Document:

EX-10.3

Exhibit 10.3

Dated 26th May 2006

(1) TALISMAN EXPRO LIMITED

(2) TALISMAN PETROLEUM LTD.

HIVE-OUT AGREEMENT

in respect of interests in Romania

CMS Cameron McKenna LLP

Mitre House

North Silver Street

Aberdeen AB10 1RJ

T +44(0)1224 622002

F +44(0)1224 622066

Ref: NW/SMLR/0Z6417.00139

1

Table of Contents

	1.	 	Definitions and interpretation	 

	2.	 	Sale and Purchase of the Interests	 

	3.	 	Consideration	 

	4.	 	Completion	 

	5.	 	Post Completion	 

	6.	 	Indemnities	 

	7.	 	No Warranty	 

	8.	 	Confidentiality and Announcements	 

	9.	 	Costs and Expenses	 

	10.	 	Further Assurance	 

	11.	 	Variation	 

	12.	 	Severance	 

	13.	 	Assignment	 

	14.	 	General	 

	15.	 	Rights of Third Parties	 

	16.	 	Governing law	 

	 	 	Schedule 1 Interests – Part 1	 

	 	 	Schedule 2 Working Capital	 

2

THIS AGREEMENT is made the 26th day of May 2006

BETWEEN

	(1)	 	TALISMAN EXPRO LIMITED, a company incorporated in England and Wales (registered number
3518803) whose registered office is at 20-22 Bedford Row, London WC1R 4JS (the “Seller”); and

	(2)	 	TALISMAN PETROLEUM LTD., a corporation duly incorporated and validly subsisting as a
corporation whose registered office is Suite 3400888, 3rd Street SW, Calgary,
Alberta, Canada T2P 5C5 (the “Purchaser”).

WHEREAS the Seller wishes to sell and the Purchaser wishes to buy the Interests on the terms and
conditions set out herein.

NOW THEREFORE IT IS HEREBY AGREED as follows:

	1.	 	Definitions and interpretation

Definitions

	1.1	 	In this Agreement the following expressions shall, except where the context otherwise
requires, have the following respective meanings:

“Accruals Basis” means that basis of accounting under which costs and benefits are
regarded as applicable to the period in which the liability for the cost is incurred or
the right to the benefit arises regardless of when invoiced, paid or received;

“Affiliate” means in relation to a Party, any company or legal entity that controls
or is controlled by, or which is controlled by an entity which controls, such Party, where
“control” means the ownership, directly or indirectly, of more than fifty percent (50%) of
the voting rights in a company or other legal entity, the right to appoint the majority of
the board of directors (or equivalent body) of a company or legal entity or the
contractual right to exercise a controlling influence over a company or other legal
entity;

“Agreement” means this agreement including the recital and the Schedules attached
hereto;

“Assignment Documents” means the assignment and novation agreements in respect of the
Interests Documents together with any other documents the Seller (acting reasonably)
considers necessary to effect the assignment and transfer of the Interests to the
Purchaser (or to such Affiliate of the Purchaser as the Purchaser may direct) and to
release the Seller and its Affiliates from contractual liability to the Relevant Third
Parties and any other third parties with respect to the Interests, and shall include any
documents the Seller (acting reasonably) considers necessary to effect the transfer of
operatorship to the Purchaser or one of its Affiliates;

“Backstop Date” has the meaning given in Clause 2.3;

“Benefits” means income, receipts, rebates, credits and other benefits of whatsoever
nature and howsoever arising;

“Business Day” means a day (other than a Saturday, a Sunday or a legal bank or public
holiday) on which clearing banks are or, as the context may require, were generally open
for business in England;

“Completion” means the completion of the sale and purchase of the Interests in
accordance with the provisions of this Agreement;

“Completion Date” means the date on which Completion takes place;

“Conditions Precedent” means the conditions precedent to Completion set out in Clause
2.2;

“Confidential Information” has the meaning given in Clause 8.1;

“Consideration” has the meaning given in Clause 3.1;

“Contract Area” has the meaning given in the Licence;

“Data” means all data in the possession of the Seller relating directly to the
Interests and used by or forming part of the property jointly owned the Seller and the
other parties to the JOAs including petroleum engineering, reservoir engineering,
drilling, geological, geophysical and all other kinds of technical data and reports,
samples, well-logs and analyses in whatever form the same are maintained, but excluding
internal memoranda, reports, interpretations and documents created for the Seller’s (or
its Affiliates’) own use and Traded Data;

“Decommissioning Liabilities” means any Obligations incurred in relation to
abandonment and/or decommissioning and/or removing and making safe all property (whether
or not in existence as at the date of this Agreement) related to the Interests (including
platforms, pipelines, plant, machinery, wells, facilities and all other offshore and
onshore installations and structures and drill cuttings) whether such Obligations are
incurred under or pursuant to any of the Interests Documents or under statutory, common
law or other obligation (whether or not in existence as at the date of this Agreement) and
including any residual liability for anticipated and/or necessary continuing insurance,
maintenance and monitoring costs;

“Environment” means all or any of the following, alone or in combination: the air
(including the air within buildings and the air within any other natural or man-made
structures above or below ground or above or below water), water (including seawater
inside or outside any territorial limits, freshwater and water under or within land or in
pipes or sewerage systems), soil and land (including the seabed and land under water) and
any ecological systems and living organisms supported by those media including man;

“Environmental Law” means all Romanian acts and laws, international treaties, national,
federal, provincial, state or local statutes, the common law, and any codes of law (having
legal effect), in any relevant jurisdiction concerning:

	 	(a)	 	harm or damage to or protection of the Environment and/or the provision of
remedies in respect of or compensation for harm or damage to the Environment; and/or

	 	(b)	 	emissions, discharges, releases or escapes into or the presence in the
Environment of Hazardous Substances or the production, processing, management,
treatment, storage, transport, handling or disposal of Hazardous Substances or the
disposal or abandonment of any fixed or floating offshore installation; and/or

(c) worker or public health and safety,

and any bylaws, regulations or subordinate legislation, judgements, decisions, notices,
orders, circulars, technical instructions, licences or permits and codes of practice from
time to time issued or made thereunder;

“Environmental Liabilities” means any Obligations in respect of the Interests under
any Environmental Law or in relation to cleaning up, decontamination of, removing and
disposing of debris or any property (including platforms, pipelines, plant, machinery,
wells, facilities and all other offshore and onshore installations and structures and
drill cuttings) from and for reinstating any area of land, foreshore or seabed, wherever
situated, whether such Obligations are incurred under or pursuant to any of the Interests
Documents or under any Environmental Law or other obligation and including any residual
liability for anticipated and/or necessary continuing insurance, maintenance and
monitoring costs;

“Field” means a hydrocarbon accumulation which forms part of the Interests as
referred to in Schedule 1;

“Field Facilities” means the hydrocarbon production, processing and transportation
facilities and the interconnecting pipelines used in relation to the Field and wholly
owned by the Field Group;

“Field Group” means the parties to a JOA;

“Hazardous Substances” means any wastes, pollutants, contaminants and any other natural or
artificial substances (whether in the form of a solid, liquid, gas or vapour, and whether
alone or in combination) which are capable of causing harm or damage to the Environment;

“Indemnified Party” has the meaning given in Clause 6.6.1;

“Indemnifying Party” has the meaning given in Clause 6.6.1;

“Interests” means

	 	(a)	 	the Seller’s undivided legal and beneficial interest in the Licence;

	 	(b)	 	the Seller’s entire interest in and under the JOA in relation to the
Licence;

	 	(c)	 	the Seller’s entire interest in the Field Facilities;

	 	(d)	 	the Seller’s entire interest in the use of the Data; and

	 	(e)	 	all other assets of the Seller in the state of Romania,

together in each case with all rights and obligations attaching thereto and including but
not limited to (i) the right to take and receive a consequent share of all petroleum and
gas produced under the Licence on and after the Completion Date and to receive the gross
proceeds from the sale or other disposition thereof; (ii) a consequent share of the
Seller’s right, title and interest in and to jointly-owned funds, jointly owned property
and all other assets which are or may be owned pursuant to or under any of the Interests
Documents; and (iii) all rights, liabilities and obligations associated with such interest
under the Interests Documents;

“Interests Documents” means those documents listed as such in Schedule 1 which relate
to each part of the Interests;

“JOA” means the joint operating agreement currently in force in respect of operations
pursuant to a Licence and identified as such in Schedule 1;

“Licence” means the Exploration and Production Sharing Agreement set out in Schedule
1;

“Licence Operator” means the entity appointed operator pursuant to the Licence and
the JOA;

“Obligations” means costs, charges, expenses, liabilities and obligations of
whatsoever nature and howsoever arising;

“Party” or “Parties” means a party or parties to this Agreement;

“Pounds Sterling” or “£” means the lawful currency for the time being of the United
Kingdom;

“Relevant Third Parties” means the parties (other than the Seller and the Purchaser) to
any or all of the Interests Documents;

“Romanian Authorities” means the National Agency for Mineral Resources, acting under the
Government of Romania and any other government authority or agency;

“Securities and Exchange Commission” means the Securities and Exchange Commission of
the United States of America;

“Third Party” has the meaning given in Clause 6.6.1;

“Third Party Claim” has the meaning given in Clause 6.6.1;

“Traded Data” means, with respect to the Interests, data which relates to an area
outside the Contract Area and which has been acquired by trade, purchase or otherwise by
and on behalf of the Seller (either alone or in conjunction with third parties) from a
third party or parties, and/or data which relates to the Contract Area and has been
acquired as aforesaid which in both cases cannot be provided to the Purchaser because such
transfer is prohibited by the agreement under which it was acquired;

“VAT” or “Value Added Tax” means value added tax as charged under the Value Added Tax
Act 1994 or such equivalent tax in Romania; and

“Working Capital Adjustment” means the adjustment described in Clause 3.2.

Interpretation

	1.2	 	All references to Clauses and Schedules (and Parts thereof) are, unless otherwise expressly
stated, references to clauses of and schedules (and parts thereof) to this Agreement.

	1.3	 	The headings in this Agreement are inserted for convenience only and shall be ignored in
construing this Agreement.

	1.4	 	Unless the context otherwise requires in this Agreement the singular shall include the plural
and vice versa.

	1.5	 	References in this Agreement to any statute, statutory provision or other legislation include
a reference to that statute, statutory provision or legislation as amended, extended,
re-enacted, consolidated or replaced from time to time (whether before or after the date of
this Agreement) and include any order, regulation, instrument or other subordinate legislation
made under the relevant statute, statutory provision or legislation.

	1.6	 	Unless the context otherwise requires references to persons shall include natural persons,
bodies corporate, unincorporated associations and partnerships and shall include such person’s
successors and permitted assigns.

	1.7	 	Unless the context otherwise requires, references to documents and agreements shall be
construed as references to those documents or agreements as may have been amended,
supplemented and/or novated from time to time.

	1.8	 	Any reference to “writing” or “written” includes faxes and any legible reproduction of words
delivered in permanent and tangible form (but does not include e-mail).

	1.9	 	References in this Agreement to the words “include”, “including” and “other” shall be
construed without limitation.

	2.	 	Sale and Purchase of the Interests

	2.1	 	Subject to the terms of this Agreement, the Seller hereby agrees to transfer to the Purchaser
and the Purchaser hereby agrees to acquire from the Seller the Interests.

	2.2	 	The obligations of the Parties to complete the sale and purchase of the Interests under this
Agreement are conditional on fulfilment or waiver, in accordance with the terms of this
Agreement, of the following conditions (“Conditions Precedent”):

	 	2.2.1	 	all necessary written consents, approvals or waivers, as the case may be,
by the Relevant Third Parties in relation to the transfer by the Seller to the
Purchaser of the Interests being obtained (and to any transfer of operatorship)
(including the waiver, non-exercise or expiry of any pre-emption rights), in form and
substance reasonably acceptable to the Seller and the Purchaser, and the execution of
the Assignment Documents by such Relevant Third Parties (other than the Secretary);

	 	2.2.2	 	the Romanian Authorities’ consent required (if any) to the assignment of
the Licence (and to any transfer of operatorship to the Purchaser or one of its
Affiliates pursuant to the Licence) being obtained in form and substance reasonably
acceptable to the Seller and the Purchaser; and

	 	2.2.3	 	such other actions as the Purchaser, acting reasonably, may require to
transfer the Interests to it.

	2.3	 	The Parties shall each use all reasonable endeavours to obtain fulfilment of the Conditions
Precedent as soon as practicable and in any event by 30 November 2006 (or such later date as
the Seller and the Purchaser may agree in writing) (the “Backstop Date”). If the Conditions
Precedent are not satisfied or waived on or before the Backstop Date then this Agreement shall
automatically terminate without liability to either the Seller or the Purchaser in respect of
any such termination, save in respect of any prior breach of this Agreement.

	2.4	 	Waiver of any of the Conditions Precedent set out in Clause 2.2 shall require the mutual
written consent of the Seller and the Purchaser.

	2.5	 	Neither the Purchaser nor the Seller shall be obliged to complete the purchase of any of the
assets comprising the Interests unless the sale of all of the assets comprising the Interests
are completed simultaneously.

	3.	 	Consideration

	3.1	 	The consideration for the transfer of the Interests shall be the payment by the Purchaser to
the Seller of a sum determined on the Completion Date by the Seller to be an amount equal to
the market value of the Interests at the Completion Date, exclusive of VAT and notified to the
Purchaser (the “Consideration”), as adjusted pursuant to Clause 3.2.

	3.2	 	The Working Capital Adjustment in respect of each of the Interests, which if positive, shall
increase the Consideration, and if negative, shall reduce the Consideration, shall be the
aggregate of the working capital balances calculated in respect of each of the categories
listed in Part B of Schedule 2 as at the Completion Date by reference to the statement
provided by the Licence Operator and otherwise in accordance with Schedule 2.

	3.3	 	The Seller shall (if relevant) calculate the Working Capital Adjustment at a date prior to
Completion and payment of such amount thereof by the Purchaser at Completion shall be in full
and final settlement therefor.

	4.	 	Completion

	4.1	 	Completion under this Agreement shall take place at the offices of the Seller at a time
agreed by the Parties.

	 	 	 	 	 	 	 
	4.2	 	On the Completion Date all but not part of the following business shall be transacted:
	 
	 	 	 	 	 	 
	
 
	 	 	4.2.1	 	 	The Purchaser shall:

pay to the Seller, or pay in accordance with a direction from an
Affiliate to an Affiliate, the Consideration as increased or decreased
by the Working Capital Adjustment;

deliver to the Seller (to the extent not already delivered prior to
Completion) a copy of the releases, consents, approvals, confirmations
or waivers, if any, referred to in Clause 2.2 and obtained by or on
behalf of the Purchaser;

deliver to the Seller (to the extent not already delivered prior to
Completion) a copy, certified as a true copy and in full force and
effect by a director or the legal manager of the Purchaser, of (i) a
resolution of the board of directors of the Purchaser authorising its
entry into the transactions contemplated by this Agreement; and, if
relevant, (ii) a Power of Attorney authorising a person or persons to
sign this Agreement and the Assignment Documents on behalf of the
Purchaser;

execute and deliver those of the Assignment Documents to which it is a
signatory; and

perform such other actions and execute such other documents as may be
required to transfer the Interests to it.

	 	4.2.2	 	The Seller shall, after confirmation of receipt of the amounts payable
under Clause 4.2.1(a), deliver to the Purchaser (to the extent not already delivered
prior to Completion):

the Assignment Documents duly executed by all the Relevant Third Parties
other than the Purchaser;

a copy of other releases, consents, approvals, confirmations or waivers,
if any, referred to in Clause 2.2 and obtained by or on behalf of the
Seller;

a copy, certified as a true copy and in full force and effect by a
director or the legal manager of the Seller, of (i) a resolution of the
board of directors of the Seller authorising its entry into the
transactions contemplated by this Agreement; and, if relevant, (ii) a
Power of Attorney authorising a person or persons to sign this Agreement
and the Assignment Documents on behalf of the Seller; and

perform such other actions and execute such other documents as the
Purchaser may reasonably require, to transfer the Interests to the
Purchaser.

	 	4.2.3	 	Title to the Interests shall pass from the Seller to the Purchaser upon
Completion.

	5.	 	Post Completion

	5.1	 	The Seller shall ensure that (to the extent not delivered prior to Completion) the Interests
Documents and all Data in the possession or control of the Seller (or copies thereof, if
originals are not in the Seller’s possession) are made available for collection by the
Purchaser within normal business hours as soon as reasonably practicable after the Completion
Date.

	6.	 	Indemnities

	6.1	 	The Purchaser shall be liable for Obligations in respect of the Interests irrespective of
when such Obligations are or were incurred and the Purchaser shall be entitled to all Benefits
in respect of the Interests irrespective of when such Benefits accrue or accrued.

	6.2	 	Save to the extent that account is taken thereof in the Working Capital Adjustment,

	 	6.2.1	 	if any Obligations in relation to the Interests are incurred by the Seller
after the Completion Date, the Purchaser shall reimburse and indemnify the Seller in
respect thereof; and

	 	6.2.2	 	if any Benefits in relation to the Interests are received by the Seller
after the Completion Date, the Seller shall account to and reimburse the Purchaser in
respect thereof.

	6.3	 	Notwithstanding any other provision of this Agreement, the Purchaser covenants with the
Seller that the Purchaser shall indemnify, defend and hold the Seller and its Affiliates
harmless against all and any Environmental Liabilities and/or Decommissioning Liabilities
irrespective of when such liabilities are or were incurred, regardless of whosoever is or was
a party to the Licence or party under the relevant JOA or other relevant Interests Document
and irrespective of the negligence or breach of duty (statutory or otherwise) of the Seller or
its Affiliates.

	6.4	 	The rights and obligations in this Clause 6 shall not come into effect unless and until
Completion takes place.

	6.5	 	Any amount to be paid or reimbursed in accordance with this Clause 6 shall be paid or
reimbursed within ten (10) Business Days of receipt thereof (or, in the case of Obligations in
relation to the Interests, within ten (10) Business Days of receipt of notification from the
Party which has incurred such Obligations) to the Seller’s Account or the Purchaser’s Account
(as appropriate).

	 	 	6.6

	 	6.6.1	 	Under this Clause 6, if any Person not a party to this Agreement (a “Third
Party”) shall notify a Party (the “Indemnified Party”) with respect to any claim that
the Third Party intends to bring or has brought (a “Third Party Claim”) against the
Indemnified Party and which gives rise or would give rise to a claim for
indemnification against the other Party (the “Indemnifying Party”), then the
Indemnified Party shall promptly (and in any event within ten (10) Business Days
after receiving notice of the Third Party Claim) notify the Indemnifying Party
thereof in writing, giving reasonably detailed particulars of the Third Party Claim.

	 	6.6.2	 	The Indemnifying Party will have the right to (and shall, if so requested
in writing by the Indemnified Party) assume and conduct the defence of the Third
Party Claim at its sole cost provided that the Indemnifying Party first indemnifies
and holds harmless the Indemnified Party (to the Indemnified Party’s reasonable
satisfaction) against all costs and liabilities it may incur as a result of allowing
the Indemnifying Party the right to assume conduct of the Third Party Claim and
provided that the Indemnifying Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnified Party (not to be withheld unreasonably).

	 	6.6.3	 	Unless and until an Indemnifying Party assumes the defence of the Third
Party Claim as provided in Clause 6.6.2, the Indemnified Party may defend against the
Third Party Claim in any manner it reasonably deems appropriate at the cost of the
Indemnifying Party.

	 	6.6.4	 	Notwithstanding Clause 6.6.3, in no event will the Indemnified Party
consent to the entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the Indemnifying Party (not to
be withheld or delayed unreasonably).

	 	6.6.5	 	In the event of a Third Party Claim being made, each Party, subject to the
other Party agreeing to keep the same confidential and to use the same only in
connection with the Third Party Claim, agrees to provide to the other Party (and its
authorised employees and its professional advisers) all material technical, legal and
financial information reasonably necessary or conducive to the proper defence of the
Third Party Claim.

	6.7	 	In this Clause 6, “indemnity” means indemnity on an after tax basis. Such indemnity payments
shall be treated as an adjustment to the Consideration. On “an after tax basis” for the
purposes of this Clause 6.7 shall mean that in calculating the amount of an indemnity there
shall be taken into account:

	 	6.7.1	 	the amount by which any liability for taxation of the party to be paid is
actually increased as a result of the indemnity payment being received; and

	 	6.7.2	 	any withholding tax suffered on the payment of indemnity payment so that
if withholding tax is suffered, the payer shall pay such sum to the payee as will,
after the deduction or withholding has been made, leave the payee with the same
amount as it would have been entitled to receive in the absence of any such
requirement to make a deduction or withholding and in the event that the payer
becomes entitled to a credit or repayment in respect of such withholding tax, it
shall pay to the payer such amount (not exceeding the credits or repayment) as will
leave the payee in no worse position than if the withholding had not been suffered.

	6.8	 	The ascertainment of all Obligations and Benefits in relation to the Interests under this
Clause 6 will be calculated on an Accruals Basis.

	7.	 	No Warranty

	7.1	 	The Purchaser shall accept without enquiry, requisition or objection such title as the Seller
may have to the Interests. The Interests are sold without any warranty or representation by
the Seller whether as to title or any other matter whatsoever.

	7.2	 	The Purchaser acknowledges that it has not relied on any representation or warranty (written
or verbal) in entering into this Agreement and the Seller neither makes any representation nor
gives any warranty in relation to the Interests and the Purchaser affirms and acknowledges
that it has made its own independent assessment and evaluation of the matters covered by this
Agreement and shall have no claim against the Seller relating hereto.

	8.	 	Confidentiality and Announcements

	8.1	 	The existence and terms of this Agreement and all information furnished or disclosed to the
Purchaser or any of its Affiliates in connection with the transactions contemplated by this
Agreement (“Confidential Information”) shall be held confidential by the Parties and shall not
be divulged in any way by a Party to any third party without the prior written approval of the
other Party provided that a Party may, without such approval, disclose such Confidential
Information to:

	 	8.1.1	 	any outside professional consultants, upon obtaining a similar undertaking
of confidentiality (but excluding this proviso) from such consultants;

	 	8.1.2	 	any bank or financial institution from whom such Party is seeking or
obtaining finance, upon obtaining a similar undertaking of confidentiality (but
excluding this proviso) from such bank or institution;

	 	8.1.3	 	any department, authority, ministry or agency of any government or other
governmental authority lawfully requesting such information;

	 	8.1.4	 	any court or arbitral tribunal of competent jurisdiction acting in
pursuance of its powers;

	 	8.1.5	 	any of its Affiliates upon obtaining a similar undertaking of
confidentiality from such Affiliates;

	 	8.1.6	 	the extent required by any applicable laws, or the requirements of any
recognised stock exchange or the Securities and Exchange Commission in compliance
with its rules and regulations; and

	 	8.1.7	 	the extent that the terms of this Agreement become public knowledge or for
any other reason cease to be confidential otherwise than through breach of this
undertaking.

	8.2	 	No Party shall, and each Party shall procure that none of its Affiliates shall, issue or make
any public announcement or statement regarding this Agreement or its terms or any transactions
contemplated hereby without the prior written consent of the other Party, such consent not to
be unreasonably withheld or delayed.

	9.	 	Costs and Expenses

	9.1	 	Save as stated in Clauses 6.6 and 9.2, the Seller and the Purchaser shall each pay its and
its Affiliates’ own costs, expenses, duties and Taxation, except as otherwise expressly agreed
in writing, in relation to the preparation and execution of this Agreement, the documents
contemplated hereby or executed pursuant hereto and any transactions contemplated by this
Agreement.

	9.2	 	The Purchaser shall be responsible for the payment in a timely fashion of any and all stamp
duties and charges payable on or in respect of this Agreement, the Assignment Documents and
any related agreements and in respect of its or their subject matter and any similar duties
and charges wheresoever arising.

	10.	 	Further Assurance

The Seller and the Purchaser shall co-operate with each other and execute and deliver to
each other such other instruments and documents and take such other actions as may
reasonably be requested from time to time in order to carry out, evidence and confirm
their rights under, and the intended purpose of, this Agreement.

	11.	 	Variation

The terms and conditions of this Agreement shall only be varied by an agreement in writing
signed by each of the Parties and specifically referring to this Agreement.

	12.	 	Severance

Each provision contained in this Agreement shall be severable and distinct from each other
provision and if at any time any one or more of such provisions is or becomes invalid,
illegal or unenforceable, the validity, legality and enforceability of the remaining such
provisions shall not in any way be affected thereby.

	13.	 	Assignment

	13.1	 	The Purchaser may assign its rights and obligations under this Agreement to an Affiliate,
without the consent of the Seller.

	13.2	 	Subject to Clause 13.1, none of the rights or obligations of a Party under this Agreement are
assignable without the prior written consent of the other Party.

	14.	 	General

	14.1	 	If there is any conflict between the provisions of this Agreement and the provisions of the
Assignment Documents, the provisions of this Agreement shall prevail.

	14.2	 	So far as it remains to be performed, this Agreement shall remain in full force and effect
notwithstanding Completion.

	14.3	 	No waiver by the Seller or the Purchaser of any breach of a provision of this Agreement shall
be binding unless made expressly and in writing and any such waiver shall relate only to the
matter to which it expressly relates and shall not apply to any subsequent or other matter.

	14.4	 	This Agreement shall inure to the benefit of and be binding upon the respective successors
and permitted assigns of the Parties.

	14.5	 	This Agreement together with any document executed pursuant to this Agreement represents the
entire understanding, and constitutes the whole agreement in relation to its subject matter
and supersedes any previous agreement between the Parties (or any of them) with respect
thereto and, to the fullest extent practicable under the relevant law, and without prejudice
to the generality of the foregoing, excludes any warranty, condition or other undertaking
implied at law or by custom.

	14.6	 	This Agreement may be executed in any number of counterparts and by the Parties on different
counterparts but shall not be effective until each Party has executed at least one
counterpart. Each counterpart shall constitute an original of this Agreement but all the
counterparts together shall constitute one and the same agreement.

	14.7	 	Nothing in this Agreement shall be read or construed as excluding any liability or remedy in
respect of fraud.

	14.8	 	The indemnities provided in this Agreement shall apply irrespective of cause and
notwithstanding the negligence or breach of duty (whether statutory or otherwise) of the
indemnified Party and shall apply irrespective of whether the basis for any claim is statutory
in tort, under contract, or otherwise at law.

	15.	 	Rights of Third Parties

	15.1	 	The Seller’s Affiliates shall be entitled to enforce the rights and benefits created in their
favour in this Agreement against the Parties in accordance with the Contracts (Rights of Third
Parties) Act 1999. Save as provided above, the operation of the Contracts (Rights of Third
Parties) Act 1999 is hereby excluded. The Parties may amend, vary or terminate this Agreement
in such a way as may affect any rights or benefits of any Seller’s Affiliate which are
directly enforceable against the Parties under the Contracts (Rights of Third Parties) Act
1999 without the consent of such Seller’s Affiliate. Any Seller’s Affiliate entitled pursuant
to the Contracts (Rights of Third Parties) Act 1999 to enforce any rights or benefits
conferred on it by this Agreement may not veto any amendment, variation or termination of this
Agreement which is proposed by the Parties and which may affect the rights or benefits of any
such Seller’s Affiliate.

	16.	 	Governing law

	16.1	 	The construction validity and performance of this Agreement shall be governed by English law
(other than choice of law rules) and the Parties hereby irrevocably submit to the exclusive
jurisdiction of the English courts.

AS WITNESS whereof this Agreement has been signed by the duly authorised representatives of the
Parties on the day and year first above written.

Schedule 1

Interests – Part 1

The Seller’s entire Interests in relation to the Interest Documents set out in Part 2 of this
Schedule 1.

Interests – Part 2

	1.	 	Exploration and Production Sharing Agreement among National Agency for Mineral Resources,
Talisman Expro Limited and Sterling Resources Ltd. dated 6 August 1992

	2.	 	Joint Operating Agreement between Talisman Expro Limited and Sterling Resources Ltd. dated 1
January 1993

	3.	 	Gas Sale Agreement – Doina Field – Off Shore Romania among Enron Capital & Trade Resources
Limited, Talisman Expro Limited and Sterling Resources Ltd. dated 9 June 2000

Schedule 2

Working Capital

Part A

	1.	 	Pursuant to Clause 3.2 of this Agreement, the working capital balance for each of the
Interests shall be determined in accordance with the provisions of this Schedule, by:

	1.1	 	adding together the amounts of the Cash Balances, VAT Receivable and Other Assets (the
“Positive Balance”) for each Interest; and

	1.1	 	adding together the amounts of any overdraft balance, VAT Payable, Accruals and Other
Liabilities (the “Negative Balance”) for each Interest; and

	1.2	 	deducting each Negative Balance from each Positive Balance, and adding together the net
balances.

	2.	 	Elements

	2.1	 	The elements of working capital shall comprise those items set out in the Exhibit to this
Schedule, which items shall have the following meanings:

“Cash Balances” means cash balances held by the Account at the Completion Date;

“VAT Receivable/Payable” means VAT due to/from the Joint Account but not recovered/paid at
the Completion Date;

“Other Assets” means other assets due to the Account but unpaid at the Completion Date;

“Accruals” means the amounts accrued by the Account but unpaid as at the Completion Date;

“Other Liabilities” means the other liabilities accrued by the Account but unpaid as at
the Completion Date;

“Account” means any account held by the Seller in Romania, either for Seller or for the
other parties to the Licence;

	2.2	 	Euro, GBP and other denominated amounts are to be translated into US Dollars at the
applicable conversion rate.

Part B

Working capital balances shall be determined as set out above in respect of each of
the Interests.

Exhibit

Form of Working Capital Statement

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	100%	 	 	 	 
	 	 	Joint Venture	 	Interest	 	 
	Interest	 	£	 	%	 	Interest Share £
	 	 	-	 	-	 	 	 	 
	As per Joint Venture Billings	 	 	 	 	 	 	 	 	 	 	 	 
	Cash
	 	 	 	 	 	 	 	 	 	 	 	 
	VAT receivable/payable
	 	 	 	 	 	 	 	 	 	 	 	 
	Other Assets
	 	 	 	 	 	 	 	 	 	 	 	 
	Accruals
	 	 	 	 	 	 	 	 	 	 	 	 
	Other Liabilities
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	0	 	 	 	 	 	 	 	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	As per terminal accounts
	 	 	 	 	 	 	 	 	 	 	 	 
	TOTAL WORKING CAPITAL
	 	 	 	 	 	 	 	 	 	 	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 

3

	 	 	 	 	 
	SIGNED for and on behalf of
	 	 	)	 
	TALISMAN EXPRO LIMITED
	 	) /s/ Jacquelynn F. Craw

	 	 	 
	

SIGNED by                             )
TALISMAN PETROLEUM LTD.               )  /s/ Louise Cowie
Acting by its duly authorized attorney Louise Cowie
SIGNED by	 	)
	TALISMAN PETROLEUM LTD.	 	) /s/ Louise Cowie
	Acting by its duly authorized attorney Louise Cowie

4EX-10.4

Exhibit 10.4

Dated 26th May 2006

(1) TALISMAN EXPRO LIMITED

(2) TALISMAN OIL TRADING LIMITED

HIVE-OUT AGREEMENT

in respect of interests in UKCS Licences P.1040 and P.1290

CMS Cameron McKenna LLP

Mitre House

North Silver Street

Aberdeen AB10 1RJ

T +44(0)1224 622002

F +44(0)1224 622066

Ref: NW/SMLR/0Z6417.00139

1

Table of Contents

	1.	 	Definitions and interpretation	 

	2.	 	Sale and Purchase of the Interests	 

	3.	 	Consideration	 

	4.	 	Completion	 

	5.	 	Post Completion	 

	6.	 	Indemnities	 

	7.	 	No Warranty	 

	8.	 	Confidentiality and Announcements	 

	9.	 	Costs and Expenses	 

	10.	 	Taxation	 

	11.	 	Further Assurance	 

	12.	 	Variation	 

	13.	 	Severance	 

	14.	 	Assignment	 

	15.	 	General	 

	16.	 	Rights of Third Parties	 

	17.	 	Governing law	 

	 	 	Schedule 1 Interests – Part 1	 

	 	 	Schedule 2 Working Capital	 

2

THIS AGREEMENT is made the 26th day of May 2006

BETWEEN

	(1)	 	TALISMAN EXPRO LIMITED, a company incorporated in England and Wales (registered number
3518803) whose registered office is at 20-22 Bedford Row, London WC1R 4JS (the “Seller”); and

	(2)	 	TALISMAN OIL TRADING LIMITED, a company incorporated in England and Wales (registered number
02307374) whose registered office is 20-22 Bedford Row, London WC1R 4JS (the “Purchaser”).

WHEREAS the Seller wishes to sell and the Purchaser wishes to buy the Interests on the terms and
conditions set out herein.

NOW THEREFORE IT IS HEREBY AGREED as follows:

	1.	 	Definitions and interpretation

Definitions

	1.1	 	In this Agreement the following expressions shall, except where the context otherwise
requires, have the following respective meanings:

“Accruals Basis” means that basis of accounting under which costs and benefits are
regarded as applicable to the period in which the liability for the cost is incurred or
the right to the benefit arises regardless of when invoiced, paid or received;

“Affiliate” means in relation to a Party, any company or legal entity that controls
or is controlled by, or which is controlled by an entity which controls, such Party, where
“control” means the ownership, directly or indirectly, of more than fifty percent (50%) of
the voting rights in a company or other legal entity, the right to appoint the majority of
the board of directors (or equivalent body) of a company or legal entity or the
contractual right to exercise a controlling influence over a company or other legal
entity;

“Agreement” means this agreement including the recital and the Schedules attached
hereto;

“Assignment Documents” means the assignment and novation agreements in respect of the
Interests Documents, which shall (to the extent appropriate) be executed as execution
deeds in accordance with the Master Deed issued by UKOOA and dated 28 April 2003 together
with any other documents the Seller (acting reasonably) considers necessary to effect the
assignment and transfer of the Interests to the Purchaser and to release the Seller and
its Affiliates from contractual liability to the Relevant Third Parties and any other
third parties with respect to the Interests, and shall include any documents the Seller
(acting reasonably) considers necessary to effect the transfer of operatorship to the
Purchaser or one of its Affiliates;

“Backstop Date” has the meaning given in Clause 2.3;

“Benefits” means income, receipts, rebates, credits and other benefits of whatsoever
nature and howsoever arising;

“Block” means a licence block on the United Kingdom Continental Shelf;

“Business Day” means a day (other than a Saturday, a Sunday or a legal bank or public
holiday) on which clearing banks are or, as the context may require, were generally open
for business in England;

“Completion” means the completion of the sale and purchase of the Interests in
accordance with the provisions of this Agreement;

“Completion Date” means the date on which Completion takes place;

“Conditions Precedent” means the conditions precedent to Completion set out in Clause
2.2;

“Confidential Information” has the meaning given in Clause 8.1;

“Consideration” has the meaning given in Clause 3.1;

“Data” means all data in the possession of the Seller relating directly to the
Interests and forming part of the property jointly owned by the Seller and the other
parties to the JOAs (as the case may be) including petroleum engineering, reservoir
engineering, drilling, geological, geophysical and all other kinds of technical data and
reports, samples, well-logs and analyses in whatever form the same are maintained, but
excluding internal memoranda, reports, interpretations and documents created for the
Seller’s (or its Affiliates’) own use and Traded Data;

“Decommissioning Liabilities” means any Obligations incurred in relation to
abandonment and/or decommissioning and/or removing and making safe all property (whether
or not in existence as at the date of this Agreement) related to the Interests (including
platforms, pipelines, plant, machinery, wells, facilities and all other offshore and
onshore installations and structures and drill cuttings) whether such Obligations are
incurred under or pursuant to any of the Interests Documents or under statutory, common
law or other obligation (whether or not in existence as at the date of this Agreement) and
including any residual liability for anticipated and/or necessary continuing insurance,
maintenance and monitoring costs;

“Environment” means all or any of the following, alone or in combination: the air
(including the air within buildings and the air within any other natural or man-made
structures above or below ground or above or below water), water (including seawater
inside or outside any territorial limits, freshwater and water under or within land or in
pipes or sewerage systems), soil and land (including the seabed and land under water) and
any ecological systems and living organisms supported by those media including man;

“Environmental Law” means all United Kingdom and European Union acts and laws,
international treaties, national, federal, provincial, state or local statutes, the common
law, and any codes of law (having legal effect), in any relevant jurisdiction concerning:

	 	(a)	 	harm or damage to or protection of the Environment and/or the provision of
remedies in respect of or compensation for harm or damage to the Environment; and/or

	 	(b)	 	emissions, discharges, releases or escapes into or the presence in the
Environment of Hazardous Substances or the production, processing, management,
treatment, storage, transport, handling or disposal of Hazardous Substances or the
disposal or abandonment of any fixed or floating offshore installation; and/or

(c) worker or public health and safety,

and any bylaws, regulations or subordinate legislation, judgements, decisions, notices,
orders, circulars, technical instructions, licences or permits and codes of practice from
time to time issued or made thereunder;

“Environmental Liabilities” means any Obligations in respect of the Interests under
any Environmental Law or in relation to cleaning up, decontamination of, removing and
disposing of debris or any property (including platforms, pipelines, plant, machinery,
wells, facilities and all other offshore and onshore installations and structures and
drill cuttings) from and for reinstating any area of land, foreshore or seabed, wherever
situated, whether such Obligations are incurred under or pursuant to any of the Interests
Documents or under any Environmental Law or other obligation and including any residual
liability for anticipated and/or necessary continuing insurance, maintenance and
monitoring costs;

“Field” means a hydrocarbon accumulation which forms part of the Interests as
referred to in Schedule 1;

“Field Facilities” means the hydrocarbon production, processing and transportation
facilities and the interconnecting pipelines used in relation to the Field and wholly
owned by the Field Group;

“Field Group” means the parties to a JOA;

“Hazardous Substances” means any wastes, pollutants, contaminants and any other natural or
artificial substances (whether in the form of a solid, liquid, gas or vapour, and whether
alone or in combination) which are capable of causing harm or damage to the Environment;

“ICTA” means the Income and Corporation Taxes Act;

“Indemnified Party” has the meaning given in Clause 6.6.1;

“Indemnifying Party” has the meaning given in Clause 6.6.1;

“Interests” means

	 	(a)	 	the Seller’s undivided legal and beneficial interest in each Licence;

	 	(b)	 	the Seller’s entire interest in and under the JOA in relation to each
Licence;

	 	(c)	 	the Seller’s entire interest in the Field Facilities; and

	 	(d)	 	The Seller’s entire interest in the Data,

together in each case with all rights and obligations attaching thereto and including but
not limited to (i) the right to take and receive a consequent share of all Petroleum
produced under the Licences on and after the Completion Date and to receive the gross
proceeds from the sale or other disposition thereof; (ii) a consequent share of the
Seller’s right, title and interest in and to jointly-owned funds, jointly owned property
and all other assets which are or may be owned pursuant to or under any of the Interests
Documents; and (iii) all rights, liabilities and obligations associated with such interest
under the Interests Documents;

“Interests Documents” means those documents listed as such in Schedule 1 which relate
to each part of the Interests;

“JOA” means the joint operating agreement currently in force in respect of operations
pursuant to a Licence and identified as such in Schedule 1;

“Licence” means each or any of the licences of which details are set out in Schedule
1;

“Licence Operator” means the entity appointed operator pursuant to a JOA and in the
case of each Licence the current Licence Operator is identified in the relevant Part of
Schedule 1;

“Obligations” means costs, charges, expenses, liabilities and obligations of
whatsoever nature and howsoever arising;

“Party” or “Parties” means a party or parties to this Agreement;

“Petroleum” shall have the meaning given in the Licences;

“Pipeline Operator” means the entity appointed operator in relation to a Pipeline
System, as identified in Schedule 1;

“Pipeline System” means a pipeline system through which production from a Field or
Fields is transported and which is identified and described in Schedule 1;

“Pounds Sterling” or “£” means the lawful currency for the time being of the United
Kingdom;

“Relevant Third Parties” means the parties (other than the Seller and the Purchaser) to
any or all of the Interests Documents;

“Securities and Exchange Commission” means the Securities and Exchange Commission of
the United States of America;

“Secretary” means the Secretary of State for Trade and Industry of Her Majesty’s
Government of the United Kingdom and any successor in relevant function in relation to the
Licences;

“TCGA” means the Taxation of Capital Gains Act;

“Third Party” has the meaning given in Clause 6.6.1;

“Third Party Claim” has the meaning given in Clause 6.6.1;

“Traded Data” means, with respect to a Block comprised within the Interests, data
which relates to an area outside such Block and which has been acquired by trade, purchase
or otherwise by and on behalf of the Seller (either alone or in conjunction with third
parties) from a third party or parties, and/or data which relates to such a Block and has
been acquired as aforesaid which in both cases cannot be provided to the Purchaser because
such transfer is prohibited by the agreement under which it was acquired;

“VAT” or “Value Added Tax” means value added tax as charged under the Value Added Tax
Act 1994; and

“Working Capital Adjustment” means the adjustment described in Clause 3.2.

Interpretation

	1.2	 	All references to Clauses and Schedules (and Parts thereof) are, unless otherwise expressly
stated, references to clauses of and schedules (and parts thereof) to this Agreement.

	1.3	 	The headings in this Agreement are inserted for convenience only and shall be ignored in
construing this Agreement.

	1.4	 	Unless the context otherwise requires in this Agreement the singular shall include the plural
and vice versa.

	1.5	 	References in this Agreement to any statute, statutory provision or other legislation include
a reference to that statute, statutory provision or legislation as amended, extended,
re-enacted, consolidated or replaced from time to time (whether before or after the date of
this Agreement) and include any order, regulation, instrument or other subordinate legislation
made under the relevant statute, statutory provision or legislation.

	1.6	 	Unless the context otherwise requires references to persons shall include natural persons,
bodies corporate, unincorporated associations and partnerships and shall include such person’s
successors and permitted assigns.

	1.7	 	Unless the context otherwise requires, references to documents and agreements shall be
construed as references to those documents or agreements as may have been amended,
supplemented and/or novated from time to time.

	1.8	 	Any reference to “writing” or “written” includes faxes and any legible reproduction of words
delivered in permanent and tangible form (but does not include e-mail).

	1.9	 	References in this Agreement to the words “include”, “including” and “other” shall be
construed without limitation.

	2.	 	Sale and Purchase of the Interests

	2.1	 	Subject to the terms of this Agreement, the Seller hereby agrees to transfer to the Purchaser
and the Purchaser hereby agrees to acquire from the Seller the Interests.

	2.2	 	The obligations of the Parties to complete the sale and purchase of the Interests under this
Agreement are conditional on fulfilment or waiver, in accordance with the terms of this
Agreement, of the following conditions (“Conditions Precedent”):

	 	2.2.1	 	all necessary written consents, approvals or waivers, as the case may be,
by the Relevant Third Parties in relation to the transfer by the Seller to the
Purchaser of the Interests being obtained (including the waiver, non-exercise or
expiry of any pre-emption rights), in form and substance reasonably acceptable to the
Seller and the Purchaser, and the execution of the Assignment Documents by such
Relevant Third Parties (other than the Secretary);

	 	2.2.2	 	the Secretary’s consent to the assignment of the Licences being obtained
in form and substance reasonably acceptable to the Seller and the Purchaser; and

	 	2.2.3	 	such other actions as the Purchaser, acting reasonably, may require to
transfer the Interests to it.

	2.3	 	The Parties shall each use all reasonable endeavours to obtain fulfilment of the Conditions
Precedent as soon as practicable and in any event by 30 November 2006 (or such later date as
the Seller and the Purchaser may agree in writing) (the “Backstop Date”). If the Conditions
Precedent are not satisfied or waived on or before the Backstop Date then this Agreement shall
automatically terminate without liability to either the Seller or the Purchaser in respect of
any such termination, save in respect of any prior breach of this Agreement.

	2.4	 	Waiver of any of the Conditions Precedent set out in Clause 2.2 shall require the mutual
written consent of the Seller and the Purchaser.

	2.5	 	Neither the Purchaser nor the Seller shall be obliged to complete the purchase of any of the
assets comprising the Interests unless the sale of all of the assets comprising the Interests
are completed simultaneously.

	3.	 	Consideration

	3.1	 	The consideration for the transfer of the Interests shall be the payment by the Purchaser to
the Seller of a sum determined on the Completion Date by the Seller to be an amount equal to
the market value of the Interests at the Completion Date, exclusive of VAT and notified to the
Purchaser (the “Consideration”), as adjusted pursuant to Clause 3.2.

	3.2	 	The Working Capital Adjustment in respect of each of the Interests, which if positive, shall
increase the Consideration, and if negative, shall reduce the Consideration, shall be the
aggregate of the working capital balances calculated in respect of each of the categories
listed in Part B of Schedule 2 as at the Completion Date by reference to the statement
provided by the Licence Operator and otherwise in accordance with Schedule 2.

	3.3	 	The Seller shall calculate the Working Capital Adjustment at a date prior to Completion and
payment of such amount thereof by the Purchaser at Completion shall be in full and final
settlement therefor.

	4.	 	Completion

	4.1	 	Completion under this Agreement shall take place at the offices of the Seller at a time
agreed by the Parties.

	 	 	 	 	 	 	 
	4.2	 	On the Completion Date all but not part of the following business shall be transacted:
	 
	 	 	 	 	 	 
	
 
	 	 	4.2.1	 	 	The Purchaser shall:

pay to the Seller, or pay in accordance with a direction from an
Affiliate to an Affiliate, the Consideration as increased or decreased
by the Working Capital Adjustment;

deliver to the Seller (to the extent not already delivered prior to
Completion) a copy of the releases, consents, approvals, confirmations
or waivers, if any, referred to in Clause 2.2 and obtained by or on
behalf of the Purchaser;

deliver to the Seller (to the extent not already delivered prior to
Completion) a copy, certified as a true copy and in full force and
effect by a director or the legal manager of the Purchaser, of (i) a
resolution of the board of directors of the Purchaser authorising its
entry into the transactions contemplated by this Agreement; and, if
relevant, (ii) a Power of Attorney authorising a person or persons to
sign this Agreement and the Assignment Documents on behalf of the
Purchaser;

execute and deliver those of the Assignment Documents to which it is a
signatory; and

perform such other actions and execute such other documents as may be
required to transfer the Interests to it.

	 	4.2.2	 	The Seller shall, after confirmation of receipt of the amounts payable
under Clause 4.2.1(a), deliver to the Purchaser (to the extent not already delivered
prior to Completion):

the Assignment Documents duly executed by all the Relevant Third Parties
other than the Purchaser;

a copy of other releases, consents, approvals, confirmations or waivers,
if any, referred to in Clause 2.2 and obtained by or on behalf of the
Seller;

a copy, certified as a true copy and in full force and effect by a
director or the legal manager of the Seller, of (i) a resolution of the
board of directors of the Seller authorising its entry into the
transactions contemplated by this Agreement; and, if relevant, (ii) a
Power of Attorney authorising a person or persons to sign this Agreement
and the Assignment Documents on behalf of the Seller; and

perform such other actions and execute such other documents as the
Purchaser may reasonably require, to transfer the Interests to the
Purchaser.

	 	4.2.3	 	Title to the Interests shall pass from the Seller to the Purchaser upon
Completion.

	5.	 	Post Completion

	5.1	 	The Seller shall ensure that (to the extent not delivered prior to Completion) the Interests
Documents and all Data in the possession or control of the Seller (or copies thereof, if
originals are not in the Seller’s possession) are made available for collection by the
Purchaser within normal business hours as soon as reasonably practicable after the Completion
Date.

	6.	 	Indemnities

	6.1	 	The Purchaser shall be liable for Obligations in respect of the Interests irrespective of
when such Obligations are or were incurred and the Purchaser shall be entitled to all Benefits
in respect of the Interests irrespective of when such Benefits accrue or accrued.

	6.2	 	Save to the extent that account is taken thereof in the Working Capital Adjustment,

	 	6.2.1	 	if any Obligations in relation to the Interests are incurred by the Seller
after the Completion Date, the Purchaser shall reimburse and indemnify the Seller in
respect thereof; and

	 	6.2.2	 	if any Benefits in relation to the Interests are received by the Seller
after the Completion Date, the Seller shall account to and reimburse the Purchaser in
respect thereof.

	6.3	 	Notwithstanding any other provision of this Agreement, the Purchaser covenants with the
Seller that the Purchaser shall indemnify, defend and hold the Seller and its Affiliates
harmless against all and any Environmental Liabilities and/or Decommissioning Liabilities
irrespective of when such liabilities are or were incurred, regardless of whosoever is or was
a licensee under the relevant Licence or party under the relevant JOA or other relevant
Interests Document and irrespective of the negligence or breach of duty (statutory or
otherwise) of the Seller or its Affiliates.

	6.4	 	The rights and obligations in this Clause 6 shall not come into effect unless and until
Completion takes place.

	6.5	 	Any amount to be paid or reimbursed in accordance with this Clause 6 shall be paid or
reimbursed within ten (10) Business Days of receipt thereof (or, in the case of Obligations in
relation to the Interests, within ten (10) Business Days of receipt of notification from the
Party which has incurred such Obligations) to the Seller’s Account or the Purchaser’s Account
(as appropriate).

	 	 	6.6

	 	6.6.1	 	Under this Clause 6, if any Person not a party to this Agreement (a “Third
Party”) shall notify a Party (the “Indemnified Party”) with respect to any claim that
the Third Party intends to bring or has brought (a “Third Party Claim”) against the
Indemnified Party and which gives rise or would give rise to a claim for
indemnification against the other Party (the “Indemnifying Party”), then the
Indemnified Party shall promptly (and in any event within ten (10) Business Days
after receiving notice of the Third Party Claim) notify the Indemnifying Party
thereof in writing, giving reasonably detailed particulars of the Third Party Claim.

	 	6.6.2	 	The Indemnifying Party will have the right to (and shall, if so requested
in writing by the Indemnified Party) assume and conduct the defence of the Third
Party Claim at its sole cost provided that the Indemnifying Party first indemnifies
and holds harmless the Indemnified Party (to the Indemnified Party’s reasonable
satisfaction) against all costs and liabilities it may incur as a result of allowing
the Indemnifying Party the right to assume conduct of the Third Party Claim and
provided that the Indemnifying Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnified Party (not to be withheld unreasonably).

	 	6.6.3	 	Unless and until an Indemnifying Party assumes the defence of the Third
Party Claim as provided in Clause 6.6.2, the Indemnified Party may defend against the
Third Party Claim in any manner it reasonably deems appropriate at the cost of the
Indemnifying Party.

	 	6.6.4	 	Notwithstanding Clause 6.6.3, in no event will the Indemnified Party
consent to the entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the Indemnifying Party (not to
be withheld or delayed unreasonably).

	 	6.6.5	 	In the event of a Third Party Claim being made, each Party, subject to the
other Party agreeing to keep the same confidential and to use the same only in
connection with the Third Party Claim, agrees to provide to the other Party (and its
authorised employees and its professional advisers) all material technical, legal and
financial information reasonably necessary or conducive to the proper defence of the
Third Party Claim.

	6.7	 	In this Clause 6, “indemnity” means indemnity on an after tax basis. Such indemnity payments
shall be treated as an adjustment to the Consideration. On “an after tax basis” for the
purposes of this Clause 6.7 shall mean that in calculating the amount of an indemnity there
shall be taken into account:

	 	6.7.1	 	the amount by which any liability for taxation of the party to be paid is
actually increased as a result of the indemnity payment being received; and

	 	6.7.2	 	any withholding tax suffered on the payment of indemnity payment so that
if withholding tax is suffered, the payer shall pay such sum to the payee as will,
after the deduction or withholding has been made, leave the payee with the same
amount as it would have been entitled to receive in the absence of any such
requirement to make a deduction or withholding and in the event that the payer
becomes entitled to a credit or repayment in respect of such withholding tax, it
shall pay to the payer such amount (not exceeding the credits or repayment) as will
leave the payee in no worse position than if the withholding had not been suffered.

	6.8	 	The ascertainment of all Obligations and Benefits in relation to the Interests under this
Clause 6 will be calculated on an Accruals Basis.

	7.	 	No Warranty

	7.1	 	The Purchaser shall accept without enquiry, requisition or objection such title as the Seller
may have to the Interests. The Interests are sold without any warranty or representation by
the Seller whether as to title or any other matter whatsoever.

	7.2	 	The Purchaser acknowledges that it has not relied on any representation or warranty (written
or verbal) in entering into this Agreement and the Seller neither makes any representation nor
gives any warranty in relation to the Interests and the Purchaser affirms and acknowledges
that it has made its own independent assessment and evaluation of the matters covered by this
Agreement and shall have no claim against the Seller relating hereto.

	8.	 	Confidentiality and Announcements

	8.1	 	The existence and terms of this Agreement and all information furnished or disclosed to the
Purchaser or any of its Affiliates in connection with the transactions contemplated by this
Agreement (“Confidential Information”) shall be held confidential by the Parties and shall not
be divulged in any way by a Party to any third party without the prior written approval of the
other Party provided that a Party may, without such approval, disclose such Confidential
Information to:

	 	8.1.1	 	any outside professional consultants, upon obtaining a similar undertaking
of confidentiality (but excluding this proviso) from such consultants;

	 	8.1.2	 	any bank or financial institution from whom such Party is seeking or
obtaining finance, upon obtaining a similar undertaking of confidentiality (but
excluding this proviso) from such bank or institution;

	 	8.1.3	 	any department, authority, ministry or agency of any government or other
governmental authority lawfully requesting such information;

	 	8.1.4	 	any court or arbitral tribunal of competent jurisdiction acting in
pursuance of its powers;

	 	8.1.5	 	any of its Affiliates upon obtaining a similar undertaking of
confidentiality from such Affiliates;

	 	8.1.6	 	the extent required by any applicable laws, or the requirements of any
recognised stock exchange or the Securities and Exchange Commission in compliance
with its rules and regulations; and

	 	8.1.7	 	the extent that the terms of this Agreement become public knowledge or for
any other reason cease to be confidential otherwise than through breach of this
undertaking.

	8.2	 	No Party shall, and each Party shall procure that none of its Affiliates shall, issue or make
any public announcement or statement regarding this Agreement or its terms or any transactions
contemplated hereby without the prior written consent of the other Party, such consent not to
be unreasonably withheld or delayed.

	9.	 	Costs and Expenses

	9.1	 	Save as stated in Clauses 6.6, 9.2 and Clause 10, the Seller and the Purchaser shall each pay
its and its Affiliates’ own costs, expenses, duties and Taxation, except as otherwise
expressly agreed in writing, in relation to the preparation and execution of this Agreement,
the documents contemplated hereby or executed pursuant hereto and any transactions
contemplated by this Agreement.

	9.2	 	The Purchaser shall be responsible for the payment in a timely fashion of any and all stamp
duties and charges payable on or in respect of this Agreement, the Assignment Documents and
any related agreements and in respect of its or their subject matter and any similar duties
and charges wheresoever arising.

	10.	 	Taxation

	10.1	 	The Parties agree that they believe that the transfer falls within section 343 ICTA 1988 and
section 171 TCGA 1992 and will file and use their reasonable endeavours to agree their tax
computations on this basis.

	10.2	 	For the purposes of calculating any losses for the trade that has been transferred to the
Purchaser pursuant to this Agreement all income and expenditure and any hedging losses
relating to the assets that have been transferred pursuant to this Agreement will be taken
into account.

	11.	 	Further Assurance

The Seller and the Purchaser shall co-operate with each other and execute and deliver to
each other such other instruments and documents and take such other actions as may
reasonably be requested from time to time in order to carry out, evidence and confirm
their rights under, and the intended purpose of, this Agreement.

	12.	 	Variation

The terms and conditions of this Agreement shall only be varied by an agreement in writing
signed by each of the Parties and specifically referring to this Agreement.

	13.	 	Severance

Each provision contained in this Agreement shall be severable and distinct from each other
provision and if at any time any one or more of such provisions is or becomes invalid,
illegal or unenforceable, the validity, legality and enforceability of the remaining such
provisions shall not in any way be affected thereby.

	14.	 	Assignment

None of the rights or obligations of a Party under this Agreement are assignable without
the prior written consent of the other Party.

	15.	 	General

	15.1	 	If there is any conflict between the provisions of this Agreement and the provisions of the
Assignment Documents, the provisions of this Agreement shall prevail.

	15.2	 	So far as it remains to be performed, this Agreement shall remain in full force and effect
notwithstanding Completion.

	15.3	 	No waiver by the Seller or the Purchaser of any breach of a provision of this Agreement shall
be binding unless made expressly and in writing and any such waiver shall relate only to the
matter to which it expressly relates and shall not apply to any subsequent or other matter.

	15.4	 	This Agreement shall inure to the benefit of and be binding upon the respective successors
and permitted assigns of the Parties.

	15.5	 	This Agreement together with any document executed pursuant to this Agreement represents the
entire understanding, and constitutes the whole agreement in relation to its subject matter
and supersedes any previous agreement between the Parties (or any of them) with respect
thereto and, to the fullest extent practicable under the relevant law, and without prejudice
to the generality of the foregoing, excludes any warranty, condition or other undertaking
implied at law or by custom.

	15.6	 	This Agreement may be executed in any number of counterparts and by the Parties on different
counterparts but shall not be effective until each Party has executed at least one
counterpart. Each counterpart shall constitute an original of this Agreement but all the
counterparts together shall constitute one and the same agreement.

	15.7	 	Nothing in this Agreement shall be read or construed as excluding any liability or remedy in
respect of fraud.

	15.8	 	The indemnities provided in this Agreement shall apply irrespective of cause and
notwithstanding the negligence or breach of duty (whether statutory or otherwise) of the
indemnified Party and shall apply irrespective of whether the basis for any claim is statutory
in tort, under contract, or otherwise at law.

	16.	 	Rights of Third Parties

	16.1	 	The Seller’s Affiliates shall be entitled to enforce the rights and benefits created in their
favour in this Agreement against the Parties in accordance with the Contracts (Rights of Third
Parties) Act 1999. Save as provided above, the operation of the Contracts (Rights of Third
Parties) Act 1999 is hereby excluded. The Parties may amend, vary or terminate this Agreement
in such a way as may affect any rights or benefits of any Seller’s Affiliate which are
directly enforceable against the Parties under the Contracts (Rights of Third Parties) Act
1999 without the consent of such Seller’s Affiliate. Any Seller’s Affiliate entitled pursuant
to the Contracts (Rights of Third Parties) Act 1999 to enforce any rights or benefits
conferred on it by this Agreement may not veto any amendment, variation or termination of this
Agreement which is proposed by the Parties and which may affect the rights or benefits of any
such Seller’s Affiliate.

	17.	 	Governing law

	17.1	 	The construction validity and performance of this Agreement shall be governed by English law
(other than choice of law rules) and the Parties hereby irrevocably submit to the exclusive
jurisdiction of the English courts.

AS WITNESS whereof this Agreement has been signed by the duly authorised representatives of the
Parties on the day and year first above written.

Schedule 1

Interests – Part 1

Licences and other related information

Part A 

Licence P.1040

	(a)	 	Block/ Co-venturers /Seller’s Percentage Interest

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Seller’s Percentage
	Block	 	Co-venturers	 	Interest
	15/18b and 15/19b
	 	Talisman Expro Limited
	 	 	20	%
	 
	 	 	 	 	 	 	 	 
	 
	 	Nexen Petroleum U.K.
	 	 	 	 
	 
	 	Limited
	 	 	 	 
	 
	 	OMV (U.K.) Limited
	 	 	 	 

	(b)	 	Operator – Nexen Petroleum U.K. Limited

	(c)	 	JOA — Joint Operating Agreement for UKCS Production Licence P.1040 (Blocks 15/18b and 15/19b)
dated 31 January 2003 (effective date 26 July 2002)

	(d)	 	Interests Documents — See Part 2

Part B 

Licence P.1290

(a) Block/ Co-venturers /Seller’s Percentage Interest

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Seller’s Percentage
	Block	 	Co-venturers	 	Interest
	14/15a
	 	Talisman Expro Limited
	 	 	50	%
	 
	 	 	 	 	 	 	 	 
	 
	 	Serica Energy (UK) Limited
	 	 	 	 

	(b)	 	Operator — Serica Energy (UK) Limited

	(c)	 	JOA  — None

	(d)	 	Interests Documents — See Part 2

Interests – Part 2

	 	 	 	 	 
	 	 	LICENCE P.1040 BLOCKS 15/18B & 15/19B	 	 
	 	 	LICENCE	 	 
	 	 	LICENCE TO SEARCH FOR AND GET PETROLEUM IN	 	 
	1	 	BLOCKS 15/18B AND 15/19B DATED 30 JULY 2002	 	00006817
	-	 	 	 	 
	 	 	OPERATING AGREEMENTS	 	 
	 	 	JOINT OPERATING AGREEMENT - FINAL DRAFT	 	 
	 	 	AWAITING SECRETARY APPROVAL DATED 14 JANUARY	 	 
	1	 	2003	 	00006831
	-	 	 	 	 
	2

	 	JOINT OPERATING AGREEMENT FOR UKCS LICENCE

P.1040 DATED 31 JANUARY 2003
	 	

00007136
	 

	 	 
	 	 
	 
	 	 	 	 
	
 
	 	LICENCE P.1290 BLOCK 14/15A
	 	

	
 
	 	 
	 	

	 
	 	 	 	 
	
 
	 	LICENCE
	 	

	
 
	 	 
	 	

	 
	 	 	 	 
	1

	 	LICENCE TO SEARCH AND BORE FOR AND GET

PETROLEUM IN BLOCKS 14/15A (IN THE PROCESS

OF BEING SIGNED)
	 	

	 

	 	 
	 	

Schedule 2

Working Capital

Part A

	1.	 	Pursuant to Clause 3.2 of this Agreement, the working capital balance for each of the
Interests shall be determined in accordance with the provisions of this Schedule, by:

	1.1	 	adding together the amounts of the Cash Balances, VAT Receivable, Other Assets and Inventory
(net of Inventory Provisions) (the “Positive Balance”) for each Interest; and

	1.1	 	adding together the amounts of any overdraft balance, VAT Payable, Accruals and Other
Liabilities (the “Negative Balance”) for each Interest; and

	1.2	 	deducting each Negative Balance from each Positive Balance, and adding together the net
balances.

	2.	 	Elements

	2.1	 	The elements of working capital shall comprise those items set out in the Exhibit to this
Schedule, which items shall have the following meanings:

“Cash Balances” means cash balances held by the Joint Account at the Completion Date;

“VAT Receivable/Payable” means VAT due to/from the Joint Account but not recovered/paid at
the Completion Date;

“Other Assets” means other assets due to the Joint Account but unpaid at the Completion
Date;

“Inventory” means the value of inventory reflected in the Joint Venture Billings and
equipment held at the onshore warehouse, vendors yards and offshore;

“Inventory Provisions” means both general and specific provision made for obsolete, slow
moving or defective items of inventory as adopted by the Joint Account at the Completion
Date and as set out in the Joint Venture Billings;

“Accruals” means the amounts accrued by the Joint Account but unpaid as at the Completion
Date;

“Other Liabilities” means the other liabilities accrued by the Joint Account but unpaid as
at the Completion Date;

“Joint Account” means any joint account held by the relevant Licence Operator in
accordance with each of the JOAs and any relevant pipeline operating agreement;

	2.2	 	Euro, GBP and other denominated amounts are to be translated into US Dollars at the
applicable conversion rate.

Part B

Working capital balances shall be determined as set out above in respect of each of
the Interests.

Exhibit

Form of Working Capital Statement

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	100%	 	 	 	 
	 	 	Joint Venture	 	Interest	 	 
	Interest	 	£	 	%	 	Interest Share £
	 	 	-	 	-	 	 	 	 
	As per Joint Venture Billings	 	 	 	 	 	 	 	 	 	 	 	 
	Cash
	 	 	 	 	 	 	 	 	 	 	 	 
	VAT receivable/payable
	 	 	 	 	 	 	 	 	 	 	 	 
	Other Assets
	 	 	 	 	 	 	 	 	 	 	 	 
	Inventory
	 	 	 	 	 	 	 	 	 	 	 	 
	Inventory Provisions
	 	 	 	 	 	 	 	 	 	 	 	 
	Accruals
	 	 	 	 	 	 	 	 	 	 	 	 
	Other Liabilities
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	0	 	 	 	 	 	 	 	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	As per terminal accounts
	 	 	 	 	 	 	 	 	 	 	 	 
	TOTAL WORKING CAPITAL
	 	 	 	 	 	 	 	 	 	 	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 

3

	 	 	 	 	 
	SIGNED for and on behalf of
	 	 	)	 
	TALISMAN EXPRO LIMITED
	 	) /s/ Jacquelynn F. Craw

	 	 	 
	

SIGNED for and on behalf of                             )
TALISMAN OIL TRADING LIMITED                            ) /s/ Jacquelynn F. Craw
SIGNED for and on behalf of	 	)
	TALISMAN OIL TRADING LIMITED	 	) /s/ Jacquelynn F. Craw

4

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