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AMENDMENT AGREEMENT



relating to



the amendments to the Production Sharing Contract relating to the Kalar-Bawanoor Block



among



THE KURDISTAN REGIONAL GOVERNMENT OF IRAQ



and



WESTERNZAGROS LIMITED



and



TALISMAN (BLOCK K44) B.V.



TABLE OF CONTENTS



1.



STATUS OF AGREEMENT; COMPLETION .............................................................. 2



2.



DEFINITIONS AND INTERPRETATION ................................................................... 3



3.



AMENDMENTS TO CONTRACT. .............................................................................. 4



4.



REPRESENTATIONS................................................................................................. 27



5.



RELEASE. .................................................................................................................. 28



6.



GENERAL PROVISIONS. .......................................................................................... 28



AMENDMENT AGREEMENT



This agreement (the “Agreement”) is entered into on 25 July 2011 and effective 31 December, 2010

(the “Agreement Date”) among:

(1)



THE



KURDISTAN



REGIONAL



GOVERNMENT



OF



IRAQ



(the



“Government”);

(2)



WESTERNZAGROS LIMITED, a company established and existing under the

laws of the Republic of Cyprus, whose office is at Suite 600, 440 Second Avenue

SW, Calgary, Alberta, Canada (“WesternZagros Limited”); and



(3)



TALISMAN (BLOCK K44) B.V., a limited liability company (Besloten

Vennootschap met beperkte aansprakelijkheid) established and existing under the

laws of the Netherlands, whose registered office is at Atrium Building,

Strawinskylaan 3159, 1077 ZX Amsterdam, the Netherlands (“Talisman”)



(each a “Party” and collectively, the “Parties”).



RECITALS

(A)



The Government, WesternZagros Limited and Talisman are parties to a Production Sharing

Contract dated 28 February 2008 in respect of the Kalar-Bawanoor Block in the Kurdistan

Region of Iraq (the “Contract”), and a Completion Agreement dated 19 June 2008 whereby

the Government transferred the Third Party Interest to Talisman (the “Completion

Agreement”).



(B)



In connection with the Completion Agreement, the Government and Talisman entered into a

Third Party Participation Agreement dated 19 June 2008 (the “Participation Agreement”)

concerning the payment by Talisman of certain sums to the Government for the purpose of

providing financial support to infrastructure and capacity building projects for the benefit of

the people of Kurdistan.



(C)



The Parties wish, effective from the Completion Date, to (i) divide the Contract Area existing

prior to the Agreement Date into two separate contract areas, one governed by the Contract

and the remaining area governed by a new Production Sharing Contract to be entered into

between the Government and WesternZagros Limited; and (ii) as a consequence of such

division, change the name of the Contract Area from “Kalar-Bawanoor” to “Kurdamir”.



(D)



The Parties are willing, effective from the Completion Date, to agree to amendments to the

Contract to effect a reduction of the Contract Area and to facilitate entry into the new

Production Sharing Contract.



(E)



The Parties further wish to confirm that a Public Company, as holder of the Government

Interest, has the rights, duties, obligations and liabilities of the Contractor (save as provided in

and subject to Article 4 of the Contract) under the Contract in respect of the Contract Area of

twenty per cent (20%), but that the Public Company is not a Contractor Entity. The Parties are

willing to agree to amendments to the Contract, effective from the Completion Date, to effect

this purpose.



(F)



WesternZagros Limited wishes (i) to confirm that the Consulting Agreements (as defined in

this Agreement) have been terminated, and (ii) prior to the Completion Date, to terminate the

interests in the production sharing contracts acquired under the Consulting Agreements.



(G)



The Parties wish to make such further amendments to the Contract as may be appropriate.



(H)



In connection with entering into this Agreement, the Government and Talisman are entering

into a First Amendment Agreement dated concurrently herewith relating to the Participation

Agreement (the “First Amendment Agreement”).



(I)



Concurrently with the Agreement Date and effective as of the Agreement Date and the

Completion Date, WesternZagros Limited, Talisman, WesternZagros Resources Ltd. and

Talisman Energy Inc. (as defined in this Agreement) have delivered letters of representations

and warranties to the Government (the “Letters of Representations and Warranties”).



(J)



The Parties affirm their ongoing commitment and adherence to the Principles and Criteria of the

Extractive Industries Transparency Initiative (EITI).



1.



STATUS OF AGREEMENT; COMPLETION

1.1



This Clause 1 (Status of Agreement; Completion), Clause 2 (Definitions and

Interpretation), Clause 4 (Representations), Clause 5 (Release), and Clause 6 (General

Provisions) come into effect on the Agreement Date.



1.2



The Clauses of this Agreement other than those listed in Clause 1.1 come into effect on

the Completion Date, as defined in Clause 1.3.



1.3



The requirements for completion are set forth in Annex 3. The Completion Date means

and will be the date set forth in a certificate of completion signed by the Minister of

Natural Resources, Talisman and WesternZagros Limited in the form and content as set

forth in Annex 4.



1.4



If the Completion Date has not occurred by 31 July 2011, or such later date as the

Government may set, then this Agreement shall terminate automatically and, except as

provided in Clause 1.5, the Parties shall treat this Agreement as void ab initio.



1.5



On termination under Clause 1.4, each Party will be discharged from any further

obligations or liabilities under this Agreement without prejudice to any liabilities that

have accrued up to the date of termination of this Agreement.



2



2.



DEFINITIONS AND INTERPRETATION

2.1



Unless otherwise defined herein (including the recitals) capitalised terms have the

meanings ascribed to them in the Contract (before amendment by this Agreement).

As used in this Agreement:

“Agreement” is defined in the preamble.

“Agreement Date” is defined in the preamble.

“Consulting Agreements” means those agreements identified in Annex 1 of the

Letter of Representations and Warranties delivered by WesternZagros Limited and

WesternZagros Resources Ltd.

“Contract” is defined in Recital (A) and shall be construed to include all

amendments thereto.

“First Amendment Agreement” is defined in Recital (H).

“Government” is defined in the preamble.

“Participation Agreement” is defined in Recital (B).

“Party” and “Parties” are defined in the preamble.

“Talisman” is defined in the preamble.

“Talisman Energy Inc.” means a corporation incorporated under the federal laws of

Canada.

“Third Party” is defined in Clause 6.2.

“WesternZagros Limited” is defined in the preamble.

“WesternZagros Resources Ltd.” means a company established and existing under

the laws of the province of Alberta, Canada.



2.2



The descriptive headings in this Agreement are for convenience only, do not

constitute a part of this Agreement, and do not affect the construction or

interpretation of this Agreement. A reference to a “Clause” is a reference to a clause

of this Agreement.



3



3.



AMENDMENTS TO CONTRACT

3.1



The Contract is amended as provided in this Clause 3.



Recitals

3.2



The portion of the first paragraph of the Contract, following the word “between”

setting out the parties shall be deleted and restated as follows:

“AND AMONG

The



KURDISTAN



REGIONAL



GOVERNMENT



OF



IRAQ



(the



“GOVERNMENT”);

AND

WESTERNZAGROS LIMITED, a company established and existing under the

laws of Cyprus, whose office is at Suite 600, 440 Second Avenue SW, Calgary,

Alberta, Canada;

AND

TALISMAN (BLOCK K44) B.V., a limited liability company (Besloten

Vennootschap met beperkte aansprakelijkheid) established and existing under the

laws of the Netherlands, whose registered office is at Atrium Building,

Strawinskylaan 3159, 1077 ZX Amsterdam, the Netherlands.

(hereafter individually referred to as a “Party” and collectively as the “Parties”).”

3.3



The recitals are amended:

(a)



by adding a new paragraph (C):

“(C)



The Parties affirm their ongoing commitment and adherence to the

Principles and Criteria of the Extractive Industries Transparency

Initiative (EITI);”;



(b)



by renumbering the existing paragraph (C), “(D)”; the existing paragraph

(D), “(E)”; the existing paragraph (E), “(F)”; and the existing paragraph (F),

“(G)”;



(c)



by deleting the existing paragraph (G) and by adding a new paragraph (H):

“(H)



Following such review in relation to the Original Contract, the

GOVERNMENT and WesternZagros Limited amended and

restated the Original Contract on 28 February 2008;”;



(d)



by renumbering: the existing paragraph (H), “(I)”;



4



(e)



by adding a new paragraph (J):

“(J)



The Contract was amended by the Amendment Agreement among

the Parties dated 25 July 2011, and effective 31 December, 2010;”;



(f)



by renumbering the existing paragraph (I), “(K)” and in that paragraph (K),

replacing the words “WesternZagros Limited” with “Each CONTRACTOR

Entity”;



(g)



by adding a new paragraph (L):

“(L)



Talisman (Block K44) B.V. has acquired, as of 27 June 2008 (the

“Participation Date”), the Third Party Interest from the

GOVERNMENT in accordance with Articles 4.6 to 4.11,

inclusive, pursuant to a Completion Agreement among the Parties

dated 19 June 2008 (the “Completion Agreement”); and”;



(h)



by adding a new paragraph (M):

“(M)



In



connection



with



the



Completion



Agreement,



the



GOVERNMENT and Talisman entered into a Third Party

Participation Agreement dated 19 June 2008, as amended by the

First



Amendment



Agreement



dated



25



July



2011



(the



“Participation Agreement”) concerning the payment by Talisman

of certain sums to the Government for the purpose of providing

financial support to infrastructure and capacity building projects for

the benefit of the people of Kurdistan.”.

Definitions

3.4



In Article 1.1, the definitions of “CONTRACTOR” and “CONTRACTOR Entity”

are deleted in their entirety and restated as follows:

“CONTRACTOR means, individually and jointly, each CONTRACTOR Entity.

CONTRACTOR Entity means each of Talisman and WesternZagros Limited and

their respective permitted successors and assignees pursuant to Article 39. A holder

of the Government Interest is not a CONTRACTOR Entity. At any time when there

is only one entity constituting the CONTRACTOR, any reference to “the entities

constituting the CONTRACTOR” or the “CONTRACTOR Entities” or similar

reference, shall be deemed to mean “the entity constituting the CONTRACTOR”.

As of the Participation Date, Talisman and WesternZagros Limited, as

CONTRACTOR Entities, each own an undivided interest in the Petroleum

Operations in respect of the entire Contract Area:

WesternZagros Limited



40%



5



Talisman



40%



The balance of the interest in Petroleum Operations in respect of the entire Contract

Area, being twenty per cent (20%), is the Government Interest, as further described

and defined in Article 4.”

3.5



New definitions are added in Article 1.1, in the appropriate alphabetical order, as

follows:

“Aaliji means the Aaliji formation of the Paleocene age, in all or in part.

Act of Insolvency means, in respect of any Party:

(a)



that it is unable, or will be unable, to timely satisfy all of its financial



obligations under the Contract and to other Parties in relation to the Contract; or

(b)



the insolvency, winding-up, dissolution, administration or liquidation of that



Party, the making by it of any arrangement or composition with its creditors or the

taking of possession by an encumbrancer of, or the appointment of a receiver or

administrative receiver over, the whole or any substantial part of its property or assets

or its ceasing or threatening to cease to carry on business and any equivalent or

analogous procedures by whatsoever name known and in whatsoever jurisdiction.

The "winding-up" of a Party also includes the amalgamation, reconstruction,

reorganisation (by way of voluntary arrangement, scheme of arrangement or

otherwise), administration, dissolution, liquidation, merger or consolidation of that

Party and any equivalent or analogous procedure under the law of any jurisdiction in

which that Party is incorporated, domiciled, or resident or carries on business or has

assets.

Amendment



Agreement



means



the



Amendment



Agreement



among



the



GOVERNMENT, WesternZagros Limited, and Talisman dated 25 July 2011, and

effective as of 31 December, 2010.

Amendment Date means 31 December, 2010.

Completion Agreement is defined in Recital (L).

Corrupt Practices Laws means, assuming the following are applicable to each

CONTRACTOR Entity, whether or not actually applicable or in effect:

(a)



the Laws of the Kurdistan Region and of Iraq in respect of bribery,

kickbacks, and corrupt business practices;



(b)



the Foreign Corrupt Practices Act of 1977 of the United States of America

(Pub. L. No. 95-213 §§ 101-104 et seq), as amended;



(c)



the Corruption of Foreign Public Officials Act of Canada;



6



(d)



the OECD Convention on Combating Bribery of Foreign Public Officials in

International Business Transactions, signed in Paris on 17 December 1997,

which entered into force on 15 February 1999, and the Convention’s

Commentaries;



(e)



the Bribery Act 2010; and



(f)



any other Law of general applicability relating to bribery, kickbacks, and

corrupt business practices.



Cretaceous means the Shiranish formation of the Cretaceous age, in all or in part.

Determination Meeting is defined in Article 4.14(b).

Disputed Matter is defined in Article 4.14(a).

Kurdamir-1 Well is defined in Article 10.2(e).

Kurdamir-2 Well is defined in Article 10.2(e).

Oligocene means the Kirkuk group of the Oligocene age, in whole or in part.

Participation Agreement is defined in Recital (M).

Participation Date is defined in Recital (L).

Proposal is defined in Article 4.14(b).

Talisman means Talisman (Block K44) B.V., the limited liability company (Besloten

Vennootschap met beperkte aansprakelijkheid) established and existing under the

laws of the Netherlands, whose registered office is at Atrium Building,

Strawinskylaan 3159, 1077 ZX Amsterdam, the Netherlands, and/or any successor or

assignee of all or part of the rights and obligations of Talisman (Block K44) B.V.

under this Contract.

Talisman Capacity Building Bonus is defined in Article 32.2.2.

WesternZagros Capacity Building Bonus is defined in Article 32.2.1.

WesternZagros Interest means all or any part of the participating interest hereunder

deemed held by WesternZagros Limited as of the Effective Date.

WesternZagros Interest Holder means a CONTRACTOR Entity to the extent it is a

holder of a WesternZagros Interest. As of the Effective Date, WesternZagros Limited is

the only WesternZagros Interest Holder.”

3.6



In Article 1.1, the definition “Minimum Financial Commitment” is deleted and

replaced in its entirety:

“Minimum Financial Commitment means:

7



(a)



in respect of the First Sub-Period, the amount set out in Article 10.2(f); and



(b)



in respect of the Second Sub-Period, the total of the amounts set out in

Article 10.3(a) and 10.3(b).”



3.7



In Article 1.1, the definition of “Petroleum Costs” is amended by adding the

following new paragraph after paragraph (b):

“Notwithstanding the foregoing, Petroleum Costs shall not include those costs solely

incurred by WesternZagros Limited before the Amendment Date, which amount to

eighty million Dollars (US$80,000,000) and which the GOVERNMENT and

WesternZagros Limited wish to allocate as petroleum costs which are cost

recoverable to another production sharing contract (in respect of an area known as the

Garmian Block). Those costs to be allocated to the Garmian PSC are further detailed

in Annex 2 to this Agreement, and represent costs which: (a) relate exclusively to

petroleum operations performed in the Contract Area of the Garmian PSC and (b)

except as noted in Annex 2, represent not more than 60% of the costs of such

petroleum operations.”



3.8



In Article 1.1, the definitions “First Exploration Well”, “Second Exploration Wells”

are deleted.



3.9



In Article 1.1, the definition of “Original Contract” is amended by adding the words

“and 28 February, 2008” after “26 February, 2007”.



Contract Area

3.10



Article 3 of the Contract is deleted in its entirety and restated:

“The Contract Area covers the Kurdamir Block (formerly part of the block named the

“Kalar-Bawanoor Block”) and extends over an area of three hundred and forty square

kilometres (340 km2), as detailed and indicated on the map attached in Annex A and

is delimited by the following coordinates:



Kalar-Bawanoor Block

Point

E1

E2

E3

F

f

e

d

c

b

a



Easting

518326.91

532347.44

538210.27

556544.53

553441.19

536640.00

526720.00

524040.00

518926.57

514750.00



Northing

Longitude

3883273.04

45.20106

3880312.81

45.35477

3883689.15

45.41922

3863905.79

45.61902

3859637.79

45.58477

3871380.00

45.40145

3873930.00

45.29284

3875760.00

45.26352

3877080.68

45.20750

3880500.00

45.16177



Latitude

35.09208

35.06503

35.09527

34.91603

34.87771

34.98434

35.00764

35.02421

35.03623

35.06713



Projection of Easting and Northing points:



8



Projected Coordinate System: WGS 1984 UTM Zone 38N

Projection: Transverse Mercator

False Easting: 500000.00000000

False Northing: 0.00000000

Central Meridian: 45.00000000

Scale Factor: 0.99960000

Latitude Of Origin: 0.00000000

Linear Unit: Meter



Projection of Longitude and Latitude points:

Geographic Coordinate System: GCS WGS 1984

Datum: D WGS 1984

Prime Meridian: Greenwich

Angular Unit: Degree

The GOVERNMENT, by execution of this Contract, hereby validates and approves

the foregoing co-ordinates of the Contract Area.

The total area of the Contract Area may be reduced only in accordance with the

provisions of this Contract.”

3.11



Annex A to the Contract is deleted in its entirely and restated as provided in Annex 1

attached to this Agreement.



Operator

3.12



Talisman shall be appointed to act as the Operator on behalf of the CONTRACTOR

effective the first day of the month following the month in which the Completion Date

occurs. Talisman and WesternZagros Limited have negotiated, agreed and executed a

Joint Operating Agreement and have, on or before the Agreement Date, submitted the

same to the Government for approval. This Joint Operating Agreement, as amended to

take into account changes (if any) required by the Government and accepted by

Talisman and WesternZagros, shall take effect on the Completion Date. The costs

associated with the transition of operatorship from WesternZagros Limited to Talisman

shall be considered Petroleum Costs.



9



3.13



Article 5.1 of the Contract is deleted in its entirety and restated:

“As of and prior to the Amendment Date, WesternZagros Limited has been and shall

continue to act as Operator on behalf of the CONTRACTOR for the execution of

Petroleum Operations, provided that on the first day of the month following the month

in which the Completion Date occurs Talisman shall be appointed to act as the Operator

on behalf of the CONTRACTOR.Any costs associated with the transition of the

operatorship from one Operator to a successor Operator shall be considered Petroleum

Costs that may be recovered under this Contract.”.



Exploration Period

3.14



Article 6.2 is deleted in its entirety and restated:

“The Exploration Period shall be subdivided in two (2) sub-periods as follows:

(a)



an initial sub-period (the “First Sub-Period”) commencing on 26 February,

2007 and terminating on 30 June 2012; and



(b)



a second sub-period of two (2) years commencing on 1 July 2012 and

terminating on 1 July 2014 (the “Second Sub-Period”),



each a “Sub-Period” and collectively the “Sub-Periods”.

It is understood that the right of the CONTRACTOR to accede to the next Sub-Period

shall be subject to fulfilment of the Minimum Exploration Obligations or minimum

work obligations applicable to the previous Sub-Period.”

3.15



Article 6.4 is deleted in its entirety and restated:

“If the CONTRACTOR decides not to enter into the Second Sub-Period, it shall notify

the GOVERNMENT at least thirty (30) days prior to the expiry of the First SubPeriod, and the Exploration Period shall expire at the end of the First Sub-Period.”



3.16



Article 6.5 is deleted in its entirety and restated:

“If the CONTRACTOR has fulfilled its Minimum Exploration Obligations for the

Second Sub-Period of the Exploration Period but considers that additional work is

required prior:

(a)



to deciding to submit an Appraisal Work Program and Budget as provided

under Article 12.2 in respect of a Discovery, or



(b)



to deciding to declare a Discovery as a Commercial Discovery in accordance

with Article 12.6(a) or 14.5(a), which additional work may include the

preparation and/or execution of an Appraisal Work Program and Budget as

provided under Article 12.2 and/or Gas Marketing Operations,



10



then the CONTRACTOR will automatically be entitled to an extension of six (6)

Months of the Second Sub-Period. The CONTRACTOR’s notification of its intention

to exercise such extension and its duration shall be submitted in writing to the

GOVERNMENT at least thirty (30) days prior to the end of the Second Sub-Period.”

3.17



Article 6.6 is deleted in its entirety.



3.18



In Article 6.8, the word “extensions” is deleted and replaced with “extension”.



3.19



In Article 6.9:

(a)



the words “within the maximum” are deleted and replaced with “during the”;



(b)



the words “of seven (7) Contract Years (as provided in Article 6.2)” are

deleted; and



(c)



the words “(notwithstanding the maximum period provided in Article 6.2)”

are deleted.



3.20



In Article 6.12, the reference to “6.10” is deleted and replaced with “6.9” and the

reference to “6.11” is deleted and replaced with “6.10”.



3.21



In Article 6, existing Articles 6.7 through 6.13 are renumbered 6.6 through 6.12,

respectively.



Minimum Exploration Work Obligations

3.22



In Article 10, a new Article 10.5 is added as follows:

“10.5



The CONTRACTOR shall be obligated to:

(a)



use the Kurdamir-1 Well to evaluate the Oligocene formation; and



(b)



subject to Article 10.4(c), drill the Kurdamir-2 Well to evaluate the

Aaliji, Oligocene and Cretaceous formations, and to make the

Minimum Financial Commitment set forth in Article 10.2(f).”



3.23



Articles 10.2(e) and (f) are deleted and restated:

“(e)



subject to Article 10.5, drill three (3) Exploration Wells (the first two of which

are the Exploration Wells completed prior to the Amendment Date known as

the “Sarqala Well” and the “Kurdamir-1 Well” and the last of which is the

“Kurdamir-2 Well”); and



(f)



commit a minimum financial amount of fifty million Dollars (US$50,000,000)

for the purpose of drilling the Kuradmir-2 Well as provided in Article 10.5.



11



Any insurance proceeds respecting the Kurdamir-1 Well that are received and expended

by the CONTRACTOR for the drilling of the Kurdamir-2 Well shall be included in,

and apply to the satisfaction of, such Minimum Financial Commitment; provided,

however, that the costs accounted for by such insurance proceeds shall not be

considered Petroleum Costs. Any funds expended by the CONTRACTOR in the

drilling of the Kurdamir-2 Well that are not insurance proceeds also shall be included

in, and apply to the satisfaction of, such Minimum Financial Commitment and shall be

considered Petroleum Costs and shall be recovered by the CONTRACTOR in

accordance with the provisions of Articles 1 and 25.”

3.24



Article 10.3 is deleted and restated in its entirety:

“During the Second Sub-Period, the CONTRACTOR:

(a)



shall drill one (1) Appraisal Well, committing for this purpose a minimum

financial amount of thirty million Dollars (US$30,000,000); and



(b)



may acquire, process and interpret either thirty-five (35) line kilometres of

two dimensional seismic data or forty (40) square kilometres of three

dimensional seismic data within the Contract Area.”



3.25



In Article 10.4:

(a)



in paragraphs (c) and (d), after each instance of the word “Exploration”, the

words “or Appraisal” are added;



(b)



in paragraph (c), in the first paragraph, after “Management Committee” the

words “except for the Kurdamir-2 Well, which shall be drilled to the

Cretaceous,” are added.



(c)



In paragraph (c), in the last paragraph, after “Management Committee” the

words “except for the Kurdamir-2 Well, which shall be deemed to have been

drilled to the Cretaceous,” are added. After the last paragraph of paragraph

(c), the following paragraph is added:

“The Kurdamir-2 Well shall evaluate the Aaliji, Oligocene and Cretaceous

formations (subject to Article 10.5) unless:

(vi)



in the CONTRACTOR’s sole opinion evaluation or continued

evaluation of the Aaliji, Oligocene or Cretaceous formations (as

applicable) presents a hazard due to the presence of abnormal,

unsafe or unforeseen conditions; or



(vii)



insurmountable technical problems are encountered rendering it

impractical to evaluate or to continue to evaluate the Aaliji,

Oligocene or Cretaceous formations (as applicable) with standard

equipment.

12



If evaluation or continued evaluation of the Aaliji, Oligocene or Cretaceous

formations in the Kurdamir-2 Well is prevented or stopped for any of the

foregoing reasons, the Kurdamir-2 Well shall be deemed to have been

successfully evaluated and the CONTRACTOR shall be deemed to have

satisfied its Minimum Exploration Obligations in respect of the Exploration

Well.”

Holder of the Government Interest

3.26



Articles 4.1 and 4.2 are deleted and restated:

“4.1



The GOVERNMENT shall participate in this Contract through a Public

Company, effective from the Effective Date in respect of the entire Contract

Area with an undivided interest in the Petroleum Operations and all the other

rights, duties, obligations and liabilities of the CONTRACTOR (save as

provided in and subject to this Article 4) under this Contract in respect of the

Contract Area of twenty per cent (20%) (the “Government Interest”).

The holder of the Government Interest shall (i) be entitled to share, as to the

extent of its Government Interest, in the CONTRACTOR’s entitlement to

Available Crude Oil and Available Associated Natural Gas in accordance

with Article 25 (subject to the cost recovery rights of WesternZagros Limited

under Article 4.2); (ii) be entitled to share, as to the extent of its Government

Interest, in the CONTRACTOR’s entitlement to Profit Petroleum in

accordance with Article 26; and (iii) not be a party to any Joint Operating

Agreement in respect of the Contract Area.”



4.2



The holder of the Government Interest will not have any liability to the

CONTRACTOR to contribute its Government Interest share of all Petroleum

Costs. All such Petroleum Costs are the exclusive obligation of WesternZagros

Limited, and WesternZagros Limited will be entitled to recover those

Petroleum Costs from the holder of the Government Interest’s share of

CONTRACTOR’s entitlement to Available Crude Oil and Available

Associated Natural Gas in accordance with Article 25. The holder of the

Government Interest shall contribute its share of Production Bonuses

attributable to the Government Interest and payable pursuant to Articles 32.3

and 32.4. In accordance with the principle in Article 16.13, the holder of the

Government Interest will be individually and separately liable (and not jointly

and



severally



liable



with



the



CONTRACTOR



Entities)



to



the



GOVERNMENT for its obligations, duties and liabilities under this Contract

and the provisions of Article 4.5 shall apply.”

The following further amendments are made:



3.27

(a)



in Article 4.3, each instance of the word



“other” and the words “as a



CONTRACTOR Entity” are deleted;



13



(b)



in Article 4.4, each instance of the word “other” and the words “as a

CONTRACTOR Entity” are deleted;



(c)



in Article 4.12(b), the words “Government Interest or” are deleted;



(d)



in Article 33.9, “, provided that where the GOVERNMENT is participating in

its capacity as a CONTRACTOR Entity pursuant to Article 4, it shall be

liable for its share of Petroleum Costs” is deleted;



(e)



in Article 40.2(g), the words “the GOVERNMENT and/or any Public

Company which may be a CONTRACTOR entity” are replaced with “the

exercise by the GOVERNMENT of its rights under Article 45.”; and



(f)



in Article 41, the words “which may be a CONTRACTOR entity” are

deleted.



Government Role in Joint Operating Committee

3.28



A new Article 4.14 is inserted:

“4.14



(a)



The procedure set out in this Article 4.14 shall only apply:

(i)



where the parties to the Joint Operating Agreement are

unable to reach an affirmative vote on such a matter in

accordance with the relevant voting procedure specified in

the Joint Operating Agreement; and



(ii)



where there are only two (2) CONTRACTOR Entities

under the Contract, each holding an equal percentage

interest in the Contract;



and in such circumstances, a matter referred for determination in

accordance with Article 4.14 shall be a “Disputed Matter”.

(b)



Within seven (7) days (or such lesser time as is required for “Urgent

Operational Matters” as such term is defined in the Joint Operating

Agreement) after delivery by Operator of each proposal

(“Proposal”) by the CONTRACTOR Entities relating to the

Disputed Matter, along with all such supporting documentation as

was presented in relation to each Proposal, to the Minister, the

CONTRACTOR Entities and the Minister or his designate, shall

meet to discuss the Proposals (“Determination Meeting”) and each

CONTRACTOR Entity shall have a reasonable opportunity at the

Determination Meeting to advocate for its Proposal.



(c)



The Minister shall determine which of the Proposals shall apply and

shall confirm his decision to the CONTRACTOR Entities prior to



14



the close of the Determination Meeting.



In the event that the



Minister or his designate requires further time to consider the

Disputed Matter, he shall communicate his decision as soon as

possible thereafter, and in any event within forty-eight (48) hours of

the Determination Meeting, to each of the Contractor Entities,

failing



which



the



Operator’s



Proposal



shall



apply.



Any



determination made in accordance with this Article 4.14 procedure

shall be final and binding on all Parties.

(d)



In making a determination under this Article 4.14, the Minister may

request the assistance of such person(s) as he determines are

necessary to make his determination (including having such

person(s) attend the said meeting), provided always that, in making

such determination, the Minister and those providing assistance to

him shall act in good faith and take into account the best interests of

the CONTRACTOR under the Contract.



3.29



In Article 4.12:

(a)



Article 4.12(a) is deleted; and



(b)



the “(b)” is deleted.



Exercise of Option of Third Party Participation

3.30



A new Article 4.15 is inserted:

“4.15



Pursuant to the Completion Agreement, the GOVERNMENT exercised the

Option of Third Party Participation and assigned the Third Party Interest to

Talisman.



In



connection



with



the



Completion



Agreement,



the



GOVERNMENT and Talisman entered into the Participation Agreement

which provides for the payment by Talisman of certain sums to the

GOVERNMENT for the purpose of providing financial support to

infrastructure and capacity building projects for the benefit of the people of

Kurdistan.



The GOVERNMENT and Talisman confirm that the



Participation Agreement does not impose any obligations or liabilities upon

WesternZagros Limited or increase or change any right or obligation of

WesternZagros Limited under this Contract, and that any obligations or

liabilities arising under the Participation Agreement are exclusively those of

the GOVERNMENT and Talisman.”

Profit Petroleum

3.31



Articles 26.9, 26.10 and 26.11 are deleted and restated:



15



“26.9



The CONTRACTOR shall deliver the quantities of Profit Petroleum to

which the GOVERNMENT and each CONTRACTOR Entity are entitled

at the Delivery Point.

The quantity of Profit Petroleum to which the GOVERNMENT is entitled

is:

(a)



the share of Profit Petroleum to which the GOVERNMENT is

entitled in any Calendar Year in accordance with Article 26.5; and



(b)



(notwithstanding any other provision of this Contract, any lifting

agreement, any sales or marketing agreement, or any other

agreement), three per cent (3%) of the share of Profit Petroleum

attributable



to



the



WesternZagros



Interest;



so



that



the



WesternZagros Interest Holders are only entitled to ninety-seven per

cent (97%) of the share of Profit Petroleum attributable to the

WesternZagros Interest.

The CONTRACTOR shall ensure that all agreements in respect of the

lifting or sale of Petroleum reflect the GOVERNMENT’s rights as set forth

in this Article 26.9.To the extent that and for as long as a CONTRACTOR

Entity is not a WesternZagros Interest Holder, such CONTRACTOR Entity

shall not be liable for nor be prejudiced by, the deficient, improper or

overdue payment of any portion of the share of Profit Petroleum attributable

to the WesternZagros Interest that the GOVERNMENT is entitled to

receive under subclause (b) immediately above.

26.10



Title and risk of loss of Profit Petroleum pass to the GOVERNMENT and

the CONTRACTOR Entities at the Delivery Point. The GOVERNMENT

and each CONTRACTOR Entity will be entitled to receive, take in kind

and to export freely its share of Profit Petroleum in accordance with the

provisions of this Contract and to retain Abroad any proceeds from the sale

of all such Profit Petroleum.



26.11



The share of the Profit Petroleum to which the GOVERNMENT is entitled

in any Calendar Year in accordance with Article 26.5 will be deemed to

include a portion representing the corporate income tax imposed upon and

due by each CONTRACTOR Entity, and which will be paid directly by the

GOVERNMENT on behalf of each such entity representing the

CONTRACTOR to the appropriate tax authorities in accordance with

Article 31.2. The GOVERNMENT shall provide the CONTRACTOR

Entities with all written documentation and evidence reasonably required by

the CONTRACTOR Entities to confirm that such corporate income tax has

been paid by the GOVERNMENT.”



16



Capacity Building Bonus

3.32



Article 32.2 is deleted in its entirety and restated:

“Capacity Building Bonus

32.2.1



WesternZagros Limited shall pay to the GOVERNMENT forty



million Dollars (US$40,000,000) for capacity building (the “WesternZagros

Capacity Building Bonus”). The WesternZagros Capacity Building Bonus

shall be paid by way of one (1) payment of five million Dollars

(US$5,000,000) payable to the GOVERNMENT by WesternZagros within

thirty (30) days of the Effective Date, with the remainder amount to be paid

to the GOVERNMENT by WesternZagros Limited at a rate of two million

five hundred thousand Dollars ($2,500,000) per Month over a period of

fourteen (14) Months following the Effective Date, with the first Monthly

payment being made in the Month in which the single payment of five

million Dollars (US$5,000,000) is made.

32.2.2



Talisman shall pay to the GOVERNMENT the First Tranche



Capacity Building Payments and the Second Tranche Capacity Building

Payment (as such terms are defined in the Participation Agreement), as

applicable, pursuant to the terms of the Participation Agreement (together,

the “Talisman Capacity Building Bonus” and together with the

WesternZagros Capacity Building Bonus, the “Capacity Building Bonus”).

32.3.3



The GOVERNMENT confirms that WesternZagros Limited in accordance

with Article 32.2.1 has paid the WesternZagros Capacity Building Bonus.”



32.3.4



The GOVERNMENT confirms that Talisman in accordance with Article

32.2.2 has paid the First Tranche Capacity Building Payments (as such term

is defined in the Participation Agreement).



Confidentiality

3.33



In Article 36.8, the proviso under clause (g) is deleted and replaced with the words

“provided that disclosure shall not be made pursuant to paragraphs (c), (d), (e) and

(f), unless such third party has entered into a confidentiality undertaking.”



Notices

3.34



In Article 39.2:

(a)



the first word “Each” is deleted and replaced with the words “Except as



provided in Article 45.6, each”.

(b)



the following sentence is added at the beginning thereof:



17



“Articles 39.2 through 39.6 do not apply to the extent provided in Article

45.6.”

3.35



In Article 44.1, under the existing heading “To the CONTRACTOR” the following

notice provision is added:

“Attention:

Nigel Webb

Talisman (Block K44) B.V.

Address:

Atrium Building, Strawinskylaan 3159

1077 ZX Amsterdam, The Netherlands

Fax: +31 (20) 540 8854

Tel: +31 (20) 540 8840

Email: nwebb@talisman-energy.com

Talisman Energy Inc.



CC:



Attention:

A. Paul Blakeley

Address:

Suite 2000, 888 3rd Street SW

Calgary, Alberta T2P 5C5

Fax:



+ 1 403 693 2446



Email: pblakeley@talisman-energy.com”.

Termination

3.36



Article 45 is deleted in its entirety and restated:

“Notice

45.1



The GOVERNMENT undertakes to exercise its termination rights under

this Article 45 in a reasonable and proportionate manner, having regard to

the nature and severity of the triggering act or event, the identity of the Party



18



at fault, and the relative significance of any adverse consequences to the

CONTRACTOR or a CONTRACTOR Entity that may arise from the

GOVERNMENT’s exercise of its rights under this Article 45.

45.2



Except as provided in Article 45.6, in any notice of termination given by the

GOVERNMENT under this Article 45, the GOVERNMENT must specify

the grounds for exercising the termination right and the date on which the

Contract or the rights and interests of a CONTACTOR Entity, as applicable,

will terminate.



Corrupt Practices Laws

45.3



If a competent authority has reasonably and finally determined (in a

proceeding applying due process):

(a)



that an interest in this Contract has been obtained by a

CONTRACTOR Entity, or any Person acting on behalf of a

CONTRACTOR Entity, in violation of Corrupt Practices Laws; or



(b)



that a permit, approval, consent or waiver in connection with this

Contract or Petroleum Operations has been obtained by a

CONTRACTOR Entity, or any Person acting on behalf of a

CONTRACTOR Entity, in violation of Corrupt Practices Laws;



then, on not less than thirty (30) days’ prior notice to the applicable

CONTRACTOR Entity, the GOVERNMENT may terminate such

CONTRACTOR Entity’s undivided interest in this Contract. Any final

determination, judgment, sanction, or conviction (not subject to further

appeal on the issue), including under a consent order in which there is a

finding or admission of guilt, of a judicial or regulatory authority in Iraq,

Canada, England, The Netherlands or Cyprus with jurisdiction over a

CONTRACTOR Entity or an Affiliate of such CONTRACTOR Entity,

will be conclusively determinative. Unless the GOVERNMENT has

cancelled a notice of termination, the applicable CONTRACTOR Entity’s

undivided interest in this Contract will be terminated as of end of such thirty

(30) day notice period.

Force Majeure

45.4



The CONTRACTOR is not entitled to claim Force Majeure as a

consequence of the GOVERNMENT’s exercise of its rights under this

Article 45, and no obligation of the CONTRACTOR will be tolled as a

consequence of any Dispute with respect to the GOVERNMENT’s exercise

of its rights under this Article 45.



19



Other Grounds for Termination

45.5



45.5.1 The GOVERNMENT may terminate this Contract, on not less than

ninety (90) days’ prior notice, if the CONTRACTOR:

(a)



fails to meet a material financial obligation expressly stated

in this Contract; or



(b)



during the First Sub-Period does not carry out drilling and

seismic acquisition, as detailed in Article 10.2 or, during

the Second Sub-Period (or earlier), does not carry out

drilling and seismic acquisition, as detailed in Article 10.3;

or



(c)



interrupts Production for a period of more than ninety (90)

consecutive days with no cause or justification acceptable

in accordance with this Contract or under prudent

international



petroleum



industry



practice,



it



being



recognised that Force Majeure is an acceptable justification

for such interruptions; or

(d)



unless such extraction or production is expressly authorised

or unavoidable as a result of operations carried out in

accordance with prudent international petroleum industry

practice, extracts or produces any mineral or object which

is not covered by this Contract and does so wilfully or in a

manner that constitutes gross negligence or persistently

after receiving notice thereof; or



(e)



refuses to abide by any negotiation, mediation, arbitration

or expert decision under Article 42.



45.5.2



If, within the ninety (90) day notice period, the CONTRACTOR

has either remedied the default identified in such notice to the

satisfaction of the GOVERNMENT, or the GOVERNMENT has

agreed another remedy with the CONTRACTOR, including

compensation, the GOVERNMENT shall cancel such notice of

termination.



45.5.3



If, within such ninety (90) day notice period, the conditions set forth

in Article 45.5.2 have not been satisfied, the GOVERNMENT

may, on not less than thirty (30) days’ notice, terminate the

Contract,



and,



unless



such



notice



is



cancelled



by



the



GOVERNMENT before the end of such thirty (30) day period, this

Contract will be terminated as of the termination date set forth in the

notice from the GOVERNMENT.



20



Act of Insolvency

45.6.1



Where the CONTRACTOR comprises only one CONTRACTOR Entity,

the GOVERNMENT may terminate the Contract on not less than thirty (30)

days’ notice to such CONTRACTOR Entity following the occurrence of an

Act of Insolvency, unless, within such thirty (30) day period, the

GOVERNMENT cancels its notice.



45.6.2



Where the CONTRACTOR comprises more than one CONTRACTOR

Entity, and WesternZagros Limited is one such CONTRACTOR Entity,

the rights and interests of WesternZagros Limited will be automatically

assigned and novated to the GOVERNMENT on not less than fourteen (14)

days’ notice from the GOVERNMENT to WesternZagros Limited, and

free of cost, if there occurs, in relation to WesternZagros Limited, an Act

of Insolvency, unless within such fourteen (14) day period, the

GOVERNMENT cancels its notice.

An assignment and novation of the Contract in accordance with this Article

45.6.2 is automatically effective on and from the date on which

WesternZagros Limited obtained knowledge of the Act of Insolvency. In a

notice provided to WesternZagros Limited in accordance with this Article

45.6.2, the GOVERNMENT is not obliged to specify the date on which the

assignment and novation is effective.



45.6.3



Each CONTRACTOR Entity shall promptly take all actions requested by

the GOVERNMENT to give effect to the assignment and novation of the

interest described in the notice referred to in Article 45.6.2 above. If the

GOVERNMENT determines that an agreement or other documentation

signed by the GOVERNMENT and each CONTRACTOR Entity or other

Party is desirable to evidence the assignment and novation to the

GOVERNMENT,



each



such



Party



shall



promptly



execute



such



documentation within ten (10) days of receipt thereof. If a Party fails to

deliver such signed agreement or other documentation in the form required

by the GOVERNMENT within ten (10) days of receipt thereof, then such

Party irrevocably constitutes and appoints the GOVERNMENT (or any

other Person which at any time during the term of the Contract may be

nominated by the GOVERNMENT) to act alone, and with full power of

substitution, as to such Party’s true and lawful attorney and agent, with full

power and authority in its name, place and stead to execute, file and record

when as and where required, any and all of such documentation and hereby

ratifies such execution, recording and filing. The power of attorney granted

by this Article 45.6.3 is irrevocable and will survive the insolvency,

dissolution, winding-up or bankruptcy of such Party and extends to bind

such Party’s trustees, administrators, successors and assigns. Each such Party

waives any and all defences which may be available to contest, negate or

disaffirm the action of the GOVERNMENT taken under such power of

21



attorney, provided that the terms of any such documentation do not increase

or change any right or obligation of such Party under this Contract, except as

required to effect the assignment referred to in Article 45.6.2. Each

CONTRACTOR Entity shall ensure that the authorising resolutions of its

board or shareholders, as applicable, specifically authorises the provision of

the power of attorney set forth in this Article 45.6.3, and shall provide a

certified copy of such resolutions on the request of the GOVERNMENT.

45.6.4



Following an assignment and novation of the interest described in the notice

referred to in Article 45.6.2 above, the rights and obligations of the

GOVERNMENT in such interest shall, except as provided in the following

sentence, be assigned to each remaining CONTRACTOR Entity, free of

cost, in the proportion that such CONTRACTOR Entity’s undivided

interest in the CONTRACTOR bears to all of the remaining

CONTRACTOR Entities’ undivided interests, or as the GOVERNMENT

and the remaining CONTRACTOR Entities may otherwise mutually agree.

Notwithstanding the previous sentence, the remaining CONTRACTOR

Entities shall be responsible for and indemnify the GOVERNMENT against

all reasonable legal and court costs and expenses incurred by the

GOVERNMENT arising out of or related to: (a) the exercise by the

GOVERNMENT of any its rights under Articles 45.6.2 and 45.6.3 above;

(b) the assignment and novation described in Article 45.6.2 above; and (c)

the assignment and novation described in this Article 45.6.4. The

GOVERNMENT will have no obligation to make the assignment and

novation referred to in this Article 45.6.4 unless such indemnity has been

provided to the GOVERNMENT. Each remaining CONTRACTOR Entity

will be responsible to indemnify the GOVERNMENT in accordance with

this Article 45.6.4 in the proportion that such CONTRACTOR Entity’s

undivided interest in the CONTRACTOR bears to all of the remaining

CONTRACTOR Entities’ undivided interests.



Change of Control, Assignment and Other Individual Grounds for Termination;

Expiration

45.7



The rights and interests of an individual CONTRACTOR Entity will be

automatically terminated, without prior notice from the GOVERNMENT, if

such CONTRACTOR Entity:

(i)



is subject to a Change of Control for which the GOVERNMENT

has not given its authorisation in accordance with Article 39.7;or



(ii)



has made an assignment of all or part of its interests hereunder

without the prior consent of the GOVERNMENT in accordance



22



with Article 39 (including under any provision of a Joint Operating

Agreement).

Talisman and the GOVERNMENT acknowledge that in the event of

Talisman’s default in payment of the Second Tranche Capacity Building

Payment (as such terms are defined in the Participation Agreement), the

termination provisions of clause 19 of the Participation Agreement shall be

applicable, including the GOVERNMENT’s rights to revoke and terminate

Talisman’s undivided interest in this Contract.

45.8



This Contract will terminate as provided in Article 6 and Article 7.



Consequences of Termination

45.9



Upon termination or expiration of this Contract:

(a)



the CONTRACTOR (and each CONTRACTOR Entity) will no

longer have, as of the effective date of such termination, any further

rights and interests under this Contract;



(b)



all accrued rights and liabilities of the CONTRACTOR and of each

CONTRACTOR Entity will survive; and



(c)



the provisions of Articles 14.10, 16.7, 30, 31, 35.1, 35.3, 35.4, 35.7,

36, 38.2(c), 41, 42, 43.1 to 43.6 and 45.6.3 will survive the

termination or expiry of this Contract.



45.10



If the GOVERNMENT terminates the undivided interests of a

CONTRACTOR Entity, as provided in Articles 45.3 and 45.7, but not the

Contract, and there are remaining CONTRACTOR Entities:

(a)



such terminated CONTRACTOR Entity will no longer have, as of

the effective date of such termination, any further rights and

interests under this Contract;



(b)



all



accrued



rights



and



liabilities



of



such



terminated



CONTRACTOR Entity will survive;

(c)



as to and in respect of such terminated CONTRACTOR Entity, the

provisions of Articles 14.10, 16.7, 30, 31, 35.1, 35.3, 35.4, 35.7, 36,

38.2(c), 41, 42, 43.1 to 43.6 and 45.6.3 will survive the termination

or expiry of this Contract; and



(d)



The remaining CONTRACTOR Entity(s) shall be responsible to

carry that portion of Petroleum Costs that would otherwise be

attributable to the terminated CONTRACTOR Entity’s interest,

subject to Article 45.11.



23



45.11



If the undivided interests of a CONTRACTOR



Entity (or of



CONTRACTOR Entities) are terminated as provided in Articles 45.3 or

45.7 (for the purposes of this Article 45.11, a “Terminated Interest”) but

the Contract is not terminated and there are remaining CONTRACTOR

Entities, the GOVERNMENT shall offer, within twelve (12) months of the

date on which such interests are terminated, to



the



remaining



CONTRACTOR Entities, to assign and novate such Terminated Interest, as

follows:

(a)



the offer shall be made to each remaining CONTRACTOR Entity

in the proportion that such CONTRACTOR Entity’s undivided

interest in the CONTRACTOR bears to all of the remaining

CONTRACTOR Entities’ undivided interests;



(b)



the effective date of a CONTRACTOR Entity’s acquisition of its

portion of the Terminated Interest shall be the date on which such

CONTRACTOR Entity has:

(i)



paid to the CONTRACTOR an amount equivalent to the

share of Petroleum Costs incurred by the CONTRACTOR

which is attributable to that portion of the Terminated

Interest to be acquired by the CONTRACTOR Entity, as

calculated from the date of termination under Articles 45.3

or 45.7 (as applicable) to the date of payment under this

provision; and



(ii)



entered into a binding and enforceable instrument of

assignment and novation with the other CONTRACTOR

Entities and the GOVERNMENT;



(c)



Until the sale of all of the Terminated Interest, CONTRACTOR

shall undertake all necessary work under this Contract, provided

always that the remaining CONTRACTOR Entities shall be

entitled (through the CONTRACTOR) to recover all such

Petroleum Costs in accordance with Article 25.



(d)



if, two (2) months after the GOVERNMENT’s offer under Article

45.11, all of the Terminated Interest has not been acquired by the

remaining CONTRACTOR Entities in accordance with Article

45.11(b), then the following shall apply in respect of any remainder

of the Terminated Interest (for the purposes of this Article 45.11, a

“Remainder Interest”):

(i)



the



GOVERNMENT



will



use



reasonable



endeavours to find a buyer for the Remainder

Interest;



24



(ii)



the terms of sale of the Remainder Interest under

subclause (i) immediately above shall provide for

the



prompt



cash



reimbursement



to



the



CONTRACTOR (not including the buyer) for an

amount equivalent to the share of Petroleum Costs

incurred by the CONTRACTOR which is

attributable



to



the



Remainder



Interest,



as



calculated from the date of termination under

Articles 45.3 or 45.7 (as applicable) to the date of

acquisition of the Remainder Interest by the buyer;

(iii)



the buyer of the Remainder Interest shall enter

into a binding and enforceable instrument of

assignment



and



novation



CONTRACTOR



with



Entities



the



other



and



the



GOVERNMENT;

(iv)



upon payment pursuant to and in accordance with

Article



45.11(d)(ii)



and



execution



of



the



instrument referred to in Article 45.11(d)(iii), a

buyer of the Remainder Interest shall participate

as a CONTRACTOR Entity under this Contract

with all the rights, duties, obligations and

liabilities under this Contract;

(v)



upon payment pursuant to and in accordance with

Article



45.11(d)(ii)



and



execution



of



the



instrument referred to in Article 45.11(d)(iii), a

buyer of the Remainder Interest shall become a

party to an existing Joint Operating Agreement on

the terms thereof, provided that if a Joint

Operating Agreement is not in place prior to the

buyer’s acquisition of the Remainder Interest, then

the CONTRACTOR Entity and the buyer shall

promptly negotiate in good faith and enter into a

Joint Operating Agreement and shall, prior to

execution of such Joint Operating Agreement,

comply with Articles 4.12(a) and (b) as if they

were provisions of this Contract;

(vi)



if, twenty-one (21) months after the date on which

the Terminated Interest was terminated, no

payment pursuant to Article 45.11(d)(ii) has been

received



by



the



CONTRACTOR



or



the



instrument referred to in Article 45.11(d)(iii) has

not been executed, then upon the day following

25



that



date



the



GOVERNMENT



will



with



immediate effect therefrom take all contractual

and procedural measures (enforceable under

applicable law) to procure that the Remainder

Interest shall, notwithstanding any other Article in

this Contract, be automatically deemed to be

assigned



and



GOVERNMENT



be



assigned

to



each



by



the



remaining



CONTRACTOR Entity in the proportion that

the such CONTRACTOR Entity’s undivided

interest in the CONTRACTOR bears to all of

the



remaining



CONTRACTOR



Entities’



undivided interests.

45.12



No assignment, novation, transfer, or other disposition of a terminated

CONTRACTOR Entity’s undivided interests to another CONTRACTOR

Entity pursuant to this Article 45 will be a taxable event under Applicable

Law as to the CONTRACTOR Entity receiving the undivided interests of a

terminated CONTRACTOR Entity.



45.13



Neither the GOVERNMENT nor any CONTRACTOR Entity will assume

any liabilities, obligations, or duties of a terminated CONTRACTOR Entity

in respect of the terminated CONTRACTOR Entity’s undivided interest

arising or accrued prior to the latter of (i) the effective date of the

termination of such CONTRACTOR Entity and (ii) in the case of

assignment and novation to the remaining CONTRACTOR Entities, the

effective date of the reassignment and redistribution of the terminated

CONTRACTOR Entity’s interests to another CONTRACTOR Entity. The

GOVERNMENT will in no circumstances assume accrued liabilities,

obligations, or duties of a terminated CONTRACTOR Entity in respect of

the terminated CONTRACTOR Entity’s undivided interest, whenever

arising or accrued. All accrued liabilities will remain the sole obligation of

the terminated CONTRACTOR Entity.



45.14



Nothing in this Article 45 limits or impairs a Party’s rights under the Laws

governing this Contract in respect of termination.”



Application of Corruption Laws and Misrepresentation

3.37



Article 46 is deleted in its entirety and replaced with the word “Reserved”.



Capacity of Government entry into Contract

3.38



In Article 47, the words “and as a CONTRACTOR Entity comprising part of the

CONTRACTOR” are deleted.



26



Change of Block Name

3.39



On the title page of the Contract and in the first sentence of Article 3, the words

“Kalar-Bawanoor” are deleted and replaced with the word “Kurdamir”.



Compliance

3.40



A new definition is added in Article 1.1, in the appropriate alphabetical order, as

follows:

“Applicable Law means, as of any time of determination, Kurdistan Region Law and

federal Laws of Iraq recognised by the Government as applicable in the Kurdistan

Region.”



3.41



A new Article 2.9 is added:

“Each CONTRACTOR Entity shall at all times comply, and procure that each

Subcontractor complies, with the Kurdistan Region Oil and Gas Law and

all other Applicable Law. No provision of this Contract will: (a) excuse the

CONTRACTOR or a CONTRACTOR Entity or any Subcontractor from

compliance with Applicable Law, or (b) impair any right or privilege of the

GOVERNMENT under Applicable Law.”



4.



REPRESENTATIONS

4.1



WesternZagros Limited and Talisman, each for itself, makes the following

representations on the Agreement Date:

4.1.1



its entry into and performance of this Agreement have been authorised by all

necessary company action;



4.1.2



this Agreement constitutes a valid, legal, and binding agreement of it;



4.1.3



it has received all authorisations and consents required under the law under

which it is organised that are or will be necessary for the entry into and

performance by it, and the validity and enforceability against it, of this

Agreement;



4.1.4



except as provided in the next sentence, there is no law to which it is subject

or agreement to which it is a party that conflicts with or prevents its entry

into, delivery, and performance of the Agreement, or calls into question the

validity, legality and enforceability of this Agreement. No representation is

made in respect of the laws of the Kurdistan Region or Iraq; and



27



4.1.5



it is not a party to any administrative or judicial proceeding, litigation, or

arbitration that could affect the validity or enforceability of this Agreement as

to it.



5.



RELEASE

Each Party releases each of the other Parties from all obligations, claims, demands, liabilities,

and duties whatsoever, whether known or unknown and whether arising prior to or after the

Agreement Date, that arise out of or are related to both, in combination, of, (a) Article 36.8

and (b) the naming or failure to name a beneficiary of a confidentiality undertaking, or the

delivery or failure to deliver a confidentiality undertaking to a Party.



6.



GENERAL PROVISIONS

6.1



Articles 36 (Information and Confidentiality), 39 (Assignment and Change of

Control), 41 (Waiver of Sovereign Immunity), 42.1 (Negotiation, Mediation and

Arbitration), and 44 (Notices) of the Contract (as amended by this Agreement) shall

apply to this Agreement.



6.2



This Agreement does not create any right under the Contracts (Rights of Third

Parties) Act 1999 that is enforceable by any Person who is not a Party (a “Third

Party”). The Parties may rescind or vary the terms of this Agreement without notice

to or the consent of any Third Party.



6.3



This Agreement constitutes the final, complete and exclusive expression of the

Parties’ agreement on the matters contained in this Agreement. All prior and

contemporaneous negotiations and agreements between the Parties on the matters

contained in this Agreement are expressly merged into and superseded by this

Agreement. The provisions of this Agreement may not be explained, supplemented

or qualified through evidence of trade usage or a prior course of dealings. In entering

into this Agreement, no Party has relied upon any statement, representation, warranty

or agreement of another party except for those expressly contained in this Agreement.

There are no conditions precedent to the effectiveness of this Agreement, other than

those expressly stated in this Agreement.



6.4



Each Party shall timely exercise all commercially reasonable endeavours to take, or

cause to be taken, all actions necessary or desirable to consummate and make

effective the transactions this Agreement contemplates.



6.5



The Parties may amend this Agreement only by a written agreement of the Parties that

identifies itself as an amendment to this Agreement. A Party or the Parties may waive

any provision in this Agreement only by a writing executed by the Party against whom

the waiver is sought to be enforced. Any amendment, waiver, or consent signed by the

Minister of Natural Resources is binding on the Government. No failure or delay in

exercising any right or remedy, or in requiring the satisfaction of any condition, under

this Agreement by a Party, and no act, omission or course of dealing between any of the



28



Parties, will operate as a waiver or estoppel of any right, remedy, or condition. A waiver

made in writing on one occasion will be effective only in that instance and only for the

purpose stated. A waiver once given is not to be construed as a waiver on any future

occasion. No waiver or amendment in respect of this Agreement will constitute a

waiver or amendment of any other agreement between the Parties.

6.6



The Parties may execute this Agreement in three counterparts, each of which

constitutes an original, and all of which, collectively, constitute only one agreement.

The signatures of all of the Parties need not appear on the same counterpart, and

delivery of an executed counterpart signature page by facsimile or electronic scan is

as effective as executing and delivering this Agreement in the presence of the other

Parties. This Agreement is effective upon delivery of one executed counterpart from

each Party to the other Parties. In proving this Agreement, a Party must produce or

account only for the executed counterpart of the Party to be charged.



6.7



This Agreement (and any non-contractual obligations arising out of or in connection

with it) is governed by English law.

[Signature page follows.]



29



For and on behalf of WesternZagros Limited:



Signature…"Ian McIntosh"…….

Title: …Director

Name:…Ian McIntosh......

For and on behalf of Talisman (Block K44) B.V.:



Signature…"Ron Achtymichuk"………………….

Title: Duly Authorized Attorney….......

Name: …Ron Achtymichuk…………………......

For and on behalf of the Kurdistan Regional Government of Iraq:



Prime Minister

Kurdistan Regional Government

On behalf of the Regional Council for the Oil and

Gas Affairs of the Kurdistan Region – Iraq



Signature:…"Barham Salih"……………… …

Barham Salih

Minister of Natural Resources

Kurdistan Regional Government

On behalf of the Ministry of Natural

Resources in the Kurdistan Region



Signature:…"Ashti Hawrami"………….…

Ashti Hawrami

[Signature page to the Kurdamir Amendment Agreement]



Annex 1

ANNEX A – Contract Area

Map showing coordinates of Kurdamir corner points



Kalar-Bawanoor Block

Point

E1

E2

E3

F

f

e

d

c

b

a



Easting

518326.91

532347.44

538210.27

556544.53

553441.19

536640.00

526720.00

524040.00

518926.57

514750.00



Northing

Longitude

3883273.04

45.20106

3880312.81

45.35477

3883689.15

45.41922

3863905.79

45.61902

3859637.79

45.58477

3871380.00

45.40145

3873930.00

45.29284

3875760.00

45.26352

3877080.68

45.20750

3880500.00

45.16177



Latitude

35.09208

35.06503

35.09527

34.91603

34.87771

34.98434

35.00764

35.02421

35.03623

35.06713



Projection of Easting and Northing points:

Projected Coordinate System: WGS 1984 UTM Zone 38N

Projection: Transverse Mercator

False Easting: 500000.00000000

False Northing: 0.00000000

Central Meridian: 45.00000000

Scale Factor: 0.99960000

Latitude Of Origin: 0.00000000

Linear Unit: Meter



Projection of Longitude and Latitude points:



Geographic Coordinate System: GCS WGS 1984

Datum: D WGS 1984

Prime Meridian: Greenwich

Angular Unit: Degree



Annex 2

Costs to be allocated to the Garmian Block



Annex 3

Completion

1.



The completion requirements of the Government are:

(a) The Government is satisfied that each of the Consulting Agreements and the interests in the

production sharing contracts acquired under the Consulting Agreements has been terminated.

(b) Receipt by the Government of board resolutions and signing authorities for the execution of

this Agreement from WesternZagros Limited and Talisman in form and content reasonably

satisfactory to the Government;

(c) The Government is satisfied that each of the representations of a Party made to the

Government is true and correct as of the Agreement Date and as of the Completion Date;

(d) The Government is satisfied that each of the representations and warranties set forth in each

Letters of Representations and Warranties is true and correct as of the Completion Date;

(e) Talisman and WesternZagros Limited have delivered to the Government such legal opinions

as the Government may consider necessary to support the representations and warranties set

forth in the Letters of Representations and Warranties;

(f) Talisman and WesternZagros Limited have delivered to the Government a joint and several

guarantee, in a form acceptable to the Government, from WesternZagros Resources Ltd. and

Talisman Energy Inc. in respect of the Minimum Exploration Obligations for the First SubPeriod;

(g) The Government has received a fully executed copy of this Agreement and the First

Amendment Agreement;

(h) The Government has received resolutions from each of WesternZagros Limited and

Talisman in accordance with Article 45.6.3 of the Contract; and

(i) The Government has received an executed Joint Operating Agreement between

WesternZagros Limited and Talisman in a form satisfactory to the Government.



2.



The completion requirements of Talisman are:

(a) Talisman has received a fully executed copy of this Agreement;

(b) Receipt of board resolutions and signing authorities from WesternZagros Limited; and

(c) Talisman is satisfied that each of the representations of WesternZagros Limited made to

Talisman is true and correct as of the Agreement Date and the Completion Date.



3.



The completion requirements of WesternZagros Limited are:

(a) WesternZagros Limited has received a fully executed copy of this Agreement;

(b) Receipt of board resolutions and signing authorities from Talisman; and

(c) WesternZagros Limited is satisfied that each of the representations of Talisman made to

WesternZagros Limited is true and correct as of the Agreement Date and the Completion

Date.



Annex 4

Form of Certificate of Completion



COMPLETION DATE: 25 July 2011

This Certificate of Completion is signed and delivered pursuant to Clause 1.3 of the Amendment

Agreement by and between the undersigned (the “Agreement”). Terms used in this certificate of

completion have the meanings set forth in the Agreement.

Each of the undersigned parties to the Agreement:

1.



represents that the representations of such Party were true as of the Agreement Date and are true as of

the Completion Date;



2.



certifies to the other Parties that all of the requirements for completion in respect of itself in the

Agreement has been satisfied or waived; and



3.



agrees the Completion Date shall be the date set forth in this certificate of completion as the

Completion Date and that, in accordance with Clause 1.2, all of the terms of the Agreement are in full

force and effect.



The Parties may execute this certificate in three counterparts, each of which constitutes an original, and

all of which, collectively, constitute only one certificate of completion. The signatures of all of the Parties

need not appear on the same counterpart, and delivery of an executed counterpart signature page by

facsimile or email is as effective as executing and delivering this certificate in the presence of the other

Parties. This certificate is effective upon delivery of one executed counterpart from each Party to each of

the other Parties, and is only effective when each Party has signed it.



[Signature page follows.]



For and on behalf of WesternZagros Limited:



Signature……………………………….

Title: ……………………………….......

Name:………………………………......

For and on behalf of Talisman (Block K44) B.V.:



Signature……………………………….

Title: ……………………………….......

Name: ………………………………......

For and on behalf of the Kurdistan Regional Government of Iraq:



Minister of Natural Resources

Kurdistan Regional Government

On behalf of the Ministry of Natural

Resources in the Kurdistan Region



Signature:………………………….…

Ashti Hawrami



[Signature page to the Certificate of Completion – Kurdamir]