If during the first exploration period, Regal Liberia Limited and European Hydrocarbons Limited have fulfilled the exploration work commitments, as reasonably ascertained by National Oil Company of Liberia, the exclusive exploration authorization can be renewed at their request for a second exploration period of 3 years.
Regal Liberia Limited and European Hydrocarbons Limited can take or use 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 not deprived of a reasonable quantity of water.
Regal Liberia Limited and European Hydrocarbons Limited should maintain accounts in accordance with applicable regulations, and the accounting procedure as described in this contract. The government may, after giving notice, inspect and audit Regal Liberia Limited's and European Hydrocarbons Limited's accounting books.
Regal Liberia Limited and European Hydrocarbons Limited should pay to the National Oil Company of Liberia the following bonuses.
(a) $2,000,000 when the total production of crude oil from the delimited area first reaches the average rate of 30,000 barrels per day during a period of the 30 consecutive days.
(b) $3,000,000 when the total production of crude oil from the delimited area first reaches the average rate of 50,000 barrels per day during a period of the 30 consecutive days.
(c) $5,000,000 when the total production of crude oil from the delimited area first reaches the average rate of 100,000 barrels per day during a period of the 30 consecutive days.
This amount should be paid within 30 days following the expiration of the reference period of the 30 consecutive days.
Except for the income tax required under this contract, Regal Liberia Limited and European Hydrocarbons Limited are 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.
Regal Liberia Limited and European Hydrocarbons Limited, their suppliers, subcontractors and affiliated companies are exempt from taxes on 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 Regal Liberia Limited and European Hydrocarbons Limited under this contract.
Regal Liberia Limited and European Hydrocarbons Limited are liable to an income tax under the laws and regulations in force in Liberia in respect of their net profit arising from petroleum operations.
The National Oil Company of Liberia is liable to pay Regal Liberia Limited's and European Hydrocarbons Limited's income tax from the National Oil Company of Liberia's share of crude oil. The oil companies are not liable for any payment to the state with respect to said tax.
Production Share - "Profit Oil features (triggers for variations in split - IRR, factor, production, etc .)
After cost oil recovery, remaining production should be shared according to the daily total production:
For increments of daily total production
(in barrels per day) from 0 to 50,000; National oil company of Liberia's share - 35%, Regal Liberia Limited and European Hydrocarbons Limited's share-65%.
For total production from 50,001 to 75,000, National oil company of Liberia's share- 40%, Regal Liberia Limited and European Hydrocarbons Limited's share- 60%.
For total production from 75,001 to 100,000, National oil company of Liberia's share- 50%, Regal Liberia Limited and European Hydrocarbons Limited's share- 55%. For total production over 100,001, National oil company of Liberia's share- 50%, Regal Liberia Limited and European Hydrocarbons Limited's share- 50%
The daily total productions is the average rate of total production during the calendar quarter in question.
Production Share - Cost Oil features (basis of calculation, limits on cost recovery - e.g. as % of revenue or production, capex uplift, etc.)
For the purpose of recovery of the petroleum costs, Regal Liberia Limited and European Hydrocarbons Limited can freely take a portion of the production which should not be more than 80% of the total production of crude oil or any lesser percentage which is necessary each calendar year. The value of such portion of total production allocated to the recovery of the petroleum costs by Regal Liberia Limited and European Hydrocarbons Limited, should be calculated in accordance with this contract.
If during a calendar year the petroleum costs not yet recovered by Regal Liberia Limited or European Hydrocarbons Limited, exceed the equivalent in value of 80% of the total production of crude oil, it should be carried forward in the following calendar year or years until full recovery of the petroleum costs or until the expiration of this contract.
Regal Liberia Limited and European Hydrocarbons Limited should employ suitably qualified Liberian personnel for the requirements of employment, for the purposes of the petroleum operations,
Managers, technicians, engineers, accountants, geologists, geophysicists, scientists, chemists, drillers, foremen, mechanics, skilled workers, secretaries and executive employees can be hired outside Liberia if similarly qualified specialists cannot be hired in Liberia.
Regal Liberia Limited and European Hydrocarbons Limited and their subcontractors shall be obligated to give preference to enterprises and goods from Liberia, if conditions of proven experience, price, quality, delivery time and terms of payment are similar to those from other countries or from non-Liberian sources. If the above conditions are not met,Regal Liberia Limited and European Hydrocarbons Limited commit themselves to award to only Liberians, supply, construction or service contracts, the estimated value of which is under US$200,000.00.
Regal Liberia Limited and European Hydrocarbons Limited and their subcontractors are obligated to give preference to enterprises and goods from Liberia, if the price, quality, delivery time and terms of payment are similar to those from other countries or from non-Liberian sources. If absence of these conditions, Regal Liberia Limited and European Hydrocarbons Limited are committed to award to only Liberians, any supply, construction or service contracts if the estimated value of these contracts are under US$ 200,000.00.
The rights on land owned by private persons, which are necessary for carrying out petroleum operations, should be acquired by direct agreement between Regal Liberia Limited and European Hydrocarbons Limited and the private person concerned.
Regal Liberia Limited and European Hydrocarbons Limited have the right to build, use, operate and maintain all the petroleum storage and transportation facilities which are necessary for the production transportation and sale of petroleum produced. They can determine the route and location of any pipeline inside Liberia which is necessary for the petroleum operations, provided that they submit plans to the National Oil Company of Liberia for approval prior to the commencement of work. Any pipeline crossing or running alongside roads or passageways (other than those used exclusively by Regal Liberia) should be built in a manner that does not hinder the passage on those roads or passageways.
Regal Liberia Limited and European Hydrocarbons Limited can, 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 exploitations other than that of Regal Liberia, provided that such flow 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.
Regal Liberia Limited and European Hydrocarbons Limited should commence geological and seismic work within 3 months from the effective date and carry out the following minimum work during the first exploration period: shoot, process and interpret 1500 square kilometers of seismic survey.
Regal Liberia Limited and European Hydrocarbons Limited should drill at least 1 exploratory well during each of the second and third exploration period.
In the event of a dispute between the government or the National Oil Company of Liberia and Regal Liberia Limited and European Hydrocarbons relating to, or arising out of, the interpretation or execution of the provisions of this contract, they should make their best efforts to settle such dispute amicably. If not settled within 2 months from the date of notice of such dispute, any party can refer the dispute for arbitration to the International Chamber of Commerce in London, England in accordance with its rules of arbitration. English should be used during the procedure. The arbitration should be determined by 3 arbitrators. The arbitrators should not have the same nationality as the parties. The tribunal's award will be final and binding on the parties and shall be enforceable in any court of appropriate jurisdiction.
Subject to the provisions of this contract, each party agrees that all information and data of a technically, geologically or commercially sensitive nature acquired in relation to this contract that is not in the public domain shall be considered confidential and shall be kept confidential and not be disclosed to any person or entity not a party to this contract, except:
(a) To an affiliated company, provided it maintains confidentiality;
(b) To a governmental agency or other entity when required by this contract;
(c) To the extent such data and information is required to be in compliance with any applicable laws or regulations, or pursuant to any legal proceedings or because of any court order;
(d) To potential subcontractors, consultants and attorneys employed by any party where disclosure is essential to their work;
(e) To a bona fide prospective transferee of a party’s participating interest (including an entity with whom a party is conducting bona fide negotiations in anticipation of a merger, consolidation or the sale of a majority of its or an affiliated company’s shares),
(f) To a bank or other financial institution to the extent appropriate to a party arranging for funding for its obligations under this contract;
(g) To the extent such data and information must be disclosed pursuant to any rules or requirements of any government or stock exchange having jurisdiction over any party, or its affiliated companies;
(h) Where any data or information which, through no fault of a party, becomes a part of the public domain; and
(i) To the arbitrators in accordance with Article 31 or to any expert in accordance with Article 18.
The laws and regulations of the Republic of Liberia and provisions of international law as are applicable to international oil and gas activities apply to Regal Liberia Limited and European Hydrocarbons Limited, to this contract and to the petroleum operations under this contract.
This Contract cannot be amended or modified by virtue of the adoption or amendment of law, regulation, treaty, inter-governmental agreement, decree or administrative order by Liberia after the date of signing. This contract can only be amended or modified by written agreement of all parties.
In the event any new laws, regulations, treaties, inter-governmental agreements, decrees or administrative orders modify the provisions of the laws and regulations in force at the date of signing of this contract and materially change the respective economic situation of the parties, the parties should in good faith enter into an agreement to modify the effected provisions to restore the economic balance to that intended at the signing. If Regal Liberia Limited's or European Hydrocarbons Limited's rights have been adversely affected, the National Oil Company of Liberia should indemnify them for any dis-benefit, deterioration in economic circumstance, loss or damages that were caused.
In the event of other changes in circumstances from those existing at the date of signing that have a material effect on the terms of this contract, either the National Oil Company of Liberia or Regal Liberia Limited and European Hydrocarbons Limited can request consultation with the other party. If it is established that such profound changes in circumstances have occurred, then the parties shall make such changes in or clarifications to the contract that they agree are necessary. The parties should meet in good faith to make the necessary revisions and adjustments to this contract in order to maintain such expected economic benefits to each of the parties.
For the purposes of this article, "profound changes in circumstances" mean 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 date of signing to the effect that the overall balance of equities and benefits reasonably anticipated by the parties will no longer be achievable. It is understood that this subjects the parties to a simple obligation to consider in good faith the proposed modification of this contract. This contract will remain unaltered and in force during any such period of consideration.