Document:

Exhibit 10.1

[AIPN LOGO]

                            JOINT OPERATING AGREEMENT

                                      AMONG

                           A&T PETROLEUM COMPANY, LTD.

                                       AND

                               HAWLER ENERGY, LTD.

                                    COVERING:

                               BINA BAWI PROSPECT
                                 KURDISTAN AREA

                                REPUBLIC OF IRAQ

<PAGE>
<TABLE>
<CAPTION>

                                TABLE OF CONTENTS

<S>        <C>                                                                                                   <C>
   ARTICLE 1 DEFINITIONS..........................................................................................1
   ARTICLE 2 EFFECTIVE DATE AND TERM..............................................................................6
   ARTICLE 3 SCOPE................................................................................................6
   3.1    Scope...................................................................................................6
   3.2    Participating Interest..................................................................................6
   3.3    Ownership, Obligations and Liabilities..................................................................7
   3.4    Government Participation................................................................................7
   ARTICLE 4 OPERATOR.............................................................................................7
   4.1    Designation of Operator.................................................................................7
   4.2    Rights and Duties of Operator...........................................................................7
   4.3    Operator Personnel......................................................................................9
   4.4    Information Supplied by Operator.......................................................................12
   4.5    Settlement of Claims and Lawsuits......................................................................13
   4.6    Limitation on Liability of Operator....................................................................13
   4.7    Insurance Obtained by Operator.........................................................................14
   4.8    Commingling of Funds...................................................................................16
   4.9    Resignation of Operator................................................................................17
   4.10   Removal of Operator....................................................................................17
   4.11   Appointment of Successor...............................................................................19
   4.12   Health, Safety and Environment (HSE)...................................................................19
   ARTICLE 5 OPERATING COMMITTEE.................................................................................21
   5.1    Establishment of Operating Committee...................................................................21
   5.2    Powers and Duties of Operating Committee...............................................................21
   5.3    Authority to Vote......................................................................................21
   5.4    Subcommittees..........................................................................................21
   5.5    Notice of Meeting......................................................................................21
   5.6    Contents of Meeting Notice.............................................................................21
   5.7    Location of Meetings...................................................................................22
   5.8    Operator's Duties for Meetings.........................................................................22
   5.9    Voting Procedure.......................................................................................22
   5.10   Record of Votes........................................................................................23
   5.11   Minutes................................................................................................23
   5.12   Voting by Notice.......................................................................................24
   5.13   Effect of Vote.........................................................................................24
   ARTICLE 6 WORK PROGRAMS AND BUDGETS...........................................................................26
   6.1    Exploration and Appraisal..............................................................................26
   6.2    Development............................................................................................27
   6.3    Production.............................................................................................28
   6.4    Itemization of Expenditures............................................................................28
   6.5    Multi-Year Work Program and Budget.....................................................................29
   6.6    Contract Awards........................................................................................29
   6.7    Authorization for Expenditure (AFE) Procedure..........................................................31
   6.8    Overexpenditures of Work Programs and Budgets..........................................................32
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

<S>        <C>                                                                                                  <C>
   ARTICLE 7 OPERATIONS BY LESS THAN ALL PARTIES.................................................................33
   7.1    Limitation on Applicability............................................................................33
   7.2    Procedure to Propose Exclusive Operations..............................................................34
   7.3    Responsibility for Exclusive Operations................................................................36
   7.4    Consequences of Exclusive Operations...................................................................36
   7.5    Premium to Participate in Exclusive Operations.........................................................39
   7.6    Order of Preference of Operations......................................................................40
   7.7    Stand-By Costs.........................................................................................41
   7.8    Special Considerations Regarding Deepening and Sidetracking............................................42
   7.9    Use of Property........................................................................................42
   7.10   Lost Production........................................................................................44
   7.11   Production Bonuses.....................................................................................44
   7.12   Conduct of Exclusive Operations........................................................................45
   ARTICLE 8 DEFAULT.............................................................................................46
   8.1    Default and Notice.....................................................................................46
   8.2    Operating Committee Meetings and Data..................................................................46
   8.3    Allocation of Defaulted Accounts.......................................................................47
   8.4    Remedies...............................................................................................48
   8.5    Survival...............................................................................................52
   8.6    No Right of Set Off....................................................................................53
   ARTICLE 9 DISPOSITION OF PRODUCTION...........................................................................53
   9.1    Right and Obligation to Take in Kind...................................................................53
   9.2    Disposition of Crude Oil...............................................................................53
   9.3    Disposition of Natural Gas.............................................................................55
   9.4    Principles of Natural Gas Agreement(s) with Government.................................................57
   ARTICLE 10 ABANDONMENT........................................................................................58
   10.1   Abandonment of Wells Drilled as Joint Operations.......................................................58
   10.2   Abandonment of Exclusive Operations....................................................................59
   10.3   Abandonment Security...................................................................................59
   ARTICLE 11 SURRENDER, EXTENSIONS AND RENEWALS.................................................................60
   11.1   Surrender..............................................................................................60
   11.2   Extension of the Term..................................................................................60
   ARTICLE 12 TRANSFER OF INTEREST OR RIGHTS AND CHANGES IN CONTROL..............................................60
   12.1   Obligations............................................................................................60
   12.2.  Transfer...............................................................................................61
   12.3   Change in Control......................................................................................66
   ARTICLE 13 WITHDRAWAL FROM AGREEMENT..........................................................................70
   13.1   Right of Withdrawal....................................................................................70
   13.2   Partial or Complete Withdrawal.........................................................................70
   13.3   Rights of a Withdrawing Party..........................................................................70
   13.4   Obligations and Liabilities of a Withdrawing Party.....................................................71
   13.5   Emergency..............................................................................................71
   13.6   Assignment.............................................................................................72
   13.7   Approvals..............................................................................................72
   13.8   Security...............................................................................................72
   13.9   Withdrawal or Abandonment by all Parties...............................................................72
</TABLE>
                                       3
<PAGE>
<TABLE>
<CAPTION>

<S>        <C>                                                                                                  <C>
   ARTICLE 14 RELATIONSHIP OF PARTIES AND TAX....................................................................72
   14.1   Relationship of Parties................................................................................72
   14.2   Tax....................................................................................................72
   14.3   United States Tax Election.............................................................................73
   ARTICLE 15  VENTURE INFORMATION - CONFIDENTIALITY - INTELLECTUAL PROPERTY.....................................74
   15.1   Venture Information....................................................................................74
   15.2   Confidentiality........................................................................................75
   15.3   Intellectual Property..................................................................................76
   15.4   Continuing Obligations.................................................................................77
   15.5   Trades.................................................................................................77
   ARTICLE 16 FORCE MAJEURE......................................................................................77
   16.1   Obligations............................................................................................77
   16.2   Definition of Force Majeure............................................................................77
   ARTICLE 17 NOTICES............................................................................................78
   ARTICLE 18  APPLICABLE LAW - DISPUTE RESOLUTION - WAIVER OF SOVEREIGN IMMUNITY................................78
   18.1   Applicable Law.........................................................................................78
   18.2   Dispute Resolution.....................................................................................79
   18.3   Expert Determination...................................................................................83
   18.4   Waiver of Sovereign Immunity...........................................................................83
   ARTICLE 19  ALLOCATION OF COST & PROFIT HYDROCARBONS..........................................................84
   19.1   Allocation of Total Production.........................................................................84
   19.2   Allocation of Hydrocarbons to Parties..................................................................84
   19.3   Use of Estimates.......................................................................................85
   19.4   Principles.............................................................................................85
   ARTICLE 20 GENERAL PROVISIONS.................................................................................86
   20.1   Conduct of the Parties.................................................................................86
   20.2   Conflicts of Interest..................................................................................86
   20.3   Public Announcements...................................................................................86
   20.4   Successors and Assigns.................................................................................87
   20.5   Waiver.................................................................................................87
   20.6   No Third Party Beneficiaries...........................................................................87
   20.7   Joint Preparation......................................................................................87
   20.8   Severance of Invalid Provisions........................................................................87
   20.9   Modifications..........................................................................................88
   20.10  Interpretation.........................................................................................88
   20.11  Counterpart Execution..................................................................................88
   20.12  Entirety...............................................................................................89

Exhibit A         - .......Accounting Procedure
Exhibit B         - .......Contract Area
[Exhibit C        - .......Insurance]
[Exhibit D        -        Lifting Procedure  [NOTE: A model Lifting Procedure may be acquired from  the AIPN]]
</TABLE>

                                       4
<PAGE>

                               OPERATING AGREEMENT

THIS AGREEMENT is made as of the ______________ (the "Effective Date") among A&T
Petroleum Company, Ltd, a company existing under the laws of the Cayman Islands
(hereinafter referred to as "A&T") and Hawler Energy, Ltd., a company existing
under the laws of the Cayman Islands (hereinafter referred to as "Hawler"). The
companies named above, and their respective successors and assignees (if any),
may sometimes individually be referred to as "Party" and collectively as the
"Parties".

                                   WITNESSETH:

         WHEREAS, the Iraq Kurdistan Regional Government and the Republic of
Iraq (hereinafter referred to as the "Government"), A&T, and Hawler entered into
the Production Sharing Agreement ("Contract") dated March 29, 2005, covering
certain areas located in the Republic of Iraq (the "Contract"); and

         WHEREAS, the Parties desire to define their respective rights and
obligations with respect to their operations under the Contract;

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements and obligations set out below and to be performed, the
Parties agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

         As used in this Agreement, the following words and terms shall have the
meaning ascribed to them below:

1.1      Accounting Procedure means the rules, provisions and conditions
         contained in Exhibit A.

1.2      AFE means an authorization for expenditure pursuant to Article 6.7.

1.3      Affiliate  means a legal entity which  Controls,  or is Controlled by,
         or which is Controlled by an entity which Controls, a Party.

1.4      Agreed Interest Rate means interest compounded on a monthly basis, at
         the rate per annum equal to the one (1) month term, London Interbank
         Offered Rate (LIBOR rate) for U.S. dollar deposits, as published in
         London by the Financial Times or if not published, then by The Wall
         Street Journal, plus four (4%) percentage points, applicable on the
         first Business Day prior to the due date of payment and thereafter on
         the first Business Day of each succeeding calendar month. If the
         aforesaid rate is contrary to any applicable usury law, the rate of
         interest to be charged shall be the maximum rate permitted by such
         applicable law.

1.5      Agreement means this agreement, together with the Exhibits attached to
         this agreement, and any extension, renewal or amendment hereof agreed
         to in writing by the Parties.

1.6      Appraisal Well means any well (other than an Exploration Well or a
         Development Well) whose purpose at the time of commencement of drilling
         such well is to appraise the extent or the volume of Hydrocarbon
         reserves contained in an existing Discovery.

1.7      Business Day means a Day on which the banks in London, United Kingdom
         are customarily open for business.

1.8      Calendar Quarter means a period of three (3) months commencing with
         January 1 and ending on the following March 31, a period of three (3)
         months commencing with April 1 and ending on the following June 30, a
         period of three (3) months commencing with July 1 and ending on the
         following September 30, or a period of three (3) months commencing with
         October 1 and ending on the following December 31, all in accordance
         with the Gregorian Calendar.

<PAGE>

1.9      Calendar Year means a period of twelve (12) months  commencing  with
         January 1 and ending on the following December 31 according to the
         Gregorian Calendar.

1.10     Change in Control means any direct or indirect change in Control of a
         Party (whether through merger, sale of shares or other equity
         interests, or otherwise) through a single transaction or series of
         related transactions, from one or more transferors to one or more
         transferees.

1.11     Commercial Discovery means any Discovery that is sufficient to entitle
         the Parties to apply for authorization from the Government to commence
         exploitation.

1.12     Completion means an operation intended to complete a well through the
         Christmas tree as a producer of Hydrocarbons in one or more Zones,
         including the setting of production casing, perforating, stimulating
         the well and production Testing conducted in such operation. "Complete"
         and other derivatives shall be construed accordingly.

1.13     Consenting  Party  means a Party  who  agrees  to  participate  in and
         pay  its  share  of the  cost of an Exclusive Operation.

1.14     Consequential Loss means any loss, damages, costs, expenses or
         liabilities caused (directly or indirectly) by any of the following
         arising out of, relating to, or connected with this Agreement or the
         operations carried out under this Agreement: (i) reservoir or formation
         damage; (ii) inability to produce, use or dispose of Hydrocarbons;
         (iii) loss or deferment of income; (iv) punitive damages; or (v) other
         indirect damages or losses whether or not similar to the foregoing.

1.15     Contract means the instrument  identified in the recitals to this
         Agreement and any extension,  renewal or amendment thereto.

1.16     Contract Area means as of the Effective Date the area that is described
         in Exhibit B. The perimeter or perimeters of the Contract Area shall
         correspond to that area covered by the Contract, as such area may vary
         from time to time during the term of validity of the Contract.

1.17     Control means the ownership directly or indirectly of

         Check one Alternative.

         [  ]     ALTERNATIVE NO. 1
                  -----------------
                  more than fifty (50) percent

         [X ]     ALTERNATIVE NO. 2
                  -----------------
                  fifty (50) percent or more

         of the  voting  rights in a legal  entity.  "Controls",  "Controlled
         by" and other  derivatives  shall be construed accordingly.

1.18     Cost Hydrocarbons means that portion of the total production of
         Hydrocarbons which is allocated to the Parties under the Contract and
         this Agreement for the recovery of the costs and expenses incurred by
         the Parties and allowed to be recovered pursuant to the Contract.

1.19     Crude Oil means all crude oils, condensates, and natural gas liquids at
         atmospheric pressure which are subject to and covered by the Contract.

1.20     Day means a calendar day unless otherwise specifically provided.

                                       2
<PAGE>

1.21     Deepening means an operation whereby a well is drilled to an objective
         Zone below the deepest Zone in which the well was previously drilled,
         or below the deepest Zone proposed in the associated AFE (if required),
         whichever is the deeper. "Deepen" and other derivatives shall be
         construed accordingly.

1.22     Development Plan means a plan for the development of Hydrocarbons from
         an Exploitation Area.

1.23     Development  Well means any well drilled for the  production  of
         Hydrocarbons  pursuant to a  Development Plan.

1.24     Discovery means the discovery of an accumulation of Hydrocarbons whose
         existence until that moment was unproven by drilling.

1.25     Dispute means any dispute, controversy or claim (of any and every kind
         or type, whether based on contract, tort, statute, regulation, or
         otherwise) arising out of, relating to, or connected with this
         Agreement or the operations carried out under this Agreement, including
         any dispute as to the construction, validity, interpretation,
         enforceability or breach of this Agreement.

1.26     Entitlement means that quantity of Hydrocarbons (excluding all
         quantities used or lost in Joint Operations) of which a Party has the
         right and obligation to take delivery pursuant to the terms of this
         Agreement and the Contract, as such rights and obligations may be
         adjusted by the terms of any lifting, balancing and other disposition
         agreements entered into pursuant to Article 9.

1.27     Environmental Loss means any loss, damages, costs, expenses or
         liabilities (other than Consequential Loss) caused by a discharge of
         Hydrocarbons, pollutants or other contaminants into or onto any medium
         (such as land, surface water, ground water and/or air) arising out of,
         relating to, or connected with this Agreement or the operations carried
         out under this Agreement, including any of the following: (i) injury or
         damage to, or destruction of, natural resources or real or personal
         property; (ii) cost of pollution control, cleanup and removal; (iii)
         cost of restoration of natural resources; and (iv) fines, penalties or
         other assessments.

1.28     Exclusive Operation means those operations and activities carried out
         pursuant to this Agreement, the costs of which are chargeable to the
         account of less than all the Parties.

1.29     Exclusive Well means a well drilled pursuant to an Exclusive Operation.

1.30     Exploitation Area means that part of the Contract Area which is
         established for development of a Commercial Discovery pursuant to the
         Contract or, if the Contract does not establish an exploitation area,
         then that part of the Contract Area which is delineated as the
         exploitation area in a Development Plan approved as a Joint Operation
         or as an Exclusive Operation.

1.31     Exploitation Period means any and all periods of exploitation during
         which the production and removal of Hydrocarbons is permitted under the
         Contract.

1.32     Exploration Period means any and all periods of exploration set out in
         the Contract.

1.33     Exploration Well means any well the purpose of which at the time of the
         commencement of drilling is to explore for an accumulation of
         Hydrocarbons, which accumulation was at that time unproven by drilling.

1.34     G & G Data means only geological, geophysical and geochemical data and
         other similar information that is not obtained through a well bore.

1.35     Government means any central, federal or regional government which has
         sovereignty over the Contract Area and any political subdivision,
         agency or instrumentality thereof, including the Government Oil & Gas
         Company.

                                       3
<PAGE>

1.36     Government Oil & Gas Company means any Government owned oil and gas
         company participating under the Contract or having rights under the
         Contract.

1.37     Gross Negligence / Willful Misconduct means any act or failure to act
         (whether sole, joint or concurrent) by any person or entity which was
         intended to cause, or which was in reckless disregard of or wanton
         indifference to, harmful consequences such person or entity knew, or
         should have known, such act or failure would have on the safety or
         property of another person or entity.

1.38     Hydrocarbons  means all substances  which are subject to and covered by
         the Contract,  including Crude Oil and Natural Gas.

1.39     Joint Account means the accounts maintained by Operator in accordance
         with the provisions of this Agreement, including the Accounting
         Procedure.

1.40     Joint Operations means those operations and activities carried out by
         Operator pursuant to this Agreement, the costs of which are chargeable
         to all Parties.

1.41     Joint Property means, at any point in time, all wells, facilities,
         equipment, materials, information, funds and property (other than
         Hydrocarbons) held for use in Joint Operations. [NOTE: This definition
         should be reviewed in light of the Alternative chosen in Article 15
         with regard to Venture Information.]

1.42     Laws / Regulations means those laws, statutes, rules and regulations
         governing activities under the Contract.

1.43     Minimum Work Obligations means those work and/or expenditure
         obligations specified in Article 5.1 of the Contract that must be
         performed in order to satisfy the obligations of the Contract.

1.44     Natural Gas means all gaseous hydrocarbons (including wet gas, dry gas
         and residue gas) which are subject to and covered by the Contract, but
         excluding Crude Oil.

1.45     Non-Consenting Party means each Party who elects not to participate in
         an Exclusive Operation.

1.46     Non-Operator means each Party to this Agreement other than Operator.

1.47     Operating Committee means the committee constituted in accordance with
         Article 5.

1.48     Operator means a Party to this Agreement designated as such in
         accordance with Articles 4 or 7.12(F).

1.49     Participating Interest means as to any Party, the undivided interest of
         such Party (expressed as a percentage of the total interests of all
         Parties) in the rights and obligations derived from the Parties'
         interest in the Contract and this Agreement.

1.50     Plugging Back means a single operation whereby a deeper Zone is
         abandoned in order to attempt a Completion in a shallower Zone. "Plug
         Back" and other derivatives shall be construed accordingly.

1.51     Profit Hydrocarbons means that portion of the total production of
         Hydrocarbons, in excess of Cost Hydrocarbons, which is allocated to the
         Parties under the terms of the Contract.

1.52     Recompletion means an operation whereby a Completion in one Zone is
         abandoned in order to attempt a Completion in a different Zone within
         the existing wellbore. "Recomplete" and other derivatives shall be
         construed accordingly.

1.53     Reworking means an operation conducted in the wellbore of a well after
         it is Completed to secure, restore, or improve production in a Zone
         which is currently open to production in the wellbore. Such operations
         include well stimulation operations, but exclude any routine repair or
         maintenance work, or drilling, Sidetracking, Deepening, Completing,
         Recompleting, or Plugging Back of a well. "Rework" and other
         derivatives shall be construed accordingly.

                                       4
<PAGE>

1.54     Security means (i) a guarantee or standby letter of credit issued by a
         bank; (ii) an on-demand bond issued by a surety corporation; (iii) a
         corporate guarantee; (iv) any financial security required by the
         Contract or this Agreement; and (v) any financial security agreed from
         time to time by the Parties; provided, however, that the bank, surety
         or corporation issuing the guarantee, standby letter of credit, bond or
         other security (as applicable) has a credit rating indicating it has a
         sufficient worth to pay its obligations in all reasonably foreseeable
         circumstances.

1.55     Senior Supervisory Personnel means, with respect to a Party, any
         individual who functions as:

         Check one Alternative.

         [X]      ALTERNATIVE NO. 1 -  Field Supervisor Tier
                  its designated manager or supervisor who is responsible for or
                  in charge of onsite drilling, construction or production and
                  related operations, or any other field operations;

         [  ]     ALTERNATIVE NO. 2 -  Facility Manager Tier
                  its designated manager or supervisor of an onshore or offshore
                  installation or facility used for operations and activities of
                  such Party, but excluding all managers or supervisors who are
                  responsible for or in charge of onsite drilling, construction
                  or production and related operations or any other field
                  operations;

         [ ]      ALTERNATIVE NO. 3 - Resident Manager and Direct Managerial
                  Report Tier its senior resident manager who directs all
                  operations and activities of such Party in the country or
                  region in which he is resident, and any manager who directly
                  reports to such senior resident manager in such country or
                  region, but excluding all managers or supervisors who are
                  responsible for or in charge of installations or facilities,
                  onsite drilling, construction or production and related
                  operations, or any other field operations;

         [  ]     ALTERNATIVE NO. 4 -  Resident Manager Tier
                  its senior resident manager who directs all operations and
                  activities of such Party in the country or region in which he
                  is resident, but excluding all managers or supervisors who are
                  responsible for or in charge of installations or facilities,
                  onsite drilling, construction or production and related
                  operations, or any other field operations;

         and, in any of the above alternatives, any individual who functions for
         such Party or one of its Affiliates at a management level equivalent to
         or superior to the tier selected, or any officer or director of such
         Party or one of its Affiliates.

1.56     Sidetracking means the directional control and intentional deviation of
         a well from vertical so as to change the bottom hole location unless
         done to straighten the hole or to drill around junk in the hole or to
         overcome other mechanical difficulties. "Sidetrack" and other
         derivatives shall be construed accordingly.

1.57     Testing  means an operation  intended to evaluate the capacity of a
         Zone to produce  Hydrocarbons.  "Test"  and other derivatives shall be
         construed accordingly.

1.58     Urgent Operational Matters has the meaning ascribed to it in Article
         5.12(A)(1).

1.59     Work Program and Budget means a work program for Joint Operations and
         budget therefor as described and approved in accordance with Article 6.

1.60     Zone means a stratum of earth containing or thought to contain an
         accumulation of Hydrocarbons separately producible from any other
         accumulation of Hydrocarbons.

                                       5
<PAGE>

                                    ARTICLE 2
                             EFFECTIVE DATE AND TERM

         This Agreement shall have effect from the Effective Date (as defined in
the preamble to this Agreement) and shall continue in effect until the following
occur in accordance with the terms of this Agreement: the Contract terminates;
all materials, equipment and personal property used in connection with Joint
Operations or Exclusive Operations have been disposed of or removed; and final
settlement (including settlement in relation to any financial audit carried out
pursuant to the Accounting Procedure) has been made. Notwithstanding the
preceding sentence: (i) Article 10 shall remain in effect until all abandonment
obligations under the Contract have been satisfied; and (ii) Article 4.5,
Article 8, Article 15.2, Article 18 and the indemnity obligation under Article
20.1 (A) shall remain in effect until all obligations have been extinguished and
all Disputes have been resolved. Termination of this Agreement shall be without
prejudice to any rights and obligations arising out of or in connection with
this Agreement which have vested, matured or accrued prior to such termination.

                                    ARTICLE 3
                                      SCOPE

3.1      Scope

         (A)      The purpose of this Agreement is to establish the respective
                  rights and obligations of the Parties with regard to
                  operations under the Contract, including the joint
                  exploration, appraisal, development, production and
                  disposition of Hydrocarbons from the Contract Area.

         (B)      For greater certainty, the Parties confirm that, except to the
                  extent expressly included in the Contract, the following
                  activities are outside of the scope of this Agreement and are
                  not addressed herein:

                  (1)      construction, operation, ownership, maintenance,
                           repair and removal of facilities downstream from the
                           delivery point (as determined under Article 9) of the
                           Parties' Entitlements;

                  (2)      transportation of the Parties' Entitlements
                           downstream from the delivery point (as determined
                           under Article 9);

                  (3)      marketing and sales of Hydrocarbons, except as
                           expressly provided in Article 7.12(E), Article 8.4
                           and Article 9;

                  (4)      acquisition of rights to explore for, appraise,
                           develop or produce Hydrocarbons outside of the
                           Contract Area (other than as a consequence of
                           unitization with an adjoining contract area under the
                           terms of the Contract); and

                  (5)      exploration, appraisal, development or production of
                           minerals other than Hydrocarbons, whether inside or
                           outside of the Contract Area.

3.2      Participating Interest

         (A) The Participating Interests of the Parties as of the Effective Date
             are:

                  A&T                                         50.0%

                  Hawler                                      50.0%

         (B)      If a Party transfers all or part of its Participating Interest
                  pursuant to the provisions of this Agreement and the Contract,
                  the Participating Interests of the Parties shall be revised
                  accordingly.

                                       6
<PAGE>

3.3      Ownership, Obligations and Liabilities

         (A)      Unless otherwise provided in this Agreement, all the rights
                  and interests of the Contractor (as defined in the Contract)
                  in and under the Contract, all Joint Property, and any
                  Hydrocarbons produced from the Contract Area shall, subject to
                  the terms of the Contract, be owned by the Parties in
                  accordance with their respective Participating Interests.

         (B)      Unless otherwise provided in this Agreement, the obligations
                  of the Parties under the Contract and all liabilities and
                  expenses incurred by Operator in connection with Joint
                  Operations shall be charged to the Joint Account and all
                  credits to the Joint Account shall be shared by the Parties,
                  in accordance with their respective Participating Interests.

         (C)      Each Party shall pay when due, in accordance with the
                  Accounting Procedure, its Participating Interest share of
                  Joint Account expenses, including cash advances and interest,
                  accrued pursuant to this Agreement. A Party's payment of any
                  charge under this Agreement shall be without prejudice to its
                  right to later contest the charge.

Check Article 3.4, if desired.

[X]      OPTIONAL PROVISION

         3.4      Government Participation

                  If Government Oil & Gas Company elects to participate in the
                  rights and obligations of Parties, the Parties shall
                  contribute, in proportion to their respective Participating
                  Interests, to the interest to be acquired by Government Oil &
                  Gas Company.

                  Check one alternative.

                  [  ]     ALTERNATIVE NO. 1
                           The Parties shall execute such documents as may be
                           necessary to effect such transfer of interests and
                           the joinder of Government Oil & Gas Company as a
                           Party to this Agreement. All payments received for
                           the transfer of such interests shall be credited to
                           the Parties in proportion to their Participating
                           Interests.

                  [X]      ALTERNATIVE NO. 2
                           The Parties shall execute such documents as may be
                           necessary to effect such transfer of interests. The
                           rights and obligations of the Parties with respect to
                           each other shall remain unchanged; however, they
                           shall enter into a separate operating agreement with
                           Government Oil & Gas Company with respect to the
                           rights and obligations of Government Oil & Gas
                           Company, on the one hand, and the Parties on the
                           other. All payments received for the transfer of such
                           interests shall be credited to the Parties in
                           proportion to their Participating Interests.

                                    ARTICLE 4
                                    OPERATOR

4.1      Designation of Operator

         A&T is designated as Operator and agrees to act as such in accordance
with this Agreement.

4.2      Rights and Duties of Operator

         (A)      Subject to the terms and conditions of this Agreement,
                  Operator shall have all of the rights, functions and duties of
                  Operator under the Contract and shall have exclusive charge of
                  and shall conduct all Joint Operations. Operator may employ
                  independent contractors and agents (which independent
                  contractors and agents may include an Affiliate of Operator, a
                  Non-Operator, or an Affiliate of a Non-Operator) in such Joint
                  Operations.

                                       7
<PAGE>

         (B)      In the conduct of Joint Operations Operator shall:

                  (1)      perform Joint Operations in accordance with the
                           provisions of the Contract, the Laws / Regulations,
                           this Agreement, and the decisions of the Operating
                           Committee not in conflict with this Agreement;

                  (2)      conduct all Joint Operations in a diligent, safe and
                           efficient manner in accordance with such good and
                           prudent petroleum industry practices and field
                           conservation principles as are generally followed by
                           the international petroleum industry under similar
                           circumstances;

                  (3)      exercise due care with respect to the receipt,
                           payment and accounting of funds in accordance with
                           good and prudent practices as are generally followed
                           by the international petroleum industry under similar
                           circumstances;

                  (4)      subject to Article 4.6 and the Accounting Procedure,
                           neither gain a profit nor suffer a loss as a result
                           of being the Operator in its conduct of Joint
                           Operations, provided that Operator may rely upon
                           Operating Committee approval of specific accounting
                           practices not in conflict with the Accounting
                           Procedure;

                  (5)      perform the duties for the Operating Committee set
                           out in Article 5, and prepare and submit to the
                           Operating Committee proposed Work Programs and
                           Budgets and (if required) AFEs, as provided in
                           Article 6;

                  (6)      acquire all permits, consents, approvals, and surface
                           or other rights that may be required for or in
                           connection with the conduct of Joint Operations;

                  (7)      upon receipt of reasonable advance notice, permit the
                           representatives of any of the Parties to have at all
                           reasonable times during normal business hours and at
                           their own risk and expense reasonable access to the
                           Joint Operations with the right to observe all Joint
                           Operations and to inspect all Joint Property and to
                           conduct financial audits as provided in the
                           Accounting Procedure;

                  (8)      undertake to maintain the Contract in full force and
                           effect in accordance with such good and prudent
                           petroleum industry practices as are generally
                           followed by the international petroleum industry
                           under similar circumstances. Operator shall timely
                           pay and discharge all liabilities and expenses
                           incurred in connection with Joint Operations and use
                           its reasonable endeavors to keep and maintain the
                           Joint Property free from all liens, charges and
                           encumbrances arising out of Joint Operations;

                  (9)      pay to the Government for the Joint Account, within
                           the periods and in the manner prescribed by the
                           Contract and the Laws / Regulations, all periodic
                           payments, royalties, taxes, fees and other payments
                           pertaining to Joint Operations but excluding any
                           taxes measured by the incomes of the Parties;

                  (10)     carry out the obligations of Operator pursuant to the
                           Contract, including preparing and furnishing such
                           reports, records and information as may be required
                           pursuant to the Contract;

                  (11)     have, in accordance with any decisions of the
                           Operating Committee, the exclusive right and
                           obligation to represent the Parties in all dealings
                           with the Government with respect to matters arising
                           under the Contract and Joint Operations. Operator
                           shall notify the other Parties as soon as possible of
                           such meetings. Subject to the Contract and any
                           necessary Government approvals, Non-Operators shall
                           have the right to attend any meetings with the
                           Government with respect to such matters, but only in
                           the capacity of observers. Nothing contained in this
                           Agreement shall restrict any Party from holding
                           discussions with the Government with respect to any
                           issue peculiar to its particular business interests
                           arising under the Contract or this Agreement, but in
                           such event such Party shall promptly advise the
                           Parties, if possible, before and in any event
                           promptly after such discussions, provided that such
                           Party shall not be required to divulge to the Parties
                           any matters discussed to the extent the same involve
                           proprietary information or matters not affecting the
                           Parties;

                                       8
<PAGE>

                  (12)     in accordance with Article 9.3 and any decisions of
                           the Operating Committee, assess (to the extent
                           lawful) alternatives for the disposition of Natural
                           Gas from a Discovery;

                  (13)     in case of an emergency (including a significant
                           fire, explosion, Natural Gas release, Crude Oil
                           release, or sabotage; incident involving loss of
                           life, serious injury to an employee, contractor, or
                           third party, or serious property damage; strikes and
                           riots; or evacuations of Operator personnel): (i)
                           take all necessary and proper measures for the
                           protection of life, health, the environment and
                           property; and (ii) as soon as reasonably practicable,
                           report to Non-Operators the details of such event and
                           any measures Operator has taken or plans to take in
                           response thereto;

                  (14)     establish and implement pursuant to Article 4.12 an
                           HSE plan to govern Joint Operations which is designed
                           to ensure compliance with applicable HSE laws, rules
                           and regulations and this Agreement;

                  (15)     include, to the extent practical, in its contracts
                           with independent contractors and to the extent
                           lawful, provisions which:

                           (a)      establish that such contractors can only
                                    enforce their contracts against Operator;

                           (b)      permit Operator, on behalf of itself and
                                    Non-Operators, to enforce contractual
                                    indemnities against, and recover losses and
                                    damages suffered by them (insofar as
                                    recovered under their contracts) from, such
                                    contractors; and

                           (c)      require such contractors to take insurance
                                    required by Article 4.7(H).

4.3      Operator Personnel

         Check one Alternative

         [  ]     ALTERNATIVE NO. 1
                  Operator shall engage or retain only such employees,
                  contractors, consultants and agents as are reasonably
                  necessary to conduct Joint Operations. Subject to the Contract
                  and this Agreement, Operator shall determine the number of
                  employees, contractors, consultants and agents, the selection
                  of such persons, their hours of work, and the compensation to
                  be paid to all such persons in connection with Joint
                  Operations.

         [X]      ALTERNATIVE NO. 2
                  Operator shall engage or retain only such employees,
                  secondees, contractors, consultants and agents as are
                  reasonably necessary to conduct Joint Operations. Subject to
                  the Contract and this Agreement, Operator shall determine the
                  number of employees, secondees, contractors, consultants and
                  other persons, the selection of such persons, their hours of
                  work, and (except for secondees) the compensation to be paid
                  to all such persons in connection with Joint Operations.

                                       9
<PAGE>

         [  ]     ALTERNATIVE NO. 3 - (from Paragraph (A) to (F))

                  (A)       Operator shall engage or retain only such employees,
                            Secondees, contractors, consultants and agents as
                            are reasonably necessary to conduct Joint
                            Operations. For the purposes of this Article 4.3,
                            "Secondee" means an employee of a Non-Operator (or
                            its Affiliate) who is seconded to Operator to
                            provide services under a secondment agreement to be
                            negotiated and entered into between Operator and
                            such Non-Operator; and "Secondment" means placement
                            within Operator's organization in accordance with
                            this Article 4.3 of one or more persons who are
                            employed by a Non-Operator or an Affiliate.

                  (B)      Subject to the Contract and this Agreement, Operator
                           shall determine the number of employees, Secondees,
                           contractors, consultants and agents, the selection of
                           such persons, their hours of work, and (except for
                           Secondees) the compensation to be paid to all such
                           persons in connection with Joint Operations.

                  (C)      No Secondment may be implemented except (i) in
                           situations requiring particular expertise or
                           involving projects of a technical, operational or
                           economically challenging nature; and (ii) in the
                           manner set out in paragraphs (1) to (7) below.

                           (1)      Any Party may propose Secondment for a
                                    designated purpose related to Joint
                                    Operations. Any proposal for Secondment must
                                    include the:

                                    (a)     designated purpose and scope of
                                            Secondment, including duties,
                                            responsibilities, and deliverables;

                                    (b)     duration of the Secondment;

                                    (c)     number of Secondees and minimum
                                            expertise, qualifications and
                                            experience required;

                                    (d)     work location and position within
                                            Operator's organization of each
                                            Secondee; and

                                    (e)     estimated costs of the Secondment.

                           (2)      In relation to a proposed Secondment meeting
                                    the requirements of Article 4.3(C)(1),
                                    Operator shall as soon as reasonably
                                    practicable:

                                    Check one Alternative.

                                    [  ]    ALTERNATIVE NO. 1
                                            approve  or  reject  any  Secondment
                                            proposed  by a  Non-Operator,  in
                                            Operator's sole discretion.

                                       10
<PAGE>

                                    [  ]    ALTERNATIVE NO. 2
                                            approve (such approval to not be
                                            unreasonably withheld) or reject any
                                            Secondment proposed by a
                                            Non-Operator. Without prejudice to
                                            Operator's right to conduct Joint
                                            Operations in accordance with this
                                            Agreement and the Contract, Operator
                                            shall consider such Secondment
                                            proposal in light of the: (i)
                                            expertise and experience required
                                            for the relevant Joint Operations;
                                            (ii) expertise and experience of
                                            Operator's personnel; and (iii)
                                            potential benefits of such
                                            Secondment to the conduct of Joint
                                            Operations.

                           (3)      Any proposal for one or more Secondment
                                    positions approved by Operator is subject
                                    to: (i) the Operating Committee's
                                    authorization of an appropriate budget for
                                    such Secondment positions; and (ii)
                                    Non-Operators continuing to make available
                                    to Operator Secondees qualified to fulfill
                                    the designated purpose and scope of such
                                    Secondment.

                           (4)      As to each approved and authorized
                                    Secondment position, Operator shall request
                                    Non-Operators to nominate, by a specified
                                    date, qualified personnel to be the Secondee
                                    for such position. Each Non-Operator has the
                                    right (but not the obligation) to nominate
                                    for each Secondment position one or more
                                    proposed Secondees who such Non-Operator
                                    considers reasonably qualified to fulfill
                                    the designated purpose and scope of such
                                    Secondment.

                           (5)      Following the deadline for submitting
                                    nominations, Operator shall consider the
                                    expertise and experience of each such
                                    nominee in light of the expertise and
                                    experience required for the approved and
                                    authorized Secondment position, and shall:

                                    Check one Alternative.

                                    [  ]    ALTERNATIVE NO. 1
                                            select or reject any nominee in
                                            Operator's sole discretion.

                                    [  ]    ALTERNATIVE NO. 2
                                            select from the nominees the best
                                            qualified person, unless Operator
                                            reasonably demonstrates that no
                                            nominee is qualified to fulfill the
                                            designated purpose and scope of such
                                            Secondment.

                           (6)      Operator shall have the right to terminate
                                    the Secondment for cause in accordance with
                                    the secondment agreement provided for under
                                    Article 4.3(D).

                           (7)      Although each Secondee shall report to and
                                    be directed by Operator, each Secondee shall
                                    remain at all times the employee of the
                                    Party (or its Affiliate) nominating such
                                    Secondee.

                  (D)      Any Secondment under this Agreement shall be in
                           accordance with a separate secondment agreement to be
                           negotiated and entered into between Operator and the
                           employer of the Secondee, which agreement shall be
                           consistent with this Article 4.3. [NOTE: A model
                           Secondment Agreement may be acquired through the
                           AIPN]

                  (E)      All costs related to Secondment and Secondees that
                           are within the Work Program and Budget related to
                           such Secondment position shall be charged to the
                           Joint Account.

                  (F)      If any Secondee acting as the Senior Supervisory
                           Personnel of Operator or its Affiliates engages in
                           Gross Negligence / Willful Misconduct which
                           proximately causes the Parties to incur damage, loss,
                           cost, expense or liability for claims, demands or
                           causes of action referred to in Articles 4.6(A) or
                           4.6(B), then all such damages, losses, costs,
                           expenses and liabilities shall be allocated to:

                                       11
<PAGE>

                           Check one Alternative.

                           [  ]     ALTERNATIVE NO. 1
                                    the Joint Account notwithstanding the
                                    provisions of Article 4.6.

                           [  ]     ALTERNATIVE NO. 2
                                    Operator, in accordance with Article 4.6.

                           [  ]     ALTERNATIVE NO. 3
                                    the Non-Operator who nominated such
                                    Secondee, in an equivalent manner and to the
                                    same extent liability for Gross Negligence /
                                    Willful Misconduct is allocated to Operator
                                    pursuant to Article 4.6.

4.4      Information Supplied by Operator

         (A)      Operator shall provide Non-Operators with the following data
                  and reports (to the extent to be charged to the Joint Account)
                  as they are currently produced or compiled from Joint
                  Operations:

                  (1)      copies of all logs or surveys, including in digitally
                           recorded format if such exists;

                  (2)      daily drilling reports;

                  (3)      copies of all Tests and core data and analysis
                           reports;

                  (4)      final well recap report;

                  (5)      copies of plugging reports;

                  (6)      copies of final geological and geophysical maps,
                           seismic sections and shot point location maps;

                  (7)      engineering studies, development schedules and
                           [quarterly/annual] progress reports on development
                           projects;

                  (8)      field and well performance reports, including
                           reservoir studies and reserve estimates;

                  (9)      as requested by a Non-Operator, (i) copies of all
                           material reports relating to Joint Operations or the
                           Contract Area furnished by Operator to the
                           Government; and (ii) other material studies and
                           reports relating to Joint Operations;

                  (10)     gas balancing reports under agreements provided for
                           in Article 9.3;

                  (11)     such additional information as a Non-Operator may
                           reasonably request, provided that the requesting
                           Party or Parties pay the costs of preparation of such
                           information and that the preparation of such
                           information will not unduly burden Operator's
                           administrative and technical personnel. Only
                           Non-Operators who pay such costs will receive such
                           additional information; and

                  (12)     other reports as directed by the Operating Committee.

                                       12
<PAGE>

         (B)      Operator shall give Non-Operators access at all reasonable
                  times during normal business hours to all data and reports
                  (other than data and reports provided to Non-Operators in
                  accordance with Article 4.4(A)) acquired in the conduct of
                  Joint Operations, which a Non-Operator may reasonably request.
                  Any Non-Operator may make copies of such other data at its
                  sole expense.

4.5      Settlement of Claims and Lawsuits

          (A)  Operator shall promptly notify the Parties of any and all
               material claims or suits that relate in any way to Joint
               Operations. Operator shall represent the Parties and defend or
               oppose the claim or suit. Operator may in its sole discretion
               compromise or settle any such claim or suit or any related series
               of claims or suits for an amount not to exceed the equivalent of
               Fifty Thousand U.S. dollars ($50,000 USD) exclusive of legal
               fees. Operator shall obtain the approval and direction of the
               Operating Committee on amounts in excess of the above-stated
               amount. Without prejudice to the foregoing, each Non-Operator
               shall have the right to be represented by its own counsel at its
               own expense in the settlement, compromise or defense of such
               claims or suits.

          (B)  Any Non-Operator shall promptly notify the other Parties of any
               claim made against such Non-Operator by a third party that arises
               out of or may affect the Joint Operations, and such Non-Operator
               shall defend or settle the same in accordance with any directions
               given by the Operating Committee. Those costs, expenses and
               damages incurred pursuant to such defense or settlement which are
               attributable to Joint Operations shall be for the Joint Account.

          (C)  Notwithstanding Article 4.5(A) and Article 4.5(B), each Party
               shall have the right to participate in any such suit,
               prosecution, defense or settlement conducted in accordance with
               Article 4.5(A) and Article 4.5(B), at its sole cost and expense;
               provided always that no Party may settle its Participating
               Interest share of any claim without first satisfying the
               Operating Committee that it can do so without prejudicing the
               interests of the Joint Operations.

4.6      Limitation on Liability of Operator

          (A)  Except as set out in Article 4.6(C), neither Operator nor any
               other Indemnitee (as defined below) shall bear (except as a Party
               to the extent of its Participating Interest share) any damage,
               loss, cost, expense or liability resulting from performing (or
               failing to perform) the duties and functions of Operator, and the
               Indemnitees are hereby released from liability to Non-Operators
               for any and all damages, losses, costs, expenses and liabilities
               arising out of, incident to or resulting from such performance or
               failure to perform, even though caused in whole or in part by a
               pre-existing defect, or the negligence (whether sole, joint or
               concurrent), gross negligence, willful misconduct, strict
               liability or other legal fault of Operator (or any such
               Indemnitee).

          (B)  Except as set out in Article 4.6(C), the Parties shall (in
               proportion to their Participating Interests) defend and indemnify
               Operator and its Affiliates, and their respective directors,
               officers, and employees (collectively, the "Indemnitees"), from
               any and all damages, losses, costs, expenses (including
               reasonable legal costs, expenses and attorneys' fees) and
               liabilities incident to claims, demands or causes of action
               brought by or on behalf of any person or entity, which claims,
               demands or causes of action arise out of, are incident to or
               result from Joint Operations, even though caused in whole or in
               part by a pre-existing defect, or the negligence (whether sole,
               joint or concurrent), gross negligence, willful misconduct,
               strict liability or other legal fault of Operator (or any such
               Indemnitee).

         Check Paragraph (C), if desired. Renumber following paragraph if
         Paragraph (C) is not selected.

         [X]      OPTIONAL PROVISION

                  (C)      Notwithstanding Articles 4.6(A) or 4.6(B), if the
                           Operator fails to take the necessary precautions to
                           prevent any Senior Supervisory Personnel of Operator
                           or its Affiliates from engaging in Gross Negligence /
                           Willful Misconduct which proximately causes the
                           Parties to incur damage, loss, cost, expense or
                           liability for claims, demands or causes of action
                           referred to in Articles 4.6(A) or 4.6(B), then, in
                           addition to its Participating Interest share:

                                       13
<PAGE>

                           Check one Alternative.

                           [X]      ALTERNATIVE NO. 1 - No Limitation
                                    Operator shall bear all such damages,
                                    losses, costs, expenses and liabilities.

                           [  ]     ALTERNATIVE NO. 2 - Joint Property
                                    Limitation Operator shall bear only the
                                    actual damage, loss, cost, expense and
                                    liability to repair, replace and/or remove
                                    Joint Property so
                                    damaged or lost, if any.

                           [  ]     ALTERNATIVE NO. 3 - Financial Limitation
                                    Operator shall bear only the first
                                    [__________ U.S.  dollars] of such damages,
                                    losses, costs, expenses and liabilities.

                                    [NOTE:  Consider whether the amount stated
                                    as a financial  limitation should be
                                    adjusted in accordance with an inflation or
                                    other index.]

                           Notwithstanding the foregoing, under no circumstances
                           shall Operator (except as a Party to the extent of
                           its Participating Interest) or any other Indemnitee
                           bear any Consequential Loss or Environmental Loss.

         (D)      Nothing in this Article 4.6 shall be deemed to relieve
                  Operator from its Participating Interest share of any damage,
                  loss, cost, expense or liability arising out of, incident to,
                  or resulting from Joint Operations.

[NOTE: Consider whether under applicable law the indemnification portions of
Article 4.6, Article 7.3 and Article 7.9 must be set out in conspicuous language
or meet other legal requirements in order to be enforceable.]

4.7      Insurance Obtained by Operator

         (A)      Operator shall procure and maintain for the Joint Account all
                  insurance in the types and amounts required by the Contract or
                  the Laws / Regulations.

         (B)      Operator shall procure and maintain any further insurance, at
                  reasonable rates, as the Operating Committee may from time to
                  time require. In the event that such further insurance is, in
                  Operator's reasonable opinion, unavailable or available only
                  at an unreasonable cost, Operator shall promptly notify the
                  Non-Operators in order to allow the Operating Committee to
                  reconsider such further insurance.

         (C)      Each Party will be provided the opportunity to underwrite any
                  or all of the insurance to be obtained by Operator under
                  Articles 4.7(A) and 4.7(B), through such Party's Affiliate
                  insurance company or, if such direct insurance is not so
                  permitted, through reinsurance policies to such Party's
                  Affiliate insurance company; provided that the security and
                  creditworthiness of such insurance arrangements are
                  satisfactory to Operator, and that such arrangements will not
                  result in any part of the premiums for such insurance not
                  being recoverable under the Contract, or being significantly
                  higher than the market rate.

         (D)      Subject to the Contract and the Laws / Regulations, any Party
                  may elect not to participate in the insurance to be procured
                  under:

                                       14
<PAGE>

                           Check one Alternative.

                           [X]      ALTERNATIVE NO. 1
                                    Articles 4.7(A) and 4.7(B) provided such
                                    Party:

                           [  ]     ALTERNATIVE NO. 2
                                    Article 4.7(B) provided such Party:

                  (1)      gives prompt written notice to that effect to
                           Operator;

                  (2)      does nothing which may interfere with Operator's
                           negotiations for such insurance for the other
                           Parties;

                  (3)      obtains insurance prior to or concurrent with the
                           commencement of relevant operations and maintains
                           such insurance (in respect of which a current
                           certificate of adequate coverage, provided at least
                           once a year, shall be sufficient evidence) or other
                           evidence of financial responsibility which fully
                           covers its Participating Interest share of the risks
                           that would be covered by the insurance to be procured
                           under Article 4.7(A) and/or Article 4.7(B), as
                           applicable, and which the Operating Committee
                           determines to be acceptable. No such determination of
                           acceptability shall in any way absolve a
                           non-participating Party from its obligation to meet
                           each cash call (except, in accordance with Article
                           4.7(F), as regards the costs of the insurance policy
                           in which such Party has elected not to participate)
                           including any cash call with respect to damages and
                           losses and/or the costs of remedying the same in
                           accordance with the terms of this Agreement, the
                           Contract and the Laws / Regulations. If such Party
                           obtains other insurance, such insurance shall (a)
                           contain a waiver of subrogation in favor of all the
                           other Parties, the Operator and their insurers but
                           only with respect to their interests under this
                           Agreement; (b) provide that thirty (30) days written
                           notice be given to Operator prior to any material
                           change in, or cancellation of, such insurance policy;
                           (c) be primary to, and receive no contribution from,
                           any other insurance maintained by or on behalf of, or
                           benefiting Operator or the other Parties; and (d)
                           contain adequate territorial extensions and coverage
                           in the location of the Joint Operations; and

                  (4)      is responsible for all deductibles, coinsurance
                           payments, self-insured exposures, uninsured or
                           underinsured exposures relating to its interests
                           under this Agreement.

         Check Paragraph (E), if desired. Renumber following paragraphs if
         Paragraph (E) is not selected.

         [X]      OPTIONAL PROVISION

                    (E)  In the event Operator elects, to the extent permitted
                         by the Contract and Laws / Regulations, to self-insure
                         all or part of the coverage to be procured under
                         Articles 4.7(A) and/or 4.7(B), Operator shall so notify
                         the Operating Committee and provide a qualified
                         self-insurance letter stating what coverages Operator
                         is self-insuring. Any risk to be covered by insurance
                         to be procured in accordance with Articles 4.7(A) and
                         4.7(B), that is not identified in the self-insurance
                         letter shall be covered by insurance and supported by a
                         current certificate of adequate coverage. If requested
                         by the Operating Committee from time to time, Operator
                         shall provide evidence of financial responsibility,
                         acceptable to the Operating Committee, which fully
                         covers the risks that would be covered by the insurance
                         to be procured under Articles 4.7(A) and 4.7(B).

         (F)      The cost of insurance in which all the Parties are
                  participating shall be for the Joint Account and the cost of
                  insurance in which less than all the Parties are participating
                  shall be charged to the Parties participating in proportion to
                  their respective Participating Interests. Subject to the
                  preceding sentence, the cost of insurance with respect to an
                  Exclusive Operation shall be charged to the Consenting
                  Parties.

                                       15
<PAGE>

         (G)      Operator shall, with respect to all insurance obtained under
                  this Article 4.7:

                  (1)      use reasonable endeavors to procure or cause to be
                           procured such insurance prior to or concurrent with,
                           the commencement of relevant operations and maintain
                           or cause to be maintained such insurance during the
                           term of the relevant operations or any longer term
                           required under the Contract or the Laws /
                           Regulations;

                  (2)      promptly inform the participating Parties when such
                           insurance is obtained and supply them with
                           certificates of insurance or copies of the relevant
                           policies when the same are issued;

                  (3)      arrange for the participating Parties, according to
                           their respective Participating Interests, to be named
                           as co-insureds on the relevant policies with waivers
                           of subrogation in favor of all the Parties but only
                           with respect to their interests under this Agreement;

                  (4)      use reasonable endeavors to ensure that each policy
                           shall survive the default or bankruptcy of the
                           insured for claims arising out of an event before
                           such default or bankruptcy and that all rights of the
                           insured shall revert to the Parties not in default or
                           bankruptcy; and

                  (5)      duly file all claims and take all necessary and
                           proper steps to collect any proceeds and credit any
                           proceeds to the participating Parties in proportion
                           to their respective Participating Interests.

         (H)      Operator shall use its reasonable endeavors to require all
                  contractors performing work with respect to Joint Operations
                  to:

                  (1)      obtain and maintain any and all insurance in the
                           types and amounts required by the Contract, the Laws
                           / Regulations or any decision of the Operating
                           Committee;

                  (2)      name the Parties as additional insureds on the
                           contractor's insurance policies and obtain from their
                           insurers waivers of all rights of recourse against
                           Operator, Non-Operators and their insurers; and

                  (3)      provide Operator with certificates reflecting such
                           insurance prior to the commencement of their
                           services.

4.8      Commingling of Funds

         Check one Alternative.

         [X]      ALTERNATIVE NO. 1
                  Operator may not commingle with Operator's own funds the
                  monies which Operator receives from or for the Joint Account
                  pursuant to this Agreement. However, Operator reserves the
                  right to make future proposals to the Operating Committee with
                  respect to the commingling of funds to achieve financial
                  efficiency.

         [  ]     ALTERNATIVE NO. 2
                  Operator may commingle with its own funds the monies which it
                  receives from or for the Joint Account pursuant to this
                  Agreement. Notwithstanding that monies of a Non-Operator have
                  been commingled with Operator's funds, Operator shall account
                  to the Non-Operators for the monies of a Non-Operator advanced
                  or paid to Operator, whether for the conduct of Joint
                  Operations or as proceeds from the sale of Hydrocarbons or
                  Joint Property under this Agreement. Such monies shall be
                  applied only to their intended use and shall in no way be
                  deemed to be funds belonging to Operator.

                                       16
<PAGE>

                  Check if desired, in relation to Alternative No. 2

                  [  ]     OPTIONAL PROVISION
                           Notwithstanding the foregoing, the Operating
                           Committee shall have the right to require Operator to
                           segregate from Operator's own funds the monies which
                           Operator receives:

                           Check one alternative.

                           [  ]     ALTERNATIVE NO. 2-1
                                    from or for the Joint Account pursuant to
                                    this Agreement.

                           [  ]     ALTERNATIVE NO. 2-2
                                    from the Parties in connection with
                                    operations on each Exploitation Area.

         Check if desired.

         [  ]     OPTIONAL PROVISION - Interest Bearing Account
                  The Operating Committee may decide that monies Operator
                  receives for the Joint Account shall be deposited in an
                  interest-bearing account

                  Check one alternative.

                  [  ]     ALTERNATIVE NO. 1
                           at any time.

                  [  ]     ALTERNATIVE NO. 2
                           after the approval of the Development Plan.

                  Interest earned shall be allocated among the Parties on an
                  equitable basis taking into account the date of the funding by
                  each Party and its share of the Joint Account monies. Operator
                  shall apply such earned interest to the next succeeding cash
                  call or, if directed by the Operating Committee, pay it to the
                  Parties.

4.9      Resignation of Operator

         Subject to Article 4.11, Operator may resign as Operator at any time by
         so notifying the other Parties at least one hundred and twenty (120)
         Days prior to the effective date of such resignation.

4.10     Removal of Operator

         (A)      Subject to Article 4.11, Operator shall be removed upon
                  receipt of notice from any Non-Operator if:

                  (1)      Operator becomes insolvent or bankrupt, or makes an
                           assignment for the benefit of creditors; or

                  (2)      an order is made by a court or an effective
                           resolution is passed for the reorganization under any
                           bankruptcy law, dissolution, liquidation, or winding
                           up of Operator; or

                  (3)      a receiver is appointed for a substantial part of
                           Operator's assets; or

                  (4)      Operator dissolves, liquidates, is wound up, or
                           otherwise terminates its existence; or

                  (5)      the Kurdistan Regional Government of Iraq states in
                           writing that the Operator is not acceptable to it as
                           a party to act as "Operator" under the Contract; or

                                       17
<PAGE>

                  (6)      a senior manager of Operator is changed without first
                           obtaining the approval of each Non-Operator holding a
                           Participating Interest of thirty percent (30%) or
                           more and replaced by a person who is not acceptable
                           to at least one (1) such Non-Operator.

               (B)  Subject to Article 4.11, Operator may be removed by the
                    decision of the Non-Operators if Operator has committed a
                    material breach of this Agreement and has either failed to
                    commence to cure that breach within thirty (30) Days of
                    receipt of a notice from Non-Operators detailing the alleged
                    breach or failed to diligently pursue the cure to
                    completion. Any decision of Non-Operators to give notice of
                    breach to Operator or to remove Operator under this Article
                    4.10(B) shall be made by an affirmative vote of one (1) or
                    more of the total number of Non-Operators holding a combined
                    Participating Interest of at least forty percent (40%).
                    However, if Operator disputes such alleged commission of or
                    failure to cure a material breach and dispute resolution
                    proceedings are initiated pursuant to Article 18.2 in
                    relation to such breach, then Operator shall remain
                    appointed and no successor Operator may be appointed pending
                    the conclusion or abandonment of such proceedings, subject
                    to the terms of Article 8.3 with respect to Operator's
                    breach of its payment obligations.

         Check Paragraph (C), if desired. Renumber following paragraphs if
         Paragraph (C) is not selected.

         [X]      OPTIONAL PROVISION

                  (C)      If Operator together with any Affiliates of Operator
                           is or becomes the holder of a Participating Interest
                           of less than thirty percent (30%), then Operator
                           shall be required to promptly notify the other
                           Parties. The Operating Committee shall then vote
                           within thirty (30) Days of such notification on
                           whether or not a successor Operator should be named
                           pursuant to Article 4.11.

         Check Paragraph (D), if desired. Renumber following paragraph if
         Paragraph (D) is not selected.

         [X]      OPTIONAL PROVISION

                  (D)      If there is a direct or indirect Change in Control of
                           Operator (other than a transfer of Control to an
                           Affiliate of Operator), Operator shall be required to
                           promptly notify the other Parties. The Operating
                           Committee shall vote within thirty (30) Days of such
                           notification on whether or not a successor Operator
                           should be named pursuant to Article 4.11.

         Check Paragraph (E), if desired.

         [X]      OPTIONAL PROVISION

                  (E)      Subject to Article 4.11, Operator may be removed at
                           any time without cause by the affirmative vote of one
                           (1) or more of the total number of Non-Operators
                           holding a combined Participating Interest of at least
                           sixty percent (60%), upon such Non-Operators giving
                           one hundred and eighty (180) days prior written
                           notice to Operator.

                  (F)      If actual expenses for the prior calendar year exceed
                           by 10% the Budget for the annual Work Program
                           approved by the Joint Steering Committee under the
                           Contract (as it may be amended from time to time
                           pursuant to its terms), then, provided that the prior
                           written approval of the Operating Committee has not
                           been obtained by Operator with respect to such excess
                           expenditures, the Operating Committee may by ninety
                           (90) days prior written notice remove the Operator

4.11     Appointment of Successor

                                       18
<PAGE>

         When a change of Operator occurs pursuant to Article 4.9 or Article
         4.10(A)-(E):

         (A)      The Operating Committee shall meet as soon as possible to
                  appoint a successor Operator pursuant to the voting procedure
                  of Article 5.9. No Party may be appointed successor Operator
                  against its will.

         (B)      If Operator is removed, [other than in the case of Article
                  4.10(C) or Article 4.10(D)], neither Operator nor any
                  Affiliate of Operator shall have the right to be considered as
                  a candidate for the successor Operator.

         (C)      The resigning or removed Operator shall be compensated out of
                  the Joint Account for its reasonable expenses directly related
                  to its resignation or removal, except in the case of Article
                  4.10(B).

         (D)      The resigning or removed Operator and the successor Operator
                  shall arrange for the taking of an inventory of all Joint
                  Property and Hydrocarbons, and an audit of the books and
                  records of the removed Operator. Such inventory and audit
                  shall be completed, if possible, no later than the effective
                  date of the change of Operator and shall be subject to the
                  approval of the Operating Committee. The liabilities and
                  expenses of such inventory and audit shall be charged to the
                  Joint Account.

         (E)      The resignation or removal of Operator and its replacement by
                  the successor Operator shall not become effective prior to
                  receipt of any necessary Government approvals.

         (F)      Upon the effective date of the resignation or removal, the
                  successor Operator shall succeed to all duties, rights and
                  authority prescribed for Operator. The former Operator shall
                  transfer to the successor Operator custody of all Joint
                  Property, books of account, records and other documents
                  maintained by Operator pertaining to the Contract Area and to
                  Joint Operations. Upon delivery of the above-described
                  property and data, the former Operator shall be released and
                  discharged from all obligations and liabilities as Operator
                  accruing after such date.

         When a change of Operator occurs pursuant to Article 4.10(F), then the
         Party which owns a Participating Interest which is equal to or greater
         than the Participating Interest of the Operator, and which has the
         largest Participating Interest owned by a Non-Operator may designate
         itself or another holder of a Participating Interest as the Operator.

4.12     Health, Safety and Environment ("HSE")

         (A)      With the goal of achieving safe and reliable operations in
                  compliance with applicable HSE laws, rules and regulations
                  (including avoiding significant and unintended impact on the
                  safety or health of people, on property, or on the
                  environment), Operator shall in the conduct of Joint
                  Operations:

                  (1)      establish and implement an HSE plan in a manner
                           consistent with standards and procedures generally
                           followed in the international petroleum industry
                           under similar circumstances;

                  (2)      design and operate Joint Property consistent with the
                           HSE plan; and

                  (3)      conform with locally applicable HSE laws, rules and
                           regulations and other HSE-related statutory
                           requirements that may apply.

         (B) The Operating Committee shall:

                  Check one Alternative.

                                       19
<PAGE>

                  [X]      ALTERNATIVE NO. 1
                           from time to time review details of Operator's HSE
                           plan and Operator's implementation thereof.

                  [  ]     ALTERNATIVE NO. 2
                           be provided by Operator, on an annual basis, with an
                           HSE letter of assurance providing adequate evidence
                           that an HSE plan is in place and that any major HSE
                           issues have been brought to the attention of the
                           Operating Committee and are being properly managed.

         (C) In the conduct of Joint Operations, Operator shall:

                  Check one Alternative.

                  [X]      ALTERNATIVE NO. 1
                           establish and implement a program for regular HSE
                           assessments. The purpose of such assessments is to
                           periodically review HSE systems and procedures,
                           including actual practice and performance, to verify
                           that the HSE plan is being implemented in accordance
                           with the policies and standards of the HSE plan.
                           Operator shall, at a minimum, conduct such an
                           assessment before entering into significant new Joint
                           Operations and before undertaking any major changes
                           to existing Joint Operations. Upon reasonable notice
                           given to Operator, Non-Operators shall have the right
                           to participate in such HSE assessments.

                  [  ]     ALTERNATIVE NO. 2
                           establish an annual audit program whereby independent
                           auditors review and verify the effectiveness of the
                           HSE plan.

         (D)      Operator shall require its contractors, consultants and agents
                  undertaking activities for the Joint Account to manage HSE
                  risks in a manner consistent with the requirements of this
                  Article 4.12.

         (E)      Operator shall establish and enforce rules consistent with
                  those generally followed in the international petroleum
                  industry under similar circumstances that, at a minimum,
                  prohibit within the Contract Area the following:

                  (1)      possession, use, distribution or sale of firearms,
                           explosives, or other weapons without the prior
                           written approval of senior management of Operator;

                  (2)      possession, use, distribution or sale of alcoholic
                           beverages without the prior written approval of
                           senior management of Operator; and

                  (3)      possession, use, distribution or sale of illicit or
                           non-prescribed controlled substances and the misuse
                           of prescribed drugs.

         Check if desired.

         [X]      OPTIONAL PROVISION

         (F)      Without prejudice to a Party's rights under Article 4.2(B)(7),
                  with reasonable advance notice, Operator shall permit each
                  Non-Operator to have at all reasonable times during normal
                  business hours (and at its own risk and expense) the right to
                  conduct its own HSE audit.

                                       20
<PAGE>

                                    ARTICLE 5
                               OPERATING COMMITTEE

5.1      Establishment of Operating Committee

         To provide for the overall supervision and direction of Joint
         Operations, there is established an Operating Committee composed of
         representatives of each Party holding a Participating Interest. Each
         Party shall appoint one (1) representative and one (1) alternate
         representative to serve on the Operating Committee. Each Party shall as
         soon as possible after the date of this Agreement give notice in
         writing to the other Parties of the name and address of its
         representative and alternate representative to serve on the Operating
         Committee. Each Party shall have the right to change its representative
         and alternate at any time by giving notice of such change to the other
         Parties.

5.2      Powers and Duties of Operating Committee

         The Operating Committee shall have power and duty to authorize and
         supervise Joint Operations that are necessary or desirable to fulfill
         the Contract and properly explore and exploit the Contract Area in
         accordance with this Agreement and in a manner appropriate in the
         circumstances.

5.3      Authority to Vote

         The representative of a Party, or in his absence his alternate
         representative, shall be authorized to represent and bind such Party
         with respect to any matter which is within the powers of the Operating
         Committee and is properly brought before the Operating Committee. Each
         such representative shall have a vote equal to the Participating
         Interest of the Party such person represents. Each alternate
         representative shall be entitled to attend all Operating Committee
         meetings but shall have no vote at such meetings except in the absence
         of the representative for whom he is the alternate. In addition to the
         representative and alternate representative, each Party may also bring
         to any Operating Committee meetings such technical and other advisors
         as it may deem appropriate.

5.4      Subcommittees

         The Operating Committee may establish such subcommittees, including
         technical subcommittees, as the Operating Committee may deem
         appropriate. The functions of such subcommittees shall be in an
         advisory capacity or as otherwise determined unanimously by the
         Parties. Each Party shall have the right to appoint a representative to
         each subcommittee.

5.5      Notice of Meeting

         (A)      Operator may call a meeting of the Operating Committee by
                  giving notice to the Parties at least fifteen (15) Days in
                  advance of such meeting.

         (B)      Any Non-Operator may request a meeting of the Operating
                  Committee by giving notice to all the other Parties. Upon
                  receiving such request, Operator shall call such meeting for a
                  date not less than fifteen (15) Days nor more than twenty (20)
                  Days after receipt of the request.

         (C)      The notice periods above may only be waived with the unanimous
                  consent of all the Parties.

5.6      Contents of Meeting Notice

         (A) Each notice of a meeting of the Operating Committee as provided by
             Operator shall contain:

                  (1)      the date, time and location of the meeting;

                  (2)      an agenda of the matters and proposals to be
                           considered and/or voted upon; and

                                       21
<PAGE>

                  (3)      copies of all proposals to be considered at the
                           meeting (including all appropriate supporting
                           information not previously distributed to the
                           Parties).

         (B)      A Party, by notice to the other Parties given not less than
                  seven (7) Days prior to a meeting, may add additional matters
                  to the agenda for a meeting.

         (C)      On the request of a Party, and with the unanimous consent of
                  all Parties, the Operating Committee may consider at a meeting
                  a proposal not contained in such meeting agenda.

5.7      Location of Meetings

         All meetings of the Operating Committee shall be held in London, United
         Kingdom, or elsewhere as the Operating Committee may decide.

5.8      Operator's Duties for Meetings

         (A)      With respect to meetings of the Operating Committee and any
                  subcommittee, Operator's duties shall include:

                  (1) timely preparation and distribution of the agenda;

                  (2) organization and conduct of the meeting; and

                  (3) preparation of a written record or minutes of each
                      meeting.

         (B)      Operator shall have the right to appoint the chairman of the
                  Operating Committee and all subcommittees.

5.9      Voting Procedure

         Check one Alternative.
         [X]      ALTERNATIVE NO. 1
                  Except as otherwise expressly provided in this Agreement, all
                  decisions, approvals and other actions of the Operating
                  Committee on all proposals coming before it shall be decided
                  by the affirmative vote of one (1) or more Parties which are
                  not Affiliates then having collectively at least sixty percent
                  (60%) of the Participating Interests.

         [  ]     ALTERNATIVE NO. 2 (From Paragraph (A) to (C))
                  Except as otherwise expressly provided in this Agreement,
                  decisions, approvals and other actions of the Operating
                  Committee on all proposals coming before it shall be decided
                  as follows.

                  (A)      All decisions, approvals and other actions for which
                           column (A) below is checked shall require the
                           affirmative vote of __________________ (_______) or
                           more Parties which are not Affiliates then having
                           collectively at least ______________ percent (____%)
                           of the Participating Interests.

                  (B)      All decisions, approvals and other actions for which
                           column (B) below is checked shall require the
                           affirmative vote of _________________ (________) or
                           more Parties which are not Affiliates then having
                           collectively at least _________ percent (____%) of
                           the Participating Interests.

                  (C)      All decisions, approvals and other actions for which
                           column (C) below is checked shall require the
                           affirmative vote of _______________ (_________) or
                           more Parties which are not Affiliates then having
                           collectively at least _________ percent (____%) of
                           the Participating Interests.

                                       22
<PAGE>
<TABLE>
<CAPTION>

                   --------- ------------------------------------------------------------- ------- ------- ------
                             Matter                                                        (A)     (B)     (C)
                             ------
                   --------- ------------------------------------------------------------- ------- ------- ------
<S>                <C>
                   (1) Minimum Work Programs.
                   --------- ------------------------------------------------------------- ------- ------- ------
                   (2)       Drilling, Deepening, Testing, Sidetracking,
                             Plugging Back, Recompleting or Reworking
                             Exploration Wells. [NOTE: This list may be split in
                             order to allow different levels of
                             approval]
                   --------- ------------------------------------------------------------- ------- ------- ------
                   (3)       Drilling, Deepening, Testing, Sidetracking,
                             Plugging Back, Recompleting or Reworking Appraisal
                             Wells. [NOTE: This list may be split in order to
                             allow different levels of approval]
                   --------- ------------------------------------------------------------- ------- ------- ------
                   (4)       Development Plans.
                   --------- ------------------------------------------------------------- ------- ------- ------
                   (5) Production programs.
                   --------- ------------------------------------------------------------- ------- ------- ------
                   (6) Completion of a well.
                   --------- ------------------------------------------------------------- ------- ------- ------
                   (7) Plugging and abandoning a well.
                   --------- ------------------------------------------------------------- ------- ------- ------
                   (8) Acquisition of G & G Data.
                   --------- ------------------------------------------------------------- ------- ------- ------
                   (9) Construction of processing, treatment, compression,
                       gathering, transportation and other downstream
                       facilities.
                   --------- ------------------------------------------------------------- ------- ------- ------
                   (10) Contract awards (if approval is required).
                   --------- ------------------------------------------------------------- ------- ------- ------
                   (11) Determination that a Discovery is a Commercial Discovery.
                   --------- ------------------------------------------------------------- ------- ------- ------
                   (12) Unitization under the terms of the Contract with an
                        adjoining contract area.
                   --------- ------------------------------------------------------------- ------- ------- ------
                   (13) Establishment of an interest bearing account for
                        Joint Account monies.
                   --------- ------------------------------------------------------------- ------- ------- ------
                   (14) Acquisition and development of Venture Information
                        under terms other than as specified in Article 15.
                   --------- ------------------------------------------------------------- ------- ------- ------
                   (15) ..................
                   --------- ------------------------------------------------------------- ------- ------- ------
                   (16) All other matters within the Operating Committee's
                        authority.
                   --------- ------------------------------------------------------------- ------- ------- ------
</TABLE>

5.10     Record of Votes

         The chairman of the Operating Committee shall appoint a secretary who
         shall make a record of each proposal voted on and the results of such
         voting at each Operating Committee meeting. Each representative shall
         sign and be provided a copy of such record at the end of such meeting,
         and it shall be considered the final record of the decisions of the
         Operating Committee.

5.11     Minutes

                                       23
<PAGE>

         The secretary shall provide each Party with a copy of the minutes of
         the Operating Committee meeting within fifteen (15) Business Days after
         the end of the meeting. Each Party shall have fifteen (15) Days after
         receipt of such minutes to give notice to the secretary of its
         objections to the minutes. A failure to give notice specifying
         objection to such minutes within said fifteen (15) Day period shall be
         deemed to be approval of such minutes. In any event, the votes recorded
         under Article 5.10 shall take precedence over the minutes described
         above.

5.12     Voting by Notice

         (A)      In lieu of a meeting, any Party may submit any proposal to the
                  Operating Committee for a vote by notice. The proposing Party
                  or Parties shall notify Operator who shall give each Party's
                  representative notice describing the proposal so submitted and
                  whether Operator considers such operational matter to require
                  urgent determination. Operator shall include with such notice
                  adequate documentation in connection with such proposal to
                  enable the Parties to make a decision. Each Party shall
                  communicate its vote by notice to Operator and the other
                  Parties within one of the following appropriate time periods
                  after receipt of Operator's notice:

                  (1)      48 hours in the case of operations which involve the
                           use of a drilling rig that is standing by in the
                           Contract Area and such other operational matters
                           reasonably considered by Operator to require by their
                           nature urgent determination (such operations and
                           matters being referred to as "Urgent Operational
                           Matters"); and

                  (2)      10 Days in the case of all other proposals.

         (B)      Except in the case of Article 5.12(A)(1), any Party may, by
                  notice delivered to all Parties within three (3) Days of
                  receipt of Operator's notice, request that the proposal be
                  decided at a meeting rather than by notice. In such an event,
                  that proposal shall be decided at a meeting duly called for
                  that purpose.

         (C)      Except as provided in Article 10, any Party failing to
                  communicate its vote in a timely manner shall be deemed to
                  have voted against such proposal.

         (D)      If a meeting is not requested, then at the expiration of the
                  appropriate time period, Operator shall give each Party a
                  confirmation notice stating the tabulation and results of the
                  vote.

5.13     Effect of Vote

         All decisions taken by the Operating Committee pursuant to this Article
         5 shall be conclusive and binding on all the Parties, except in the
         following cases.

         (A)      If pursuant to this Article 5, a Joint Operation has been
                  properly proposed to the Operating Committee and the Operating
                  Committee has not approved such proposal in a timely manner,
                  then any Party that voted in favor of such proposal shall have
                  the right for the appropriate period specified below to
                  propose, in accordance with Article 7, an Exclusive Operation
                  involving operations essentially the same as those proposed
                  for such Joint Operation.

                  (1)      For proposals related to Urgent Operational Matters,
                           such right shall be exercisable for twenty-four (24)
                           hours after the time specified in Article 5.12(A)(1)
                           has expired or after receipt of Operator's notice
                           given to the Parties pursuant to Article [5.13(D)],
                           as applicable.

                  (2)      For proposals to develop a Discovery, such right
                           shall be exercisable for ten (10) Days after the date
                           the Operating Committee was required to consider such
                           proposal pursuant to Article 5.6 or Article 5.12.

                                       24
<PAGE>

                  (3)      For all other proposals, such right shall be
                           exercisable for five (5) Days after the date the
                           Operating Committee was required to consider such
                           proposal pursuant to Article 5.6 or Article 5.12.

         Check Paragraph (B) if desired. Renumber following paragraphs if
Paragraph (B) is not selected.

         [X]      OPTIONAL PROVISION (Paragraph (B))

                    (B)  If a Party voted against any proposal which was
                         approved by the Operating Committee and which could be
                         conducted as an Exclusive Operation pursuant to Article
                         7, then such Party shall have the right not to
                         participate in the operation contemplated by such
                         approval. Any such Party wishing to exercise its right
                         of non-consent must give notice of non-consent to all
                         other Parties within five (5) Days (or twenty-four (24)
                         hours for Urgent Operational Matters) following
                         Operating Committee approval of such proposal. If a
                         Party exercises its right of non-consent, the Parties
                         who were not entitled to give or did not give notice of
                         non-consent shall be Consenting Parties as to the
                         operation contemplated by the Operating Committee
                         approval, and shall conduct such operation as an
                         Exclusive Operation under Article 7; provided, however,
                         that any such Party who was not entitled to give or did
                         not give notice of non-consent may, by notice provided
                         to the other Parties within five (5) Days (or
                         twenty-four (24) hours for Urgent Operational Matters)
                         following the notice of non-consent given by any
                         non-consenting Party, require that the Operating
                         Committee vote again on the proposal in question. Only
                         the Parties which were not entitled to or have not
                         exercised their right of non-consent with respect to
                         the contemplated operation shall participate in such
                         second vote of the Operating Committee, with voting
                         rights proportional to their respective Participating
                         Interest. If the Operating Committee approves again the
                         contemplated operation, any Party which voted against
                         the contemplated operation in such second vote may
                         elect to be a Non-Consenting Party with respect to such
                         operation, by notice of non-consent provided to all
                         other Parties within five (5) Days (or twenty-four (24)
                         hours for Urgent Operational Matters) following the
                         Operating Committee's second approval of such
                         contemplated operation.

         (C)      If the Consenting Parties to an Exclusive Operation under
                  Article 5.13(A) [or Article 5.13(B)] concur, then the
                  Operating Committee may, at any time, pursuant to this Article
                  5, reconsider and approve, decide or take action on any
                  proposal that the Operating Committee declined to approve
                  earlier, or modify or revoke an earlier approval, decision or
                  action.

         (D)      Once a Joint Operation for the drilling, Deepening, Testing,
                  Sidetracking, Plugging Back, Completing, Recompleting,
                  Reworking, or plugging of a well has been approved and
                  commenced, such operation shall not be discontinued without
                  the consent of the Operating Committee; provided, however,
                  that such operation may be discontinued if:

                  (1)      an impenetrable substance or other condition in the
                           hole is encountered which in the reasonable judgment
                           of Operator causes the continuation of such operation
                           to be impractical; or

                  (2)      other circumstances occur which in the reasonable
                           judgment of Operator cause the continuation of such
                           operation to be unwarranted and the Operating
                           Committee, within the period required under Article
                           5.12(A)(1) after receipt of Operator's notice,
                           approves discontinuing such operation.

                  On the occurrence of either of the above, Operator shall
                  promptly notify the Parties that such operation is being
                  discontinued pursuant to the foregoing, and any Party shall
                  have the right to propose in accordance with Article 7 an
                  Exclusive Operation to continue such operation.

                                       25
<PAGE>

                                   ARTICLE 6
                            WORK PROGRAMS AND BUDGETS

6.1      Exploration and Appraisal

          (A)  Upon the signing of this agreement, Operator delivered to the
               Parties a proposed Work Program and Budget detailing the Joint
               Operations to be performed for the remainder of the current
               Calendar Year. The Operating Committee has met and approved such
               Work Program and Budget.

          (B)  On or before the 30th Day of September of each Calendar Year,
               Operator shall deliver to the Parties a proposed Work Program and
               Budget detailing the Joint Operations to be performed for the
               following Calendar Year. Within thirty (30) Days of such
               delivery, the Operating Committee shall meet to consider and to
               endeavor to agree on a Work Program and Budget.

          (C)  If a Discovery is made, Operator shall deliver any notice of
               Discovery required under the Contract and shall as soon as
               possible submit to the Parties a report containing available
               details concerning the Discovery and Operator's recommendation as
               to whether the Discovery merits appraisal. If the Operating
               Committee determines that the Discovery merits appraisal,
               Operator within sixty (60) Days shall deliver to the Parties a
               proposed Work Program and Budget for the appraisal of the
               Discovery. Within sixty (60) Days of such delivery, or earlier if
               necessary to meet any applicable deadline under the Contract, the
               Operating Committee shall meet to consider, modify and then
               either approve or reject the appraisal Work Program and Budget.
               If the appraisal Work Program and Budget is approved by the
               Operating Committee, Operator shall take such steps as may be
               required under the Contract to secure approval of the appraisal
               Work Program and Budget by the Government. In the event the
               Government requires changes in the appraisal Work Program and
               Budget, the matter shall be resubmitted to the Operating
               Committee for further consideration.

          (D)  The Work Program and Budget agreed pursuant to this Article shall
               include at least that part of the Minimum Work Obligations
               required to be carried out during the Calendar Year in question
               under the terms of the Contract. If within the time periods
               prescribed in this Article 6.1 the Operating Committee is unable
               to agree on such a Work Program and Budget, then the proposal
               capable of satisfying the Minimum Work Obligations for the
               Calendar Year in question that receives the largest Participating
               Interest vote (even if less than the applicable percentage under
               Article 5.9) shall be deemed adopted as part of the annual Work
               Program and Budget. If competing proposals receive equal votes,
               then Operator shall choose between those competing proposals. Any
               portion of a Work Program and Budget adopted pursuant to this
               Article 6.1(D) instead of Article 5.9 shall contain only such
               operations for the Joint Account as are necessary to maintain the
               Contract in full force and effect, including such operations as
               are necessary to fulfill the Minimum Work Obligations required
               for the given Calendar Year.

          (E)  Any approved Work Program and Budget may be revised by the
               Operating Committee from time to time. To the extent such
               revisions are approved by the Operating Committee, the Work
               Program and Budget shall be amended accordingly. Operator shall
               prepare and submit a corresponding work program and budget
               amendment to the Government if required by the Contract.

          (F)  Subject to Article 6.8, approval of any such Work Program and
               Budget which includes:

                  (1)      an Exploration Well, whether by drilling, Deepening
                           or Sidetracking, shall include approval for:

                           Check one Alternative.

                                       26
<PAGE>

                    [ ]  ALTERNATIVE NO. 1 - No Casing Point Election all
                         expenditures necessary for drilling, Deepening or
                         Sidetracking, as applicable, and Testing and Completing
                         an Exploration Well.

                    [X]  ALTERNATIVE NO. 2 - Casing Point Election - (This
                         alternative shall not apply where Minimum Work
                         Obligations require Testing or Completing of a well.)
                         only expenditures necessary for the drilling, Deepening
                         or Sidetracking of such Exploration Well, as
                         applicable. When an Exploration Well has reached its
                         authorized depth, all logs, cores and other approved
                         Tests have been conducted and the results furnished to
                         the Parties, Operator shall submit to the Parties in
                         accordance with Article 5.12(A)(1) an election to
                         participate in an attempt to Complete such Exploration
                         Well. Operator shall include in such submission
                         Operator's recommendation on such Completion attempt
                         and an AFE for such Completion costs.

                  (2)      an Appraisal Well, whether by drilling, Deepening or
                           Sidetracking, shall include approval for:

                           Check one Alternative.

                    [ ]  ALTERNATIVE NO. 1 - No Casing Point Election all
                         expenditures necessary for drilling, Deepening or
                         Sidetracking, as applicable, and Testing and Completing
                         such Appraisal Well.

                    [X]  ALTERNATIVE NO. 2 - Casing Point Election - (This
                         alternative shall not apply where Minimum Work
                         Obligations require Testing or Completing of an
                         Appraisal Well.) only expenditures necessary for the
                         drilling, Deepening or Sidetracking of such Appraisal
                         Well, as applicable. When an Appraisal Well has reached
                         its authorized depth, all logs, cores and other
                         approved Tests have been conducted and the results
                         furnished to the Parties, Operator shall submit to the
                         Parties in accordance with Article 5.12(A)(1) an
                         election to participate in an attempt to Complete such
                         Appraisal Well. Operator shall include in such
                         submission Operator's recommendation on such Completion
                         attempt and an AFE for such Completion costs.

         (G)      Any Party desiring to propose a Completion attempt, or an
                  alternative Completion attempt, must do so within the time
                  period provided in Article 5.12(A)(1) by notifying all other
                  Parties. Any such proposal shall include an AFE for such
                  Completion costs.

6.2      Development

         (A)      If the Operating Committee determines that a Discovery may be
                  a Commercial Discovery, Operator shall, as soon as
                  practicable, deliver to the Parties a Development Plan
                  together with the first annual Work Program and Budget (or a
                  multi-year Work Program and Budget pursuant to Article 6.5)
                  and provisional Work Programs and Budgets for the remainder of
                  the development of the Discovery, which shall contain, inter
                  alia:

                  (1)      details of the proposed work to be undertaken,
                           personnel required and expenditures to be incurred,
                           including the timing of same, on a Calendar Year
                           basis;

                  (2) an estimated date for the commencement of production;

                  (3) a delineation of the proposed Exploitation Area; and

                                       27
<PAGE>

                  (4) any other information requested by the Operating
                     Committee.

          (B)  After receipt of the Development Plan and prior to any applicable
               deadline under the Contract, the Operating Committee shall meet
               to consider, modify and then either approve or reject the
               Development Plan and the first annual Work Program and Budget for
               the development of a Discovery, as submitted by Operator. If the
               Operating Committee determines that the Discovery is a Commercial
               Discovery and approves the corresponding Development Plan,
               Operator shall, as soon as possible, deliver any notice of
               Commercial Discovery required under the Contract and take such
               other steps as may be required under the Contract to secure
               approval of the Development Plan by the Government. In the event
               the Government requires changes in the Development Plan, the
               matter shall be resubmitted to the Operating Committee for
               further consideration.

          (C)  If the Development Plan is approved, such work shall be
               incorporated into and form part of annual Work Programs and
               Budgets, and Operator shall, on or before the 30th Day of
               September of each Calendar Year submit a Work Program and Budget
               for the Exploitation Area, for the following Calendar Year.
               Subject to Article 6.5, within thirty (30) Days after such
               submittal, the Operating Committee shall endeavor to agree to
               such Work Program and Budget, including any necessary or
               appropriate revisions to the Work Program and Budget for the
               approved Development Plan.

6.3      Production

         On or before the 30th day of September of each Calendar Year, Operator
         shall deliver to the Parties a proposed production Work Program and
         Budget detailing the Joint Operations to be performed in the
         Exploitation Area and the projected production schedule for the
         following Calendar Year. Within thirty (30) Days of such delivery, the
         Operating Committee shall agree upon a production Work Program and
         Budget, failing which the provisions of Article 6.1(D) shall be applied
         mutatis mutandis.

6.4      Itemization of Expenditures

         (A)      During the preparation of the proposed Work Programs and
                  Budgets and Development Plans contemplated in this Article 6,
                  Operator shall consult with the Operating Committee or the
                  appropriate subcommittees regarding the contents of such Work
                  Programs and Budgets and Development Plans.

         (B)      Each Work Program and Budget and Development Plan submitted by
                  Operator shall contain an itemized estimate of the costs of
                  Joint Operations and all other expenditures to be made for the
                  Joint Account during the Calendar Year in question and shall,
                  inter alia:

                  (1)      identify each work category in sufficient detail to
                           afford the ready identification of the nature, scope
                           and duration of the activity in question;

                  (2)      include such reasonable information regarding
                           Operator's allocation procedures and estimated
                           manpower costs as the Operating Committee may
                           determine;

                  (3)      comply with the requirements of the Contract;

                  Check (4), if desired. Renumber following paragraph if (4) is
                  not selected.

                  [X]      OPTIONAL PROVISION
                           (4) contain an estimate of funds to be expended by
                           Calendar Quarter; and

                  Check (5), if desired.

                                       28
<PAGE>

                  [X]      OPTIONAL PROVISION
                           (5)      during the Exploration Period, provide a
                                    forecast of annual expenditures and
                                    activities through the end of the
                                    Exploration Period.

         (C)      The Work Program and Budget shall designate the portion or
                  portions of the Contract Area in which Joint Operations
                  itemized in such Work Program and Budget are to be conducted
                  and shall specify the kind and extent of such operations in
                  such detail as the Operating Committee may deem suitable.

6.5      Multi-Year Work Program and Budget

         Any work that cannot be efficiently completed within a single Calendar
         Year may be proposed in a multi-year Work Program and Budget. Upon
         approval by the Operating Committee, such multi-year Work Program and
         Budget shall, subject only to revisions approved by the Operating
         Committee thereafter: (i) remain in effect as between the Parties (and
         the associated cost estimate shall be a binding pro-rata obligation of
         each Party) through the completion of the work; and (ii) be reflected
         in each annual Work Program and Budget. If the Contract requires that
         Work Programs and Budgets be submitted to the Government for approval,
         such multi-year Work Program and Budget shall be submitted to the
         Government either in a single request for a multi-year approval or as
         part of the annual approval process, according to the terms of the
         Contract.

6.6      Contract Awards

         Check one Alternative.

         [X]      ALTERNATIVE NO. 1
                  Subject to the Contract, Operator shall award the contract to
                  the best qualified contractor as determined by cost and
                  ability to perform the contract without the obligation to
                  tender and without informing or seeking the approval of the
                  Operating Committee, except that before entering into
                  contracts with Affiliates of Operator exceeding Fifty Thousand
                  U.S. dollars ($50,000), Operator shall obtain the approval of
                  the Operating Committee.

         [  ]     ALTERNATIVE NO. 2 (From Paragraph (A) to (C))
                  Subject to the Contract, Operator shall award each contract
                  for Joint Operations on the following basis (the amounts
                  stated are in thousands of U.S. dollars):

<TABLE>
<CAPTION>
                                                      Procedure A        Procedure B            Procedure C
<S>                                                   <C>
                  Exploration and Appraisal           0 to               _______  to            >
                                                           --------      -------     ----       ------
                  Operations
                  Development Operations              0 to                        to            >
                                                           --------      --------    ------     ------

                  Production Operations               0 to                        to            >
                                                           --------      --------    -------    ------
</TABLE>

                  Procedure A

                  (A)      Operator shall award the contract to the best
                           qualified contractor as determined by cost and
                           ability to perform the contract without the
                           obligation to tender and without informing or seeking
                           the approval of the Operating Committee, except that
                           before entering into contracts with Affiliates of
                           Operator exceeding [__________ U.S. dollars],
                           Operator shall obtain the approval of the Operating
                           Committee.

                                       29
<PAGE>

                  Procedure B

                  (B) Operator shall:

                           (1)      provide the Parties with a list of the
                                    entities whom Operator proposes to invite to
                                    tender for the said contract;

                           (2)      add to such list any entity whom a Party
                                    reasonably requests to be added within
                                    fourteen (14) Days of receipt of such list;

                           (3)      complete the tendering process within a
                                    reasonable period of time;

                           (4)      inform the Parties of the entities to whom
                                    the contract has been awarded, provided that
                                    before awarding contracts to Affiliates of
                                    Operator which exceed [__________ U.S.
                                    dollars], Operator shall obtain the approval
                                    of the Operating Committee;

                           (5)      circulate to the Parties a competitive bid
                                    analysis stating the reasons for the choice
                                    made; and

                           (6)      upon the request of a Party, provide such
                                    Party with a copy of the final version of
                                    the contract.

                  Procedure C

                  (C) Operator shall:

                           (1)      provide the Parties with a list of the
                                    entities whom Operator proposes to invite to
                                    tender for the said contract;

                           (2)      add to such list any entity whom a Party
                                    reasonably requests to be added within
                                    fourteen (14) Days of receipt of such list;

                           (3)      prepare and dispatch the tender documents to
                                    the entities on the list as aforesaid and to
                                    Non-Operators;

                           (4)      after the expiration of the period allowed
                                    for tendering, consider and analyze the
                                    details of all bids received;

                           (5)      prepare and circulate to the Parties a
                                    competitive bid analysis, stating Operator's
                                    recommendation as to the entity to whom the
                                    contract should be awarded, the reasons
                                    therefor, and the technical, commercial and
                                    contractual terms to be agreed upon;

                           (6)      obtain the approval of the Operating
                                    Committee to the recommended bid; and

                           (7)      upon the request of a Party, provide such
                                    Party with a copy of the final version of
                                    the contract.

                                       30
<PAGE>

Check Article 6.7, if desired. Renumber following article if Article 6.7 is not
selected.

[X]      OPTIONAL PROVISION

         [NOTE: If Article 6.7 is not checked, the definition of an AFE in
         Article 1.2 and all references to AFEs in Articles 1.20, 4.2(B)(5),
         6.1(F), 6.1(G), 6.8(B), 7.4(C), and 13.4(A) are to be removed.]

         6.7      Authorization for Expenditure ("AFE") Procedure

                  (A)      Prior to incurring any commitment or expenditure for
                           the Joint Account, which is estimated to be:

                           (1)      in excess of Two Hundred Thousand U.S.
                                    dollars  ($200,000) in an exploration or
                                    appraisal Work Program and Budget;

                           (2)      in excess of Two Hundred  Thousand  U.S.
                                    dollars  ($200,000)  in a development
                                    Work Program and Budget; and

                           (3)      in excess of Two Hundred Thousand U.S.
                                    dollars  ($200,000) in a production Work
                                    Program and Budget,

                           Operator shall send to each Non-Operator an AFE as
                           described in Article 6.7(C). Notwithstanding the
                           above, Operator shall not be obliged to furnish an
                           AFE to the Parties with respect to any Minimum Work
                           Obligations, workovers of wells and general and
                           administrative costs that are listed as separate line
                           items in an approved Work Program and Budget.

                  Check one Alternative for Paragraph (B).

                  [X]      ALTERNATIVE NO. 1

                           (B)      Notwithstanding any other provision of this
                                    Agreement, all AFEs shall be for
                                    informational purposes only. Approval of an
                                    operation in the current Work Program and
                                    Budget shall authorize Operator to conduct
                                    the operation (subject to Article 6.8)
                                    without further authorization from the
                                    Operating Committee.

                  [  ]     ALTERNATIVE NO. 2

                    (B)  Prior to making any expenditures or incurring any
                         commitments for work subject to the AFE procedure in
                         Article 6.7(A), Operator shall obtain the approval of
                         the Operating Committee. If the Operating Committee
                         approves an AFE for the operation within the applicable
                         time period under Article 5.12(A), Operator shall be
                         authorized to conduct the operation under the terms of
                         this Agreement. If the Operating Committee fails to
                         approve an AFE for the operation within the applicable
                         time period, the operation shall be deemed rejected.
                         Operator shall promptly notify the Parties if the
                         operation has been rejected, and, subject to Article 7,
                         any Party may thereafter propose to conduct the
                         operation as an Exclusive Operation under Article 7.
                         When an operation is rejected under this Article 6.7(B)
                         or an operation is approved for differing amounts than
                         those provided for in the applicable line items of the
                         approved Work Program and Budget, the Work Program and
                         Budget shall be deemed to be revised accordingly.

                                       31
<PAGE>

                  [  ]     ALTERNATIVE NO. 3

                    (B)  Prior to making any expenditures or incurring any
                         commitments for work subject to the AFE procedure in
                         Article 6.7(A), Operator shall obtain the approval of
                         the Operating Committee to an AFE for cost and
                         technical control purposes. A Party may vote to
                         disapprove an AFE issued in furtherance of an approved
                         Work Program and Budget only if (i) some or all of the
                         costs described in the AFE exceed the line items in the
                         approved Work Program and Budget by more than is
                         permitted under Article 6.8; (ii) the proposed terms of
                         any third party contract described in the AFE do not
                         approximate fair market terms; or (iii) in such Party's
                         good faith opinion, any material technical
                         specifications contained in the AFE that are not in the
                         approved Work Program and Budget are imprudent or are
                         not supported by the known data about the formations
                         being drilled. A Party's vote shall be considered a
                         vote to approve the AFE unless the Party specifically
                         describes one or more of the three reasons listed above
                         as the basis for its vote of disapproval. If the
                         Operating Committee approves an AFE for the operation
                         within the applicable time period under Article
                         5.12(A), Operator shall be authorized to conduct the
                         operation under the terms of this Agreement. If the
                         Operating Committee fails to approve an AFE for the
                         operation within the applicable time period, the
                         operation shall be deemed rejected. Operator shall
                         promptly notify the Parties if the operation has been
                         rejected, and, subject to Article 7, any Party may
                         thereafter propose to conduct the operation as an
                         Exclusive Operation under Article 7. When an operation
                         is rejected under this Article 6.7(B) or an operation
                         is approved for differing amounts than those provided
                         for in the applicable line items of the approved Work
                         Program and Budget, the Work Program and Budget shall
                         be deemed to be revised accordingly.

                  (C) Each AFE proposed by Operator shall:

                           (1)      identify the operation by specific reference
                                    to the applicable line items in the Work
                                    Program and Budget;

                           (2)      describe the work in detail;

                           (3)      contain Operator's best estimate of the
                                    total funds required to carry out such work;

                           (4)      outline the proposed work schedule;

                           (5)      provide a timetable of expenditures, if
                                    known; and

                           (6)      be accompanied by such other supporting
                                    information as is necessary for an informed
                                    decision.

6.8      Overexpenditures of Work Programs and Budgets

         (A)      For expenditures on any line item of an approved Work Program
                  and Budget, Operator shall be entitled to incur without
                  further approval of the Operating Committee an overexpenditure
                  for such line item up to ten percent (10%) of the authorized
                  amount for such line item; provided that the cumulative total
                  of all overexpenditures for a Calendar Year shall not exceed
                  five percent (5%) of the total annual Work Program and Budget
                  in question.

         (B)      At such time Operator reasonably anticipates the limits of
                  Article 6.8(A) will be exceeded, Operator shall furnish to the
                  Operating Committee:

                                       32
<PAGE>

                  Check one Alternative.

                  [X] ALTERNATIVE NO. 1 - Informational AFE System
                           a reasonably detailed estimate for the Operating
                           Committee's approval. The Work Program and Budget
                           shall be revised accordingly and the overexpenditures
                           permitted in Article 6.8(A) shall be based on the
                           revised Work Program and Budget. Operator shall
                           promptly give notice of the amounts of
                           overexpenditures when actually incurred.

                  [ ]      ALTERNATIVE NO. 2  - Operational AFE System
                           a supplemental AFE for the estimated expenditures for
                           the Operating Committee's approval, and Operator
                           shall provide reasonable details of such
                           overexpenditures. The Work Program and Budget shall
                           be revised accordingly and the overexpenditures
                           permitted in Article 6.8(A) shall be based on the
                           revised Work Program and Budget. Operator shall
                           promptly give notice of the amounts of
                           overexpenditures when actually incurred.

         (C)      The restrictions contained in this Article 6 shall be without
                  prejudice to Operator's rights to make expenditures for Urgent
                  Operational Matters and measures set out in Article 13.5
                  without the Operating Committee's approval.

                                    ARTICLE 7
                       OPERATIONS BY LESS THAN ALL PARTIES

7.1      Limitation on Applicability

         (A)      No operations may be conducted in furtherance of the Contract
                  except as Joint Operations under Article 5 or as Exclusive
                  Operations under this Article 7. No Exclusive Operation shall
                  be conducted (other than the tie-in of Exclusive Operation
                  facilities with existing production facilities pursuant to
                  Article 7.10) which conflicts with a previously approved Joint
                  Operation or with a previously approved Exclusive Operation.

         (B)      Operations which are required to fulfill the Minimum Work
                  Obligations must be proposed and conducted as Joint Operations
                  under Article 5, and may not be proposed or conducted as
                  Exclusive Operations under this Article 7.

                  Check if desired.

                  [X]      OPTIONAL PROVISION

                           Except for Exclusive Operations relating to
                           Deepening, Testing, Completing, Sidetracking,
                           Plugging Back, Recompletions or Reworking of a well
                           originally drilled to fulfill the Minimum Work
                           Obligations, no Exclusive Operations may be proposed
                           or conducted until the Minimum Work Obligations are
                           fulfilled.

         (C)      No Party may propose or conduct an Exclusive Operation under
                  this Article 7 unless and until such Party has properly
                  exercised its right to propose an Exclusive Operation pursuant
                  to Article 5.13, or is entitled to conduct an Exclusive
                  Operation pursuant to Article 10.

         Check one Alternative for Paragraph (D).

         [X]      ALTERNATIVE NO. 1

                  (D)      Any operation that may be proposed and conducted as a
                           Joint Operation, other than operations pursuant to an
                           approved Development Plan, may be proposed and
                           conducted as an Exclusive Operation, subject to the
                           terms of this Article 7.

                                       33
<PAGE>

         [  ]     ALTERNATIVE NO. 2

                  (D)      The following operations may be proposed and
                           conducted as Exclusive Operations, subject to the
                           terms of this Article 7:

                           (1)      drilling and/or Testing of Exploration Wells
                                    and Appraisal Wells;

                           (2)      Completion of Exploration Wells and
                                    Appraisal Wells not then Completed as
                                    productive of Hydrocarbons;

                           (3)      Deepening, Sidetracking, Plugging Back
                                    and/or Recompletion of Exploration Wells and
                                    Appraisal Wells;

                           (4)      development of a Commercial Discovery;

                           (5)      acquisition of G & G Data;

                           (6)      any operations specifically authorized to be
                                    undertaken as an Exclusive Operation under
                                    Article 10; and

                           (7)      _______________________________.

                           No other type of operation may be proposed or
                          conducted as an Exclusive Operation.

7.2      Procedure to Propose Exclusive Operations

         (A)      Subject to Article 7.1, if any Party proposes to conduct an
                  Exclusive Operation, such Party shall give notice of the
                  proposed operation to all Parties, other than Non-Consenting
                  Parties who have relinquished their rights to participate in
                  such operation pursuant to Article 7.4(B) or Article 7.4(F)
                  and have no option to reinstate such rights under Article
                  7.4(C). Such notice shall specify that such operation is
                  proposed as an Exclusive Operation and include the work to be
                  performed, the location, the objectives, and estimated cost of
                  such operation.

         (B)      Any Party entitled to receive such notice shall have the right
                  to participate in the proposed operation.

                  (1)      For proposals to Deepen, Test, Complete, Sidetrack,
                           Plug Back, Recomplete or Rework related to Urgent
                           Operational Matters, any such Party wishing to
                           exercise such right must so notify the proposing
                           Party and Operator within twenty-four (24) hours
                           after receipt of the notice proposing the Exclusive
                           Operation.

                  (2)      For proposals to develop a Discovery, any Party
                           wishing to exercise such right must so notify
                           Operator and the Party proposing to develop within
                           sixty (60) Days after receipt of the notice proposing
                           the Exclusive Operation.

                  (3)      For all other proposals, any such Party wishing to
                           exercise such right must so notify the proposing
                           Party and Operator within ten (10) Days after receipt
                           of the notice proposing the Exclusive Operation.

         (C)      Failure of a Party to whom a proposal notice is delivered to
                  properly reply within the period specified above shall
                  constitute an election by that Party not to participate in the
                  proposed operation.

                                       34
<PAGE>

         (D)      If all Parties properly exercise their rights to participate,
                  then the proposed operation shall be conducted as a Joint
                  Operation. Operator shall commence such Joint Operation as
                  promptly as practicable and conduct it with due diligence.

         (E)      If less than all Parties entitled to receive such proposal
                  notice properly exercise their rights to participate, then:

                  Check one Alternative.

                  [  ]     ALTERNATIVE NO. 1 (From Paragraph (1) to (3))

                           (1)      The Party proposing the Exclusive Operation,
                                    together with any other Consenting Parties,
                                    shall have the right exercisable for the
                                    applicable notice period set out in Article
                                    7.2(B), to instruct Operator (subject to
                                    Article 7.12(F)) to conduct the Exclusive
                                    Operation.

                           (2)      If the Exclusive Operation is conducted, the
                                    Consenting Parties shall bear a
                                    Participating Interest in such Exclusive
                                    Operation, the numerator of which is such
                                    Consenting Party's Participating Interest as
                                    stated in Article 3.2(A) and the denominator
                                    of which is the aggregate of the
                                    Participating Interests of the Consenting
                                    Parties as stated in Article 3.2(A), or as
                                    the Consenting Parties may otherwise agree.

                           (3)      If such Exclusive Operation has not been
                                    commenced within ____________ (________)
                                    Days (excluding any extension specifically
                                    agreed by all Parties or allowed by the
                                    force majeure provisions of Article 16)
                                    after the date of the instruction given to
                                    Operator under Article 7.2(E)(1), the right
                                    to conduct such Exclusive Operation shall
                                    terminate. If any Party still desires to
                                    conduct such Exclusive Operation, notice
                                    proposing such operation must be resubmitted
                                    to the Parties in accordance with Article 5,
                                    as if no proposal to conduct an Exclusive
                                    Operation had been previously made.

                  [X] ALTERNATIVE NO. 2 (From Paragraph (1) to (8))

                           (1)      Immediately after the expiration of the
                                    applicable notice period set out in Article
                                    7.2(B), Operator shall notify all Parties of
                                    the names of the Consenting Parties and the
                                    recommendation of the proposing Party as to
                                    whether the Consenting Parties should
                                    proceed with the Exclusive Operation.

                           (2)      Concurrently, Operator shall request the
                                    Consenting Parties to specify the
                                    Participating Interest each Consenting Party
                                    is willing to bear in the Exclusive
                                    Operation.

                           (3)      Within twenty-four (24) hours after receipt
                                    of such notice, each Consenting Party shall
                                    respond to Operator stating that it is
                                    willing to bear a Participating Interest in
                                    such Exclusive Operation equal to:

                                    (a) only its Participating Interest as
                                        stated in Article 3.2(A);

                                    (b)     a fraction, the numerator of which
                                            is such Consenting Party's
                                            Participating Interest as stated in
                                            Article 3.2(A) and the denominator
                                            of which is the aggregate of the
                                            Participating Interests of the
                                            Consenting Parties as stated in
                                            Article 3.2(A); or

                                       35
<PAGE>

                                    (c)     the Participating Interest as
                                            contemplated by Article 7.2(E)(3)(b)
                                            plus all or any part of the
                                            difference between one hundred
                                            percent (100%) and the total of the
                                            Participating Interests subscribed
                                            by the other Consenting Parties. Any
                                            portion of such difference claimed
                                            by more than one Party shall be
                                            distributed to each claimant on a
                                            pro-rata basis.

                           (4)      Any Consenting Party failing to advise
                                    Operator within the response period set out
                                    above shall be deemed to have elected to
                                    bear the Participating Interest set out in
                                    Article 7.2(E)(3)(b) as to the Exclusive
                                    Operation.

                           (5)      If, within the response period set out
                                    above, the Consenting Parties subscribe less
                                    than one hundred percent (100%) of the
                                    Participating Interest in the Exclusive
                                    Operation, the Party proposing such
                                    Exclusive Operation shall be deemed to have
                                    withdrawn its proposal for the Exclusive
                                    Operation, unless within twenty-four (24)
                                    hours of the expiry of the response period
                                    set out in Article 7.2(E)(3), the proposing
                                    Party notifies the other Consenting Parties
                                    that the proposing Party shall bear the
                                    unsubscribed Participating Interest.

                           (6)      If one hundred percent (100%) subscription
                                    to the proposed Exclusive Operation is
                                    obtained, Operator shall promptly notify the
                                    Consenting Parties of their Participating
                                    Interests in the Exclusive Operation.

                           (7)      As soon as any Exclusive Operation is fully
                                    subscribed pursuant to Article 7.2(E)(6),
                                    Operator, subject to Article 7.12(F), shall
                                    commence such Exclusive Operation as
                                    promptly as practicable and conduct it with
                                    due diligence in accordance with this
                                    Agreement.

                           (8)      If such Exclusive Operation has not been
                                    commenced within two hundred ten (210) Days
                                    (excluding any extension specifically agreed
                                    by all Parties or allowed by the force
                                    majeure provisions of Article 16) after the
                                    date of the notice given by Operator under
                                    Article 7.2(E)(6), the right to conduct such
                                    Exclusive Operation shall terminate. If any
                                    Party still desires to conduct such
                                    Exclusive Operation, notice proposing such
                                    operation must be resubmitted to the Parties
                                    in accordance with Article 5, as if no
                                    proposal to conduct an Exclusive Operation
                                    had been previously made.

7.3      Responsibility for Exclusive Operations

         (A)      The Consenting Parties shall bear in accordance with the
                  Participating Interests agreed under Article 7.2(E) the entire
                  cost and liability of conducting an Exclusive Operation and
                  shall indemnify the Non-Consenting Parties from any and all
                  costs and liabilities incurred incident to such Exclusive
                  Operation (including Consequential Loss and Environmental
                  Loss) and shall keep the Contract Area free and clear of all
                  liens and encumbrances of every kind created by or arising
                  from such Exclusive Operation.

         (B)      Notwithstanding Article 7.3(A), each Party shall continue to
                  bear its Participating Interest share of the cost and
                  liability incident to the operations in which it participated,
                  including plugging and abandoning and restoring the surface
                  location, but only to the extent those costs were not
                  increased by the Exclusive Operation.

7.4      Consequences of Exclusive Operations

          (A)  With regard to any Exclusive Operation, for so long as a
               Non-Consenting Party has the option under Article 7.4(C) to
               reinstate the rights it relinquished under Article 7.4(B), such
               Non-Consenting Party shall be entitled to have access
               concurrently with the Consenting Parties to all data and other
               information relating to such Exclusive Operation, other than data
               obtained in an Exclusive Operation for the purpose of acquiring G
               & G Data. If a Non-Consenting Party desires to receive and
               acquire the right to use such G & G Data, then such
               Non-Consenting Party shall have the right to do so by paying to
               the Consenting Parties its Participating Interest share as set
               out in Article 3.2(A) of the cost incurred in obtaining such G &
               G Data.

                                       36
<PAGE>

          (B)  Subject to Article 7.4(C) [and Articles 7.6(E) and 7.8, if
               selected], each Non-Consenting Party shall be deemed to have
               relinquished to the Consenting Parties, and the Consenting
               Parties shall be deemed to own, in proportion to their respective
               Participating Interests in any Exclusive Operation:

                  (1)      all of each such Non-Consenting Party's right to
                           participate in further operations in the well or
                           Deepened or Sidetracked portion of a well in which
                           the Exclusive Operation was conducted and on any
                           Discovery made or appraised in the course of such
                           Exclusive Operation; and

                  (2)      all of each such Non-Consenting Party's right
                           pursuant to the Contract to take and dispose of
                           Hydrocarbons produced and saved:

                           (a)      from the well or Deepened or Sidetracked
                                    portion of a well in which such Exclusive
                                    Operation was conducted; and

                           (b)      from any wells drilled to appraise or
                                    develop a Discovery made or appraised in the
                                    course of such Exclusive Operation.

         (C)      A Non-Consenting Party shall have only the following options
                  to reinstate the rights it relinquished pursuant to Article
                  7.4(B):

                  (1)      If the Consenting Parties decide to appraise a
                           Discovery made in the course of an Exclusive
                           Operation, the Consenting Parties shall submit to
                           each Non-Consenting Party the approved appraisal
                           program. For thirty (30) Days (or forty-eight (48)
                           hours for Urgent Operational Matters) from receipt of
                           such appraisal program, each Non-Consenting Party
                           shall have the option to reinstate the rights it
                           relinquished pursuant to Article 7.4(B) and to
                           participate in such appraisal program. The
                           Non-Consenting Party may exercise such option by
                           notifying Operator within the period specified above
                           that such Non-Consenting Party agrees to bear its
                           Participating Interest share of the expense and
                           liability of such appraisal program, and to pay such
                           amounts as set out in Articles 7.5(A) and 7.5(B).

                  (2)      If the Consenting Parties decide to develop a
                           Discovery made or appraised in the course of an
                           Exclusive Operation, the Consenting Parties shall
                           submit to the Non-Consenting Parties a Development
                           Plan substantially in the form intended to be
                           submitted to the Government under the Contract. For
                           sixty (60) Days from receipt of such Development Plan
                           or such lesser period of time prescribed by the
                           Contract, each Non-Consenting Party shall have the
                           option to reinstate the rights it relinquished
                           pursuant to Article 7.4(B) and to participate in such
                           Development Plan. The Non-Consenting Party may
                           exercise such option by notifying Operator within the
                           period specified above that such Non-Consenting Party
                           agrees to bear its Participating Interest share of
                           the liability and expense of such Development Plan
                           and such future operating and producing costs, and to
                           pay the amounts as set out in Articles 7.5(A) and
                           7.5(B).

                  (3)      If the Consenting Parties decide to Deepen, Complete,
                           Sidetrack, Plug Back or Recomplete an Exclusive Well
                           and such further operation was not included in the
                           original proposal for such Exclusive Well, the
                           Consenting Parties shall submit to the Non-Consenting
                           Parties the approved AFE for such further operation.
                           For thirty (30) Days (or forty-eight (48) hours for
                           Urgent Operational Matters) from receipt of such AFE,
                           each Non-Consenting Party shall have the option to
                           reinstate the rights it relinquished pursuant to
                           Article 7.4(B) and to participate in such operation.
                           The Non-Consenting Party may exercise such option by
                           notifying Operator within the period specified above
                           that such Non-Consenting Party agrees to bear its
                           Participating Interest share of the liability and
                           expense of such further operation, and to pay the
                           amounts as set out in Articles 7.5(A) and 7.5(B).

                                       37
<PAGE>

                  A Non-Consenting Party shall not be entitled to reinstate its
                  rights in any other type of operation.

          (D)  If a Non-Consenting Party does not properly and in a timely
               manner exercise its option under Article 7.4(C), including paying
               all amounts due in accordance with Articles 7.5(A) and 7.5(B),
               such Non-Consenting Party shall have forfeited the options as set
               out in Article 7.4(C) and the right to participate in the
               proposed program, unless such program, plan or operation is
               materially modified or expanded (in which case a new notice and
               option shall be given to such Non-Consenting Party under Article
               7.4(C)).

          (E)  A Non-Consenting Party exercising its option under Article 7.4(C)
               shall notify the other Parties that it agrees to bear its share
               of the liability and expense of such further operation and to
               reimburse the amounts set out in Articles 7.5(A) and 7.5(B) that
               such Non-Consenting Party had not previously paid. Such
               Non-Consenting Party shall in no way be deemed to be entitled to
               any amounts paid pursuant to Articles 7.5(A) and 7.5(B) incident
               to such Exclusive Operations. The Participating Interest of such
               Non-Consenting Party in such Exclusive Operation shall be its
               Participating Interest set out in Article 3.2(A). The Consenting
               Parties shall contribute to the Participating Interest of the
               Non-Consenting Party in proportion to the excess Participating
               Interest that each received under Article 7.2(E). If all Parties
               participate in the proposed operation, then such operation shall
               be conducted as a Joint Operation pursuant to Article 5.

          (F)  If after the expiry of the period in which a Non-Consenting Party
               may exercise its option to participate in a Development Plan the
               Consenting Parties desire to proceed, Operator shall give notice
               to the Government under the appropriate provision of the Contract
               requesting a meeting to advise the Government that the Consenting
               Parties consider the Discovery to be a Commercial Discovery.
               Following such meeting such Operator for such development shall
               apply for an Exploitation Area (if applicable in the Contract).
               Unless the Development Plan is materially modified or expanded
               prior to the commencement of operations under such plan (in which
               case a new notice and option shall be given to the Non-Consenting
               Parties under Article 7.4(C)), each Non-Consenting Party to such
               Development Plan shall:

                  (1)      if the Contract so allows, elect not to apply for an
                           Exploitation Area covering such development and
                           forfeit all interest in such Exploitation Area, or

                  (2) if the Contract does not so allow, be deemed to have:

                           (a)      elected not to apply for an Exploitation
                                    Area covering such development;

                           (b)      forfeited all economic interest in such
                                    Exploitation Area; and

                           (c)      assumed a fiduciary duty to exercise its
                                    legal interest in such Exploitation Area for
                                    the benefit of the Consenting Parties.

                  In either case such Non-Consenting Party shall be deemed to
                  have withdrawn from this Agreement to the extent it relates to
                  such Exploitation Area, even if the Development Plan is
                  modified or expanded subsequent to the commencement of
                  operations under such Development Plan and shall be further
                  deemed to have forfeited any right to participate in the
                  construction and ownership of facilities outside such
                  Exploitation Area designed solely for the use of such
                  Exploitation Area.

                                       38
<PAGE>

7.5      Premium to Participate in Exclusive Operations

         (A) Each such Non-Consenting Party shall:

                  Check one Alternative.

                  [X]      ALTERNATIVE NO. 1
                           within thirty (30) Days of the exercise of its option
                           under Article 7.4(C), pay in immediately available
                           funds to the Consenting Parties in proportion to
                           their respective Participating Interests in such
                           Exclusive Operations a lump sum amount payable in the
                           currency designated by such Consenting Parties. Such
                           lump sum amount shall be equal to such Non-Consenting
                           Party's Participating Interest share of all
                           liabilities and expenses that were incurred in every
                           Exclusive Operation relating to the Discovery (or
                           Exclusive Well, as the case may be) in which the
                           Non-Consenting Party desires to reinstate the rights
                           it relinquished pursuant to Article 7.4(B), and that
                           were not previously paid by such Non-Consenting
                           Party.

                  [  ]     ALTERNATIVE NO. 2
                           immediately upon the exercise of its option under
                           Article 7.4(C), begin to bear one hundred percent
                           (100%) of the cash calls made on each Consenting
                           Party in respect of both Joint Operations and
                           Exclusive Operations until such Non-Consenting Party
                           has reimbursed the original Consenting Parties (in
                           proportion to their respective Participating Interest
                           in the Exclusive Operations in which such
                           Non-Consenting Party is reinstating its rights) an
                           amount equal to such Non-Consenting Party's
                           Participating Interest share of all liabilities and
                           expenses that were incurred in every Exclusive
                           Operation relating to the Discovery (or Exclusive
                           Well, as the case may be) in which the Non-Consenting
                           Party desires to reinstate the rights it relinquished
                           pursuant to Article 7.4(B) and that were not
                           previously paid by such Non-Consenting Party.

         (B)      In addition to the payment required under Article 7.5(A),
                  immediately following the exercise of its option under Article
                  7.4(C) each such Non-Consenting Party shall be liable to
                  reimburse the Consenting Parties who took the risk of such
                  Exclusive Operations (in proportion to their respective
                  Participating Interests) an amount equal to the total of:

                  (1)      Six Hundred percent (600%) of such Non-Consenting
                           Party's Participating Interest share of all
                           liabilities and expenses that were incurred in any
                           Exclusive Operation relating to the obtaining of the
                           portion of the G & G Data which pertains to the
                           Discovery, and that were not previously paid by such
                           Non-Consenting Party; plus

                  (2)      Six Hundred percent (600%) of such Non-Consenting
                           Party's Participating Interest share of all
                           liabilities and expenses that were incurred in any
                           Exclusive Operation relating to the drilling,
                           Deepening, Testing, Completing, Sidetracking,
                           Plugging Back, Recompleting and Reworking of the
                           Exploration Well which made the Discovery in which
                           the Non-Consenting Party desires to reinstate the
                           rights it relinquished pursuant to Article 7.4(B),
                           and that were not previously paid by such
                           Non-Consenting Party; plus

                  (3)      Six Hundred percent (600%) of the Non-Consenting
                           Party's Participating Interest share of all
                           liabilities and expenses that were incurred in any
                           Exclusive Operation relating to the drilling,
                           Deepening, Testing, Completing, Sidetracking,
                           Plugging Back, Recompleting and Reworking of the
                           Appraisal Well(s) which delineated the Discovery in
                           which the Non-Consenting Party desires to reinstate
                           the rights it relinquished pursuant to Article
                           7.4(B), and that were not previously paid by such
                           Non-Consenting Party.

                                       39
<PAGE>

         (C)      Each such Non-Consenting Party who is liable for the amounts
                  set out in Article 7.5(B) shall:

                  Check one Alternative.

                  [X]      ALTERNATIVE NO. 1
                           within thirty (30) Days of the exercise of its option
                           under Article 7.4(C), pay in immediately available
                           funds the full amount due from it under Article
                           7.5(B) to such Consenting Parties, in the currency
                           designated by such Consenting Parties.

                  [  ]     ALTERNATIVE NO. 2
                           bear one hundred percent (100%) of the cash calls
                           made on each Consenting Party in respect of both
                           Joint Operations and Exclusive Operations until each
                           Non-Consenting Party has reimbursed the full amount
                           due from it under Article 7.5(B). Unless otherwise
                           agreed, any balance remaining unreimbursed at the end
                           of, or upon a Party's withdrawal from, the subject
                           Exploration Period will be reimbursed by cash payment
                           in the currency designated by the Consenting Parties
                           who took the risk of such Exclusive Operations. The
                           due date for any such payment shall be fifteen (15)
                           Days after notice from Operator of the balance
                           remaining unreimbursed. Unpaid amounts shall accrue
                           interest at the Agreed Interest Rate from the due
                           date until timely paid in full. With respect to
                           Parties who are participants in an on-going
                           Exploitation Period, any balance remaining
                           unreimbursed after twenty-four (24) months from the
                           date of the notice under Article 7.4(C) shall be
                           settled through allocation from the Non-Consenting
                           Parties to the Consenting Parties of an additional
                           share of Profit Hydrocarbons, such allocation timed
                           to enable the reimbursement to be completed in not
                           more than thirty (30) months from the date of the
                           notice under Article 7.4(C).

         (D)      The Non-Consenting Party exercising its option under Article
                  7.4(C) shall, in accordance with Article 19, be entitled to
                  all Cost Hydrocarbons derived from reimbursements made under
                  Article 7.5(A). Such Non-Consenting Party shall not be
                  entitled to Cost Hydrocarbons associated with payments made
                  under Article 7.5(B), unless the Contract or any Laws /
                  Regulations require otherwise. Each Consenting Party shall
                  have the right to refuse to accept all or any portion of its
                  share of amounts paid under Articles 7.5(A) and 7.5(B). In
                  such case the refused amount shall be distributed to each
                  non-refusing Consenting Party on a pro-rata basis.

7.6      Order of Preference of Operations

         (A)      Except as otherwise specifically provided in this Agreement,
                  if any Party desires to propose the conduct of an operation
                  that will conflict with an existing proposal for an Exclusive
                  Operation, such Party shall have the right exercisable for
                  five (5) Days (or twenty-four (24) hours for Urgent
                  Operational Matters) from receipt of the proposal for the
                  Exclusive Operation, to deliver such Party's alternative
                  proposal to all Parties entitled to participate in the
                  proposed operation. Such alternative proposal shall contain
                  the information required under Article 7.2(A).

         (B)      Each Party receiving such proposals shall elect by delivery of
                  notice to Operator and to the proposing Parties within the
                  appropriate response period set out in Article 7.2(B) to
                  participate in one of the competing proposals. Any Party not
                  notifying Operator and the proposing Parties within the
                  response period shall be deemed to have voted against the
                  proposals.

         (C)      The proposal receiving the largest aggregate Participating
                  Interest vote shall have priority over all other competing
                  proposals. In the case of a tie vote, Operator shall choose
                  among the proposals receiving the largest aggregate
                  Participating Interest vote. Operator shall deliver notice of
                  such result to all Parties entitled to participate in the
                  operation within five (5) Days (or twenty-four (24) hours for
                  Urgent Operational Matters).

                                       40
<PAGE>

         (D)      Each Party shall then have two (2) Days (or twenty-four (24)
                  hours for Urgent Operational Matters) from receipt of such
                  notice to elect by delivery of notice to Operator and the
                  proposing Parties whether such Party will participate in such
                  Exclusive Operation, or will relinquish its interest pursuant
                  to Article 7.4(B). Failure by a Party to deliver such notice
                  within such period shall be deemed an election not to
                  participate in the prevailing proposal.

         Check Paragraph (E), if desired.

         [X]      OPTIONAL PROVISION

          (E)  Notwithstanding the provisions of Article 7.4(B), if for reasons
               other than the encountering of granite or other practically
               impenetrable substance or any other condition in the hole
               rendering further operations impracticable, a well drilled as an
               Exclusive Operation fails to reach the deepest objective Zone
               described in the notice proposing such well, Operator shall give
               notice of such failure to each Non-Consenting Party who submitted
               or voted for an alternative proposal under this Article 7.6 to
               drill such well to a shallower Zone than the deepest objective
               Zone proposed in the notice under which such well was drilled.
               Each such Non-Consenting Party shall have the option exercisable
               for forty-eight (48) hours from receipt of such notice to
               participate for its Participating Interest share in the initial
               proposed Completion of such well. Each such Non-Consenting Party
               may exercise such option by notifying Operator that it wishes to
               participate in such Completion and by paying its Participating
               Interest share of the cost of drilling such well to its deepest
               depth drilled in the Zone in which it is Completed. All
               liabilities and expenses for drilling and Testing the Exclusive
               Well below that depth shall be for the sole account of the
               Consenting Parties. If any such Non-Consenting Party does not
               properly elect to participate in the first Completion proposed
               for such well, the relinquishment provisions of Article 7.4(B)
               shall continue to apply to such Non-Consenting Party's interest.

7.7      Stand-By Costs

          (A)  When an operation has been performed, all tests have been
               conducted and the results of such tests furnished to the Parties,
               stand by costs incurred pending response to any Party's notice
               proposing an Exclusive Operation for Deepening, Testing,
               Sidetracking, Completing, Plugging Back, Recompleting, Reworking
               or other further operation in such well (including the period
               required under Article 7.6 to resolve competing proposals) shall
               be charged and borne as part of the operation just completed.
               Stand by costs incurred subsequent to all Parties responding, or
               expiration of the response time permitted, whichever first
               occurs, shall be charged to and borne by the Parties proposing
               the Exclusive Operation in proportion to their Participating
               Interests, regardless of whether such Exclusive Operation is
               actually conducted.

          (B)  If a further operation related to Urgent Operational Matters is
               proposed while the drilling rig to be utilized is on location,
               any Party may request and receive up to five (5) additional Days
               after expiration of the applicable response period specified in
               Article 7.2(B)(1) within which to respond by notifying Operator
               that such Party agrees to bear all stand by costs and other costs
               incurred during such extended response period. Operator may
               require such Party to pay the estimated stand by costs in advance
               as a condition to extending the response period. If more than one
               Party requests such additional time to respond to the notice,
               stand by costs shall be allocated between such Parties on a
               Day-to-Day basis in proportion to their Participating Interests.

                                       41
<PAGE>

Check Article 7.8, if desired. Renumber following articles if Article 7.8 is not
selected.

[  ]     OPTIONAL PROVISION

         7.8      Special Considerations Regarding Deepening and Sidetracking

                    (A)  An Exclusive Well shall not be Deepened or Sidetracked
                         without first affording the Non-Consenting Parties in
                         accordance with this Article 7.8 the opportunity to
                         participate in such operation.

                    (B)  In the event any Consenting Party desires to Deepen or
                         Sidetrack an Exclusive Well, such Party shall initiate
                         the procedure contemplated by Article 7.2. If a
                         Deepening or Sidetracking operation is approved
                         pursuant to such provisions, and if any Non-Consenting
                         Party to the Exclusive Well elects to participate in
                         such Deepening or Sidetracking operation, such
                         Non-Consenting Party shall not owe amounts pursuant to
                         Article 7.5(B), and such Non-Consenting Party's payment
                         pursuant to Article 7.5(A) shall be such Non-Consenting
                         Party's Participating Interest share of the liabilities
                         and expenses incurred in connection with drilling the
                         Exclusive Well from the surface to the depth previously
                         drilled which such Non-Consenting Party would have paid
                         had such Non-Consenting Party agreed to participate in
                         such Exclusive Well; provided, however, all liabilities
                         and expenses for Testing and Completing or attempting
                         Completion of the well incurred by Consenting Parties
                         prior to the commencement of actual operations to
                         Deepen or Sidetrack beyond the depth previously drilled
                         shall be for the sole account of the Consenting
                         Parties.

7.9      Use of Property

          (A)  The Parties participating in any Deepening, Testing, Completing,
               Sidetracking, Plugging Back, Recompleting or Reworking of any
               well drilled under this Agreement shall be permitted to use (free
               of cost) all casing, tubing and other equipment in the well that
               is not needed for operations by the owners of the wellbore, but
               the ownership of all such equipment shall remain unchanged. On
               abandonment of a well in which operations with differing
               participation have been conducted, the Parties abandoning the
               well shall account for all equipment in the well to the Parties
               owning such equipment by tendering to them their respective
               Participating Interest shares of the value of such equipment less
               the cost of salvage.

         Check Paragraph (B), if desired. Renumber following paragraphs if
         Paragraph (B) is not selected.

         [  ]     OPTIONAL PROVISION

                    (B)  Any Party (whether owning interests in the platform or
                         not) shall be permitted to use spare slots in a
                         platform constructed pursuant to this Agreement for
                         purposes of drilling Exploration Wells and/or Appraisal
                         Wells and running tests in the Contract Area. No Party
                         except an owner of a platform may drill Development
                         Wells or run production from a well (except production
                         resulting from initial well tests) from the platform
                         without the prior written consent of all platform
                         owners. If all owners of the platform participate in
                         the drilling of a well, then no fee shall be payable
                         under this Article 7.9(B). Otherwise, each time a well
                         is drilled from a platform, the Consenting Parties in
                         the well shall pay to the owners of the platform until
                         all wells drilled by such Parties have been plugged and
                         abandoned a monthly fee equal to (1) that portion of
                         the total cost of the platform (including costs of
                         material, fabrication, transportation and
                         installation), divided by the number of months of
                         useful life established for the platform under the tax
                         law of the host country, that one well slot bears to
                         the total number of slots on the platform plus (2) that
                         proportionate part of the monthly cost of operating,
                         maintaining and financing the platform that the well
                         drilled under this Article 7.9(B) bears to the total
                         number of wells served by such platform. Consenting
                         Parties who have paid to drill a well from a platform
                         under this Article 7.9(B) shall be entitled to Deepen
                         or Sidetrack that well for no additional charge if done
                         prior to moving the drilling rig off of location.

                                       42
<PAGE>

         Check Paragraph (C), if desired. Renumber following paragraphs if
         Paragraph (C) is not selected.

         [X]      OPTIONAL PROVISION

                    (C)  Spare capacity in equipment that is constructed
                         pursuant to this Agreement and used for processing or
                         transporting Crude Oil and Natural Gas after it has
                         passed through primary separators and dehydrators
                         (including treatment facilities, gas processing plants
                         and pipelines) shall be available for use by any Party
                         for Hydrocarbon production from the Contract Area on
                         the terms set forth below. All Parties desiring to use
                         such equipment shall nominate capacity in such
                         equipment on a monthly basis by notice to Operator at
                         least ten (10) Days prior to the beginning of each
                         month. Operator may nominate capacity for the owners of
                         the equipment if they so elect. If at any time the
                         capacity nominated exceeds the total capacity of the
                         equipment, the capacity of the equipment shall be
                         allocated in the following priority: (1) first, to the
                         owners of the equipment up to their respective
                         Participating Interest shares of total capacity, (2)
                         second, to owners of the equipment desiring to use
                         capacity in excess of their Participating Interest
                         shares, in proportion to the Participating Interest of
                         each such Party and (3) third, to Parties not owning
                         interests in the equipment, in proportion to their
                         Participating Interests in the Agreement. Owners of the
                         equipment shall be entitled to use up to their
                         Participating Interest share of total capacity without
                         payment of a fee under this Article 7.9(C). Otherwise,
                         each Party using equipment pursuant to this Article
                         7.9(C) shall pay to the owners of the equipment monthly
                         throughout the period of use an arm's-length fee based
                         upon third party charges for similar services in the
                         vicinity of the Contract Area. If no arm's-length rates
                         for such services are available, then the Party
                         desiring to use equipment pursuant to this Article
                         7.9(C) shall pay to the owners of the equipment a
                         monthly fee equal to (1) that portion of the total cost
                         of the equipment, divided by the number of months of
                         useful life established for such equipment under the
                         tax law of the host country, that the capacity made
                         available to such Party on a fee basis under this
                         Article 7.9(C) bears to the total capacity of the
                         equipment plus (2) that portion of the monthly cost of
                         maintaining, operating and financing the equipment that
                         the capacity made available to such Party on a fee
                         basis under this Article 7.9(C) bears to the total
                         capacity of the equipment.

         Check, if desired, Paragraph (D) in conjunction with Paragraph (B) or
         (C). Renumber following paragraph if Paragraph (D) is not selected.

         [X]      OPTIONAL PROVISION

                  (D)      Payment for the use of a platform under Article
                           7.9(B) or the use of equipment under Article 7.9(C)
                           shall not result in an acquisition of any additional
                           interest in the equipment or platform by the paying
                           Parties. However, such payments shall be included in
                           the costs which the paying Parties are entitled to
                           recoup under Article 7.5.

         Check, if desired, Paragraph (E) in conjunction with Paragraph (C) or
(D).

         [X]      OPTIONAL PROVISION

                  (E)      Parties electing to use spare capacity on platforms
                           or in equipment pursuant to Article 7.9(B) or Article
                           7.9(C) shall indemnify the owners of the equipment or
                           platform against any and all costs and liabilities
                           incurred as a result of such use (including any
                           Consequential Loss and Environmental Loss) but
                           excluding costs and liabilities for which Operator is
                           solely responsible under Article 4.6.

                                       43
<PAGE>

7.10     Lost Production During Tie-In of Exclusive Operation Facilities

         If, during the tie-in of Exclusive Operation facilities with the
         existing production facilities of another operation, the production of
         Hydrocarbons from such other pre-existing operations is temporarily
         lessened as a result, then the Consenting Parties shall compensate the
         parties to such existing operation for such loss of production in the
         following manner. Operator shall determine the amount by which each
         Day's production during the tie-in of Exclusive Operation facilities
         falls below the previous month's average daily production from the
         existing production facilities of such operation. The so-determined
         amount of lost production shall be recovered by all Parties who
         experienced such loss in proportion to their respective Participating
         Interest. Upon completion of the tie-in, such lost production shall be
         recovered in full by Operator deducting up to one hundred percent
         (100%) of the production from the Exclusive Operation, prior to the
         Consenting Parties being entitled to receive any such production.

Check Article 7.11, if desired. Renumber following article if Article 7.11 is
not selected.

[ X]     OPTIONAL PROVISION:

7.11     Production Bonuses

         The bonus payable by the Parties under Section 10.4(b) of the Contract
         ("Production Bonus") shall be charged to the Joint Account if there is
         no Hydrocarbon production from an Exclusive Operation at the time they
         are incurred. If there is Hydrocarbon production from one or more
         Exclusive Operations, then any Production Bonus which becomes payable
         under the Contract shall be borne

                  Check one Alternative.

                  [  ]     ALTERNATIVE NO. 1
                           totally by the Exploitation Area(s) in which the
                           average daily commercial production of Hydrocarbons
                           during the ____ Day period preceding the date on
                           which liability for the Production Bonus is incurred
                           exceeded their average daily production of
                           Hydrocarbons during the immediately preceding ____
                           Day period, in proportion to the amount of the
                           increase for each such Exploitation Area.

                  [  ]     ALTERNATIVE NO. 2
                           by each Exploitation Area, in the proportion that its
                           average daily production of Hydrocarbons bears to the
                           total average daily production of Hydrocarbons from
                           the Contract Area during the ____ Day period
                           preceding the date on which liability for the
                           Production Bonus is incurred.

                  [ X]     ALTERNATIVE NO. 3
                           by each Exploitation Area that produced Hydrocarbons
                           during the 365 Day period preceding the date on which
                           liability for the Production Bonus is incurred, in
                           the proportion that its cumulative production of
                           Hydrocarbons through that date bears to the total
                           cumulative production of Hydrocarbons through that
                           date from all Exploitation Areas liable for the
                           Production Bonus.

                  [  ]     ALTERNATIVE NO. 4
                           by the Parties in accordance with their Participating
                           Interests.

                  The Parties in an Exploitation Area shall bear the Production
                  Bonus allocated to that Exploitation Area in accordance with
                  their Participating Interests in that Exploitation Area as of
                  the date on which liability for the Production Bonus was
                  incurred. Only types, grades and qualities of Hydrocarbons
                  used for the determination of the Production Bonus under the
                  Contract shall be utilized in the calculations in this Article
                  7.11.

                                       44
<PAGE>

7.12     Conduct of Exclusive Operations

          (A)  Each Exclusive Operation shall be carried out by the Consenting
               Parties acting as the Operating Committee, subject to the
               provisions of this Agreement applied mutatis mutandis to such
               Exclusive Operation and subject to the terms and conditions of
               the Contract.

          (B)  The computation of liabilities and expenses incurred in Exclusive
               Operations, including the liabilities and expenses of Operator
               for conducting such operations, shall be made in accordance with
               the principles set out in the Accounting Procedure.

          (C)  Operator shall maintain separate books, financial records and
               accounts for Exclusive Operations which shall be subject to the
               same rights of audit and examination as the Joint Account and
               related records, all as provided in the Accounting Procedure.
               Said rights of audit and examination shall extend to each of the
               Consenting Parties and each of the Non-Consenting Parties so long
               as the latter are, or may be, entitled to elect to participate in
               such Exclusive Operations.

          (D)  Operator, if it is conducting an Exclusive Operation for the
               Consenting Parties, regardless of whether it is participating in
               that Exclusive Operation, shall be entitled to request cash
               advances and shall not be required to use its own funds to pay
               any cost and expense and shall not be obliged to commence or
               continue Exclusive Operations until cash advances requested have
               been made, and the Accounting Procedure shall apply to Operator
               in respect of any Exclusive Operations conducted by it.

          (E)  Should the submission of a Development Plan be approved in
               accordance with Article 6.2, or should any Party propose (but not
               yet have the right to commence) a development in accordance with
               this Article 7 where neither the Development Plan nor the
               development proposal call for the conduct of additional appraisal
               drilling, and should any Party wish to drill an additional
               Appraisal Well prior to development, then the Party proposing the
               Appraisal Well as an Exclusive Operation shall be entitled to
               proceed first, but without the right (subject to the following
               sentence) to future reimbursement pursuant to Article 7.5. If
               such an Appraisal Well is produced, any Consenting Party shall
               own and have the right to take in kind and separately dispose of
               all of the Non-Consenting Party's Entitlement from such Appraisal
               Well until the value received in sales to purchasers in
               arm-length transactions equals one hundred percent (100%) of such
               Non-Consenting Party's Participating Interest shares of all
               liabilities and expenses that were incurred in any Exclusive
               Operations relating to the Appraisal Well. Following the
               completion of drilling such Appraisal Well as an Exclusive
               Operation, the Parties may proceed with the Development Plan
               approved pursuant to Article 5.9, or (if applicable) the Parties
               may complete the procedures to propose an Exclusive Operation to
               develop a Discovery. If, as the result of drilling such Appraisal
               Well as an Exclusive Operation, the Party or Parties proposing to
               develop the Discovery decide(s) not to do so, then each
               Non-Consenting Party who voted in favor of such Development Plan
               prior to the drilling of such Appraisal Well shall pay to the
               Consenting Party the amount such Non-Consenting Party would have
               paid had such Appraisal Well been drilled as a Joint Operation.

                                       45
<PAGE>

          (F)  If Operator is a Non-Consenting Party to an Exclusive Operation,
               then Operator

                  Check one Alternative.

                  [X]      ALTERNATIVE NO. 1
                           may resign, but in any event shall resign on the
                           unanimous request of the Consenting Parties, as
                           Operator for such Exclusive Operation, and the
                           Consenting Parties shall select a Consenting Party to
                           serve as Operator for such Exclusive Operation only.

                  [  ]     ALTERNATIVE NO. 2
                           may resign as Operator for the Exploitation Area for
                           such Discovery. If Operator so resigns, the
                           Consenting Parties shall select a Consenting Party to
                           serve as Operator for such Exclusive Operation only.

                                    ARTICLE 8
                                     DEFAULT

8.1      Default and Notice

         (A) Any Party that fails to:

                  (1)      pay when due its share of Joint Account expenses
                           (including cash advances and interest); or

                  (2)      obtain and maintain any Security required of such
                           Party under the Contract or this Agreement;

                  shall be in default under this Agreement (a "Defaulting
                  Party"). Operator, or any non-defaulting Party in case
                  Operator is the Defaulting Party, shall promptly give notice
                  of such default (the "Default Notice") to the Defaulting Party
                  and each of the non-defaulting Parties.

         (B)      For the purposes of this Article 8, "Default Period" means the
                  period beginning five (5) Business Days from the date that the
                  Default Notice is issued in accordance with this Article 8.1
                  and ending when all the Defaulting Party's defaults pursuant
                  to this Article 8.1 have been remedied in full.

8.2      Operating Committee Meetings and Data

         (A)      Notwithstanding any other provision of this Agreement, the
                  Defaulting Party shall have no right, during the Default
                  Period, to:

                  (1)      call or attend Operating Committee or subcommittee
                           meetings;

                  (2)      vote on any matter coming before the Operating
                           Committee or any subcommittee;

                  (3)      access any data or information relating to any
                           operations under this Agreement;

                  (4)      consent to or reject data trades between the Parties
                           and third parties, nor access any data received in
                           such data trades;

                  (5)      consent to or reject any Transfer (as defined in
                           Article 12.1) or otherwise exercise any other rights
                           in respect of Transfers under this Article 8 or under
                           Article 12;

                  (6)      receive its Entitlement in accordance with Article
                           8.4;

                  (7)      withdraw from this Agreement under Article 13; or

                                       46
<PAGE>

                  (8)      take assignment of any portion of another Party's
                           Participating Interest in the event such other Party
                           is either in default or withdrawing from this
                           Agreement and the Contract.

         (B) Notwithstanding any other provisions in this Agreement, during the
             Default Period:

                  (1)      unless agreed otherwise by the non-defaulting
                           Parties, the voting interest of each non-defaulting
                           Party shall be equal to the ratio such non-defaulting
                           Party's Participating Interest bears to the total
                           Participating Interests of the non-defaulting
                           Parties;

                  (2)      any matters requiring a unanimous vote or approval of
                           the Parties shall not require the vote or approval of
                           the Defaulting Party;

                  (3)      the Defaulting Party shall be deemed to have elected
                           not to participate in any operations that are voted
                           upon during the Default Period, to the extent such an
                           election would be permitted by Article 5.13 and
                           Article 7; and

                  (4)      the Defaulting Party shall be deemed to have
                           approved, and shall join with the non-defaulting
                           Parties in taking, any other actions voted on during
                           the Default Period.

8.3      Allocation of Defaulted Accounts

          (A)  The Party providing the Default Notice pursuant to Article 8.1
               shall include in the Default Notice to each non-defaulting Party
               a statement of: (i) the sum of money that the non-defaulting
               Party shall pay as its portion of the Amount in Default; and (ii)
               if the Defaulting Party has failed to obtain or maintain any
               Security required of such Party in order to maintain the Contract
               in full force and effect, the type and amount of the Security the
               non-defaulting Parties shall post or the funds they shall pay in
               order to allow Operator, or (if Operator is in default) the
               notifying Party, to post and maintain such Security. Unless
               otherwise agreed, the obligations for which the Defaulting Party
               is in default shall be satisfied by the non-defaulting Parties in
               proportion to the ratio that each non-defaulting Party's
               Participating Interest bears to the Participating Interests of
               all non-defaulting Parties. For the purposes of this Article 8:

                  "Amount in Default" means the Defaulting Party's share of
                  Joint Account expenses which the Defaulting Party has failed
                  to pay when due pursuant to the terms of this Agreement (but
                  excluding any interest owed on such amount); and

                  "Total Amount in Default" means the following amounts: (i) the
                  Amount in Default; (ii) third-party costs of obtaining and
                  maintaining any Security incurred by the non-defaulting
                  Parties or the funds paid by such Parties in order to allow
                  Operator to obtain or maintain Security, in accordance with
                  Article 8.3(A)(ii); plus (iii) any interest at the Agreed
                  Interest Rate accrued on the amount under (i) from the date
                  this amount is due by the Defaulting Party until paid in full
                  by the Defaulting Party and on the amount under (ii) from the
                  date this amount is incurred by the non-defaulting Parties
                  until paid in full by the Defaulting Party.

          (B)  If the Defaulting Party remedies its default in full before the
               Default Period commences, the notifying Party shall promptly
               notify each non-defaulting Party by facsimile or telephone and by
               email, and the non-defaulting Parties shall be relieved of their
               obligations under Article 8.3(A). Otherwise, each non-defaulting
               Party shall satisfy its obligations under Article 8.3(A)(i)
               before the Default Period commences and its obligations under
               Article 8.3(A)(ii) within ten (10) Days following the Default
               Notice. If any non-defaulting Party fails to timely satisfy such
               obligations, such Party shall thereupon be a Defaulting Party
               subject to the provisions of this Article 8. The non-defaulting
               Parties shall be entitled to receive their respective shares of
               the Total Amount in Default payable by such Defaulting Party
               pursuant to this Article 8.

                                       47
<PAGE>

          (C)  If Operator is a Defaulting Party, then all payments otherwise
               payable to Operator for Joint Account costs pursuant to this
               Agreement shall be made to the notifying Party instead until the
               default is cured or a successor Operator appointed. The notifying
               Party shall maintain such funds in a segregated account separate
               from its own funds and shall apply such funds to third party
               claims due and payable from the Joint Account of which it has
               notice, to the extent Operator would be authorized to make such
               payments under the terms of this Agreement. The notifying Party
               shall be entitled to bill or cash call the other Parties in
               accordance with the Accounting Procedure for proper third party
               charges that become due and payable during such period to the
               extent sufficient funds are not available. When Operator has
               cured its default or a successor Operator is appointed, the
               notifying Party shall turn over all remaining funds in the
               account to Operator and shall provide Operator and the other
               Parties with a detailed accounting of the funds received and
               expended during this period. The notifying Party shall not be
               liable for damages, losses, costs, expenses or liabilities
               arising as a result of its actions under this Article 8.3(C),
               except to the extent Operator would be liable under Article 4.6.

8.4      Remedies

         [NOTE:  Default  remedies  must be  considered  and  modified  in the
         context of the  requirements  of the Contract and applicable laws and
         regulations of the host country.]

          (A)  During the Default Period, the Defaulting Party shall not have a
               right to its Entitlement, which shall vest in and be the property
               of the non-defaulting Parties. Operator (or the notifying Party
               if Operator is a Defaulting Party) shall be authorized to sell
               such Entitlement in an arm's-length sale on terms that are
               commercially reasonable under the circumstances and, after
               deducting all costs, charges and expenses incurred in connection
               with such sale, pay the net proceeds to the non-defaulting
               Parties in proportion to the amounts they are owed by the
               Defaulting Party as a part of the Total Amount in Default (in
               payment of first the interest and then the principal) and apply
               such net proceeds toward the establishment of the Reserve Fund
               (as defined in Article 8.4(C)), if applicable, until all such
               Total Amount in Default is recovered and such Reserve Fund is
               established. Any surplus remaining shall be paid to the
               Defaulting Party, and any deficiency shall remain a debt due from
               the Defaulting Party to the non-defaulting Parties. When making
               sales under this Article 8.4(A), the non-defaulting Parties shall
               have no obligation to share any existing market or obtain a price
               equal to the price at which their own production is sold.

          (B)  If Operator disposes of any Joint Property or if any other credit
               or adjustment is made to the Joint Account during the Default
               Period, Operator (or the notifying Party if Operator is a
               Defaulting Party) shall be entitled to apply the Defaulting
               Party's Participating Interest share of the proceeds of such
               disposal, credit or adjustment against the Total Amount in
               Default (against first the interest and then the principal) and
               toward the establishment of the Reserve Fund (as defined in
               Article 8.4(C)), if applicable. Any surplus remaining shall be
               paid to the Defaulting Party, and any deficiency shall remain a
               debt due from the Defaulting Party to the non-defaulting Parties.

          (C)  The non-defaulting Parties shall be entitled to apply the net
               proceeds received under Articles 8.4(A) and 8.4(B) toward the
               creation of a reserve fund (the "Reserve Fund") in an amount
               equal to the Defaulting Party's Participating Interest share of:
               (i) the estimated cost to abandon any wells and other property in
               which the Defaulting Party participated; (ii) the estimated cost
               of severance benefits for local employees upon cessation of
               operations; and (iii) any other identifiable costs that the
               non-defaulting Parties anticipate will be incurred in connection
               with the cessation of operations. Upon the conclusion of the
               Default Period, all amounts held in the Reserve Fund shall be
               returned to the Party previously in Default.

         Check one Alternative for Paragraph (D).

         [X]      ALTERNATIVE 1 - Forfeiture

                                       48
<PAGE>

                  (D)      (1) If a Defaulting Party fails to fully remedy all
                           its defaults by the one hundred and eightieth (180th)
                           Day following the date of the Default Notice, then,
                           without prejudice to any other rights available to
                           each non-defaulting Party to recover its portion of
                           the Total Amount in Default,

                           Check one Alternative.

                               [ ] ALTERNATIVE 1-1
                            each non-defaulting Party

                           [X]      ALTERNATIVE NO. 1-2
                                    a  majority  in  interest  of  the
                                    non-defaulting   Parties  (after  excluding
                                    Affiliates of the Defaulting Party)

                           shall have the option, exercisable at anytime
                           thereafter during the Default Period, to require that
                           the Defaulting Party completely withdraw from this
                           Agreement and the Contract. Such option shall be
                           exercised by notice to the Defaulting Party and each
                           non-defaulting Party. If such option is exercised,
                           the Defaulting Party shall be deemed to have
                           transferred, pursuant to Article 13.6, effective on
                           the date of the non-defaulting Party's or Parties'
                           notice, its Participating Interest to the
                           non-defaulting Parties. Notwithstanding the terms of
                           Article 13, in the absence of an agreement among the
                           non-defaulting Parties to the contrary, any transfer
                           to the non-defaulting Parties following a withdrawal
                           pursuant to this Article 8.4(D)(1) shall be in
                           proportion to the Participating Interests of the
                           non-defaulting Parties.
                           Check if desired in conjunction with Alternative 1.

                           [X] OPTIONAL PROVISION - Expedited Forfeiture for
                           Subsequent Default

                                    (2)     A Party which is held in default
                                            under this Agreement (and
                                            subsequently cures such default)
                                            shall be subject to the provisions
                                            of this Article 8.4(D)(2) for a
                                            period of seven hundred thirty (730)
                                            Days following the last Day of the
                                            Default Period associated with such
                                            initial occurrence of default. If
                                            such Party fails to remedy a
                                            subsequent default by the ninetieth
                                            (90th) Day following the date of the
                                            Default Notice associated with such
                                            subsequent occasion of default (a
                                            "Repeat Defaulting Party"), then,
                                            without prejudice to any other
                                            rights available to each
                                            non-defaulting Party to recover its
                                            portion of the Total Amount in
                                            Default,

                                            Check one Alternative.

                                            [  ]     ALTERNATIVE NO. 1
                                                     each non-defaulting Party

                                            [X]      ALTERNATIVE NO. 2
                                                     a majority in interest of
                                                     the non-defaulting Parties
                                                     (after excluding Affiliates
                                                     of the Repeat Defaulting
                                                     Party)

                                            shall have the option, exercisable
                                            at any time thereafter until the
                                            Repeat Defaulting Party has
                                            completely cured its defaults, to
                                            require that the Repeat Defaulting
                                            Party completely withdraw from this
                                            Agreement and the Contract. Such
                                            option shall be exercised by notice
                                            to the Repeat Defaulting Party and
                                            each non-defaulting Party. If such
                                            option is exercised, the Repeat
                                            Defaulting Party shall be deemed to
                                            have transferred, pursuant to
                                            Article 13.6, effective on the date
                                            of the non-defaulting Party's or
                                            Parties' notice, its Participating
                                            Interest to the non-defaulting
                                            Parties. Notwithstanding the terms
                                            of Article 13, in the absence of an
                                            agreement among the non-defaulting
                                            Parties to the contrary, any
                                            transfer to the non-defaulting
                                            Parties following a withdrawal
                                            pursuant to this Article 8.4(D)(2)
                                            shall be in proportion to the
                                            Participating Interests of the
                                            non-defaulting Parties

                                       49
<PAGE>

         [  ]     ALTERNATIVE NO. 2 - Buy-Out of Defaulting Party's
                  Participating Interest

                    (D)  Each Party grants to each of the other Parties the
                         right and option to acquire (the "Buy-Out Option") all
                         of its Participating Interest for a value (the
                         "Appraised Value") as determined in this Article 8.4(D)
                         in the event that such Party becomes a Defaulting Party
                         and fails to fully remedy all its defaults by the
                         thirtieth (30th) Day following the date of the Default
                         Notice. If a Defaulting Party fails to remedy its
                         default by the thirtieth (30th) Day following the date
                         of the Default Notice, then, without prejudice to any
                         other rights available to each non-defaulting Party to
                         recover its portion of the Total Amount in Default,

                           Check one Alternative.

                           [  ]     ALTERNATIVE NO. 2-1
                                    each non-defaulting Party may, but shall not
                                    be obligated to, exercise such Buy-Out
                                    Option by notice to the Defaulting Party and
                                    each non-defaulting Party (the "Option
                                    Notice"). The Defaulting Party shall be
                                    obligated to transfer, pursuant to Article
                                    13.6, effective on the date of the Option
                                    Notice, its Participating Interest to the
                                    non-defaulting Parties having exercised the
                                    Buy-Out Option (each, an "Acquiring Party").
                                    If, within thirty (30) Days after the
                                    Buy-Out Option is first exercised by an
                                    Acquiring Party, other non-defaulting
                                    Parties become an Acquiring Party, each
                                    Acquiring Party shall acquire a proportion
                                    of the Participating Interest of the
                                    Defaulting Party equal to the ratio of its
                                    own Participating Interest to the total
                                    Participating Interests of all Acquiring
                                    Parties and pay such proportion of the
                                    Appraised Value (as defined below), unless
                                    they otherwise agree. Each Acquiring Party
                                    shall specify in its Option Notice a value
                                    for the Defaulting Party's Participating
                                    Interest. Within five (5) Days of the Option
                                    Notice, the Defaulting Party shall (i)
                                    notify the Acquiring Parties that it
                                    accepts, with respect to each Acquiring
                                    Party, the value specified by such Acquiring
                                    Party in its Option Notice (in which case
                                    this value is, with respect to such
                                    Acquiring Party, the "Appraised Value"); or
                                    (ii) refer the Dispute to an independent
                                    expert pursuant to Article 18.3 for
                                    determination of the value of its
                                    Participating Interest (in which case the
                                    value determined by such expert shall be
                                    deemed the "Appraised Value"). If the
                                    Defaulting Party fails to so notify the
                                    Acquiring Parties, then the Defaulting Party
                                    shall be deemed to have accepted, with
                                    respect to each Acquiring Party, such
                                    Acquiring Party's proposed value as the
                                    Appraised Value.

                           [  ]     ALTERNATIVE NO. 2-2
                                    a majority in interest of the non-defaulting
                                    Parties (after excluding Affiliates of the
                                    Defaulting Party) may, but shall not be
                                    obligated to, exercise such Buy-Out Option
                                    by notice to the Defaulting Party and each
                                    non-defaulting Party (the "Option Notice").
                                    If more than one non-defaulting Party elects
                                    to exercise the Buy-Out Option, each
                                    electing non-defaulting Party (collectively,
                                    the "Acquiring Parties") shall acquire a
                                    proportion of the Participating Interest of
                                    the Defaulting Party equal to the ratio of
                                    its own Participating Interest to the total
                                    Participating Interests of all Acquiring
                                    Parties and pay such proportion of the
                                    Appraised Value (as defined below), unless
                                    they otherwise agree. The Defaulting Party
                                    shall be obligated to transfer, pursuant to
                                    Article 13.6, effective on the date of the
                                    Option Notice, its Participating Interest to
                                    the Acquiring Parties in consideration of
                                    the payment to the Defaulting Party of the
                                    Appraised Value. In the Option Notice the
                                    Acquiring Parties shall specify a value for
                                    the Defaulting Party's Participating
                                    Interest. Within five (5) Days of the Option
                                    Notice, the Defaulting Party shall (i)
                                    notify the Acquiring Parties that it accepts
                                    the value specified in the Option Notice (in
                                    which case such value is the "Appraised
                                    Value"); or (ii) refer the Dispute to an
                                    independent expert pursuant to Article 18.3
                                    for determination of the value of its
                                    Participating Interest (in which case the
                                    value determined by such expert shall be
                                    deemed the "Appraised Value"). If the
                                    Defaulting Party fails to so notify the
                                    Acquiring Parties, the Defaulting Party
                                    shall be deemed to have accepted the
                                    Acquiring Parties' value as the Appraised
                                    Value.

                                       50
<PAGE>

                           If the valuation of the Defaulting Party's
                           Participating Interest is referred to an expert, such
                           expert shall determine the Appraised Value which
                           shall be equal to the fair market value of the
                           Defaulting Party's Participating Interest, less the
                           following: (i) the Total Amount in Default; (ii) all
                           costs, including the costs of the expert, to obtain
                           such valuation; and (iii) ___ percent (__%) of the
                           fair market value of the Defaulting Party's
                           Participating Interest.

                           The Appraised Value shall be paid to the Defaulting
                           Party in four (4) installments, each equal to 25% of
                           the Appraised Value as follows:

                           (1)      the first installment shall be due and
                                    payable to the Defaulting Party within [15
                                    Days] after the date on which the Defaulting
                                    Party's Participating Interest is
                                    effectively transferred to the Acquiring
                                    Parties (the "Transfer Date");
                           (2)      the second installment shall be due and
                                    payable to the Defaulting Party within [180
                                    Days] after the Transfer Date;

                           (3)      the third installment shall be due and
                                    payable to the Defaulting Party within [365
                                    Days] after the Transfer Date; and

                           (4)      the fourth installment shall be due and
                                    payable to the Defaulting Party within [545
                                    Days] after the Transfer Date.

         Check Paragraph (E), if desired. Renumber following paragraphs if
         Paragraph (E) is not selected.

         [  ]     OPTIONAL PROVISION- Security Interest

                  (E)      In addition to the other remedies available to the
                           non-defaulting Parties under this Article 8 and any
                           other rights available to each non-defaulting Party
                           to recover its portion of the Total Amount in
                           Default, in the event a Defaulting Party fails to
                           remedy its default within thirty (30) Days of the
                           Default Notice, the non-Defaulting Parties may elect
                           to enforce a mortgage and security interest on the
                           Defaulting Party's Participating Interest as set
                           forth below, subject to the Contract and the Laws /
                           Regulations.

                           (1)      Each Party grants to each of the other
                                    Parties, in pro rata shares based on their
                                    relative Participating Interests, a mortgage
                                    and security interest on its Participating
                                    Interest, whether now owned or hereafter
                                    acquired, together with all products and
                                    proceeds derived from that Participating
                                    Interest (collectively, the "Collateral") as
                                    security for (i) the payment of all amounts
                                    owing by such Party (including interest and
                                    costs of collection) under this Agreement;
                                    and (ii) any Security which such Party is
                                    required to provide under the Contract.

                                       51
<PAGE>

                           (2)      Should a Defaulting Party fail to remedy its
                                    default by the thirtieth (30th) Day
                                    following the date of the Default Notice,
                                    then, each non-defaulting Party shall have
                                    the option, exercisable at any time
                                    thereafter during the Default Period, to
                                    foreclose its mortgage and security interest
                                    against its prorata share of the Collateral
                                    by any means permitted under the Contract
                                    and the Laws / Regulations and to sell all
                                    or any part of that Collateral in public or
                                    private sale after providing the Defaulting
                                    Party and other creditors with any notice
                                    required by the Contract or the Laws /
                                    Regulations, and subject to the provisions
                                    of Article 12. Except as may be prohibited
                                    by the Contract or the Laws / Regulations,
                                    the non-defaulting Party that forecloses its
                                    mortgage and security interest shall be
                                    entitled to become the purchaser of the
                                    Collateral sold and shall have the right to
                                    credit toward the purchase price the amount
                                    to which it is entitled under Article 8.4.
                                    Any deficiency in the amounts received by
                                    the foreclosing party shall remain a debt
                                    due by the Defaulting Party. The foreclosure
                                    of mortgages and security interests by one
                                    non-defaulting Party shall neither affect
                                    the amounts owed by the Defaulting Party to
                                    the other non-defaulting Parties nor in any
                                    way limit the rights or remedies available
                                    to them. Each Party agrees that, should it
                                    become a Defaulting Party, it waives the
                                    benefit of any appraisal, valuation, stay,
                                    extension or redemption law and any other
                                    debtor protection law that otherwise could
                                    be invoked to prevent or hinder the
                                    enforcement of the mortgage and security
                                    interest granted above.

                           (3)      Each Party agrees to execute such memoranda,
                                    financing statements and other documents,
                                    and make such filings and registrations, as
                                    may be reasonably necessary to perfect,
                                    validate and provide notice of the mortgages
                                    and security interests granted by this
                                    Article 8.4(E).

          (F)  For purposes of [Articles 8.4(D) and 8.4(E), as elected], the
               Defaulting Party shall, without delay following any request from
               the non-defaulting Parties, do any act required to be done by the
               Laws / Regulations and any other applicable laws in order to
               render the transfer of its Participating Interest legally valid,
               including obtaining all governmental consents and approvals, and
               shall execute any document and take such other actions as may be
               necessary in order to effect a prompt and valid transfer. The
               Defaulting Party shall be obligated to promptly remove any liens
               and encumbrances which may exist on its assigned Participating
               Interests. In the event all Government approvals are not timely
               obtained, the Defaulting Party shall hold the assigned
               Participating Interest in trust for the non-defaulting Parties
               who are entitled to receive it. Each Party constitutes and
               appoints each other Party its true and lawful attorney to execute
               such instruments and make such filings and applications as may be
               necessary to make such transfer legally effective and to obtain
               any necessary consents of the Government. Actions under this
               power of attorney may be taken by any Party individually without
               the joinder of the others. This power of attorney is irrevocable
               for the term of this Agreement and is coupled with an interest.
               If requested, each Party shall execute a form prescribed by the
               Operating Committee setting forth this power of attorney in more
               detail.

          (G)  The non-defaulting Parties shall be entitled to recover from the
               Defaulting Party all reasonable attorneys' fees and all other
               reasonable costs sustained in the collection of amounts owing by
               the Defaulting Party.

          (H)  The rights and remedies granted to the non-defaulting Parties in
               this Article 8 shall be cumulative, not exclusive, and shall be
               in addition to any other rights and remedies that may be
               available to the non-defaulting Parties, whether at law, in
               equity or otherwise. Each right and remedy available to the
               non-defaulting Parties may be exercised from time to time and so
               often and in such order as may be considered expedient by the
               non-defaulting Parties in their sole discretion.

8.5      Survival

                                       52
<PAGE>

         The obligations of the Defaulting Party and the rights of the
         non-defaulting Parties shall survive the surrender of the Contract,
         abandonment of Joint Operations and termination of this Agreement.

8.6      No Right of Set Off

         Each Party acknowledges and accepts that a fundamental principle of
         this Agreement is that each Party pays its Participating Interest share
         of all amounts due under this Agreement as and when required.
         Accordingly, any Party which becomes a Defaulting Party undertakes
         that, in respect of either any exercise by the non-defaulting Parties
         of any rights under or the application of any of the provisions of this
         Article 8, such Party hereby waives any right to raise by way of set
         off or invoke as a defense, whether in law or equity, any failure by
         any other Party to pay amounts due and owing under this Agreement or
         any alleged claim that such Party may have against Operator or any
         Non-Operator, whether such claim arises under this Agreement or
         otherwise. Each Party further agrees that the nature and the amount of
         the remedies granted to the non-defaulting Parties hereunder are
         reasonable and appropriate in the circumstances.

                                    ARTICLE 9
                            DISPOSITION OF PRODUCTION

9.1      Right and Obligation to Take in Kind

         Except as otherwise provided in this Article 9 or in Article 8, each
         Party shall have the right and obligation to own, take in kind and
         separately dispose of its Entitlement.

9.2      Disposition of Crude Oil

         Check one Alternative.

         [  ]     ALTERNATIVE NO. 1
                  Crude Oil to be produced from an Exploitation Area shall be
                  taken and disposed of in accordance with the rules and
                  procedures set forth in Exhibit D.

         [  ]     ALTERNATIVE NO. 2
                  If Crude Oil is to be produced from an Exploitation Area, the
                  Parties shall in good faith, and not less than three (3)
                  months prior to the anticipated first delivery of Crude Oil,
                  as promptly notified by Operator, negotiate and conclude the
                  terms of a lifting agreement to cover the offtake of Crude Oil
                  produced under the Contract. The lifting procedure shall be
                  based on the AIPN Model Form Lifting Procedure and shall
                  contain all such terms as may be negotiated and agreed by the
                  Parties, consistent with the Development Plan and subject to
                  the terms of the Contract. The Government Oil & Gas Company
                  may, if necessary and practicable, also be party to the
                  lifting agreement; if the Government Oil & Gas Company is a
                  party to the lifting agreement, then the Parties shall
                  endeavor to obtain its agreement to the principles set forth
                  in this Article 9.2. If a lifting agreement has not been
                  entered into by the date of first delivery of Crude Oil, the
                  Parties shall nonetheless be obligated to take and separately
                  dispose of such Crude Oil as provided in Article 9.1 and in
                  addition shall be bound by the terms set forth in the AIPN
                  Model Form Lifting Procedure until a lifting agreement is
                  executed by the Parties.

         [  ]     ALTERNATIVE NO. 3
                  If Crude Oil is to be produced from an Exploitation Area, the
                  Parties shall in good faith, and not less than three (3)
                  months prior to the anticipated first delivery of Crude Oil,
                  as promptly notified by Operator, negotiate and conclude the
                  terms of a lifting agreement to cover the offtake of Crude Oil
                  produced under the Contract. The Government Oil & Gas Company
                  may, if necessary and practicable, also be party to the
                  lifting agreement; if the Government Oil & Gas Company is
                  party to the lifting agreement, then the Parties shall
                  endeavor to obtain its agreement to the principles set forth
                  in this Article 9.2. The lifting agreement shall, to the
                  extent consistent with the Development Plan and subject to the
                  terms of the Contract, make provision for:

                                       53
<PAGE>

                    (a)  the delivery point at which title and risk of loss of
                         each Party's Entitlement of Crude Oil shall pass to
                         such Party;

                    (b)  Operator's regular periodic advice to the Parties of
                         estimates of total available production for succeeding
                         periods, quantities of each type and/or grade of Crude
                         Oil and each Party's Entitlement for as far ahead as is
                         necessary for Operator and the Parties to plan lifting
                         arrangements. Such advice shall also cover, for each
                         type and/or grade of Crude Oil, the total available
                         production and deliveries for the preceding period, and
                         overlifts and underlifts;

                    (c)  nomination by the Parties to Operator of acceptance of
                         their shares of total available production for the
                         succeeding period. Such nominations shall in any one
                         period be for each Party's entire Entitlement of
                         available production during that period, subject to
                         operational tolerances and agreed minimum economic
                         cargo sizes or as the Parties may otherwise agree;

                    (d)  timely mitigation of the effects of overlifts and
                         underlifts and any related re-allocation of Cost
                         Hydrocarbons and Profit Hydrocarbons;

                    (e)  if offshore loading or a shore terminal for vessel
                         loading is involved, risks regarding acceptability of
                         tankers, demurrage and (if applicable) availability of
                         berths;

                    (f)  distribution to the Parties of available grades,
                         gravities and qualities of Crude Oil to ensure, to the
                         extent Parties take delivery of their Entitlements as
                         they accrue, that each Party shall receive in each
                         period Entitlements of grades, gravities and qualities
                         of Crude Oil from each Exploitation Area in which it
                         participates similar to the grades, gravities and
                         qualities of Crude Oil received by each other Party
                         from that Exploitation Area in that period;

                    (g)  to the extent that distribution of Entitlements on such
                         basis is impracticable due to availability of
                         facilities and minimum cargo sizes, a method of making
                         periodic adjustments; and

                    (h)  the right of the other Parties to sell an Entitlement
                         which a Party fails to nominate for acceptance pursuant
                         to (c) above or of which a Party fails to take
                         delivery, in accordance with applicable agreed
                         procedures, provided that such failure either
                         constitutes a breach of Operator's or such Party's
                         obligations under the terms of the Contract, or is
                         likely to result in the curtailment or shut-in of
                         production. Such sales shall be made only to the
                         limited extent necessary to avoid disruption in Joint
                         Operations. Operator shall give all Parties as much
                         notice as is practicable of such situation and that a
                         right of sale option has arisen. Any sale shall be of
                         the unnominated or undelivered Entitlement (as the case
                         may be) and for reasonable periods of time (in no event
                         to exceed twelve (12) months). Payment terms for
                         production sold under this option shall be established
                         in the lifting agreement.

                  If a lifting agreement has not been entered into by the date
                  of first delivery of Crude Oil, the Parties shall nonetheless
                  be obligated to take and separately dispose of such Crude Oil
                  as provided in Article 9.1 and in addition shall be bound by
                  the principles set forth in this Article 9.2 until a lifting
                  agreement is executed by the Parties.

                                       54
<PAGE>

         [X]      ALTERNATIVE NO. 4
                  The Parties shall in good faith, and not less than three (3)
                  months prior to the anticipated first delivery of Crude Oil,
                  as promptly notified by Operator, negotiate and endeavor to
                  conclude the terms of a lifting agreement to cover the offtake
                  of Crude Oil produced under the Contract.

9.3      Disposition of Natural Gas

         Check one Alternative.

         [X] ALTERNATIVE NO. 1 (From Paragraph (A) to (B))

                    (A)  Natural Gas to be produced from an Exploitation Area
                         shall be taken and disposed of in accordance with the
                         rules and procedures set forth in this Article 9.3. The
                         Parties recognize that, in the event of individual
                         disposition of Natural Gas, imbalances may arise with
                         the result being that a Party will temporarily have
                         disposed of more than its Participating Interest share
                         of production of Natural Gas. Accordingly, if Natural
                         Gas is to be produced from an Exploitation Area, the
                         Parties shall, in good faith and no later than the date
                         on which the Development Plan for Natural Gas
                         production is approved by the Operating Committee,
                         negotiate and conclude the terms of a balancing
                         agreement to cover the disposition of Natural Gas
                         produced under the Contract, regardless of whether all
                         of the Parties have entered into a sales arrangement or
                         sales contract for their respective Entitlement of
                         Natural Gas. The Natural Gas balancing agreement shall,
                         subject to the terms of the Contract, make provision
                         for:

                           (1)      the right of a Party not in default to take
                                    delivery of Natural Gas (and to thereby use
                                    all relevant facilities) in excess of its
                                    Participating Interest share of production,
                                    subject to the right of an under-taking
                                    Party to take later delivery of make-up
                                    Natural Gas; provided that, such make-up
                                    Natural Gas shall in no month exceed fifty
                                    percent of total Natural Gas production
                                    produced monthly from the Exploitation Area,
                                    and further provided the such under-taking
                                    Party shall lose its right to such make-up
                                    Natural Gas if it has not taken delivery of
                                    the make-up Natural Gas within thirty-six
                                    months after the excess Natural Gas was
                                    originally taken;

                                    Check if desired.

                                    [  ]    OPTIONAL PROVISION
                                            and further provided that in the
                                            event any Party takes delivery of
                                            Natural Gas in excess of its
                                            Participating Interest share of
                                            production, such overproduction
                                            shall in no month exceed ______
                                            percent of such Party's
                                            Participating Interest share of
                                            production;

                           (2)      balancing of overproduction and
                                    underproduction on a gross calorific value
                                    basis, determined by comparison of the
                                    Natural Gas taken by a Party with that
                                    Party's Participating Interest share of
                                    production for the period of time;

                           (3)      Natural Gas taken by a Party being regarded
                                    as Natural Gas taken and owned exclusively
                                    for its own account with title thereto being
                                    in such Party, regardless of whether such
                                    Natural Gas is (i) attributable to such
                                    Party's Participating Interest share of
                                    production; (ii) taken as overproduction; or
                                    (iii) taken as make-up for past
                                    underproduction;

                                       55
<PAGE>

                           (4)      unless otherwise agreed, no agency
                                    relationship or other relationship of trust
                                    and confidence being created between the
                                    Parties in regard to disposition of Natural
                                    Gas;

                           (5)      unless otherwise agreed, the delivery point
                                    (at which title and risk of loss of
                                    Entitlements of Natural Gas shall pass to
                                    the Party taking delivery of such Natural
                                    Gas) being the point where fiscal
                                    calculations are made consistent with the
                                    Contract;

                           (6)      each Party's provision to Operator of such
                                    information respecting such Party's
                                    arrangements for the disposition of its
                                    Entitlement of Natural Gas production as
                                    Operator may reasonably require in order to
                                    conduct Joint Operations in accordance with
                                    Article 4.2;

                           (7)      each Party's regular periodic nominations to
                                    Operator of the amount of such Party's
                                    Entitlement of total available Natural Gas
                                    production which it wishes to accept during
                                    a defined future period, along with
                                    Operator's regular periodic advice to the
                                    Parties of estimates of total Natural Gas
                                    production (as reasonably in advance as
                                    practicable in order to assist the Parties
                                    to plan Natural Gas disposition
                                    arrangements); provided, however, that the
                                    Parties recognize that Operator's estimates
                                    may vary from the actual Natural Gas volumes
                                    produced and that the Parties may rely upon
                                    any such information at their own risk; and

                           (8)      the allocation of Cost Hydrocarbons and
                                    Profit Hydrocarbons in relation to such
                                    individual Natural Gas disposition.

                           If such balancing agreement has not been entered into
                           by the date of first delivery of Natural Gas, the
                           Parties shall nonetheless be bound by the principles
                           set forth in this Article 9.3(A) until a Natural Gas
                           balancing agreement has been entered into between the
                           Parties in accordance with this Agreement.

                  (B)      Unless prohibited by the Laws / Regulations, the
                           Parties may, by unanimous execution of a multiparty
                           Natural Gas disposition agreement, agree to dispose
                           of Natural Gas produced under the Contract on a
                           multiparty basis to a common purchaser or purchasers.
                           The multiparty Natural Gas disposition agreement
                           shall, subject to the Contract, make provision for:

                           (1)     the terms of sale or disposition of Natural
                                   Gas on a multiparty basis;

                           (2)      the Parties' rights and obligations with
                                    respect to the disposition of Natural Gas on
                                    a multiparty basis, including the extent to
                                    which Operator is designated as the Parties'
                                    authorized representative for the purpose of
                                    conducting marketing studies, designing and
                                    constructing necessary facilities,
                                    investigating financing opportunities, and
                                    negotiating sales agreements;

                           (3)      the managerial structure for making
                                    decisions governing the multiparty disposal
                                    venture;

                           (4)      the scope and duration of the multiparty
                                    disposal venture;

                           (5)      the extent, if any, to which the costs of
                                    the multiparty disposal venture are
                                    chargeable to the Joint Account;

                           (6)      the obligation of the Parties to participate
                                    in all Natural Gas infrastructure necessary
                                    for such multiparty Natural Gas disposal,
                                    and the multiparty disposition venture
                                    governing only such Natural Gas
                                    infrastructure as is necessary to deliver
                                    Natural Gas to the point where fiscal
                                    calculations are made for the purposes of
                                    the Contract;

                           (7)      the extent to which a Party shall have, or
                                    shall be permitted to hold itself out as
                                    having, the authority to create any
                                    obligation on behalf of the multiparty
                                    disposal venture;

                                       56
<PAGE>

                           (8)      confirmation that the relationship among the
                                    Parties shall be contractual only and shall
                                    not be construed as creating a partnership
                                    or other recognized association;

                           (9)      confirmation that formation of the
                                    multiparty disposal venture shall not create
                                    any rights in any persons not a party
                                    thereto; and

                           (10)     the allocation of Cost Hydrocarbons and
                                    Profit Hydrocarbons in relation to the
                                    multiparty Natural Gas disposal.

         [  ]     ALTERNATIVE NO. 2
                  The Parties recognize that if Natural Gas is discovered it may
                  be necessary for the Parties to enter into special
                  arrangements for the disposal of the Natural Gas, which are
                  consistent with the Development Plan and subject to the terms
                  of the Contract.

9.4      Principles of Natural Gas Agreement(s) with the Government

         [NOTE: To be revised or deleted if Alternative No. 2 to Article 9.3 is
         selected.]

         (A)      The Government Oil & Gas Company may, if necessary and
                  practicable, also be party to the balancing agreement under
                  Article 9.3(A) and/or the multiparty disposition venture under
                  Article 9.3(B). If the Government Oil & Gas Company is party
                  to the balancing agreement, then the Parties shall endeavor to
                  obtain its agreement to the principles set forth in Article
                  9.3(A). Furthermore, if the Government Oil & Gas Company is
                  party to the multiparty disposition venture, then the Parties
                  shall endeavor to obtain its agreement to the principles set
                  forth in Article 9.3(B).

         (B)      In addition, the Parties shall endeavor to include in the
                  Contract, and in any other agreement with the Government Oil &
                  Gas Company in relation to the disposition of Natural Gas, the
                  following principles:

                  (1)      assured access to a fair share of the available
                           Natural Gas market, including suitable assurances for
                           Government controlled sales;

                  (2)      the right to market Natural Gas, including purchase
                           of the Government's share, to the highest value
                           outlets (domestic or export) and the right to export
                           the Parties' Entitlements of Natural Gas;

                  (3)      a minimum contractual term which provides a
                           reasonable period to develop a Natural Gas market and
                           enables Natural Gas reserves to be produced for their
                           full economic life; and

                  (4)      assured access to infrastructure for the purposes of
                           processing and/or transporting Natural Gas at a
                           competitive tariff.

                                       57
<PAGE>

                                   ARTICLE 10
                                  ABANDONMENT

10.1     Abandonment of Wells Drilled as Joint Operations

         (A)      A decision to plug and abandon any well which has been drilled
                  as a Joint Operation shall require the approval of the
                  Operating Committee.

         (B)      Should any Party fail to reply within the period prescribed in
                  Article 5.12(A)(1) or Article 5.12(A)(2), whichever is
                  applicable, after delivery of notice of Operator's proposal to
                  plug and abandon such well, such Party shall be deemed to have
                  consented to the proposed abandonment.

         (C)      If the Operating Committee approves a decision to plug and
                  abandon an Exploration Well or Appraisal Well, subject to the
                  Laws / Regulations, any Party voting against such decision may
                  propose (within the time periods allowed by Article 5.13(A))
                  to conduct an alternate Exclusive Operation in the wellbore.
                  If no Exclusive Operation is timely proposed, or if an
                  Exclusive Operation is timely proposed but is not commenced
                  within the applicable time periods under Article 7.2, such
                  well shall be plugged and abandoned.

         (D)      Any well plugged and abandoned under this Agreement shall be
                  plugged and abandoned in accordance with the Laws /
                  Regulations and at the cost, risk and expense of the Parties
                  who participated in the cost of drilling such well.

         Check Paragraph (E), if desired.

         [X]      OPTIONAL PROVISION

                  (E) Notwithstanding anything to the contrary in this Article
                      10.1:

                           (1)      If the Operating Committee approves a
                                    decision to plug and abandon a well from
                                    which Hydrocarbons have been produced and
                                    sold, subject to the Laws / Regulations, any
                                    Party voting against the decision may
                                    propose (within five (5) Days after the time
                                    specified in Article 5.6, Article 5.12(A)(1)
                                    or Article 5.12(A)(2), whichever is
                                    applicable, has expired) to take over the
                                    entire well as an Exclusive Operation. Any
                                    Party originally participating in the well
                                    shall be entitled to participate in the
                                    operation of the well as an Exclusive
                                    Operation by response notice within ten (10)
                                    Days after receipt of the notice proposing
                                    the Exclusive Operation.

                                    Check one Alternative.

                                    [  ]    ALTERNATIVE NO. 1
                                            In such event, the Consenting
                                            Parties shall be entitled to
                                            continue producing only from the
                                            Zone open to production at the time
                                            they assumed responsibility for the
                                            well and shall not be entitled to
                                            drill a substitute well in the event
                                            that the well taken over becomes
                                            impaired or fails.

                                    [X]     ALTERNATIVE NO. 2
                                            In such event, the Consenting
                                            Parties shall be entitled to conduct
                                            an Exclusive Operation in the well;
                                            provided that the proposed operation
                                            may not be in the same Zone from
                                            which production was previously
                                            obtained nor be in a Zone which is
                                            produced by any other Joint
                                            Operation wells.

                                       58
<PAGE>

                           (2)      Each Non-Consenting Party shall be deemed to
                                    have relinquished free of cost to the
                                    Consenting Parties in proportion to their
                                    Participating Interests all of its interest
                                    in the wellbore of a produced well and
                                    related equipment in accordance with Article
                                    7.4(B). The Consenting Parties shall
                                    thereafter bear all cost and liability of
                                    plugging and abandoning such well in
                                    accordance with the Laws / Regulations, to
                                    the extent the Parties are or become
                                    obligated to contribute to such costs and
                                    liabilities, and shall indemnify the
                                    Non-Consenting Parties against all such
                                    costs and liabilities.

                           (3)      Subject to Article 7.12(F), Operator shall
                                    continue to operate a produced well for the
                                    account of the Consenting Parties at the
                                    rates and charges contemplated by this
                                    Agreement, plus any additional cost and
                                    charges which may arise as the result of the
                                    separate allocation of interest in such
                                    well.

10.2     Abandonment of Exclusive Operations

         This Article 10 shall apply mutatis mutandis to the abandonment of an
         Exclusive Well or any well in which an Exclusive Operation has been
         conducted (in which event all Parties having the right to conduct
         further operations in such well shall be notified and have the
         opportunity to conduct Exclusive Operations in the well in accordance
         with the provisions of this Article 10).

Check Article 10.3, if desired.

[  ]     OPTIONAL PROVISION

         10.3     Abandonment Security

                  If under the Contract or the Laws / Regulations, the Parties
                  are or become obliged to pay or contribute to the cost of
                  ceasing operations, then during preparation of a Development
                  Plan, the Parties shall negotiate a security agreement, which
                  shall be completed and executed by all Parties participating
                  in such Development Plan prior to application for an
                  Exploitation Area. The security agreement shall incorporate
                  the following principles:

                  (A)      a Security shall be provided by each such Party for
                           each Calendar Year commencing with the Calendar Year
                           in which the Discounted Net Value equals____ percent
                           (____%) of the Discounted Net Cost; and

                  (B)      the amount of the Security required to be provided by
                           each such Party in any Calendar Year (including any
                           security previously provided which will still be
                           current throughout such Calendar Year) shall be equal
                           to the amount by which ____ percent (____%) of the
                           Discounted Net Cost exceeds the Discounted Net Value.

                  "Discounted Net Cost" means that portion of each Party's
                  anticipated before tax cost of ceasing operations in
                  accordance with the Laws / Regulations which remains after
                  deduction of salvage value. Such portion should be calculated
                  at the anticipated time of ceasing operations and discounted
                  at the Discount Rate to December 31 of the Calendar Year in
                  question.

                  "Discounted Net Value" means the value of each Party's
                  estimated Entitlement which remains after payment of estimated
                  liabilities and expenses required to win, save and transport
                  such production to the delivery point and after deduction of
                  estimated applicable taxes, royalties, imposts and levies on
                  such production. Such Entitlement shall be calculated using
                  estimated market prices and including taxes on income,
                  discounted at the Discount Rate to December 31 of the Calendar
                  Year in question. No account shall be taken of tax allowances
                  expected to be available in respect of the costs of ceasing
                  operations.

                                       59
<PAGE>

                  "Discount Rate" means the rate per annum equal to the one (1)
                  month term, London Interbank Offered Rate (LIBOR rate) for
                  U.S. dollar deposits applicable to the date falling thirty
                  (30) Business Days prior to the start of a Calendar Year as
                  published in London by the Financial Times or if not published
                  then by The Wall Street Journal.

                                   ARTICLE 11
                       SURRENDER, EXTENSIONS AND RENEWALS

11.1     Surrender

          (A)  If the Contract requires the Parties to surrender any portion of
               the Contract Area, Operator shall advise the Operating Committee
               of such requirement at least one hundred and twenty (120) Days in
               advance of the earlier of the date for filing irrevocable notice
               of such surrender or the date of such surrender. Prior to the end
               of such period, the Operating Committee shall determine pursuant
               to Article 5 the size and shape of the surrendered area,
               consistent with the requirements of the Contract. If a sufficient
               vote of the Operating Committee cannot be attained, then the
               proposal supported by a simple majority of the Participating
               Interests shall be adopted. If no proposal attains the support of
               a simple majority of the Participating Interests, then the
               proposal receiving the largest aggregate Participating Interest
               vote shall be adopted. In the event of a tie, Operator shall
               choose among the proposals receiving the largest aggregate
               Participating Interest vote. The Parties shall execute any and
               all documents and take such other actions as may be necessary to
               effect the surrender. Each Party renounces all claims and causes
               of action against Operator and any other Parties on account of
               any area surrendered in accordance with the foregoing but against
               its recommendation if Hydrocarbons are subsequently discovered
               under the surrendered area.

          (B)  A surrender of all or any part of the Contract Area which is not
               required by the Contract shall require the unanimous consent of
               the Parties.

11.2     Extension of the Term

         (A)      A proposal by any Party to enter into or extend the term of
                  any Exploration or Exploitation Period or any phase of the
                  Contract, or a proposal to extend the term of the Contract,
                  shall be brought before the Operating Committee pursuant to
                  Article 5.

         (B)      Any Party shall have the right to enter into or extend the
                  term of any Exploration or Exploitation Period or any phase of
                  the Contract or to extend the term of the Contract, regardless
                  of the level of support in the Operating Committee. If any
                  Party takes such action, any Party not wishing to extend shall
                  have a right to withdraw, subject to the requirements of
                  Article 13.

                                   ARTICLE 12
              TRANSFER OF INTEREST OR RIGHTS AND CHANGES IN CONTROL

[NOTE: Transfer provisions must be considered and modified in the context
of the requirements of the Contract and applicable laws and regulations of the
host country.]

12.1     Obligations

         (A) Subject to the requirements of the Contract,

                  (i)      any Transfer (except Transfers pursuant to Article 7,
                           Article 8 or Article 13) shall be effective only if
                           it satisfies the terms and conditions of Article
                           12.2; and

                  (ii)     a Party subject to a Change in Control must satisfy
                           the terms and conditions of Article 12.3.

                                       60
<PAGE>

                  Should a Transfer subject to this Article or a Change in
                  Control occur without satisfaction (in all material respects)
                  by the transferor or the Party subject to the Change in
                  Control, as applicable, of the requirements hereof, then:

                  Check one Alternative.

                  [X]      ALTERNATIVE NO. 1
                           each other Party shall be entitled to enforce
                           specific performance of the terms of this Article, in
                           addition to any other remedies (including damages) to
                           which it may be entitled. Each Party agrees that
                           monetary damages alone would not be an adequate
                           remedy for the breach of any Party's obligations
                           under this Article.

                  [  ]     ALTERNATIVE NO. 2
                           the transferor or Party subject to the Change in
                           Control shall pay to the other Parties in proportion
                           to their Participating Interests, as their exclusive
                           remedy, liquidated damages in an amount equal to
                           _____ percent (___%) of the Cash Value of the
                           Participating Interest that is the subject of the
                           Transfer or Change in Control. The Parties agree that
                           it would be difficult if not impossible to determine
                           accurately the actual amount of damages suffered by
                           the other Parties as a result of the failure to
                           comply with the terms of this Article 12 and that
                           these liquidated damages constitute a reasonable
                           approximation of the damages that would be suffered
                           by such other Parties.

         (B) For purposes of this Agreement:

                  "Cash Transfer" means any Transfer where the sole
                  consideration (other than the assumption of obligations
                  relating to the transferred Participating Interest) takes the
                  form of cash, cash equivalents, promissory notes or retained
                  interests (such as production payments) in the Participating
                  Interest being transferred; and

                  "Cash Value" means

                  Check one Alternative.

                           [  ]     ALTERNATIVE NO. 1
                                    the portion of the total monetary value
                                    (expressed in U.S. dollars) of the
                                    consideration being offered by the proposed
                                    transferee (including any cash, other
                                    assets, and tax savings to the transferor
                                    from a non-cash deal) that reasonably should
                                    be allocated to the Participating Interest
                                    subject to the proposed Transfer or Change
                                    in Control.

                           [X]      ALTERNATIVE NO. 2
                                    the market value (expressed in U.S. dollars)
                                    of the Participating Interest subject to the
                                    proposed Transfer or Change in Control,
                                    based upon the amount in cash a willing
                                    buyer would pay a willing seller in an arm's
                                    length transaction.

                   "Encumbrance" means a mortgage, lien, pledge, charge or other
                  encumbrance. "Encumber" and other derivatives shall be
                  construed accordingly.

                  "Transfer" means any sale, assignment, Encumbrance or other
                  disposition by a Party of any rights or obligations derived
                  from the Contract or this Agreement (including its
                  Participating Interest), other than its Entitlement and its
                  rights to any credits, refunds or payments under this
                  Agreement, and excluding any direct or indirect change in
                  Control of a Party.

12.2.    Transfer

                                       61
<PAGE>

          (A)  Except in the case of a Party transferring all of its
               Participating Interest, no Transfer shall be made by any Party
               which results in the transferor or the transferee holding a
               Participating Interest of less than ten percent (10%) or any
               interest other than a Participating Interest in the Contract and
               this Agreement.

          (B)  Subject to the terms of Articles 4.9 and 4.10, the Party serving
               as Operator shall remain Operator following Transfer of a portion
               of its Participating Interest. In the event of a Transfer of all
               of its Participating Interest, except to an Affiliate, the Party
               serving as Operator shall be deemed to have resigned as Operator,
               effective on the date the Transfer becomes effective under this
               Article 12, in which event a successor Operator shall be
               appointed in accordance with Article 4.11. If Operator transfers
               all of its Participating Interest to an Affiliate, that Affiliate
               shall automatically become the successor Operator, provided that
               the transferring Operator shall remain liable for its Affiliate's
               performance of its obligations.

          (C)  Both the transferee, and, notwithstanding the Transfer, the
               transferring Party, shall be liable to the other Parties for the
               transferring Party's Participating Interest share of any
               obligations (financial or otherwise) which have vested, matured
               or accrued under the provisions of the Contract or this Agreement
               prior to such Transfer. Such obligations, shall include any
               proposed expenditure approved by the Operating Committee prior to
               the transferring Party notifying the other Parties of its
               proposed Transfer

                  Check one alternative

                  [  ]     ALTERNATIVE NO. 1
                           and shall also include

                  [X]      ALTERNATIVE NO. 2 but shall not include

                  costs of plugging and abandoning wells or portions of wells
                  and decommissioning facilities in which the transferring Party
                  participated (or with respect to which it was required to bear
                  a share of the costs pursuant to this sentence) to the extent
                  such costs are payable by the Parties under the Contract.

         (D)      A transferee shall have no rights in the Contract or this
                  Agreement (except any notice and cure rights or similar rights
                  that may be provided to a Lien Holder (as defined in Article
                  12.2(E)) by separate instrument signed by all Parties) unless
                  and until:

                  (1)      it expressly undertakes in an instrument reasonably
                           satisfactory to the other Parties to perform the
                           obligations of the transferor under the Contract and
                           this Agreement in respect of the Participating
                           Interest being transferred and obtains any necessary
                           Government approval for the Transfer and furnishes
                           any guarantees required by the Government or the
                           Contract on or before the applicable deadlines; and

                  (2)      except in the case of a Transfer to an Affiliate,
                           each Party has consented in writing to such Transfer,
                           which consent shall be denied only if the transferee
                           fails to establish to the reasonable satisfaction of
                           each Party

                           Check one alternative

                           [X]      ALTERNATIVE NO. 1
                                    its financial capability to perform its
                                    payment obligations under the Contract and
                                    this Agreement.

                                       62
<PAGE>

                           [  ]     ALTERNATIVE NO. 2
                                    its financial capability to perform its
                                    payment obligations under the Contract and
                                    this Agreement and its technical capability
                                    to contribute to the planning and conduct of
                                    Joint Operations.

                           No consent shall be required under this Article
                           12.2(D)(2) for a Transfer to an Affiliate if the
                           transferring Party agrees in an instrument reasonably
                           satisfactory to the other Parties to remain liable
                           for its Affiliate's performance of its obligations.

         (E)      Nothing contained in this Article 12 shall prevent a Party
                  from Encumbering all or any undivided share of its
                  Participating Interest to a third party (a "Lien Holder") for
                  the purpose of security relating to finance, provided that:

                  (1)      such Party shall remain liable for all obligations
                           relating to such interest;

                  (2)      the Encumbrance shall be subject to any necessary
                           approval of the Government and be expressly
                           subordinated to the rights of the other Parties under
                           this Agreement;

                  (3)      such Party shall ensure that any Encumbrance shall be
                           expressed to be without prejudice to the provisions
                           of this Agreement; [and]

                  Check paragraph (4), if desired.

                  [  ]     OPTIONAL PROVISION
                           (4)      the Lien Holder shall first enter into and
                                    deliver a subordination agreement in favor
                                    of the other Parties, substantially in the
                                    form attached to this Agreement as Exhibit
                                    ___. [NOTE: If possible, the Parties should
                                    agree in advance to the form of such
                                    subordination agreement and attach such form
                                    as an Exhibit to this Agreement ]

         Check one Optional Alternative for Paragraph (F), if desired.

         [  ]     OPTIONAL ALTERNATIVE NO. 1 - Preemptive Rights

                  (F)      Any Transfer of all or a portion of a Party's
                           Participating Interest, other than a Transfer to an
                           Affiliate or the granting of an Encumbrance as
                           provided in Article 12.2(E), shall be subject to the
                           following procedure.

                           (1)      Once the final terms and conditions of a
                                    Transfer have been fully negotiated, the
                                    transferor shall disclose all such final
                                    terms and conditions as are relevant to the
                                    acquisition of the Participating Interest
                                    (and, if applicable, the determination of
                                    the Cash Value of the Participating
                                    Interest) in a notice to the other Parties,
                                    which notice shall be accompanied by a copy
                                    of all instruments or relevant portions of
                                    instruments establishing such terms and
                                    conditions. Each other Party shall have the
                                    right to acquire the Participating Interest
                                    subject to the proposed Transfer from the
                                    transferor on the terms and conditions
                                    described in Article 12.2(F)(3) if, within
                                    thirty (30) Days of the transferor's notice,
                                    such Party delivers to all other Parties a
                                    counter-notification that it accepts such
                                    terms and conditions without reservations or
                                    conditions (subject to Articles 12.2(F)(3)
                                    and 12.2(F)(4), where applicable). If no
                                    Party delivers such counter-notification,
                                    the Transfer to the proposed transferee may
                                    be made, subject to the other provisions of
                                    this Article 12, under terms and conditions
                                    no more favorable to the transferee than
                                    those set forth in the notice to the
                                    Parties, provided that the Transfer shall be
                                    concluded within one hundred eighty (180)
                                    Days from the date of the notice plus such
                                    additional period as may be required to
                                    secure governmental approvals. No Party
                                    shall have a right under this Article
                                    12.2(F) to acquire any asset other than a
                                    Participating Interest, nor may any Party be
                                    required to acquire any asset other than a
                                    Participating Interest, regardless of
                                    whether other properties are included in the
                                    Transfer.

                                       63
<PAGE>

                           (2)      If more than one Party counter-notifies that
                                    it intends to acquire the Participating
                                    Interest subject to the proposed Transfer,
                                    then each such Party shall acquire a
                                    proportion of the Participating Interest to
                                    be transferred equal to the ratio of its own
                                    Participating Interest to the total
                                    Participating Interests of all the
                                    counter-notifying Parties, unless the
                                    counter-notifying Parties otherwise agree.

                           (3)      In the event of a Cash Transfer that does
                                    not involve other properties as part of a
                                    wider transaction, each other Party shall
                                    have a right to acquire the Participating
                                    Interest subject to the proposed Transfer on
                                    the same final terms and conditions as were
                                    negotiated with the proposed transferee. In
                                    the event of a Transfer that is not a Cash
                                    Transfer or involves other properties
                                    included in a wider transaction (package
                                    deal), the transferor shall include in its
                                    notification to the other Parties a
                                    statement of the Cash Value of the
                                    Participating Interest subject to the
                                    proposed Transfer, and each other Party
                                    shall have a right to acquire such
                                    Participating Interest on the same final
                                    terms and conditions as were negotiated with
                                    the proposed transferee except that it shall
                                    pay the Cash Value in immediately available
                                    funds at the closing of the Transfer in lieu
                                    of the consideration payable in the third
                                    party offer, and the terms and conditions of
                                    the applicable instruments shall be modified
                                    as necessary to reflect the acquisition of a
                                    Participating Interest for cash. In the case
                                    of a package sale, no Party may acquire the
                                    Participating Interest subject to the
                                    proposed package sale unless and until the
                                    completion of the wider transaction (as
                                    modified by the exclusion of properties
                                    subject to preemptive rights or excluded for
                                    other reasons) with the package sale
                                    transferee. If for any reason the package
                                    sale terminates without completion, the
                                    other Parties' rights to acquire the
                                    Participating Interest subject to the
                                    proposed package sale shall also terminate.

                           (4)      For purposes of Article 12.2(F)(3), the Cash
                                    Value proposed by the transferor in its
                                    notice shall be conclusively deemed correct
                                    unless any Party (each a "Disagreeing
                                    Party") gives notice to the transferor with
                                    a copy to the other Parties within ten (10)
                                    Days of receipt of the transferor's notice
                                    stating that it does not agree with the
                                    transferor's statement of the Cash Value,
                                    stating the Cash Value it believes is
                                    correct, and providing any supporting
                                    information that it believes is helpful. In
                                    such event, the transferor and the
                                    Disagreeing Parties shall have fifteen (15)
                                    Days in which to attempt to negotiate an
                                    agreement on the applicable Cash Value. If
                                    no agreement has been reached by the end of
                                    such fifteen (15) Day period, either the
                                    transferor or any Disagreeing Party shall be
                                    entitled to refer the matter to an
                                    independent expert as provided in Article
                                    18.3 for determination of the Cash Value.

                           (5)      If the determination of the Cash Value is
                                    referred to an independent expert and the
                                    value submitted by the transferor is no more
                                    than five percent (5%) above the Cash Value
                                    determined by the independent expert, the
                                    transferor's value shall be used for the
                                    Cash Value and the Disagreeing Parties shall
                                    pay all costs of the expert. If the value
                                    submitted by the transferor is more than
                                    five percent (5%) above the Cash Value
                                    determined by the independent expert, the
                                    independent expert's value shall be used for
                                    the Cash Value and the transferor shall pay
                                    all costs of the expert. Subject to the
                                    independent expert's value being final and
                                    binding in accordance with Article 18.3, the
                                    Cash Value determined by the procedure shall
                                    be final and binding on all Parties.

                                       64
<PAGE>

                           (6)      Once the Cash Value is determined under
                                    Article 12.2(F)(5), Operator shall provide
                                    notice of such Cash Value to all Parties and

                                    Check one Alternative.

                                    [  ]    ALTERNATIVE NO. 1
                                            the transferor shall be obligated to
                                            sell and the Parties which provided
                                            notice of their intention to
                                            purchase the transferor's
                                            Participating Interest pursuant to
                                            Article 12.2(F)(1) shall be
                                            obligated to buy the Participating
                                            Interest at said value.

                                    [  ]    ALTERNATIVE NO. 2
                                            if the Cash Value that was submitted
                                            to the independent expert by the
                                            transferor is more than five percent
                                            (5%) above the Cash Value determined
                                            by the independent expert, the
                                            transferor may elect to terminate
                                            its proposed Transfer by notice to
                                            all other Parties within five (5)
                                            Days after notice to the Parties of
                                            the final Cash Value. Similarly, if
                                            the Cash Value that was determined
                                            by the independent expert is more
                                            than five percent (5%) above the
                                            Cash Value submitted to the
                                            independent expert by a Disagreeing
                                            Party (or, in the case of a Party
                                            that is not a Disagreeing Party, is
                                            more than five percent (5%) above
                                            the Cash Value originally proposed
                                            by the transferor), such Party may
                                            elect to revoke its notice of
                                            intention to purchase the
                                            transferor's Participating Interest
                                            pursuant to Article 12.2(F)(1). If
                                            the transferor does not properly
                                            terminate the proposed Transfer and
                                            one or more Parties which provided
                                            notices of their intention to
                                            purchase the transferor's
                                            Participating Interest pursuant to
                                            Article 12.2(F)(1) have not properly
                                            revoked their notices of such
                                            intention, then the transferor shall
                                            be obligated to sell and such
                                            Parties shall be obligated to buy
                                            the Participating Interest at the
                                            Cash Value as determined in
                                            accordance with Article 12.2(F)(5).
                                            If all Parties which provided notice
                                            of their intention to purchase the
                                            transferor's Participating Interest
                                            pursuant to Article 12.2(F)(1)
                                            properly revoke their notices of
                                            such intention, the transferor shall
                                            be free to sell the interest to the
                                            third party at the determined Cash
                                            Value or a higher value and under
                                            conditions not more favorable to the
                                            transferee than those set forth in
                                            the notice of Transfer sent by the
                                            transferor to the other Parties,
                                            provided that the Transfer shall be
                                            concluded within one hundred eighty
                                            (180) Days from the date of the
                                            determination plus such additional
                                            period as may be required to secure
                                            governmental approvals.

         [  ]     OPTIONAL ALTERNATIVE NO. 2 - Right of First Negotiation

                  (F)      Any Transfer (other than a Transfer to an Affiliate
                           and the granting of an Encumbrance as provided in
                           Article 12.2(E)) shall be subject to the following
                           procedure.

                           (1)      In the event that a Party wishes to transfer
                                    any part or all of its Participating
                                    Interest, prior to the transferor entering
                                    into a written agreement providing for such
                                    a Transfer (whether or not such agreement is
                                    binding) the transferor shall send the other
                                    Parties notice of its intention and invite
                                    them to submit offers for the Participating
                                    Interest subject to the Transfer. The other
                                    Parties shall have thirty (30) Days from the
                                    date of such notification to deliver a
                                    counter-notification with a binding offer in
                                    accordance with Article 12.2(F)(3). If the
                                    transferor notifies the offering Party or
                                    Parties that the binding offer presents an
                                    acceptable basis for negotiating a Transfer
                                    agreement, the transferor and that offering
                                    Party or Parties shall have the next sixty
                                    (60) Days in which to negotiate in good
                                    faith and execute the terms and conditions
                                    of a mutually acceptable Transfer agreement.
                                    If the transferor does not find that any
                                    Party's offer presents an acceptable basis
                                    for negotiating a Transfer agreement, or if
                                    the above sixty (60) Days elapse and the
                                    transferor in its sole discretion believes
                                    that a fully negotiated agreement based on
                                    the offer deemed acceptable by the
                                    transferor with all offering Parties is not
                                    imminent, the transferor shall be entitled
                                    for a period of one hundred eighty (180)
                                    Days from the expiration of the thirty (30)
                                    Day offer period or the sixty (60) Day
                                    negotiation period, respectively, plus such
                                    additional period as may be necessary to
                                    secure governmental approvals, to Transfer
                                    all or such portion of its Participating
                                    Interest to a third party, subject to the
                                    obligations set forth in this Article 12,

                                       56
<PAGE>

                                    Check if desired.

                                    [  ]    OPTIONAL PROVISION
                                            provided that the terms and
                                            conditions of any such Transfer must
                                            be more favorable to the transferor
                                            than the best terms and conditions
                                            offered by any Party.

                           (2)      If more than one Party counter-notifies the
                                    transferor that it intends to acquire the
                                    Participating Interest subject to the
                                    proposed Transfer, then each such Party
                                    shall acquire a proportion of the
                                    Participating Interest to be transferred
                                    equal to the ratio of its own Participating
                                    Interest to the total Participating
                                    Interests of all the counter-notifying
                                    Parties, unless the counter-notifying
                                    Parties otherwise agree.

                           (3)      All Parties desiring to give such a
                                    counter-notice shall meet to formulate a
                                    joint offer. Each such Party shall make
                                    known to the other Parties the highest price
                                    or value that it is willing to offer to the
                                    transferor. The proposal with the highest
                                    price or value shall be offered to the
                                    transferor as the joint proposal of the
                                    Parties still willing to participate in such
                                    offer under the provisions of Article
                                    12.2(F)(1) above.

         Check Paragraph (G), if desired, in conjunction with Paragraph (F).

         [  ]     OPTIONAL PROVISION

                  (G)      Notwithstanding anything to the contrary contained
                           therein, the terms of Article 12.2(F) shall only
                           apply to Cash Transfers and shall not apply to
                           Transfers that are not Cash Transfers.

12.3     Change in Control

         (A)      A Party subject to a Change in Control shall obtain any
                  necessary Government approval with respect to the Change in
                  Control and furnish any replacement Security required by the
                  Government or the Contract on or before the applicable
                  deadlines.

         Check Paragraph (B), if desired. Renumber following paragraphs if
         Paragraph (B) is not selected.

         [X]      OPTIONAL PROVISION

               (B)  A Party subject to a Change in Control shall provide
                    evidence reasonably satisfactory to the other Parties that
                    following the Change in Control such Party shall continue to
                    have the financial capability to satisfy its payment
                    obligations under the Contract and this Agreement. Should
                    the Party that is subject to the Change in Control fail to
                    provide such evidence, any other Party, by notice to such
                    Party, may require such Party to provide Security
                    satisfactory to the other Parties with respect to its
                    Participating Interest share of any obligations or
                    liabilities which the Parties may reasonably be expected to
                    incur under the Contract and this Agreement during the
                    then-current Exploration or Exploitation Period or phase of
                    the Contract.

                                       66
<PAGE>

         Check one Optional Alternative for Paragraph (C), if desired.

         [  ]     OPTIONAL ALTERNATIVE NO. 1 - Preemptive Rights

         (C)      Any Change in Control of a Party, other than one which results
                  in ongoing Control by an Affiliate, shall be subject to the
                  following procedure. For purposes of this Article 12.3, the
                  term "acquired Party" shall refer to the Party that is subject
                  to a Change in Control and the term "acquiror" shall refer to
                  the Party or third party proposing to acquire Control in a
                  Change in Control.

                           (1)      Once the final terms and conditions of a
                                    Change in Control have been fully
                                    negotiated, the acquired Party shall
                                    disclose all such final terms and conditions
                                    as are relevant to the acquisition of such
                                    Party's Participating Interest and the
                                    determination of the Cash Value of that
                                    Participating Interest in a notice to the
                                    other Parties, which notice shall be
                                    accompanied by a copy of all instruments or
                                    relevant portions of instruments
                                    establishing such terms and conditions. Each
                                    other Party shall have the right to acquire
                                    the acquired Party's Participating Interest
                                    on the terms and conditions described in
                                    Article 12.3(C)(3) if, within thirty (30)
                                    Days of the acquired Party's notice, such
                                    Party delivers to all other Parties a
                                    counter-notification that it accepts such
                                    terms and conditions without reservations or
                                    conditions (subject to Articles 12.3(C)(3)
                                    and 12.3(C)(4), where applicable). If no
                                    Party delivers such counter-notification,
                                    the Change in Control may proceed without
                                    further notice, subject to the other
                                    provisions of this Article 12, under terms
                                    and conditions no more favorable to the
                                    acquiror than those set forth in the notice
                                    to the Parties, provided that the Change in
                                    Control shall be concluded within one
                                    hundred eighty (180) Days from the date of
                                    the notice plus such additional period as
                                    may be required to secure governmental
                                    approvals. No Party shall have a right under
                                    this Article 12.3(C) to acquire any asset
                                    other than a Participating Interest, nor may
                                    any Party be required to acquire any asset
                                    other than a Participating Interest,
                                    regardless of whether other properties are
                                    subject to the Change in Control.

                           (2)      If more than one Party counter-notifies that
                                    it intends to acquire the Participating
                                    Interest subject to the proposed Change in
                                    Control, then each such Party shall acquire
                                    a proportion of that Participating Interest
                                    equal to the ratio of its own Participating
                                    Interest to the total Participating
                                    Interests of all the counter-notifying
                                    Parties, unless the counter-notifying
                                    Parties otherwise agree.

                           (3)      The acquired Party shall include in its
                                    notification to the other Parties a
                                    statement of the Cash Value of the
                                    Participating Interest subject to the
                                    proposed Change in Control, and each other
                                    Party shall have a right to acquire such
                                    Participating Interest for the Cash Value,
                                    on the final terms and conditions negotiated
                                    with the proposed acquiror that are relevant
                                    to the acquisition of a Participating
                                    Interest for cash. No Party may acquire the
                                    acquired Party's Participating Interest
                                    pursuant to this Article 12.3(C) unless and
                                    until completion of the Change in Control.
                                    If for any reason the Change in Control
                                    agreement terminates without completion, the
                                    other Parties' rights to acquire the
                                    Participating Interest subject to the
                                    proposed Change in Control shall also
                                    terminate.

                                       67
<PAGE>

                           (4)      For purposes of Article 12.3(C)(3), the Cash
                                    Value proposed by the acquired Party in its
                                    notice shall be conclusively deemed correct
                                    unless any Party (each a "Disagreeing
                                    Party") gives notice to the acquired Party
                                    with a copy to the other Parties within ten
                                    (10) Days of receipt of the acquired Party's
                                    notice stating that it does not agree with
                                    the acquired Party's statement of the Cash
                                    Value, stating the Cash Value it believes is
                                    correct, and providing any supporting
                                    information that it believes is helpful. In
                                    such event, the acquired Party and the
                                    Disagreeing Parties shall have fifteen (15)
                                    Days in which to attempt to negotiate an
                                    agreement on the applicable Cash Value. If
                                    no agreement has been reached by the end of
                                    such fifteen (15) Day period, either the
                                    acquired Party or any Disagreeing Party
                                    shall be entitled to refer the matter to an
                                    independent expert as provided in Article
                                    18.3 for determination of the Cash Value.

                           (5)      If the determination of Cash Value is
                                    referred to an independent expert, and the
                                    value submitted by the acquired Party is no
                                    more than five percent (5%) above the Cash
                                    Value determined by the independent expert,
                                    the acquired Party's value shall be used for
                                    the Cash Value and the Disagreeing Parties
                                    shall pay all costs of the expert. If the
                                    value submitted by the acquired Party is
                                    more than five percent (5%) above the Cash
                                    Value determined by the independent expert,
                                    the independent expert's value shall be used
                                    for the Cash Value and the acquired Party
                                    shall pay all costs of the expert. Subject
                                    to the independent expert's value being
                                    final and binding in accordance with Article
                                    18.3, the Cash Value determined by the
                                    procedure shall be final and binding on all
                                    Parties.

                           (6)      Once the Cash Value is determined under
                                    Article 12.3(C)(4), Operator shall provide
                                    notice of such Cash Value to all Parties and

                                    Check one Alternative.

                                    [  ]    ALTERNATIVE NO. 1
                                            the acquired Party shall be
                                            obligated to sell and the Parties
                                            which provided notice of their
                                            intention to purchase the acquired
                                            Party's Participating Interest
                                            pursuant to Article 12.3(C)(1) shall
                                            be obligated to buy the
                                            Participating Interest at said
                                            value.

                                    [  ]    ALTERNATIVE NO. 2
                                            if the Cash Value that was submitted
                                            by the acquired Party to the
                                            independent expert is more than five
                                            percent (5%) above the Cash Value
                                            determined by the independent
                                            expert, the acquired Party and its
                                            Affiliates may elect to terminate
                                            the proposed Change in Control by
                                            notice to all other Parties within
                                            five (5) Days after notice to the
                                            Parties of the final Cash Value.
                                            Similarly, if the Cash Value that
                                            was determined by the independent
                                            expert is more than five percent
                                            (5%) above the Cash Value submitted
                                            to the independent expert by a
                                            Disagreeing Party (or, in the case
                                            of a Party that is not a Disagreeing
                                            Party, is more than five percent
                                            (5%) above the Cash Value originally
                                            proposed by the acquiror), such
                                            Party may elect to revoke its notice
                                            of intention to purchase the
                                            acquired Party's Participating
                                            Interest pursuant to Article
                                            12.3(C)(1). If the acquired Party
                                            and its Affiliates do not properly
                                            terminate the proposed Change in
                                            Control and one or more Parties
                                            which provided notices of their
                                            intention to purchase the acquired
                                            Party's Participating Interest
                                            pursuant to Article 12.3(C)(1) have
                                            not properly revoked their notices
                                            of such intention, then the acquired
                                            Party shall be obligated to sell and
                                            such Parties shall be obligated to
                                            buy the Participating Interest at
                                            the Cash Value as determined in
                                            accordance with Article 12.3(C)(5).
                                            If all Parties which provided notice
                                            of their intention to purchase the
                                            acquired Party's Participating
                                            Interest pursuant to Article
                                            12.3(C)(1) properly revoke their
                                            notices of such intention, the
                                            Change in Control may proceed
                                            without further notice, under terms
                                            and conditions no more favorable to
                                            the acquiror than those in effect at
                                            the time of the determination,
                                            provided that the Change in Control
                                            shall be concluded within one
                                            hundred eighty (180) Days from the
                                            date of the determination plus such
                                            additional period as may be required
                                            to secure governmental approvals.

                                       68
<PAGE>

         [  ]     OPTIONAL ALTERNATIVE NO. 2 - Right of First Negotiation

         (C)      Any Change in Control of a Party, other than to an Affiliate,
                  shall be subject to the following procedure. For purposes of
                  this 12.3, the term "acquired Party" shall refer to the Party
                  that is subject to the Change in Control.

                           (1)      In the event that the Affiliates of a Party
                                    wish to enter into a transaction that will
                                    result in a Change in Control of the Party,
                                    prior to such Affiliates entering into a
                                    written agreement (whether or not such
                                    agreement is binding) the acquired Party
                                    shall send the other Parties notice of its
                                    Affiliates' intention and invite them to
                                    submit offers for the Participating Interest
                                    subject to the Change in Control. The other
                                    Parties shall have thirty (30) Days from the
                                    date of such notification to deliver a
                                    counter-notification with a binding offer in
                                    accordance with Article 12.3(C)(3). If the
                                    acquired Party notifies an offering Party or
                                    Parties that their binding offer presents an
                                    acceptable basis for negotiating a transfer
                                    agreement, the acquired Party and the
                                    offering Party or Parties shall have the
                                    next sixty (60) Days in which to negotiate
                                    in good faith and execute the terms and
                                    conditions of a mutually acceptable transfer
                                    agreement. If the acquired Party does not
                                    find that any Party's offer presents an
                                    acceptable basis for negotiating a transfer
                                    agreement, or if the above sixty (60) Days
                                    elapse and the acquired Party in its sole
                                    discretion believes that a fully negotiated
                                    agreement with an offering Party or Parties
                                    is not imminent, the Change in Control may
                                    proceed without further notice, subject to
                                    the obligations set forth in this Article
                                    12, provided that the Change in Control
                                    shall be concluded within one hundred eighty
                                    (180) Days from the expiration of the thirty
                                    (30) Day offer period or the sixty (60) Day
                                    negotiation period, respectively, plus such
                                    additional period as may be necessary to
                                    secure governmental approvals.

                           (2)      If more than one Party counter-notifies the
                                    acquired Party that it intends to acquire
                                    the Participating Interest subject to the
                                    proposed Change in Control, then each such
                                    Party shall acquire a proportion of the
                                    Participating Interest equal to the ratio of
                                    its own Participating Interest to the total
                                    Participating Interests of all the
                                    counter-notifying Parties, unless the
                                    counter-notifying Parties otherwise agree.

                           (3)      All Parties desiring to give such a
                                    counter-notice shall meet to formulate a
                                    joint offer. Each such Party shall make
                                    known to the other Parties the highest price
                                    or value which it is willing to offer to the
                                    acquired Party. The proposal with the
                                    highest price or value shall be offered to
                                    the acquired Party as the joint proposal of
                                    the Parties still willing to participate in
                                    such offer under the provisions of Article
                                    12.3(C)(1) above.

                                       69
<PAGE>

                                   ARTICLE 13
                            WITHDRAWAL FROM AGREEMENT

13.1     Right of Withdrawal

         (A)      Subject to the provisions of this Article 13 and the Contract,
                  any Party not in default may at its option withdraw from this
                  Agreement and the Contract by giving notice to all other
                  Parties stating its decision to withdraw. Such notice shall be
                  unconditional and irrevocable when given, except as may be
                  provided in Article 13.7.

         (B)      The effective date of withdrawal for a withdrawing Party shall
                  be the end of the calendar month following the calendar month
                  in which the notice of withdrawal is given, provided that if
                  all Parties elect to withdraw, the effective date of
                  withdrawal for each Party shall be the date determined by
                  Article 13.9.

13.2     Partial or Complete Withdrawal

          (A)  Within thirty (30) Days of receipt of each withdrawing Party's
               notification, each of the other Parties may also give notice that
               it desires to withdraw from this Agreement and the Contract.
               Should all Parties give notice of withdrawal, the Parties shall
               proceed to abandon the Contract Area and terminate the Contract
               and this Agreement. If less than all of the Parties give such
               notice of withdrawal, then the withdrawing Parties shall take all
               steps to withdraw from the Contract and this Agreement on the
               earliest possible date and execute and deliver all necessary
               instruments and documents to assign their Participating Interest
               to the Parties which are not withdrawing, without any
               compensation whatsoever, in accordance with the provisions of
               Article 13.6.

          (B)  Any Party withdrawing under Article 11.2 or under this Article 13
               shall

                  Check one Alternative

                  [  ]     ALTERNATIVE NO. 1
                           withdraw from the entirety of the Contract Area,
                           including all Exploitation Areas and all Discoveries
                           made prior to such withdrawal, and thus abandon to
                           the other Parties not joining in its withdrawal all
                           its rights to Cost Hydrocarbons and Profit
                           Hydrocarbons generated by operations after the
                           effective date of such withdrawal and all rights in
                           associated Joint Property.

                  [X]      ALTERNATIVE NO. 2
                           at its option, (1) withdraw from the entirety of the
                           Contract Area, or (2) withdraw only from all
                           exploration activities under the Contract, but not
                           from any Exploitation Area, Commercial Discovery, or
                           Discovery (whether appraised or not) made prior to
                           such withdrawal. Such withdrawing Party shall retain
                           its rights in Joint Property, but only insofar as
                           they relate to any such Exploitation Area, Commercial
                           Discovery or Discovery, and shall abandon all other
                           rights in Joint Property.

13.3     Rights of a Withdrawing Party

         A withdrawing Party shall have the right to receive its Entitlement
         produced through the effective date of its withdrawal. The withdrawing
         Party shall be entitled to receive all information to which such Party
         is otherwise entitled under this Agreement until the effective date of
         its withdrawal. After giving its notification of withdrawal, a Party
         shall not be entitled to vote on any matters coming before the
         Operating Committee, other than matters for which such Party has
         financial responsibility.

                                       70
<PAGE>

13.4     Obligations and Liabilities of a Withdrawing Party

         (A)      A withdrawing Party shall, following its notification of
                  withdrawal, remain liable only for its share of the following:

                  (1)      costs of Joint Operations, and Exclusive Operations
                           in which it has agreed to participate, that were
                           approved by the Operating Committee or Consenting
                           Parties as part of a Work Program and Budget
                           (including a multi-year Work Program and Budget under
                           Article 6.5) or AFE prior to such Party's
                           notification of withdrawal, regardless of when they
                           are incurred;

                  (2)      any Minimum Work Obligations for the current period
                           or phase of the Contract, and for any subsequent
                           period or phase which has been approved pursuant to
                           Article 11.2 and with respect to which such Party has
                           failed to timely withdraw under Article 13.4(B);

                  (3)      expenditures described in Articles 4.2(B)(13) and
                           13.5 related to an emergency occurring prior to the
                           effective date of a Party's withdrawal, regardless of
                           when such expenditures are incurred;

                  (4)      all other obligations and liabilities of the Parties
                           or Consenting Parties, as applicable, with respect to
                           acts or omissions under this Agreement prior to the
                           effective date of such Party's withdrawal for which
                           such Party would have been liable, had it not
                           withdrawn from this Agreement; and

                  (5)      in the case of a partially withdrawing Party, any
                           costs and liabilities with respect to Exploitation
                           Areas, Commercial Discoveries and Discoveries from
                           which it has not withdrawn.

                  The obligations and liabilities for which a withdrawing Party
                  remains liable shall specifically include its share of any
                  costs of plugging and abandoning wells or portions of wells in
                  which it participated (or was required to bear a share of the
                  costs pursuant to Article 13.4(A)(1)) to the extent such costs
                  of plugging and abandoning are payable by the Parties under
                  the Contract. Any mortgages, liens, pledges, charges or other
                  encumbrances which were placed on the withdrawing Party's
                  Participating Interest prior to such Party's withdrawal shall
                  be fully satisfied or released, at the withdrawing Party's
                  expense, prior to its withdrawal. A Party's withdrawal shall
                  not relieve it from liability to the non-withdrawing Parties
                  with respect to any obligations or liabilities attributable to
                  the withdrawing Party under this Article 13 merely because
                  they are not identified or identifiable at the time of
                  withdrawal.

          (B)  Notwithstanding the foregoing, a Party shall not be liable for
               any operations or expenditures it voted against (other than
               operations and expenditures described in Article 13.4(A)(2) or
               Article 13.4(A)(3)) if it sends notification of its withdrawal
               within five (5) Days (or within twenty-four (24) hours for Urgent
               Operational Matters) of the Operating Committee vote approving
               such operation or expenditure. Likewise, a Party voting against
               voluntarily entering into or extending of an Exploration Period
               or Exploitation Period or any phase of the Contract or
               voluntarily extending the Contract shall not be liable for the
               Minimum Work Obligations associated therewith provided that it
               sends notification of its withdrawal within thirty (30) Days of
               such vote pursuant to Article 11.2.

13.5     Emergency

         If a well goes out of control or a fire, blow out, sabotage or other
         emergency occurs prior to the effective date of a Party's withdrawal,
         the withdrawing Party shall remain liable for its Participating
         Interest share of the costs of such emergency, regardless of when they
         are incurred.

                                       71
<PAGE>

13.6     Assignment

         A withdrawing Party shall assign its Participating Interest free of
         cost to each of the non-withdrawing Parties in the proportion which
         each of their Participating Interests (prior to the withdrawal) bears
         to the total Participating Interests of all the non-withdrawing Parties
         (prior to the withdrawal), unless the non-withdrawing Parties agree
         otherwise. The expenses associated with the withdrawal and assignments
         shall be borne by the withdrawing Party.

13.7     Approvals

         A withdrawing Party shall promptly join in such actions as may be
         necessary or desirable to obtain any Government approvals required in
         connection with the withdrawal and assignments. The non-withdrawing
         Parties shall use reasonable endeavors to assist the withdrawing Party
         in obtaining such approvals. Any penalties or expenses incurred by the
         Parties in connection with such withdrawal shall be borne by the
         withdrawing Party. If the Government does not approve a Party's
         withdrawal and assignment to the other Parties, then the withdrawing
         Party shall at its option either (1) retract its notice of withdrawal
         by notice to the other Parties and remain a Party as if such notice of
         withdrawal had never been sent, or (2) hold its Participating Interest
         in trust for the sole and exclusive benefit of the non-withdrawing
         Parties with the right to be reimbursed by the non-withdrawing Parties
         for any subsequent costs and liabilities incurred by it for which it
         would not have been liable, had it successfully withdrawn.

13.8     Security

         A Party withdrawing from this Agreement and the Contract pursuant to
         this Article 13 shall provide Security satisfactory to the other
         Parties to satisfy any obligations or liabilities for which the
         withdrawing Party remains liable in accordance with Article 13.4, but
         which become due after its withdrawal, including Security to cover the
         costs of an abandonment, if applicable.

13.9     Withdrawal or Abandonment by All Parties

         In the event all Parties decide to withdraw, the Parties agree that
         they shall be bound by the terms and conditions of this Agreement for
         so long as may be necessary to wind up the affairs of the Parties with
         the Government, to satisfy any requirements of the Laws / Regulations
         and to facilitate the sale, disposition or abandonment of property or
         interests held by the Joint Account, all in accordance with Article 2.

                                   ARTICLE 14
                         RELATIONSHIP OF PARTIES AND TAX

14.1     Relationship of Parties

         The rights, duties, obligations and liabilities of the Parties under
         this Agreement shall be individual, not joint or collective. It is not
         the intention of the Parties to create, nor shall this Agreement be
         deemed or construed to create, a mining or other partnership, joint
         venture or association or (except as explicitly provided in this
         Agreement) a trust. This Agreement shall not be deemed or construed to
         authorize any Party to act as an agent, servant or employee for any
         other Party for any purpose whatsoever except as explicitly set forth
         in this Agreement. In their relations with each other under this
         Agreement, the Parties shall not be considered fiduciaries except as
         expressly provided in this Agreement.

14.2     Tax

         Each Party shall be responsible for reporting and discharging its own
         tax measured by the profit or income of the Party and the satisfaction
         of such Party's share of all contract obligations under the Contract
         and under this Agreement. Each Party shall protect, defend and
         indemnify each other Party from any and all loss, cost or liability
         arising from the indemnifying Party's failure to report and discharge
         such taxes or satisfy such obligations. The Parties intend that all
         income and all tax benefits (including deductions, depreciation,
         credits and capitalization) with respect to the expenditures made by
         the Parties hereunder will be allocated by the Government tax
         authorities to the Parties based on the share of each tax item actually
         received or borne by each Party. If such allocation is not accomplished
         due to the application of the Laws / Regulations or other Government
         action, the Parties shall attempt to adopt mutually agreeable
         arrangements that will allow the Parties to achieve the financial
         results intended. Operator shall provide each Party, in a timely manner
         and at such Party's sole expense, with such information with respect to
         Joint Operations as such Party may reasonably request for preparation
         of its tax returns or responding to any audit or other tax proceeding.

                                       72
<PAGE>

Check Article 14.3, if desired.

[X]      OPTIONAL PROVISION

         14.3     United States Tax Election

          (A)  If, for United States federal income tax purposes, this Agreement
               and the operations under this Agreement are regarded as a
               partnership and if the Parties have not agreed to form a tax
               partnership, each U.S. Party elects to be excluded from the
               application of all of the provisions of Subchapter "K", Chapter
               1, Subtitle "A" of the United States Internal Revenue Code of
               1986, as amended (the "Code"), to the extent permitted and
               authorized by Section 761(a) of the Code and the regulations
               promulgated under the Code. Operator, if it is a U.S. Party, is
               authorized and directed to execute and file for each U.S. Party
               such evidence of this election as may be required by the Internal
               Revenue Service, including all of the returns, statements, and
               data required by United States Treasury Regulations Sections
               1.761-2 and 1.6031(a)-1(b)(5) and shall provide a copy thereof to
               each U.S. Party. However, if Operator is not a U.S. Party, the
               Party who holds the greatest Participating Interest among the
               U.S. Parties shall fulfill the obligations of Operator under this
               Article 14.3. Should there be any requirement that any U.S. Party
               give further evidence of this election, each U.S. Party shall
               execute such documents and furnish such other evidence as may be
               required by the Internal Revenue Service or as may be necessary
               to evidence this election.

          (B)  No Party shall give any notice or take any other action
               inconsistent with the foregoing election. If any income tax laws
               of any state or other political subdivision of the United States
               or any future income tax laws of the United States or any such
               political subdivision contain provisions similar to those in
               Subchapter "K", Chapter 1, Subtitle "A" of the Code, under which
               an election similar to that provided by Section 761(a) of the
               Code is permitted, each U.S. Party shall make such election as
               may be permitted or required by such laws. In making the
               foregoing election or elections, each U.S. Party states that the
               income derived by it from operations under this Agreement can be
               adequately determined without the computation of partnership
               taxable income.

          (C)  Unless approved by every Non-U.S. Party, no activity shall be
               conducted under this Agreement that would cause any Non-U.S.
               Party to be deemed to be engaged in a trade or business within
               the United States under United States income tax laws and
               regulations.

          (D)  A Non-U.S. Party shall not be required to do any act or execute
               any instrument which might subject it to the taxation
               jurisdiction of the United States.

          (E)  For the purposes of this Article 14.3, "U.S. Party" shall mean
               any Party that is subject to the income tax law of the United
               States in respect with operations under this Agreement. "Non-U.S.
               Party" shall mean any Party that is not subject to such income
               tax law.

                                       73
<PAGE>

                                   ARTICLE 15
          VENTURE INFORMATION - CONFIDENTIALITY - INTELLECTUAL PROPERTY

15.1     Venture Information

         Check one Alternative for Paragraph (A).

         [X]      ALTERNATIVE NO. 1

          (A)  Except as otherwise provided in this Article 15 or in Articles
               4.4 and 8.4(A), each Party will be entitled to receive all
               Venture Information related to operations in which such party is
               a participant. "Venture Information" means any information and
               results developed or acquired as a result of Joint Operations and
               shall be Joint Property, unless provided otherwise in accordance
               with this Agreement and the Contract. Each Party shall have the
               right to use all Venture Information it receives without
               accounting to any other Party, subject to any applicable patents
               and any limitations set forth in this Agreement and the Contract.
               For purposes of this Article 15, such right to use shall include,
               the rights to copy, prepare derivative works, disclose, license,
               distribute, and sell.

         [  ]     ALTERNATIVE NO. 2

          (A)  Each Party may use all information it receives under Article
               4.4(A) (the "Venture Information") without the approval of any
               other Party, subject to any applicable restrictions and
               limitations set forth in this Article 15, the Agreement and the
               Contract. For purposes of this Article 15, the right to use shall
               entail the right to copy and prepare derivative works.

          (B)  Each Party may, subject to any applicable restrictions and
               limitations set forth in the Contract, extend the right to use
               Venture Information to each of its Affiliates which are obligated
               to terms not less restrictive that this Article 15.

                  Check if desired.

                  [X]      OPTIONAL PROVISION
                           Except as otherwise provided in the Contract, each
                           Party may extend the right to use Venture Information
                           to members of joint ventures or production sharing
                           arrangements in which such Party or its Affiliates
                           have an ownership or equity interest, or to an
                           assignee of all or a fraction of a Participating
                           Interest, provided that each such member agrees in
                           writing to keep the Venture Information in confidence
                           at least to the same extent as required in Article
                           15.2 and to use the Venture Information only for the
                           benefit of that joint venture or production sharing
                           arrangement.

          (C)  The acquisition or development of Venture Information under terms
               other than as specified in this Article 15 shall require the
               approval of the Operating Committee. The request for approval
               submitted by a Party shall be accompanied by a description of,
               and summary of the use and disclosure restrictions which would be
               applicable to, the Venture Information, and any such Party will
               be obligated to use all reasonable efforts to arrange for rights
               to use which are not less restrictive than specified in this
               Article 15.

          (D)  All Venture Information received by a Party under this Agreement
               is received on an "as is" basis without warranties, express or
               implied, of any kind. Any use of such Venture Information by a
               Party shall be at such Party's sole risk.

                                       74
<PAGE>

15.2     Confidentiality

         (A)      Subject to the provisions of the Contract and this Article 15,
                  the Parties agree that all information in relation with Joint
                  Operations or Exclusive Operations shall be considered
                  confidential and shall be kept confidential and not be
                  disclosed during the term of the Contract and for a period of
                  five (5) years thereafter to any person or entity not a Party
                  to this Agreement, except:

                  (1) to an Affiliate pursuant to Article 15.1(B);

                  (2)      to a governmental agency or other entity when
                           required by the Contract;

                  (3)      to the extent such information is required to be
                           furnished in compliance with the applicable law or
                           regulations, or pursuant to any legal proceedings or
                           because of any order of any court binding upon a
                           Party;

                  (4)      to prospective or actual attorneys engaged by any
                           Party where disclosure of such information is
                           essential to such attorney's work for such Party;

                  (5)      to prospective or actual contractors and consultants
                           engaged by any Party where disclosure of such
                           information is essential to such contractor's or
                           consultant's work for such Party;

                  (6)      to a bona fide prospective transferee of a Party's
                           Participating Interest to the extent appropriate in
                           order to allow the assessment of such Participating
                           Interest (including an entity with whom a Party
                           and/or its Affiliates are conducting bona fide
                           negotiations directed toward a merger, consolidation
                           or the sale of a majority of its or an Affiliate's
                           shares);

                  (7)      to a bank or other financial institution to the
                           extent appropriate to a Party arranging for funding;

                  (8)      to the extent such information must be disclosed
                           pursuant to any rules or requirements of any
                           government or stock exchange having jurisdiction over
                           such Party, or its Affiliates; provided that if any
                           Party desires to disclose information in an annual or
                           periodic report to its or its Affiliates'
                           shareholders and to the public and such disclosure is
                           not required pursuant to any rules or requirements of
                           any government or stock exchange, then such Party
                           shall comply with Article 20.3;

                  (9)      to its respective employees for the purposes of Joint
                           Operations or Exclusive Operations as the case may
                           be, subject to each Party taking customary
                           precautions to ensure such information is kept
                           confidential; and

                  (10)     any information which, through no fault of a Party,
                           becomes a part of the public domain.

         (B)      Disclosure as pursuant to Articles 15.2(A)(5), (6), and (7)
                  shall not be made unless prior to such disclosure the
                  disclosing Party has obtained a written undertaking from the
                  recipient party to keep the information strictly confidential
                  for at least five (5) years and to use the information for the
                  sole purpose described in Articles 15.2(A)(5), (6), and (7),
                  whichever is applicable, with respect to the disclosing Party.

                                       75
<PAGE>

15.3     Intellectual Property

           Check one Alternative for Paragraph (A).

           [X]    ALTERNATIVE NO. 1

               (A)  Subject to Articles 15.3(C) and 15.5 and unless provided
                    otherwise in the Contract, all intellectual property rights
                    in the Venture Information shall be Joint Property. Each
                    Party and its Affiliates have the right to use all such
                    intellectual property rights in their own operations
                    (including joint operations or a production sharing
                    arrangement in which the Party or its Affiliates has an
                    ownership or equity interest) without the approval of any
                    other Party. Decisions regarding obtaining, maintaining and
                    licensing such intellectual property rights shall be made by
                    the Operating Committee, and the costs thereof shall be for
                    the Joint Account. Upon unanimous consent of the Operating
                    Committee as to ownership, licensing rights, and income
                    distribution, the ownership of intellectual property rights
                    in the Venture Information may be assigned to the Operator
                    or to a Party.

           [  ]   ALTERNATIVE NO. 2

               (A)  Subject to Articles 15.3(C) and 15.5, all intellectual
                    property rights in the Venture Information shall be owned by
                    Operator unless provided otherwise in the Contract. Each
                    Party and its Affiliates shall have a perpetual,
                    royalty-free, irrevocable license to use, all such
                    intellectual property rights in their own operations
                    (including joint venture operations or a production sharing
                    arrangement in which such Party has an ownership or equity
                    interest) without the approval of any other Party. If any
                    Venture Information amounts to a patentable invention,
                    Operator shall be entitled to seek patent protection for
                    such invention. If Operator does not intend to seek patent
                    protection, Operator shall offer its rights to such
                    invention for assignment to the other Parties and shall
                    assign such rights to any requesting Party or Parties. In
                    case of the granting of a license under such rights to a
                    third party other than Affiliates of a Party, the license
                    income shall be shared among the Parties in proportion to
                    their respective Participating Interest. The Party granting
                    any such license shall (i) be entitled to deduct its
                    reasonable costs incurred in registering and maintaining the
                    rights licensed prior to the aforementioned sharing among
                    the Parties; (ii) keep records of any license income
                    received for any such license; and (iii) if requested,
                    provide each Party with a statement, certified by its
                    statutory auditor to be correct and in accordance with this
                    Article 15.3, regarding such income received.

               (B)  Nothing in this Agreement shall be deemed to require a Party
                    to (i) divulge proprietary technology to any of the other
                    Parties; or (ii) grant a license or other rights under any
                    intellectual property rights owned or controlled by such
                    Party or its Affiliates to any of the other Parties.

           Check one Alternative for Paragraph (C).

           [X]    ALTERNATIVE NO. 1

               (C)  If a Party or an Affiliate of a Party has proprietary
                    technology applicable to activities carried out under this
                    Agreement which the Party or its Affiliate desires to make
                    available on terms and conditions other than as specified in
                    Article 15.3(A), the Party or Affiliate may, with the prior
                    approval of the Operating Committee, make the proprietary
                    technology available on terms to be agreed. If the
                    proprietary technology is so made available, then any
                    inventions, discoveries, or improvements which relate to
                    such proprietary technology and which result from Joint
                    Account expenditures shall belong to such Party or
                    Affiliate. In such case, each other Party shall have a
                    perpetual, royalty-free, irrevocable license to practice
                    such inventions, discoveries, or improvements, but only in
                    connection with the Joint Operations.

                                       76
<PAGE>

           [  ]   ALTERNATIVE NO. 2

                  (C)    If in the course of carrying out activities charged to
                         the Joint Account, a Party or an Affiliate of a Party
                         makes or conceives any inventions, discoveries, or
                         improvements which primarily relate to or are primarily
                         based on the proprietary technology of such Party or
                         its Affiliates, then all intellectual property rights
                         to such inventions, discoveries, or improvements shall
                         vest exclusively in such Party and each other Party
                         shall have a perpetual, royalty-free, irrevocable
                         license to use such inventions, discoveries, or
                         improvements, but only in connection with the Joint
                         Operations.

           (D)    Subject to Article 4.6(B), all costs and expenses of
                  defending, settling or otherwise handling any claim which is
                  based on the actual or alleged infringement of any
                  intellectual property right shall be for the account of the
                  operation from which the claim arose, whether Joint Operations
                  or Exclusive Operations.

15.4     Continuing Obligations

         Any Party ceasing to own a Participating Interest during the term of
         this Agreement shall nonetheless remain bound by the obligations of
         confidentiality in Article 15.2, and any disputes in relation thereto
         shall be resolved in accordance with Article 18.2.

15.5     Trades

         Operator may, with approval of the Operating Committee, make well
         trades and data trades for the benefit of the Parties, with any data so
         obtained to be furnished to all Parties who participated in the cost of
         the data that was traded. Operator shall cause any third party to such
         trade to enter into an undertaking to keep the traded data
         confidential.

                                   ARTICLE 16
                                  FORCE MAJEURE

16.1     Obligations

         If as a result of Force Majeure any Party is rendered unable, wholly or
         in part, to carry out its obligations under this Agreement, other than
         the obligation to pay any amounts due or to furnish Security, then the
         obligations of the Party giving such notice, so far as and to the
         extent that the obligations are affected by such Force Majeure, shall
         be suspended during the continuance of any inability so caused and for
         such reasonable period thereafter as may be necessary for the Party to
         put itself in the same position that it occupied prior to the Force
         Majeure, but for no longer period. The Party claiming Force Majeure
         shall notify the other Parties of the Force Majeure within a reasonable
         time after the occurrence of the facts relied on and shall keep all
         Parties informed of all significant developments. Such notice shall
         give reasonably full particulars of the Force Majeure and also estimate
         the period of time which the Party will probably require to remedy the
         Force Majeure. The affected Party shall use all reasonable diligence to
         remove or overcome the Force Majeure situation as quickly as possible
         in an economic manner but shall not be obligated to settle any labor
         dispute except on terms acceptable to it, and all such disputes shall
         be handled within the sole discretion of the affected Party.

16.2     Definition of Force Majeure

         Check one Alternative.

         [X]      ALTERNATIVE NO. 1
                  For the purposes of this Agreement, "Force Majeure" shall have
                  the same meaning as is set out in the Contract.

                                       77
<PAGE>

         [  ]     ALTERNATIVE NO. 2
                  For the purposes of this Agreement, "Force Majeure" shall mean
                  circumstances which were beyond the reasonable control of the
                  Party concerned and shall include strikes, lockouts and other
                  industrial disturbances even if they were not "beyond the
                  reasonable control" of the Party.

                                   ARTICLE 17
                                     NOTICES

         Except as otherwise specifically provided, all notices authorized or
required between the Parties by any of the provisions of this Agreement shall be
in writing (in English) and delivered in person or by courier service or by any
electronic means of transmitting written communications which provides written
confirmation of complete transmission, and addressed to such Parties. Oral
communication does not constitute notice for purposes of this Agreement, and
e-mail addresses and telephone numbers for the Parties are listed below as a
matter of convenience only. A notice given under any provision of this Agreement
shall be deemed delivered only when received by the Party to whom such notice is
directed, and the time for such Party to deliver any notice in response to such
originating notice shall run from the date the originating notice is received.
"Received" for purposes of this Article 17 shall mean actual delivery of the
notice to the address of the Party specified hereunder or to be thereafter
notified in accordance with this Article 17. Each Party shall have the right to
change its address at any time and/or designate that copies of all such notices
be directed to another person at another address, by giving written notice
thereof to all other Parties.
<TABLE>
<CAPTION>

<S>         <C>    <C>                                                    <C>   <C> <C>
A&T Petroleum Company, Ltd.                                   Hawler Energy, Ltd.
-----------------------------------------------------         -------------------------
Koza Sokak No:43, GOP                                         2500 City West Blvd., Suite 1700
-----------------------------------------------------         --------------------------------------------
06700 Ankara, Turkey                                          Houston, TX 77042, USA
-----------------------------------------------------         ----------------------
Attention: M. Ali AK                                          Attention: W. Richard Anderson
                    ---------------------------------         --------------
Fax:  +90 312 441 6026 / 441 6027                             Fax: +1-713-953 3200
                                 --------------------         ------------------------
Email:  ak@petoil.com.tr                                      Email: randerson@primenri.com
                        -----------------------------         ---------------
Telephone: +90 312 4408482                                    Telephone: +1-713-953 3210
                          ---------------------------         ------------------

Attention:                                                    Attention:
          -------------------------------------------                   ----------------------------------
Fax:                                                          Fax:
    -------------------------------------------------             ----------------------------------------
Email:                                                        Email:
      -----------------------------------------------               --------------------------------------
Telephone:                                                    Telephone:
          -------------------------------------------                   ----------------------------------
</TABLE>

                                   ARTICLE 18
       APPLICABLE LAW - DISPUTE RESOLUTION - WAIVER OF SOVEREIGN IMMUNITY

18.1     Applicable Law

[NOTE: The provisions of this Agreement must be analyzed taking into
consideration the law chosen in this Article 18.1 and any other applicable law.]

         Check one Alternative.

         [X]      ALTERNATIVE NO. 1
                  The substantive laws of England, exclusive of any conflicts of
                  laws principles that could require the application of any
                  other law, shall govern this Agreement for all purposes,
                  including the resolution of all Disputes between or among
                  Parties.

                                       78
<PAGE>

         [  ]     ALTERNATIVE NO. 2
                  The laws of ______________, to the extent consistent with
                  international law, shall govern this Agreement for all
                  purposes, including the resolution of all Disputes between or
                  among Parties. To the extent the laws of ______________ are
                  not consistent with international law, then international law
                  shall prevail.

18.2     Dispute Resolution

         Check Paragraph (A) if Paragraphs 18.2 (B) or (C) are selected.
         Renumber following paragraphs if Paragraph (A) is not selected.

         [X ]     OPTIONAL PROVISION - Notification

                  (A)      Notification. A Party who desires to submit a Dispute
                           for resolution shall commence the dispute resolution
                           process by providing the other parties to the Dispute
                           written notice of the Dispute ("Notice of Dispute").
                           The Notice of Dispute shall identify the parties to
                           the Dispute and contain a brief statement of the
                           nature of the Dispute and the relief requested. The
                           submission of a Notice of Dispute shall toll any
                           applicable statutes of limitation related to the
                           Dispute, pending the conclusion or abandonment of
                           dispute resolution proceedings under this Article 18.

         Check Paragraph (B), if desired. Renumber following paragraphs if
         Paragraph (B) is not selected.

         [X]      OPTIONAL PROVISION - Senior Executive Negotiations

               (B)  Negotiations. The parties to the Dispute shall seek to
                    resolve any Dispute by negotiation between Senior
                    Executives. A "Senior Executive" means any individual who
                    has authority to negotiate the settlement of the Dispute for
                    a Party. Within thirty (30) Days after the date of the
                    receipt by each party to the Dispute of the Notice of
                    Dispute (which notice shall request negotiations among
                    Senior Executives), the Senior Executives representing the
                    parties to the Dispute shall meet at a mutually acceptable
                    time and place to exchange relevant information in an
                    attempt to resolve the Dispute. If a Senior Executive
                    intends to be accompanied at the meeting by an attorney,
                    each other party's Senior Executive shall be given written
                    notice of such intention at least three (3) Days in advance
                    and may also be accompanied at the meeting by an attorney.
                    Notwithstanding the above, any Party may initiate
                    arbitration proceedings pursuant to Article 18.2 (D)
                    concerning such Dispute within thirty (30) Days after the
                    date of receipt of the Notice of Dispute.

         Check Paragraph (C), if desired. Renumber following paragraphs if
         Paragraph (C) is not selected.

         [  ]     OPTIONAL PROVISION - Mediation

               (C)  Mediation. [Subject to the requirements of negotiation
                    between Senior Executives pursuant to Article 18(B)], [t]he
                    parties to the Dispute shall seek to resolve the Dispute by
                    mediation. Within thirty (30) Days after the date of the
                    receipt by each party to the Dispute of the Notice of
                    Dispute [NOTE: Alternative, if paragraph (B) is selected:
                    thirty (30) Days after the date of the first negotiation
                    meeting among Senior Executives pursuant to Article 18(B)],
                    any party to the Dispute may initiate such mediation
                    pursuant to the [_________ mediation rules then in effect,
                    as modified herein] by sending all other parties to the
                    Dispute a written request that the Dispute be mediated. The
                    Parties receiving such written request will promptly respond
                    to the requesting Party so that all parties to the Dispute
                    may jointly select a neutral mediator and schedule the
                    mediation session. The mediator shall meet with the parties
                    to the Dispute to mediate the Dispute within thirty (30)
                    Days after the date of receipt of the written request for
                    mediation. Notwithstanding the above, any Party may initiate
                    arbitration proceedings pursuant to Article 18.2 (D)
                    concerning such Dispute within thirty (30) Days after the
                    date of receipt of the Notice of Dispute [NOTE: Alternative,
                    if paragraph (B) is selected: within sixty (60) Days after
                    the date of receipt of the Notice of Dispute].

               [NOTE: To govern mediation under Article 18.2(C) consider
                    choosing the mediation rules of the institution chosen below
                    for purposes of conducting any arbitration]

                                       79
<PAGE>

         (D)      Arbitration. Any Dispute [not finally resolved by alternative
                  dispute resolution procedures set forth in Article 18.2(B)]
                  shall be exclusively and definitively resolved through final
                  and binding arbitration, it being the intention of the Parties
                  that this is a broad form arbitration agreement designed to
                  encompass all possible disputes.

                  (1)      Rules. The arbitration shall be conducted in
                           accordance with the following arbitration rules (as
                           then in effect) (the "Rules"):

                           Check one Alternative.

                           [X]      ALTERNATIVE NO. 1
                                    Rules of Arbitration of the International
                                    Chamber of Commerce (ICC).

                           [  ]     ALTERNATIVE NO. 2
                                    Arbitration Rules of the London Court of
                                    International Arbitration (LCIA).

                           [  ]     ALTERNATIVE NO. 3
                                    International Arbitration Rules of the
                                    American Arbitration Association (AAA).

                           [  ]     ALTERNATIVE NO. 4
                                    Arbitration Rules of the Singapore
                                    International Arbitration Centre (SIAC).

                           [  ]     ALTERNATIVE NO. 5
                                    Arbitration  Rules of the Institute of the
                                    Stockholm  Chamber of Commerce (SCC
                                    Institute).

                           [  ]     ALTERNATIVE NO. 6
                                    United Nations  Commission of  International
                                    Trade Law (UNCITRAL)  Arbitration
                                    Rules. The appointing authority shall be
                                    [____________ Arbitral Institution].

                           [NOTE: If the Host Government is a Party to this
                           Agreement, consider whether the Rules of Procedure
                           for Arbitration of the International Center for
                           Settlement of Investment Disputes (ICSID) would be
                           appropriate and, if so, whether an alternative
                           arbitral institution should also be selected for
                           disputes for which ICSID may lack
                           jurisdiction.]

                           [NOTE: Verify the consistency of this Article 18.2
                           with the Rules selected.]

         (2)      Number of Arbitrators. The arbitration shall be conducted by
                  three arbitrators, unless all parties to the Dispute agree to
                  a sole arbitrator within thirty (30) Days after the filing of
                  the arbitration. For greater certainty, for purposes of this
                  Article 18.2(D), the filing of the arbitration means the date
                  on which the claimant's request for arbitration is received by
                  the other parties to the Dispute.

         (3)      Method of Appointment of the Arbitrators. If the arbitration
                  is to be conducted by a sole arbitrator, then the arbitrator
                  will be jointly selected by the parties to the Dispute. If the
                  parties to the Dispute fail to agree on the arbitrator within
                  thirty (30) Days after the filing of the arbitration, then the
                  ICC shall appoint the arbitrator.

                                       80
<PAGE>

                  If the arbitration is to be conducted by three arbitrators and
                  there are only two parties to the Dispute, then each party to
                  the Dispute shall appoint one arbitrator within thirty (30)
                  Days of the filing of the arbitration, and the two arbitrators
                  so appointed shall select the presiding arbitrator within
                  thirty (30) Days after the latter of the two arbitrators has
                  been appointed by the parties to the Dispute. If a party to
                  the Dispute fails to appoint its party-appointed arbitrator or
                  if the two party-appointed arbitrators cannot reach an
                  agreement on the presiding arbitrator within the applicable
                  time period, then the ICC shall appoint the remainder of the
                  three arbitrators not yet appointed.

                  If the arbitration is to be conducted by three arbitrators and
                  there are more than two parties to the Dispute, then within
                  thirty (30) Days of the filing of the arbitration, all
                  claimants shall jointly appoint one arbitrator and all
                  respondents shall jointly appoint one arbitrator, and the two
                  arbitrators so appointed shall select the presiding arbitrator
                  within thirty (30) Days after the latter of the two
                  arbitrators has been appointed by the parties to the Dispute.
                  If either all claimants or all respondents fail to make a
                  joint appointment of an arbitrator or if the party-appointed
                  arbitrators cannot reach an agreement on the presiding
                  arbitrator within the applicable time period, then the ICC
                  shall appoint

                  Check one Alternative.

                  [  ]     ALTERNATIVE NO. 1
                           all three arbitrators.

                  [X]      ALTERNATIVE NO. 2
                           the remainder of the three arbitrators not yet
                           appointed.

                  [NOTE: If the laws of France (and possibly other jurisdictions
                  that have not yet addressed the "Dutco" problem) are
                  applicable to the arbitration, Alternative 2 may result in an
                  unenforceable arbitral award.]

                  Check Paragraph (4), if desired. Renumber following paragraphs
                  if Paragraph (4) is not selected.

                  [X] OPTIONAL PROVISION (Paragraph (4))
                           (4)      Consolidation. If the Parties initiate
                                    multiple arbitration proceedings, the
                                    subject matters of which are related by
                                    common questions of law or fact and which
                                    could result in conflicting awards or
                                    obligations, then all such proceedings may
                                    be consolidated into a single arbitral
                                    proceeding.

                  (5)      Place of Arbitration. Unless otherwise agreed by all
                           parties to the Dispute, the place of arbitration
                           shall be London, England.

                  (6)      Language. The arbitration proceedings shall be
                           conducted in the English language and the
                           arbitrator(s) shall be fluent in the English
                           language.

                  (7)      Entry of Judgment. The award of the arbitral tribunal
                           shall be final and binding. Judgment on the award of
                           the arbitral tribunal may be entered and enforced by
                           any court of competent jurisdiction.

                  (8)      Notice. All notices required for any arbitration
                           proceeding shall be deemed properly given if sent in
                           accordance with Article 17.

                  (9)      Qualifications and Conduct of the Arbitrators. All
                           arbitrators shall be and remain at all times wholly
                           impartial, and, once appointed, no arbitrator shall
                           have any ex parte communications with any of the
                           parties to the Dispute concerning the arbitration or
                           the underlying Dispute other than communications
                           directly concerning the selection of the presiding
                           arbitrator, where applicable.

                                       81
<PAGE>

                           Check if desired.

                           [X ]     OPTIONAL PROVISION
                                    Whenever the parties to the Dispute are of
                                    more than one nationality, the single
                                    arbitrator or the presiding arbitrator (as
                                    the case may be) shall not be of the same
                                    nationality as any of the parties or their
                                    ultimate parent entities, unless the parties
                                    to the Dispute otherwise agree.

                  (10)     Interim Measures. [Notwithstanding any requirements
                           for alternative dispute resolution procedures as set
                           forth in Article 18(B)], [a]ny party to the Dispute
                           may apply to a court for interim measures (i) prior
                           to the constitution of the arbitral tribunal (and
                           thereafter as necessary to enforce the arbitral
                           tribunal's rulings); or (ii) in the absence of the
                           jurisdiction of the arbitral tribunal to rule on
                           interim measures in a given jurisdiction. The Parties
                           agree that seeking and obtaining such interim
                           measures shall not waive the right to arbitration.
                           The arbitrators (or in an emergency the presiding
                           arbitrator acting alone in the event one or more of
                           the other arbitrators is unable to be involved in a
                           timely fashion) may grant interim measures including
                           injunctions, attachments and conservation orders in
                           appropriate circumstances, which measures may be
                           immediately enforced by court order. Hearings on
                           requests for interim measures may be held in person,
                           by telephone, by video conference or by other means
                           that permit the parties to the Dispute to present
                           evidence and arguments.

                           Check if desired.

                           [X]      OPTIONAL PROVISION
                                    Without limiting the generality of the
                                    foregoing, any party to the Dispute may have
                                    recourse to and shall be bound by the
                                    Pre-arbitral Referee Procedure of the
                                    International Chamber of Commerce in
                                    accordance with its rules then in effect.

                  (11)     Costs and Attorneys' Fees. The arbitral tribunal is
                           authorized to award costs and attorneys' fees and to
                           allocate them between the parties to the Dispute. The
                           costs of the arbitration proceedings, including
                           attorneys' fees, shall be borne in the manner
                           determined by the arbitral tribunal.

                  (12)     Interest. The award shall include interest, as
                           determined by the arbitral award, from the date of
                           any default or other breach of this Agreement until
                           the arbitral award is paid in full. Interest shall be
                           awarded at the Agreed Interest Rate.

                  (14)     Currency of Award. The arbitral award shall be made
                           and payable in United States dollars, free of any tax
                           or other deduction.

                  (15)     Exemplary Damages. The Parties waive their rights to
                           claim or recover, and the arbitral tribunal shall not
                           award, any punitive, multiple, or other exemplary
                           damages (whether statutory or common law) except to
                           the extent such damages have been awarded to a third
                           party and are subject to allocation between or among
                           the parties to the Dispute.

                  (16)     Waiver of Challenge to Decision or Award. To the
                           extent permitted by law, any right to appeal or
                           challenge any arbitral decision or award, or to
                           oppose enforcement of any such decision or award
                           before a court or any governmental authority, is
                           hereby waived by the Parties except with respect to
                           the limited grounds for modification or
                           non-enforcement provided by any applicable
                           arbitration statute or treaty.

                                       82
<PAGE>

         Check Paragraph (E), if desired.

         [  ]     OPTIONAL PROVISION

               (E)  Confidentiality. All negotiations, mediation, arbitration,
                    and expert determinations relating to a Dispute (including a
                    settlement resulting from negotiation or mediation, an
                    arbitral award, documents exchanged or produced during a
                    mediation or arbitration proceeding, and memorials, briefs
                    or other documents prepared for the arbitration) are
                    confidential and may not be disclosed by the Parties, their
                    employees, officers, directors, counsel, consultants, and
                    expert witnesses, except (in accordance with Article 15.2)
                    to the extent necessary to enforce this Article 18 or any
                    arbitration award, to enforce other rights of a Party, or as
                    required by law; provided, however, that breach of this
                    confidentiality provision shall not void any settlement,
                    expert determination or award.

Check Article 18.3, if any of Article 8.4 - Alternative No. 2, Article
12.2(F) - Alternative No. 2, or Article 12.3(C) - Alternative No. 2 is selected.
Renumber following article if Article 18.3 is not selected.

[   ]    OPTIONAL PROVISION (Article 18.3)

         18.3     Expert Determination

                  For any decision referred to an expert under Articles [8.4,
                  12.2 or 12.3], the Parties hereby agree that such decision
                  shall be conducted expeditiously by an expert selected
                  unanimously by the parties to the Dispute. The expert is not
                  an arbitrator of the Dispute and shall not be deemed to be
                  acting in an arbitral capacity. The Party desiring an expert
                  determination shall give the other parties to the Dispute
                  written notice of the request for such determination. If the
                  parties to the Dispute are unable to agree upon an expert
                  within ten (10) Days after receipt of the notice of request
                  for an expert determination, then, upon the request of any of
                  the parties to the Dispute, the International Centre for
                  Expertise of the International Chamber of Commerce (ICC) shall
                  appoint such expert and shall administer such expert
                  determination through the ICC's Rules for Expertise. The
                  expert, once appointed, shall have no ex parte communications
                  with any of the parties to the Dispute concerning the expert
                  determination or the underlying Dispute. All Parties agree to
                  cooperate fully in the expeditious conduct of such expert
                  determination and to provide the expert with access to all
                  facilities, books, records, documents, information and
                  personnel necessary to make a fully informed decision in an
                  expeditious manner. Before issuing his final decision, the
                  expert shall issue a draft report and allow the parties to the
                  Dispute to comment on it. The expert shall endeavor to resolve
                  the Dispute within thirty (30) Days (but no later than sixty
                  (60) Days) after his appointment, taking into account the
                  circumstances requiring an expeditious resolution of the
                  matter in dispute. The expert's decision shall be final and
                  binding on the parties to the Dispute unless challenged in an
                  arbitration pursuant to Article 18.2(D) within sixty (60) Days
                  of the date the expert's final decision is received by the
                  parties to the Dispute and until replaced by such subsequent
                  arbitral award. In such arbitration (i) the expert
                  determination on the specific matter under Articles [8.4, 12.2
                  or 12.3] shall be entitled to a rebuttable presumption of
                  correctness; and (ii) the expert shall not (without the
                  written consent of the parties to the Dispute) be appointed to
                  act as an arbitrator or as adviser to the parties to the
                  Dispute.

18.4     Waiver of Sovereign Immunity

         [NOTE: Confirm the authority of each Party to waive its sovereign
         immunity under applicable local laws.]

         Any Party that now or hereafter has a right to claim sovereign immunity
         for itself or any of its assets hereby waives any such immunity to the
         fullest extent permitted by the laws of any applicable jurisdiction.
         This waiver includes immunity from (i) any expert determination,
         mediation, or arbitration proceeding commenced pursuant to this
         Agreement; (ii) any judicial, administrative or other proceedings to
         aid the expert determination, mediation, or arbitration commenced
         pursuant to this Agreement; and (iii) any effort to confirm, enforce,
         or execute any decision, settlement, award, judgment, service of
         process, execution order or attachment (including pre-judgment
         attachment) that results from an expert determination, mediation,
         arbitration or any judicial or administrative proceedings commenced
         pursuant to this Agreement. Each Party acknowledges that its rights and
         obligations hereunder are of a commercial and not a governmental
         nature.

                                       83
<PAGE>

                                   ARTICLE 19
                    ALLOCATION OF COST & PROFIT HYDROCARBONS

[NOTE: Article 19 must be analyzed taking into consideration the Contract and
Laws / Regulations.]

Check one Alternative for Articles 19.1 and 19.2.

[X]      ALTERNATIVE NO. 1 (Article 19.1 and Article 19.2) - Allocation by
         Exploitation Area

         19.1     Allocation of Total Production

                  (A)      The total quantity of Hydrocarbons produced and
                           measured at the delivery point (as determined in
                           accordance with Article 9) from each Exploitation
                           Area and to which the Parties are collectively
                           entitled under the Contract shall be composed of Cost
                           Hydrocarbons and Profit Hydrocarbons in accordance
                           with the provisions of the Contract.

                  (B)      Operator shall develop and the Operating Committee
                           shall approve procedures for allocating such Cost
                           Hydrocarbons and Profit Hydrocarbons during each
                           Calendar Quarter among the individual Exploitation
                           Areas based upon the following principles.

                           (1)      Cost Hydrocarbons and Profit Hydrocarbons
                                    shall first be allocated to Exploitation
                                    Areas based on the principle that an earlier
                                    established operation shall not be enhanced
                                    or impaired in any way through the
                                    subsequent establishment of any Exploitation
                                    Area, whether the subsequently established
                                    Exploitation Areas are Exclusive Operations
                                    or Joint Operations.

                           (2)      All allocations made pursuant to this
                                    Article 19 shall incorporate adjustments to
                                    reflect differences in value if different
                                    qualities of Hydrocarbons are produced.

         19.2     Allocation of Hydrocarbons to Parties

               (A)  Cost Hydrocarbons and Profit Hydrocarbons allocated to
                    Exploitation Areas pursuant to Article 19.1 shall be
                    allocated to the Parties in proportion to their
                    Participating Interests in each such Exploitation Area.

               (B)  Notwithstanding anything to the contrary contained in this
                    Article 19, and to the extent allowed under the Contract,
                    Cost Hydrocarbons which are not specifically attributable to
                    an Exploitation Area, if any, shall be allocated to the
                    Parties in proportion to their respective participation in
                    the operations which underlie any such Cost Hydrocarbons,
                    provided, however, that the rights of a Party to Cost
                    Hydrocarbons or Profit Hydrocarbons from an Exploitation
                    Area to which it is a participant shall not be impaired by
                    the rights of any other Party to recover Cost Hydrocarbons
                    which are not specifically attributable to such Exploitation
                    Area.

                                       84
<PAGE>

[  ]     ALTERNATIVE NO. 2 (Article 19.1 and Article 19.2) - Allocation by Type
         of Operation

         19.1     Allocation of Total Production

                  (A)      The total quantity of Hydrocarbons produced and
                           measured at the delivery point (as determined in
                           accordance with Article 9) from each Exploitation
                           Area and to which the Parties are collectively
                           entitled under the Contract shall be composed of Cost
                           Hydrocarbons and Profit Hydrocarbons in accordance
                           with the provisions of the Contract.

                  (B)      Operator shall develop and the Operating Committee
                           shall approve procedures for allocating such Cost
                           Hydrocarbons and Profit Hydrocarbons during each
                           Calendar Quarter among the individual operations
                           based upon the following principles.

                           (1)      Cost Hydrocarbons and Profit Hydrocarbons
                                    shall first be allocated to Joint Operations
                                    based on the principle that Joint Operations
                                    shall not be enhanced or impaired in any way
                                    by the execution of any Exclusive
                                    Operations. Any remaining Cost Hydrocarbons
                                    and Profit Hydrocarbons shall be allocated
                                    to Exclusive Operations based on the
                                    principle that an earlier executed Exclusive
                                    Operation shall not be enhanced or impaired
                                    in any way by the subsequent execution of
                                    another Exclusive Operation.

                           (2)      All allocations made pursuant to this
                                    Article 19 shall incorporate adjustments to
                                    reflect differences in value if different
                                    qualities of Hydrocarbons are produced.

         19.2     Allocation of Hydrocarbons to Parties

                    (A)  Cost Hydrocarbons and Profit Hydrocarbons allocated to
                         Joint Operations or Exclusive Operations pursuant to
                         Article 19.1 shall be allocated to the Parties in
                         proportion to their respective Participating Interests
                         in such operations.

                    (B)  Notwithstanding anything to the contrary contained in
                         this Article 19, and to the extent allowed under the
                         Contract, Cost Hydrocarbons which are not specifically
                         attributable to an operation, if any, shall be
                         allocated to the Parties in proportion to their
                         respective participation in the operations which
                         underlie any such Cost Hydrocarbons, provided, however,
                         that the rights of a Party to Cost Hydrocarbons or
                         Profit Hydrocarbons from an operation to which it is a
                         participant shall not be impaired by the rights of any
                         other Party to recover Cost Hydrocarbons which are not
                         specifically attributable to an operation.

19.3     Use of Estimates

          Initial distribution of Hydrocarbons pursuant to this Article 19 shall
          be based upon estimates furnished by Operator pursuant to Article 9,
          with adjustments for actual figures to be made in kind within
          forty-five (45) Days after the end of the Calendar Quarter and at any
          later date when adjustments must be made with the Government under the
          Contract.

19.4     Principles

         If no allocation procedure is approved by the Operating Committee in
         accordance with Article 19.1, the Parties shall nonetheless be bound by
         the principles set forth in this Article 19 with regard to the
         allocation of Cost Hydrocarbons and Profit Hydrocarbons.

                                       85
<PAGE>

                                   ARTICLE 20
                               GENERAL PROVISIONS

20.1     Conduct of the Parties

          (A)  Each Party warrants that it and its Affiliates have not made,
               offered, or authorized and will not make, offer, or authorize
               with respect to the matters which are the subject of this
               Agreement, any payment, gift, promise or other advantage, whether
               directly or through any other person or entity, to or for the use
               or benefit of any public official (i.e., any person holding a
               legislative, administrative or judicial office, including any
               person employed by or acting on behalf of a public agency, a
               public enterprise or a public international organization) or any
               political party or political party official or candidate for
               office, where such payment, gift, promise or advantage would
               violate (i) the applicable laws of [(host country)]; (ii) the
               laws of the country of incorporation of such Party or such
               Party's ultimate parent company and of the principal place of
               business of such ultimate parent company; or (iii) the principles
               described in the Convention on Combating Bribery of Foreign
               Public Officials in International Business Transactions, signed
               in Paris on December 17, 1997, which entered into force on
               February 15, 1999, and the Convention's Commentaries. Each Party
               shall defend, indemnify and hold the other Parties harmless from
               and against any and all claims, damages, losses, penalties, costs
               and expenses arising from or related to, any breach by such first
               Party of such warranty. Such indemnity obligation shall survive
               termination or expiration of this Agreement. [Each Party shall in
               good time (i) respond in reasonable detail to any notice from any
               other Party reasonably connected with the above-stated warranty;
               and (ii) furnish applicable documentary support for such response
               upon request from such other Party.]

          (B)  Each Party agrees to (i) maintain adequate internal controls;
               (ii) properly record and report all transactions; and (iii)
               comply with the laws applicable to it. Each Party must rely on
               the other Parties' system of internal controls, and on the
               adequacy of full disclosure of the facts, and of financial and
               other data regarding the Joint Operations undertaken under this
               Agreement. No Party is in any way authorized to take any action
               on behalf of another Party that would result in an inadequate or
               inaccurate recording and reporting of assets, liabilities or any
               other transaction, or which would put such Party in violation of
               its obligations under the laws applicable to the operations under
               this Agreement.

20.2     Conflicts of Interest

         (A)      Operator undertakes that it shall avoid any conflict of
                  interest between its own interests (including the interests of
                  Affiliates) and the interests of the other Parties in dealing
                  with suppliers, customers and all other organizations or
                  individuals doing or seeking to do business with the Parties
                  in connection with activities contemplated under this
                  Agreement.

         (B)      The provisions of the preceding paragraph shall not apply to:
                  (1) Operator's performance which is in accordance with the
                  local preference laws or policies of the Government; or (2)
                  Operator's acquisition of products or services from an
                  Affiliate, or the sale thereof to an Affiliate, made in
                  accordance with the terms of this Agreement.

         (C)      Unless otherwise agreed, the Parties and their Affiliates are
                  free to engage or invest (directly or indirectly) in an
                  unlimited number of activities or businesses, any one or more
                  of which may be related to or in competition with the business
                  activities contemplated under this Agreement, without having
                  or incurring any obligation to offer any interest in such
                  business activities to any Party.

20.3     Public Announcements

          (A)  Operator shall be responsible for the preparation and release of
               all public announcements and statements regarding this Agreement
               or the Joint Operations; provided that no public announcement or
               statement shall be issued or made unless, prior to its release,
               all the Parties have been furnished with a copy of such statement
               or announcement and the approval of at least one (1) Party which
               is not an Affiliate of Operator holding fifty percent (50%) or
               more of the Participating Interests not held by Operator or its
               Affiliates has been obtained. Where a public announcement or
               statement becomes necessary or desirable because of danger to or
               loss of life, damage to property or pollution as a result of
               activities arising under this Agreement, Operator is authorized
               to issue and make such announcement or statement without prior
               approval of the Parties, but shall promptly furnish all the
               Parties with a copy of such announcement or statement.

                                       86
<PAGE>

          (B)  If a Party wishes to issue or make any public announcement or
               statement regarding this Agreement or the Joint Operations, it
               shall not do so unless, prior to the release of the public
               announcement or statement, such Party furnishes all the Parties
               with a copy of such announcement or statement, and obtains the
               approval of at least two (2) Parties which are not Affiliates
               holding fifty percent (50%) or more of the Participating
               Interests not held by such announcing Party or its Affiliates;
               provided that, notwithstanding any failure to obtain such
               approval, no Party shall be prohibited from issuing or making any
               such public announcement or statement if it is necessary to do so
               in order to comply with the applicable laws, rules or regulations
               of any government, legal proceedings or stock exchange having
               jurisdiction over such Party or its Affiliates as set forth in
               Article 15.2.

20.4     Successors and Assigns

         Subject to the limitations on Transfer contained in Article 12, this
         Agreement shall inure to the benefit of and be binding upon the
         successors and assigns of the Parties.

20.5     Waiver

         No waiver by any Party of any one or more defaults by another Party in
         the performance of any provision of this Agreement shall operate or be
         construed as a waiver of any future default or defaults by the same
         Party, whether of a like or of a different character. Except as
         expressly provided in this Agreement no Party shall be deemed to have
         waived, released or modified any of its rights under this Agreement
         unless such Party has expressly stated, in writing, that it does waive,
         release or modify such right.

20.6     No Third Party Beneficiaries

         Except as provided under Article 4.6 (B), the interpretation of this
         Agreement shall exclude any rights under legislative provisions
         conferring rights under a contract to persons not a party to that
         contract.

         [NOTE: If English Law is the law chosen, consider whether an express
         reference should be made to the Contracts (Right of Third Parties) Act
         1999.]

20.7     Joint Preparation

         Each provision of this Agreement shall be construed as though all
         Parties participated equally in the drafting of the same. Consequently,
         the Parties acknowledge and agree that any rule of construction that a
         document is to be construed against the drafting party shall not be
         applicable to this Agreement.

20.8     Severance of Invalid Provisions

         If and for so long as any provision of this Agreement shall be deemed
         to be judged invalid for any reason whatsoever, such invalidity shall
         not affect the validity or operation of any other provision of this
         Agreement except only so far as shall be necessary to give effect to
         the construction of such invalidity, and any such invalid provision
         shall be deemed severed from this Agreement without affecting the
         validity of the balance of this Agreement.

                                       87
<PAGE>

20.9     Modifications

         Except as is provided in Articles 11.2(B) and 20.8, there shall be no
         modification of this Agreement or the Contract except by written
         consent of all Parties.

20.10    Interpretation

         (A)      Headings. The topical headings used in this Agreement are for
                  convenience only and shall not be construed as having any
                  substantive significance or as indicating that all of the
                  provisions of this Agreement relating to any topic are to be
                  found in any particular Article.

         (B)      Singular and Plural. Reference to the singular includes a
                  reference to the plural and vice versa.

         (C)      Gender. Reference to any gender includes a reference to all
                  other genders.

         (D)      Article. Unless otherwise provided, reference to any Article
                  or an Exhibit means an Article or Exhibit of this Agreement.

         (E)      Include. "include" and "including" shall mean include or
                  including without limiting the generality of the description
                  preceding such term and are used in an illustrative sense and
                  not a limiting sense.

20.11    Counterpart Execution

         This Agreement may be executed in any number of counterparts and each
         such counterpart shall be deemed an original Agreement for all
         purposes; provided that no Party shall be bound to this Agreement
         unless and until all Parties have executed a counterpart. For purposes
         of assembling all counterparts into one document, Operator is
         authorized to detach the signature page from one or more counterparts
         and, after signature thereof by the respective Party, attach each
         signed signature page to a counterpart.

20.12    Entirety

         With respect to the subject matter contained herein, this Agreement (i)
         is the entire agreement of the Parties; and (ii) supersedes all prior
         understandings and negotiations of the Parties.

                                       88
<PAGE>

         IN WITNESS of their agreement each Party has caused its duly authorized
representative to sign this instrument on the date indicated below such
representative's signature.

                               A&T PETROLEUM COMPANY, LTD.

                               By:
                                  -----------------------------------------

                                  (Print or type name)
                               Title:
                                    ---------------------------------
                               Date:
                                    -------------------------------

                               HAWLER ENERGY, LTD.

                               By:
                                  -----------------------------------------

                                  (Print or type name)
                               Title:
                                    ------------------------------------
                               Date:
                                    -------------------------------------

                                       89Exhibit 10.2

                       Bina Bawi Joint Operating Agreement

                        Novation and Amendment Agreement

                        DATED: 8th day of September 2006

                          A & T Petroleum Company, Ltd.

                               Hawler Energy, Ltd.

                              Hillwood Energy, Ltd.

                                     - and -

                              Calibre Energy, Ltd.

--------------------------------------------------------------------------------

                        NOVATION AND AMENDMENT AGREEMENT

                                 - relating to -

                the Joint Operating Agreement for Bina Bawi EPSA
--------------------------------------------------------------------------------

<PAGE>

                       BINA BAWI JOINT OPERATING AGREEMENT

                        NOVATION AND AMENDMENT AGREEMENT

This Agreement is made and entered into this day of September, 2006 between
and among A & T Petroleum Company, Ltd., a company incorporated and existing
under the laws of the Cayman Islands ("A & T"), Hawler Energy, Ltd., a company
incorporated and existing under the laws of the Cayman Islands ("Hawler"),
Hillwood Energy, Ltd, a company incorporated and existing under the laws of the
Cayman Islands ("Hillwood"), and Calibre Energy, Ltd., a company incorporated
and existing under the laws of ________________ ("Calibre").

A & T, Hawler, Hillwood and Calibre are sometimes herein referred to
collectively as the "Parties" and individually as a "Party".

WITNESSETH:

A.       WHEREAS, A & T and Hawler entered into a Joint Operating Agreement
         dated August __, 2006 (hereinafter referred to as the "JOA"), which
         sets forth the respective rights, interests, obligations and
         liabilities of the parties thereto with regard to the conduct of
         Petroleum Operations in the Bina Bawi Area, pursuant to the Exploration
         and Production Sharing Agreement dated March 29, 2006 (hereinafter
         referred to as the "PSA"), between A & T, Hawler and the Oil and Gas
         Petroleum Establishment of the Kurdistan Regional Government - Iraq
         ("OGE");

B.       WHEREAS, Hawler has transferred and assigned an undivided 10%
         Participating Interest in and under the PSA to Hillwood. OGE approval
         of the assignment of the interest in the PSA is currently pending.

C.       WHEREAS, Hawler has transferred and assigned an undivided 10%
         Participating Interest in and under the PSA to Calibre. OGE approval of
         the assignment of the interest in the PSA is currently pending.

D.       WHEREAS, the assignment of the 10% Participating Interest in and under
         the JOA will be perfected, inter alia, by the execution of this
         Novation and Amendment Agreement.

NOW THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:

1.       Unless specifically defined in this Agreement, terms and expressions
         defined in the JOA shall bear the same meanings herein.

2.       The Parties severally agree that from the date on which the OGE gives
         its final official written approval to the assignment to Hillwood of an
         undivided 10% Participating Interest in and under the PSA to
         (hereinafter referred to as the "Hillwood Effective Date"), Hillwood
         shall become a party to the JOA with a 10% Participating Interest
         (hereinafter referred to as the "Hillwood Assigned Interest") and shall
         be entitled to all the benefits and subject to all the obligations
         under the JOA in respect to such Assigned Interest.

                                  Page 2 of 5
<PAGE>

3.       The Parties severally agree that from the date on which the OGE gives
         its final official written approval to the assignment to Calibre of an
         undivided 10% Participating Interest in and under the PSA to
         (hereinafter referred to as the "Calibre Effective Date"), Calibre
         shall become a party to the JOA with a 10% Participating Interest
         (hereinafter referred to as the "Calibre Assigned Interest") and shall
         be entitled to all the benefits and subject to all the obligations
         under the JOA in respect to such Assigned Interest.

4.       Hillwood hereby undertakes with each other Party, from the Hillwood
         Effective Date to observe, perform, discharge and be bound by all
         liabilities and obligations of Hawler to an undivided 10% Participating
         Interest, whether actual, accrued, contingent, or otherwise, to the
         same extent as if Hillwood had been a party to the JOA in relation to
         the Hillwood Assigned Interest in place of Hawler as to such interest.

5.       Calibre hereby undertakes with each other Party, from the Calibre
         Effective Date to observe, perform, discharge and be bound by all
         liabilities and obligations of Hawler to an undivided 10% Participating
         Interest, whether actual, accrued, contingent, or otherwise, to the
         same extent as if Calibre had been a party to the JOA in relation to
         the Calibre Assigned Interest in place of Hawler as to such interest.

6.       Each of the Parties hereto hereby releases and discharges Hawler from
         the liabilities and obligations assumed by Hillwood pursuant to
         paragraph 4 above and each Party hereto accepts the like liabilities
         and obligations of Hillwood thereof.

7.       Each of the Parties hereto hereby releases and discharges Hawler from
         the liabilities and obligations assumed by Calibre pursuant to
         paragraph 5 above and each Party hereto accepts the like liabilities
         and obligations of Calibre thereof.

8.       From the Hillwood Effective Date and the Calibre Effective Date,
         Article 3.2(A) of the JOA is hereby amended with the replacement of the
         following Participating Interests shares of the Parties, becoming as
         follows:

                  A & T                              50%
                  Hawler                             30%
                  Hillwood                           10%
                  Calibre                            10%

                                  Page 3 of 5
<PAGE>

9. In Article 17 of the JOA the following address for notices is added:

         Hillwood
         13600 Heritage Parkway, Suite 200
         Fort Worth, TX 76177
         Attention:        Mark Rollins
         Office:              817.224.6031
         Fax:                  817.224.6062

         Calibre
         Suite 402
         1155 Dairy Ashford St.
         Houston, Texas  77079-3012
         Attention:        Edward L. Moses
         Office:
         Fax:

10.      This Agreement shall be treated as constituting all approvals,
         confirmations, undertakings and other actions required under the JOA in
         respect of the matters referred to herein.

11.      Subject as expressly provided in this Agreement, all other provisions
         of the JOA shall remain in full force and effect and binding on the
         parties hereto.

12.      This Agreement may be executed in counterparts with the same effect as
         if all parties hereto had executed the same document, provided that no
         party hereto shall be bound to this Agreement unless and until all
         parties hereto have executed a counterpart.

13.      This Agreement is governed by and interpreted in accordance with the
         laws of England, excluding those conflicts of law rules that would
         apply the laws of another jurisdiction.

14.      Parties hereby agree that any dispute, controversy or claim arising out
         of or in relation to this Agreement either before or after Hillwood or
         Calibre becomes a Party to the JOA, shall be settled in accordance with
         the provisions of Article 18 of the JOA. Parties declare that they
         fully know and understand such Article 18 and consider it incorporated
         into this Agreement.

                                  Page 4 of 5
<PAGE>

IN WITNESS WHEREOF, each party has caused its duly authorised representative to
execute this instrument in 4 originals on the day and year first above written
with the intention of being bound thereby.

                                            A & T PETROLEUM COMPANY, LTD.

                                            By:
                                               ---------------------------------
                                                     Name
                                                     Title

                                            HAWLER ENERGY, LTD.

                                            By:
                                               ---------------------------------
                                                     Name
                                                     Title

                                            HILLWOOD ENERGY, LTD.

                                            By:
                                               ---------------------------------
                                                     Name
                                                     Title

                                            CALIBRE ENERGY, LTD.

                                            By:
                                               ---------------------------------
                                                     Name
                                                     Title

                                  Page 5 of 5

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}]]