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Exhibit 10.58    
    

        Confidential material has been redacted and filed separately with the Securities and Exchange Commission.  

                   

                  

                  

                   

                   

                   

 
 

Second Supplementary Agreement    
    
    Relating to    
    
    Contract No 97.22.02    
    
    For the Provision of Production, Storage, Offtake and Transportation Services
  for the Pierce
Field    
    
    between    
    
    Enterprise Oil plc    
    
    And    
    
    Pierce Production Company Limited    

 
 
 

Contents    
    

	Section 1	 	Second Supplementary Agreement relating to Contract No. 97.22.02 for the Provision of Production, Storage, Offtake and Transportation Services for the Pierce Field
	Section 2	 	Attachment 'A' to Second Supplementary Agreement Comprising amended Clauses 1, 2, 9, 11, 12, 14, 47 and Exhibits G & H

2

 

This
Second Supplementary Agreement ("the Agreement") is made this            day of 2003. 

between

        (1)   Enterprise Oil plc, Company No 01682048 having its registered office at 8 York Road, London, SE1 7NA, in its capacity as
Pierce Operator as agent for and on behalf of the Pierce Coventurers ("Enterprise") 

and

        (2)   Pierce Production Company Limited, Company No 3492253, having its registered office at 15 Appold Street, EC2A 2HB London.
("PPC"); 

Enterprise
and PPC hereinafter referred to individually as a "Party" and collectively as the "Parties". 

Whereas:

	(A)
	The
Parties entered into a Settlement Agreement dated 7th September 2001 (the "Settlement Agreement") which recorded the resolution reached between the Parties in
relation to five issues as set out therein which had been the subject of dispute between the Parties relating to Contract No 97.22.02 for Provision of Production, Storage, Offtake and Transportation
Services for the Pierce Field dated 9th September 1997, as amended and novated (the "POSA");

	(B)
	The
Settlement Agreement contained, a Heads of Agreement (the "Heads of Agreement") setting out the principles of a second supplementary agreement to replace the first supplementary
agreement to the POSA of 22nd December 1999 (the "First Supplementary Agreement") to be applicable to any period of time under the POSA during which oil production from the Pierce
Field is maximised by maximising gas production;

	(C)
	This
Agreement sets forth the changes which the Parties have agreed to make to the POSA implementing the terms of the Settlement Agreement in relation to the said five issues and
adopting the agreed principles contained in the Heads of Agreement. 

NOW IT IS HEREBY AGREED AS FOLLOWS:  

1.    Definitions  

Subject
to Clause 2 hereof, in this Agreement, terms and expressions defined in the POSA shall, unless the context otherwise requires, bear the same meanings herein. 

2.    Amendments to POSA  

With
effect from 1st September 2001 (the "Effective Date") notwithstanding the date of signature hereof, the POSA shall be amended by substituting for Clauses 1, 2, 9, 11, 12, 14,
47 and Exhibits G and H of the POSA those versions of said Clauses and Exhibits as set forth in Attachment 'A' hereto. 

3.    Dispute Resolution  

The
"Dispute Resolution" and "Proceedings" provisions of the POSA, Clauses 41 and 42 respectively of the POSA, shall apply to any dispute, difference or claim arising between the Parties concerning
the construction, interpretation or performance of this Agreement. 

4.    Governing Law and Jurisdiction  

The
construction, validity and performance of this Contract shall be governed by and construed in accordance with the laws of England. 

3

 

5.    Entire Agreement  

	(a)
	This
Agreement together with its Attachment constitutes the entirety of the agreement between the Parties relating to the changes to be made to the POSA and any correspondence,
meeting notes, memoranda or other documentation prior to the date of this Agreement shall be disregarded in the interpretation of this Agreement and its Attachment.

	(b)
	For
the avoidance of doubt and without prejudice to the foregoing generality, the Parties acknowledge and agree that this Agreement shall supersede entirely (save for any rights and
obligations accrued prior to the Effective Date) the terms and provisions of the First Supplementary Agreement.

	(c)
	Subject
to (b) above and save as amended hereby, the POSA shall continue in full force and effect. 

IN WITNESS WHEREOF the Parties have caused this Agreement to be executed by their duly authorised signatories the day and year first above written. 

Signed
for and on behalf of 

ENTERPRISE OIL plc  

/s/ TOM BOTTS 

as
Pierce Operator on behalf of the Pierce Co-venturers 

Signed
for and on behalf of 

PIERCE PRODUCTION COMPANY LIMITED

/s/
RUUD ZOON 

4

   Attachment 'A'  

 to Supplementary Agreement  

 relating to  

 Contract No. 97.22.02  

 for the Provision of Production, Storage, Offtake and Transportation Services for the Pierce Field  

 between  

 Enterprise Oil plc  

 and  

 Pierce Production Company Limited  

 Comprising of amended Clauses 1, 2, 9, 11, 12, 14, 47  

 and Exhibits G and H  

5

 

CLAUSE 1    DEFINITIONS  

	
1.1
	For
the purposes of this Contract:— 

        "Affiliate"
means:— 

	(a)
	in
the case of a Party which is a Shell Company; any other Shell Company. "Shell Company" means any of the following;

	(i)
	N.V.
Koninklijke Nederlandsche Petroleum Maatschappij (a Dutch registered company),

	(ii)
	The
"Shell" Transport and Trading Company, p.l.c., (an English registered company); and

	(iii)
	any
company (wherever registered) which at the time in question is directly or indirectly affiliated with either or both of the companies mentioned in (i) or
(ii) above. 

        For
the purpose of this paragraph (a), 

	(1)
	a
company is directly affiliated with another company or companies if the latter is (are) beneficial owner of shares (or their equivalent) controlling more than fifty percent (50%) of
votes exercisable at a general meeting (or its equivalent) of such company;

	(2)
	a
company is indirectly affiliated with a company or companies (the parent or parents) if a series of companies can be specified beginning with the parent(s) and ending with the
particular company, so related that each company or companies except the parent(s) is directly affiliated with one or more companies in the series;

	(b)
	in
the case of a Party which is not a Shell Company,

	(i)
	if
the Party is a subsidiary of another company the Party's ultimate holding company and any subsidiary (other than the Party itself) of the Party's ultimate holding
company; or

	(ii)
	if
the Party is not a subsidiary of another company any subsidiary of the Party 

For
the purposes of this paragraph (b), the expressions "subsidiary" and "holding company" have the meanings ascribed thereto in Section 736 of the Companies Act 1985 as amended by
Section 144 of the Companies Act 1989. 

"Agreed
Daily Capacity" means the FPSO maximum gas production capacity, as determined pursuant to Clause 9.6 on a daily basis, which cannot be less than the Functional Specification, and should
reflect the proven maximum throughput of the gas compression system during full system functionality, unless otherwise agreed between the Parties pursuant to Clause 9.6 or Clause 12. 

"Available
Well Capacity" means production (bbl/d under Oil FHR Regime, MMscf/d under Gas FHR Regime) available at the dynamic riser termination assemblies at the STP Buoy from all wells made
available for production at the maximum rates consistent with the Operator's reservoir management strategy, and with a flaring strategy consistent with meeting flaring consents agreed between the
Operator and the DTI. The Available Well Capacity will be determined pursuant to Clause 9.6 on a daily basis. Produced water shall be excluded from the well capacity estimate. 

"Barrel"
means that quantity of liquid hydrocarbons which, at fifteen (15) degrees Celsius and at a pressure of one (1) bar, occupies the volume of 0.158988 cubic metres; and all
references to "Barrels" shall be construed accordingly. 

"bbl/d"
means Barrels per Day. 

6

 

"Commencement
of Commercial Production" means the successful completion of all of the following: delivery and hook-up of the Pierce Facilities (excluding such other equipment not required
to commence and maintain Production), commissioning and pressure testing of the Pierce Facilities including commencement of gas re-injection into a gas injection well, commencement of
production from a minimum of one well from each subsea site processed through to the FPSO storage tank(s); the production of one hundred thousand (100,000) barrels of Production at rates of at least
ten thousand (10,000) bbl/d with a peak rate equivalent to forty thousand (40,000) bbl/d for at least six (6) continuous hours; achievement of minimum required Turndown (in accordance with the
manufacturer's specifications); receipt of formal acceptance of the Operations Safety Case by the United Kingdom Health & Safety Executive in relation to the Pierce Field; confirmation that all
documentation has been accepted by the relevant certifying authorities as complete and correct and issue by the Pierce Operator of a certificate to the Contractor confirming that all of these criteria
have been met. Commencement of Commercial Production is agreed to be 5th March 1999. 

"Contract"
means this agreement and the Exhibits, each as they may from time to time be amended. 

"Contractor's
Equipment" means the FPSO, topsides and the equipment and facilities described in Exhibit C—Part 2—including the Contractor's stock of spare parts,
all of which shall meet the Functional Specification. 

"Contractor's
Personnel" means the persons engaged in accordance with Clause 6.1 by the Contractor, Sub-contractors or its or their Affiliates in connection with the Services. 

"Contractor's
Representative" means the person or persons appointed as such by the Contractor (and notified in writing to the Pierce Operator) to perform the functions set out in Clause 21 and,
subject to Clause 21.3, shall include any other person or persons notified in writing as an alternate. 

"Counsel's
Opinion" means, in relation to a proposed guarantee of performance, opinion(s) given by independent lawyers of high repute and standing, qualified in the law and practising in the
jurisdiction(s) of the proposed issuer's incorporation and principal place of business to the effect, inter alia, that the guarantee of performance in question is a valid and legally binding
obligation pursuant to the laws of such jurisdiction(s) and the memorandum and articles of association, statutes, by-laws or equivalent of the proposed issuer, and its performance will not
contravene any existing or announced exchange control regulations in such jurisdiction(s); such opinion(s) and lawyers to be acceptable to the Pierce Operator, acting reasonably. 

"Co-venturers
Personnel" means any employee, officer, director or contractor working as a member of staff of any of the Pierce Co-venturers. 

"Day"
means a period of time beginning at 0600 hours on any day and ending at 0600 hours on the next succeeding day and the expression "Daily" shall be construed accordingly". 

"Daily
Rate" means the payment rate set out in Clause 12.4.2. 

"Definition
of Requirements" or "DOR" means the document issued by Britoil plc on 2nd July 1997 in its capacity as operator of the Pierce Pre Development Agreement. 

"Development
Contract" means the Contract No. 97.22.01 of even date herewith and entered into between the Pierce Operator and the Contractor for the design, procurement, construction,
installation, hook-up and commissioning activities therein. 

"Dollars"
or "USD" means the lawful currency of the United States of America. 

7

 

"Exceptional
Upgrade Work Requirements" means work intended to enhance vessel performance which the Contractor and Operator agree cannot be managed within the target indicators pursuant to
Clause 12.6.1. 

"Expert"
means the person appointed as such pursuant to Clause 43. 

"Export"
means export, in accordance with the Functional Specification, of natural gas from the Pierce Field. 

"Extraordinary
Expenditure" means any item of expenditure incurred by the Contractor (or a Guarantor) in relation to a Rectification Event but Extraordinary Expenditure shall not under any
circumstances include expenditure which relates to planned maintenance, repair or renewal of the FPSO or any part thereof, or to ordinary unplanned maintenance, repair or renewal of the FPSO or any
part thereof, or to operating expenditure incurred in the provision of the Services. Any item of Extraordinary Expenditure shall be notified forthwith to the Pierce Operator. 

"Field
Area" means the areas identified as such in Exhibit E. 

"Field
Time" commences when notice of readiness (NOR) is tendered at the loading point. Field Time ends when the loading hose is disconnected upon completion of loading operation, as evidenced by the
statement of the master of the Vessel and agreed by the Operator's Representative on the FPSO. If NOR is tendered and the loading operation at the Pierce Field is delayed due to adverse weather
conditions, failure or underperformance of the Vessel or its equipment or crew, or the Vessel remains at the Pierce Field for the sole purpose of loading additional Pierce crude oil which at that time
is not yet produced (excluding delays attributable to the Pierce Equipment or to the Pierce Field), the time of such delay as evidenced by the Vessel's master's statement and agreed by the Operator's
Charterer's Representative on the FPSO, shall not count as Field Time. 

"Force
Majeure" has the meaning attributed to it in Clause 34. 

"FPSO"
means m.v. "Haewene Brim" being a floating production and oil storage vessel, all as more particularly described in the Functional Specification and referred to at Exhibit C. 

"Functional
Specification" means the functional specification attached at Exhibit A as may be amended from time to time in accordance with the provisions of Clauses 1.8 and 9.7. 

"Gas
FHR Regime" means any period of time under this contract during which oil production from the field is maximised by maximising gas production. 

"Gas
Production Efficiency" means the actual average gas production divided by the Target Gas Rate. This is expressed as a percentage, and is calculated for each day and averaged for each month. This
value cannot be greater than 100%. 

"Guarantor"
means any guarantor required pursuant to Clause 25. 

"Information"
has the meaning given to it in Clause 33. 

"Injection"
means injection, in accordance with the Functional Specification, of natural gas, produced water or seawater into the Pierce Field from the FPSO. 

"Month"
means a calendar month commencing on the first day of a calendar month. 

"Moving-in-time"
means: 

	1)
	At
the Pierce FPSO:

	1.1)
	If
the vessel is instructed by the Pierce FPSO OIM to move in directly upon arrival: Time from vessel tendering NOR until completion of mooring (excluding connection of hoses). 

8

 

	1.2)
	If,
after tendering NOR, the vessel is instructed by the OIM to wait before moving in: time from vessel being instructed by the OIM to move in until completion of mooring (excluding
connection of hoses).

	2)
	At
the discharge port:

	2.1)
	If
the vessel does not anchor: time from pilot (or first pilot, if more than one) on board until completion of mooring (excluding connection of hoses).

	2.2)
	If
the vessel anchors; time from anchor aweigh until completion of mooring (excluding connection of hoses). 

"Oil
FHR Regime" means any period of time under this contract during which Gas FHR Regime is not applicable. 

"Operating
Report" has the meaning given to it in Clause 32. 

"Operations
Budget" means the budget provided by the Contractor with the Operations Programme all as more particularly referred to in Clause 5.2. 

"Operations
Programme" means the anticipated annual work programme to be conducted by the Contractor all as more particularly referred to in Clause 5.2 and at Exhibit D. 

"Operator's
Representative" shall mean the person or persons appointed as such by the Pierce Operator (and notified in writing to the Contractor) to perform the functions set out in Clause 21
and, subject to Clause 21.2, shall include any other person or persons notified in writing as an alternate. 

"Party"
means any party which is from time to time a signatory to this Contract in its capacity as specified herein, its successors and permitted assigns in such capacity; and the expression "Parties"
shall be construed accordingly. 

"P&I
Club" means a mutual association providing Protection and Indemnity Insurance for marine vessels. 

"Performance
Incentive" means the incentive provided for under Clause 14.2(ii)(b). 

"Pierce
Co-venturers" means each of: 

MOC
EXPLORATION (U.K.) LIMITED, whose principal office is at 2-4 Toranomon 1-Chome, Minato-ku, Tokyo 105, Japan and whose branch office in the United Kingdom is at
38 Finsbury Square, London EC2A 1PX; 

AGIP
(U.K.) LIMITED, whose registered office is at Ebury Bridge House, 10 Ebury Bridge Road, London SW1W 8PZ; 

ENTERPRISE
OIL plc ("Enterprise"), whose registered office is 8 York Road, London SE1 7NA 

ENTERPRISE
OIL EXPLORATION LIMITED, whose registered office is 8 York Road, London SE1 7NA and 

in
their capacity as parties with a beneficial interest in the Pierce Field, and their respective successors and permitted assigns in such capacity. 

"Pierce
Equipment" means the equipment owned by the Pierce Co-venturers listed and/or described at Exhibit B. 

"Pierce
Facilities" are as described at Exhibit A and means all the Contractor's Equipment and all the Pierce Equipment. 

9

 

"Pierce
Field" means the hydrocarbon accumulations known generally as North Pierce and South Pierce which underlie blocks 23/22a and 23/27, to the extent that they lie within the Field Area. 

"Pierce
Operator" means Enterprise Oil plc acting in its capacity as operator of the Pierce Field as agent on behalf of the Pierce Co-venturers, and its successors and permitted assigns in
such capacity. 

"Pierce
FPSO Offshore Installation Manager" or "OIM" means Offshore Installation Manager of the FPSO. 

"Port
Time" commences when the Vessel tenders notice of readiness (NOR) at the first discharge port. Port Time ends at the time of dropping the outbound pilot at the last discharge port. If NOR is
tendered and discharge is delayed due to failure or underperformance of the Vessel, its equipment or crew, or Owners using their allowance in accordance with Clause 13 of the TPFA, the time of
such delay, as evidenced by the Vessel's master's statement, shall not count as Port Time. 

"Pounds"
or "GBP" means the lawful currency of the United Kingdom. 

"Production"
means production, in accordance with the Functional Specification, of stabilised crude oil and/or natural gas from the Pierce Field achieved by utilising the Pierce Facilities. 

"Production
Schedule" has the meaning given to it in Clause 9.1. 

"Rate
Commencement Date" has the meaning given to it in Clause 12.2.1. 

"Reasonable
and Prudent Operator" means in relation to either Party, a person seeking in good faith to perform its contractual obligations and, in so doing and in the general conduct of its
undertaking, exercising that degree of skill, diligence, prudence and foresight which would reasonably and ordinarily be expected from a skilled and experienced operator engaged in the same type of
undertaking in the United Kingdom Continental Shelf and in similar circumstances or conditions who is complying with all relevant laws and regulations; and the expression "Standard of a Reasonable and
Prudent Operator" shall be construed accordingly. 

"Rectification
Event" means, in relation to the FPSO, an event occurring after Commencement of Commercial Production which could not reasonably have been anticipated by the Contractor at the date of
entering into this Contract and which has arisen notwithstanding the due performance by the Contractor of the Contractor's material obligations under this Contract and which requires the Contractor
(or a Guarantor) to incur Extraordinary Expenditure to ensure the due performance of the Contractor's obligations under this Contract, including the ability to achieve the Functional Specification. 

"Secretary
of State" means the Secretary of State for Trade and Industry or her successor in office or any other person for the time being responsible for carrying out the function at present carried
out by her in relation to the Pierce Field. 

"Services"
means those services referred to in Clause 5. 

"Sub-contractors"
means those persons or companies engaged by the Contractor in connection with the Services and in accordance with Clause 26. 

"Subsea
Production System" means and shall include the christmas trees, manifolds, flowlines, jumpers, risers and umbilicals which in their entirety form the subsea equipment required for the Pierce
Field and are more fully described in Exhibit A. 

10

 

"Surplus
Production Downtime Credit" means, pursuant to Clause 12.6, monthly production performance above the threshold qualifying for FHR (85%) and below threshold utilised for any monthly
incentive payments (92%) calculated in percentage times number of days in month and expressed in terms of days. 

"Target
Gas Rate" means the lesser of the Available Well Capacity and the Agreed Daily Capacity, unless otherwise agreed between the Parties pursuant to Clauses 9.6 and 12. 

"Target
Date of Commencement of Commercial Production" or "TDCCP" means 20th August 1998 or such other date as may be agreed in writing between the Contractor and the Pierce
Operator or as adjusted or varied pursuant to the Development Contract. 

"TPFA"
means the agreement between Enterprise Oil plc and Den norske stats oljeselskap a.s., entitled Tankers for Pierce Field, of even date herewith, for the transportation of Pierce crude oil. 

"Total
Loss" means an actual or constructive total loss of the FPSO. An actual total loss of the FPSO shall be deemed to have occurred on the actual date and time the FPSO was lost but in the event of
the date of the loss being unknown then the actual loss shall be deemed to have occurred on the date when there were last communications to or from the FPSO. A constructive total loss shall be deemed
to have occurred at the date and time notice of abandonment of the FPSO is given to the insurers of the FPSO provided a claim for total loss is admitted by the insurers or if the insurers do not admit
such a claim, at the date and time at which a total loss is subsequently adjudged by a competent court of law to have occurred. 

"Turndown"
means the percentage of change in capacity (referred to rated capacity) between the rated capacity and the surge point capacity at the rated head when the unit is operating at rated suction
temperature and gas composition (reference paragraph 1.4.22 of API 617, 6th Edition, dated February 1995). 

"Vessel"
means the shuttle-tanker that transports the Pierce crude oil as per the TPFA. 

"Windfall"
means that element of production incentive provided for in Clause 14.2(ii)(a). 

"Working
Day" means any day (other than a Saturday or Sunday) on which banks in the City of London and Oslo are open for all normal business. 

"Year"
means a calendar year from 1st January to 31st December inclusive. 

	1.2
	Headings
of Clauses and sections shall be disregarded in the interpretation of this Contract.

	1.3
	References
in this Contract to Clauses shall be to clauses of the main body of this Contract. References to Sections are to sections of the relevant Exhibit.

	1.4
	In
this Contract, unless the context otherwise requires, reference to the singular shall include a reference to the plural and vice versa and reference to any gender shall include a
reference to all genders.

	1.5
	The
several documents forming this Contract are to be taken as mutually explanatory of one another, but in the event of any inconsistency between the main body of this Contract and
any Exhibit the provisions of the former shall prevail.

	1.6
	The
ruling language of the Contract shall be the English language and all Services performed hereunder and the results there from shall be expressed in the English language.

	1.7
	In
the event of any conflict as between the terms of this Contract and the Development Contract, the terms of the latter shall prevail in the period up to the issue of the Completion
Certificate (as defined in the Development Contract), and thereafter the terms of this Contract shall prevail.

	1.8
	This
Contract may only be amended by an agreement in writing signed by all the Parties. 

11

 
	1.9
	Except
in the definition of Affiliate, any reference to any statute or statutory instrument in this Contract shall be a reference to the same as amended, supplemented, consolidated or
re-enacted from time to time and shall include any orders, regulations, instruments and other subordinate legislation made under the relevant statute. 

CLAUSE 2    DURATION  

	2.1
	Second
paragraph to read 

For
the avoidance of doubt in accordance with the provisions of clause 4.1 and subject always to the provisions of Clause 3, the minimum duration of this contract, including notice
periods, is to be five (5) years from Commencement of Commercial Production. 

CLAUSE 9    PRODUCTION  

	9.1
	The
Pierce Operator shall, in advance on a monthly basis, provide the Contractor with a production schedule, set taking into account the greater of the production capacity of the FPSO
as per the Functional Specification or the actual production capacity of the FPSO, stating required daily Production or Injection rates for each well and Production, Injection or Export rates for the
Pierce Field for each day of the following month (hereinafter referred to as the "Production Schedule").

	9.2
	The
Contractor performing to the Standard of a Reasonable and Prudent Operator shall use all reasonable endeavours to achieve Production, Injection and/or Export in accordance with
the Production Schedule. Consistent and substantial failure by the Contractor to meet the average monthly Production, Injection and/or Export rates, and/or consistent and substantial Production,
Injection and/or Export in excess of the said daily production rates contained in the Production Schedule contrary to the Pierce Operator's instructions, and/or consistent and substantial failure to
use reasonable endeavours to produce, inject and/or export at any rate requested pursuant to Clause 9.3 shall constitute a material default under this Contract, where any such failure arises as
a result of the action or inaction of the Contractor and/or its Sub-contractors and is not attributable to the failure of the Pierce Equipment, failure of the Pierce Field reservoir or
Force Majeure.

	9.3
	Subject
always to Clauses 9.4 and 21.4, the Pierce Operator shall have the right, on giving notice to the Contractor's Representative, to require the Contractor to reduce or increase
Production, Injection and/or Export from those rates stated in the Production Schedule issued pursuant to Clause 9.1 to such greater or lesser rate as shall be stated in the notice, and the
Contractor, performing to the Standard of a Reasonable and Prudent Operator, shall use all reasonable endeavours to comply with such instruction subject to operational constraints.

	9.4
	Notwithstanding
any other provision of this Clause 9, the Contractor shall at all times pay the highest regard to the safety of its operations and nothing in this
Clause 9 shall be construed so as to require the Contractor to maintain Production at rates which prejudice safety.

	9.5
	At
the request of the Pierce Operator the Parties undertake to discuss in good faith and agree procedures for the nomination of volumes of gas to be exported or
re-injected into the Pierce Field on a daily basis in accordance with the provisions of the gas sales and transportation arrangements to be entered into by the Pierce
Co-venturers. 

12

 
	9.6
	It
is agreed that from 1st September 2001, Gas FHR Regime applies. On a daily basis the FPSO OIM and the Operator's Representative will agree the Agreed Daily
Capacity and the Available Well Capacity. The lesser of these two (the "Target Gas Rate") will be included in the FPSO Daily Report. The Target Gas Rate supercedes any values of well rates set in the
monthly Production Schedule. If the Operator considers that the Gas FHR Regime should cease to apply (for example if oil production ceases to be constrained by gas handling capacity and becomes
constrained by oil processing capacity), he shall advise the Contractor to this effect, and the Parties shall meet to negotiate and agree in good faith the required modifications to the Target Gas
Rate, Gas Production Efficiency, Agreed Daily Capacity and any other parameters for the new regime.

	9.7
	If
the Pierce Co-venturers have wholly funded modifications to the Contractor's Equipment, to increase the Agreed Daily Capacity, then the Functional Specification shall
be amended to reflect the increase in gas compression capacity resulting from such modifications. If the Pierce Co-venturers have partially funded such modifications, then the Parties
shall meet to discuss in good faith how to amend the Functional Specification so that it reflects the increase in gas compression capacity in proportion to Pierce Co-venturers funding.

	9.8
	Flaring
rates are a function of the following parameters:

	(i)
	Flare
used versus remaining consents

	(ii)
	DTI
concerns

	(iii)
	Well
configurations

	(iv)
	Length
of predicted outage 

The
Pierce Operator is responsible for agreeing, with the regulatory authorities, flare consent for the field, and also for negotiating short-term flaring rates during periods of unplanned
Contractor Downtime. The Pierce Operator will attempt to negotiate rates that allow reasonable level of production to continue during such periods. The Parties will meet from time to time to discuss
and agree flaring rates during periods of equipment unavailability for which the Pierce Operator will be able to obtain the consent of the regulatory authorities. Rates for which consent can be
reasonably assumed are currently not less than: 

	Period of Gas Compression

System Shutdown
	 	Flaring Rate

	0-12 hours	 	30 MMscf/d
	12-24 hours	 	15 MMscf/d
	beyond 24 hours	 	8 MMscf/d

Such
rates to be to be reduced if no longer considered acceptable by the regulatory authorities. 

13

 
	9.9
	The
Contractor agrees to use best endeavours to ensure accurate metering during Gas FHR Regime. In order to ensure the reliability of gas rate measurements, a gas metering system
integrity audit has been performed to identify equipment anomalies and has determined the acceptable equipment accuracy figure / tolerance band for future use to be plus or minus four percent (4%) of
true value. Any system anomalies found during the integrity audit, or additional metering equipment identified as being necessary to achieve the agreed figure, will be identified in the final report
and will be addressed and implemented in good time. The final report will specify expected metering accuracies following the recommended upgrades and reconfiguration. Thereafter, an annual system
audit will be performed by an independent third party, at the Contractor's cost, to ensure accuracy levels are maintained. The scope of this audit will be outlined in auditor's report as part of the
initial system integrity audit. Additionally the frequency of audit will be annually, or as agreed between the Parties. Any offset or bias found as a result of any subsequent routine audit will be
quantified and corrected by suitable adjustment of meter factors, or by maintenance to metering equipment. Any such corrections to meter factors to be applied until superceded by subsequent audit
findings. Any maintenance recommended by the third party performing the audit will be implemented by the Contractor at the Contractor's expense, and will be treated as ordinary maintenance to the
Contractor equipment, and will be carried out on-line, or scheduled with regular planned shutdowns so as not to cause production loss. Failure to conduct an audit within the required time,
or failure to implement agreed recommendations of an audit report within 3 months of date of an audit, will be cause to suspend payment of the Performance Incentive until audit and/or agreed
recommendations have been implemented. 

CLAUSE 11    TRANSPORTATION  

	11.1
	The
Pierce Operator has contracted Navion ASA for the provision of dedicated shuttle tankers for the off-take, transportation and discharge of Production from the FPSO at
such ports as may be directed by the Pierce Operator all in accordance with the provisions of the TPFA which sets out the detailed arrangements for transportation of oil produced from the Pierce
Field. In the event of the Pierce operator replacing the TPFA, the terms of clause 11 shall apply mutatis mutandis to replacement arrangements for the off-take, transportation and
discharge of Production from the FPSO.

	11.2
	Under
the terms of the TPFA, the Pierce Operator may become liable for certain amounts to the operator of the shuttle tankers including but not limited to payments when said tankers
are delayed at the Pierce Field or obliged to transport less than the nominated quantity. Where such payment is not a direct consequence of the failure of Pierce Equipment, the Pierce Field reservoir,
instructions of the Pierce Operator to the operator of the shuttle tanker to load less than the Cargo specified in Clause 13 of the TPFA or instructions of the Pierce Operator pursuant to
Clause 9.3, the Pierce Operator shall recover the full amount of such payment from the Contractor in accordance with Clause 13.3. In relation to demurrage charges, on a cargo by cargo
basis, within seventy-two (72) hours of allowable laytime, demurrage charges will be passed to the Contractor after Field Time, less half the "Moving-in time", exceeds
thirty-six (36) hours and that no charge will be made to the Contractor for any Port Time exceeding thirty-six (36) hours. Where the Pierce Operator nominates a
3 day date range to the offtake tanker provider which commences earlier than the load date nominated by the Contractor consistent with production to tank tops, the Pierce Operator will not hold
the Contractor liable for time penalties attributable to Field Time in advance of 1200hrs on the load date nominated by the Contractor, or for incremental dead freight charges directly attributable to
such earlier nomination date. 

CLAUSE 12    RATES  

	12.1
	General

In
consideration of the full and satisfactory performance of the Services the Pierce Operator shall, with effect from the Rate Commencement Date pay the Contractor in accordance with the provisions
set out in this Clause 12. 

14

 
	12.2
	Rate Commencement

	 	12.2.1	 	The relevant rate payable hereunder shall be payable from the day (herein referred to as the "Rate Commencement Date") on which Commencement of Commercial Production occurs, provided that if Commencement of Commercial
Production can not be achieved or is delayed:

	a)
	due
to the failure of the Pierce reservoir to perform as expected or failure of the Pierce wells or wellheads, provided that all components of the Pierce Facilities, other than those
not required to commence and continue Production, have been delivered to the Pierce Field area and are installed, hooked up, commissioned and tested and are ready for production, as far as is
practicable, and the Pierce Operator has taken such steps as it considers necessary to establish that the failure to achieve Commencement of Commercial Production is attributable to a failure of the
Pierce reservoir or wells or wellheads, then the Rate Commencement Date shall be the date upon which Commencement of Commercial Production would have been achieved but for such failure; or

	b)
	due
to any action or inaction (including in relation to the drilling of wells) on the part of the Pierce Operator which prevents Commencement of Commercial Production, then the Rate
Commencement Date shall be that date which would have been the date upon which Commencement of Commercial Production would have been achieved but for such action or inaction. 

PROVIDED
ALWAYS that the Rate Commencement Date shall not be before the TDCCP unless agreed by both Parties. 

	12.3
	Full Hire Rate (FHR)

	 	12.3.1	 	FHR shall apply from the Rate Commencement Date until the date seven (7) days after the demobilisation of the FPSO from the Field Area except:

	(i)
	as
set out in Clause 3.9.2 (in which circumstances no rate shall be payable); or

	(ii)
	in
the event of a shutdown or Production for reclassification of the FPSO after the fifth anniversary of the Commencement of Commercial Production, for any period of
such shutdown in excess of twenty one (21) days (in which circumstances no rate shall be payable); or

	(iii)
	where
the Daily Rate is payable, as set out in Clause 12.4; or

	(iv)
	where
the Force Majeure Rate is payable as set out in Clause 12.5. 

	 	12.3.2	 	The FHR shall apply and payment shall be Operating Costs (as set out in Exhibit H) plus Hire Rate (as set out in Exhibit H) under the following circumstances:

	(a)
	when
the average rate of Production:

	(i)
	exceeds
twenty thousand (20,000) barrels of oil a day in the first thirty (30) days after Commencement of Commercial Production; or

	(ii)
	exceeds
thirty five thousand (35,000) barrels of oil a day in the second thirty (30) days after Commencement of Commercial Production; or

	(iii)
	exceeds
forty thousand (40,000) barrels of oil a day in the third thirty (30) days after Commencement of Commercial Production; or

	(b)
	in
Gas FHR Regime, in the event that all relevant Contractor's Equipment is fully operational and capable of meeting 

15

  

	(i)
	actual
gas production such that Gas Production Efficiency meets, as a minimum, 85% or

	(ii)
	actual
gas production meeting, as a minimum (100/110)% of the Functional Specification. 

In
setting the above thresholds, the Parties agree that shutdowns for any reason other than Exceptional Upgrade Works Requirements will be managed within the target indicators detailed in 12.3.2,
(b) (i) and (ii); or 

	c)
	in
the event of a Production shutdown or period of reduced production requested or caused by the Contractor including any shutdown required for ordinary maintenance or repair (but
excluding the shutdown for reclassification of the FPSO) referred to in Clause 12.3.2 (d), to the extent that there is sufficient available unutilised Surplus Production Downtime Credit
pursuant to Clause 12.6 to offset any shortfall in meeting the conditions set in 12.3.2(b); or

	d)
	in
the event of a shutdown of Production for reclassification of the FPSO after the fifth anniversary of the Commencement of Commercial Production (5th March 1999)
but subject to a maximum duration of twenty one (21) days. 

	Example #1	 	(i)	 	(ii)	 	(iii)
	Compression availability on each day of month (MMscf/d)	 	115	 	80	 	115
	Functional Specification (MMscf/d)	 	110	 	110	 	110
	Agreed Daily Capacity (MMscf/d)	 	115	 	115	 	115
	Available Well Capacity (MMscf/d)	 	120	 	120	 	60
	Target Gas Rate (MMscf/d)	 	115	 	115	 	60
	Test (i) 85% of Target Gas Rate	 	97.8	 	97.8	 	51.0
	Test (ii) 91% of Functional Specification	 	100.0	 	100.0	 	100.0
	Monthly Avg. Gas Rate to earn FHR (MMscf/d)	 	97.8	 	97.8	 	51.0
	

Example with Upgrade by PPC #2	
 	

(iv)	
 	

(iv)	
 	

(iv)
	Compression availability on each day of Month (MMscf/d)	 	125	 	80	 	125
	Functional Specification (MMscf/d)	 	110	 	110	 	110
	Agreed Daily Capacity (MMscf/d)	 	125	 	125	 	125
	Available Well Capacity (MMscf/d)	 	130	 	130	 	60
	Target Gas Rate (MMscf/d)	 	125	 	125	 	60
	Test (i) 85% of Target Gas Rate	 	106.3	 	106.3	 	51.0
	Test (ii) 91% of Functional Specification	 	100.0	 	100.0	 	100.0
	Monthly Avg. Gas Rate to earn FHR (MMscf/d)	 	100.0	 	100.0	 	51.0
	

Example with Upgrade (from Ex#1) by Pierce Partners #3	
 	

(v)	
 	

(v)	
 	

(v)
	Compression availability on each day of Month (MMscf/d)	 	125	 	80	 	125
	Functional Specification (MMscf/d)	 	120	 	120	 	120
	Agreed Daily Capacity (MMscf/d)	 	125	 	125	 	125
	Available Well Capacity (MMscf/d)	 	130	 	130	 	70
	Target Gas Rate (MMscf/d)	 	125	 	125	 	70
	Test (i) 85% of Target Gas Rate	 	106.3	 	106.3	 	59.5
	Test (ii) 91% of Functional Specification	 	109.1	 	109.1	 	109.1
	Monthly Avg. Gas Rate to earn FHR (MMscf/d)	 	106.3	 	106.3	 	59.5

	(i)
	FPSO
gas compression availability on the day is equal to the Agreed Daily Capacity of 115 MMscf/d, and there is excess well capacity, so Target Gas Rate is 115 MMscf/d.
Actual production meeting or exceeding 85% of the Target Gas Rate will earn FHR; 

16

 

	(ii)
	Compression
availability on each day of the month is 80 MMscf/d. Proven maximum throughput is still 115 MMscf/d, so Agreed Daily Capacity remains at 115 MMscf/d and
Target Gas Rate also remains at 115 MMscf/d.;

	(iii)
	Example
of how failures of Pierce Equipment affects contractual payments. Because failures of Pierce Equipment reduce Available Well Capacity from 120 to 60 MMscf/d,
the Target Gas Rate is reduced from 115 (in example (i)) to 60 MMscf/d; example (iii) also illustrates how Target Gas Rate would be reduced to equal the Available Well Capacity in event of well
testing or because field production has declined;

	(iv)
	Gas
compression upgrade (of incremental 10 MMscf/d) funded by Contractor;

	(v)
	Gas
compression upgrade (of incremental 10 MMscf/d) funded by Pierce Co-venturers. 

	 	12.3.3	 	In all other circumstances where the FHR is applicable pursuant to Clause 12.3.1, but in the event that the Contractor's Equipment is not capable of meeting the conditions set out in Clause 12.3.2(b) or
12.3.2(c):
	

 	

 	
 	

The FHR shall apply, but payment shall be Operating Costs (as set out in Exhibit H) plus a proportion of Hire Rate (as set out in Exhibit H). The proportion of Hire Rate payable will be Gas Production Efficiency divided by 85%, having a
maximum value of 100% of Hire Rate, and allowing for the use of Surplus Production Downtime Credit according to Clause 12.6.

17

 

Example
calculations are shown below:— 

	Functional Specification (MMscf/d)	 	110	 	110	 	110	 	110	 
	Agreed Daily Capacity (MMscf/d)	 	115	 	115	 	115	 	115	 
	Available Well Capacity (MMscf/d)	 	120	 	120	 	60	 	70	 
	Target Gas Rate (MMscf/d)	 	115	 	115	 	60	 	70	 
	Gas Rate required to earn FHR (MMscf/d)	 	97.75

(85% of TGR	
)	97.75

(85% of TGR	
)	51.0

(85% of TGR	
)	59.5

(85% of TGR	
)
	Gas Rate required to earn FHR (30 day month) (MMscf)	 	2933	 	2933	 	1530	 	1785	 
	Actual Production (MMscf/d)	 	50	 	50	 	50	 	50	 
	Actual Production (30 day month) (MMscf)	 	1500	 	1500	 	1500	 	1500	 
	Percentage Efficiency	 	43.5	%	43.5	%	83.3	%	71.4	%
	FHR Shortfall	 	41.5	%	41.5	%	1.7	%	13.6	%
	If Surplus Production Downtime Credit available at start of month was	 	14	 	5	(i)	1	 	1	(ii)
	Percentage of Hire Rate earned after offset	 	100	%	70.79	%%	100	%	87.96	%
	Surplus Production Downtime Credit to carry forward (days)	 	1.55	 	0	 	0.5	 	0	 

	 	 	 	 	 

18

 

	(i)	 	Production threshold is 85% of Target Gas Rate	 	85%x115x30=2933
	 	 	Actual monthly production	 	1500 (=43.5% of TGR)
	 	 	FHR shortfall	 	85%-43.5% = 41.5% of TGR
	 	 	 	 	41.5% of TGR × 30 days in month = 12.45 days
	

 	
 	

Allowing for use of Surplus Production Downtime Credit	
 	

12.45-5 = 7.45 days shortfall
	 	 	 	 	7.45/30 = 24.83%
	

 	
 	

Then Hire Rate Payment for month	
 	

HR × (85%-24.83%)/85% = HR × 70.79%
	

(ii)	
 	

Production threshold is 85% of Target Gas Rate	
 	

85%×70×30=1785
	 	 	Actual monthly production	 	1500 (=71.4% of TGR)
	 	 	FHR shortfall	 	85%-71.4% = 13.6% of TGR
	 	 	 	 	13.6% of TGR × 30 days in month = 4.07 days
	

 	
 	

Allowing for use of Surplus Production Downtime Credit	
 	

4.07-1 = 3.07 days shortfall
	 	 	 	 	3.07/30 = 10.24%
	

 	
 	

Then Hire Rate Payment for month	
 	

HR × (85%-10.24%)/85% = HR × 87.96%

	12.4
	Daily Rate

	 	12.4.1	 	The Daily Rate shall apply in the following circumstances:

	a)
	for
the duration of any Production shutdown requested or caused by the Contractor, other than as provided for in Clause 12.3.2 (c), where the Contractor's Surplus Production
Downtime Credit has been utilised pursuant to Clause 12.6.2; and

	b)
	where
the Contractor is in default or breach of its obligations hereunder in such a way as to affect Production materially or affect the safety of personnel or equipment, from the date
when the Pierce Operator has issued a notice to such effect until such time as the default or breach has been remedied to the reasonable satisfaction of the Pierce Operator or this Contract has been
terminated; and

	c)
	for
the duration of any period when the Services (or any part thereof) have been stopped or suspended on the instructions of the Operator's Representative pursuant to
Clause 21.4 other than instructions related to the performance of the Pierce Equipment; and

	d)
	for
the duration of any period of production shutdown arising out of the non-availability of a shuttle tanker. 

	 	12.4.2	 	The Daily Rate payable under this Clause 12.4 shall be as follows:

	(a)
	for
a maximum of four hundred and thirty two (432) hours in a Year the Operating Costs as set out in Exhibit H, subject to indexation pursuant to Exhibit H; and

	(b)
	for
the four hundred and thirty third (433rd) hour and each subsequent hour zero.

	12.5
	Force Majeure Rate

19

 

Force
Majeure Rate shall apply during any period ("Force Majeure Period") when Production operations are delayed or suspended as a result of Force Majeure affecting any Party. The applicable Force
Majeure Rate shall be calculated as follows: 

	a)
	for
the first thirty (30) days of each separate Force Majeure Period the Force Majeure Rate shall be equal to the FHR payable pursuant to Clause 12.3.2; and

	b)
	for
each subsequent day of each separate Force Majeure Period the Force Majeure Rate shall be equal to ninety percent (90%) of the Hire Rate as set out in Exhibit H, subject to
indexation pursuant to Exhibit H.

	12.6
	Surplus Production Downtime Credit

	 	12.6.1	 	With effect from 1st September 2001, the Contractor shall be entitled to earn Surplus Production Downtime Credit provided that no Surplus Production Downtime Credit shall accrue during any Force Majeure
Period, failures of Pierce Equipment, suspensions of operations at the Pierce Operator's request and shutdowns for reclassification of the FPSO.
	

 	

 	
 	

The gas produced on any day shall count first towards meeting the FHR threshold; gas produced in excess of FHR threshold shall then count as Surplus Production Downtime Credit until the Performance Incentive threshold is met; it shall then count as
Performance Incentive gas; if the Performance Incentive threshold is higher than the Windfall threshold, then the amount of gas between the Windfall threshold and the Performance Incentive threshold shall count as both Windfall production and Surplus
Production Downtime Credit.
	

 	

 	
 	

If requested by the Contractor, the Parties will meet to discuss and agree any Exceptional Upgrade Works Requirements which will necessitate a temporary increase to the 14 day cap as set out in clause 12.6.3, such Exceptional Upgrade Works
Requirements to exclude all ordinary maintenance and repair that a Reasonable and Prudent Operator would carry out.
	

 	

12.6.2	
 	

If a production deficit occurs against FHR in any month, available accrued Surplus Production Downtime Credit shall be utilised by offset to make good the production deficit (days) caused by production shutdown or production shortfall requested or
caused by the Contractor (including shutdowns required for ordinary maintenance or repair but excluding any shutdown for reclassification of the FPSO) and the cumulative Surplus Production Downtime Credit shall be reduced by the amount
offset.
	

 	

12.6.3	
 	

Any Surplus Production Downtime Credit in any month can be accumulated and carried forward to offset a production deficit against FHR (days) in any future month. Surplus Production Downtime Credit which is not utilised in accordance with
Clause 12.6.2 during the month in which it accrued shall be carried forward and accumulated subject to a maximum available accrued Surplus Production Downtime Credit of fourteen (14) days. There shall be no time limit to the accumulation of
Surplus Production Downtime Credit. For the avoidance of doubt, any accrued Surplus Production Downtime Credit in excess of such maximum shall be deemed to have been utilised.

20

 
	12.7
	Annual Reconciliation

At
the end of any Year in which the FHR calculated in accordance with Clause 12.3.2 has at any time not been payable, the Pierce Operator will perform a reconciliation to compare the actual
total production of crude oil during such Year with the required total oil production for such Year. The same will be done for gas under Gas FHR regime. Under Gas FHR Regime, firstly: any unused part
of the capped Surplus Production Downtime Credit earned during that year can be used to calculate an adjusted Gas Production Efficiency for any month of that year in which Hire Rate has not been paid
in full, and the difference in Hire Rate can be invoiced; secondly: any Performance Incentive which the Contractor has elected to retain rather than take payment of when submitting the billing for the
relevant month may either be claimed for payment or used to recover any remaining FHR deficit for any month during that year at the time of annual reconciliation. Annual reconciliation shall also
apply to that part of the Performance Incentive payments not paid monthly (and which the Contractor does not elect to use to offset FHR deficit as above). The first period of such annual
reconciliation of FHR and Performance Incentive payments shall run from 1st September 2001 to 31st December 2001, and thereafter for twelve-month periods
ending 31st December. 

There
is no annual reconciliation of Windfall Incentive. 

Example
calculations of the Annual Reconciliation are illustrated in the attachments to this agreement. 

Any
adjustment payments payable under this Clause 12.7 shall be paid as soon as practicable and in any event no later than sixty (60) days after the end of the Year to which they relate. 

	12.8
	Revision of Rates

With
effect from the fifth anniversary of the Rate Commencement Date the Operating Costs referred to in Exhibit H shall be reviewed. The review shall consider the actual operating costs
incurred by the Contractor over the five year period. In the course of such review, the Contractor and the Pierce Operator shall provide each other with reasonable substantiation of their views. If
the review demonstrates that the actual operating costs exceed the Operating Costs referred to in Exhibit H over the five year period the Parties shall discuss and agree revised operating costs
to be effective for subsequent years and the Contract shall be amended accordingly. 

	12.9
	The
value of P0 from 5th March 2000 onwards shall be 101.15. Values of the Indicator, P1, shall be taken from the Index of "Producer
Prices (Output: Home Sales: Output of Manufactured Products)" as published in the table number 18.7 of Central Statistical Office in the Monthly Digest of Statistics. In the event that the Indicator
specified in Exhibit H ceases to be published the Parties shall consult to agree upon the substitution of a new index or indices matching as closely as possible the characteristics of the index
in question which has ceased to be published. In the event that the Parties are unable to agree on how to effect this substitution, the matter shall be referred to an Expert. 

In
the event that the Parties fail to agree on a substitute index or indices within four Months of the cessation of publication of the index in question the matter shall be referred to an Expert for
decision in accordance with Clause 43. The Parties shall furnish the Expert with all information, written or oral, and other evidence which he may reasonably require for his determination. The
Expert shall have regard in making his decision to the requirement that the substitute index or indices should match as closely as possible the characteristics of the index in question which has
ceased to be published. Any new index or indices substituted by the Expert shall be final and binding on the Parties except in the case of mistake or manifest error. 

21

 

In
the event that the base or weightings of the index in question are changed then: 

	(i)
	For
as long as indices on the immediately preceding base and weightings are published such figures shall be used for the purposes of indexation pursuant to
Exhibit H.

	(ii)
	From
the time that the indices on the immediately preceding base and weightings cease to be published, the indices on the new base and weightings shall be used for the
purpose of Indexation of the relevant rates except that the value of P0 as appropriate in the formula described in Exhibit H shall be revised at the same time by multiplying it by a
conversion factor calculated by dividing the arithmetic total of the indices on the new base and weightings by the arithmetic total of the indices on the immediately preceding base and weightings for
all those months for which indices are published on both the immediately preceding base and weightings and the new base and weightings. 

	12.10	 	Adjustment to Costs

	(i)
	In
the event of an adjustment to the Hire Rate and/or Operating Costs, as agreed between the Parties, resulting from upgrades or modifications to the Contractor's
Equipment as specifically requested by the Pierce Operator pursuant to Clause 15 or the Development Contract or in the event of a change in applicable laws, regulations or Codes of Practice
pursuant to Clause 23.2, such adjustments shall be made in the form of a Contract amendment.

	(ii)
	In
the event of a lump sum being payable to the Contractor, as agreed between the Parties, resulting from upgrades or modifications to the Contractor's Equipment as
specifically requested by the Pierce Operator pursuant to Clause 15 or the Development Contract, such lump sums shall be payable in accordance with Clause 13. 

	12.11	 	Additional Costs

	(i)
	Where
the Pierce Operator instructs the Contractor to carry out inspection, repair and maintenance of any part of the Pierce Equipment, pursuant to Clause 7.3,
the Pierce Operator shall reimburse the Contractor for such services in accordance with the approved Operations Budget, subject to Clause 7.4.

	(ii)
	Where
the Pierce Operator instructs the Contractor to procure third party materials on its behalf in support of the Services, the Contractor shall be reimbursed for
such materials at [***]. 

	12.12	 	During any period when Daily Rate is payable in accordance with Clause 12.4.1, the cost of any diesel or other fuel oil utilised by the Contractor on the FPSO shall be for the Contractor's account and any such costs
shall be deducted from payments due to the Contractor pursuant to Clause 13.3. The Parties shall provide such substantiation of volumes consumed and the costs of provision as may reasonably be required.
	

 	
 	
[***] CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE
SECURITIES ACT OF 1933, AS AMENDED.
	

 	
 	

 

22

 

CLAUSE 14    INCENTIVE PAYMENTS  

	14.1
	Period

For
the twelve month period starting at the Commencement of Commercial Production and for each subsequent twelve month period starting on the anniversary of the Commencement of Commercial Production,
the Pierce Operator shall pay the Contractor a production incentive payment subject to an HSEQ performance adjustment as determined in accordance with Clauses 14.2 and 14.3 PROVIDED ALWAYS that the
Pierce Facilities are operated by the Contractor in accordance with good oil field practice to maximise oil yield and in accordance with the instructions given in Clause 9. 

	14.2
	Production Incentive

For
each twelve month period, the production incentive will be the greatest of the following: 

	(i)
	For
every Barrel of oil produced in excess of sixteen decimal four two five (16.425) million Barrels in said twelve month period, the Pierce Operator will pay to the
Contractor the sum of [***]; or

	(ii)
	The
Pierce Operator will pay to the Contractor a production incentive for gas. In Gas FHR Regime, the production incentive for gas will be divided into a windfall
element and a performance-based element:

	a)
	The  windfall element of the production incentive ("Windfall Incentive") will be payable for gas produced in excess of (100/110)% of the
Functional Specification. Incentive gas will be calculated as MMscf produced in the month in excess of the (100/110)% of the Functional Specification times days in the month and will be converted to
excess equivalent barrels using the average GOR for the month (e.g. if average gas produced in a 30-day month is 5 MMscf/d in excess of (100/110)% of Functional Specification, and average
GOR for the month is 3000 scf/stb, then Windfall Incentive is 5,000,000 / 3000 * [***]). Whatever the actual GOR, the GOR to be
used for the calculation will be capped at 5000 scf/stb. Windfall Incentive will be payable at the reduced rate of [***].
Monthly Windfall Incentive payment will not exceed [***].

	b)
	A
performance element of the production incentive ("Performance Incentive") will also be paid, calculated in part on a monthly basis,
and in part on an annual basis. Monthly and annual thresholds for the Performance Incentive will be based upon Gas Production Efficiency. 

The
threshold for payment of the performance element of the production incentive will be when Gas Production Efficiency is equal to Y%. Y shall be 92% for the monthly Performance Incentive and 91% for
the annual Performance Incentive. The Performance Incentive will be payable as: 

Performance
Incentive ($) = (Gas Production Efficiency (%)-Y%) × Z 

where
Z is one half of the Hire Rate. 

[***] CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

23

 

A
monthly calculation shall be made with Y having a value of 92%, and the Performance Incentive shall be payable for each day of the month in question for which the Target Gas Rate is greater than
zero. Contractor may elect either to receive payment when submitting the billing for the relevant month or to retain entitlement to payment of the monthly Performance Incentive earned until the Annual
Reconciliation. If the Contractor elects to retain the Performance Incentive for any month, the Contractor shall have the option at the time of Annual Reconciliation of Hire Rate and Performance
Incentive payments to use such production which would otherwise have given rise to an entitlement to the Performance Incentive for offsetting any deficit in FHR. If payment of the Performance
Incentive is claimed when submitting the billing for the relevant month, the relevant production shall not be available to be used for offsetting FHR deficit at the time of Annual Reconciliation. 

An
annual calculation shall also be made in January for the preceding year, and a further Performance Incentive shall be payable using the same formula but with Y having a value of 91%, where Gas
Production Efficiency (%) = average actual performance achieved over the year, and Z = one half the then-current Hire Rate to be paid for each day of the year in question.
There shall be no revision to the previously-calculated monthly Performance Incentive payments. 

	14.3
	HSEO Performance Adjustment

If
any of the following events occurs on or in connection with the Contractor's Equipment in the twelve (12) month period, and the event in question is as a result of a significant failure of
the Contractor's Management System: 

	(a)
	a
fatality occurs; or

	(b)
	an
Incident has occurred that is classified as a High Risk Incident, with an actual outcome of severity level 3 (major injury or health effects, or work absence of more than
15 days) or greater, as defined in the Shell Incident Investigation manual 3138-001, issue 08/02. Note; All future revisions to this document will be issued to the Contractor. If
Contractor disagrees with any revisions, Contractor must notify the Operator of their disagreement within 30 days of the date of issue, otherwise revisions will apply; or

	(c)
	a
major spill in excess of one thousand (1,000) Barrels occurs, 

then
the amount payable under Clause 14.2 will be affected as follows: monthly Windfall and Performance Incentive payments for the month in which the event has occurred will be zero. Monthly
Windfall and Performance Incentive payments for the subsequent eleven months will be made at the discretion of the Pierce Operator following assessment by the Pierce Operator's Incident Review Panel
and consultation with the Contractor: if the Incident Review Panel considers that the Contractor either failed to report, investigate and/or put in place adequate controls or measures to prevent the
reoccurrence of such an incident, the Pierce Operator will have the right to withhold any monthly Windfall and Performance Incentive payments for any of the subsequent eleven months. 

24

 

Irrespective
of whether one of the above events has occurred, payment of the monthly Windfall Incentive, the monthly Performance Incentive and the annual Performance Incentive will be related to
achievement of the Health, Safety, Environmental and Quality scorecard for the asset. The scorecard will be set and agreed annually by the Pierce Operator following consultation with the Contractor,
and an HSEQ performance index will be calculated each month from the scorecard by weighting each element of the scorecard. The monthly Windfall Incentive, the monthly Performance Incentive and the
annual Performance Incentive payment as calculated based on production will be pro-rated by HSEQ performance index: outstanding HSEQ performance will result in 120% of payment; HSEQ
performance meeting target will result in 100% of payment; poor HSEQ performance will result in 0% of payment. 

	14.4
	Operating Costs

The
Parties agree that the Operating Costs set out in Exhibit H shall be subject to a challenge process with a view to reducing the Operating Costs. The challenge process will include the
implementation of an incentive scheme based on the reduction of the Operating Costs. The Parties shall in good faith agree and implement the details of such incentive scheme which will operate in
addition to that contained in Clause 14.2. 

CLAUSE 47    NOTICES  

	47.1
	Any
notices required to be served hereunder shall be in writing and may be given by delivering the same by hand or by sending a letter by pre-paid first class post or by
facsimile transmission equipment to the relevant address set out below or such other address as may be notified from time to time. All notices from the Pierce Co-venturers shall be sent by
the Pierce Operator and all notices to the Pierce Co-venturers shall be sent to the Pierce Operator. 

	

the Pierce Operator:	
 	

Enterprise Oil plc

Shell UK Exploration and Production,

1 Altens Farm Road,

Nigg,

Aberdeen AB 12 3FY
	

 	
 	

Fax:	
 	

01224 881683
	

 	
 	

Attn:	
 	

Pierce Operations Leader
	

the Contractor:	
 	

Pierce Production Company Limited

21 Guild Street

Aberdeen

AB11 6NJ
	

 	
 	

Fax:	
 	

01224 582049
	

 	
 	

Attn:	
 	

Managing Director,

Any
notice given as aforesaid shall be deemed to have been received: 

	(i)
	in
the case of delivery by hand, when delivered; or

	(ii)
	in
the case of a letter sent by first class post, on the third Working Day following the date of its dispatch; or

	(iii)
	in
the case of facsimile transmission when receipt is acknowledged. 

25

   Exhibit G—Key Contractor's Personnel  

	Operations Manager
	

OIM
	

Marine Superintendent
	

Technical Superintendent
	

Production Superintendent

Note:
To be nominated and approved pursuant to Clause 6.2. 

26

 

Exhibit H—Daily Rates ($US)  

	Year
 
	 	Year Commencing

6th March
	 	Hire Rate

(US$)
	 	Operating

Costs (US$)
	 	Accomodation

Charge (US$)

	1	 	1999	 	[***]	 	[***]	 	[***]
	2	 	2000	 	[***]	 	[***]	 	[***]
	3	 	2001	 	[***]	 	[***]	 	[***]
	4	 	2002	 	[***]	 	[***]	 	[***]
	5	 	2003	 	[***]	 	[***]	 	[***]
	6	 	2004	 	[***]	 	[***]	 	[***]
	7	 	2005	 	[***]	 	[***]	 	[***]
	8	 	2006	 	[***]	 	[***]	 	[***]
	9	 	2007	 	[***]	 	[***]	 	[***]
	10	 	2008	 	[***]	 	[***]	 	[***]
	11	 	2009	 	[***]	 	[***]	 	[***]
	12	 	2010	 	[***]	 	[***]	 	[***]
	13	 	2011	 	[***]	 	[***]	 	[***]
	14	 	2012	 	[***]	 	[***]	 	[***]
	15	 	2013	 	[***]	 	[***]	 	[***]

Notes:  

	1.
	Daily
Hire Rates are fixed in the periods indicated above.

	2.
	Daily
Operating Costs (for vessel, topsides and onshore support) are subject to indexation in accordance with paragraphs 1 and 2 below. In addition the Operating Costs are subject to
revision for years 6 onwards in accordance with Clause 12.8 and to challenge process according to Clause 14.4.

	3.
	The
Pierce Operator shall reimburse the Contractor for accommodation for additional Pierce Operator's personnel on the Contractor's Equipment in accordance with clause 21.2
using the Accommodation Rate per person per day. 

Indexation  

	1.
	It
is agreed that the Operating Costs which form part of FHR referred to in Clause 12.3.1 and form the Daily Rate referred to in Clause 12.4.1 shall be revised annually
with effect from the Rate Commencement Date (the Rate Commencement Date and each relevant anniversary thereof being referred to as "the Review Date") to reflect changes in costs from 1st
January 1997 ("the Base Date") in accordance with the following formula: 

	 	 	 	P1	 	 
	 	 	AC = BC × 	
	 	 
	 	 	 	P0	 	 

[***] CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

27

 

        Where:

	AC	=	the adjusted relevant cost in Dollars;
	

BC	

=	

the Operating Costs set out for the relevant year in Exhibit H;
	

P1	

=	

the value of the Indicator most recently published by the Review Date, provisionally published valued being ignored;
	

P0	

=	

being the agreed value of the Indicator most recently published by the Base Date, provisionally published value being ignored;

and
where 

"the
Indicator" means the Index of "Producer Prices (Output: Homes Sales—Output of Manufactured Products) as published in table number 18.7 by the Central Statistical Office in the Monthly
Digest of Statistics. 

	2.
	In
respect of any indexation taking effect after a revision of rates pursuant to Clause 12.8, only that proportion of the Operating Costs referred to in Exhibit H
relating to personnel costs, maintenance costs, insurance costs and other like costs reasonably incurred by the Contractor in the day to day operation of the FPSO and agreed within 30 days of
the fifth anniversary of the Rate Commencement Date pursuant to Clause 12.8 (such amount being referred to as the "Indexed Amount") shall be subject to indexation in accordance with
paragraph 1 above. For the purposes of indexation occurring after the fifth anniversary of the Rate Commencement Date, BC shall be in the Indexed Amount, and P0 shall be the agreed
value of the Indicator most recently published by the fifth anniversary of the Rate Commencement Date, provisionally published values being ignored. 

28

 

Example (1) of Daily Production and Monthly Payment Calculations  

Production meets neither 12.3.2.(b)(i) nor 12.3.2.(b)(i) criterion  

	Day
 
	 	Available

Well

Capacity
	 	Agreed

Daily

Capacity
	 	TGR
	 	Target Gas

Rate (Min

AWC+GIC)
	 	Actual

Rate

Achieved
	 	FHR

Achieved?

(85%TGR)
	 	Comments
	 	Func

Spec

	1	 	160	 	120	 	120	 	A.D.C	 	120	 	Yes	 	 	 	110
	2	 	160	 	120	 	120	 	A.D.C.	 	120	 	Yes	 	 	 	110
	3	 	160	 	120	 	120	 	A.D.C.	 	105	 	Yes	 	Comp Trip	 	110
	4	 	160	 	120	 	120	 	A.D.C.	 	100	 	No	 	Comp Trip	 	110
	5	 	55	 	120	 	55	 	W.C.	 	55	 	Yes	 	Well testing	 	110
	6	 	160	 	120	 	120	 	A.D.C.	 	105	 	Yes	 	Comp Trip	 	110
	7	 	160	 	120	 	120	 	A.D.C.	 	90	 	No	 	Comp wash	 	110
	8	 	160	 	120	 	120	 	A.D.C.	 	95	 	No	 	Comp Trip	 	110
	9	 	160	 	120	 	120	 	A.D.C.	 	120	 	Yes	 	 	 	110
	10	 	160	 	120	 	120	 	A.D.C.	 	98	 	No	 	Comp Trip	 	110
	11	 	160	 	130	 	130	 	A.D.C.	 	130	 	Yes	 	(1) PPC funded upgrade	 	110
	12	 	160	 	130	 	130	 	A.D.C.	 	58	 	No	 	Comp Trip	 	110
	13	 	160	 	130	 	130	 	A.D.C.	 	130	 	Yes	 	 	 	110
	14	 	160	 	130	 	130	 	A.D.C.	 	110	 	No	 	Comp Trip	 	110
	15	 	55	 	130	 	55	 	W.C.	 	45	 	No	 	Well testing / Comp Trip	 	110
	16	 	55	 	130	 	55	 	W.C.	 	55	 	Yes	 	Well testing	 	110
	17	 	160	 	130	 	130	 	A.D.C.	 	130	 	Yes	 	 	 	110
	18	 	160	 	130	 	130	 	A.D.C.	 	130	 	Yes	 	 	 	110
	19	 	160	 	130	 	130	 	A.D.C.	 	80	 	No	 	Comp Trip	 	110
	20	 	160	 	130	 	130	 	A.D.C.	 	70	 	No	 	Comp Trip	 	110
	21	 	160	 	150	 	150	 	A.D.C.	 	150	 	Yes	 	(2) EO funded upgrade	 	140
	22	 	160	 	150	 	150	 	A.D.C.	 	58	 	No	 	Comp Trip	 	140
	23	 	160	 	150	 	150	 	A.D.C.	 	150	 	Yes	 	 	 	140
	24	 	160	 	150	 	150	 	A.D.C.	 	150	 	Yes	 	 	 	140
	25	 	160	 	150	 	150	 	A.D.C.	 	120	 	No	 	Comp Trip	 	140
	26	 	55	 	150	 	55	 	W.C.	 	55	 	Yes	 	Well testing	 	140
	27	 	55	 	150	 	55	 	W.C.	 	30	 	No	 	Well testing / Comp Trip	 	140
	28	 	160	 	150	 	150	 	A.D.C.	 	90	 	No	 	Comp Wash	 	140
	29	 	160	 	150	 	150	 	A.D.C.	 	80	 	No	 	Comp Trip	 	140
	30	 	160	 	150	 	150	 	A.D.C.	 	80	 	No	 	Comp Trip	 	140
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 	

	Totals	 	4275.00	 	4000.00	 	3595.00	 	 	 	2909.00	 	 	 	 	 	3600.00

29

 

	Is 85% TGR achieved ?	 	No
	Is (100/110)% Monthly Avg Func Spec achieved ?	 	No
	Proportion of Hire Rate Payable (%)	 	0.95
	Surplus earned (Days)	 	0
	Volume of Incentive Earned (MMscf)	 	0.00
	Volume of Windfall Production Earned (MMscf)	 	0.00

Notes;

	(1)
	PPC
funded upgrade, hence Functional Spec remains unchanged.

	(2)
	EO
funded upgrade, hence Functional Spec. is changed to new tested design level. 

30

   Example (2) of Daily Production and Monthly Payment Calculations  

 Production meets the 12.3.2.(b)(i) criterion  

	Day
 
	 	Available

Well

Capacity
	 	Agreed

Daily

Capacity
	 	TGR
	 	Target

Gas Rate

(Min

AWC+GIC)
	 	Actual Rate

Achieved
	 	FHR

Achieved?

(85%TGR)
	 	Comments
	 	Func

Spec

	1	 	160	 	120	 	120	 	A.D.C	 	120	 	Yes	 	 	 	110
	2	 	160	 	120	 	120	 	A.D.C.	 	120	 	Yes	 	 	 	110
	3	 	160	 	120	 	120	 	A.D.C.	 	120	 	Yes	 	 	 	110
	4	 	160	 	120	 	120	 	A.D.C.	 	100	 	No	 	Comp Trip	 	110
	5	 	55	 	120	 	55	 	W.C.	 	55	 	Yes	 	Well testing	 	110
	6	 	160	 	120	 	120	 	A.D.C.	 	120	 	Yes	 	 	 	110
	7	 	160	 	120	 	120	 	A.D.C.	 	90	 	No	 	Comp wash	 	110
	8	 	160	 	120	 	120	 	A.D.C.	 	95	 	No	 	Comp Trip	 	110
	9	 	160	 	120	 	120	 	A.D.C.	 	120	 	Yes	 	 	 	110
	10	 	160	 	120	 	120	 	A.D.C.	 	98	 	No	 	Comp Trip	 	110
	11	 	160	 	130	 	130	 	A.D.C.	 	130	 	Yes	 	(1) PPC funded upgrade	 	110
	12	 	160	 	130	 	130	 	A.D.C.	 	130	 	Yes	 	 	 	110
	13	 	160	 	130	 	130	 	A.D.C.	 	108	 	No	 	Comp Trip	 	110
	14	 	160	 	130	 	130	 	A.D.C.	 	130	 	Yes	 	 	 	110
	15	 	55	 	130	 	55	 	W.C.	 	45	 	No	 	Well testing/Comp Trip	 	110
	16	 	55	 	130	 	55	 	W.C.	 	55	 	Yes	 	Well testing	 	110
	17	 	160	 	130	 	130	 	A.D.C.	 	90	 	No	 	Comp Trip	 	110
	18	 	160	 	130	 	130	 	A.D.C.	 	130	 	Yes	 	 	 	110
	19	 	160	 	130	 	130	 	A.D.C.	 	130	 	Yes	 	 	 	110
	20	 	160	 	130	 	130	 	A.D.C.	 	105	 	No	 	Comp Trip	 	110
	21	 	160	 	150	 	150	 	A.D.C.	 	150	 	Yes	 	(2) EO funded upgrade	 	150
	22	 	160	 	150	 	150	 	A.D.C.	 	150	 	Yes	 	 	 	150
	23	 	160	 	150	 	150	 	A.D.C.	 	150	 	Yes	 	 	 	150
	24	 	160	 	150	 	150	 	A.D.C.	 	150	 	Yes	 	 	 	150
	25	 	160	 	150	 	150	 	A.D.C.	 	150	 	Yes	 	 	 	150
	26	 	55	 	150	 	55	 	W.C.	 	55	 	Yes	 	Well testing	 	150
	27	 	55	 	150	 	55	 	W.C.	 	45	 	No	 	Well testing/Comp Trip	 	150
	28	 	160	 	150	 	150	 	A.D.C.	 	90	 	No	 	Comp Wash	 	150
	29	 	160	 	150	 	150	 	A.D.C.	 	150	 	Yes	 	 	 	150
	30	 	160	 	150	 	150	 	A.D.C.	 	130	 	Yes	 	 	 	150
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 	

	Totals	 	4275.00	 	4000.00	 	3595.00	 	 	 	3311.00	 	 	 	 	 	3700.00
	

Is 85% TGR achieved ?	
 	

Yes	
 	

 	
 	

 
	Is (100/110)% Monthly Avg Func Spec achieved ?	 	No	 	 	 	 
	Proportion of Hire Rate Payable (%)	 	100.00	 	 	 	 
	Surplus earned (Days)	 	2.10	 	 	 	 
	Volume of Incentive Earned (MMscf)	 	3.60	 	 	 	 
	Volume of Windfall Production Earned (MMscf)	 	0.00	 	 	 	 

Notes;

	(1)
	PPC
funded upgrade, hence Functional Spec remains unchanged.

	(2)
	EO
funded upgrade, hence Functional Spec. is changed to new tested design level. 

31

 

Example (3) of Daily Production and Monthly Payment Calculations  

Production meets the 12.3.2.(b)(ii) criterion  

	Day
 
	 	Available

Well

Capacity
	 	Agreed

Daily

Capacity
	 	TGR
	 	Target

Gas Rate

(Min

AWC+GIC)
	 	Actual

Rate

Achieved
	 	FHR

Achieved?

(85%TGR)
	 	Comments
	 	Func

Spec

	1	 	160	 	120	 	120	 	A.D.C.	 	120	 	Yes	 	 	 	110
	2	 	160	 	120	 	120	 	A.D.C.	 	120	 	Yes	 	 	 	110
	3	 	160	 	120	 	120	 	A.D.C.	 	120	 	Yes	 	 	 	110
	4	 	160	 	120	 	120	 	A.D.C.	 	90	 	No	 	Comp Trip	 	110
	5	 	160	 	120	 	120	 	A.D.C.	 	120	 	Yes	 	 	 	110
	6	 	160	 	120	 	120	 	A.D.C.	 	120	 	Yes	 	 	 	110
	7	 	160	 	120	 	120	 	A.D.C.	 	90	 	No	 	Comp wash	 	110
	8	 	160	 	120	 	120	 	A.D.C.	 	95	 	No	 	Comp Trip	 	110
	9	 	160	 	120	 	120	 	A.D.C.	 	120	 	Yes	 	 	 	110
	10	 	160	 	120	 	120	 	A.D.C.	 	98	 	No	 	Comp Trip	 	110
	11	 	160	 	130	 	130	 	A.D.C.	 	130	 	Yes	 	(1) PPC funded upgrade	 	110
	12	 	160	 	130	 	130	 	A.D.C.	 	130	 	Yes	 	 	 	110
	13	 	160	 	130	 	130	 	A.D.C.	 	108	 	No	 	Comp Trip	 	110
	14	 	160	 	130	 	130	 	A.D.C.	 	130	 	Yes	 	 	 	110
	15	 	160	 	130	 	130	 	A.D.C.	 	45	 	No	 	Comp Trip	 	110
	16	 	160	 	130	 	130	 	A.D.C.	 	130	 	Yes	 	 	 	110
	17	 	160	 	130	 	130	 	A.D.C.	 	90	 	No	 	Comp Trip	 	110
	18	 	160	 	130	 	130	 	A.D.C.	 	130	 	Yes	 	 	 	110
	19	 	160	 	130	 	130	 	A.D.C.	 	130	 	Yes	 	 	 	110
	20	 	160	 	130	 	130	 	A.D.C.	 	105	 	No	 	Comp Trip	 	110
	21	 	160	 	150	 	150	 	A.D.C.	 	150	 	Yes	 	(2) EO funded upgrade	 	150
	22	 	160	 	150	 	150	 	A.D.C.	 	58	 	No	 	Comp Trip	 	150
	23	 	160	 	150	 	150	 	A.D.C.	 	150	 	Yes	 	 	 	150
	24	 	160	 	150	 	150	 	A.D.C.	 	100	 	No	 	Comp Trip	 	150
	25	 	160	 	150	 	150	 	A.D.C.	 	100	 	No	 	Comp Trip	 	150
	26	 	160	 	150	 	150	 	A.D.C.	 	150	 	Yes	 	 	 	150
	27	 	160	 	150	 	150	 	A.D.C.	 	50	 	No	 	Comp Trip	 	150
	28	 	160	 	150	 	150	 	A.D.C.	 	90	 	No	 	Comp Wash	 	150
	29	 	160	 	150	 	150	 	A.D.C.	 	150	 	Yes	 	 	 	150
	30	 	160	 	150	 	150	 	A.D.C.	 	150	 	Yes	 	Comp Trip	 	150
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 	

	Totals	 	4800.00	 	4000.00	 	4000.00	 	 	 	3369.00	 	 	 	 	 	3700.00
	

Is 85% TGR achieved ?	
 	

No	
 	

 	
 	

 
	Is (100/110)% Monthly Avg Func Spec achieved ?	 	Yes	 	 	 	 
	Proportion of Hire Rate Payable (%)	 	100.00	 	 	 	 
	Surplus earned (Days)	 	0	 	 	 	 
	Volume of Incentive Earned (MMscf)	 	0.00	 	 	 	 
	Volume of Windfall Production Earned (MMscf)	 	5.36	 	 	 	 

Notes;

	(1)
	PPC
funded upgrade, hence Functional Spec remains unchanged.

	(2)
	EO
funded upgrade, hence Functional Spec. is changed to new tested design level. 

32

   Example (#1) of monthly production and annual reconciliation payment calculations  

Example 1; No Surplus used and all Monthly Incentive claimed  

	Month
 
	 	Available

Well

Capacity
	 	Agreed

Daily

Capacity
	 	TGR

(Min AWC+

ADC)
	 	Actual Rate

Achieved
	 	Prod Effy

%
	 	FHR

85% TGR
	 	FHR

Shortfall

mmscf
	 	FHR

Shortfall

Days
	 	FHR

Achieved?

(85% TGR)
	 	Comments
	 	Func

Spec
	 	Surplus
	 	Surplus

(Days)
	 	Cum

Surplus
	 	Cum

Surplus

(Days)
	 	Incentive

Target
	 	Incentive

earned

Avg
	 	Incentive

Earned
	 	Incentive

Claimed
	 	Windfall

	Jan	 	160	 	110	 	110	 	110	 	100.00	 	93.5	 	0	 	0.00	 	Yes	 	 	 	110	 	239	 	2.17	 	239	 	2.17	 	101.2	 	8.8	 	273	 	273	 	310
	Feb	 	160	 	110	 	110	 	110	 	100.00	 	93.5	 	0	 	0.00	 	Yes	 	 	 	110	 	216	 	1.96	 	454	 	4.13	 	101.2	 	8.8	 	246	 	246	 	280
	Mar	 	160	 	110	 	110	 	100	 	90.91	 	93.5	 	0	 	0.00	 	Yes	 	#	 	110	 	202	 	1.83	 	656	 	5.96	 	101.2	 	0	 	0	 	0	 	0
	Apr	 	160	 	110	 	110	 	100	 	90.91	 	93.5	 	0	 	0.00	 	Yes	 	#	 	110	 	195	 	1.77	 	851	 	7.73	 	101.2	 	0	 	0	 	0	 	0
	May	 	160	 	120	 	120	 	120	 	100.00	 	102	 	0	 	0.00	 	Yes	 	(1) PPC funded upgrade	 	110	 	260	 	2.17	 	1111	 	9.90	 	110.4	 	9.6	 	298	 	298	 	620
	Jun	 	55	 	120	 	55	 	55	 	100.00	 	46.76	 	0	 	0.00	 	Yes	 	Well problems	 	110	 	116	 	2.10	 	1227	 	12.00	 	50.6	 	4.4	 	132	 	132	 	0
	Jul	 	160	 	120	 	120	 	120	 	100.00	 	102	 	0	 	0.00	 	Yes	 	Good Month	 	110	 	260	 	2.17	 	1487	 	14.00	 	110.4	 	9.6	 	298	 	298	 	620
	Aug	 	160	 	120	 	120	 	115	 	95.83	 	102	 	0	 	0.00	 	Yes	 	#	 	110	 	260	 	2.17	 	1680	 	14.00	 	110.4	 	4.6	 	143	 	143	 	465
	Sep	 	160	 	150	 	150	 	140	 	93.33	 	127.5	 	0	 	0.00	 	Yes	 	EO funded upgrade	 	150	 	315	 	2.10	 	1995	 	14.00	 	133	 	2	 	60	 	60	 	109
	Oct	 	160	 	150	 	150	 	133	 	86.67	 	127.5	 	0	 	0.00	 	Yes	 	Poor month	 	150	 	78	 	0.52	 	2073	 	14.00	 	133	 	0	 	0	 	0	 	0
	Nov	 	160	 	150	 	150	 	150	 	100.00	 	127.5	 	0	 	0.00	 	Yes	 	Good Month	 	150	 	315	 	2.10	 	2100	 	14.00	 	138	 	12	 	360	 	360	 	409
	Dec	 	160	 	150	 	150	 	140	 	93.33	 	127.5	 	0	 	0.00	 	Yes	 	#	 	150	 	326	 	2.17	 	2100	 	14.00	 	138	 	2	 	62	 	62	 	113
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 	

	Totals	 	 	 	 	 	44310	 	42315	 	96	 	37664	 	0	 	0	 	 	 	 	 	45030	 	2781	 	 	 	2100	 	14.00	 	40765.2	 	 	 	1871	 	1871	 	2926
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Days
	 	Volume (MMscf)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 Total of Monthly FHR shortfalls at year end	 	0.00	 	0	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Days of Surplus at year end (Capped at 14 days)	 	14.00	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Volume of Monthly Incentives claimed at year end	 	 	 	1871	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Volume of Monthly Incentives not claimed at year end	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Surplus offered against FHR Shortfall	 	0.00	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Reconciled Monthly FHR Shortfall (1) at year and (Days./MMscf)	 	0.00	 	0	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Reconciled Surplus at year and (Days)	 	14.00	 	Carries forward until used	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Volume of Unclaimed Monthly Incentive offered against FHR Shortfalls (MMscf)	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Reconciled Monthly FHR shortfalls (2) at year end (MMscf)	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Reconciled Unclaimed Monthly Incentive to be claimed at Year end (MMscf)	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Annual Incentive Earned at 91% (MMscf)	 	 	 	1993	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Volume of Windfall Production Earned (MMscf)	 	 	 	2926	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

Above example assumes no surplus of Incentive volumes are used to offset monthly FHR losses 

#
Where monthly Actual is less than TGR, and there are no specific comments, topsides trips are inferred. 

	(1)
	PPC
funded upgrade, hence Functional Spec remains unchanged.

	(2)
	FO
funded upgrade, hence Functional Spec, is changed in new tested design level. 

33

 

Example (#2) of monthly production and annual reconciliation payment calculations  

Example 2; End of year Surplus and unclaimed Monthly Incentive used to make up FHR annual losses  

	Month
 
	 	Available

Well

Capacity
	 	Agreed

Daily

Capacity
	 	TGR

(Min AWC+

ADC)
	 	Actual Rate

Achieved
	 	Prod Effy

%
	 	FHR

85% TGR
	 	FHR

Shortfall
	 	FHR

Shortfall

Days
	 	FHR

Achieved?

(85%TGR)
	 	Comments
	 	Func

Spec
	 	Surplus
	 	Surplus

(Days)
	 	Cum

Surplus
	 	Cum

Surplus

(Days)
	 	Incentive

Target
	 	Incentive

earned

Avg
	 	Incentive

Earned
	 	Incentive

Claimed
	 	Windfall

	Jan	 	160	 	110	 	110	 	105	 	95.45	 	93.5	 	0	 	0.00	 	Yes	 	#	 	110	 	239	 	2.17	 	239	 	2.17	 	101.2	 	3.8	 	118	 	118	 	155
	Feb	 	160	 	110	 	110	 	105	 	95.45	 	93.5	 	0	 	0.00	 	Yes	 	#	 	110	 	216	 	1.96	 	454	 	4.13	 	101.2	 	3.8	 	106	 	106	 	140
	Mar	 	160	 	110	 	110	 	105	 	95.45	 	93.5	 	0	 	0.00	 	Yes	 	#	 	110	 	239	 	2.17	 	693	 	6.30	 	101.2	 	3.8	 	118	 	118	 	155
	Apr	 	160	 	110	 	110	 	15	 	13.64	 	93.5	 	-1662	 	-15.11	 	No	 	used=40.7% FHR payable	 	110	 	0	 	0.00	 	0	 	0.00	 	101.2	 	0	 	0	 	0	 	0
	May	 	160	 	120	 	120	 	115	 	95.83	 	102	 	0	 	0.00	 	Yes	 	(1) PPC funded upgrade	 	110	 	260	 	2.17	 	260	 	2.17	 	110.4	 	4.6	 	143	 	0 (note 3	)	465
	Jun	 	55	 	120	 	55	 	50	 	90.91	 	46.75	 	0	 	0.00	 	Yes	 	wall problems	 	110	 	98	 	1.77	 	358	 	3.94	 	50.6	 	0	 	0	 	0	 	0
	Jul	 	160	 	120	 	120	 	120	 	100.00	 	102	 	0	 	0.00	 	Yes	 	 	 	110	 	260	 	2.17	 	618	 	6.11	 	110.4	 	9.6	 	298	 	0 (note 3	)	620
	Aug	 	160	 	120	 	120	 	115	 	95.83	 	102	 	0	 	0.00	 	Yes	 	#	 	110	 	260	 	2.17	 	879	 	8.28	 	110.4	 	4.6	 	143	 	143	 	465
	Sep	 	160	 	150	 	150	 	140	 	93.33	 	127.5	 	0	 	0.00	 	Yes	 	(2) EO funded upgrade	 	150	 	315	 	2.10	 	1194	 	10.38	 	138	 	2	 	60	 	60	 	109
	Oct	 	160	 	150	 	150	 	120	 	80.00	 	127.5	 	0	 	0.00	 	Yes	 	Poor month-Use surplus	 	150	 	0	 	0.00	 	961	 	8.83	 	138	 	0	 	0	 	0	 	0
	Nov	 	160	 	150	 	150	 	150	 	100.00	 	127.5	 	0	 	0.00	 	Yes	 	Good Month	 	150	 	315	 	2.10	 	1276	 	10.93	 	138	 	12	 	360	 	360	 	409
	Dec	 	160	 	150	 	150	 	140	 	93.33	 	127.5	 	0	 	0.00	 	Yes	 	#	 	150	 	326	 	2.17	 	1602	 	13.10	 	138	 	2	 	62	 	67	 	113
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 	

	Totals	 	 	 	 	 	44310	 	39010	 	87.44	 	37664	 	-1662	 	-15.11	 	Yes	 	Enough surplus/incent to offset April FHR S/F	 	45030	 	2527	 	 	 	1602	 	13.10	 	40765.2	 	 	 	1407	 	957	 	2631
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Days
	 	Volume(mmscf)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total of Monthly FHR shortfalls at year end	 	-15.11	 	-1662	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Days of Surplus at year end (Capped at 14 days)	 	13.10	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Volume of Monthly incentives claimed at year end	 	 	 	967	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Volume of Monthly incentives not claimed at year end	 	 	 	440	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Surplus Offset against FHR shortfall	 	13.10	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Reconciled Monthly FHR shortfalls (1) at year end (Days)	 	-2.01	 	-61	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Reconciled Surplus at year end (Days)	 	0.00	 	Carries forward until used	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Volume of Unclaimed Monthly Incentive offset against FHR shortfalls (MMscf)	 	 	 	61	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Reconciled Monthly FHR shortfalls (2) of year end (MMscf)	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Reconciled Unclaimed Monthly Incentive to be claimed at year end (MMscf)	 	 	 	379	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Annual Incentive earned at 31% (MMscf)	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Volume of Windfall production Earned (MMscf)	 	 	 	2631	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

Notes:

Above
example requires use of surplus, and unclaimed monthly incentives to offset FHR losses 

#
Where monthly Actual is less than TGR, and there are no specific comments, topsides trips are inferred. 

	(1)
	PPC
funded upgrade, hence Functional Spec remains unchanged. 
	(2)
	EO
funded upgrade, hence Functional Spec. is changed to new tested design level. 
	(3)
	Incentive
not claimed to allow for offset of FHR monthly losses at annual reconciliation 

Summary  

Annual
gas efficiency = 87.44 (>85%), so the 59.3% not paid in April can be claimed via surplus and unclaimed monthly incentive. 

Reconciled
Monthly Incentive of 376 MMscf outstanding at year end can be claimed. 

No
Annual performance incentive is payable. 

34

 

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35

  

Performance and windfall Incentives  

	HR year 1-5	 	[***]
	HR year 6-12	 	[***]
	HR year 13-15	 	[***]

 
 

Performance Incentives    
    

	Gas efficiency
 
	 	Monthly incentive
	 	Monthly incentive (30 days)
	 	Annual incentive
	 	Annual incentive (365 days)
	 	Max. incentive

	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]

[***] CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

36

 

	Produced	 	105	 	GOR	 	3,000 Incentive	 	***
	No days	 	30	 	 	 	 	 	 	 	 

	
Monthly windfall incentives
	
MMscf

Produced
 
	
 	

GOR

2,500
	
 	

GOR

3,000
	
 	

GOR

3,500
	
 	

GOR

4,000
	
 	

GOR

4,500
	
 	

GOR

5,000

	100	 	—	 	—	 	—	 	—	 	—	 	—
	101	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]
	102	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]
	103	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]
	104	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]
	105	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]
	106	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]
	107	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]
	108	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]
	109	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]
	110	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]
	111	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]
	112	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]
	113	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]
	114	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]
	115	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]
	116	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]
	117	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]
	118	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]
	119	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]
	120	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]
	121	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]
	122	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]
	123	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]
	124	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]
	125	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]

Windfall
is capped at [***]

[***] CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

37

 
 
 

COMPARING ANNUAL WINDFALL AGAINST DIFFERENT PERFORMANCES    
    

	Potential incentives per year
	

Available vs actual production
	
Performance	
 	

110	
 	

115	
 	

120	
 	

125
	93%	 	102.3	 	107.0	 	111.6	 	116.3
	

Performance incentive	
 	
[***]	
 	
[***]	
 	
[***]	
 	
[***]
	
GOR
	
 	

Windfall incentives
	
2,700	
 	
[***]	
 	
[***]	
 	
[***]	
 	
[***]
	2,800	 	[***]	 	[***]	 	[***]	 	[***]
	2,900	 	[***]	 	[***]	 	[***]	 	[***]
	3,000	 	[***]	 	[***]	 	[***]	 	[***]
	3,100	 	[***]	 	[***]	 	[***]	 	[***]
	3,200	 	[***]	 	[***]	 	[***]	 	[***]
	3,300	 	[***]	 	[***]	 	[***]	 	[***]
	3,400	 	[***]	 	[***]	 	[***]	 	[***]
	3,500	 	[***]	 	[***]	 	[***]	 	[***]
	3,600	 	[***]	 	[***]	 	[***]	 	[***]
	3,700	 	[***]	 	[***]	 	[***]	 	[***]
	3,750	 	[***]	 	[***]	 	[***]	 	[***]
	3,800	 	[***]	 	[***]	 	[***]	 	[***]
	3,900	 	[***]	 	[***]	 	[***]	 	[***]
	4,000	 	[***]	 	[***]	 	[***]	 	[***]
	4,100	 	[***]	 	[***]	 	[***]	 	[***]
	4,200	 	[***]	 	[***]	 	[***]	 	[***]
	4,300	 	[***]	 	[***]	 	[***]	 	[***]
	4,400	 	[***]	 	[***]	 	[***]	 	[***]
	4,500	 	[***]	 	[***]	 	[***]	 	[***]
	4,600	 	[***]	 	[***]	 	[***]	 	[***]
	4,700	 	[***]	 	[***]	 	[***]	 	[***]
	4,800	 	[***]	 	[***]	 	[***]	 	[***]
	4,900	 	[***]	 	[***]	 	[***]	 	[***]
	5,000	 	[***]	 	[***]	 	[***]	 	[***]

[***] CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

38

QuickLinks

Exhibit 10.58

Second Supplementary Agreement Relating to Contract No 97.22.02 For the Provision of Production, Storage, Offtake and Transportation Services for the Pierce Field between Enterprise Oil plc And Pierce Production
Company Limited

Contents

Performance Incentives

COMPARING ANNUAL WINDFALL AGAINST DIFFERENT PERFORMANCESQuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 10.59    
    

Dated
8 April 2003 

BLUEWATER HOLDING B.V.

as Standby Lessor  

 —and—  

 PIERCE PRODUCTION COMPANY LIMITED

as Sub-Lessee  

 STANDBY SUB-LEASE AGREEMENT FOR TOPSIDES FACILITIES  

relating to the topsides processing plant for the

Floating Production, Storage and

Off-Loading Facility "Haewene Brim" 

 
 

WATSON, FARLEY & WILLIAMS
  London    
    

 
 

INDEX    
    

	 
	 	 
	 	Page

	1	 	DEFINITIONS	 	2
	2	 	LEASE	 	7
	3	 	DELIVERY	 	7
	4	 	HIRE	 	8
	5	 	PAYMENTS	 	9
	6	 	EXTENT OF STANDBY LESSOR'S OBLIGATIONS AND LIABILITY	 	10
	7	 	COST AND INDEMNITY	 	12
	8	 	TAXES	 	14
	9	 	USE AND EMPLOYMENT	 	15
	10	 	MAINTENANCE AND OPERATION	 	15
	11	 	PARTS	 	16
	12	 	TITLE	 	16
	13	 	INSURANCES	 	16
	14	 	LOSS, DAMAGE AND REQUISITION	 	19
	15	 	REDELIVERY	 	20
	16	 	TERMINATION	 	21
	17	 	FORCE MAJEURE	 	21
	18	 	NOTICES	 	22
	19	 	ASSIGNMENTS	 	22
	20	 	MISCELLANEOUS	 	22
	21	 	APPLICABLE LAW	 	23
	APPENDIX 1 DESCRIPTION OF EQUIPMENT	 	25
	APPENDIX 2 CERTIFICATE OF DELIVERY AND ACCEPTANCE	 	27

   THIS AGREEMENT is made on 8 April 2003 

BETWEEN:  

	(1)
	BLUEWATER HOLDING B.V., a company incorporated in The Netherlands with company number 349 2253 with its registered office at Marsstraat
33, 2132 HR Hoofddorp, The Netherlands (the "Standby Lessor") and

	(2)
	PIERCE PRODUCTION COMPANY LIMITED, a company incorporated in England with its registered office at c/o Watson, Farley &
Williams, 15 Appold Street, London EC2A 2HB, England (the "Sub-Lessee") 

WHEREAS:  

	(A)
	By
a standby put option deed entered into or, as the context may require, to be entered into on or about the date of this Agreement between Ola Dunk II Foundation (the
"Standby Purchaser") and Hill Samuel Leasing No.4 Limited (the "Lessor") (the
"Standby Put Option Deed"), the Standby Purchaser granted or, as the context may require, will grant the Lessor an option to dispose of the Lessor's
rights in the topsides processing plant for the floating production storage and offloading facility "Haewene Brim" (as more particularly therein defined, the
"Equipment") to the Standby Purchaser in accordance with the terms of the Standby Put Option Deed.

	(B)
	By
a lease agreement entered into or, as the context may require, to be entered into on or about the date of this Agreement between the Standby Purchaser and the Standby Lessor (the
"Standby Lease Agreement") the Standby Purchaser agreed or, as the context may require, will agree that upon the completion of the purchase of the
Equipment by the Lessor in accordance with the terms of the Standby Put Option Deed, the Standby Purchaser shall lease the Equipment to the Standby Lessor and the Standby Lessor shall take the
Equipment on lease in accordance with the terms of the Standby Lease Agreement for the purpose of, inter alia, on-leasing the Equipment by the Standby Lessor to the Sub-Lessee
to enable the Sub-Lessee to perform its obligations to Enterprise Oil plc (in its capacity as Pierce Operator) ("Enterprise") under the
Enterprise Contract.

	(C)
	This
Agreement sets out the terms and conditions on which, from the date of delivery to and acceptance by the Standby Lessor of the Equipment in accordance with the terms of
clause 4.2 of the Standby Lease Agreement (the "Delivery Date") the Standby Lessor will let and the Sub-Lessee will hire the
Equipment. 

NOW IT IS HEREBY AGREED  

1      DEFINITIONS  

	1.1
	Credit Agreement definitions. The words and expressions used in the Credit Agreement (as defined in Clause 1.2) shall, unless
the context otherwise requires, bear the same meaning attributed to them in this Agreement.

	1.2
	In this Agreement the following expressions shall have the following meanings unless the context otherwise requires: 

"Approved Profit" means, during the Security Period, that part of gross income comprising Earnings which the Sub-Lessee is entitled to
retain (and actually receives) for or on account of profit derived from the Enterprise Contract and is not otherwise included in the received Operating Expenses, in an amount approved by the Facility
Agent if and to the extent such approval is required under or pursuant to the Credit and Security Documents; 

"Banks" has the meaning given to such term in the Credit Agreement; 

2

 

"Banking Day" has, during the Security Period, the meaning given to it in the Credit Agreement and otherwise means any day (other than Saturday or
Sunday or other holiday established by law) on which the banks are open for business in London and Amsterdam; 

"Beneficiaries" has the meaning given to it in the Credit Agreement; 

"Business Day" means a day (other than a Saturday or a Sunday) on which banks are open for business in London, Curaçao and Amsterdam; 

"Certificate of Delivery and Acceptance" means a certificate in substantially the form set out in Appendix 2 to be signed on Delivery as required
under Clause 3.2; 

"Charter" means the bareboat charter of the Vessel dated 9 November 2001 and made between the Vessel Owners as owners and the Charterer; 

"Charterer" means the Sub-Lessee, in its capacity as charterer of the Vessel under the Charter; 

"Commencement of Commercial Production" (or "CCP"), "Completion
Certificate", "Development Contract", "DOR",
"Extraordinary Expenditure" "FPSO", "FPSO Mooring
System", "FPSO Vessel", "Functional Specification",
"Pierce Operator", "Rectification Event", "Scope of
Works", "TDCCP" and "Works", have the meanings given in the Enterprise
Contracts; 

"Compulsory Acquisition" means, in relation to the Equipment, requisition of title or other compulsory acquisition requisition, appropriation,
expropriation, deprivation, forfeiture or confiscation for any reason of the Equipment by any Government Entity or other competent authority, whether de jure or de facto, but excluding requisition for
use or hire not involving requisition of title; 

"Credit Agreement" means the credit agreement dated 15 January 2002 entered into between (1) Bluewater Holding B.V., Bluewater (Munin)
N.V., Bluewater (Haewene Brim) N.V., Bluewater Energy Services B.V., Bluewater Offshore Production Systems Limited, Ranberger Holding N.V., Luludia Asset Finance B.V. and Refugio B.V., as borrowers,
(2) the Banks and Financial Institutions listed in Schedule 1 thereto, and their assignees and transferees, as lenders, (3) Barclays Bank PLC, acting through its investment
banking division, Barclays Capital, Fortis Bank (Nederland) N.V., and ING Bank N.V., as arrangers, (4) ING Bank N.V., acting as facility agent, (5) Barclays Bank PLC acting as facility
security trustee, (6) Barclays Bank PLC acting through its investment banking division, Barclays Capital, as technical bank, and (7) Bluewater Energy Services B.V., as Aurelia agent; 

"Credit and Security Documents" means the Credit Agreement and the other Facility Documents executed or to be executed under or pursuant to, or as a
condition precedent or subsequent to any obligation of any person in, the Credit Agreement; 

"Delivery Date" means the date as defined in Recital A; 

"Delivery" means the date on and time at which the Equipment is delivered to and accepted by the Sub-Lessee subject to the terms of the
Credit and Security Documents; 

"Development Contract" means contract no 97.22.01 dated 9 September 1997 and made between Enterprise Oil plc (in its capacity as
Pierce Operator) and Statoil, as novated by Statoil to the Lessee and as supplemented and amended from time to time; 

"Dollars" and "$" mean lawful currency of the United States of America; 

3

 

"Earnings" means, in relation to the Equipment, all monies whatsoever from time to time due or payable to any person arising out of or otherwise in
connection with the use or operation of that Equipment or any part thereof including (without limitation) all freight, hire and passage monies, monies arising under any contract or other agreement or
arrangement with any operator (including, without limitation, the Enterprise Contract in relation to that Equipment), income arising under any pooling arrangements, compensation payable as a result
of, or otherwise in connection with, the requisition of the Equipment for hire, remuneration for salvage and towage services, demurrage and detention monies, and all damages for breach, and all
payments for, or otherwise in connection with, any variation or termination of any charterparty, contract or other agreement or arrangement in respect of, or otherwise in connection with, the
employment of the Equipment (including, without limitation, the Enterprise Contract); 

"Encumbrance" means, during the Non-Security Period, any mortgage, charge (whether fixed or floating), pledge, lien, right of set off,
hypothecation, assignment, security interest, title retention or other encumbrance securing any obligation of any person, and during the Security Period has the meaning given to it in the Credit
Agreement; 

"Enterprise Contract" means contract no. 97.22.02 dated 9 September 1997 and made between the Field Contractor and Statoil, as novated by
Statoil to the Sub-Lessee and as supplemented and amended from time to time; 

"Equipment" means the topsides processing plant attached to the Hull and forming part of the Haewene Brim, as more particularly described in the
Topsides Facilities Description contained in Appendix A, and currently made available to PPC for service under the Enterprise Contract pursuant to the lease agreement dated 9
November 2001 and entered into in relation to the Equipment between (1) Ranberger and (2) PPC, as amended by the deed of amendment dated 28 January 2002, the ownership
interest of the Lessor in which is, upon delivery to the Lessor, to be registered as a "deviating condition" pursuant to article 1 of book 8 of the Netherlands Antilles Civil Code of 1
January 2001; 

"Equipment Rights" means all rights and claims, including without prejudice to the generality of the foregoing, the benefit of all guarantees,
warranties and indemnities which may from time to time exist against any manufacturer or repairer or supplier in respect of the title, condition, design or construction of any part of the Equipment
other than, for the avoidance of doubt, the right to take possession of and title to the Equipment; 

"Facility Agent" has the meaning given to it in the Credit Agreement; 

"Facility Documents" has the meaning given to it in the Credit Agreement; 

"Field Contract" means the Enterprise Contract and upon expiry or early termination of the Enterprise Contract any production or service contract under
which the Equipment is employed from time to time; 

"Field Contractor" means: 

	(a)
	during
the term of the Enterprise Contract, Enterprise;

	(b)
	thereafter,
the relevant counterparty to the Field Contract; 

"General Assignment" has the meaning given to it in the Credit Agreement; 

4

 

"Hire Payment" means: 

	(c)
	an
amount equal to the amount of Earnings which are identified in the Notice of Assignment which is from time to time served on the Field Contractor pursuant to the General Assignment
(but excluding, for the avoidance of doubt, any Operating Expenses and Approved Profit) and which:

	(i)
	are
required by the Banks to be received and applied by the Standby Lessor in repayment or payment of the Indebtedness incurred under the Credit Agreement;

	(ii)
	are
actually received from Enterprise or any other Field Contractor under the Enterprise Contract or any other Field Contract; and

	(iii)
	which
the Standby Lessor agrees in writing on or before the date of this Agreement with the Facility Agent are attributable to the Equipment rather than the Vessel (payment for
which is made under the Charter); 

"Hire Payment Date" means in respect of any Hire Payment, each Banking Day on which the Sub-Lessee receives a payment of Earnings under the
Enterprise Contract; 

"Insurance Plan" means the insurance plan as from time to time arranged and agreed between the Standby Lessor, the Sub-Lessee and other
interested parties in relation to the FPSO (including the Equipment) its mobilization and operation under and in connection with the Enterprise Contract or any other Field Contract, and related
matters; 

"Losses" means, during the Non-Security Period, any and all losses, costs. charges, expenses, fees, payments, liabilities, penalties, fines,
damages or other sanctions of a monetary nature other than Taxes; and during the Security Period has the meaning given in Clause 7.1; 

"Management Agreement" means the agreement of even date with this Agreement made between the Sub-Lessee and APS UK Limited in respect of the
operation and maintenance of the Equipment during the Standby Sub-Lease Period; 

"Non-Security Period" means that part of the Standby Sub-Lease Period (if any) which continues after the end of the Security
Period; 

"Operating Expense" means the proper and reasonable costs required for the proper, safe and orderly operation of the Vessel and the Equipment in
accordance with good industry practice and any contract under which the Vessel and the Equipment are operated or chartered but excluding any VAT chargeable on those costs other than irrecoverable VAT; 

"Operating Phase" means the period commencing on the Delivery and ending on the date of termination or expiry of the Enterprise Contract; 

"Payment Date" means, during the Non-Security Period, the 10th day of each calendar month and the last day of the Non-Security
Period, provided that if any Payment Date would, but for this proviso, fall on a day which is not a Business Day it shall fall on the next following Business Day; 

"Rate of Interest" means an annual rate of interest determined, from time to time, in accordance with Clause 5.3; 

"Recognition of Rights Agreement" has the meaning given to it in the Credit Agreement; 

"Security Period" has the meaning given to it in the Credit Agreement; 

"Standby Sub-Lease Period" means the period determined in accordance with Clause 2.1; 

"Statoil" means Den norske stats oljeselskap a.s.; 

5

 

"Taxes" includes all present and future taxes, levies, imposts, duties, or charges of a similar nature, including, but not limited to, income tax,
corporation tax, Value Added Tax, customs and other import or export duty or excise duty, imposed by any national or local taxing or fiscal authority or agency together with interest thereon and
penalties in respect thereof and "Taxation" shall be construed accordingly; 

"Total Loss" means, during the Non-Security Period, in relation to the Equipment. the occurrence of any of the events described in the
definition of "Total Loss" in the Field Contract; and during the Security Period it has the meaning given to it in the Credit Agreement; 

"UKCS" means the United Kingdom Continental Shelf; 

"Vessel" means the Haewene Brim registered in the Netherlands Antilles and owned by the Vessel Owner, which, for the avoidance of doubt, excludes the
Equipment belonging to the Standby Purchaser; 

"Vessel Owners" means Bluewater (Haewene Brim) N.V; and 

"Value Added Tax" means (i) value added tax of the United Kingdom as provided for in the Value Added Tax Act 1994, including legislation
(delegated of otherwise) supplementary thereto, and any similar or substitute tax and (ii) any tax similar thereto imposed, levied or assessed in any jurisdiction outside the United Kingdom. 

	1.3
	In this Agreement, unless the context otherwise requires:

 
	(a)
	 references to "Clauses" and "Appendices" shall mean the clauses of and appendices to this Agreement;

	(b)
	references
to this Agreement include the Appendices;

	(c)
	any
word denoting the singular shall include the plural and vice versa;

	(d)
	any
word denoting a person only shall also denote a corporation, company, association or partnership;

	(e)
	clause
headings are inserted for convenience of reference only and shall be ignored in construing this Agreement;

	(f)
	references
to any agreement, instrument or document shall include such agreement, instrument or document as it may from time to time be amended, supplemented or substituted; and

	(g)
	references
to any person shall include its successors, permitted assignees and permitted transferees, in accordance with the terms of the relevant document or documents. 

1.4    

	(a)
	Notwithstanding
any other provision of this Agreement, during the Security Period:

	(i)
	in
the event of any conflict between the provisions of this Agreement on the one hand and the Credit and Security Documents on the other hand, the latter shall prevail; and, without
limiting the generality of the foregoing, the Standby Lessor and the Sub-Lessee agree to comply with all the provisions of the Credit and Security Documents and they shall not act or fail
to act in a manner which would, in relation to the leasing of the Equipment under this Agreement, cause either party to breach the terms of the Credit and Security Documents; 

6

 

	(ii)
	if
the Standby Lessor and the Sub-Lessee are complying with the Credit and Security Documents in the performance of any term of the Credit and Security Documents relating
to the Equipment, this Agreement or both, such compliance shall be deemed to be compliance with the terms of this Agreement;

	(iii)
	where
any provision of this Agreement requires the Sub-Lessee to indemnify the Standby Lessor in respect of any loss, damage. liability, cost or expense referred to in
the relevant provision, references therein to the Standby Lessor shall be deemed to include (additionally) a reference to each Beneficiary and such indemnity shall include, without double-counting,
any amount which the Standby Lessor is required to pay to the Beneficiaries under the Credit and Security Documents as a direct or indirect consequence of the Sub-Lessees breach of such
provision.

	(b)
	The
Standby Lessor and the Sub-Lessee confirm to each other that they are each fully familiar with the terms of the Credit and Security Documents and will comply with
those to which they are a party, and ensure that they do not act or fail to act under this Agreement in a manner which would put any other party to those documents in breach of them. 

2      LEASE  

2.1   

	(a)
	During
the Security Period the Sub-Lessee and the Standby Lessor shall only be entitled to terminate or cancel this Agreement and re-deliver the Equipment in
the manner and on the terms prescribed by the Credit and Security Documents (including, without limitation, where the Sub-Lessee has not made a Hire Payment (or part of a Hire Payment) on
its due date for whatever reason).

	(b)
	During
the Non-Security Period either party will be entitled to terminate this Agreement and re-deliver the Equipment to the Standby Lessor on the date of
expiry or early termination of the Enterprise Contract or any other Field Contract.

	(c)
	Unless
agreed otherwise by the Beneficiaries this Agreement shall terminate:

	(i)
	on
any sale of the Equipment required by or under or pursuant to the Credit and Security Documents whether on their enforcement or otherwise; or

	(ii)
	upon
the receipt by the Sub-Lessee of written notice from the Facility Agent requiring such termination following any exercise by the Beneficiaries of their respective
rights under (and subject to the terms of) the Credit and Security Documents. 

3      DELIVERY  

	3.1
	Delivery shall be on the Delivery Date and at a location on or nearby the Pierce Field (in the UKCS of North Sea) to be mutually
agreed; Delivery of the Equipment shall be contemporaneous with its delivery under the Standby Lease.

	3.2
	On Delivery the Sub-Lessee and the Standby Lessor shall each sign the Certificate of Delivery and Acceptance in a form
attached hereto as Appendix 2. (Without prejudice to the obligations of the Standby Lessor under this Agreement, delivery of the Certificate of Delivery and Acceptance shall be conclusive proof
of acceptance of the Equipment by the Sub-Lessee).

	3.3
	The Equipment shall be delivered "as is, where is, and with all faults" and otherwise subject to the terms of the following provisions
of this Clause 3. 

7

 
	3.4
	The Sub-Lessee acknowledges and agrees that:

	(a)
	each
part of the Equipment has been designed, manufactured, assembled, constructed and converted at the instigation and under the supervision or with the approval of the
Sub-Lessee and that the Sub-Lessee alone has selected the equipment for leasing by the Standby Lessor to the Sub-Lessee under this Agreement;

	(b)
	the
Standby Lessor has not made or given or shall be deemed to have made or given any term, condition, representation, warranty or covenant, express or implied (whether statutory or
otherwise), as to the suitability, capacity, age, state, value, quality, durability, condition, appearance, safety, design, construction, operation, performance, description, satisfactory quality,
fitness for use or purpose or suitability of the Equipment or any part thereof as to the absence of latent or other defects, whether or not discoverable, as to the absence of any infringement of any
patent, trademark or copyright, or as to title to the Equipment or any part thereof (except as stated in Clause 12) or any other representation or warranty whatsoever, express or implied, with
respect to the Equipment or any part thereof (except representations and warranties expressly and specifically stated in this Agreement), all of which are hereby excluded;

	(c)
	the
Sub-Lessee's acceptance of Delivery from the Standby Lessor in accordance with this Agreement shall be conclusive evidence as between the Standby Lessor and the
Sub-Lessee that the Equipment is complete, in good order and condition, of satisfactory quality, fit for any purpose for which it may be intended or required, suitable in all respects and
in every way satisfactory;

	(d)
	save
as otherwise expressly and specifically provided by this Agreement, the Sub-Lessee hereby waives as between itself and the Standby Lessor all its rights, express or
implied (whether statutory or otherwise), whether against the Standby Lessor in respect of the Equipment (or any part thereof) or against the Equipment or any part thereof (except rights arising out
of any act or omission of the Standby Lessor which is a breach by the Standby Lessor of its express and specific obligations to the Sub-Lessee under this Agreement). 

4      HIRE  

	4.1
	During the Security Period the Sub-Lessee shall pay to the Standby Lessor for the hire of the Equipment the Hire Payment
(without deduction or set-off otherwise than may be permitted under the Credit and Security Documents) on each of the Hire Payment Dates.

	4.2
	Without limiting Clause 4.1, during the Security Period all Hire Payments shall be paid and secured in the manner required by
the Credit and Security Documents.

	4.3
	In the event that the Standby Lessor, or the Beneficiaries as direct or indirect assignees of the Standby Lessor, receives any payment
under the Enterprise Contract or other Field Contract which, but for the exercise of any rights or powers of the Beneficiaries, would have been paid to and retained by the Sub-Lessee free
of any Encumbrances created by or pursuant to the Credit and Security Documents (the "Direct Payment"), the Sub-Lessee shall be deemed to
have paid to the Standby Lessor an amount of Hire Payment under this Agreement equivalent to the Direct Payment. 

Hire
is payable to such account as the Facility Agent (during the Security Period) or the Standby Lessor (during the Non-Security Period) shall advise. 

8

 
	4.4
	In respect of the Operating Phase occurring during the Non-Security Period hire shall be based on daily rates determined by
the Standby Lessor and notified to the Sub-Lessee applying principles established on a reasonable basis by the Standby Lessor reflecting arm's length terms taking proper account of the
proceeds receivable from the relevant Field Contract.

	4.5
	Hire is payable in all circumstances, unless and until the letting and hiring of the Equipment under this Agreement is terminated,
except in respect of any day (or part thereof) when the FPSO is off-hire under the Enterprise Contract due to a Rectification Event (as defined in the Enterprise Contract) or hire rate
payment are otherwise not payable under the Enterprise Contract.

	4.6
	The daily rates of hire applicable during that part of the Operating Phase occurring during the Non-Security Period shall
be adjusted on an appropriate basis, as agreed by the parties, to reflect any revision or adjustment of the Daily Rates under the Enterprise Contract, including (without limitation) as follows:

	(a)
	to
reflect any revision to account for exchange rate movement relating to the cost of the Equipment, as provided for in Note I to Exhibit H (Daily Rates) to the
Enterprise Contract;

	(b)
	to
reflect any agreed adjustment to the Hire Rate under Clause 12.10 of the Enterprise Contract;

	(c)
	to
reflect the reduced Force Majeure Rate under Clause 12.5(b) of the Enterprise Contract;

	(d)
	to
reflect variations to the FPSO Hire Rate under Item 7.3 (Variations to FPSO Topsides Conversion Costs) of Exhibit D (Remuneration Schedule) to the Development Contract. 

5      PAYMENTS  

	5.1
	All payments and other amounts payable by the Sub-Lessee under this Agreement shall be made, without prior demand, on their
scheduled due dates (unless expressly stated to be payable on demand) and in full without any right of set-off or counterclaim and free and clear of all deductions or withholdings
whatsoever, unless any deductions or withholdings are required by law in which event Clause 8.2 to 8.5 shall apply, in Dollars (or, in the case of payments in respect of Losses, in the currency
in which the relevant Losses are incurred) in cleared funds to such account as the Standby Lessor may from time to time notify to the Sub-Lessee in writing, with the consent of the Banks.
Time of payment of hire and other amounts payable by the Sub-Lessee under this Agreement shall be of the essence of this Agreement.

	5.2
	The Sub-Lessee shall pay to the Standby Lessor any Value Added Tax levied on any payments of hire of other amounts payable
by the Sub-Lessee under this Agreement at the rate applicable for the time being (by addition to, and at the time of payment of, the said hire of other amounts).

	5.3
	In the event of failure by the Sub-Lessee to pay on the due date for payment thereof or, in the case of a sum payable on
demand, the date of demand therefor, any hire or other amount payable by it under this Agreement (including any failure to pay on demand any amount due under this Clause 5.3) the
Sub-Lessee will pay to the Standby Lessor on demand interest on such hire or other amount from the date of such failure to the date of actual payment (both before and after any relevant
judgement or winding up of the Sub-Lessee):

	(a)
	during
the Security Period, at the Default Rate; and

	(b)
	during
the Non-Security Period, 

9

 

at
the rate determined by the Standby Lessor and certified by it to the Sub-Lessee (such certification to be conclusive in the absence of manifest error) to be the aggregate of
(a) four per cent and (b) the rate per annum (as notified by the Bank to the Standby Lessor) at which three month deposits in Dollars are offered to the Bank in the London Interbank
Market at or about 11:00 a.m. (London time) on the relevant date. Such rate to be recalculated on the same basis at the end of each 3 month period until such hire or other amount is
received by the Standby Lessor. 

	5.4
	Interest payable under this Agreement during the Non-Security Period shall accrue from day to day and shall be recalculated
on the basis of the actual number of days elapsed and a 360 day year, and during the Security Period shall accrue and be recalculated in the manner (if different) set out in the Credit and
Security Documents.

	5.5
	The Sub-Lessee shall obtain or procure that there are obtained all certificates, licences, permits and other authorisations
which are from time to time required for all payments of hire or other amounts by the Sub-Lessee under this Agreement on the dates and in the amounts and currency which are stipulated
herein, and shall maintain the same or procure that the same are maintained in full force and effect for so long as the same shall be required. 

6      EXTENT OF STANDBY LESSOR'S OBLIGATIONS AND LIABILITY  

	6.1
	The Standby Lessor shall be under no obligation to provide to the Sub-Lessee or any other person any replacement for the
Equipment (or any part thereof) during any period when the Equipment (or any part thereof) is unavailable for use for any reason whatever nor, except where the unavailability for use arises solely as
a result of the breach by the Standby Lessor of its express and specific obligations to the Sub-Lessee under this Agreement, otherwise to compensate the Sub-Lessee in respect
of such unavailability for use.

	6.2
	Save as expressly provided in this Agreement, the Standby Lessor shall be under no liability to the Sub-Lessee whatsoever
and howsoever arising, and from whatever cause, and whether in contract, tort or otherwise, in respect of any loss (consequential or otherwise), liability or damage of, or to, or in connection with,
the Equipment or any part thereof (including delay in delivery of the Equipment under this Agreement) or any person or property whatsoever irrespective of whether such loss, liability or damage shall
arise from the Standby Lessor's act or omission, unless such action or omission was a breach of the Standby Lessor's express and specific obligations under this Agreement or from its gross negligence
or wilful misconduct.

	6.3
	The Standby Lessor warrants that during the Standby Sub-Lease Period the Standby Lessor shall not, otherwise than pursuant
to its obligations under the Credit and Security Documents (and then subject to any restriction on the exercise of those rights under the Credit and Security Documents) and except as may be required
by law, through its own acts, interfere with the Sub-Lessee's quiet use, operation, possession and enjoyment of the Equipment on and subject to the terms and conditions contained in this
Agreement.

	6.4
	Nothing in this Agreement shall afford to the Standby Lessor any wider exclusion of any liability of the Standby Lessor to any person
for death or personal injury than the Standby Lessor may effectively exclude having regard to the provisions of the Unfair Contract Terms Act 1977.

	6.5
	Upon the expiry or termination of the Standby Sub-Lease Period the Sub-Lessee shall cease to be entitled to any
rights under Clauses 6.1 to 6.3. 

10

  

	6.6
	The Standby Lessor covenants with the Sub-Lessee that unless and until the leasing of the Equipment terminates under this
Agreement the Standby Lessor shall not create or permit to arise or suffer to exist any Encumbrance on the Equipment or this Agreement which arises solely from, or solely as a result of:

	(a)
	any
claim against the Standby Lessor that is not related to, or does not arise directly or indirectly as a result of, the transactions contemplated by this Agreement, the Credit and
Security Documents; or

	(b)
	any
act or omission of the Standby Lessor which constitutes its gross negligence or wilful misconduct.

 

	6.7
	If the Standby Lessor creates or permits to arise or suffers to exist any Encumbrance on the Equipment which arises as a result of the
circumstances or events set out in Clause 6.6, the Standby Lessor hereby authorises the Sub-Lessee, as agent of the Standby Lessor, to discharge such Encumbrances.

	6.8
	The Standby Lessor and the Sub-Lessee agree that:

	(a)
	the
Standby Lessor hereby assigns and agrees to assign to the Sub-Lessee, at the cost and expense of the Sub-Lessee, any Equipment Rights which are (at the
date of this Agreement) vested in the Standby Lessor, or which become vested in the Standby Lessor at any time after the date of this Agreement and prior to the end of the Standby
Sub-Lease Period, to the extent they are assignable in any case;

	(b)
	the
Sub-Lessee shall be entitled, at its cost and expense, to take such action as assignee of the Standby Lessor (and in the name of the Standby Lessor, if the
Sub-Lessee desires) to enforce against any person such Equipment Rights as may from time to time be vested in the Standby Lessor;

	(c)
	if
the Sub-Lessee is not entitled for any reason in its own name to enforce, take any action in relation to, or otherwise deal with any Equipment Rights which the Standby
Lessor has assigned or agreed to assign to the Standby Lessor under this Agreement, the Standby Lessor shall, at the Sub-Lessee's cost and expense and subject to the Standby Lessor being
indemnified against any resulting liability, from time to time do and perform such further acts and execute and deliver such other instruments as may be required by law or reasonably requested by the
Sub-Lessee to establish, maintain, protect and enforce the Sub-Lessee's title, interest and other rights to or in relation to the Equipment Rights against any other person, or
otherwise to enable the Sub-Lessee to deal with such Equipment Rights, and shall, without prejudice to the generality of the foregoing. commence and conduct, or defend, in each case on the
instructions and at the direction of the Sub-Lessee, any action or proceedings in relation to such Equipment Rights which the Sub-Lessee considers appropriate for such purpose,
or, alternatively, shall permit the Sub-Lessee to take such action in the Standby Lessor's name, subject to the Standby Lessor first being indemnified and secured to its satisfaction,
acting reasonably, by or on behalf of the Sub-Lessee against all potential, losses costs, damages or expenses; and

	(d)
	if,
prior to or during the Standby Sub-Lease Period, any Equipment Right becomes vested in the Standby Lessor but is not assignable, the Standby Lessor shall at the cost
and expense of the Sub-Lessee, use all reasonable endeavours to enforce such rights and procure the remedy of any defect to which such rights relate, and pay to the Sub-Lessee
any sum received in respect of the exercise of the relevant Equipment Rights. 

11

 

	6.9
	Notwithstanding any other provision of this Agreement (including, but not limited to, Clause 7.2) the Standby Lessor shall not
be responsible for any act or failure to act of the Sub-Lessee or any other party to the Credit and Security Documents (except itself) and, accordingly, no inaction by the Standby Lessor
with respect to any such act or failure to act shall constitute gross negligence or wilful misconduct of the Standby Lessor for the purposes of this Agreement.

	6.10
	During the Security Period the assignment and agreements to assign and the other actions referred to in paragraphs (a) to
(d) of Clause 6.8 shall be subject to the terms of the Credit and Security Documents. 

7      COST AND INDEMNITY  

	7.1
	The Sub-Lessee hereby agrees at all times to pay promptly or, as the case may be, indemnify and hold the Standby Lessor and
its officers, directors, secondees, agents and employees (together, the "Indemnified Persons") harmless on a full indemnity basis from and against each
and every liability, loss, charge, claim, demand, action, proceeding, damage, judgment, order or other sanction, enforcement, penalty, fine, fee, commission, interest, Encumbrances, salvage, general
average cost and expense of whatever nature suffered or incurred by or imposed on any Indemnified Person (together, "Losses"):

	(a)
	arising
out of or in connection with the purchase, manufacture, construction, ownership, possession, transportation, performance, management, sale, import to or export from any
jurisdiction, control, use or operation, registration, navigation, certification, classification, management, manning, provisioning, the provision of bunkers and lubricating oils, testing, design,
condition, delivery to or by the Standby Lessor, acceptance, leasing, sub-leasing, insurance, maintenance, repair, service, modification, refurbishment, drydocking, survey, conversion,
overhaul, replacement, removal, repossession, return, redelivery, sale or disposal by the Sub-Lessee or any other person of the Equipment (or any part thereof), whether or not such
liability may be attributable to any defect in the Equipment (or any part thereof) or to the design, construction or use thereof or from any maintenance, service, repair, overhaul, inspection or to
any other reason whatsoever (whether similar to the foregoing or not), and regardless of when the same shall arise (whether prior to, during or after termination of the Standby Sub-Lease
Period), and whether or not the Equipment (or any part thereof) is in the possession or control of the Sub-Lessee or any other person and whether the same is in the waters of the United
Kingdom or abroad;

	(b)
	as
a consequence of any claim that any design, article or material in the Equipment (or any part thereof) or relating thereto or the operation or use thereof constitutes an
infringement of patent, copyright, design or other proprietary right;

	(c)
	in
preventing or attempting to prevent the arrest, confiscation, seizure. taking in execution, requisition, impounding, forfeiture or detention of the Equipment (or any part thereof),
or in securing or attempting to secure the release of the Equipment (or any part thereof);

	(d)
	which
are costs and expenses incurred by the Standby Lessor in connection with the sale of the Equipment (or any part thereof) (including, without limitation, brokers' commissions,
redelivery costs, marketing expenses, legal costs, storage, insurance, registration fees and any other expenses of the Standby Lessor incurred pending the sale or disposal of the equipment (or any
part thereof) or otherwise in connection with the sale or disposal of the Equipment (or any part thereof); and 

12

 

	(e)
	if
the Equipment or the FPSO as a whole becomes a wreck or obstruction to navigation, against all losses, costs, damages and expenses which such Indemnified Person may in consequence
thereof incur, including in respect of the removal or destruction of the wreck or obstruction under statutory or other powers.

 

	7.2
	The indemnities contained in Clause 7.1 shall extend to:

	(a)
	cost
or expense incurred in taking preventative measures to avoid or mitigate loss or damage; and

	(b)
	all
costs of interest, fees and other amounts whatsoever suffered or incurred by any Indemnified Person in order to fund the satisfaction or discharge of any Loss.

 

	7.3
	The indemnities contained in Clauses 7.1 and 7.2 shall not extend to any Loss:

	(a)
	to
the extent that such Loss is caused by any act of an Indemnified Person which constitutes the gross negligence or wilful misconduct of such Indemnified Person;

	(b)
	to
the extent that such Loss is caused by any failure on the part of the Standby Lessor to comply with any of its express and specific obligations under this Agreement, or the Credit
and Security Documents; and

	(c)
	in
respect of which the Standby Lessor is expressly and specifically indemnified under any provision of this Agreement.

 

	7.4
	The Standby Lessor shall:

	(a)
	notify
the Sub-Lessee in writing as soon as reasonably practicable after receipt by the Standby Lessor of notice of a Loss, and such notice to the Sub-Lessee
from the Standby Lessor shall give such details as the Standby Lessor then has and which are in all the circumstances reasonable having regard to the contents of the notice of Loss received by the
Standby Lessor; and

	(b)
	notify
the Sub-Lessee of the Standby Lessor's intention to pay or procure the payment of any moneys in respect of any such Loss before any payment is made.

 

	7.5
	The Sub-Lessee shall be entitled to take (at its own cost) such actions as it reasonably deems fit to defend or avoid any
liability arising in respect of a Loss or to take action against any third a party in respect of a Loss and shall be entitled to take action in the name of the Standby Lessor, subject always to the
Standby Lessor first being indemnified and secured to its satisfaction, acting reasonably, by the Sub-Lessee against all potential, losses, costs damages and expenses.

	7.6
	If any Indemnified Person shall recover from or be paid by any person other than the Sub-Lessee any amount in respect of
payments paid or discharged by the Sub-Lessee in accordance with this Clause 7, then provided that the Standby Lessor has received payment of such amount and is satisfied, acting
reasonably, that such amount is unconditionally available for retention by the relevant Indemnified Person, the Standby Lessor shall pay to the Sub-Lessee a sum equal to the value of such
recovered or paid amount together with any interest actually earned on such recovered or paid amount.

	7.7
	Where in this Clause 7 an indemnity is expressed to be for the benefit of any person who is not a party to this Agreement the
Standby Lessor shall be entitled to indemnify such person on the same terms as the indemnities expressed to be for the benefit of such person in this Clause 7, and the Sub-Lessee
shall, without double-counting, indemnify the Standby Lessor and hold the Standby Lessor harmless on a full indemnity basis from and against each amount paid or payable by the Standby Lessor to such
person tinder any such indemnity. 

13

 
	7.8
	The Sub-Lessee agrees, without prejudice to the express provisions of this Agreement, to waive any rights as against the
Standby Lessor that the Sub-Lessee may have under the 1976 Convention on the Limitation of Liability for Maritime Claims (as most recently enacted in the United Kingdom under the Merchant
Shipping Act 1995) to limit or reduce any amount that the Sub-Lessee is or may be obliged to pay to the Standby Lessor.

	7.9
	If circumstances arise in respect of the Standby Lessor which could reasonably be expected, or would upon the giving of notice, result
in the Sub-Lessee being obliged to pay the Standby Lessor or any other Indemnified Person any amount under this Clause 7, the Standby Lessor shall at the cost of the
Sub-Lessee take all reasonable steps, and procure that any other Indemnified Person takes all reasonable steps, to mitigate any actual or potential Loss which are requested in writing by
the Sub-Lessee.

	7.10
	The indemnities given by the Sub-Lessee under this Clause 7 shall continue in full force and effect notwithstanding
any sale, transfer or other disposition of the Equipment, a Total Loss having occurred, the repudiation by the Sub-Lessee of this Agreement, the expiration of the Standby
Sub-Lease Period i-n or any other circumstance whatsoever. 

8      TAXES  

	8.1
	

	(a)
	The
Sub-Lessee shall pay promptly all Taxes which are levied or assessed on, or in respect of, the Equipment, which are incidental to the use and operation of the
Equipment or which are otherwise levied or assessed on, or in respect of, the chartering of the Equipment pursuant to this Agreement and the making of any payments pursuant to this Agreement
("Equipment Taxes").

	(b)
	If
any Equipment Taxes are imposed on the Standby Lessor, the Standby Lessor will, promptly following receipt by it of any demand for such Equipment Taxes, notify the
Sub-Lessee in writing of the amount of such Equipment Taxes and provide the Sub-Lessee with a copy of any such demand. The Sub-Lessee will, promptly thereafter,
fund the Standby Lessor with money which are sufficient to enable the Standby Lessor to pay such Equipment Taxes on their due date of payment.

	(c)
	Equipment
Taxes shall not include any Taxes on the Standby Lessor's management fee in the agreed amount, nor any other payment or income of the Standby Lessor not connected with this
Agreement or the transaction of which this Agreement forms part.

 

	8.2
	If the Sub-Lessee is required by law to make a tax deduction from any payment to the Standby Lessor:

	(a)
	the
Sub-Lessee shall notify the Standby Lessor as soon as it becomes aware of the requirement;

	(b)
	the
Sub-Lessee shall pay the tax deducted to the appropriate taxation authority promptly, and in any event before any fine or penalty arises;

	(c)
	the
amount due in respect of the payment shall be increased by the amount necessary to ensure that the Standby Lessor receives and retains (free from any liability relating to the tax
deduction) a net amount which, after tax deduction, is equal to the full amount which it would otherwise have received.

 

	8.3
	Within 1 month after making any tax deduction. the Sub-Lessee shall deliver to the Standby Lessor documentary
evidence satisfactory to the Standby Lessor that the tax had been paid to the appropriate taxation authority. 

14

 
	8.4
	If the Standby Lessor receives for its own account a repayment or credit in respect of tax on account of which the
Sub-Lessee has made an increased payment under Clause 8.2 it shall pay to the Sub-Lessee a sum equal to the proportion of the repayment or credit which the Standby
Lessor allocates to the amount due from the Sub-Lessee in respect of which the Sub-Lessee made the increased payment, provided always that:

	(a)
	nothing
in this Clause 8.4 shall oblige the Standby Lessor to arrange its tax affairs in any particular manner, to claim any type of relief, credit, allowance or deduction
instead of, or in priority to, another or to make any such claim within any particular time; and

	(b)
	nothing
in this Clause 8.4 shall oblige the Standby Lessor to make a payment which would leave it in a worse position than it would have been in if the Sub-Lessee
had not been required to make a tax deduction from a payment. 

9      USE AND EMPLOYMENT  

	9.1
	During the Standby Sub-Lease Period the Sub-Lessee shall have the full possession and use of the Equipment,
which is or shall be installed on the Vessel for use in the course of the FPSO's employment (including, without limitation, under the Enterprise Contract).

	9.2
	The Sub-Lessee, if and when requested so to do by the Standby Lessor in writing, shall promptly furnish to the Standby
Lessor all such information as the Standby Lessor may from time to time reasonably require regarding the Equipment and the use or employment of the Equipment.

	9.3
	The Sub-Lessee shall not without the previous consent of the Standby Lessor in writing sub-lease the Equipment.

	9.4
	The Standby Lessor and the Sub-Lessee shall ensure that throughout the Security Period the Equipment shall be attached to
the Vessel, or removed, as required by the Credit and Security Documents.

	9.5
	Notwithstanding the provisions of Clauses 9.1 to 9.4, during the Security Period the Sub-Lessee shall comply with covenants
contained in clause 10 of the General Assignment concerning the subject-matter of this Clause 9. 

10    MAINTENANCE AND OPERATION  

	10.1
	During the Standby Sub-Lease Period the Sub-Lessee shall at its own expense maintain the Equipment and every
part of the Equipment in a good state of repair, in efficient operating condition and in accordance with good commercial maintenance practice (fair wear and tear expected) and so as to comply with the
provisions of all regulations and requirements (statutory or otherwise) from time to time applicable to the Equipment, wherever the Equipment may be located.

	10.2
	The Sub-Lessee shall be permitted at its own risk to make such substitutions of or modifications to all or any part of the
Equipment (including the fitting of additional equipment) as are required to ensure the Equipment's compliance with the DOR and the Functional Specification and its mobilisation and operation under
the Enterprise Contracts.

	10.3
	The Sub-Lessee shall not do anything which, nor omit to do anything the omission of which, prejudices any right which the
Standby Lessor may have against a manufacturer or supplier of any part of the Equipment in respect of the Equipment of any part thereof. 

15

 
	10.4
	The Standby Lessor shall have the right at all reasonable times and intervals to inspect or survey the Equipment to ascertain the
condition of the Equipment and satisfy itself that the Equipment is being properly repaired and maintained in accordance with the provisions of this Agreement. The Sub-Lessee shall afford
all proper and reasonable facilities for inspection. Each party shall bear its own costs in relation to surveys.

	10.5
	The Sub-Lessee shall have the use of all such books, manuals, handbooks, data, drawings and such other documentation
(including updating documentation to include modifications) in regard to the Equipment, and the same or their substantial equivalent shall be returned to the Standby Lessor on redelivery in good order
and condition fair wear and tear alone expected.

	10.6
	Notwithstanding the provisions of Clauses 10.1 to 10.5, during the Security Period the Sub-Lessee shall comply with
covenants contained in clause 10 of the General Assignment. 

11    PARTS  

	11.1
	During the Standby Sub-Lease Period the Sub-Lessee shall, from time to time during the Standby
Sub-Lease Period replace, renew or obtain substitutions for such parts of the Equipment as shall be so damaged or worn as to be unfit for use provided always that in any such case title to
any part replaced, renewed or substitute shall remain with the Standby Purchaser until the part which replaced it of the new or substitute part becomes the property of the Standby Purchaser or is
replaced, renewed or substituted by a part which thereupon becomes the property of the Standby Purchaser and the Sub-Lessee shall, if any replacement or renewed or substituted part is not
the property of the Standby Purchaser, as soon as practicable replace the same with a part which thereupon becomes the property of the Standby Purchaser; and the Sub-Lessee shall at its
expense, execute and do any and all such further documents and acts as may be required by the Standby Purchaser to vest, or evidencing the vesting of, property in the replacement or renewed or
substituted part in the Standby Purchaser.

	11.2
	Notwithstanding the provisions of Clause 11.1, during the Security Period the Sub-Lessee shall comply with
covenants contained in clause 10 of the General Assignment concerning the subject-matter of this Clause 11. 

12    TITLE  

	12.1
	During the Standby Sub-Lease Period title to and ownership of the Equipment shall remain vested in the Standby Purchaser.
The Sub-Lessee shall have no right, title of interest in or to any part of the Equipment except the rights expressly set out in this Agreement. The Sub-Lessee shall do all acts
and things, which the Standby Purchaser or the Standby Lessor may reasonably require to be done to evidence the interest of the Standby Purchaser and the Standby Lessor in the Equipment or to protect
such interest against the claims of any other person.

	12.2
	Without prejudice to the generality of Clause 12.1 the Sub-Lessee will not create, suffer, nor permit to exist or
be continued, any Encumbrance over the title and interest of the Standby Lessor in the Equipment or the rights of the Sub-Lessee hereunder, and shall pay and discharge (or provide bail in
respect of) all debts, damages and liabilities whatsoever which may have given or may give rise to such Encumbrance or any claim enforceable against the Equipment (other than those for which the
Standby Lessor is expressly and specifically liable under this Agreement). 

13    INSURANCES  

	13.1
	During the Security Period the Equipment shall be insured in accordance with the provisions of the Insurance Plan, but subject always
to the General Assignment and, as between the Standby Lessor and the Sub-Lessee, at the expense of the Sub-Lessee. 

16

 
	13.2
	Subject as hereinafter provided, during the Non-Security Period:

	(a)
	the
Equipment shall throughout the Standby Sub-Lease Period be in every respect at the risk of the Sub-Lessee, who shall bear all risks howsoever arising of,
operation and maintenance of the Equipment or otherwise; and

	(b)
	the
Sub-Lessee shall throughout the Standby Sub-Lease Period at its expense and in accordance with the Insurance Plan (and otherwise as the Standby Lessor and
Sub-Lessee may agree) insure the Equipment and keep the Equipment insured in accordance with Insurance Plan.

	(c)
	all
such insurances as aforesaid shall be effected and maintained by the Sub-Lessee in the joint names of the Standby Purchaser, the Standby Lessor and the
Sub-Lessee according to their respective interests (but without, as between the Standby Lessor and the Sub-Lessee, liability on the part of the Standby Lessor for premiums or
calls and with all deductibles to be assumed by, for the account of and at the sole risk of the Sub-Lessee);

	(d)
	the
Sub-Lessee shall pay punctually all premiums, calls, contributions or other sums payable in respect of all such insurances and produce all relevant receipts when so
required by the Standby Lessor;

	(e)
	the
Sub-Lessee shall arrange for the execution of such guarantees as may from time to time be required by any protection and indemnity or war risks association;

	(f)
	the
Sub-Lessee shall be entitled to procure that the policies in respect of the insurances against fire and usual marine risks and the policies or entries in respect of
the insurances against war risks shall, in each case, be endorsed to the effect that payment of any claim (including for a Total Loss) will be made to the Sub-Lessee (for application in
accordance with Clause 13.10).

	(g)
	the
Sub-Lessee shall procure that the policies or entries in respect of protection and indemnity risks shall provide for moneys payable thereunder to be paid to the person
to whom was incurred the liability in respect of which the relevant money was paid;

	(h)
	the
Sub-Lessee shall (if the Standby Lessor so requests) procure that duplicates of all cover notes, policies and certificates of entry shall be furnished to the Standby
Lessor of its approval and custody;

	(i)
	the
Sub-Lessee shall (if the Standby Lessor so requests) procure that the brokers and the war risk and protection and indemnity associations with which the Equipment is
entered shall supply to the Standby Lessor such information in relation to the insurances effected. or to be effected, with them as the Standby Lessor may from time to time require;

	(j)
	the
Sub-Lessee shall not do any act or permit of suffer any act to be done whereby any insurance required as aforesaid shall or may be suspended, impaired or become
defective and (without prejudice to the generality of the foregoing) shall not use the Equipment or allow the Equipment to be used otherwise than in conformity with the terms of the insurances
effected pursuant to this Clause 13 (including any warranties expressed or implied therein) without first obtaining the consent to such employment of the insurers and complying with such
requirements as to extra premium or otherwise as the insurers may prescribe.

 

	13.3
	Unless otherwise agreed between the Standby Lessor and the Sub-Lessee, during the Non-Security Period the
Equipment shall be kept insured in respect of fire and usual marine risks for not less than its market value. 

17

 
	13.4
	Nothing in this Clause 13 shall prohibit either party from placing additional insurance on the Equipment at its own expense and
for its sole benefit provided however that:

	(a)
	such
insurance shall not exceed the amount permitted by warranties or other conditions contained in the insurance required by the preceding provisions of this Clause 13 without
the consent of the insurers of such required insurance; and

	(b)
	the
placing party shall upon request immediately furnish the other party with particulars of any additional insurance effected including copies of any cover notes or policies and of
the written consent of the insurers of the required insurance in any case where such consent is necessary.

 

	13.5
	In the event of the FPSO or the Equipment becoming a wreck or obstruction to navigation the Sub-Lessee shall indemnify the
Standby Lessor against any sums which the Standby Lessor shall become liable to pay, and shall pay, in respect of the removal or destruction of the wreck or obstruction under statutory powers.

	13.6
	In the event that at any time the Standby Lessor is not satisfied that the Equipment is being insured and kept insured by the
Sub-Lessee in accordance with the requirements of this Clause 13 the Standby Lessor shall notify the Sub-Lessee whereupon the Sub-Lessee shall rectify the
position within seven running days, failing which the Standby Lessor shall be at liberty to effect and thereafter to maintain such insurances on the Equipment of the Sub-Lessee's account.

	13.7
	If the Standby Lessor assigns its rights or any thereof as permitted by this Agreement, the Sub-Lessee will, upon request
and subject to the agreement of the insurers, procure that the assignee shall be added as additional assured in any policy effected under this Clause 13, so as to enjoy the same rights and
insurances enjoyed by the Standby Lessor under the insurance policy or policies and any amendments thereof.

	13.8
	The Sub-Lessee shall with due regard to the interest of the Standby Lessor in the Equipment be entitled to settle,
compromise or (with the consent of the Standby Lessor in respect of any claim for Total Loss) abandon any claim under the insurances (save any placed by the Standby Lessor in accordance with
Clause 13.4); and the Standby Lessor shall upon the request of the Sub-Lessee promptly execute such documents as may be required to enable the Sub-Lessee to abandon the
Equipment to insurers and claim a constructive total loss.

	13.9
	Without prejudice to the generality of its obligations under Clauses 10.1 and 11, the Sub-Lessee shall throughout the
Standby Sub-Lease Period be responsible for effecting all insured repairs and for settling all costs in connection with such repairs (including all insured charges, expenses and
liabilities), reimbursement to be secured by the Sub-Lessee from the insurers or underwriters to the extent of coverage under the insurances provided for under this Clause 13.

	13.10
	All moneys payable by the insurers in respect of any Total Loss of or any damage to the Equipment shall (save for amounts payable
under any additional insurances placed in accordance with Clause 13.4 which shall be paid to the placing party and retained for its sole benefit) be paid to the Sub-Lessee for
application as follows:

	(a)
	if
the Equipment becomes a Total Loss, the Sub-Lessee shall distribute insurance proceeds of such Total Loss between the Standby Lessor and the Sub-Lessee
according to their respective interest.

	(b)
	the
Sub-Lessee shall apply the proceeds of any claim for repairable damage to the Equipment in or towards settlement or reimbursement of the cost of effecting repair of
the Equipment in accordance with the Sub-Lessee's repair and maintenance obligations under this Agreement. 

18

 

	13.11
	Notwithstanding the provisions of Clauses 13.1 to 13.10, during the Security Period the Sub-Lessee shall comply with
insurance covenants (including, but not limited to, the payment, receipt and application of insurance proceeds) contained in clause 10 of the General Assignment. 

14    LOSS, DAMAGE AND REQUISITION  

	14.1
	Throughout the Standby Sub-Lease Period the Sub-Lessee shall bear the full risk of any Total Loss of or any
damage (fair wear and tear excepted) to the Equipment howsoever arising and of any other occurrence of whatever kind which may or shall deprive the Sub-Lessee of the use, possession or
enjoyment of the Equipment and no such event shall affect any obligation of the Sub-Lessee under this Agreement.

	14.2
	The Sub-Lessee shall notify the Standby Lessor forthwith by telex (thereafter confirmed by letter) of any occurrence in
consequence whereof the Equipment has become or is, by the passing of time or otherwise, likely to become a Total Loss.

	14.3
	If there is a Total Loss or Compulsory Acquisition of the Equipment, the Sub-Lessee shall promptly pay to the Standby
Lessor all hire, and any other amounts, due and payable under this Agreement as at the date on which the Total Loss or Compulsory Acquisition occurred (the "Date of
Loss") and shall cease to be under any liability to pay any hire, but not any other amounts, thereafter becoming due and payable under this Agreement.

	14.4
	For the purpose of ascertaining the Date of Loss:

	(a)
	an
actual Total Loss of the Equipment shall be deemed to have occurred at noon London time on the actual date the Equipment was lost but in the event of the date of the loss being
unknown the actual total loss shall be deemed to have occurred at noon London time on the date on which it is acknowledged by the insurers to have occurred;

	(b)
	a
constructive, comprised, agreed, or arranged total loss of the Equipment shall be deemed to have occurred at noon London Time on the date that notice claiming such a total loss of
the Equipment is given to the insurers, or, if the insurers do not admit such a claim, at the date and time at which a total loss is subsequently admitted by the insurers or adjudged by a competent
court of law or arbitration tribunal to have occurred. Either the Standby Lessor or, with the prior written consent of the Standby Lessor (such consent not to be unreasonably withheld), the
Sub-Lessee shall be entitled to give notice claiming a constructive total loss but prior to the giving of such notice there shall be consultation between the Sub-Lessee and the
Standby Lessor and the party proposing to give such notice shall be supplied with all such information as such party may request; and

	(c)
	a
Compulsory Acquisition shall be deemed to have occurred at noon London time on the first day following the end of the one month period specified in the definition of Compulsory
Acquisition.

 

	14.5
	With effect from the Date of Loss the letting and hiring of the Equipment under this Agreement shall terminate. All compensation
payable in respect of a Compulsory Acquisition shall be paid over to the Sub-Lessee for application between the Standby Lessor and the Sub-Lessee according to their respective
interests. 

19

 
	14.6
	If the Equipment is requisitioned for hire by any governmental or other competent authority during the Standby Sub-Lease
Period then:

	(a)
	the
letting and hiring of the Equipment under this Agreement shall continue in full force and effect for the remainder of the Standby Sub-Lease Period and the
Sub-Lessee shall continue to pay the stipulated hire in the manner provided by this Agreement. The Sub-Lessee shall also remain fully responsible for the due compliance with
all its other obligations under this Agreement other than such obligations which the Sub-Lessee is unable to comply with solely by virtue of such requisition; and

	(b)
	if
the Sub-Lessee shall duly comply with all its obligations under this Agreement, the Sub-Lessee shall during the Standby Sub-Lease Period be
entitled as between the Standby Lessor and the Sub-Lessee to all requisition hire paid to the Standby Lessor or to the Sub-Lessee by such governmental or other competent
authority or by any person acting by the authority of the same on account of such requisition; and

	(c)
	the
Sub-Lessee shall as soon as practicable after the end of any requisition for hire, and whether that requisition shall end during or after the expiry or termination of
the Standby Sub-Lease Period, cause the Equipment to be put into the condition required by this Agreement; and

	(d)
	the
Standby Lessor shall be entitled to all compensation payable by the relevant governmental or other competent authority, or by any person acting by the authority of the same, in
respect of any change in the structure, state or condition of the Equipment arising during the period of requisition for hire (and such compensation shall be paid to the Sub-Lessee to the
extent required to compensate it for the cost of complying with Clause 14.6(c)).

 

	14.7
	Notwithstanding the provisions of Clauses 14.1 to 14.6, during the Security Period the Sub-Lessee shall comply with
covenants contained in clause 10 of the General Assignment in relation to the subject-matter of this Clause 14. 

15    REDELIVERY  

	15.1
	On termination of the letting and hiring of the Equipment under this Agreement (other than pursuant to Clause 14.4), or upon
the ending of the Standby Sub-Lease Period by effluxion of time, the Sub-Lessee at its own expense shall (unless otherwise directed by the Standby Lessor, or, during the
Security Period, the Banks) remove the Equipment from the FPSO Vessel and redeliver the Equipment to the Standby Lessor at a place to be agreed between the parties and subject to the provisions of
Clauses 15.2 through 15.4, unless the same are disapplied by Clause 15.5.

	15.2
	The Sub-Lessee shall ensure that on redelivery the Equipment shall be in the same (or as good) structure, state and
condition (fair wear and tear alone excepted) as at Delivery or, if redelivery takes place after CCP, as at CCP.

	15.3
	At or about the time of redelivery a survey shall, if the Standby Lessor so requires, be made to determine the state and condition of
the Equipment. The Sub-Lessee and the Standby Lessor shall each appoint surveyors to be present at such survey and the surveyors present shall determine the state and condition of the
Equipment and shall identify the repairs or work necessary to place the Equipment at the date of redelivery in the class and the structure, state and condition referred to in Clause 15.2. If
the said surveyors disagree they shall refer the matter to a surveyor appointed on the application of either of them by the Director General of the Institute of Petroleum in London. Such surveyor
shall act as expert and not as arbitrator and his decision shall be final and binding on the parties hereto. All reasonable costs accessioned by any such survey including the costs of the said
surveyors shall be payable by the Sub-Lessee. 

20

 
	15.4
	If on redelivery the requirements of Clause 15.2 shall not have been satisfied the Standby Lessor shall be entitled to request
the Sub-Lessee to make good such and carry out such work on or repairs to the Equipment without delay or, if the Sub-Lessee fails to so take such actions, to carry out such
work on or repairs to the Equipment, and otherwise take such actions, as shall be necessary to cause such requirements to be satisfied and shall be entitled to recover from the Sub-Lessee
on demand the costs so incurred together with interest at the Default Rate from the date of expenditure by the Standby Lessor of the relevant cost until the date of recovery thereof from the
Sub-Lessee (both before and after any relevant judgement).

	15.5
	If the Sub-Lessee has performed or procured the performance of its obligations in respect of the maintenance and repair of
the Equipment through the Management Agreement, the foregoing provisions of Clauses 15.2, 15.3 and 15.4 shall not apply and the Standby Lessor shall be deemed to have accepted the Equipment to be in
satisfactory condition at the time of its redelivery under Clause 15.1.

	15.6
	Notwithstanding the provisions of Clause 15.1 to 15.5, during the Security Period the Sub-Lessee and the Standby
Lessor shall comply with the terms of the Credit and Security Documents applying to the subject matter of those Clauses. 

16    TERMINATION  

	16.1
	Subject to any restrictions on termination contained in the Credit and Security Documents the Sub-Lessee will be entitled
to cancel this Agreement and re-deliver the Equipment to the Standby Lessor if the Enterprise Contract or any other Field Contract is terminated.

	16.2
	During the Non-Security Period in the event of a failure by the Sub-Lessee to pay hire (or any other amount
due to the Standby Lessor under this Agreement) continuing beyond a period of 30 running days, the Standby Lessor shall have the right at its option (and without prejudice to any of its other rights
under this Agreement or under applicable law) to accept such repudiation and by 10 days written notice to the Sub-Lessee (copied to its Board of Directors) to terminate the letting
and hiring of the Equipment by the Sub-Lessee, without noting any protest and without interference by any court or any other formality whatsoever; and shall, without prejudice to any other
claim the Standby Lessor may otherwise have against the Sub-Lessee under this Agreement, be entitled to damages in respect of all costs and losses incurred as a result of the
Sub-Lessee's default and the ensuing termination of this Agreement and of the Standby Lessor's consent to the possession of the Equipment by the Sub-Lessee of the Development
Contract. 

17    FORCE MAJEURE  

	

	Intentionally
deleted. 

21

  

18    NOTICES  

	18.1
	Any notice, certificate, demand or other communication to be served, given made or sent under or in relation to this Agreement shall
be in writing and (without prejudice to any other valid method or giving making or sending the same) shall be deemed sufficiently given or made or sent if despatched if sent by registered post or by
telex to the following respective addresses:

	(a)
	to
the Standby Lessor to:

Marsstraat 33,

2132 HR Hoofddorp,

The Netherlands

	(b)
	to
the Sub-Lessee to:

Pierce Production Company Limited

St Magnus House

Guild Street

Aberdeen

AB11 6NJ, Scotland

For the attention of the Project Manager 

Or,
if a party hereto changes its address or telex number, to such other address or telex number as that party may notify to the other party hereto. 

19    ASSIGNMENTS  

	19.1
	Except as required by or permitted under or pursuant to the Credit and Security Documents, neither the Standby Lessor nor the
Sub-Lessee may:

	(a)
	sell,
assign or otherwise transfer or dispose of its rights, title, interests or obligations in or under this Agreement or the Equipment (including, but not limited to, the Standby
Lessor's rights to receive hire or any other payment) to any person; nor

	(b)
	create
or allow to subsist any Encumbrance over or in its rights, title, interests or obligations in this Agreement or the Equipment (including, but not limited to, the Standby
Lessor's right to receive hire or any other payment) to any person; nor

	(c)
	(without
limiting the generality of Clauses 19.1(a) or any other clause of this Agreement), sub-demise, charter, lease or otherwise use or employ the Equipment under this
Agreement. 

20    MISCELLANEOUS  

	20.1
	The terms and conditions of this Agreement and the rights of the parties shall not be waived or varied otherwise than by an instrument
in writing of the same date as or subsequent to this Agreement executed by both parties or by their duly authorised representatives.

	20.2
	No failure or delay on the part of either party in exercising any power, right or remedy hereunder or in relation to the Equipment
shall operate as a waiver thereof nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise of any such right or owner or the exercise of any
other right, power or remedy.

	20.3
	If any term or condition of this Agreement shall to any extent be illegal invalid or unenforceable the remainder of this Agreement
shall not be affected thereby and each other term and condition shall be legal valid and enforceable to the fullest extent permitted by law. 

22

 

21    APPLICABLE LAW  

	21.1
	This Agreement shall be governed by and construed in accordance with English law, and the Standby Lessor and the
Sub-Lessee hereby submit to the exclusive jurisdiction of the English courts.

	21.2
	No term of this Agreement is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this
Agreement.

	21.3
	The Standby Lessor agrees to appoint an agent for service of process in England and to maintain that or a similar appointment
throughout the Standby Sub-Lease Period on terms similar to those applying to the same subject under the General Assignment. 

IN WITNESS whereof the parties hereto have entered into this Agreement the day and year first above written. 

23

 

	THE STANDBY LESSOR	 	 
	SIGNED by	 	)
	Cornelis Voormolen	 	)
	For and on behalf of	 	)
	BLUEWATER HOLDING B.V.	 	)
	in the presence of: Karita Shah	 	 
	 	 	 
	THE SUB-LESSEE	 	 
	SIGNED by Cornelis Voormolen	 	)
	 	 	)
	For and on behalf of	 	)
	PIERCE PRODUCTION	 	)
	COMPANY LIMITED	 	)
	in the presence of: Karita Shah	 	)

24

 
 
 

APPENDIX 1
  DESCRIPTION OF EQUIPMENT    
    

DESCRIPTION OF EQUIPMENT & SCOPE OF SUPPLY  

1 GENERALLY  

The
Sub-Lessee shall lease from the Standby Lessor on the terms contained herein this Agreement the Equipment, all as further described hereunder by way of information only, to meet the
requirements of the DOR, CCP and Functional Specification prescribed by the Enterprise Contracts. 

2 DESCRIPTION OF THE TOPSIDE FACILITIES  

The
Equipment comprises of the following main elements, all being installed above the tank deck of the Vessel. Support stools for modules and skids are included. 

	(a)
	Manifold

	(b)
	Topside
Piperack Sections (8)

	(c)
	Flare
Stack

	(d)
	Workshop
Module

	(e)
	Gas
treatment Module

	(f)
	Separation
Module

	(g)
	Produced
Water Skid

	(h)
	Flair
Skid

	(i)
	Gas
Reinjection Module

	(j)
	Gas
recompression Module

	(k)
	Utility
Module

	(l)
	Infill
Skid

	(m)
	Chemical
Injection Module

	(n)
	Pedestal
Crane Aft (pedestal included) 

In
addition. the Equipment includes: 

	(a)
	Access
Corridor (from aft end of topside Pierack to Temporary Refuge Area Aft)

	(b)
	Boom
Rest for Pedestal Crane Aft

	(c)
	Closed
Drain System above tank deck

	(d)
	Open
Drain System above tank deck

	(e)
	Combined
Open Drain and Slop Treatment Package

	(f)
	El.
Driven Fire Water Pumps (2)

	(g)
	Sea
water Lift Pumps (2)

	(h)
	Sea
water Intake Hose 

25

 

	(i)
	Air
Compressor and Dryer (those installed in addition to the units being part of the Vessel)

	(j)
	Transport
Equipment as forklift, trolleys and multi-roller for use within the Topside Facility

	(k)
	HVAC
equipment for Access Corridor and Rooms in the aftship prepared for distribution of electric power to the Topside Facility

	(l)
	Electric
Distribution Equipment for the Topside Facility, either located within the Vessel forward and aft, or within the Topside Facility area

	(m)
	Oil
Metering Package

	(n)
	Safety
and Automation System (SAS) for the Topside Facility including furniture in CCR.

	(o)
	Deluge
Skids including Strainers, Deluge Nozzles and Hydrants for the Topside facility

	(p)
	Misc.
Safety Equipment for the Topside Facility. 

3      INSTALLATION TOOLS AND OPERATIONAL SPARES  

Special
tools and consumables / spares for installation. commissioning and start-up are included in the Equipment delivery at levels and numbers to be agreed with PPC. 

4      INSTALLATION, HOOK-UP AND COMMISSIONING  

Pipes,
cables, instruments, etc. required for hook-up of all these items, form part of the Equipment. In case the hook-ups have interfaces to the PPC or PPC partners
deliveries, the interfaces are specified in SIR. 

5      CERTIFICATION & DOCUMENTATION  

The
Standby Lessor shall if requested in writing by, and at the cost of, the Sub-Lessee: 

	(a)
	obtain
and maintain such regularity approvals as are required by the Sub-Lessee in connection with the Equipment;

	(b)
	provide
such documentation, manuals. and data as is necessary for the operation, maintenance and repair of the Equipment; and

	(c)
	assist
the Sub-Lessee with preparation of documentation for the Equipment as required for the design and operation Safety case and other documents required by the
Statutory Authorities. 

26

 

 
 

APPENDIX 2
  CERTIFICATE OF DELIVERY AND ACCEPTANCE    
    

27

 
 
 

Protocol of Delivery and Acceptance    
    

	Agreement: Lease Agreement No. [•]	 	Dated: [•]
	

Standby Lessor: [•]	
 	

 

Sub-Lessee:
Pierce Production Company Limited, c/o Watson, Farley & Williams, 15 Appold Street, London EC2A 2HB. 

It
is hereby certified through this certificate that the Standby Lessor has delivered to the Sub-Lessee and the Sub-Lessee has accepted delivery of the Equipment (as defined in
the Agreement) in accordance with the Agreement at such place and date as hereinafter indicated. 

Place
and Date of Delivery: [    •    ] 

	Item No.	 	Description	 	Qty	 	Comments
	

	

	

	

	

	

Signed
and executed in [    •    ] on this [    •    ] day of
[    •    ] 

	For the Standby Lessor	 	For the Sub-Lessee
	

Signed:	
 	

	
 	

Signed:	
 	

	

Name:	
 	

	
 	

Name:	
 	

28

QuickLinks

Exhibit 10.59

WATSON, FARLEY & WILLIAMS London

INDEX

APPENDIX 1 DESCRIPTION OF EQUIPMENT

APPENDIX 2 CERTIFICATE OF DELIVERY AND ACCEPTANCE

Protocol of Delivery and Acceptance

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