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EX-10.6 7 a2201620zex-10_6.htm EX-10.6

Exhibit 10.6

UNITIZATION AND UNIT OPERATING AGREEMENT



Ghana National Petroleum Corporation (1)

Tullow Ghana Limited (2)

Kosmos Energy Ghana HC (3)

Anadarko WCTP Company (4)

Sabre Oil & Gas Holdings Limited (5)

EO Group Limited (6)



COVERING:

The Jubilee Field Unit located offshore the Republic of Ghana



TABLE OF CONTENTS

ARTICLE 1 DEFINITIONS

ARTICLE 2 EFFECTIVE DATE AND TERM

ARTICLE 3 SCOPE

ARTICLE 4 CREATION AND EFFECT OF UNIT

ARTICLE 5 TRACT PARTICIPATIONS, UNIT INTERESTS AND PAYING INTERESTS

ARTICLE 6 NON-UNIT OPERATIONS, USE OF UNIT FACILITIES

ARTICLE 7 UNIT OPERATOR

ARTICLE 8 UNIT OPERATING COMMITTEE

ARTICLE 9 UNIT WORK PROGRAMS AND BUDGETS

ARTICLE 10 DEFAULT

ARTICLE 11 DISPOSITION OF PRODUCTION

ARTICLE 12 DECOMMISSIONING

ARTICLE 13 MAINTENANCE, TERMINATION, SURRENDER, EXPIRY, EXTENSIONS AND RENEWALS

ARTICLE 14 TRANSFER OF INTEREST OR RIGHTS

ARTICLE 15 WITHDRAWAL FROM AGREEMENT

ARTICLE 16 RELATIONSHIP OF PARTIES AND TAX

ARTICLE 17 UNIT DATA - CONFIDENTIALITY - INTELLECTUAL PROPERTY

ARTICLE 18 FORCE MAJEURE

ARTICLE 19 NOTICES

ARTICLE 20 APPLICABLE LAW - DISPUTE RESOLUTION - WAIVER OF IMMUNITY

ARTICLE 21 GENERAL PROVISIONS

Exhibit A:



-



Exhibit B:



-



Exhibit C:

Exhibit D:

Exhibit E:

Exhibit F:



-



Part 1: Contract Group Interests, Tract Participations and Unit Interests

Part 2: Contract Group Paying Interests, Tract Participations and Paying Interests

Unit Area and Definition of Unit Interval

Part 1: Unit Area Coordinates

Part 2: Unit Area Map

Part 3: Unit Interval Definition

Unit Accounting Procedure

Decommissioning Procedures

Redetermination Procedures

Redetermination Technical Procedures



1

13

14

15

21

32

37

59

63

71

79

80

82

85

86

89

90

93

94

95

100



Exhibit G:

Exhibit H:

Exhibit I:

Exhibit J:



-



Exhibit K:

Exhibit L:

Exhibit M:

Exhibit N:

Exhibit O:

Exhibit P:

Exhibit Q:



-



Exhibit R:



-



Exhibit S:

Exhibit T:



-



Exhibit U:

Exhibit V:

Exhibit W:



-



-



-



DWT Contract

WCTP Contract

Pre-Unitization Expenditures

Part 1(a): Existing Data in which all Parties have interests as of the Effective Date

Part 1(b): Existing Data licensed as of the Effective Date among the Parties

Part 1(c): Existing Data licensed as of the Effective Date by GNPC to the other Parties

Part 2: Form of Data License Agreement

Existing Facilities

Existing Contracts

Existing Work Programs and Budgets

Existing AFEs

Jubilee Operating Committee Minutes

Unit Development Plan

Part 1: Form of Government Approval

Part 2: Form of Contract Acknowledgment



Part 1: Form of Secondment Agreement

Attachment A: Secondee’s Specifications

Attachment B: Form of Secondee Agreement

Part 2: Initial Positions

Form of Technical Services Agreement

Part 1: IPT Technical Operations Contract Procedure

Part 2: Unit Operations Contract Procedure

DWT JOA

WCTP JOA

Pre-Unit Agreement



UNITIZATION AND UNIT OPERATING AGREEMENT

THIS AGREEMENT is entered into as a deed on 13 July 2009 among Ghana National Petroleum Corporation, a public

corporation existing under the laws of the Republic of Ghana and established by Provisional National Defence Council Law 64 of

1983 (hereinafter referred to as “GNPC”); Tullow Ghana Limited, a company existing under the laws of Jersey, Channel Islands

and registered in Ghana with branch registration number 1017 (hereinafter referred to as “Tullow”); Kosmos Energy Ghana HC, a

company existing under the laws of the Cayman Islands and registered in Ghana with branch registration number EXT 927

(hereinafter referred to as “Kosmos”); Anadarko WCTP Company, a company existing under the laws of the Cayman Islands and

registered in Ghana with branch registration number EXT 1090 (hereinafter referred to as “Anadarko”); Sabre Oil & Gas Holdings

Limited, a company existing under the laws of the British Virgin Islands and registered in Ghana with branch registration number

EXT 1226 (being the successor-in-interest to Sabre Oil & Gas Limited and being hereinafter referred to as “Sabre”); and EO

Group Limited, a company existing under the laws of the Cayman Islands and registered in Ghana with branch registration number

EXT 1238 (hereinafter referred to as “EO Group”). The companies named above, and their respective successors and assignees (if

any), may sometimes individually be referred to as “Party” and collectively as the “Parties”.

WITNESSETH:

WHEREAS, Tullow, Kosmos, Anadarko, Sabre and EO Group or their predecessors-in-interest entered into a Petroleum

Agreement with the Government (represented by the Minister) and GNPC dated July 22, 2004 covering certain areas located in the

West Cape Three Points (WCTP) Block Contract Area offshore Ghana;

WHEREAS, Tullow, Kosmos, Anadarko and Sabre or their predecessors-in-interest entered into a Petroleum Agreement

with the Government (represented by the Minister) and GNPC dated March 10, 2006 covering certain areas located in the

Deepwater Tano (DWT) Contract Area offshore Ghana;

WHEREAS, the Parties have determined that the Unit Interval extends across the boundary between the two Contract

Areas and lies in part within each Contract Area;



WHEREAS, a letter has been received from the Minister dated November 25, 2008 determining that the field

encompassed by the Unit Interval extends across the boundary between the Contract Areas and that such field shall be developed

and exploited as a single unit pursuant to unitization and engineering principles and practices and in accordance with accepted

international petroleum industry practices and the Laws/Regulations and instructing the Parties to negotiate and enter into a

unitization and unit operating agreement setting forth the terms of the unitization;

WHEREAS, the Parties and the Government have agreed that the terms of this Agreement relating to unitization satisfy

any requirements of the Laws/Regulations with respect to unitization; and

WHEREAS, the Parties desire to define their respective rights and obligations with respect to their development and

operation of the Unit Interval on a unitized basis;

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements and obligations set out

below and to be performed, the Parties agree as follows:

ARTICLE 1

DEFINITIONS

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

1.1



Acknowledgment has the meaning ascribed to it in Article 4.1(D)(3).



1.2



Acquiring Party has the meaning ascribed to it in Article 10.8(C).



1.3



Act has the meaning ascribed to it in Article 21.8.



1.4



Additional Oil Entitlements has the meaning ascribed to it in each Contract.



1.5



Adjustment Date has the meaning ascribed to it in Article 5.7(B)(4).



1.6



Adjustment Percentage has the meaning ascribed to it in Article 5.7(B)(3)(f).



1.7



Adjustment Quantity has the meaning ascribed to it in Article 5.7(B)(3)(c).



1.8



Adjustment Quantity Contribution has the meaning ascribed to it in Article 5.7(B)(3)(e).



1.9



AFE means an authorization for expenditure pursuant to Article 9.6.



1.10



Affected Group has the meaning ascribed to it in Article 13.1(B)(1).



1.11



Affected JOA Group has the meaning ascribed to it in Article 13.2(B).



1.12



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

Party.



1.13



Agreed Interest Rate means interest compounded on a monthly basis, at the rate per annum equal to the one (1) month

term, London Interbank Offered Rate (LIBOR rate) for U.S. dollar deposits, as published in London by the Financial

Times or if not published, then by The Wall Street Journal, plus three (3) percentage points, applicable on the first

Business Day prior to the due date of payment and thereafter on the first Business Day of each succeeding Calendar

Month. If the aforesaid rate is contrary to any applicable usury law, the rate of interest to be charged shall be the

maximum rate permitted by such applicable law.



1.14



Agreement means this agreement, together with the Exhibits attached to this agreement, and any extension, renewal or

amendment hereof agreed to in writing by the Parties.



1.15



Annual Unit Work Program and Budget has the meaning ascribed to it in Article 9.3(A).



1.16



Anticorruption Legislation means (1) the applicable laws of Ghana; (2) with respect to each Party, the anti-corruption

laws of any Home Country Governmental Authority with respect to such Party or any Affiliate of such Party including,

as applicable to such Party or its Affiliates, the United Kingdom’s anti-corruption legislation, including the AntiTerrorism Crime & Security Act 2001, and the U.S. Foreign Corrupt Practices Act; (3) the OECD Anti-bribery

Principles; or (4) with respect to each Party, any other implementing legislation with respect to (1), (2) and (3) above.



1.17



Appraisal Operation means any operation designed to delineate the accumulation of Hydrocarbons contained in an

existing Discovery, including drilling, well testing and seismic operations, but excluding any operation within the scope

of a Unit Development Plan.



1.18



Appraised Value has the meaning ascribed to it in Article 10.8(C)(1).



1.19



Approved Phase 1 Development Plan means the “Jubilee Field Phase 1 Development Plan” approved by the Government

under the Contracts for the development of Hydrocarbons from the Unit.



1.20



Associated Agreements means any agreement (or series of substantially identical agreements) other than this Agreement

entered into after the Effective Date by all of the Parties and, if applicable, one or more Third Parties, relating to Unit

Operations.



1.21



Assumption Notice has the meaning ascribed to it in Article 13.1(B)(1)(a).

2



1.22



Attorney has the meaning ascribed to it in Article 10.9(B).



1.23



Authorized Seconding Party means Tullow, Anadarko, Kosmos, any successor or assign pursuant to Article 7.3(C), and

GNPC or any successor entity owned or Controlled by the Government.



1.24



Burden has the meaning ascribed to it in Article 4.11.



1.25



Business Day means a Day on which the banks are customarily open for business in the cities of: Dallas, Texas; Houston,

Texas; London, England; and Accra, Ghana.



1.26



Buy-Out Option has the meaning ascribed to it in Article 10.8(C).



1.27



Calendar Month means one of the twelve (12) calendar months of the Calendar Year commencing on the first Day of

each calendar month, in accordance with the Gregorian Calendar, and the term “Monthly” shall be construed accordingly.



1.28



Calendar Quarter means a period of three (3) months commencing with January 1 and ending on the following

March 31, a period of three (3) months commencing with April 1 and ending on the following June 30, a period of three

(3) months commencing with July 1 and ending on the following September 30, or a period of three (3) months

commencing with October 1 and ending on the following December 31, all in accordance with the Gregorian Calendar.



1.29



Calendar Year means a period of twelve (12) months commencing with January 1 and ending on the following

December 31 according to the Gregorian Calendar.



1.30



Code has the meaning ascribed to it in Article 16.3(A).



1.31



Consequential Loss means any loss, damages, costs, expenses or liabilities caused (directly or indirectly) by any of the

following arising out of, relating to, or connected with this Agreement or the operations carried out under this

Agreement: (i) reservoir or formation damage; (ii) inability to produce, use or dispose of Hydrocarbons; (iii) loss or

deferment of income; (iv) punitive damages; or (v) other indirect damages or losses whether or not similar to the

foregoing.



1.32



Contract means the DWT Contract or the WCTP Contract.



1.33



Contract Area means the DWT Contract Area or the WCTP Contract Area.



1.34



Contract Group means the DWT Contract Group or the WCTP Contract Group.



1.35



Contract Group Interest means the following, expressed as a percentage to four (4) decimal places: in the case of GNPC,

its GNPC Participating Interest in connection with the applicable Contract and, in the case of each other Party, (i) its JOA

Group Interest in connection with the applicable Contract (ii) divided by one hundred (100), and (iii) multiplied by the

“Contractor’s” “Participating Interest” under the applicable Contract.



1.36



Contract Group Paying Interest means for either Contract the following, expressed as a percentage to four (4) decimal

places: (a) with respect to all Unit Operations which are “Production Operations” (as that term is defined in each

Contract) in the case of each Party, its Contract Group Interest; (b) with respect to all Unit Operations which are

“Development Operations” (as that term is defined in each Contract), in the case of GNPC, the GNPC Additional Interest

under the applicable Contract and, in the case of each other Party, (i) such Party’s JOA Group Interest in connection with

the applicable Contract with respect to a specified operation (ii) divided by 100, and (iii) multiplied by the difference

between one hundred percent (100%) and the GNPC Additional Interest.



1.37



Contributing Parties has the meaning ascribed to it in Article 10.2(B).

3



1.38



Contributing Share has the meaning ascribed to it in Article 10.2(B).



1.39



Contribution Notice has the meaning ascribed to it in Article 10.2(B).



1.40



Control means the ownership directly or indirectly of more than fifty percent (50%) of the voting rights in a legal entity

or the ability to direct, directly or indirectly, the management or policies of a Person, whether through ownership of

voting shares or other voting rights, pursuant to written contract, or otherwise. “Controls”, “Controlled by” and other

derivatives shall be construed accordingly.



1.41



Crude Oil means all crude oils, condensates, and natural gas liquids at atmospheric pressure which are subject to and

covered by the applicable Contract.



1.42



Cure Deficiency Notice has the meaning ascribed to it in Article 13.1(B)(1)(b).



1.43



Date of Commencement of Commercial Production has the meaning ascribed to such term in each Contract with respect

to the production of Unit Substances from the Unit Interval.



1.44



Day means a calendar day unless otherwise specifically provided.



1.45



Decommissioning means all work required in respect of the abandonment of Unit Facilities in accordance with good oil

field practice and any specific legal obligation including, as applicable, plugging of wells, abandonment, disposal and/or

demolition, cleanup or removal and any necessary site restoration and “Decommission” shall be construed accordingly.



1.46



Decommissioning Costs means costs of Decommissioning.



1.47



Decommissioning Response Deadline has the meaning ascribed to it in Article 12.1(A).



1.48



DWT Contract means that certain Petroleum Agreement entered into by the Government and GNPC with Tullow,

Kosmos and Sabre dated March 10, 2006, as amended from time to time. A copy of the DWT Contract is attached hereto

as Exhibit G.



1.49



DWT Contract Area means the area specified in the DWT Contract as the “Contract Area”, as modified from time to

time in accordance with the terms of the DWT Contract.



1.50



DWT Contract Group means all those Persons who from time to time constitute the “Contractor” or equivalent under the

DWT Contract (who, at the Effective Date, consist of Tullow, Kosmos, Anadarko and Sabre) and GNPC or any

successor-in-interest to GNPC’s interest in the DWT Contract.



1.51



DWT JOA means that certain Joint Operating Agreement dated August 15, 2006 by and among Tullow, Kosmos and

Sabre, as amended from time to time, and any other agreements entered into wholly or partially in substitution therefor. A

copy of the DWT JOA is attached hereto as Exhibit U.



1.52



DWT JOA Group means all those Persons who, from time to time, are parties to the DWT JOA (who, at the Effective

Date, consist of Tullow, Kosmos, Anadarko and Sabre).



1.53



DWT Operator means the operator from time to time under the DWT JOA.



1.54



DWT Tract means that portion of the DWT Contract Area that falls within the Unit Area.



1.55



Defaulting Group has the meaning ascribed to it in Article 10.1(A).



1.56



Defaulting Party has the meaning ascribed to it in Article 10.1(A).



1.57



Default Notice has the meaning ascribed to it in Article 10.1(A).

4



1.58



Default Period has the meaning ascribed to it in Article 10.1(B).



1.59



Delivery Point means, with respect to Unit Substances, each outlet flange where such Unit Substances are first delivered

from Unit Facilities to non-Unit Facilities, including the outlet flange of any Unit Facility connecting to non-Unit

offshore or onshore facilities, or any non-Unit pipeline, or to any non-Unit vessel, vehicle or other means of

transportation, as applicable.



1.60



Development Well means any well drilled pursuant to a Unit Development Plan.



1.61



Development Unit Work Program and Budget has the meaning ascribed to it in Article 9.2(A).



1.62



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

drilling.



1.63



Dispute means any dispute, controversy or claim (of any and every kind or type, whether based on contract, tort, statute,

regulation, or otherwise) arising out of, relating to, or connected with this Agreement or the operations carried out under

this Agreement, including any dispute as to the construction, validity, existence, tet mination, interpretation,

enforceability or breach of this Agreement.



1.64



Effective Date means the date on which the last of the conditions precedent to this Agreement are satisfied as notified by

the Unit Operator to the other Parties pursuant to Article 4.1(D).



1.65



Employer Indemnitees has the meaning ascribed to it in Article 7.3(G)(1).



1.66



Encumbrance or Encumbrances means a mortgage, lien, pledge, charge or other encumbrance. “Encumber” and other

derivatives shall be construed accordingly.



1.67



Entitlement means that quantity of Unit Substances (excluding all quantities used or lost in Unit Operations) of which a

Party has the right and obligation to take delivery pursuant to the terms of this Agreement and the applicable Contract(s),

as such rights and obligations may be adjusted by the terms of any lifting, balancing and other disposition agreements

entered into pursuant to Article 11.



1.68



Environmental Loss means any loss, damages, costs, expenses or liabilities (other than Consequential Loss) caused by a

discharge of Hydrocarbons, pollutants or other contaminants into or onto any medium (such as land, surface water,

ground water and/or air) arising out of, relating to, or connected with this Agreement or the operations carried out under

this Agreement, including any of the following: (i) injury or damage to, or destruction of, natural resources or real or

personal property; (ii) cost of pollution control, cleanup and removal; (iii) cost of restoration of natural resources; and

(iv) fines, penalties or other assessments.



1.69



Expansion Call Date has the meaning ascribed to it in Article 5.3(B)(1).



1.70



Expansion End Date has the meaning ascribed to it in Article 5.3(B)(3).



1.71



Expansion Period means a period of time associated with a proposal for the expansion of the Unit Interval (and, if

applicable, Unit Area) in accordance with Article 5.3(B) that begins with the Expansion Call Date and ends with the

Expansion End Date attributable to such proposed expansion.



1.72



Expansion Proposal has the meaning ascribed to it in Article 5.3(B)(1).



1.73



Expert means the Person appointed as such pursuant to the provisions of Article 20.4 or Exhibit E, as applicable.



1.74



Expert Costs means the Expert’s reimbursable expenses plus the Expert’s fee.

5



1.75



Family Member means a Person related to another within the second degree of consanguinity, affinity, or legal adoption.



1.76



Force Majeure has the meaning ascribed to it in Article 18.2.



1.77



GNPC Additional Interest means: (i) with respect to the WCTP Contract, the “Additional Paying Interest” of two

decimal five percent (2.5%) which GNPC has elected to acquire under Article 2.6 of the WCTP Contract; and (ii) with

respect to the DWT Contract, the “Additional Interest” of five percent (5%) which GNPC has elected to acquire under

Articles 2.5 and 2.6 of the DWT Contract.



1.78



GNPC Initial Interest means: (i) with respect to the WCTP Contract, a ten percent (10%) “Participating Interest” under

Article 2.4 of the WCTP Contract; and (ii) with respect to the DWT Contract, a ten percent (10%) “Initial Interest” under

Article 2.4 of the DWT Contract.



1.79



GNPC Participating Interest means, with respect to each Contract, the sum of the GNPC Additional Interest and the

GNPC Initial Interest.



1.80



Government means the government of the Republic of Ghana and any political subdivision, agency or instrumentality

thereof, but excluding GNPC in its role as a party under this Agreement.



1.81



Government Action Notice has the meaning ascribed to it in Article 13.1(B)(1).



1.82



Government Approval has the meaning ascribed to it in Article 4.1(D)(2).



1.83



Governmental Authority means (i) any national, regional or local government and any ministry or department thereof, or

(ii) any Person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to

government (including any independent regulator) or (iii) any other governmental entity, instrumentality, agency,

authority, court, or company, or (iv) any other entity, committee or commission under the direct or indirect control of a

government, or (v) any government-owned or Controlled commercial enterprise.



1.84



Gross Negligence / Willful Misconduct means any act or failure to act (whether sole, joint or concurrent) by any person

or entity which was intended to cause, or which was in reckless disregard of or wanton indifference to, harmful

consequences such person or entity knew, or should have known, such act or failure would have on the safety or property

of another person or entity.



1.85



Home Country Governmental Authority means any Governmental Authority where a Party or any of its direct or indirect

parent companies is organized or has its principal place of business.



1.86



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

Gas.



1.87



HSE has the meaning ascribed to it in Article 7.14.



1.88



ICC has the meaning ascribed to it in Article 20.3(C)(1).



1.89



ICC Court has the meaning ascribed to it in Article 20.3(C)(2).



1.90



Indemnitees has the meaning ascribed to it in Article 7.6(B).



1.91



Initial Positions has the meaning ascribed to it in Article 7.3(C)(1).



1.92



IPT has the meaning ascribed to it in Article 7.2(D).



1.93



IPT Technical Operations means those Technical Operations described in Article 7.2(D).

6



1.94



IPT Technical Operations Contract Procedure means the contracting procedure applicable to the award of contracts with

respect to IPT Technical Operations attached hereto as Exhibit T, Part 1 and made a part hereof.



1.95



IPT Technical Operator means the Technical Operator designated from time to time pursuant to Article 7 to conduct IPT

Technical Operations.



1.96



JCC Parties means each Party which holds a Unit Interest of over twenty per cent (20%) and GNPC.



1.97



JOA Group means the DWT JOA Group or the WCTP JOA Group.



1.98



JOA Group Interest means a Party’s undivided share, expressed as a percentage to four (4) decimal places, in the rights

and obligations of the Parties in a JOA Group under the applicable Joint Operating Agreement.



1.99



Joint Management Committee means a “Joint Management Committee” established pursuant to Article 6 of either

Contract.



1.100



Joint Operating Agreement means the DWT JOA or the WCTP JOA.



1.101



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



1.102



Lien Holder has the meaning ascribed to it in Article 14.2(D).



1.103



Long Term Contract means any contract for the sale of Unit Substances that is not a Spot Contract.



1.104



Minimum Work Obligations means those work and/or expenditure obligations specified in Article 4 of the DWT

Contract and Article 4 of the WCTP Contract.



1.105



Minister means the Minister for Energy of Ghana.



1.106



Natural Gas means all gaseous hydrocarbons (including wet gas, dry gas and residue gas) which are subject to and

covered by the applicable Contract, but excluding Crude Oil.



1.107



Non-Affected Group has the meaning ascribed to it in Article 13.1(B)(1).



1.108



Non-Affected Parties has the meaning ascribed to it in Article 13.1(B)(1)(a).



1.109



Non-Affiliated Third Party means a Third Party who is not an Affiliate of any Party.



1.110



Non-Operator means each Party to this Agreement other than Unit Operator (or, where the reference is to Technical

Operations or Technical Operator, other than Technical Operator).



1.111



Non-Unit Well means a well drilled in the Unit Area, or drilled outside the Unit Area but having a portion of its wellbore

within the Unit Area, other than a Unit Well.



1.112



Non-U.S. Party has the meaning ascribed to it in Article 16.3(F).



1.113



Non-Unit Operations means operations (other than Unit Operations) conducted in the Unit Area and/or utilizing Unit

Facilities, and undertaken by or on behalf of some or all of the Parties in either JOA Group with respect to its Contract

Area, including such operations for purposes of exploring for, gathering, treating, processing, storing, transporting or

marketing Hydrocarbons.



1.114



Non-Unit Production means production of Crude Oil, Natural Gas and/or other substances from or attributable to either

Contract Area that is not attributable to the Unit Interval.

7



1.115



Notice of Dispute has the meaning ascribed to it in Article 20.3(A).



1.116



OECD Anti-bribery Principles means the following principles, which are based on the principles set forth in Article 1.1

and 1.2 of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business

Transactions, signed in Paris on 17 December 1997, and entered into force on 15 February 1999, and the Convention’s

Commentaries, namely, that:

(a)



It is unlawful for any person intentionally to offer, promise or give any undue pecuniary or other advantage,

whether directly or through intermediaries, to a foreign public official, for that official or for a third party, in

order that the official act or refrain from acting in relation to the performance of official duties, in order to

obtain or retain business or other improper advantage in the conduct of international business; and



(b)



Complicity in, including incitement, aiding and abetting, or authorization of an act of bribery of a foreign public

official shall be unlawful. Furthermore, attempt and conspiracy to bribe a foreign public official of a country

that is not a Party’s Home Country Governmental Authority shall be unlawful to the same extent as attempt and

conspiracy to bribe a public official of a country that is a Party’s Home Country Governmental Authority.



1.117



Official means (i) any official, officer, employee or Person acting in an official capacity on behalf of a Governmental

Authority or public international organization; or (ii) any political party or political party official; or (iii) any candidate

for political office.



1.118



OHIP (or Original Hydrocarbon in Place) has the meaning ascribed to it in Article 5.5(A).



1.119



Operator means the Unit Operator or Technical Operator.



1.120



Option Notice has the meaning ascribed to it in Article 10.8(C).



1.121



Original Expansion Proposal has the meaning ascribed to it in Article 5.3(B)(1).



1.122



Original Party means each of GNPC, Tullow, Kosmos, Anadarko, Sabre and EO Group together with any of their

Affiliates that subsequently become a Party to this Agreement.



1.123



Other Group has the meaning ascribed to it in Article 10.2(A).



1.124



Other Party has the meaning ascribed to it in Article 10.2(A).



1.125



Paying Interest means each Party’s undivided share, expressed as a percentage to four (4) decimal places, in the Unit

Account expense obligations under this Agreement with respect to a specific Unit Operation, equal to the sum of (i) such

Party’s Contract Group Paying Interest for the DWT Contract Group with respect to such Unit Operation multiplied by

the Tract Participation for the DWT Tract and divided by one hundred (100) and (ii) such Party’s Contract Group Paying

Interest for the WCTP Contract Group with respect to such Unit Operation multiplied by the Tract Participation for the

WCTP Tract and divided by one hundred (100). “Paying Interest” with respect to a JOA Group means the sum of the

Paying Interests of each Party in the JOA Group derived from its interest in the applicable Tract.



1.126



Person means an individual, corporation, company, partnership, limited partnership, limited liability company, trust,

estate, government agency or any other entity, including unincorporated business associations.



1.127



Pressure Communication means, with respect to any accumulation of Hydrocarbons, that:

(a)



such accumulation has Hydrocarbon-bearing sediments which are in direct and continuous Hydrocarbon contact

with the Unit Interval, and

8



(b)



such accumulation belongs to the same Hydrocarbon pressure regime(s) as the Unit Interval, with which it is in

direct and continuous Hydrocarbon contact as defined in (a) above, and



(c)



the composition of the Hydrocarbons of such accumulation is consistent with the composition of the Unit

Interval Hydrocarbons, with which they are in direct and continuous Hydrocarbon contact as defined in

(a) above.



1.128



Pre-Unit Agreement means the pre-unitization agreement dated February 22, 2008 by and among Tullow, Kosmos,

Anadarko, Sabre and EO Group or their predecessors in interest with respect to the Unit Area, a copy of the Pre-Unit

Agreement is attached hereto as Exhibit W.



1.129



Production Forecast has the meaning ascribed to it in Article 11.4(A).



1.130



Prohibited Assignee means (i) any Official in Ghana or of the Government or GNPC whilst it is owned or Controlled by

the Government; or (ii) any Family Member of such an Official referred to in (i) above; or (iii) any entity in which one or

more individuals specified in (i) or (ii) owns an interest, except as a consequence of ownership by such individual of

publicly-traded securities.



1.131



Project Interest means, with respect to any Party, its Unit Interest derived from each Contract Group and its

corresponding interests in the Project Interest Agreements.



1.132



Project Interest Agreements means this Agreement, the Contracts, the Joint Operating Agreements and the Associated

Agreements, and when used to refer to the Project Interest Agreements of a particular Party, means this Agreement, the

Contracts to which such Party is party, the Joint Operating Agreements applicable to such Contracts and the Associated

Agreements.



1.133



Proposing Group has the meaning ascribed to it in Article 5.3(B)(1).



1.134



Proposed Phase 1 Development Plan means the “Jubilee Field Phase 1 Development Plan” approved for submission to

the Joint Management Committee under Article 6 of each Contract, and to the Government for approval, attached hereto

as Exhibit P.



1.135



Proscribed Persons means any Person: (a) whose name is specified in, or pursuant to, any directive or resolution of, or

list maintained by, any Home Country Governmental Authority or the United Nations relating to the designation of a

person as a terrorist or of a terrorist organization or the blocking of assets of such person or organization; (b) in respect of

whom any Home Country Governmental Authority or the United Nations has publicly announced that all financial

transactions involving the assets of such Person or organization have been, or are to be, blocked; or (c) who is designated

from time to time by any Home Country Governmental Authority or the United Nations as a terrorist person or

organization or an organization that assists or provides support to a terrorist person or organization.



1.136



Purchase Price has the meaning ascribed to it in Article 10.8(C).



1.137



Reasonably Prudent Operator has the meaning ascribed to it in Article 7.12(B)(2).



1.138



Received has the meaning ascribed to it in Article 19.



1.139



Recoverable Oil means the amount of recoverable Crude Oil within the Unit Interval as set out in the Unit Operator’s

most recent production profile for the Unit Interval, and as adjusted by the Unit Operator in accordance with any

expansion of the Unit Interval under Article 5.3.



1.140



Redetermination means the process established in Article 5.3 and in Article 5.4 for the review and possible revision of



the Tract Participations, Unit Interests and Paying Interests pursuant to Articles 5.5, 5.6 and 5.7, as applicable, including

any such review and revision involving a referral to an independent Expert. The term “Redetermination” shall include

both the revision of Tract Participations, Unit Interests and Paying

9



Interests and where applicable under those Articles the reapportionment of each Party’s rights to Unit Substances and

obligations for Unit Account costs.

1.141



Redetermination Basis has the meaning ascribed to it in Article 5.5(A).



1.142



Redetermination Call Date has the meaning ascribed to it in Article 5.5(D)(2).



1.143



Redetermination Effective Date has the meaning ascribed to it in Article 5.5(E).



1.144



Redetermination Effective Month has the meaning ascribed to it in Article 5.6(B)(4). 1.145 Redetermination End Date

has the meaning ascribed to it in Article 5.5(E).



1.146



Redetermination Period means a period of time associated with a particular Redetermination that begins with the

Redetermination Trigger Date for such Redetermination and ends with the Redetermination End Date for such

Redetermination.



1.147



Redetermination Trigger Date has the meaning ascribed to it in Exhibit E.



1.148



Reserve Fund has the meaning ascribed to it in Article 10.5(D).



1.149



Rules has the meaning ascribed to it in Article 20.3(C)(1).



1.150



Run Down Period has the meaning ascribed to it in Exhibit D.



1.151



Secondee has the meaning ascribed to it in Article 7.3(A).



1.152



Secondment has the meaning ascribed to it in Article 7.3(A).



1.153



Security means (i) cash in an escrow account held by a bank or such other form of investment as may be authorized by

Exhibit D with respect to Decommissioning, or (ii) an irrevocable standby letter of credit issued by a bank; or (iii) an on

demand bond issued by a bank, in each case in favor of the Unit Operator on behalf of the Parties for the purposes for

which such Security is required under the terms of this Agreement; provided, however, that the bank holding the cash or

issuing the standby letter of credit or bond (as applicable) has a credit rating for long-term unsecured debt of at least

“AA” by Standard & Poor’s or “Aa2” by Moody’s, or, in the event neither such entity is issuing credit ratings for longterm unsecured debt, the equivalent rating by a comparable international credit rating agency.



1.154



Senior Executive has the meaning ascribed to it in Article 20.3(B).



1.155



Senior Supervisory Personnel means, (i) with respect to Unit Operator, any individual who functions as its designated

manager or supervisor of an onshore or offshore installation or facility used for operations and activities of such Party,

but excluding all managers or supervisors who are responsible for or in charge of onsite drilling, construction or

production and related operations or any other field operations, and any individual who functions for Unit Operator or

one of its Affiliates at a management level equivalent to or superior to the management level described herein above, or

any officer or director of Unit Operator or one of its Affiliates, and (ii) with respect to the IPT Technical Operator, any

individual who functions as its director of the IPT, and any individual who functions for the IPT Technical Operator or

one of its Affiliates at a management level equivalent to or superior to the management level described hereinabove, or

any officer or director of the IPT Technical Operator or one of its Affiliates, and (iii) for any other Technical Operator,

any individual with overall responsibility for the Technical Operations it is performing, and any individual who functions

for such Technical Operator or one of its Affiliates at a management level equivalent to or superior to the management

level described hereinabove, or any officer or director of such Technical Operator or one of its Affiliates.

10



1.156



Spot Contract means any contract for the sale of Unit Substances terminating, or terminable at will by the seller without

penalty, ninety (90) Days or less after the commencement of the contract.



1.157



Subcommittee has the meaning ascribed to it in Article 8.4(A).



1.158



Subcontractor means any Third Party with whom an Operator enters into an agreement or arrangement for the provision

of goods and/or services in connection with the conduct of Unit Operations.



1.159



Sufficient New Data means well log data and other wellbore data from outside the Unit Interval from a well completed

after (i) in the case of any potential first expansion of the Unit Interval, the Effective Date and (ii) in the case of potential

second and subsequent expansions of the Unit Interval, the last preceding Expansion Call Date.



1.160



Technical Operations mean operations within the scope of this Agreement (or whose purpose, at the time of being

undertaken, was within the scope of this Agreement), including IPT Technical Operations, conducted by a Technical

Operator on behalf of all of the Parties on or after the Effective Date, as further designated pursuant to this Agreement.



1.161



Technical Operator means a Party designated from time to time pursuant to Article 7 to conduct Technical Operations, in

such capacity and not in its capacity as a Party.



1.162



Technical Operator Indemnitees has the meaning ascribed to it in Article 7.6(B).



1.163



Technical Services Agreement has the meaning ascribed to it in Article 7.3(H).



1.164



Third Party means any Person who is not a Party.



1.165



Tract means the DWT Tract or the WCTP Tract.



1.166



Tract Operator means the DWT Operator or the WCTP Operator.



1.167



Tract Participation means each Tract’s undivided allocation of Unit Substances under Article 4.2(A) and the undivided

share of the rights and obligations of the Parties under this Agreement with respect to the Unit and in the Unit Facilities,

Unit Data and other assets held for the Unit Account accruing to the Contract Group associated with that Tract, expressed

as a percentage to four (4) decimal places, as initially set out in Exhibit A, but subject to adjustment pursuant to Articles

5.3, 5.4, 13.1(B) and 13.2(A).



1.168



Transfer means any sale, assignment or other disposition by a Party of any rights or obligations derived from the

Contracts or this Agreement or the Joint Operating Agreements to the extent that such transfer covers all or a portion of

the Unit Interval, other than an Encumbrance or a transfer of the transferring Party’s Entitlement and its rights to any

credits, refunds or payments under this Agreement, and excluding any direct or indirect change in Control of a Party, and

use of “Transfer” as a verb in this Agreement shall be construed accordingly.



1.169



Transfer Date has the meaning ascribed to it in Article 10.8(C)(5)(a).



1.170



Trigger Date has the meaning ascribed to it in Exhibit D.



1.171



Unit means the Jubilee Field Unit created pursuant to Article 4.1 of this Agreement.



1.172



Unit Account means the account maintained by the Unit Operator in accordance with the provisions of this Agreement

and the Unit Accounting Procedure to record charges, expenditures, receipts and credits for Unit Operations.

11



1.173



Unit Accounting Procedure means the accounting procedure attached hereto as Exhibit C and made a part hereof.



1.174



Unit Area means the area described and depicted in Exhibit B, Part 1 and Exhibit B, Part 2, as amended from time to time

in accordance with the terms of this Agreement.



1.175



Unit Data means all information and data acquired by Unit Operator in the conduct of Unit Operations or contributed as

Unit Data pursuant to Article 4.6.



1.176



Unit Development Plan means a plan approved by the Government under the Contracts for the development of

Hydrocarbons from the Unit Interval, including the Approved Phase 1 Development Plan, as amended from time to time

in accordance with the terms of this Agreement.



1.177



Unit Facilities means any equipment or other real or personal property or rights with respect thereto, acquired or

constructed for the Unit Account or contributed to the Unit Account pursuant to Article 4.7.



1.178



Unit Interest means each Party’s undivided share, expressed as a percentage to four (4) decimal places, in the rights and

obligations of the Parties under this Agreement with respect to the Unit and in the Unit Facilities, Unit Data and other

assets held for the Unit Account, as initially set out in Exhibit A and adjusted pursuant to Articles 5.2(B)(1), 5.3, 5.4,

13.1(B) and 13.2(A), provided that, notwithstanding the preceding, each Party’s obligations with respect to Unit Account

expenses are equal to its Paying Interest.



1.179



Unit Interval means the interval between the top and bottom depths described in Exhibit B, Part 3 to the extent located

within the Unit Area, as amended from time to time in accordance with the terms of this Agreement.



1.180



Unit Operating Committee means the committee established pursuant to Article 8.1.



1.181



Unit Operations means operations within the scope of this Agreement (or whose purpose, at the time of being

undertaken, was within the scope of this Agreement) conducted by the Unit Operator on behalf of all of the Parties on or

after the Effective Date, including operations for purposes of developing, producing, gathering, treating, processing,

storing, transporting or delivering Unit Substances and including Technical Operations.



1.182



Unit Operator means the Party designated from time to time pursuant to Article 7 to conduct Unit Operations, in its

capacity as operator and not its capacity as a Party.



1.183



Unit Operations Contract Procedure means the contracting procedure applicable to the award of contracts with respect

to Unit Operations attached hereto as Exhibit T, Part 2 and made a part hereof.



1.184



Unit Operator Indemnitees has the meaning ascribed to it in Article 7.6(B).



1.185



Unit Substances means all Hydrocarbons produced from or attributable to the Unit Interval which the Parties are entitled

to produce under the DWT Contract or the WCTP Contract, as applicable.



1.186



Unit Well means a well drilled or acquired for the Unit Account and held for the Unit Account at the time referenced.



1.187



Unit Work Program and Budget means a work program for Unit Operations and budget therefor established pursuant to

Article 9.



1.188



Urgent Operational Matters has the meaning ascribed to it in Article 8.12(A)(1).



1.189



U.S. Party has the meaning ascribed to it in Article 16.3(F).

12



1.190



WCTP Contract means that certain Petroleum Agreement entered into by the Government and GNPC with Kosmos and

The E.O. Group dated July 22, 2004, as amended from time to time. A copy of the WCTP Contract is attached hereto as

Exhibit H.



1.191



WCTP Contract Area means the area specified in the WCTP Contract as the “Contract Area”, as modified from time to

time in accordance with the terms of the WCTP Contract.



1.192



WCTP Contract Group means all those Persons who from time to time constitute the “Contractor” or equivalent under

the WCTP Contract (who, at the Effective Date, consist of Tullow, Kosmos, Anadarko, Sabre and EO Group) and GNPC



or any successor-in-interest to GNPC’s interest in the WCTP Contract.

1.193



WCTP JOA means that certain Joint Operating Agreement dated July 22, 2004 by and between Kosmos and The E.O.

Group, as amended from time to time, and any other agreements entered into wholly or partially in substitution therefor.

A copy of the WCTP JOA is attached hereto as Exhibit V.



1.194



WCTP JOA Group means all those Persons who from time to time are parties to the WCTP JOA (who, at the Effective

Date, consist of Tullow, Kosmos, Anadarko, Sabre and EO Group).



1.195



WCTP Operator means the operator from time to time under the WCTP JOA.



1.196



WCTP Tract means that portion of the WCTP Contract Area that falls within the Unit Area.

ARTICLE 2

EFFECTIVE DATE AND TERM

This Agreement shall have effect from the Effective Date and shall continue in effect until the earliest of the following:

(A)



The expiration, termination or revocation of both Contracts;



(B)



Termination pursuant to Article 4.1(D);



(C)



All Parties have become Defaulting Parties as described in Article 10.2(B);



(D)



The withdrawal of all of the Parties pursuant to Article 15.2(D); or



(E)



The written agreement of all of the Parties to terminate this Agreement.



For the avoidance of doubt, following the expiration, termination or revocation of either Contract, this Agreement shall remain in

effect, Article 5.3(E) shall apply, and the Parties to the remaining Contract and GNPC as Contract Group with respect to the

expired, terminated or revoked Contract shall continue to have the right to use the Unit Facilities on the same basis as prior to such

expiration, termination or revocation, including those Unit Facilities in the Contract Area for the expired, revoked or terminated

Contract, until the expiration, termination or revocation of the remaining Contract.

Notwithstanding anything to the contrary in this Article 2: (i) Article 12 and the terms of Exhibit D, as applicable, shall remain in

effect until all Decommissioning obligations under this Agreement have been satisfied and all funds held pursuant to Exhibit D

have been distributed as provided for therein; and (ii) Article 4, Article 6.3, Article 7.5, Article 7.6, Article 10, Article 17,

Article 20 and the obligations to indemnify and to respond and provide information under Article 21.1 shall remain in effect until

all such obligations have been extinguished and all Disputes have been resolved. Termination of this Agreement shall be without

prejudice to any rights and obligations arising out of or in connection with this Agreement that have vested, matured or accrued

prior to such termination.

13



ARTICLE 3

SCOPE

3.1



Scope

(A)



The scope of this Agreement shall include:

(1)



The development and operation of the Unit Interval;



(2)



The production of Unit Substances and the handling and transportation thereof up to the applicable

Delivery Point and, if agreed unanimously by the Parties, transportation of Unit Substances to a point

downstream of the Delivery Point;



(3)



The principles in accordance with which each Party is entitled to have delivered to it and to take Unit



Substances, or any proceeds of sale deriving therefrom;



(B)



(4)



The acquisition, construction, operation, ownership, use, maintenance, repair and removal of fixed and

floating facilities for the development, production, gathering, treatment, processing, compression and

transportation of Unit Substances, (i) for Crude Oil, through the offloading flange(s) of any floating

production, storage and offloading vessels or other offshore facilities in the Unit Area, or up to the inlet

flange of any pipeline transporting Crude Oil from the Unit Area to outside of the Unit Area, and

(ii) for Natural Gas, up to the inlet flange of any pipeline transporting Natural Gas from the Unit Area

to outside of the Unit Area, plus (iii) any onshore facilities located in Ghana and acquired or

constructed for the Unit Account in aid of development and production operations;



(5)



Regulation of Non-Unit Operations affecting the Unit Area or proposing to use Unit Facilities;



(6)



The regulation of Associated Agreements to the extent set forth herein;



(7)



Development of information and promotional marketing material relating to Crude Oil from the Unit

Interval;



(8)



Decommissioning of Unit Facilities; and



(9)



All other activities in connection with any of the foregoing that are expressly provided for by the terms

hereof.



For greater certainty, the Parties confirm that, except to the extent expressly included in the Contract, the

following activities are outside of the scope of this Agreement and are not addressed herein:

(1)



Acquisition, construction, operation, ownership, use, maintenance, repair and removal of fixed and

floating facilities, which facilities are located downstream from the facilities described in Articles

3.1(A)(4)(i) and (ii) (including, for the avoidance of doubt, any gas pipeline and downstream

processing facilities), other than those facilities described in Article 3.1(A)(4)(iii);



(2)



Transportation of the Parties’ Entitlements downstream from the applicable Delivery Point;



(3)



Marketing and sales of Hydrocarbons, except as expressly provided in Article 10.5 and Article 11;

14



(4)



Acquisition or exercise of rights to explore for, appraise, develop or produce Hydrocarbons outside of

the Unit Area (other than as a consequence of expansion of the Unit Area into an adjoining area under

the terms of Article 5.3); and



(5)



Exploration, appraisal, development or production of minerals other than Hydrocarbons, whether

inside or outside of the Unit Area.

ARTICLE 4

CREATION AND EFFECT OF UNIT



4.1



Unitization of Rights and Interests

(A)



All rights and interests of the Parties under the DWT Contract and the WCTP Contract insofar as they relate to

the Unit Interval, the Unit Substances and the conduct of Unit Operations, are, subject to Article 4.1(D), hereby

unitized, effective as of the Effective Date, in accordance with the terms of this Agreement.



(B)



As of the Effective Date, all Unit Operations shall be carried out in accordance with and subject to the

provisions of this Agreement.



(C)



Nothing in this Agreement shall be construed to result in a transfer of title to any Party’s interest in a Contract,

Joint Operating Agreement or Associated Agreement to any other Party except as provided in Article 4.9(D) or



in Article 10.

(D)



Save for the provisions of this Article 4.1(D) which shall be effective from the date hereof, this Agreement shall

not become effective unless and until the following conditions precedent are satisfied, or waived in writing by

all Parties:

(1)



Approval for the Proposed Phase 1 Development Plan has been received from the Government.



(2)



Approval for the unitization described in this Article 4.1 has been received from the Government in

substantially the form of the approval instrument attached hereto as Exhibit Q, Part 1 (the

“Government Approval”).



(3)



The Parties and the Minister have signed the form of contract acknowledgement attached hereto as

Exhibit Q, Part 2 in connection with the unitization (the “Acknowledgment”).



(4)



An opinion from the Attorney General of Ghana has been received confirming that the Government

Approval and the Acknowledgment are consistent with the Constitution and laws of Ghana and satisfy

all approvals required under the Constitution and laws of Ghana and the Contracts, that no further

approval of Parliament, the Cabinet of Ministers or other governmental bodies is required for the

unitization pursuant to and in accordance with the terms of this Agreement and that the Minister has

the power to execute the Government Approval and the Acknowledgment in connection with the

unitization and to take other actions needed to implement the Government Approval and the

Acknowledgment.



The Unit Operator shall promptly notify the other Parties upon satisfaction of each of the conditions

precedent. If, after the expiry of ten (10) Business Days from the date hereof, any of these conditions

precedent remain neither satisfied nor waived then this Article 4.1(D) shall terminate and the remainder of

this Agreement shall not become effective unless such period is extended by an affirmative “Passmark Vote”

of the Jubilee Operating Committee pursuant to the Pre-Unit Agreement (as such term is defined therein).

15



4.2



4.3



Allocation of Unit Substances and Expenditures

(A)



All Unit Substances that are produced and saved from and after the Effective Date, excluding, for the avoidance

of doubt, any substances re-injected into the Unit Interval as part of Unit Operations, shall be allocated to each

Tract in proportion to its Tract Participation. The Unit Substances allocated to a Tract to which the Parties in the

applicable Contract Group are entitled under their Contract shall be allocated among those Parties in proportion

to their Contract Group Interests.



(B)



All expenditures properly chargeable to the Unit Account, incurred with respect to the period from and after the

Effective Date, shall be allocated to each Contract Group in proportion to its Tract Participation and to GNPC

and the JOA Group in respect of the applicable Contract Group in proportion to their Contract Group Paying

Interests.



Applicability to Contract Obligations and Taxes

(A)



The Unit Substances allocated to each Tract under Article 4.2(A) shall, for purposes of the calculation of

Additional Oil Entitlements under each Contract, calculation of income tax, profits tax, withholding tax and all

other taxes with respect to each Party and each Contract, calculation of royalties under each Contract,

determination of domestic marketing obligations with respect to each Contract, and for all other purposes, be

deemed to have been produced and saved under the Contract applicable to that Tract, regardless of the actual

location of the well from which such Unit Substances are produced.



(B)



The expenditures for the Unit Account allocated to GNPC and each JOA Group with respect to each Contract

under Article 4.2(B) shall, for purposes of the calculation of Additional Oil Entitlements under that Contract,

calculation of income tax, profits tax, withholding tax and all other taxes with respect to GNPC and each JOA

Group in connection with that Contract, and for all other purposes, be deemed to have been incurred under that



Contract, regardless of the actual location of the Unit Operations to which those expenditures relate.

(C)



4.4



If the allocation of expenditures and Unit Substances under Article 4.2 are not given effect as described in

Articles 4.2(A), 4.2(B), 4.3(A) and 4.3(B) due to the application of Laws/Regulations or other Government

action or inaction, the Parties shall attempt to adopt mutually agreeable arrangements which will allow the

Parties to achieve the financial results intended by Articles 4.2(A), 4.2(B), 4.3(A) and 4.3(B).



Continued Liability under Contracts

As between Contract Groups, and subject to the delegation of certain functions to the Unit Operator as described in this

Agreement, each Contract Group shall continue to be solely responsible for all obligations accruing with respect to its

Contract, including any obligations for royalties, Additional Oil Entitlements and domestic marketing obligations, and

the performance of any remaining Minimum Work Obligations, and shall indemnify and hold harmless the Parties in the

other Contract Group against any claims with respect to the performance of such obligations.



4.5



Pre-Unitization Expenditures

(A)



Those expenditures for the period prior to the Effective Date which are incurred after December 31, 2007 as

“Unit Costs” pursuant to the terms of the Pre-Unit Agreement, including those expenditures incurred during the

period from January 1, 2008 to the last Day of the Calendar Month which ends prior to the Effective Date,

provided that if such Calendar Month ends less than ten (10) Days prior to the Effective Date, such period shall

end on the last Day of the preceding Calendar Month, shown in Exhibit I, shall be considered to be expenditures

for the Unit Account for all purposes of this Agreement. Notwithstanding the foregoing approval, the Parties

16



acknowledge that acceptance of such costs as “Petroleum Costs”, as defined under the applicable Contract, shall

be subject to the provisions of each Contract. Within fifteen (15) Days after the satisfaction of the conditions

precedent set out in Article 4.1(D), the Unit Operator shall issue to the Tract Operators a schedule showing each

JOA Group’s actual share of such expenditures, the share that each JOA Group would have borne had it paid its

applicable Paying Interest share, and the amount owing by or to each JOA Group. Within fifteen (15) Days after

receipt of such schedule each JOA Group owing such funds shall make payment in the manner described in the

Unit Accounting Procedure to the Unit Operator, who shall promptly distribute each such payment to the Tract

Operator for the JOA Group entitled to reimbursement. Should the JOA Group owing any amount pursuant to

this Article fail to pay that amount when due, no other Party shall be obligated to contribute the amount in

default under Article 10.2, but all other rights and remedies of the Parties under Article 10 shall apply with

respect to such default.



4.6



(B)



Each Party shall be entitled to audit the expenditures charged to the Unit Account under Article 4.5(A) in the

same manner as provided in the Unit Accounting Procedure for other expenditures for the Unit Account, to the

extent they were not previously audited pursuant to the Pre-Unit Agreement, except that the twenty-four (24)

month audit and claim period under the Unit Accounting Procedure shall begin to run for all expenditures

incurred prior to the Effective Date at the end of the Calendar Year in which the Effective Date falls. Where

such expenditures were incurred by a Non-Operator or its Affiliates, the provisions of the Unit Accounting

Procedure regarding audits of the Unit Operator or a Technical Operator and its Affiliates shall apply to that

Non-Operator and its Affiliates, mutatis mutandis. Any amount paid under this Article 4.5 that was not properly

charged shall be refunded by the Party or Parties receiving the payment and shall be thereafter treated in

accordance with Article 4.5(C).



(C)



Except as expressly provided in Article 4.5(A) or elsewhere in this Agreement, all expenditures incurred by any

Party prior to the Effective Date shall be the sole responsibility of the Party incurring them (subject to any rights

such Party may have under its Joint Operating Agreement or other contractual arrangements) and shall not be

charged to the Unit Account. All rights with respect to deductions for Additional Oil Entitlement purposes and

tax benefits attributable to expenditures not included in the Unit Account shall remain the property of and inure

to the benefit of the Parties which would be entitled to such rights in the absence of this Agreement.



Existing Data



(A)



The data and information listed in Exhibit J, Part 1(a), Part 1(b) and Part 1(c) is owned by GNPC in accordance

with Section 23, Subsection 2 of the Petroleum (Exploration and Production) Law, 1984 (PNDCL 84). The

Parties agree that all Parties have interests in the data and information listed in Exhibit J, Part 1(a), which data

and information shall be deemed to be Unit Data with effect from the Effective Date. The Parties further agree

that each JOA Group has the right to use the data and information listed in Exhibit J, Part 1(b) and, with effect

from the Effective Date, GNPC grants to each other Party the right to use such data and information, on a nonexclusive and irrevocable basis and without the payment of fees, for so long as it is a party to a Contract. Such

right is not transferable in whole or in part, except in connection with a permitted Transfer or Encumbrance of

all or a portion of a Party’s Unit Interest in accordance with Article 10.8, Article 10.9, Article 14 or Article 15.

The grant of rights pursuant to this Article 4.6 shall not result in the transfer of title to the data and information

set out in Exhibit J, Part 1(b) , and only the rights granted with respect to such data and information shall be

deemed to be Unit Data. Each receiving Party shall keep the data confidential in accordance with the terms of

Article 17.2. The grant of rights under this Article is subject to the terms of the applicable Contract and the

Laws/Regulations and is without prejudice to any rights of the Government and/or GNPC with respect to such

data and information under the terms of either Contract or the Laws/Regulations. The data and information

listed in Exhibit J, Part 1(c) shall be licensed to the other Parties pursuant to the seismic data license agreement,

in the form attached hereto as Exhibit J, Part 2, to be entered into on the date hereof by GNPC, as licensor, and

the other Parties, as licensees. Only the licensed rights with respect to such data and information shall be

deemed to be Unit Data.

17



4.7



(B)



Except as provided in Article 4.6(A) or Article 4.7(D), and subject to the Laws/Regulations and the terms of the

applicable Contract, each Party shall retain its rights to all other data and information with respect to the Unit

Area acquired prior to the Effective Date or through Non-Unit Operations, and no such data and information

shall be deemed to be Unit Data.



(C)



Each Party that has delivered data and information listed in Exhibit J, Part 1(b) or Exhibit J, Part 1(c) warrants to

the other Parties that it has the right to disclose and grant the right to use such data and information under

Article 4.6(A) and that use of such data and information in accordance with the terms and conditions of this

Agreement will not infringe on the intellectual property rights of any Third Party. Subject to the foregoing

sentence, such data and information is furnished on an “as is” basis without warranties, express or implied, of

any kind, including any warranty that such information and data is merchantable or fit for any particular purpose,

or of a particular condition, quality or accuracy. Any use of or reliance on such information and data shall be at

each receiving Party’s sole risk.



(D)



For the avoidance of doubt, data and information included as Unit Data pursuant to this Article and Exhibit J

shall not be automatically included in the Common Database pursuant to Exhibit E if such Unit Data lies outside

the Unit Area, unless otherwise specified in Exhibit E.



Existing Facilities

(A)



The Parties agree that, with effect from the Effective Date, the facilities, wells and other real property and

tangible personal property listed in Exhibit K shall be deemed to be Unit Facilities and the Parties holding the

existing rights in such property shall be deemed to have transferred their rights therein to the Parties collectively

in proportion to their Unit Interests. This transfer of rights is subject to the terms of the applicable Contract and

the Laws/Regulations and is without prejudice to any rights of the Government with respect to such property

under the terms of either Contract or the Laws/Regulations.



(B)



Except as provided in Article 4.7(A), each Party shall retain its rights to all other facilities, wells and other real

property and tangible personal property acquired prior to the Effective Date or through Non-Unit Operations, and

no such property shall be deemed to be Unit Facilities.



(C)



All rights transferred pursuant to this Article 4.7 are transferred on an “as is” basis without warranties, express or

implied, including warranties as to merchantability, fitness for a particular purpose, conformity to models or

samples of materials, use, maintenance, condition, capacity or capability, provided that each Party that has

delivered facilities or rights to use facilities pursuant to Article 4.7(A) warrants to the other Parties that it has the

right to transfer such facilities, or rights therein, free and clear of all liens, charges and encumbrances, excepting

the terms of the applicable Contract and the Laws/Regulations and the rights of the Government.



Notwithstanding the preceding sentence, should any facilities, wells and other real property and tangible personal

property transferred under this Article 4.7 be entitled to the benefits of a warranty by any Person other than a

transferring Party or its Affiliates, the transferring Party or Parties holding the warranty shall transfer such

warranty rights to the Parties collectively, in proportion to their Unit Interests, to the extent transferable.

(D)



Any Party transferring a well pursuant to Article 4.7(A) shall also transfer or license its rights to all data and

information obtained in wellbore operations in that well, on the terms set forth in Article 4.6, to the extent such

transfer is permitted by the Contracts, the Laws/Regulations and any applicable Non-Affiliated Third Party

agreements. The transfer or license of such rights is without prejudice to any rights of the Government and

GNPC with respect to such data and information, under the terms of either Contract or the Laws/Regulations.

18



4.8



4.9



Non-Unit Discoveries

(A)



Should a well drilled as a Unit Well encounter Hydrocarbons which may constitute a Discovery outside of the

Unit Interval, the Unit Operator shall promptly notify the Contract Group holding the Contract on which the

Hydrocarbons were discovered. The applicable Tract Operator shall report the Discovery to the Government and

GNPC pursuant to Article 8.1 of the applicable Contract.



(B)



The Contract Group holding the Contract on which the Hydrocarbons were discovered shall have no rights with

respect to the Unit Well that made the Discovery except as provided in Article 12.1(B).



Effect on Existing Agreements

(A)



The Parties in each Contract Group have provided the Parties that are members of the other Contract Group with

a copy of the providing Contract Group’s Contract as amended as of the Effective Date; a copy of the DWT

Contract is attached hereto as Exhibit G and a copy of the WCTP Contract is attached hereto as Exhibit H. The

Parties in each Contract Group will provide the Parties in the other Contract Group with copies of any

amendments to such Contract entered into after the Effective Date.



(B)



The Parties intend, subject to applicable Ghana Laws/Regulations, that the terms of each Contract, to the extent

that they apply to the operations carried out pursuant to this Agreement, shall be applied in such a manner as to

give effect to the terms of the Government Approval and the Acknowledgment.



(C)



This Agreement shall not be deemed to amend or modify the provisions of either Joint Operating Agreement

except as provided in the next sentence and except as expressly provided in the Unit Accounting Procedure. This

Agreement shall apply with respect to Unit Operations in lieu of either Joint Operating Agreement, except to the

extent the terms of the Joint Operating Agreements are expressly incorporated or otherwise expressly applied by

the terms hereof, and, in addition, in the event of conflict between a provision of this Agreement and the

provisions of either Joint Operating Agreement with respect to Non-Unit Operations, the provisions of this

Agreement will prevail.



(D)



Each contract set forth on Part 1 of Exhibit L entered into by a Tract Operator or Anadarko for the joint account

under the terms of its Joint Operating Agreement prior to the Effective Date that is still in effect on the Effective

Date shall, to the extent relating to operations within the scope of this Agreement as described in Article 3 and to

the extent transferable, be transferred to and assumed by Unit Operator and be deemed to have been properly

approved with respect to Unit Operations under this Agreement, without prejudice to a Non-Operator’s right to

audit in accordance with Article 4.9(E). Upon the transfer and assumption of each such contract, Unit Operator

shall be fully authorized to perform and enforce that contract on behalf of the Parties. Each contract entered into

by Unit Operator, IPT Technical Operator or by Anadarko pursuant to the Pre-Unit Agreement prior to the

Effective Date that is still in effect on the Effective Date, including those set forth on Part 2 of Exhibit L, shall be

deemed to have been properly approved with respect to Unit Operations under this Agreement (and, in the case

of contracts entered into by IPT Technical Operator or by Anadarko shall, to the extent transferable, be

transferred to and assumed by Unit Operator), without prejudice to a Non-Operator’s right to audit in accordance

with Article 4.9(E). Unit Operator shall be fully authorized to execute and perform each such contract on behalf

of the Parties. The Parties shall cooperate to cause the execution of such instruments of assignment and/or

novation as shall be reasonably necessary to transfer from the IPT Technical Operator or Anadarko and vest in



Unit Operator those rights and obligations under such contracts as are to be transferred to and assumed by Unit

Operator pursuant to this Article 4.9(D). Within fifteen (15) Days after the satisfaction of the conditions

precedent set out in Article 4.1(D), the Unit Operator shall deliver or cause to be delivered to each counterparty

19



under each contract set forth on Part 1 and Part 2 of Exhibit L and transferred to Unit Operator pursuant to this

Article 4.9(D), written notice of such assignment to and assumption by Unit Operator.

(E)



4.10



Each Operator warrants and represents to the other Parties that each contract set forth in Exhibit L entered into

by such Operator was entered into in accordance with the terms of the IPT Technical Operations Contract

Procedure or the Unit Operations Contract Procedure, as applicable, as set forth in Exhibit T and in accordance

with the provisions of Article 7.2. Notwithstanding anything to the contrary contained in this Agreement or in the

Unit Accounting Procedure, a Non- Operator’s right to audit the Unit Accounts and records of any Operator

relating to any such contracts shall continue for the greater of (i) the period provided for in Section 1.8.1 of the

Unit Accounting Procedure and (ii) twenty-four (24) months following the Effective Date.



Existing Work Programs and Budgets and AFEs and Jubilee Operating Committee Approvals

Each expenditure under the work programs and budgets approved by the Jubilee Operating Committee pursuant to the

Pre-Unit Agreement, as set forth in Exhibit M, shall, without any further action being required by the Unit Operating

Committee under this Agreement, be deemed to be adopted on the Effective Date as the initial Unit Work Program and

Budget under this Agreement (but only to the extent the operations approved thereunder fall within the scope of this

Agreement as described in Article 3). Likewise, the unexpended portion of all AFEs set forth in Exhibit N shall be

deemed to be adopted on the Effective Date as approved AFEs under this Agreement to the extent the operations

approved thereunder fall within the scope of this Agreement as described in Article 3. Any portions of a Pre-Unit

Agreement work program and budget and any Pre-Unit Agreement AFE transferred to the Unit pursuant to this

Article 4.10 shall thereafter no longer be subject to the Pre-Unit Agreement. Each decision approved by the Jubilee

Operating Committee pursuant to the Pre-Unit Agreement which is contained within Exhibit O shall, without any further

action being required, be deemed to be adopted on the Effective Date as a matter approved by the Unit Operating

Committee under this Agreement (but only to the extent the operations approved thereunder fall within the scope of this

Agreement as described in Article 3). The decisions adopted pursuant to this Article 4.10 are subject to the terms of the

applicable Contract and the Laws/Regulations, and this Article 4.10 is without prejudice to any remaining obligation to

obtain approval of the Government for any such decisions under the terms of either Contract or the Laws/Regulations.

For the avoidance of doubt, this Article 4.10 is without prejudice to any required approval of the Joint Management

Committee under Article 6 of each Contract.



4.11



Responsibility For Existing Burdens

Each Party represents and warrants to the other Parties that the interest in its Contract and rights with respect thereto that

have become subject to this Agreement are free and clear of any overriding royalty, production payment, net profits

interest, carry or special allocation of Unit Substances, proceeds thereof or costs of Unit Operations, or other right or

Encumbrance (each, a “Burden”) except (i) rights in favor of the Government and GNPC under its Contract and the

Laws/Regulations, (ii) security rights under its Joint Operating Agreement for amounts not yet due and payable,

(iii) Tullow’s carry of Sabre’s interest, and Kosmos’ carry of E0 Group’s interest, each as disclosed in writing to GNPC

and the Minister pursuant to the Contracts, (iv) Sabre’s financing arrangements as disclosed in writing to all Parties and

which do not attach to the rights received by the other Parties under this Agreement, and (v) such other Burdens as have

been previously disclosed in writing to all Parties. Any Burden on a Party’s interest shall be satisfied solely by that Party,

and such Party shall be solely responsible for, and shall defend and indemnify each other Party (except those Parties

which have otherwise agreed in writing to bear a part of such arrangements) against any and all costs, expenses, losses,

damages and liabilities (including reasonable legal costs, expenses and attorneys’ fees, and contractual liability to other

Persons for such costs, expenses, losses, damages and liabilities) incident to the Burdens affecting its interest. Each Party

contributing an interest in its Contract subject to an existing Burden has obtained ratification of the Unit from each holder

of the Burden and has provided a copy thereof to the other Parties.

20



ARTICLE 5

TRACT PARTICIPATIONS, UNIT INTERESTS AND PAYING INTERESTS

5.1



5.2



Tract Participations

(A)



The Tract Participation of each Tract as of the Effective Date shall be as set forth in Exhibit A.



(B)



The Tract Participations set forth in Article 5.1(A) shall not change during the term of this Agreement for any

reason except as expressly provided in Articles 5.3, 5.4, 13.1(B) and 13.2(B), regardless of depletion of Unit

Substances, changes in reserve estimates, or the surrender or revocation of any portion of either Contract Area.



Unit Interests and Paying Interests

(A)



The Unit Interests of each Party as of the Effective Date shall be as set forth in Exhibit A, Part 1. The Paying

Interests of each Party as of the Effective Date shall be as set forth in Exhibit A, Part 2.



(B)



Each Party’s Unit Interest is determined by multiplying that Party’s Contract Group Interest in each Contract

Group by the Tract Participation for the applicable Tract and adding the results. Unit Interests shall be

automatically revised (without the need for any amendment to the terms of this Agreement) upon:



(C)



(D)



5.3



(1)



Any Transfer of a Unit Interest (including a Transfer under Article 10.8 as a consequence of a default, a

Transfer under Article 14, and a Transfer under Article 15 as a consequence of a withdrawal); or



(2)



An adjustment of the Tract Participations pursuant to Article 5.3, Article 5.4, Article 13.1(B) or

Article 13.2(B).



Paying Interests shall be automatically revised in accordance with the definitions of “Paying Interest” (without

the need for any amendment to the terms of this Agreement) upon:

(1)



Any Transfer of a Unit Interest (including a Transfer under Article 10.8 as a consequence of a default, a

Transfer under Article 14, and a Transfer under Article 15 as a consequence of a withdrawal); or



(2)



An adjustment of the Tract Participations pursuant to Article 5.3, Article 5.4, Article 13.1(B) or

Article 13.2(B) .



All Unit Interest and Paying Interest calculations shall be rounded to the fourth (4th) decimal place, with digits

of five and above rounded upward and those of four and below rounded downward. The total of all Tract

Participations within the Unit, the total of all Unit Interests within the Unit and the total of all Paying Interests

within the Unit shall each always equal one hundred percent (100%).



Changes in Unit Area and Unit Interval

(A)



Except as provided in Article 5.3(B) and without prejudice to any rights of the Government under the terms of

either Contract or the Laws/Regulations, any change to the Unit Area or Unit Interval shall require the

unanimous written approval of the Parties, except in the event of the surrender, revocation, termination or

expiration of any Contract with respect to any portion (but not all) of the Unit Area covered by that Contract in

the circumstances provided in Articles 13.1 and 13.2, in which case the Unit Area and Unit Interval shall be

adjusted to exclude the area with respect to which the Contract has been surrendered or revoked or has

terminated or expired without any

21



approval being required. In the case of the surrender, revocation, termination or expiration of any Contract with

respect to all of the Unit Area covered by that Contract in the circumstances provided in Articles 13.1 and 13.2,

Article 5.3(E) shall apply. In the event of surrender of only a portion of a Contract Area within the Unit Area,

such surrendered area shall automatically be excluded from the Unit Area and the provisions of Article 13.2 shall

apply. Should an accumulation of Hydrocarbons be located in the surrendered area which is determined to be in



Pressure Communication with the Unit Substances, and the Minister so requires pursuant to Article 8.20 of each

Contract, each Contract Group and GNPC (as holder of the surrendered area) shall negotiate in good faith to

reach an agreement on unitization between the Unit Area and the portion of the surrendered area that is in

Pressure Communication with the Unit Substances based upon the principles set forth in this Agreement.

(B)

(1)



In the event a Party or group of Parties holding a collective Unit Interest of at least ten percent (10%)

(the “Proposing Group”) desires that the Unit Interval (and, if applicable, Unit Area) be expanded to

include an accumulation of Hydrocarbons located outside the Unit Interval and within either Contract

Area and the Proposing Group has Sufficient New Data indicating that there is an accumulation of

Hydrocarbons located outside the Unit Interval and within either Contract Area that is in Pressure

Communication with the Unit Substances, the Proposing Group shall propose (the date on which such

proposal has been received by all the other Parties being referred to as the “Expansion Call Date”) to all

Parties to expand the Unit Interval (and, if applicable, Unit Area) (the “Original Expansion

Proposal”). The Proposing Group shall also submit, simultaneously with the Original Expansion

Proposal, the specific areas and formations proposed to be included in the applicable expansion and a

proposed incremental addition to the quantity of OHIP contained within either Tract in the Unit Interval

as a result of the proposed expansion, together with technical evidence and other relevant supporting

documentation in relation to the proposed expansion. Any other Party may, within twenty (20) Days of

the Expansion Call Date, provide to all other Parties additional information related to the proposed

expansion, including alternate areas and formations proposed to be included in such expansion, an

alternate proposed incremental addition to the quantity of OHIP contained within either Tract in the

Unit Interval and alternate technical evidence and other relevant supporting documentation in relation to

the proposed expansion. Within thirty (30) Days of the Expansion Call Date, the Unit Operating

Committee shall vote, in accordance with Article 8.9(A)(1), whether to approve the Original Expansion

Proposal or an alternate proposal (each referred to herein as an “Expansion Proposal”) and, if an

Expansion Proposal is so approved, shall determine the specific areas and formations to include in such

expansion. Subject to Article 5.3(B)(2), if an Expansion Proposal is approved, together with the specific

areas and formations to be included in such expansion, the Unit Operating Committee shall also vote to

determine the incremental addition to the quantity of OHIP contained within either Tract in the Unit

Interval.



(2)



Should the Unit Operating Committee fail to approve an Expansion Proposal and the specific areas and

formations to include in such expansion within the thirty (30) Day period following the Expansion Call

Date, such Expansion Proposal shall fail and no expansion shall be conducted pursuant to such

Expansion Proposal, without prejudice to the rights of any Proposing Group to make a subsequent

Expansion Proposal.



(3)



If within thirty (30) Days of the Expansion Call Date, the Unit Operating Committee has voted to

approve an Expansion Proposal and to include certain areas and formations within the Unit Interval

(and, if applicable, Unit Area), the Unit Interval (and, if applicable, Unit Area) shall be expanded upon

such applicable date to incorporate such areas and formations. The date upon which the Unit Interval

(and, if applicable, Unit Area) is expanded in accordance with a particular proposed expansion or, if the

Unit Interval is not expanded, the end of the time period provided for a vote by the Unit

22



Operating Committee to approve an Expansion Proposal shall be referred to herein as the “Expansion

End Date” with respect to each such proposed expansion.

(4)



If:

(a)



the Unit Operating Committee has voted to approve an Expansion Proposal and areas and

formations for the expansion, but the Unit Operating Committee has failed to approve the

incremental addition to the quantity of OHIP contained within either Tract in the Unit Interval

as a consequence of the approved expansion, the quantity of OHIP contained within either

Tract in the Unit Interval and the Tract Participations shall not be adjusted in accordance with



such approved expansion (provided that such approved expansion shall be used in the next

Redetermination provided for in Article 5.5);



(5)



(b)



the Unit Operating Committee has voted to approve an Expansion Proposal and areas and

formations for the expansion, and the incremental addition to the quantity of OHIP contained

within either Tract in the Unit Interval as a consequence of the expansion, and the Expansion

End Date for such approved expansion is within the three hundred and sixty five (365) Days

prior to a Redetermination Call Date, the quantity of OHIP contained within either Tract in the

Unit Interval and the Tract Participations shall not be adjusted in accordance with such

approved expansion (provided that such approved expansion shall be used in the next

Redetermination provided for in Article 5.5);



(c)



the Unit Operating Committee has voted to approve an Expansion Proposal and areas and

formations for the expansion and the incremental addition to the quantity of OHIP contained

within either Tract in the Unit Interval as a consequence of the expansion, and the Expansion

End Date for such approved expansion is during a Redetermination Period, the quantity of

OHIP contained within either Tract in the Unit Interval and the Tract Participations shall be

adjusted automatically in accordance with the incremental addition to the quantity of OHIP

contained within either Tract in the Unit Interval that has been approved by the Unit Operating

Committee, provided that the adjustments shall not be applied until the applicable

Redetermination End Date, at which time they shall be applied to the quantities of OHIP and

Tract Participations as in effect at that time for each Tract in the Unit Interval; or



(d)



the Unit Interval is expanded in accordance with Article 5.3(B)(3) and none of Articles 5.3(B)

(4)(a) to (c) apply, the quantity of OHIP contained within either Tract in the Unit Interval and

the Tract Participations shall be adjusted automatically in accordance with the incremental

addition to the quantity of OHIP contained within either Tract in the Unit Interval as a

consequence of the expansion that has been approved by the Unit Operating Committee.



Within seven (7) Days after any incremental additions to the quantity of OHIP contained within either

Tract in the Unit Interval are to be applied pursuant to Article 5.3(B)(4)(c) or Article 5.3(B)(4)(d), the

Unit Operator shall calculate the revised Tract Participations in accordance with Article 5.5(A), using

such incremental additions plus the quantity of OHIP previously determined to be contained within each

Tract in the Unit Interval, without consideration of the expansion, as of the last Redetermination End

Date falling on or before the date on which the incremental additions are to be applied. Unit Interests

and Paying Interests shall be automatically revised in accordance with Articles 5.2(B) and 5.2(C) upon

an adjustment of Tract Participations in accordance with Article 5.3(B)(4).

23



(6)



(C)



(D)



Notwithstanding anything to the contrary in this Article 5.3(B):

(a)



in the case of any expansion for which the Expansion End Date occurs during a

Redetermination Period, the changes to the Unit Interval resulting from the expansion shall not

be considered for purposes of the applicable Redetermination and all facets of such expansion

shall be kept separate from such Redetermination (provided that such expansion shall be used

in any future Redetermination provided for in Article 5.5); and



(b)



no expansion may be proposed after the final Redetermination Call Date scheduled in

accordance with Article 5.5(D)(2)(e).



Notwithstanding anything to the contrary in this Article 5.3, no expansion may be proposed in accordance with

Article 5.3(B) prior to or upon the date upon which the Redetermination Trigger Date associated with the

Redetermination scheduled in accordance with Article 5.5(D)(1) occurs; except that an expansion may be

proposed in accordance with Article 5.3(B) during the period beginning on, and including, January 1, 2010, and

ending on, and including, February 28, 2010.



(E)



(1)



Upon any modification of the Unit Interval (and, if applicable, Unit Area) pursuant to Article 5.3(A),

but not, for the avoidance of doubt, Article 5.3(B), unless one Contract Group has lost its entire interest

in the Unit, a Redetermination of Tract Participations shall be carried out. Such Redetermination shall

follow the same procedure as, but shall be in addition to, the Redeterminations permitted under

Article 5.5, and shall be effective as of the date of modification of the Unit Area or Unit Interval.



(2)



Upon any modification of the Unit Interval (and, if applicable, Unit Area) pursuant to Article 5.3(B) the

rights and obligations of the Parties under this Agreement shall be based upon their Tract Participations,

Unit Interests and Paying Interests as determined in accordance with Articles 5.3(B)(4) and 5.3(B)(5).

For the avoidance of doubt, there will be no immediate adjustments for past Unit Account costs,

revenues and credits, contributions to any fund for Decommissioning of Unit Facilities, or past

production of Unit Substances, as described in Articles 5.6(B) and (C) and 5.7(B) and (C), following

any such change in Tract Participations pursuant to Article 5.3(B); however, the expanded Unit Area or

Unit Interval shall be considered in any future Redeteuninations provided for in Article 5.5.



(3)



As soon as practicable following the effective date of any adjustment of Tract Participations pursuant to

this Article 5.3(D), Exhibit A hereto shall be revised as necessary to reflect the results of such

adjustment.



In cases where one Contract Group loses its entire interest in the Unit as a consequence of the surrender,

expiration or termination of its Contract, the Unit Area shall not change but instead, as provided in the

Government Approval, GNPC shall become the Contract Group for that Contract, as if the entire Project Interest

with respect to such Contract had been Transferred pursuant to Article 12, and GNPC shall assume the

obligations with respect to such Transfer pursuant to Article 14.2(B)(1). For the avoidance of doubt, no consent

shall be required in such case under Article 14.2(B)(2). Where this Article 5.3(E) applies, GNPC shall be deemed

to have Contract Group Interests and Contract Group Paying Interests of one hundred percent (100%) with

respect to the surrendered, revoked, terminated or expired Contract, notwithstanding any terms of this Agreement

to the contrary.

24



5.4



Redetermination of Tract Participations

The respective Tract Participations as shown in Exhibit A hereto are subject to Redetermination in accordance with

Articles 5.5, 5.6 and 5.7. It is recognized that the Tract Participations are based on the data available at the time, that the

Redeterminations provided in Article 5.5 are to reflect additional or better data, that adjustments made under Article 5.6

are corrections of each Party’s respective share of costs incurred for the Unit Account, and that the adjustments to

entitlement to Unit Substances made under Article 5.7 are corrections to the Entitlements of the respective Parties based

on such corrected Tract Participations.



5.5



Conduct of a Redetermination

(A)



Tract Participations shall be redetermined by dividing the redetermined volumes of Original Hydrocarbon in

Place (“OHIP”) (as that term is defined in Exhibit F) in the Unit Interval underlying the respective Tracts by the

total redetermined volume of Original Hydrocarbon in Place in the Unit Interval (the “Redetermination Basis”).



(B)



The Parties shall follow the procedures in Exhibit E and Exhibit F to redetermine the Tract Participations. Any

redetermination decision by an Expert pursuant to Exhibit E shall be fmal and binding on the Parties.



(C)



Unit Interests and Paying Interests shall be automatically revised in accordance with Articles 5.2(B) and

5.2(C) upon a Redetermination of Tract Participations.



(D)



Redeterminations may take place only in the circumstances set forth in this Article 5.5(D), or as otherwise

expressly provided for in this Agreement.

(1)



Tract Participations shall be automatically redetermined in a Redetermination commencing on the date

that is the later of (i) six (6) Calendar Months prior to the anticipated Date of Commencement of



Commercial Production as such date has been determined by the IPT as of January 1, 2010, or

(ii) March 1, 2010.

(2)



Any Party or group of Parties holding individually or collectively a Unit Interest of at least ten percent

(10%) may require that the Tract Participations be redetermined by notice to all Parties within thirty

(30) Days after occurrence of any of the events listed below (the date of each such event hereinafter

referred to as a “Redetermination Call Date”):

(a)



on the date that is the later of (i) two (2) years after the Date of Commencement of

Commercial Production, or (ii) two (2) years after the Redetermination End Date associated

with the Redetermination scheduled in accordance with Article 5.5(D)(1);



(b)



on the date that is four (4) years after the Redetermination End Date associated with the

Redetermination Call Date scheduled in accordance with Article 5.5(D)(2)(a);



(c)



on the date that is five (5) years after the Redetermination End Date associated with the

Redetermination Call Date scheduled in accordance with Article 5.5(D)(2)(b);



(d)



on each subsequent date that is both (i) at least five (5) years after the Redetermination End

Date associated with the Redetermination Call Date scheduled in accordance with

Article 5.5(D)(2)(c) and (ii) five (5) years after the

25



Redetermination End Date associated with the most recent prior Redetermination Call Date;

and

(e)



on the earlier of: (i) January 1, 2024, or (ii) the date upon which sixty percent (60%) of the

Recoverable Oil has been extracted from the Unit Interval,



provided that, should any Redetermination Call Date scheduled in accordance with the events

described in Articles 5.5(D)(2)(a)-(d) be scheduled to occur at a time after either (i) January 1, 2022 or

(ii) the date upon which fifty percent (50%) of the Recoverable Oil has been extracted from the Unit

Interval, such Redetermination Call Date, and any Redetermination associated with such

Redetermination Call Date, shall not occur. Unit Operator shall provide written notice to all of the

Parties at least ninety (90) Days in advance of any Redetermination Call Date.

(3)



Notwithstanding the provisions of Article 5.5(D)(2), if any Redetermination Call Date occurs

following an Expansion End Date that (i) resulted in an expansion of the Unit Interval and (ii) such

expansion was not taken into account in the most recent preceding Redetermination under the

principles set forth in Article 5.3(B)(6)(a), then the applicable Redetermination associated with such

Redetermination Call Date shall occur automatically without being called by a Party or group of

Parties holding a collective Unit Interest of at least ten percent (10%).



(4)



Notwithstanding the other provisions of this Article 5.5:

(i)



the commencement of any Redetermination that can be called pursuant to Article 5.5(D)(2) or

pursuant to Article 5.3 shall be deferred, one time only, until the Expansion End Date(s) for

any Expansion Period(s) that is/are pending at the scheduled commencement of the

Redetermination;



(ii)



the commencement of the Redetermination that is to take place pursuant to Article 5.5(D)

(1) shall be deferred until the Expansion End Date for any expansion proposed during the

expansion proposal period described in Article 5.3(C); and



(iii)



any Redetermination (including any Redetermination pursuant to Article 5.3) that would

otherwise commence within twenty-four (24) Calendar Months of the Redetermination

Effective Date for the previous Redetermination shall be deferred until after the end of that



twenty-four (24) Calendar Month period.

For the avoidance of doubt, nothing in this Article 5.5(D)(4) shall restrict Unit Interval (and, if applicable, Unit

Area) expansion and the corresponding adjustment of Tract Participations pursuant to Article 5.3(B). Any

Redetermination or Redeterminations prevented from commencing by this Article 5.5(D)(4) may commence at

the end of such period, subject to the limitations set out in the proviso following Article 5.5(D)(2)(e). Even

though more than one Redetermination has been deferred in this manner, only one Redetermination may

commence at the end of the period as a result of the deferral.

(E)



A Redetermination shall be effective as of the first Day of the second Calendar Month following the Calendar

Month in which: (1) the Parties have unanimously approved Redetermination in writing or (2) the Expert has

notified the Parties of its final decision regarding the Redetermination in accordance with the procedures set

forth in Exhibit E (the “Redetermination Effective Date”). By virtue of approving the unitization of the Unit

Interval in accordance with the terms of this Agreement, the Government thereby approves the results of

subsequent Redeterminations conducted in accordance with the terms of this Agreement. The Redetermination

Effective Date for a particular Redetermination or, if applicable, the date upon which the thirty (30) Day period

26



following the Redetermination Call Date for such Redetermination ends without such Redetermination being

called or the date upon which the Redetermination process ends pursuant to Section 4.6 of Exhibit E, shall be

referred to as the “Redetermination End Date” with respect to each Redetermination or Redetelinination Call

Date, as applicable.

(F)



(G)



(1)



In the case of (a) any automatic Redetermination under Article 5.5(D)(1) or 5.5(D)(3), or any

Redetermination pursuant to Article 5.3(A), regardless of the final shift in Tract Participations, or

(b) any Redetermination under Article 5.5(D)(2) referred to an Expert by the Unit Operating

Committee pursuant to Section 4.5 of Exhibit E, regardless of the final shift in Tract Participations,

(c) any Redetermination under Article 5.5(D)(2)(a), or (d) any other Redetermination conducted under

Article 5.5(D)(2) that results in a shift of Tract Participations between the Tracts of one half of a

percentage point (0.5%) or more out of one hundred percent (100%), the costs and expenses of

Redetermination incurred and paid by the Unit Operator for the Unit Account (and not as a Party) and

required under the terms of Exhibit F, including the Expert Costs, shall be charged to the Unit Account

and borne by the Parties in accordance with their revised Paying Interests, and all other costs incurred

by the Parties in connection with the Redetermination shall be borne by the Parties which incurred

them.



(2)



In the case of a Redetermination conducted under Article 5.5(D)(2) that is not addressed under

Article 5.5(F)(1), the Party or group of Parties which requested the Redetermination pursuant to

Article 5.5(D) shall reimburse all direct costs incurred and paid by the other Parties to participate in

that Redetermination and all direct costs incurred and paid by the Unit Operator for the Unit Account

(and not as a Party) under the terms of Exhibits E and F, including the Expert Costs, plus interest on all

such costs from the date of expenditure to the date of reimbursement at the Agreed Interest Rate, plus

shall pay to the Unit Account for the sole benefit of the non-requesting Party or Parties, on a pro rata

basis according to their respective Unit Interests, an amount equal the greater of (a) five million U.S.

dollars ($5,000,000) or (b) ten (10) times the Expert Costs and, notwithstanding anything to the

contrary in Article 5.5, the Tract Participations shall not be adjusted.



(3)



All costs reimbursable under this Article 5.5 shall be subject to audit by any of the Parties within the

time period and in the manner established by the Unit Accounting Procedure for the audit of the Unit

Account, and each Party agrees to allow the other Parties to audit its books and records related to any

costs claimed by it under this Article.



From the Redetermination Effective Date pursuant to this Article 5.5, the rights and obligations of the Parties

under this Agreement shall be based upon their redetermined Tract Participations, revised Unit Interests and

revised Paying Interests, and, except as provided in Article 5.3(D), adjustments shall be made as provided in



Articles 5.6 and 5.7 as to costs incurred and revenues and credits received for the Unit Account, contributions to

any fund for Decommissioning of Unit Facilities, and Unit Substances received, prior to the Redetermination

Effective Date. As soon as practicable following the Redetermination Effective Date, Exhibit A hereto shall be

revised as necessary to reflect the results of such Redetermination.

5.6



Adjustments to Contributions following Redetermination

(A)



From, and including, the Redetermination Effective Date, all Unit Account expenditures shall be borne and paid

by GNPC and each JOA Group in accordance with their revised Paying Interests and any revenues and credits

(other than proceeds from the sale of Unit Substances) received for the Unit Account shall be allocated based

upon GNPC’s or such JOA Group’s revised Paying Interests.

27



(B)



With regard to Unit Account expenditures paid, and revenues and credits (other than proceeds from the sale of

Unit Substances) received for the Unit Account prior to, but not including, the Redetermination Effective Date:

(1)



Following the Redetermination Effective Date, GNPC’s and each JOA Group’s shares of such Unit

Account expenditures, and revenues and credits, shall be adjusted in accordance with the provisions of

this Article 5.6(B).



(2)



Within fifteen (15) Days of the Redetermination Effective Date, the Unit Operator shall furnish each

Party a statement showing:

(a)



GNPC’s and each JOA Group’s Monthly contributions to the Unit Account, less its Monthly

receipts (other than proceeds from the sale of Unit Substances) from the Unit Account, for

each Calendar Month up to but not including the Redetermination Effective Date;



(b)



GNPC’s and each JOA Group’s revised Paying Interest share of such Monthly contributions,

less GNPC’s or the JOA Group’s revised Paying Interest share of such Monthly receipts,

assuming the redetermined Tract Participations had always been in effect, but considering

Paying Interests separately for each specified operation, so that GNPC is not required to bear

a share of any Unit Account Costs with respect to any Unit Operation in excess of its Paying

Interest;



(c)



the amount of GNPC’s and each JOA Group’s net overpayment or underpayment to the Unit

Account for each Calendar Month, based upon the difference between its revised Paying

Interest share of net contributions and its actual net contributions, as determined in

accordance with Articles 5.6(B)(2)(a) and 5.6(B)(2)(b), and the aggregate amount owing by

or owing to GNPC and each JOA Group. “Contributions” for purposes of this Article 5.6,

shall include amounts deducted for the benefit of the Unit Account directly from the proceeds

of a Party’s share of Unit Substances prior to receipt by that Party, whether as part of a

financing of the Unit Facilities or otherwise. Where GNPC or either JOA Group has made a

late contribution but paid interest on the amount owing from the date due to the date paid at

the Agreed Interest Rate, such contribution shall be deemed to have been paid on the due date

for all purposes of this Article 5.6 and the interest paid shall not be considered for purposes of

this Article 5.6.



(3)



If GNPC or a JOA Group owes an aggregate underpayment, it shall pay that amount to the Unit

Operator in accordance with Article 5.6(B)(4), and upon receipt of any such amounts the Unit Operator

shall promptly pay the amounts owed to GNPC or the JOA Group that has made an aggregate

overpayment in proportion to the aggregate overpayment by each. All payments under this

Article shall be made in the same currency(ies) as the original contributions to which they relate.



(4)



If GNPC or a JOA Group owes any amount pursuant to Article 5.6(B)(2), GNPC or the Tract Operator

acting on behalf of the JOA Group shall pay that amount by bearing its proportionate share (based

upon the relative amounts owed by each such debtor) of sixty percent (60%) of the share of cash calls

made by the Unit Operator in respect of Unit Account expenses during the twelve (12) Calendar

Months following the Calendar Month of the Redetermination Effective Date (the “Redetermination



Effective Month”) that would otherwise be borne by GNPC, to the extent GNPC is an overpaying Party

or by the overpaying JOA Group with respect to their overpaying Paying Interests, until the earlier of

(a) the last Business Day of the twelfth (12th) Calendar Month following the Redetermination

Effective Month or (b) the entire amount owing has been paid in full.

28



If, following the last Business Day of the twelfth (12th) Calendar Month following the

Redetermination Effective Month, GNPC or a JOA Group continues to owe an underpayment pursuant

to Article 5.6(B)(2), GNPC or such JOA Group shall, commencing with the thirteenth (13th) Calendar

Month following the Redetermination Effective Month, bear its proportionate share (based upon the

relative amounts owed by each such debtor) of one hundred percent (100%) of the share of cash calls

made by the Unit Operator in respect of Unit Account expenses that would otherwise be borne by

GNPC, to the extent GNPC is an overpaying Party or by the overpaying JOA Group with respect to

their overpaying Paying Interests until the entire amount owing has been paid in full. In the event that

the entire amount owing by GNPC or either JOA Group has not been repaid by the second (2nd)

anniversary of the Redetermination Effective Date, the remaining balance shall be due and payable on

that anniversary. Until all such amounts have been paid in full, the Unit Operator shall provide each

Party with a Monthly statement showing the balance owed by, or owed to, each Party as of the end of

the prior Calendar Month. Such make-up payments are adjustments among the Parties for payments

that have already been incurred by the overpaying Parties and therefore shall not be subject to taxation.



(C)



5.7



(5)



GNPC’s and each JOA Group’s actual and redetermined Monthly contributions to the Unit Account

and receipts from the Unit Account, as described in Articles 5.6(B)(2)(a) and 5.6(B)(2)(b), shall, for

purposes of this Article 5.6, be increased by an amount equal to the interest that would accrue on such

contributions or receipts at the Agreed Interest Rate, calculated in each case from the last Day of the

Calendar Month in which each such contribution or receipt was made up to the Redetermination

Effective Date. This interest shall not be entered into the Unit Account, notwithstanding the terms of

Article 5.6(C), nor considered in future Redeterminations.



(6)



Should GNPC or either JOA Group owing any amount pursuant to Article 5.6(B)(2) fail to pay that

amount when due, no other Party shall be obligated to contribute the amounts in default under

Article 10.2, but all other rights and remedies of the Parties under Article 10 of the Agreement shall

apply with respect to such default.



Upon GNPC’s or any JOA Group’s payment of amounts owing under Article 5.6(B), the Unit Account shall be

adjusted to reflect that GNPC, as a paying Party, or such JOA Group paid its revised share of each such

contribution and received its revised share of each such receipt as of the time of the original contribution or

receipt. Upon GNPC’s or any JOA Group’s receipt of amounts owing under Article 5.6(B) the Unit Account

shall be adjusted to reflect that GNPC, as a receiving Party, or such JOA Group paid only its revised share of

each such contribution and received only its revised shares of each such receipt as of the time of the original

contribution or receipt. Such adjustments shall apply for all purposes of this Agreement, including Article 4.2,

provided that there shall be no retroactive adjustment of amounts payable to the Government under Article 4.3

but instead the payments made pursuant to this Article 5.6 shall be taken into account as increases in or

reductions to the expenditures by GNPC or such JOA Group in the Calendar Year of payment.



Adjustments to Entitlements following Redetermination

(A)



From, and including, the Redetermination Effective Date, each Tract shall be allocated its redetermined Tract

Participation share of Unit Substances, and the Unit Substances so allocated to the Tract to which the Parties in

the applicable Contract Group are entitled under their Contract shall be allocated among those Parties in

proportion to their Contract Group Interests.



(B)



With regard to production from the Unit prior to, but not including, the Redetermination Effective Date:

29



(1)



No compensation shall be paid to any Party for past variations in the price of Unit Substances.



(2)



Following the Redetermination Effective Date, each Tract’s share of Unit Substances produced up to,

but not including the effective date of Redetermination shall be adjusted in accordance with the

provisions of this Article 5.7(B).



(3)



The Unit Operator shall within fifteen (15) Days of the Redetermination Effective Date furnish each

Party and the Government with a statement showing:



(4)



(a)



the aggregate quantities of each type of Unit Substance allocated to each Tract, up to but not

including the Redetermination Effective Date;



(b)



the quantities of each type of Unit Substance which each Tract would have been allocated,

had the redetermined Tract Participations been in effect from the Date of Commencement of

Commercial Production until the date prior to the Redetermination Effective Date;



(c)



the difference between (i) the quantity that each Tract whose Tract Participation has been

adjusted upward was allocated and (ii) the quantity which such Tract would have been

allocated, had the redetermined Tract Participations been in effect, as determined in

accordance with Articles 5.7(B)(3)(a) and 5.7(B)(3)(b) (referred to as the “Adjustment

Quantity” with respect to each type of Unit Substance sold separately);



(d)



the Government’s and each Party’s actual shares of Monthly production of each type of Unit

Substance for each Calendar Month of production until the date prior to the Redetermination

Effective Date and revised shares of Monthly production of each type of Unit Substance for

each Calendar Month of production until the date prior to the Redetermination Effective Date,

assuming the redetermined Tract Participations had been in effect from the Date of

Commencement of Commercial Production;



(e)



the amount of the Government’s and each Party’s overproduction or underproduction of each

type of Unit Substance, based upon the difference between its revised share of such type of

Unit Substance, and the actual quantities it has produced, determined in accordance with

Article 5.7(B)(3)(d) (where consisting of an overproduction, such Person’s “Adjustment

Quantity Contribution” with respect to such type of Unit Substance); and



(f)



An estimate as to whether the remaining production of each type of Unit Substances will be

sufficient to correct the aggregate production allocations of each Tract to its redetermined

Tract Participation allocation over two (2) years under the respective Contracts, and, if the

remaining production of a type of Unit Substance will be sufficient, the minimum percentage

reallocation of the overproduced Tract’s share of that type of Unit Substance that is necessary

under Article 5.7(B)(4) to permit full recovery of the Adjustment Quantity over the next two

(2) years (the “Adjustment Percentage”).



Except to the extent insufficient quantities of any type of Unit Substances are being sold by any

overproduced Party under Spot Contracts to permit the adjustments described in this Article 5.7(B)

(4) without affecting the production dedicated to Long Term Contracts, such Party’s Adjustment

Quantity Contribution with respect to that type of Unit Substances shall be subtracted from the relevant

quantity of Unit Substances being sold by such Party under Spot Contracts which such Party would

otherwise have been

30



allocated, beginning from the first Day of the third Calendar Month following the Calendar Month of

the Redetermination Effective Date (the “Adjustment Date”) and continuing onwards and shall be

added to the quantity and type of Unit Substances, as applicable, which the Tract whose Tract

Participation has been adjusted upward would otherwise be allocated, beginning from the Adjustment

Date and continuing onwards, in each case in the manner described in the next sentence. Starting on



the Adjustment Date the Tract whose Tract Participation is increased shall additionally receive the

Adjustment Percentage of the production of each type of Unit Substance which each overproduced

Party would otherwise be allocated with respect to the Tract with the decreased Tract Participation

following the Adjustment Date, until such overproduced Party has returned its entire Adjustment

Quantity Contribution for such type of Unit Substance. The share of the Adjustment Quantity for each

type of Unit Substance to which the underproduced Contract Group is entitled under its Contract shall

be allocated among the Parties in that Contract Group in proportion to the underproduced balance of

each Party within the Contract Group.

(5)



Where quantities of any type of Unit Substance which are attributable to any overproduced Party that

are being sold under Long Term Contracts must be used to recover such Party’s Adjustment Quantity

Contribution at the rate specified in Article 5.7(B)(4), then subject to the terms of the applicable Long

Term Contract, the Government and the Contract Group for the underproduced Tract shall be assigned

a percentage of the rights that the overproduced Party holds in each applicable Long Term Contract

sufficient to permit each of them to receive the full percentage of the redetermined production

allocation of that type of Unit Substance to which they are entitled under Article 5.7(B)(4) and the

applicable Contract. Such assignment shall be effective as of the Adjustment Date. Each Party (and, by

approval of this Agreement, the Government) agrees that each Long Term Contract that it enters into

with respect to the sale of Unit Substances shall contain language authorizing the assignment of

interests to the Government and the Contract Group for the underproduced Tract contemplated herein

without further approval. Each Party shall cooperate to obtain any approvals that are necessary or

advisable, notwithstanding the preceding sentence, from any purchaser of Unit Substances and shall

execute such instruments and take such actions as shall be reasonably required to accomplish such

assignment (and, if applicable, novate the underproduced Contract Group and the Government into the

Long Term Contract).



(6)



If (a) at the time of termination of this Agreement an Adjustment Quantity Contribution remains to be

recovered from any Person or (b) an overproduced Party elects to withdraw pursuant to Article 15 prior

to satisfying its entire Adjustment Quantity Contribution, then the overproduced Party (or, in the event

of the termination of this Agreement, each overproduced Person) shall pay a cash settlement to the

underproduced Contract Group and the Government, equal in aggregate to the current value of its

remaining Adjustment Quantity Contribution with respect to each type of Unit Substances using the

average weighted price for all sales of that type of Unit Substance by the Parties during the final three

(3) Calendar Months of sales prior to such withdrawal or the termination of this Agreement.



(7)



Any additional allocation of production to a Party pursuant to this Article 5.7(B) is conditional upon

the Party claiming production being current in its payments to the Unit Account. In the event an

overproduced Person or Persons are to make a cash payment upon termination or withdrawal pursuant

to Article 5.7(B)(6), each underproduced Person or Persons shall simultaneously pay to the

overproduced Person or Persons required to make such cash payment the underproduced Person’s

share(s) of any amount that remains owing pursuant to Article 5.6(B)(4).

31



(8)



(C)



The Unit Operator shall provide Monthly statements to all Parties and to the Government showing the

remaining Adjustment Quantity and Adjustment Quantity Contributions for each type of Unit

Substance as at the end of the prior Month.



For the avoidance of doubt, expenditures for the Unit Account from the Redetermination Effective

Date until recovery of the Adjustment Quantity shall be borne and paid as set forth in Article 5.6(A),

notwithstanding the fact that the underproduced Tract will have an allocation of Unit Substances in excess of its

redetermined Tract Participation.

ARTICLE 6

NON-UNIT OPERATIONS, USE OF UNIT FACILITIES



6.1



Right to Conduct



6.2



(A)



Subject to the conditions under this Article 6 and the terms of its applicable Joint Operating Agreement, each

Party or JOA Group has the right, at its own risk and expense, to conduct Non- Unit Operations within the

portion of the Unit Area lying within the Tract or Tracts in which it holds an interest. Except as otherwise

expressly provided in Article 6.7, all Non-Unit Operations shall be conducted on behalf of such Party or JOA

Group by the Tract Operator for such Party’s or JOA Group’s Tract or by GNPC if GNPC so elects to conduct

Non-Unit Operations pursuant to its right to conduct sole risk operations in accordance with Article 9 of the

applicable Contract (or, if those Parties participating in the Non-Unit Operation so determine, by Anadarko,

provided that the ability to conduct such operations is personal to Anadarko and may not be assigned).



(B)



The conduct of Unit Operations shall always have precedence over the conduct of Non-Unit Operations. Each

Non-Unit Operation shall be conducted in a manner that does not have a material adverse effect on Unit

Operations.



Conditions to Conduct

(A)



A JOA Group or a Party wishing to conduct Non-Unit Operations must give the Parties and the Unit Operator

not less than forty-five (45) Days prior notice of its intention to undertake such operations and provide the

location, the nature of the works, the estimated commencement date and other pertinent information.



(B)



No Non-Unit Operation (except use of Unit Facilities, which is governed by Article 6.5) may proceed without

the approval of the Unit Operating Committee, except operations which GNPC may be entitled to conduct on a

sole risk basis under Article 9 of either Contract. The Unit Operating Committee shall approve or reject any

proposal to conduct Non-Unit Operations within thirty (30) Days of its submission to the Unit Operating

Committee. The proposal shall be deemed approved unless Parties having sufficient votes to prevent a passmark

vote under Article 8.9(A)(1) notify the Unit Operator and the other Parties within such thirty (30) Day period of

their vote against the proposal. A Party may vote against a Non-Unit Operation only if, in its reasonable opinion,

the Non-Unit Operations will cause a material adverse effect on Unit Operations. A Party’s vote against a NonUnit Operation must specifically describe the material adverse effect or effects (which may include, by way of

example and not limitation, the Non-Unit Operation’s failure to have a drilling and casing program that

adequately protects the Unit Interval, physical conflict (surface or subsurface) between the proposed location of

the Non-Unit Operation and the location of Unit Facilities, or the conduct of an unreasonably dangerous

operation in the vicinity of Unit Operations) that form the basis for its disapproval. Unit Operating Committee

approval shall likewise be required for any material deviation from the announced program for such Non- Unit

Operation. In the event that the proposed Non-Unit Operation or material deviation from an approved Non-Unit

Operation involves the use of a drilling rig or vessel that is standing by in the Unit Area or in a Contract Area

specifically for the purpose of conducting such Non-Unit Operation, the foregoing provisions shall apply in

respect of such approval, provided that the

32



thirty (30) Day approval period provided in this Article 6.2(B) may be shortened to seventy two (72) hours at

the request of the JOA Group or Party wishing to conduct the Non-Unit Operations.

(C)



Non-Unit Operations shall be conducted under the provisions of the Contract and Joint Operating Agreement

applicable to the JOA Group or Party conducting the Non-Unit Operations and shall be at the cost and risk of

that JOA Group and/or Party.



(D)



Non-Unit Operations must not be conducted, or must cease to be conducted, as the case may be, if the Unit

Operator or the Unit Operating Committee determines that the Non-Unit Operations in question present an

imminent threat of damage to the Unit Interval or an imminent threat of loss of life, injury, property damage or

damage to the environment and so notifies the Party or JOA Group conducting such Non-Unit Operations. Such

Non-Unit Operations may not be commenced or resumed until, and on such terms and conditions as, the Unit

Operating Committee determines A Party may propose to commence or resume any Non-Unit Operation

prevented or suspended as a result of a Unit Operator or a Unit Operating Committee determination under this

Article by notice to all Parties, and the proposal shall be deemed approved by the Unit Operating Committee

unless Parties having sufficient votes to prevent a passmark vote under Article 8.9(A)(1) notify the Unit

Operator and the other Parties within thirty (30) Days from the date of receipt of such proposal of their vote

against the commencement or resumption of such Non-Unit Operation. A Party may vote against



commencement or resumption of such Non-Unit Operation only if, in its reasonable opinion, the Non-Unit

Operation will continue to present an imminent threat of damage to the Unit Interval or an imminent threat of

loss of life, injury, property damage or damage to the environment. A Party’s vote against commencement or

resumption of such Non-Unit Operation must specifically describe the threat or threats that form the basis for its

disapproval. In the event that the proposed commencement or resumption of a Non-Unit Operation involves the

use of a drilling rig or vessel that is standing by in the Unit Area or in a Contract Area specifically for the

purpose of conducting such Non-Unit Operation, the foregoing provisions shall apply in respect of such

approval, provided that the thirty (30) Day approval period provided in this Article 6.2(D) may be shortened to

seventy two (72) hours at the request of the JOA Group or Party wishing to conduct the Non-Unit Operations.

(E)



Any Non-Unit Operation that will penetrate the Unit Interval must be conducted with such precautions as are

reasonably necessary to protect the Unit Interval. The JOA Group or Party conducting the Non-Unit Operation

that will penetrate the Unit Interval shall include in its notice under Article 6.2(A) the following program:

(1)



The surface and bottomhole locations of the wellbore;



(2)



The well prognosis;



(3)



The proposed well and casing programs; and



(4)



A description of the method proposed for protecting the Unit Interval.



The JOA Group or Party shall also furnish any other information with respect to the Non-Unit Operations that is

reasonably requested by the Unit Operator or the Unit Operating Committee. The JOA Group or Party shall

provide a second notice to all Parties between seventy-two (72) and forty-eight (48) hours prior to spudding the

well or commencing the wellbore operation. In the event of any proposed deviation from the announced

program the JOA Group or Party shall promptly provide a notice to all Parties. No Non-Unit Well may be

completed in the Unit Interval. For the avoidance of doubt, the Unit shall have no rights with respect to a NonUnit Well that encounters Hydrocarbons in Pressure Communication with the Unit Interval except as provided

in Article 6.8.

33



6.3



Responsibility

The JOA Group or Party participating in Non-Unit Operations shall:

(A)



Bear the entire cost and liability of conducting the Non-Unit Operation (without prejudice to any allocation of

such cost and liability among such JOA Group or Parties under the terms of the applicable Joint Operating

Agreement and any other agreements among some or all of them);



(B)



Indemnify the non-participating Parties and the Unit Operator in its capacity as such from any and all costs and

liabilities arising from or incurred incident to such Non-Unit Operation including damage to the Unit Interval,

Consequential Loss and Environmental Loss, even though caused in whole or in part by a pre-existing defect, or

the negligence (whether sole, joint or concurrent), Gross Negligence/Willful Misconduct, strict liability or other

legal fault of any indemnitee; provided that, if the Non-Unit Operations have been conducted substantially in

accordance with a program approved by the Unit Operating Committee under Article 6.2(E), such indemnity

shall not extend to, and the JOA Group or Party conducting the Non-Unit Operations shall not be liable for, any

damage inflicted on the subsurface, including the Unit Interval, or any Consequential Losses, such as deferral of

production, resulting from such subsurface damage;



(C)



Keep the Unit Area and Unit Facilities free and clear of all Encumbrances of every kind created by or arising

from such Non-Unit Operation,



(D)



Obtain all necessary consents from the Government and other Third Parties, make any necessary reports and

returns to the Government and other Third Parties, and otherwise ensure compliance with the terms of the

relevant Contract and Laws/Regulations in connection with Non-Unit Operations; and



(E)



6.4



Procure and maintain for such operation all insurance in the types and amounts required by the Contracts and

the Laws/Regulations and such other insurance as may reasonably be required by the Unit Operating

Committee, subject to the terms of Articles 7.7(G), (H) and (I), applied mutatis mutandis.



Data

Subject to the Laws/Regulations and the terms of the relevant Contract, each JOA Group or Party shall have the right to

use all information and data obtained by such JOA Group or Party from Non-Unit Operations, but data and information

from Non-Unit Operations covering the Unit Area or relevant to the Unit Operations shall, subject to the

Laws/Regulations and the terms of the applicable Contract and of the relevant data license, if any, be made available

without undue delay to the Parties free of charge and on a confidential basis under an irrevocable, non-exclusive license

that is transferable only to successor Parties under this Agreement. This license shall constitute part of the Unit Data.

Access to any other data and information from Non-Unit Operations shall be subject to the mutual agreement of the

relevant Parties.



6.5



Use of Unit Facilities

(A)



Subject to the provisions of this Article, Unit Facilities shall only be used for Unit Operations.



(B)



Notwithstanding Article 6.5(A), the Unit Operating Committee may, subject to such Person’s complying with

the provision of this Article 6, authorize a Party or a Third Party to use spare capacity in Unit Facilities

consisting of facilities for production, processing or transportation of Hydrocarbons (excluding Unit Wells) or of

unused land available at any shore base acquired for the Unit Account, on such terms and conditions as it

determines provided that, in the case of proposed use by a Party or JOA Group as a Non-Unit Operation, no

Party’s approval in the Unit Operating Committee vote shall be unreasonably withheld.

34



(C)



(D)



The use of Unit Facilities may only be authorized under Article 6.5(B) if:

(1)



Such use does not cause a material adverse effect on Unit Operations in the opinion of the Unit

Operating Committee;



(2)



Such use does not involve a breach of any relevant Laws/Regulations, either Contract or any

Associated Agreement;



(3)



An appropriate fee (except to the extent already provided for in Article 6.5(F) or Article 6.5(G)) and

other acceptable terms and conditions for such use are agreed between the Unit Operating Committee

and the Party or a Third Party and the agreed fees are paid as and when due and credited to the Unit

Account; and



(4)



Such use will not prevent the commingled production stream from meeting any minimum quality

standards established by the Unit Operating Committee or by any contract for the sale of Unit

Substances pursuant to which all Parties are sellers.



Where Crude Oil or Natural Gas from multiple sources are commingled in the Unit Facilities, each owner of

such commingled substances shall retain title to a share of the commingled substances equal to the share of each

such substance that the quantity of such substance supplied to the Unit Facilities by such owner at the time in

question (assuming that the first quantities in are the first quantities out) bears to the total quantity of the

substance in the Unit Facilities at the time. In the event losses of Crude Oil or Natural Gas occur in the Unit

Facilities:

(1)



Losses that occur as a result of a single identifiable event shall be attributed to each owner of the

commingled substances in the ratio that such owner’s quantity of each substance in the Unit Facilities

at the time the loss occurs (assuming the first quantities in are the first quantities out) bears to the total

quantity of the substance in the Unit Facilities at the time the loss occurs.



(2)



All losses due to shrinkage, evaporation, interface losses, or otherwise that are not addressed in



Article 6.5(D)(1) shall be attributed to each owner of each substance using the Unit Facilities in the

ratio that such owner’s quantity of that substance passing through the Unit Facilities during the

applicable Calendar Month bears to the total quantity of such substance passing through the Unit

Facilities during the applicable Calendar Month.

(E)



Should any Party entitled to use capacity in the Unit Facilities pursuant to this Article 6.5 propose to introduce

into the Unit Facilities at any time any Crude Oil or Natural Gas meeting the minimum standards for entry into

the Unit Facilities but of a materially different quality than the Crude Oil or Natural Gas already utilizing the

Unit Facilities, the Parties shall meet to discuss the desirability of establishing a quality adjustment procedure to

provide each user with a share of each commingled substance having a value that is equal to the value of the

Crude Oil or Natural Gas, as applicable, that was delivered by such user into the Unit Facilities (less losses as

described in Article 6.5(D)).



(F)



Each Party using up to its Unit Interest share of total capacity for producing, processing or transporting NonUnit Production shall pay to the Unit Account a Monthly amount equal to that portion of the Monthly cost of

maintaining, operating and financing the Unit Facilities used by such Party that the capacity used by such Party

(excluding its share of Unit Production) bears to the total capacity of such Unit Facilities used by all users

during such Calendar Month, but without payment of any other fee under this Article 6.5. Otherwise, each Party

using Unit Facilities for producing, processing or transporting Non-Unit Production pursuant to this Article 6.5

shall pay to the Unit Account Monthly throughout the period of use an arm’s-length fee based upon arm’s length

Non-Affiliated Third Party charges for similar services in the vicinity of

35



the Unit Area. If no such arm’s-length rates for such services are available, then the Party desiring to use Unit

Facilities pursuant to this Article 6.5 shall pay to the Unit Account a Monthly fee equal to (a) that portion of the

total cost of the Unit Facilities made available to such Party, plus the Unit Operator’s latest estimate of the

Decommissioning Costs for such Unit Facilities as furnished to the Parties pursuant to Exhibit D, divided by the

number of months of useful life established for such Unit Facilities under the tax law of the country of

operations, that the capacity made available to such Party on a fee basis under this Article (whether or not

actually used) bears to the total capacity of the Unit Facilities (which fee shall continue regardless of the number

of months of use or whether the capital costs or Decommissioning Costs have previously been recovered in

some other manner) plus (b) that portion of the Monthly cost of maintaining, operating and financing the Unit

Facilities used by such Party that the capacity used by such Party on a fee basis under this Article 6.5 during

such Calendar Month bears to the total capacity of such Unit Facilities used by all users during such Calendar

Month.

(G)



6.6



Each Party may use land available at any shore base, acquired for the Unit Account but not being used for Unit

Operations or any other Non-Unit Operations being undertaken at that time, for purposes of Non-Unit

Operations and shall pay to the Unit Account Monthly for the period of use an arm’s length rental payment

based upon arm’s length Non-Affiliated Third Party charges for similar land rental in the vicinity of the shore

base. If no such arm’s length rental rates for use of land in the vicinity of the shore base are available, and the

Parties are unable to agree on the rental rate, any Party may by notice to the other Parties require that the

decision on the arm’s length rental rate be referred to an Expert pursuant to Article 20.4.



Expansion or Modification of Unit Facilities

Subject to any necessary approval under its Contract and the Laws/Regulations, and provided that safety and Unit

Operations are not impaired, any JOA Group or Party may propose to modify or to expand the capacity of the existing

Unit Facilities at its sole risk and expense. In this event, the JOA Group or Party shall present a proposal to the Unit

Operating Committee for its consideration, containing at least the information required by Article 6.2(A), and such

modification or expansion may not take place until the Unit Operating Committee has granted its approval, not to be

unreasonably withheld. The terms of Articles 6.2(C), 6.2(D), and 6.3 shall apply to any such modification or expansion

operation.



6.7



Tie-in of Facilities

(A)



Subject to any necessary approval under its Contract and the Laws/Regulations, and provided that safety is not



impaired and there is no material adverse effect on Unit Operations, any JOA Group or Party entitled to use

capacity in the Unit Facilities may propose to tie-in Non-Unit Facilities to the Unit Facilities. In this event, the

JOA Group or Party shall present a proposal to the Unit Operating Committee for its consideration, containing

at least the information required by Article 6.2(A), which proposal shall be deemed approved unless within

thirty (30) Days of receipt of such proposal Parties having sufficient votes to prevent a passmark vote under

Article 8.9(A)(1) notify the Unit Operator and the other Parties of their vote against the proposal. A Party may

vote against a tie-in proposal only if, in its reasonable opinion, the tie-in proposal would impair safety of or have

a material adverse effect on Unit Operations. A Party’s vote against a tie-in proposal must specifically describe

the impairment or material adverse effect or effects that form the basis for its disapproval. The terms of Articles

6.2(C), 6.2(D), and 6.3 shall apply to any such tie-in operation.

(B)



If production operations are already on-going under this Agreement, a Non-Unit Operation shall not lessen the

production from the then existing Unit Wells and or the capacity used by such production in the Unit Facilities

except for the period of time necessary to tie-in facilities that are part of the Non-Unit Operation. If, during the

tie-in of Non-Unit Facilities with the existing Unit Facilities, the production of Hydrocarbons from other preexisting operations is interrupted as a result, then the Parties to the Non-Unit Operation shall compensate the

parties to such existing operations for such temporary deferral of production by paying a fee at a rate approved

by the Unit

36



Operating Committee for each Day or fraction thereof in excess of one hour during which production of

Hydrocarbons is interrupted.



6.8



(C)



The Unit Operator shall conduct all tie-ins of Non-Unit Facilities to Unit Facilities. The Unit Operator, in

conducting such tie-ins, shall bear no liability or cost of such Non-Unit Operations except as provided in

Article 7.6, which shall apply, mutatis mutandis, to the Unit Operator’s conduct of such Non-Unit Operations.



(D)



Principles, procedures and requirements regarding metering and sampling shall be established by the Unit

Operating Committee. If the Parties to the Non-Unit Operations and the Unit Operating Committee cannot agree

on the principles, procedures and requirements for metering and sampling within thirty (30) Days after the

proposal for the tie-in was first submitted by the Parties to the Non-Unit Operation, the issues in dispute shall be

referred to an Expert for resolution in accordance with the terms of Article 20.4.



(E)



The cost of decommissioning of facilities installed by the Parties participating in a Non-Unit Operation shall be

borne by such Parties.



Abandonment of Non-Unit Wells

If any JOA Group or Party desires to abandon permanently any Non-Unit Well that penetrates the Unit Interval, that JOA

Group or Party will give notice thereof to the Unit Operator and the other Parties not later than (a) forty-eight (48) hours

prior to such abandonment, in the case of a well with a rig on location or (b) thirty (30) Days prior to such abandonment,

in all other cases, stating in the notice that the well is to be abandoned and offering it to the Unit on the terms set forth in

this Article. The Unit shall have an option, to be exercised by notice to the abandoning JOA Group or Party on or before

the end of the applicable period, to take over the Non-Unit Well for the Unit Account (in which event the well shall

become a Unit Well) on the terms set forth in this Article. Any decision by the Unit to exercise the option shall be made

by a vote of the Unit Operating Committee. If the Unit elects to take over the well, the Parties shall assume responsibility

for the Unit Account for all costs of plugging and abandoning the well and shall indemnify and hold harmless the JOA

Group or Party which previously held the well against all costs, expenses, liabilities and losses associated with such

plugging and abandonment (except such JOA Group’s or Party’s Paying Interest shares of those costs, expenses,

liabilities and losses). Except as provided in the immediately preceding sentence, the Parties shall not be required to make

any payment or undertake any obligation in connection with such transfer. Any Non-Unit Well transferred to the Unit

pursuant to this Article is transferred on an “as is” basis without warranties, express or implied, including warranties as to

merchantability, fitness for a particular purpose, or conformity to models or samples of materials.

ARTICLE 7

UNIT OPERATOR



7.1



Designation of Unit Operator and Technical Operator

Tullow is designated as Unit Operator and agrees to act as such in accordance with this Agreement. Kosmos is designated

as the IPT Technical Operator and agrees to act as such in accordance with this Agreement. The Parties agree that

additional Technical Operators may be appointed by a decision of the Unit Operating Committee from time to time, for

the purposes designated in the instrument of appointment, subject to the terms and conditions of this Agreement and with

the prior approval of the Minister and GNPC, such approval not to be unreasonably withheld or delayed.

37



7.2



Rights and Duties of Unit Operator and Technical Operator

(A)



(B)



(1)



Subject to the terms and conditions of this Agreement, Unit Operator shall have exclusive charge of

and responsibility for and shall conduct all Unit Operations, but excluding Technical Operations. Unit

Operator may employ independent Subcontractors and agents (which independent Subcontractors and

agents may include an Affiliate of Unit Operator, a Non-Operator, or an Affiliate of a Non-Operator) in

such Unit Operations.



(2)



Subject to the terms and conditions of this Agreement, including Articles 9.3(A), 9.5 and 9.9, each

Technical Operator shall have exclusive charge of and responsibility for and shall conduct all Technical

Operations entrusted to it, including, in the case of IPT Technical Operator, IPT Technical Operations.

Technical Operator may employ independent Subcontractors and agents (which independent

Subcontractors and agents may include an Affiliate of Technical Operator, a Non-Operator, or an

Affiliate of a Non- Operator) in such Technical Operations.



In the conduct of Unit Operations Unit Operator and each Technical Operator shall, as applicable:

(1)



Perform Unit Operations in accordance with the provisions of all applicable Laws/Regulations, this

Agreement, the Contracts, the Unit Development Plan, relevant Work Programs and Budgets and the

decisions of the Unit Operating Committee not in conflict with this Agreement;



(2)



Conduct all Unit Operations in a diligent, safe and efficient manner in accordance with such good and

prudent petroleum industry practices and field conservation principles as are generally followed by the

international petroleum industry under similar circumstances;



(3)



Exercise due care with respect to the receipt, payment and accounting of funds in accordance with

good and prudent practices as are generally followed by the international petroleum industry under

similar circumstances;



(4)



Comply with the requirements of Article 20 of each Contract with respect to the acquisition of plant,

equipment, services and supplies and with the requirements of Articles 21.2 and 21.3 of the WCTP

Contract and Articles 21.3 and 21.4 of the DWT Contract with respect to the employment and

secondment of Ghanaian and GNPC personnel;



(5)



Subject to Article 7.6 and the Unit Accounting Procedure, neither gain a profit nor suffer a loss as a

result of being an Operator in its conduct of Unit Operations, provided that each Operator may rely

upon Unit Operating Committee approval of specific accounting practices not in conflict with the Unit

Accounting Procedure;



(6)



In the case of Unit Operator, perform the duties for the Unit Operating Committee set out in Article 8,

and prepare and submit to the Unit Operating Committee proposed Work Programs and Budgets and (if

required) AFEs, as provided in Article 9;



(7)



In the case of Unit Operator, acquire all permits, consents, approvals, and surface or other rights that

may be required for or in connection with the conduct of Unit Operations;



(8)



Upon receipt of reasonable advance notice, permit the representatives of any of the Parties to have at

all reasonable times during normal business hours and at their own risk and expense reasonable access

to the Unit Operations with the right to observe all Unit Operations and to inspect all Unit Facilities

and to conduct financial audits as provided in the Unit Accounting Procedure;

38



(9)



Timely pay and discharge all liabilities and expenses incurred in connection with Unit Operations and

use its reasonable endeavors to keep and maintain the Unit Facilities free from all liens, charges and

encumbrances arising out of Unit Operations;



(10)



Carry out the obligations of Unit Operator or Technical Operator, as applicable, pursuant to this

Agreement, including preparing and furnishing such reports, Work Programs and Budgets, AFEs,

records and information as may be required;



(11)



In the case of Unit Operator, have, in accordance with any decisions of the Unit Operating Committee,

and subject to the rights and duties of the Tract Operators as described in Article 7.2(D)(11), the

exclusive right and obligation to represent the Parties in all dealings with the Government, excluding

any dealings with GNPC as a Unit Interest or Paying Interest owner, with respect to matters arising

under this Agreement and Unit Operations. Unit Operator shall notify the other Parties as soon as

possible of such meetings. Subject to the Agreement and any necessary Government approvals, NonOperators shall have the right to attend any meetings with the Government with respect to such

matters, but only in the capacity of observers. Nothing contained in this Agreement shall restrict any

Party from holding discussions with the Government with respect to any issue peculiar to its particular

business interests arising under the Contracts or this Agreement, but in such event such Party shall

promptly advise the Parties, if possible, before and in any event promptly after such discussions,

provided that such Party shall not be required to divulge to the Parties any matters discussed to the

extent the same involve proprietary information or matters not affecting the Parties;



(12)



In the case of Unit Operator, in conjunction with the Unit Operating Committee, collaborate with

GNPC in accordance with the gas commercialization provisions of the Approved Phase 1

Development Plan;



(13)



In case of an emergency (including a significant fire, explosion, Natural Gas release, Crude Oil

release, or sabotage; incident involving loss of life, serious injury to an employee, Subcontractor, or

Third Party, or serious property damage; strikes and riots; or evacuations of Operator personnel):

(i) take all necessary and proper measures for the protection of life, health, the environment and

property; and (ii) as soon as reasonably practicable, report to all other Parties the details of such event

and any measures such Operator has taken or plans to take in response thereto;



(14)



Establish and implement pursuant to Article 7.14 an HSE plan to govern Unit Operations which is

designed to ensure compliance with applicable HSE laws, rules and regulations and this Agreement;



(15)



Include, to the extent practical, in its contracts with independent Subcontractors and to the extent

lawful, provisions which:



(16)



(a)



establish that such Subcontractors can only enforce their contracts against the Unit Operator

or Technical Operator, as applicable;



(b)



permit Unit Operator or Technical Operator, as applicable, on behalf of itself and NonOperators, to enforce contractual indemnities against, and recover losses and damages

suffered by them (insofar as recovered under their contracts) from, such Subcontractors; and



(c)



require such Subcontractors to take insurance required by Article 7.7(I).



In the case of the Unit Operator and the IPT Technical Operator, jointly develop appropriate

procedures for commissioning, transition and handover in respect of Unit



39



Facilities and reservoir development plans and reservoir management for each portion of the Unit

Development Plan and jointly carry out acceptance and sign-off processes for Unit Facilities with

Subcontractor entities;



(C)



(17)



In the case of the Unit Operator and the IPT Technical Operator, respective representatives shall meet

and jointly develop appropriate procedures for the smooth and timely transition of the reservoir

development plan and the reservoir management plan for the first phase and each subsequent phase of

the Unit Development Plan in the period prior to commencement of first production (and each

subsequent commencement of first production) to ensure the Unit Operator is fully prepared to

optimize the reservoir management plan to maximize commercial reserves recovery;



(18)



In the case of Unit Operator, in conjunction with the Unit Operating Committee, supply the Tract

Operators with all reports and information necessary for the Tract Operators to fulfill their reporting

obligations under their respective Contracts;



(19)



In the case of Unit Operator, allow the Government access to reports and information with respect to

Unit Operations and to the Unit Area in accordance with the teems and conditions of the Contracts.



Unit Operator has established the following work teams made up of employees, Secondees, Subcontractors,

consultants and agents, performing the functions set forth below, as part of its conduct of Unit Operations:

(1)



Ghana operating team, having the following responsibility with respect to Unit Operations:

(a)



Drilling, testing and completion of Development Wells within the Unit Interval;



(b)



Logistics and local procurement;



(c)



Shore base operations;



(d)



Dispatch (marine and air);



(e)



Importation and customs;



(f)



Local permits, filings and liaison with GNPC regarding same;



(g)



Warehousing and supply yard;



(h)



Community relations and services;



(i)



Overall in-country shore base support of the development activities (including Unit Facilities

installation);



(j)



Overall support of drilling and production activities; and



(k)



Providing services, on such terms as may be agreed by Unit Operator and the Tract Operator,

as requested by either Tract Operator for drilling and other operations on such Tract

Operator’s Contract Area but outside of the Unit Interval, with the costs of such services to be

invoiced to such Tract Operator, provided that Unit Operator may decline to provide such

services in the event that, acting reasonably, Unit Operator considers that to do so would have

a material adverse effect on the Unit Interval or Unit Operations.

40



(2)



Production operations team, having the following responsibilities with respect to Unit Operations:



(3)



(4)



(D)



(a)



Production operations with respect to production of Unit Substances;



(b)



Unit Facilities operations and maintenance;



(c)



Scheduling offtake activities;



(d)



Production reporting to the Tract Operators;



(e)



Production forecasting; and



(f)



Planning and scheduling workovers and other remedial well operations.



A Technical Team of sub-surface and facilities personnel, having the following responsibilities with

respect to Unit Operations:

(a)



Prior to commencement of first production from each phase under the Unit Development

Plan, the transition and handover from the IPT Technical Operator in a controlled manner of

the complete responsibility for the sub-surface technical studies and execution of the

remaining Unit Development Plan work in each such phase; and



(b)



After each such handover, continued reservoir management, optimization and further

planning and selection of infill well locations and workover requirements which may be

additional and incremental to the Unit Development Plan and the Unit Facilities, and are in

the immediate area developed by respective phases of the Unit Development Plan.



Gas commercialization team, having responsibility for gas commercialization activities including

liaising with GNPC as envisaged by the Approved Phase 1 Development Plan.



IPT Technical Operator is responsible for the functions set forth below (“IPT Technical Operations”) and has

established an integrated project team (“IPT”), made up of employees, Secondees, Subcontractors, consultants

and agents, to assist in the performance of IPT Technical Operations:

(1)



Evaluate and characterize the subsurface resource in the Unit Interval and develop the best depletion

plan;



(2)



Planning and selection of locations of all development drilling within the Unit Interval up to the point

of the start of transition from the IPT Technical Operator to the Unit Operator and then, jointly with the

Unit Operator, during the transition until the completion of the handover of all sub-surface studies and

operations to the Unit Operator (see Article 7.2(C)(3)) prior to commencement of first production;



(3)



Front end engineering and design work for the Unit Facilities (other than Unit Wells);



(4)



Propose amendments to the Unit Development Plan to the Unit Operator for submission to the Unit

Operating Committee, including a Development Unit Work Program and Budget and proposed first

production date for the additional phases of development covered by such amendment;



(5)



Detailed engineering and design work for the Unit Facilities;

41



(6)



Providing support to the Unit Operator in respect of gas commercialization activities to be carried out

by the Contractor (as such term is defined in the Contract) under the Unit Development Plan (including

supporting Unit Operator in its collaboration with GNPC in accordance with the Approved Phase 1

Development Plan);



(7)



Organize and conduct the procurement and tender processes for the Unit Facilities (including

potentially some work on Unit Wells);



(8)



Manage the fabrication, inspection, testing, installation and commissioning of all Unit Facilities;



(9)



Coordinate with the Unit Operator all activities and interfaces between Unit Well drilling and aboveground Unit Facilities with respect to the activities in Articles 7.2(D)(7) and 7.2(D)(8);



(10)



Provide all Unit Work Program and Budget and other operational data relating to its activities to the

Unit Operator to enable Unit Operator to distribute such information to the Unit Operating Committee;

and



(11)



Review and provide recommendations with respect to the potential expansion of the Unit Area and/or

the Unit Interval as a consequence of the possible existence of an accumulation of Hydrocarbons

within either Contract Area that is outside of the Unit Interval but in Pressure Communication with the

Unit Interval as anticipated in Article 5.3.



(E)



The Unit Operating Committee shall determine when each portion of the Approved Phase 1 Development Plan,

and any subsequent amendments thereto, have been completed following installation, commissioning, testing

and completion, transition and handover of the Unit Facilities for that portion of the Approved Phase 1

Development Plan, or subsequent amendments thereto.



(F)



Notwithstanding Article 7.2(B), each Tract Operator shall:

(1)



Pay to the Government for its respective joint account under its respective Joint Operating Agreement

all periodic rentals, bonuses, taxes (excluding any measured by the income of the Parties), fees and

other payments attributable to its Contract generally, and not specifically to Unit Operations;



(2)



Furnish to the Government in kind or pay to the Government in cash, as applicable, the Government’s

royalty and share of Additional Oil Entitlements with respect to all production of Hydrocarbons from

or attributable to its Contract, including Unit Substances allocated to that Tract;



(3)



Cause the satisfaction of any domestic marketing or Government sales obligation under its Contract;



(4)



Prepare and submit to the Government all budgets and work programs required by its Contract,

including where applicable its Group’s proportionate part of any Unit Work Program and Budget

approved under this Agreement;



(5)



Prepare and submit development plans (and, if authorized under this Agreement, plans of appraisal)

with respect to operations under its Contract, including such plans with respect to Unit Operations as

described in Article 9;

42



7.3



(6)



Make any other filings or submissions and perform any other activities that may be required under its

Contract and that are not to be filed, submitted or performed by the Unit Operator pursuant to

Article 7.2(B); and



(7)



Cooperate with and assist the other Tract Operator and the Unit Operator with any filings or

submissions required under the other Contract or pursuant to this Agreement, subject to conforming

with the approved operations and Work Programs and Budgets under this Agreement.



Unit Operator and Technical Operator Personnel

(A)



Unit Operator shall engage or retain only such employees, Secondees, Subcontractors, consultants and agents as

are reasonably necessary to conduct Unit Operations (excluding Technical Operations). Technical Operators

shall engage or retain only such employees, Secondees, Subcontractors, consultants and agents as are reasonably

necessary to conduct Technical Operations. For the purposes of this Article 7.3, “Secondee” means an employee

of a Non- Operator (or its Affiliate) who is seconded to Unit Operator or a Technical Operator, as applicable, to

provide services under a secondment agreement to be entered into between Unit Operator or such Technical



Operator, as applicable, and such Non-Operator substantially in the form of Exhibit R, Part 1; and

“Secondment” means placement within Unit Operator’s or Technical Operator’s organization in accordance with

this Article 7.3 of one or more persons who are employed by a Non-Operator or an Affiliate.

(B)



Subject to the Contracts and this Agreement, (i) Unit Operator shall determine the number of employees,

Secondees, Subcontractors, consultants and agents, the selection of such persons, their hours of work, and

(except for Secondees) the compensation to be paid to all such persons in connection with Unit Operations

(excluding Technical Operations); and (ii) each Technical Operator shall determine the number of employees,

Secondees, Subcontractors, consultants and agents, the selection of such persons, their hours of work, and

(except for Secondees) the compensation to be paid to all such persons in connection with Technical Operations

performed by such Technical Operator.



(C)



Each Authorized Seconding Party shall have the right, as set out herein, to nominate and second qualified

personnel to fill certain positions in the organizations of Unit Operator and IPT Technical Operator which are of

appropriate influence and seniority to reflect such Party’s position under this Agreement. In the event an

Authorized Seconding Party, other than GNPC, Transfers more than fifty per cent (50%) of its entire Project

Interest, or undergoes a change in Control (other than a change in Control of an Authorized Seconding Party to

an Affiliate of such Authorized Seconding Party), then, only in respect of the first such assignment by, or

change in Control of, such Authorized Seconding Party, its successor or assignee shall have the same rights to

fill certain positions of appropriate influence and seniority in place of such Authorized Seconding Party

provided that: (i) in the case of an assignment, the number of such positions shall be reduced pro rata to the

assignee’s Unit Interest; (ii) such assignee shall not be entitled to assign such rights to any other person; and

(iii) the assigning Authorized Seconding Party shall cease to be an Authorized Seconding Party. In each case,

such positions shall be determined pursuant to Articles 7.3(D)(1) through (D)(11). Without limiting the

generality of the foregoing:

(1)



Each Authorized Seconding Party shall have the right to nominate and second qualified personnel to

fill initially the positions in the organizations of Unit Operator and IPT Technical Operator as set forth

in Exhibit R, Part 2 (the “Initial Positions”); and



(2)



The individuals named by an Authorized Seconding Party and whose names are set forth in Exhibit R,

Part 2 have been accepted and shall be seconded into the respective Initial Positions designated for

such individuals in the organizations of Unit Operator and IPT Technical Operator as set forth in

Exhibit R, Part 2. To the extent that individuals are not

43



listed for an Initial Position in Exhibit R, Part 2, the applicable Authorized Seconding Party shall

nominate for such Initial Position one or more proposed Secondees who such Authorized Seconding

Party considers reasonably qualified to fulfill the designated purpose and scope of such Secondment,

and the applicable Operator shall consider and approve or reject such nominee on the same basis as is

described in Article 7.3(D)(7), and the process may be repeated, at the option of such Authorized

Seconding Party, until such Initial Position is filled. Any Secondee in the Initial Positions may be

terminated by the applicable Operator for cause as described in Article 7.3(D)(8); and

(3)



(D)



Upon a subsequent vacancy in respect of any Initial Position (whether through resignation, removal,

withdrawal or otherwise), the individual to fill such vacancy (if any) shall be determined pursuant to

Articles 7.3(D)(1) through (D)(11), provided that each Authorized Seconding Party shall have the right

from time to time to propose a qualified secondee for a number of positions in the organizations of

Unit Operator and IPT Technical Operator that are comparable in terms of influence and seniority to its

respective Initial Positions.



Except as provided in Article 7.3(C) with regard to the Initial Positions, no further Secondments may be

implemented without the concurrence of the applicable Operator, in its discretion, except in the manner set out

in Articles 7.3(D)(1) through (11) below.

(1)



Each Authorized Seconding Party may propose Secondment for a designated purpose related to

Technical Operations or other Unit Operations. Any proposal for Secondment must include the:



(a)



designated purpose and scope of Secondment, including duties, responsibilities, and

deliverables;



(b)



duration of the Secondment;



(c)



number of Secondees and minimum expertise, qualifications and experience required;



(d)



work location and position within the applicable Operator’s organization of each Secondee;

and



(e)



estimated costs of the Secondment.



(2)



In relation to a proposed Secondment meeting the requirements of Article 7.3(D)(1), (i) the applicable

Operator shall as soon as reasonably practicable, approve (such approval to not be unreasonably

withheld) or reject any Secondment proposed by an Authorized Seconding Party. Without prejudice to

such Operator’s right to conduct Unit Operations (or Technical Operations, as applicable) in

accordance with this Agreement and the Contracts, such Operator shall consider such Secondment

proposal in light of the: (i) expertise and experience required for the relevant Unit Operations;

(ii) expertise and experience of such Operator’s personnel; and (iii) potential benefits of such

Secondment to the conduct of Unit Operations.



(3)



Any Party (other than an Authorized Seconding Party) may propose Secondment for a designated

purpose related to Technical Operations or other Unit Operations. Any proposal for Secondment must

include the:

(a)



designated purpose and scope of Secondment, including duties, responsibilities, and

deliverables;

44



(b)



duration of the Secondment;



(c)



number of Secondees and minimum expertise, qualifications and experience required;



(d)



work location and position within the applicable Operator’s organization of each Secondee;

and



(e)



estimated costs of the Secondment.



The applicable Operator shall, as soon as reasonably practicable, approve or reject in its discretion any

Secondment proposed by any such Party.

(4)



Any proposal for one or more Secondment positions approved by an Operator is subject to: (i) the Unit

Operating Committee’s authorization of an appropriate budget for such Secondment positions; and

(ii) the Authorized Seconding Parties continuing to make available to each Operator Secondees

qualified to fulfill the designated purpose and scope of such Secondment.



(5)



As to each approved and authorized Secondment position pursuant to Article 7.3(D)(2), the applicable

Operator shall request the Authorized Seconding Parties to nominate, by a specified date, qualified

personnel to be the Secondee for such position. Each Authorized Seconding Party has the right (but not

the obligation) to nominate for each Secondment position one or more proposed Secondees who such

Authorized Seconding Party considers reasonably qualified to fulfill the designated purpose and scope

of such Secondment.



(6)



As to each approved and authorized Secondment position pursuant to Article 7.3(D)(3), the applicable

Operator shall request the Parties to nominate, by a specified date, qualified personnel to be the

Secondee for such position. Each Party has the right (but not the obligation) to nominate for each



Secondment position one or more proposed Secondees who such Party considers reasonably qualified

to fulfill the designated purpose and scope of such Secondment.

(7)



Following the deadline for submitting nominations, the applicable Operator shall consider the

expertise and experience of each such nominee in light of the expertise and experience required for the

approved and authorized Secondment position, and shall select from the nominees the qualified

nominee such Operator, in its discretion, deems best for the position, unless such Operator reasonably

believes that no nominee is qualified to fulfill the designated purpose and scope of such Secondment

and so reports to the Authorized Seconding Parties or Parties, as applicable.



(8)



Each Operator shall have the right to terminate any Secondment for cause in accordance with the

secondment agreement provided for under Article 7.3(E).



(9)



Upon a subsequent vacancy in respect of any Secondment other than an Initial Position, or a

Secondment in lieu thereof pursuant to Article 7.3(C)(3), the Secondment shall terminate, subject to

any Authorized Seconding Party’s, or Party’s, right to again propose a Secondment pursuant to this

Article 7.3(D).



(10)



Although each Secondee shall report to and be directed by Unit Operator or Technical Operator, as

applicable, each Secondee shall remain at all times the employee of the Party (or its Affiliate)

nominating such Secondee. Each Secondee shall enter into a secondee agreement substantially in the

form set forth in Exhibit R, Part 1, Attachment B.

45



(11)



Notwithstanding the terms of this Article 7.3, the Parties agree that neither the Authorized Seconding

Parties nor any of the other Parties shall have the right to propose Secondees for positions within the

organizations of Unit Operator or a Technical Operator which: (i) are not full time Unit Operation

positions (including the positions of Ghana Country Manager and Ghana Finance Manager for such

Unit Operator or Technical Operator); or (ii) are the most senior full time position (such as asset

manager) within the organization of Unit Operator or a Technical Operator with respect to carrying out

Unit Operations, which positions shall be filled by such Operator.



(E)



Any Secondment under this Agreement shall be subject to the terms between Unit Operator or Technical

Operator, as applicable, and the employer of the Secondee set forth in the secondment agreement provided for

under Article 7.3(A). The terms of Articles 7.3(D)(8), 7.3(D)(10), 7.3(F) and 7.3(G) and the terms of any

secondment agreement entered into pursuant to Article 7.3(A) or secondee agreement entered into pursuant to

Article 7.3(D)(10) shall apply retroactively to January 1, 2008 with respect to any employee of a Non-Operator

or its Affiliates who has been seconded to an Operator or its Affiliates prior to the Effective Date.



(F)



All costs related to Secondment and Secondees that are within a Unit Work Program and Budget related to such

Secondment position shall be charged to the Unit Account.



(G)

(1)



Except as provided in Article 7.3(G)(2), neither the Non-Operator providing a Secondee to an

Operator nor its Affiliates and their respective directors, officers and employees (collectively, the

“Employer Indemnitees”) shall bear any damage, loss, cost, expense or liability (except as a Party to

the extent of its Paying Interest share) resulting from the Secondee’s performance of (or failure to

perform) its duties and functions, and the Employer Indemnitees are hereby released from liability to

the other Parties for any and all damages, losses, costs, expenses and liabilities arising out of, incident

to or resulting from such performance or failure to perform even though caused in whole or in part by a

pre-existing defect, or the negligence (whether sole, joint or concurrent), Gross Negligence/Willful

Misconduct, strict liability or other legal fault of any Employer Indemnitee. Except as set out in

Article 7.3(G)(2), the Parties shall (in proportion to their Paying Interests) defend and indemnify the

Employer Indemnitees from any and all damages, losses, costs, expenses (including reasonable legal

costs, expenses and attorneys’ fees) and liabilities incident to claims, demands or causes of action

brought by or on behalf of any Person or any entity, which claims, demands or causes of action arise



out of, are incident to or result from the Secondee’s performance of (or failure to perform) its duties

and functions even though caused in whole or in part by a pre-existing defect, or the negligence

(whether sole, joint or concurrent), Gross Negligence/Willful Misconduct, strict liability or other legal

fault of any Employer Indemnitee.

(2)



If any Secondee acting as a Senior Supervisory Personnel seconded to an Operator or its Affiliates

engages in Gross Negligence/Willful Misconduct which proximately causes the Parties to incur

damage, loss, cost, expense or liability for claims, demands or causes of action referred to in Articles

7.6(A) or 7.6(B), then:

(a)



all such damages, losses, costs, expenses and liabilities shall be allocated to the Non-Operator

providing such Secondee, in an equivalent manner and to the same extent liability for Gross

Negligence/Willful Misconduct of Senior Supervisory Personnel is allocated to Unit Operator

or any Technical Operator pursuant to the provisions of Article 7.6;



(b)



provided that, where such Gross Negligence/Willful Misconduct results from an action by

such Secondee at the direction of Unit Operator or any Technical Operator, such Operator

shall bear all such damages, losses, costs, expenses and

46



liabilities in the manner and to the extent liability for Gross Negligence/Willful Misconduct

of Senior Supervisory Personnel is allocated to Unit Operator or any Technical Operator

pursuant to the provisions of Article 7.6, including Article 7.6(C).

(H)



7.4



The Parties contemplate that, from time to time during the term of this Agreement, Anadarko may provide

services, other than the services of individual Secondees, for the benefit of an Operator under the terms of a

technical services agreement between such Operator and Anadarko (each a “Technical Services Agreement”)

which shall be substantially in the form of Exhibit S.



Information Supplied by Unit Operator

(A)



Unit Operator shall provide Non-Operators with the following data and reports (to the extent to be charged to

the Unit Account) as they are currently produced or compiled from Unit Operations, in digital or electronic form

where available:

(1)



Copies of all logs or surveys, including in digitally recorded format if such exists;



(2)



Daily drilling reports and Monthly production reports;



(3)



Monthly Production Forecasts;



(4)



Copies of all tests and core data and analysis reports;



(5)



Final well recap report;



(6)



Copies of plugging reports;



(7)



Copies of final geological and geophysical maps, seismic data and shot point location maps;



(8)



Engineering studies, development schedules and quarterly progress reports on development projects;



(9)



Field and well performance reports, including reservoir studies and reserve estimates;



(10)



As requested by a Non-Operator, (i) copies of all material reports relating to Unit Operations or the

Unit Area furnished by Unit Operator to the Government; and (ii) other material studies and reports

relating to Unit Operations;



(B)



(11)



Crude oil lifting reports under agreements provided for in Article 11.2 and gas balancing reports as

provided for in Article 11.3;



(12)



Copies of all reports supplied to a Tract Operator relating to Unit Operations;



(13)



Such additional information as a Non-Operator may reasonably request, provided that the requesting

Party or Parties pay the costs of preparation of such information and that the preparation of such

information will not unduly burden Unit Operator’s administrative and technical personnel. Only NonOperators who pay such costs will receive such additional information; and



(14)



Other reports as directed by the Unit Operating Committee.



Where information required to be provided by Unit Operator pursuant to Article 7.4(A) is generated by

Technical Operations, including information described in Article 7.4(A)(8), the



47



applicable Technical Operator shall provide such information to Unit Operator as it is currently produced or

compiled from Technical Operations to enable Unit Operator to distribute such information to the NonOperators.

(C)



7.5



Unit Operator and each Technical Operator shall each give Non-Operators access at all reasonable times during

normal business hours to all data and reports (other than data and reports provided to Non-Operators in

accordance with Article 7.4(A)) acquired in the conduct of Unit Operations or Technical Operations, as

applicable, which a Non-Operator may reasonably request. Any Non- Operator may make copies of such other

data at its sole expense.



Settlement of Claims and Lawsuits

(A)



Each Technical Operator shall promptly notify Unit Operator of any and all claims and suits that primarily arise

out of, are incident to or result from its Technical Operations. Unit Operator shall promptly notify the Parties of

any and all material claims or suits that primarily arise out of, are incident to or result from Unit Operations

(including Technical Operations). Unit Operator shall represent the Parties and defend or oppose any such claim

or suit. Unit Operator may in its sole discretion compromise or settle any such claim or suit or any related series

of claims or suits for an amount not to exceed the equivalent of five hundred thousand U.S. dollars

(US$500,000) exclusive of legal fees. Unit Operator shall obtain the approval and direction of the Unit

Operating Committee on amounts in excess of the above-stated amount. Without prejudice to the foregoing,

each Non-Operator shall have the right to be represented by its own counsel at its own expense in the

settlement, compromise or defense of such claims or suits. Any material claims or suits that primarily arise out

of, are incident to or result from Tract Operations shall be dealt with according to the applicable Joint Operating

Agreement, and any material disputes between the Government and/or GNPC and those Persons who from time

to time constitute the “Contractor” or the equivalent under either Contract shall be dealt with in accordance with

Article 24 of the applicable Contract or, where so provided in the Acknowledgment, pursuant to Article 1.10 of

the Acknowledgment.



(B)



Any Non-Operator shall promptly notify the other Parties of any claim made or suit filed against such NonOperator by a Non-Affiliated Third Party that primarily arises out of, is incident to or results from the Unit

Operations (including each Technical Operator for this purpose except with respect to claims or suits that

primarily arise out of, are incident to or result from its Technical Operations), and such Non-Operator shall

defend or settle the same in accordance with any directions given by the Unit Operating Committee. Those

costs, expenses and damages incurred pursuant to such defense or settlement which are attributable to Unit

Operations shall be for the Unit Account. If any material claims or suits primarily arise out of, are incident to or

result from Tract Operations the Non-Operator shall promptly notify the other parties to the Tract and such

claims or suits shall be dealt with according to the applicable Joint Operating Agreement.



(C)



Notwithstanding Article 7.5(A) and Article 7.5(B), each Party shall have the right to participate in any such suit,

prosecution, defense or settlement conducted in accordance with Article 7.5(A) and Article 7.5(B), at its sole



cost and expense; provided always that no Party may settle its Paying Interest share of any claim without first

satisfying the Unit Operating Committee that it can do so without prejudicing the interests of the Unit

Operations.

7.6



Limitation on Liability of Unit Operator and Technical Operator

(A)



Except as set out in Article 7.6(C), neither Unit Operator nor any Technical Operator (nor any other Party, to the

extent it performed the duties of Unit Operator or IPT Technical Operator between January 1, 2008 and the

Effective Date) nor any other Indemnitee shall bear (except as a Party to the extent of its Paying Interest share)

any damage, loss, cost, expense or liability resulting from performing (or failing to perform) the duties and

functions of Unit Operator or Technical Operator, as applicable, and the Indemnitees are hereby released from

liability to Non- Operators for any and all damages, losses, costs, expenses and liabilities arising out of, incident

to

48



or resulting from such performance or failure to perform, even though caused in whole or in part by a preexisting defect, or the negligence (whether sole, joint or concurrent), Gross Negligence/Willful Misconduct,

strict liability or other legal fault of Unit Operator or Technical Operator (or any such Indemnitee).

(B)



Except as set out in Article 7.6(C), the Parties shall (in proportion to their Paying Interests) defend and

indemnify Unit Operator and its Affiliates, and their respective directors, officers, and employees (and any other

Party and its Affiliates, and their respective directors, officers, and employees, to the extent they performed the

duties of Unit Operator between January 1, 2008 and the Effective Date) (collectively, the “Unit Operator

Indemnitees”), from any and all damages, losses, costs, expenses (including reasonable legal costs, expenses

and attorneys’ fees) and liabilities incident to claims, demands or causes of action brought by or on behalf of

any Person or entity, which claims, demands or causes of action arise out of, are incident to or result from Unit

Operations, even though caused in whole or in part by a pre-existing defect, or the negligence (whether sole,

joint or concurrent), Gross Negligence/Willful Misconduct, strict liability or other legal fault of Unit Operator

(or any such Indemnitee). Except as set out in Article 7.6(C), the Parties shall (in proportion to their Paying

Interests) defend and indemnify each Technical Operator and its Affiliates, and their respective directors,

officers, and employees (and any other Party and its Affiliates, and their respective directors, officers, and

employees, to the extent it performed the duties of IPT Technical Operator between January 1, 2008 and the

Effective Date) (collectively, the “Technical Operator Indemnitees” and, together with the Unit Operator

Indemnitees, the “Indemnitees”), from any and all damages, losses, costs, expenses (including reasonable legal

costs, expenses and attorneys’ fees) and liabilities incident to claims, demands or causes of action brought by or

on behalf of any Person or entity, which claims, demands or causes of action arise out of, are incident to or

result from Technical Operations, even though caused in whole or in part by a pre-existing defect, or the

negligence (whether sole, joint or concurrent), Gross Negligence/Willful Misconduct, strict liability or other

legal fault of Technical Operator (or any such Indemnitee).



(C)



Notwithstanding Articles 7.6(A) or 7.6(B), if any Senior Supervisory Personnel of Unit Operator or any

Technical Operator (or of any other Party to the extent that any of its directors, officers and employees acted as

Senior Supervisory Personnel prior to the Effective Date) (as applicable) or its Affiliates engage in Gross

Negligence / Willful Misconduct which proximately causes the Parties to incur damage, loss, cost, expense or

liability for claims, demands or causes of action referred to in Articles 7.6(A) or 7.6(B), including by virtue of

directions to a Secondee in the circumstances described in Article 7.3(G)(2)(b), then Unit Operator or such

Technical Operator (or other Party), as applicable, shall bear all such damages, losses, costs, expenses and

liabilities. Notwithstanding the foregoing, under no circumstances shall Unit Operator or any Technical

Operator (or other Party) (except as a Party to the extent of its Paying Interest) or any other Indemnitee bear any

Consequential Loss or Environmental Loss without prejudice to the obligations of the Parties collectively under

Article 17.5 of each Contract.



(D)



Nothing in this Article 7.6 shall be deemed to relieve Unit Operator or any Technical Operator (or other Party)

from its Paying Interest share of any damage, loss, cost, expense or liability arising out of, incident to, or

resulting from Unit Operations.



(E)



The Parties recognize that each of Unit Operator and each Technical Operator is also a Party, and may also be a



Tract Operator, and shall be free to pursue its own interests as a Party (and, if applicable, Tract Operator),

including through the Unit Operating Committee under Article 8 and as part of each Redetermination process

under Article 5. The Parties hereby release:

(1)



The Unit Operator, in its capacity as Unit Operator, from liability to Non-Operators for any and all

claims of conflict of interest or breach of duty, arising out of, incident to or resulting from its actions in

its capacity as a Party or as Tract Operator, and

49



(2)



Each Technical Operator, in its capacity as Technical Operator, from liability to Non-Operators for any

and all claims of conflict of interest or breach of duty, arising out of, incident to or resulting from its

actions in its capacity as a Party or as Tract Operator,



in the case of clauses (1) and (2) even though caused in whole or in part by a pre-existing defect, or the

negligence (whether sole, joint or concurrent), gross negligence, willful misconduct, strict liability or other legal

fault of such Operator; provided that, for the avoidance of doubt, nothing in this Article 7.6(E) shall be deemed

to relieve an Operator when acting as Tract Operator from its obligations and liabilities under the applicable

Joint Operating Agreement.

(F)



7.7



The Unit Operator, in its role as such, shall bear no liability or cost of conducting Non-Unit Operations on

behalf of any Party except as provided in this Article 7.6 which shall apply, mutatis mutandis, to the Unit

Operator’s conduct of Non-Unit Operations.



Insurance Obtained by Unit Operator

(A)



Unit Operator shall procure and maintain for the Unit Account all insurance in the types and amounts required

by either Contract and/or this Agreement or the Laws/Regulations in respect of the Unit Operations.



(B)



Unit Operator shall procure and maintain any further insurance as the Unit Operating Committee may from time

to time require and at competitive rates. In procuring such insurance the Unit Operator shall comply with the

Contract and Laws/Regulations and, without prejudice to the generality of the foregoing, shall comply with the

provisions relating to contracting with an offshore insurer set out in sections 37 and 38 of the Ghana Insurance

Act 2006 (Act 724) as then in effect.



(C)



Subject to the Contract and Laws/Regulations including, for the avoidance of doubt, the Ghana Insurance Act

2006 (Act 724), as may be amended from time to time, and to Article 7.7(E), each Party will be provided the

opportunity to underwrite any or all of the insurance (excluding the contractor’s all risk (“CAR”)) to be

procured by Unit Operator under Articles 7.7(A) and 7.7(B) through reinsurance policies to such Party’s

Affiliate insurance company; provided that:



(D)



(1)



the direct insurance in such case is through a Ghanaian registered insurance company;



(2)



such Party’s Affiliate insurance company is licensed and regulated as an insurer under the laws of its

country of domicile applicable to it and has (and maintains) a credit rating of at least “A-” by

Standard & Poor’s or A.M. Best or “A3” by Moody’s, or in the event no such entity is issuing credit

ratings for long-term unsecured debt, the equivalent rating by a comparable international credit rating

agency; and



(3)



such arrangements will not result in any part of the premiums for such insurance not being recoverable

under the Contract, or being significantly higher than the market rate.



Subject to the Contract and the Laws/Regulations including, for the avoidance of doubt, the Ghana Insurance

Act 2006 (Act 724), as may be amended from time to time, and to Articles 7.7(E) and 7.7(F), any Party may

elect not to participate in some or all of the liability and property insurance (excluding the CAR) to be procured

by Unit Operator under Articles 7.7(A) and 7.7(B) provided such Party:

(1)



gives prompt written notice to that effect to Unit Operator;



(2)



does nothing which may interfere with Unit Operator’s negotiations for such insurance for the other

Parties;

50



(3)



(4)



obtains insurance prior to or concurrent with the commencement of relevant operations and maintains

such insurance (in respect of which a current certificate of adequate coverage, provided at least once a

year, shall be sufficient evidence) which fully covers its Unit Interest share of the risks that would be

covered by the insurance to be procured under Article 7.7(A) or 7.7(B) issued by:

(a)



an insurer, either as a direct insurer or as a reinsurer to a Party’s Affiliate insurance company,

having (and maintaining) a credit rating of at least “A-” by Standard & Poor’s or A.M. Best

or “A3” by Moody’s, or in the event no such entity is issuing credit ratings for long-term

unsecured debt, the equivalent rating by a comparable international credit rating agency; or



(b)



an insurer that is a Ghanaian registered insurance company and then reinsured with such

Party’s Affiliate insurance company, provided that such Party’s Affiliate insurance company

is licensed and regulated as an insurer under the laws of its country of domicile applicable to

it and has (and maintains) a credit rating of at least “A-” by Standard & Poor’s or A.M. Best

or “A3” by Moody’s, or in the event no such entity is issuing credit ratings for long-term

unsecured debt, the equivalent rating by a comparable international credit rating agency; and



obtains insurance that:

(a)



contains a waiver of subrogation in favor of all the other Parties, the Unit Operator and their

insurers but only to the extent of those liabilities assumed by such Party under this

Agreement;



(b)



provides that thirty (30) Days written notice be given to Unit Operator prior to any material

change in, or cancellation of, such insurance policy;



(c)



is primary to, and receives no contribution from, any other insurance maintained by or on

behalf of, or benefiting Unit Operator or the other Parties; and



(d)

(E)



contains adequate territorial extensions and coverage in the location of the Unit Operations.



With respect to all of the insurance to be procured by Unit Operator under Articles 7.7(A) and 7.7(B) (excluding

the CAR), in the event that a Party elects:

(1)



not to participate in some or all of the insurance to be procured by Unit Operator under Articles

7.7(A) and 7.7(B); and



(2)



to cover its Unit Interest share of the risks in accordance with the provisions of Article 7.7(C) or

Article 7.7(D)(3)(b) by reinsuring through its Affiliate insurance company;

then the aggregate maximum amount of insurance to be procured under Articles 7.7(A) and 7.7(B) in

which such Party may elect to either underwrite or not to participate, and to reinsure through such

Party’s Affiliate insurance company in accordance with Article 7.7(C) and Article 7.7(D)(3)(b),

excluding the amount of reinsurance through such Party’s Affiliate insurance company that is further

reinsured with an insurer that satisfies the minimum rating requirements of Article 7.7(D)(3)(a); shall

be one hundred million U.S. dollars ($100,000,000) net for such Party’s interest; provided that such

Party’s Affiliate or its ultimate publicly traded parent company (or, if there is no publicly

51



traded parent company, the highest parent company Controlling the Party) shall be required:



(F)



(a)



to maintain a credit rating of at least “A-” by Standard & Poor’s or A.M. Best or “A3” by

Moody’s, or in the event no such entity is issuing credit ratings for long-term unsecured debt,

the equivalent rating by a comparable international credit rating agency; and



(b)



to provide a guarantee under an unconditional guarantee of payment in form reasonably

acceptable to the Unit Operating Committee with respect to the amount of reinsurance issued

by such Party’s Affiliate insurance company that is not further insured with an insurer that

satisfies the minimum rating requirements of Article 7.7(D)(3)(a).



To the extent that another insurance company provides insurance to a Party’s Affiliate insurance company to

satisfy the obligations set out in Article 7.7(D)(3)(a), such entity shall be required to maintain a credit rating of

at least “A-” by Standard & Poor’s or A.M. Best or “A3” by Moody’s, or in the event no such entity is issuing

credit ratings for long-term unsecured debt, the equivalent rating by a comparable international credit rating

agency.

In the event that the insurance company fails to maintain a credit rating satisfying such requirements, such Party

shall immediately notify the Unit Operator and, within thirty (30) Days of such notification, such Party shall

either:

(1)



provide notice that it will participate in the insurance to be procured by Unit Operator under

Article 7.7(A) or 7.7(B) in satisfaction of its Unit Interest share of the risks, in which event Unit

Operator shall issue a cash call to such Party for its Paying Interest share of the cost of such insurance

payable by such Party in accordance with the terms of this Agreement; or



(2)



procure the insurance to be procured by Unit Operator under Article 7.7(A) or 7.7(B) in satisfaction of

its Unit Interest share of the risks from an insurer with a credit rating of at least “A-” by Standard &

Poor’s or A.M. Best or “A3” by Moody’s, or in the event no such entity is issuing credit ratings for

long-term unsecured debt, the equivalent rating by a comparable international credit rating agency;



failing which such Party shall be deemed to be in default of its obligations under this Agreement.

(G)



The cost of insurance in which all the Parties are participating shall be for the Unit Account and the cost of

insurance in which less than all the Parties are participating shall be charged to the Parties participating in

proportion to their respective Paying Interests.



(H)



Unit Operator shall, with respect to all insurance obtained for the Unit Account under this Article 7.7:

(1)



procure such insurance (or reinsurance of such insurance) from an insurer having (and maintaining) a

credit rating of at least “A-” by Standard & Poor’s or A.M. Best or “A3” by Moody’s, or in the event

no such entity is issuing credit ratings for long-term unsecured debt, the equivalent rating by a

comparable international credit rating agency;



(2)



use reasonable endeavors to procure or cause to be procured such insurance prior to or concurrent

with, the commencement of relevant operations and maintain or cause to be maintained such insurance

during the term of the relevant operations or any longer term required under the Contract and the

Laws/Regulations;

52



(3)



promptly inform the participating Parties when such insurance is obtained and supply them with

certificates of insurance or copies of the relevant policies when the same are issued;



(4)



arrange for the participating Parties, according to their respective Unit Interests, to be named as coinsureds on the relevant policies with waivers of subrogation in favor of all the Parties but only with

respect to their interests under this Agreement;



(I)



(5)



use reasonable endeavors to ensure that each policy shall survive the default or bankruptcy of the

insured for claims arising out of an event before such default or bankruptcy and that all rights of the

insured shall revert to the Parties not in default or bankruptcy; and



(6)



duly file all claims and take all necessary and proper steps to collect any proceeds and credit any

proceeds to the participating Parties in proportion to their respective Paying Interests.



Unit Operator shall use its reasonable endeavors to require all Subcontractors performing work with respect to

Unit Operations (and Technical Operator, to the extent it is negotiating contracts for Technical Operations, shall

use its reasonable endeavors to require all Subcontractors performing work with respect to Technical

Operations) to:

(1)



obtain and maintain any and all insurance in the types and amounts required by the Contract, the

Laws/Regulations or any decision of the Unit Operating Committee;



(2)



name the Parties as additional insureds on the Subcontractor’s insurance policies and obtain from their

insurers waivers of all rights of recourse against Operators, Non- Operators and their insurers; and



(3)



provide Unit Operator (and, in the case of Technical Operations, the applicable Technical Operator)

with certificates reflecting such insurance prior to the commencement of their services;



Provided that, in the event the Unit Operator is unable to obtain agreement from a Subcontractor to obtain any

insurance referred to in Article 7.7(I)(1) then the Unit Operator shall obtain appropriate alternative insurance for

the Unit Account as required by the Contract and the Laws/Regulations; and, in the case of further insurance

required by any decision of the Unit Operating Committee, shall obtain such insurance to the extent available

and subject to Article 7.7(B).

7.8



Commingling of Funds

Unit Operator may not commingle with Unit Operator’s own funds the monies which Unit Operator receives from or for

the Unit Account pursuant to this Agreement.



7.9



Resignation of Unit Operator or Technical Operator

Subject to Article 7.13, (i) Unit Operator may resign as Unit Operator at any time by so notifying the other Parties at least

one hundred and twenty (120) Days prior to the effective date of such resignation; and (ii) any Technical Operator may

resign as Technical Operator at any time by so notifying the other Parties at least one hundred and twenty (120) Days

prior to the effective date of such resignation.

53



7.10



Termination of IPT Technical Operatorship

The IPT Technical Operator position shall terminate, and IPT Technical Operator shall automatically be deemed to have

resigned, upon completion of the installation of all production facilities required for full field development of the Unit

Interval under the Unit Development Plan as determined by the Unit Operating Committee pursuant to Article 7.2(E).



7.11



Assignment of the Unit Operatorship or Technical Operatorship to an Affiliate

No Operator may assign its rights or obligations as Operator except that either Operator may assign all (but not part) of

its rights and obligations as Operator to one of its Affiliates, subject to the prior written consent of the Minister and

GNPC, such consent not to be unreasonably withheld or delayed, and to the following conditions and provisions:

(A)



Either (i) such Affiliate shall possess sufficient technical competence and financial resources to perform the

duties of the Unit Operator or Technical Operator, as applicable, or (ii) the assigning Operator or another

Affiliate possessing such technical competence and financial resources shall have agreed in writing for the

benefit of the other Parties that it shall be responsible, and remain responsible, for the assignee’s performance of

such duties;



7.12



(B)



Such Affiliate shall have entered into a written instrument whereby it accepts and assumes all of the obligations

of the Unit Operator or Technical Operator, as applicable, and is granted all of the rights of such Operator; and



(C)



If the Affiliate should cease to be the Affiliate of the assigning Operator, then, notwithstanding Article 7.13, the

Affiliate shall be removed as the Unit Operator or Technical Operator, as applicable, and the rights and

obligations of such Operator shall be reassigned by the assignee to the former Operator or another Party that is

an Affiliate of the Bonner Operator; and



(D)



Without prejudice to the right to remove an Operator under Article 7.12(C), if the former Operator and all of its

Affiliates cease to own any Unit Interest, the Affiliate shall be deemed to have resigned pursuant to Article 7.9.



Removal of Unit Operator or Technical Operator

(A)



(B)



Subject to Article 7.13, Unit Operator or Technical Operator shall be removed upon receipt of notice from any

Non-Operator if:

(1)



Such Operator becomes insolvent or bankrupt, or makes an assignment for the benefit of creditors;



(2)



An order is made by a court or an effective resolution is passed for the reorganization under any

bankruptcy law, dissolution, liquidation, or winding up of such Operator;



(3)



A receiver is appointed for a substantial part of such Operator’s assets; or



(4)



Such Operator dissolves, liquidates, is wound up, or otherwise terminates its existence.



Subject to Article 7.13, an Operator may be removed:

(1)



By the decision of the Non-Operators if such Operator has committed a material breach of this

Agreement and has either failed to commence to cure that breach within thirty (30) Days of receipt of a

notice from the Non-Operators detailing the alleged breach or failed to diligently pursue the cure to

completion. Any decision of the Non-Operators to give notice of breach to an Operator or to remove an

Operator under this Article 7.12(B)(1)

54



shall be made by an affirmative vote of two (2) or more Non-Operators which are not Affiliates

holding a combined Unit Interest of at least sixty-six percent (66%) of the Unit Interest held by all of

the Non-Operators (after excluding Affiliates of such Operator); or

(2)



If such Operator has repeatedly committed breaches of this Agreement (without regard to whether any

or all of such repeated breaches (a) are similar or not, (b) are material or not or (c) were cured or not)

over the course of a period of six (6) consecutive months from the date of receipt by such Operator of

notice of the first such repeated breach, in a manner that demonstrates a course of conduct that would

not reasonably and ordinarily be expected from a Reasonably Prudent Operator, taking into account for

this purpose efforts by the Unit Operator to cure such breaches, and such Operator was notified in

writing of each such breach by a Non-Operator, by the affirmative vote of three (3) or more of the total

number of Non-Operators which are not Affiliates holding combined Unit Interests of at least eighty

percent (80%) of the Unit Interests held by all of the Non- Operators (after excluding Affiliates of the

affected Operator). If at any relevant time there are fewer than four (4) Parties to this Agreement, then

the number of Non- Operators stipulated in this Article 7.12(B)(2) shall be two (2). A “Reasonably

Prudent Operator” for purposes of this Article 7.12(B)(2) means an operator seeking in good faith to

perform its contractual obligations and, in so doing, and in the general conduct of its undertaking,

exercising that degree of skill, diligence, prudence and foresight which would reasonably and

ordinarily be expected from a skilled and experienced operator engaged in the same type of

undertaking under the same or similar circumstances and conditions and complying with applicable

law,



provided, however, if such Operator disputes: (i) such alleged commission of or failure to cure a material

breach, in the case of Article 7.12(B)(1), or (ii) such alleged commission of repeated breaches, in the case of

Article 7.12(B)(2), and dispute resolution proceedings are initiated pursuant to Article 20.3 in relation to such

breach or breaches, then such Operator shall remain appointed and no successor Operator may be appointed

pending the conclusion or abandonment of such proceedings, subject to the terms of Article 10 with respect to

such Operator’s breach of its payment obligations.

(C)



If an Operator together with any Affiliates of such Operator becomes the holder of a Unit Interest of less than

twenty percent (20%), then such Operator shall promptly notify the other Parties of such event. The Unit

Operating Committee shall then vote within thirty (30) Days of such notification (or, if no such notification is

provided by such Operator, within thirty (30) Days of any Party’s notification to the other Parties of such event)

whether or not to remove such Operator under this Article 7.12(C). An affirmative vote of two (2) or more of

the total number of Non- Operators holding a combined Unit Interest of at least sixty six percent (66%) of the

Unit Interest held by all of such Non-Operators (after excluding Affiliates of such Operator), shall be required to

remove an Operator under this Article. This Article 7.12(C) shall not apply where the IPT Technical Operator

position has not yet terminated pursuant to Article 7.10 and Tullow, Kosmos or Anadarko, or any of their

respective Affiliates, but not any other successor-in-interest, is serving as the applicable Operator.



(D)



If prior to the termination of the IPT Technical Operator position pursuant to Article 7.10:

(1)



Tullow, Kosmos or Anadarko, or any of their respective Affiliates, but not any other successor-ininterest, is serving as the IPT Technical Operator; and either

(a)



There is a direct or indirect change in Control of the IPT Technical Operator (other than a

change in Control of IPT Technical Operator to an Affiliate of IPT Technical Operator); or



(b)



The IPT Technical Operator and/or any of its Affiliates Transfers a portion of its Unit Interest

(other than a Transfer to an Affiliate of IPT Technical Operator or

55



to GNPC as required by a Contract or Contracts) which results, at the date of completion of

such Transfer, in the IPT Technical Operator together with its Affiliates holding a Unit

Interest which is less than the Unit Interest at such date held by any of Tullow, Kosmos or

Anadarko, together with its Affiliates, other than the Unit Interest held by any of them which

serves as Unit Operator,

then IPT Technical Operator shall promptly notify the other Parties of such events. Within thirty (30) Days of

such notification (or, if no such notification is provided by IPT Technical Operator, within thirty (30) Days of

notification by Tullow, Kosmos or Anadarko, or any of their respective Affiliates, to the other Parties of such

events), any of Tullow, Kosmos or Anadarko, or any of their respective Affiliates, may remove the IPT

Technical Operator by serving written notice of removal to all Parties, in which event a successor IPT Technical

Operator shall be appointed in accordance with Article 7.13(D). The right to remove the IPT Technical Operator

under this Article 7.12(D) is personal to each of Kosmos, Anadarko and Tullow and may not be assigned,

except by Kosmos, Anadarko or Tullow to any of its Affiliates, in each case, together with an assignment of a

Unit Interest to such Affiliate. Except as provided in Article 7.9 or this Article 7.12, a Party serving as IPT

Technical Operator shall remain IPT Technical Operator following a direct or indirect change in Control or a

Transfer of a portion of its or any of its Affiliates Unit Interest.

(E)



If prior to the termination of the IPT Technical Operator position pursuant to Article 7.10:

(1)



Tullow, Kosmos or Anadarko, or any of their respective Affiliates, but not any other successor-in

interest, is serving as Unit Operator; and either

(a)



There is a direct or indirect change in Control of Unit Operator (other than a change in

Control of Unit Operator to an Affiliate of Unit Operator); or



(b)



The Unit Operator and/or any of its Affiliates Transfers a portion of its Unit Interest (other



than a Transfer to an Affiliate of Unit Operator or to GNPC as required by a Contract or

Contracts) which results, at the date of completion of such Transfer, in the Unit Operator

together with its Affiliates holding a Unit Interest which is less than the Unit Interest at such

date held by any of Tullow, Kosmos or Anadarko together with its Affiliates,

then the Unit Operator shall promptly notify the other Parties of such events. Within thirty (30) Days of such

notification (or, if no such notification is provided by Unit Operator, within thirty (30) Days of notification by

Tullow, Kosmos or Anadarko, or any of their respective Affiliates, to the other Parties of such events), any of

Tullow, Kosmos or Anadarko, or any of their respective Affiliates, may remove the Unit Operator by serving

written notice of removal to all Parties, in which event a successor Unit Operator shall be appointed in

accordance with Article 7.13(D). The right to remove the Unit Operator under this Article 7.12(E) is personal to

Tullow, Kosmos and Anadarko and may not be assigned, except by Tullow, Kosmos or Anadarko to any of its

Affiliates, in each case, together with an assignment of a Unit Interest to such Affiliate. Except as provided in

Article 7.9 or this Article 7.12, a Party serving as Unit Operator shall remain Unit Operator following a direct or

indirect change in Control or a Transfer of a portion of its or any of its Affiliates Unit Interest.

(F)



For the avoidance of doubt, a reduction of the Unit Interest of an Operator or an Affiliate of an Operator as a

result of a Redetermination shall not constitute a Transfer for the purposes of this Agreement, including for the

purposes of Article 7.12(D) or Article 7.12(E).



(G)



Notwithstanding the terms of Article 7.12(C), if, prior to the termination of the IPT Technical Operator position

pursuant to Article 7.10:

56



(1)



Tullow, Kosmos or Anadarko, or any of their respective Affiliates, but not any other successor-in

interest, is serving as an Operator; and either

(a)



The Unit Operator Transfers all of its Unit Interest (other than a Transfer to an Affiliate of

Unit Operator); or



(b)



The IPT Technical Operator Transfers all of its Unit Interest (other than a Transfer to an

Affiliate of IPT Technical Operator),



then such Operator shall be deemed to have resigned as Operator, effective on the date the Transfer becomes

effective under Article 14, in which event a successor Operator shall be appointed in accordance with

Article 7.13(D).

(H)



Notwithstanding the terms of Article 7.12(C), if,

(1)



A Party serving as Operator Transfers all of its Unit Interest (other than a Transfer to an Affiliate of

such Operator); and either

(a)



Prior to the termination of the IPT Technical Operator position pursuant to Article 7.10, a

Party other than Tullow, Kosmos or Anadarko, or any of their respective Affiliates, is serving

as an Operator and Transfers all of its Unit Interest (other than a Transfer to an Affiliate of

such Operator); or



(b)



After termination of the IPT Technical Operator position pursuant to Article 7.10 a Party

serving as Operator Transfers all of its Unit Interest (other than a Transfer to an Affiliate of

such Operator),



then such Operator shall be deemed to have resigned as Operator, effective on the date the Transfer becomes

effective under Article 14, in which event a successor Operator shall be appointed in accordance with Articles

7.13(A) and 7.13(B).

7.13



Appointment of Successor

When a change of Operator occurs pursuant to Article 7.9 or Article 7.12:



(A)



Unit Operator shall fulfill the role of any Technical Operator following any resignation or removal of such

Technical Operator unless and until a successor Technical Operator is appointed pursuant to the provisions of

this Article 7.13.



(B)



Except as provided in Article 7.12(D), Article 7.12(E) and Article 7.12(G), the Unit Operating Committee shall

meet as soon as possible to appoint a successor Operator pursuant to the voting procedure of Article 8.9. No

Party may be appointed as a successor Operator against its will.



(C)



If any Operator is removed, neither such Operator nor any Affiliate of such Operator shall be considered as a

candidate for the successor Operator provided that: (a) any Operator removed under Article 7.12(C) or any

Affiliate of such Operator; and (b) any Operator which is removed under Article 7.12(D), Article 7.12(E) or

Article 7.12(G), or any Affiliate of such Operator or any transferee (pursuant to Article 14), may be considered

as a candidate for the successor Operator.



(D)



In the case of removal or deemed resignation of:

(1)



the Unit Operator under Article 7.12(E) or Article 7.12(G), within sixty (60) Days of such removal or

deemed resignation, Tullow, Kosmos and Anadarko (other than the Party which is the current Unit

Operator) shall determine, by agreement solely between them, which of them should fill the open Unit

Operator position; and

57



(2)



7.14



the IPT Technical Operator under Article 7.12(D) or Article 7.12(G), within sixty (60) Days of such

removal or deemed resignation, Tullow, Kosmos and Anadarko (other than the Party which is the

current IPT Technical Operator) shall determine, by agreement solely between them, which of them

should fill the open IPT Technical Operator position; provided that if Anadarko is not the affected IPT

Technical Operator, Anadarko shall fill the open IPT Technical Operator position and provided further

that the right to succeed the IPT Technical Operator is personal to Anadarko and may not be assigned,

except to an Affiliate of Anadarko together with an assignment of a Unit Interest by Anadarko to such

Affiliate. In the event that Anadarko is the affected IPT Technical Operator and the applicable Parties

cannot agree within such period, the successor IPT Technical Operator shall be determined by the

affirmative vote of two (2) or more of the total number of Non-Operators which are not Affiliates

holding a combined Unit Interest of at least a majority of the Unit Interests held by all of the NonOperators (after excluding Affiliates of Anadarko).



(E)



The resigning or removed Operator shall be compensated out of the Unit Account for its reasonable expenses

directly related to its resignation or removal, except in the case of Article 7.12(B)(1) or Article 7.12(B)(2).



(F)



The resigning or removed Operator and the successor Operator shall arrange for the taking of an inventory of all

Unit Facilities and Unit Substances, and an audit of the books and records of the removed Operator. Such

inventory and audit shall be completed, if possible, no later than the effective date of the change of Operator and

shall be subject to the approval of the Unit Operating Committee. The liabilities and expenses of such inventory

and audit shall be charged to the Unit Account.



(G)



Following a resignation or removal, upon the effective date of appointment of a successor Operator, such

successor Operator shall succeed to all duties, rights and authority prescribed for the Operator it replaces. The

former Operator shall transfer to the successor Operator custody, where applicable, of all Unit Facilities, books

of account, records and other documents maintained by such Operator pertaining to the Unit Area and to Unit

Operations. Upon delivery of the above- described facilities and data, the former Operator shall be released and

discharged from all obligations and liabilities as such Operator accruing after such date.



Health, Safety and Environment (“HSE”)

(A)



With the goal of achieving safe and reliable operations in compliance with applicable HSE laws, rules and

regulations (including avoiding significant and unintended impact on the safety or health of people, on property,

or on the environment), Unit Operator and IPT Technical Operator shall meet and no later than six (6) months



following the date of execution of this Agreement establish and implement an HSE plan in a manner consistent

with standards and procedures generally followed in the international petroleum industry under similar

circumstances, harmonizing the HSE policies of each of them, and using (unless they otherwise agree) the most

stringent standards established by either of their policies. Each Operator shall thereafter design and operate Unit

Facilities consistent with the HSE plan. In addition, each Operator shall conform with locally applicable HSE

laws, rules and regulations and other HSE-related statutory requirements that may apply.

(B)



The Unit Operating Committee shall from time to time review details of the HSE plan and each Operator’s

implementation thereof.



(C)



In the conduct of Unit Operations, each Operator shall establish and implement a program for regular HSE

assessments. The purpose of such assessments is to periodically review HSE systems and procedures, including

actual practice and performance, to verify that the HSE plan is being implemented in accordance with the

policies and standards of the HSE plan. Each Operator shall, at a minimum, conduct such an assessment before

entering into significant new Unit Operations

58



and before undertaking any major changes to existing Unit Operations. Upon reasonable notice given to an

Operator, Non-Operators shall have the right to participate in such HSE assessments.

(D)



Each Operator shall require its Subcontractors, consultants and agents undertaking activities for the Unit

Account to manage HSE risks in a manner consistent with the requirements of this Article 7.14.



(E)



The HSE plan adopted under Article 7.14(A) shall, at a minimum, prohibit within the Unit Area the following:

(1)



Possession, use, distribution or sale of firearms, explosives, or other weapons (except use of explosives

required for drilling operations, with the approval of senior management of Unit Operator and in

accordance with applicable Laws/Regulations);



(2)



Possession, use, distribution or sale of alcoholic beverages without the prior written approval of senior

management of Unit Operator; and



(3)



Possession, use, distribution or sale of illicit or non-prescribed controlled substances and the misuse of

prescribed drugs.

ARTICLE 8

UNIT OPERATING COMMITTEE



8.1



Establishment of Unit Operating Committee

To provide for the overall supervision and direction of Unit Operations, there is established a Unit Operating Committee

composed of representatives of each Party holding a Unit Interest. Each Party shall appoint one (1) representative and

one (1) alternate representative to serve on the Unit Operating Committee. Each Party shall as soon as possible after the

date of this Agreement give notice in writing to the other Parties of the name and address of its representative and

alternate representative to serve on the Unit Operating Committee. Each Party shall have the right to change its

representative and alternate at any time by giving notice of such change to the other Parties.



8.2



Powers and Duties of Unit Operating Committee

The Unit Operating Committee shall have power and duty to authorize and supervise Unit Operations that are necessary

or desirable to fulfill this Agreement and properly develop the Unit Area in accordance with this Agreement and in a

manner appropriate in the circumstances.



8.3



Authority to Vote

The representative of a Party, or in his absence his alternate representative, shall be authorized to represent and bind such

Party with respect to any matter which is within the powers of the Unit Operating Committee and is properly brought



before the Unit Operating Committee. Each such representative shall have a vote equal to the Unit Interest of the Party

such Person represents. Each alternate representative shall be entitled to attend all Unit Operating Committee meetings

but shall have no vote at such meetings except in the absence of the representative for whom he is the alternate.

In addition to the representative and alternate representative, each Party may also bring to any Unit Operating Committee

meetings such technical and other advisors as it may deem appropriate.

8.4



Subcommittees

(A)



The Unit Operating Committee may establish such subcommittees, including technical subcommittees, as the

Unit Operating Committee may deem appropriate (each a

59



“Subcommittee”). The functions of such Subcommittees shall be in an advisory capacity or as otherwise

determined unanimously by the Parties. Each Party shall have the right to appoint a representative to each

Subcommittee, and to remove and replace that representative at any time, by notice to the other Parties.

(B)



All reasonable costs incurred by Subcommittee representatives to attend and participate in Subcommittee

meetings shall be charged to the Unit Account.



(C)



Each of the following Subcommittees shall be deemed to be established on the Effective Date as approved

Subcommittees under this Agreement:



(D)



8.5



Technical (to cover all technical and operational matters from subsurface to production) ;



(2)



Gas;



(3)



Accounting & Financing;



(4)



Oil Marketing;



(5)



Audit; and



(6)



Environment Health and Safety.



The Unit Operating Committee may, from time to time, vote to rename, consolidate or dissolve any of the

Subcommittees established pursuant to the provisions of this Article 8.4.



Notice of Meeting

(A)



8.6



(1)



Unit Operator may call a meeting of the Unit Operating Committee by giving notice to the Parties at least fifteen

(15) Days in advance of such meeting. Any Non-Operator or group of Non- Operators holding individually or

collectively a Unit Interest of at least ten percent (10%) may request a meeting of the Unit Operating Committee

by giving notice to all the other Parties. Upon receiving such request, Unit Operator shall call such meeting for a

date not less than fifteen (15) Days nor more than twenty (20) Days after receipt of the request. The notice

periods above may only be waived with the unanimous consent of all the Parties.



Contents of Meeting Notice

(A)



Each notice of a meeting of the Unit Operating Committee as provided by Unit Operator shall contain:

(1)



The date, time and location of the meeting;



(2)



The agenda of the matters and proposals to be considered and/or voted upon; and



(3)



Copies of all proposals to be considered at the meeting (including all appropriate supporting

information not previously distributed to the Parties).



(B)



A Party, by notice to the other Parties given not less than seven (7) Days prior to a meeting, may add other

matters to the agenda for the meeting.



(C)



On the request of a Party, and with the unanimous consent of all Parties, the Unit Operating Committee may

consider at a meeting a proposal not contained in such meeting agenda.

60



8.7



Location of Meetings

All meetings of the Unit Operating Committee shall be held in the offices of the Unit Operator in London, England or

Accra, Ghana or the offices of the IPT Technical Operator in Dallas, Texas (or elsewhere, as may be convenient to the

Parties, if the Unit Operating Committee so decides,).



8.8



Unit Operator’s Duties for Meetings

(A)



(B)



8.9



With respect to meetings of the Unit Operating Committee and any Subcommittee, Unit Operator’s duties shall

include, but not be limited to:

(1)



Timely preparation and distribution of the agenda;



(2)



Organization and conduct of the meeting; and



(3)



Preparation of a written record or minutes of each meeting.



Unit Operator shall have the right to appoint the chairman of the Unit Operating Committee and all

Subcommittees.



Voting Procedure

(A)



Except as otherwise expressly provided in this Agreement, all decisions, approvals and other actions of the Unit

Operating Committee on all proposals coming before it shall be decided as follows:

(1)



All decisions, approvals and other actions of the Unit Operating Committee for which a voting

passmark is not specifically established by the other terms of this Agreement shall require the

affirmative vote of two (2) or more Parties which are not Affiliates then having collectively at least

eighty percent (80%) of the Unit Interests. If there are fewer than three (3) Parties to this Agreement,

then the number of Parties stipulated in this Article 8.9(A)(1) does not apply.



(2)



All decisions, approvals and other actions listed below shall require the unanimous approval of the

Parties who are eligible to vote under the terms hereof

Matter

(a)



Amendment of this Agreement



(b)



Any decision to voluntarily expand the Unit Area or Unit Interval pursuant to

Article 5.3(A)



(c)



Any voluntary approval by the Parties of redetermined Tract Participations pursuant to

Exhibit E



(d)



Any voluntary disposition of substantially all of the Unit Facilities, except in connection

with a termination of Unit Operations under Article 10.2(B) or Article 15.2(D)



(e)



Any voluntary permanent termination of Unit Operations as a whole, except as a

consequence of the expiration, termination or revocation of either Contract or pursuant to



Article 10.2(B), Article 15.2(C) or Article 15.2(D).

(f)



Any voluntary surrender by a JOA Group of a portion of its Contract Area that is located

within the Unit Area pursuant to Article 13.2(A).

61



8.10



(g)



Assignment of ownership of intellectual property rights in the Unit Data to Unit Operator

or a Party



(h)



Any matter for which unanimous approval of the Parties is expressly required by the terms

of this Agreement.



Record of Votes

The chairman of the Unit Operating Committee shall appoint a secretary who shall make a record of each proposal voted

on and the results of such voting at each Unit Operating Committee meeting. Each representative shall sign and be

provided a copy of such record at the end of such meeting, and it shall be considered the final record of the decisions of

the Unit Operating Committee.



8.11



Minutes

The secretary shall provide each Party with a copy of the minutes of the Unit Operating Committee meeting within

fifteen (15) Business Days after the end of the meeting. Each Party shall have fifteen (15) Days after receipt of such

minutes to give notice to the secretary of its objections to the minutes. A failure to give notice specifying objection to

such minutes within said fifteen (15) Day period shall be deemed to be approval of such minutes. In any event, the votes

recorded under Article 8.10 shall take precedence over the minutes described above.



8.12



Voting by Notice

(A)



In lieu of a meeting, any Party may submit any proposal to the Unit Operating Committee for a vote by notice.

The proposing Party or Parties shall notify Unit Operator who shall give each Party’s representative notice

describing the proposal so submitted and whether Unit Operator considers such operational matter to require

urgent determination. Unit Operator shall include with such notice adequate documentation in connection with

such proposal to enable the Parties to make a decision. Each Party shall communicate its vote by notice to Unit

Operator and the other Parties within one of the following appropriate time periods after receipt of Unit

Operator’s notice:

(1)



(a) twenty-four (24) hours in the case of operations which involve the use of a drilling rig or vessel that

is standing by in the Unit Area specifically for the purpose of conducting such operations, and

(b) seventy two (72) hours in case of any other operational matters reasonably considered by Unit

Operator to require by their nature urgent determination ((a) and (b) together being referred to as

“Urgent Operational Matters”); and



(2)



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



(B)



Except in the case of Article 8.12(A)(1), any Party or group of Parties holding individually or collectively a

Unit Interest of at least ten percent (10%) may, by notice delivered to all Parties within ten (10) Days of receipt

of Unit Operator’s notice, request that the proposal be decided at a meeting rather than by notice. In such an

event, that proposal shall be decided at a meeting duly called for that purpose.



(C)



Except as provided in Article 10, any Party failing to communicate its vote in a timely manner shall be deemed

to have voted against such proposal.



(D)



If a meeting is not requested, then at the expiration of the appropriate time period, Unit Operator shall give each

Party a confirmation notice stating the tabulation and results of the vote.

62



8.13



Effect of Vote

All decisions taken by the Unit Operating Committee pursuant to this Article 8 that are within the scope of this

Agreement shall be conclusive and binding on all the Parties. For the avoidance of doubt, any decision taken by the Unit

Operating Committee hereunder, is without prejudice to any required approval of the JMC under each Contract.



8.14



Joint Management Committee

The Unit Operator shall be entitled to participate in meetings of the Joint Management Committee established pursuant to

Article 6 of each Contract to act as representative of the Parties with respect to Unit Operations, regardless of whether

Unit Operator holds a position as a Joint Management Committee representative under such Contract. The Joint

Management Committee representative(s) appointed by each Tract Operator with respect to each Contract shall have the

sole right to exercise all voting rights of the “Contractor” on the Joint Management Committee and shall exercise such

voting rights to the extent pertaining solely to Unit Operations in accordance with the prior decisions of the Unit

Operating Committee as directed by Unit Operator. Any Technical Operator shall be entitled to participate in meetings of

the Joint Management Committee established pursuant to Article 6 of each Contract, to the extent helpful for purposes of

discussing operations handled by such Technical Operator, regardless of whether such Technical Operator holds a

position as a Joint Management Committee representative under such Contract.

ARTICLE 9

UNIT WORK PROGRAMS AND BUDGETS



9.1



Appraisal

The Parties agree that no Appraisal Operations may be conducted with respect to the Unit Interval. The Mahogany-2 Well

and the Hyedua-2 Well, as such wells are described in the Proposed Phase 1 Development Plan, shall each be deemed an

“Appraisal Well” under the applicable Contract, even though used for production or injection purposes under this

Agreement. The Parties agree that GNPC shall have no obligation to bear any share of the cost of such “Appraisal

Wells”, notwithstanding the fact that such costs may be incurred after GNPC’s acquisition of an “Additional Interest” or

“Additional Paying Interest” under either Contract. The Mahogany-2 Well and the Hyedua-2 Well shall be considered

Unit Operations under this Agreement.



9.2



Unit Development Plan and Development Unit Work Program and Budget

(A)



The Parties have approved for submission to the Joint Management Committee under Article 6 of each Contract,

and to the Government for approval, the Proposed Phase 1 Development Plan attached hereto as Exhibit P and

the development Unit Work Program and Budget (the “Development Unit Work Program and Budget”) as set

out in Exhibit M hereto.



(B)



Unit Operator shall periodically review the Unit Development Plan and associated Development Unit Work

Program and Budget and propose amendments as may be prudent, and the Unit Operating Committee shall

consider, modify (if necessary), and approve or reject those proposed amendments in accordance with

Article 8.9.



(C)



The Parties agree that approval of a Unit Development Plan and associated Development Unit Work Program

and Budget and any amendments thereto by the Unit Operating Committee shall constitute approval of the

corresponding plan of development and associated budget and amendments under the JOA Groups’ respective

Joint Operating Agreements. Each Tract Operator shall submit the Unit Development Plan (and any approved

amendments) and its proportionate share of the Development Unit Work Program and Budget to the Joint

Management Committee under its Contract and to the Government for its approval. Unit Operator shall support

each JOA

63



Group in seeking such approval. If any changes are required by either Joint Management Committee or by the

Government, Unit Operator may make such requested changes if necessary to obtain approval, without

resubmitting the Unit Development Plan, Development Unit Work Program and Budgets or amendments, as

applicable, to the Unit Operating Committee, provided that such changes would not constitute a material change



to the Development Unit Work Program and Budget or add or delete any material aspect of the Unit

Development Plan, with “material” deemed to include any amendment which (either alone or cumulatively with

other amendments) increases or decreases the previously approved Development Unit Work Program and

Budget by more than five percent (5%) or any major budget category in such Development Unit Work Program

and Budget by more than ten percent (10%). Unit Operator shall promptly notify the Parties of any such

changes, and the Unit Development Plan, Development Unit Work Program and Budget, and the associated

work programs and budgets under the Contracts, shall be deemed approved as changed.

9.3



Annual Work Programs and Budgets

(A)



Not later than the first Day of September of each preceding Calendar Year with respect to Calendar Year 2010

and thereafter, Unit Operator shall submit to the Parties a proposed Unit Work Program and Budget for Unit

Operations for the applicable Calendar Year (the “Annual Unit Work Program and Budget”), which shall with

respect to development operations be consistent with the then-existing Unit Development Plan, along with

reasonable and necessary supporting information, and a proposed update of the life of Unit Interval production

forecast in the Unit Development Plan. Technical Operator shall submit its proposal for the relevant portions of

the Annual Unit Work Program and Budget relating to Technical Operations to Unit Operator at least thirty (30)

Days prior to the date for Unit Operator’s submission of the Annual Unit Work Program and Budget to the

Parties. Each Annual Unit Work Program and Budget submitted by Unit Operator shall contain an itemized

estimate of the cost of Unit Operations and all other expenditures to be made for the Unit Account during the

Calendar Year in question and shall, inter alia: (i) identify each work category in sufficient detail to afford the

ready identification of the nature, scope and duration of the activity in question; (ii) include such reasonable

information regarding each Operator’s allocation procedures and estimated manpower costs as the Unit

Operating Committee may determine; and (iii) comply with the requirements of each Contract. Within thirty

(30) Days of the Unit Operator’s delivery of the proposed Annual Unit Work Program and Budget and updated

production forecast, the Unit Operating Committee shall meet to consider, modify (if necessary), and either

approve or reject the proposed Annual Unit Work Program and Budget in accordance with Article 8.9; provided

that no Annual Unit Work Program and Budget may provide for development operations that exceed the scope

of, or conflict with, the previously approved Unit Development Plan or associated Development Unit Work

Program and Budget unless amendments to such previously approved plan and budget are adopted at or before

the adoption of the Annual Unit Work Program and Budget.



(B)



Any work that cannot be efficiently completed within a single Calendar Year may be proposed in a multi-year

Unit Work Program and Budget. Upon approval by the Unit Operating Committee, such multi-year Unit Work

Program and Budget shall, subject only to revisions approved by the Unit Operating Committee thereafter:

(i) remain in effect as among the Parties (and the associated cost estimate shall be a binding pro-rata obligation

of each Party) through the completion of the work; and (ii) be reflected in each Annual Unit Work Program and

Budget. If either Contract requires that Work Programs and Budgets be submitted to the Government for

approval, such multi-year Unit Work Program and Budget shall be submitted to the Government either in a

single request for a multi-year approval or as part of the annual approval process, according to the terms of the

Contract.



(C)



The Parties agree that approval of an Annual Unit Work Program and Budget by the Unit Operating Committee

shall constitute approval of a proportionate work program and budget under each Tract’s respective Joint

Operating Agreement. Each Contract Group shall include its Tract Participation pro rata share of an Annual

Unit Work Program and Budget adopted under this

64



Article 9.3 in the work programs and budgets submitted to the Joint Management Committee under its Contract

and to the Government for approval under its Contract, if required. Unit Operator shall support each Contract

Group in seeking such approvals, if required. If any changes are required by either Joint Management

Committee or by the Government to the Unit portion of any work program and budget submitted under either

Contract, Unit Operator may make such requested changes to the Annual Unit Work Program and Budget if

necessary to obtain approval, without submitting the Annual Unit Work Program and Budget to the Unit

Operating Committee, provided such changes do not add or delete any material portion of the work program and

are within Unit Operator’s deemed authority pursuant to Article 9.7 and, if applicable, Article 9.2(C). Unit

Operator shall promptly notify the Parties of any such changes, and the Annual Unit Work Program and Budget,



and work programs and budgets under the Contracts, shall be deemed approved as changed.



9.4



(D)



In the event an Annual Unit Work Program and Budget is not approved by the Unit Operating Committee prior

to the date on which the Government requires a final Annual Unit Work Program and Budget (or, if sooner, by

the commencement of the Calendar Year to which the Annual Unit Work Program and Budget applies), Unit

Operator may submit to the Government such Annual Unit Work Program and Budget for the Calendar Year,

consistent with the scope of, and not in conflict with, the approved Unit Development Plan and Development

Unit Work Program and Budget, as is reasonably necessary to meet the commitments under the Unit

Development Plan and Development Unit Work Program and Budget that are required to be carried out during

the relevant Calendar Year and to fulfill all obligations of the Parties under any contracts for the sale or delivery

of Unit Substances and other Associated Agreements. In this event, the Unit Operating Committee shall be

deemed to have approved such Annual Unit Work Program and Budget. Unit Operator shall be reimbursed by

GNPC and each JOA Group for their Paying Interest shares of costs and expenses incurred by Unit Operator and

deemed approved in accordance with this Article 9.3(D). In the event no update of the life of Unit Interval

production forecast in the Unit Development Plan is approved by the Unit Operating Committee, the existing

production forecast shall continue to apply for purposes of this Agreement.



(E)



As set out in Article 1.6.12 of the Unit Accounting Procedure and notwithstanding any other terms of this

Agreement, in no event shall GNPC be liable for, and GNPC shall be deemed to have a Paying Interest of zero

(0) with respect to, any Unit Account expenses which are not allowable under Article 3.17 of Annex 2 of either

Contract.



Amendments of Work Programs and Budgets.

A Party or group of Parties may at any time, by notice to the other Parties, propose that a Unit Work Program and Budget

be amended. In the case of a specific Unit Operation that will be subject to an amendment to the Annual Unit Work

Program and Budget (but not the Development Unit Work Program and Budget), such proposal may take the form of an

AFE submitted for approval. To the extent that such amendment is approved by the Unit Operating Committee, the

relevant Work Program and/or Budget shall, subject to any requisite approval by either Joint Management Committee or

by the Government of amendments to the underlying work programs and budgets for the Contracts, be deemed amended

accordingly, provided that, any such amendment shall not invalidate any commitment or expenditure already made by the

Unit Operator in accordance with any previous authorization given pursuant hereto.



9.5



Contract Awards

All contract awards shall be conducted in accordance with Article 20 of each Contract and the Laws/Regulations. The

applicable Operator shall award each contract for Unit Operations on the basis set out below (the amounts stated are in

U.S. dollars and the person mentioned in the “Contracts” column is the contract recipient). Where a contract is to be

awarded under Procedure B or Procedure C below, each JCC Party shall be invited to tender (or to have one of its

Affiliates tender) for the contract and, in the event that the bid submitted by such Party or Affiliate is equivalent to or

more favorable than other bids received in

65



terms of technical and quality standards, price, grade, quantity, delivery dates and other commercial terms, it shall be

given preference, subject to the terms of Article 20 of each Contract.

Contracts



Procedure A



Procedure B



Procedure C



Procedure D



Procedure E



IPT Technical Operations:

Persons not a Party or Affiliates of

a Party



0 to $1,000,000



> $1,000,000

to $25,000,000



>$25,000,000











Unit Operations (Other than IPT

Technical Operations):

Persons not a Party or Affiliates of

a Party



0 to $1,000,000



> $1,000,000

to $25,000,000



>$25,000,000











IPT Technical Operations:















0 to



> $1,000,000



Parties or Affiliates of a Party

Unit Operations (other than IPT

Technical Operations):

Parties or Affiliates of a Party



$1,000,000













0 to

$1,000,000



> $1,000,000



Procedure A - No Tender. Non-Affiliated Third Parties

(A)



Unit Operator (or, in the case of contracts with respect to Technical Operations, the applicable Technical

Operator) shall award the contract to the best qualified Person as determined by cost and ability to perform the

contract without the obligation to tender and without informing or seeking the approval of the Unit Operating

Committee.



Procedure B - Tender, Non-Affiliated Third Parties

(B)



Unit Operator (or, in the case of contracts with respect to Technical Operations, the applicable Technical

Operator) shall:

(1)



Provide the Parties with a list of the Persons whom such Operator proposes to invite to tender for the

said contract;



(2)



Add to such list any Person whom a Party reasonably requests to be added within not more than seven

(7) Days of receipt of such list;



(3)



Complete the tendering process within a reasonable period of time;



(4)



Notify the Parties of the Persons to whom the contract has been awarded;



(5)



Deliver a competitive bid analysis stating the reasons for the choice made to GNPC and to any other

Party upon its request; and



(6)



Provide a copy of the final version of the contract to GNPC and to any other Party upon its request.



Procedure C - Tender and Unit Operating Committee Approval, Non-Affiliated Third Parties

(C)



Unit Operator (or, in the case of contracts with respect to Technical Operations, the applicable Technical

Operator) shall:

66



(1)



Provide the Parties with a list of the Persons whom such Operator proposes to invite to tender for the

said contract;



(2)



Add to such list any Person whom a Party reasonably requests to be added within not more than seven

(7) Days of receipt of such list;



(3)



Prepare and dispatch the tender documents to the Persons on the list as aforesaid and to the JCC Parties

and to any other Party upon request;



(4)



After the expiration of the period allowed for tendering, consider and analyze the details of all bids

received;



(5)



Prepare and circulate to the Parties, a competitive bid analysis, stating such Operator’s

recommendation as to the Person to whom the contract should be awarded, the reasons therefor, and

the technical, commercial and contractual terms to be agreed upon;



(6)



Obtain the approval of the Unit Operating Committee to the recommended bid; and



(7)



Provide a copy of the final version of the contract to GNPC and to any other Party upon its request.



Procedure D - No Tender, Affiliates

(D)



Unit Operator (or, in the case of contracts with respect to Technical Operations, the applicable Technical

Operator) may award the contract to an Affiliate as the best qualified Subcontractor as determined by cost and

ability to perform the contract without the obligation to tender and without informing or seeking the approval of

the Unit Operating Committee.



Procedure E - Tender and Unit Operating Committee Approval, Affiliates

(E)



Unit Operator (or, in the case of contracts with respect to Technical Operations, the applicable Technical

Operator) shall:

(1)



Prepare and circulate to the Parties an analysis, stating such Operator’s reasons for the award, and the

technical, commercial and contractual terms to be agreed upon;



(2)



Obtain the approval of the Unit Operating Committee to the recommended bid; and



(3)



Provide a copy of the final version of the contract to GNPC and to any other Party upon its request.



(F)



The Parties have approved additional contracting and procurement procedures which shall apply to the award of

contracts with respect to (i) IPT Technical Operations (“IPT Technical Operations Contract Procedure”) and

(ii) Unit Operations (“Unit Operations Contract Procedure”) each in the form attached hereto as Exhibit T.

The IPT Technical Operations Contract Procedure and the Unit Operations Contract Procedure may be amended

by vote of the Unit Operating Committee pursuant to Article 8.9(A)(1).



(G)



With respect to contracts for Technical Operations, each Technical Operator (through the IPT in the case of IPT

Operator) shall conduct the initial procurement process in accordance with the applicable procedures set forth in

Articles 9.5(A) to 9.5(F) above (and the IPT Technical Operations Contract Procedure in the case of IPT

Operator), including development of bidder lists and preparation of requests for proposal, conduct the tender

and bid evaluation and shall either award the contract or recommend the award of the contract to the Unit

Operating Committee, as applicable in accordance with the above procedures and provide notice of the contract

award with

67



respect to contracts for Technical Operations, provided that, unless the Unit Operating Committee otherwise

determines, Unit Operator shall execute each contract for Technical Operations.



9.6



(H)



The requirements to hold a competitive tender pursuant to Procedure B or Procedure C may be waived on a

contract by contract basis by a vote of the Unit Operating Committee pursuant to Article 8.9(A)(1).



(I)



The procedures set forth in this Article 9.5 shall not apply to any contracts that have been awarded, or in respect

of which invitations to tender have been issued, on or before the Effective Date.



Authorization for Expenditure (“AFE”) Procedure

(A)



Prior to incurring any commitment or expenditure for the Unit Account, which is estimated to be:

(1)



In excess of one million U.S. dollars ($1,000,000) in a Development Unit Work Program and Budget;

and



(2)



In excess of one million U.S. dollars ($1,000,000) in a Production Unit Work Program and Budget,



Unit Operator shall send to each Non-Operator an AFE as described in Article 9.6(D). Notwithstanding the

above, Unit Operator shall not be obliged to furnish an AFE to the Parties with respect to general and

administrative costs and operating expenditures that are listed as separate line items in an approved Annual Unit

Work Program and Budget.



(B)



Technical Operator shall furnish Unit Operator with the form of each AFE required for Technical Operations to

permit Unit Operator to distribute the AFE to each Non-Operator.



(C)



Prior to making any expenditures or incurring any commitments for work subject to the AFE procedure in

Article 9.6(A), Unit Operator shall obtain the approval of the Unit Operating Committee. If the Unit Operating

Committee approves an AFE for the operation, Unit Operator shall be authorized to conduct the operation under

the terms of this Agreement. When an AFE for an operation is approved for differing amounts than those

provided for in the applicable line items of the approved Annual Unit Work Program and Budget, the Annual

Unit Work Program and Budget shall be deemed to be revised accordingly. Unit Operator shall be entitled to

submit for approval master AFEs covering multiple commitments or expenditures that are subject to

Article 9.6(A), and if any such AFE is approved, subsequent AFEs issued for individual commitments or

expenditures covered by the master AFE shall be for informational purposes only and shall not require a further

approval.



(D)



Each AFE proposed by Unit Operator (or sent to Unit Operator by Technical Operator) shall:

(1)



Identify the operation by specific reference to the applicable line items in the Annual Unit

Work Program and Budget but may relate to the total cost of the operation to be performed;



(2)



Describe the work in detail;



(3)



Contain such Operator’s best estimate of the total funds required to carry out such work;



(4)



Outline the proposed work schedule;



(5)



Provide a timetable of expenditures, if known; and

68



(6)



9.7



Be accompanied by such other supporting information as is necessary for an informed

decision.



Overexpenditures

(A)



For expenditures on any line item of an approved Unit Work Program and Budget, or under any approved AFE,

each Operator shall be entitled to incur without further approval of the Unit Operating Committee an

overexpenditure for such line item or AFE of up to ten percent (10%) of the authorized amount for such line

item or AFE; provided that the cumulative total of all overexpenditures for a Calendar Year shall not exceed five

percent (5%) of the total Annual Unit Work Program and Budget for that Calendar Year. Any increases to the

approved Unit Work Program and Budget by the Unit Operator pursuant to the authority granted to it under

Article 9.2(C) or 9.3(B) without Unit Operating Committee approval shall be considered overexpenditures for

purposes of this Article 9.7.



(B)



At such time that Unit Operator reasonably anticipates the limits of Article 9.7(A) will be exceeded, Unit

Operator shall furnish to the Unit Operating Committee a reasonably detailed estimate for the Unit Operating

Committee’s approval. In the case of a specific operation, such estimate may take the form of an AFE submitted

for approval. Upon receipt of Unit Operating Committee approval, the Unit Work Program and Budget shall be

revised accordingly and the overexpenditures permitted in Article 9.7(A) shall be based on the revised Unit

Work Program and Budget. Unit Operator shall promptly give notice of the amounts of overexpenditures when

actually incurred. Technical Operator shall promptly provide Unit Operator with notice if Technical Operator

reasonably anticipates that the limits of Article 9.7(A) will be exceeded with respect to Technical Operations,

and with notice of the amounts of overexpenditures on Technical Operations when actually incurred, to permit

Unit Operator to provide the necessary notice to the Unit Operating Committee.



(C)



The restrictions contained in this Article 9 shall be without prejudice to Unit Operator’s rights to make

expenditures necessary and proper for the protection of life, health, the environment and property in the case of

an emergency without the Unit Operating Committee’s approval; provided, however, that Unit Operator shall



immediately notify the Parties of the details of such emergency and measures taken.

9.8



Decommissioning Unit Work Program and Budget

(A)



Unit Operator has included a preliminary estimated Decommissioning budget in the Proposed Phase 1

Development Plan under Article 9.2(A). Not later than the first Day of September of the Calendar Year that

immediately precedes the Calendar Year in which the Unit Operator’s latest estimate of Recoverable Oil

pursuant to Article 9.3(A) indicates that the Trigger Date will occur, Unit Operator shall deliver to the Parties a

draft Decommissioning Unit Work Program and Budget along with reasonable and necessary supporting

information. Within thirty (30) Days of such delivery, the Unit Operating Committee shall meet to consider,

modify (if necessary), and either approve or reject the proposed Decommissioning Unit Work Program and

Budget in accordance with Article 8.9(A)(1). If the Unit Operating Committee fails to approve such

Decommissioning Unit Work Program and Budget, the preliminary estimated Decommissioning budget

included in the Unit Development Plan shall govern as the applicable Decommissioning Unit Work Program

and Budget for all purposes of this Agreement, without prejudice to the terms of either Contract or applicable

Laws/Regulations, until a Decommissioning Unit Work Program and Budget is approved under the terms

hereof.



(B)



The Parties agree that approval of a Decommissioning Unit Work Program and Budget and any amendments

thereto by the Unit Operating Committee shall constitute approval of the corresponding Decommissioning work

program and budget and amendments under the Parties’ respective Joint Operating Agreements, and the current

Annual Unit Work Program and Budget shall be deemed to have been amended accordingly. Following receipt

of the Decommissioning

69



Unit Work Program and Budget as approved by the Unit Operating Committee, each Tract Operator shall submit

its proportionate share of the approved Decommissioning Unit Work Program and Budget (and any approved

amendments) to the Joint Management Committee under its Contract and to the Government for its approval. If

any changes are required by the Joint Management Committee under either Contract or by the Government,

Unit Operator may make such requested changes if necessary to obtain approval without resubmitting the

Decommissioning Unit Work Program and Budget or amendments, as applicable, to the Unit Operating

Committee, provided that such changes would not constitute a material change to the Decommissioning Work

Program Budget, with “material” deemed to include any amendment which (either alone or cumulatively with

other amendments) increases or decreases the previously approved Decommissioning Unit Work Program and

Budget by more than five percent (5%) or any major budget category in such Decommissioning Unit Work

Program and Budget by more than ten percent (10%). Unit Operator shall promptly notify the Parties of any

such changes, and the Decommissioning Unit Work Program and Budget, and the associated work programs and

budgets under the Contracts, shall be deemed approved as changed.

(C)



(D)



Not later than the first Day of September of each Calendar Year subsequent to the Calendar Year in which a

Decommissioning Unit Work Program and Budget is required to be delivered by the Unit Operator pursuant to

Article 9.8(A), the Unit Operator shall prepare and shall submit the following for approval by the Unit

Operating Committee:

(1)



If necessary, proposals to amend the Decommissioning Unit Work Program and Budget;



(2)



A detailed estimate of the Decommissioning Costs to be incurred in each Calendar Year pursuant to the

Decommissioning Unit Work Program and Budget (expressed as the undiscounted cost in U.S. dollars

at the time of expected expenditure and including a ten percent (10%) contingency); and



(3)



For Calendar Years prior to the expiration of the Run Down Period, an estimate of the total

Decommissioning Costs at the end of each Calendar Year within the Run Down Period.



Any amendment of the Decommissioning Unit Work Program and Budget and the estimates of

Decommissioning Costs proposed pursuant to Article 9.8(C) shall be considered by the Unit Operating

Committee within thirty (30) Days of its submission.



9.9



(E)



If all or part of the Decommissioning Unit Work Program and Budget, or any annual estimate of

Decommissioning Costs pursuant to Article 9.8(C), for any Calendar Year subsequent to the Calendar Year in

which a Decommissioning Unit Work Program and Budget is required to be delivered by Unit Operator

pursuant to Article 9.8(A), is not approved by the Unit Operating Committee in accordance with the terms of

this Article 9.8, then the Decommissioning Unit Work Program and Budget which governs the immediately

preceding Calendar Year shall continue to govern for all purposes of this Agreement, without prejudice to the

terms of either Contract or applicable Laws/Regulations, until a revised Decommissioning Unit Work Program

and Budget is approved under the terms hereof.



(F)



Prior to making any expenditures or incurring any commitments under an approved Decommissioning Unit

Work Program and Budget, Unit Operator shall comply with the AFE procedure in Article 9.6, where

applicable.



Costs of Technical Operations and Other Unit Operations

Unit Operator shall be entitled to call for advances, or may bill, GNPC and the JOA Groups for charges to the Unit

Account, including charges for Technical Operations, in accordance with the terms of the Unit Accounting Procedure,

based upon their Paying Interests with respect to the applicable charges. Technical

70



Operator shall provide Unit Operator with a request for advances, or an invoice for costs paid, for Technical Operations

in accordance with the terms of this Agreement at least five (5) Days prior to the date for delivery of Unit Operator’s call

for advances or billing to GNPC and the Tract Operators on behalf of the JOA Groups. Should Technical Operator

provide a request for advances or invoice after that date, Unit Operator shall use reasonable efforts to make a

corresponding call for advances or billing to GNPC and the Tract Operators within five (5) Days after receipt of

Technical Operator’s request or invoice, provided that in no event shall Unit Operator be required to send out more than

two calls for advances, or two billings, to GNPC and the Tract Operators in any Calendar Month. Within ten (10) Days

after receipt of funds from GNPC or either Tract Operator with respect to Unit Operator’s call for advances or billing,

Unit Operator shall send to Technical Operator the portion attributable to Technical Operator’s request for advance or

invoice. In the event of a partial payment or other circumstance in which the portion of a payment that should be

attributed to Technical Operator is not clear, Unit Operator shall allocate the funds received on a pro rata basis, in

proportion to the outstanding amounts for which advances have been requested or which have been billed to the paying

Party or JOA Group by each of Unit Operator and Technical Operator.

ARTICLE 10

DEFAULT

10.1



10.2



Default

(A)



Subject where applicable to the rights of GNPC under the Contracts, if GNPC or either JOA Group fails to pay

when due its Paying Interest share and, as applicable, its Contributing Share of Unit Account expenses

(including cash advances and interest) or to obtain and maintain any Security required of GNPC or either JOA

Group under Exhibit D, then GNPC (a “Defaulting Party”) or that JOA Group (a “Defaulting Group”) shall be

in default. Unit Operator, or any Other Group in case Unit Operator is a member of the Defaulting Group but

not a member of an Other Group, as defined below, shall promptly give notice of such default (the “Default

Notice”) to each Party. For the avoidance of doubt, in the event of a failure by GNPC to pay “Petroleum Costs”

pursuant to either Contract, GNPC shall have whatever rights it is entitled to under the Contracts, including the

right to apply the applicable provisions of Article 2 of the applicable Contract in lieu of Article 10.4, and, in

addition, the provisions of Article 10.6(A)(3) and Article 10.8 shall not apply.



(B)



For purposes of this Article 10, “Default Period” means the period beginning five (5) Business Days from the

date that the Default Notice is issued in accordance with this Article 10.1 and ending when all of the Defaulting

Party’s or Defaulting Group’s defaults pursuant to this Article 10 have been remedied in full.



Contributions of Amount in Default

(A)



With respect to the Defaulting Party or Defaulting Group, if GNPC and/or a JOA Group (the “Other Group”) is



not in default, they shall each be known as an “Other Party”.

(B)



Upon a failure by the Defaulting Party or Defaulting Group to pay the entire amount due within ten

(10) Business Days of receipt of the Default Notice, Unit Operator may by notice (a “Contribution Notice’’),

require each of the Other Parties to contribute a share of the amount due from the Defaulting Party or Defaulting

Group or to post a share of the Security required to be posted by the Defaulting Party or Defaulting Group, such

“Contributing Share” being the proportion that such Other Party’s Paying Interest bears to the total Paying

Interests of the Other Parties. If any Other Party fails to pay or post its Contributing Share within ten

(10) Business Days of receipt of the Contribution Notice, it shall also be in default, with the result that Unit

Operator shall send another Default Notice to the remaining Other Party, if any, and the remaining Other Party

shall be required to contribute its revised Contributing Share of the amount due or post its revised Contributing

Share of the amount required to be posted. The Other Parties contributing the amounts in default or posting the

Security required to be posted shall be referred to as the “Contributing Parties” for purposes of this Article 10.

If both JOA Groups become

71



Defaulting Groups, the Unit Operator shall undertake to terminate Unit Operations pursuant to Article 2.



10.3



(C)



Until such time as the Defaulting Party or Defaulting Group has remedied the default in respect of all unpaid

amounts, each Contributing Party shall contribute its Contributing Share of the Defaulting Party’s or Defaulting

Group’s share of all subsequent Unit Account costs, and post its Contributing Share of any Security

subsequently required to be posted by the Defaulting Party or Defaulting Group.



(D)



If the Unit Operator is a member of the Defaulting Group but not also a member of an Other Group, then any

Other Group member may send the Default Notice (and Contribution Notice, if applicable) and all payments

otherwise payable to the Unit Operator for Unit Account costs pursuant to this Agreement shall be made to the

Tract Operator for the Other Group instead until the default is cured or a successor Unit Operator appointed.

The Tract Operator for notifying Other Group shall maintain such funds in a segregated account separate from

its own funds and shall apply such funds to claims due and payable from the Unit Account of which it has

notice, to the extent the Unit Operator would be authorized to make such payments under the terms of this

Agreement. The Tract Operator shall be entitled to bill or cash call the Contributing Parties in accordance with

the Unit Accounting Procedure for proper charges that become due and payable during such period to the extent

sufficient funds are not available. When the Unit Operator’s JOA Group has cured its default or a successor Unit

Operator is appointed, the Tract Operator acting under this Article shall turn over all remaining funds in the

account to the Unit Operator and shall provide the Unit Operator and the other Parties with a detailed

accounting of the funds received and expended during this period. The notifying Other Group and its Tract

Operator shall not be liable for damages, losses, costs, expenses or liabilities arising as a result of its actions

under this Article 10.2(D), except to the extent the Unit Operator would be liable under Article 7.6. While the

Unit Operator is a member of the Defaulting Group, the Unit Operator shall continue to perform its other

functions as the Unit Operator that are not transferred to the notifying Party by this Article, until Unit Operator

is removed or resigns.



Temporary Financing

If the Unit Operator requires funds in a shorter time than it is possible for the Contributing Parties to make funds

available then the Unit Operator in its discretion may itself temporarily finance such deficit, or may obtain a temporary

line of credit. The Unit Operator shall require each Contributing Party to pay its Contributing Share of the costs,

attributable to the Defaulting Party or Defaulting Group, of such temporary financing together with any interest which

may be payable on the temporary financing and, for the purpose of Article 10.5, such costs together with such interest

shall be added to the amount in default. Finance made available by the Unit Operator shall bear interest calculated at the

Agreed Interest Rate. The Unit Operator shall be considered a Contributing Party with respect to amounts advanced by it

as Unit Operator until such amounts are repaid in full, including interest, and costs to which it is entitled under

Article 10.11.



10.4



Interest Due Under Default

Subject, where applicable, to GNPC’s rights under the Contracts, all amounts in default and not paid when due under this



Agreement shall bear interest at the Agreed Interest Rate plus an additional five percentage points (5%) (or, if such rate is

contrary to any applicable usury law, the maximum rate permitted by such applicable law) from the due date to the date

of payment.

10.5



Share of Unit Substances; Other Set-Off

(A)



During the Default Period, the Defaulting Party or Defaulting Group shall not have a right to its Entitlement,

which shall vest in and be the property of the Contributing Parties. Unit Operator (or the notifying Other Group,

acting through its Tract Operator, if Unit Operator is a member of the Defaulting Group and not also a member

of an Other Group) shall be authorized to sell such Entitlement in an arm’s-length sale on terms that are

commercially reasonable under the

72



circumstances and, after deducting all costs, charges and expenses incurred in connection with such sale, pay the

net proceeds to the Contributing Parties in proportion to the amounts they are owed by the Defaulting Party or

Defaulting Group with respect to the Defaulting Party’s or Defaulting Group’s interest (in payment of first the

costs they are entitled to under Article 10.11, then interest and then principal) and, after amounts owed to the

Contributing Parties are repaid, apply such net proceeds toward the establishment of the Reserve Fund, if

applicable, until all such total amount in default is recovered and such Reserve Fund is established. Any surplus

remaining shall be paid to the Defaulting Party or Defaulting Group, as applicable, and any deficiency shall

remain a debt due from the Defaulting Party or Defaulting Group to the Contributing Parties. When making

sales under this Article 10.5(A), the Contributing Parties shall have no obligation to share any existing market or

obtain a price equal to the price at which their own production is sold.



10.6



(B)



Without prejudice to GNPC’s rights under the Contracts, if Unit Operator disposes of any Unit Facilities or if

any other credit or adjustment is made to the Unit Account during the Default Period, Unit Operator (or the

notifying Other Group, acting through its Tract Operator, if Unit Operator is a member of the Defaulting Group

and not also a member of an Other Group) shall be entitled to apply the Defaulting Party’s or Defaulting

Group’s Paying Interest share of the proceeds of such disposal, credit or adjustment against the total amount in

default (against first the costs to which the Contributing Parties are entitled under Article 10.11, then interest

and’then principal) and toward the establishment of the Reserve Fund, if applicable. Any surplus remaining

shall be paid to the Defaulting Party or Defaulting Group, and any deficiency shall remain a debt due from the

Defaulting Party or Defaulting Group to the Contributing Parties.



(C)



If the Defaulting Party or Defaulting Group are entitled to any payment under Article 5.6(B) following a

Redetermination, Unit Operator (or the notifying Other Group, acting through its Tract Operator, if Unit

Operator is a member of the Defaulting Group and not also a member of an Other Group) shall be entitled to

apply such payment instead against the Defaulting Party’s or Defaulting Group’ total amount in default (against

first the costs to which the Contributing Parties are entitled under Article 10.11, then interest and then principal)

and toward the establishment of the Reserve Fund, if applicable. Any surplus remaining shall be paid to the

Defaulting Party or Defaulting Group, and any deficiency shall remain a debt due from the Defaulting Party or

Defaulting Group to the Contributing Parties.



(D)



The Contributing Parties shall be entitled to apply the net proceeds received under Articles 10.5(A), 10.5(B) and

10.5(C) toward the creation of a reserve fund (the “Reserve Fund”) in an amount equal to the Defaulting Party’s

or Defaulting Group’s share of: (i) the estimated cost of Decommissioning pursuant to Exhibit D: (ii) the

estimated cost of severance benefits for local employees upon cessation of operations; and (iii) any other

identifiable costs that the Contributing Parties anticipate will be incurred in connection with the cessation of

operations. Upon the conclusion of the Default Period, all amounts held in the Reserve Fund shall continue to be

held as security for the Defaulting Party’s or Defaulting Group’ share of such costs (provided that, once security

for Decommissioning is required pursuant to Exhibit D. the amounts held hereunder as security for

Decommissioning shall be deposited as such Defaulting Party’s or Defaulting Group’s Security pursuant to

Exhibit D).



Other Effects of Default

(A)



Notwithstanding any other provision of this Agreement, but subject to the rights of GNPC under



Article 10.1(A), the Defaulting Party, or the members of the Defaulting Group (with respect to their Unit

Interests and Paying Interests derived from the Defaulting Group, but not with respect to their Unit Interests and

Paying Interests derived from an Other Group), as applicable, shall have no right, during the Default Period, to:

(1)



Call or attend Unit Operating Committee or Subcommittee meetings;



(2)



Vote on any matter coming before the Unit Operating Committee or any Subcommittee;

73



(B)



10.7



(3)



Receive or access any data or information relating to any operations under this Agreement (except

statements of the amounts for which it is in default);



(4)



Consent to or reject data trades between the Parties and Third Parties, nor access any data received in

such data trades;



(5)



Transfer or Encumber all or part of its Unit Interest subject to the default, except to non-defaulting

Parties in accordance with this Article 10;



(6)



Consent to or reject any Transfer or Encumbrance or otherwise exercise any other rights in respect of

Transfers or Encumbrances under Article 14;



(7)



Receive its share of Unit Substances or proceeds thereof;



(8)



Withdraw from this Agreement under Article 15;



(9)



Take assignment of any portion of another Party’s Unit Interest in the event such Party is either in

default or withdrawing from this Agreement or a Joint Operating Agreement; or



(10)



Require that any redetermination be conducted pursuant to Article 5.5(D) or propose any expansion

under Article 5.3.



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

(1)



Unless agreed otherwise by the Contributing Parties, for purposes of voting during the Default Period,

the Unit Interest of each Contributing Party shall be deemed to be increased by allocating to it a share

of the Unit Interest of the Defaulting Party or Defaulting Group equal to the ratio such Contributing

Party’s Unit Interest, after excluding any Unit Interest attributable to a Defaulting Group, bears to the

total Unit Interests of the Contributing Parties (after excluding any Unit Interests attributable to a

Defaulting Group);



(2)



Any matters requiring a unanimous vote or approval of the Parties shall not require the vote or

approval of the Defaulting Party or the vote of the Unit Interests of the Parties attributable to the

Defaulting Group; and



(3)



The Defaulting Party or Defaulting Group shall be bound by decisions of the Unit Operating

Committee made during the default.



Right to Remedy

(A)



A Defaulting Party or Defaulting Group may remedy its default at any time prior to the loss of its Project

Interest under Article 10.8 by the payment to the Unit Operator of the total amount in default together with

interest thereon at the rate specified in Article 10.4 and all costs for which it is liable under Article 10.11.

(1)



If a Defaulting Party or Defaulting Group makes any payment, the amount so received shall first be

applied towards the payment of costs for which it is liable under Article 10.11, then toward the

payment of interest and thereafter toward the defaulted amounts.



(2)



Any such payment, together with interest thereon, received by the Unit Operator shall be paid to the



Contributing Parties in proportion to the amounts they are owed by the Defaulting Party or Defaulting

Group, provided that, in the event that such Parties as have paid a Contributing Share have not all paid

their respective Contributing Share on

74



the same Day in respect of any requirement or cash call from the Unit Operator, such proportions shall

be adjusted in respect of any payment of interest to take account of the different periods in respect of

which their respective Contributing Shares have been outstanding.

(3)



10.8



Interest paid by a Defaulting Party or Defaulting Group under this Article 10.7 shall be accounted for

outside the Unit Account but in related records so that such interest is not taken into account for the

purposes of a Redetermination of Tract Participations pursuant to this Agreement or for the purposes of

calculation of taxes or Additional Oil Entitlements under either Contract.



Remedies in the Event of Continued Default

(A)



If a Defaulting Party or Defaultmg Group has been in default and failed to remedy its default within thirty (30)

Days following the date of the Contribution Notice provided for in Article 10.2(B), then, without prejudice to

any other rights available to the Contributing Parties to recover amounts owed them under this Agreement, at

any time thereafter until the Defaulting Party or Defaulting Group has cured its defaults:

(1)



Any Contributing Party or group of Contributing Parties holding individually or collectively a Unit

Interest (as increased pursuant to Article 10.6(B)(1)) of at least fifty percent (50%) shall have the

option, exercisable in its discretion, to require that the Defaulting Party or Defaulting Group withdraw

from this Agreement and Transfer all of its Project Interests (in the case of a Defaulting Group, only

that Project Interest attributable to the Contract with respect to which it is in default), as described in

Article 10.8(B); and



(2)



Any Contributing Party or group of Contributing Parties holding individually or collectively a Unit

Interest (as increased pursuant to Article 10.6(B)(1)) of at least fifty percent (50%) shall have the

option, exercisable in its discretion, to require that the Defaulting Party or Defaulting Group offer to

sell all of its Project Interests (in the case of a Defaulting Group, only that Project Interest attributable

to the Contract with respect to which it is in default) to any Contributing Parties wishing to purchase

such interests, as described in Article 10.8(C).



Such options shall be exercised by providing notice of such election to the Defaulting Party or Defaulting Group

and each Contributing Party. Until the Defaulting Party’s or Defaulting Group’s interests have been Transferred

in full pursuant to this Article 10.8, each option is cumulative, not exclusive, and the exercise of one option

which does not result in the Transfer of the Defaulting Party’s or Defaulting Group’s interests shall not preclude

the Contributing Parties from exercising such option again, or another option. If the Government or any other

Person whose consent is required does not consent to the proposed Transfer, then the Defaulting Party or

Defaulting Group shall hold its Project Interest in trust for the sole and exclusive benefit of the Parties entitled

to the Transfer with the right to be indemnified by the Parties entitled to the Transfer for any subsequent costs

and liabilities incurred by it for which it would not have been liable had it successfully withdrawn from the

Project. Subject to that, all costs and expenses pertaining to any such assignment (including for the avoidance of

doubt any stamp duty incurred on the documents executed to effect such assignment) shall be the responsibility

of the Defaulting Party or Defaulting Group.

(B)



If option (1) in Article 10.8(A) is exercised, the Defaulting Party or Defaulting Group shall be deemed to have

withdrawn and Transferred, pursuant to Article 15.6, effective on the date of the Contributing Party’s notice

under Article 10.8(A), all of its Project Interest to the Contributing Parties. In the absence of an agreement

among the Contributing Parties to the contrary, any Transfer to the Contributing Parties following the exercise

of the remedies set forth in option (1) of Article 10.8(A) shall be in proportion to the Contributing Shares of the

Contributing Parties.

75



The acceptance by a Contributing Party of any portion of the Defaulting Party’s or Defaulting Group’s Project

Interest shall not limit any rights or remedies that such Contributing Party has to recover any remaining balance

(including interest and costs to which it is entitled under Article 10.11) owing under this Agreement by the

Defaulting Party or Defaulting Group.

(C)



In connection with option (2) in Article 10.8(A) each Party grants to each of the other Parties the right and

option to acquire (the “Buy-Out Option”) all of its Project Interest (in the case of a Defaulting Group, only that

Project Interest attributable to the Contract for which it is in default), as determined in this Article 10.8(C). If

option (2) is exercised, by notice to the Defaulting Party or Defaulting Group and each Other Party (the “Option

Notice”), the Defaulting Party or Defaulting Group shall be obligated to transfer, effective on the date of the

Option Notice, its Project Interest to the Contributing Parties electing to acquire such interest pursuant to this

Article 10.8(C) (each, an “Acquiring Party”). If there is more than one Acquiring Party, each Acquiring Party

shall acquire a proportion of the Project Interest of the Defaulting Party equal to the ratio of its own

Contributing Share to the total Contributing Share of all Acquiring Parties and pay such proportion of the

Purchase Price, unless they otherwise agree.

The amount to be paid to acquire the Defaulting Party’s or Defaulting Group’s Project Interest (the “Purchase

Price”) shall be as follows:

(1)



In the Option Notice the Parties providing the Option Notice shall specify a value for the Defaulting

Party’s or Defaulting Group’s Project Interest (in the case of a Defaulting Group, only that Project

Interest attributable to the Contract for which it is in default). Within five (5) Days of the Option

Notice, the Defaulting Party or Defaulting Group shall (i) notify all Contributing Parties that it accepts

the value specified in the Option Notice (in which case such value is the “Appraised Value”); or

(ii) refer the Dispute to an Expert pursuant to Article 20.4 for determination of the value of such

Project Interest (in which case the value determined by such Expert shall be deemed the “Appraised

Value”). If the Defaulting Party or Defaulting Group fails to so notify the Contributing Parties, the

Defaulting Party or Defaulting Group shall be deemed to have accepted the value contained in the

Option Notice as the Appraised Value.



(2)



If the valuation of the Defaulting Party’s or Defaulting Group’s Project Interest is referred to an

Expert, such Expert shall determine the Appraised Value which shall be equal to the fair market value

of the Defaulting Party’s or Defaulting Group’s Project Interest (in the case of a Defaulting Group,

limited to that Project Interest attributable to the Contract for which it is in default), less the following:

(i) the total amount in default; (ii) all costs, including the Expert Costs, to obtain such valuation; and

(iii) fifteen percent (15%) of the fair market value of such Project Interest.



(3)



Within ten (10) Days of notification of the Appraised Value, each Contributing Party shall, by notice to

Unit Operator and the other Contributing Parties, elect whether to purchase some or all of the

Defaulting Party’s or Defaulting Group’s Project Interest (in the case of a Defaulting Group, limited to

that Project Interest attributable to the Contract for which it is in default), based upon the Appraised

Value. A failure to timely deliver such a notice shall be deemed an election not to acquire any of such

Project Interest at such Appraised Value.



(4)



Should no Contributing Party elect to purchase the Defaulting Party’s or Defaulting Group’s Project

Interest at the Appraised Value, no transfer pursuant to this Article 10.8(C) shall take place, the

Defaulting Party or Defaulting Group shall remain in default, and the Contributing Parties shall

continue to have available to them all rights and remedies as if the Option Notice had never been

delivered.

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(5)



If the Defaulting Party’s Project Interest is transferred pursuant to this Article 10.8(C), the Appraised

Value shall be paid to the Unit Operator in four (4) installments, each equal to twenty five percent

(25%) of the Appraised Value as follows:



(a)



the first installment shall be due and payable within fifteen (15) Days after the date on which

the Defaulting Party’s or Defaulting Group’s Project Interest (in the case of a Defaulting

Group, only that Project Interest attributable to the Contract for which it is in default) is

effectively transferred to the Acquiring Parties (the “Transfer Date”);



(b)



the second installment shall be due and payable within one hundred and eighty (180) Days

after the Transfer Date;



(c)



the third installment shall be due and payable within three hundred and sixty five (365) Days

after the Transfer Date; and



(d)



the fourth installment shall be due and payable within five hundred and forty five (545) Days

after the Transfer Date.



Effective as of the date of the Option Notice, the Defaulting Party or Defaulting Group shall Transfer all of its

Project Interest (in the case of a Defaulting Group, limited to that Project Interest attributable to the Contract for

which it is in default), to the Acquiring Parties electing to acquire such interest. The Unit Operator shall use the

receipts received from the Acquiring Party(ies) to remedy the default and to repay to the Contributing Parties all

amounts owed to them with respect to the Defaulting Party or Defaulting Group (including interest and costs to

which they are entitled under Article 10.11). Any amount in excess of the amounts necessary to remedy the

default and to pay all related costs, (including the costs of the assignment) and interest, if any, shall be paid by

the Unit Operator to the Defaulting Party or the Defaulting Group, as applicable. Assignment of the Defaulting

Party’s or Defaulting Group’s Project Interests pursuant to this Article 10.8(C) shall not limit any rights or

remedies that the Contributing Parties have to recover any remaining balance (including interest and costs to

which they are entitled under Article 10.11) owing under this Agreement by the Defaulting Party or Defaulting

Group.

10.9



Conditions of Assignment

(A)



Any Transfer of the Defaulting Party’s or Defaulting Group’s Project Interest made pursuant to Article 10.8

shall be:

(1)



Subject to any necessary consent of the Government and GNPC under the Contracts;



(2)



Without prejudice to any other rights and remedies any Party may have against the Defaulting Party or

Defaulting Group, whether in law, equity or otherwise;



(3)



Accompanied by the putting into effect the provisions of Article 12 regarding Security for

Decommissioning Costs; and



(4)



Effective as among the Parties as of the date of the first notice of exercise of the applicable option by a

Contributing Party under Article 10.8(A).



The Defaulting Party or Defaulting Group and other Parties shall use their reasonable endeavors to obtain any

necessary consent of the Government and any other necessary consents, and to take any other actions necessary

to effect the Transfer. Promptly after obtaining all necessary consents, the Defaulting Party or Defaulting Group

shall execute and deliver any and all documents necessary to effect the Transfer, provided that it shall be a term

of such Transfer that the Defaulting Party or Defaulting Group shall warrant that it is the beneficial owner of the

interest it is purporting to

77



assign and that such interest is being assigned free of any Encumbrances (other than the terms of this

Agreement, the Joint Operating Agreement, the Associated Agreements and the Contract, as applicable). The

Defaulting Party or Defaulting Group shall promptly remove any Encumbrance that may exist on the interest

that it is required to Transfer.

(B)



By way of security for the performance of its obligations under Article 10.8 and this Article 10.9, each Party



hereby constitutes and appoints, jointly and severally, each other Party as its true and lawful attorney

“Attorney”) on its behalf and in its name or otherwise to execute, sign, enter into and give effect to any and all

documents and instruments and make such filings and applications as may be necessary to accomplish any such

Transfer and to make such Transfer legally effective, and to obtain any necessary consents, including consents

required under the Contract, on the following terms:



10.10



(1)



The Unit Operator, or, if the Unit Operator is a member of the Defaulting Group but not also a member

of an Other Group, the Tract Operator for the Other Group, shall be responsible for the preparation of

any and all documents to effect any Transfer in accordance with the terms of this Article 10.9 and shall

co-ordinate as between or among the Contributing Parties the arrangements in relation to the execution

thereof.



(2)



This power of attorney may be exercised independently by each Attorney, without the need to join the

others. An Attorney may act under this power of attorney notwithstanding that another Attorney has

previously acted or purported to act under it.



(3)



The appointment contained in this power of attorney shall remain in full force and effect and be

irrevocable until the earlier of the expiry or termination of this Agreement or the Transfer of the whole

of the Project Interest of the appointing Party in question to another Party or Parties or a Third Party.



(4)



In relation to the introduction of a Third Party to this Agreement as a Party hereto, and to any

applicable Joint Operating Agreement, each Associated Agreement and the applicable Contract, such

Third Party shall not acquire any rights hereunder unless and until each Party has executed in favour of

the other Parties (other than any Party whose Project Interest is being reduced to zero (0) as a

consequence of such introduction) a power of attorney in favour of such Parties which shall be granted

in accordance with the terms of this Article 10.9.



(5)



All acts done and documents executed or signed by an Attorney in good faith in the purported exercise

of any power conferred by this power of attorney shall for all purposes be valid and binding on the

grantor and its successors and assigns. If so requested, each Party will ratify and confirm each act done

or caused to be done on its behalf by one of its Attorneys.



(6)



Each Party irrevocably and unconditionally undertakes to indemnify each Attorney with respect to

such Party against all actions, proceedings, claims, costs, expenses and liabilities of every kind arising

from the exercise of any powers conferred by this power of attorney.



Effect of Transfer on Decommissioning

Any Defaulting Party or Defaulting Group whose interest is Transferred pursuant to the terms of this Article 10 shall

have the same liability for Decommissioning Costs as such Party would have had if it had withdrawn under Article 15.

78



10.11



Right to Costs

The Other Parties shall be entitled to recover from the Defaulting Party or Defaulting Group all reasonable attorneys’ fees

and other costs incurred by the Other Parties in the collection of amounts owing by the Defaulting Party or Defaulting

Group and in the enforcement of their remedies hereunder.



10.12



Rights not Exclusive

The rights and remedies granted to the Other Parties in this Article 10 shall be cumulative, not exclusive, and shall be in

addition to any other rights and remedies that may be available to the non-defaulting parties, whether at law, in equity or

otherwise. Each right and remedy available to the Other Parties may be exercised from time to time and so often and in

such order as may be considered expedient by the non-defaulting parties in their sole discretion.



10.13



Survival



The obligations of the Defaulting Party or Defaulting Group and the rights of the Other Parties shall survive the surrender

of the Contracts, abandonment of Unit Operations and termination of this Agreement.

10.14



No Right of Set Off

Each Party acknowledges and accepts that a fundamental principle of this Agreement is that GNPC and each JOA Group

pays its Paying Interest share of all amounts due under this Agreement as and when required. Accordingly, GNPC and

each JOA Group which becomes a Defaulting Party or Defaulting Group undertakes that, in respect of either any exercise

by the Other Parties of any rights under or the application of any of the provisions of this Article 10, GNPC and such

JOA Group hereby waives any right to raise by way of set off or invoke as a defense, whether in law or equity, any failure

by any other Party to pay amounts due and owing under this Agreement or any alleged claim that such Party may have

against Unit Operator, Technical Operator or any Non-Operator, whether such claim arises under this Agreement or

otherwise. Each Party further agrees that, without prejudice to GNPC’s rights under the Contracts, the nature and the

amount of the remedies granted to the Other Parties hereunder are reasonable and appropriate in the circumstances.

ARTICLE 11

DISPOSITION OF PRODUCTION



11.1



Right and Obligation to Take in Kind

Except as otherwise provided in Article 10 or this Article 11, each Party shall have the right and obligation to own, take

in kind and separately dispose of its Entitlement.



11.2



Disposition of Crude Oil

If Crude Oil is to be produced from the Unit Interval, the Parties shall in good faith, and not less than three (3) months

prior to the anticipated first delivery of Crude Oil, as promptly notified by Unit Operator, negotiate and conclude the

terms of a lifting agreement to cover the offtake of Crude Oil produced from the Unit Interval at each applicable Delivery

Point. Each lifting procedure shall be based on the AIPN Model Form Lifting Procedure and shall contain all such terms

as may be negotiated and agreed by the Parties, consistent with the Unit Development Plan and subject to the terms of the

Contracts and shall contain provisions to allow for joint liftings. If a lifting agreement has not been entered into for each

Delivery Point by the date of first delivery of Crude Oil, the Parties shall nonetheless be obligated to take and separately

dispose of such Crude Oil as provided in Article 11.1 and in addition shall be bound by the terms set forth in the AIPN

Model Form Lifting Procedure for each Delivery Point for which no lifting agreement is in place until a lifting agreement

is executed by the Parties.

79



11.3



Disposition of Natural Gas

The Parties recognize that it may be necessary to enter into arrangements for the marketing and sale of Natural Gas which

are consistent with the Unit Development Plan. The Parties shall in good faith negotiate and conclude the terms of any

such arrangements.



11.4



Production Forecasts

(A)



No later than the first Day of the Calendar Month preceding the Calendar Month in which the Date of

Commencement of Commercial Production is anticipated to occur, and thereafter on the first Day of each

Calendar Quarter, the Unit Operator shall provide the Parties with a Production Forecast. A “Production

Forecast” shall consist of the estimated average daily rate of production of Unit Substances for each Calendar

Month during each of the next succeeding two (2) Calendar Years and, if there are multiple Delivery Points, the

estimated quantities to be delivered to each Delivery Point.



(B)



If at any time the Unit Operator becomes aware that a change has taken place or will take place which in the

Unit Operator’s judgment has caused or will cause a significant variance from the latest Production Forecast, the

Unit Operator shall promptly notify each Party of the following:

(1)



The reason for such variance, its estimated magnitude, the date and time the change is expected to



begin, and the estimated duration thereof; and

(2)



The Unit Operator’s revised Production Forecast for the period covered by the current Production

Forecast based on such variance, along with all other requirements for a Production Forecast pursuant

to Article 11.4(A).



For the purposes of this Article 11.4(B) only, a variation often percent (10%) or more in any figure appearing in

a Production Forecast for Unit Substances shall be deemed to be a significant variance.

(C)



The Production Forecast under this Article are only estimates. Actual production may vary based upon reservoir

performance, variations in well deliverability and the composition of the produced substances, actions of the

Government and other Third Parties, maintenance and repair obligations and Force Majeure, among other

factors.

ARTICLE 12

DECOMMISSIONING



12.1



Right to Take over Unit Facilities and Unit Wells

(A)



In the event that Unit Operations are to terminate pursuant to Article 10.2(B) or Article 15.2(D), the Unit

Operator shall give notice thereof to each JOA Group stating that Unit Operations are to terminate, and listing

the material Unit Facilities together with Unit Operator’s latest estimate of Decommissioning Costs pursuant to

Exhibit D. Subject to the terms of the Contracts and applicable Laws/Regulations, each JOA Group shall have

an option to take over as Non-Unit Operations any or all of such Unit Facilities located or held for use in the

Contract Area or Contract Areas in which it holds its JOA Group Interests, which option shall be exercised by

notice to the Unit Operator within thirty (30) Days after receipt of the Unit Operator’s notice (the

“Decommissioning Response Deadline”). If a JOA Group elects to take over any such Unit Facilities, the JOA

Group shall (i) collectively assume responsibility for all Decommissioning Costs for the Unit Facilities that they

take over and indemnify the other Parties and the Unit Operator (in its role as such) from and hold them

harmless against all costs, expenses, liabilities and losses associated with that decommissioning and

(ii) collectively assume responsibility for any remaining Trust Fund Cash Calls required pursuant to Exhibit D

and prior to taking over such

80



Unit Facilities, provide replacement Complementary Security for the Decommissioning Costs (as described in

Exhibit D) for any Complementary Security then held pursuant to Exhibit D with respect to such Unit Facilities,

which Security may not be released prior to completion of Decommissioning without the written consent of the

other Parties. Any Complementary Security previously provided by the other JOA Group with respect to such

Unit Facilities pursuant to Article 12.3 shall be released immediately after the Party or JOA Group has provided

replacement Complementary Security pursuant to Article 12.1(A)(ii) above. All rights to Unit Facilities

transferred pursuant to this Article 12.1(A) are transferred on an “as is” basis without warranties expressed or

implied, including warranties as to merchantability, fitness for a particular purpose, conformity to models or

samples of materials, use, maintenance, condition, capacity or capability. When any Unit Facilities are

transferred to a JOA Group under this Article 12.1, all rights held by the Parties for the Unit Account in data and

information for those Unit Facilities shall also be transferred to the JOA Group. The transfer of such rights is

subject to the terms of the applicable Contract and the Laws/Regulations and is without prejudice to any rights

of the Government with respect to such data and information under the terms of either Contract or the

Laws/Regulations.

(B)



If any Unit Well is to be abandoned permanently, Unit Operator shall provide notice to the members of the JOA

Group in whose Contract Area the Unit Well is located not later than forty-eight (48) hours prior to such

abandonment, in the case of a well with a rig on location or thirty (30) Days prior to such abandonment, in all

other cases, stating in the notice that the well is to be abandoned and offering it to such JOA Group on the terms

set forth in this Article. The JOA Group shall have an option, to be exercised by notice to the Unit Operator on

or before the end of the applicable period, to take over the Unit Well as a Non-Unit Well on the terms set forth

in this Article. If the JOA Group elects to take over the well, such JOA Group shall assume responsibility for all

costs of plugging and abandoning the well and shall indemnify and hold harmless the other Parties against all



costs, expenses, liabilities and losses associated with such plugging and abandonment. Any Unit Well

transferred to a JOA Group pursuant to this Article is transferred on an “as is” basis without warranties, express

or implied, including warranties as to merchantability, fitness for a particular purpose, conformity to models or

samples of materials, use, maintenance, condition, capacity or capability. When any Unit Well is transferred to a

JOA Group under this Article 12.1, all rights held by the Parties for the Unit Account in data and information

for that Unit Well, excluding data and information limited to the Unit Interval (such as past production data),

shall also be transferred to that JOA Group. The Parties shall be entitled to retain copies of the transferred data

and information on the same terms as are set forth in Article 6.4. The transfer of such rights is subject to the

terms of the applicable Contract and the Laws/Regulations and is without prejudice to any rights of the

Government with respect to such data and information under the terms of either Contract or the

Laws/Regulations. The JOA Group taking over the Unit Well may not produce the Unit Interval and any

operations conducted in such well after the date of the transfer shall be subject to the terms of Article 6.

12.2



Decommissioning

To the extent either Group is responsible for decommissioning under its Contract, the Unit Operating Committee shall

direct the Decommissioning of the Unit Facilities which are not taken over pursuant to Article 12.1, in accordance with

the Contracts, any applicable Laws/Regulations, the approved Decommissioning Unit Work Program and Budget and

good international oil and gas field practice. All costs and expenses of Decommissioning shall be charged to the Unit

Account, and subject to the Contracts, any proceeds derived from the disposition of salvaged Unit Facilities upon

Decommissioning shall be credited to the Unit Account.



12.3



Provision for and the Conduct of Decommissioning

The Parties shall provide for and conduct the Decommissioning of the Unit Facilities and the abandonment of the Unit

Area and provide Security for the same in accordance with the terms of Exhibit D. In the event that some of the Parties

continue to use the Unit Facilities following the expiration, termination, or

81



revocation of one Contract as provided for in Article 2, the Security provided by both Contract Groups shall remain in

effect until such Unit Facilities are finally Decommissioned.

12.4



Decommissioning Liability

For the avoidance of doubt, subject to the obligations of the Government under Exhibit D, nothing provided for in

Exhibit D shall remove, vitiate or otherwise annul the obligation of any Party to meet in full its liability to pay its Paying

Interest share of Decommissioning Costs in accordance with this Agreement. Each Party shall remain liable for due

payment of all Cash Calls (as defined in the Unit Accounting Procedure) payable by it under this Agreement in respect of

its liability for Decommissioning Costs and for meeting Trust Fund Cash Calls (including posting Complementary

Security) payable by it under Exhibit D. In the event that the Security provided by the Parties pursuant to Article 12.3 and

in accordance with the terms of Exhibit D is insufficient to meet Decommissioning Costs in full, each Party shall remain

liable to pay its Paying Interest share of any outstanding Decommissioning Costs.



12.5



Decommissioning Liability upon Transfer

In the event of a Transfer by any Party pursuant to the terms of Article 14, transferee shall demonstrate its financial

capability to provide for its Paying Interest share of Trust Fund Cash Calls (as defined in Exhibit D) and such other

Decommissioning Costs as may be required in the future pursuant to Article 12.3 and Exhibit D in order to obtain the

consent of the other Parties required under Article 14.2(B)(2).

ARTICLE 13

MAINTENANCE, TERMINATION, SURRENDER, EXPIRY, EXTENSIONS AND RENEWALS



13.1



Maintenance

(A)



Each Contract Group covenants, in respect of its Contract, that it will:

(1)



To the extent it is reasonably within its control, preserve such Contract insofar as it covers the Unit



Area for its remaining stated duration and comply with its terms and will exercise any optional rights

to extend the term of its Contract if all terms of that extension are already established by its Contract

and the Laws/ Regulations, provided that a Party that (a) engages in a good faith dispute with the

Government over the interpretation of its Contract or the Laws/Regulations, or (b) fails to take actions

not expressly required under the terms of its Contract or applicable Laws/Regulations to preserve its

Contract, shall not be in breach of this Article 13.1(A)(1) with respect to any such actions under

Article 13.1(A)(1)(a) or any omissions to take such actions under Article 13.1(A)(1)(b);

(2)



Not agree to (to the extent that it is reasonably within its power to prevent) any amendment,

modification or replacement of its Contract which would impair the rights of any of the Parties in the

other Contract Group or affect Unit Operations without the prior written consent of the other Contract

Group, or do or omit to do any other thing that would prevent or adversely affect performance of its

obligations under this Agreement, and exercise its rights in such manner as to secure that the terms and

provisions of this Agreement may be performed.



(3)



Not resort to or take any action or omit to take any action that would create or cause or which is likely

to create or cause a termination or revocation of its Contract insofar as it relates to the Unit Area,

provided that a Party that: (a) engages in a good faith dispute with the Government over the

interpretation of its Contract or Law/Regulations, or (b) fails to take actions not expressly required

under the terms of its Contract or applicable Law/Regulations to preserve its Contract, shall not be in

breach of this Article 13.1(A)(3) with respect to any such actions under Article 13.1(A)(3)(a) or any

omissions to take such actions under Article 13.1(A)(3)(b).

82



(B)

(1)



If either Contract Group or Tract Operator for a Group receives a notice of default or proposed

termination or revocation with respect to its Contract from the Government (such Contract Group, for

purposes of this Article 13.1(B)(1), the “Affected Group”, and the other Contract Group, the “NonAffected Group”), it shall provide notice of such default, termination or revocation notice (for

purposes of this Article 13.1(B)(1), a “Government Action Notice”) to the members of the NonAffected Group within ten (10) Days after receipt of such Government Action Notice, accompanied by

a description of the steps that it proposes to take to challenge or cure that default or proposed

termination or revocation.

(a)



If the Affected Group fails to provide a Government Action Notice in accordance with

Article 13.1(B)(1), any Party or group of Parties in the Non-Affected Group holding

individually or collectively a Unit Interest of at least ten percent (10%) (“Non-Affected

Parties”) may provide the Affected Group notice of the Affected Group’s failure to provide a

Government Action Notice and such Parties’ intention to take the steps necessary to challenge

or cure the default or proposed termination or revocation (for purposes of this Article 13.1(B)

(1)(a), an “Assumption Notice”). If the Affected Group fails to provide a Government Action

Notice within ten (10) Days of its receipt of an Assumption Notice, the Non-Affected Parties

may challenge or cure the default or proposed termination or revocation on behalf of the

Affected Group, and in the event such default, termination or revocation is successfully

challenged or cured, the Affected Group shall, except to the extent that some or all of the

Non-Affected Group notifies it in writing that it does not wish to receive assignment of some

or all of the Affected Group’s Project Interests, assign its Project Interest free of cost to the

Parties in the Non-Affected Group in proportion to such Parties’ Group Interests, unless the

Parties in the Non-Affected Group otherwise agree, and the Affected Group shall be treated

as a withdrawing Group under Article 15.



(b)



If the Affected Group provides a Government Action Notice in accordance with

Article 13.1(B)(1), but the Government Action Notice fails to identify the steps reasonably

necessary to challenge or cure the default or proposed termination or revocation, or the

Affected Group fails to take the steps reasonably necessary to challenge or cure the default or

proposed termination or revocation, Non-Affected Parties may provide notice of such

occurrence to the Affected Group (for purposes of this Article 13.1(B)(1)(b), a “Cure



Deficiency Notice”). If the Affected Group fails to respond to the Cure Deficiency Notice by

either providing a supplemental Government Action Notice properly identifying the steps

reasonably necessary to challenge or cure the default or proposed termination or revocation,

or taking the steps reasonably necessary to challenge or cure the default or proposed

termination or revocation within ten (10) Days of a Cure Deficiency Notice, as applicable, the

Non-Affected Parties may challenge or cure the default or proposed termination or revocation

on behalf of the Affected Group, and in the event such default, termination or revocation is

successfully challenged or cured, the Affected Group shall, except to the extent that some or

all of the Non-Affected Group notifies it in writing that it does not wish to receive assignment

of some or all of the Affected Group’s Project Interests, assign its Project Interest free of cost

to the Parties in the Non-Affected Group in proportion to such Parties’ Group Interests, unless

the Parties in the Non-Affected Group otherwise agree, and the Affected Group shall be

treated as a withdrawing Group under Article 15. For the avoidance of doubt, Non-Affected

Parties may provide more than one Cure Deficiency Notice with respect to each Government

Action Notice pursuant to this Article 13.1(B)(1)(b).

83



(c)



(2)



13.2



Notwithstanding the terms of Articles 13.1(B)(1)(a) and 13.1(B)(1)(b), if the Affected Group

disputes the alleged failure to provide an Assumption Notice, or to identify or take the steps

reasonably necessary to challenge or cure the default or proposed termination or revocation,

and dispute resolution proceedings are initiated under Article 20.3 with respect to such

Dispute within twenty (20) Days after delivery to the Affected Group of the relevant

Assumption Notice or Cure Deficiency Notice, then the Affected Group shall not be required

to assign its Project Interest or withdraw pending conclusion or abandonment of such

proceedings, provided that the Affected Group may not Transfer or Encumber all or any part

of its Project Interest during this period.



If either Contract expires, terminates or is revoked prior to the expiry of this Agreement as provided

herein, then the Parties to the expired, terminated, or revoked Contract shall cease to own a Project

Interest with respect to that Contract and GNPC shall assume such Project Interest in accordance with

the terms of Article 5.3(E). This loss of interest shall be without prejudice to any remedy that a Party

may have against any other Party under this Agreement, at law or in equity because of the actions or

omissions resulting in such a termination or revocation.



Surrender

(A)



No JOA Group shall voluntarily renounce relinquish or surrender any portion of its Contract Area that is located

within the Unit Area without the prior unanimous consent of the Unit Operating Committee. Should any JOA

Group voluntarily surrender all or a portion of its Contract Area within the Unit Area without the prior

unanimous consent of the Unit Operating Committee in contravention of the terms of this Article, it shall,

except to the extent that the other Contract Group notifies it in writing that the other Contract Group does not

wish to receive assignment of some or all of the surrendering JOA Group’s Project Interests, assign any

remaining Project Interest free of cost to the Parties in the other Contract Group in proportion to such Parties’

Contract Group Interests, unless the Parties in the other Contract Group otherwise agree. The surrendering JOA

Group shall be treated as a withdrawing Contract Group under Article 15. This loss of interest shall be without

prejudice to any remedy that a Party may have against any other Party under this Agreement, at law or in equity

because of the actions or omissions resulting in such a termination or revocation.



(B)



If under any applicable Laws or pursuant to the Contract, either JOA Group (for purposes of this

Article 13.2(B), an “Affected JOA Group”) is required to renounce or relinquish or surrender a part of its

Contract Area, that part of the Contract Area that is included in the Unit Area shall be given first priority as to

the area to be retained and no part of the Unit Area shall be renounced, relinquished or surrendered unless it

becomes necessary, in which event the Tract Operator for the Affected JOA Group shall advise the Unit

Operator and the Unit Operating Committee of such necessity at least one hundred and twenty (120) Days in

advance of the earlier of the date for filing irrevocable notice of such surrender or the date of such surrender.

Prior to the end of such period, the Unit Operating Committee, in consultation with the Affected JOA Group,

shall determine the size and shape of the surrendered area, consistent with the requirements of the Contract. If a



sufficient vote of the Unit Operating Committee cannot be obtained, then the proposal supported by a simple

majority of the Unit Interests shall be adopted. If no proposal attains the support of a simple majority of the Unit

Interests, then the proposal receiving the largest aggregate Unit Interest vote shall be adopted. In the event of a

tie, Unit Operator shall choose among the proposals receiving the largest aggregate Unit Interest vote. The

Affected JOA Group shall execute any and all documents and take such other actions as may be necessary to

effect the surrender. Each Party renounces all claims and causes of action against Unit Operator and any other

Parties on account of any area surrendered in accordance with the foregoing but against its recommendation if

Hydrocarbons are subsequently discovered under the surrendered area. In the event of such surrender, the Unit

Operating Committee shall meet to consider the incremental reduction to the quantity of OHIP contained within

either Tract in the Unit Interval as a

84



consequence of the surrender, and Tract Participations shall be adjusted in the same manner, if any, as would be

the case following an expansion under Article 5.3(B).

(C)



13.3



As contemplated by the applicable Laws/Regulations, GNPC shall have the right to explore, develop and

produce Hydrocarbons from any part of a Contract Area that is renounced, relinquished or surrendered, subject

to Article 5.4 of the applicable Contract.



Extension of the Term

Without prejudice to any provisions to the contrary in any other applicable agreement, each JOA Group shall have the

right but not the obligation to seek or obtain renewals or extensions of its Contract, the terms of which are not directly

established under its Contract, on terms and conditions acceptable to such JOA Group in its sole discretion. Where the

terms of any renewal or extension are already established under the Contract and renewal or extension is necessary to

maintain the Contract in effect, the JOA Group shall be required to exercise the renewal or extension in accordance with

Article 13.1(A)(1) and Article 13.1(A)(2).

ARTICLE 14

TRANSFER OF INTEREST OR RIGHTS



14.1



Obligations

A Transfer or Encumbrance shall be effective only if it satisfies the terms and conditions of: (A) the applicable Contract

and any applicable Joint Operating Agreement, and (B) Article 14.2.



14.2



Transfer

(A)



Any Transfer or Encumbrance of an interest in a Contract and the corresponding Joint Operating Agreement

must also include a Transfer or Encumbrance of the corresponding rights and obligations in this Agreement and

all Associated Agreements in which the transferor holds an interest. Likewise, any Transfer or Encumbrance of

an interest in this Agreement or any Associated Agreement must include a Transfer or Encumbrance of the

corresponding rights and obligations in this Agreement and all Associated Agreements, one or both of the

Contracts, as applicable, and the Joint Operating Agreement or Joint Operating Agreements corresponding to

such Contract or Contracts.



(B)



A transferee shall have no rights in this Agreement (except any notice and cure rights or similar rights that may

be provided to a Lien Holder by separate instrument signed by all Parties) unless and until:

(1)



It expressly undertakes in an instrument reasonably satisfactory to the other Parties to perform the

obligations of the transferor under this Agreement in respect of the Project Interest being transferred,

whenever accruing, and obtains and furnishes to the other Parties a copy of any necessary Government

approval for the Transfer or Encumbrance and furnishes any guarantees required by the Government or

the applicable Contract on or before the applicable deadlines, and



(2)



Except in the case of a Transfer to an Affiliate and Transfers among Parties as provided for in

Article 10 or Article 15, each Party has consented in writing to such Transfer, which consent shall be



denied only if the transferee fails to establish to the reasonable satisfaction of each Party its financial

capability to perform its payment obligations under this Agreement including the satisfaction of its

obligations with respect to Decommissioning pursuant to Article 12. No consent shall be required

under this Article 14.2(B)(2) for a Transfer to an Affiliate if the transferring Party agrees in an

instrument reasonably satisfactory to the other Parties to remain liable for its Affiliate’s performance of

its obligations.

85



(C)



To the extent a transferee has satisfied the requirements set out in Article 14.2(B), the transferor shall be

released from any and all of its obligations hereunder in relation to such transferred interest; provided that,

notwithstanding the Transfer, the transferor shall remain liable to the other Parties for any obligations, financial

or otherwise, in relation to such transferred interest which have vested, matured or accrued under the provisions

of this Agreement prior to the date of such Transfer.



(D)



Nothing contained in this Article 14 shall prevent a Party from Encumbering all or any undivided share of its

Project Interest to a Third Party (a “Lien Holder”) for the purpose of security relating to finance, provided that:

(1)



Such Party shall remain liable for all obligations relating to such interest;



(2)



The Encumbrance shall be subject to any necessary approval of the Government and be expressly

subordinated to the rights of the other Parties under this Agreement; and



(3)



Such Party shall ensure that any Encumbrance shall be expressed to be without prejudice to the

provisions of this Agreement.



(E)



Each Party represents that neither it, nor any holder of equity interests in it or its direct or indirect parent

companies or any right to any revenues or dividends or other distributions of such Party or its direct or indirect

parent companies is or shall while it is a Party to this Agreement be a Prohibited Assignee, or a Person

appearing on any list of Proscribed Persons, except as a consequence of purchase by such Prohibited Assignee

or Proscribed Person of publicly-traded securities. From and after the Effective Date, should a Transfer or

Encumbrance of (1) equity interests in a Party or its direct or indirect parent companies or any right to any

revenues or dividends or other distributions of such Party or its direct or indirect parent companies or (2) any

interest by such Party in any Project Interest Agreement or any right to revenues or other distributions under any

Project Interest Agreement occur which would breach this Article, such Party shall promptly provide notice to

all other Parties and shall have thirty (30) Days in which to Transfer or Encumber its interest to a Person not in

violation of the restrictions in this Article, failing which the other Parties shall have the remedies described in

Article 10.8 as if such Party were a Defaulting Party.



(F)



No Party shall Transfer or Encumber an interest in a segregated portion of the Unit Interval or Unit Area, or in

any portion of a Contract Area. A Transfer or Encumbrance by a Party must be in respect of all or an undivided

percentage of its Unit Interest share together with the corresponding rights and obligations in this Agreement

and all Associated Agreements, one or both of the Contracts, as applicable, and the Joint Operating Agreement

or Joint Operating Agreements corresponding to such Contract or Contracts. For the avoidance of doubt, a Party

with interests in both Contracts may Transfer or Encumber its interests in one Contract and the corresponding

interests in such Contract’s Joint Operating Agreement, this Agreement and the Associated Agreements, and

maintain its interests in the other Contract and the corresponding interests in such other Contract’s Joint

Operating Agreement, this Agreement and the Associated Agreements.



(G)



In the event of a Transfer by an Operator, the terms of Articles 7.11 and/or 7.12(C), (D), (E) or (F) may apply as

provided therein.

ARTICLE 15

WITHDRAWAL FROM AGREEMENT



15.1



Right of Withdrawal

(A)



Subject to the provisions of this Article 15 and the Project Interest Agreements, any Party not in default may at



its option withdraw from the Project Interest Agreements by giving notice to all

86



other Parties stating its decision to so withdraw. Such notice shall be unconditional and irrevocable when given,

except as may be provided in Article 15.7.



15.2



(B)



No Party may withdraw from this Agreement without withdrawing from its other Project Interest Agreements,

nor may any Party withdraw from any other Project Interest Agreement without withdrawing from this

Agreement and no Party may withdraw from a segregated portion of the Unit Area or Unit Interval, or from any

portion of a Contract Area without withdrawing from an entire Contract Area, provided that, for the avoidance

of doubt, a Party with interests in both Contracts may withdraw from one Contract and the corresponding

interests in such Contract’s Joint Operating Agreement, this Agreement and the Associated Agreements, and

maintain its interests in the other Contract and the corresponding interests in such other Contract’s Joint

Operating Agreement, this Agreement and the Associated Agreements.



(C)



The effective date of withdrawal for a withdrawing Party shall be the end of the Calendar Month following the

Calendar Month in which the notice of withdrawal is given, provided that if all Parties elect to withdraw, the

effective date of withdrawal for each Party shall be the date determined by Article 15.9.



Withdrawal

(A)



Within thirty (30) Days of receipt of each withdrawing Party’s notification, each of the other Parties may also

give notice that it desires to withdraw from its Project Interest Agreements.



(B)



If less than all of the Parties in a Contract Group give such notice of withdrawal, then the withdrawing Parties

shall take all steps to withdraw from their Project Interest Agreements on the earliest possible date and execute

and deliver all necessary instruments and documents to assign their Project Interests to the Parties in the Group

which are not withdrawing, without any compensation whatsoever, in accordance with the provisions of

Article 15.6.



(C)



Should all of the members of a Contract Group give notice of withdrawal, the other Contract Group may, within

thirty (30) Days after the last notice from the members of the withdrawing Contract Group, notify the

withdrawing Contract Group that it does not wish to receive assignment of some or all of the withdrawing

Contract Group’s Project Interests, in which case those interests shall not be assigned. Following the end of the

thirty (30) Day period, the Parties in the withdrawing Contract Group shall take all steps to withdraw from their

Project Interest Agreements on the earliest possible date, and execute and deliver all necessary instruments and

documents to assign their Project Interests as to which the other Contract Group has not refused assignment to

the members of the Contract Group for the remaining Contract that are not electing to withdraw, without any

compensation whatsoever, in accordance with the provisions of Article 15.6. Should the members of the nonwithdrawing Contract Group refuse assignment of the interest in the other Contract that would be assigned,

Article 5.3(E) shall apply.



(D)



Within thirty (30) Days of receipt of a notice that all of the members of a Contract Group are withdrawing

pursuant to Article 15.2(C) above, the other Contract Group may also give notice that it desires to withdraw

from its Project Interest Agreements. Should all Parties give notice of withdrawal from the Project Interest

Agreements, the Parties shall proceed to abandon the Contract Areas and terminate the Project Interest

Agreements.



(E)



All costs and expenses incurred by a withdrawing Party in connection with its withdrawal shall be borne by

such Party, and a withdrawing Party shall reimburse all non-withdrawing Parties for all costs and expenses

incurred by such Parties in connection with such withdrawal.

87



15.3



Rights of a Withdrawing Party



A withdrawing Party shall have the right to receive its Entitlement produced through the effective date of its withdrawal.

The withdrawing Party shall be entitled to receive all information to which such Party is otherwise entitled under this

Agreement until the effective date of its withdrawal. After giving its notification of withdrawal, a Party shall not be

entitled to vote on any matters coming before the Unit Operating Committee, except that it shall be entitled to vote prior

to the effective date of its withdrawal upon matters for which such Party has financial responsibility.

15.4



Obligations and Liabilities of a Withdrawing Party

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

(A)



Costs of Unit Operations: (1) in which it has agreed to participate, (2) that were approved by the Unit Operating

Committee as part of a Development Unit Work Program and Budget or an Annual Unit Work Program and

Budget (including a multi-year Unit Work Program and Budget under Article 9.3(B)) or AFE prior to such

Party’s notification of withdrawal, or (3) incurred under any contract for performance of all or any part of Unit

Operations entered into by Unit Operator prior to such Party’s notification of withdrawal;



(B)



Expenditures described in Articles 7.2(B)(13) and 15.5 related to an emergency occurring prior to the effective

date of a Party’s withdrawal, regardless of when such expenditures are incurred;



(C)



All other obligations and liabilities of the Parties with respect to acts or omissions under this Agreement prior to

the effective date of such Party’s withdrawal for which such Party would have been liable, had it not withdrawn

from this Agreement; and



(D)



Regardless of whether a Party is abandoning the Contract Area, the obligations and liabilities for which a

withdrawing Party remains liable shall specifically include its share of any costs of: (1) plugging and

abandoning wells or portions of wells in which it was required to bear a share of the costs pursuant to

Article 15.4(A) to the extent such costs of plugging and abandoning are payable by the Parties under the

applicable Contract, Laws/Regulations or this Agreement, and (2) Decommissioning any Unit Facilities in

which it was required to bear a share of the costs pursuant to Article 15.4(A), to the extent the Decommissioning

Costs for such Unit Facilities are payable by the Parties under the applicable Contract, and (3) contributions

owing pursuant to Article 5.6 as a result of Redetermination and any cash amounts owing pursuant to

Article 5.7(B)(6) in lieu of adjustments to Entitlements as a result of a Redetermination. Any Encumbrances

which were placed on the withdrawing Party’s Unit Interest prior to such Party’s withdrawal shall be fully

satisfied or released, at the withdrawing Party’s expense, prior to its withdrawal. A Party’s withdrawal shall not

relieve it from liability to the non-withdrawing Parties with respect to any obligations or liabilities attributable to

the withdrawing Party under this Article 15 merely because they are not identified or identifiable at the time of

withdrawal.



Notwithstanding the other provisions of this Article 15.4, a Party shall not be liable for any operations or expenditures it

voted against (other than operations and expenditures described in Article 15.4(B)) if it sends notification of its

withdrawal within five (5) Days (or within such shorter period as may be required for Urgent Operational Matters) of the

Unit Operating Committee vote approving such operation or expenditure.

15.5



Emergency

If a well goes out of control or a fire, blow out, sabotage or other emergency occurs prior to the effective date of a Party’s

withdrawal, the withdrawing Party shall remain liable for its Paying Interest share of the costs of such emergency,

regardless of when they are incurred.

88



15.6



Assignment

Subject to any necessary consent of the Government and GNPC under the Contracts, a withdrawing Party or Parties shall

assign their Project Interests, free of cost, to each of the non-withdrawing Parties in its Contract Group in proportion to

such non-withdrawing Parties’ Contract Group Interests as provided herein, unless such non-withdrawing Parties agree

otherwise. Subject to any necessary consent of the Government and GNPC under the Contracts, a withdrawing Contract



Group shall assign those portions of its Project Interest as to which the non-withdrawing Contract Group has not refused

assignment pursuant to Article 15.2(C), free of cost, to the Parties in the non-withdrawing Contract Group that are not

electing to withdraw, in proportion to the non-withdrawing Parties’ Contract Group Interests as provided herein, unless

the non-withdrawing Contract Group agrees otherwise.

15.7



Approvals

A withdrawing Party shall promptly join in such actions as may be necessary or desirable to obtain any Government

approvals required in connection with the withdrawal and assignments. The non-withdrawing Parties shall use reasonable

endeavors to assist the withdrawing Party in obtaining such approvals. Any penalties or expenses incurred by the Parties

in connection with such withdrawal shall be borne by the withdrawing Party.



15.8



Security

A Party withdrawing from its Project Interest Agreements pursuant to this Article 15 shall provide Security reasonably

satisfactory to the other Parties to satisfy any obligations or liabilities for which the withdrawing Party remains liable in

accordance with Article 15.4, but which become due after its withdrawal, including Security to cover the costs of an

abandonment and Decommissioning, if applicable.



15.9



Withdrawal or Abandonment by All Parties

In the event all Parties decide to withdraw, the Parties agree that they shall be bound by the terms and conditions of this

Agreement for so long as may be necessary to wind up the affairs of the Parties with the Government, to satisfy any

requirements of the Laws/Regulations and to facilitate the sale, disposition or abandonment of property or interests held

by the Unit Account, all in accordance with Article 2.

ARTICLE 16

RELATIONSHIP OF PARTIES AND TAX



16.1



Relationship of Parties

The rights, duties, obligations and liabilities of the Parties under this Agreement shall be individual, not joint or

collective. It is not the intention of the Parties to create, nor shall this Agreement be deemed or construed to create, a

mining or other partnership, joint venture or association or (except as explicitly provided in this Agreement) a trust. This

Agreement shall not be deemed or construed to authorize any Party to act as an agent, servant or employee for any other

Party for any purpose whatsoever except as explicitly set forth in this Agreement. In their relations with each other under

this Agreement, the Parties shall not be considered fiduciaries except as expressly provided in Articles 10.8(A) and 15.7

of this Agreement.



16.2



Tax

Each Party shall be responsible for reporting and discharging its own tax measured by the profit or income of the Party

and the satisfaction of such Party’s share of all contract obligations under the Contract and under this Agreement. Each

Party shall protect, defend and indemnify each other Party from any and all loss, cost or liability arising from the

indemnifying Party’s failure to report and discharge such taxes or satisfy such obligations. The Parties intend that all

income and all tax benefits (including deductions, depreciation, credits and capitalization) with respect to the

expenditures made by the Parties hereunder will

89



be allocated by the Government tax authorities to the Parties based on the share of each tax item actually received or

borne by each Party. If such allocation is not accomplished due to the application of the Laws/ Regulations or other

Government action, the Parties shall attempt to adopt mutually agreeable arrangements that will allow the Parties to

achieve the financial results intended. Unit Operator shall provide each Party, in a timely manner and at such Party’s sole

expense, with such information with respect to Unit Operations as such Party may reasonably request for preparation of

its tax returns or responding to any audit or other tax proceeding.

16.3



United States Tax Election



(A)



If, for United States federal income tax purposes, this Agreement and the operations under this Agreement are

regarded as a partnership and if the Parties have not agreed to form a tax partnership, each U.S. Party elects to

be excluded from the application of all of the provisions of Subchapter “K”, Chapter 1, Subtitle “A” of the

United States Internal Revenue Code of 1986, as amended (the “Code”), to the extent permitted and authorized

by Section 761(a) of the Code and the regulations promulgated under the Code. Unit Operator, if it is a U.S.

Party, is authorized to execute and file for each U.S. Party such evidence of this election as may be required by

the Internal Revenue Service, including all of the returns, statements, and data required by United States

Treasury Regulations Sections 1.761-2 and 1.6031(a)-l, and shall provide a copy thereof to each U.S. Party.

However, if Unit Operator is not a U.S. Party, the Party who holds the greatest Unit Interest among the U.S.

Parties shall fulfill the obligations of Unit Operator under this Article 16.3, and in the event Kosmos and

Anadarko have the greatest, and equal, Unit Interests, such obligations shall be fulfilled by Anadarko.



(B)



Should there be any requirement that any U.S. Party give further evidence of this election, each U.S. Party shall

execute such documents and furnish such other evidence as may be required by the Internal Revenue Service or

as may be necessary to evidence this election.



(C)



No Party shall give any notice or take any other action inconsistent with the foregoing election. If any income

tax laws of any state or other political subdivision of the United States or any future income tax laws of the

United States or any such political subdivision contain provisions similar to those in Subchapter “K”, Chapter 1,

Subtitle “A” of the Code, under which an election similar to that provided by Section 761(a) of the Code is

permitted, each U.S. Party shall make such election as may be permitted or required by such laws. In making the

foregoing election or elections, each U.S. Party states that the income derived by it from operations under this

Agreement can be adequately determined without the computation of partnership taxable income.



(D)



Unless approved by every Non-U.S. Party, no activity shall be conducted under this Agreement that would

cause any Non-U.S. Party to be deemed to be engaged in a trade or business within the United States under

United States income tax laws and regulations.



(E)



A Non-U.S. Party shall not be required to do any act or execute any instrument which might subject it to the

taxation jurisdiction of the United States.



(F)



For the purposes of this Article 16.3, “U.S. Party” shall mean any Party that is subject to the income tax laws of

the United States with respect to operations under this Agreement. “Non-U.S. Party” shall mean any Party that

is not subject to such income tax laws.

ARTICLE 17

UNIT DATA - CONFIDENTIALITY - INTELLECTUAL PROPERTY



17.1



Unit Data

(A)



Each Party may use all Unit Data (including interpretation of and derivative works from such Unit Data) in its

own operations without the approval of or accounting to any other Party, subject to

90



any applicable restrictions and limitations set forth in this Article 17, this Agreement, the Contracts, or any

applicable patents or other Non-Affiliated Third Party rights. For purposes of this Article 17, the right to use

shall entail the right to copy and prepare derivative works subject to any applicable restrictions and limitations

set forth in this Article 17, this Agreement, the Contracts, or any applicable patents or other Non-Affiliated

Third Party rights.

(B)



Each Party may, subject to any applicable restrictions and limitations set forth in this Agreement, the Contracts,

any applicable patents or other Non Affiliated Third Party rights, extend the right to use Unit Data to each of its

Affiliates which are obligated to terms not less restrictive than this Article 17.



(C)



Subject to Article 4.6(C), all Unit Data received by a Party under this Agreement is received on an “as is” basis

without warranties, express or implied, of any kind. Any use of such Unit Data by a Party shall be at such



Party’s sole risk.

17.2



Confidentiality

(A)



Subject to the provisions of the Contracts, any other applicable Non-Affiliated Third Party agreements and

rights and this Article 17, the Parties agree that all information in relation to Unit Operations and, with respect

to the receiving Parties, any information received pursuant to Article 6.4, shall be considered confidential and

shall be kept confidential and not be disclosed (i) during the term of either Contract, to the extent disclosure is

prohibited by the terms thereof, except as may be permitted therein, (ii) during the term of the data license

agreement to be entered into pursuant to Article 4.6(A), to the extent disclosure is prohibited by the terms

thereof, except as may be permitted therein, and (iii) during the term of this Agreement to any person or entity

not a Party to this Agreement, except:

(1)



Pursuant to Article 17.1(B);



(2)



To a Governmental Authority when required by the Contracts provided that prior to any such

disclosure (except routine disclosures by any Operator in fulfillment of its duties hereunder) such Party

provides reasonable advance written notice of the disclosure and the legal reasons for such disclosure

to the other, non-disclosing Parties;



(3)



To the extent such information is required to be furnished in compliance with the applicable law or

regulations, or pursuant to any legal proceedings or because of any order of any court binding upon a

Party, or under the terms of either Contract;



(4)



To a Governmental Authority with respect to any information disclosed by any Party in accordance

with the terms of Article 21.1, where the general counsel of such Party, or where such Party has no

general counsel, the senior external legal advisor of such Party determines to voluntarily disclose such

information on the basis that such Governmental Authority has a legitimate need to know such

information disclosed in accordance with the terms of Article 21.1; provided that prior to any such

disclosure such Party provides reasonable advance written notice of the disclosure and the legal

reasons for such disclosure to the other, non-disclosing Parties;



(5)



To prospective or actual attorneys engaged by any Party where disclosure of such information is

essential to such attorney’s work for such Party;



(6)



To prospective or actual Subcontractors and consultants engaged by any Party where disclosure of

such information is essential to such Subcontractor’s or consultant’s work for such Party;

91



(7)



To a bona fide prospective Transferee of all or a portion of a Party’s Unit Interest to the extent

appropriate in order to allow the assessment of such Unit Interest (including an entity with whom a

Party and/or its Affiliates are conducting bona fide negotiations directed toward a merger,

consolidation or the sale of a majority of its or an Affiliate’s shares), and any Transferee of all or a

portion of a Party’s Unit Interest;



(8)



To a bank or other financial institution to the extent appropriate to a Party arranging for funding, or to

provide Security;



(9)



To the extent such information must be disclosed pursuant to any rules or requirements of any

government or stock exchange having jurisdiction over such Party, or its Affiliates; provided that if any

Party desires to disclose information in an annual or periodic report to its or its Affiliates’ shareholders

and to the public and such disclosure is not required pursuant to any rules or requirements of any

government or stock exchange, then such Party shall comply with Article 21.5;



(10)



To its and its Affiliates’ respective employees for the purposes of Unit Operations as the case may be,

subject to each Party taking customary precautions to ensure such information is kept confidential;



17.3



(11)



Any information which, through no fault of a Party, becomes a part of the public domain;



(12)



To any Third Party to whom Unit Data is licensed pursuant to Article 17.3; and



(13)



To any mediator, arbitrator or expert in a proceeding pursuant to Article 20.3 or Article 20.4

(including, for the avoidance of doubt, a proceeding pursuant to Exhibit E).



(B)



Disclosure as pursuant to Articles 17.2(A)(6), (7) and (8) shall not be made unless prior to such disclosure the

disclosing Party has obtained a written undertaking from the recipient party to keep the information strictly

confidential for at least two (2) years (or such longer term as is required by a Project Interest Agreement or any

other applicable Non-Affiliated Third Party agreement) and to use the information for the sole purpose

described in Articles 17.2(A)(6), (7) and (8), whichever is applicable, with respect to the disclosing Party.



(C)



Without prejudice to any other rights or remedies that a Party may have, each Party acknowledges and agrees

that damages alone would not be an adequate remedy for any breach of the terms of this Article 17.2.

Accordingly, a Party shall be entitled, without proof of special damages, or the posting of a bond, to the

remedies of injunction, specific performance or other equitable relief for any threatened or actual breach of the

terms of this Article 17.2.



(D)



Each Party hereby expressly acknowledges and agrees to the disclosure of the power of attorney as set forth in

Article 10.9(B), by the Unit Operator or any other Party to a Third Party, to the extent that such disclosure is

necessary or desirable in connection with the exercise of any remedies as set out in Articles 10.8 or 10.9

regarding a continued Default.



Intellectual Property

(A)



Decisions regarding obtaining, maintaining and licensing such intellectual property rights shall be made by the

Unit Operating Committee, and the costs and revenues thereof shall be for the Unit Account. Upon unanimous

consent of the Unit Operating Committee as to ownership, licensing rights, and income distribution, the

ownership of intellectual property rights in the Unit Data may be assigned to the Unit Operator or to a Party.

92



17.4



(B)



Nothing in this Agreement shall be deemed to require a Party to (i) divulge proprietary technology to any of the

other Parties; or (ii) grant a license or other rights under any intellectual property rights owned or controlled by

such Party or its Affiliates to any of the other Parties.



(C)



If a Party or an Affiliate of a Party has proprietary technology applicable to activities carried out under this

Agreement which the Party or its Affiliate desires to make available on terms and conditions other than as

specified in Article 17.3(A), the Party or Affiliate may, with the prior approval of the Unit Operating

Committee, make the proprietary technology available on terms to be agreed. If the proprietary technology is so

made available, then any inventions, discoveries, or improvements which relate to such proprietary technology

and which result from Unit Account expenditures shall belong to such Party or Affiliate. In such case, each other

Party shall have a perpetual, royalty-free, irrevocable license to practice such inventions, discoveries, or

improvements, but only in connection with the Unit Operations.



(D)



Subject to Article 7.6(C), all costs and expenses of defending, settling or otherwise handling any Non-Affiliated

Third Party claim, including any claim accruing or arising prior to the date hereof, which is based on the actual

or alleged infringement of any intellectual property right through the possession, disclosure or use of Unit Data

in Unit Operations shall be for the Unit Account and charged to the Parties based upon the Unit Operation from

which the claim arose (or, if not attributable to a particular operation, shall be deemed to arise from the

Approved Phase 1 Development Plan).



Continuing Obligations

Any Party ceasing to own a Unit Interest during the term of this Agreement shall nonetheless remain bound by the

obligations of confidentiality in Article 17.2, and any Disputes in relation thereto shall be resolved in accordance with

Article 20.3.



17.5



Trades

Unit Operator may, with approval of (i) the Unit Operating Committee and (ii) GNPC of the specific data to be traded,

make well trades and data trades for the benefit of the Parties, with any data so obtained to be furnished to all Parties.

Unit Operator shall cause any Third Party to such trade to enter into an undertaking to keep the traded data confidential

and to confirm that ownership of the traded data remains with GNPC.

ARTICLE 18

FORCE MAJEURE



18.1



Obligations

If as a result of Force Majeure any Party is rendered unable, wholly or in part, to carry out its obligations under this

Agreement, other than the obligation to pay any amounts due or to furnish Security, then the obligations of the Party

giving such notice, so far as and to the extent that the obligations are affected by such Force Majeure, shall be suspended

during the continuance of any inability so caused and for such reasonable period thereafter as may be necessary for the

Party to put itself in the same position that it occupied prior to the Force Majeure, but for no longer period. The Party

claiming Force Majeure shall notify the other Parties of the Force Majeure within a reasonable time after the occurrence

of the facts relied on and shall keep all Parties informed of all significant developments. Such notice shall give

reasonably full particulars of the Force Majeure and also estimate the period of time which the Party will probably

require to remedy the Force Majeure. The affected Party shall use all reasonable diligence to remove or overcome the

Force Majeure situation as quickly as possible in an economic manner but shall not be obligated to settle any labor

dispute except on terms acceptable to it, and all such disputes shall be handled within the sole discretion of the affected

Party. GNPC may not claim Force Majeure in respect of any action or provision of the Government or any agency of the

Government and no other Party may claim Force Majeure in respect of any action by such Party or its Affiliates.

93



18.2



Definition of Force Majeure

For the purposes of this Agreement, “Force Majeure” shall mean circumstances which were beyond the reasonable

control of the Party concerned and shall include strikes, lockouts and other industrial disturbances.

ARTICLE 19

NOTICES



Except as otherwise specifically provided or as may otherwise be specifically agreed by the Unit Operating Committee,

all notices authorized or required between or among the Parties by any of the provisions of this Agreement shall be in writing, in

English, and delivered in person or by courier service or by facsimile which provides written confirmation of complete

transmission, and addressed to such Parties. Oral communication and (except as may otherwise be specifically agreed by the Unit

Operating Committee) e-mail do not constitute notice for purposes of this Agreement, and e-mail addresses and telephone

numbers for the Parties are listed below as a matter of convenience only. A notice given under any provision of this Agreement

shall be deemed delivered only when received by the Party to whom such notice is directed, and the time for such Party to deliver

any notice in response to such originating notice shall run from the date the originating notice is received. “Received” for purposes

of this Article 19 shall mean actual delivery of the notice to the address of the Party specified hereunder or to be thereafter notified

in accordance with this Article 19. Each Party shall have the right to change its address at any time and/or designate that copies of

all such notices be directed to another person at another address, by giving written notice thereof to all other Parties.

Ghana National Petroleum Corporation

Petroleum House

Harbour Road

Private Mail Bag Tema

Accra, Ghana

Attention: Managing Director

Fax: +233 22 202854

Email: nb.asafuadjaye@gnpcghana.com

Telephone: +233 22 204726



Kosmos Energy Ghana HC

c/o Kosmos Energy LLC

8176 Park Lane

Suite 500

Dallas, Texas 75231 USA

Attention: Mr. J Matthews, VP & License Manager

Fax: +1 214 445 9705

Email: jmatthews@Kosmosenergy.com

Telephone: +1 214 445 9709



Copy to: Director of Operations

Fax: +233 22 202 854

Email: t.manu@gnpcghana.com

Telephone: +233 22 202 843



Copy to: Kosmos Energy Ghana HC

Suite 409, Century Yard

Cricket Square, Elgin Avenue

George Town

Grand Cayman KY1-1209

CAYMAN ISLANDS

Attention: Mr. Andrew Johnson

Fax: + 345 946 4090

94



Tullow Ghana Limited

Del Mina Place

Orphan Crescent

Labone

Osu Accra, Ghana

Attention: President and General Manager, Tullow

Ghana

Fax: +233 21 768121

Email: dai.jones@tullowoil.com

Telephone: +233 21 763 600

Copy to: General Counsel, Tullow Oil plc

Fax: +44 208 994 5332

Email: graham.martin@tullowoil.com

Telephone: +44 208 996 1000

Sabre Oil & Gas Holdings Limited

Avenue Louis Casai 18, 5th Floor

CH-1203 Geneva, Switzerland

Attention: David Lampe - Director

Fax: + 41 22 747 7763

Email: david.lampe@sabreoilandgas.com

Telephone: + 41 22 747 7763

Copy to: David Morton - Director

Fax: + 44 (0) 1932 221115

Email: david.morton@sabreoilandgas.com

Telephone: + 44 (0) 1932 230063 (Direct)

or + 44 (0) 207 060 9131 (Office)



Anadarko WCTP Company

1201 Lake Robbins Drive

The Woodlands

Texas 77380

United States of America

Attention: Manager International Negotiations

Fax: +1 832 636 9800

Email: john.bostock@anadarko.com

Telephone: +1 832 636 2827

Copy to: General Counsel International

Fax: +1 832 636 5587

Email: luis.derrota@anadarko.com

Telephone: +1 832 636 7523



EO Group Limited

PMB CT123 Cantoments

112A Adole Crescent Way

Airport, Accra Ghana

Attention: George Owusu

Fax: +233 21 740 889

Email: georgeyawowusu@yahoo.com

Telephone: +233 21 740 888

Copy to: Barnes & Cascio LLP

Fax: +1 281 875 0255

Email: james@barnescascio.com

Telephone: +1 281 875 0205



ARTICLE 20

APPLICABLE LAW - DISPUTE RESOLUTION - WAIVER OF IMMUNITY

20.1



Compliance with Ghana Laws/Regulations

Unit Operations shall be carried out in compliance with the terms of the applicable Ghana Laws/Regulations, the

Contracts, the Government Approval and the Acknowledgment. For the avoidance of doubt, if a dispute, controversy or

claim is between GNPC and one or more of the other Parties and arises out of, relates to or is connected with either the

terms and conditions of the Contract or the Government Approval or the Acknowledgment, that dispute, claim or

controversy shall be resolved in accordance with the terms of Article 24 of the applicable Contract or Article 1.10 of the

Acknowledgment, as applicable.

The Parties confirm that the enforcement by the Minister, on behalf of the government of the Republic of Ghana, of the

unitization of the Jubilee Field Unit pursuant to the Government Approval and/or the Acknowedgment shall be governed

by the laws of the Republic of Ghana and shall be resolved in accordance with the terms of Article 1.10 of the

Acknowledgment.



20.2



Law of Interpretation

This Agreement shall be interpreted and construed in accordance with the laws of England, exclusive of any conflicts of

law principles that could require the application of any other law to such interpretation and construction.

95



20.3



Dispute Resolution

(A)



Notification. Except to the extent a Dispute is to be resolved by an Expert as provided in Article 20.4, a Party

who desires to submit a Dispute for resolution shall commence the dispute resolution process by providing the

other parties to the Dispute written notice of the Dispute (“Notice of Dispute”). The Notice of Dispute shall

identify the parties to the Dispute and contain a brief statement of the nature of the Dispute and the relief

requested. The submission of a Notice of Dispute shall toll any applicable statutes of limitation related to the

Dispute, pending the conclusion or abandonment of dispute resolution proceedings under this Article 20.



(B)



Negotiations. Except to the extent a Dispute is to be resolved by an Expert as provided in Article 20.4, the

parties to the Dispute shall seek to resolve any Dispute by negotiation among Senior Executives. A “Senior

Executive” means any individual who has authority to negotiate the settlement of the Dispute for a Party. Within

thirty (30) Days after the date of the receipt by each party to the Dispute of the Notice of Dispute (which notice

shall request negotiations among Senior Executives), the Senior Executives representing the parties to the

Dispute shall meet at a mutually acceptable time and place to exchange relevant information in an attempt to

resolve the Dispute. If a Senior Executive intends to be accompanied at the meeting by an attorney, each other

party’s Senior Executive shall be given written notice of such intention at least three (3) Days in advance and

may also be accompanied at the meeting by an attorney. Notwithstanding the above, any Party may initiate

arbitration proceedings pursuant to Article 20.3(C) concerning such Dispute within thirty (30) Days after the

date of receipt of the Notice of Dispute.



(C)



Arbitration. Except to the extent a Dispute is to be resolved by an Expert as provided in Article 20.4 (but

including under this Article 20.3(C) for the avoidance of doubt, any Dispute as to the interpretation of the Expert

procedures under this Agreement or as to whether any Expert proceedings conducted pursuant to this Agreement

have conformed to such procedures), any Dispute not resolved by the Parties shall be exclusively and

definitively resolved through final and binding arbitration, it being the intention of the Parties that this is a broad

form arbitration agreement designed to encompass all possible disputes.

(1)



Rules. The arbitration shall be conducted in accordance with the Arbitration Rules of the International

Chamber of Commerce (“ICC”) (as then in effect) (the “Rules”).



(2)



Number of Arbitrators. The arbitration shall be conducted by three (3) arbitrators, unless all parties to

the Dispute agree to a sole arbitrator within thirty (30) Days after the commencement of the arbitration.

For greater certainty, for purposes of this Article 20.3(C), the commencement of the arbitration means

the date on which the claimant’s request for arbitration is received by the Secretariat of the

International Court of Arbitration of the ICC (“ICC Court”).



(3)



Method of Appointment of the Arbitrators.

(a)



If the arbitration is to be conducted by a sole arbitrator, then the arbitrator will be jointly

nominated by the parties to the Dispute. If the parties to the Dispute fail to agree on the

arbitrator within thirty (30) Days after reaching agreement to use a sole arbitrator, then the

ICC Court shall appoint the arbitrator.



(b)



If the arbitration is to be conducted by three (3) arbitrators and there are only two (2) parties

to the Dispute, then each party to the Dispute shall nominate one (1) arbitrator within forty

five (45) Days of the commencement of the arbitration, and the two (2) arbitrators so

nominated shall select the presiding arbitrator within thirty (30) Days after the latter of the

two (2) arbitrators has been nominated. If a party to the Dispute fails to nominate its partynominated arbitrator or if the two (2) party-nominated arbitrators cannot reach an agreement

on the presiding arbitrator within the applicable time period, then the



96



ICC Court shall appoint the remainder of the three (3) arbitrators not yet appointed.

(c)



If the arbitration is to be conducted by three (3) arbitrators and there are more than two

(2) parties to the Dispute, then within forty five (45) Days of the commencement of the

arbitration, all claimants shall jointly nominate one (1) arbitrator and all respondents shall

jointly nominate one (1) arbitrator, and the two (2) arbitrators so nominated shall select the

presiding arbitrator within thirty (30) Days after the latter of the two (2) arbitrators has been

nominated. If either all claimants or all respondents fail to make a joint nomination of an

arbitrator or if the party-nominated arbitrators cannot reach an agreement on the presiding

arbitrator within the applicable time period, then the ICC Court shall appoint all three

(3) arbitrators.



(4)



Consolidation. If the Parties initiate multiple arbitration proceedings under this Agreement and/or

under any Joint Operating Agreement, the subject matters of which are related by common questions

of law or fact, then all such proceedings may be consolidated into a single arbitral proceeding, as

determined by the tribunal constituted hereunder. To the extent an arbitral proceeding under this

Agreement is consolidated with an arbitral proceeding under a Joint Operating Agreement and there is

a conflict between the dispute resolution provisions of this Agreement and such Joint Operating

Agreement, the dispute resolution provisions of this Agreement shall prevail. For the avoidance of

doubt, as noted above in Article 20.1, if a dispute, controversy or claim is between GNPC and one or

more of the other Parties and arises out of, relates to or is connected with either the terms and

conditions of the Contract or the Government Approval or the Acknowledgment, that dispute, claim or

controversy shall be resolved in accordance with the terms of Article 24 of the applicable Contract or

Article 1.10 of the Acknowledgement, as applicable. If the subject matter of such a dispute,

controversy and claim and an arbitration proceeding under this Agreement are related by common

questions of law or fact, then such proceedings may all also be consolidated into a single arbitral

proceeding, as determined by the tribunal constituted hereunder.



(5)



Place of Arbitration. Unless otherwise agreed by all parties to the Dispute, the place of arbitration shall

be London, England.



(6)



Language. The arbitration proceedings shall be conducted in the English language and the

arbitrator(s) shall be fluent in the English language.



(7)



Entry of Judgment. The award of the arbitral tribunal shall be final and binding. Judgment on the

award of the arbitral tribunal may be entered and enforced by any court of competent jurisdiction.



(8)



Notice. All notices required for any arbitration proceeding shall be deemed properly given if sent in

accordance with Article 19.



(9)



Qualifications and Conduct of the Arbitrators. All arbitrators shall be and remain at all times wholly

impartial and independent, and, once appointed, no arbitrator shall have any ex parte communications

with any of the parties to the Dispute concerning the arbitration or the underlying Dispute other than

communications directly concerning the selection of the presiding arbitrator, where applicable.

Whenever the parties to the Dispute are of more than one nationality, the single arbitrator or the

presiding arbitrator (as the case may be) shall not be of the same nationality as any of the parties or

their ultimate parent entities, unless the parties to the Dispute otherwise agree.



(10)



Interim Measures. Notwithstanding any requirements for alternative dispute resolution procedures as

set forth in Articles 20.3(B) and (C), any party to the Dispute may apply to

97



a court for interim measures (i) prior to the constitution of the arbitral tribunal (and thereafter as

necessary to enforce the arbitral tribunal’s rulings); or (ii) in the absence of the jurisdiction of the

arbitral tribunal to rule on interim measures in a given jurisdiction. The Parties agree that seeking and

obtaining such interim measures shall not waive the right to arbitration. The arbitrators (or in an

emergency the presiding arbitrator acting alone in the event one or more of the other arbitrators is

unable to be involved in a timely fashion) may grant interim measures including injunctions,

attachments and conservation orders in appropriate circumstances, which measures may be

immediately enforced by court order. Such grant by the presiding arbitrator acting alone may be set

aside by the full panel of arbitrators. Hearings on requests for interim measures may be held in person,

by telephone, by video conference or by other means that permit the parties to the Dispute to present

evidence and arguments.



(D)



(11)



Costs and Attorneys’ Fees. The arbitral tribunal is authorized to award costs and attorneys’ fees and to

allocate them between or among the parties to the Dispute. The costs of the arbitration proceedings,

including attorneys’ fees, shall be borne in the manner determined by the arbitral tribunal.



(12)



Interest. The award shall include interest, as determined by the arbitral award, from the date of any

default or other breach of this Agreement until the arbitral award is paid in full. Interest shall be

awarded at the Agreed Interest Rate.



(13)



Currency of Award. The arbitral award shall be made and payable in United States dollars, free of any

tax or other deduction.



(14)



Consequential or Exemplary Damages. The Parties waive their rights to claim or recover, and the

arbitral tribunal shall not award, any Consequential Loss, except to the extent such damages have been

awarded to a Person other than the Parties and their Affiliates and are subject to allocation between or

among the parties to the Dispute, or any punitive, multiple or other exemplary damage (whether

statutory or common law).



(15)



Waiver of Challenge to Decision or Award. To the extent permitted by law, any right to appeal or

challenge any arbitral decision or award, or to oppose enforcement of any such decision or award, or to

refer any question of law, before a court or any governmental authority, is hereby waived by the

Parties. Without limiting the generality of the preceding sentence, the Parties agree to exclude any

right to appeal any question of law to the courts of England under Section 45 or 69 of the Arbitration

Act of 1996.



(16)



Privilege. Legal professional privilege, including privileges protecting attorney-client communications

and attorney work product of each Party from compelled disclosure or use in evidence, legal advice

privilege and litigation privilege, as recognized by the laws governing each Party’s relationship with its

in-house and its outside counsel, shall apply to and be binding in any arbitration proceeding conducted

under this Article 20.3.



Confidentiality. All negotiations, mediation, arbitration, and expert determinations relating to a Dispute

(including a settlement resulting from negotiation or mediation, an arbitral award, documents exchanged or

produced during a negotiation or Expert determination or mediation or arbitration proceeding, and memorials,

briefs or other documents prepared for the arbitration) are confidential and may not be disclosed by the Parties,

their employees, officers, directors, counsel, consultants, and expert witnesses, except (in accordance with

Article 17.2) to the extent necessary to enforce this Article 20 or any arbitration award, to enforce other rights of

a Party, or as required by law; provided, however, that breach of this confidentiality provision shall not void any

settlement, expert determination or award.

98



(E)



20.4



Acknowledgment Dispute Resolution. Each of the Parties agrees to be bound by the provisions of Article 1.10

of the Acknowledgment with respect to disputes or differences within the scope of that Article.



Expert Determination



For any determination referred to an Expert under this Agreement, the Parties hereby agree that such determination shall

be conducted expeditiously by an Expert selected unanimously by the parties to the Dispute. The Expert is not an

arbitrator of the Dispute and shall not be deemed to be acting in an arbitral capacity. The Expert shall not (without the

written consent of the parties to the Dispute) be appointed to act as an arbitrator or as adviser to any party to a Dispute

arbitrated pursuant to Article 20.3(C), provided that nothing in this sentence shall preclude any party to such a Dispute

from using the Expert as a witness regarding the proper conduct of the expert procedure. The Party desiring an Expert

determination shall give the other parties to the Dispute written notice of the request for such determination. If the parties

to the Dispute are unable to agree upon an Expert within ten (10) Days after receipt of the notice of request for an Expert

determination, then, upon the request of any of the parties to the Dispute, the International Centre for Expertise of the

ICC shall appoint such Expert. The Expert, once appointed, shall have no ex parte communications with any of the

parties to the Dispute concerning the Expert determination or the underlying Dispute. All communications between any

Party and the Expert shall be conducted in writing, with copies sent simultaneously to the other parties to the Dispute in

the same manner, or at a meeting to which representatives of all parties to the Dispute have been invited and of which

such parties have been provided at least five (5) Business Days notice. Within thirty (30) Days after the Expert’s

acceptance of its appointment, the Party or Parties who referred the matter for resolution under this Article shall provide

the Expert with a report containing its or their proposal for the resolution of the matter and the reasons therefor,

accompanied by all relevant supporting information and data. Within the same thirty (30) Day period, the respondent

Party or Parties shall provide the Expert with a report explaining their proposal and the reasons therefor, accompanied by

all relevant supporting information and data. Within sixty (60) Days of receipt of the above-described materials and after

receipt of additional information or data as may be required by the Expert, the Expert shall make a determination, which

determination shall be consistent with the terms of this Agreement, with respect to each issue submitted to it pursuant to

this Article 20.4.

The Expert’s determination shall be final and binding on the parties to the Dispute. Any Party that fails or refuses to

honor the determination of an Expert shall be in default under this Agreement.

The provisions of Exhibit E shall supersede the provisions of this Article 20.4 with respect to any Expert determination

under Exhibit E, to the extent the two are in conflict.

20.5



Waiver of Immunity

Any Party that now or hereafter has a right to claim immunity for itself or any of its assets hereby waives such immunity

and agrees not to claim such immunity, in connection with this Agreement, including any Dispute hereunder. This waiver

includes immunity from (A) legal process of any sort whatsoever, (B) jurisdiction or judgment, award, determination,

order or decision of any court, arbitrator, tribunal or Expert, (C) inconvenient forum, and (D) any effort to confirm,

enforce, or execute any decision, settlement, award, judgment, service of process, execution order, attachment (including

pre-judgment attachment) or other remedy that results from an expert determination, arbitration or any judicial or

administrative proceedings commenced pursuant to this Agreement. Each Party acknowledges that its rights and

obligations hereunder are of a commercial and not a governmental nature.

99



ARTICLE 21

GENERAL PROVISIONS

21.1



Conduct of the Parties

(A)



Public Anti Corruption Provisions.

(1)



No Party to this Agreement shall knowingly permit or allow, by act or omission, the paying, making,

offering, promising, authorizing or causing to pay, make, offer, give, promise or authorize, either

directly or indirectly, by it or any of its Affiliates, of any bribe, commission, money, payment, gift

(other than promotional and marketing gifts of nominal value), loan, fee, reward, travel, entertainment

or transfer of anything of value, to or for the use or benefit of any Official, of a nature and cost which

is not permitted under the Anticorruption Legislation, in connection with this Agreement or the

operations associated therewith.



(2)



Furthermore and without prejudice to the above, each Party, in recognition of the OECD Anti-bribery



Principles represents and warrants that it and its Affiliates have not knowingly, either directly or

indirectly, paid, made, offered, given, promised, or authorized and will not knowingly pay, make, offer,

give, promise or authorize, in connection with this Agreement or the operations associated therewith,

any commissions, money, payment, gift (other than promotional and marketing gifts of nominal value),

loan, fee, reward, travel, entertainment or transfer anything of value, to or for the use or benefit of any

Official for the purposes of:

(a)



influencing any act, omission or decision on the part of any such Official, in his or her official

capacity;



(b)



securing any improper advantage from such Official; or



(c)



inducing any such Official to use his or her influence with another Official or Governmental

Authority to affect or influence any official act or to direct business to any Person, or to

obtain or retain business related to this Agreement;



where such commission, money, payment, gift (other than promotional and marketing gifts of nominal

value), loan, fee, reward, travel, entertainment or transfer of anything of value would violate the

Anticorruption Legislation applicable to it.

(3)



Each Party further represents and warrants that it and its Affiliates have not either directly or indirectly

paid, made, offered, given, promised or authorized, and will not pay, make, offer, give, promise or

authorize, in connection with this Agreement or the operations associated therewith, to or for the use or

benefit of any other Person, any commissions, money, payment, gift (other than promotional and

marketing gifts of nominal value), loan, fee, reward, travel, entertainment or anything of value, if the

Party or Affiliate knows, has a firm belief or is aware that there is a high probability that the other

Person would use the commissions, money, payment, gift (other than promotional and marketing gifts

of nominal value), loan, fee, reward, travel, entertainment or anything of value for any of the purposes

prohibited by Article 21.1(A)(2).



(4)



Each Party further represents and warrants that it and its Affiliates have not either directly or indirectly

taken or authorized, and will not take or authorize, any act in connection with this Agreement or the

operations associated therewith that could give rise to either civil or criminal liability for any Original

Party under any Anticorruption Legislation applicable to such Original Party.

100



(B)



Indemnity. Each Party shall defend, indemnify and hold the other Parties harmless from and against any and all

claims, damages, losses, penalties, costs and expenses arising from or related to, any breach by such first Party

of such warranties or covenants under Article 21.1(A) (excluding any Consequential Loss or punitive, multiple

or other exemplary damages in accordance with Article 20.3(C)(14)). Such indemnity obligation shall survive

termination or expiration of this Agreement.



(C)



Internal Controls. Each Party agrees, in connection with this Agreement or the operations associated therewith,

to (1) maintain adequate internal controls; (2) properly record and report all transactions; and (3) comply with

the Anticorruption Legislation applicable to it. Each Party shall be entitled to rely on the other Parties’ system of

internal controls and record keeping, and on the adequacy of full disclosure of the facts, and transactions and of

financial and other data regarding Unit Operations and any other activity undertaken under this Agreement. No

Party is in any way authorized to take any action on behalf of another Party that would result in an inadequate or

inaccurate recording and reporting of assets, liabilities or any other transaction, or which would put such Party in

violation of its obligations under the Anticorruption Legislation or any other laws applicable in connection with

this Agreement or the operations associated therewith.



(D)



Audit Rights. During the term of this Agreement and for a period of five (5) years thereafter, each Party shall in

a timely manner:

(1)



respond in reasonable detail as to itself and its Affiliates after reasonable inquiry and investigation to

any notice from any other Party reasonably connected with the representations, warranties and



covenants set forth in Article 21.1(A) and Article 21.3;



21.2



(2)



furnish relevant documentary support for such response upon request from such other Party; and



(3)



in general, cooperate in good faith with such other Party in determining whether a breach of the

representations and warranties has occurred.



(E)



Annual Certification. Each Party shall complete an annual certification attesting that, to its knowledge after

reasonable inquiry and investigation, neither such Party nor its Affiliates has breached the terms of

Article 21.1(A) or Article 21.3 or committed to any act prohibited by the Anticorruption Legislation in

connection with this Agreement or the matters which are the subject of this Agreement.



(F)



Subcontractors. Unit Operator and each Technical Operator, shall obtain express anticorruption provisions,

including where appropriate in the contracting party’s opinion, applicable anticorruption legislation provisions,

audit rights, termination provisions, and requirements that each Subcontractor obtain similar provisions in any

contracts with its subcontractors, in a written agreement with each of its respective Subcontractors retained for

the Unit Account.



Proscribed Persons

Each Party represents and warrants that neither it nor its Affiliates is or shall be on any list of Proscribed Persons, and

agrees that, if it or any of its Affiliates is or becomes a Proscribed Person, it shall notify the other Parties to this

Agreement as soon as possible after it becomes aware of such fact. A Party or its Affiliate being or becoming a

Proscribed Person shall be deemed to be a breach of this Agreement and such Party shall be deemed to be a Defaulting

Party subject to the remedies under Articles 10.6, 10.8, 10.9, 10.10 and 10.11, notwithstanding such Party’s payment of

all amounts owing by it when due under this Agreement and furnishing and maintaining any Security required of it under

this Agreement. Such Party will only cease being a Defaulting Party by having itself removed from the list of Proscribed

Persons prior to loss of its Project Interest under Article 10.8.

101



21.3



Private Anti Corruption Provisions

Each Party agrees that neither it, nor its Affiliates nor their respective directors, officers and employees or individual

contractors or consultants (natural persons) fulfilling a staff role in such Party’s organization, will knowingly, whether

directly or indirectly, pay, make, offer, give, promise or authorize, or accept, in connection with this Agreement or the

operations associated herewith, any bribe, commission, money, payment, gift (other than promotional and marketing gifts

of nominal value), loan, fee, reward, travel, entertainment or transfer of anything of value, to or for the use of any

directors, officers and employees or individual contractors or consultants (natural persons) fulfilling a staff role, of any

other Party, or any of its Affiliates, or any subcontractor of any tier, for the purpose of:



21.4



(A)



improperly influencing any act, omission or decision on the part of any such other Party, or its Affiliates, or any

such subcontractor of any tier, in connection with this Agreement and the operations associated herewith; or



(B)



securing any improper advantage from such other Party, or its Affiliates, or any subcontractor of any tier, in

connection with this Agreement or the operations associated herewith.



Conflicts of Interest

(A)



Each Operator undertakes that it shall avoid any conflict of interest between its own interests (including the

interests of Affiliates) and the interests of the other Parties in dealing with suppliers, customers and all other

organizations or individuals seeking to provide goods or services to the Parties in connection with Unit

Operations.



(B)



The provisions of the preceding paragraph regarding each Operator shall not apply to: (1) such Operator’s

performance which is in accordance with the written local preference laws or policies of the Government;

(2) such Operator’s acquisition of products or services from an Affiliate, or the sale thereof to an Affiliate, made

in accordance with the terms of this Agreement; or (3) such Operator’s acquisition of goods and services for the



benefit of any Tract for which it is Tract Operator.

(C)



21.5



Unless otherwise agreed by the Parties in writing, the Parties and their Affiliates are free to engage or invest

(directly or indirectly) in an unlimited number of activities or businesses, any one or more of which may be

related to or in competition with the business activities contemplated under this Agreement, without having or

incurring any obligation to the other Parties, including any obligation to offer any interest in such business

activities to any Party.



Public Announcements

(A)



Subject to any required approvals under Article 16 of each Contract, Unit Operator shall be responsible for the

preparation and release of all public announcements and statements regarding this Agreement or the Unit

Operations; provided that no public announcement or statement shall be issued or made unless, prior to its

release, all the Parties have been furnished with a copy of such statement or announcement and the approval of

at least two (2) Parties which are not Affiliates of Unit Operator holding fifty percent (50%) or more of the Unit

Interests not held by Unit Operator or its Affiliates has been obtained. Any Party failing to communicate its vote

within three (3) Business Days of receipt shall be deemed to have approved such statement or announcement.

Where a public announcement or statement becomes necessary or desirable because of danger to or loss of life,

damage to property or pollution as a result of activities arising under this Agreement, Unit Operator and the

applicable Tract Operator are authorized to issue and make such announcement or statement without prior

approval of the Parties, but shall promptly furnish all the Parties with a copy of such announcement or

statement.

102



(B)



21.6



If a Party wishes to issue or make any public announcement or statement regarding this Agreement or the Unit

Operations, it shall not do so unless, at least three (3) Business Days prior to the release of the public

announcement or statement, such Party furnishes all the Parties with a copy of such announcement or statement,

and obtains the approval of at least two (2) Parties which are not Affiliates holding fifty percent (50%) or more

of the Unit Interests not held by such announcing Party or its Affiliates; provided that, notwithstanding any

failure to obtain such approval, no Party shall be prohibited from issuing or making any such public

announcement or statement if it is necessary to do so in order to comply with the applicable laws, rules or

regulations of any government, legal proceedings or stock exchange having jurisdiction over such Party or its

Affiliates as set forth in Article 17.2.



Successors and Assigns

Subject to the limitations on Transfer and Encumbrances contained in Article 14, this Agreement shall inure to the

benefit of and be binding upon the successors and assigns of the Parties.



21.7



Waiver

No waiver by any Party of any one or more defaults by another Party in the performance of any provision of this

Agreement shall operate or be construed as a waiver of any future default or defaults by the same Party, whether of a like

or of a different character. Except as expressly provided in this Agreement no Party shall be deemed to have waived,

released or modified any of its rights under this Agreement unless such Party has expressly stated, in writing, that it does

waive, release or modify such right.



21.8



No Third Party Beneficiaries

The Contracts (Rights of Third Parties) Act 1999 (the “Act”) shall only apply in respect of any relief from liability, hold

harmless, indemnity or benefit expressly granted by Article 7.3(G), Article 7.6(A) and Article 7.6(B) and, without

prejudice to those Articles, no Third Party shall otherwise have any right pursuant to the Act to enforce any term of this

Agreement. Any rights held by a Third Party hereunder may only be enforced by arbitration in accordance with

Article 20.3(C). The consent of a Third Party shall not be necessary for any rescission or variation (including any release

or compromise in whole or part of any liability), novation or termination of this Agreement.



21.9



For the avoidance of doubt, notwithstanding the foregoing, the Parties recognise that the Minister, on behalf of the

government of the Republic of Ghana, shall have the right to enforce the unitization of the Jubilee Field Unit and rights



arising therefrom pursuant to the Government Approval and/or the Acknowedgment which enforcement shall be

governed by the laws of the Republic of Ghana and shall be resolved in accordance with the terms of Article 1.10 of the

Acknowledgment.Joint Preparation

Each provision of this Agreement shall be construed as though all Parties participated equally in the drafting of the same.

Consequently, the Parties acknowledge and agree that any rule of construction that a document is to be construed against

the drafting party shall not be applicable to this Agreement.

21.10



Severance of Invalid Provisions

If and for so long as any provision of this Agreement shall be deemed to be judged invalid for any reason whatsoever,

such invalidity shall not affect the validity or operation of any other provision of this Agreement except only so far as

shall be necessary to give effect to the construction of such invalidity, and any such invalid provision shall be deemed

severed from this Agreement without affecting the validity of the balance of this Agreement, but only if the economic or

legal substance of the transactions contemplated hereby is not affected in any way that is materially adverse to any Party

hereto. In the event that any provision in this Agreement is determined to be invalid or unenforceable, the Parties shall

negotiate in good faith to agree upon a valid and enforceable replacement provision that will effectuate the intent of the

Parties as set forth herein.

103



21.11



Modifications

Except as is provided in Article 21.10, there shall be no modification of this Agreement except by written consent of all

Parties (without any further approvals being necessary).



21.12



21.13



Interpretation

(A)



Headings. The topical headings used in this Agreement are for convenience only and shall not be construed as

having any substantive significance or as indicating that all of the provisions of this Agreement relating to any

topic are to be found in any particular Article.



(B)



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



(C)



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



(D)



Article. Unless otherwise provided, reference to any Article or an Exhibit means an Article or Exhibit of this

Agreement, and any reference to an Article or an Exhibit in any Exhibit means an Article or Exhibit of that

Exhibit.



(E)



Include. “include” and “including” shall mean include or including without limiting the generality of the

description preceding such term and are used in an illustrative sense and not a limiting sense.



(F)



Priority. In the event of a conflict between the body of this Agreement and any Exhibit, the body of this

Agreement shall prevail except in the case of matters concerning an Expert, in which case the terms of the

applicable Exhibit shall prevail over Article 20.3.



Counterpart Execution

This Agreement may be executed in any number of counterparts and each such counterpart shall be deemed an original

Agreement for all purposes; provided that no Party shall be bound to this Agreement unless and until all Parties have

executed a counterpart. For purposes of assembling all counterparts into one document, Unit Operator is authorized to

detach the signature page from one or more counterparts and, after signature thereof by the respective Party, attach each

signed signature page to a counterpart.



21.14



Entirety

With respect to the subject matter contained herein, this Agreement (i) is the entire agreement of the Parties; and



(ii) supersedes all prior understandings and negotiations of the Parties.

IN WITNESS of their agreement each Party has caused its duly authorized representative to execute and deliver this

instrument as a deed on the date first written above.

SIGNATURE PAGE FOLLOWS



104



Signed as a deed on behalf of

GHANA NATIONAL PETROLEUM CORPORATION



By:

Name:

Title:

Date:



/s/ Nana Boakye Asafu-Adjaye

Nana Boakye Asafu-Adjaye

Managing Director

13th July 2009



In the presence of: /s/ Thomas Manu

Name: Thomas Manu

Address: Ghana National Petroleum Corp.

Date: 13th July 2009

Signed as a deed on behalf of

TULLOW GHANA LIMITED



By:

Name:

Title:

Date:



/s/ Dai Jones

Dai Jones

President and General Manager

13/07/09



By:

/s/ TULLOW GHANA LIMITED

Name:

Title:

Date:

Signed as a deed on behalf of

KOSMOS ENERGY GHANA HC

By:

/s/ KOSMOS ENERGY GHANA HC

Name:

Title:

Date:

In the presence of: Andrew B. Jerman

Name: Andrew B. Jerman

Address: 1717, Arts Plaza, Dallas, Tx 75201

Date: 13-July 2009

105



Signed as a deed on behalf of

ANADARKO WCTP COMPANY



[Seal]



By:

Name:

Title:

Date:



/s/ Donald H. Macliver

Donald H. Macliver

Vice President

13 July 2009



By:

Name:

Title:

Date:



/s/ Charles E. Provost

Charles E. Provost

Vice President

13 July 2009



Signed as a deed on behalf of

SABRE OIL & GAS HOLDINGS LIMITED



By:

Name:

Title:

Date:



/s/ Kofi Esson

Kofi Esson

Attorney In Fact

13 July 2009



In the presence of: Peter Sloan

Name: Peter Sloan

Address: 6 Park Rd, Selsey, W. Sussex, UK

Date: 13 July 2009

Signed as a deed on behalf of

EO GROUP LIMITED



By:

/s/ EO GROUP LIMITED

Name:

Title:

Date:

In the presence of: James Barnes

Name: James Barnes

Address: Houston Texas

Date: 13 July 2009

106