TABLE OF CONTENTS

ARTICLE 1 - ASSIGNMENT OF INTEREST			1

	Section 1.1	Assignment	1

	Section 1.2	Execution and Delivery of Documents	1

	Section 1.3	Submission to the Government	2

	Section 1.4	Request for Governmental Approval	2

	Section 1.5	Farmee Interest	2

	Section 1.6	Ownership	3

	Section 1.7	Additional Farmouts and/or Assignments	3

	Section 1.8	Cost Recovery Pool	3

ARTICLE 2 - CONDITIONS PRECEDENT			3

	Section 2.1	Conditions	3

	Section 2.2	Waiver of Conditions	4

	Section 2.3	Frustration of Conditions	4

ARTICLE 3 - FARM-IN OBLIGATIONS			4

	Section 3.1	Payment Obligations	4

	Section 3.2	Payments; Designated Account	6

	Section 3.3	Security Instrument	6

ARTICLE 4 - TERMINATION			7

	Section 4.1	Termination	7

	Section 4.2	Return of Information	7

	Section 4.3	Effect of Termination	8

ARTICLE 5 - OBLIGATION WELL			8

	Section 5.1	Obligation Well Location	8

ARTICLE 6 - WARRANTIES			8

	Section 6.1	Farmor’s Warranties	8

	Section 6.2	Farmee’s Warranties	15

	Section 6.3	Warranties Regarding Anti-Corruption	17

	Section 6.4	Disclaimer	19

	Section 6.5	Effectiveness of Warranties	19

	Section 6.6	Knowledge	20

ARTICLE 7 - CERTAIN COVENANTS OF THE PARTIES			20

	Section 7.1	Covenants of Farmor	20

	Section 7.2	Covenants of Farmee	23

	Section 7.3	Mutual Covenants	23

	Section 7.4	Mutual Covenants Regarding Anti-Corruption	24

ARTICLE 8 - EXPENSES, STAMP DUTIES AND TAXES			26

	Section 8.1	Expenses	26

	Section 8.2	Duties, Taxes and Fees	26

ARTICLE 9 - RELATIONSHIP OF THE PARTIES			26

	Section 9.1	Independent Co-Owners	26

	Section 9.2	Tax	26

	Section 9.3	United States Internal Revenue Code	26

	Section 9.4	Area of Mutual Interest	27

	Section 9.5	Right of Competition	28

ARTICLE 10 - CONFIDENTIALITY			28

	Section 10.1	Obligation of Confidentiality	28

	Section 10.2	Publicity	29

	Section 10.3	Conflict	29

ARTICLE 11 - INDEMNIFICATION			29

	Section 11.1	Indemnification by Farmor	29

	Section 11.2	Pre-Closing Date Indemnification	30

	Section 11.3	Indemnification by Farmee	30

	Section 11.4	Post-Closing Date Indemnification	30

	Section 11.5	Indemnification Regarding Anti-Corruption	30

	Section 11.6	General Provisions	30

	Section 11.7	Indemnification Procedures	32

ARTICLE 12 - DISPUTE RESOLUTION			33

	Section 12.1	Agreement to Arbitrate	33

	Section 12.2	Number and Appointment of Arbitrators	33

	Section 12.3	Venue; Procedural Issues	33

	Section 12.4	Powers of the Arbitrators; Limitations On Remedies	34

	Section 12.5	Arbitration Awards	34

	Section 12.6	Exclusive Method of Resolving Claims; Assistance of Courts	35

	Section 12.7	Confidentiality	35

	Section 12.8	Costs of Arbitration	35

	Section 12.9	Interest	35

	Section 12.10	Consolidation and Joinder	35

ARTICLE 13 - PAYMENT DEFAULT			36

	Section 13.1	Default and Interest	36

	Section 13.2	Termination	36

ARTICLE 14 - MISCELLANEOUS			36

	Section 14.1	Conflict	36

	Section 14.2	Assignment	36

	Section 14.3	Parties in Interest	37

	Section 14.4	Entire Agreement	37

	Section 14.5	Amendment, Modification and Waiver	37

	Section 14.6	Notices	37

	Section 14.7	Counterparts	38

	Section 14.8	Severability	38

	Section 14.9	Survival of Claims	38

	Section 14.10	Governing Law	38

	Section 14.11	Language	39

	Section 14.12	Independent Accountant	39

	Section 14.13	Interpretation	39

APPENDICES

Appendix A Definitions

SCHEDULES

Schedule 3.2 Farmor Designated Account

Schedule 6.1(b) Farmor Consents

Schedule 6.1(d) Contract

Schedule 6.1(e) Contract Obligations

Schedule 6.1(f) Other Obligations

Schedule 6.1(g) No Surrender, Relinquishment or Withdrawal

Schedule 6.1(i) Farmor Litigation

iii

FARMOUT AGREEMENT

THIS FARMOUT AGREEMENT (this “Agreement”) is made and entered on March 30, 2017 (the “Execution Date”) by and between SCS Corporation Ltd., a company registered in the Cayman Islands, with its address at 12012 Wickchester Lane, Suite 475, Houston, TX 77079, USA, a wholly owned subsidiary of Hyperdynamics Corporation, a Delaware corporation traded on the OTCQX (the “Farmor”), and South Atlantic Petroleum Limited, a company registered under the laws of the Federal Republic of Nigeria, with its registered address at 11th and 12th Floors, South Atlantic Petroleum Towers, 1 Adeola Odeku Street, Victoria Island, Lagos, Nigeria (the “Farmee”). Farmor and Farmee are collectively referred to herein as the “Parties” and individually referred to as a “Party.”

Capitalized terms used in this Agreement shall have the meanings ascribed to them in Appendix A to this Agreement or as such terms are otherwise identified and/or defined in this Agreement.

RECITALS

A. Farmor is a party to that certain Hydrocarbons Production Sharing Contract between the Republic of Guinea and SCS Corporation dated September 22, 2006; as amended by that certain Amendment No. 1 to the Hydrocarbons Production Sharing Contract between the Republic of Guinea and SCS Corporation dated March 25, 2010; and as further amended by that memorandum of understanding between the Republic of Guinea and SCS Corporation Ltd. dated August 19, 2016 and that certain Second Amendment to the Hydrocarbons Production Sharing Contract between the Republic of Guinea and SCS Corporation Ltd. dated September 14, 2016 and duly approved by a Decree No. 275/PRG/SGG of the President of the Republic dated 21 September 2016 (“Second PSC Amendment”) (as amended, the “Contract”) covering the area in the Republic of Guinea shown on Exhibit A hereto (the “Contract Area”).

B. Farmor owns a one hundred percent (100%) Participating Interest, and is willing to assign and transfer to Farmee the Farmee Interest upon the terms and conditions set forth in this Agreement.

C. Farmee desires to obtain the Farmee Interest from Farmor and to assume all obligations and liabilities related to such Participating Interest, all upon the terms and conditions set forth in this Agreement.

NOW THEREFORE, in consideration of the mutual premises and covenants contained herein, the Parties hereby agree as follows:

ARTICLE 1 - ASSIGNMENT OF INTEREST

Section 1.1 Assignment. Upon the terms and subject to the conditions of this Agreement, Farmor, as legal and beneficial owner of the Farmee Interest, shall assign and transfer to Farmee the Farmee Interest and Farmee shall accept and acquire the Farmee Interest at the Closing Date, free from and clear of any Encumbrance.

Section 1.2 Execution and Delivery of Documents. On the Execution Date, Farmor

shall deliver to Farmee the Farmor Parent Guaranty from Hyperdynamics Corporation guaranteeing Farmor’s full compliance with, and performance of, Farmor’s duties, obligations and liabilities hereunder.

Section 1.3 Submission to the Government. At such time as Farmor requests Governmental Approval pursuant to Section 1.4., Farmor shall submit a copy of this Agreement (which shall include, as Exhibits, unsigned copies of the Assignment and the JOA) to the Government. If and to the extent requested by Farmor, Farmee shall cooperate with Farmor in connection with the submission. In the event the Government requires any amendments to the Assignment or the JOA and if such amendments are acceptable to the Parties (acting reasonably), the Parties shall make the necessary amendments prior to execution of the Assignment and the JOA on the Closing Date.

Section 1.4 Request for Governmental Approval. As soon as reasonably practicable following the satisfaction or waiver, in accordance with Section 2.2 of the condition set out in Section 2.1(e), Farmor shall request Governmental Approval from the Government. If and to the extent reasonably requested by Farmor, Farmee shall cooperate with Farmor in connection with such submission.

Section 1.5 Farmee Interest.

(a) Farmor shall keep Farmee informed of the progress towards the satisfaction or non-satisfaction of the conditions described in Section 2.1. Within five days following the date (the “Trigger Date”) on which the conditions described in Section 2.1 have been satisfied (or waived by the applicable Parties), Farmor shall deliver a notice (the “Closing Notice”) to Farmee notifying Farmee that such conditions have been satisfied or waived, unless this Agreement has been terminated pursuant to Section 4.1.

(b) Unless Farmee terminates this Agreement pursuant to Section 4.1, the Parties shall proceed to close the assignment and transfer of the Farmee Interest as contemplated by this Agreement on a date within five days following the delivery of the Closing Notice (the “Closing Date”).

(c) On the Closing Date, Farmor shall deliver to Farmee a copy of any written notification of Governmental Approval provided to Farmor by the Government.

(d) On the Closing Date, Farmee shall pay Farmor the Closing Payment in accordance with Section 3.1(b).

(e) On the Closing Date, Farmor and Farmee shall each execute and deliver to the other, the Assignment and the JOA which shall be binding on the Parties and enter into effect on the Closing Date.

Section 1.6 Ownership. Immediately following the Closing Date, upon completion of the actions to be taken by the Parties on the Closing Date, the Participating Interests in the Contract and the JOA shall be as follows:

Farmor:	50	%

Farmee:	50	%

Section 1.7 Additional Farmouts and/or Assignments. Notwithstanding anything to the contrary in this Agreement, during the Interim Period, the Farmor may assign or transfer interests in the Contract other than the Farmee Interest (whether pursuant to farm-out agreements or otherwise) to third parties, provided that the Farmor has obtained the Farmee’s written consent for such transfers (such consent not to be unreasonably withheld, and which may be withheld only on the basis of the lack of necessary technical or financial capacity of the assignee), and Farmee shall have no pre-emptive right of any kind whatsoever to acquire such interests under this Agreement.

Section 1.8 Cost Recovery Pool. To the extent allowed by the Government and the Contract without any liability of any kind whatsoever to Farmor, Farmee shall be entitled to receive its Participating Interest share of all cost recovery allocations to the Contractor under the Contract, together with all income, receipts, credits, rebates and other benefits in respect thereof, irrespective of whether the costs and expenditures were incurred in or relate to the period before, on or after the Closing Date. Except as specifically set forth in Section 6.1(v), Farmor makes no representation or warranty whatsoever as to (i) the amount in the of Petroleum Costs (as such term is defined in the Contract) which are accountable for cost recovery purposes under the Contract (the “Cost Recovery Pool”), (ii) the amount of the Cost Recovery Pool that will actually be approved for cost recovery or received by the Contractor as cost recovery allocations, or (iii) whether, or to what extent, the Government will allow Farmee to receive its Participating Interest share of cost recovery allocations to the Contractor.

ARTICLE 2 - CONDITIONS PRECEDENT

Section 2.1 Conditions. The following are conditions to the occurrence of the Trigger Date:

(a) No statute, rule, regulation, temporary restraining order, preliminary or permanent injunction or other order of the Government preventing the transactions contemplated by this Agreement shall be in effect.

(b) There shall not be pending or threatened in writing (by the Government or any other third party) any suit, action or proceeding challenging or seeking to restrain or prohibit the transactions contemplated by this Agreement.

(d) If (i) required by the Government; and (ii) subject to the Farmor having provided security in respect of its own Participating Interest share, Farmee shall have delivered the Farmee Performance Bond to the Government.

(e) Farmor shall have obtained and maintained as of April 10, 2017 (local time in the Republic of Guinea), to the satisfaction of Farmee acting reasonably, sufficient cash or committed financings to enable it to meet its obligations to pay for its Participating Interest share of the Obligation Well Costs.

Section 2.2 Waiver of Conditions.

(a) Farmor and Farmee may jointly in writing, waive the conditions set out in Sections 2.1(a), (b), (c) and (d) in whole or in part at any time.

(b) Farmee may, by written notice to Farmor, waive the conditions set out in Section 2.1(e) in whole or in part at any time.

Section 2.3 Frustration of Conditions. No Party may rely on the failure of any applicable condition set forth in this Article 2 to be satisfied if such failure was caused solely by its own failure to comply with Section 7.3(d).

ARTICLE 3 - FARM-IN OBLIGATIONS

Section 3.1 Payment Obligations.

(a) Together with the Closing Notice delivered pursuant to Section 1.5(a), Farmor shall deliver to Farmee a statement (“Preliminary Closing Statement”) setting out Farmor’s reasonable and bona fide estimate of the total Closing Payment to be paid by Farmee on the Closing Date.

(b) On the Closing Date, Farmee shall pay Farmor the Closing Payment set out in the Preliminary Closing Statement.

(c) From and after the Closing Date and receipt by Farmor of the Closing Payment, all costs and expenses of the Joint Operations, including Obligation Well Costs and Emergency Costs, shall be paid by Farmor and Farmee in proportion to their respective Participating Interests and in accordance with the Joint Operating Agreement, and the terms of the Joint Operating Agreement shall govern all matters related to all costs and expenses of the Joint Operations, including Obligation Well Costs and Emergency Costs.

(d) Within ten (10) days after the Closing Date occurs, Farmor shall provide Farmee with a final adjustment statement (the “Final Adjustment Statement”) setting out Farmor’s final calculation of the Closing Payment, which shall reflect any amounts:

(ii) if the Final Settlement Amount is less than the amount set out in the Preliminary Adjustment Statement, Farmor shall pay Farmee the Final Settlement Amount in immediately available funds by wire transfer to Farmee’s account.

Section 3.2 Payments; Designated Account.

(a) Payments made pursuant to this Article 3 shall be made by wire transfer in immediately available funds in U.S. Dollars to the appropriate account designated on Schedule 3.2. Farmor or Farmee may change its designated account by providing at least five (5) days advance notice to the other.

(b) Unless otherwise expressly provided in this Agreement, any other amount to be paid or reimbursed in accordance with this Agreement shall be paid or reimbursed within fifteen (15) days of receipt thereof (or, in the case of Losses, within fifteen (15) days of receipt of notification from the Party which has incurred such Losses) to the appropriate account designated on Schedule 3.2. Either Party may change its designated account by providing at least five days advance notice to the other Party.

Section 3.3 Security Instrument. Subject to the following sentence, for any Security Instrument required by the Contract to be provided to the Government, and which has not been provided to the Government by Farmor as of the Closing Date, both Farmor and Farmee shall separately provide a Security Instrument covering that portion of the secured amount that is equal to their Participating Interest share. In the event that the Government requires a single Security Instrument covering one hundred percent (100%) of the secured amount, then:

(a) if Farmor is required to provide the Security Instrument, Farmee shall bear and pay (and/or reimburse Farmor for), and shall indemnify Farmor from and against any Losses arising out of or in relation to, its Participating Interest share of the costs and expenses arising out of providing and maintaining any Security Instrument required by the Contract to be provided to the Government, and which has not been provided to the Government by Farmor as of the Execution Date, including all costs and expenses arising out of such Security Instrument and any liability that may arise thereunder or in relation thereto; and

(b) if Farmee is required to provide the Security Instrument, Farmor shall bear and pay (and/or reimburse Farmee for), and shall indemnify Farmee from and against any Losses arising out of or in relation to, its Participating Interest share of the costs and expenses arising out of providing and maintaining any Security Instrument required by the Contract to be provided to the Government, and which has not been provided to the Government by Farmor as of the Execution Date, including all costs and expenses arising out of such Security Instrument and any liability that may arise thereunder or in relation thereto.

ARTICLE 4 - TERMINATION

Section 4.1 Termination. This Agreement may be terminated at any time prior to the Closing Date (as pertains to (b), (c), (d) and (e) below) and at any time prior to or after the Closing Date (as pertains to (a) and (f) below):

(a) by mutual written consent of Farmee and Farmor;

(b) by either Farmee or Farmor, if the Closing Date does not occur on or prior to May 31, 2017 or if either of the Parties receives final, unappealable written notice from the Government that it will not give the Governmental Approval;

(c) by Farmor, if on or prior to the Trigger Date (i) the representations and warranties of Farmee made in this Agreement are not correct or would not be correct as of the Trigger Date as though made as of such time or (ii) Farmee shall not have performed or complied with all obligations and covenants required by this Agreement to be performed or complied with by Farmee by the Trigger Date;

(d) by Farmee, if on or prior to the Trigger Date (i) the representations and warranties of Farmor made in this Agreement are not correct or would not be correct as of the Trigger Date as though made as of such time; or (ii) Farmor shall not have performed or complied with all obligations and covenants required by this Agreement to be performed or complied with by Farmor by the Trigger Date; or (iii) any Material Development occurs;

(e) by Farmee, if Farmor does not deliver a Closing Notice within five days following the Trigger Date; or

(f) by Farmor, pursuant to Section 13.2,

provided, however, that the Party seeking termination pursuant to Section 4.1(c) or Section 4.1(d), as applicable, is not in breach of any of its representations, warranties, covenants or agreements contained in this Agreement. In the event of termination by Farmee or Farmor pursuant to Section 4.1(b), Section 4.1(c), Section 4.1(d), Section 4.1(e), or Section 4.1(f), as applicable, this Agreement shall be terminated upon written notice by the terminating Party to the other Party, without further action by either Party required in order to terminate this Agreement.

Section 4.2 Return of Information. If this Agreement is terminated as provided in Section 4.1, Farmee shall, within 10 days following such termination: (a) return to Farmor all information, documents and other material received from Farmor, relating to the transactions contemplated hereby, and all information, documents and other materials relating to Joint Operations, whether obtained before or after the Execution Date, and Farmee shall remain subject to the confidentiality provisions of Article 10 in relation to such information, documents and materials; (b) deliver to Farmor any data and/or the derivatives obtained therefrom as part of

the Joint Operations; and (c) grant to Farmor a royalty-free, perpetual license to use such data and/or derivatives.

Section 4.3 Effect of Termination.

(a) If this Agreement is terminated as provided in Section 4.1, this Agreement, and any rights conveyed to Farmee under the Assignment, shall become void and of no further force or effect, except for the provisions of Sections 4.2, 4.3, 8.1 and 9.4 and Articles 10, 12 and 14, which shall survive such termination. Such termination shall not affect the rights and obligations of Farmor or Farmee which have accrued or become due prior to the date of termination.

(b) Upon the termination of this Agreement, Farmee shall promptly reassign to Farmor any rights conveyed to Farmee under the Assignment free and clear of any Encumbrances arising by, through, or under Farmee, and Farmee shall execute such other documents and take such other actions as may be necessary to reassign the Farmee Interest to Farmor, including any related to obtaining approvals or consents of the Government.

ARTICLE 5 - OBLIGATION WELL

Section 5.1 Obligation Well Location. Farmor and Farmee have agreed on Latitude: 8 deg, 37 min, 30.552829 sec N, Longitude: 14 deg, 54 min, 6.95248 sec W, X Coordinate: 510790 m, Y Coordinate: 953412 m as the bottom-hole location of the Obligation Well, after review of the location proposed by Farmor. The bottom-hole location of the Obligation Well shall not be amended without the written consent of both Parties which consent shall not be unreasonably withheld, conditioned or delayed.

ARTICLE 6 - WARRANTIES

Section 6.1 Farmor’s Warranties. Farmor warrants to Farmee as follows:

(a) Organization, Authority. Farmor is registered, validly existing and in good standing under the laws of the Cayman Islands. Farmor has the corporate power and authority to own its property and to carry on its business as presently conducted, and to enter into and to comply with the terms of this Agreement. The execution, delivery, and performance of this Agreement (and all documents required to be executed and delivered by Farmor hereunder), and the consummation of the transactions contemplated hereby and thereby, have been duly authorized by all necessary corporate action on the part of Farmor. This Agreement has been duly executed and delivered by Farmor, and all documents required to be executed and delivered by Farmor hereunder shall be duly executed and delivered by Farmor. This Agreement and any other documents to which Farmor is a party, or is to become a party, pursuant to or in connection with this Agreement constitute legal, valid and binding

the lapse of time or both, would constitute a breach thereof or a default thereunder or would result in a termination, modification, acceleration or vesting of any rights or obligations or loss of benefits thereunder.

(n) Work Programs and Budgets.

(i) Farmor has disclosed to Farmee copies of the current Work Programs and Budget in respect of the Contract Area and all correspondence with the Government that relate thereto.

(ii) Farmor has disclosed to Farmee copies of minutes of all meetings of the Oil and Gas Operations Management Committee for the past two (2) years.

(o) Health and Safety. Farmor is not aware of and has not been notified of the occurrence of any material health or safety incident concerning the Contract and the operations related thereto.

(p) Environmental Laws.

(i) Farmor has not received any notices, orders or directives under any Environmental Laws or laws relating to health and safety which require any work, repairs, construction or capital expenditures in connection with the Contract or the operations related thereto which have not been fully complied with.

(ii) To Farmor’s knowledge, no event or incident has occurred in respect of the Participating Interests, the Contract Area or the Farmee Interest which has given rise or would be expected to rise to any Environmental Liabilities.

(iii) To Farmor’s knowledge, there has been no infringement or alleged infringement (in writing received by Farmor) of any Environmental Laws during any Petroleum Operations conducted in relation to the Participating Interests or the Farmee Interest.

(iv) Farmor has not received, and is not aware of, any notice of any lawsuit or formal administrative proceeding issued before or by any Governmental Entity or any other public organisation the subject matter of which is an infringement or breach of Environmental Law relating to the Participating Interests or the Contract Area (or any part thereof).

(q) Insurance. Except as disclosed on Schedule 6.1(q), the insurance policies of Farmor are in full force and effect and all premia have been paid to date. No claim has been made under the insurance policies of Farmor which is still pending at the date of this Agreement and, to the knowledge of Farmor, there are no circumstances likely to give rise to any such claim

(c) Litigation. Except as disclosed on Schedule 6.2(c). there are no actions, suits, arbitrations, mediations, investigations or similar proceedings pending, or to Farmee’s knowledge, threatened, before any Governmental Entity with respect to Farmee, nor are there any presently outstanding judgments, decrees, injunctions, orders or awards applicable to Farmee, in each case that could adversely affect the ability of Farmee to consummate the transactions contemplated hereby or the obligations attributable to the Farmee Interest under the Contract.

(d) Availability of Funds. Farmee has cash available or has existing borrowing facilities or other sources of immediately available funds which together are sufficient to enable it to consummate the transactions contemplated herein and the obligations attributable to the Farmee Interest under the Contract and this Agreement.

(e) Technical Capability. Farmee has the technical capability, personnel, and resources to fulfill its obligations under this Agreement and the obligations attributable to the Farmee Interest under the Contract.

(f) Investment. Farmee is familiar with investments of the nature of the Farmee Interest and the Joint Operations and is capable of evaluating, and has evaluated, the merits and risks inherent in acquiring the Farmee Interest.

(g) Guinean Law. Farmee has retained advisors who are familiar with the Laws of the Republic of Guinea that are relevant to oil and gas operations, and with the Contract and the Joint Operating Agreement.

(h) No Knowledge of Farmor’s Breach. Farmee has no knowledge of any undisclosed breach of Farmor’s representations and warranties hereunder.

(i) Broker’s Fees. Farmee has incurred no liability, contingent or otherwise, for broker’s or finder’s fees or commissions relating to this Agreement for which Farmor shall have responsibility.

(j) Bankruptcy.

(i) Farmee is not subject to any actual or threatened insolvency proceedings, is able to pay its debts as they are due, is not bankrupt and has not stopped paying its material debts as and when they fall due.

(ii) No order has been made and no resolution has been passed for the winding up, dissolution or administration of Farmee or for a receiver, administrator, trustee, liquidator or similar officer to be appointed in respect of it or any of the assets and no petition has been presented and no meeting has been convened for the purposes of any of the foregoing in relation to Farmee.

(iii) No event analogous to any of the events specified in (i) and (ii) above has occurred in respect of Farmee in any jurisdiction.

(k) Exports. Farmee is not prohibited by the Laws of the USA from, and has obtained any licenses required thereby for: (i) exporting from the USA (or any other country) items to be utilized in Joint Operations, (ii) receiving exports of items to be utilized in Joint Operations and (iii) receiving exports of U.S. goods or technology to be utilized in Joint Operations.

(l) Sanctions. Farmee is not subject to economic, financial, trade or other sanctions or restrictions imposed by the Laws or treaties or conventions of the USA or its Home Country Governmental Authority or by treaties or conventions of the United Nations.

Section 6.3 Warranties Regarding Anti-Corruption.

(a) Without prejudice to Section 7.4, each Party, in recognition of the OECD Principles warrants that it and its Affiliates have not knowingly, either directly or indirectly, paid, made, offered, given, promised, or authorized and will not knowingly pay, make, offer, give, promise or authorize, in connection with this Agreement, the Contract or the operations associated therewith, commission, money, payment, gift (other than promotional and marketing gifts of nominal value), loan, fee, reward, travel, entertainment, transfer anything of value or any other advantage, to or for the use or benefit of any Official or Commercial Agent for the purposes of:

(i) influencing any act, omission or decision on the part of any such Official or Commercial Agent, in his or her official capacity;

(ii) securing any improper advantage from such Official or Commercial Agent; or

(iii) inducing any such Official or Commercial Agent to use his or her influence with another Official or Governmental Authority (or with his employer or company) to affect or influence any official act or to direct business to any Person, or to obtain or retain business related to this Agreement and/or the Contract;

where such bribe, commission, money, payment, gift (other than promotional and marketing gifts of nominal value), loan, fee, reward, travel, entertainment, transfer of anything of value or any other advantage, would violate the Anti-Corruption Legislation (each a “Corrupt Act”).

(b) Each Party warrants that it and its Affiliates:

(i) have not accepted or agreed to receive; and

(ii) will not accept or agree to receive,

with respect to any of the matters which are the subject of this Agreement, the Contract or the operations associated therewith, any financial or other advantage, whether directly or indirectly, from an Official or Commercial Agent, as an inducement or reward for taking or omitting to take any action, in any case where such payment, gift, promise or advantage would violate any Anti-Corruption Legislation.

(c) Each Party warrants that it and its Affiliates have not either directly or indirectly paid, made, offered, given, promised or authorized, and will not pay, make, offer, give, promise or authorize, in connection with this Agreement, the Contract (including as regards Farmee obtaining an interest in the Contract), or the operations associated therewith, to or for the use or benefit of any other Person, any bribe, commissions, money, payment, gift (other than promotional and marketing gifts of nominal value), loan, fee, reward, travel, entertainment, anything of value or any other advantage, if the Party or Affiliate knows, has a firm belief or is aware that there is a high probability that the other Person would use the bribe, commissions, money, payment, gift (other than promotional and marketing gifts of nominal value), loan, fee, reward, travel, entertainment, or anything of value or any other advantage for any of the purposes prohibited by Section 6.3 or Section 7.4.

(d) Each Party warrants that it and its Affiliates have not either directly or indirectly taken or authorized, and will not take or authorize, any act in connection with this Agreement, or the Contract or the operations associated therewith that could give rise to either civil or criminal liability for any Party under any Anti-Corruption Legislation applicable to such Party.

(e) Farmor warrants to Farmee that it, in the exercise of its rights under the Contract (including without limitation obtaining the award of such Contract and all activities relating to the Contract Area):

(i) has properly recorded all material transactions;

(ii) has in place and, since 1 May 2012, has implemented internal controls which would be seen as adequate procedures in respect of the Anti-Corruption Legislation (as amended from time to time);

(f) Each Party agrees and confirms that it will, in connection with all activities pursuant to this Agreement, the Contract and the Contract Area:

(i) properly record all material transactions; and

(ii) have in place and implement internal controls in order to comply with any anti-corruption Laws and which would be seen as adequate procedures in respect of s7(2) of the UK’s Bribery Act 2010 (as amended from time to time).

(i) restrict Farmor’s ability to do such things as it may consider necessary (acting reasonably):

(1) to preserve all rights and interests under the Contract; or

(2) due to emergency operational requirements; or

(ii) impose any obligation that may be inconsistent with the obligations under the Contract or applicable Laws,

provided that Farmor shall notify Farmee of any action required to be taken in accordance with Section 7.1(d) or, where not feasible to do so, promptly thereafter.

Section 7.2 Covenants of Farmee.

(a) Approvals. If and to the extent requested by Farmor, Farmee shall cooperate with Farmor in connection with Farmor’s obligations under Section 1.3 and Section 1.4 and in connection with Section 4.3(b), and shall participate in discussions with the Government relating thereto. If and to the extent requested by Farmor, Farmee shall provide such evidence of its financial, administrative and technical capability as may reasonably be necessary in connection with Farmor’s obligations under Section 1.3 and Section 1.4.

(b) Certain Events. From the Execution Date until the Closing Date (unless this Agreement is otherwise terminated), Farmee shall promptly notify Farmor of and furnish Farmor with any information with respect to the occurrence of any event or condition known to Farmee that could reasonably be expected to cause any of the conditions set forth in Section 2.1 not to be satisfied. If Farmee discovers the existence of a breach by Farmor of the representations, warranties, obligations or covenants contained in this Agreement (or the existence of any matter that would have been such a breach had it been in existence on the date hereof), then Farmee shall notify Farmor in writing of such information within five days after such discovery or the day prior to the Closing Date, whichever is earlier.

(c) Government Contact. Farmee shall not contact the Government in relation to this Agreement or the Contract without Farmor’s prior consent.

Section 7.3 Mutual Covenants.

(a) Obligation Well Commencement Date. Farmor and Farmee shall each use commercially reasonable efforts (i) to cause operations in anticipation of drilling of the Obligation Well to commence on a date that would allow the drilling rig to commence actual drilling operations on or before May 31, 2017, and (ii) thereafter to cause the Obligation Well to be drilled

ARTICLE 8 - EXPENSES, STAMP DUTIES AND TAXES

Section 8.1 Expenses. Whether or not the transactions contemplated hereby are consummated, and except as otherwise specifically provided in this Agreement, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such costs or expenses.

Section 8.2 Duties, Taxes and Fees. All Taxes, duties, levies, and fees, if any, (other than Taxes which may be based upon the income, profits, revenues, gross receipts or capital gains of Farmor), payable to the Government in respect of the farm-in for and transfer of the Farmee Interest shall be paid by Farmee. Each Party shall use commercially reasonable efforts to avail itself of any available exemptions from any such Taxes, duties, levies, or fees, and to cooperate with the other Party in providing any information and documentation that may be necessary to obtain such exemptions. If the Government imposes joint and several liability on the Parties for any fees, levy, charge or Tax, the Parties agree to cross indemnify each other to the extent that such fees, levy, charge or Tax is owed by one Party individually.

ARTICLE 9 - RELATIONSHIP OF THE PARTIES

Section 9.1 Independent Co-Owners. It is not the intention of the Parties to create, nor shall this Agreement be construed as creating, a joint venture, a trust, a mining or other partnership or association, or otherwise render the Parties liable as partners. The liability of the Parties shall be several and not joint or collective. This Agreement does not authorize either Party to act as agent or principal of the other Party for any purpose, except as expressly set forth in this Agreement. Neither Party shall have a fiduciary duty to the other Party.

Section 9.2 Tax. Each Party shall be responsible for reporting and discharging its own Taxes measured by the profit or income of the Party and the satisfaction of such Party’s share of all contract obligations under this Agreement and under the Contract. Each Party shall indemnify, defend and hold each other Party harmless from any and all charges, claims, costs, damages, expenses, expenditures, fines, judgments, liabilities, losses and penalties (including reasonable attorneys’ fees and related expenses) (collectively, “Losses”) arising from such Party’s failure to report and discharge such Taxes or satisfy such obligations. The Parties intend that all income and all Tax benefits (including deductions, depreciation, credits and capitalization) with respect to the expenditures made by the Parties hereunder will be allocated by the Government Tax authorities to the Parties based on the share of each Tax item actually received or borne by each Party. If such allocation is not accomplished due to the application of the Laws or other Government action, the Parties shall attempt to adopt mutually agreeable arrangements that will allow the Parties to achieve the financial results intended.

Section 9.3 United States Internal Revenue Code. If, for United States federal income tax purposes, this Agreement and the operations under this Agreement are regarded as a partnership, each Party elects to be excluded from the application of all of the provisions of Subchapter “K”, Chapter 1, Subtitle “A” of the United States Internal Revenue Code of 1986, as amended (the “Code”), to the extent permitted and authorized by Section 761(a) of the Code and the regulations promulgated under the Code. Farmor is authorized and directed to execute and file for each Party such evidence of this election as may be required by the Internal Revenue

Service, including all of the returns, statements, and data required by United States Treasury Regulations Sections 1.761-2 and 1.6031(a)-1(b)(5) and shall provide a copy thereof to each U.S. Party. Should there be any requirement that any Party give further evidence of this election, each Party shall execute such documents and furnish such other evidence as may be required by the Internal Revenue Service or as may be necessary to evidence this election. No Party shall give any notice or take any other action inconsistent with the foregoing election. If any income tax laws of any state or other political subdivision of the United States or any future income tax laws of the United States or any such political subdivision contain provisions similar to those in Subchapter “K”, Chapter 1, Subtitle “A” of the Code, under which an election similar to that provided by Section 761(a) of the Code is permitted, each Party shall make such election as may be permitted or required by such laws. In making the foregoing election or elections, Farmor states that the income derived by it from operations under this Agreement can be adequately determined without the computation of partnership taxable income. Unless approved by Farmee, no activity shall be conducted under this Agreement that would cause Farmee to be deemed to be engaged in a trade or business within the United States under United States income tax laws and regulations.

Section 9.4 Area of Mutual Interest.

(a) If, during the AMI Term, either Party (or any Affiliate) (the “Acquiring Party”) acquires an Interest in the AMI Area or acquires the right to acquire any Interest in the AMI Area (either being an “Acquired Interest”), it shall promptly notify the other Party (the “Offeree”) in writing of the acquisition of (a) an Acquired Interest or (b) the right to acquire an Acquired Interest. The notice shall contain reasonable full particulars of (i) the consideration the Acquiring Party has paid or given, or has agreed to pay or give, for the acquisition of the Acquired Interest and (ii) all reasonable out-of-pocket costs and expenses incurred, or to be incurred, by the Acquiring Party that are directly related to the acquisition of the Acquired Interest (collectively, the “Consideration”). The Offeree shall have a period of 30 days after receipt of the notice to irrevocably commit, by written notice received by the Acquiring Party, to acquire its AMI Share of the Acquired Interest by paying and bearing its AMI Share of the Consideration. Failure of the Offeree to so commit in writing in such 30-day period shall be deemed a binding election by the Offeree not to acquire its AMI Share of the Acquired Interest. If the Offeree elects in writing to acquire its AMI Share in the Acquired Interest, then within 30 days of the Offeree’s commitment to acquire its AMI Share of the Acquired Interest, it shall pay to the Acquiring Party its AMI Share of the Consideration to the extent already paid or given by the Acquiring Party or enter into an agreement with the Acquiring Party to pay or bear its share of the Consideration to the extent not already paid or given by the Acquiring Party.

(b) When an Acquired Interest includes more than one separate Interest within the AMI area, the Offeree may not make separate elections as to the separate Interests. When an Acquired Interest is part of a package deal or

larger transaction which includes separate interests outside of the AMI Area, the Offeree may make separate elections as to the separate Interests within the AMI Area. The Acquiring Party shall, in good faith, make an accurate and realistic allocation of the Consideration attributable to each of the separate interests acquired, or to be acquired, including the separate Interests within the AMI Area.

Section 9.5 Right of Competition. Without prejudice to any obligation contained in the Contract or the Joint Operating Agreement, except as set forth in Section 9.4, nothing in this Agreement shall preclude either Party, or its Affiliates, from engaging in any business or purchasing any property of any sort whatsoever, whether or not in competition with operations under this Agreement, or compel either Party or its Affiliates to consult with the other Party or to invite or allow the other Party to participate in such business or property.

ARTICLE 10 - CONFIDENTIALITY

Section 10.1 Obligation of Confidentiality. Except as otherwise provided in the Contract, each Party agrees that all information disclosed under or pursuant to this Agreement, except information in the public domain or lawfully in possession of a Party prior to the Execution Date (which such information not to include information previously disclosed under the Confidentiality Agreement), shall be considered confidential and shall not be disclosed to any other person or entity without the prior written consent of the Party which owns such confidential information. This obligation of confidentiality shall remain in force during the term of the Contract and the Joint Operating Agreement and for a period of two (2) years thereafter. Notwithstanding the foregoing, confidential information may be disclosed without consent and without violating the obligations contained in this Article 10 in the following circumstances:

(a) to an Affiliate provided the Affiliate is bound to the provisions of this Article 10 and the Party disclosing is responsible for the violation of an Affiliate;

(b) to a Governmental Entity when required by the Contract;

(c) to the extent such information is required to be furnished by or in compliance with applicable Laws, or pursuant to any legal proceedings or because of any order of any court binding upon a Party;

(d) to attorneys engaged, or proposed to be engaged, by any Party where disclosure of such information is essential to such attorney’s work for such Party, and such attorneys are bound by an obligation of confidentiality;

(e) to contractors and consultants engaged, or proposed to be engaged, by any Party where disclosure of such information is essential to such contractor’s or consultant’s work for such Party;

(f) to a bona fide prospective transferee of a Party’s Participating Interest, or portion thereof) or a Party’s rights and obligations under this Agreement, to the extent appropriate in order to allow the assessment of such

Participating Interest or rights and obligations (including an entity with whom a Party and/or its Affiliates are conducting bona fide negotiations directed toward a merger, consolidation or the sale of a majority of its or an Affiliate’s shares);

(g) to a bank or other financial institution to the extent appropriate to a Party arranging for funding;

(h) to the extent such information must be disclosed pursuant to any rules or requirements of any government or stock exchange having jurisdiction over such Party, or its Affiliates; provided, however, that such Party shall comply with the requirements of Section 10.2;

(i) to its respective employees, subject to each Party taking sufficient precautions to ensure such information is kept confidential;

(j) to the extent any information which, through no fault of a Party, becomes a part of the public domain; and

(k) to the Government and any other Governmental Entities solely to the extent required to satisfy the conditions pursuant to Section 2.1.

Disclosure pursuant to Sections 10.1 (e), (f), (g) and (i) shall not be made unless prior to such disclosure the disclosing Party has obtained a written undertaking from the recipient party to keep the information strictly confidential for at least as long as the period set out above and to use the information for the sole purpose described in Sections 10.1 (e), (f), (g) and (i).

Section 10.2 Publicity. Each Party agrees that no public release or announcement concerning the transactions contemplated hereby shall be issued by either Party or its Affiliates without the prior consent of the other Party (which consent shall not be unreasonably withheld, delayed or conditioned), except as such release or announcement may be required by Law or the rules or regulations of any securities exchange, in which case the Party required to make the release or announcement shall, to the extent practicable, allow the other Party reasonable time to comment on such release or announcement in advance of such issuance.

Section 10.3 Conflict. To the extent there is any conflict between the provisions of this Article 10 and the confidentiality provisions of the Joint Operating Agreement, prior to the Closing Date the provisions of this Article 10 shall prevail, and after the Closing Date the confidentiality provisions of the Joint Operating Agreement shall prevail.

ARTICLE 11 - INDEMNIFICATION

Section 11.1 Indemnification by Farmor. Subject to the other provisions of this Agreement, Farmor shall fully and effectively indemnify, defend and hold Farmee harmless from and against all Actions and all Losses incurred by Farmee which result from any breach by Farmor of any of its representations, warranties, covenants and other agreements set forth in this Agreement or in any other agreement or instrument furnished by Farmor pursuant to this Agreement. EXCEPT TO THE EXTENT SUCH LOSSES ARE CAUSED IN WHOLE OR IN

PART BY THE NEGLIGENCE (WHETHER SOLE, JOINT OR CONCURRENT), STRICT LIABILITY, OR OTHER LEGAL FAULT OF THE INDEMNIFIED PERSON.

Section 11.2 Pre-Closing Date Indemnification. Save as provided in Section 1.8 and Section 3.1:

(a) Farmor shall, subject to the Closing Date occurring, be liable for, and shall fully and effectively indemnify, defend and hold Farmee harmless in respect of, all Actions and Losses in respect of the Farmee Interest which accrue in or relate to the period prior to the Closing Date; and

(b) Farmee shall be entitled to all income, receipts, credits, rebates and other benefits in respect of the Farmee Interest (together the “Benefits”) which accrue in or relate to any period from and after the Closing Date and Farmor shall account to and reimburse Farmee any amounts arising in respect thereof.

Section 11.3 Indemnification by Farmee. Subject to the other provisions of this Agreement, Farmee shall fully and effectively indemnify, defend and hold Farmor harmless from and against all Actions and all Losses incurred by Farmor which result from any breach by Farmee of any of its representations, warranties, covenants and other agreements set forth in this Agreement or in any other agreement or instrument furnished by Farmee pursuant to this Agreement, EXCEPT TO THE EXTENT SUCH LOSSES ARE CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE (WHETHER SOLE, JOINT OR CONCURRENT), STRICT LIABILITY, OR OTHER LEGAL FAULT OF THE INDEMNIFIED PERSON.

Section 11.4 Post-Closing Date Indemnification. Save as provided in Section 1.8 and Section 3.1:

(a) Farmee shall, subject to the Closing Date occurring, be liable for, and shall fully and effectively indemnify, defend and hold Farmor harmless in respect of, all Actions and Losses in respect of the Farmee Interest which accrue in or relate to the period from and after the Closing Date; and

(b) Farmor shall be entitled to all Benefits which accrue in or relate to any period prior to the Closing Date and Farmee shall account to and reimburse Farmor any amounts arising in respect thereof.

Section 11.5 Indemnification Regarding Anti-Corruption. Notwithstanding Section 12.4(d), each Party shall defend, indemnify and hold the other Parties harmless from and against any and all Losses arising from or related to, any breach by such first Party of representations, warranties or covenants under Section 6.3 or Section 7.4.

Section 11.6 General Provisions.

(a) Except as set forth in the following two sentences, the warranties of Farmor in Section 6.1 and of Farmee in Section 6.2 shall survive the transfer of the Farmee Interest to Farmee and shall terminate on the first

personnel in connection with an indemnity claim pursuant to this Article 11. All such records and information provided to the Indemnifying Party shall be kept confidential in accordance with the confidentiality provisions of Article 10 and the Joint Operating Agreement, as applicable, except to the extent necessary for defending against a Third Party Claim or resolving any dispute regarding the obligations of either Party pursuant to this Article 11. In the event that Farmor or Farmee shall fail to make such commercially reasonable efforts to mitigate any Losses, then notwithstanding anything else to the contrary in this Agreement, the Indemnifying Party shall not be required to indemnify the Indemnified Party (or the indemnified Persons affiliated with it) for the portion of any Loss that could reasonably be expected to have been avoided or mitigated if the Indemnified Party had made such efforts.

(f) Except as set forth in Article 4 and Sections 12.4(c) and Article 13, the Parties agree that the indemnification provisions in this Article 11 shall be the exclusive remedy of the Parties with respect to breaches of warranties and failures to perform covenants or agreements hereunder.

Section 11.7 Indemnification Procedures. All claims for indemnification pursuant to this Article 11 shall be asserted and resolved pursuant to this Section 11.7. Any Person claiming indemnification hereunder is hereinafter referred to as the “Indemnified Party” and any Person against whom such claims are asserted hereunder is hereinafter referred to as the “Indemnifying Party.” In the event that any Third Party Claims are asserted against or sought to be collected from an Indemnified Party, such Indemnified Party shall with reasonable promptness provide to the Indemnifying Party a written notice of claim specifying in reasonable detail the specific nature, specific basis and amount of the Third Party Claims for which indemnification is sought. The Indemnifying Party shall have 30 days from the personal delivery or receipt of such written notice (the “Notice Period”) to notify the Indemnified Party (a) whether or not it disputes the liability of the Indemnifying Party to the Indemnified Party hereunder with respect to such Third Party Claims and (b) whether or not it desires, at the sole cost and expense of the Indemnifying Party, to defend the Indemnified Party against such Third Party Claims. However, an Indemnified Party is hereby authorized prior to and during the Notice Period to file any motion, answer or other pleading that it shall deem necessary or appropriate to protect its interests or those of the Indemnifying Party (and of which it shall have given notice and opportunity to comment to the Indemnifying Party) and not prejudicial to the Indemnifying Party. In the event that the Indemnifying Party notifies the Indemnified Party within the Notice Period that it desires to defend the Indemnified Party against such Third Party Claims, the Indemnifying Party shall have the right to defend all appropriate proceedings, and with counsel of its own choosing, which proceedings shall be promptly settled or prosecuted by them to a final conclusion. The Indemnifying Party shall keep the Indemnified Party indemnified from and against any increased liability arising out of the Indemnifying Party’s defense of the Third Party Claim. Without the prior written consent of the Indemnified Party, the Indemnifying Party shall not settle, compromise or consent to the entry of judgment with respect to a Third Party Claim unless such settlement, compromise or consent includes an unconditional release of the Indemnified Party from all liability arising out of such Third Party Claim and does not include an admission of fault or culpability by the Indemnified Party. If the Indemnified Party desires to participate in, but not

control, any such defense or settlement it may do so at its sole cost and expense. If requested by the Indemnifying Party, the Indemnified Party agrees to cooperate with the Indemnifying Party and its counsel in contesting any Third Party Claims that the Indemnifying Party elects to contest or, if appropriate and related to the Third Party Claim in question, in making any counterclaim against the Person asserting the Third Party Claim, or any cross-complaint against any Person. No Third Party Claim may be settled or otherwise compromised without the prior written consent of the Indemnifying Party. In the event a claim for indemnification pursuant to this Article 11 does not involve a Third Party Claim, the Indemnified Party shall deliver written notice of such claim with reasonable promptness to the Indemnifying Party. The failure by an Indemnified Party to so notify the Indemnifying Party shall not relieve the Indemnifying Party from any liability it may have to the Indemnified Party pursuant to this Article 11, except to the extent that the Indemnifying Party demonstrates that it has been prejudiced by such failure.

ARTICLE 12 - DISPUTE RESOLUTION

Section 12.1 Agreement to Arbitrate. Any and all claims, counterclaims, demands, causes of action, disputes, controversies, and other matters in question arising out of or relating to this Agreement, other than any matter referred to an Independent Accountant in accordance with Section 3.1(h), or the alleged breach hereof, or in any way relating to the subject matter of this Agreement or the relationship between the Parties created by this Agreement , together with any Related Agreement Dispute commenced in the same Request for Arbitration (a “Dispute”) shall be finally resolved by binding arbitration submitted to the London Court of International Arbitration (“LCIA”) under the Arbitration Rules of the LCIA (the “Rules”) then in force, to the extent such Rules are not inconsistent with the provisions of this Agreement, regardless of whether some or all of such Disputes allegedly (a) are extra-contractual in nature, (b) sound in contract, tort, or otherwise, (c) are provided by statute, common law or otherwise, or (d) seek damages or any other relief, whether at law, in equity or otherwise. Notwithstanding anything to the contrary herein, a Party may apply to any competent judicial authority for interim or conservatory relief, and the application for such measures, or the application for the enforcement of such measures ordered by the arbitrators, shall not be deemed an infringement or waiver of the Agreement to arbitrate and shall not affect the powers of the arbitrators. This arbitration agreement shall be governed by English law.

Section 12.2 Number and Appointment of Arbitrators. Except as provided herein, the appointment of the arbitrators shall be made in accordance with the relevant provisions of the Rules. The arbitral tribunal shall be composed of three arbitrators (the “Tribunal”). Each Party shall appoint one arbitrator within 30 days of the filing of the request for arbitration, and the two arbitrators so appointed shall together appoint the presiding arbitrator by mutual agreement within 20 days of their appointment. If a Party fails to appoint its party-appointed arbitrator or if the two party-approved arbitrators fail to appoint the presiding arbitrator within the applicable time period, the LCIA Court shall appoint the remainder of the three arbitrators not yet appointed.

Section 12.3 Venue; Procedural Issues. The seat of the arbitration and the location of any hearings shall be London, England. The arbitration shall be conducted and the award rendered in the English language. The Parties agree that discovery and evidence in the arbitration shall be governed by the IBA Rules on the Taking of Evidence in International

been presented to the Tribunal, and shall be final and binding on the Parties and non-appealable to the maximum extent permitted by Law.

Section 12.6 Exclusive Method of Resolving Claims; Assistance of Courts. It is the intent of the Parties that the arbitration shall be conducted expeditiously, without initial recourse to the courts and without interlocutory appeals of the Tribunal’s decisions to the courts. However, if a Party refuses to honor its obligations under this agreement to arbitrate, the other Party may obtain appropriate relief compelling arbitration in any court having jurisdiction over the refusing Party, and the order compelling arbitration shall require that the arbitration proceedings take place in London, England and in the manner specified herein. Prior to the appointment of the presiding arbitrator, a Party may apply to any court having relevant jurisdiction for an order preserving the status quo ante and/or evidence in anticipation of arbitration, including orders preventing the disclosure of confidential information or other protectable information (for avoidance of doubt, such an application is not intended to constitute waiver of the right to arbitrate Disputes nor does it refer any Dispute to court for decision). Any and all of the Tribunal’s orders and decisions, including procedural orders and interim measures, may be enforced by any court having relevant jurisdiction. Each Party agrees that arbitration pursuant to this Article 12 shall be the exclusive method for resolving all Disputes and that it will not commence an action or proceeding, except as provided in this Article 12 or the Rules.

Section 12.7 Confidentiality. Except to the extent necessary for proceedings relating to enforcement of the arbitration agreement, the award or other, related rights of the Parties, the fact of the arbitration, the arbitration proceeding itself, all evidence, memorials or other documents exchanged or used in the arbitration and the arbitrators’ award shall be maintained in confidence by the Parties to the fullest extent permitted by applicable Law. However, a violation of this covenant shall not affect the enforceability of this agreement to arbitrate or of the Tribunal’s award.

Section 12.8 Costs of Arbitration. The Tribunal may award to the prevailing Party (or Parties) its attorneys’ fees, costs and expenses of the arbitration (including the arbitrators’ fees and expenses) in full or in an appropriate amount.

Section 12.9 Interest. The award shall include interest, which shall run from the date of any breach or violation of this Agreement. Interest shall continue to run from the date of award until the award is paid in full. Interest shall be calculated at the Agreed Interest Rate.

Section 12.10 Consolidation and Joinder. If more than one arbitration is commenced under this Agreement and any separate agreements related to this Agreement (“Related Agreements”), and any Party to this Agreement contends that two or more arbitrations are substantially related and/or involve the same parties and that the issues should be heard in one proceeding, the Tribunal appointed in the first-filed of such proceedings shall have the power to determine whether, in the interests of justice and efficiency, the whole or part of the matters at issue should be consolidated before that Tribunal upon such terms or conditions as the Tribunal thinks fit. The Parties expressly accept that any Dispute under this Agreement may accordingly be disposed of in the same arbitration proceedings as any Related Agreement Dispute, even in the presence of parties other than the Parties to this Agreement. The Tribunal appointed in respect of any Dispute may, upon the request of a Party, or a party to any of the Related

Agreements, having regard to the stage of the proceedings and other relevant circumstances, join any Party or any party to any of the Related Agreements to arbitration proceedings in relation to that Dispute. Any party so joined to arbitration proceedings may request that one or more further Parties or parties to any of the Related Agreements be joined to such arbitration proceedings. Each of the Parties hereby consents to be joined to arbitration proceedings under and on terms of any of the Related Agreements at the request of a party to that arbitration following the initiation of the joinder of parties or consolidation of disputes or arbitral proceedings. The Parties hereby agree that any arbitration proceedings to which any one or more of them may be joined pursuant to this provision shall continue under the same arbitration rules as those under which it was commenced and with the same arbitrators. Any joined Party shall be bound by any Award rendered by the Arbitral Tribunal even if such Party chooses not to participate in the arbitral proceedings.

ARTICLE 13 - PAYMENT DEFAULT

Section 13.1 Default and Interest. If a Party fails to pay amounts due by the applicable due dates, such Party shall be in default and such amounts shall accrue interest at the Agreed Interest Rate calculated from the due date until the date payment is made.

Section 13.2 Termination. Without limiting any other remedies available to Farmor, if Farmee fails to pay the Closing Payment by the applicable due date, and such failure remains uncured 5 business days after written notice from Farmor, and Farmor does not seek or receive payment under the Farmee Parent Guaranty provided pursuant to Section 14.2(a), Farmor may terminate this Agreement by written notice to Farmee, time and full performance being of the essence.

ARTICLE 14 - MISCELLANEOUS

Section 14.1 Conflict.

(a) In the event of a conflict between the terms of the main body of this Agreement and its Exhibits, the terms of the main body of the Agreement shall prevail.

(b) In the event of a conflict between the terms of this Agreement and the Contract, the terms of this Agreement shall prevail as amongst the Parties unless such would be in violation of applicable Laws or terms of the Contract.

Section 14.2 Assignment.

(a) Farmee may freely transfer its rights, obligations and liabilities under this Agreement to any of its Affiliates on the condition that concurrently with such transfer, Farmee, Farmor and the Affiliate execute, and deliver to each other, the Farmee Parent Guaranty. If and to the extent requested by Farmee, Farmor shall cooperate with Farmor and execute the Farmee Parent Guaranty. Any attempt to transfer to an Affiliate without execution

and delivery of the Farmee Parent Guaranty by Farmee and the relevant Affiliate shall be void.

(b) Except as set out in Section 14.2(a), this Agreement and the rights and obligations hereunder may not be Transferred by a Party without the prior written consent of the other Party, which consent may be withheld for any reason. Any attempted Transfer in violation of this Section 14.2 shall be void.

Section 14.3 Parties in Interest. This Agreement shall be binding upon and, except as provided below, inure solely to the benefit of each Party and its successors and permitted assigns, and nothing in this Agreement, express or implied, is intended to confer upon any other Person (except as expressly provided otherwise in Section 11.6(d) any rights or remedies of any nature whatsoever under or by reason of this Agreement.

Section 14.4 Entire Agreement. This Agreement, together with the Transaction Documents, contains the entire agreement and understanding between the Parties with respect to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, relating to such subject matter.

Section 14.5 Amendment, Modification and Waiver. This Agreement may not be amended or modified except by an instrument in writing signed by the Party against which enforcement of such amendment or modification is sought. The failure of a Party to exercise any right or remedy shall not be deemed or constitute a waiver of such right or remedy in the future. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (regardless of whether similar), nor shall any such waiver constitute a continuing waiver unless otherwise expressly provided.

Section 14.6 Notices. Any notice, request, instruction, correspondence or other document required or permitted to be given hereunder shall be in writing and delivered in person or by courier service requiring acknowledgment of receipt of delivery or mailed by registered or certified mail, postage prepaid and return receipt requested, or by facsimile, as follows; provided, that copies to be delivered below shall not be required for effective notice and shall not constitute notice:

If to Farmee:

South Atlantic Petroleum Limited
11th and 12th Floors
South Atlantic Petroleum Towers
1 Adeola Odeku Street
Victoria Island
Lagos
Nigeria
Attention: Mr. Dale Rollins
Facsimile: + 234 810 483 4380

If to Farmor:

c/o Hyperdynamics Corporation
12012 Wickchester Lane, Suite 475
Houston, TX 77079, USA
Attention: Mr. Ray Leonard
Facsimile: + 1 713-353-9421

Notice given by personal delivery, courier service or mail shall be effective upon actual receipt. Notice given by facsimile shall be confirmed by appropriate answer back and shall be effective upon actual receipt if received during the recipient’s normal business hours, or at the beginning of the recipient’s next day after receipt if not received during the recipient’s normal business hours. All notices by facsimile shall be confirmed promptly after transmission in writing by certified mail or personal delivery. A Party may change any address to which notice is to be given to it by giving notice as provided above of such change of address.

Section 14.7 Counterparts. This Agreement may be executed in one or more counterparts (written, electronic or facsimile signature), all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each Party and delivered to the other Party, it being understood that both Parties need not sign the same counterpart.

Section 14.8 Severability. If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any rule of applicable Law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated by this Agreement are not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated by this Agreement are consummated as originally contemplated to the fullest extent possible.

Section 14.9 Survival of Claims. For the avoidance of doubt, the rights and remedies of either Party under or in connection with this Agreement in respect of any provision of this Agreement (including in respect of any representation and warranty) which accrue on or prior to the Closing Date shall not be affected by the Closing Date having occurred, the occurrence of which shall be without prejudice to and shall not be a waiver of rights or liabilities in relation to any provision of this Agreement.

Section 14.10 Governing Law. This Agreement, including the resolution of disputes between the Parties under Article 12 (or otherwise), shall be governed by, construed, interpreted and enforced in accordance with English law, without regard to principles of conflicts of law that could require the application of other law.

Section 14.11 Language. This Agreement has been negotiated and executed in the English language, and the English language version of this Agreement will serve as the official version of this Agreement. Translations of this Agreement in languages other than English shall not be used to govern, construe, interpret or enforce this Agreement.

Section 14.12 Independent Accountant. For any matter referred to an Independent Accountant in accordance with Section 3.1(g), the Parties agree that such matter shall be resolved by an independent, internationally recognised firm of chartered accountants (the “Independent Accountant”) to be appointed by Farmor and Farmee. If Farmor and Farmee are not able to agree on the appointment of the Independent Accountant within a period of twenty (20) days, the Independent Accountant shall be nominated by the Institute of Chartered Accountants in England and Wales. The Independent Accountant shall be granted such access to books, records, accounts and documents in the possession of the Parties as he may reasonably request. The Independent Accountant shall give Farmor and Farmee reasonable opportunity to make written representations to the Independent Accountant and shall require that any such written representations are made available to the other Party at the same time as to the Independent Accountant. The Independent Accountant shall render its decision within thirty (30) days of its appointment. The Independent Accountant must select either the position of Farmor or the position of Farmee. The costs of the Independent Accountant shall be apportioned equally between Farmor and Farmee, provided that Farmor and Farmee shall each be responsible for their own costs in respect of a matter referred to an Independent Accountant. The Independent Accountant shall act as an expert and not as an arbitrator and his determination shall be final and binding on the Parties in the absence of manifest error or fraud.

Section 14.13 Interpretation.

(a) The table of contents and all headings in this Agreement are included for convenience only and shall not affect this Agreement’s construction or validity;

(b) Unless otherwise specified, references to Exhibits, Schedules, Articles or Sections are to Exhibits, Schedules, Articles or Sections of this Agreement, as amended from time to time;

(c) References to “day”, “month” or “year” shall unless otherwise stated mean a Gregorian calendar “day”, “month” or “year” respectively;

(d) In the computation of periods of time from a specified date to a later specified date the word “from” shall mean “from and including” and the words “until” and “to” shall respectively mean “until and including” and “to and including”;

(e) In the computation of periods of time specified for giving any notice, such periods shall be exclusive of the day on which the notice was deemed to have been given in accordance with this Agreement and inclusive of the day on which the event or action specified in such notice is due to occur or be taken;

APPENDIX A

“Acquired Interest” has the meaning set forth in Section 9.4.

“Acquiring Party” has the meaning set forth in Section 9.4.

“Actions” means claims, actions, proceedings, damages, demands, judgments, sums payable, liabilities and losses (in each case, whether or not successful, compromised, settled, withdrawn or which shall become unenforceable by the lapse of time or otherwise).

“Affiliate” means, with respect to any Person, any other Person controlling, controlled by or under common control with such first Person. For purposes of this definition and this Agreement, the term “control” (and correlative terms) means (i) the ownership of 50% or more of the equity interest in a Person, or (ii) the power, whether by contract, equity ownership or otherwise, to direct or cause the direction of the policies or management of a Person.

“Agreed Interest Rate” means the lesser of: (i) the one-year U.S.$ LIBOR rate as published by the Financial Times on the first business day of the month plus 3 per cent, compounded monthly, and (ii) the maximum rate allowed by applicable Law.

“Agreement” has the meaning set forth in the preamble to this Agreement.

“AMI Area” means the Contract Area covered by the Contract as of the Closing Date.

“AMI Share” means the Party’s Participating Interest share.

“AMI Term” means a period of three years commencing on the Execution Date.

“Anti-Corruption Legislation” means (1) the applicable laws of the Republic of Guinea; (2) the anti-corruption laws of any Home Country Governmental Authority applying to a Party or any Affiliate of a Party, (3) the U.S. Foreign Corrupt Practices Act; (4) the OECD Principles; (5); the U.K. Bribery Act 2010 and (6) any other implementing legislation with respect to (1), (2), (3), (4) and (5) above.

“Arrêté” means a decree issued by the Director General of the National Petroleum Office of the Republic of Guinea.

“Assignment” means the assignment agreement (‘acte de cession’) attached hereto as Exhibit C.

“Benefits” has the meaning set forth in Section 11.2(b).

“Closing Date” has the meaning set forth in Section 1.5.

“Closing Notice” has the meaning set forth in Section 1.5.

“Closing Payment” means an amount equal to fifty percent (50%) of the costs and expenses of long-lead items and costs and expenses of the drilling program for the Obligation Well, including

Obligation Well Costs and Emergency Costs, in respect of the period commencing on September 15, 2016 and ending on the Closing Date, which amount shall not exceed Ten Million U.S. Dollars (U.S. $10,000,000) without the approval of Farmee.

“Code” has the meaning set forth in Section 9.3.

“Commercial Agent” means any representative, employee, director, agent or consultant of any Person who is acting in such capacity.

“Confidentiality Agreement” means the Confidentiality Agreement dated September 28, 2016, by and between Hyperdynamics Corporation and Farmee.

“Consideration” has the meaning set forth in Section 9.4.

“Contract” has the meaning set forth in the recitals to this Agreement.

“Contract Area” has the meaning set forth in the recitals to this Agreement.

“Dispute” has the meaning set forth in Section 12.1.

“Emergency Costs” means any costs incurred due to a blow-out, fire, sabotage or similar type of emergency.

“Encumbrance” means any claim, option, charge (fixed or floating), mortgage, lien, pledge, equity, encumbrance, burden, right to acquire, right of pre-emption, right of first refusal, title retention or any other third party right, or other security interest or any agreement or arrangement having a similar effect or any agreement to create any of the foregoing.

“Environment” means all or any of the following, alone or in combination: the air, water (including seawater inside or outside any territorial limits, freshwater and water under or within land), soil and land (including the seabed and land under water) and any ecological systems and living organisms supported by those media including man.

“Environmental Laws” means all Laws, international treaties, national, federal, provincial, state or local statutes, the common law, and any codes of law (having legal effect), in any applicable jurisdiction concerning:

a) harm or damage to or protection of the Environment and/or the provision of remedies in respect of or compensation for harm or damage to the Environment;

b) emissions, discharges, releases or escapes into or the presence in the Environment of hazardous substances or the production, processing, management, treatment, storage, transport, handling or disposal of hazardous substances or the disposal or abandonment of any fixed or floating offshore installation; or

c) worker or public health and safety,

and any bylaws, regulations or subordinate legislation, judgements, decisions, notices, orders, circulars, technical instructions, licences or permits and codes of practice from time to time issued or made thereunder.

“Environmental Liabilities” means, in so far as these relate to the Farmee Interest, all costs, charges, expenses, liabilities and obligations, relating to violations of Environmental Laws, arising under Environmental Laws, or arising under contractual obligations related to the matters addressed in clauses (a), (b) and (c) of the definition of Environmental Laws.

“Execution Date” has the meaning set forth in the preamble to this Agreement.

“Farmee” has the meaning set forth in the preamble to this Agreement.

“Farmee Interest” means a fifty percent (50%) Participating Interest.

“Farmee Parent Guaranty” means the parent guaranty in the form attached hereto as Exhibit E.

“Farmee Performance Bond” means one or more of a bond, letter of credit, guarantee or other form of security in favor of the Government from an institution acceptable to the Government, in a form and for an amount acceptable to the Government, as may be required by the Government in order to obtain Governmental Approval.

“Farmor” has the meaning set forth in the preamble to this Agreement.

“Farmor Parent Guaranty” means the parent guaranty in the form attached hereto as Exhibit D.

“Final Adjustment Statement” has the meaning set forth in Section 3.1(d).

“Final Settlement Amount” has the meaning set forth in Section 3.1(i).

“Government” means the government of the Republic of Guinea and any ministry, state-owned or operated oil company, agency or organization, department, office and/or bureau of the Republic of Guinea with jurisdiction over the Contract, the Joint Operating Agreement, or the Farmee Interest.

“Governmental Approval” means all required approvals and consents of the Government necessary for:

(a) the transfer of the Farmee Interest from Farmor to Farmee, which will be in the form of the issuance of an Arrêté approving the assignment of the Farmee Interest to Farmee, or such other form as the Government may direct provided that the terms and conditions of such approvals and consents are satisfactory to Farmor and Farmee, acting reasonably, and do not impose any unusual or onerous provisions on the Parties; and

(b) the third amendment to the Contract to reflect such transfer, on terms and conditions satisfactory to Farmee (including the waiver of previous non-

compliance by Farmor disclosed in Schedule 6.1(d)), acting reasonably having taken into account the advice of its legal advisers in the Republic of Guinea in relation thereto.

“Governmental Entity” means any government, including the Government, and all departments, political subdivisions, instrumentalities, agencies, corporations or commissions under the direct or indirect control thereof or owned thereby and shall include any court, arbitral tribunal, legislature, council or other state government or national, regional, municipal or local authorities.

“Home Country Governmental Authority” means any Governmental Entity where a Party or any of its direct or indirect parent companies is organized or has its principal place of business.

“Indemnified Party” has the meaning set forth in Section 11.7.

“Indemnifying Party” has the meaning set forth in Section 11.7.

“Independent Accountant” has the meaning set forth in Section 14.12.

“Interest” means any kind of right, title or interest in oil and/or gas in the AMI Area, including without limitation, leasehold interest, fee interest, fee interest, mineral interest, royalty interest, overriding royalty interest, non-participating royalty interest, working interest, earned interest or carried working interest, whether producing or non-producing, acquired by any means whatsoever, including, without limitation, production sharing contract, permit, license, concession, lease, purchase, assignment or farm-in.

“Interim Period” means the period commencing on the Execution Date and ending on the Closing Date.

“Joint Account Assets” means materials, movable property and fixed assets, permits, consents, approvals, clearances, surface rights, rights-of-way, easements, leases and all other rights and privileges purchased or otherwise acquired, possessed or used for Joint Operations.

“Joint Operating Agreement” or “JOA” means the Joint Operating Agreement attached hereto as Exhibit B, with Farmor serving as Operator.

“Joint Operations” means all operations and activities conducted in accordance with this Agreement, the Contract and/or the Joint Operating Agreement, and which for purposes of this Agreement shall include the drilling of the Obligation Well, all of which shall be conducted by Farmor as Operator.

“Laws” means all laws, statutes, rules, regulations, ordinances, orders, decrees, requirements, judgments and codes of Governmental Entities.

“LCIA” has the meaning set forth in Section 12.1.

“Loss” or “Losses” has the meaning set forth in Section 9.2.

“Material Adverse Effect” means any event, circumstance, effect, occurrence or state of affairs or any combination of them (whether existing or occurring on or before the date of this Agreement or arising or occurring afterwards) which is reasonably expected to have an adverse impact on (i) the business, assets, financial condition or results of operations under the Contract or the Joint Operations, taken as a whole or (ii) the ability of either Farmor or Farmee to consummate the transactions contemplated hereby. The term “Material Adverse Effect” shall not include (A) any effect resulting from entering into this Agreement or the announcement of the transactions contemplated by this Agreement, (B) any effect resulting from changes in general market, economic, financial or political conditions or any outbreak of hostilities or war, (C) any effect that affects the hydrocarbon exploration, production, development, processing, gathering and/or transportation industry generally (including changes in commodity prices or general market prices in the hydrocarbon exploration, production, development, processing, gathering and/or transportation industry generally), or (D) any effect resulting from a change in Laws or regulatory policies. For the avoidance of doubt, the termination of the Contract or any approval or consent granted in respect thereof shall be considered a Material Adverse Effect.

“Material Development” mean (i) the termination of the Contract, (ii) expropriation of the Contract by the Government, or (iii) the outbreak of hostilities or war in the Republic of Guinea.

“MSA” means the master service agreement entered into between Farmor and Schlumberger Oilfield Eastern Limited on December 27, 2016.

“Notice Period” has the meaning set forth in Section 11.7.

“Objective Depth” means the point at which the Obligation Well has been drilled to a depth of 2,500 meters total vertical depth below the mud line, as required by the Contract.

“Obligation Well” means the extension well to be drilled in the Contract Area at the location detailed in Section 5.1 pursuant to the terms of the Contract, which well shall be drilled (i) in accordance with the terms of the Contract, this Agreement and the Joint Operating Agreement, (ii) with a bottom-hole location determined in accordance with Section 5.1, and (iii) to the Objective Depth. The term “Obligation Well” shall include any substitute well therefor.

“Obligation Well Costs” means the costs, expenses and other charges of drilling (which shall include operations in anticipation of drilling, including but not limited to mobilization fees) the Obligation Well to Objective Depth, logging, coring and otherwise testing the Obligation Well, subsequently abandoning (either as a dry hole or temporarily for future work or production) the Obligation Well in accordance with all applicable Laws, and demobilization fees, as shown on the Work Program and Budget. The costs associated with any sidetracking will not be included unless done to straighten the hole, drill around junk in the hole, or overcome similar mechanical difficulties.

“OECD Principles” means the following principles, which are based on the principles set forth in Article 1.1 and 1.2 of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, signed in Paris on 17 December 1997, and entered into force on 15 February 1999, and the Convention’s commentaries, namely, that:

(a) It is unlawful for any person intentionally to offer, promise or give any undue pecuniary or other advantage, whether directly or through intermediaries, to a foreign public official, for that official or for a third party, in order that the official act or refrain from acting in relation to the performance of official duties, in order to obtain or retain business or other improper advantage in the conduct of international business; and

(b) Complicity in, including incitement, aiding and abetting, or authorization of an act of bribery of a foreign public official shall be unlawful. Furthermore, attempt and conspiracy to bribe a foreign public official of a country that is not a Party’s Home Country Governmental Authority shall be unlawful to the same extent as attempt and conspiracy to bribe a public official of a country that is a Party’s Home Country Governmental Authority.

“Offeree” has the meaning set forth in Section 9.4.

“Official” means (i) any official, officer, employee or Person acting in an official capacity on behalf of a Governmental Authority or Public International Organization; or (ii) any political party or political party official; or (iii) any candidate for political office.

“Offshore Drilling Contract” means the offshore drilling contract entered into between Farmor and Pacific Drilling Operations Limited on 28 November 2016.

“Operator” means at any time the Person designated and acting as such pursuant to the Joint Operating Agreement.

“Participating Interest” means the undivided percentage interest of the Persons comprising Contractor (as that term is defined in the Contract) in the rights and obligations of the Contract and, as applicable once effective, the Joint Operating Agreement, subject to any carried interests of the Government, and all corresponding rights and obligations associated therewith.

“Party” or “Parties” has the meaning set forth in the recitals to this Agreement.

“Person” means any natural or juridical person including any individual, firm, corporation, partnership, limited liability company, trust, association, joint venture, Government Entity or other entity.

“Petroleum Operations” means all exploration, development, extraction, production, transportation, marketing, abandonment and site restoration operations authorised or contemplated under the Contract.

“Preliminary Closing Statement” has the meaning set forth in Section 3.1(a).

“Public International Organization” means any public international organization (including those covered by the Anti-Corruption Legislation), including international financial institutions such as the World Bank Group, the International Bank for Reconstruction & Development, the European Bank for Reconstruction and Development, and the Asian Development Bank.

“Related Agreements” has the meaning set forth in Section 12.10.

“Rules” has the meaning set forth in Section 12.1.

“Second PSC Amendment” has the meaning set forth in the recitals to this Agreement.

“Security Instrument” has the meaning given to such term in the Contract.

“Settlement and Release Agreement” the settlement and release agreement entered into between Farmor and the Government on 14 September 2016.

“Tax” means all taxes, including regional taxes, municipal taxes, customs, special hydrocarbon taxes, national insurance and social security contributions (or their equivalent), rates, VAT, transfer taxes, stamp duties, other duties and any similar tax, together with any interest, addition or penalty.

“Third Party Claim” means a third-party claim asserted against an Indemnified Party by a Person other than (i) an Affiliate of such Indemnified Party or (ii) any director, officer, employee or agent of any such Indemnified Party or its Affiliates.

“Transaction Documents” means this Agreement and, once executed by all the parties thereto, the Assignment, the JOA, the Farmor Parent Guaranty and the Farmee Parent Guaranty.

“Transfer” means a sale, assignment, transfer, conveyance, gift, exchange or other disposition (including an assignment of contractual rights or a delegation of contractual obligations), and whether voluntary, involuntary or by operation of Law.

“Tribunal” has the meaning set forth in Section 12.2.

“Trigger Date” has the meaning set forth Section 1.5.

“UOC PSCs” means the production sharing contract entered into by US Oil Corporation and the Government dated 14 November 1995 and the production sharing contract entered into by US Oil Corporation and the Government dated 29 October 2002 and any related contracts and commitments entered into by US Oil Corporation and the Government relating directly or indirectly to the Participating Interest or all or part of the Contract Area.

“U.S.$” and “U.S. Dollar” means the United States dollar, the legal currency of the USA.

“USA” means United States of America.

“Work Program and Budget” means the work program and budget attached hereto as Exhibit F.

CONTENTS		PAGE

1	Defined terms and interpretation	1

2	Effective Date and term	1

3	Scope	2

4	Operator	4

5	Operating Committee	16

6	Work Programs and Budgets	22

7	Operations by less than all parties	30

8	Default	40

9	Disposition of production	47

10	Abandonment	51

11	Surrender, extensions and renewals	52

12	Transfers, Changes in Control, Tag-Along Rights, and AMI	53

13	Withdrawal from Agreement	62

14	Relationship of Parties and tax	65

15	Venture Information, confidentiality, intellectual property	66

16	Force Majeure	69

17	Notices	69

18	Applicable law, dispute resolution and waiver of sovereign immunity	70

19	General provisions	75

Schedule 1— Dictionary and Interpretation Rules		80

Execution page		89

Exhibit A — Accounting Procedure		1

Exhibit B — Contract Area		21

Exhibit C —Initial Work Program and Budget		22

Parties

1 SCS Corporation Ltd., a company registered in the Cayman Islands, with its address at 12012 Wickchester Lane, Suite 475, Houston, TX 77079, USA, a wholly owned subsidiary of Hyperdynamics Corporation, a Delaware corporation traded on the OTCQX (SCS); and

2 South Atlantic Petroleum Limited, a company registered under the laws of the Federal Republic of Nigeria, with its registered address at 11th and 12th Floors, South Atlantic Petroleum Towers, 1 Adeola Odeku Street, Victoria Island, Lagos, Nigeria (SAPETRO)

Background

A SCS owns certain rights pertaining to (1) that certain Hydrocarbons Production Sharing Contract between the Republic of Guinea and SCS dated September 22, 2006; as amended by that certain (a) Amendment No. 1 to the Hydrocarbons Production Sharing Contract between the Republic of Guinea and SCS dated March 25, 2010, (b) that certain Second Amendment to the Hydrocarbons Production Sharing Contract between the Republic of Guinea and SCS dated September 15, 2016 (the Second Amendment) and (c) [ · ](1) (as amended, the PSC) and (2) the Contract Area.

B SCS and SAPETRO, collectively, own one hundred percent (100%) of the Participating Interest(s); and desire to hereby define their respective rights, interests, duties and obligations in relation to the operations under the PSC and all permits, concessions and licenses granted pursuant thereto.

In consideration of the premises set out above, the mutual covenants and agreements and obligations set out below to be performed, the Parties agree as follows:

1 Defined terms and interpretation

1.1 Definitions in the Dictionary

A term or expression starting with a capital letter which is defined in the Dictionary in Schedule 1-1 (Dictionary) has the meaning given to it in the Dictionary. Any capitalized term used in this Agreement and not specifically defined in this Agreement shall have the same meaning as in the PSC.

1.2 Interpretation

The interpretation clause in Schedule 1-2 (Interpretation Rules) sets out rules of interpretation for this Agreement.

2 Effective Date and term

2.1 Effective Date

This Agreement shall have effect from the date of this Agreement (as set forth on the cover

(1) NTD: The description of the third PSC amendment, if any, will be added in part (c).

page hereto; and, hereafter, the Effective Date) and shall continue in effect until the following occur in accordance with the terms of this Agreement:

(a) the PSC terminates;

(b) all materials, equipment and personal property used in connection with Joint Operations or Exclusive Operations have been disposed of or removed; and

(c) final settlement (including settlement of any financial audit carried out pursuant to the Accounting Procedure) has been made.

2.2 Term

(a) Notwithstanding the termination of this Agreement pursuant to clause 2.1:

(i) clause 10 shall remain in effect until all abandonment obligations under the PSC and Laws / Regulations have been satisfied;

(ii) clause 4.5, clause 4.6 (as to continuing obligations of Operator, if any, and unresolved Disputes), clause 8, clause 18 and the indemnity obligation under clause 19.1(b) shall remain in effect until all obligations have been extinguished and all Disputes have been resolved;

(iii) this clause 2.2, , clause 17, clauses 19.3 through 19.6, clause 19.7, clause 19.8, clause 19.9, clause 19.11, clause 19.12, and clause 1 and Schedule 1 (to the extent that defined terms and/or interpretation rules apply to the other surviving provisions hereof) shall remain in effect so long as any of the provisions in clauses (i), (ii), (iv) and (v) of this clause 2.2 remain in effect;

(iv) clause 12.5 shall remain in effect for any remaining portion of the AMI Term; and

(v) clause 15.2 shall remain in effect as provided in clause 15.2(a).

(b) Termination of this Agreement shall be without prejudice to any rights and obligations arising out of or in connection with this Agreement which have vested, matured or accrued prior to such termination.

3 Scope

3.1 Scope

(a) The purpose of this Agreement is to establish the respective rights and obligations of the Parties with regard to operations under the PSC, including the joint exploration, appraisal, development, production and disposition of Hydrocarbons from the Contract Area.

(b) For greater certainty, the Parties confirm that, except to the extent expressly included in the PSC, the following activities are outside of the scope of this Agreement and are not addressed herein:

(i) construction, operation, ownership, maintenance, repair and removal of facilities downstream from the Delivery Point of the Parties’ Entitlements;

(ii) transportation of the Parties’ Entitlements downstream from the Delivery Point;

(iii) marketing and sales of Hydrocarbons, except as expressly provided in this Agreement;

(iv) except as set forth in clause 12.5, acquisition of rights to explore for, appraise, develop or produce Hydrocarbons outside of the Contract Area (other than as a consequence of unitization with an adjoining contract area under the terms of the PSC or Laws / Regulations); and

(v) exploration, appraisal, development or production of minerals other than Hydrocarbons, whether inside or outside of the Contract Area.

3.2 Participating Interest

(a) The Participating Interests of the Parties as of the Effective Date are:

SCS	50%
SAPETRO	50%

For the avoidance of doubt, the Participating Interests of the Parties are calculated based upon the sum of each of the Party’s undivided interest in the PSC, totalling, as of the Effective Date, a one hundred percent (100%) undivided interest in the PSC.

(b) If a Party transfers all or part of its Participating Interest pursuant to the provisions of this Agreement and the PSC, the Participating Interests of the Parties shall be revised accordingly.

3.3 Ownership, obligations and liabilities

(a) Unless otherwise provided in this Agreement, all the rights and interests in and under the PSC, all Joint Property, and any Hydrocarbons produced from the Contract Area, shall, subject to the terms of the PSC, be owned by the Parties in proportion to their respective Participating Interests.

(b) Unless otherwise provided in this Agreement, the obligations of the Parties under the PSC and all liabilities and expenses incurred by Operator in connection with Joint Operations shall be charged to the Joint Account and all credits to the Joint Account shall be shared by the Parties, in proportion to their respective Participating Interests.

(c) Each Party shall pay when due, in accordance with the Accounting Procedure, its Participating Interest share of Joint Account expenses, including cash advances and interest, accrued pursuant to this Agreement. A Party’s payment of any charge under this Agreement shall be without prejudice to its right to later contest the charge.

(d) Each Party shall obtain and maintain Security in favor of the Government as required under the terms of the PSC. The amount of each Party’s Security shall be that Party’s Participating Interest share of the total amount required under the PSC. If the Government requires that the Parties provide a single Security instrument covering one hundred percent (100%) of the secured amount under the PSC, the

costs and expenses of, and any losses arising out of providing and maintaining, said Security instrument (including all costs and expenses arising out of such Security instrument and any liability that may arise thereunder or in relation thereto) will be charged to the Joint Account and shared by the Parties based on their respective Participating Interests; and the Party providing the Security instrument on behalf of the Parties will be reimbursed out of the Joint Account as soon as reasonably practicable for the other Parties’ respective Participating Interest shares of such costs, expenses and/or losses.

3.4 Government Participation

(a) If Government Oil & Gas Company elects to participate in the rights and obligations of Parties under Article 15 of the PSC, the Parties shall contribute, in proportion to their respective Participating Interests, to the interest to be acquired by Government Oil & Gas Company.

(b) The Parties shall sign such documents as may be necessary to effect such transfer of interests and the joinder of Government Oil & Gas Company as a Party to this Agreement. All payments received for the transfer of such interests shall be credited to the Parties in proportion to their contribution.

4 Operator

4.1 Designation of Operator

SCS is designated as Operator, accepts the rights, duties, and obligations of Operator, and agrees to act as such in accordance with this Agreement from the Effective Date.

4.2 Rights and duties of Operator

(a) Subject to the terms and conditions of this Agreement, Operator shall have all of the rights, functions and duties of Operator under the PSC and shall have exclusive charge of and shall conduct all Joint Operations. Operator may employ independent contractors and agents (which independent contractors and agents may include an Affiliate of Operator, a Non-Operator, or an Affiliate of a Non-Operator) in such Joint Operations.

(b) In the conduct of Joint Operations Operator shall:

(i) perform Joint Operations in accordance with the provisions of the PSC, the Laws / Regulations, this Agreement, and the decisions of the Operating Committee not in conflict with this Agreement;

(ii) conduct all Joint Operations in a diligent, safe and efficient manner in accordance with such good and prudent petroleum industry practices and field conservation principles as are generally followed by the international petroleum industry under similar circumstances;

(iii) exercise due care with respect to the receipt, payment and accounting of funds in accordance with good and prudent practices as are generally followed by the international petroleum industry under similar circumstances;

(iv) subject to clause 4.6 and the Accounting Procedure, neither gain a profit nor

suffer a loss as a result of being the Operator in its conduct of Joint Operations, provided that Operator may rely upon Operating Committee approval of specific accounting practices not in conflict with the Accounting Procedure;

(v) perform the duties for the Operating Committee set out in clause 5, and prepare and submit to the Operating Committee proposed Work Programs and Budgets and (if required) AFEs, as provided in clause 6;

(vi) acquire all permits, consents, approvals, and surface or other rights that may be required for or in connection with the conduct of Joint Operations;

(vii) upon receipt of reasonable advance notice, permit the representatives of any of the Parties to have at all reasonable times during normal business hours and at their own risk and expense reasonable access to the Joint Operations with the right to observe all Joint Operations and to inspect all Joint Property, to conduct HSE audits, and to conduct financial audits, and to observe taking of inventory, as provided in the Accounting Procedure, such access limited, in each case, to/in a manner that minimizes interference with the day-to-day operations and activities of Operator;

(viii) undertake to maintain the PSC in full force and effect consistent with such good and prudent petroleum industry practices as are generally followed by the international petroleum industry under similar circumstances. Operator shall timely pay and discharge all liabilities and expenses incurred in connection with Joint Operations and use its reasonable endeavors to keep and maintain the Joint Property free from all Encumbrances arising out of Joint Operations;

(ix) pay in cash, and/or make available in kind to the Government on behalf of the Parties in accordance with the PSC and/or for the Joint Account, within the periods and in the manner prescribed by the PSC and the Laws / Regulations, all periodic payments, royalties, any domestic supply obligations, taxes, fees and other payments pertaining to Joint Operations but excluding any taxes measured by the incomes of the Parties;

(x) carry out the obligations of Operator pursuant to the PSC, including preparing and furnishing such reports, records and information as may be required pursuant to the PSC;

(xi) have, in accordance with any decisions of the Operating Committee, the exclusive right and obligation to represent the Parties in all dealings with the Government with respect to matters arising under the PSC and Joint Operations. Operator shall notify the other Parties as soon as possible of the time, place and agenda of such meetings. Subject to the PSC and any necessary Government approvals, Non-Operators shall have the right to attend any meetings with the Government with respect to such matters, but only in the capacity of observers. Nothing contained in this Agreement shall restrict any Party from holding discussions with the Government with respect to any issue peculiar to its particular business interests arising under the PSC or this Agreement, but in such event such Party shall promptly advise the Parties, if possible, before and in any event promptly after such discussions, provided that such Party shall not be required to divulge to the Parties any matters discussed to the extent the same involve proprietary information or matters not affecting the other Parties;

(xii) in accordance with clause 9.3 and any decisions of the Operating Committee, assess (to the extent lawful) alternatives for the disposition of Natural Gas from a Discovery;

(xiii) in case of an emergency (including a significant fire, explosion, Natural Gas release, Crude Oil release, or sabotage; incident involving loss of life, serious injury to an employee, contractor, or third party, or serious property damage; strikes and riots; or evacuations of Operator personnel):

(A) take all necessary and proper measures for the protection of life, health, the environment and property; and

(B) as soon as reasonably practicable, report to Non-Operators the details of such event and any measures Operator has taken or plans to take in response thereto;

(xiv) establish and implement pursuant to clause 4.13 an HSE plan to govern Joint Operations which is designed to ensure compliance with applicable HSE Laws / Regulations, the PSC and this Agreement;

(xv) prior to appointing or engaging any independent contractor, conduct appropriate and proportionate due diligence concerning relevant criteria, including such contractor’s ability to perform the proposed work properly, on time, within budgeted cost, and in compliance with applicable legal and contractual requirements;

(xvi) include, to the extent practical, in its contracts with independent contractors and to the extent lawful, provisions which:

(A) establish that such contractors can only enforce their contracts against Operator;

(B) permit Operator, on behalf of itself and Non-Operators, to enforce contractual warranties and indemnities against, and recover losses and damages suffered by them (insofar as recovered under their contracts) from, such contractors;

(C) require such contractors to comply with applicable Laws / Regulations, including registration to do business, immigration, import/export, local preference, national content, tax withholding and payment and HSE;

(D) require such contractors to establish and implement reasonable anti-bribery and anti-corruption programs; and

(E) require such contractors to obtain insurance required by clause 4.7(h).

4.3 Operator personnel

(a) Operator shall engage and/or retain only such employees, Secondees, contractors, consultants and agents as are reasonably necessary to conduct Joint Operations.

(b) Subject to the PSC and this Agreement, Operator shall determine the number of such employees, Secondees, contractors, consultants and agents, the selection of

such persons, their hours of work, and (except for Secondees) their compensation.

(d) Any Party may propose Secondment for a designated purpose related to Joint Operations. Any proposal for Secondment must include the:

(i) designated purpose and scope of Secondment, including duties, responsibilities, and deliverables;

(ii) duration of the Secondment;

(iii) number of Secondees;

(iv) work location and position within Operator’s organization of each Secondee; and

(v) estimated costs of the Secondment.

(e) If a proposed Secondment meets the requirements of clause 4.3(d), Operator shall as soon as reasonably practicable approve (such approval not to be unreasonably withheld) or reject any Secondment proposed by a Non-Operator. Without prejudice to Operator’s right to conduct Joint Operations under this Agreement and the PSC, Operator shall consider such Secondment proposal in light of the potential benefits of such Secondment to the conduct of Joint Operations.

(f) Any proposal for one or more Secondment positions approved by Operator is subject to: (i) the Operating Committee’s authorization of an appropriate budget for such Secondment positions; and (ii) Non-Operators continuing to make available to Operator Secondees qualified to fulfill the designated purpose and scope of such Secondment.

(g) Operator shall have the right to terminate the Secondment for cause under the Secondment agreement provided for under clause 4.3(i).

(h) Each Secondee shall report to and be directed and supervised by Operator (as further set forth in the Secondment agreement provided for under clause 4.3(i)), but, for the avoidance of doubt, shall remain at all times the employee of the Party (or its Affiliate) nominating such Secondee.

(i) Operator and the Non-Operator that employs, or whose Affiliate employs, the Secondee shall enter into a separate agreement relating to such Secondment consistent with this clause 4.3.

(j) Operator shall charge to the Joint Account the costs related to Secondment and Secondees that are within the approved Work Program and Budget.

(k) If a Secondee acting as a Senior Supervisory Personnel of Operator or its Affiliates engages in Gross Negligence / Willful Misconduct that proximately causes the Parties to incur damage, loss, cost, or liability for claims, demands or causes of action referred to in clauses 4.6(a) and 4.6(b), then all such damages, losses, costs, and liabilities shall be allocated to the Joint Account despite clause 4.6.

4.4 Information supplied by Operator

(a) Operator shall provide Non-Operators in a timely manner with the following data and reports (to the extent to be charged to the Joint Account) as they are currently produced or compiled from Joint Operations:

(i) copies of all logs and surveys, including in digitally recorded format if such exists;

(ii) daily drilling reports;

(iii) copies of all Tests and core data and analysis reports;

(iv) final well recap report;

(v) copies of plugging reports;

(vi) copies of final geological and geophysical maps, seismic sections and shot point location maps;

(vii) engineering studies, development schedules and quarterly and annual progress reports on Development Plan projects which progress reports shall at least set out the then current development schedule, the status of each such Development Plan project from inception to date, its cumulative costs to date and the cumulative commitments undertaken;

(viii) weekly production summary and production activity reports, and monthly reports on well, reservoir, field and infrastructure performance;

(ix) reservoir studies, annual reserve estimates, and annual forecasts of production capability, infrastructure capacity, and scheduled outages, provided that Operator makes no representations about the accuracy of its identification of reserves and that each Non-Operator retains full responsibility for making its own assessment of reserves for internal and reporting purposes;

(x) before filing with the Government, copies of all material reports relating to Joint Operations or the PSC required, or anticipated, to be furnished by Operator to the Government, and copies of such reports as filed;

(xi) to the extent not already provided pursuant to clause (viii) or (ix) above, field and well performance reports, including reservoir studies and reserve estimates;

(xii) to the extent not already provided pursuant to clause (x) above, as requested by a Non-Operator, (i) copies of all material reports relating to Joint Operations or the Contract Area furnished by Operator to the Government; and (ii) other material studies and reports relating to Joint Operations;

(xiii) gas balancing reports under agreements provided for in clause 9.3;

(xiv) to the extent not already provided pursuant to the clauses above, data, reports, forecasts and schedules under agreements provided for in clause 9;

(xv) such additional information as a Non-Operator may reasonably request, provided that (A) the requesting Party or Parties pay the costs of preparation of such information and that the preparation of such information will not unduly burden Operator’s administrative and technical personnel; and (B) only Non-Operators

who pay such costs will receive such additional information; and

(xvi) other reports as directed by the Operating Committee.

(b) Operator shall give Non-Operators access at all reasonable times during normal business hours to all data and reports (other than data and reports provided to Non-Operators in accordance with clause 4.4(a)) acquired in the conduct of Joint Operations, which a Non-Operator may reasonably request. Any Non-Operator may make copies of such other data at its sole expense.

4.5 Settlement of claims and lawsuits

(a) Operator shall promptly notify the Parties of any and all material claims or suits that relate in any way to Joint Operations. Operator shall represent the Parties and defend or oppose the claim or suit. Operator may in its sole discretion compromise or settle any such claim or suit or any related series of claims or suits for an amount not to exceed the equivalent of one million U.S. dollars (US$1,000,000) exclusive of legal fees. Operator shall obtain the approval and direction of the Operating Committee on amounts in excess of the above-stated amount. Without prejudice to the foregoing, each Non-Operator shall have the right to be represented by its own counsel at its own expense in the settlement, compromise or defense of such claims or suits.

(b) Any Non-Operator shall promptly notify the other Parties of any claim made against such Non-Operator by a third party that arises out of or may affect the Joint Operations, and such Non-Operator shall defend or settle the same in accordance with any directions given by the Operating Committee. Those costs, expenses and damages incurred pursuant to such defense or settlement which are attributable to Joint Operations shall be charged to the Joint Account.

(c) Notwithstanding clause 4.5(a) and clause 4.5(b), each Party shall have the right to participate in any such suit, prosecution, defense or settlement conducted in accordance with clause 4.5(a) and clause 4.5(b), at its sole cost and expense; provided always that no Party may settle its Participating Interest share of any claim without first satisfying the Operating Committee that it can do so without prejudicing the interests of the Joint Operations.

4.6 Limitation on liability of Operator

(a) Neither Operator nor any other Indemnitee (as defined below) shall bear (except as a Party to the extent of its Participating Interest share) any damage, loss, cost, expense or liability for claims, demands or cause of action resulting from performing (or failing to perform) the duties and functions of Operator, and the Indemnitees are hereby released from liability to Non-Operators for any and all damages, losses, costs, expenses and liabilities arising out of, incident to or resulting from such performance or failure to perform, even though caused in whole or in part by a pre-existing defect, or the negligence (whether sole, joint or concurrent), gross negligence, willful misconduct (but excluding any such claim, demand or cause of action to the extent caused by the Gross Negligence / Willful Misconduct of any Senior Supervisory Personnel of Operator or its Affiliates. for which the Operator shall bear all such damages, losses, costs, expenses and liabilities), strict liability or other legal fault of the Operator or an Indemnitee.

(b) Except as set out in clause 4.6(d), the Parties shall (in proportion to their

Participating Interests) defend and indemnify Operator, its Affiliates and their respective directors, officers and employees (collectively, the Indemnitees), from any and all damages, losses, costs, expenses (including reasonable legal costs, expenses and attorneys’ fees) and liabilities incident to claims, demands or causes of action brought by or on behalf of any person or entity, which claims, demands or causes of action arise out of, are incident to or result from Joint Operations, even though caused in whole or in part by a pre-existing defect, or the negligence (whether sole, joint or concurrent), gross negligence, willful misconduct (but excluding any such claim, demand or cause of action to the extent caused by the Gross Negligence / Willful Misconduct of any Senior Supervisory Personnel of Operator or its Affiliates, for which the Operator shall bear all such damages, losses, costs, expenses and liabilities), strict liability or other legal fault of the Operator or an Indemnitee.

(c) Notwithstanding the foregoing, under no circumstances shall Operator (except as a Party to the extent of its Participating Interest) or any other Indemnitees bear any Consequential Loss or Environmental Loss.

(d) Nothing in this clause 4.6 shall be deemed to relieve Operator from its Participating Interest share of any damage, loss, cost, expense or liability arising out of, incident to, or resulting from Joint Operations.

4.7 Insurance obtained by Operator

(a) Operator shall procure and maintain for the Joint Account all insurance in the types and amounts required by the PSC or the Laws / Regulations.

(b) Operator shall procure and maintain any further insurance, at reasonable rates, as the Operating Committee may from time to time require. In the event that such further insurance is, in Operator’s reasonable opinion, unavailable or available only at an unreasonable cost, Operator shall promptly notify the Non-Operators in order to allow the Operating Committee to reconsider such further insurance.

(c) Each Party will be provided the opportunity to propose to underwrite any or all of the insurance to be obtained by Operator pursuant to clauses 4.7(a) and 4.7(b), through such Party’s Affiliate insurance company or, if direct insurance is not so permitted, through reinsurance policies to such Party’s Affiliate insurance company. Any Party exercising its rights under this Article shall furnish to Operator details of the proposed insurance. If Operator in its sole discretion is satisfied with the security and creditworthiness of such insurance or reinsurance arrangements, and that the premiums for such insurance or reinsurance will not be significantly higher than market rate and will be recoverable under the PSC, then Operator shall procure such insurance or reinsurance from such Party.

(d) Subject to the PSC and the Laws / Regulations, any Party may elect not to participate in the insurance to be procured under clauses 4.7(a) and 4.7(b), provided such Party:

(i) gives prompt written notice to that effect to Operator;

(ii) fully cooperates with and does nothing which may interfere with Operator’s negotiations for such insurance for the other Parties;

(iii) obtains insurance prior to or concurrent with the commencement of relevant operations and maintains such insurance (in respect of which a current

certificate of adequate coverage, provided at least once a year, shall be sufficient evidence) or other evidence of financial responsibility which fully covers its Participating Interest share of the risks that would be covered by the insurance to be procured under clause 4.7(a) and/or clause 4.7(b), as applicable, and which the Operating Committee determines to be acceptable. No such determination of acceptability shall in any way absolve a non-participating Party from its obligation to meet each cash call (except, in accordance with clause 4.7(e), as regards the costs of the insurance policy in which such Party has elected not to participate) including any cash call with respect to damages and losses and/or the costs of remedying the same in accordance with the terms of this Agreement, the PSC and the Laws / Regulations. If such Party obtains other insurance, such insurance shall:

(A) contain a waiver of subrogation in favor of all the other Parties, the Operator and their insurers but only with respect to their interests under this Agreement;

(B) provide that thirty (30) Days’ written notice be given to Operator prior to any material change in, or cancellation of, such insurance policy;

(C) be primary to, and receive no contribution from, any other insurance maintained by or on behalf of, or benefiting Operator or the other Parties; and

(D) contain adequate territorial extensions and coverage in the location of the Joint Operations; and

(iv) is solely responsible for all deductibles, coinsurance payments, self-insured exposures, uninsured or underinsured exposures relating to its interests under this Agreement.

(e) The cost of insurance in which all the Parties are participating shall be for the Joint Account and the cost of insurance in which fewer than all the Parties are participating shall be charged to the Parties participating in proportion to their respective Participating Interests. Subject to the preceding sentence, the cost of insurance with respect to an Exclusive Operation shall be charged to the Consenting Parties.

(f) In the event Operator elects, to the extent permitted by the PSC and Laws / Regulations, to self-insure all or part of the coverage to be procured under clauses 4.7(a) and/or 4.7(b), Operator shall so notify the Operating Committee and provide a qualified self-insurance letter stating what coverages Operator is self-insuring. Any risk to be covered by insurance to be procured in accordance with clauses 4.7(a) and 4.7(b), that is not identified in the self-insurance letter shall be covered by insurance and supported by a current certificate of adequate coverage. If requested by the Operating Committee from time to time, Operator shall provide evidence of financial responsibility, acceptable to the Operating Committee, which fully covers the risks that would be covered by the insurance to be procured under clauses 4.7(a) and 4.7(b).

(g) Operator shall, with respect to all insurance obtained under this clause 4.7:

(i) use reasonable endeavors to procure or cause to be procured such insurance prior to or concurrent with, the commencement of relevant operations and

maintain or cause to be maintained such insurance during the term of the relevant operations or any longer term required under the PSC or the Laws / Regulations;

(ii) promptly inform the participating Parties when such insurance is obtained and supply them with certificates of insurance or copies of the relevant policies when the same are issued;

(iii) arrange for the participating Parties, according to their respective Participating Interests, to be named as co-insureds on the relevant policies with waivers of subrogation in favor of all the Parties but only with respect to their interests under this Agreement;

(iv) use reasonable endeavors to ensure that each policy shall survive the default or bankruptcy of the insured for claims arising out of an event before such default or bankruptcy and that all rights of the insured shall revert to the Parties not in default or bankruptcy; and

(v) duly file all claims and take all necessary and proper steps to collect any proceeds and credit any proceeds to the participating Parties in proportion to their respective Participating Interests.

(h) Operator shall use its reasonable endeavors to require all contractors performing work with respect to Joint Operations to:

(i) obtain and maintain any and all insurance in the types and amounts required by the PSC, the Laws / Regulations or any decision of the Operating Committee;

(ii) name the Parties as additional insureds on the contractor’s insurance policies and obtain from their insurers waivers of all rights of recourse against Operator, Non-Operators and their insurers; and

(iii) provide Operator with certificates evidencing such insurance prior to the commencement of their services.

4.8 Commingling of funds

Operator may not commingle with Operator’s own funds the monies which Operator receives from or for the Joint Account pursuant to this Agreement. However, Operator reserves the right to make future proposals to the Operating Committee with respect to the commingling of funds to achieve financial efficiency. Operator shall open one or more separate bank accounts for the Joint Operations, including currency accounts and interest bearing accounts, as necessary. Operator will have no obligation to utilize interest bearing accounts, provided that in the event it does utilize interest bearing accounts, Operator shall account to each Non-Operator for its allocable share of interest derived therefrom in accordance with the Accounting Procedure. Any account maintained for Joint Operations pursuant to this clause 4.8 may also hold funds paid by the Government or its designee in respect of, if applicable, its share of the costs and expenses of operations conducted pursuant to the PSC.

4.9 Resignation of Operator

Subject to clause 4.11, Operator may resign as Operator at any time by so notifying the other Parties at least one hundred and twenty (120) Days prior to the effective date of such

resignation.

4.10 Removal of Operator

(a) Subject to clause 4.11, Operator shall be removed upon receipt of notice from any Non-Operator if:

(i) (A) Operator becomes bankrupt, (B) is subject to threatened or actual insolvency proceedings or (C) makes an assignment for the benefit of creditors;

(ii) an order is made by a court or an effective resolution is passed for the reorganization under any bankruptcy law, dissolution, liquidation, or winding up of Operator;

(iii) a receiver is appointed for a substantial part of Operator’s assets; or

(iv) Operator dissolves, liquidates, is wound up, or otherwise terminates its existence.

(b) Subject to clause 4.11, Operator may be removed by the decision of the Non-Operators if Operator has committed a material breach of this Agreement and has either failed to commence to cure that breach within thirty (30) Days of receipt of a notice from Non-Operators detailing the alleged breach or failed to diligently pursue the cure to completion. Any decision of Non-Operators to give notice of breach to Operator or to remove Operator under this clause 4.10(b) shall be made by an affirmative vote of at least sixty-six and two-thirds percent (66 2/3%) of the Participating Interests held by the Non-Operators. However, if Operator disputes such alleged commission of or failure to cure a material breach and dispute resolution proceedings are initiated pursuant to clause 18.2 in relation to such breach, then Operator shall remain appointed and no successor Operator may be appointed pending the conclusion or abandonment of such proceedings, subject to the terms of clause 8.3 with respect to Operator’s breach of its payment obligations.

(c) If Operator together with any Affiliates of Operator is or becomes the holder of a Participating Interest of less than twenty percent (20%), then Operator shall be required to promptly notify the other Parties. The Operating Committee shall then vote within thirty (30) Days of such notification on whether or not a successor Operator should be named pursuant to clause 4.11.

(d) If there is a Change in Control of Operator (other than a transfer of Control to an Affiliate of Operator), Operator shall promptly notify the other Parties. The Parties shall vote within fourteen (14) Days of such notification on whether or not Operator should be removed and a successor Operator should be named pursuant to clause 4.11. An affirmative vote of Non-Operators holding a combined Participating Interest of at least fifty one percent (51%) of the Participating Interest held by all of the Non-Operators shall be required to remove Operator pursuant to this clause.

(e) Subject to clause 4.11, Operator may be removed at any time without cause by the affirmative vote of two (2) or more of the total number of Non-Operators (excluding Affiliates of the Operator), holding at least eighty five percent (85%) of the combined Participating Interest of such Non-Operators, provided that the Non-Operators hold a combined Participating Interest of at least fifty one percent (51%) of the Participating Interest held by all of the Parties.

(f) Subject to clause 4.11, Operator may be removed by the decision of the Non-Operators,

as set out below, if:

(i) Operator has admitted allegations made by a government authority concerning operations and/or activities under this Agreement that Operator or its Affiliates or their directors, officers, employees or personnel have violated Anti-Bribery Laws and Obligations applicable to Operator;

(ii) It has been finally adjudicated that Operator or its Affiliates or their directors, officers, employees or personnel have violated Anti-Bribery Laws and Obligations applicable to Operator concerning operations and/or activities under this Agreement; or

(iii) Operator has been finally determined in arbitration to have materially breached its warranty and/or covenant set out in clause 19.1, based on Operator’s settlement of claims (without admission of allegations) made by a government authority concerning operations and/or activities under this Agreement that Operator or its Affiliates or their directors, officers, employees or personnel have violated Anti-Bribery Laws and Obligations applicable to Operator; and

the Non-Operators determine such admission, adjudication or breach was a material breach of this Agreement. Any decision of Non-Operators to give notice of breach to Operator or to remove Operator under this clause 4.10(f) shall be made by an affirmative vote of at least sixty-six and two-thirds percent (66 2/3%) of the Participating Interests held by the Non-Operators (excluding any Affiliates of the Non-Operators). However, if Operator disputes such alleged commission of or failure to cure a material breach and Dispute resolution proceedings are initiated under clause 18.2 concerning such breach, then Operator shall remain appointed and no successor Operator may be appointed pending the conclusion or abandonment of such proceedings, subject to the terms of clause 8.3 with respect to Operator’s breach of its payment obligations.

4.11 Appointment of successor

When a change of Operator occurs pursuant to clause 4.9 or clause 4.10:

(a) The Operating Committee shall meet as soon as possible to appoint a successor Operator pursuant to the voting procedure of clause 5.10. No Party may be appointed successor Operator against its will.

(b) If Operator is removed, other than in the case of clause 4.10(c), neither Operator nor any Affiliate of Operator shall have the right to be considered as a candidate for the successor Operator.

(c) The resigning or removed Operator shall, subject to its duty to use reasonable efforts to mitigate the costs related to its resignation or removal, be compensated out of the Joint Account for its reasonable costs and expenses directly related to its resignation or removal, except in the case of clause 4.10(b).

(d) The resigning or removed Operator and the successor Operator shall arrange for the taking of an inventory of all Joint Property and Hydrocarbons, and an audit of the books and records of the removed Operator. Such inventory and audit shall be completed, if possible, no later than the effective date of the change of Operator and shall be subject to the approval of the Operating Committee. The liabilities and expenses of such

inventory and audit shall be charged to the Joint Account.

(e) The resignation or removal of Operator and its replacement by the successor Operator shall not become effective prior to receipt of any necessary Government approvals.

(f) Upon the effective date of the resignation or removal, the successor Operator shall succeed to all duties, rights and authority prescribed for Operator. The former Operator shall transfer to the successor Operator custody of all Joint Property, books of account, records and other documents maintained by Operator pertaining to the Contract Area and to Joint Operations and shall endeavor to transfer rights, warranties, indemnities and duties under contracts and licences entered into for Joint Operations. Upon delivery of the above-described property and data, the former Operator shall be released and discharged from all obligations and liabilities as Operator accruing after such date.

4.12 Assignment of the Operatorship

The Party designated as “Operator” hereunder may only assign (or otherwise transfer) its rights and/or obligations as Operator as part of a Transfer that includes all or part of its Participating Interest, subject to clause 12.2(b).

4.13 Health, safety and environment (HSE)

(a) With the goal of achieving safe and reliable operations in compliance with applicable HSE Laws / Regulations (including avoiding significant and unintended impact on the safety or health of people, on property, or on the environment), Operator shall in the conduct of Joint Operations:

(i) establish and implement an HSE plan in a manner consistent with standards and procedures generally followed in the international petroleum industry under similar circumstances;

(ii) design and operate Joint Property consistent with the HSE plan; and

(iii) conform with locally applicable HSE Laws / Regulations and other HSE-related statutory requirements that may apply.

(b) In the conduct of Joint Operations, Operator shall establish and implement a program for regular HSE assessments. The purpose of such assessments is to periodically review HSE systems and procedures, including actual practice and performance, to verify that the HSE plan is being implemented in accordance with the policies and standards of the HSE plan. Operator shall, at a minimum, conduct such an assessment before entering into significant new Joint Operations and before undertaking any major changes to existing Joint Operations. Upon reasonable notice given to Operator, Non-Operators shall have the right to participate in such HSE assessments, in a manner that minimizes interference with the assessments and the day-to-day operations of Operator.

(c) Operator shall require its contractors, consultants and agents undertaking activities for the Joint Account to manage HSE risks in a manner consistent with the requirements of this clause 4.13.

(d) Operator shall establish and enforce rules consistent with those generally followed in the international petroleum industry under similar circumstances that, at a

minimum, prohibit within the Contract Area the following:

(i) possession, use, distribution or sale of firearms, explosives, or other weapons without the prior written approval of senior management of Operator;

(ii) possession, use, distribution or sale of alcoholic beverages without the prior written approval of senior management of Operator; and

(iii) possession, use, distribution or sale of illicit or non-prescribed controlled substances and the misuse of prescribed drugs.

(e) Without prejudice to a Party’s rights under clause 4.2(b)(vii), with reasonable advance notice and not more than once per Calendar Year, Operator shall permit each Non-Operator to have at all reasonable times during normal business hours (and at its own risk and expense) the right to conduct its own HSE audit, which HSE audit shall be conducted in a way to minimize interference with the day-to-day operations of Operator. When there are two or more Non-Operators desiring to conduct an HSE audit, such Non-Operators shall conduct a joint HSE Audit.

5 Operating Committee

5.1 Establishment of Operating Committee

To provide for the overall supervision and direction of Joint Operations and to coordinate the Parties’ activities with respect to the Management Committee, there is established an Operating Committee composed of representatives of each Party holding a Participating Interest. Each Party shall appoint one (1) representative and one (1) alternate representative to serve on the Operating Committee. Each Party shall as soon as possible after the Effective Date give notice in writing to the other Parties of the name and address of its representative and alternate representative to serve on the Operating Committee. Each Party shall have the right to change its representative and alternate at any time by giving notice of such change to the other Parties.

5.2 Representation on PSC Management Committee

(a) The Parties agree that of the three (3) Management Committee representatives to be appointed by the Parties pursuant to Article 9.2.1 of the Second Amendment (i) if there are less than three parties to this Agreement, two (2) representatives shall be selected by Operator and the remaining representative shall be selected by the Non-Operator and (ii) in all other cases, one (1) representative shall be selected by Operator and the other two (2) representatives shall be selected by the Non-Operators.

(b) The representatives appointed pursuant to this clause 5.2 shall, after attending Management Committee meetings, promptly report back to the Operating Committee.

5.3 Powers and duties of Operating Committee

The Operating Committee shall have power and duty to authorize and supervise Joint Operations that are necessary or desirable to fulfill the PSC and properly explore and exploit the Contract Area in accordance with this Agreement and Laws / Regulations and generally accepted practices of the international petroleum industry under similar circumstances; provided that Operating Committee may not compel any Party to exercise,

make, or take, or prevent any Party from exercising, making, or taking, any right, decision, or action concerning any matter or proposal under this Agreement, which right, decision or action is reserved or delegated to a Party or the Parties. The Operating Committee shall meet at least three (3) times per year at regularly spaced intervals, if a regular meeting is not so scheduled, within thirty (30) Days prior to each Management Committee meeting or as otherwise agreed by the Parties.

5.4 Authority to vote

The representative of a Party, or in his absence his alternate representative, shall be authorized to represent and bind such Party with respect to any matter which is within the powers of the Operating Committee and is properly brought before the Operating Committee. Each such representative shall have a vote equal to the Participating Interest of the Party such person represents. Each alternate representative shall be entitled to attend all Operating Committee meetings but shall have no vote at such meetings except in the absence of the representative for whom he is the alternate. In addition to the representative and alternate representative, each Party may also bring to any Operating Committee meetings such technical and other advisors as it may deem appropriate.

5.5 Subcommittees

The Operating Committee shall establish a technical subcommittee and may establish such other subcommittees as the Operating Committee may deem appropriate. The functions of such subcommittees shall be in an advisory capacity only unless otherwise determined unanimously by the Parties. Each Party shall have the right to appoint a representative to each subcommittee. The technical subcommittee shall meet at least twice a year at regularly spaced intervals, or as otherwise agreed by the Parties.

5.6 Notice of meeting

(a) Operator may call a meeting of the Operating Committee by giving notice to the Parties at least ten (10) Days in advance of such meeting.

(b) Any Non-Operator may request a meeting of the Operating Committee by giving notice to all the other Parties. Upon receiving such request, Operator shall call such meeting for a date not less than ten (10) Days nor more than twenty (20) Days after receipt of the request.

5.7 Contents of meeting notice

(a) Each notice of a meeting of the Operating Committee as provided by Operator shall contain:

(i) the date, time and location of the meeting;

(ii) an agenda of the matters and proposals to be considered and/or voted upon; and

(iii) copies of all proposals to be considered at the meeting (including all appropriate supporting information not previously distributed to the Parties).

(b) A Party, by notice to the other Parties given not less than three (3) Business Days

prior to a meeting, may add additional matters to the agenda for a meeting.

(c) On the request of a Party, and with the unanimous consent of all Parties, the Operating Committee may consider at a meeting a proposal not contained in such meeting agenda.

5.8 Location of meetings

All meetings of the Operating Committee shall be held in Houston, Texas or elsewhere as the Operating Committee may decide. Meetings may be held by teleconference or using some other form of technology, in which case any representative of a Party being linked to the meeting by any technology will be deemed to be present at the place of the meeting.

5.9 Operator’s duties for meetings

(a) With respect to meetings of the Operating Committee and any subcommittee, Operator’s duties shall include:

(i) timely preparation and distribution of the agenda;

(ii) organization and conduct of the meeting; and

(iii) preparation of a written record or minutes of each meeting, in such detail as to provide an adequate record of the discussion of each item of business considered at the meeting.

(b) Operator shall have the right to appoint the chairman of the Operating Committee and all subcommittees.

5.10 Voting procedure

Except as otherwise expressly provided in this Agreement, decisions, approvals, and other actions of the Operating Committee on all proposals (other than proposals on matters reserved to the Parties) coming before it shall be decided as follows:

(a) All decisions, approvals, and other actions for which column (A) below is checked shall require the affirmative vote of two or more of Voting Groups that hold sixty five percent (65%) or more of the Participating Interests.

(b) All decisions, approvals, and other actions for which column (B) below is checked shall require the affirmative vote of two or more Voting Groups that hold eighty five percent (85%) or more of the Participating Interest.

(c) All decisions, approvals, and other actions for which column (C) below is checked shall require the affirmative vote unanimous votes of the Parties.

(d) A Voting Group is comprised of all Parties that are Affiliates of one another. If a Party has no Affiliate that is also a Party, such Party will be the only member of its Voting Group.

#		Proposal		(A)		(B)		(C)
(1)		Minimum Work Programs.		X

(2)	HSE Plan.	X
(3)	Appraisal Plan(s).	X
(4)	Development Plan(s).	X
(5)	Decommissioning Plan(s).		X
(6)	Determination that a Discovery is a Commercial Discovery, and if applicable declaration of commerciality under the PSC.	X
(7)	Exploration and Appraisal Work Programs and Budgets.	X
(8)	Development Work Programs and Budgets.	X
(9)	Production Work Programs and Budgets and Production Forecasts.	X
(10)	Decommissioning Work Program and Budget.		X
(11)	Acquisition of G & G Data.	X
(12)	Drilling, Deepening, Testing, Sidetracking, Plugging Back, Recompleting, or Reworking Exploration Wells.	X
(13)	Drilling, Deepening, Testing, Sidetracking, Plugging Back, Recompleting, or Reworking Appraisal Wells.	X
(14)	Drilling, Deepening, Testing, Sidetracking, Plugging Back, Recompleting, or Reworking Development Wells.	X
(15)	Completion of a well.		X
(16)	Plugging and abandoning a well.	X
(17)	Construction and/or installation of processing, treatment, compression, gathering, storage, handling, transportation, and other facilities within the scope of this Agreement.	X
(18)	Contract awards (if approval is required).	X
(19)	AFE (if applicable) and Supplemental AFEs	X
(20)	Relinquishment of all or part of the Contract Area and determination of size and shape consistent with the PSC.		X
(21)	Voluntary surrender of all or part of the Contract Area or any Exploitation Area and determination of size and shape consistent with the PSC.		X
(22)	Unitization under the PSC and/or Law with an adjoining contract area.		X
(23)	Establishment of an interest bearing account for Joint Account monies.	X
(24)	Acquisition and development of Venture Information under terms other than as specified in clause 15.	X

(25)	Entering into or extending or renewing the term of any Exploration or Exploitation Period or any phase of the PSC.		X
(26)	Amendment to the PSC of this Agreement		X
(27)	All other proposals within the Operating Committee’s authority.	X

5.11 Record of votes

The chairman of the Operating Committee shall appoint a secretary who shall make a record of each proposal voted on and the results of such voting at each Operating Committee meeting. Each representative shall sign and be provided a copy of such record at the end of such meeting, and it shall be considered the final record of the decisions of the Operating Committee.

5.12 Minutes

The secretary shall provide each Party with a copy of the minutes of the Operating Committee meeting within fifteen (15) Business Days after the end of the meeting. Each Party shall have fifteen (15) Days after receipt of such minutes to give notice to the secretary of its objections and corrections to the minutes. A failure to give notice specifying objections and corrections to such minutes within said fifteen (15) Day period shall be deemed to be approval of such minutes. In any event, the votes recorded under clause 5.11 shall take precedence over the minutes described above.

5.13 Voting by notice

(a) In lieu of a meeting, any Party may submit any proposal to the Operating Committee for a vote by notice. The proposing Party or Parties shall notify Operator who shall give each Party’s representative notice describing the proposal so submitted and whether Operator considers such operational matter to require urgent determination. Operator shall include with such notice adequate documentation in connection with such proposal to enable the Parties to make a decision. Each Party shall communicate its vote by notice to Operator and the other Parties within one of the following appropriate time periods after receipt of Operator’s notice:

(i) twenty-four (24) hours in the case of operations which involve the use of a drilling rig (or similar specialized vessels, offshore equipment, infrastructure and/or services) that is standing by in the Contract Area and such other operational matters reasonably considered by Operator to require by their nature urgent determination (such operations and matters being referred to as Urgent Operational Matters); and

(ii) seven (7) Days in the case of all other proposals.

(b) Except in the case of clause 5.13(a)(i), any Party may, by notice delivered to all Parties within five (5) Days of receipt of Operator’s notice, request that the proposal be decided at a meeting rather than by notice. In such an event, that proposal shall be decided at a meeting duly called for that purpose.

(c) Except as provided in clause 7.2, clause 10 or elsewhere in this Agreement, any Party failing to communicate its vote in a timely manner shall be deemed to have voted

against such proposal.

(d) If a meeting is not requested, then at the expiration of the appropriate time period, Operator shall give each Party a confirmation notice stating the tabulation and results of the vote.

5.14 Effect of vote

All decisions taken by the Operating Committee pursuant to this clause 5 shall be conclusive and binding on all the Parties, except in the following cases.

(a) If pursuant to this clause 5, a Joint Operation has been properly proposed to the Operating Committee and the Operating Committee has not approved such proposal in a timely manner, then any Party that voted in favor of such proposal shall have the right for the appropriate period specified below to propose, in accordance with clause 7, an Exclusive Operation involving operations essentially the same as those proposed for such Joint Operation.

(i) For proposals related to Urgent Operational Matters, such right shall be exercisable for twenty-four (24) hours after the time specified in clause 5.13(a)(i) has expired or after receipt of Operator’s notice given to the Parties pursuant to clause 5.14(d), as applicable.

(ii) For proposals to develop a Discovery, such right shall be exercisable for ten (10) Days after the date the Operating Committee was required to consider such proposal pursuant to the terms hereof.

(iii) For all other proposals, such right shall be exercisable for five (5) Days after the date the Operating Committee was required to consider such proposal pursuant to pursuant to the terms hereof.

(b) If a Party voted against any proposal which was approved by the Operating Committee and which could be conducted as an Exclusive Operation pursuant to clause 7, then such Party shall have the right not to participate in the operation contemplated by such approval. Any such Party wishing to exercise its right of non-consent must give notice of non-consent to all other Parties within five (5) Days (or twenty-four (24) hours for Urgent Operational Matters) following Operating Committee approval of such proposal. If a Party exercises its right of non-consent, the Parties who were not entitled to give or did not give notice of non-consent shall be Consenting Parties as to the operation contemplated by the Operating Committee approval, and shall conduct such operation as an Exclusive Operation under clause 7, provided, however, that any such Party who was not entitled to give or did not give notice of non-consent may, by notice provided to the other Parties within five (5) Days (or twenty four (24) hours for Urgent Operational Matters) following the notice of non-consent given by any non-consenting Party, require that the Operating Committee vote again on the proposal in question. Only the Parties which were not entitled to or have not exercised their right of non-consent with respect to the contemplated operation shall participate in such second vote of the Operating Committee, with voting rights proportional to their respective Participating Interest. If the Operating Committee approves again the contemplated operation, any Party which voted against the contemplated operation in such second vote may elect to be a Non-Consenting Party with respect to such operation, by notice of non-consent provided to all other Parties within five (5) Days (or twenty four (24) hours for Urgent Operational Matters) following the

Operating Committee’s second approval of such contemplated operation.

(c) If the Consenting Parties to an Exclusive Operation under clause 5.14(a) or clause 5.14(b) concur, then the Operating Committee may, at any time, pursuant to this clause 5, reconsider and approve, decide or take action on any proposal that the Operating Committee declined to approve earlier, or modify or revoke an earlier approval, decision or action.

(d) Once a Joint Operation for the drilling, Deepening, Testing, Sidetracking, Plugging Back, Completing, Recompleting, Reworking, or plugging of a well has been approved and commenced, such operation shall not be discontinued without the consent of the Operating Committee; provided, however, that such operation may be discontinued if:

(i) an impenetrable substance or other condition in the hole is encountered which in the reasonable judgment of Operator causes the continuation of such operation to be impractical; or

(ii) other circumstances occur which in the reasonable judgment of Operator cause the continuation of such operation to be unwarranted and the Operating Committee, within the period required under clause 5.13(a)(i) after receipt of Operator’s notice, approves discontinuing such operation.

On the occurrence of either of the above, Operator shall promptly notify the Parties that such operation is being discontinued pursuant to the foregoing, and any Party shall have the right to propose in accordance with clause 7 an Exclusive Operation to continue such operation.

(e) Any vote made under the PSC shall be made in accordance with, and give full effect, to the decisions made by the Operating Committee under this clause 5 or the decision of a Party to conduct an Exclusive Operation under this clause 5 or clause 7.

(f) A Party to this Agreement may not exercise their rights under, or cast their vote in respect of the Management Committee in a manner inconsistent with a decision of the Operating Committee.

6 Work Programs and Budgets

6.1 Contents of Work Programs and Budgets

Following the Exploration Period, each annual Work Program and Budget shall with respect to the applicable Calendar Year contain, inter alia:

(a) An itemized list of the operations and activities to be conducted, described in sufficient detail to afford ready identification of the nature, scope, location, timing, and duration of each such operation and activity, including:

(i) designating whether such line item is intended to satisfy the Minimum Work Obligations of the PSC, the commitments of a previously approved appraisal Work Program and Budget, and/or the commitments of a previously approved Development Plan; and

(ii) specifying whether such line item is firm or contingent and the conditions

under which the Operating Committee may decide to make a contingent line item firm;

(iii) An estimate of the costs corresponding to each such line item enumerated in sufficient detail to be readily tracked and charged under the Accounting Procedure and consistent with the PSC;

(iv) An estimate of funds to be expended by Calendar Quarter;

(v) Information with respect to Operator’s estimated manpower requirements and costs and Operator’s allocation procedures under the Accounting Procedure;

(vi) Reasonable and necessary supporting information; and

(vii) Any additional information and detail as the Operating Committee may deem suitable.

6.2 Initial Work Program and Budget

The Parties agree to implement the Work Program and Budget for the period from the Effective Date until the end of the current period under the PSC attached as Exhibit C to this Agreement (the Initial Work Program and Budget). Any subsequent Work Program and Budget prepared during the Exploration Period shall be in a format substantially similar to the Initial Work Program and Budget; and prepared, approved and revised, as applicable, in accordance with, and pursuant to, the other applicable provisions of this Agreement.

6.3 Subsequent Work Programs and Budgets

(a) On or before the Day that is ninety (90) Days prior to the Day that Operator or the Parties are required to submit a Work Program and Budget to the Management Committee or the Government, as applicable, pursuant to the terms of the PSC, Operator shall deliver to the Parties a proposed Work Program and Budget detailing the Joint Operations to be performed for the applicable period. Within thirty (30) Days of such delivery, the Operating Committee shall meet to consider and to endeavor to agree on such Work Program and Budget.

(b) Once the Parties have agreed on a Work Program and Budget, Operator shall deliver the agreed Work Program and Budget to the Management Committee or the Government, as applicable, for approval in accordance with the terms of the PSC. The Parties agree to vote in favor of any Work Program and Budget delivered to the Management Committee when the Management Committee considers the agreed Work Program and Budget.

(c) If the Management Committee or the Government, as applicable, fails to approve any Work Program and Budget delivered to the Management Committee or the Government, as applicable, in accordance with clause 6.3(b), the Parties shall endeavor to agree on a revised Work Program and Budget in accordance with clause 6.3(a). If the Parties agree on a revised Work Program and Budget the Operator shall deliver that revised Work Program and Budget to the Management Committee or the Government, as applicable, for approval. The Parties agree to vote in favor of any revised Work Program and Budget delivered to the Management Committee or the Government, as applicable, when the Management

Committee or the Government, as applicable, considers any agreed revised Work Program and Budget.

6.4 Discovery

(a) If a Discovery is made, Operator shall deliver any notice of Discovery required under the PSC and shall as soon as possible submit to the Parties a report containing available details concerning the Discovery and Operator’s recommendation as to whether the Discovery merits appraisal.

(b) If the Operating Committee determines that the Discovery merits appraisal, Operator within one hundred (100) Days, or earlier if necessary to meet any applicable deadline under the PSC. shall deliver to the Parties a proposed Work Program and Budget for the appraisal of the Discovery. Within thirty (30) Days of such delivery, or earlier if necessary to meet any applicable deadline under the PSC, the Operating Committee shall meet to consider, modify and then either approve or reject the appraisal Work Program and Budget.

(c) If the appraisal Work Program and Budget is approved by the Operating Committee, Operator shall take such steps as may be required under the PSC to secure approval of the appraisal Work Program and Budget by the Government. In the event the Government requires changes in the appraisal Work Program and Budget, the matter shall be resubmitted to the Operating Committee for further consideration.

6.5 Minimum Work Obligations

(a) Each Work Program and Budget agreed pursuant to this clause 6 shall include at least that part of the Minimum Work Obligations required to be carried out during the applicable period in question under the terms of the PSC. If within the time periods prescribed in this clause 6 the Operating Committee is unable to agree on such a Work Program and Budget, then the proposal capable of satisfying the Minimum Work Obligations for the applicable period in question that receives the largest Participating Interest vote (even if less than the applicable percentage under clause 5.10) shall be deemed adopted as part of the annual Work Program and Budget.

(b) If competing proposals receive equal votes, then Operator shall choose between those competing proposals.

(c) Any portion of a Work Program and Budget adopted pursuant to clause 6.5(a) instead of clause 5.10 shall contain only such operations for the Joint Account as are necessary to maintain the PSC in full force and effect, including such operations as are necessary to fulfill the Minimum Work Obligations required for the relevant period.

6.6 Revision to Work Programs and Budgets

(a) Any approved Work Program and Budget may be revised by the Operating Committee from time to time. To the extent such revisions are approved by the Operating Committee, the Work Program and Budget shall be amended accordingly. Operator shall prepare and submit a corresponding work program and budget amendment to the Management Committee or the Government, as applicable, if required by the PSC.

(b) Subject to clause 6.13, approval of any such Work Program and Budget which

includes:

(i) an Exploration Well, whether by drilling, Deepening or Sidetracking, shall include approval for only expenditures necessary for drilling, Deepening or Sidetracking of such Exploration Well. When an Exploration Well has reached its authorized depth, all logs, cores and other approved Tests have been conducted and the results furnished to the Parties, Operator shall submit to the applicable Parties in accordance with clause 5.13(a)(i) an election to participate in an attempt to Complete such Exploration Well. Operator shall include in such submission Operator’s recommendation on such Completion attempt and an AFE for such Completion costs.

(ii) an Appraisal Well, whether by drilling, Deepening or Sidetracking, shall include approval for only expenditures necessary for drilling, Deepening or Sidetracking of such Appraisal Well. When an Appraisal Well has reached its authorized depth, all logs, cores and other approved Tests have been conducted and the results furnished to the Parties, Operator shall submit to the applicable Parties in accordance with clause 5.13(a)(i) an election to participate in an attempt to Complete such Appraisal Well. Operator shall include in such submission Operator’s recommendation on such Completion attempt and an AFE for such Completion costs.

(c) Any Party desiring to propose a Completion attempt, or an alternative Completion attempt, must do so within the time period provided in clause 5.13(a)(i) by notifying all other Parties. Any such proposal shall include an AFE for such Completion costs.

(d) Notwithstanding anything to the contrary herein, no Party with a Participating Interest that is less than or equal to ten percent (10%) may make an election not to participate in a Completion attempt in any Exploration Well or Appraisal Well if any other Party elects to participate in such Completion attempt, nor may a Party with a Participating Interest that is less than or equal to ten percent (10%) make an election to participate in a Completion attempt in any Exploration Well or Appraisal Well if no other Party elects to do so.

6.7 Development

(a) If the Operating Committee determines that a Discovery may be a Commercial Discovery, Operator shall, as soon as practicable, deliver to the Parties a Development Plan together with the first annual Work Program and Budget (or a multi-year Work Program and Budget pursuant to clause 6.10) and provisional Work Programs and Budgets for the remainder of the development of the Discovery, which shall contain, inter alia:

(i) details of the proposed work to be undertaken, personnel required and expenditures to be incurred, including the timing of same, on a Calendar Year basis;

(ii) an estimated date for the commencement of production;

(iii) a delineation of the proposed Exploitation Area

(iv) a production forecast of estimated production for each type of Hydrocarbon to be produced by Calendar Year for the estimated productive life of the Commercial Discovery;

(v) a description of all material facilities to be constructed as Joint Property;

(vi) an estimated Decommissioning Work Program and Budget; and

(vii) any other information requested by the Operating Committee.

(b) After receipt of the Development Plan and prior to any applicable deadline under the PSC, the Operating Committee shall meet to consider, modify and then either approve or reject the Development Plan and the first annual Work Program and Budget for the development of a Discovery, as submitted by Operator. If the Operating Committee determines that the Discovery is a Commercial Discovery and approves the corresponding Development Plan, Operator shall, as soon as possible, deliver any notice of Commercial Discovery required under the PSC and take such other steps as may be required under the PSC to secure approval of the Development Plan by the Management Committee or the Government, as applicable. In the event the Management Committee or the Government requires changes in the Development Plan and/or such Work Program and Budget, the matter shall be resubmitted to the Operating Committee for further consideration.

(c) If the Development Plan is approved, such work shall be incorporated into and form part of annual Work Programs and Budgets, and Operator shall, on or before the first (1st) Day of October of each Calendar Year submit a Work Program and Budget for the Exploitation Area, for the following Calendar Year. Subject to clause 6.10, within thirty (30) Days after such submittal, the Operating Committee shall endeavor to agree to such Work Program and Budget, including any necessary or appropriate revisions to the Work Program and Budget for the approved Development Plan.

6.8 Production

On or before the Day that is ninety (90) Days prior to the Day that Operator or the Parties are required to submit to the Management Committee or the Government a proposed production Work Program and Budget detailing the Joint Operations to be performed in the Exploitation Area and the projected production schedule for the next applicable period, Operator shall deliver to the Parties a proposed draft of such Work Program and Budget. Within thirty (30) Days of such delivery, the Operating Committee shall agree upon a production Work Program and Budget, failing which the provisions of clause 6.5 shall be applied mutatis mutandis.

6.9 Itemization of expenditures

(a) During the preparation of the proposed Work Programs and Budgets and Development Plans contemplated in this clause 6, Operator shall consult with the Operating Committee or the appropriate subcommittees regarding the contents of such Work Programs and Budgets and Development Plans.

(b) Each Work Program and Budget (following the Exploration Period) and Development Plan submitted by Operator shall contain an itemized estimate of the costs of Joint Operations and all other expenditures to be made for the Joint Account during the Calendar Year in question and shall, inter alia:

(i) identify each work category in sufficient detail to afford the ready identification of the nature, scope and duration of the activity in question;

(ii) include such reasonable information regarding Operator’s allocation procedures and estimated manpower costs as the Operating Committee may determine;

(iii) comply with the requirements of the PSC;

(c) The Work Program and Budget shall designate the portion or portions of the Contract Area in which Joint Operations itemized in such Work Program and Budget are to be conducted and shall specify the kind and extent of such operations in such detail as the Operating Committee may deem suitable.

6.10 Multi-Year Work Program and Budget

(a) Any work that cannot be efficiently completed within a single Calendar Year may be proposed in a multi-year Work Program and Budget. Upon approval by the Operating Committee, such multi-year Work Program and Budget shall, subject only to revisions approved by the Operating Committee thereafter:

(i) remain in effect as between the Parties (and the associated cost estimate shall be a binding pro-rata obligation of each Party) through the completion of the work; and

(ii) be reflected in each annual Work Program and Budget.

(b) If the PSC requires that Work Programs and Budgets be submitted to the Management Committee or the Government for approval, such multi-year Work Program and Budget shall be submitted to the Management Committee or the Government either in a single request for a multi-year approval or as part of the annual approval process, according to the terms of the PSC.

6.11 Contract awards

Subject to the PSC, and except for services provided by Affiliates of Operator described in Section 2.8 of the Accounting Procedure, Operator shall award each contract for Joint Operations on the following basis (the amounts stated are in U.S. dollars):

Procedure A		Procedure B		Procedure C
0 to $1,000,000		$1,000,001 to $4,999,999		>$5,000,000

Procedure A

(a) Operator shall award the contract to the best qualified contractor as determined by quality and ability to perform the contract, competitive cost and commitment to health, safety, environment and community issues without the obligation to tender and without informing or seeking the approval of the Operating Committee except that before entering into contract with Affiliates of Operator exceeding two hundred thousand U.S. Dollars (US$200,000), Operator shall obtain the approval of the Operating Committee.

Procedure B

(b) Operator shall:

(i) seek bids from qualified contractors as determined by ability to perform the contract and competitive cost without seeking the approval of the Operating Committee;

(ii) provide the Parties with a list of the entities whom Operator proposes to invite to tender for the said contract;

(iii) complete the tendering process within a reasonable period of time and award the contract based on the tender results;

(iv) inform the Parties of the entities to whom the contract has been awarded provided that before awarding contracts to Affiliates of Operator or of any Non-Operator that exceed two hundred thousand U.S. Dollars (US$200,000), Operator shall obtain the approval of the Operating Committee;

(v) upon the request of a Party, provide such Party with a copy of the final version of the contract.

Procedure C

(i) provide the Parties with a list of the entities whom Operator proposes to invite to tender for the said contract;

(ii) add to such list any entity whom a Party reasonably requests to be added within fourteen (14) Days of receipt of such list;

(iii) prepare and dispatch the tender documents to the entities on the list as aforesaid and to Non-Operators;

(iv) after the expiration of the period allowed for tendering, consider and analyze the details of all bids received;

(v) prepare and circulate to the Parties a competitive bid analysis, stating Operator’s recommendation as to the entity to whom the contract should be awarded, the reasons therefor, and the technical, commercial and contractual terms to be agreed upon;

(vi) obtain the approval of the Operating Committee to the recommended bid; and

(vii) upon the request of a Party, provide such Party with a copy of the final version of the contract.

6.12 Authorization for expenditure (AFE) procedure

(a) Prior to incurring any commitment or expenditure for the Joint Account, which is estimated to be in excess of, in the case of any commitment or expenditure that is not undertaken in connection with a Development Plan, one million U.S. dollars (US$1,000,000), and in the case of any commitment or expenditure that is undertaken in connection with a Development Plan, three million U.S. dollars (US$3,000,000), in either case, in a Work Program and Budget, Operator shall send to each Non-Operator an AFE as described in clause 6.12(c). Notwithstanding anything to the contrary herein, Operator shall not be obliged

(prior to, upon or after incurring (or entering into) any commitment or expenditure that would otherwise be subject to the AFE procedure in this clause 6.12) to furnish an AFE to the Parties with respect to (i) any Minimum Work Obligations, (ii) any expenditures during the Exploration Period included in an approved Work Program and Budget or (iii) any workovers of wells or any general and administrative costs included in an approved Work Program and Budget.

(b) Before entering into any commitments or making any expenditures subject to the AFE procedure in this clause 6.12, Operator shall submit the corresponding AFE for approval by the Operating Committee. If the Operating Committee approves an AFE for a commitment or expenditure within the applicable time period under clause 5.13, Operator shall be authorized to enter into such commitment or incur such expenditure and conduct the corresponding Joint Operation under this Agreement. If the Operating Committee fails to approve an AFE for a commitment or expenditure within the applicable time period, the corresponding Joint Operation shall be deemed rejected. Operator shall promptly notify the Parties that the Joint Operation has been rejected, and, subject to clause 7, any Party may afterwards propose to conduct such operation or activity as an Exclusive Operation under clause 7. When a Joint Operation is rejected under this clause 6.12(b) or a commitment or expenditure is approved for differing amounts than those provided for in the applicable line items of the approved Work Program and Budget, the Work Program and Budget shall, subject to obtaining any Government consent required under the PSC, be deemed to be revised accordingly; provided that no revised Work Program and Budget may provide for appraisal operations that exceed the scope of, or conflict with, any previously approved Appraisal Plan, and/or provide for development operations that exceed the scope of, or conflict with, any previously approved Development Plan, unless such previously approved plans, programs and budgets are amended at or before the adoption of the revised Work Program and Budget.

(i) identify the operation by specific reference to the applicable line items in the Work Program and Budget;

(ii) describe the work in reasonable detail;

(iii) contain Operator’s best estimate of the total funds required to carry out such work;

(iv) outline the proposed work schedule;

(v) provide a timetable of expenditures, if known; and

(vi) be accompanied by other reasonable supporting information.

6.13 Over-commitments and over-expenditures of Work Programs and Budgets

(a) For commitments and expenditures on any line item of an approved Work Program and Budget, Operator shall be entitled to incur without further approval of the Operating Committee an over-commitment or over-expenditure for such line item up to ten percent (10%) of the authorized amount for such line item; provided that the cumulative total of all over-commitments and over-expenditures, (a) in the case of the Initial Work Program and Budget, shall not exceed ten percent (10%) of the

Initial Work Program and Budget and, (ii) in all other cases, shall not exceed for any Calendar Year five percent (5%) of the total annual Work Program and Budget in question.

(b) At such time as Operator reasonably anticipates the limits of clause 6.13(a) will be exceeded, Operator shall furnish to the Operating Committee Operator’s reasonably detailed estimate of the total commitments and expenditures required to carry out the Joint Operations corresponding to such line item, together with any supporting documentation. The Work Program and Budget shall be revised accordingly and the over-commitment or over-expenditures permitted in clause 6.13(a) shall be based on the revised Work Program and Budget. Operator shall promptly give notice of the amounts of over-commitments and over-expenditures when actually incurred.

(c) The restrictions contained in this clause 6 shall be without prejudice to Operator’s rights to make expenditures for Urgent Operational Matters, measures set out in clause 4.2(b)(xiii), and measures set out in clause 13.5 without the Operating Committee’s approval.

7 Operations by less than all parties

7.1 Limitation on applicability

(a) No operations may be conducted in furtherance of the PSC except as Joint Operations under clause 5 or as Exclusive Operations under this clause 7. No Exclusive Operation shall be conducted (other than the tie-in of Exclusive Operation facilities with existing production facilities pursuant to clause 7.10) which conflicts with a previously approved Joint Operation or with a previously approved Exclusive Operation.

(b) Operations which are required to fulfill the Minimum Work Obligations must be proposed and conducted as Joint Operations under clause 5, and may not be proposed or conducted as Exclusive Operations under this clause 7.

(c) Except for Exclusive Operations relating to Deepening, Testing, Completing, Sidetracking, Plugging Back, Recompletions or Reworking of a well originally drilled to fulfill the Minimum Work Obligations for the then current phase or period of the PSC, no Exclusive Operations may be proposed or conducted until the Minimum Work Obligations for the then current phase or period of the PSC are fulfilled.

(d) No Party may propose or conduct an Exclusive Operation under this clause 7 unless and until such Party has properly exercised its right to propose an Exclusive Operation pursuant to clause 5.14, or is entitled to conduct an Exclusive Operation pursuant to clause 10.

(e) The following operations may be proposed and conducted as Exclusive Operations, subject to the terms of this clause 7:

(i) drilling and/or Testing of Exploration Wells and Appraisal Wells;

(ii) Completion of Exploration Wells and Appraisal Wells not then Completed as productive of Hydrocarbons;

(iii) Deepening, Sidetracking, Plugging Back and/or Recompletion of Exploration Wells and Appraisal Wells;

(iv) development of a Commercial Discovery, other than the drilling of a development well into a developed Discovery; and

(v) acquisition of G & G Data.

No other type of operation may be proposed or conducted as an Exclusive Operation.

7.2 Procedure to propose Exclusive Operations

(a) Subject to clause 7.1, if any Party proposes to conduct an Exclusive Operation, such Party shall give notice of the proposed operation to all Parties, other than Non-Consenting Parties who have relinquished their rights to participate in such operation pursuant to clause 7.4(b) or clause 7.4(f) and have no option to reinstate such rights under clause 7.4(c). Such notice shall specify that such operation is proposed as an Exclusive Operation and include the work to be performed, the location, the objectives, and estimated cost of such operation.

(b) Any Party entitled to receive such notice shall have the right to participate in the proposed operation as follows:

(i) for proposals to Deepen, Test, Complete, Sidetrack, Plug Back, Recomplete or Rework related to Urgent Operational Matters, any such Party wishing to exercise such right must so notify the proposing Party and Operator within twenty-four (24) hours after receipt of the notice proposing the Exclusive Operation.

(ii) for proposals to develop a Discovery, any Party wishing to exercise such right must so notify Operator and the Party proposing to develop within ninety (90) Days after receipt of the notice proposing the Exclusive Operation.

(iii) for all other proposals, any such Party wishing to exercise such right must so notify the proposing Party and Operator within thirty (30) Days after receipt of the notice proposing the Exclusive Operation.

(c) Failure of a Party to whom a proposal notice is delivered to properly reply within the period specified above shall constitute an election by that Party not to participate in the proposed operation.

(d) If all Parties properly exercise their rights to participate, then the proposed operation shall be conducted as a Joint Operation. Operator shall commence such Joint Operation as promptly as practicable and conduct it with due diligence.

(e) If less than all Parties entitled to receive such proposal notice properly exercise their rights to participate, then:

(i) Immediately after the expiration of the applicable notice period set out in clause 7.2(b), Operator shall notify all Parties of the names of the Consenting Parties and the recommendation of the proposing Party as to whether the Consenting Parties should proceed with the Exclusive Operation.

(ii) Concurrently, Operator shall request the Consenting Parties to specify the Participating Interest each Consenting Party is willing to bear in the Exclusive Operation.

(f) Within twenty-four (24) hours after receipt of such notice each Consenting Party shall respond to Operator stating that it is willing to bear a Participating Interest in such Exclusive Operation equal to:

(i) only its Participating Interest as stated in clause 3.2(a);

(ii) a fraction, the numerator of which is such Consenting Party’s Participating Interest as stated in clause 3.2(a) and the denominator of which is the aggregate of the Participating Interests of the Consenting Parties as stated in clause 3.2(a); or

(iii) the Participating Interest as contemplated by clause 7.2(f)(ii) plus all or any part of the difference between one hundred percent (100%) and the total of the Participating Interests subscribed by the other Consenting Parties. Any portion of such difference claimed by more than one party shall be distributed to each claimant on a pro-rata basis.

(g) Any Consenting Party failing to advise Operator within the response period set out above shall be deemed to have elected to bear the Participating Interest set out in clause 7.2(f)(ii) as to the Exclusive Operation.

(h) If, within the response period set out above, the Consenting Parties subscribed less than one hundred percent (100%) of the Participating Interest in the Exclusive Operation, the Party proposing such Exclusive Operation shall be deemed to have withdrawn its proposal for the Exclusive Operation, unless within twenty-four (24) hours of the expiry of the response period set out in clause 7.2(f), the proposing Party notifies the other Consenting Parties that the proposing Party shall bear the unsubscribed Participating Interest.

(i) If one hundred percent (100%) subscription to the proposed Exclusive Operation is obtained, Operator shall promptly notify the Consenting Parties of their Participating Interest in the Exclusive Operation.

(j) As soon as any Exclusive Operation is fully subscribed pursuant to clause 7.2(i), Operator, subject to clause 7.12(f), shall commence such Exclusive Operation as promptly as practicable and conduct it with due diligence in accordance with this Agreement.

(k) If such Exclusive Operation has not been commenced within one hundred eighty (180) Days (excluding any extension specifically granted by all Parties or allowed by the force majeure provisions of clause 16) after the date of the notice given by Operator under clause 7.2(i), the right to conduct such Exclusive Operation shall terminate. If any Party still desires to conduct such Exclusive Operation, notice proposing such operation must be resubmitted to the Parties in accordance with clause 5, as if no proposal to conduct an Exclusive Operation had been previously made.

7.3 Responsibility for Exclusive Operations

(a) The Consenting Parties shall bear in accordance with the Participating Interests

agreed under clause 7.2 the entire cost and liability of conducting an Exclusive Operation and shall indemnify the Non-Consenting Parties from any and all losses, costs and liabilities incurred incident to such Exclusive Operation (including Consequential Loss and Environmental Loss) and shall keep the Contract Area free and clear of all Encumbrances of every kind created by or arising from such Exclusive Operation.

(b) Notwithstanding clause 7.3(a), each Party shall continue to bear its Participating Interest share of the cost and liability incident to the operations in which it participated, including plugging and abandoning and restoring the surface location, but only to the extent those costs were not increased by the Exclusive Operation.

7.4 Consequences of Exclusive Operations

(a) With regards to any Exclusive Operation, for so long as a Non-Consenting Party has the option under clause 7.4(c) to reinstate the rights it relinquished under clause 7.4(b), such Non-Consenting Party shall be entitled to have access concurrently with the Consenting Parties to all data and other information relating to such Exclusive Operation, other than data obtained in an Exclusive Operation for the purposes of acquiring G&G Data. If a Non-Consenting Party desires to receive and acquire the right to use such G&G Data, then such Non-Consenting Party shall have the right to do so by paying to the Consenting Parties its Participating Interest share as set out in clause 3.2(a) of the costs incurred in obtaining such G&G Data plus an additional amount equal to one hundred percent (100%) of such Non-Consenting Party’s Participating Interest share of the costs incurred in obtaining such G&G Data.

(b) Subject to clause 7.4(c), clause 7.6(e) and clause 7.8, each Non-Consenting Party shall be deemed to have relinquished to the Consenting Parties, and the Consenting Parties shall be deemed to own, in proportion to their respective Participating Interests in any Exclusive Operation:

(i) all of each such Non-Consenting Party’s right to participate in further operations in the well or Deepened or Sidetracked portion of a well in which the Exclusive Operation was conducted and on any Discovery made or appraised in the course of such Exclusive Operation; and

(ii) all of each such Non-Consenting Party’s rights pursuant to the PSC to take and dispose of Hydrocarbons produced and saved:

(A) from the well or Deepened or Sidetracked portion of a well in which such Exclusive Operation was conducted; and

(B) from any wells drilled to appraise or develop a Discovery made or appraised in the course of such Exclusive Operation.

(c) A Non-Consenting Party shall have only the following options to reinstate the rights it relinquished pursuant to clause 7.4(b):

(i) If the Consenting Parties decide to appraise a Discovery made in the course of an Exclusive Operation, the Consenting Parties shall submit to each Non-Consenting Party the approved appraisal program. For forty-five (45) Days (or twenty-four (24) hours for Urgent Operational Matters) from receipt of such appraisal program, each Non-Consenting Party shall have the option to

reinstate the rights it relinquished pursuant to clause 7.4(b) and to participate in such appraisal program. The Non-Consenting Party may exercise such option by notifying Operator within the period specified above that such Non-Consenting Party agrees to bear its Participating Interest share of the expense and liability of such appraisal program, and to pay such amounts as set out in clauses 7.5(a) and 7.5(b).

(ii) If the Consenting Parties decide to develop a Discovery made or appraised in the course of an Exclusive Operation, the Consenting Parties shall submit to the Non-Consenting Parties a Development Plan substantially in the form intended to be submitted to the Management Committee or the Government under the PSC. For ninety (90) Days from receipt of such Development Plan or such lesser period of time prescribed by the PSC, each Non-Consenting Party shall have the option to reinstate the rights it relinquished pursuant to clause 7.4(b) and to participate in such Development Plan. The Non-Consenting Party may exercise such option by notifying Operator within the period specified above that such Non-Consenting Party agrees to bear its Participating Interest share of the liability and expense of such Development Plan and such future operating and producing costs, and to pay the amounts as set out in clauses 7.5(a) and 7.5(b).

(iii) If the Consenting Parties decide to Deepen, Complete, Sidetrack, Plug Back or Recomplete an Exclusive Well and such further operation was not included in the original proposal for such Exclusive Well, the Consenting Parties shall submit to the Non-Consenting Parties the approved AFE for such further operation. For thirty (30) Days (or twenty-four (24) hours for Urgent Operational Matters) from receipt of such AFE, each Non-Consenting Party shall have the option to reinstate the rights it relinquished pursuant to clause 7.4(b) and to participate in such operation. The Non-Consenting Party may exercise such option by notifying Operator within the period specified above that such Non-Consenting Party agrees to bear its Participating Interest share of the liability and expense of such further operation, and to pay the amounts as set out in clauses 7.5(a) and 7.5(b).

A Non-Consenting Party shall not be entitled to reinstate its rights in any other type of operation.

(d) If a Non-Consenting Party does not properly and in a timely manner exercise its option under clause 7.4(c), including paying all amounts due in accordance with clauses 7.5(a) and 7.5(b), such Non-Consenting Party shall have forfeited the options as set out in clause 7.4(c) and the right to participate in the proposed program, unless such program, plan or operation is materially modified or expanded (in which case a new notice and option shall be given to such Non-Consenting Party under clause 7.4(c)).

(e) A Non-Consenting Party exercising its option under clause 7.4(c) shall notify the other Parties that it agrees to bear its share of the liability and expense of such further operation and to reimburse the amounts set out in clauses 7.5(a) and 7.5(b) that such Non-Consenting Party had not previously paid. Such Non-Consenting Party shall in no way be deemed to be entitled to any amounts paid pursuant to clauses 7.5(a) and 7.5(b) incident to such Exclusive Operations. The Participating Interest of such Non-Consenting Party in such Exclusive Operation shall be its Participating Interest set out in clause 3.2(a). The Consenting Parties shall contribute to the Participating Interest of the Non-Consenting Party in proportion to the excess Participating Interest that each received under clause 7.2(e). If all

Parties participate in the proposed operation, then such operation shall be conducted as a Joint Operation pursuant to clause 5.

(f) If after the expiry of the period in which a Non-Consenting Party may exercise its option to participate in a Development Plan the Consenting Parties desire to proceed, Operator shall give notice to the Management Committee or the Government, as applicable, under the appropriate provision of the PSC requesting a meeting to advise the Management Committee or the Government, as applicable, that the Consenting Parties consider the Discovery to be a Commercial Discovery.

Following such meeting such Operator for such development shall apply for an Exploitation Area (if applicable in the PSC). Unless the Development Plan is materially modified or expanded prior to the commencement of operations under such plan (in which case a new notice and option shall be given to the Non-Consenting Parties under clause 7.4(c)), each Non-Consenting Party to such Development Plan shall:

(i) if the PSC so allows, elect not to apply for an Exploitation Area covering such development and forfeit all interest in such Exploitation Area, or

(ii) if the PSC does not so allow, be deemed to have:

(A) elected not to apply for an Exploitation Area covering such development;

(B) forfeited all economic interest in such Exploitation Area; and

(C) assumed a fiduciary duty to exercise its legal interest in such Exploitation Area for the benefit of the Consenting Parties.

In either case such Non-Consenting Party shall be deemed to have withdrawn from this Agreement to the extent it relates to such Exploitation Area, even if the Development Plan is modified or expanded subsequent to the commencement of operations under such Development Plan and shall be further deemed to have forfeited any right to participate in the construction and ownership of facilities outside such Exploitation Area designed solely for the use of such Exploitation Area.

7.5 Premium to participate in Exclusive Operations

(a) Each such Non-Consenting Party shall within sixty (60) Days of the exercise of its option under clause 7.4(c), pay in immediately available funds to the Consenting Parties in proportion to their respective Participating Interests in such Exclusive Operations a lump sum amount payable in the currency designated by such Consenting Parties. Such lump sum amount shall be equal to such Non-Consenting Party’s Participating Interest share of all liabilities and expenses that were incurred in every Exclusive Operation relating to the Discovery (or Exclusive Well, as the case may be) in which the Non-Consenting Party desires to reinstate the rights it relinquished pursuant to clause 7.4(b), and that were not previously paid by such Non-Consenting Party.

(b) In addition to the payment required under clause 7.5(a), immediately following the exercise of its option under clause 7.4(c) each such Non-Consenting Party shall be liable to reimburse the Consenting Parties who took the risk of such Exclusive

Operations (in proportion to their respective Participating Interests) an amount equal to the total of the following amounts:

(i) five hundred percent (500%) of such Non-Consenting Party’s Participating Interest share of all liabilities and expenses that were incurred in any Exclusive Operation relating to the drilling, Deepening, Testing, Completing, Sidetracking, Plugging Back, Recompleting and Reworking of the Exploration Well which made the Discovery in which the Non-Consenting Party desires to reinstate the rights it relinquished pursuant to clause 7.4(b), and that were not previously paid by such Non-Consenting Party; plus

(ii) five hundred percent (500%) of the Non-Consenting Party’s Participating Interest share of all liabilities and expenses that were incurred in any Exclusive Operation relating to the drilling, Deepening, Testing, Completing, Sidetracking, Plugging Back, Recompleting and Reworking of the Appraisal Well(s) which delineated the Discovery in which the Non-Consenting Party desires to reinstate the rights it relinquished pursuant to clause 7.4(b), and that were not previously paid by such Non-Consenting Party.

(c) Each such Non-Consenting Party who is liable for the amounts set out in clause 7.5(b) shall within sixty (60) Days of the exercise of its option under clause 7.4(c), pay in immediately available funds the full amount due from it under clause 7.5(b) to such Consenting Parties, in the currency designated by such Consenting Parties.

7.6 Order of preference of operations

(a) Except as otherwise specifically provided in this Agreement, if any Party desires to propose the conduct of an operation that will conflict with an existing proposal for an Exclusive Operation, such Party shall have the right exercisable for ten (10) Days (or twenty-four (24) hours for Urgent Operational Matters) from receipt of the proposal for the Exclusive Operation, to deliver such Party’s alternative proposal to all Parties entitled to participate in the proposed operation. Such alternative proposal shall contain the information required under clause 7.2(a).

(b) Each Party receiving such proposals shall elect by delivery of notice to Operator and to the proposing Parties within the appropriate response period set out in clause 7.2(b) to participate in one of the competing proposals. Any Party not notifying Operator and the proposing Parties within the response period shall be deemed to have voted against the proposals.

(c) The proposal receiving the largest aggregate Participating Interest vote shall have priority over all other competing proposals. In the case of a tie vote, Operator shall choose among the proposals receiving the largest aggregate Participating Interest vote. Operator shall deliver notice of such result to all Parties entitled to participate in the operation within five (5) Days (or twenty-four (24) hours for Urgent Operational Matters).

(d) Each Party shall then have five (5) Days (or twenty-four (24) hours for Urgent Operational Matters) from receipt of such notice to elect by delivery of notice to Operator and the proposing Parties whether such Party will participate in such Exclusive Operation, or will relinquish its interest pursuant to clause 7.4(b). Failure by a Party to deliver such notice within such period shall be deemed an election not to participate in the prevailing proposal.

(e) Notwithstanding the provisions of clause 7.4(b), if for reasons other than the encountering of granite, basalt or other practically impenetrable substance or any other condition in the hole rendering further operations impracticable, a well drilled as an Exclusive Operation fails to reach the deepest objective Zone described in the notice proposing such well, Operator shall give notice of such failure to each Non-Consenting Party who submitted or voted for an alternative proposal under this clause 7.6 to drill such well to a shallower Zone than the deepest objective Zone proposed in the notice under which such well was drilled. Each such Non-Consenting Party shall have the option exercisable for forty-eight (48) hours from receipt of such notice to participate for its Participating Interest share in the initial proposed Completion of such well. Each such Non-Consenting Party may exercise such option by notifying Operator that it wishes to participate in such Completion and by paying its Participating Interest share of the cost of drilling such well to its deepest depth drilled in the Zone in which it is Completed. All liabilities and expenses for drilling and Testing the Exclusive Well below that depth shall be for the sole account of the Consenting Parties. If any such Non-Consenting Party does not properly elect to participate in the first Completion proposed for such well, the relinquishment provisions of clause 7.4(b) shall continue to apply to such Non-Consenting Party’s interest.

7.7 Stand-by costs

(a) When an operation has been performed, all tests have been conducted and the results of such tests furnished to the Parties, stand by costs incurred pending response to any Party’s notice proposing an Exclusive Operation for Deepening, Testing, Sidetracking, Completing, Plugging Back, Recompleting, Reworking or other further operation in such well (including the period required under clause 7.6 to resolve competing proposals) shall be charged and borne as part of the operation just completed. Stand-by costs incurred subsequent to all Parties responding, or expiration of the response time permitted, whichever first occurs, shall be charged to and borne by the Parties proposing the Exclusive Operation in proportion to their Participating Interests, regardless of whether such Exclusive Operation is actually conducted.

(b) If a further operation related to Urgent Operational Matters is proposed while the drilling rig to be utilized is on location, any Party may request and receive up to five (5) additional Days after expiration of the applicable response period specified in clause 7.2(b)(i) within which to respond by notifying Operator that such Party agrees to bear all stand-by costs and other costs incurred during such extended response period. Operator may require such Party to pay the estimated stand-by costs in advance as a condition to extending the response period. If more than one Party requests such additional time to respond to the notice, stand-by costs shall be allocated between such Parties on a Day-to-Day basis in proportion to their Participating Interests.

7.8 Special considerations regarding Deepening and Sidetracking

(a) An Exclusive Well shall not be Deepened or Sidetracked without first affording the Non-Consenting Parties in accordance with this clause 7.8 the opportunity to participate in such operation.

(b) In the event any Consenting Party desires to Deepen or Sidetrack an Exclusive Well, such Party shall initiate the procedure contemplated by clause 7.2. If a Deepening or Sidetracking operation is approved pursuant to such provisions, and if any Non-Consenting Party to the Exclusive Well elects to participate in such Deepening or Sidetracking operation, such Non-Consenting Party shall not owe amounts pursuant to

clause 7.5(b), and such Non-Consenting Party’s payment pursuant to clause 7.5(a) shall be such Non-Consenting Party’s Participating Interest share of the liabilities and expenses incurred in connection with drilling the Exclusive Well from the surface to the depth previously drilled which such Non-Consenting Party would have paid had such Non-Consenting Party agreed to participate in such Exclusive Well; provided, however, all liabilities and expenses for Testing and Completing or attempting Completion of the well incurred by Consenting Parties prior to the commencement of actual operations to Deepen or Sidetrack beyond the depth previously drilled shall be for the sole account of the Consenting Parties.

7.9 Use of property

The Parties participating in any Deepening, Testing, Completing, Sidetracking, Plugging Back, Recompleting or Reworking of any well drilled under this Agreement shall be permitted to use (free of cost) all casing, tubing and other equipment in the well that is not needed for operations by the owners of the wellbore, but the ownership of all such equipment shall remain unchanged. On abandonment of a well in which operations with differing participation have been conducted, the Parties abandoning the well shall account for all equipment in the well to the Parties owning such equipment by tendering to them their respective Participating Interest shares of the value of such equipment less the cost of salvage.

7.10 Lost production during tie-in of Exclusive Operation facilities

If, during the tie-in of Exclusive Operation facilities with the existing production facilities of another operation, the production of Hydrocarbons from such other pre-existing operations is temporarily lessened as a result, then the Consenting Parties shall compensate the parties to such existing operation for such loss of production in the following manner. Operator shall determine the amount by which each Day’s production during the tie-in of Exclusive Operation facilities falls below the previous month’s average daily production from the existing production facilities of such operation. The so-determined amount of lost production shall be recovered by all Parties who experienced such loss in proportion to their respective Participating Interest. Upon completion of the tie-in, such lost production shall be recovered in full by Operator deducting up to one hundred percent (100%) of the production from the Exclusive Operation, prior to the Consenting Parties being entitled to receive any such production.

7.11 Production Bonuses

(a) Any bonus payable by the Parties under the PSC (Production Bonus) shall be charged to the Joint Account if there is no Hydrocarbon production from an Exclusive Operation at the time such Production Bonus is incurred. If there is Hydrocarbon production from one or more Exclusive Operations, then any Production Bonus which becomes payable under the PSC shall be borne by each Exploitation Area in the proportion that its total production of Hydrocarbons bears to the total production of Hydrocarbons from the Contract Area during the period commencing with the date the applicable Exploitation Area is established pursuant to the PSC and ending on the date on which the event giving rise to the Production Bonus occurs.

(b) The Parties in an Exploitation Area shall bear the Production Bonus allocated to that Exploitation Area in accordance with their Participating Interests in that Exploitation Area as of the date on which liability for the Production Bonus was incurred. Only types, grades and qualities of Hydrocarbons used for the determination of the Production Bonus under the PSC shall be utilized in the

calculations in this clause 7.11.

7.12 Conduct of Exclusive Operations

(a) Each Exclusive Operation shall be carried out by the Consenting Parties acting as the Operating Committee, subject to the provisions of this Agreement applied mutatis mutandis to such Exclusive Operation and subject to the terms and conditions of the PSC.

(b) The computation of liabilities and expenses incurred in Exclusive Operations, including the liabilities and expenses of Operator for conducting such operations, shall be made in accordance with the principles set out in the Accounting Procedure.

(c) Operator shall maintain separate books, financial records and accounts for Exclusive Operations which shall be subject to the same rights of audit and examination as the Joint Account and related records, all as provided in the Accounting Procedure. Said rights of audit and examination shall extend to each of the Consenting Parties and each of the Non-Consenting Parties so long as the latter are, or may be, entitled to elect to participate in such Exclusive Operations.

(d) Operator, if it is conducting an Exclusive Operation for the Consenting Parties, regardless of whether it is participating in that Exclusive Operation, shall be entitled to request cash advances and shall not be required to use its own funds to pay any cost and expense and shall not be obliged to commence or continue Exclusive Operations until cash advances requested have been made, and the Accounting Procedure shall apply to Operator in respect of any Exclusive Operations conducted by it.

(e) Should the submission of a Development Plan be approved in accordance with clause 6.7, or should any Party propose (but not yet have the right to commence) a development in accordance with this clause 7 where neither the Development Plan nor the development proposal call for the conduct of additional appraisal drilling, and should any Party wish to drill an additional Appraisal Well prior to development, then the Party proposing the Appraisal Well as an Exclusive Operation shall be entitled to proceed first, but without the right (subject to the following sentence) to future reimbursement pursuant to clause 7.5. If such an Appraisal Well is produced, any Consenting Party shall own and have the right to take in kind and separately dispose of all of the Non-Consenting Party’s Entitlement from such Appraisal Well until the value received in sales to purchasers in arm-length transactions equals one hundred percent (100%) of such Non-Consenting Party’s Participating Interest shares of all liabilities and expenses that were incurred in any Exclusive Operations relating to the Appraisal Well. Following the completion of drilling such Appraisal Well as an Exclusive Operation, the Parties may proceed with the Development Plan approved pursuant to clause 5.10, or (if applicable) the Parties may complete the procedures to propose an Exclusive Operation to develop a Discovery. If, as the result of drilling such Appraisal Well as an Exclusive Operation, the Party or Parties proposing to develop the Discovery decide(s) not to do so, then each Non-Consenting Party who voted in favor of such Development Plan prior to the drilling of such Appraisal Well shall pay to the Consenting Party the amount such Non-Consenting Party would have paid had such Appraisal Well been drilled as a Joint Operation.

(f) If Operator is a Non-Consenting Party to an Exclusive Operation to develop a Discovery, then Operator may resign as Operator for the Exploitation Area for such Discovery. If Operator so resigns, the Consenting Parties shall select a Consenting Party to serve as Operator for such Exclusive Operation only.

Any such resignation of Operator and appointment of a Consenting Party to serve as Operator for such Exclusive Operation shall be subject to the Parties having first obtained any necessary Government approvals.

8 Default

8.1 Default and notice

(a) Any Party that fails to:

(i) pay when due its share of Joint Account expenses (including cash advances and interest); or

(ii) provide when due and maintain any Security required of such Party under the PSC or this Agreement;

shall be in default under this Agreement (a Defaulting Party). Operator, or any non-defaulting Party in case Operator is the Defaulting Party, shall promptly give notice of such default (the Default Notice) to the Defaulting Party and each of the non-defaulting Parties.

(b) For the purposes of this clause 8, Default Period means the period beginning five (5) Business Days from the date that the Default Notice is issued in accordance with this clause 8.1 and ending when all the Defaulting Party’s defaults pursuant to this clause 8.1 have been remedied in full.

8.2 Operating Committee meetings and data

(a) Notwithstanding any other provision of this Agreement, the Defaulting Party shall have no right, during the Default Period, to:

(i) call or attend Operating Committee or subcommittee meetings or Management Committee meetings (and during such Default Period, the non-defaulting Parties will have the right to appoint substitute Management Committee member(s) on behalf of the Defaulting Party, if any);

(ii) vote on any matter coming before the Operating Committee or any subcommittee;

(iii) access any data or information relating to any operations under this Agreement;

(iv) consent to or reject data trades between the Parties and third parties, nor access any data received in such data trades;

(v) Transfer all or part of its Participating Interest, except to non-defaulting Parties in accordance with this clause 8;

(vi) consent to or reject any Transfer or otherwise exercise any other rights in respect of Transfers under this clause 8 or under clause 12;

(vii) receive its Entitlement in accordance with clause 8.4;

(viii) withdraw from this Agreement and the PSC under clause 13; or

FARMOR:		FARMEE:

SCS CORPORATION LTD.		SOUTH ATLANTIC PETROLEUM LIMITED

By:	/s/ Ray Leonard	By:	/s/ Dale Rollins

Name:	Ray Leonard	Name:	Dale Rollins

Title:	Director	Title:	Managing Director

Account Number		0030341029
ABA Bank Routing Number		1130 11258
Swift Code		ZFNBUS55
Institution		Amegy Bank, a division of ZB, N.A. (Zions Bnkcorp)
Bank location phone number for courier		713-235-8810; 800-287-0301
Physical Bank location address for COURIER		4400 Post Oak Parkway
Street 2		6th Floor
City in Texas, Zip		Houston 77027