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West Bay Belize Ltd. 11/3/2003
PRODUCTIONSHAIDNGAGREEMENT
THIS AGREEMENT, made and entered into this i~ day of l!.9~k~f. of 2003, by and
between the GOVERNMENT OF BELIZE, (hereinafter referred to as the "Government") acting
tl-M-ough the Minister of Natural Resources, the Environment, Commerce & Industry and
ROBERT E. TUCKER TR. OF WEST BAY EXPLORATION CO., A US COMPANY,
PARENT OF WEST BAY BEUZE UMITED, OF 15 SWASEY STREET, BELMOPAN
CITY, BEUZE C.A. a corporation incorporated under the Companies Act, Chapter 250,
Substantive Laws of Belize, Revised Edition 2000 (hereinafter referred to as the "Contractor").
WHEREAS, the entire property in, and control over all Petroleum resources in or under the
territory of Belize is vested in the Government on behalf of Belize;
AND WHEREAS, no petroleum operations shall be conducted in Belize by any person other
than the Government unless such person has entered into a contract in accordance with the
Petroleum Act Chapter 225 Substantive Laws of Belize, Revised Edition 2000;
AND WHEREAS, the Government wishes to promote the exploration for and production of the
petroleum resources in and throughout the contract area, and the Contractor desires to join and
assist the Government in accelerating the exploration for and production of the petroleum
resources within the contract area;
AND WHEREAS, the Contractor represents that it has the financial resources, technical
competence and professional skills necessary to carry out the petroleum operations hereinafter
described;
AND WHEREAS, the Contractor understands that successful implementation of contractor's
rights and obligations hereunder may involve cross-border hydrocarbon deposits and concomitant
Joint Development Agreement(s) GDAs);
AND WHEREAS, the Government and the Contractor agree that this Agreement is in
compliance with all Belize statutes, regulations and laws which govern or regulate the exploration,
development and production of petroleum in Belize;
AND WHEREAS, the Government and the Contractor agree that this Agreement is bound by all
Belize statutes, regulations and laws which govern or regulate the exploration, development and
production of petroleum in Belize which are in effect at the time this Agreement was signed;
AND WHEREAS, the Government and the Contractor agree that this Agreement was freely
negotiated at arms length;
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West Bay Behie Ltd. 11/3/2003
AND WHEREAS, both the Government and the Contractor were represented by legal counsel
with respect to the drafting and negotiation of this Agreement;
AND WHEREAS, the Government and the Contractor agree that the geographic area covered
under this Agreement is that of Block(s) 1 referenced by coordinates in exhibit A, attached hereto,
and a map exhibit B, attached hereto;
AND WHEREAS, the Government has accepted the application for Block(s) 1 made by
ROBERT E. TUCKERJR. OF WEST BAY BEliZE UMITED and submitted to the Geology
& Petroleum Department;
AND WHEREAS, the award of Block(s) 1 is dependent on, inter alia, success of negotiation
process and approval of project proposal (work programme) including applicable Environmental
Studies.
NOW, THEREFORE, THE PARTIES HERETO HEREBY AGREE AS FOLLOWS:
ARTICLE I
Definitions
1.1
In this Agreement, the following terms shall have the following
meanmgs:
1.1.1
"affiliated company" means any entity directly or indirectly
effectively controlling, or effectively controlled by, or under direct
or indirect effective common control of, a specified entity. For the
purposes of this definition, "control", when used with respect to any
specified entity, means the power to direct, administer and dictate
policies of such entity (it being understood and agreed that it is not
necessary to own directly or indirectly fifty percent (50%) or more
of such entity's voting securities to have effective control over such
entity, but ownership, direct or indirect, of fifty percent (50%) or
more of such entity's voting securities shall automatically indicate
effective control), and the terms "controlling" and "controlled" have
meanings corresponding to the foregoing;
1.1.2
"appraisal well" means a well drilled within the contract area,
following a discovery, for the purpose of delineating the petroleum
reservoir(s) to which the discovery relates in terms of thickness and
lateral extent and estimating the quantity of recoverable petroleum
therein;
1.1.3
"barrel" means a quantity or unit of crude oil equal to 158.9874
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West Bay BehZe Ltd. 11/3/2003
liters (forty-two (42) United States gallons) at a temperature of sixty
(60) degrees Fahrenheit (15.56 degrees Centigrade) under one
atmosphere of pressure;
1.1.4
"calendar year" means a period of twelve (12) consecutive months,
according to the Gregorian Calendar, starting with the 1st ofJanuary
and ending with the 31 st of December;
1.1.5
"calendar month" or "month" means any of the twelve (12) months
of the calendar year;
1.1.6
"commercial discovery" means a discovery of petroleum which can
be exploited commercially in accordance with accepted practices in
the international petroleum industry;
1.1.7
"continental shelf' means the part of the seabed and subsoil of the
submarine areas adjacent to the coast of Belize, but outside the
territorial waters, over which Belize is entitled by international law
to exercise sovereign rights for the purposes of exploring and
exploiting its natural resources;
1.1.8
"contract area" means a geographical area which is covered by the
contract; and includes the whole of, or such part or parts of, the
original area awarded to a Contractor which shall remain at the
disposal of such Contractor from time to time pursuant to the tenns
of the contract;
1.1.9
"contract year" means a period of twelve (12) consecutive calendar
months, counted from the first day of the first calendar month
following the effective date of this Agreement or from the
anniversary of such first day of such month;
1.1.10
"Contractor" means any person with whom the Government enters
into a contract and includes his agents, representatives and
asSIgnees;
1.1.11
"crude oil" means petroleum which is in liquid state at the well head
or gas/oil separator or which is extracted from natural gas, including
distillate and condensate;
1.1.12
"day" means a calendar day unless otherwise provided herein;
1.1.13
"delivery point" means the FOB point of export in Belize or such
other point which may be agreed between the Government and the
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West Bay Belize Ltd. 11/3/2003
Contractor;
1.1.14
"development and production operations" means operations for or
in connection with the production of petroleum;
1.1.15
"development and production period" means the period referred to
in paragraph 3.4;
1.1.16
"discovery" in relation to petroleum, means petroleum not
previously known to have existed, recovered at the surface in a flow
measurable by conventional petroleum industry testing methods;
1.1.17
"effective date" means the date first above written;
1.1.18
"exploration expenditures" shall mean expenditures made in
conducting exploration operations hereunder, but excluding
expenditures made within the area of a field after a commercial
These expenditures shall be
discovery has been declared.
determined in accordance with the Income and Business Tax Act,
Chapter 55, Substantive Laws of Belize, Revised Edition 2000;
1.1.19
"exploration operations" means operations for or in connection
with exploration for petroleum;
1.1.20
"exploration period" means the period referred to in paragraph 3.1;
1.1.21
"exploration well" means a well other than an appraisal well drilled
in the course of exploration operations;
1.1.22
"field" means an area, as designated by agreement between the
Government and the Contractor, where a commercial discovery of
crude oil or natural gas has been declared;
1.1.23
"gross revenues" means the sum of all proceeds of sales and the
monetary equivalent of the value of other dispositions of petroleum
produced and saved and not used in petroleum operations and any
other proceeds derived from petroleum operations;
1.1.24
"income tax" means that tax imposed on net income pursuant to
the Income and Business Tax Act Chapter 55 Substantive Laws of
Belize, Revised Edition 2000;
1.1.25
"initial commercial production" means the date on which the first
regular shipment of crude oil or natural gas, or both, is made from a
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West Bay Belize Ltd. 11/3/2003
field under a program of regular production and sale;
1.1.26
"Inspector" means the Inspector of Petroleum appointed under
section 4 of the Petroleum Act, Chapter 225 of the Substantive
Laws of Belize, Revised Edition 2000 or any officer of the Geology
& Petroleum Department duly designated in that behalf;
1.1.27
"maximum efficient rate" means the maximum rate of production
of crude oil in a field, without excessive rate of decline of
production or excessive loss of reservoir pressure, and in
accordance with generally accepted practices in the international
petroleum industry and the provisions of paragraph 6.3;
1.1.28
"Minister" means the Minister responsible for petroleum affairs in
the Government of Belize;
1.1.29
"natural gas" means all petroleum which at atmospheric conditions
of temperature and pressure is in a gaseous state, and includes wet
mineral gas, dry mineral gas, wet gas and residue gas remaining after
the extraction, processing or separation of liquid petroleum from
wet gas, as well as non-petroleum gas or gases produced in
association with liquid or gaseous petroleum;
1.1.30
"net petroleum" means the value of the total quantity of petroleum
produced and saved in a given calendar year and not used in
petroleum operations after deductions of the value of the royalties
made in such calendar year and after recovery of petroleum
operations expenditures pursuant to paragraph 9.1;
1.1.31
"net taxable income" means net taxable income as determined in
accordance with the provisions of the Income and Business Tax
Act, Chapter 55, of the Substantive Laws of Belize, Revised Edition
2000;
1.1.32
"petroleum" means all natural organic substances composed of
carbon and hydrogen; and includes crude oil and natural gas, and
all other mineral substances, products, by-products and derivatives
that are found in conjunction with petroleum;
1.1.33
"Petroleum Act" means the Petroleum Act, Chapter 225
Substantive Laws of Belize, Revised Edition 2000, and any
subsidiary legislation made thereunder;
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1.1.34
"petroleum operations" means the operations related to the
exploration, development, extraction, production, field separation,
transportation, storage, sale or disposal of petroleum; but does not
include any transportation or other operations (i) beyond the point
of export; or (ii) in the case of petroleum which is processed within
Belize, beyond the point of entry into a refinery or liquefaction or
natural gas treatment plant;
1.1.35
"petroleum operations expenditures" shall mean expenditures
incurred in conducting petroleum operations hereunder,
determined in accordance with the Income and Business Tax Act,
Chapter 55 of the Substantive Laws of Belize, Revised Edition
2000;
1.1.36
"PSA" means Production Sharing Agreement;
1.1.37
"royalty" means the royalty or production payment described
Article VIII;
1.1.38
"quarter" means a period of three (3) consecutive months
commencing with the first day ofJanuary, April, July and October,
respectively, of each calendar year;
1.1.39
"well" means any opening in the ground made or being made by
drilling or boring, or in any other manner, in connection with
exploration operations or development and production operations,
other than a seismic hole;
1.1.40
"work programme" means an itemized statement of the petroleum
operations to be carried out in the contract area in each calendar
year, or to be carried out for specific activities such as drilling of
exploration wells and appraisal wells and development
programmes, all in a form acceptable to the Government;
1.1.41
"work programme budget" means the estimate of the costs of all
items included in the corresponding work programme, including
both capital and operating budgets, all in a form acceptable to the
Government.
III
ARTICLE II
Grant of Rights to
the Contractor
2.1
The Government gTants to the Contractor, subject to the terms and
conditions set forth in this Agreement, the exclusive right to
conduct petroleum operations within the contract area for the term
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West Bay Behze Ltd. 11/3/2003
of this Agreement. Except as provided in paragraph 11.3, the
Contractor shall have the right, during the term of this Agreement,
to freely lift, dispose of and export its share of the petroleum
produced hereunder.
2.2
Title to petroleum to which the Contractor is entitled hereunder
shall pass to the Contractor at the delivery point.
2.3
The Contractor shall, except as expressly otheIWise provided in this
Agreement, conduct all petroleum operations hereunder at his sole
risk, cost and expense. The Contractor shall look only to the
petroleum to which he is entitled under this Agreement to recover
such costs and expenses, and such petroleum shall be the
Contractor's sole source of compensation thereunder.
2.4
The Contractor shall be responsible to the Government for the
execution of all petroleum operations in accordance with the
provisions of this Agreement. Without prejudice to the Contractor's
position as an independent contractor hereunder, the extent and
character of such work to be done by the Contractor shall be
subject to the general supervision, review and approval of the
Government to which the Contractor shall report and be
responsible as herein set forth. Government approval, as required
pursuant to any provision of this Agreement, shall not be
unreasonably withheld, and unless specified to the contrary in this
Agreement, Government approval will be deemed given if the
Government has not responded to the Contractor in writing within
thirty (30) working days of Contractor's compliance with any
provision of this Agreement.
2.5
The Contractor is authorized to construct pipelines, bridges, ferries,
landing fields, radio, telephone, facsimile and related
communication systems as may be necessary for petroleum
operations but subject to the laws in force in Belize from time to
time for the regulation and control of such installations and their
construction. In the event that the laws or regulations of Belize
change (after the signing of this Agreement) in any manner that
frustrates the purpose of this Agreement, the Government agrees to
use best efforts to take any action necessary to effectuate the
purpose of this Agreement.
2.6
The Government reserves the right to grant licenses to others to
prospect for, explore for and mine minerals other than
hydrocarbons including petroleum within the contract area, and
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West Bay Belize Ltd. 11/3/2003
further reserves to itself the right to so prospect, explore and mine
directly, all subject to the provisions of paragraph 5.3.
ARTICLE III
Term
3.1
The Contractor is authorized to conduct exploration operations
during an exploration period which shall be comprised (i) an initial
exploration period of two (2) contract years ("Initial Exploration
Period"), and (ii) subject to the conditions hereinafter provided,
three (3) successive renewal periods ("First Renewal Period",
"Second Renewal Period" and "Third Renewal Period") of two (2)
years each to the initial exploration period. Such renewal periods
shall be granted to the Contractor upon the Contractor's request
delivered to the Government in writing not later than ninety (90)
days prior to the expiration of the then current period, subject to
the Contractor having fulfilled his obligations hereunder for the
then current period, including the relinquishment provisions of
Article IV, and having submitted with such application a work
programme and work programme budget for the period of renewal
which is consistent with the undertakings set forth in paragraph 6.1.
3.2
If at the end of the exploration period, no commercial discovery
has been made in any part of the contract area, this Agreement shall
automatically terminate in its entirety, provided, however, that the
Government undertakes to grant an extension for such period, and
for such area as may be necessary, in the opinion of the
Government and the Contractor, (i) for the Contractor to complete
the drilling, testing, appraisal or plugging of any well actually being
drilled, tested, appraised or plugged at the end of the exploration
period and (ii) for the Government and the Contractor to
determine that a discovery resulting from such a well is a
commercial discovery pursuant to paragraphs under 6.2.
3.3
If a commercial discovery is made in any portion of the contract
area during the exploration period, the Contractor will commence
development and product operations in that particular portion of
the contract area.
3.4
In the event of a commercial discovery, the extent of the area
capable of production of petroleum from the formation or
formations so identified shall be determined in accordance with the
provisions of the paragraphs under 6.2 or Article XIV. The area so
determined shall thereupon be converted automatically into a field,
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West Bay Beh"ze Ltd. 11/3/2003
with effect from the date of the declaration of the commercial
discovery. The term of the development and production period for
each field shall extend for twenty-five (25) contract years from the
first day of the calendar year commencing after the date of the
declaration of the commercial discovery therein.
ARTICLE IV
Relinquishment
4.1
On or before the end of the initial exploration period, the
Contractor shall relinquish twenty-five percent (25%) of the original
contract area.
4.1.2
On or before the end of the first renewal period the Contractor
shall relinquish an additional twenty-five percent (25%) of the
original contract area.
4.2
On or before the end of the second renewal period the Contractor
shall relinquish an additional area equal to twenty-five percent
(25%) of the original contract area.
4.3
At the end of the exploration period, the Contractor shall relinquish
the remainder of the original contract area not then converted to a
field.
4.4
The size and shape of the portion or portions to be relinquished
shall be determined by the Contractor, provided however, that (a)
the Contractor shall advise the Government at least ninety (90) days
in advance of the date of relinquishment of the description and area
of the portion or portions to be relinquished, (b) the Contractor
shall consult with the Government regarding the shape and size of
each individual portion of the areas being relinquished, (c) the area
being relinquished shall not be divided into more than two portions,
each of which shall be comprised of, and be defined by reference
to, blocks as described in Exhibit B, save where no such area or
areas can be identified for relinquishment in accordance with this
paragraph without including in such area or areas in whole or in
part a field or area in which a discovery has been made which the
Contractor is not otherwise required to relinquish hereunder, and
(d) each such relinquished, individual portion shall be not less than
twenty percent (20%) of the area being relinquished at such time
with sides parallel to the boundaries of the original contract area, to
the extent that the boundaries of the original contract area permit,
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West Bay Belize Ltd. 11/3/2003
and with the longest side not more than three times as long as the
shortest side, and shall in any event be of sufficient size and
convenient shape to enable petroleum operations to be conducted
thereon or thereunder.
..
4.5
The Contractor shall not be obliged to relinquish, pursuant to
paragraphs 4.1 and 4.2, any part of the original contract area which
has been converted to a field or in which a discovery has been made
which the Contractor is not otherwise required to relinquish
hereunder.
4.6
Upon at least ninety (90) days written notice to the Government
prior to the end of any contract year, the Contractor shall have the
right to relinquish all or any portion of the contract area effective as
of the end of such contract year, subject to the provisions of
paragraph 4.4, and such portion shall then be credited against that
portion of the contract area which the Contractor is next required to
relinquish pursuant to the provisions of paragraphs 4.1 and 4.2.
4.7
No relinquishment made in accordance with this Article IV shall
relieve the Contractor of: (a) its obligations to make payments due
as a result of surface rentals prior to the effective date of any such
relinquishment, or (b) the minimum work and expenditure
commitments undertaken pursuant to paragraphs 6.1.1 and 6.1.2.
4.8
Upon relinquishment of any area, the Contractor shall perform all
necessary clean-up activities in accordance with generally accepted
practices in the international petroleum industry, and shall take all
other action necessary to prevent hazards to human life or third
party property.
ARTICLE V
General Obligations
of the Contractor
5.1
The Contractor shall be responsible for conducting all petroleum
operations within the contract area diligently, expeditiously and
efficiently in accordance with generally accepted practices in the
international petroleum industry and the environmental laws of
Belize and pursuant to work programmes approved in accordance
with paragraph 5.4. The Contractor shall ensure that all equipment,
materials, supplies, plant and installations used by himself, and his
contractors and subcontractors comply with generally accepted
standards in the international petroleum industry and are of proper
construction and kept in optimal working order.
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5.2
5.3
Except as otheIWise provided
shall:
In
this Agreement, the Contractor
(a)
advance all necessary funds and purchase or lease all
equipment, materials and supplies required to be purchased
or leased in connection with petroleum operations;
(b)
furnish all the technical expertise and assistance, including
foreign personnel, required for the conduct of petroleum
operations;
(c)
furnish all other funds for the performance of petroleum
operations as may be required, including payment to foreign
entities that perform services as contractors or
subcontractors to the Contractor;
(d)
appoint a local representative and in his absence, a
replacement therefor, with respect to this Agreement, who
shall have an office and be resident in Belize and who shall
have full authority to represent the Contractor for all
purposes of this Agreement and whose name shall, on
appointment within ninety (90) days after the effective date,
be made known to the Government;
(e)
provide acceptable working conditions and living
accommodations, and access to medical attention and
nursing care, for all personnel employed by him , his
contractors and subcontractors in petroleum operations; and
(0
pay social security for all employees as per the Laws of
Belize.
If, after the effective date, others are granted licenses within the
contract area authorizing prospecting for, exploration for or mining
of any minerals or other substances other than petroleum, or the
Government proceeds with such prospecting, exploration or mining
directly in its own behalf, the Contractor shall use his best efforts to
avoid obstruction or interference with such licensee's or
Government's operations within the contract area.
The
Government shall use its best efforts to ensure that operations of
third parties do not interfere with the Contractor's petroleum
operations within the contract area. Additionally, at the request of
the Contractor the Government shall notify Contractor (and
provide Contractor the name, phone number, and address) of any
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West Bay Behie Ltd. 11/3/2003
companies which are granted licenses authorizing them to prospect
for, explore for or mine any minerals in the contract area.
5.4
(a)
At least ninety (90) days prior to the beginning of each
calendar year, or at such other time as is mutually agreed by the
parties, the Contractor shall prepare and submit for approval to the
Government an annual work programme and work programme
budget of petroleum operations and petroleum operations
expenditures by quarters for the contract area setting forth the
petroleum operations the Contractor proposes to carry out during
the ensuing calendar year. Such annual work programmes and
work programme budgets shall comply with the minimum work and
expenditure obligations described in paragraphs 6.1. Approval by
the Government of the proposed annual work programme budget
of petroleum operations and petroleum operation expenditures will
not be unreasonably withheld or delayed. The Government and
the Contractor shall have reached agreement upon an annual work
programme and work programme budget for the period from the
effective date until the end of the calendar year in which the
effective date falls or for the ensuing calendar year if the effective
date falls after the 30th day of September.
(b)
Should the Government wish to propose revisions to the
annual work programme or work programme budget, it shall within
thirty (30) days after receipt thereof so notify the Contractor
specifying in reasonable detail its reasons therefor. Promptly
thereafter the parties shall meet and endeavor to agree on the
revisions proposed by the Government. If the Contractor and the
Government fail to agree upon any revisions proposed by the
Government within sixty (60) days of the receipt of the Contractor's
proposals, the points of disagreement shall be resolved as follows:
(i)
all other aspects of the annual work programme and work
programme budget to which the Government proposes
revisions shall be mutually agreed before such aspects of the
annual work programme and work programme budget shall
be adopted.
(c)
It is recognized by the parties that the details of an annual
work programme may require changes in light of then existing
circumstances. In such event, the Contractor may introduce such
changes as may be necessary, following consultation with the
Government, but subject to the following:
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(i)
in the case of changes to an annual work programme
and work programme budget which relate to exploration
operations, such changes may be implemented to the extent
that they are not inconsistent with the undertakings set forth
in paragraph 6.1 or the general objective of such annual
work programme;
(ii)
in the case of changes to an annual work programme
and work programme budget which relate to the
development of a field, such changes may be implemented
to the extent that they are not inconsistent with the
applicable development work programme and work
programme budget adopted pursuant to paragraph 6.2 or
the general objective of such annual work programme;
(iii)
all other changes may be notified in writing to the
Government and shall be mutually agreed before they may
be implemented.
(d)
To the maximum extent practicable, the Contractor shall
involve representatives of the Government in the preparation of the
annual work programme and work programme budget.
(e)
Within thirty (30) days after the end of each quarter, the
Contractor shall submit to the Government a report describing and
summarizing petroleum operations carried out, and petroleum
operations expenditures incurred during such quarter. Such report
shall be in a form acceptable to the Government.
ARTICLE VI
Minimum Work
and Expenditure
Obligations
6.1
The Contractor shall commence petroleum operations hereunder
not later than ninety (90) days after the effective date.
Exploration Period
6.1.1
The amount to be expended by the Contractor in conducting
exploration operations in accordance with approved work
programmes during the exploration period, shall not be less than
the following as adjusted pursuant to paragraph 6.1.4.
6.1.1.1
Initial Exploration Period:
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(a) First contract year $50,000.00 US$
(b) Second contract year $100,000.00 US$
6.1.1.2
First renewal period (if requested by the Contractor pursuant to
paragraph 3.1):
(a) First contract year $ 200,000.00 US$
(b) Second contract year $ 400,000.00 US$
6.1.1.3
Second renewal period (if requested by the Contractor pursuant to
paragraph 3.1):
(a) First contract year $ 800,000.00 US$
(b) Second contract year $800,000.00 US$
6.1.1.4
Third renewal period (if requested by the Contractor pursuant to
paragraph 3.1):
(a) First contract year $1,000,000.00 US$
(b) Second contract year $1,000,000.00 US$
6.1.2
The Contractor undertakes to carry out and comply with the
following minimum work commitments.
6.1.2.1
Initial exploration period:
INITIAL PERIOD
(a) First contract year:
Acquire and/or reprocess geophysical data, which may include
seismic, gravity, alo magnetic in any combination. Acquire air
photos in PSA area.
INITIAL PERIOD
(b) Second contract year:
Interpret geophysical data, and interpret petrophysical data on
existing wells inside and immediately adjacent to PSA area.
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West Bay Belize Ltd. 11/3/2003
Perform geomorphic analysis.
6.1.2.2
FIRST RENEWAL PERIOD
First renewal period (if requested by the Contractor pursuant to
paragraph 3.1):
Combine geophysical, petrophysical, and geological information
into a complete integrated interpretation.
Acquire additional geophysical data as required by integrated
interpretation.
6.1.2.3
SECOND RENEWAL PERIOD
Second 'renewal period (if requested by the Contractor pursuant to
paragraph 3.1):
Drill initial test well.
Perform additional exploratory drilling as required.
6.1.2.4
THIRD RENEWAL PERIOD
Third renewal period (if requested by the Contractor pursuant to
paragraph 3.1):
Perform additional drilling as required.
Perform additional drilling as required.
6.1.3
-
If, during any contract year in the exploration period, the
Contractor should expend more than the required minimum
annual exploration expenditures, the Contractor may subtract an
amount equal to the excess amount spent from the required
minimum exploration expenditures for the ensuing contract year in
the exploration period. If works carried out in any contract year
exceed the minimum work commitment relating to such contract
year as provided in paragraph 6.1.2, the excesses will count towards
the satisfaction of the minimum work commitments for the ensuing
contract year.
Compliance with the required minimum exploration expenditures
for a given contract year shall not relieve the Contractor of his
obligation to comply with the required minimum work
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West Bay Belize Ltd. 11/3/2003
commitment, nor shall compliance with the required mInImUm
work commitment for a given contract year relieve the Contractor
of his obligation to comply with the required minimum exploration
expenditures for such contract year.
Security
6.1.4
(a) Within ninety (90) days of the effective date and where this
Agreement has been extended pursuant to Regulation 9 of the
Belize Petroleum Regulation S.l. No. 112 of 1992, and within thirty
(30) days of each extension period, the Contractor shall provide
security by means of a bank guarantee, in a form substantially
similar to that set forth in Exhibit C, equal to the total potential
penalties for the initial exploration period, or, as the case may be,
for the first, second and third renewal periods, as set forth in
Upon prior confirmation by independent
paragraph 6.1.1.
accounts acceptable to both the Contractor and the Government of
the exploration expenditures actually incurred, such security shall
be reduced at the end of each contract year in the exploration
period to the extent that the Contractor has spent the prescribed
minimum amounts stipulated in paragraph 6.1.1, provided that the
outstanding balance shall not be less than the required minimum
exploration expenditures for the remaining contract year of the
exploration period in question, as stipulated in paragraph 6.1.1 and
as adjusted pursuant to paragraph 6.1.4.
(b) If, at the expiration of the exploration period, or upon the date
of termination of this Agreement, or upon relinquishment of the
entire contract area by the Contractor pursuant to paragraph 4.6,
whichever first occurs, the Contractor has not expended for
exploration operations sums at least equal to the total minimum
exploration expenditures, as adjusted, required hereunder, the
balance of the security corresponding to the unexpended minimum
exploration expenditures, as adjusted automatically shall be paid to
the Government.
(c) If, at the end of any contract year in the exploration period, the
Contractor has not expended for exploration operations sums at
least equal to the minimum exploration expenditures, as adjusted,
required hereunder for such contract year, a portion of the security
corresponding to the unexpended minimum exploration
expenditures, as adjusted, for such contract year automatically shall
be paid to the Government.
Discovery and
Development Period
6.2
The terms and
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conditions
relating to
the
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West Bay Belize Ltd. 11/3/2003
development period shall be as follows:
6.2.1
When in the course of petroleum operations, a discovery of
petroleum is made, the Contractor shall immediately notify the
Government in writing accordingly, specifying in such notice all
pertinent information concerning the discovery.
6.2.2
If the Contractor determines to conduct a drill-stem or production
test, in open hole or through perforated casing, with regard to the
discovery, he shall notify the Government that a drill-stem or
production test will be made within twenty-four (24) hours of the
time that such proposed test has been called, and the Government
shall have the right to have a representative present during such test.
Not later than ninety (90) days after completion of such test or tests,
the Contractor shall complete the analysis and interpretation of the
data resulting from such test and submit a report to the
Government which shall contain copies of such data and its analysis
and interpretation thereof, and which shall also contain a written
notification of whether or not, in the Contractor's opinion, such
discovery is of potential commercial interest. If the Contractor
plugs and abandons the well which encountered such discovery
without conducting a drill stem or production test, or fails to
conduct a drill stem or production test with respect to such
discovery within one hundred and eighty (180) days from the date
on which such discovery has been made, it shall be deemed to have
notified the Government that, in the Contractor's opinion, such
discovery is not of potential commercial interest.
6.2.3
If, pursuant to paragraph 6.2.2, the Contractor notifies, or is
deemed to have notified, the Government that such discovery is not
of potential commercial interest, the Government shall have the
option, exercisable by notice in writing to the Contractor, to require
the Contractor to relinquish the area corresponding to such
discovery and forfeit any rights relating to such discovery and any
production therefrom. The area subject to relinquishment shall not
exceed the prospective producing area determined by taking into
account the area of the structural closure of the prospective horizon
and other relevant technical factors. Any such relinquishment by
the Contractor of the area relating to such discovery before the end
of the exploration period shall be carried out in accordance with
paragraphs 4.4, 4.6 and 4.8.
6.2.4
If, pursuant to paragraph 6.2.2, the Contractor notifies the
Government that the discovery is of potential commercial interest,
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West Bay Beljze Ltd. 11/3/2003
the Contractor shall promptly prepare and submit for approval to
the Government a reasonable work programme and work
programme budget for the appraisal of such discovery. Such
appraisal work programme and work programme budget shall
include a complete programme of appraisal operations necessary to
determine whether such discovery is a commercial discovery.
6.2.5
Within fifteen (15) days after the submission of the appraisal work
programme and work programme budget pursuant to paragraph
6.2.4, the Contractor and the Government shall meet with a view to
adopting such work programme and work programme budget or
mutually agreeing upon amendments or additions thereto. Failing
agreement between the Contractor and the Government as to such
work programme and work programme budget at such meeting, or
within fifteen (15) days thereafter, the original appraisal work
programme and work programme budget submitted by the
Contractor, revised in accordance with any agreed amendments or
additions thereto, shall be deemed adopted, and the Contractor
shall immediately commence implementation thereof. On adoption
of the appraisal work programme and work programme budget, the
annual work programme and work programme budget adopted
pursuant to paragraph 5.6 shall be revised accordingly.
6.2.6
If, pursuant to paragraph 6.2.2, the Contractor has notified the
Government that the discovery is of potential commercial interest, it
shall, unless otherwise agreed:
(a) in respect of a discovery of crude oil, advise the Government by
notice in writing, whether or not in its opinion, the discovery is
commercial within a period of agreed eighteen (18) months from
the date on which the Contractor notified the Government that said
discovery was of potential commercial interest:
Provided that in respect of a discovery of crude oil in water
depths of more than 600 feet, such period may be increased by
mutual agreement from eighteen (18) months to twenty-four (24)
months.
(b) in respect of a discovery of non-associated natural gas, advise
the Government by notice in writing, whether or not in its opinion,
the discovery is commercial, within such period as may be
stipulated in an Agreement made pursuant to Article XIV with
respect to such discovery or, in the absence of such Agreement,
within thirty-six (36) months from the date on which the Contractor
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West Bay Belize Ltd. 11/3/2003
notified the Government that said discovery was of potential
commercial interest.
6.2.7
If the Contractor notifies the Government that the discovery is not
commercial, or fails to notify the Government that the discovery is
commercial within the periods prescribed in paragraphs 6.2.6(a)
and (b), the Government shall have the option, exercisable by
notice in writing to the Contractor, to require the Contractor to
relinquish the area corresponding to such discovery and forfeit any
rights relating to such discovery and any production therefrom. The
area subject to relinquishment shall not exceed the prospective
producing area determined by taking into account the area of
structural closure of the prospective horizon and other relevant
technical factors. Any such relinquishment by the Contractor of the
area relating to such discovery before the end of the exploration
period shall be carried out in accordance with paragraphs 4.4, 4.6
and 4.8.
6.2.8
(a) The notice submitted to the Government by the Contractor
pursuant to paragraph 6.2.6 (a) and (b) shall be accompanied by a
report on the discovery setting forth all relevant technical and
economic data, including, but not limited to, geological and
geophysical information, areas, thicknesses and extent of the
productive strata, petrophysical properties of the reservoir
formations, PVf data, the reservoir's productivity indices for the
wells tested at various rates of flow, permeability and porosity of the
reservoir formations, the relevant characteristics and qualities of the
petroleum discovered, additional geological data and evaluations
of the reservoir, crude oil and natural gas reserves estimates and any
other relevant characteristics and properties of the reservoirs and
fluids contained therein, as well as all evaluations, interpretations
and analyses of such data and feasibility studies relating to the
discovery prepared by the Contractor, his contractors,
subcontractors and affiliated companies.
(b) In addition, if the Contractor believes that the discovery is
commercial, he shall submit to the Government with the report
described in paragraph 6.2.8 (a) a work programme and work
programme budget for the development of such discovery. Such
development work programme and work programme budget shall
set out detailed proposals, including cost estimates, drilling
schedules, number of wells and well spacing, production forecasts
and a timing schedule, in accordance with generally accepted
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West Bay Belize Ltd. 11/3/2003
engineering practices and economics of the international petroleum
industry, for the establishment and operation of all the facilities,
installations and services required for the production, processing,
storage and transportation of petroleum from the area in which the
discovery is located and any other activities incidental thereto.
Proposals relating to production procedures shall ensure that the
area does not suffer an excessive rate of decline of production or an
excessive loss of reservoir pressure. Such development work
programme and work programme budget shall also contain
particulars of feasible alternatives, if any, considered by the
Contractor for the development and exploitation of the discovery
and economic feasibility studies carried out by or for the Contractor
with respect to the discovery taking into account the location,
meteorological conditions, cost estimates, the price of petroleum
and any other relevant data and evaluations thereof.
6.2.9
The Government shall examine the report and any work
programme and work programme budget submitted pursuant to
paragraph 6.2.8 and may require the Contractor to provide, within a
specified period of time, such additional information and data as it
may reasonably require to evaluate such report, work programme
and work programme budget. As soon as possible after the
submission of the report and any work programme and work
programme budget pursuant to paragraph 6.2.8 or receipt of such
additional information and data, the Government and the
Contractor shall meet (i) to determine at such meeting, or at such
later date as may be mutually agreed, the boundaries of the area to
be delineated as a field, and (ii) to adopt a work programme and
work programme budget for the development of the discovery.
6.2.10
(a) At the meeting described in paragraph 6.2.9, the Contractor
shall carefully consider and take into account the proposals of the
Government and the reasons therefor and shall attempt in good
faith to reach an agreement with the Government on the points at
issue paying particular consideration to the objective of achieving
initial commercial production expeditiously taking into account
generally accepted engineering practices and economics of the
international petroleum industry.
(b) If the Government and the Contractor agree upon the
boundaries of the area to be delineated as a field and upon the
adoption of a work programme and work programme budget for
the development of the discovery, the date upon which such
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West Bay Belize Ltd. 11/3/2003
agreement is reached, as reflected in writing signed by both parties,
shall be the date of the declaration of the commercial discovery for
all purposes of this Agreement. The area so determined shall, on
such date, be automatically converted into a field, and the
Contractor shall, as soon as is practicable, commence development
and production operations in the field according to the adopted
work programme and work programme budget. Upon adoption of
the development work programme and work programme budget,
the annual work programme and work programme budget adopted
pursuant to paragraph 5.6 shall be revised accordingly.
(c) In the event that no agreement is reached between the
Government and the Contractor within one hundred and eighty
(180) days from the date of submission of the report and work
programme and work programme budget pursuant to paragraph
6.2.8 as to (i) matters relating to the adoption of the work
programme and work programme budget for the development of
the discovery or (ii) the boundaries of the area to be delineated as a
field, the Government or the Contractor may refer the matter for
determination pursuant to Article XXIV. The determination in
accordance with Article XXIV shall be final and the work
programme and work programme budget for the development of
the discovery and the boundaries of the area to be delineated as a
field, as the case may be, shall be deemed to have been adopted
and agreed as determined, except that the Contractor may, within
sixty (60) days of receipt of such determination, notify the
Government that the discovery to which such work programme and
work programme budget and area so determined is no longer
considered to be commercial. If the Contractor so notifies the
Government, the provisions of paragraph 6.2.7 shall apply. Failing
such notification, the date after sixty (60) days of the receipt of such
determination shall be deemed to be the date of the declaration of
the commercial discovery for all purposes of this Agreement. The
area so determined shall, on such date, be automatically converted
into a field and the Contractor shall, as soon as is practicable,
commence development and production operations in the field
according to the work programme and work programme budget so
adopted. Upon adoption of the development work programme and
work programme budget as aforesaid, the annual work programme
and work programme budget adopted pursuant to paragraph 5.6
shall be revised accordingly.
6.2.11
Notwithstanding any other provision of this Agreement, in the event
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West Bay Belize Ltd. 11/3/2003
that initial commercial production has not occurred within three (3)
years, in the case of a crude oil discovery on land or in water depths
ofless than six hundred feet (200 m), or five (5) years, in the case of
non-associated natural gas discovery, or such longer period as the
Government may have agreed in the development work
programme and work programme budget, from the date of
declaration of commercial discovery for a field, the Contractor shall
relinquish the area comprising such field and shall forfeit any rights
relating to such field and any production therefrom.
Production Period
6.3
The terms and conditions of the production period shall be as set
out below.
6.3.1
The Contractor shall produce crude oil from the contract area at a
rate below the maximum efficient rate. In conjunction with the
adoption of the development work programme and work
programme budget pursuant to paragraph 6.2.10 the Contractor
and the Government shall establish at that time the maximum
efficient rate of production for crude oil and the production rate for
non-associated natural gas. Such rates shall be reviewed annually at
the time of submission of the annual work programme by the
Contractor pursuant to paragraph 5.4 and revised, if necessary, by
mutual agreement. In the case of non-associated natural gas, the
production rate shall not be required by the Government to be less
than that required to satisfy any contracts then in existence for the
sale of such natural gas.
6.3.2
Not less than ninety (90) days prior to the beginning of each
calendar year following initial commercial production, the
Contractor shall prepare and furnish to the Government for
approval a forecast statement setting forth by quarters the total
quantity of crude oil (by quality, grade and gravity) and natural gas
that the Contractor estimates can be produced, saved and
transported hereunder during such calendar year in accordance
with generally accepted practices in the international petroleum
industry. The Contractor shall endeavor to produce in each
calendar year the forecast quantity. The crude oil shall be run to
storage tanks, constructed, maintained and operated by the
Contractor in accordance with Government Regulations, in which
such crude oil shall be metered or otherwise measured for all
purposes required by this Agreement.
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West Bay Beljze Ltd. 11/3/2003
ARTICLE VII
The Government shall:
Obligations of the
Government
7.1
assist the Contractor in the execution of work programmes by
supplying or otherwise making available all geological, geophysical,
geographical, drilling, well, production and other information,
including well location maps, relating to the contract area in the
possession of the Government or coming into the possession of the
Government;
7.2
provide the right of ingress to and egress from the contract area and
any facilities used in petroleum operations, and, upon application in
the prescribed manner, all necessary visas, work permits, import
licenses and rights of way and easements as may be required by the
Contractor and his contractors and subcontractors and which may
be available from resources within the Government's control.
ARTICLE VIII
Royalty/production
Payment
8.1
The Contractor shall pay to the Government a royalty equal to (i)
seven point five percent (7.5%) of the value of the annual gross
production of crude oil produced and saved in each calendar year
and not used or consumed in petroleum operations and (ii) five
percent (5%) of the value of the annual gross production of natural
gas produced, saved and sold in each calendar year and not used or
consumed in the conduct of petroleum operations.
8.2
The royalty with respect to crude oil shall be payable in cash and/or
kind at the option of the Government. The royalty with respect to
natural gas shall always be paid in cash.
8.3
For the purposes of determining the amount of the royalty due,
crude oil and natural gas shall be valued in accordance with
paragraphs 10.1, 10.2 and 14.4, less such costs as the Government
may reasonably allow for handling and transportation from the
wellhead to the delivery point as described in such paragraphs, and
the royalty shall be payable quarterly within thirty (30) days of the
end of each quarter on the basis of crude oil production or natural
gas sales which occur in each such quarter. Payment shall be
accompanied by a certificate from the Contractor setting forth in
detail the basis for computation of the royalty. Such certificate shall
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West Bay Beh"ze Ltd. 11/3/2003
be in a form acceptable to the Government.
8.4
If the Government elects to take the Royalty with respect to Crude
Oil, or any part thereof, in kind, it shall notify the Contractor in
accordance with the provisions of paragraph 11.2.
ARTICLE IX
Recovery of
Petroleum
Operations
Expenditures:
Production Sharing
9.1
In each calendar year, after discharging its obligation for the royalty
payment due to the Government pursuant to Article VIII, the
Contractor shall be entitled to recover all petroleum operations
expenditures incurred hereunder, out of one hundred percent
(l00%) of the petroleum produced and saved in such calendar year
and not used in petroleum operations by retaining and disposing of
that amount of petroleum equal in value to the unrecovered
petroleum operations expenditures for that calendar year plus all
unrecovered petroleum operations expenditures from prior
calendar years. All such petroleum operations expenditures shall be
recovered without a ceiling in the manner, to the extent provided
for, in the Income and Business Tax Act, Chapter 55 of the
Substantive Laws of Belize, Revised Edition 2000. For the purpose
of determining the value of the quantity of petroleum to which the
Contractor is entitled in each calendar year pursuant to this
paragraph 9.1, the provisions of Article X shall be applied.
9.2
The remaining quantity of petroleum produced and saved in a given
calendar year and not used in petroleum operations, after
deduction of the value of the royalty, payments made in such
calendar year and after recovery by the Contractor of petroleum
operations expenditures pursuant to paragraph 9.1, ("Net
Petroleum") shall be taken and disposed of separately by the
Government and the Contractor in each calendar year in the
following proportions:
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West Bay Belize Ltd. 11/3/2003
Daily Average Production:
Government's Share
Percent (%)
Contractor's Share
Percent (%)
First 50,000 bopd
5
95
Next 50,000 bopd
7.5
92.5
Next 50,000 bopd
10
90
Next 50,000 bopd
15
85
Above 200,000 bopd
20
80
ARTICLE X
Valuation and
Measurement of
Petroleum
10.1
Crude oil sold to third parties shall be valued at the net realized
price at the delivery point, well-head or point of collection III
Belize received by the Contractor for such crude oil.
10.2
Crude oil sold to other than third parties shall be valued as
follows:
10.2.1
By using the weighted average unit price received by the Contractor
from sales to third parties at the delivery point, net of any
commissions and brokerages paid in relation to such third party
sales, during the ninety (90) days preceding such sale, adjusted as
necessary for quality, grade and gravity, and taking into
consideration any special circumstances with respect to such sales,
unless less than fifty percent (50%), by volume, of crude oil sales
during such period are made to third parties, in which case crude
oil sold to other than third parties shall be valued in accordance
with paragraph 10.2.2.
10.2.2
If no third party sales have been made during such period of time,
then (a) on the basis used to value other crude oil from Belize of
similar quality, grade and gravity (or, if not similar, adjusted as
necessary for quality, grade and gravity) and taking into
consideration any special circumstances with respect to sales of such
crude oil, or (b) if there is no other crude oil from Belize, on the
basis used to value crude oil from other sources in the Caribbean,
Central America, Colombia and Venezuela as posted in Platt's Oil
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West Bay BehZe Ltd. 11/3/2003
Gram for Caribbean/Central American Crudes of similar quality,
grade and gravity and taking into consideration any special
circumstances with respect to sales of such similar crude oil.
10.3
Natural gas shall be valued in accordance with the provisions of
paragraph 14.4.
10.4
Third party sales referred to in this Article shall mean sales other
than barter sales made by the Contractor to purchasers who are not
affiliated companies of the Contractor in arms length transactions
and with whom (at the time the same is made) the Contractor has
no contractual interest involving direcdy or indirecdy any joint
interest.
10.5
Commissions or brokerages incurred in connection with sales to
third parties, if any, shall not exceed the customary and prevailing
rate.
10.6
In the event that petroleum operations involve the segregation of
crude oils of different quality, grade or gravity, and if the parties do
not otherwise mutually agree, any and all provisions of this
Agreement concerning valuation of crude oil shall separately apply
to each segregated crude oil. However, in electing to take crude oil
for internal consumption pursuant to paragraph 11.7 and to take
royalty in kind pursuant to paragraph 11.2, the Government shall
have the right to receive, at its own expense and risk, crude oil of
the quality, grade and gravity of its choice.
10.7
The Contractor shall supply, operate and maintain equipment for
measuring the volume and quality of the petroleum produced and
saved hereunder, including gravity, density, temperature and
pressure measuring devices and any other devices that may be
required. All measurement equipment and devices shall, prior to
their installation or usage, be approved by the Inspector of
Petroleum. Such equipment and devices shall at all reasonable
times be available for inspection and testing by the Inspector of
Petroleum or other authorized representatives. Any such inspection
or testing shall not interfere with the normal operation of the
facilities involved. The equipment and devices used or installed
pursuant to this paragraph shall not be replaced or altered without
the prior approval of the Government.
10.8
The Contractor shall undertake to measure the volume and quality
of the petroleum produced and saved hereunder, consistent with
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West Bay Belize Ltd. 11/3/2003
generally accepted practices in the international petroleum industry,
with the frequency and according to procedures which shall be
approved by the Government.
10.9
The Contractor shall give the Inspector of Petroleum timely notice
of its intention to conduct measuring operations and the Inspector
shall have the right to be present at and supervise, either directly or
through authorized representatives, such operations.
10.10
If it is determined, following an inspection or test carried out by the
Government or its representatives, that the equipment, devices or
procedures used for measurement are inaccurate and exceed the
permissible tolerances which shall be established by agreement
between the Government and the Contractor, and such
determination is verified by an independent surveyor acceptable to
both parties, such inaccuracy shall be deemed to have existed for
one-half of the period since the last previous such inspection or test,
unless it is proved that such inaccuracy has been in existence for a
longer or shorter period. Appropriate adjustments covering such
period shall be made within thirty (30) days from the date of such
determination.
ARTICLE XI
Marketing, Production
(Royalty) in Kind and
Domestic
Requirements
11.1
The Contractor shall be obligated to market all crude oil produced
and saved from the contract area, subject to the provisions
hereinafter set forth.
11.2
If the Government elects to take the royalty payment on crude oil in
kind, it shall so notify the Contractor in writing not less than sixty
(60) days prior to the commencement of each six month period of
each calendar year specifying the quantity, and designating the grade
and quality that it elects to take in kind, based upon estimates,
including those contained in the forecast statement furnished
pursuant to paragraph 6.3.2. Final adjustments shall be made
within ninety (90) days of the end of each calendar year on the basis
of actual quantities. Such notice shall be effective for the ensuing
six month semester of that calendar year. Failure to give such notice
shall be conclusively deemed to indicate the election by the
Government not to take in kind.
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West Bay Behie Ltd. 11/3/2003
11.3
Any sale by the Contractor of any part of the Government's share of
crude oil production shall not be for a term expiring more than six
(6) months after the date of execution of the sales contract without
the Government's written consent If the Government so consents,
the Government shall not exercise its rights to receive crude oil in
kind pursuant to paragraph 11.2.
11.4
Any sale by the Contractor of any part of its share of the crude oil
produced and saved from the contract area shall not be for a term
expiring more than twelve (12) months after the date of execution of
the sales contract without the Government's written consent. The
Government shall not exercise its rights under paragraph 11.7 to
require the Contractor to satisfy the internal consumption
requirements of Belize from crude oil which is subject to such
contract.
11.5
Crude oil which the Government has elected to take in kind shall
be delivered by the Contractor, free of cost to the Government, at
regularly spaced intervals at the delivery point or to the
Government's storage facilities in the field, or both, at the option of
the Government. The Government shall provide at such delivery
points, at its sole risk and expense, all storage, transportation and
other facilities necessary to receive such crude oil, provided,
however, that if the Government requests, the Contractor shall
provide adequate storage facilities at such places, free of charge, at
the risk of the Government, for a quantity of the Government's
crude oil not exceeding one hundred thousand 000,000) barrels
for each field. If storage exceeds one hundred thousand 000,000)
barrels per field at any time, the Government shall pay to the
Contractor a reasonable storage charge for such excess. If such
storage is provided, and the Government has no need for such
storage capacity, the Contractor has the right to use such storage
capacity for its own use and Government shall not pay any storage
charge for any such period in which Contractor uses the storage
facilities.
11.6
If the Government elects to meet all or part of the requirements of
the domestic market of Belize from crude oil production in Belize,
it shall use its share of production from all crude oil production in
Belize to do so. If in any year there is domestic demand in excess of
the Government's share of such production, the Government may
require the Contractor to sell crude oil in Belize on a pro rata basis
with other producers in Belize, according to the quantity of crude
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West Bay Belize Ltd. 11/3/2003
oil production of each producer in each year. The Government
shall give the Contractor at least three (3) months notice in advance
of such requirement and the term of supply will be on an annual
basis. The price for such sales shall be the price as calculated
pursuant to paragraph 10.2 above.
11.7
If the Government elects to exercise its rights under paragraph 11.6,
it shall notify the Contractor in accordance with the provisions of
paragraph 11.2 relating to the Government's election to take royalty
payment in kind. The amounts to be taken shall be based upon
estimates, including those contained in the forecast statement
furnished pursuant to paragraph 6.3.2, and final adjustments shall
be made within ninety (90) days of the end of each calendar year on
the basis of actual quantities.
11.8
Not less than twelve (12) months prior to initial commercial
production in any field, the Contractor shall submit to the
Government for approval, proposed procedures and related
operating regulations and financial terms covering the scheduling,
storage and lifting of crude oil from such field. The procedures,
regulations and terms shall be in accordance with accepted
standards and practices in the international petroleum industry and
comprehend the subjects necessary to efficient and equitable
operations including, but not limited to:
rights of parties,
notification time, maximum and minimum quantities: duration of
storage, scheduling, conservation, spillage, liabilities of the parties,
and penalties for over and under lifting, safety and emergency
procedures.
ARTICLE XII
PayrnentProcedure
12.1
All payments due to the Government hereunder shall be made in
United States dollars at a bank to be designated by the Government,
or at the Contractor's election, such other currency as is acceptable
to the Government.
12.2
All payments due to the Contractor hereunder shall be made in
United States dollars at a bank to be designated by the Contractor,
or, at the Government's election, such other currency as is
acceptable to the Contractor.
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12.3
Except as otherwise expressly provided herein, all payments
required to be made pursuant to this Agreement shall be made
within thirty (30) days following the end of the calendar month in
which the obligation to make such payment occurs.
12.4
First year administrative fees for the Initial Exploration period shall
be paid to the Government of Belize (GOB) via the Inspector of
Petroleum within ninety (90) days of execution of PSA. Fees for
the subsequent years of the Exploration period shall be paid on or
before anniversary of effective date of PSA.
12.5
If any payment is not made when due, such unpaid amount shall
bear interest from and after the due date at an interest rate
compounded annually at two percent (2%) greater than the interest
rate charged by any Commercial Bank in Belize to prime
commercial customers for ninety (90) day loans as in effect from
time to time until the date of payment or prime rate published in
the Wall Street]ournal which is a base rate on corporate loans
posted by at least 75% of the nation's 30 largest banks or LIBOR.
ARTICLE XIII
Surface Rentals
13.1
The Contractor shall be liable for payment of such fees and surface
rentals as are stipulated in the Petroleum Regulations 1992. The
fees payable for each year shall be paid in advance and in
accordance with paragraph 12.4. The fees for the first year shall be
paid within ninety (90) days of the effective date of this Agreement.
ARTICLE XIV
Natural Gas
14.1
The Contractor shall have the right to use associated natural gas for
petroleum operations, including reinjection for pressure
maintenance in the field or adjacent fields of the Contractor.
Associated natural gas which is, in the opinion of both the
Contractor and the Government, not economical, shall be returned
to the subsurface structure, or may be flared with the consent of the
Government. In the event that the Contractor chooses to process
and sell associated natural gas, the Contractor shall notify the
Government of the same and upon such notification, the
Government and the Contractor shall, as soon as practicable
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West Bay Beljze Ltd. 11/3/2003
thereafter, meet together with a view to reaching an agreement on
the production, processing and sale of such gas. In the event the
Contractor chooses not to process and sell associated natural gas,
the Government may elect to off-take at the outlet flange of the gas
oil separator and use such associated natural gas which is not
required for petroleum operations. There shall be no charge to the
Government for such associated natural gas, provided that the cost
to gather such associated natural gas in the field at the point of being
flared and to process and utilize it shall be for the account of the
Government.
14.2
Where non-associated natural gas is discovered in the contract area
and the Contractor has, pursuant to paragraph 6.2 informed the
Government that the discovery is of potential commercial interest,
the Government and the Contractor will, on completion of the
appraisal programme relating to such discovery, or sooner if so
agreed, meet together with a view to reaching an agreement on the
development, production, processing, utilization, disposition or sale
of such gas.
14.3
In the event that the development, production, processing,
utilization, disposition or sale of natural gas from the contract area is
determined by the parties to be economically feasible in accordance
with this Article XIV, the costs of development and production of
the same from the reservoir to the delivery point, and the revenue
derived therefrom, shall, unless otherwise agreed pursuant to
paragraphs 14.1 and 14.2, be included in petroleum operations
expenditures and gross revenues, respectively, for all purposes of
this Agreement, subject to the accounting procedure outlined in the
Bulletin of the Income Tax Commissioner (Annex 1).
14.4
The price to be paid for natural gas, or the value to be attributed
thereto shall
14.4.1
for sales to third parties, be equal to the net realized price obtained
by the Contractor for such Natural Gas at the delivery point;
14.4.2
for sales other than to third parties, be determined by agreement
between the Government and the Contractor, provided, however,
that such price or value shall reflect the following: (i) the quality and
quantity of the natural gas (ii) the price at which sales of natural gas
from other sources in Belize, if any, are then being made, (iii) the
price at which sales, if any, of natural gas imported into Belize are
being made, (iv) the purpose for which the natural gas is to be used,
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West Bay BehZe Ltd. 11/3/2003
and (v) the international market price of competing or alternative
fuels or feedstocks.
14.4.3
Third party sales shall mean sales as described in paragraph 10.4
ARTICLE XV
Taxes
15.1
The Contractor and his contractors and subcontractors shall be
obligated to pay income tax for the applicable calendar year upon
net taxable income derived from petroleum operations pursuant to
the Income and Business Tax Act, Chapter 55 Substantive Laws of
Belize, Revised Edition 2000.
15.2
In each calendar year, the Contractor's income tax shall be payable
to the Government in installments on the last day of each quarter
on the basis of the estimate, and quarterly updates thereto, provided
to the Government. The estimated unpaid liability for income tax
for each calendar year as of the current estimate or quarterly update
shall be payable equally over the remaining quarterly installments
for such calendar year. Adjusting payments or refunds, as the case
may be, shall be made within ninety (90) days of the end of the
calendar year based upon the detailed accounts submitted for such
calendar year pursuant to paragraph 26.2 as approved by the
Government.
15.3
(a) The Contractor shall within ninety (90) days of the end of each
calendar year, notify the Government of any and all amounts paid
to its contractors with respect to operations carried out by them in
Belize and in tum shall notify its contractors that they must similarly
advise the Government within ninety (90) days after the end of each
calendar year of any and all amounts paid to their sub-eontractors
with respect to operations carried out by them in Belize.
The Contractor shall also advise each of its contractors, and
shall require such contractors to likewise notify their subcontractors
that for every six (6) months such contractors and subcontractors
shall furnish to the Government a list of all their Belizean and
expatriate personnel, along with the remuneration received by each
of such personnel, and that they shall be required, prior to leaving
Belize, to establish to the satisfaction of the Government that the
necessary income taxes have been paid.
(b)
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15.4
The Contractor and his contractors and subcontractors and their
respective personnel shall be obligated to pay such reasonable
transfer taxes and stamp duties as may be in effect from time to
time at the rates which are generally applicable to all persons or
entities in Belize.
15.5
Except as may be otheIWise agreed in wntmg between the
Government and the Contractor, all transactions giving rise to
revenues, costs or expenses which will be credited or charged to the
books, accounts, records and reports prepared, maintained or
submitted hereunder shall be conducted at arm's length or on such
a basis as will assure that all such revenues, costs or expenses will
not be higher or lower, as the case may be, than would result from a
transaction conducted at arm's length on a competitive basis with
third parties.
ARTICLE XVI
Exemptions from
Custom Duties
16.1
The Contractor and his non-Belizean contractors and
subcontractors engaged in conducting petroleum operations under
this Agreement shall be permitted to import upon application to
and approval by the Minister of Finance for exemptions from
customs duties with respect to the importation of, machinery,
equipment, spare parts, materials, supplies, consumable items,
moveable property, and any other items or articles connected with
petroleum operations, subject to the provisions of paragraph 16.2.
16.2
The exemptions provided in paragraph 16.1 shall not apply to any
imported item when, in the reasonable opinion of the Government,
items of the same, or substantially the same, kind and quality are
manufactured locally and/or are available locally for purchase and
timely delivery at the Contractor's operating base in Belize at a price
equal to the cost of the imported item{s).
16.3
The Government reserves the right to inspect during normal
business hours the records, documentation or the physical item or
items for which an exemption is or has been provided under
paragraph 16.1 to determine that such item or items are being or
have been imported solely for the purpose for which the exemption
was granted.
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16.4
The item or items exempt from customs duties hereunder shall not
be sold to third parties (who are not in their own right exempt from
such customs duties) for use or consumption in Belize unless prior
written authorization is obtained from the Government and the
importing party pays the tax or duty due on the assessed value of
such item or items at the time of sale.
16.5
Any of the items imported into Belize, whether exempt or non
exempt from customs duties, may be exported by the importing
party at any time without the payment of any export duties, taxes or
imposts.
16.6
"Custom duties" as used herein shall include all duties, taxes, or
imposts (except those charges, as may be in force from time to time,
paid to the Government for actual services rendered such as normal
handling and storage charges) which are payable as a result of the
importation of the item or items under consideration.
16.7
The Contractor shall be exempted from any duty, fee or any other
financial imposts (except those charges paid to the Government for
actual services rendered such as normal handling and storage
charges (if any)) in respect of the export of petroleum to which the
Contractor is entitled hereunder.
16.8
The Contractor shall not, directly or indirectly, export any
petroleum produced from the contract area to any country or
person which the Government has by law or official
pronouncement declared to be hostile or unfriendly.
ARTICLEXVn
Exchange and
Currency Controls
17.1
The Contractor shall be subject to the applicable exchange control
legislation and regulations in effect from time to time in Belize,
provided, however, that:
(i) the Contractor shall be permitted to freely dispose of any crude
oil produced after satisfying its obligations of payment of taxes,
bonuses, royalties and other fees to the Government and with the
prior approval of the Central Bank of Belize to receive and hold the
proceeds from the sale of any petroleum, crude oil, natural gas and
casinghead petroleum spirit produced therefrom in its offshore
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West Bay Belize Ltd. 11/3/2003
- banking account;
(ii)
the Contractor shall be permitted to remit any profits,
dividends, capital, or sums owed in repayment of loans including
sums owed to affiliates, which are not required for conducting the
petroleum operations, to their home office or non-resident
shareholders free of any charges, taxes, imposts or other duties;
(iii) the Contractor shall have the right to establish and maintain
local bank accounts which may be denominated in Belize dollars
or, subject to the prevailing conditions of the Central Bank of
Belize, in United States dollars which may be utilized as necessary
for payment of Contractor's obligations in Belize;
(iv) no restriction shall be placed on the importation by the
Contractor of funds necessary for carrying out the petroleum
operations stipulated in this Agreement;
(v) the Contractor shall have the right to pay directly outside of
Belize from its offices abroad for purchases or services for
petroleum operations hereunder, provided, however, that no such
payments shall be made to residents of Belize or to firms using
Belize as their main base of operations (whether natural or juridical)
contrary to the Laws of Belize.
ARTICLE XVIII
Title to Equipment
18.1
All equipment and assets which are fixed installations and are not
exported by the Contractor under paragraph 16.6 shall become the
property of the Government without cost as soon as this Agreement
is terminated.
ARTICLE XIX
Government
Participation
19.1
The Government shall have the option to acquire for itself or for its
designee an undivided and unencumbered equity, working interest
of up to ten percent (lO%) of the total interest of the Contractor in
this Agreement and in return therefore shall furnish its participating
interest share of the funds as provided in paragraphs 19.3.
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19.2
Within ninety (90) days following the date of -declaratioll--Of
commercial discovery for any field, the Government, by written
notice to the Contractor, may exercise its option to participate in
this Agreement. If the Government exercises its option to
participate, (a) it shall promptly reimburse the Contractor an
amount, equivalent to that percentage of working interest ten (lo%)
requested by the Government of Belize and not exceeding ten
percent (l0%) of all exploration expenditures incurred prior to the
date of declaration of commercial discovery for such field and (b)
the Contractor (or each corporation, individual or entity comprising
the Contractor at that time pro rata) shall assign and transfer to the
Government or its designee the percentage interest that the
Government has opted to acquire. The Government or its designee
shall assume all rights and obligations of the Contractor pro rata
with its participating interest, in connection with this agreement.
19.3
The Government may, upon giving the Contractor reasonable
written notice, require the Contractor to lend the Government up to
one hundred percent (l00%) of the funds required to pay the
Government's pro-rata share of expenditure. The loan shall bear
interest at U.S. Prime rate plus three percent (3%).
The
Government shall make repayments of the loan on a quarterly basis
in amount equal to eighty-five (85%) of the differences between the
gross revenues attributable to the Government's Participating
Interest in the field and the costs and expenses, including royalty
but excluding income taxes, attributable to the Government's
Participating Interest in the field for Petroleum Operations.
Repayments of the loan shall be applied first to accrued and unpaid
interest and the balance shall be applied in reduction of the
outstanding principal balance.
ARTICLE XX
Training and
Employment
20.1
The Contractor agrees to train and employ qualified nationals of
Belize in its petroleum operations and, after initial commercial
production, will undertake the schooling and training of nationals of
Belize for staff positions, including administrative and executive
management positions. The Contractor will require his contractors
and subcontractors to do the same. The Contractor undertakes to
gradually replace its expatriate staff with qualified nationals of Belize
as they become available. An annual programme for training and
phasing in of nationals of Belize shall be established by the
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Contractor and shall be submitted for approval to the Government.
Such programme shall be included in the annual work programmes
submitted by the Contractor pursuant to paragraph 5.4. Within
thirty (30) days of the end of each calendar year, the Contractor
shall submit a written report to the Government describing the
number of personnel employed, their nationality, their positions
and the status of training programmes for nationals of Belize.
20.2
The Contractor shall also be required to establish a programme,
satisfactory to the Government, to train personnel of the
Government to undertake skilled and technical jobs in petroleum
operations for the Government. Such programme shall also include
provisions for involving representatives of the Government in
preparation of the annual work programme and work programme
budgets as required by paragraph 5.4 (d).
20.3
The Contractor shall be responsible for on-the-job trammg of
Belizean nationals during the exploration and development periods
pursuant to paragraphs 20.1 and 20.2. Commencing with the first
contract year following initial commercial production in the first
field, the Contractor shall undertake responsibility of training not
less than three (3) Belizean nationals per each calendar year in
accordance with paragraphs 20.1.
ARTICLE XXI
Purchases in Belize
21.1
In procurement, the Contractor shall give preference to goods
which are produced or available in Belize and services which are
rendered by nationals of Belize and companies of Belize, provided
such goods and services are offered on terms equal to or better than
imported goods and services with regard to quality, price and
availability at the time and in the quantities required.
21.2
Locally produced or available equipment, materials and supplies
shall be deemed equal in price to imported items if the local cost of
such locally produced or available items at the Contractor's
operating base in Belize is not more than ten percent (10%) higher
than the cost of such imported items before customs duties but after
transportation and insurance costs have been added.
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ARTICLEXXn
Unitization
22.1
If a field is designated within the contract area and such field
extends beyond the contract area to other areas of Belize over
which other parties have the right to conduct exploration,
development and production operations, the Government may
require that the development of the field and the production of
petroleum therefrom be carried out in collaboration with the other
contractors consistent with accepted practices in the international
petroleum industry. The same rule shall be applicable if deposits of
petroleum within the contract area, although not equivalent to a
commercial discovery if developed alone, would be deemed to be a
commercial discovery if developed with those parts of the deposits
which extend to areas controlled by other contractors.
22.2
If the Government so requests, the Contractor shall collaborate with
other contractors in preparing a collective proposal for common
development and production of the deposits of petroleum for
approval by the Government.
22.3
If the proposal for common development and production has not
been presented within ninety (90) days of the request described in
paragraph 22.2, or if the Government does not approve such
proposal, the Government may prepare or cause to be prepared,
for the account of the Contractor and the other contractors
involved, a reasonable plan for common development and
production. If the Government adopts such plan, the Contractor
shall comply with all conditions established in such plan.
22.4
The Contractor may within twenty eight (28) days from the date on
which notice in writing of such plan has been given to him by the
Minister refer the matter to arbitration pursuant to Article XXIV.
In such event the plan shall not be implemented until the
arbitrators render a decision or the parties agree on a compromise
plan, whichever occurs first.
22.5
This Article XXII shall also be applicable to discoveries of deposits
of petroleum within the contract area which extend to areas that are
not within the dominion of Belize, provided that in these cases the
Government shall be empowered to impose the special rules and
conditions which may be necessary to satisfy obligations under any
agreements with international organizations or adjacent states with
respect to the development and production of such deposits of
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West Bay Belize Ltd. 11/3/2003
petroleum.
22.6
Within ninety (90) days following the approval or adoption of a
unitization plan for common development and production, the
Contractor shall proceed to operate under any such plan. If a clause
of a cooperative or unitary development and production plan which
by its terms affects the contract area or a part of the same,
contradicts a clause of this Agreement, the clause of the cooperative
or unitary plan shall prevail.
ARTICLE XXIII
Danger to Persons,
Propelty or
Environment
23.1
The Contractor shall undertake relevant studies to identify sources
of potential environmental damage and pollution which may result
as a consequence of petroleum operations under PSA 2 of 2003.
The Contractor shall identify mitigation/prevention measures to be
adopted to minimize the effects(s) of any and all such sources
identified, and shall submit these to the approval of the
Government prior to the execution of any work.
23.2
If the Government reasonably determines that any works or
installations erected by the Contractor or any operations conducted
by the Contractor endanger or may endanger persons or third party
property or cause pollution or harm wild-life or the environment to
a degree that is unacceptable according to international petroleum
standards, the Government may require the Contractor to take
remedial measures within a reasonable period established by the
Government and to repair any damage to the environment that may
be necessary in accordance with international petroleum standards.
In the event that the Contractor fails to take the remedial measures
required by the Government within the time period established by
the Government, the Government may carry out such remedial
measures for the Contractor's account.
ARTICLE XXIV
Arbitration
24.1
If any time during the continuance of this Agreement or any
renewal thereof or after the termination thereof any question,
disagreement or dispute shall arise regarding this Agreement or any
matter or thing connected therewith or the breach thereof or the
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West Bay Beljze Ltd. 11/3/2003
powers, duties, or liabilities of the parties thereunder, the parties
shall first attempt to amicably solve the question, disagyeement or
dispute between themselves by consulting and negotiating with each
other in good faith. If the Government and the Contractor are not
able to amicably resolve their differences within a period of forty
five (45) days after such difference arises, then the dispute or
differences shall be finally settled by arbitration in accordance with
the Arbitration Rules of the United Nations Commission on
International Trade Law (hereinafter referred to as UNCITRAL
Arbitration Rules).
...
24.2
The number of arbitrators shall be three. The Government shall
appoint one and the Contractor shall appoint one. The two
arbitrators thus appointed shall choose the third arbitrator who will
act as the Presiding Arbitrator. If the two arbitrators cannot come to
an agyeement on the designation of the third, the third arbitrator
shall be designated in accordance with the UNCITRAL Arbitration
Rules.
24.3
The place of arbitration shall be Belmopan, Belize if at the time of
such arbitration, Belize is recognized as a member state of the 1958
Convention on the Recognition and Enforcement of Foreign
Arbitral Awards ("New York Convention"). If Belize is not a
member state of the New York Convention at that time, the place
of arbitration shall be Mexico City, Mexico.
24.4
The language to be used in the arbitration proceeding shall be
English.
24.5
The arbitral tribunal shall decide all questions presented on the
basis of:
(a) the laws and regulations of Belize applicable to this Agreement
and other relevant laws, both national and international;
(b) the provisions of the Agreement, and
(c)
trade usages and customs of the international petroleum
industry.
24.6
Arbitral awards shall be final and binding upon the parties from the
date they are made and judgment upon the award may be entered
in any court having jurisdiction.
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ARTICLE XXV
Tennination
25.1
The Government shall have the right to terminate this Agreement
upon giving thirty (30) days written notice of its intention to do so if
the Contractor (a) fails to make any monetary payment required by
law or under this Agreement for a period of thirty (30) days after the
due date for such payment, (b) fails to comply with any other
material obligation that he has assumed under this agreement, or (c)
fails to comply with the Petroleum Act Chapter 225, Substantive
Laws of Belize, Revised Edition 2000 and any lawful acts,
regulations, orders or instructions issued by the Government or any
department or agency of the Government, or (d) becomes
bankrupt, or goes into liquidation because of insolvency or makes a
composition with its creditors.
25.2
If the circumstance or circumstances that result in termination
under paragraph 25.l(a), (b) or (c) are remedied by the Contractor
within the thirty (30) days period following the notice of termination
as aforesaid, such termination shall not become effective.
25.3
If the circumstance or circumstances that would otherwise result in
termination under paragraph 25.1 are the result of force majeure,
then termination shall not take place so long as such force majeure
continue and for such period thereafter as is reasonable.
25.4
The termination of this Agreement for whatever reason shall be
without prejudice to the obligations incurred and not discharged by
the Contractor prior to the date of termination.
25.5
In the event of termination pursuant to paragraph 25.1 or 25.7, the
Government may require the Contractor, where reasonable, for a
period not to exceed one hundred eighty (180) days, to continue,
for the account of the Government at the Government's sole risk
and expense, crude oil or natural gas production activities until the
right to continue such production has been transferred to another
entity.
25.6
Within ninety (90) days after the termination of this Agreement
pursuant to paragraph 25.1 or paragraph 25.7, unless the Minister
has granted an extension of this period, the Contractor shall
complete any reasonably necessary action as directed by the
Government to avoid environmental damage or a hazard to human
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West Bay Belize Ltd. 11/3/2003
life or third party property.
25,7
The Contractor has the right to terminate this Agreement for
material nonperformance of the Government consistent with all
available remedies at law and equity. Additionally, Contractor shall
have the right to terminate this Agreement totally, or partially, (a)
with respect to any part of the contract area other than a field then
producing, or that prior thereto had produced, crude oil or natural
gas upon giving thirty (30) days written notice of its intention to do
so, and (b) with respect to any field then producing, or that prior
thereto had produced crude oil or natural gas upon giving ninety
(90) days written notice of its intention to do so. Upon termination,
the provisions of paragraphs 4.7 and 4.8 shall apply.
ARTICLE XXVI
Books, Accounts and
Audits, Records,
Reports and
Inspections
26.1
The Contractor shall be responsible for keeping complete accounts,
books and records reflecting all petroleum operations expenditures
and gross revenues consistent with generally accepted procedures
and standards in the international petroleum industry and in
accordance with the accounting procedure outlined in the Bulletin
of the Income Tax Commissioner (Annex 1).
26,2
Within ninety (90) days after the expiration of each calendar year,
the Contractor shall submit to the Government detailed accounts
showing all petroleum operations expenditures and all gross
revenues during the past calendar year. Before submission to the
Government, the accounts shall be audited by an independent
chartered accountant or certified public accountant acceptable to
both parties, at the expense of the Contractor. It is understood that
the Government, through the Auditor General's Department,
retains the authority to review and audit the Contractor's accounts,
books and records with respect to petroleum operations conducted
hereunder either directly or through an independent accountant
designated by the Government.
26.3
The Government and its duly authorized representatives shall have
full and complete access to the contract area at all reasonable times
with a right to observe petroleum operations and shall have the right
to inspect all assets, records, books, accounts and data kept by the
Contractor relating to petroleum operations and this Agreement. In
so doing, the Government and its representatives shall not unduly
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West Bay Belize Ltd. 11/3/2003
interfere with the Contractor's petroleum operations. However, the
Government and its representatives may make a reasonable
number of surveys, drawings, tests and copies for the purpose of
implementing this Agreement. In doing so, the Government and its
representatives shall be entitled to make reasonable use of the
equipment and instruments of the Contractor provided that no
damage to the equipment or instruments or impediment to the
petroleum operations hereunder shall result from such use. The
Government shall indemnify and reimburse the Contractor for any
loss or damage which may in fact result from any such use of
equipment and instruments, provided that such loss or damage is
reported to the Government within twenty-four (24) hours from the
time of such inspection. The Government and its representatives
shall be given reasonable assistance by the Contractor for such
functions, and the Contractor shall afford to the Government and
its representatives all facilities and privileges afforded to its own
personnel in the field.
26.4
The Contractor shall prepare and maintain accurate and current
records of its activities in the contract area hereunder. The
Contractor shall furnish the Government in conformity with the
applicable regulations, and as the Government may reasonably
require, information, reports and data concerning its activities and
operations under this Agreement.
26.5
The Contractor shall save and keep for the duration of this
Agreement all unused cores and samples taken from the wells
drilled, which shall be forwarded to the Inspector of Petroleum or
his authorized representatives at such time and in the manner
directed by the Government. All cores and samples acquired by the
Contractor shall be available for inspection by the Inspector of
Petroleum or his authorized representatives at all reasonable times.
Unless previously forwarded to the Government pursuant to
instructions given under this paragraph, the Contractor shall
forward to the Government all remaining cores and samples upon
the expiration or termination of this Agreement.
26.6
Unless otherwise agreed to by the Government, III the case of
exporting any rock or petroleum samples from Belize for the
purpose of testing and analysis, samples equivalent in size and
quantity shall, before such exportation, be delivered to the
Inspector of Petroleum.
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26.7
Originals of records and other data can be exported only with the
pennission of the Government, provided, however, that magnetic
tapes and any other data which must be processed or analyzed
outside Belize may be exported if a comparable record is
maintained in Belize and provided that such exported records and
data shall be repatriated to Belize.
26.8
The Contractor shall provide to the Inspector of Petroleum in
appropriate fonn all original data resulting from petroleum
operations, including, but not limited to, geological, geophysical,
petrophysical engineering, well logs, production data and
completion status reports and any other data which the Contractor
may compile during the tenn hereof including all reports, analyses,
interpretations, maps and evaluations thereof prepared by the
Contractor and any contractors, subcontractors or consultants to the
Contractor or by affiliated companies, and cuttings of all samples
that have been obtained or compiled during the tenn hereof
("data"), The Government shall have title to all such data. Such
data shall not be disclosed to third parties by the Government prior
to relinquishment of the area to which they relate, or prior to the
end of the exploration period if such area is not sooner
relinquished, provided, however, that the Government may make
copies available to professional consultants, legal counsel,
accountants, underwriters, lenders and such Government entities as
may need to be made aware thereof or have the right to require
disclosure. In any event, the Contractor may retain copies of all
such data. The Contractor shall not disclose such data to any third
parties without the Government's prior written consent, provided,
however, that the Contractor may make copies available to
professional consultants, legal counsel, accountants, underwriters,
lenders, affiliated companies and contractors and subcontractors of
the Contractor and such government entities as may need to be
made aware thereof or have the right to require disclosure. Any
data which are disclosed by the Government or the Contractor to
third parties pursuant to this paragraph (26.8) shall be disclosed on
tenns which ensure that such data are treated as confidential by the
recipient. To the extent that there is any inconsistency between the
provisions of this paragraph (26.8) and the provisions of Article
XXXIII, the provisions of this paragraph (26.8) shall govern.
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West Bay BehZe Ltd. 11/3/2003
ARTICLE XXVII
Insurance and
Indemnification
27.1
To ensure that the Contractor shall meet his obligations to third
parties, or to Government agencies, that might arise in the event of
damage or injury (including environmental damage or injury,
removal of wrecks and cleaning up caused by accidents) caused by
petroleum operations, notwithstanding that the damage is
accidental, the Contractor shall maintain in force a third party
liability insurance policy covering the activities of himself, his
contractors and subcontractors and the employees of all such
parties. Such insurance policy shall include the Government as an
additional insured, shall waive subrogation against the Government
and shall provide that it may not be cancelled except upon thirty
(30) days prior written notice to the Government. A certificate
evidencing such insurance policy shall be furnished to the
Government within ninety (90) days of the effective date. The
limits, coverage, deductibles and other terms thereof shall be
subject to approval in writing by the Government. To the extent
that such third party liability insurance is unavailable or is not
obtained, or does not cover part or all of any claims or damage
caused by or resulting from petroleum operations, the Contractor
shall remain fully responsible and shall defend, indemnify and hold
the Government harmless against all such nature whatsoever. The
Contractor shall maintain in force a third party liability insurance
policy covering the activities of himself, his contractors and
subcontractors and the employees of all such parties. Such
insurance policy shall include the Government as an additional
insured, shall waive subrogation against the Government, and shall
provide that it may not be canceled except upon thirty (30) days
prior written notice to the Government. A certificate evidencing
such insurance policy shall be furnished to the Government within
ninety (90) days of the effective date. The Contractor shall procure
at his own expense and maintain in full force at all times, where
applicable and available, the following:
1. Workmen's Compensation Insurance in full compliance with
the laws of the applicable country and state of hire.
2. Employer's liability Insurance.
3. Commercial General Liability Insurance with Bodily Injury
(other than automobile)
4. Pollution Liability; Sudden and accidental pollution liability on
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West Bay Belize Ltd. 11/3/2003
a claims made basis.
Excess liability
5. Umbrella Liability or Excess Insurance:
insurance pursuant to an "umbrella" policy covering claims III
excess of the underlying insurance as set forth in (3) above.
6. Automobile Liability: Coverage with Bodily Insurance and
Property Damage with combined Single Limit per Occurrence.
7. Energy Exploration and Development Policy: Blowout insurance
covering cost of well control, redrilling and pollution liability.
Such insurance will be purchased within limits that are mutually
agreed to and acceptable based on international industry standards.
Originals of all insurances obtained under Article XXVII, this para.
27.1 shall be lodged with the Inspector of Petroleum within thirty
(30) days of execution of insurances.
27.2
The Contractor shall indemnify, defend and hold the Government
harmless against claims, losses and damages, without limitation,
claims for loss or damage to property or injury or death to persons
caused by or resulting from only petroleum operations conducted
by or on behalf of the Contractor, provided that the Contractor
shall not be held responsible to the Government under this
paragraph 27.2 for any loss, claim, damage or injury caused by or
resulting from any negligent action of personnel of the Government
27.3
The Contractor shall contribute one tenth of one percent (0.10%)
of the value of the annual gross production of crude oil and/or
natural gas produced and saved in each calendar year and not used
or consumed in petroleum operations to a Common Fund to be
held in trust by the Government and managed for the sole purpose
of indemnification against any or all environmental damages caused
during the petroleum operations.
27.4
Nothing contained in paragraph 27.3 above shall be construed to
relieve the Contractor of his obligations of indemnification as set
elsewhere out in this Agreement.
ARTICLE XXVIII
Assignment
28.1
The Contractor may assign, transfer, conveyor otherwise dispose of
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West Bay Beh"ze Ltd. 11/3/2003
any part or all of its rights or interest under this Agreement with the
prior written consent of the Government, which consent shall not
be unreasonably withheld.
28.2
Notwithstanding the provisions of paragraph 28.1, if the Contractor
assigns to any affiliated company, the Contractor shall remain fully
liable for the performance of this Agreement and shall be fully
liable for the performance of any such assignee.
28.3
In the case of an assignment to any non-affiliated company, the
Contractor shall provide to the Government an unconditional
undertaking by the assignee to assume all obligations of the
Notwithstanding such
Contractor under this Agreement
undertaking, the Contractor shall remain jointly and severally liable
with the assignee for performance of the obligations of the
Contractor unless the Contractor assigns his entire interest under
this Agreement.
ARTICLE XXIX
Law of the Agreement
29.1
This Agreement shall be construed under, governed by and
interpreted in accordance with the laws of Belize and such
principles of international law as may be applicable.
ARTICLE XXX
Force Majeure
30.1
Except as otherwise provided in this Article, each party shall be
excused from complying with the terms of this Agreement, if such
compliance is prevented by strikes, wars (declared or undeclared),
acts of God, governmental intervention not otherwise addressed in
this Agreement, third-party intervention, or by any act or cause that
is reasonably beyond the control of such party, such causes being
herein called "force majeure". In the event that either party hereto
is rendered unable, wholly or in part, by any of these causes to carry
out its obligations under this Agreement, such party shall give notice
and details of force majeure in writing to the other party within
thirty (30) days after the party giving notice of such force majeure is
aware of its occurrence. In such cases, the obligations of the party
giving the notice shall be suspended during the continuance of any
inability so caused. The Government and Contractor will do all
- 49
West Bay Beljze Ltd. 11/3/2003
that is reasonably within their power to remove such cause.
ARTICLE XXXI
Entire Agreement and
Amendments
31.1
This Agreement is based on the principles of pactil. sunt observanda
and rebus sic stantibus. Since this Agreement embodies the entire
agreement and understanding between the Contractor and the
Government relative to the subject matter hereof, and supercedes
and replaces any provisions on the same subject in any other
Agreement between the parties, whether written or oral, prior to the
date of this agreement. Therefore, this Agreement may not be
amended, modified, varied or supplemented except by an
instrument in writing signed by the Contractor and the
Government.
ARTICLE XXXII
Waiver
32.1
Performance of any condition or obligation to be performed
hereunder shall not be deemed to have been waived or postponed
except by an instrument in writing signed by the party which is
claimed to have granted such waiver or postponement.
32.2
No waiver by any party of anyone or more obligations or defaults
by any other party in the performance of this Agreement shall
operate or be construed as a waiver of any other obligations or
defaults whether of a like or of a different character.
ARTICLE XXXIII
Confidentiality
33.1
This Agreement and any confidential information of any party
hereto which becomes known to the other party in connection with
the performance of this Agreement shall not be published or
disclosed to third parties without the former party's written consent,
except as otherwise provided herein, and provided however that
such other party may communicate confidential information to legal
counsel, accountants, other professional consultants, underwriters,
lenders, agents, contractors or shipping companies to the extent
necessary in connection with this Agreement, with the obligation of
- 50
West Bay Belize Ltd. 11/3/2003
the parties receiving such infonnation to maintain confidentiality, or
to an agency of the Government of the country of the Contractor
having authority to require such disclosure.
The tenn "confidential infonnation", as used herein shall mean
infonnation identified as "confidential" by the party originally in
possession of it and disclosed to the other party, excluding
infonnation previously known to the other party or infonnation
which is publicly known (except through disclosure of the other
party in violation of this Article XXXIII) or infonnation that comes
into the legitimate possession of such other party.
.
33.2
The confidentiality obligations of this Article XXXIII shall expire
upon relinquishment of the area to which the information relates.
ARTICLE XXXIV
Notices
34.1
All notices and other communications required or permitted
hereunder or any notices that one party may desire to give to the
other party shall be in writing in the English language and deemed
to have been properly delivered if personally handed to an
authorized representative of the party for whom intended, or sent
by registered ainnail, cable, telex, facsimile and/or e-mail, at or to
the address of such party for whom intended, or such other
addresses as any party may from time to time designate by notice in
writing to the other party.
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West Bay Belize Ltd. 11/3/2003
EXHIBIT "A"
THIS EXHIBIT "A" is attached to and is incoIJlorated as part of the award and delivery of
acreage dated this
~
day of
---JJ e\3 ~\ae--r
, 2003
from Government of Belize
(GOB) to Robert E. Tucker Jr. for West Bay Belize Limited, covering Block 1 Sub-sectors or
44.1,086.5 acres more or less.
ACREAGE DESCRIPTION
SECTOR
SUBSECTORS
NO. OF
ACRES
SUBSECTORS
56
57
58
59
77
78
79
80
81
98
99
100
101
118
119
120
121
138
153
154
155
156
157
172
173
174
175
S,T,W,x,Y; Parts ofj,M,N,O,Q,R,V
B-E,G-Y; Parts of A,F
A-Y
A-Y
D,E,!J; Parts of A,B,C,H,M,N,O
A-J,L-O,Q-T,W-Y; Parts ofK,P,U,V
A-Y
A-Y
A-Y
C-E,HJ,M-O,R-T,W-Y; Parts ofB,G,L,Q,V
A-Y
A-Y
A-Y
A-Y
A-Y
A-Y
A-Y
A,U; Parts ofB,F,G,K,L,P,Q,V
B-D, G-J, L-O, Q-T, V-Y; Parts of A,F,K,P,U
U-W; Parts ofP,Q,R
Y
O,R,S,T,U,V,W; Parts ofEJ,N,Q,X,Y
A,F,K,P; Parts ofB,G,L,Q,U,V
B-E; Part of A
A-E
A-E
Parts of A,B,C,D
TOTAL:
8.7135
24.5894
25
25
7.5581
23.8779
25
25
25
15.2225
25
25
25
25
25
25
25
7.805
19.7159
4.5
1
10.2268
8.3792
4.2450
5
5
0.4225
8,612.6
24,304.6
24,710.4
24,710.4
7,470.6
23,601.3
24,710.4
24,710.4
24,710.4 .
15,046.2
24,710.4
24,710.4
24,710.4
24,710.4
24,710.4
24,710.4
24,710.4
7,714.6
19,487.5
4,447.9
988.4
10,108.3
8,282.1
4195.8
4,942.1
4,942.1
417.6
441,086.5
- 52
West Bay Belize Ltd. 11/3/2003
EXHmIT-B"
MAP OF CONTRACT AREA
37
39
62
96
116
4
135
/36
97
102
1/7
137
155
/72
157
m<
- 53
/39
140
/41
158
159
160
West Bay Beljze Ltd. 11/3/2003
EXHIBIT"C"
SECURITY - BANK GUARANTEE
Ministry of Finance,
Government of Belize,
Belmopan, Belize
Gendemen,
RE: OUR LETTER OF GUARANTEE
In compliance with the request of WEST BAY BELIZE LTD. ("the Contractor"), we, WEST
BAY EXPLORATION COMPANY, 13685 S. West Bay Shore, Suite 200, Traverse City,
Michigan 49684, issue this unconditional irrevocable Letter of Guarantee in your favour for a sum
not exceeding One Hundred and Fifty Thousand United States Dollars (US $150,000.00), which
represents the total minimum exploration expenditures set forth in paragraph 6.1.1. of the Agree
ment ("Agreement"),- dated _ ~I/D~~1!!...4~~__, 2003, between the Contractor and the
Government of Belize ("Government"), relating to petroleum exploration, development and
production in the territory of Belize, to guarantee the Contractor's faithful performance of its
minimum exploration expenditures obligations as provided for in the Agreement, the said sum of
One Hundred and Fifty Thousand United States Dollars (US $150,000.00) to be reduced at the
end of each contract year, as defined in the Agreement, by the amount stipulated to be expended
in such contract year, if such amount is in fact expended as evidenced by a signed certificate from
the Government, provided, however, that said sum shall under no circumstances be reduced below
the stipulated minimum exploration expenditures for the remaining contract year of the initial
exploration period, as set forth in paragraph 6.1.1 of the Agreement, as evidenced by a, signed
certificate from the Government.
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West Bay Belize Ltd. 11/3/2003
The terms and conditions of this Letter of Guarantee are as follows:
1.
The said amount, or any part thereof, shall be paid to you upon our receipt of your written
statement that the amount claimed is duly payable under the Agreement.
2.
We hereby waive diligence, presentment, demand for payment, protest, any requirement
that the Government exhaust any right or power or take any action against the Contractor, all
notices {whether of non-payment by the Contractor, dishonour, protest or otherwise} and all
demands whatsoever. Our obligations hereunder are continuing, absolute and unconditional,
and will not in any way affected by giving of time or any forbearance by the Government, the
waiver or consent by the Government with respect to any provisions of the Agreement, and
irrespective of the validity, regularity, enforceability or value of the Agreement, or by any
other circumstances which might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor, all of which are hereby expressly waived.
3.
Our obligations hereunder shall be paid in United States Dollars to the bank account
designated by the Government, free and clear of and without reduction by reason of any and
all present and future taxes, levies, assessed, imposed or collected with respect thereto by the
Government of or any political subdivision or taxing authority thereof of therein. We shall
bear connection with this Letter of Guarantee.
4.
In order to give effect to this Letter of Guarantee, we hereby declare that the Government
shall be at liberty to act as though we were the principal debtor, and we hereby waive all and
any of the rights as surety which may at any time be inconsistent with any of the above
5.
Any claim or demand under this Letter of Guarantee shall be presented to us on or before
the expiration of the date of the validity of the Letter of Guarantee.
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West Bay Belize Ltd. 11/3/2003
6.
This Letter of Guarantee shall be effective immediately and expire ninety (90) days after
the end of the Initial Exploration period as
West Bay Beljze Ltd. 11/3/2003
IN WITNESS WHEREOF, the Government and the Contractor have hereunto set their hands
and seals the day and year first herein before written.
SIGNED, SEALED AND DELIVERED BY
the above-named JOHN BRICENO
for and on behalf
of the Government of Belize
in the presence of:
000 Briceiio
M' . te of Natural Resources,
Environm n Commerce & Industry
1~~~~;£~:!U-
WITNESS
SIGNED, SEALED AND DELIVERED BY
~~
Robert E. Tucl(er
Robert E. Tucker
For West Bay Belize Limited
For West Bay Belize limited
in the presence of:
(~~.
~J)
.
c:- '"'.<~ ci ' L).~
------------
WITNESS
I, _.:J_~hb_~~~~.Q... of Belmopan, hereby acknowledge that I did sign, seal and deliver the
within-written document as my act and deed.
Acknowledged at BELMOPAN this
.!l~- day of _~Pd~·~,J.o!(; 2003.
J 00 Briceiio
f Natural Resources,
ommerce & Industry
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West Bay Beh"ze Ltd. 11/3/2003
Before me,
BE IT REMEMBERED, that on the
_i4tA
day of
_~~~~~\(""
, 2003 personally
appeared before me the within named John Briceno and acknowledged before me that he did
sign, seal and deliver the within-written instrument as his act and deed and that the signature of
John Briceno is in his writing.
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West Bay Belize Ltd. 11/3/2003
I, Evadne L. Wade MAKE OATH AND SAY as follows:
1.
I am subscribing witness to the execution of this agreement by Robert E. Tucker Jr. of
West Bay Belize Limited.
2.
I was present and did see Robert E. Tucker Jr. of West Bay Belize Limited sign, seal, and
deliver this agreement as his act and deed.
3.
The signature
,,6l-..~ ( ~
" is in the proper handwriting of Robert E.
Tucker Jr. of West Bay Belize Limited and the signature"
f J~
cI C.J ..~~
"is my own
proper handwriting.
SWORN AT BELMOPAN
THIS _l{~:~ DAY OF _MI;}~\{2003
Before me,
BE IT REMEMBERED that on the
:l.~_ day of _~~~be:<: 2003, personally appeared before
me the within-named Evadne L. Wade and made oath that she was a subscribing witness to the
execution of this AGREEMENT by Robert E. Tucker Jr. of West Bay Belize Limited and was
present and did se~ Robert E. Tucker Jr. of
W.est Bay ~elize Limited sigp,. seal an? deliver. ~s
agreement as her/his act and deed and that the SIgnature
his proper handwritings.
~~'Z... '/[.L..A:lJ
J
r "
IS m
M~
VOFFICER
ECUT.l
- 59
West Bay Belize Ltd. 11/3/2003
I hereby certify that I have count the within-written document and that it contains two hundred
ninety-five (295) folios of seventy-two words each and twenty three (23) words over and no more.
AS WITNESS my hand this ~ of ~\)e~2003.
___~;c
THIS DOCUMENT was prepared in the Geology & Petroleum Department for the Inspector of
Petroleum for and on behalf of the Government of Belize
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West Bay BehZe Ltd. 11/3/2003
Annex -I
INCOME TAX COMMISSIONER'S BUlLETIN
Article I General Provisions
1.1
Definitions
1.2
Inconsistency
1.3
Accounting Records and Reports
1.4
Language - and Units of Account
Tax Accounting Principles
1.5
1.6
Accrual Basis
1.7
Definitions of Capital and Operating Expenditures
1.8
Depreciation
1.9
Ann's Length Transactions
1.10 General Exclusions
1.11 Currency Exclusions
1.12 Revision of the Accounting Procedure
1.13 Acceptance of Costs
Article II Petroleum Operations Expenditures
2.1
Definition for the Purpose of Detennining Compliance with the Minimum Exploration
Expenditures Commitment
2.2
Definition for the Purpose of Article IX
Article III Accounting Methods and Principles
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
Labour Costs
Material Costs
Technical Services Costs
Insurance and Claims
Legal and Litigation Costs
General Administration and Services
Interest, etc
Office Costs, etc. in Belize
Example of Production Share Calculation
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West Bay Belize Ltd. 11/3/2003
INCOME TAX COMMISSIONER'S BUlLETIN
ARTICLE I
DEFINITIONS
1.1
The Accounting Procedure described herein is to be
followed and obseIVed in the performance of both
parties' obligations under this Agreement The
definitions appearing in Article I of this Agreement
shall also apply to this Exhibit.
INCONSISTENCY
1.2
In the event of any inconsistency or conflict between
the provisions of this Exhibit and the other
provisions of this Agreement, then the other
provisions of this Agreement shall prevail.
ACCOUNTING
RECORDS
AND
REPORT
1.3
(a) The Contractor shall establish and maintain at its
business office in Belize complete accounts, books
and records of all revenues, costs and expenses
relating to all Petroleum Operations hereunder in
accordance with generally accepted procedures and
standards in the international petroleum industry.
Such account books, records and reports will be
available for the inspection and use of the
Government and its representatives in carrying out
its supervisory function under the Agreement.
(b) Within thirty (30) days of the Effective Date of
this Agreement, the Contractor shall submit to and
discuss with the Government a proposed outline of
charts of accounts, books, records and reports,
which outline shall be in accordance with generally
accepted and recognized accounting systems and
consistent with modem petroleum industry practices
and procedures. Within ninety (90) days of receiving
the above submission, the Government shall either
indicate its approval of the proposal or request
revisions to the proposal. Within one hundred and
eighty (180) days after the Effective Date of the
Agreement, the Contractor and the Government
shall agree on the outline of charts of accounts,
books, records and reports which shall describe the
- 62
West Bay Belize Ltd. 11/3/2003
basis of the accounting system and procedure to be
developed and used under this Agreement.
Following such agreement, the Contractor shall
expeditiously prepare and provide the Government
with formal copies of the comprehensive charts of
accounts and manuals related to the accounting,
recording and reporting functions, and procedures
which are, and shall be, observed under this
Agreement.
(a) All reports and statements will be prepared in
accordance with this Agreement, the laws of Belize,
and where there are no relevant provisions of either
of these, in accordance with generally accepted
practices in the international petroleum industry.
LANGUAGE - AND UNITS OF
ACCOUNT
1.4
Unless otherwise agreed, all accounts, records,
books and reports shall be maintained and prepared
in the English language and shall be recorded in
United States dollars.
TAX ACCOUNTING
PROCEDURES
1.5
The following tax accounting principles shall apply:
1.5.1
In the event that the Contractor at any time
comprises more than one corporation, individual or
entity, in the form of a partnership, joint venture,
unincorporated association or other combination of
entities or individuals, Income Tax shall in all cases
be calculated and assessed on the basis of the Net
Taxable Income of each corporation, individual,
partner, joint venture, associate or other entity
comprising the Contractor.
1.5.2
Commencing with the Calendar Year in which Initial
Commercial Production first occurs, any allowable
deductions for Income Tax purposes with respect to
Petroleum Operations Expenditures, the Production
Payment and the Government's share of Crude Oil
production which remain unrecovered in any
Calendar Year from Gross Revenue shall be treated
as an operating loss and may be carried forward as
CARRY FORWARD OF LOSSES
- 63
West Bay Belize Ltd. 11/3/2003
an allowable deduction to subsequent Calendar
Years until fully recovered from Gross Revenues. In
the event that an operating loss remains unrecovered
upon the termination of this Agreement, such loss
may be carried over and deducted from other
revenues of the Contractor from Petroleum
Operations in Belize
ACCRUAL BASIS
1.6
All books, accounts and records shall be prepared
on an accrual basis. Revenues shall be attributed to
the accounting period in which they are earned, and
costs and expenses to the accounting period in which
they are incurred, without the need to distinguish
whether cash is received or disbursed in connection
with a particular transaction. Costs and expenses
shall be deemed to have been incurred, in the case
of physical items, in the accounting period when title
thereto passes, and in the case of services, in the
accounting period when such services are
performed.
DEFINITION OF
PETROLEUM
OPERATIONS
EXPENDITURES
1.7
Petroleum Operations Expenditures may consist of
capital and operating expenditures as follows:
1.7.1
Capital
expenditures
are
those
Petroleum
Operations Expenditures for assets that normally
have a useful life which extends beyond the year in
which the assets was acquired.
CAP I TAL EXPENDITURES
In addition to expenditures relating to assets that
normally have a useful life beyond the year in which
the asset was acquired, the costs of development and
production drilling operations, as described in
paragraph 1.7.1 (e) of this Exhibit, will be classified
as capital expenditures.
Capital expenditures include, but are not limited to,
the following:
(a) Construction utilities, but are not limited to, the
following: water facilities, warehouses, and field
- 64
West Bay Beh"ze Ltd. 11/3/2003
roads. Cost of Crude Oil treating plants and
equipment, secondary recovery systems, natural gas
plants and steam systems,
(b) Construction housing and welfare housing
recreational facilities and other tangible property
incidental to construction,
(c) Production facilities - production rigs (including
the costs of labor, fuel, hauling and supplies for both
the offsite fabrication and onsite installation of rigs,
and other construction costs in erecting rigs and
installing pipelines), wellhead equipment, subsurface
lifting equipment, production tubing, sucker rods,
surface pumps, flow lines, gathering equipment,
delivery lines and storage facilities,
(d) Movables - surface and subsurface drilling and
production tools, equipment and instruments,
barges, floating craft, automotive equipment, aircraft,
construction equipment, furniture and office
equipment and miscellaneous equipment,
(e) Development and production drilling - labor,
materials and services used in drilling wells with the
object of penetrating a proven reservoir, including
the drilling of delineation wells as well as redrilling,
deepening or recompleting wells, and access roads, if
any, leading directly to wells,
OPERATING EXPENDITURES
1.7.2
Operating expenditures are all
Petroleum
Operations Expenditures other than capital
expenditures.
Operational expenditures include, but are not
limited to, the following:
(a) Exploration drilling - labor, materials and
services used in the drilling of wells with the object of
finding unproven reservoirs of crude oil and natural
gas, and access roads, if any, leading directly to wells.
- 65
West Bay Belize Ltd. 11/3/2003
(b) Surveys - labor, materials and services used in
aerial, geological, topographical, geophysical and
seismic surveys, and core hole drilling, and
(c) Other exploration expenditures -auxiliary or
temporary facilities having lives of one year or less
used in exploration and purchased geological and
geophysical information.
DEPRECIATION
ARM'S LENGTH
TRANSACTIONS
1.7.3
Capital expenditures, as defined in paragraph 1.7 of
this Exhibit, shall be depreciated only for the
purpose of the calculation of Income Tax. For the
purpose of determining the amount of depreciation
which is allowable as a deduction in each calendar
year,
the
following principles shall apply,
1.8.1
Capital expenditures will be depreciated usmg the
straight line method over five (5) years,
1.8.2
A full year's depreciation may be taken in the first
calendar year in which such depreciation is
allowable,
1.8.3
Deductions with respect to depreciation of capital
be
allowable
expenditures
incurred
shall
commencing with (A) the calendar year in which the
capital asset is placed into service, or, if the capital
expenditure does not relate to an asset that normally
has a useful life beyond the year in which it is placed
in service, the calendar year in which the capital
expenditure is incurred, or (B) the calendar year in
which Initial Commercial Production first occurs,
whichever is later.
1.9
Except as may be otherwise agreed in wntmg
between the Government and the Contractor, all
transactions giving rise to revenues, costs or expenses
which will be credited or charged to the books,
accounts, records and reports prepared, maintained
or submitted hereunder shall be conducted at arm's
length or on such a basis as will assure that all such
- 66
West Bay Beh'ze Ltd. 11/3/2003
revenues, costs or expenses will not be higher or
lower, as the case may be, than would result from a
transaction conducted at arm's length on a
competitive basis with third parties.
GE N ERA L EXCLUSIONS
1.10
The following expenditures shall not be included in
Petroleum Operations Expenditures:
(a) costs and expenses incurred at any time prior to
the Effective Date,
(b) costs relating to petroleum marketing
transportation beyond the Delivery Point,
(c) contributions and donations
approved by the Government,
except
or
those
(d) gifts or rebates to suppliers, and gifts or
commissions to intermediaries arranging service or
supply contracts,
(e) any interest, fines, monetary corrections or
increases in expenses resulting from the Contractor's
failure to comply with its obligations under this
Agreement, applicable law or agreements with third
parties, and
(f) any other expenditures not directly related to
Petroleum Operations or not in compliance with the
provisions of this Exhibit
CURRENCY EXCHANGE
RATES
1.11
For conversion purposes between any other
currency and United States dollars, the average of
the buying and selling rate of exchange shall be used
as issued by the Central Bank of Belize on the first
day of the month in which the revenues, costs or
expenses are recorded. Any realized or unrealized
gains or losses from the exchange of currency shall
be charged or credited to Petroleum Expenditures.
A record of the exchange rates used in converting
other currencies into United States dollars shall be
kept by the Contractor.
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West Bay Beh"ze Ltd. 11/3/2003
REVISION OF
THE ACCOUNTING
PROCEDURE
1.12
By mutual agreement between the Government and
the Contractor this Accounting Procedure may be
revised from time to time.
ACCEPTANCE OF COSTS
1.13
The acceptance by the Government of the values
and treatment proposed by the Contractor relating to
all costs and expenses may be conditional upon the
presentation by the Contractor, following a request
by the Government or its representatives, of all
records and original documents supporting such
costs and expenses, such as invoices, cash vouchers,
debit notes, price lists or similar documentation
verifying the value and treatment proposed.
Article II
Petroleum Operations Expenditures
DEFINTION FOR
THE PURPOSE OF
DETERMINING
COMPLIANCE
WITH THE
MINIMUM
EXPLORATION
EXPENDITURES
COMMITMENT
2.1
DEFINITION FOR
THE PURPOSE OF
ARTICLE IX
2.2
2.2.1
In determining the Contractor's compliance with the
minimum Exploration Expenditures obligations
undertaken pursuant to this Agreement, Petroleum
Operations Expenditures shall include all costs and
expenses incurred in the performance of exploration
operations in accordance with approved work
programmes, but excluding those incurred in the
performance of development and production
operations in the contract year in question without
the need to distinguish, between capital and
operating expenditures, provided, however, that
expenditures incurred in training nationals of Belize
pursuant to paragraphs 20.1 and 20.2 of this
Agreement and the value of stock listed in inventory
shall be excluded from petroleum operations
expenditures for the purpose of this subparagraph.
For each calendar year, including any calendar year
prior to the calendar year in which initial commercial
production first occurs, petroleum operations
expenditures, for the purposes of Article IX of this
Agreement, shall include all petroleum operations
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West Bay Beljze Ltd. 11/3/2003
expenditures incurred
contract area.
2.2.2
III
that calendar year in the
The following costs and expenses shall not be
included in petroleum operations expenditures for
the purposes of Article IX of this Agreement
(a) surface rentals payable pursuant to Article XIII
of this Agreement,
(b) any costs relating to the provision of the security
described in paragraph 6.1.6 of this Agreement
including payments made to the Government
pursuant to such security or otherwise for failure to
incur the minimum exploration expenditures in
accordance with paragraph 6.1 of this Agreement,
and
(c) any interest, fees, duties, taxes and other financial
charges, referred to in paragraph 3.7 of this Exhibit,
relating to loans and credits obtained by the
Contractor to acquire funds for the execution of its
obligations under this Agreement.
DEFINillON FOR THE
PURPOSE OF THE INCOME
TAX
2.2.3
For each calendar year, commencing with the
calendar year in which initial commercial production
first occurs, petroleum operations expenditures
which shall be deductible for the purpose of the
calculation of Income Tax payable shall consist of
the sum of:
(1) the
current
calendar
year's
operating
expenditures incurred, including the current
calendar year's allowable deductions for depreciation
of capital expenditures determined in accordance
with subparagraphs 1.5.2 of this Exhibit.
Article III
Accounting Methods and Principles
Petroleum operations expenditures incurred
hereunder shall be calculated and accounted for in a
- 69
West Bay Belize Ltd. 11/3/2003
manner consistent with the following principles and
definitions and shall include:
LABOUR COSTS
MATERIAL COSTS
3.1
3.2
Costs of salaries and wages of the Contractor' s
employees directly engaged in petroleum operations,
including costs of holidays, vacations, sickness, living
and housing allowances, travel time, bonuses and
other established plans for employee benefits
customarily granted to the Contractor's employees
and their families in similar ventures,
Costs of materials, equipment, machines, tools and
any other goods of a similar nature used or
consumed in petroleum operations subject to the
following:
(a) Acquisition - the Contractor shall only supply or
purchase materials for use in petroleum operations
that may be used in the foreseeable future. The
accumulation of surplus stocks and inventory shall
be avoided. Inventory levels shall, however, take into
account the time lag for replacement, emergency
needs and similar considerations,
(b) Components of costs - costs of materials
purchased by the Contractor for use in petroleum
operations may include, in addition to the invoice
price (subtracting the discounts given, if any), freight
costs and costs of transportation between the supply
point and delivery point (provided that such costs are
not included in the invoice price), inspection costs,
insurance, custom duties, taxes and other items that
may be charged to imported materials or to materials
purchased in the Belize,
(c) Accounting - such materials costs shall be
charged to the accounting records and books based
on the "First in-First Out" (FIFO) method,
(d) Supply of Materials by Affiliated Companies
materials supplied by the Contractor's Affiliated
- 70
West Bay Belize Ltd. 11/3/2003
Companies shall be charged to the accounting
records and books at prices no higher than the
prices comparable material purchased on a
competitive basis from third party suppliers. This
criterion shall apply to both new and used materials,
(e) Inventories - the Contractor shall maintain both a
physical and accounting inventory of all materials in
stock in accordance with generally accepted practices
in the international petroleum industry. The
Contractor shall make a physical inventory of all
such materials at least twice in any Contract Year.
The Government may carry out total or partial
inventories whenever it deems it necessary. The
costs of non capital items purchased for inventory
shall be charged to operating expenditure when
issued from stock for consumption,
TECHNICAL SERVICE COSTS
3.3
The value of technical services costs relating to
Petroleum Operations shall be:
(a) In the case of technical services performed by
third parties directly subcontracted, including outside
consultants, contractors and utilities, the price paid
by the Contractor, provided that such prices are no
higher than the prices charged by other suppliers for
comparable work and services, and
(b) In the case of technical services performed by
the Contractor or its Affiliated Companies, prices
which are no higher than the most favorable prices
charged to other Affiliated Companies of the
Contractor and to third parties for comparable
servIces.
INSURANCE AND CLAIMS
3.4
Costs relating to insurance, provided such insurance
is customary, affords prudent protection against risks
and is at a premium no higher than that charged on a
competitive basis by insurance companies which are
not Affiliated Companies of the Contractor. The
proceeds of any insurance or claim shall be credited
against Petroleum Operations Expenditures. Except
- 71
West Bay Belize Ltd. 11/3/2003
in cases where insurance coverage is required
pursuant to Article XXV of this Agreement, if no
insurance is carried for a particular risk, all costs
incurred by the Contractor in settlement of any
related loss, claim, damage or judgment, including
legal services, shall be includable in Petroleum
Operations Expenditures provided that such costs
did not result from the Contractor's gross negligence.
LEGAL AND
LITIGATION
COSTS
3.5
Costs and expenses of litigation and legal or related
services necessary or expedient for the protection of
the Contract area. Any damages or compensation
received shall be credited against Petroleum
Operations Expenditures. Under no circumstances
may the Contractor's costs incurred in the course of
arbitration, entered into under Article XXII of this
Agreement, be included in Petroleum Operations
Expenditures,
GENERAL
ADMINISTRATION
AND SERVICES
OVERHEAD COSTS
3.6
General services and administrative costs, other than
direct costs, including, but not limited to:
(a) The Contractor's personnel and services costs,
outside of Belize relating to administration, legal,
accounting, treasury, auditing, taxation, planning,
employee relations, purchasing and other functions
required for Petroleum Operations under this
Agreement, and
(b) Reasonable travel expenses of the Contractor's
personnel in the general and administrative
categories listed in (a) above for the purpose of
inspection and supervision of Petroleum Operations
in Belize shall be allocable to Petroleum Operations
Expenditures according to methods agreed to by the
Contractor and the Government. The methods
agreed shall result from a detailed study and the
methods selected following such study shall be
applied each year consistently unless otherwise
agreed by the parties. In the case of Exploration
Operations, these general administration and
services overhead costs shall not exceed three
- 72
West Bay Beljze Ltd. 11/3/2003
percent (3%) of the direct costs incurred in such
operations in each Calendar Year. Following the
date of declaration of Commercial Discovery in the
first Field, the Government and the Contractor shall
agree upon the level of General Administration and
Services Overhead Costs which may be allocable to
Petroleum Operations Expenditures and the
percentage of direct costs ceiling shall be reduced
accordingly.
INTEREST, ETC.
3.7
Interest, fees, duties, taxes and other financial
charges relating to loans and credits obtained by the
Contractor to acquire funds for the execution of its
obligations under this Agreement at rates not
exceeding the prevailing commercial rates may be
charged to Petroleum Operations Expenditures.
Details of any financing plan, and amounts thereof,
shall be included in each annual Work Programme
Budget
OFFICE COSTS, ETC. IN
BELIZE
3.8
St Staffing and maintenance of the Contractor's head
office in Belize and other offices in Belize, including
rent, telephone, telex and radio expenses, as well as
the expenses of general facilities such as shore bases,
warehouses, water, power and communications
systems, roads and bridges.
EXAMPLE OF
PRODUCfION
SHARE
CALCULATION
3.9
The examples below shows the application of the
scale of Production Sharing for fields producing
360,000 bbls per day on an average in the course of
a quarter.
- 73
West Bay Belize Ltd. 11/3/2003
Example-l (offshore)
Production Share Table
Daily Average Production
(bbl/d)
Government Share
0-50,000
50,000 - 150,000
150,000 - 250,000
250,000 - 350,000
,350,000
10
15
(%)
20
25
30
Gross Value of 360,000 bbl/d @ $20/bbl
100% Recovery of expenses
Balance in dollars
$ 7,200,000
$ 2,880,000
$ 4,320,000
Government's Share of the Balance:
[(50,000 bbls x 10% + 100,000 bbls x 15%
+ 100,000 bbls x 20% + 100,000 bbls x 2596
+ 10,000 bbls X 30%) / (360,000 bbls)]
X
$ 4,320,000
Contractor's Share
$ 4,320,000 - $ 816,000
- $ 816,000
- $3,504,000
-74
Contractor Share
(96)
90
85
80
75
70
West Bay Belize Ltd. 11/3/2003
Example-2 (onshore)
Production Share Table
Daily Average Production
(bbVd)
0-50,000
50,000 - 100,000
100,000 - 150,000
> 150,000
Government Shore
(%)
10
20
30
40
Gross Value of 360,000 bbVd @ $20/bbl
100% Recovery of Expenses
Balance in dollars
$7,200,000
$1,620,000
$5,580,000
Government's Share of the Balance:
(50,000 bbls x 10% + 50,000 bbls x 20% +
50,000 bbls x 30% + 210,000 bbls x 40%)f360,OOObbls)]
x 5,580,000
- $1,767,000
- $3,813,000
- 75
Contractor Share
(%)
90
80
70
60
BE LIZ E:
PRODUCTION SHARING AGREEMENT
MODIFICATION AGREEMENT
. #.
THIS MODIFICATION AGREEMENT is made this
7
day of
.
te--b~l.A.A.{i
2006 between THE GOVERNMENT OF BELIZE (acting through the Minister of
Natural Resources, Local Government and the Environment) (hereinafter referred to as
"the Government") of the one part and WEST BAY BELIZE LIMITED, a company duly
incorporated under the laws of Belize, with registered address at No. 91 North Front
Street, Belize City, Belize, C.A. (hereinafter referred to as "the Contractor") of the other
part.
WHEREAS on the 4th day of November 2003 the Government and the Contractor,
through its authorized representative, Robert E. Tucker Jr., entered into a Production
Sharing Agreement (hereinafter referred to as "the Principal Agreement") for the conduct
of petroleum operations by the Contractor in the area of Belize described in Exhibit A
and Exhibit B of the Principal Agreement;
AND WHEREAS the Contractor has made an application for other acreage, in addition
to the area described in the Exhibit A and Exhibit B of the Principal Agreement, within
which to conduct petroleum operations under the Principal Agreement;
AND WHEREAS the Government is desirous of granting such application subject to the
provisions herein contained;
NOW THEREFORE TillS AGREEMENT WITNESSETH as follows:
1.
The words used in this Agreement shall have the same meaning as the definition
of such words in Article I of the Principal Agreement.
2.
The Principal Agreement is hereby amended by repealing and replacing Exhibit A
and Exhibit B thereof with Exhibit A and Exhibit B hereof.
3.
The Principal Agreement shall be construed as if though Exhibit A and Exhibit B
hereof were originally included in the Principal Agreement instead of the repealed
Exhibit A and Exhibit B.
4.
Without prejudice to paragraphs 3 and 8 hereof, the Contractor shall revise the
current annual work programme of petroleum operations and work programme
budget of petroleum operations expenditures (providedfor in paragraph 5.4 ofthe
Principal Agreement) in light of the new contract area and submit the same within
forty-five (45) days from the date hereof, for approval, which approval shall be
determined in accordance with paragraph 5.4 ofthe Principal Agreement and any
other applicable paragraphs.
5.
The Principal Agreement is hereby amended as follows:
(a) In paragraph 6.1.2.3 of Article VI thereof, which said paragraph is captioned
"SECOND RENEWAL PERIOD", by deleting the sentence "Drill initial test
well." occurring therein; and
(b) In paragraph 6.1.2.2 of Article VI thereof, which said paragraph is captioned
"FIRST RENEWAL PERIOD", by adding the following new sentence
immediately after the sentence "Acquire additional geophysical data as
required by integrated interpretation." occurring therein:
"Commence drilling of initial test well by the end of the second
&
6.
quarter of the second year of the first renewal period"
The Principal Agreement is hereby amended by repealing and replacing paragraph
8.1 of Article vm thereof, with the following:
"8.1
(a) Subject to paragraphs 8.1(b) and 8. 1(c) below, the Contractor
shall pay to the Government a royalty equal to (i) seven point five
percent (7.5%) of the value of the annual gross production of crude
oil produced and saved in each calendar year and not used or
consumed in petroleum operations, and (ii) five percent (5%) of
the value of the annual gross production of natural gas produced,
saved and sold in each calendar year and not used or consumed in
the conduct ofpetroleum operations.
(b) With respect to crude oil produced from any part of the contract
area coloured pink in Exhibit B, and more particularly described in
Part IT of Exhibit A, the Contractor shall pay to the Government
royalty equal to twenty percent (200.10) of the value of the annual
gross production of crude oil produced and saved in each calendar
year and not used or consumed in petroleum operations.
(c) With respect to natural gas produced from any part of the
contract area coloured pink in Exhibit B, and more particularly
described in Part II of Exhibit A, the Contractor shall pay to the
Government royalty equal to ten percent (10%) of the value of the
annual gross production of natural gas produced, saved and sold in
each calendar year and not used or consumed in petroleum
operations."
7.
The Principal Agreement is hereby amended by repealing and replacing
paragraphs 9.1 and 9.2 of Article IX thereof, with the following:
"9.1
(a) In each calendar year, after discharging its obligation
for the royalty payment due to the Government pursuant to Article
VITI, the Contractor shall be entitled to recover all petroleum
operations expenditures incurred hereunder, out of one hundred
percent (100%) of the petroleum produced and saved in such
calendar year and not used in petroleum operations by retaining
and disposing of that amount of petroleum equal in value to the
unrecovered petroleum operations expenditures for that calendar
year plus all unrecovered petroleum operations expenditures from
prior calendar years:
Provided that petroleum operations expenditures incurred
in respect of the conduct of petroleum operations in or relating to
that part ofthe contract area coloured green in Exhibit B and more
particularly described in Part I of Exhibit A shall be recovered
solely out of the petroleum produced from within that part, and that
petroleum operations expenditures incurred in respect of the
conduct of petroleum operations in or relating to that part of the
contract area coloured pink in Exhibit B and more particularly
described in Part II of Exhibit A shall be recovered solely out of
the petroleum produced from within that other part.
(b) All such petroleum operations expenditures referred to in
paragraph (a) above shall be recovered without a ceiling in the
manner and to the extent provided for in the Income and Business
Tax Act, Chapter 55 of The Substantive Laws of Belize, Revised
Edition 2000. For the purpose of determining the value of the
quantity of petroleum to which the Contractor is entitled in each
calendar year pursuant to this paragraph 9.1, the provisions of
Article X shall be applied.
9.2
Any remaining quantity of petroleum produced and saved
in a given calendar year and not used in petroleum operations, that
is, after payment of royalty pursuant to Article VIII and paragraph
9.1 above and recovery by the Contractor of petroleum operations
expenditures pursuant to the said paragraph 9.1, (Net Petroleum),
shall be taken and disposed of separately by the Government and
Contractor in each calendar year in the following shares:
(a)
In respect of petroleum produced from that part of the
contract area coloured green in Exhibit B and more particularly
described in Part I of Exhibit A:
Daily Average Production:
Government's Share
Contractor's Share
Percent (%)
Percent (%)
First 50,000 bopd
5
95
Next 50,000 bopd
7.5
92.5
Next 50,000 bopd
10
90
Next 50,000 bopd
15
85
Above 200,000 bopd
20
80.
(b)
In respect of petroleum produced from that part of the
contract area coloured pink in Exhibit B and more particularly
described in Part IT ofExhibit A:
Daily Average Production:
Government's Share
Contractor's Share
Percent (%)
Percent (%)
First 10,000 bopd
25
75
Next 10,000 bopd
30
70
Next 10,000 bopd
35
65
Next 10,000 bopd
40
60
Above 40,000 bopd
45
55.
9.3
(a) In the event of commercial discoveries in both said parts
of the contract area (coloured green in Exhibit B and more
particularly described in Part I of Exhibit A and coloured pink in
Exhibit B and more particularly described in Part IT of Exhibit A.,
respectively) the Contractor shall develop and produce each said
part of the contract area independently of each other, including
establishing separate production facilities.
(b) Without prejudice to paragraph 9.3(a) above, where the
boundaries of a field extend into both said parts of the contract area
the Contractor shall, within the term of the development and
production period for a field as prescribed in paragraph 3.4,
develop and produce that portion of the field that extends into one
part independent of, but simultaneous with, the development and
production of that portion of the field that extends into the other
part of the contract area, including establishing separate production
facilities.
The matters required to be set forth in the report
required under paragraph 6.2.8(a) and the work programme and
work programme budget pertaining to the development of the field
required under paragraph 6.2.8(b) shall be set forth in respect of
each said portions of the field as if though such portion were the
entire field.
9.4
In respect of each said parts of the contract area coloured
green and pink in Exhibit B and more particularly described in Part
I and Part IT of Exhibit A., respectively, the Contractor shall keep
separate books, accounts and records, which are required to be kept
pursuant to Article XXVI and any other applicable provisions
hereof and where necessary or as required by the Government,
provide a detailed explanation of the apportionment of any
petroleum operations expenditures between the said two parts of
the contract area."
8.
All other terms and conditions of the Principal Agreement shall remain the same.
SCHEDULE I
EXHIBIT "A"
ACREAGE DESCRIPTION
PART I
SECTOR
SUB-SECTORS
NO. OF
ACRES
SUB-SECTORS
56
57
58
59
77
78
79
80
81
98
99
100
101
118
119
120
121
138
153
154
155
156
157
172
173
174
175
SUB-TOTAL
S,T,W,x,Y; Parts of J,M,N,O,Q,R,V
B-E,G-Y; Parts of A,F
A-Y
A-Y
D,E,I,J; Parts of A,B,C,H,M,N,O
A-J,L-O,Q-T,W-Y; Parts ofK,P,U,V
A-Y
A-Y
A-Y
C-E,H-J,M-O,R-T,W-Y; Parts ofB,G,L,Q,V
A-Y
A-Y
A-Y
A-Y
A-Y
A-Y
A-Y
A,U; Parts ofB,F,G,K,L,P,Q,V
B-D, G-J, L-O, Q-T, V-V; Parts of A,F,K,P,U
U-W; Parts ofP,Q,R
Y
O,R,S,T,U,V,W; Parts ofE,J,N,Q,x,Y
A,F,K,P; Parts ofB,G,L,Q,U,V
B-E; Part of A
A-E
A-E
Parts of A,B,C,D
8.7135
24.5894
25
25
7.5581
23.8779
25
25
25
15.2225
25
25
25
25
25
25
25
7.805
19.7159
4.5
1
10.2268
8.3792
4.2450
5
5
0.4225
8,612.6
24,304.6
24,710.4
24,710.4
7,470.6
23,601.3
24,710.4
24,710.4
24,710.4
15,046.2
24,710.4
24,710.4
24,710.4
24,710.4
24,710.4
24,710.4
24,710.4
7,714.6
19,487.5
4,447.9
988.4
10,108.3
8,282.1
4195.8
4,942.1
4,942.1
417.6
441,086.5
PART II
SUB-SECTORS
NO. OF SUB-SECTORS
ACRES
S,T,V,W,x,Y; Parts of J,M,N,O,P,Q,R,U
9.03
8,925.42
9.96
9,841.29
23.69
23,418.92
13.55
13,397.18
25
24,710.44
25
24,710.44
1.98
1,955.23
SECfOR
13
A,B,F,G,K,L,P,Q,U,V
14
20
36
B,C,D,E,G,H,I,J,K,L,M,N,O,P,
Q,R,S,T,U,V,W,x,Y; Parts of
A,F
J,N,O,R,S,T,V,W,x,Y; Parts of
E,I,L,M,Q,U
A-Y
37
A-Y
38
All those Jands situated north of Sector
36 and west of Sector 20 Jying in the
territory of BeJize
SUB-TOTAL
106,958.92
TOTAL
548,045.42
SCHEDULEll
EXHIBIT "B"
MAP OF CONTRACT AREA
•
...........
., »
..
..
i
IN WITNESS WHEREOF the parties hereto have set their hands and seals the day and
year first herein before written.
SIGNED, SEALED AND DELIVERED
)
by JOHN BRICENO, Minister ofNatural
)
Resources, Local Government and the
)
Environment for and on behalf ofthe
)
Government of Belize
)
In the presence of:
SIGNED, SEALED AND DELIVERED
)
by MORRIS MICELI
)
for and on behalf of West Bay Belize Ltd.
)
In the presence of:
~."."'.'
..- ..
~
",""'-
...".., ,~.".
..
--..;;s
WITNESS
Name:
Sct""ck,r ~ ~cJ'-eA\s
Address:
1 f> SwC\..se.i S~,
()e-\'-o~
~hl..-e...
MORRIS MICELI
I, JOHN BRICENO, Minister of Natural Resources, Local Government and the
Environment hereby acknowledge that I did sign, seal and deliver the within written
document as my act and deed.
Acknowledge at BELMOPAN this
'l~
day of~~V\."-\11
2006.
JO
MINISTER OF NA
OJ ....
BRICENO
T"'~LJ RESOURCES,
LOC
RNMENTAND
ENVIRONMENT
Before me,
ClllEF EXECUTIVE OFFICER
BE IT REMEMBERED that on the
t ~
t
day of
e.-~·""{>""1
2006
personally appeared before me the within named JOHN BRICENO and acknowledged
before me that he did sign, seal a
deliv
t)1e
'!hin-~itten docume.nt as his act and
deed and that the signature "
handwriting.
.. .;.
is i
.S
.oper
.
ClllEF EXECUTIVE OFFICER
I, MORRIS MICELi, hereoy aCKnowleoge
WeU .1 UIU ~)10U,
.,,,
u"". . . "".
• ••_
written document as my act and deed for and on behalfof West Bay Belize Ltd.
Acknowledge at BELMOPAN this
,~
day of
-:t~. . . . o...,"'f
2006.
Before me,
CHIEF EXECUTIVE OFFICER
BE IT REMEMBERED that on the
I
~
day of
~ eJ'~<~\f1
2006
personally appeared before me the within named MORRIS MICELI and acknowledged
before me that he did sign, seal and deliver the within-written document as his act and
deed for and on behalf of West Bay Belize Ltd. and that the signature
"
~ ~)" is in his own proper handwri .
g..
CHIEF EXECUTIVE OFFICER
I hereby certify that I have counted the within-written document and that it contains
twenty-nine (29) folios of seventy-two words each and seventeen words over and no
more.
Witness my hand this l~ dayof ~e,...-~nAcw'f
2006.
......._ ...~-?
WITNESS
This Document was prepared and drawn in the Ministry of Natural Resources, Local
Government and the Environment.
INSPECTOR OF PETROLEUM