NOTICE: The text below was created automatically and may contain errors and differences from the contract's original PDF file. Learn more here

PRODUCTION SHARING CONTRACT



BETWEEN



NATIONAL OIL COMPANY OF LIBERIA

(NOCAL)



AND



BROADWAY CONSOLIDATED PLC



Offshore Block 13



31 May 2005it is blank TABLE OF CONTENTS

ARTICLE PAGE

1. DEFINITIONS 5

2. SCOPE OF THE CONTRACT 8

3. DURATION OF EXPLORATION PERIODS AND SURRENDERS 9

4. EXPLORATION WORK COMMITMENTS 11

5. ESTABLISHMENT AND APPROVAL OF ANNUAL WORK

PROGRAMS AND BUDGETS 13

6. CONTRACTOR'S OBLIGATIONS IN RESPECT OF THE

EXPLORATION PERIODS 15

7. CONTRACTOR'S RIGHTS IN RESPECT OF THE

EXPLORATION PERIODS 17

8. ACTIVITY REPORTS DURING THE EXPLORATION PERIODS

AND SUPERVISION OF PETROLEUM OPERATIONS 18

9. OCCUPATION OF LAND 20

10. USE OF FACILITIES 21

11. APPRAISAL OF A PETROLEUM DISCOVERY 22

12. GRANT OF AN EXCLUSIVE EXPLOITATION AUTHORIZATION

IN RESPECT OF A COMMERCIAL DISCOVERY 25

13. DURATION OF THE EXPLORATION PERIOD 26

14. EXPLOITATION OBLIGATION 27

15. CONTRACTOR'S OBLIGATIONS AND RIGHTS IN RESPECT

OF EXCLUSIVE EXPLOITATION AUTHORIZATIONS 28

16. RECOVERY OF PETROLEUM COSTS AND PRODUCTION

SHARING 30

17. TAXATION 32

18. VALUATION OF PETROLEUM 35

19. BONUSES 37

20. OWNERSHIP AND ABANDONMENT OF ASSETS 38

21. NATURAL GAS 39

22. FOREIGN EXCHANGE CONTROL 42

23. APPLICABLE LAW 43

24. MONETARY UNIT 44

[initials][initials]

2 31 May 2005

[initials]25 ACCOUNTING METHODS AND AUDITS 45

26 IMPORT AND EXPORT 46

27 DISPOSAL OF PRODUCTION 48

28 PROTECTION OF RIGHTS 49

29 PERSONNEL AND TRAINING 50

30 ACTIVITY REPORTS IN RESPECT OF EXCLUSIVE

EXPLOITATION AUTHORIZATIONS 52

31 ARBITRATION 53

32 FORCE MAJEURE 54

33 JOINT AND SEVERAL OBLIGATIONS AND

GUARANTEES 55

34 RIGHTS OF ASSIGNMENT 56

35 STABILITY OF CONDITIONS 57

36 IMPLEMENTATION OF THE CONTRACT 58

37 EFFECTIVE DATE 60

APPENDIX

1 DELIMITED AREA 62

2 ACCOUNTING PROCEDURE 63

3 MAP 73

[SIGNATURE] [SIGNATURE]

3 31 MAY 2005PRODUCTION SHARING CONTRACT



BETWEEN



The Republic of Liberia (STATE) represented for the purposes of this Contract by the National Oil Company of Liberia (NOCAL), a company incorporated under the laws of Liberia;



AND



Broadway Consolidated PLC, a company incorporated in the jurisdiction of The Isle of Man, hereinafter referred to as Broadway ("the Contractor").



WHEREAS



- the discovery and exploitation of Petroleum are important for the interest and the economic development of the country and its people;



- NOCAL wishes to undertake operations for exploration for exploitation, transportation, storage, processing and marketing of Petroleum;



- NOCAL has the mining rights in respect of Petroleum exploration and exploitation over the entirety of available areas in Liberia including the Delimited Area defined hereinafter;



- NOCAL wishes to promote the development of the Delimited Area, and the Contractor wishes to cooperate with NOCAL by assisting it in the exploration for and production of the potential resources within the Delimited Area, and thereby encouraging the economic growth of the country;



- the company which is a Party to this Contract shall be the Contractor, and



- the Contractor represent that it has the financial resources, the technical competence and the organization capacity necessary to carry out in the Delimited Area the Petroleum Operations specified hereinafter.



NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:



31 May 2005 ARTICLE 1



DEFINITIONS



The following terms used in this Contract shall have the following meaning:



1.1 CALENDAR YEAR means a period of twelve (12) consecutive months beginning on January first (1st) and ending on the following December thirty-first (31st) according to the Gregorian Calendar.



1.2 CONTRACT YEAR means a period of twelve (12) consecutive months beginning on the Effective Date or on the anniversary thereof.



1.3 FISCAL YEAR means a period of twelve (12) consecutive months beginning on January first (1st) and ending on the following December thirty-first (31st).



1.4 BARREL means U.S. barrel i.e. 42 U.S. gallons measured at a temperature of 60°F and under an atmospheric pressure.



1.5 BUDGET means the itemized cost estimates of the Petroleum Operations described in an Annual Work Program.



1.6 EFFECTIVE DATE means the date on which this Contract comes into force and effect, as defined in Article 37.



1.7 CONTRACTOR means Broadway and any of its successors and permitted assigns that shall act as operator and shall conduct Petroleum Operations.



1.8 CONTRACT means this Production Sharing Contract and its appendices forming an integral part hereof, together with any extension, renewal, replacement or modification hereto which may by mutually agreed between the Parties.



1.9 PETROLEUM COSTS means all expenditures actually incurred and paid by the Contractor for the purposes of the Petroleum Operations under this Contract, and determined in accordance with the Accounting Procedure attached hereto as Appendix 2.



1.10 DOLLAR means dollar of the United States of America.



1.11 NATURAL GAS means methane, ethane, propane, butane and dry or wet gaseous hydrocarbons, whether or not associated with Crude Oil, as well as all gaseous products extracted in association with Petroleum, such as, without limitation, nitrogen, hydrogen sulfide, carbon dioxide, helium and water vapor.



1.12 ASSOCIATED NATURAL GAS means Natural Gas which exists in a reservoir in solution with Crude Oil which is or could be produced in association with Crude Oil.



1.13 NON-ASSOCIATED NATURAL GAS means Natural Gas which exists in a reservoir in solution with Crude Oil which is or could be produced in associated with Crude Oil.



1.14 FIELD means a commercial accumulation of Petroleum in one or several overlaying horizons, which has been appraised in accordance with the provisions of Article 11.



1.15 PETROLEUM means Crude Oil and Natural Gas.



[three signatures]





5 31 May 2005



1.16 PETROLEUM OPERATIONS means all the Petroleum exploration, appraisal, development, production, transportation and marketing operations, and more generally, any other operations directly associated therewith, carried out under this contract.



1.17 PARTIES means NOCAL and the Contractor; and PARTY means either NOCAL or the Contractor.



1.18 APPRAISAL PERIMETER means any part of the Delimited Area where one or more Petroleum discoveries have been made, and in respect of which NOCAL has granted to the Contractor an exclusive appraisal authorization for the purpose of appraising the extent of said discoveries.



1.19 EXPLOITATION PERIMETER means any part of the Delimited Area in respect of which NOCAL has granted to the Contractor an exclusive exploration authorization.



1.20 CRUDE OIL means crude mineral oil, asphalt, ozokerite, and all kinds of Petroleum and bitumen, either solid or liquid in their natural condition or obtained from Natural Gas by condensation or extraction, including condensates and Natural Gas liquids.



1.21 DELIVERY POINT means the F.O.B. point connecting the loading facilities to the vessel then loading Crude Oil in the Republic of Liberia or any other transfer point mutually agreed between the parties.



1.22 TOTAL PRODUCTION means the total production of Crude Oil or the total production of Natural Gas obtained from the whole Delimited Area less the quantities used for the requirements of the Petroleum Operations and any unavoidable losses.



1.23 ANNUAL WORK PROGRAM means the document describing, item by item, the Petroleum Operations to be carried out during a Calendar Year within the Delimited Area and in each Exploitation Perimeter, if any, established in accordance with the Contract.



1.24 DELIMITED AREA means the area in respect of which NOCAL under this Contract, grants to the Contractor an exclusive exploration right. The areas surrendered by the Contractor in accordance with the provisions of Articles 3.5 and 3.6 shall be deemed as excluded from the Delimited Area which shall be reduced accordingly. Conversely, the Exploitation Perimeter(s) shall be an integral part of the Delimited Area during the term of the relevant exclusive exploitation authorization.



1.25 AFFILIATED COMPANY means:



1.25.1 a company or any other entity which directly or indirectly controls or is controlled by any entity consulting the Contractor; or



1.25.2 a company or any other entity which directly or indirectly controls or is controlled by a company or entity which itself directly or indirectly controls any entity constituting the Contractor.



Such "control" means direct or indirect ownership by a company or any other entity of more than fifty percent (50%) of the shares, conferring voting rights, forming the stock of another company.



1.26 THIRD PARTY means a company or any other entity, other than the Contractor, which does not come within the foregoing definition.



1.27 ARMS LENGTH SALES. For the purpose of determining arms length sales, the price of Crude Oil will generally be based on a per barrel basis of one or more Crude Oil blends which at the time of calculation are being freely and actively traded in the international oil



6 31 May 2005

JH [signature]market and have similar characteristics and quality to the Crude Oil being marketed. The price of such Crude Oil will be ascertained from Platt's Crude Oil Market Wire daily publication on the spot market for the same Crude Oil ascertained in a similar manner.

[Signature][Signature]

7 31 May 2005ARTICLE 2



SCOPE OF THE CONTRACT



2.1 This Contract is a Production Sharing Contract and includes all the provisions of the agreement between NOCAL and the Contractor.



2.2. NOCAL authorizes the Contractor to be the Operator pursuant to the terms set forth herein and to carry out the useful and necessary Petroleum Operations in the Delimited Area, on an exclusive basis.



2.3 The Contractor undertakes, for all the work necessary for carrying out the Petroleum Operations provided for hereunder, to comply with good international petroleum industry practice and to be subject to the laws and regulations in force in Liberia unless otherwise provided under this Contract.



2.4 The Contractor shall supply all financial and technical means necessary for the proper performance of the Petroleum Operations.



2.5 The Contractor shall bear alone the financial risk associated with the performance of the Petroleum Operations. The Petroleum Costs related thereto shall be recoverable by the Contractor in accordance with the provisions of Article 16.2.



2.6 During the term hereof, in the event of production, the Total Production arising from the Petroleum Operations shall be shared between the Parties according to the terms set forth in Articles 16.2 and 16.3.



2.7 On the Effective Date, the Delimited Area shall be the area as defined in Appendix 1.



2.8 The Contractor shall furnish NOCAL with all reports, information and data referred to hereunder, including without limitation any agreement, for the provision of goods and services in respect of Petroleum Operations in excess of $100,000, binding on the entities and constituting the Contractor.

[initials] [initials] [initials]



8 31 May 2005









ARTICLE 3





DURATION OF EXPLORATION PERIODS AND SURRENDERS





3.1 The exclusive exploration authorization is hereby granted to the Contractor for a period of 9 consecutive years defined by three consecutive periods.



A first Exploration Period of four (4) Contract Years, a second Exploration Period of three (3) Contract Years and a third Exploration Period of two (2) Contract Years in respect of the entire Delimited Area.



3.2 If, during the first exploration period set forth above the Contractor has fulfilled the exploration work commitments defined in Article 4, as ascertained by the Government, the exclusive exploration authorization shall, at the Contractor's request, be renewed for a second exploration period of three (3) Contractual Years.



3.3 If, at the end of such second exploration period and provided that it has fulfilled its work commitments as set forth above, the Contractor so requests, a third exploration period shall be authorized for two (2) Contractual Years.



3.4 The applications referred to in Articles 3.2 and 3.3 shall be made at least sixty (60) days prior to the expiration of the current exploration period.



3.5 The Contractor shall surrender at least the following surfaces:



(a) twenty-five percent (25%) of the initial surface of the Delimited Area at the expiration of the first exploration period.



(b) twenty-five percent (25%) of the initial surface of the Delimited Area at the expiration of the second exploration period.



Such surrenders shall be constituted of one block of a simple geometrical shape delimited by north-south, east-west lines or by natural boundaries of the area concerned.



For the purpose of computing the surface to be surrendered, the surface in respect of any Exploitation Perimeter shall be deducted from the initial surface of the Delimited Area.



The surfaces previously surrendered pursuant to the provisions of Article 3.6 shall be deducted from the surfaces to be surrendered.



Subject to its compliance with the above-mentioned requirements, the Contractor shall have the right to determine the area to be surrendered.



The Contractor undertakes to furnish NOCAL with a precise description and a map showing the details of the surrendered areas and those retained, together with a report specifying the work carried out in the surrendered areas from the Effective Date and the results obtained.



3.6 During any exploration period, the Contractor may, at any time, notify NOCAL, that it surrenders on the whole or any part of the Delimited Area the rights granted to it by giving sixty (60) days notice to that affect.

(initials) (initials)







9 31 May 2006



No surrender during or at the expiration of any exploration period shall reduce the work commbnents and the investment obligations set forth in Article 4 for the current explanation period.



In the event of surrender, the Contractor shall have the exclusive right to retain, for their respective term, the surfaces in respect of Appraisal Perimeters and Exploration Perimeters which would have been granted and to carry out the Petrciaum Operations therein.



3.7 At the expiration of the third explanation period set forth in Article 3.3, the Contractor shall surrender the whole remaining surface of the Delimited Area except as to any Appraisal Perimeters and Exploitation Perimeters which would have then been granted.



3.8 If at the exploration of all the exploration periods the Contractor has not obtained an exclusive appraisal authorization or an exclusive exploitation authorization, this Contract shall terminate.



3.9 The termination of this Contract whatever the reason thereof shall not relieve the Contractor of any obligations under this Contract incurred prior to , or arising from, said termination and which shall be fulfiled.



[Signature] [Signature] [Signature]



10 31 May 2005

ARTICLE 4



EXPLORATION WORK COMMITMENTS



4.1 The Contractor shall commence the geological and seismic work within three months from the Effective Date.



4.2 The Contractor, during the first exploration period defined in Article 3.1, shall carry out a minimum work programme at a cost of no less then $5(five) million Dollars which includes a 3D Seismic Survey of 1500 square Km.





4.3 The Contractor, during the second exploration period defined in Article 3.1. shall carry out a minimum work programme at a cost of no less than $12(twelve) million Dollars including a commitment to drill an exploration wel.



4.4 The Contractor, during the third exploration period defined in Article 3.1. shall carry out a minimum work programme at a cost of no less than $13(thirteen)million Dollars including a commitment to drill an exploration wel.



4.5 Each of the exploretory wells shall be drilled to a minimum depth of 1000 meters, after deduction of the water depth, or to a lesser depth if the continuation of drilling performed in accordance with good international petroleum industry practice is prevented for any of the following reasons.



(a) the basement is encountered at a lesser depth than the minimum contractual depth.



(b) continuation of driling presents an obvious danger due to the existence of abnormal formation pressure.



(c) rock formations are encountered the hardness of which prevents in practice the continuation of drilling by the use of appropriate equipment,



(d) petroleum formations are encountered the crossing of which requires, for their protection, the laying of casings preventing the minimum contractual depth from being reached.



In the event that any of the above reasons occurs, the explonatory well shall be deemed to have been drilled to the minimum contractual depth.



Notwithstanding any provision in this Article to the contrary, NODAL, and the Contractor may, at any time, agree to abardon the drilling of a well at a lesser depth than the minimum contractual depth.





4.F In order to carry out the exploration drilling defined in Articles 4.3 and 4.4 in the best technical conditions in accordance with good international petroleum industry practice, the Contractor undertakes to make the expenditure required to meet the objectives of the well work programme which will include drilling and as appropriate testing.



[Signature] [Signature]



11 [Signature] 31 May 2005













4.7 If during the exploration period the Contractor has

performed its work commitments far an amount lesser

than the amount specified above. it shall be deemed to

have fulfilled its investment obligations relating to

that period. Conversely, the Contractor shall perform

the entirely of its work commitments set forth in

respect of an exploration period even if it results

in exceeding the amount specified above for that

period.



4.8 If at the expiration of any of the three (3)

exploration periods defined in Articles 3.1, 3.2 and

3.3 or upon the date of surrender of the whole

Delimited Area or upon the date of termination of this

Contract the Contractor has not fulfilled its

applicable work commitments set forth in this Article,

it shall pay as compensation to NOCAL, within thirty

(30) days after that date of expiration, surrender or

termination, the unspent balance of exploration work

commitments above-defined for the current exploration

period.







31 May 2005





12

ARTICLE 5



ESTABLISHMENT AND APPROVAL OF ANNUAL WORK PROGRAMS AND BUDGETS



5.1 At least three (3) months before the beginning of each Calendar Year, or for the first year, within one (1) month from the Effective Date, the Contractor shall prepare and submit for approval to NOCAL an Annual Work program together with the related Budget for the entire Delimited Area, specifying the Petroleum Operations that the Contractor proposes to perform during that Calendar Year and their cost.



5.2 If NOCAL wishes to propose any revisions or modifications to the Petroleum Operations specified in said Annual Work Program, it shall, within thirty (30) days after receipt of that Program, so notify the Contractor, presenting all justifications deemed useful. In that event, NOCAL and the Contractor shall meet as soon as possible to consider the proposed revisions or modifications and to mutually establish the Annual Work Program and the related Budget in its final form, in accordance with good international petroleum industry practice. However, during the Exploration Period, the Annual Work Program and the related Budget established by the Contractor after the above mentioned meeting shall be deemed to be approved provided that they comply with the obligations set forth in Article 4 and provided that any increase in expenditure is mutually agreed by NOCAL and the Contractor in the forum of a Joint Operations Committee according to he terms of Article 5.5.



Each part of the Annual Work Program and Budget in respect of which NOCAL has not proposed any revision or modification within the period of thirty (30) days above-mentioned, shall be carried out by the Contractor within the stated time.



5.3 Should NOCAL fail to notify the Contractor of its wish for revision or modification within the period of thirty (30) days above-mentioned, such Annual Work Program and the related Budget submitted by the Contractor shall be deemed to be approved by NOCAL it is agreed by NOCAL and the Contractor that the Contractor may acquire knowledge as and when the work is implemented, or certain events may justify changes to the details of the Annual Work Program. In that event, after notification to NOCAL, the Contractor may make such changes provided that the basic objective of said Annual Work Program are not modified.



5.4. Whenever NOCAL is required to exercise its discretion or its approval is required under this Agreement, it shall exercise its discretion or grant its approval on the basis of the efficient and economic conduct of Petroleum Operations in respect of the Delimited Area and in accordance with good international oil industry practice.



5.5 At the commencement of the first Exploration Period NOCAL and the Contractor shall form a Joint Operations Committee (JOC) consisting of not more than three (3) members appointed by NOCAL and not more than three (3) members appointed by the Contractor. The purpose of this JOC will be to review present and future Petroleum Operations and report jointly to NOCAL and the Contractor.



5.6 The JOC shall meet twice every calendar year or as otherwise agreed by the members. No meeting of the JOC shall be held unless two (2) members each appointed by the Contractor and NOCAL are present.



5.7 The Contractor shall appoint the first Chairman of the JOC who shall hold office until the second anniversary following the Effective Date. Thereafter, NOCAL and the Contractor



13 31 May 2005shall have the alternating right to nominate a Chairman of the JOC who shall hold office for a period of two (2) years.



5.8 All costs of the meeting of the JOC shall be borne by the Contractor and these costs will be regarded as recovered costs. Members of the JOC shall be entities to sitting fees for attendance at the JOC ( payable by the Contractor) in such amount as are agreed by NOCAL and the the Contractor. ARTICLE 6

CONTRACTOR'S OBLIGATIONS IN RESPECT OF THE EXPLORATION

PERIODS



6.1 The Contractor shall provide all the necessary

funds and purchase or hire all the equipment,

facilities and materials required to carry out the

Petroleum Operations.



6.2 The Contractor shall provide ail technical

assistance including the personnel required to

carry out the Petroleum Operations.



6.3 The Contractor shall be responsible for the

preparation and performance of the Annual Work

Programs which shall be carried out in the most

appropriate manner in observance of good

international Petroleum industry practice.



6.4 The Contractor undertakes to take ail the

reasonable and practical steps to:



(a) ensure the protection of water-bearing strata

encountered during its work;



(b) carry out the tests necessary for determining

the value of any show encountered during

drilling and the exploit ability of any

possible Petroleum discoveries.



(c) avoid losses and discharges of Petroleum

produced as well as losses and discharges of

mud or any other product used in the Petroleum

Operations.



(d) submit to NOCAL an Environmental Impact

Statement (EIS) prior to the commencement of

exploration and production.



(e) take reasonable preventive, corrective and

restorative measures to protect from pollution,

contamination or damage resulting Petroleum

Operations, and that any pollution,

contamination and damage of such water bodies,

land surface and atmosphere here under be

rectified.



Subject to the foregoing, and at the conclusion of

Petroleum Operations in the Delimited Area, the

Contractor will undertake reasonable efforts to

restore the terrain to a state in which it is

useable.



6.5 All works and facilities erected by the Contractor

here under shall. according to their nature and to

the circumstances, be built placed, signaled,

marked, fitted and preserved so as to allow at any

time and in safety free passage to navigation within

the Delimited Area, and without prejudice to the

foregoing, the Contractor shall in order to

facilitate navigation, install the sound and optical

devices approved or required by the competent

authorities and maintain them in a manner

satisfactory to said authorities.



6.6 In the exercise of its rights to build carry out

work and maintain all facilities necessary for the

purposes hereof, the Contractor shall not disturb

any existing graveyard or building used for

religious purposes, nor cause a nuisance to any

government or public building except with the prior

consent of NOCAL, and shall make good the damage

caused by it in mat event.



6.7 In its conduct of Petroleum Operations, the

Contractor undertakes to take all necessary

precautions to prevent marine pollution



31 May 2005



15

6.8 in order to prevent pollution, NOCAL and Contractor agree that the Contractor that observe at existing international environmental protocols regulators and rules as may be applicable to prevent pollution and preserve the environment NOCAL and the Contractor shall meet and consider any measure which may be necessary to preserve the environment.



6.9 NOCAL and the Contractor shall commission periodic environmental audits as requird to ensure compliance with the EIS.



6.10 The Contractor and the subcontractors shall be obligated to give preference to enterprises and goods from Liberia, if conditions of pride quality, delivery time and terms of payment are similar.



[Signature] [Signature] [Signature]





16 31 MaY 2005 ARTICLE 7

CONTRACTOR'S RIGHTS IN RESPECT OF THE EXPLORATION

PERIODS



a. Without prejudice to the provisions hereof, the

Contractor shall have the right to carry out the

Petroleum Operations within the Delimited area. Such

right includes inter alia.



(a) full responsibility for management of and control

over all the Petroleum Operations;



(b) authority to exercise any of the rights conferred

hereby through agents and independent

contractors and to pay accordingly any of their

expenses and costs in the place and in the

currency chosen by the Contractor.



b. The Contractor shall have the right to clear the

ground, dig perforate, drill build erect place,

supply, operate, manage and maintain ditches pools

wells, trenches, excavations dams, canals. water

conducts, plants tanks basins maritime and other

storage facilities primary distillation units, first

extraction gasoline separator units, sulfur plants

and other facilities for Petroleum production,

together with the pipelines, pumping stations,

generator units, power plants, high voltage Lines,

telephone, telegraph radio and other communication

facilities, factories, warehouses, offices employees

housing hospitals premises ports, docks harbors,

dikes, jetties dredges, sea walls under water piers

and other facilities, ships, vehicles railways,

warehouses workshops, foundries repair shops and all

the auxiliary services which are necessary for or

useful to the Petroleum Operations or in connection

therewith; and ail additional facilities which are or

may become necessary for or reasonably subsidiary to

the carrying out of the Petroleum Operations.



c. The agents, employees and representatives of the

Contractor or its subcontractors shall have the

right, for the purposes of the Petroleum Operations

to enter into or eave the Delimited Area and shall

have free access to ail the facilities set up by the

Contractor.



d. The Contractor shall have the right, subject to the

payment of fees applicable in Liberia, to remove and

use the surface soil mature timber day, sand,

limestone gypsum stones another similar materials

which may be necessary for the performance of the

Petroleum Operations.



With the consent of the competent administrative

services, the Contractor may make reasonable use of

such materials for the performance of the Petroleum

Operations subject to payment of fees applicable in

Liberia, when they are located on land owned by the

STATE and placed in the vicinity of the land where

said Operations are taking place.



The Contractor may take or use the water necessary

for the Petroleum Operations provided that existing

irrigation or navigation are not impaired and that

land, houses or watering places for livestock are

net deprived of a reasonable quantity of water.





17

31 May 2005 ARTICLE 8



ACTIVITY REPORTS DURING THE EXPLORATION PERIODS AND SUPERVISION OF PETROLEUM OPERATIONS



8.1 Subject to the terms of Articles 8.5 and 8.6, NOCAL

shall own and may freely use ail the original data

and documents relating to the Petroleum Operations

such as, but without limitation records, samples.

geological, geophysical, petrophysical, drilling

and operating reports.



8.2 The Contractor undertakes to furnish NOCAL with the

following periodic reports:



(a) daily reports on drilling operations;

(b) weekly reports on seismic operations;

(c) within thirty (30) days after each Calendar

quarter a report on the Petroleum Operations

carried out together with a detailed statement

on Petroleum Costs in respect of the preceding

quarter;

(d) prior to the end of February of each Calendar

Year, an annual report en the Petroleum

Operations carried out together with a detailed

statement on Petroleum Costs in respect of the

preceding Calendar Year.



8.3 In addition, the following reports or documents

shall be furnished to NOCAL as soon as they are

prepared or obtained.



(a) a copy of all geological surveys and syntheses

together with the related maps;



(b) a copy of ail geophysical surveys measurement

and interpretation reports, map profiles,

sections or other documents related thereto, as

well as at NOCAL request the originals of all

recorded seismic magnetic tapes;



(c) a copy of the drilling location and completion

report for each well together with a complete

set of recorded logs;



(d) a copy of all drill tests or production tests

together with any study relating to the flow or

production of a well;



(e) a copy of all reports relating to core analyses



All maps, sections, profiles, logs and all other

or geophysical documents shall be supplied on an

appropriate transparent support in view of

subsequent reproduction.



A representative portion of the cores and cuttings

removed from each well, as well as samples of

fluids produced during drill tests or production

tests shall also be supplied to NOCAL within a

reasonable period.



Upon expiration or m the event of surrender or

termination of tins Contract the original documents

and samples relating to the Petroleum Operations

shall be provided to NOCAL.



8.4 The Contractor shall keep NOCAL informed of its

activities through the duly designated

representative of the latter. In particular the

Contractor shall notify NOCAL as soon as possible

and in any event at least fifteen (15) days in

advance of all projected Petroleum Operations, such

as any geological surveys, seismic surveys

commencement of drilling.



18 31 May 2005









and installation of a platform. In the event the Contractor decides to abandon a drilling, it shall notify NOCAL thereof within at least seventy-two (72) hours prior to such abandonment, unless operational safety demands a faster response.



8.5 All data, information, documents, reports and statistics including interpretation and analysis supplied by the Contractor pursuant to this Contract shall be treated as confidential and shall not be disclosed by any Party to any other person without the express written consent of the other Parties within the life of the Exploration, Appraisal or Exploitation authorization period.



8.6 The provision of Article 8.5 shall not prevent disclosure:



8.6.1 By NOCAL or the State



a) To any agency of the State or to any adviser or consultant to NOCAL



b) For the purpose of complying with the State's international obligations for the submission of statistics and related data.



8.6.2 By the Contractor



a) To its Affiliates, advisers or consultants



b) To a bona fide potential assignee or all or part of the Contractor's interest hereunder



c) To banks or other lending institutions for the purpose of seeking external financing of costs of the Petroleum Operations



d) To Non-Affiliates who shall provide services for the Petroleum Operations including sub-contractors, vendors, and other service contractors, where this is essential for their provision of services



e) To government agencies for obtaining necessary rulings, permits, licenses and approvals, or as may be required by applicable law or financial stock exchange, accounting or reporting practices.



8.6.3 Any Party disclosing information or providing data to a Third Party under the terms of this Article shall require such persons to undertake the confidentiality of such data.



8.7 In the event the Contractor decides to abandon a drilling, it shall notify NOCAL thereof within at least seventy-two (72) hours prior to such abandonment, unless operational safety demands a more urgent response.



(initials) (initials)

(initials)









19 31 May 2005

ARTICLE 9



OCCUPATION OF LAND



9.1 The STATE shall make available to the Contractor, and only for the purposes of the Petroleum Operations, any land which is necessary for said operations. The Contractor shall have the right to build and the obligation to maintain, above and below the ground, the facilities necessary for the Petroleum Operations.



The Contractor shall indemnify the STATE for any damage caused to the land by the construction, use and maintenance of its facilities on such land.



The STATE shall authorize the Contractor to build, use and maintain telephone, telegraph and piping systems above and below the ground and along the land not belonging to the STATE, provided that the Contractor pays to the land-owners, a reasonable compensations mutually agreed upon.



9.2 The rights on land owned by private persons, which would be necessary for the carrying out of the Petroleum Operations, shall be acquired by direct agreement between the Contractor and the private person concerned.



In the event of disagreement, the Contractor shall notify the STATE thereof, and the latter shall proceed to expropriation for a public purpose at Contractor's expenses. When determining the value of those property rights, no consideration shall be given to the Contractor's purpose for acquiring them and the STATE agrees that no law or procedure for said acquisition shall have the effect of giving them an excessive value or a confiscation value. Those rights acquired by the STATE shall be registered in its name, but the Contractor shall be entitled to benefit therefrom for the purposes of the Petroleum Operations. During the entire term of this Contract, the STATE guarantees that the Contractor shall be protected in the use and occupation of such land just as if it owns the property rights thereto. [initials] [initials] [initials]



20 31 May 2005 ARTICLE 10



USE OF FACILITIES



10.1 For the purposes of the Petroleum Operations, the

Contractor shall have the right to use, in

accordance with the applicable laws, any railroad

tramway, road, airport, landing strip, canal,

river, bridge, waterway and any telephone or

telegraph network in Liberia whether owned by the

STATE or by any private enterprise, subject to the

payment of fees then in effect or mutually agreed

upon which will not be in excess of the prices and

tariffs charged to Third Parties tor similar

services.



The Contractor shall also have the right to use for

the purposes of the Petroleum Operations any land.

sea or air transportation means for the

transportation of its employees or equipment.

subject to compliance with the laws and regulations

which generally govern the use of such means of

transportation.



10.2 The STATE shall have the right to use for

exceptional matters any transportation and

communication facility installed by the Contractor,

subject to a fair compensation mutually agreed upon

which will not be in excess of the prices and

tariffs charged to Third Parties for similar

services provided that such use does interfere with

Petroleum Operations.



10.3 Nothing in this Traction shall limit the STATE's

right to build, operate and maintain on, under and

along the land made available to the Contractor for

the purposes of the Petroleum Operations roads.

railroads, airports landing strips, canals,

bridges, pipelines, useful telephone and telegraph

lines, provided that such right :s not exercised in

in a manner which restricts or hinders the

Contractor's rights hereunder, or the Petroleum

Operations.



31 May 2005





21

ARTICLE 11



APPRAISAL OF A PETROLEUM DISCOVERY



11.1 In the event the Contractor discovers Petroleum, it shall, as promptly as possible, notify NOCAL thereof and submit to it, within thirty (30) days after the date of the temporary plugging or abandonment of the discovery well, a report including all information relating to said discovery.



11.2 If the Contractor wishes to undertake appraisal work relating to the abovementioned Petroleum discovery, it shall submit for approval to NOCAL, within six (6) months after the date of notification of said discovery, the appraisal work program and the estimate of the related Budget.



The provisions of Article 5 shall be applicable, mutatis mutandis, to said program as regards its approval and performance, it being understood that the submitted program shall comply with good international petroleum industry practice.



11.3 If the Contractor meets the conditions referred to in Article 11.2 and on request to NOCAL, the latter shall grant to it an exclusive appraisal authorization for a duration of two (2) years from the date of approval of the appraisal work program and the related Budget, in respect of the Appraisal Perimeter specified in said program. Except otherwise provided by this Article, the Contractor shall, during the term of said exclusive appraisal authorization, be subject to the same regime as that applicable to the exclusive exploration authorization.



11.3.1 The Contractor shall then diligently carry out the appraisal work program for the discovery in question; in particular it shall drill the appraisal wells and carry out the production tests specified in said program.



At the Contractor's request, notified at least thirty (30) days prior to the expiration of the appraisal period above-defined, the duration of said period may be extended by a maximum of six (6) months, provided that such extension is justified by the continuation of the drilling and production tests specified in the appraisal program.



Further extensions of the appraisal period may be requested by the Contractor and granted by NOCAL in the event that further geological, geophysical, subsurface, facilities or commercial work is considered justified by the Contractor in order to establish whether the Field corresponding to the Petroleum discovery is commercial.



11.3.2 Within three (3) months after the completion of appraisal work, and no later than thirty (30) days prior to the expiration of the appraisal period, the Contractor shall provide NOCAL with a detailed report giving all the information relating to the discovery and the appraisal thereof.



11.3.3 If, after having carried out the appraisal work, the Contractor considers that the Field corresponding to the Petroleum discovery is commercial, it shall submit to NOCAL, together with the previous report, an application for an exclusive exploitation authorization accompanied by a detailed development and production plan for said Field, specifying inter alia;

[signature]

22 31 May 2005(a) the planned delimitation of the Exploitation

Perimeter applied for by the Contractor so that it

covers the area defined by the seismic closure of me

Field concerned, together with ail the technical

justifications with respect to the extent of said

Field;



(b) an estimate of the reserves in place the proven and

probable recoverable reserves and the corresponding

annual productions, together with a study on the

methods of recovery and the possible valorization of

the products associated with Crude Oil, such as any

Associated Natural Gas;



(c) item by item, the description of equipment and work

necessary for production, such as the number o<

development wells, the number of platforms,

pipelines, production, processing, storage and

loading facilities together with their

specifications.



(d) the estimated schedule for its implementation and

the projected date of production start-up.



(e) the estimated of Investments and exploitation costs

together with on economic evaluation demonstrating

the commercial nature of the discovery in question.



11.3.4 The commercial nature of one or more Petroleum

Fields shall be determined by the Contractor.

provided that it shall, at the end of appraisal

work, submit to NOCAL the economic study referred

to in Article 11 3.3 (e) demonstrating the

commercial nature of said Field or Fields.



A Field may be declared commercial by the

Contractor if, after taking into account the

provisions of this Contract and the submitted

development and production plan the projected

incomes and expenses determined in accordance

with good international petroleum industry

practice confirm the commercial nature of said

Field.



11.3.5 For the purposes of evaluating the commercial

nature of said Field or Fields, NOCAL and the

Contractor shall meet within thirty (30) days

after the submission of the development and

production plan accompanied by the economic

evaluation.



11.3.6 The development and production plan submitted by

the Contractor shall be subject to the approval

of NOCAL Within ninety (90) days after the

submission of said plan, NOCAL may propose

revisions or modifications hereto by notifying

the Contractor thereof with all the useful

justifications. In that event. the Parties shall

meet as soon as possible in order to consider the

proposed revisions or modifications and establish

by mutual agreement tho plan in its final form;

the plan shall be deemed to be approved by NOCAL

upon the date of such agreement.



Should NOCAL fail to notify the Contractor of its

wish for revision or modification within the

above-mentioned ninety (90) day period, the plan

submitted by the Contractor shall be deemed *o be

approved by NOCAL at the expiration of said

period.



11.4 If for reasons not technically justified the

Contractor, within twelve (12) months after

notification to NOCAL of a Petroleum discovery

has not applied for an exclusive appraisal

authorization or if, after its granting. it has

not commenced the appraisal work in respect of

said discovery, or if the Contractor within

eighteen (18} months after completion of the

appraisal work, does not declare the discovery as

commercial, NOCAL may require that the





23

31 May 2005

Contractor surrenders all its rights in respect of the area deemed to encompass said discovery without any compensation for the Contractor has not notified its decision, it shall surrender said area and will forfeit all its rights on Petroleum which could be produced from said discovery and any area so surrendered shall be deducted from the surfaces to be surrendered under Article 3.5 ARTICLE 12

GRANT OF AN EXCLUSIVE EXPLOITATION AUTHORIZATION





12.1 A commercial Petroleum discovery shall entitle the

Contractor to an exclusive right. if it so requests

pursuant to the conditions set forth m Article

11.3.3., ta obtain, In respect of the Field

concerned an exclusive exploitation authorization

covering the related Exploitation Perimeter Said

authorization shall be granted by NOCAL as soon as

possible.



12.2 If the Contractor makes several commercial

discoveries in the Delimited Area. each such

discovery shall, in accordance with me provisions

of Article 12.1 give rise to an exclusive

exploitation authorization each corresponding to an

Exploitation Perimeter The number of exclusive

exploitation authorizations and related

Exploitation Perimeters within the Delimited Area

shall not be limited.



12.3 If in the course of work carried out after the

grant of an exclusive exploitation authorization,

it appeals that the area defined by the seismic

closure of the Field concerned is larger than

originally estimated pursuant to Article 11.3.3

NOCAL shall grant to the Contractor, as part of the

exclusive exploitation authorization already

granted, an additional area so that the entirely of

said Field is included in the Exploitation

Perimeter, provided, however, that the Contractor

supplies NOCAL together with its application with

the technical evidence of the extension so required

and provided, further, that the above mentioned

extension is an integral part or the Delimited Area

as defined at the time of said application.



12.4 Where a Field extends beyond the boundaries of the

Delimited Area NOCAL may require the Contractor to

exploit said Field in association with the right

holder of the adjacent area under the provisions of

a utilization agreement.



Within six (6) months after NOCAL has notified its

request. the Contractor shall submit to its

approval the development and production plan of the

Field concerned which shall be prepared in

agreement with the right holder of the adjacent

area.





31 May 2005





25

ARTICLE 13



DURATION OF THE EXPLORATION PERIOD



13.1 The duration of an exclusive exploitation authorization during which the Contractor is authorized to carry out the exploitation of a Field declared commercial is set at twenty-five (25) years from its date of issue.



If upon expiration of the exploitation period of twenty-five (25) years above-defined, a commercial exploitation of a Field remains possible NOCAL may authorize the Contractor, at the latter's request submitted at least twelve (12) months prior to said expiration, to continue under this Contract the exploitation of said Field during an additional period of no more than ten (10) years, provided that the Contractor has fulfilled all its obligations during the current exploitation period.



If, upon expiration of that additional exploitation period, a commercial exploitation of said Field remains possible, the Contractor may request NOCAL, at least twelve (12) months prior to said expiration that it be authorized to continue the exploitation of said Field under this Contract, during an additional period to be agreed upon.



13.2 The Contractor may, at any time, fully or partially surrender any exclusive exploitation authorization by giving at least twelve (12) months' prior notices which may be reduced with NOCAL's consent. That notice shall be accompanied by the list of steps which the surrendering Contractor undertakes to take, in accordance with good international petroleum industry practices arising out of its surrender.



13.3 Interruption of development work or production of a Field declared commercial, for a consecutive period of at least six (6) months, decided by the Contractor without NOCAL's consent, or abandonment of the exploitation of a Field, may give rise to the withdrawal of the exclusive exploitation authorization concerned. In the event of any disagreement between NOCAL and the Contractor regarding the circumstances of the interruption then the JOC shall meet to resolve the disagreement.



13.4 Upon expiration, surrender or withdrawal of the last exclusive exploitation authorization granted to the Contractor, this Contract shall terminate.



13.5 The termination of this Contract, whatever the reason thereof, shall not relieve the Contractor of any obligations incurred prior to, or arising from, said expiration or termination and which shall be fulfilled.

[initials] [initials] [initials]



26 31 May 2005Article 14

EXPLOITATION OBLIGATION

14.1 For any Field in respect of which an exclusive exploitation authorization has been granted, the Contractor undertakes to perform, at its sole cost and its own financial risk, all the Petroleum Operations useful and necessary for the exploitation of said Field.

14.2 However, if the Contractor can provide accounting evidence, during either the development period or the production period, that the exploitation of a Field cannot be commercially profitable, notwithstanding that an exclusive exploitation authorization has being ranted in accordance with the provisions of Article 12.1, NOCAL agrees not to force the Contractor to continue the exploitation of such Field.

In that event, NOCAL, in its discretion, may withdraw the exclusive exploitation authorization concerned from the Contractor without any compensation for the latter, by giving a sixty (60) days' prior notice.

[signature]

[signature]

27

31 May 2005 ARTICLE 15



CONTRACTOR'S OBLIGATIONS AND RIGHTS IN RESPECT OF

EXCLUSIVE EXPLOITATION AUTHORIZATIONS



15.1 The Contractor shall commence development work not

later than six (6) months after approval of the

development and production plan referred to in

Article 11.36 and shall continue it with the

maximum diligence.



15.2 The provisions of Articles 5, 6, 7, 8, 9 and 10

are also applicable, mutatis mutandis, in respect

of any exclusive exploitation authorization.



15.3 The Contractor shall have the right to build, use

operate and maintain ail the Petroleum storage and

transportation facilities which are necessary for

the production transportation and sale of

Petroleum produced. pursuant to the conditions

specified in this Contract.



The Contractor may determine the route and

location of any pipeline inside Liberia which is

on the surface land of Liberia all under the

waters that lie within the jurisdiction of the

State which is necessary for the Petroleum

Operations provided that it shall submit plans to

NOCAL for approval prior to the commencement of

work any pipeline Crossing or running alongside

toads or passageways (other than those used

exclusive by the Contractor) shall be built so as

not to hinder the passage on those roads or

passageways.



15.4 The Contractor may, to the extent and for the

duration of the excess capacity of a pipeline or

processing transportation or storage facility

built for the purposes of the Petroleum Operations

be obligated to accept the flow of Petroleum

coming from exploitation's other than that of the

Contractor, provided that such flaw shall not

cause prejudice to the Petroleum Operations and

provided, further, that a reasonable tariff

covering a normal remuneration for capital

invested in respect of the pipeline or facility

concerned shall be paid by the user



15.5 Following the grant of an exclusive exploration

authorization the Contractor undertakes to proceed

diligently with the carrying out of development

wells, spacing them in a manner so to ensure, in

accordance with good international petroleum

industry practice, the maximum economic recovery

of the Petroleum contained in the Field in

question.



15.6 The Contractor shall, in the conduct of

development and production operations, comply with

ail good international petroleum Industry practice

which in particular ensures the good conservation

of Fields and maximum economic recovery of

Petroleum.



The Contractor shall, inter alia, carry out

enhanced recovery studies and use such recovery

processes If they may lead to an Increase in

Petroleum recovery rate under economic conditions.



15.7 The Contractor shall provide NOCAL with all the

reports, studies, measurement results, tests and

documents enabling the monitoring of the proper

exploitation of each Field.



The Contractor shall. in particular carry out the

following measures on each producing well:



(a) monthly testing of production and gas/oil

ratio;

(b) half-yearly measurement of the Field

reservoirs pressure.





28

31 May 200515.8 The Contractor undertakes to produce every year from each Field quantities of Petroleum in accordance with the provisions of article 15.6.



The annual production rates of each Field shall be submitted by the Contractor together with the Annual Work Programs for the approval of NOCAL which shall not be withheld provided that the Contractor gives proper technical and economic grounds.



15.9 The Contractor shall measure,in a point mutually agreed between the Parties, all Petroleum produced and not used for the requirements of the Petroleum Operations, and excluding unavoidable losses, after extraction of water and sediments, by using the measurement appliances and procedures customarily used in the international petroleum industry.The authorized NOCAL'S representatives shall have the right to examine those measurements and inspect or cause to be inspected the appliances or procedures used. If the Contractor wishes to change said measurement appliances or procedures , it shall obtain prior approval from NOCAL. Where the appliances and procedures used therefore have caused the overstatement an understatement of measured quantities, the error shall be deemed to have existed since the date of the last calibration of the appliances, unless the contrary can be justified, and the proper adjustment shall be made for the period of existence of such error.

[Signature] [Signature] [Signature]



29 31 May 2005 ARTICLE 16



RECOVERY OF PETROLEUM COSTS AND PRODUCTION SHARING



16.1 From the commencement of regular production of Crude Oil, the Contractor shall market all the production of Crude Oil obtained from the Delimited Area, in accordance with the provisions hereinafter defined.



16.2 For the purposes of recovery of the Petroleum Costs, the Contractor may freely take each Calendar Year a portion of the production in no event greater than eighty percent (80_%) of the Total Production of Crude Oil or Gas from the Delimited Area, or only any lesser percentage which would be necessary and sufficient.



The value of such portion of Total Production allocated to the recovery of the Petroleum Costs by the Contractor, as defined in the preceding paragraph, shall be calculated in accordance with the provisions of Article 18.



If during a Calendar Year the Petroleum Costs not yet recovered by the Contractor under the provisions of this Article 16.2 exceed the equivalent in value of eighty percent (80%) of the Total Production of Crude Oil or Total Production of Gas from the Delimited Area, as calculated above, the balance of the Petroleum Costs which cannot be recovered in that Calendar Year shall be carried forward in the following Calendar Year or Years until full recovery of the Petroleum Costs or until the expiration of this Contract.



16.3 The quantity of Crude Oil from the Delimited Area remaining during each Calendar Year after the Contractor has taken from the Total Production the portion necessary for the recovery of the Petroleum Costs, hereinafter referred to as "Remaining Oil Production," shall be shared between NOCAL and the Contractor as follows:



The Remaining Oil Production shall be shared according to the daily Total Production from the Delimited Area.



"Increments of daily oil | NOCAL's Share | Contractor's share"

"Total Production"

"(in Barrels per day)"

"from 0 to 50,000 | 45% | 55%"

"from 50,000 to 75,000 | 60% | 50%"

"from 75,000 to 100,000 | 55% | 45%"

"over 100,000 | 60% | 40%"

16.4 The sharing of production revenue derived from the sale of Gas shall be as follows:

"Increments of daily Gas | NOCAL's Share | Contractor's share"

"Total Production"

"35% | 65%"

[signature]

30 31 May 2005The quantity of Gas from the Delimited Area remaining during each Calendar Year after the Contractor has taken from the Total Production the portion necessary for the recovery of the Petroleum Costs, hereinafter referred to as âRemaining Gas Production,â shall be shared between NOCAL and the Contractor as follows:



The Remaining Gas Production shall be shared according to the daily Total Production from the Delimited Area:



For the purpose of this Article, the daily Total Production shall be the average rate of Total Production during the calendar quarter in question.



16.5 For the purposes of the tax legislation of the Republic of Liberia, the quantity of Crude Oil or Gas that NOCAL will receive during each Calendar Year pursuant to this Article 16.3 shall include the portion necessary to pay any Liberian taxes to which the Contractor is liable and which will be assessed on its incomes. NOCAL agrees to pay from this portion any income tax on behalf and in the name of the Contractor and to deliver to the latter official receipts of such payments.



16.6 NOCAL may receive its share of production defined in Article 16.3 and 16.4 either in kind or in cash.



16.7 If NOCAL wishes to receive in kind all or part of its share of production defined in Article 16.3 or 16.4 it shall so notify in writing the Contractor at least ninety (90) days prior to the beginning of the calendar quarter concerned specifying the precise quantity that it wishes to receive in kind during said quarter.



16.6 IF NOCAL wishes to receive in cash all or part of its share of production defined in Article 16.3 or 16.4 or if NOCAL has not notified the Contractor if its decision to receive its share of production in kind pursuant to Article 16.7, the Contractor shall market NOCALâs share, of production to be taken in cash for the quarter concerned lift said share during such quarter and pay to NOCAL within thirty (30) days following the date of each lifting an amount equal to the quantity corresponding to NOCALâs share of production multiplied by the sale price defined in Article 18.



NOCAL may require payment for sales of its shares of production sold by the Contractor in Dollars or in the foreign currency in which the sale has been made.



31

31 May 2005

ARTICLE 17



TAXATION



17.1 Unless otherwise provided for in this Contract the Contractor shall, in respect of its Petroleum Operations, be subject to the laws generally applicable and the regulations in force in Liberia concerning taxes which are or may be levied on incomes, or determined thereto.



It is specifically acknowledged that the provisions of this Article shall apply individually to any entity comprising the Contractor under this Contract.



The Contractor shall keep separate accounts for each Fiscal year in respect of the Petroleum Operations, in accordance with the regulations in force in Liberia, enabling in particular the establishment of a profit and loss account as well as a balance sheet showing both the results of said Petroleum Operations and the asset and liability items allocated or related thereto.



17.2 For the purposes of Article 17.1 the Contractor shall in respect of its net profit arising from Petroleum Operations, be liable to corporate income tax under the laws and regulations in force in Liberia. income tax applicable to Petroleum Operations carried out under this Contract shall be thirty five (35)%



In accordance with the provisions of Article 16.5 under which NOCAL shall pay Contractorâs income tax from NOCALâs share of crude oil, the Contractor shall not be liable for any payment to the STATE with respect to said tax. As regards the tax authorities of Liberia, the share of Crude Oil Total Production or Gas Total Production, which the Contractor is entitled to receive under the provisions of Articles 16.3 and 16.4 is considered as representing the net profit obtained by the Contractor.



17.3 For the purposes of assessing the Contractorâs taxable net income in respect of a Fiscal Year, the profit and loss account shall, inter alia, be credited by the following:



(a) the Contractorâs annual gross income recorded in its accounting books, arising from the marketing of the quantity of Crude oil or Gas to which it is entitled under Articles 16.2, 16.3or 16.4 all other incomes or proceeds related to the Petroleum Operations, including inter alia those arising from:



i) the sale of related substances;

ii) processing, transportation or storage of products for Third Parties in the facilities dedicated to the Petroleum Operations.



17.4 Such profit and loss account shall be debited with all charges necessary for the purposes of the Petroleum Operations in respect of the Fiscal Year concerned, which may be deducted under the applicable laws of Liberia and the provisions of this Contract.



In particular the following items may be debited from the income of the Fiscal Year:



(a) In addition to the charges specifically set forth below in the Article 17.4, all other Petroleum costs, including the costs of supplies, personnel and manpower expenses, costs of services provided to the Contractor in respect of the Petroleum Operations, provided, however, that costs of supplies, personnel and services rendered by Affiliated Companies shall be deductible provided that they do not



[signature]

[signature]



32 31 May 2005

exceed those which would be normally charged in arm's length transactions between independent buyer and seller for identical or similar supplies or services.



(b) Overhead costs relating to the Petroleum Operations performed under this Contract, including without limitation:

(i) Rentals for movable and immovable properties as well as insurance premiums;

(ii) As set out in the Accounting Procedure in light of the services rendered to the Petroleum Operations performed in Liberia, of wages and salaries paid to managers and employees residing abroad, and the general and administrative overhead costs of the central services of the Contractor and its Affiliated Companies working for its account, located abroad, and indirect costs incurred by said central services abroad for their account. Overhead costs paid abroad shall in no event be greater than the limits specified in the Accounting Procedure.



(c) Interest paid to creditors of the Contractor, for their actual amount, subject to the limits specified in the Accounting Procedure.



(d) Losses of materials or assets resulting from destruction or damage, assets which are renounced or abandoned during the year, bad debts, indemnities paid to Third Parties as compensation for damage.



(e) Reasonable and justified reserves made for clearly identified future losses or liabilities which current events render probable.



(f) Any other loses or charges directly related to the Petroleum Operations, including exchange losses realized in connection with the Petroleum Operations as well as bonuses and amounts paid during the Fiscal Year.



(g) Surface Rentals as defined in Article 17.10.



(h) Any other Contractor Expense recorded according to the Accounting Procedure.



17.5 The Contractor's taxable net profit shall be equal to the difference, if positive, between all the amounts credited and all the amounts debited in the profit and loss account, plus an amount equal to Contractor's Liberian income tax paid by NOCAL on behalf or in the name of the Contractor. If this amount is negative, it shall constitute a loss.



17.6 Within three (3) months after the end of a Fiscal Year, each entity constituting the Contractor shall submit to the competent tax authorities its annual tax return together with financial statements, as required by applicable regulations.



Nocal, shall, after submission of said annual tax return and acknowledgment of tax payment, furnish to the Contractor within a reasonable period the tax receipts evidencing, the payment of Contractors Liberian income tax and all other documents certifying that the Contractor has, for the Fiscal Year in question, complied with all its tax obligations with respect to the income tax as defined in this Article 17.



17.7 Except for the income tax defined in this Article and the bonuses provided for an Article 19, the Contractor shall be exempt from all other levies, duties, taxes or contributions of any nature whatsoever arising from the Petroleum Operations and any revenues related thereto or, more generally, on Contractor's property, activities or actions, including its establishment and its operation hereunder.

[signature]

33 31 May 2005In particular, the contractor, its suppliers, subcontractors and Affiliated Companies shall be exempt from the taxes or turnover value added taxes and taxes on services) which would be payable in connection with sales made by, work performed for and services rendered to the Contractor under this contract

17.8 Assignments of any kind between the companies signing this contract and their Affiliated Companies as well as any assignment made in accordance with this Agreement shall be exempt from any duties or taxes payable in such respect.

17.9 Surface rental shall be payable to NOCAL per square kilometer of the area remaining at the beginning of each Calendar Year as part of the Delimited area,in the amounts as set out below

Phase of Operation Surface Rentals Per Annum First Exploration Period $ 30 per sq. km

Second Exploration Period $ 50 per sq. km.

Third Exploration Period $ 75 per sq. km.

Development and Exploration Area $100 per sq. km.

[Signature] [Signature]

34 31 may 2005

ARTICLE 18



VALUATION OF PETROLEUM



18.1 For the purposes of this Contract, the Crude Oil price shall be the F.O.B. "Market Price" at the Delivery Point, expressed in Dollars per Barrel and payable within thirty (30) days after the date of the bill of lading, as determined hereinafter for each quarter.



A Market Price shall be determined for each type of Crude Oil or Crude Oil mix.



18.2 The Market Price applicable to liftings of Crude Oil made during a calendar quarter shall be calculated at the end of said quarter and shall be equal to the weighted average of the prices obtained for Crude Oil from the Delimited Area during said quarter by the Contractor and by NOCAL from independent purchasers, as adjusted to take into account the differences in quality and gravity as well as in F.O.B. delivery terms and payment conditions.



18.3 In the event such sales are not made, the Market Price shall be determined on the basis of the prices obtained on the international market during said quarter between independent buyers and sellers for sales of crude oils of quality similar to the Crude Oil from the Delimited Area in the same markets as those in which the Liberian Crude Oil would normally be sold, as adjusted to take into account the differences in quality, gravity, transportation as well as in sales and payment conditions. For the avoidance of doubt, oil sales into the Liberian Market shall be valued according to the terms of this Article 18.3



18.4 The following transactions shall, inter alia, be excluded from the calculation of the Market Price of Crude Oil:



(a) sales in which the buyer is an Affiliated Company of the seller as well as sales between entities constituting the Contractor;



(b) sales in exchange for other than payment in freely convertible currencies and sales fully or partially made for reasons other then the usual economic incentives involved in Crude Oil sales on the international market (such as exchange contracts, sales from government to government or to government agencies).



18.5 Within ten (10) days following the end of each quarter, the Parties shall advise each other of the prices obtained for their share of production of Crude Oil from the Delimited Area sold to independent purchasers during the quarter in question, indicating for each sale the identity of the purchaser, the quantities sold, the delivery and payment terms.



Within twenty (20) days following the end of each quarter, the Contractor shall determine in accordance with the provisions of Article 18.2 or Article 18.3, as the case ma be, the Market Price applicable for the quarter concerned, and shall notify NOCAL of that Market Price, indicating the method of calculation and all data used in the calculation of that market Price.



Within thirty (30) days following receipt of the notice referred to in the preceding paragraph, NOCAL shall verify that the calculation of Market Price complies with the provisions hereof and shall notify the Contractor of its acceptance or objections. Failing notification from NOCAL within that thirty (30) day period the Market Price provided for the Contractor's

[signature]

35 31 May 2005notice referred to in the preceding paragraph shall be deemed to have been accepted by NOCAL



in the event that NOCAL has notified objections to the Market Price, the Parties shall meet within fifteen (15) days following NOCAL's notification to mutually agree on the Market Price. If the Parties fail to agree on the Market Price applicable to a given quarter within seventy-five (75) days after the end of that quarter, NOCAL or the Contractor may immediately submit to an expert, appointed in accordance with the following paragraph, the determination of the Market Price (including the determination of reference crude oils if the Parties have not determined them). The expert shall determine the price within thirty (30) days after his appointment and his conclusions shall be final and binding on the Parties. The expert shall decide in accordance with the provisions of this Article



The expert shall be selected by agreement between the Parties or, if no agreement is reached by the international Center of Expertise of the International Chamber of Commerce in accordance with its rules on Technical Expertise, at the request of the most diligent Party. The expertise costs shall be charged to the Contractor and included in the petroleum Costs.



18.6 In the event it would be necessary to calculate on a provisional basis during a quarter the Crude Oil price applicable to the liftings made during said quarter, that price shall be established as follows:



(a) For any sale to independent buyers, the price applicable to that sale shall be the price obtained for the Crude Oil for said sale, as adjusted to take into account the F.O.B delivery terms and thirty (30) days Payment terms.



(b) For any lifting other than those which are the subject of a sale to independent buyers, the price applicable to that lifting shall be the Market Price determined for the preceding quarter or, if that Market Price has not been determined, a price set up by agreement between the Parties or, failing agreement, the last known Market Price



Once the Market Price for a quarter has been determined on a final basis, adjustments, if required, shall be made with thirty (30) days.



36 31 May 2005 ARTICLE 19

BONUSES

19.1 The Contractor shall pay to NOCAL the following bonuses.

(a) Two (2) million Dollars when the total production of Crude Oil from the Delimited Area first reaches the average rate of thirty thousand (30000) Barrels per day during a period of thirty (30) consecutive days.

(b)Three (3) million Dollars when the Total production of Crude Oil from the Delimited Area first reaches the average rate of fifty thousand (50000) Barrels per day during a period of thirty (30) consecutive days.

(c) Five (5) million Dollars when the Total Production of Crude Oil from the Delimited area first reaches the average rate of one hundred thousand (100,000) Barrels per day during the period of thirty (30) consecutive days.



Each of the amounts referred to in (a), (b) and (c) above Shall be paid within thirty (30) days following the expiration of the reference period of thirty (30) consecutive days.

19.2 The payments reffered to in article 19.1 will be recoverable and, therefore, shall be considered as Petroleum Costs. [signature] [signature] [signature]

37 31 may 2005 ARTICLE 20



OWNERSHIP AND ABANDONMENT OF ASSETS



20.1 Upon expiration, surrender or termination of this contract, whatever the reason thereof, In respect of all or part of the Delimited Area or at the end of exploitation of a Field, the Contractor shall transfer at no cost to NOCAL the ownership of assets, movables and immovables, used for the requirements of the Petroleum Operations carried out in the area so surrendered located whether inside or outside the Delimited Area such as wells and their equipment, buildings, warehouses, docks, lands, offices, plants machinery and equipment, bases harbors, wharfs, jettles, buoys platforms , pipelines, roads, bridges railroads and other facilities.



Such transfer of ownership shall cause the automatic cancellation of any security or surety concerning those assets, or which those assets constitute.



However the Contractor may continue to use those assets beyond the date refeered to in the first paragraph, for the requirement of its Petroleum Operations in Liberia governed by other contracts



20.2 If NOCAL decides not to accept, for all or part of the assets, the transfer of ownership provided for in Article 20.1. it may not later than ninety (90) days following the date specified in said Article require the Contractor, in accordance with good international petroleum industry practice , to perform abandonment operations and to remove, at the cost of the contractor, the facilities relating to the surrendered area.







38 31 May 2005 ARTICLE 21



NATURAL GAS



21.1 Non-Associated Natural Gas



21.1.1 In the event of a Non-Associated Natural Gas discovery, the Contractor shall engage in discussions with NOCAL with a view to determining whether the appraisal and exploitation of said discovery have a potentially commercial nature.

21.1.2 If the Contractor, after the above-mentioned discussions, considers that the appraisal of such Non-Associated Natural Gas discovery is justified, it shall undertake the appraisal work program for said discovery.



The Contractor shall have the right, for the purposes of evaluating the commerciality of the Non-Associated Natural Gas discovery, if it so requests at least thirty (30) days prior to the expiration of the third exploration period set forth in Article 3.3 to be granted an exclusive appraisal authorization concerning the Appraisal Perimeter of the abovementioned discovery, for a term of two (2) years.



In addition, the Parties shall jointly evaluate the possible outlets for the Natural Gas, both on the local market and for export, together with the necessary means for its marketing, and they shall consider the possibility of a joint marketing of their shares of production in the event the Natural Gas discovery would not otherwise be commerciality exploitable. For that purpose, a Consultative Committee for Natural Gas shall be established by the Parties to ensure the coordination of the upstream and downstream components of the Natural Gas project and facilitate its evaluation and implementation.



21.1.3 Following completion of appraisal work, in the event the Parties should jointly decide that the exploitation of that discovery is justified to supply the local market, or in the event the Contractor should undertake to develop and produce that Natural Gas for export, the Contractor shall submit prior to the expiration of the appraisal period an application for an exclusive exploitation authorization which NOCAL will grant under the terms provided by Article 12.1.



The Contractor shall then have the right and obligation to proceed with the development and production of that Natural Gas in accordance with the approved development plan referred to in Article 11.3 and the provisions of the Contract applicable to Crude Oil shall apply, mutatis mutandis, to Natural Gas, unless otherwise specifically provided under Article 21.3.



21.1.4 If the Contractor considers that the appraisal of the Non-Associated Natural Gas discovery concerned is not justified, NOCAL, may, by giving twelve (12) months prior notice which may be reduced either with NOCAL’s consent or automatically in the event the exclusive exploration authorization expires earlier, require the Contractor to surrender its rights in respect of the area encompassing said discovery.



In the same manner, if the Contractor, after completion of appraisal works, considers that the Non-Associated Natural Gas discovery is not commercial NOCAL may, by giving three (3) months prior notice, unless the exclusive







39exploration authorization expires earler, require the Contractor to surrender is rights on the area encompassing said discovery.



in both cases, the Contractor shall forfeit its rights to all Non-Associated Natural Gas which could be produced from said discovery and NOCAL may then carry out, or cause to be carried out, all the appraisal, development production, processing, transportation and marketing work relating to that discovery, without any compensation for the Contractor.



21.15 Norwithstanding the terms of Article 21.14, if the Operator is of the view that the Non-Associated Cos Discovery in question is non-economic as a standalone development but can demonstrain that there is sufficient prospectivity in the region to support a combined development of current discovered reserves and future exploration prospects as a combined economic development, then NOCAL will provide the Contractor a period of 38 months before exercising its right pursuant to Article 21.14.



21 2 ASSOCIATED NATURAL GAS



21 2.1 In the event of a commercial discovery of Crude Of, the Contractor shall state if it considers that the production of Associated Natural Gas is likely to exceed the quantities necessary for the requirements of the Petroleum Operations related to the production of Crude Oil(including reinjection operations), and if it considers that such excess is capable of being produced in commercial quantities. In the event the Contractor shall have informed NOCAL of such an excess, the Parties shell jointly evaluate the possible outlets for that excess of Natural Gas, both on the local market and for export (including the possibility of joint marketing of their shares of production of that excess of Natural Gas in the event such excess would not otherwise be commercialy explorable; together with the means necessary for its marketing.



In the event the Parties should decide that the development of the excess of Nature Gas is justified, or in the event the Contractor would wish to develop and produce that excess for export, the Contractor shall indicate in the development and production program referred to in Article 11 .3.3 the additional facilities necessary for the development and explosation of that excess and its estimate of the Dosts reosted thereto.



The Contractor shall then have the right to proceed with the development and exploitation of that excess in accordance with the development and production program approved by NOCAL under the terms provided by Article 11.3.5. and the provisions of the Contract applicable to Crude Oil shall apply mutatis mutandis to the excess of Natural Gas unless otherwise specifically provided by Article 2*.3.



A similar procedure shall be applicable if the sale of marketing of Associated Natural Gas is decided during the exploration of a Field.



21.2.2 In the event Contractor should not consider the exploitation of the excess of Natural Gas as justified and if NOCAL at any time, would wish to utilize it, NOCAL shot notify the Contractor thereof, in which event.



[Signature] [Signature]



40 31 May 2005









(a) the Contractor shall make available to NOCAL free of charge at the Crude Oil and Natural Gas separation facilities all or part of the excess that NOCAL wishes to lift;



(b) NOCAL shall be responsible for the gathering, processing, compressing and transporting of that excess from the above mentioned separation facilities, and shall bear any additional costs related thereto;



(c) the construction of the facilities necessary for the operations referred to in paragraph (b) above, together with the lifting of that excess by NOCAL, shall be carried out in accordance with good international petroleum industry practice and in such a manner as not to hinder the production, lifting and transportation of Crude Oil by the Contractor.



21.2.3 Any excess of Associated Natural Gas which would not be utilized under Articles 21.2.1 and 21.2.2, shall be reinjected by the Contractor. However, the Contractor shall have the right to flare said gas in accordance with good international petroleum industry practice, provided that the Contractor furnishes NOCAL with a report demonstrating that said gas cannot be economically utilized to improve the rate of recovery of Crude Oil by means of reinjection pursuant to the provisions of Article 15.6., and provided, further, that NOCAL approves said flaring, which approval shall not be unreasonably withheld.



21.3 Provisions common to Associated and Non-

Associated Gas



21.3.1 In order to encourage the exploitation of Natural Gas, NOCAL may grant to the Contractor specific benefits when they are duly justified concerning, inter alia, the recovery of the Petroleum Costs relating to Natural Gas.



21.3.2 The Contractor shall have the right to dispose of its share of production of Natural Gas, in accordance with the provisions of this Contract. It shall also have the right to proceed with the separation of liquids from all Natural Gas produced, and to transport, store as well as sell on the local market or for export its share of liquid Petroleum so separated which will be considered as Crude Oil for the purposes of their sharing between the Parties under Article 16.



21.3.3 For the purposes of this Contract, the Natural Gas price, expressed in Dollars per million BTU, shall be equal to:



(a) with respect to Natural Gas export sales to Third Parties, the price obtained from purchasers;



(b) with respect to sales on the local market of Natural Gas as a fuel, such price as NOCAL and the Contractor shall mutually agree upon.



(initials)



(initials)









41 31 May 2005 ARTICLE 22



FOREIGN EXCHANGE CONTROL



22.1 The Contractor shall comply with the foreign exchange control regulations,subject to the provisions of this Article.

22.2 The Contractor shall have the right to retain abroad all the foreign currencies arising from export sales of all Petroleum to which it is entitled under this Contract, or from assignments, as well as equity, incomes from loan and more generally, all assets acquired abroad by it, and to freely dispose of such foreign currencies or assets to the extent that they may exceed its requirements for its operations in Liberia.

22.3 No restriction shall be exercised on importatation by the contractor of funds intended for the performance of the Petroleum Operations.

22.4 The Contractor shall have the right to purchase currencies of Liberia with foreign currencies, and freely exchange into foreign currencies of its election any funds held by it in Liberia in excess of its local requirements at exchange rates which shall not be less favourable than than those generally applicable to any other buyer or seller of foreign currencies.

[Signature] [Signature]

42 31st May 2005 ARTICLE 23





APPLICABLE LAW





The laws and regulations in force in the Republic of Liberia and the provisions of international law as may be applicable to international oil and gas activities shall apply to the Contractor, to this Contract and to the Operations which are the purpose thereof, unless otherwise provided by the Contract. ARTICLE 24



MONETARY UNIT



24.1 The registers and accounting books relating to this Contract shall be maintained and recorded in Dollars.Said registers and accounting books shall be used to determine the Petroleum Costs , gross income , exploitation costs and net profits for the purpose of the preparation of the Contractor's tax return;they shall contain, inter alia , Contractor's accounts showing the sales of Petroleum under this Contract.



24.2 Whenever it is necessary to convert into Dollars expenses and incomes expressed in another currency, the exchange rates to be used shall be equal to the arithmetic average of the daily closing rates for the purchase and sale of said currency during the month when the expenses were paid and the income received.



24.3 The originals of the registers and accounting books referred to in Article 24.1 shall be kept in Liberia.



The registers and accounting books shall be supported by detailed documents with respect to receipts and Petroleum Costs.

[Signature] [Signature] [Signature]



44 31 may 2005







ARTICLE 25





ACCOUNTING METHOD AND AUDITS







25.1 The Contractor shall maintain its accounts in accordance with the regulations in force and with the provisions of the Accounting Procedure set out in Appendix 2 attached hereto forming an integral part of this Contract.



25.2 After giving the Contractor notice thereof in writing, the STATE shall have the right to cause the registers and accounting books relating to the Petroleum Operations to be inspected and audited by its own agents or by experts of its election, and shall have a period of four (4) years following the end of each Calendar Year to carry out those inspections or audits relating to said Year and may submit its obligations to the Contractor for any contradictions or errors found during such inspection or audits.



Should the STATE fail to make any claim within the above-mentioned period of four (4) years, no further objection or claim shall be made by the Liberian administration for the Calendar Year concerned.



(initials) (initials)

(initials)

















45 31 May 2005

ARTICLE 26



IMPORT AND EXPORT



26.1. (a) The contractor shall have the right to import into Liberia, in its own name or on behalf of its contractors and subcontractors, all the technical equipment, materials, machinery and tools, goods and supplies necessary in the Contractor's opinion for the proper conduct and achievements of the Petroleum Operations; such imports include but are not limited to, drilling, exploration, development, production, transportation, sales and marketing, equipment, pipelines, tanks, geological and geophysical tools, boats, ships, launches, drilling barges, ships and platforms, production platforms, civil engineering and telecommunication equipment, power plants and all related equipment, aircraft, automotive equipment and other vehicles, instruments, tools, spare parts, alloys and additives, camping equipment, protective clothing and equipment, medical, surgical and operation of hospitals and dispensaries, documentation equipment, construction materials of all types, lumber, office furniture and equipment, automobiles, explosives, chemicals, fuels, ship supplies, pharmaceutical products, medicines.



(b) The Contractor shall have the right to import into Liberia, in its own name or on behalf of its contractors or subcontractors, the furniture, clothing, household appliances and all personal effects for all the foreign employees and their families assigned to work in Liberia for the Contractor or its contractors or subcontractors.



(c) However, the Contractor, its agents, contractors and subcontractors undertake not to proceed with the imports mentioned in Article 26.1.(a) insofar as such items are available in Liberia under equivalent conditions of quantity, quality, price, delivery and terms of payment, unless specific requirements or technical emergencies are presented by the Contractor.



(d) The Contractor, its agents, contractors and subcontractors shall have the right to re-export from Liberia, free of all duties and taxes and at any time, all the items imported under Article 26.1.(a) and (b) which are no longer necessary for the Petroleum Operations except the items which have become the property of the State under the provisions of Article 20.



26.2. All the technical materials, machinery and tools, goods and supplies specified in Article 26.1 which the Contractor, its agents, contractors and subcontractors, their foreign employees and their families will have the right to import in one or more shipments to Liberia, shall be fully exempt of all duties and taxes payable as a result of the importation

("entry duties and taxes").



As the case may be the applicable administrative formalities will be those of the following regimes.



(a) Exceptional temporary admission regime in full suspension of entry duties and taxes for equipment, materials, machinery and tools, goods and supplies necessary for the proper progress of the Petroleum Operations, for the entire duration of their use in Liberia including the continental shelf, it being understood that

[signature]

48 31 May 2005for the equipment, materials, machinery and tools, and goods and supplies consumed during the operations or left in place the exceptional temporarily admission discharge will be automatic by simple quarterly declaration and without payment of duties and taxes.



In the event of a duly justified emergency, the equipment materials, tools and machinery, goods and supplies will be placed at the disposal of the users and soon as they arrive in Liberia and the administrative regularization relating to their admission will be made later and as soon as possible.



(b) Supply regime for consumable goods and foodstuffs, fuels and lubricants used at sea, in particular on all ships, aircraft and machinery used for petroleum exploration and exploitation.



(c) Exempt admission regime according to the regulations in force, for furniture, clothing household appliances and personal effects.



26.3 The Contractor, its agents, contractors and subcontractors shall, provided that they inform the STATE in advance of their intent to sell and subject to the provisions of Article 20, have the right to sell in Liberia, all equipment, materials, machinery and tools, goods and supplies which they have imported when they are considered as surplus and no longer necessary for the Petroleum Operations. In that event the seller shall be responsible for paying all duties and taxes applicable on the date of the transaction and for filing all the formalities prescribed by the regulations in force.



26.4 During the term of this Contract, the Contractor, its customers and their carriers shall have the right to export freely at the export point selected for the purpose, free of all duties and taxes and at any time, the portion of petroleum to which the Contractor is entitled in accordance with the provisions of this Contract, after deduction of all deliveries made to the STATE.



47 31 May 2005ARTICLE 27





DISPOSAL OF PRODUCTION







27.1. Each Calendar Year, up to a total of ten percent (10%) of the share of Crude Oil Production to which the Contractor is entitled, shall be sold to NOCAL by the Contractor for the purpose of satisfying the needs of the domestic market of Liberia. Such contribution of the Contractor shall be in proportion to the share of production, in the total Crude Oil Production in Liberia.



The quantity of Crude Oil the Contractor shall be obligated to sell to NOCAL shall be notified to it by NOCAL at least three (3) months prior to the beginning of each calendar quarter.



27.2. The price of the Crude Oil sold to NOCAL under Article 28.1 for the needs of the domestic market shall be the Market Price defined in Article 18.



That Crude Oil price shall be payable to the Contractor in Dollars two (2) months after receipt of the invoice unless otherwise agreed between the Parties.



27.3. The transfer of title to, and risk of, the share of Petroleum production to which each party is entitled shall be made at the Delivery Point,or at any other transfer point agreed between the Parties.



27.4. Each of the Parties shall have the right and obligation, to dispose of and lift the share of Petroleum to which it is entitled under this Contract. Such share shall be lifted on as regular a basis as possible, it being understood that each of the Parties, within reasonable limits, will be authorized to lift more (overlift) or less (underlift) that its share of Petroleum produced and unlifted by the lifting day to the extent that such overlift or underlift does not infringe on the rights of the other Party and is compatible with the production rate and the storage capacity. In the establishment of the sequence of liftings, priority will be given to the Party with the largest share of produced and unlifted quantity of Petroleum at a given time. The Parties shall periodically meet to establish a provisional lifting program on the basis of the principles above-described and taking into account the wishes of the Parties as regards the dates and quantities of their lifting, provided that those wishes are compatible with said principles.





















48 31 May 2005ARTICLE 28



PROTECTION OF RIGHTS



28.1 The Contractor shall take all necessary steps to achieve the objectives of this Contract in its conduct of Petroleum Operations



28.2 NOCAL shall take all necessary steps to facilitate the implementation by the Contractor of the objectives of this Contract, and the State shall protect the Property and operations of the Contractor, its employees and agents in the territory of Liberia.



28.3 At the request of the Contractor, the STATE shall prohibit the construction of dwelling or business buildings in the vicinity of installations which the Contractor may declare dangerous as a result of it operations it shall take all necessary precautions to prohibit anchoring in the vicinity of submerged pipelines at river passages, and to prohibit any hindrance to the use of any other installation necessary for the Petroleum Operations whether on land or offshore.



28.4 The Contractor shall take out and cause to be taken out by its contractors and subcontractors, in respect of the Petroleum Operations, all insurances of the type and for such amounts customarily used in the international petroleum industry, including without limitation, third party liability insurance and insurance to cover damage to property facilities, equipment and materials, without prejudice to such insurances which would be required under Liberian legislation.



49 31 May 2005ARTICLE 29



PERSONNEL AND TRAINING



29.1 The Contractor shall, for the purposes of the Petroleum Operations, employ Liberian personnel whenever qualified for requirements of the employment.



Managers, technicians, engineers, accountants, geologists, geophysicists, scientists, chemists, drillers, foremen, mechanics, skilled workers, secretaries and executive employees may be hired outside Liberia if similarly qualified specialists cannot be hired in Liberia.



29.2

29.2.1 Upon commencement of the Petroleum Operations, the Contractor shall provide funding for Training Programmes in Liberia and for that purpose the Contractor shall devote an annual Training Budget of:



(a) $125,000 Dollars during each year of the exploration period;



(b) $150,000 Dollars during each year of the exploitation period.



29.2.2 Upon commencement of the Petroleum Operations, the Contractor shall provide funding for Social and Welfare programmes in Liberia and for that purpose the Contractor shall devote an annual Social and Welfare Budget of:



(a) $150,000 Dollars during each year of the exploration period;



(b) $250,000 Dollars during each year of the exploitation period



An escrow account shall be established by both Parties for the purposes of receiving money and paying for the programmes detailed in Articles 29.2.1 and 29.2.2 and they shall both be signatories to such account.

The Training requirements shall be developed by both Parties with the understanding that NOCAL shall provide 70% of the training candidates and the Contractor shall provide 30% of the candidates.

The Training and Social and Welfare Programmes shall be mutually agreed by the Parties.

The Training and Social and Welfare expenses borne by the Contractor shall be included in recoverable Petroleum Costs Funding for the Training and Social and Welfare Programmes shall be paid to the fund 0 days after the Effective Date.

29.3 The entry into Liberia of all foreign personnel shall be authorized and the STATE shall issue the documents necessary for that entry to all members of the foreign personnel, such as entry visas, working permits and exit visas, in compliance with the immigration regulations in force in Liberia.



At the request of the Contractor, the STATE shall facilitate any immigration formalities with the Immigration Bureau, at the points of entry into and exit from Liberia, in respect of the



50

31 May 2005

Contractor's employees, contractors, subcontractors and agents, and their families, all without undue delays



29.4 All the employees required for the conduct of the Petroleum Operations shall be under the Contractor's authority or that of its contractors, sub contractors and agents, in their capacity as employers. Their work, number of working hours, salaries and any other matters relating to their employment conditions shall be determined by the contractor or its contractors, subcontractors and agents. ARTICLE 30



ACTIVITY REPORTS IN RESPECT OF



EXCLUSIVE EXPLOITATION AUTHORIZATIONS



30.1 The provisions of Article 12 shall apply, mutatis mutandis, to any exclusive explotation authorizations. In addition the following periodic activity reports shall, inter alia , be furnished in respect of each Field.



(a) daily production reports



(b) monthly reports stating the quantities of Petroleum produced and those sold during the previous month together with information on such sales



Unless the contractor gives its written consent, the information relating to a field under exploitation except statstical data about activity, shall be considered as confidential by the Parties during the term of this Contract.



30.2 The Contractor shall forthwith notify the STATE of any material damage whatsoever caused to the petroleum fields or facilities and shall take all necessary steps to terminate it and carry out the necessary repairs



30.3 From the year of granting and exclusive authorization, the annual report referred to in Article 8.2 shall also include the following.



(a) information on all development and production operations carried out during the previous Calender year, including the quantities of petroleum produced and those sold if any;



(b) information on all transportation and sales operations together with the location of the main facilities built by the contractor, if any;



(c) a statement specifying the number of employees and workers, their qualification and their nationality , together with a report on the medical care and training provided to them.

ARTICLE 31



ARBITRATION



31.1 in the event of any dispute between the STATE or NOCAL and the Contractor relating to, or arising out of the interpretation or execution of the provisions of this Contract, the Parties shall make their best efforts to settle such dispute amicably.



If within three (3) months from the date of notice of such dispute by either party to the other, the Parties have not reached settlement, the dispute shall, at the request of the most diligent party, be referred for arbitration to the international Chamber of Commerce in accordance with its rules and regulations.



31.2 The arbitration shall be held in London, England. The language used during the procedure shall be the English language. The arbitration shall be determined by three (3) arbitrators. The arbitrators shall not have the same nationality as the Parties.



The arbitration tribunal's award shall be final, it shall be binding on the Parties and shall be enforceable in any court of appropriate jurisdiction.



31.3 The expenses of any arbitration shall be borne equally by the Parties, that is to say, each Party shall pay the expenses of its own arbitrator and the expenses of the third arbitrator in equal shares, and any expenses imposed by the international Chamber of Commerce shall be shared equally by the Parties.



The performance by the Parties of their obligations under this Contract shall not be suspended during the course of the arbitration.



53 31 May 2005 ARTICLE 32



FORCE MAJEURE



32.1 No delay or default of a party in performing any of the obligations resulting from this Contract shall be considered as a breach of this Contract if such delay or default is caused by a case of Force Majeure



If in the event of Force Majeure the performance of any of the obligations under this Contract is delayed, that delay extended by the period of time required to repair the damage caused during such delay and to resume the Petroleum Operations , shall be added to the period provided by the Contract for the performance of said obligation, and the exclusive exploration or exploitation authorizations shall be extended by that period as regards the area concerned by Force Majeure



32.2 Force Majeure means any event unforeseeable and beyond the control of a party, such as earthquake, flood , accident, strike, lockout, riot, delay in obtaining the rights-of-way, insurrection, civil disturbances, sabotages, act of war or conditions attributable to war, or any other cause beyond its control, similar to or different from those already mentioned.



32.3 Where a Party considers it is prevented from performing any of its obligations by the occurrence of Force Majeure, it shall forth with notify the other Party thereof by specifying the grounds for establishing Force Majeure, and take all necessary and useful steps to ensure the normal resumption of the performance of the concerned obligations upon termination of the event constituting the Force Majeure.



Obligations other than those affected by Force Majeure shall continue to be performed in accordance with the provisions of this contract.



ARTICLE 33



JOINT AND SEVERAL OBLIGATIONS



AND GUARANTEES



33.1 All the clauses, conditions and provisions of this Contract shall be binding on the Parties and their respective successors and assignees. This Contract constitutes the only agreement between the Parties and no previous communication, promise on agreement, whether oral or written, between the Parties, related to the purpose of this Contract may be asserted to amend the clauses hereof.



The STATE certifieS and guarantees that there is no other applicable agreement with respect to the petroleum rights within the Delimited Area, that it will perform its obligation in fairness and good faith and that this Contract will not be cancelled, amended or modified except by agreement between the Parties.



33.2 Where the Contractor is constituted by several entities, the obligations and liabilities of those entities under this contract shall be joint and several. [Signature] [Signature] [Signature]



55 31 may 2005ARTICLE 34



RIGHTS OF ASSIGNMENT



34.1 All or part of the rights and obligations arising from the Contract may be assigned by any of the entities constituting the Contractor to Third Parties whose technical and financial reputation is well established the assignees with the other entities constituting the Contractor shall thereafter be jointly and severally liable for the obligations arising from this Contract.



The terms of any assignment shall be subject to the prior approval of NOCAL, which approval shall not be unreasonably withheld.



If within thirty (30) days following notification to NOCAL of a projected assignment accompanied by all the related information and the draft assignment deed, NOCAL has not given its decision, the assignment shall be deemed to be approved by NOCAL.



From the date of approval of an assignment, the assignee shall comply with the terms and conditions of this Contract



34.2 All or part of the joint and several rights and obligations arising from this Contract may be freely assigned at any time by an of the entities constituting the Contractor to one or more Affiliated Companies or other entities constituting the Contractor.



56 31 May 2005ARTICLE 35



STABILITY OF CONDITIONS



35.1 This Contract is executed between the Parties in accordance with the laws and regulations in force at the date of its signing and on the basis of the provisions of said laws and regulations, as regards, inter alia, the economic, fiscal, and financial provisions of this Contract.



35.2 This Agreement may not be amended or modified by virtue of the adoption or amendment of Law or regulation by the State of Liberia after the Effective Date of this Agreement. This Agreement may only be amended or modified by written agreement of all Parties.



35.3 In the event of other changes in circumstances from those existing at the Effective Date, that have a material effect on the terms of this Agreement (Profound Changes in Circumstances), either NOCAL or the Contractor shall at the request of the other consult together. If it is established that such Profound Changes in Circumstances have occurred, then the Parties shall effect such changes in or clarifications to this Agreement that they agree are necessary. The Parties shall meet in good faith to make the necessary revisions and adjustments to the Agreement in order to maintain such expected economic benefits to each of the Party's, provided that the economic benefits to the Parties shall not be reduced as a result of exercising the terms of this article. For the purposes of this Agreement the term "Profound Changes in Circumstances" shall mean such changes in the economic conditions of the petroleum industry world wide or in Liberia or such changes that result in such a material and fundamental alteration of the conditions and assumptions relied upon by the Parties at the Effective Date of this Agreement (or the time after any subsequent review under this Article) to the effect that the overall balance of equities and benefits reasonably anticipated by the Parties will no longer be achievable.





57 31 May 2005ARTICLE 36



IMPLEMENTATION OF THE CONTRACT



36.1 The Parties agree to cooperate in every possible manner to achieve the objectives of this Contract.



NOCAL shall facilitate the Contractor's performance of its activities by granting it any permits, licenses, access rights necessary for the performance of the Petroleum Operations and by making available to it any appropriate services and facilities, so that the Parties can obtain the best benefit from a sincere cooperation. However, the Contractor shall observe the applicable procedures and formalities, and shall apply to the competent Ministries and/or Agencies of the Administration.

The Parties agree to respect the terms of this Agreement and not to unilaterally abrogate any part of the terms and conditions contained herein.



36.2 Any notices or other communication under this Contract shall be deemed to have been made when they are delivered to an authorized representative of the Party concerned at the location of said Party's principal office in Liberia, or sent by teenagers, cable or facsimile with all expenses paid, or deposited as registered letters with the Postal administration of Liberia with postage prepaid.



Notifications shall be deemed to have been made on the date when the addressee shall receive them.



36.3 If NOCAL considers that the Contractor has committed a breach in the performance of any of its obligations, it shall so notify the Contractor in writing and the Contractor shall have sixty (60) days to remedy the breach or refer the matter to arbitration in accordance with this Contract.



36.4 The terms and conditions of this Contract may be modified only in writing and by mutual agreement between the Parties.



36.5 Unless otherwise specified in writing, the Ministry and NOCAL shall represent the STATE under this Contract and its empowered to grant, in the name and on behalf of the STATE, any consent necessary or useful for the implementation of this Contract.



36.6 Headings in this Contract are inserted for purposes of convenience and reference and in no event shall define, restrict or describe the scope of object of the Contract or of any of its clauses.



36.7 Appendices 1 and 2 attached hereto shall form an integral part of this Contract.



36.8 Any waiver of the STATE or NOCAL concerning the performance of any obligation of the Contractor shall be in writing and signed by the representative of the STATE or NOCAL,



58 31 May 2005and no waiver shall be implied if the STATE or NOCAL does not exercise any of its rights to which it is entitled under this Contract.

[scribble] [scribble]



59 ARTICLE 37

EFFECTIVE DATE

Upon execution by the Parties and when promulgated as the law of the Republic of Liberia, this Contract shall become effective, the date of execution being referred to as the Effective Date and said Contraction become binding on the Parties.[signature][signature]

60 31 May 2005Counterparts. This Agreement may be executed in multiple counterparts, and by different Parties in separate counterparts, and each such counterpart shall be deemed an original Agreement for all purposes provided that no party shall be bound by this Agreement unless and until all Parties have executed a counterpart.



IN WITNESS WHEREOF, the Parties have signed this Contract on the date as set forth below



[signature] June 16, 05

____________ _______________

President of NOCAL Date



[signature] 16th June 2005

____________ _________________

Contractor Date



[signature] 16 June 05

_____________ _________________

Chairman of Board of Directors Date

of NOCAL



_____________ ________________

Attested by Minister of Justice, Date

Republic of Liberia



_____________ _________________

Approved by CHAIRMAN National Date

Transitional Government of Liberia



_____________ _________________

Ratified by Date

National Transitional Legislative

Assembly



61 31 May 2005 APPENDIX 1



Attached to and made part of this contract between the Republic of Liberia and the Contractor.





DELIMITED AREA



on the effective Date, the Delimited Area, designated as Block 13, is formed by the area included inside the perimeter constituted by the points indicated on the map attached thereto.



The geographical coordinates of those points are the following, with reference to the Greenwich meridian





Point Latitude Longitude

1. 5.208786 N 10.8083 W

2. 5.397447 N 11.0207 W

3. 6.148121 N 10.4245 W

4. 6.088258 N 10.3546 W

5. 6.057457 N 10.2842 W

6. 6.020982 N 10.2279 W

7. 5.974796 N 10.1995 W

8. 5.208786 N 10.8083 W





Those Coordinates are only given for purposes of defining the Delimited Area and shall not be considered as the boundaries of the national jurisdiction of Liberia.



The Surface of the Delimited Area above-defined is deemed to be approximately 3300 sq km.In WITNESS WHEREOF, the Parties have signed this contract on the date as set forth below.

fodee kromach 7/8/06

______________________ ______________

Dr. Fodee Kromach Date

PRESIDENT/CEO

NATIONAL OIL COMPANY LIBERIA



clemenccauurey 08-07-06

_______________________ ______________

Mr. Clemenccau B. Urey Date

CHAIRMAN, BOARD OF DIRECTORS

NATIONAL OIL COMPANY OF LIBERIA



eugeneshannon 08-15-06

______________________ ______________

Dr. Eugene Shannon Date

MINISTER OF LANDS, MINES & ENERGY

REPUBLIC OF LIBERIA



antoinettemsayeh August 16, 2006

______________________ ______________

Dr. Antoinette Sayeh Date

MINISTER OF FINANCE

REPUBLIC OF LIBERIA



richard tolbert 8-16-06

______________________ ______________

Dr. Richard Tolbert Date

CHAIRMAN, NATIONAL INVESTMENT COM.

REPUBLIC OF LIBERIA



F.T. johnson-morris August 16, 2006

______________________ ______________

Attested: Date

Mon. Frances Johnson-Morris

MINISTER OF JUSTICE

REPUBLIC OF LIBERIA



ellen johnson sirleaf 17-08-2006

______________________ ______________

Approved: Date

Her Excellency

Ellen Johnson-Sirleaf

PRESIDENT

REPUBLIC OF LIBERIA



______________________ ______________

Ratified:

National Legislature of the Republic of Liberia



APPENDIX 2



Attached to and made part of this Contract between the Republic of Liberia and the Contractor.



ACCOUNTING PROCEDURE



Article 1 – General Provisions



1.1 Object



This Accounting Procedure shall be followed and observed in the performance of the obligations under the Contract to which this Appendix is attached.

The purpose of this Accounting Procedure is to establish the principles of accounting which shall reflect the Operations actual costs relating to Joint Operations to the end that the Operator shall subject to the processes of the Agreement neither gain nor lose by reason or the fact that it acts as Operator.



1.2 Accounts and statements



This registers and accounting books of the Contractor shall be in conformity with accounting rules and regulations for business applicable in Liberia. However, the Contractor may apply the accounting rules and procedures customarily used in the petroleum industry, insofar as none of these are contrary to the rules and regulations referred to above.



In accordance with the provisions of Article 25 of the Contract accounts, books and registers shall be maintained and recorded in Dollars. These accounts shall be used, inter alie, to determine the amount of Petroleum Costs, the recovery of said Costs, the production sharing, as well as for the purposes of Contractor’s tax return.



The Contractor shall record all operations connected with the Petroleum Operations in accounts separate from those relating to any other activities which it may carry out in the Republic of Liberia.



All accounts, books, records and statements, together with documents supporting expenses incurred, such as invoices and service contracts, shall be kept in the Republic of Liberia in order to be provided at the request of the competent authorities of Liberia.



1.3 Interpretation



The definitions of the terms used to this Appendix 2 shall be the same as those of the same terms set forth in the Contract. In the event of any conflict between the provisions of this Accounting Procedure and the Contract, the provisions of the Contract shall prevail.



1.4 Modifications





63 31 May 2005The provisions of this Accounting Procedure may be modified by mutual agreement between the Parties.The provisions of this Accounting Procedure may be modified by mutual agreement between the Parties.

The Parties agree that if any provision of the Accounting Procedure proves inequitable to either Party, such provision shall be modified in good faith by the Parties

[Signature] [ Signature] [ Signature]

64 31 May 2005











Article II-Petroleum Costs



11.1. Petroleum Costs Account



The Contractor shall maintain a "Petroleum Costs Account" which will record in detail the expenses incurred by the Contractor directly relating to the Petroleum Operations carried out under this Contract, and which will be recoverable in accordance with the provisions of Article 16 of the Contract.



This Petroleum Costs Account shall, inter alia, record separately, by Appraisal Perimeter or Exploitation Perimeter if any, the following expenses:



(a) exploration expenditures;



(b) appraisal expenditures;



(c) development expenditures;



(d) exploitation expenses;



(e) financial costs;



(f) overhead costs in Liberia;



(g) overhead costs abroad.



The Petroleum Costs Account shall enable, inter

alia, to identify at any time:



(a) the total amount of Petroleum Costs since the

Effective Date;



(b) the total amount of Petroleum Costs recovered;



(c) the total amount credited to the Petroleum

Costs Account pursuant to Article II.4 (b) below;



(d) the total amount of Petroleum Costs which

remain to be recovered.



(e) the calculation of taxable income



For the purposes of Article 16 of the Contract,

Petroleum Coasts shall be recovered in the

following sequence:



(a) exploitation expenses in respect of a Field

incurred and paid from the date of commencement of

regular production;



(b) financial costs;



(c) other Petroleum Costs.





65 31 May 2005



in addition, within each of the foregoing categories, the costs shall be recovered in the sequence in which they are incurred.



Unless otherwise provided for in this Accounting Procedure the intent of the Parties is not to duplicate any item of the credit or debit of the accounts maintained under the Contract.



II.2. Items debited to the Petroleum Costs Account



The following expenses and costs shall be debited to the Petroleum Costs Account.



II.2.1. Personnel expenses



All payments in respect of the salaries and wages of the Contractor's employees will be those costs directly assigned to the Petroleum Operations carried out under this Contract. The precise amounts of expenses will be reviewed in the future and will be in agreement with accepted human resource procedures adopted by the Contractor that are generally applicable in the international oil and gas industry. The expenses allowed will be the actual expenses incurred as permitted by such Human resource Procedures.



II.2.2 Overhead costs in Liberia



Wages and salaries of the Contractor's personnel directly engaged in the Petroleum Operations in the Republic of Liberia, whose work time is not directly allocated to the programs as well as costs of maintaining and operating in Liberia a main and administrative office and sub-offices necessary for the Petroleum Operations.



II.2.3. Overhead costs abroad



The Contractor shall charge costs paid abroad, connected to the carrying out of the Petroleum Operations by the Contractor or its Affiliated Companies. The amounts charged shall be the actual costs borne by the Contractor. These costs, including a detailed breakdown of the costs, will be provided to the JOC for its review and agreement.



II.2.4 Buildings



Construction, maintenance expenses, as well as rents paid for all offices, houses, warehouses and buildings of other types, including housing for employees, and cost of equipment, furniture, and fitting necessary for the operation of those buildings directly required for the performance of the Petroleum Operations.



II.2.5 Materials, equipment and rentals



Costs of equipment, materials, machinery, and facilities purchased or provided for use in the Petroleum Operations, as well as rentals or compensations paid or incurred for the use of any equipment or facilities required directly for the performance of the Petroleum Operations.

[signature] [signature] [signature]

66 31 May 2005B.2.6. Services



Costs of services directly related to Petroleum Operations rendered by subcontractors and consultants, as well as any costs directly related to services rendered by the STATE or NOCAL or any other authorities of the Republic of Liberia.



Costs of services directly related to Petroleum Operations rendered by Affiliated Companies, provided that such costs shall not exceed those normally charged by independent companies for an identical or similar service.



B.2.7 Insurance Premiums



Premiums paid for insurances customarily taken out for the Petroleum Operations to be carried out by the Contractor.



B.2.8 Legal Expenses



All expenses of handling, investigation and settlement of litigation or claims directly arising from the Petroleum Operations.



B.2.9. Financial Costs



All interests paid by the Contractor in respect of the loans from Third Parties and advances obtained from Affiliated Companies, provided that those loans and advances shall be for the purpose of the financing of Petroleum Costs related only to the development of Petroleum Operations in respect of a Field in the event such financing is provided by Affiliated Companies, the allowable interest rates shall not exceed the rates customarily used in the international financial markets for loans of a similar nature.



B.2.10 Other Expenses



Any other expenses incurred and paid by the Contractor for the purposes of the necessary and proper conduct of the Petroleum Operations under the approved Annual Work Programs and Budgets, other than the expenses covered and dealt with by the foregoing provisions of this Article and other than the expenses excluded from the Petroleum Costs.



B.3. Expenses not chargeable to the Petroleum Costs Account



The expenses which are not directly necessary for the performance of the Petroleum Operations, and the expenses excluded by the provisions of the Contract or this Accounting Procedure as well as by the regulations in force in Liberia, are not chargeable to the Petroleum Costs Account and shall therefore not be recoverable.



Such expenses shall include, without limitation.



(a) expenses relating to the period before the Effective Date;



(b) any expenses relating to the operations carried out beyond the Delivery Point, such as transportation and marketing costs;







67 31 May 2005(c) financial costs relating to the financing of exploration Petroleum Operations, and those relating to the share of financing of development Petroleum Operations;



(d) bonuses defined in Article 19 of the Contract;



(f) exchange losses.



11.4 Items credited to the Petroleum Costs Account



The following incomes and proceeds shall, inter alia, be credited to the Petroleum Costs Account



(a) income arising from the marketing of the quantity of Crude Oil to which the Contractor is entitled under Article 16 of the Contract for the purpose of recovery of the Petroleum Costs;



(b) any other incomes or proceeds related to the Petroleum Operations, specifically those arising from



. sales of related substances;



. any services rendered to Third Parties using the facilities dedicated to the Petroleum Operations, including, but not limited to processing, transportation and storage of products for Third Parties in those facilities.

[Signature] [Signature] [Signature]

68 31 may 2005Article III - Cost Evaluation Basis For Services, Materials and Equipment Used in the Petroleum Operations



III.1. Technical services



A reasonable rate shall be charged for the technical services rendered by the Contractor or its Affiliated Companies for the direct benefit of the Petroleum Operations carried out under the Contract, such as gas, water, core analyses and any other analyses and tests, provided that such charges shall not exceed those normally charged by independent technical service companies and laboratories for similar services.



III.2. Purchase of materials and equipment



Materials and equipment purchased from Third Parties and directly necessary for the performance of the Petroleum Operations carried out under the Contract shall be charged to the Petroleum Costs Account at "Net Cost" incurred by the Contractor.



"Net Cost" shall include such items as taxes, shipping agent fees, transportation, loading and unloading costs, license fees, related to the supply of materials and equipment, as well as transit losses not recovered through insurance.



III.3. Use of equipment and facilities owned exclusively by the Contractor



Equipment and facilities owned by the Contractor and used directly for the Petroleum Operations shall be charged to the Petroleum Costs Account at a rental rate which shall be sufficient to cover maintenance, repairs, depreciation and services required for the performance of the Petroleum Operations.



III.4. Valuation of materials



All materials transferred to Liberia from the Contractor's warehouses, or from those of any entity constituting the Contractor or their Affiliated Companies, shall be valued as follows:



(a) New Material



New material (condition "A") means new material which has never been used; one hundred percent (100%) of the current market price, which corresponds to the price normally charged for similar supplies in arm's length transactions between buyer and seller.



Material in good condition (condition "B") means material in good condition which is still usable for its original purpose without repair, at a maximum of seventy-five percent (75%) of the price of new material.



(b) Other used material



Other used material (condition "C") means material still usable for its original purpose, but only after repairs and reconditioning: at a maximum of fifty percent (50%) of the price of new material.

[signature] [signature]

69 31 May 2005(c) Material in poor condition



Material in poor condition (condition "D") means material no longer usable for its original purpose but still usable for other purposes at a maximum of twenty-five percent (25%) of the price of new material.



(d) Scrap material



Scrap material (Condition "E") means material beyond usage and repair; prevailing price of scrap material.



III.5. Materials and equipment disposed by the Contractor



Materials and equipment purchased by all the entitles constituting the Contractor shall be valued in accordance with the principle defined in Article III.4 above.



Materials and equipment purchased by any entity constituting the Contractor or by Third Parties shall be valued at the received sale price, which shall in no event be less than the price determined in accordance with the principles defined in Article III.4 above.



The corresponding amounts shall be credited to the Petroleum Costs Account.



Article IV - Inventories



IV.1. Period



The Contractor shall keep a permanent inventory both in quantity and value of all normally controllable materials used for the Petroleum Operations and shall proceed at reasonable intervals with the physical inventories as required by the Parties.



IV.2. Notice



A written notice of intention to take an inventory shall be sent by the Contractor at least ninety (90) days prior to the commencement of said inventory so that the STATE and the entities constituting the Contractor may be represented at their own expenses during the inventory operations.



IV.3. Information



In the event the STATE or any entity constituting the Contractor shall not be represented at an inventory, such Party or Parties shall be bound to accept the inventory taken by the Contractor which shall furnish to such Party or Parties a copy of said inventory.



70 31 May 2005Article V - Financial and Accounting Statements



The Contractor shall furnish the STATE and NOCAL with all the reports, records and statements provided by the provisions of the Contract and the applicable regulations and, inter alia, the following financial and accounting statements:



V.1. Statement of exploration work obligations



Such annual statement shall be submitted not later than one (1) month after the end of each Contractual Year in respect of the exploration periods.



It shall present with details the exploration work and expenditures carried out by the Contractor to fulfill its obligations set forth in Article 4 of the Contract, excluding specifically appraisal wells and related appraisal expenditures as well as development expenditures, exploitation expenses, overhead costs and bonuses.



V.2. Statement of recovery of Petroleum Costs



A recovery statement shall be submitted not later than one (1) month after the end of each Calendar Quarter, it shall present the following items of the Petroleum Costs Account:



(a) the amount of Petroleum Costs which remain to be recovered at the beginning of the quarter.



(b) the amount of Petroleum Costs in respect of that quarter and recoverable under the provisions of the Contract;



(c) the quantity and the value of the production of Petroleum taken by the Contractor during the quarter for the purpose of recover of the Petroleum Costs;



(d) the amount of incomes or proceeds credited for the purpose of Article II.5 (b) above during the quarter;



(e) the amount of Petroleum Costs which remain to be recovered at the end of the quarter.



In addition, an annual statement of the recovery of Petroleum Costs shall be submitted prior to the end of February of each Calendar Year.



V.3. Statement of production



After commencement of production, such monthly statement shall be submitted not later than fifteen (15) days after the end of each month.

[signature] [signature] [signature]

71 31 May 2005it shall be present for each month the detailed production of each Exploitation. perimeter and inter alia. the quantities of Petroleum:



(a) stored at the beginning of the month;



(b) lifted during the month;



(c) lost and used for the requirement of the Petroleum Operations;



(d) stored at the end of the month.Offshore Liberia - Block 13



[map]



73Blank pdf page ADDENDUM TO PRODUCTION SHARING CONTRACT

BETWEEN THE NATINOAL OIL COMPANY OF LIBERIA

AND BROADWAY CONSOLIDATED PLC, BLOCK LB-13,

JUNE 2005



BETWEEN



The Republic of Liberia represented for the purposes of this Contract by the National Oil Company of Liberia (NOCAL), a company incorporated under the laws of Liberia; REPRESENTED by its Chairman of the BOARD and President/CEO



AND



Broadway Consolidated Plc, a company incorporated under the jurisdiction of the Isle of Man, hereinafter referred to as “the Contractor”.



This addendum represents decisions reached between the two parties at a meeting held on Friday July 14th, 2006 at The Royal Air Force Club in London, UK.









1ARTICLE 3

DURATION OF EXPLORATION PERIODS AND SURRENDERS



3.1 The exclusive exploration authorization is hereby granted to the Contractor for a period of nine (9) consecutive years defined by three consecutive periods



A first Exploration Period of four (4) Contract Years, a second Exploration Period of three (3) Contract Years and a third Exploration Period of two (2) Contract Years in respect of the entire Delimited Area.



3.2 If during the first exploration period set forth above the Contractor has fulfilled the exploration work commitments defined in Article 4, as ascertained by the Government, the exclusive exploration authorization shall, at the Contractor's request, be renewed for a second exploration period of two (2) Contract years.



ARTICLE 4

EXPLORATION WORK COMMITMENTS



4.2 The Contractor, during the first exploration period defined in Article 3.1, shall carry out a minimum work programmed at a cost of no less than five (5) million Dollars which includes a 3D Seismic Survey of 1500 square Km.



4.3 The Contractor, during the second exploration period defined in Article 3.1, shall carry out a minimum work programme at a cost of no less than ten (10) million Dollars including a commitment to drill one (1) exploration well.



4.4 The Contractor, during the third exploration period defined in Article 3.1, shall carry out a minimum work programmed at a cost of no less than ten (10) million Dollars including a commitment to drill one (1) exploration well.



24.5 Each of the exploratory wells shall be drilled to a minimum depth of two thousand (2000) meters, after deduction of the water depth, or to a lesser depth if the continuation of drilling performed in accordance with good international petroleum industry practice is prevented for any of the following reasons:



(a) The basement is encountered at a lesser depth than the minimum contractual depth;

(b) Continuation of drilling presents an obvious danger due to the existence of abnormal formation pressure.

(c) Rock formations are encountered the hardness of which prevents, in practice, the continuation of drilling by the use of appropriate equipment;

(d) Petroleum formations are encountered the crossing of which requires, for their protection, the laying of casings preventing the minimum contractual depth from being reached.



In the event that any of the above reasons occurs, the exploratory well shall be deemed to have been drilled to the minimum contractual depth.



Notwithstanding any provision in this Article to the contrary, NOCAL and the Contractor may, at any time, agree to abandon the drilling of a well at a lesser depth than the minimum contractual depth.



In order to carry out the exploration drilling defined in Articles 4.3 and 4.4 in the best technical conditions in accordance with good international petroleum industry practice, the Contractor undertakes to make the expenditure required to meet the objectives of the well work programme which will include drilling and as appropriate, testing









3ARTICLE 6

CONTRACTOR'S OBLIGATIONS IN RESPECT OF THE EXPLORATION PERIODS AND ENVIRONMENTAL MANAGEMENT



6.5 The Contractor further undertakes to carry out all petroleum operations in accordance with the Environmental Protection and Management Laws of Liberia and all international environmental protocols. In this respect, the Contractor shall:



(a) Submit to the Government an Environmental impact Statement (EIS) prior to the commencement of exploration and production.



(b) take reasonable preventative, corrective and restorative measures to protect from pollution, contamination or damage resulting Petroleum Operations water bodies, land surfaces and the atmosphere, and that any pollution, contamination and damage of such water bodies, land surface and atmosphere hereunder be rectified.



Subject to the foregoing, and at the conclusion of Petroleum Operations in the Delimited Area, the Contractor will undertake reasonable efforts to restore the terrain to state in which it is useable.



6.11 he Contractor and it subcontractors shall be obligated to give preference to enterprises and goods from Liberia, if conditions of price, quality, delivery time and terms of payment are similar of those from other countries or from non-Liberian sources. Specifically, the Contractor commits itself to award to only Liberians, supply, construction or service contracts, the estimated value of which is under Two Hundred Thousand United States Dollars (US$200,000.00) if the Contract is above Two Hundred Thousand United States Dollars (US$200,000.00) and is awarded to a Non-Liberian contractor; the contractor must seek a partnership with a Liberian company(ies), subject to the public procurement and concession commissions act



4ARTICLE 16

RECOVERY OF PETROLEUM COSTS AND PRODUCTION SHARING



16.1 For the purposes of recovery of the Petroleum Costs, the Contractor may freely take each Calendar Year a portion of the production in no event greater than seventy percent (70%) of the Total Production of Crude Oil or Gas from the Delimited Area, or only any lesser percentage which would be necessary and sufficient to recover remaining cost.



The value of such portion of Total Production allocated to the recovery of the Petroleum Costs by the Contractor, as defined in the preceding paragraph, shall be calculated in accordance with the provisions of Article 18.



If during a Calendar Year the Petroleum Costs not yet recovered by the Contractor under the provisions of this Article 16.2 exceed the equivalent in value of seventy percent (70%) of the Total Production of Crude Oil or Total Production of Gas from the Delimited Area, as calculated above, the balance of the Petroleum Costs which cannot be recovered in that Calendar Year shall be carried forward in the following Calendar Year or Years until full recovery of the Petroleum Costs or until the expiration of this Contract.



16.2 For the purposes of recovery of the Petroleum Costs, the Contractor may freely take each Calendar Year a portion of the production in no event greater than seventy percent (70%) of the Total Production of Crude Oil or Gas from the Delimited Area, or any lesser percentage which would be necessary and sufficient to recover remaining cost.



The value of such portion of Total Production allocated to the recovery of the Petroleum Costs by the Contract, as defined in the preceding paragraph, shall be calculated in accordance with the provisions of Article 18. [initials] [initials] [initials]



5 ARTICLE 36



STABILITY OF CONDITIONS



36.3 Periodic Review: In the event of changes in circumstances from those existing at the Effective Date, that have a material effect on the terms of this Agreement , either NOCAL or the Contractor shall at the request of the other consult together. If it is established that such Profound Changes in Circumstances have occurred, then the Parties shall effect such changes in or clarifications to this Agreement that they agree are necessary. The Parties shall meet in good faith to make the necessary revisions and adjustments to the Agreement in order to maintain such expected economic benefits to each of the Parties, provided that the economic benefits to the Parties shall not be reduced as a result of exercising the terms of this article. For the purposes of this Agreement the term “Profound Changes in Circumstances” shall mean such changes in the economic conditions of the petroleum industry world wide or in Liberia or such changes that result in such a material and fundamental alteration of the conditions and assumptions relied upon by the Parties at the Effective Date of this Agreement (or the time after any subsequent review under this Article) to the effect that the overall balance of equities and benefits reasonably anticipated by the Parties will no longer be achievable. Additionally , the Parties also agree to review the agreement every five years to consider the concerns of any of the Parties.

IN WITNESS WHEREOF, the Parties have signed this Contract on the date as set forth below:



On Behalf of NOCAL



[signature] | 21/7/06

Dr. Fodee Kromah

Persident/CEO of NOCAL | Date



[signature] | 07-21-06

Mr. Clemenceau B. Urey

Chairman of the Board, NOCAL | Date



Attested by:

[signature] | 7/26/06

Mrs. Marie E. Leigh-Parker

VP Administration/Finance | Date



On behalf of The Contractor

[signature] | 21st July 2006

Date



Attested by:

[signature] | 21st July 2006

Date



15IN WITNESS WHEREOF, the Parties have signed this Contract on the date as set forth below.

Fodee Kromah 7/8/06

Dr. Fodee Kromah Date

PRESIDENT/CEO

NATIONAL OIL COMPANY OF LIBERIA

Clemenceau Urey 08-07-06

Mr. Clemenceau B. Urey Date

CHAIRMAN BOARD OF DIRECTORS

NATIONAL OIL COMPANY OF LIBERIA

Eugene Shannon 08-15-06

pp Dr. Eugene Shannon Date

MINISTER OF LANDS, MINES & ENERGY

REPUBLIC OF LIBERIA

Antoinette Sayeh August 16, 2006

Dr. Antoinette Sayeh Date

MINISTER OF FINANCE

REPUBLIC OF LIBERIA

[signature] 8-16-06

Dr. Richard Tolbert Date

CHAIRMAN, NATIONAL INVESTMENT COM.

REPUBLIC OF LIBERIA

[signature] August 16, 2006

Attested: Date

Hon. Frances Johnson-Morris

MINISTER OF JUSTICE

REPUBLIC OF LIBERIA

Ellen Johnson-Sirleaf 17-08-2006

Approved Date

Her Excellency

Ellen Johnson-Sirleaf

PRESIDENT

REPUBLIC OF LIBERIA

Ratified: Date

National Legislature of the Republic of Liberia