Document:

Exhibit
10.1

 

INTERNATIONAL DAYWORK DRILLING CONTRACT - OFFSHORE

 

THIS AGREEMENT, dated the
8th day of November, 2010, is made between CIE Angola Block 21 Ltd., a company
organized under the laws of the Cayman Islands, and having offices at Rua 1° Congresso do MPLA Edificio CIF
Luanda One — 17° Andar, Ingombota,
Luanda, República de Angola, and hereinafter called Operator, and Z
North Sea Ltd., a corporation organized under the laws of Delaware, and having
its main office at 15415 Katy Freeway, Suite 100, Houston, Texas 77094,
U.S.A., and hereinafter called Contractor.

 

WHEREAS, Operator desires to
have offshore wells drilled or worked over in the Operating Area and to have
performed or carried out all auxiliary operations and services as detailed in
the Appendices hereto or as Operator may request; and

 

WHEREAS, Contractor is
willing to furnish the dynamically positioned semi-submersible drilling vessel OCEAN CONFIDENCE together with drilling and other equipment
(hereinafter called the “Drilling Unit”), insurance and personnel, all as
detailed in the Appendices hereto, for the purpose of drilling said wells and
performing said auxiliary operations and services for Operator.

 

NOW THEREFORE THIS AGREEMENT
WITNESSETH that in consideration of the covenants herein it is agreed as
follows:

 

ARTICLE I — INTERPRETATION

 

101.         Definitions

 

In this Contract, unless the
context otherwise requires:

 

(a)                                  “Commencement
Date” means the point in time that the Drilling Unit is available, fully
crewed, having been inspected and all critical items remediated and with a work
plan with respect to all non-critical items having been agreed to by both
parties as to the equipment quantities, descriptions and performance
specifications set forth in Appendix B, and is positioned within 500 feet of
Operator’s first drilling location, being in compliance with all applicable
Host Country laws and regulations, with all the governmental and agency
approvals, permits and visa requirements in place in order to commence
operations, and after the Earliest Acceptance Date as specified in Appendix A
(for purposes of this Sub-Paragraph 101(a), “critical items” are those which
prevent the safe and efficient performance of operations);

 

(b)                                 “Operator’s
Items” mean the equipment, material and services owned by Operator or which are
listed in Appendix D that are to be furnished by Operator;

 

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(c)                                  “Contractor’s
Items” mean the Drilling Unit, equipment, material and services owned by
Contractor or which are listed in Appendices B and D that are to be furnished
by Contractor;

 

(d)                                 “Contractor’s
Personnel” means the personnel to be provided by Contractor from time to time
to conduct operations hereunder as listed in Appendix C and personnel of
Contractor’s subcontractors;

 

(e)                                  “Operator’s
Personnel” means the personnel of Operator, and personnel of Operator’s other
contractors, to be provided by Operator from time to time in connection with
operations hereunder;

 

(f)                                    “Operating Area”
means waters offshore of the country or area specified in Appendix A in which
Operator is entitled to conduct drilling operations;

 

(g)                                 “Operating Base”
means the place onshore designated by Operator and specified in Appendix A;

 

(h)                                 “Affiliated
Company” means as respects a particular entity, an entity owning fifty percent
(50%) or more of the equity or voting rights of Operator or Contractor, an
entity in which Operator or Contractor owns fifty percent (50%) or more of its
equity or voting rights, or an entity 
fifty percent (50%) or more of whose equity or voting rights are owned
by the same entity that owns fifty percent (50%) or more of the equity or
voting rights of Operator or Contractor.

 

(i)                                     “Work” means
furnishing the personnel, equipment and services requested of Contractor by this
Contract and Appendices to drill, complete or workover a well or wells within
the Operating Area during the term of this Contract, as requested by Operator
pursuant to the terms of this Contract. 
The term “well” shall specifically exclude any geological sidetrack or
any other operation requiring additional or modified permits unless otherwise
mutually agreed, but shall specifically include any bypass sidetrack for
coring.

 

(j)                                     “Host Country”
means the Republic of Angola.

 

102.         Currency

 

In this Contract, all
amounts expressed in dollars are United States dollar amounts unless otherwise
indicated in Appendix A.

 

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103.         Conflicts

 

Appendices A, B, C, D, E, F,
G and H attached hereto are incorporated herein by reference.  Any reference to this Contract includes such
Appendices, schedules, exhibits and attachments. If any provision of the
Appendices conflicts with a provision in the body hereof, the latter shall
prevail.  If any provision of the
Appendices, schedules, exhibits and attachments conflicts with a provision in
one of the other Appendices, schedules, exhibits and attachments, the
Appendices shall prevail in the following order: Appendices A, D, E, B, C, F, G
and H.

 

104.         Headings

 

The paragraph headings shall
not be considered in interpreting the text of this Contract.

 

105.         Further Assurances

 

Each party shall perform the
acts and execute and deliver the documents and give the assurances necessary to
give effect to the provisions of this Contract.

 

106.         Contractor’s Status

 

Contractor shall be an
independent contractor in performing its obligations hereunder.  This Contract does not create, and Operator
and Contractor stipulate and agree that this Contract shall not be construed to
create any agency relationship, employer/employee relationship, or
master/servant relationship by or between any of the agents and/or employees of
Contractor and the agents and/or employees of Operator.  Neither Contractor nor anyone employed by
Contractor will be deemed to be an employee, agent, servant, or representative
of Operator.  As an independent
contractor, neither Contractor nor anyone employed by Contractor will be
eligible for the benefits provided to regular employees of Operator, including,
but not limited to, health and disability insurance.  Contractor will not be the agent of Operator
for any purpose and will not have the power or right to enter into any
agreements on behalf of the Operator. 
Operator and its authorized representatives will have the right to inspect
all operations conducted by Contractor with respect to any and all Work.  Operator’s failure to make any inspection,
test or to discover any improper operations by Contractor will not relieve
Contractor from any of its responsibilities or obligations under this Contract
or otherwise.

 

107.         Governing Law and Dispute
Resolution

 

This Contract shall be
governed by, construed and interpreted, and the legal relations between the
parties determined, under the law designated in Appendix A, without regard to
or application of any of its conflicts of law provisions that would refer to
the application of the laws of another jurisdiction.

 

Any dispute, controversy or
claim arising out of or in relation to this Contract or at law, or the breach,
termination or invalidity thereof, that cannot be settled amicably by agreement

 

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between the parties, shall
be finally settled by binding arbitration administered by the International
Chamber of Commerce (the “ICC”) in accordance with the Rules of
Arbitration of the ICC then in force by one or more arbitrators appointed in
accordance with such rules, provided that this clause shall not be construed to
limit any rights which either party may have to apply to any court of competent
jurisdiction for injunctive or other provisional relief.  This arbitration provision shall be deemed
self-executing, and in the event that either party fails to appear at any
properly noticed arbitration proceeding, an award may be entered against such
party notwithstanding said failure to appear. 
Such arbitration shall be conducted at the offices of the ICC or any
other location established by the appointed arbitrator(s) in the city of
Houston, Texas.  The arbitration
proceedings shall be conducted in English and the arbitrator(s) shall
apply the law chosen as the governing law in Appendix A.  All documents and agreements relative to any
such dispute shall be read, interpreted, and construed from the English
versions thereof.  The award rendered shall
be final and binding upon both parties. 
Judgment upon the award may be entered in any court having jurisdiction,
or application may be made to such court for judicial acceptance of the award
and/or an order of enforcement as the case may be.  The parties agree that:  (i) the award of the arbitrator(s) shall
be the sole and exclusive remedy between them regarding any claims,
counterclaims, issues, or accountings presented or pled to the arbitrator(s) and
shall be binding and enforceable against them; (ii) such award shall be
made and shall be promptly payable in U.S. dollars free of any deduction, or
offset; and (iii) any costs or fees, incident to enforcing the award
shall, to the maximum extent permitted by law, be charged against the party
resisting such enforcement.  The award
shall include interest from the date of any damages incurred for breach or
other violation of this Contract, and from the date of the award until paid in
full, at the three —month London Interbank Offered Rate (LIBOR) for US$ deposits
as published by the Wall Street Journal plus 2% per annum, applicable on the
first business day prior to the due date of payment and thereafter on the first
business day of each succeeding calendar month, and reasonable attorneys’ fees
and costs of investigation of the prevailing party.  All notices by one party to the other in
connection with the arbitration shall be in writing and shall be deemed to have
been duly given or made if delivered or mailed in accordance with this
Contract.

 

108.         Operator’s Status

 

Operator enters into this
Contract on behalf of itself and its joint venturers, partners, co-owners,
co-lessors or co-lessees with Operator who wholly or partially bear the costs
of operations hereunder, and agrees that Operator and only Operator may enforce
any obligation or right herein expressed or implied to be for the benefit of
Operator and its joint venturers, partners, co-owners, co-lessors or
co-lessees, and Operator and only Operator may commence any action, claim or
proceeding against Contractor resulting from, arising out of or in connection
with this Contract.

 

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ARTICLE II — TERM

 

201.         Effective Date

 

The parties shall be bound
by this Contract when each of them has executed it (hereinafter referred to as “Effective
Date”).

 

202.         Duration

 

This Contract shall, subject
to Paragraphs 203 and 204 below, be for the term specified in Appendix A.

 

203.         Termination

 

This Contract shall
terminate:

 

(a)                                  if the Drilling
Unit becomes an actual total loss, on the date of such actual total loss or if
the Drilling Unit becomes a constructive, arranged or compromised total loss,
on the date of the casualty which results in such constructive, arranged or
compromised total loss;

 

(b)                                 after the
number of wells or on the date specified in Appendix A or, if operations are
then being conducted on a well, as soon thereafter as such operations are
completed and the last dynamic positioning beacon has been recovered and the
Drilling Unit is prepared to move from Operator’s last drilling location and
all of Operator’s Items have been offloaded, whichever is latest;

 

(c)                                  if, in the
reasonable opinion of Operator, there is a serious failure or neglect or breach
on the part of Contractor to perform properly its obligations under this
Contract, Operator may give notice in writing to Contractor to remedy such
failure, neglect or breach.  If
Contractor fails to commence reasonable and adequate steps to remedy such
failure, neglect or breach within seven (7) days after Contractor’s
receipt of the notice from Operator and continue diligently to prosecute such
remedy until completion, then Operator shall have the right to terminate this
Contract upon written notice to Contractor;

 

(d)                                 in accordance
with Paragraph 705;

 

(e)                                  in accordance
with Paragraph 706;

 

(f)                                    in accordance
with Paragraph 707;

 

(g)                                 in accordance
with Paragraph 802; or

 

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(h)                                 in accordance
with Paragraph 805.

 

204.         Option to Extend

 

Operator may extend the duration
of this Contract for an additional period and at the same terms and conditions
as agreed to herein by giving notice thereof to Contractor as specified in
Appendix A, subject to mutually agreed rates not to exceed US$375,000.00 per 24
hour day.

 

205.         Continuing Obligations

 

Notwithstanding the
termination of this Contract, the parties shall continue to be bound by the
provisions of this Contract that reasonably require some action or forbearance
after such termination.

 

206.         Return of Operator’s Items

 

Upon termination of
operations, Contractor shall return to Operator on board the Drilling Unit, or
as directed by Operator at Operator’s sole cost, any of Operator’s Items which
are at the time in Contractor’s possession.

 

ARTICLE III - CONTRACTOR’S PERSONNEL

 

301.         Number, Selection, Hours
of Labor and Remuneration

 

Except where herein
otherwise provided, the number, selection, replacement, hours of labor and
remuneration of Contractor’s Personnel shall be determined by the Contractor.
Such employees or subcontractors’ employees shall be the employees solely of
Contractor or its subcontractors.

 

302.         Contractor’s
Representative

 

Contractor shall nominate
one of its personnel as Contractor’s Representative who shall be in charge of
the remainder of Contractor’s Personnel and who shall have full authority to
resolve all day-to-day matters which arise between Operator and
Contractor.  Contractor’s Representative
shall not have authority to amend this Contract.

 

303.         Increase or Decrease in
Contractor’s Personnel

 

Operator may, at any time,
with Contractor’s approval (which shall not be unreasonably withheld) require
Contractor to increase or decrease the number of Contractor’s Personnel and the
day rates provided herein shall be adjusted accordingly.  In the event that Contractor fails, unless
due to reasons beyond its control, to provide its Personnel onboard the
Drilling Unit as specifically provided on Appendix C for any period in excess
of seventy-two (72) hours, the 

 

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dayrate payable during any
such period shall be reduced by an amount equal to twice the daily rate(s) of
pay and benefits listed on Appendix C, in the aggregate, of all missing
Contractor Personnel.  For the avoidance
of doubt, the Repair Rate of zero ($0) will be payable for any period in excess
of the period specified in Appendix A per occurrence during which operations
are suspended as a result of Contractor’s failure to provide its Personnel as
provided in Appendix C.

 

304.         Replacement of Contractor’s
Personnel

 

Contractor will remove and
replace in a reasonable time any of Contractor’s Personnel if Operator so
requests in writing based upon reasonable grounds.  Contractor agrees not to make lateral
transfers of Contractor’s Personnel from the Drilling Unit to another drilling
unit without the consent of Operator (which shall not be unreasonably withheld)
if doing so would negatively impact the operations.

 

305.         Anti-Corruption
Undertaking

 

Contractor agrees to comply
fully with the Anti-Corruption Undertaking set forth in Appendix F.

 

ARTICLE IV - CONTRACTOR’S ITEMS

 

401.         Obligation to Supply

 

Contractor shall provide
Contractor’s Items and Personnel and perform the services to be performed by it
in accordance with Appendices B, C and D.

 

402.         Maintain Stocks

 

Contractor shall be
responsible, at its cost, for maintaining adequate stock levels of Contractor’s
Items and replenishing as necessary.

 

403.         Maintain and Repair
Equipment

 

Contractor shall, subject to
Paragraph 901 and Appendix D, be responsible for the maintenance and repair of
all Contractor’s Items and shall provide all spare parts and materials required
therefor. Contractor shall, in the condition received, fair wear and tear
resulting from normal use excepted, if requested by Operator, also maintain or
repair any of Operator’s Items on board the Drilling Unit which Contractor is
qualified to and can maintain or repair with Contractor’s normal complement of
personnel and equipment on board the Drilling Unit, provided, however, that Operator
shall at its cost provide all spare parts and materials required to maintain or
repair Operator’s Items, and the basic responsibility and liability for
furnishing and maintaining such items shall remain with the Operator.

 

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404.         Flag, Certification, and Class of
Vessel

 

Contractor shall ensure that
Contractor maintains, and the Drilling Unit carries on board at all times
during the term covered by this Contract, all valid licenses, certificates, and
applicable documents as may be required by applicable law concerning the
ownership, condition, and operation of the Drilling Unit, including, without
limitation, all licenses, certificates and applicable documents as may be
required by applicable law concerning flag, certification and class of
vessel.  Notwithstanding anything to the
contrary herein, the Repair Rate of zero ($0) shall apply during any period in
which Contractor is not in compliance with applicable law concerning flag,
certification and class of vessel.

 

ARTICLE V - CONTRACTOR’S GENERAL OBLIGATION

 

501.         Contractor’s Standard of
Performance

 

Contractor shall carry out
all operations hereunder on a daywork basis. For purposes hereof the term “daywork
basis” means Contractor shall furnish equipment, labor, and perform services as
herein provided, for a specified sum per day at the request of Operator
(including any employee, agent, consultant or subcontractor engaged by Operator
to direct drilling operations). When operating on a daywork basis, Contractor
shall be paid at the applicable rates of payment.  Contractor shall perform its obligations in a
good and workmanlike manner in accordance with good oilfield practices and in
conformity with all specifications. 
Contractor’s performance of the Work shall meet or exceed Operator’s
minimum standards for contractor health, safety, security and environment
requirements, as set forth on Appendix G hereto.

 

Contractor shall ensure that
all of its employees and those of its subcontractors are in material compliance
with applicable Host Country immigration laws.

 

502.         Operation of Drilling Unit

 

Subject to Paragraph 606,
Contractor shall be responsible for the operation of the Drilling Unit,
including, supervising moving operations and positioning on drilling locations
as required by Operator. Operations under this Contract will be performed on a
twenty-four (24) hour per day basis.  In
addition, Contractor shall be responsible for obtaining all necessary permits,
certifications, and other permissions with respect to the Drilling Unit to
allow Contractor to perform the Work with the Drilling Unit in the Operating
Area and to comply with all applicable Host Country laws and regulations.

 

503.         Compliance with Operator’s
Requests

 

Contractor shall comply with
all requests of Operator consistent with the provisions of this Contract,
including, without limitation, drilling, well control and safety requests.  Such requests 

 

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shall, if Contractor so
requires, be confirmed in writing by the authorized representative of Operator.
However, Operator shall not knowingly issue any requests which would be
inconsistent with Contractor’s rules, policies or procedures pertaining to the
safety of its personnel, equipment or the Drilling Unit, or knowingly request
Contractor to exceed the rated capacities of Contractor’s Items or the minimum
or maximum water depths set forth in Appendix A.

 

504.         Adverse
Weather

 

Contractor, in consultation
with Operator, shall decide when, in the face of impending adverse weather
conditions, to institute precautionary measures in order to safeguard the well,
the well equipment, the Drilling Unit and personnel to the fullest possible
extent. Contractor and Operator shall each ensure that each senior representative
for the time being on board will not act unreasonably in the exercise of their
discretion under this Paragraph, provided that Contractor shall retain the
ultimate authority, in the event of any dispute, to determine precautionary
measures with respect to the safety of the Drilling Unit and its crew.

 

505.         Drilling Fluids and Casing
Program

 

Contractor shall take
reasonable care to follow the Operator’s requests with respect to the Drilling
Fluid and Casing Program as requested by Operator. Operator shall provide
Contractor with these programs reasonably in advance of the spud date of each
well to be drilled hereunder.

 

506.         Cutting/Coring Program

 

Contractor shall save and
identify cuttings and cores according to Operator’s instructions and place them
in containers furnished by Operator.

 

507.         Records to be Kept by
Contractor

 

Contractor shall keep and
furnish to Operator an accurate record of the work performed and formations
drilled on the IADC-API Daily Drilling Report Form or other form acceptable
to Operator.  A legible copy of said form
signed by Contractor’s Representative shall be furnished by Contractor to
Operator.  Operator shall have the right
to all data and information gathered during the drilling of any well or used in
connection with preparing to drill any well pursuant to this Contract.

 

508.         Difficulties During
Drilling

 

In the event of any
difficulty arising which precludes either drilling ahead under reasonably
normal procedures or the performance of any other operations planned for a
well, Contractor may suspend the work in progress and shall immediately notify
the representative of Operator, 

 

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in the meantime exerting
reasonable effort to overcome the difficulty. 
In the event Contractor is required to drill a relief well(s) or to
undertake well control activities, such operations may be subject to reasonable
additional conditions or premiums imposed by Contractor’s underwriters.  With respect to any additional premiums and
deductibles, unless otherwise agreed in advance in writing by Operator and
Contractor, the first $1,500,000 thereof shall be for Operator’s account and
the excess amount shall be for both Operator’s and Contractor’s accounts in
equal portions.

 

509.         Well Control Equipment

 

Contractor shall maintain
its well control equipment listed in Appendices B and D in good condition at
all times in conformity with recommended industry practices and specifications
and shall use all reasonable means to control and prevent fires and blowouts
and to protect the hole.  Contractor
shall test all well control equipment as requested by Operator but within the
manufacturer’s equipment ratings. 
Contractor shall use and maintain in good working order all alarm
equipment.

 

510.         Inspection of Materials
Furnished by Operator

 

Contractor agrees to
visually inspect all materials furnished by Operator before using same and to
notify Operator of any apparent defects therein.  Contractor shall make no use of any such
apparent defective materials, equipment, or supplies.

 

ARTICLE VI - OPERATOR’S OBLIGATIONS

 

601.         Equipment and Personnel

 

Operator shall at its cost
provide Operator’s Items and Operator’s Personnel and perform the services to
be provided or performed by it according to Appendix D.  In addition to providing the initial supply
of Operator’s Items, Operator shall be responsible, at its cost, for
maintaining adequate stock levels and replenishing as necessary.  When, at Operator’s request and with
Contractor’s agreement, the Contractor furnishes or subcontracts for certain
items which Operator is required herein to provide, for purposes of this
Contract said items or services shall be deemed to be Operator furnished items
or services, any subcontractor so hired shall be deemed to be Operator’s
contractor, and Operator shall not be relieved of any of its liabilities in
connection therewith. For furnishing said items and services, Operator shall
reimburse Contractor its entire cost plus a handling charge as specified in
Appendix A.

 

602.         Maintenance and Repair

 

Operator shall be
responsible, at its cost, for the maintenance and repair of all Operator’s
Items on board the Drilling Unit which Contractor is not qualified to or cannot
maintain or repair with Contractor’s normal complement of personnel and the
equipment on board.

 

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603.         Operator’s
Personnel

 

Operator shall ensure that
all of its employees and those of its other contractors are in material
compliance with applicable Host Country immigration laws.

 

604.         Anti-Corruption
Undertaking

 

Operator agrees to comply
fully with the Anti-Corruption Undertaking set forth in Appendix F.

 

605.         Operator’s Personnel and
Representatives

 

Operator shall nominate one
of its personnel as Operator’s senior representative onboard the Drilling Unit
(“Operator’s Representative”) who shall be the contact person for the Operator’s
Personnel onboard the Drilling Unit and who shall have full authority to
resolve all day-to-day matters which arise between Operator and
Contractor.  In addition, Operator may,
from time to time, designate representatives (including, without limitation,
representatives from Sociedade Nacional
de Combustíveis de Angola - Empresa Pública (“Sonangol”) or Operator’s other
Angolan partners) for the purpose of this Contract who shall at all
times have access to the Drilling Unit and may, among other things, observe
tests, examine cuttings and cores, inspect the work performed by Contractor, or
examine the records kept on the Drilling Unit by Contractor.  Contractor agrees that Operator’s
representatives shall have access to the Drilling Unit and be entitled to
conduct an inspection of the Drilling Unit (including all well control
equipment) prior to mobilization to the Host Country.  Operator agrees that Operator’s Personnel and
designated representatives shall be subject to Contractor’s policies regarding
prohibition of alcoholic beverages, controlled substances and contraband,
including the right to conduct random searches and tests.

 

606.         Drilling Site and Access

 

Operator will be responsible
for providing access to the drilling site, as well as selecting, marking, and
clearing drilling locations, for providing proper and sufficient certificates,
permits or permission necessary to enter upon and operate on the drilling site,
and for notifying Contractor of any obstructions, impediments, faulty bottom
conditions or hazards to operations in the area of each drilling location or
within the anchor pattern, including but not limited to any wellheads,
pipelines, cables, boulders and mud filled depressions.  Operator will also provide Contractor with
soil and sea bottom condition surveys at each drilling location hereunder when
reasonably required to satisfy Contractor’s Marine Surveyor.

 

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Notwithstanding any other
provision of this Contract, should there be obstructions, impediments, faulty
bottom conditions or hazards to operations at or within the area of the drill
site, including the anchor pattern, and these obstructions, impediments, faulty
bottom conditions or hazards to operations damage Contractor’s Items, or if
seabed conditions prove unsatisfactory to properly support or moor the Drilling
Unit during operations hereunder, Operator will be responsible for and hold
harmless and indemnify Contractor for all resulting damage to Contractor’s
Items not covered by Contractor’s insurance, including payment of the Standby
Rate during required repairs as provided in Paragraph 705(d).  All expenses associated with improvements to
the seabed and repositioning the Drilling Unit at the drilling site shall be
for Operator’s account; provided, however, that Operator’s total liability
under this Paragraph 606 for damage to Contractor’s Items shall in no
circumstances exceed $10,000,000.

 

607.         Custom or Excise Duties,
Levies, Taxes, Assessments and Fees

 

Operator
shall pay all Import/Export Charges (as defined below) imposed on Operator’s
Items by any governmental authority of any country.  Contractor shall pay all Import/Export
Charges imposed on Contractor’s Items by any governmental authority of any
country; provided, however, that the stamp tax associated with the temporary
import of the Drilling Unit into the Host Country based on the value of the
underlying contract, which is equal to the Operating Rate multiplied by 200
days plus insurance and mobilization costs, shall be for Operator’s account and
reimbursed to Contractor at the time Operator pays Contractor the Mobilization
Fee; and provided further, however, that if the appropriate governmental
authority of the Host Country prohibits Contractor from paying the stamp tax
based on the value of the underlying contract and instead requires that
Contractor pay a stamp tax based on the CIF Value of the Drilling Unit, then
such stamp tax amount shall be for Operator’s account and reimbursed to
Contractor at the time Operator pays Contractor the Mobilization Fee unless
Operator elects to import the Drilling Unit into the Host Country itself (in
which case any such stamp tax shall still be for Operator’s account).  In the event that Operator expects to operate
the Drilling Unit for more than 200 days under this Contract, then Operator
shall promptly notify Contractor to such effect by giving notice thereof to
Contractor as specified in Appendix A, and Contractor shall amend the
documentation required to pay the stamp tax for such extension, which amount
shall be for Operator’s account and reimbursed to Contractor upon receipt of
Contractor’s invoice.

 

608          Import/Export Obligations

 

(a)                                  Definitions
Relating to Import/Export Obligations.

 

(1)                                        “Import/Export
Charges” means properly and lawfully payable customs or import or export
duties, levies, taxes, assessments and fees (including any related fines,
penalties, and interest) and all other proper and lawful charges related to
port or customs clearances or charged on the 

 

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import or export of goods including pilotage, agent
fees, brokerage fees, handling charges and port dues, which are charged in
relation to Contractor’s Items or Operator’s Items, as applicable.

 

(2)                                  “Import/Export
Exemptions” means exemptions from or reductions of Import/Export Charges
available to Contractor or its subcontractors through the Risk Services
Agreement, or under Host Country law.

 

 (b)                              Imports.  Contractor is responsible for exporting all
of Contractor’s Items from their country of origin and for importing all
Contractor’s Items into the Host Country or Operating Area, and for obtaining
all necessary permits, licenses, authorizations and clearances as required for
the import of Contractor’s Items into the Host Country or Operating Area.
Operator is responsible for importing all of Operator’s Items into the Host
Country or Operating Area, and for obtaining all necessary permits, licenses,
authorizations and clearances for the import of Operator’s Items into the Host
Country or Operating Area.

 

(c)                                  Import/Export
Exemptions.  Operator shall use its
reasonable best efforts to provide Contractor with the documentation necessary
for Contractor to obtain all possible Import/Export Exemptions related to
Contractor’s Items, and Contractor shall provide all necessary information
pertaining to Contractor’s Items to assist Operator in providing such
documentation.

 

(d)                                 Payment of
Import/Export Charges.  Operator and
Contractor shall pay all Import/Export Charges in accordance with Paragraph 607
above.

 

(e)                                  Reimbursement.  If Contractor pays any Import/Export Charges
for the import or export of Operator’s Items into or out of the Host Country
and an Import/Export Exemption is not available through no fault of Contractor,
then Operator shall reimburse Contractor for the actual documented cost of any
Import/Export Charges for the import or export of Operator’s Items that are
paid by Contractor to a duly authorized representative of the governmental
authority of the Host Country having jurisdiction, provided that Contractor’s
payment of such Import/Export Charges shall be substantiated with each
invoice.  If Operator pays any
Import/Export Charges for the import or export of Contractor’s Items into or
out of the Host Country and an Import/Export Exemption is not available through
no fault of Operator, then Contractor shall reimburse Operator for the actual
documented cost of any Import/Export Charges for the import or export of
Contractor’s Items into or out of the Host Country that are paid by Operator to
a duly authorized representative of the governmental authority of the Host
Country having jurisdiction, provided that Operator’s payment of such
Import/Export Charges shall be substantiated in an invoice.

 

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(f)                                    Exports after
Completion of the Work.  Contractor is
responsible for exporting all Contractor’s Items from the Host Country and for
importing all Contractor’s Items into their country of destination, and for
obtaining all necessary permits, licenses, authorizations and clearances as
required for the export of Contractor’s Items from the Host Country. Operator
is responsible for exporting all of Operator’s Items from the Host Country, and
for obtaining all necessary permits, licenses, authorizations and clearances
for the export of Operator’s Items from the Host Country.

 

609.
 Duties,
Levies, Taxes, Assessments and Fees

 

(a) Incurred Outside of Host
Country.  Contractor shall be
responsible for all duties, levies, taxes, assessments and fees (including any
related fines, penalties, and interest) directly or indirectly imposed on or
incurred by Contractor, Contractor’s Items or Contractor’s employees,
subcontractors and suppliers and their respective employees, arising, directly
or indirectly, out of the performance of the Work (excluding materials owned
and titled to Operator) by any governmental authority outside of the Host
Country.  Contractor agrees to be
responsible for and hold harmless and indemnify Operator from any and all
claims and liabilities with respect thereto.

 

(b)  Incurred in the Host Country for Contractor’s account.  Contractor shall be solely
responsible for reporting, filing, withholding, and paying all Host Country
duties, levies, taxes, assessments and fees (including any related fines,
penalties and interest) imposed directly or indirectly on Contractor’s  employees as a result of the Contractor’s employees’
performance of the Work in Host Country.

 

Contractor shall ensure that its subcontractors (of
any tier) and their employees shall be solely responsible for reporting,
filing, withholding, and paying all Host Country duties, levies, taxes,
assessments and fees (including any related fines, penalties and interest) imposed
directly or indirectly on subcontractors and their employees as a result of the
subcontractors’ performance of Work in the Host Country.

 

When required by applicable law, Contractor shall
withhold the applicable Host Country amounts from payments made to Contractor’s
subcontractors for services performed for Contractor in the Host Country and
pay such withholdings to the appropriate governmental authority of Host
Country.  Any related fines, penalties or
interest arising from Contractor’s failure to withhold from subcontractors
according to the law of the Host Country or pay to the appropriate governmental
authority of Host Country shall be for the account of Contractor.  Operator has the right to engage a third-party
auditor to audit Contractor’s withholding to ensure correct withholding has
been made and the amounts have been transferred to the governmental authority
of Host Country.

 

14

 

Contractor shall be solely responsible for
reporting, filing and paying all other Host Country duties, levies, taxes,
assessments and fees (including any related fines, penalties and interest)
which are assessed to Contractor by the appropriate governmental authority
having jurisdiction other than as provided in Paragraphs 607, 608(d) and
609(c).

 

(c) Incurred in the Host
Country for Operator’s account.  Operator
may be required by law of the Host Country to withhold Host Country tax
(including, without limitation, contributions for training of Angolan personnel
pursuant to Decree 20/82 dated April 17, 1982, Executive Decree 124/82 dated
December 31, 1982, and other related regulations) from payments made to
Contractor in respect of Work performed in the Host Country (or waters offshore
of Host Country).  In such case, Operator shall withhold the applicable
Host Country amounts from payments made to Contractor or its Affiliated
Companies and pay such withholding to the appropriate governmental authority of
Host Country.  Operator shall provide Contractor with an official tax certificate
showing taxes paid to governmental authorities on Contractor’s behalf.
 Any related fines, penalties or interest arising from Operator’s failure
to withhold from Contractor according to the law of the Host Country or pay to
the appropriate governmental authority of Host Country shall be for the account
of Operator.

 

610.                           Registration

 

Contractor
is informed about fiscal and other legislation in force in the Host
Country.  Contractor shall, at its own
cost and expense, comply and shall procure that all of Contractor’s
subcontractors comply, with all legal, contractual and administrative
requirements in relation to their status and presence in the Host Country,
including registration.  When required by
law of the Host Country, Contractor shall register with the appropriate
governmental authority of Host Country for the period required by law of Host
Country.  Upon written request by
Operator, Contractor shall provide Operator with a current copy of any required
tax registration documents or other such certification in support of its proper
registration with the relevant governmental authority of Host Country.

 

611.         Preservation of records
and documents

 

Contractor shall maintain and preserve all records
and documents with regard to duties, levies, taxes, assessments and fees
(including any related fines, penalties and interest) for a period of five (5)
years from completion of performance of the Work under this Contract.

 

15

 

ARTICLE VII - RATES OF PAYMENT

 

701.         Payment

 

Operator shall pay to
Contractor during the term of this Contract the amounts from time to time due
calculated to the nearest half-hour according to the rates of payment herein
set forth and in accordance with the other provisions hereof.

 

702.         Mobilization

 

Operator shall pay
Contractor a Mobilization Fee as specified in Appendix A which shall be earned
on the Commencement Date.  The
Mobilization Fee shall cover the period beginning when the last dynamic
positioning beacon is recovered and the Drilling Unit is ready for transit from
the previous operator’s final location until the Commencement Date.

 

703.         Demobilization

 

Operator shall pay
Contractor a Demobilization Fee as specified in Appendix A which shall be
earned on the date of termination of this Contract; provided, however, that no
Demobilization Fee shall be payable by Operator if (i) the Contract is
terminated pursuant to Paragraph 203(c) or (ii) on the termination of this
Contract, the Drilling Unit is under contract with another operator and such
contract provides for a mobilization fee (or a mobilization fee is built into a
dayrate) to be paid by such other operator to Contractor in connection with the
mobilization of the Drilling Unit to such other operator’s designated location.

 

704.         Operating Rate

 

The
Operating Rate specified in Appendix A will first become payable on the
Commencement Date.  The Operating Rate
shall continue to be payable throughout the duration of the Contract, except as
herein otherwise provided.  The Operating
Rate shall also be payable as follows:

 

(a)                                  during any
period of delay when Contractor is unable to proceed as a direct result of an
act, instruction or omission of Operator including, without limitation, the
failure of any of Operator’s Items, or the failure of Operator to issue
instructions, provide Operator’s Items or furnish services; and

 

(b)                                 during any
period after the Commencement Date (other than Mobilization or Demobilization)
that the Drilling Unit is under tow, or under way.

 

705.         Standby Rate

 

The Standby Rate specified
in Appendix A will be payable as follows:

 

16

 

(a)                                  during any
period of delay when Contractor is unable to proceed because of adverse sea or
weather conditions including but not limited to tropical disturbances, tropical
depressions, tropical storms, hurricanes, and loop and eddy currents;

 

(b)                                 (intentionally
blank);

 

(c)                                  as provided in
Paragraph 901(a) and Paragraph 901(b) or due to blowout, in each case up to a
maximum of ten (10) days per occurrence after which the dayrate shall be
reduced to zero ($0).  If the dayrate has
been reduced to zero ($0) for a period of twenty-five (25) consecutive days,
either party may terminate the Contract; provided, however, that Operator may prevent
such termination by paying the Standby Rate; or

 

(d)                                 as provided in
Paragraph 606 and Paragraph 901(c), in each case up to a maximum of thirty (30)
days per occurrence after which the dayrate shall be reduced to zero ($0).  If the dayrate has been reduced to zero ($0)
for a period of twenty-five (25) consecutive days, either party may terminate
the Contract; provided, however, that Operator may prevent such termination by
paying the Standby Rate.

 

706.         Rate During Repair

 

The Repair Rate of zero ($0)
will be payable for any period in excess of the period specified in Appendix A
per occurrence during which operations are suspended as a result of Contractor’s
failure to provide its Personnel as provided in Appendix C or Paragraph
303.  The Repair Rate of zero ($0) will
be payable for any period in excess of the periods specified in Appendix A per
occurrence during which operations are suspended as a result of breakdown or
failure of Contractor’s Items or to permit necessary replacement, inspection
(including certification inspections), repair or maintenance of Contractor’s
Items, except as otherwise provided in Paragraphs 606, 707, 901(a), 901(b), and
901(c). Routine maintenance such as lubrication, packing of swivels, changing
of pump parts, servicing top drive or slipping lines shall not be considered as
Repair for purposes of this Paragraph; provided, however, that Contractor shall
be limited to twenty-four (24) cumulative hours of routine maintenance per
month, after which the Repair Rate of zero ($0) shall apply.  If the dayrate has been reduced to zero ($0)
for a period of sixty (60) consecutive days, either party may terminate the
Contract; provided, however, that Operator may prevent such termination by
paying the Force Majeure Rate.

 

17

 

If operations are suspended
as a result of breakdown or failure of Contractor’s Items to permit
replacement, inspection, repair or maintenance of Contractor’s subsea
equipment, the repair period shall commence and the Repair Rate of zero ($0)
shall apply immediately upon such suspension of operations and shall cease when
the BOP stack/LMRP has been rerun, latched, successfully tested and the
BOP/LMRP test plug has been pulled to the surface.

 

707.         Force Majeure Rate

 

The Force Majeure Rate
specified in Appendix A will be payable during any period in which operations
are not being carried on because of Force Majeure as defined in Paragraph 1303,
including periods required to repair damage caused by a Force Majeure event, up
to a maximum of thirty (30) consecutive days, after which and during the
continuous existence of the Force Majeure condition, no day rate will be
payable and, subject to Paragraph 1303, the Contract may be terminated by
either party upon written notice, subject to demobilization as provided in
Paragraph 703; provided, however, that Operator may prevent such termination by
continuing to pay the Force Majeure Rate.

 

708.         Additional Payments

 

Operator shall, in addition,
pay to Contractor:

 

(a)                                  the cost of any
overtime approved by Operator and paid by Contractor to Contractor’s Personnel
in respect of the maintenance or repair on board the Drilling Unit of Operator’s
Items or other overtime required by the Operator;

 

(b)                                 Contractor’s
costs associated with waiting on Operator furnished transportation or for time
in excess of four hours in transit to or from the Drilling Unit, or as a direct
result of an act, instruction or omission of Operator;

 

(c)                                  Contractor’s
costs associated with moving Contractor’s Items and Personnel, and their
personal effects, if Contractor is requested by Operator to change its
Operating Base; and

 

(d)                                 Contractor’s
costs associated with evacuations and accommodations of personnel caused by
adverse sea or weather conditions to the Operating Base.

 

709.                           Variation of Rates

 

Provided that no revision of
the rates listed below under (a), (e), (f), (g) or (h) shall occur during the
first three hundred sixty five (365) days following the Effective Date, the
rates and payment herein set forth shall be revised by the actual documented
amount of the change in Contractor’s cost if an event as described below occurs
or if the cost of any of the items hereinafter listed shall 

 

18

 

increase or decrease by more
than 5% from Contractor’s cost thereof on the Effective Date and by any further
subsequent revisions in Contractor’s costs throughout the term of the Contract:

 

(a)                                  labor costs,
including all payroll burden and benefits paid by Contractor for its employees;

 

(b)                                 if Operator
requires Contractor to increase or decrease the number of Contractor’s
Personnel;

 

(c)                                  if it becomes
necessary for Contractor, at Operator’s request, to change the work schedule of
Contractor’s Personnel or change the location of its Operating Base or
Operating Area;

 

(d)                                 in the event
described in Paragraph 1102 (Assignment);

 

(e)                                  if the cost of
insurance premiums in the Host Country increases or decreases;

 

(f)                                    if the cost of
catering increases or decreases;

 

(g)                                 the rates
listed herein shall be increased or decreased for costs other than those listed
above on the Commencement Date and at three (3) month intervals thereafter
based on changes in the Bureau of Labor Statistics Oilfield Drilling Machinery
and Equipment Wholesale Price Index (Code No. 1191-02) as published by the U.S.
Department of Labor from that reported for the month of the Effective Date.
Said rates shall be increased or decreased proportionately by the percentage
specified in Appendix A for each change of five percent (5%) in said Index;

 

(h)                                 if there is a
change of five percent (5%) or more in Contractor’s cost or expense of
performing under this Contract brought about by a change in the applicable
monetary rate of exchange;

 

(i)                                     if there is any
change in laws, rules, regulations or legislation, including the enforcement or
interpretation thereof, which was not foreseeable by Contractor at the
Effective Date of this Contract, that increases Contractor’s financial burden.

 

710.                           One
Rate or Fee

 

Notwithstanding anything to
the contrary in this Contract, if a dayrate is owed to Contractor, only one
dayrate or fee will be applicable at any one time.

 

19

 

ARTICLE VIII - INVOICES AND PAYMENTS

 

801.         Monthly Invoices

 

Contractor shall bill
Operator at the end of each month, or at the end of each well, if sooner, for
all daily charges earned by Contractor. 
Other charges shall be billed as earned. 
Billings for daily charges will reflect details of the time spent
(calculated to the nearest half-hour) and the rate charged for that time.  Billings for other charges will be
accompanied by invoices supporting costs incurred for Operator or other
substantiation as reasonably required. 
All billing statements and invoices sent by Contractor to Operator shall
be mailed to the address listed on Appendix A and emailed to those recipients
listed on Appendix A.

 

802.         Payment

 

Operator shall pay all
undisputed portions of invoices within thirty (30) days after the receipt
thereof except that if Operator disputes an item invoiced, Operator shall
within thirty (30) days after receipt of the invoice notify Contractor of the
amount disputed, specifying the reason therefor, and payment of the disputed
amount may be withheld until settlement of the dispute, but payment shall be
made on any undisputed portion.  Any sums
not paid within thirty (30) days after receipt of invoice (or, in the case of
disputed sums, within thirty (30) days after resolution of the dispute)  shall bear interest at the three-month London
Interbank Offered Rate (LIBOR) for US$ deposits as published by the Wall Street
Journal plus 2% per annum, applicable on the first business day prior to the
due date of payment and thereafter on the first business day of each succeeding
calendar month, from said due date until paid. 
Payment of any invoice shall not constitute acceptance of the
correctness thereof, and no payment of any amount, disputed or undisputed,
shall constitute a waiver of Operator’s right to later contest such payment and
obtain reimbursement of amounts which are determined to have been over paid.

 

If Operator fails or refuses
to pay to Contractor undisputed portions of invoices within forty (40) days
after the receipt thereof, then Contractor, at its sole discretion and upon ten
(10) days prior written notice, shall have the right to cease Work at Operator’s
location and/or terminate this Contract; provided, however, that Operator may
prevent such termination by paying such undisputed portions of invoices plus
interest, as applicable, before the expiration of such ten (10) day notice
period.

 

803.         Manner of Payment

 

All payments due by Operator
to Contractor hereunder shall be made by wire transfer or as otherwise agreed
to Contractor’s bank account which is specified in Appendix A.

 

804.         Non-Withholding Payment

 

Operator and Contractor
acknowledge and agree that their respective duties and obligations each to the
other during the term of this Contract will at all times be covered under the
terms and

 

20

 

conditions of this
Contract.  Operator acknowledges and
agrees that it shall have no right whatsoever to withhold or offset any amounts
invoiced by Contractor during the term of this Contract with respect to any
matter of dispute that does not arise in connection with the work performed by
the Drilling Unit.

 

805.           Escrow Agreement

 

In
order to guarantee Operator’s due performance of its obligations under this
Contract to make timely payment of monies invoiced by Contractor, Contractor
and Operator will in the manner and in accordance with and subject to the terms
and conditions contained in the form of Escrow Agreement attached to this
Agreement as Appendix H (the “Escrow Agreement”) open an Escrow Account with
JPMorgan Chase Bank, National Association (the “Escrow Account”).

 

The
said Escrow Account will be:

 

(i)                                     in the joint
names of Operator and Contractor;

(ii)                                  operated
according to the terms of the Escrow Agreement;

(iii)                               opened (and the
Escrow Agreement will be entered into) on a fixed date which shall be a date
which is no later than the anticipated Commencement Date; and

(iv)                              funded on or
before the actual Commencement Date by Operator with an initial deposit of U.S.
$10,800,000, which is equal to the sum of thirty (30) days of Work at the
Operating Rate under the Contract.

 

All
charges, fees, commissions and other costs relating to the opening, maintenance
and closure of the Escrow Account shall be paid by Operator.  Contractor shall have the right to
immediately terminate this Contract by providing written notice to Operator if
Operator fails or refuses either to sign the Escrow Agreement as required
hereunder or to make deposits into the Escrow Account in accordance with the
Escrow Agreement.

 

ARTICLE IX - LIABILITY

 

901.         Equipment or Property

 

Operator shall at all times
be responsible for and hold harmless and indemnify Contractor from and against
damage to or loss of Operator’s property, Operator’s Items and the property,
equipment and materials of Operator’s Affiliated Companies, and its and all of
their co-owners, co-lessees, farmors, farmees, partners, co-venturers, joint
owners, and its contractors and subcontractors of any tier (with the exception
of Contractor and its subcontractors of any tier), consultants, agents or
servants, and the employees of each of the foregoing.  Except as specifically provided herein to the
contrary, Contractor shall at all times be responsible for and hold harmless
and indemnify Operator from and against damage to or loss of Contractor’s 

 

21

 

Items and the property,
equipment and materials of Contractor’s Affiliated Companies, subcontractors,
consultants, agents or servants, and the employees of each of the
foregoing.  Notwithstanding the
foregoing, to the extent that the proceeds from Contractor’s insurance as made
available to Contractor do not compensate Contractor therefor:

 

(a)                                  Operator shall
be responsible for and hold harmless and indemnify Contractor for loss or
destruction of or damage to Contractor’s drill pipe, drill collars, subs,
reamers, bumper subs, stabilizers and other in-hole equipment when such
equipment is being used in the hole below the rotary table, excluding normal
wear and/or damage resulting from Contractor’s gross negligence, willful misconduct
or defects in Contractor’s Items. 
Abnormal wear and/or damage for which Operator shall be responsible
hereunder shall include, but not be limited to, wear and/or damage resulting
from the presence of H2S or other
corrosive elements in the hole including those introduced into the drilling
fluid, damage or excessive wear caused by jarring on drill pipe, sandcutting,
damage resulting from uncontrolled pressures such as those encountered during
blowout, or in a well out of control, 
dog-leg severity, fishing, cementing or testing operations, and from any
unusual drilling practices employed at Operator’s request.  Operator shall pay the cost of repairing
damaged equipment if repairable.  In the
case of equipment lost, destroyed or damaged beyond repair, except for loss or
damage caused by the gross negligence, willful misconduct of Contractor’s
Personnel, or defects in Contractor’s Items, Operator shall reimburse
Contractor an amount equal to the then current documented depreciated cost of
such equipment delivered to the Drilling Unit. 
Additionally, Operator shall pay the Standby Rate provided in Paragraph
705(c).  For the avoidance of doubt, the
Standby Rate shall not be payable in the event of failure of Contractor’s Items
not attributable to the events described in this Paragraph 901(a).  Operator shall have no liability pursuant to
this Paragraph 901 until the Commencement Date.

 

(b)                                 Operator shall
be responsible for and hold harmless and indemnify Contractor for damage to or
loss of Contractor’s subsea and mooring equipment, including without
limitation, chains,  mooring wires,
anchors, marine riser, slip joint, choke and kill lines, flexible hoses,
hydraulic hoses and guidelines, subsea BOP, shackles, pendant lines and buoys,
except for loss or damage caused by the gross negligence or willful misconduct
of Contractor’s Personnel, and shall reimburse Contractor an amount equal to
the then current documented depreciated cost of such equipment delivered to the
Drilling Unit, or the repair cost, whichever is applicable, and shall pay the
Standby Rate as provided in Paragraph 705(c). 
In the event operations are conducted on any well where the well head
angle exceeds 1o from vertical, and such operations result in damage to or loss
of Contractor’s subsea equipment, not withstanding anything else contained in
this Contract, Operator shall assume all liability for loss of or damage to
such equipment.  

 

22

 

Additionally, Operator shall
pay the Standby Rate as provided in Paragraph 705(c).  For the avoidance of doubt, the Standby Rate
shall not be payable in the event of failure of Contractor’s Items not
attributable to the events described in this Paragraph 901(b).

 

(c)                                  Operator shall
be responsible for and hold harmless and indemnify Contractor for damage to or
loss of the Drilling Unit caused by the negligence or other fault of Operator
furnished tugs, anchor handling vessels, supply or service vessels, except for
loss or damage caused by the negligence or willful misconduct of Contractor’s
Personnel.  Additionally, Operator shall
pay the Standby Rate as provided in Paragraph 705(d).

 

902.         The Hole

 

In the event the hole should
be lost or damaged, Operator shall be responsible for and hold harmless and
indemnify Contractor from such damage to or loss of the hole, including all
downhole property therein. 
Notwithstanding the foregoing, should such damage or loss occur as a
result of Contractor’s sole negligence or willful misconduct, Operator at its
sole discretion may require Contractor, as Operator’s sole remedy and
Contractor’s exclusive liability for such sole negligence or willful
misconduct, to re-drill the hole or portion thereof so lost or damaged at 65%
of the Operating Rate; provided that such re-drill shall be considered
operations in continuation of the existing well and shall not constitute a new
well.

 

903.         Contractor’s
Personnel

 

Contractor shall be
responsible for and hold harmless and indemnify Operator from and against all
claims, demands and causes of action of every kind and character on account of
bodily injury, illness or death of Contractor’s Personnel or Contractor’s
invitees or damage to their property.

 

904.         Operator’s Personnel

 

Operator shall be
responsible for and hold harmless and indemnify Contractor from and against all
claims, demands, and causes of action of every kind and character on account of
bodily injury, illness or death of Operator’s Personnel or Operator’s invitees
or damage to their property.

 

905.         Pollution and
Contamination

 

Without prejudice to the
parties’ respective indemnity obligations provided in Paragraph 606 and
elsewhere in this Article IX, but notwithstanding anything else to the
contrary contained in this Contract, the responsibility for pollution or
contamination shall be as follows:

 

23

 

(a)                                  Contractor
shall be responsible for and hold harmless and indemnify Operator against all
claims, demands, and causes of action of every kind and character (including
control and removal of the pollutant involved) arising directly or indirectly
from all pollution or contamination which originates from the Drilling Unit
above the surface of the water, including, without limitation, from spills of
fuels, lubricants, motor oils, drilling fluid from mud pits and attendant
cuttings, pipe dope, paints, solvents, ballast, bilge and garbage in Contractor’s
possession or control or directly associated with Contractor’s equipment and
facilities.

 

(b)                                 Operator shall
be responsible for and hold harmless and indemnify Contractor against all
claims, demands, and causes of action of every kind and character (including
control and removal of the pollutant involved) arising directly or indirectly
from all pollution or contamination, other than that described in Paragraph 905(a) above,
which may occur as a result of operations hereunder, including, but not limited
to, that which may result from fire, blowout, well diversion, cratering, seepage or
any other uncontrolled flow of oil, gas, water or other substance, as well as
the use or disposition of lost circulation and fish recovery materials and
fluids, oil emulsion, oil base or chemically treated drilling fluids, and
drilling fluids other than drilling fluid from mud pits.

 

906.         Debris Removal

 

Contractor shall be
responsible for and hold harmless and indemnify Operator for all costs of
removal of wreck and debris of Contractor’s Items and the equipment and
property of Contractor under this Contract if such wreck and debris interferes
with Operator’s continued operations on such well location or if removal of
such wreck and debris is required by regulatory authorities having jurisdiction
over the relevant well location. 
Operator shall be responsible for and hold harmless and indemnify
Contractor for the cost of removal of wreck and debris of Operator’s Items and
the equipment and property of Operator.

 

907.         Cost of
Control

 

Operator shall be
responsible for and hold harmless and indemnify Contractor for the cost of
regaining control of any wild well.

 

908.         Underground Damage

 

Operator shall be
responsible for and hold harmless and indemnify Contractor for any and all
claims resulting from operations under this Contract on account of injury to,
destruction of, or loss or impairment of any property right in or to oil, gas
or other mineral substance or water, if at the time of the act or omission
causing such injury, destruction, loss, or impairment, said 

 

24

 

substance had not been
reduced to physical possession above the seabed, and for any loss or damage to
any formation, strata, or reservoir beneath the seabed.

 

909.         Patent Liability

 

Contractor shall be
responsible for and hold harmless and indemnify Operator against any and all
loss or liability arising from infringement or alleged infringement of patents
covering the property, equipment, methods or processes furnished or directed by
Contractor.  Operator shall be
responsible for and shall hold harmless and indemnify Contractor against any
and all loss or liability arising from infringement or alleged infringements of
patents covering the property, equipment, methods or processes furnished or
directed by Operator.

 

910.         Consequential Damages

 

Each party shall be
responsible for and hold harmless and indemnify the other party from and
against its own and its Affiliated Companies’, joint interest owners’,
co-lessees’, co-owners’ and joint-owners’ special, indirect, or consequential
damages resulting from or arising out of this Contract, including, without
limitation, loss of profits, loss of revenue, loss of or deferment of
production, business interruptions, loss of actual savings or anticipated
savings, loss of use, loss of agreement or contract, however same may be caused
and whether caused directly or indirectly and whether or not foreseeable at the
Effective Date.

 

911.         Indemnity Obligation

 

(a)                                  Except as
expressly stated otherwise in Paragraphs 606, 901(a), 901(b), 901(c) and
902, the parties intend and agree that the phrase “be responsible for and hold
harmless and indemnify” in Paragraphs 606, 609, 901 through 910 hereof mean
that the indemnifying party shall release, indemnify, hold harmless and defend
(including payment of reasonable attorney’s fees and costs) the indemnified
party from and against any and all claims, demands, causes of action, damages,
judgments and awards of any kind or character, without limit and without regard
to the cause or causes thereof, including pre-existing conditions, whether such
conditions be patent or latent, the unseaworthiness of any vessel or vessels
(including the Drilling Unit), breach of representation or warranty (express or
implied), strict liability, tort, breach of contract, breach of duty (whether
statutory, contractual or otherwise), or the negligence of any person or
persons, including that of the indemnified party, whether such negligence be
sole, joint or concurrent, active, passive or gross, or any other theory of
legal liability.

 

(b)                                 An indemnifying
party’s obligations contained in this Contract shall also extend to the
indemnified party and its Affiliated Companies, its and their joint interest
owners, co-lessees, co-owners, joint-owners, and its and their contractors and 

 

25

 

subcontractors of every tier
and the Affiliated Companies, officers, directors, employees, agents, owners,
shareholders and insurers of each (“Contractor Group” or “Operator Group”
respectively, provided that no member of Contractor Group shall be a member of
Operator Group) and to actions against the Drilling Unit, its legal and
beneficial owners, whether in rem or in personam; provided,
however, that Contractor’s obligations as the indemnifying party
contained in this Contract shall not extend in any event to Operator’s other
contractors and subcontractors providing flight services, and shall not extend
to Operator’s other contractors and subcontractors providing tugs, supply or
service vessels in the event of damage to or loss of the Drilling Unit.

 

(c)                                  The terms and
provisions of Paragraphs 606, 607, 609 and 901 through 910 shall have no
application to claims or causes of action asserted against Operator or
Contractor which arise solely by reason of any agreement of indemnity with a
person or entity not a party hereto. 
Except as otherwise provided herein, nothing contained herein shall
confer any rights upon any third party beneficiary.

 

912.         General Intent

 

The parties recognize that
the performance of well drilling, workover and associated activities such as
those to be performed under this Contract have resulted in bodily injury,
death, damage to or loss of property, well loss or damage, pollution, loss of
well control, reservoir damage and other losses and liabilities.  It is the intention of the parties hereto
that the provisions of Paragraphs 606, 607 and 609 and this Article IX
shall exclusively govern the allocation of risks and liabilities of said
parties without regard to cause (as more particularly specified in Paragraph
911), it being acknowledged that the compensation payable to Contractor as
specified herein has been based upon the express understanding that risks and
liabilities shall be determined in accordance with the provisions of this
Contract.

 

ARTICLE X - INSURANCE

 

1001.       Contractor’s Insurance

 

Contractor shall carry and
maintain insurance coverages, purchased from
Lloyds of London and/or other companies that are rated A- or better by A. M.
Best or Standard & Poor’s, of the type and in the amounts set forth in
Appendix E, covering only those liabilities specifically assumed by Contractor
under this Contract.

 

All references in this
Contract to “insurance” of Contractor shall mean such insurance as set forth in
Appendix E.  Subject to applicable Host
Country law, Contractor shall have the right to self-insure any or all of that
portion of insurance relating to loss or damage to the Drilling Unit 

 

26

 

and any equipment on board
and shall have the right to establish retentions, deductibles and coinsurance
on liability insurance at the levels the Contractor considers reasonable and
economic.

 

1002.  Operator’s
Insurance

 

Operator will carry and
maintain insurance coverages, purchased from
Lloyds of London and/or other companies that are rated A- or better by A. M.
Best or Standard & Poor’s (provided such purchase is in compliance
with applicable Host Country laws), in any event of the type and in the amount
normally carried by prudent oil and gas companies with the same or similar
lines of business, including but not limited to coverage for general and excess
liabilities of at least $50,000,000, Owned or Non-Owned Aircraft Liability
Insurance, as appropriate, and Operators Extra Expense or equivalent, including
Control of Well, Restoration/Re-drill and Pollution arising from a well out of
control, with a total limit of $150,000,000 for each occurrence – in each and
all cases, adequate to cover liabilities assumed by Operator under this
contract.

 

1003.       Certificates

 

Contractor will furnish
Operator, on request, with certificates indicating that the required insurance
is in full force and effect and that the same (except War Risk) shall not be
canceled or materially and adversely changed without thirty (30) days prior
written notice to Operator.  Acceptance
of, or failure to object to, or commencement of Work despite an incomplete or
improperly completed certificate shall not constitute a waiver of any of
Operator’s insurance obligations or Contractor’s rights.

 

Operator will furnish
Contractor, on request, with certificates indicating that the required
insurance is in full force and effect and that the same shall not be canceled
or materially and adversely changed without thirty (30) days prior written
notice to Contractor.  Acceptance of, or
failure to object to, or commencement of Work despite an incomplete or
improperly completed certificate shall not constitute a waiver of any of
Contractor’s insurance obligations or Operator’s rights.

 

1004.       Subrogation

 

All insurance policies of
Contractor will provide that the underwriters waive their right of subrogation
against Operator Group (as defined in 911(b)), but only with respect to, and to
the extent of, the liabilities specifically assumed by Contractor under this
Contract.

 

All insurance policies of
Operator will provide that the underwriters waive their right of subrogation
against Contractor Group (as defined in 911(b)), but only with respect to, and
to the extent of, the risks and liabilities specifically assumed by Operator
under this Contract.

 

27

 

1005.       Additional Insured

 

All insurance policies of
Contractor (except Workers Compensation) will name Operator Group (as defined
in 911(b)) as additional insured on a broad form basis, but only with respect
to, and to the extent of, the liabilities specifically assumed by Contractor
under this Contract.

 

All insurance policies of
Operator (except Workers Compensation and Operator’s Extra Expense) will name
Contractor Group (as defined in 911(b)) as additional insured on a broad form
basis, but only with respect to, and to the extent of, the liabilities
specifically assumed by Operator under this Contract.

 

1006.       Primary Insurance

 

All insurance of Contractor
shall, to the extent of the liabilities assumed hereunder by Contractor, be
primary as respects to any valid or collectible insurance in favor of any
member of Operator Group (as defined in 911(b)).

 

All insurance of Operator
shall, to the extent of the liabilities assumed hereunder by Operator, be
primary as respects to any valid or collectible insurance in favor of any
member of Contractor Group (as defined in 911(b)).

 

1007.       Insurance Not A Limit On Indemnity

 

The indemnity obligations of
Contractor, as set out in this Contract, are independent of any insurance
requirements as set out in this Article X and Appendix E, and such
indemnity obligations shall not be lessened or extinguished by reason of
Contractor’s failure to obtain or maintain insurance coverage or by any
defenses asserted by Contractor’s insurers.

 

The indemnity obligations of
Operator, as set out in this Contract, are independent of any insurance
requirements as set out in this Article X and Appendix E, and such
indemnity obligations shall not be lessened or extinguished by reason of
Operator’s failure to obtain or maintain insurance coverage or by any defenses
asserted by Operator’s insurers.

 

ARTICLE XI - SUBLETTING AND ASSIGNMENT

 

1101.       Subcontracts

 

Operator may employ other
contractors to perform any of the operations or services to be provided or
performed by it.

 

28

 

Contractor may employ other
contractors to perform any of the operations or services to be provided or
performed by it with the prior written consent of Operator, which consent shall
not be unreasonably withheld.

 

1102.       Assignment

 

Neither party may assign or
novate this Contract to anyone other than an Affiliated Company without the
prior written consent of the other, and prompt notice of any such intent to
assign shall be given to the other party. 
In the event of an assignment or novation by either party to an
Affiliated Company, the assigning party shall remain liable to the other party
as a guarantor of the performance by the assignee of the terms of this
Contract.  In the event of an assignment
or novation by either party to a third party other than an Affiliated Company,
the assigning party shall not remain liable to the other party as a guarantor
of the performance by the assignee of the terms of this Contract.  Contractor shall have the right to satisfy
itself, in its sole discretion, as to the acceptability of any such third party
to whom Operator requests to assign or novate this Contract.  If any assignment is made that increases
Contractor’s financial burden, Contractor’s compensation shall be adjusted to
give effect to any increase in Contractor’s operating costs or taxes.

 

ARTICLE XII - NOTICES

 

1201.       Notices

 

Notices, reports and other
communications required or permitted by this Contract to be given or sent by
one party to the other shall be delivered by hand, mailed, emailed, or
telecopied to the address as specified in Appendix A.  Either party may by notice to the other party
change its address.  Notices shall be
effective upon receipt.

 

ARTICLE XIII - GENERAL

 

1301.       Confidential Information

 

All information relating to
a well obtained by Contractor in the conduct of operations hereunder shall be
held confidential by Contractor who will use the same degree of care it uses in
safeguarding its own confidential information.

 

Upon written request of
Contractor, all drawings and technical information relating to the Drilling
Unit or Contractor’s equipment shall be held confidential by Operator who will
use the same degree of care it uses in safeguarding its own confidential
information.  The existence and terms of
this Contract may be publicly disclosed by either party to its investors via
press release or if required pursuant to any law, order, decree, regulation or rule (including,
without limitation, those of any regulatory agency, securities commission or
stock exchange).

 

29

 

1302.       Attorney’s Fees

 

If this Contract is placed
in the hands of an attorney for collection of any sums due hereunder, or suit
is brought on same, or sums due hereunder are collected through bankruptcy or
arbitration proceedings, then the prevailing party shall be entitled to recover
reasonable attorney’s fees and costs.

 

1303.       Force
Majeure

 

Except as otherwise provided
in this Paragraph 1303, each party to this Contract shall be excused from
complying with the terms of this Contract, except for the payment of monies
when due, if and for so long as such compliance is hindered or prevented by
riots, strikes, wars (declared or undeclared), insurrection, rebellions,
terrorist acts, civil disturbances, dispositions or order of governmental
authority, whether such authority be actual or assumed, acts of God, inability
to obtain equipment, supplies or fuel (if attributable to the foregoing), or by
any act or cause (other than financial distress or inability to pay debts when
due) which is reasonably beyond the control of such party, such cause being
herein sometimes called “Force Majeure.” 
For the avoidance of doubt, Operator’s inability to obtain required
permits from any governmental and/or regulatory agency having or purporting to
have jurisdiction over any Operating Area under this Contract does not
constitute a Force Majeure event, unless such inability to obtain permits is
due to circumstances beyond the control of Operator or which have arisen
through no fault of Operator and renders continued operations impossible.  In the event that either party hereto is
rendered unable, wholly or in part, by any of these causes to carry out its
obligations under this Contract, the obligations of such party shall be
suspended during the continuance of any inability so caused, except that
Operator shall be obliged to pay to Contractor the Force Majeure Rate provided
for in Paragraph 707 (but only for the period of time specified therein), and
such party shall give notice and details of Force Majeure in writing to the
other party as promptly as possible after its occurrence.

 

1304.       Right to Audit

 

Except as otherwise provided
in Paragraph 611, for a period of three (3) years from termination of this
Contract, Contractor shall keep proper books, records and accounts of
operations hereunder and shall permit Operator at all reasonable times to
inspect the portions thereof related to any variation of the rates hereunder or
charges for reimbursable items.

 

1305.       Compliance with Laws

 

Each party hereto agrees to
comply with all laws, rules and regulations of any federal, state or local
government authority having jurisdiction over the Operating Area which are now
or may become applicable to that party’s operations covered by or arising out
of the performance of this

 

30

 

Contract.  In the event any provision of this Contract
is inconsistent with or contrary to any applicable federal, state or local law,
rule or regulation, said provision shall be deemed to be modified to the
extent required to be consistent with said law, rule or regulation, and as
so modified said provision and this Contract shall continue in full force and
effect.

 

1306.       Waivers

 

It is fully understood and
agreed that none of the requirements of this Contract shall be considered as
waived by either party unless the same is done in writing, and then only by the
persons executing this Contract, or other duly authorized agent or
representative of the party.

 

1307.       Entire Agreement

 

This Contract supersedes and
replaces any oral or written communications heretofore made between the parties
relating to the subject matter hereof.

 

1308.       Enurement

 

This Contract shall enure to
the benefit of and be binding upon the successors and assigns of the parties.

 

1309.       Conflicts of Interest

 

No director, employee or
agent of Contractor or of any of its Affiliated Companies, or its or their
subcontractors shall give to or receive from any director, employee or agent of
Operator any commission, fee, rebate, or any gift or entertainment of
significant cost or value in connection with the Work or this Contract, or
enter into any business arrangement with any director, employee or agent of
Operator other than as a representative of Operator, without prior written
notification thereof to Operator. Contractor shall promptly notify Operator of
any violation of this Paragraph 1309 and any consideration received as a result
of such violation shall be paid over or credited to Operator.

 

1310.       Liens, Privileges, Charges, or Other Encumbrances

 

Contractor shall not create,
incur, or permit any liens, privileges, charges, or other encumbrances to be
imposed upon any property of Operator Group whether subject to this Contract or
otherwise as a result of the Work or any action taken or permitted to be taken
by Contractor, its Affiliated Companies, or its or their subcontractors in
connection with this Contract. 
Contractor agrees to indemnify and hold harmless Operator Group from all
such liens, privileges, charges, or other encumbrances.

 

31

 

1311.       Angolan Content

 

Operator places prime
importance on Angolan Content and requires that Contractor and its
subcontractors actively pursue the highest level of Angolan Content that is
practicable in performance of the Work. In addition, Contractor shall comply
with what is established in
Law-Decree Nr. 17/09, of June 26 and the regulations, Law-Decree No. 127/03
of November 25 and the regulations, and all other applicable
Angolan laws and regulations in respect of the local preference and employment and
training of relevant personnel.

 

In performing the Work,
Contractor shall:

 

(a)                                  contract with
Angolan subcontractors as long as their performance is similar to that on the
international market and the price of their services, when subject to the same
tax charges, are no more than ten percent (10%) higher than the prices of
international items, before Angolan customs duties, but after the respective
costs of transportation and insurance have been included; and

 

(b)                                 acquire
materials, equipment, machinery and consumable goods of Angolan production
insofar as their quality and delivery dates are similar to such items available
on the international market and the prices for such Angolan items, before
Angolan customs duties, but after the respective costs of transportation and
insurance have been included.

 

1312.       Personal Contract

 

This
Contract shall be deemed a personal contract of Contractor and neither
Contractor nor its underwriters shall be entitled to claim the benefits of any
limitation of liability statute in respect of claims asserted by Operator or
any member of Operator Group based on this Contract, whether under the
Limitation of Liability Act, 46 U.S.C. App. Sections 181-189, or any other
similar laws or treaties. The purpose of this provision is to insure by
specific contractual agreement that Operator and the members of Operator Group
are able to enforce all defense, release, indemnity, and insurance obligations
and coverage for their benefit under this Contract without regard to any
potential limitation of liability by Contractor. Subject to Contractor’s
contractual obligations in this Contract, nothing in this provision is intended
to prevent Contractor or its underwriters from asserting all applicable
limitation of liability defenses against any tort claims by any person or
entity.

 

1314.       Contracts (Rights of Third
Parties) Act 1999

 

Operator and Contractor acknowledge that it is
their intention to extend to those parties included in the definition of
Operator Group and Contractor Group certain liability protection pursuant to
the provisions of Paragraphs 606, 607 and 609 and Article IX of this
Contract.  

 

32

 

However, except as provided in Paragraphs 606,
607 and 609 and Article IX of this Contract, a person or party who is not
a party to this Contract (“other party”) shall have no right under the
Contracts (Rights of Third Parties) Act 1999 to enforce any term of the
Contract (or any agreement amending the Contract or expressed to be
supplemental hereto) notwithstanding that any such term may purport to confer
or may be construed as conferring a benefit on such other party.

 

Notwithstanding
the foregoing, Operator and Contractor may rescind and/or vary any of the terms
of this Contract (including in respect of any relief from liability, hold
harmless, indemnity or benefit given to any other party) without the consent of
any party acquiring rights under this Paragraph 1314.

 

IN WITNESS
WHEREOF THE PARTIES HAVE EXECUTED THIS CONTRACT ON THE DAY AND YEAR FIRST ABOVE
WRITTEN.

 

	
   

  	
   

  	
  OPERATOR:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BY:

  	
  /s/ Michael D. Drennon

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TITLE:

  	
  EVP - Angola

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CONTRACTOR:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BY:

  	
  /s/ M. R. Plaisance

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TITLE:

  	
  Vice President

  
					

 

33

 

APPENDIX A

 

Attached to and incorporated
as a part of that certain Contract dated the 8th day of
November, 2010.

 

	
  Para Nos.:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  101 (a)

  	
   

  	
  Earliest Acceptance Date:

  	
   

  	
  January 1, 2011

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  101 (f)

  	
   

  	
  Operating Area:

  	
   

  	
  Offshore Angola, Block 21/09

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  101 (g)

  	
   

  	
  Operating Base:

  	
   

  	
  Equipment Sonils Base – Luanda, Angola

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Personnel Heliport, Luanda,
  Angola

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  102

  	
   

  	
  Currency:

  	
   

  	
  U.S. $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  107

  	
   

  	
  Governing Law:

  	
   

  	
  Laws of England and Wales

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  202

  	
   

  	
  Duration:

  	
   

  	
  Days required to drill two (2) Firm Wells plus two
  (2) Single-Well Options

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  203 (b)

  	
   

  	
  Termination:

  	
   

  	
  Upon completion of the Work in Paragraph 202

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  204

  	
   

  	
  Option Term:

  	
   

  	
  Two (2) Single-Well options

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Option Notice:

  	
   

  	
  For the first Single-Well option, no later than forty (40) days after
  completion of operations of the first Firm Well

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  For the second Single-Well option, no later than forty (40) days
  after completion of operations of the second Firm Well

  

 

A-1

 

	
  503

  	
   

  	
  Maximum Water Depth:

  	
   

  	
  2,000 m

  
	
   

  	
   

  	
  Minimum Water Depth:

  	
   

  	
  500 m

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  601

  	
   

  	
  Handling Charge:

  	
   

  	
  five percent (5%)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  702

  	
   

  	
  Mobilization Fee:

  	
   

  	
  U.S. $4,000,000.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  703

  	
   

  	
  Demobilization Fee:

  	
   

  	
  U.S. $3,500,000.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  704

  	
   

  	
  Operating Rate:

  	
   

  	
  U.S. $360,000.00 per day

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  705

  	
   

  	
  Standby Rate:

  	
   

  	
  U.S. $324,000.00 per day

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  706

  	
   

  	
  Personnel Shortage Time:

  	
   

  	
  Seventy–two (72) cumulative hours per occurrence at Operating Rate,
  after which the rate will be reduced to zero ($0).

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Repair Time:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Surface Equipment: Twenty–four (24) cumulative hours per calendar
  month at Operating Rate, after which the rate will be reduced to zero ($0).

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Subsea Equipment: Forty–eight (48) cumulative hours per calendar
  month at Operating Rate, after which the rate will be reduced to zero ($0).

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  707

  	
   

  	
  Force Majeure Rate:

  	
   

  	
  U.S. $360,000.00 per day

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  709 (g)

  	
   

  	
  Variation of Rates:

  	
   

  	
  1%

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  801

  	
   

  	
  Addresses for Invoice:

  	
   

  	
  CIE Angola Block 21 Ltd.

  
	
   

  	
   

  	
   

  	
   

  	
  Rua 1°
  Congresso do MPLA

  
	
   

  	
   

  	
   

  	
   

  	
  Edificio
  CIF Luanda One, 17° Andar, Ingombota,
  Luanda, República de Angola

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Email addresses for Invoice:

  	
   

  	
  ted.smith@cobaltintl.com

  
	
   

  	
   

  	
   

  	
   

  	
  bob.wernick@cobaltintl.com

  

 

A-2

 

	
  803

  	
   

  	
  Address for Payment:

  	
   

  	
  Contractor:

  
	
   

  	
   

  	
   

  	
   

  	
  Wire Transfer Instructions

  
	
   

  	
   

  	
   

  	
   

  	
  Bank:

  	
  JP Morgan Chase

  
	
   

  	
   

  	
   

  	
   

  	
  City:

  	
  New York, NY

  
	
   

  	
   

  	
   

  	
   

  	
  Country:

  	
  USA

  
	
   

  	
   

  	
   

  	
   

  	
  Swift ID:

  	
  *****

  
	
   

  	
   

  	
   

  	
   

  	
  ABA Number:

  	
  *****

  
	
   

  	
   

  	
   

  	
   

  	
  Acct Name:

  	
  Z North Sea Limited

  
	
   

  	
   

  	
   

  	
   

  	
  Acct Number:

  	
  *****

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1201

  	
   

  	
  Address for Notices:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Operator:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CIE Angola Block 21 Ltd.

  	
   

  	
   

  
	
   

  	
   

  	
  c/o Cobalt International
  Energy, L.P.

  	
   

  	
   

  
	
   

  	
   

  	
  1980 Post Oak Blvd.,
  Suite 1200

  	
   

  	
   

  
	
   

  	
   

  	
  Houston, TX 77056

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Tel: 713-579-9137

  	
   

  	
   

  
	
   

  	
   

  	
  Fax: 713-579-9196

  	
   

  	
   

  
	
   

  	
   

  	
  Email:
  greg.herring@cobaltintl.com

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:   Greg Herring

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Contractor:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Z North Sea Ltd.

  	
   

  	
   

  
	
   

  	
   

  	
  15415 Katy Freeway,
  Suite 100

  	
   

  	
   

  
	
   

  	
   

  	
  Houston, Texas 77094

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Tel:   281-492-5303

  	
   

  	
   

  
	
   

  	
   

  	
  Fax:   281-492-5310

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:
  Morrison R. Plaisance

  	
   

  	
   

  

 

Special Provisions:      None

 

A-3

 

APPENDIX B

 

DRILLING UNIT AND EQUIPMENT TO BE PROVIDED BY CONTRACTOR

 

A.                    GENERAL DESCRIPTION

 

The
Ocean Confidence is a deep-water self-propelled, dynamic positioned,
semi-submersible drilling unit, which was built to operate in severe
environment areas worldwide. Enhanced stability, structural strength, high
performance and efficiency were Diamond Offshore’s guidelines in the
development of this unit which includes the necessary winterization and deck
load capacity to operate both in typical North Sea type environment conditions
and in remote deep water areas for extended periods without constant logistic
support. The Ocean Confidence has the capacity to drill to a depth of 35,000’
subject to the rated capacity of the equipment as specified in this Appendix B
of the Contract.

 

	
  Principal Characteristics and Dimensions

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Lower hull length

  	
   

  	
  319.8 ft

  	
   

  
	
  Overall width of lower
  hull

  	
   

  	
  238.0 ft

  	
   

  
	
  Overall width of lower
  hull (with anchor racks)

  	
   

  	
  276.2 ft

  	
   

  
	
  Lower hull pontoon width
  (with sponsons)

  	
   

  	
  76.1 ft

  	
   

  
	
  Lower hull pontoon Depth

  	
   

  	
  26.0 ft

  	
   

  
	
  Diameter of stability
  columns

  	
   

  	
  37/39 ft

  	
   

  
	
  Diameter of Structural
  columns

  	
   

  	
  31ft

  	
   

  
	
  Main deck length

  	
   

  	
  276 ft

  	
   

  
	
  Main deck width

  	
   

  	
  217 ft

  	
   

  
	
  Height of main deck from
  bottom of hull

  	
   

  	
  127.3 ft

  	
   

  
	
  Transit draft (w/maximum
  wave height of 25’)

  	
   

  	
  26 ft

  	
   

  
	
  Drilling draft

  	
   

  	
  75 ft

  	
   

  
	
  Survival draft (w/maximum
  wave height of 98’ and 15 sec. Period)

  	
   

  	
  54 ft

  	
   

  
	
  Distance from water to
  rotary at 75’ drilling draft

  	
   

  	
  88 ft

  	
   

  
	
  Air gap at 75’ drilling draft

  	
   

  	
  38
  ft

  	
   

  
	
  Drilling draft
  displacement (75’)

  	
   

  	
  47,047 mt

  	
   

  
	
  Survival draft
  displacement (54’)

  	
   

  	
  40,647 mt

  	
   

  
	
  Transit draft displacement   (26’)

  	
   

  	
  31,013 mt

  	
   

  
	
  Maximum opening through
  cellar deck

  	
   

  	
  25 x 33 ft

  	
   

  
	
  Maximum Vertical clearance
  cellar deck

  	
   

  	
  39.3 ft

  	
   

  

 

B-1

 

	
  Variable Deck Load

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Transit
  draft (26’)

  	
   

  	
  4,500
  Mt

  	
   

  
	
  Drilling
  (75’)

  	
   

  	
  6,000
  Mt

  	
   

  

 

	
  Water Depth Rating

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Minimum DP Operations

  	
   

  	
  1,500 ft

  	
   

  
	
  Maximum DP Operations

  	
   

  	
  10,000 ft

  	
   

  

 

 

NOTE: For locations in
excess of 8,000 feet of water, Operator must provide Contractor with a minimum
of three (3) months prior notice to ensure equipment availability, and
such locations are subject to site-specific station keeping and riser analyses
to determine limitations, if any.

 

	
  Approximate Natural Periods

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Roll

  	
   

  	
  45.6 sec

  	
   

  
	
  Pitch

  	
   

  	
  37.4 sec

  	
   

  
	
  Heave

  	
   

  	
  21.8 sec

  	
   

  

 

	
  Capacities/Areas

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Drill water (lower hulls)

  	
   

  	
  11,145 bbls

  	
   

  
	
  Fuel oil (lower hulls)

  	
   

  	
  20,968 bbls

  	
   

  
	
  Lube oil

  	
   

  	
  271 bbls

  	
   

  
	
  Potable water

  	
   

  	
  7,309 bbls

  	
   

  
	
  Liquid mud (total)

  	
   

  	
  7,796 bbls

  	
   

  
	
  Base oil stowage (lower
  hulls)

  	
   

  	
  2,808 bbls

  	
   

  
	
  Brine stowage (lower
  hulls)

  	
   

  	
  2,808 bbls

  	
   

  
	
  Bulk mud and cement
  stowage

  	
   

  	
  25,138 cu.ft.

  	
   

  
	
  Sack storage (approx.
  20,000 sacks)

  	
   

  	
  726 mt.

  	
   

  
	
  Main deck area

  	
   

  	
  40,000 sq.ft.

  	
   

  
	
  Drill floor area

  	
   

  	
  2,500 sq.ft.

  	
   

  
	
  Cellar deck area

  	
   

  	
  5,900 sq.ft.

  	
   

  
	
  Sack room area

  	
   

  	
  4,300 sq.ft.

  	
   

  
	
  Pipe rack area

  	
   

  	
  5,500 sq.ft.

  	
   

  
	
  Riser rack area

  	
   

  	
  9,700 sq.ft.

  	
   

  

 

	
  Drilling Loads

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Hook

  	
   

  	
  2,000 kips

  	
   

  
	
  Rotary

  	
   

  	
  2,000 kips

  	
   

  

 

B-2

 

	
  Set back

  	
   

  	
  2,000 kips

  	
   

  
	
  Riser tension

  	
   

  	
  3,000 kips

  	
   

  

 

Note that the above loads
are individual maximum design loads for each area.  For details on allowable combined loadings,
refer to the “Specification of Load Cases for Substructure Design”.

 

Quarters

 

Modern and comfortable
living quarters including galley and hospital are provided for 146 people.  Senior supervisory personnel, including the
Operator’s supervisor, geologist, and petroleum engineers, are provided with
large offices and independent quarters. In addition to spacious recreation
rooms for crewmembers, the drilling unit has separate TV/card rooms, both
smoking and non-smoking, and a fully equipped exercise facility.

 

Helideck

 

89’ x 89’ – rated for Boeing
234 Chinook helicopter. A helicopter refueling system with all related fire fighting
and safety equipment is provided.

 

Class

 

ABS Maltese Cross A-1 Column Stabilized Drilling
Unit for Unrestricted Ocean Service with Class Notations: Drill (N),
DYNPOS ATRO, POSMOOR (N) TA, CRANE, EO, HELIDIK

 

Design

 

Aker H3.2 Enhanced

 

Commissioned

 

Mitsui Shipyard, Japan 1988

 

Upgraded

 

TDI Shipyard, Sabine Pass,
TX, 1999 with a 5th generation drilling package

 

B-3

 

Documentation

 

Marshall Islands flag -
Complies with ABS, SOLAS, NMD & NPD, HSE-UK, US MMS & USCG
Regulations.

 

Propulsion System

 

Eight (8) Kamewa
controllable pitch, fully azithmuthing thrusters, with thrust of 48.6 mt each.

 

	
  Self Propelled Speed

  	
   

  	
  3 - 5 knots

  	
   

  

 

Tow Requirements

 

The
minimum tow requirement for the Ocean Confidence at transit draft is a tug with
a minimum bollard pull of 132 short tons. If two or more tugs are used, the
bollard pull shall be shared by the weaker boats as follows:

 

Two tugs, at least 40% from the weaker boat

Three tugs, at least 25% from the weakest boat

Four tugs, at least 20% from the weakest boat

 

All
requirements are for towage classified as field moves in moderate environments.
For towage in more significant environmental conditions and ocean tows, each
move shall be evaluated by the Marine Department and insurance underwriters for
selection of towing equipment.

 

After
March 1 2004, all towing vessels shall provide a bollard pull certificate
acceptable to Diamond Offshore Drilling and to their Warranty Surveyor of
Record.

 

Mooring System

 

Mooring lines

 

	
  Number

  	
   

  	
  8 (system capable of 12
  lines)

  	
   

  
	
  Chain size

  	
   

  	
  3 inch

  	
   

  
	
  Chain length

  	
   

  	
  3500 feet each (1,066
  meters)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Chain grade

  	
   

  	
  NVR4S RIG type

  	
   

  
	
  Chain breaking strength
  (new)

  	
   

  	
  7,350 kN.

  	
   

  
	
  Chain proof load (new)

  	
   

  	
  5,733 kN.

  	
   

  
	
  Length

  	
   

  	
  2,000 ft.

  	
   

  

 

B-4

 

	
  Chain grade

  	
   

  	
  NV K4 RIG type

  	
   

  
	
  Chain breaking strength
  (new)

  	
   

  	
  612.9 mt

  	
   

  
	
  Chain proof load (new)

  	
   

  	
  482.4 mt

  	
   

  
	
  Length

  	
   

  	
  1,500 ft.

  	
   

  

 

Anchors

 

Four (4) each 10 metric
ton Stevpris HP anchors w/permanent chain chaser system (no surface buoys)

 

Windlass:

 

Four (4) ea Pusnes 3
line electric windlasses, driven by 2 Toshiba MSC-RBKMW 900HP DC motors. Each
line is equipped with a 1,000 hp water-cooled hydraulic disc brake and
hydraulic band brake. Each unit is fitted with 2 — 5,000 hp hydrodynamic
brakes. Each control unit is housed in a weather-protected enclosure. Each unit
features continuous readout for line tension, speed, and amount of chain out.
Similar Information is provided in the Pilothouse, with emergency release capability.

 

B.  DRILL FLOOR EQUIPMENT

 

1.               Drawworks - Continental
Emsco Electrohoist EH-V 5,000 Hp rating, with Lebus grooving sized for 1-3⁄4”
diameter wire, driven by four (4) GE752R1, 1,250 hp DC motors. These
motors will provide the hoisting power and the regenerative braking.

 

The primary braking is supplied by regenerative
braking from the GE752R1 DC motors. Secondary braking is supplied by the Dual
Eaton WCS 736 brake system.  The third
braking is Emsco Type SS Disk Brakes that are for parking and emergency use.

 

·                  Two (2) catheads, Varco
Type HC-26 EV hydraulic cathead with adjustable consistent pull force.

 

2.               Derrick -
Pyramid, 50’ x 50’ Base by 18’ x 18’ top with 170’ clear height dynamic bolted
vertical beam leg galvanized construction, with a dynamic hook load capacity of
2,000,000 pounds on 16 lines. The derrick is complete with all the standard
accessories which includes:

 

·                                          Racking
platform to accommodate 35,800’ of drill pipe, bottom hole assembly and up to
72 stands of 13-3/8” casing doubles.  The
detailed racking capacity is as follows:

 

	
  5-1/2” HWDP

  	
   

  	
  85 stands

  	
   

  
	
  6-5/8” drill pipe

  	
   

  	
  285 stands

  	
   

  

 

B-5

 

	
  9-3/4” Drill Collars

  	
   

  	
  15 stands

  	
   

  
	
  13-3/8” Casing Doubles

  	
   

  	
  72 stands

  	
   

  

 

 

·                                          Derrick is
equipped with PRS-4I automated pipe handling system

·                                          Shaffer
Crown-mounted Compensator, 1,000,000 pound capacity with 25’ stroke

 

·                                          Crown safety
platform complete with handrails

·                                          Traveling block
with TDS – 6S retractable block guide

·                                          Two (2) hydraulic
work baskets above finger board

 

3.               Traveling Equipment
consisting of:

 

·                                          One (1) Continental
Emsco traveling block Type RA-72-8 1,000 ton , eight (8) sheaves 72”
diameter, grooved for 1-3/4” Drill line

·                                          One (1) BJ-51000,
1,000 ton hook complete with powered rotating hook adapter

·                                          One (1) Varco
TDS -6S 750 ton rated top drive drilling system, complete with two (2) GE-752
US Hi-Torque shunt wound drilling motors

·                                          Swivel packing
assembly 7,500 psi WP.

·                                          Motor Airbrake –
two-drum type airbrake provides 70,000 ft/lb combined static braking torque at
90 psi air pressure

·                                          Remote air
cooling system producing 3,000 cfm

·                                          Type RBS IV,
Raised backup system with torque backup tool and stabbing assembly. Handles 43⁄4”
to 81⁄4” OD tool joints.

·                                          Guide Dolly
Assembly, heavy duty dolly with 45” stroke retraction capability

·                                          PH –85H pipe
handler complete with 750 ton rated link adapter with landing collar, remote
operated upper safety valve, manual operated lower safety valve, torque wrench,
stabbing guide and link tilt assembly. Torque wrench is rated at 85000 ft/lbs.
Makeup and breakout torque and has a range of 31⁄2” through 6-5/8”. OD drill
pipe.

 

4.               One (1) Dreco FLH –160C
drill line anchor for 13⁄4”drill line, 160,000 lbs. deadline capacity.

 

5.               One (1) Rotary - 60-1/2”
Varco-BJ RST hydraulic rotary support table with four high torque motors.
Static load capacity – 1,000 tons, maximum 30 rpm.

 

B-6

 

6.               One (1) Mathey
wire line measuring unit, 0.108 in. x 35,000 ft wire line, with line guide and
depth indicator.  Powered by electric
driven hydraulic motor.

 

7.               One (1) deviation
recorder, complete with one (1) recording instrument - 0o to 8o.

 

8.               One (1) Driller’s
control console consisting of the Varco V-ICIS System V-ICIS provides a
centralized means of controlling and monitoring most major drilling equipment
packages on board to allow operation by a single man or small team from a
central control area.

 

9.     Air Winches:

 

	
  One (1) on D.P. catwalk

  	
   

  	
  (utility)

  
	
  Two on Cellar deck

  	
   

  	
  (man rider)

  
	
  Four (4) on cellar deck

  	
   

  	
  (utility)

  
	
  Two (2) on drill floor

  	
   

  	
  (man rider)

  
	
  Four (4) on drill floor

  	
   

  	
  (utility)

  
	
  Three (3) on monkey board

  	
   

  	
  (utility)

  
	
  One (1) deep sea tugger

  	
   

  	
  (utility)

  

 

10.        One (1) Varco Automated
Iron Roughneck Model AR3200. Includes spinning wrench and torque wrench with
size range of 3-1/2” to 9-3/4”.

 

C.    MUD CIRCULATING SYSTEM

 

1.               Four (4) Continental
Emsco FC-2200 triplex mud pumps. Each pump is belt-driven by two (2) GE
752 shunt motors, top-mounted, 1,130 hp each. Pumps complete with suction and
discharge dampeners and Retsco Type R reset relief valves rated at 4,000 psi -
7,500 psi. Maximum operating conditions for these pumps are as follows. DODI
approved strokes per minute or DODI approved discharge pressure, whichever
occurs first, is the operating limit.

 

Note:
Maximum working pressure of mud manifold is 7,500 psi. Also there is service to
the Riser booster line.

 

2.               Mud service pumps consist of:

 

B-7

 

·                                          Four (4) Mission
Magnum 8 x 6 x 14 supercharging pumps, each driven by a 100 hp AC motor

 

·                                          Five (5) Mission
Magnum 8 x 6 x 14 mud mixing / transfer pumps each driven by a 100 hp AC motor.
One of these pumps to be dedicated as a mud shear pump

 

3.     Mud
cleaning equipment consisting of:

 

·                                          One (1) Gumbo
Box (Nu-Tec)

 

·                                          Six (6) Swaco
Model ACS cascading shale shakers

 

·                                          Two (2) Swaco
Model 14-T4W/ALS-2 linear mud cleaners

 

·                                          Two (2) Burgess
Model 1500 vacuum-type degassers, totally self-contained

 

4.               Mud/Gas Separator, 72”OD x
22’ vertical cylindrical vessel type with 12” vent line extending to the
crown.  Piped to take returns from the
marine riser and the choke manifold.

 

5.     Active/
return and reserve mud pits consisting of: (all figures 90% of total capacity)

 

	
  2 Active pits

  	
   

  	
  (669 bbls each)

  	
   

  	
  w/agitation

  	
   

  	
  1,338 bbls

  	
   

  
	
  1 Active pit

  	
   

  	
   

  	
   

  	
  w/agitation

  	
   

  	
  445 bbls

  	
   

  
	
  2 Reserve pits

  	
   

  	
  (671 bbls each)

  	
   

  	
  w/agitation

  	
   

  	
  1,342 bbls

  	
   

  
	
  2 Centrifuge pits

  	
   

  	
  (111 bbls each)

  	
   

  	
   

  	
   

  	
  222 bbls

  	
   

  
	
  2 Premix pits

  	
   

  	
  (333 bbls each)

  	
   

  	
  w/agitation

  	
   

  	
  666 bbls

  	
   

  
	
  2 Pill pits

  	
   

  	
  (111 bbls each)

  	
   

  	
  w/agitation

  	
   

  	
  222 bbls

  	
   

  
	
  2 Chemical pits

  	
   

  	
  (111 bbls each)

  	
   

  	
  w/agitation

  	
   

  	
  222 bbls

  	
   

  
	
  1 Mud return pit

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  37 bbls

  	
   

  
	
  1 Mud Cleaner pit

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  55 bbls

  	
   

  
	
  1 Degasser pit

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  94 bbls

  	
   

  
	
  A. 1 Gumbo box

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  45 bbls

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Total = 4,688 bbls

  	
   

  

 

Mud storage in four (4) chain
lockers provides an additional 4,000 bbls. 
Each locker has pumping and agitation capabilities.

 

Storage facilities in the
lower pontoons provide storage for 2,527 bbls of base oil

 

Storage facilities in the lower pontoons provide
storage for 2,807 bbls of 17.0 ppg brine (100%)

 

B-8

 

6.               Bulk mud and cement storage
consisting of:   (60 psi system)

 

·                                          Six (6) pneumatic
bulk barite storage tanks (total 10,244 ft3)

 

·                                          Six (6) pneumatic
bulk cement storage tanks (total 11,745 ft3) located near the cement unit. System designed for
cement delivery at 8 barrels per minute.

 

·                                          Two (2) pneumatic
bulk bentonite storage tanks (3,169 ft3)

 

·                                          Removable
crossover line available between barite and bentonite systems.

 

·                                          Two (2) 100
ft3 surge tanks for barite and bentonite located in the sack storage room

 

5.               Sack storage area in an
enclosed space located near the mud pits.

 

·                                          Three (3) low
pressure mud hoppers

 

·                                          One (1) Polymer
shear low pressure hopper

 

·                                          Two (2) rotary
hoses, 4” ID x 75ft long 7,500 psi WP 5” Weco unions

 

·                                          One (1) Trip
Tank 50 bbl. capacity, continuous fill-up of the well bore by two (2) 4 x
3 x 13” Mission Magnum pumps. The tank is equipped with visual, mechanical, and
electronic level indicators

 

·                                          One (1) chemical
mixer with manual agitator and discharge lines to mud pits for caustic soda

 

·                                          One (1) cementing
standpipe, 15,000 WP

 

·                                          One (1) climate
controlled mud logging facility as an integral part of the mud return area with
Geologist office and mud engineers’ lab. The facility is pre-wired and enables
rapid rig up and rig down.

 

D.  WELL CONTROL AND SUBSEA
EQUIPMENT

 

1.                One (1) 18-3/4 x 15,000
psi WP Subsea BOP stack with lower marine riser package consisting of:

 

a.               BOP Stack (H2S rated)

 

B-9

 

·                  One (1) 18-3/4” x 15,000 psi Cameron
Collet DWHC connector

·                  One (1) 18-3/4” x 15,000 psi DWHC
connector test stump

·                  One (1) 18-3/4” x 15,000 psi Vetco DWHD
H4 Connector

·                  One (1) 18-3/4” x
15,000 psi DWHD Connector test stump

·                  Three (3) Shaffer type
SLX 18-3/4” 15,000 psi double ram preventers.

 

·                  BOP equipped with ROV
interface stabs to allow closure of the shear rams in the event of inadvertent
release of the LMRP.  (ROV system with
pump and male stinger to be provided by Operator)

 

·                  Rams are fitted from top to
bottom as follows:

 

·                  Shear/Blind ram

·                  Shear/Blind ram

·                  Casing shear ram

·                  Variable MULTI-RAM

·                  Variable MULTI-RAM

·                  Variable MULTI-RAM

 

·                  One (1) 18-3/4” 15,000 psi CIW Collet
riser mandrel

 

·                  Four (4) Shaffer 15,000 psi WP 3-1/16”
dual block hydraulic operated gate valve with fail safe            operators, two (2) for kill line and two (2) for
choke line.

 

·                  One (1) Regan 5o Bulls-eye stack angle
indicator.

 

c.               Lower Marine Riser Package
(LMRP) H2S rated

 

·                  One (1) 18-3/4” x 15,000 psi CIW HC
Collet hydraulic riser connector

 

·                  One (1) Shaffer dual 18-3/4” 10,000 psi
annular BOP

 

·                  One (1) Oilstate 2,000/5,000 psi Flex
Joint, ±10o deflection

 

·                  Two (2) choke and kill line flex hoses,
4-1/2” ID, 15,000 psi WP.

 

·                  Note: Coflexip hoses
currently installed are not compatible with Zinc Bromide. Use of Zinc Bromide
will require changing of hoses.

 

B-10

 

·                  One (1) Hydraulic
control flex hose, 2-1/2” ID, 7,500 psi WP

 

·                  Two (2) Shaffer 15,000
psi WP 3-1/16 hydraulic controlled isolation valves to allow testing the choke
and kill lines when running the LMRP

 

·                  One (1) Shaffer 15,000
psi WP 3- 1/16 Dual block hydraulic operated gate valve with fail safe
operators for Gas Relief (choke line)

 

·                  One (1) guide frame
complete with choke and kill stabs and guide funnel to facilitate making up the
complete stack

 

·                  Two (2) Shaffer 18-3/4”
15,000 psi test/storage stumps for transporting and testing

 

·                  One (1) Regan 5o
bulls-eye riser angle indicator

 

·                  One (1) Regan 2.5o
bulls-eye riser angle indicator

 

2.               Shaffer
diverter with control system:

 

·                          Assembly
for 601⁄2” Rotary with a 20” I.D. packer, 20” flow line and a Flex joint with
maximum ±15o angle deflection with a maximum hang off load of 2,000 kips.  Controlled by hydraulics from the H.P.U. and
from the Driller’s Panel

 

3.               B.O.P. and diverter control
system consisting of:

 

·                          One
(1) 5,000 psi WP Shaffer automatic pump accumulator unit for use with
Subsea BOP control system with sufficient accumulator capacity in both surface
and LMRP mounted accumulators to meet applicable regulatory requirements. The
unit has three (3) electrically driven quintuple pumps, 1,000 gallon mixed
fluid reservoir, and central manifold.

 

·                          One
(1) Shaffer graphic control panel at Driller’s station for operation of
BOPs and diverter system with an audible and visual alarm for low pressure and
fluid levels.

 

·                          One
(1) Shaffer graphic remote control panel located at the Toolpusher’s
office for operation of BOPs with alarms for low pressure and fluid levels.

 

·                          Two
(2) subsea pod cable storage reels with 11000 ft. MUX cable storage capacity
suitable for 10000 ft. operating water depths.

 

B-11

 

·                          Two
(2) 11000 ft. long MUX pod control cables.

 

·                          Two
(2) Shaffer Control Pods

 

·                          One
(1) Shaffer high accuracy variable ratio fluid mixing system with 500 gal.
BOP fluid storage, 500 gal. Glycol storage, and 1,000 gal. mixed, fluid
reservoir.

 

4.               Marine Riser and associated
equipment:

 

a.                                       Marine riser
for 15,000 psi WP operations in water depths to 10,000. (H2S rated)

 

·                  21” OD x 75’ Shaffer FTG riser complete with
two (2) 4-1/2” ID 15,000 psi WP H2S trim choke and kill lines; one (1) 4” ID
5,000 psi WP booster line; one (1) 2.32” ID 5,000 psi WP stainless steel
hydraulic line for BOP supply.

 

·                  Two (2) telescopic joints with 65 ft.
stroke

 

·                  Riser pup joints: 15, 20, 2 x 25, 50 ft., one
(1) each

 

·                  Two (2) hydraulic riser running tools

 

·                  One (1) SDL tensioner ring

 

·                  One (1) riser spider

 

·      Two (2) choke and kill line droop hoses , 4-1/2” ID x 85
ft., 15,000 psi WP.

 

·                  Note: Coflexip hoses currently
installed are not compatible with Zinc Bromide. Use of Zinc Bromide will
require changing of hoses.

 

·                  One (1) hydraulic
control droop hose, 2-1/2” ID x 85 ft., 7,500 psi WP

 

·                  One (1) 4” ID x 85’
booster line droop hose, rated at 7,500 psi WP

 

·                  Two (2) 15,000 psi
choke/kill line test caps

 

5.               Two (2) Nautronix
RS-925 Long Base Line / Short Base Line hole positioning and acoustic riser
angle indicator system.

 

a. Two (2) Silvertech
electronic riser angle sensors with input into DP system.

 

B-12

 

b. Two (2) Silvertech
electronic BOP angle sensors with input into DP system.

 

6.               One (1) Shaffer 15,000
psi WP H2S rated choke
manifold consisting of :

 

·                  Two (2) Powerchoke
3-1/16” x 15,000 psi WP remote adjustable chokes

 

·                  Two (2) Varco Best BH2
3-1/16” x 15,000 psi WP manually operated chokes

 

·                  Eighteen (18) Shaffer type “B”
gate valves, 3-1/16” API 15,000 psi WP

 

·                  Four (4) Shaffer type “B”
gate valves, 2 -1/16” API 15,000 psi WP

 

·                  Four (4) Shaffer type “B”
gate valves, 4-1/16” API 10,000 psi WP

 

·                  Two (2) Buffer tanks,
10,000 psi WP

 

7.               One (1) electric
operated BOP test pump, 15,000 psi WP, with chart recorder for testing BOPs on
test stump.

 

8.               One (1) Shaffer marine
riser tensioning system with control panel, air receivers, sheaves and wire
rope with a total stroke length of 65 ft. and having a total maximum capacity
of 2,500,000 lbs. (10 ea. 250,000 lb. tensioners ). Each tensioner is
independently piped.

 

9.     One (1) Hydra-Lift BOP handling system rated at 354 metric
tons

 

10.   Two (2) Hydra-Lift BOP/SST carts

 

11.   One (1) 300 metric ton overhead crane with two (2) 100
metric ton hooks

 

12.   One (1) 160 metric ton auxiliary cart

 

13.   One (1) 35 metric ton riser gantry crane

 

14.   One (1) Varco riser cart

 

E.     DRILL STRING AND HANDLING
TOOLS

 

1.     Drill Pipe

 

·                  10,000 ft. of 6-5/8” OD
27.70 lb/ft, Range 2 Grade S-135 drill pipe 6-5/8” FH connections. Pipe
internally coated and with hardbanding.

 

B-13

 

·                  10,000 ft. of 5-1/2” OD
24.70 lb/ft, Range 2 Grade S-135 drill pipe 5-1/2” FH connections.  Pipe internally coated and with hardbanding.

 

·                  7000 ft. of 5” OD 19.50
lb/ft, Range 2 Grade S-135 drill pipe 4-1/2” IF connections.  Pipe internally coated and with hard banding.

 

·                  10,000 ft. of 6-5/8” OD .813”wall,
Range 2 Grade S 135 drill pipe 6-5/8” FH connections. Pipe internally coated.

 

·                  8,000 ft. of 6-5/8” OD 34.0
lb/ft. Range 2 Grade S 135 drill pipe 6-5/8 FH connections. Pipe internally
coated with hardbanding.

 

·                  One (1) each; 5’, 10’,
5’ pup joint with 6-5/8 FH connection; 27.70 lb/ft.

 

·                  One (1) each; 5’, 10’,
5’ pup joint with 5-1/2 FH connection; 0.75 wall

 

·                  One (1) each; 5’, 10’,
5’ pup joint with 4-1/2” IF connection, 19.50 lb/ft.

 

2.     Drill Collars

 

·                                          Nine (9) 9-1/2”
OD x 3” ID x 31ft. with 7-5/8” REG connections

 

·                                          Twelve (12) 8”
OD x 2-13/16” ID x 31 ft. with 6-5/8” REG connections

 

·                                          Eighteen (18)
6-3/4” OD x 3” ID x 31 ft. with 4-1/2” IF connections

 

3.               1,000 ft. of 5-1/2” OD 58.10
lb/ft. “Hevi-Wate” drill pipe with 5-1/2” FH connections

 

4.               1,000 ft. of 5” OD 49.5
lb/ft.  “Hevi-Wate” drill pipe with 4-1/2”
IF connections

 

5.               Subs consisting
of

 

·                                          Two (2) ea.
bit subs, for 6-3/4” drill collars, bored for float

 

·                                          Two (2) ea.
bit subs, for 8” drill collars, bored for float

 

·                                          Two (2) ea.
bit subs, for 9-1/2” drill collars, bored for float

 

·                                          Two (2) each
crossover subs as needed for use with all contractor finished drill string and
down hole tools.

 

·                                          Six (6) saver
subs, 2 ea. for 6-5/8” FH,  2 ea. for
5-1/2” FH,  2ea. for 4-1/2” IF

 

B-14

 

·                  Four (7) ea. D.C. lift
subs for  6-3/4” drill collars

 

·                  Seven (7) ea. D.C. lift
subs for 8” drill collars

 

·                  Seven (4) ea. D.C. lift
subs for 9-1/2” drill collars

 

6.     Safety
Valves consisting of:

 

·                  Two (2) ea. for 6-5/8”
FH drill pipe, rated for 15,000 psi

 

·                  Two (2) ea. for 5-1/2”
FH drill pipe, rated for 15,000 psi

 

·                  Two (2) ea. for 4-1/2”
IF drill pipe, rated for 15,000 psi

 

7.               Inside BOP Valves consisting
of:

 

·                  Two (2) ea. for 6-5/8”
FH drill pipe, rated for 15,000 psi

 

·                  Two (2) ea. for 5-1/2”
FH drill pipe, rated for 15,000 psi

 

·                  Two (2) ea. for 4 -1/2”
IF drill pipe, rated for 15,000 psi

 

8.               Fishing tools consisting of:

 

·                  Taper taps and overshots
including accessories to catch contractor furnished drill pipe and drill
collars.

 

9.               Drill Pipe and Drill Collar
Elevators consisting of

 

·                  One (1) 3-1/2” MGG 250
ton drill pipe elevator with wear bushing

 

·                  One (1) 5” GG 350 ton
drill pipe elevator

 

·                  One (1) 5-1/2” HGG, 500
ton drill pipe elevator

 

·                  Two (2) Varco BJ, BX
hydraulic operated elevator, frame (4) complete with adapter bushings for
drill pipe, drill collars, tubing and casing ranging 3-1/2” to 9-5/8”

 

10.         Elevator Links consisting of

 

·                  One (1) Set BJ 3-1/2” x
180”, 500 ton

 

B-15

 

·                  One (1) Set BJ 3-1/2” x
132”, 500 ton

 

·                  One (1) Set BJ 2-3/4” x
132”, 350 ton

 

·                  One (1) Set BJ 4-3/4” x
180”, 750 ton

 

11.         Drill Pipe tongs consisting
of

 

·                  Two (2) BJ Type HT-100
manual tongs, complete with lug jaw assemblies for pipe sizes 4” to 17”

 

·                  Two (2) BJ Type HT- 25
assemblies for pipe sizes 13-3/8” to 21-1/2”

 

12.         Slips consisting of

 

·                  One (1) set Varco Type
SDXL for 4-1/2” x 3-1/2”

 

·                  One (1) set Varco Type
SDHL for  5-1/2” x 5”

 

·                  One (1) set Varco Type
SDHL for 7” x 6-5/8”

 

13.         One (1) Safety Clamp
for  6-1/2”, 8”, and 9-1/2” drill
collars:

 

14.         One (1) Mud saver
bucket

 

F.     AUXILIARY EQUIPMENT AND MACHINERY

 

1.               Diesel electric power for
the D.P. and domestic system consisting of

 

·                  Eight (8) Wartsila
Nohab F316B 16 cylinder diesel engines for dynamic positioning rated at 3,310
kW continuous at 900 rpm.  Each driving
one (1) 3,150 kW alternator.

 

·                  Three (3) Caterpillar
3616 16cylinder diesel engines for drilling and hotel system, each driving (1) 4,800
kW alternator for rig service through an AC switchboard and Toshiba 3500 SCR
drive system and Tech Power 2000 amp, 16 Bays.

 

·                  One (1) emergency
generator unit with 900 kW capacity. 
Emergency power supplied selectively to 120 volt lighting and
electronics system, four (4) ballast pumps, BOP control unit, column
elevators, emergency fire pump, and diving auxiliaries.  There is an “AFB” to connect the emergency
switchboard to main switchboard. 
Emergency generator is a completely independent unit, starts
automatically on failure of main generators after 25 seconds.  Uninterrupted

 

B-16

 

emergency lighting is available. 
Starting batteries have sufficient power for (3) simultaneous
starts and charges immediately on starting of emergency generator.

 

2.               Rig air compressors
consisting of

 

·                  Three (4) Quincy Rotary
Screw, Model 500 general service rig air compressors complete with (2 ea.)
Deltech desiccant air drying systems.

 

·                  Two (2) Quincy piston
type model MOR3505T10HP; cold start air compressors, one (1) diesel driven
and one (1) electric driven.

 

·                  Three (3) Quincy bulk
air compressors complete with (2 ea.) General Pneumatic OP300 heatless
regenerative desiccant air dryers.

 

·                  Four (4) Hamworthy high
pressure compressors for tensioner system, each with Hamworthy twin tower
desiccant dryer.

 

·                  Two (2) Bauer high
pressure air compressors each with refrigerated air driers

 

3.               Material handling equipment
consisting of:

 

Three (3) heavy lifting capacity
electro-hydraulic pedestal cranes with 168’ booms.

 

·                  One (1) Crane - 100
ton, Man Wolfkran HDK 1500 HM

 

	
  20
  tons

  	
   

  	
  at

  	
   

  	
  50
  meter radius

  	
   

  
	
  42
  tons

  	
   

  	
  at

  	
   

  	
  30
  meter radius

  	
   

  
	
  71
  tons

  	
   

  	
  at

  	
   

  	
  20
  meter radius

  	
   

  
	
  100
  tons

  	
   

  	
  at

  	
   

  	
  12/15
  meter radius

  	
   

  

 

·                  Two (2) Cranes – 50 ton, HDK 1000 HM

 

	
  20t 

  	
   

  	
  at

  	
   

  	
  50 meter radius

  	
   

  
	
  33t 

  	
   

  	
  at

  	
   

  	
  30 meter radius

  	
   

  
	
  50t 

  	
   

  	
  at

  	
   

  	
  9/20 meter radius

  	
   

  

 

Whip line maximum load (at all radii) = 15 tons from
14 meters to 55 meters

 

·                  One (1) Hydralift riser
handling gantry crane system and one (1) Varco RHS riser handling system

 

·                  One (1) Outreach
knuckle boom crane for drill pipe and casing handling

 

B-17

 

·                  One (1) Varco PTC-1
tubular conveyor for transferring tubulars to and from drill floor

 

4.     Two (2) personnel
transfer nets.

 

5.               One (1) lot of
certified slings, bridles and lifting gear necessary for the loading and
offloading of equipment and supplies.

 

6.               Two (2) sets of mooring
lines and cargo transfer hoses of sufficient length to reach supply
vessels.  One (1) on port side of
rig and one (1) on starboard side of rig.

 

7.               Welding equipment consisting
of Seven (7) 300 amp AC rectifier units and one (1) 400 amp diesel
driven unit.

 

8.               Two (2) Alfa Laval
D-PU-36-C100/125 potable water distillation units.

 

9.               Two (2) pressure washer
systems for cleaning drilling unit.

 

10.         Pollution control equipment
consisting of one (1) Heli-Sep 10,000 oil content detector and two (2) portable
waste oil disposal tanks to meet IMO/MARPOL regulations.

 

11.         Safety, fire fighting and
lifesaving equipment required to comply with Marshall Islands, ABS, SOLAS, NMD,
and USCG requirements including, but not limited to:

 

·                  Four (4) Fiskars 379
enclosed life boats, 73 person capacity, Saab M4.295 70 hp diesel engine, dual
start, gravity davit launch system with “on-load-offload” type release
mechanism with hydrostatic interlock. Maximum speed is 7.2 knots for 10-12 hours.
Fuel capacity for 24 hours @ 6.0 knots.

 

·                  One (1) H. Henriksen
Mek Verksted, GTC 900, Fast Rescue Craft, 10 person capacity. Castoldi Hydrojet
model 06 jet drive, Volvo Penta diesel engine, TAMD 60C, 255 hp at 2,800 rpm.
Gravity type outrigger boat davit, single fall, hydraulic driven winch launch
system with “offload” type release mechanism. Maximum speed is 28 knots with 3
people. 260 liter fuel capacity allows 7 hours full speed running.

 

·                  Ten (10) 20 person
Viking type DK inflatable life rafts, davit launch system with hydrostatic
release mechanism.

 

·                  Fourteen (14) SOLAS approved
life buoys.

 

B-18

 

·                  Seven (7) fixed
vertical ladders and one (1) incline ladder from upper deck to pontoon top
located on columns.

 

·                  Three hundred eight (308)
Helly-Hansen survival suits NMD approved (enough for 200%+ of normal rig
complement).

 

·                  Six (6) complete
firemen outfits located in lockers, one located on the 1st deck, four located
on the 2nd deck, and one located on the 6th deck.

 

·                  Four hundred fifty four
(454) SOLAS approved life jackets.

 

·                  Twenty-four (24) Safeguard
work vests.

 

·                  Two (2) Fire pumps,
Shinko Kinzoku Ind. Co. RVP 200-2M vertical/centrifugal, driven by a 185 kW
electric motor.

 

·                  One (1) Sprinkler pump,
Shinko Kinzoku Ind. Co. RVP 160-2M vertical/centrifugal, driven by a 75 kW
electric motor.

 

·                  Two (2) Naniway Eureka
vertical centrifugal pumps, C-128B 10-14, with 600 kW motors.

 

·                  Nine (9) Unitor AGA
Spiromatic demand-type SCBA.

 

·                  Thirty Seven (37) spare 30
minute AGA bottles.

 

·                  One (1) Bauer breathing
air compressor; Model U1-HU

 

·                  Three (3) Lumidor
MicroMax portable gas detectors

 

·                  One (1) helideck foam
protection system with three (3) monitors located around helideck. Tank
capacity 2900 liters.

 

·                  One (1) dual agent
(foam and dry powder) protection system with three (3) hose reels located
on helideck.

 

·                  One (1) dual dry powder
hose reel located at refueling point at helideck.

 

·                  Portable UHF radio set for
internal communication for fire fighting personnel.

 

·                  One (1) base station
and eight (8) intrinsically safe portable units (part of bridge navigation
package)

 

B-19

 

·                  Portable oxygen / acetylene
cutting apparatus, as required.

 

·                  Fire hydrant outlets as
required, each with 15 meters of hose with a 12mm or 19mm nozzle.

 

·                  Automatic sprinkler system
or similar in all six levels of the living quarters.

 

·                  Portable fire extinguishers,
as required.

 

·                  1 x 50-lb. CO2 , wheeled

 

·                  11 x 10-kg. CO2

 

·                  70 x 6-kg. CO2

 

·                  5 x 25-kg. dry powder,
wheeled

 

·                  125 x 12-kg. dry powder

 

·                  58 x 10-liter water

 

·                  2 x 55-lb. dry powder,
wheeled

 

·                  Nine (9) portable foam
applicators, injector, hose and fluor-protein foam, as required

 

·                  Combustible gas detection
and alarm system.

 

·                  H2S detection and alarm system.

 

·                  Smoke and fire detection and
alarm system.

 

·                  One (1) deluge system
covering the drill floor, well test area and flare booms, cellar deck / derrick
substructure, mud pits and shaker house.

 

·                  Fixed fire suppression
systems covering the following areas

 

·                  Thruster and pump rooms in lower hulls

 

·                  Boiler room and cement room - A flats

 

B-20

 

·                  Engine, Auxiliary  machinery, and high voltage switchboard rooms
- 1st deck

 

·                  Galley ventilation - 1st deck

 

·                  Engine room - 2nd deck

 

·                  Paint and hazardous waste lockers - 2nd deck

 

·                  Emergency generator, and SCR room - 4th deck

 

·                  Transformer and bridge control room - 6th
deck

 

·                  Hard piped emergency eye
wash / shower stations, as required

 

·                  One (1) container
containing spill cleanup equipment.

 

·                  One (1) 10’ container
for hazardous waste storage.

 

12.   Ships
service pumps consisting of:

 

·                  One (1) saltwater
service pump, Aurora, 2.5 x 3 x 10.81.

 

·                  Eight (8) ballast
pumps, Shinko Kinzoku Ind. Co., Ltd., RVP250 MS vertical / centrifugal,
with 75 kW, 1,800 rpm motors.

 

·                  Eight (8) fresh water
cooling pump (generators), Shinko Kinzoku Ind. Co., Ltd., model SVS 100MH,
with 7.5 kW,1800 rpm motors.

 

·                  Eight (8) lube oil
pumps, gear type (generators), Taiko Kikai Ind. Co. LTD. Model NHG/2.5, with
1.5 kW, 1,200 rpm motors.

 

·                  Four (4) salt water
cooling pumps (DP engines) Shinko Kinzoku Ind. Co., Ltd., (3) Model
RVP 160 M with 55 kW, 1,800 rpm motors and (1) RVP 250M with 110 kW, 1,800
rpm motor.

 

·                  Eight (8) salt water
cooling pumps (Thrusters) Shinko Kinzoku Ind. Co., Ltd., (6) Model
SVS 100M with 5.5 kW 1,800 rpm motors, and (2) model SVS 100M with 7.5 kW
1,800 rpm motors.

 

·                  Four (4) fresh water
cooling pumps (Windlass) Shinko Kinzoku Ind. Co., Ltd., model SVS 200M
with 15 kW 1,800 rpm motors.

 

B-21

 

·                  Four (4) salt water
cooling pumps (Windlass) Shinko Kinzoku Ind. Co., Ltd., RVP 200M with 75
kW 1,800 rpm motors.

 

·                  Two (2) condenser water
circulating pumps, Shinko Kinzoku Ind. Co., Ltd., Model SVS 250M with 45
kW 1,750 rpm motors.

 

·                  Two (2) chill
water circulating pumps, Aurora, 6 x 6 x 11, Series 344

 

·                  Two (2) salt water
cooling pumps (Air conditioner and refer), Aurora, 5 x 6 x 15 Series 413-BF.

 

·                  Two (2) brake cooling
pumps, Aurora, 6 x 6 x 11, Series 344.

 

·                  Two (2) brake cooling
booster pumps, Aurora, 4 x 3 x 11-9/16, Series 344.

 

·                  Four (4) fuel oil
transfer gear-type pumps, Viking Model AL4 195, with 7-1/2 hp electric motor.

 

·                  Two (2) air compressor
cooling pumps, Aurora, 4 x 5 x 11, Series 344.

 

·                  Six (6) fuel oil
centrifuges.

 

·                  Four (4) potable water
pumps, Model FHP 125MS.

 

·                  Two (2) brine pumps,
Mission Magnum 4 x 3 x 9, 150 hp.

 

·                  Two (2) base oil pumps,
Mission Magnum 4 x 3 x 9, 60 hp.

 

·                  Fourteen (15) lube oil centrifuges.

 

·                  Three (3) lube oil
transfer pumps.

 

·                  Two (2) fuel oil
service pumps.

 

·                  Two (2) dirty oil
transfer pumps.

 

·                  Four (4) bilge pumps,
Barnes Model 25 CCE with 15 HP 3450 RPM Motors.

 

·                  Two (2) 3 -1/2 ID
15,000 psi frac lines with two (2) each 15,000 psi valves

 

B-22

 

13.   Radio
communications and navigation equipment to meet U.S. Coast Guard and SOLAS     requirements including:

 

·                  One (1) Satellite radio
telephone link, private line with fax and modem capability, through the
Offshore Telephone Company’s microwave system (DODI use only).

 

·                  One (1) Iridium
portable satellite phone with external antenna for backup emergency phone
comms.

 

·                  Single Side Band (SSB)
radiotelephone  (GMDSS) - Sailor HT 4250 with
DSC

 

·                  VHF-FM radiotelephone (2) -
Sailor RT 4822 with DSC & (2) Sailor RT2048 W/O DSC

 

·                  VHF-AM Helicopter
Transceiver - one (1)   ICOM-IC-A200

 

·                  Public Address General alarm
system- Spector Luminex ACE 100

 

·                  Portable UHF hand sets -
eight (8) Motorola 55/75 plus base station in pilothouse

 

·                  Loud Hailers as required

 

·                  Satellite Communications
System - Sailor Inmarsat B (GMDSS), voice. Sailor Inmarsat C terminal, telex

 

·                  Helicopter Homing Beacon -
one (1) Southern Avionics SS800A

 

·                  Fathometer - Raytheon DE 795

 

·                  Magnetic Compass - one (1) Cassen &
Plath

 

·                  Radar - Raytheon Pathfinder
ST MK2 S-band and Raytheon Pathfinder ST MK2 X-band both with ARPA

 

·                  Speed Log — Consillium
marine

 

·                  ECDIS — Cap’n voyager
Electronic charting with DGPS input.

 

·                  Fog Horns - one (1) Kahlenberg
M-511

 

·                  Current Meter - one (1) Anderaa
3127 with input into DP system

 

B-23

 

·                  Meteorological Station —
Anderaa 3660. Provides wind speed/direction, temperature, barometric pressure,
Relative humidity.

 

·                  Advanced Design Corporation
Weather Data/Doppler Radar System

 

·                  Navigational Lighting — Aqua
Signal

 

14.         Nautronix ASK 5003 Triple
Redundant Dynamic Positioning System consisting of a dual redundancy ASK 5002
console and a single backup ASK 5001 console

 

·                  Nautronix TCS 5001 thruster
control system.

 

·                  Dual Nautronix RS925 LBL/SBL
long baseline/ short baseline acoustic system with 6 hydrophones.

 

·                  Eight (8) Maxi Beacons
MKII position beacons rated for 10,000’ water depth.

 

·                  Three (3) Anschutz/Raytheon
Electronics Standard 20 gyrocompasses.

 

·                  Two (2) Maxi Beacons
MKII riser angle beacons.

 

·                  One (1) Anschutz/Raytheon
Electronics STD 20 gyro compass for vessel navigation

 

·                  Two (2) Motion
Reference units with a pitch and roll accuracy of  ±0.05 degrees.

 

·                  Four (4) Differential
Global Positioning Systems for position indication to DP system

 

·                  One (1) Vertical
Reference Unit.

 

·                  Four (4) R M Young
Anemometers for input of wind speed to the DP system.

 

15.   One (1) Sasakura/
Hamworthy Super Trident sewage treatment plant.

 

16.         One (1) Caterpillar
model EC-30 electric forklift for handling pallet material in the sack room.

 

17.         Two (2) British Rope “Viking”
boat mooring systems - one (1) each for port and starboard supply boat
loading stations.

 

18.   Two (2) positions
designed to accept well test burner booms

 

19.   Two (2) trash
compactors.

 

B-24

 

20.         0ne (1) SETEC
helicopter refueling system consisting of pumping cabinet, filter, water separator
and two (2) 5,000 liter stationary tanks.

 

21.         Two (2) Elevators -
personnel elevators in columns for access to pump and propulsion rooms and one (1) inside
the accommodations to transport personnel to the helideck.

 

22.   One (1) air
conditioned/heated Driller’s console house located at drill floor.

 

23.         One (1) closed circuit
multi-channel TV monitoring system with monitors located in Toolpusher’s
office, Operator’s office, pilot house, drill floor and other key areas.  Cameras are located to view helideck, cellar
deck, port/starboard supply vessel loading stations as well as subsea
operations.

 

B-25

 

24.         Four (4) rig monitoring
locations with separate computerized systems/consoles:

 

·                  Weather, vessel, motion, and
tank volumes are monitored on the bridge by either the DPO or BCO

 

·                  Tank levels are monitored at
ballast control.

 

·                  Engine information for
propulsion engines are monitored in the ECR and information is only accessible
to the ECR at the DP desk on the bridge.

 

·                  Drilling engines are
monitored in the ECR and in the drilling engine rooms.

 

25.         One (1) Model Gulf Gulp
waste food processor.

 

G.    THIRD PARTY EQUIPMENT

 

1. ROV Unit (Operator
Furnished)

 

Magnum class ROV, built and
operated by Oceaneering International

 

a. Cage

 

·                  10,000 feet maximum
operating depth, equipped with 50 hp motor HPU.

·                  Twin steering thrusters.

 

b. Vehicle

 

·                  Twin 50 hp motor and pump
HPU units plumbed in parallel for redundancy.

·                  600 foot maximum vehicle
excursion from cage.

·                  300 pound payload (requires
removing ballast).

·                  100 pound lifting capability
from neutral buoyancy.

·                  Various hydraulic and
mechanical tooling, capabilities upon request.

·                  ROVNAV and various sub sea
survey capabilities upon request.

·                  One Conan 7-function
manipulator.

·                  One Hercules 7-function
manipulator.

 

2. Cementing Unit (Operator furnished)

 

MD1000 class unit built and operated by Schlumberger Ltd.

 

a.               Pumps

 

·                  Twin triplex pumps

·                  15,000 psi. max pressure
rating

 

B-26

 

·                  8.5 bpm. pump rate. (limited
due to 2” discharge line size.)

 

b.              Engines

 

·                  Two marine cooled V12
Detroit engines

·                  750 Hydraulic horsepower
rating

·                  Zone II safe exhaust system

 

c.               Mixing System

 

·                  Continuous jet mixing
re-circulating system

·                  Automatic density control
system

·                  5 x 6 100 hp.  Electric C-pump for primary mixer

·                  5 x 6 hydraulic C-pump for
back up mixer

·                  4 x 5 direct drive C-pump
for mix water injection

·                  2 x 3x 11 direct drive
C-pump for back up mix water injection

·                  75 cu.ft. hopper for cement

·                  NRD (non-radioactive
densiometer) density detection system

 

d.              Acquisition System

 

·                  Azonix computer system

·                  Uses CemCat  recording software

 

e.     Liquid Additive System

 

·                  2”  Wilden diaphragm pumps

·                  30 gal. drop tanks on unit

·                  Hook up is 2” cam-lock to
tote / MPT tanks

 

3. Mud Recovery Unit (Operator furnished)

 

A SWACO and Hutchison-Hayes joint venture cuttings collection and dryer
package.

 

a.               Cuttings Collection System

 

Augers

 

·                  2 each 10 hp 9” auger
systems in shaker house with audible and visual alarms (manual Emergency Stop
for these augers)

·                  1 each 10 hp 14” auger
system that feeds cuttings dryer

 

Vacuums

 

·                  2 each 100 hp series vacuum
systems

·                  2 each 15 bbl drop tanks

·                  2 each Roto-Lock hoppers

·                  2 each 16” Roto-Valves

 

B-27

 

·                  2 each 6” PVC collection
lines that run from shaker house to Roto-Lock hoppers

 

b.              Cuttings Dryer and
Centrifuge Package (Operator furnished)

 

H&H Duster Dryer

 

·                  1 each 40 hp motor to drive
main bowl

·                  1 each 20hp motor to run
back drive

·                  1 each 3 hp motor for feed
conveyor

·                  1 each active system return
pump

·                  1 each dryer control panel

·                  2 each SWACO type II mono
pumps

 

H&H 5500 variable speed electric back-drive centrifuge

 

·                  1 each 60 hp motor for main
bowl

·                  1 each 25 hp motor for back
drive

·                  1 each H&H centrifuge
feed pump

·                  1 each H&H PDP 80 pump
(this is the pump in the pit room which is used for cutting mud weight)

 

c.               Rig Vacuum System (Operator
furnished)

 

Rig Vacuum

 

·                  1 each 100 hp series vacuum
unit

·                  1 each 15 bbl drop tank

·                  1 each RIG VAC tank with
attached 2” diaphragm pump

·                  Multiple direction 2”, 3”&4”
PVC collection lines located at critical spill areas on the rig

 

4.   Schlumberger Wireline
Logging Unit (Operator Furnished)

 

Note:   Periodically it will be necessary to
substitute like equipment for the purpose of 
inspection, overhaul, repair, upgrade, etc. for the equipment
listed in this exhibit.

 

Load ratings are nominal and
may vary according to Manufacturers’ wear tolerances.

 

B-28

 

APPENDIX C

 

PERSONNEL
TO BE PROVIDED BY CONTRACTOR

 

A.            DRILLING UNIT PERSONNEL

 

	
  Classification

  	
   

  	
  Number Onboard

  	
   

  	
  Expat (E) /

  National (N)

  
	
  Rig
  Superintendent

  	
   

  	
  1

  	
   

  	
  E

  
	
  Toolpusher

  	
   

  	
  2

  	
   

  	
  E

  
	
  Driller

  	
   

  	
  2

  	
   

  	
  E

  
	
  Asst.
  Driller

  	
   

  	
  2

  	
   

  	
  E

  
	
  Derrickhand

  	
   

  	
  4

  	
   

  	
  E

  
	
  Floorhand

  	
   

  	
  6

  	
   

  	
  N

  
	
  Mechanic

  	
   

  	
  4

  	
   

  	
  E

  
	
  Motorhand

  	
   

  	
  4

  	
   

  	
  N

  
	
  Oiler

  	
   

  	
  4

  	
   

  	
  E

  
	
  Mudhand

  	
   

  	
  2

  	
   

  	
  N

  
	
  Senior
  Electrician

  	
   

  	
  1

  	
   

  	
  E

  
	
  Electrician

  	
   

  	
  3

  	
   

  	
  E

  
	
  Electronic
  Technician

  	
   

  	
  3

  	
   

  	
  E

  
	
  Welder
  / Fitter

  	
   

  	
  2

  	
   

  	
  N

  
	
  Crane
  Operator

  	
   

  	
  4

  	
   

  	
  E

  
	
  Deck
  Coordinator

  	
   

  	
  4

  	
   

  	
  N

  
	
  Roustabout

  	
   

  	
  12

  	
   

  	
  N

  
	
  Storekeeper

  	
   

  	
  2

  	
   

  	
  E

  
	
  Safety
  Representative

  	
   

  	
  2

  	
   

  	
  E

  
	
  Safe
  Operations Coordinator

  	
   

  	
  1

  	
   

  	
  E

  
	
  Master/OIM

  	
   

  	
  1

  	
   

  	
  E

  
	
  Chief
  Engineer

  	
   

  	
  1

  	
   

  	
  E

  
	
  Chief
  Mate

  	
   

  	
  1

  	
   

  	
  E

  
	
  Boatswain

  	
   

  	
  1

  	
   

  	
  E

  

 

C-1

 

	
  Classification

  	
   

  	
  Number Onboard

  	
   

  	
  Expat (E) /

  National (N)

  
	
  Radio
  Operator/Rig Clerk

  	
   

  	
  2

  	
   

  	
  1- E / 1 - N

  
	
  1st Assistant Engineer

  	
   

  	
  1

  	
   

  	
  E

  
	
  2nd Assistant Engineer

  	
   

  	
  1

  	
   

  	
  E

  
	
  3rd Assistant Engineer

  	
   

  	
  2

  	
   

  	
  E

  
	
  Senior
  DP Operator

  	
   

  	
  2

  	
   

  	
  E

  
	
  DP
  Operator

  	
   

  	
  2

  	
   

  	
  E

  
	
  Ballast
  Control Operator

  	
   

  	
  2

  	
   

  	
  E

  
	
  Subsea
  Specialist

  	
   

  	
  2

  	
   

  	
  E

  
	
  Medic

  	
   

  	
  1

  	
   

  	
  E

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
  84

  	
   

  	
   

  

 

B.                                   ONSHORE
PERSONNEL

 

Contractor shall provide the following dedicated
personnel in an onshore facility:

 

Rig Manager

Rig
Superintendent

Logistics
Manager

HSSE Manager

 

C.                                   CATERING
PERSONNEL

 

Catering Crew, as required.  Operator and third party meals and lodging in
excess of three (3) persons will be paid at a rate of $20.00 per meal and
$20.00 per lodging per day.

 

C-2

 

D.                                  WORK SCHEDULE

 

All drilling unit personnel will work an equal time “on”/”off”
schedule.  The regular hourly work
schedule on board the Drilling Unit will be twelve (12) hours per day (6:00 am —
6:00 pm).

 

E.                                      OVERTIME

 

At Operator’s request, Contractor shall furnish rig
labor for Operator’s account at the scheduled overtime cost, when such labor is
required outside the normal working hours of the crew members involved.

 

F.                                    WEATHER DELAY

 

Operator shall reimburse Contractor for any
additional costs incurred (i.e. overtime, lodging, transportation, etc.) as
a result of delayed crew change or evacuation of the Drilling Unit due to
adverse weather conditions.

 

G.                                   ADDITIONAL
PERSONNEL

 

Should Operator request rig crew personnel in
addition to those provided herein, either on a temporary or a permanent basis, Contractor
shall provide such additional personnel at the following daily rates which will
include fringe benefits, catering and other related costs.

 

	
  Classification

  	
   

  	
  Expat

  Per Man

  (US$)

  	
   

  	
  National

  Per Man

  (US$)

  	
   

  
	
  Rig Superintendent

  	
   

  	
  1,542.00

  	
   

  	
   

  	
   

  
	
  Toolpusher

  	
   

  	
  1,306.00

  	
   

  	
   

  	
   

  
	
  Driller

  	
   

  	
  1,171.00

  	
   

  	
   

  	
   

  
	
  Asst. Driller

  	
   

  	
  796.00

  	
   

  	
   

  	
   

  
	
  Derrickhand

  	
   

  	
  730.00

  	
   

  	
   

  	
   

  
	
  Floorhand

  	
   

  	
  655.00

  	
   

  	
   

  	
   

  
	
  Mechanic

  	
   

  	
  1,101.00

  	
   

  	
   

  	
   

  
	
  Motorhand

  	
   

  	
   

  	
   

  	
  120.00

  	
   

  
	
  Oiler

  	
   

  	
  739.00

  	
   

  	
   

  	
   

  
	
  Mudhand

  	
   

  	
   

  	
   

  	
  120.00

  	
   

  
	
  Senior Electrician

  	
   

  	
  1,175.00

  	
   

  	
   

  	
   

  

 

C-3

 

	
  Classification

  	
   

  	
  Expat

  Per Man

  (US$)

  	
   

  	
  National

  Per Man

  (US$)

  	
   

  
	
  Electrician

  	
   

  	
  1,101.00

  	
   

  	
   

  	
   

  
	
  Electronic Technician

  	
   

  	
  1,101.00

  	
   

  	
   

  	
   

  
	
  Welder / Fitter

  	
   

  	
   

  	
   

  	
  120.00

  	
   

  
	
  Crane Operator

  	
   

  	
  809.00

  	
   

  	
   

  	
   

  
	
  Deck Coordinator

  	
   

  	
   

  	
   

  	
  120.00

  	
   

  
	
  Roustabout

  	
   

  	
   

  	
   

  	
  120.00

  	
   

  
	
  Storekeeper

  	
   

  	
  802.00

  	
   

  	
   

  	
   

  
	
  Safety Representative

  	
   

  	
  876.00

  	
   

  	
   

  	
   

  
	
  Safe Operations Coordinator

  	
   

  	
  796.00

  	
   

  	
   

  	
   

  
	
  Master/OIM

  	
   

  	
  1,542.00

  	
   

  	
   

  	
   

  
	
  Chief Engineer

  	
   

  	
  1,461.00

  	
   

  	
   

  	
   

  
	
  Chief Mate

  	
   

  	
  1,305.00

  	
   

  	
   

  	
   

  
	
  Boatswain

  	
   

  	
  836.00

  	
   

  	
   

  	
   

  
	
  Radio Operator/Rig Clerk

  	
   

  	
  837.00

  	
   

  	
  120.00

  	
   

  
	
  AB Seaman (Marine Roustabout)

  	
   

  	
   

  	
   

  	
  120.00

  	
   

  
	
  1st Assistant Engineer

  	
   

  	
  1,190.00

  	
   

  	
   

  	
   

  
	
  2nd Assistant Engineer

  	
   

  	
  994.00

  	
   

  	
   

  	
   

  
	
  3rd Assistant Engineer

  	
   

  	
  896.00

  	
   

  	
   

  	
   

  
	
  Senior DP Operator

  	
   

  	
  1,188.00

  	
   

  	
   

  	
   

  
	
  DP Operator

  	
   

  	
  1,123.00

  	
   

  	
   

  	
   

  
	
  Ballast Control Operator

  	
   

  	
  875.00

  	
   

  	
   

  	
   

  
	
  Subsea Specialist

  	
   

  	
  1,251.00

  	
   

  	
   

  	
   

  

 

H.                                  LABOR AND
CATERING COST INCREASES

 

The rates for personnel and
catering set forth in this Appendix shall be revised by the actual documented
amount of the change in Contractor’s cost (including all payroll burden, 

 

C-4

 

benefits and catering costs
paid by Contractor for its employees) if the cost of those items increases from
Contractor’s cost thereof on the Effective Date and by any further subsequent
revisions in Contractor’s costs throughout the term of the Contract.

 

C-5

 

APPENDIX D

 

CHECKLIST OF CONTRACTOR’S AND OPERATOR’S OBLIGATIONS

 

	
   

  	
  Category

  
	
   

  	
   

  
	
  Furnished by Contractor, paid by Contractor

  	
  1

  
	
  Furnished by Contractor, paid by Operator, plus handling charge not
  to exceed 5% of net invoice

  	
  2

  
	
  Furnished by Contractor, paid by Operator, no handling charge

  	
  3

  
	
  Furnished by Operator, paid by Operator

  	
  4

  

 

************************************************************************************************************

 

	
  1.

  	
   

  	
  Contractor’s Items as set forth in Appendix “B”.

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Except as otherwise specified, maintenance and
  repair including repair parts of Contractor’s Items.

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Maintenance and repair including repair parts of
  Operator’s Items except as provided in Paragraph 403 (Maintain and Repair
  Equipment).

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  All charges relative to acquisition, shipping and
  transportation (except charges as provided in Items 65, 71 and 73) of all
  Contractor’s Items required as replacements or spare parts.

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Contractor’s personnel as set forth in Appendix
  “C” including replacement, subsistence, insurance, wages, benefits, and all
  other costs related thereto, except for increases pursuant to Paragraph 708
  (Additional Payments).

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Extra personnel in excess of the complement of
  personnel set forth in Appendix “C” when requested in writing by Operator.

  	
   

  	
  3

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Overtime beyond normal work schedule for
  Contractor’s personnel when requested in writing by Operator.

  	
   

  	
  3

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Required licenses, permits, certificates of
  financial

  	
   

  	
   

  	
   

  

 

D-1

 

	
   

  	
   

  	
  responsibility and clearances to enter upon and
  depart from drilling location, pursuant to Paragraph 606 (Drilling Site and
  Access).

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Surveying service and marker buoys to mark drilling
  location

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  Acoustic Beacons, Repair and replacement of Contractor provided
  beacons

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  Sea floor surveys required by Contractor’s Marine
  Surveyor.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  Sea bottom coring services at the drilling
  location if required by Contractor.

  	
   

  	
  3

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  Fuel, oil, greases, lubes and hydraulic fluid for
  Contractor’s equipment and Operator’s equipment.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a.  Fuel;

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  b.  Oil, greases, lubes and
  hydraulic fluid for Contractor’s Items.

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  c.  Oil, greases, lubes and
  hydraulic fluid for Operator’s Items.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
   

  	
  Water for drilling, washdown and cementing and
  excess potable water, if required.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
   

  	
  Drilling fluid and additives including lost
  circulation

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
   

  	
  Mud logging services.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
   

  	
  Normal welding and services required on Operator’s
  Items to the extent available from Contractor’s Personnel.

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
   

  	
  Welding materials used on Operator’s Items.

  	
   

  	
  2

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
   

  	
  Pneumatic hoses between supply vessels and
  Drilling Unit for unloading fuel, water, bulk cement and mud materials
  including repair and replacement of same:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a.  Initial hoses, new;

  	
   

  	
  1

  	
   

  

 

D-2

 

	
   

  	
   

  	
  b.  All replacements.

  	
   

  	
  2

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20.

  	
   

  	
  Mooring system between supply vessels and Drilling
  Unit including repair and replacement:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a.  Initial;

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  b.  All replacements.

  	
   

  	
  2

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21.

  	
   

  	
  Cargo baskets for use in transporting Contractor’s
  Items to and from supply vessels.

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  22.

  	
   

  	
  Cargo baskets for use in transporting Operator’s
  Items to and from supply vessels.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  23.

  	
   

  	
  Towing service (except during Mobilization or
  Demobilization) for all Drilling Unit moves, as approved by Contractor’s
  insurance underwriters.

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  24.

  	
   

  	
  Towing services (except during Mobilization or
  Demobilization), as approved by Contractor’s insurance underwriters, required
  in addition to supply vessels to provide necessary horsepower for all
  Drilling Unit moves.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  25.

  	
   

  	
  Anchor setting and retrieving with marine vessels
  including anchor handling crews, if required.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  26.

  	
   

  	
  Additional anchors and buoy lines, if required,
  including all repairs and replacement.

  	
   

  	
  3

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  27.

  	
   

  	
  Inspection of Contractor’s drill pipe, drill
  collars and other in-hole equipment according to API-IADC and DS-1 Rev3 Cat 5
  standards before operations commence under this Contract, pursuant to
  Contractor’s regularly scheduled inspection intervals.

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  28.

  	
   

  	
  Inspection of Contractor’s drill pipe, drill
  collars and other in-hole equipment according to API-IADC and DS-1 Rev3 Cat 5
  standards after operations commence under this Contract at reasonable
  intervals requested by Operator.

  	
   

  	
  3

  	
   

  

 

D-3

 

	
  29.

  	
   

  	
  [Intentionally Removed] 

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  30.

  	
   

  	
  [Intentionally Removed].

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  31.

  	
   

  	
  Drill pipe wipers.

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  32.

  	
   

  	
  Fishing tools other than provided by Contractor as
  set forth in Appendix “B”.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  33.

  	
   

  	
  Repair and/or replacement parts for Operator
  furnished fishing tools.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  34.

  	
   

  	
  Drilling bits, stabilizers, hole openers, reamers,
  under-reamers, well scrapers, drilling bumper subs, drilling safety joints,
  hydraulic drilling jars, and other special in-hole equipment, including
  replacement parts and repairs for same.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  35.

  	
   

  	
  Directional surveying equipment and service.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  36.

  	
   

  	
  Deflection drilling tools and service.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  37.

  	
   

  	
  Drill pipe, drill collars and handling tools other
  than those specified in Appendix “B”.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  38.

  	
   

  	
  Blowout prevention equipment other than as listed
  in Appendix “B”.

  	
   

  	
  3

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  39.

  	
   

  	
  Wellhead equipment and supplies.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  40.

  	
   

  	
  Tubular goods, hangers, packers and accessories.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  41.

  	
   

  	
  Casing shoes, float collars, baskets, centralizers,
  scratchers, scrapers, baffles and other casing accessories.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  42.

  	
   

  	
  Casing tools for sizes 36”, 20”, 16”, 13.3/8”,
  11.3/4”, 9.5/8”, 7” and 5” casing.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  43.

  	
   

  	
  Tubing tools, including slips, elevators, power
  tongs (or jaws for Contractor’s power tongs), 

  	
   

  	
   

  	
   

  

 

D-4

 

	
   

  	
   

  	
  wrenches, and tubing pipe wipers.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  44.

  	
   

  	
  Mud waste reduction tools, including mud bucket

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  45.

  	
   

  	
  Core equipment and handling tools.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  46.

  	
   

  	
  Electric logging unit, maintenance of unit and
  logging services.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  47.

  	
   

  	
  Wire line formation testing and sidewall sampling
  equipment and services.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  48.

  	
   

  	
  Drill stem test equipment and services.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  49.

  	
   

  	
  Gun and perforating services.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  50.

  	
   

  	
  Cement and cementing services.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  51.

  	
   

  	
  Drilling Fluids Materials and Services

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  52

  	
   

  	
  Drilling Fluids Laboratory fully serviced and air conditioned

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  i) Laboratory Equipment

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  53.

  	
   

  	
  Cementing unit, if not specified in Appendix B.*

  	
   

  	
  4

  	
   

  

 

	
   

  	
   

  	
  * NOTE:  If Operator uses the
  services of a cementing service company other than the owner of the cementing
  unit, any charges imposed upon Contractor by the owner of the cementing unit
  as consequence thereof shall be for the Operator’s account.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  54.

  	
   

  	
  Repair and maintenance of cementing unit.

  	
   

  	
  3

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  55.

  	
   

  	
  Labor to install 3rd Party equipment by Operator aboard
  the Drilling Unit and for later removal, if required, such as, but not
  limited to:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Cementing Unit;

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Electric Logging Unit;

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Mud Logging Unit;

  	
   

  	
   

  	
   

  

 

D-5

 

	
   

  	
   

  	
  Diving Equipment;

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Well Testing System.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  56.

  	
   

  	
  Supplies and materials to install Operator’s
  Items.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  57.

  	
   

  	
  Well testing system complete with separators,
  heaters, gas vents, metering, piping and valves, oil and/or gas burner,
  necessary booms, piping igniters, fabrication and installation and test tanks
  for well fluid (excluding fixed well test pipe work).

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  58.

  	
   

  	
  Fixed well test pipe work from the rig floor to well test area and
  well test area to burner booms

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  59.

  	
   

  	
  Administrative center including offices, office
  furniture, equipment and supplies for Contractor’s Personnel, warehousing and
  storage yard at Operating Base for Contractor’s Items, if required.

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  60.

  	
   

  	
  Administrative center including offices, office
  furniture, equipment and supplies for Operator’s Personnel, warehousing and
  storage yard facilities for Operator’s Items.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  61.

  	
   

  	
  Port Facilities and dockside area in vicinity of
  Operating Base for loading and unloading Contractor’s and Operator’s Items on
  and off supply vessels.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  62.

  	
   

  	
  Transportation for Contractor’s Items and
  Personnel: 

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a. Routine transportation from point of origin to
  Operating Base;

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  b. Routine transportation
  from within Operating Base to and return from dockside and/or heliport;

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  c. Routine transportation from one Operating Base
  to another;

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  d. Temporary lodging, if required and
  transportation from Operating Base to and return 

  	
   

  	
   

  	
   

  

 

D-6

 

	
   

  	
   

  	
  from dockside and/or heliport and between
  Operating Base during evacuation due to weather or other safety reasons in
  the event Operator is unable to provide adequate evacuation transportation;

  	
   

  	
  3

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  e.  Emergency transportation from Operating
  Area to helicopter base or Operating Base for both Operator and Contractor,
  as required.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  f.  Other
  emergency transportation for Contractor Personnel

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  63.

  	
   

  	
  Transportation for Operator’s Items and Personnel
  to dockside at Operating Base or point of departure and return.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  64.

  	
   

  	
  Dockside labor and equipment at Operating Base to
  load and unload Contractor’s and Operator’s Items from or to supply vessels.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  65.

  	
   

  	
  Marine transportation for Contractor’s and
  Operator’s Items from dockside to Drilling Unit and return with supply
  vessels supplied by Operator:

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a. 
  Helicopters to transport personnel of Operator and Contractor;

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  b.  Stand by boat, if required.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  66.

  	
   

  	
  Storage space at Operating Base for Contractor’s Items.

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  67.

  	
   

  	
  Storage space at dock site and Operating Base for
  Operator’s Items.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  68.

  	
   

  	
  Onshore transportation for Contractor’s
  shore-based personnel.

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  69.

  	
   

  	
  Onshore transportation for Operator’s shore-Based
  personnel.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  70.

  	
   

  	
  Fees, licenses, pilotage fees, wharfage fees,
  harbor fees and costs or similar charges 

  	
   

  	
   

  	
   

  

 

D-7

 

	
   

  	
   

  	
  including any sales taxes or clearing agent or
  brokerage fees incurred outside Host Country relating to Contractor’s Items
  and replacements or spare parts.

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  71.

  	
   

  	
  (a) Fees, licenses, pilotage fees, wharfage
  fees, harbor fees and costs or similar charges including any sales taxes or
  clearing agent or brokerage fees relating to Operator’s Items and
  replacements or spare parts.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b) Fees, licenses, pilotage fees, wharfage fees, harbor fees
  and costs or similar charges including any sales taxes or clearing agent or
  brokerage fees, incurred in Host Country relative to Contractor’s Items and
  replacements or spare parts

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  72.

  	
   

  	
  Satellite phone system from Drilling Unit to
  supply vessel and supply vessel to Operator’s Opera-ting Base office or
  direct to Operating Base including permits and licenses:

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a.

  	
  Satellite phone and data
  system from Drilling Unit to Contractor’s office or shorebase including
  permits and licenses;

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  b.

  	
  Satellite phone and data
  system from Drilling Unit to Operator office or shorebase including permits
  and licenses;.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  73.

  	
   

  	
  All helicopter transportation as required
  including medical evacuation.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a. Non-directional beacon for helicopter operations.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  74.

  	
   

  	
  Helicopter refueling system aboard Drilling Unit
  including helicopter fuel tanks, fuel tank stand, fuel pump filters, hoses
  and grounding systems.

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  75.

  	
   

  	
  Helicopter fuel and lubes.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  76.

  	
   

  	
  Special or additional helicopter safety equipment 

  	
   

  	
   

  	
   

  

 

D-8

 

	
   

  	
   

  	
  aboard Drilling Unit.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  77.

  	
   

  	
  i)  ROV and diving equipment
  services and installation costs

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ii) Surface diving and ROV services for hull inspections and
  Contractors marine equipment.

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  78.

  	
   

  	
  Meals and quarters for all of Contractor’s
  Personnel and up to and including 5 Operator’s
  Personnel.

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  79.

  	
   

  	
  Meals and quarters for Operator’s Personnel and
  Operator’s third party personnel in excess of 5 per day to be charged at
  US$60/day/man.

  	
   

  	
  3

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  80.

  	
   

  	
  Waste storage, removal and disposal including any
  required registration and permits.

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  81.

  	
   

  	
  Trash compactor and supplies

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  82.

  	
   

  	
  Insurance as provided in Appendix “E”.

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  83.

  	
   

  	
  Maintenance and repair including repair parts:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a. Of Contractor’s surface equipment;

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  b. Rubber goods in Contractor’s BOP’s;

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  i) Initial supply in as new condition for standard
  service at Commencement Date

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ii) Replacement goods after the initial set

  	
   

  	
  3

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  c.  Of
  Contractor’s subsurface equipment

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  d.  Of
  Contractor’s subsurface mooring equip-ment including pendant lines.

  	
   

  	
  3

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  84.

  	
   

  	
  Extra labor (in excess of supply vessel’s
  personnel) required aboard supply vessels when alongside Drilling Unit to
  unload or load Contractor’s and/or Operator’s Items.

  	
   

  	
  4

  	
   

  

 

D-9

 

	
  85.

  	
   

  	
  Subsea equipment:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a. Wellhead equipment;

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  b. Wellhead connector seal ring from BOP stack to
  wellhead;

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  c. Wellhead connector seal ring from BOP stack to
  LMRP;

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  d. Contractor’s surface or subsea blowout preventer
  system as described in Appendix “B”;

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  86.

  	
   

  	
  Screens for shale shakers up to and including 100   mesh.

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a. Screens for shale shakers above 100  
  mesh.

  	
   

  	
  3

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  87.

  	
   

  	
  All screens for mud cleaners

  	
   

  	
  3

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  88.

  	
   

  	
  Weather forecast services (if required)

  	
   

  	
  4

  	
   

  

 

D-10

 

APPENDIX E

 

Insurance Requirements for
Contractor

 

CIE Angola Block 21 Ltd.
(Operator)

 

Minimum Insurance Coverage to be maintained by CONTRACTOR

 

1.                                      Comprehensive Commercial General Liability (bodily
injury and property damage) insurance and protection and indemnity
insurance with limits of not less than One Million U.S.
Dollars (US $1,000,000.00) combined single limit per occurrence and in the
aggregate including the following supplementary coverage:

 

A.                                    Contractual
Liability to cover liability assumed under this Contract.

B.                                      Products Hazard
Coverage for any and all products provided or furnished by or on behalf of
Contractor during the course of service rendered by Contractor hereunder.

C.                                      Completed
Operations Hazard Coverage for any claim relating to defects or deficiencies in
goods, products, and materials or services used or rendered by Contractor in
connection with its operations.

D.                                     Broad Form Property
Damage Liability insurance.

E.                                       Coverage for
explosion, collapse, and underground hazards for work performed by Contractor
involving equipment or materials of a volatile, incendiary or explosive nature
or involving excavation, drilling or subsurface activity.

F.                                       Independent
Contractor’s Contingent coverage.

G.                                      Bodily and or
Personal Injury Liability.

H.                                     Premises
Liability

I.                                          In Rem
Endorsement.

J.                                         Territorial
extension to cover all work areas.

K.                                     Watercraft
exclusion deleted in both Contractual Liability Insurance and Contractual
Liability Endorsement.

L.                                       Seepage and
Pollution Liability, including cleanup on a sudden and accidental basis for
pollution emanating from the Drilling Unit.

M.                                  Coverage
including, but not limited to, injuries to or death of master, mates and crews
of vessels with limits of not less that $1,000,000 combined single limit per
occurrence and in the aggregate, including, insurance for removal of wreck and
debris coverage, diving operations, and liability for seepage, pollution,
containment and cleanup emanating from the rig on a sudden and accidental basis
and/or as per Water Quality Improvement Act is amended. This insurance shall be
equivalent to Form Sp-23, including coverage for crew, Tower’s Liability
(with the sistership clause unamended), sue and labor and salvage charges, and
Contractual Liability. Any language in this policy which limits the coverage to

 

E-1

 

an insured who is not the Contractor or who is not
entitled to limitation of liability shall be deleted.

 

2.                                        Automobile
Liability Insurance covering owned, hired and non-owned vehicles or automotive
equipment used by or for Contractor with limits of One Million U.S. Dollars (US
$1,000,000.00) combined single limit per occurrence for bodily injury and
property damages combined single limits, including, without limitation, coverage
for sudden and accidental pollution for trucking companies and contractual
liability to cover liability assigned under this Contract.

 

3.                                        Worker’s
Compensation and Employer’s Liability Insurance in accordance with the state,
federal, and maritime laws and requirements of the state or offshore location
where the work is to be performed, the state in which the Contractor’s
employees reside and the state in which the Contractor is domiciled; covering
all liabilities owed for compensation and other benefits under the relevant
Worker’s Compensation laws of any state or of the federal government, and
Employer’s Liability Insurance with limits of not less than One Million U.S.
Dollars (US $1,000,000.00) per accident or occurrence, without limitation:

 

A.                                    Protection for
liabilities under the U.S. Longshore and Harbor Worker’s Compensation Act and
the Outer Continental Shelf Lands Act.

B.                                      Coverage for liability under the Merchant Marine Act 1920, commonly known
as the Jones Act, the Admiralty Extension Act of 1948, and the Death on the
High Sea Act.

C.                                      Protection
against liability of the employer to provide transportation, wages, maintenance
and cure fund to maritime employees and a Voluntary Compensation Endorsement.

D.                                     Coverage
amended to provide that a claim In Rem shall be treated as a claim against the
employer.

E.                                       Territorial
extension to cover all work areas.

F.                                       “Alternate
Employer or Borrowed Servant” Endorsement stating that a claim brought against
Operator as a “Borrowed Servant” by any person who is on the payroll of the
Contractor or its subcontractors shall be treated as a claim against the
Contractor or its subcontractor.

 

4.                                      Umbrella/Excess
Liability Insurance Coverage providing coverage excess of insurance
requirements set forth in numbered paragraphs 1, 2, 3 and 7 of this Exhibit E
in the amount of at least One Hundred and Fifty Million U.S. Dollars (US
$150,000,000.00) following form of the primary insurance coverages.

 

E-2

 

5.                                      Property
Insurance in an all risk form (including transit) covering the Contractor’s
machinery and equipment for its declared value and including removal of wreck
and debris coverage.

 

For
all vessels owned by Contractor or its Affiliated Companies in connection with
its work under the Contract, Contractor shall carry or require the owner of
such vessels to carry (including Umbrella and/or Excess Liability Insurance
where applicable) the following insurances as detailed in paragraphs 6 – 7,
inclusive):

 

6.                                      Hull and
Machinery Insurance – Full Form Hull and Machinery Insurance, including
Collision Liability, with the sistership clause unamended and with navigational
limits adequate for Contractor to perform the work and services hereunder.
Where the vessel(s) engage in towing operations, said insurance shall
include full Tower’s Liability with the sistership clause unamended.  Insurance will provide for removal of wreck
and debris coverage.  Any language in
this policy which limits the coverage to an insured who is not the Contractor
or who is not entitled to limitation of liability shall be deleted.

 

7.                                      Charterers
Legal Liability Insurance for bodily injury and property damage with limits of
not less than One Million U.S. Dollars (US $1,000,000.00) combined single limit
per occurrence and in the aggregate.

 

Any
and all deductibles and retentions in the above described insurance policies
shall be assumed by, for the account of and at Contractor’s sole risk, unless
otherwise stated in this Contract.

 

All policies providing coverage hereunder shall
contain provisions that no cancellation or material changes in the policies
shall become effective except on thirty (30) days written notice (48 hours for
war risk) thereof to Operator at the office originating the Contractor.
Contractor shall not cancel or make any material change in any such policies
without the prior written consent of Operator.

 

Contractor shall require its subcontractors to
maintain normal and customary insurance in minimum amounts deemed necessary by
Contractor to cover the work of the particular subcontractor.  Upon written request by Company, Contractor
shall furnish or cause to be furnished to Operator certificates of such
insurance coverage for each subcontractor.

 

E-3

 

APPENDIX  F

 

ANTI-CORRUPTION  UNDERTAKING

 

1.01                                 At all times
during the term of this Contract, Operator and Contractor shall comply with all
APPLICABLE ANTI-CORRUPTION LAWS, as defined below, including any future
anti-corruption or anti-bribery laws, regulations or requirements of any
jurisdiction, that are or may become applicable to Operator, Operator Group,
Contractor, or Contractor Group during the term of this Contract.

 

1.02                                 Specifically,
Operator and Contractor each agrees, undertakes and confirms that neither it,
nor any of its Affiliated Companies, and its contractors and subcontractors,
and its and their respective owners, directors, officers, employees, agents and
representatives or other persons or entities working for or on behalf of any of
the foregoing with respect to this Contract, has made, offered, authorized or
promised to make, or will make, offer, authorize or promise to make, any
payment, gift, promise or other advantage (including any fee, gift, sample,
travel expense, entertainment, service, equipment, loan, debt forgiveness,
donation, grant or other payment or support in cash or in kind), directly or
indirectly, to any PROHIBITED PERSON (as defined below) (A) for the
purpose of obtaining or retaining business or favorable government action,
influencing any official act or decision of a PROHIBITED PERSON or inducing
such PROHIBITED PERSON to use his or her influence to affect or influence any
governmental act or decision or otherwise secure any improper advantage for any
person or entity or (B) that is otherwise illegal or improper under any
Applicable Anti-Corruption Law (as defined below).

 

(a)                                        For purposes of
this Contract, a PROHIBITED PERSON means (A) any foreign public official
(including any person holding a legislative, administrative or judicial
office), (B) any person employed by or acting on behalf of a foreign
public agency, a foreign public enterprise or a foreign public international
organization, (C) any officer or employee of a foreign government,
department, sub-division, agency or an entity controlled by a foreign
government (including any state-owned, stated-controlled or state-operated
company), or any person acting in an official capacity on behalf of any such
department, agency or entity, (D) any foreign political party, (E) any
official of a foreign political party, (F) any candidate for foreign
political office or (G) any officer or employee of a public international
organization.

 

(b)                                       For purposes of
this Contract, APPLICABLE ANTI-CORRUPTION LAWS means, collectively, (A) the
United States Foreign Corrupt Practices Act of 1977, as amended, (B) the
principles set out in the Organization for Economic 

 

F-1

 

Cooperation and Development
Convention Combating Bribery of Foreign Public Officials in International
Business Transactions, (c) the anti-corruption or anti-bribery laws of
Angola, and (d) all other anti-corruption and/or anti-bribery laws,
regulations and requirements of any jurisdiction applicable to Operator,
Operator Group, Contractor, or Contractor Group, whether by virtue of either
Party’s jurisdiction of incorporation or by virtue of availing itself of the
jurisdiction in which the Work is provided under this Contract.

 

1.03                                 As a matter of
corporate policy, Operator and Contractor each expressly prohibits payment of
bribes and also payment of any so-called “facilitation” or “grease” payments in
connection with Operator’s or Contractor’s business operations by any
contractor or agent engaged to provide goods or services to Operator or
Contractor.  Operator and Contractor each
agrees, undertakes and confirms that it, and each of its Affiliated Companies,
and its contractors and subcontractors, and its and their respective owners, directors,
officers, employees, agents and representatives, has not made, offered,
promised to make or authorized the making of, and will not make, offer, or
promise to make, or authorize the making of, any payment or other transfer of
anything of value, including without limitation the provision of any funds,
services, gifts or entertainment, directly or indirectly to any PROHIBITED
PERSON with respect to the performance of this Contract.

 

1.04                                 Notwithstanding
the foregoing undertakings, Operator and Contractor each agrees to notify the
other promptly upon discovery of any instance where it has formed a reasonable
belief that either it or any of its Affiliated Companies, or its contractors or
subcontractors, or its or their respective owners, directors, officers,
employees, agents or representatives, failed to comply with any provisions of
this Appendix F.

 

1.05                                 Operator and
Contractor each agrees and undertakes that in connection with this Contract and
in connection with any other business transactions involving the other in
Angola, Operator and Contractor each, and each of its Affiliated Companies and
contractors and subcontractors:

 

a)                                            Will apply
effective disclosure controls and procedures;

 

b)                                           Will maintain
throughout the term of this Contract and, except as otherwise provided in
Paragraph 611, for at least three (3) years following its expiration or
termination books, records, and accounts which, in reasonable detail,
accurately and fairly reflect the transactions undertaken and the disposition
of assets; and

 

c)                                            Will maintain
an internal accounting controls system that is sufficient to ensure the proper
authorization, recording and reporting of all transactions and to 

 

F-2

 

provide reasonable assurance
that violations of the anticorruption laws of the applicable jurisdictions will
be prevented, detected and deterred.

 

1.06                                 Contractor
agrees and acknowledges that the Operator, itself or through its duly appointed
representatives, shall have the right to inspect and audit any and all books
and records of Contractor relating to Contractor’s compliance with its
obligations under this Anti-Corruption Undertaking, and to make copies, at its
expense, of any such books and records.

 

1.07                                 Operator and
Contractor each agrees to cooperate with the other as the other may request in
making its books, records, and personnel available in connection with any
investigation conducted by government authorities of matters that may implicate
transactions or activities carried out by the Parties in connection with this Contract.  Contractor will also provide the Operator
with such further assurances or certificates that the Operator may request from
time to time during the term of this Contract relating to matters covered by
this Anti-Corruption Undertaking, and Contractor shall, upon request, certify
to Operator in writing its compliance with this Anti-Corruption Undertaking on
an annual basis.

 

1.08                                 All payments by
Operator to Contractor shall be made in accordance with the terms of payment
specified in this Contract. In the absence of any such specific payment
instructions elsewhere in this Contract, payments by Operator to Contractor
shall only be made by check or wire transfer to a bank account of Contractor in
the country in which Contractor is incorporated or where it has its head
office, or to its office in Angola, details of which shall be given by
Contractor to Operator in writing. Such notification shall be deemed to
constitute a representation and warranty that the bank account so notified is
owned solely by Contractor and that no person other than Contractor has any
ownership of or interest in such account.

 

1.09                                 Contractor
represents, warrants, and covenants that (i) no PROHIBITED PERSON will
have during the term of this Contract a direct or indirect interest in
Contractor or in this Contract, or in the proceeds thereof, and (ii) it
shall notify the Operator promptly and in writing of any change in the
foregoing.

 

1.10                                 Operator and
Contractor each further agrees and undertakes that with respect to any
contractors and subcontractors it may engage in connection with this Contract
or any other business transactions in Angola involving the Parties that (i) it
will conduct appropriate due diligence prior to appointing or engaging such
contractors and subcontractors to ensure that they are duly qualified to
perform the tasks for which they have been engaged and that they are of good
reputation, and (ii) it will be 

 

F-3

 

responsible for compliance
by all such contractors and subcontractors with APPLICABLE ANTI-CORRUPTION
LAWS.

 

F-4

 

APPENDIX G

OPERATOR’S MINIMUM HSSE
STANDARDS FOR CONTRACTORS

 

1.0                               Definitions

 

HAZIDS:  A study tool
for hazard identification used early in a project, as soon as process flow
diagrams, draft heat and mass balances, and plot layouts are available. HAZIDS also
requires existing site infrastructure, weather, and geotechnical data, which
are sources of external hazards.

 

HAZOPS:  A
structured, team-based method for hazard identification at process design
completion or during planned modifications. HAZOPS technique requires detailed
examination of the process and engineering intention of new or existing
facilities to assess the hazard potential of operation outside the design
intention, or malfunction of individual items of equipment and the
consequential effects on the facility as a whole.

 

Health, Safety, Security, and Environmental Management System (HSSE
MS):  A company structure,
responsibilities, practices, procedures, processes, and resources for
implementing health, safety, security and environmental management.

 

Job Hazard Analysis (JHA):  A process for reviewing the scope of work to
be performed on a broad scale.  JHAs can
uncover hazards overlooked in the original design, mock-up, or setup of a
particular process, operation, or task.

 

Job Safety Analysis (JSA):  A site-specific, job-specific hazard
identification exercise conducted before commencement of a job.  JSAs break jobs down to basic tasks, identify
all hazards associated with the steps in the tasks, and place one or more
control for each hazard.

 

Management of Change (MOC):  A system to verify that changes in
facilities, documentation, personnel, and operations are evaluated and managed
to ensure that any safety, health, and environmental risks that arise from the
changes are controlled.

 

Short Service Employee (SSE): Employee with less than six
months of experience working for the Contractor or in a new job classification.

 

2.0                               Requirements

 

2.01                         HSSE Management
Systems (HSSE MS)

 

G-1

 

·                  Contractor must
have an appropriate and fully-implemented HSSE MS designed to address HSSE
issues associated with the Work the Contractor will provide to Operator.

 

·                  Contractor’s
HSSE MS must be in conformance with API RP 75, ANSI Z10, OSHAS 18001, or another
recognized and internationally-accepted protocol.

 

2.02                         SUBCONTRACTOR
HSSE Management

 

All subcontractors selected by the Contractor to
provide services in connection with the Work are subject to the following
requirements:

 

·                  All
subcontractors must have been evaluated and accepted based on the Contractor’s
HSSE evaluation process before performing services.

 

·                  All known
subcontractors must be identified to the Operator’s Drilling Superintendent and
Supply Chain Manager before contracting, or as soon as possible before
mobilization.

 

·                  Activities
requiring the use of subcontractors that are not yet determined must be
identified to the Operator’s Drilling Superintendent; upon determination, the
subcontractor must be identified to the Operator’s Drilling Superintendent.

 

·                  HSSE evaluation
documentation must be provided to Operator upon request.

 

·                  Operator
reserves the right to refuse the use of subcontractors based on unacceptable
HSSE evaluations or performance.

 

2.03                         HSSE
Recordkeeping Requirements

 

·                  Contractor
shall record all HSSE information required by Operator prior to commencing
activities with the Drilling Unit by completing the PEC Premiere Standardized
Safety Questionnaire (SSQ) which will be provided by Operator.

 

·                  The purpose of
the SSQ is to record the internationally-accepted protocol recordkeeping and
HSSE MS information.

 

·                  Contractor
shall update HSSE performance data in the PEC Premiere SSQ within 30
days of the end of each calendar quarter.

 

G-2

·                  Contractor
shall update the PEC Premiere SSQ as required due to any changes in the HSSE
MS.

 

·                  Operator
reserves the right to audit Contractor to validate the information they provide
in the SSQ.

 

2.04                         Training and
Competency

 

·                  Contractor must
maintain a detailed training and competency policy defining at a minimum:

 

·                  Training
requirements by job classifications;

 

·                  Competency
requirements by job classifications;

 

·                  Measurement of
competency; and

 

·                  Recordkeeping
requirements.

 

·                  Training and
competency records must be available for audit and supplied upon request by
Operator.

 

·                  All Contractor’s
Personnel accessing the Drilling Unit must comply with offshore travel
requirements.

 

2.05                         Physically Fit
for Work

 

·                  Contractor
shall have a method in place to determine the physical fitness for duty for all
Contractor’s Personnel accessing the Drilling Unit.

 

·                  Documentation
of the physical fitness for duty issued by a licensed medical practitioner for
all Contractor’s Personnel accessing the Drilling Unit shall be provided to
Operator upon request.

 

2.06                         Short Service
Employee (SSE) Program

 

·                  As SSEs
represent elevated risks associated with Contractor performing the Work,
Contractor shall implement a SSE Program which shall address the following:

 

·                  Client notification regarding SSE personnel;

 

G-3

 

·                  SSE employment
length definition;

 

·                  Method of
identification;

 

·                  Mentoring;

 

·                  Maximum percent
of SSE personnel per crew without variance; and

 

·                  Requirements
for graduation from the program.

 

2.07                         Personnel
Protective Equipment (PPE)

 

·                  Contractor
shall conduct hazard assessments of work activities and facilities to address
hazards and establish PPE requirements.

 

·                  Contractor
shall ensure that Contractor’s Personnel are provided, maintain and utilize all
required PPE and are knowledgeable of all PPE requirements by Operator and the
Contractor’s HSSE MS.

 

·                  Contractor’s
Personnel shall understand and conform to PPE rules as identified in
Operator’s or Contractor’s site-specific orientations.

 

2.08                         Alcohol and
Drug Program

 

Contractor shall, at minimum, have a written alcohol
and drug program that complies with applicable law and regulations and provide
for a drug-free workplace.

 

2.09                         Operating
Procedures

 

Based on the Work performed and the nature of the
scope of Work requested by Operator, Contractor may be required to implement
written operating procedures as necessary to ensure safe and successful
completion of any Work performed for Operator.

 

2.10                         Mechanical
Integrity Programs

 

Contractor must implement a mechanical integrity
program designed to address all elements of safe and dependable operation.

 

G-4

 

2.11                         Hazard
Identification and Management

 

·                  Hazard
identification includes HAZID and Job Hazard Analysis (JHA) processes.

 

·                  Contractor may
be required to participate in or facilitate hazard identification processes,
including HAZOP, HAZID, task risk assessment, and Job Hazard Analysis as
determined by the Contractor’s scope of Work and the Operator’s Drilling
Superintendent.

 

·                  Job Safety
Analysis (JSA):  Contractor must
implement an acceptable process that defines the tasks or jobs for which the
Contractor will conduct JSAs.

 

·                  Safety
Observation Programs

 

·                  Contractor must
have formal, fully-implemented safety observation programs.

 

·                  Subcontractors
and smaller contractors that do not have safety observation programs must
participate in the safety observation program currently active on the Drilling
Unit or at the applicable Operator location.

 

2.12                         Incident
Management and Investigation

 

·                  All incidents
on the Drilling Unit or at the applicable Operator location, shall be reported
immediately to the Operator’s Drilling Superintendent or other representative.

 

·                  Subsequent case
management reports for any incidents must be provided to Operator upon request.

 

·                  Contractor must
investigate all incidents that result in real or potential impact to personnel,
equipment, environment, or the reputation of Operator and must use
causal-factor analysis. Operator may elect to be part of the investigation team
at any time.

 

2.13                         Management of
Change (MOC)

 

·                  Contractor
shall implement a MOC policy to ensure a process is in place to recognize
change that can create hazards and to manage that change safely and
effectively.

 

·                  At a minimum,
Contractor’s MOC policies must address changes in the following:

 

G-5

 

·                  Procedures and
work practices;

 

·                  Personnel;

 

·                  Equipment; and

 

·                  Facilities.

 

2.15                         HSSE Audits and
Assessments

 

·                                          Desktop audits
are HSSE MS evaluations conducted at Operator’s offices that use documentation
provided by Contractor. Contractor shall make HSSE MS information available
upon request for use in completing desktop audits.

 

·                                          Field audits
are HSSE evaluations conducted at Contractor’s facilities such as the Drilling
Unit. Contractor shall make a knowledgeable representative and all requested
HSSE material available for use in completing field audits of the Contractor’s
HSSE MS, equipment, and facilities.

 

Unless otherwise agreed,
Contractor is expected to audit all subcontractors HSSE MS and will provide the
results of subcontractor audits to Operator upon request.

 

G-6

 

APPENDIX H

 

Form of Escrow Agreement

 

THIS ESCROW AGREEMENT (as
the same may be amended or modified from time to time pursuant hereto, this “Agreement”)
is made and entered into as of October     , 2010, by
and among CIE ANGOLA BLOCK 21 LTD., a company organized under the laws of the
Cayman Islands, (“Cobalt”),  Z NORTH SEA
LTD., a company organized under the laws of Delaware, (“Z North Sea”, and
together with Cobalt, sometimes referred to individually as “Party” or  collectively
as the “Parties”), and JPMorgan Chase Bank, National Association (the “Escrow
Agent”).

 

WHEREAS, the Parties have entered into that certain International Daywork
Drilling Contract — Offshore dated as of October     ,
2010 for the dynamically positioned semi-submersible drilling vessel Ocean
Confidence (the “Underlying Agreement”); and

 

WHEREAS, the Parties
have agreed that Cobalt will deposit in escrow certain funds to guarantee
payment to Z North Sea for work performed under the Underlying Agreement, and
the Parties wish such deposit to be subject to the terms and conditions set
forth herein.

 

NOW THEREFORE, in
consideration of the foregoing and of the mutual covenants hereinafter set
forth, the parties hereto agree as follows:

 

1.             Appointment.  The Parties hereby appoint the Escrow Agent
as their escrow agent for the purposes set forth herein, and the Escrow Agent
hereby accepts such appointment under the terms and conditions set forth
herein.

 

2.             Fund.  Cobalt agrees to deposit  with the Escrow Agent the sum of U.S.
$10,800,000.00 (the “Escrow Deposit”) on or before the Commencement Date as
defined in the Underlying Agreement. 
Escrow Agent will not be responsible for monitoring the date that the
Escrow Deposit is to be deposited.  The
Escrow Agent shall hold the Escrow Deposit and, subject to the terms and
conditions hereof, shall invest and reinvest the Escrow Deposit and the
proceeds thereof (the “Fund”) as directed in Section 3.

 

3.             Investment of Fund.  During the term of this Agreement, the Fund
shall be invested in a JPMorgan Money Market Deposit Account (“MMDA”),   or similar investment offered by the Escrow
Agent, unless otherwise instructed by the Parties and as shall be acceptable to
the Escrow Agent.    MMDA have rates of
compensation that vary from time to time based upon market conditions.  Instructions to make any other investment (“Alternative
Investment”), must be in writing and shall specify the type and identity of the
investments to be purchased and/or sold. 
The Escrow Agent is hereby authorized to execute purchases and sales of 

 

H-1

 

investments
through the facilities of its own trading or capital markets operations or
those of any affiliated entity.  The
Escrow Agent or any of its affiliates may receive compensation with respect to
any Alternative Investment directed hereunder including without limitation
charging any applicable agency fee in connection with each transaction.  The Parties recognize and agree that the
Escrow Agent will not provide supervision, recommendations or advice relating
to either the investment of moneys held in the Fund or the purchase, sale,
retention or other disposition of any investment described herein. The Escrow
Agent shall not have any liability for any loss sustained as a result of any
investment in an investment made pursuant to the terms of this Agreement or as
a result of any liquidation of any investment prior to its maturity or for the
failure of the Parties to give the Escrow Agent instructions to invest or
reinvest the Fund.  The Escrow Agent
shall have the right to liquidate any investments held in order to provide
funds necessary to make required payments under this Agreement.

 

4.             Disposition
and Termination.  The Escrow Agent shall distribute the Fund
(or a part thereof) to either Cobalt or Z North Sea at the following times:

 

(a) Upon receipt of a duly completed and
executed certificate(s) from time to time signed by an individual on
Schedule 1 hereto (“Authorized Signer”) of Z North Sea in the form of Exhibit A
hereto, the Escrow Agent shall distribute to Z North Sea, the amount of the “Defaulted
Payment” set forth in such certificate;

 

(b) Upon receipt of written instructions signed
by an Authorized Signer of Cobalt and Z North Sea, the Escrow Agent shall
distribute such amount(s) and to such Parties as set forth in such
certificate;

 

(c) Upon receipt of a duly completed and
executed certificate signed by an Authorized Signer of Cobalt and Z North Sea
in the form of Exhibit B hereto, the Escrow Agent shall distribute to
Cobalt, the balance of the Fund.

 

If
Cobalt is not in default of its payment obligations under the Underlying
Agreement, Z North Sea and Cobalt will execute a certificate in the form of Exhibit B
promptly after the termination of the Underlying Agreement or assignment of the
Underlying Agreement to any party other than an affiliate of the assigning
party.  The Escrow Agent may rely on the
validity, accuracy, and content of the statements contained in the certificate(s) from
the Parties described in 4(a), 4(b) and 4(c) without further
investigation, inquiry or examination. 
Upon delivery of the Fund by the Escrow Agent, this Agreement shall
terminate, subject to the provisions of Section 8(b).

 

5.             Escrow Agent.  (a) The Escrow Agent shall have only
those duties as are specifically and expressly provided herein, which shall be
deemed purely ministerial in nature, and no other duties shall be implied.  The Escrow Agent shall neither be responsible
for, nor chargeable with, knowledge of, nor have any requirements to comply
with, the terms and 

 

H-2

 

conditions
of the Underlying Agreement or any other agreement, instrument or document
between the Parties, in connection herewith, if any, nor
shall the Escrow Agent be required to determine if any person or entity has
complied with any Underlying  Agreement,
nor shall any additional obligations of the Escrow Agent be inferred from the
terms of any Underlying Agreement, even though reference thereto may be made in
this Agreement.  In the event of any
conflict between the terms and provisions of this Agreement, those of any Underlying Agreement, any schedule or exhibit
attached to the Agreement, or any other agreement among the Parties, the
terms and conditions of this Agreement shall control.  The Escrow Agent may rely upon and shall not
be liable for acting or refraining from acting upon any written notice,
document, instruction or request furnished to it hereunder and believed by it
to be genuine and to have been signed or presented by the proper Party or
Parties without inquiry and without requiring substantiating evidence of any
kind.  The Escrow Agent shall not be
liable to any Party, any beneficiary or other person for refraining from acting
upon any instruction setting forth, claiming, containing, objecting to, or
related to the transfer or distribution of the Fund, or any portion thereof,
unless such instruction shall have been delivered to the Escrow Agent in
accordance with Section 11 below and the Escrow Agent has been able to
satisfy any applicable security procedures as may be required thereunder. The
Escrow Agent shall be under no duty to inquire into or investigate the
validity, accuracy or content of any such document, notice, instruction or
request.  The Escrow Agent shall have no
duty to solicit any payments which may be due it or the Fund, including,
without limitation, the Escrow Deposit  nor shall the
Escrow Agent have any duty or obligation to confirm or verify the accuracy or
correctness of any amounts deposited with it hereunder.

 

(b)  The Escrow Agent shall
not be liable for any action taken, suffered or omitted to be taken by it in
good faith except to the extent that a final adjudication of a court of
competent jurisdiction determines that the Escrow Agent’s gross negligence or
willful misconduct was the cause of any loss to either
Party. 
The Escrow Agent may execute any of its powers and perform any of its
duties hereunder directly or through affiliates or agents.  The Escrow Agent may consult with counsel, accountants
and other skilled persons to be selected and retained by it.  The Escrow Agent shall not be liable for any
action taken, suffered or omitted to be taken by it in accordance with, or in
reliance upon, the advice or opinion of any such counsel, accountants or other
skilled persons.  In the event that the
Escrow Agent shall be uncertain or believe there is some ambiguity as to its
duties or rights hereunder or shall receive instructions, claims or demands
from any Party hereto which, in its opinion, conflict with any of the
provisions of this Agreement, it shall be entitled to refrain from taking any
action and its sole obligation shall be to keep safely all property held in
escrow until it shall be given a direction in writing by the Parties which eliminates
such ambiguity or uncertainty to the satisfaction of Escrow Agent or by a final
and non-appealable order or judgment of a court of competent jurisdiction.  The Parties agree to pursue any redress or
recourse in connection with any dispute without making the Escrow Agent a party
to the same.  Anything in this Agreement
to the contrary notwithstanding, in no event shall the 

 

H-3

 

Escrow Agent be liable for special,
incidental, punitive, indirect or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the Escrow
Agent has been advised of the likelihood of such loss or damage and regardless
of the form of action.

 

6.             Succession.  (a) The
Escrow Agent may resign and be discharged from its duties or obligations
hereunder by giving thirty (30) days advance notice in writing of such
resignation to the Parties specifying a date when such resignation shall take
effect.  If the Parties have failed to
appoint a successor escrow agent prior to the expiration of  thirty (30) days following receipt of the notice of
resignation, the Escrow Agent may petition any court of competent jurisdiction
for the appointment of a successor escrow agent or for other appropriate relief,
and any such resulting appointment shall be binding upon all of the parties
hereto.  Escrow Agent’s sole
responsibility after such thirty (30) day notice period expires shall be to
hold the Fund (without any obligation to reinvest the same) and to deliver the
same to a designated substitute escrow agent, if any, or in accordance with the
directions of a final order or judgment of a court of competent jurisdiction,
at which time of delivery Escrow Agent’s obligations hereunder shall cease and
terminate, subject to the provisions of Section 8(b).  In
accordance with Section 8(b), the Escrow Agent shall have the right to
withhold an amount equal to any amount due and owing to the Escrow Agent, plus
any costs and expenses the Escrow Agent shall reasonably believe may be
incurred by the Escrow Agent in connection with the termination of the
Agreement.

 

(b)           Any
entity into which the Escrow Agent may be merged or converted or with which it
may be consolidated, or any entity to which all or substantially all the escrow
business may be transferred, shall be the Escrow Agent under this Agreement
without further act.

 

7.             Compensation
and Reimbursement.  Cobalt
agrees (a) to pay the Escrow Agent upon execution of this Agreement and
from time to time thereafter reasonable compensation for the services to be
rendered hereunder, along with any fees or charges for accounts, including
those levied by any governmental authority which the Escrow Agent may impose,
charge or pass-through, which unless otherwise agreed in writing shall be as
described in Schedule 2 attached hereto, and (b) to pay or reimburse the
Escrow Agent upon request for all expenses, disbursements and advances,
including, without limitation reasonable attorney’s fees and expenses, incurred
or made by it in connection with the performance, modification and termination
of this Agreement. The obligations contained in this Section 7 shall
survive the termination of this Agreement and the resignation, replacement or
removal of the Escrow Agent.

 

8.             Indemnity.  (a) The Parties shall jointly and
severally indemnify, defend and hold harmless the Escrow Agent and its
affiliates and their respective successors, assigns, directors, agents and
employees (the “Indemnitees”) from and against any and all losses, damages, 

 

H-4

 

claims,
liabilities, penalties, judgments, settlements, litigation, investigations,
costs or expenses (including, without limitation, the fees and expenses of
outside counsel and experts and their staffs and all expense of document
location, duplication and shipment)(collectively “Losses”) arising out of or in
connection with (i) the Escrow Agent’s execution and performance of this
Agreement, tax reporting or withholding, the enforcement of any rights or
remedies under or in connection with this Agreement, or as may arise by reason
of any act, omission or error of the Indemnitee, except in the case of any
Indemnitee to the extent that such Losses are finally adjudicated by a court of
competent jurisdiction to have been caused by the gross negligence or willful
misconduct of such Indemnitee, or (ii) its following any instructions or
directions, whether joint or singular, from the Parties, except to the extent
that its following any such instruction or direction is expressly forbidden by
the terms hereof.  The indemnity
obligations set forth in this Section 8(a) shall survive the
resignation, replacement or removal of the Escrow Agent or the termination of
this Agreement.

 

(b) 
The Parties hereby grant the Escrow Agent a lien on, right of set-off against
and security interest in, the Fund for the payment of any claim for
indemnification, fees, expenses and amounts due to the Escrow Agent or an
Indemnitee.  In furtherance of the
foregoing, the Escrow Agent is expressly authorized and directed, but shall not
be obligated, to charge against and withdraw from the Fund for its own account
or for the account of an Indemnitee any amounts due to the Escrow Agent or to
an Indemnitee under either Sections 6(a), 7 or 
8(a) of this Agreement.

 

9.             Patriot Act
Disclosure/Taxpayer Identification Numbers/Tax Reporting.

 

(a) Patriot Act Disclosure. 
Section 326 of the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA
PATRIOT Act”) requires the Escrow Agent to implement reasonable procedures to
verify the identity of any person that opens a new account with it.  Accordingly, the Parties acknowledge that Section 326
of the USA PATRIOT Act and the Escrow Agent’s identity verification procedures
require the Escrow Agent to obtain information which may be used to confirm the
Parties identity including without limitation name, address and organizational
documents (“identifying information”). The Parties agree to provide the Escrow
Agent with and consent to the Escrow Agent obtaining from third parties any
such identifying information required as a condition of opening an account with
or using any service provided by the Escrow Agent.

 

(b) 
Certification and  Tax
Reporting.  The Parties have
provided the Escrow Agent with their respective fully executed Internal Revenue
Service (“IRS”) Form W-8, or W-9 and/or other required documentation. All
interest or other income earned under this Agreement shall be allocated to
Cobalt and reported, as and to the extent required by law, by the Escrow Agent
to the IRS, or any other taxing authority, on IRS Form 1099 or 1042S (or
other appropriate form) as income earned from the Escrow Deposit by Cobalt
whether or not said income has been 

 

H-5

 

distributed
during such year. Escrow Agent shall withhold any taxes it deems appropriate in
the absence of proper tax documentation or as required by law, and shall remit
such taxes to the appropriate authorities. 
The Parties hereby represent to the Escrow Agent that (i) there is
no sale or transfer of an United States Real Property Interest as defined under
IRC Section 897(c) in the underlying transaction giving rise to this
Agreement; and (ii) such underlying transaction does not constitute an
installment sale requiring tax reporting or withholding of imputed interest or
original issue discount to the IRS or other taxing authority.

 

10.           Notices. 
All communications hereunder shall be in writing and except for
communications from the Parties setting forth, claiming, containing, objecting
to, or in any way related to the transfer or distribution of funds, including
but not limited to funds transfer instructions (all of which shall be specifically
governed by Section 11 below), shall be deemed to be duly given after it
has been received and the receiving party has had a reasonable time to act upon
such communication if it is sent or served:

 

(a) by
facsimile;

(b) by
overnight courier; or

(c) by prepaid
registered mail, return receipt requested;

 

to the appropriate notice address set
forth below or at such other address as any party hereto may have furnished to
the other parties in writing by registered mail, return receipt requested.

 

If to Cobalt

CIE Angola Block
21 Ltd.

c/o Cobalt
International Energy, L.P.

1980 Post Oak
Blvd., Suite 1200

Houston, Texas,
77056

Attention:  Ann Graves, Treasurer

Tel No.: 
713-579-9165

Fax
No.:  713-579-9196

 

H-6

 

If to Z North Sea

Z North Sea Ltd.

15415 Katy
Freeway, Suite 100

Houston, Texas
77094

Attention: 
Morrison R. Plaisance

Tel No.:  281-492-5303

Fax
No.:  281-492-5310

 

If
to the Escrow Agent

JPMorgan
Chase Bank, N.A.

Escrow Services

712 Main Street, 5th Floor South

Houston, Texas 77002

Attention: 
Susie Becvar

Fax No.:  713-216-6927

 

Notwithstanding the above, in the case of
communications delivered to the Escrow Agent, such communications shall be
deemed to have been given on the date received by an officer of the Escrow
Agent or any employee of the Escrow Agent who reports directly to any such
officer at the above-referenced office. 
In the event that the Escrow Agent, in its sole discretion, shall
determine that an emergency exists, the Escrow Agent may use such other means
of communication as the Escrow Agent deems appropriate.  For purposes of this Agreement, “Business Day”
shall mean any day other than a Saturday, Sunday or any other day on which the
Escrow Agent located at the notice address set forth above is authorized or
required by law or executive order to remain closed.

 

11.           Security Procedures.  Notwithstanding anything to the contrary as
set forth in Section 10, any instructions setting forth, claiming,
containing, objecting to, or in any way related to the transfer or distribution
of funds, including but not limited to any such funds transfer instructions
that may otherwise be set forth in a written instruction permitted pursuant to Section 4
of this Agreement, may be given to the Escrow Agent only by confirmed facsimile
and no instruction for or related to the transfer or distribution of the Fund,
or any portion thereof, shall be deemed delivered and effective unless the
Escrow Agent actually shall have received such instruction by facsimile at the number
provided to the Parties by the Escrow Agent in accordance with Section 10
and as further evidenced by a confirmed transmittal to that number.

 

(a) In the event funds transfer
instructions are so received by the Escrow Agent by facsimile, the Escrow Agent
is authorized to seek confirmation of such instructions by telephone call-back
to the person or persons designated on Schedule 1 hereto, and the Escrow Agent
may rely upon the confirmation of anyone purporting to be the person or persons
so designated.  The 

 

H-7

 

persons and telephone numbers for
call-backs may be changed only in a writing actually received and acknowledged
by the Escrow Agent. If the Escrow Agent is unable to contact any of the
authorized representatives identified in Schedule 1, the Escrow Agent is hereby
authorized both to receive written instructions from and seek confirmation of
such instructions by telephone call-back to any one or more of Cobalt or Z
North Sea’s executive officers, (“Executive Officers”), as the case may be,
which shall include the titles of President, Senior Vice President, Treasurer
or Assistant Treasurer, as the Escrow Agent may select. Such “Executive Officer”
shall deliver to the Escrow Agent a fully executed incumbency certificate,
and the Escrow Agent may rely upon the confirmation of anyone purporting to be
any such officer. The Escrow Agent and the beneficiary’s bank in any funds
transfer may rely solely upon any account numbers or similar identifying numbers
provided by Cobalt or Z North Sea to identify (i) the beneficiary, (ii) the
beneficiary’s bank, or (iii) an intermediary bank.  The Escrow Agent may apply any of the Fund
for any payment order it executes using any such identifying number, even when
its use may result in a person other than the beneficiary being paid, or the
transfer of funds to a bank other than the beneficiary’s bank or an
intermediary bank designated.

 

(b) Cobalt acknowledges that the
Escrow Agent is authorized to use the following funds transfer instructions to
disburse any funds due to Cobalt under this Agreement without a verifying
call-back as set forth in Section 11(a) above:

 

	
  Cobalt’s
  Bank account information:

  	
   

  	
  Bank
  name: JPMorgan Private Bank

  
	
   

  	
   

  	
  Bank
  Address: Newark, DE

  
	
   

  	
   

  	
  ABA number:
  *****

  
	
   

  	
   

  	
  Account
  name: CIE Angola Block 21 LTD

  
	
   

  	
   

  	
  Account
  number: *****

  

 

Z
North Sea acknowledges that the Escrow Agent is authorized to use the following
funds transfer instructions to disburse any funds due to Z North Sea under this
Agreement without a verifying call-back as set forth in Section 11(a) above:

 

	
  Z North Sea’s Bank account information:

  	
   

  	
  Bank
  name: JP Morgan Chase

  
	
   

  	
   

  	
  Bank
  Address: New York, NY

  
	
   

  	
   

  	
  ABA
  number: *****

  
	
   

  	
   

  	
  Account
  name: Z North Sea Ltd.

  
	
   

  	
   

  	
  Account
  number: *****

  

 

(c) In addition to their respective
funds transfer instructions as set forth in Section 11(b) above,
Cobalt and Z North Sea acknowledges that repetitive funds transfer instructions
may be given to the Escrow Agent for one or more beneficiaries where only the
date of the requested transfer, the amount of funds to be transferred, and/or
the description of the payment shall 

 

H-8

 

change within the repetitive instructions
(“Standing Settlement Instructions”). 
Accordingly, Cobalt or Z North Sea shall deliver to Escrow Agent such
specific Standing Settlement Instructions only for each respective beneficiary
as set forth in Schedule 1, by facsimile in accordance with this Section 11.  Escrow Agent may rely solely upon such Standing
Settlement Instructions and all identifying information set forth therein for
each beneficiary.  Escrow Agent and
Cobalt or Z North Sea agree that such Standing Settlement Instructions shall be
effective as the funds transfer instructions of Cobalt or Z North Sea, without
requiring a verifying callback, whether or not authorized, if such Standing
Settlement Instructions are consistent with previously authenticated Standing
Settlement Instructions for that beneficiary.

 

(d) The Parties acknowledge that the
security procedures set forth in this Section 11are commercially
reasonable.

 

12.           Compliance
with Court Orders.  In the
event that any escrow property shall be attached, garnished or levied upon by
any court order, or the delivery thereof shall be stayed or enjoined by an
order of a court, or any order, judgment or decree shall be made or entered by
any court order affecting the property deposited under this Agreement, the
Escrow Agent is hereby expressly authorized, in its sole discretion, to obey and
comply with all writs, orders or decrees so entered or issued, which it is
advised by legal counsel of its own choosing is binding upon it, whether with
or without jurisdiction, and in the event that the Escrow Agent obeys or
complies with any such writ, order or decree it shall not be liable to any of
the parties hereto or to any other person, entity, firm or corporation, by
reason of such compliance notwithstanding such writ, order or decree be
subsequently reversed, modified, annulled, set aside or vacated.

 

13.           Miscellaneous.  Except for changes to funds transfer
instructions as provided in Section 11, the provisions of this
Agreement may be waived, altered, amended or supplemented, in whole or in part,
only by a writing signed by the Escrow Agent and the Parties.  Neither this Agreement nor any right or
interest hereunder may be assigned in whole or in part by the Escrow Agent or
any Party, except as provided in Section 6, without the prior consent of
the Escrow Agent and the other Parties. 
This Agreement shall be governed by and construed under the laws of the
State of Texas.  Each Party and the
Escrow Agent irrevocably waives any objection on the grounds of venue, forum
non-convenience or any similar grounds and irrevocably consents to service of
process by mail or in any other manner permitted by applicable law and consents
to the jurisdiction of the courts located in the State of Texas. To the extent
that in any jurisdiction either Party may now or hereafter be entitled to claim
for itself or its assets, immunity from suit, execution attachment (before or
after judgment), or other legal process, such Party shall not claim, and it
hereby irrevocably waives, such immunity. 
The Escrow Agent and the Parties further hereby waive any right to a
trial by jury with respect to any lawsuit or judicial proceeding arising or
relating to this Agreement.  No party to
this Agreement is liable to any other party for losses due to, or if it is
unable to perform its obligations under the terms of this Agreement because of,
acts of God, fire, war, terrorism, 

 

H-9

 

floods, strikes, electrical outages,
equipment or transmission failure, or other causes reasonably beyond its
control.  This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. All signatures
of the parties to this Agreement may be transmitted by facsimile, and such
facsimile will, for all purposes, be deemed to be the original signature of
such party whose signature it reproduces, and will be binding upon such
party.  If any provision of this
Agreement is determined to be prohibited or unenforceable by reason of any
applicable law of a jurisdiction, then such provision shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions thereof, and any
such prohibition or unenforceability in such jurisdiction shall not invalidate
or render unenforceable such provisions in any other jurisdiction.  A person who is not a party to this Agreement
shall have no right to enforce any term of this Agreement. The Parties
represent, warrant and covenant that each document, notice, instruction or
request provided by such Party to Escrow Agent shall comply with applicable
laws and regulations.  Where, however,
the conflicting provisions of any such applicable law may be waived, they are
hereby irrevocably waived by the parties hereto to the fullest extent permitted
by law, to the end that this Agreement shall be enforced as written.  Except as expressly provided in Section 8
above, nothing in this Agreement, whether express or implied, shall be
construed to give to any person or entity other than the Escrow Agent and the
Parties any legal or equitable right, remedy, interest or claim under or in
respect of this Agreement or any funds escrowed hereunder.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
set forth above.

 

	
  CIE ANGOLA BLOCK
  21 LTD.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  

 

H-10

 

	
  Z NORTH SEA LTD.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  
	
  JPMORGAN CHASE BANK, NATIONAL ASSOCIATION

  
	
  as Escrow Agent

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
				

 

H-11

 

A.                                   SCHEDULE 1

 

Telephone
Number(s) and authorized signature(s) for Person(s) Designated to give Funds
Transfer Instructions — Authorized Signers.

 

If
from Cobalt:

 

	
   

  	
   

  	
  Name

  	
   

  	
  Telephone Number

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Joseph H. Bryant

  	
   

  	
  (713) 579-9100

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Samuel H. Gillespie

  	
   

  	
  (713) 579-9100

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  John P. Wilkirson

  	
   

  	
  (713) 579-9100

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Ann P. Graves

  	
   

  	
  (713) 579-9100

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  If from Z North Sea:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name

  	
   

  	
  Telephone Number

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Scott Kornblau

  	
   

  	
  (281) 647-4031

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Margie Morgan

  	
   

  	
  (281) 492-5351

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Gary Krenek

  	
   

  	
  (281) 492-5350

  	
   

  	
   

  

 

H-12

 

Telephone
Number(s) for Call-Backs and Person(s) Designated to Confirm Funds Transfer
Instructions

 

If
from Cobalt:

 

	
   

  	
   

  	
  Name

  	
   

  	
  Telephone Number

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Joseph H. Bryant

  	
   

  	
  (713) 579-9100

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Samuel H. Gillespie

  	
   

  	
  (713) 579-9100

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  John P. Wilkirson

  	
   

  	
  (713) 579-9100

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Ann P. Graves

  	
   

  	
  (713) 579-9100

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  If from Z North Sea:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name

  	
   

  	
  Telephone Number

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Scott Kornblau

  	
   

  	
  (281) 647-4031

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Margie Morgan

  	
   

  	
  (281) 492-5351

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Gary Krenek

  	
   

  	
  (281) 492-5350

  	
   

  	
   

  

 

H-13

 

B.                                     SCHEDULE 2

 

 

Schedule of
Fees for Escrow Agent  Services

 

Schedule of Fees for Escrow
Agent Services

 

Based upon our current
understanding of your proposed transaction, our fee proposal is as follows:

 

Account Acceptance Fee                           WAIVED

 

Encompassing review, negotiation and execution of
governing documentation, opening of the account, and completion of all due
diligence documentation.  Payable upon
closing.

 

Annual Administration Fee                                          $2,500

 

The Administration Fee covers our usual and customary ministerial
duties, including record keeping, distributions, document compliance and such
other duties and responsibilities expressly set forth in the governing
documents for each transaction.  Payable
upon closing and annually in advance thereafter, without pro-ration for partial
years.

 

Extraordinary Services and Out-of
Pocket Expenses

 

Any additional services
beyond our standard services as specified above, and all reasonable
out-of-pocket expenses including attorney’s or accountant’s fees and expenses will
be considered extraordinary services for which related costs, transaction
charges, and additional fees will be billed at the Bank’s then standard
rate.  Disbursements, receipts,
investments or tax reporting exceeding 25 items per year may be treated as
extraordinary services thereby incurring additional charges.
The Escrow Agent may impose, charge, pass-through and modify fees and/or
charges for any account established and services provided by the Escrow Agent,
including but not limited to, transaction, maintenance, balance-deficiency, and
service fees and other charges, including those levied by any governmental
authority.

 

Disclosure & Assumptions

 

·                  Please note
that the fees quoted are based on a review of the transaction documents
provided and an internal due diligence review. JPMorgan reserves the right to
revise, modify, change and supplement the fees quoted herein if the assumptions
underlying the activity in the account, level of balances, market volatility or
conditions or other factors change from those used to set our fees.

 

·                  The escrow deposit shall be continuously invested in a JPMorgan Chase
Bank money market deposit account (“MMDA”) or a JPMorgan Chase Bank Cash
Compensation account. MMDA and Cash Compensation Accounts
have rates of compensation that may vary from time to time based upon market
conditions.  The Annual Administration Fee would include a supplemental charge up to
25 basis points on the escrow deposit amount if another investment option were
to be chosen.

 

·            The Parties acknowledge and agree that they
are permitted by U.S. law to make up to six (6) pre-authorized withdrawals or
telephonic transfers from an MMDA per calendar month or statement cycle or
similar period.  If the MMDA can be
accessed by checks, drafts, bills of exchange, notes and other financial
instruments (“Items”), then no more than three (3) of these six  (6) transfers may be 

 

H-14

 

made by an
Item.  The Escrow Agent is required by
U.S. law to reserve the right to require at least seven  (7) days notice prior to a withdrawal from a
money market deposit account.

 

·            Payment of the
invoice is due upon receipt.

 

Compliance

 

To
help the government fight the funding of terrorism and money laundering
activities, Federal law requires all financial institutions to obtain, verify,
and record information that identifies each person or entity that opens an
account.  We may ask for information that
will enable us to meet the requirements of the Act.

 

H-15

 

EXHIBIT
A

 

JPMorgan Chase Bank, National Association

712 Main Street, 5th Floor South, TX2 S037

Houston, Texas   77002

Attn: 
Susie Becvar, Escrow Services

Fax No.: 
(713) 216-6927

 

Re:    CIE Angola Block 21 Ltd/Z North Sea Ltd
Offshore Escrow Agreement Dated as of October     ,
2010 No.                      

 

Ladies and Gentlemen:

 

Reference is made to the Escrow Agreement
(the “Escrow Agreement”) dated as of October     , 2010 by
and among CIE Angola Block 21 Ltd. (“Cobalt”), Z North Sea Ltd. (“Z North Sea”),
and JPMorgan Chase Bank, National Association (the “Escrow Agent”).

 

Pursuant to Section 4(a) of he Escrow
Agreement, the undersigned, an Authorized Signer of Z North Sea Ltd. hereby
certifies to the Escrow Agent that:

 

1.)           The
undersigned is an Authorized Signer of Z North Sea Ltd.

 

2.)           As
of the date of this Certificate [$                      ]
(the “Defaulted Payment”) is due and owing by CIE Angola Block 21 Ltd. to Z
North Sea Ltd. pursuant to the International Daywork Drilling Contract —
Offshore (the “Rig Contract”) dated October     , 2010
between CIE Angola Block 21 Ltd. and Z North Sea Ltd. and the related notice of
Z North Sea’s intent to draw under the Escrow Agreement (a copy of which notice
is attached to this Certificate) which was delivered to Cobalt on a date that
is 10 days prior to the date of this Certificate. The Defaulted Payment is not
the subject of a dispute under the Rig Contract and remains unpaid as of the
date of this Certificate.

 

3.)           Upon
receipt of the Defaulted Payment, Z North Sea will not have received, in the
aggregate, payments in excess of what it is entitled to receive under the Rig
Contract.

 

The Escrow Agent is instructed to release the
Defaulted Payment to Z North Sea using the wiring instructions on Exhibit C of
the Escrow Agreement.

 

H-16

 

IN WITNESS HEREOF, the undersigned has
executed and delivered this Certificate as of the      day
of
              ,
          .

 

	
   

  	
  Z North Sea Ltd.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Signer

  

 

H-17

 

EXHIBIT
B

 

JPMorgan Chase Bank, National Association

712 Main Street, 5th Floor South, TX2 S037

Houston, Texas 77002

Attn: 
Susie Becvar, Escrow Services

Fax No.: 
(713) 216-6927

 

Re:
CIE Angola Block 21 Ltd/Z North Sea Ltd Offshore Escrow Agreement Dated as of
October     , 2010 No.

 

Ladies and Gentlemen:

 

Reference is made to the Escrow Agreement
(the “Escrow Agreement”) dated as of October     , 2010 by
and among CIE Angola Block 21 Ltd. (“Cobalt”), Z North Sea Ltd. (“Z North Sea”),
and JPMorgan Chase Bank, National Association (the “Escrow Agent”).

 

Pursuant to Section 4(b) of the Escrow
Agreement, the undersigned, Authorized 
Signer of Z North Sea Ltd. and Cobalt, respectively, hereby certify to
the Escrow Agent that:

 

1.)           The
undersigned is an Authorized Signer of CIE Angola Block 21 Ltd. or Z North Sea
Ltd., as applicable.

 

2.)           The
date of this Certificate is on or after the termination or assignment date of
the Underlying Agreement (as defined in the Escrow Agreement).

 

H-18

 

The Escrow Agent is hereby directed to
transfer to Cobalt the balance of the Fund, using the wiring instructions on
Exhibit C of the Escrow Agreement.

 

IN WITNESS HEREOF, the undersigned has
executed and delivered this Certificate as of the      day
of
              ,
          .

 

	
   

  	
  Z North Sea Ltd.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Signer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CIE Angola Block 21 Ltd.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Signer

  

 

H-19

 

EXHIBIT
C

 

Standing
Settlement Instructions

 

	
  Cobalt’s
  Bank account information:

  	
   

  	
  Bank
  name: JPMorgan Private Bank

  
	
   

  	
   

  	
  Bank
  Address: Newark, DE

  
	
   

  	
   

  	
  ABA
  number: *****

  
	
   

  	
   

  	
  Account
  name: CIE Angola Block 21 LTD

  
	
   

  	
   

  	
  Account
  number: *****

  
	
   

  	
   

  	
   

  
	
  Z North Sea’s Bank account information:

  	
   

  	
  Bank
  name: JP Morgan Chase

  
	
   

  	
   

  	
  Bank
  Address: New York, NY

  
	
   

  	
   

  	
  ABA
  number: *****

  
	
   

  	
   

  	
  Account
  name: Z North Sea Ltd.

  
	
   

  	
   

  	
  Account
  number: *****

  

 

All funds transfer instructions must
include the signature of the person(s) authorizing said funds transfer.

 

Parties
agrees that repetitive or standing settlement instructions will be effective as
the funds transfer instructions of the stated beneficiary, whether or not
authorized, if such settlement instructions are verified pursuant to the
security procedure provided in the Agreement or such other security procedure
to which Escrow Agent and Parties may agree.

 

H-20Exhibit 10.2

 

SPECIAL STANDBY RATE AND
POTENTIAL SUSPENSION AGREEMENT

 

This Special Standby Rate and
Potential Suspension Agreement  (the “Agreement”)
is made and entered into as of November 9, 2010 (the “Effective Date”),
by and between Cobalt International Energy, L.P. (“Operator”), a
Delaware limited partnership and ENSCO Offshore Company (“Contractor”),
a Delaware corporation. Operator and Contractor may hereinafter be referred to
individually as a “Party” or collectively as the “Parties”.

 

WHEREAS, Operator and Contractor
entered into an Offshore Daywork Drilling Contract on the 5th day of May 2008
addressing utilization of the dynamically-positioned semi-submersible drilling
rig ENSCO 8503 (the “Rig”) to conduct drilling and associated operations
for Operator in federal waters on the Outer Continental Shelf in the U.S. Gulf
of Mexico and otherwise as specified therein, which contract as heretofore
amended is referred to herein as the “Drilling Contract”; and

 

WHEREAS, construction of the Rig has
been completed and the Rig is being mobilized to the Area of Operations; and

 

WHEREAS, Operator has requested
Contractor to consider various scenarios in the event Operator is unable to
commence drilling operations upon the Term Commencement Date as contemplated in
the Drilling Contract, including a potential extended standby period and/or
alternative utilization of the Rig to engage in operations for another oil and
gas company; and

 

WHEREAS, Operator may desire to
defer commencement of drilling and associated operations under the Drilling
Contract and to potentially allow for the deployment of the Rig to work for
another oil and gas company under a separate drilling contract (as an
alternative to assignment of the Drilling Contract) addressing utilization of
the Rig by such other oil and gas company; and

 

WHEREAS, Contractor and Operator
have entered into this Agreement for purposes of (i) addressing the
possibility that Operator may not be in a position to commence operations under
the Drilling Contract on the Term Commencement Date, (ii) specifying the
manner in which the Parties will proceed to perform their respective
obligations to effect the Term Commencement Date, (iii) agreeing on a
Special Standby Rate to be applicable for certain periods as specified herein,
and (iv) specifying the bases upon which the Drilling Contract may be
suspended for potential Third Party Work as provided herein.

 

NOW, THEREFORE, the Operator and
Contractor, for and in consideration of the mutual obligations, undertakings,
premises and covenants herein contained, do hereby agree as follows:

 

Section 1.              Definitions.

 

A.           The defined terms as contained in Article I and
elsewhere of the Drilling Contract as used herein (including the recitals
hereinabove) shall be applicable to this Agreement with the same meaning.

 

1

 

B.             “Daily Upgrade Fee” has the meaning ascribed to it in
the Drilling Contract as further defined in that certain letter agreement dated
October 29, 2008 and executed by the Parties.

 

C.             “Drilling Mobilization for Operator” shall mean the
date and time that the Rig is underway under tight tow or Rig propulsion to the
first drilling location designated by Operator or its assignee.

 

D.            “Effective Date Regulations” shall mean any U.S.
federal or state laws, rules or regulations applicable to operations under
or contemplated by the Drilling Contract that are in effect as of the Effective
Date.

 

E.              “Modification Deadline” shall mean November 30,
2010, unless Contractor has failed to provide Operator with applicable
modification schedules and cost information sufficiently in advance of November 30,
2010 to enable Operator to make an informed request for any Rig Modifications
or upgrades to the Rig, in which case “Modification Deadline” shall mean the
date that is fourteen (14) days following receipt of such applicable
modification schedules and cost information.

 

F.              “Rig Modifications” shall mean any modification or
upgrade to the Rig’s blowout preventer and associated equipment, that are (i) requested
by Operator prior to or on the Modification Deadline and/or (ii) required
to comply with the Effective Date Regulations.

 

G.             “Daily Rig Modification Fee” shall have the meaning
ascribed to it in Section 2.C. hereof.

 

H.            “Special Standby Period” shall mean the period of
time from the Term Commencement Date until the earliest to occur of the
following: (i) the date and time that is three hundred sixty five (365)
days from the Term Commencement Date, or (ii) Drilling Mobilization for
Operator. The aforesaid three hundred sixty-five (365) days shall continue to
run during any Third Party Suspension Period.

 

I.                 “Special Standby Rate” shall mean a day rate of
US$210,000 per 24-hour day which shall be subject to the rate adjustment
provisions in Section 3.2(b), (c), (e) and (f) of the Drilling
Contract as respects variations in cost based on prevailing costs in the Area
of Operations following the Effective Date.

 

J.                “Third Party Suspension Period” shall mean that
period of time from when the Rig commences mobilization to a third party’s
designated location to perform Third Party Work under tight tow or on a
heavy-lift carrier until the time the applicable contract term for such Third
Party Work has been completed and the Rig has demobilized from such third party’s
designated location to the designated anchorage area in Grand Isle Block 105 in
the U.S. Gulf of Mexico or such other location as may be mutually agreed by
Operator and Contractor; provided, however, that the Third Party Suspension
Period shall not conclude unless and until any modifications that were made to
the Rig to enable the Third Party Work have been, if requested by Operator
prior to the commencement of Rig demobilization from the last location of such
Third Party Work, satisfactorily removed and the Rig is otherwise returned to
Operator substantially in the same condition (exclusive of normal wear and
tear) as originally delivered to Operator.

 

2

 

K.            “Third Party Work” shall mean the utilization of the
Rig commencing during the Special Standby Period by an oil and gas company
other than Operator pursuant to a separate drilling contract entered into
between Contractor or Contractor’s affiliate and such other oil and gas
company.

 

Section 2.              Compensation.

 

A.           The Special Standby Rate shall be payable by Operator to
Contractor during the Special Standby Period, except during any Third Party
Suspension Period for which a dayrate of zero ($0) shall be payable by Operator
to Contractor. The Special Standby Rate shall be invoiced according to Article IV
of the Drilling Contract.

 

B.             Notwithstanding Section 2.A, the Special Standby Rate
shall also be payable by Operator to Contractor during any period in which Rig
Acceptance Criteria, outstanding sea trials or operations cannot be conducted
because the Rig is waiting to undergo or undergoing Rig Modifications or
modifications required to comply with new laws, rules or regulations
applicable to operations under or contemplated by the Drilling Contract that
become effective after the Effective Date and before the Term Commencement Date
(but not new interpretations of Effective Date Regulations which arise after
the Effective Date). However, any incremental time solely required to perform
any other remedial work necessary to meet the Rig Acceptance Criteria shall be
at Zero Rate. All such time at the Special Standby Rate or Zero Rate that
occurs prior to the Term Commencement Date shall extend the Secondary Delivery
Date under the Drilling Contract.

 

C.             Upon completion of the Rig Modifications or modifications
required to comply with new laws, rules or regulations applicable to
operations under or contemplated by the Drilling Contract that become effective
after the Effective Date and before the Term Commencement Date and any required
related third party certifications, all documented costs incurred by Contractor
to complete all such modifications shall be fully amortized and paid by
Operator, without interest or premium, over a period of time equal to (i) the
remaining Special Standby Period, if any, plus (ii) the two (2) year
Primary Term (the “Daily Rig Modification Fee”). Upon commencement of
the Primary Term, the unrecovered daily amortized amount shall be divided by
seven hundred thirty-one (731) and that adjusted daily amount shall be paid by
Operator thereafter for a maximum of seven hundred thirty-one (731) days.
Contractor shall invoice Operator on a monthly basis for such amortized costs.
In the event the Drilling Contract is terminated at any time prior to
completion of the Primary Term for any reason, the unrecovered portion of any
and all such amortized costs shall be due and payable to Contractor by Operator
in a lump sum.

 

D.            Operator shall have the right, during normal business hours,
to audit Contractor’s records with respect to the documented costs incurred by
Contractor to complete the Rig Modifications or modifications required to
comply with new laws, rules or regulations applicable to operations under
or contemplated by the Drilling Contract that become effective after the
Effective Date.

 

E.              Upon completion of any and all Third Party Work, any time
spent performing recertification of the Rig’s blowout preventer and associated
equipment or consumed because the Rig is waiting to undergo or undergoing
uncompleted Rig Modifications, 

 

3

 

modifications required to
comply with new laws, rules or regulations applicable to operations under
or contemplated by the Drilling Contract that became effective after the
Effective Date and/or normal seal and consumable replacement that occurs upon
completion of Third Party Work shall be performed at the Special Standby Rate
even if the Special Standby Period has elapsed.

 

F.              The Daily Upgrade Fee and Daily Rig Modification Fee shall
become payable by Operator to Contractor beginning on the Term Commencement
Date or, in the case of any Rig Modifications that are in progress or occur
thereafter, on the later date of completion and certification, as the case may
be, and continuing until the expiration of the Primary Term, including during
the Special Standby Period or any Third Party Suspension Period.  If the Special Standby Period is less than
three hundred sixty five (365) days from the Term Commencement Date, the Daily
Upgrade Fee shall be adjusted accordingly with effect upon the beginning of the
Primary Term as specified in Annex A hereof. 
Notwithstanding anything in this Agreement or the Drilling Contract to
the contrary, in the event of a termination of the Drilling Contract at any
time prior to completion of the Primary Term for any reason, Operator shall pay
Contractor a lump sum fee to reflect the unrecovered portion of the Daily
Upgrade Fee calculated in the manner specified in Annex A hereto.

 

G.             During the Special Standby Period and the Third Party
Suspension Period, if any, the rate adjustment provisions in Section 3.2(b),
(c), (e) and (f) of the Drilling Contract shall continue to be
applicable based upon prevailing costs in the Area of Operations.

 

Section 3.              Rig Acceptance.

 

Following arrival of the Rig in the
U.S. Gulf of Mexico the Parties shall diligently proceed with their respective
obligations under the Drilling Contract related to acceptance of the Rig
including performance of the Rig Acceptance Criteria, and shall provide all
personnel, services, and facilities associated therewith as contemplated in the
Drilling Contract on a timely basis. 
Upon completion of the Rig Acceptance Criteria and any outstanding deep
sea trials, the Term Commencement Date shall commence notwithstanding anything
to the contrary contained in the Drilling Contract.

 

Section 4.              Potential Suspension of the Drilling Contract

 

A.           Contractor shall inform Operator as soon as reasonably
practicable of any proposed Third Party Work and the terms thereof, including,
without limitation, the duration and location of such proposed Third Party Work
and whether any permanent modifications to the Rig are required by such
proposed Third Party Work.  Any proposed
Third Party Work shall be subject to the prior written consent of Operator,
which shall promptly be granted or denied. 
Any material amendments or changes to the aforementioned terms of any
Third Party Work previously consented to by Operator shall also be subject to
the prior written consent of Operator, which shall promptly be granted or
denied.

 

B.             Subject to the applicable third party’s willingness to grant
access to the Rig, Operator personnel shall have the right to inspect the Rig
during the Third Party Suspension Period(s), if any, in which case the
provisions of Articles 8.9 and 8.10 of the Drilling Contract shall be
applicable between Operator and Contractor notwithstanding Section 4.C.
hereof.

 

4

 

C.             Except as specifically stated otherwise herein, the Drilling
Contract shall be suspended with effect during any Third Party Suspension
Period.

 

D.            It is expressly agreed that the provisions of this Agreement
addressing the potential Third Party Work and the other provisions of this
Agreement are mutually exclusive and not dependent upon one another.

 

Section 5.              Preservation of the Primary Term of the
Drilling Contract.

 

A.           Operator and Contractor expressly agree that neither the
Special Standby Period, any rig time paid at the Special Standby Rate, or the
Third Party Suspension Period, if any, shall reduce the Primary Term of the
Drilling Contract, which shall be preserved in its entirety and shall commence
upon the conclusion of the Special Standby Period, any rig time paid at the
Special Standby Rate or the Third Party Suspension Period(s), if any, whichever
occurs last.

 

B.             Notwithstanding anything to the contrary in this Agreement,
Operator may elect by submission of written notice to Contractor at any time
and for any reason to commence the Primary Term of the Drilling Contract and to
thereafter pay the applicable rates under the Drilling Contract, at which time
the Special Standby Rate shall cease to be applicable.

 

Section 6.              Miscellaneous.

 

A.           From and after the Term Commencement Date, all Rig service
obligations shall be for Operator’s account as specified in Appendix D of the
Drilling Contract, except during any Third Party Suspension Period(s).

 

B.             Within thirty (30) days from the Effective Date, Contractor,
Operator and JP Morgan Chase Bank, National Association shall enter into an
amendment of the Escrow Agreement entered into as of 9 December 2009 as
may be agreed to and necessary to reflect the terms, conditions and impact of
this Agreement which shall incorporate the principles listed in Annex B hereto.

 

C.             The Drilling Contract, as amended, shall be and is hereby
deemed to be further amended to comport with the provisions of this Agreement
and shall otherwise remain in full force and effect. Except as expressly amended
hereby, the terms and conditions of the Drilling Contract shall otherwise be
applicable to this Agreement.  In the
event the terms and conditions of this Agreement conflict with the terms and
conditions of the Drilling Contract, as amended, the terms of this Agreement
shall prevail.

 

D.            This Agreement may be executed in counterparts via facsimile
or electronically transmitted signature, each of which will be considered an
original and all of which together will constitute one and the same
agreement.  At the request of a Party,
the other Party will confirm its facsimile or electronically transmitted
signature page by delivering an original signature page to the
requesting Party.

 

5

 

IN WITNESS WHEREOF, the Parties
hereto have executed this Special Standby Rate and Potential Suspension
Agreement by their duly authorized officers or representatives as of the
Effective Date.

 

 

	
  OPERATOR:

  	
   

  
	
   

  	
   

  
	
  COBALT INTERNATIONAL ENERGY,
  L.P.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Van P. Whitfield

  	
   

  
	
  Name:

  	
  Van P. Whitfield

  	
   

  
	
  Title:

  	
  Executive Vice President,
  Operations and Development

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  CONTRACTOR:

  	
   

  
	
   

  	
   

  
	
  ENSCO OFFSHORE COMPANY

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Tom L. Rhoades

  	
   

  
	
  Name:

  	
  Tom L. Rhoades

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  

 

6

 

ANNEX A

 

The following principles shall be
applied in administering the Daily Upgrade Fee:

 

DAILY UPGRADE FEE

The Daily Upgrade Fee shall reflect
the intention of Article 3 of the Drilling Contract as amended by
Amendment #1, dated October 29, 2008. 
The fee is based on Contractor receiving a 12% return on payments
amortized over the term of the Drilling Contract.   The Daily Upgrade Fee is a factor of the Rig
Upgrade Cost divided by the number of days of anticipated term then multiplied
by an Upgrade Premium factor.  The
Upgrade Premium factor is calculated by determining the multiplier required to
produce a 12% Internal Rate of Return (IRR) over the anticipated payment
period.

 

The following examples show how the
Daily Upgrade Fee is calculated for two term periods.

 

Term — 1096 days (12 months Special Standby Period plus two year Primary
Term)

 

	
  Rig
  Upgrade Cost

  	
   

  	
  $

  	
  10,867,652.00

  	
   

  	
  (current estimate, not final)

  	
   

  
	
  Upgrade
  Premium to provide 12% IRR

  	
   

  	
  1.185

  	
   

  	
   

  	
   

  
	
  Total
  Upgrade Fee

  	
   

  	
  $

  	
  12,878,167.62

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Daily
  Upgrade Fee

  	
   

  	
  $

  	
  11,761.00

  	
   

  	
   

  	
   

  

 

Term — 913 days
(6 months Special Standby Period plus two year Primary Term)

 

	
  Rig
  Upgrade Cost

  	
   

  	
  $

  	
  10,867,652.00

  	
   

  	
  (current estimate, not final)

  	
   

  
	
  Upgrade
  Premium to provide 12% IRR

  	
   

  	
  1.153

  	
   

  	
   

  	
   

  
	
  Total
  upgrade fee

  	
   

  	
  $

  	
  12,530,402.76

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Daily
  Upgrade Fee

  	
   

  	
  $

  	
  13,724.00

  	
   

  	
   

  	
   

  

 

For the purpose of this Agreement,
the Daily Upgrade Fee shall initially be set assuming the term of payment is
1096 days (12 months Special Standby Period plus two year Primary Term) and the
current estimate of the Total Upgrade Cost, $10,867,652, resulting in a Daily
Upgrade Fee of $11,761.  If, at a later date, the payment term is altered,
as would be the case if the Special Standby Period is less than or greater than
365 days, the Daily Upgrade Fee shall be recalculated to maintain a 12% IRR and
full repayment of the Rig Upgrade Cost over the new anticipated term.

 

The provisions of Article 3.3
of the Drilling Contract shall apply in the event of termination prior to
completion of term.

 

7

 

ANNEX B

 

With respect to Section 6.C. of
the Contract Amendment and Potential Suspension Agreement, the principal
aspects of the contemplated amendment to the Escrow Agreement entered into on 9
December 2009 are as follows:

 

·                  Invoices for Special Standby Rate shall be paid from the
escrow account following submission to Operator, subject to a maximum draw of
$62MM. Operator to pay Company directly for all other invoices during the
Special Standby Period, including but not limited to accruals for Rig Upgrades,
Rig Modifications, reimbursables, etc.

 

·                  The remaining escrow balance continues until the first
anniversary of the Primary Term, at which time 50% of the remaining escrow fund
shall be released to Operator minus any prior escrow draw-downs due to Operator’s
default in payments.

 

·                  The remaining balance of escrow account shall be released to
Operator upon termination of the Drilling Contract.

 

8

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