Indonesia

12/02/1981

This contract is drawn up in the English and Indonesian languages. If any questions regarding the interpretation of the 2 texts arises, then the English text shall prevail.

The contract area is located at the coordinates set out in Exhibit A. The area shall consist of approximately 15,130 square kilometers.

Kerr-McGee of Indonesia, Inc. (operator); Quintana Indonesia Ltd; Samedan Oil of Indonesia, Inc; Wainoco International, Inc.

Bawean Block

Bawean Block

Petroleum

Perusahaan Pertambangan Minyak Dan Gas Bumi Negara

The term of this contract shall be 30 years from the effective date; however, the contract shall terminate if no commercial quantities of petroleum are discovered after the first 6 years.

Production sharing contract

Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International shall take the necessary precautions for protection of navigation and fishing and shall prevent extensive pollution of the sea or rivers

Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International shall have the right to inspect and audit Pertamina's books and accounts relating to this contract for any calendar year within the 1 year period following the end of such calendar year. Any such audit will be satisfied within 12 months after its commencement. Pertamina and the government shall have the right to inspect and audit Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International books and accounts relating to this contract for any calendar year covered by this contract. In addition, Pertamina and the government may require Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International to engage their independent accountants to examine, in accordance with generally accepted auditing standards, the books and accounts relating to this contract for any calendar year or perform such auditing procedures as deemed appropriate by Pertamina.

Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International shall pay to Pertamina as compensation for information now held by Pertamina the sum of US$ 1.5 million, after approval of this contract by the government in accordance with the provisions of applicable law. Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International shall pay to Peramina the sum of US$ 5 million 90 days after the end of the first calendar year in which the value of Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International’s portion of the crude oil produced and saved and not used in petroleum operations exceeds recoverable costs, income taxes paid and due. Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International shall pay to Pertamina the sum of US$ 2.5 million after daily production from the contract area averages 25,000 barrels per day for a period of 120 consecutive days. Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International shall pay to Pertamina the sum of US$ 5 million after daily production from the contract area averages 50,000 barrels per day for a period of 120 consecutive days. Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International shall pay to Pertamina the sum of US$ 5 million after daily production from the contract area averages 75,000 barrels per day for a period of 120 consecutive days. Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International shall pay to Pertamina the sum of US$ 14 million after daily production from the contract area averages 100,000 barrels per day for a period of 120 consecutive days. These costs will not count as operating costs.

Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International severally pay to the government the income tax including the final tax on profits after tax deductions imposed on it pursuant to the Indonesian income tax law and its implementing regulations

Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International may recover an investment credit amounting to 17% of the capital investment cost directly required for developing crude oil production facilities of a new field out of deduction from gross production before recovering operation costs, commencing in the earliest production year or years before tax deduction. In addition, for such crude oil production facilities which are in water depths of more than 600 feet, the contractor may recover an additional investment credit amounting to 110% of the relevant capital investment cost and in the same manner, and provided further that such capital investment costs are the costs contemplated under the original development program approved by Pertamina. Furthermore, for floating production facilities of a field partly serving deep sea production, such additional investment credit is applicable to that portion of the capital investment for said floating production facilities if any, corresponding with that portion of the capital investment for the production facilities standing/lying on the seabed deeper than 600 feet. This deep sea incentive, is also applicable for natural gas field development projects, except that for such case the investment credit amounts to 55%. Pertamina shall except with respect to its obligation to pay Indonesian corporate tax and the tax on the interest dividend and royalty assume and discharge other Indonesian taxes of (contractor) including transfer tax, import and export duties on materials, equipment and supplies brought into Indonesia by the contractor, its contractors and subcontractors; exaction in respect of property, capital, net worth, operations, remittances or transactions including any tax or levy on or in connection with operations performed by Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International. Pertamina shall not be obliged to pay Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International the Indonesian corporate tax and the tax on Interest, dividend and royalty, nor taxes on tobaccos, liquor and personal income tax; and corporate tax and other taxes not listed above of contractors and subcontractors.

If the first crude oil production of this contract area is from a marginal field as described below, for such production the parties shall be entitled to take and receive each year, respectively 54.5455% for Pertamina and 45.4545% for the contractor over the life of such field. A 'marginal field' is capable of crude oil production not exceeding 10,000 barrels daily average projected for the initial 2 production years. For crude oil production as a result of tertiary recovery EOR projects, the parties shall be entitled to take and receive each year, respectively 54.5455% for Pertamina and 45.4545% for the contractor. For crude oil production from pre-tertiary reservoir rocks, the parties shall be entitled to take and receive each year as follows: (a) Pertamina 54.3455% and the contractor 45.4545% for the segment of 0-50,000 barrels daily average of all of such pre-Tertiary production of the contract area for the calendar year; (b) Pertamina 65.9091% and the contractor 34.0909% for the segment of 50,001-150,000 barrels daily average of all of such pre-tertiary production of the contract area for the calendar year; (c) Pertamina 77.2727% and the contractor 22.7273% for the segment of 150,001 barrels daily average of all such pre-tertiary production of the contract area for the calendar year and more; For crude oil production of the contract area from fields which are in water depths of more than 600 feet, the parties shall be entitled to take and receive each year as follows : (a) Pertamina 54.5455% and the contractor 45.4545% for the segment of 0-50,000 barrels daily average of crude oil production from all platforms and subsea completions on the seabed deeper than 600 feet of the contract area for the calendar year; (b) Pertamina 65.9091% and the contractor 34.0909% for the segment of 50,0001-150,000 barrels daily average of deepsea production of the contract area for the calendar year; (c) Pertamina 77.2727% and the contractor 22.7273% for the segment of 150,001 barrels daily average of deepsea production of the contract area for the calendar year and more. For crude oil production of the contract area other than those under the previous clauses, each year Pertamina shall be entitled to take and receive 65.9091% and the contractor shall be entitled to take and receive 34.0909%. The parties shall be entitled to first take and receive each year a quantity of petroleum of 20% of the petroleum production of each such year, called the first tranche petroleum before any deduction for recovery of operating costs and handling of production. For natural gas, such first tranche petroleum is shared between Pertamina and the contractor in accordance with the sharing split provided under subsection 2.2 of this section VI.

Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International will recover all operating costs out of the sales proceeds or other disposition of the required quantity of crude oil equal in value to such operating cost which is produced and saved and not used in petroleum operations. If in any calendar year, the operating costs exceed the value of the crude oil produced and saved and not used in petroleum operations, then the unrecovered excess shall be recovered in succeeding years.

Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International shall pay to the government the tax on interest, dividend and royalty imposed on it pursuant to the Indonesian tax laws.

Pertamina shall have the right to demand from Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International that a 10% undivided interest in the total rights and obligations under this contract be offered to either a limited liability company to be designated by Pertamina, the shareholders of which shall be Indonesian Nationals, or to an Indonesian entity to be designated by Pertamina. This right shall lapse unless exercised by Pertamina not later than 3 months after the first discovery of commercial amounts of petroleum in the contract area. The offer to the Indonesian participant shall be effective for a period of 6 months. If the Indonesian participant has not accepted this offer by registered letter within this period, Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International shall be released from the obligation. In the event of acceptance by the Indonesian participant, the Indonesian participant shall be deemed to have acquired the undivided interest, and shall be liable for the proportional share of costs incurred thereafter. For the acquisition of a 10% undivided interest in the total of the rights and obligations arising out of this contract, the Indonesian participant shall reimburse Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International an amount: - equal to 10% of the sum of operating costs incurred for and on behalf of its activities in the contract area up to the date of acceptance by the Indonesian participant; - 10% of the compensation paid to Pertamina for information referred to in section 1.1. of Section VIII of this contract; and - 10% of the amounts referred to in Subsection 1.2 and 1.3 of Section VIII of this contract.

Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International agree to employ qualified Indonesian personnel in their operations and after commercial production commences will undertake the schooling and training of Indonesian personnel for labor and staff positions including administrative and executive management positions

Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International shall give preference to such goods and services which are produced in Indonesia or rendered by Indonesian nationals, provided such goods and services are offered at equally advantageous conditions with regard to quality, price, availability at the time and in the quantities required

Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International shall prepare and carry out plans and programs for industrial training and educational of Indonesians for all job classifications with respect to petroleum operations. Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International agree to employ qualified Indonesian personnel in their operations and after commercial production commences will undertake the schooling and training of Indonesian personnel for labor and staff positions including administrative and executive management positions. At such time, Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International shall also consider with Pertamina a program of assistance for the training of Pertamina's personnel. Costs and expenses of training Indonesian personnel for its own employment shall be included in operating costs. Costs and expenses for a program of training for Pertamina's personnel shall be borne on the basis agreed by Pertamina and Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International.

Should Pertamina and Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International consider that the processing and utilization of natural gas is economical and choose to participate in the processing and utilization, in addition to that used in secondary recovery operations, then the construction and installation of facilities for such processing and utilization should be carried out pursuant to an approved Work Program

Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International shall fulfill its obligation towards the supply of the domestic market in Indonesia. Any natural gas produced from the contract area to the extent not used in petroleum operations, may be flared if the processing and utilization is not economical. Such flaring shall be permitted to the extent that gas is not required to effectuate the maximum economic recovery of petroleum by secondary recovery operations, including repressuring and recycling. (Contractor) shall be willing to consider to come to another contract or loan agreement for the processing of products derived from the petroleum operations hereunder, on mutually agreeable terms. Within the framework of the preceding principle, (contractor) would agree on the conditions stated below to have refined in Indonesia 28.57% of the share of crude oil to which it is entitled and, should no refining capacity be available, to set up a corresponding refining capacity for that purpose. The conditions above referred to are that: (a) Pertamina has first requested (contractor) thereto; (b) (contractor's) share of crude oil be not less than 150,000 barrels per day; and (c) if refining capacity has to be erected, that the setting up and use of such refining capacity be economical in the judgment of the parties. It is further agreed that (contractor) may in lieu of setting up such refining capacity, but subject to the same conditions, make an equivalent investment in another project related to petroleum or petro-chemical industries.

The amount to be spent by Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International in conducting exploration operations pursuant to the terms of this contract during the first 6 contract years shall in the aggregate be not less than specified as follows: First contract year: US$ 3.5 million; Second contract year: US$ 6.5 million; Third contract year: US$ 4.5 million; Fourth contract year: US$ 7.5 million; Fifth contract year: US$ 8 million; Sixth contract year: US$ 10 million. If during any contract year Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International should spend less than the amount of money required, an amount equal to the under expenditure may, with Pertamina consent, be carried forward and added to the amount to be expended in the following contract year. If during any contract year Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International should expend more than the amount of money required, the excess shall be subtracted from the amount of money to be expended during the succeeding contract years.

Disputes, if any, arising between Pertamina and Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International relating to this contract or the interpretation and performance of any of the clauses of this contract, and which cannot be settled amicable, shall be submitted to the decision of arbitration. The decision of a majority of the arbitrators shall be final and binding upon the parties. In the event the arbitrators are unable to reach a decision, the dispute shall be referred to Indonesian Courts of Law for settlement. Except as provided in this section, arbitration shall be conducted in accordance with the Rules of Arbitration of the International Chamber of Commerce.

The government shall have title to all original data resulting from the petroleum operations including but not limited to geological, geophysical, petrophysical engineering, well logs and completion, status reports and any other data as Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International may compile. This is provided that all such data shall not be disclosed to third parties without informing and giving Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International the opportunity to discuss the disclosure.

The laws of the Republic of Indonesia shall apply to this contract. No term or provision of this contract, including the agreement of the parties to submit to arbitration, shall prevent or limit the government from exercising its inalienable rights.

Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International shall be willing to consider to come to another contract or loan agreement for the processing of products derived from the petroleum operations hereunder, on mutually agreeable terms. Within the framework of the preceding principle, Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International would agree on the conditions stated below to have refined in Indonesia 28.57% of the share of crude oil to which it is entitled and, should no refining capacity be available, to set up a corresponding refining capacity for that purpose. The conditions above referred to are that: (a) Pertamina has first requested (contractor) thereto; (b) (contractor's) share of crude oil be not less than 150,000 barrels per day; and (c) if refining capacity has to be erected, that the setting up and use of such refining capacity be economical in the judgment of the parties. It is further agreed that Kerr-McGee of Indonesia, Quintana Indonesia, Samedan Oil of Indonesia, and Wainoco International may in lieu of setting up such refining capacity, but subject to the same conditions, make an equivalent investment in another project related to petroleum or petro-chemical industries.