---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

(1)	The basis difference, which is associated with oil and gas properties and subject to amortization, has been allocated to the Ceiba Field and Okume Complex. We amortize the basis difference using the unit-of-production method.

(1)	Includes $42.3 million and $23.6 million of unamortized deferred financing costs related to the Facility and $17.5 million and $18.6 million of unamortized deferred financing costs and discounts related to the Senior Notes as of March 31, 2018 and December 31, 2017, respectively.

---

---

(1)

Includes the scheduled principal maturities for the $525.0 million aggregate principal amount of Senior Notes issued in August 2014 and April 2015 and the Facility. The scheduled maturities of debt related to the Facility are based on, as of March 31, 2018, our level of borrowings and our estimated future available borrowing base commitment levels in future periods. Any increases or decreases in the level of borrowings or increases or decreases in the available borrowing base would impact the scheduled maturities of debt during the next five years and thereafter. As of March 31, 2018, there were no borrowings under the Corporate Revolver.

(2)	Represents payments for the period April 1, 2018 through December 31, 2018.

---

(1)	Represents call option contracts sold to counterparties to enhance other derivative positions.

---

(1)	Includes net deferred premiums payable of $0.4 million and net deferred premiums receivable of $0.8 million related to commodity derivative contracts as of March 31, 2018 and December 31, 2017, respectively.

(2)	Includes net deferred premiums receivable of $4.0 million and $0.1 million related to commodity derivative contracts as of March 31, 2018 and December 31, 2017, respectively.

(3)	Includes net deferred premiums payable of $5.3 million and $5.6 million related to commodity derivative contracts as of March 31, 2018 and December 31, 2017, respectively.

(4)	Includes net deferred premiums payable of $3.5 million and $4.8 million related to commodity derivative contracts as of March 31, 2018 and December 31, 2017, respectively.

(1)	Amounts represent the change in fair value of our provisional oil sales contracts.

---

•	Level 1 — quoted prices for identical assets or liabilities in active markets.

•	Level 2 — quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and inputs derived principally from or corroborated by observable market data by correlation or other means.

•	Level 3 — unobservable inputs for the asset or liability. The fair value input hierarchy level to which an asset or liability measurement in its entirety falls is determined based on the lowest level input that is significant to the measurement in its entirety.

---

---

(1)	The restricted stock units with a combination of market and service vesting criteria include 4.9 million shares granted as a result of the 2014 and 2015 awards achieving 200% of their respective market performance conditions.

---

(1)

Our service vesting restricted stock awards represent participating securities because they participate in non-forfeitable dividends with common equity owners. Income allocable to participating securities represents the distributed and undistributed earnings attributable to the participating securities. Our restricted stock awards with market and service vesting criteria and all restricted stock units are not considered to be participating securities and, therefore, are excluded from the basic net loss per common share calculation. Our service

---

(2)	We excluded outstanding restricted stock awards and units of 11.3 million and 14.6 million for the three months ended March 31, 2018 and 2017, respectively, from the computations of diluted net loss per share because the effect would have been anti-dilutive.

(1)	Does not include purchase commitments for jointly owned fields and facilities where we are not the operator and excludes commitments for exploration activities, including well commitments, in our petroleum contracts.

(2)	Represents payments for the period from April 1, 2018 through December 31, 2018.

(3)	Primarily relates to corporate office and foreign office leases.

---

---

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

---

---

(1)

For the three months ended March 31, 2018, we have presented our 50% share of the results of operations, including our basis difference which is reflected in depletion and depreciation. Under the equity method of accounting, we only recognize our share of the net income of Kosmos-Trident International Petroleum Inc. ("KTIPI"), which is recorded in (gain) loss on equity method investments, net in the consolidated statement of operations.

---

---

---

---

---

•	drill additional wells in the Jubilee and TEN Fields;

•	fund asset integrity projects at Jubilee;

•	execute exploration and appraisal activities in a number of our exploration license areas, including drilling two exploration wells in Suriname; and

•	acquire and analyze seismic on existing licenses, pursue new ventures and manage our rig activities.

---

(1)

Includes the scheduled principal maturities for the $525.0 million aggregate principal amount of Senior Notes issued in August 2014 and April 2015 and the Facility. The scheduled maturities of debt related to the Facility are based on the level of borrowings and the estimated future available borrowing base as of March 31, 2018. Any increases or decreases in the level of borrowings or increases or decreases in the available borrowing base would impact the scheduled maturities of debt during the next five years and thereafter. As of March 31, 2018, there were no borrowings under the Corporate Revolver.

(2)	Based on outstanding borrowings as noted in (1) above and the LIBOR yield curves at the reporting date and commitment fees related to the Facility and Corporate Revolver and the interest on the Senior Notes.

(3)	Primarily relates to corporate office and foreign office leases.

(4)	Does not include purchase commitments for jointly owned fields and facilities where we are not the operator and excludes commitments for exploration activities, including well commitments and seismic obligations, in our petroleum contracts.

---

(5)	Represents the period from April 1, 2018 through December 31, 2018.

(1)

The amounts included in the table represent principal maturities only. The scheduled maturities of debt are based on the level of borrowings and the available borrowing base as of March 31, 2018. Any increases or decreases in the level of borrowings or increases or decreases in the available borrowing base would impact the scheduled maturities of debt during the next five years and thereafter. As of March 31, 2018, there were no borrowings under the Corporate Revolver.

(2)	Based on outstanding borrowings as noted in (1) above and the LIBOR yield curves plus applicable margin at the reporting date. Excludes commitment fees related to the Facility and Corporate Revolver.

(3)	We expect to pay the fixed rate if 1-month LIBOR is below the cap, and pay the market rate less the spread between the cap and the fixed rate if LIBOR is above the cap, net of the capped interest rate swaps.

(4)	Based on implied forward rates in the yield curve at the reporting date.

(5)	Represents the period April 1, 2018 through December 31, 2018.

---

•	our ability to find, acquire or gain access to other discoveries and prospects and to successfully develop and produce from our current discoveries and prospects;

•	uncertainties inherent in making estimates of our oil and natural gas data;

•	the successful implementation of our and our block partners’ prospect discovery and development and drilling plans;

•	projected and targeted capital expenditures and other costs, commitments and revenues;

•	termination of or intervention in concessions, rights or authorizations granted by the governments of the countries in which we operate (or their respective national oil companies) or any other federal, state or local governments or authorities, to us;

•	our dependence on our key management personnel and our ability to attract and retain qualified technical personnel;

•	the ability to obtain financing and to comply with the terms under which such financing may be available;

•	the volatility of oil and natural gas prices;

•	the availability, cost, function and reliability of developing appropriate infrastructure around and transportation to our discoveries and prospects;

•	the availability and cost of drilling rigs, production equipment, supplies, personnel and oilfield services;

•	other competitive pressures;

•	potential liabilities inherent in oil and natural gas operations, including drilling and production risks and other operational and environmental risks and hazards;

•	current and future government regulation of the oil and gas industry or regulation of the investment in or ability to do business with certain countries or regimes;

•	cost of compliance with laws and regulations;

•	changes in environmental, health and safety or climate change or greenhouse gas (“GHG”) laws and regulations or the implementation, or interpretation, of those laws and regulations;

•	adverse effects of sovereign boundary disputes in the jurisdictions in which we operate;

•	environmental liabilities;

•	geological, geophysical and other technical and operations problems, including drilling and oil and gas production and processing;

•	military operations, civil unrest, outbreaks of disease, terrorist acts, wars or embargoes;

•	the cost and availability of adequate insurance coverage and whether such coverage is enough to sufficiently mitigate potential losses and whether our insurers comply with their obligations under our coverage agreements;

•	our vulnerability to severe weather events;

•	our ability to meet our obligations under the agreements governing our indebtedness;

•	the availability and cost of financing and refinancing our indebtedness;

•	the amount of collateral required to be posted from time to time in our hedging transactions, letters of credit and other secured debt;

•	the result of any legal proceedings, arbitrations, or investigations we may be subject to or involved in;

---

•	our success in risk management activities, including the use of derivative financial instruments to hedge commodity and interest rate risks; and

•	other risk factors discussed in the “Item 1A. Risk Factors” section of this quarterly report on Form 10-Q and our annual report on Form 10-K.

---

(1)	Represents call option contracts sold to counterparties to enhance other derivative positions.

(2)	Fair values are based on the average forward Dated Brent oil prices on March 31, 2018 which by year are: 2018 — $67.63 and 2019 — $63.75. These fair values are subject to changes in the underlying commodity price. The average forward Dated Brent oil prices based on May 1, 2018 market quotes by year are: 2018 — $71.73 and 2019 — $67.15.

---

---

Item 3.	Defaults Upon Senior Securities

Item 4.	Mine Safety Disclosures

Item 5.	Other Information.

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

2.1	Section 1.2(v) is deleted and replaced with the following: “Effective Date means April 14, 1997.”

2.2	Section 1.2(z) (definition of Royalty) of the Contract is deleted and replaced with the following:

2.3	The following definitions shall be added to Section 1.2 of the Contract.

3.1	Sections 7.2 through 7.4 of the Contract shall be deleted and replaced with the following:

“7.2	After making Royalty payments to the STATE in accordance with the provisions of Section 6.1(n) of this Contract, CONTRACTOR shall be entitled to recover the totality of the Petroleum Operations Expenditures relating to a Field out of seventy percent (70%) of the remaining sales

---

“7.3	After payment of the Royalty to the STATE and the portion allocated to CONTRACTOR for the recovery of recoverable Petroleum Operation Expenditures by the CONTRACTOR, the remaining Crude Oil produced, saved and sold from a particular Field and not used in Petroleum Operations shall be referred to as “Net Crude Oil”.

“7.4	The percentage of Net Crude Oil to which the STATE and CONTRACTOR are entitled in a particular Field will be triggered when the cumulative Crude Oil production produced, saved and sold from such Field reaches the corresponding tranche shown below:.

3.2	In the first sentence of Section 8.1(b) of the Contract delete “Except for the Royalty,”.

3.3	Article II, paragraph 2(h) of Annex “C” (Accounting Procedure) to the Contract is hereby deleted and replaced with:

---

3.4	A new paragraph 2(i) to Article II in Annex “C” (Accounting Procedure) to the Contract will be added as follows:

3.5	Article III, paragraph 3 of Annex “C” (Accounting Procedure) to the Contract is amended as of the First Amendment Date by deleting the first sentence and replacing it with the following:

4.1	Sections 9.2 and 9.3 of the Contract shall be deleted and replaced with the following:

“9.2	On the date of declaration of a Commercial Discovery with respect to a Field, the CONTRACTOR shall pay the STATE the sum of Seven Hundred Fifty Thousand United States Dollars (U.S. $750,000). Such payment will not be cost recoverable.”

“9.3

CONTRACTOR shall pay the STATE a one-time payment of Three Million United States Dollars (U.S. $3,000,000) after daily production from a Field averages for the first time thirty thousand (30,000) Barrels per day for a period of sixty (60) consecutive calendar days; CONTRACTOR shall make a further one-time payment to the STATE of Three Million United States Dollars (U.S. $3,000,000) after daily production from a Field averages for the first time sixty thousand (60,000) Barrels per day for a period of sixty (60) consecutive calendar days.

---

“(e)	have the right, with prior notification to the MINISTRY, to sell, assign, transfer, convey or dispose of any part or all of the rights and interests and obligations under this Contract or in any Field in the Contract Area to any Affiliated Company;”

“(f)

have the right to sell, assign, transfer, convey or dispose of all or any part of its rights and interests and obligations under this Contract or in any Field in the Contract Area to parties other than Affiliated Companies with the prior consent of the MINISTRY, which consent shall not be unreasonably withheld, and shall be deemed granted if the MINISTRY does not respond to such entity within sixty (60) calendar days of the date of confirmed receipt by the Ministry of the request for its consent.

6.1	Section 6.1(m) of the Contract shall be deleted and replaced with the following language:

6.2	A new paragraph 3 shall be added to Section 16 as follows:

---

7.1	Section 2.7 of the Contract shall be deleted and replaced with the following language:

(a)	The redefinition of any area of development of a Field shall always be subject to the submittal by CONTRACTOR to the MINISTRY of pertinent relevant technical evidence that warrants said redefinition, the approval of which shall not be unreasonably denied by the MINISTRY.

(b)

In the case of any new Commercial Discovery which, at the time of its being determined by the CONTRACTOR pursuant to Section 2.5 of this Contract to be a Commercial Discovery, underlies or overlies, in whole or in part, the area of development of an existing Field as it may by that time have been extended pursuant to Section 2.6(a) of this Contract, shall be treated as an integral part of such existing Field which will be defined or redefined as may be necessary to incorporate all of such new underlying and overlying Commercial Discoveries.

(c)

In the case of any new Commercial Discovery which, at the time of its being determined by the Contractor pursuant to Section 2.5 of this Contract to be a Commercial Discovery, does not underlie or overlie, in whole or in part, the area of development of an existing Field as it may by that time have been extended pursuant to Section 2.6(a) of this Contract, such new Commercial Discovery shall constitute a separate Field.

(d)	In the event of subsequent extensions to the area of any such new Commercial Discovery as referred to in Section 2.7(c) as a separate Field extending into an area overlying or underlying an area of development of another Field,

---

7.2	Section 4.7 of the Contract is hereby amended by inserting language at the end of this Section as follows:

8.1	As of the First Amendment Date, Section 6.1(j) of the Contract shall be deleted and replaced by the following:

“(j)

as of the First Amendment Date, include in the Annual Work Program and Budget of Petroleum Operations Expenditures the sum of Two Hundred Fifty Thousand United States Dollars (U.S. $250,000) to be spent on (i) training personnel of the MINISTRY and citizens of the Republic of Equatorial Guinea, who are not personnel of CONTRACTOR at such time, for professional, skilled and technical jobs in Petroleum Operations or (ii) for all costs related to attendance at professional or industry conferences, institutes or similar events, whether regional or international, for the enhancement of the knowledge or the skills of such persons or the promotion of the oil and gas industry of the Republic of Equatorial Guinea. In fulfillment of CONTRACTOR’s obligation under this Section 6.1(j), the CONTRACTOR will remit Sixty-Two Thousand Five Hundred United States

---

8.2	Effective from the date that the Parties hereto execute this Amendment as indicated below, a Section 6.5 will be added to the Contract as follows:

“6.5

If, in connection with CONTRACTOR’s performance of its obligations under this Contract, or if circumstances emerged regarding this Contract other than as provided in Section 6.1(j) of this Contract, any employee or official of the STATE, including the MINISTRY’s personnel, is required to travel to any location outside the Republic of Equatorial Guinea, and the STATE agrees, through the MINISTRY, to permit such employee or official to travel for such purposes, CONTRACTOR agrees, subject to the prior mutual agreement of the Parties to such travel, to pay the following amounts to the MINISTRY, on behalf of the STATE, for the travel expenses related to the participation of such employees or officials:

(a)	the actual expenses incurred for travel to the location outside of the Republic of Equatorial Guinea and for travel to return to the Republic of Equatorial Guinea and lodging of such employees or officials at the foreign location, and

(b)	an amount equal to the following for each day such employee or official is out of the Republic of Equatorial Guinea in accordance with the request of CONTRACTOR:

---

(i)	for a Minister or comparable or more senior official of the government of the Republic of Equatorial Guinea (the “Government”): US$ 350.00;

(ii)	for a Secretary of State or comparable official of the Government: US$ 325.00.

(iii)	for a Director General, Secretary General, Regional Delegate of the STATE or comparable employee or official of the Government: US$ 300.00;

(iv)	for a Department Chief of the MINISTRY or comparable official of the Government: US$ 250.00; or

(v)	for Engineers, Geo-scientists, Economists, and Attorneys of the MINISTRY and all other employees or comparable officials of the Government: US$ 200.00.

---

10.1	Each of the Parties shall carry out all acts and measures as shall be necessary to fully perform and carry out this Amendment.

10.2	This Amendment constitutes the entire agreement among the Parties and may not be amended or modified except by a written document signed by the Parties. In the event of any conflict between the provisions of this Amendment and the Contract with respect to the subject matter hereof, the provisions of this Amendment shall prevail.

10.3	This Amendment shall inure to the benefit of and be binding upon the successors and assigns of the Parties.

10.4	This Amendment shall become effective as of the date it is signed by the Parties and shall have the force of law with retroactive effect as of 1 January 2000.

10.5	This Amendment is written and signed in six (6) copies, three (3) in Spanish and three (3) in English that shall constitute a single original. In the event of a conflict over the interpretation or implementation of the contents of this Amendment, the Spanish text shall prevail.

10.6	In the event of a dispute arising out of or related to the interpretation or meaning of this Amendment, the Consultation and Arbitration provisions of Section XIII of the Contract shall apply.

---

---

5.1	Each of the Parties shall carry out all acts and measures as shall be necessary to fully perform and carry out this Agreement.

5.2	This Amendment constitutes the entire agreement among the Parties and may not be amended or modified except by a written document signed by the Parties. In the event of any conflict between the provisions of this Amendment and the Contract with respect to the subject matter hereof, the provisions of this Amendment shall prevail.

5.3	This Amendment shall inure to the benefit of and be binding upon the successors and assigns of the Parties.

5.4	This Amendment shall become effective and shall have the force of law with effect as of 15 December, 2005.

5.5	This Amendment is written and signed in six (6) copies, three (3) in Spanish and three (3) in English that shall constitute a single original. In the event of a conflict over the interpretation or implementation of the contents of this Amendment, the Spanish text shall prevail.

5.6	In the event of a dispute arising out of or related to the interpretation or meaning of this Amendment, the Consultation and Arbitration provisions of Section XIII of the Contract shall apply.

---

---

---

---

4.1	Section 7.4 of the Contract will be deleted and replaced with the following:

4.2	A new paragraph 13 will be added to Section 7 as follows:

(a)

On or after January 1, 2018, the minimum income tax amount shall be a fixed yearly amount of five million dollars of the United States of America (US$ 5,000,000) gross for CONTRACTOR (Hess' share is US$ 4,250,000; Tullow's share is US$ 750,000), and the minimum income tax amount will be deducted from the corporate income tax amount in accordance with Art. 461 of Law No. 4/2004 of October 28, of the Republic of Equatorial Guinea, as has been amended prior to January 1, 2018; and

(b)

On or after January 1, 2017, if, with the exception of any additional tax arising due to the corporate income tax rate or minimum income tax, the CONTRACTOR or the parent company of the CONTRACTOR is required to pay any taxes or other levies under Law No . 4/2004 of October 28, of the Republic of Equatorial Guinea, as amended prior to January 1, 201 7 in excess of those that would have arisen under Decree Law No. 1/1986 of February 10, of the Republic of Equatorial Guinea, as amended prior to the Effective Date the difference shall be fully and timely repaid to the CONTRACTOR by the STATE out of the STATE's share of Net Crude Oil and/or by a reduction of Royalty payments due to the

---

4.3	A new paragraph 14 will be added to Section 7 as follows:

7.14.1	in the event of any conflict between the provisions of the Tax Law and the provisions of the Contract with respect to the payment, discharge or method of calculation of taxes, the provisions of the Contract shall control and continue to apply regardless of the change of Tax Law;

7.14.2	The STATE confirms that the CONTRACTOR can continue to operate through a branch, until the end of the Contract term, and will not be required at any time to establish a local affiliate under the laws of Equatorial Guinea or otherwise; and

7.14.3	The STATE confirms as per article 456 of the Law No. 4/2004 of October 28, of the Republic of Equatorial Guinea, as amended prior to January 1, 2017, no value added tax ("VAT") shall be applicable to goods and services used by CONTRACTOR, its contractors or subcontractors in or for Petroleum Operations."

5.1	Each of the Parties shall carry out all acts and measures as shall be necessary to fully perform and carry out this Amendment.

5.2	This Amendment constitutes the entire agreement among the Parties and may not be amended or modified except by a written document signed by the Parties. In the event of any conflict between the provisions of this Amendment and the Contract with respect to the subject matter hereof, the provisions of this Amendment shall prevail.

5.3	This Amendment shall inure to the benefit of and be binding upon the successors and assignees of the Parties.

5.4	This Amendment shall become effective and shall have the force of law with effect as of January 1, 2017.

5.5	This Amendment is written and signed in six (6) copies, three (3) in Spanish and three (3) in English that shall constitute a single signed original. In the event of a conflict over the interpretation or implementation of the contents of this Amendment, the Spanish text shall prevail.

5.6	In the event of a dispute arising out of or related to the interpretation or meaning of this Amendment, the Consultation and Arbitration provisions of Section XIII of the Contract and the applicable law under Section XVI of the Contract shall apply.

---

---

---

(1)	THE REPUBLIC OF EQUATORIAL GUINEA (hereinafter referred to as the State), represented for the purposes of this Contract by the Ministry of Mines and Hydrocarbons, represented for purposes of its execution by His Excellency Mr. Gabriel Mbaga OBIANG LIMA, the Minister;

(2)	GUINEA ECUATORIAL DE PETRÓLEOS (hereinafter referred to as the National Company), acting in its own name and legal right for the purposes of this Contract and represented for purposes of its execution by Mr. Antonio OBURU ONDO, in his capacity as Director General; and

(3)

KOSMOS ENERGY EQUATORIAL GUINEA, a company organized and existing under the laws of the Cayman Islands, under company registration number WT-269135 and having its registered office at do Circumference (Cayman), P.O. Box 32322, 4th Floor, Century Yard, Cricket Square, Elgin Avenue, George Town, Grand Cayman, KYI-1209, Cayman Islands (hereinafter referred to as Company), represented for the purposes of this Contract by [insert name Andrew G. Inglis], in his capacity as [insert position President].

(A)	WHEREAS, all Hydrocarbons existing within the territory of the Republic of Equatorial Guinea, as set forth in the Hydrocarbons Law, are national resources owned exclusively by the. State;

(B)	WHEREAS, the State wishes to promote the development of Hydrocarbon deposits within the Contract Area and the Contractor desires to associate itself with the State with a view to accelerating the Development and Production of Hydrocarbons within the Contract Area;

(C)	WHEREAS, the Contractor has the financial ability, technical competence and professional skills necessary to carry out Petroleum Operations in accordance with this Contract and good oil field practices; and

(D)	WHEREAS, the Parties desire to enter into this Contract in accordance with the Hydrocarbons Law, which allows for agreements to be entered into between the State and foreign investors in the form of a production sharing contract, through direct negotiation or by international public tender.

---

1.1	Definitions

1.1.1	Accounting Procedure means the accounting procedure set forth in Annex C.

1.1.2	Affiliated Company or Affiliate of any specified Person means any other Person directly or indirectly Controlling or Controlled by or under direct or indirect common Control of such specified Person or other Person.

1.1.3	Annual Budget means the expenditure of the Contractor with respect to an Annual Work Program.

1.1.4	Annual Work Program means an itemized statement of the Petroleum Operations to be carried out in the Contract Area during a Calendar Year.

1.1.5	Appraisal Area means an area within the Contract Area encompassing the geographical extent of a Discovery that is subject to an Appraisal work program and corresponding budget in accordance with Article ‎5.2.

1.1.6	Appraisal Well means a Well drilled following a Discovery, with the objective of delimiting and mapping the reservoir, and also to estimate the quantity of recoverable Hydrocarbons.

1.1.7	Associated Natural Gas means all Natural Gas produced from a reservoir the predominant content of which is Crude Oil and which is separated from Crude Oil in accordance with generally accepted international petroleum industry practice, including free gas cap, but excluding any liquid Hydrocarbons extracted from such gas either by normal field separation, dehydration or in a gas plant.

1.1.8	Barrel means a quantity or unit of Crude Oil equal to 158.9874 liters (forty-two (42) United States gallons) at a temperature of fifteen point five six degrees (15.56°) Centigrade (sixty degrees (60°) Fahrenheit) and at one (I) atmosphere of pressure.

1.1.9	BEAC means Banco de los Estados de Africa Central (Bank of the States of Central Africa).

1.1.10	Book Value means the value at which the asset is carried on the balance sheet prepared in accordance with generally accepted accounting practices used in the international petroleum industry.

1.1.11	Business Day means a day on which the banks are generally open for business in Equatorial Guinea and Dallas, Texas.

---

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

1.1.13

Change in Law means, with respect to Article 25, any change in the laws, decrees, regulations or standards of Equatorial Guinea, effective as of January 1, 2017, including with respect to any fiscal, taxes, Customs, or currency control, any change in the interpretation or application of, or in the customs and practices related to, such laws (the provisions of this Contract are deemed to conform to said interpretation and application from the date hereof) Decrees, regulations or rules of Equatorial Guinea and excludes all laws, decrees, regulations or standards which: (i) are related to health, safety, labor and the environment, (ii) are consistent with the international practices and standards of the oil and gas industry, and (iii) are applied on a non-discriminatory basis.

1.1.14	CIF has the meaning set out in the publication of the International Chamber of Commerce, INCOTERMS 2010.

1.1.15	Commercial Discovery means a Discovery that the Contractor has determined to be economically viable and so submits a Development and Production Plan for such Discovery for the approval of the Ministry.

1.1.16	Cost Recovery Oil has the meaning ascribed to it in Article ‎7.2.1.

1.1.17	Contractor means Company and the National Company.

1.1.18	Contract means this production sharing contract, including its Recitals and Annexes.

1.1.19	Contract Year means a period of twelve (12) consecutive months according to the Gregorian calendar, counted from the Effective Date of this Contract or from the anniversary of such Effective Date.

1.1.20	Contract Area or Area means the geographic area within the territory of Equatorial Guinea, which is the subject of this Contract. Such Contract Area shall be described in Annex .A and illustrated in Annex B, as it may be changed by relinquishments of the Contractor in accordance with this Contract.

1.1.21	Control, when used with respect to any specified Person, means the power to direct, administer and dictate policies of such Person through the ownership of a percentage of such Person’s equity sufficient to hold a majority of voting rights in an ordinary shareholders meeting. The terms Controlling and Controlled have meanings correlative to the foregoing.

1.1.22	Crude Oil means Hydrocarbons which are produced at the wellhead in a liquid state at atmospheric pressure including asphalt and ozokerites, and the liquid Hydrocarbons known as condensate and/or Natural Gas liquids obtained from Natural Gas by condensation or extraction through field separation units.

1.1.23	Dated Brent means a quote published daily in the Crude Oil Market Plans Bulletin that reflects the price of a North Sea Brent crude oil blend charge over a given period.

---

1.1.24	Development and Production Plan has the meaning ascribed to it in Article ‎5.5.1.

1.1.25	Delivery Point means that point located within the jurisdiction of Equatorial Guinea at which Hydrocarbons reach (i) the inlet flange at the FOB export 3 vessel, (ii) the loading facility metering station of a pipeline or (iii) such other point within the jurisdiction of Equatorial Guinea as may be agreed by the Parties.

1.1.26	Development and Production Area means an area within the Contract Area encompassing the geographical extent of a Commercial Discovery subject to a Development and Production Plan in accordance with Article ‎5.5.

1.1.27	Development and Production Costs means all costs, expenses and liabilities incurred by the Contractor in connection with Development and Production Operations in a Development and Production Area, excluding all Exploration Costs incurred in the Development and Production Area prior to the establishment of any Field, as determined in accordance with this Contract and the Hydrocarbons Law.

1.1.28	Development and Production Operations means all operations, other than Exploration Operations, conducted to facilitate the Development and Production of Hydrocarbons from the Contract Area to the Delivery Point, but excluding the refining and distribution of Hydrocarbon products.

1.1.29	Development Well means a Well, other than an Exploration Well or an Appraisal Well, drilled with the purpose of producing or improving the Production of Hydrocarbons, including Exploration Wells and Appraisal Wells completed as production or injection Wells.

1.1.30	Discovery means the finding by the Contractor of Hydrocarbons whose existence within the Contract Area was not known prior to the Effective Date or Hydrocarbons within the Contract Area which had not been declared a Commercial Discovery prior to the Effective Date and which are measurable by generally accepted international petroleum industry practices.

1.1.31	Dividend Withholding Tax has the meaning ascribed to it in Article ‎17.1.1.

1.1.32	Dollars or $ means the legal tender of the United States of America.

1.1.33	Effective Date means the date of receipt by the Contractor of the ratification by the State of this Contract pursuant to Article ‎31.

1.1.34	Equatorial Guinea means the Republic of Equatorial Guinea.

1.1.35

Exploration Operations include geological and geophysical studies, aerial mapping, investigations relating to subsurface geology, stratigraphic test drilling, Exploration Wells, Appraisal Wells and related activities such as drill site preparation, surveying and ail work connected therewith that is conducted in relation to the Exploration for and Appraisal of Hydrocarbon deposits in the Contract Area.

---

1.1.36	Exploration Costs means all costs, expenses and liabilities incurred by the Contractor in connection with Exploration Operations in the Contract Area, as determined in accordance with this Contract and the Hydrocarbons Law.

1.1.37	Extension Period means the First Extension Period and the Second Extension Period individually.

1.1.38	Exploration Periods means the Initial Exploration Period, an Extension Period and any further extensions thereof as set out in Article ‎2.2.1.

1.1.39	Exploration Well means any Well whose sole objective is to verify the existence of Hydrocarbons or to study all the necessary elements that might lead to a Discovery.

1.1.40

Field means a Discovery or an aggregation of Discoveries that is established as a Field in accordance with Article ‎5 and can be developed commercially after taking into account all pertinent operational, economic and financial data collected during the performance of the Appraisal work program or otherwise, in accordance with generally accepted international petroleum practices. A Field may consist of a Hydrocarbon reservoir or multiple Hydrocarbon reservoirs all grouped on or related to the same individual geological structural or stratigraphic conditions, or areas that are not related but will be developed by using a single Development and Production Plan. All deposits superimposed, adjacent to or underlying a Field in the Contract Area shall form part of the said Field.

1.1.41	FOB has the meaning set out in the publication of the International Chamber of Commerce, INCOTERMS 2010.

1.1.42	First Extension Period means the period of one (1) Contract Year commencing immediately after the conclusion of the Initial Exploration Period.

1.1.43	First Exploration Sub-Period means the first three (3) Contract Year(s) of the Initial Exploration Period.

1.1.44	First Oil means, in respect of each Development and Production Area, the date on which production of Hydrocarbons under a program of regular production, lifting and sale commences.

1.1.45	Gross Revenues means the total income from sales of Total Disposable Production plus the equivalent monetary value of any other disposal of Total Disposable Production from the Contract Area during any Calendar Year.

1.1.46	Hydrocarbons means all natural organic substances composed of carbon and hydrogen, including Crude Oil and Natural Gas that may be found and extracted from, or otherwise produced and saved from the Contract Area.

1.1.47	Hydrocarbons Law means Law No. 8/2006 dated 3 November 2006 of Equatorial Guinea, and any law that amends it or replaces it.

1.1.48	Initial Exploration Period means a period of five (5) Contract Years from the Effective Date, subdivided into two sub-periods of three (3) Contract Years for the First

---

1.1.49	Joint Operating Agreement or JOA means the joint operating agreement that regulates the internal relations of the Parties comprising the Contractor for the conduct of Petroleum Operations in the Contract Area.

1.1.50

LIBOR means the interest rate at which Dollar deposits of six (6) months duration are offered in the London Inter Bank Market, as published in the Financial Times of London. The applicable LIBOR rate for each month or part thereof within an applicable interest period shall be the interest rate published in the Financial Times of London on the last Business Day of the immediately preceding calendar month. If no such rate is quoted in the Financial Times of London during a period of five (5) consecutive Business Days, another rate (for example, the rate quoted in the Wall Street Journal) chosen by mutual agreement between the Ministry and the Contractor will apply.

1.1.51	Market Price means the FOB price for Crude Oil calculated in accordance with Article ‎10.

1.1.52

Material Contract means a contract with a value greater than five hundred thousand Dollars ($500,000) with respect to Exploration Operations or to one million Dollars ($1,000,000) in respect of Development Operations or Production Operations with (i) a Operator Affiliate, when the contract has not been previously and specifically approved in an Annual Budget as a contract to be carried out by an Affiliate or (ii) a non-Affiliate of the Operator. In the event that a law or regulation establishes a value higher than that stipulated in this definition for the supervision of contracts by the State, this definition will be amended to reflect the new higher limit.

1.1.53	Maximum Efficient Production Rate means the maximum efficient production rate of Hydrocarbons from a Field, that does not damage reservoir formations and does not cause excessive decline or loss of reservoir pressure in accordance with good oil field practice and as agreed in accordance with Article ‎6.4.

1.1.54	Member State of CEMAC means a country that is a member of the Central African Economic and Monetary Community.

1.1.55	Member State of the OHADA means a country that is a member of the Organization for the Harmonization of Commercial Law in Africa.

1.1.56	Minimum Retention means that the Operator and its Affiliates shall maintain a minimum deposit amount. This amount shall be measured annually and per Calendar Year, at one or more banks chosen by the Operator and operating in Equatorial Guinea. The amounts will be as follows:

a)	From the effective date until the approval of the first Development and Production Plan, a deposit amount equivalent to ten per cent (10 %) of the Annual Budget applicable to such Calendar Year;

---

b)	From the approval of the first Development and Production Plan, and until First Oil, a deposit amount equivalent to point five per cent (0.5 %) of the Annual Budget applicable to such Calendar Year; and

c)	From First Oil until the end of Operations„ a deposit amount equivalent to a five per cent (5 %) of the Annual Budget applicable to such Calendar Year; provided that

d)	If, at any time, a later Development and Production Plan is approved and should this Plan require a development operation, the deposit amount required shall return to a point five per cent (0.5 %) of the Annual Budget applicable to such Calendar Year, until the year following the year during which the development operations foreseen in such Development and Production Plan cease to exist.

1.1.57	Minimum Work Program has the meaning ascribed to it in Article ‎3.1.

1.1.58	Ministry means the Ministry of Mines and Hydrocarbons of Equatorial Guinea, the entity responsible for supervising Petroleum Operations in coordination with other Government bodies within the respective areas of their competence, and any successor.

1.1.59	National Company for the purposes of this Contract, means Equatorial Guinea of Petroleum (GEPetrol), as a national oil company of Equatorial Guinea; or any successor state company.

1.1.60	National Company’s Participation Interest means the Participation Interest of the National Company as set forth in Article ‎1.3.

1.1.61	Natural Gas means those Hydrocarbons that, at atmospheric conditions of temperature and pressure, are in a gaseous state including dry gas, wet gas and residual gas remaining after extraction, treatment, processing, or separation of liquid Hydrocarbons from wet gas, as well as gas or gases produced in association with liquid or gaseous Hydrocarbons.

1.1.62	Net Crude Oil has the meaning ascribed to it in Article ‎7.3.

1.1.63	Net Natural Gas has the meaning ascribed to in Article ‎13.3.5.

1.1.64	Parties or Party means the parties or a party to this Contract, as the context may require.

1.1.65	Participation Interest means for each Party comprising the Contractor, the undivided percentage share of such Party in the rights and obligations under this Contract, as is specified in Article ‎1.3.

1.1.66	Person means any individual, firm, company, corporation, society, trust, foundation, government, state or agency of the state or any association or partnership (whether or not having separate legal personality) or two or more of these.

1.1.67	Petroleum Operations means all operations related to Exploration, Development, Production, transportation, storage, conservation, decommissioning, sale and/or other disposal of Hydrocarbons from the Contract Area to the Delivery Point and any other

---

1.1.68	Petroleum Operations Costs means Exploration Costs and/or Development and Production Costs (as the context may require) incurred by the Contractor in the carrying out of Petroleum Operations, as determined in accordance with this Contract and the Accounting Procedure.

1.1.69	Petroleum Regulations means all regulations promulgated by the Ministry pursuant to the Hydrocarbons Law.

1.1.70	Platts means Platts Crude Oil Marketwire, or if Platts Crude Oil Marketwire ceases to be published then another similar daily international publication that lists benchmark crude oil prices and which is agreed at the time between the Parties.

1.1.71	Quarter means a period of three (3) consecutive months beginning on I January, 1 April, 1 July or 1 October and ending on 31 March, 30 June, 30 September or 31 December, respectively.

1.1.72	Reserve Fund has the meaning ascribed to it in Article ‎24.3.1.

1.1.73	Royalties means an entitlement of the State over Hydrocarbons produced and saved from the Contract Area, and not utilized in Petroleum Operations, based on percentages calculated as a function of the daily rate of the Total Disposable Production as determined in accordance with Article ‎7.1.

1.1.74	Second Extension Period means the period of one (1) Contract Year commencing immediately after the end of the First Extension Period.

1.1.75	Second Exploration Sub-Period means the final two (2) Contract Year(s) of the Initial Exploration Period.

1.1.76	Taxes mean the coercive financial payments in accordance to the Tax Laws, that the State, local authorities and/ other public entities, demand in the exercise of their sovereign power. These taxes will be levied on each of the Parties comprising the Contractor and all other applicable Persons.

1.1.77	Tax Laws means Law No. 4/2004 dated 28 October 2004 of Equatorial Guinea, and Law No. 2/2007 dated 16 May 2007 of Equatorial Guinea, and any law that amends one or both of them or replaces one or both of them.

1.1.78	Transfer Fee has the meaning ascribed to in Article ‎17.2.1.

1.1.79	Total Disposable Production means all Hydrocarbons produced and saved from a Development and Production Area less the quantities used for Petroleum Operations.

1.1.80	Unassociated Natural Gas means all gaseous Hydrocarbons produced from Natural Gas reservoirs, and includes wet gas, dry gas and residual gas remaining after the extraction of liquid Hydrocarbons from wet gas.

---

1.1.81	Well means any opening in the ground or seabed made or being made by drilling or boring, or in any other manner, for the purpose of exploring and/or discovering, evaluating or producing Crude Oil or Natural Gas, or for the injection of any fluid or gas into an underground formation other than a seismic hole.

1.1.82	Withholding Tax Waiver has the meaning ascribed to it in Article ‎17.1.1.

1.2	Scope

1.2.1	This Contract is a production sharing contract awarded pursuant to Chapter IV of the Hydrocarbons Law. In accordance with the provisions of this Contract and the Hydrocarbons Law, the Ministry shall be responsible for supervising Petroleum Operations in the Contact Areas.

1.2.2	The State grants to the Contractor the sole and exclusive right and charge of conducting all Petroleum ‘Operations in the Contract Area during the term of this Contract. In consideration of this, the Contractor shall:

a)	be responsible to the State as an independent contractor, for the execution of the Petroleum Operations in accordance with the provisions of this Contract and the Hydrocarbons Law;

b)	provide all funds, machinery, equipment, technology and personnel prudent and necessary to conduct Petroleum Operations; and

c)	diligently, with due regard to good oil field practice, perform at its exclusive responsibility and risk all investments and contractual obligations necessary for conducting Petroleum Operations in accordance with this Contract.

1.2.3	All Petroleum Operations Costs shall be recoverable and deductible for tax purposes in the manner set forth in this Contract and the Hydrocarbons Law.

1.2.4	During the term of this Contract, the total Production achieved as a consequence of Petroleum Operations shall be shared between the Parties in accordance with Article ‎7.

1.3	Participation Interests

---

2.1	Initial Exploration Period

2.1.1	Upon the fulfillment by the Contractor of its Exploration obligations set forth in Article ‎3.1.1 with respect to the First Exploration Sub-Period, the Contractor may elect to enter the Second Exploration Sub-Period.

2.1.2

To elect to enter the Second Exploration Sub-Period, the Contractor shall file a request with the Ministry at least two (2) months prior to the expiry of the First Exploration Sub-Period. The Ministry shall not unreasonably withhold or delay the granting of such request; provided that the Contractor has complied with all of its obligations in the First Exploration Sub-Period and shall not be otherwise in breach of this Contract.

2.2	Extension Periods

2.2.1	Upon the fulfillment by the Contractor of its Exploration obligations set forth in Articles ‎3.1.1 and ‎3.1.2 with respect to the Initial Exploration Period, the Contractor may request up to two (2) extensions of one (1) year each of the Initial Exploration Period.

2.2.2

For each Extension Period, the Contractor shall file a request with the Ministry at least two (2) months prior to the expiry of the Initial Exploration Period, or as the case may be, the First Extension Period. The Ministry shall not unreasonably withhold or delay the granting of such Extension Period; provided that the Contractor has complied with all of its obligations in the Initial Exploration Period and the First Extension Period, as applicable, and shall not be otherwise in breach of this Contract.

2.2.3	Each request for an Extension Period shall be accompanied by a map specifying the Contract Area proposed to be retained by the Contractor, along with a report specifying any work performed in the proposed relinquished area since the Effective Date and the results obtained therefrom.

2.2.4

If upon expiry of the Initial Exploration Period, or of any Extension Period, any Appraisal work program with respect to a Discovery is still under progress or an Exploration Well is still under progress, the Contractor shall be entitled to an additional extension of the then current Exploration Period necessary to complete the work in progress. Furthermore, where Appraisal work has not yet been completed by the Contractor at the time at which a relinquishment contemplated by Article ‎2.4 is due, the requirement to relinquish shall be suspended until such time that the Contractor completes the said Appraisal work, commerciality is determined and, if applicable, the related establishment of a Field is approved or denied. Any additional extension granted under this Article ‎2.2.4 shall not exceed one ( I) Contract Year, or such longer period as may be approved by the Ministry, plus the period of time established under Article ‎5 necessary for the evaluation of a marketing plan, the preparation of a Development and Production Plan and the Ministry’s response.

2.2.5	In the event additional time is needed to complete said Appraisal work as set out in Article ‎2.2.4, the Contractor shall file a request for an extension with the Ministry at least two (2) months prior to the expiry of the current Initial Exploration Period or

---

2.3	Termination

(a)	not to extend the Initial Exploration Period (or not to enter the Second Exploration Sub-Period) and no Field has been established during such period; or

(b)	to extend the Initial Exploration Period and no Field has been established during an Extension Period or any additional extension thereof,

2.4	Mandatory Relinquishments

2.4.1

The Contractor must relinquish to the State thirty percent (30%) of the initial surface area of the Contract Area by the end of the Initial Exploration Period, twenty-five percent (25%) of the remaining area by the end of the First Extension Period, and the remainder of the Contract Area by the end of the Second Extension Period, or at the end of the Initial Exploration Period or the First Extension Period, if no further extension is requested by the Contractor. To determine the area or areas which the Contractor shall relinquish, the following areas shall be excluded for the purposes of such calculation:

(a)	areas designated as an Appraisal Area;

(b)	Development and Production Areas;

(c)	areas for which the approval of a Development and Production Plan is pending, until finally decided;

(d)	the area of any Field, including any Field which may be subject to unitization pursuant to Article ‎22; and

(e)	any area reserved for a possible Unassociated Natural Gas Appraisal in relation to which the Contractor is engaged in discussions with the Ministry in accordance with Article ‎13.1.

2.4.2	Upon expiry of the applicable final extension period indicated in Article ‎2.2, and subject to the provisions of Article ‎2.2.4, the Contractor shall relinquish the remainder of the Contract Area, with the exception of:

(a)	Development and Production Areas;

(b)	those areas for which an application for a Development and Production Area is pending, until finally decided;

---

(c)	the area of any Field, including any Field which may be subject to unitization pursuant to Article ‎22; and

(d)	any area reserved for a possible Unassociated Natural Gas Appraisal in relation to which the Contractor is engaged in discussions with the Ministry in accordance with Article ‎13.

2.5	Voluntary Relinquishments

2.5.1	Subject to the Contractor’s obligations under Article ‎24 and the Hydrocarbons Law, the Contractor may at any time notify the Ministry upon three (3) months prior notice that it relinquishes all of its rights over all or any part of the Contract Area.

2.5.2	In no event shall any voluntary relinquishment by the Contractor of rights over all or any part of the Contract Area reduce the Exploration obligations of the Contractor set forth in Article ‎3.

2.6	Involuntary Relinquishments

2.6.1

Should the Contractor, during the First Exploration Sub-Period (as may be extended), (i) be unable to fulfill its Minimum Work Program pursuant to Article ‎3.1.1(a) or (ii) be unable fulfill its Minimum Work Program pursuant to Article ‎3.1.1(b), excluding for reasons of Force Majeure or acts or failure to act by the State, including failure to deliver the data package referenced in Article ‎3.1.1(b), then the Contractor will relinquish all its rights on the whole of the Contract Area at the end of the First Exploration Sub-Period (as may be extended).

2.7	Relinquishments Generally

2.7.1	No relinquishment made in accordance with Articles ‎2.4 or ‎2.5 shall relieve the Contractor from its obligation to pay surface rentals accrued or make payments due and payable as a result of Petroleum Operations conducted up to the date of relinquishment.

2.7.2

The Contractor shall, in accordance with good oil field practice, propose the geographic location of the portion of the Contract Area that it proposes to retain, and which shall have a continuous geometric shape going from North to South and East to West delimited as a minimum by one minute (1’) of latitude or longitude or by natural boundaries and such area shall also be subject to the approval of the Ministry and shall be deemed approved after sixty (60) days.

3.1	Minimum Work Program

3.1.1	During the First Exploration Sub-Period, the Contractor must:

---

(a)	acquire, process, and interpret 2,250 square kilometers of new 3D seismic data; andacquire all existing data packages (both seismic and well) over the Area for $1,076,000. All costs of data acquisition shall be cost recoverable.

(b)	The minimum expenditure for this Sub-Period shall be seven million Dollars ($7,000,000).

3.1.2	During the Second Exploration Sub-Period, the Contractor must drill a minimum of one (1) Exploration Well to a minimum depth of the deepest target interval in the approved well program. The minimum expenditure for this period shall be thirty million Dollars ($30,000,000).

3.1.3	If the Contractor elects to enter the First Extension Period, the Contractor must perform technical work on geological and geophysical studies and surveys. The minimum expenditure for this period shall be seven hundred thousand Dollars ($700,000).

3.1.4	If the Contractor elects to enter the Second Extension Period, the Contractor must drill a minimum of one (1) Exploration Well to a minimum depth of the deepest target interval in the approved well program. The minimum expenditure for this period shall be thirty million Dollars ($30,000,000).

3.1.5	However, if the Contractor has performed work exceeding the Minimum Work Program required of it under any of Articles ‎3.1.1, ‎3.1.2 or ‎3.1.3, then the excess work, including Wells, is carried over to the next Sub-Period or Extension Period, and shall be deducted from the Minimum Work Program and the minimum expenditure for such next Sub-Period or Extension Period.

3.1.6	If the Contractor fulfills the Minimum Work Program (as set out in Articles ‎3.1.1, ‎3.1.2, ‎3.1.3, and ‎3.1.4) as applicable for each such Sub-Period and Extension Period, then the Contractor shall be deemed to have satisfied the minimum expenditure for each such Sub-Period and Extension Period, as applicable.

3.2	Minimum Depth of Wells

3.2.1	Each Exploration Well set forth above must be drilled to the minimum depth specified above in Article ‎3.1.2 or ‎3.1.4, as the case may be, or to a lesser depth if authorized by the Ministry in accordance with this Article or if discontinuing drilling is justified by one of the following reasons:

(a)	the economic basement is encountered at a depth less than the stipulated minimum contractual depth;

(b)	continued drilling is clearly dangerous because of abnormal pressure in the formation;

(c)	rock formations are encountered, the hardness of which makes it impracticable to continue drilling with appropriate equipment; or

---

(d)	Hydrocarbon bearing formations are encountered that require the installation of protective casings which excludes the possibility of reaching the minimum contractual depth.

3.2.2	For the purposes of Article ‎3.2.1, economic basement means any stratum in and below which the geological structure or physical characteristics of the rock sequence do not have the properties necessary for the accumulation of Hydrocarbons in commercial quantities and which also reflects the maximum depth at which any accumulation of this type can be reasonably expected.

3.3	Cessation of Drilling

3.4	Substitute Wells

(a)	drill a substitute Exploration Well at the same or another location to be agreed with the Ministry; or

(b)	pay the Ministry an amount equal to the difference between thirty million Dollars ($30,000,000) and the amount of Exploration Costs actually spent in connection with such Exploration Well; and

(c)	such substitute well or payment per Articles ‎3.4(a) or ‎(b) shall be deemed to have fulfilled the Minimum Work Program obligations for the relevant Sub-Period or Extension Period.

3.5	Provision of Guarantee

---

3.6	Participation Interest of the National Company

4.1	Submission of Annual Work Program

4.2	Form and Approval of Annual Work Program

---

4.3	Conduct of Petroleum Operations

4.4	Overexpenditures

4.4.1

It is acknowledged by the Ministry and the Contractor that the technical results acquired as work progresses or the occurrence of certain unforeseen changes in circumstances may justify modifications to an approved Annual Work Program and corresponding Annual Budget. In such circumstances, the Contractor shall promptly notify the Ministry of the proposed modifications. Such modifications are subject to review and approval by the Ministry within sixty (60) days after receipt of such notice. Failure of the Ministry to approve or reject such proposed modifications within such sixty (60) day period shall be deemed to be an approval of such proposed modifications. Notwithstanding the foregoing and in no event shall the Contractor incur any line item expenditure which exceeds an approved Annual Budget line item by more than ten percent (10%), provided that the cumulative total of all overexpenditures for a Calendar Year shall not exceed five percent (5%) of the total approved Annual Budget without the prior approval of the Ministry; otherwise such excess expenditures shall not be recoverable as a Petroleum Operations Cost or deductible for tax purposes.

4.4.2	At such time that the Contractor reasonably believes that the limits of an Annual Budget will be exceeded, the Contractor shall promptly notify the Ministry and shall provide the Ministry with full details of such overexpenditures, including reasons therefor.

4.4.3	The limitations set out in this Article ‎4.4 shall be without prejudice to the Contractor’s right to make expenditures in the event of an emergency or accident requiring urgent action under Article ‎4.5.

4.4.4	Save as otherwise provided in Article ‎4.5, should the Contractor incur any expenditure whose program and budget has not been approved within an Annual Work Program and corresponding Annual Budget or any amendment thereto approved by the Ministry, then such expenditure shall not be recoverable by the Contractor as a Petroleum Operations Cost or be deductible for tax purposes.

4.5	Emergency or Accident

4.5.1

In the event of an emergency or accident requiring urgent action, the Contractor shall take all steps and measures as may be prudent and necessary in accordance with good oil field practice for the protection of its interests and those of the State and the property, life and health of other Persons, the environment and the safety of Petroleum Operations. The Contractor shall promptly inform the Ministry of such emergency or accident.

---

4.5.2

All of the related costs incurred by the Contractor in accordance with this Article ‎4.5 shall be recoverable as Petroleum Operations Costs in accordance with this Contract. Notwithstanding the foregoing, all costs incurred by the Contractor in the cleaning up of pollution or damage to the environment caused by the gross negligence or willful misconduct of the Contractor, its subcontractors or any Person acting on its or their behalf shall not be recoverable as a Petroleum Operations Cost.

5.1	Notification of Discovery

5.2	Appraisal Work Program

5.2.1

If the Contractor considers that the Discovery merits Appraisal it shall diligently submit to the Ministry a detailed Appraisal work program and corresponding budget no later than six (6) months following the date on which the Discovery was notified in accordance with Article ‎5.1. The Appraisal work program, corresponding budget and designated Appraisal Area are subject to the review and approval of the Ministry in accordance with the procedures set forth in Article ‎4.

5.2.2

The draft Appraisal work program shall specify the estimated size of the Hydrocarbon reserves of the said Discovery, the area proposed to be designated as the Appraisal Area and shall include all seismic, drilling, testing and Appraisal operations necessary to carry out an appropriate Appraisal of the Discovery. The Contractor shall diligently undertake the approved Appraisal work program, it being understood that the provisions of Article ‎4.4 shall apply to such program.

5.2.3	The duration of the Appraisal work program shall not exceed twenty-four (24) months for Crude Oil and in the case of Natural Gas the duration of the Appraisal work program shall be determined in accordance with the provisions of Article ‎13, unless as otherwise approved by the Ministry, such approval not to be unreasonably withheld or delayed.

5.3	Submission of Appraisal Report

5.3.1

Within six (6) months following completion of the Appraisal work program and in any event no later than thirty (30) days prior to the expiry of the Initial Exploration Period, or the First Extension Period or the Second Extension Period, including any additional extension in accordance with the provisions of Article ‎2.2, as may be the case, the Contractor shall subunit to the Ministry a detailed report giving all the technical and economic information associated with the Discovery so appraised and which shall confirm, in the Contractor’s opinion, whether such Discovery is a Commercial Discovery.

---

5.3.2	The above-referred report shall include geological and petrophysical characteristics of the Discovery, estimated geographical extent of the Discovery, results of the production tests yielded by the formation and the preliminary economic study with respect to the exploitation of the Discovery.

5.4	Determination of Commerciality

5.5	Submission and Approval of Development and Production Plan

5.5.1	If the Contractor deems the Discovery or aggregation of Discoveries to be a Field it shall submit for the approval of the Ministry a development and production plan (the Development and Production Plan) for such Discovery or aggregation of Discoveries within twelve (12) months following the remittance of the report referred to in Article ‎5.3.

5.5.2

The Ministry may propose amendments or modifications to the aforementioned Development and Production Plan, and also to the Development and Production Area subject to such Development and Production Plan, by notice to the Contractor within ninety (90) days following receipt of the relevant plan. Such notification shall set out the reasons for the amendments or modifications proposed by the Ministry. In such event the Ministry and the Contractor shall meet as soon as possible to review the proposed amendments or modifications of the Ministry and establish by mutual agreement the Development and Production Plan.

5.5.3

If (i) the Contractor and the Ministry do not reach a written agreement within one hundred eighty (180) days following the submission of amendments and modifications by the Ministry, or (ii) the Ministry notifies the Contractor that it does not approve the Development and Production Plan, within thirty (30) Business Days of the occurrence of either (i) or (ii) above, the Parties shall meet to assess the discrepancies in accordance with articles 49 and 50 of the Petroleum Regulations; if an agreement is not reached, the points of discrepancies shall be referred to and shall be determined by an internationally recognized expert appointed by the International Chamber of Commerce in accordance with its Rules for Expertise (ICC Expertise Rules). The determination of the expert shall be final and binding upon the Parties, including the Ministry, and, if should it not be complied with pursuant to Equatorial Guinea legislation, either Parties may refer the matter to arbitration under Article ‎26 to reach a final and binding decision. .

5.6	Modifications to Development and Production Plan

5.6.1	When the results obtained during Development and Production Operations require certain modifications to the Development and Production Plan, such plan may be

---

5.6.2	During a period of Development and Production, the Contractor may propose to the Ministry revisions to the Development and Production Plan at any time that additional Development and Production Operations are under consideration. Such revisions shall be submitted for approval by the Ministry, using the same procedure provided for with respect to the initial approval thereof.

5.7	Number of Fields

5.8	Extension of Field beyond Contract Area

5.8.1

If, during work performed after approval of a Development and Production Plan, it appears that the geographical extent of a Field is larger than the Development and Production Area designated pursuant to Article ‎5.5, the Ministry may grant the Contractor the additional area, on condition that it is included in the Contract Area in effect at that time, and provided that the Contractor provides supporting evidence of the existence of the additional area applied for.

5.8.2	In the event that a Field extends beyond the boundaries of the Contract Area as delimited at any particular time, the Ministry may require the Contractor to exploit such Field in association with the contractor of the adjacent area in accordance with Article ‎22, the Hydrocarbons Law and generally accepted practice of the international petroleum industry.

5.8.3	When the area proposed to be unitized is not subject to any production sharing contract, the Ministry may grant the Contractor the additional area, on condition that it is included in the Contract Area in effect at that time, it being understood that any award of an additional area must be in accordance with the Hydrocarbons Law.

5.9	Commencement and Performance of Development and Production Operations

5.9.1	The Contractor shall commence Development and Production Operations within six (6) months from the date of approval of the Development and Production Plan and shall pursue such operations diligently.

5.9.2	The Contractor undertakes to perform all Development and Production Operations in accordance with generally accepted practice of the international petroleum industry, this Contract and the Hydrocarbons Law.

5.10	Duration of Operations

---

5.10.1	The duration of the Development and Production period during which the Contractor is authorized to exploit a Field is twenty-five (25) Years from the date of approval of the Development and Production Plan related to such Field.

5.11	Risk and Expense of Contractor

5.12	Mandatory Relinquishment

(a)	has not submitted, in accordance with Article ‎5.2, an Appraisal work program and corresponding budget with respect to such Discovery within six (6) months following the date on which such Discovery has been notified to the Ministry; or

(b)	subject to Article ‎13.1 regarding Unassociated Natural Gas, does not establish the Discovery as a Field within one (1) Year after completion of Appraisal work with respect to such Discovery.

5.13	Future Operations

---

5.14	Available Facilities

6.1	Obligations of Contractor

6.2	Joint Operating Agreement

6.3	Conduct of Petroleum Operations

6.4	Maximum Efficient Production Rate

---

6.5	Working Conditions

6.6	Discovery of other Minerals

6.7	Award of Contracts

6.7.1	In all the Material Contracts, the Contractor shall:

(a)	call a bid for the contract.

(b)	give preference to the national companies the Contractor thinks that are qualified;

(c)	before awarding a Material Contract, notify and inform the Ministry about the intention of the Contractor to present an offer for such contract;

(d)	include the national companies that have been included in a list provided by the Ministry and that the Contractor regard as competent, in the list of bids for such Material Contract;

(e)	include in the list of bids, any qualified Person the Ministry suggests to be included;

(f)	finish the bid process within a reasonable period of time;

(g)	consider and analyze the submitted offers;

(h)	draft and send to the Ministry a competitive analysis of the offers submitted including the Contractor’s recommendation in terms of the Person that will be awarded with the contract, the underlying reasons and the technical, commercial and contractual conditions to be agreed;

---

(i)	obtain the Ministry’s approval, which will be regarded as awarded if there is no response to an approval application thirty (30) days after since the reception of the written application; and

(j)	Provide the Ministry with a final copy of the signed contract.

6.7.2	Should the Contractor imports and/or use any service, material, equipment, consumables and other goods from a country other than Equatorial Guinea, aware of contravention of this Article or Article ‎23.1, or otherwise signs a contract aware of contravention of such Articles, their costs shall not be Petroleum Operational Costs and they shall not be recoverable costs by the Contractor.

6.8	Inspection of Petroleum Operations

6.8.1

All Petroleum Operations may be inspected and audited by the Ministry at such intervals as the Ministry deems necessary. The duly commissioned representatives of the Ministry shall have the right, among others, to monitor Petroleum Operations and inspect all equipment, facilities and materials relating to Petroleum Operations, provided that any such inspection shall not unduly delay or impede Petroleum Operations. The representatives of the Ministry inspecting and monitoring Petroleum Operations shall comply with the safety standards of the Contractor.

6.8.2	For the purposes of permitting the exercise of the above-mentioned rights, the Contractor shall provide reasonable assistance to the representatives of the Ministry, including transportation and accommodation, as set forth in Article ‎6.23.

6.8.3	All costs directly related to the technical inspection, verification and audit of Petroleum Operations or otherwise in connection with the exercise of the Ministry’s rights under this Contract or the performance of the Contractor’s obligations shall be borne by the Contractor and are recoverable as Petroleum Operations Costs in accordance with this Contract, including:

(a)	outbound and return travel expenses;

(b)	local transportation, as necessary, when there is no transportation available under Article ‎6.8.2;

(c)	accommodation, when such accommodation is necessary to perform the official duties and is not provided under Article ‎6.8.2; and

(d)	per diems, which shall be adjusted in accordance with such amounts assigned to the ranking of each agent of the Ministry as published in the general budget law of the State approved for such Calendar Year, applicable to all companies in the extraction sector of Hydrocarbons in Equatorial Guinea, as set out in Article ‎6.23 below.

---

6.9	Provision of Information to Ministry

6.9.1

The Contractor shall keep the Ministry fully informed on the performance and status of Petroleum Operations at reasonable intervals and as required under this Contract and of any emergencies or accidents that may have occurred during such operations. Furthermore, the Contractor shall provide the Ministry with all documentation and information that is required to be provided under this Contract and the Hydrocarbons Law and as may otherwise be requested by the Ministry from time to time.

6.9.2	The Contractor shall keep the Ministry informed on a daily basis of the volumes of Hydrocarbons produced from the Contract Area.

6.10	Production of Energy for Own Use

6.11	Standard of Equipment

6.12	Care of Contractor and the Environment

6.12.1	The Contractor shall take all prudent and necessary steps in accordance with generally accepted practice of the international petroleum industry, the Hydrocarbons Law and this Contract to:

(a)	prevent pollution and protect the environment and living resources;

(b)	ensure that any Hydrocarbons discovered or produced in the Contract Area are handled in a manner that is safe for the environment;

(c)	avoid causing damage to overlying, adjacent and/or underlying formations trapping Hydrocarbon reserves;

---

(d)	prevent the ingress of water via Wells into strata containing Hydrocarbon reservoirs;

(e)	avoid causing damage to overlying, adjacent and/or underlying aquifers;

(f)	ensure that Petroleum Operations are carried out in accordance with this Contract, the Hydrocarbons Law and all other laws of Equatorial Guinea;

(g)	undertake the precautions necessary for the protection of maritime transportation and the fishing industry and to avoid contamination of the ocean and rivers;

(h)	drill and exploit each Field in such a manner that the interests of Equatorial Guinea are protected; and

(i)	ensure prompt, fair and full compensation for injury to Persons or property caused by the effects of Petroleum Operations.

6.12.2

If the Contractor’s actions result in any pollution or damage to the environment, any Person, living resources, property or otherwise, the Contractor shall immediately take all prudent and necessary measures to remedy such damages and effects thereof and/or any additional measures as may be directed by the Ministry. If the pollution or damage is caused as a result of the negligence or willful misconduct of the Contractor, its subcontractors or any Persons acting on its or their behalf all costs in relation thereof shall not be recoverable as a Petroleum Operations Cost. If the Contractor does not act promptly so as to control or clean-up any pollution or make good any damage caused, the Ministry may, after giving the Contractor reasonable notice in the circumstances, carry out the actions which are prudent or necessary hereunder and under Article ‎4.5 and all reasonable costs and expenses of such actions shall be borne by the Contractor and shall not be recoverable as a Petroleum Operations Cost.

6.12.3

If the Ministry determines that any works or installations built by the Contractor or any activity undertaken by the Contractor threatens the safety of any Persons or property or causes pollution or harm to the environment, the Ministry shall promptly advise the Contractor of its determination, and may require the Contractor to take all appropriate mitigating measures, consistent with generally accepted practice of the international petroleum industry, to repair any damage caused by the Contractor’s conduct or activities. Furthermore, if the Ministry deems it necessary, it may demand that the Contractor suspend totally or partially the affected Petroleum Operations until the Contractor has taken the appropriate mitigating measures or repaired any damage.

6.12.4

The Contractor shall undertake comprehensive environmental impact assessment studies prior to, during and after major drilling operations. The Contractor shall assume the costs of these studies and such costs shall be recoverable. This requirement is mandatory and the first study shall be presented to the Ministry before the start of the drilling of the first Well in the Contract Area. However, an environmental impact assessment must also be completed prior to undertaking any seismic work in any areas of particular environmental sensitivity specified by the State.

6.13	Re-injection and Flaring of Natural Gas

---

6.14	Design and Identification of Wells

6.14.1	The Contractor shall conform to the practices generally accepted in the international petroleum industry in the design and drilling of Wells, including their casing and cementation.

6.14.2	Each Well shall be identified by a name or number agreed with the Ministry, which shall be indicated on all maps, plans and other similar records produced by or on behalf of the Contractor.

6.15	Vertical Projection Wells

6.16	Notification of Commencement of Drilling

6.17	Construction of Facilities

6.18	Occupation of Land

---

6.18.1	In order to carry out Petroleum Operations, the Contractor shall have the right to:

(a)	subject to Articles ‎6.17 and ‎6.18.2, occupy the necessary land for the performance of Petroleum Operations and associated activities as set out in paragraphs ‎(b) and ‎(c) below, including lodging for personnel;

(b)

undertake or procure the undertaking of any infrastructure work necessary in normal technical and economic conditions for the carrying out of Petroleum Operations and associated activities such as transport, storage of equipment, materials and extracted substances, establishment of telecommunications equipment and communication lines necessary for the conduct of Petroleum Operations at installations located both offshore and onshore;

(c)	undertake or ensure the undertaking of works necessary for the supply of water to personnel and installation works in accordance with water supply regulations; and

(d)	extract and use or ensure the extraction and utilization of resources (other than Hydrocarbons) from the subsoil necessary for the activities stipulated in paragraphs ‎(a), ‎(b) and ‎(c) above in accordance with relevant regulations.

6.18.2	Occupation of land as mentioned in Article ‎6.18.1 shall become effective after the Ministry or other applicable governmental authority approves the request submitted by the Contractor indicating and detailing the location of such land and how the Contractor plans to use it, taking the following into consideration:

(a)	if the land belongs to the State, the State shall grant it to the Contractor for occupation and to build its fixed or temporary facilities during the term of this Contract for a fee and on terms to be agreed and such amount shall be considered a Petroleum Operations Cost;

(b)

if the land is private property by traditional or local right according to the Property Registry, then (i) if the occupation is merely temporary or transitory, or for right of way, the Contractor shall reach an agreement with the relevant property owner and the property owner shall reach an agreement with any occupant, tenant or possessor, with regard to the rental to be paid, and the resulting amounts shall be considered recoverable Petroleum Operations Costs, or (ii) if the occupation is permanent, the relevant owner and the Contractor shall reach an agreement regarding matters related to the property’s acquisition and such amounts shall be considered Petroleum Operations Costs;

(c)

if the Contractor and the relevant property owner or occupant, tenant or possessor do not reach an agreement regarding the matters mentioned in paragraph (b) above, the Ministry shall act as a mediator between them and in the event that such mediation does not produce a resolution of the case the dispute shall be resolved by the courts of Equatorial Guinea unless recourse is had to the procedure described in paragraph (d) below;

(d)	the State may proceed to expropriate the land, subject to the prior publication of a decree of compulsory expropriation followed by a fair and reasonable valuation

---

(e)

the relinquishment, in whole or in part, of the Contract Area, will not affect the Contractor’s rights under Article ‎6.18.1 to carry out building works and construction of installations, provided that such works and installations are directly related to other activities of the Contractor in the remainder of the Contract Area, as in the case of partial relinquishment, and covered by other production sharing contracts.

6.19	Residence of Personnel

6.20	Assistance of Ministry

6.21	Opening of Branch Office

6.22	Premises

6.23	State Expenses

---

(a)	the actual expenses incurred for travel to the location outside of the Republic of Equatorial Guinea and for travel to return to the Republic of Equatorial Guinea and lodging of such employees or officials at the foreign location, and

(b)	to pay to the Ministry, on behalf of the State, for the per diem as provided in the 2017 Budget Law. amount equal to the following for each day such employee or official is out of the Republic of Equatorial Guinea in accordance with the request of CONTRACTOR;

A.	As a consequence of the payment of the per diems noted above, Company shall not make any payments to or on behalf of any Government of Equatorial Guinea travelers in relation to meals or other incidental or miscellaneous costs incurred by such travelers during such travel, and all such costs shall be for the sole account of such travelers.

B.

The Parties agree that all payments made pursuant to this Section ‎6.23 by Company to the Ministry, on behalf of the State, and to the provider of services, shall be recoverable expenses under the Contract as Petroleum Operations Costs. The Parties further agree that in relation to all payments made pursuant to this Section ‎6.23, Company is neither seeking nor shall it gain any business or business advantage from the Ministry or the Government of the Republic of Equatorial Guinea as a result of making such payments.

---

7.1	Royalties

7.1.1	The Contractor shall pay Royalties to the State from the first day of Production based on the daily Total Disposable Production from a Development and Production Area. The calculation shall be determined according to the following table applicable for each tranche:

7.1.2	The percentage corresponding to the level of Production shall be applied directly. Thus, for example: for a Production level of ninety thousand (90,000) Barrels per day, fourteen point five percent (14.5%) would be applied and the Royalty would be thirteen thousand fifty (13,050) Barrels.

7.2	Cost Recovery Oil

7.2.1	After deducting Royalties, the Contractor shall be entitled to up to seventy percent (70%) of the Total Disposable Production remaining in any Calendar Year for recovery of its Petroleum Operations Costs (Cost Recovery Oil).

7.2.2	The value of the portion of Total Disposable Production assigned to the Contractor’s Petroleum Operations Costs recovered will be determined in accordance with Article ‎10.

7.2.3	If, during any Calendar Year, the Petroleum Operations Costs not yet recovered by the Contractor in accordance with this Contract exceed the value of the maximum amount of available Cost Recovery Oil, the portion of Petroleum Operations Costs not recovered in the said Year will be carried forward to the following Calendar Year for recovery purposes.

7.3	Net Crude Oil

---

7.4	Delivery of State’s Entitlement

7.5	Price Obtained by Contractor

7.5.1

If, pursuant to Article ‎7.4, the State requires the Contractor to purchase its share of Crude Oil, the State shall advise the Contractor of its next scheduled shipment at least three (3) months in advance, and the Ministry and the Contractor shall come to a mutual agreement as to the terms and conditions of such sale and purchase. In the event that three (3) months advance notice is not given, or they do not reach an agreement as to the terms and conditions of the sale and purchase, the Contractor shall not be obliged to purchase said Crude Oil.

7.5.2

The Ministry shall be entitled to compare the price for its Crude Oil obtained from the Contractor with similar market quotations. In the event that it is shown that the price obtained from the Contractor differs substantially from the quotations in similar markets, the Ministry shall have the right to evaluate the Contractor’s sales and marketing operations and, if justified, cancel any sales agreement between the State and the Contractor, without prejudice to any claim that the State may have against the Contractor with respect to the matters under dispute.

7.6	Export of Entitlement

7.7	Title to Contractor’s Entitlement

---

8.1	Liability for Petroleum Operations Costs

8.2	Participation Interest of the National Company

8.2.1

The National Company’s Participation Interest will be carried and paid for in full by the other Parties comprising the Contractor (other than the National Company) in proportion to their respective Participation Interests (other than the National Company’s) through the Exploration Period. At approval of the Development and Production Plan, the National Company shall convert its carried Participation Interest into a full working Participation Interest in accordance with the Hydrocarbons Law. From that point on, the National Company shall be responsible for all its costs in respect of the area covered by the approved Development and Production Plan. For the avoidance of doubt, the National Company’s Participation Interest in respect of the remainder of the Contract Area shall continue to be carried and paid for by the Parties comprising the Contractor (other than the National Company) in proportion to their respective Participation Interests (not including the National Company’s) until such time as the National Company elects to convert its carried interest into a full working interest.

8.2.2

The costs, expenditures and obligations, including the costs incurred pursuant to Article ‎6.23, incurred by the Parties comprising the Contractor (other than the National Company) in relation to the National Company’s carried Participation Interest shall be recoverable by the Parties comprising the Contractor (other than the National Company) in accordance with the provisions of this Contract and the Hydrocarbons Law.

8.2.3	The Parties comprising the Contractor (other than the National Company) shall recover the costs and expenditures in relation to the National Company’s carried Participation Interest from fifty percent (50%) of the Hydrocarbons corresponding to the National Company’s total entitlement in accordance with Articles ‎7.2 and ‎7.3.

9.1	Payment of Taxes

---

9.2	Audit Rights

10.1	Market Price

10.1.1	The unit selling price of Crude Oil under this Contract shall be the FOB Market Price at the Delivery Point, expressed in Dollars per Barrel and calculated in accordance with this Article ‎10.1. A Market Price shall be established for each type of Crude Oil or Crude Oil blend in accordance with this Article ‎10.1.

10.1.2	The Market Price applicable to all liftings of Crude Oil sold to third Parties under market conditions during one Quarter shall be the agreed selling price, adjusted, as necessary, to reflect differentials in quality, gravity, quantity, delivery conditions and terms of payment.

10.1.3

Before the period in which a price for Crude Oil is quoted by Platts for the Field from where Crude Oil is sold, the Market Price applicable to all liftings of Crude Oil sold to a Contractor’s Affiliate and later sold to a third party, will be the value received under the Contract under market conditions with the said third party, adjusted, as necessary, to reflect differentials in quality, gravity, quantity, delivery conditions and terms of payment. Should there be no price quoted by Platts for the produced Crude Oil, the Contractor and the Ministry shall meet to establish a differential related to a crude marker quoted by Plaits to reflect the differential in terms of quality and the commercial differentials. The meeting shall be held six months after the introduction in the market; all the Persons comprising the Contractor and participating in the marketing of Crude Oil during that period of six months, shall attend such meetings with the Ministry.

10.1.4

The Market Price applicable to all liftings of Crude Oil sold to a Contractor’s Affiliate after having set a quoted price during a Quarter will be calculated by summing up the average of high and low quotes for Dated Brent according to the data published in the five (5) consecutive issues of the Platts Bulletin for the Crude Oil Market (including all corrections) posterior to the lifting informed date and the differential average between the sold Crude Oil and the Dated Brent one as published in the Plaits Crude for the period starting on the fifteenth day (15th) day and ends on the last day of the Month of the Load Commercialization (inclusive).

A=	average o the high and low quotes of Brent Dating according to the according to the data published in the five (5) consecutive issues of the Platts Bulletin for the

---

B=	differential average between the quality of the sold Crude Oil and the Dated Brent as published in the Plaits Crude for the period starting on the fifteenth day (15th) day and ends on the last day of the Month of the Load Commercialization (inclusive).

10.1.5	The Market Price applicable to all liftings of Crude Oil during one Quarter shall be equivalent to the weighted average of the prices obtained by the Parties comprising the Contractor, with the exception of the National Company, for all Crude Oil sold and valued in accordance with Articles ‎10.1.2, ‎10.1.3 and ‎10.1.4.

10.1.6	The following transactions shall be excluded from the calculation of the Market Price:

(a)	Sales between Crude Oil providers and the national market; and

(b)	Sales in which the compensation is different from a payment in a freely convertible currency, and sales totally or partially conducted due to reasons different from common commercial incentives for Crude Oil Sales in the international market (such as exchange contracts).

10.2	Disagreement of Market Price

10.2.1

The Contractor and the Ministry shall agree the Market Price in accordance with this Article ‎10; in the event that they are unable to agree on any matter concerning the Market Price of Crude Oil, either the Contractor or the Ministry may serve on the other a dispute notice. Within seven (7) days of the date of the dispute notice the Ministry shall establish a committee of two (2) Persons of which the Minister of Mines, Industry and Energy or his delegate will be the President and the other committee member will be a representative designated by the Contractor to represent it. The committee must meet and make a decision resolving any dispute under this Article ‎10 within thirty (30) days of the date of the dispute notice. The committee shall unanimously decide the dispute.

10.2.2

In the event a unanimous decision is not reached by the committee within the aforementioned thirty (30) day period, the dispute shall be determined by an internationally recognized expert appointed by the International Chamber of Commerce in accordance with its Rules for Expertise (ICC Expertise Rules). The determination of the expert shall be final and binding on the Parties. The expert shall determine the Market

---

10.2.3	Pending the determination of the Market Price for a Quarter, the Market Price provisionally applicable to a Quarter shall be the Market Price of the preceding Quarter. Any necessary adjustment shall be made no later than thirty (30) days after the determination of the Market Price for the Quarter in question.

10.3	Payment Deadline to the State of the Market Price should the Contractor Commercialize the State Crude Oil.

10.4	Audit of Market Price

11.1	Signature Bonus

11.2	Discovery Bonus

11.3	Production Bonuses

---

(a)	on the date of start Production of Crude Oil from a Development and Production Area, two million Dollars ($2,000,000);

(b)	two million Dollars ($2,000,000) after daily Production from a Development and Production Area first averages 20,000 Barrels per day for a period of sixty (60) consecutive days;

(c)	three million Dollars ($3,000,000) after daily Production from a Development and Production Area first averages 40,000 Barrels per day for a period of sixty (60) consecutive days;

(d)	five million Dollars ($5,000,000) after daily Production from a Development and Production Area first averages 60,000 Barrels per day for a period of sixty (60) consecutive days; and

(e)	six million Dollars ($6,000,000) after daily Production from a Development and Production Area first averages 120,000 Barrels per day for a period of sixty (60) consecutive days.

11.4	Surface Rentals

11.4.1	The Contractor shall pay to the State the following annual surface rentals:

(a)	zero point twenty five Dollars ($0.25) per hectare of the Contract Area annually, for each Calendar Year or part thereof, during the Initial Exploration Period, the Extension Periods or any extension thereof; or

(b)	two point five Dollars ($2.50) per hectare for each Development and Production Area, annually for each Calendar Year or part thereof, during the term of the relevant Development and Production period.

11.4.2

For the Year in which this Contract is signed, the surface rental set forth in Article 11.4.1(a) shall be prorated from the Effective Date through to 31 December of such Year and shall be paid within thirty (30) days after the Effective Date. For succeeding Years the surface rentals set forth in Article 11.4.1(a) and (b) shall be paid in advance not less than thirty (30) days before the beginning of each Calendar Year.

---

11.4.3

Surface rentals shall be calculated based on the surface of the Contract Area and, where applicable, of a Development and Production Area occupied by the Contractor on the date of payment of such surface rentals. For the avoidance of doubt, this shall exclude any relinquished areas. In the event of relinquishments made during a Calendar Year, the Contractor shall have no right to be reimbursed for the surface rentals already paid.

12.1	Obligation to Supply

12.2	Notification from Ministry

13.1	Unassociated Natural Gas

13.1.1

In the event of an Unassociated Natural Gas Discovery, the Contractor shall comply with the provisions of Article ‎5.2. However, if the Appraisal work program presented by the Contractor following the Discovery of Unassociated Natural Gas has a duration exceeding that of the Initial Exploration Period or any of its extensions, the Contractor may request from the Ministry an extension of the relevant Exploration Period with respect to the Appraisal Area related to such Discovery for a period of up to four (4) Years starting from the expiry of the Initial Exploration Period or any of its Extension Periods, as appropriate. The Contractor shall request the aforementioned extension at least sixty (60) days prior to the expiry of the relevant period.

13.1.2	If the Contractor considers that the Unassociated Natural Gas Discovery does not warrant Appraisal or further Appraisal, in conformity with the provisions of Article ‎5.12, the

---

13.1.3	In the same manner, if after completion of the Appraisal work, the Contractor considers that the Unassociated Natural Gas Discovery is not commercial, the Ministry may, with ninety (90) days’ advance notice, require the Contractor to relinquish all of its rights over the Appraisal Area encompassing such Discovery.

13.1.4

In both the above cases the Contractor shall be deemed to have waived all its rights to the Hydrocarbons produced from such Unassociated Natural Gas Discovery, and the State may then carry out, or cause to be carried out, all the Petroleum Operations relating to that Discovery, without compensation or indemnification to the Contractor, provided, however, that such work shall not prejudice the performance of other Petroleum Operations of the Contractor. The Ministry may request that the Contractor undertake all continuing operations for a fee and on terms to be agreed between the Ministry and the Contractor.

13.2	Associated Natural Gas

13.2.1

In the event that a Discovery of Crude Oil is considered to be a Commercial Discovery, the Contractor shall state in the report referred to in Article ‎5.3 whether it considers that the Production of Associated Natural Gas is likely to exceed the quantities necessary for the requirements of Petroleum Operations relating to the Production of Crude Oil (including re-injection operations), and whether it considers that such excess is capable of being produced in commercial quantities. In the event the Contractor has informed the Ministry of such an excess, the Ministry and the Contractor shall jointly assess the possible markets and uses for such excess of Associated Natural Gas, both on the local market and for export (including the possibility of joint marketing of their shares of Production of that excess of Associated Natural Gas in the event such excess would not otherwise be commercially exploitable), together with the means necessary for its marketing.

13.2.2

In the event the Ministry and the Contractor should decide that the Development of the excess Associated Natural Gas is justified, or in the event the Contractor should wish to develop and produce such excess, the Contractor shall indicate in the Development and Production Plan the additional facilities necessary for the Development and Production of such excess and its estimate of the costs related thereto. The Contractor shall then proceed with the Development and Production of such excess in accordance with the Development and Production Plan submitted and approved by the Ministry under Article ‎5.5. A similar procedure shall be applicable if the sale or marketing of Associated Natural Gas is agreed during the Production of a Field.

13.2.3	In the event the Contractor does not consider the exploitation of the excess Associated Natural Gas is justified and if the State at any time wishes to utilize it, the Ministry shall notify the Contractor of the State’s wish, in which event:

(a)	the Contractor shall put at the disposal of the State free of charge the Crude Oil and Associated Natural Gas separation facilities for all or part of such excess that the State wishes to utilize;

---

(b)	the State shall be responsible for the gathering, treatment, compression and transportation of such excess Associated Natural Gas from the receiving point at the Contractor’s facilities and for bearing any additional costs and liabilities related thereto; and

(c)	the construction of the facilities necessary for the operations referred to in paragraph ‎(b) above, together with the recovery of that excess by the State shall be carried out in accordance with generally accepted practice of the international petroleum industry.

13.2.4	In no event shall the Operations carried out by the State in relation to such Associated Natural Gas interfere with Petroleum Operations of the Contractor.

13.2.5

Any excess Associated Natural Gas not utilized in accordance with Articles ‎13.2.1, ‎13.2.2 and ‎13.2.3 shall be re-injected by the Contractor in accordance with Article 6.14. Flaring will be permitted only in accordance with the Hydrocarbons Law and is subject to the approval of the Ministry. The Contractor shall be permitted to flare Associated Natural Gas without the approval of the Ministry in the event of an emergency, provided that every effort is made to diminish and extinguish such flaring of Natural Gas as soon as possible. The Ministry has the right to offtake, free of charge, at the wellhead or gas oil separator all Natural Gas that would otherwise be re-injected or flared by the Contractor.

13.3	Provisions Common to Associated and Unassociated Natural Gas

13.3.1	The Contractor shall dispose of its share of the Production of Natural Gas in accordance with this Contract and the Hydrocarbons Law. The provisions of this Contract applicable to Crude Oil shall apply mutatis mutandis to Natural Gas unless otherwise specified herein.

13.3.2	The selling price for all Natural Gas to be sold in the domestic market shall be set by the Ministry in accordance with the Hydrocarbons Law. The selling price for all Natural Gas to be sold outside of the domestic market shall be as agreed between the Ministry and the Contractor. The Ministry and Contractor shall proceed in good faith to negotiate a gas sales agreement, if required.

13.3.3

For the purposes of Articles ‎7.3 and ‎11.3, the quantities of available Natural Gas after deduction of the quantities re-injected, flared or necessary for the conduct of Petroleum Operations shall be expressed in a number of Barrels of Crude Oil on a BTU equivalent energy content basis adjusted monthly by a commercially appropriate factor relating the price of Natural Gas with the price of Crude Oil in terms of the provisions of Article ‎10.3, unless otherwise agreed between the Ministry and the Contractor.

13.3.4	The provisions of Article ‎7.2 in respect of cost recovery shall apply mutatis mutandis to the Production of Natural Gas.

13.3.5	The quantity of Natural Gas produced and saved from the Contract Area which remains after the Contractor has taken the portion for the recovery of Petroleum Operations Costs pursuant to Article ‎13.3.4 shall be referred to as Net Natural Gas.

---

13.3.6	Subject to the Hydrocarbons Law, the Ministry and the Contractor hereby agree that, in the case of Natural Gas Production, they shall reach separate agreements and arrangements with respect to the sale and marketing of Natural Gas.

14.1	Importation of Goods, etcetera

14.1.1	In accordance with the stipulations of Articles 63 and 64 of the Hydrocarbons Law, the Contractor shall be permitted to import into Equatorial Guinea all the goods, materials, machinery, equipment and consumer goods directly necessary to properly carry out Petroleum Operations in its own name or in the name of its sub-contractors or other Persons acting on its or their behalf.

14.1.2	For the purpose of this Contract, the Contractor shall benefit from the following advantages:

(a)

All materials, products, machinery, equipment and tools necessary for Petroleum Operations, provided that these goods, which are exclusively destined and actually dedicated directly to Petroleum Operations and that are destined to be re-exported at the end of their use, will be treated as imported under the conditions stipulated in the Customs Code, the importation in compliance with the regulations of Temporary Admission (TA) or Temporary Imports (TI), either normal or special, whichever is the case for the Contractor, for its sub-contractors and Persons acting on its or their behalf, of all materials, products, machinery, equipment and tools necessary for Petroleum Operations; and

(b)

Admission with exemption from any tax and/or duty of all materials, products, machinery, equipment and tools totally used or consumed in Equatorial Guinea, exclusively and effectively devoted to Hydrocarbon prospecting, Exploration, Development, and Production Operations subject to this Contract. This exemption applies to imports directly made by the Contractor, its subcontractors and Persons acting on its behalf, on condition that a certificate of end use is issued.

14.1.3

Apart from the exemptions established in the above paragraphs of this Article ‎14 and the items referred to in Article ‎14.1.4, which are waivers that may be granted by the Government according to the law, all goods, materials, products, machinery and equipment imported or exported by the Contractor shall be subject to taxes and/or duties, in accordance with the customs legislation in force in Equatorial Guinea.

14.1.4

The Contractor shall follow the procedures to obtain such waivers, according to the Decree 134/2015 of 2nd of November 2015. The Government shall grant those waivers in accordance with the law to import all goods, materials, machinery, equipment and consumer goods directly needed to implement such Petroleum Operations on behalf of the Contractor or on behalf of its subcontractors or other Persons acting on behalf of the Contractor or its subcontractors in such a way that the import of these items be free and exempt from all customs duties, taxes and fees different from charges resulting from the delivery of the services needed to comply with customs legislation.

---

14.2	Oil Export Rights

14.3	Export of Goods and Materials that have not been transferred to the State

14.4	Customs Documentation

14.5	Exclusion of Penalties and Fines related to Petroleum Operations Costs

14.6	Imports and Exports by Foreign Personnel

---

15.1	Exchange Control Laws

(a)	to retain or dispose of any proceeds outside of Equatorial Guinea including any proceeds from the sale of its or their share of Hydrocarbons;

(b)

to pay foreign subcontractors and expatriate employees of the Contractor, outside of Equatorial Guinea, after deduction of the relevant taxes in Equatorial Guinea. For this purpose, the Contractor may open and use freely bank accounts in Dollars or in other currencies in banks of its choice in Equatorial Guinea and abroad. Notwithstanding the foregoing, while this Contract is in force the Contractor and each of its subcontractors shall establish and maintain a bank account in a national banking institution in Equatorial Guinea, which shall have the Minimum Retention as set out in Article ‎1.1.77, which has been approved by the Ministry and, in the case of subcontractors, the minimum amount set by the Ministry from time to time;

(c)	to transfer such funds as the Contractor or its subcontractors shall have imported into Equatorial Guinea, or earned from Petroleum Operations, or from the proceeds of the sale or lease of goods or performance of services under this Contract;

(d)	to obtain abroad loans required for the performance of their activities under this Contract, provided that the Ministry shall have approved the terms of such loan, including the rate of interest and terms of repayment, whose approval shall not be unreasonably withheld or delayed);

(e)	to collect and maintain abroad all the funds acquired or borrowed abroad, and to freely dispose thereof, limited to the amounts that exceed the requirement of funds for their operations in Equatorial Guinea; and

(f)	free movement of funds owned by them according to the laws of Equatorial Guinea.

15.2	Report on Foreign Exchange Transactions

---

15.3	Freedom of Exchange

16.1	Maintenance of Records and Books

16.1.1	The Contractor shall at all times maintain at its offices in Equatorial Guinea the original records and books of Petroleum Operations in accordance with all applicable regulations and the Accounting Procedure.

16.1.2

All records and books shall be maintained in the Spanish and English languages and be denominated in Dollars, or such other currency as shall be requested by the Ministry from time to time. They shall be supported by detailed documents demonstrating the expenses and receipts of the Contractor under this Contract. Such records and books shall be used to determine the Contractor’s Gross Revenues, Petroleum Operations Costs and net profits, and to establish the Contractor’s Income Tax and other payment obligations. Such records and books shall also include the Contractor’s accounts showing sales of Hydrocarbons.

16.2	Submission of Accounts

16.3	Audit of Ministry

16.3.1

After notifying the Contractor, the Ministry may have experts of its choice or its own agents examine and audit any records and books relating to Petroleum Operations. The Ministry has a period of three (3) years from the date the Contractor submits to the Ministry such records and books in accordance with Article ‎16.2, to perform such examinations or audits with respect to the said Calendar Year and submit its objections to the Contractor for any contradictions or errors found during such examinations or audits.

16.3.2	The Contractor shall provide to the Persons designated by the Ministry any necessary assistance for the foregoing purpose and facilitate the performance of their duties. The Contractor shall bear all reasonable expenses incurred in such examination or audit,

---

16.3.3

In the event of a disagreement between the Ministry and the Contractor in relation to the results of any examination or audit, the dispute shall be determined by an internationally recognized expert appointed by the International Chamber of Commerce in accordance with its Rules for Expertise (ICC Expertise Rules). The determination of the expert shall be final and binding on the Parties. Unless otherwise determined by the expert, the costs and expenses of such expert shall be met proportionately by the Parties on a per capita basis and the Contractor’s share shall not be a Petroleum Operations Cost.

16.4	Currency and Account of Payments

16.4.1

All payments between the Parties under this Contract shall, unless otherwise agreed, be in Dollars, or such other currency as shall be requested by the Ministry from time to time. Subject to Article ‎16.4.2, when the receiving Party is the State, payments shall be made to the General Treasury of the State, and when the receiving Party is the Contractor, payments shall be made to a bank account designated by the Contractor and notified to the Ministry.

16.4.2	All payments to be made to the Ministry pursuant to Article 23.2.2 shall be made to such account as shall be notified to the Contractor.

16.5	Timing and Overdue Payments

17.1	Transfer to Equatoguinean Affiliate

---

17.1.1	As to the withholding tax on dividends, pursuant to Article 237 of Law Number 4/2004 dated October 28, 2004, Regulating the Taxation System of the Republic of Equatorial Guinea (the “Dividend Withholding Tax”):

17.2	Assignment, Transfer, Change of Control

17.2.1

The assignment, transfer, or other disposition of the rights and/or obligations of a Party comprising the Contractor shall require the prior consent of the Ministry. Any request for authorization shall be accompanied by all information related to the assignment, transfer, or other disposition including all legal instruments, in final draft form, to be used to carry out the proposed transaction, the identity of all parties to the transaction, the estimated value of the transaction and whether the consideration is payable in kind, securities, cash or otherwise. Such assignment, transfer, or other disposition shall be subject to the payment of a non-recoverable, non-deductible fee (“Transfer Fee”) of (i) one percent (1%) of Book Value of the assignment, transfer, or disposition when such occurs during the Exploration Periods, and (ii) two percent (2%) of Book Value of the assignment, transfer, or disposition when such occurs during Development and Production Operations, and other non-monetary requirements stipulated in the authorization issued by the Ministry. The assignee and the assignor shall be jointly and severally liable for the payment of such Transfer Fee and for the fulfillment of any other requirements. If within ninety (90) days following notification to the Ministry of a proposed assignment accompanied by the necessary information to prove the technical and financial means of the assignee as well as the terms and conditions of assignment, the Ministry has not given notice of his opposition with reasonable justification, such assignment shall be deemed to have been approved by the Ministry.

17.2.2	All assignees must:

(i)	have the technical and financial ability to meet its obligations under this Contract;

(ii)	in relation to the interest assigned, accept and assume all of the terms and conditions of this Contract, the Joint Operating Agreement and any other agreements relating to Petroleum Operations; and

(iii)	be an entity with which the Ministry and each of the Parties comprising the 44 Contractor can legally do transactions.

17.2.3	All profits resulting from any assignment, transfer or other disposition of any rights and/or obligations under this Contract, regardless of the type and location of the transaction, shall be subject to taxation in conformity of the Tax Law of Equatorial Guinea.

---

17.2.4

Subject to Article 104 of the Hydrocarbon Law and Article 168 of the Petroleum Regulations, each and every one of the Parties comprising the Contractor shall have the right to sell, grant, hand over, transfer or dispose in any other manner all or part of their rights and interests in the Contract, subject to the prior written consent of the Ministry, which shall not be withheld or delayed with no justified reason:

(a)	To a wholly owned Affiliate;

(b)	To the beneficiary of the transfer as foreseen in Article ‎17.1;

(c)	To any of the other Parties comprising the Contractor; or

(d)	To third parties.

17.2.5	If there is an assignment or transfer all or part of their rights and interests in the Contract by Company to a third party, the third party assignee will purchase all existing data packages (both seismic and well) over the Area for one million Dollars ($1,000,000).

17.3	Change of Control

17.4	Recourse to Third Party Funding

17.5	The National Company’s Right of Preemption

---

18.1	Liability and Indemnity

18.1.1

The Contractor shall indemnify, hold harmless and compensate any Person, including the State, for any damage or loss which the Contractor, its Affiliates, its subcontractors and their respective directors, officers, employees, agents or consultants and any other Person acting on its or their behalf may cause to such Person or their property in the conduct of Petroleum Operations. All costs incurred under this Article ‎18.1 caused by the negligence or willful misconduct of the Contractor, its Affiliates, its subcontractors or their respective directors, officers, employees, agents or consultants or any other Persons acting on its or their behalf shall not be cost recoverable as a Petroleum Operations Cost.

18.1.2

The Contractor shall assume all liability, and exempt the State from any liability, in respect of any and all claims, obligations, losses, expenses (including attorneys’ fees), damages or costs of any nature resulting from the violation of any intellectual property rights of any kind caused by the Contractor, its Affiliates or subcontractors as a result of or in relation to the conduct of Petroleum Operations, regardless of the nature of the violation or of the way in which it may occur.

18.2	Joint and Several Liability

18.3	Insurance

18.3.1

The Contractor shall obtain and, during the term of this Contract, maintain in full force and effect, for Petroleum Operations insurance of such type and in such amount as is customary and prudent in accordance with generally accepted practice of the international petroleum industry, and whose coverage terms and conditions shall be communicated to the Ministry within thirty (30) days after the Effective Date. The foregoing insurance shall, without prejudice to the generality of the foregoing provisions, cover:

(a)	any loss or damage to all assets used in Petroleum Operations;

(b)	pollution caused in the course of Petroleum Operations;

(c)	property loss or damage or bodily injury or death suffered by any Person in the course of Petroleum Operations;

(d)	the cost of removing wrecks and clean-up operations following an accident or upon decommissioning; and

(e)	the Contractor’s liability to its employees engaged in Petroleum Operations.

18.3.2	The Contractor shall require its subcontractors to carry insurance of such type and in such amount as is customary in accordance with generally accepted practice of the international petroleum industry.

---

18.3.3	The Contractor shall use all reasonable endeavors to place the insurance required under this Article ‎18 with Equatoguinean insurance brokers and insurance companies.

19.1	Title and Use of Facilities, etcetera

19.1.1

The Contractor and the Ministry shall agree the mode and conditions of such use, subject to ensuring their maintenance in good condition and good working order, normal wear and tear excepted. In any case, upon termination, rescission or cancellation of this Contract, for any reason whatsoever, in relation to all or any part of the Contract Area, the ownership of said installations, facilities, goods, equipment, materials or land, and including those whose costs have not been fully recovered, and any other items acquired and used for Petroleum Operations shall become the sole property of the State and shall be conveyed directly to it.

19.1.2	Regardless of whether or not the Contractor has recovered the relevant costs in accordance with this Contract, the State is entitled to use the said facilities, goods, equipment, materials or land for its own purposes, provided that such use does not interfere with the Contractor’s Petroleum Operations.

19.1.3	Under no circumstances may the Contractor sell, assign, transfer or otherwise dispose of any such facilities, goods, equipment, materials or land to any other Persons.

19.1.4	The provisions of this Article ‎19.1 shall not apply to any leased equipment or to the Contractor’s equipment that is not charged to Petroleum Operations as a Petroleum Operations Cost.

19.1.5

If the Ministry does not wish to use any of the facilities, goods, equipment and materials referred to in this Article ‎19.1, it has the right to request the Contractor to remove them at the Contractor’s own expense, and the Contractor will carry out any decommissioning operations of the said facilities, goods, equipment and materials in accordance with this Contract and the Hydrocarbons Law, and based on the time frame and specified conditions in the approved decommissioning plan.

19.2	Ownership of Data

---

20.1	Disclosure of Confidential Information

20.1.1	The Parties agree that for the duration of this Contract, the terms hereof and all information relating to this Contract and Petroleum Operations shall be kept strictly confidential and may not be divulged by any Party without mutual consent, except:

(a)	to an Affiliated Company;

(b)	to any governmental agency, designated by the State or other entities or consultants of the Ministry;

(c)	to the extent that such data and information is required to be furnished in compliance with any applicable laws or regulations;

(d)	in conformity with the requirements of any stock exchange having jurisdiction over a Party;

(e)	where any data or information forms part of the public domain otherwise than a result of a breach of this Contract;

(f)	to employees, directors, officers, agents, advisors, consultants or subcontractors (both actual and potential) of a Party comprising the Contractor or an Affiliate;

(g)	to any company with a bona fide interest in the carrying out of a possible assignment; and

(h)	to any bank or financial establishment with which an entity of the Contractor solicits or obtains financing,

20.1.2	For an additional period of two (2) Years after the termination of this Contract, only the Parties comprising the Contractor (other than the National Company) shall be obliged to comply with the above stated requirements.

---

20.2	The Contractor’s Patents

20.3	Continuation of Obligations

20.4	Disclosure of Confidential Information by the State and Ministry

21.1	Termination by the State

(a)	a material breach by the Contractor (not attributable to any act or omission of the State or to any Person representing the State) of any of the provisions of this Contract or the Hydrocarbons Law;

(b)	a delay by the Contractor (not attributable to any act or omission of the State or to any Person representing the State) in making any payment owed to the State that exceeds three (:3) months;

(c)	the suspension of Development works on a Field for six (6) consecutive months, except when such suspension (i) has been approved by the Ministry in advance, or (ii) is due to an act or omission on the part of the State or of any Person representing the State, or (iii) is as a result of Force Majeure,

(d)	when, after the commencement of Production of a Field, its exploitation is suspended for at least three (3) consecutive months, without the prior permission of the Ministry, except when such suspension (i) is due to an act or omission on the part of the State or of a Person representing the State, or (ii) is as a result of Force Majeure;

(e)	when the Contractor fails to comply within the prescribed time period with an arbitration award in accordance with the provisions of Article ‎26, and the failure to comply is not attributable to any act or omission of the State or to any Person representing the State;

---

(f)	when a Well is drilled to an objective beyond the vertical planes of the limits of the Contract Area without the prior consent of the Ministry;

(g)	a breach of this Contract arising out of activities which are illegal or contrary to national or international law (not attributable to any act or omission of the State or to any Person representing the State);

(h)	under the provisions of Article ‎2.3; or

(i)

when the Contractor is declared bankrupt, or in liquidation as a result of financial insolvency, or enters into judicial or financial arrangements on insolvency with its creditors generally, except when the Contractor can provide the State with a new financial guarantee that is acceptable to the Ministry in its sole discretion, and that guarantees the capacity of that Party to fulfill its obligations under this Contract.

21.2	Notice of Termination and Grace Period

21.2.1

The Ministry may declare this Contract terminated only after having served a formal notice on the Contractor, by registered mail, requesting it to remedy the situation or breach in question, and, if the situation or breach in question is capable of remedy, requesting it to remedy the same within five (5) Business Days from receipt of such notice regarding payments due under Article ‎21.1(b) or within three (3) months from receipt of such notice for all other situations or breaches capable of remedy. Otherwise the effective date of the termination of this Contract shall be date of receipt by the Contractor of the foregoing notice.

21.2.2	If the Contractor fails to comply with such notice within the prescribed time period or fails to show within such five (5) Business Days or three (3) month period that it has commenced and is promptly and diligently continuing to remedy the situation or breach in question, the Ministry may pronounce ipso jure the termination of this Contract.

21.3	Termination against one Party

22.1	Obligation to Unitize

22.2	Suspension of Obligations

---

23.1	Regulation of National Content.

(a)	before awarding a service contract, the Contractor shall notify the Ministry the need for such services;

(b)	the Ministry shall provide a list of national companies to the Contractor within fifteen (15) days of Contractor’s notice of the need for such services. The Contractor shall support the Ministry by including the national companies of the list the Contractor regards as competent in the bids required in the framework of this Contract;

(c)

When granting the contracts, the Contractor shall give preference to the national companies included in the list given by the Ministry according to Article ‎23.1(b), in agreement with the Decree 127/2004. Should the Contractor consider that such companies are not competent or not in compliance with Contractor’s compliance and financial requirements, the contract may be granted to a foreign company, according to Articles 12 and 13 of the Ministerial Order 1/2014;

(d)	The Contractor shall notify the foreign company winning the tender regarding the hire of services about the conditions specified in Article 23 (1) (c);

(e)	the Contractor shall send the Ministry, at the end of July and January of every calendar year, a list of the subcontractors that have provided services in Equatorial Guinea during the previous period;

(f)	in the contracts that imply service delivery or goods supply in Equatorial Guinea, the Contractor shall include clauses that make the subcontractors to abide by the specifications of the Ministerial Order 1/2014;

(g)	the Contractor shall organize workshops to make the national companies aware of the requirements demanded by the Operator in terms of service delivery;

(h)	the Contractor shall notify the Ministry, which in turn shall inform all the additional competent authorities, of the vacancies and new jobs to implement 51 the works in Equatorial Guinea;

---

(i)

at the beginning of the Operations of Development and Production, the Contractor shall hand over and agree a plan with the Ministry to hire national employees and empower them; this action shall include tasks and actions for their professional development to be carried out at the offices of the Operator in Dallas with the possibility of joining the Technical Team of Operations of Equatorial Guinea to reach the reasonable and feasible nationalization targets, and shall send updated information to the Ministry with regard to the implementation of such a plan at the end of July and January of each subsequent year; and

(j)	The Contractor shall send to the Ministry a description of the tools used to evaluate the national employees.

23.2	Employment and Empowerment of Equatoguinean Personnel

23.2.1

At the beginning of the Operations of Development and Production of the EG-21 Block, the Operator shall ensure priority of employment of Equatoguinean qualified personnel at all levels of its organization, according to the following table and on the basis of the competences and skills of the employees. For the purpose of this Article, the technicians proposed by the National Company will also be taken into account as long as they have the competences and experience required; such employees will join the technical team of the operator under the personnel coverage in secondment. The Operator shall empower or contribute to the training of the aforementioned personnel so that they acquire the competences and skills required to fill any vacancy, including the supervision positions, related to Petroleum Operations. However, the Operator will only have to hire the numbers of personnel needed to implement the Petroleum Operations in a cautious and profitable manner.

23.3	Preference to Equatoguinean Service Companies

---

23.4	Employment and Training of Equatoguineans

23.4.1

From the Effective Date, the Contractor shall ensure priority employment for adequately qualified Equatoguinean personnel in all levels of their organization, as the employee’s skill allows, and as provided for in Article 23,2.2, shall train or contribute in the training of such personnel to enable them to qualify for any position relating to Petroleum Operations. Expatriate personnel may only be employed if the Contractor and its subcontractors have exhausted all possibilities of recruiting adequately qualified Equatoguinean personnel in the required area of specialization.

23.4.2

During the term of this Contract, the Parties comprising the Contractor (other than the National Company), during the Exploration Period, shall spend one hundred thousand Dollars ($100,000) per Calendar Year, to provide a mutually agreed number of Ministry and National Company personnel with on-the-job training in the Contractor’s operations in Equatorial Guinea and overseas and/or practical training at institutions abroad, particularly in the areas of natural earth sciences, engineering, technology, accounting, economics and other related fields of oil and gas exploration and exploitation (“Job Training”). During the term of this Contract, the Parties comprising the Contractor (other than the National Company), during the Development and Production Period, shall spend three hundred thousand Dollars ($300,000) per Calendar Year, to provide Job Training.

23.4.3

Additionally, during the term of this Contract, the Parties comprising the Contractor (other than the National Company) shall transfer to the Ministry one hundred thousand Dollars ($100,000) per Calendar Year during the Exploration Period and shall transfer to the Ministry three hundred thousand Dollars ($300,000) per Calendar Year during the Development and Production Period, which the Ministry shall use at its sole discretion to educate and train Equatoguinean personnel selected by the Ministry at universities, colleges or other training institutions selected by the Ministry and for other general training and educational purposes (“Training Funds”).

23.5	Social Projects

---

23.6	National Technology Institute

23.7	National Database of the Ministry of Mines and Hydrocarbons

24.1	Relinquishment or Decommissioning

24.1.1

Subject to Article ‎2.5.2, the Contractor may at any time relinquish and/or abandon any portion of the Contract Area or any Well not included in a Field subject to having given three (3) months prior notice to the Ministry, provided that the Contractor shall have fulfilled all of its obligations under this Contract and that it has given the Ministry full details of the state of any reservoir and the facilities and equipment in such area in addition to any plans for the removal or dismantling of such facilities and equipment including all technical and financial information. All decommissioning operations must be undertaken in accordance with the Hydrocarbons Law.

24.1.2

The decommissioning of a Field by the Contractor and its corresponding decommissioning plan shall require the prior approval of the Ministry in accordance with the Hydrocarbons Law. The Contractor shall prepare and deliver to the Ministry a plan for the decommissioning of all Wells, facilities and equipment, the rehabilitation of the landscape and the continuation of Petroleum Operations, if applicable, in accordance with the Hydrocarbons Law.

24.1.3	Unless the Ministry elects to keep the facilities and equipment in order to continue Petroleum Operations in accordance with Article ‎24.3.3, the Contractor is obligated to fully decommission all Fields within the Contract Area.

24.2	Right of Ministry

---

24.3	Reserve Fund

24.3.1

In order to implement the decommissioning of a Field, the Contractor shall contribute to a reserve fund for the estimated decommissioning costs, (the Reserve Fund) in accordance with the Hydrocarbons Law and the approved decommissioning plan, and shall be included as a recoverable cost. As for the constitution of the Reserve Fund, it will begin from the Fifth (5) year from the first production at an international bank holding at least a Standard and Poor’s A- rating to be agreed by the Parties. All contributions mentioned will be deductible for tax purposes and will be considered as a cost of Petroleum Operations in the year in which they were contributed.

24.3.2	In the event that the total amount of the Reserve Fund is greater than the actual cost of decommissioning, the account balance shall be distributed between the State and the Contractor in accordance with Article ‎7.3. In the event that the amount of the Reserve Fund is less than the actual cost of decommissioning operations, the Contractor shall be liable for the remainder.

24.3.3

In the event that the Ministry elects to keep the facilities and equipment in order to continue Petroleum Operations after the withdrawal of the Contractor, the Reserve Fund so established together with the related interest shall be put at the Ministry’s disposal to cover the later decommissioning. The Contractor shall be released from any further decommissioning liability in respect of such facilities and equipment.

24.4	Continuing Operations

24.5	Protection of the Environment

25.1	Applicable Law

---

25.2	Change in Law

25.3	Business Standards

26.1	Dispute Resolution and Notification

26.1.1	In the event of any dispute, claim, conflict or controversy (a Dispute) between any of the Parties arising out of, or in relation to, this Contract, including any question regarding its breach, existence., validity or termination, the Parties shall take all reasonable measures to resolve such Dispute amicably.

26.1.2	If the relevant Parties have not reached an amicable agreement after three (3) months of the date of the notice of a Dispute by one Party to another, unless the Parties to the Dispute mutually agree to an extension, any Party to the Dispute may refer the Dispute for resolution by final and binding arbitration:

(a)	to the International Centre for the Settlement of Investment Disputes (the Centre) established by the Convention on the Settlement of Investment Disputes between States and Nationals of other States, done at Washington, March 18, 1965 (the ICSID Convention);

---

(b)	in accordance with the Arbitration Rules of the International Chamber of Commerce (ICC), if neither the Centre or the Additional Facility are available.

26.1.3

The Parties hereby consent to submit to the Centre any dispute arising out of or relating to this Contract for settlement by arbitration pursuant to the Rules of Arbitration of the Centre. The State and the National Company agrees not to make, and hereby irrevocably waives, in relation to any Dispute, whether relating to acts of a sovereign or governmental nature or otherwise, all claims of immunity (sovereign or otherwise) by it or on its behalf from the jurisdiction of, and from the enforcement of any arbitral award rendered by, an arbitral tribunal constituted pursuant to this Contract as well as all claims of immunity from the service of process or the jurisdiction of any court in aid of the jurisdiction of such arbitral tribunal or in connection with the enforcement of any such award.

26.2	Seat and Language of Arbitration

26.3	Number and Identity of Arbitrators

(a)

The claimant and the respondent shall, within thirty (30) days from the day on which a request for arbitration has been submitted, appoint an arbitrator each (and if there is more than one claimant or more than one ( I) respondent, then the claimants and/or the respondents collectively shall each appoint a single arbitrator), by giving notice in writing of such appointment to the Secretary-General of ICSID and the other Party or Parties to the Dispute.

(b)

If either the claimant or the respondent fails to comply with the time limit in the preceding paragraph, the Chairman of the Administrative Council of ICSID shall appoint the arbitrator or arbitrators that have not yet been appointed, at the request of either the claimant or the respondent and after consulting the claimant and the respondent as far as possible. The Chairman of the Administrative Council of ICSID shall give notice in writing of such appointment or appointments to the Secretary-General of ICSID and the claimant and the respondent.

(c)	The two (2) arbitrators so appointed shall, within thirty (30) days of their appointment agree upon the person to be appointed as the President of the tribunal, and give notice of such appointment to the Secretary-General of ICSID and the claimant and the respondent.

(d)	If the two (2) arbitrators fail to agree upon the person of the President of the tribunal, the Chairman of the Administrative Council of ICSID shall appoint the President, at the request of either the claimant or the respondent, and after consulting the claimant and the respondent as far as possible. The Chairman of

---

26.4	Rules of Arbitration

26.5	Binding Nature of Arbitration

26.6	Costs of Arbitration

26.7	Payment of Awards

27.1	Non-fulfillment of Obligations

27.2	Definition of Force Majeure

---

(a)	it has the effect of temporarily or permanently preventing a Party from performing its obligations under this Contract;

(b)	it is unforeseeable, unavoidable and beyond the control of the Party which declares Force Majeure; and

(c)	it is not a result of the negligence or willful misconduct of the Party which declares Force Majeure.

27.3	Notification of Force Majeure

27.4	Continuation of Obligations

27.5	Cessation of Force Majeure

27.6	Continuation of Force Majeure

---

28.1	Assistance of Ministry

28.1.1

The Ministry shall facilitate, within its authority and in accordance with the rules and procedures in effect in Equatorial Guinea, the performance of the Contractor’s activities by granting it all permits, licenses and access rights that are reasonably necessary for the purposes of Petroleum Operations, and by making available to it all necessary services with respect to Petroleum Operations in Equatorial Guinea.

28.1.2	The Ministry shall also facilitate and assist the Contractor in obtaining all permits, licenses or rights not directly related to Petroleum Operations, but which the Contractor may reasonably require for the purposes of fulfilling its obligations under this Contract.

28.2	Notices and Other Communications

---

29.1	Amendments

29.2	No Partnership

29.3	Hydrocarbons Law

29.4	Entire Agreement

29.5	No Waiver

---

29.6	No Conflict

29.6.1	Each of the Parties constituting the Contractor undertakes that it shall avoid any conflict of interest between its own interests (including the interests of Affiliates) and the interests of the other Parties in connection with activities contemplated under this Contract

29.6.2	In the event of any conflict between the main body of this Contract and its Annexes, the main body shall prevail. In the event of any conflict between this Contract and the Hydrocarbons Law, the Hydrocarbons Law shall prevail,

30.1	The table of contents and headings used in this Contract are for convenience only and shall not be construed as having any substantive significance or as indicating that all of the provisions of this Contract relating to any topic are to be found in any particular Article.

30.2	Reference to the singular includes a reference to the plural and vice versa.

30.3	Reference to any gender includes a reference to all other genders.

30.4	Unless otherwise provided, reference to an Article or an Annex means an Article or Annex of this Contract.

30.5	The words include and including shall mean include or including without limiting the generality of the description preceding such term and are used in an illustrative sense and not a limiting sense.

30.6	Any reference to a Person shall be construed as including a reference to its successors, permitted transferees and permitted assignees.

30.7	Any reference to a statute or enactment shall be construed as a reference to such statute or enactment as it may have been or may be amended or re-enacted from time to time, or any subordinate legislation made or legal norm created, or may from time to time be done, under such statute or enactment.

30.8	Reference to this Contract or part thereof or any other document shall be construed as a reference to the same as it may be amended, supplemented, novated or replaced from time to time.

---

---

---

---

---

---

1.1	PURPOSE

(a)	classifying and defining Petroleum Operations Costs; and

(b)	prescribing the manner of preparing and submitting the financial statements of the Contractor in accordance with accounting principles in effect in Equatorial Guinea.

1.2	INTERPRETATION

1.3	ACCOUNTING RECORDS AND REPORTS

1.3.1

In accordance with the provisions of Article ‎16.1 of the Contract, the Contractor shall maintain in its office in Equatorial Guinea original, complete, true and correct accounts, books and records of the Production and disposition of Hydrocarbons, and all costs and expenses under the Contract, as well as all other records and data necessary or proper for the settlement of accounts in accordance with the laws of Equatorial Guinea, generally accepted accounting procedures and generally accepted practice in the international petroleum industry and pursuant to the chart of accounts agreed pursuant to Article ‎1.3.2 below.

1.3.2	Within sixty (60) days from the Effective Date, the Contractor shall submit to and discuss with the Ministry a proposed outline for the chart of accounts and the books, records and reports in accordance with generally accepted standards and consistent with normal petroleum industry practices and procedures.

---

1.3.3	In addition to the generality of the foregoing, the Contractor shall submit to the Ministry, at regular intervals, statements relating to the Petroleum Operations, including, but not limited to, the following:

(a)	monthly statement of Production;

(b)	quarterly statement of value of Production and pricing;

(c)	statement of Petroleum Operations Costs;

(d)	annual statement of Petroleum Operations Cost not yet recovered;

(e)	statement of Production sharing;

(f)	annual end-of-year statement;

(g)	Annual Budget tracking statement;

(h)	Annual statement of tangible goods subject to depreciation; and

(i)	Quarterly, the state of goods, materials and properties which are anticipated to be transferred to the State within three months of said report, due to the full recovery of its cost.

1.3.4	All reports and statements shall be prepared in accordance with the Contract, the laws of Equatorial Guinea and any regulations thereunder and in accordance with generally accepted practice of the international petroleum industry.

1.3.5	Within sixty (60) days after the Calendar Year, the Contractor shall submit to the Ministry the execution of the budgets as well as the annual accounts (the balance sheet, the cash flow statement and the income statement) and the schedule of amortizations, attaching for the report of internal audit for reliability of said information.

1.4	LANGUAGE AND UNIT OF ACCOUNT

1.5	VERIFICATION AND AUDIT RIGHTS OF THE STATE

1.5.1

When the Ministry exercises its right of audit under Article ‎16.3 of the Contract, it shall provide notice to the Contractor, at least sixty (60) days in advance regarding such audit, which shall take place during normal business hours. The Contractor shall make available to the Ministry all accounts, books, records, invoices, cash vouchers, debit notes, price lists or any other documentation relating to Petroleum Operations. Furthermore, the auditors shall have the right, in connection with such audit, to visit and inspect at

---

1.5.2	Any audit exceptions shall be made in writing and notified to the Contractor within ninety (90) days of completion of the corresponding audit. Failure to give such exception by the Ministry shall be deemed to be an acknowledgement of the accuracy of the Contractor’s books and accounts.

1.5.3	If the Contractor fails to respond to any notice of exception under Article ‎1.5.2 within ninety (90) days of receipt of such notice, the results of the audit will be considered valid and accepted by the Contractor. After the said period of time the Ministry’s exception shall prevail.

1.5.4	Any adjustments resulting from an audit shall be promptly applied to the Contractor’s accounts; any adjustments to payments due shall also be effected promptly.

1.5.5	If the Contractor and the Ministry are unable to reach final agreement on the proposed audit adjustments they shall resolve the dispute in accordance with the provisions of Article ‎16.3.3 of the Contract.

1.6	CURRENCY EXCHANGE RATES

1.7	ACCOUNTING BASIS

---

1.8	REVIEW OF ACCOUNTING PROCEDURE

---

2.1	EXPLORATION COSTS

(a)	aerial, geophysical, geochemical, palaeontological, geological, topographical and seismic surveys and studies and their interpretation;

(b)	core hole drilling;

(c)	any labor, materials, supplies, and services used in drilling Exploration Wells and Appraisal Wells;

(d)	any facilities used solely in support of the purposes described in paragraphs ‎(a), ‎(b) and ‎(c) above, including access roads and acquired geological and geophysical data, all separately identified;

(e)	any other cost incurred in the Exploration and Appraisal of Hydrocarbons after the Effective Date but prior to the date of approval of a Development and Production Plan with respect to the relevant Field and not covered under Articles ‎2.2, ‎2.3 and ‎2.4 below; and

(f)	the costs incurred prior to the Effective Date which both Parties have agreed to, including the cost of the Sea Bed Logging, 2D, 3D speculative data and other costs of complying with Article ‎3.1.1 of the Contract.

2.2	DEVELOPMENT AND PRODUCTION COSTS

(a)	Wells defined as Development Wells for purposes of producing from a Commercial Field, whether such Wells turn out to be dry or productive by nature, and drilling Wells for the injection of water or gas to enhance Hydrocarbon recovery;

(b)	completing Wells by way of installation of casing or equipment or otherwise after a Well has been drilled for the purpose of bringing the Well into use as a

---

(c)	transportation and installation of tank storage facilities, pipelines, flow lines, production and treatment units, wellhead equipment, subsurface equipment, enhanced recovery systems, offshore platforms, export terminals and piers, harbors and related facilities, and access roads for development activities; and

(d)	engineering and design studies for facilities referred to under paragraph (c) above.

2.3	OPERATING OR PRODUCTION COSTS

2.4	COMMERCIALIZATION COSTS

2.5	ALLOCATION OF GENERAL AND ADMINISTRATIVE COSTS

(a)	Prior to First Oil (commercial Production):

(b)	After First Oil (first commercial Production):

---

2.6	Except as provided otherwise in the Contract to the contrary, approved Petroleum Operation Costs described in Articles ‎2.1 to ‎2.5 of this Accounting Procedure, will be recoverable by the Contractor in accordance with Article ‎7.2 of the Contract.

2.7	INTEREST RECOVERY

2.8	NON RECOVERABLE COSTS

(a)	signature bonus paid by the Contractor;

(b)	any Discovery bonus paid by the Contractor;

(c)	any Production bonus paid by the Contractor;

(d)	annual surface rentals paid to the State;

(e)	interests on loans as provided by Article ‎2.7 of this Accounting Procedure;

(f)	any unapproved over-expenditures that exceed the limits of Article ‎4.4 of this Contract;

(g)	any payments made to the State for failure to fulfill the minimum Exploration work obligations pursuant to Article ‎3 of the Contract;

(h)	any fines and sanctions incurred for infringing the laws and regulations of Equatorial Guinea;

(i)	any donation to the State or other similar expenses unless otherwise agreed;

(i)	the State’s audit and inspection expenses incurred as a result of the absence of original documents in the Contractor’s offices in Equatorial Guinea;

(j)	any sanction imposed on the Contractor under the Hydrocarbons Law or otherwise; and

(k)	costs related to the assignment from the Contractor to any of its Affiliates or other Persons.

2.9	INSURANCE AND CLAIMS

---

2.10	INVENTORY ACCOUNTING

---

3.1	CAPITAL COSTS

3.1.1	TANGIBLE CAPITAL COSTS

(a)

for Development Wells: the costs of completion materials and equipment (downhole equipment, fixed production tubing, production packers, valves, wellhead equipment, subsoil elevation equipment, pumping rods, surface pumps, discharge cables, collection equipment, delivery lines, fixed Christmas tree and valves, oil and gas pipelines, fixed materials and equipment, piers, anchors, buoys, Hydrocarbon treatment facilities and equipment, secondary recovery systems, reinjection compressors, water pumps and their pipes);

(b)	for any purchase of goods and equipment: the actual cost of the asset (excluding transportation), the cost for construction of platforms outside of the Contract Area, the cost of power generators and facilities onshore;

(c)	for the purchase of moveable goods: automotive machinery (vehicles, tractors, tow trucks, tools, flatbeds, etc.), construction machinery and equipment (furniture, office equipment and other equipment);

(d)	for construction purposes: the building cost of housing and residential facilities, offices, warehouses, workshops, power plants, storage facilities and access roads for development activities, the cost of piers and anchors, treatment plants and machinery, secondary recovery systems, gas plants and steam systems; and

(e)	drilling and Production facilities and platforms.

3.1.2	INTANGIBLE CAPITAL COSTS

---

(a)	costs of aerial magnetic, aerial gravimetric, topographic, geological, geophysical and geochemical surveys, interpreting and reinterpreting technical data costs, Exploration labor and similar costs;

(b)

costs of drilling Exploration Wells and Appraisal Wells: all costs of services rendered for drilling Exploration and Appraisal Wells, chemical products, rental costs (for helicopters, flatbeds, ships, tow barges, etc.) transportation, storage facilities, accommodation, technical services for mud control, Well geology, directional Well drilling, divers, mud control, well geology testing, cementing and similar costs;

(c)

costs of drilling Development Wells, such as rig and platform mobilization and demobilization, rig and platform drilling contracts and leases, platform and infrastructure installations labor, fuel, water, conductors, drill bits, drill pipe, equipment rental, production testing equipment, Christmas tree for production testing, mud and its components, chemical products, rental costs (for helicopters, flatbeds, ships, tow barges, etc.), transportation, storage facilities, accommodation, technical services for mud control, Well placement geology, directional drilling Wells, divers, production and appraisal tests, completion and supervision;

(d)	costs of acquisition or purchase of goods and services such as transportation costs, operation costs, equipment checks, costs of on-site installation, maintenance costs and fuel costs;

(e)	general services (electric logs, vertical seismic profile (VSP), mud control, core sampling, Well geology tests, cementing, production tests, supervision and similar costs), delineation services, any heavy engineering machinery leasing, and other expenses incurred abroad;

(f)	materials, reconstruction of access and other roads, and other intangible goods for construction, public services and construction support; and

(g)	other Exploration Costs, support or temporary facilities with a useful life of less than one (1) Year.

3.2	DEPRECIATION OF TANGIBLE CAPITAL COSTS

3.3	NON-CAPITAL COSTS

---

3.3.1	CONTRACTOR’S DEDUCTIBLE COSTS

(a)	general and administrative expenses (personnel salaries, insurance premiums, labor, technical office services and other similar services, material services, public relations, expenses abroad related with Petroleum Operations in Equatorial Guinea, determined in accordance with Article ‎2.5 of this Accounting Procedure);

(b)	Intangible Capital Costs;

(c)

labor, materials and services indirectly used in operations of Wells, feasibility studies for production of Crude Oil or Natural Gas fields, secondary recovery operations, storage operations, handling, transportation and delivery, Natural Gas Well operations, transportation and delivery of Natural Gas, services for Natural Gas treatment, environmental protection measures and any other maintenance activities indirectly related to Petroleum Operations.

(d)	Contributions to the Reserve Fund.

3.3.2	CONTRACTOR’S NON-DEDUCTIBLE COSTS

(a)	signature bonus paid by the Contractor;

(b)	any Discovery bonus paid by the Contractor;

(c)	any Production bonus paid by the Contractor;

(d)	annual surface rentals paid to the State;

(e)	any unapproved over-expenditures that exceed the limits of Article ‎4.4 of the Contract;

(f)	interest on loans as provided in Article ‎2.7 of this Accounting Procedure;

(g)	any payment made to the State for failure to fulfill the minimum Exploration work obligations pursuant to Article ‎3 of the Contract;

(h)	any fines and sanctions incurred for infringing the laws and regulations of Equatorial Guinea;

(i)	sums that exceed the set limits with regard to the depreciation of tangible assets;

(j)	any donation to the State and other similar expenses unless otherwise agreed;

---

(k)	the State’s audit and inspection expenses incurred by the absence of original documents in the office of the Contractor in Equatorial Guinea;

(l)	any sanction imposed on the Contractor under the Hydrocarbons Law or otherwise; and

(m)	costs relating to the assignment from the Contractor to any of its Affiliates or other Persons.

---

4.1	PRACTICAL DETERMINATION OF THE TAXABLE BASE

(1)	Annual gross revenues

(2)	Royalties

(3)	State’s share of net Hydrocarbons

(4)	State’s right to a share of Production based on its carried or paid interest in the Contract

(5)	Deductible intangible capital costs

(6)	Depreciation of tangible capital costs

(7)	Deductible non-capital costs

(8)	Losses authorized and certified by the Ministry, corresponding to previous Calendar Years

4.2	PRINCIPLE OF TAX TREATMENT OF A FINANCIAL YEAR DEFICIT

---

5.1	RECORDS

5.2	INVENTORIES DURING INITIAL EXPLORATION OPERATIONS

5.3	INVENTORIES IN SUBSEQUENT OPERATIONS

---

6.1	FINANCIAL STATEMENTS AND TAX REPORTS TO BE SUBMITTED BY CONTRACTOR

(a)	depreciation details;

(b)	fixed assets information;

(c)	Production and export statistics and details;

(d)	all tax related reports provided for in the Contract; and

(e)	detailed information on deductible expenses for estimating tax liabilities in accordance with the Tax Law.

6.2	PRODUCTION STATEMENT

(a)	the quantity of Crude Oil produced and saved;

(b)	the quality characteristics of such Crude Oil produced and saved;

(c)	the quantity of Natural Gas produced and saved;

(d)	the quality characteristics of such Natural Gas produced and saved;

(e)	the quantities of Crude Oil and Natural Gas used for the purposes of carrying out drilling and Production operations;

(f)	the quantities of Crude Oil and Natural Gas unavoidably lost;

(g)	the quantities of Natural Gas flared and vented;

---

(h)	the size of Hydrocarbon stocks held at the beginning of the calendar month in question;

(i)	the size of any Hydrocarbon stocks held at the end of the calendar month in question;

(j)	the quantities of Natural Gas re-injected into the Hydrocarbon reservoir; and

(k)	the quantities of Hydrocarbons delivered and sold.

6.3	VALUE OF PRODUCTION AND PRICING STATEMENT

(a)	the quantities, prices and income received by the Contractor as a result of sales of Hydrocarbons to third parties during the Quarter in question;

(b)	the quantities, prices and income received by the Contractor as a result of sales of Hydrocarbons, other than sales to third parties, during the Quarter in question;

(c)	the value of any stocks of Hydrocarbons at the end of the Quarter preceding the Quarter in question;

(d)	the value of any stocks of Hydrocarbons at the end of the Quarter in question; and

(e)	the information available to the Contractor concerning the prices of competitive Crude Oils, insofar as required for the purposes of Article ‎10 of the Contract.

6.4	PETROLEUM OPERATIONS COSTS STATEMENT

6.4.1	Quarterly Statement

---

6.4.2	Annual Statement

(a)	Petroleum Operations Costs not yet recovered and carried forward from the previous Calendar Year, if any;

(b)	Petroleum Operations Costs for the Calendar Year in question;

(c)	the quantity and value of Hydrocarbon Production taken by the Contractor as Cost Recovery Oil under the provisions of Article ‎7.2 of the Contract for the Calendar Year in question; and

(d)	Petroleum Operations Costs not yet recovered at the end of the Calendar Year in question.

6.5	PRODUCTION SHARING STATEMENT

(a)	the value of all sales of Hydrocarbons made by the Contractor as from the Effective Date of the Contract up to the end of the previous Calendar Year;

(b)	the value of all sales of Hydrocarbons made by the Contractor during the Calendar Year in question;

(c)	the total of ‎(a) and ‎(b) above at the end of the Calendar Year in question;

(d)	the accumulated Petroleum Operations Costs as from the Effective Date of the Contract up to the end of the previous Calendar Year;

(e)	the Petroleum Operations Costs for the Calendar Year in question;

(f)	the total of ‎(d) and ‎(e) above at the end of the Calendar Year in question;

(g)	quantity and value of the ‘Contractor’s share in Hydrocarbons; and

---

(h)	quantity of State’s share of Hydrocarbons and its value if sold by the Contractor.

6.6	ANNUAL END-OF-YEAR STATEMENT

(a)	accounting conciliation of the expenses against the approved Annual Budget;

(b)	accounting conciliation of the expenses with the recoverable costs; and

(c)	accounting conciliation of the expenses with the deductible costs.

6.7	ANNUAL BUDGET STATEMENT

---

(1)	[THE GUARANTOR], a company organized and existing under the laws of [insert jurisdiction], and having its registered office at [insert address] (the Guarantor); and

(2)	THE REPUBLIC OF EQUATORIAL GUINEA (the State), represented for the purposes of this Guarantee by the Ministry of Mines and Hydrocarbons (the Ministry).

---

(b)	[insert amount] Dollars ($[insert amount]) during the Exploration Period, as may be extended in accordance with the Contract; and

(c)	[insert amount] Dollars ($[insert amount]) during the Development and Production period.

---

---

---

---

---

(1)	THE REPUBLIC OF EQUATORIAL GUINEA (hereinafter referred to as the State), represented for the purposes of this Contract by the Ministry of Mines and Hydrocarbons, represented for purposes of its execution by His Excellency Mr. Gabriel Mbaga OBIANG LIMA, the Minister;

(2)	GUINEA ECUATORIAL DE PETRÓLEOS (hereinafter referred to as the National Company), acting in its own name and legal right for the purposes of this Contract and represented for purposes of its execution by Mr. Antonio OBURU ONDO, in his capacity as Director General; and

(3)

KOSMOS ENERGY EQUATORIAL GUINEA, a company organized and existing under the laws of the Cayman Islands, under company registration number WT-269135 and having its registered office at do Circumference (Cayman), P.O. Box 32322, 4th Floor, Century Yard, Cricket Square, Elgin Avenue, George Town, Grand Cayman, KY1-1209, Cayman Islands (hereinafter referred to as Company), represented for the purposes of this Contract by Andrew G. Inglis, in his capacity as President.

(A)	WHEREAS, all Hydrocarbons existing within the territory of the Republic of Equatorial Guinea, as set forth in the Hydrocarbons Law, are national resources owned exclusively by the State;

(B)	WHEREAS, the State wishes to promote the development of Hydrocarbon deposits within the Contract Area and the Contractor desires to associate itself with the State with a view to accelerating the Development and Production of Hydrocarbons within the Contract Area;

(C)	WHEREAS, the Contractor has the financial ability, technical competence and professional skills necessary to carry out Petroleum Operations in accordance with this Contract and good oil field practices; and

(D)	WHEREAS, the Parties desire to enter into this Contract in accordance with the Hydrocarbons Law, which allows for agreements to be entered into between the State and foreign investors in the form of a production sharing contract, through direct negotiation or by international public tender.

---

1.1	Definitions

1.1.1	Accounting Procedure means the accounting procedure set forth in Annex C.

1.1.2	Affiliated Company or Affiliate of any specified Person means any other Person directly or indirectly Controlling or Controlled by or under direct or indirect common Control of such specified Person or other Person.

1.1.3	Annual Budget means the expenditure of the Contractor with respect to an Annual Work Program.

1.1.4	Annual Work Program means an itemized statement of the Petroleum Operations to be carried out in the Contract Area during a Calendar Year.

1.1.5	Appraisal Area means an area within the Contract Area encompassing the geographical extent of a Discovery that is subject to an Appraisal work program and corresponding budget in accordance with Article ‎5.2.

1.1.6	Appraisal Well means a Well drilled following a Discovery, with the objective of delimiting and mapping the reservoir, and also to estimate the quantity of recoverable Hydrocarbons.

1.1.7	Associated Natural Gas means all Natural Gas produced from a reservoir the predominant content of which is Crude Oil and which is separated from Crude Oil in accordance with generally accepted international petroleum industry practice, including free gas cap, but excluding any liquid Hydrocarbons extracted from such gas either by normal field separation, dehydration or in a gas plant.

1.1.8	Barrel means a quantity or unit of Crude Oil equal to 158.9874 liters (forty-two (42) United States gallons) at a temperature of fifteen point five six degrees (15.56°) Centigrade (sixty degrees (60°) Fahrenheit) and at one (1) atmosphere of pressure.

1.1.9	BEAC means Banco de los Estados de África Central (Bank of the States of Central Africa).

1.1.10	Book Value means the value at which the asset is carried on the balance sheet prepared in accordance with generally accepted accounting practices used in the international petroleum industry.

1.1.11	Business Day means a day on which the banks are generally open for business in Equatorial Guinea and Dallas, Texas.

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

---

1.1.13

Change in Law means, with respect to ‎Article 25, any change in the laws, decrees, regulations or standards of Equatorial Guinea, effective as of January 1, 2017, including with respect to any fiscal, taxes, Customs, or currency control, any change in the interpretation or application of, or in the customs and practices related to, such laws (the provisions of this Contract are deemed to conform to said interpretation and application from the date hereof) Decrees, regulations or rules of Equatorial Guinea and excludes all laws, decrees, regulations or standards which: (i) are related to health, safety, labor and the environment, (ii) are consistent with the international practices and standards of the oil and gas industry, and (iii) are applied on a non-discriminatory basis.

1.1.14	CIF has the meaning set out in the publication of the International Chamber of Commerce, INCOTERMS 2010.

1.1.15	Commercial Discovery means a Discovery that the Contractor has determined to be economically viable and so submits a Development and Production Plan for such Discovery for the approval of the Ministry.

1.1.16	Cost Recovery Oil has the meaning ascribed to it in Article ‎7.2.1.

1.1.17	Contractor means the Company and the National Company.

1.1.18	Contract means this production sharing contract, including its Recitals and Annexes.

1.1.19	Contract Year means a period of twelve (12) consecutive months according to the Gregorian calendar, counted from the Effective Date of this Contract or from the anniversary of such Effective Date.

1.1.20	Contract Area or Area means the geographic area within the territory of Equatorial Guinea, which is the subject of this Contract. Such Contract Area shall be described in Annex A and illustrated in Annex B, as it may be changed by relinquishments of the Contractor in accordance with this Contract.

1.1.21	Control, when used with respect to any specified Person, means the power to direct, administer and dictate policies of such Person through the ownership of a percentage of such Person’s equity sufficient to hold a majority of voting rights in an ordinary shareholders meeting. The terms Controlling and Controlled have meanings correlative to the foregoing.

1.1.22	Crude Oil means Hydrocarbons which are produced at the wellhead in a liquid state at atmospheric pressure including asphalt and ozokerites, and the liquid Hydrocarbons known as condensate and/or Natural Gas liquids obtained from Natural Gas by condensation or extraction through field separation units.

1.1.23	Dated Brent means a quote published daily in the Crude Oil Market Platts Bulletin that reflects the price of a North Sea Brent crude oil blend charge over a given period.

1.1.24	Development and Production Plan has the meaning ascribed to it in Article ‎5.5.1.

1.1.25	Delivery Point means that point located within the jurisdiction of Equatorial Guinea at which Hydrocarbons reach (i) the inlet flange at the FOB export 3 vessel, (ii) the loading facility metering station of a pipeline or (iii) such other point within the jurisdiction of Equatorial Guinea as may be agreed by the Parties.

---

1.1.26	Development and Production Area means an area within the Contract Area encompassing the geographical extent of a Commercial Discovery subject to a Development and Production Plan in accordance with Article ‎5.5.

1.1.27	Development and Production Costs means all costs, expenses and liabilities incurred by the Contractor in connection with Development and Production Operations in a Development and Production Area, excluding all Exploration Costs incurred in the Development and Production Area prior to the establishment of any Field, as determined in accordance with this Contract and the Hydrocarbons Law.

1.1.28	Development and Production Operations means all operations, other than Exploration Operations, conducted to facilitate the Development and Production of Hydrocarbons from the Contract Area to the Delivery Point, but excluding the refining and distribution of Hydrocarbon products.

1.1.29	Development Well means a Well, other than an Exploration Well or an Appraisal Well, drilled with the purpose of producing or improving the Production of Hydrocarbons, including Exploration Wells and Appraisal Wells completed as production or injection Wells.

1.1.30	Discovery means the finding by the Contractor of Hydrocarbons whose existence within the Contract Area was not known prior to the Effective Date or Hydrocarbons within the Contract Area which had not been declared a Commercial Discovery prior to the Effective Date and which are measurable by generally accepted international petroleum industry practices.

1.1.31	Dividend Withholding Tax has the meaning ascribed to it in Article ‎17.1.1.

1.1.32	Dollars or $ means the legal tender of the United States of America.

1.1.33	Effective Date means the date of receipt by the Contractor of the ratification by the State of this Contract pursuant to ‎Article 31.

1.1.34	Equatorial Guinea means the Republic of Equatorial Guinea.

1.1.35

Exploration Operations include geological and geophysical studies, aerial mapping, investigations relating to subsurface geology, stratigraphic test drilling, Exploration Wells, Appraisal Wells and related activities such as drill site preparation, surveying and all work connected therewith that is conducted in relation to the Exploration for and Appraisal of Hydrocarbon deposits in the Contract Area.

1.1.36	Exploration Costs means all costs, expenses and liabilities incurred by the Contractor in connection with Exploration Operations in the Contract Area, as determined in accordance with this Contract and the Hydrocarbons Law.

1.1.37	Extension Period means the First Extension Period and the Second Extension Period individually.

1.1.38	Exploration Periods means the Initial Exploration Period, an Extension Period and any further extensions thereof as set out in Article ‎2.2.1.

1.1.39	Exploration Well means any Well whose sole objective is to verify the existence of Hydrocarbons or to study all the necessary elements that might lead to a Discovery.

---

1.1.40

Field means a Discovery or an aggregation of Discoveries that is established as a Field in accordance with ‎Article 5 and can be developed commercially after taking into account all pertinent operational, economic and financial data collected during the performance of the Appraisal work program or otherwise, in accordance with generally accepted international petroleum practices. A Field may consist of a Hydrocarbon reservoir or multiple Hydrocarbon reservoirs all grouped on or related to the same individual geological structural or stratigraphic conditions, or areas that are not related but will be developed by using a single Development and Production Plan. All deposits superimposed, adjacent to or underlying a Field in the Contract Area shall form part of the said Field.

1.1.41	FOB has the meaning set out in the publication of the International Chamber of Commerce, INCOTERMS 2010.

1.1.42	First Extension Period means the period of one (1) Contract Year commencing immediately after the conclusion of the Initial Exploration Period.

1.1.43	First Exploration Sub-Period means the first three (3) Contract Year(s) of the Initial Exploration Period.

1.1.44	First Oil means, in respect of each Development and Production Area, the date on which production of Hydrocarbons under a program of regular production, lifting and sale commences.

1.1.45	Gross Revenues means the total income from sales of Total Disposable Production plus the equivalent monetary value of any other disposal of Total Disposable Production from the Contract Area during any Calendar Year.

1.1.46	Hydrocarbons means all natural organic substances composed of carbon and hydrogen, including Crude Oil and Natural Gas that may be found and extracted from, or otherwise produced and saved from the Contract Area.

1.1.47	Hydrocarbons Law means Law No. 8/2006 dated 3 November 2006 of Equatorial Guinea, and any law that amends it or replaces it.

1.1.48	Initial Exploration Period means a period of five (5) Contract Years from the Effective Date, subdivided into two sub-periods of three (3) Contract Years for the First Exploration Sub-Period and two (2) Contract Years for the Second Exploration Sub-Period.

1.1.49	Joint Operating Agreement or JOA means the joint operating agreement that regulates the internal relations of the Parties comprising the Contractor for the conduct of Petroleum Operations in the Contract Area,

1.1.50

LIBOR means the interest rate at which Dollar deposits of six (6) months duration are offered in the London Inter Bank Market, as published in the Financial Times of London. The applicable LIBOR rate for each month or part thereof within an applicable interest period shall be the interest rate published in the Financial Times of London on the Last Business Day of the immediately preceding calendar month. If no such rate is quoted in the Financial Times of London during a period of five (5) consecutive Business Days, another rate (for example, the rate quoted in the Wall Street Journal) chosen by mutual agreement between the Ministry and the Contractor will apply.

---

1.1.51	Market Price means the FOB price for Crude Oil calculated in accordance with ‎Article 10.

1.1.52

Material Contract means a contract with a value greater than five hundred thousand Dollars ($500,000) with respect to Exploration Operations or to one million Dollars ($1,000,000) in respect of Development Operations or Production Operations with (i) a Operator Affiliate, when the contract has not been previously and specifically approved in an Annual Budget as a contract to be carried out by an Affiliate or (ii) a non-Affiliate of the Operator. In the event that a law or regulation establishes a value higher than that stipulated in this definition for the supervision of contracts by the State, this definition will be amended to reflect the new higher limit.

1.1.53	Maximum Efficient Production Rate means the maximum efficient production rate of Hydrocarbons from a Field, that does not damage reservoir formations and does not cause excessive decline or loss of reservoir pressure in accordance with good oil field practice and as agreed in accordance with Article ‎6.4.

1.1.54	Member State of CEMAC means a country that is a member of the Central African Economic and Monetary Community.

1.1.55	Member State of the OHADA means a country that is a member of the Organization for the Harmonization of Commercial Law in Africa.

1.1.56	Minimum Retention means that the Operator and its Affiliates shall maintain a minimum deposit amount. This amount shall be measured annually and per Calendar Year, at one or more banks chosen by the Operator and operating in Equatorial Guinea. The amounts will be as follows:

(a)	From the effective date until the approval of the first Development and Production Plan, a deposit amount equivalent to ten per cent (10 %) of the Annual Budget applicable to such Calendar Year;

(b)	From the approval of the first Development and Production Plan, and until First Oil, a deposit amount equivalent to point five per cent (0.5 %) of the Annual Budget applicable to such Calendar Year; and

(c)	From First Oil until the end of Operations,, a deposit amount equivalent to a five per cent (5 %) of the Annual Budget applicable to such Calendar Year; provided that

(d)	If, at any time, a later Development and Production Plan is approved and should this Plan require a development operation, the deposit amount required shall return to a point five per cent (0.5 %) of the Annual Budget applicable to such Calendar Year, until the year following the year during which the development operations foreseen in such Development and Production Plan cease to exist.

1.1.57	Minimum Work Program has the meaning ascribed to it in Article ‎3.1.

1.1.58	Ministry means the Ministry of Mines and Hydrocarbons of Equatorial Guinea, the entity responsible for supervising Petroleum Operations in coordination with other Government bodies within the respective areas of their competence, and any successor.

---

1.1.59	National Company for the purposes of this Contract, means Equatorial Guinea of Petroleum (GEPetrol), as a national oil company of Equatorial Guinea; or any successor state company.

1.1.60	National Company’s Participation Interest means the Participation Interest of the National Company as set forth in Article ‎1.3.

1.1.61	Natural Gas means those Hydrocarbons that, at atmospheric conditions of temperature and pressure, are in a gaseous state including dry gas, wet gas and residual gas remaining after extraction, treatment, processing, or separation of liquid Hydrocarbons from wet gas, as well as gas or gases produced in association with liquid or gaseous Hydrocarbons.

1.1.62	Net Crude Oil has the meaning ascribed to it in Article ‎7.3.

1.1.63	Net Natural Gas has the meaning ascribed to in Article ‎13.3.5.

1.1.64	Parties or Party means the parties or a party to this Contract, as the context may require.

1.1.65	Participation Interest means for each Party comprising the Contractor, the undivided percentage share of such Party in the rights and obligations under this Contract, as is specified in Article ‎1.3.

1.1.66	Person means any individual, firm, company, corporation, society, trust, foundation, government, state or agency of the state or any association or partnership (whether or not having separate legal personality) or two or more of these.

1.1.67

Petroleum Operations means all operations related to Exploration, Development, Production, transportation, storage, conservation, decommissioning, sale and/or other disposal of Hydrocarbons from the Contract Area to the Delivery Point and any other work or activities necessary or ancillary to such operations; these operations and activities shall be carried out in accordance with this Contract and the Hydrocarbons Law and shall not include transport outside of Equatorial Guinea.

1.1.68	Petroleum Operations Costs means Exploration Costs and/or Development and Production Costs (as the context may require) incurred by the Contractor in the carrying out of Petroleum Operations, as determined in accordance with this Contractor and the Accounting Procedure,

1.1.69	Petroleum Regulations means all regulations promulgated by the Ministry pursuant to the Hydrocarbons Law.

1.1.70	Platts means Platts Crude Oil Marketwire, or if Platts Crude Oil Marketwire ceases to be published then another similar daily international publication that lists benchmark crude oil prices and which is agreed at the time between the Parties.

1.1.71	Quarter means a period of three (3) consecutive months beginning on 1 January, 1 April, 1 July or 1 October and ending on 31 March, 30 June, 30 September or 31 December, respectively.

1.1.72	Reserve Fund has the meaning ascribed to it in Article ‎24.3.1.

---

1.1.73	Royalties means an entitlement of the State over Hydrocarbons produced and saved from the Contract Area, and not utilized in Petroleum Operations, based on percentages calculated as a function of the daily rate of the Total Disposable Production as determined in accordance with Article ‎7.1,

1.1.74	Second Extension Period) means the period of one (1) Contract Year commencing immediately after the end of the First Extension Period.

1.1.75	Second Exploration Sub-Period means the final two (2) Contract Year(s) of the Initial Exploration Period.

1.1.76	Taxes mean the coercive financial payments in accordance to the Tax Laws, that the State, local authorities and other public entities, demand in the exercise of their sovereign power. These taxes will be levied on each of the Parties comprising the Contractor and all other applicable Persons.

1.1.77	Tax Laws means Law No. 412004 dated 28 October 2004 of Equatorial Guinea, and Law No. 2/2007 dated 16 May 2007 of Equatorial Guinea, and any law that amends one or both of them or replaces one or both of them.

1.1.78	Transfer Fee has the meaning ascribed to in Article ‎17.2.1.

1.1.79	Total Disposable Production means all Hydrocarbons produced and saved from a Development and Production Area less the quantities used for Petroleum Operations.

1.1.80	Unassociated Natural Gas means all gaseous Hydrocarbons produced from Natural Gas reservoirs, and includes wet gas, dry gas and residual gas remaining after the extraction of liquid Hydrocarbons from wet gas.

1.1.81	Well means any opening in the ground or seabed made or being made by drilling or boring, or in any other manner, for the purpose of exploring and/oi discovering, evaluating or producing Crude Oil or Natural Gas, or for the injection of any fluid or gas into an underground formation other than a seismic hole.

1.1.82	Withholding Tax Waiver has the meaning ascribed to it in Article ‎17.1.1.

1.2	Scope

1.2.1	This Contract is a production sharing contract awarded pursuant to Chapter IV of the Hydrocarbons Law. In accordance with the provisions of this Contract and the Hydrocarbons Law, the Ministry shall be responsible for supervising Petroleum Operations in the Contact Areas.

1.2.2	The State grants to the Contractor the sole and exclusive right and charge of conducting all Petroleum Operations in the Contract Area during the term of this Contract. In consideration of this, the Contractor shall:

(a)	be responsible to the State as an independent contractor, for the execution of the Petroleum Operations in accordance with the provisions of this Contract and the Hydrocarbons Law;

(b)	provide all funds, machinery, equipment, technology and personnel prudent and necessary to conduct Petroleum Operations; and

---

(c)	diligently, with due regard to good oil field practice, perform at its exclusive responsibility and risk all investments and contractual obligations necessary for conducting Petroleum Operations in accordance with this Contract.

1.2.3	All Petroleum Operations Costs shall be recoverable and deductible for tax purposes in the manner set forth in this Contract and the Hydrocarbons Law.

1.2.4	During the term of this Contract, the total Production achieved as a consequence of Petroleum Operations shall be shared between the Parties in accordance with ‎Article 7.

1.3	Participation Interests

2.1	Initial Exploration Period

2.1.1	Upon the fulfillment by the Contractor of its Exploration obligations set forth in Article ‎3.1.1 with respect to the First Exploration Sub-Period, the Contractor may elect to enter the Second Exploration Sub-Period.

2.1.2

To elect to enter the Second Exploration Sub-Period, the Contractor shall file a request with the Ministry at least two (2) months prior to the expiry of the First Exploration Sub-Period. The Ministry shall not unreasonably withhold or delay the granting of such request; provided that the Contractor has complied with all of its obligations in the First Exploration Sub-Period and shall not be otherwise in breach of this Contract.

2.2	Extension Periods

2.2.1	Upon the fulfillment by the Contractor of its Exploration obligations set forth in Articles ‎3.1.1 and ‎3.1.2 with respect to the Initial Exploration Period, the Contractor may request up to two (2) extensions of one (1) year each of the Initial Exploration Period.

2.2.2	For each Extension Period, the Contractor shall file a request with the Ministry at least two (2) months prior to the expiry of the Initial Exploration Period, or as the case may be, the First Extension Period. The Ministry shall not unreasonably withhold or delay the granting of such Extension Period; provided that the Contractor

---

2.2.3	Each request for an Extension Period shall be accompanied by a map specifying the Contract Area proposed to be retained by the Contractor, along with a report specifying any work performed in the proposed relinquished area since the Effective Date and the results obtained therefrom.

2.2.4

If upon expiry of the Initial Exploration Period, or of any Extension Period, any Appraisal work program with respect to a Discovery is still under progress or an Exploration Well is still under progress, the Contractor shall be entitled to an additional extension of the then current Exploration Period necessary to complete the work in progress. Furthermore, where Appraisal work has not yet been completed by the Contractor at the time at which a relinquishment contemplated by Article ‎2.4 is due, the requirement to relinquish shall be suspended until such time that the Contractor completes the said Appraisal work, commerciality is determined and, if applicable, the related establishment of a Field is approved or denied. Any additional extension granted under this Article ‎2.2.4 shall not exceed one (1) Contract Year, or such longer period as may be approved by the Ministry, plus the period of time established under ‎Article 5 necessary for the evaluation of a marketing plan, the preparation of a Development and Production Plan and the Ministry’s response.

2.2.5

In the event additional time is needed to complete said Appraisal work as set out in Article ‎2.2.4, the Contractor shall file a request for an extension with the Ministry at least two (2) months prior to the expiry of the current Initial Exploration Period or Extension Period, as applicable. In the event additional time is needed to complete an Exploration Well still under progress, the current Initial Exploration Period or Extension Period, as applicable, upon notification to the Ministry, will be extended automatically for such time necessary to complete said Exploration Well and an additional thirty (30) days to allow for the time to deliver the notice of Discovery as required in Article ‎5.1.

2.3	Termination

(a)	not to extend the Initial Exploration Period (or not to enter the Second Exploration Sub-Period) and no Field has been established during such period; or

(b)	to extend the Initial Exploration Period and no Field has been established during an Extension Period or any additional extension thereof,

2.4	Mandatory Relinquishments

2.4.1

The Contractor must relinquish to the State thirty percent (30%) of the initial surface area of the Contract Area by the end of the Initial Exploration Period, twenty-five percent (25%) of the remaining area by the end of the First Extension Period, and the remainder of the Contract Area by the end of the Second Extension Period, or at the end of the Initial Exploration Period or the First Extension Period, if no further extension is requested by the Contractor. To determine the area or areas which the

---

(a)	areas designated as an Appraisal Area;

(b)	Development and Production Areas;

(c)	areas for which the approval of a Development and Production Plan is pending, until finally decided;

(d)	the area of any Field, including any Field which may be subject to unitization pursuant to ‎Article 22; and

(e)	any area reserved for a possible Unassociated Natural Gas Appraisal in relation to which the Contractor is engaged in discussions with the Ministry in accordance with Article ‎13.1.

2.4.2	Upon expiry of the applicable final extension period indicated in Article ‎2.2, and subject to the provisions of Article ‎2.2.4, the Contractor shall relinquish the remainder of the Contract Area, with the exception of:

(a)	Development and Production Areas;

(b)	those areas for which an application for a Development and Production Area is pending, until finally decided;

(c)	the area of any Field, including any Field which may be subject to unitization pursuant to ‎Article 22; and

(d)	any area reserved for a possible Unassociated Natural Gas Appraisal in relation to which the Contractor is engaged in discussions with the Ministry in accordance with ‎Article 13.

2.5	Voluntary Relinquishments

2.5.1	Subject to the Contractor’s obligations under ‎Article 24 and the Hydrocarbons Law, the Contractor may at any time notify the Ministry upon three (3) months prior notice that it relinquishes all of its rights over all or any part of the Contract Area.

2.5.2	In no event shall any voluntary relinquishment by the Contractor of rights over all or any part of the Contract Area reduce the Exploration obligations of the Contractor set forth in ‎Article 3.

2.6	Involuntary Relinquishments

2.6.1

Should the Contractor, during the First Exploration Sub-Period (as may be extended), (i) be unable to fulfill its Minimum Work Program pursuant to Article ‎3.1.1(a) or (ii) be unable fulfill its Minimum Work Program pursuant to Article ‎3.1.1(b), excluding for reasons of Force Majeure or acts or failure to act by the State, including failure to deliver the data package referenced in Article ‎3.1.1(b), then the Contractor will relinquish all its rights on the whole of the Contract Area at the end of the First Exploration Sub-Period (as may be extended).

---

2.7	Relinquishments Generally

2.7.1	No relinquishment made in accordance with Articles ‎2.4 or ‎2.5 shall relieve the Contractor from its obligation to pay surface rentals accrued or make payments due and payable as a result of Petroleum Operations conducted up to the date of relinquishment.

2.7.2

The Contractor shall, in accordance with good oil field practice, propose the geographic location of the portion of the Contract Area that it proposes to retain, and which shall have a continuous geometric shape going from North to South and East to West delimited as a minimum by one minute (1’) of latitude or longitude or by natural boundaries and such area shall also be subject to the approval of the Ministry and shall be deemed approved after sixty (60) days.

3.1	Minimum Work Program

3.1.1	During the First Exploration Sub-Period, the Contractor must:

(a)	acquire, process, and interpret 1,200 square kilometers of new 3D seismic data; and

(b)	acquire all existing data packages (both seismic and well) over the Area for two million one hundred ten thousand Dollars ($2,110,000). All costs of data acquisition shall be cost recoverable.

3.1.2	During the Second Exploration Sub-Period, the Contractor must drill a minimum of one (1) Exploration Well to a minimum depth of the deepest target interval in the approved well program. The minimum expenditure for this period shall be thirty million Dollars ($30,000,000).

3.1.3	if the Contractor elects to enter the First Extension Period, the Contractor must perform technical work on geological and geophysical studies and surveys. The minimum expenditure for this period shall be seven hundred thousand Dollars ($700,000).

3.1.4	If the Contractor elects to enter the Second Extension Period, the Contractor must drill a minimum of one (1) Exploration Well to a minimum depth of the deepest target interval in the approved well program. The minimum expenditure for this period shall be thirty million Dollars ($30,000,000).

3.1.5	However, if the Contractor has performed work exceeding the Minimum Work Program required of it under any of Articles ‎3.1.1, ‎3.1.2 or ‎3.1.3, then the excess work, including Wells, is carried over to the next Sub-Period or Extension Period, and shall be deducted from the Minimum Work Program and the minimum expenditure for such next Sub-Period or Extension Period.

---

3.1.6	If the Contractor fulfills the Minimum Work Program (as set out in Articles ‎3.1.1, ‎3.1.2, ‎3.1.3, and ‎3.1.4) as applicable for each such Sub-Period and Extension Period, then the Contractor shall be deemed to have satisfied the minimum expenditure for each such Sub-Period and Extension Period, as applicable.

3.2	Minimum Depth of Wells

3.2.1	Each Exploration Well set forth above must be drilled to the minimum depth specified above in Article ‎3.1.2 or ‎3.1.4, as the case may be, or to a lesser depth if authorized by the Ministry in accordance with this Article or if discontinuing drilling is justified by one of the following reasons:

(a)	the economic basement is encountered at a depth less than the stipulated minimum contractual depth;

(b)	continued drilling is clearly dangerous because of abnormal pressure in the formation;

(c)	rock formations are encountered, the hardness of which makes it impracticable to continue drilling with appropriate equipment; or

(d)	Hydrocarbon bearing formations are encountered that require the installation of protective casings which excludes the possibility of reaching the minimum contractual depth.

3.2.2	For the purposes of Article ‎3.2.1, economic basement means any stratum in and below which the geological structure or physical characteristics of the rock sequence do not have the properties necessary for the accumulation of Hydrocarbons in commercial quantities and which also reflects the maximum depth at which any accumulation of this type can be reasonably expected.

3.3	Cessation of Drilling

3.4	Substitute Wells

(a)	drill a substitute Exploration Well at the same or another location to be agreed with the Ministry; or

---

(b)	pay the Ministry an amount equal to the difference between thirty million Dollars ($30,000,000) and the amount of Exploration Costs actually spent in connection with such Exploration Well; and

(c)	such substitute well or payment per Articles ‎3.4(a) or ‎(b) shall be deemed to have fulfilled the Minimum Work Program obligations for the relevant Sub-Period or Extension Period.

3.5	Provision of Guarantee

3.6	Participation Interest of the National Company

4.1	Submission of Annual Work Program

4.2	Form and Approval of Annual Work Program

4.2.1

Each Annual Work Program and corresponding Annual Budget shall be broken down into the various Exploration Operations and, as applicable, the Appraisal operations for each Appraisal Area and the Development and Production Operations for each Development and Production Area. The Ministry may propose amendments or modifications to the Annual Work Program and corresponding Annual Budget, by giving notice to the Contractor and including reasons for such amendments or modifications, within sixty (60) days following receipt of such Annual Work

---

4.3	Conduct of Petroleum Operations

4.4	Overexpenditures

4.4.1

It is acknowledged by the Ministry and the Contractor that the technical results acquired as work progresses or the occurrence of certain unforeseen changes in circumstances may justify modifications to an approved Annual Work Program and corresponding Annual Budget. In such circumstances, the Contractor shall promptly notify the Ministry of the proposed modifications. Such modifications are subject to review and approval by the Ministry within sixty (60) days after receipt of such notice. Failure of the Ministry to approve or reject such proposed modifications within such sixty (60) day period shall be deemed to be an approval of such proposed modifications. Notwithstanding the foregoing and in no event shall the Contractor incur any line item expenditure which exceeds an approved Annual Budget line item by more than ten percent (10%), provided that the cumulative total of all overexpenditures for a Calendar Year shall not exceed five percent (5%) of the total approved Annual Budget without the prior approval of the Ministry; otherwise such excess expenditures shall not be recoverable as a Petroleum Operations Cost or deductible for tax purposes.

4.4.2	At such time that the Contractor reasonably believes that the limits of an Annual Budget will be exceeded, the Contractor shall promptly notify the Ministry and shall provide the Ministry with full details of such overexpenditures, including reasons therefor.

4.4.3	The limitations set out in this Article ‎4.4 shall be without prejudice to the Contractor’s right to make expenditures in the event of an emergency or accident requiring urgent action under Article ‎4.5.

---

4.4.4	Save as otherwise provided in Article ‎4.5, should the Contractor incur any expenditure whose program and budget has not been approved within an Annual Work Program and corresponding Annual Budget or any amendment thereto approved by the Ministry, then such expenditure shall not be recoverable by the Contractor as a Petroleum Operations Cost or be deductible for tax purposes.

4.5	Emergency or Accident

4.5.1

In the event of an emergency or accident requiring urgent action, the Contractor shall take all steps and measures as may be prudent and necessary in accordance with good oil field practice for the protection of its interests and those of the State and the property, life and health of other Persons, the environment and the safety of Petroleum Operations. The Contractor shall promptly inform the Ministry of such emergency or accident.

4.5.2

All of the related costs incurred by the Contractor in accordance with this Article ‎4.5 shall be recoverable as Petroleum Operations Costs in accordance with this Contract. Notwithstanding the foregoing, all costs incurred by the Contractor in the cleaning up of pollution or damage to the environment caused by the gross negligence or willful misconduct of the Contractor, its subcontractors or any Person acting on its or their behalf shall not be recoverable as a Petroleum Operations Cost.

5.1	Notification of Discovery

5.2	Appraisal Work Program

5.2.1

If the Contractor considers that the Discovery merits Appraisal it shall diligently submit to the Ministry a detailed Appraisal work program and corresponding budget no later than six (6) months following the date on which the Discovery was notified in accordance with Article ‎5.1. The Appraisal work program, corresponding budget and designated Appraisal Area are subject to the review and approval of the Ministry in accordance with the procedures set forth in ‎Article 4.

5.2.2

The draft Appraisal work program shall specify the estimated size of the Hydrocarbon reserves of the said Discovery, the area proposed to be designated as the Appraisal Area and shall include all seismic, drilling, testing and Appraisal operations necessary to carry out an appropriate Appraisal of the Discovery. The Contractor shall diligently undertake the approved Appraisal work program, it being understood that the provisions of Article ‎4.4 shall apply to such program.

5.2.3	The duration of the Appraisal work program shall not exceed twenty-four (24) months for Crude Oil and in the case of Natural Gas the duration of the Appraisal work program shall be determined in accordance with the provisions of ‎Article 13,

---

5.3	Submission of Appraisal Report

5.3.1

Within six (6) months following completion of the Appraisal work program and in any event no later than thirty (30) days prior to the expiry of the Initial Exploration Period, or the First Extension Period or the Second Extension Period, including any additional extension in accordance with the provisions of Article ‎2.2, as may be the case, the Contractor shall submit to the Ministry a detailed report giving all the technical and economic information associated with the Discovery so appraised and which shall confirm, in the Contractor’s opinion, whether such Discovery is a Commercial Discovery.

5.3.2	The above-referred report shall include geological and petrophysical characteristics of the Discovery, estimated geographical extent of the Discovery, results of the production tests yielded by the formation and the preliminary economic study with respect to the exploitation of the Discovery.

5.4	Determination of Commerciality

5.5	Submission and Approval of Development and Production Plan

5.5.1	If the Contractor deems the Discovery or aggregation of Discoveries to be a Field it shall submit for the approval of the Ministry a development and production plan (the Development and Production Plan) for such Discovery or aggregation of Discoveries within twelve (12) months following the remittance of the report referred to in Article ‎5.3.

5.5.2

The Ministry may propose amendments or modifications to the aforementioned Development and Production Plan, and also to the Development and Production Area subject to such Development and Production Plan, by notice to the Contractor within ninety (90) days following receipt of the relevant plan. Such notification shall set out the reasons for the amendments or modifications proposed by the Ministry. In such event the Ministry and the Contractor shall meet as soon as possible to review the proposed amendments or modifications of the Ministry and establish by mutual agreement the Development and Production Plan.

5.5.3

If (i) the Contractor and the Ministry do not reach a written agreement within one hundred eighty (180) days following the submission of amendments and modifications by the Ministry, or (ii) the Ministry notifies the Contractor that it does not approve the Development and Production Plan, within thirty (30) Business Days of the occurrence of either (i) or (ii) above, the Parties shall meet to assess the discrepancies in accordance with articles 49 and 50 of the Petroleum Regulations;

---

5.6	Modifications to Development and Production Plan

5.6.1

When the results obtained during Development and Production Operations require certain modifications to the Development and Production Plan, such plan may be modified using the same procedure provided for with respect to the initial approval thereof. Subject to Article ‎4.4, the Contractor may not incur any expenditure which exceeds the approved Development and Production Plan without the prior approval of the Ministry; if prior approval is not obtained, such excess expenditures will not be recoverable by the Contractor as Petroleum Operations Costs or deductible for tax purposes.

5.6.2	During a period of Development and Production, the Contractor may propose to the Ministry revisions to the Development and Production Plan at any time that additional Development and Production Operations are under consideration. Such revisions shall be submitted for approval by the Ministry, using the same procedure provided for with respect to the initial approval thereof.

5.7	Number of Fields

5.8	Extension of Field beyond Contract Area

5.8.1

If, during work performed after approval of a Development and Production Plan, it appears that the geographical extent of a Field is larger than the Development and Production Area designated pursuant to Article ‎5.5, the Ministry may grant the Contractor the additional area, on condition that it is included in the Contract Area in effect at that time, and provided that the Contractor provides supporting evidence of the existence of the additional area applied for.

5.8.2	In the event that a Field extends beyond the boundaries of the Contract Area as delimited at any particular time, the Ministry may require the Contractor to exploit such Field in association with the contractor of the adjacent area in accordance with ‎Article 22, the Hydrocarbons Law and generally accepted practice of the international petroleum industry.

5.8.3	When the area proposed to be unitized is not subject to any production sharing contract, the Ministry may grant the Contractor the additional area, on condition that it is included in the Contract Area in effect at that time, it being understood that any award of an additional area must be in accordance with the Hydrocarbons Law.

5.9	Commencement and Performance of Development and Production Operations

---

5.9.1	The Contractor shall commence Development and Production Operations within six(6) months from the date of approval of the Development and Production Plan and shall pursue such operations diligently.

5.9.2	The Contractor undertakes to perform all Development and Production Operations in accordance with generally accepted practice of the international petroleum industry, this Contract and the Hydrocarbons Law.

5.10	Duration of Operations

5.10.1	The duration of the Development and Production period during which the Contractor is authorized to exploit a Field is twenty-five (25) Years from the date of approval of the Development and Production Plan related to such Field.

5.11	Risk and Expense of Contractor

5.12	Mandatory Relinquishment

(a)	has not submitted, in accordance with Article ‎5.2, an Appraisal work program and corresponding budget with respect to such Discovery within six (6) months following the date on which such Discovery has been notified to the Ministry; or

(b)	subject to Article ‎13.1 regarding Unassociated Natural Gas, does not establish the Discovery as a Field within one (1) Year after completion of Appraisal work with respect to such Discovery.

5.13	Future Operations

---

5.14	Available Facilities

6.1	Obligations of Contractor

6.2	Joint Operating Agreement

6.3	Conduct of Petroleum Operations

6.4	Maximum Efficient Production Rate

---

6.5	Working Conditions

6.6	Discovery of other Minerals

6.7	Award of Contracts

6.7.1	In all the Material Contracts, the Contractor shall:

(a)	call a bid for the contract.

(b)	give preference to the national companies the Contractor thinks that are qualified;

(c)	before awarding a Material Contract, notify and inform the Ministry about the intention of the Contractor to present an offer for such contract;

(d)	include the national companies that have been included in a list provided by the Ministry and that the Contractor regard as competent, in the list of bids for such Material Contract;

(e)	include in the list of bids, any qualified Person the Ministry suggests to be included;

(f)	finish the bid process within a reasonable period of time;

(g)	consider and analyze the submitted offers;

---

(h)	draft and send to the Ministry a competitive analysis of the offers submitted including the Contractor’s recommendation in terms of the Person that will be awarded with the contract, the underlying reasons and the technical, commercial and contractual conditions to be agreed;

(i)	obtain the Ministry’s approval, which will be regarded as awarded if there is no response to an approval application thirty (30) days after since the reception of the written application; and

(j)	Provide the Ministry with a final copy of the signed contract.

6.7.2	Should the Contractor imports and/or use any service, material, equipment, consumables and other goods from a country other than Equatorial Guinea, aware of contravention of this Article or Article ‎23.1, or otherwise signs a contract aware of contravention of such Articles, their costs shall not he Petroleum Operational Costs and they shall not be recoverable costs by the Contractor.

6.8	Inspection of Petroleum Operations

6.8.1

All Petroleum Operations may be inspected and audited by the Ministry at such intervals as the Ministry deems necessary. The duly commissioned representatives of the Ministry shall have the right, among others, to monitor Petroleum Operations and inspect all equipment, facilities and materials relating to Petroleum Operations, provided that any such inspection shall not unduly delay or impede Petroleum Operations. The representatives of the Ministry inspecting and monitoring Petroleum Operations shall comply with the safety standards of the Contractor.

6.8.2	For the purposes of permitting the exercise of the above-mentioned rights, the Contractor shall provide reasonable assistance to the representatives of the Ministry, including transportation and accommodation, as set forth in Article ‎6.23.

6.8.3	All costs directly related to the technical inspection, verification and audit of Petroleum Operations or otherwise in connection with the exercise of the Ministry’s rights under this Contract or the performance of the Contractor’s obligations shall be borne by the Contractor and are recoverable as Petroleum Operations Costs in accordance with this Contract, including:

(a)	outbound and return travel expenses;

(b)	local transportation, as necessary, when there is no transportation available under Article ‎6.8.2;

(c)	accommodation, when such accommodation is necessary to perform the official duties and is not provided under Article ‎6.8.2; and

(d)	per diems, which shall be adjusted in accordance with such amounts assigned to the ranking of each agent of the Ministry as published in the general budget law of the State approved for such Calendar Year, applicable to all

---

6.9	Provision of Information to Ministry

6.9.1

The Contractor shall keep the Ministry fully informed on the performance and status of Petroleum Operations at reasonable intervals and as required under this Contract and of any emergencies or accidents that may have occurred during such operations. Furthermore, the Contractor shall provide the Ministry with all documentation and information that is required to be provided under this Contract and the Hydrocarbons Law and as may otherwise be requested by the Ministry from time to time.

6.9.2	The Contractor shall keep the Ministry informed on a daily basis of the volumes of Hydrocarbons produced from the Contract Area.

6.10	Production of Energy for Own Use

6.11	Standard of Equipment

6.12	Care of Contractor and the Environment

6.12.1	The Contractor shall take all prudent and necessary steps in accordance with generally accepted practice of the international petroleum industry, the Hydrocarbons Law and this Contract to:

(a)	prevent pollution and protect the environment and living resources;

(b)	ensure that any Hydrocarbons discovered or produced in the Contract Area are handled in a manner that is safe for the environment;

(c)	avoid causing damage to overlying, adjacent and/or underlying formations trapping Hydrocarbon reserves;

---

(d)	prevent the ingress of water via Wells into strata containing Hydrocarbon reservoirs;

(e)	avoid causing damage to overlying, adjacent and/or underlying aquifers;

(f)	ensure that Petroleum Operations are carried out in accordance with this Contract, the Hydrocarbons Law and all other laws of Equatorial Guinea;

(g)	undertake the precautions necessary for the protection of maritime transportation and the fishing industry and to avoid contamination of the ocean and rivers;

(h)	drill and exploit each Field in such a manner that the interests of Equatorial Guinea are protected; and

(i)	ensure prompt, fair and full compensation for injury to Persons or property caused by the effects of Petroleum Operations.

6.12.2

If the Contractor’s actions result in any pollution or damage to the environment, any Person, living resources, property or otherwise, the Contractor shall immediately take all prudent and necessary measures to remedy such damages and effects thereof and/or any additional measures as may be directed by the Ministry. If the pollution or damage is caused as a result of the negligence or willful misconduct of the Contractor, its subcontractors or any Persons acting on its or their behalf all costs in relation thereof shall not be recoverable as a Petroleum Operations Cost. If the Contractor does not act promptly so as to control or clean-up any pollution or make good any damage caused, the Ministry may, after giving the Contractor reasonable notice in the circumstances, carry out the actions which are prudent or necessary hereunder and under Article ‎4.5 and all reasonable costs and expenses of such actions shall be borne by the Contractor and shall not be recoverable as a Petroleum Operations Cost.

6.12.3

If the Ministry determines that any works or installations built by the Contractor or any activity undertaken by the Contractor threatens the safety of any Persons or property or causes pollution or harm to the environment, the Ministry shall promptly advise the Contractor of its determination, and may require the Contractor to take all appropriate mitigating measures, consistent with generally accepted practice of the international petroleum industry, to repair any damage caused by the Contractor’s conduct or activities. Furthermore, if the Ministry deems it necessary, it may demand that the Contractor suspend totally or partially the affected Petroleum Operations until the Contractor has taken the appropriate mitigating measures or repaired any damage.

6.12.4

The Contractor shall undertake comprehensive environmental impact assessment studies prior to, during and after major drilling operations. The Contractor shall assume the costs of these studies and such costs shall be recoverable. This requirement is mandatory and the first study shall be presented to the Ministry before the start of the drilling of the first Well in the Contract Area. However, an environmental impact assessment must also be completed prior to undertaking any seismic work in any areas of particular environmental sensitivity specified by the State.

6.13	Re-injection and Flaring of Natural Gas

---

6.14	Design and Identification of Wells

6.14.1	The Contractor shall conform to the practices generally accepted in the international petroleum industry in the design and drilling of Wells, including their casing and cementation.

6.14.2	Each Well shall be identified by a name or number agreed with the Ministry, which shall be indicated on all maps, plans and other similar records produced by or on behalf of the Contractor.

6.15	Vertical Projection Wells

6.16	Notification of Commencement of Drilling

6.17	Construction of Facilities

6.18	Occupation of Land

6.18.1	In order to carry out Petroleum Operations, the Contractor shall have the right to:

---

(a)	subject to Articles ‎6.17 and ‎6.18.2, occupy the necessary land for the performance of Petroleum Operations and associated activities as set out in paragraphs ‎(b) and ‎(c) below, including lodging for personnel;

(b)

undertake or procure the undertaking of any infrastructure work necessary in normal technical and economic conditions for the carrying out of Petroleum Operations and associated activities such as transport, storage of equipment, materials and extracted substances, establishment of telecommunications equipment and communication lines necessary for the conduct of Petroleum Operations at installations located both offshore and onshore;

(c)	undertake or ensure the undertaking of works necessary for the supply of water to personnel and installation works in accordance with water supply regulations; and

(d)	extract and use or ensure the extraction and utilization of resources (other than Hydrocarbons) from the subsoil necessary for the activities stipulated in paragraphs ‎(a), ‎(b) and ‎(c) above in accordance with relevant regulations.

6.18.2	Occupation of land as mentioned in Article ‎6.18.1 shall become effective after the Ministry or other applicable governmental authority approves the request submitted by the Contractor indicating and detailing the location of such land and how the Contractor plans to use it, taking the following into consideration:

(a)	if the land belongs to the State, the State shall grant it to the Contractor for occupation and to build its fixed or temporary facilities during the term of this Contract for a fee and on terms to be agreed and such amount shall be considered a Petroleum Operations Cost;

(b)

if the land is private property by traditional or local right according to the Property Registry, then (i) if the occupation is merely temporary or transitory, or for right of way, the Contractor shall reach an agreement with the relevant property owner and the property owner shall reach an agreement with any occupant, tenant or possessor, with regard to the rental to be paid, and the resulting amounts shall be considered recoverable Petroleum Operations Costs, or (ii) if the occupation is permanent, the relevant owner and the Contractor shall reach an agreement regarding matters related to the property’s acquisition and such amounts shall be considered Petroleum Operations Costs;

(c)

if the Contractor and the relevant property owner or occupant, tenant or possessor do not reach an agreement regarding the matters mentioned in paragraph ‎(b) above, the Ministry shall act as a mediator between them and in the event that such mediation does not produce a resolution of the case the dispute shall be resolved by the courts of Equatorial Guinea unless recourse is had to the procedure described in paragraph ‎(d) below;

(d)	the State may proceed to expropriate the land, subject to the prior publication of a decree of compulsory expropriation followed by a fair and reasonable valuation of the land concerned by an expert valuator, In such event the Contractor shall compensate the expropriated property owner in accordance with the value determined by such expert valuator if the State has not done

---

(e)

the relinquishment, in whole or in part, of the Contract Area, will not affect the Contractor’s rights under Article ‎6.18.1 to carry out building works and construction of installations, provided that such works and installations are directly related to other activities of the Contractor in the remainder of the Contract Area, as in the case of partial relinquishment, and covered by other production sharing contracts.

6.19	Residence of Personnel

6.20	Assistance of Ministry

6.21	Opening of Branch Office

6.22	Premises

6.23	State Expenses

---

(a)	the actual expenses incurred for travel to the location outside of the Republic of Equatorial Guinea and for travel to return to the Republic of Equatorial Guinea and lodging of such employees or officials at the foreign location, and

(b)	to pay to the Ministry, on behalf of the State, for the per diem as provided in the 2017 Budget Law. amount equal to the following for each day such employee or official is out of the Republic of Equatorial Guinea in accordance with the request of CONTRACTOR;

(i)	As a consequence of the payment of the per diems noted above, Company shall not make any payments to or on behalf of any Government of Equatorial Guinea travelers in relation to meals or other incidental or miscellaneous costs incurred by such travelers during such travel, and all such costs shall be for the sole account of such travelers.

(ii)

The Parties agree that all payments made pursuant to this Section 6.23 by Company to the Ministry, on behalf of the State, and to the provider of services, shall be recoverable expenses under this Contract as Petroleum Operations Costs, The Parties further agree that in relation to all payments made pursuant to this Section 6.23, Company is neither seeking nor shall it/ gain any business or business advantage from the Ministry or the Government of the Republic of Equatorial Guinea as a result of making such payments.

7.1	Royalties

---

7.1.1	The Contractor shall pay Royalties to the State from the first day of Production based on the daily Total Disposable Production from a Development and Production Area. The calculation shall be determined according to the following table applicable for each tranche:

7.1.2	The percentage corresponding to the level of Production shall be applied directly. Thus, for example: for a Production level of ninety thousand (90,000) Barrels per day, fourteen point five percent (14.5%) would be applied and the Royalty would be thirteen thousand fifty (13,050) Barrels.

7.2	Cost Recovery Oil

7.2.1	After deducting Royalties, the Contractor shall be entitled to up to seventy percent (70%) of the Total Disposable Production remaining in any Calendar Year for recovery of its Petroleum Operations Costs (Cost Recovery Oil).

7.2.2	The value of the portion of Total Disposable Production assigned to the Contractor’s Petroleum Operations Costs recovered will be determined in accordance with ‎Article 10.

7.2.3	If, during any Calendar Year, the Petroleum Operations Costs not yet recovered by the Contractor in accordance with this Contract exceed the value of the maximum amount of available Cost Recovery Oil, the portion of Petroleum Operations Costs not recovered in the said Year will be carried forward to the following Calendar Year for recovery purposes.

7.3	Net Crude Oil

---

7.4	Delivery of State’s Entitlement

7.5	Price Obtained by Contractor

7.5.1

If, pursuant to Article ‎7.4, the State requires the Contractor to purchase its share of Crude Oil, the State shall advise the Contractor of its next scheduled shipment at least three (3) months in advance, and the Ministry and the Contractor shall come to a mutual agreement as to the terms and conditions of such sale and purchase. In the event that three (3) months advance notice is not given, or they do not reach an agreement as to the terms and conditions of the sale and purchase, the Contractor shall not be obliged to purchase said Crude Oil.

7.5.2

The Ministry shall be entitled to compare the price for its Crude Oil obtained from the Contractor with similar market quotations. In the event that it is shown that the price obtained from the Contractor differs substantially from the quotations in similar markets, the Ministry shall have the right to evaluate the Contractor’s sales and marketing operations and, if justified, cancel any sales agreement between the State and the Contractor, without prejudice to any claim that the State may have against the Contractor with respect to the matters under dispute.

7.6	Export of Entitlement

---

7.7	Title to Contractor’s Entitlement

8.1	Liability for Petroleum Operations Costs

8.2	Participation Interest of the National Company

8.2.1

The National Company’s Participation Interest will be carried and paid for in full by the other Parties comprising the Contractor (other than the National Company) in proportion to their respective Participation Interests (other than the National Company’s) through the Exploration Period. At approval of the Development and Production Plan, the National Company shall convert its carried Participation Interest into a full working Participation Interest in accordance with the Hydrocarbons Law. From that point on, the National Company shall be responsible for all its costs in respect of the area covered by the approved Development and Production Plan. For the avoidance of doubt, the National Company’s Participation Interest in respect of the remainder of the Contract Area shall continue to be carried and paid for by the Parties comprising the Contractor (other than the National Company) in proportion to their respective Participation Interests (not including the National Company’s) until such time as the National Company elects to convert its carried interest into a full working interest.

8.2.2

The costs, expenditures and obligations, including the costs incurred pursuant to Article ‎6.23, incurred by the Parties comprising the Contractor (other than the National Company) in relation to the National Company’s carried Participation Interest shall be recoverable by the Parties comprising the Contractor (other than the National Company) in accordance with the provisions of this Contract and the Hydrocarbons Law.

8.2.3	The Parties comprising the Contractor (other than the National Company) shall recover the costs and expenditures in relation to the National Company’s carried Participation Interest from fifty percent (50%) of the Hydrocarbons corresponding to the National Company’s total entitlement in accordance with Articles ‎7.2 and ‎7.3.

9.1	Payment of Taxes

---

9.2	Audit Rights

10.1	Market Price

10.1.1	The unit selling price of Crude Oil under this Contract shall be the FOB Market Price at the Delivery Point, expressed in Dollars per Barrel and calculated in accordance with this Article ‎10.1. A Market Price shall be established for each type of Crude Oil or Crude Oil blend in accordance with this Article ‎10.1.

10.1.2	The Market Price applicable to all liftings of Crude Oil sold to third Parties under market conditions during one Quarter shall be the agreed selling price, adjusted, as necessary, to reflect differentials in quality, gravity, quantity, delivery conditions and terms of payment.

10.1.3

Before the period in which a price for Crude Oil is quoted by Platts for the Field from where Crude Oil is sold, the Market Price applicable to all liftings of Crude Oil sold to a Contractor’s Affiliate and later sold to a third party, will be the value received under the Contract under market conditions with the said third party, adjusted, as necessary, to reflect differentials in quality, gravity, quantity, delivery conditions and terms of payment. Should there be no price quoted by Platts for the produced Crude Oil, the Contractor and the Ministry shall meet to establish a differential related to a crude marker quoted by Plans to reflect the differential in terms of quality and the commercial differentials, The meeting shall be held six months after the introduction in the market; all the Persons comprising the Contractor and participating in the marketing of Crude Oil during that period of six months, shall attend such meetings with the Ministry.

10.1.4

The Market Price applicable to all liftings of Crude Oil sold to a Contractor’s Affiliate after having set a quoted price during a Quarter will be calculated by summing up the average of high and low quotes for Dated Brent according to the data published in the five (5) consecutive issues of the Platts Bulletin for the Crude Oil Market (including all corrections) posterior to the lifting informed date and the differential average between the sold Crude Oil and the Dated Brent one as published in the Platts Crude for the period starting on the fifteenth day (15th) day and ends on the last day of the Month of the Load Commercialization (inclusive).

A=	average o the high and low quotes of Brent Dating according to the according to the data published in the five (5) consecutive issues of the Platts Bulletin for the Crude Oil Market (including all corrections) posterior to the lifting informed date.

---

B=	differential average between the quality of the sold Crude Oil and the Dated Brent as published in the Platts Crude for the period starting on the fifteenth day (15th) day and ends on the last day of the Month of the Load Commercialization (inclusive).

10.1.5	The Market Price applicable to all liftings of Crude Oil during one Quarter shall be equivalent to the weighted average of the prices obtained by the Parties comprising the Contractor, with the exception of the National Company, for all Crude Oil sold and valued in accordance with Articles‎10.1.2, ‎10.1.3 and ‎10.1.4.

10.1.6	The following transactions shall be excluded from the calculation of the Market Price:

a)	Sales between Crude Oil providers and the national market; and

b)	Sales in which the compensation is different from a payment in a freely convertible currency, and sales totally or partially conducted due to reasons different from common commercial incentives for Crude Oil Sales in the international market (such as exchange contracts).

10.2	Disagreement of Market Price

10.2.1

The Contractor and the Ministry shall agree the Market Price in accordance with this ‎Article 10; in the event that they are unable to agree on any matter concerning the Market Price of Crude Oil, either the Contractor or the Ministry may serve on the other a dispute notice. Within seven (7) days of the date of the dispute notice the Ministry shall establish a committee of two (2) Persons of which the Minister of Mines, Industry and Energy or his delegate will be the President and the other committee member will be a representative designated by the Contractor to represent it. The committee must meet and make a decision resolving any dispute under this ‎Article 10 within thirty (30) days of the date of the dispute notice. The committee shall unanimously decide the dispute.

10.2.2

In the event a unanimous decision is not reached by the committee within the aforementioned thirty (30) day period, the dispute shall be determined by an internationally recognized expert appointed by the International Chamber of Commerce in accordance with its Rules for Expertise (ICC Expertise Rules). The determination of the expert shall be final and binding on the Parties. The expert shall determine the Market Price in accordance with the provisions of this ‎Article 10 within twenty (20) days from the date of his appointment. The determination of the expert shall be final and binding upon the Parties, and, if should it not be complied with pursuant to Equatorial Guinea legislation, either Parties may refer the matter

---

10.2.3	Pending the determination of the Market Price for a Quarter, the Market Price provisionally applicable to a Quarter shall be the Market Price of the preceding Quarter. Any necessary adjustment shall be made no later than thirty (30) days after the determination of the Market Price for the Quarter in question.

10.3	Payment Deadline to the State of the Market Price should the Contractor Commercialize the State Crude Oil.

10.4	Audit of Market Price

11.1	Signature Bonus

11.2	Discovery Bonus

11.3	Production Bonuses

(a)	on the date of start Production of Crude Oil from a Development and Production Area, two million Dollars ($2,000,000);

---

(b)	two million Dollars ($2,000,000) after daily Production from a Development and Production Area first averages 20,000 Barrels per day for a period of sixty (60) consecutive days;

(c)	three million Dollars ($3,000,000) after daily Production from a Development and Production Area first averages 40,000 Barrels per day for a period of sixty (60) consecutive days;

(d)	five million Dollars ($5,000,000) after daily Production from a Development and Production Area first averages 60,000 Barrels per day for a period of sixty (60) consecutive days; and

(e)	six million Dollars ($6,000,000) after daily Production from a Development and Production Area first averages 120,000 Barrels per day for a period of sixty (60) consecutive days.

11.4	Surface Rentals

11.4.1	The Contractor shall pay to the State the following annual surface rentals:

(a)	zero point twenty five Dollars ($0.25) per hectare of the Contract Area annually, for each Calendar Year or part thereof, during the Initial Exploration Period, the Extension Periods or any extension thereof; or

(b)	two point five Dollars ($2.50) per hectare for each Development and Production Area, annually for each Calendar Year or part thereof, during the term of the relevant Development and Production period.

11.4.2

For the Year in which this Contract is signed, the surface rental set forth in Article ‎11.4.1(a) shall be prorated from the Effective Date through to 31 December of such Year and shall be paid within thirty (30) days after the Effective Date. For succeeding Years the surface rentals set forth in Article ‎11.4.1(a) and ‎(b) shall be paid in advance not less than thirty (30) days before the beginning of each Calendar Year.

11.4.3

Surface rentals shall be calculated based on the surface of the Contract Area and, where applicable, of a Development and Production Area occupied by the Contractor on the date of payment of such surface rentals. For the avoidance of doubt, this shall exclude any relinquished areas. In the event of relinquishments made during a Calendar Year, the Contractor shall have no right to be reimbursed for the surface rentals already paid.

---

12.1	Obligation to Supply

12.2	Notification from Ministry

13.1	Unassociated Natural Gas

13.1.1

In the event of an Unassociated Natural Gas Discovery, the Contractor shall comply with the provisions of Article ‎5.2. However, if the Appraisal work program presented by the Contractor following the Discovery of Unassociated Natural Gas has a duration exceeding that of the Initial Exploration Period or any of its extensions, the Contractor may request from the Ministry an extension of the relevant Exploration Period with respect to the Appraisal Area related to such Discovery for a period of up to four (4) Years starting from the expiry of the Initial Exploration Period or any of its Extension Periods, as appropriate. The Contractor shall request the aforementioned extension at least sixty (60) days prior to the expiry of the relevant period.

13.1.2	If the Contractor considers that the Unassociated Natural Gas Discovery does not warrant Appraisal or further Appraisal, in conformity with the provisions of Article ‎5.12, the Ministry may, with ninety (90) days’ advance notice, require the Contractor to relinquish all of its rights over the Appraisal Area encompassing such Discovery.

13.1.3	In the same manner, if after completion of the Appraisal work, the Contractor considers that the Unassociated Natural Gas Discovery is not commercial, the Ministry may, with ninety (90) days’ advance notice, require the Contractor to relinquish all of its rights over the Appraisal Area encompassing such Discovery.

13.1.4	In both the above cases the Contractor shall be deemed to have waived all its rights to the Hydrocarbons produced from such Unassociated Natural Gas Discovery, and

---

13.2	Associated Natural Gas

13.2.1

In the event that a Discovery of Crude Oil is considered to be a Commercial Discovery, the Contractor shall state in the report referred to in Article ‎5.3 whether it considers that the Production of Associated Natural Gas is likely to exceed the quantities necessary for the requirements of Petroleum Operations relating to the Production of Crude Oil (including re-injection operations), and whether it considers that such excess is capable of being produced in commercial quantities. In the event the Contractor has informed the Ministry of such an excess, the Ministry and the Contractor shall jointly assess the possible markets and uses for such excess of Associated Natural Gas, both on the local market and for export (including the possibility of joint marketing of their shares of Production of that excess of Associated Natural Gas in the event such excess would not otherwise be commercially exploitable), together with the means necessary for its marketing.

13.2.2

In the event the Ministry and the Contractor should decide that the Development of the excess Associated Natural Gas is justified, or in the event the Contractor should wish to develop and produce such excess, the Contractor shall indicate in the Development and Production Plan the additional facilities necessary for the Development and Production of such excess and its estimate of the costs related thereto. The Contractor shall then proceed with the Development and Production of such excess in accordance with the Development and Production Plan submitted and approved by the Ministry under Article ‎5.5. A similar procedure shall be applicable if the sale or marketing of Associated Natural Gas is agreed during the Production of a Field.

13.2.3	In the event the Contractor does not consider the exploitation of the excess Associated Natural Gas is justified and if the State at any time wishes to utilize it, the Ministry shall notify the Contractor of the State’s wish, in which event:

(a)	the Contractor shall put at the disposal of the State free of charge the Crude Oil and Associated Natural Gas separation facilities for all or part of such excess that the State wishes to utilize;

(b)	the State shall be responsible for the gathering, treatment, compression and transportation of such excess Associated Natural Gas from the receiving point at the Contractor’s facilities and for bearing any additional costs and liabilities related thereto; and

(c)	the construction of the facilities necessary for the operations referred to in paragraph ‎(b) above, together with the recovery of that excess by the State shall be carried out in accordance with generally accepted practice of the international petroleum industry.

13.2.4	In no event shall the Operations carried out by the State in relation to such Associated Natural Gas interfere with Petroleum Operations of the Contractor.

---

13.2.5

Any excess Associated Natural Gas not utilized in accordance with Articles ‎13.2.1, ‎13.2.2 and ‎13.2.3 shall be re-injected by the Contractor in accordance with Article ‎6.14. Flaring will be permitted only in accordance with the Hydrocarbons Law and is subject to the approval of the Ministry. The Contractor shall be permitted to flare Associated Natural Gas without the approval of the Ministry in the event of an emergency, provided that every effort is made to diminish and extinguish such flaring of Natural Gas as soon as possible. The Ministry has the right to offtake, free of charge, at the wellhead or gas oil separator all Natural Gas that would otherwise be re-injected or flared by the Contractor.

13.3	Provisions Common to Associated and Unassociated Natural Gas

13.3.1	The Contractor shall dispose of its share of the Production of Natural Gas in accordance with this Contract and the Hydrocarbons Law. The provisions of this Contract applicable to Crude Oil shall apply mutatis mutandis to Natural Gas unless otherwise specified herein.

13.3.2	The selling price for all Natural Gas to be sold in the domestic market shall be set by the Ministry in accordance with the Hydrocarbons Law. The selling price for all Natural Gas to be sold outside of the domestic market shall be as agreed between the Ministry and the Contractor. The Ministry and Contractor shall proceed in good faith to negotiate a gas sales agreement, if required.

13.3.3

For the purposes of Articles ‎7.3 and ‎11.3, the quantities of available Natural Gas after deduction of the quantities re-injected, flared or necessary for the conduct of Petroleum Operations shall be expressed in a number of Barrels of Crude Oil on a BTU equivalent energy content basis adjusted monthly by a commercially appropriate factor relating the price of Natural Gas with the price of Crude Oil in terms of the provisions of Article ‎10.3, unless otherwise agreed between the Ministry and the Contractor.

13.3.4	The provisions of Article ‎7.2 in respect of cost recovery shall apply mutatis mutandis to the Production of Natural Gas.

13.3.5	The quantity of Natural Gas produced and saved from the Contract Area which remains after the Contractor has taken the portion for the recovery of Petroleum Operations Costs pursuant to Article ‎13.3.4 shall be referred to as Net Natural Gas.

13.3.6	Subject to the Hydrocarbons Law, the Ministry and the Contractor hereby agree that, in the case of Natural Gas Production, they shall reach separate agreements and arrangements with respect to the sale and marketing of Natural Gas.

14.1	Importation of Goods, etcetera

14.1.1	In accordance with the stipulations of Articles 63 and 64 of the Hydrocarbons Law, the Contractor shall be permitted to import into Equatorial Guinea all the goods, materials, machinery, equipment and consumer goods directly necessary to properly carry out Petroleum Operations in its own name or in the name of its sub-contractors or other Persons acting on its or their behalf.

---

14.1.2	For the purpose of this Contract, the Contractor shall benefit from the following advantages:

(a)

All materials, products, machinery, equipment and tools necessary for Petroleum Operations, provided that these goods, which are exclusively destined and actually dedicated directly to Petroleum Operations and that are destined to be re-exported at the end of their use, will be treated as imported under the conditions stipulated in the Customs Code, the importation in compliance with the regulations of Temporary Admission (TA) or Temporary Imports (TI), either normal or special, whichever is the case for the Contractor, for its sub-contractors and Persons acting on its or their behalf, of all materials, products, machinery, equipment and tools necessary for Petroleum Operations; and

(b)

Admission with exemption from any tax and/or duty of all materials, products, machinery, equipment and tools totally used or consumed in Equatorial Guinea, exclusively and effectively devoted to Hydrocarbon prospecting, Exploration, Development, and Production Operations subject to this Contract. This exemption applies to imports directly made by the Contractor, its subcontractors and Persons acting on its behalf, on condition that a certificate of end use is issued.

14.1.3

Apart from the exemptions established in the above paragraphs of this ‎Article 14 and the items referred to in Article ‎14.1.4, which are waivers that may be granted by the Government according to the law, all goods, materials, products, machinery and equipment imported or exported by the Contractor shall be subject to taxes and/or duties, in accordance with the customs legislation in force in Equatorial Guinea.

14.1.4

The Contractor shall follow the procedures to obtain such waivers, according to the Decree 134/2015 of 2nd of November 2015. The Government shall grant those waivers in accordance with the law to import all goods, materials, machinery, equipment and consumer goods directly needed to implement such Petroleum Operations on behalf of the Contractor or on behalf of its subcontractors or other Persons acting on behalf of the Contractor or its subcontractors in such a way that the import of these items be free and exempt from all customs duties, taxes and fees different from charges resulting from the delivery of the services needed to comply with customs legislation.

14.2	Oil Export Rights

14.3	Export of Goods and Materials that have not been transferred to the State

---

14.4	Customs Documentation

14.5	Exclusion of Penalties and Fines related to Petroleum Operations Costs

14.6	Imports and Exports by Foreign Personnel

15.1	Exchange Control Laws

(a)	to retain or dispose of any proceeds outside of Equatorial Guinea including any proceeds from the sale of its or their share of Hydrocarbons;

(b)	to pay foreign subcontractors and expatriate employees of the Contractor, outside of Equatorial Guinea, after deduction of the relevant taxes in Equatorial Guinea. For this purpose, the Contractor may open and use freely bank accounts in Dollars or in other currencies in banks of its choice in Equatorial Guinea and abroad. Notwithstanding the foregoing, while this

---

(c)	to transfer such funds as the Contractor or its subcontractors shall have imported into Equatorial Guinea, or earned from Petroleum Operations, or from the proceeds of the sale or lease of goods or performance of services under this Contract;

(d)	to obtain abroad loans required for the performance of their activities under this Contract, provided that the Ministry shall have approved the terms of such loan, including the rate of interest and terms of repayment, whose approval shall not be unreasonably withheld or delayed);

(e)	to collect and maintain abroad all the funds acquired or borrowed abroad, and to freely dispose thereof, limited to the amounts that exceed the requirement of funds for their operations in Equatorial Guinea; and

(f)	free movement of funds owned by them according to the laws of Equatorial Guinea.

15.2	Report on Foreign Exchange Transactions

15.3	Freedom of Exchange

16.1	Maintenance of Records and Books

16.1.1	The Contractor shall at all times maintain at its offices in Equatorial Guinea the original records and books of Petroleum Operations in accordance with all applicable regulations and the Accounting Procedure.

16.1.2

All records and books shall be maintained in the Spanish and English languages and be denominated in Dollars, or such other currency as shall be requested by the Ministry from time to time. They shall be supported by detailed documents demonstrating the expenses and receipts of the Contractor under this Contract. Such records and books shall be used to determine the Contractor’s Gross Revenues, Petroleum Operations Costs and net profits, and to establish the Contractor’s Income

---

16.2	Submission of Accounts

16.3	Audit of Ministry

16.3.1

After notifying the Contractor, the Ministry may have experts of its choice or its own agents examine and audit any records and books relating to Petroleum Operations. The Ministry has a period of three (3) years from the date the Contractor submits to the Ministry such records and books in accordance with Article ‎16.2, to perform such examinations or audits with respect to the said Calendar Year and submit its objections to the Contractor for any contradictions or errors found during such examinations or audits.

16.3.2

The Contractor shall provide to the Persons designated by the Ministry any necessary assistance for the foregoing purpose and facilitate the performance of their duties. The Contractor shall bear all reasonable expenses incurred in such examination or audit, which shall be recoverable as Petroleum Operations Costs. However, any expenses incurred for the audit and inspection of accounting books and records outside of Equatorial Guinea due to the Contractor’s non-compliance with this ‎Article 16 shall be borne by the Contractor and will not be recoverable as a Petroleum Operations Cost or deductible for tax purposes.

16.3.3

In the event of a disagreement between the Ministry and the Contractor in relation to the results of any examination or audit, the dispute shall be determined by an internationally recognized expert appointed by the International Chamber of Commerce in accordance with its Rules for Expertise (ICC Expertise Rules). The determination of the expert shall be final and binding on the Parties. Unless otherwise determined by the expert, the costs and expenses of such expert shall be met proportionately by the Parties on a per capita basis and the Contractor’s share shall not be a Petroleum Operations Cost.

16.4	Currency and Account of Payments

16.4.1

All payments between the Parties under this Contract shall, unless otherwise agreed, be in Dollars, or such other currency as shall be requested by the Ministry from time to time. Subject to Article ‎16.4.2, when the receiving Party is the State, payments shall be made to the General Treasury of the State, and when the receiving Party is the Contractor, payments shall be made to a bank account designated by the Contractor and notified to the Ministry.

16.4.2	All payments to be made to the Ministry pursuant to Article ‎23.2.2 shall be made to such account as shall be notified) to the Contractor.

---

16.5	Timing and Overdue Payments

17.1	Transfer to Equatoguinean Affiliate

17.1.1	As to the withholding tax on dividends, pursuant to Article 237 of Law Number 4/2004 dated October 28, 2004, Regulating the Taxation System of the Republic of Equatorial Guinea (the “Dividend Withholding Tax”):

17.2	Assignment, Transfer, Change of Control

17.2.1

The assignment, transfer, or other disposition of the rights and/or obligations of a Party comprising the Contractor shall require the prior consent of the Ministry. Any request for authorization shall be accompanied by all information related to the assignment, transfer, or other disposition including all legal instruments, in final draft form, to be used to carry out the proposed transaction, the identity of all parties to the transaction, the estimated value of the transaction and whether the consideration is payable in kind, securities, cash or otherwise. Such assignment, transfer, or other disposition shall be subject to the payment of a non-recoverable, non-deductible fee (“Transfer Fee”) of (i) one percent (1%) of Book Value of the assignment, transfer, or disposition when such occurs during the Exploration Periods, and (ii) two percent (2%) of Book Value of the assignment, transfer, or disposition when such occurs during Development and Production Operations, and other non-monetary requirements stipulated in the authorization issued by the Ministry. The assignee and the assignor shall be jointly and severally liable for the payment of such Transfer Fee and for the fulfillment of any other requirements. If within ninety (90) days following notification to the Ministry of a proposed assignment

---

17.2.2	All assignees must:

(i)	have the technical and financial ability to meet its obligations under this Contract;

(ii)	in relation to the interest assigned, accept and assume all of the terms and conditions of this Contract, the Joint Operating Agreement and any other agreements relating to Petroleum Operations; and

(iii)	be an entity with which the Ministry and each of the Parties comprising the Contractor can legally do transactions.

17.2.3	All profits resulting from any assignment, transfer or other disposition of any rights and/or obligations under this Contract, regardless of the type and location of the transaction, shall be subject to taxation in conformity of the Tax Law of Equatorial Guinea.

17.2.4

Subject to Article 104 of the Hydrocarbon Law and Article 168 of the Petroleum Regulations, each and every one of the Parties comprising the Contractor shall have the right to sell, grant, hand over, transfer or dispose in any other manner all or part of their rights and interests in the Contract, subject to the prior written consent of the Ministry, which shall not be withheld or delayed with no justified reason:

(a)	To a wholly owned Affiliate;

(b)	To the beneficiary of the transfer as foreseen in Article ‎17.1;

(c)	To any of the other Parties comprising the Contractor; or

(d)	To third parties.

17.2.5	If there is an assignment or transfer all or part of their rights and interests in the Contract by Company to a third party, the third party assignee will purchase all existing data packages (both seismic and well) over the Area for one million five hundred thousand Dollars ($1,500,000).

17.3	Change of Control

---

17.4	Recourse to Third Party Funding

17.5	The National Company’s Right of Preemption

18.1	Liability and Indemnity

18.1.1

The Contractor shall indemnify, hold harmless and compensate any Person, including the State, for any damage or loss which the Contractor, its Affiliates, its subcontractors and their respective directors, officers, employees, agents or consultants and any other Person acting on its or their behalf may cause to such Person or their property in the conduct of Petroleum Operations. All costs incurred under this Article ‎18.1 caused by the negligence or willful misconduct of the Contractor, its Affiliates, its subcontractors or their respective directors, officers, employees, agents or consultants or any other Persons acting on its or their behalf shall not be cost recoverable as a Petroleum Operations Cost.

18.1.2

The Contractor shall assume all liability, and exempt the State from any liability, in respect of any and all claims, obligations, losses, expenses (including attorneys’ fees), damages or costs of any nature resulting from the violation of any intellectual property rights of any kind caused by the Contractor, its Affiliates or subcontractors as a result of or in relation to the conduct of Petroleum Operations, regardless of the nature of the violation or of the way in which it may occur.

18.2	Joint and Several Liability

18.3	Insurance

---

18.3.1

The Contractor shall obtain and, during the term of this Contract, maintain in full force and effect, for Petroleum Operations insurance of such type and in such amount as is customary and prudent in accordance with generally accepted practice of the international petroleum industry, and whose coverage terms and conditions shall be communicated to the Ministry within thirty (30) days after the Effective Date. The foregoing insurance shall, without prejudice to the generality of the foregoing provisions, cover:

(a)	any loss or damage to all assets used in Petroleum Operations;

(b)	pollution caused in the course of Petroleum Operations;

(c)	property loss or damage or bodily injury or death suffered by any Person in the course of Petroleum Operations;

(d)	the cost of removing wrecks and clean-up operations following an accident or upon decommissioning; and

(e)	the Contractor’s liability to its employees engaged in Petroleum Operations.

18.3.2	The Contractor shall require its subcontractors to carry insurance of such type and in such amount as is customary in accordance with generally accepted practice of the international petroleum industry.

18.3.3	The Contractor shall use all reasonable endeavors to place the insurance required under this ‎Article 18 with Equatoguinean insurance brokers and insurance companies.

19.1	Title and Use of Facilities, etcetera

19.1.1

The Contractor and the Ministry shall agree the mode and conditions of such use, subject to ensuring their maintenance in good condition and good working order, normal wear and tear excepted. In any case, upon termination, rescission or cancellation of this Contract, for any reason whatsoever, in relation to all or any part of the Contract Area, the ownership of said installations, facilities, goods, equipment, materials or land, and including those whose costs have not been fully recovered, and any other items acquired and used for Petroleum Operations shall become the sole property of the State and shall be conveyed directly to it.

19.1.2	Regardless of whether or not the Contractor has recovered the relevant costs in accordance with this Contract, the State is entitled to use the said facilities, goods, equipment, materials or land for its own purposes, provided that such use does not interfere with the Contractor’s Petroleum Operations.

---

19.1.3	Under no circumstances may the Contractor sell, assign, transfer or otherwise dispose of any such facilities, goods, equipment, materials or land to any other Persons.

19.1.4	The provisions of this Article ‎19.1 shall not apply to any leased equipment or to the Contractor’s equipment that is not charged to Petroleum Operations as a Petroleum Operations Cost.

19.1.5

If the Ministry does not wish to use any of the facilities, goods, equipment and materials referred to in this Article ‎19.1, it has the right to request the Contractor to remove them at the Contractor’s own expense, and the Contractor will carry out any decommissioning operations of the said facilities, goods, equipment and materials in accordance with this Contract and the Hydrocarbons Law, and based on the time frame and specified conditions in the approved decommissioning plan.

19.2	Ownership of Data

20.1	Disclosure of Confidential Information

20.1.1	The Parties agree that for the duration of this Contract, the terms hereof and all information relating to this Contract and Petroleum Operations shall be kept strictly confidential and may not be divulged by any Party without mutual consent, except:

(a)	to an Affiliated Company;

(b)	to any governmental agency, designated by the State or other entities or consultants of the Ministry;

(c)	to the extent that such data and information is required to be furnished in compliance with any applicable laws or regulations;

(d)	in conformity with the requirements of any stock exchange having jurisdiction over a Party;

---

(e)	where any data or information forms part of the public domain otherwise than a result of a breach of this Contract;

(f)	to employees, directors, officers, agents, advisors, consultants or subcontractors (both actual and potential) of a Party comprising the Contractor or an Affiliate;

(g)	to any company with a bona fide interest in the carrying out of a possible assignment; and

(h)	to any bank or financial establishment with which an entity of the Contractor solicits or obtains financing,

20.1.2	For an additional period of two (2) Years after the termination of this Contract, only the Parties comprising the Contractor (other than the National Company) shall be obliged to comply with the above stated requirements.

20.2	The Contractor’s Patents

20.3	Continuation of Obligations

20.4	Disclosure of Confidential Information by the State and Ministry

21.1	Termination by the State

(a)	a material breach by the Contractor (not attributable to any act or omission of the State or to any Person representing the State) of any of the provisions of this Contract or the Hydrocarbons Law;

---

(b)	a delay by the Contractor (not attributable to any act or omission of the State or to any Person representing the State) in making any payment owed to the State that exceeds three (3) months;

(c)	the suspension of Development works on a Field for six (6) consecutive months, except when such suspension (i) has been approved by the Ministry in advance, or (i) is due to an act or omission on the part of the State or of any Person representing the State, or (i) is as a result of Force Majeure,

(d)	when, after the commencement of Production of a Field, its exploitation is suspended for at least three (3) consecutive months, without the prior permission of the Ministry, except when such suspension (i) is due to an act or omission on the part of the State or of a Person representing the State, or (i) is as a result of Force Majeure;

(e)	when the Contractor fails to comply within the prescribed time period with an arbitration award in accordance with the provisions of ‎Article 26, and the failure to comply is not attributable to any act or omission of the State or to any Person representing the State;

(f)	when a Well is drilled to’ an objective beyond the vertical planes of the limits of the Contract Area without the prior consent of the Ministry;

(g)	a breach of this Contract arising out of activities which are illegal or contrary to national or international law (not attributable to any act or omission of the State or to any Person representing the State);

(h)	under the provisions of Article ‎2.3; or

(i)

when the Contractor is declared bankrupt, or in liquidation as a result of financial insolvency, or enters into judicial or financial arrangements on insolvency with its creditors generally, except when the Contractor can provide the State with a new financial guarantee that is acceptable to the Ministry in its sole discretion, and that guarantees the capacity of that Party to fulfill its obligations under this Contract.

21.2	Notice of Termination and Grace Period

21.2.1

The Ministry may declare this Contract terminated only after having served a formal notice on the Contractor, by registered mail, requesting it to remedy the situation or breach in question, and, if the situation or breach in question is capable of remedy, requesting it to remedy the same within five (5) Business Days from receipt of such notice regarding payments due under Article ‎21.1(b) or within three (3) months from receipt of such notice for all other situations or breaches capable of remedy. Otherwise the effective date of the termination of this Contract shall be date of receipt by the Contractor of the foregoing notice.

21.2.2	If the Contractor fails to comply with such notice within the prescribed time period or fails to show within such five (5) Business Days or three (3) month period that it has commenced and is promptly and diligently continuing to remedy the situation or breach in question, the Ministry may pronounce ipso jure the termination of this Contract.

21.3	Termination against one Party

---

22.1	Obligation to Unitize

22.2	Suspension of Obligations

23.1	Regulation of National Content

(a)	before awarding a service contract, the Contractor shall notify the Ministry the need for such services;

(b)	the Ministry shall provide a list of national companies to the Contractor within fifteen (15) days of Contractor’s notice of the need for such services. The Contractor shall support the Ministry by including the national companies of the list the Contractor regards as competent in the bids required in the framework of this Contract;

(c)

When granting the contracts, the Contractor shall give preference to the national companies included in the list given by the Ministry according to Article ‎23.1(b), in agreement with the Decree 127/2004. Should the Contractor consider that such companies are not competent or not in compliance with Contractor’s compliance and financial requirements, the contract may be granted to a foreign company, according to Articles 12 and ‎13 of the Ministerial Order 1/2014;

(d)	The Contractor shall notify the foreign company winning the tender regarding the hire of services about the conditions specified in Article ‎23.1(c);

---

(e)	the Contractor shall send the Ministry, at the end of July and January of every calendar year, a list of the subcontractors that have provided services in Equatorial Guinea during the previous period;

(f)	in the contracts that imply service delivery or goods supply in Equatorial Guinea, the Contractor shall include clauses that make the subcontractors to abide by the specifications of the Ministerial Order 1/2014;

(g)	the Contractor shall organize workshops to make the national companies aware of the requirements demanded by the Operator in terms of service delivery;

(h)	the Contractor shall notify the Ministry, which in turn shall inform all the additional competent authorities, of the vacancies and new jobs to implement the works in Equatorial Guinea;

(i)

at the beginning of the Operations of Development and Production, the Contractor shall hand over and agree a plan with the Ministry to hire national employees and empower them; this action shall include tasks and actions for their professional development to be carried out at the offices of the Operator in Dallas with the possibility of joining the Technical Team of Operations of Equatorial Guinea to reach the reasonable and feasible nationalization targets, and shall send updated information to the Ministry with regard to the implementation of such a plan at the end of July and January of each subsequent year; and

(j)	The Contractor shall send to the Ministry a description of the tools used to evaluate the national employees.

23.2	Employment and Empowerment of Equatoguinean Personnel

23.2.1

At the beginning of the Operations of Development and Production of the S Block, the Operator shall ensure priority of employment of Equatoguinean qualified personnel at all levels of its organization, according to the following table and on the basis of the competences and skills of the employees. For the purpose of this Article, the technicians proposed by the National Company will also be taken into account as long as they have the competences and experience required; such employees will join the technical team of the operator under the personnel coverage in secondment. The Operator shall empower or contribute to the training of the aforementioned personnel so that they acquire the competences and skills required to fill any vacancy, including the supervision positions, related to Petroleum Operations. However, the Operator will only have to hire the numbers of personnel needed to implement the Petroleum Operations in a cautious and profitable manner.

---

23.3	Preference to Equatoguinean Services

23.4	Employment and Training of Equatoguineans

23.4.1

From the Effective Date, the Contractor shall ensure priority employment for adequately qualified Equatoguinean personnel in all levels of their organization, as the employee’s skill allows, and as provided for in Article ‎23.2.2, shall train or contribute in the training of such personnel to enable them to qualify for any position relating to Petroleum Operations. Expatriate personnel may only be employed if the Contractor and its subcontractors have exhausted all possibilities of recruiting adequately qualified) Equatoguinean personnel in the required area of specialization.

23.4.2

During the term of this Contract, the Parties comprising the Contractor (other than the National Company), during the Exploration Period, shall spend one hundred thousand Dollars ($100,000) per Calendar Year, to provide a mutually agreed number of Ministry and National Company personnel with on-the-job training in the Contractor’s operations in Equatorial Guinea and overseas and/or practical training at institutions abroad, particularly in the areas of natural earth sciences, engineering, technology, accounting, economics and other related fields of oil and gas exploration and exploitation (“Job Training”). During the term of this Contract, the Parties comprising the Contractor (other than the National Company), during the Development and Production Period, shall spend three hundred thousand Dollars ($300,000) per Calendar Year, to provide Job Training.

23.4.3	Additionally, during the term of this Contract, the Parties comprising the Contractor (other than the National Company) shall transfer to the Ministry one hundred thousand Dollars ($100,000) per Calendar Year during the Exploration Period and

---

23.5	Social Projects

23.6	National Technology Institute

23.7	National Database of the Ministry of Mines and Hydrocarbons

24.1	Relinquishment or Decommissioning

---

24.1.1

Subject to Article ‎2.5.2, the Contractor may at any time relinquish and/or abandon any portion of the Contract Area or any Well not included in a Field subject to having given three (3) months prior notice to the Ministry, provided that the Contractor shall have fulfilled all of its obligations under this Contract and that it has given the Ministry full details of the state of any reservoir and the facilities and equipment in such area in addition to any plans for the removal or dismantling of such facilities and equipment including all technical and financial information. All decommissioning operations must be undertaken in accordance with the Hydrocarbons Law.

24.1.2

The decommissioning of a Field by the Contractor and its corresponding decommissioning plan shall require the prior approval of the Ministry in accordance with the Hydrocarbons Law. The Contractor shall prepare and deliver to the Ministry a plan for the decommissioning of all Wells, facilities and equipment, the rehabilitation of the landscape and the continuation of Petroleum Operations, if applicable, in accordance with the Hydrocarbons Law.

24.1.3	Unless the Ministry elects to keep the facilities and equipment in order to continue Petroleum Operations in accordance with Article ‎24.3.3, the Contractor is obligated to fully decommission all Fields within the Contract Area.

24.2	Right of Ministry

24.3	Reserve Fund

24.3.1

In order to implement the decommissioning of a Field, the Contractor shall contribute to a reserve fund for the estimated decommissioning costs, (the Reserve Fund) in accordance with the Hydrocarbons Law and the approved decommissioning plan, and shall be included as a recoverable cost. As for the constitution of the Reserve Fund, it will begin from the Fifth (5) year from the first production at an international bank holding at least a Standard and Poor’s A- rating to be agreed by the Parties. All contributions mentioned will be deductible for tax purposes and will be considered as a cost of Petroleum Operations in the year in which they were contributed.

24.3.2	In the event that the total amount of the Reserve Fund is greater than the actual cost of decommissioning, the account balance shall be distributed between the State and the Contractor in accordance with Article ‎7.3. In the event that the amount of the Reserve Fund is less than the actual cost of decommissioning operations, the Contractor shall be liable for the remainder.

24.3.3

In the event that the Ministry elects to keep the facilities and equipment in order to continue Petroleum Operations after the withdrawal of the Contractor, the Reserve Fund so established together with the related interest shall be put at the Ministry’s disposal to cover the later decommissioning. The Contractor shall be released from any further decommissioning liability in respect of such facilities and equipment.

---

24.4	Continuing Operations

24.5	Protection of the Environment

25.1	Applicable Law

25.2	Change in Law

25.3	Business Standards

---

26.1	Dispute Resolution and Notification

26.1.1	In the event of any dispute, claim, conflict or controversy (a Dispute) between any of the Parties arising out of, or in relation to, this Contract, including any question regarding its breach, existence, validity or termination, the Parties shall take all reasonable measures to resolve such Dispute amicably.

26.1.2	If the relevant Parties have not reached an amicable agreement after three (3) months of the date of the notice of a Dispute by one Party to another, unless the Parties to the Dispute mutually agree to an extension, any Party to the Dispute may refer the Dispute for resolution by final and binding arbitration:

(a)	to the International Centre for the Settlement of Investment Disputes (the Centre) established by the Convention on the Settlement of Investment Disputes between States and Nationals of other States, done at Washington, March 18, 1965 (the ICSID Convention);

(b)	to the Additional Facility of the Centre, if the Centre is not available; or

(c)	in accordance with the Arbitration Rules of the International Chamber of Commerce (ICC), if neither the Centre or the Additional Facility are available.

26.1.3

The Parties hereby consent to submit to the Centre any dispute arising out of or relating to this Contract for settlement by arbitration pursuant to the Rules of Arbitration of the Centre. The State and the National Company agrees not to make, and hereby irrevocably waives, in relation to any Dispute, whether relating to acts of a sovereign or governmental nature or otherwise, all claims of immunity (sovereign or otherwise) by it or on its behalf from the jurisdiction of, and from the enforcement of any arbitral award rendered by, an arbitral tribunal constituted pursuant to this Contract as well as all claims of immunity from the service of process or the jurisdiction of any court in aid of the jurisdiction of such arbitral tribunal or in connection with the enforcement of any such award.

26.2	Seat and Language of Arbitration

26.3	Number and Identity of Arbitrators

(a)	The claimant and the respondent shall, within thirty (30) days from the day on which a request for arbitration has been submitted, appoint an arbitrator each (and if there is more than one claimant or more than one (1) respondent, then the claimants and/or the respondents collectively shall each appoint a

---

(b)

If either the claimant or the respondent fails to comply with the time limit in the preceding paragraph, the Chairman of the Administrative Council of ICSID shall appoint the arbitrator or arbitrators that have not yet been appointed, at the request of either the claimant or the respondent and after consulting the claimant and the respondent as far as possible. The Chairman of the Administrative Council of ICSID shall give notice in writing of such appointment or appointments to the Secretary-General of ICSID and the claimant and the respondent.

(c)	The two (2) arbitrators so appointed shall, within thirty (30) days of their appointment agree upon the person to be appointed as the President of the tribunal, and give notice of such appointment to the Secretary-General of ICSID and the claimant and the respondent.

(d)

If the two (2) arbitrators fail to agree upon the person of the President of the tribunal, the Chairman of the Administrative Council of ICSID shall appoint the President, at the request of either the claimant or the respondent, and after consulting the claimant and the respondent as far as possible. The Chairman of the Administrative Council of ICSID shall give notice in writing of such appointment to the Secretary-General of ICSID and the claimant and the respondent.

26.4	Rules of Arbitration

26.5	Binding Nature of Arbitration

26.6	Costs of Arbitration

26.7	Payment of Awards

---

27.1	Non-fulfillment of Obligations

27.2	Definition of Force Majeure

(a)	it has the effect of temporarily or permanently preventing a Party from performing its obligations under this Contract;

(b)	it is unforeseeable, unavoidable and beyond the control of the Party which declares Force Majeure; and

(c)	it is not a result of the negligence or willful misconduct of the Party which declares Force Majeure,

27.3	Notification of Force Majeure

27.4	Continuation of Obligations

27.5	Cessation of Force Majeure

---

27.6	Continuation of Force Majeure

28.1	Assistance of Ministry

28.1.1

The Ministry shall facilitate, within its authority and in accordance with the rules and procedures in effect in Equatorial Guinea, the performance of the Contractor’s activities by granting it all permits, licenses and access rights that are reasonably necessary for the purposes of Petroleum Operations, and by making available to it all necessary services with respect to Petroleum Operations in Equatorial Guinea.

28.1.2	The Ministry shall also facilitate and assist the Contractor in obtaining all permits, licenses or rights not directly related to Petroleum Operations, but which the Contractor may reasonably require for the purposes of fulfilling its obligations under this Contract.

28.2	Notices and Other Communications

---

29.1	Amendments

29.2	No Partnership

29.3	Hydrocarbons Law

29.4	Entire Agreement

---

29.5	No Waiver

29.6	No Conflict

29.6.1	Each of the Parties constituting the Contractor undertakes that it shall avoid any conflict of interest between its own interests (including the interests of Affiliates) and the interests of the other Parties in connection with activities contemplated under this Contract.

29.6.2	In the event of any conflict between the main body of this Contract and its Annexes, the main body shall prevail. In the event of any conflict between this Contract and the Hydrocarbons Law, the Hydrocarbons Law shall prevail.

30.1	The table of contents and headings used in this Contract are for convenience only and shall not be construed as having any substantive significance or as indicating that ail of the provisions of this Contract relating to any topic are to be found in any particular Article.

30.2	Reference to the singular includes a reference to the plural and vice versa. ‎30.3 Reference to any gender includes a reference to all other genders.

30.3	Unless otherwise provided, reference to an Article or an Annex means an Article or Annex of this Contract.

30.4	The words include and including shall mean include or including without limiting the generality of the description preceding such term and are used in an illustrative sense and not a limiting sense.

30.5	Any reference to a Person shall be construed as including a reference to its successors, permitted transferees and permitted assignees.

30.6	Any reference to a statute or enactment shall be construed as a reference to such statute or enactment as it may have been or may be amended or re-enacted from time to time, or any subordinate legislation made or legal norm created, or may from time to time be done, under such statute or enactment.

30.7	Reference to this Contract or part thereof or any other document shall be construed as a reference to the same as it may be amended, supplemented, novated or replaced from time to time.

---

---

---

---

---

1.1	PURPOSE

(a)	classifying and defining Petroleum Operations Costs; and

(b)	prescribing the manner of preparing and submitting the financial statements of the Contractor in accordance with accounting principles in effect in Equatorial Guinea.

1.2	INTERPRETATION

1.3	ACCOUNTING RECORDS AND REPORTS

1.3.1

In accordance with the provisions of Article ‎16.1 of the Contract, the Contractor shall maintain in its office in Equatorial Guinea original, complete, true and correct accounts, books and records of the Production and disposition of Hydrocarbons, and all costs and expenses under the Contract, as well as all other records and data necessary or proper for the settlement of accounts in accordance with the laws of Equatorial Guinea, generally accepted accounting procedures and generally accepted practice in the international petroleum industry and pursuant to the chart of accounts agreed pursuant to Article ‎1.3.2 below.

1.3.2	Within sixty (60) days from the Effective Date, the Contractor shall submit to and discuss with the Ministry a proposed outline for the chart of accounts and the books, records and reports in accordance with generally accepted standards and consistent with normal petroleum industry practices and procedures.

---

1.3.3	In addition to the generality of the foregoing, the Contractor shall submit to the Ministry, at regular intervals, statements relating to the Petroleum Operations, including, but not limited to, the following:

(a)	monthly statement of Production;

(b)	quarterly statement of value of Production and pricing;

(c)	statement of Petroleum Operations Costs;

(d)	annual statement of Petroleum Operations Cost not yet recovered;

(e)	statement of Production sharing;

(f)	annual end-of-year statement;

(g)	Annual Budget tracking statement;

(h)	Annual statement of tangible goods subject to depreciation; and

(i)	Quarterly, the state of goods, materials and properties which are anticipated to be transferred to the State within three months of said report, due to the full recovery of its cost.

1.3.4	All reports and statements shall be prepared in accordance with the Contract, the laws of Equatorial Guinea and any regulations thereunder and in accordance with generally accepted practice of the international petroleum industry.

1.3.5	Within sixty (60) days after the Calendar Year, the Contractor shall submit to the Ministry the execution of the budgets as well as the annual accounts (the balance sheet, the cash flow statement and the income statement) and the schedule of amortizations, attaching for the report of internal audit for reliability of said information.

1.4	LANGUAGE AND UNIT OF ACCOUNT

1.5	VERIFICATION AND AUDIT RIGHTS OF THE STATE

1.5.1

When the Ministry exercises its right of audit under Article ‎16.3 of the Contract, it shall provide notice to the Contractor, at least sixty (60) days in advance regarding such audit, which shall take place during normal business hours. The Contractor shall make available to the Ministry all accounts, books, records, invoices, cash vouchers, debit notes, price lists or any other documentation relating to Petroleum Operations. Furthermore, the auditors shall have the right, in connection with such

---

1.5.2	Any audit exceptions shall be made in writing and notified to the Contractor within ninety (90) days of completion of the corresponding audit. Failure to give such exception by the Ministry shall be deemed to be an acknowledgement of the accuracy of the Contractor’s books and accounts.

1.5.3	If the Contractor fails to respond to any notice of exception under Article ‎1.5.2 within ninety (90) days of receipt of such notice, the results of the audit will be considered valid and accepted by the Contractor. After the said period of time the Ministry’s exception shall prevail.

1.5.4	Any adjustments resulting from an audit shall be promptly applied to the Contractor’s accounts; any adjustments to payments due shall also be effected promptly.

1.5.5	If the Contractor and the Ministry are unable to reach final agreement on the proposed audit adjustments they shall resolve the dispute in accordance with the provisions of Article ‎16.3.3 of the Contract.

1.6	CURRENCY EXCHANGE RATES

1.7	ACCOUNTING BASIS

---

1.8	REVIEW OF ACCOUNTING PROCEDURE

---

2.1	EXPLORATION COSTS

(a)	aerial, geophysical, geochemical, paleontological, geological, topographical and seismic surveys and studies and their interpretation;

(b)	core hole drilling;

(c)	any labor, materials, supplies, and services used in drilling Exploration Wells and Appraisal Wells;

(d)	any facilities used solely in support of the purposes described in paragraphs ‎(a), ‎(b) and ‎(c) above, including access roads and acquired geological and geophysical data, all separately identified;

(e)	any other cost incurred in the Exploration and Appraisal of Hydrocarbons after the Effective Date but prior to the date of approval of a Development and Production Plan with respect to the relevant Field and not covered under Articles ‎2.2, ‎2.3 and ‎2.4 below; and

(f)	the costs incurred prior to the Effective Date which both Parties have agreed to, including the cost of the Sea Bed Logging, 2D, 3D speculative data and other costs of complying with Article ‎3.1.1 of the Contract.

2.2	DEVELOPMENT AND PRODUCTION COSTS

(a)	Wells defined as Development Wells for purposes of producing from a Commercial Field, whether such Wells turn out to be dry or productive by nature, and drilling Wells for the injection of water or gas to enhance Hydrocarbon recovery;

(b)	completing Wells by way of installation of casing or equipment or otherwise after a Well has been drilled for the purpose of bringing the Well into use as a Development Well or a Well for the injection of water or gas to enhance Hydrocarbon recovery;

(c)	transportation and installation of tank storage facilities, pipelines, flow lines, production and treatment units, wellhead equipment, subsurface equipment,

---

(d)	engineering and design studies for facilities referred to under paragraph ‎(c) above.

2.3	OPERATING OR PRODUCTION COSTS

2.4	COMMERCIALIZATION COSTS

2.5	ALLOCATION OF GENERAL AND ADMINISTRATIVE COSTS

(a)	Prior to First Oil (commercial Production):

(b)	After First Oil (first commercial Production):

2.6	Except as provided otherwise in the Contract to the contrary, approved Petroleum Operation Costs described in Articles ‎2.1 to ‎2.5 of this Accounting Procedure, will be recoverable by the Contractor in accordance with Article ‎7.2 of the Contract.

2.7	INTEREST RECOVERY

---

2.8	NON RECOVERABLE COSTS

(a)	signature bonus paid by the Contractor;

(b)	any Discovery bonus paid by the Contractor;

(c)	any Production bonus paid by the Contractor;

(d)	annual surface rentals paid to the State;

(e)	interests on loans as provided by Article ‎2.7 of this Accounting Procedure;

(f)	any unapproved over-expenditures that exceed the limits of Article ‎4.4 of this Contract;

(g)	any payments made to the State for failure to fulfill the minimum Exploration work obligations pursuant to ‎Article 3 of the Contract;

(h)	any fines and sanctions incurred for infringing the laws and regulations of Equatorial Guinea;

(i)	any donation to the State or other similar expenses unless otherwise agreed;

(j)	the State’s audit and inspection expenses incurred as a result of the absence of original documents in the Contractor’s offices in Equatorial Guinea;

(k)	any sanction imposed on the Contractor under the Hydrocarbons Law or otherwise; and

(l)	costs related to the assignment from the Contractor to any of its Affiliates or other Persons.

2.9	INSURANCE AND CLAIMS

2.10	INVENTORY ACCOUNTING

---

---

3.1	CAPITAL COSTS

3.1.1	TANGIBLE CAPITAL COSTS

(a)

for Development Wells: the costs of completion materials and equipment (downhole equipment, fixed production tubing, production packers, valves, wellhead equipment, subsoil elevation equipment, pumping rods, surface pumps, discharge cables, collection equipment, delivery lines, fixed Christmas tree and valves, oil and gas pipelines, fixed materials and equipment, piers, anchors, buoys, Hydrocarbon treatment facilities and equipment, secondary recovery systems, reinjection compressors, water pumps and their pipes);

(b)	for any purchase of goods and equipment: the actual cost of the asset (excluding transportation), the cost for construction of platforms outside of the Contract Area, the cost of power generators and facilities onshore;

(c)	for the purchase of moveable goods: automotive machinery (vehicles, tractors, tow trucks, tools, flatbeds, etc.), construction machinery and equipment (furniture, office equipment and other equipment);

(d)	for construction purposes: the building cost of housing and residential facilities, offices, warehouses, workshops, power plants, storage facilities and access roads for development activities, the cost of piers and anchors, treatment plants and machinery, secondary recovery systems, gas plants and steam systems; and

(e)	drilling and Production facilities and platforms.

3.1.2	INTANGIBLE CAPITAL COSTS

---

(a)	costs of aerial magnetic, aerial gravimetric, topographic, geological, geophysical and geochemical surveys, interpreting and reinterpreting technical data costs, Exploration labor and similar costs;

(b)

costs of drilling Exploration Wells and Appraisal Wells: all costs of services rendered for drilling Exploration and Appraisal Wells, chemical products, rental costs (for helicopters, flatbeds, ships, tow barges, etc.) transportation, storage facilities, accommodation, technical services for mud control, Well geology, directional Well drilling, divers, mud control, well geology testing, cementing and similar costs;

(c)

costs of drilling Development Wells, such as rig and platform mobilization and demobilization, rig and platform drilling contracts and leases, platform and infrastructure installations labor, fuel, water, conductors, drill bits, drill pipe, equipment rental, production testing equipment, Christmas tree for production testing, mud and its components, chemical products, rental costs (for helicopters, flatbeds, ships, tow barges, etc.), transportation, storage facilities, accommodation, technical services for mud control, Well placement geology, directional drilling Wells, divers, production and appraisal tests, completion and supervision;

(d)	costs of acquisition or purchase of goods and services such as transportation costs, operation costs, equipment checks, costs of on-site installation, maintenance costs and fuel costs;

(e)	general services (electric logs, vertical seismic profile (VSP), mud control, core sampling, Well geology tests, cementing, production tests, supervision and similar costs), delineation services, any heavy engineering machinery leasing, and other expenses incurred abroad;

(f)	materials, reconstruction of access and other roads, and other intangible goods for construction, public services and construction support; and

(g)	other Exploration Costs, support or temporary facilities with a useful life of less than one (1) Year.

3.2	DEPRECIATION OF TANGIBLE CAPITAL COSTS

3.3	NON-CAPITAL COSTS

3.3.1	CONTRACTOR’S DEDUCTIBLE COSTS

---

(a)	general and administrative expenses (personnel salaries, insurance premiums, labor, technical office services and other similar services, material services, public relations, expenses abroad related with Petroleum Operations in Equatorial Guinea, determined in accordance with Article ‎2.5 of this Accounting Procedure);

(b)	Intangible Capital Costs;

(c)

labor, materials and services indirectly used in operations of Wells, feasibility studies for production of Crude Oil or Natural Gas fields, secondary recovery operations, storage operations, handling, transportation and delivery, Natural Gas Well operations, transportation and delivery of Natural Gas, services for Natural Gas treatment, environmental protection measures and any other maintenance activities indirectly related to Petroleum Operations.

(d)	Contributions to the Reserve Fund.

3.3.2	CONTRACTOR’S NON-DEDUCTIBLE COSTS

(a)	signature bonus paid by the Contractor;

(b)	any Discovery bonus paid by the Contractor;

(c)	any Production bonus paid by the Contractor;

(d)	annual surface rentals paid to the State;

(e)	any unapproved over-expenditures that exceed the limits of Article ‎4.4 of the Contract;

(f)	interest on loans as provided in Article ‎2.7 of this Accounting Procedure;

(g)	any payment made to the State for failure to fulfill the minimum Exploration work obligations pursuant to ‎Article 3 of the Contract;

(h)	any fines and sanctions incurred for infringing the laws and regulations of Equatorial Guinea;

(i)	sums that exceed the set limits with regard to the depreciation of tangible assets;

(j)	any donation to the State and other similar expenses unless otherwise agreed;

(k)	the State’s audit and inspection expenses incurred by the absence of original documents in the office of the Contractor in Equatorial Guinea;

---

(l)	any sanction imposed on the Contractor under the Hydrocarbons Law or otherwise; and

(m)	costs relating to the assignment from the Contractor to any of its Affiliates or other Persons.

4.1	PRACTICAL DETERMINATION OF THE TAXABLE BASE

(1)	Annual gross revenues

(2)	Royalties

(3)	State’s share of net Hydrocarbons

(4)	State’s right to a share of Production based on its carried or paid interest in the Contract

(5)	Deductible intangible capital costs

(6)	Depreciation of tangible capital costs

(7)	Deductible non-capital costs

(8)	Losses authorized and certified by the Ministry, corresponding to previous Calendar Years

4.2	PRINCIPLE OF TAX TREATMENT OF A FINANCIAL YEAR DEFICIT

---

5.1	RECORDS

5.2	INVENTORIES DURING INITIAL EXPLORATION OPERATIONS

5.3	INVENTORIES IN SUBSEQUENT OPERATIONS

---

6.1	FINANCIAL STATEMENTS AND TAX REPORTS TO BE SUBMITTED BY CONTRACTOR

(a)	depreciation details;

(b)	fixed assets information;

(c)	Production and export statistics and details;

(d)	all tax related reports provided for in the Contract; and

(e)	detailed information on deductible expenses for estimating tax liabilities in accordance with the Tax Law.

6.2	PRODUCTION STATEMENT

(a)	the quantity of Crude Oil produced and saved;

(b)	the quality characteristics of such Crude Oil produced and saved;

(c)	the quantity of Natural Gas produced and saved;

(d)	the quality characteristics of such Natural Gas produced and saved;

(e)	the quantities of Crude Oil and Natural Gas used for the purposes of carrying out drilling and Production operations;

(f)	the quantities of Crude Oil and Natural Gas unavoidably lost;

(g)	the quantities of Natural Gas flared and vented;

---

(h)	the size of Hydrocarbon stocks held at the beginning of the calendar month in question;

(i)	the size of any Hydrocarbon stocks held at the end of the calendar month in question;

(j)	the quantities of Natural Gas re-injected into the Hydrocarbon reservoir; and

(k)	the quantities of Hydrocarbons delivered and sold.

6.3	VALUE OF PRODUCTION AND PRICING STATEMENT

(a)	the quantities, prices and income received by the Contractor as a result of sales of Hydrocarbons to third parties during the Quarter in question;

(b)	the quantities, prices and income received by the Contractor as a result of sales of Hydrocarbons, other than sales to third parties, during the Quarter in question;

(c)	the value of any stocks of Hydrocarbons at the end of the Quarter preceding the Quarter in question;

(d)	the value of any stocks of Hydrocarbons at the end of the Quarter in question; and

(e)	the information available to the Contractor concerning the prices of competitive Crude Oils, insofar as required for the purposes of ‎Article 10 of the Contract.

6.4	PETROLEUM OPERATIONS COSTS STATEMENT

6.4.1	QUARTERLY STATEMENT

---

6.4.2	Annual Statement

(a)	Petroleum Operations Costs not yet recovered and carried forward from the previous Calendar Year, if any;

(b)	Petroleum Operations Costs for the Calendar Year in question;

(c)	the quantity and value of Hydrocarbon Production taken by the Contractor as Cost Recovery Oil under the provisions of Article ‎7.2 of the Contract for the Calendar Year in question; and

(d)	Petroleum Operations Costs not yet recovered at the end of the Calendar Year in question.

6.5	PRODUCTION SHARING STATEMENT

(a)	the value of all sales of Hydrocarbons made by the Contractor as from the Effective Date of the Contract up to the end of the previous Calendar Year;

(b)	the value of all sales of Hydrocarbons made by the Contractor during the Calendar Year in question;

(c)	the total of (a) and (b) above at the end of the Calendar Year in question;

(d)	the accumulated Petroleum Operations Costs as from the Effective Date of the Contract up to the end of the previous Calendar Year;

(e)	the Petroleum Operations Costs for the Calendar Year in question;

(f)	the total of (d) and (e) above at the end of the Calendar Year in question;

(g)	quantity and value of the Contractor’s share in Hydrocarbons; and

---

(h)	quantity of State’s share of Hydrocarbons and its value if sold by the Contractor.

6.6	ANNUAL END-OF-YEAR STATEMENT

(a)	accounting conciliation of the expenses against the approved Annual Budget;

(b)	accounting conciliation of the expenses with the recoverable costs; and

(c)	accounting conciliation of the expenses with the deductible costs.

6.7	ANNUAL BUDGET STATEMENT

---

(1)	[THE GUARANTOR], a company organized and existing under the laws of [insert jurisdiction], and having its registered office at [insert address] (the Guarantor); and

(2)	THE REPUBLIC OF EQUATORIAL GUINEA (the State), represented for the purposes of this Guarantee by the Ministry of Mines and Hydrocarbons (the Ministry).

1.	Definitions and Interpretation

2.	Scope of this Guarantee

(a)	the liabilities of the Company to the State;

---

(b)	[insert amount] Dollars ($[insert amount]) during the Exploration Period, as may be extended in accordance with the Contract; and

(c)	[insert amount] Dollars ($[insert amount]) during the Development and Production period.

3.	Waiver of Notice, Agreement to All Modifications

4.	Absolute and Unconditional Guarantee

5.	No Discharge of Guarantor

6.	No Prior Action Required

7.	Cumulative Rights

8.	Continuing Guarantee

9.	Notice of Demand

---

10.	Assignment

11.	Subrogation

12.	Payment of Expenses

13.	Governing Law and Arbitration

14.	Severability of Provisions

15.	Confidentiality

---

---

---

(1)	THE REPUBLIC OF EQUATORIAL GUINEA (hereinafter referred to as the State), represented for the purposes of this Contract by the Ministry of Mines and Hydrocarbons, represented for purposes of its execution by His Excellency Mr. Gabriel Mbaga OBIANG LIMA, the Minister;

(2)	GUINEA ECUATORIAL DE PETRÓLEOS (hereinafter referred to as the National Company), acting in its own name and legal right for the purposes of this Contract and represented for purposes of its execution by Mr. Antonio OBURU ONDO, in his capacity as Director General; and

(3)

KOSMOS ENERGY EQUATORIAL GUINEA, a company organized and existing under the laws of the Cayman Islands, under company registration number WT-269135 and having its registered office at c/o Circumference (Cayman), P.O. Box 32322, 4th Floor, Century Yard, Cricket Square, Elgin Avenue, George Town, Grand Cayman, KY1-1209, Cayman Islands (hereinafter referred to as Company), represented for the purposes of this Contract by [insert name Andrew Inglis], in his capacity as [insert position President].

(A)	WHEREAS, all Hydrocarbons existing within the territory of the Republic of Equatorial Guinea, as set forth in the Hydrocarbons Law, are national resources owned exclusively by the State;

(B)	WHEREAS, the State wishes to promote the development of Hydrocarbon deposits within the Contract Area and the Contractor desires to associate itself with the State with a view to accelerating the Development and Production of Hydrocarbons within the Contract Area;

(C)	WHEREAS, the Contractor has the financial ability, technical competence and professional skills necessary to carry out Petroleum Operations in accordance with this Contract and good oil field practices; and

(D)	WHEREAS, the Parties desire to enter into this Contract in accordance with the Hydrocarbons Law, which allows for agreements to be entered into between the State and foreign investors in the form of a production sharing contract, through direct negotiation or by international public tender..

---

1.1	Definitions

1.1.1	Accounting Procedure means the accounting procedure set forth in ‎Annex C.

1.1.2	Affiliated Company or Affiliate of any specified Person means any other Person directly or indirectly Controlling or Controlled by or under direct or indirect common Control of such specified Person or other Person.

1.1.3	Annual Budget means the expenditure of the Contractor with respect to an Annual Work Program.

1.1.4	Annual Work Program means an itemized statement of the Petroleum Operations to be carried out in the Contract Area during a Calendar Year.

1.1.5	Appraisal Area means an area within the Contract Area encompassing the geographical extent of a Discovery that is subject to an Appraisal work program and corresponding budget in accordance with Article ‎5.2.

1.1.6	Appraisal Well means a Well drilled following a Discovery, with the objective of delimiting and mapping the reservoir, and also to estimate the quantity of recoverable Hydrocarbons.

1.1.7	Associated Natural Gas means all Natural Gas produced from a reservoir the predominant content of which is Crude Oil and which is separated from Crude Oil in accordance with generally accepted international petroleum industry practice, including free gas cap, but excluding any liquid Hydrocarbons extracted from such gas either by normal field separation, dehydration or in a gas plant.

1.1.8	Barrel means a quantity or unit of Crude Oil equal to 158.9874 liters (forty-two (42) United States gallons) at a temperature of fifteen point five six degrees (15.56°) Centigrade (sixty degrees (60°) Fahrenheit) and at one (1) atmosphere of pressure.

1.1.9	BEAC means Banco de los Estados de África Central (Bank of the States of Central Africa).

1.1.10	Book Value means the value at which the asset is carried on the balance sheet prepared in accordance with generally accepted accounting practices used in the international petroleum industry.

1.1.11	Business Day means a day on which the banks are generally open for business in Equatorial Guinea and Dallas, Texas.

---

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

1.1.13

Change in Law means, with respect to ‎Article 25, any change in the laws, decrees, regulations or standards of Equatorial Guinea, effective as of January 1, 2017, including with respect to any fiscal, taxes, Customs, or currency control, any change in the interpretation or application of, or in the customs and practices related to, such laws (the provisions of this Contract are deemed to conform to said interpretation and application from the date hereof) Decrees, regulations or rules of Equatorial Guinea and excludes all laws, decrees, regulations or standards which: (i) are related to health, safety, labor and the environment, (ii) are consistent with the international practices and standards of the oil and gas industry, and (iii) are applied on a non-discriminatory basis.

1.1.14	CIF has the meaning set out in the publication of the International Chamber of Commerce, INCOTERMS 2010.

1.1.15	Commercial Discovery means a Discovery that the Contractor has determined to be economically viable and so submits a Development and Production Plan for such Discovery for the approval of the Ministry.

1.1.16	Cost Recovery Oil has the meaning ascribed to it in Article ‎7.2.1.

1.1.17	Contractor means Company and the National Company.

1.1.18	Contract means this production sharing contract, including its Recitals and Annexes.

1.1.19	Contract Year means a period of twelve (12) consecutive months according to the Gregorian calendar, counted from the Effective Date of this Contract or from the anniversary of such Effective Date.

1.1.20	Contract Area or Area means the geographic area within the territory of Equatorial Guinea, which is the subject of this Contract. Such Contract Area shall be described in ‎Annex A and illustrated in ‎Annex B, as it may be changed by relinquishments of the Contractor in accordance with this Contract.

1.1.21	Control, when used with respect to any specified Person, means the power to direct, administer and dictate policies of such Person through the ownership of a percentage of such Person’s equity sufficient to hold a majority of voting rights in an ordinary shareholders meeting. The terms Controlling and Controlled have meanings correlative to the foregoing.

1.1.22	Crude Oil means Hydrocarbons which are produced at the wellhead in a liquid state at atmospheric pressure including asphalt and ozokerites, and the liquid Hydrocarbons known as condensate and/or Natural Gas liquids obtained from Natural Gas by condensation or extraction through field separation units.

1.1.23	Dated Brent means a quote published daily in the Crude Oil Market Plans Bulletin that reflects the price of a North Sea Brent crude oil blend charge over a given period.

---

1.1.24	Development and Production Plan has the meaning ascribed to it in Article ‎5.5.1.

1.1.25	Delivery Point means that point located within the jurisdiction of Equatorial Guinea at which Hydrocarbons reach (i) the inlet flange at the FOB export vessel, (ii) the loading facility metering station of a pipeline or (iii) such other point within the jurisdiction of Equatorial Guinea as may be agreed by the Parties.

1.1.26	Development and Production Area means an area within the Contract Area encompassing the geographical extent of a Commercial Discovery subject to a Development and Production Plan in accordance with Article ‎5.5.

1.1.27	Development and Production Costs means all costs, expenses and liabilities incurred by the Contractor in connection with Development and Production Operations in a Development and Production Area, excluding all Exploration Costs incurred in the Development and Production Area prior to the establishment of any Field, as determined in accordance with this Contract and the Hydrocarbons Law.

1.1.28	Development and Production Operations means all operations, other than Exploration Operations, conducted to facilitate the Development and Production of Hydrocarbons from the Contract Area to the Delivery Point, but excluding the refining and distribution of Hydrocarbon products.

1.1.29	Development Well means a Well, other than an Exploration Well or an Appraisal Well, drilled with the purpose of producing or improving the Production of Hydrocarbons, including Exploration Wells and Appraisal Wells completed as production or injection Wells.

1.1.30	Discovery means the finding by the Contractor of Hydrocarbons whose existence within the Contract Area was not known prior to the Effective Date or Hydrocarbons within the Contract Area which had not been declared a Commercial Discovery prior to the Effective Date and which are measurable by generally accepted international petroleum industry practices.

1.1.31	Dividend Withholding Tax has the meaning ascribed to it in Article ‎17.1.1.

1.1.32	Dollars or $ means the legal tender of the United States of America.

1.1.33	Effective Date means the date of receipt by the Contractor of the ratification by the State of this Contract pursuant to ‎Article 31.

1.1.34	Equatorial Guinea means the Republic of Equatorial Guinea.

1.1.35

Exploration Operations include geological and geophysical studies, aerial mapping, investigations relating to subsurface geology, stratigraphic test drilling, Exploration Wells, Appraisal Wells and related activities such as drill site preparation, surveying and all work connected therewith that is conducted in relation to the Exploration for and Appraisal of Hydrocarbon deposits in the Contract Area.

---

1.1.36	Exploration Costs means all costs, expenses and liabilities incurred by the Contractor in connection with Exploration Operations in the Contract Area, as determined in accordance with this Contract and the Hydrocarbons Law.

1.1.37	Extension Period means the First Extension Period and the Second Extension Period individually.

1.1.38	Exploration Periods means the Initial Exploration Period, an Extension Period and any further extensions thereof as set out in Article ‎2.2.1.

1.1.39	Exploration Well means any Well whose sole objective is to verify the existence of Hydrocarbons or to study all the necessary elements that might lead to a Discovery.

1.1.40

Field means a Discovery or an aggregation of Discoveries that is established as a Field in accordance with ‎Article 5 and can be developed commercially after taking into account all pertinent operational, economic and financial data collected during the performance of the Appraisal work program or otherwise, in accordance with generally accepted international petroleum practices. A Field may consist of a Hydrocarbon reservoir or multiple Hydrocarbon reservoirs all grouped on or related to the same individual geological structural or stratigraphic conditions, or areas that are not related but will be developed by using a single Development and Production Plan. All deposits superimposed, adjacent to or underlying a Field in the Contract Area shall form part of the said Field.

1.1.41	FOB has the meaning set out in the publication of the International Chamber of Commerce, INCOTERMS 2010.

1.1.42	First Extension Period means the period of one (1) Contract Year commencing immediately after the conclusion of the Initial Exploration Period.

1.1.43	First Exploration Sub-Period means the first three (3) Contract Year(s) of the Initial Exploration Period.

1.1.44	First Oil means, in respect of each Development and Production Area, the date on which production of Hydrocarbons under a program of regular production, lifting and sale commences.

1.1.45	Gross Revenues means the total income from sales of Total Disposable Production plus the equivalent monetary value of any other disposal of Total Disposable Production from the Contract Area during any Calendar Year.

1.1.46	Hydrocarbons means all natural organic substances composed of carbon and hydrogen, including Crude Oil and Natural Gas that may be found and extracted from, or otherwise produced and saved from the Contract Area.

1.1.47	Hydrocarbons Law means Law No. 8/2006 dated 3 November 2006 of Equatorial Guinea, and any law that amends it or replaces it.

1.1.48	Initial Exploration Period means a period of five (5) Contract Years from the Effective Date, subdivided into two sub-periods of three (3) Contract Years for the First

---

1.1.49	Joint Operating Agreement or JOA means the joint operating agreement that regulates the internal relations of the Parties comprising the Contractor for the conduct of Petroleum Operations in the Contract Area.

1.1.50

LIBOR means the interest rate at which Dollar deposits of six (6) months duration are offered in the London Inter Bank Market, as published in the Financial Times of London. The applicable LIBOR rate for each month or part thereof within an applicable interest period shall be the interest rate published in the Financial Times of London on the last Business Day of the immediately preceding calendar month. If no such rate is quoted in the Financial Times of London during a period of five (5) consecutive Business Days, another rate (for example, the rate quoted in the Wall Street Journal) chosen by mutual agreement between the Ministry and the Contractor will apply.

1.1.51	Market Price means the FOB price for Crude Oil calculated in accordance with ‎Article 10.

1.1.52

Material Contract means a contract with a value greater than five hundred thousand Dollars ($500,000) with respect to Exploration Operations or to one million Dollars ($1,000,000) in respect of Development Operations or Production Operations with (i) an Operator Affiliate, when the contract has not been previously and specifically approved in an Annual Budget as a contract to be carried out by an Affiliate or (ii) a non-Affiliate of the Operator. In the event that a law or regulation establishes a value higher than that stipulated in this definition for the supervision of contracts by the State, this definition will be amended to reflect the new higher limit.

1.1.53	Maximum Efficient Production Rate means the maximum efficient production rate of Hydrocarbons from a Field, that does not damage reservoir formations and does not cause excessive decline or loss of reservoir pressure in accordance with good oil field practice and as agreed in accordance with Article ‎6.4.

1.1.54	Member State of CEMAC means a country that is a member of the Central African Economic and Monetary Community.

1.1.55	Member State of the OHADA means a country that is a member of the Organization for the Harmonization of Commercial Law in Africa.

1.1.56	Minimum Retention means that the Operator and its Affiliates shall maintain a minimum deposit amount. This amount shall be measured annually and per Calendar Year, at one or more banks chosen by the Operator and operating in Equatorial Guinea. The amounts will be as follows:

a)	From the effective date until the approval of the first Development and Production Plan, a deposit amount equivalent to ten per cent (10 %) of the Annual Budget applicable to such Calendar Year;

---

b)	From the approval of the first Development and Production Plan, and until First Oil, a deposit amount equivalent to point five per cent (0.5 %) of the Annual Budget applicable to such Calendar Year; and

c)	From First Oil until the end of Operations, a deposit amount equivalent to a five per cent (5 %) of the Annual Budget applicable to such Calendar Year; provided that

d)	If, at any time, a later Development and Production Plan is approved and should this Plan require a development operation, the deposit amount required shall return to a point five per cent (0.5 %) of the Annual Budget applicable to such Calendar Year, until the year following the year during which the development operations foreseen in such Development and Production Plan cease to exist.

1.1.57	Minimum Work Program has the meaning ascribed to it in Article ‎3.1.

1.1.58	Ministry means the Ministry of Mines and Hydrocarbons of Equatorial Guinea, the entity responsible for supervising Petroleum Operations in coordination with other Government bodies within the respective areas of their competence, and any successor.

1.1.59	National Company for the purposes of this Contract, means Equatorial Guinea of Petroleum (GEPetrol), as a national oil company of Equatorial Guinea; or any successor state company.

1.1.60	National Company’s Participation Interest means the Participation Interest of the National Company as set forth in Article ‎1.3.

1.1.61	Natural Gas means those Hydrocarbons that, at atmospheric conditions of temperature and pressure, are in a gaseous state including dry gas, wet gas and residual gas remaining after extraction, treatment, processing, or separation of liquid Hydrocarbons from wet gas, as well as gas or gases produced in association with liquid or gaseous Hydrocarbons.

1.1.62	Net Crude Oil has the meaning ascribed to it in Article ‎7.3.

1.1.63	Net Natural Gas has the meaning ascribed to in Article ‎13.3.5.

1.1.64	Parties or Party means the parties or a party to this Contract, as the context may require.

1.1.65	Participation Interest means for each Party comprising the Contractor, the undivided percentage share of such Party in the rights and obligations under this Contract, as is specified in Article ‎1.3.

1.1.66	Person means any individual, firm, company, corporation, society, trust, foundation, government, state or agency of the state or any association or partnership (whether or not having separate legal personality) or two or more of these.

1.1.67	Petroleum Operations means all operations related to Exploration, Development, Production, transportation, storage, conservation, decommissioning, sale and/or other disposal of Hydrocarbons from the Contract Area to the Delivery Point and any other

---

1.1.68	Petroleum Operations Costs means Exploration Costs and/or Development and Production Costs (as the context may require) incurred by the Contractor in the carrying out of Petroleum Operations, as determined in accordance with this Contract and the Accounting Procedure.

1.1.69	Petroleum Regulations means all regulations promulgated by the Ministry pursuant to the Hydrocarbons Law.

1.1.70	Platts means Platts Crude Oil Marketwire, or if Platts Crude Oil Marketwire ceases to be published then another similar daily international publication that lists benchmark crude oil prices and which is agreed at the time between the Parties.

1.1.71	Quarter means a period of three (3) consecutive months beginning on 1 January, 1 April, 1 July or 1 October and ending on 31 March, 30 June, 30 September or 31 December, respectively.

1.1.72	Reserve Fund has the meaning ascribed to it in Article ‎24.3.1.

1.1.73	Royalties means an entitlement of the State over Hydrocarbons produced and saved from the Contract Area, and not utilized in Petroleum Operations, based on percentages calculated as a function of the daily rate of the Total Disposable Production as determined in accordance with Article ‎7.1.

1.1.74	Second Extension Period means the period of one (1) Contract Year commencing immediately after the end of the First Extension Period.

1.1.75	Second Exploration Sub-Period means the final two (2) Contract Year(s) of the Initial Exploration Period.

1.1.76	Taxes mean the coercive financial payments in accordance to the Tax Laws, that the State, local authorities and/ other public entities, demand in the exercise of their sovereign power. These taxes will be levied on each of the Parties comprising the Contractor and all other applicable Persons.

1.1.77	Tax Laws means Law No. 4/2004 dated 28 October 2004 of Equatorial Guinea, and Law No. 2/2007 dated 16 May 2007 of Equatorial Guinea, and any law that amends one or both of them or replaces one or both of them.

1.1.78	Transfer Fee has the meaning ascribed to in Article ‎17.2.1.

1.1.79	Total Disposable Production means all Hydrocarbons produced and saved from a Development and Production Area less the quantities used for Petroleum Operations.

1.1.80	Unassociated Natural Gas means all gaseous Hydrocarbons produced from Natural Gas reservoirs, and includes wet gas, dry gas and residual gas remaining after the extraction of liquid Hydrocarbons from wet gas.

---

1.1.81	Well means any opening in the ground or seabed made or being made by drilling or boring, or in any other manner, for the purpose of exploring and/or discovering, evaluating or producing Crude Oil or Natural Gas, or for the injection of any fluid or gas into an underground formation other than a seismic hole.

1.1.82	Withholding Tax Waiver has the meaning ascribed to it in Article ‎17.1.1.

1.2	Scope

1.2.1	This Contract is a production sharing contract awarded pursuant to Chapter IV of the Hydrocarbons Law. In accordance with the provisions of this Contract and the Hydrocarbons Law, the Ministry shall be responsible for supervising Petroleum Operations in the Contact Areas.

1.2.2	The State grants to the Contractor the sole and exclusive right and charge of conducting all Petroleum Operations in the Contract Area during the term of this Contract. In consideration of this, the Contractor shall:

a)	be responsible to the State as an independent contractor, for the execution of the Petroleum Operations in accordance with the provisions of this Contract and the Hydrocarbons Law;

b)	provide all funds, machinery, equipment, technology and personnel prudent and necessary to conduct Petroleum Operations; and

c)	diligently, with due regard to good oil field practice, perform at its exclusive responsibility and risk all investments and contractual obligations necessary for conducting Petroleum Operations in accordance with this Contract.

1.2.3	All Petroleum Operations Costs shall be recoverable and deductible for tax purposes in the manner set forth in this Contract and the Hydrocarbons Law.

1.2.4	During the term of this Contract, the total Production achieved as a consequence of Petroleum Operations shall be shared between the Parties in accordance with ‎Article 7.

1.3	Participation Interests

2.1	Initial Exploration Period

---

2.1.1	Upon the fulfillment by the Contractor of its Exploration obligations set forth in Article ‎3.1.1 with respect to the First Exploration Sub-Period, the Contractor may elect to enter the Second Exploration Sub-Period.

2.1.2

To elect to enter the Second Exploration Sub-Period, the Contractor shall file a request with the Ministry at least two (2) months prior to the expiry of the First Exploration Sub-Period, The Ministry shall not unreasonably withhold or delay the granting of such request; provided that the Contractor has complied with all of its obligations in the First Exploration Sub-Period and shall not be otherwise in breach of this Contract.

2.2	Extension Periods

2.2.1	Upon the fulfillment by the Contractor of its Exploration obligations set forth in Articles ‎3.1.1 and ‎3.1.2 with respect to the Initial Exploration Period, the Contractor may request up to two (2) extensions of one (1) year each of the Initial Exploration Period.

2.2.2

For each Extension Period, the Contractor shall file a request with the Ministry at least two (2) months prior to the expiry of the Initial Exploration Period, or as the case may be, the First Extension Period. The Ministry shall not unreasonably withhold or delay the granting of such Extension Period; provided that the Contractor has complied with all of its obligations in the Initial Exploration Period and the First Extension Period, as applicable, and shall not be otherwise in breach of this Contract.

2.2.3	Each request for an Extension Period shall be accompanied by a map specifying the Contract Area proposed to be retained by the Contractor, along with a report specifying any work performed in the proposed relinquished area since the Effective Date and the results obtained therefrom.

2.2.4

If upon expiry of the Initial Exploration Period, or of any Extension Period, any Appraisal work program with respect to a Discovery is still under progress or an Exploration Well is still under progress, the Contractor shall be entitled to an additional extension of the then current Exploration Period necessary to complete the work in progress. Furthermore, where Appraisal work has not yet been completed by the Contractor at the time at which a relinquishment contemplated by Article ‎2.4 is due, the requirement to relinquish shall be suspended until such time that the Contractor completes the said Appraisal work, commerciality is determined and, if applicable, the related establishment of a Field is approved or denied. Any additional extension granted under this Article ‎2.2.4 shall not exceed one (1) Contract Year, or such longer period as may be approved by the Ministry, plus the period of time established under ‎Article 5 necessary for the evaluation of a marketing plan, the preparation of a Development and Production Plan and the Ministry’s response.

2.2.5	In the event additional time is needed to complete said Appraisal work as set out in Article ‎2.2.4, the Contractor shall file a request for an extension with the Ministry at least two (2) months prior to the expiry of the current Initial Exploration Period or Extension Period, as applicable. In the event additional time is needed to complete an

---

2.3	Termination

(a)	not to extend the Initial Exploration Period (or not to enter the Second Exploration Sub-Period) and no Field has been established during such period; or

(b)	to extend the Initial Exploration Period and no Field has been established during an Extension Period or any additional extension thereof, this Contract shall automatically terminate.

2.4	Mandatory Relinquishments

2.4.1

The Contractor must relinquish to the State thirty percent (30%) of the initial surface area of the Contract Area by the end of the Initial Exploration Period, twenty-five percent (25%) of the remaining area by the end of the First Extension Period, and the remainder of the Contract Area by the end of the Second Extension Period, or at the end of the Initial Exploration Period or the First Extension Period, if no further extension is requested by the Contractor. To determine the area or areas which the Contractor shall relinquish, the following areas shall be excluded for the purposes of such calculation:

(a)	areas designated as an Appraisal Area;

(b)	Development and Production Areas;

(c)	areas for which the approval of a Development and Production Plan is pending, until finally decided;

(d)	the area of any Field, including any Field which may be subject to unitization pursuant to ‎Article 22; and

(e)	any area reserved for a possible Unassociated Natural Gas Appraisal in relation to which the Contractor is engaged in discussions with the Ministry in accordance with Article ‎13.1.

2.4.2	Upon expiry of the applicable final extension period indicated in Article ‎2.2, and subject to the provisions of Article ‎2.2.4, the Contractor shall relinquish the remainder of the Contract Area, with the exception of:

(a)	Development and Production Areas;

(b)	those areas for which an application for a Development and Production Area is pending, until finally decided;

(c)	the area of any Field, including any Field which may be subject to unitization pursuant to ‎Article 22; and

---

(d)	any area reserved for a possible Unassociated Natural Gas Appraisal in relation to which the Contractor is engaged in discussions with the Ministry in accordance with ‎Article 13.

2.5	Voluntary Relinquishments

2.5.1	Subject to the Contractor’s obligations under ‎Article 24 and the Hydrocarbons Law, the Contractor may at any time notify the Ministry upon three (3) months prior notice that it relinquishes all of its rights over all or any part of the Contract Area.

2.5.2	In no event shall any voluntary relinquishment by the Contractor of rights over all or any part of the Contract Area reduce the Exploration obligations of the Contractor set forth in ‎Article 3.

2.6	Involuntary Relinquishments

2.6.1

Should the Contractor, during the First Exploration Sub-Period (as may be extended), (i) be unable to fulfill its Minimum Work Program pursuant to Article ‎3.1.1(a) or (ii) be unable fulfill its Minimum Work Program pursuant to Article ‎3.1.1(b), excluding for reasons of Force Majeure or acts or failure to act by the State, including failure to deliver the data package referenced in Article 3.1.1(b), then the Contractor will relinquish all its rights on the whole of the Contract Area at the end of the First Exploration Sub-Period (as may be extended).

2.7	Relinquishments Generally

2.7.1	No relinquishment made in accordance with Articles ‎2.4 or ‎2.5 shall relieve the Contractor from its obligation to pay surface rentals accrued or make payments due and payable as a result of Petroleum Operations conducted up to the date of relinquishment.

2.7.2

The Contractor shall, in accordance with good oil field practice, propose the geographic location of the portion of the Contract Area that it proposes to retain, and which shall have a continuous geometric shape going from North to South and East to West delimited as a minimum by one minute (1’) of latitude or longitude or by natural boundaries and such area shall also be subject to the approval of the Ministry and shall be deemed approved after sixty (60) days.

3.1	Minimum Work Program

3.1.1	During the First Exploration Sub-Period, the Contractor must:

(a)	acquire, process, and interpret 2,250 square kilometers of new 3D seismic data; and

---

3.1.2	During the Second Exploration Sub-Period, the Contractor must drill a minimum of one (1) Exploration Well to a minimum depth of the deepest target interval in the approved well program. The minimum expenditure for this period shall be thirty million Dollars ($30,000,000).

3.1.3	If the Contractor elects to enter the First Extension Period, the Contractor must perform technical work on geological and geophysical studies and surveys. The minimum expenditure for this period shall be seven hundred thousand Dollars ($700,000).

3.1.4	If the Contractor elects to enter the Second Extension Period, the Contractor must drill a minimum of one (1) Exploration Well to a minimum depth of the deepest target interval in the approved well program. The minimum expenditure for this period shall be thirty million Dollars ($30,000,000).

3.1.5	However, if the Contractor has performed work exceeding the Minimum Work Program required of it under any of Articles ‎3.1.1, ‎3.1.2 or ‎3.1.3, then the excess work, including Wells, is carried over to the next Sub-Period or Extension Period, and shall be deducted from the Minimum Work Program and the minimum expenditure for such next Sub-Period or Extension Period.

3.1.6	If the Contractor fulfills the Minimum Work Program (as set out in Articles ‎3.1.1, ‎3.1.2, ‎3.1.3, and ‎3.1.4) as applicable for each such Sub-Period and Extension Period, then the Contractor shall be deemed to have satisfied the minimum expenditure for each such Sub-Period and Extension Period, as applicable.

3.2	Minimum Depth of Wells

3.2.1	Each Exploration Well set forth above must be drilled to the minimum depth specified above in Article ‎3.1.2 or ‎3.1.4, as the case may be, or to a lesser depth if authorized by the Ministry in accordance with this Article or if discontinuing drilling is justified by one of the following reasons:

(a)	the economic basement is encountered at a depth less than the stipulated minimum contractual depth;

(b)	continued drilling is clearly dangerous because of abnormal pressure in the formation;

(c)	rock formations are encountered, the hardness of which makes it impracticable to continue drilling with appropriate equipment; or

(d)	Hydrocarbon bearing formations are encountered that require the installation of protective casings which excludes the possibility of reaching the minimum contractual depth.

---

3.2.2	For the purposes of Article ‎3.2.1, economic basement means any stratum in and below which the geological structure or physical characteristics of the rock sequence do not have the properties necessary for the accumulation of Hydrocarbons in commercial quantities and which also reflects the maximum depth at which any accumulation of this type can be reasonably expected.

3.3	Cessation of Drilling

3.4	Substitute Wells

(a)	drill a substitute Exploration Well at the same or another location to be agreed with the Ministry; or

(b)	pay the Ministry an amount equal to the difference between thirty million Dollars ($30,000,000) and the amount of Exploration Costs actually spent in connection with such Exploration Well; and

(c)	such substitute well or payment per Articles ‎3.4(a) or ‎(b) shall be deemed to have fulfilled the Minimum Work Program obligations for the relevant Sub-Period or Extension Period.

3.5	Provision of Guarantee

---

3.6	Participation Interest of the National Company

4.1	Submission of Annual Work Program

4.2	Form and Approval of Annual Work Program

---

4.3	Conduct of Petroleum Operations

4.4	Overexpenditures

4.4.1

It is acknowledged by the Ministry and the Contractor that the technical results acquired as work progresses or the occurrence of certain unforeseen changes in circumstances may justify modifications to an approved Annual Work Program and corresponding Annual Budget. In such circumstances, the Contractor shall promptly notify the Ministry of the proposed modifications. Such modifications are subject to review and approval by the Ministry within sixty (60) days after receipt of such notice. Failure of the Ministry to approve or reject such proposed modifications within such sixty (60) day period shall be deemed to be an approval of such proposed modifications. Notwithstanding the foregoing and in no event shall the Contractor incur any line item expenditure which exceeds an approved Annual Budget line item by more than ten percent (10%), provided that the cumulative total of all overexpenditures for a Calendar Year shall not exceed five percent (5%) of the total approved Annual Budget without the prior approval of the Ministry; otherwise such excess expenditures shall not be recoverable as a Petroleum Operations Cost or deductible for tax purposes.

4.4.2	At such time that the Contractor reasonably believes that the limits of an Annual Budget will be exceeded, the Contractor shall promptly notify the Ministry and shall provide the Ministry with full details of such overexpenditures, including reasons therefor.

4.4.3	The limitations set out in this Article ‎4.4 shall be without prejudice to the Contractor’s right to make expenditures in the event of an emergency or accident requiring urgent action under Article ‎4.5.

4.4.4	Save as otherwise provided in Article ‎4.5, should the Contractor incur any expenditure whose program and budget has not been approved within an Annual Work Program and corresponding Annual Budget or any amendment thereto approved by the Ministry, then such expenditure shall not be recoverable by the Contractor as a Petroleum Operations Cost or be deductible for tax purposes.

4.5	Emergency or Accident

4.5.1

In the event of an emergency or accident requiring urgent action, the Contractor shall take all steps and measures as may be prudent and necessary in accordance with good oil field practice for the protection of its interests and those of the State and the property, life and health of other Persons, the environment and the safety of Petroleum Operations. The Contractor shall promptly inform the Ministry of such emergency or accident.

4.5.2	All of the related costs incurred by the Contractor in accordance with this Article ‎4.5 shall be recoverable as Petroleum Operations Costs in accordance with this Contract. Notwithstanding the foregoing, all costs incurred by the Contractor in the cleaning up of pollution or damage to the environment caused by the gross negligence or willful

---

5.1	Notification of Discovery

5.2	Appraisal Work Program

5.2.1

If the Contractor considers that the Discovery merits Appraisal it shall diligently submit to the Ministry a detailed Appraisal work program and corresponding budget no later than six (6) months following the date on which the Discovery was notified in accordance with Article ‎5.1. The Appraisal work program, corresponding budget and designated Appraisal Area are subject to the review and approval of the Ministry in accordance with the procedures set forth in ‎Article 4.

5.2.2

The draft Appraisal work program shall specify the estimated size of the Hydrocarbon reserves of the said Discovery, the area proposed to be designated as the Appraisal Area and shall include all seismic, drilling, testing and Appraisal operations necessary to carry out an appropriate Appraisal of the Discovery. The Contractor shall diligently undertake the approved Appraisal work program, it being understood that the provisions of Article ‎4.4 shall apply to such program.

5.2.3	The duration of the Appraisal work program shall not exceed twenty-four (24) months for Crude Oil and in the case of Natural Gas the duration of the Appraisal work program shall be determined in accordance with the provisions of ‎Article 13, unless as otherwise approved by the Ministry, such approval not to be unreasonably withheld or delayed.

5.3	Submission of Appraisal Report

5.3.1

Within six (6) months following completion of the Appraisal work program and in any event no later than thirty (30) days prior to the expiry of the Initial Exploration Period, or the First Extension Period or the Second Extension Period, including any additional extension in accordance with the provisions of Article ‎2.2, as may be the case, the Contractor shall submit to the Ministry a detailed report giving all the technical and economic information associated with the Discovery so appraised and which shall confirm, in the Contractor’s opinion, whether such Discovery is a Commercial Discovery.

5.3.2	The above-referred report shall include geological and petrophysical characteristics of the Discovery, estimated geographical extent of the Discovery, results of the production

---

5.4	Determination of Commerciality

5.5	Submission and Approval of Development and Production Plan

5.5.1	If the Contractor deems the Discovery or aggregation of Discoveries to be a Field it shall submit for the approval of the Ministry a development and production plan (the Development and Production Plan) for such Discovery or aggregation of Discoveries within twelve (12) months following the remittance of the report referred to in Article ‎5.3.

5.5.2

The Ministry may propose amendments or modifications to the aforementioned Development and Production Plan, and also to the Development and Production Area subject to such Development and Production Plan, by notice to the Contractor within ninety (90) days following receipt of the relevant plan. Such notification shall set out the reasons for the amendments or modifications proposed by the Ministry. In such event the Ministry and the Contractor shall meet as soon as possible to review the proposed amendments or modifications of the Ministry and establish by mutual agreement the Development and Production Plan.

5.5.3

If (i) the Contractor and the Ministry do not reach a written agreement within one hundred eighty (180) days following the submission of amendments and modifications by the Ministry, or (ii) the Ministry notifies the Contractor that it does not approve the Development and Production Plan, within thirty (30) Business Days of the occurrence of either (i) or (ii) above, the Parties shall meet to assess the discrepancies in accordance with articles 49 and 50 of the Petroleum Regulations; if an agreement is not reached, the points of discrepancies shall be referred to and shall be determined by an internationally recognized expert appointed by the International Chamber of Commerce in accordance with its Rules for Expertise (ICC Expertise Rules). The determination of the expert shall be final and binding upon the Parties, including the Ministry, and, if should it not be complied with pursuant to Equatorial Guinea legislation, either Parties may refer the matter to arbitration under ‎Article 26 to reach a final and binding decision. .

5.6	Modifications to Development and Production Plan

5.6.1

When the results obtained during Development and Production Operations require certain modifications to the Development and Production Plan, such plan may be modified using the same procedure provided for with respect to the initial approval thereof. Subject to Article ‎4.4, the Contractor may not incur any expenditure which exceeds the approved Development and Production Plan without the prior approval of

---

5.6.2	During a period of Development and Production, the Contractor may propose to the Ministry revisions to the Development and Production Plan at any time that additional Development and Production Operations are under consideration. Such revisions shall be submitted for approval by the Ministry, using the same procedure provided for with respect to the initial approval thereof.

5.7	Number of Fields

5.8	Extension of Field beyond Contract Area

5.8.1

If, during work performed after approval of a Development and Production Plan, it appears that the geographical extent of a Field is larger than the Development and Production Area designated pursuant to Article ‎5.5, the Ministry may grant the Contractor the additional area, on condition that it is included in the Contract Area in effect at that time, and provided that the Contractor provides supporting evidence of the existence of the additional area applied for.

5.8.2	In the event that a Field extends beyond the boundaries of the Contract Area as delimited at any particular time, the Ministry may require the Contractor to exploit such Field in association with the contractor of the adjacent area in accordance with ‎Article 22, the Hydrocarbons Law and generally accepted practice of the international petroleum industry.

5.8.3	When the area proposed to be unitized is not subject to any production sharing contract, the Ministry may grant the Contractor the additional area, on condition that it is included in the Contract Area in effect at that time, it being understood that any award of an additional area must be in accordance with the Hydrocarbons Law.

5.9	Commencement and Performance of Development and Production Operations

5.9.1	The Contractor shall commence Development and Production Operations within six (6) months from the date of approval of the Development and Production Plan and shall pursue such operations diligently.

5.9.2	The Contractor undertakes to perform all Development and Production Operations in accordance with generally accepted practice of the international petroleum industry, this Contract and the Hydrocarbons Law.

---

5.10	Duration of Operations

5.10.1	The duration of the Development and Production period during which the Contractor is authorized to exploit a Field is twenty-five (25) Years from the date of approval of the Development and Production Plan related to such Field.

5.11	Risk and Expense of Contractor

5.12	Mandatory Relinquishment

(a)	has not submitted, in accordance with Article ‎5.2, an Appraisal work program and corresponding budget with respect to such Discovery within six (6) months following the date on which such Discovery has been notified to the Ministry; or

(b)	subject to Article ‎13.1 regarding Unassociated Natural Gas, does not establish the Discovery as a Field within one (1) Year after completion of Appraisal work with respect to such Discovery.

5.13	Future Operations

---

5.14	Available Facilities

6.1	Obligations of Contractor

6.2	Joint Operating Agreement

6.3	Conduct of Petroleum Operations

6.4	Maximum Efficient Production Rate

---

6.5	Working Conditions

6.6	Discovery of other Minerals

6.7	Award of Contracts

6.7.1	In all the Material Contracts, the Contractor shall:

(a)	call a bid for the contract.

(b)	give preference to the national companies the Contractor thinks that are qualified;

(c)	before awarding a Material Contract, notify and inform the Ministry about the intention of the Contractor to present an offer for such contract;

(d)	include the national companies that have been included in a list provided by the Ministry and that the Contractor regard as competent, in the list of bids for such Material Contract;

(e)	include in the list of bids, any qualified Person the Ministry suggests to be included; finish the bid process within a reasonable period of time;

(f)	consider and analyze the submitted offers;

(g)	draft and send to the Ministry a competitive analysis of the offers submitted including the Contractor’s recommendation in terms of the Person that will be awarded with the contract, the underlying reasons and the technical, commercial and contractual conditions to be agreed;

---

(h)	obtain the Ministry’s approval, which will be regarded as awarded if there is no response to an approval application thirty (30) days after since the reception of the written application; and

(i)	Provide the Ministry with a final copy of the signed contract.

6.7.2	Should the Contractor imports and/or use any service, material, equipment, consumables and other goods from a country other than Equatorial Guinea, aware of contravention of this Article or Article ‎23.1, or otherwise signs a contract aware of contravention of such Articles, their costs shall not be Petroleum Operational Costs and they shall not be recoverable costs by the Contractor.

6.8	Inspection of Petroleum Operations

6.8.1

All Petroleum Operations may be inspected and audited by the Ministry at such intervals as the Ministry deems necessary. The duly commissioned representatives of the Ministry shall have the right, among others, to monitor Petroleum Operations and inspect all equipment, facilities and materials relating to Petroleum Operations, provided that any such inspection shall not unduly delay or impede Petroleum Operations. The representatives of the Ministry inspecting and monitoring Petroleum Operations shall comply with the safety standards of the Contractor.

6.8.2	For the purposes of permitting the exercise of the above-mentioned rights, the Contractor shall provide reasonable assistance to the representatives of the Ministry, including transportation and accommodation, as set forth in Article ‎6.23.

6.8.3	All costs directly related to the technical inspection, verification and audit of Petroleum Operations or otherwise in connection with the exercise of the Ministry’s rights under this Contract or the performance of the Contractor’s obligations shall be borne by the Contractor and are recoverable as Petroleum Operations Costs in accordance with this Contract, including:

(a)	outbound and return travel expenses;

(b)	local transportation, as necessary, when there is no transportation available under Article ‎6.8.2;

(c)	accommodation, when such accommodation is necessary to perform the official duties and is not provided under Article ‎6.8.2; and

(d)	per diems, which shall be adjusted in accordance with such amounts assigned to the ranking of each agent of the Ministry as published in the general budget law of the State approved for such Calendar Year, applicable to all companies in the extraction sector of Hydrocarbons in Equatorial Guinea, as set out in Article ‎6.23 below.

---

6.9	Provision of Information to Ministry

6.9.1

The Contractor shall keep the Ministry fully informed on the performance and status of Petroleum Operations at reasonable intervals and as required under this Contract and of any emergencies or accidents that may have occurred during such operations. Furthermore, the Contractor shall provide the Ministry with all documentation and information that is required to be provided under this Contract and the Hydrocarbons Law and as may otherwise be requested by the Ministry from time to time.

6.9.2	The Contractor shall keep the Ministry informed on a daily basis of the volumes of Hydrocarbons produced from the Contract Area.

6.10	Production of Energy for Own Use

6.11	Standard of Equipment

6.12	Care of Contractor and the Environment

6.12.1	The Contractor shall take all prudent and necessary steps in accordance with

(a)	prevent pollution and protect the environment and living resources;

(b)	ensure that any Hydrocarbons discovered or produced in the Contract Area are handled in a manner that is safe for the environment;

(c)	avoid causing damage to overlying, adjacent and/or underlying formations trapping Hydrocarbon reserves;

---

(d)	prevent the ingress of water via Wells into strata containing Hydrocarbon reservoirs;

(e)	avoid causing damage to overlying, adjacent and/or underlying aquifers;

(f)	ensure that Petroleum Operations are carried out in accordance with this Contract, the Hydrocarbons Law and all other laws of Equatorial Guinea;

(g)	undertake the precautions necessary for the protection of maritime transportation and the fishing industry and to avoid contamination of the ocean and rivers;

(h)	drill and exploit each Field in such a manner that the interests of Equatorial Guinea are protected; and

(i)	ensure prompt, fair and full compensation for injury to Persons or property caused by the effects of Petroleum Operations.

6.12.2

If the Contractor’s actions result in any pollution or damage to the environment, any Person, living resources, property or otherwise, the Contractor shall immediately take all prudent and necessary measures to remedy such damages and effects thereof and/or any additional measures as may be directed by the Ministry. If the pollution or damage is caused as a result of the negligence or willful misconduct of the Contractor, its subcontractors or any Persons acting on its or their behalf all costs in relation thereof shall not be recoverable as a Petroleum Operations Cost. If the Contractor does not act promptly so as to control or clean-up any pollution or make good any damage caused, the Ministry may, after giving the Contractor reasonable notice in the circumstances, carry out the actions which are prudent or necessary hereunder and under Article ‎4.5 and all reasonable costs and expenses of such actions shall be borne by the Contractor and shall not be recoverable as a Petroleum Operations Cost.

6.12.3

If the Ministry determines that any works or installations built by the Contractor or any activity undertaken by the Contractor threatens the safety of any Persons or property or causes pollution or harm to the environment, the Ministry shall promptly advise the Contractor of its determination, and may require the Contractor to take all appropriate mitigating measures, consistent with generally accepted practice of the international petroleum industry, to repair any damage caused by the Contractor’s conduct or activities. Furthermore, if the Ministry deems it necessary, it may demand that the Contractor suspend totally or partially the affected Petroleum Operations until the Contractor has taken the appropriate mitigating measures or repaired any damage.

6.12.4

The Contractor shall undertake comprehensive environmental impact assessment studies prior to, during and after major drilling operations. The Contractor shall assume the costs of these studies and such costs shall be recoverable. This requirement is mandatory and the first study shall be presented to the Ministry before the start of the drilling of the first Well in the Contract Area. However, an environmental impact assessment must also be completed prior to undertaking any seismic work in any areas of particular environmental sensitivity specified by the State.

6.13	Re-injection and Flaring of Natural Gas

---

6.14	Design and Identification of Wells

6.14.1	The Contractor shall conform to the practices generally accepted in the international petroleum industry in the design and drilling of Wells, including their casing and cementation.

6.14.2	Each Well shall be identified by a name or number agreed with the Ministry, which shall be indicated on all maps, plans and other similar records produced by or on behalf of the Contractor.

6.15	Vertical Projection Wells

6.16	Notification of Commencement of Drilling

6.17	Construction of Facilities

---

6.18	Occupation of Land

6.18.1	In order to carry out Petroleum Operations, the Contractor shall have the right to:

(a)	subject to Articles ‎6.17 and ‎6.18.2, occupy the necessary land for the performance of Petroleum Operations and associated activities as set out in paragraphs ‎(b) and ‎(c) below, including lodging for personnel;

(b)

undertake or procure the undertaking of any infrastructure work necessary in normal technical and economic conditions for the carrying out of Petroleum Operations and associated activities such as transport, storage of equipment, materials and extracted substances, establishment of telecommunications equipment and communication lines necessary for the conduct of Petroleum Operations at installations located both offshore and onshore;

(c)	undertake or ensure the undertaking of works necessary for the supply of water to personnel and installation works in accordance with water supply regulations; and

(d)	extract and use or ensure the extraction and utilization of resources (other than Hydrocarbons) from the subsoil necessary for the activities stipulated in paragraphs ‎(a), ‎(b) and ‎(c) above in accordance with relevant regulations.

6.18.2	Occupation of land as mentioned in Article ‎6.18.1 shall become effective after the Ministry or other applicable governmental authority approves the request submitted by the Contractor indicating and detailing the location of such land and how the Contractor plans to use it, taking the following into consideration:

(a)	if the land belongs to the State, the State shall grant it to the Contractor for occupation and to build its fixed or temporary facilities during the term of this Contract for a fee and on terms to be agreed and such amount shall be considered a Petroleum Operations Cost;

(b)

if the land is private property by traditional or local right according to the Property Registry, then (1) if the occupation is merely temporary or transitory, or for right of way, the Contractor shall reach an agreement with the relevant property owner and the property owner shall reach an agreement with any occupant, tenant or possessor, with regard to the rental to be paid, and the resulting amounts shall be considered recoverable Petroleum Operations Costs, or (ii) if the occupation is permanent, the relevant owner and the Contractor shall reach an agreement regarding matters related to the property’s acquisition and such amounts shall be considered Petroleum Operations Costs;

(c)

if the Contractor and the relevant property owner or occupant, tenant or possessor do not reach an agreement regarding the matters mentioned in paragraph ‎(b) above, the Ministry shall act as a mediator between them and in the event that such mediation does not produce a resolution of the case the dispute shall be resolved by the courts of Equatorial Guinea unless recourse is had to the procedure described in paragraph ‎(d) below;

---

(d)

the State may proceed to expropriate the land, subject to the prior publication of a decree of compulsory expropriation followed by a fair and reasonable valuation of the land concerned by an expert valuator. In such event the Contractor shall compensate the expropriated property owner in accordance with the value determined by such expert valuator if the State has not done so; such amounts shall be considered recoverable Petroleum Operations Costs;

(e)

the relinquishment, in whole or in part, of the Contract Area, will not affect the Contractor’s rights under Article ‎6.18.1 to carry out building works and construction of installations, provided that such works and installations are directly related to other activities of the Contractor in the remainder of the Contract Area, as in the case of partial relinquishment, and covered by other production sharing contracts.

6.19	Residence of Personnel

6.20	Assistance of Ministry

6.21	Opening of Branch Office

6.22	Premises

---

6.23	State Expenses

(a)	the actual expenses incurred for travel to the location outside of the Republic of Equatorial Guinea and for travel to return to the Republic of Equatorial Guinea and lodging of such employees or officials at the foreign location, and

(b)	to pay to the Ministry, on behalf of the State, for the per diem as provided in the 2017 Budget Law. amount equal to the following for each day such employee or official is out of the Republic of Equatorial Guinea in accordance with the request of CONTRACTOR;

A.	As a consequence of the payment of the per diems noted above, Company shall not make any payments to or on behalf of any Government of Equatorial Guinea travelers in relation to meals or other incidental or miscellaneous costs incurred by such travelers during such travel, and all such costs shall be for the sole account of such travelers.

B.

The Parties agree that all payments made pursuant to this Section ‎6.23 by Company to the Ministry, on behalf of the State, and to the provider of services, shall be recoverable expenses under this Contract as Petroleum Operations Costs. The Parties further agree that in relation to all payments made pursuant to this Section ‎6.23, Company is neither seeking nor shall it gain any business or business advantage from the Ministry or the Government of the Republic of Equatorial Guinea as a result of making such payments.

---

7.1	Royalties

7.1.1	The Contractor shall pay Royalties to the State from the first day of Production based on the daily Total Disposable Production from a Development and Production Area. The calculation shall be determined according to the following table applicable for each tranche:

7.1.2	The percentage corresponding to the level of Production shall be applied directly. Thus, for example: for a Production level of ninety thousand (90,000) Barrels per day, fourteen point five percent (14.5%) would be applied and the Royalty would be thirteen thousand fifty (13,050) Barrels.

7.2	Cost Recovery Oil

7.2.1	After deducting Royalties, the Contractor shall be entitled to up to seventy percent (70%) of the Total Disposable Production remaining in any Calendar Year for recovery of its Petroleum Operations Costs (Cost Recovery Oil).

7.2.2	The value of the portion of Total Disposable Production assigned to the Contractor’s Petroleum Operations Costs recovered will be determined in accordance with ‎Article 10.

7.2.3	If, during any Calendar Year, the Petroleum Operations Costs not yet recovered by the Contractor in accordance with this Contract exceed the value of the maximum amount of available Cost Recovery Oil, the portion of Petroleum Operations Costs not recovered in the said Year will be carried forward to the following Calendar Year for recovery purposes.

7.3	Net Crude Oil

---

7.4	Delivery of State’s Entitlement

7.5	Price Obtained by Contractor

7.5.1

If, pursuant to Article ‎7.4, the State requires the Contractor to purchase its share of Crude Oil, the State shall advise the Contractor of its next scheduled shipment at least three (3) months in advance, and the Ministry and the Contractor shall come to a mutual agreement as to the terms and conditions of such sale and purchase. In the event that three (3) months advance notice is not given, or they do not reach an agreement as to the terms and conditions of the sale and purchase, the Contractor shall not be obliged to purchase said Crude Oil.

7.5.2

The Ministry shall be entitled to compare the price for its Crude Oil obtained from the Contractor with similar market quotations. In the event that it is shown that the price obtained from the Contractor differs substantially from the quotations in similar markets, the Ministry shall have the right to evaluate the Contractor’s sales and marketing operations and, if justified, cancel any sales agreement between the State and the Contractor, without prejudice to any claim that the State may have against the Contractor with respect to the matters under dispute.

7.6	Export of Entitlement

7.7	Title to Contractor’s Entitlement

---

8.1	Liability for Petroleum Operations Costs

8.2	Participation Interest of the National Company

8.2.1

The National Company’s Participation Interest will be carried and paid for in full by the other Parties comprising the Contractor (other than the National Company) in proportion to their respective Participation Interests (other than the National Company’s) through the Exploration Period. At approval of the Development and Production Plan, the National Company shall convert its carried Participation Interest into a full working Participation Interest in accordance with the Hydrocarbons Law. From that point on, the National Company shall be responsible for all its costs in respect of the area covered by the approved Development and Production Plan. For the avoidance of doubt, the National Company’s Participation Interest in respect of the remainder of the Contract Area shall continue to be carried and paid for by the Parties comprising the Contractor (other than the National Company) in proportion to their respective Participation Interests (not including the National Company’s) until such time as the National Company elects to convert its carried interest into a full working interest.

8.2.2

The costs, expenditures and obligations, including the costs incurred pursuant to Article ‎6.23, incurred by the Parties comprising the Contractor (other than the National Company) in relation to the National Company’s carried Participation Interest shall be recoverable by the Parties comprising the Contractor (other than the National Company) in accordance with the provisions of this Contract and the Hydrocarbons Law.

8.2.3	The Parties comprising the Contractor (other than the National Company) shall recover the costs and expenditures in relation to the National Company’s carried Participation Interest from fifty percent (50%) of the Hydrocarbons corresponding to the National Company’s total entitlement in accordance with Articles ‎7.2 and ‎7.3.

9.1	Payment of Taxes

---

9.2	Audit Rights

10.1	Market Price

10.1.1	The unit selling price of Crude Oil under this Contract shall be the FOB Market Price at the Delivery Point, expressed in Dollars per Barrel and calculated in accordance with this Article ‎10.1. A Market Price shall be established for each type of Crude Oil or Crude Oil blend in accordance with this Article ‎10.1.

10.1.2	The Market Price applicable to all liftings of Crude Oil sold to third Parties under market conditions during one Quarter shall be the agreed selling price, adjusted, as necessary, to reflect differentials in quality, gravity, quantity, delivery conditions and terms of payment.

10.1.3

Before the period in which a price for Crude Oil is quoted by Platts for the Field from where Crude Oil is sold, the Market Price applicable to all liftings of Crude Oil sold to a Contractor’s Affiliate and later sold to a third party, will be the value received under the Contract under market conditions with the said third party, adjusted, as necessary, to reflect differentials in quality, gravity, quantity, delivery conditions and terms of payment. Should there be no price quoted by Platts for the produced Crude Oil, the Contractor and the Ministry shall meet to establish a differential related to a crude marker quoted by Platts to reflect the differential in terms of quality and the commercial differentials. The meeting shall be held six months after the introduction in the market; all the Persons comprising the Contractor and participating in the marketing of Crude Oil during that period of six months, shall attend such meetings with the Ministry.

10.1.4

The Market Price applicable to all liftings of Crude Oil sold to a Contractor’s Affiliate after having set a quoted price during a Quarter will be calculated by summing up the average of high and low quotes for Dated Brent according to the data published in the five (5) consecutive issues of the Platts Bulletin for the Crude Oil Market (including all corrections) posterior to the lifting informed date and the differential average between the sold Crude Oil and the Dated Brent one as published in the Platts Crude for the period starting on the fifteenth day (15th) day and ends on the last day of the Month of the Load Commercialization (inclusive).

A=	average o the high and low quotes of Brent Dating according to the according to the data published in the five (5) consecutive issues of the Platts Bulletin for the

---

B=	differential average between the quality of the sold Crude Oil and the Dated Brent as published in the Plaits Crude for the period starting on the fifteenth day (15th) day and ends on the last day of the Month of the Load Commercialization (inclusive).

10.1.5	The Market Price applicable to all liftings of Crude Oil during one Quarter shall be equivalent to the weighted average of the prices obtained by the Parties comprising the Contractor, with the exception of the National Company, for all Crude Oil sold and valued in accordance with Articles ‎10.1.2, ‎10.1.3 and ‎10.1.4.

10.1.6	The following transactions shall be excluded from the calculation of the Market Price:

a)	Sales between Crude Oil providers and the national market; and

b)	Sales in which the compensation is different from a payment in a freely convertible currency, and sales totally or partially conducted due to reasons different from common commercial incentives for Crude Oil Sales in the international market (such as exchange contracts).

10.2	Disagreement of Market Price

10.2.1

The Contractor and the Ministry shall agree the Market Price in accordance with this ‎Article 10; in the event that they are unable to agree on any matter concerning the Market Price of Crude Oil, either the Contractor or the Ministry may serve on the other a dispute notice. Within seven (7) days of the date of the dispute notice the Ministry shall establish a committee of two (2) Persons of which the Minister of Mines, Industry and Energy or his delegate will be the President and the other committee member will be a representative designated by the Contractor to represent it. The committee must meet and make a decision resolving any dispute under this ‎Article 10 within thirty (30) days of the date of the dispute notice. The committee shall unanimously decide the dispute.

10.2.2

In the event a unanimous decision is not reached by the committee within the aforementioned thirty (30) day period, the dispute shall be determined by an internationally recognized expert appointed by the International Chamber of Commerce in accordance with its Rules for Expertise (ICC Expertise Rules). The determination of the expert shall be final and binding on the Parties. The expert shall determine the Market

---

10.2.3	Pending the determination of the Market Price for a Quarter, the Market Price provisionally applicable to a Quarter shall be the Market Price of the preceding Quarter. Any necessary adjustment shall be made no later than thirty (30) days after the determination of the Market Price for the Quarter in question.

10.3	Payment Deadline to the State of the Market Price should the Contractor Commercialize the State Crude Oil.

10.4	Audit of Market Price

11.1	Signature Bonus

11.2	Discovery Bonus

11.3	Production Bonuses

---

(a)	on the date of start Production of Crude Oil from a Development and Production Area, two million Dollars ($2,000,000);

(b)	two million Dollars ($2,000,000) after daily Production from a Development and Production Area first averages 20,000 Barrels per day for a period of sixty (60) consecutive days;

(c)	three million Dollars ($3,000,000) after daily Production from a Development and Production Area first averages 40,000 Barrels per day for a period of sixty (60) consecutive days;

(d)	five million Dollars ($5,000,000) after daily Production from a Development and Production Area first averages 60,000 Barrels per day for a period of sixty (60) consecutive days; and

(e)	six million Dollars ($6,000,000) after daily Production from a Development and Production Area first averages 120,000 Barrels per day for a period of sixty (60) consecutive days.

11.4	Surface Rentals

11.4.1	The Contractor shall pay to the State the following annual surface rentals:

(a)	zero point twenty five Dollars ($0.25) per hectare of the Contract Area annually, for each Calendar Year or part thereof, during the Initial Exploration Period, the Extension Periods or any extension thereof; or

(b)	two point five Dollars ($2.50) per hectare for each Development and Production Area, annually for each Calendar Year or part thereof, during the term of the relevant Development and Production period.

11.4.2

For the Year in which this Contract is signed, the surface rental set forth in Article ‎11.4.1(a) shall be prorated from the Effective Date through to 31 December of such Year and shall be paid within thirty (30) days after the Effective Date. For succeeding Years the surface rentals set forth in Article ‎11.4.1(a) and ‎(b) shall be paid in advance not less than thirty (30) days before the beginning of each Calendar Year.

---

11.4.3

Surface rentals shall be calculated based on the surface of the Contract Area and, where applicable, of a Development and Production Area occupied by the Contractor on the date of payment of such surface rentals. For the avoidance of doubt, this shall exclude any relinquished areas. In the event of relinquishments made during a Calendar Year, the Contractor shall have no right to be reimbursed for the surface rentals already paid.

12.1	Obligation to Supply

12.2	Notification from Ministry

13.1	Unassociated Natural Gas

13.1.1

In the event of an Unassociated Natural Gas Discovery, the Contractor shall comply with the provisions of Article ‎5.2. However, if the Appraisal work program presented by the Contractor following the Discovery of Unassociated Natural Gas has a duration exceeding that of the Initial Exploration Period or any of its extensions, the Contractor may request from the Ministry an extension of the relevant Exploration Period with respect to the Appraisal Area related to such Discovery for a period of up to four (4) Years starting from the expiry of the Initial Exploration Period or any of its Extension Periods, as appropriate. The Contractor shall request the aforementioned extension at least sixty (60) days prior to the expiry of the relevant period.

13.1.2	If the Contractor considers that the Unassociated Natural Gas Discovery does not warrant Appraisal or further Appraisal, in conformity with the provisions of Article ‎5.12, the

---

13.1.3	In the same manner, if after completion of the Appraisal work, the Contractor considers that the Unassociated Natural Gas Discovery is not commercial, the Ministry may, with ninety (90) days’ advance notice, require the Contractor to relinquish all of its rights over the Appraisal Area encompassing such Discovery.

13.1.4

In both the above cases the Contractor shall be deemed to have waived all its rights to the Hydrocarbons produced from such Unassociated Natural Gas Discovery, and the State may then carry out, or cause to be carried out, all the Petroleum Operations relating to that Discovery, without compensation or indemnification to the Contractor, provided, however, that such work shall not prejudice the performance of other Petroleum Operations of the Contractor. The Ministry may request that the Contractor undertake all continuing operations for a fee and on terms to be agreed between the Ministry and the Contractor.

13.2	Associated Natural Gas

13.2.1

In the event that a Discovery of Crude Oil is considered to be a Commercial Discovery, the Contractor shall state in the report referred to in Article ‎5.3 whether it considers that the Production of Associated Natural Gas is likely to exceed the quantities necessary for the requirements of Petroleum Operations relating to the Production of Crude Oil (including re-injection operations), and whether it considers that such excess is capable of being produced in commercial quantities. In the event the Contractor has informed the Ministry of such an excess, the Ministry and the Contractor shall jointly assess the possible markets and uses for such excess of Associated Natural Gas, both on the local market and for export (including the possibility of joint marketing of their shares of Production of that excess of Associated Natural Gas in the event such excess would not otherwise be commercially exploitable), together with the means necessary for its marketing.

13.2.2

In the event the Ministry and the Contractor should decide that the Development of the excess Associated Natural Gas is justified, or in the event the Contractor should wish to develop and produce such excess, the Contractor shall indicate in the Development and Production Plan the additional facilities necessary for the Development and Production of such excess and its estimate of the costs related thereto. The Contractor shall then proceed with the Development and Production of such excess in accordance with the Development and Production Plan submitted and approved by the Ministry under Article ‎5.5. A similar procedure shall be applicable if the sale or marketing of Associated Natural Gas is agreed during the Production of a Field.

13.2.3	In the event the Contractor does not consider the exploitation of the excess Associated Natural Gas is justified and if the State at any time wishes to utilize it, the Ministry shall notify the Contractor of the State’s wish, in which event:

(a)	the Contractor shall put at the disposal of the State free of charge the Crude Oil and Associated Natural Gas separation facilities for all or part of such excess that the State wishes to utilize;

---

(b)	the State shall be responsible for the gathering, treatment, compression and transportation of such excess Associated Natural Gas from the receiving point at the Contractor’s facilities and for bearing any additional costs and liabilities related thereto; and

(c)	the construction of the facilities necessary for the operations referred to in paragraph ‎(b) above, together with the recovery of that excess by the State shall be carried out in accordance with generally accepted practice of the international petroleum industry.

13.2.4	In no event shall the Operations carried out by the State in relation to such Associated Natural Gas interfere with Petroleum Operations of the Contractor.

13.2.5

Any excess Associated Natural Gas not utilized in accordance with Articles ‎13.2.1, ‎13.2.2 and ‎13.2.3 shall be re-injected by the Contractor in accordance with Article ‎6.14. Flaring will be permitted only in accordance with the Hydrocarbons Law and is subject to the approval of the Ministry. The Contractor shall be permitted to flare Associated Natural Gas without the approval of the Ministry in the event of an emergency, provided that every effort is made to diminish and extinguish such flaring of Natural Gas as soon as possible. The Ministry has the right to offtake, free of charge, at the wellhead or gas oil separator all Natural Gas that would otherwise be re-injected or flared by the Contractor.

13.3	Provisions Common to Associated and Unassociated Natural Gas

13.3.1	The Contractor shall dispose of its share of the Production of Natural Gas in accordance with this Contract and the Hydrocarbons Law. The provisions of this Contract applicable to Crude Oil shall apply mutatis mutandis to Natural Gas unless otherwise specified herein.

13.3.2	The selling price for all Natural Gas to be sold in the domestic market shall be set by the Ministry in accordance with the Hydrocarbons Law. The selling price for all Natural Gas to be sold outside of the domestic market shall be as agreed between the Ministry and the Contractor. The Ministry and Contractor shall proceed in good faith to negotiate a gas sales agreement, if required.

13.3.3

For the purposes of Articles ‎7.3 and ‎11.3, the quantities of available Natural Gas after deduction of the quantities re-injected, flared or necessary for the conduct of Petroleum Operations shall be expressed in a number of Barrels of Crude Oil on a BTU equivalent energy content basis adjusted monthly by a commercially appropriate factor relating the price of Natural Gas with the price of Crude Oil in terms of the provisions of Article ‎10.3, unless otherwise agreed between the Ministry and the Contractor.

13.3.4	The provisions of Article ‎7.2 in respect of cost recovery shall apply mutatis mutandis to the Production of Natural Gas.

13.3.5	The quantity of Natural Gas produced and saved from the Contract Area which remains after the Contractor has taken the portion for the recovery of Petroleum Operations Costs pursuant to Article ‎13.3.4 shall be referred to as Net Natural Gas.

---

13.3.6	Subject to the Hydrocarbons Law, the Ministry and the Contractor hereby agree that, in the case of Natural Gas Production, they shall reach separate agreements and arrangements with respect to the sale and marketing of Natural Gas.

14.1	Importation of Goods, etcetera

14.1.1	In accordance with the stipulations of Articles 63 and 64 of the Hydrocarbons Law, the Contractor shall be permitted to import into Equatorial Guinea all the goods, materials, machinery, equipment and consumer goods directly necessary to properly carry out Petroleum Operations in its own name or in the name of its sub-contractors or other Persons acting on its or their behalf.

14.1.2	For the purpose of this Contract, the Contractor shall benefit from the following advantages:

(a)

All materials, products, machinery, equipment and tools necessary for Petroleum Operations, provided that these goods, which are exclusively destined and actually dedicated directly to Petroleum Operations and that are destined to be re-exported at the end of their use, will be treated as imported under the conditions stipulated in the Customs Code, the importation in compliance with the regulations of Temporary Admission (TA) or Temporary Imports (TI), either normal or special, whichever is the case for the Contractor, for its sub-contractors and Persons acting on its or their behalf, of all materials, products, machinery, equipment and tools necessary for Petroleum Operations; and

(b)

Admission with exemption from any tax and/or duty of all materials, products, machinery, equipment and tools totally used or consumed in Equatorial Guinea, exclusively and effectively devoted to Hydrocarbon prospecting, Exploration, Development, and Production Operations subject to this Contract. This exemption applies to imports directly made by the Contractor, its subcontractors and Persons acting on its behalf, on condition that a certificate of end use is issued.

14.1.3

Apart from the exemptions established in the above paragraphs of this ‎Article 14 and the items referred to in Article ‎14.1.4, which are waivers that may be granted by the Government according to the law, all goods, materials, products, machinery and equipment imported or exported by the Contractor shall be subject to taxes and/or duties, in accordance with the customs legislation in force in Equatorial Guinea.

14.1.4

The Contractor shall follow the procedures to obtain such waivers, according to the Decree 134/2015 of 2nd of November 2015. The Government shall grant those waivers in accordance with the law to import all goods, materials, machinery, equipment and consumer goods directly needed to implement such Petroleum Operations on behalf of the Contractor or on behalf of its subcontractors or other Persons acting on behalf of the Contractor or its subcontractors in such a way that the import of these items be free and exempt from all customs duties, taxes and fees different from charges resulting from the delivery of the services needed to comply with customs legislation.

---

14.2	Oil Export Rights

14.3	Export of Goods and Materials that have not been transferred to the State

14.4	Customs Documentation

14.5	Exclusion of Penalties and Fines related to Petroleum Operations Costs

14.6	Imports and Exports by Foreign Personnel

---

15.1	Exchange Control Laws

(a)	to retain or dispose of any proceeds outside of Equatorial Guinea including any proceeds from the sale of its or their share of Hydrocarbons;

(b)

to pay foreign subcontractors and expatriate employees of the Contractor, outside of Equatorial Guinea, after deduction of the relevant taxes in Equatorial Guinea. For this purpose, the Contractor may open and use freely bank accounts in Dollars or in other currencies in banks of its choice in Equatorial Guinea and abroad. Notwithstanding the foregoing, while this Contract is in force the Contractor and each of its subcontractors shall establish and maintain a bank account in a national banking institution in Equatorial Guinea, which shall have the Minimum Retention as set out in Article ‎1.1.77, which has been approved by the Ministry and, in the case of subcontractors, the minimum amount set by the Ministry from time to time;

(c)	to transfer such funds as the Contractor or its subcontractors shall have imported into Equatorial Guinea, or earned from Petroleum Operations, or from the proceeds of the sale or lease of goods or performance of services under this Contract;

(d)	to obtain abroad loans required for the performance of their activities under this Contract, provided that the Ministry shall have approved the terms of such loan, including the rate of interest and terms of repayment, whose approval shall not be unreasonably withheld or delayed);

(e)	to collect and maintain abroad all the funds acquired or borrowed abroad, and to freely dispose thereof, limited to the amounts that exceed the requirement of funds for their operations in Equatorial Guinea; and

(f)	free movement of funds owned by them according to the laws of Equatorial Guinea.

15.2	Report on Foreign Exchange Transactions

---

15.3	Freedom of Exchange

16.1	Maintenance of Records and Books

16.1.1	The Contractor shall at all times maintain at its offices in Equatorial Guinea the original records and books of Petroleum Operations in accordance with all applicable regulations and the Accounting Procedure.

16.1.2

All records and books shall be maintained in the Spanish and English languages and be denominated in Dollars, or such other currency as shall be requested by the Ministry from time to time. They shall be supported by detailed documents demonstrating the expenses and receipts of the Contractor under this Contract. Such records and books shall be used to determine the Contractor’s Gross Revenues, Petroleum Operations Costs and net profits, and to establish the Contractor’s Income Tax and other payment obligations. Such records and books shall also include the Contractor’s accounts showing sales of Hydrocarbons.

16.2	Submission of Accounts

16.3	Audit of Ministry

16.3.1

After notifying the Contractor, the Ministry may have experts of its choice or its own agents examine and audit any records and books relating to Petroleum Operations. The Ministry has a period of three (3) years from the date the Contractor submits to the Ministry such records and books in accordance with Article ‎16.2, to perform such examinations or audits with respect to the said Calendar Year and submit its objections to the Contractor for any contradictions or errors found during such examinations or audits.

16.3.2	The Contractor shall provide to the Persons designated by the Ministry any necessary assistance for the foregoing purpose and facilitate the performance of their duties. The Contractor shall bear all reasonable expenses incurred in such examination or audit,

---

16.3.3

In the event of a disagreement between the Ministry and the Contractor in relation to the results of any examination or audit, the dispute shall be determined by an internationally recognized expert appointed by the International Chamber of Commerce in accordance with its Rules for Expertise (ICC Expertise Rules). The determination of the expert shall be final and binding on the Parties. Unless otherwise determined by the expert, the costs and expenses of such expert shall be met proportionately by the Parties on a per capita basis and the Contractor’s share shall not be a Petroleum Operations Cost.

16.4	Currency and Account of Payments

16.4.1

All payments between the Parties under this Contract shall, unless otherwise agreed, be in Dollars, or such other currency as shall be requested by the Ministry from time to time. Subject to Article ‎16.4.2, when the receiving Party is the State, payments shall be made to the General Treasury of the State, and when the receiving Party is the Contractor, payments shall be made to a bank account designated by the Contractor and notified to the Ministry.

16.4.2	All payments to be made to the Ministry pursuant to Article 23.2.2 shall be made to such account as shall be notified to the Contractor.

16.5	Timing and Overdue Payments

17.1	Transfer to Equatoguinean Affiliate

---

17.1.1	As to the withholding tax on dividends, pursuant to Article 237 of Law Number 4/2004 dated October 28, 2004, Regulating the Taxation System of the Republic of Equatorial Guinea (the “Dividend Withholding Tax”):

17.2	Assignment, Transfer, Change of Control

17.2.1

The assignment, transfer, or other disposition of the rights and/or obligations of a Party comprising the Contractor shall require the prior consent of the Ministry. Any request for authorization shall be accompanied by all information related to the assignment, transfer, or other disposition including all legal instruments, in final draft form, to be used to carry out the proposed transaction, the identity of all parties to the transaction, the estimated value of the transaction and whether the consideration is payable in kind, securities, cash or otherwise. Such assignment, transfer, or other disposition shall be subject to the payment of a non-recoverable, non-deductible fee (“Transfer Fee”) of (i) one percent (1%) of Book Value of the assignment, transfer, or disposition when such occurs during the Exploration Periods, and (ii) two percent (2%) of Book Value of the assignment, transfer, or disposition when such occurs during Development and Production Operations, and other non-monetary requirements stipulated in the authorization issued by the Ministry. The assignee and the assignor shall be jointly and severally liable for the payment of such Transfer Fee and for the fulfillment of any other requirements. If within ninety (90) days following notification to the Ministry of a proposed assignment accompanied by the necessary information to prove the technical and financial means of the assignee as well as the terms and conditions of assignment, the Ministry has not given notice of his opposition with reasonable justification, such assignment shall be deemed to have been approved by the Ministry.

17.2.2	All assignees must:

(i)	have the technical and financial ability to meet its obligations under this Contract;

(ii)	in relation to the interest assigned, accept and assume all of the terms and conditions of this Contract, the Joint Operating Agreement and any other agreements relating to Petroleum Operations; and

(iii)	be an entity with which the Ministry and each of the Parties comprising the Contractor can legally do transactions.

17.2.3	All profits resulting from any assignment, transfer or other disposition of any rights and/or obligations under this Contract, regardless of the type and location of the transaction, shall be subject to taxation in conformity of the Tax Law of Equatorial Guinea.

---

17.2.4

Subject to Article 104 of the Hydrocarbon Law and Article 168 of the Petroleum Regulations, each and every one of the Parties comprising the Contractor shall have the right to sell, grant, hand over, transfer or dispose in any other manner all or part of their rights and interests in the Contract, subject to the prior written consent of the Ministry, which shall not be withheld or delayed with no justified reason:

(a)	To a wholly owned Affiliate;

(b)	To the beneficiary of the transfer as foreseen in Article ‎17.1;

(c)	To any of the other Parties comprising the Contractor; or

(d)	To third parties.

17.2.5	If there is an assignment or transfer all or part of their rights and interests in the Contract by Company to a third party, the third party assignee will purchase all existing data packages (both seismic and well) over the Area for one million five hundred thousand Dollars ($1,500,000).

17.3	Change of Control

17.4	Recourse to Third Party Funding

17.5	The National Company’s Right of Preemption

---

18.1	Liability and Indemnity

18.1.1

The Contractor shall indemnify, hold harmless and compensate any Person, including the State, for any damage or loss which the Contractor, its Affiliates, its subcontractors and their respective directors, officers, employees, agents or consultants and any other Person acting on its or their behalf may cause to such Person or their property in the conduct of Petroleum Operations. Ali costs incurred under this Article ‎18.1 caused by the negligence or willful misconduct of the Contractor, its Affiliates, its subcontractors or their respective directors, officers, employees, agents or consultants or any other Persons acting on its or their behalf shall not be cost recoverable as a Petroleum Operations Cost.

18.1.2

The Contractor shall assume all liability, and exempt the State from any liability, in respect of any and all claims, obligations, losses, expenses (including attorneys’ fees), damages or costs of any nature resulting from the violation of any intellectual property rights of any kind caused by the Contractor, its Affiliates or subcontractors as a result of or in relation to the conduct of Petroleum Operations, regardless of the nature of the violation or of the way in which it may occur.

18.2	Joint and Several Liability

18.3	Insurance

18.3.1

The Contractor shall obtain and, during the term of this Contract, maintain in full force and effect, for Petroleum Operations insurance of such type and in such amount as is customary and prudent in accordance with generally accepted practice of the international petroleum industry, and whose coverage terms and conditions shall be communicated to the Ministry within thirty (30) days after the Effective Date. The foregoing insurance shall, without prejudice to the generality of the foregoing provisions, cover:

(a)	any loss or damage to all assets used in Petroleum Operations;

(b)	pollution caused in the course of Petroleum Operations;

(c)	property loss or damage or bodily injury or death suffered by any Person in the course of Petroleum Operations;

(d)	the cost of removing wrecks and clean-up operations following an accident or upon decommissioning; and

(e)	the Contractor’s liability to its employees engaged in Petroleum Operations.

18.3.2	The Contractor shall require its subcontractors to carry insurance of such type and in such amount as is customary in accordance with generally accepted practice of the international petroleum industry.

---

18.3.3	The Contractor shall use all reasonable endeavors to place the insurance required under this ‎Article 18 with Equatoguinean insurance brokers and insurance companies.

19.1	Title and Use of Facilities, etcetera

19.1.1

The Contractor and the Ministry shall agree the mode and conditions of such use, subject to ensuring their maintenance in good condition and good working order, normal wear and tear excepted. In any case, upon termination, rescission or cancellation of this Contract, for any reason whatsoever, in relation to all or any part of the Contract Area, the ownership of said installations, facilities, goods, equipment, materials or land, and including those whose costs have not been fully recovered, and any other items acquired and used for Petroleum Operations shall become the sole property of the State and shall be conveyed directly to it.

19.1.2	Regardless of whether or not the Contractor has recovered the relevant costs in accordance with this Contract, the State is entitled to use the said facilities, goods, equipment, materials or land for its own purposes, provided that such use does not interfere with the Contractor’s Petroleum Operations.

19.1.3	Under no circumstances may the Contractor sell, assign, transfer or otherwise dispose of any such facilities, goods, equipment, materials or land to any other Persons.

19.1.4	The provisions of this Article ‎19.1 shall not apply to any leased equipment or to the Contractor’s equipment that is not charged to Petroleum Operations as a Petroleum Operations Cost.

19.1.5

If the Ministry does not wish to use any of the facilities, goods, equipment and materials referred to in this Article ‎19.1, it has the right to request the Contractor to remove them at the Contractor’s own expense, and the Contractor will carry out any decommissioning operations of the said facilities, goods, equipment and materials in accordance with this Contract and the Hydrocarbons Law, and based on the time frame and specified conditions in the approved decommissioning plan.

19.2	Ownership of Data

---

20.1	Disclosure of Confidential Information

20.1.1	The Parties agree that for the duration of this Contract, the terms hereof and all information relating to this Contract and Petroleum Operations shall be kept strictly confidential and may not be divulged by any Party without mutual consent, except:

(a)	to an Affiliated Company;

(b)	to any governmental agency, designated by the State or other entities or consultants of the Ministry;

(c)	to the extent that such data and information is required to be furnished in compliance with any applicable laws or regulations;

(d)	in conformity with the requirements of any stock exchange having jurisdiction over a Party;

(e)	where any data or information forms part of the public domain otherwise than a result of a breach of this Contract;

(f)	to employees, directors, officers, agents, advisors, consultants or subcontractors (both actual and potential) of a Party comprising the Contractor or an Affiliate;

(g)	to any company with a bona fide interest in the carrying out of a possible assignment; and

(h)	to any bank or financial establishment with which an entity of the Contractor solicits or obtains financing,

20.1.2	For an additional period of two (2) Years after the termination of this Contract, only the Parties comprising the Contractor (other than the National Company) shall be obliged to comply with the above stated requirements.

---

20.2	The Contractor’s Patents

20.3	Continuation of Obligations

20.4	Disclosure of Confidential Information by the State and Ministry

21.1	Termination by the State

(a)	a material breach by the Contractor (not attributable to any act or omission of the State or to any Person representing the State) of any of the provisions of this Contract or the Hydrocarbons Law;

(b)	a delay by the Contractor (not attributable to any act or omission of the State or to any Person representing the State) in making any payment owed to the State that exceeds three (3) months;

(c)	the suspension of Development works on a Field for six (6) consecutive months, except when such suspension (i) has been approved by the Ministry in advance, or (ii) is due to an act or omission on the part of the State or of any Person representing the State, or (iii) is as a result of Force Majeure,

(d)	when, after the commencement of Production of a Field, its exploitation is suspended for at least three (3) consecutive months, without the prior permission of the Ministry, except when such suspension (i) is due to an act or omission on the part of the State or of a Person representing the State, or (ii) is as a result of Force Majeure;

(e)	when the Contractor fails to comply within the prescribed time period with an arbitration award in accordance with the provisions of ‎Article 26, and the failure to comply is not attributable to any act or omission of the State or to any Person representing the State;

---

(f)	when a Well is drilled to an objective beyond the vertical planes of the limits of the Contract Area without the prior consent of the Ministry;

(g)	a breach of this Contract arising out of activities which are illegal or contrary to national or international law (not attributable to any act or omission of the State or to any Person representing the State);

(h)	under the provisions of Article ‎2.3; or

(i)

when the Contractor is declared bankrupt, or in liquidation as a result of financial insolvency, or enters into judicial or financial arrangements on insolvency with its creditors generally, except when the Contractor can provide the State with a new financial guarantee that is acceptable to the Ministry in its sole discretion, and that guarantees the capacity of that Party to fulfill its obligations under this Contract.

21.2	Notice of Termination and Grace Period

21.2.1

The Ministry may declare this Contract terminated only after having served a formal notice on the Contractor, by registered mail, requesting it to remedy the situation or breach in question, and, if the situation or breach in question is capable of remedy, requesting it to remedy the same within five (5) Business Days from receipt of such notice regarding payments due under Article ‎21.1(b) or within three (3) months from receipt of such notice for all other situations or breaches capable of remedy. Otherwise the effective date of the termination of this Contract shall be date of receipt by the Contractor of the foregoing notice.

21.2.2	If the Contractor fails to comply with such notice within the prescribed time period or fails to show within such five (5) Business Days or three (3) month period that it has commenced and is promptly and diligently continuing to remedy the situation or breach in question, the Ministry may pronounce ipso jure the termination of this Contract.

21.3	Termination against one Party

22.1	Obligation to Unitize

22.2	Suspension of Obligations

---

23.1	Regulation of National Content

(a)	before awarding a service contract, the Contractor shall notify the Ministry the need for such services;

(b)	the Ministry shall provide a list of national companies to the Contractor within fifteen (15) days of Contractor’s notice of the need for such services. The Contractor shall support the Ministry by including the national companies of the list the Contractor regards as competent in the bids required in the framework of this Contract;

(c)

When granting the contracts, the Contractor shall give preference to the national companies included in the list given by the Ministry according to Article ‎23.1(b), in agreement with the Decree 127/2004. Should the Contractor consider that such companies are not competent or not in compliance with Contractor’s compliance and financial requirements, the contract may be granted to a foreign company, according to Articles 12 and 13 of the Ministerial Order 1/2014;

(d)	The Contractor shall notify the foreign company winning the tender regarding the hire of services about the conditions specified in ‎Article 23 (1) (c);

(e)	the Contractor shall send the Ministry, at the end of July and January of every calendar year, a list of the subcontractors that have provided services in Equatorial Guinea during the previous period;

(f)	in the contracts that imply service delivery or goods supply in Equatorial Guinea, the Contractor shall include clauses that make the subcontractors to abide by the specifications of the Ministerial Order 1/2014;

(g)	the Contractor shall organize workshops to make the national companies aware of the requirements demanded by the Operator in terms of service delivery;

(h)	the Contractor shall notify the Ministry, which in turn shall inform all the additional competent authorities, of the vacancies and new jobs to implement the works in Equatorial Guinea;

---

(i)

at the beginning of the Operations of Development and Production, the Contractor shall hand over and agree a plan with the Ministry to hire national employees and empower them; this action shall include tasks and actions for their professional development to be carried out at the offices of the Operator in Dallas with the possibility of joining the Technical Team of Operations of Equatorial Guinea to reach the reasonable and feasible nationalization targets, and shall send updated information to the Ministry with regard to the implementation of such a plan at the end of July and January of each subsequent year; and

(j)	The Contractor shall send to the Ministry a description of the tools used to evaluate the national employees.

23.2	Employment and Empowerment of Equatoguinean Personnel

23.2.1

At the beginning of the Operations of Development and Production of the EG-21 Block, the Operator shall ensure priority of employment of Equatoguinean qualified personnel at all levels of its organization, according to the following table and on the basis of the competences and skills of the employees. For the purpose of this Article, the technicians proposed by the National Company will also be taken into account as long as they have the competences and experience required; such employees will join the technical team of the operator under the personnel coverage in secondment. The Operator shall empower or contribute to the training of the aforementioned personnel so that they acquire the competences and skills required to fill any vacancy, including the supervision positions, related to Petroleum Operations. However, the Operator will only have to hire the numbers of personnel needed to implement the Petroleum Operations in a cautious and profitable manner.

23.3	Preference to Equatoguinean Services

---

23.4	Employment and Training of Equatoguineans

23.4.1

From the Effective Date, the Contractor shall ensure priority employment for adequately qualified Equatoguinean personnel in all levels of their organization, as the employee’s skill allows, and as provided for in Article 23.2.2, shall train or contribute in the training of such personnel to enable them to qualify for any position relating to Petroleum Operations. Expatriate personnel may only be employed if the Contractor and its subcontractors have exhausted all possibilities of recruiting adequately qualified Equatoguinean personnel in the required area of specialization.

23.4.2

During the term of this Contract, the Parties comprising the Contractor (other than the National Company), during the Exploration Period, shall spend one hundred thousand Dollars ($100,000) per Calendar Year, to provide a mutually agreed number of Ministry and National Company personnel with on-the-job training in the Contractor’s operations in Equatorial Guinea and overseas and/or practical training at institutions abroad, particularly in the areas of natural earth sciences, engineering, technology, accounting, economics and other related fields of oil and gas exploration and exploitation (“Job Training”). During the term of this Contract, the Parties comprising the Contractor (other than the National Company), during the Development and Production Period, shall spend three hundred thousand Dollars ($300,000) per Calendar Year, to provide Job Training.

23.4.3

Additionally, during the term of this Contract, the Parties comprising the Contractor (other than the National Company) shall transfer to the Ministry one hundred thousand Dollars ($100,000) per Calendar Year during the Exploration Period and shall transfer to the Ministry three hundred thousand Dollars ($300,000) per Calendar Year during the Development and Production Period, which the Ministry shall use at its sole discretion to educate and train Equatoguinean personnel selected by the Ministry at universities, colleges or other training institutions selected by the Ministry and for other general training and educational purposes (“Training Funds”).

23.5	Social Projects

---

23.6	National Technology Institute

23.7	National Database of the Ministry of Mines and Hydrocarbons

24.1	Relinquishment or Decommissioning

24.1.1

Subject to Article ‎2.5.2, the Contractor may at any time relinquish and/or abandon any portion of the Contract Area or any Well not included in a Field subject to having given three (3) months prior notice to the Ministry, provided that the Contractor shall have fulfilled all of its obligations under this Contract and that it has given the Ministry full details of the state of any reservoir and the facilities and equipment in such area in addition to any plans for the removal or dismantling of such facilities and equipment including all technical and financial information. All decommissioning operations must be undertaken in accordance with the Hydrocarbons Law.

24.1.2

The decommissioning of a Field by the Contractor and its corresponding decommissioning plan shall require the prior approval of the Ministry in accordance with the Hydrocarbons Law. The Contractor shall prepare and deliver to the Ministry a plan for the decommissioning of all Wells, facilities and equipment, the rehabilitation of the landscape and the continuation of Petroleum Operations, if applicable, in accordance with the Hydrocarbons Law.

24.1.3	Unless the Ministry elects to keep the facilities and equipment in order to continue Petroleum Operations in accordance with Article ‎24.3.3, the Contractor is obligated to fully decommission all Fields within the Contract Area.

24.2	Right of Ministry

---

24.3	Reserve Fund

24.3.1

In order to implement the decommissioning of a Field, the Contractor shall contribute to a reserve fund for the estimated decommissioning costs, (the Reserve Fund) in accordance with the Hydrocarbons Law and the approved decommissioning plan, and shall be included as a recoverable cost. As for the constitution of the Reserve Fund, it will begin from the Fifth (5) year from the first production at an international bank holding at least a Standard and Poor’s A- rating to be agreed by the Parties. All contributions mentioned will be deductible for tax purposes and will be considered as a cost of Petroleum Operations in the year in which they were contributed.

24.3.2	In the event that the total amount of the Reserve Fund is greater than the actual cost of decommissioning, the account balance shall be distributed between the State and the Contractor in accordance with Article ‎7.3. In the event that the amount of the Reserve Fund is less than the actual cost of decommissioning operations, the Contractor shall be liable for the remainder.

24.3.3

In the event that the Ministry elects to keep the facilities and equipment in order to continue Petroleum Operations after the withdrawal of the Contractor, the Reserve Fund so established together with the related interest shall be put at the Ministry’s disposal to cover the later decommissioning. The Contractor shall be released from any further decommissioning liability in respect of such facilities and equipment.

24.4	Continuing Operations

24.5	Protection of the Environment

25.1	Applicable Law

---

25.2	Change in Law

25.3	Business Standards

26.1	Dispute Resolution and Notification

26.1.1	In the event of any dispute, claim, conflict or controversy (a Dispute) between any of the Parties arising out of, or in relation to, this Contract, including any question regarding its breach, existence, validity or termination, the Parties shall take all reasonable measures to resolve such Dispute amicably.

26.1.2	If the relevant Parties have not reached an amicable agreement after three (3) months of the date of the notice of a Dispute by one Party to another, unless the Parties to the Dispute mutually agree to an extension, any Party to the Dispute may refer the Dispute for resolution by final and binding arbitration:

(a)	to the International Centre for the Settlement of Investment Disputes (the Centre) established by the Convention on the Settlement of Investment Disputes between States and Nationals of other States, done at Washington, March 18, 1965 (the ICSID Convention);

---

(b)	in accordance with the Arbitration Rules of the International Chamber of Commerce (ICC), if neither the Centre or the Additional Facility are available.

26.1.3

The Parties hereby consent to submit to the Centre any dispute arising out of or relating to this Contract for settlement by arbitration pursuant to the Rules of Arbitration of the Centre. The State and the National Company agrees not to make, and hereby irrevocably waives, in relation to any Dispute, whether relating to acts of a sovereign or governmental nature or otherwise, all claims of immunity (sovereign or otherwise) by it or on its behalf from the jurisdiction of, and from the enforcement of any arbitral award rendered by, an arbitral tribunal constituted pursuant to this Contract as well as all claims of immunity from the service of process or the jurisdiction of any court in aid of the jurisdiction of such arbitral tribunal or in connection with the enforcement of any such award.

26.2	Seat and Language of Arbitration

26.3	Number and Identity of Arbitrators

(a)

The claimant and the respondent shall, within thirty (30) days from the day on which a request for arbitration has been submitted, appoint an arbitrator each (and if there is more than one claimant or more than one (1) respondent, then the claimants and/or the respondents collectively shall each appoint a single arbitrator), by giving notice in writing of such appointment to the Secretary-General of ICSID and the other Party or Parties to the Dispute.

(b)

If either the claimant or the respondent fails to comply with the time limit in the preceding paragraph, the Chairman of the Administrative Council of ICSID shall appoint the arbitrator or arbitrators that have not yet been appointed, at the request of either the claimant or the respondent and after consulting the claimant and the respondent as far as possible. The Chairman of the Administrative Council of ICSID shall give notice in writing of such appointment or appointments to the Secretary-General of ICSID and the claimant and the respondent.

(c)	The two (2) arbitrators so appointed shall, within thirty (30) days of their appointment agree upon the person to be appointed as the President of the tribunal, and give notice of such appointment to the Secretary-General of ICSID and the claimant and the respondent.

(d)	If the two (2) arbitrators fail to agree upon the person of the President of the tribunal, the Chairman of the Administrative Council of ICSID shall appoint the President, at the request of either the claimant or the respondent, and after consulting the claimant and the respondent as far as possible. The Chairman of

---

26.4	Rules of Arbitration

26.5	Binding Nature of Arbitration

26.6	Costs of Arbitration

26.7	Payment of Awards

27.1	Non-fulfillment of Obligations

27.2	Definition of Force Majeure

---

(a)	it has the effect of temporarily or permanently preventing a Party from performing its obligations under this Contract;

(b)	it is unforeseeable, unavoidable and beyond the control of the Party which declares Force Majeure; and

(c)	it is not a result of the negligence or willful misconduct of the Party which declares Force Majeure.

27.3	Notification of Force Majeure

27.4	Continuation of Obligations

27.5	Cessation of Force Majeure

27.6	Continuation of Force Majeure

---

28.1	Assistance of Ministry

28.1.1

The Ministry shall facilitate, within its authority and in accordance with the rules and procedures in effect in Equatorial Guinea, the performance of the Contractor’s activities by granting it all permits, licenses and access rights that are reasonably necessary for the purposes of Petroleum Operations, and by making available to it all necessary services with respect to Petroleum Operations in Equatorial Guinea.

28.1.2	The Ministry shall also facilitate and assist the Contractor in obtaining all permits, licenses or rights not directly related to Petroleum Operations, but which the Contractor may reasonably require for the purposes of fulfilling its obligations under this Contract.

28.2	Notices and Other Communications

---

29.1	Amendments

29.2	No Partnership

29.3	Hydrocarbons Law

29.4	Entire Agreement

29.5	No Waiver

---

29.6	No Conflict

29.6.1	Each of the Parties constituting the Contractor undertakes that it shall avoid any conflict of interest between its own interests (including the interests of Affiliates) and the interests of the other Parties in connection with activities contemplated under this Contract.

29.6.2	In the event of any conflict between the main body of this Contract and its Annexes, the main body shall prevail. In the event of any conflict between this Contract and the Hydrocarbons Law, the Hydrocarbons Law shall prevail.

30.1	The table of contents and headings used in this Contract are for convenience only and shall not be construed as having any substantive significance or as indicating that all of the provisions of this Contract relating to any topic are to be found in any particular Article.

30.2	Reference to the singular includes a reference to the plural and vice versa.

30.3	Reference to any gender includes a reference to all other genders.

30.4	Unless otherwise provided, reference to an Article or an Annex means an Article or Annex of this Contract.

30.5	The words include and including shall mean include or including without limiting the generality of the description preceding such term and are used in an illustrative sense and not a limiting sense.

30.6	Any reference to a Person shall be construed as including a reference to its successors, permitted transferees and permitted assignees.

30.7	Any reference to a statute or enactment shall be construed as a reference to such statute or enactment as it may have been or may be amended or re-enacted from time to time, or any subordinate legislation made or legal norm created, or may from time to time be done, under such statute or enactment.

30.8	Reference to this Contract or part thereof or any other document shall be construed as a reference to the same as it may be amended, supplemented, novated or replaced from time to time.

---

---

---

---

---

1.1	PURPOSE

(a)	classifying and defining Petroleum Operations Costs; and

(b)	prescribing the manner of preparing and submitting the financial statements of the Contractor in accordance with accounting principles in effect in Equatorial Guinea.

1.2	INTERPRETATION

1.3	ACCOUNTING RECORDS AND REPORTS

1.3.1

In accordance with the provisions of Article ‎16.1 of the Contract, the Contractor shall maintain in its office in Equatorial Guinea original, complete, true and correct accounts, books and records of the Production and disposition of Hydrocarbons, and all costs and expenses under the Contract, as well as all other records and data necessary or proper for the settlement of accounts in accordance with the laws of Equatorial Guinea, generally accepted accounting procedures and generally accepted practice in the international petroleum industry and pursuant to the chart of accounts agreed pursuant to Article ‎1.3.2 below.

1.3.2	Within sixty (60) days from the Effective Date, the Contractor shall submit to and discuss with the Ministry a proposed outline for the chart of accounts and the books, records and reports in accordance with generally accepted standards and consistent with normal petroleum industry practices and procedures.

---

1.3.3	In addition to the generality of the foregoing, the Contractor shall submit to the Ministry, at regular intervals, statements relating to the Petroleum Operations, including, but not limited to, the following:

(a)	monthly statement of Production;

(b)	quarterly statement of value of Production and pricing;

(c)	statement of Petroleum Operations Costs;

(d)	annual statement of Petroleum Operations Cost not yet recovered;

(e)	statement of Production sharing;

(f)	annual end-of-year statement;

(g)	Annual Budget tracking statement;

(h)	Annual statement of tangible goods subject to depreciation; and

(i)	Quarterly, the state of goods, materials and properties which are anticipated to be transferred to the State within three months of said report, due to the full recovery of its cost.

1.3.4	All reports and statements shall be prepared in accordance with the Contract, the laws of Equatorial Guinea and any regulations thereunder and in accordance with generally accepted practice of the international petroleum industry.

1.3.5	Within sixty (60) days after the Calendar Year, the Contractor shall submit to the Ministry the execution of the budgets as well as the annual accounts (the balance sheet, the cash flow statement and the income statement) and the schedule of amortizations, attaching for the report of internal audit for reliability of said information.

1.4	LANGUAGE AND UNIT OF ACCOUNT

1.5	VERIFICATION AND AUDIT RIGHTS OF THE STATE

1.5.1

When the Ministry exercises its right of audit under Article ‎16.3 of the Contract, it shall provide notice to the Contractor, at least sixty (60) days in advance regarding such audit, which shall take place during normal business hours. The Contractor shall make available to the Ministry all accounts, books, records, invoices, cash vouchers, debit notes, price lists or any other documentation relating to Petroleum Operations. Furthermore, the auditors shall have the right, in connection with such audit, to visit and inspect at

---

1.5.2	Any audit exceptions shall be made in writing and notified to the Contractor within ninety (90) days of completion of the corresponding audit. Failure to give such exception by the Ministry shall be deemed to be an acknowledgement of the accuracy of the Contractor’s books and accounts.

1.5.3	If the Contractor fails to respond to any notice of exception under Article ‎1.5.2 within ninety (90) days of receipt of such notice, the results of the audit will be considered valid and accepted by the Contractor. After the said period of time the Ministry’s exception shall prevail.

1.5.4	Any adjustments resulting from an audit shall be promptly applied to the Contractor’s accounts; any adjustments to payments due shall also be effected promptly.

1.5.5	If the Contractor and the Ministry are unable to reach final agreement on the proposed audit adjustments they shall resolve the dispute in accordance with the provisions of Article ‎16.3.3 of the Contract.

1.6	CURRENCY EXCHANGE RATES

1.7	ACCOUNTING BASIS

---

1.8	REVIEW OF ACCOUNTING PROCEDURE

---

2.1	EXPLORATION COSTS

(a)	aerial, geophysical, geochemical, palaeontological, geological, topographical and seismic surveys and studies and their interpretation;

(b)	core hole drilling;

(c)	any labor, materials, supplies, and services used in drilling Exploration Wells and Appraisal Wells;

(d)	any facilities used solely in support of the purposes described in paragraphs ‎(a), ‎(b) and ‎(c) above, including access roads and acquired geological and geophysical data, all separately identified;

(e)	any other cost incurred in the Exploration and Appraisal of Hydrocarbons after the Effective Date but prior to the date of approval of a Development and Production Plan with respect to the relevant Field and not covered under Articles ‎2.2, ‎2.3 and ‎2.4 below; and

(f)	the costs incurred prior to the Effective Date which both Parties have agreed to, including the cost of the Sea Bed Logging, 2D, 3D speculative data and other costs of complying with Article ‎3.1.1 of the Contract.

2.2	DEVELOPMENT AND PRODUCTION COSTS

(a)	Wells defined as Development Wells for purposes of producing from a Commercial Field, whether such Wells turn out to be dry or productive by nature, and drilling Wells for the injection of water or gas to enhance Hydrocarbon recovery;

(b)	completing Wells by way of installation of casing or equipment or otherwise after a Well has been drilled for the purpose of bringing the Well into use as a

---

(c)	transportation and installation of tank storage facilities, pipelines, flow lines, production and treatment units, wellhead equipment, subsurface equipment, enhanced recovery systems, offshore platforms, export terminals and piers, harbors and related facilities, and access roads for development activities; and

(d)	engineering and design studies for facilities referred to under paragraph ‎(c) above.

2.3	OPERATING OR PRODUCTION COSTS

2.4	COMMERCIALIZATION COSTS

2.5	ALLOCATION OF GENERAL AND ADMINISTRATIVE COSTS

(a)	Prior to First Oil (commercial Production):

(b)	After First Oil (first commercial Production):

---

2.6	Except as provided otherwise in the Contract to the contrary, approved Petroleum Operation Costs described in Articles ‎2.1 to ‎2.5 of this Accounting Procedure, will be recoverable by the Contractor in accordance with Article ‎7.2 of the Contract.

2.7	INTEREST RECOVERY

2.8	NON RECOVERABLE COSTS

(a)	signature bonus paid by the Contractor;

(b)	any Discovery bonus paid by the Contractor;

(c)	any Production bonus paid by the Contractor;

(d)	annual surface rentals paid to the State;

(e)	interests on loans as provided by Article ‎2.7 of this Accounting Procedure;

(f)	any unapproved over-expenditures that exceed the limits of Article ‎4.4 of this Contract;

(g)	any payments made to the State for failure to fulfill the minimum Exploration work obligations pursuant to ‎Article 3 of the Contract;

(h)	any fines and sanctions incurred for infringing the laws and regulations of Equatorial Guinea;

(i)	any donation to the State or other similar expenses unless otherwise agreed;

(i)	the State’s audit and inspection expenses incurred as a result of the absence of original documents in the Contractor’s offices in Equatorial Guinea;

(j)	any sanction imposed on the Contractor under the Hydrocarbons Law or otherwise; and

(k)	costs related to the assignment from the Contractor to any of its Affiliates or other Persons.

2.9	INSURANCE AND CLAIMS

---

2.10	INVENTORY ACCOUNTING

---

3.1	CAPITAL COSTS

3.1.1	TANGIBLE CAPITAL COSTS

(a)

for Development Wells: the costs of completion materials and equipment (downhole equipment, fixed production tubing, production packers, valves, wellhead equipment, subsoil elevation equipment, pumping rods, surface pumps, discharge cables, collection equipment, delivery lines, fixed Christmas tree and valves, oil and gas pipelines, fixed materials and equipment, piers, anchors, buoys, Hydrocarbon treatment facilities and equipment, secondary recovery systems, reinjection compressors, water pumps and their pipes);

(b)	for any purchase of goods and equipment: the actual cost of the asset (excluding transportation), the cost for construction of platforms outside of the Contract Area, the cost of power generators and facilities onshore;

(c)	for the purchase of moveable goods: automotive machinery (vehicles, tractors, tow trucks, tools, flatbeds, etc.), construction machinery and equipment (furniture, office equipment and other equipment);

(d)	for construction purposes: the building cost of housing and residential facilities, offices, warehouses, workshops, power plants, storage facilities and access roads for development activities, the cost of piers and anchors, treatment plants and machinery, secondary recovery systems, gas plants and steam systems; and

(e)	drilling and Production facilities and platforms.

---

3.1.2	INTANGIBLE CAPITAL COSTS

(a)	costs of aerial magnetic, aerial gravimetric, topographic, geological, geophysical and geochemical surveys, interpreting and reinterpreting technical data costs, Exploration labor and similar costs;

(b)

costs of drilling Exploration Wells and Appraisal Wells: all costs of services rendered for drilling Exploration and Appraisal Wells, chemical products, rental costs (for helicopters, flatbeds, ships, tow barges, etc.) transportation, storage facilities, accommodation, technical services for mud control, Well geology, directional Well drilling, divers, mud control, well geology testing, cementing and similar costs;

(c)

costs of drilling Development Wells, such as rig and platform mobilization and demobilization, rig and platform drilling contracts and leases, platform and infrastructure installations labor, fuel, water, conductors, drill bits, drill pipe, equipment rental, production testing equipment, Christmas tree for production testing, mud and its components, chemical products, rental costs (for helicopters, flatbeds, ships, tow barges, etc.), transportation, storage facilities, accommodation, technical services for mud control, Well placement geology, directional drilling Wells, divers, production and appraisal tests, completion and supervision;

(d)	costs of acquisition or purchase of goods and services such as transportation costs, operation costs, equipment checks, costs of on-site installation, maintenance costs and fuel costs;

(e)	general services (electric logs, vertical seismic profile (VSP), mud control, core sampling, Well geology tests, cementing, production tests, supervision and similar costs), delineation services, any heavy engineering machinery leasing, and other expenses incurred abroad;

(f)	materials, reconstruction of access and other roads, and other intangible goods for construction, public services and construction support; and

(g)	other Exploration Costs, support or temporary facilities with a useful life of less than one (1) Year.

3.2	DEPRECIATION OF TANGIBLE CAPITAL COSTS

---

3.3	NON-CAPITAL COSTS

3.3.1	CONTRACTOR’S DEDUCTIBLE COSTS

(a)	general and administrative expenses (personnel salaries, insurance premiums, labor, technical office services and other similar services, material services, public relations, expenses abroad related with Petroleum Operations in Equatorial Guinea, determined in accordance with Article ‎2.5 of this Accounting Procedure);

(b)	Intangible Capital Costs;

(c)

labor, materials and services indirectly used in operations of Wells, feasibility studies for production of Crude Oil or Natural Gas fields, secondary recovery operations, storage operations, handling, transportation and delivery, Natural Gas Well operations, transportation and delivery of Natural Gas, services for Natural Gas treatment, environmental protection measures and any other maintenance activities indirectly related to Petroleum Operations.

(d)	Contributions to the Reserve Fund.

3.3.2	CONTRACTOR’S NON-DEDUCTIBLE COSTS

(a)	signature bonus paid by the Contractor;

(b)	any Discovery bonus paid by the Contractor;

(c)	any Production bonus paid by the Contractor;

(d)	annual surface rentals paid to the State;

(e)	any unapproved over-expenditures that exceed the limits of Article ‎4.4 of the Contract;

(f)	interest on loans as provided in Article ‎2.7 of this Accounting Procedure;

(g)	any payment made to the State for failure to fulfill the minimum Exploration work obligations pursuant to ‎Article 3 of the Contract;

(h)	any fines and sanctions incurred for infringing the laws and regulations of Equatorial Guinea;

(i)	sums that exceed the set limits with regard to the depreciation of tangible assets;

(j)	any donation to the State and other similar expenses unless otherwise agreed;

---

(k)	the State’s audit and inspection expenses incurred by the absence of original documents in the office of the Contractor in Equatorial Guinea;

(l)	any sanction imposed on the Contractor under the Hydrocarbons Law or otherwise; and

(m)	costs relating to the assignment from the Contractor to any of its Affiliates or other Persons.

---

4.1	PRACTICAL DETERMINATION OF THE TAXABLE BASE

(1)	Annual gross revenues

(2)	Royalties

(3)	State’s share of net Hydrocarbons

(4)	State’s right to a share of Production based on its carried or paid interest in the Contract

(5)	Deductible intangible capital costs

(6)	Depreciation of tangible capital costs

(7)	Deductible non-capital costs

(8)	Losses authorized and certified by the Ministry, corresponding to previous Calendar Years

4.2	PRINCIPLE OF TAX TREATMENT OF A FINANCIAL YEAR DEFICIT

---

5.1	RECORDS

5.2	INVENTORIES DURING INITIAL EXPLORATION OPERATIONS

5.3	INVENTORIES IN SUBSEQUENT OPERATIONS

---

6.1	FINANCIAL STATEMENTS AND TAX REPORTS TO BE SUBMITTED BY CONTRACTOR

(a)	depreciation details;

(b)	fixed assets information;

(c)	Production and export statistics and details;

(d)	all tax related reports provided for in the Contract; and

(e)	detailed information on deductible expenses for estimating tax liabilities in accordance with the Tax Law.

6.2	PRODUCTION STATEMENT

(a)	the quantity of Crude Oil produced and saved;

(b)	the quality characteristics of such Crude Oil produced and saved;

(c)	the quantity of Natural Gas produced and saved;

(d)	the quality characteristics of such Natural Gas produced and saved;

(e)	the quantities of Crude Oil and Natural Gas used for the purposes of carrying out drilling and Production operations;

(f)	the quantities of Crude Oil and Natural Gas unavoidably lost;

(g)	the quantities of Natural Gas flared and vented;

---

(h)	the size of Hydrocarbon stocks held at the beginning of the calendar month in question;

(i)	the size of any Hydrocarbon stocks held at the end of the calendar month in question;

(j)	the quantities of Natural Gas re-injected into the Hydrocarbon reservoir; and

(k)	the quantities of Hydrocarbons delivered and sold.

6.3	VALUE OF PRODUCTION AND PRICING STATEMENT

(a)	the quantities, prices and income received by the Contractor as a result of sales of Hydrocarbons to third parties during the Quarter in question;

(b)	the quantities, prices and income received by the Contractor as a result of sales of Hydrocarbons, other than sales to third parties, during the Quarter in question;

(c)	the value of any stocks of Hydrocarbons at the end of the Quarter preceding the Quarter in question;

(d)	the value of any stocks of Hydrocarbons at the end of the Quarter in question; and

(e)	the information available to the Contractor concerning the prices of competitive Crude Oils, insofar as required for the purposes of ‎Article 10 of the Contract.

6.4	PETROLEUM OPERATIONS COSTS STATEMENT

6.4.1	Quarterly Statement

---

6.4.2	Annual Statement

(a)	Petroleum Operations Costs not yet recovered and carried forward from the previous Calendar Year, if any;

(b)	Petroleum Operations Costs for the Calendar Year in question;

(c)	the quantity and value of Hydrocarbon Production taken by the Contractor as Cost Recovery Oil under the provisions of Article ‎7.2 of the Contract for the Calendar Year in question; and

(d)	Petroleum Operations Costs not yet recovered at the end of the Calendar Year in question.

6.5	PRODUCTION SHARING STATEMENT

(a)	the value of all sales of Hydrocarbons made by the Contractor as from the Effective Date of the Contract up to the end of the previous Calendar Year;

(b)	the value of all sales of Hydrocarbons made by the Contractor during the Calendar Year in question;

(c)	the total of (a) and (b) above at the end of the Calendar Year in question;

(d)	the accumulated Petroleum Operations Costs as from the Effective Date of the Contract up to the end of the previous Calendar Year;

(e)	the Petroleum Operations Costs for the Calendar Year in question;

(f)	the total of (d) and (e) above at the end of the Calendar Year in question;

(g)	quantity and value of the ‘Contractor’s share in Hydrocarbons; and

---

(h)	quantity of State’s share of Hydrocarbons and its value if sold by the Contractor.

6.6	ANNUAL END-OF-YEAR STATEMENT

(a)	accounting conciliation of the expenses against the approved Annual Budget;

(b)	accounting conciliation of the expenses with the recoverable costs; and

(c)	accounting conciliation of the expenses with the deductible costs.

6.7	ANNUAL BUDGET STATEMENT

---

(1)	[THE GUARANTOR], a company organized and existing under the laws of [insert jurisdiction], and having its registered office at [insert address] (the Guarantor); and

(2)	THE REPUBLIC OF EQUATORIAL GUINEA (the State), represented for the purposes of this Guarantee by the Ministry of Mines and Hydrocarbons (the Ministry).

---

(b)	[insert amount] Dollars ($[insert amount]) during the Exploration Period, as may be extended in accordance with the Contract; and

(c)	[insert amount] Dollars ($[insert amount]) during the Development and Production period.

---

---

---

---

---

(1)	THE DEMOCRATIC REPUBLIC OF SAO TOME AND PRINCIPE represented by the AGÊNCIA NACIONAL DO PETRÓLEO DE SÃO TOMÉ E PRÍNCIPE;

(2)

BP EXPLORATION (STP) LIMITED, a company organized and existing under the laws of England, whose registered office is at Chertsey Road, Sunbury-on-Thames, Middlesex TW16 7LN, United Kingdom, with a branch registered at Guiché Único de São Tomé e Princípe under nº 8042/20180308 and offices located at Avenida da Independência no. 392, II/III, São Tomé – São Tomé e Príncipe, hereinafter referred to as “BP” and

(3)

KOSMOS ENERGY SAO TOME AND PRINCIPE, a company organized and existing under the laws of Cayman Islands, whose registered office is at c/o Circumference (Cayman), P.O. Box 32322, 4th floor, Century Yard, Cricket Square, Elgin Avenue, George Town, Grand Cayman, KY1, 1209 with a branch registered in Sao Tome and Principe with the Guiché Único under nº 5492/2016 at Condomínio da Praia Lagarto C.P. 987 Distrito de Agua Grande, São Tomé - São Tomé e Príncipe, hereinafter referred to as “Kosmos”

(A)	All Petroleum existing within the Territory of Sao Tome and Principe, as set forth in the Petroleum Law, are natural resources exclusively owned by the State.

(B)	The Agência Nacional do Petróleo de São Tome e Príncipe, with the approval of the Government of Sao Tome and Principe, has the authority to enter into contracts for the conduct of Petroleum Operations in and throughout the area, whose co-ordinates are described and outlined on the map in Schedule 1 of this Contract, which area is hereinafter referred to as the Contract Area.

(C)	The State wishes to promote Petroleum Operations in the Contract Area and the Contractor desires to join and assist the State in accelerating the exploration and exploitation of potential Petroleum resources within the Contract Area.

(D)	The Contractor has the necessary financial capability and technical knowledge and ability to carry out the Petroleum Operations hereinafter described in accordance with this Contract, the Petroleum Law and Good Oil Field Practice.

(E)	Pursuant to and in accordance with the Petroleum Law, this Contract has been entered into by and between the State and the Contractor for the purpose of Petroleum Operations in the Contract Area.

(F)	BP is hereby designated as the Operator under Clause 28 of this Contract.

---

1.1	Except where the context otherwise indicates or as defined in the Petroleum Law and Petroleum Operations Regulation, the following words and expressions shall have the following meanings:

(b)	running supplementary studies and acquisition, processing and interpretation of geophysical and other data;

---

(a)	by means of the holding of shares or the possession of voting power, directly or indirectly, in or in relation to the first Person; or

(b)	by virtue of any power conferred by the articles of association of, or any other document regulating, the first Person or any other Person,

---

(a)	geological, geophysical and reservoir studies and surveys;

(b)	drilling of production and injection wells; and

(c)	design, construction, installation, connection and initial testing of equipment, pipelines, systems, facilities, machinery and related activities necessary to produce and operate said wells, to take, treat, handle, store, re-inject, transport and deliver Petroleum, and to undertake re-pressuring, recycling and other secondary and tertiary recovery projects;

(a)	Reservoir, geological and geophysical studies and surveys;

(b)	drilling of production and injection wells; and

(c)	design, construction, installation, connection and initial testing of equipment, pipelines, systems, facilities, plants and related activities necessary to produce and operate said wells, to take, save, treat, handle, store, transport and deliver

---

---

(a)	any naturally occurring hydrocarbon, whether in a gaseous, liquid or solid state;

(b)	any mixture of naturally occurring hydrocarbons, whether in a gaseous, liquid or solid state; or

(c)	any Petroleum (as defined above) that has been returned to a Reservoir;

(a)	the Exploration, Appraisal, Development, Production, transportation, sale or export of Petroleum;

(b)	the construction, installation or operation of any structures, facilities or installations for the Development, Production and export of Petroleum, or Decommissioning or removal of any such structure, facility or installation;

---

1.2	Unless the context otherwise requires, reference to the singular shall include the plural and vice versa and reference to any gender shall include all genders.

1.3	The Schedules form an integral part of this Contract.

1.4	The table of contents and headings in this Contract are inserted for convenience only and shall not affect the meaning or construction of this Contract.

1.5	References in this Contract to the words "include", "including" and "other" shall be construed without limitation.

1.6	In the event of any inconsistency between the main body of this Contract and any Schedule, the provisions of the former shall prevail.

---

2.1	Signature Bonus

2.2	Production Bonuses

2.3	The production bonuses provided for in Clause 2.2 shall be payable to the State by deposit into the National Petroleum Account within thirty (30) days of such Production level being first attained in immediately available funds.

2.4	The signature and production bonuses provided for in this Clause 2 shall not be recoverable as Cost Oil or deductible for Tax purposes.

2.5	Social Projects

---

2.6

The details of the social projects to be undertaken by the Contractor in accordance with Clause 2.5 shall be determined by agreement between the Contractor and the National Petroleum Agency. Failing such agreement, the Contractor and the National Petroleum Agency shall each submit a proposal to an expert appointed by the World Bank and such expert shall determine which of the two (2) proposals shall be implemented. The Contractor shall be solely responsible for any and all costs and expenses associated with the foregoing expert determination. The value of the projects provided for in Clause 2.5 above shall not be recoverable as Cost Oil or deductible for Tax purposes.

2.7	The Contractor shall be responsible for the implementation of all agreed or chosen social projects, which shall be undertaken using all reasonable skill and care.

3.1

This Contract is a production sharing contract awarded pursuant to the Petroleum Law and governed in accordance with the terms and provisions hereof. The conduct of Petroleum Operations and provision of financial and technical requirements by the Contractor under this Contract shall be with the prior approval of or in prior consultation with the National Petroleum Agency as required under this Contract or the Petroleum Law. The State hereby appoints and constitutes the Contractor as the exclusive company(ies) to conduct Petroleum Operations in the Contract Area.

3.2	During the term of this Contract the total Available Crude Oil shall be allocated to the Parties in accordance with the provisions of Clause 10, the Accounting Procedures and the Allocation and Lifting Procedures.

3.3	The Contractor together with its Affiliates shall provide all funds and bear all risk of Operating Costs and the sole risk in carrying out Petroleum Operations.

3.4	The Contractor shall engage in Petroleum Operations solely in accordance with the Petroleum Law, the Petroleum Taxation Law, Good Oil Field Practice and all other applicable laws and regulations.

4.1

Save as otherwise provided in Clause 4.6 and the extensions granted by the National Petroleum Agency, and subject to Clause 20, the term of this Contract shall be for a period of twenty-eight (28) years from the Effective Date, with an eight (8) year Exploration and Appraisal period, as extended pursuant to Clauses 5.1(b) and/or (c) (the "Exploration Period") and a twenty (20) year Production period, as extended pursuant to Clause 4.6.

4.2	The Exploration Period shall be divided as follows:

Phase II:	from the end of Phase I until two (2) years after the end of Phase I; and

---

Phase III:	from the end of Phase II until two (2) years after the end of Phase II, as extended pursuant to Clauses 5.1(b) and/or (c).

4.3	The Contractor shall commence Petroleum Operations no later than thirty (30) days after the National Petroleum Agency has approved the first Work Program.

4.4

Provided the Contractor has fulfilled all of its obligations relative to the current phase of the Exploration Period as described in Clause 7.2, the Contractor may enter the next phase. The Contractor shall provide the National Petroleum Agency with written notice of its intention to enter the next phase of the Exploration Period at least sixty (60) days prior to the end of the relevant phase. The report shall document that the work commitments for the phase are fulfilled. The Ministry may, upon application, exempt Contractor from the work obligations.

4.5	Provided the Contractor has fulfilled all of its obligations relative to the current phase of the Exploration Period as described in Clause 7.2, the Contractor may terminate this Contract at the end of any phase during the Exploration Period in accordance with Clause 20.7.

4.6

The Contractor shall have the right to produce Petroleum from each Development Area for a period of twenty (20) years from the date of the first commercial Production in the relevant Development Area (the “Production Period”). This Contract will terminate with respect to the relevant Development Area at the end of such twenty (20) year period unless the National Petroleum Agency grants an extension on application of the Contractor. The Contractor may, for any Development Area, be granted one (1) or more five (5) year extension periods for a Development Area until all Petroleum has been economically depleted. In connection with any such extensions, the Parties agree to engage in good faith to re-negotiate the commercial terms of this Contract governing the applicable Development Area at least five (5) years prior to the expiration of the initial twenty (20) year period and at least two (2) years prior to the expiration of any subsequent extension period.

5.1	The sequence of Petroleum Operations to establish a Commercial Discovery of Petroleum (other than Unassociated Natural Gas) shall be as follows:

(a)	the Contractor shall have a period of up to forty-five (45) days from the date on which the drilling of the applicable Exploration Well terminates to declare whether the Exploration Well has proven a Discovery;

(b)	the Contractor shall then have a period of two (2) years (unless otherwise agreed by the National Petroleum Agency) from declaration of a Discovery to declare the Discovery, either on its own or in aggregation with other Discoveries, a

---

(c)	if the Contractor declares a Commercial Discovery it shall have a period of two (2) years (unless otherwise agreed by the National Petroleum Agency) from the time the Contractor declares a Discovery or aggregation of Discoveries to be a Commercial Discovery to submit a Field Development Program to the National Petroleum Agency for approval;

(d)

in the event a Discovery is not determined to be a Commercial Discovery, upon expiration of the period set out in Clause 5.1(b), the State may, provided it gives at least eighteen (18) months' notice, require the Contractor to promptly relinquish, without any compensation or indemnification whatsoever, the area encompassing the Discovery, including all of its rights to Petroleum which may be produced from such Discovery;

(e)	if a Field Development Program is approved by the National Petroleum Agency, the Contractor shall initiate field development and production according to the time schedule outlined in such Field Development Program.

5.2	Unassociated Natural Gas shall be developed in accordance with Clause 23.4.

6.1	The Contractor must relinquish the Contract Area or part thereof in accordance with the following:

(a)	twenty-five percent (25%) of the initial surface area of the Contract Area shall be relinquished at the end of Phase I of the Exploration Period;

(b)	a further twenty-five percent (25%) of the initial surface area of the Contract Area shall be relinquished at the end of Phase II of the Exploration Period; and

(c)	the remainder of the Contract Area shall be relinquished at the end of Phase III of the Exploration Period less:

(i)	any area which is the subject of an approved Appraisal program pursuant to Clause 5.1(b) or any Development Area;

(ii)	areas for which the approval of a Field Development Program is pending, until finally decided; and

(iii)	any area reserved for a possible Unassociated Natural Gas Appraisal in relation to which the Contractor is engaged in discussions with the State in accordance with Clause 23.4.

---

6.2

Any Retained Area and Relinquished Area shall be, as far as possible, single continuous units and delimited by meridians of longitude and parallels of latitude defined in the relevant coordinate reference system using degrees, minutes and seconds to the nearest whole minute to be approved by the National Petroleum Agency. In the case where the Retained Area or Relinquished Area is aligned with an international maritime boundary the international maritime boundary shall define the relevant edges of the Retained Area or Relinquished Area.

6.3	Any Relinquished Area shall revert to the State.

6.4

Subject to the Contractor's obligations under Clause 7 and its Decommissioning obligations, the Contractor may at any time notify the National Petroleum Agency upon three (3) months prior written notice that it relinquishes its rights over all or part of the Contract Area. In no event shall any voluntary relinquishment by the Contractor over all or any part of the Contract Area reduce the Minimum Work Obligations or Minimum Financial Commitment set out in Clause 7.

7.1

Within two (2) months after the Effective Date and thereafter at least three (3) months prior to the beginning of each Calendar Year, the Contractor shall prepare and submit for the approval of the National Petroleum Agency, a Work Program and Budget for the Contract Area setting forth the Petroleum Operations which the Contractor proposes to carry out during the ensuing Year, or in case of the first Work Program and Budget, during the remainder of the current Year.

7.2	The minimum Work Program for each phase of the Exploration Period is as follows (the "Minimum Work Obligations"):

(a)	Phase I: The Contractor shall: acquire six thousand eight hundred (6,800) square kilometres (km2) 3D seismic.

(b)	Phase II: If the Contractor elects to enter Phase II, then during such Phase II of the Exploration Period the Contractor shall drill one (1) well into the Campanian/Santonian or to a total depth of five thousand, five hundred (5,500) meters sub-sea in the Contract Area.

(c)	Phase III: If the Contractor elects to enter Phase III of the Exploration Period, then during such Phase III the Contractor shall drill one (1) well.

(a)	The Contractor shall be obligated to incur the following minimum financial commitment (the "Minimum Financial Commitment"):

Phase I:	US$15,000,000 (fifteen million United States dollars)

---

(b)	If the Contractor fulfills the Minimum Work Obligations set forth in Clause 7.2 for each phase of the Exploration Period, then the Contractor shall be deemed to have satisfied the Minimum Financial Commitments for each such phase.

7.4	The Contractor shall be excused from any delay or failure to comply with the terms and conditions of Clauses 7.2 and/or 7.3:

(a)	during any period of Force Majeure; or

(b)	if the National Petroleum Agency or any other State authority denies the Contractor any required permissions to perform the Petroleum Operations which constitute Minimum Work Obligations.

7.5	The time for performing any incomplete Minimum Work Obligations for any phase of the Exploration Period and the term of this Contract shall be extended by the following periods in the circumstances set out in Clause 7.4:

(a)	with respect to Clause 7.4(a), for the period during which Force Majeure is in existence; and

(b)	with respect to Clause 7.4(b), for six (6) months to permit the Contractor time to make a revised drilling plan or other work which is satisfactory to the National Petroleum Agency.

7.6	If any circumstance described in Clauses 7.4 and 7.5 is not resolved within the time periods specified above, then after consultation with National Petroleum Agency, the Contractor shall be liable to pay into the National Petroleum Account an amount corresponding to the unfulfilled work for that phase and, notwithstanding Clause 20, this Contract shall automatically terminate.

7.7	Any unfulfilled Minimum Work Obligation in any phase of the Exploration Period may, with the written consent of the National Petroleum Agency, be added to the Minimum Work Obligation for the next succeeding phase.

7.8	Expenditures or work by the Contractor over and above the Minimum Work Obligations or Minimum Financial Commitment for any phase shall be credited against and reduce

---

7.9	For the purposes of determining whether an Exploration Well or an Appraisal Well has been drilled in accordance with the Minimum Work Obligations, such a well shall be deemed drilled if the minimum total depth has been reached or if any one of the following events occurs prior to reaching the minimum total depth:

(a)	a Discovery is made and further drilling may cause irreparable damage to such Discovery;

(c)	the National Petroleum Agency and the Contractor agree the well is drilled for the purpose of fulfilling the obligation to complete the Minimum Work Obligation; or

(d)	technical difficulties are encountered which, in the judgment of the Contractor and in accordance with Good Oil Field Practice, makes further drilling impracticable, uneconomic, unsafe or a danger to the environment.

7.10

The Exploration Period provided in Clause 4.2, may be extended for an additional six (6) months to conclude the drilling and testing of any well for which operations have been commenced by the end of Phase III of such period (as extended); provided that if no Commercial Discovery has been declared by the Contractor during the Exploration Period, as may be extended, this Contract shall automatically terminate.

7.11	Performance Bond

(a)	Within thirty (30) days from the Effective Date, the Contractor shall submit a performance bond in a form approved by the National Petroleum Agency and from a reputable international financial institution approved by the National Petroleum Agency to cover the Minimum Financial Commitment for Phase I of the Exploration Period.

(b)

Should the Contractor satisfy in full the conditions for continuing Petroleum Operations at the end of Phase I of the Exploration Period pursuant to Clause 7.2, a replacement performance bond in the same form and from a reputable international financial institution unless otherwise agreed by the National Petroleum Agency shall be submitted within thirty (30) days from the date of the extension to cover the Minimum Financial Commitment for Phase II of the Exploration Period.

(c)	Should the Contractor satisfy in full the conditions for continuing Petroleum Operations at the end of Phase II of the Exploration Period pursuant to Clause 7.2, a replacement performance bond in the same form and from a reputable international financial institution unless otherwise agreed by the National Petroleum Agency shall be submitted within thirty (30) days from the date of the

---

7.12	The amount of a performance bond shall be reduced annually by deducting the verified expenditures the Contractor has incurred in the previous year of each phase and shall terminate at the end of each phase, if the Minimum Work Obligations or Minimum Financial Commitment for that phase has been satisfied in full.

8.1	The State, either through the National Petroleum Agency or any other State Entity designated by the State, shall have as of the Effective Date a carried interest of fifteen percent (15%) of the Contractor’s rights and obligations under this Contract. The Contractor shall fund, bear and pay all costs, expenses and amounts due in respect of Petroleum Operations conducted pursuant to this Contract.

8.2	The National Petroleum Agency or other State Entity designated by the State shall become a party to the Joint Operating Agreement in respect of its carried interest referred to in Clause 8.1.

8.3	Upon the commencement of commercial Production the Contractor shall be entitled to receive one hundred percent (100%) of Cost Oil in order to recover all costs, expenses and amounts paid in respect of Petroleum Operations pursuant to Clause 8.1 and incurred on behalf of the National Petroleum Agency or other State Entity designated by the State.

8.4	The National Petroleum Agency or other State Entity designated by the State shall be entitled to receive fifteen percent (15%) of the Contractor's entitlement to Profit Oil as provided for in Clause 10.1(d).

8.5	The National Petroleum Agency or other State Entity designated by the State shall be entitled at any time, upon advance forty-five (45) days written notice to the Contractor, to convert its carried interest into a full working participating interest.  The National

---

9.1	In accordance with this Contract, the National Petroleum Agency shall:

(a)	pursuant to Clause 14, jointly work with the Contractor’s professional staff in the fulfillment of Petroleum Operations under this Contract;

(b)

assist and expedite the Contractor’s execution of Petroleum Operations and Work Programs including assistance in supplying or otherwise making available all necessary visas, work permits, rights of way and easements as may be reasonably requested by the Contractor. All expenses incurred by the National Petroleum Agency at the Contractor’s request in providing such assistance shall be reimbursed to the National Petroleum Agency by the Contractor in accordance with Clause 12. Such reimbursement shall be made against presentation of invoices and shall be in United States dollars. The Contractor shall include such reimbursements in the Operating Costs;

(c)	have the right to recover from the Contractor all costs which are reasonably incurred for purposes of Petroleum Operations, duly documented and previously agreed with Contractor;

(d)

have legal title to and shall keep originals of all data and information resulting from Petroleum Operations including geological, geophysical, engineering, well logs, completion, production, operations, status reports and any other data and information as the Contractor may compile during the term of this Contract but excluding any Contractor’s Intellectual Property Rights; provided, however, that the Contractor shall be entitled to keep copies and use such data and information during the term of this Contract; and

(e)	not exercise all or any of its rights or authority over the Contract Area in derogation of the rights of the Contractor otherwise than in accordance with the Petroleum Law.

(a)	promptly pay to the State by deposit into the National Petroleum Account all fees, bonuses, and other amounts due to the State under the terms of this Contract;

(b)	provide all necessary funds for the payment of Operating Costs including funds required to provide all materials, equipment, facilities, supplies and technical requirements (including personnel) whether purchased or leased;

---

(c)	provide such other funds for the performance of Work Programs including payments to third parties who perform services to the Contractor in the conduct of Petroleum Operations;

(d)	prepare Work Programs and Budgets and carry out approved Work Programs in accordance with Good Oil Field Practice with the objective of avoiding waste and obtaining maximum ultimate recovery of Petroleum at a minimum cost;

(e)	exercise all the rights and comply with all the obligations under the Petroleum Law and any other applicable laws and pay the following fees to the State by deposit into the National Petroleum Account (all expressed in United States dollars):

(f)	ensure that all leased equipment brought into the Territory of Sao Tome and Principe for the conduct of Petroleum Operations is treated in accordance with the terms of the applicable leases;

(g)	have the right of ingress to and egress from the Contract Area and to and from facilities therein located at all times during the term of this Contract;

(h)	promptly submit to the National Petroleum Agency for permanent custody originals of all geological, geophysical, drilling, well production, operating and other data, information and reports as it or its Associates may compile during the term of this Contract;

(i)	prepare estimated and final tax returns and submit same to the relevant tax authority on a timely basis in accordance with the Petroleum Taxation Law;

(j)

have the right to lift Available Crude Oil in accordance with the lifting agreement to be agreed by the Parties pursuant to Schedule 3 no later than nine (9) months prior to commencement of Production, and, in the event the Parties have not agreed a lifting agreement by the commencement of Production then, in accordance with the principles set forth in Schedule 3. Contractor shall have the right to freely export Available Crude Oil allocated to it under this Contract exempt from all and any customs duties, levies or charges (excluding routine administrative fees associated with export documentation and inspection of such export, if applicable), and retain abroad the Proceeds from the sale of Available Crude Oil allocated to it under this Contract;

---

(k)	in accordance with Clause 14, prepare and carry out plans and programs of the State for industry training and education of nationals of Sao Tome and Principe for all job classifications with respect to Petroleum Operations pursuant to and in accordance with the Petroleum Law;

(l)	employ only such qualified personnel as is required to conduct Petroleum Operations in accordance with Good Oil Field Practice and in a prudent and cost-effective manner giving preference to qualified nationals of Sao Tome and Principe;

(m)	give preference to such goods, material and equipment which are available in Sao Tome and Principe or services that can be rendered by nationals of Sao Tome and Principe in accordance with the Petroleum Law and this Contract;

(n)	the Contractor and its Associates shall, as the case may be, pay all charges and fees as are imposed by law in Sao Tome and Principe. The Contractor and its Associates shall not be treated differently from any other Persons engaged in similar petroleum operations in the Territory of Sao Tome and Principe;

(o)

indemnify and hold the State, including the National Petroleum Agency, harmless against all losses, damages, injuries, expenses, actions of whatever kind and nature including all legal fees and expenses suffered by the State or the National Petroleum Agency where such loss, damage, injury, expense or action is caused by the Gross Negligence or Willful Misconduct of the Contractor, its Affiliates, its sub-contractors or any other Person acting on its or their behalf or any of their respective directors, officers, employees, agents or consultants;

(p)	not exercise all or any rights or authority over the Contract Area in derogation of the rights of the State or in breach of the Petroleum Law;

(q)

in the event of any emergency requiring immediate operational action, take all actions it deems proper or advisable to protect the interests of the Parties and any other affected Persons and any costs so incurred shall be included in the Operating Costs. Prompt notification of any such action taken by the Contractor and the estimated cost shall be given to the National Petroleum Agency within forty-eight (48) hours of becoming aware of the event; and

(r)	have, as of the date of execution of this agreement, the participating interests of:

---

10.	RECOVERY OF OPERATING COSTS AND SHARING OF PETROLEUM PRODUCTION

10.1	The allocation of Available Crude Oil shall be calculated on a Contract Area basis for Royalty Oil, Cost Oil and Profit Oil. This allocation of Available Crude Oil shall be in accordance with the Accounting Procedures, the Allocation and Lifting Procedures and this Clause 10 as follows:

(a)	Royalty Oil shall be allocated to the State from the first day of Production, based on the daily total of Available Crude Oil from the Contract Area, set at a rate of 2%;

(b)	Cost Oil shall be allocated to the Contractor in such quantum as will generate an amount of Proceeds sufficient for recovery of Operating Costs in the Contract Area. All costs will be recovered in United States dollars through Cost Oil allocation;

(c)	Cost Oil shall be not more than eighty percent (80%) of Available Crude Oil in the Contract Area after deduction of Royalty Oil in any accounting period;

(d)	Profit Oil, being the balance of Available Crude Oil after deducting Royalty Oil and Cost Oil shall be allocated to each Party based on the pre-tax, nominal rate of return calculated on a quarterly basis for the Contract Area in accordance with the following sliding scale:

10.2	Beginning at the date of Commercial Discovery, Contractor’s rate of return shall be determined at the end of each Quarter on the basis of the accumulated compounded net cash flow for the Contract Area, using the following procedure:

(i)	The sum of Contractor’s Cost Oil and share of Contract Area Profit Oil regarding the Petroleum actually lifted in that Quarter at the Realizable Price;

(ii)	Minus Operating Costs.

---

(b)	For this computation, neither any expenditure incurred prior to the date of Commercial Discovery for the Contract Area nor any Exploration Expenditure shall be included in the computation of the Contractor’s net cash flow.

(c)	The Contractor’s net cash flows for each Quarter are compounded and accumulated for the Contract Area from the date of the Commercial Discovery according to the following formula:

(d)	The Contractor’s rate of return in any given Quarter for the Contract Area shall be deemed to be between the largest DA which yields a positive or zero ACNCF and the smallest DA which causes the ACNCF to be negative.

(e)	The sharing of Profit Oil from the Contract Area between the State and the Contractor in a given Quarter shall be in accordance with the scale in Clause 10.1(d) above using the Contractor’s deemed rate of return as per paragraph (d) in the immediately preceding Quarter.

(f)	In the Contract Area, it is possible for the Contractor’s deemed rate of return to decline as a result of negative cash flow in a Quarter with the consequence that Contractor’s share of Profit Oil from the Contract Area would increase in the subsequent Quarter.

(g)	Pending finalization of accounts, Profit Oil from the Contract Area shall be shared on the basis of provisional estimates, if necessary, of deemed rate of return as approved by the National Petroleum Agency. Adjustments shall be effected with the procedure subsequently to be adopted by the National Petroleum Agency.

10.3	The quantum of Available Crude Oil to be allocated to each Party under this Contract shall be determined at the Delivery Point.

10.4	Each Party shall lift and dispose of its allocation of Available Crude Oil in accordance with the Allocation and Lifting Procedures. In the event of any reconciliation, the records of the National Petroleum Agency shall be the official, final and binding records.

---

10.5

Allocation of Royalty Oil and the State’s Profit Oil shall be in the form of delivery of Production of Petroleum to the National Petroleum Agency and the National Petroleum Agency or other appropriate authority shall issue receipts for such delivery within thirty (30) days of lifting such Royalty Oil and Profit Oil. These receipts are issued by the National Petroleum Agency or other appropriate authority on behalf of the Government of Sao Tome and Principe.

10.6

Any Party may, at the request of any other Party, lift such other Party’s Available Crude Oil pursuant to Clause 10.3 and the lifting Party within thirty (30) days from the end of the month in which the lifting occurred shall transfer to the account of the non-lifting Party the Proceeds of the sale to which the non-lifting Party is entitled. Overdue payments shall bear interest at the rate of LIBOR plus two percent (2%).

10.7	The State may sell to the Contractor all or any portion of its allocation of Available Crude Oil from the Contract Area under mutually agreed terms and conditions.

10.8	The Parties shall meet as and when agreed in the Allocation and Lifting Procedures to reconcile all Petroleum produced, allocated and lifted during the period in accordance with the Allocation and Lifting Procedures.

10.9

Notwithstanding the above, in lieu of lifting the State's Profit Oil and/or Royalty Oil, the State, upon one hundred eighty (180) days advance notice to the Operator issued by the National Petroleum Agency, may elect to receive the State’s allocation of Profit Oil and/or Royalty Oil in cash based on the Realizable Price rather than through lifting regardless of whether or not the Contractor sells the State's Profit Oil and/or Royalty Oil to a third party. If the State elects to receive cash in lieu of lifting, the Operator shall lift the State's allocation of Profit Oil and/or Royalty Oil and pay into the National Petroleum Account cash in respect of such lifting within thirty (30) days from the end of the month in which the lifting occurred. Every one hundred eighty (180) days, the State may elect to have an entity designated by the State to resume lifting the State’s allocation of Profit Oil and/or Royalty Oil upon one hundred eighty (180) days' notice to the Operator prior to the date the State elects to have an entity designated by the State to resume lifting.

11.1	Unless a pre-marketing plan is agreed, and save as otherwise provided in this Contract, Crude Oil shall be valued in accordance with the following procedures:

(a)	On the attainment of commercial production of Crude Oil, each Party shall engage the services of an independent laboratory of good repute to undertake a qualitative and quantitative analysis of such Crude Oil.

(b)	A trial marketing period shall be designated which shall extend for the first six (6) month period during which a new stream is lifted or for the period of time required for the first ten (10) liftings, whichever is longer. During the trial marketing period the Parties shall:

---

(i)	collect samples of the new Crude Oil upon which the qualitative and quantitative analysis shall be performed as provided in Clause 11.1(a);

(ii)	determine the approximate quality of the new Crude Oil by estimating the yield values from refinery modeling;

(iii)

market in accordance with their entitlement to the new Crude Oil and to the extent that one Party lifts the other Party’s allocation of Available Crude Oil, payments therefor shall be made by the buyers to the Operator which will be responsible for distributing to the other Parties in accordance with their entitlement, and Cost Oil and Profit Oil and the Contractor's accounting shall reflect such revenues, in accordance with Clause 10;

(iv)	provide information to a third party who shall compile the information and maintain all individual Party information confidential with regard to the marketing of the new Crude Oil including documents which verify the sales price and terms of each lifting; and

(v)	apply the actual F.O.B. sales price to determine the value for each lifting which F.O.B. sales pricing for each lifting shall continue, as the Realizable Price, after the trial marketing period until the Parties agree to a valuation of the new Crude Oil but in no event longer than ninety (90) days after conclusion of the trial marketing period.

(c)

As soon as practicable but in any event not later than sixty (60) days after the end of the trial marketing period, the Parties shall meet to review the qualitative and quantitative analysis, yield and actual sales data. The Realizable Price shall be based on a single weighted average price for all Available Crude Oil in the month, based on the international FOB market price at the Delivery Point. It is the intent of the Parties that such price shall reflect the true market value based on arm’s length transactions for the sale of the new Crude Oil to independent parties.

(d)	Upon the conclusion of the trial marketing period, the Parties shall be entitled to lift their allocation of Available Crude Oil pursuant to Clause 10.3 and the Allocation and Lifting Procedures.

(e)

When a new Crude Oil stream is produced from the Contract Area and is commingled with an existing Crude Oil produced which has an agreed Realizable Price basis then such basis shall be applied to the extent practicable for determining the Realizable Price of the new Crude Oil. The Parties shall meet and mutually agree on any appropriate modifications to such agreed Realizable Price, which may be required to reflect any change in the market value of the Crude Oils as a result of commingling.

11.2	If the National Petroleum Agency or the Contractor are unable to agree the valuation of Crude Oil produced in the Contract Area for a particular month, then such Party may propose its alternative valuation to the other Parties. The Parties shall then meet within thirty (30) days of such proposal and mutually agree on such valuation with or without

---

11.3	Segregation of Crude Oils of different quality and/or grade shall, by agreement of the Parties, take into consideration, among other things, the operational practicality of segregation and the cost benefit analysis thereof. If the Parties agree on such segregation the following provisions shall apply:

(a)	any and all provisions of this Contract concerning valuation of Crude Oil shall separately apply to each segregated Crude Oil produced; and

(b)	each grade or quality of Crude Oil produced and segregated in a given year shall contribute its proportionate share to the total quantity designated in such year as Royalty Oil, Cost Oil and Profit Oil.

12.1

The Contractor shall make all payments to the State for which it is liable under this Contract in United States dollars or such other currency agreed between the Contractor and the National Petroleum Agency. Payments shall be made into the National Petroleum Account in accordance with the Oil Revenue Law. Where a payment is made in currency other than United States dollars, the exchange rate used to convert the United States dollars liability into that currency shall be the exchange rate published on the date of payment by the Central Bank of Sao Tome and Principe for Dobras, and the Financial Times of London for other currencies. Overdue payments shall bear interest at the annual rate of LIBOR plus two percent (2%) from the due date until the date of actual payment.

12.2

The State shall make all payments to the Contractor for which it is liable under this Contract in United States dollars or such other currency agreed between the Contractor and the National Petroleum Agency. Where a payment is made in a currency other than United States dollars, the exchange rate used to convert the United States dollar liability into that currency shall be the exchange rate published on the date of payment by the Central Bank of Sao Tome and Principe for Dobras, and the Financial Times of London for other currencies. Overdue payments shall bear interest at the annual rate of LIBOR plus two percent (2%) from the due date until the date of actual payment.

12.3	Any payments required to be made pursuant to this Contract shall be made within twenty (20) days following the end of the month in which the obligation to make such payments is incurred.

---

12.4	The Contractor shall have the right to pay their subcontractors and their expatriates, in currencies they have agreed, either in Sao Tome and Principe or abroad.

13.1

The Contractor shall finance the cost of purchasing or leasing all materials, equipment and facilities to be used in Petroleum Operations in the Contract Area pursuant to approved Work Programs and Budgets and such materials, equipment and facilities, if purchased, shall become the sole property of the State when the Contractor has recovered the cost of such materials, equipment and facilities (as the case may be) in accordance with this Contract and free of all liens and other encumbrances. Except as otherwise provided for in the Petroleum Law, the Contractor shall have the right to use, free of any additional charge, all of materials, equipment and facilities exclusively for Petroleum Operations in the Contract Area during the term of this Contract and any extensions thereof. The State, including the National Petroleum Agency, shall have the right to use all such materials, equipment and facilities in the Contract Area during the term of this Contract and any extensions thereof and such use shall be subject to terms and conditions agreed by the Parties, provided that it is understood that Petroleum Operations in the Contract Area hereunder shall take precedence over such use by the State or the National Petroleum Agency.

13.2	The Contractor’s right to use such cost recovered purchased materials, equipment and facilities shall cease with the termination or expiration (whichever is earlier) of this Contract, including any extensions hereof.

13.3	The provisions of Clause 13.1 with respect to the title of property passing to the State shall not apply to leased equipment belonging to local or foreign third parties, and such equipment may be freely exported from the Territory of Sao Tome and Principe in accordance with the terms of the applicable lease.

13.4

Subject to Clause 13.1, all fixed assets purchased or otherwise acquired by the Contractor for the purposes of Petroleum Operations hereunder shall become the property of the State when the Contractor has recovered the cost of such materials, equipment and facilities (as the case may be) in accordance with this Contract. Upon termination of this Contract, the Contractor shall hand over possession of such fixed assets to the State in good working order and free of all liens and other encumbrances.

13.5	During the term of this Contract, any agreed sales of equipment, land, fixed assets, materials and machinery acquired for the purpose of Petroleum Operations shall be

---

13.6	Decommissioning

13.7	Unless otherwise agreed with the National Petroleum Agency, the procedure for the Contractor providing funds to meet its Decommissioning obligations shall be as follows:

(a)	an amount shall be established on a Contract Area basis, commencing with effect from the fourth (4th) anniversary after the start of commercial production, on a unit of production basis as follows:

DP =	Decommissioning provision for the period (millions of US dollars)

PVDC =	Present Value of Decommissioning costs (millions of US dollars)

DF =	Balance of Decommissioning fund at the start of the period (millions of US dollars)

RP =	Estimated remaining recoverable Crude Oil (millions of Barrels) from the Contract Area

(b)

All Decommissioning provisions shall be held in a Decommissioning reserve fund, which shall be an interest bearing escrow account jointly established by the Parties at a first class commercial bank or other financial institution in accordance with the Petroleum Law (the “Decommissioning Reserve Fund”). The bank or financial institution shall have a long term rating of not less than "A minus" by Standard and Poor’s Corporation or an "A3" rating by Moody’s Investor Service or a comparable rating by another mutually agreed rating service.

(c)	For the purposes of calculating the present value of Decommissioning costs, the following formula shall be used:

EDC =	estimated value of Decommissioning costs in nominal terms at the expected date of Decommissioning

i =	interest rate applicable to the escrow account in the current period

n =	number of Years between current period and expected date of Decommissioning

---

13.8

The Decommissioning Reserve Fund shall be used solely for the purposes of paying for Decommissioning activities. No Party may mortgage, pledge, encumber or otherwise use such Decommissioning Reserve Fund for any purpose whatsoever except as expressly provided herein or in the Petroleum Law. The Decommissioning Reserve Fund may be invested in investments approved in advance by the Contractor and the National Petroleum Agency.

13.9	The Contractor shall annually meet any shortfall between the actual Decommissioning costs and the Decommissioning Reserve Fund for the Contract Area, such amount to be deposited into the escrow account within thirty (30) days after the end of each Calendar Year.

13.10	Any balance remaining in the Decommissioning Reserve Fund after all Decommissioning costs in the Contract Area have been met shall be distributed between the National Petroleum Agency and the Contractor in the same proportion as the allocation of Available Crude Oil at the time of Decommissioning operations.

13.11	Decommissioning expenditures incurred under these Decommissioning provisions are both cost recoverable as Contract Area non-capital costs under the Accounting Procedures and deductible for Tax purposes under the Petroleum Taxation Law.

14.1	Each Calendar Year, the Contractor shall submit a detailed program for recruitment and training for the following Calendar Year in respect of its personnel from Sao Tome and Principe in accordance with the Petroleum Law.

14.2	Qualified nationals from Sao Tome and Principe shall be employed in all non-specialized positions.

14.3

Qualified nationals from Sao Tome and Principe shall also be employed in specialized positions such as those in exploration, drilling, engineering, production, environmental safety, legal and finance. The Contractor shall have the right, subject to applicable laws, rules and regulations, to employ non-nationals of Sao Tome and Principe in such specialized positions where qualified individuals from Sao Tome and Principe are not available, provided that the Contractor shall recruit and train nationals from Sao Tome and Principe for such specialized positions, such that the number of expatriate staff shall be kept to a minimum.

14.4

Pursuant to Clause 9.2(k), qualified competent professionals of the National Petroleum Agency shall be assigned to work with the Contractor and such personnel and the Contractor's national personnel from Sao Tome and Principe shall not be treated differently with regard to salaries and other benefits. The Contractor and the National Petroleum Agency shall mutually agree on the numbers of National Petroleum Agency's staff to be assigned to Petroleum Operations. The costs and expenses of such National Petroleum Agency personnel shall be included in Operating Costs. The Contractor shall not be liable for any damages resulting from the Gross Negligence or Willful Misconduct of any National Petroleum Agency employees assigned to work for the Contractor.

---

14.5	The Parties shall mutually agree on the organizational chart of the Contractor which shall include nationals of Sao Tome and Principe in key positions.

14.6

No Sao-Tomean who is employed by the Contractor shall be dismissed without the prior written approval of the National Petroleum Agency, except in the case of a serious misbehavior on the part of such employee, in which case a prior notice of the dismissal to the National Petroleum Agency will be required. For the purposes of this clause, a serious misbehavior means serious inadequate conduct of the employee which corresponds to a violation of the employee’s duties under the applicable Sao Tome and Principe labor legislation, which has been investigated and proved by documentary evidence.

14.7

The Contractor shall spend point twenty-five percent (0.25%) of the Operating Costs in each Year of the Exploration Period subject to a minimum of US$250,000 (two hundred and fifty thousand United States dollars) and a maximum of US$300,000 (three hundred thousand United States dollars) in any Calendar Year on scholarships for the training of nationals of Sao Tome and Principe at institutions to be selected by the National Petroleum Agency subject to compliance with the laws applicable to each Party and appropriate due diligence by the Parties. In connection with the review of the annual Work Program and Budgets, the National Petroleum Agency may propose additional budgets for training and the National Petroleum Agency and the Contractor shall mutually agree to such proposal.

14.8

The Contractor shall spend US$500,000 (five hundred thousand United States Dollars) in each Calendar Year during the Production Period on scholarships for the training of nationals of Sao Tome and Principe at institutions to be selected by the National Petroleum Agency subject to compliance with the laws applicable to each Party and appropriate due diligence by the Parties. In connection with the review of the annual Work Program and Budgets, the National Petroleum Agency may propose additional budgets for training and the Parties may mutually agree to such proposal.

14.9	Amounts payable under Clauses 14.7 and 14.8 shall be recoverable as Contract Area non-drilling exploration costs under the terms of the Accounting Procedures.

(a)

The Contractor shall be responsible for keeping complete books of accounts consistent with Good Oil Field Practice and modern petroleum industry accounting practices and procedures. The books and accounts maintained under and in accordance with this Contract shall be kept in United States dollars. All other books of accounts as the Operator may consider necessary shall also be kept in United States dollars. Officials of the National Petroleum Agency and the

---

(b)	All original books of account shall be kept at the registered address or principal place of business of the Contractor in Sao Tome and Principe.

15.2	Audits

(a)

The National Petroleum Agency shall have the right to inspect and audit the accounting records relating to this Contract or Petroleum Operations for any Calendar Year by giving thirty (30) days advance written notice to the Operator. The Operator may request additional time. The Operator shall facilitate the work of such inspection and auditing; provided, however, that such inspection and auditing shall be carried out within three (3) Calendar Years following the end of the Calendar Year in question. If not, the books and accounts relating to such Calendar Year shall be deemed to be accepted by the Parties. Any exception must be made in writing within ninety (90) days following the end of such audit and failure to give such written notice within such time shall establish the correctness of the books and accounts by the Parties.

(b)

The National Petroleum Agency may undertake the inspection and audit in Clause 15.2(a) either through its own personnel or through a qualified firm of chartered accountants appointed for such purpose by the National Petroleum Agency; provided, that transportation and per diem, in accordance with Sao-Tomean legislation, are borne by the Contractor. The National Petroleum Agency’s own personnel shall be borne by the Contractor as a general administrative cost, as long as these are reasonable and are duly documented and shall be cost recoverable. Costs for the qualified firm of chartered accountants shall be borne by the National Petroleum Agency.

(c)

Notwithstanding that the said period of three (3) Calendar Years may have expired, if the Contractor or any of its employees or any Person acting on its behalf has acted with Gross Negligence or engaged in Willful Misconduct, the National Petroleum Agency shall have the right to conduct further audit to the extent required to investigate such Gross Negligence or Willful Misconduct in respect of any earlier periods and all costs of such investigation shall be for the account of the Contractor and shall not be cost recoverable.

---

15.4	Home Office Overhead Charges

16.1	Tax

16.2	The Realizable Price established in accordance with Clause 11 shall be used in determining the amount of profits of a Contractor Party and its resulting Tax liability under the Petroleum Taxation Law.

16.3	Customs

17.1

The Contractor shall obtain and maintain such insurance as is customarily obtained in accordance with Good Oil Field Practice with respect to Petroleum Operations with an insurance company of good repute approved by the National Petroleum Agency, in the names of the Parties and with limits of liability not less than those required in accordance with Good Oil Field Practice. The premium for such policies shall be included in Operating Costs. All policies shall name the National Petroleum Agency as a co-insured

---

(b)	pollution caused in the course of Petroleum Operations for which the Contractor or the Operator may be held responsible;

(c)	property loss or damage or bodily injury suffered by any third party in the course of Petroleum Operations for which the Contractor, the Operator, the State or the National Petroleum Agency may be held liable;

(d)	the cost of removing wrecks and cleaning up operations following an accident in course of Petroleum Operations; and

(e)	the Contractor's and/or the Operator's liability to its employees and other persons engaged in Petroleum Operations.

17.2

In case of any loss or damage to property, all amounts paid by an insurance company shall be received by the Contractor for the conduct of Petroleum Operations. The Contractor shall determine whether the lost or damaged property should be repaired replaced or abandoned. If the decision is to repair or replace the property in question, the Contractor shall immediately take steps to replace or repair such lost or damaged property. Any excess cost of repair or replacement above the amount reimbursed by the insurance company shall be regarded as an Operating Cost. If the cost of repair is less than the amount reimbursed by the insurance company, the difference shall be deducted from Operating Costs. If the decision is to neither repair nor replace then the proceeds of any coverage shall be credited to Operating Costs. In the event that the loss or damage is attributable to the Contractor’s Gross Negligence or Willful Misconduct, the excess cost of replacement or repair shall not be reimbursed as an Operating Cost.

17.3	The Contractor shall obtain and maintain an insurance policy covering damage caused to third parties as provided in Clause 17.1(c) as a direct or indirect result of Petroleum Operations under this Contract.

17.4

All insurance policies obtained and maintained pursuant to this Clause 17 shall be based upon Good Oil Field Practice and shall be taken out in Sao Tome and Principe, except for those concerning risks for which the Contractor cannot obtain local coverage with an insurance company holding a long term rating not inferior to A minus by Standard and Poor’s Corporation or an A3 rating by Moody’s Investor Service or an equivalent rating by any other mutually agreed rating service, in which case it shall be taken out outside of the Territory of Sao Tome and Principe.

17.5	In entering into contracts with any sub-contractor or other Person for the performance of Petroleum Operations, the Contractor shall require, whenever reasonably practicable, such sub-contractor or other Person to take out adequate insurance in accordance with this Clause 17 and to properly indemnify the State and its organs and agencies and the

---

17.6	The Contactor shall also maintain all other insurance policies required under the laws of Sao Tome and Principe.

18.1

Subject to Clauses 18.4 and 18.5, the Contractor and the National Petroleum Agency shall keep information furnished to each other in connection with Petroleum Operations and all plans, maps, drawings, designs, data, scientific, technical and financial reports and other data and information of any kind or nature relating to Petroleum Operations including any discovery of Petroleum as strictly confidential and shall ensure that their entire or partial contents shall under no circumstances be disclosed in any announcement to the public or to any third party without the prior written consent of the other. With regard to data about aspects of geology, reservoir engineering or production engineering, reports or other material submitted to public authorities, the confidentiality obligations shall have the duration specified in Clause 18.3.

(a)	Affiliates;

(b)	sub-contractors, auditors, financial consultants or legal advisers, provided that such disclosures are required for the effective performances of the aforementioned recipients’ duties related to Petroleum Operations and provided further that they are under a similar undertaking of confidentiality as that contained in this Clause 18;

(c)	comply with statutory obligation or the requirements of any governmental agency or the rules of a stock exchange on which a Party’s or its Affiliates’ stock is publicly traded in which case the disclosing Party will notify the other Party of any information so disclosed prior to such disclosure;

(d)	financial institutions involved in the provision of finance for the Petroleum Operations hereunder provided, in all such cases, that the recipients of such data and information agree in writing to keep such data and information strictly confidential;

(e)	a bona fide third party purchaser provided that such third party executes an undertaking similar to the undertaking contained in this Clause 18 to keep the information disclosed to it strictly confidential; and

(f)	in accordance with and as required by the Oil Revenue Law.

18.2	The Parties shall take necessary measures in order to make their directors, officers, employees, agents and representatives comply with the same obligation of confidentiality provided for in this Clause 18.

---

18.3	The provisions of this Clause 18 shall terminate five (5) years after the termination or expiration of this Contract.

18.4

Subject to Clause 18.1(c), the Contractor shall use best endeavors to ensure that it, its Affiliates and Associates and each of their respective directors, officers, servants, employees and agents shall not make any reference in public or publish any notes in newspapers, periodicals or books nor divulge, by any other means whatsoever, any information on the activities under the Petroleum Operations, or any reports, data or any facts and documents that may come to their knowledge by virtue of this Contract, without the prior written consent of the National Petroleum Agency.

18.5	No announcement of a Discovery or Commercial Discovery may be made by the Contractor otherwise than in accordance with this Clause 18 and unless and until the Government has made a prior announcement of such Discovery or Commercial Discovery in the national and international media.

19.1	Subject to Clause 19.5, the Contractor may not sell, assign, transfer, encumber, convey or otherwise dispose of part or all of its rights, interest and/or obligations under this Contract to any third party without the prior written consent of the National Petroleum Agency.

19.2

All changes in Control of a Contractor Party shall be subject to the prior approval of the Government. Where a change in Control occurs without the prior approval of the Government, the Government may terminate this Contract in respect of such Contractor Party. This Clause 19.2 does not apply if the change of Control is the direct result of an acquisition of shares or other securities of a publicly traded company on a recognized stock exchange. Change of Control includes a Person ceasing to be Controlled (whether or not another Person becomes in Control), and a Person obtaining Control (whether or not another Person was in Control).

19.3

When an assignment, transfer or other disposition of any rights under this Contract, other than a transfer pursuant to Clause 19.5, is anticipated, the assigning Contractor Party must notify in writing the National Petroleum Agency as soon as practicable. The Government, acting through the National Petroleum Agency or other nominee, shall then have the right to purchase the assigning Contractor Party's interest under this Contract proposed to be assigned, transferred or otherwise disposed of on the same terms and conditions as those offered to a bona fide transferee provided that it gives notice to the Contractor Party of its decision to exercise such right within thirty (30) days of the Contractor Party’s notice pursuant to the first sentence above. This right is in addition to any right of pre-emption granted under an applicable Joint Operating Agreement.

19.4	If the written consent by the National Petroleum Agency is granted, the assigning Contractor Party shall be relieved of its obligation and liabilities under this Contract to

---

19.5

The Contractor may sell, assign, transfer, convey or otherwise dispose of part or all of its rights and interest under this Contract to an Affiliate with a prior written notice to the National Petroleum Agency, provided that the relevant Contractor Party and the Affiliate shall remain jointly and severally liable for all obligations and liabilities under this Contract notwithstanding such assignment, transfer, conveyance or other disposal. If the Affiliate shall cease at any time to be an Affiliate of the transferring Contractor Party, the Affiliate shall immediately re-assign or re-transfer to the original Contractor Party all rights and obligations transferred to it under this Contract. Transfers of interests to an Affiliate of a Contractor Party shall not change the nationality of the Contractor Party for the purpose of determining jurisdiction of any arbitration tribunal.

19.6	Any request for consent pursuant to Clause 19.1 made by the Contractor to the National Petroleum Agency shall include the assignment agreement and other relevant information relating to financial and corporate standing of the assignee, and its capability to contribute to the Petroleum Operations under this Contract as required under the Petroleum Law.

20.1	The State, by decision of the Government, shall be entitled to terminate this Contract with the Contractor (or in respect of any Party making up the Contractor) if any of the following events occur:

(a)	the Contractor defaults in the performance of any of its material obligations set forth in Clause 9;

(b)	the Contractor fails to execute the Minimum Work Obligations;

(c)	the Contractor assigns, transfers, conveys, encumbers or other disposes of its rights, interests and/or obligations under this Contract otherwise than in accordance with Clause 19 and/or the Petroleum Law;

(d)	the Contractor is adjudged insolvent or bankrupt by a court of competent jurisdiction or acknowledges or claims that it is unable to pay its debts or makes an application for bankruptcy protection that is not discharged within thirty (30) days;

(e)	the Contractor ceases to carry on its business as carried on at the date of this Contract or liquidates or terminates its corporate existence;

(f)	the warranties made by the Contractor under Clause 24 are found to have been untrue when made;

(g)	the Contractor fails to make any payment to the State when due;

---

(h)	the Contractor fails to submit the performance bond or guarantee when due;

(i)

the Contractor fails to initiate field development and production in accordance to the time schedule outlined in the approved Field Development Program (Clause 5.1 (e)), except if that occurs for acceptable and duly demonstrated reasons; or if, after production of Petroleum is initiated in the Contract Area, production of Petroleum ceases for a period of more than four (4) months for causes which are not acceptable, not attributable to Force Majeure or without the consent of the National Petroleum Agency; and

(j)	the events provided for in the articles 34, 35 or 36 of the Petroleum Law.

20.2

If the cause for termination is an event specified in Clause 20.1(a), (b), (f), (g), (h), (i) and/or (j) above, the National Petroleum Agency shall give written notice thereof to the Contractor requiring it to remedy such default within a period not more than thirty (30) days of receipt of the National Petroleum Agency’s notice or such additional days as the National Petroleum Agency deems appropriate in the circumstances in its sole discretion. If upon the expiration of the said period such default has not been remedied or removed, the Government may, by written notice issued by the National Petroleum Agency to the Contractor, declare this Contract terminated.

20.3	Termination for any of the events specified in Clause 20.1(c), (d) and/or (e) above, shall be with immediate effect and the Government may, by written notice to the Contractor issued by the National Petroleum Agency, declare this Contract terminated. Termination as to one Contractor Party shall not constitute termination as to the other Contractor Party(ies).

20.4	Where this Contract is terminated with respect to only one Contractor Party, the State shall have the option to assume the interests, rights and obligations of such defaulting Contractor Party under this Contract. If the State elects not to exercise this option, the interests, rights and obligations shall be assigned to the remaining Contractor Parties who shall be liable jointly and severally.

20.5	In the event that any other Contractor Party(ies) fail to meet any and all liabilities of the terminated Contractor Party as provided in Clause 20.4, the State reserves the right to terminate this Contract, in respect of all other Contractor Parties upon written notice.

20.6	Without prejudice to all other rights of the State, the Contractor shall upon the termination of this Contract permit inspection, copying and auditing of its accounts and records for the Petroleum Operations by the National Petroleum Agency and/or its agents.

20.7

The Contractor shall have the right, at its sole discretion, to relinquish its rights and to terminate this Contract without further obligations or liabilities, upon completion of the stipulated Minimum Work Obligations and Minimum Financial Commitment at the end of any phase of the Exploration Period, upon giving a thirty (30) day advance notice to the National Petroleum Agency. This Clause 20.7 shall not release the Contractor from any unfulfilled obligations incurred prior to the termination of this Contract nor from

---

20.8	This Contract shall automatically terminate if no Commercial Discovery is made in the Contract Area at the end of Exploration Period, as extended.

21.1

Any failure or delay on the part of any Party in the performance of its obligations or duties (other than the obligation to pay money) under this Contract shall be excused to the extent attributable to Force Majeure. A Force Majeure situation includes delays, defaults or inability to perform under this Contract due to any event beyond the reasonable control of the Party claiming Force Majeure. Such event may be, but is not limited to, any act, event, happening or occurrence due to natural causes and acts or perils of navigation, fire, hostilities, war (whether declared or undeclared), blockade, labor disturbances, strikes riots, insurrection, civil commotion, quarantine restrictions, epidemics, storms, floods, earthquakes, accidents, blowouts and lightning.

21.2	If Petroleum Operations are delayed, curtailed or prevented by an event of Force Majeure, then the time for carrying out the obligation and duties thereby affected, and rights and obligations hereunder, shall be extended for a period equal to the period of such delay.

21.3	The Party who is unable to perform its obligations as a result of the Force Majeure shall promptly notify the other Parties not later than five (5) days after the establishment of the commencement of the event of Force Majeure, stating the cause, and the Parties shall do all that is reasonably within their powers to remove such cause.

21.4	The Contractor’s failure or inability to find Petroleum in commercial quantities for reasons other than as specified in Clause 21.1 shall not be deemed an event of Force Majeure.

22.1	This Contract shall be governed by and construed in accordance with the laws of the Democratic Republic of Sao Tome and Principe.

22.2	Subject to Clause 25.8 and to the principles of public international law, no term of this Contract shall prevent or limit the State from exercising its sovereign rights.

23.1	If the Contractor discovers a commercially viable quantity of Natural Gas, the Contractor shall have the right to develop, commercialize, recover the costs and share in the profits of a development of such Natural Gas under this Contract on terms to be mutually agreed. Such terms when agreed shall become an integral part of this Contract.

---

23.2

Notwithstanding Clause 23.1, the Contractor may utilize, at no cost, Natural Gas required as fuel for Petroleum Operations such as gas recycling, gas injection, gas lift or any other Crude Oil enhancing recovery schemes, stimulation of wells necessary for maximum Crude Oil recovery in the field discovered and developed by the Contractor and such usage shall be with prior written consent of the National Petroleum Agency, which consent shall not be unreasonably withheld. This shall be included in a Field Development Program.

23.3

The attainment of recovery of Crude Oil through an efficient, economic and technically acceptable method shall always be paramount in all decisions regarding Associated Natural Gas. However, prior to the commencement of Production of Crude Oil from the Contract Area, the Contractor shall submit to the National Petroleum Agency, a program for the utilization of any Associated Natural Gas that has been discovered in the Contract Area, which shall be subject to the approval of the National Petroleum Agency.

23.4

If the Contractor discovers sufficient volumes of Unassociated Natural Gas that could justify commercial development, the Contractor shall immediately report the volume of potentially recoverable Natural Gas to the National Petroleum Agency and shall promptly investigate and submit proposals to the National Petroleum Agency for the commercial development of such Natural Gas taking in consideration local strategic needs as may be identified by the National Petroleum Agency, within two (2) years of the date of the relevant discovery. Any cost in respect of such proposals or investigation presented by the Contractor to the National Petroleum Agency shall be included in Operating Costs. The Contractor and the National Petroleum Agency will determine the plan and time needed, which shall be no more than five (5) years, unless otherwise agreed by the National Petroleum Agency, to progress a commercial development project, which shall include the terms for recovery of Operating Costs and sharing of Natural Gas production, which terms when agreed shall form an integral part of this Contract. If the Contractor fails to justify a commercial development within the agreed timeframe and if the National Petroleum Agency determines that a sufficient volume of Unassociated Natural Gas exists, the National Petroleum Agency shall have the right to propose to the Contractor a commercial development of such Natural Gas. The Contractor shall have the right to participate in the commercial development under terms pursuant to Clause 23.1. If the Contractor declines to participate in the commercial development of such Natural Gas as presented by the National Petroleum Agency and if the Field Development Program does not hinder or jeopardize current Petroleum Operations, the National Petroleum Agency may develop the Natural Gas in the manner presented to the Contractor.

24.1	In consideration of the State entering into this Contract, the Contractor hereby represents and warrants to the State as follows:

---

(a)	The Contractor has the power to enter into and perform this Contract and has taken all necessary action to execute, deliver and perform this Contract in accordance with the terms herein contained.

(b)	The execution, delivery and performance of this Contract by the Contractor will not contravene, any of the provisions of:

(i)	any law or regulations or order of any governmental authority, agency or court applicable to or by which the Contractor may be bound; and

(ii)	any mortgage, contract or other undertaking or instrument to which the Contractor is a party or which is binding upon it or any of its respective revenues or assets.

(c)	Full disclosure has been made to the National Petroleum Agency.

(d)	As of the Effective Date all facts in relation to the Contractor and its financial condition and affairs as are material and ought properly to be made known to the National Petroleum Agency and have been made so known in full.

(e)	The Contractor, together with its Affiliates, has sufficient funds both in foreign and local currencies to carry out Petroleum Operations under this Contract.

(f)	The representations and warranties set out in this Clause 24 shall remain in full force and effect for the duration of this Contract.

24.2	In consideration of the Contractor entering into this Contract, the State hereby represents and warrants to the Contractor as follows:

25.1	Should there be a difference or dispute between the Parties concerning the interpretation or performance of this Contract (a "Dispute") such that the Dispute cannot be resolved by mutual agreement, the Parties may refer the matter to an independent expert for an opinion to assist the Parties in reaching a mutual agreement.

25.2	Where an independent expert is used, the National Petroleum Agency and the Contractor shall furnish the expert with all written information which he may reasonably require. The cost of the services of the expert, if appointed, shall be shared equally between the National Petroleum Agency and each Contractor Party.

25.3	If the Dispute cannot be settled by amicable agreement or through an independent expert or if a Party does not agree to the use of an independent expert, then either the National Petroleum Agency or the Contractor may serve on the other a demand for arbitration in

---

25.4

If the relevant Parties have not reached a mutual agreement after three (3) months of the date of a notice of a Dispute by one Party to another, unless the Parties to the Dispute mutually agree to an extension, any Party to the Dispute may refer the Dispute for resolution by final and binding arbitration to the International Centre for the Settlement of Investment Disputes (the "Centre" or “ICSID”) established by the Convention on the Settlement of Investment Disputes between States and Nationals of other States, done at Washington, March 18, 1965 (the "ICSID Convention"); to the Additional Facility of the Centre, if the Centre is not available; or in accordance with the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL), if neither the Centre nor the Additional Facility are available.

(i)

The claimant and the respondent shall, within thirty (30) days from the day on which a request for arbitration has been submitted, appoint an arbitrator each (and if there is more than one claimant or more than one (1) respondent, then the claimants and/or the respondents collectively shall each appoint a single arbitrator), by giving notice in writing of such appointment to the Secretary-General of ICSID and the other Party or Parties to the Dispute.

(ii)

If either the claimant or the respondent fails to comply with the time limit in the preceding paragraph, the Chairman of the Administrative Council of ICSID shall appoint the arbitrator or arbitrators that have not yet been appointed, at the request of either the claimant or the respondent and after consulting the claimant and the respondent as far as possible. The Chairman of the Administrative Council of ICSID shall give notice in writing of such appointment or appointments to the Secretary-General of ICSID and the claimant and the respondent.

(iii)	The two (2) arbitrators so appointed shall, within thirty (30) days of their appointment, agree upon the person to be appointed as the President of the tribunal, and give notice of such appointment to the Secretary-General of ICSID and the claimant and the respondent.

---

(iv)

If the two (2) arbitrators fail to agree upon the person to be the President of the tribunal, the Chairman of the Administrative Council of ICSID shall appoint the President, at the request of either the claimant or the respondent, and after consulting the claimant and the respondent as far as possible. The Chairman of the Administrative Council of ICSID shall give notice in writing of such appointment to the Secretary-General of ICSID and the claimant and the respondent.

(v)	None of the arbitrators shall be a citizen of the countries of any of the Parties to the Dispute (or in the case where the Party is a company or another entity, any country or countries of nationality of such Party, including the country of its ultimate parent).

---

26.1	This Contract shall come into force on the date (the “Effective Date”) of the instrument of ratification executed by the Prime-Minister on behalf of the Government. Record of such ratification shall be annexed to this Contract as proof of the Effective Date.

26.2	Failure by the Contractor to meet its obligation to pay the signature bonus in accordance with the terms of Clause 2.1 shall mean that this Contract shall be null and void.

27.1

The Parties agree that the commercial terms and conditions of this Contract have been negotiated and agreed having due regard to the existing fiscal terms in accordance with the provisions of the Petroleum Law and the Petroleum Taxation Law in force at the time of the Effective Date. If such fiscal terms are materially changed to the detriment of the Contractor, the Parties agree to review the terms and conditions of this Contract affected by such changes and to align such terms and conditions with the fiscal terms as at the Effective Date.

27.2

If at any time or from time to time, there is a change in legislation or regulations, or a change to the interpretation of such legislation or regulations, which materially affect the commercial benefit afforded to the Contractor under this Contract, the Parties will consult each other and shall agree to such amendments to this Contract as are necessary to restore as near as practicable such commercial benefits which existed under this Contract as of the Effective Date.

27.3	Where the parties cannot agree on new terms within one hundred and twenty (120) days of the Contractor’s request for review of the terms and conditions of the Contract affected by the changes, the matter may be submitted to arbitration pursuant to Clause 25.

28.1	BP is hereby designated as the Operator under this Contract to execute, for and on behalf of the Contractor, all Petroleum Operations in the Contract Area pursuant to and in accordance with this Contract and the Petroleum Law.

28.2

The Operator, for and on behalf of the Contractor, shall have the exclusive control and administration of Petroleum Operations under this Contract. The Operator, for and on behalf of the Contractor, and within the limits defined by the National Petroleum Agency, this Contract and the Petroleum Law, shall have the authority to execute all contracts, incur expenses, make commitments, and implement other actions in connection with the Petroleum Operations.

---

29.1

Each Party represents and warrants that it did not engage any person, firm or company as a commission agent for purposes of this Contract and that it has not given or offered to give nor will it give or offer to give to or to accept from (directly or indirectly) any person any bribe, gift, gratuity, commission or other thing of significant value, as an inducement or reward for doing or forbearing to do any action or take any decision in relation to this Contract, or for showing or forbearing to show favor or disfavor to any person in relation thereto.

29.2

The Contractor further represents and warrants that no loan, reward, offer, advantage or benefit of any kind has been given to any public official or any person for the benefit of such public official or person or third parties, as consideration for an act or omission by such public official in connection with the performance of such person's duties or functions or to induce such public official to use his or her position to influence any act or decisions of the Administration with respect to this Contract. Any breach of this representation shall cause this Contract to be declared invalid and voidable by the State Administration.

30.1	Any notice or other communication required to be given by a Party to another shall be in writing (in Portuguese and English) and shall be considered as duly delivered if given by hand delivery in person, by courier or by facsimile at the following addresses:

---

30.2	All notices and other communications shall be deemed to have been duly delivered upon actual receipt by the intended recipient.

30.3.	Each Party shall notify the other promptly of any change in the above address.

32.1	No supplement or modification of any provision of this Contract shall be binding unless executed in writing by all Parties.

32.2	No waiver by any Party of any breach of a provision of this Contract shall be binding unless made expressly in writing. Any such waiver shall relate only to the breach to which it expressly relates and shall not apply to any subsequent or other breach.

32.3	The validity and effectiveness of this Contract shall be subject to the full compliance with all applicable administrative procedural rules relating to State contracting.

32.4	This Contract is prepared and filed in the Portuguese and English languages. In case of non-conformity, the Portuguese language version shall prevail.

32.5	This Contract shall be made public and a copy hereof shall be provided to the Public Registration and Information Office within ten (10) days from its execution.

---

---

---

---

---

---

1.3	In the event of a conflict between the terms of these Accounting Procedures and the Contract, the terms of the Contract shall apply.

1.4	These Accounting Procedures may be amended from time to time by the mutual agreement of the Parties.

2.1	Operating Costs shall be defined as all costs, expenses paid and obligations incurred in carrying out Petroleum Operations and shall consist of:

---

(a)	General office expenses - office, services and general administration services pertaining to Petroleum Operations including services of legal, financial, purchasing, insurance, accounting, computer, and personnel department; communications, transportation, rental of specialized equipment, scholarships, charitable contributions and educational awards.

(b)

Labor and related costs - salaries and wages, including bonuses, of employees of the Contractor who are directly engaged in the conduct of Petroleum Operations, whether temporarily or permanently assigned, irrespective of the location of such employee including the costs of employee benefits, customary allowance and personal expenses incurred under the Contractor’s practice and policy, and amounts imposed by applicable governmental authorities which are applicable to such employees.

(i)	cost of established plans for employee group life insurance, hospitalization, pension, retirement, savings and other benefit plans;

(ii)	cost of holidays, vacations, sickness and disability benefits;

(iii)	cost of living, housing and other customary allowances;

(iv)	reasonable personal expenses, which are reimbursable under the Contractor's standard personnel policies;

(vi)	cost of transportation of employees, other than as provided in paragraph (c) below, as required in the conduct of Petroleum Operations; and

(vii)	charges in respect of employees temporarily engaged in Petroleum Operations, which shall be calculated to reflect the actual costs thereto during the period or periods of such engagement.

(c)	Employee relocation costs - costs for relocation, transportation and transfer of employees of the Contractor engaged in Petroleum Operations including the cost of freight and passenger service of such employees’ families and their personal and household effects together with meals, hotel and other expenditures related to such transfer incurred with respect to:

---

(i)	employees of the Contractor within Sao Tome and Principe including expatriate employees engaged in Petroleum Operations;

(ii)	transfer to Sao Tome and Principe for engagement in Petroleum Operations;

(iii)

relocation costs and other expenses incurred in the final repatriation or transfer of the Contractor's expatriate employees and families in the case of such employees’ retirement, or separation from the Contractor, or in case of such employees’ relocation to the Contractor’s point of origin, provided that relocation costs incurred in moving an expatriate employee and his family beyond point of origin, established at the time of his transfer to Sao Tome and Principe, will not be recoverable as Operating Costs; and

(iv)	Sao-Tomean employees on training assignments outside the Contract Area.

(d)	Services provided by third parties - cost of professional, technical, consultation, utilities and other services procured from third party sources pursuant to any contract or other arrangements between such third parties and the Contractor for the purpose of Petroleum Operations.

(e)

Legal expenses - all costs or expenses of handling, investigating, asserting, defending and settling litigation or claims arising out of or relating to Petroleum Operations or necessary to protect or recover property used in Petroleum Operations including, but not limited to, legal fees, court costs, arbitration costs, cost of investigation or procuring evidence and amounts paid in settlement or satisfaction of any such litigation, arbitration or claims in accordance with the provisions hereof.

(f)	Head office overhead charge – parent company overhead in the amount specified in Clause 15.4 of the Contract.

(g)	Insurance premiums and settlements - premiums paid for insurance normally required to be carried for the Petroleum Operations together with all expenditures incurred and paid in settlement of any and all losses, claims, damages, judgments, and other expenses, including fees and deductibles relating to the Contractor's performance under the Contract.

(h)	Duties and taxes - all duties and taxes, fees and any Government assessments, including gas flare charges, license fees, custom duties, other than Royalty and Tax.

(i)	Operating expenses - labor, materials and services used in day to day oil well operations, oil field production facilities operations, secondary recovery

---

(j)	Successful Exploration drilling - all expenditures incurred in connection with the drilling of any Exploration Well which results in a Commercial Discovery.

(k)	Successful Appraisal drilling – all expenditures incurred in connection with the drilling of Appraisal Wells on a Commercial Discovery.

(l)	Unsuccessful Development drilling - all expenditures incurred in connection with drilling of development wells which are dry, including costs incurred in respect of casing, well cement and well fixtures.

(m)	Successful Development drilling - all intangible expenditures incurred in connection with labor, fuel, repairs, maintenance, hauling, and supplies and materials (not including, casing and other well fixtures) which are for or incidental to drilling, cleaning, deepening or completion wells or the preparation thereof incurred in respect of:

(i)	determination of well locations, geological, geophysical, topographical and geographical surveys for site evaluation preparatory to drilling including the determination of near surface and near sea bed hazards;

(ii)	cleaning, draining and leveling land, road-building and the laying of foundations;

(iii)	drilling, shooting, testing and cleaning wells; and

(iv)	erection of rigs and tankage assembly and installation of pipelines and other plant and equipment required in the preparation or drilling of wells producing Crude Oil.

(n)	Decommissioning provisions - any deposits in the Decommissioning Reserve Fund set aside for the purposes of Decommissioning pursuant to Clause 13 of the Contract.

(o)

Affiliate services – professional, administrative, scientific and technical services provided by Affiliates of the Contractor for the direct benefit of Petroleum Operations including services provided by the Exploration, Production, legal, financial, purchasing, insurance, accounting and computer services departments of such Affiliates. Charges for providing these services shall reflect costs only, and must be consistent with international market practices and shall not include any element of profit.

---

(p)	Pre-production Contract Area Non-capital Costs – all recoverable Contract Area Non-capital Costs incurred before first production from the Contract Area are accumulated and treated as if they had been incurred on the first day of production from the Contract Area.

2.3	Contract Area Capital Costs

(a)

Plant expenditures – expenditures in connection with the design, construction, and installation of plant facilities (including machinery, fixtures, and appurtenances) associated with the production, treating, and processing of Crude Oil (except such costs properly allocable to intangible drilling costs) including offshore platforms, secondary or enhanced recovery systems, gas injection, water disposal, expenditures for equipment, machinery and fixtures purchased to conduct Petroleum Operations such as office furniture and fixtures, office equipment, barges, floating crafts, automotive equipment, petroleum operational aircraft, construction equipment, miscellaneous equipment.

(b)	Pipeline and storage expenditure - expenditures in connection with the design, installation, and construction of pipeline, transportation, storage, and terminal facilities associated with Petroleum Operations including tanks, metering, and export lines.

(c)	Building expenditure - expenditures incurred in connection with the construction of buildings, structures or works of a permanent nature including workshops, warehouses, offices, roads, wharves, furniture and fixtures related to employee housing and recreational facilities and other tangible property incidental to construction.

(d)	Successful Development drilling - all tangible expenditures incurred in connection with drilling development wells such as casing, tubing, surface and sub-surface production equipment, flow lines and instruments.

(e)	Material inventory - cost of materials purchased and maintained as inventory items solely for Petroleum Operations subject to the following provisions:

(i)	the Contractor shall supply or purchase any materials required for the Petroleum Operations, including those required in the foreseeable future. Inventory stock levels shall take account of the time necessary to provide the replacement, emergency needs and similar considerations;

(ii)	materials purchased by the Contractor for use in the Petroleum Operations shall be valued so as to include invoice price (less prepayment discounts, cash discounts, and other discounts if any) plus freight and forwarding

---

(iii)	materials not available in Sao Tome and Principe supplied by the Contractor or from its Affiliates stocks shall be valued at the current competitive cost in the international market; and

(iv)

the Contractor shall maintain physical and accounting controls of materials in stock in accordance with Good Oil Field Practice. The Contractor shall make a total inventory at least once a year to be observed by the National Petroleum Agency and its external auditors. The National Petroleum Agency may however carry out partial or total inventories at its own expense, whenever it considers necessary, provided such exercise does not unreasonably disrupt Petroleum Operations.

(f)	Pre-production Contract Area Capital Costs – all recoverable Contract Area Capital Costs incurred before first production from the Contract Area are accumulated and treated as if they had been incurred on the first day of production from the Contract Area.

(a)	Geological and geophysical surveys - labor, materials and services used in aerial, geological, topographical, geophysical and seismic surveys incurred in connection with Exploration excluding however the purchase of data from the National Petroleum Agency.

(b)	Pre-Contract seismic costs – reasonable costs associated with the acquisition of seismic data covering the Contract Area, including third party processing but not interpretation of the data by the Contractor or its Affiliates, which were incurred prior to the Effective Date.

---

(a)	to the extent that the Contract Area has Available Cost Oil after recovering the Operating Costs (other than Unsuccessful Exploration and Appraisal Costs) related to that Contract Area; and

(b)	if there is insufficient Available Cost Oil in the Contract Area in any period to fully recover Unsuccessful Exploration and Appraisal costs the unrecovered amount may be carried forward and included in the next period’s Unsuccessful Exploration and Appraisal costs account.

(a)	bonuses and expenditure incurred by the Contractor in carrying out any obligation to fund social projects as defined in Clause 2 of the Contract;

(b)	interest incurred under loans taken to finance Petroleum Operations from either inter-Affiliate loans or loans from third parties; and

(c)	costs incurred in excess of five percent (5%) above costs budgeted for in a Work Program and Budget, unless such costs are approved in advance by the National Petroleum Agency, which shall not be denied in cases where costs reflect fair market conditions or are technically supported.

3.1	The Contractor shall compute the amount of Royalty and Tax payable to the State pursuant to and in accordance with the Contract. Such amounts shall be computed in the manner

---

3.2	The Contractor shall compute the Royalty to be paid to the State in a given month based on the Realizable Price of the Crude Oil produced during the second preceding month. Tax payments shall be calculated and remitted in accordance with the Petroleum Taxation Law.

4.1	The Contractor and the National Petroleum Agency shall agree within three (3) months on a format for monthly accounting analysis reflecting the volumes lifted in terms of Royalty Oil, Cost Oil, and Profit Oil, and Proceeds received by each Party.

4.2	The Realizable Price and the quantities actually lifted by the Parties shall be used to compute the Proceeds as reflected in the agreed monthly accounting analysis format in Article 4.1 above and the allocation of such Proceeds in the categories described under Clause 10 of the Contract shall be reflected.

4.3	The allocation of the quantity of Available Crude Oil to each Party pursuant to Clause 10 of the Contract shall be according to and governed by provisions of the Allocation and Lifting Procedures.

4.4	The priority of allocation of the total Proceeds for each period shall be as follows:

(a)	Royalty Oil;

(b)	Cost Oil; and

(c)	Profit Oil.

4.5	The amount chargeable to and recoverable as Royalty Oil, and Cost Oil shall be determined as follows:

(a)	Royalty Oil - The sum of royalties payable during such month.

(b)	Cost Oil - The Operating Costs applicable to such month for the purposes of Cost Oil are as follows:

(i)	Contract Area Non-Capital Costs shall be the amount recorded in the books and accounts of the Contractor for such month in accordance with these Accounting Procedures and shall be recoverable in full in the period incurred.

(ii)	Contract Area Capital Costs shall be the amount recorded in the books and accounts of the Contractor for such month in accordance with these Accounting Procedures and shall be recoverable over the depreciation period as provided in Article 6.1 below or the remaining life of the Contract, whichever is less.

---

(iii)	Contract Area Non-Drilling Exploration Costs shall be the amount recorded in the books and accounts of the Contractor for such month in accordance with these Accounting Procedures and shall be recoverable in full in the period incurred.

(iv)

Contract Area Unsuccessful Exploration and Appraisal Costs shall be the amount recorded in the books and accounts of the Contractor for such month in accordance with these Accounting Procedures and shall be recoverable over the depreciation period of five (5) years in equal installments of twenty percent (20%) per annum or the remaining life of the Contract Area, whichever is less, commencing with production from the Contract Area which costs are allocated to the Contract Area in accordance with Article 2.5 of this Schedule 2.

(c)	Any carryover from previous months as provided under Article 4.6 of this Schedule 2.

4.6	Any amounts chargeable and recoverable in excess of the allocation of Proceeds for the month to Royalty Oil and Cost Oil shall be carried forward to subsequent months. Carryovers shall be determined as follows:

(a)	A Royalty Oil carryover results when the Proceeds for such month are insufficient for allocation of the Royalty Oil due for the month, as described in Clause 10 of the Contract.

(b)	A Cost Oil carryover results when the Proceeds remaining, after allocating a portion of the Proceeds to Royalty Oil, are insufficient for allocation of Cost Oil due for the month, as described in Clause 10 of the Contract.

4.7	Profit Oil is available where Proceeds remain after allocations to Royalty Oil and Cost Oil pursuant to Articles 4.5 and 4.6 above. Profit Oil shall be allocated as described in Clause 10 of the Contract.

5.1

The Contractor shall open and keep bank accounts in United States dollars where all funds remitted from abroad shall be deposited for the purpose of meeting local expenditures. For purposes of keeping the books of accounts, any foreign currency remitted by the Contractor shall be converted at the monthly exchange rates published on the date of payment by the Central Bank of Sao Tome and Principe for Dobras, and the Financial Times of London for other currencies. The Contractor shall have the right to convert any currency into United States dollars and transfer any funds irrespective of currency into or outside of Sao Tome and Principe, free of any tax imposed by the State. It is understood that commercial banks may apply routine charges or fees on such transactions.

5.2	The Contractor shall prepare financial accounting and budget statements in accordance with the National Petroleum Agency’s prescribed reporting format.

---

5.3	With respect to any agreed sum arising out of the Contract owing between the Parties that is past due, any set-off pursuant to Clause 12 of the Contract shall be exercised by giving the other Party written notice thereof accompanied by sufficient description of the offsetting sums to allow the Parties to properly account thereof.

6.1	Any Operating Costs, which are to be depreciated, shall be depreciated according to the following schedule:

---

---

1.

If Crude Oil is to be produced from the Contract Area, the Parties shall, in good faith and not fewer than twelve (12) months before the commencement of Production, as promptly notified by the Operator, negotiate and agree the terms of a lifting agreement based on the 2001 version of the AIPN Model Lifting Agreement to cover the offtake of Available Crude Oil produced under the Contract. Consistent with the Field Development Program and subject to terms of the Contract, the lifting agreement shall make provision for:

i)	The Delivery Point;

ii)

Operator’s regular periodic advice to the Parties of estimates of Available Crude Oil for succeeding periods, quantities of each type and/or grade of Crude Oil forecast to be produced consistent with the projected production schedule approved as part of the approved Work Program and each Party’s entitlement for as far ahead as is necessary for Operator and the Parties to plan lifting arrangements, taking into account each such Party’s entitlement at the beginning of, and scheduled liftings during, each period. Such advice shall also cover, for each type and/or grade of Crude Oil, the Available Crude Oil and deliveries for the preceding period, and overlifts and underlifts;

iii)	Nomination by the Parties to Operator of acceptance of their entitlements for the succeeding period, with such nominations in any one period being for each Party’s entire entitlement during that period, subject to overlifting limits, underlifting limits, operational tolerances and minimum economic cargo sizes or as the Parties may otherwise agree;

iv)	Timely mitigation of the effects of overlifts and underlifts;

v)	If offshore loading or a shore terminal for vessel loading is involved, vetting procedures relating to risks regarding tankers and procedures for demurrage and (if applicable) availability of berths;

vi)	Procedures to make available to each Party its nominated quantities of each type and grade of Crude Oil, and to ensure that each Party takes delivery as it is made available in each period of its respective entitlement of grades, gravities and qualities of Crude Oil from the Contract Area;

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

viii)

The right of the other Parties to sell an entitlement that a Party fails to nominate for acceptance under paragraph (iii) above or of which a Party fails to take delivery, in accordance with applicable agreed procedures, provided that such failure either breaches Operator’s, or such Party’s, obligations under the Contract, or is likely to result in the curtailment or shut-in of production. Such sales shall be made only to the limited extent necessary to avoid disruption in Petroleum Operations. Operator shall give all Parties as much notice as is practicable of such situation and that a right of sale option has arisen. Any sale shall be of the un-nominated or undelivered entitlement (as applicable) and for reasonable periods of time (in

---

2.

If a lifting agreement has not been agreed before the commencement of Production, the Operator shall act as lifting coordinator and the Parties shall be obligated to take and separately dispose of their entitlement to such Crude Oil (taking overlifts and underlifts into account) and in addition shall be bound by the principles set forth in this Schedule 3 until a lifting agreement is agreed by the Parties.

---

1.1	These Procurement Procedures form part of the Contract and shall be followed and observed in the performance of a Party’s obligations under the Contract.

1.2	These Procurement Procedures shall be applicable to all contracts and purchase orders whose values exceed the respective limits set forth in Article 1.5 below and which, pursuant thereto, require the prior approval of the National Petroleum Agency.

1.3	In the event of a conflict between the terms of these Procurement Procedures and the Contract, the terms of the Contract shall prevail.

1.4	These Procurement Procedures may be amended from time to time by the mutual agreement of the Parties.

1.5	The Contractor shall have the authority to enter into any contract or place any purchase order in its own name for the performance of services or the procurement of facilities, equipment, materials or supplies, provided that:

(a)	prior approval of the National Petroleum Agency shall be obtained for all foreign contracts and foreign purchase orders awarded to third parties where the cost exceeds $2,000,000 or in another currency equivalent during the Exploration Period and $3,000,000 or in another currency equivalent during the Production Period;

(b)	prior approval of the National Petroleum Agency shall be obtained for all local contracts and purchase orders where the cost exceeds $1,000,000 or in other currency equivalent in utilization at the location of the contract or purchase;

(c)

the amount set forth in paragraphs (a), (b) and (h) of this Article 1.5 will be reviewed by the Parties whenever it becomes apparent to a Party that such limits create unreasonable constraints on Petroleum Operations or are no longer appropriate. In the event of a significant change in the exchange rate of local currencies to United States dollars compared to that which existed on the Effective Date, the Parties shall review the limits set forth in paragraphs (a), (b) and (h) of this Article 1.5;

(d)	such contracts shall be entered into and such purchase orders shall be placed with third parties, which in the Contractor’s opinion are technically and financially able to properly perform their obligations;

---

(e)	procedures customary in the oil industry for securing best total value shall be utilized at all times;

(f)	the Contractor shall give preferences to sub-contractors that are companies organized under the laws of Sao Tome and Principe to the maximum extent possible and in accordance with the Petroleum Law;

(g)	the Contractor shall give preference to such goods which are manufactured or produced in Sao Tome and Principe or services rendered by nationals of Sao Tome and Principe in accordance with the Petroleum Law; and

(h)

the above limits and these procedures shall not apply to purchases made for warehouse replenishment stock not exceeding $1,500,000 or in another currency equivalent nor shall they apply to the purchase of tubulars of less than $1,500,000 or in another currency equivalent made in furtherance of planned drilling programs. Where there are United States dollars and other currency components of such purchases the total shall not exceed the equivalent of $1,500,000.

2.1	The Contractor, realizing the need for a project or contract to which these Procurement Procedures apply pursuant to Article 1.5, shall introduce it as part of the proposed Work Program and Budgets to be developed and submitted by the Contractor to the National Petroleum Agency pursuant to Clause 7 of the Contract.

(a)	The Contractor shall provide full information with respect to a project including the following:

(ii)	the scope of the project; and

(b)	The Contractor shall transmit the project proposal along with the relevant related documentation to the National Petroleum Agency for consideration.

(c)	The National Petroleum Agency shall consider the proposal and the recommendation of the Contractor and whether to proceed with the Contractor’s proposal. If the National Petroleum Agency does not object to the project or any part thereof within thirty (30) days of the submission of the project, the project as proposed by the Contractor shall be deemed to have been approved.

2.2	The project as approved pursuant to Article 2.1 shall form part of the Work Program and Budget for Petroleum Operations. Such approval shall also constitute all authorizations by the National Petroleum Agency to the Contractor to initiate contracts and purchase

---

2.3

The resources for the project design, supervision, and management shall first be drawn from the Contractor’s available in-house expertise. If the National Petroleum Agency approves the foregoing under the approved budget for the project it may be performed by the Contractor. Competent Sao-Tomean engineering and design companies shall be given priority over other third parties by the Contractor for such projects in accordance with the Petroleum Law. Staff of the National Petroleum Agency who shall be seconded pursuant to Clause 14 of the Contract shall be fully involved in the project design, supervision and management.

2.4	After approval of the project and its budget, the Contractor shall prepare and transmit to the National Petroleum Agency complete details of the project including the following:

(b)	project specification;

(d)	projects implementation schedule showing all phases of the project including engineering design, material and equipment procurement, inspection, transportation, fabrication, construction, installation, testing and commissioning;

(f)	cost estimate of the project;

(h)	copies of all approved authorization for expenditure (AFEs).

3.1	The following tender procedure shall apply to works contracts and contracts for the supply of services and supply contracts not directly undertaken by the Contractor or an Affiliate:

(a)

The Contractor shall maintain a list of approved sub-contractors for the purpose of contracts for Petroleum Operations, (the "Approved Contractors’ List"). The National Petroleum Agency shall have the right to nominate sub-contractors to be included in and excluded, for good cause, from the list. The National Petroleum Agency and the Contractor shall be responsible for pre-qualifying any sub-contractor to be included in the Approved Contractors’ List.

---

(b)	Sub-contractors included in the Approved Contractors’ List shall be both local and/or overseas sub-contractors and entities. Where required by law, they shall be registered with the National Petroleum Agency.

(c)

When a contract is to be bid, the Contractor shall present a list of proposed bidders to the National Petroleum Agency for concurrence not less than fifteen (15) working days before the issuance of invitations to bid to prospective sub-contractors. The National Petroleum Agency may propose additional names to be included in and excluded, for good cause, from the list of proposed bidders. Contract specifications shall be in Portuguese and/or English and in a recognized format used in the international petroleum industry.

(d)	If the National Petroleum Agency has not responded within fifteen (15) working days from the date of the official receipt following the presentation of the list of proposed bidders as aforesaid, the list shall be deemed to have been approved.

3.2	The Contractor shall, for contracts above the limits set forth in Article 1.5, establish a Tender Committee who shall be responsible for pre-qualifying bidders, sending out bid invitations, receiving and evaluating bids and determining successful bidders to whom contracts shall be awarded.

3.3	Before a contract is signed, the Contractor shall send analysis and recommendations of bids received and opened by the Tender Committee to the National Petroleum Agency for approval within thirty (30) days from the date of the official receipt. Approval of the Contractor’s recommendations shall be deemed to have been given if the National Petroleum Agency has not responded within such period.

3.4

Prospective vendors and/or sub-contractors for work estimated in excess of $2,000,000 for the Exploration Period and $3,000,000 for the Production Period or their equivalent shall submit the commercial summary of their bids to the Contractor in two (2) properly sealed envelopes, one addressed to the Contractor and one addressed to the National Petroleum Agency. The Contractor shall retain one and send one to the National Petroleum Agency properly enveloped, sealed and addressed to National Petroleum Agency, together with the recommendation provided for in Article 3.3.

3.5	In all cases, the Contractor shall make full disclosure to the National Petroleum Agency of its relationship, if any, with any sub-contractors.

3.6	These Procurement Procedures may be waived and the Contractor may negotiate directly with a sub-contractor:

(a)	in emergency situations provided that it promptly informs the National Petroleum Agency of the outcome of such negotiations; and

(b)	in work requiring unusually specialized skills or when special circumstances warrant, upon the approval of the National Petroleum Agency, which approval shall not be unreasonably withheld.

---

4.1	The payment terms, to the extent viable, shall provide that:

(a)	Contractor is required to include in the services contracts, terms and condition that guarantees the appropriate security for the sub-contractor’s performance, including but not limited to for example, industry standard warranties, retention fees or other guarantees; and

(b)	a provision shall be made for appropriate withholding tax as may be applicable.

4.2	The governing law of all agreements signed with sub-contractors shall be, to the extent feasible, Sao-Tomean law.

4.3	Sao-Tomean law shall apply to all sub-contractors performing work in the Territory of Sao Tome and Principe. In as far as practicable, they shall use Sao-Tomean resources both human and material in accordance with the Petroleum Law.

4.4	Each contract shall provide for early termination where necessary and the Contractor shall use all reasonable endeavors to obtain a termination provision with minimal penalty.

4.5	Sub-contractors shall provide, in the case of a foreign sub-contractor, that the local part of the work, in all cases, shall be performed by the sub-contractor’s local subsidiary whenever possible.

5.1	The Contractor may, through itself or its Affiliates, procure materials and equipment subject to conditions set forth in this Article 5 and these Procurement Procedures.

5.2	The provisions of this Article 5 shall not apply to lump sum or turnkey contracts/projects.

5.3	In ordering the equipment or materials, the Contractor shall obtain from vendors / manufacturers such rebates and discounts and such warranties and guarantees that such discounts, guarantees and all other grants and responsibilities shall be for the benefit of Petroleum Operations.

5.4	The Contractor shall:

(a)	by means of established policies and procedures ensure that its procurement efforts provide the best total value, with proper consideration of safety, quality, services, price, delivery and Operating Costs to the benefit of Petroleum Operations;

(b)	maintain appropriate records, which shall be kept up to date, clearly documenting procurement activities;

(c)	provide quarterly and annual inventory of materials and equipment in stock;

---

(d)	provide a quarterly listing of excess materials and equipment in its stock list to the National Petroleum Agency; and

(e)	check the excess materials and equipment listings from other companies operating in the Territory of Sao Tome and Principe, to identify materials available in the country prior to initiating any foreign purchase order.

5.5	The Contractor shall initiate and maintain policies and practices, which provide a competitive environment and climate amongst local and overseas suppliers. Competitive quotation processes shall be employed for all local procurement where the estimated value exceeds the equivalent of $1,000,000 as follows:

(a)	fabrication, wherever practicable shall be done locally. To this effect, the Petroleum Operations recognize and shall accommodate local offers at a premium not exceeding ten percent (10%); and

(b)

subject to Article 3.1, the Contractor shall give preferences to Sao-Tomean indigenous sub-contractors in the award of contracts. Contracts within the agreed financial limit of the Contractor shall be awarded to only competent Sao-Tomean indigenous sub-contractors possessing the required skill/capability for the execution of such contracts and the Contractor shall notify the National Petroleum Agency accordingly.

5.6

Analysis and recommendation of competitive quotations of a value exceeding the limits established in Article 1.5 shall be transmitted to the National Petroleum Agency for approval before a purchase order is issued to the selected vendor/manufacturer. Approval shall be deemed to have been given if a response has not been received from the National Petroleum Agency within thirty (30) days of receipt by the National Petroleum Agency of the said analysis and recommendations.

5.7	Pre-inspection of rig, equipment and stock materials of reasonable value shall be jointly carried out at the factory site and/or quay before shipment at the request of either Party.

6.1	The Contractor shall provide a project report to the National Petroleum Agency.

6.2	For major projects exceeding $5,000,000 or its equivalent, the Contractor shall provide to the National Petroleum Agency a detailed quarterly report which shall include:

(a)	approved budget total for each project;

(b)	expenditure on each project;

(c)	variance and explanations;

(d)	number and value of construction change orders;

---

(e)	bar chart of schedule showing work progress and work already completed and schedule of mile-stones and significant events; and

(f)	summary of progress during the reporting period, summary of existing problems, if any, and proposed remedial action, anticipated problems, and percentage of completion,

6.3	In the case of an increase in cost in excess of five percent (5%) of the project, the Contractor shall promptly notify the National Petroleum Agency and obtain necessary budget approval, in accordance with Article 2.6 (c) of Schedule 2.

6.4	Not later than six (6) months following the physical completion of any major project whose cost exceeds $5,000,000 or its equivalent, the Contractor shall prepare and deliver to the National Petroleum Agency a project completion report which shall include the following:

(a)	a cost performance of the project in accordance with the work breakdown at the commencement of the project;

(b)	the significant variation in any item or sub-item;

(c)	a summary of problems and unexpected events encountered during the project; and

d)	a list of excess materials.

---

1.	The Contractor shall call for a bid duly advertised, for example, online, in a national newspaper, national radio station or national television station for all assets not directly related to Petroleum Operations whose book values are $10,000 and over, irrespective of length of ownership of such assets.

2.	All assets as described in paragraph 1 above, with book values of $10,000 and over shall be sold with proof of highest bid, subject to the highest bidder not being related to the Contractor.

3.	Sale of assets to the Contractor's Affiliate shall be brought to the express attention of the National Petroleum Agency and only with the written consent given by the National Petroleum Agency.

4.	The Contractor may dispose of all assets as described in paragraph 1 above, with book values less than $10,000 in the best manner available to the Contractor on the basis of the highest price available.

5.	The Contractor shall sell, in customary industry manner, all assets directly related to Petroleum Operations, irrespective of length of ownership of such assets.

6.	This Sale of Assets Procedure may be amended from time to time by the mutual agreement of the Parties.

---

(1)	[THE GUARANTOR], a company organized and existing under the laws of [insert JURISDICTION], and having its registered office at [INSERT ADDRESS] (the Guarantor); and

(2)	THE DEMOCRATIC REPUBLIC OF SAO TOME AND PRINCIPE (the "State"), represented for the purposes of this Guarantee by the National Petroleum Agency.

1.	Definitions and Interpretation

2.	Scope of this Guarantee

---

(a)	the liabilities of the Company to the State;

(b)	Company’s paying interest share of ten million Dollars ($10,000,000) during the Exploration Period, as may be extended in accordance with the Contract; and

(c)	Company’s paying interest share of two hundred and fifty million Dollars ($250,000,000) during the Production Period.

3.	Waiver of Notice, Agreement to All Modifications

4.	Absolute and Unconditional Guarantee

5.	No Discharge of Guarantor

6.	No Prior Action Required

7.	Cumulative Rights

---

8.	Continuing Guarantee

9.	Notice of Demand

10.	Assignment

11.	Subrogation

12.	Payment of Expenses

13.	Governing Law and Arbitration

---

14.	Severability of Provisions

15.	Confidentiality

---

---

---

(1)	THE DEMOCRATIC REPUBLIC OF SAO TOME AND PRINCIPE represented by the AGÊNCIA NACIONAL DO PETRÓLEO DE SÃO TOMÉ E PRÍNCIPE;

(2)

BP EXPLORATION (STP) LIMITED, a company organized and existing under the laws of England, whose registered office is at Chertsey Road, Sunbury-on-Thames, Middlesex TW 16 7LN, United Kingdom, with a branch registered at Guiché Único de São Tomé e Princípe under n° 8042/20180308 and offices located at Avenida da Independencia no. 392, II/111, São Tomé – São Tomé e Principe, hereinafter referred to as “BP” and

(3)

KOSMOS ENERGY SAO TOME AND PRINCIPE, a company organized and existing under the laws of Cayman Islands, whose registered office is at c/o Circumference (Cayman), P.O. Box 32322, 4th floor, Century Yard, Cricket Square, Elgin Avenue, George Town, Grand Cayman, KY1, 1209 with a branch registered in Sao Tome and Principe with the Gulichã Único under n° 5492/2016 at Condomínio da Praia Lagarto C.P. 987 Distrito de Agua Grande, São Tomé - São Tomé e Principe, hereinafter referred to as “Kosmos”

(A)	All Petroleum existing within the Territory of Sao Tome and Principe, as set forth in the Petroleum Law, are natural resources exclusively owned by the State.

(B)	The Agência Nacional do Petróleo de São Tome e Príncipe, with the approval of the Government of Sao Tome and Principe, has the authority to enter into contracts for the conduct of Petroleum Operations in and throughout the area, whose co-ordinates are described and outlined on the map in Schedule 1 of this Contract, which area is hereinafter referred to as the Contract Area.

(C)	The State wishes to promote Petroleum Operations in the Contract Area and the Contractor desires to join and assist the State in accelerating the exploration and exploitation of potential Petroleum resources within the Contract Area.

(D)	The Contractor has the necessary financial capability and technical knowledge and ability to carry out the Petroleum Operations hereinafter described in accordance with this Contract, the Petroleum Law and Good Oil Field Practice.

(E)	Pursuant to and in accordance with the Petroleum Law, this Contract has been entered into by and between the State and the Contractor for the purpose of Petroleum Operations in the Contract Area.

(F)	BP is hereby designated as the Operator under Clause ‎28 of this Contract.

---

1.	DEFINITIONS AND INTERPRETATION

1.1	Except where the context otherwise indicates or as defined in the Petroleum Law and Petroleum Operations Regulation, the following words and expressions shall have the following meanings:

(a)	drilling of Appraisal Wells and running tests; and

(b)	running supplementary studies and acquisition, processing and interpretation of geophysical and other data;

---

(a)	by means of the holding of shares or the possession of voting power, directly or indirectly, in or in relation to the first Person; or

(b)	by virtue of any power conferred by the articles of association of, or any other document regulating, the first Person or any other Person,

---

(a)	geological, geophysical and reservoir studies and surveys;

(b)	drilling of production and injection wells; and

(c)	design, construction, installation, connection and initial testing of equipment, pipelines, systems, facilities, machinery and related activities necessary to produce and operate said wells, to take, treat, handle, store, re-inject, transport and deliver Petroleum, and to undertake re-pressuring, recycling and other secondary and tertiary recovery projects;

---

(a)	Reservoir, geological and geophysical studies and surveys;

(b)	drilling of production and injection wells; and

(c)	design, construction, installation, connection and initial testing of equipment, pipelines, systems, facilities, plants and related activities necessary to produce and operate said wells, to take, save, treat, handle, store, transport and deliver Petroleum, and to undertake re-pressurizing, recycling and other secondary or tertiary recovery projects;

---

(a)	any naturally occurring hydrocarbon, whether in a gaseous, liquid or solid state;

(b)	any mixture of naturally occurring hydrocarbons, whether in a gaseous, liquid or solid state; or

(c)	any Petroleum (as defined above) that has been returned to a Reservoir;

(a)	the Exploration, Appraisal, Development, Production, transportation, sale or export of Petroleum;

(b)	the construction, installation or operation of any structures, facilities or installations for the Development, Production and export of Petroleum, or Decommissioning or removal of any such structure, facility or installation;

---

---

1.2	Unless the context otherwise requires, reference to the singular shall include the plural and vice versa and reference to any gender shall include all genders.

1.3	The Schedules form an integral part of this Contract.

1.4	The table of contents and headings in this Contract are inserted for convenience only and shall not affect the meaning or construction of this Contract.

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

1.6	In the event of any inconsistency between the main body of this Contract and any Schedule, the provisions of the former shall prevail.

2.	BONUSES AND SOCIAL PROJECTS

2.1	Signature Bonus

2.2	Production Bonuses

2.3	The production bonuses provided for in Clause ‎2.2 shall be payable to the State by deposit into the National Petroleum Account within thirty (30) days of such Production level being first attained in immediately available funds.

---

2.4	The signature and production bonuses provided for in this Clause ‎2 shall not be recoverable as Cost Oil or deductible for Tax purposes.

2.5	Social Projects

2.6

The details of the social projects to be undertaken by the Contractor in accordance with Clause ‎2.5 shall be determined by agreement between the Contractor and the National Petroleum Agency. Failing such agreement, the Contractor and the National Petroleum Agency shall each submit a proposal to an expert appointed by the World Bank and such expert shall determine which of the two (2) proposals shall be implemented, The Contractor shall be solely responsible for any and all costs and expenses associated with the foregoing expert determination. The value of the projects provided for in Clause ‎2.5 above shall not be recoverable as Cost Oil or deductible for Tax purposes.

2.7	The Contractor shall be responsible for the implementation of all agreed or chosen social projects, which shall be undertaken using all reasonable skill and care.

3.	SCOPE

3.1

This Contract is a production sharing contract awarded pursuant to the Petroleum Law and governed in accordance with the terms and provisions hereof. The conduct of Petroleum Operations and provision of financial and technical requirements by the Contractor under this Contract shall be with the prior approval of or in prior consultation with the National Petroleum Agency as required under this Contract or the Petroleum Law. The State hereby appoints and constitutes the Contractor as the exclusive company(ies) to conduct Petroleum Operations in the Contract Area.

3.2	During the term of this Contract the total Available Crude Oil shall be allocated to the Parties in accordance with the provisions of Clause ‎10, the Accounting Procedures and the Allocation and Lifting Procedures.

---

3.3	The Contractor together with its Affiliates shall provide all funds and bear all risk of Operating Costs and the sole risk in carrying out Petroleum Operations,

3.4	The Contractor shall engage in Petroleum Operations solely in accordance with the Petroleum Law, the Petroleum Taxation Law, Good Oil Field Practice and all other applicable laws and regulations.

4.	TERM

4.1

Save as otherwise provided in Clause ‎4.6 and the extensions granted by the National Petroleum Agency, and subject to Clause ‎20, the term of this Contract shall be for a period of twenty-eight (28) years from the Effective Date, with an eight (8) year Exploration and Appraisal period, as extended pursuant to Clauses ‎5.1(b) and/or ‎(c) (the “Exploration Period”) and a twenty (20) year Production period, as extended pursuant to Clause ‎4.6.

4.2	The Exploration Period shall be divided as follows:

Phase I:	four (4) years from the Effective Date;

Phase II:	from the end of Phase I until two (2) years after the end of Phase I; and

Phase III:	from the end of Phase II until two (2) years after the end of Phase II, as extended pursuant to Clauses ‎5.1(b) and/or ‎(c).

4.3	The Contractor shall commence Petroleum Operations no later than thirty (30) days after the National Petroleum Agency has approved the first Work Program.

4.4

Provided the Contractor has fulfilled all of its obligations relative to the current phase of the Exploration Period as described in Clause ‎7.2, the Contractor may enter the next phase. The Contractor shall provide the National Petroleum Agency with written notice of its intention to enter the next phase of the Exploration Period at least sixty (60) days prior to the end of the relevant phase. The report shall document that the work commitments for the phase are fulfilled. The Ministry may, upon application, exempt Contractor from the work obligations.

4.5	Provided the Contractor has fulfilled all of its obligations relative to the current phase of the Exploration Period as described in Clause ‎7.2, the Contractor may terminate this Contract at the end of any phase during the Exploration Period in accordance with Clause ‎20.7.

4.6

The Contractor shall have the right to produce Petroleum from each Development Area for a period of twenty (20) years from the date of the first commercial Production in the relevant Development Area (the “Production Period”). This Contract will terminate with respect to the relevant Development Area at the end of such twenty (20) year period unless the National Petroleum Agency grants an extension on application of the Contractor, The Contractor may, for any Development Area, be granted one (1) or more five (5) year extension periods for a Development Area until all Petroleum has been economically depleted. In connection with any such extensions, the Parties agree to engage in good faith to re-negotiate

---

5.	COMMERCIAL DISCOVERY AND DECLARATION OF COMMERCIALITY

5.1	The sequence of Petroleum Operations to establish a Commercial Discovery of Petroleum (other than Unassociated Natural Gas) shall be as follows:

(a)	the Contractor shall have a period of up to forty-five (45) days from the date on which the drilling of the applicable Exploration Well terminates to declare whether the Exploration Well has proven a Discovery;

(b)

the Contractor shall then have a period of two (2) years (unless otherwise agreed by the National Petroleum Agency) from declaration of a Discovery to declare the Discovery, either on its own or in aggregation with other Discoveries, a Commercial Discovery, which may be extended for one (1) year, subject to the approval of the National Petroleum Agency and observance of Clauses ‎2.5 (pro-rata per annum) and ‎14.7, if the results of those activities indicate that further Appraisal is necessary;

(c)	if the Contractor declares a Commercial Discovery it shall have a period of two (2) years (unless otherwise agreed by the National Petroleum Agency) from the time the Contractor declares a Discovery or aggregation of Discoveries to be a Commercial Discovery to submit a Field Development Program to the National Petroleum Agency for approval;

(d)

in the event a Discovery is not determined to be a Commercial Discovery, upon expiration of the period set out in Clause ‎5.1(b), the State may, provided it gives at least eighteen (18) months’ notice, require the Contractor to promptly relinquish, without any compensation or indemnification whatsoever, the area encompassing the Discovery, including all of its rights to Petroleum which may be produced from such Discovery;

(e)	if a Field Development Program is approved by the National Petroleum Agency, the Contractor shall initiate field development and production according to the time schedule outlined in such Field Development Program.

5.2	Unassociated Natural Gas shall be developed in accordance with Clause ‎23.4.

6.	RELINQUISHMENT OF AREAS

6.1	The Contractor must relinquish the Contract Area or part thereof in accordance with the following:

(a)	twenty-five percent (25%) of the initial surface area of the Contract Area shall be relinquished at the end of Phase I of the Exploration Period;

---

(b)	a further twenty-five percent (25%) of the initial surface area of the Contract Area shall be relinquished at the end of Phase II of the Exploration Period; and

(c)	the remainder of the Contract Area shall be relinquished at the end of Phase III of the Exploration Period less:

(i)	any area which is the subject of an approved Appraisal program pursuant to Clause ‎5.1(b) or any Development Area:

(ii)	areas for which the approval of a Field Development Program is pending, until finally decided; and

(iii)	any area reserved for a possible Unassociated Natural Gas Appraisal in relation to which the Contractor is engaged in discussions with the State in accordance with Clause ‎23.4.

6.2

Any Retained Area and Relinquished Area shall be, as far as possible, single continuous units and delimited by meridians of longitude and parallels of latitude defined in the relevant coordinate reference system using degrees, minutes and seconds to the nearest whole minute to be approved by the National Petroleum Agency. In the case where the Retained Area or Relinquished Area is aligned with an international maritime boundary the international maritime boundary shall define the relevant edges of the Retained Area or Relinquished Area.

6.3	Any Relinquished Area shall revert to the State.

6.4

Subject to the Contractor’s obligations under Clause ‎7 and its Decommissioning obligations, the Contractor may at any time notify the National Petroleum Agency upon three (3) months prior written notice that it relinquishes its rights over all or part of the Contract Area. In no event shall any voluntary relinquishment by the Contractor over all or any part of the Contract Area reduce the Minimum Work Obligations or Minimum Financial Commitment set out in Clause ‎7.

7.	MINIMUM WORK PROGRAM AND BUDGET

7.1

Within two (2) months after the Effective Date and thereafter at least three (3) months prior to the beginning of each Calendar Year, the Contractor shall prepare and submit for the approval of the National Petroleum Agency, a Work Program and Budget for the Contract Area setting forth the Petroleum Operations which the Contractor proposes to carry out during the ensuing Year, or in case of the first Work Program and Budget, during the remainder of the current Year.

7.2	The minimum Work Program for each phase of the Exploration Period is as follows (the “Minimum Work Obligations”):

(a)	Phase I: The Contractor shall: acquire six thousand seven hundred (6,700) square kilometres (km2) 3D seismic.

---

(b)	Phase II: If the Contractor elects to enter Phase II, then during such Phase II of the Exploration Period the Contractor shall drill one (1) well into the Campanian/Santonian or to a total depth of five thousand, five hundred (5,500) meters sub-sea in the Contract Area.

(c)	Phase III: If the Contractor elects to enter Phase III of the Exploration Period, then during such Phase III the Contractor shall drill one (1) well.

7.3	Minimum Financial Commitments

(a)	The Contractor shall be obligated to incur the following minimum financial commitment (the “Minimum Financial Commitment”):

(b)

If the Contractor fulfills the Minimum Work Obligations set forth in Clause ‎7.2 for each phase of the Exploration Period, then the Contractor shall be deemed to have satisfied the Minimum Financial Commitments for each such phase. If the Contractor fails to complete the Minimum Work Obligations for any phase of the Exploration Period and such commitment has not been moved to the next phase, if any, with the consent of the National Petroleum Agency, then the Contractor shall pay to the State by deposit into the National Petroleum Account (i) the difference between the Minimum Financial Commitment for the then current phase and the amount actually expended in Petroleum Operations for such phase and (ii) two percent 2% of the Minimum Financial Commitment for the subsequent phase that is not initiated, as liquidated damages in full and final settlement of all potential claims for breach of this Contract and, notwithstanding Clause ‎20, this Contract shall automatically terminate.

7.4	The Contractor shall be excused from any delay or failure to comply with the terms and conditions of Clauses ‎7.2 and/or ‎7.3:

(a)	during any period of Force Majeure; or

(b)	if the National Petroleum Agency or any other State authority denies the Contractor any required permissions to perform the Petroleum Operations which constitute Minimum Work Obligations.

7.5	The time for performing any incomplete Minimum Work Obligations for any phase of the Exploration Period and the term of this Contract shall be extended by the following periods in the circumstances set out in Clause ‎7.4:

(a)	with respect to Clause ‎7.4(a), for the period during which Force Majeure is in existence; and

---

(b)	with respect to Clause ‎7.4(b), for six (6) months to permit the Contractor time to make a revised drilling plan or other work which is satisfactory to the National Petroleum Agency.

7.6	If any circumstance described in Clauses ‎7.4 and ‎7.5 is not resolved within the time periods specified above, then after consultation with National Petroleum Agency, the Contractor shall be liable to pay into the National Petroleum Account an amount corresponding to the unfulfilled work for that phase and, notwithstanding Clause ‎20, this Contract shall automatically terminate.

7.7	Any unfulfilled Minimum Work Obligation in any phase of the Exploration Period may, with the written consent of the National Petroleum Agency, be added to the Minimum Work Obligation for the next succeeding phase.

7.8	Expenditures or work by the Contractor over and above the Minimum Work Obligations or Minimum Financial Commitment for any phase shall be credited against and reduce the Minimum Work Obligations or Minimum Financial Commitments for the next succeeding phase.

7.9	For the purposes of determining whether an Exploration Well or an Appraisal Well has been drilled in accordance with the Minimum Work Obligations, such a well shall be deemed drilled if the minimum total depth has been reached or if any one of the following events occurs prior to reaching the minimum total depth:

(a)	a Discovery is made and further drilling may cause irreparable damage to such Discovery;

(b)	basement is encountered;

(c)	the National Petroleum Agency and the Contractor agree the well is drilled for the purpose of fulfilling the obligation to complete the Minimum Work Obligation; or

(d)	technical difficulties are encountered which, in the judgment of the Contractor and in accordance with Good Oil Field Practice, makes further drilling impracticable, uneconomic, unsafe or a danger to the environment.

7.10

The Exploration Period provided in Clause ‎4.2, may be extended for an additional six (6) months to conclude the drilling and testing of any well for which operations have been commenced by the end of Phase III of such period (as extended); provided that if no Commercial Discovery has been declared by the Contractor during the Exploration Period, as may be extended, this Contract shall automatically terminate.

7.11	Performance Bond

(a)	Within thirty (30) days from the Effective Date, the Contractor shall submit a performance bond in a form approved by the National Petroleum Agency and from a reputable international financial institution approved by the National Petroleum

---

(b)

Should the Contractor satisfy in full the conditions for continuing Petroleum Operations at the end of Phase I of the Exploration Period pursuant to Clause ‎7.2, a replacement performance bond in the same form and from a reputable international financial institution unless otherwise agreed by the National Petroleum Agency shall be submitted within thirty (30) days from the date of the extension to cover the Minimum Financial Commitment for Phase II of the Exploration Period.

(c)

Should the Contractor satisfy in full the conditions for continuing Petroleum Operations at the end of Phase II of the Exploration Period pursuant to Clause ‎7.2, a replacement performance bond in the same form and from a reputable international financial institution unless otherwise agreed by the National Petroleum Agency shall be submitted within thirty (30) days from the date of the extension to cover the Minimum Financial Commitment for Phase III of the Exploration Period.

7.12	The amount of a performance bond shall be reduced annually by deducting the verified expenditures the Contractor has incurred in the previous year of each phase and shall terminate at the end of each phase, if the Minimum Work Obligations or Minimum Financial Commitment for that phase has been satisfied in full.

7.13	Guarantee

8.	STATE PARTICIPATION AND CARRY

8.1	The State, either through the National Petroleum Agency or any other State Entity designated by the State, shall have as of the Effective Date a carried interest of fifteen percent (15%) of the Contractor’s rights and obligations under this Contract. The Contractor shall fund, bear and pay all costs, expenses and amounts due in respect of Petroleum Operations conducted pursuant to this Contract.

8.2	The National Petroleum Agency or other State Entity designated by the State shall become a party to the Joint Operating Agreement in respect of its carried interest referred to in Clause ‎8.1.

---

8.3	Upon the commencement of commercial Production the Contractor shall be entitled to receive one hundred percent (100%) of Cost Oil in order to recover all costs, expenses and amounts paid in respect of Petroleum Operations pursuant to Clause ‎8.1 and incurred on behalf of the National Petroleum Agency or other State Entity designated by the State.

8.4	The National Petroleum Agency or other State Entity designated by the State shall be entitled to receive fifteen percent (15%) of the Contractor’s entitlement to Profit Oil as provided for in Clause ‎10.1(d).

8.5

The National Petroleum Agency or other State Entity designated by the State shall be entitled at any time, upon advance forty-five (45) days written notice to the Contractor, to convert its carried interest into a full working participating interest. The National Petroleum Agency or other State Entity designated by the State shall be entitled to fifteen percent (15%) of the Cost Oil to which the Contractor is entitled pursuant to Clause ‎10.1 (b) and (c), after Contractor has recovered outstanding cost, expense or any other amount incurred by the Contractor pursuant to Clause ‎8.1.

9.	RIGHTS AND OBLIGATIONS OF THE PARTIES

9.1	In accordance with this Contract, the National Petroleum Agency shall:

(a)	pursuant to Clause ‎14, jointly work with the Contractor’s professional staff in the fulfillment of Petroleum Operations under this Contract;

(b)

assist and expedite the Contractor’s execution of Petroleum Operations and Work Programs including assistance in supplying or otherwise making available all necessary visas, work permits, rights of way and easements as may be reasonably requested by the Contractor. All expenses incurred by the National Petroleum Agency at the Contractor’s request in providing such assistance shall be reimbursed to the National Petroleum Agency by the Contractor in accordance with Clause ‎12. Such reimbursement shall be made against presentation of invoices and shall be in United States dollars. The Contractor shall include such reimbursements in the Operating Costs;

(c)	have the right to recover from the Contractor all costs which are reasonably incurred for purposes of Petroleum Operations, duly documented and previously agreed with Contractor;

(d)

have legal title to and shall keep originals of all data and information resulting from Petroleum Operations including geological, geophysical, engineering, well logs, completion, production, operations, status reports and any other data and information as the Contractor may compile during the term of this Contract but excluding any Contractor’s Intellectual Property Rights; provided, however, that the Contractor shall be entitled to keep copies and use such data and information during the term of this Contract; and

---

(e)	not exercise all or any of its rights or authority over the Contract Area in derogation of the rights of the Contractor otherwise than in accordance with the Petroleum Law.

9.2	In accordance with this Contract, the Contractor shall:

(a)	promptly pay to the State by deposit into the National Petroleum Account all fees, bonuses, and other amounts due to the State under the terms of this Contract;

(b)	provide all necessary funds for the payment of Operating Costs including funds required to provide all materials, equipment, facilities, supplies and technical requirements (including personnel) whether purchased or leased;

(c)	provide such other funds for the performance of Work Programs including payments to third parties who perform services to the Contractor in the conduct of Petroleum Operations;

(d)	prepare Work Programs and Budgets and carry out approved Work Programs in accordance with Good Oil Field Practice with the objective of avoiding waste and obtaining maximum ultimate recovery of Petroleum at a minimum cost;

(e)	exercise all the rights and comply with all the obligations under the Petroleum Law and any other applicable laws and pay the following fees to the State by deposit into the National Petroleum Account (all expressed in United States dollars):

(f)	ensure that all leased equipment brought into the Territory of Sao Tome and Principe for the conduct of Petroleum Operations is treated in accordance with the terms of the applicable leases;

(g)	have the right of ingress to and egress from the Contract Area and to and from facilities therein located at all times during the term of this Contract;

(h)	promptly submit to the National Petroleum Agency for permanent custody originals of all geological, geophysical, drilling, well production, operating and other data, information and reports as it or its Associates may compile during the term of this Contract;

(i)	prepare estimated and final tax returns and submit same to the relevant tax authority on a timely basis in accordance with the Petroleum Taxation Law;

---

(j)

have the right to lift Available Crude Oil in accordance with the lifting agreement to be agreed by the Parties pursuant to Schedule 3 no later than nine (9) months prior to commencement of Production, and, in the event the Parties have not agreed a lifting agreement by the commencement of Production then, in accordance with the principles set forth in Schedule 3. Contractor shall have the right to freely export Available Crude Oil allocated to it under this Contract exempt from all and any customs duties, levies or charges (excluding the routine administrative fees associated with export documentation and inspection of such export, if applicable), and retain abroad the Proceeds from the sale of Available Crude Oil allocated to it under this Contract;

(k)	in accordance with Clause ‎14, prepare and carry out plans and programs of the State for industry training and education of nationals of Sao Tome and Principe for all job classifications with respect to Petroleum Operations pursuant to and in accordance with the Petroleum Law;

(l)	employ only such qualified personnel as is required to conduct Petroleum Operations in accordance with Good Oil Field Practice and in a prudent and cost-effective manner giving preference to qualified nationals of Sao Tome and Principe;

(m)	give preference to such goods, material and equipment which are available in Sao Tome and Principe or services that can be rendered by nationals of Sao Tome and Principe in accordance with the Petroleum Law and this Contract;

(n)	the Contractor and its Associates shall, as the case may be, pay all charges and fees as are imposed by law in Sao Tome and Principe. The Contractor and its Associates shall not be treated differently from any other Persons engaged in similar petroleum operations in the Territory of Sao Tome and Principe;

(o)

indemnify and hold the State, including the National Petroleum Agency, harmless against all losses, damages, injuries, expenses, actions of whatever kind and nature including all legal fees and expenses suffered by the State or the National Petroleum Agency where such loss, damage, injury, expense or action is caused by the Gross Negligence or Willful Misconduct of the Contractor, its Affiliates, its sub-contractors or any other Person acting on its or their behalf or any of their respective directors, officers, employees, agents or consultants;

(p)	not exercise all or any rights or authority over the Contract Area in derogation of the rights of the State or in breach of the Petroleum Law;

(q)

in the event of any emergency requiring immediate operational action, take all actions it deems proper or advisable to protect the interests of the Parties and any other affected Persons and any costs so incurred shall be included in the Operating Costs. Prompt notification of any such action taken by the Contractor and the estimated cost shall be given to the National Petroleum Agency within forty-eight (48) hours of becoming aware of the event; and

---

(r)	have, as of the date of execution of this agreement, the participating interests of:

BP –	50% (fifty percent);

Kosmos –	35% (thirty-five percent).

10.	RECOVERY OF OPERATING COSTS AND SHARING OF PETROLEUM PRODUCTION

10.1	The allocation of Available Crude Oil shall be calculated on a Contract Area basis for Royalty Oil, Cost Oil and Profit Oil. This allocation of Available Crude Oil shall be in accordance with the Accounting Procedures, the Allocation and Lifting Procedures and this Clause ‎10 as follows:

(a)	Royalty Oil shall be allocated to the State from the first day of Production, based on the daily total of Available Crude Oil from the Contract Area, set at a rate of 2%;

(b)	Cost Oil shall be allocated to the Contractor in such quantum as will generate an amount of Proceeds sufficient for recovery of Operating Costs in the Contract Area. All costs will be recovered in United States dollars through Cost Oil allocation;

(c)	Cost Oil shall be not more than eighty percent (80%) of Available Crude Oil in the Contract Area after deduction of Royalty Oil in any accounting period;

(d)	Profit Oil, being the balance of Available Crude Oil after deducting Royalty Oil and Cost Oil shall be allocated to each Party based on the pre-tax, nominal rate of return calculated on a quarterly basis for the Contract Area in accordance with the following sliding scale:

10.2	Beginning at the date of Commercial Discovery, Contractor’s rate of return shall be determined at the end of each Quarter on the basis of the accumulated compounded net cash flow for the Contract Area, using the following procedure:

(a)	The Contractor’s net cash flow for the Contract Area for each Quarter is:

---

(i)	The sum of Contractor’s Cost Oil and share of Contract Area Profit Oil regarding the Petroleum actually lifted in that Quarter at the Realizable Price;

(ii)	Minus Operating Costs.

(b)	For this computation, neither any expenditure incurred prior to the date of Commercial Discovery for the Contract Area nor any Exploration Expenditure shall be included in the computation of the Contractor’s net cash flow.

(c)	The Contractor’s net cash flows for each Quarter are compounded and accumulated for the Contract Area from the date of the Commercial Discovery according to the following formula:

(d)	The Contractor’s rate of return in any given Quarter for the Contract Area shall be deemed to be between the largest DA which yields a positive or zero ACNCF and the smallest DA which causes the ACNCF to be negative.

(e)	The sharing of Profit Oil from the Contract Area between the State and the Contractor in a given Quarter shall be in accordance with the scale in Clause ‎10.1(d) above using the Contractor’s deemed rate of return as per paragraph ‎(d) in the immediately preceding Quarter.

(f)	In the Contract Area, it is possible for the Contractor’s deemed rate of return to decline as a result of negative cash flow in a Quarter with the consequence that Contractor’s share of Profit Oil from the Contract Area would increase in the subsequent Quarter.

(g)	Pending finalization of accounts, Profit Oil from the Contract Area shall be shared on the basis of provisional estimates, if necessary, of deemed rate of return as approved by the National Petroleum Agency. Adjustments shall be effected with the procedure subsequently to be adopted by the National Petroleum Agency,

10.3	The quantum of Available Crude Oil to be allocated to each Party under this Contract shall be determined at the Delivery Point.

---

10.4	Each Party shall lift and dispose of its allocation of Available Crude Oil in accordance with the Allocation and Lifting Procedures. In the event of any reconciliation, the records of the National Petroleum Agency shall be the official, final and binding records.

10.5

Allocation of Royalty Oil and the State’s Profit Oil shall be in the form of delivery of Production of Petroleum to the National Petroleum Agency and the National Petroleum Agency or other appropriate authority shall issue receipts for such delivery within thirty (30) days of lifting such Royalty Oil and Profit Oil. These receipts are issued by the National Petroleum Agency or other appropriate authority on behalf of the Government of Sao Tome and Principe.

10.6

Any Party may, at the request of any other Party, lift such other Party’s Available Crude Oil pursuant to Clause ‎10.3 and the lifting Party within thirty (30) days from the end of the month in which the lifting occurred shall transfer to the account of the non-lifting Party the Proceeds of the sale to which the non-lifting Party is entitled. Overdue payments shall bear interest at the rate of LIBOR plus two percent (2%).

10.7	The State may sell to the Contractor all or any portion of its allocation of Available Crude Oil from the Contract Area under mutually agreed terms and conditions.

10.8	The Parties shall meet as and when agreed in the Allocation and Lifting Procedures to reconcile all Petroleum produced, allocated and lifted during the period in accordance with the Allocation and Lifting Procedures.

10.9

Notwithstanding the above, in lieu of lifting the State’s Profit Oil and/or Royalty Oil, the State, upon one hundred eighty (180) days advance notice to the Operator issued by the National Petroleum Agency, may elect to receive the State’s allocation of Profit Oil and/or Royalty Oil in cash based on the Realizable Price rather than through lifting regardless of whether or not the Contractor sells the State’s Profit Oil and/or Royalty Oil to a third party. If the State elects to receive cash in lieu of lifting, the Operator shall lift the State’s allocation of Profit Oil and/or Royalty Oil and pay into the National Petroleum Account cash in respect of such lifting within thirty (30) days from the end of the month in which the lifting occurred. Every one hundred eighty (180) days, the State may elect to have an entity designated by the State to resume lifting the State’s allocation of Profit Oil and/or Royalty Oil upon one hundred eighty (180) days’ notice to the Operator prior to the date the State elects to have an entity designated by the State to resume lifting.

11.	VALUATION OF CRUDE OIL

11.1	Unless a pre-marketing plan is agreed, and save as otherwise provided in this Contract, Crude Oil shall be valued in accordance with the following procedures:

(a)	On the attainment of commercial production of Crude Oil, each Party shall engage the services of an independent laboratory of good repute to undertake a qualitative and quantitative analysis of such Crude Oil.

---

(b)	A trial marketing period shall be designated which shall extend for the first six (6) month period during which a new stream is lifted or for the period of time required for the first ten (10) liftings, whichever is longer. During the trial marketing period the Parties shall:

(i)	collect samples of the new Crude Oil upon which the qualitative and quantitative analysis shall be performed as provided in Clause ‎11.1(a);

(ii)	determine the approximate quality of the new Crude Oil by estimating the yield values from refinery modeling;

(iii)

market in accordance with their entitlement to the new Crude Oil and to the extent that one Party lifts the other Party’s allocation of Available Crude Oil, payments therefor shall be made by the buyers to the Operator which will be responsible for distributing to the other Parties in accordance with their entitlement, and Cost Oil and Profit Oil and the Contractor’s accounting shall reflect such revenues, in accordance with Clause ‎10;

(iv)	provide information to a third party who shall compile the information and maintain all individual Party information confidential with regard to the marketing of the new Crude Oil including documents which verify the sales price and terms of each lifting; and

(v)	apply the actual F.O.B. sales price to determine the value for each lifting which F.O.B. sales pricing for each lifting shall continue, as the Realizable Price, after the trial marketing period until the Parties agree to a valuation of the new Crude Oil but in no event longer than ninety (90) days after conclusion of the trial marketing period.

(c)

As soon as practicable but in any event not later than sixty (60) days after the end of the trial marketing period, the Parties shall meet to review the qualitative and quantitative analysis, yield and actual sales data. The Realizable Price shall be based on a single weighted average price for all Available Crude Oil in the month, based on the international FOB market price at the Delivery Point. It is the intent of the Parties that such price shall reflect the true market value based on arm’s length transactions for the sale of the new Crude Oil to independent parties.

(d)	Upon the conclusion of the trial marketing period, the Parties shall be entitled to lift their allocation of Available Crude Oil pursuant to Clause ‎10.3 and the Allocation and Lifting Procedures.

(e)	When a new Crude Oil stream is produced from the Contract Area and is commingled with an existing Crude Oil produced which has an agreed Realizable Price basis then such basis shall be applied to the extent practicable for determining the Realizable Price of the new Crude Oil. The Parties shall meet and mutually agree on any

---

11.2

If the National Petroleum Agency or the Contractor are unable to agree the valuation of Crude Oil produced in the Contract Area for a particular month, then such Party may propose its alternative valuation to the other Parties. The Parties shall then meet within thirty (30) days of such proposal and mutually agree on such valuation with or without any appropriate modifications within thirty (30) days from such meeting, failing which the issue shall be referred to a mutually agreed independent expert who shall have the appropriate international oil and gas experience and who will resolve and settle the matter in a manner as he shall in his absolute discretion think fit and the decision of the expert shall be final and binding on the Parties. If after a period of thirty (30) days, the Parties are unable to agree on the identity of the expert, such expert shall be appointment by the International Centre for Expertise in accordance with the provisions for the appointment of experts under the Rules for Expertise of the International Chamber of Commerce.

11.3	Segregation of Crude Oils of different quality and/or grade shall, by agreement of the Parties, take into consideration, among other things, the operational practicality of segregation and the cost benefit analysis thereof. If the Parties agree on such segregation the following provisions shall apply:

(a)	any and all provisions of this Contract concerning valuation of Crude Oil shall separately apply to each segregated Crude Oil produced; and

(b)	each grade or quality of Crude Oil produced and segregated in a given year shall contribute its proportionate share to the total quantity designated in such year as Royalty Oil, Cost Oil and Profit Oil.

12.	PAYMENTS

12.1

The Contractor shall make all payments to the State for which it is liable under this Contract in United States dollars or such other currency agreed between the Contractor and the National Petroleum Agency. Payments shall be made into the National Petroleum Account in accordance with the Oil Revenue Law. Where a payment is made in currency other than United States dollars, the exchange rate used to convert the United States dollars liability into that currency shall be the exchange rate published on the date of payment by the Central Bank of Sao Tome and Principe for Dobras, and the Financial Times of London for other currencies. Overdue payments shall bear interest at the annual rate of LIBOR plus two percent (2%) from the due date until the date of actual payment.

12.2

The State shall make all payments to the Contractor for which it is liable under this Contract in United States dollars or such other currency agreed between the Contractor and the National Petroleum Agency. Where a payment is made in a currency other than United States dollars, the exchange rate used to convert the United States dollar liability into that currency shall be the exchange rate published on the date of payment by the Central Bank of Sao Tome and Principe for Dobras, and the Financial Times of London for other currencies.

---

12.3	Any payments required to be made pursuant to this Contract shall be made within twenty (20) days following the end of the month in which the obligation to make such payments is incurred.

12.4	The Contractor shall have the right to pay their subcontractors and their expatriates, in currencies they have agreed, either in Sao Tome and Principe or abroad.

13.	TITLE TO EQUIPMENT / DECOMMISSIONING

13.1

The Contractor shall finance the cost of purchasing or leasing all materials, equipment and facilities to be used in Petroleum Operations in the Contract Area pursuant to approved Work Programs and Budgets and such materials, equipment and facilities, if purchased, shall become the sole property of the State when the Contractor has recovered the cost of such materials, equipment and facilities (as the case may be) in accordance with this Contract and free of all liens and other encumbrances. Except as otherwise provided for in the Petroleum Law, the Contractor shall have the right to use, free of any additional charge, all of materials, equipment and facilities exclusively for Petroleum Operations in the Contract Area during the term of this Contract and any extensions thereof. The State, including the National Petroleum Agency, shall have the right to use all such materials, equipment and facilities in the Contract Area during the term of this Contract and any extensions thereof and such use shall be subject to terms and conditions agreed by the Parties, provided that it is understood that Petroleum Operations in the Contract Area hereunder shall take precedence over such use by the State or the National Petroleum Agency.

13.2	The Contractor’s right to use such cost recovered purchased materials, equipment and facilities shall cease with the termination or expiration (whichever is earlier) of this Contract, including any extensions hereof.

13.3	The provisions of Clause ‎13.1 with respect to the title of property passing to the State shall not apply to leased equipment belonging to local or foreign third parties, and such equipment may be freely exported from the Territory of Sao Tome and Principe in accordance with the terms of the applicable lease.

13.4	Subject to Clause ‎13.1, all fixed assets purchased or otherwise acquired by the Contractor for the purposes of Petroleum Operations hereunder shall become the property of the State when the Contractor has recovered the cost of such materials, equipment and facilities (as

---

13.5	During the term of this Contract, any agreed sales of equipment, land, fixed assets, materials and machinery acquired for the purpose of Petroleum Operations shall be conducted by the Contractor on the basis of the procedure for sale of assets as set forth in Schedule 5, subject to the consent of the National Petroleum Agency.

13.6	Decommissioning

13.7	Unless otherwise agreed with the National Petroleum Agency, the procedure for the Contractor providing funds to meet its Decommissioning obligations shall be as follows:

(a)	an amount shall be established on a Contract Area basis, commencing with effect from the fourth (4th) anniversary after the start of commercial production, on a unit of production basis as follows:

DP =	(PVDC – DF) * (P / RP), where:

DP =	Decommissioning provision for the period (millions of US dollars)

PVDC =	Present Value of Decommissioning costs (millions of US dollars)

DF =	Balance of Decommissioning fund at the start of the period (millions of US dollars)

P =	Crude Oil production in the period (millions of Barrels)

RP =	Estimated remaining recoverable Crude Oil (millions of Barrels) from the Contract Area

(b)

All Decommissioning provisions shall be held in a Decommissioning reserve fund, which shall be an interest bearing escrow account jointly established by the Parties at a first class commercial bank or other financial institution in accordance with the Petroleum Law (the “Decommissioning Reserve Fund”). The bank or financial institution shall have a long term rating of not less than “A minus” by Standard and Poor’s Corporation or an “A3” rating by Moody’s Investor Service or a comparable rating by another mutually agreed rating service.

(c)	For the purposes of calculating the present value of Decommissioning costs, the following formula shall be used:

---

PVDC =	EDC / (1 + i) n, where:

PVDC =	present value of Decommissioning costs

EDC =	estimated value of Decommissioning costs in nominal terms at the expected date of Decommissioning

i =	interest rate applicable to the escrow account in the current period

n =	number of Years between current period and expected date of Decommissioning

13.8

The Decommissioning Reserve Fund shall be used solely for the purposes of paying for Decommissioning activities. No Party may mortgage, pledge, encumber or otherwise use such Decommissioning Reserve Fund for any purpose whatsoever except as expressly provided herein or in the Petroleum Law. The Decommissioning Reserve Fund may be invested in investments approved in advance by the Contractor and the National Petroleum Agency.

13.9	The Contractor shall annually meet any shortfall between the actual Decommissioning costs and the Decommissioning Reserve Fund for the Contract Area, such amount to be deposited into the escrow account within thirty (30) days after the end of each Calendar Year.

13.10	Any balance remaining in the Decommissioning Reserve Fund after all Decommissioning costs in the Contract Area have been met shall be distributed between the National Petroleum Agency and the Contractor in the same proportion as the allocation of Available Crude Oil at the time of Decommissioning operations.

13.11	Decommissioning expenditures incurred under these Decommissioning provisions are both cost recoverable as Contract Area non-capital costs under the Accounting Procedures and deductible for Tax purposes under the Petroleum Taxation Law.

14.	EMPLOYMENT AND TRAINING OF NATIONALS OF THE STATE

14.1	Each Calendar Year, the Contractor shall submit a detailed program for recruitment and training for the following Calendar Year in respect of its personnel from Sao Tome and Principe in accordance with the Petroleum Law.

14.2	Qualified nationals from Sao Tome and Principe shall be employed in all nonspecialized positions.

14.3

Qualified nationals from Sao Tome and Principe shall also be employed in specialized positions such as those in exploration, drilling, engineering, production, environmental safety, legal and finance. The Contractor shall have the right, subject to applicable laws, rules and regulations, to employ non-nationals of Sao Tome and Principe in such specialized positions where qualified individuals from Sao Tome and Principe are not available, provided

---

14.4

Pursuant to Clause ‎9.2(k), qualified competent professionals of the National Petroleum Agency shall be assigned to work with the Contractor and such personnel and the Contractor’s national personnel from Sao Tome and Principe shall not be treated differently with regard to salaries and other benefits. The Contractor and the National Petroleum Agency shall mutually agree on the numbers of National Petroleum Agency’s staff to be assigned to Petroleum Operations. The costs and expenses of such National Petroleum Agency personnel shall be included in Operating Costs. The Contractor shall not be liable for any damages resulting from the Gross Negligence or Willful Misconduct of any National Petroleum Agency employees assigned to work for the Contractor.

14.5	The Parties shall mutually agree on the organizational chart of the Contractor which shall include nationals of Sao Tome and Principe in key positions.

14.6

No Sao-Tomean who is employed by the Contractor shall be dismissed without the prior written approval of the National Petroleum Agency, except in the case of a serious misbehavior on the part of such employee, in which case a prior notice of the dismissal to the National Petroleum Agency will be required. For the purposes of this clause, a serious misbehavior means serious inadequate conduct of the employee which corresponds to a violation of the employee’s duties under the applicable Sao Tome and Principe labor legislation, which has been investigated and proved by documentary evidence.

14.7

The Contractor shall spend point twenty-five percent (0.25%) of the Operating Costs in each Year of the Exploration Period subject to a minimum of US$250,000 (two hundred and fifty thousand United States dollars) and a maximum of US$300,000 (three hundred thousand United States dollars) in any Calendar Year on scholarships for the training of nationals of Sao Tome and Principe at institutions to be selected by the National Petroleum Agency subject to compliance with the laws applicable to each Party and appropriate due diligence by the Parties. In connection with the review of the annual Work Program and Budgets, the National Petroleum Agency may propose additional budgets for training and the National Petroleum Agency and the Contractor shall mutually agree to such proposal.

14.8

The Contractor shall spend US$500,000 (five hundred thousand United States Dollars) in each Calendar Year during the Production Period on scholarships for the training of nationals of Sao Tome and Principe at institutions to be selected by the National Petroleum Agency subject to compliance with the laws applicable to each Party and appropriate due diligence by the Parties. In connection with the review of the annual Work Program and Budgets, the National Petroleum Agency may propose additional budgets for training and the Parties may mutually agree to such proposal.

14.9	Amounts payable under Clauses ‎14.7 and ‎14.8 shall be recoverable as Contract Area non-drilling exploration costs under the terms of the Accounting Procedures.

15.	BOOKS AND ACCOUNTS, AUDIT AND OVERHEAD CHARGES

---

15.1	Books and Accounts

(a)

The Contractor shall be responsible for keeping complete books of accounts consistent with Good Oil Field Practice and modern petroleum industry accounting practices and procedures. The books and accounts maintained under and in accordance with this Contract shall be kept in United States dollars. All other books of accounts as the Operator may consider necessary shall also be kept in United States dollars. Officials of the National Petroleum Agency and the Contractor shall have access to such books and accounts at all times upon reasonable notice.

(b)	All original books of account shall be kept at the registered address or principal place of business of the Contractor in Sao Tome and Principe.

15.2	Audits

(a)

The National Petroleum Agency shall have the right to inspect and audit the accounting records relating to this Contract or Petroleum Operations for any Calendar Year by giving thirty (30) days advance written notice to the Operator. The Operator may request additional time. The Operator shall facilitate the work of such inspection and auditing; provided, however, that such inspection and auditing shall be carried out within three (3) Calendar Years following the end of the Calendar Year in question. If not, the books and accounts relating to such Calendar Year shall be deemed to be accepted by the Parties. Any exception must be made in writing within ninety (90) days following the end of such audit and failure to give such written notice within such time shall establish the correctness of the books and accounts by the Parties.

(b)

The National Petroleum Agency may undertake the inspection and audit in Clause ‎15.2(a) either through its own personnel or through a qualified firm of chartered accountants appointed for such purpose by the National Petroleum Agency; provided, that transportation and per diem, in accordance with Sao-Tomean legislation, are borne by the Contractor. The National Petroleum Agency’s own personnel shall be borne by the Contractor as a general administrative cost, as long as these are reasonable and are duly documented and shall be cost recoverable. Costs for the qualified firm of chartered accountants shall be borne by the National Petroleum Agency.

(c)

Notwithstanding that the said period of three (3) Calendar Years may have expired, if the Contractor or any of its employees or any Person acting on its behalf has acted with Gross Negligence or engaged in Willful Misconduct, the National Petroleum Agency shall have the right to conduct further audit to the extent required to investigate such Gross Negligence or Willful Misconduct in respect of any earlier periods and all costs of such investigation shall be for the account of the Contractor and shall not be cost recoverable.

15.3	Materials

---

15.4	Home Office Overhead Charges

16.	TAXES AND CUSTOMS

16.1	Tax

16.2	The Realizable Price established in accordance with Clause ‎11 shall be used in determining the amount of profits of a Contractor Party and its resulting Tax liability under the Petroleum Taxation Law.

16.3	Customs

17.	INSURANCE

---

17.1

The Contractor shall obtain and maintain such insurance as is customarily obtained in accordance with Good Oil Field Practice with respect to Petroleum Operations with an insurance company of good repute approved by the National Petroleum Agency, in the names of the Parties and with limits of liability not less than those required in accordance with Good Oil Field Practice. The premium for such policies shall be included in Operating Costs. All policies shall name the National Petroleum Agency as a co-insured with a waiver of subrogation rights in favor of the Contractor. Without prejudice to the generality of the foregoing, such insurance may cover:

(a)	any loss or damage to all assets used in Petroleum Operations;

(b)	pollution caused in the course of Petroleum Operations for which the Contractor or the Operator may be held responsible;

(c)	property loss or damage or bodily injury suffered by any third party in the course of Petroleum Operations for which the Contractor, the Operator, the State or the National Petroleum Agency may be held liable;

(d)	the cost of removing wrecks and cleaning up operations following an accident in course of Petroleum Operations; and

(e)	the Contractor’s and/or the Operator’s liability to its employees and other persons engaged in Petroleum Operations.

17.2

In case of any loss or damage to property, all amounts paid by an insurance company shall be received by the Contractor for the conduct of Petroleum Operations. The Contractor shall determine whether the lost or damaged property should be repaired replaced or abandoned. If the decision is to repair or replace the property in question, the Contractor shall immediately take steps to replace or repair such lost or damaged property. Any excess cost of repair or replacement above the amount reimbursed by the insurance company shall be regarded as an Operating Cost. If the cost of repair is less than the amount reimbursed by the insurance company, the difference shall be deducted from Operating Costs. If the decision is to neither repair nor replace then the proceeds of any coverage shall be credited to Operating Costs. In the event that the loss or damage is attributable to the Contractor’s Gross Negligence or Willful Misconduct, the excess cost of replacement or repair shall not be reimbursed as an Operating Cost.

17.3	The Contractor shall obtain and maintain an insurance policy covering damage caused to third parties as provided in Clause ‎17.1(c) as a direct or indirect result of Petroleum Operations under this Contract.

17.4

All insurance policies obtained and maintained pursuant to this Clause ‎17 shall be based upon Good Oil Field Practice and shall be taken out in Sao Tome and Principe, except for those concerning risks for which the Contractor cannot obtain local coverage with an insurance company holding a long term rating not inferior to A minus by Standard and Poor’s Corporation or an A3 rating by Moody’s Investor Service or an equivalent rating by any

---

17.5

In entering into contracts with any sub-contractor or other Person for the performance of Petroleum Operations, the Contractor shall require, whenever reasonably practicable, such sub-contractor or other Person to take out adequate insurance in accordance with this Clause ‎17 and to properly indemnify the State and its organs and agencies and the Contractor for any damage done and to fully indemnify and hold the State and its organs and agencies and the Contractor harmless against claims from any third parties.

17.6	The Contactor shall also maintain all other insurance policies required under the laws of Sao Tome and Principe.

18.	CONFIDENTIALITY AND PUBLIC ANNOUNCEMENTS

18.1

Subject to Clauses ‎18.4 and ‎18.5, the Contractor and the National Petroleum Agency shall keep information furnished to each other in connection with Petroleum Operations and all plans, maps, drawings, designs, data, scientific, technical and financial reports and other data and information of any kind or nature relating to Petroleum Operations including any discovery of Petroleum as strictly confidential and shall ensure that their entire or partial contents shall under no circumstances be disclosed in any announcement to the public or to any third party without the prior written consent of the other. With regard to data about aspects of geology, reservoir engineering or production engineering, reports or other material submitted to public authorities, the confidentiality obligations shall have the duration specified in Clause ‎18.3.

(a)	Affiliates;

(b)	sub-contractors, auditors, financial consultants or legal advisers, provided that such disclosures are required for the effective performances of the aforementioned recipients’ duties related to Petroleum Operations and provided further that they are under a similar undertaking of confidentiality as that contained in this Clause ‎18;

(c)	comply with statutory obligation or the requirements of any governmental agency or the rules of a stock exchange on which a Party’s or its Affiliates’ stock is publicly traded in which case the disclosing Party will notify the other Party of any information so disclosed prior to such disclosure;

(d)	financial institutions involved in the provision of finance for the Petroleum Operations hereunder provided, in all such cases, that the recipients of such data and information agree in writing to keep such data and information strictly confidential;

---

(e)	a bona fide third party purchaser provided that such third party executes an undertaking similar to the undertaking contained in this Clause ‎18 to keep the information disclosed to it strictly confidential; and

(f)	in accordance with and as required by the Oil Revenue Law.

18.2	The Parties shall take necessary measures in order to make their directors, officers, employees, agents and representatives comply with the same obligation of confidentiality provided for in this Clause ‎18.

18.3	The provisions of this Clause ‎18 shall terminate five (5) years after the termination or expiration of this Contract.

18.4

Subject to Clause ‎18.1(c), the Contractor shall use best endeavors to ensure that it, its Affiliates and Associates and each of their respective directors, officers, servants, employees and agents shall not make any reference in public or publish any notes in newspapers, periodicals or books nor divulge, by any other means whatsoever, any information on the activities under the Petroleum Operations, or any reports, data or any facts and documents that may come to their knowledge by virtue of this Contract, without the prior written consent of the National Petroleum Agency.

18.5	No announcement of a Discovery or Commercial Discovery may be made by the Contractor otherwise than in accordance with this Clause ‎18 and unless and until the Government has made a prior announcement of such Discovery or Commercial Discovery in the national and international media.

19.	ASSIGNMENT

19.1	Subject to Clause ‎19.5, the Contractor may not sell, assign, transfer, encumber, convey or otherwise dispose of part or all of its rights, interest and/or obligations under this Contract to any third party without the prior written consent of the National Petroleum Agency.

19.2

All changes in Control of a Contractor Party shall be subject to the prior approval of the Government. Where a change in Control occurs without the prior approval of the Government, the Government may terminate this Contract in respect of such Contractor Party. This Clause ‎19.2 does not apply if the change of Control is the direct result of an acquisition of shares or other securities of a publicly traded company on a recognized stock exchange. Change of Control includes a Person ceasing to be Controlled (whether or not another Person becomes in Control), and a Person obtaining Control (whether or not another Person was in Control).

19.3

When an assignment, transfer or other disposition of any rights under this Contract, other than a transfer pursuant to Clause ‎19.5, is anticipated, the assigning Contractor Party must notify in writing the National Petroleum Agency as soon as practicable. The Government, acting through the National Petroleum Agency or other nominee, shall then have the right to purchase the assigning Contractor Party’s interest under this Contract proposed to be

---

19.4	If the written consent by the National Petroleum Agency is granted, the assigning Contractor Party shall be relieved of its obligation and liabilities under this Contract to the extent that the assignee or transferee accepts the assumption of such obligations and liabilities under this Contract.

19.5

The Contractor may sell, assign, transfer, convey or otherwise dispose of part or all of its rights and interest under this Contract to an Affiliate with a prior written notice to the National Petroleum Agency, provided that the relevant Contractor Party and the Affiliate shall remain jointly and severally liable for all obligations and liabilities under this Contract notwithstanding such assignment, transfer, conveyance or other disposal. If the Affiliate shall cease at any time to be an Affiliate of the transferring Contractor Party, the Affiliate shall immediately re-assign or re-transfer to the original Contractor Party all rights and obligations transferred to it under this Contract. Transfers of interests to an Affiliate of a Contractor Party shall not change the nationality of the Contractor Party for the purpose of determining, jurisdiction of any arbitration tribunal.

19.6	Any request for consent pursuant to Clause ‎19.1 made by the Contractor to the National Petroleum Agency shall include the assignment agreement and other relevant information relating to financial and corporate standing of the assignee, and its capability to contribute to the Petroleum Operations under this Contract as required under the Petroleum Law.

20.	TERMINATION

20.1	The State, by decision of the Government, shall be entitled to terminate this Contract with the Contractor (or in respect of any Party making up the Contractor) if any of the following events occur:

(a)	the Contractor defaults in the performance of any of its material obligations set forth in Clause ‎9;

(b)	the Contractor fails to execute the Minimum Work Obligations;

(c)	the Contractor assigns, transfers, conveys, encumbers or other disposes of its rights, interests and/or obligations under this Contract otherwise than in accordance with Clause ‎19 and/or the Petroleum Law;

(d)	the Contractor is adjudged insolvent or bankrupt by a court of competent jurisdiction or acknowledges or claims that it is unable to pay its debts or makes an application for bankruptcy protection that is not discharged within thirty (30) days;

---

(e)	the Contractor ceases to carry on its business as carried on at the date of this Contract or liquidates or terminates its corporate existence;

(f)	the warranties made by the Contractor under Clause ‎24 are found to have been untrue when made;

(g)	the Contractor fails to make any payment to the State when due;

(h)	the Contractor fails to submit the performance bond or guarantee when due;

(i)

the Contractor fails to initiate field development and production in accordance to the time schedule outlined in the approved Field Development Program (Clause ‎5.1(e)), except if that occurs for acceptable and duly demonstrated reasons; or if, after production of Petroleum is initiated in the Contract Area, production of Petroleum ceases for a period of more than four (4) months for causes which are not acceptable, not attributable to Force Majeure or without the consent of the National Petroleum Agency; and

(j)	the events provided for in the articles 34, 35 or 36 of the Petroleum Law.

20.2

If the cause for termination is an event specified in Clause ‎20.1(a), ‎(b), ‎(f), ‎(g), ‎(h), ‎(i) and/or ‎(j) above, the National Petroleum Agency shall give written notice thereof to the Contractor requiring it to remedy such default within a period not more than thirty (30) days of receipt of the National Petroleum Agency’s notice or such additional days as the National Petroleum Agency deems appropriate in the circumstances in its sole discretion. If upon the expiration of the said period such default has not been remedied or removed, the Government may, by written notice issued by the National Petroleum Agency to the Contractor, declare this Contract terminated.

20.3	Termination for any of the events specified in Clause ‎20.1(c), ‎(d) and/or ‎(e) above, shall be with immediate effect and the Government may, by written notice to the Contractor issued by the National Petroleum Agency, declare this Contract terminated. Termination as to one Contractor Party shall not constitute termination as to the other Contractor Party(ies).

20.4	Where this Contract is terminated with respect to only one Contractor Party, the State shall have the option to assume the interests, rights and obligations of such defaulting Contractor Party under this Contract. If the State elects not to exercise this option, the interests, rights and obligations shall be assigned to the remaining Contractor Parties who shall be liable jointly and severally.

20.5	In the event that any other Contractor Party(ies) fail to meet any and all liabilities of the terminated Contractor Party as provided in Clause ‎20.4, the State reserves the right to terminate this Contract, in respect of all other Contractor Parties upon written notice.

---

20.6	Without prejudice to all other rights of the State, the Contractor shall upon the termination of this Contract permit inspection, copying and auditing of its accounts and records for the Petroleum Operations by the National Petroleum Agency and/or its agents.

20.7

The Contractor shall have the right, at its sole discretion, to relinquish its rights and to terminate this Contract without further obligations or liabilities, upon completion of the stipulated Minimum Work Obligations and Minimum Financial Commitment at the end of any phase of the Exploration Period, upon giving a thirty (30) day advance notice to the National Petroleum Agency. This Clause ‎20.7 shall not release the Contractor from any unfulfilled obligations incurred prior to the termination of this Contract nor from any liabilities arising from acts or omissions taking place prior to the termination of this Contract.

20.8	This Contract shall automatically terminate if no Commercial Discovery is made in the Contract Area at the end of Exploration Period, as extended.

21.	FORCE MAJEURE

21.1

Any failure or delay on the part of any Party in the performance of its obligations or duties (other than the obligation to pay money) under this Contract shall be excused to the extent attributable to Force Majeure. A Force Majeure situation includes delays, defaults or inability to perform under this Contract due to any event beyond the reasonable control of the Party claiming Force Majeure. Such event may be, but is not limited to, any act, event, happening or occurrence due to natural causes and acts or perils of navigation, fire, hostilities, war (whether declared or undeclared), blockade, labor disturbances, strikes riots, insurrection, civil commotion, quarantine restrictions, epidemics, storms, floods, earthquakes, accidents, blowouts and lightning.

21.2	If Petroleum Operations are delayed, curtailed or prevented by an event of Force Majeure, then the time for carrying out the obligation and duties thereby affected, and rights and obligations hereunder, shall be extended for a period equal to the period of such delay.

21.3	The Party who is unable to perform its obligations as a result of the Force Majeure shall promptly notify the other Parties not later than five (5) days after the establishment of the commencement of the event of Force Majeure, stating the cause, and the Parties shall do all that is reasonably within their powers to remove such cause.

21.4	The Contractor’s failure or inability to find Petroleum in commercial quantities for reasons other than as specified in Clause ‎21.1 shall not be deemed an event of Force Majeure.

22.	LAWS AND REGULATIONS

22.1	This Contract shall be governed by and construed in accordance with the laws of the Democratic Republic of Sao Tome and Principe.

22.2	Subject to Clause ‎25.8 and to the principles of public international law, no term of this Contract shall prevent or limit the State from exercising its sovereign rights.

---

23.	NATURAL GAS

23.1	If the Contractor discovers a commercially viable quantity of Natural Gas, the Contractor shall have the right to develop, commercialize, recover the costs and share in the profits of a development of such Natural Gas under this Contract on terms to be mutually agreed. Such terms when agreed shall become an integral part of this Contract.

23.2

Notwithstanding Clause ‎23.1, the Contractor may utilize, at no cost, Natural Gas required as fuel for Petroleum Operations such as gas recycling, gas injection, gas lift or any other Crude Oil enhancing recovery schemes, stimulation of wells necessary for maximum Crude Oil recovery in the field discovered and developed by the Contractor and such usage shall be with prior written consent of the National Petroleum Agency, which consent shall not be unreasonably withheld. This shall be included in a Field Development Program.

23.3

The attainment of recovery of Crude Oil through an efficient, economic and technically acceptable method shall always be paramount in all decisions regarding Associated Natural Gas. However, prior to the commencement of Production of Crude Oil from the Contract Area, the Contractor shall submit to the National Petroleum Agency, a program for the utilization of any Associated Natural Gas that has been discovered in the Contract Area, which shall be subject to the approval of the National Petroleum Agency.

23.4

If the Contractor discovers sufficient volumes of Unassociated Natural Gas that could justify commercial development, the Contractor shall immediately report the volume of potentially recoverable Natural Gas to the National Petroleum Agency and shall promptly investigate and submit proposals to the National Petroleum Agency for the commercial development of such Natural Gas taking in consideration local strategic needs as may be identified by the National Petroleum Agency, within two (2) years of the date of the relevant discovery. Any cost in respect of such proposals or investigation presented by the Contractor to the National Petroleum Agency shall be included in Operating Costs. The Contractor and the National Petroleum Agency will determine the plan and time needed, which shall be no more than five (5) years, unless otherwise agreed by the National Petroleum Agency, to progress a commercial development project, which shall include the terms for recovery of Operating Costs and sharing of Natural Gas production, which terms when agreed shall form an integral part of this Contract. If the Contractor fails to justify a commercial development within the agreed timeframe and if the National Petroleum Agency determines that a sufficient volume of Unassociated Natural Gas exists, the National Petroleum Agency shall have the right to propose to the Contractor a commercial development of such Natural Gas. The Contractor shall have the right to participate in the commercial development under terms pursuant to Clause ‎23.1. If the Contractor declines to participate in the commercial development of such Natural Gas as presented by the National Petroleum Agency and if the Field Development Program does not hinder or jeopardize current Petroleum Operations, the National Petroleum Agency may develop the Natural Gas in the manner presented to the Contractor.

24.	REPRESENTATIONS AND WARRANTIES

---

24.1	In consideration of the State entering into this Contract, the Contractor hereby represents and warrants to the State as follows:

(a)	The Contractor has the power to enter into and perform this Contract and has taken all necessary action to execute, deliver and perform this Contract in accordance with the terms herein contained.

(b)	The execution, delivery and performance of this Contract by the Contractor will not contravene, any of the provisions of:

(i)	any law or regulations or order of any governmental authority, agency or court applicable to or by which the Contractor may be bound; and

(ii)	any mortgage, contract or other undertaking or instrument to which the Contractor is a party or which is binding upon it or any of its respective revenues or assets.

(c)	Full disclosure has been made to the National Petroleum Agency.

(d)	As of the Effective Date all facts in relation to the Contractor and its financial condition and affairs as are material and ought properly to be made known to the National Petroleum Agency and have been made so known in full.

(e)	The Contractor, together with its Affiliates, has sufficient funds both in foreign and local currencies to carry out Petroleum Operations under this Contract.

(f)	The representations and warranties set out in this Clause ‎24 shall remain in full force and effect for the duration of this Contract.

24.2	In consideration of the Contractor entering into this Contract, the State hereby represents and warrants to the Contractor as follows:

25.	CONCILIATION AND ARBITRATION

25.1	Should there be a difference or dispute between the Parties concerning the interpretation or performance of this Contract (a “Dispute”) such that the Dispute cannot be resolved by mutual agreement, the Parties may refer the matter to an independent expert for an opinion to assist the Parties in reaching a mutual agreement.

25.2	Where an independent expert is used,, the National Petroleum Agency and the Contractor shall furnish the expert with all written information which he may reasonably require. The cost of the services of the expert, if appointed, shall be shared equally between the National Petroleum Agency and each Contractor Party.

---

25.3

If the Dispute cannot be settled by amicable agreement or through an independent expert or if a Party does not agree to the use of an independent expert, then either the National Petroleum Agency or the Contractor may serve on the other a demand for arbitration in accordance with this Clause ‎25. The procedures set forth in this Clause ‎25 shall be the exclusive procedures for arbitration of any and all Disputes arising under or involving the interpretation of this Contract. No other arbitration tribunal under any other procedure, agreement or international treaty shall have jurisdiction over such disputes between the Parties.

25.4

If the relevant Parties have not reached a mutual agreement after three (3) months of the date of a notice of a Dispute by one Party to another, unless the Parties to the Dispute mutually agree to an extension, any Party to the Dispute may refer the Dispute for resolution by final and binding arbitration to the International Centre for the Settlement of Investment Disputes (the “Centre” or “ICSID”) established by the Convention on the Settlement of Investment Disputes between States and Nationals of other States, done at Washington, March 18, 1965 (the “ICSID Convention”); to the Additional Facility of the Centre, if the Centre is not available; or in accordance with the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL), if neither the Centre nor the Additional Facility are available.

25.5	Seat and Language of Arbitration

25.6	Number and Identity of Arbitrators

(i)

The claimant and the respondent shall, within thirty (30) days from the day on which a request for arbitration has been submitted, appoint an arbitrator each (and if there is more than one claimant or more than one (1) respondent, then the claimants and/or the respondents collectively shall each appoint a single arbitrator), by giving notice in writing of such appointment to the Secretary-General of ICSID and the other Party or Parties to the Dispute.

(ii)

If either the claimant or the respondent fails to comply with the time limit in the preceding paragraph, the Chairman of the Administrative Council of ICSID shall appoint the arbitrator or arbitrators that have not yet been appointed, at the request of either the claimant or the respondent and after consulting the claimant and the respondent as far as possible. The Chairman of the Administrative Council of ICSID shall give notice in writing of such appointment or appointments to the Secretary-General of ICSID and the claimant and the respondent.

---

(iii)	The two (2) arbitrators so appointed shall, within thirty (30) days of their appointment, agree upon the person to be appointed as the President of the tribunal, and give notice of such appointment to the Secretary-General of ICSID and the claimant and the respondent.

(iv)

If the two (2) arbitrators fail to agree upon the person to be the President of the tribunal, the Chairman of the Administrative Council of ICSID shall appoint the President, at the request of either the claimant or the respondent, and after consulting the claimant and the respondent as far as possible. The Chairman of the Administrative Council of ICSID shall give notice in writing of such appointment to the Secretary-General of ICSID and the claimant and the respondent.

(v)	None of the arbitrators shall be a citizen of the countries of any of the Parties to the Dispute (or in the case where the Party is a company or another entity, any country or countries of nationality of such Party, including the country of its ultimate parent).

25.7	Rules of Arbitration

25.8	Binding Nature of Arbitration

25.9	Costs of Arbitration

25.10	Payment of Awards

26.	EFFECTIVE DATE

---

26.1	This Contract shall come into force on the date (the “Effective Date”) of the instrument of ratification executed by the Prime-Minister on behalf of the Government. Record of such ratification shall be annexed to this Contract as proof of the Effective Date.

26.2	Failure by the Contractor to meet its obligation to pay the signature bonus in accordance with the terms of Clause ‎2.1 shall mean that this Contract shall be null and void.

27.	REVIEW / RE-NEGOTIATION OF CONTRACT AND FISCAL TERMS

27.1

The Parties agree that the commercial terms and conditions of this Contract have been negotiated and agreed having due regard to the existing fiscal terms in accordance with the provisions of the Petroleum Law and the Petroleum Taxation Law in force at the time of the Effective Date. If such fiscal terms are materially changed to the detriment of the Contractor, the Parties agree to review the terms and conditions of this Contract affected by such changes and to align such terms and conditions with the fiscal terms as at the Effective Date.

27.2

If at any time or from time to time, there is a change in legislation or regulations, or a change to the interpretation of such legislation or regulations, which materially affect the commercial benefit afforded to the Contractor under this Contract, the Parties will consult each other and shall agree to such amendments to this Contract as are necessary to restore as near as practicable such commercial benefits which existed under this Contract as of the Effective Date.

27.3	Where the parties cannot agree on new terms within one hundred and twenty (120) days of the Contractor’s request for review of the terms and conditions of the Contract affected by the changes, the matter may be submitted to arbitration pursuant to Clause ‎25.

28.	OPERATOR

28.1	BP is hereby designated as the Operator under this Contract to execute, for and on behalf of the Contractor, all Petroleum Operations in the Contract Area pursuant to and in accordance with this Contract and the Petroleum Law.

28.2

The Operator, for and on behalf of the Contractor, shall have the exclusive control and administration of Petroleum Operations under this Contract. The Operator, for and on behalf of the Contractor, and within the limits defined by the National Petroleum Agency, this Contract and the Petroleum Law, shall have the authority to execute all contracts, incur expenses, make commitments, and implement other actions in connection with the Petroleum Operations.

29.	CONFLICT OF INTERESTS

29.1	Each Party represents and warrants that it did not engage any person, firm or company as a commission agent for purposes of this Contract and that it has not given or offered to give nor will it give or offer to give to or to accept from (directly or indirectly) any person any bribe, gift, gratuity, commission or other thing of significant value, as an inducement or

---

29.2

The Contractor further represents and warrants that no loan, reward, offer, advantage or benefit of any kind has been given to any public official or any person for the benefit of such public official or person or third parties, as consideration for an act or omission by such public official in connection with the performance of such person’s duties or functions or to induce such public official to use his or her position to influence any act or decisions of the Administration with respect to this Contract. Any breach of this representation shall cause this Contract to be declared invalid and voidable by the State Administration.

30.	NOTICES

30.1	Any notice or other communication required to be given by a Party to another shall be in writing (in Portuguese and English) and shall be considered as duly delivered if given by hand delivery in person, by courier or by facsimile at the following addresses:

---

30.2	All notices and other communications shall be deemed to have been duly delivered upon actual receipt by the intended recipient.

30.3	Each Party shall notify the other promptly of any change in the above address.

31.	LIABILITY

32.	MISCELLANEOUS

32.1	No supplement or modification of any provision of this Contract shall be binding unless executed in writing by all Parties.

32.2	No waiver by any Party of any breach of a provision of this Contract shall be binding unless made expressly in writing. Any such waiver shall relate only to the breach to which it expressly relates and shall not apply to any subsequent or other breach.

32.3	The validity and effectiveness of this Contract shall be subject to the full compliance with all applicable administrative procedural rules relating to State contracting.

32.4	This Contract is prepared and filed in the Portuguese and English languages. In case of non-conformity, the Portuguese language version shall prevail.

32.5	This Contract shall be made public and a copy hereof shall be provided to the Public Registration and Information Office within ten (10) days from its execution.

---

---

---

---

---

1.	GENERAL PROVISIONS

1.1	Definitions

1.2	Accounts and Statements

1.3	In the event of a conflict between the terms of these Accounting Procedures and the Contract, the terms of the Contract shall apply.

1.4	These Accounting Procedures may be amended from time to time by the mutual agreement of the Parties.

2.	Operating Costs

2.1	Operating Costs shall be defined as all costs, expenses paid and obligations incurred in carrying out Petroleum Operations and shall consist of:

(a)	Contract Area Non-capital Costs;

(b)	Contract Area Capital Costs;

(c)	Contract Area Non-Drilling Exploration Costs; and

(d)	Contract Area Unsuccessful Exploration and Appraisal Costs.

2.2	Contract Area Non-capital Costs

(a)	General office expenses – office, services and general administration services pertaining to Petroleum Operations including services of legal, financial, purchasing,

---

(b)

Labor and related costs – salaries and wages, including bonuses, of employee; of the Contractor who are directly engaged in the conduct of Petroleum Operations, whether temporarily or permanently assigned, irrespective of the location of such employee including the costs of employee benefits, customary allowance and personal expenses incurred under the Contractor’s practice and policy, and amounts imposed by applicable governmental authorities which an applicable to such employees.

(i)	cost of established plans for employee group life insurance, hospitalization, pension, retirement, savings and other benefit plans;

(ii)	cost of holidays, vacations, sickness and disability benefits;

(iii)	cost of living, housing and other customary allowances;

(iv)	reasonable personal expenses, which are reimbursable under the Contractor’s standard personnel policies;

(v)	obligations imposed by governmental authorities;

(vi)	cost of transportation of employees, other than as provided in paragraph ‎(c) below, as required in the conduct of Petroleum Operations; and

(vii)	charges in respect of employees temporarily engaged in Petroleum Operations, which shall be calculated to reflect the actual costs thereto during the period or periods of such engagement.

(c)	Employee relocation costs – costs for relocation, transportation and transfer of employees of the Contractor engaged in Petroleum Operations including the cost of freight and passenger service of such employees’ families and their personal and household effects together with meals, hotel and other expenditures related to such transfer incurred with respect to:

(i)	employees of the Contractor within Sao Tome and Principe including expatriate employees engaged in Petroleum Operations;

(ii)	transfer to Sao Tome and Principe for engagement in Petroleum Operations;

(iii)	relocation costs and other expenses incurred in the final repatriation or transfer of the Contractor’s expatriate employees and families in the case of such employees’ retirement, or separation from the Contractor, or in case of

---

(iv)	Sao-Tomean employees on training assignments outside the Contract Area.

(d)	Services provided by third parties – cost of professional, technical, consultation, utilities and other services procured from third party sources pursuant to any contract or other arrangements between such third parties and the Contractor for the purpose of Petroleum Operations.

(e)

Legal expenses – all costs or expenses of handling, investigating, asserting, defending and settling litigation or claims arising out of or relating to Petroleum Operations or necessary to protect or recover property used in Petroleum Operations including, but not limited to, legal fees, court costs, arbitration costs, cost of investigation or procuring evidence and amounts paid in settlement or satisfaction of any such litigation, arbitration or claims in accordance with the provisions hereof.

(f)	Head office overhead charge – parent company overhead in the amount specified in Clause ‎15.4 of the Contract.

(g)	Insurance premiums and settlements – premiums paid for insurance normally required to be carried for the Petroleum Operations together with all expenditures incurred and paid in settlement of any and all losses, claims, damages, judgments, and other expenses, including fees and deductibles relating to the Contractor’s performance under the Contract.

(h)	Duties and taxes – all duties and taxes, fees and any Government assessments, including gas flare charges, license fees, custom duties, other than Royalty and Tax.

(i)	Operating expenses – labor, materials and services used in day to day oil well operations, oil field production facilities operations, secondary recovery operations, storage, transportation, delivering and marketing operations; and other operating activities, including repairs, well workovers, maintenance and related leasing or rental of all materials, equipment and supplies.

(j)	Successful Exploration drilling – all expenditures incurred in connection with the drilling of any Exploration Well which results in a Commercial Discovery.

(k)	Successful Appraisal drilling – all expenditures incurred in connection with the drilling of Appraisal Wells on a Commercial Discovery.

(l)	Unsuccessful Development drilling – all expenditures incurred in connection with drilling of development wells which are dry, including costs incurred in respect of casing, well cement and well fixtures.

---

(m)	Successful Development drilling – all intangible expenditures incurred in connection with labor, fuel, repairs, maintenance, hauling, and supplies and materials (not including, casing and other well fixtures) which are for or incidental to drilling, cleaning, deepening or completion wells or the preparation thereof incurred in respect of:

(i)	determination of well locations, geological, geophysical, topographical and geographical surveys for site evaluation preparatory to drilling including the determination of near surface and near sea bed hazards;

(ii)	cleaning, draining and leveling land, road-building and the laying of foundations;

(iii)	drilling, shooting, testing and cleaning wells; and

(iv)	erection of rigs and tankage assembly and installation of pipelines and other plant and equipment required in the preparation or drilling of wells producing Crude Oil.

(n)	Decommissioning provisions – any deposits in the Decommissioning Reserve Fund set aside for the purposes of Decommissioning pursuant to Clause ‎13 of the Contract.

(o)

Affiliate services – professional, administrative, scientific and technical services provided by Affiliates of the Contractor for the direct benefit of Petroleum Operations including services provided by the Exploration, Production, legal, financial, purchasing, insurance, accounting and computer services departments of such Affiliates. Charges for providing these services shall reflect costs only, and must be consistent with international market practices and shall not include any element of profit.

(p)	Pre-production Contract Area Non-capital Costs – all recoverable Contract Area Non-capital Costs incurred before first production from the Contract Area are accumulated and treated as if they had been incurred on the first day of production from the Contract Area.

2.3	Contract Area Capital Costs

(a)

Plant expenditures – expenditures in connection with the design, construction, and installation of plant facilities (including machinery, fixtures, and appurtenances) associated with the production, treating, and processing of Crude Oil (except such costs properly allocable to intangible drilling costs) including offshore platforms, secondary or enhanced recovery systems, gas injection, water disposal, expenditures for equipment, machinery and fixtures purchased to conduct Petroleum Operations

---

(b)	Pipeline and storage expenditure – expenditures in connection with the design, installation, and construction of pipeline, transportation, storage, and terminal facilities associated with Petroleum Operations including tanks, metering, and export lines.

(c)	Building expenditure – expenditures incurred in connection with the construction of buildings, structures or works of a permanent nature including workshops, warehouses, offices, roads, wharves, furniture and fixtures related to employee housing and recreational facilities and other tangible property incidental to construction.

(d)	Successful Development drilling – all tangible expenditures incurred in connection with drilling development wells such as casing, tubing, surface and sub-surface production equipment, flow lines and instruments.

(e)	Material inventory – cost of materials purchased and maintained as inventory items solely for Petroleum Operations subject to the following provisions:

(i)	the Contractor shall supply or purchase any materials required for the Petroleum Operations, including those required in the foreseeable future. Inventory stock levels shall take account of the time necessary to provide the replacement, emergency needs and similar considerations;

(ii)

materials purchased by the Contractor for use in the Petroleum Operations shall be valued so as to include invoice price (less prepayment discounts, cash discounts, and other discounts if any) plus freight and forwarding charges between point of supply and point of destination but not included in the invoice price, inspection costs, insurance, custom fees and taxes, on imported materials required for the Contract;

(iii)	materials not available in Sao Tome and Principe supplied by the Contractor or from its Affiliates stocks shall be valued at the current competitive cost in the international market; and

(iv)

the Contractor shall maintain physical and accounting controls of materials in stock in accordance with Good Oil Field Practice. The Contractor shall make a total inventory at least once a year to be observed by the National Petroleum Agency and its external auditors. The National Petroleum Agency may however carry out partial or total inventories at its own expense, whenever it considers necessary, provided such exercise does not unreasonably disrupt Petroleum Operations.

---

(f)	Pre-production Contract Area Capital Costs – all recoverable Contract Area Capital Costs incurred before first production from the Contract Area are accumulated and treated as if they had been incurred on the first day of production from the Contract Area.

2.4	Contract Area Non-Drilling Exploration Costs

(a)	Geological and geophysical surveys – labor, materials and services used in aerial, geological, topographical, geophysical and seismic surveys incurred in connection with Exploration excluding however the purchase of data from the National Petroleum Agency.

(b)	Pre-Contract seismic costs – reasonable costs associated with the acquisition of seismic data covering the Contract Area, including third party processing but not interpretation of the data by the Contractor or its Affiliates, which were incurred prior to the Effective Date.

(c)	Annual scholarship payments as described under Clause ‎14 of the Contract.

2.5	Contract Area Unsuccessful Exploration and Appraisal Costs

(a)	to the extent that the Contract Area has Available Cost Oil after recovering the Operating Costs (other than Unsuccessful Exploration and Appraisal Costs) related to that Contract Area; and

(b)	if there is insufficient Available Cost Oil in the Contract Area in any period to fully recover Unsuccessful Exploration and Appraisal costs the unrecovered amount may be carried forward and included in the next period’s Unsuccessful Exploration and Appraisal costs account.

---

2.6	Non-Recoverable Costs

(a)	bonuses and expenditure incurred by the Contractor in carrying out any obligation to fund social projects as defined in Clause ‎2 of the Contract;

(b)	interest incurred under loans taken to finance Petroleum Operations from either inter-Affiliate loans or loans from third parties; and

(c)	costs incurred in excess of five percent (5%) above costs budgeted for in a Work Program and Budget, unless such costs are approved in advance by the National Petroleum Agency, which shall not be denied in cases where costs reflect fair market conditions or are technically supported.

3.	Computation of Royalty and Tax

3.1	The Contractor shall compute the amount of Royalty and Tax payable to the State pursuant to and in accordance with the Contract. Such amounts shall be computed in the manner set forth in the Petroleum Law, the Petroleum Taxation Law and the provisions hereof as stated in Article ‎4 of this Schedule 2.

3.2	The Contractor shall compute the Royalty to be paid to the State in a given month based on the Realizable Price of the Crude Oil produced during the second preceding month. Tax payments shall be calculated and remitted in accordance with the Petroleum Taxation Law.

4.	Accounting Analyses

4.1	The Contractor and the National Petroleum Agency shall agree within three (3) months on a format for monthly accounting analysis reflecting the volumes lifted in terms of Royalty Oil, Cost Oil, and Profit Oil, and Proceeds received by each Party.

4.2	The Realizable Price and the quantities actually lifted by the Parties shall be used to compute the Proceeds as reflected in the agreed monthly accounting analysis format in Article ‎4.1 above and the allocation of such Proceeds in the categories described under Clause ‎10 of the Contract shall be reflected.

4.3	The allocation of the quantity of Available Crude Oil to each Party pursuant to Clause ‎10 of the Contract shall be according to and governed by provisions of the Allocation and Lifting Procedures.

4.4	The priority of allocation of the total Proceeds for each period shall be as follows:

(a)	Royalty Oil;

(b)	Cost Oil; and

(c)	Profit Oil

---

4.5	The amount chargeable to and recoverable as Royalty Oil, and Cost Oil shall be determined as follows:

(a)	Royalty Oil – The sum of royalties payable during such month.

(b)	Cost Oil – The Operating Costs applicable to such month for the purposes of Cost Oil are as follows:

(i)	Contract Area Non-Capital Costs shall be the amount recorded in the books and accounts of the Contractor for such month in accordance with these Accounting Procedures and shall be recoverable in full in the period incurred.

(ii)	Contract Area Capital Costs shall be the amount recorded in the books and accounts of the Contractor for such month in accordance with these Accounting Procedures and shall be recoverable over the depreciation period as provided in Article ‎6.1 below or the remaining life of the Contract, whichever is less.

(iii)	Contract Area Non-Drilling Exploration Costs shall be the amount recorded in the books and accounts of the Contractor for such month in accordance with these Accounting Procedures and shall be recoverable in full in the period incurred.

(iv)

Contract Area Unsuccessful Exploration and Appraisal Costs shall be the amount recorded in the books and accounts of the Contractor for such month in accordance with these Accounting Procedures and shall be recoverable over the depreciation period of five (5) years in equal installments of twenty percent (20%) per annum or the remaining life of the Contract Area, whichever is less, commencing with production from the Contract Area which costs are allocated to the Contract Area in accordance with Article ‎2.5 of this Schedule 2.

(c)	Any carryover from previous months as provided under Article ‎4.6 of this Schedule 2.

4.6	Any amounts chargeable and recoverable in excess of the allocation of Proceeds for the month to Royalty Oil and Cost Oil shall be carried forward to subsequent months. Carryovers shall be determined as follows:

(a)	A Royalty Oil carryover results when the Proceeds for such month are insufficient for allocation of the Royalty Oil due for the month, as described in Clause ‎10 of the Contract.

(b)	A Cost Oil carryover results when the Proceeds remaining, after allocating a portion of the Proceeds to Royalty Oil, are insufficient for allocation of Cost Oil due for the month, as described in Clause ‎10 of the Contract.

---

4.7	Profit Oil is available where Proceeds remain after allocations to Royalty Oil and Cost Oil pursuant to Articles ‎4.5 and ‎4.6 above. Profit Oil shall be allocated as described in Clause ‎10 of the Contract.

5.	Other Provisions

5.1

The Contractor shall open and keep bank accounts in United States dollars where all funds remitted from abroad shall be deposited for the purpose of meeting local expenditures. For purposes of keeping the books of accounts, any foreign currency remitted by the Contractor shall be converted at the monthly exchange rates published on the date of payment by the Central Bank of Sao Tome and Principe for Dobras, and the Financial Times of London for other currencies. The Contractor shall have the right to convert any currency into United States dollars and transfer any funds irrespective of currency into or outside of Sao Tome and Principe, free of any tax imposed by the State. It is understood that commercial banks may apply routine charges or fees on such transactions.

5.2	The Contractor shall prepare financial accounting and budget statements in accordance with the National Petroleum Agency’s prescribed reporting format.

5.3	With respect to any agreed sum arising out of the Contract owing between the Parties that is past due, any set-off pursuant to Clause ‎12 of the Contract shall be exercised by giving the other Party written notice thereof accompanied by sufficient description of the offsetting sums to allow the Parties to properly account thereof.

6.	Depreciation Schedule

6.1	Any Operating Costs, which are to be depreciated, shall be depreciated according to the following schedule:

---

1.

If Crude Oil is to be produced from the Contract Area, the Parties shall, in good faith and not fewer than twelve (12) months before the commencement of Production, as promptly notified by the Operator, negotiate and agree the terms of a lifting agreement based on the 2001 version of the AIPN Model Lifting Agreement to cover the offtake of Available Crude Oil produced under the Contract. Consistent with the Field Development Program and subject to terms of the Contract, the lifting agreement shall make provision for:

i)	The Delivery Point;

ii)

Operator’s regular periodic advice to the Parties of estimates of Available Crude Oil for succeeding periods, quantities of each type and/or grade of Crude Oil forecast to be produced consistent with the projected production schedule approved as part of the approved Work Program and each Party’s entitlement for as far ahead as is necessary for Operator and the Parties to plan lifting arrangements, taking into account each such Party’s entitlement at the beginning of, and scheduled liftings during, each period. Such advice shall also cover, for each type and/or grade of Crude Oil, the Available Crude Oil and deliveries for the preceding period, and overlifts and underlifts;

iii)	Nomination by the Parties to Operator of acceptance of their entitlements for the succeeding period, with such nominations in any one period being for each Party’s entire entitlement during that period, subject to overlifting limits, underlifting limits, operational tolerances and minimum economic cargo sizes or as the Parties may otherwise agree;

iv)	Timely mitigation of the effects of overlifts and underlifts;

v)	If offshore loading or a shore terminal for vessel loading is involved, vetting procedures relating to risks regarding tankers and procedures for demurrage and (if applicable) availability of berths;

vi)	Procedures to make available to each Party its nominated quantities of each type and grade of Crude Oil, and to ensure that each Party takes delivery as it is made available in each period of its respective entitlement of grades, gravities and qualities of Crude Oil from the Contract Area;

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

viii)	The right of the other Parties to sell an entitlement that a Party fails to nominate for acceptance under paragraph (iii) above or of which a Party fails to take delivery, in accordance with applicable agreed procedures, provided that such failure either breaches

---

2.

If a lifting agreement has not been agreed before the commencement of Production, the Operator shall act as lifting coordinator and the Parties shall be obligated to take and separately dispose of their entitlement to such Crude Oil (taking overlifts and underlifts into account) and in addition shall be bound by the principles set forth in this Schedule 3 until a lifting agreement is agreed by the Parties.

---

1.	Application

1.1	These Procurement Procedures form part of the Contract and shall be followed and observed in the performance of a Party’s obligations under the Contract.

1.2	These Procurement Procedures shall be applicable to all contracts and purchase orders whose values exceed the respective limits set forth in Article ‎1.5 below and which, pursuant thereto, require the prior approval of the National Petroleum Agency.

1.3	In the event of a conflict between the terms of these Procurement Procedures and the Contract, the terms of the Contract shall prevail.

1.4	These Procurement Procedures may be amended from time to time by the mutual agreement of the Parties.

1.5	The Contractor shall have the authority to enter into any contract or place any purchase order in its own name for the performance of services or the procurement of facilities, equipment, materials or supplies, provided that:

(a)	prior approval of the National Petroleum Agency shall be obtained for all foreign contracts and foreign purchase orders awarded to third parties where the cost exceeds $2,000,000 or in another currency equivalent during the Exploration Period and $3,000,000 or in another currency equivalent during the Production Period;

(b)	prior approval of the National Petroleum Agency shall be obtained for all local contracts and purchase orders where the cost exceeds $1,000,000 or in other currency equivalent in utilization at the location of the contract or purchase;

(c)

the amount set forth in paragraphs ‎(a), ‎(b) and ‎(h) of this Article ‎1.5 will be reviewed by the Parties whenever it becomes apparent to a Party that such limits create unreasonable constraints on Petroleum Operations or are no longer appropriate. In the event of a significant change in the exchange rate of local currencies to United States dollars compared to that which existed on the Effective Date, the Parties shall review the limits set forth in paragraphs ‎(a), ‎(b) and ‎(h) of this Article ‎1.5;

(d)	such contracts shall be entered into and such purchase orders shall be placed with third parties, which in the Contractor’s opinion are technically and financially able to properly perform their obligations;

(e)	procedures customary in the oil industry for securing best total value shall be utilized at all times;

---

(f)	the Contractor shall give preferences to sub-contractors that are companies organized under the laws of Sao Tome and Principe to the maximum extent possible and in accordance with the Petroleum Law;

(g)	the Contractor shall give preference to such goods which are manufactured or produced in Sao Tome and Principe or services rendered by nationals of Sao Tome and Principe in accordance with the Petroleum Law; and

(h)

the above limits and these procedures shall not apply to purchases made for warehouse replenishment stock not exceeding $1,500,000 or in another currency equivalent nor shall they apply to the purchase of tubulars of less than $1,500,000 or in another currency equivalent made in furtherance of planned drilling programs. Where there are United States dollars and other currency components of such purchases the total shall not exceed the equivalent of $1,500,000.

2.	Project Implementation Procedure

2.1	The Contractor, realizing the need for a project or contract to which these Procurement Procedures apply pursuant to Article ‎1.5, shall introduce it as part of the proposed Work Program and Budgets to be developed and submitted by the Contractor to the National Petroleum Agency pursuant to Clause ‎7 of the Contract.

(a)	The Contractor shall provide full information with respect to a project including the following:

(i)	a clear definition of the necessity and objectives of the project;

(ii)	the scope of the project; and

(iii)	the cost estimate thereof.

(b)	The Contractor shall transmit the project proposal along with the relevant related documentation to the National Petroleum Agency for consideration.

(c)	The National Petroleum Agency shall consider the proposal and the recommendation of the Contractor and whether to proceed with the Contractor’s proposal. If the National Petroleum Agency does not object to the project or any part thereof within thirty (30) days of the submission of the project, the project as proposed by the Contractor shall be deemed to have been approved.

2.2	The project as approved pursuant to Article ‎2.1 shall form part of the Work Program and Budget for Petroleum Operations. Such approval shall also constitute all authorizations by the National Petroleum Agency to the Contractor to initiate contracts and purchase orders relevant to the project proposal, subject to the provisions of Articles ‎1.5 and ‎3 of this Schedule 4.

---

2.3

The resources for the project design, supervision, and management shall first be drawn from the Contractor’s available in-house expertise. If the National Petroleum Agency approves the foregoing under the approved budget for the project it may be performed by the Contractor. Competent Sao-Tomean engineering and design companies shall be given priority over other third parties by the Contractor for such projects in accordance with the Petroleum Law. Staff of the National Petroleum Agency who shall be seconded pursuant to Clause ‎14 of the Contract shall be fully involved in the project design, supervision and management.

2.4	After approval of the project and its budget, the Contractor shall prepare and transmit to the National Petroleum Agency complete details of the project including the following:

(a)	project definition;

(b)	project specification;

(c)	flow diagrams;

(d)	projects implementation schedule showing all phases of the project including engineering design, material and equipment procurement, inspection, transportation, fabrication, construction, installation, testing and commissioning;

(e)	major equipment specifications;

(f)	cost estimate of the project;

(g)	an activity status report; and

(h)	copies of all approved authorization for expenditure (AFEs).

3.	Contract Tender Procedure

3.1	The following tender procedure shall apply to works contracts and contracts for the supply of services and supply contracts not directly undertaken by the Contractor or an Affiliate:

(a)

The Contractor shall maintain a list of approved sub-contractors for the purpose of contracts for Petroleum Operations, (the “Approved Contractors’ List”). The National Petroleum Agency shall have the right to nominate sub-contractors to be included in and excluded, for good cause, from the list. The National Petroleum Agency and the Contractor shall be responsible for pre-qualifying any sub-contractor to be included in the Approved Contractors’ List.

(b)	Sub-contractors included in the Approved Contractors’ List shall be both local and/or overseas sub-contractors and entities. Where required by law, they shall be registered with the National Petroleum Agency.

---

(c)

When a contract is to be bid, the Contractor shall present a list of proposed bidders to the National Petroleum Agency for concurrence not less than fifteen (15) working days before the issuance of invitations to bid to prospective subcontractors. The National Petroleum Agency may propose additional names to be included in and excluded, for good cause, from the list of proposed bidders. Contract specifications shall be in Portuguese and/or English and in a recognized format used in the international petroleum industry.

(d)	If the National Petroleum Agency has not responded within fifteen (15) working days from the date of the official receipt following the presentation of the list of proposed bidders as aforesaid, the list shall be deemed to have been approved.

3.2	The Contractor shall, for contracts above the limits set forth in Article ‎1.5, establish a Tender Committee who shall be responsible for pre-qualifying bidders, sending out bid invitations, receiving and evaluating bids and determining successful bidders to whom contracts shall be awarded.

3.3	Before a contract is signed, the Contractor shall send analysis and recommendations of bids received and opened by the Tender Committee to the National Petroleum Agency for approval within thirty (30) days from the date of the official receipt. Approval of the Contractor’s recommendations shall be deemed to have been given if the National Petroleum Agency has not responded within such period.

3.4

Prospective vendors and/or sub-contractors for work estimated in excess of $2,000,000 for the Exploration Period and $3,000,000 for the Production Period or their equivalent shall submit the commercial summary of their bids to the Contractor in two (2) properly sealed envelopes, one addressed to the Contractor and one addressed to the National Petroleum Agency. The Contractor shall retain one and send one to the National Petroleum Agency properly enveloped, sealed and addressed to National Petroleum Agency, together with the recommendation provided for in Article ‎3.3.

3.5	In all cases, the Contractor shall make full disclosure to the National Petroleum Agency of its relationship, if any, with any sub-contractors.

3.6	These Procurement Procedures may be waived and the Contractor may negotiate directly with a sub-contractor:

(a)	in emergency situations provided that it promptly informs the National Petroleum Agency of the outcome of such negotiations; and

(b)	in work requiring unusually specialized skills or when special circumstances warrant, upon the approval of the National Petroleum Agency, which approval shall not be unreasonably withheld.

---

4.	General Conditions of Contracts

4.1	The payment terms, to the extent viable, shall provide that:

(a)	Contractor is required to include in the services contracts, terms and condition that guarantees the appropriate security for the sub-contractor’s performance, including but not limited to for example, industry standard warranties, retention fees or other guarantees; and

(b)	a provision shall be made for appropriate withholding tax as may be applicable.

4.2	The governing law of all agreements signed with sub-contractors shall be, to the extent feasible, Sao-Tomean law.

4.3	Sao-Tomean law shall apply to all sub-contractors performing work in the Territory of Sao Tome and Principe. In as far as practicable, they shall use Sao-Tomean resources both human and material in accordance with the Petroleum Law.

4.4	Each contract shall provide for early termination where necessary and the Contractor shall use all reasonable endeavors to obtain a termination provision with minimal penalty.

4.5	Sub-contractors shall provide, in the case of a foreign sub-contractor, that the local part of the work, in all cases, shall be performed by the sub-contractor’s local subsidiary whenever possible.

5.	Materials and Equipment Procurement

5.1	The Contractor may, through itself or its Affiliates, procure materials and equipment subject to conditions set forth in this Article ‎5 and these Procurement Procedures.

5.2	The provisions of this Article ‎5 shall not apply to lump sum or turnkey contracts/projects.

5.3	In ordering the equipment or materials, the Contractor shall obtain from vendors / manufacturers such rebates and discounts and such warranties and guarantees that such discounts, guarantees and all other grants and responsibilities shall be for the benefit of Petroleum Operations.

5.4	The Contractor shall:

(a)	by means of established policies and procedures ensure that its procurement efforts provide the best total value, with proper consideration of safety, quality, services, price, delivery and Operating Costs to the benefit of Petroleum Operations;

(b)	maintain appropriate records, which shall be kept up to date, clearly documenting procurement activities;

(c)	provide quarterly and annual inventory of materials and equipment in stock;

---

(d)	provide a quarterly listing of excess materials and equipment in its stock list to the National Petroleum Agency; and

(e)	check the excess materials and equipment listings from other companies operating in the Territory of Sao Tome and Principe, to identify materials available in the country prior to initiating any foreign purchase order.

5.5	The Contractor shall initiate and maintain policies and practices, which provide a competitive environment and climate amongst local and overseas suppliers. Competitive quotation processes shall be employed for all local procurement where the estimated value exceeds the equivalent of $1,000,000 as follows:

(a)	fabrication, wherever practicable shall be done locally. To this effect, the Petroleum Operations recognize and shall accommodate local offers at a premium not exceeding ten percent (10%); and

(b)

subject to Article ‎3.1, the Contractor shall give preferences to Sao-Tomean indigenous sub-contractors in the award of contracts. Contracts within the agreed financial limit of the Contractor shall be awarded to only competent Sao-Tomean indigenous sub-contractors possessing the required skill/capability for the execution of such contracts and the Contractor shall notify the National Petroleum Agency accordingly.

5.6

Analysis and recommendation of competitive quotations of a value exceeding the limits established in Article ‎1.5 shall be transmitted to the National Petroleum Agency for approval before a purchase order is issued to the selected vendor/manufacturer. Approval shall be deemed to have been given if a response has not been received from the National Petroleum Agency within thirty (30) days of receipt by the National Petroleum Agency of the said analysis and recommendations.

5.7	Pre-inspection of rig, equipment and stock materials of reasonable value shall be jointly carried out at the factory site and/or quay before shipment at the request of either Party.

6.	Project Monitoring

6.1	The Contractor shall provide a project report to the National Petroleum Agency.

6.2	For major projects exceeding $5,000,000 or its equivalent, the Contractor shall provide to the National Petroleum Agency a detailed quarterly report which shall include:

(a)	approved budget total for each project;

(b)	expenditure on each project;

(c)	variance and explanations;

(d)	number and value of construction change orders;

---

(e)	bar chart of schedule showing work progress and work already completed and schedule of mile-stones and significant events; and

(f)	summary of progress during the reporting period, summary of existing problems, if any, and proposed remedial action, anticipated problems, and percentage of completion,

6.3	In the case of an increase in cost in excess of five percent (5%) of the project, the Contractor shall promptly notify the National Petroleum Agency and obtain necessary budget approval, in accordance with Article ‎2.6(c) of Schedule 2.

6.4	Not later than six (6) months following the physical completion of any major project whose cost exceeds $5,000,000 or its equivalent, the Contractor shall prepare and deliver to the National Petroleum Agency a project completion report which shall include the following:

(a)	a cost performance of the project in accordance with the work breakdown at the commencement of the project;

(b)	the significant variation in any item or sub-item;

(c)	a summary of problems and unexpected events encountered during the project; and

(d)	a list of excess materials.

---

1.	The Contractor shall call for a bid duly advertised, for example, online, in a national newspaper, national radio station or national television station for all assets not directly related to Petroleum Operations whose book values are $10,000 and over, irrespective of length of ownership of such assets.

2.	All assets as described in paragraph ‎1 above, with book values of $10,000 and over shall be sold with proof of highest bid, subject to the highest bidder not being related to the Contractor.

3.	Sale of assets to the Contractor’s Affiliate shall be brought to the express attention of the National Petroleum Agency and only with the written consent given by the National Petroleum Agency.

4.	The Contractor may dispose of all assets as described in paragraph ‎1 above, with book values less than $10,000 in the best manner available to the Contractor on the basis of the highest price available.

5.	The Contractor shall sell, in customary industry manner, all assets directly related to Petroleum Operations, irrespective of length of ownership of such assets.

6.	This Sale of Assets Procedure may be amended from time to time by the mutual agreement of the Parties.

---

(1)	[THE GUARANTOR], a company organized and existing under the laws of [insert JURISDICTION], and having its registered office at [INSERT ADDRESS] (the Guarantor); and

(2)	THE DEMOCRATIC REPUBLIC OF SAO TOME AND PRINCIPE (the “State”), represented for the purposes of this Guarantee by the National Petroleum Agency.

1.	Definitions and Interpretation

2.	Scope of this Guarantee

---

(a)	the liabilities of the Company to the State;

(b)	Company’s paying interest share of ten million Dollars ($10,000,000) during the Exploration Period, as may be extended in accordance with the Contract; and

(c)	Company’s paying interest share of two hundred and fifty million Dollars ($250,000,000) during the Production Period.

3.	Waiver of Notice, Agreement to All Modifications

4.	Absolute and Unconditional Guarantee

5.	No Discharge of Guarantor

6.	No Prior Action Required

7.	Cumulative Rights

---

8.	Continuing Guarantee

9.	Notice of Demand

10.	Assignment

11.	Subrogation

12.	Payment of Expenses

13.	Governing Law and Arbitration

---

14.	Severability of Provisions

15.	Confidentiality

---

---

(1)	KOSMOS ENERGY FINANCE INTERNATIONAL a company incorporated under the laws of the Cayman Islands with registered number 253656 and having its registered office at P.O. Box 32322, 4th Floor, Century Yard, Cricket Square, Elgin Avenue, George Town, Grand Cayman KY1-1209, Cayman Islands (the “Original Borrower”);

(2)	KOSMOS ENERGY SENEGAL a company incorporated under the laws of the Cayman Islands with registered number 290078 and having its registered office at P.O. Box 32322, 4th Floor, Century Yard, Cricket Square, Elgin Avenue, George Town, Grand Cayman KY1-1209, Cayman Islands (“KES”);

(3)	KOSMOS ENERGY MAURITANIA a company incorporated under the laws of the Cayman Islands with registered number 266444 and having its registered office at P.O. Box 32322, 4th Floor, Century Yard, Cricket Square, Elgin Avenue, George Town, Grand Cayman KY1-1209, Cayman Islands (“KEM” and together with KES, the “New Borrowers”, and together with KES and the Original Borrower, the “Borrowers”);

(4)	KOSMOS ENERGY INVESTMENTS SENEGAL LIMITED a company incorporated under the laws of England and Wales with registered number 10520822 and having its registered office at 6th Floor, 65 Gresham Street, London EC2V 7NQ, UK (“KEISL”);

(5)	KOSMOS ENERGY EQUATORIAL GUINEA a company a company incorporated under the laws of the Cayman Islands with registered number 269135 and having its registered office at P.O. Box 32322, 4th Floor, Century Yard, Cricket Square, Elgin Avenue, George Town, Grand Cayman KY1-1209, Cayman Islands; (“KEEG” and together with the Original Borrower, KES, KEISL and KEM, the “New Guarantors”);

(6)	KOSMOS ENERGY OPERATING a company incorporated under the laws of the Cayman Islands with registered number 231417 and having its registered office at P.O. Box 32322, 4th Floor, Century Yard, Cricket Square, Elgin Avenue, George Town, Grand Cayman KY1-1209, Cayman Islands (“KEO”);

(7)	KOSMOS ENERGY INTERNATIONAL a company incorporated under the laws of the Cayman Islands with registered number 218274 and having its registered office at P.O. Box 32322, 4th Floor, Century Yard, Cricket Square, Elgin Avenue, George Town, Grand Cayman KY1-1209, Cayman Islands (“KEI”);

(8)	KOSMOS ENERGY DEVELOPMENT a company incorporated under the laws of the Cayman Islands with registered number 225879 and having its registered office at P.O. Box 32322, 4th Floor, Century Yard, Cricket Square, Elgin Avenue, George Town, Grand Cayman KY1-1209, Cayman Islands (“KED”);

(9)	KOSMOS ENERGY GHANA HC a company incorporated under the laws of the Cayman Islands with registered number 135710 and having its registered office at P.O. Box 32322, 4th Floor, Century Yard, Cricket Square, Elgin Avenue, George Town, Grand Cayman KY1-1209, Cayman Islands (“KEG”, and together with KEO, KEI and KED, the “Original Guarantors”);

---

(10)	KOSMOS ENERGY HOLDINGS a company incorporated under the laws of the Cayman Islands with registered number 133483 and having the registered office at P.O. Box 32322, 4th Floor, Century Yard, Cricket Square, Elgin Avenue, George Town, Grand Cayman KY1 1209, Cayman Islands (the “Chargor”);

(11)	BNP PARIBAS in its capacity as agent of the Finance Parties under the Facility Agreement (the “Retiring Facility Agent”);

(12)	BNP PARIBAS in its capacity as agent of the Secured Parties on the terms set out in the Intercreditor Agreement (the “Security Agent”);

(13)	BNP PARIBAS as the Intercreditor Agent;

(14)	STANDARD CHARTERED BANK in its capacity as the successor Facility Agent following the amendment and restatement of the Facility Agreement (the “Successor Facility Agent”);

(15)	STANDARD CHARTERED BANK as onshore account bank;

(16)	HSBC BANK PLC as offshore account bank in London (“HSBC”);

(17)	SOCIETE GENERALE, LONDON BRANCH as the Technical Bank;

(18)	SOCIETE GENERALE, LONDON BRANCH as the Modelling Bank;

(19)	THE FINANCIAL INSTITUTIONS listed in ‎Part 1 (Exiting Lenders) of ‎Schedule 3 (Lenders) as exiting lenders (the “Exiting Lenders”);

(20)	THE FINANCIAL INSTITUTIONS listed in ‎Part 2 (New Lenders) of ‎Schedule 3 (Lenders) as new lenders (the “New Lenders”);

(21)	THE FINANCIAL INSTITUTIONS listed in ‎Part 3 (Continuing Lenders) of ‎Schedule 3 (Lenders) as continuing lenders (the “Continuing Lenders”);

(22)	THE FINANCIAL INSTITUTIONS listed in ‎Part 1 (Continuing Hedging Counterparties) of ‎Schedule 4 (Hedging Counterparties) as continuing Hedging Counterparties; (the “Continuing Hedging Counterparties”);

(23)	THE FINANCIAL INSTITUTIONS listed in ‎Part 2 (New Hedging Counterparties) of ‎Schedule 4 (Hedging Counterparties) as new Hedging Counterparties (the “New Hedging Counterparties”);

(24)	ABSA BANK LIMITED (ACTING THROUGH ITS CORPORATE AND INVESTMENT BANKING DIVISION), BNP PARIBAS, CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK, HSBC BANK PLC, SOCIÉTÉ GÉNÉRALE, LONDON BRANCH AND STANDARD CHARTERED BANK as the existing mandated lead arrangers of the Facility; and

(25)	ING BELGIUM SA/NV, NATIXIS, N.B.S.A. LIMITED, THE STANDARD BANK OF SOUTH AFRICA LIMITED, ISLE OF MAN BRANCH and SUMITOMO MITSUI BANKING CORPORATION EUROPE LIMITED as the new mandated lead arrangers of the Facility.

---

(A)

The Original Borrower, Original Guarantors, the Retiring Facility Agent and Security Agent, amongst others, entered into a facility agreement dated 28 March 2011, as amended on 14 February 2012, 27 April 2012, 25 June 2012 and 3 April 2013 and amended and restated on 23 November 2012, 14 January, 2014 and 14 March 2014 and as further amended on 30 September 2014 and as further amended on 1 October 2015 (the “Facility Agreement”).

(B)	The Facility Agreement is to be amended and restated pursuant to this Deed to (i) contemplate the inclusion of EG Block Assets and the Greater Tortue Block Assets as Borrowing Base Assets, (ii) to include KES and KEM as New Borrowers and the Original Borrower, KEEG, KES, KEISL and KEM as New Guarantors and (iii) replace the Retiring Facility Agent with the Successor Facility Agent.

(C)	The parties hereto have agreed to amend the terms of the Facility Agreement and the Intercreditor Agreement as set out in Clause ‎4 (Amendment and Restatement of Facility Agreement) and Clause ‎5 (Amendment of the Intercreditor Agreement) of this Deed.

---

1.	INTERPRETATION

1.1.	Incorporation of defined terms

(A)	Unless a contrary indication appears herein, a term defined in the Restated Facility Agreement (as defined below), the Intercreditor Agreement or any other Finance Document (as amended from time to time) has the same meaning in this Deed.

(B)	The principles of construction and interpretation set out under clause 1.2 (Construction of particular terms) and clause 1.3 (Interpretation) of the Restated Facility Agreement and clause 1.2 (Construction) of the Intercreditor Agreement shall have effect as if set out in this Deed.

1.2.	Definitions

(A)	each of the “Assigned Documents” as defined in the Supplemental Assignment Security Documents referred to in paragraphs (A) to (D) (inclusive) of that definition; and

(B)	“Assigned Property” as defined in the Supplemental Assignment Security Document referred to in paragraph (E) of that definition.

(A)	the fee letter between the Original Borrower and the Documentation Bank dated on or around the date of this Deed;

(B)	the fee letter between the Original Borrower and the Successor Facility Agent dated on or around the date of this Deed;

(C)	the fee letter between the Original Borrower and the Technical and Modelling Bank dated on or around the date of this Deed;

(D)	the fee letter between the Original Borrower and ABSA Bank Limited (acting through its corporate and investment banking division) dated on or around the date of this Deed;

(E)	the fee letter between the Original Borrower and Bank of America Merrill Lynch International Limited dated on or around the date of this Deed;

---

(F)	the fee letter between the Original Borrower and Bank of Montreal, London Branch dated on or around the date of this Deed;

(G)	the fee letter between the Original Borrower and The Bank of Tokyo-Mitsubishi UFJ, Ltd. dated on or around the date of this Deed;

(H)	the fee letter between the Original Borrower and Citibank N.A., London Branch dated on or around the date of this Deed;

(I)	the fee letter between the Original Borrower and Crédit Agricole Corporate and Investment Bank dated on or around the date of this Deed;

(J)	the fee letter between the Original Borrower and HSBC Bank Plc dated on or around the date of this Deed;

(K)	the fee letter between the Original Borrower and ING Belgium SA/NV dated on or around the date of this Deed;

(L)	the fee letter between the Original Borrower and Natixis dated on or around the date of this Deed;

(M)	the fee letter between the Original Borrower and N.B.S.A. Limited dated on or around the date of this Deed;

(N)	the fee letter between the Original Borrower and Société Générale, London Branch dated on or around the date of this Deed;

(O)	the fee letter between the Original Borrower and The Standard Bank of South Africa Limited, Isle of Man Branch dated on or around the date of this Deed;

(P)	the fee letter between the Original Borrower and Standard Chartered Bank dated on or around the date of this Deed; and

(Q)	the fee letter between the Original Borrower and Sumitomo Mitsui Banking Corporation Europe Limited dated on or around the date of this Deed.

---

(A)	the English law governed supplemental security assignment and debenture between KED and the Security Agent;

(B)	the English law governed supplemental security assignment and debenture between KEI and the Security Agent;

(C)	the English law governed supplemental security assignment and debenture between KEO and the Security Agent;

(D)	the Supplemental Borrower Offshore Security Assignment; and

(E)	the English law governed supplemental security assignment between KEI, KEO and the Security Agent.

1.3.	Scope and designation

2.	REQUISITE CONSENT

3.	EFFECTIVE DATE

(i)	the provisions of this Deed (other than Clause ‎1 (Interpretation), Clause ‎3 (Effective Date), Clause ‎21 (Miscellaneous), Clause ‎22 (Execution as a Deed) and Clause ‎23 (Governing Law)) shall automatically terminate; and

(ii)	the Retiring Facility Agent shall return any amounts paid to it by any party pursuant to Clause ‎9 (Utilisation under the Restated Facility Agreement) of this Deed.

4.	AMENDMENT AND RESTATEMENT OF FACILITY AGREEMENT

---

5.	AMENDMENT OF THE INTERCREDITOR AGREEMENT

(A)	by amending the definition of “Acceleration Event” in the Intercreditor Agreement, by deleting the words “or clause 29.18 (Acceleration - IFC and the Lenders)” immediately after the words “clause 29.17 (Acceleration - all Lenders)”;

(B)	by deleting clause 6.3 (Exclusions) of the Intercreditor Agreement in its entirety and replacing it with:

“6.3	Exclusions

(C)	by including the clause set out in ‎Schedule 6 (Parallel Obligation (Covenant to pay the Security Agent) to this Deed as new clause 11.23 (Parallel Obligation (Covenant to pay the Security Agent) of the Intercreditor Agreement; and

(D)	by deleting clause 21 (Governing law) of the Intercreditor Agreement in its entirety and replacing it with:

“21	GOVERNING LAW

6.	SCHEDULE OF INSURANCES

7.	FACILITY CONTINUATION

(A)	The Facility Agreement, the Intercreditor Agreement and any documents executed or entered into pursuant thereto, where applicable as amended and restated by this Deed, shall continue in full force and effect save as expressly amended and restated pursuant to this Deed.

(B)	This Deed shall not prejudice or affect any liability of any parties which may have arisen under the Finance Documents prior to the Effective Date or waive or modify any obligation thereunder to the extent that such obligation was to be performed or observed at any time prior to the Effective Date.

---

8.	WAIVED NOTICE PERIODS FOR PREPAYMENT

9.	UTILISATION UNDER THE RESTATED FACILITY AGREEMENT

(A)

Notwithstanding clause 6.2 (Delivery of a Utilisation Request) of the Restated Facility Agreement, a Borrower may, no later than 10:00 a.m. London time on the third Business Day before the intended Effective Date (or such other time as all the Lenders under the Restated Facility Agreement may agree), submit to the Retiring Facility Agent a signed but undated Utilisation Request (under and as defined in the Restated Facility Agreement) for any Initial Loan thereunder to be made on the proposed Effective Date.

(B)	Each Borrower hereby authorises the Retiring Facility Agent to input any missing information required to complete a Utilisation Request submitted pursuant to paragraph (A) above (including the amount of the Utilisation), for the purposes of making the relevant Initial Loan under the Restated Facility Agreement on the proposed Effective Date.

(C)

Provided that the relevant Borrower has complied with paragraph (A) above with respect to any Initial Loan under the Restated Facility Agreement, the Retiring Facility Agent shall confirm to each Lender under the Restated Facility Agreement the amount of its participation in that Initial Loan by 5:00 p.m. (London time) on the second Business Day before the intended Effective Date (or such other time as all the Lenders under the Restated Facility Agreement may agree).

(D)	Notwithstanding anything in clause 12 (Interest Periods) of the Restated Facility Agreement, the first Interest Period for the Initial Loan shall commence on the Effective Date and shall end on 1 March 2018. All subsequent Interest Periods shall be determined in accordance with clause 12 (Interest Periods) of the Restated Facility Agreement.

(E)	If all the conditions relating to the availability of the same have been met, each Lender under the Restated Facility Agreement shall make available its participation in each Initial Loan under the Restated Facility Agreement on the Effective Date.

(F)

The Original Borrower shall (or shall procure that an Obligor will), within three Business Days of demand, indemnify each Finance Party (as such term is defined in the Restated Facility Agreement) against any cost, loss or liability incurred by that Finance Party as a result of funding, or making arrangements to fund, its participation in a Utilisation requested by a Borrower in a Utilisation Request submitted in accordance with this Clause ‎9 but not made by reason of the operation of any one or more of the provisions of this Deed.

10.	NEW OBLIGOR ACCESSION TO INTERCREDITOR AGREEMENT

(A)	Each New Obligor and the Security Agent agree that the Security Agent shall hold:

---

(i)	any Security in respect of Liabilities created or expressed to be created pursuant to the Finance Documents;

(ii)	all proceeds of that Security; and

(iii)

all obligations expressed to be undertaken by that New Obligor to pay amounts in respect of the Liabilities to the Security Agent as trustee for the Secured Parties (in the Finance Documents or otherwise) and secured by the Transaction Security together with all representations and warranties expressed to be given by that New Obligor (in the Finance Documents or otherwise) in favour of the Security Agent as trustee for the Secured Parties,

(B)	Each New Obligor confirms that it intends to be party to the Intercreditor Agreement as an Obligor, undertakes to perform all the obligations expressed to be assumed by an Obligor under the Intercreditor Agreement and agrees that it shall be bound by all the provisions of the Intercreditor Agreement as if it had been an original party to the Intercreditor Agreement.

11.	NEW LENDER ACCESSION TO INTERCREDITOR AGREEMENT

(A)	Subject to and in accordance with clause 30 (Changes to the Lenders) of the Restated Facility Agreement, on the Effective Date, each New Lender accedes to the Intercreditor Agreement as a Lender (as defined in the Restated Facility Agreement) and agrees to be bound by the terms of the Intercreditor Agreement as a Lender.

(B)

In consideration of each New Lender being accepted as a Lender for the purposes of the Intercreditor Agreement, each New Lender confirms to each relevant party to this Deed that, as from the Effective Date, it intends to be a party to the Intercreditor Agreement as a Lender and undertakes to perform all the obligations expressed in the Intercreditor Agreement to be assumed by a Lender and agrees that it shall be bound by all the provisions of the Intercreditor Agreement, as if it had been an original party to the Intercreditor Agreement.

12.	NEW BORROWERS

13.	EXITING LENDERS

14.	RESIGNATION OF THE RETIRING FACILITY AGENT

(A)	Subject to the terms of this Agreement, the Retiring Facility Agent hereby provides its notice of resignation to the other Finance Parties and the Original Borrower.

---

(B)	With effect from the Effective Date in accordance with clause 32.12 (Resignation of an Agent) of the Restated Facility Agreement:

(i)	the Retiring Facility Agent shall resign in its capacity as Facility Agent under the Finance Documents;

(ii)	the Majority Lenders shall appoint the Successor Facility Agent as the successor Facility Agent for all purposes under the Finance Documents; and

(iii)	the Successor Facility Agent accepts such appointment.

(C)	The Retiring Facility Agent shall, at its own cost, make available to the Successor Facility Agent such documents and records and provide such assistance as the Successor Facility Agent may reasonably request for the purposes of performing its functions as Facility Agent under the Finance Documents.

(D)

In connection with the resignation and appointment referred to in this Clause ‎14 and Clause ‎15 (Successor Facility Agent Accession to Intercreditor Agreement) of this Deed, the Retiring Facility Agent, to the extent that all or any part of the same is not transferred to the Successor Facility Agent by operation of law or pursuant to the terms of any Finance Document, on and with effect from the Effective Date:

(i)	(assigns and transfers absolutely to the Successor Facility Agent all its rights, title and interest in and under the Finance Documents; and

(ii)	is discharged from any further obligations as Facility Agent under or in connection with the Finance Documents, other than any obligations arising before the Effective date which have not been performed by it on or before the Effective Date,

(E)	Upon appointment of a successor, the Retiring Facility Agent shall continue to remain entitled to the benefit of clauses 17.3 (Indemnity to the Agents) (and 32 (Role of the Agents and the Arranger) of the Restated Facility Agreement.

15.	SUCCESSOR FACILITY AGENT ACCESSION TO INTERCREDITOR AGREEMENT

(A)	On the Effective Date, the Successor Facility Agent accedes to each of the Finance Documents to which the Retiring Facility Agent is a party (the “Relevant Finance Documents”) as Facility Agent and agrees to be bound by the terms of the Relevant Finance Documents as the Facility Agent.

(B)

In consideration of the Successor Facility Agent being accepted as the Facility Agent for the purposes of the Relevant Finance Documents, the Successor Facility Agent confirms to each relevant party to this Deed that, as from the Effective Date, it intends to be a party to the Relevant Finance Documents as the Facility Agent and undertakes to perform all the obligations expressed in the Relevant Finance Documents to be assumed by the Facility Agent and agrees that it shall be bound by all the provisions of the Relevant Finance Documents, as if it had been an original party to the Relevant Finance Documents.

---

(C)	In connection with the resignation and appointment referred to in Clause ‎14 (Resignation of the Retiring Facility Agent) and this Clause ‎15 of this Deed, the Successor Facility Agent, on and with effect from the Effective Date:

(i)	agrees to and accepts the transfers and assignments made to it by the Retiring Facility Agent under Clause ‎14(D) of this Deed other than, for the avoidance of doubt, any obligations arising up to (and including) the Effective Date which have not been performed by the Retiring Agent on or before the Effective Date; and

(ii)	is entitled to all the powers and protections which the Finance Documents confer on the Facility Agent.

16.	NEW HEDGING COUNTERPARTY ACCESSION TO INTERCREDITOR AGREEMENT

(A)	On the Effective Date, each New Hedging Counterparty accedes to the Intercreditor Agreement as a Hedging Counterparty and agrees to be bound by the terms of the Intercreditor Agreement as a Hedging Counterparty.

(B)

In consideration of each New Hedging Counterparty being accepted as a Hedging Counterparty for the purposes of the Intercreditor Agreement, each New Hedging Counterparty confirms to each relevant party to this Deed that, as from the Effective Date, it intends to be a party to the Intercreditor Agreement as a Hedging Counterparty and undertakes to perform all the obligations expressed in the Intercreditor Agreement to be assumed by a Hedging Counterparty and agrees that it shall be bound by all the provisions of the Intercreditor Agreement, as if it had been an original party to the Intercreditor Agreement.

17.	REPRESENTATIONS

18.	FEES AND EXPENSES

19.	CONDITIONS PRECEDENT

(A)	Provision of this Deed, duly executed by each of the parties to it.

---

(B)	Provision of the Fee Letters, duly executed by each of the parties to them.

(C)	Evidence that each Finance Party has completed all “know your customer” and similar checks that it is required to carry out.

(D)	Provision of each Novation Agreement, duly executed by each of the parties to them (other than the Successor Facility Agent).

(E)	Provision of each New Security Document, duly executed by each of the parties to them.

(F)	Provision of the KEG Offshore Security Assignment, duly executed by KEG.

(G)	Provision of the KEEG Offshore Project Accounts Agreement, duly executed by all the parties to it other than the Successor Facility Agent.

(H)	Provision of legal due diligence reports:

(i)	prepared by Herbert Smith Freehills LLP in respect of the English law governed Project Agreements relating to the EG Block Assets and the Greater Tortue Block Assets (Mauritania);

(ii)	prepared by Vieira de Almeida in respect of the EG Block Assets; and

(iii)	prepared by Mine Abdoullah in respect of the Greater Tortue Block Assets (Mauritania).

(I)	Provision of a certified copy of each Material Contract.

(J)

Provision by each Obligor and the Chargor of a certified copy of its constitutional documents (or certification that the same have not changed since last provided, and if applicable, confirmation by each of KEFI, KEO, KEI, KED, KEH, KEG and the Chargor that the copies of the constitutional documents most recently delivered to the Retiring Facility Agent on 26 March 2014 have not been amended and remain in full force and effect as at a date no earlier than the date of this Deed), a certified copy of its certificates of incorporation (or equivalent) and, as applicable, a copy of its certificate of good standing.

(K)	Provision of a certified copy of a resolution of the board of directors of each Obligor and the Chargor approving the terms of, and the transactions contemplated by, the Finance Documents to which it is a party and resolving that one or more specified persons execute the Finance Documents to which it is a party and any other documents and notices required in connection with the Finance Documents.

(L)	Provision of a copy of a resolution signed by all the holders of the issued shares in KEISL, approving the terms of, and the transactions contemplated by, the Finance Documents to which KEISL is a party.

(M)	Provision by each Obligor and the Chargor of the specimen signatures of the persons authorised to execute the Finance Documents to which it is a party and all other documents and notices required in connection with the Finance Documents.

(N)	A certificate of an Authorised Signatory of each Obligor and the Chargor certifying that:

---

(i)	borrowing or guaranteeing or securing, as appropriate, the Total Commitments would not cause any borrowing, guarantee, security or similar limit binding on it to be exceeded;

(ii)	each relevant copy document listed in this clause ‎19 is correct, complete and in full force and effect as at a date no earlier than the date of this Deed and includes a certification as to solvency; and

(iii)	complete and up-to-date copies of any Project Agreement to which it is a party, including all amendments in relation thereto, have been delivered to the Agents.

(O)	In respect of KEISL, either:

(i)	a certificate of an authorised signatory of the Original Borrower certifying that:

(a)	each member of the KEL Group has complied within the relevant timeframe with any notice it has received pursuant to Part 21A of the Companies Act 2006 from KEISL; and

(b)	no “warning notice” or “restrictions notice” (in each case as defined in Schedule 1B of the Companies Act 2006) has been issued in respect of those shares,

(ii)	a certificate of an authorised signatory of the Original Borrower certifying that KEISL is not required to comply with Part 21A of the Companies Act 2006.

(P)	Receipt by the Retiring Facility Agent of appropriate legal opinions from Walkers, Herbert Smith Freehills LLP and Bentsi-Enchill, Letsa & Ankomah.

(Q)	Provision of evidence that KEISL has been appointed as process agent by each Obligor and the Chargor.

(R)	Provision of a copy of all notices required to be sent under the New Security Documents executed by the relevant Obligors.

(S)	Provision of an undated copy of all notices required to be sent under the KEG Offshore Security Assignment executed by KEG.

(T)	All share charges entered into pursuant to a New Security Document are perfected and fully valid and, where applicable, provision of:

(i)	share certificates and signed and undated stock or share transfer forms to the Security Agent in respect of share charges entered into pursuant to a New Security Document;

---

(ii)	certified copy registers of members to the Security Agent in relation to companies whose shares have been charged pursuant to a New Security Document;

(iii)	certified copy registers of mortgages and charges to the Security Agent in relation to each Obligor incorporated in the Cayman Islands and which is granting a share charge pursuant to a New Security Document;

(iv)	letters of undertaking from the companies whose shares are being charged pursuant to a New Security Document; and

(v)	validly adopted shareholders’ resolutions authorising the amendment to the articles of association of the companies whose shares are being, or will be, secured pursuant to a New Security Document or a Greater Tortue Security Document.

(U)	KEO shall provide a copy of its most recent audited consolidated accounts of the Group.

(V)	Provision of a copy of any other Authorisation or other document, opinion or assurance which the Retiring Facility Agent considers to be necessary or desirable in connection with the entry into and performance of the transactions contemplated by this Deed or for the validity and enforceability of any Finance Document.

(W)	Evidence that the fees, costs and expenses then due from any Obligor to any Finance Party have been paid or will be paid by the Effective Date.

(X)	Kosmos shall have paid to the Retiring Facility Agent for the account of each Lender an amount which is, in aggregate, equal to:

(i)	any Break Costs payable to that Lender as at the Effective Date pursuant to clause 13.4 (Break Costs) of the Facility Agreement;

(ii)	any accrued Commitment Fee, to the extent owed to that Lender; and

(iii)	the accrued interest payable to that Lender as at the Effective Date pursuant to clause 11.3 (Payment of Interest) and clause 30.9 (Pro rata interest settlement) of the Facility Agreement.

(Y)	The Retiring Facility Agent shall have paid an amount to each Lender equal to the relevant amounts referred to it paragraph (X) above.

20.	CONDITIONS SUBSEQUENT

(A)	each Novation Agreement; and

(B)	the KEEG Offshore Project Accounts Agreement.

---

21.	MISCELLANEOUS

21.1.	Construction

(A)	With effect from the Effective Date, references to the Facility Agreement, however expressed, will be read and construed as references to the Restated Facility Agreement.

(B)	With effect from the Effective Date, references to the Schedule of Insurances, however expressed, will be read and construed as references to the Schedule of Insurances as amended and restated in the form set out in ‎Schedule 2 (Schedule of Insurances) to this Deed.

(C)	With effect from the Effective Date, references to the Intercreditor Agreement, however expressed, will be read and construed as references to the Intercreditor Agreement as amended and restated pursuant to Clause ‎5 (Amendment of the Intercreditor Agreement) of this Deed.

21.2.	Incorporation of terms

21.3.	Confirmation of Guarantees and Security

(A)	subject to the terms of this Deed, the Facility Agreement, the Intercreditor Agreement, the Schedule of Insurances and the other Finance Documents will remain in full force and effect, and:

(i)	the Facility Agreement and this Deed will be read and construed as one document;

(ii)	the Schedule of Insurances and this Deed will be read and construed as one document; and

(iii)	the Intercreditor Agreement and this Deed will be read and construed as one document;

(B)

the guarantee and indemnity obligations set out under Clause 25 (Guarantee and Indemnity) of the Facility Agreement and Clause 25 (Guarantee and Indemnity) of the Restated Facility Agreement (the “Guarantee and Indemnity Obligations”) shall remain in full force and effect notwithstanding the designation of any new document as a Finance Document or any additions, amendments, novation, substitution, or supplements of or to the Finance Documents and the imposition of any amended, new or more onerous obligations under the Finance Documents in relation to any Obligor and that the Guarantee and Indemnity Obligations extend to

---

(C)	the Security Interests created by it pursuant to the Security Documents to which it is a party shall:

(i)

remain in full force and effect notwithstanding the designation of any new document as a Finance Document or any additions, amendments, novation, substitution, or supplements of or to the Finance Documents and the imposition of any amended, new or more onerous obligations under the Finance Documents in relation to any Obligor including but not limited to the amendments referred to in this Deed; and

(ii)	continue to secure its Secured Liabilities under the Finance Documents as amended (including, but not limited to, under the Restated Facility Agreement and the Intercreditor Agreement, as amended pursuant to this Deed).

21.4.	Counterparts

(A)	This Deed may be executed in any number of counterparts, and by the parties on separate counterparts, but shall not be effective until each party has executed at least one counterpart.

(B)	Each counterpart shall constitute an original of this Deed, but all the counterparts shall together constitute one and the same instrument.

22.	EXECUTION AS A DEED

23.	GOVERNING LAW

---

---

---

---

---

(1)	KOSMOS ENERGY FINANCE INTERNATIONAL a company incorporated under the laws of the Cayman Islands with registered number 253656 and having its registered office at P.O. Box 32322, 4th Floor, Century Yard, Cricket Square, Elgin Avenue, George Town, Grand Cayman KY1-1209, Cayman Islands (the “Original Borrower” or “KEFI”);

(2)	KOSMOS ENERGY EQUATORIAL GUINEA a company incorporated under the laws of the Cayman Islands with registered number 269135 and having its registered office at P.O. Box 32322, 4th Floor, Century Yard, Cricket Square, Elgin Avenue, George Town, Grand Cayman KY1-1209, Cayman Islands (“KEEG”)

(3)	KOSMOS ENERGY INVESTMENTS SENEGAL LIMITED a company incorporated under the laws of England and Wales with company number 10520822 and having its registered office at 6th Floor 65 Gresham Street, London, United Kingdom, EC2V 7NQ (“KEISL”)

(4)	KOSMOS ENERGY SENEGAL a company incorporated under the laws of the Cayman Islands with registered number 290078 and having its registered office at P.O. Box 32322, 4th Floor, Century Yard, Cricket Square, Elgin Avenue, George Town, Grand Cayman KY1-1209, Cayman Islands (“KES”)

(5)	KOSMOS ENERGY MAURITANIA a company incorporated under the laws of the Cayman Islands with registered number 266444 and having its registered office at P.O. Box 32322, 4th Floor, Century Yard, Cricket Square, Elgin Avenue, George Town, Grand Cayman KY1-1209, Cayman Islands (“KEM”)

(6)	KOSMOS ENERGY OPERATING a company incorporated under the laws of the Cayman Islands with registered number 231417 and having its registered office at P.O. Box 32322, 4th Floor, Century Yard, Cricket Square, Elgin Avenue, George Town, Grand Cayman KY1-1209, Cayman Islands (“KEO”);

(7)	KOSMOS ENERGY INTERNATIONAL a company incorporated under the laws of the Cayman Islands with registered number 218274 and having its registered office at P.O. Box 32322, 4th Floor, Century Yard, Cricket Square, Elgin Avenue, George Town, Grand Cayman KY1-1209, Cayman Islands (“KEI”);

(8)	KOSMOS ENERGY DEVELOPMENT a company incorporated under the laws of the Cayman Islands with registered number 225879 and having its registered office at P.O. Box 32322, 4th Floor, Century Yard, Cricket Square, Elgin Avenue, George Town, Grand Cayman KY1-1209, Cayman Islands (“KED”);

(9)	KOSMOS ENERGY GHANA HC a company incorporated under the laws of the Cayman Islands with registered number 135710 and having its registered office at P.O. Box 32322, 4th Floor, Century Yard, Cricket Square, Elgin Avenue, George Town, Grand Cayman KY1-1209, Cayman Islands (“KEG”);

(10)	ABSA BANK LIMITED (ACTING THROUGH ITS CORPORATE AND INVESTMENT BANKING DIVISION), CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK, HSBC BANK PLC, ING BELGIUM SA/NV, NATIXIS, N.B.S.A. LIMITED, SOCIETE GENERALE, LONDON BRANCH, THE STANDARD BANK OF SOUTH AFRICA LIMITED, ISLE OF MAN BRANCH, STANDARD CHARTERED BANK AND SUMITOMO MITSUI

---

(11)	ABSA BANK LIMITED (ACTING THROUGH ITS CORPORATE AND INVESTMENT BANKING DIVISION), BNP PARIBAS, CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK, HSBC BANK PLC, SOCIETE GENERALE LONDON BRANCH AND STANDARD CHARTERED BANK as underwriters of the Facility (each an “Underwriter” and together, the “Underwriters”);

(12)	THE FINANCIAL INSTITUTIONS listed in Schedule 2 as lenders (the “Original Lenders”);

(13)	SOCIETE GENERALE, LONDON BRANCH (as the “Technical Bank”);

(14)	SOCIETE GENERALE, LONDON BRANCH (as the “Modelling Bank”);

(15)	HSBC BANK PLC as the documentation bank (the “Documentation Bank”);

(16)	STANDARD CHARTERED BANK as onshore account bank in Ghana on the terms and conditions set out in the KEG Onshore Project Accounts Agreement;

(17)	HSBC BANK PLC as offshore account bank in London on the terms and conditions set out in the KEG Offshore Project Accounts Agreement, the KES Offshore Project Accounts Agreement, the KEISL Offshore Project Accounts Agreement, the KEM Offshore Project Accounts Agreement and the Borrower Offshore Project Accounts Agreement;

(18)	STANDARD CHARTERED BANK as agent of the Finance Parties under this Agreement (the “Facility Agent”);

(19)	BNP PARIBAS in its capacity as Security Agent for the Secured Parties on the terms and conditions set out in the Intercreditor Agreement (the “Security Agent” which expression includes its successors in title and assigns or any person appointed as an additional trustee for the purpose of and in accordance with the Intercreditor Agreement); and

(20)	BNP PARIBAS as the intercreditor agent (the “Intercreditor Agent”).

(1)	The Original Lenders have agreed to provide a secured, revolving and amortising loan and letter of credit facility for loans of up to USD 1.5 billion.

(2)	The parties have agreed to enter into this Agreement for the purpose of setting out the provisions on which such facility will be provided.

---

1.	Definitions and Interpretation

1.1	Definitions

(A)	any refinancing, deferral, novation or extension of that debt;

(B)	any further advance which may be made under any document, agreement or instrument supplemental to any relevant finance document together with any related interest, fees and costs;

(C)	any claim for damages or restitution in the event of rescission of that debt or otherwise in connection with any relevant finance document;

(D)	any claim against any Obligor flowing from any recovery by that Obligor or any liquidator, receiver, administrator, administrative receiver, compulsory manager or other similar officer of a payment or discharge in respect of that debt on the grounds of preference or otherwise; and

(E)	any amount (such as post-insolvency interest) which would be included in any of the above but for any discharge, non-provability, unenforceability or non-allowability of the same in any insolvency or other proceedings.

---

(A)	with respect to any Obligor that is not incorporated in the European Union, any one of Deloitte LLP, Ernst & Young, PriceWaterhouse Coopers LLP or such other internationally recognised auditor as the Majority Lenders may approve from time to time (acting reasonably); and

---

(B)	with respect to any Obligor incorporated in the European Union, any firm appointed by that Obligor to act as its statutory auditor.

(A)	a US Dollar denominated institutional money market fund with at least USD 1 billion of funds and an average rate of maturity not exceeding one year;

(B)	a US Dollar denominated freely negotiable and marketable bond, treasury bill or debt security of a remaining maturity not exceeding one year issued by the United States of America or any agency or instrumentality thereof, or by any other sovereign government with a long-term credit rating of at least A3 by Moody’s or A- by Standard & Poor’s at such time;

(C)	a US Dollar denominated time deposit (of an original maturity not exceeding six months) made in London or New York or any other place agreed between a Borrower and the Facility Agent with a bank authorised to carry on business there whose long-term debt securities are, at such time, rated at least A3 by Moody’s or A- by Standard & Poor’s;

(D)	a US Dollar denominated instrument with a maturity of less than one year which has a short-term rating at such time of at least P1 by Moody’s or A1 by Standard & Poor’s or instruments with a maturity of less than one year issued by, or guaranteed by, entities whose short-term securities are rated at such time at least P1 by Moody’s or A1 by Standard & Poor’s; or

(E)	any other investment agreed between the Facility Agent and the relevant Borrower.

(A)	one or more directors who are duly authorised whether singly or jointly, to act to bind that company or other legal person; or

(B)	a person or persons duly authorised by that company or other legal person to act to bind that company or other legal person.

(A)	the amount of its participation in any outstanding Loans; and

(B)	in relation to any proposed Utilisation, the amount of its participation in any Loans that are due to be made on or before the proposed Utilisation Date,

---

(A)	in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time; and

(B)	in relation to any other state, any analogous law or regulation from time to time which requires contractual recognition of any Write-down and Conversion Powers contained in that law or regulation.

(A)

the agreements on capital requirements, a leverage ratio and liquidity standards contained in “Basel III: a global regulatory framework for more resilient banks and banking systems”, “Basel III: international framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated;

(B)	the rules for global systemically important banks contained in “Global systemically important banks: assessment methodology and the additional loss absorbency requirement – Rules text” published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and

(C)	any further guidance or standards published by the Basel Committee on Banking Supervision relating to “Basel III”.

---

(A)	the Ghana Block Assets, including the Entitlement to all Unit Substances;

(B)	the EG Block Assets;

(C)	after satisfaction of the FID Requirements and at the Original Borrower’s election, the Greater Tortue Block Assets; and

(D)	the assets in any Permitted Acquisition or Approved Development (which can be either Developed Assets or Developing Assets), which (but without prejudice to any other provision of this Agreement) the Original Borrower elects to include as a “Borrowing Base Asset”,

(A)	the interest which a Lender should have received for the period from the date of receipt of all or any part of its participation in a Loan or Unpaid Sum to the last day of the current Interest Period in respect of that Loan or Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of that Interest Period;

(B)	the amount which that Lender would be able to obtain by placing an amount equal to the total sum received by it on deposit with a leading bank in the London interbank market for a period starting on the date of receipt or recovery and ending on the last day of the current Interest Period.

---

(1)	under clause 10.1 (General) of this Agreement or if clause 10.10 (Right of repayment and cancellation in relation to a single Lender) of this Agreement applies; or

(2)	a Market Disruption Event has occurred in relation to that Loan and no substitute basis for determining the rate of interest has been agreed.

---

(A)	in relation to an Original Lender, the amount set opposite its name under the heading “Commitment” in Schedule 2 of this Agreement and the amount of any other Commitment transferred to it; and

(B)	in relation to any other Lender, the amount of any Commitment transferred to it,

---

(A)	cash in hand or on deposit including, for the avoidance of doubt, restricted cash;

(B)	any investment in a liquidity fund, provided that such investment is capable of being withdrawn in cash on not more than 5 Business Days’ notice;

(C)	certificates of deposit, maturing within one year after the relevant date of calculation;

(D)	any investment in marketable obligations in Sterling, US Dollar or euro having not more than three months to final maturity issued or guaranteed with a rating of A- or above by Standard and Poor’s (or its equivalent by Moody’s);

(E)	any other instrument, security or investment approved in writing by the Majority Lenders.

(A)	the outstanding principal amount of any Financial Indebtedness incurred;

(B)	any fixed or minimum premium payable on the repayment or redemption of any instrument referred to in paragraph (A) above; and

(C)	the outstanding principal amount of any indebtedness arising in connection with any other transaction (including any forward sale or purchase agreement) which has the commercial effect of a borrowing,

---

(A)	Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms; and

(B)	Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repeating Directives 2006/48/EC and 2006/49/EC.

(A)	the Common Reporting Standard issued by the Organisation for Economic Cooperation and Development;

(B)	any treaty, law, regulation or other official guidance enacted in any other jurisdiction (including the Cayman Islands), or relating to an intergovernmental agreement which facilitates the implementation of paragraph (A) above; or

(C)	any agreement pursuant to the implementation of paragraphs (A) or (B) above with any governmental or taxation authority in any other jurisdiction.

---

(A)	after satisfaction of the FID Requirements and if and when they become Borrowing Base Assets, the Greater Tortue Block Assets; and

(B)	as applicable, Approved Developments and Permitted Acquisitions which are to be counted as Developing Assets.

(A)	a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Facility (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties; or

(B)	the occurrence of any other event which results in a disruption (including, without limitation, disruption of a technical or systems-related nature) to the treasury or payments operations of a Party preventing or severely inhibiting that or any other Party:

(i)	from performing its payment obligations under the Finance Documents; or

(ii)	from communicating with other Parties in accordance with the terms of the Finance Documents,

---

(A)	adding back Net Interest Payable;

(B)	adding back depletion and depreciation charged to the consolidated profit and loss account of the Group in accordance with the Approved Accounting Principles;

(C)	adding back amounts amortised to the consolidated profit and loss account of the Group;

(D)	adding back any amount attributable to exploration expense (except to the extent that any such exploration expenses have been capitalised);

---

(E)	adding back any amount attributable to unrealised losses and deducting any amount attributable to unrealised gains on the value of any Derivative Transaction. For the avoidance of doubt, any realised losses will be deducted while any realised gains will be added back;

(F)	adding back any amount attributable to a loss and deducting any amount attributable to a gain against book value on the disposal of any non-current asset and any amount attributable to an impairment charge relating to a non current asset;

(G)	adding back the amount attributable to any compensation which is paid by way of equity instruments in KEL;

(H)	adding back or deducting (as applicable) the amount attributable to any other material item of an unusual or non-recurring nature which represent gains or losses, including (but not limited to) those arising on:

(i)	the refinancing of or the extinguishment of any financing, in relation to any cost associated with the original financing which is subsequently written off as a consequence of that refinancing or extinguishment; and

(ii)	the restructuring of the activities of an entity and the reversal of any provisions for the cost of restructuring,

(a)	including fifty per cent. of the EBITDAX adjustments of EG JV Holdco during that Measurement Period;

(b)	including the EBITDAX of a subsidiary of KEL or attributable to a business or asset acquired during that Measurement Period for the part of the Measurement Period when it was not a member of the KEL Group and/or the business or asset was not owned by a member of the KEL Group; and

(c)	excluding the EBITDAX attributable to any subsidiary of KEL or to any business or asset sold during that Measurement Period.

---

---

(A)	sections 1471 to 1474 of the Code or any associated regulations;

(B)	any treaty, law or regulation of any other jurisdiction (including the Cayman Islands), or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (A) above; or

(C)	any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (A) or (B) above with the US Internal Revenue Service,

---

(A)	in relation to a “withholdable payment” described in section 1473(1)(A)(i) of the Code (which relates to payments of interest and certain other payments from sources within the US), 1 July 2014;

(B)	in relation to a “withholdable payment” described in section 1473(1)(A)(ii) of the Code (which relates to “gross proceeds” from the disposition of property of a type that can produce interest from sources within the US), 1 January 2019; or

(C)	in relation to a “passthru payment” described in section 1471(d)(7) of the Code not falling within paragraphs (A) or (B) above, 1 January 2019,

(A)	the final investment decision having been taken by KEISL and KEM for the development of the Greater Tortue Contract Area and the applicable development plan having been approved by the respective governments,

(B)	an updated reserves report prepared by the Reserves Consultant having been produced for the purpose of producing the Forecast;

(C)

the Original Borrower has delivered to the Facility Agent (i) a one-time Technical Consultant report in form and substance acceptable to the Technical Bank (exact form and consultant to be agreed by the Original Borrower and the Technical Bank) and (ii) a one-time ESIA and HSE report (exact form and consultant to be agreed by the Original Borrower and the Technical Bank), for informational purposes only;

(D)	the Original Borrower has delivered to the Facility Agent a broker’s certificate in respect of the project insurances;

(E)	the Original Borrower has delivered to the Facility Agent an updated Schedule of Insurances (in a form agreed between the Original Borrower and the Facility Agent) setting out the Agreed Insurances in respect of the Greater Tortue Assets;

---

(F)	the Original Borrower has provided evidence to the Facility Agent that each Project Account required to be maintained by KEM, KEISL and KES under the Finance Documents have been opened with an Account Bank;

(G)	the Original Borrower has delivered to the Security Agent, or procured the delivery to the Security Agent of, any legal opinion or other document (in form and substance satisfactory to the Majority Lenders) that the Security Agent may reasonably require in connection with the entry into the Greater Tortue Security Documents; and

(H)	the Original Borrower has delivered to the Facility Agent, or procured the delivery to the Facility Agent of, a legal due diligence report (in form and substance satisfactory to the Facility Agent, acting reasonably) prepared by the Lenders’ Senegalese counsel in respect of the Greater Tortue Block Assets, offshore Senegal.

(A)	“A” being the net present value of Net Cash Flow (calculated on the basis of the Forecast Assumptions) from the relevant Forecast Date until the Field Depletion Date plus the net present value of Relevant Capital Expenditure; and

(B)	“B” being the aggregate of all Loans outstanding under the Facility on that Forecast Date.

---

(A)	moneys borrowed;

(B)	any amount raised by acceptance under any acceptance credit facility or dematerialised equivalent;

(C)	any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;

(D)	the amount of any liability in respect of any lease or hire purchase contract which would be treated in the accounts of the relevant entity as a finance or capital lease;

(E)	receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis);

(F)	any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price (and, when calculating the value of any derivative transaction, only the market to market value shall be taken into account);

(G)	any amount raised under any other transaction (including any forward sale or purchase agreement) of a type not referred to in any other paragraph of this definition but which is classified as a borrowing in the accounts of the relevant entity;

(H)

any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution in respect of an underlying liability of an entity which is not a member of the Group and which underlying liability would fall within one of the other paragraphs of this definition if it were a liability of a member of the Group; and

(I)	the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (A) to (H) above (but only to the extent that the Financial Indebtedness supported thereby is or is at any time in the future capable of being outstanding).

---

(A)	the date on which an asset becomes a Borrowing Base Asset;

(B)	31 March in each year commencing on and from 31 March 2019;

(C)	any other date designated by the Original Borrower which falls no more than 90 days after the date on which the Reserves Consultant has, at the request of the Original Borrower, produced a new or updated reserves report, provided that such reserves report is produced on or after 31 March 2018;

(D)	the date of disposal of a Borrowing Base Asset (other than a Permitted Disposal which falls under any of paragraphs (D) to (G) of the definition of “Permitted Disposal” set out below);

(E)

on request by the Majority Lenders on any date after the Effective Date and before the date falling 12 months after the Effective Date upon which the Majority Lenders (acting reasonably) determine that an event (or series of events) or circumstance or any effect or consequence thereof has occurred (other than any fluctuation or change in crude oil prices) that could reasonably be expected to have a Material Adverse Effect, provided that, before making such determination, the Majority Lenders must first consult with the Original Borrower in good faith for not less than 5 Business Days;

(F)	on request by the Original Borrower on any date immediately prior to the expiry of any BBA Cure Period if the Original Borrower is of the reasonable opinion that if a new Forecast were to be prepared, it would, or is likely to demonstrate that the aggregate of the outstandings under the Facility on that date does not exceed the Borrowing Base Amount as determined in that Forecast; and

(G)	any date designated by the Facility Agent pursuant to clause 24.13(B) (Forecast Notification Events).

(A)	total annual production across all of the Borrowing Base Assets for any applicable year is reasonably expected by the Original Borrower to be at least 15% below the annual production forecast for that year; and

(B)	an uninterrupted period of at least 60 days occurs during which (A) historical dated Brent oil prices have been on average 15% below the relevant price deck used in the applicable Forecast, and/or (B) realised dated Brent oil prices (inclusive of the Borrowers’ and KEEG’s hedging arrangements) have been on average below the relevant price deck used in the applicable Forecast.

---

---

(A)	the KEISL Offshore Security Assignment;

(B)	the KES Offshore Security Assignment;

(C)	the KEM Offshore Security Assignment;

(D)	the Charge over Shares in KEISL;

(E)	the Charge over Shares in KES;

(F)	the Charge over Shares in KEM;

(G)	the KEISL Offshore Project Accounts Agreement;

(H)	the KES Offshore Project Accounts Agreement;

(I)	the KEM Offshore Project Accounts Agreement; and

(J)	any other document reasonably requested by the Facility Agent.

(A)	amounts received or to be received from the sale of crude oil, condensate, natural gas liquids and all output and product from the Borrowing Base Assets or otherwise received or to be received pursuant to any Project Agreement;

(B)	amounts representing interest on the Project Accounts and interest or distributions or income of any kind in respect of Authorised Investments;

(C)	all refunds of tax of any kind;

(D)	all Insurance Proceeds;

(E)	all damages or other payments for termination or non-performance or failure to perform or variation under any contract;

(F)	all net amounts received under any Derivative Agreement;

(G)	all amounts received in respect of any Permitted Disposal; and

(H)	all other amounts which fall to be credited to the profit and loss account of an Obligor for the financial year in which the relevant period falls.

---

(A)	any person which is named on the signing pages of the Intercreditor Agreement as a Hedging Counterparty and;

(B)	any person which becomes a Party as a Hedging Counterparty pursuant to Clause 13.5 (Agent Accession Undertaking) of the Intercreditor Agreement.

---

(A)	the applicable Screen Rate for the longest period (for which that Screen Rate is available) which is less than the Interest Period of that Loan; and

(B)	the applicable Screen Rate for the shortest period (for which that Screen Rate is available) which exceeds the Interest Period of that Loan,

---

(A)	the DWT JOA;

(B)	the WCTP JOA;

(C)	the EG JOA;

(D)	the Mauritania JOA; and

(E)	the Senegal JOA.

---

---

---

(A)	any Original Lender; and

(B)	any bank or financial institution which has become a Party as a lender in accordance with clause 30 (Changes to the Lenders) of this Agreement,

---

(A)	substantially in the form set out in Schedule 12 (Form of Letter of Credit) of this Agreement subject to such amendments as any beneficiary may reasonably require;

(B)	in such form as already issued by the Original Borrower on the date of this Agreement (together with such amendments as may reasonably be required by the beneficiary thereunder); or

(C)	in any other form requested by the Original Borrower and agreed by the Facility Agent (pursuant to instructions from the Majority Lenders (acting reasonably)) and each LC Lender.

(A)	the applicable Screen Rate;

(B)	(if no Screen Rate is available for the Interest Period of that Loan) the Interpolated Screen Rate for that Loan; or

(C)	if:

(i)	no Screen Rate is available for the currency of that Loan; or

(ii)	no Screen Rate is available for the Interest Period of that Loan and it is not possible to calculate an Interpolated Screen Rate for that Loan,

(A)	“A” being the net present value of Net Cash Flow (calculated on the basis of the Forecast Assumptions) from the relevant Forecast Date until the Final Maturity Date plus the net present value of Relevant Capital Expenditure; and

(B)	“B” being the aggregate of all Loans outstanding under the Facility on the relevant Forecast Date.

---

(A)	Jubilee Field Unit Second Crude Oil Lifting Agreement between Ghana National Petroleum Corporation, Tullow Ghana Limited, Kosmos Energy Ghana HC, Anadarko WCTP Company and Sabre Oil & Gas Holdings Limited dated 1 March 2013;

(B)	Agreement in respect of the Engineering, Procurement, Installation, Commissioning and Charter (EPIC+Charter) of an Integrated FPSO Facility for the TEN Development Project (Contract No. ORD-TGHA1058081) between Tullow Ghana Limited and T.E.N. Ghana MV25 B.V. dated 14 August 2013;

(C)	Agreement for Provision of FPSO Operations and Maintenance Services for the TEN Development Project between Tullow Ghana Limited and T.E.N. Ghana MV25 B.V. dated 14 August 2013;

(D)	Agreement for the Operation and Maintenance of a Floating, Production, Storage and Offloading (FPSO) Facility for the Jubilee Field Unit between Tullow Ghana Limited and Modec Management Services Private Limited dated 29 December 2011;

(E)	TEN Field Crude Oil Lifting Agreement between Ghana National Petroleum Corporation, Tullow Ghana Limited, Kosmos Energy Ghana HC, Anadarko WCTP Company and Petrosa Ghana Limited dated 30 August 2016;

(F)	Jubilee Field Master Crude Sales Agreement between Glencore Energy UK Limited and Kosmos Energy Ghana HC dated 16 December 2015;

(G)	TEN Field Master Crude Sales Agreement between Glencore Energy UK Limited and Kosmos Energy Ghana HC dated 13 September 2016;

---

(H)	Okume Complex and FPSO Sendje Ceiba Management, Operations and Maintenance Agreement between Hess Equatorial Guinea, Inc. and Wood Group Equatorial Guinea Limited dated 1 July 2006;

(I)	Ceiba Field, Block G Crude Oil Lifting Agreement between the Republic of Equatorial Guinea, Triton Equatorial Guinea, Inc. and Energy Africa Equatorial Guinea Limited dated 1 October 2001; and

(J)	Agreement for the Marketing and Offtake of Ceiba Blend Crude Oil between Hess Equatorial Guinea, Inc. and BP Oil International Limited dated 28 November 2017.

---

(A)	Net Revenues; minus

(B)	Project Costs,

---

(A)	any Lender who fails to participate in any Utilisation in the amount and at the time required;

(B)	any Lender who has indicated publicly or to the Facility Agent or an Obligor that it does not intend to participate in all or part of any Utilisation;

(C)	any Lender which has repudiated its obligations under the Facility; or

(D)	any Lender in respect of which or in respect of whose holding company any of the events specified in clause 29.6 (Insolvency) or clause 29.7 (Insolvency proceedings) of this Agreement (disregarding paragraph (B) of clause 29.7) (Insolvency proceedings) applies or has occurred.

(A)	the Ghanaian law governed novation agreement, dated on or about the Effective Date, between KEG, Standard Chartered Bank (as the Onshore Account Bank), BNP Paribas (as the Security Agent and outgoing facility agent) and the Facility Agent in relation to the KEG Onshore Project Accounts Agreement;

(B)	the English law governed novation agreement, dated on or about the Effective Date, between KEG, HSBC (as the Offshore Account Bank), BNP Paribas (as the Security Agent and outgoing facility agent) and the Facility Agent in relation to the KEG Offshore Project Accounts Agreement; and

(C)	the English law governed novation agreement, dated on or about the Effective Date, between the Original Borrower, HSBC (as the Offshore Account Bank), BNP Paribas (as the Security Agent and outgoing facility agent) and the Facility Agent in relation to the Borrower Offshore Project Accounts Agreement.

---

(A)	which are made in the ordinary course of the day to day business of the acquiring company;

(B)	which are funded by equity or debt subordinated on terms acceptable to the Majority Lenders (acting reasonably);

(C)	which are in respect of the implementation and development of the Borrowing Base Assets;

---

(D)	which are included within a Forecast;

(E)	in respect of which the aggregate consideration paid (which shall exclude the amount of any debt assumed) does not in any calendar year exceed USD 50 million (or its equivalent in other currencies), or such higher figure as the Majority Lenders may agree (acting reasonably);

(F)	by an Obligor where the asset acquired or invested in is to be included as a Borrowing Base Assets as approved by the Majority Lenders (acting reasonably); or

(G)	which are approved by the Majority Lenders (acting reasonably),

(A)	disposal permitted or not otherwise prohibited by clause 28.8 (Disposals) of this Agreement;

(B)	disposals expressly permitted under any Project Agreement;

(C)	disposals of cash for purposes not prohibited by the Finance Documents;

(D)	disposals expressly required in order to comply with its obligations under the Project Agreements;

(E)	disposals of obsolete assets;

(F)	disposals on arm’s length terms for market value of its Entitlements from a Field or petroleum products to which an Obligor is entitled by virtue of its ownership or investment in a Petroleum Asset; or

(G)	disposals not falling within paragraphs (A) to (F) above which are consented to by the Majority Lenders.

(A)	any Financial Indebtedness arising under or contemplated by the Finance Documents;

(B)	any Financial Indebtedness the proceeds of which are applied, promptly on receipt by an Obligor, in making or procuring the making of a prepayment of all amounts outstanding under the Finance Documents in full;

(C)	any Financial Indebtedness subordinated to the Lenders on terms approved by the Majority Lenders (each acting reasonably) provided that there shall be no subordination in respect of amounts held in any Distributions Reserve Account;

(D)	any guarantee granted by an Obligor in favour of the Revolving Credit Facility Lenders and/or the HY Noteholders, which in either case is subordinated in accordance with the terms of the KEFI Intercreditor Agreement, or otherwise on terms acceptable to the Majority Lenders;

---

(E)	any Financial Indebtedness owed to an Obligor, provided that such Obligor (as subordinated lender) has entered into a Deed of Subordination;

(F)	any Financial Indebtedness arising under finance or capital leases of vehicles, plant, equipment or computers, provided that the aggregate capital value of all such items so leased under outstanding leases by members of the Group does not exceed USD 100 million (or its equivalent in other currencies) at any time;

(G)	any Financial Indebtedness arising under any Derivative Agreement that an Obligor may enter further to the provisions of clause 28.17(A) (Hedging); or

(H)	any Financial Indebtedness otherwise approved by the Majority Lenders (such approval not to be unreasonably withheld or delayed).

(A)	any netting or set-off arrangement entered into in the ordinary course of financing arrangements for the purpose of netting or setting off debit and credit balances;

(B)	any lien securing obligations no more than 90 days overdue arising by operation of law;

(C)	any Security Interest arising under or contemplated by the Finance Documents or pursuant to the express terms of any Project Agreement;

(D)	any title retention provisions in a supplier’s standard conditions of supply of goods;

(E)	any Security Interest created over or in respect of any Distributions Reserve Accounts;

(F)	any Security Interest created pursuant to clause 31.6 (Unwind of Equatorial Guinea Joint Venture)

(G)	any Security Interest not falling within (A) to (F) above which is consented to by the Majority Lenders.

(A)	the DWT PA;

(B)	the WCTP PA;

(C)	the EG PSC;

(D)	the Mauritania Exploration and Production Contract; and

(E)	the Senegal Hydrocarbon Exploration and Production Sharing Contract.

---

(A)	each Petroleum Agreement (including any Required Approval or any Authorisation required for the production, transportation or sale of petroleum from a Borrowing Base Asset);

(B)	the Joint Operating Agreements;

(C)	the UUOA;

(D)	the KEEG/Trident Shareholders’ Agreement; and

(E)	each New Project Agreement and any other agreement which the Facility Agent and the Original Borrower agree shall be a Project Agreement,

(A)	the Ghana Contract Area and the EG Contract Area;

(B)	the Greater Tortue Contract Area; and

---

(C)	any other project, venture, Field or Petroleum Asset which can at that time be funded by the proceeds of a Utilisation made pursuant to clause 21.2(B) (Withdrawals – No Default Outstanding).

(A)	the FPSO for the Jubilee Field Phase 1;

(B)	a taut-leg mooring system for the FPSO for the Jubilee Field Phase 1;

(C)	seven production wells;

(D)	five production drill centers;

(E)	five production manifolds;

(F)	four water injection wells;

(G)	two water-injection drill centers;

(H)	two water injection manifolds;

(I)	three gas-injection wells;

(J)	one gas-injection drill center;

(K)	one gas-injection manifold;

(L)	two riser bases;

(M)	six subsea distribution units; and

(N)	associated flowlines, risers, umbilicals and jumpers.

(A)	which is not on a Sanctions List or subject to a sanctions regime issued, imposed or administered by the United States or any member country of the European Union, or the European Union itself or the United Nations (or any agency of any of them) (a “Sanctions Regime”); or

(B)	which does not have its principal place of business in a country which is subject to a Sanctions Regime; or

(C)	which is not a bank whose principal place of business is in a country notified by the Original Borrower to BNP Paribas (as facility agent at the date of this Agreement) prior to signing of this Agreement; or

(D)	whose long-term unguaranteed, unsecured securities or debt is rated at least Baa3 (Moody’s) or a comparable rating from an internationally recognised credit rating agency (except that this shall not be a requirement if an Event of Default is continuing).

---

(A)	clauses 26.1 (Status), 26.2 (Legal validity), 26.3 (Non-conflict), 26.4 (Powers and authority) of this Agreement, each as at the time the power or authority was exercised only; and

(B)	clauses 26.5 (Authorisations), 26.9 (Financial Statements and other factual information), 26.10 (Proceedings pending or threatened), 26.11 (Breach of laws), 26.12 (Ranking of security), 26.13 (Pari passu ranking), 26.14 (Assets), 26.15 (Project Agreements), 26.16 (No Immunity), 26.17 (Ownership of Obligors), 26.18 (Sanctions) and 26.19 (Anti-corruption law) of this Agreement.

---

(A)	at any time when the DCR is greater than 2.50:1.00, the greater of the balances which is required to meet the payment either of: (a) interest and fees only due and payable in the next six months on the Facility; and (b) Scheduled KEL Debt Payments due and payable in the next six months; and

(B)	at any time when the DCR is less than or equal to 2.50:1.00, zero.

(A)	listed on, or (directly or indirectly) owned or controlled (as such terms are defined by the relevant Sanctions Authority) by one or more persons listed on, or acting on behalf of a person listed on, any Sanctions List;

(B)	located in, incorporated under the laws of, or owned or (directly or indirectly) controlled by, or acting on behalf of, a person located in or organized under the laws of a country or territory that is the target of country-wide or territory-wide Sanctions; or

(C)	otherwise a target of Sanctions (“target of Sanctions” signifying a person with whom a US person or other national of a Sanctions Authority would be prohibited or restricted by law from engaging in trade, business or other activities).

---

(A)	made or to be made on the same day that a maturing Loan is due to be repaid;

(B)	the aggregate amount of which is equal to or less than the amount of the maturing Loan;

(C)	made or to be made to the same Borrower for the purpose of refinancing a maturing Loan.

(A)	the United States government;

(B)	the United Nations;

(C)	the European Union (or any of its members states);

(D)	the United Kingdom; or

(E)	the respective governmental institutions and agencies of any of the foregoing, including, without limitation OFAC, the United States Department of State and Her Majesty’s Treasury,

---

(A)	the KEG Offshore Security Assignment;

(B)	the KEG Onshore Security Assignment;

(C)	the KEEG Offshore Security Assignment;

(D)	the KEISL Offshore Security Assignment;

(E)	the KES Offshore Security Assignment;

---

(F)	the KEM Offshore Security Assignment;

(G)	the KED Offshore Security Assignment;

(H)	the KEI Offshore Security Assignment;

(I)	the KEO Offshore Security Assignment;

(J)	the Borrower Offshore Security Assignment;

(K)	the KEI and KEO Offshore Security Assignment;

(L)	the Charge over Shares in EG JV Holdco

(M)	the Charge over Shares in KED;

(N)	the Charge over Shares in KEG;

(O)	the Charge over Shares in KEO;

(P)	the Charge over Shares in KEI;

(Q)	the Charge over Shares in KEEG;

(R)	the Charge over Shares in KEISL;

(S)	the Charge over Shares in KES;

(T)	the Charge over Shares in KEM;

(U)	the Charge over Shares in the Original Borrower;

(V)	the KEG Assignment of Reinsurance Rights;

(W)	the KEG Offshore Project Accounts Agreement;

(X)	the KEG Onshore Project Accounts Agreement;

(Y)	the KEEG Offshore Project Accounts Agreement;

(Z)	the KEISL Offshore Project Accounts Agreement;

(AA)	the KES Offshore Project Accounts Agreement;

(BB)	the KEM Offshore Project Accounts Agreement;

(CC)	the Borrower Offshore Project Accounts Agreement;

(DD)	each Supplemental Security Document; and

(EE)	subject to the provisions of the Intercreditor Agreement, each other document evidencing or creating any Security Interest held or obtained from an Obligor for or in respect of any Secured Liabilities.

---

---

(A)	the English law governed supplemental charge over shares in KED dated on or about the Effective Date between KEI and the Security Agent;

(B)	the English law governed supplemental charge over shares in KEG dated on or about the Effective Date between KED and the Security Agent;

(C)	the English law governed supplemental charge over shares in KEI dated on or about the Effective Date between KEO and the Security Agent;

(D)	the English law governed supplemental limited recourse charge over shares in KEO dated on or about the Effective Date between KEH as chargor, KEO and the Security Agent; and

(E)	the English law governed supplemental charge over shares in the Original Borrower dated on or about the Effective Date between KEI and the Security Agent.

---

(A)	the English law governed supplemental security assignment and debenture, dated on or about the Effective Date, between KED and the Security Agent;

(B)	the English law governed supplemental security assignment and debenture, dated on or about the Effective Date, between KEI and the Security Agent;

(C)	the English law governed supplemental security assignment and debenture, dated on or about the Effective Date, between KEO and the Security Agent;

(D)	the English law governed supplemental security assignment and debenture, dated on or about the Effective Date, between the Original Borrower and the Security Agent;

(E)	the English law governed supplemental security assignment dated on or about the Effective Date, between KEI, KEO and the Security Agent; and

(F)	each Supplemental Charge over Shares.

---

(A)	the proposed Transfer Date specified in the Transfer Certificate; and

(B)	the date on which the Facility Agent executes the Transfer Certificate.

(A)	a Borrower which is resident for tax purposes in the United States of America; or

(B)	an Obligor some or all of whose payments under the Finance Documents are from sources within the United States for US federal income tax purposes.

---

(A)	any tax imposed in compliance with the Council Directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112);and

(B)	any other tax of a similar nature, whether imposed in a member state of the European Union in substitution for, or levied in addition to, such tax referred to in paragraph (A) above, or imposed elsewhere.

(A)	in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule; and

(B)	in relation to any other applicable Bail-In Legislation:

(i)

any powers under that Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers; and

(ii)	any similar or analogous powers under that Bail-In Legislation.

1.2	Construction of particular terms

(A)	Unless a contrary indication appears, any reference in this Agreement to:

---

(i)	“this Agreement” shall be construed as a reference to the agreement or document in which such reference appears together with all recitals and Schedules thereto;

(ii)	a reference to “assets” includes properties, revenues and rights of every description;

(iii)	an “authorisation” or “consent” shall be construed as including any authorisation, consent, approval, resolution, licence, exemption, permission, recording, notarisation, filing or registration;

(iv)

an “authorised officer” shall be construed, in relation to any Party, as a reference to a Director or other person duly authorised by such Party as notified by such Party to the Facility Agent as being authorised to sign any agreement, certificate or other document or to take any decision or action, as applicable. The provision of any certificate or the making of any certification by any authorised officer of an Obligor shall not create for that authorised officer any personal liability to the Finance Parties;

(v)	a “calendar year” is a reference to a period starting on (and including) 1 January and ending on (and including) the immediately following 31 December;

(vi)	a “certified copy” shall be construed as a reference to a copy of that document, certified by an authorised officer of the relevant Party delivering it to be a complete, accurate and up-to-date copy of the original document;

(vii)	a “clause” shall, subject to any contrary indication, be construed as a reference to a clause of the agreement or document in which such reference appears;

(viii)	“continuing” shall, in relation to any Default or Event of Default, be construed as meaning that such Default or Event of Default has not been remedied or waived;

(ix)

the “equivalent” on any given date in any currency (the “first currency”) of an amount denominated in another currency (the “second currency”) is a reference to the amount of the first currency which could be purchased with the amount of the second currency at the spot rate of exchange quoted by the Facility Agent in the normal course of business at or about 11.00 a.m. on such date for the purchase of the first currency with the second currency in the London foreign exchange markets for delivery on the second Business Day thereafter;

(x)	the “group” of any person, shall be construed as a reference to that person, its subsidiaries and any holding company of that person and all other subsidiaries of any such holding company, from time to time;

(xi)	a “holding company” of a company or corporation shall be construed as a reference to any company or corporation of which the first-mentioned company or corporation is a subsidiary;

---

(xii)	“include” or “including” shall be deemed to be followed by “without limitation” or “but not limited to” whether or not they are followed by such phrase or words of like import;

(xiii)

a “month” or “Month” is a reference to a period starting on one day in a calendar month and ending on the numerically corresponding day in the next succeeding calendar month save that, where any such period would otherwise end on a day which is not a Business Day, it shall end on the next succeeding Business Day, unless that day falls in the calendar month succeeding that in which it would otherwise have ended, in which case it shall end on the immediately preceding Business Day provided that, if a period starts on the last Business Day in a calendar month or if there is no numerically corresponding day in the month in which that period ends, that period shall end on the last Business Day in that later month (and references to “months” and “Months” shall be construed accordingly);

(xiv)	a “person” shall be construed as a reference to any person, trust, firm, company, corporation, government, state or agency of a state or any association or partnership (whether or not having separate legal personality) of two or more of the foregoing;

(xv)

a reference to a “regulation” includes any regulation, rule, official directive, request or guideline (whether or not having the force of law but, if not having the force of law, being a regulation, rule, official directive, request or guideline with which a prudent person carrying on the same or a similar business to an Obligor would comply) of any governmental, intergovernmental or supranational body, agency, department or of any regulatory, self-regulatory or other authority or organisation;

(xvi)	a “right” shall be construed as including any right, title, interest, claim, remedy, discretion, power or privilege, in each case whether actual, contingent, present or future;

(xvii)	a “Schedule” shall, subject to any contrary indication, be construed as a reference to a schedule of the agreement or document in which such reference appears;

(xviii)	a “subsidiary” of a company or corporation means a subsidiary undertaking within the meaning of section 1162 of the Companies Act 2006 which shall be construed as a reference to any company or corporation:

(xix)	which is controlled, directly or indirectly, by the first-mentioned company or corporation;

(xx)	more than half the issued share capital of which is beneficially owned, directly or indirectly, by the first-mentioned company or corporation; or

(xxi)	which is a subsidiary of another subsidiary of the first-mentioned company or corporation,

(xxii)	and, for these purposes, a company or corporation shall be treated as being controlled by another if that other company or corporation is able to direct its affairs and/or to control the composition of its board of directors or equivalent body;

---

(xxiii)

the “winding-up”, “dissolution” or “administration” of a company or corporation shall be construed so as to include any equivalent or analogous proceedings under the law of the jurisdiction in which such company or corporation is incorporated or any jurisdiction in which such company or corporation carries on business including the seeking of liquidation, bankruptcy, winding-up, reorganisation, dissolution, administration, receivership, judicial custodianship, administrative receivership, arrangement, adjustment, protection or relief of debtors;

(xxiv)

a “year” is a reference to a period starting on one day in a month in a calendar year and ending on the numerically corresponding day in the same month in the next succeeding calendar year, save that, where any such period would otherwise end on a day which is not a Business Day, it shall end on the next succeeding Business Day, unless that day falls in the month succeeding that in which it would otherwise have ended, in which case it shall end on the immediately preceding Business Day Provided that, if a period starts on the last Business Day in a month, that period shall end on the last Business Day in that later month (and references to “years” shall be construed accordingly); and

(xxv)	a provision of law is a reference to that provision as amended and reenacted.

(B)

Unless a contrary indication appears, any reference in any Finance Document to “Bank of America Merrill Lynch International Limited” is a reference to its successor in title Bank of America Merrill Lynch International Designated Activity Company (including, without limitation, its branches) pursuant to and with effect from the merger between Bank of America Merrill Lynch International Limited and Bank of America Merrill Lynch International Designated Activity Company that takes effect in accordance with Chapter II, Title II of Directive (EU) 2017/1132 (which repeals and codifies the Cross-Border Mergers Directive (2005/56/EC)), as implemented in the United Kingdom and Ireland. Notwithstanding anything to the contrary in any Finance Document, a transfer of rights and obligations from Bank of America Merrill Lynch International Limited to Bank of America Merrill Lynch International Designated Activity Company pursuant to such merger shall be permitted.

1.3	Interpretation

(A)	Words importing the singular shall include the plural and vice versa.

(B)	Words indicating any gender shall include each other gender.

(C)	Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection with any Finance Document to:

(i)	any party or person shall be construed so as to include its and any subsequent successors, permitted transferees and permitted assigns in accordance with their respective interests;

(ii)	such agreement or document or any other agreement or document shall be construed as a reference to each such agreement or document or, as the case may be, such other agreement or document as the same may have been, or may from time to time be, amended, varied, novated or

---

(iii)	a time of day shall, save as otherwise provided in any agreement or document, be construed as a reference to London time.

(D)	Section, Part, Clause and Schedule headings contained in, and any index or table of contents to, any agreement or document are for ease of reference only.

1.4	Third Party Rights

(A)

Any Hedging Counterparty may enforce the terms of clause 21.2 (Withdrawals – No Default Outstanding), clause 25 (Guarantee and Indemnity) and clause 42.2(E) (Exceptions) of this Agreement by virtue of the Contracts (Rights of Third Parties) Act 1999 (the “Third Parties Act”). This clause 1.4(A) confers a benefit on each such Hedging Counterparty, and, subject to the remaining provisions of this clause 1.4, is intended to be enforceable by each Hedging Counterparty by virtue of the Third Parties Act.

(B)	Any Account Bank may enforce the terms of this Agreement by virtue of the Third Parties Act. This clause 1.4(B) confers a benefit on each such Account Bank, and, subject to the remaining provisions of this clause 1.4, is intended to be enforceable by each Account Bank by virtue of the Third Parties Act.

(C)	Subject to paragraph (A) and (B) above, a person who is not a party to this Agreement has no right under the Third Parties Act to enforce or enjoy the benefit of any term of this Agreement.

(D)	Notwithstanding any term of any Finance Document, this Agreement may be rescinded or varied without the consent of any person who is not a Party hereto.

1.	Conditions Precedent

1.1	Conditions Precedent to first Utilisation

1.2	Conditions Precedent to each Utilisation

(A)	no Default or Event of Default is continuing or will result from the proposed Loan; and

(B)	an Authorised Signatory of the relevant Borrower certifies that

---

(i)	the funds from that Utilisation are expected to be applied in payment of amounts subject to and in accordance with the Cash Waterfall within 90 days of the relevant drawdown date (other than making a distribution in accordance with paragraph (vii) of the Cash Waterfall) or are otherwise required to maintain a reasonable and prudent level of working capital in the Project Accounts;

(ii)	the aggregate principal amount outstanding under the Facility does not exceed the Borrowing Base Amount, and the making of the Utilisation would not result in the aggregate principal amount outstanding under the Facility exceeding the Borrowing Base Amount; and

(iii)	the Repeating Representations to be made by each Obligor are, in the light of the facts and circumstances then existing, true and correct in all material respects (or, in the case of a Repeating Representation that contains a materiality concept, true and correct in all respects);

1.3	Waivers of Conditions Precedent

(A)	The Facility Agent, acting in accordance with the instructions of the Lenders, may waive the requirement under clause 2.1 (Conditions Precedent to first Utilisation) to deliver any one or more of the documents and other evidence listed in Schedule 3 (Conditions Precedent).

(B)	Satisfaction of any of the conditions set out in clause 2.2 (Conditions Precedent to each Utilisation) may be waived by the Facility Agent acting in accordance with the instructions of the Majority Lenders.

(C)	Any waiver effected by the Facility Agent in accordance with this clause shall be binding on all Parties.

(D)	For the avoidance of doubt, no Utilisation may be made under the Facility, until the Facility Agent has confirmed all relevant Conditions Precedent have been satisfied (acting reasonably) or waived in accordance with this clause 2 (Conditions Precedent).

(E)

Prior to the first Utilisation of the Facility (and not thereafter), any Default or Event of Default which arises by virtue of the fact that the Security Interests granted pursuant to the Security Documents are second-ranking (due to the subsistence during such period of Security Interests (as defined in the Existing Finance Documents) which were granted pursuant to the Existing Finance Documents), shall be deemed not to have arisen.

1.	The Facility

1.1	Facility Commitment amounts

(A)	Subject to the terms of the Finance Documents the Lenders have agreed to make available to the Borrowers a secured US Dollar revolving loan facility and a letter of credit facility on the terms and conditions set out in this Agreement (the “Facility”) in an aggregate amount equal to the Total Commitments.

---

(B)	The Facility may be utilised by way of:

(i)	Loans (which, during the Availability Period only, shall include Rollover Loans); and

(ii)	Letters of Credit up to an aggregate amount not exceeding USD 200 million.

1.2	Total Available Facility Amount

(A)	The Total Available Facility Amount shall be computed in accordance with this clause 3.2.

(B)	If at any time the aggregate amount of all Loans exceeds the Borrowing Base Amount, the Total Available Facility Amount shall be zero.

(C)	Notwithstanding any increase to the Total Available Facility Amount by the addition of (a) Additional Commitments pursuant to clause 3.3 below; or (b) the IFC Commitment pursuant to clause 3.4 below and subject to paragraph (B) above, the Total Available Facility Amount shall be an amount equal to the lesser of:

(i)	the Total Facility Amount less (1) the amount of all Loans which have not been either prepaid or repaid and (2) the aggregate amount of any Letters of Credit issued, or to be issued, under the Facility; and

(ii)	the Borrowing Base Amount less (1) the amount of all Loans and (2) the aggregate amount of any Letters of Credit issued, or to be issued, under the Facility (only to the extent not cash collateralised by amounts standing to the credit of the LC Cash Collateral Account),

(D)

For the avoidance of doubt, if at any time a Letter of Credit is cash collateralised in whole in or part in accordance with clause 7.1(B) of this Agreement, the Total Available Facility Amount shall, subject always to paragraphs (B) and (C) above, automatically increase by the amount of such deposit. Conversely, in the event that the whole or any part of the cash collateral is withdrawn in accordance with clause 7.1(B) of this Agreement, then the Total Available Facility Amount will reduce by the amount of such withdrawal.

1.3	Additional Commitment

(A)

The Original Borrower may notify the Facility Agent (such notice being an “Additional Commitment Notice”) that it has agreed with any Lender or any other bank or financial institution (in each case, an “Additional Lender”) to increase the Total Facility Amount by the provision of additional commitments under the Facility (each such increase in commitments being an “Additional Commitment”), provided that:

(i)	the Additional Commitment Notice is delivered at any time after the Effective Date, and prior to the expiry of the Availability Period;

(ii)	the increase is to take effect before the expiry of the Availability Period and the maximum aggregate amount of Additional Commitment (including all

---

(iii)	no Event of Default is continuing or would arise as a result of the provision of the Additional Commitment; and

(iv)	the terms of the Additional Commitment shall, for all purposes of this Agreement, be treated pursuant to the terms of this Agreement in the same manner as the existing Commitments.

(B)	Each Additional Commitment Notice shall:

(i)	confirm that the requirements of clause 3.3(A) above are fulfilled;

(ii)	specify the date upon which the Additional Commitment is anticipated to be made available to the Borrowers (the “Additional Commitment Date”); and

(iii)	where the Additional Lender is IFC, include any further details that may be required by the Facility Agent (acting reasonably) pursuant to clause 3.4 (IFC as Additional Lender).

(C)	In the event that the Additional Lender is not a Party to this Agreement, the Original Borrower shall procure that each Additional Lender:

(i)	delivers a Lender Accession Notice duly completed and signed on behalf of the Additional Lender and specifying its Additional Commitment to the Facility Agent; and

(ii)	accedes to the Intercreditor Agreement in accordance with the terms of the Intercreditor Agreement,

(D)	Subject to the conditions in paragraph (B) and (C) above being met, from the relevant Additional Commitment Date:

(i)	the Additional Lender shall make available the relevant Additional Commitment for Utilisation under the Facility in accordance with the terms of this Agreement (as amended);

(ii)	the Additional Commitment shall rank pari passu with respect to existing Commitments; and

(iii)	any necessary rebalancing of the Commitments and outstandings under the Facility and the Additional Commitment provided by the Additional Lender to ensure that they are pro rata (the “New Commitment Rebalancing”) will be made by a Borrower making utilisations from the Additional Commitment within five business days of the relevant Additional Commitment Date:

(a)	in priority to utilisations from Commitments under the Facility; or

---

(b)	to effect a prepayment under the Facility to the existing Lenders (which amount may be redrawn by the Borrowers),

(E)	Each Additional Lender may only become a party to this Agreement (and be entitled to share in the Security created under the Security Documents in accordance with the terms of the Finance Documents) if such Additional Lender simultaneously accedes to the Intercreditor Agreement in accordance with the terms of the Intercreditor Agreement.

(F)

Each Party (other than the relevant Additional Lender) irrevocably authorises and instructs the Facility Agent to execute on its behalf any Lender Accession Notice which has been duly completed and signed on behalf of that proposed Additional Lender and each Party agrees to be bound by such accession. The Facility Agent must promptly sign any such Lender Accession Notice (and in any event within three Business Days of receipt).

(G)

The Facility Agent shall only be obliged to execute a Lender Accession Notice delivered to it by an Additional Lender once the Facility Agent (acting reasonably) has, to the extent that the necessary information is not already available to it, received all required information to comply with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to the accession of such Additional Lender.

(H)	On the date that the Facility Agent executes a Lender Accession Notice:

(i)

the Additional Lender party to that Lender Accession Notice, each other Finance Party and the Obligors shall acquire the same rights and assume the same obligations between themselves as they would have acquired and assumed had that Additional Lender been an Original Lender with the rights and/or obligations acquired or assumed by it as a result of that accession and with the Commitment specified by it as its Additional Commitment; and

(ii)	that Additional Lender shall become a Party to this Agreement as a “Lender”.

1.4	IFC as Additional Lender

(A)

In the event that the Additional Commitment is to be provided by IFC, subject to compliance with the provisions of clause 3.3 (Additional Commitment) and clause 3.5(B), IFC shall provide its Additional Commitment (the “IFC Commitment”) through a separate tranche, facility or facilities ranking pari passu with the Facility (the “IFC Facility”) details of which, together with any amendments to the Finance Documents as the Original Borrower and IFC (each acting reasonably) consider necessary, shall be provided with the Additional Commitment Notice.

(B)	Any IFC Commitment shall be provided on substantially the same terms and conditions as the Facility, save that the IFC Facility shall include such additional or alternative terms and conditions as required by IFC’s policies and practices (the rights in relation to which shall not be available to the Finance Parties).

---

(C)	In order to rebalance the Commitments and outstandings under the Facility and the IFC Facility to ensure that they are pro rata (the “IFC Rebalancing”), a Borrower will make utilisations under the IFC Facility:

(i)	in priority to the Facility; or

(ii)	to effect a prepayment under the Facility (which amount may be redrawn by a Borrower),

1.5	Amendments to Finance Documents

(A)

The Parties shall, acting reasonably, make such amendments to the Finance Documents as may be necessary to increase the Total Facility Amount pursuant to clause 3.3 (Additional Commitment) above (including amendments to the Amortisation Schedule and such amendments as required to implement any alternative terms and conditions as required by IFC’s policies and practices) and to enable each Additional Lender to accede to the Finance Documents and provide its Additional Commitment hereunder. The Facility Agent may effect, on behalf of the Finance Parties, any such amendment. Any Lender Accession Notice or accession in respect of the Intercreditor Agreement entered into, or any amendment to the Finance Documents effected pursuant to clause 3.3 (Additional Commitment) above, by the Facility Agent, the Additional Lender or the Original Borrower, shall be binding on all Parties.

(B)

Notwithstanding paragraph (A) above, any amendments to the Finance Documents or additional or alternative terms and conditions, in each case as may be reasonably required as a consequence of any IFC Commitment being provided to the Borrowers shall not require the consent of the Finance Parties, provided that such amendments are not prejudicial to the rights and obligations of the Finance Parties under this Agreement.

2.	Finance Parties’ Rights and Obligations

(A)	The obligations of each Finance Party under the Finance Documents are several. Failure by a Finance Party to perform its obligations under any Finance Documents to which it is a Party does not affect the obligations of any other Party under the Finance Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.

(B)

The rights of each Finance Party under or in connection with the Finance Documents to which it is a Party are separate and independent rights and any debt arising under the Finance Documents to a Finance Party from an Obligor shall be a separate and independent debt in respect of which a Finance Party shall be entitled to enforce its rights in accordance with paragraph (C) below. The rights of each Finance Party include any debt owing to that Finance Party under the Finance Documents and, for the avoidance of doubt, any part of a Loan or any other amount owed by an Obligor which relates to a Finance Party’s participation in a Facility or its role under a Finance Document (including any such amount payable to the Facility Agent on its behalf) is a debt owing to that Finance Party by that Obligor.

---

(C)	A Finance Party may, except as otherwise stated in the Finance Documents, separately enforce its rights under the Finance Documents.

3.	Purpose

3.1	Purpose

(A)	in the case of a first Utilisation of the Facility, to repay all amounts outstanding under the Existing Finance Documents in full;

(B)	to pay Project Costs (including Relevant Capital Expenditure);

(C)	to pay Financing Costs (other than principal and interest);

(D)	to make advances to an Obligor under an Intercompany Loan Agreement to enable such Obligor to pay Project Costs;

(E)	to fund the DSRA and the LC Cash Collateral Account;

(F)	to meet all costs and expenses incurred in respect of making any Permitted Acquisition;

(G)	to issue Letters of Credit under the Facility; and

(H)	subject to Clause 20.6 (Distributions Reserve Account) to fund the Distributions Reserve Account.

3.2	Monitoring

4.	Utilisation - Loans

4.1	Availability Period

(A)	the date falling one month prior to the Final Maturity Date; and

(B)	any date imposed in accordance with Clause 28.35 (HY Notes Maturity Date).

4.2	Delivery of a Utilisation Request

---

4.3	Completion of a Utilisation Request

(A)	Each Utilisation Request is irrevocable and will not be regarded as having been duly completed unless:

(i)	the proposed Utilisation Date is a Business Day within the Availability Period;

(ii)	the amount of the Utilisation complies with clause 6.4 (Amount); and

(iii)	the proposed Interest Period complies with clause 12 (Interest Periods).

(B)	Only one Loan may be requested in each Utilisation Request and a maximum of 3 Utilisation Requests may be requested in any one month.

(C)	A Borrower may not deliver a Utilisation Request if as a result of the proposed Utilisation 10 or more Loans would be outstanding.

4.4	Amount

(A)	a minimum of USD 10 million (or, in any event, such lesser amount as the Facility Agent may agree); and

(B)	an integral multiples of USD 10 million (or, in any event, such lesser amount as the Facility Agent may agree),

4.5	Lenders’ participation

(A)	If the conditions set out in this Agreement have been met, each Lender under the Facility shall make its participation in the relevant Loan available by the Utilisation Date through its Facility Office in accordance with the terms of this Agreement.

(B)	The amount of a Lender’s participation in that Loan will be equal to the proportion borne by its Available Commitment to the Available Commitments under the Facility immediately prior to the making of the relevant Loan.

(C)	The Facility Agent shall notify each Lender of the amount of each Loan under the Facility and the amount of its participation in each such Loan not less than 3 Business Days before the Utilisation Date.

(D)	A Business Day for the purposes of clause 6 (Utilisation) shall mean a day (other than a Saturday or Sunday) when banks are open for business in London, New York and Paris.

---

5.	Letters of Credit – Utilisation

5.1	General

(A)	In this clause 7 and clause 8 (Letters of Credit – General Provisions):

(i)	“Expiry Date” means, for a Letter of Credit, the last day of its Term;

(ii)

“LC Proportion” means, in relation to a Lender in respect of any Letter of Credit, the proportion (expressed as a percentage) borne by the Available Commitment of such Lender under the Facility to the aggregate Available Commitments of all the Lenders under the Facility immediately prior to the issue of that Letter of Credit, adjusted to reflect any assignment or transfer under this Agreement to or by that Lender;

(iii)	“Renewal or Extension Request” means a written notice delivered to the Facility Agent in accordance with clause 7.7 (Renewal or extension of a Letter of Credit);

(iv)	“Start Date” means, for a Letter of Credit, the first day of its Term; and

(v)	“Term” means each period determined under this Agreement for which an LC Issuing Bank is under a liability under a Letter of Credit.

(B)	Any reference in this Agreement to:

(i)	a “Finance Party” includes each of the LC Lenders and each of the LC Issuing Banks;

(ii)	an amount borrowed under the Facility includes any amount utilised by way of Letter of Credit;

(iii)	a Utilisation under the Facility made or to be made to the Original Borrower includes a Letter of Credit issued on its behalf;

(iv)	a Lender funding its participation in a Utilisation under the Facility includes a Lender participating in a Letter of Credit;

(v)	amounts outstanding under the Facility include amounts outstanding under or in respect of any Letter of Credit;

(vi)	an outstanding amount of a Letter of Credit at any time is the maximum amount that is or may be payable in respect of that Letter of Credit at that time;

(vii)	the Original Borrower “repaying” or “prepaying” a Letter of Credit means:

(a)	the Original Borrower providing cash collateral for that Letter of Credit by depositing funds into the LC Cash Collateral Account;

(b)	the maximum amount payable under the Letter of Credit being reduced in accordance with its terms; or

---

(c)	an LC Issuing Bank being satisfied (acting reasonably) that it has no further liability under that Letter of Credit,

(viii)	the Original Borrower providing “cash collateral” for a Letter of Credit means the Original Borrower paying an amount in the currency of the Letter of Credit in to the LC Cash Collateral Account and the following conditions are met:

(a)	the account is with an LC Issuing Bank (if the cash collateral is to be provided for all the Lenders) or with a Lender (if the cash collateral is to be provided for that Lender);

(b)	withdrawals from the LC Cash Collateral Account may only be made at any time provided that:

(1)	there is no Default or Event of Default outstanding at the time;

(2)	the withdrawal does not occur during a BBA Cure Period;

(3)	the latest Sources and Uses Statement does not show that there is a shortfall in funding projected to be available to meet Project Costs; and

(4)	the Total Available Facility Amount at that time is equal to or exceeds the amount of the withdrawal; and

(c)	any amount withdrawn from the LC Cash Collateral Account is deposited into the account from which the original payment was made into the LC Cash Collateral Account.

(C)	Clause 6 (Utilisation) does not apply to a Utilisation by way of Letter of Credit.

(D)

For the avoidance of doubt, in determining the amount of the Available Commitment and a Lender’s LC Proportion of a proposed Letter of Credit for the purposes of this Agreement the Available Commitment of a Lender will be calculated taking account of any cash collateral provided for outstanding Letters of Credit, subject to the Total Available Facility Amount not exceeding the lesser of (i) the Total Facility Amount and (ii) the Borrowing Base Amount.

(E)	A “Business Day” for the purposes of clause 7 (Letters of Credit – Utilisation) shall mean a day (other than a Saturday or Sunday) when banks are open for business in London, New York and Paris.

(F)	The ORGL LC shall be deemed to have been issued by BNP Paribas as LC Issuing Bank (such appointment as LC Issuing Bank being solely in respect of the ORGL LC) pursuant to a Utilisation Request submitted by the Original Borrower in accordance with the terms of this Agreement and such utilisation shall be deemed

---

(i)	BNP Paribas shall pay the cash collateral already posted with it pursuant to the ORGL LC to the Distributions Reserve Account; and

(ii)	no conditions other than those which are required in order to facilitate the first Utilisation will be required to be satisfied in order for the ORGL LC Utilisation to be effective.

5.2	Letter of Credit Option

(A)	The Facility may also be utilised by way of Letters of Credit at any time during the Availability Period.

(B)	Letters of Credit may be issued under the Facility by any LC Issuing Bank or LC Issuing Banks as may be selected by the Original Borrower.

(C)	The Original Borrower may at any time request any or all Lenders to agree to become a LC Issuing Bank. If any such Lender or Lenders so agree, the Original Borrower may in its absolute discretion decide which of those Lenders (if any) it wishes to appoint as a LC Issuing Bank.

(D)

The Original Borrower may appoint any Lender as an LC Issuing Bank at any time by notice in writing to the Facility Agent (accompanied by a deed of accession in the form agreed between the Facility Agent and the Original Borrower, signed by the relevant Lender confirming its appointment as an LC Issuing Bank), following receipt of which the Facility Agent shall promptly countersign any such deed of accession on behalf of the Finance Parties (and in any event within 3 Business Days of receipt of the notice) and notify the Finance Parties (with a copy to the Original Borrower) that the relevant Lender has become an LC Issuing Bank.

5.3	Delivery of a Utilisation Request for Letters of Credit

5.4	Completion of a Utilisation Request for Letters of Credit

(A)	it specifies that it is for a Letter of Credit;

(B)	it specifies the amount that is to be utilised under the Facility;

(C)	the proposed Utilisation Date is a Business Day within the Availability Period;

(D)	the currency and amount of the Letter of Credit comply with clause 7.5 (Amount);

---

(E)	the form of Letter of Credit is attached;

(F)	the Expiry Date of the Letter of Credit falls on or before the Final Repayment Date for the Facility; and

(G)	the delivery instructions for the Letter of Credit are specified.

5.5	Amount

5.6	Issue of Letters of Credit

(A)	If the conditions set out in this Agreement have been met, the relevant LC Issuing Bank shall issue the Letter of Credit on the Utilisation Date.

(B)	The relevant LC Issuing Bank will only be obliged to comply with paragraph (A) above if on the date of the Utilisation Request or Renewal or Extension Request and on the proposed Utilisation Date:

(i)	in the case of a Letter of Credit renewed in accordance with clause 7.7 (Renewal or extension of a Letter of Credit), no Event of Default is continuing or would result from the proposed Utilisation and, in the case of any other Utilisation, no Default is continuing or would result from the proposed Utilisation;

(ii)	the making of the proposed Utilisation would not result in (i) the aggregate principal amount outstanding under the Facility exceeding the lesser of the Total Facility Amount and the Borrowing Base Amount or (ii) the aggregate of all outstanding Letters of Credit issued by the LC Issuing Banks exceeding USD 200 million;

(iii)	the Repeating Representations to be made by each Obligor are true in all material respects (or, in the case of a Repeating Representation that contains a materiality concept, true and correct in all respects); and

(iv)	that LC Issuing Bank and the Lenders have completed all applicable know-your-customer and compliance requirements which are required by law in relation to the beneficiary of the Letter of Credit.

(C)	The amount of each Lender’s participation in each Letter of Credit will be equal to the proportion borne by the Available Commitment of such Lender under the Facility to the aggregate Available Commitments of all the Lenders under the Facility immediately prior to the issue of the Letter of Credit.

(D)	The Facility Agent shall notify the relevant LC Issuing Banks and each Lender of the details of the requested Letter of Credit and its participation in that Letter of Credit by the Specified Time.

5.7	Renewal or extension of a Letter of Credit

---

(A)	The Original Borrower may request any Letter of Credit issued on its behalf be renewed or extended by delivery to the Facility Agent and the relevant LC Issuing Bank of a Renewal or Extension Request by the sixth Business Day before the date of the proposed renewal.

(B)	The Lenders shall treat any Renewal or Extension Request in the same way as a Utilisation Request for a Letter of Credit except that the conditions set out in paragraph (E) of clause 7.4 (Completion of a Utilisation Request for Letters of Credit) shall not apply.

(C)	The terms of each renewed or extended Letter of Credit shall be the same as those of the relevant Letter of Credit immediately prior to its renewal, except that:

(i)	its amount may be less than the amount of the Letter of Credit immediately prior to its renewal or extension;

(ii)	(in relation to a renewal only) its Term shall start on the date which was the Expiry Date of the Letter of Credit immediately prior to its renewal, and shall end on the proposed Expiry Date specified in the Renewal or Extension Request subject to clause 7.4(F); and

(iii)	(in relation to an extension only) its Term shall start on the date which was the Start Date of the Letter of Credit immediately prior to its extension, and shall end on the proposed Expiry Date specified in the Renewal or Extension Request subject to clause 7.4(F)

(D)	If the conditions set out in this Agreement have been met, the relevant LC Issuing Bank shall re-issue and/or amend any Letter of Credit pursuant to a Renewal or Extension Request.

6.	Letters of Credit – General Provisions

6.1	When immediately repayable or prepayable

6.2	Fee payable in respect of Letters of Credit

(A)	The Original Borrower shall pay to each of the LC Issuing Banks a fronting fee in respect of each Letter of Credit issued by it, in the amount and at the times agreed in the letter between each relevant LC Issuing Bank and the Original Borrower. A reference in this Agreement to a Fee Letter shall include the letter referred to in this paragraph.

(i)

Subject to (ii) below, the Original Borrower shall pay to the Facility Agent (for the account of each LC Lender) a letter of credit fee computed at the same rate as the Margin on the outstanding amount of each Letter of Credit for the period from the issue of that Letter of Credit until its Expiry Date. This fee shall be distributed according to each LC Lender’s LC Proportion of that Letter of Credit.

---

(ii)

The Original Borrower shall be entitled to deduct, from the letter of credit fee calculated as described in (i) above and paid to the Facility Agent, in respect of each Relevant Lender, an amount which is the product of the Margin and any Borrower Replacement Collateral (as defined in clause 8.10 below) held in respect of such Relevant Lender (the “RL Reduction”). The net fee distributed by the Facility Agent to each Relevant Lender shall be the fee calculated according to such Relevant Lender’s LC Proportion then reduced by the amount of the RL Reduction.

(C)	The accrued letter of credit fee on a Letter of Credit shall be payable quarterly (on each of 31 March, 30 June, 30 September and 31 December and as from the first of such dates falling after the date of issue of that Letter of Credit) and on the Expiry Date for that Letter of Credit.

(D)	If the Original Borrower uses cash collateral to cover any part of a Letter of Credit then the fronting fee payable to the relevant LC Issuing Bank and the letter of credit fee payable for the account of each LC Lender shall not (in respect of the part of the Letter of Credit covered by the cash collateral) be payable.

6.3	Claims under a Letter of Credit

(A)	The Original Borrower irrevocably and unconditionally authorises each LC Issuing Bank to pay any claim made or purported to be made under a Letter of Credit and which appears on its face to be in order (a “claim”).

(B)	The Original Borrower shall immediately on demand pay to the Facility Agent for the account of the relevant LC Issuing Bank an amount equal to the amount of any claim under that Letter of Credit.

(C)	The Original Borrower acknowledges that each LC Issuing Bank:

(i)	is not obliged to carry out any investigation or seek any confirmation from any other person before paying a claim; and

(ii)	deals in documents only and will not be concerned with the legality of a claim or any underlying transaction or any available set-off, counterclaim or other defence of any person.

(D)	The obligations of the Original Borrower under this clause will not be affected by:

(i)	the sufficiency, accuracy or genuineness of any claim or any other document; or

(ii)	any incapacity of, or limitation on the powers of, any person signing a claim or other document.

6.4	Indemnities

(A)

The Original Borrower shall immediately on demand indemnify each LC Issuing Bank against any cost, loss or liability incurred by such LC Issuing Bank (otherwise than by reason of such LC Issuing Bank’s gross negligence or wilful misconduct and otherwise in respect of the obligation of any Lender to provide cash collateral pursuant to clause 8.10 (Cash collateralisation)) in acting as an LC Issuing Bank under any Letter of Credit.

---

(B)

Each Lender shall (according to its LC Proportion) immediately on demand by the Facility Agent (acting on the instructions of the relevant LC Issuing Bank), indemnify each LC Issuing Bank against any cost, loss or liability incurred by such LC Issuing Bank (otherwise than by reason of such LC Issuing Bank’s gross negligence or wilful misconduct) in acting as such LC Issuing Bank under any Letter of Credit (unless that LC Issuing Bank has been reimbursed by the Original Borrower pursuant to a Finance Document).

(C)

The Original Borrower shall immediately on demand reimburse any Lender for any payment it makes to an LC Issuing Bank under this clause 8.4 (Indemnities) (other than any Cash Deposit made pursuant to clause 8.10 (Cash collateralisation) but including in respect of any amount withdrawn from the Cash Deposit and payment to any LC Issuing Bank under clause 8.10(C) or 8.10(E)). In the absence of reimbursement of an LC Issuing Bank or Lenders by the Original Borrower pursuant to this clause 8.4 (Indemnities) within 5 Business Days of demand (the “LC Payment Date”), the Original Borrower shall be deemed to have requested a Loan of an amount (in Dollars) equal to the outstanding amount payable on the LC Payment Date and the Original Borrower shall be treated as having agreed to borrow that Loan on the LC Payment Date. The proceeds of each Loan made available by the Lenders in accordance with this clause 8.4(C) and deemed to be made to the Original Borrower shall be paid to an LC Issuing Bank (or, as the case may be, the Facility Agent on behalf of the Lenders) in satisfaction of the obligations of the Original Borrower in accordance with this clause 8.4 to reimburse that LC Issuing Bank or Lenders for the amount of the outstanding payment.

(D)	The obligations of each Lender and the Original Borrower under this clause are continuing obligations and will extend to the ultimate balance of sums payable by that Lender or, as the case may be, the Original Borrower in respect of any Letter of Credit, regardless of any intermediate payment or discharge in whole or in part.

(E)	The obligations of a Lender or the Original Borrower under this clause will not be affected by any act, omission, matter or thing which, but for this clause, would reduce, release or prejudice any of its obligations under this clause (without limitation and whether or not known to it or any other person) including:

(i)	any time, waiver or consent granted to, or composition with, any Obligor, any beneficiary under a Letter of Credit or any other person;

(ii)	the release of any other Obligor or any other person under the terms of any composition or arrangement;

(iii)

the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any Obligor, any beneficiary under a Letter of Credit or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;

(iv)	any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of an Obligor, any beneficiary under a Letter of Credit or any other person;

(v)	any amendment (however fundamental) or replacement of a Finance Document, any Letter of Credit or any other document or security;

---

(vi)	any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document, any Letter of Credit or any other document or security; or

(vii)	any insolvency or similar proceedings.

6.5	Rights of contribution

6.6	Role of a LC Issuing Bank

(A)	Nothing in this Agreement constitutes a LC Issuing Bank as a trustee or fiduciary of any other person.

(B)	An LC Issuing Bank shall not be bound to account to any Lender for any sum, or the profit element of any sum received by it for its own account.

(C)	An LC Issuing Bank may accept deposits from, lend money to and generally engage in any kind of banking or other business with any member of the Group.

(D)	An LC Issuing Bank may rely on:

(i)	any representation, notice or document believed by it to be genuine, correct and appropriately authorised; and

(ii)	any statement made by a director, Authorised Signatory or employee of any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power to verify.

(E)	An LC Issuing Bank may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors or other experts.

(F)	An LC Issuing Bank may act in relation to the Finance Documents through its personnel and agents.

(G)	An LC Issuing Bank is not responsible for:

(i)

the adequacy, accuracy and/or completeness of any information (whether oral or written) provided by any Party (including itself), or any other person under or in connection with any Finance Document, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document; or

(ii)	the legality, validity, effectiveness, adequacy or enforceability of any Finance Document or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document.

6.7	Exclusion of liability

---

(A)	Without limiting paragraph (B) below, the relevant LC Issuing Bank will not be liable for any action taken by it under or in connection with any Finance Document, unless directly caused by its gross negligence or wilful misconduct.

(B)

No Party (other than an LC Issuing Bank) may take any proceedings against any officer, employee or agent of an LC Issuing Bank in respect of any claim it might have against that LC Issuing Bank or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document and any officer, employee or agent of an LC Issuing Bank may rely on this clause subject to clause 1.4 (Third Party Rights) and the provisions of the Third Parties Act.

6.8	Credit appraisal by the Lenders

6.9	Amendments and Waivers

6.10	Cash collateralisation

(A)	If and for so long as:

(i)	the long-term senior unsecured credit rating of a Lender is, or is reduced to, below BBB- (Standard & Poor’s) or Baa3 (Moody’s); or

(ii)	it becomes unlawful in any applicable jurisdiction for a Lender to perform its obligations under clause 8.4 (Indemnities) of this Agreement,

(B)	Any Cash Deposit made pursuant to this clause 8.10 shall be placed by the relevant LC Issuing Bank in a separately designated bank account and shall bear interest (at the rate of interest customarily given by that LC Issuing Bank for short-term cash

---

(C)	An LC Issuing Bank shall only withdraw amounts standing to the credit of such account:

(i)	for payment to that LC Issuing Bank up to (and including) the amount of the Cash Deposit in accordance with clause (E) below; and

(ii)	in excess of the Cash Deposit, for payment to the Relevant Lender, if so instructed by the Relevant Lender.

(D)	Any Cash Deposit made pursuant to this clause 8.10 shall, on demand by the Relevant Lender, be repaid to such Relevant Lender provided that the long-term senior unsecured credit rating of such Relevant Lender is, or is greater than BBB- (Standard & Poor’s) or Baa3 (Moody’s).

(E)

Without prejudice to the provisions of clause 8.4(B), each Relevant Lender hereby irrevocably authorises each LC Issuing Bank to withdraw from any account established pursuant to this clause 8.10 in relation to such Relevant Lender such Relevant Lender’s LC Proportion of the amount specified in any claim made under a Letter of Credit, up to the amount of the Relevant Lender’s Cash Deposit in discharge of such Relevant Lender’s obligations to it under clause 8.4(B).

(F)	If and to the extent the Relevant Lender at any time fails to comply with its payment obligations under clause 8.10(A), then (without prejudice to clause 8.4(B)):

(i)	the Relevant Lender hereby irrevocably authorises any Agent to apply its entitlement to sums received by that Agent from any source in respect of payment under, and/or any other sum received by that Agent under or in respect of, the Finance Documents, towards such payment obligations;

(ii)	the Original Borrower and each LC Issuing Bank may (in their sole discretion) agree that the Original Borrower shall pay an amount to that LC Issuing Bank:

(a)	which may or may not be equal to the Relevant Lender’s Cash Deposit or such part thereof as is unpaid by the Relevant Lender; and

(b)	which shall be placed by that LC Issuing Bank in a separately designated bank account and shall bear interest (at the rate of interest customarily given by that LC Issuing Bank for short-term cash deposits in amounts equal to such amounts) from (and including) the date of deposit of any amounts in, until (but excluding) the date of withdrawal of any amounts from, such account,

(iii)	that LC Issuing Bank may withdraw amounts standing to the credit of such account:

---

(a)	to pay that LC Issuing Bank such Relevant Lender’s LC Proportion of any claim made under a Letter of Credit; and

(b)	as otherwise agreed between the Original Borrower and that LC Issuing Bank.

1.	Repayment

1.1	Repayment of the Facility

(A)	Subject to paragraph (B) below, all Loans outstanding under the Facility will be repaid semi-annually on each successive 31 March and 30 September commencing on 31 March 2022. Repayment Instalments will be sufficient to ensure that the Amortisation Schedule is met.

(B)	Any repayment made during the Availability Period may be redrawn, but any repayment may not be redrawn after the expiry of the Availability Period.

1.2	Amendment to Amortisation Schedule

(A)	the final Repayment Instalment for the Facility is to be paid on the Reserve Tail Date (the “Revised Final Repayment Date”); and

(B)	the Repayment Instalment payable on each Repayment Date shall be adjusted on a pro rata basis so as to ensure that all Loans under the Facility are fully repaid on the Reserve Tail Date.

2.	Prepayment and Cancellation

2.1	General

(A)

Subject to there being no Event of Default outstanding and other than an obligation to make a prepayment where the aggregate outstandings under the Facility exceed the Borrowing Base Amount at the end of the BBA Cure Period or upon a Change of Control, prepayments in respect of the Facility shall be paid at the end of the next Interest Period falling not less than 15 days after the date on which the event giving rise to the obligation to make the prepayment occurs, and shall be applied pro rata to each Repayment Instalment under the Facility.

(B)	Any amount prepaid may only be redrawn if such prepayment and Utilisation:

(i)	is not contrary to any other term of this Agreement; and

(ii)	occurs prior to expiry of the Availability Period.

(C)	Any prepayment shall be made with accrued interest on the amount prepaid and, subject to Break Costs (excluding any Margin), without premium or penalty.

---

2.2	Illegality

(A)	If it becomes unlawful (including as a result of any Sanctions) in any applicable jurisdiction for a Lender (an “Illegality Lender”) to perform any of its obligations as contemplated by the Finance Documents, or to fund or maintain its participation in any Utilisation or it becomes unlawful for any Affiliate of a Lender for that Lender to do so:

(i)	that Lender shall promptly notify the Facility Agent upon becoming aware of that event;

(ii)	upon the Facility Agent notifying the Original Borrower, the Commitment of that Lender will be immediately cancelled; and

(iii)	each Borrower shall either:

(a)

if the Lender so requires, repay that Lender’s participation in the Utilisations made to that Borrower on the last day of the Interest Period for each Utilisation occurring after the Facility Agent has notified that Borrower or, if earlier, the date specified by the Lender in the notice delivered to the Facility Agent (being no earlier than the last day of any applicable grace period permitted by law); or

(b)	replace that Lender in accordance with paragraph (B) of clause 10.10 (Right of repayment and cancellation in relation to a single Lender) on or before the first date applicable under paragraph (a) above in respect of which a payment is due and payable.

(B)	If it becomes unlawful (including as a result of any Sanctions) in any applicable jurisdiction for any Borrower to perform any of its obligations as contemplated by the Finance Documents:

(i)	that Borrower shall promptly notify the Facility Agent upon becoming aware of that event;

(ii)	the Facility Agent shall notify the Lenders; and

(iii)	that Borrower shall repay each Utilisation made to it on the last day of the Interest Period for that Utilisation occurring after the Facility Agent have notified the Lenders or, if earlier, the last day of any applicable grace period permitted by law.

(C)

If it becomes unlawful (including as a result of any Sanctions) for an LC Issuing Bank to issue or leave outstanding any Letter of Credit or it becomes unlawful for any Affiliate of an Issuing Bank for that Issuing Bank to do so, the relevant LC Issuing Bank shall promptly notify the Facility Agent upon becoming aware of that event, and upon the Facility Agent notifying the Original Borrower, (i) the Facility shall cease to be available for the issue of Letters of Credit unless and until the relevant LC Issuing Bank is replaced by another Lender in accordance with paragraph (B)of clause 10.10 (Right of repayment and cancellation in relation to a single Lender) and (i) the Original Borrower shall prepay all Letters of Credit issued by such LC Issuing Bank and use its reasonable endeavours to procure the release of such LC Issuing Bank from all outstanding Letters of Credit.

---

2.3	Aggregate outstandings exceed the Borrowing Base Amount

(A)

In the event that a Forecast shows that the aggregate of the outstandings under the Facility on the relevant Forecast Date exceeds the Borrowing Base Amount as determined in such Forecast, a Borrower shall, within 90 days of the date of the relevant Forecast (in addition to Repayment Instalments under the Amortisation Schedule), make an additional mandatory repayment of the Facility as necessary to ensure that the aggregate of the outstandings under the Facility does not exceed the Borrowing Base Amount provided always that:

(i)	subject to (ii) below, an Event of Default shall arise in respect of such mandatory prepayment only if such prepayment has not been made in full after a period of 90 days from the relevant Forecast Date (the “BBA Cure Period”); and

(ii)	such mandatory repayment will be required at the expiry of the BBA Cure Period only if, at such time, a Forecast prepared immediately prior to the expiry of the BBA Cure Period confirms that the aggregate of the outstandings under the Facility exceeds the Borrowing Base Amount.

(B)

The Obligors shall be entitled to make any such mandatory prepayment by (i) depositing cash into an account with the Account Bank in London secured in favour of the Lenders (which shall be a Project Account) which has been established solely for this purpose or (i) procuring a letter of credit on terms approved by the Facility Agent (acting reasonably), in favour of the Facility Agent, in each case, in an amount equal to the mandatory prepayment required. Any excess standing to the credit of such account on any Forecast Date shall be released and may be withdrawn by the relevant Borrower and applied for any purpose as it sees fit (without reference to the Cash Waterfall) provided that prior to being paid into such account none of the Secured Parties had any rights to such amounts (if any Secured Parties had any rights to such amount, such amount shall be paid into an Offshore Proceeds Account).

2.4	Permitted disposals

2.5	Insurance Receipts

(A)	All Insurance Proceeds received by an Obligor in excess of USD10 million (or its equivalent in other currencies) in aggregate shall be paid into and retained in an Insurance Proceeds Account until applied in accordance with the terms of this clause.

(B)	Subject to paragraph (C) below, all net proceeds of any insurance claim received by an Obligor in respect of a Borrowing Base Asset shall, unless the Majority Lenders otherwise agree, be first applied in prepayment of the Facility:

---

(i)	where the aggregate amount of the insurance proceeds received by that Obligor is in excess of USD 100 million (or its equivalent in other currencies) (less expenses); or

(ii)

where the aggregate amount of the insurance proceeds received by that Obligor is less than USD 100 million (or its equivalent in other currencies) but more than USD 10 million (or its equivalent in other currencies), to the extent not applied or committed to be applied to meet a third party claim or to cover operating losses of, or in the reinstatement of, a Borrowing Base Asset or purchase of a replacement Borrowing Base Asset or otherwise in amelioration of the loss to a Borrowing Base Asset or reinvestment in the Borrowing Base Asset within, in each case, one year of receipt.

(C)	Neither (i) any insurance proceeds paid to the Operator and applied by the Operator in meeting the cost, loss or liability for which that payment was made, nor (i) any proceeds of any insurance claim received by an Obligor in respect of business interruption shall be subject to the prepayment obligation in paragraph (B) above.

2.6	Change of Control

(A)	Upon a Change of Control:

(i)	the relevant Obligor shall promptly notify the Facility Agent upon becoming aware of the occurrence of that event; and

(ii)	if the Majority Lenders so require, the Facility Agent shall, on not less than 30 days written notice to the Original Borrower, cancel the Commitments and each Borrower shall repay each Lender’s participation in any Utilisations on the last day of the then current period under the Facility, together with accrued interest and all other amounts accrued under the Finance Documents.

(B)

For the purposes of paragraph (A) above, a “Change of Control” means any person (or persons with whom they act in concert) other than a Permitted Transferee acquiring, directly or indirectly, more than 50 per cent. of the ordinary share capital in any Obligor carrying a right to vote in general meetings of that company. For the avoidance of doubt, a Change of Control shall not occur on an IPO of any Shareholder (directly or indirectly) in KEO or the Original Borrower, or an IPO of any Obligor.

(C)	For the purposes of paragraph (B) above, any persons includes more than one person acting in concert and a “Permitted Transferee” means:

(i)	an Affiliate of a Shareholder or KEH, so long as they remain an Affiliate (including any funds associated with Warburg Pincus and Blackstone Capital Partners or the Blackstone Group); or

(ii)

a person who is otherwise approved by the Majority Lenders (acting reasonably) provided that any Lender which does not grant its approval may, on not less than 30 days written notice to the Facility Agent and the Original Borrower, demand that its participation in the Facility be prepaid in full and that its Commitment be immediately cancelled, provided that the Original Borrower may, in accordance with paragraph (B) of clause 10.10 (Right of repayment and cancellation in relation to a single Lender), procure

---

2.7	Automatic Cancellation

2.8	Voluntary Cancellation

(A)

The Original Borrower may, by giving not less than ten Business Days’ (or such shorter period as the Majority Lenders may agree) prior written notice to the Facility Agent, without penalty, cancel the undrawn Commitments under any Facility in whole or in part (but if in part, in a minimum amount of USD 1 million or, if less, the balance of the undrawn Commitments). The relevant Commitments in respect of the Facility will be cancelled on a date specified in such notice, being a date not earlier than ten Business Days after the relevant notice is received by that Facility Agent.

(B)	Any valid notice of cancellation will be irrevocable and will specify the date on which the cancellation shall take effect. No part of any Commitment which has been cancelled or which is the subject of a notice of cancellation may subsequently be utilised.

(C)	When any cancellation of Commitments under the Facility takes effect, each Lender’s Available Commitment under the Facility will be reduced by an amount which bears the same proportion to the total amount being cancelled as its Available Commitment under the Facility bears to the Available Commitment (at that time) under the Facility.

2.9	Voluntary Prepayment of Loans

(A)	Subject to clause 10.1 (General), a Utilisation may be prepaid whether in whole or in part by a Borrower without penalty upon ten Business Days’ prior written notice to the Facility Agent.

(B)	Any valid notice of prepayment will be irrevocable and, unless a contrary indication appears in this Agreement, will specify the date on which the cancellation shall take effect. Any amount prepaid or repaid may not be redrawn if such prepayment or repayment and Utilisation occurs after the expiry of the Availability Period.

(C)	Prepayment shall take effect:

(i)	on the last day of the then current Interest Period; or

(ii)	on any other date subject to payment by the relevant Borrower, on demand of Break Costs (if any), in accordance with clause 13.4 (Break Costs).

---

(D)	Unless a contrary indication appears in this Agreement, when any prepayment of the whole or part of a Loan takes place, each Lender’s participation in the relevant Loan shall be reduced rateably.

2.10	Right of repayment and cancellation in relation to a single Lender

(A)	If:

(i)	the Original Borrower reasonably believes that the sum payable to any Lender by an Obligor is required to be increased under clause 15.2 (Tax gross-up);

(ii)	the Original Borrower receives a notice from the Facility Agent under clause 15.3 (Tax Indemnity) or clause 16 (Increased Costs);

(iii)	any Lender is or becomes a Non-Funding Lender; or

(iv)	any Lender is or becomes entitled to increase its rate of interest further to clause 13.2 (Market disruption),

(a)	give the Facility Agent notice of cancellation of the Commitment of that Lender and its intention to procure the repayment of that Lender’s participation in the Utilisations;

(b)	in the case of a Non-Funding Lender or Illegality Lender, give the Facility Agent notice of cancellation of the Available Commitment of that Lender in relation to the Facility and reinstate all or part of such Available Commitment in accordance with paragraph (B) below;

(c)	or replace that Lender in accordance with paragraph (B) below.

(B)	The Original Borrower may:

(i)

in the circumstances set out in paragraph (A) above or pursuant to clause 10.1 (General) or clause 10.2 (Illegality) or clause 10.6(A)(ii) (Change of Control), replace an Existing Lender (as defined in clause 30 (Changes to the Lenders)), with one or more other Lenders (which need not be Existing Lenders) (each a “Replacement Lender”), which have agreed to purchase all or part of the Commitment and participations of that Existing Lender in Utilisations made to a Borrower pursuant to an assignment or transfer in accordance with the provisions of clause 30 (Changes to the Lenders); or

(ii)

in the circumstances set out in paragraph (A)(iv)(a) of this clause 10.10, cancel the Available Commitments of the Non-Funding Lender or Illegality Lender in respect of the Facility and procure that one or more Replacement Lenders assume Commitments under the Facility in an aggregate amount not exceeding the Available Commitment of the relevant Non-Funding Lender or Illegality Lender in relation to the Facility,

---

(a)	each assignment or transfer under this paragraph (B) shall be arranged by the Original Borrower (with such reasonable assistance from the Existing Lender as the Original Borrower may reasonably request); and

(b)	no Existing Lender shall be obliged to make any assignment or transfer pursuant to this paragraph (B) unless and until:

(1)

it has received payment from the Replacement Lender or Replacement Lenders in an aggregate amount equal to the outstanding principal amount of the participations in the Utilisations owing to the Existing Lender, together with accrued and unpaid interest (to the extent that the Facility Agent has not given a notification under clause 30.9 (Pro rata interest settlement)) and fees (including, without limitation, any Break Costs to the date of payment) and all other amounts payable to the Existing Lender under this Agreement; and

(2)	the requirements under clause 24.12 (“Know your customer” and “customer due diligence” requirements) have been satisfied in respect of the Replacement Lender.

(C)	On receipt of a notice from the Original Borrower referred to in paragraph (A) above, the Commitment of that Lender shall immediately be reduced to zero.

(D)	On the last day of each Interest Period which ends after the Original Borrower has given notice under paragraph (A) above (or, if earlier, the date specified by the Original Borrower in that notice), the relevant Borrower shall repay that Lender’s participation in the relevant Utilisation.

(E)	Paragraphs (A) and (B) do not in any way limit the obligations of any Finance Party under clause 18.1 (Mitigation).

3.	Interest

3.1	Calculation of interest

(A)	Margin; and

(B)	LIBOR.

3.2	Margin

---

3.3	Payment of interest

3.4	Default interest

(A)

If an Obligor fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to paragraph (B) below, is 1.0 per cent. higher than the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted a Loan in the currency of the overdue amount for successive Interest Periods, each of a duration selected by the Facility Agent (acting reasonably). Any interest accruing under this clause shall be immediately payable by the Obligor on demand by that Facility Agent.

(B)	If any overdue amount consists of all or part of a Loan which became due on a day which was not the last day of an Interest Period relating to that Loan:

(i)	the first Interest Period for that overdue amount shall have a duration equal to the unexpired portion of the current Interest Period relating to that Loan; and

(ii)	the rate of interest applying to the overdue amount during that first Interest Period shall be 1.0 per cent. higher than the rate which would have applied if the overdue amount had not become due.

(C)	Default interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount but will remain immediately due and payable.

3.5	Notification of rates of interest

4.	Interest Periods

4.1	Selection of Interest Periods

(A)	A Borrower shall select an Interest Period for a Loan in the Utilisation Request for that Loan.

---

(B)	Subject to this clause, a Borrower may select an Interest Period of 1, 3 or 6 months or such other period as may be agreed between a Borrower and the Facility Agent (acting on behalf of the Majority Lenders).

(C)	No Interest Period for a Loan under the Facility shall extend beyond the Final Maturity Date.

(D)	The first Interest Period of each Loan shall commence on the Utilisation Date and end on the same day as the end of the selected Interest Period. In the case of each Loan (other than the first Loan under the Facility), each subsequent Interest Period shall end on the same day as the current Interest Period of any outstanding Loan made under the Facility.

4.2	Non-Business Days

4.3	Consolidation and division of Loans

(A)	Subject to paragraph (B) below, if two or more Interest Periods for Loans under the Facility end on the same date, those Loans will, unless a Borrower specifies to the contrary in the Utilisation Request or in a notice to the Facility Agent, be consolidated into, and treated as, a single Loan under the Facility on the last day of the Interest Period.

(B)	If a Borrower requests (in either a Utilisation Request or otherwise in a notice to the Facility Agent) that a Loan be divided into two or more Loans, that Loan will, on the last day of its Interest Period, be so divided into the amounts specified in such request, being an aggregate amount equal to the amount of the Loan immediately before its division.

5.	Changes to the Calculation of Interest

5.1	Absence of quotations

5.2	Market disruption

(A)	If a Market Disruption Event occurs in relation to a Loan for any Interest Period, then the rate of interest on each Lender’s share of that Loan for the Interest Period shall be the percentage rate per annum which is the sum of:

(i)	the Margin; and

(ii)	the rate notified to the Facility Agent by that Lender as soon as practicable and in any event before interest is due to be paid in respect of that Interest Period, to be that which expresses as a percentage rate per annum the

---

(B)

In this Agreement “Market Disruption Event” means if, on or about noon in London on the Quotation Day for the relevant Interest Period none or only one of the Reference Banks supplies a rate to the Facility Agent to determine LIBOR for the Interest Period, or the Facility Agent receives notifications from a Lender or Lenders (whose participations exceed 35 per cent. in aggregate of all participations) that the cost to it of obtaining matching deposits in the London interbank market would be materially in excess of LIBOR.

(C)	The Facility Agent shall notify the relevant Borrower immediately upon receiving notice from the Lender(s).

5.3	Alternative basis of interest or funding

(A)	If a Market Disruption Event occurs and the Facility Agent or the relevant Borrower so requires, the Facility Agent and the relevant Borrower shall enter into negotiations (for a period of not more than thirty days) with a view to agreeing a substitute basis for determining the rate of interest.

(B)	Any alternative basis agreed pursuant to paragraph (A) above shall, with the prior consent of all the Lenders and the relevant Borrower, be binding on all Parties.

5.4	Break Costs

(A)	Each Borrower shall, within three Business Days of demand by a Finance Party, pay to that Finance Party its Break Costs attributable to all or any part of a Loan or Unpaid Sum being paid by it on a day other than the last day of an Interest Period for that Loan or Unpaid Sum.

(B)	Each Lender shall, as soon as reasonably practicable after a demand by the Facility Agent, provide a certificate confirming the amount of its Break Costs for any Interest Period in which they accrue.

(C)	If, following a payment by the relevant Borrower of all or part of a Loan or Unpaid Sum on a day other than the last day of an Interest Period for that Loan or Unpaid Sum, a Lender realises a profit, and no Event of Default is continuing, that Lender must pay an amount equal to that profit to that Borrower as soon as practicable.

5.5	FATCA Information

(A)	Subject to paragraph (D) below, each Party shall, within ten Business Days of a reasonable request by another Party:

(i)	confirm to that other Party whether it is:

(a)	a FATCA Exempt Party; or

(b)	not a FATCA Exempt Party;

(ii)	supply to that other Party such forms, documentation and other information relating to its status under FATCA or CRS as that other Party reasonably

---

(iii)	supply to that other Party such forms, documentation and other information relating to its status as that other Party reasonably requests for the purposes of that other Party’s compliance with any other law, regulation, or exchange of information regime.

(B)

Each Party agrees to the disclosure by the other Party of information required to be disclosed under FATCA or CRS to the Cayman Islands Tax Information Authority or equivalent authority and any other foreign government body as required by FATCA or CRS. Such information may include, without limitation, confidential information such as financial information and any information relating to any shareholders, principals, partners, beneficial owners (direct or indirect) or controlling persons (direct or indirect) of such Party.

(C)	If a Party confirms to another Party pursuant to clause 13.5(A)(i) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.

(D)	Paragraph (A) or (B) above shall not oblige any Finance Party to do anything, and paragraph (A)(iii) above shall not oblige any other Party to do anything, which would or might in its reasonable opinion constitute a breach of:

(i)	any law or regulation;

(ii)	any fiduciary duty; or

(iii)	any duty of confidentiality.

(E)

If a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation or other information requested in accordance with paragraph (A)(i) or (A)(ii) above (including, for the avoidance of doubt, where paragraph (D) above applies), then such Party shall be treated for the purposes of the Finance Documents (and payments under them) as if it is not a FATCA Exempt Party until such time as the Party in question provides the requested confirmation, forms, documentation or other information,

(F)	If a Borrower is a US Tax Obligor or the Facility Agent reasonably believes that its obligations under FATCA or any other applicable law or regulation require it, each Lender shall, within ten Business Days of:

(i)	where the Original Borrower is a US Tax Obligor and the relevant Lender is an Original Lender, the date of this Agreement;

(ii)	where a Borrower is a US Tax Obligor on a Transfer Date and the relevant Lender is a New Lender, the relevant Transfer Date;

(iii)	the date a new US Tax Obligor accedes as a Borrower; or

(iv)	where a Borrower is not a US Tax Obligor, the date of a request from the Facility Agent,

---

(a)	a withholding certificate on Form W-8, Form W-9 or any other relevant form; or

(b)	any withholding statement or other document, authorisation or waiver as the Facility Agent may require to certify or establish the status of such Lender under FATCA or that other law or regulation.

(G)	The Facility Agent shall provide any withholding certificate, withholding statement, document, authorisation or waiver it receives from a Lender pursuant to paragraph (F) above to the relevant Borrower.

(H)

If any withholding certificate, withholding statement, document, authorisation or waiver provided to the Facility Agent by a Lender pursuant to paragraph (F) above is or becomes materially inaccurate or incomplete, that Lender shall promptly update it and provide such updated withholding certificate, withholding statement, document, authorisation or waiver to the Facility Agent unless it is unlawful for the Lender to do so (in which case the Lender shall promptly notify the Facility Agent). The Facility Agent shall provide any such updated withholding certificate, withholding statement, documentation, authorisation or waiver to the relevant Borrower.

(I)	The Facility Agent may rely on any withholding certificate, withholding statement, document, authorisation or waiver it receives from a Lender pursuant to paragraph (F) or (H) above without further verification. The Facility Agent shall not be liable for any action taken by it under or in connection with paragraphs (F), (G) or (H) above.

(J)

Without prejudice to any other term of this Agreement, if a Lender fails to supply any withholding certificate, withholding statement, document, authorisation, waiver or information in accordance with paragraph (F) above, or any withholding certificate, withholding statement, document, authorisation, waiver or information provided by a Lender to the Facility Agent is or becomes materially inaccurate or incomplete, then such Lender shall indemnify the Facility Agent, within three Business Days of demand, against any cost, loss, Tax or liability (including, without limitation, for negligence or any other category of liability whatsoever) incurred by the Facility Agent (including any related interest and penalties) in acting as Facility Agent under the Finance Documents as a result of such failure.

6.	Fees

6.1	Commitment fee

(A)	The Original Borrower shall pay to the Facility Agent for the account of each Lender a fee computed as follows:

(i)	when Commitment is available for utilisation, at a rate equal to 30 per cent. per annum of the then applicable Margin; and

(ii)	when Commitment is not then available for utilisation, at a rate equal to 20 per cent. per annum of the then applicable Margin.

(B)	The accrued commitment fee is payable quarterly (on each of 31 March, 30 June, 30 September and 31 December) in arrears on any undrawn and uncancelled portion

---

(C)	Notwithstanding paragraphs (A) and (B) above, the Original Borrower shall not be required to pay any such commitment fees to the Facility Agent for the account of any Lender during the period in which such Lender is a Non-Funding Lender.

6.2	Front end and underwriting fees

6.3	Facility Agent fee

6.4	Security Agent fee

6.5	The Technical Bank fee

6.6	The Modelling Bank fee

6.7	The Documentation Bank fee

1.	Tax Gross Up and Indemnities

1.1	Definitions

---

1.2	Tax gross-up

(A)	Each Obligor shall make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law.

(B)	The Original Borrower shall promptly upon becoming aware that an Obligor must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Facility Agent accordingly.

(C)	If a Tax Deduction is required by law to be made by an Obligor, the amount of the payment due from that Obligor shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.

(D)	If an Obligor is required to make a Tax Deduction, that Obligor shall make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law.

(E)

Within thirty days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Obligor making that Tax Deduction shall deliver to the Facility Agent for the Finance Party entitled to the payment evidence reasonably satisfactory to that Finance Party (acting reasonably) that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.

(F)	If an Obligor makes any payment to a Finance Party in respect of or relating to a Tax Deduction, but such Obligor was not obliged to make such payment, the relevant Finance Party shall within five Business Days of demand refund such payment to such Obligor.

1.3	Tax Indemnity

(A)	Except as provided below, the Original Borrower shall (within five Business Days of demand by the Facility Agent) indemnify a Finance Party against any loss, liability or cost which that Finance Party determines will be or has been (directly or indirectly) suffered by that Finance Party for or on account of Tax, by that Finance Party in respect of a Finance Document.

(B)	Paragraph (A) above shall not apply:

(i)	with respect to any Tax assessed on a Finance Party under the law of the jurisdiction in which:

(a)	that Finance Party is incorporated or, if different, the jurisdiction (or jurisdictions) in which that Finance Party is treated as resident for tax purposes; or

(b)	that Finance Party’s Facility Office is located in respect of amounts received or receivable in that jurisdiction,

---

(ii)	to the extent a loss, liability or cost is compensated for by an increased payment under clause 15.2 (Tax gross-up); or

(iii)	to the extent a loss, liability or cost relates to a FATCA Deduction required to be made by a Party; or

(iv)	with respect to any Tax assessed prior to the date which is 180 days prior to the date on which the relevant Finance Party requests such a payment from the Original Borrower, unless a determination of the amount claimed could only be made on or after the first of those dates.

(C)	A Finance Party making, or intending to make a claim under paragraph (A) above shall promptly notify the Facility Agent of the event which will give, or has given, rise to the claim, following which the Facility Agent shall provide to the Original Borrower a copy of the notification by such Finance Party.

(D)

A Finance Party shall, on receiving a payment from an Obligor under this clause, notify the Facility Agent. The Finance Parties will undertake to use reasonable endeavours to obtain reliefs and remissions for taxes and deductions and to reimburse that Obligor for reliefs, remissions or credits obtained (but without any obligation to arrange its tax affairs other than as it sees fit nor to disclose any information about its tax affairs).

1.4	Tax Credit

(A)	If:-

(i)	an Obligor makes a Tax Payment, and

(ii)	a Tax Credit is attributable either to an increased payment of which that Tax Payment forms part, or to that Tax Payment, and

(iii)	that Finance Party has obtained, utilised and retained that Tax Credit,

(B)	Nothing in this clause will:

(i)	interfere with the rights of any Finance Party to arrange its affairs in whatever manner it thinks fit; or

(ii)	oblige any Finance Party to disclose any information relating to its Tax affairs or computations.

1.5	Stamp Taxes

---

1.6	Value added tax

(A)

All consideration expressed to be payable under a Finance Document by any Party to a Finance Party shall be deemed to be exclusive of any VAT. If VAT is chargeable on any supply made by any Finance Party to any Party in connection with a Finance Document, that Party shall pay to the Finance Party (in addition to and at the same time as paying the consideration) an amount equal to the amount of the VAT against delivery of an appropriate VAT invoice.

(B)

Where a Finance Document requires any Party to reimburse a Finance Party for any costs or expenses, that obligation shall be deemed to extend to all VAT incurred by the Finance Party in respect of the costs or expenses to the extent that the Finance Party reasonably determines that neither the Finance Party nor any other member of any VAT group of which it is a member is entitled to credit or repayment of the VAT.

1.7	FATCA Deduction

(A)	Each Party may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.

(B)

Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction), and in any case at least three Business Days prior to making a FATCA Deduction, notify the Party to whom it is making the payment and, on or prior to the day on which it notifies that Party, shall also notify the Original Borrower, the Facility Agent and the other Finance Parties.

2.	Increased Costs

2.1	Increased costs

(A)

Subject to clause 16.3 (Exceptions) the Original Borrower shall, within five Business Days of a demand by the Facility Agent, pay for the account of a Finance Party the amount of any Increased Costs incurred by that Finance Party or any of its Affiliates as a result of the introduction of or any change in (or in the interpretation, administration or application by any governmental body or regulatory Authority of) any law or regulation (whether or not having the force of law, but if not, being of a type with which that Finance Party or Affiliate is expected or required to comply), or as a result of the implementation or application of, or compliance with, Basel III, CRD IV or any law or regulation that implements or applies Basel III or CRD IV.

(B)	In this Agreement “Increased Costs” means:

(i)	a reduction in the rate of return from the Facility or on a Finance Party’s (or its Affiliate’s) overall capital;

(ii)	an additional or increased cost; or

(iii)	a reduction of any amount due and payable under any Finance Document,

---

2.2	Increased cost claims

(A)	A Finance Party intending to make a claim pursuant to clause 16.1 (Increased costs) shall notify the Facility Agent of the event giving rise to the claim, following which the Facility Agent shall promptly notify the Original Borrower.

(B)	Each Finance Party shall provide a certificate confirming the amount of its Increased Costs.

2.3	Exceptions

(A)	Clause 16.1 (Increased costs) does not apply to the extent any Increased Cost is:

(i)	attributable to a Tax Deduction required by law to be made by an Obligor provided that this clause is without prejudice to any rights which the affected Lender may have under clause 15.2 (Tax gross-up) to receive a grossed up payment;

(ii)	attributable to a FATCA Deduction required to be made by a Party;

(iii)	the subject of a claim under clause 15.3 (Tax Indemnity) (or might be or have been the subject of a claim under clause 15.3 (Tax Indemnity) but for any of the exclusions in paragraph (B) of clause 15.3 (Tax Indemnity));

(iv)	incurred prior to the date which is 180 days prior to the date on which the Finance Party makes a claim in accordance with clause 16.2 (Increased cost claims), unless a determination of the amount incurred could only be made on or after the first of those dates;

(v)	attributable to the wilful breach by the relevant Finance Party or any of its Affiliates of any law or regulation; or

(vi)

attributable to the implementation or application of or compliance with the “International Convergence of Capital Measurement and Capital Standards, a Revised Framework” published by the Basel Committee on Banking Supervision in June 2004 in the form existing on the Effective Date (but excluding any amendment contained in Basel III) (“Basel II”) or any other law or regulation which implements Basel II (whether such implementation, application or compliance is by a government, regulator, Finance Party or any of its Affiliates).

(B)	In this clause 16.3 (Exceptions), a reference to a “Tax Deduction” has the same meaning given to the term in clause 15.1 (Definitions).

3.	Other Indemnities

3.1	Currency indemnity

(A)	If any sum due from an Obligor under the Finance Documents (a “Sum”), or any order, judgment or award given or made in relation to a Sum, has to be converted

---

(i)	making or filing a claim or proof against that Obligor; or

(ii)	obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,

(B)	Each Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.

3.2	Other indemnities

(A)	the occurrence of any Event of Default;

(B)	a failure by an Obligor to pay any amount due under a Finance Document on its due date;

(C)	funding, or making arrangements to fund, its participation in a Utilisation requested by a Borrower in a Utilisation Request but not made by reason of a Default or an act or omission on the part of an Obligor; and

(D)	a Utilisation (or part of a Utilisation) not being prepaid in accordance with a notice of prepayment given by a Borrower.

3.3	Indemnity to the Agents

(A)	any cost, loss or liability incurred by that Agent (acting reasonably) as a result of:

(i)	investigating any event which it reasonably believes is a Default;

(ii)	acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised by an Obligor; or

(iii)	instructing lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as permitted under this Agreement; and

(B)	any cost, loss or liability (including for negligence or any other category of liability whatsoever) incurred by that Agent (otherwise than by reason of that Agent’s gross negligence or wilful misconduct) (or, in the case of any cost, loss or liability pursuant

---

4.	Mitigation by the Lenders

4.1	Mitigation

(A)

Each Finance Party shall, in consultation with the Original Borrower, use all reasonable endeavours to mitigate or remove any circumstances which arise and which would result in any facility ceasing to be available or any amount becoming payable under or pursuant to, or cancelled pursuant to, any of clause 10.2 (Illegality), clause 15.2 (Tax gross-up), clause 16.1 (Increased costs) or clause 13.2 (Market disruption) including (but not limited to) transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office.

(B)	Paragraph (A) above does not in any way limit the obligations of any Obligor under the Finance Documents.

(C)	Each Finance Party shall notify the Facility Agent as soon as it becomes aware that any circumstances of the kind described in paragraph (A) above have arisen or may arise. The Facility Agent shall notify the Original Borrower promptly of any such notification from a Finance Party.

4.2	Limitation of liability

(A)	Each Obligor shall promptly indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of steps taken by it under clause 18.1 (Mitigation).

(B)	A Finance Party is not obliged to take any steps under clause 18.1 (Mitigation) if, in the bona fide opinion of that Finance Party (acting reasonably), to do so might in any way be prejudicial to it.

1.	Forecasts and Calculations

1.1	Forecast Procedures

(A)

Not less than 30 Business Days before any proposed or required Forecast Date, the Original Borrower and the Technical and Modelling Bank shall consult together with a view to preparing and agreeing the relevant Forecast including the Forecast Assumptions and all associated calculations and information. The Original Borrower shall ensure that a new or updated reserves report is prepared by the Reserves Consultant for the Forecast prepared for 31 March 2019 and for each Forecast prepared on subsequent Forecast Dates. Each party shall consult in good faith and act reasonably, and shall make available sufficiently experienced personnel, with a view to reaching agreement as soon as reasonably practicable. Each Forecast (and all Forecast Assumptions used) shall have due and proper regard to any reasonable

---

(B)

The Original Borrower shall provide its proposed Forecast to each Lender and the Facility Agent 15 Business Days before the relevant Forecast Date and the Technical and Modelling Bank shall provide their commentary on such Forecast, including whether it agrees or disagrees with such Forecast (including, if applicable, details of the grounds for its determination not to agree with the Forecast). Each Lender shall have 10 Business Days to approve the Forecast and, once approved by the Majority Lenders that Forecast will apply for the relevant Forecast Period. If any such Lender has not objected in writing to the Forecast within such 10 Business Day period, then such Lender shall be deemed to have approved the Forecast. A Forecast shall only be deemed to have been accepted by such Lenders if it has been approved (or deemed approved) by the Majority Lenders. In making any objection, such Lenders must act reasonably and no objection may be made other than on the grounds that a Forecast Assumption which has been used in the Forecast is not reasonable in the circumstances, or on the grounds of proven or manifest error.

(C)

In making any determination in the Forecasting Procedures the Majority Lenders shall give due and proper regard to any information provided (including any report delivered by the Consultants for the purposes of the Forecast) or representations made by the Original Borrower and the Technical and Modelling Bank. Any determination shall take due and proper regard of any plan of development, work program and budget (and any updates thereto) and the provisions and requirements of the Project Agreements. In making any determination in accordance with the Forecasting Procedures in relation to product prices, the price of crude oil derived from a relevant Field will be subject to a floor which will be determined subject to and in accordance with the Forecasting Procedures, provided that the floor may not be reduced at any time to less than 70% of the average Brent Forward Curve for the next 36 months as at the date the relevant Forecast is prepared. Any determination in relation to product prices shall be reasonable in the circumstances and shall be made in accordance with current business practices, applied on a consistent, reasonable and non-discriminatory basis and reflecting market practice at the time.

(D)	If the Majority Lenders do not approve the Forecast, the Original Borrower and the Technical and Modelling Bank shall prepare a revised Forecast which satisfies, in all reasonable respects, the objections of the Majority Lenders.

(E)	If, for any reason, a Forecast is not agreed prior to the applicable Forecast Date, the then applicable Forecast shall continue to apply until the new Forecast is prepared and agreed in accordance with the Forecast Procedures.

1.2	Contents of Forecast

---

(A)	Each Forecast will set out or include:

(i)	the Technical Assumptions and Economic Assumptions upon which the Forecast is based (including, without limitation, on product prices);

(ii)	an updated Model;

(iii)	the calculation of the Borrowing Base Amount;

(iv)	the calculation of any mandatory prepayment required because the aggregate of outstandings under the Facility exceeds the Borrowing Base Amount;

(v)	calculations of the Field Life Cover Ratio and the Loan Life Cover Ratio;

(vi)	the calculation of the Reserve Tail Date;

(vii)

the aggregate economically recoverable proved (1P) reserves and the proved and probable (2P) reserves remaining to be produced from the Borrowing Base Assets (reflecting any updated reserves report produced by the Reserves Consultant in respect of that Forecast, or if no such updated reserves report has been produced, reflecting the immediately preceding reserves report as may be updated by the Original Borrower with the agreement of the Technical Consultant and the Technical and Modelling Bank (acting reasonably);

(viii)	the revised Amortisation Schedule (if required) or confirmation that no revision to the Amortisation Schedule is required pursuant to clause 9.2 (Amendment to Amortisation Schedule); and

(ix)	such other reasonable information as the Technical and Modelling Bank may reasonably require.

(B)	All projections and calculations to be made under this clause shall be expressed and made in US Dollars (at the Facility Agent’s spot rate of exchange at the time if so required (which the Facility Agent will provide promptly on request)).

1.3	New Borrowing Base Assets and removal of Borrowing Base Assets

(A)	Whenever a new asset becomes, or is to become, a Borrowing Base Asset (including the designation of the Greater Tortue Block Assets), a new Forecast must first be prepared and provided to each Lender for approval, in accordance with this clause 19 (Forecasts and Calculations), together with a Sources and Uses Statement, including that asset.

(B)

Following notice from the Original Borrower that it has elected for the Greater Tortue Block Assets to be designated as Borrowing Base Assets and on or before the date on which a Forecast is approved to designate the Great Tortue Block Assets as Borrowing Base Assets, the Security Agent and the relevant Obligor shall execute each of the Greater Tortue Security Documents (in form and substance satisfactory to the Security Agent, acting reasonably).

---

(C)	Subject to paragraph (D) below, the Original Borrower may at any time elect that any asset (other than those situated in the Ghana Contract Area), which at that time is included as a Borrowing Base Asset, be excluded from the Borrowing Base Assets.

(D)	Whenever a Borrowing Base Asset is to cease to be designated as a Borrowing Base Asset, a new Forecast must first be prepared and provided to each Lender for approval, in accordance with this clause 19 (Forecasts and Calculations), together with a Sources and Uses Statement, which does not include that Borrowing Base Asset.

1.4	Manner of Calculations

(A)	All the calculations required for each Forecast will be calculated using the Model on the basis of the Technical Assumptions and Economic Assumptions determined for the purposes of that Forecast.

(B)	Where the manner of determining any of the calculations required for a Forecast differs between the programme on which the Model operates and the provisions of the Finance Documents, the Finance Documents will prevail.

1.5	Borrowing Base Amount

1.6	Calculation of Borrowing Base Amount

(A)	Subject to paragraph (C) below, the Borrowing Base Amount for the purposes of the Facility shall be the lesser of:

(i)	the sum of: (a) the net present value of Net Cash Flow until the Field Depletion Date plus (a) the net present value of Relevant Capital Expenditure, divided by 1.4; and

(ii)	the sum of: (a) the net present value of Net Cash Flow until the Final Maturity Date plus (a) the net present value of Relevant Capital Expenditure, divided by 1.15;

(B)	The discount rate utilised to determine the net present values referred to in paragraph (A) above shall be eight per cent. and shall be applied in calculating the net present value of cash flows.

(C)	In determining the reserves attributable to:

(i)	the Ghana Block Assets and the EG Block Assets and any Developed Assets, such determination shall take account of the proved and probable (2P) reserves;

(ii)	the Greater Tortue Block Assets:

(a)	while the Greater Tortue Block Assets are a Developing Asset, such determination shall take account of the proved (1P) reserves; and

---

(b)	on and from commercial start-up and satisfaction of the Completion Test in respect of the Greater Tortue Block Assets, such determination shall take account of proved and probable (2P) reserves,

(iii)	Developing Assets (other than the Greater Tortue Block Assets), such determination shall take account of proved (1P) reserves only.

(D)	The contribution of the EG Block Assets and the Greater Tortue Block Assets to the Borrowing Base Amount will be capped, in aggregate, at USD 500 million or such larger amount as may be agreed by the Supermajority Lenders.

1.7	Model

(A)	The Technical and Modelling Bank and the Original Borrower may each make proposals with regard to amendments to the Model which it believes:

(i)	in good faith are required for the purpose of correcting any manifest error in the form or structure of the Model; or

(ii)	to incorporate additional assumptions.

(B)

If the Technical and Modelling Bank and the Original Borrower are unable to agree on the required changes to the Model within 15 Business Days from the date on which such changes were proposed, then the matter shall, on the request of the Original Borrower or the Technical and Modelling Bank, be referred for resolution to an appropriate expert appointed by the Technical and Modelling Bank (being a person having appropriate independent expertise with respect to, but no interest in, the outcome of the matter referred to it).

(C)

The costs of any references to an expert and the costs, if any, incurred in giving effect to any agreed revision to the Model will be borne by the Original Borrower except, in the case of the costs of any reference to an expert only, if the expert determines that any proposal by the Technical and Modelling Bank in respect of the changes to the Model which are in dispute could not be regarded as reasonable and are rejected by such expert, in which case such costs shall be borne by the Lenders.

(D)	Any amendments to the Model will not be made until such time as such amendment has been agreed or determined (as appropriate) pursuant to paragraphs (A) and (B) above. Prior to such amendment being incorporated into the Model, the Model will continue to be utilised without such amendment.

(E)	Where the manner of determining any of the calculations required for a Forecast is amended as a consequence of any amendments made to the Model, the Finance Documents shall be deemed to be amended to reflect any such amendment.

1.8	Approved Developments and Permitted Acquisitions

---

1.	Bank Accounts and Cash Management

1.1	Project Accounts

(A)	(i)    Each Obligor shall establish and maintain each of the Project Accounts, as required under the terms of this Agreement, with the Account Bank in London or such other jurisdiction approved by the Facility Agent (acting reasonably).

(i)

Notwithstanding any other provision of this Agreement or any other Finance Document KEO may maintain and operate such bank accounts (which are not Project Accounts) as it, in its discretion, sees fit and may, subject to clause 28.26(B)-(C), receive and make withdrawals from any such account without restriction. Any amounts standing to the credit of any such account shall not be subordinated to the rights of the Lenders and shall not be available to the Finance Parties whether as secured or unsecured creditors of the Obligors and irrespective of whether an Event of Default has occurred. KEO may grant security over any such account in favour of any person and shall not be required to grant any Security Interest in favour of the Finance Parties.

(B)	The Project Accounts, other than the Ghana Working Capital Cedi Account which shall be denominated in Ghanaian Cedi, shall be denominated in US Dollars. Any sum constituting interest paid in respect of the credit balance on any Project Account shall be treated in the same manner as any other sum credited to a Project Account.

(C)	Each Project Account will be a separate account at the Account Bank. The Project Accounts will be maintained until the Discharge Date.

(D)	Amounts may be deposited into the Onshore Working Capital Accounts, to the extent necessary, to meet local onshore payments only, provided that the aggregate

---

(E)	Subject to paragraph (D) above and to the order of payments provided for in the Cash Waterfall, each Obligor shall maintain the balance of the Offshore Proceeds Accounts and the Onshore Working Capital Accounts, which, when aggregated and taken together with amounts paid in advance for its liabilities under the Project Agreements, is prudent and reasonable.

1.2	Other bank accounts

(A)	Each Obligor (but excluding KEO for these purposes) shall not open or maintain any bank accounts other than:

(i)

the Project Accounts (including such other accounts established by KEG with the Account Bank which would be Project Accounts but for the execution of the KEG Onshore Security Assignment and the KEG Offshore Security Assignment by all the parties thereto in accordance with this Agreement), which shall not be overdrawn at any time and any withdrawals from such Project Accounts shall only be made out of cleared funds;

(ii)	the Distributions Reserve Accounts, which shall not be overdrawn at any time; and

(iii)

such accounts as may be necessary or appropriate for it to perform its obligations as an operator and, except into which moneys received from, or for the account of, any other party may be paid as required (but any money being related to any carried interest (including in respect of the carried interest of EO) in relation to any Borrowing Base Asset shall be paid into an Offshore Proceeds Account) (an “Interested Third Party”),

(B)	The Lenders will account to KEH and/or the relevant Obligor if and to the extent they receive any proceeds from any account of KEO (which is not a Project Account) as referred to in clause 20.1(A) or any other account referred to in 20.2(A)(ii) or (A)(iii) above, and shall hold any such moneys to the account of, and on trust for, KEH or, as the case may be, KEO.

(C)	Any Lender that is in receipt of proceeds as described in paragraph (B) above shall:

(i)	within five Business Days notify details of the receipt or recovery to the Original Borrower, KEH and the Facility Agent; and

(ii)	within five Business Days of demand by KEH or KEO, pay an amount equal to such receipt or recovery to KEH or, as the case may be, KEO.

---

1.3	Appointment of Account Bank

(A)	Any appointment of or change to an Account Bank will become effective only upon that Account Bank executing, or new Account Bank acceding to the terms of, the Project Accounts Agreements or such other terms as may be approved by the Original Borrower and the Facility Agent (acting reasonably).

(B)

An Obligor may, with the consent of the Facility Agent (not to be unreasonably withheld or delayed), change an Account Bank to another bank which meets the requirements of paragraph (C) below, but subject to paragraph (A) above and clause 20.1 (Project Accounts). If an Account Bank resigns, then the relevant Obligor will appoint a replacement Account Bank which meets the requirements of paragraph (C), but subject to paragraph (A) and clause 20.1 (Project Accounts).

(C)	Each Account Bank shall be a bank whose long-term unguaranteed, unsecured securities or debt has a rating of A- or higher from Standard and Poor’s or A3 or higher from Moody’s (or equivalent) or such lower rating as the Facility Agent and the Original Borrower shall agree in writing.

(D)	If the Account Bank refuses to establish or maintain any Project Account, as required under the terms of this Agreement, the Original Borrower may appoint a replacement Account Bank in respect of the affected account which meets the requirements of paragraph (C), but subject to paragraph (A) and clause 20.1 (Project Accounts).

1.4	Security Documents and Project Accounts Agreements

(A)

Subject to paragraph (C) below, the Project Accounts shall be subject to a first ranking Security Interest in favour of the Secured Parties. The relevant Obligors shall forthwith upon any change to the Account Bank, or upon opening any Project Account which is not subject to the security constituted by the relevant Security Documents, execute and deliver to the Security Agent such supplemental Security Documents as the Security Agent and the Facility Agent may reasonably require in order to create a first priority Security Interest over that Project Account in favour of the Finance Parties. Such supplemental Security Documents must be in a form and in substance satisfactory to the Facility Agent and the Security Agent.

(B)	Subject to paragraph (C) below, the Original Borrower shall, before any Project Account is opened (other than in a country in which a Borrowing Base Asset is situated excluding Ghana), procure that the Obligor and the Account Bank have entered into the Project Accounts Agreements.

(C)

The obligations under paragraphs (A) and (B) above shall not apply to the KES Offshore Proceeds Account, the KEISL Offshore Proceeds Account and the KEM Offshore Proceeds Account unless the Greater Tortue Block Assets are designated as Borrowing Base Assets. The Obligors will satisfy their obligations under paragraphs (A) and (B) above, if the relevant Greater Tortue Security Documents are executed in accordance with Clause 19.3(B) (New Borrowing Base Assets and removal of Borrowing Base Assets).

(D)

In the case of execution of any of the Security Documents and Project Accounts Agreements referred to in paragraphs (A) and (B) above, the Original Borrower shall deliver to the Facility Agent documents which are the equivalent of those referred to in paragraph 1 of Schedule 3 (Conditions Precedent) in respect of such Security Documents and Project Accounts Agreements, together with any legal opinions

---

(E)	The detailed operating procedures for the Project Accounts will be agreed between the relevant Obligor which maintains that Project Account and each Account Bank, but in the event of any inconsistency between those procedures and the Project Accounts Agreements or this Agreement, the provisions of this Agreement shall prevail.

1.5	Control on withdrawals following Default

(A)	with the prior consent of the Facility Agent;

(B)	to meet an Obligor’s payment obligations under the Finance Documents (but not any payment obligations owed to any Junior Finance Party or the Proceeds Agent, each as defined in the KEFI Intercreditor Agreement) or the Project Agreements on the relevant due date; or

(C)	to pay for Project Costs not included in paragraph (B) above where:

(i)	the payment in question has been budgeted for and the Facility Agent have given their written consent to the relevant expenditure or cost being incurred; or

(ii)	the failure to make the payment in question would materially and adversely affect the business or financial condition of the Borrowers or any other Obligor.

1.6	Distributions Reserve Account

(A)

Each Obligor may maintain a Distributions Reserve Account into which the amount of any permitted distribution under clause 28.23 (Distributions), permitted indebtedness and contributions to the capital of an Obligor may be credited subject to compliance with the Cash Waterfall and such amounts shall not be subordinated to the rights of the Lenders. Amounts standing to the credit of the Distributions Reserve Accounts shall not be available to the Finance Parties whether as secured or unsecured creditors of the relevant Obligor and irrespective of whether an Event of Default has occurred. The Obligors may grant security over their Distributions Reserve Account in favour of any person and shall not be required to grant any Security Interest over the Distributions Reserve Account in favour of the Finance Parties. Sums standing to the credit of the Distributions Reserve Accounts may be withdrawn and applied as the Obligor sees fit.

(B)

The Lenders will account to KEH and/or the relevant Obligor if and to the extent they receive any proceeds from a Distributions Reserve Account or any account of KEO (which is not a Project Account), and shall hold any such moneys to the account of, and on trust for, KEH or, as the case may be, KEO. If any other person has a Security Interest or claim against amounts standing to the credit of a Distributions Reserve Account, any such interest or claim shall be limited to these amounts and they shall not have recourse to the assets of any Obligor generally, nor shall they

---

(C)	Any Lender that is in receipt of proceeds as described in paragraph (B) above, shall turnover such proceeds to KEH or, as the case may be, KEO in accordance with paragraph (C) of clause 20.2 (Other bank accounts) above.

2.	Operation of the Offshore Proceeds Accounts

2.1	Payments in

(A)	all Gross Revenues received;

(B)	the proceeds of any Loan or amounts received under an Intercompany Loan Agreement pursuant to clauses 5.1(D), 21.2(A)(ii) and 21.2(A)(iii);

(C)	the proceeds of repayment of any loan made pursuant to any FPSO Construction Financing;

(D)	the proceeds of any Permitted Disposals; and

(E)	any other amount payable to, or received by an Obligor (including payments received under any offtake contract (and the Obligors shall direct any person making such payments that any such payment shall be paid into that account only)), but excluding any amount which may be:

(i)	credited to the Distributions Reserve Account of the Original Borrower;

(ii)	lent to an Obligor under an Intercompany Loan Agreement pursuant to clause 21.2(A)(viii); or

(iii)	credited to an account of KEO (which is not a Project Account),

2.2	Withdrawals – No Default Outstanding

(A)	Subject to paragraph (B) below, unless otherwise provided and unless there is a Default outstanding, amounts may only be withdrawn from the Offshore Proceeds Accounts and the Onshore Working Capital Accounts (including by way of transfer to any other account) if they are applied for the following purposes and subject to the following priority:

(i)	first, payment of Project Costs provided that, if the latest Sources And Uses Statement shows that there is a shortfall in funding projected to be available, then such available funding must, unless the Majority Lenders otherwise agree, be allocated to meet costs in the following order of priority:

(a)	the Ghana Contract Area and the EG Contract Area;

(b)	the Greater Tortue Contract Area; and

---

(c)	any other Project Costs.

(ii)	secondly, pari passu, payment of (or the funding of an Obligor, including by way of payment under any Intercompany Loan Agreement, to enable it to pay) any Financing Costs (excluding any payments of principal) under the Facility due but unpaid (applied to overdue amounts first, unpaid fees second, and unpaid interest third) or scheduled payments due but unpaid under a Hedging Agreement;

(iii)

thirdly, pari passu, payments of (or the funding of an Obligor, including by way of payment under any Intercompany Loan Agreement to enable it to pay) principal under the Facility due but unpaid (applied to overdue amounts first and then to unpaid principal payments) and payment of (or the funding of a Borrower, including by way of payment under any Intercompany Loan Agreement to enable it to pay) any liabilities, including any early termination payment, due but unpaid under a Hedging Agreement;

(iv)	fourthly, payment of any mandatory prepayments required because the outstandings under the Facility exceed the Borrowing Base Amount as determined by the most recent Forecast;

(v)	fifthly, payment of Scheduled KEL Debt Payments which are made by way of a Scheduled KEL Debt Payment Distribution;

(vi)	sixthly, payments required to be made into the DSRA up to the Required Balance;

(vii)	seventhly, prepayments under the Finance Documents and/or providing cash collateral under any Letter of Credit; and

(viii)

lastly, so long as the Dividend Release Test is met, to make distributions to its shareholders at the relevant Borrower’s discretion, which shall include making payments to the Distributions Reserve Account and payments under any Intercompany Loan Agreement provided that the amount distributed shall be based on the aggregate amount standing to the credit of the Offshore Proceeds Accounts on the relevant payment date after the amounts in (i) to (vii) above have been deducted.

(B)

Notwithstanding paragraph (A) above, so long as the Dividend Release Test is met, a Borrower may make a Utilisation in order to deposit an amount directly into a Distribution Reserve Account in an amount less than or equal to the amount by which the funding which is projected to be available to meet costs exceeds the aggregate costs (for these purposes excluding Shareholder Distributions), in each case, as set out in the latest Sources and Uses Statement.

---

3.	Debt Service Reserve Account

3.1	Funding of Debt Service Reserve Account

(A)	The Original Borrower shall ensure on an ongoing basis that deposits are made into the Debt Service Reserve Account in accordance with the Cash Waterfall until the balance of such account is not less than the Required Balance. The funding of the Debt Service Reserve Account shall continue in accordance with the Cash Waterfall until the Discharge Date.

(B)

Failure to maintain the Required Balance standing to the credit of the Debt Service Reserve Account shall not constitute an Event of Default for the purposes of clause 29 (Events of Default), but failure to apply amounts from the Project Accounts during the relevant Forecast Period in accordance with the Cash Waterfall shall constitute an Event of Default for the purposes of clause 29 (Events of Default).

(C)	Notwithstanding the provisions of paragraphs (A) and (B) above, a Borrower may (without being restricted by the Cash Waterfall) make a Utilisation under the Facility to fund the Debt Service Reserve Account.

3.2	Withdrawals from Debt Service Reserve Account

(A)	Subject to paragraph (B) below, amounts standing to the credit of the Debt Service Reserve Account may be withdrawn only to pay any Financing Costs under the Facility and to make Scheduled KEL Debt Payments in accordance with the Cash Waterfall.

(B)	In addition, withdrawals may be made from the Debt Service Reserve Account to the extent the amount withdrawn is equal to or less than the amount (if any) by which the amount standing to the credit of the Debt Service Reserve Account exceeds the applicable Required Balance at that time. Any such withdrawal may be applied in accordance with, and for the purposes set out in, the Cash Waterfall.

4.	Authorised Investments

4.1	Power of investment

4.2	Type of investment

(A)	The Obligors shall use their reasonable endeavours to procure that there are maintained from time to time a prudent spread of Authorised Investments and that the maturity of Authorised Investments is such that they can be liquidated to enable all payment obligations under the Finance Documents to be met on the due date.

(B)	If any Authorised Investment ceases to be an Authorised Investment, the relevant Obligor which maintains that Authorised Investment will, as soon as reasonably practicable upon becoming aware of this, procure that the relevant investment is replaced by an Authorised Investment or cash, provided that if it does not propose

---

4.3	Realisations

(A)

Upon the realisation (whether by way of disposal, maturity or otherwise) of any Authorised Investment, the net proceeds of realisation shall either immediately be credited directly to the Project Account from which the Authorised Investment or such investment was made, or (unless a Default has occurred and is continuing) immediately be invested in another Authorised Investment, whichever the relevant Obligor directs.

(B)

Upon the receipt of any interest, dividends or other income from or in respect of any Authorised Investment, such interest, dividends or other income shall be credited to the Project Account concerned with the Authorised Investment or such other investment from which such interest, dividend or other income derives, or (if such interest, dividend or other income is derived from an Authorised Investment and such Authorised Investment is to be retained after such interest, dividend or other income is received and the relevant Obligor so requests) the relevant interest, dividend or other income shall be reinvested in that Authorised Investment.

4.4	Project Accounts include Authorised Investments

(A)

Any reference in this Agreement to the balance standing to the credit of one of the Project Accounts shall be deemed to include a reference to the Authorised Investments in which all or part of such balance is for the time being invested. (other than for the purposes of determining the balance required to comply with clause 20.1 (Project Accounts)). In the event of any dispute as to the value of any Authorised Investment for the purpose of determining the amount deemed to be standing to the credit of a Project Account, that value shall be determined by the Facility Agent acting reasonably and in good faith and following consultation with the Original Borrower and having given due consideration to any representations given by the Original Borrower within the period required by the Facility Agent (which period shall not, in any event, be of shorter duration than five Business Days). If the Original Borrower so requests, the Facility Agent will give the Original Borrower details of the basis or method of its determination.

(B)	An Obligor may, by notice in writing to the Facility Agent and the relevant Account Bank, deem an Authorised Investment to be concerned with a different Project Account so as to transfer Authorised Investments between Project Accounts, if:

(i)	the aggregate amount standing to the credit of each Project Account remains the same; or

(ii)	the transfer of an equivalent amount between those Project Accounts would be permitted.

4.5	Security over Authorised Investments

---

4.6	Interest on balances in Project Accounts

1.	Information Undertakings

1.1	Books of account and auditors

(A)	keep proper books of account relating to its business; and

(B)	appoint and maintain as its auditors any Auditor.

1.2	Financial statements

(A)	Before (but for the avoidance of doubt not after) KEL or any of its Subsidiaries from time to time undertakes an IPO, the Original Borrower shall procure that KEH shall supply to the Facility Agent (in sufficient copies as most recently notified by the Facility Agent as being sufficient to allow one copy for each Lender):

(i)	as soon as they become available, but in any event within 180 days of the end of each financial year, its audited consolidated financial statements for that financial year;

(ii)	within 90 days of the end of each semi-annual period, its unaudited semi-annual consolidated financial statements for that period; and

(iii)	within 90 days of the end of each quarter, its quarterly management reports for that period.

(B)	After (but for the avoidance of doubt not before) KEL or any of its Subsidiaries from time to time undertakes an IPO, the Original Borrower shall procure that KEL shall supply to the Facility Agent (in sufficient copies as most recently notified by the Facility Agent as being sufficient to allow one copy for each Lender):

---

(i)	as soon as they become available, but in any event within 180 days of the end of each financial year, its audited consolidated financial statements for that financial year; and

(ii)	within 90 days of the end of each quarter, its quarterly management reports for that period.

(C)	KEO shall supply to the Facility Agent (in sufficient copies as most recently notified by the Facility Agent as being sufficient to allow one copy for each Lender) within 90 days of the end of each quarter, its quarterly management reports for that period.

(D)	If any audited consolidated financial statements which have been provided to the Facility Agent pursuant to either clause (A)(i) or (B)(i) above contain an auditors’ qualification then, in each case if instructed to do so by the Facility Agent (acting only on the instructions of the Majority Lenders):

(i)	KEO shall supply to the Facility Agent (in sufficient copies as most recently notified by the Facility Agent as being sufficient to allow one copy for each Lender), as soon as practicable, but in any event within 120 days of being so requested, its audited financial statements for its last financial year; and

(ii)	each Borrower and KEEG shall supply to the Facility Agent (in sufficient copies as most recently notified by the Facility Agent as being sufficient to allow one copy for each Lender), as soon as practicable, but in any event within 120 days of being so requested, its audited financial statements for its last financial year.

(E)

If during any financial year of any Borrower or KEEG there is a material change in the nature and extent of the accounting transactions which that Borrower or KEEG enters into, it shall promptly inform the Facility Agent thereof and that Borrower or KEEG (as applicable) shall, if instructed to do so by the Facility Agent (acting on the instructions of the Majority Lenders (acting reasonably)), supply to the Facility Agent (in sufficient copies for each Lender), as soon as they become available, but in any event within 180 days of request, its audited consolidated financial statements for its last financial year.

1.3	Year-end

1.4	Form of financial statements

(A)	KEO and the Original Borrower must ensure that each set of financial statements supplied under this Agreement:

(i)	is certified by an Authorised Signatory of the relevant company as a true and correct copy; and

(ii)	gives (if audited) a true and fair view of, or (if unaudited) fairly represents, the financial condition of the relevant company for the period to the date on which those financial statements were drawn up.

---

(B)	Unless otherwise agreed with the Facility Agent, all accounts of KEH, KEL, KEO, KEEG, KEM, KES and the Original Borrower delivered under this Agreement shall be prepared in accordance with the Approved Accounting Principles.

(C)	KEO and the Original Borrower must notify the Facility Agent of any material change to the manner in which any audited financial statements delivered under this Agreement are prepared.

(D)	If requested by the Facility Agent, each of KEH, KEL, KEO, KEEG, KEM, KES and the Original Borrower must supply to the Facility Agent:

(i)	a full description of any change notified under paragraph (B) above and the adjustments which would be required to be made to those financial statements in order to cause them to use the accounting policies, practices, procedures and reference period upon which such financial statements were prepared prior to such change; and

(ii)	sufficient information, in such detail and format as may be required by the Facility Agent (acting reasonably), to enable the Lenders to make a proper comparison between the financial position shown by the set of financial statements prepared on the changed basis and its most recent audited financial statements delivered to the Facility Agent under this Agreement prior to such change.

1.5	Compliance Certificate

(A)	KEO, KEEG, KEM, KES and the Original Borrower must supply (and, in the case of the Original Borrower, procure that KEH and KEL supply) to the Facility Agent a compliance certificate with each set of financial statements sent to the Facility Agent under clauses 24.2(A), 24.2(B), 24.2(C), 24.2(D) and 24.2(E) above certifying the matters specified in clause 24.4(A)(ii) above.

(B)	A compliance certificate supplied in accordance with paragraph (A) above must be signed by two Authorised Signatories of KEH, KEL, KEO, KEEG, KEM, KES or the Original Borrower, as applicable.

1.6	Project Information and Hedging Information

(A)	Each Obligor must (as soon as reasonably practicable) supply to the Facility Agent, in sufficient copies for all the Lenders if the Facility Agent so requests:

(i)

any new updates to, and amendments to, each agreed budget, or development and/or work programme in relation to each Borrowing Base Asset owned by it as soon as reasonably practicable following receipt from the relevant Operator (and, in any event, within 21 days of receipt) and the latest Operator Report for each Borrowing Base Asset and each Developing Asset owned by it, as soon as reasonably practicable following receipt from the relevant Operator (and, in any event, within 21 days of receipt);

(ii)	copies of all reports provided to any Authority by the Operator which have been copied to an Obligor (and in any event within 21 days of receipt);

(iii)	such technical and commercial information which an Obligor has in its possession relating to a Field or Petroleum Assets or its or their condition

---

(iv)	promptly, details of any material updates or amendments to any Project Agreement.

(B)	Subject to paragraph (C) below, the Original Borrower shall procure that the terms of appointment of the Technical Consultant shall require it (in consultation with the Technical and Modelling Bank) to prepare and deliver the following reports and information to the Technical and Modelling Bank and the Original Borrower for distribution to the Lenders:

(i)	a quarterly report on the Project Costs which have been incurred, reconciled against draw-downs made, equity contributed and cash held in the Project Accounts;

(ii)

a semi-annual report on the progress of each Developing Asset, including confirmation of the projected date for Completion and the aggregate of Project Costs required to achieve Completion (reconciled against the most recent Forecast) and whether there are, in its opinion, any other material issues or concerns of which it is aware in relation to the Developing Asset which should be brought to the attention of the Lenders;

(iii)	a semi-annual report on the operation of each Developed Asset, including the amount and timing of all Entitlement lifted by the Obligors and details of the disposal of that Entitlement (including price); and

(iv)	in any of the foregoing reports, such additional information or commentary as the Technical and Modelling Bank may reasonably require (following prior consultation with the Original Borrower) in order for the Lenders (in the context of their interests under the Finance Documents) to be properly informed about the progress, implementation, development and operation of the Borrowing Base Assets,

(C)

The Technical Consultant shall not be obliged to prepare and deliver, and the Original Borrower shall not be obliged to assist in the preparation and delivery of, reports and information as detailed in clause 24.6(B)(i) to (iv) in relation to the Ghana Block Assets and/or the EG Block Assets subject to the right of the Technical and Modelling Bank or the Majority Lenders (acting reasonably) to request the same. Following such request the Technical Consultant shall prepare and deliver, and the Original Borrower shall assist in the preparation and delivery of, the reports and information in accordance with clause 24.6(B).

---

(D)	At any time when no Technical Consultant is appointed, the Facility Agent and Technical Bank may request that one is appointed and the Original Borrower shall procure such appointment on terms satisfactory to the Technical Bank (acting reasonably) within 10 Business Days of request.

(E)	The Original Borrower must supply to the Facility Agent at the end of each quarter a summary of such information related to its hedging arrangements under clause 28.17 (Hedging) as is currently contained in the relevant SEC Form 10-Q, including for the avoidance of doubt, nominal amount, net mark-to-market, and products used.

1.7	Information: Miscellaneous

(A)	all documents dispatched by each Obligor to its Shareholders (or any class of them) or its creditors generally, at the same time as they are dispatched;

(B)	promptly after becoming aware of them, the details of any material litigation, arbitration or administrative proceedings which are currently threatened or pending against the Guarantor or any member of the Group or in respect of or relevant to an interest in a Borrowing Base Asset or a Greater Tortue Block Asset;

(C)	promptly after they have been issued, copies of any insurance policies in respect of all Agreed Insurances and any renewals in respect of such insurance policies;

(D)	promptly after becoming aware of them, details of any claims made under any Insurance where the claim is for a sum in excess of USD 10 million (or its equivalent in other currencies); and

(E)	promptly, such further information regarding the financial condition, assets, business and operations of the Guarantor or any member of the Group as the Facility Agent may reasonably request.

1.8	Sources and Uses

(A)	The Original Borrower must supply to the Facility Agent on 31 March and 30 September in each year (each such date a “Sources and Uses Statement Date”) and may supply to the Facility Agent at any other time (in sufficient copies for all the Lenders if the Facility Agent so requests) for the following twelve month period:

(i)	a sources and uses statement (“Sources and Uses Statement”) in the form set out in Part I of Schedule 15 to this Agreement; and

(ii)	a liquidity statement (“Liquidity Statement”) in the form set out in Part II of Schedule 15 to this Agreement.

(B)

In relation to any Sources and Uses Statement and/or any Liquidity Statement prepared on a Sources and Uses Statement Date, in the event that the aggregate costs to be applied under any Sources and Uses Statement and/or any Liquidity Statement delivered to the Facility Agent under paragraph (A) above exceed the funding which is projected to be available to meet those costs (respectively), then the Original Borrower shall consult with the Facility Agent and the Technical and

---

(C)

Notwithstanding paragraph (B) above, within 30 days of the relevant Sources and Uses Statement Date, the Original Borrower shall deliver to the Facility Agent the Original Borrower’s remedial plan for the funding of any projected shortfall in funding shown in a Sources and Uses Statement and/or a Liquidity Statement. Each Borrower shall use all reasonable endeavours to comply with such plan (or any update thereto which it delivers to the Facility Agent), and shall consult on a regular basis with the Facility Agent and the Technical and Modelling Bank on the remedial steps being taken to fund any projected shortfall in funding.

(D)

In the event that the sum of Project Costs and Scheduled KEL Debt Payments specified under any Sources and Uses Statement delivered to the Facility Agent under paragraph (A)(i) above exceeds the funding which is projected to be available to meet those Project Costs and Scheduled KEL Debt Payments, then a Junior Payment Stop Event (as defined in the KEFI Intercreditor Agreement) will be deemed to have occurred in accordance with the process set out in Clause 4.4 (Issue of Junior Payment Stop Notice) of the KEFI Intercreditor Agreement. Notwithstanding this clause 24.8(D), nothing shall block the payment of Scheduled KEL Debt Payments or the making of a Scheduled KEL Debt Payment Distribution which is paid or made from amounts standing to the credit of the Distributions Reserve Account.

(E)	A Default or an Event of Default will not occur solely as a result of a Sources and Uses Statement or a Liquidity Statement showing a shortfall in funding.

1.9	Approved Development

1.10	Compliance with Remedial Plan

1.11	Notification of Default

1.12	“Know your customer” and “customer due diligence” requirements

(A)	If:

---

(i)	the introduction of or any change in (or in the interpretation, administration or application by any government or regulatory Authority of) any law or regulation (having the force of law) made after the date of this Agreement;

(ii)	any change in the status of an Obligor (or of a holding company of an Obligor (including a change in the public company status of KEL)) or the composition of the shareholders of an Obligor (or of a holding company of an Obligor (other than a change in the composition of the shareholders of KEL)) after the date of this Agreement; or

(iii)	a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,

(B)

Each Lender shall promptly upon the request of the Facility Agent supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Facility Agent (for itself) in order for the Facility Agent, as the case may be, to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.

(C)	The Original Borrower shall, by not less than 10 Business Days’ prior written notice to the Facility Agent, notify the Facility Agent (which shall promptly notify the Lenders) of its intention to request that one of KEL’s subsidiaries (other than a subsidiary of an Obligor (excluding KEEG) which owns Borrowing Base Assets) becomes an Additional Guarantor pursuant to this Agreement.

(D)

Following the giving of any notice pursuant to paragraph (C) above, if the accession of such Additional Guarantor obliges the Facility Agent or any Lender to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, the Original Borrower shall promptly upon the request of the Facility Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Facility Agent (for itself or on behalf of any Lender) or any Lender (for itself or on behalf of any prospective new Lender) in order for the Facility Agent or such Lender or any prospective new Lender to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the accession of such subsidiary to this Agreement as an Additional Guarantor.

1.13	Forecast Notification Events

---

(A)	The Original Borrower shall notify the Facility Agent and the Lenders promptly after becoming aware of any Forecast Notification Event.

(B)

Any such notification under clause 24.13(A) shall result in the commencement of a consultation period for a period ending 10 Business Days after the date of such notification (a “Consultation Period”) during which time the Original Borrower and the Lenders will consult. Following the end of the Consultation Period, the Lenders will be required to submit their vote to the Facility Agent as to whether to waive or not waive the preparation of an interim Forecast as a result of the Forecast Notification Event in accordance with clause 42 (Amendments and Waivers). If the Majority Lenders do not waive the preparation of an interim Forecast relating to that Forecast Notification Event, the Original Borrower shall prepare a Forecast pursuant to clause 19 (Forecasts and Calculations) and the Facility Agent shall designate a Forecast Date which falls no more than 90 days after the last day of the Consultation Period relating to that Forecast Notification Event.

1.14	Use of websites

(A)	Except as provided below, each Obligor may deliver any information under this Agreement to the Facility Agent by posting it on to an electronic website if:

(i)	it maintains or has access to an electronic website for this purpose and provides the Facility Agent with the details and password to access the website and the information; and

(ii)	the information posted is in a format required by this Agreement or is otherwise agreed between each Obligor and the Facility Agent (whose approval shall not be unreasonably withheld or delayed).

(B)	Notwithstanding the above, the Original Borrower must supply to the Facility Agent in paper form a copy of any information posted on the website together with sufficient copies for:

(i)	any Lender who notifies the Facility Agent in writing (copied to each Obligor) that it does not wish to receive information via the website; and

(ii)	within ten Business Days of request, any other Lender, if that Lender so requests.

(C)	Each Obligor must promptly upon becoming aware of its occurrence, notify the Facility Agent if:

(i)	the website cannot be accessed;

(ii)	the website or any information on the website is infected by any electronic virus or similar software;

(iii)	the password for the website is changed; or

(iv)	any information to be supplied under this Agreement is posted on the website or amended after being posted.

---

(D)	If the circumstances in sub-paragraph (C)(i) or (C)(ii) above occur, an Obligor must supply any information required under this Agreement in paper form until the circumstances giving rise to the notification are no longer continuing and the information can be provided in accordance with paragraph (A) above.

1.	Guarantee and Indemnity

1.1	Guarantee and indemnity

(A)	guarantees to each Finance Party punctual performance by each Borrower of all that Borrower’s obligations under the Finance Documents;

(B)	undertakes with each Finance Party that whenever a Borrower does not pay any amount when due under or in connection with any Finance Document, that Guarantor shall immediately on demand pay that amount as if it was the principal obligor; and

(C)	will, as an independent and primary obligation, indemnify each Finance Party immediately on demand against any cost, loss or liability suffered by that Finance Party if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal. The amount of the cost, loss or liability shall be equal to the amount which that Finance Party would otherwise have been entitled to recover.

1.2	Continuing guarantee

1.3	Reinstatement

(A)	the liability of each Obligor shall continue as if the payment, discharge, avoidance or reduction had not occurred; and

(B)	each Finance Party shall be entitled to recover the value or amount of that security or payment from each Obligor, as if the payment, discharge, avoidance or reduction had not occurred.

1.4	Waiver of defences

---

(A)	any time, waiver or consent granted to, or composition with, any Obligor or other person;

(B)	the release of any other Obligor or any other person under the terms of any composition or arrangement with any creditor of any member of the Group;

(C)	the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any Obligor or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;

(D)	any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of an Obligor or any other person;

(E)	any amendment, novation, supplement, extension, restatement (however fundamental and whether or not more onerous) or replacement of any Finance Document or any other document or security including without limitation any change in the purpose of, any extension of or any increase in any facility or the addition of any new facility under any Finance Document or other document or security;

(F)	any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security; or

(G)	any insolvency or similar proceedings.

1.5	Immediate recourse

1.6	Appropriations

(A)	refrain from applying or enforcing any other moneys, security or rights held or received by that Finance Party (or any trustee or agent on its behalf) in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those amounts or otherwise) and no Guarantor shall be entitled to the benefit of the same; and

(B)	hold in an interest-bearing suspense account any moneys received from any Guarantor or on account of any Guarantor’s liability under this clause 25.

1.7	Deferral of Guarantors’ rights

(A)	Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full and unless the Facility Agent otherwise directs, no Guarantor will exercise any rights

---

(i)	to be indemnified by an Obligor;

(ii)	to claim any contribution from any other guarantor of any Obligor’s obligations under the Finance Documents;

(iii)	to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Finance Parties under the Finance Documents or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents by any Finance Party;

(iv)	to bring legal or other proceedings for an order requiring any Obligor to make any payment, or perform any obligation, in respect of which any Guarantor has given a guarantee, undertaking or indemnity under clause 25.1 (Guarantee and indemnity);

(v)	to exercise any right of set-off against any Obligor; and/or

(vi)	to claim or prove as a creditor of any Obligor in competition with any Finance Party.

(B)

If a Guarantor receives any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution to the extent necessary to enable all amounts which may be or become payable to the Finance Parties by the Obligors under or in connection with the Finance Documents to be repaid in full on trust for the Finance Parties and shall promptly pay or transfer the same to the Agent or as the Agent may direct for application in accordance with clause 34 (Payment Mechanics) of this Agreement.

1.8	Release of Guarantors’ right of contribution

(A)	that Retiring Guarantor is released by each other Guarantor from any liability (whether past, present or future and whether actual or contingent) to make a contribution to any other Guarantor arising by reason of the performance by any other Guarantor of its obligations under the Finance Documents; and

(B)

each other Guarantor waives any rights it may have by reason of the performance of its obligations under the Finance Documents to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Finance Parties under any Finance Document or of any other security taken pursuant to, or in connection with, any Finance Document where such rights or security are granted by or in relation to the assets of the Retiring Guarantor.

1.9	Additional security

---

---

1.	Representations

1.1	Status

(A)	It is a limited liability company, duly incorporated and validly existing under the laws of its jurisdiction of incorporation.

(B)	It has the power to own its assets and carry on its business as it is being conducted.

1.2	Legal validity

1.3	Non-conflict

(A)	any applicable law or regulation;

(B)	its constitutional documents; or

(C)	any agreement binding upon it,

1.4	Powers and authority

1.5	Authorisations

1.6	Stamp and registration duties

---

1.7	No Default

1.8	Final Information Memorandum

(A)

The factual information in the Final Information Memorandum (other than that referred to in paragraph (B) below) was true in all material respects on the date of the Final Information Memorandum and did not omit anything material which was known to the Original Borrower at the time or contain anything that was materially misleading and, except to the extent advised in writing to the Facility Agent by the Original Borrower on or prior to Financial Close, so far as the Original Borrower is aware having made due and careful enquiry, no information has been disclosed to it nor have circumstances arisen nor has any event occurred since the date of the Final Information Memorandum which renders the information contained in the Final Information Memorandum materially misleading or materially incorrect.

(B)	The statements of opinion, projections and forecasts in the Final Information Memorandum attributable to the Original Borrower were made in good faith, with due care and on what the Original Borrower believed to be reasonable assumptions at the relevant time and representing the views of the Original Borrower at the time.

1.9	Financial Statements and other factual information

(A)	The most recent audited financial statements and interim financial statements delivered to the Facility Agent in accordance with clause 24.2 (Financial statements) (which, at the Signing Date, is the unaudited opening balance sheet of the Original Borrower as at 18 March 2011):

(i)	have been prepared in accordance with the Approved Accounting Principles (if relevant); and

(ii)	(if audited) give a true and fair view of, or (if unaudited) fairly represent, its financial condition for the relevant period.

(B)	All factual information provided by or under the express direction of KEO or any Borrower to the Finance Parties in connection with the Facility was believed by KEO or that Borrower (as the case may be) at the time it was so provided to be true in all material respects.

1.10	Proceedings pending or threatened

1.11	Breach of laws

---

(A)	It has not breached any law or regulation which has, or could reasonably be expected to have, a Material Adverse Effect.

(B)

It is in compliance with all environmental laws, a breach of which could reasonably be expected to give rise to a liability on it which has, or could reasonably be expected to have, a Material Adverse Effect and, so far as it is aware having made due and careful enquiry, there is no environmental claim outstanding against it which, if adversely determined, would give rise to a liability on it which has, or could reasonably be expected to have, a Material Adverse Effect.

1.12	Ranking of security

1.13	Pari passu ranking

1.14	Assets

(A)	KEG holds the legal and beneficial interest in a 30.01736% per cent Participating Interest in the WCTP Block; and the legal and beneficial interest in an 17 per cent Participating Interest in the DWT Block.

(B)	KEEG holds the legal and beneficial indirect interest in a 40.375 per cent. Participating Interest in the EG Blocks.

(C)	KEM holds the legal and beneficial interest in a 28 per cent. Participating Interest in Bloc C8.

(D)	KEISL holds the legal and beneficial interest in a 30 per cent. Participating Interest in Saint Louis Profond Block.

1.15	Project Agreements

(A)	each copy of a Project Agreement delivered to the Facility Agent under this Agreement is true and complete;

(B)	there is no other agreement in connection with, or arrangements which amend, supplement or affect any Project Agreement in any material respect; and

(C)	no Obligor has a material obligation (being an obligation or liability exceeding USD 50 million (or its equivalent in other currencies)) under any agreement which is not a Project Agreement, a Finance Document, or a Material Contract.

---

1.16	No Immunity

1.17	Ownership of Obligors

(A)	KEH beneficially owns, indirectly, all of the issued share capital of the Guarantors and the Borrowers.

(B)	The issued share capital of the Guarantors and the Borrowers is fully paid up and, to the extent beneficially owned by KEH, free of all encumbrances or other third party rights (other than pursuant to the Security Documents).

(C)	To the extent that a member of the KEL Group has entered into a Security Document that creates, or purports to create, a Security Interest over any shares:

(i)	such shares are free from any restrictions as to transfer or registration (including pursuant to the creation or enforcement of any Security Interest); and

(ii)	no company whose shares are subject to such Security Interest and which is incorporated in the United Kingdom keeps information in respect of its members on the central register kept by the registrar at Companies House.

1.18	Sanctions

(A)	is a Restricted Party or is engaging in or has engaged in any transaction or conduct that could reasonably be expected to result in it becoming a Restricted Party; or

(B)	has received notice of, or is aware of, any claim, action, suit, proceeding or investigation against it with respect to Sanctions by any Sanctions Authority,

1.19	Anti-corruption law

1.20	Times for making representations

(A)	The representations set out in this clause 26 (Representations) (other than the representations in clauses 26.8 (Final Information Memorandum), 26.4 (Powers

---

(B)	When a representation is repeated, it is applied to the facts and circumstances existing at the time of repetition.

2.	Financial Covenants

(A)	On any Forecast Date and 30 September in each year (each such date a “Financial Covenant Test Date”), the Original Borrower shall ensure that:

(i)	the Field Life Cover Ratio shall not be less than 1.30; and

(ii)	the Loan Life Cover Ratio shall not be less than 1.10,

(B)	On each Financial Covenant Test Date, the Original Borrower shall ensure that:

(i)	the ratio of Consolidated Total Net Borrowings to EBITDAX shall be less than or equal to 3.50 : 1.00; and

(ii)	the ratio of EBITDAX to the Net Interest Payable shall be greater than or equal to 2.25 : 1.00.

(C)	No later than three Business Days following each Financial Covenant Test Date, the Original Borrower shall send to the Facility Agent, a certificate signed by two authorised representatives setting out its calculation of the financial ratios referred to in this clause 27 as at such date.

3.	General Undertakings

3.1	Corporate existence

3.2	Authorisations

3.3	Compliance with laws

---

3.4	Pari passu ranking

3.5	Security

3.6	Negative pledge

(A)	an Obligor (but excluding KEO for the purposes of this sub-clause (A)) shall not create or permit to exist any Security Interest over any of its assets; and

(B)	KEO shall not create or permit to exist any Security Interest over any of the assets as contained in Clause 28.8(A)(ii)(1) - (5) below.

3.7	Conduct of other business

3.8	Disposals

(A)	(i)    Other than Permitted Disposals, an Obligor shall not, either in a single transaction or in a series of transactions and whether related or not, dispose of all or a material part of any Borrowing Base Asset or any interests therein or any of its shareholdings in any person holding any interest (whether directly or indirectly) in any Borrowing Base Asset.

(i)	Notwithstanding any other provision of this Agreement or any other Finance Document KEO shall have full flexibility and discretion to deal with its subsidiaries and its and their assets, other than its interests in:

(1)	any other Obligor;

(2)	the assets of any other Obligor;

(3)	any asset which is the subject of a Security Document;

(4)	any Project Account; or

---

(5)	any Borrowing Base Asset.

(B)

If an Obligor wishes to make a Permitted Disposal of an asset which is subject to a Security Interest in favour of the Finance Parties, then the Finance Parties shall, promptly upon request from the Original Borrower, absolutely and unconditionally release and discharge the relevant asset from that Security Interest and shall do all things necessary at the cost and expense of the Original Borrower to effect such discharge.

(C)

The shares in the capital of KEO, KEEG, KES, KEM or the Original Borrower may at any time be transferred to another holding company in which event the existing security over such shares shall be released subject to such new holding company providing substitute security over all shares in the capital of KEO, KEEG, KES, KEM or the Original Borrower, as the case may be, on substantially the same terms and conditions.

3.9	Financial Indebtedness

3.10	Material contracts

(A)	contracts or agreements entered into in the ordinary course of business and on arm’s length terms (including in relation to Approved Developments and Permitted Acquisitions);

(B)	contracts or agreements relating to a Permitted Disposal and entered into on arm’s length terms;

(C)	the Project Agreements and the EO Participation Agreement and contracts and agreements required or contemplated therein or in respect of the development and implementation of the Obligors’ interest in the Fields;

(D)	contracts or agreements otherwise permitted or contemplated by the Finance Documents;

(E)	where the obligations and liabilities of the Obligor thereunder are fully funded by Permitted Financial Indebtedness or equity contributions; or

(F)	with the approval of the Majority Lenders (acting reasonably).

3.11	Guarantees

---

3.12	Mergers

3.13	Loans

(A)	Except as provided in (B) below, no Obligor may be a creditor in respect of any Financial Indebtedness.

(B)	Paragraph (A) does not apply to:

(i)	any loans made pursuant to an Intercompany Loan Agreement;

(ii)	any credit provided under a Project Agreement;

(iii)	any trade credit in the ordinary course of day to day business;

(iv)	loans or other credit not exceeding USD 100 million (or its equivalent in other currencies) in aggregate at any one time; or

(v)	any other credit approved by the Majority Lenders (acting reasonably).

3.14	Operation

3.15	Compliance with Project Agreements

(A)	Each Obligor must comply with its obligations under the Project Agreements to which it is a party where failure to do so would have a Material Adverse Effect.

(B)	In the event an Obligor fails to pay any sum due under any Project Agreement it shall take such steps as shall be reasonably available to it so as to permit such payment to be made on its behalf by any Finance Party or any person acting on behalf of any Finance Party.

3.16	Insurances

(A)

Each Obligor will maintain all Agreed Insurances which it maintains in its own name, promptly pay all premiums and other monies payable under all its Agreed Insurances and promptly on written request produce to the Facility Agent a copy of each policy and evidence (reasonably acceptable to the Facility Agent) of payment of such sums (and allow the Lenders to implement such insurance at the cost of the Original

---

(B)	On an annual basis commencing on the Effective Date, the Original Borrower shall deliver a certificate to the Facility Agent, which is addressed to the Finance Parties from the Group’s insurance broker confirming, among other things, (a) the Agreed Insurances are in place, effective and consistent with industry practice and (b) there are no overdue billed premiums.

3.17	Hedging

(A)

The Obligors will maintain in place at all times a prudent risk management policy relating to managing their exposure to interest rates and fluctuations in the price of crude oil derived from a relevant Field. In relation to hedging which is implemented to manage exposure to fluctuations in the price of crude oil derived from a relevant Field, the volume which may be hedged by instruments creating contingent liabilities will be capped at 90 per cent. of 2P Developed Assets (as determined in accordance with the applicable Forecast) which are producing, such cap to apply on a rolling annual basis and thereafter 75 per cent. shall be the relevant cap.

(B)

To the extent that either the 90 per cent. cap or 75 per cent. cap, as applicable, is exceeded at any time, it shall not constitute a Default or an Event of Default under any circumstances provided that the Obligors have used their reasonable endeavours to take such reasonable action as is available to them to cure or mitigate the excess as soon as reasonably possible such that the cap is no longer exceeded.

(C)	The Obligors will have the right to implement any hedging by either (i) entering into Hedging Agreements with one or more Hedging Counterparties; and/or (ii) entering into Derivative Agreements with counterparties who do not accede to the terms of the Intercreditor Agreement and where the relevant payments thereunder are a Project Cost.

(D)	The Original Borrower will permit not less than three Lenders, selected at its discretion, to bid for a share of any hedging proposed by an Obligor

(E)	If the Original Borrower or any Obligor makes any change to any internal hedging policies or procedures it has in place from time to time which could reasonably be expected to have a material impact on the hedging arrangements implemented by the Group as a whole, then it will notify the Facility Agent of the change and will provide reasonable details of the implications of the change.

3.18	Borrowing Base Assets

3.19	Project Agreements

(A)	No Obligor will agree to any amendment, waiver or termination of a Project Agreement which would have a Material Adverse Effect or approve or vote in favour of any work programme, budget or development plan which would commit an Obligor to expenditure which it would not be able to meet from funds available to it, after taking account of forecast Project Costs and Financing Costs.

---

(B)	No term or condition of any Finance Document shall prevent any Obligor from complying with its express obligations under any Project Agreement, or require an Obligor to act or omit to act in a manner which would or might reasonably be expected to result in a breach of any provision of a Project Agreement including, but without limitation, KEG’s obligations under the EO Participation Agreement.

(C)

In the event that an Obligor has an obligation under a Project Agreement to make a payment in respect of a Project Cost because of the default by another party in paying its share of the relevant Project Cost, then the Obligor shall promptly notify the Facility Agent of the additional payment obligation (including reasonable details of how it arose and any steps being taken by the parties in relation to the relevant default and such other additional information as the Facility Agent may reasonably request). In such an event, the Facility Agent will have the right (acting reasonably) to request a sources and uses test to be performed.

3.20	Eligible offtakers

3.21	Tax affairs

3.22	Permitted Acquisitions

3.23	Distributions

(A)

Except for a Scheduled KEL Debt Payment Distribution (in relation to which clause 28.24 (Scheduled KEL Debt Payment Distributions) below, shall apply), each Obligor (but excluding KEO for these purposes, which may make, declare or pay a distribution of any kind at any time without restriction from any account which is not a Project Account (but subject to clause 28.8 (Disposals) and any projected distribution by KEO being included in any applicable Liquidity Statement)) may make, declare or pay a distribution (including any payment under any subordinated loan agreement falling within the terms of subparagraph (C) of the definition of Permitted Financial Indebtedness and including any funding pursuant to, or payment

---

(i)	there being no Default or Event of Default outstanding and no Default or Event of Default would be caused by such Shareholder Distribution;

(ii)	the latest Sources and Uses Statement not indicating a projected shortfall in funding to meet projected Project Costs (ignoring for these purposes any Scheduled KEL Debt Payments);

(iii)	a limit on the amount of any Shareholder Distribution (which is not otherwise restricted by the terms of this clause 28.23) in accordance with paragraph (C) below.

(iv)	no Shareholder Distribution being permitted during a BBA Cure Period; and

(v)	such Shareholder Distribution being made, declared, or paid in compliance with the Cash Waterfall.

(B)	Any Shareholder Distribution permitted to be paid hereunder may be paid directly to the recipient or deposited into the Distributions Reserve Account, in accordance with the terms of this Agreement.

(C)	In the event that the latest Sources and Uses Statement indicates a projected shortfall (including for these purposes, any Scheduled KEL Debt Payments) the maximum Shareholder Distribution that shall be permitted at that time shall be an amount equal to:

(i)	the aggregate of all sources which are set out in column A of the relevant Sources and Uses Statement; minus

(ii)	the aggregate of all uses which are set out in column B of the relevant Sources and Uses Statement (ignoring for these purposes any Scheduled KEL Debt Payments).

3.24	Scheduled KEL Debt Payment Distributions

(A)	Each Obligor (but excluding KEO for these purposes) may make, declare or pay a distribution, or make any payment under an intercompany loan which constitutes Permitted Financial Indebtedness, in relation to a Scheduled KEL Debt Payment (a “Scheduled KEL Debt Payment Distribution”), to the extent that such payment is due and payable, subject to:

(i)	the terms of clause 20.5 (Control on withdrawals following Default) of this Agreement; and

(ii)	no Junior Payment Stop Event (as defined in the KEFI Intercreditor Agreement) having occurred and being continuing in accordance with the terms of clause 24.8(D) (Sources and Uses) of this Agreement and Clause 4.4 (Issue of Junior Payment Stop Notice) of the KEFI Intercreditor Agreement;

(iii)	no Scheduled KEL Debt Payment Distribution being permitted during a BBA Cure Period; and

---

(iv)	such Scheduled KEL Debt Payment Distribution being made, declared, or paid in compliance with the Cash Waterfall.

(B)	Any distribution or payment permitted to be paid hereunder may be paid directly to the recipient or deposited into the Distributions Reserve Account, in accordance with the terms of this Agreement.

(C)	Nothing in this clause 28.24 shall block the payment of Scheduled KEL Debt Payments or the making of a Scheduled KEL Debt Payment which is paid or made from amounts standing to the credit of the Distributions Reserve Account.

3.25	Constitutional documents

3.26	Further assurance and turn over

(A)

Subject to clause 28.28 (Due execution of security assignments) and clause 28.31 (Security Documents: consents, ranking and perfection) each of the Obligors shall, at its own expense, promptly do all things, take all such action and execute all such other documents and instruments as may be requested by the Facility Agent from time to time and to the extent they are reasonably required or necessary for the purpose of giving effect to the provisions of the Finance Documents and the Project Agreements and for the purpose of perfecting and protecting the Lenders’ rights with respect to the Security Interests which are required to be created or perfected by the Finance Documents when required thereunder.

(B)	KEO will account to the Facility Agent if and to the extent it receives any proceeds in breach of the terms of any Finance Document from:

(i)	any asset which is the subject of a Security Document

(ii)	any Borrowing Base Asset;

(iii)	any Project Account (excluding amounts received from any other Obligor pursuant to clause 28.23 (Distributions);

(iv)	any other Obligor which would otherwise be placed into an Offshore Proceeds Account pursuant to clause 21.1 (Payments in) (whether by way of cash, loan or otherwise),

(C)	If at any time KEO is in receipt of proceeds as described in paragraph (B) above it shall:

(i)	within five Business Days notify details of the receipt or recovery to the Facility Agent; and

(ii)	within five Business Days of demand by the Facility Agent, pay an amount equal to such receipt or recovery to the Facility Agent.

---

3.27	Delivery of certain documents

3.28	Due execution of security assignments

(A)

The Security Agent shall have safe custody and control of the Assignments (which term shall, for the avoidance of doubt for the purposes of this clause 28.28 (Due execution of security assignments), be deemed not to include the KEG Assignment of Reinsurance Rights until its execution by the relevant insurers, it being agreed that the Obligors shall take all such steps as may be reasonable (taking into account all of the circumstances at the time and the steps taken previously by that Obligor) to procure its execution by the relevant insurers). The Security Agent shall execute and date such documents for and on behalf of the Finance Parties in any of the following circumstances:

(i)	if an Event of Default has occurred and is continuing and the Majority Senior Lenders have instructed the Security Agent to execute and date the Assignments for and on behalf of the Finance Parties; or

(ii)	if instructed to do so at any time by the relevant Obligor.

(B)

Each party to this Agreement irrevocably authorises the Security Agent to execute the Assignments for and on behalf of the Finance Parties and to date the Assignments when it is required to do so under paragraph (A) above. The Assignments shall be of no force or effect until they are duly executed by the Security Agent and dated for and on behalf of the Finance Parties in accordance with this clause 28.28 (Due execution of security assignments).

(C)

In the event that the Security Agent signs and dates the Assignments in accordance with this clause 28.28 (Due execution of security assignments), then the relevant Borrower (or a Borrower on a Guarantor’s behalf) shall (and the Facility Agent may) without the requirement for any further authorisation from any Obligor make a Utilisation under the Facility to meet the payment of any stamp duty which is payable as a consequence of the Assignments being signed and dated. The relevant Obligor shall (and the Facility Agent shall if it effects the Utilisation under the Facility) apply the relevant funds promptly in payment of the relevant stamp duty and shall ensure that the Assignments are stamped and registered as soon as practicable (and in any event within any time period required by law). The relevant Obligor (or the Facility Agent, as the case may be) shall in each case notify the Security Agent and each Finance Party upon making the payment of any stamp duty and the stamping and registration of the Assignments.

3.29	Stamp duty and other impost waiver

---

3.30	Lenders’ custody of documents

(A)

Each Lender undertakes that it shall not deliver any Finance Document or any other document or agreement into a country that would result in such Finance Document, other document or agreement (or any party to it) becoming subject to (or liable for payment of) any stamp duty, documentary taxes or any other similar tax, charge or impost (or impose any obligation upon a member of the Group or KEH to reimburse any other person for such a payment).

(B)	Paragraph (A) above shall not apply to a Lender at any time at which such Lender (i) has a right to take Enforcement Action; (ii) has the written consent of the Original Borrower; or (iii) is required to deliver such Finance Document or other document or agreement by any order or a court or regulatory authority or other legal or regulatory requirement.

3.31	Security Documents: consents, ranking and perfection

(A)	No Obligor shall be required to grant any assignment of rights under any contract, or Security Interest over any asset (including contracts and rights), where the consent of any Government or any governmental body, regulatory body or state-owned or controlled company or enterprise is required for the granting of such assignment or Security Interest.

(B)

With the exception of those consents referred to in paragraph (A) above, each Obligor shall use reasonable endeavours to seek any other third party consents required in relation to any relevant Security Document, provided that the obtaining of such consent shall not be a condition precedent to any Utilisation of the Facility and provided that there shall be no fixed date by which such consent must be obtained.

(C)	Each Obligor shall use reasonable endeavours to obtain acknowledgments to any notices of assignment served in relation to any relevant Security Document, provided that receipt of such acknowledgments shall not be a condition precedent to any Utilisation of the Facility.

(D)	Where required by the terms of any agreement which is binding upon any Obligor, any Security Interest granted in favour of the Lenders shall be subordinated to the interests of the parties under such agreement.

(E)	With the exception of the Charges over Shares, perfection of any Security Interest shall not be a condition precedent to first Utilisation.

3.32	IPO Reorganisation

---

3.33	Ghanaian security

(A)

The Original Borrower shall use reasonable endeavours to obtain a legal opinion from Ghanaian counsel confirming that the consent obtained on 18 December 2010 from the Ghana National Petroleum Corporation and the Ministry of Energy of Ghana, which was required in relation to the grant of certain Security Interests (the “Ghana Security Interests”) contemplated by the Security Documents (as defined in the Existing Finance Documents), would extend to the grant of such Security Interests in favour of the Finance Parties in the context of the Finance Documents.

(B)

If such a legal opinion is obtained, the Original Borrower shall then promptly enter into security documents in the required form in order to grant to the Finance Parties equivalent Security Interests to the Ghana Security Interests in the context of the Finance Documents. Such security documents will be held by the Security Agent in accordance with clause 28.28 (Due execution of security assignments) above.

3.34	Application of the Loans/Use of the Letters of Credit

(A)

No Borrower shall (and shall ensure that no other member of the KEL Group shall) permit or authorise any other person to, directly or indirectly, use, lend, make payments of, contribute or otherwise make available, all or any part of the proceeds of any Loan or other transaction(s) (including any Letter of Credit) contemplated by this Agreement to fund or facilitate any trade, business or other activities:

(i)	relating to, involving or for the benefit of any Restricted Party; and/or

(ii)	in any other manner that would result in any member of the KEL Group, or a Finance Party or its US Affiliate being in breach of any Sanctions or becoming a Restricted Party.

(B)

No Obligor shall (and shall ensure that no other member of the KEL Group shall) fund all or part of any payment under the Facility out of proceeds derived, directly or indirectly, from any trade, business or other activities with a Restricted Party or in any other manner that would reasonably be expected to result in any member of the KEL Group, or a Finance Party or its US Affiliate being in breach of any Sanctions (if and to the extent applicable to any of them) or becoming a Restricted Party.

(C)	Each Obligor shall (and shall procure that each member of the KEL Group shall) comply with Sanctions and maintain in effect and enforce policies and procedures designed to ensure such compliance.

---

3.35	HY Notes Maturity Date

(A)	The Original Borrower shall, on or before the date falling twelve months prior to the HY Notes Maturity Date (the “relevant date”):

(i)	extend the maturity date for the HY Notes to no earlier than 30 June 2025; or

(ii)

produce (a) a new Forecast (a) a new Sources and Uses Statement and (a) a new Liquidity Statement, in accordance with the Forecasting Procedures as at the relevant date which includes the full repayment of the HY Notes on the HY Notes Maturity Date and which shows that there are adequate funds available to the Group to meet all costs falling due and payable by the Group on or before the HY Notes Maturity Date, including the repayment of the HY Notes.

(B)	In the event that the Original Borrower cannot satisfy the requirements of either paragraph (A)(i) or (A)(ii) above, the Parties agree that the Final Maturity Date shall be the date falling six months prior to the HY Notes Maturity Date and the Availability Period shall expire on the date falling nine months prior to the HY Notes Maturity Date.

(C)	Other than with respect to those HY Notes maturing on the HY Notes Maturity Date, the Original Borrower shall procure that the maturity date of any HY Notes shall not fall on or before the Final Repayment Date.

3.36	HY Noteholder Trustee accession

3.37	Intercompany Loan Agreement terms

(A)	The Borrowers shall make demands for repayment of any amounts outstanding under any Intercompany Loan Agreement so as to ensure that the Borrowers will have sufficient funds available to meet all payment obligations under this Agreement as and when they fall due for payment.

(B)	Each of KEEG, KES, KEM, KEISL and KEG shall use all amounts borrowed by it under an Intercompany Loan Agreement for the payment of Project Costs and for any other purpose set out in Clause 5 (Purpose).

(C)	On or before the date on which a Borrower makes an Intercompany Loan to an Obligor, that Borrower shall:

(i)	to the extent that such Security has not been effected under the terms of an existing Security Document, enter into a Security Document (in form and substance satisfactory to the Security Agent) for the purposes of creating Security over the Intercompany Loan provided by it in favour of the Security Agent;

(ii)	deliver to the Security Agent, or procure the delivery to the Security Agent of, any legal opinion or other document that the Security Agent may

---

(iii)	without prejudice to Clause 21.22 (Security) promptly obtain all such Authorisations as may be necessary in order for such Security to be granted.

3.38	KEEG

(A)	KEEG shall not, and KEEG shall procure that EG JV and EG JV HoldCo shall not, borrow, make or permit to be made any Priority Loan (as defined in the KEEG/Trident Shareholders’ Agreement), unless those payments are reflected in the then current Forecast.

(B)	On or before the date falling 90 days after the Effective Date, KEEG shall provide evidence to the Facility Agent (in form and substance satisfactory to the Facility Agent (acting reasonably)) that each Project Account required to be maintained by KEEG has been opened with an Account Bank.

3.39	Anti-corruption law

(A)	No Borrower shall (and the Original Borrower shall ensure that no other member of the KEL Group will) directly or indirectly use the proceeds of the Facility for any purpose which would breach, or cause a Finance Party to breach, the Bribery Act 2010, the United States Foreign Corrupt Practices Act of 1977 or other similar legislation applicable to it or the Finance Parties.

(B)	Each Obligor shall (and the Original Borrower shall ensure that each other member of the KEL Group will):

(i)	conduct its businesses in compliance with applicable anti-corruption and anti-money laundering laws and regulations; and

(ii)	maintains and enforces policies and procedures designed to promote and achieve compliance with such laws and regulations.

(C)	Each Obligor confirms no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving that Obligor with respect to anti-corruption and anti-money laundering laws is pending and, to the best of that Obligor’s knowledge, no such actions, suits or proceedings are threatened or contemplated.

3.40	People with Significant Control regime

(A)	within the relevant timeframe, comply with any notice it receives pursuant to Part 21A of the Companies Act 2006 from any company incorporated in the United Kingdom whose shares are the subject of a Security Interest created or expressed to be created in favour of the Security Agent pursuant to the Security Documents; and

(B)	promptly provide the Security Agent with a copy of that notice.

---

3.41	Register of members

4.	Events of Default

4.1	Non-payment

4.2	Breach of financial covenant

4.3	Breach of other obligations

(A)	capable of remedy; and

(B)	remedied within 30 days of the earlier of the Facility Agent giving notice or the Obligor becoming aware of the non-compliance.

4.4	Misrepresentation

(A)	capable of remedy; and

(B)	remedied within 30 days of the earlier of the Facility Agent giving notice or the relevant Obligor becoming aware of the misrepresentation,

---

4.5	Cross-default

(A)	Except in relation to paragraph (C) below, any Financial Indebtedness of any Obligor is not paid when due nor within any applicable grace period.

(B)	Except in relation to paragraph (C) below, any Financial Indebtedness of any Obligor is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (however described) and such amount is not paid when due.

(C)	A Junior Event of Default (as defined in the KEFI Intercreditor Agreement) has occurred and the Security Agent has not, no later than 30 days after such occurrence, received a notice from the Security and Intercreditor Agent (as defined in the KEFI Intercreditor Agreement) stating that such Junior Event of Default is no longer continuing.

(D)

Notwithstanding paragraphs (A) and (B) above, no Event of Default will occur under this clause if the aggregate amount of Financial Indebtedness or commitment for Financial Indebtedness is less than USD 150 million (or its equivalent in any other currency or currencies) or if the relevant event or default has been waived, or if such event or default is caused by a Disruption Event, provided that, in the case of a Disruption Event the requisite payment is made within five Business Days.

4.6	Insolvency

(A)	it is, or is deemed for the purposes of any law to be unable to, or admits its inability to, pay its debts as they fall due or is or becomes insolvent or a moratorium is declared in relation to its indebtedness generally; or

(B)	it stops or suspends or threatens to suspend or announces an intention to stop or suspend making payment of all or any class of its debts as they fall due in default of the obligation to make the relevant payment.

4.7	Insolvency proceedings

(A)	Except as provided in paragraph (B) below, any of the following occurs in respect of an Obligor:

(i)	a written resolution is passed or a resolution is passed at a meeting of its shareholders, directors or other officers to petition for or to file documents with a court or any registrar for its winding-up, administration or dissolution;

(ii)	any person presents a petition, or files documents with a court or any registrar for its winding-up, administration or dissolution;

(iii)	an order for its winding-up, administration or dissolution is made;

---

(iv)	any liquidator, provisional liquidator, trustee in bankruptcy, judicial custodian, compulsory manager, receiver, administrative receiver, administrator or similar officer is appointed in respect of it or any material part of its assets;

(v)	a moratorium is declared in relation to the indebtedness of an Obligor;

(vi)	its shareholders, directors or other officers request the appointment of, or give notice of their intention to appoint a liquidator, trustee in bankruptcy, judicial custodian, compulsory manager, provisional liquidator, receiver, administrative receiver, administrator or similar officer;

(vii)	any composition, compromise, assignment or arrangement is made with any of its creditors; or

(viii)	any other analogous step or procedure is taken in any jurisdiction.

(B)	Paragraph (A) does not apply to:

(i)	any step or procedure which is part of a re-organisation of an Obligor on a solvent basis with the consent of the Majority Lenders (acting reasonably); or

(ii)	an IPO Reorganisation pursuant to clause 28.32 (IPO Reorganisation); or

(iii)

in the case of sub-paragraph (ii) or (iv) (or any step or procedure under sub-paragraph (vi) that is analogous to sub-paragraph (ii) or (iv)), if the relevant step, petition or filing is made by a person other than an Obligor, shareholder or their respective officers or directors and the relevant Obligor is taking steps in good faith and with due diligence for such proceedings or action to be stayed, discontinued, revoked or set aside and the same is stayed, discontinued, revoked or set aside within a period of 60 days; or

(iv)	any enforcement action that applies to assets having an aggregate value of less than USD 150 million (or its equivalent in other currencies).

4.8	Creditors’ process

4.9	Unlawfulness and Invalidity of the Finance Documents and Project Agreements

(A)	all or any part of a Finance Document is not, or ceases to be, a legal, valid, binding and enforceable obligation of an Obligor;

(B)	following its execution, all or any part of a Project Agreement is not or ceases to be, a legal, valid, binding and enforceable obligation of an Obligor in circumstances which would have a Material Adverse Effect; or

---

(C)	following its execution, all or any part of a Project Agreement is suspended, terminated or revoked in circumstances which would have a Material Adverse Effect,

(i)	the Obligors fail, within 60 days (or, in the case of a Finance Document, 30 days) of becoming aware of the matter, to procure the execution of a substitute agreement or agreements on substantially the same terms and with a commercially qualified party or parties acceptable to the Majority Lenders (acting reasonably); or

(ii)	the matter is not otherwise remedied within 60 days (or, in the case of a Finance Document, 30 days) of an Obligor becoming aware of the matter.

4.10	Cessation of Business

4.11	Abandonment

(A)	A Borrowing Base Asset is abandoned (other than as a consequence of unsuccessful exploration activities) in whole or in part and where such abandonment has or could reasonably be expected to have a Material Adverse Effect.

(B)	Without limiting the above paragraph, an Obligor will be deemed to have abandoned a Borrowing Base Asset if, after the Completion in respect of that Borrowing Base Asset, no petroleum is produced at a commercial level for a continuous period of 180 days and all necessary steps are not being diligently pursued with a view to recommencing production as soon as practically possible.

4.12	Expropriation

4.13	Repudiation of Finance Documents

4.14	Material Litigation

4.15	Breach or Termination of Project Agreements

---

4.16	Material Adverse Effect

4.17	Acceleration – all Lenders

(A)	cancel the Total Commitments whereupon they shall immediately be cancelled;

(B)	declare that all or part of the Loans, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents be immediately due and payable, whereupon they shall become immediately due and payable; and/or

(C)	declare that all or part of the Loans be payable on demand, whereupon they shall immediately become payable on demand by the Facility Agent on the instructions of the Majority Lenders; and/or

(D)	exercise or direct the Security Agent to exercise any or all of its rights, remedies, powers or discretions under any of the Finance Documents.

1.	Changes to the Lenders

1.1	Assignments and transfers and changes in Facility Office by the Lenders

(A)	(i)    assign any of its rights; or

(i)	transfer by novation any of its rights and obligations,

(B)	change its Facility Office.

1.2	Conditions of assignment and transfer or change in Facility Office

---

(A)	The consent of the Original Borrower is required for an assignment or transfer by an Existing Lender, unless the assignment or transfer is (i) to, or in favour of, another Lender, an Affiliate of a Lender or a Qualifying Bank; or (ii) made at a time when an Event of Default is continuing.

(B)

The consent of the Original Borrower is required for a change in Facility Office to a different jurisdiction (other than, in the case of Bank of America Merrill Lynch International Limited, a change in its Facility Office to a Facility Office located in the Republic of Ireland). In the case of a change of Facility Office for which the Original Borrower’s consent is not required, the Lender must notify the Original Borrower of the new Facility Office promptly on the change taking effect.

(C)	The consent of the Original Borrower to an assignment or transfer or change in Facility Office must not be unreasonably withheld or delayed (and will be deemed to have been given five Business Days after the relevant Lender has requested it unless consent is expressly refused by the Original Borrower within that time).

(D)	In the event a Letter of Credit is outstanding, transfer or assignment of a Commitment shall require the prior consent of each LC Issuing Bank.

(E)	An assignment will only be effective on:

(i)	receipt by the Facility Agent of written confirmation from the New Lender (in form and substance satisfactory to the Facility Agent) that the New Lender will assume the same obligations to the other Finance Parties as it would have been under if it was an Original Lender;

(ii)	the New Lender entering into the documentation required for it to accede as a party to the relevant Finance Documents (including, but not limited to, the Intercreditor Agreement); and

(iii)	performance by the Facility Agent of all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to such assignment to a New Lender (such checks not to be unreasonably held or delayed), the completion of which the Facility Agent shall promptly notify to the Existing Lender and the New Lender.

(F)	A transfer will only be effective if the procedure set out in clause 30.5 (Procedure for transfer) is complied with.

(G)	If:

(i)	a Lender assigns or transfers any of its rights or obligations under the Finance Documents or changes its Facility Office; and

(ii)	as a result of circumstances existing at the date the assignment, transfer or change occurs, an Obligor would be obliged to make a payment to the New Lender or Lender acting through its new Facility Office under clause 15 (Tax Gross Up and Indemnities) or clause 16 (Increased Costs),

---

(H)

Each New Lender, by executing the relevant Transfer Certificate confirms, for the avoidance of doubt, that the Facility Agent has authority to execute on its behalf any amendment or waiver that has been approved by or on behalf of the requisite Lender or Lenders in accordance with the Finance Documents on or prior to the date on which the transfer or assignment becomes effective in accordance with this Agreement.

(I)	Any assignment or transfer of part of the Existing Lender’s rights and/or obligations must be a minimum of USD 5 million and must not result in the Existing Lender retaining less than USD 5 million.

(J)	The Facility Agent shall only be obliged to execute an assignment agreement delivered to it by the Existing Lender and the New Lender once it is satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to the assignment to such New Lender.

1.3	Assignment or transfer fee

1.4	Limitation of responsibility of Existing Lenders

(A)	Unless expressly agreed to the contrary, an Existing Lender makes no representation or warranty and assumes no responsibility to a New Lender for:

(i)	the legality, validity, effectiveness, adequacy or enforceability of the Finance Documents or any other documents;

(ii)	the financial condition of any Obligor;

(iii)	the performance and observance by any Obligor of its obligations under the Finance Documents or any other documents; or

(iv)	the accuracy of any statements (whether written or oral) made in or in connection with any Finance Document or any other document,

(B)	Each New Lender confirms to the Existing Lender and the other Finance Parties that it:

(i)	has made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of each Obligor and its related entities in connection with its participation in the Facility and has not relied exclusively on any information provided to it by the Existing Lender in connection with any Finance Document; and

(ii)	will continue to make its own independent appraisal of the creditworthiness of each Obligor and its related entities whilst any amount is or may be outstanding under the Finance Documents or any Commitment is in force.

(C)	Nothing in any Finance Document obliges an Existing Lender to:

---

(i)	accept a re-transfer or re-assignment from a New Lender of any of the rights and obligations assigned or transferred under this clause; or

(ii)	support any losses directly or indirectly incurred by the New Lender by reason of the non-performance by any Obligor of its obligations under the Finance Documents or otherwise.

1.5	Procedure for transfer

(A)

Subject to the conditions set out in clause 30.2 (Conditions of assignment and transfer or change in Facility Office) a transfer is effected in accordance with paragraph (C) below when the Facility Agent executes an otherwise duly completed Transfer Certificate delivered to it by the Existing Lender and the New Lender. The Facility Agent shall, as soon as reasonably practicable after receipt by it of a duly completed Transfer Certificate appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, execute that Transfer Certificate on behalf of the other Finance Parties and the Obligors as well as itself, and notify the Original Borrower of the date of the transfer and name of the New Lender. Each Finance Party and each Obligor irrevocably authorises the Facility Agent to sign such a Transfer Certificate on its behalf.

(B)	The Facility Agent shall only be obliged to execute a Transfer Certificate delivered to it by the Existing Lender and the New Lender once it is satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to the transfer to such New Lender.

(C)	Subject to clause 30.9 (Pro rata interest settlement), on the Transfer Date:

(i)

to the extent that in the Transfer Certificate the Existing Lender seeks to transfer by novation its rights and obligations under the Finance Documents, each of the Obligors and the Existing Lender shall be released from further obligations towards one another under the Finance Documents and their respective rights against one another under the Finance Documents shall be cancelled (being the “Discharged Rights and Obligations”);

(ii)	each of the Obligors and the New Lender shall assume obligations towards one another and/or acquire rights against one another which differ from the Discharged Rights and Obligations only insofar as that Obligor and the New Lender have assumed and/or acquired the same in place of that Obligor and the Existing Lender;

(iii)

the Facility Agent, each Mandated Lead Arranger, the New Lender and the other Finance Parties shall acquire the same rights and assume the same obligations between themselves as they would have acquired and assumed had the New Lender been an Original Lender with the rights and/or obligations acquired or assumed by it as a result of the transfer and to that extent such Finance Parties and the Existing Lender shall each be released from further obligations to each other under the Finance Documents; and

(iv)	the New Lender shall become a Party as a “Lender”.

1.6	Copy of Transfer Certificate to the Original Borrower

---

1.7	Disclosure of information

(A)	Any Finance Party, its officers and agents may disclose to any of its Affiliates (including its head office, representative and branch offices in any jurisdiction) (each a “Permitted Party”) and:

(i)	to any person (or through) whom that Finance Party assigns or transfers (or may potentially assign or transfer) all or any of its rights and obligations under this Agreement (or any adviser on a need to know basis advising such person on any of the foregoing);

(ii)	to a professional adviser or a service provider of the Permitted Parties on a need to know basis advising such person on the rights and obligations under the Finance Documents or to an auditor of any Permitted Party on a need to know basis;

(iii)	with (or through) whom that Finance Party enters into (or may potentially enter into) any sub-participation in relation to, or any other transaction under which payments are to be made by reference to, this Agreement or any Obligor (or any adviser of any of the foregoing on a need to know basis advising such person on the rights and obligations under the Finance Documents);

(iv)	to any person appointed by that Finance Party to provide administration or settlement services in respect of one or more of the Finance Documents (including in relation to the trading of participations in respect of the Finance Documents) only on a need to know basis;

(v)	to any rating agency (provided only general terms are disclosed in relation to the rating of a portfolio of assets), insurer or insurance broker, a direct or indirect provider of credit protection in respect of the Finance Party’s participation in the Facility only on a need to know basis;

(vi)	to whom and to the extent that information is required to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation or other regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation;

(vii)	subject to paragraph (B) below, to whom and to the extent that information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitration, administrative or other investigations, proceedings or disputes;

(viii)	to any other party to this Agreement; or

(ix)	to any person with the consent of the Original Borrower,

---

(B)

If a Finance Party is required to make any disclosure in accordance with paragraph (A)(vii) above, it shall promptly notify the Original Borrower upon becoming aware of that requirement, save that there shall be no requirement to notify (1) where prohibited under law or regulation, (2) where prohibited under the applicable rules relating to the relevant procedure or situation described in paragraph (A)(vii), or (3) where notification would prejudice the position of the Finance Party under the relevant procedure or situation described in paragraph (A)(vii).

1.8	Security over Lenders’ rights

(A)	any charge, assignment or other Security Interest to secure obligations to a federal reserve or central bank; and

(B)	in the case of any Lender which is a fund, any charge, assignment or other Security Interest granted to any holders (or trustee or representatives of holders) of obligations owed, or securities issued, by that Lender as security for those obligations or securities,

(i)	release a Lender from any of its obligations under the Finance Documents or substitute the beneficiary of the relevant charge, assignment or Security Interest for the Lender as a party to any of the Finance Documents; or

(ii)	require any payments to be made by an Obligor other than or in excess of, or grant to any person any more extensive rights than, those required to be made or granted to the relevant Lender under the Finance Documents.

1.9	Pro rata interest settlement

(A)	If the Facility Agent has notified the Lenders that it is able to distribute interest payments on a “pro rata basis” to Existing Lenders and New Lenders then (in respect of any transfer pursuant to clause 30.5 (Procedure for transfer) the Transfer Date of which is after the date of such notification and is not on the last day of an Interest Period):

(i)

any interest or fees in respect of the relevant participation which are expressed to accrue by reference to the lapse of time shall continue to accrue in favour of the Existing Lender up to but excluding the Transfer Date (“Accrued Amounts”) and shall become due and payable to the Existing Lender (without further interest accruing on them) on the last day of the current Interest Period (or, if the Interest Period is longer than six

---

(ii)	the rights assigned or transferred by the Existing Lender will not include the right to the Accrued Amounts, so that, for the avoidance of doubt:

(a)	when the Accrued Amounts become payable, those Accrued Amounts will be payable to the Existing Lender; and

(b)	the amount payable to the New Lender on that date will be the amount which would, but for the application of this clause 30.9 (Pro rata interest settlement), have been payable to it on that date, but after deduction of the Accrued Amounts.

(B)	In this clause 30.9 (Pro rata interest settlement) references to “Interest Period” shall be construed to include a reference to any other period for accrual of fees.

(C)

An Existing Lender which retains the right to the Accrued Amounts pursuant to this clause 30.9 (Pro rata interest settlement) but which does not have a Commitment shall be deemed not to be a Lender for the purposes of ascertaining whether the agreement of any specified group of Lenders has been obtained to approve any request for a consent, waiver, amendment or other vote of Lenders under the Finance Documents.

2.	Changes to the Obligors

2.1	Assignments and transfers by Obligors

2.2	Additional Borrowers

(A)	Subject to compliance with the provisions of paragraphs (C) and (D) of clause 24.12 (“Know your customer” and “customer due diligence” requirements), the Original Borrower may request that any subsidiary of KEL becomes an Additional Borrower. That subsidiary shall become an Additional Borrower if:

(i)	the Majority Lenders (or, if that Additional Borrower is incorporated in a jurisdiction in which no other Borrower is incorporated, all the Lenders) approve the addition of that subsidiary;

(ii)	the Additional Borrower is, or simultaneously becomes, a Guarantor;

(iii)	the Original Borrower delivers to the Facility Agent a duly completed and executed Accession Letter;

(iv)	the Original Borrower confirms that no Default is continuing or would occur as a result of that subsidiary becoming an Additional Borrower; and

(v)	the Facility Agent has received all of the documents and other evidence listed in Part II of Schedule 3 (Conditions Precedent) in relation to that Additional Borrower, each in form and substance satisfactory to the Facility Agent.

---

(B)	The Facility Agent shall notify the Original Borrower and the Lenders promptly upon being satisfied that it has received (in form and substance satisfactory to it) all the documents and other evidence listed in Part II of Schedule 3 (Conditions Precedent).

(C)	In the event that an Additional Borrower becomes a party to this Agreement:

(i)	the Original Borrower, on behalf of all Obligors; and

(ii)	the Facility Agent on behalf of all Finance Parties,

2.3	Resignation of a Borrower

(A)	The Original Borrower may request that any Borrower (other than the Original Borrower) ceases to be a Borrower by delivering to the Facility Agent a Resignation Letter.

(B)	The Facility Agent shall accept a Resignation Letter and notify the Original Borrower and the Lenders of its acceptance if:

(i)	no Default is continuing or would result from the acceptance of the Resignation Letter (and the Original Borrower has confirmed this is the case); and

(ii)	the relevant Borrower is under no actual or contingent obligations as a Borrower under any Finance Documents,

2.4	Additional Guarantor

(A)	Subject to compliance with the provisions of paragraphs (C) and (D) of clause 24.12 (“Know your customer” and “customer due diligence” requirements), a Borrower may request that any of its subsidiaries becomes an Additional Guarantor. That subsidiary shall become an Additional Guarantor if:

(i)	the relevant Borrower delivers to the Facility Agent an Accession Letter duly completed and executed by that Additional Guarantor and the relevant Borrower; and

(ii)	the Facility Agent has received all of the documents and other evidence listed in Part II of Schedule 3 (Conditions Precedent) in relation to that Additional Guarantor, each in form and substance satisfactory to the Facility Agent.

(B)	The Facility Agent shall notify the Original Borrower and the Lenders promptly upon being satisfied that it has received (in form and substance satisfactory to it) all the documents and other evidence listed in Part II of Schedule 3 (Conditions Precedent).

2.5	Repetition of Representations

---

2.6	Unwind of Equatorial Guinea Joint Venture

3.	Role of the Agents and the Arrangers

3.1	Appointment of the Agents

(A)	Each other Finance Party (other than the relevant Agent) appoints each Agent to act in that capacity under and in connection with the Finance Documents.

(B)	Each other Finance Party authorises each Agent to exercise the rights, powers, authorities and discretions specifically given to that Agent under or in connection with the Finance Documents together with any other incidental rights, powers, authorities and discretions.

3.2	Duties of the Facility Agent

(A)	The Facility Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Facility Agent for that Party by any other Party.

(B)	Except where a Finance Document specifically provides otherwise, the Facility Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party.

(C)	If the Facility Agent receives notice from a Party referring to this Agreement, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the Finance Parties.

(D)	If the Facility Agent is aware of the non-payment of any principal, interest, commitment fee or other fee payable to a Finance Party (other than to an Agent or a Mandated Lead Arranger) under this Agreement it shall promptly notify the other Finance Parties.

(E)	The Facility Agent’s duties under the Finance Documents are solely mechanical and administrative in nature.

3.3	Role of the Mandated Lead Arrangers

3.4	No fiduciary duties

---

(A)	Except as specifically provided in the Finance Documents, nothing in this Agreement constitutes an Agent or a Mandated Lead Arranger as a trustee or fiduciary of any other person.

(B)	No Agent nor any Mandated Lead Arranger shall be bound to account to any Lender for any sum or the profit element of any sum received by it for its own account.

3.5	Business with the Group

3.6	Rights and discretions of Agents

(A)	Each Agent may rely on:

(i)	any representation, notice or document believed by it to be genuine, correct and appropriately authorised; and

(ii)	any statement made by a director, Authorised Signatory or employee of any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power to verify.

(B)	Each Agent may assume (unless it has received notice to the contrary in its capacity as agent for the Lenders) that:

(i)	no Default has occurred (unless it has actual knowledge of a Default arising under clause 29.1 (Non-payment));

(ii)	any right, power, authority or discretion vested in any Party or the Lenders (or any consistent majority of Lenders) has not been exercised; and

(iii)	any notice or request made by an Obligor (other than a Utilisation Request) is made on behalf of and with the consent and knowledge of all the Obligors.

(C)	Each Agent may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors or other experts.

(D)	Each Agent may act in relation to the Finance Documents through its personnel and agents.

(E)	Each Agent may disclose to any other Party any information it reasonably believes it has received as agent under this Agreement.

(F)	Notwithstanding any other provision of any Finance Document to the contrary, no Agent nor any Mandated Lead Arranger is obliged to do or omit to do anything if it would or might in its reasonable opinion constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality.

3.7	Lenders’ instructions

(A)	Unless a contrary indication appears in a Finance Document, each Agent shall (i) exercise any right, power, authority or discretion vested in it as Agent in accordance

---

(B)	Each Agent may refrain from acting in accordance with instructions given to it by the Lenders in accordance with this Agreement and the Intercreditor Agreement until it has received such security as it may require for any cost, loss or liability (together with any associated VAT) which it may incur in complying with the instructions.

(C)	In the absence of instructions in accordance with this Agreement and the Intercreditor Agreement each Agent may act (or refrain from taking action) as it considers to be in the best interest of the Lenders.

(D)	Neither Agent is authorised to act on behalf of a Lender (without first obtaining that Lender’s consent) in any legal or arbitration proceedings relating to any Finance Document.

3.8	Responsibility for documentation

(A)	is responsible for the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by an Agent, a Mandated Lead Arranger, an Obligor or any other person given in or in connection with any Finance Document or the Final Information Memorandum; or

(B)	is responsible for the legality, validity, effectiveness, adequacy or enforceability of any Finance Document or any other agreement, arrangement or document entered into, made or executed in anticipation of or in connection with any Finance Document.

3.9	No duty to monitor

(A)	whether or not any Default has occurred;

(B)	as to the performance, default or any breach by any Party of its obligations under any Finance Document; or

(C)	whether any other event specified in any Finance Document has occurred.

3.10	Exclusion of liability

(A)

Without limiting paragraph (B) below (and without prejudice to the provisions of paragraph (E) of clause 34.9 (Disruption to Payment Systems etc.), no Agent shall be liable (including, without limitation, for negligence or any other category of liability whatsoever) for any action taken by it under or in connection with any Finance Document, unless directly caused by its gross negligence or wilful misconduct.

---

(B)	No Party (other than the relevant Agent) may take any proceedings against any officer, employee or agent of that Agent in respect of any claim it might have against it or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document and any officer, employee or agent of the relevant Agent may rely on this clause.

(C)	An Agent will not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid by it if that Agent has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by it for that purpose.

3.11	Lenders’ indemnity to the Agents

3.12	Resignation of an Agent

(A)	An Agent may resign and appoint one of its Affiliates acting through an office in the United Kingdom as successor by giving notice to the other Finance Parties and the Original Borrower.

(B)	Alternatively, an Agent may resign by giving notice to the other Finance Parties and the Original Borrower, in which case the Majority Lenders may appoint a successor Agent.

(C)	If the Majority Lenders have not appointed a successor Agent in accordance with paragraph (B) above within 30 days after notice of resignation was given, the relevant Agent may (with the prior written consent of the Original Borrower) appoint a successor Agent (acting through an office in the United Kingdom).

(D)	A retiring Agent shall, at its own cost, make available to the successor Agent such documents and records and provide such assistance as the successor Agent may reasonably request for the purposes of performing its functions as Agent under the Finance Documents. This obligation shall not apply in the event the Agent is required to resign pursuant to paragraph (G) below.

(E)	An Agent’s resignation notice shall only take effect upon the appointment of a successor.

(F)	Upon the appointment of a successor, a retiring Agent shall be discharged from any further obligation in respect of the Finance Documents but shall remain entitled to the benefit of clause 17.3 (Indemnity to the Agents) and this clause 32. Its successor

---

(G)	After consultation with the Original Borrower, the Majority Lenders may, by notice to an Agent, require it to resign in accordance with paragraph (B) above.

(H)	The Facility Agent shall resign in accordance with paragraph (B) above (and, to the extent applicable, shall use reasonable endeavours to appoint a successor Facility Agent pursuant to paragraph (C) above) if on or after the date which is three months before the earliest FATCA Application Date relating to any payment to the Facility Agent under the Finance Documents, either:

(i)	the Facility Agent fails to respond to a request under clause 13.5 (FATCA Information) and the Original Borrower or a Lender reasonably believes that the Facility Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date;

(ii)	the information supplied by the Facility Agent pursuant to clause 13.5 (FATCA Information) indicates that the Facility Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date; or

(iii)	the Facility Agent notifies the Original Borrower and the Lenders that the Facility Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date;

3.13	Replacement of Administrative Parties

(A)	If:

(i)	in relation to the Facility Agent, the Security Agent or an LC Issuing Bank (or their respective holding companies), clause 29.6 (Insolvency) or clause 29.7 (Insolvency proceedings) (disregarding paragraph (B) of that clause) applies or has occurred; or

(ii)	if the Facility Agent, the Security Agent or an LC Issuing Bank or any of their Affiliates repudiates its obligations under the Facility or (in its capacity as Lender) becomes a Non-Funding Lender,

(B)	The Facility Agent, the Security Agent or any LC Issuing Bank to which either of the circumstances described in (A)(i) or (A)(ii) above applies (an “Affected Administrative Party”) shall cease to be entitled to fees in respect of its role upon becoming an Affected Administrative Party.

---

(C)

Each Affected Administrative Party shall provide all assistance and documentation reasonably required to the Original Borrower and the other Lenders to enable the uninterrupted administration of the Facility. This shall include, where the Affected Administrative Party is the Facility Agent, the provision to the Original Borrower on request and in any event, within five Business Days, of an up to date list of participants in the Facility including names and contact details.

3.14	Confidentiality

(A)	In acting as agent for the Finance Parties, an Agent shall be regarded as acting through its agency division or, in the case of the Technical and Modelling Bank, through the relevant division performing the role which shall be treated as a separate entity from any other of its divisions or departments.

(B)	If information is received by another division or department of an Agent, it may be treated as confidential to that division or department and the relevant Agent shall not be deemed to have notice of it.

3.15	Facility Agent relationship with the Lenders

3.16	Credit appraisal by the Lenders

(A)	the financial condition, status and nature of the Guarantor and each member of the Group;

(B)	the legality, validity, effectiveness, adequacy or enforceability of any Finance Document and any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document;

(C)	whether that Lender has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under or in connection with any Finance Document, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document; and

(D)

the adequacy, accuracy and/or completeness of the Final Information Memorandum and any other information provided by the Agents, any Party or by any other person under or in connection with any Finance Document, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document.

3.17	Deductions from amounts payable by Agents

---

3.18	Accession to the KEFI Intercreditor Agreement

(A)

Each Finance Party and each Obligor agrees that any collateral agent, trustee or other representative of the HY Noteholders may enter into and accede to the KEFI Intercreditor Agreement, the KEL Guarantee and the Charge over Shares in KEH for and on behalf of itself and each HY Noteholder without the requirement for any consent or approvals from the Finance Parties or the Obligors (or any of them). Such accession shall confer upon the HY Noteholders all of the rights and privileges set out in the relevant agreement. The Original Borrower may by five Business Days written notice (the “Amendment Notice Period”) to the Facility Agent request that such amendments and/or additions be made to the KEFI Intercreditor Agreement as any collateral agent, trustee or other representative of the HY Noteholders (whether appointed at that time or not) may reasonably require (the “HY Noteholder Trustee Amendments”). During the Amendment Notice Period, either:

(i)	the Security Agent shall enter into any agreement effecting the HY Noteholder Trustee Amendments, on the instructions of the Majority Lenders; or

(ii)	the Facility Agent shall notify the Original Borrower in writing of any determination by the Majority Lenders that the HY Noteholder Trustee Amendments would materially and adversely prejudice their interests.

(B)

If, on the instructions of the Majority Lenders, the Facility Agent is required to make the notification described in paragraph (A)(ii) above, the Facility Agent shall promptly contact the Original Borrower in writing, setting out in reasonable detail the basis and reasons for that decision and the changes which the Majority Lenders (acting reasonably) would require for the Security Agent to enter into the KEFI Intercreditor Agreement with the HY Noteholder Trustee Amendments incorporated. If such changes are made, then the Security Agent will be deemed to have been instructed by the Majority Lenders promptly to enter into any agreement effecting the HY Noteholder Amendments, together with the changes required by the Majority Lenders.

3.19	Execution of the KEFI Intercreditor Agreement

3.20	Amendment of the KEFI Intercreditor Agreement

---

3.21	Replacement of the Security Agent

(A)

If, KEG receives the relevant consents required from GNPC and the Government of Ghana under the relevant Project Agreements and evidence of such consents is provided to the Facility Agent (in form and substance satisfactory to the Majority Lenders), the Security Agent shall resign in accordance with the process set out in clause 12.1 (Resignation of the Security Agent) of the Intercreditor Agreement and the Lenders shall appoint Crédit Agricole Corporate and Investment Bank as successor Security Agent.

(B)

In connection with the resignation of the Security Agent referred to in paragraph (A) above, each of the Obligors shall, and the Original Borrower shall procure that KEH shall, at its own expense, promptly do all things, take all such action and execute all such other documents and instruments as may be reasonably requested by the Facility Agent and to the extent they are reasonably required or necessary for the purpose of giving effect to the provisions of the Finance Documents and the Project Agreements and for the purpose of perfecting and protecting the Lenders’ rights with respect to the Security Interests which are required to be created or perfected by the Finance Documents when required thereunder.

4.	Consultants

4.1	Reserves Consultant

4.2	Terms of appointment of Consultants

4.3	Termination and replacement

---

1.	Payment Mechanics

1.1	Payments to the Facility Agent

(A)

On each date on which an Obligor or a Lender is required to make a payment under a Finance Document (other than any Hedging Agreement), that Obligor or Lender shall make the same available to the Facility Agent (unless a contrary indication appears in a Finance Document) for value on the due date at the time and in such funds specified by the Facility Agent as being customary at the time for settlement of transactions in the relevant currency in the place of payment.

(B)	Payment shall be made to such account in London (or, as the case may be, Paris or New York) as the Facility Agent specifies.

1.2	Distributions by the Facility Agent

1.3	Clawback

(A)	Where a sum is to be paid to the Facility Agent under the Finance Documents for another Party, the Facility Agent is not obliged to pay that sum to that other Party (or enter into or perform any related exchange contract) until it has been able to establish to its satisfaction that it has actually received that sum.

(B)

If the Facility Agent pays an amount to another Party and it proves to be the case that the Facility Agent had not actually received that amount, then the Party to whom that amount (or the proceeds of any related exchange contract) was paid by the Facility Agent shall on demand refund the same to the Facility Agent together with interest on that amount from the date of payment to the date of receipt by the Facility Agent, calculated by the Facility Agent to reflect its cost of funds.

1.4	Partial Payments

---

1.5	No set-off by Obligors

1.6	Business Days

(A)	Any payment which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).

(B)	During any extension of the due date for payment of any principal or Unpaid Sum under the Finance Documents, interest is payable on the principal or Unpaid Sum at the rate payable on the original due date.

1.7	Currency of account

(A)	Subject to paragraphs (B) to (E) below, the base currency is the currency of account and payment for any sum due from an Obligor under any Finance Document and is the US Dollar (“Base Currency”).

(B)	A repayment of a Utilisation or Unpaid Sum or a part of a Utilisation or Unpaid Sum shall be made in the currency in which that Utilisation or Unpaid Sum is denominated on its due date.

(C)	Each payment of interest shall be made in the currency in which the sum in respect of which the interest is payable was denominated when that interest accrued.

(D)	Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred.

(E)	Any amount expressed to be payable in a currency other than the Base Currency shall be paid in that other currency.

1.8	Change of currency

(A)	Unless otherwise prohibited by law, if more than one currency or currency unit are at the same time recognised by the central bank of any country as the lawful currency of that country, then:

(i)	any reference in the Finance Documents to, and any obligations arising under the Finance Documents in, the currency of that country shall be translated into, or paid in, the currency or currency unit of that country designated by the Facility Agent acting reasonably (after consultation with the Original Borrower); and

(ii)	any translation from one currency or currency unit to another shall be at the official rate of exchange recognised by the central bank for the conversion of that currency or currency unit into the other, rounded up or down by the Facility Agent (acting reasonably).

---

(B)	If a change in any currency of a country occurs, the Parties will enter negotiations in good faith with a view to agreeing any amendments which may be necessary to this Agreement to comply with any generally accepted conventions and market practice in the London interbank market and otherwise to reflect the change in currency.

1.9	Disruption to Payment Systems etc.

(A)

the Facility Agent may, and shall if requested to do so by the Original Borrower, consult with the Original Borrower with a view to agreeing with the Original Borrower such changes to the operation or administration of the Facility (including, without limitation, changes to the timing and mechanics of payments due under the Finance Documents) as the Facility Agent may deem necessary in the circumstances;

(B)	the Facility Agent shall not be obliged to consult with the Original Borrower in relation to any changes mentioned in paragraph (A) above if, in its reasonable opinion, it is not practicable to do so in the circumstances and, in any event, shall have no obligation to agree to such changes;

(C)	the Facility Agent may consult with the Finance Parties in relation to any changes mentioned in paragraph (A) above but shall not be obliged to do so if, in its opinion, it is not practicable to do so in the circumstances;

(D)	any such changes agreed upon by the Facility Agent and the Original Borrower shall (whether or not it is finally determined that a Disruption Event has occurred) be binding upon the Parties as an amendment to (or, as the case may be, waiver of) the terms of the Finance Documents notwithstanding the provisions of clause 42 (Amendments and Waivers);

(E)	the Facility Agent shall not be liable for any damages, costs or losses whatsoever (including, without limitation for negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Facility Agent) arising as a result of its taking, or failing to take, any actions pursuant to or in connection with this clause; and

(F)	the Facility Agent shall notify the Finance Parties of all changes agreed pursuant to paragraph (D) above.

2.	Set-Off

---

3.	Costs and Expenses

3.1	Transaction expenses

(A)	the negotiation, preparation, printing, and execution of:

(i)	this Agreement and any other documents referred to in this Agreement; and

(ii)	any other Finance Documents executed after the date of this Agreement;

(B)	the appointments of the Consultants.

3.2	Amendment costs

(A)	an Obligor requests an amendment, waiver or consent; or

(B)	an amendment is required pursuant to clause 34.8 (Change of currency),

3.3	Enforcement costs

4.	Notices

4.1	Communications in writing

4.2	Addresses

(A)	in the case of the Obligors, that identified with its name below;

(B)	in the case of each Lender, that notified in writing to the Facility Agent on or prior to the date on which it becomes a Party; and

---

(C)	in the case of an Agent, that identified with its name below,

Name:	Standard Chartered Bank – Loans Agency

Email:	lisa.richardson@sc.com;

Address:	1 Basinghall Avenue, London, EC2V 5DD

Attention:	Lisa Richardson, Emma Hattersley

Name:	BNP Paribas - CIB - Agency- EMEA

Address:	Millenaire 4 - 35 Rue de la Gare - 75019 Paris

Fax:	+ 33 (0) 1 42 98 43 17

Attention:	Alexandra Arhab/Lise Yu

---

Name:	BNP Paribas - CIB - Agency- EMEA

Address:	Millenaire 4 - 35 Rue de la Gare - 75019 Paris

Fax:	+ 33 (0) 1 42 98 43 17

Address:	SG House, 41 Tower Hill, London, EC3N 4SG, United Kingdom

Attention:	Mark Bromfield

Address:	SG House, 41 Tower Hill, London, EC3N 4SG, United Kingdom

Attention:	Mark Bromfield

4.3	Delivery

(A)	Subject to clause 37.5 (Electronic communication), any communication or document made or delivered by one person to another under or in connection with the Finance Documents will only be effective:

(i)	if by way of fax, when received in legible form; or

(ii)	if by way of letter, when it has been left at the relevant address or five Business Days after being deposited in the post with postage prepaid in an envelope addressed to it at that address;

---

(B)	Any communication or document to be made or delivered to an Agent will be effective only when actually received by that Agent and then only if it is expressly marked for the attention of the department or officer identified with that Agent’s signature below (or any substitute department or officer as the Facility Agent shall specify for this purpose).

(C)	All notices from or to an Obligor shall be sent through the Facility Agent.

(D)	Any communication or document made or delivered to the Original Borrower in accordance with this clause will be deemed to have been made or delivered to each of the Obligors.

4.4	Notification of address and fax number

4.5	Electronic communication

(A)	Any communication to be made between the Facility Agent and a Lender or the Facility Agent and the Original Borrower under or in connection with the Finance Documents may be made by electronic mail or other electronic means, if the Facility Agent and the relevant Lender or the Facility Agent and the Original Borrower:

(i)	agree that, unless and until notified to the contrary, this is to be an accepted form of communication;

(ii)	notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and

(iii)	notify each other of any change to their address or any other such information supplied by them.

(B)

Any electronic communication made between the Facility Agent and a Lender or the Facility Agent and the Original Borrower will be effective only when actually received in readable form and in the case of any electronic communication made by a Lender to the Facility Agent or by the Original Borrower to the Facility Agent only if it is addressed in such a manner as the Facility Agent shall specify for this purpose.

4.6	English language

(A)	Any notice given under or in connection with any Finance Document must be in English.

(B)	All other documents provided under or in connection with any Finance Document must be:

(i)	in English; or

(ii)	if not in English, and if so required by either the Facility Agent or the Security Agent, accompanied by a certified English translation and, in this case, the

---

5.	Calculations and Certificates

5.1	Accounts

5.2	Certificates and determinations

5.3	Day count convention

6.	Disclosure to numbering service providers

(A)	Any Finance Party may disclose to any national or international numbering service provider appointed by that Finance Party to provide identification numbering services in respect of this Agreement, the Facility and/or one or more Obligors the following information:

(i)	names of Obligors;

(ii)	country of domicile of Obligors;

(iii)	place of incorporation of Obligors;

(iv)	date of this Agreement;

(v)	the names of the Facility Agent and Mandated Lead Arrangers;

(vi)	date of each amendment and restatement of this Agreement;

(vii)	amount of Total Commitments;

(viii)	currencies of the Facility;

(ix)	type of Facility;

(x)	ranking of Facility;

(xi)	the Final Maturity Date;

(xii)	changes to any of the information previously supplied pursuant to paragraphs (i) to (xi) above; and

---

(xiii)	such other information agreed between such Finance Party and the Original Borrower,

(B)	The Parties acknowledge and agree that each identification number assigned to this Agreement, the Facility and/or one or more Obligors by a numbering service provider and the information associated with each such number may be disclosed to users of its services in accordance with the standard terms and conditions of that numbering service provider.

(C)	KEFI represents that none of the information set out in paragraphs (i) to (xiii) of paragraph (A) above is, nor will at any time be, unpublished price-sensitive information.

(D)	The Facility Agent shall notify KEFI and the other Finance Parties of:

(i)	the name of any numbering service provider appointed by the Facility Agent in respect of this Agreement, the Facility and/or one or more Obligors; and

(ii)	the number or, as the case may be, numbers assigned to this Agreement, the Facility and/or one or more Obligors by such numbering service provider.

7.	Partial Invalidity

8.	Remedies and Waivers

9.	Amendments and Waivers

9.1	Required consents

(A)

Subject to clause 42.2 (Exceptions) and to paragraph (D) below, any term of the Finance Documents (other than a waiver of a Condition Precedent or a Condition Subsequent, which shall be made pursuant to clause 2.3 (Waivers of Conditions Precedent) may be amended or waived only with the consent of the Majority Lenders and the Obligors and any such amendment or waiver will be binding on all Parties.

(B)	The Facility Agent may effect, on behalf of any Finance Party, any amendment or waiver permitted by this clause.

(C)	Paragraph (C) of clause 30.9 (Pro rata interest settlement) shall apply to this clause 42.

---

(D)	Notwithstanding the terms of this clause 42, in relation to an amendment, variation or waiver of the terms of the Intercreditor Agreement or the Security Documents, the terms of the Intercreditor Agreement shall prevail.

9.2	Exceptions

(A)	The following may not be effected without the consent of all the Lenders.

(i)	amending the definition of “Majority Lenders” or “Supermajority Lenders”;

(ii)	amending, varying or waiving clause 4 (Finance Parties’ Rights and Obligations) of this Agreement and/or any other term of any Finance Document which relates to the rights and/or obligations of each Finance Party being several;

(iii)	varying the date for, or altering the amount or currency of, any payment to Lenders under the Finance Documents;

(iv)	increasing or extending the Commitment of a Lender;

(v)	amending varying or waiving a term of any Finance Document which expressly requires the consent of all the Lenders; ;

(vi)	amending, varying or waiving this clause 42 (Amendments and Waivers); or

(vii)

any release of Security Interests granted pursuant to any Security Document or amendment, waiver or variation of the obligations of any Obligor pursuant to clause 25.1 (Guarantee and indemnity). Nothing in this clause (vii) shall require any consent to be obtained for any release of Security Interests, Security Documents (including but not limited to under releases made pursuant to clause 28.8(C)) or obligations of any Obligor pursuant to clause 25.1 (Guarantee and indemnity), which are permitted by clause 28.32 (IPO Reorganisation).

(B)	An amendment to Clause 28.35 (HY Notes Maturity Date) may not be effected without the consent of the Supermajority Lenders.

(C)	An amendment of clause 19.6 (Calculation of Borrowing Base Amount) to reduce the figure of 1.4 or the figure of 1.15 may not be effected without the consent of the Majority Lenders.

(D)	An amendment or waiver which relates to the rights or obligations of an Agent, an LC Issuing Bank or an Account Bank may not be effected without the consent of that Agent, LC Issuing Bank or that Account Bank.

(E)	Any release of Security Interests granted pursuant to any Security Document, an amendment or waiver which relates to clause 21.2 (Withdrawals – No Default Outstanding), clause 25 (Guarantee and Indemnity) and the rights or obligations of a Hedging Counterparty, in each case, may not be effected without the consent of the relevant Hedging Counterparty.

---

(F)	(i)    If a Lender becomes a Non-Funding Lender that Lender’s Commitment shall not be included for the purposes of calculating Total Commitments under the Facility when ascertaining whether a certain percentage of Total Commitments has been obtained to approve any requested amendment, waiver, consent or approval.

(i)	If a Lender does not accept or reject a request for an amendment, waiver, consent or approval within:

(a)	in respect of clause 31.6 (Unwind of Equatorial Guinea Joint Venture), ten Business Days;

(b)	in any other case, fifteen Business Days,

9.3	Disenfranchisement of Shareholder Affiliates

(A)	in the event that a matter requires decision by one or more Lenders under this Agreement or any of the Finance Documents,

(i)	the Commitment of such Shareholder Affiliate and any associated participation of such Shareholder Affiliate in a Loan shall be deemed to be zero; and

(ii)	such Shareholder Affiliate shall be deemed not to be a Lender;

(B)	in relation to any meeting or conference call to which all or any number of Lenders are invited to attend or participate, it shall not attend or participate in the same if so requested by the Facility Agent or, unless the Facility Agent otherwise agree, be entitled to receive the agenda or any minutes of the same; and

(C)	it shall not, unless the Facility Agent otherwise agree, be entitled to receive any report or other document prepared at the behest of, or on the instructions of, the Facility Agent or one or more of the Lenders.

---

10.	Counterparts

(A)	This Agreement may be executed in any number of counterparts, and by the parties on separate counterparts, but shall not be effective until each Party has executed at least one counterpart.

(B)	Each counterpart shall constitute an original of this Agreement, but all the counterparts shall together constitute one and the same instrument.

1.	Governing Law

2.	Jurisdiction

2.1	Arbitration

(A)	the arbitration shall be conducted in accordance with the Rules of Arbitration of the International Chamber of Commerce (“ICC”) (the “Rules”), which Rules are deemed to be incorporated by reference into this clause;

(B)	the seat of the arbitration shall be London;

(C)	the language of the arbitration shall be English;

(D)	there shall be three arbitrators; and

(E)	the arbitration agreement in this clause 45.1 and any non-contractual obligations arising out of or in connection with it shall be governed by and construed in accordance with English law.

2.2	Consolidation and joinder of Disputes

---

2.3	Joinder

(A)	Each party consents to be joined as a party to an arbitration commenced under this Agreement on the terms provided by paragraphs (B) and (C) below. Each party consents to the joinder of any party to this Agreement to an arbitration under this Agreement on the terms provided by paragraphs (B) and (C) below.

(B)

Within 30 days from the date on which a Request for Arbitration (as defined in Article 4 of the Rules) is served on all parties to the Request for Arbitration (the “Initial Joinder Period”), any party to the arbitration may effect joinder by serving notice on any party to this Agreement whom it seeks to join, copying the other parties to the Request for Arbitration. The joined party will become a claimant or respondent party (to be finally determined by the ICC Court in the event of a dispute) to the arbitration and participate in the arbitrator appointment process in clause 45.5 (Appointment of arbitrators).

(C)

After the Initial Joinder Period has ended, any party to the Request for Arbitration may submit a request for arbitration against the additional party (the “Request for Joinder”) to the Secretariat and promptly notify all parties to the Request for Arbitration and the party it seeks to join of that application. On hearing such application, the tribunal may, if it considers appropriate, make a Joinder Order. Notice of such Joinder Order must be given to all parties to the Request for Arbitration, the joined party and the Secretariat.

2.4	Consolidation

(A)	Any party to either a Primary Arbitration or one or more Later Arbitration(s) may apply to the ICC Court for a Consolidation Order in relation to any Later Arbitration(s). That party must also send such applications to all parties to the Primary Arbitration and the Later Arbitration. The relevant provisions of the Rules shall apply.

(B)

Each party to this Agreement waives any objection, on the basis of joinder, a Joinder Order or a Consolidation Order, to the validity and/or enforcement of any arbitral award made by a tribunal following any joinder, Joinder Order or Consolidation Order and such award shall be binding whether or not the parties to this Agreement participate in the arbitration. For the avoidance of doubt, this includes a waiver of any objection that the joinder, Joinder Order or Consolidation Order has resulted in a party to this Agreement being deprived of any right to participate in the nomination of the arbitrators.

2.5	Appointment of arbitrators

(A)

if there are two parties to the arbitration, and neither party has exercised the right to joinder within the Initial Joinder Period, each party to the arbitration will nominate one arbitrator within 20 days after the end of the Initial Joinder Period. The two arbitrators so nominated shall jointly nominate a third arbitrator who shall act as presiding arbitrator within 30 days of the appointment of the second arbitrator. If an arbitrator is not nominated within the time prescribed above, the appointment shall, at the request of either party to the arbitration, be made by the ICC Court;

---

(B)

if there are more than two parties to the arbitration, or at least one of the parties has exercised the right to joinder within the Initial Joinder Period, the claimant(s) will jointly nominate one arbitrator and the respondent(s) will jointly nominate one arbitrator, both within 30 days after the end of the Initial Joinder Period. The two arbitrators so nominated shall jointly nominate a third arbitrator who shall act as presiding arbitrator within 30 days of the appointment of the second arbitrator. If an arbitrator is not nominated within the time prescribed above, the appointment shall, at the request of either party to the arbitration, be made by the ICC Court. Any existing nomination or confirmation of the arbitrator chosen by the party or parties on the other side of the proposed arbitration shall be unaffected, and the remaining arbitrator(s) shall be appointed in accordance with the Rules;

(C)	each Finance Party agrees that the Facility Agent, acting on the instructions of the Majority Lenders, shall exercise the right of appointment of an arbitrator for the Finance Parties where more than one Finance Party is party to the Dispute; and

(D)	each party to this Agreement expressly agrees and consents to this process for nominating and appointing the arbitral tribunal and, if this clause operates to exclude a party’s right to choose its own arbitrator, irrevocably and unconditionally waives any right it may have to do so.

2.6	Confidentiality

2.7	Inter-bank disputes

3.	Service of Process

(A)	Without prejudice to any other mode of service allowed under any relevant law, each of the Obligors:

(i)	irrevocably appoints KEISL of 10 Stratton Street, 6th Floor, Mayfair, London W1J 8LG (the “Process Agent”) as its agent for service of process in relation to any proceedings before the English courts in connection with any Finance Document;

(ii)	irrevocably agrees that any Service Document may be sufficiently and effectively served on it in connection with any Dispute in England and Wales by service on the Process Agent (or any replacement agent appointed pursuant to paragraph (C) of this clause 46 (Service of Process); and

---

(iii)	irrevocably agrees that failure by a process agent to notify the relevant Obligor of the process will not invalidate the proceedings concerned.

(B)	KEISL confirms its acceptance of its irrevocable appointment as agent for service of process pursuant to this clause 46.

(C)

If the agent referred to in paragraph (A) of this clause 46 (or any replacement agent appointed pursuant to this paragraph (C)) at any time ceases for any reason to act as such, as the case may be, each Obligor shall as soon as reasonably practicable appoint a replacement agent to accept service having an address for service in England or Wales and shall notify the Facility Agent of the name and address of the replacement agent; failing such appointment and notification, the agent referred to in paragraph (A) of this clause 46 (or any replacement agent appointed pursuant to this paragraph (C)) shall continue to be authorised to act as agent for service of process in relation to any proceedings before the English courts on behalf of the relevant Obligor and service of process on that agent shall constitute good service.

(D)	Any document addressed in accordance with paragraph (A) shall be deemed to have been duly served if:

(i)	left at the specified address, when it is left; or

(ii)	sent by first class post, two clear Business Days after posting.

(E)	For the purposes of this clause 46, “Service Document” means a writ, summons, order, judgment or other document relating to or in connection with any Dispute. Nothing contained herein shall affect the right to serve process in any other manner permitted by law.

4.	Contractual recognition of bail-in

(A)	any Bail-In Action in relation to any such liability, including (without limitation):

(i)	a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability;

(ii)	a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and

(iii)	a cancellation of any such liability; and

(B)	a variation of any term of any Finance Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability.

---

---

---

1.	Provision of each of the following Finance Documents, duly executed by each of the parties to them (subject, in the case of the relevant Security Document, to the Lenders having agreed to the requirements of subordination in relation to any Security created in respect of a Project Agreement):

(i)	this Agreement;

(ii)	any Intercompany Loan Agreement;

(iii)	the KEG Offshore Project Accounts Agreement;

(iv)	the Borrower Offshore Project Accounts Agreement;

(v)	the KEG Onshore Project Accounts Agreement;

(vi)	the Intercreditor Agreement;

(vii)	the Charge over Shares in the Original Borrower;

(viii)	the Charge over Shares in KEO;

(ix)	the Charge over Shares in KEG;

(x)	the Charge over Shares in KED;

(xi)	the Charge over Shares in KEI;

(xii)	the Borrower Offshore Security Assignment;

(xiii)	the KEO Offshore Security Assignment;

(xiv)	the KEI Offshore Security Assignment;

(xv)	the KED Offshore Security Assignment;

(xvi)	the KEG Offshore Security Assignment;

(xii)	the KEG Onshore Security Assignment;

(xiii)	the KEI and KEO Offshore Security Assignment;

(xix)	the Facility Agent Fee Letter;

(xx)	the front end and underwriting Fee Letter;

(xxi)	the Technical Bank Fee Letters;

---

(xxii)	the Modelling Bank Fee Letters;

(xxiii)	the Security Agent Fee Letter;

(xxiv)	the Documentation Bank Fee Letter; and

(xxv)	the BNP Paribas LC Issuing Fee Letter.

2.	Provision of certified copies of each Obligor's constitutional documents and corporate resolutions authorising entry into and performance of the Finance Documents to which they are a party and certification as to solvency.

3.	Receipt by the Facility Agent of appropriate legal opinions from Clifford Chance LLP, Walkers, Fugar & Company, Maples & Calder, Thompson & Knight and Bentsi-Enchill, Letsa & Ankomah.

4.	Final Reports and/or letters issued by the Consultants (provided that there is only an obligation to provide an executive summary of the Final Report from the Technical Consultant as a condition precedent to first Utilisation).

5.	Provision of a certificate from the Original Borrower that all Required Approvals on the date of the proposed utilisation have been obtained (including a schedule of all such Required Approvals).

6.	Provision of a certificate in the agreed form certifying that complete copies of the following Project Agreements, including all amendments in relation thereto, have been delivered to the Agents under the Existing Finance Documents pursuant to the terms of the CTA (as defined in the Definitions Agreement):

(i)	the DWT PA;

(ii)	the DWT JOA;

(iii)	the WCTP PA; and

(iv)	the WCTP JOA,

7.	An audit of the Model prepared by the Model Auditor.

8.

All share charges are entered into pursuant to condition precedent 1 above are perfected and fully valid and, where applicable (by adopting a consistent approach as was adopted for the Existing Finance Documents): (a) share certificates and blank stock transfer forms are delivered to the Security Agent; (b) certified copy registers of members are delivered to the Security Agent in relation to companies whose shares have been pledged; and (c) letter of undertaking from the Company whose shares are being charged.

9.	Each Obligor (save for the Original Borrower and KEO) shall provide a certified copy of its most recent audited accounts, if any, and KEO shall provide a copy of the Form S-1 filed by Kosmos Energy Ltd. with the United States Securities and Exchange Commission on 23 March 2011, which includes the most recent audited consolidated accounts of the Group.

---

10.	The Schedule of Insurances.

11.	The following documents for release of the Security Interests (as defined in the Existing Finance Documents) created by under the Existing Finance Documents, in the form agreed by the Security Trustee (as defined in the Existing Finance Documents):

•	deed of release between KEH, KEO, KEI, KED and BNP PARIBAS, as security trustee, releasing the security created by the existing charges over shares;

•	deed of release between KED, Kosmos Energy Finance, KEG and KEO and BNP Paribas, as security trustee, releasing the security created by the existing debentures;

•	deed of release between KEI, KEO and BNP Paribas, as security trustee, releasing the secured property under the existing security assignment.

---

1.	Provision of an Accession Letter, duly executed by the Additional Obligor and the Original Borrower.

2.	Provision of a Deed of Subordination in respect of any Financial Indebtedness of such Additional Obligor and a deed, duly signed on behalf of the Additional Obligor and each other Obligor and KEH, substantially in the form of the Deed of Acknowledgment and Release.

3.	Provision of certified copies of the Additional Obligor's constitutional documents and certificates of incorporation (or equivalent).

4.	A copy of a resolution of the board of directors of the Additional Obligor approving the terms of, and the transactions contemplated by, the Accession Letter and the Finance Documents and resolving that one or more specified persons execute the Accession Letter and any other documents and notices in connection with the Finance Documents.

5.	A specimen signature of each person authorised to execute the Accession Letter and any other documents and notices in connection with the Finance Documents.

6.	A certificate of the Additional Obligor (signed by a director) confirming that borrowing or guaranteeing or securing, as appropriate, the Total Commitments would not cause any borrowing, guarantee, security or similar limit binding on it to be exceeded.

7.	A certificate of an Authorised Signatory of the Additional Obligor certifying that each copy document listed in this Part II of Schedule 3 is correct, complete and in full force and effect as at a date no earlier than the date of the Accession Letter.

8.	A copy of any other Authorisation or other document, opinion or assurance which the Facility Agent considers to be necessary or desirable in connection with the entry into and performance of the transactions contemplated by the Accession Letter or for the validity and enforceability of any Finance Document.

9.	If available, the latest audited financial statements of the Additional Obligor.

10.	Receipt by the Facility Agent of any appropriate legal opinions.

11.	If the proposed Additional Obligor is incorporated in a jurisdiction other than England and Wales, evidence that the process agent specified in clause 46 (Service of Process), if not an Obligor, has accepted its appointment in relation to the proposed Additional Obligor.

12.	In respect of an Additional Obligor incorporated in the United Kingdom whose shares are to be the subject of a Security Interest created or expressed to be created in favour of the Security Agent pursuant to the Security Documents (a “Charged Company”), either:

(i)	a certificate of an authorised signatory of the Original Borrower certifying that:

(A)	each member of the KEL Group has complied within the relevant timeframe with any notice it has received pursuant to Part 21A of the Companies Act 2006 from that Charged Company; and

---

(B)	no “warning notice” or “restrictions notice” (in each case as defined in Schedule 1B of the Companies Act 2006) has been issued in respect of those shares,

(ii)	a certificate of an authorised signatory of the Original Borrower certifying that such Charged Company is not required to comply with Part 21A of the Companies Act 2006.

---

From:	[•] (the “Borrower”)

To:	STANDARD CHARTERED BANK (the “Facility Agent”)

1.	We refer to the Agreement. This is a Utilisation Request in respect of a Utilisation under the Facility. Terms defined in the Agreement have the same meaning in this Utilisation Request unless given a different meaning in this Utilisation Request.

2.	We wish to borrow a Loan under the Facility on the following terms:

3.	We hereby certify that on the proposed Utilisation Date:

(a)	no Default or Event of Default is continuing or will result from the proposed Loan;

(b)	the Loan is expected to be applied in payment of amounts subject to and in accordance with the Cash Waterfall within 90 days of the Utilisation Date or are otherwise required for the Obligors to comply with clause 20.1 (Project Accounts) of the Agreement;

(d)	the aggregate principal amount outstanding under the Facility does not exceed the Borrowing Base Amount and the making of the Utilisation would not result in the aggregate principal amount outstanding under the Facility exceeding the Borrowing Base Amount; and

(e)	the Repeating Representations to be made by each Obligor on the proposed Utilisation Date are, in the light of the facts and circumstances then existing, true and correct in all material respects (or, in the case of a Repeating Representation that contains a materiality concept, true and correct in all respects).

---

4.	The proceeds of this Loan should be credited to the [Borrower/other] Offshore Proceeds Account and to the extent an amount has been attributed to Interest payments above, such amount shall be applied towards the payment of Interest on the Facility.

5.	This Utilisation Request is irrevocable and is a Finance Document.

---

From:	Kosmos Energy Finance International

To:	STANDARD CHARTERED BANK (the “Facility Agent”)

1.	We wish to arrange for a Letter of Credit to be issued by the LC Issuing Bank on the following terms:

2.	We hereby certify that each condition specified in clause 7.6 (Issue of Letters of Credit) is satisfied on the date of this Utilisation Request.

3.	We attach a copy of the proposed Letter of Credit.

4.	This Utilisation Request is irrevocable and is a Finance Document.

---

---

---

To:	STANDARD CHARTERED BANK as (the “Facility Agent”)

1.	We refer to the Agreement. This is a Transfer Certificate. Terms defined in the Agreement have the same meaning in this Transfer Certificate unless given a different meaning in this Transfer Certificate.

2.	We refer to clause 30.5 (Procedure for transfer):

(A)	The Existing Lender and the New Lender agree to the Existing Lender transferring to the New Lender by novation all or part of the Existing Lender's Commitment, rights and obligations referred to in the Schedule in accordance with clause 30.5 (Procedure for transfer).

(B)	The proposed Transfer Date is [•].

(C)	The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of clause 37.2 (Addresses) are set out in the Schedule.

3.	The New Lender expressly acknowledges the limitations on the Existing Lender's obligations set out in paragraph (C) of clause 30.4 (Limitation of responsibility of Existing Lenders).

4.	The New Lender confirms that it is a Qualifying Bank.

5.	This Transfer Certificate may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Transfer Certificate.

6.	This Transfer Certificate or any non-contractual obligations arising out of or in connection with it governed by English law.

Note:

The execution of this Transfer Certificate may not transfer a proportionate share of the Existing Lender’s interest in the Security Interest created or expressed to be created in favour of the Security Agent pursuant to the Security Documents in all jurisdictions. It is the responsibility of the New Lender to ascertain whether any other documents or other formalities are required to perfect a transfer of such a share in the Existing Lender’s Security Interest created or expressed to be created in favour of the Security Agent pursuant to the Security Documents in any jurisdiction and, if so, to arrange for execution of those documents and completion of those formalities.

---

---

To:	STANDARD CHARTERED BANK as Facility Agent

From:	[Additional Lender]

1.	We refer to the Facility Agreement. This is a Lender Accession Notice. Terms defined in the Facility Agreement have the same meaning in this Lender Accession Notice unless given a different meaning in this Lender Accession Notice.

2.	[Additional Lender] agrees:

(a)	to be bound by the terms of the Facility Agreement as a Lender pursuant to clause [3.3] (Additional Commitment) of the Facility Agreement; and

(b)	to be bound by the terms of the Intercreditor Agreement as a [Lender/ Creditor].

3.	[Additional Lender]’s Additional Commitment is USD [ ].

4.	[Additional Lender’s] administrative details are as follows:

5.	This Lender Accession Notice and any non-contractual obligations arising out of or in connection with it are governed by English law.

6.	This Lender Accession Notice has been delivered as a deed on the date stated at the beginning of this Lender Accession Notice.

---

---

From:	[name of subsidiary] (the “Company”) and [•] (the “Borrower”)

To:	STANDARD CHARTERED BANK (the “Facility Agent”)

1.	We refer to the Agreement. This is an Accession Letter. Terms defined in the Agreement have the same meaning in this Accession Letter unless given a different meaning in this Accession Letter.

2.	The Company agrees to become an Additional [Borrower]/[Guarantor] and to be bound by the terms of the Agreement as an Additional [Borrower]/[Guarantor] pursuant to clause [31.2 (Additional Borrowers)]/[31.4 (Additional Guarantor)] of the Agreement. The Company is a company duly incorporated under the laws of [name of relevant jurisdiction].

3.	The Company's administrative details are as follows:

4.	This Accession Letter and any non-contractual obligations arising out of or in connection with it are governed by English law.

---

From:	[resigning Obligor] and Kosmos Energy Finance International

To:	STANDARD CHARTERED BANK (the “Facility Agent”)

1.	We refer to the Agreement. This is a Resignation Letter. Terms defined in the Agreement have the same meaning in this Resignation Letter unless given a different meaning in this Resignation Letter.

2.	Pursuant to clause [31.3 (Resignation of a Borrower)] of the Agreement, we request that [resigning Obligor] be released from its obligations as a Borrower under the Agreement.

3.	We confirm that:

(a)	no Default is continuing or would result from the acceptance of this request; and

(b)	[•].

4.	This Resignation Letter and any non-contractual obligations arising out of or in connection with it are governed by English law.

[resigning Obligor]	Kosmos Energy Finance International

---

To:	STANDARD CHARTERED BANK as Facility Agent

From:	[Obligor]

1.	We refer to the Agreement. This is Compliance Certificate. Terms defined in the Agreement have the same meaning in this Compliance Certificate unless given a different meaning in this Compliance Certificate.

2.	We confirm that as at [•], being the last occurring Forecast Date:

(A)	the Field Life Cover Ratio was [•];

(B)	the Loan Life Cover Ratio was [•];

(C)	the DCR was [•]; and

(D)	the ICR was [•],

3.	We set out below the calculations establishing the figures in paragraph 2 above:

4.	We confirm that as at [•], so far as we are aware having made diligent enquiries, no Default has occurred or is continuing.

5.	The balance of each Debt Service Reserve Account is as follows:

---

---

To:	[Beneficiary] (the “Beneficiary”)

1.	Definitions

2.	LC Issuing Bank's agreement

(A)	The Beneficiary may request a drawing or drawings under this Letter of Credit by giving to the LC Issuing Bank a duly completed Demand. A Demand must be received by the LC Issuing Bank by [•] p.m. (London time) on the Expiry Date. Multiple drawings are permitted.

(B)	Subject to the terms of this Letter of Credit, the LC Issuing Bank unconditionally and irrevocably undertakes to the Beneficiary that, within [ten] Business Days of receipt by it of a Demand, it shall pay to the Beneficiary the amount demanded in that Demand.

(C)	The LC Issuing Bank will not be obliged to make a payment under this Letter of Credit if as a result the aggregate of all payments made by it under this Letter of Credit would exceed the Total L/C Amount.

3.	Expiry

(A)	The LC Issuing Bank will be released from its obligations under this Letter of Credit on the date (if any) notified by the Beneficiary to the LC Issuing Bank as the date upon which the obligations of the LC Issuing Bank under this Letter of Credit are released.

(B)	Unless previously released under paragraph (A) above, on [•] p.m. ([London] time) on the Expiry Date the obligations of the LC Issuing Bank under this Letter of Credit

---

(C)	When the LC Issuing Bank is no longer under any further obligations under this Letter of Credit, the Beneficiary must return the original of this Letter of Credit to the LC Issuing Bank.

4.	Payments

5.	Delivery of Demand

6.	Assignment

7.	Amendment

8.	ISP 98

9.	Governing Law

10.	Jurisdiction

---

To:	[LC Issuing Bank]

1.	We certify that the sum of [•] is due [and has remained unpaid for at least [•] Business Days] [under [set out underlying contract or agreement]]. We therefore demand payment of the sum of [•].

2.	The amount specified in paragraph 1 is not in excess of the Total L/C Amount.

3.	Payment should be made to the following account:

4.	The date of this Demand is not later than the Expiry Date.

(Authorised Signatory)	(Authorised Signatory)

---

To:	[Purchaser's details]

1.	Confidentiality Undertaking: You undertake:

(A)	to keep the Confidential Information confidential and not to disclose it to anyone except as provided for by paragraph 2 below and to ensure that the Confidential Information is protected with security measures with a degree of care not less than that which you would apply to your own confidential information;

(B)	to keep confidential and not disclose to anyone except as provided for by paragraph 2 below the fact that the Confidential Information has been made available or that discussions or negotiations are taking place or have taken place between us;

(C)	to use the Confidential Information only for the Permitted Purpose;

(D)	to ensure that any person to whom you pass any Confidential Information in accordance with paragraph 2 (unless disclosed under paragraph 2(B) below) acknowledges and complies with the provisions of this letter as if that person were also a party to it; and

(E)

not to make enquiries in relation to the Confidential Information of any other person, whether a third party or any member of the Group or any of their officers, directors, employees or professional advisers, save for such officers, directors, employees or professional advisers as may be expressly nominated by us for this purpose, provided that this paragraph shall not prevent or restrict you from conducting and completing all necessary and appropriate due diligence in accordance with your normal credit and underwriting approval processes and as required to be performed in order to obtain any requisite credit or underwriting approvals in relation to your possible participation in the Facility.

---

2.	Permitted Disclosure: We agree that you may disclose Confidential Information:

(A)	to members of the Participant Group and their officers, directors, employees, consultants and professional advisers but only to the extent necessary for the proper fulfilment of the Permitted Purpose, provided that:

(i)	such information is disclosed strictly on a need to know basis and provided that the Confidential Information may not be disclosed to any person in the Participant Group who is not working directly on matters concerning your participation in the Facility; and

(ii)	appropriate information barriers or other procedures as may be necessary are in place to ensure there can be no unauthorised disclosure of, or access to, the Confidential Information to any such person referred to in subparagraph (i) above;

(B)

(i) where required by any court of competent jurisdiction or any competent judicial, governmental, supervisory or regulatory body, (ii) where required by the rules of any stock exchange on which the shares or other securities of any member of the Participant Group are listed or (iii) where required by the laws or regulations of any country with jurisdiction over the affairs of any member of the Participant Group; or

(C)	with our prior written consent.

3.	Notification of Required or Unauthorised Disclosure: You agree (to the extent permitted by law) to inform us of the full circumstances of any disclosure under paragraph 2(B) (in advance where reasonable and practicable) or immediately upon becoming aware that Confidential Information has been disclosed in breach of this letter.

4.

Return of Copies: If we so request in writing, you shall return all Confidential Information supplied to you by us or any member of the Group and destroy or permanently erase all copies of Confidential Information made by you and use all reasonable endeavours to ensure that anyone to whom you have supplied any Confidential Information destroys or permanently erases such Confidential Information and any copies made by them, in each case save to the extent that you or the recipients are required to retain any such Confidential Information by any applicable law, rule or regulation or by any competent judicial, governmental, supervisory or regulatory body, or where the Confidential Information has been disclosed in accordance with paragraph 2(B) above.

5.

Continuing Obligations: The obligations in the preceding paragraphs of this letter are continuing and, in particular, shall survive the termination of any discussions or negotiations between you and us, irrespective of their outcome. Notwithstanding the previous sentence, the obligations in this letter shall cease twelve months after you have returned all Confidential Information and destroyed or permanently erased all copies of Confidential Information made by you to the extent required pursuant to paragraph 4 above.

6.	No Representation; Consequences of Breach, etc: You acknowledge and agree that:

(A)

neither we nor any of our officers, employees or advisers, and no other member of the Group and none of the officers, employees or advisers of any member of the Group (each a “Relevant Person”), (i) make any representation or warranty, express or implied, as to, or assume any responsibility for, the accuracy, reliability or completeness of any of the Confidential Information or any other information supplied by us or any member of the Group or the assumptions on which it is based

---

(B)	we and other members of the Group may be irreparably harmed by the breach of the terms of this letter and damages may not be an adequate remedy; each Relevant Person may be granted an injunction or specific performance for any threatened or actual breach of the provisions of this letter by you or any other person.

7.

Inside Information: You acknowledge that some or all of the Confidential Information is or may be price-sensitive information and that the use of such information may be regulated or prohibited by applicable legislation relating to insider dealing and you undertake not to use any Confidential Information for any unlawful purpose. As a result of being given the Confidential Information you may well become insiders and, therefore, be unable to take certain actions which you would otherwise be able to take.

8.

No Waiver; Amendments, etc: This letter shall not affect any other obligation owed by you to any member of the Group. No failure or delay in exercising any right, power or privilege under this letter will operate as a waiver thereof nor will any single or partial exercise of any right, power or privilege preclude any further exercise thereof or the exercise of any other right, power or privileges under this letter. The terms of this letter and your obligations under this letter may only be amended or modified by written agreement between us and you.

9.	Nature of Undertakings: The undertakings and acknowledgements given by you under this letter are given to us and (without implying any fiduciary obligations on our part) are also given for the benefit of each other member of the Group.

10.	Third party rights:

(A)

Each other member of the Group and each Relevant Person (each a “Third Party”) may enforce the terms of this letter by virtue of the Contracts (Rights of Third Parties) Act 1999 (the “Third Parties Act”). This paragraph 10(A) confers a benefit on each Third Party, and, subject to the remaining provisions of this paragraph 10, is intended to be enforceable by each Third Party by virtue of the Third Parties Act.

(B)	Subject to paragraph 10(a), a person who is not a party to this letter has no right under the Third Parties Act to enforce or enjoy the benefit of any term of this letter.

(C)	Notwithstanding any provisions of this letter, the parties to this letter do not require the consent of any person to rescind or vary this letter at any time.

11.	Counterparts: This letter may be executed in any number of counterparts, and by the parties on separate counterparts, but shall not be effective until each party has executed at least one counterpart. Each counterpart shall constitute an original of this letter, but all the counterparts shall together constitute one and the same instrument.

12.	Governing Law and Jurisdiction: Any matter, claim or dispute, whether contractual or non-contractual, arising out of or in connection with this letter (including the agreement constituted by your acknowledgement of its terms), is to be governed by and determined in accordance with English law, and the parties submit to the non-exclusive jurisdiction of the English courts.

13.	Definitions and Construction: In this letter (including the acknowledgement set out below):

---

---

To:	[Seller's details]

---

(1)	[•] (the “Obligor”);

(2)	BNP PARIBAS in its capacity as Security Agent for the Secured Parties on the terms and conditions set out in the Intercreditor Agreement (the “Security Agent”) which expression includes its successors in title and assigns or any person appointed as an additional trustee for the purpose of and in accordance with the Intercreditor Agreement; and

(3)	[•] (the “Subordinated Party”).

(1)	Under the Facility, the Lenders have agreed to make available a USD[•] billion loan facility to (among others) the Original Borrower.

(2)	The Subordinated Party has agreed to make, or may in the future make, loans available to the Obligor.

(3)	The Obligor and the Subordinated Party have agreed that the Subordinated Debt (as defined below) shall be subordinated to the claims of the Secured Parties on the terms of this Deed.

1.	DEFINITIONS AND INTERPRETATION

1.1	Definitions

1.2	Incorporation of defined terms

---

1.3	Construction of particular terms

1.4	Third Party Rights

(a)	Subject to clause 1.4(b), the parties to this Deed do not intend that any term of this Deed should be enforceable by virtue of the Contracts (Rights of Third Parties) Act 1999, by any person who is not a party to this Deed.

(b)	Each of the Secured Parties shall have the right to enforce the terms of this Deed.

2.	RANKING

(a)	The Secured Liabilities shall rank senior in priority to the Subordinated Debt.

(b)	Except as provided in this Deed, any payment in respect of the Subordinated Debt is conditional upon the expiry of the Subordination Period.

(c)	As between the Secured Parties, nothing in this Deed shall prejudice the ranking of the Secured Liabilities as set forth in the Intercreditor Agreement.

3.	UNDERTAKINGS

3.1	Undertakings of the Obligor

(a)	During the Subordination Period the Obligor shall not, and the Subordinated Party shall not require the Obligor to:

(i)	pay, repay or prepay any principal, interest or other amount on or in respect of, or make any distribution in respect of, or redeem, purchase, acquire or defease, any of the Subordinated Debt whether in cash or in kind;

(ii)	exercise any set-off against any Subordinated Debt;

(iii)	create or permit to subsist any Security over any of its assets, or give any guarantee, for, or in respect of, any Subordinated Debt;

(iv)	amend, terminate or give any waiver or consent under the Subordinated Documents, other than any amendment, termination, waiver or consent purely of a technical or administrative nature; or

(v)	take or omit to take any action whereby the ranking and/or subordination contemplated by this Deed might be impaired or terminated.

(b)	Notwithstanding paragraph (a) above, the Obligor may:

---

(i)	do anything prohibited by paragraph (a) above with the prior written consent of the Security Agent; and

(ii)	make any Permitted Payment.

3.2	Undertakings of the Subordinated Party

(a)	During the Subordination Period, the Subordinated Party shall not:

(i)	demand or receive payment, repayment or prepayment of any principal, interest or other amount on or in respect of, or any distribution in respect of, the Subordinated Debt in cash or in kind or apply any money or property in or towards discharge of the Subordinated Debt;

(ii)	exercise any set-off against the Subordinated Debt;

(iii)	permit to subsist or receive any Security, or any guarantee, for, or in respect of, the Subordinated Debt;

(iv)	amend, terminate or give any waiver or consent under any Subordinated Document, other than any amendment, termination, waiver or consent purely of a technical or administrative nature;

(v)	take or omit to take any action whereby the ranking and/or subordination contemplated by this Deed might be impaired;

(vi)	take any Enforcement Action in relation to the Subordinated Debt; or

(vii)	assign, transfer or otherwise dispose of any of its rights, benefit, title or interest in or to the Subordinated Debt.

(b)	Notwithstanding paragraph (a) above, the Subordinated Party may:

(i)	do anything prohibited by paragraph (a) above with the prior written consent of the Security Agent; and

(ii)	receive and retain a Permitted Payment.

4.	PERMITTED PAYMENTS

(a)	a Default is continuing; or

(b)	an Insolvency Event or Insolvency Proceedings have occurred in which case clause 7 (Subordination on Insolvency) applies; or

(c)

the aggregate of the outstandings under the Facility on the most recent Forecast Date exceeds the Borrowing Base Amount pursuant to clause 10.3 (Aggregate outstandings exceed the Borrowing Base Amount) of the Agreement and the earlier of the date of the mandatory prepayment to cure the deficiency or the date which is 90 days following that Forecast Date has not occurred (in which case the provisions of clause 7 (Subordination on Insolvency) shall apply),

---

5.	REPRESENTATIONS

5.1	Representations of the Subordinated Party

(a)	It is duly incorporated (if a corporate person) or duly established (in any other case except for a natural person) and validly existing under the law of its jurisdiction of incorporation or formation.

(b)	It has the power to own its assets and carry on its business as it is being and is proposed to be, conducted, and it has the power to enter into and perform all its obligations under this Deed and the transactions contemplated by this Deed.

(c)	The obligations expressed to be assumed by it under this Deed are legal, valid, binding and enforceable obligations.

(d)	The entry into and performance by it of, and the transactions contemplated by, this Deed does not and will not conflict with:

(i)	any law applicable to it;

(ii)	its constitutional documents; or

(iii)	any agreement or instrument binding upon it or any of its assets.

(e)	It has (or had at the relevant time) the power and authority to execute and deliver this Deed and it has the power and authority to perform its obligations under this Deed and the transactions contemplated thereby.

(f)	All Required Approvals have been obtained or effected and are in full force and effect where a failure to do so has or could reasonably be expected to have a Material Adverse Effect.

(g)	It is the sole beneficial owner of the Subordinated Debt owed to it.

5.2	Repetition

6.	TURNOVER

---

(a)	a payment (other than a Permitted Payment) in cash or in kind or distribution in respect of any of the Subordinated Debt from the Obligor or any other source; or

(b)	the proceeds of any enforcement of any Security or any guarantee or other assurance against financial loss for any Subordinated Debt,

(i)	within three (3) Business Days notify details of the receipt or recovery to the Security Agent;

(ii)	hold any such assets and moneys received or recovered by it (up to a maximum of an amount equal to the Secured Liabilities on trust for the Security Agent for application against the Secured Liabilities in accordance with the order and priority set forth in the Intercreditor Agreement; and

(iii)	within three (3) Business Days of demand by the Security Agent, pay an amount equal to such receipt or recovery (up to a maximum of an amount equal to the Secured Liabilities) to the Security Agent for application against the Secured Liabilities in accordance with the order and priority set forth in the Intercreditor Agreement.

7.	SUBORDINATION ON INSOLVENCY

7.1	Subordination

7.2	Filing of Claims

(a)	If an Insolvency Event or Insolvency Proceedings occur or any Event of Default is continuing, the Security Agent may, and is hereby irrevocably authorised on behalf of the Obligor and the Subordinated Party to:

(i)	take any Enforcement Action in relation to the Subordinated Debt;

(ii)	demand, claim, enforce and prove for the Subordinated Debt;

(iii)	file claims and proofs, give receipts and take any proceedings in respect of filing such claims or proofs and do anything which the Security Agent reasonably considers necessary or desirable to recover the Subordinated Debt; and

(iv)	receive all distributions of the Subordinated Debt for application first against the Secured Liabilities in accordance with the order and priority set forth in the Intercreditor Agreement.

(b)	If and to the extent that the Security Agent is not entitled, or elects not, to take any of the action mentioned in paragraph (a) above, the Subordinated Party will do so promptly on request by the Security Agent.

7.3	Distributions

---

(a)	hold all payments and distributions in cash or in kind received or receivable by it in respect of the Subordinated Debt on trust for the Security Agent and promptly pay the same for application first against the Secured Liabilities in accordance with the order and priority set forth in the Intercreditor Agreement;

(b)	within three Business Days of demand by Security Agent, pay an amount equal to any Subordinated Debt owing to it and discharged by set-off or otherwise to the Security Agent for application in accordance first against the Secured Liabilities in accordance with the order and priority set forth in the Intercreditor Agreement;

(c)	promptly direct the trustee in bankruptcy, liquidator, assignee or other person distributing the assets of the Obligor or their proceeds to pay any and all distributions in respect of the Subordinated Debt directly to the Security Agent; and

(d)	promptly undertake any action requested by the Security Agent to give effect to this clause 7.3.

7.4	Voting

(a)	If an Insolvency Event or Insolvency Proceedings occur:

(i)	the Security Agent may, and is hereby irrevocably so authorised on behalf of the Subordinated Party, to exercise all powers of convening meetings, voting and representation in respect of the Subordinated Debt; and

(ii)	the Subordinated Party shall promptly execute and/or deliver to the Security Agent such forms of proxy and representation as it may require to facilitate any such action.

(b)	If and to the extent that the Security Agent is not entitled, or elects not, to exercise a power under paragraph (a) above, the Subordinated Party will:

(i)	exercise that power in such manner as the Security Agent directs; and

(ii)	exercise that power so as not to impair the ranking and/or subordination contemplated by this Deed.

8.	PROTECTION OF SUBORDINATION

8.1	Continuing subordination

8.2	Waiver of defences

---

(a)	any time, waiver or consent granted to, or composition with, any person;

(b)	the release of any person under the terms of any composition or arrangement with any creditor of any person;

(c)	the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;

(d)	any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of any person;

(e)	any amendment, novation, supplement, extension (whether of maturity or otherwise) or restatement (in each case, however fundamental and of whatever nature) or replacement of any Finance Document or any other document or security;

(f)	any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security;

(g)	any insolvency or similar proceedings; or

(h)	any postponement, discharge, reduction, non-provability or other similar circumstance affecting any obligation of any person under any Finance Document resulting from any insolvency, liquidation or dissolution proceedings or from any law, regulation or order.

8.3	Immediate recourse

8.4	Appropriations

(a)	apply any moneys or other assets received or recovered by it under this Deed or from any person against the Secured Liabilities, in accordance with the order and priority set forth in the Intercreditor Agreement;

(b)	apply any moneys or other assets received or recovered by it from any person (other than any moneys or other assets received or recovered under the applicable Finance Documents or under this Deed) against any liability of the relevant person to it other than the Secured Liabilities owed to it; and

(c)	unless or until such moneys or other assets received or recovered by it under the applicable Finance Documents or under this Deed in aggregate are sufficient to end the Subordination Period if otherwise applied in accordance with the provisions of this Deed, hold in an interest-bearing suspense account any moneys or other assets received from any person.

---

9.	PRESERVATION OF DEBT

9.1	Preservation of Subordinated Debt

9.2	No liability

10.	SUBROGATION

11.	NO OBJECTION BY SUBORDINATED PARTY

(a)	the entry by any of them into any Finance Document or any other agreement between any Secured Party and the Obligor;

(b)	any waiver or consent given by any Secured Party under any Finance Document or any such other agreement; or

(c)	any requirement or condition imposed by or on behalf of any Secured Party under any Finance Document or any such other agreement,

12.	POWER OF ATTORNEY

(a)

During the Subordination Period, the Subordinated Party, by way of security for the obligations of the Subordinated Party under this Deed, irrevocably appoints Security Agent as its attorney (with full power of substitution and delegation), on its behalf and in its name or otherwise as its act and deed, and in such manner as the attorney thinks fit to do anything which the Subordinated Party is obliged to do under this Deed but has not done, and the taking of action by the attorney shall (as between it and any third party) be conclusive evidence of its right to take such action.

---

(b)	The Subordinated Party ratifies and confirms and agrees to ratify and confirm everything that such attorney does or purports to do in the exercise or purported exercise of the power of attorney granted by it in this clause 12.

13.	NEW MONEY

14.	FAILURE OF TRUSTS

15.	TRUSTS

(a)	The Security Agent shall hold the benefit of this Deed upon trust for itself and the other relevant Secured Parties.

(b)	The perpetuity period of the trusts created under this Deed shall be 125 years.

16.	NON-CREATION OF CHARGE

17.	CERTIFICATES AND DETERMINATIONS

18.	CHANGES TO THE PARTIES

18.1	The Obligor and the Subordinated Party

18.2	The Security Agent

(a)	The Security Agent may assign or otherwise dispose of all or any of its rights under this Deed as permitted under the Finance Documents.

(b)	References in this Deed to the Security Agent include any successor in title and assigns or any person appointed as an additional trustee for the purposes of and in accordance with the Intercreditor Agreement.

19.	INFORMATION

---

19.1	Defaults

19.2	Amounts of Subordinated Debt

20.	NOTICES

20.1	Communications in writing

20.2	Addresses

20.3	Delivery

(a)	if by way of fax, when received in legible form; or

(b)	if by way of letter, when it has been left at the relevant address or five Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address,

20.4	English language

21.	REMEDIES AND WAIVERS

---

---

22.	PARTIAL INVALIDITY

(a)	If, at any time, any provision of this Deed is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions under the law of that jurisdiction or any other jurisdiction will in any way be affected or impaired.

(b)	The parties shall enter into good faith negotiations, but without any liability whatsoever in the event of no agreement being reached, to replace any illegal, invalid or unenforceable provision with a view to obtaining the same commercial effect as this Deed would have had if such provision had been legal, valid and enforceable.

23.	AMENDMENTS

24.	COUNTERPARTS

25.	EXECUTION AS A DEED

26.	ENFORCEMENT

26.1	Jurisdiction

(a)	The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Deed (including a dispute regarding the existence, validity or termination of this Deed and any non-contractual obligations arising out of or in connection with this Deed) (a “Dispute”).

(b)	The parties agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no party will argue to the contrary.

(c)	This clause 26.1 is for the benefit of the Security Agent only. As a result, the Security Agent shall not be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Security Agent may take concurrent proceedings in any number of jurisdictions.

(d)	The Subordinated Party agrees that it will not take proceedings relating to a Dispute in relation to the Subordinated Debt in any other courts with jurisdiction.

26.2	Service of process

---

(a)	Without prejudice to any other mode of service allowed under any relevant law the Subordinated Party (which is not incorporated in England and Wales) irrevocably appoints [name] of [address] as its agent for service of process in relation to any proceedings before the English courts in connection with this Deed.

(b)	The Subordinated Party agrees that failure by a process agent to notify the relevant party of the process will not invalidate the proceedings concerned.

27.	FURTHER ASSURANCE

28.	GOVERNING LAW

---

---

---

---

---

---

(B)	Supplementary Insurance

---

(A)	The Obligors shall only place Insurances with underwriters and insurance companies constituted under the laws of locations where that Obligor is operating, or who are carrying on in insurance business under the laws of locations where that Obligor is operating (each a “Local Insurer”), where (and only for so long as) it is required to do so under any applicable local law.

(B)	Subject to paragraph (A), each Obligor shall procure that each Insurance shall be placed with insurers or reinsurers other than Local Insurers (each such insurer an “International Insurer”) with a minimum rating of A - X by AM Best, A by Standard and Poor’s or a similarly reputable international rating agency, or to be otherwise reasonably acceptable to the Technical Bank (acting reasonably).

(A)	promptly and diligently perform and comply with the terms and conditions of each policy of Insurance (or, to the extent applicable, the Project Reinsurances);

(B)	ensure that no action is taken by it which might reasonably be foreseen to make any Insurance or Project Reinsurance void or voidable or suspended, impaired or

---

(C)	maintain appropriate procedures for risk management and reporting.

(A)	Premiums

(B)	Payment of Premiums in Default

(A)	Provision of Information

(B)	Notification

4.	PLACING OF INSURANCES AND REINSURANCES BY FINANCE PARTY BENEFICIARIES

---

---

---

---

---

---

---

1.	Charge over Shares in KEEG

2.	Charge over Shares in EG JV Holdco

3.	KEEG Offshore Security Assignment

4.	Supplemental security assignment and debenture between KED and the Security Agent

5.	Supplemental security assignment and debenture between KEI and the Security Agent

6.	Supplemental security assignment and debenture between KEO and the Security Agent

7.	Supplemental Borrower Offshore Security Assignment

8.	Supplemental security assignment between KEI, KEO and the Security Agent

9.	Supplemental charge over shares in KED between KEI and the Security Agent;

10.	Supplemental charge over shares in KEG between KED and the Security Agent

11.	Supplemental charge over shares in KEI between KEO and the Security Agent

12.	Supplemental limited recourse charge over shares in KEO between KEH as chargor, KEO and the Security Agent

13.	Supplemental charge over shares in the Original Borrower between KEI and the Security Agent

---

(A)

Notwithstanding any other provision of this Agreement, for the purposes of any Relevant Security Document, each Affected Obligor hereby irrevocably and unconditionally undertakes to pay to the Security Agent, as creditor in its own right and not as representative of the other Finance Parties, sums equal to and in the currency of each amount payable by any Obligor to each of the Finance Parties under each of the Finance Documents as and when that amount falls due for payment under the relevant Finance Document or would have fallen due for payment under the relevant Finance Document or would have fallen due but for any discharge resulting from failure of another Finance Party to take appropriate steps, in insolvency proceedings affecting the Affected Obligor, to preserve such Finance Party’s entitlement to be paid that amount (the “Parallel Obligation”).

(B)

The Security Agent shall have its own independent right to demand payment of the amounts payable by any Affected Obligor under this Clause 11.23 irrespective of any discharge of the Affected Obligor’s obligation to pay those amounts to the other Finance Parties resulting from failure by them to take appropriate steps, in insolvency proceedings affecting the Affected Obligor, to preserve their entitlement to be paid those amounts.

(C)

Any amount due and payable by any Affected Obligor to the Security Agent under this Clause 11.23 shall be decreased to the extent that the other Finance Parties have received (and are able to retain) payment in full of the corresponding amount under the other provisions of the Finance Documents and any amount due and payable by any Affected Obligor to the other Finance Parties under those provisions shall be decreased to the extent that the Security Agent has received (and is able to retain) payment in full of the corresponding amount under this Clause 11.23.

(D)	The rights of the Finance Parties (other than the Security Agent) to receive payment of amounts payable by any Affected Obligor under the Finance Documents are several and are separate and independent from, and without prejudice to, the rights of the Security Agent to receive payment under this Clause 11.23.

(E)	All monies received or recovered by the Security Agent pursuant to this Clause 11.23 and enforcement proceeds received or recovered by the Security Agent pursuant to this Clause 11.23 shall be applied by the Security Agent in accordance with this Agreement.

(F)	For the purposes of this Clause 11.23:

(i)	“Affected Obligor” refers to any Obligor which is a party to a Relevant Security Document; and

(ii)	“Relevant Security Document” means any Security Document governed by the laws of (i) Mauritania or (ii) any other relevant jurisdiction identified by the Security Agent and notified to all the other Parties.

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

1.	I have reviewed this quarterly report on Form 10-Q of Kosmos Energy Ltd.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

1.	I have reviewed this quarterly report on Form 10-Q of Kosmos Energy Ltd.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.