (numeral 9.3), THE ASSOCIATE shall be entitled to
          execute such work as it may consider necessary in or to exploit such
          field and to reimburse itself two hundred percent (200%) of the total
          cost of the work executed at its own account and risk in the such
          field and up to fifty percent (50%) of the Direct Exploration Costs
          carried out by THE ASSOCIATE before the date of the presentation of
          the commerciality surveys of such field. For the effects of this
          Clause the reimbursement shall be done with the value of the produced
          Hydrocarbons, less the royalties referred to in Clause 13, deducting
          the costs of production, gathering, transportation and sale. If THE
          ASSOCIATE abides to the modality of sole risk, it is understood that
          the term of the exploitation begins on the date in which ECOPETROL
          informs THE ASSOCIATE of the nonexistence of a Commercial Field. For
          the purposes of liquidation of the value in dollars of the
          disbursements done in pesos, it shall be liquidated at the
          representative market rate certified by the Superintendencia Bancaria
          or by the corresponding authority, on the date in which THE ASSOCIATE
          has made such disbursements. For the purpose of this Clause, the value
          of each barrel of Hydrocarbons produced in such Field during a
          calendar month shall be the average price per barrel that THE
          ASSOCIATE receives from the sales of its participation in the
          Hydrocarbons produced in the Contract area during the same month. With
          reference to the reimbursement of the Direct Exploration Costs, that
          established in paragraph of clause 9 (numeral 9.2.3) shall be applied.

          When THE ASSOCIATE has reimbursed itself of the percentage established
          in the present clause, all drilled wells, installations and all types
          of goods acquired by THE ASSOCIATE for the exploitation of the field
          and paid for as indicated in the present clause, shall become the
          property of a Joint Account without any cost, previous the acceptance
          by ECOPETROL to participate in the development of such field.

9.6       ECOPETROL may, at any time, start to participate in the operation of
          the field discovered and developed by THE ASSOCIATE without prejudice
          to THE ASSOCIATE' s right to reimburse itself for the investments it
          made at its expense, in the form and percentage stipulated in Clause 9
          (numeral 9.5). Once THE ASSOCIATE is reimbursed, ECOPETROL shall enter
          to participate in the economic results of the wells developed at the
          exclusive expense of THE ASSOCIATE.

9.7       The demarcation of the boundaries of a Commercial Field shall take
          into consideration all the geological and geophysical information and
          that of the wells drilled within said field or related to the same.

9.8       If after the commerciality of one or more fields is accepted, THE
          ASSOCIATE continues to fulfill the exploratory obligations established
          in Clause 5, it may continue to simultaneously carry out the
          exploitation of such fields before the expiration of the Exploration
          Period established in Clause 4, but only as of the date of its
          termination shall the Exploitation Period begin. When concerning Gas
          Fields, and ECOPETROL has granted a Retention
<PAGE>

                                                                              13

          Period, the Exploitation Period for each Field shall begin on the date
          of expiration of the respective Retention Period.

9.9       If as a result of the drilling of Exploratory Wells, after confirming
          the existence of a Commercial field, THE ASSOCIATE proves the presence
          of additional accumulations of Hydrocarbons associated to such Field,
          it must request ECOPETROL to extend the area of the Commercial Field
          and its commerciality, following the procedure set forth in Clause 9
          (numeral 9.1). If ECOPETROL accepts its commerciality, it shall
          reimburse THE ASSOCIATE fifty percent (50%) of the Direct Exploration
          Costs exclusively related with the expansion of the area of the
          Commercial Field, in the terms established in numerals 9.2.2 and
          9.2.3. If ECOPETROL does not accept the commerciality, THE ASSOCIATE
          is entitled to reimburse itself up to two hundred percent (200%) of
          the total cost of the work executed on its own cost and risk for the
          exploitation of the Exploratory Wells that have resulted productive
          and up to fifty percent (50%) of the direct Exploration Costs carried
          out by THE ASSOCIATE exclusively related to the expansion of the area
          requested before the date in which ECOPETROL notifies on the same.
          Such reimbursement shall be done with the production originated from
          the Exploratory Wells that have resulted productive, after deducting
          royalties, following the procedure set forth in Clause 21 (numeral
          21.2) up to the percentages herein defined.

CLAUSE 10 - OPERATOR

10.1      The Parties agree that HARKEN DE COLOMBIA LIMITED is the Operator and,
          as such, with the limitations set forth in this contract, shall have
          the control of all the operations and activities it may consider
          necessary for an efficient technical and economic development of the
          exploitation of the hydrocarbons found within the area of the
          Commercial Field. They also agree that, nevertheless that in this
          contract - executed for the commercial purposes established in Clause
          1 of the same, HARKEN DE COLOMBIA LIMITED is the Operator, it is
          understood by the Parties, and thus determined, that for all labor
          legal effects, HARKEN DE COLOMBIA LIMITED does not act as a
          representative of the Parties, but as an only and true employer of the
          workers he contracts for the operation of the Commercial Field and, as
          a consequence, shall be responsible for the labor obligations that
          arise from the respective relations or work contracts, such as salary
          payments and social benefits, para-fiscal contributions, affiliation
          and payment of bids or contributions for pensions, health and
          professional risks to the Sistema de Seguridad Social Integral, to
          which Law 100 of 1993 refers to and its Reglementary decrees or those
          regulations that substitute or modify it.

10.2      The Operator has the obligation to carry out all of the development
          and production operations pursuant to the standards and practices
          generally accepted by the industry using the best technical methods
          and systems required for the economic and efficient exploitation of
          the Hydrocarbons and fulfilling the legal and regulatory provisions on
          the issue. Also, he must present on time, to the parties, the reports
          and documents mentioned in the contract, as well as any other
          information required by the Executive Committee with respect to the
          Joint Account and/or Operation.

10.3      Due to the afore mentioned, and in view that for the execution and
          fulfillment of the operation of the Commercial Field, HARKEN DE
          COLOMBIA LIMITED shall perform all the activities with its own
          resources, with liberty and technical and directive autonomy, for all
          the
<PAGE>

                                                                              14

          purposes of this contract, such Operator shall be considered an entity
          different from The Parties hereto as well as for the purposes of the
          implementation of civil, labor and administrative legislation and for
          the Operator's relations with the personnel at his service, as set
          forth in clause 32.

10.4      The Operator shall have the right to resign as such, by written
          notification to the Parties six (6) months in advance of the effective
          date of such resignation. The Executive Committee shall then assign a
          new Operator pursuant to Clause 19 (numeral 19,3,5). In case the
          Operator assigned by the Executive Committee is a third person
          different from the Parties, a contract must be executed between the
          Parties and the new Operator.

10.5      The Operator shall carry out the operations described in this contract
          in a diligent, responsible, efficient and technically and economically
          adequate manner, being understood that at no time shall he be
          responsible for mistakes in criteria, or for losses or damages that
          are not the result of a serious fault by the Operator.

10.6      The Operator shall have the right to execute any type of work by means
          of contractors, subject to the faculty that the Executive Committee
          has, pursuant to Clause 11 (numeral 11.1). To fulfill that herein
          established, the Operator shall carry out the contracting operations
          following the procedure described in Annex "B" and subject to the
          principles of good faith, transparency, economy, equity,
          responsibility, planning, quality, celerity and social and
          environmental responsibility that must rule in the contracting.

CLAUSE 11 - EXPLOITATION PROGRAMS AND BUDGETS

11.1      Within the three (3) months following the acceptance of a Commercial
          Field in the Contract Area, the Operator shall present to the parties,
          a proposal for projects, programs and budget for the Development Plan
          of the commercial field for the remaining of the corresponding
          Calendar year, to be agreed on by the Executive Committee. In case
          there are less than six months and a half (6 - 1/2) for the expiration
          of such year, the Operator shall prepare and present a proposal for
          projects, programs and Budget for the following calendar year, within
          a term of three (3) months.

11.1.     The projects, programs and the Budget contained in the Development
          Plan of the Commercial Field shall be checked and adjusted on a yearly
          basis and presented by the Operator to the Parties during the month of
          May of each calendar year, for which the Operator shall send his
          proposal within the first ten (10) days of the month of May. Within
          the twenty (20) days following the receipt of the proposal of the
          projects, programs, and Budget of the Development Plan of the
          Commercial Field, the Parties shall inform the Operator in writing on
          the changes they wish to propose. When this occurs, the Operator shall
          consider the observations and proposed reforms made by the Parties for
          the elaboration of the revised Development Plan, that shall be
          submitted for final approval of the Executive Committee, at the
          ordinary meeting during the month of July of each year. In case the
          total Budget of the Commercial Field has not been approved before the
          month of July, those aspects of the Budget of the Commercial Field on
          which an agreement has been reached, shall be approved by the
          Executive Committee, and those aspects not approved shall be submitted
          immediately to the Parties, for study and final decision, as set forth
          in Clause 20.
<PAGE>

                                                                              15

11.2.     The Parties may propose additions or revisions to the projects,
          programs and the annual Budget approved for each Commercial Field,
          but, except in cases of emergency, these must not be formulated with a
          frequency of less than three (3) months. The Executive Committee shall
          decide on the proposed additions or revisions at a meeting called
          within thirty (30) days following the presentation of the same.

11.3.     The main objectives of the projects, programs and Budgets are:

11.3.1    Determine the operations to be carried out and the expenses and
          investments (Budget) that the Operator is authorized to execute in
          each Commercial field during the following calendar year.

11.3.2    Maintain a vision of the development of each field in a horizon of
          medium and long term.

11.4      The projects, programs and annual Budget approved by the Executive
          Committee and contained in the Development Plan of each Commercial
          Field constitute the work plan shown and the expenses and investments
          estimated to be carried out by the Operator in the different aspects
          of the operation, such as:

11.4.1    Capital investments in production: drilling for the development of
          Reservoirs, well workover or recovery, and specific production
          constructions.

11.4.2    General construction and equipment: industrial and camp facilities,
          transportation equipment, drilling and production equipment. Other
          construction and equipment.

11.4.3    Maintenance and operating expenses: production expenses, geological
          expenses, administration expenses for the operation.

11.4.4    Working capital requirements.

11.4.5    Funds for contingencies

11.5      The Operator shall make all expenditures and investments and shall
          carry out the development and production operations set forth in the
          projects, programs and annual Budgets approved in the Development Plan
          for each Commercial Field referred to in Clause 11 (numeral 11.1),
          pursuant to the Operating Agreement (Annex B) that is part of this
          contract, without exceeding the total Budget for each year, except by
          authorization of the parties in special cases.

11.6      The Operator is authorized to carry out expenditures not contemplated
          expressly in the Budget of each Commercial field and chargeable to the
          Joint Account, without previous authorization of the Executive
          Committee, in the event of emergency measures aimed at safeguarding
          personnel or the property of the Parties, emergency expenses
          originating in fires, floods, storms or other disasters; emergency
          expenses essential for the operation and maintenance of the production
          facilities, including maintenance of the wells in a condition to
          produce with a maximum efficiency; emergency expenses essential for
          the protection and preservation of materials and equipment necessary
          in the operations. In such cases, the Operator shall call the
          Executive Committee to a special meeting as soon as possible, to
          obtain their approval in order to continue with the emergency
          measures.
<PAGE>

                                                                              16

11.7      From the amount of the expenditures incurred in by and the contracts
          executed by the Operator for amounts that exceed the annual Budget
          approved by the Executive Committee for each Commercial Field, as set
          forth in Clause 19 (numeral 19.3.9), without them having been
          opportunely authorized by the Executive Committee, except the
          assumptives set forth in Clause 11 (numeral 11.6), the Operator shall
          be the only one responsible, who shall assume the totality of the
          corresponding value. When the expense or contract in question is
          confirmed by the Executive Committee, the corresponding value shall be
          paid to the operator, pursuant to the rules defined by the Executive
          Committee. In case in which the expenditure or contract is not
          accepted by the Executive Committee, the Operator, if possible, may
          withdraw the good in question reimbursing the Parties for any cost
          that its withdrawal may cause them. When it is impossible for the
          Operator to withdraw such goods, or he rejects doing so, the benefit
          or patrimonial increase resulting from these expenses or contracts,
          shall belong to the Parties in proportion to their Interest in the
          Operation.

CLAUSE 12 - PRODUCTION

12.1      Whenever necessary, the Operator shall determine, with the approval of
          the Executive Committee, the Maximum Efficiency Rate (MER) for each
          commercial Field. This Maximum Efficiency Rate (MER) shall be the
          maximum producing rate of Hydrocarbons that may be extracted from a
          Reservoir for the purpose of obtaining a maximum economic benefit in
          the final recovery of Reservoirs. In agreement with the economic and
          engineering principles and the practices and procedures generally used
          and in use in the international oil industry, in conditions and
          circumstances similar to those experienced in the activities under
          this contract. The estimated production must be adjusted as necessary
          to compensate the real or anticipated conditions of the operation,
          such as wells under repair that are not producing, limitations in the
          capacity of the collecting lines, in the pumps, in the separators, in
          the tanks, in the pipelines and in other facilities.

12.2      The Operator shall determine periodically, at least once a year, with
          the approval of the Executive Committee, the area deemed capable of
          producing Hydrocarbons in a commercial quantity in each Commercial
          Field.

12.3      The Operator shall prepare and deliver to each Party, at regular three
          (3) month intervals, a program showing each Party's share of
          production, and another one showing the distribution of each Party's
          production for the following six (6) months. The forecast for the
          production must be based on the Maximum Efficiency Rate (MER,) as set
          forth in Clause 12 (numeral 12.1) and adjusted to each party's rights
          according to this contract. The Production Distribution Program shall
          be determined based on each party's periodic requests, and, set forth
          in Clause 14 (numeral 14.2) with the corrections deemed necessary to
          ensure that none of the Parties, while being able to withdraw, will
          receive less than the quantity to which it is entitled to under
          provisions of Clause 14 and without prejudice to the stipulations of
          Clauses 21 (numeral 21.2) and 22 (numeral 22.5).

12.4      If either of the Parties foresees a reduction in its capacity to
          receive Hydrocarbons compared to the forecast given to the Operator,
          the Party must inform the Operator as soon as possible, and if such
          reduction is due to an emergency situation, the Party shall inform the
          Operator within the twelve (12) hours following the occurrence of the
          event that causes
<PAGE>

                                                                              17

          the reduction. As a consequence, such Party shall give the Operator a
          new receipt schedule based on the appropriate reduction.

12.5      The Operator may use the Hydrocarbons that are consumed in the
          development of the production operations in the Contract Area and
          these consumptions shall be exempt from the royalties to which Clause
          13 (numeral 13.1) refer to.

CLAUSE 13 - ROYALTIES

13.1      For the payment of the royalties for the exploitation of the
          nationally owned Hydrocarbons, the Operator shall give ECOPETROL the
          percentage of the production established by Law. The delivery of this
          production shall be carried at the same place and time in which the
          Parties distribute the production that corresponds them pursuant to
          Clause 14 of this contract. In the case of Fields under exploitation
          in the modality of Sole Risk, THE ASSOCIATE shall give ECOPETROL the
          percentage of the production that corresponds to the royalties in the
          place agreed on by the Parties.

13.2      From the percentage of the production given to ECOPETROL in the terms
          of the previous numeral, ECOPETROL, in the way and terms established
          by law, shall pay those entities mentioned by law the royalties that
          are caused in favor of the Nation on the total of the production of
          the Field and, in no case, shall THE ASSOCIATE be responsible for any
          type of payment before these entities.

CLAUSE 14 - DISTRIBUTION AND AVAILABILITY OF THE HYDROCARBONS

14.1      The Hydrocarbons produced, except those that have been used in benefit
          of the operations of this contract and those that are inevitably
          wasted in these functions, shall be transported to the jointly owned
          tanks or to other measuring facilities agreed upon by the Parties. If
          there is no agreement, to the measuring site nearest to the control
          site established by the Ministry of Mines and Energy. The Hydrocarbons
          shall be measured pursuant to the regulations and methods accepted by
          the oil industry, and based on this measurement, the volumes to which
          Clause 13 refer to shall be determined. As of this moment, the
          remaining Hydrocarbons shall be the property of each Party in the
          proportions specified in this contract.

14.2 Distribution of Production

14.2.1    After having deducted the percentage that corresponds to the
          royalties, the rest of the Hydrocarbons produced by each Commercial
          Field are the property of the Parties in the proportion of fifty
          percent (50%) for ECOPETROL and fifty percent (50%) for THE ASSOCIATE,
          until the cumulative controlled production of the corresponding
          Commercial Field reaches the amount of sixty (60) million barrels of
          liquid Hydrocarbons or the amount of four hundred twenty (420) cubic
          gigafeet of gaseous Hydrocarbons to standard conditions, what ever
          occurs first (1 cubic gigafoot = 1 X 109 cubic feet).

14.2.2    Independently from the classification of the Commercial Field given by
          ECOPETROL in the definition of commercialization, exceeding the limits
          set forth in numeral 14.2.1, the distribution of the production of
          each Commercial Field (previous the deduction of the
<PAGE>

                                                                              18

          percentage corresponding to royalties) is the property of the Parties
          in the proportion that results from applying factor R as follows:

14.2.2.1  If the Hydrocarbon that reached first the limit established in numeral
          14.2.1 of the present Clause was the liquid Hydrocarbon, the following
          table shall be applied:

R  FACTOR        Distribution of Production After Royalties (%)
                          ASSOCIATE           ECOPETROL

0.0 to 1.0                   50                 50
1.0 to 2.0                   50/R            100 - 50 R
2.0 or more                  25                 75

14.2.2.2. If the Hydrocarbon that reached first the limit established in numeral
          14.2.1 of the present Clause was the gaseous Hydrocarbon, the
          following table shall be applied:

R  FACTOR        Distribution of Production After Royalties (%)
                          ASSOCIATE          ECOPETROL

0.0 to 2.0                   50                  50
2.0 to 3.0                   50/(R-1)        100 - [50 /(R-1)]
3.0 or more                  25                  75

14.2.3    For the effects of the previous tables, factor R shall be defined as
          the relation of cumulative incomes, expressed in constant terms, over
          the cumulative expenses, equally expressed in constant terms,
          corresponding to THE ASSOCIATE for each Commercial Field in the
          following terms:

                                       IA
                         R = ---------------------------
                                 ID + A - B + GO

          Where:
          IA (Cumulative Income of THE ASSOCIATE): Is the valuation of the
          cumulative incomes corresponding to the volume of THE ASSOCIATE' s
          Hydrocarbons produced, after royalties, at the reference priced agreed
          on by the Parties, excluding re-injected Hydrocarbons in the Fields in
          the Contract Area, those consumed in the operation and the flared gas.

          The average reference price of the Hydrocarbons shall be determined by
          mutual agreement between the Parties.

          To determine the cumulative incomes, the Monthly Incomes shall be
          taken as a base, which shall be determined as a result of multiplying
          the monthly average reference price by the production of the month
          pursuant to the formats established for such effect by the Ministry of
          Mines and Energy.
<PAGE>

                                                                              19

          ID (Cumulative Development Investments): Are fifty percent (50%) of
          the Cumulative Development Investments approved by the Executive
          Committee of the Association for each Commercial Field. The cumulative
          Development Investments done previous to the date of the initiation of
          the exploitation defined by the Ministry of Mines and Energy for the
          respective Field, shall be adjusted up to the present date in the same
          manner in which the Direct Exploration Costs are adjusted in the
          Paragraph of Clause 9 (numeral 9.2.2.).

          A: Are the Direct Exploration Costs in which THE ASSOCIATE has
          incurred in, pursuant to Clause 9 of this contract and adjusted
          pursuant to that established in Paragraph of clause 9 (numeral 9.2.2)

          B: Is the cumulative Reimbursement of the Direct Exploration Costs,
          previously mentioned, pursuant to Clause 9 of this contract.

          GO: (Cumulative Operation Expenses): Are the cumulative operation
          expenses approved by the Executive Committee of the Association, in
          the proportion that corresponds THE ASSOCIATE, plus the cumulative
          transportation costs of THE ASSOCIATE. As transportation costs it is
          understood, the investment and operation expenditures for the
          transportation of Hydrocarbons produced in the Commercial Fields
          located in the Contract Area, from it to the port of export or site
          where it is agreed to take the price to be used in the calculation of
          incomes IA. Such transportation costs shall be determined by the
          parties in mutual agreement once the exploitation stage of the Fields
          begins, which commerciality has been accepted by ECOPETROL. Within the
          Operation Expenses the Special Contributions are included or those
          similar that have direct application on the production of Hydrocarbons
          in the Contract Area.

          All values that, with posteriority to the date of initiation of the
          exploitation defined by the Ministry of Mines and Energy, included in
          the determination of factor R shall be taken in current dollars.

          For such effect, the expenses in pesos must be converted into dollars
          at the market rate certified by the Superintendencia Bancaria or by
          the corresponding authority, in charge on the date in which the
          corresponding disbursements have been done.

14.2.4    Calculation of factor R: The distribution of the production based on
          factor R shall begin to be applied as of the first day of the third
          calendar month after which the cumulative production of each
          Commercial Field reaches the amount of sixty (60) million barrels of
          liquid Hydrocarbons or to the amount of four hundred twenty (420)
          cubic gigafeet of gaseous Hydrocarbons at standard conditions,
          pursuant to numeral 14.2.1 of this clause.

          The calculation of factor R for each Commercial Field shall be done
          based on the accounting closing corresponding to the calendar month in
          which the cumulative control production of sixty (60) million barrels
          of liquid Hydrocarbons was reached or the amount of four hundred
          twenty (420) cubic gigafeet of gaseous Hydrocarbons at standard
          conditions, pursuant to numeral 14.2.1.

          The resulting distribution of the production shall be applied until
          June 30 of the following year. As of that moment, the distribution of
          the production with the application of factor R shall be done in one
          year terms (from July 1 to June 30), over its liquidation, based on
          the
<PAGE>

                                                                              20

          cumulative values to December 31 of the year immediately preceding
          pursuant to the corresponding accounting closing.

14.3      In addition to the tanks and other jointly owned facilities, each
          Party shall have the right to build its own production facilities in
          the Contract Area for its own and exclusive use in compliance with the
          legal regulations. The transportation and delivery of Hydrocarbons by
          each Party to the pipeline and to other storage facilities that are
          not jointly owned shall be done on the sole account and risk of the
          Party that receives the Hydrocarbons.

14.4      When production is obtained in places not connected by pipelines, the
          Parties may agree to install pipelines up to a point in which the
          Hydrocarbons may be sold, or to a place that connects with the
          pipeline. If the parties agree on the construction of such pipelines,
          they shall enter the contracts they consider suitable for this purpose
          and appoint the Operator pursuant to the legal provisions in force.

14.5      Each Party shall be the owner of the Hydrocarbons produced and stored
          as a result of the Operation hereunder and that are made available to
          it pursuant to the provisions of this contract, and on its account
          each Party must receive them in kind or sell them or dispose of them
          separately, according to that established in Clause 14 (numeral 14.3).

14.6      Should any of the Parties be unable for any reason to dispose of or
          separately withdraw from the tanks Jointly Account all or part of the
          Hydrocarbons it is entitled to pursuant to this contract, the
          following procedure must be followed:

14.6.1    If ECOPETROL is the Party unable to withdraw, in all or in part, its
          quota of Hydrocarbons (share plus royalties), pursuant to clause 12
          (numeral 12.3), the Operator may continue to produce the field and
          delivering to the ASSOCIATE, in addition to the portion that the quota
          of THE ASSOCIATE represents in the operation on the basis of one
          hundred percent (100%) of the MER, all those Hydrocarbons that THE
          ASSOCIATE decides to and in the capacity of withdrawing up to a limit
          of one hundred percent (100%) of the MER, crediting ECOPETROL for
          subsequent delivery, the volume of Hydrocarbons that ECOPETROL had the
          right to withdraw but that did not do so. With regard to the not
          withdrawn volume of Hydrocarbons to which ECOPETROL is entitled to
          during the month for royalties, THE ASSOCIATE, at the request of
          ECOPETROL, shall pay ECOPETROL in dollars of the United States of
          America, the difference that exists between the amount of Hydrocarbons
          that for the concept of royalties ECOPETROL has lifted and the amount
          of Hydrocarbons that it is entitled to for the concept of the
          royalties to which Clause 13 refers to, being understood that any
          withdrawal of Hydrocarbons done by ECOPETROL shall be applied, in
          first place to royalty payment in kind, and subsequently, any
          additional withdrawals of Hydrocarbons performed shall be applied to
          the share that it is entitled to pursuant to Clause 14 (numeral 14.2).

14.6.2    Should THE ASSOCIATE be the Party unable to withdraw, in all or in
          part, its quota assigned under Clause 12 (numeral 12.3), the Operator
          shall deliver to ECOPETROL, on the basis of one hundred percent (100%)
          of MER, not only the share and the quota that corresponds to
          ECOPETROL, but also the Hydrocarbons that ECOPETROL is in the capacity
          of withdrawing up to a limit of one hundred percent (100%) of MER,
          accrediting THE ASSOCIATE for its subsequent delivery, the part that
          corresponds to its quota and that it has been unable to withdraw.
<PAGE>

                                                                              21

14.7      When both parties are in the capacity to receive the Hydrocarbons
          assigned under Clause 12 (numeral 12.3), the Operator shall deliver to
          the Party that was previously unable to receive its quota of the
          production and, upon such Party's request, besides its share in the
          operation, a minimum of ten percent (10%) per month of the production
          that corresponds to the other Party on a monthly basis and, by mutual
          agreement, up to one hundred percent (100%) of the quota that was not
          received, up to the time in which the total amounts that were credited
          to the Party that was unable to received its Hydrocarbons, are
          cancelled.

14.8      Without prejudice of the legal provisions that rule the mater, each
          Party shall be free, at any moment, to sell or export its quota of the
          Hydrocarbons obtained, as agreed to in this contract, or to dispose of
          the same in any manner.

CLAUSE 15 - USE OF THE ASSOCIATED NATURAL GAS

In the case in which one or more fields of associated natural gas are
discovered, the Operator shall, within the three (3) years following to the date
of the initiation of the exploitation of the Field defined by the Ministry of
Mines and energy, submit a project on the use of the Natural Gas for benefit of
the Joint Operation. The Executive committee shall approve the project and, if
necessary, decide on the chronogram for the execution thereof. If the Operator
fails to present any project within the three (3) following years or does not
execute the project previously approved, within the time limits set by the
Executive Committee, ECOPETROL may take, free of charge, for itself, all the
associated natural gas available from the Reservoirs in exploitation, which is
not required for the efficient exploitation of the Field.

CLAUSE 16 - UNIFICATION

When an economically exploitable Reservoir extends continuously into other area
or areas outside the Contract Area, the Operator shall implement, in agreement
with the Parties and with any other interested parties, upon approval of the
Ministry of Mines and Energy, a unified exploitation program that meets the
Hydrocarbons exploitation engineering techniques.

CLAUSE 17 - SUPPLY OF INFORMATION AND INSPECTION DURING THE EXPLOITATION

17.1      The Operator shall deliver to the parties, as they are obtained,
          reproducible originals (sepias), and copies of the electric,
          radioactive and sonic logs of the wells drilled, historical records,
          core analysis, cores, production tests, reservoir surveys and other
          relevant technical information, as well as all routine reports made or
          received in connection with the operations and activities carried out
          in the Contract Area.

17.2      Each Party, at its own cost, expense and risk, shall have the right to
          inspect, through authorized representatives, the wells and the
          facilities in the Contract Area and the activities related thereto.
          Such representatives shall have the right to examine cores, samples,
          maps, logs for wells drilled, liftings, books and any other source of
          information connected with the performance of this contract.

17.3      To enable ECOPETROL to comply with the provisions of Clause 29, the
          Operator shall prepare and deliver to ECOPETROL all reports required
          by the National Government.
<PAGE>

                                                                              22

17.4      The information and data connected with exploitation operations shall
          be treated as confidential, in the same way as set forth in Clause 6
          (numeral 6.3) of this contract.

                        CHAPTER IV - EXECUTIVE COMMITTEE

CLAUSE 18 - CONSTITUTION

18.1      Within the thirty (30) calendar days from the acceptance of the first
          commercial Field, each Party must appoint a representative and
          corresponding first and second alternates, who shall form the
          Executive Committee, notifying the other Party in writing of the names
          and addresses of its representatives and alternates. Each Party may
          replace its representative or alternates at any time, but shall give
          written notice thereof to the other Party. The vote or decision of the
          principal representative of each Party shall be binding upon such
          Party. If the principal representative of any of the Parties is unable
          to attend a Committee meeting, the alternate, in its order first or
          second, shall attend, and shall have the same authority as the
          principal.

18.2      The Executive Committee will hold ordinary meetings during the months
          of March, July and November, during which the exploitation program
          carried out by the Operator shall be reviewed as well as the
          development program and the immediate plans. Every year, at the July
          ordinary meeting, the Operator shall present the Executive Committee
          with the annual operating program and the investment and expenses
          Budget for each Commercial Field, for the next calendar year, and if
          it is the case, the Revised Development Program.

18.3      The Parties and the Operator may request a special Executive Committee
          Meeting to analyze specific conditions of the operation. The
          representative of the interested Party shall notify the date of the
          meeting and the issues to be discussed with a ten (10) calendar day's
          notice. Any issue not included in the agenda of the meeting may be
          discussed during the meeting, upon acceptance of the representatives
          of the Parties on the Committee.

18.4      Each Party's representative shall have a vote in all matters discussed
          in the Executive Committee, equivalent to the percentage of that
          Party's total Interests in the Joint Operation. However, the decisions
          of the Executive Committee on the issues set forth in numerals 19.3.4
          through 19.3.9 of Clause 19 of this contract, shall be adopted by a
          unanimous vote of the Parties.

          Any decisions taken by the Executive Committee, set forth in the
          procedure established in this clause, shall be binding and final upon
          the Parties and the Operator.

CLAUSE 19 - FUNCTIONS

19.1      The representatives of the Parties shall form the Executive Committee
          which shall have full authority and responsibility to establish and
          adopt exploitation, development and operations programs and Budgets in
          relation with this contract. A representative of the Operator shall
          attend the meetings of the Executive Committee.
<PAGE>

                                                                              23

19.2      The Executive Committee shall designate a Secretary for each session.
          The Secretary shall take full, detailed records and minutes of all the
          meetings, including a summary of the discussions and decisions taken
          by the Committee. The Minutes shall be approved and signed by the
          representatives of the Parties within the ten (10) working days
          following the adjournment of the meeting and delivered to the Parties
          as soon as possible.

19.3      The responsibilities of the Executive Committee are, amongst others,
          as follows:

19.3.1    Adopt its own regulations.

19.3.2    Decide on those issues that the Operator submits for its
          consideration.

19.3.3    Supervise the performance of the Joint Account and of the Joint
          Operation

19.3.4    Create the necessary sub-committees and establish the functions they
          must perform under its direction.

19.3.5    Appoint the Operator in case of resignation or discharge, and dictate
          the regulations that the Operator must fulfill when he is a third
          person different from the Parties, definitely stating the motives for
          his discharge.

19.3.6    Appoint an External Auditor of the Joint Account.

19.3.7    Approve or reject the Development Plans and any subsequent
          modification or revision.

19.3.8    Determine the rules and policies on expenditures.

19.3.9    Approve or reject the projects, programs and the annual Budget of each
          Commercial Field and authorize extraordinary expenditures not included
          in the approved Budgets.

19.3.10   In general, to carry out all the functions authorized in this contract
          that do not correspond to the Operator, to any other entity or person
          under the specific clause hereof or under a legal or regulatory
          provision.

CLAUSE 20 - DECISION IN CASE OF DISAGREEMENTS

20.1      Any disagreement that cannot be solved in the Executive Committee,
          shall be directly submitted to the highest ranking executive of each
          of the Parties resident in Colombia, in order to reach a joint
          decision. If within the sixty (60) calendar days following the
          submission of the consultation, the Parties reach an agreement or a
          decision on the issue under discussion, they shall so advise the
          Operator, who, within the fifteen (15) calendar days following the
          receipt of the communication, shall call the Executive Committee to an
          extraordinary meeting, during which the agreement or decision adopted
          shall be approved.

20.2      If within the sixty (60) calendar days following to the date of the
          presentation of the consultation to the highest ranking executive of
          each of the Parties resident in Colombia, the Parties fail to agree on
          the issue, the procedures set forth in Clause 28 of this contract must
<PAGE>

                                                                              24

          be followed, except if concerning issues related to the operations, in
          which case they may be executed pursuant to Clause 21.

CLAUSE 21 - OPERATIONS UNDER RISK OF ONE OF THE PARTIES

21.1      If at any time one of the Parties wishes to drill an Exploitation Well
          not approved in the operations program, it shall notify the other
          Party written notice not less than thirty (30) calendar days in
          advance of the next Executive Committee meeting, of its wish to drill
          such well, including information such as location, recommendation to
          drill, and estimated depth and costs. The Operator shall include such
          a proposal among the issues to be discussed in the next Executive
          Committee Meeting. If such proposal is approved by the Executive
          Committee such well shall be drilled at the expense of the Joint
          Account. If such proposal is not accepted by the Executive Committee,
          the Party wishing to drill such well, hereinafter called participating
          Party, shall have the right to drill, complete, produce or abandon
          such well at its sole cost and risk. The Party not wishing to
          participate in the previous operation shall be called the
          non-participating Party. The participating Party must begin the
          drilling of such well within one hundred eighty (180) days following
          its rejection by the Executive Committee. If the drilling is not
          commenced within said period, it must again be submitted to the
          Executive Committee for its consideration. Upon request of the
          participating Party, the Operator shall drill the previously mentioned
          well on account and risk of the participating Party, provided that by
          judgment of the Operator such operation does not interfere with the
          normal development of the operations of the field, upon advance
          payment to the Operator by the Participant Party of such amounts as
          the Operator may deem necessary in order to drill. If said well is
          unable to be drilled by the Operator without interfering in the normal
          development of the operations, the participating Party shall have the
          right to drill such well directly or through a competent service
          company and, in this case, the participating Party shall be
          responsible for such operation, without interfering with the
          development of the normal operations in the Field.

21.2      If the well referred to in Clause 21 (numeral 21.1) is completed as a
          producing well, it shall be administered by the Operator and the
          production of such well, after deducting the royalties referred to in
          Clause 13, it shall become the property of the participating Party,
          who shall pay for all the operation costs of such well until the net
          production value, after deducting the production costs, gathering,
          storage, transportation and similar costs, as well as sale costs, is
          equal to two hundred percent (200%) of the drilling and completing
          cost of such well, which thereupon and for the purposes of this
          contract shall become the property of the holders of the Joint Account
          in the proportion established, as if it had been drilled with the
          approval of the Executive Committee for the account of both Parties;
          for such purpose the investments done and the costs incurred, in the
          exploitation of this well shall become part of Factor R of the
          Commercial Field. For the purpose of the present Clause, the value of
          each barrel of Hydrocarbons produced in such well, during a calendar
          month, before deducting the previously mentioned costs, shall be the
          reference price agreed by the Parties.

21.3      If at any time one of the Parties decides to workover, deepen up to
          the Production Objectives or plug a well that is not in commercial
          production or a dry well drilled by the Joint Account, and if such
          operations have not been included in a schedule approved by the
          Executive Committee, such Party shall notify the other Party of its
          intention to workover,
<PAGE>

                                                                              25

          deepen or plug such well. If in the location there is no equipment,
          the procedure mentioned in Clause 21 (numerals 21.1 and 21.2) shall be
          enforced. If at the well site there is adequate equipment to perform
          the operations proposed, the Party that receives the notification of
          the operations that the other Party wishes to carry out, shall have a
          term of forty eight (48) hours following the receipt of the notice, to
          approve or disapprove the operation, if during such term no answer
          whatsoever is received, it is understood that the operation shall be
          done on account and at the risk of the Joint Account. If the work
          proposed is carried out on account and sole risk of one participating
          Party, the well shall be administered pursuant to Clause 21 (numeral
          21.2).

21.4      If at any time one of the Parties wishes to build new facilities for
          the extraction of liquids from the gaseous Hydrocarbons and for the
          transportation and export of the Hydrocarbons produced, to be called
          additional facilities, such Party shall so advise the other in writing
          giving the following information:

21.4.1    General description, design, specifications and estimated costs of the
          additional facilities.

21.4.2    Projected capacity.

21.4.3    Approximate date of the initiation of the construction and duration of
          the same. Within ninety (90) calendar days from the date of
          notification, the other Party, by written notice, has the right to
          decide if it participates in the additional facilities projected. In
          case in which such Party decides not to participate in the additional
          facilities, or gives no answer to the proposal of the participating
          Party, from hereinafter referred to as the constructing Party, it may
          proceed with the additional installations and order the Operator to
          build, operate and maintain such facilities at the exclusive cost and
          risk of the constructing Party, without prejudice to the normal
          development of the Joint Operations. The constructing Party may
          negotiate with the other Party the use of such facilities for the
          Joint Operation. During the time in which the facilities are operated
          on the constructing Party sole account and risk, the Operator shall
          charge this party all operation and maintenance costs of the
          additional facilities pursuant to the accounting standards generally
          accepted.

                            CHAPTER V - JOINT ACCOUNT

CLAUSE 22 - HANDLING

22.1      Without prejudice to any provisions contained herein, the expenses
          covering Exploration Operations shall be on account and risk of THE
          ASSOCIATE.

22.2      As from the time ECOPETROL accepts the existence of a Commercial Field
          and subject to the provisions in Clause 5 (numeral 5.2) and of Clause
          13 (numerals 13.1 and 13.2), the property of the rights or Interest in
          the Operation of the Contract Area, shall be divided as follows:
          ECOPETROL fifty percent (50%), THE ASSOCIATE fifty percent (50%). From
          the moment of such acceptance, all expenses, payments, investments,
          costs and obligations incurred in and contracted for the development
          of the Joint Operation, in agreement with this contract, shall be
          charged to the Joint Account and the Direct Exploration Costs done by
          THE ASSOCIATE before a Commercial Field is accepted and its
          extensions, pursuant to Clause 9 (numeral 9.9), shall be registered in
          the Joint Account. Except for that established
<PAGE>

                                                                              26

          in Clauses 14 (numerals 14.3) and 21, all properties acquired or used
          from there on for the fulfillment of the operation activities of the
          Commercial Field shall be paid for and belong to the Parties, in the
          same proportion established in the present clause.

22.3      Within the first five (5) days of each month, the Parties shall supply
          the Operator, in the bank account of the Joint Account, the quota that
          corresponds them in the Budget of each Commercial Field pursuant to
          the needs and in the currency in which the expenses must be made in,
          meaning, in Colombian pesos or in dollars of the United States of
          America, as per request of the Operator pursuant to the programs and
          Budgets approved by the Executive Committee. When THE ASSOCIATE has
          insufficient Colombian pesos to cover the quota that corresponds it
          from its share in this currency, ECOPETROL shall have the right to
          supply such pesos and to receive a credit for the contributions it
          must make in dollars, liquidated at the market rate certified by the
          Superintendencia Bancaria or by the corresponding authority, of the
          day in which ECOPETROL must make the corresponding contribution, when
          such transaction is allowed by the legal provisions.

22.4      The Operator shall present a monthly statement to the Parties within
          the ten (10) calendar days following the termination of each month,
          showing the funds advanced, expenses incurred, outstanding liabilities
          and a report on other debits and credits made to Joint Account; this
          report that shall be done as set forth in Annex "B", and in an
          independent Annex, the parameters and calculation of factor R as
          mentioned in Clause 14 (numerals 14.2.3 and 14.2.4). If the payments
          to which Clause 22 (numeral 22.3) refer to are not made within the
          term therein set forth and the Operator decides to cover the same, the
          Debtor Party shall pay the commercial interest in the same currency in
          which the payment has been incurred for the period of time for which
          the payment has been delayed.

22.5      Should either party, in a timely manner, fails to supply the Joint
          Account with the sums due and payable, as of the due at date such
          Party shall be considered as a Debtor Party, and the other Party, as
          the Prompt Party. If the Prompt Party has made the corresponding share
          to the Debtor Party, in addition to its own, after sixty (60) calendar
          days of delay such Party shall have the right to have the Operator
          issue it the total participation of the Debtor Party, in the Contract
          Area (excluding the percentage that corresponds to the royalty), up to
          an amount of production that shall allow the Prompt Party a net income
          for the sales made equal to the sums not paid by the Debtor Party,
          plus an annual interest equal to the Interest in Arrears after of
          commencement of default.. By "net income" it is understood the
          difference between the sales price of the Hydrocarbons taken by the
          Prompt Party, less cost for transportation, storage, loading and other
          reasonable expenses incurred in by the Prompt Party in the sale of the
          products taken. The right of the Prompt Party may be exercised at any
          time after thirty (30) calendar days from having notified the Debtor
          Party in writing of its intention to take part or all of the
          production shares that correspond to the Debtor Party.

22.6      Direct and Indirect Expenses.

22.6.1    All Direct Expenses of the Joint Operation shall be charged to the
          Parties in the same proportion in which the production is distributed
          after the royalties.

22.6.2    The indirect Expenses shall be charged to the Parties in the same
          proportion established in numeral 22.6.1 of the present Clause for
          Direct Expenses. The amount of these
<PAGE>

                                                                              27

          expenditures shall be the result of taking the total annual value of
          the investments and direct expenditures (excluding the technical and
          administrative supports) and apply the equation a + m (X-b). In this
          equation "X" is the total value of the annual investments and
          expenditures, and "a", "m" and "b" are constants which values are
          shown in the following chart with relation to the amount of annual
          investments and expenditures:

     AMOUNT OF INVESTMENTS AND EXPENSES                VALUES OF THE CONSTANT
               "X" (US$)                   "a" (US$)   M (frac.)     "b"(US$)

1.            0       to   25.000.000         0            0.10           0
2.        25.000.001  to   50.000.000      2.500.000       0.08       25.000.000
3.        50.000.001  to  100.000.000      4.500.000       0.07       50.000.000
4.       100.000.001  to  200.000.000      8.000.000       0.06      100.000.000
5.       200.000.001  to  300.000.000     14.000.000       0.04      200.000.000
6.       300.000.001  to  400.000.000     18.000.000       0.02      300.000.000
7.       400.000.001  on                  20.000.000       0.01      400.000.000

          The equation shall be applied only one time per year, in each case
          with the value of the constants that correspond to the total value of
          the annual investments and expenditures.

22.7      The monthly statements of the account referred to in Clause 22
          (numeral 22.4) may be revised or objected by any of the Parties from
          the time they are received by the Parties up to two (2) years counted
          from the end of the calendar year to which they pertain to, clearly
          specifying the corrected or questioned entries and the reason thereof.
          Any account that has not been corrected nor objected within this
          period, shall be considered as final and correct.

22.8      The Operator shall keep the accounting records, vouchers and reports
          for the Joint Account in Colombian pesos pursuant with the Colombian
          laws and every debit or credit to the Joint Account shall be made
          pursuant to the accounting procedure established in Annex "B", that is
          part of this contract. In case of disagreement between such accounting
          procedure and that established in this contract, that stipulated in
          this later one shall prevail.

22.9      The Operator may sell materials or equipment during the first twenty
          (20) years of the Exploitation Period or the first twenty eight (28)
          years of the Exploitation Period, if it concerns a Gas Field, for the
          benefit of the Joint Account, when the value of that sold does not
          exceed five thousand dollars of the United States of America
          (US$5.000) or its equivalent in Colombian pesos. This type of
          operations, per calendar year may not exceed the amount of fifty
          thousand dollars of the United States of America (US$50.000) or its
          equivalent in Colombian currency. The sales in excess of these amounts
          or sales of real property shall be approved by the Executive
          Committee. The sale of such material or equipment shall be done at a
          reasonable commercial price pursuant to the conditions wear of the
          asset.
<PAGE>

                                                                              28

22.10     Any machinery, equipment and other assets or personal property
          acquired by the Operator for the execution of this contract, charged
          to the Joint Account, shall be the property of the Parties in the same
          proportion to their Interest in the Operation. However, if one of the
          Parties has decided to terminate its interest in the contract prior to
          the end of the first seventeen (17) years of the Exploitation Period,
          with the exception of that established in Clause 25, such Party is
          obliged to sell its interest in such items to the other Party, at a
          price commercially reasonable or at book value, which ever is lower.
          Should the other Party not wish to purchase such items within the
          ninety (90) calendar days following the formal offer of sale made to
          it, the Party wishing to withdraw shall have the right to yield to a
          third person the Interest that corresponds it in such machinery,
          equipment and items. If THE ASSOCIATE decides to withdraw after
          seventeen (17) years of the Exploitation Period, its rights in the
          Joint Operation shall pass to ECOPETROL free of charge, previous its
          acceptance.

                      CHAPTER VI - DURATION OF THE CONTRACT

CLAUSE 23 - MAXIMUM DURATION

This contract shall have a maximum duration of twenty eight (28) years, counted
as from its Effective Date distributed as follows: up to six (6) years as an
Exploration Period pursuant to Clause 5 without prejudice of that set forth in
Clause 5 (numeral 5.4) and in Clause 9 (numeral 9.3); and twenty two (22) years
as an Exploitation Period as from the date of the termination of the Exploration
Period. It is understood that in the events contemplated in this contract, in
which the Period of Exploration is extended, in no case, shall the total term of
twenty eight (28) years be extended.

Paragraph 1: The Exploitation period for the Gas Fields that are discovered
within the Contract Area shall have a maximum duration of thirty (30) years as
from the date of expiration of the Exploration Period or of the Retention Period
granted. In any case, the total term of the contract for such Fields may not
exceed forty (40) years from its Effective Date.

Paragraph 2: Notwithstanding the afore mentioned, ECOPETROL and THE ASSOCIATE,
with an anticipation not less than five (5) years to the date of expiration of
the Exploitation Period of each Field, shall study the conditions to continue
with its exploitation subsequent to the term to which this Clause refers to. In
such case in which the Parties agree to continue such exploitation, they shall
define the terms and conditions within which it shall be performed.

CLAUSE 24 - TERMINATION

This contract shall be terminated in any of the cases hereinafter mentioned and
in which the rights of THE ASSOCIATE mentioned in this contract shall stop, both
as interested Party, and in its character of Operator, if at the time of the
expiration the two qualities mentioned concur in THE ASSOCIATE.

24.1      Due to the expiration of the Exploration Period without THE ASSOCIATE
          having discovered a Commercial Field, except for that provided in
          Clauses 5 (numeral 5.4), 9 (numerals 9.5) and 34.
<PAGE>

                                                                              29

24.2      Upon expiration of the term of the duration of the contract as set
          forth in Clause 23.

24.3      At any time at THE ASSOCIATE' s will, upon fulfillment of its
          obligations as set forth in Clause 5 and of any others entered into
          hereunder, up to the date of its expiration.

24.4      If THE ASSOCIATE assigns this contract, fully or in part, without
          having fulfilled that set forth in Clause 27.

24.5      By not fulfilling the obligations acquired by THE ASSOCIATE pursuant
          to this contract.

24.5.1    ECOPETROL may not end this contract until after sixty (60) calendar
          days of having notified THE ASSOCIATE or its assignees in writing,
          clearly specifying the causes invoked to make such a declaration and
          only if the other Party has not presented the satisfactory
          explanations to ECOPETROL or if THE ASSSOCIATE has not corrected the
          failure in the fulfillment of the contract, without prejudice of the
          right of THE ASSOCIATE to present the legal resources it considers
          convenient.

24.5.2    If within the term previously mentioned THE ASSOCIATE presents the
          satisfactory explanations to ECOPETROL and the remaining term to
          complete the time of sixty (60) calendar days is insufficient to
          fulfill the pending obligations pursuant to the good oil industry
          practices, the Parties may agree on an additional term to allow such
          fulfillment, without prejudice of the right of ECOPETROL to demand the
          necessary guarantees to support it. If at the end of this term the
          operations agreed on have not been fulfilled, ECOPETROL shall
          terminate the contract.

24.6      At any time by mutual agreement of the Parties.

24.7      By the unilateral causes for termination mentioned in Clause 25.

CLAUSE 25 - CAUSES FOR UNILATERAL TERMINATION

25.1      ECOPETROL may unilaterally declare this contract terminated, at any
          time before the expiration of the period set forth in Clause 23, in
          the following instances.

25.1.1    By death or permanent physical disability or judicial interdiction of
          THE ASSOCIATE, if a natural person.

25.1.2    By initiation of a process of liquidation of THE ASSOCIATE if a
          juridical person.

25.1.3    By legal injunction of THE ASSOCIATE that seriously affects the
          fulfillment of the contract.

25.1.4    When THE ASSOCIATE is conformed by several legal and/or natural
          persons, the causes in numerals 25.1.1 and 25.1.2 shall be applied
          when they seriously affect the fulfillment of the contract.

25.2      In the case of declaration of a unilateral termination, the rights of
          THE ASSOCIATE mentioned in this contract shall end, both as interested
          Party to the Contract, and as
<PAGE>

                                                                              30

          operator, if at the time of the declaration of a unilateral
          termination the two qualities mentioned concur in THE ASSOCIATE.

CLAUSE 26 - OBLIGATIONS IN CASE OF TERMINATION

26.1      Upon termination of the contract pursuant to Clause 24, either in the
          Exploration, Retention or Exploitation periods, THE ASSOCIATE shall
          leave in production any wells that are then producing and restitute
          the facilities, transfer pipelines and other real property of the
          Joint Account (located in the Contract Area), all of which, shall pass
          free of charge to ECOPETROL with the any rights of ways and assets
          obtained to the exclusive benefit of the contract, even though the
          former or the latter be located outside of the Contract Area.

26.2      If this contract is terminated for any reason after the first
          seventeen (17) years of the Exploitation Period, all Interest of THE
          ASSOCIATE in the machinery, equipment or other assets or facilities
          used or obtained by THE ASSOCIATE or by the Operator for the execution
          of this contract, shall pass to ECOPETROL free of charge.

26.3      If this contract is terminated before the seventeen (17) years of the
          Exploitation Period, that set forth in Clause 22 (numeral 22.10) shall
          be applied.

26.4      In case this contract is terminated by a declaration of a unilateral
          termination issued at any time, all the real and personal property
          acquired for the sole benefit of the Joint Account shall pass to
          ECOPETROL free of charge.

26.5      Upon termination of this contract by any cause and at any time, the
          Parties are obliged to satisfactorily fulfill their legal obligations
          between each other and before Third Parties and those acquired in this
          contract.

                        CHAPTER VII - VARIOUS PROVISIONS

CLAUSE 27 - RIGHTS OF ASSIGNMENT

27.1      THE ASSOCIATE shall be entitled to assign or transfer all or part of
          its interests, rights and obligations originated from this contract,
          with the previous written authorization of ECOPETROL, to another
          person, company or group that has the financial capacity, the
          technical competence, the necessary professional abilities and legal
          capacity to act in Colombia.

          For such purpose, THE ASSOCIATE shall submit a written request to
          ECOPETROL, indicating the essential elements of the negotiation, such
          as the name of the possible assignee, information on his legal,
          financial, technical and operational capacities, the cost of the
          rights and obligations to be assigned, scope of the operation, etc.
          Within the sixty (60) working days following the receipt of the
          request, submitted in a complete form, ECOPETROL, shall exercise the
          discretional faculty to study the information supplied by THE
          ASSOCIATE, after which it shall adopt its determination, without being
          obliged to motivate it.

27.1.1    When the assignments are in favor of companies that control or direct
          THE ASSOCIATE, or of any one of the companies that integrate it or
          their affiliates or subsidiaries, or between
<PAGE>

                                                                              31

          companies that conform the same economic group, it shall be sufficient
          to previously and timely notify ECOPETROL on the essential elements of
          the negotiation previously mentioned.

27.1.2    The operations performed under the development of this clause, and
          that pursuant to the Colombian Legal Tax legislation, are taxable,
          shall cause the payment of the corresponding taxes.

          Paragraph: When THE ASSOCIATE is conformed by more than one company
          and one of them wishes to totally or partially assign its interests,
          rights and obligations in the contract pursuant to this clause, it
          must give preference to the other companies that integrate THE
          ASSOCIATE, offering them, before doing so to Private Parties, the
          interests, rights and obligations it wishes to assign, unless the
          companies that conform THE ASSOCIATE have agreed otherwise.

                            CLAUSE 28 - DISAGREEMENTS

28.1      In the event of any discrepancies or inconsistencies in the
          interpretation of the Clauses of this contract with relation to those
          set forth in Annex "B" called the "Operating Agreement", those
          stipulations of the first shall prevail.

28.2      The disagreements that arise between the Parties on matters of rights
          related with the interpretation and execution of the contract and that
          cannot be solved in a friendly way, are subject to the knowledge and
          decision of the legal branch of the Colombian public authorities.

28.3      Any difference as to the facto or technical matters that may arise
          between the parties hereto as a result of the interpretation or
          application of this contract and that cannot be solved in a friendly
          manner, shall be subject to a final decision of experts appointed as
          follows: one by each Party and, the third one, appointed by mutual
          agreement by the principal experts appointed. Should these two fail to
          reach an agreement as to the appointing of the third, the latter shall
          be designated upon request of either Parties by the Board of Directors
          of the Sociedad Colombiana de Ingenieros "SCI" (Colombian Society of
          Engineers), with offices in Bogota, D.C.

28.4      Any differences of an accounting nature that may arise between the
          Parties hereto by reason of the interpretation and implementation of
          the contract, which cannot be solved in a friendly manner, shall be
          referred for the decision of experts who shall be professional public
          accountants designated as follows: one by each Party and, the third
          appointed by the two principal experts; should these fail to reach an
          agreement and by request of any of the Parties, such third expert
          shall be designated by the Central Board of Accountants of Bogota
          (Junta Central de Contadores de Bogota).

28.5      Both parties declare that the experts decision shall have all the full
          effect of a settlement between them and in consequence, such decision
          shall be final.

28.6      In case of disagreement between the Parties on the technical,
          accounting or legal nature of the controversy, it shall be considered
          legal and Clause 28 (numeral 28.2) shall be applied.
<PAGE>

                                                                              32

                        CLAUSE 29 - LEGAL REPRESENTATION

Without prejudice to THE ASSOCIATE's legal rights and as a consequence of the
legal provisions or of the clauses of this contract, ECOPETROL shall represent
the Parties before the Colombian authorities on any matters concerning the
exploitation of the Contract Area whenever it is necessary, and shall supply the
officers and government entities with all the data and reports that may be
legally required. The Operator shall be obliged to prepare and supply ECOPETROL
with the corresponding reports. Any expenses incurred in by ECOPETROL to attend
any matter to which this Clause refers to, shall be charged to the Joint
Account, and when such expenses exceed five thousand dollars of the United
States of America (US$5.000) or its equivalent in Colombian currency, the
previous approval of THE ASSOCIATE is required. The Parties declare, for any
relation with Third Parties, that neither that established in this Clause nor in
any other of this contract, shall imply the granting of a general power of
attorney, moreover that the Parties have constituted a civil or commercial
association or any other relationship under which, any of the Parties may be
considered as jointly and severally liable for the acts or omissions of the
other party or as having authority or mandate that may be binding upon the other
Party in relation to any obligation. This contract is concerned to the
activities within the territory of the Republic of Colombia, and even though
ECOPETROL is a Colombian State-Owned and industrial company, the Parties agree
that THE ASSOCIATE, given the case, may choose to be excluded from the
enforcement of all the provisions of Sub-chapter K titled PARTNERS AND
PARTNERSHIPS of Internal Revenue Code of the United States of America. THE
ASSOCIATE shall make such election on its behalf and in the appropriate manner.

CLAUSE 30 - RESPONSIBILITIES

30.1      The liabilities Contracted hereunder by ECOPETROL and by THE ASSOCIATE
          with relation to Third Parties shall not be joint and, in consequence,
          each Party shall be separately liable for its share in the expenses,
          investments and obligations that may result as a consequence of such
          liabilities.

30.2      Environmental Management. During the performance of all of the
          activities provided for in the contract, THE ASSOCIATE or the
          Operator, shall on time comply with the provisions of the National
          Code on Natural Renewal Resources and Environmental Protection, issued
          by the Colombian Government, as well as with all other relevant legal
          regulations. Also, motivate among their contractors, suppliers,
          intermediaries, and/or workers working in benefit of this contract,
          the conservation of a healthy environment, taking the necessary
          precautions to protect the environment, human life and property of
          others and prevent the contamination of the Contract Area. From the
          beginning of this contract, THE ASSOCIATE shall elaborate a general
          diagnostic on the environmental and social reality of the zones where
          the Exploration Operations shall be executed and shall establish the
          communication channels with the authorities and communities of the
          area.

          THE ASSOCIATE is obliged to execute a permanent preventive program to
          guarantee the preservation and restoration of the natural resources
          within the zones where the operations of Exploration, exploitation and
          transportation set forth in this contract are carried out.

          Such plans and programs must be made known by THE ASSOCIATE to the
          national and regional communities and entities related to this issue.
          Also, specific contingency programs must be established to face those
          emergencies that may occur and to carry out the
<PAGE>

                                                                              33

          necessary remedial actions. For such effect, THE ASSOCIATE must
          coordinate such plans and actions with the competent authorities.

          The respective programs and Budgets must be prepared by THE ASSOCIATE
          pursuant to the corresponding Clauses of this contract.

          All costs caused shall be assumed by THE ASSOCIATE during the
          Exploration Period and in the exploitation under the modality of sole
          risk, and by both Parties with charge to the Joint Account in the
          Exploitation period.

CLAUSE 31 - TAXES, CHARGES AND OTHERS

The taxes and charges accrued after the opening of the Joint Account and before
the Parties receive their production share, chargeable to the exploitation of
Hydrocarbons, shall be charged to the Joint Account. Income, patrimony and
supplementary or presumptive taxes, shall be to the sole account of each of the
Parties as applicable to each of them.

CLAUSE 32 - PERSONNEL

32.1      When THE ASSOCIATE is the Operator, the assignment of the Manager of
          the Operator shall be previously consulted with ECOPETROL.

32.2      Pursuant to the terms of this contract and subject to the regulations
          established, the Operator in his condition as the sole and true
          employer, shall have the autonomy to assign the personnel required for
          the operations hereunder, being able to set the salaries, duties,
          ranks and conditions. The Operator shall adequately and diligently
          train the Colombian personnel required to replace the foreign
          personnel that the Operator considers necessary for the performance of
          the operations of this contract. In any case, the Operator must
          fulfill all the legal provisions that show the proportion of national
          and foreign employees and workmen.

32.3      Technological Transfer - THE ASSOCIATE is obliged to pay for or
          perform at its cost the training programs for the professionals of
          ECOPETROL in areas related to the development of the contract.

          For the fulfillment of this obligation in the Exploration Period, the
          training may also be in the areas of geology, geophysics and related
          areas, evaluation of Reservoirs and characterization of reservoirs,
          drilling and production. The supervised training shall be done
          throughout the entire Exploration Period of six (6) years and during
          its extensions, by integrating the professionals that are assigned by
          ECOPETROL, to the work group organized by THE ASSOCIATE for the
          Contract Area or for other activities handled by THE ASSOCIATE.

          To be able to choose to resign as set forth in Clause 5 of this
          contract, THE ASSOCIATE must have previously fulfilled the training
          programs herein mentioned.

          During the Exploitation Period, the scope, duration, place,
          participants, training conditions and other aspects, shall be
          established by the Executive Committee of the Company.
<PAGE>

                                                                              34

          All costs for guided training, with the exception of those of work
          caused in favor of the professionals that receive it, shall be assumed
          by THE ASSOCIATE in the Exploration Period and by both parties with
          charge to the Joint Account in the Exploitation Period.

          PARAGRAPH: To fulfill all of the Technological Transference
          obligations pursuant to that herein mentioned, during the first three
          (3) years of the Exploration Period and for each year, THE ASSOCIATE
          is committed to carry out programs of guided training and technical
          exchanges for professionals of ECOPETROL in the areas of joint
          interest up to a value of forty thousand dollars (US$40.000) per year.
          The subject and type of program shall be previously agreed to between
          ECOPETROL and THE ASSOCIATE. In the event that the Exploration Period
          is extended, the guided training shall consist of similar programs to
          that herein considered.

CLAUSE 33 - INSURANCES

THE ASSOCIATE or the Operator shall obtain all the insurances required by the
Colombian laws. Also, it shall require that each contractor performing any type
of work during the development of this contract obtain all the insurances
considered necessary, that must be maintained in force. Also, the Operator shall
take all other insurances that the Executive Committee considers necessary.

At the expiration of this contract, at any moment during the exploitation period
or by expiration of a term set forth in clause 23, the Operator and/or THE
ASSOCIATE shall constitute an insurance policy that guarantees the payment of
salaries, benefits and indemnifications and other working credits for eventual
legal sentences derived from claims of the workers contracted by the Operator in
his condition as a sole and true employer of the same and during the time of
operation of the Commercial Field. The life of the policy shall not be less than
three (3) years as of the date of the termination of the Association Contract
and the sum insured shall be decided by the Executive Committee, subject to that
ordered in the labor regulations that apply to the respective labor contracts.

CLAUSE 34 - FORCE MAJEURE OR ACT OF GOD

The obligations to which this contract refer to shall be suspended for the time
in which any of the Parties is unable to fulfill them in whole or in part, due
to unforeseeable events that constitute a force majeure or Act of God, such as
strikes, lockouts, wars, earth quakes, floods or other catastrophes, laws or
government regulations or decrees that hinder the provision of essential
material and, in general, any non financial motive that really impedes the work,
even when not previously mentioned, but that affects the Parties and that is out
of their control. Should either Party be unable to fulfill its obligations with
this contract due to force majeure or Act of God, it must immediately notify the
other Party, for its consideration, specifying the causes of its impediment. In
no case can the events of force majeure or Act of God extend or prolong the
total period of exploration, retention and exploitation beyond a maximum
duration of the contract pursuant to that set forth in Clause 23, but any
impediment of force majeure during the period of six (6) years of exploration
set forth in Clause 5, which duration is more than sixty (60) consecutive days,
shall extend this period of six (6) years for the same period of the duration of
the impediment.
<PAGE>

                                                                              35

CLAUSE 35 - APPLICATION OF THE COLOMBIAN LAWS

The Parties set the city of Bogota, D.C., Republic of Colombia for any purposes
hereunder. This contract is governed ruled in all of its parts by the Colombian
laws and THE ASSOCIATE abides by the jurisdiction of the Colombian Courts and
waives any diplomatic claim in respect to its rights and obligations hereunder,
except in the case of denial of justice. Denial of justice shall not be deemed
to exist when THE ASSOCIATE in its condition as a Party or as Operator has had
access to all the resources and ways of action that, pursuant to the Colombian
laws, may be used before a jurisdictional branch of the public power.

CLAUSE 36 - NOTIFICATIONS

Notices or communications between the Parties hereto in relation to this
contract, shall require for their validity mentioned or the pertinent clauses
and shall be sent to the representatives or delegates assigned by the Parties to
the following addresses: ECOPETROL: Carrera 13 No. 36.24, Bogota, D.C.,
Colombia. To THE ASSOCIATE: Calle 114 No. 9-01 Bogota, D.C., Colombia. The
change of address and of representative shall be notified to the other Party in
advance.

CLAUSE 37 - VALUATION OF THE HYDROCARBONS

The payments or Reimbursements set forth in Clauses 9 (numerals 9.2 and 9.4) and
22 (numeral 22.5), shall be made in dollars of the United States of America, or
in Hydrocarbons based on the price in effect and with the limitations
established or that may be established by the Colombian legislation for the sale
of that portion of the Hydrocarbons payable in dollars, originated from the
Contract Area, and to be refined within the national territory.

CLAUSE 38 - PRICES FOR HYDROCARBONS

38.1      The Hydrocarbons to which THE ASSOCIATE is entitled to in the
          development of this contract, to be refined or used in internal
          supply, shall be paid when situated at the refinery where they shall
          be processed or at the station where they are received as agreed to by
          the Parties, pursuant to the government rules and regulations in force
          or those that substitute them.

38.2      The differences that arise from the application of this Clause shall
          be solved through the systems established in this contract.

CLAUSE 39 - DELEGATION AND ADMINISTRATION

The PRESIDENT of EMPRESA COLOMBIANA DE PETROLEOS - ECOPETROL appoints the
administration of this contract in the Vice-President of Exploration and
Production, pursuant to the rules and Reglementary provisions of ECOPETROL, with
faculties to execute all the matters concerning the development of this
Contract. The Vice-President of Exploration and Production is authorized to
perform this assignment through the Assistant Vice-Presidents of Exploration and
Production.
<PAGE>

                                                                              36

CLAUSE 40 - LANGUAGE

For all effects and acts related to this contract, the official language is
Spanish.

CLAUSE 41 - VALIDITY

To be valid, this contract requires the approval of the Ministry of Mines and
Energy.

In witness whereof, it is signed in Bogota, D.C., before witnesses, on the
twentieth (20) day of the month of December of the year two thousand (2001).

                         EMPRESA COLOMBIANA DE PETROLEOS
                                    ECOPETROL

                               (Signed) illegible
                             ALBERTO CALDERON ZULETA
                                    President

                           HARKEN DE COLOMBIA LIMITED

                               (Signed) illegible
                         GABRIEL GUSTAVO CANO VELASQUEZ
                         Principal Legal Representative

                                    WITNESSES

          (Signed) Illegible                      (Signed) Illegible
          VICTOR EDUARDO PEREZ                      ALBERTO TOVAR
<PAGE>

                                                                              37

                                  CAJARO SECTOR
                                     ANNEX A
<PAGE>

                                                                              38

                                     ANNEX A
                                  CONTRACT AREA
             ANNEX TO THE ASSOCIATION CONTRACT OF THE CAJARO SECTOR

The area of the polygon formed by the vertices mentioned hereinafter is of
thirty four thousand one hundred ninety five (34.195) hectares with seven
thousand fifty eight (7.058) square meters and is located within the municipal
jurisdiction of Mani in the department of Casanare. The cartographic information
was taken from the Political Map of Colombia, digital file of the I.G.A.C., at a
scale of 1:1'500.000.

The Contract Area is described as follows and, as it appears on the map enclosed
as Annex "A", that is part of this contract, as well as the corresponding
charts: The Geodesic Vertex "RECREO- 912" of the Agustin Codazzi Geographical
Institute has been taken as the point of reference, which flat GAUSS coordinates
with origin Bogota are: N-1'051.829,47 meters, E-1'158.055,62 meters, that
correspond to the geographic coordinates Latitude 05(0) 03'58"0,207 to the North
of the Equator, Longitude 72(0) 39'20"0,698 West of Greenwich. From this vertex
it bears S 50(0) 43'3"0,552 E for a distance of 70.494,393 meters until reaching
point "A" start off point of boundaries which coordinates are N-1007.196,48
meters, E-1'212.620,77 meters. From this point it bears S 67(0) 33'25"0.116 E
for a distance of 3.709,75 meters until reaching point "B", which coordinates
are N- 1'005.780,23 meters, E-1'216.049,54 meters. The line "A-B" is contiguous
in all of its extension with line "C-B" of the Alcaravan Association Contract
operated by Harken. From this point it bears S 58(0) 57'42"0.358 E for a
distance of 18.968, 27 meters until reaching point "C" which coordinates are
N-996.000,00 meters, E 1'232.302,00 meters. From this point it bears S 54(0)
42'41"0.066 W for a distance of 22.725,46 meters until reaching point "D" which
coordinates are N-982.871,61 meters, E- 1'213.752,28 meters. The point "D" is
contiguous with point "D" of the Vuelta Laraga Association Contract operated by
the Emerald company. From this point it bears N 23(0) 38'28"0.601 W for a
distance of 9.395,40 meters until reaching point "E" which coordinates are
N-991.478,49 meters, E- 1'209.984,64 meters. From this point it bears N 51(0)
1'59"0.565 W for a distance of 9.036,48 meters until reaching point "F", which
coordinates are N- 997.161,26 meters, E- 1'202.958,68 meters. From this point it
bears N 43(0) 54'53"0.153 E for a distance of 13.930,60 meters until reaching
point "A" start off point and closure of the boundaries. Lines "D-E", "E-F" and
"F-A" are contiguous in all their extension with lines "O-N", "N-M" and "M-L" of
the Bicudo Association Contract operated by the Braspetro company.
<PAGE>

                                                                              39

                                                                        ANNEX -A

                         EMPRESA COLOMBIANA DE PETROLEOS
                        Calculation of Area, courses and
                Distances as of Gauss Coordinates. Origin Bogota

                  Data and Results Chart for the CAJARO Sector
          Municipal Jurisdiction of Mani in the Department of Casanare

POINT Coord. N. Coord. E. Distance Dif.N. Dif. East Courses
<PAGE>

                                                                              40

                       ANNEX B TO THE OPERATIONS AGREEMENT

                        ANNEX TO THE ASSOCIATION CONTRACT

                             FOR THE "CAJARO" SECTOR

Entered into by the Empresa Colombiana de Petroleos - ECOPETROL and HARKEN DE
COLOMBIA LIMITED, with effective date February eighteenth (18th) year two
thousand two (2002), which hereinafter shall be known as The Contract.

                           PART 1 - TECHNICAL ASPECTS

                            Section One - Exploration

The geological and geophysical information that THE ASSOCIATE is to provide to
ECOPETROL, shall be provided following the international norms accepted by the
industry, compatible with the norms used by ECOPETROL (included in ECOPETROL's
information provision manual) in order to allow for regional assessments of the
sedimentary basins. As a supplement of what is provided for in Clause 6 (number
6.2) in The Contract, THE ASSOCIATE or the Operator shall deliver to ECOPETROL,
as it becomes available, the following information with respect to the
exploratory activities that are undertaken by THE ASSOCIATE.

1.1       The geological, geophysical, magnetometric, gravimetric information
          from remote sensors, electrical methods and, in general, from any
          Exploration Work performed by THE ASSOCIATE in the development of The
          Contract shall be submitted in magnetic media, in a reproducible
          original and one copy, with its respective support information,
          including the maps related with the acquisition and interpretation of
          the acquisition, processing and interpretation reports for the data
          acquired.

1.2       Processed seismic sections for each line, obtained in two scales,
          together with an interpretation report to contain: information used,
          background, seismic programs, geological information and geophysical,
          geological and economic considerations that back up the conclusions
          and technical recommendations.

1.3       Two (2) sets of magnetic tapes corresponding to the seismic lines, one
          with the de- multiplexed information and the other with the stacked
          information, with their support information and processing report. For
          the case of vibrators, a copy of the field tape is to be delivered in
          lieu of the de- multiplexed tape.

1.4       One seismic shot-point map, in reproducible sepia and copy, with the
          information of coordinates and elevations. This information shall also
          be delivered on magnetic tapes.

1.5       Magnetic, gravimetric profiles and residual maps in reproducible
          originals, copies and magnetic tapes, with all of the support
          information generated.

1.6       Report on the seismic, gravimetric and magnetometric interpretation,
          together with all of the sections, profiles and maps interpreted,
          submitted set forth in the norms that ECOPETROL has established for
          this information.

1.7       Geological, structural, isopach, isolithic, facies, seismic, etc. maps
          for The Contract area, in reproducible sepias and copies, with the
          scales established by ECOPETROL for each basin.

1.8       Before starting to drill the well: Intention to Drill (Form 4- CR of
          the Ministry of Mines and Energy), drilling program, well location
          map, isochronic or structural map of the prospective
<PAGE>

                                                                              41

          area and the geological drilling prognosis, duly approved by the
          Ministry of Mines and Energy. In the event of Exploratory Wells, the
          following shall also be submitted in three scenarios: the calculation
          for the Reservoirs in the prospective area to be drilled and the
          forecast of investments and production. The location of the
          Exploratory Wells shall be referenced to the seismic maps that served
          as the basis for the definition of the prospect. For each of the
          Exploratory Wells that is drilled in The Contract area, a geodesic
          precision point shall be materialized, duly accepted by the Agustin
          Codazzi Geographical Institute - "IGAC," obtained by satellite and
          with its respective azimuth line.

1.9       Daily drilling and geology reports: These reports shall be delivered
          to ECOPETROL, preferably by telefax, and shall contain the basic
          information on the well, the drilling conditions, the properties of
          the drilling fluid, the manifestations of Hydrocarbons that are being
          obtained, the geological description of the formations penetrated, the
          daily and cumulative cost and the program to be carried out. The
          ASSOCIATE or the Operator shall advise ECOPETROL with sufficient
          advance notice on the performance of electrical logs, cores and
          testing, so that the latter can send a representative to attend and
          witness all of the operations.

1.10      Copy of the reports sent to the Ministry of Mines and Energy (Form 5-
          CR) every two weeks.

1.11      Final Geological Report: This report is compulsory for any well that
          is drilled in the country, whether it be exploratory, stratigraphic,
          or development, and shall be submitted in Spanish, by a registered
          geologist, latest ninety (90) days after the date of termination or
          abandonment of the well, and shall include the following information
          by chapters:

1.11.1    Summary of all activities performed during the drilling operations

1.11.2    Location of the well and maps at a 1:250,000 scale.

1.11.3    Stratigraphy: shall include the stratigraphic column, determination of
          environments and age for each of the formations drilled.

1.11.4    Biostatigraphy: The dispersion charts, analyses performed and possible
          correlations are to be submitted.

1.11.5    Geochemistry: All of the analyses performed shall be included, both
          for the ditch samples and for each of the cores recovered.

1.11.6    Electrical logs: All of the calculations performed for the
          determination of RW, SW shall be included. The analysis of log
          velocity shall be included in this chapter.

1.11.7    Formation testing: All of the results obtained for each of the tests
          performed shall be included, as well as the results of the analyses
          performed in the laboratories for water and Hydrocarbons.

1.11.8    The Final Geological Report shall contain the following Annexs:

          Annex A: Description of the ditch samples at every ten (10) feet.

          Annex B: Detailed description of the cores and side wall samples that
          may have been recovered.

          Annex C: All of the laboratory analyses that are performed on the
          cores and side wall samples.
<PAGE>

                                                                              42

          Annex D: Composite graphic log, in reproducible sepia and copy at a
          1:500 scale. The symbols that are used by the American Association of
          Petroleum Geologists (AAPG) for these cases shall be used for the
          various lithologies included in the composite graphic log.

          Annex E: Final report issued by the company that performed the
          "logging" for the well, including the "Grapholog" log.

1.12      Reproducible sepias and copies of each and every log run in the well,
          including the velocity log, in 1:200 and 1:500 scales. In addition,
          the magnetic tapes in LIS format for each of the logs shall be
          delivered, together with the computer tabulations in the formats
          established by ECOPETROL for these cases.

1.13      Report on the formation and/ or production tests performed, including
          the analysis of bottom hole pressure (both open well and closed).

1.14      Two sets of ditch samples shall be delivered to ECOPETROL, one
          unwashed every thirty (30) feet and a dry one every ten (10) feet,
          with the detailed lithological description.

1.15      Coring report, whenever performed, including the detailed description
          for it, as well as on all of the analyses that are carried out. With
          this report, THE ASSOCIATE is to deliver photographs to ECOPETROL, as
          well as 50% of the core.

1.16      A report on all of the materials used during drilling.

1.17      Biostratigraphic analyses with their dispersion chart: These analyses
          shall be performed for Exploratory Wells, since the sedimentation
          environments and the age of each of the formations drilled are defined
          with this information. This type of analysis can also be performed on
          the various recovered cores.

1.18      Geochemical analyses performed on the ditch, side wall and core
          samples.

1.19      Official completion, plugging or abandonment report for the well (Form
          6- CR or 10A- CR) and, in general, any other report related with the
          termination of the well (further work, multiple termination).

1.20      Final Well Report. Shall include all of the engineering information
          and a summary of the Final Geological Report. It shall be submitted in
          the Spanish language, latest ninety (90) days after the date of
          termination or abandonment of the well, with the approval of a duly
          registered petroleum engineer.

1.21      Copy of the Annual Technical Report (Geology and Geophysics and of the
          Engineering Report), with their respective support, submitted to the
          Ministry of Mines and Energy, set forth in the existing legal
          provisions.

1.22      Any other engineering or geology study that may be performed.

CLAUSE 2 - RESTITUTED OF AREAS

2.1       The areas that THE ASSOCIATE shall restitute to ECOPETROL, set forth
          in Clause 8 of The Contract shall be, inasmuch as possible, regular
          lots with a polygon shape, attempting to facilitate the demarcation of
          borders, without prejudice of the areas in the existing Fields. For
          such purpose, an imaginary grid or grille shall be superimposed upon
          the initially Contract area, divided into ten rows and columns in a
          north- south direction, the limits of which shall be given by the
          maximum and minimum border north and east coordinates,
<PAGE>

                                                                              43

          which shall define the base cells for the areas to be restituted
          herein. Every time an area is restituted, the imaginary grid or grille
          shall be adjusted, based on the new coordinates for the Contract Area.

2.2       THE ASSOCIATE shall determine the areas that it shall restituted to
          ECOPETROL, based on the imaginary grid or grille mentioned in the
          above point. For such purpose, it shall carry out the restitution of
          up to two lots made up by one or more cells that are contiguous and
          adjacent on their sides, and trying to conserve a sole polygon, unless
          THE ASSOCIATE demonstrates that this is not possible or convenient,
          for which purpose it shall require ECOPETROL's approval.

CLAUSE 3 - EXTENSIVE PRODUCTION TESTS

The following is the established procedure for performing Extensive Production
Testing for Exploratory Wells and for the handling of Hydrocarbons from such
tests, prior acceptance or not of the existence of a Commercial Field by
ECOPETROL, set forth in Clause 9 of The Contract:

3.1       THE ASSOCIATE is entitled to perform Extensive Production Tests for
          the Exploratory Wells that turn out to be producers, with the purpose
          of assessing in the best manner, the Reservoir or Reservoirs
          discovered and prepare the Development Program for the possible Field.
          Before initiating the Extensive Production Tests THE ASSOCIATE shall
          obtain ECOPETROL's approval and subsequently, permission from the
          Ministry of Mines and Energy. Such tests shall be performed with
          temporary production facilities and shall not require more than ninety
          (90) calendar days, unless THE ASSOCIATE proves the contrary and
          obtains timely approval from ECOPETROL and from the Ministry of Mines
          and Energy, respectively.

3.2       THE ASSOCIATE, on its own account and risk, shall, set forth in
          international oil industry recommended rules and practices, carry out
          the Extensive Production Tests accepted by ECOPETROL and authorized by
          the Ministry of Mines and Energy, set forth in the operations program.
          In order to obtain such approvals, THE ASSOCIATE shall prepare and
          submit to ECOPETROL the operations program for the Extensive
          Production Testing, which shall contain, among others, the following
          aspects:

3.2.1     Information of the completion of the Exploratory Well and of the
          Reservoirs to be tested.

3.2.2     Specific objectives for the Extensive Production Tests.

3.2.3     Information to be compiled on the Reservoirs and fluids, periodicity
          for sampling, analyses and data on the possible Field, such as type,
          quality and properties of rocks and fluids, pressures, volumes of "in
          situ" and recoverable Hydrocarbons, maximum economic Hydrocarbons
          production rate, production mechanism, etc.

3.2.4     Information on the subsurface equipment and temporary surface
          facilities to be used to handle and decant the volumes of fluids
          obtained and other equipment required to ensure the safety of the
          operations, including the location diagram for the temporary surface
          facilities on site.

3.2.5     Detailed chronogram on the main activities to be performed in order to
          achieve the specific objectives referred to in number 3.2.2. mentioned
          above.

3.2.6     Budget for the main activities to be carried out and the estimated
          disbursement schedule.
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                                                                              44

3.2.7     Destination of the Hydrocarbons and other fluids to be recovered from
          the Extensive Production Testing.

3.2.8     Evacuation and marketing scheme for the Hydrocarbons from the
          Extensive Production Tests (including the volume the corresponds to
          royalties) and reference price proposal subject to be agreed upon with
          ECOPETROL for the valuation of such Hydrocarbons.

3.2.9     Draft contract and proposals (at least three) for the transport of the
          Hydrocarbons to be produced corresponding to the royalties set forth
          in Clause 13 of The Contract, from the Exploratory Well to the
          delivery point of such Hydrocarbons to ECOPETROL.

3.2.10    Any other information that THE ASSOCIATE may consider necessary.

3.3       ECOPETROL may request clarification or suggest adjustments to the
          operations program submitted by THE ASSOCIATE for the execution of the
          Extensive Production Tests. When this occurs, THE ASSOCIATE shall
          submit the explanations to ECOPETROL and, if required, shall bear in
          mind the comments proposed by ECOPETROL, it being understood that, in
          any case, the responsibility and the risk for any operation that is
          included in the operations program for the Extensive Production Tests
          shall be the responsibility of THE ASSOCIATE. Once the operations
          program is accepted by ECOPETROL and the appropriate agreements have
          been reached, it shall be submitted to the Ministry of Mines and
          Energy by THE ASSOCIATE in order to obtain the corresponding
          permission.

3.4       THE ASSOCIATE shall be responsible for one hundred percent (100%) of
          the disbursements incurred during the Extensive Production Tests,
          including the costs of transporting the volumes of hydrocarbons
          corresponding to the royalties, if this were the case, from the
          Exploratory Well to the delivery point that the Parties agree to, set
          forth in the transportation proposal accepted by ECOPETROL. The costs
          incurred on account of Extensive Production Testing for each
          Exploratory Well shall be charged as an increased value for the
          respective Exploratory Well and shall be considered as Direct
          Exploration Costs (without including administrative or technical
          support from Head Office, nor from the central headquarters of the
          Company) for purposes of their recovery or Reimbursement, set forth in
          the origin of their disbursement.

3.5       The volumes produced during the Extensive Production Tests shall be
          those recovered from the respective Exploration Well during the
          maximum time period for testing approved by the Ministry of Mines and
          Energy in the corresponding permit, discounting any volume of the
          Hydrocarbons that may be used as consumption in the testing
          operations. The remaining production, once the percentage
          corresponding to royalties has been discounted, which shall be paid
          directly by ECOPETROL, shall be taken by THE ASSOCIATE, and the income
          stemming from the valuation of such Hydrocarbons at the reference
          price agreed to by the Parties, shall be deducted from the Direct
          Exploration Costs for the respective Exploratory Well, up to a maximum
          of fifty percent (50%) of such costs, for purposes of their recovery
          or Reimbursement in the following order: i) Direct Exploration Costs
          in the Extensive Production Tests; ii) Direct Exploration Costs in the
          drilling and completion of the respective Exploratory Well; and iii)
          Direct Exploration Costs incurred in Exploration Work undertaken
          before the drilling of the respective Exploratory Well. Once fifty
          percent (50%) of the Direct Exploration Costs has been recovered, the
          production from the Extensive Production Tests shall be distributed
          between the parties in a proportion of fifty percent (50%) for
          ECOPETROL and fifty percent (50%) for THE ASSOCIATE.
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                                                                              45

3.6       Prior consent by ECOPETROL, THE ASSOCIATE may carry out the sale of
          the portion of production of Hydrocarbons from the Extensive
          Production Tests corresponding to the royalties and to ECOPETROL. In
          this case, the Parties shall previously enter into the corresponding
          agreement.

3.7       THE ASSOCIATE shall keep at the disposal of ECOPETROL the daily logs
          of the production and consumption measurements of Hydrocarbons and
          fluids, the disbursements incurred and the valuation of the produced
          Hydrocarbons at the agreed to reference price, with their respective
          support documentation and the balance in the recovery of Direct
          Exploration Costs in the development of the Extensive Production Tests
          for each Exploratory Well. In addition to the periodic reports on the
          progress of the Extensive production Tests for each Exploratory Well,
          THE ASSOCIATE shall, within the first ten (10) days each month, submit
          to ECOPETROL, a report wherein the development of the operations
          program for the Extensive Production Tests, the results obtained in
          the fulfillment of the specific objectives for the tests and the
          status of income and disbursements are reflected, taking as the basis
          the cumulative values for the accounting closure for the month prior
          to that for which the report is submitted. The information that THE
          ASSOCIATE submits in the periodic reports shall be subject to audit by
          ECOPETROL under the terms provided for in Clause 22 of this agreement.

                           Section Two - Exploitation

CLAUSE 4 - COMMERCIAL FIELD

4.1       THE ASSOCIATE, once it has obtained sufficient information related to
          the development of the Field, shall carry out the necessary studies to
          define the criteria on the petrophysical parameters, improved
          demarcation of the productive area, calculation of Reservoirs and
          commercial feasibility of the Field. Such studies shall be carried out
          by THE ASSOCIATE at its own expense, using the technical methods
          available in country or abroad; when the circumstances require it, the
          appropriate reviews shall be performed.

4.2       For new facilities, expansions or modifications, the basic production
          designs and detail engineering shall be submitted to the consideration
          of the Technical Subcommittee.

4.3       The engineering for the production facilities shall be Contract with
          national companies, unless, in the decision of the Technical
          Subcommittee, their technological complexity requires the involvement
          of a foreign company, preferably in a consortium with a national
          company.

4.4       The final mechanical completion of the wells passing to the Joint
          Account's property must agree upon by the Technical Subcommittee. The
          Reimbursement for such completion for the Exploratory Wells shall be
          made as set forth in Clause 9 (numbers 9.2.1 through 9.2.3) herein.

4.5       With respect to the dry Exploratory Wells, THE ASSOCIATE shall abandon
          them as set forth in the actual legal and environmental provisions.

CLAUSE 5 - SOLE RISK
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                                                                              46

5.1       The Reimbursement corresponds to two hundred percent (200%) of the
          total cost of the work executed on the account and risk of THE
          ASSOCIATE in the exploitation of the corresponding Field and of up to
          fifty percent (50%) of the Direct Exploration Costs made by THE
          ASSOCIATE on its own account and risk within the Contract Area before
          the date on which ECOPETROL makes a statement with respect to the
          commerciality of the Field, which have not been previously charged to
          a different Field. ECOPETROL shall carry out an audit to determine the
          amount of the reimbursable investments.

5.2       In the same manner as set forth in Clause 11 numeral 11.1 of The
          Contract, THE ASSOCIATE shall submit to ECOPETROL the proposal on the
          projects, programs and Budget, set forth in the Field Development
          Program, for the first time, within sixty (60) calendar days following
          the date of the notification to ECOPETROL by THE ASSOCIATE with
          respect to its intention to exploit the Field under the sole risk
          method and subsequently, latest on the fifteenth (15th) of November of
          each year. ECOPETROL may, with the corresponding justification,
          request clarification or suggest adjustments to the programs, projects
          and Budget submitted by THE ASSOCIATE. When this were to occur, THE
          ASSOCIATE shall submit the explanations to ECOPETROL and, if this were
          the case, shall bear in mind the comments proposed by ECOPETROL in the
          preparation of the revised Development Plan, being understood that in
          all cases, the responsibility and the risk for any operation shall
          fall upon THE ASSOCIATE. The Development Plan for the Fields that are
          exploited under the sole risk method shall be reviewed annually and
          shall be consistent with international oil industry standards for the
          technical, efficient and economic exploitation of each field.

5.3       During the exploitation of a Field under the sole risk method, THE
          ASSOCIATE shall deliver to ECOPETROL, within the first ten (10) days
          of each quarter, a report listing all of the technical, economic,
          legal, administrative and accounting information for the previous
          quarter, such as the entering into of contracts, well completion, flow
          lines, production facilities, measuring systems, storage capacity,
          wells in production, restriction orifices, production reports,
          economic studies, etc. It is understood that the various Clauses in
          The Contract and the clarification in this document are fully
          applicable in the case of Clause 21 of The Contract, Operations for
          the Risk of one of the Parties, for purposes of timely information,
          the technical control of Reservoirs and other administrative aspects.

5.4       Within the first three (3) months of each year, THE ASSOCIATE shall
          contract an external auditor, accepted by ECOPETROL, to review the
          total costs of the work executed for the account and risk of THE
          ASSOCIATE for the exploitation of the respective field and the Direct
          Exploration Costs. The cost of the audit shall be part of the expenses
          that THE ASSOCIATE shall recover. THE ASSOCIATE shall deliver to
          ECOPETROL, immediately after having received them, the reports issued
          by the external auditor and shall maintain at its disposal all of the
          documentation on the costs in which THE ASSOCIATE has incurred in the
          exploitation of the respective field.

CLAUSE 6 - INSPECTION OF THE OPERATIONS

For the inspection and audit of the activities that are carried out in the
Contract Area, ECOPETROL may send its representatives. During their stay in the
area, THE ASSOCIATE or the Operator shall provide lodging and other conditions
designated by ECOPETROL, equal to those provided for its engineers.
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                                                                              47

CLAUSE 7 - PRODUCTION

7.1       The Operator shall also transmit to the Parties any information of
          improvements in production techniques that it may develop during the
          Exploitation Period.

7.2       For the control and prevention of Hydrocarbon losses and damage to the
          environment, the Operator and the Parties shall apply the appropriate
          measures, with the generally accepted methods used by the oil industry
          in order to avoid Hydrocarbon losses or spills in any way during the
          drilling, production, transport and storage operations.

7.3       The Operator shall maintain a daily control of consumption of
          Hydrocarbons for the operation and shall submit a monthly report of
          these to the Parties, attaching the forms that the Ministry of Mines
          and Energy has for this purpose.

CLAUSE 8 - DISTRIBUTION AND AVAILABILITY OF HYDROCARBONS

8.1       As per Clause 14 (number 14.1) of The Contract, the Operator shall
          carry out the measurement, sampling and quality control of the
          Hydrocarbons produced and maintain the measuring equipment or
          instruments calibrated, as set forth in the standards and methods
          accepted by the oil industry (ASTM, AGA and API) and the legal and
          regulatory provisions in force, performing the appropriate analyses
          and performing the pertinent corrections for the settlement of the net
          volumes of Hydrocarbons received and delivered under standard
          conditions. In order to preserve the integrity, reliability and safety
          of the facilities and the equipment or instruments for control, the
          Operator shall adopt all of the necessary actions and shall maintain,
          for purposes of review by the Parties, the records of periodic
          calibration of such equipment or instruments and of the daily
          measurements of production and consumption of Hydrocarbons and fluids.
          For the case of Extensive Production Testing and for Fields exploited
          under the sole risk, it shall be THE ASSOCIATE's responsibility to
          abide by the obligations assigned to the Operator in this number. The
          volumes of Hydrocarbons that the Operator accepts for its
          transportation shall be determined with the measuring equipment that
          the Operator shall have installed for this purpose at the receiving
          stations or delivery points.

8.2       If at any time the Parties were to ascertain that there has been an
          error in the calculation of the R Factor set forth in Clause 14
          (numbers 14.2.3 and 14.2.4) herein, and that on account of this error
          it turns out that a different R Factor than the one applied is to be
          applied, or that it should have been applied at a different time than
          the one it was applied at, the corresponding correction shall then be
          made, with effect for the year in which the error was incurred in,
          adjusting the percent participation that corresponds to each Party as
          of that year. To perform the respective corrections with regard to the
          distribution of production, a similar procedure to the one described
          in Clause 14 (number 14.7) of The Contract shall be followed.

CLAUSE 9 - SUPPLY OF HYDROCARBONS FOR EXPORT

For purposes of Clause 14 of The Contract, in order to proceed with the export
of Hydrocarbons, THE ASSOCIATE's priority shall be the domestic requirements of
the country, before performing any export of Hydrocarbons, set forth in the
legal provisions that may be in force regarding this matter.
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                                                                              48

                   PART II - ACCOUNTING AND FINANCIAL ASPECTS

                  Section One - Programs, Projects and Budgets

CLAUSE 10 - EXPLORATION BUDGET AND PROGRAMS

10.1      With respect to the Budget set forth in Clause 7 herein, THE ASSOCIATE
          shall differentiate and detail it, according to the type of
          Exploration Work and to the indication of the currency in which the
          disbursement is forecast to be made. With respect to the reports every
          six months, these shall be submitted within the first ten (10)
          calendar days of the months of January and July. The January report
          shall refer fully to the previous year and the July report to the
          first half of the current calendar year.

CLAUSE 11 - EXPLOITATION PROGRAMS AND BUDGETS

11.1      For purposes of Clause 11 herein, the Operator shall submit the
          proposal for projects, programs and annual Budget, set forth in the
          Development Plan for each Commercial Field, with a detail short- term
          and medium- term outlook. The short- term Budget shall be submitted
          annually and by quarters, in order to facilitate its execution and for
          the preparation of the corresponding treasury flows.

11.2      The Operator shall submit to ECOPETROL the organization chart for the
          operation of each Commercial Field, which shall be agreed to at
          Subcommittee level and approved by the Executive Committee.

CLAUSE 12 - BUDGET PREPARATION AND PRESENTATION

The following norms and procedures constitute the guidelines for the
preparation, presentation and control of the Budgets during the exploitation of
each Commercial Field that may be discovered in the development of The Contract.
The Budget shall be divided into three (3) parts, namely:

12.1      Income Budget

12.2      Expenditures Budget

12.3      Other provisions

CLAUSE 13 - INCOME BUDGET

This Budget, is in turn, broken down into two (2) sections: Current income
Budget and Capital contributions.

13.1      Current Income:

          All funds which regularly accrue in the Joint Account and which the
          Operator can forecast. Such income includes the following items, when
          applicable:

13.1.1    Product sales:

          Income from the sale of Hydrocarbons that the Operator may perform on
          behalf of the Parties, to one of the Parties, or to Third Parties (it
          shall be understood that these sales are different from those made by
          each of the Parties of the production to which they are entitled to).
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                                                                              49

13.1.2    Services Furnished:

          All services that the Operator furnishes to one of the Parties or to a
          Third Party, in accordance with the rates established by the
          Sub-Committees and approved by the Executive Committee.

13.1.3    Sales of assets or materials:

          Sales of equipment or materials which the Operator makes to the
          Parties or to third parties as provided in Clause 20 (numeral 20.2) of
          this Agreement.

13.1.4    Other income:

          All funds received by the Operator on account on behalf of the Joint
          Account, for items such as the yield on temporary financial
          investments and other income that may be forecast by the Operator.

13.2      Capital Contributions:

          All funds received by the Operator on account of advances made by each
          of the Parties according to their share in The Contract. This income
          is given the name of advances or advance payments (cash calls) and
          shall be handled as set forth in the procedures in Clause 15 (number
          15.5) in this Agreement.

CLAUSE 14 - EXPENSE BUDGET

As a prior step to its preparation, the Executive Committee, through the
respective Subcommittees, shall set the policies and general parameters to be
borne in mind when elaborating the Budget for the respective Commercial Field.
The expense or appropriations Budget is made by the Operational Expenses Budget
and by the Investment Budget, each of which shall be prepared in the currency of
origin for its disbursement in pesos and in dollars of the United States of
America, and shall be consolidated in dollars.

14.1      Operations expense Budget.

          The operations expense budget shall be prepared by the Operator as set
          forth in the norms and policies established by the Executive Committee
          as per Clause 19 (number 19.3.8) of The Contract, and taking as the
          base parameters and economic indicators, that the respective
          Subcommittee has defined as being the most representative for the
          budget execution term.

14.1.1.   Preparation Procedure

          The Operator shall submit the Operating Expenses Budget, identifying
          the requirements of the Joint Operation, and shall detail the expense
          items set forth in the classification indicated in Clause 14 (number
          14.1.2) of this Agreement.

          The cost factors for the assessment of the various activities that it
          plans to carry out during the year to which the Budget refers to,
          shall correspond to the true figures known at the time of preparation
          or, to the best information available. In all cases, the operating
          expense Budget shall be calculated bearing in mind the costs that are
          required by the entities that,
<PAGE>

                                                                              50

          directly, render services to the Joint Account and, as such, are to be
          assumed one hundred percent (100%) by the Joint Account and charged
          back to the Parties in the proportion that Clause 22 (number 22.6.1)
          of The Contract refers to. The Indirect Expenses that are to be
          assumed by the Joint Account shall be charged to the Parties and shall
          be determined as set forth in Clause 22 (number 22.6.2) of The
          Contract.

14.1.2    Classification for the operating expenditure Budget

          For all presentation purposes, the operating expenditure Budget shall
          be broken down into programs, groups and expenditure concept. The
          expenditure programs within the Budget represent homogeneous
          activities necessary for the development of the Joint Operation,
          including those programs related with the investment projects. The
          expenditure groupings in numerical and continuous order within each
          program and project represent the object of the expense, shall be duly
          supported and explained, and shall be expressed in expenditure
          concepts. Following is a listing of the groups and the main
          expenditure concepts to be used:

14.1.2.1  Personnel expenses - organization chart

          Salaries

          Social Benefits

          Parafiscal contributions

14.1.2.2  Material and operation supplies

          Repair and maintenance materials

14.1.2.3  Contracted Services

          Technical services for the operation and Field maintenance

          Services given by the Operator

          Other Services

14.1.2.4  General Expenditures

          Equipment and office rental

          Shared expenses.

          Insurances.

          Public Utilities.

          Community relations

          Other general expenses.

14.1.2.5  Environmental Management

          Materials

          Contracted services

          Well abandonment

          Area restoration

          Other expenses

14.1.2.6  Added tax value (IVA)
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                                                                              51

14.1.2.7  Indirect expenses

14.1.3    Calculation base.

          Calculation for the operating expenses Budget shall be based on the
          following:

          The salary and social benefits Budget shall be calculated as set forth
          in the organization charts approved by the Executive Committee and
          their estimate shall be made as set forth in Clause 18 (number 18.1.1)
          herein. The calculation of salaries, social benefits and other special
          extra-legal bonuses originated by national and foreign personnel shall
          be presented separately, according to the origin of the disbursement,
          to be presented to the Subcommittees and the Executive Committee.

          The estimate of the cost of materials and supplies shall be made based
          on actual prices or updated quotations and, in general, with the best
          available information.

          Importation expenses shall be based on the FOB price calculations for
          the materials and/or equipment to be imported, and in their
          preparation the following factors shall be considered: freight,
          insurance, taxes for the use of Colombian ports, import duties and all
          other import expenses.

          The value of maintenance and operational services contracted shall be
          estimated on contracts formalized or to be formalized that the Joint
          Operation may have at the time the Budget is prepared.

          Indirect expenses chargeable to he Joint Account for services that are
          or may be provided by the Operator shall be calculated as set forth in
          Clause 22 (number 22.6.2) of The Contract).

          The purpose for the Budget for environmental expenses is to
          appropriate the annual funds that are required to fulfill
          environmental norms.

          General expenses shall be calculated taking into account the specific
          need of the Joint Operation in the normal course of its work. Shared
          expenses are those expenditures that are to be assumed by the Joint
          Account as a result of the use of facilities and/or services that are
          shared between Fields in the same Contract or with other areas. The
          Budget and the charges made to the Joint Account for general expenses
          shall be recommended by the Subcommittees and approved by the
          Executive Committee. Community Assistance will be budgeted on both the
          request of the interested parties and according to the policies that
          for such effect are established by the Executive Committee. In special
          duly-justified circumstances, the Operator may deal with requests
          according to its procedures, after first notifying each of the Parties
          on such matters

14.1.4    Budget Execution

          Execution of the operations expense Budget shall be made as follows:

14.1.4.1  All services, purchases or contracts that are charged to the Joint
          Account on account of operations expenses shall be budgeted and fully
          justified.

14.1.5    Budget execution control
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                                                                              52

          The Operator is responsible for controlling the expense budget
          execution and must see that expenses are properly managed.

          Within the first ten (10) calendar days following the end of the
          respective quarter, the Operator shall prepare and submit to the
          Parties a report explaining the results obtained in the Budget
          execution, which shall contain:

14.1.5.1  Expenses accrued to date, itemized as per expense categories set forth
          Clause 14 (number 14.1.2) in this Agreement.

14.1.5.2  Special comments on items which deviate significantly from budget
          average or quarterly estimate.

14.1.5.3  Estimated expenses forecast for disbursements per quarter or for the
          rest of the year.

14.1.5.4  Justification for possible budget additions, adjustments or transfers
          that the Operator may deem necessary or that are proposed by one of
          the Parties.

14.2      Investment Budget

          Constitutes the basic planning, execution and control tool for each of
          the investment programs and projects that the Joint Operation foresees
          it shall carry out, and acts as means to estimate the required funds
          in the execution of the various programs that are approved by the
          Executive Committee.

14.2.1    The investment Budget is composed of items allotted for the following
          items:

14.2.1.1  Purchase of durable goods, materials and services required for the
          execution of the different projects approved by the Executive
          Committee.

14.2.1.2  Purchase of major maintenance equipment and tools destined for the
          Joint Operation shops, in order to ensure the normal development of
          the operations.

14.2.1.3  Construction and/ or expansion of buildings that the operation may
          require, including the facilities destined for workers in the
          Commercial Field's organization chart.

14.2.2    Classification of the Investment Budget

          For all presentation purposes, the Investment Budget shall be grouped
          into programs and projects. Programs, in numerical order within each
          Budget, represent a set of projects to be undertaken which, on account
          of their technical, operational and administrative characteristics,
          merit being controlled in a connected manner and which the Joint
          Operation shall execute through the Operator. Projects, in a numerical
          and continuous order within each program, constitute the set of
          activities that are common to a specific work or job and shall be duly
          supported and explained. Following are the main programs and projects
          to be used:

14.2.2.1  Development Wells

          Locations

          Drilling

          Completion

          Surface equipment, artificial lifting, recompletion and services that
          are capitalizable to the wells.

14.2.2.2  Surface facilities
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                                                                              53

          Collection system and transfer lines

          Separation and treatment system

          Storage system

          DISPOSAL OF WATER AND CONTAMINANTS

          Pressure maintenance and/ or improved recovery system

          Pump Stations

          Hydrocarbon transport and transfer system

          Other support systems

14.2.2.3  Civil Work

          Roads

          Bridges

          Constructions (camp, workshops, warehouses and offices)

14.2.2.4  Other assets

          Automotive equipment

          Firefighting equipment

          Communications equipment

          Office equipment

          Electromechanical maintenance equipment

          Major tools

          Cleaning or workover equipment

14.2.2.5  Special programs

          Environmental management

          Reservoir studies

          Simulation studies

          Pressure, interference, etc. tests

          Others

14.2.2.6  Warehouses

          For projects.

          For maintenance materials.
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                                                                              54

14.2.2.7  Each one of the above projects can be broken down into sub-projects as
          needed, using a uniform identification. Final presentation thereof
          shall be made on a project by project basis, according to the
          classification given above and using forms two (2) and four (4)
          established by ECOPETROL for such purpose which may be adapted by
          previous agreement between the Parties, through the corresponding
          Subcommittee. In order to achieve increased clarity in the preparation
          and structuring of the investment Budget, the following considerations
          are to taken into account:

14.2.2.7.1 Maintenance investments

          All investments made in equipment, materials and construction for the
          purpose of keeping facilities in good operating condition as well as
          their original capacity and performance limits.

14.2.2.7.2 Enlargement Investment

          The investments are to be classified as such if their objective is to
          increase the facility capacity, increase the authorized provision of
          automotive equipment, office equipment, etc.

14.2.2.7.3 Special investments

          These include all of those investments which, on account of their
          amount, their importance for the industrial activities or their impact
          on a social or ecological level, merit being classified as special.

14.2.3    Preparation and presentation of the Budget

          Each and every one of the projects within the various programs that
          make up the Investment Budget shall be fully justified and analyzed
          before being included in the general Budget. In this sense, the
          Operator shall prepare an investment draft which shall contain the
          following general information:

          a)   Analysis of needs

          b)   Project justification

          c)   General project description

          d)   Estimated amount of the investment

          e)   Execution chronogram

          f)   Critical path for the project

          g)   Economic evaluation

          The draft with the aforementioned information, plus any other
          information that may be considered necessary for its assessment that
          the Operator may submit, shall be studied jointly by the respective
          Subcommittees, which shall recommend or object to the viability of the
          project, as set forth in the policies drawn up by the Executive
          Committee.

          Once such Subcommittees recommend that a specific project be
          undertaken, the project shall then be included in the Budget to be
          approved by the Executive Committee for the respective Commercial
          Field.
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                                                                              55

          All of the general information that is submitted to justify each
          project will be compiled in a Technical-Financial Annex, which shall
          serve as support when presenting the Budget for each Commercial Field
          for the approval of the Executive Committee.

14.3      Budget Consolidation.

          Once the Joint Operation's requirements have been defined, the
          Operator will consolidate the Operations Expense and Investment Budget
          for each of the Commercial fields, as set forth in classification in
          Clause 14 of this Agreement (numerals 14.1.2 and 14.2.2 respectively)
          and shall present it to the Executive Committee for final approval.
          The Operation Expense Budget and the investment Budget, will be
          submitted in four columns that will contain the accrual origin in
          United States of America dollars, accrual origin in pesos, a
          consolidated statement in dollars and one in pesos, using the forecast
          of the exchange rate for the respective year for this purpose. In
          addition, the Operator shall prepare, for information purposes, a
          disbursement chronogram that indicates the cash requirements in the
          short term, itemized by quarter and by currency origin, at the level
          of expense group, program and investment project.

14.4      Budget Execution

          In all cases, the Operator is authorized to make all of the operations
          and investment expenses that the Joint Operation requires, set forth
          in the approved Budget and subject to the procedures in this
          Agreement, and those that the Executive Committee may establish. The
          execution of the budget shall be performed by the Operator through its
          various departments and set forth in the previously established
          execution schedules.

          The appropriations assigned to each project shall be identified with a
          previously defined code, which shall be used on all documents that
          originate in carrying out its budgetary execution.

14.5      Budget Control.

          The Operator shall be responsible for carrying out each of the
          investment programs and projects and shall be accountable for the
          execution of these within the conditions under which they were
          approved.

          Similarly, it shall be responsible for the verification that the
          corresponding steps for the performance of the projects are taken
          adequately and on a timely basis. In the event that any problem is
          encountered that prevents the normal development of the projects, it
          shall immediately report it in writing to each of the Parties, in
          order to seek the solution to the difficulty that has been
          encountered. The Operator, as the responsible party for the
          Development Plan, the programs, projects and Budget, shall prepare the
          quarterly reports regarding the budget and technical advance of these,
          which it shall send to each of the Parties for their study and
          subsequent approval by the Executive Committee.

          The quarterly report that is to be prepared and presented by the
          Operator within the ten (10) days following the end of each quarter,
          shall contain the following information:

          a)   Period covered by the report.

          b)   Project code and description.

          c)   Total project budget.

          d)   Financial advances from its start to final date. Investments per
               current-year, accumulated to date.
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                                                                              56

          e)   Technical progress of the work.

          f)   Quarterly projection of work to be carried up to year-end, for
               information purposes.

CLAUSE 15 - OTHER PROVISIONS

15.1      Budget Additions

          If, during the execution of the Budget, it were necessary to add
          supplementary items above and beyond the appropriations approved by
          the Executive Committee, the Operator shall request the corresponding
          modifications from the Parties in an extraordinary manner and their
          ratification shall be made in the next ordinary meeting of the
          Executive Committee.

          On a periodic basis, requests for budget transfers or additions for
          expenses and investments may be submitted, studied and approved, every
          time the Executive Committee meets on an ordinary basis. However, the
          Executive Committee may meet in an extraordinary manner to deal with
          budgetary issues any time a special situation may so merit.

          Every time that a budget addition is requested, the Operator shall
          initiate, with due lead time, the corresponding procedures, submitting
          the requests to the respective Subcommittee for its study and
          subsequent recommendation to the Executive Committee. In any event,
          the requests for budget additions shall be fully justified, explaining
          the reasons that gave rise to the variation in the appropriated items,
          with their respective technical and financial Annex, as specified in
          Clause 14 (number 14.2.3) in this Agreement.

15.2      Budget transfers

          Those appropriations that are carried over from one year to another as
          a result of those projects that could not be concluded during the term
          for which they were budgeted for reasons such as the lack of
          availability of equipment, importation procedures, bad weather, among
          others, shall be considered to be budget transfers.

          When a project is not totally completed, the value of the budget shall
          become part of the Budget for the immediately following year and shall
          be subjected to approval by the Executive Committee. The presentation
          of these projects within the Budget shall be singled out and
          specifically identified and shall be considered in the preparation of
          the disbursement schedule that Clause 15 (number 15.4) in this
          Agreement refers to. In addition, budget transfers shall give rise to
          an Annex wherein the cause for the budget transfer shall be explained,
          as well as the way in which it is to be executed during the following
          term.

15.3      Approvals

          The Executive Committee shall be entity entrusted with approving the
          programs, projects and the Budget recommended by the Subcommittees,
          and with authorizing the Operator to purchase or contract, for the
          account of the Joint Account, all of those goods and services that are
          required by Joint Operation.

15.4      Disbursement Schedule

          Together with the overall Budget, the Executive Committee shall
          approve the Budget by quarters submitted by the Operator and
          recommended by the Subcommittees for the immediately following year,
          and which shall constitute the basis on which the monthly cash calls
          shall be calculated.
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15.5      Cash Calls

          The requests for advances of funds or cash calls shall be made by the
          Operator to each of the Parties, based on the obligations entered into
          by the Joint Operation for the month immediately following the one of
          the request, referring to the quarterly Budget approved by the latest
          Executive Committee and the forecast cash flows. The management of the
          advances or cash calls that this Clause refers to shall be made
          through a bank account that the Operator shall establish for such
          purpose, for the exclusive use by the Joint Operation. In the
          preparation of the requests for advances or cash calls, the following
          requirements are to be followed:

15.5.1    Preparation

          Based on the approved Budget and the obligations entered into on
          behalf of the Joint Operation for the following month, the Operator
          shall prepare the requests for advances, bearing in mind the following
          conditions:

15.5.1.1  The request shall be made by the Operator separately for each of the
          Commercial Fields being exploited in the Contract Area, identifying
          operations and investment expenses, in pesos and in United States of
          America dollars, depending on the origin in which the disbursement is
          forecast to be made.

15.5.1.2  The request shall be by programs and projects, in the case of
          investments, and by group and expense item in the case of expenses, in
          the same manner in which they are listed in the Budget approved by the
          Executive Committee.

15.5.1.3  For each of the projects and expense items listed in the request for
          advance funds to be considered, they must be included in the Budget;
          otherwise, they shall be deducted from the total amount requested.

15.5.1.4  The projects and expense groups shall necessarily have a sufficient
          Budget.

15.5.2    Presentation

          The request for funds (cash call) shall be made by the Operator within
          the first twenty (20) days of the immediately preceding month to the
          month in which the contributions are to be made. If the Operator were
          to have to make extraordinary disbursements, that are not provided for
          at the time that the monthly advance cash call is made, it shall
          request special advances in writing from the Parties, covering their
          respective share in such disbursements.

          Every request for an advance or cash calls shall be submitted for
          processing in the form previously agreed to by the Parties in the
          respective Subcommittee and shall show the actual and estimated
          charges for investments and expenses and shall comprise the following
          documents:

15.5.2.1  Letter of Request

15.5.2.2. Request format, wherein the financial status for each of the programs,
          projects and expense items is shown on the date on which the request
          is made.

15.5.2.3. General comments of a technical nature in which the destination of the
          requested funds is identified, within the main projects or expense
          items.
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                       Section Two - Accounting Procedure

CLAUSE 16 - ACCOUNTING PROCEDURE

In each half- yearly report that Clause 10 (number 10.1) in this Agreement
refers to, THE ASSOCIATE shall submit to ECOPETROL the direct Explorations Costs
for the period of the report that could be subject to reimbursement in agreement
with Clause 9 of The Contract, with the indication of the currency in which the
disbursement was made and a consolidated statement in United States of America
dollars. In addition, in this same report, THE ASSOCIATE shall submit the
preliminary cumulative value that is to be included as variable "A" for the
calculation of the R Factor that Clause 14 (numbers 14.2.3 and 14.2.4) in The
Contract refers to, clearly showing the parameters used for the calculation, It
is understood that the Direct Exploration Costs shall only be definitive once
they have been audited and accepted by ECOPETROL.

During exploitation of each Commercial Field, the credits and charges incurred
in by the Operator in development of the Joint Operation, shall be charged to
the Joint Account set forth in the provisions of Clause 22 of The Contract. The
Joint Account shall be divided into three main items, as stated below, for each
Commercial Field discovered in performance of The Contract, and the consolidated
statement, when there is more than one Commercial Field in the Contract Area:

16.1      General Joint Account (clarification, charges and entries).

          This account shall reflect all of the movements, as is expressed later
          on, and shall be fully distributed on a monthly basis between the
          Parties, in a share of fifty percent (50%) for ECOPETROL and fifty
          percent (50%) for THE ASSOCIATE with respect to the investments, and
          in the proportion that is set out in Clause 22 (numbers 22.6.1 and
          22.6.2) in The Contract for Direct Expenses and Indirect Expenses.
          That is to say, it shall serve as the basis for monthly billing, set
          forth in the provisions of this procedure, ending every month with a
          balance of zero (0).

          All of the accounting operations related with this account shall be
          booked by the Operator in Colombian pesos, set forth in the laws of
          the Republic of Colombia, but the Operator may, in turn, keep ledgers
          wherein it shows the disbursements it may incur in any currency other
          than Colombian pesos.

16.2      Joint operations current account.

          This account shall record the cash calls received from the Parties and
          the charges or credits corresponding to the invoicing of these and, at
          all times, shall show a balance in favor or against each of the
          Parties, as appropriate. This account shall be divided into two sub-
          accounts, set forth in the monetary origin of the transaction, namely:
          Colombian pesos and United States of America dollars.

16.3      Joint property records.

          Through the Joint Account, the Operator shall keep a record of all of
          the assets acquired that are subject to inventory, indicating in
          detail the kind of asset, the date of purchase and its original cost.

          The accounts mentioned in Clause 16 (numbers 16.1, 16.2 and 16.3) of
          this Agreement shall constitute part of the Operator's official
          accounting records, but without mixing them with accounting records
          other than those of the Joint Account. The three aforementioned
          records shall be subject to Clause 22 of this Agreement.
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                                                                              59

16.4      The Operator shall send to ECOPETROL on a monthly basis, together with
          the information cited in Clause 17 (number 17.2.2) of this Agreement,
          in an independent Annex, the parameters and the calculation of the R
          Factor, set forth in the provisions of Clause 14 (number 14.2.3 and
          14.2.4) of the Contract. The Operator shall keep in its files and at
          the disposal of the Parties, all of the support documentation for the
          charges made to the variables that are included in the calculation of
          the R Factor for each Commercial Field.

CLAUSE 17 - ADVANCES, INVOICES AND ADJUSTMENTS

17.1      Advances.

          Despite the fact that the Operator shall pay and clear, initially, all
          of the costs and expenses incurred set forth in The Contract, charging
          each Party with its percentage share, it is agreed that, to finance
          such share, each Party, at the Operator's request, shall advance to
          the latter, from the moment of acceptance by the Parties of the
          existence of a Commercial Field and, latest within the first five (5)
          days of every month, the proportion of the disbursements for the
          account of each and that were estimated for the operations of the
          given month. These advances shall be made in United States of America
          dollars and in Colombian pesos, set forth in the requirements
          established in the approved Budget by quarter and in the forecast cash
          flow for each Commercial Field and in the requests for advances (cash
          calls) prepared by the Operator, set forth in Clause 15.5 in this
          Agreement.

17.2      Invoices.

17.2.1    The Operator shall prepare an initial invoice for ECOPETROL after the
          acceptance of the existence of each Commercial Field, in the amount of
          fifty percent (50%) of the Direct Exploration Costs incurred in before
          the date of ECOPETROL's statement regarding the commerciality of each
          new Commercial Field discovered, that is audited and accepted by
          ECOPETROL set forth in Clause 22 of this Annex and that has not
          previously been charged to another Field. In the Direct Exploration
          Costs for the Exploratory Wells, all of the direct costs incurred in
          drilling, termination and testing shall be included for the case of
          Exploratory Wells that are producers, and the cost of drilling and
          abandonment of the Exploratory Wells that are dry. Such invoice shall
          also include fifty percent (50%) of the costs of additional work that
          Clause 9 (number 9.3) in The Contract refers to, if applicable. For
          the monthly update of the values that the paragraph in Clause 9
          (number 9.2.2) in The Contract refers to, one twelfth (1/12th) of the
          value resulting from averaging the percent annual variation available
          for the last two (2) years in the consumer price index for
          industrialized countries shall be used, taken from the "International
          Financial Statistics" of the International Monetary Fund (page S63 or
          its replacement) or, if not available, the publication that may be
          agreed to by the Parties. This invoice shall include a summary of the
          costs, expressing separately the currency in which the investments and
          the expenses were made, that is to say, in Colombian pesos or in
          United States of America dollars.

17.2.2    Set forth in Clause 22 (number 22.2) of The Contract, the Operator
          shall charge the Parties, within the ten (10) days following the last
          day of each month, their proportional share of the investments and
          operational expenses during that month. In the invoices, the details
          that may be available in the Operator's accounting procedures shall be
          noted, including a detailed summary of accounts, expressing separately
          the investments and operational expenses originating in pesos and
          those originating in United States of America dollars.
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17.2.3    Investments and expenses during the Retention Period.

          The costs and expenses made by THE ASSOCIATE during the Retention
          Period to establish the commercial viability of a Gas Field shall be
          assumed by THE ASSOCIATE in their entirety.

17.3      Adjustments

          The invoices shall be adjusted between the Operator and the Parties
          after deducting the advances in United States of America dollars and
          in Colombian pesos.

          When the advances made by either of the Parties differ from their
          share in the actual costs determined for each period, the difference
          in pesos and/ or in dollars shall be adjusted in the invoices for the
          following month.

17.4      Acceptance of the invoices.

          The payment of the invoices shall not affect the right of the Parties
          to protest or inquire about the accuracy of these, set forth in the
          terms of Clause 22 (number 22.7) of The Contract.

CLAUSE 18 - CHARGES

Subject to the limitations that are set forth below, the Operator shall charge
the Joint Account and invoice each Party, set forth in the percentages
established in Clause 16 (number 16.1) of this Agreement, for the following
expenses:

18.1      Labor.

18.1.1    National and foreign employees

18.1.1.1  The salaries of the Operator's employees or workers that are working
          directly for the benefit of the Joint Operation, including the payment
          for overtime, nighttime surcharge, payment of Sundays and holidays and
          their respective compensatory rest periods and, in general, all
          payments that constitute salary.

18.1.1.2  Social benefits, compensation, insurance, subsidies, bonuses and, in
          general, any benefit that is not salary and that is awarded to the
          workers and/ or their relatives or dependents, whether it is granted
          individually or collectively, or whether it is granted to them by
          virtue of the labor contract, the law, arbitration conventions or
          sentences, with the exception of housing plans, with respect to which
          a special agreement shall be required. Among the aforementioned, one
          can cite, among others, the following: severance pay, vacation,
          retirement and disability pensions, benefits to retirees and their
          relatives, benefits and aid caused on account of professional or non-
          professional illnesses and accidents, service bonuses, life insurance,
          compensation or indemnity on account of contract cancellation, labor
          union benefits, all types of bonuses, subsidies and aid, for savings,
          health, education and, in general, for social security. In addition,
          the contributions to the Colombian Family Welfare Institute (ICBF),
          National Vocational Training Service (SENA), Social Security Institute
          (ISS) and other similar ones that may be established.

18.1.1.3  All expenses incurred for the benefit of the Joint Operation with
          respect to the maintenance and operation of the camp, its offices and
          service facilities at the site. Among these, the following expenses
          are also included, not in a restrictive manner but rather as a
          listing, as indicated below, whether the services are rendered for
          free or for payment, or
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                                                                              61

          whether they be for the workers, their dependents or relatives, of
          that these be provided in a voluntary or compulsory manner.

          Such services include the following:

          18.1.1.3.1    Medical, pharmaceutical, surgical and hospital services.

          18.1.1.3.2    Camp and full services thereof, including its repairs
                        and sanitation.

          18.1.1.3.3.   Training and educational expenses.

          18.1.1.3.4    Workers recreation.

          18.1.1.3.5    Maintenance of schools for the workers, their children
                        and dependent relatives.

          18.1.1.3.6    Safety, social work and camp surveillance.

18.1.1.4  It is understood that the expenses and services outlined in the
          aforementioned Clause 18 (numbers 18.1.1.1, 18.1.1.2 and 18.1.1.3)
          shall be for the account of the Joint Account when, by provisions of
          law, labor agreements and/ or arbitration sentences or voluntarily,
          they are applicable in a direct or by extension to contractors,
          subcontractors, intermediaries and/ or their workers who are working
          for the benefit of the operation.

18.1.1.5  With respect to retirement pensions and disability compensation, the
          Executive Committee shall proceed set forth in the provisions of the
          Social Security and Pension System established by Law 100 issued in
          1993 and other norms that regulate it or substitute it.

18.2      Materials, equipment and supplies

          The materials and supplies that are necessary to undertake the
          operations shall be charged to the Joint Account. The materials and
          supplies shall be purchased for warehouse inventories for the projects
          or for the maintenance materials warehouse when it is convenient for
          the operation and shall be credited to it, at cost in the books, as
          they are withdrawn from the warehouse to be used. The capital
          equipment units shall be charged directly to the Joint Account. The
          book cost is determined as follows:

18.2.1    Book cost

          It is understood that book cost means the last average price of the
          inventory in the warehouse, based on the cost obtained in the import
          liquidation sheets, or the local cost, as follows:

18.2.1.1  For imported materials, equipment and supplies, the book cost shall
          include the net price on the manufacturer or vendor's invoices, the
          cost of purchases, freight and delivery charges between the supply
          point and the loading point, freight to the entry port, insurance,
          import duties or any other tax, handling from the vessel to the
          customs warehouse and transport to the site of operations.

18.2.1.2  For materials, equipment and supplies purchased locally, the book cost
          shall include the seller's net invoice, plus sales taxes, procurement
          expenses, transport, insurance and other similar costs paid to Private
          Parties, from the purchase location to the site of operations.

18.2.1.3  the materials shall be charged to the Joint Account set forth in the
          monetary purchase origin, so that it can similarly be charged to each
          Party.
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18.2.2    Return of materials to Joint Operation's warehouses, as the case may
          be.

          The materials, equipment and supplies that are returned to the
          warehouses of the Joint Operation shall be valued as follows:

18.2.2.1  New materials, at book cost.

18.2.2.2  Second- hand materials, in good condition and that can render service,
          as well as equipment that can subsequently be used without repairs,
          can be reincorporated by the Operator to the corresponding warehouse
          at one hundred percent (100%) of their cost on the books, crediting
          the respective project in the Joint Account.

18.2.2.3  Second- hand equipment and materials which, when repaired, can be
          used, can be reincorporated by the Operator to the corresponding
          warehouse at one hundred percent (100%) of their cost on the books.

          These materials, upon being used again, shall be charged at the new
          book value.

18.2.3    Sales by the Parties. The materials, equipment and supplies sold by
          the Parties to the Joint Operations shall be valued at the replacement
          price agreed to by the Parties. The corresponding transport costs
          shall be for the account of the Joint Operation. In the cases of sales
          by the Joint Operation to one of the Parties, these shall be valued at
          the replacement price agreed to by the Parties, and the transport
          costs shall be for the account of the purchasing Party.

18.2.4    Local transport of materials

18.2.4.1  For materials shipped through an external transporter, at cost, set
          forth in the invoice issued by the transportation company.

18.2.4.2  For materials sent in transportation units owned by the Parties, at
          the fees calculated to cover the actual costs, pursuant to the
          procedure established in Clauses 18 (number 18.4) and 23 (number
          23.1.1) in this Agreement.

18.2.5    Materials for projects that have been cancelled, postponed or changed.
          When there is an accumulation of inventory in the warehouse on account
          of the change, deferral or cancellation of projects approved by the
          Parties, the cost of such materials shall be charged to the warehouse
          account. These materials may be sold to Private Parties set forth in
          the provisions of Clause 20 (number 20.2.1) in this Agreement and what
          is obtained shall be credited to the Joint Account. Surplus materials
          from projects, purchased with direct charge. Once the project has been
          finalized, these should be reincorporated to the warehouse and
          credited to the corresponding projects. The Operator shall advise the
          Parties of this operation at the ordinary meetings of the Financial
          Subcommittee when this were to occur.

18.3      Travel expenses

          All travel expenses incurred on behalf of the Joint Operation for
          Colombian or foreign personnel, such as transport, hotels, food, etc.

18.4      Service units and facilities

          The value of the service rendered for equipment and facilities that
          are owned by any of the Parties shall be charged to the Joint Account
          at reasonable rates, as provided for in Clause 23 of this Agreement.
          The rates that are established shall be applied until such time as
          they are modified by mutual agreement.
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18.5      Service

          Services rendered by Private Parties, including contractors, to the
          Joint Operation, at their actual cost. Similarly, technical services,
          such as laboratory analyses and special studies, require the
          recommendation of the Technical Subcommittee and approval by the
          Executive Committee.

18.6      Repairs

          Expenses for repairs made to the equipment or elements of either of
          the Parties, destined for use by the Joint Operation, unless these
          costs have already been charged through leasing or in another manner.

18.7      Litigation

          Expenses to the Joint Operation regarding the threat of effective
          lawsuits (including the investigation and collection of evidence),
          lifting encumbrances, sentences, legal claims and procedures for
          claims, compensation for accidents, settlement for death and funeral
          expenses, provided that these charges have not been recognized by an
          insurance company or covered by the proportional surcharges mentioned
          in Clause 18 (number 18.1.1) in this Agreement. When legal services
          are provided in these matters by permanent or external counsel, whose
          total or partial compensation is included in indirect costs, no
          additional charges shall be made for their services, but rather, these
          shall be charged to Direct Expenses incurred in such procedures.

18.8      Damages and losses of Joint Operation property and equipment.

          All costs and expenses necessary to replaced or repair damage or
          losses caused by fire, flood, storm, theft, accident or any other
          similar event. The Operator shall notify the Parties in writing
          regarding the damages or losses occurred, as soon as possible.

18.9      Taxes and rentals

          The value of all taxes paid or accrued in carrying out the Joint
          Operation shall be charged to the Joint Account, in keeping with the
          existing legal provisions.

          The value of leases, right of way and indemnity for improvements, the
          occupation of land, etc. shall also be charged to the Joint Account.

18.10     Insurance

18.10.1   Premiums paid for insurance taken out for the benefit of the
          operations that The Contract refers to, together with all of the
          expenses and indemnities accrued and paid, an all losses, claims and
          other expenses that have not been covered by the insurance companies,
          including the legal services mentioned in Clause 18 (number 18.7) in
          this Agreement, shall be charged to the Joint Account.

18.10.2   When no insurance exists, the actual costs incurred, mentioned above,
          and paid for by the Operator, shall also be charged to the Joint
          Account.

CLAUSE 19 - CREDITS

19.1      Incomes

          The Operator shall credit the Joint Account for incomes resulting from
          the following items:
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19.1.1    Collection of insurance with respect to the Joint Operation, the
          premiums for which have been charged to such operation.

19.1.2    Sale of geological information, when previously authorized by the
          Parties, provided that the collection of such information was charged
          to the Joint Operation.

19.1.3    Sale of property, plants, equipment and materials owned by the Joint
          Operation.

19.1.4    Rental payments received, the reimbursement for claims of customs
          duties and tax or transportation, etc. shall be credited to the Joint
          Operation if such lease payments or reimbursements pertain thereto.

19.1.5    Any other income from operations or contractual income authorized by
          the Executive Committee on behalf of and for the service of the Joint
          Account.

19.2      Warranty

          In the event of defective equipment, once the Operator has received
          the corresponding adjustment from the manufacturer or its agents,
          credit shall be made to the Joint Account.

CLAUSE 20 - DISPOSAL OF EXCESS  MATERIALS AND EQUIPMENT.

20.1      Excess materials and equipment

          The Operator shall advise the Parties in writing regarding the Joint
          Operation's surplus materials and equipment, thirty (30) days after
          finalizing the inventory that Clause 21 of this Annex refers to. Each
          of the Parties shall designate a representative to review the status
          and establish which materials or equipment are to be put up for sale.
          For the purchase of the useable materials or equipment, ECOPETROL
          shall have the first option and THE ASSOCIATE the second option; these
          options shall be exercised within sixty (60) days following the date
          of notification. In the event that they are not purchased by these,
          the Operator shall report it in writing and they shall be put up for
          auction.

20.2      Disposal of capital equipment and materials.

          Set forth in Clause 22 (number 22.9) of The Contract, the Operator may
          sell the materials and equipment owned by the Joint Account under the
          following conditions:

20.2.1    The sale by the Operator to Private Parties of major materials and
          capital equipment that may have been charged to the Joint Account
          shall only be made with the approval of the Executive Committee. The
          revenue shall be credited to the Joint Account. Only for this
          particular purpose, major materials are defined as any asset that has
          an estimated sales value that is greater than the amount that is
          approved by the Executive Committee for such purpose, as a result of
          the request submitted in advance by the Operator, set forth in Clause
          19 (number 19.3.2) of The Contract.

20.2.2    Minor materials charged to the Joint Account and not required for the
          operation or which are returned to the warehouse, may be sold by the
          Operator and its proceeds shall be credited to the Joint Account.

20.2.3    For any abandonment and dismantling of the assets whose cost or
          estimated value is greater than the amount approved by the Executive
          Committee for this purpose, as a result of a request presented
          beforehand by the Operator set forth in Clause 19 (number 19.3.2) of
          The Contract, prior authorization by the Executive Committee is
          required.
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                                                                              65

20.2.4    Neither of the parties is under the obligation to purchase the
          interest of the other in surplus materials, whether they are new or
          second- hand. The withdrawal of major items of surplus materials, such
          as towers, tanks, motors, pumping units and piping shall be subject to
          approval by the Executive Committee. However, the Operator shall have
          the right to dispose of the damaged or useless materials in any
          manner.

20.2.5    All of the taxes that may be caused on account of the sale or transfer
          of materials or assets from the Joint Account shall be the Operator's
          responsibility, for the account of the Joint Account.

CLAUSE 21 - INVENTORY

At ECOPETROL's request, the Operator shall submit the necessary information to
perform the inventory analyses in warehouses and the Parties shall agree upon
their joint participation in inventory control. The Operator shall provide the
ease and cooperation that ECOPETROL may require to carry out the physical task
of accounting for the fixed assets at the facilities at each Commercial Field,
prior agreement with the respective Subcommittee, regarding the date, time and
number of persons who are to perform the inventory.

21.1      Inventory and Audit

          Set forth in the existing norms and, at least once every three (3)
          years, the Operator shall perform an inventory of all of the Joint
          Operation assets.

21.2      The notification of the intention of carrying out an inventory shall
          be given by the Operator to the Parties in writing with at least one
          (1) month advance notice to the date on which it is to commence, so
          that the latter can be present. However, non- attendance by one of the
          Parties to carry out the inventory does not jeopardize or reduce the
          validity and effectiveness of the inventory thus carried out by the
          Operator.

21.3      The Operator shall provide the Parties with a copy of each inventory,
          with a copy of its reconciliation, and shall submit the results to the
          Subcommittees of the Joint Operation, which shall study the report and
          shall propose the actions to be taken in this regard.

21.4      Inventory adjustments for surpluses or shortfalls shall be brought to
          the attention of the Executive Committee for its consideration and
          approval.

21.5      With due timing and through midnight of the last day of the term set
          forth as the Exploitation Period, the Parties shall carry out
          inventories of the materials that are in the warehouses and that are
          the property of the Joint Account, as well as of the products produced
          that are in the collection batteries, the pipes that lead from them to
          the storage tanks and in the storage tanks, all within the
          exploitation sites, and such inventories shall be distributed between
          the Parties, after having deducted the royalties, in the same manner
          provided for in Clause 13 of The Contract.

CLAUSE 22 - AUDIT

Subject to Clause 17 (number 17.4) in this Agreement, the Parties may, through
their own auditors or their representatives, examine and control the Operator's
records related to the joint properties and the operation of these. Similarly,
ECOPETROL may carry out audits to the records of the Fields exploited by THE
ASSOCIATE under the sole risk method. In order to facilitate the review of the
Direct Exploration Costs that Clause 17 (number 17.2.1) of this Agreement refers
to, once THE ASSOCIATE or the Operator advises the Parties regarding the date on
which any reimbursable
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                                                                              66

Exploration Work is to commence, THE ASSOCIATE or the Operator shall allow that,
prior timely notification, ECOPETROL auditors periodically examine the accounts
for such Exploration Work, in such a way that, when the existence or not of a
Commercial Field is accepted, the aforementioned review has already been
performed under the best conditions of timing and location. In the audit reviews
that are provided for in this Agreement, in addition to the representatives for
the Parties, representatives from the Comptroller General of the Republic may
also intervene, if such organization deems it convenient for this to be the
case. The costs and expenses of such review shall be for the account of the
interested Party.

22.1      Once the audit report is delivered, THE ASSOCIATE or the Operator
          shall have a maximum six (6) month term in order to respond and
          support the objections made. Once this term expires, without the
          Operator having responded, it shall be considered that the objections
          have been accepted and consequently, all shall proceed accordingly.
          The notes or observations from the audit that are not resolved within
          the three (3) months following this term shall be resolved set forth
          in Clause 20 of The Contract.

CLAUSE 23 - RATE AND FEE CHARTS

23.1      Subject to the aforementioned limitations, the services rendered to
          the Joint Operation for facilities that are ECOPETROL or THE
          ASSOCIATE's exclusive property, shall be charged at the corresponding
          rates, in order to allow for the recovery of the actual costs. Such
          costs shall include the normal costs for work, salaries, social
          benefits, depreciation and other operational expenses, bearing the
          following in mind:

23.1.1    The rate for transportation units that is normally calculated, using
          as a basis the time of operation, shall include the time required for
          loading and unloading, the time elapsed waiting to be loaded, and the
          waiting time for unloading to take place. Charges for transportation
          units assigned to the operation shall include Sundays and holidays,
          except when the vehicles are out of service for repairs.

23.1.2    When the material for aforementioned operations is transported
          together with other materials by river or land fleet that is the
          exclusive property of ECOPETROL or of THE ASSOCIATE, the charge shall
          be made based on the tonnage transported, at rates that are not any
          higher than commercial ones.

23.2      Rates for the lease of equipment and tools

          The procedure to calculate the lease rate for equipment and tools that
          are the property of the Parties, excluding drilling equipment and
          major equipment, where the rates are to be calculated separately and
          approved by the Executive Committee, shall comprise a value for
          depreciation plus a value for maintenance, and the procedure shall be
          as follows:

23.2.1    Description, model, number, date of purchase and original cost of the
          equipment.

23.2.2    Site where the equipment is to be used, reasons for leasing it and
          estimated time of use.

23.2.3    Value of the annual depreciation for the equipment, calculated based
          on the depreciated book value and its estimated remaining useful life
          (the minimum book value considered shall be ten percent (10%) of the
          original cost, that is to say, the salvage value).

23.2.4    The annual maintenance value shall be a percentage of the original
          cost, which may vary between five percent (5%) for new equipment and
          up to fifteen percent (15%) for equipment
<PAGE>

                                                                              67

          that has already been depreciated, depending on the time it has been
          depreciated. For example:

          Equipment A: (Five [5] years of life)

          Time (in years) 1, 2, 3, 4, 5: equipment one hundred percent (100%)
          depreciated

          Maintenance: 5, 6, 7, 8, 9: 15%.

          Equipment B: (Ten [10] years of life)

          Time (in years) 1, 2, 3, 4, 5, 6, 7, 8, 9, 10: equipment one hundred
          percent (100%) depreciated.

          Maintenance: 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15: 15%.

          Note: The time for useful life and depreciation shall be those that
          are established by accounting techniques applicable to oil operations.

23.2.5    The rate for annual lease is equal to the value provided for in Clause
          23 (number 23.2.3) of this Agreement, plus the one established in
          number 23.2.4 of this same Clause.

23.2.6    The rate for monthly or daily lease of equipment shall be equal to the
          provided for in Clause 23 (number 23.2.5) in this Agreement, divided
          by twelve (12) or by three hundred and sixty five (365), as
          appropriate.

23.2.7    No lease charge shall be made for "stand by," but it shall be charged
          to Private Parties.

23.2.8    The aforementioned lease rates do not include transport, installation,
          operation, lube and fuel costs, which shall be charged to the
          operation that the equipment is destined for.

23.2.9    The aforementioned lease rates shall be applied to the possible use of
          one hundred percent (100%) equipment and tools owned by the operation,
          THE ASSOCIATE or the Operator, and vice versa.

23.2.10   In every case, the Subcommittees shall recommend to the Executive
          Committee the use of leased equipment and may apply the rate system
          that the latter may recommend.

23.2.11   The lease rate for equipment shall be calculated in United States of
          America dollars, but for the respective collection, it shall be
          invoiced in Colombian pesos, at the rate that the Parties may agree
          to.

23.3      Rate for rental for warehouses and fixed assets

          For the calculation of the lease rate for warehouses that are the
          property of one of the Parties or of the Joint Account, for their
          complete or partial use, a procedure shall be followed which shall be
          agreed to by the respective Subcommittee.

CLAUSE 24 - CONTRIBUTIONS IN KIND

ECOPETROL or THE ASSOCIATE shall contribute in kind, those materials that they
may consider convenient, set forth in the agreements that may be established by
the Parties.
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                                                                              68

             PART III - ADMINISTRATIVE ASPECTS AND OTHER PROVISIONS

                        Section One - Executive Committee

CLAUSE 25 - CONDITIONS FOR FUNCTIONING

For the exercise of its functions, the Executive Committee shall fulfill the
conditions provided for in Clause 19 of The Contract, as indicated below:

25.1      The Executive Committee shall be alternately chaired by the Parties,
          beginning with ECOPETROL.

25.2      The Executive Committee shall name its Secretary, alternating between
          the persons designated by ECOPETROL and by THE ASSOCIATE. The Chair
          and the Secretary shall fall n the same Party.

25.3      The Executive Committee shall meet in an ordinary manner during the
          months of March, July and November, and in an extraordinary manner
          every time that the Parties and/ or the Operator may consider it
          necessary. At such meetings, the exploitation strategy being carried
          out by the Operator shall be reviewed, as well as the Development Plan
          and the immediate programs and plans. The Executive Committee may be
          attended by the advisors that each of the Parties may consider
          convenient, it being understood that each of the Parties shall bring
          along the smallest possible number of persons.

25.4      For the ordinary meetings of the Executive Committee, the
          representative entrusted with presiding the following meeting shall
          notify the other representatives (the principal and his alternates) of
          the other Party and of the Operator, with ten (10) days advance notice
          of the date of the meeting, the venue and the issues to be discussed
          (agenda).

25.5      Pursuant to Clause 18 (number 18.3) of The Contract, both for the
          regular meetings as well as the extraordinary meetings of the
          Executive Committee, the issues to be discussed that have not been
          included in the agenda may be considered during the meeting, prior
          acceptance by the representatives of the Parties on the Committee.

                          Section Two - Sub Committees

CLAUSE 26 - CREATION OF THE SUBCOMMITTEES

In development of the function provided for in Clause 19 (number 19.3.4) of The
Contract, the Executive Committee may create the advisory Subcommittees that it
may consider necessary. In any case, the Executive Committee shall designate a
Technical Subcommittee and Financial Subcommittee.

These Subcommittees shall be the organizations established to control and define
the technical, financial and legal considerations of The Contract before the
Executive Committee and shall be governed by The Contract and this Agreement.
Each Subcommittee shall establish its own internal regulation, approved by the
Executive Committee.

CLAUSE 27 - RIGHTS AND OBLIGATIONS
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                                                                              69

27.1      Set forth in Clause 10 of The Contract, the Operator shall conduct the
          Joint Operations itself, or through its contractors, under the overall
          guidance of the Executive Committee. In any event, the Operator shall
          be responsible for the Joint Operation, set forth in the provisions of
          The Contract.

27.2      The following are among the Operator's obligations:

27.2.1    The preparation, presentation and implementation of the Development
          Plan, the Budgets and Exploration and Exploitation Programs, as well
          as for the approval of expenses.

27.2.2    The direction and control of all statistics and accounting services.

27.2.3    Planning and obtaining all services and materials required for the
          proper development of the Joint Operation.

27.2.4    Providing all the technical skill and consulting required for the
          efficient development of the Joint Operation.

27.2.5    Planning the tax effects and fulfilling all tax obligations that may
          be derived from the operations performed and providing the timely
          report to the Parties for the proportion that corresponds to each of
          them.

27.2.6    Establishing a bank account for the exclusive management of the Joint
          Account resources.

27.3      The Operator may not establish any encumbrance whatsoever on the
          properties of the Joint Operation.

27.4      The resignation or removal of the Operator may be made without
          prejudice of any right, obligation or responsibility acquired during
          the time in which the Operator acted as such; if the Operator resigns
          or is removed before fulfilling the obligations established in The
          Contract, it may not charge the Joint Account for the costs and
          expenses in which it incurred on account of the change. But if the
          Executive Committee were to approve them, these charges and expenses
          may then be charged to the Joint Account.

27.5      Once the Operator is notified of his removal or of the acceptance of
          its resignation, for the transfer or responsibilities, ECOPETROL shall
          audit the Joint Account and shall perform an inventory of all of the
          properties of the Joint Operation. Such inventory shall be used for
          purposes or return and accounting for the procedure of such transfer
          or responsibilities. All costs and expenses incurred with respect to
          such inventory and audit shall be for the account of the Joint
          Account.

27.6      The Operator shall not be responsible for any loss or damage on
          account of the Joint Operation, unless such damages or losses are the
          result of:

27.6.1    Gross negligence by the Operator

27.6.2    Failure to obtain and maintain any of the insurance required in Clause
          33 of The Contract, except when the Operator has made all possible
          efforts to obtain it and maintain them, and the results of such
          efforts have been fruitless, a situation which the Operator must first
          communicate to the Parties in writing.
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                                                                              70

                      Section Four - Contracting Procedure

CLAUSE 28 - SUPPLIER REGISTRATION AND BIDDERS LIST

28.1      It shall be the Operator's responsibility to maintain an updated
          registration of vendors, classified pursuant to the various activities
          that the operation may require, as well as to establish the
          qualification criteria for the firms to be included in the bidders'
          list. The respective Subcommittee may request a review of the criteria
          before approving the bidders' list.

28.2      ECOPETROL may review the Operator's vendor registration on an annual
          basis and may suggest to it, through the respective Subcommittee, that
          vendors be included or excluded from the registration. Despite the
          above, ECOPETROL may, at any time, by means of a request that duly
          explains the motives, request the withdrawal of persons or entities
          from the registration.

28.3      In all cases that imply soliciting proposals to contract, the vendor
          registration shall be consulted, recording a statement on the
          corresponding document.

28.4      The persons or entities that are included in the vendor registration
          shall accredit technical, moral and economic solvency, in addition to
          the experience, not only of the company but that of its partners as
          well, and also that of its technicians that are permanently hired by
          it.

28.5      Set forth in the aforementioned criteria, the Operator shall establish
          a registration of qualified vendors, which shall be updated
          periodically, set forth in their performance.

28.6      In the Fields that are exploited under the sole risk, THE ASSOCIATE
          shall have the right that is provided for in Clause 10 (number 10.6)
          of The Contract.

CLAUSE 29 - BIDDING PROCESS

29.1      Responsibility: The Operator shall be responsible for preparing the
          Request for Proposals in due time, and shall submit it to
          consideration by the corresponding Subcommittee.

29.2      The list of those invited to submit proposals shall be prepared based
          on the information in the Registration of Vendors.

29.3      In every bidding process, the Operator shall invite at least three
          companies. If this were not to be possible, a statement shall be made
          with respect to the justification in the report of recommendations to
          the respective Subcommittee.

29.4      It shall be endeavored not to invite more than six (6) companies, in
          order to avoid additional costs in the assessment of the proposals
          and, similarly, to provide a greater opportunity to the participating
          companies to successfully obtain the respective contract.

29.5      All other factors being the same, the order of priorities to be
          included in the list of bidder shall be as follows: - Companies
          registered and with headquarters in the department or departments
          where the Commercial Field or Fields are located, but with a branch
          established in such department. - Colombian companies whose
          headquarters are outside the department or departments where the
          Commercial Field or Fields are located, but with a branch established
          in such department. - Foreign companies with a branch in Colombia. -
          Foreign companies that do not have a branch in Colombia.
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                                                                              71

29.6      In the list of companies to be invited to submit proposals, those
          companies that are technically and commercially qualified and that
          have not had the opportunity to participate in similar bids in the
          past shall also be kept in mind.

29.7      The Operator shall prepare the bid documents and shall submit these to
          the consideration of the respective Subcommittee with sufficient
          advance notice.

29.8      It shall be clearly expressed in the bidding documents that:

29.8.1    Cost shall be one of the criteria to be considered, though not the
          sole one, for the award of the contract;

29.8.2    The assessment of the bid shall bear in mind other factors other than
          cost, which shall be included in the bid documents;

29.8.3    All proposals that exceed the range of real cost for this activity
          shall be disqualified;

29.8.4    The proposals are to be submitted set forth in the terms of the
          invitation, and the failure to observe this requirement may lead to
          not being considered as valid proposals;

29.8.5    The request for proposals shall include a table with the details of
          the prices which is to be filled out by the bidders, in order to
          facilitate comparing the proposals;

29.9      The list of bidders shall be reviewed and approved by the Technical
          Subcommittee before the invitations to bid are sent out.

29.10     Once the bid documents have been distributed, the following rules
          shall apply:

29.10.1   Any information, modification or clarification of the original bid
          documents shall be sent out to all the bidders. The Procurement and
          Supplies Department of the Operator shall be responsible for these
          changes. The changes shall be duly justified by means of a document in
          writing.

29.10.2   No bidders can be added or deleted from the list of bidders originally
          approved by the corresponding Subcommittee.

29.10.3   Any bidder that does not abide by the bid procedures and rules, or
          that may violate the Operator's business ethics code shall be
          disqualified immediately.

29.11     The content and format for all of the materials in a request for
          proposals shall fulfill the requirements of the procedure known as
          "Documentation format submitted to the Technical Subcommittee" and
          shall be submitted to the consideration of the corresponding
          Subcommittee.

29.12     The internal approvals that are required by the Operator and by
          ECOPETROL depend on the estimated value of the contract, set forth in
          the internal procedures of the former and the latter.

CLAUSE 30 - AWARDS OF CONTRACTS AND PURCHASE ORDERS

30.1      The Operator is responsible for awarding bids for contracts and
          purchase orders. For this purpose, it shall submit its recommendation
          to the respective Subcommittee, subject to the procedures that have
          been established by the Executive Committee for this purpose.
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                                                                              72

30.2      Value: The awards shall be based on the best global (overall) value.
          The lowest price does not always mean the best proposal, since, in
          addition to the amount, other aspects are borne in mind, such as
          scheduling and quality, experience, reputation and the Colombian
          content submitted by the bidder. In the event that the contract is not
          awarded to the lowest amount proposal, such decision should be
          justified.

30.3      Justification in writing: The Operator shall present a recommendation
          in writing to the corresponding Subcommittee, justifying the contract
          and purchase order award, subject to the procedures that are
          established for such purpose by the Executive Committee. Such
          justification shall include a summary of the commercial and technical
          assessments of the proposals received and the basis for the Operator's
          recommendation.

30.4      Direct contracting: Direct contracting shall be supported and
          presented in writing to the respective Subcommittees, clearly
          identifying their justification. The Operator may contract directly,
          without having to go through a bidding process, in any of the
          following events:

30.4.1    When only one vendor can be obtained, within the time frame required
          to satisfy the project schedule;

30.4.2    When an item or service Contract before in a direct manner does not
          have an equivalent or satisfactory substitute;

30.4.3    When a service or work is derived from a previous one or is an
          extension to an existing contract or work order issued during the last
          ninety days and the commercial conditions are not modified, or when
          the evidence stemming from a recent bid justify contracting without
          undergoing a bidding process;

30.4.4    When the Operator has standardized a specific item or service for all
          of the applications within its are of operations and there is only one
          known vendor for such item or service;

30.4.5    When it is considered that a sole item or service fulfills the
          Operator's requirements within a specified delivery time period;

30.4.6    When an item or service is obtained for testing or assessment;

30.4.7    When there is an emergency. The Operator shall notify ECOPETROL at the
          corresponding Subcommittee's immediately next meeting after such
          emergency.

30.5      Partial awards: A bid can be awarded partially to two or more bidders,
          provided that all of the following conditions are met:

30.5.1    The possibility of a partial award is specifically indicated in the
          request for proposals;

30.5.2    The successful bidders have fulfilled the requirements established in
          the Request for Proposals;

30.5.3    The partial award represents the best value for the items or services
          that shall be obtained;

30.5.4    Any change in the scope of work or in the award criteria shall be
          clearly communicated to all of the bidders before the partial award.

30.6      Rejection of proposals: The Operator may declare a bid null and void
          when the respective Subcommittee finds motives to justify such
          decision and/ or when the proposals are out of line with the actual
          costs.

30.7      Notification to the unsuccessful bidders: The result of the award
          shall be communicated in writing to all participants.
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                                                                              73

30.8      Clarification: During the assessment period, the Operator may request
          clarification from the bidders. The Technical Subcommittee shall
          approve the significant commercial clarifications. No new approval
          shall be required by the respective Subcommittee when clarifications
          refer to technical issues. Clarifications that may affect the bid
          shall be communicated in writing to all of the bidders.

CLAUSE 31 - MANAGEMENT OF CONTRACT AND WORK ORDER

31.1      The Operator shall be responsible for managing the contracts and
          purchase orders during their execution.

31.2      The bases for contract or purchase order management are their
          execution itself, which shall include all of the agreed- to prices,
          schedule and quality requirements.

31.3      The Operator shall maintain a written record of all modifications to
          the original contract. The cost impact for each change to the contract
          shall be assessed by the Operator and negotiated with the vendor or
          contractor before the contract price is changed.

31.4      Any change in the initially approved value of the contract shall be
          subject to consideration by the respective Subcommittees and, if
          required, shall be approved by the Executive Committee, set forth in
          the procedure that is established for such purpose by the Executive
          Committee.

31.5      The Operator is responsible for cost control.

31.6      Any additional work or job under the terms of the contract shall be
          authorized by the Operator's Project Manager or Operations Manager,
          who shall consult with the Procurement and Logistics Manager or with
          the departments that fulfill these functions, before making any
          modification to the contract. This dual responsibility ensures control
          for the integrity of the change process. In the event that the changes
          imply modifications to the text of the contract, these shall be
          submitted to approval by the Operator's Legal Department.

31.7      Quality control shall be managed with the QA/QC (Quality Control /
          Quality Assurance) process, which shall include the independent
          inspection and verification of the work and shall be performed at
          appropriate moments during the execution of the work.

31.8      The processes used by the Operator for cost control shall be described
          in a cost control procedure.

31.9      The Parties shall receive a monthly report on work progress, with cost
          documentation and schedule, including the analysis of the variations
          with respect to the originally agreed- to Budget for the main
          contracts and purchase orders.

31.10     Once the main contracts and purchase orders have been executed, a
          detailed analysis shall be undertaken to assess the experiences
          learned that could be applied to similar contracts or work orders, and
          also in order to allow for improvements in their control.

CLAUSE 32 - INSURANCE

For purposes of Clause 33 in the Contract, with respect to Insurance, the
Operator shall deliver the following information to ECOPETROL, for the latter to
insure fifty percent (50%) of the assets corresponding to the Commercial Field:
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                                                                              74

32.1      Description of the assets, differentiated, inasmuch as possible, as
          follows:

32.1.1    Offices, camps and other non- industrial facilities

32.1.2    Collection stations, specifying tanks (number and capacity) and other
          equipment.

32.1.3    Diverse warehouses and other facilities

Note:     The external pipelines and the wells are not insured under the fire
          policy, since, in this case,

ECOPETROL assumes the risk directly.

32.2 Value of the assets, indicating only the value of the part that belongs to
ECOPETROL and indicating the percentage of the value that it represents.

32.2      Geographic location.

32.4      Date of receipt, as of which the risk is transferred to the Joint
          Operation.

CLAUSE 33 - FORCE MAJEURE OR ACTS OF GOD

33.1      Clause 34 of The Contract only suspends fulfillment of those specific
          obligations whose performance becomes impossible on account of events
          that constitute force majeure or acts of God. Similarly, it only
          interrupts the obligations on the assets, properties, production
          facilities, etc. that are affected by the aforementioned circumstance.
          The affected Party shall notify the termination of the force majeure,
          providing details on the magnitude of the damages and the corrective
          actions that affect the system.

33.2      If one of the Parties cannot, on account of force majeure or acts of
          God, fulfill the obligations of this Contract, it shall notify this to
          the other Party for its consideration, within ten (10) working days
          following the date on which the cause was produced, specifying the
          causes of its impediment, the estimated period of suspension of the
          activities and the way in which it affects fulfillment of the
          corresponding affected obligation. The other Party shall respond in
          writing, either accepting the cause or not for force majeure or acts
          of God.

33.3      The Party affected by the cause for force majeure or acts of God shall
          recommence fulfillment of the affected obligations within a reasonable
          term once such cause has disappeared, for which it shall advise the
          other Party within ten (10) working days after the cause has
          disappeared. In the event of partial or delayed execution of the
          obligation affected by force majeure or acts of God, the Party that is
          obligated to its fulfillment shall exert its best efforts to execute
          it within the terms and conditions agreed- to between the Parties in
          this Contract, having to continue with the fulfillment of the
          remaining contractual obligations.

33.4      If the force majeure cause were to affect the execution of any of the
          Exploration Work agreed to as part of the exploratory activities that
          Clause 5 of this Contract refers to, the guarantee that supports the
          fulfillment of the affected Exploration Work shall be extended for the
          same period of time that the impediment may last, which were not
          executed during this period of time. For such purpose, THE ASSOCIATE
          shall extend or substitute such guarantee, as the case may be.
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                                                                              75

CLAUSE 34 - REVISION OF THE OPERATIONS AGREEMENT

This Operations Agreement may be revised when the Parties consider it convenient
to do so, at the request of any of the Parties. For its revision or
modifications the Executive Committee is fully empowered to do so. This
Operations Agreement shall be valid until one of the following events occurs:

34.1      Termination of The Contract

34.2      Agreement in writing between the Parties

34.3      The signing of a new Agreement.

In faith of the previously mentioned, the Parties sign the present Operations
Agreement, in contract paper of ECOPETROL on the twentieth (20) day of the month
of December of the year two thousand two (2002).

                         EMPRESA COLOMBIANA DE PETROLEOS
                                    ECOPETROL

                               (Signed) illegible
                             ALBERTO CALDERON ZULETA
                                    President

                           HARKEN DE COLOMBIA LIMITED

                               (Signed) illegible
                         GABRIEL GUSTAVO CANO VELASQUEZ
                         Principal Legal Representative

                                    WITNESSES

             (Signed) Illegible                (Signed) Illegible
            VICTOR EDUARDO PEREZ                   ALBERTO TOVAR
<PAGE>

                                                                              76

                                        ANNEX C - LINEAMENTS FOR THE PREPARATION
                                                         OF THE DEVELOPMENT PLAN

                    ANNEX C - LINEAMENTS FOR THE PREPARATION
                             OF THE DEVELOPMENT PLAN

The present Annex establishes the main aspects that must be considered for the
preparation of the initial Development Plan and of the programs, projects and
annual Budget for each of the Fields discovered in the development of The
Contract, which shall be subject to the consideration of ECOPETROL. In this
document the general conditions of the Development Plan are described without
including a detailed explanation of the format or of the level of detail to be
presented, further than the coverage of the main issues identified herein.
Additional information may be presented in each Development Plan as it is
considered appropriate.

A.   INITIAL DEVELOPMENT PLAN

1.   Outline of the Development Strategy

     Summary of the background of the Field, of the development strategy and of
     the most relevant aspects of the economic and commercial conclusions.

2.   Description of the Field

     Includes the geological synthesis of the Reservoirs discovered and the
     determination of the geometry of the field. In this section the area
     capable of producing Hydrocarbons of the different Reservoirs is determined
     and the commercial area is delimited, using the plain Gauss coordinates, by
     the projection in surface of the lowest level of Hydrocarbons commercially
     exploitable.

3.   Reservoir Engineering

     This implies the evaluation of the properties of the rocks and of the
     fluids contained in the Field Reservoirs and other analysis that conduce
     to:

     a)   Determine the original volumes of Hydrocarbons in each Reservoir, the
          tested, probable and possible Reservoirs of the Field (in each case,
          based on its useful life, independently from the duration of the
          Exploitation Period established in The Contract) and discriminated by
          Liquid Hydrocarbons and Gas Hydrocarbons.

     b)   Establish the forecast for production of Hydrocarbons that THE
          ASSOCIATE expects to produce during each year of exploitation of the
          Field, both for the tested Reservoirs and for the tested Reservoirs
          plus those probable.

     c)   Define the strategy for exploitation so that the production profile,
          in the case of tested Reservoirs, achieves the Maximum Degree of
          Productive Efficiency (MER) or the top of the production, in that case
          in which THE ASSOCIATE identifies restrictions to achieve he MER, and
          expose the preliminary strategy of exploitation of the probable
          Reservoirs.
<PAGE>

                                                                              77

     d)   Specify the program of obtainment of information to be executed for
          the adequate administration of the Reservoirs.

4.   Criteria of the Design of the Development Plan

     Description of the logics and coherence of the Development plan and
     synopsis of the criteria, bases and presumptives taken into consideration
     for the design of the plan.

5.   Development Drilling and Completion

     Back ground of the main aspects that refer to the drilling and completion
     of Development Wells.

6.   Surface Installations

     Presentation of the options of development that were taken into account,
     the justification of the option chosen, its general specifications, key
     aspects and diagram of each of the Production Systems; Treatment and
     Storage; Transportation and Transfer, and of Support to the production of
     Hydrocarbons that come from the Field.

7.   Construction and Assembly

     Explanation of the strategy for the Development drilling and the
     construction and assembly of the surface facilities and the assurance of
     the quality.

8.   Operation and Maintenance

     General Description of the scheme and logistics of the operation with its
     corresponding proposal of the Organizational Letter for the handling of the
     field with a background of the contingency plans for the control of the
     critical factors.

9.   Abandonment of the Field and Restoration of the Area

     Synthesis of the program, methods and practices foreseen for the
     abandonment of the wells and the withdrawals of the surface facilities and
     alternatives considered for the provision of funds for the abandonment of
     the field and the recuperation of the area

10.  Economic and Commercial Aspects.

     They include the evaluation of the commercialization options of the
     Hydrocarbons discovered, the economic viability of the Field and the
     reasons why such alternative was chosen. It must also include:

     a)   Estimate of the Direct Exploration Costs incurred in before the
          presentation of the initial Development Plan.
<PAGE>

                                                                              78

     b)   Annual budget and chronogram for disbursements on account of capital
          expenses (investments) and operational (Direct and Indirect Expenses)
          in current dollars during the exploitation of the Field, with relation
          to the Reservoirs tested and the Reservoirs tested plus those
          probable.

     c)   Main economic indicators obtained in the economic evaluation and
          optimization carried out for the determination of the commerciality of
          the Field.

     d)   When it is necessary to unify the field or when the design of the
          Development Plan suggests the need to share the production facilities
          of the Field with other Fields discovered in the development of the
          same Contract, or of another Association Contract, the proposal of a
          unified exploitation plan that THE ASSOCIATE proposes to submit for
          the consideration of others interested and/or the proposal of the
          agreement to share facilities or other assets, including cost
          assignments and other distributions necessary, must be attached.

B.   PROGRAMS, PROJECTS AND ANNUAL BUDGET

The Operator, or THE ASSOCIATE if concerning a field exploited under the
modality of only risk, pursuant to that established in The Contract and in the
Operating Agreement (Annex B), shall prepare and present to the Parties the
proposal of the programs, projects and Budget for the following calendar year,
pursuant to the initial Development Plan accepted for the field.

For all effects of the presentation of the annual programs and projects, by
program it is understood the group of projects to be developed, or that by their
technical, operational and administrative characteristics deserve to be
controlled in a joint manner (for example: Building of Battery X). Each program
includes the presentation of the projects to be carried out, their sequence of
execution and the general conditions to which they must abide by to obtain a
determined result.

By project it is understood the group of activities proper of a work or an
specific necessary work for the development and production of the field.
(example: Civil work, Access roads, Facilities, Separation and Treatment System,
etc.). Each project shall be duly supported with the explanatory documents and
the technical and economic specifications.

The annual Budget shall be divided into Expense Budget and Investment Budget.
For all effects of the presentation, the Expense Budget shall be divided into
programs, groups and concepts of expenses and that of Investments in programs
and projects, in numerical order and continuous within each section of the
Budget. With respect to the Expense Budget, the programs and projects shall be
divided into expense groups and these into concept of expenses. By expense
groups it is understood the purpose or object of the expense (for example
Personnel Expenses) and by concept of expenses the specific assignment granted
(for example: Salaries, Social Benefits).

              EXAMPLE OF THE INDEX OF THE INITIAL DEVELOPMENT PLAN

1.   Development Scheme of the field

     .    History and Location of the Field

     .    Development Strategy
<PAGE>

                                                                              79

     .    Production Curve and Investment and Expense Program

     .    Commercial and Economic Conclusions

2.   Description of the Field

     .    Geology

          .    Regional Frame

          .    Local Frame

          .    Structural

          .    Geology of Reservoirs (Stratigraphy, Sedimentology and factors
               that control the quality of the reservoir)

     .    Geophysics - Seismic Information

          .    Seismic Data Base

          .    Seismic Data Processing

          .    Analysis and Interpretation of Seismic Data

     .    Petrophysics

          .    Subsurface Logging Information

          .    Data on recovered Nucleus

          .    Calibration of the information on Logs and Nucleus

          .    Analysis and Interpretation of Petrophysical data

     .    Maps and Geological Patterns

          .    Isopachous

          .    Structural

          .    Isoporosity

          .    Others
<PAGE>

                                                                              80

3.   Reservoir Engineering

     .    Basic Reservoir Information

          .    Rock Properties

          .    Fluid Properties

          .    Analysis of Nucleus and PVT

          .    Gas-Oil and Oil-Water Contacts

          .    Productivity of the wells

     .    Simulation of Reservoirs

          .    Models of Reservoirs

          .    Predictions

     .    Original Hydrocarbons "in-situ". OOIP and OGIP

          .    Uncertainties

     .    Calculation of Reservoirs (scenarios for Tested, Probable and Possible
          Reserves)

     .    Production Forecasts (of Tested Reservoirs and of Tested plus
          Probable)

     .    Exploitation Strategy

          .    Development Wells Spacing (Productive and Injectors)

          .    Pressure Maintenance Projects

     .    Conservation and/or Use of Gas

     .    Administration of Reservoirs and Obtainment of Data

          .    Well Testing

          .    Pressure Measurement and Fluid Sampling

          .    Coring and Logging

          .    Production Behavior
<PAGE>

                                                                              81

          .    Production Optimization

     .    Projects of Improved Recovery

     .    Opportunities for Future Developments

          .    Well Testing

4.   Criteria of the Design of the Development Plan

     .    Logics of the Design

     .    Regulations and Standards Observed

     .    Environmental Criteria

          .    Environmental Diagnostic and Impacts

          .    Operational Limits

     .    Functional Criteria

          .    Production Mechanisms of the Reservoirs

          .    Flow Rates and Production Capacities

          .    Useful Life

          .    Specifications of the fluids produced

     .    Geotechnical Criteria

5.   Development Drilling and Completion

     .    Development wells

          .    Location

          .    Design of the Wells (pursuant to the purpose of the well, type
               and trajectory of the hole.

          .    Drilling Strategy and Chronogram

          .    Critical success factors (technical and operational)
<PAGE>

                                                                              82

     .    Completion of Wells under Development

          .    Design of the completion of Producer and Injector Wells

          .    Artificial Lifting

     .    Subsequent Operations

          .    Overhauling

          .    Stimulation

6.   Surface Installations (Diagram, Specifications and Key Aspects)

     .    Production System

          .    Systems considered

          .    Justification of the system(s) proposed

          .    Sub-system of Pressure Maintenance

          .    Improved Recovery

     .    Treatment and Storing System

          .    Gathering

          .    Separation and Treatment

          .    Measurement and Sampling

          .    Water, gas and impurities disposition

          .    Storing

          .    Pumping

     .    Support Systems

          .    Safety and Control of the Production

          .    Telecommunications

          .    Power Generation

          .    Camping, Warehouses, workshops, Offices and Transportation
               Terminals
<PAGE>

                                                                              83

     .    Transportation System and Transference of Hydrocarbons.

7.   Construction and Assembly

     .    Strategy

          .    Coordination of Activities

          .    Permissions and Licenses required

          .    Construction and Assembly Chronogram

          .    Required Services

     .    Quality Assurance and Control

8.   Operation and Maintenance

     .    Proposal of an Organizational Letter of the Field

     .    Operational Limits of the surface and subsurface systems.

     .    General Vision of the Logistics of the Operation

          .    Production

          .    Health, Safety and Environmental Monitoring

          .    Relations with the Community and the Government

          .    Personnel lodging

          .    Warehouses

          .    Materials and Supplies

          .    Displacement and Transportation

          .    Communications

          .    Others
<PAGE>

                                                                              84

     .    Contingency Plans

          .    Evaluation of Operational Risks

          .    Organization and Training for Emergencies Response

9.   Abandonment of the field and Restoration of the Area

     .    Methods and Practices of Abandonment and withdrawal of installations

          .    Development Wells (Producers and Injectors)

          .    Surface Installations

     .    Restoration and recuperation of the area

10.  Economic and Commercial Aspects

     .    Commercialization

          .    Market Opportunities and Options considered

          .    Justification of the Option(s) proposed

          .    Estimation of Incomes

          .    Critical success factors

     .    Direct Exploration Costs caused before the design of the Plan

          .    Acquisition of Seismic Information

          .    Exploratory Wells

     .    Estimation of Capital Costs and Operation Expenses

          .    Investments (Distributed between the main operations or goods)

          .    Direct Expenses (Distributed between the main activities)

          .    Indirect Expenses
<PAGE>

                                                                              85

     .    Disbursement Chronograms

          .    Investments

          .    Expenses

          .    Total

     .    Economic Analysis and Evaluation of the project

          .    Economic Indicators

          .    Sensibility Analysis

          .    Exploratory Wells<PAGE>

                                                                   Exhibit 10.15
                                                                   -------------

                           PURCHASE AND SALE AGREEMENT

                                      dated

                                January 31, 2002

                                     between

                            REPUBLIC RESOURCES, INC.

                                       as

                                     Seller

                                       and

                            HARKEN ENERGY CORPORATION

                                       as

                                      Buyer
<PAGE>

                                TABLE OF CONTENTS

1.  PURCHASE AND SALE........................................................ 1
         1.1.  PURCHASE AND SALE............................................. 1
         1.2.  INTERESTS..................................................... 1
         1.3.  RESERVED INTERESTS............................................ 2
         1.4.  EFFECTIVE TIME................................................ 2

2.  PURCHASE PRICE........................................................... 3
         2.1.  PURCHASE PRICE................................................ 3
         2.2.  ADJUSTMENTS TO PURCHASE PRICE................................. 3

3.  REPRESENTATIONS AND WARRANTIES........................................... 4
         3.1.  REPRESENTATIONS AND WARRANTIES OF SELLER...................... 4
         3.2.  REPRESENTATIONS AND WARRANTIES OF BUYER....................... 5

4.  COVENANTS AND AGREEMENTS................................................. 6
         4.1.  COVENANTS AND AGREEMENTS OF SELLER............................ 6
         4.2.  COVENANTS AND AGREEMENTS OF BUYER............................. 7

5.  TITLE MATTERS............................................................ 8
         5.1.  DEFENSIBLE TITLE.............................................. 8
         5.2.  TITLE DEFECT ADJUSTMENTS...................................... 9
         5.3.  CASUALTY LOSS................................................. 9
         5.4.  CONSENTS..................................................... 10

6.  ENVIRONMENTAL MATTERS................................................... 10

7.  TAX MATTERS............................................................. 11

8.  CONDITIONS TO CLOSING................................................... 11
         8.1.  SELLER'S CONDITIONS.......................................... 11
         8.2.  BUYER'S CONDITIONS........................................... 11

9.  CLOSING................................................................. 12
         9.1.  DATE OF CLOSING.............................................. 12
         9.2.  PLACE OF CLOSING............................................. 12
         9.3.  CLOSING OBLIGATIONS.......................................... 12

10. OBLIGATIONS AFTER CLOSING............................................... 13
         10.1. POST-CLOSING ADJUSTMENT PROCEDURE............................ 13
         10.2. FILES AND RECORDS............................................ 14
         10.3. FURTHER ASSURANCES........................................... 14
         10.4. ASSUMPTION OF OBLIGATIONS.................................... 14
         10.5. INDEMNIFICATION.............................................. 15
<PAGE>

11. TERMINATION OF AGREEMENT................................................ 15
         11.1.  TERMINATION................................................. 15
         11.2.  LIABILITIES UPON TERMINATION OR BREACH...................... 15

12. MISCELLANEOUS........................................................... 16
         12.1.  EXHIBITS.................................................... 16
         12.2.  EXPENSES.................................................... 16
         12.3.  NOTICES..................................................... 16
         12.4.  WIRE TRANSFER INSTRUCTIONS.................................. 17
         12.5.  AMENDMENTS.................................................. 17
         12.6.  ASSIGNMENT.................................................. 17
         12.7.  CONDITIONS.................................................. 17
         12.8.  COUNTERPARTS................................................ 17
         12.9.  GOVERNING LAW............................................... 17
         12.10. ENTIRE AGREEMENT............................................ 18
         12.11. PARTIES IN INTEREST......................................... 18
         12.12. SURVIVAL.................................................... 18
         12.13. ARBITRATION................................................. 18

                  EXHIBIT NO.    DESCRIPTION
                  -----------    -----------

                   EXHIBIT A     Description of Seller's oil and gas wells
                   EXHIBIT B     Seller's oil and gas leases
                   EXHIBIT C     Contracts and agreements
                   EXHIBIT D     Contingent Payment Agreement
                   EXHIBIT E     Form of assignment, conveyance and bill of sale
                   EXHIBIT F     Debenture Exchange Subscription Agreement
                   EXHIBIT G     Registration Rights Agreement

                                     (ii)
<PAGE>

                           PURCHASE AND SALE AGREEMENT

     This Purchase and Sale Agreement (the "Agreement"), dated January 31, 2002,
is between Republic Resources, Inc. ("Seller"), a Nevada corporation and Harken
Energy Corporation ("Buyer"), a Delaware corporation, and is made with reference
to the following agreed facts:

     A. Seller holds an undivided interest in various oil and natural gas
properties in the states of Texas and Louisiana in which there were, as of
January 1, 2002, estimated proved reserves of oil and natural gas totaling
approximately 3.1 Bcfe.

     B. As of the date of this Agreement, there are outstanding $2,645,500 of
Seller's 11% Convertible Debentures ("Debentures") and approximately $5.1
million in Seller's Series C Redeemable Preferred Stock, including accrued but
unpaid dividends ("Series C Preferred").

     C. Seller intends to sell and transfer to Buyer or Buyer's Subsidiary all
of Seller's interests in certain oil and natural gas reserves in accordance with
the terms and conditions set forth below and to have the purchase price paid to
the holders of its outstanding Debentures and Series C Preferred.

     IN CONSIDERATION OF the mutual promises contained herein, the benefits to
be derived by each party hereunder and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Buyer and Seller
agree as follows:

                              1. PURCHASE AND SALE.

     1.1. PURCHASE AND SALE.

     Seller agrees to sell and convey and Buyer agrees to purchase and pay for
the all of Seller's right, title and interest in and to those certain oil and
natural gas properties (the "Interests" as defined in Section 1.2), subject to
the terms and conditions of this Agreement.

     1.2. INTERESTS.

     Subject to the reservations set forth in Section 1.3, all of Seller's,
right, title and interest in and to the following shall herein be called the
Interests:

          (a) The oil and gas wells described in EXHIBIT A hereto (the "Wells"),
                                                 ---------
     together with all oil, gas and mineral production from the Wells;

          (b) The leasehold estates created by the leases, licenses, permits and
     other agreements described in EXHIBIT B, (the "Leases"); together with all
                                   ---------
     overriding royalty interests, production payments and other payments out of
     or measured by the value of oil and gas production;

          (c) All oil, gas, casinghead gas, condensate, distillate, liquid
     hydrocarbons, gaseous hydrocarbons and all products refined therefrom,
     together with all minerals produced in association with these substances
     (collectively called the "Hydrocarbons") in and under and which may be
     produced and saved from or attributable to the Leases or Wells, and all
     rents, issues, profits, proceeds, products, revenues and other income from
     or attributable thereto;
<PAGE>

          (d) All of the personal property, fixtures and improvements
     appurtenant to the Wells, or the Leases or used or obtained in connection
     with the operation of the Wells, or the Leases or with the production,
     treatment, sale or disposal of hydrocarbons or water produced therefrom or
     attributable thereto, including without limitation, pipelines, disposal
     systems, gathering systems and compression facilities (the "Equipment")
     appurtenant to or located upon the Leases; and

          (e) All the property, rights, privileges, benefits and appurtenances
     in any way belonging, incidental to, or pertaining to the property,
     interests and rights described in Sections 1.2(a) through 1.2(d) including
     the Wells, the Leases and reserves of unproduced oil and natural gas in
     place, including, to the extent transferable, all exploration agreements,
     letter agreements, product purchase and sale contracts, surface leases, gas
     gathering contracts, processing agreements, compression agreements,
     equipment leases, permits, gathering lines, rights-of-way, easements,
     licenses, farmouts and farmins, options, orders, pooling, spacing or
     consolidation agreements and operating agreements and all other agreements
     relating thereto, including those listed on EXHIBIT C (the "Contracts");
                                                 ---------
     and

          (f) All of the files, records, data (including seismic data and
     related information) and other documentary information maintained in the
     normal course of business by Seller pertaining to the Wells, Leases,
     Equipment, Hydrocarbons and the Contracts (collectively, the "Data") in the
     format maintained by Seller. The Data shall not, however, include any
     information, which, if disclosed, would cause Seller to breach any contract
     or agreement. Seller will use reasonable efforts to obtain any required
     consent to disclose such information.

     1.3. RESERVED INTERESTS.

     Seller shall reserve and except from the sale and conveyance of the
Interests in favor of itself, its successors and assigns the following:

          (a) All accounts receivable attributable to the Interests that are, in
     accordance with generally accepted accounting principles, attributable to
     the period prior to the Effective Time;

          (b) All claims and rights relating to overpayments of costs and
     expenses attributable to periods prior to the Effective Time, including,
     without limitation, the right to initiate, prosecute or participate, at
     Seller's sole cost and expense, in all audits, audit claims and tax claims
     or proceedings relating to or including periods prior to the Effective
     Time, regardless of when commenced, arising under applicable law, operating
     or product sale agreements or otherwise, and to recover all costs and
     expenses claimed or shown by such audits or proceedings as owing to the
     owner of the Interests for periods prior to the Effective Time; and

          (c) All rights, if any, to recover additional production or proceeds
     or requirements to refund monies attributable to such production or
     proceeds therefrom attributable to the Interests for any production month
     prior to the Effective Time, resulting from any adjustment to the net
     revenue interest attributable to the Interests in the applicable division
     orders.

     1.4. EFFECTIVE TIME.

     The purchase and sale of the Interests shall be deemed to be effective as
of January 1, 2002 at 12:01 a.m. at the location of the Interests (the Effective
Time).

                                       2
<PAGE>

                               2. PURCHASE PRICE.

     2.1. PURCHASE PRICE.

     The purchase price ("Purchase Price") for the Interests shall consist of
the following:

          (a) A number of shares of Buyer's $0.01 par value common stock (the
     "Common Stock") determined by dividing $2,645,500 by the average reported
     closing price for Buyer's common stock for the 20 trading days ending on
     the day before the Closing Date of this Agreement (the "Common Stock Value
     Per Share"), provided that under no circumstances shall the Common Stock
     Value Per Share be less than $1.00, such that no more than a maximum of
     2,645,500 shares of Buyer's common stock shall be issued;

          (b) The cash adjustment required for any adjustments described in
     Section 2.2(c) below (the "Cash Adjustment"); and

          (c) A "Contingent Payment" payable within 45 days of December 31, 2003
     which shall be made to holders of Seller's outstanding Series C Preferred .
     A description of the factors to be used to determine the amount of the
     Contingent Payment, the payees and other details concerning Buyer's
     obligation to pay the Contingent Payment are described in EXHIBIT D
                                                               ---------
     attached hereto and incorporated herein by reference (the "Contingent
     Payment Agreement").

     2.2. ADJUSTMENTS TO PURCHASE PRICE.

     The Cash Adjustment portion of the Purchase Price shall be adjusted at
Closing as follows:

          (a) The Purchase Price shall be adjusted upward by the following:

               (1) the value of any oil in storage above the pipeline connection
     as of the Effective Time and not previously sold by Seller that is
     attributable to the Interests, such value to be the actual amount received
     by Seller.

               (2) the amount of all expenditures; rentals and other charges; ad
     valorem, property, production, excise, severance and similar taxes based
     upon or measured by the ownership of property or the production of
     hydrocarbons or the receipt of proceeds therefrom; expenses billed under
     applicable operating agreements and, in the absence of an operating
     agreement, expenses of the sort customarily billed under such agreements
     paid by the Seller in connection with the operation of the Interests,
     attributable to the period after the Effective Time and paid before
     Closing, which shall be evidenced by billings, statements or other like
     written evidence;

               (3) an amount equal to all prepaid expenses attributable to the
     Interests that are paid by or on behalf of Seller that are attributable to
     the period after the Effective Time and paid before Closing, including
     without limitation cash calls for wells to be drilled in accordance with
     the Contracts;

               (4) any other amount agreed upon by Seller and Buyer; and

          (b) The Purchase Price shall be adjusted downward by the following:

                                       3
<PAGE>

               (1) proceeds received by Seller before Closing attributable to
     the Interests that are attributable to production sold from and after the
     Effective Time and received by Seller before Closing;

               (2) an amount equal to the sum of all Title Defect adjustments;

               (3) any other amount agreed upon by Seller and Buyer.

          (c) In the event of Cash Adjustment of the purchase price required by
     Sections 2.2(a) or (b), the net amount of any such adjustments shall be
     determined and Buyer shall pay to Seller, or Seller shall pay to Buyer, as
     appropriate, the net amount of any Cash Adjustment, to be paid at the
     Closing or, as described in Sections 8.3(b) and 9.1 not later than 90 days
     from the Closing Date of this Agreement.

                       3. REPRESENTATIONS AND WARRANTIES.

     3.1. REPRESENTATIONS AND WARRANTIES OF SELLER.

     Seller represents and warrants as of the date hereof and as of the Closing
Date to Buyer as follows:

          (a) The consummation of the transactions contemplated by this
     Agreement will not violate, or be in conflict with any provision of any
     agreement or instrument to which Seller is a party or by which it is bound.

          (b) Seller is a corporation duly organized, validly existing and in
     good standing under the laws of the State of Nevada, and is duly qualified
     to carry on its business in each state where the Interests are located, or
     where the ownership of the Interests located in such state require Seller
     to be so qualified.

          (c) Seller has all requisite corporate power and authority to carry on
     its business as presently conducted, and to perform its obligations under
     this Agreement. The consummation of the transactions contemplated by this
     Agreement will not violate, or be in conflict with, (i) any provision of
     its articles of incorporation or bylaws; (ii) any provision of any
     agreement or instrument to which it is a party or by which it is bound,
     noncompliance with which would have a material adverse effect upon Buyer's
     ownership or operation of the Interests, or upon any of the transactions
     contemplated by this Agreement, and (iii) to its knowledge, any judgment,
     decree, order, statute, rule or regulation applicable to Seller.

          (d) This Agreement has been, subject to the receipt of approval of
     Seller's stockholders which will be received before Closing, duly
     authorized, executed and delivered on behalf of Seller and constitutes the
     legal, valid and binding obligation of Seller, enforceable in accordance
     with its terms, subject, however, to the effects of bankruptcy, insolvency,
     reorganization and other laws for the protection of creditors.

          (e) Seller has incurred no liability, contingent or otherwise, for
     brokers or finders fees relating to the transactions contemplated by this
     Agreement for which Buyer shall have any responsibility whatsoever.

          (f) There are no bankruptcy, reorganization or arrangement proceedings
     pending, being contemplated by or, to the knowledge of Seller, threatened
     against Seller.

                                       4
<PAGE>

          (g) Seller has, and shall deliver to Buyer at Closing, Defensible
     Title to the Interests as defined in Section 5 below.

          (h) Seller is in compliance in all material respects with all the
     Contracts and with all operating agreements, productions sales agreements,
     and other material contractual obligations and commitments which relate to
     the Interests.

          (i) The Seller has, and to the best of the Seller's information and
     belief each operator of the Interests has, complied with all rules,
     regulations, laws, judgments, orders, or other restrictions applicable to
     the Interests and in the operations thereon, including any environmental
     laws, rules or regulations. The Seller has received no notice or other
     information from any operator of any of the Interests or any other person
     that is contrary to the preceding sentence.

          (j) To the best of Seller's information and belief, all holders of
     Debentures qualify as Accredited Investors under Rule 501 of Regulation D
     adopted under the Securities Act of 1933, as amended ("Securities Act").

     3.2. REPRESENTATIONS AND WARRANTIES OF BUYER.

     Buyer represents and warrants as of the date hereof and as of the Closing
Date to Seller as follows:

          (a) The consummation of the transactions contemplated by this
     Agreement will not violate, or be in conflict with any provision of any
     agreement or instrument to which Buyer is a party or by which it is bound.

          (b) Buyer is a corporation duly organized, validly existing and in
     good standing under the laws of the State of Delaware, and is duly
     qualified to the extent legally necessary to carry on its business in each
     state where the Interests are located, or where the ownership of the
     Interests located in such state require Buyer to be so qualified.

          (c) Buyer has all requisite corporate power and authority to carry on
     its business as presently conducted, and to perform its obligations under
     this Agreement. The consummation of the transactions contemplated by this
     Agreement will not violate, or be in conflict with, (i) any provision of
     its articles of incorporation or bylaws; (ii) any provision of any
     agreement or instrument to which it is a party or by which it is bound,
     noncompliance with which would have a material adverse effect upon its
     ownership or operation of the Interests, or upon any of the transactions
     contemplated by this Agreement, and (iii) to its knowledge, any judgment,
     decree, order, statute, rule or regulation applicable to Buyer.

          (d) This Agreement constitutes the legal, valid and binding obligation
     of Buyer, enforceable in accordance with its terms, subject, however, to
     the effects of bankruptcy, insolvency, reorganization and other laws for
     the protection of creditors.

          (e) Buyer has incurred no liability, contingent or otherwise, for
     brokers or finders fees relating to the transactions contemplated by this
     Agreement for which Seller shall have any responsibility whatsoever.

          (f) The Interests to be acquired by Buyer pursuant to this Agreement
     are being acquired by it for its own account for investment purposes and
     not for distribution within the meaning of any securities law. In acquiring
     the Interests, it is acting in the conduct of its own business and not
     under

                                       5
<PAGE>

     any specific contractual commitment to any third party, or any specific
     nominee agreement with any third party, to transfer to, or to hold title on
     behalf of, such third party, with respect to all or any part of the
     Interests.

          (g) There are no bankruptcy, reorganization or arrangement proceedings
     pending, being contemplated by or, to the knowledge of Buyer, threatened
     against Buyer.

          (h) The Common Stock of Buyer to be issued as part of the Purchase
     Price, shall, at the time of Closing, be duly authorized by all necessary
     corporate action and such securities shall be validly issued such that the
     holders to whom the securities shall be issued shall have the rights set
     forth on the certificates delivered by Buyer at the Closing.

                          4. COVENANTS AND AGREEMENTS.

     4.1. COVENANTS AND AGREEMENTS OF SELLER.

     Seller covenants and agrees with Buyer as follows:

          (a) Upon execution of this Agreement, Seller will make available to
     Buyer for examination at Seller's Grand Junction, Colorado office during
     normal business hours, all of Seller's title information, production
     information and other information relating to the Interests, including
     without limitation, accounting files, production files, land files, lease
     files, well files, division order files, contract files and marketing
     files, and, subject to the consent and cooperation of operators and other
     third parties, will cooperate with Buyer in Buyer's efforts to obtain, at
     Buyer's expense, such additional information relating to the Interests as
     Buyer may reasonably desire, to the extent in each case that Seller may do
     so without violating legal constraints or any obligation of confidence or
     other contractual commitment of Seller to a third party.

          (b) Seller shall use reasonable efforts to cause the operators of the
     Interests to permit Buyer's authorized representative to conduct, at
     Buyer's sole risk and expense, on-site inspections of the Interests. All
     such inspections shall be conducted at the sole risk, cost and expense of
     Buyer, and Buyer shall indemnify and defend Seller from and against any and
     all losses arising from such inspections.

          (c) During the period from the date of this Agreement to the Closing
     Date, Seller agrees, unless specifically waived by Buyer in writing, as
     follows:

               (1) Subject to the provisions of applicable operating and other
     agreements, Seller shall continue to administer the Interests in a good and
     workmanlike manner consistent with its past practices, and shall carry on
     its business with respect to the Interests in substantially the same manner
     as before execution of this Agreement.

               (2) Seller shall, except for emergency action taken in the face
     of risk to life, property or the environment, submit to Buyer for prior
     written approval, all requests for operating or capital expenditures and
     all proposed contracts and agreements relating to the Interests that
     involve individual commitments of more than $20,000.00 net to Seller's
     interest, or a cumulative total of $75,000 net to Seller's interest. Seller
     will timely notify Buyer of any and all such expenditures and commitments
     made which relate to the Interests.

                                       6
<PAGE>

               (3) Buyer acknowledges that Seller owns an undivided interest in
     all of the Interests, and Buyer agrees that the acts or omissions of the
     other working interest owners who are not affiliated with Seller shall not
     constitute a violation of the provisions of this Agreement, nor shall any
     action required by a vote of working interest owners constitute such a
     violation so long as Seller has voted its interest in a manner that
     complies with the provisions of this Section. To the extent that Seller is
     not the operator of any of the Interests, the obligations of Seller in this
     Agreement shall be construed to require that Seller use reasonable efforts
     (without being obligated to incur any expense or institute any cause of
     action) to cause the operator of such Interests to take such actions or
     render such performance within the constraints of the applicable operating
     agreements and other applicable agreements.

     4.2. COVENANTS AND AGREEMENTS OF BUYER.

     Buyer covenants and agrees with Seller that:

          (a) Buyer shall use its best efforts to ensure that as of the Closing
     Date it will not be under any material legal or contractual restriction
     that would prohibit or delay the timely consummation of such transaction.

          (b) Buyer shall, subject to the applicable terms of existing operating
     agreements, become the working or other interest owner of the Interests as
     of 12:01 a.m. local time at the wellsites on the Closing Date, effective as
     of the Effective Time.

          (c) After this Agreement is signed, Buyer shall provide reasonable
     assistance to Seller to solicit from Seller's Debenture holders Debenture
     Exchange Subscription Agreements (in the form approved by both parties and
     attached hereto as EXHIBIT F, hereafter the "Exchange Agreements") pursuant
                        ---------
     to which the holders shall agree to exchange the Debentures for Common
     Stock of Buyer (as described in Section 7.1(a) (2) below), subject to
     Closing of the Agreement in a manner which is intended to be exempt from
     registration under Rule 506 of Regulation D adopted under the Securities
     Act. Buyer shall prepare, with reasonable assistance from Seller, a
     disclosure document for delivery to the holders. Buyer and Seller shall
     take reasonable steps to comply with Regulation D; however Buyer shall have
     no obligation to Seller or to any such holder with respect to the number of
     holders who enter into the Exchange Agreements. At the Closing of the
     transaction, Buyer shall issue the appropriate number of shares of Buyer's
     Common Stock as determined under Section 2.1(a) above. Such shares shall be
     issued to Seller and the holders of Seller's Debentures, as directed in
     writing by Seller on or before the Closing Date.

          (d) Buyer shall cause the Common Stock of Buyer that is issued
     pursuant to this Agreement to be registered on Form S-3 (or other
     appropriate form) for resale by the holders of such stock within 60 days
     following the Closing Date. Buyer shall use reasonable commercial efforts
     to have the registration statement covering the Common Stock declared
     effective by the United States Securities and Exchange Commission within a
     reasonable time after filing such registration statement. The terms and
     conditions of the Registration Rights Agreement, attached hereto as EXHIBIT
                                                                         -------
     G, which shall run to the benefit of the former holders of the Debentures,
     -
     shall govern the obligations of the Buyer and the rights of the holders of
     the Common Stock.

          (e) If Buyer issues Common Stock to Seller under Section 11.2 of this
     Agreement, or in accordance with its obligations under the Contingent
     Payment Agreement, then in either such case, Buyer shall file a
     registration statement to register such shares for resale within three (3)
     months after

                                       7
<PAGE>

     issuance and the obligations of Buyer under the Registration Rights
     Agreement shall be deemed to be obligations of Buyer to the holders in any
     such registration.

                                5. TITLE MATTERS.

     5.1. DEFENSIBLE TITLE.

          (a) The term Defensible Title shall mean, as to the Interests, such
     title, whether held by Seller or for the benefit of Seller, that, except
     for and subject to the Permitted Encumbrances (as defined in Section
     5.1(b)): (i) entitles Seller to receive as to each Well set forth in
     EXHIBIT A not less than the Net Revenue Interest set forth in EXHIBIT A as
     ---------                                                     ---------
     to the oil, gas and associated liquid and gaseous hydrocarbons produced,
     saved and marketed therefrom as to its presently producing formations; (ii)
     obligates Seller to bear costs and expenses relating to the maintenance,
     development and operation of each Well or Lease in an amount not greater
     than the Working Interest set forth in EXHIBIT A without a proportionate
                                            ---------
     increase in the Net Revenue Interest, and (iii) is free and clear of liens
     and material encumbrances and defects.

          (b) The term Permitted Encumbrances, as used herein, shall mean, as
     follows:

               (1) lessors' royalties, overriding royalties, unitization and
     pooling designations and agreements, reversionary interests and similar
     burdens;

               (2) required third party consents to assignments, preferential
     rights to purchase, and similar agreements with respect to which prior to
     Closing (i) waivers or consents have been or will be obtained from the
     appropriate parties prior to the closing date, or (ii) the appropriate time
     period for asserting such rights has expired without an exercise of such
     rights;

               (3) all rights to consent by, required notices to, filings with,
     or other actions by governmental entities in connection with the sale or
     conveyance of oil and gas leases or interests therein if the same are
     customarily obtained subsequent to such sale or conveyance;

               (4) easements, rights-of-way, servitudes, permits, surface leases
     and other rights with respect to surface operations, pipelines, grazing,
     logging, canals, ditches, reservoirs or the like; conditions, covenants or
     other restrictions; and easements for streets, alleys, highways, pipelines,
     telephone lines, power lines, railways and other easements and
     rights-of-way, on, over or in respect of any of the Interests;

               (5) materialmen's, mechanics', repairmen's, employees',
     contractors', operators', tax and other similar liens or charges arising in
     the ordinary course of business incidental to construction, maintenance or
     operation of any of the Interests: (i) if they have not been filed pursuant
     to law, (ii) if filed, they have not yet become due and payable or payment
     is being withheld as provided by law, or (iii) if their validity is being
     contested in good faith in the ordinary course of business by appropriate
     action;

               (6) any other liens, charges, encumbrances, contracts,
     agreements, instruments, obligations, defects or irregularities of any kind
     whatsoever affecting the Interests that individually or in the aggregate
     are not such as to have a materially adverse effect, do not prevent Seller
     and after Closing will not prevent Buyer from receiving the proceeds of
     production and that do not and after Closing will not operate to (i) reduce
     the net revenue interest of Seller below that set forth on EXHIBIT A, or
                                                                ---------
     (ii) increase the working interest above that set forth on EXHIBIT A
                                                                ---------
     without a proportionate increase in the Net Revenue Interest; and

                                       8
<PAGE>

               (7) the limitations included in the contracts, agreements and
     other matters, if any, described on EXHIBIT C.
                                         ---------

          (c) The term Title Defect as used herein shall mean any material
     encumbrance or defect in Seller's title to the Interests (expressly
     excluding Permitted Encumbrances), that renders Seller's title to the
     Interests less than Defensible Title. The term Allocated Value as used
     herein means the value allocated to the Well as set forth in the
     Netherland, Sewell Reserve Report on the Interests as of the Effective
     Time, to be prepared after the date of this Agreement.

     5.2. TITLE DEFECT ADJUSTMENTS.

          (a) No adjustment to the Purchase Price for Title Defects shall be
     made unless and until, and only to the extent that the individual value of
     each Title Defect exceeds $25,000 net to Seller's Working Interest in the
     Well or Lease affected by the Title Defect or exceeds $75,000 in the
     aggregate for all such Title Defects in all Wells or Leases.

          (b) Buyer shall give Seller written notice of Title Defects ten (10)
     days prior to the Closing Date. Such notice shall be in writing and shall
     include (i) a description of the Title Defect, and (ii) the amount by which
     Buyer believes the Value of such Well or Lease has been reduced because of
     such Title Defect. Buyer shall be deemed to have waived all Title Defects
     of which Seller has not been given timely notice by Buyer and all Title
     Defects that do not meet the thresholds for an adjustment set forth in
     Section 5.2(a).

          (c) Subject to the limitation contained in Section 5.2(a), a Title
     Defect of a Well and the Leases comprising the production unit or proration
     unit for the Well shall be cured to the reasonable satisfaction of Buyer
     before the Closing, provided that Seller may cure the Title Defect to
     Buyer's reasonable satisfaction within 30 days following Closing. If the
     Title Defect cannot be cured before the Closing or within the 30 day period
     following Closing to the reasonable satisfaction of Buyer, then the parties
     shall negociate a reduction of the Purchase Price to reflect the diminution
     of value due to the Title Defect in accordance with Section 2.2 unless
     prior to closing, (i) Buyer agrees to waive the relevant Title Defect and
     purchase the affected Interests notwithstanding the defect, or (ii) Seller
     agrees to indemnify Buyer against all losses, costs, expenses and
     liabilities with respect to such Title Defect.

     5.3. CASUALTY LOSS.

     If subsequent to the date of this Agreement and, prior to the Closing, all
or any material portion of the Interests to be conveyed to Buyer at the Closing
is destroyed by fire or other casualty, is taken in condemnation or under the
right of eminent domain or proceedings for such purposes are pending or
threatened, subject to the limitations set forth in Section 5.2, Buyer shall
purchase such Interests notwithstanding any such destruction, taking or pending
or threatened taking and the Purchase Price shall be adjusted in accordance with
the diminution in value. Seller shall, at the Closing, pay to Buyer all sums
paid to Seller by third parties by reason of the destruction or taking of such
Interests to be assigned to Buyer, and shall assign, transfer and set over unto
Buyer all of the right, title and interest of Seller in and to any unpaid awards
or other payments from third parties arising out of the destruction, taking or
pending or threatened taking as to such Interests to be conveyed to Buyer.
Seller shall not voluntarily compromise, settle or adjust any material amounts
payable by reason of any material destruction, taking or pending or threatened
taking as to the Interests to be conveyed to Buyer without first obtaining the
written consent of Buyer.

                                       9
<PAGE>

     5.4. CONSENTS.

     Some of the Leases are subject to consent of assignment by the Lessor.
Seller will use its best efforts to obtain consents prior to Closing and will
assist Buyer in obtaining any required consents after Closing. Any such consent
not obtained prior to Closing will be deemed to be a Title Defect under Section
5.2 above, without need of further notice from Buyer. Seller shall have the
right to cure Title Defects arising under this Section within the time limits
described in Section 5.2(c) above.

                            6. ENVIRONMENTAL MATTERS.

     Buyer acknowledges that Seller is a non-operator of the Interests and has
no direct control over any matter or circumstance relating to environmental
laws, environmental conditions or environmental claims, the release of materials
into the environment or protection of the environment or health. Buyer hereby
agrees to assume the risk that the Interests may contain waste materials,
including naturally occurring radioactive materials, or hazardous substances,
that adverse physical conditions, including the presence of unknown abandoned
oil and gas wells, water wells, sumps and pipelines may not have been revealed
by Buyer's investigation, and that liabilities under environmental claims or
environmental conditions or environmental laws could in the future be asserted
against persons who hold working interests in any of the Interests. Seller shall
protect, release, defend and indemnify and hold Buyer free and harmless from and
against any and all costs, expenses, claims, demands, litigation costs,
attorneys' fees and causes of action of every kind and character which result,
or may be claimed to result from, environmental claims, or environmental
conditions or claimed breach of environmental laws or regulations which occurred
or existed on or in connection with any of the Interests as of the Closing Date
of this Agreement, provided, however, that this obligation of Seller to
indemnify Buyer shall apply only to claims, demands, expenses or costs which are
asserted by third parties on or before December 31, 2002.

     Except for Seller's obligation to indemnify and hold harmless the Buyer for
liabilities associated with claims made on or before December 31, 2002 for
claims which arose or would be deemed to have arisen prior to the Closing Date,
Buyer hereby releases and discharges, and shall be deemed to release Seller at
Closing from and against, any and all other claims at law or in equity,
including but not limited to environmental claims and environmental conditions,
known or unknown, whether now existing or arising in the future, contingent or
otherwise, against Seller with respect to any matter or circumstance relating to
environmental laws, the release of materials into the environment or protection
of the environment or health.

     Assuming the occurrence of Closing, Buyer hereby expressly agrees to
protect, release, defend, indemnify and hold Seller, its officers, directors,
representatives, agents and its employees free and harmless from and against any
and all costs, expenses, claims, demands, litigation costs, attorneys fees, and
causes of action of every kind and character, including but not limited to
injuries or death to persons, damages to or loss of property, environmental
claims or environmental conditions, arising out of or in connection with the
use, operation, occupancy, occupation, resale or abandonment of the Interests to
be assigned to Buyer hereunder regardless of whether the claim is a result of an
act or omission occurring or condition existing prior to or after the Closing
Date, and from any violation of environmental laws, provided that Buyer has no
obligation to Seller with respect to any liabilities for environmental claims,
environmental conditions or alleged violation of environmental laws or
regulations related to any of the Interests which are asserted against Buyer or
Seller by any third party and which may have occurred prior to the Closing Date
and are asserted on or before December 31, 2002. The parties acknowledge and
agree that the indemnity provided for in this section complies with the express
negligence rule.

                                       10
<PAGE>

     Buyer represents that it has had an adequate opportunity to review the
indemnity and waiver provisions contained in this Section including the
opportunity to submit the same to legal counsel for review and comment, and
understands the indemnity obligations contained herein. Buyer acknowledges that,
except for Seller's representations and warranties expressly set forth in this
Agreement, it accepts the Interests "AS IS, WHERE IS" with all faults and
existing conditions.

                                 7. TAX MATTERS

     All ad valorem, severance, personal property taxes or any other taxes
assessed against the Interests prior to the Effective Time shall be the
obligation of Seller no matter when invoiced by the operator of any of the
Interests. All ad valorem, severance, personal property taxes or any other taxes
assessed against the Interests after the Effective Time shall be the obligation
of Buyer.

                            8. CONDITIONS TO CLOSING.

     8.1. SELLER'S CONDITIONS.

     The obligations of Seller at the Closing are subject to the satisfaction,
at or prior to the Closing, of the following conditions:

          (a) Each of the following shall have occurred:

               (1) Holders of a majority of the outstanding voting common stock
     of the Seller shall have voted, at a special meeting of stockholders called
     for that purpose, to approve this Agreement and the transfer of the
     Interests by the Buyer to the Seller;

               (2) Holders of at least 90% of the outstanding principal amount
     of Seller's Debentures shall have conditionally agreed to exchange the
     Seller's Debentures held by them in exchange for the following: for each
     $10,000 in principal amount of the Debentures, the holder will receive at
     Closing of this Agreement, out of the Purchase Price, a number of shares of
     Buyer's Common Stock determined by dividing $10,000 by the Common Stock
     Value Per Share, and rounded to the nearest whole share; and

               (3) Holders of 100% of the outstanding Series C Preferred shall
     have voted or consented in writing to approve this transaction.

          (b) No order shall have been entered by any court or governmental
     agency having jurisdiction over the parties or the subject matter of this
     Agreement that restrains or prohibits the purchase and sale contemplated by
     this Agreement and which remains in effect at the time of such Closing; and

          (c) The aggregate sum of Title Defect adjustments, if any, shall not
     exceed $100,000.

     8.2. BUYER'S CONDITIONS.

     The obligations of Buyer at the Closing are subject to the satisfaction at
or prior to the Closing of the following conditions:

                                       11
<PAGE>

          (a) All representations of Seller contained in this Agreement shall be
     true in all material respects at and as of the Closing as if such
     representations were made at and as of the Closing, and Seller shall have
     performed and satisfied all material agreements in all material respects
     required by this Agreement to be performed and satisfied by Seller at or
     prior to the Closing;

          (b) No order shall have been entered by any court or governmental
     agency having jurisdiction over the parties or the subject matter of this
     Agreement that restrains or prohibits the purchase and sale contemplated by
     this Agreement and which remains in effect at the time of such Closing; and

          (c) The aggregate sum of Title Defect adjustments, if any, shall not
     exceed $100,000; and

          (d) Each of the following shall have occurred:

               (1) Holders of at least 90% of the outstanding principal amount
     of Seller's Debentures shall have conditionally agreed to exchange the
     Seller,s Debentures held by them in exchange for the following: for each
     $10,000 in principal amount of the Debentures, the holder will receive at
     Closing of this Agreement, out of the Purchase Price, a number of shares of
     Buyer's Common Stock determined by dividing $10,000 by the Common Stock
     Value Per Share, and rounded to the nearest whole share; and

               (2) Holders of 100% of the outstanding Series C Preferred shall
     have voted or consented in writing to approve this transaction.

                                   9. CLOSING.

     9.1. DATE OF CLOSING.

     Subject to the conditions stated in this Agreement, the consummation of the
transactions described herein (the "Closing") shall be held on the first
business day following the Seller's Stockholders meeting at which this agreement
is approved or at such later date as may be agreed upon by the parties. The date
the Closing actually occurs is called the Closing Date.

     9.2. PLACE OF CLOSING.

     The Closing shall be held at the offices of Buyer in Houston, Texas.

     9.3. CLOSING OBLIGATIONS.

     At the Closing the following events shall occur, each being a condition
precedent to the others and each being deemed to have occurred simultaneously
with the others:

          (a) Seller and Buyer shall execute, acknowledge and deliver an
     assignment, bill of sale and conveyance (in sufficient counterparts to
     facilitate recording) in substantially the form of EXHIBIT E hereto
                                                        ---------
     conveying to Buyer or Buyer's Subsidiary the Interests; and

                                       12
<PAGE>

          (b) Seller and Buyer shall execute and deliver a settlement statement,
     prepared in accordance with this Agreement (the "Settlement Statement")
     prepared by Seller that shall set forth any Cash Adjustments required under
     Section 2.2 then known to the parties and the means used to determine such
     amount. Seller shall provide Buyer with the preliminary Settlement
     Statement three business days prior to Closing for Buyer's review and
     approval, using for such adjustments the best information then available.

          (c) Buyer shall deliver to Seller, or if appropriate, Seller shall
     deliver to Buyer, the Cash Adjustments to Purchase Price, subject to any
     further amounts which may be later determined under Section 10.1 below.

          (d) Buyer shall issue the appropriate number of shares of Buyer's
     Common Stock determined in accordance with Section 2.1(a) above. The Common
     Stock shall be issued as designated by Seller to Buyer in writing at or
     prior to the Closing Date. At the written request of Seller, Buyer shall
     transmit certificates for the Common Stock to the appropriate holders of
     Seller's Debentures conditional upon Buyer having received a fully executed
     Debenture Exchange Subscription Agreement as set forth in EXHIBIT F.
                                                               ---------

          (e) Buyer shall enter into the Contingent Payment Agreement EXHIBIT D
                                                                      ---------
     with each holder of Seller's Series C Preferred Stock, pursuant to written
     instructions from Seller to be delivered at or before the Closing Date.

          (f) Buyer shall deliver to Seller the balance of the Purchase Price
     not paid to holders of Seller's Debentures.

          (g) Seller and Buyer shall execute, acknowledge and deliver letters in
     lieu of transfer orders directing all purchasers of production to make
     payment to Buyer of proceeds attributable to production from the Interests
     assigned to Buyer after the Effective Time.

          (h) Seller shall prepare such notices to third-party operators of the
     change in ownership of the Interests from Seller to Buyer.

                         10. OBLIGATIONS AFTER CLOSING.

     10.1. POST-CLOSING ADJUSTMENT PROCEDURE.

     As soon as practicable after the Closing Date, but no later than 90 days
after the Closing Date, Seller shall prepare and deliver to Buyer, in accordance
with this Agreement, a statement (the Final Settlement Statement) setting forth
each adjustment or payment under Section 2.2 that was not finally determined as
of the Closing Date and showing the calculation of such adjustments. Within
fifteen days after receipt of the Final Settlement Statement, or if Seller fails
to deliver a Final Settlement Statement, Buyer shall deliver to Seller a written
report containing any changes that Buyer proposes be made to the Final
Settlement Statement. The parties shall undertake to agree with respect to the
amounts due pursuant to such post-closing adjustment no later than fifteen days
after Seller has received Buyer's proposed changes. The date upon which such
agreement is reached or upon which the Final Purchase Price is established,
shall be called the Final Settlement Date. In accordance with Section 2.1(d), if
(i)Buyer owes a net amount to Seller, Buyer shall pay in immediately available
federal funds the amount of such difference to Seller or to Seller's account (as
designated by Seller), or (ii) Seller owes a net amount to Buyer, Seller shall
pay in immediately available federal funds the amount of such difference to
Buyer or to Buyer's account (as designated by Buyer). Payment by Buyer or Seller
of this portion, if any, of the Cash Adjustment shall be made within five days
after the Final Settlement Date.

                                       13
<PAGE>

     10.2. FILES AND RECORDS.

     Within thirty days after the Closing Date, Seller shall deliver to Buyer
originals of all of Seller's files and records relating to the Interests in the
format maintained by Seller, but excluding any records or data that cannot be
transferred because of prior contractual restrictions. Seller shall have the
right to retain copies of any or all files and records delivered to Buyer. Buyer
shall make available to Seller, in Buyer's office during normal hours, Buyer's
files and records relating to the Interests so long as Buyer retains such files
and records.

     10.3. FURTHER ASSURANCES.

     After Closing, Seller and Buyer shall execute, acknowledge and deliver or
cause to be executed, acknowledged and delivered such instruments, and shall
take such other action as may be necessary or advisable to carry out their
obligations under this Agreement and under any document, certificate or other
instrument delivered pursuant hereto.

     10.4. ASSUMPTION OF OBLIGATIONS.

          (a) Transfer and assignment of the Interests to Buyer or Buyer's
     Subsidiary shall constitute an express assumption by Buyer of, and Buyer
     expressly agrees to pay, perform, fulfill and discharge all claims, costs,
     expenses, liabilities and obligations (including but not limited to
     environmental claims and environmental conditions) accruing or relating to
     the owning, developing, exploring, operating and maintaining of the
     Interests conveyed to Buyer at the Closing, including without limitation,
     all violations of environmental law and all obligations arising under
     operating agreements, product sales agreements and the other agreements
     covering or relating to the Interests, except as specifically stated to the
     contrary in Section 6 above.

          (b) Buyer acknowledges that Seller has not made, and Seller hereby
     expressly disclaims and negates, any representation or warranty, express or
     implied, relating to the condition of any real or immovable property,
     personal or movable property, equipment, inventory, machinery and fixtures
     constituting part of the interests including, without limitation, (i) any
     implied or express warranty of merchantability, (ii) any implied or express
     warranty of fitness for a particular purpose, (iii) any implied or express
     warranty of conformity to models or samples of materials, (iv) any rights
     of Buyer under appropriate statutes to claim diminution of consideration or
     return of the Purchase Price, and (v) any implied or express warranty
     regarding environmental laws, the release of materials into the environment
     including naturally occurring radioactive material, or protection of the
     environment or health, it being the express intention of Buyer and Seller
     that the real or immovable property, personal or movable property,
     equipment, inventory, machinery and fixtures shall be conveyed to Buyer as
     is and in their present condition and state of repair. Buyer represents to
     Seller that Buyer has made or caused to be made such inspections with
     respect to the real or immovable property, personal or movable property,
     equipment, inventory, machinery and fixtures as Buyer deems appropriate and
     Buyer will accept the real or immovable property, personal or movable
     property, equipment, inventory, machinery and fixtures as is, in their
     present condition and state of repair.

          (c) Seller hereby expressly negates and disclaims, and Buyer hereby
     waives and acknowledges that Seller has not made, any representation or
     warranty, express or implied, relating to (i) the accuracy, completeness or
     materiality of any information, data or other materials (written or oral)
     furnished to Buyer by or on behalf of Seller or (ii) production rates,
     recompletion opportunities, decline rates, geological or geophysical data
     or interpretations, the quality, quantity, cost of recovery of any
     hydrocarbon reserves, any product pricing assumptions, or the ability to
     sell or market any hydrocarbons after Closing.

                                       14
<PAGE>

          (d) Buyer shall also indemnify Seller for all liabilities which are
     assessed against Seller for federal, state, or local taxes, (not including
     income taxes) together with penalties or interest thereon (provided the
     penalties and interest do not result from the negligence, late filing,
     fraud or other acts of malfeasance of Seller), which relate to all
     operations of the property transferred hereunder and which arise on or
     after the Effective Time.

     10.5. INDEMNIFICATION.

     From and after the Closing date, Buyer and Seller shall indemnify each
other as follows:

          (a) Seller shall defend, indemnify and save and hold harmless Buyer,
     its officers, directors, employees and agents, against all losses, damages,
     claims, demands, suits, costs, expenses, liabilities and sanctions of every
     kind and character, including without limitation reasonable attorneys'
     fees, court costs and costs of investigation, which arise from or in
     connection with any breach by Seller of this Agreement.

          (b) Buyer shall defend, indemnify and save and hold harmless Seller,
     its officers, directors, employees and agents against all losses, damages,
     claims, demands, suits, costs, expenses, liabilities and sanctions of every
     kind and character, including without limitation reasonable attorneys'
     fees, court costs and costs of investigation, which arise from or in
     connection with (i) any of the claims, costs, expenses, liabilities and
     obligations assumed by Buyer pursuant to Section 6 or (ii) any breach by
     Buyer of this Agreement.

                          11. TERMINATION OF AGREEMENT.

     11.1. TERMINATION.

     This Agreement and the transactions contemplated hereby may be terminated
in the following instances:

          (a) By Seller if any of the conditions set forth in Section 8.1 are
     not satisfied in all material respects or waived as of the Closing Date.

          (b) By Buyer if any of the conditions set forth in Section 8.2 are not
     satisfied in all material respects or waived as of the Closing Date.

          (c) At any time by the mutual written agreement of Buyer and Seller.

          (d) By either party at its written election if the Closing Date has
     not occurred by April 15, 2002.

     11.2. LIABILITIES UPON TERMINATION OR BREACH.

     In the event of the termination of this Agreement by Seller in accordance
with Section 11.1(a), Seller shall pay Buyer $25,000 cash as liquidated damages
for termination. If Buyer terminates this Agreement for any reason other than
those described in Section 11.1(b) above, it shall pay Seller $200,000 as
liquidated damages for termination. Any obligation under this Section 11.2 shall
be payable immediately upon termination of this Agreement. In the event Buyer
shall owe Seller liquidated damages under this Section, Buyer may at its sole
election pay up to one-half of such liquidated damages in shares of Buyer's
Common Stock

                                       15
<PAGE>

                               12. MISCELLANEOUS.

     12.1. EXHIBITS.

     The Exhibits referred to in this Agreement are hereby incorporated in this
Agreement by reference and constitute a part of this Agreement.

     12.2. EXPENSES.

     Except as otherwise specifically provided, all fees, costs and expenses
incurred by Buyer or Seller in negotiating this Agreement or in consummating the
transactions contemplated by this Agreement shall be paid by the party incurring
the same, including, without limitation, legal and accounting fees, costs and
expenses.

     12.3. NOTICES.

     All notices and communications required or permitted under this Agreement
shall be in writing and any communication or delivery hereunder shall be deemed
to have been duly made when personally delivered to the individual indicated
below, or if mailed, when received by the party charged with such notice and
addressed as follows:

          IF TO SELLER:

          REPUBLIC RESOURCES, INC.
          743 Horizon Court, Suite 333
          Grand Junction, Colorado 81506
          Attention: Patrick J. Duncan, President

          With a copy to:

          ALAN W. PERYAM, ESQ.
          1120 Lincoln Street, Suite 1000
     Denver, Colorado 80203

          IF TO BUYER:

          HARKEN ENERGY CORPORATION
          580 WestLake Park Boulevard, Suite 600
          Houston, Texas 77079
          Attention: Bruce N. Huff, President and Chief Operating Officer

                                       16
<PAGE>

          With a copy to:

          HARKEN ENERGY CORPORATION
          580 WestLake Park Boulevard, Suite 600
          Houston, Texas 77079
          Attention: Larry E. Cummings, Vice President, General Counsel

     Any party may, by written notice so delivered to the other parties, change
the address or individual to which delivery shall thereafter be made.

     12.4. WIRE TRANSFER INSTRUCTIONS.

     In the event a party is required to pay cash to the other party, payments
shall be by wire transfer unless otherwise agreed by the parties at the time.
When a wire transfer payment is required, the party to whom payment is to made
shall furnish written wire transfer instructions to the other party.

     12.5. AMENDMENTS.

     This Agreement may not be amended nor any rights hereunder waived except by
an instrument in writing signed by the party to be charged with such amendment
or waiver and delivered by such party to the party claiming the benefit of such
amendment or waiver.

     12.6. ASSIGNMENT.

     Neither party may assign all or any portion of its rights or delegate all
or any portion of its duties hereunder unless it continues to remain liable for
the performance of its obligations hereunder and obtains the prior written
consent of the other party, which consent shall not be unreasonably withheld.

     12.7. CONDITIONS.

     The inclusion in this Agreement of conditions to Seller's and Buyer's
obligations at the Closing shall not, in and of itself, constitute a covenant of
either Seller or Buyer to satisfy the conditions to the other party's
obligations at the Closing.

     12.8. COUNTERPARTS.

     This Agreement may be executed by Buyer and Seller in any number of
counterparts, each of which shall be deemed an original instrument, but all of
which together shall constitute but one and the same instrument.

     12.9. GOVERNING LAW.

     This Agreement and the transactions contemplated hereby shall be construed
and enforced in accordance with the laws of the state of Colorado, but without
regard to laws or principles of conflicts of laws that would cause application
of the laws of another jurisdiction. The parties hereby consent to the exclusive
venue of the proper state or federal court located in the Denver, Colorado, and
hereby waive all other venues.

                                       17
<PAGE>

     12.10. ENTIRE AGREEMENT.

     This Agreement (including the Exhibits hereto) constitutes the entire
understanding among the parties with respect to the subject matter hereof,
superseding all negotiations, prior discussions and prior agreements and
understandings relating to such subject matter.

     12.11. PARTIES IN INTEREST.

     This Agreement shall be binding upon, and shall inure to the benefit of,
the parties hereto, and their respective successors and assigns, and nothing
contained in this Agreement, express or implied, is intended to confer upon any
other person or entity any benefits, rights or remedies.

     12.12. SURVIVAL.

     The representations, warranties, covenants, agreements and indemnities
provided for in this Agreement shall survive the Closing and shall not be
extinguished by the doctrine of merger by deed or any similar doctrine and no
waiver, release, or forbearance of the application of the provisions of those
paragraphs in any given circumstance shall operate as a waiver, release, or
forbearance of the provisions of the paragraphs as to any other circumstance.

     12.13. ARBITRATION.

     All disputes arising out of or in connection with this agreement, or any
determination required to be made by the parties as to which the parties are
unable to agree (including, without limitation, the determination of Defects),
shall be settled by arbitration in Denver, Colorado. Any matter to be submitted
to arbitration hereunder may be submitted to arbitration by either party. Any
matter submitted to arbitration shall be conducted in accordance with the rules
of the American Arbitration Association. Any award by the arbitrator(s) shall be
final, binding and not appealable, and judgment may be entered thereon in any
court of competent jurisdiction. Notwithstanding the above, neither Seller or
Buyer shall be required to resolve any disputes relating to this Agreement
through arbitration if an unrelated third party files suit against both Buyer
and Seller relating to the interests conveyed pursuant to this Agreement, in
such event, it being understood and agreed that Buyer and Seller may assert any
claims and/or defenses arising out of this Agreement against each other in the
lawsuit.

                                       18
<PAGE>

     Executed as of the date stated on the first page of this Agreement.

                                               SELLER:

                                               REPUBLIC RESOURCES, INC.

                                               By: /s/ Patrick J. Duncan
                                                   ------------------------
                                                   Patrick J. Duncan, President

                                               BUYER:

                                               HARKEN ENERGY CORPORATION

                                               By: /s/ Bruce N. Huff
                                                   -----------------------
                                                   Bruce N.Huff, President and
                                                   Chief Operating Officer

                                       19
<PAGE>

                                    EXHIBIT A

                                    [Ommited]
<PAGE>

                                    EXHIBIT B

                                    [Ommited]
<PAGE>

                                    EXHIBIT C

                                    [Ommited]
<PAGE>

                                    EXHIBIT D

                                    EXHIBIT D
                          CONTINGENT PAYMENT AGREEMENT

     This Contingent Payment Agreement (this "Agreement") is made and entered
into as of the            day of            , 2002, by and between Republic
              -----------        -----------
Resources, Inc. ("Republic"), a Nevada corporation, and Harken Energy
Corporation ("Harken"), a Delaware corporation.

                                    RECITALS

     A. Republic and Harken have entered into that certain Purchase and Sale
Agreement (the "Purchase Agreement") dated January 31, 2002, pursuant to which
Republic is selling to Harken all of Republic's interest in and to certain oil
and natural gas properties in the states of Texas and Louisiana, as further
described therein;

     B. Pursuant to Section 2.1 (c) of such Purchase Agreement, Harken is
entering into this Agreement (which is attached as Exhibit D to the Purchase
Agreement) to pay, subject to the terms and conditions herein, to Republic a
"Contingent Payment" (as defined herein).

                                    AGREEMENT

     NOW, THEREFORE, for and in consideration of the foregoing Recitals and the
mutual agreements contained herein, the sufficiency of which is hereby
acknowledged and confirmed, the parties hereto, intending to be legally bound,
hereby agree as follows:

Section 1. Contingent Payment.
           ------------------

     (a) Subject to the terms and conditions of this Agreement, Harken hereby
covenants and agrees to pay, within forty five (45) days after December 31,
2003, to Republic or its permitted assigns (as provided in Section 3 of this
Agreement), the Contingent Payment (as hereinafter defined). The Contingent
Payment may be payable in either cash, shares of Harken Common Stock, $.01 par
value (the valuation of such shares as determined below), or any combination
thereof, as Harken in its sole and absolute discretion determines. In the event
some or all of the Contingent Payment is made in the form of shares of Harken
Common Stock, the value per share of such shares shall be equal to the average
reported closing price for Harken's Common Stock for the 20 trading days
immediately prior to the Valuation Date.

     (b) The Contingent Payment shall be determined as follows (all the amounts
below will be determined or calculated either: a) as of December 31, 2003; or b)
through December 31, 2003, as appropriate);

Revenues                                              XXX
Less Costs                                           (XXX)
                                                     ----
Equals the (Excess Cost)
         or the Excess Revenue                       (XXX) or XXX
Less 15% of Excess Cost, if any                      (XXX)
Plus:    PV15 of the PDP Reserves                     XXX
         PV30 of the PDNP Reserves                    XXX
         PV50 of the PUD Reserves                     XXX
                                                     ----
Subtotal                                              XXX
Times the Contingent Payment %                         50%
                                                     ----
         Equals the Contingent Payment                XXX
                                                     ====

     Should the above calculation result in a negative number for the Contingent
Payment, there will be no liability by either Republic or Harken. In no event
shall the Contingent Payment exceed $3,968,250.

     (c) In the event Harken elects to make any portion of the payment which may
become due hereunder in the form of its shares of Common Stock, Harken shall
execute and deliver to Republic (or its permitted assigns) a Registration Rights
Agreement in a form substantially similar to the Registration Rights Agreement
entered into in connection with the Purchase Agreement, provided that Harken
shall not be obligated to execute and deliver such Registration Rights Agreement
unless and until the recipient of such Registration Rights Agreement agrees to
execute and be bound by the terms and provisions of such Registration Rights
Agreement.
<PAGE>

     (d) Notwithstanding anything in this Agreement, in no event shall Harken
have any duty, commitment or obligation to develop or participate in the
Properties, and Harken may develop or participate in the Properties as it
determines in its sole and absolute discretion (using such reasonable business
judgment as Harken uses in connection with its other properties). In the event
Harken determines in its sole and absolute discretion not to participate in
development of the Properties, then the Proved Reserves Value will be calculated
on the non-consenting, reversionary or other retained interest (if any) held by
Harken in such Properties. If the Proved Reserves Value after application of the
Adjusted Costs is zero, then Harken shall not be obligated to make any
Contingent Payment hereunder.

Section 2. Definitions and References.When used in this Agreement, the following
           --------------------------
terms shall have the respective meanings assigned hereto:

          "Lookback Properties" shall mean Harken's right, title and interest in
           -------------------
     and to acquired pursuant to the Purchase Agreement: (i) the Wilcox
     Prospects located in Jackson County, Texas, currently known as the
     Matterhorn Prospect, the W1 and W2 prospects, the WR (Wilcox River)
     prospect, the W3 prospect, the W4 prospect, and the W5 prospect, and (ii)
     the Yegua Prospects located in Jackson County, Texas, currently known as
     the Yegua 17-C prospect, and the River prospect, all of these prospects and
     corresponding leases being more particularly described on Exhibit A
     attached hereto.

          "Revenues" shall mean any proceeds received or receivable by Harken
           --------
     from any production or sale of the Lookback Properties between January 1,
     2002 and December 31, 2003.

          "Costs" shall mean any and all costs (including without limitation
           -----
     geophysical, geological and land costs), expenses, obligations,
     liabilities, and all other associated costs incurred by Harken relating to
     or incurred in connection with the development and production of the
     Lookback Properties between January 1, 2002 and December 31, 2003.

          "Proved Reserves" shall mean the estimated quantities of oil and/or
           ---------------
     natural gas from of any interests held by Harken in the Lookback Properties
     that, with reasonable certainty, appear to be recoverable in the future
     under the economic and operating conditions as of December 31, 2003. The
     Parties agree that this estimate of proved reserves will be determined by
     either Netherland, Sewell and Associates or some other mutually agreeable
     petroleum engineering firm.

          "Proved Reserves Value" shall mean the undiscounted pre-tax value of
           ---------------------
     any interests held by Harken in the Proved Reserves as of the December 31,
     2003. In determining the Proved Reserves Value, the oil and gas shall be
     priced by using the average of (x) the average strip price for the 12
     months immediately preceding the Valuation Date (as published in Inside
                                                                      ------
     FERC (or other publications acceptable to Harken and Republic) on the
     ----
     Valuation Date) and (y) the projected average strip price for the 12 months
     immediately following the Valuation Date (as published in The Wall Street
                                                               ---------------
     Journal (or other publications acceptable to Harken and Republic) on the
     -------
     December 31, 2003). In addition, the Proved Reserve Values will be
     categorized between Proved Developed Producing ("PDP"), Proved Developed
     Non-producing ("PDNP"), and Proved Underdeveloped ("PUD") in accordance
     with generally accepted petroleum-engineering methods. The Parties agree
     that the estimate of Proved Reserves Value will be determined by the same
     petroleum-engineering firm that determines the Proved Reserves.

          "PV15 of the PDP Reserves" shall mean the value of the Proved
           ------------------------
     Developed Producing Reserve Value discounted on an annual basis at 15%.

          "PV30 of the PDNP Reserves" shall mean the value of the Proved
           -------------------------
     Developed Non-producing Reserve Value discounted on an annual basis at 30%.

          "PV50 of the PUD Reserves" shall mean the value of the Proved
           ------------------------
     Undeveloped Reserve Value discounted on an annual basis at 50%.

          "Contingent Payment" shall be the amount payable by Harken, as
           ------------------
     computed and described in Section 1 of this Agreement. In no event shall
     the Contingent Payment exceed $3,968,250.

          "Valuation Date" shall mean December 31, 2003.
           --------------

                                        2
<PAGE>

Section 3. Miscellaneous.

     (a) Except as otherwise specifically provided, all fees, costs and expenses
incurred by Republic or Harken in negotiating this Agreement or in consummating
the transactions contemplated by this Agreement shall be paid by the party
incurring the same, including, without limitation, legal and accounting fees,
costs and expenses.

     (b) All notices and communications required or permitted under this
Agreement shall be in writing and any communication or delivery hereunder shall
be deemed to have been duly made when personally delivered to the individual
indicated below, or if mailed, when received by the party charged with such
notice and addressed as follows:

          IF TO REPUBLIC:

          REPUBLIC RESOUCES, INC.
          743 Horizon Court, Suite 333
          Grand Junction, Colorado 81506
          Attention: Patrick J. Duncan, President

          With a copy to:

          ALAN W. PERYAM, ESQ.
          1120 Lincoln Street, Suite 1000
          Denver, Colorado 80203

          IF TO HARKEN:

          HARKEN ENERGY CORPORATION
          580 WestLake Park Boulevard, Suite 600
          Houston, Texas 77079
          Attention: Bruce N. Huff, President and Chief Operating Officer

          With a copy to:

          HARKEN ENERGY CORPORATION
          580 WestLake Park Boulevard, Suite 600
          Houston, Texas 77079
          Attention: Larry E. Cummings, Vice President, General Counsel

     Any party may, by written notice so delivered to the other parties, change
the address or individual to which delivery shall thereafter be made.

     (c) This Agreement may not be amended nor any rights hereunder waived
except by an instrument in writing signed by the party to be charged with such
amendment or waiver and delivered by such party to the party claiming the
benefit of such amendment or waiver.

     (d) Neither party may assign all or any portion of its rights or delegate
all or any portion of its duties hereunder unless it continues to remain liable
for the performance of its obligations hereunder and obtains the prior written
consent of the other party, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, Republic may assign this Agreement to the holders
of its Series C Redeemable Preferred Stock (the "Series C Preferred"), provided
that Republic provides prior notice of such assignment and provided further that
Harken receives prior to such assignment evidence to Harken's reasonable
satisfaction that the holders of such Series C Preferred are "accredited
investors" as that term is defined in Regulation D promulgated under the
Securities Act of 1933 and such other evidence as Harken may reasonably require
that such assignment does not violate federal and state securities laws.
Further, notwithstanding the foregoing, Harken may assign this Agreement to any
of its subsidiaries if Harken shall also assign the Properties under this
Agreement to such subsidiairy. Harken shall provide notice of such assignment to
Republic following making of the same.

     (e) This Agreement may be executed by Republic and Harken in any number of
counterparts, each of which shall be deemed an original instrument, but all of
which together shall constitute but one and the same instrument.

                                        3
<PAGE>

     (f) This Agreement and the transactions contemplated hereby shall be
construed and enforced in accordance with the laws of the state of Colorado, but
without regard to laws or principles of conflicts of laws that would cause
application of the laws of another jurisdiction. The parties hereby consent to
the exclusive venue of the proper state or federal court located in Denver,
Colorado, and hereby waive all other venues.

     (g) All disputes arising out of or in connection with this Agreement, or
any determination required to be made by the parties as to which the parties are
unable to agree, shall be settled by arbitration in Denver, Colorado. Any matter
to be submitted to arbitration hereunder may be submitted to arbitration by
either party. Any matter submitted to arbitration shall be conducted in
accordance with the rules of the American Arbitration Association. Any award by
the arbitrator(s) shall be final, binding and not appealable, and judgment may
be entered thereon in any court of competent jurisdiction. In the event Republic
initiates such arbitration and it is determined in such arbitration that Harken
has failed to pay any amounts required to be paid under this Agreement to
Republic by an amount of 5% or more, then Harken shall be required to pay the
costs of the arbitrators.

     (h) Notwithstanding anything in this Agreement to the contrary, in no event
shall Harken have any duty, commitment or obligation to develop or participate
in the Properties, and Harken may develop or participate in the Properties as it
determines in its sole and absolute discretion (using such reasonable business
judgment as Harken uses in connection with its other properties).

     (i) All references in this Agreement to sections, subsections and other
subdivisions refer to corresponding sections, subsections and other subdivisions
of this Agreement unless expressly provided otherwise. Titles appearing at the
beginning of any such subdivisions are for convenience only and shall not
constitute part of such subdivisions and shall be disregarded in construing the
language contained herein. Words in the singular form shall be construed to
include the plural and vice versa, unless the context otherwise requires.
                       ----------
     (j) Harken shall provide to Republic (or its permitted assigns)
semi-annually, on a calendar year basis, a status report on the current value of
the proved oil and natural gas reserves in the Properties (as of the date of
such report), using the calculations as described herein to determine the Proved
Reserves Value and determining the value of such proved reserves as of the date
of the report instead of the Valuation Date. Harken shall also include with such
report the assumptions used in calculating the Proved Reserves Value. Harken may
base such report upon its own internal reserve valuations if such report is
provided for any time other than as of a calendar year end. Any such report
provided as of a calendar year end will be based upon a third party outside
engineering report.

     Executed as of the date stated on the first page of this Agreement.

                                END OF EXHIBIT D

                                       4
<PAGE>

                                   EXHIBIT E
                                   ---------

                 Form of Assignment, Conveyance and Bill of Sale
                 -----------------------------------------------

KNOW ALL MEN BY THESE PRESENTS:

     Republic Resources, Inc.,
     743 Horizon Court, Suite 333
     Grand Junction, CO 81506-8715

(hereinafter referred to as "Assignor") for and in consideration of the sum of
Ten Dollars ($10.00) and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, does hereby sell, assign, convey,
transfer, and set over, subject to the reservations herein set forth, unto

     Xplor Energy SPV-I, Inc.
     an Oklahoma corporation,
     580 WestLake Park Boulevard, Suite 600
     Houston, TX 77079

(hereinafter referred to as "Assignee") and subject to the following terms and
provisions, all of its right, title and interest in and to the "Subject
Property" described as follows:

     (a) The oil and gas wells described in EXHIBIT A hereto (the "Wells"),
                                            ---------
together with all oil, gas and mineral production from the Wells;

     (b) The leasehold estates created by the leases, licenses, permits and
other agreements described in EXHIBIT B, (the "Leases"); together with all
                              ---------
overriding royalty interests, production payments and other payments out of or
measured by the value of oil and gas production;

     (c) All oil, gas, casinghead gas, condensate, distillate, liquid
hydrocarbons, gaseous hydrocarbons and all products refined therefrom, together
with all minerals produced in association with these substances (collectively
called the "Hydrocarbons") in and under and which may be produced and saved from
or attributable to the Leases or Wells, and all rents, issues, profits,
proceeds, products, revenues and other income from or attributable thereto;

     (d) All of the personal property, fixtures and improvements appurtenant to
the Wells, or the Leases or used or obtained in connection with the operation of
the Wells, or the Leases or with the production, treatment, sale or disposal of
hydrocarbons or water produced therefrom or attributable thereto, including
without limitation, pipelines, disposal systems, gathering systems and
compression facilities (the "Equipment") appurtenant to or located upon the
Leases; and

     (e) All the property, rights, privileges, benefits and appurtenances in any
way belonging, incidental to, or pertaining to the property, interests and
rights described in(a) through (d) including the Wells, the Leases and reserves
of unproduced oil and natural gas in place, including, to the extent
transferable, all exploration agreements, letter agreements, product purchase
and sale contracts, surface leases, gas gathering contracts, processing
agreements, compression agreements, equipment leases, permits, gathering lines,
rights-of-way, easements, licenses, farmouts and farmins, options, orders,
pooling, spacing or consolidation agreements and operating agreements and all
other agreements relating thereto, including those listed on EXHIBIT C (the
                                                             ---------
"Contracts");

     (f) All of the files, records, data (including seismic data and related
information) and other documentary information maintained in the normal course
of business by Seller pertaining to the Wells, Leases, Equipment, Hydrocarbons
and the Contracts (collectively, the "Data") in the format maintained by
Assignor. The Data shall not, however, include any information, which, if
disclosed, would cause Seller to breach any contract or agreement. Assignor will
use reasonable efforts to obtain any required consent to disclose such
information; and
<PAGE>

     (g) All other rights and interests in, to or under or derived from the
Subject Property, even though improperly described in the Exhibits. It is the
expressed intent of the parties that all of Assignor's right, title and interest
in any and all of the Subject Property, whether or not the same may be correctly
described on the Exhibits hereto be assigned to Assignee hereunder.

     This Assignment, Conveyance and Bill of Sale is made subject to the
following terms and provisions:

     (a) NOTWITHSTANDING ANY PROVISION IN THIS ASSIGNMENT, CONVEYANCE AND BILL
OF SALE OR ANY DOCUMENT DELIVERED IN CONNECTION HEREWITH TO THE CONTRARY, THE
SUBJECT PROPERTY AND ANY OTHER PROPERTY OR RIGHTS CONVEYED HEREUNDER ARE
CONVEYED "AS IS, WHERE IS," "WITH ALL FAULTS," AND IN THEIR PRESENT CONDITION
AND STATE OF REPAIR, AND WITHOUT WARRANTY, EITHER EXPRESS OR IMPLIED (EXCEPT
WARRANTY OF TITLE BY, THROUGH OR UNDER ASSIGNOR, BUT NOT OTHERWISE) INCLUDING
WARRANTY OF MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER
SORT OF WARRANTY. ASSIGNEE HAS INSPECTED, OR HAS HAD THE OPPORTUNITY TO INSPECT,
THE ASSIGNED PREMISES FOR ALL PURPOSES.

     (b) Assignor reserves from this Assignment, Conveyance and Bill of Sale in
favor of itself the following:

          (i)  All accounts receivable attributable to the Subject Property that
               are attributable to the period prior the Effective Time;

          (ii) All claims and rights relating to overpayments of costs and
               expenses attributable to period prior to the Effective Time,
               including, without limitation, the right to initiate, prosecute
               or participate, at Assignor's sole cost and expense, in all
               audits, audit claims and tax claims or proceedings relating to or
               including periods prior to the Effective Time, regardless of when
               commenced, arising under applicable law, operating or product
               sale agreements or otherwise, and to recover all costs and
               expenses claimed or shown by such audits or proceedings as owing
               to the owner of the Subject Property for periods prior to the
               Effective Time; and

          (iii)All rights, if any, to recover additional production or proceeds
               or requirements to refund monies attributable to such production
               or proceeds therefrom attributable to the Subject Property for
               any production month prior to the Effective Time, resulting from
               any adjustment to the net revenue interest attributable to the
               Subject Property in the applicable division orders.

     Assignee, its successors and assignees, shall observe, perform and comply
with the terms, provisions, covenants and conditions, express or implied, of the
oil and gas leases described on EXHIBIT B, together with any related contracts,
                                ---------
and all laws, rules, regulations and orders, both state and federal, applicable
to the ownership and enjoyment of the rights herein assigned.

     Effective from and after the Effective Time of this instrument, Assignee
hereby agrees to assume and shall assume, pay and perform all liabilities and
obligations arising in connection with the ownership or operations of the
Subject Property. Commencing from and after the Effective Time of this
instrument, Assignee shall indemnify and hold harmless Assignor against and from
any and all loss, cost, expense, liability or damage (including fees and
expenses of attorneys, technical experts and expert witnesses) incurred or
suffered by Assignor arising out of or relating to Assignee's failure to
discharge any such liabilities and obligations.

     All saleable gas, oil and/or condensate at the Effective Time of this
instrument is owned by the Assignor and is not to be considered a part of this
sale.

     This Assignment, Conveyance and Bill of Sale is to be treated as an
occasional sale, and no sales tax is being collected from Assignee. If however,
this transaction is later deemed to be subject to sales or use tax, Assignee
agrees to be solely responsible for any and all sales or use taxes due on
equipment, material and property hereby assigned and sold, and Assignee shall
remit such taxes to the proper taxing authority.

                                        2
<PAGE>

     This Assignment, Conveyance and Bill of Sale is subject to the terms and
provisions of that certain Purchase and Sale Agreement dated January 31, 2002 by
and between Assignor and Assignee.

     This instrument shall be binding upon and inure to the benefit of Assignor
and Assignee, their personal representatives, executors, successors and assigns.
The provisions hereof shall be covenants running with the lands and leases
assigned.

        EXECUTED this          day of                     , 2002, but effective
                     ---------       ---------------------
for all purposes as of January 1, 2002, at 12:01 A.M. at the location of the
Subject Property ("Effective Time").

ASSIGNOR:

Attest:                                        REPUBLIC RESOURCES, INC.

By:                                            By:
   -----------------------------                  ----------------------------
   Marilyn L. Adams, Secretary                    Patrick J. Duncan, President

ASSIGNEE:

Attest:                                        Xplor Energy SPV-I, Inc.
                                               an Oklahoma corporation,

By:                                            By:
   -----------------------------                  ------------------------

ACKNOWLEDGMENTS

STATE OF COLORADO)
                )ss
COUNTY OF MESA)

     This instrument was acknowledged before me, a Notary Public, by Patrick J.
Duncan, President of Republic Resources, Inc., a Nevada corporation, on behalf
of said corporation.

     Witness my hand and official seal this         day of        , 2002.
                                            --------       -------

My Commission Expires:

---------------------------------------------------------------------

------------------------------
                                          Notary Public in and for the State of
--------------

STATE OF TEXAS)
                  )ss
COUNTY OF)

     This instrument was acknowledged before me, a Notary Public, by

----------------- , President of Xplor Energy SPV-I, Inc., an Oklahoma
corporation, on behalf of said corporation.

     Witness my hand and official seal this         day of        , 2002.
                                           ---------      --------

My Commission Expires:

---------------------------------------------------------------------

------------------------------
                                           Notary Public in and for the State of
--------------

                                END OF EXHIBIT E

                                        3
<PAGE>

                                    EXHIBIT F
                                    ---------

                    Debenture Exchange Subscription Agreement

                                                  ------------------------------
                                                        Name of Debenture Holder

                                                  ------------------------------
                                                                Principal Amount

                    DEBENTURE EXCHANGE SUBSCRIPTION AGREEMENT

     This Debenture Exchange Subscription Agreement (the "Agreement") is between
the debenture holder identified on the signature page of this Agreement
("Subscriber"), Republic Resources, Inc. ("Republic") and Harken Energy
Corporation ("Harken") and is made with reference to the following agreed facts:

     A. The undersigned Subscriber is the holder of a 11% Convertible Debenture,
due April 15, 2003 (the "Debenture") of Republic (formerly Pease Oil and Gas
Company) in the principal amount set forth on the signature page of this
Agreement.

     B. There are outstanding $2,645,500 of the Debentures held by Subscriber
and other holders of the Debentures.

     C. Republic has agreed to sell to Harken, pursuant to a Purchase and Sale
Agreement dated January 31, 2002 (the "Asset Sale Agreement"), all of Republic's
interests in its oil and natural gas properties located in the states of
Louisiana and Texas that have "proved reserves" as of January 1, 2002. The
properties to be sold include all of Republic's income-producing assets as of
January 1, 2002. In exchange for these assets, Harken will deliver at closing up
to 2,645,500 shares of Harken common stock that will be distributed to the
Subscriber and other holders of the Debentures on a pro-rata basis in full
satisfaction of Republic's principal obligation under the outstanding
Debentures.

     D. The number of shares of Harken Common Stock to be issued at the closing
of the Asset Sale Agreement will be determined by dividing the total principal
amount of Republic's outstanding Debentures by the average reported closing
price for Harken's Common Stock for the 20 trading days ending on the day before
the Closing of the Asset Sale Agreement (hereafter the "Common Stock Value Per
Share"). However, under no circumstances shall the Common Stock Value Per Share
be less than $1.00.

     E. The completion of the sale of the Republic assets to Harken is
contingent upon: (i) the approval of the Asset Sale Agreement by stockholders of
Republic at a special meeting of stockholders to be called for that purpose, and
(ii) acceptance of the exchange offer described in this Agreement by the holders
of substantially all of the outstanding Debentures.

     F. The parties intend that this Agreement shall be irrevocable by
Subscriber unless the Asset Sale Agreement is not closed by at least June 1,
2002.

     G. In addition to the proved oil and gas properties, Republic will also
convey to Harken the Company's interest in certain exploratory prospects in
Jackson County, Texas that have not been given any initial value in the
contemplated transaction. These exploratory prospects will be evaluated for
additional value at the end of 2003 using a "Lookback" formula as defined in the
P&S Agreement, and a future "Lookback Payment" may be made in early 2004. The
amount of any "Lookback Payment" will be contingent on, among other things,
future exploratory successes in the Jackson County prospects, of which there can
be no assurance. In addition, there can be no assurance that the operators of
those prospects will actually drill any wells on the prospects by the end of the
Lookback period (which is at the end of 2003) and if so whether Harken will
agree to participate in exploration of the prospects since it will be under no
obligation to do so. Accordingly, the amount of any "Lookback Payment", if any,
cannot be reasonablely determined at this time. In any case, Republic
anticipates that the contingent Lookback Payment ultimately will be assigned to
the holders of its Series C Redeemable Preferred Stock in connection with a
restructuring of that security. It is expressly understood that neither the
Subscriber nor any other holder of the Debentures will haveany right, title or
interest in the contingent Lookback Payment regardless of its ultimate value, if
any, and regardless of whether it is ultimately assigned to the Series C
Preferred stockholders or retained by Republic.

     IN CONSIDERATION, of the covenants and agreements of the parties and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
<PAGE>

     1. Agreement to Exchange. Subscriber hereby agrees to exchange and
surrender the Debenture held by Subscriber effective on the day of Closing of
the Asset Sale Agreement. In exchange for surrender and cancellation of
Subscriber's Debenture, Subscriber shall receive the following:

          (a)  Payment of all unpaid interest on Subscriber's Debenture through
               the date of the Closing, to be paid by Republic at such time as
               Subscriber's Debenture certificate is delivered to Republic for
               cancellation; and

          (b)  An amount of common stock of Harken determined by dividing the
               principal amount of Subscriber's Debenture by the "Common Stock
               Value Per Share" determined as described above. The shares of
               Harken Common Stock shall be issued effective as of the closing
               of the Asset Sale Agreement and shall be delivered to Subscriber
               at such time as Subscriber's Debenture certificate is delivered
               to Republic for cancellation.

Republic shall pay the interest to Subscriber through the date of the Closing of
the Asset Sale Agreement and Subscriber's Debenture shall be deemed surrendered
and canceled as of such date, subject only to delivery to Subscriber of the
Harken Common Stock in exchange for surrender of Subscriber's Debenture
certificate.

     2. Irrevocable Subscription; Acceptance. Subscriber understands and
acknowledges that this subscription to exchange Subscriber's Debenture in the
manner described in this Agreement is irrevocable by Subscriber unless Republic
and Harken have not closed the Asset Sale Agreement by June 1, 2002. Acceptance
of this subscription by Republic and Harken is subject to: (i) approval of the
Asset Sale Agreement by Republic stockholders, (ii) receipt of Debenture
Exchange Subscriptions from holders of at least 90% of the outstanding principal
amount of Republic's Debentures (provided that Harken and Republic may, in their
discretion, waive this condition), and (iii) Closing of the Asset Sale
Agreement. Until and unless the foregoing conditions are satisfied, Subscriber's
Debenture shall continue to earn interest and to represent an obligation of
Republic to Subscriber as described in the Debenture.

     3. Acknowledgment of Disclosure. Subscriber acknowledges the receipt of
Harken's Disclosure Memorandum, dated January 31, 2002, including Harken's
Annual Report on Form 10-KSB for the fiscal year ended December 31, 2001, and
Quarterly Report on Form 10-QSB for the quarter ended September 30, 2001, which
are the last publicly-filed reports of Harken. Subscriber acknowledges receipt
from Republic of Republic's letter dated January 11, 2002, together with copies
of Republic's Quarterly Report on Form 10-QSB for the quarter ended September
30, 2001 and Form 8-K dated February  , 2002, the most recent public reports
                                    --
filed by Republic. Subscriber has also been given access to full and complete
information regarding Republic and Harken and has utilized such access to the
Subscriber's satisfaction for the purpose of obtaining such information
regarding Republic and Harken as the Subscriber has reasonably requested; and,
particularly, Subscriber has been given reasonable opportunity to ask questions
of, and receive answers from, representatives of Republic and Harken concerning
the terms and conditions of the exchange offer described in this Agreement, the
business and affairs of Republic and of Harken and all additional information
requested by Subscriber to the extent it would be reasonably available.

     4. Investment Intent. Subscriber represents and warrants that the common
stock of Harken which will be issued upon completion fo the exchange described
in this Agreement will be held for the Subscriber's own account and for
investment purposes only, and without the intention of reselling or
redistributing the same except as may be effected in compliance with the
registration requirements of the Securities Act of 1933, as amended ("Securities
Act"); Subscriber has made no agreement with others regarding any of the
securities to be obtained in the exchange and Subscriber's financial condition
is such that it is not likely that it will be necessary for Subscriber to
dispose of any of such securities in the foreseeable future. Subscriber further
represents and agrees that if, contrary to the foregoing intentions, Subscriber
should later desire to dispose of or transfer any of the Harken Common Stock
received by Subscriber in the exchange in any manner, Subscriber shall not do so
unless and until (i) such securities have been registered under the Securities
Act and all applicable securities laws; or (ii) Subscriber shall first deliver
to Harken a written notice declaring such holders's intention to effect such
transfer and describe in sufficient detail the manner and circumstances of the
proposed transfer, which notice shall be accompanied either by: (A) written
opinion of legal counsel who shall be reasonably satisfactory to Harken, which
opinion shall be addressed to Harken and reasonably satisfactory in form and
substance to Harken's counsel, to the effect that the proposed sale or transfer
is exempt from the registration provisions of the Securities Act and all
applicable state securities laws, or (B) a "no-action letter" from the
Securities and Exchange Commission to the effect that the transfer of the Harken
Common Stock without registration would not result in a recommendation by the
staff of the Commission that action be taken with respect thereto.

     5. Residence of Subscriber. Subscriber represents and warrants that
Subscriber is a bona fide resident of, is domiciled in, and received the
exchange offer and made the decision to exchange securities in the state of
residence set out on the signature page of this Agreement.

     6. Subscriber is Accredited Investor. Subscriber acknowledges that at the
time the Debenture was initially acquired, and at the time that Republic and
Subscriber agreed to extend the maturity and otherwise modify the terms of the
Debentures in March 2001, Subscriber qualified as a Accredited Investor as
described in Rule 501 of Regulation D adopted by the United States Securities
and Exchange Commission under the Securities Act. Subscriber represents to
Republic and Harken that as of the date of this Agreement set forth on the
signature page below, Subscriber continues to qualify as an Accredited Investor.

                                        2
<PAGE>

     7. Acknowledgment of Certain Risks. Subscriber acknowledges that upon
Closing of the Asset Sale Agreement, Subscriber shall have exchanged the
Republic Debenture now held, a debt security of Republic, for Harken Common
Stock, an equity security in a different entity. Following the exchange Republic
shall have no obligation to Subscriber and Subscriber will, instead, hold an
equity investment in Harken with no assurance that he will be able to liquidate
the investment and no right to receive the existing principal amount of the
Debenture. Subscriber acknowledges that holding the Harken Common Stock involves
certain risks, some of which are summarized or referred to in the Harken
Disclosure Memorandum. Likewise, Subscriber acknowledges that continuing to hold
the Republic Debenture would involve risk to Subscriber and other holders of the
Debentures, some of which are summarized in the information furnished to
Subscriber as summarized or described above. Subscriber is accepting the
exchange offer described in this Agreement notwithstanding such risks.

     8. No Tax Advice. Subscriber acknowledges that an exchange of Subscriber's
Debenture for Harken Common Stock as described in this Agreement is likely to be
deemed to be a taxable transaction to Subscriber. Subscriber is likely to have
taxable gain or loss equal to the difference between Subscriber's tax basis in
the Debenture and the fair market value of the Harken Common Stock to be
received in the exchange. While it is expected that the fair market value of the
Harken Common Stock is likely to be approximately equal to the principal balance
of the Debenture, Republic and Harken have made no representations to Subscriber
as to the tax implications to Subscriber from the exchange described in this
Agreement and Subscriber has been advised to seek his own tax counsel regarding
the exchange. Subscriber has received, from Subscriber's own tax or other
advisors, all information Subscriber requires concerning the tax consequences of
the exchange described in this Agreement and has not, and does not, rely upon
Republic or Harken with respect to tax implications of the exchange.

     9. No Transfer or Assignment. Neither this Agreement nor any of the rights
of Subscriber, Republic or Harken may be transferred or assigned by any party.
This Agreement shall survive the death or disability of Subscriber and shall be
binding upon Subscriber's heirs, executors, administrators, successors and
attempted assigns.

     10. Arbitration of Disputes. In the event that a dispute arises between
Subscriber and Republic or Harken arising out of or in connection with exchange
by Subscriber of the Debenture for Harken Common Stock, Subscriber, Republic and
Harken hereby expressly agree that such dispute shall be resolved through
arbitration rather than litigation. The undersigned hereby agrees to submit the
dispute to binding arbitration through the American Arbitration Association
("AAA") in Denver, Colorado, to be conducted in accordance with the rules of
commercial arbitration adopted by AAA. Such a dispute shall be submitted to
arbitration by any party by filing a written request for arbitration with AAA.
Subscriber, Republic and Harken agree that the Federal Arbitration Act shall
govern the disposition of all issues raised in the arbitration proceeding. A
decision in the arbitration proceeding shall be final and binding on the
parties.

     11. Notices. All notices or other communications required under this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered personally or mailed by certified or registered mail, return receipt
requested, postage prepaid as follows: if to Subscriber, to the address set
forth on the signature page to this Agreement; and if to Republic or Harken to
their address as set forth in the Harken Disclosure Memorandum.

                       [The balance of this page is blank]

                                        3
<PAGE>

                                SIGNATURE PAGE TO
                    DEBENTURE EXCHANGE SUBSCRIPTION AGREEMENT
                    -----------------------------------------

     By signing this Agreement in the place indicated below, Subscriber
represents to Republic and Harken that Subscriber has read this entire
Agreement, that the information set forth below is accurate, and that Subscriber
agrees to exchange his or her Debenture for Harken Common Stock as described in
this Agreement.

                                   INDIVIDUAL
                                   ----------
<TABLE>
<S>                                                           <C>

-----------------------------------------                     Address to Which Correspondence
Name of Registered Owner of                                   Should be Directed
Debenture ("Subscriber")
                                                              -------------------------------------------

                                                              -------------------------------------------

-----------------------------------------                     -------------------------------------------
Signature (Individual)                                        City, State, and Zip Code

-----------------------------------------                     --------------------------------------------
Signature (Second Signature if Joint Owner)                   Tax Identification or Social Security Number

-----------------------------------------                     --------------------------------------------
Name Typed or Printed                                         Second Name Type or Printed

(      )                                                      (         )
-----------------------------------------                     --------------------------------------------
Fax Number                                                    Telephone Number

                                                              $
-----------------------------------------                     -------------------------------------------
Date                                                          Principal Amount of Debenture
</TABLE>

                                   ACCEPTANCE
                                   ----------

     This Debenture Exchange Subscription Agreement is accepted as of
                                                                     -----------
, 2002 (the date of Closing of the Purchase and Sale Agreement dated
January 31, 2002).

REPUBLIC RESOURCES, INC.                    HARKEN ENERGY CORPORATION

By                                          By
   ------------------------------              ---------------------------------
   Patrick J. Duncan, President                 Bruce N. Huff, President

                                        4
<PAGE>

                                   SIGNATURES
                                   ----------

     By signing this Agreement in the place indicated below, Subscriber
represents to Republic and Harken that Subscriber has read this entire
Agreement, that the information set forth below is accurate, and that Subscriber
agrees to exchange his or her Debenture for Harken Common Stock as described in
this Agreement.

                 CORPORATION, PARTNERSHIP, TRUST OR OTHER ENTITY
                 -----------------------------------------------
<TABLE>
<S>                                                   <C>

                                                      Address to Which Correspondence
-----------------------------------------             Should be Directed
Name of Registered Owner of
Debenture ("Subscriber")
                                                      -------------------------------------------

                                                      -------------------------------------------

-----------------------------------------             -------------------------------------------
Signature (Individual)                                City, State, and Zip Code

-----------------------------------------             --------------------------------------------
Signature (Second Signature if Joint Owner)           Tax Identification or Social Security Number
-----------------------------------------             --------------------------------------------
Name Typed or Printed                                 Second Name Type or Printed

(      )                                              (         )
-----------------------------------------             --------------------------------------------
Fax Number                                            Telephone Number

                                                      $
-----------------------------------------             -------------------------------------------
Date                                                  Principal Amount of Debenture
</TABLE>

     *The Certificate of Signatory must also be completed.

                            CERTIFICATE OF SIGNATORY
                            ------------------------
            To be completed if the Debentures are owned by an entity
            --------------------------------------------------------

         I,                                       , am the                    of
            --------------------------------------         ------------------
            [Name printed]
                                                                  (the "Entity")
------------------------------------------------------------------

     I certify that I am empowered and duly authorized by the Entity to execute
anc carry out the terms of this Agreement and to exchange the Debentures as
described in this Agreement, and certify that this Agreement has been duly and
validly executed on behalf of the Entity and constitutes a legal and binding
obligation of the Entity.

        IN WITNESS WHEREOF, I have hereto set my hand this       day of
                                                           -----
        , 200  .
--------     --

                                    --------------------------------------------
                                       Signature

                                   ACCEPTANCE
                                   ----------

        This Debenture Exchange Subscription Agreement is accepted as of
           , 2002 (the date of Closing of the Purchase and Sale Agreement dated
-----------
January 31, 2002).

REPUBLIC RESOURCES, INC.                     HARKEN ENERGY CORPORATION

By                                           By
   ------------------------------------         --------------------------------
   Patrick J. Duncan, President                 Bruce N. Huff, President

                                        5
<PAGE>

                                    EXHIBIT G
                                    ---------

                          REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is made and entered into as of
the      day of              , 2002, by and among Harken Energy Corporation, a
    ----       --------------
Delaware corporation ("Harken"), and Republic Resources, Inc., a Nevada
corporation ("Republic").

                                    RECITALS:
                                    ---------

A.    Reference is hereby made to that certain Purchase and Sale Agreement dated
      as of the date hereof (the "Purchase Agreement") by and among Harken and
      Republic pursuant to which Republic will upon Closing, receive a certain
      number of Shares of Harken Common Stock, which Shares are the subject of
      this Agreement.

B.    Pursuant to the terms of the Agreement, Harken has agree to provide
      Republic and the holders of the Registrable Securities (as defined herein)
      with the registration rights set forth herein.

                                   AGREEMENT:
                                   ----------

NOW, THEREFORE, for and in consideration of the foregoing Recitals and the
mutual agreements contained herein, the sufficiency of which is hereby
acknowledged and confirmed, the parties hereto, intending to be legally bound,
agree as follows:

Section 1. Definitions and References.
           --------------------------

(1)  When used in this Agreement, the following terms shall have the respective
     meanings assigned to them in this Section 1 or in the Sections referred to
     below:

          "Agreement" shall mean this Registration Rights Agreement, as
          hereafter amended or modified in accordance with the terms hereof.

          "Commission" shall mean the Securities and Exchange Commission (or any
           successor body thereto).

          "Common Stock" shall mean the common stock, par value $0.01 per share,
          of Harken.

          "Purchase Agreement" shall mean the Purchase and Sale Agreement dated
          as of the date hereof between Harken and Republic.

          "Exchange Act" shall mean the Securities Exchange Act of 1934, as
          amended, and all rules and regulations promulgated under such Act.

          "Harken" shall have the meaning assigned to it in the preamble to this
          Agreement.

          "Harken Indemnified Parties" shall have the meaning assigned to it in
          Section 5(b).

          "Holder" shall mean any Person that holds Registrable Securities.

          "Holder Indemnified Parties" shall have the meaning assigned to it in
          Section 5(a).

          "Republic" shall have the meaning assigned to it in the preamble to
          this Agreement.

          "Person" shall mean any individual, corporation, partnership, joint
          venture, limited partnership, limited liability company, trust,
          unincorporated organization, government or any agency or political
          subdivision thereof or other entity.

          "Prospectus" shall mean the prospectus included in any Registration
          Statement (including, without limitation, a prospectus that discloses
          information previously omitted from a prospectus filed as part of an
          effective registration statement in reliance upon Rule 430A
          promulgated pursuant to the Securities Act), as amended or
          supplemented by any prospectus supplement, with respect to the terms
          of the offering of any portion of the Registrable Securities covered
          by such Registration Statement, and all other amendments and
          supplements to any such prospectus, including post-effective
          amendments, and all material incorporated by reference or deemed to be
          incorporated by reference, if any, in such prospectus.
<PAGE>

          "Registrable Securities" shall mean the Shares issued to Republic
          under the Purchase Agreement or pursuant to that certain Contingent
          Payment Agreement attached as EXHIBIT D to the Purchase Agreement.
                                        ---------

          "Registration Expenses" shall mean all fees and expenses incident to
          Harken's performance of or compliance with the registration rights
          granted hereunder, including (without limitation) all registration and
          filing fees, fees and expenses of compliance with securities and blue
          sky laws, printing and engraving expenses, messenger, telephone and
          delivery expenses, fees and disbursements of counsel for Harken, and
          fees and disbursements of all independent certified public accountants
          and underwriters (excluding discounts and commissions); provided,
          however, that Registration Expenses shall not include any Selling
          Expenses.

          "Registration Statement" shall mean any registration statement of
          Harken that covers any of the Registrable Securities pursuant to this
          Agreement, including the Prospectus, amendments and supplements to
          such registration statement or Prospectus, including pre- and
          post-effective amendments, all exhibits thereto, and all material
          incorporated by reference or deemed to be incorporated by reference,
          if any, in such registration statement.

          "Securities Act" shall mean the Securities Act of 1933, as amended,
          and all rules and regulations promulgated under such Act.

          "Selling Expenses" shall mean underwriting discounts or commissions,
          any selling commissions and stock transfer taxes attributable to sales
          of Registrable Securities and the fees and expenses of counsel for any
          Holder.

(2)  All references in this Agreement to sections, subsection and other
     subdivisions refer to corresponding sections, subsections and other
     subdivisions of this Agreement unless expressly provided otherwise. Titles
     appearing at the beginning of any such subdivisions are for convenience
     only and shall not constitute part of such subdivisions and shall be
     disregarded in construing the language contained herein. The words "this
     Agreement", "this instrument", "herein", "hereof", "hereby", "hereunder"
     and words of similar import refer to this Agreement as a whole and not to
     any particular subdivision unless expressly so limited. Words in the
     singular form shall be construed to include the plural and vice versa,
                                                                ----------
     unless the context otherwise requires.

Section 2. Registration Shares.
           -------------------

Harken shall prepare and file with the Commission as soon as reasonably
practicable and in any event no later than sixty (60) days after Closing the
Purchase Agreement and the issuance contemplated thereunder to Republic of the
Shares, a registration statement on Form S-3 or other appropriate form pursuant
to Rule 415 under the Securities Act covering the sale by Republic of such
Registrable Securities. Harken shall use its reasonable best efforts to cause
each such Registration Statement to be declared effective as soon as reasonably
practicable after the filing thereof and to keep each such Registration
Statement effective for no less than the later of 365 days or the expiration of
the Selling Period (as defined in the Exchange Agreement) applicable to the
Registrable Securities covered thereby.

Section 3. Registration Procedures.
           -----------------------

     (a)  In connection with Harken's registration obligations hereunder, Harken
          will use its reasonable best efforts to effect the registration of the
          Registrable Securities in accordance with the intended methods of
          disposition thereof as quickly as practicable, and pursuant thereto
          Harken will a expeditiously as possible:

          (1)  prepare and file with the Commission not later than the time
               specified in this Agreement, a Registration Statement on the
               appropriate form with respect to the Registrable Securities and
               use its reasonable best efforts to cause such Registration
               Statement to become effective as soon as reasonably practicabl
               after the filing thereof (provided, that before filing a
               Registration Statement or Prospectus or any amendments or
               supplements thereto, Harke will furnish copies of all such
               documents proposed to be file to all Holders of Registrable
               Securities covered by such Registration Statement);

                                        2
<PAGE>

          (2)  prepare and file with the Commission such amendments an
               supplements to such Registration Statement and the Prospectus
               used in connection therewith as may be necessary to keep such
               Registration Statement effective for a period of not less than
               the period set fort in this Agreement or such shorter period
               which will terminate when all Registrable Securities covered by
               such Registration Statement have been sold (but not before the
               expiration of the applicable Prospectus deliver period) and
               comply with the provisions of the Securities Act with respect to
               the disposition of all Registrabl Securities covered by such
               Registration Statement during such period in accordance with the
               intended methods of disposition by the Holders thereof set forth
               in such Registration Statement:

          (3)  furnish to each Holder of Registrable Securities such number of
               copies of such Registration Statement, each amendment and
               supplement thereto, the Prospectus included in such Registration
               Statement (including, without limitation, each preliminary
               prospectus) and such other documents as such Holde may reasonably
               request in order to facilitate the disposition of the Registrable
               Securities owned by such Holder.

          (4)  use its reasonable best efforts to register or qualif such
               Registrable Securities under such other securities or blue sky
               laws of such jurisdictions within the United States as any Holder
               reasonably requests and do an and all other acts and things which
               may be reasonably necessary or advisable to enable such Holder to
               consummate the disposition in such jurisdictions of the
               Registrable Securities owned by such Holder (provided that Harken
               will not be required to qualify generally to do business or
               subject itself to any general service of process in any
               jurisdiction where it is otherwise not the so subject);

          (5)  notify each Holder of such Registrable Securities, at an time
               when a Prospectus relating thereto is required to be delivered
               under the Securitie Act, of the happening of any event which
               requires the making of any change in the Prospectus included in
               such Registration Statement so that such document will not
               contain an untrue statement of a materia fact or omit to state
               any material fact required to be stated therein or necessary to
               make the statements therein not misleading, and, at the request
               of any such Holder, Harken will prepare a supplement or amendment
               to such Prospectus so that such Prospectus will not contain a
               untrue statement of a materia fact or omit to state any material
               fact required to be stated therein or necessary to make the
               statements therein not misleading;

          (6)  use its reasonable best efforts to cause all such Registrable
               Securities to be listed on each securities exchange or exchanges,
               automated quotatio system or over-the-counter market upon which
               securities of Harken of the same class are then listed;

          (7)  enter into such customary agreements (including, withou
               limitation, underwriting agreements in customary form, substance
               and scope) and take all such other actions as the Holders of a
               majority of the Registrable Securities being sold or the
               underwriters, if any, reasonably request in order to expedite or
               facilitate the disposition of such Registrable Securities;

          (8)  otherwise use its reasonable best efforts to comply with all
               applicable rules and regulations of the Commission, and make
               generally available to its security holders an earnings statement
               no later than ninety (90) day after the end of the 12-month
               period beginning with the first day of Harken's first full
               calendar quarter after the effective date of the Registration
               Statement, which earnings statement shall satisfy the provisions
               of Section 11(a) o the Securities Act and Rule 158 thereunder;

          (9)  in the event of the issuance or threatened issuance of any stop
               order suspending the effectiveness of a Registration Statement,
               or an order suspending or preventin the use of any related
               Prospectus or suspending the qualification of any Registrable
               Securities included in such Registration Statemen for sale in any
               jurisdiction, promptly notify each Holder o Registrable
               Securities of the issuance or threatened issuance of such order
               and us its reasonable best efforts promptly to prevent the entry
               of such order or obtain the withdrawal of such order if issued;

          (10) use its reasonable best efforts to cause such Registrable
               Securities covere by such Registration Statement to be registered
               with or approved by such other governmental agencies or
               authorities as may be necessary to enable the Holders thereof to
               consummate the disposition of such Registrable Securities;

                                        3
<PAGE>

          (11) make available at all reasonable times and in a reasonable manner
               for inspection by any Holder of Registrable Securities, any
               underwriter participating in any disposition pursuant to such
               Registration Statement, and any attorney, accountant or other
               agent retained by an such Holder or underwriter (collectively,
               the "Inspecto", all fi records, corporate documents and
               properties of Harken (collectively, the "Records") and cause the
               officers, directors and employees of Harken to supply all
               information reasonably requested by any such Inspector in
               connection with such Registration Statement prior to its
               effectiveness, in each case to the extent that such Records and
               information are pertinent to the information disclosed in the
               Registration Statement; provided, that eac such Inspector shall
               execute and deliver to Harken a Confidentiality Agreement in the
               form attached hereto as EXHIBIT A. Records which Harken
                                       ---------
               determines, in good faith, to be confidential and which Harken
               notifies the Inspectors are confidential shall not be disclosed
               by the Inspectors unless (i) the disclosure of such Records is
               necessary to avoid or correct a misstatement or omission in the
               Registration Statement or (ii the release of such Records i
               ordered pursuant to a subpoen or other order from a court of
               competent jurisdiction; each Holder of Registrable Securities
               agrees that it will, upon learning that disclosure of such
               Records is sought in a court of competent jurisdiction, give
               notice to Harken and allow Harken, at Harken's expense, to
               undertake appropriate action to prevent disclosure of the Records
               deemed confidential; and

          (12) use its reasonable best efforts to obtain, if require by said
               underwriters in connection with an underwritten offering, a
               comfort letter from Harken's independent public accountant in
               customary form and covering such matters of the type customarily
               covered by comfor letters with respect to offerings of the type
               being made pursuant to the Registration Statement as the Holders
               of the Registrable Securities reasonably request

     (b)  In connection with each Registration Statement, Republic agrees and
          each Holder of Registrable Securities (including Registrable
          Securities in any Registration Statement filed pursuant to this
          Agreement) will be deemed to have agreed, as follows:

          (1)  upon receipt of any notice from Harken of the happening of any
               event of the kind described in Section 3(a)(5) or the issuance of
               any order of the kind described in Section 3(a 9), the Holders of
               Registrable Securities covered by such Registration Statement
               will forthwith discontinue disposition of such Registrable
               Securities until the Holders of Registrable Securities receive
               copies of the supplemented or amended Prospectus contemplated by
               Section 3(a)(5), or until the are advised in writing by Harken
               that the use of the applicable Prospectus may be resumed, an they
               have received copies of any additional or supplementa filings
               that are incorporated or deemed to be incorporated by reference
               in such Prospectus (it being the agreement of the parties hereto,
               however, that the obligation of Harken with respect to
               maintaining the subject Registration Statement curren and
               effective, and the Sellin Period (as defined in the Exchange
               Agreement) with respect to such Registrable Securities, shall be
               extended by a number of trading days equal to the period the
               Holders of Registrable Securities are required by this Section
               3(b)(1) to discontinue disposition of such Registrable
               Securities; and

          (2)  furnish to Harken such information regarding each Holder, the
               Registrable Securities held by such Holder and the intended
               method of disposition thereof as Harken shall reasonably request
               and as shall be reasonably required in connection with the
               preparation of the applicable Registration Statement and other
               actions taken by Harken under this Agreement, and it shall be a
               condition precedent to the obligation of Harken to take any
               action pursuant to this Agreement in respect of the Registrable
               Securities that such information has been furnished to Harken by
               the Holders of Registrable Securities.

Section 4. Expenses. Harken shall pay all Registration Expenses whether or not
           --------
any Registration Statement is filed or becomes effective and whether or not any
securities are sold pursuant to any Registration Statement and, in any event,
shall pay its internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal and accounting duties),
the expense of any annual audit and the fees and expenses incurred in connection
with the listing of the securities to be registered on each securities exchange
on which similar securities of Harken are then listed. All Selling Expenses
incurred in connection with a registration effected pursuant to the terms hereof
shall be borne by the seller or sellers of Registrable Securities pro rata based
upon the number of Registrable Securities included in such registration.

                                        4
<PAGE>

Section 5. Indemnification.
           ---------------

     (a)  Harken shall indemnify and hold harmless, with respect to any and all
          Registration Statements, each Holder of Registrable Securities covered
          by such Registration Statement, and each other Person, if any, who
          controls such Holder within the meaning of Section 15 of the
          Securities Act (collectively, "Holder Indemnified Parties"), against
          all losses, claims, damages, liabilities and expenses, joint or
          several, to which any such Holder Indemnified Party may become subject
          under the Securities Act, the Exchange Act, at common law or
          otherwise, insofar as such losses, claims, damages, liabilities or
          expenses (or actions or proceedings, whether commenced or threatened,
          in respect thereof) arise out of or are based upon (i) any untrue
          statement or alleged untrue statement of a material fact contained in
          any Registration Statement in which such Registrable Securities were
          included or any omission or alleged omission to state therein a
          material fact required to be stated therein or necessary to make the
          statements therein not misleading, (ii) any untrue statement or
          alleged untrue statement of a material fact contained in any
          preliminary, final or summary Prospectus, together with the documents
          incorporated by reference therein (as amended or supplemented if
          Harken shall have filed with the Commission any amendment thereof or
          supplement thereto), or any omission or alleged omission to state
          therein a material fact required to be stated therein or necessary in
          order to make the statements therein, in the light of the
          circumstances under which they were made, not misleading, or (iii) any
          violation by Harken of any federal, state or common law rule or
          regulation applicable to Harken and relating to action of or inaction
          by Harken in connection with any such registration; and in each such
          case, Harken shall reimburse each such Holder Indemnified Party for
          any reasonable legal or other expenses incurred by any of them in
          connection with investigating or defending any such loss, claim,
          damage, liability, expense, action or proceeding; provided, however,
          that Harken shall not be liable to any such Holder Indemnified Party
          in any such case to the extent that any such loss, claim, damage,
          liability or expense (or action or proceeding, whether commenced or
          threatened, in respect thereof) arises out of or is based upon any
          untrue statement or alleged untrue statement or omission or alleged
          omission made in such Registration Statement or amendment thereof or
          supplement thereto or in any such preliminary, final or summary
          Prospectus in reliance upon and in conformity with written information
          furnished to Harken by or on behalf of any such Holder Indemnified
          Party for use in the preparation thereof. Such indemnity and
          reimbursement of expenses and other obligations shall remain in full
          force and effect regardless of any investigation made by or on behalf
          of the Holder Indemnified Parties and shall survive the transfer of
          such securities by such Holder Indemnified Parties.

     (b)  Each Holder of Registrable Securities participating in any
          registration hereunder shall severally (and not jointly or jointly and
          severally) indemnify and hold harmless Harken, its directors,
          officers, employees and agents, and each Person who controls Harken
          (within the meaning of Section 15 of the Securities Act)
          (collectively, "Harken Indemnified Parties") against all losses,
          claims, damages, liabilities and expenses to which any Harken
          Indemnified Party may become subject under the Securities Act, the
          Exchange Act, at common law or otherwise, insofar as such losses,
          claims, damages, liabilities or expenses (or actions or proceedings,
          whether commenced or threatened, in respect thereof) arise out of or
          are based upon (i) any untrue statement or alleged untrue statement of
          a material fact contained in any Registration Statement in which such
          Holder's Registrable Securities were included or the omission or
          alleged omission to state therein a material fact required to be
          stated therein or necessary to make the statements therein not
          misleading, (ii) any untrue statement or alleged untrue statement of a
          material fact contained in any preliminary, final or summary
          Prospectus, together with the documents incorporated by reference
          therein ( as amended or supplemented if Harken shall have filed with
          the Commission any amendment thereof or supplement thereto), or the
          omission or alleged omission to state therein a material fact required
          to be stated therein or necessary in order to make the statements
          therein, in the light of the circumstances under which they were made,
          not misleading, to the extent, in the cases described in clauses (i)
          and (ii), that such untrue statement or omission was furnished in
          writing by such Holder for use in the preparation thereof, or (iii)
          any violation by such Holder of any federal, state or common law rule
          or regulation applicable to such Holder and relating to action of or
          inaction by such Holder in connection with any such registration. Such
          indemnity obligation shall remain in full force and effect regardless
          of any investigation made by or on behalf of the Harken Indemnified
          Parties (except as provided above) and shall survive the transfer of
          such securities by such Holder.

     (c)  Promptly after receipt by an indemnified party under subsection 5(a)
          or (b) of written notice of the commencement of any action, suit,
          proceeding, investigation or threat thereof made in writing with
          respect to which a claim for indemnification may be made pursuant to
          this Section 5, such indemnified party shall, if a claim in respect
          thereof is to be made against an indemnifying party, give written
          notice to the indemnifying party of the threat or commencement
          thereof; provided, however, that the failure to so notify the
          indemnifying party shall not relieve it from any liability which it
          may have to any indemnified party except to the extent that the
          indemnifying party is actually prejudiced by such failure to give
          notice. If any such claim or action referred to under subsection (a)
          or (b) is brought against any indemnified party and it then notifies
          the indemnifying party of the threat or commencement thereof, the
          indemnifying party shall be entitled to participate therein and, to
          the extent that it wishes, jointly with any other indemnifying party
          similarly notified, to assume the defense thereof with counsel
          reasonably satisfactory to such indemnified party. After notice from
          the indemnifying party to such indemnified party of its election so to
          assume the defense of any such claim or action, the indemnifying party
          shall not be liable to such indemnified party under this Section 5 for
          any legal expenses of counsel or any other expenses subsequently
          incurred by such indemnified party in connection with the defense
          thereof other than reasonable costs of investigation unless the
          indemnifying party has failed to assume the defense of such claim or
          action or to employ counsel reasonably satisfactory to such
          indemnified party. Under no circumstances will the indemnifying party
          be obligated to pay the fees and expenses of more than one law firm
          for all indemnified parties. The indemnifying party shall not be
          required to indemnify the indemnified party with respect to any
          amounts paid in settlement of any action, proceeding or investigation
          entered into without the written consent of the indemnifying party,
          which consent shall not be unreasonably withheld. No indemnifying
          party shall consent to the entry of any judgment or enter into any
          settlement without the consent of the indemnified party unless (i)
          such judgment or settlement does not impose any obligation or
          liability upon the indemnified party other than the execution,
          delivery or approval thereof, and (ii) such judgment or settlement
          includes as an unconditional term thereof the giving by the claimant
          or plaintiff to such indemnified party of a full release and discharge
          from all liability in respect of such claim for all persons that may
          be entitled to or obligated to provide indemnification or contribution
          under this Section 5.

                                        5
<PAGE>

     (d)  Indemnification similar to that specified in the preceding subsections
          of this Section 5 (with appropriate modifications) is hereby given by
          Harken and each Holder of Registrable Securities with respect to any
          required registration or qualification of securities under any state
          securities or blue sky laws.

     (e)  If the indemnification provided for in this Section 5 is unavailable
          to or insufficient to hold harmless an indemnified party under
          subsection (a) or (b), then each indemnifying party shall contribute
          to the amount paid or payable by such indemnified party as a result of
          the losses, claims, damages, liabilities or expenses (or actions or
          proceedings in respect thereof) referred to in subsection (a) or (b)
          in such proportion as is appropriate to reflect the relative fault of
          the indemnifying party on the one hand and the indemnified party on
          the other in connection with the statements, omissions, actions or
          inactions which resulted in such losses, claims, damages, liabilities
          or expenses as well as any other relevant equitable considerations.
          The relative fault of the indemnifying party and the indemnified party
          shall be determined by reference to, among other things, whether the
          untrue or alleged untrue statement of a material fact or the omission
          or alleged omission to state a material fact relates to information
          supplied by the indemnifying party or the indemnified party, any
          action or inaction by any such party, and the parties' relative
          intent, knowledge, access to information and opportunity to correct or
          prevent such statement, omission, action or inaction. The amount paid
          or payable by an indemnified party as a result of the losses, claims,
          damages, liabilities or expenses (or actions or proceedings in respect
          thereof) pursuant to this subsection (e) shall be deemed to include,
          without limitation, any reasonable legal or other expenses incurred by
          such indemnified party in connection with investigating or defending
          any such action or claim (which shall be limited as provided in
          subsection (c) if the indemnifying party has assumed the defense of
          any such action in accordance with the provisions thereof) which is
          the subject of this subsection (e). No person guilty of fraudulent
          misrepresentation (within the meaning of Section 11(f) of the
          Securities Act) shall be entitled to contribution from any person who
          was not guilty of such fraudulent misrepresentation. Promptly after
          receipt by an indemnified party under this subsection (e) of written
          notice of the commencement of any action, suit, proceeding,
          investigation or threat thereof made in writing with respect to which
          a claim for contribution may be made against an indemnifying party
          under this subsection (e), such indemnified party shall, if a claim
          for contribution in respect thereof is to be made against an
          indemnifying party, give written notice to the indemnifying party in
          writing of the commencement thereof (if the notice specified in
          subsection (c) has not been given with respect to such action);
          provided, however, that the failure to so notify the indemnifying
          party shall not relieve it from any obligation to provide contribution
          which it may have to any indemnified party under this subsection (e)
          except to the extent that the indemnifying party is actually
          prejudiced by the failure to give notice.

          The parties hereto agree that it would not be just and equitable if
          contribution pursuant to this paragraph were determined by pro rata
          allocation or by any other method of allocation which does not take
          account the equitable considerations referred to in the immediately
          preceding paragraph.

                                        6
<PAGE>

          If indemnification is available under Section 5, the indemnifying
          parties shall indemnify each indemnified party to the fullest extent
          provided in subsections (a) or (b), without regard to the relative
          fault of said indemnifying party or any other equitable consideration
          provided for in this paragraph. The provisions of this paragraph
          shall be in addition to any other rights to indemnification or
          contribution which any indemnified party may have pursuant to law or
          contract, shall remain in full force and effect regardless of any
          investigation made by or on behalf of any indemnified party, and
          shall survive the transfer of securities by any such party.

     (f)  In connection with any underwritten offering contemplated by this
          Agreement which includes Registrable Securities, Harken and all
          Holders of Registrable Securities included in any Registration
          Statement shall agree to customary provisions for indemnification and
          contribution (consistent with the other provisions of this Section 5)
          in respect of losses, claims, damages, liabilities and expenses of the
          underwriters of such offering.

     (g)  The indemnification obligations hereunder with respect to any
          Registration Statement shall terminate three (3) years after the
          termination of the offering of Registrable Securities covered by such
          Registration Statement.

Section 6. Selection of Underwriters. The Holders of Registrable Securities
           -------------------------
shall have the right to elect that the offering of Registrable Securities
pursuant to a Registration Statement filed under this Agreement be in the form
of an underwritten offering or a best efforts offering. If any registration
hereunder is an underwritten offering or a best efforts offering, the investment
banker or investment bankers and manager or managers that will administer the
offering shall be selected by Harken; provided, that such investment bankers and
managers must be reasonably satisfactory to the Holders of a majority of the
Registrable Securities to be registered in such registration.

Section 7. Rule 144. Harken covenants to each Holder that, to the extent that
           --------
Harken shall be required to do so under the Exchange Act, Harken shall (a)
timely file the reports required to be filed by it under the Exchange Act or the
Securities Act (including, but not limited to, the reports under Sections 13 and
15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule 144 adopted
by the Commission under the Securities Act) and the rules and regulations
adopted by the Commission thereunder, and (b) take such further action as any
Holder may reasonably request, all to the extent required from time to time to
enable such Holder to sell Registrable Securities without registration under the
Securities Act within the limitations of the exemption provided by Rule 144
under the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission. Upon the request
of any Holder, Harken shall deliver to such Holder a written statement as to
whether it has complied with such requirements.

Section 8. Transferability. Republic may transfer any or all of the Registrable
           ---------------
Securities issued under the Purchase Agreement to other parties who are Holders
of Republic's outstanding Debentures ("Debenture Holder"), and Republic may
transfer any or all of the Registrable Securities issued under the Contingent
Payment Agreement (attached as EXHIBIT D to the Purchase Agreement) to the
                               ---------
holders of Republic's Series C Redeemable Preferred Stock (the "Preferred
Holders"), provided such Debenture Holder or Preferred Holder, as the case may
be, first provides to Harken written representation that such party constitutes
an Accredited Investor as such term is defined in the Securities Act. To the
extent Republic does transfer any or all of the Registrable Securities to one or
more Debenture Holders or Preferred Holders in accordance with this Section 8,
then such Debenture Holders or Preferred Holders shall accrue the rights,
benefits and obligations of this Agreement to the same extent as if they had
originally been signature parties hereto.

Republic agrees and warrants to Harken that any and all transfers of Registrable
Securities to Debenture Holders and Preferred Holders will be expressly made
subject to the terms of this Agreement.

Transfers of any or all of the Registrable Securities except to Debenture
Holders or Preferred Holders as provided in this Section 8, or under an
effective registration as provided under this Agreement, may only be made with
Harken's prior written consent, for which consent Harken my require
representations, indemnifications and warranties regarding the proposed party to
whom such transfer is requested.

Section 9. Miscellaneous.
           -------------

     (1)  >From and after the date of this Agreement, Harken will not, without
          the prior written consent of the Holders of a majority of the
          Registrable Securities then outstanding, enter into any agreement with
          respect to its securities which is inconsistent with or violates the
          rights granted to the Holders of Registrable Securities in this
          Agreement.

                                        7
<PAGE>

     (2)  Investors agree, and each other Holder of Registrable Securities
          (including Registrable Securities in any Registration Statement filed
          pursuant to this Agreement) will be deemed to have agreed, as follows:

          (1)  if any Registrable Securities are being registered in any
               registration pursuant to this Agreement, the Holder thereof will
               comply with all anti-stabilization, manipulation and similar
               provisions of Section 10 of the Exchange Act, and any rules
               promulgated thereunder by the Commission, and, at the request of
               Harken, will execute and deliver to Harken and to any underwriter
               participating in such offering, an appropriate agreement to such
               effect; and

          (2)  at the end of any period during which Harken is obligated to keep
               a Registration Statement current and effective as described
               herein, the Holders of Registrable Securities included in this
               Registration Statement shall discontinue sales thereof pursuant
               to such Registration Statement.

     (3)  All questions concerning the construction, validity and interpretation
          of this Agreement and all actions, proceedings and matters arising out
          of this Agreement shall be governed by the internal law, and not the
          law of conflicts, of the State of Texas.

     (4)  All covenants and agreements in this Agreement by or on behalf of any
          of the parties hereto will bind and inure to the benefit of the
          respective successors and assigns of the parties hereto whether
          expressed or not.

     (5)  This Agreement is intended by the parties as a final expression of
          their agreement and intended to be a complete and exclusive statement
          of the agreement and understanding of the parties hereto in respect of
          the subject matter herein contained. There are no restrictions,
          promises, warranties or undertakings, other than those set forth or
          referred to herein, with respect to the registration rights granted by
          Harken to the Holders of the Registrable Securities. This Agreement
          supersedes all prior agreements and understandings between the parties
          with respect to such subject matter.

     (6)  All notices, demands or other communications to be given or delivered
          under or by reason of the provisions of this Agreement shall be in
          writing and shall be deemed to have been given when delivered
          personally or sent by reputable express courier service (charges
          prepaid), or mailed to the recipient by certified or registered mail,
          return receipt requested and potage prepaid, or sent by telefax, to
          the parties at the following address (or to such other address or to
          the attention of such other person as the recipient party has
          specified by prior like notice to the sending party):

If to Harken:
------------

          Harken Energy Corporation
          580 WestLake Park Blvd., Suite 600
          Houston, Texas 77079
          Telecopier No.: (281) 504-4110
          Attention: Bruce N. Huff President and
          Larry E. Cummings, General Counsel

If to Republic:
--------------

          Republic Resources, Inc.
          743 Horizon Ct., Suite 333
          Grand Junction, Colorado 81506-8715
          Tel: (970) 245-5917
          Telecopier No.: (970) 243-8840
          Attention: Patrick J. Duncan, President

                                        8
<PAGE>

With a copy to:
--------------

          Alan W. Peryam, Esq.
          1120 Lincoln Street, Suite 1000
          Denver, Colorado 80203
          Tel: (303) 866-0900
          Telecopier No.: (303) 866-0999

     (7)  If any provision of this Agreement is held to be unenforceable, this
          Agreement shall be considered divisible and such provision shall be
          deemed inoperative to the extent it is deemed unenforceable, and in
          all other respects of this Agreement shall remain in full force and
          effect; provided, however, that if any such provision may be made
          enforceable by limitation thereof, then such provision shall be deemed
          to be so limited and shall be enforceable to the maximum extent
          permitted by applicable law.

     (9)  This Agreement may be executed by the parties hereto in any number of
          counterparts, each of which shall be deemed an original, but all of
          which shall constitute one and the same agreement. Each counterpart
          may consist of a number of copies hereof each signed by less than all,
          but together signed by all, the parties hereto.

     (9)  Each Holder of Registrable Securities, in addition to being entitled
          to exercise all rights granted by law, including recovery of damages,
          will be entitled to specific performance of its rights under this
          Agreement. Harken agrees that monetary damages would not be adequate
          compensation for any loss incurred by reason of breach by it of the
          provisions of this Agreement and hereby agree to waive (to the extent
          permitted by law) the defense in any action for specific performance
          that a remedy of law would be adequate.

     (10) In any action or proceeding brought to enforce any provision of this
          Agreement, or where any provision hereof is validly asserted as a
          defense, the successful party shall be entitled to recover reasonable
          attorney's fees in addition to any other available remedy.

     (11) Harken agrees to remove any legends on certificates representing
          Registrable Securities describing transfer restrictions applicable to
          such securities upon the sale of such securities (i) pursuant to an
          effective Registration Statement under the Securities Act or (ii) in
          accordance with the provisions of Rule 144 under the Securities Act.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

                                                    HARKEN ENERGY CORPORATION

                                                By:
                                                    --------------------------
                                                    Name:  Bruce N. Huff
                                                    Title:  President

                                                    REPUBLIC RESOURCES, INC.

                                                By:
                                                    --------------------------
                                                    Name:  Patrick. J. Duncan
                                                    Title:  President

                                       9

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