This contract has been prepared and signed in the Portuguese language which shall be the only official version for the purpose of establishing the rights and obligations of the parties.
There shall be a production period for each development area which shall be 25 years from the date of commercial discovery in said development area (in addition to up to 6 years of exploration)
In the course of activities provided for under this agreement, flaring of associated and/or non-associated gas, except short-term flaring necessary for testing or other operational reasons in accordance with practice generally accepted in the international petroleum industry, is prohibited except on prior authorization of the Ministry of Petroleum following a request by Sonangol.
The company shall formulate such request to Sonangol which shall include an evaluation of alternatives to flaring that have been considered along with information on the amount and quality of gases involved and the duration of the requested flaring.
Subject to any other provisions of this contract, company shall permit Sonangol's duly authorized representatives and employees to have full and complete access to the contractor area at all convenient times with the right to observe the petroleum operations being conducted and to inspect all assets, records and data kept by company.
Sonangol's representatives and employees, in exercising the aforementioned rights shall not interfere with company's petroleum operations.
Company shall grant to said Sonangol's representatives and employees the same facilities in the camp as those afforded to its own employees of similar professional rank.
Company shall pay to Sonangol, as a signature bonus, the sum of US$ [X] on the effective date.
Such signature bonus shall neither be recovered nor amortized by company.
The minimum exploration work obligations shall be secured by a financial guarantee. Such guarantee shall be given by the company group not later than 3 months after the beginning of each phase of the exploration period. The amount of each guarantee shall in each phase be equal to US$ [X] for each of the obligatory explorations wells.
Production Share - "Profit Oil features (triggers for variations in split - IRR, factor, production, etc .)
The total crude oil produced and saved in a quarter from each commercial discovery and its development area and not used in petroleum operations less the cost recovery crude oil from the same development area shall be shared between Sonangol and company according to the after tax, nominal rate of return achieved at the end of the preceding quarter by company in the corresponding development area as follows:
Company's rate of return for each development area; Sonangol share; Company share
Less than [X]: [X]%; [X]%
[X] to less than [X]: [X]%; [X]%
[X] to less than [X]: [X]%; [X]%
[X] or more than [X]: [X]%; [X]%
Production Share - Cost Oil features (basis of calculation, limits on cost recovery - e.g. as % of revenue or production, capex uplift, etc.)
Company shall recover all exploration, development, production and administration and services expenditures incurred under this agreement by taking and freely disposing of up to a maximum amount of 50% per year of all crude oil produced and saved from development areas and not used in petroleum operations.
Development expenditures in each development area shall be recovered only from cost recovery crude oil from that development area.
Development expenditures in each individual development area shall be multiplied by [X] and the resulting amount shall be recoverable at the rate of 25% per year in equal annual installments starting in the year in which such expenditures are incurred or the year in which commercial production in that development area commences, whichever occurs last.
In the case that, in any given year, recoverable costs, expenses or expenditures exceed the value of cost recovery crude oil from the relevant development area for such year, the excess shall be carried forward for recovery in the next succeeding year or years until fully recovered; but in no case after the termination of the contract.
Company and its subcontractor shall contract local contractors as long as their services are similar to those available on the international market and the prices of their services, when subject to the same tax charges, are no more than 10% higher compared to the prices charged by foreign contractors for identical services; and acquire materials, equipment, machinery and consumable goods of national production, insofar as their quantity, quality and delivery dates are similar to those of such material, equipment, machinery and consumable goods available on the international market.
Company shall be subject to the provisions of Decree No. 20/82 of 17 April 1982, and ancillary regulations regarding the recruitment, integration and training of Angolan personnel.
In the petroleum operations, company shall apply the most appropriate technology and managerial experience, including their proprietary technology such as patents, "know how" or other confidential technology, to the extent permitted by applicable laws and agreements.
In planned, systematic and various ways and in accordance with the provisions of this article, company shall train all its Angolan personnel directly or indirectly involved in the petroleum operations, for the purpose of improving their knowledge and professional qualification in order that the Angolan personnel gradually reach the level of knowledge and professional qualification held by the company's foreign workers.
Such training will also include the transfer of the knowledge of petroleum technology and the necessary management experience so as to enable the Angolan personnel to use the most advanced and appropriate technology in use in the petroleum operations, including proprietary and patented technology, "know how" and other confidential technology, to the extent permitted by applicable laws and agreements, subject to appropriate confidentiality agreements.
In keeping with the three-year plan for the recruitment, integration and training of Angolan personnel which is provided for in Article 12 of the Concession Degree-Law, company undertakes, notably, to:
(a) prepare a draft of the initial plan and submit it to the government within 4 months of the effective date;
(b) prepare a proposal for implementation of the plan and submit it to Sonangol within 1 month of the approval of such plan by the government; and
(c) implement the approved plan in accordance with the directives of the government, company being able, in this regard and with the approval of the government, to contract outside specialists not associated with company to proceed with the implementation of specific aspects of the subject plan.
Company agrees to require in its contracts with subcontractors who work for company for a period of more than 1 year, compliance with requirements for the training of work crews, to which requirements such subcontractors are subject by operation of current law.
Company further agrees to monitor compliance with the aforementioned obligations.
Company shall be responsible for the training costs of Angolan personnel it employs, such costs being recovered as production expenditures.
Costs incurred by company for training programs for government personnel will be borne in a manner to be agreed upon by the government and company.
Sonangol and the company group may sign a petroleum operations procedure document which will regulate and interpret the contents of this contract.
Any such document would be agreed between the parties and would be in accordance with the provisions of this agreement and the law.
Within the initial exploration phase, company will conduct a seismic program covering [X] of seismic profiles.
Such seismic program will begin within 6 months of the effective date provided that an appropriate seismic vessel is available.
Company will drill to geological horizons defined in the approved work program and budget [X] obligator exploration wells on [X] separate drillable prospects within the Initial exploration phase.
In the event company elects to extend the exploration period into the optional exploration phase, company shall be obligated to drill [X] obligatory exploration wells (other than appraisal wells) to geological horizons defined in the approved work program and budget.
Company shall be obligated to incur the following minimum exploration expenditures:
Initial exploration phase US$ [X]
Optional exploration phase US$ [X]
Any disputes, differences, or claims arising out of this contract or relating to same, or relating to the breach, termination or invalidation of the same, which it has not been possible to resolve amicably shall be finally and exclusive settled by arbitration, in accordance with the UNCITRAL Rules of Arbitration of 1976 as existing on the effective date.
The number of arbitrators shall be 3. The arbitration tribunal shall decide according to the Angolan substantive law.
According to the law in force the arbitration tribunal shall be set up in Luanda and the language of arbitration shall be Portuguese.
The parties agree that this arbitration clause is an explicit waiver of immunity against validity and enforcement of the award or any judgement on same and the award shall be final, binding and enforceable against any litigant in any court having jurisdiction in accordance with its laws.
The government and company agree to maintain the confidentiality of this contract; provided, however, either party may, without the approval of the other party, disclose this contract:
(a) to any affiliate or potential assignee of such party upon such affiliate or potential assignee giving a similar undertaking of confidentiality;
(b) in connection with the arranging of financing or of a corporate reorganization upon obtaining a similar undertaking of confidentiality;
(c) to the extent required by any applicable law, decree or regulation (including, without limitation, any requirement or rule of any regulatory agency, securities commission or securities exchange on which the securities of such party are listed); and
(d) to consultants as necessary in connection with petroleum operations upon obtaining a similar undertaking of confidentiality.
Without prejudice to other rights and obligations of the parties under the contract, in the event that any change in the provisions of any law, decree or regulation in force in the Republic of Angola occurs subsequent to the signing of this contract, which adversely affects the obligations, rights and benefits under this contract, then the parties shall agree on amendments to the contract to be submitted to the competent authorities for approval, so as to restore such rights, obligations and forecasted benefits.