Mauritania

Kosmos Energy Mauritania

Bloc C8

Hydrocarbons; oil and natural gas

The Islamic Republic of Maurtania

Kosmos

Exploration and production agreement

Kosmos must take all necessary measures for the protection of the environment during the course of petroleum operations. For any petroleum operation subject to prior authorization according to the Environmental Code, Kosmos must submit to the Minister in Charge of Crude Hydrocarbons the studies or notices of environmental impact required for this type of operation, carry out the measures and comply with restrictions set forth in the environmental management plan, furnish the declarations and submit himself to the oversight provided for in the Environmental Code. Kosmos must take all reasonable measures according to good oilfield practice in the international petroleum industry in order to: a) Ensure that all facilities and equipment used in petroleum operations be at all times in good repair and in conformity with the applicable norms, including therein those which result from international conventions ratified by Mauritania related to the prevention of pollution; b) Avoid losses and dumping of hydrocarbons, including the flaring of natural gas; d) Store the Hydrocarbons produced in the facilities and receptacles constructed for this purpose; e) Dismantle facilities which are no longer necessary to the petroleum operations and return the sites to their original condition; f) Generally prevent pollution of the soil and of the subsoil, of the water and of the atmosphere, as well as prevent harm to fauna and flora.

The Minister in Charge of Crude Hydrocarbons, after having informed Kosmos in writing, may have the records and books of account relative to the petroleum operations examined and verified by auditors of the Minister's choice or by the Minister's own agents. The Minister shall have a period of 3 years following the end of a given calendar year to carry out the examinations or verifications concerning said calendar year and present to Kosmos the Minister's objections for any contradictions or errors noted at the time of such examinations or verifications.

Kosmos shall pay to the government a signature bonus in the amount of $1,000,000 within 30 days following the effective date. Additionally, Kosmos shall pay to Mauritania the following production bonuses: a) $6,000,000 when the regular commercial production of hydrocarbons extracted from the exploitation perimeter(s) reaches for the first time an average rate equal to 25,000 barrels of crude petroleum per day during a period of 30 consecutive days; b) $8,000,000 when the regular commercial production of hydrocarbons extracted from the exploitation perimeter(s) reaches for the first time an average rate equal to 50,000 barrels of crude petroleum per day during a period of 30 consecutive days; c) $12,000,000) when the regular commercial production of hydrocarbons extracted from the exploitation perimeter(s) reaches for the first time an average rate equal to 100,000 barrels of crude petroleum per day during a period of 30 consecutive days; d) $20,000,000) when the regular commercial production of hydrocarbons extracted from the exploitation perimeter(s) reaches for the first time an average rate equal to 150,000 barrels of crude petroleum per day during a period of 30 consecutive days.

Kosmos shall be subject to the Industrial and Commercial Income Tax levied on the net profits earned in relation to the petroleum operations in accordance with Articles 66 to 74 of the Crude Hydrocarbons Code. The rate of this tax is set at 27% for the entire duration of the contract.

The volume of hydrocarbons remaining for each quarter after Kosmos has taken from total production the share necessary to the recovery of petroleum costs shall be shared between the government and Kosmos in the following manner, in the ratio of the applicable figure for the ratio “R” defined as follows: <<R>> Less than 1: State = 31%; Kosmos = 69% <<R>> Greater than or equal to 1 and less than 1.5: State = 33%; Kosmos = 67% <<R>> Greater than or equal to 1.5 and less than 2: State = 35%; Kosmos = 65% <<R>> Greater than or equal to 2 and less than 2.5: State = 37%; Kosmos = 63% <<R>> Greater than or equal to 2.5 and less than 3: State = 39%; Kosmos = 61% <<R>> Greater than or equal to 3: State = 42%; Kosmos = 58%

For the recovery of petroleum costs, Kosmos shall freely for each exploitation authorization each quarter a share of total production equal to 55% for crude petroleum and 62% for dry gas, calculated on total production. Over a calendar year, if petroleum costs not yet recovered by Kosmos exceed the equivalent in value of 55% with respect to crude petroleum and 62% with respect to dry gas, of the total production, the excess which cannot be recovered for the year under consideration shall be carried forward to the following calendar year(s) until full recovery of petroleum costs or the termination of this contract.

On the effective date, the government shall acquire through the National Enterprise (Société Mauritanienne des Hydrocarbures) a carried interest of 10% in the rights and obligations of Kosmos in the exploration perimeter.

Kosmos shall pay to the government the following surface rentals: a) $2 per square kilometer and per year during the first phase of the exploration period ; b) $3 per square kilometer and per year during the second phase of the exploration period ; c) $4 per square kilometer and per year during the third phase of the exploration period and during any extension provided for in this contract; d) $170 per square kilometer and per year during the validity of the exploitation authorization.

From the beginning of operations, Kosmos undertakes to ensure the employment on a priority basis, with equal qualification, of Mauritanian personnel and to contribute to the training of such personnel, in order to allow their accession to all employment as qualified workers, supervisors, management, engineers and directors. To this end, Kosmos shall establish a recruitment plan of Mauritanian personnel and a plan for training and skills improvement in order to attain a greater and greater participation of Mauritanian personnel in the petroleum operations.

Kosmos commits to granting preference to Mauritanian enterprises and products, on equivalent conditions in terms of price, quantity, quality, terms for payment and timeframe of delivery, and to require his subcontractors to make a similar commitment.

- During the first phase of the exploration period of 4 years, Kosmos undertakes to acquire 2,000 km 2D seismic. Such acquisition must commence within 12 months following the effective date. - During the second phase of the exploration period of 3 years, Kosmos undertakes to acquire 1000 sq. km 3D seismic and drill 1 exploration well to a depth of 2,500 tmeters below the mud line. Said works must commence within 6 months following the start of the second phase. - During the third phase of the exploration period of 3 years, Kosmos undertakes to drill 1 exploration well to a depth of 2,500 meters below mud line. Drilling must commence within the 3 months following the start of the third phase. - Within 30 days following the effective date, Kosmos must remit to the Minister in Charge of Crude Hydrocarbons a bank guarantee issued by an international bank of $9,000,000 covering the minimum work commitments for the first phase of the exploration period. - If the exploration authorization is renewed, Kosmos must also remit to the Minister in Charge of Crude Hydrocarbons a bank guarantee of $27,000,000 within 30 days following receipt of the grant of renewal for the second phase of the exploration period, and of $22,000,000 covering the minimum work commitments for the relevant phase.

In the event of a dispute between the government and Kosmos concerning the interpretation or the application of the provisions of this contract, Kosmos and the government shall make good faith effort to resolve such dispute amicably. If, within 90 days Kosmos and the government are not able to reach an amicable solution the dispute shall be submitted to the International Chamber of Commerce (ICC) ICC for arbitration following the rules set by the Rules of Arbitration of the ICC. The location of the arbitration shall be Paris. The languages utilized during the proceedings shall be the French and English languages and the applicable law shall be the Mauritanian law, as well as the rules and customs of applicable international law. The tribunal shall be made up of 3 arbitrators. No arbitrator shall be a national of the countries of which Kosmos and the government are nationals. The award of the court is rendered on a definitive and irrevocable basis. It is binding upon Kosmos and the government and is immediately executory.

Kosmos and the government undertake to consider as confidential and to not communicate to third parties or to publish data and information of a technical nature related to the Petroleum Operations and which would not already be in the public domain, for the entire duration of the contract, except with the prior consent of the Minister in Charge of Crude Hydrocarbons. In the case of relinquishment of a surface area or surrender of a perimeter , Kosmos undertakes to consider as confidential and to not communicate to third parties or to publish the data and information relating to the perimeter in question and which would not already be in the public domain, except with the prior consent of the Minister in Charge of Crude Hydrocarbons. After the surrender, termination or expiration of the contract, Kosmos undertakes to consider as confidential and to not communicate to third parties or to publish, the data and information relating to petroleum operations which would not already be in the public domain, except with the prior consent of the Minister in Charge of Crude Hydrocarbons.

This Contract is governed by the laws and regulations of Mauritania, supplemented by general principles of the laws of international commerce.

No legislative or regulatory provision occurring after the effective date may be applied to Kosmos which would as a direct or an indirect effect diminish the rights of Kosmos or increase its obligations under this contract and the legislation and regulations in force upon the effective date of this contract, without the prior agreement of Kosmos and the government. However, this does not apply to legislative and regulatory provisions which are generally applicable in the matter of safety of persons and of protection of the environment or employment law which are adopted after the effective date. Except for taxes, fees and dues provided in Title VI of the Crude Hydrocarbons Code, for special taxes related to the utilization of drinking water or of irrigation water, for the surface rentals provided for in this contract, Kosmos shall not be subject to any tax, fees, royalties, payments and contributions of any nature whatsoever, be they national, regional or municipal, either in effect now or in the future, which may burden the petroleum operations, and of any revenue derived therefrom or more generally, the property, the activities or action of Kosmos, including its facility, its money transfers, and its operation in implementation of this contract. That these exemptions are only applicable to petroleum operations.