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STRATEGIC ALLIANCE AGREEMENT


BETWEEN





NIGERIAN PETROLEUM DEVELOPMENT





COMPANY LIMITED


AND





ATLANTIC ENERGY DRILLING CONCEPTS


NIGERIA LIMITED











FOR








THE DEVELOPMENT AND PRODUCTION OF


OML 30 





THIS AGREEMENT is made this 35^ day of ........... 2011 BETWEEN


NIGERIAN PETROLEUM DEVELOPMENT COMPANY LIMITED, a company


incorporated under the laws of the Federal Republic of Nigeria whose registered


office is at 62, Sapele Road, Benin City (hereinafter referred to as “NPDC” which


expression shall where the context so admits, include its successors and assigns)


of the one part;


AND


ATLANTIC ENERGY DRILLING CONCEPTS NIGERIA LIMITED, a company


incorporated under the laws of the Federal Republic of Nigeria whose registered


office is at 50D Glover Road, , Lagos (hereinafter referred to as “ATLANTIC ”


which expression shall, where the context so admits, include its successors and


assigns) of the other part.


WHEREAS the Federal Government of Nigeria (Government) has granted consent


vide a Deed of Assignment dated 21st April, 2011 for the Nigeria National


Petroleum Corporation (NNPC) to assign its fifty five per cent (55%) equity interest


in the Contract Area to NPDC;


WHEREAS ATLANTIC has offered to carry NPDC's equity interest share of


Petroleum Operation Costs and provide technical expertise as and when


required in relation to Petroleum Operations in the Contract Area;








WHEREAS Government in consideration of the huge capital outlay and other


resources required for Petroleum Operations in the aforementioned assets has


approved that NPDC enter into a strategic alliance with ATLANTIC for the


provision of funding and technical expertise;


WHEREAS NPDC and ATLANTIC warrant that they have the right, power and


authority to enter Into this Agreement;








WHEREAS ATLANTIC represents that it has technical competence, professional


skills and funds (both local and foreign) necessary to support NPDC in Petroleum


Operations for the Contract Area and has agreed to provide the funds for


carrying out Petroleum Operations and further agreed to support NPDC with


technical expertise.








NOW THEREFORE in consideration of the premises and mutual covenants herein


contained, the Parties hereby agree as follows:




















SAA_0ML 30_NPDC_ATLANT1C_2011 Page 2


 ARTICLE 1





1.0 DEFINITIONS





1.1 In this Agreement, including the recitals and the Annexes attached hereto


unless the context otherwise requires, words and expressions used shall


bear the meanings stated herein:





"Accounting Procedure" means, the rules and procedures set forth in Annex “C"


attached hereto and forming part of this Agreement;


“Affiliate or Affiliated Company" means, a company or other entity that controls


or is controlled by a Party, or a company or other entity which controls or is


controlled by a company or other entity which controls a Party; and for the


purpose of this definition, ‘'control" means, ownership by one company or entity


of at least fifty-one per cent (51 %} of:


(a) the voting stock, if the other company is a company issuing stock; or


(b) the controlling rights or interest if the other entity is not a company.








“Available Crude Oil" means, the Crude Oil won, saved and allocated to NPDC


from the Contract Area.








"Available Natural Gas" means, the non associated nalural gas won, saved and


allocated to NPDC from the Contract Area.








"Barrel" means, a quantity or unit of Crude Oil, equal to forty-two (42) United


States gallons at the temperature of sixty degrees (60°) Fahrenheit at normal


atmospheric pressure.


"Barrels of Oil Equivalent" or "BOE" means, the amount of energy equivalent


contained in a barrel of crude oil {5.8 X 10 BTU).


"BCF" means, billion cubic feet of Natural Gas.








"Budget" means, the cost estimate of items included in Work Programme.











SM.0ML 30_NPDCLATLANTIC_2011 Page 3


“CAPEX” means, the costs referred to in Article II, paragraph 2 of Annex "C" of


this Agreement.








“Agreement" means, this Strategic Alliance Agreement including the Annexes


attached hereto.








“Contract Area" means, the area covered by Oil Mining Lease 30 and any


subdivisions arising therefrom in compliance with the relinquishment provisions of


Paragraph 12 of the first schedule to the Petroleum Act. The Coordinates of the


Contract Area is as described in Annex “A” hereto.





“Companies Income Tax" or “CIT" means, the tax obligations arising from the


utilization of natural gas as defined in the Companies Income Tax Act Cap C20


LFN 2004, as amended (CITA)





“Contract Year" means, a period of twelve (12) consecutive calendar months


from the Effective Date of this Agreement or from the anniversary of the Effective


Date.








“Cost OH" means, the quantum of Available Crude Oil allocated to the Parties to


enable the Parties to generate the proceeds to recover their respective costs


incurred in carrying out Petroleum Operations under this Agreement.





“Cost Gas" means, the proceeds realized from the sale of Natural Gas produced





from the Contract Area to enable the Parties recover their respective costs


incurred in carrying out Petroleum Operations with respect to non associated


gas under this Agreement.








“Crude Oil" means, mineral oil in its natural state before it has been refined or


treated (excluding basic sediments and water or other foreign .substances).





“Crude Oil Proceeds" means, the amount in U.S. Dollars determined by


multiplying the Official Selling Price by the number of Barrels of Available Crude


Oil lifted by either Party.





"Development" means. Petroleum Operations undertaken in the Contract Area


for the purpose of putting the Contract Area into production pursuant to anv


development programme approved in accordance with Article 9 hereof.














SAAOML 30.NPDC.ATIANTIC.2011 Page 4


to





"Development Costs" means, the cost of developmental activities which


includes but is not limited to drilling, completing, capping, plugging and


abandoning, appraisal, development, water injection or gas injection wells, the


construction and installation of facilities and equipment required for the


production, storage, transportation and delivery and evacuation of Crude Oil


and Natural Gas as well as the installation of secondary recovery facilities.


Development Costs shall also include cost incurred during Incremental


Production activities.








"Effective Date1’ means, the date of the execution of this Agreement by the


Parties hereto being the day and year first above written.








“Financial Year" means, a period of twelve (12) calendar months from the lsl


January to the 31st December.








"Fixed Assets" means, immovable property and includes movable property,


which has been affixed, installed, constructed or attached to immovable


property as part of the facilities utilised for carrying out Petroleum Operations.





“Foreign Exchange" means, currency other than that of Nigeria that is


acceptable to both NPDC and ATLANTIC.








“Gross Negligence" means, any act or failure to act by the Operator or


ATLANTIC which was intended to cause or which was in reckless disregard or


wanton indifference to the harmful consequence that the Operator or ATLANTIC


knew or should have known such act or Failure would have on (a) safety of life or


property or (b) Petroleum Operations or (c) books and accounts particularly oil


industry accounting standards and procedures.





“Incremental Production" means, monthly production of Crude Oil or Natural





Gas over and above Proven, Developed and Producing reserves attributable to


capital contributions by ATLANTIC .








“LIBOR" means, the seven-day term London Inter-Bank Offer Rate for U.S. Dollars


for similar amounts to the sums in question, quoted by Barclays Bank in London at


11:00 a.m. on the first business day of the relevant period.








"Operating Committee" means, the Committee established by NPDC and


ATLANTIC to carry out the functions set out in Article 7 of this Agreement.











SAA.OML 30_NPDC_ATLANTIC_2011 0 Page 5





“Market Price" means, official selling price in a given month of the Crude Oil and


non associated Natural Gas produced from the Contract Area in US Dollars per


Barrel, shall be related to Dated Brent + Differential (NNPC) in accordance with


the NNPC's monthly published price for the different grades of Crude Oil.








“MCF" means, million cubic feet of Natural Gas.











"Dated Brent" means, the average of Platt's mid-range quotations of Dated Brent


crude as published by Platts Crude Oil marketwire.








"Differential" means, the monthly premium as published by NNPC.








The applicable pricing shall be on either Prompt, Advanced or Deferred basis.








"Prompt basis" shall be five (5) consecutive published quotations after the bill of


lading date with the bill of lading date as day zero.








“Advanced valuation" shall be five (5) consecutive published quotations with the


fifth day before the bill of lading day i.e. the bill of lading day is day six.








"Deferred pricing option" shall be five (5) consecutive published quotations with


the 14th day after the bill of lading date as day one i.e. the bill of lading date is


day zero.








However, each Party's preferred option must be indicated at close of work (4.00


pm) of the sixth (6th) working day before the first day of the laycan. In case either


Party's preferred option is not advised to the Operator by close of work of the 6,h


working day prior to the first day of the laycan, the Prompt option will apply in


the valuation of that Party's lifting.








For Natural Gas it shall be US Dollars /MCF according to the gas pricing


regulations.








“Natural Gas" means, all gaseous hydrocarbons produced in association with


Crude Oil or from reseivoirs which produce gaseous hydrocarbons.








"Natural Gas Proceeds" means, the amount in U.S. Dollars agreed between the


Parties and any off taker of Natural Gas.











SAA 0ML30 NPDC_ATLANTtC_2011 Page 6


"Operator" means, any operator appointed to carry out Petroleum Operations in


the Contract Area.








"Party" means, NPDC or ATLANTIC.





"Parties" means, both NPDC and ATLANTIC.











"Petroleum Operations" means, all Crude Oil and Natural Gas Development and


Production Operations, processing, transportation and Crude Oil terminal


activities for or with respect to the Contract Area.








"Petroleum Operations Costs" means, expenditures made and obligation


incurred in carrying out Petroleum Operations as determined in accordance with


this Agreement and the Accounting Procedure.


"Petroleum Profit Tax" or "PPT" means, the tax obligations arising from the


Petroleum Operations as defined In the Petroleum Profit Tax Act Cap PI3 LFN


2004, as amended (PPT Act).








"Production Costs" means, all costs incurred in carrying out Production


Operations.





"Production Operations" means, all operations carried out subsequent to


Development in order to produce, treat, store, convey and deliver Crude Oil and


Natural Gas from wells, platforms and facilities to a refinery, terminal or other


utilisation or marketing point.








"Profit Oil" means, the balance of Available Crude Oil after the allocation of


Royalty Oil, Cost Oil and Tax Oil.








"Profit Gas" means, the balance of Available Natural Gas after the allocation of


Royalty Gas, Cost Gas and Tax Gas.





"Proven, Developed and Producing" or "PDP" or "PI Developed" means, the


monthly production forecast attached to this Agreement attributable to the


Proved, Developed and Producing reserves from the Contract Area of 155.9


Million Barrels.

















SAA.OML 30_NPDC_ATLANT!C_2011 Page 7


"Quarter" means, the time interval from: January 1st to March 315‘ inclusive, April


lsl to June 30lh inclusive, )sl July to 30lh September inclusive, October 1st to


December 31s' inclusive.








"Term of Agreement" means, the period referred to in Article 3.








"Royalty" means, the amount payable pursuant to the Petroleum Act and


Petroleum (Drilling and Production) Regulations Cap P10 LFN 2004, as amended.








"Royalty Oil" means, the quantum of Available Crude Oil allocated to NPDC





which will generate an amount of proceeds equal to the actual payment of


Royalty.








"Royalty Gas" means, the quantum of Available Natural Gas allocated to NPDC


which will generate an amount of proceeds equal to the actual payment of


Royalty.








"Tax Oil" means, the quantum of Available Crude Oil allocated to NPDC which


will generate an amount of proceeds equal to the actual payment of PPT.











"Tax Gas” means, the quantum of Available Natural Gas allocated to NPDC


which will generate an amount of proceeds equal to the actual payment of CIT.








"U.S. Dollars" means the currency of the United States of America.








"Willful Misconduct” means, in relation to the Operator or ATLANTIC, an


intentional, conscious, reckless and wanton disregard of:








(a) any material provision of this Agreement; or





(b) any substantial part of the Work Programme as contained in Article 9.








But shall not include an intentional and conscious disregard of either (a) or |b)


above, if the same relates to safeguarding of life, property or Petroleum


Operations.








"Work Programme" means, for the applicable period a statement itemizing the





Petroleum Operations to be carried out in the Contract Area.








m


SAA.OMt 30_NPDC_ATLANTIC_2011 Page 8


 2P Reserves" means, those reserves as described in Annex H.








H 2C Reserves" means, those reserves as described in Annex H.








ARTICLE 2


ENTRY FEE











2.1 NPDC acknowledges ATLANTIC 's obligation to pay $0.30/bbl and


$0.010/Mcf of the 2P Reserves to NPDC as an entry fee for participation in


the development of Reserves of 451.6 Million Barrels of Crude Oil as


• contained in Annex H to this Agreement. In the event of a change to the


2P Reserves by the Parties or by a report from an independent auditor


appointed by the Parties, the Parties agree that the entry fee may be


adjusted.








2.2 The entry fee shall be paid Seventy (70) days after NPDC has been legally


assigned interest in the OML by the Minister and the complete divestment


of all other OML interest holders apart from NNPC.








2.3 No later than 70 days prior to the commencement of the Work


Programme for the capture of 2C contingent resources of [....] as


contained In Annex H to this Agreement, ATLANTIC shall pay 'NPDC a


further sum of $0.30/bbl and $0.010/Mcf of the 2C Reserves as an entry fee


for participation in the development of 2C Reserves. If ATLANTIC fails to


make payment within the stated period, ATLANTIC shall not be entitled to


participate in the development of the 2C Reserves, in the event of a


change to the 2C Reserves by the Parties or by a report from an


independent auditor appointed by the Parties, the Parties agree that the


entry fee may be adjusted.








2.4 The entry fee shall not be recoverable as Cost Oil or Cost Gas.








2.5 This Agreement shall commence upon the payment of the entry fee by


ATLANTIC.








ARTICLE 3








DURATION OF THE AGREEMENT








3.1 This Agreement shall remain in full force and effect until the cumulative


production from the Contract Area has reached the 2P reserves of 451.6








SAA.OML 30_NPDC_ATLANT1C.2011 Page 9


Cb


 Million Barrels of Crude Oil attached as Annex H to this Agreement,


thereafter, this Agreement shall terminate. Upon payment of the entry fee





referred to in Article 2,3, the Agreement shall be renewed on the same


terms and conditions with respect to the capture of the 2C Reserves of


[....] as contingent reserves.








3.2 If new producible reserves are added to the volumes referred to in Article


3.1, the duration of this Agreement shall, subject to new terms and


conditions agreed upon by the Parties, be extended till the full recovery of


such new reserves.








3.3 Subject to mutual agreement of the Parties this Agreement may be


terminated whenever it appears evident that the cumulative production


referred to in Article 3.1 hereinabove cannot be economically attained.








ARTICLE 4





RIGHTS AND OBLIGATIONS OP THE PARTIES











4.1 In accordance with this Agreement ATLANTIC shall:








(a) subject to Article 8.1 and in accordance with the approved Work


Programme and Budget, provide all the funds required for NPDC’s


55% share of Petroleum Operation Costs in respect of the Contract


Area;








(b) deliver to NPDC, within seventy (70) days from the Effective Date, a


parent company guarantee from SPOG PETROCHEMICAL NIGERIA


LIMITED Limited in the form set out in Annex G covering the total


amount of the minimum disbursement required to meet NPDC’s





fifty five percent (55%) share of Petroleum Operation Costs for the


full Development of the Contract Area and additional funds which


ATLANTIC may be obliged to provide in accordance with- Article


8.2;








(c) shall carry out an agreed annual training programme in


accordance with Article 14 hereof;








(d) provide training facilities for NPDC/NNPC staff with an annual sum


of Three Hundred and Fifty Thousand US Dollars ($350,000)for a Jt*'


period of five (5) years from the Effective Date, which amount shall pm





SAA_OML30_NPDC_ATLA.NT1C.2011 Page 10














i r^-nTir-ST” -•"Ttr


 be paid in January of each year into an account of and in the


name of NPDC;








(e) be subject to ail Nigerian laws, orders and regulations applicable to


Petroleum Operations;


(f) respect all the rights concerning industrial property and indemnify





and hold NPDC harmless from and against all claims, loss, damage


or action arising out of or resulting from, violation of such rights;


(g) not to transfer or assign any rights acquired and obligations





undertaken by ATLANTIC under this Agreement without prior


written consent of NPDC, which consent shall not be unreasonably


withheld;





(h) indemnify and hold harmless NPDC its servants, agents and


representatives from and against all losses, fees {including legal '


fees and expenses) of whatsoever kind and nature which NPDC


may suffer or be compelled to pay to employees, representatives


or agents of ATLANTIC as a consequence of any final decision


given by a Nigerian court except where actions or failure to act on


the part of NPDC or its employees, agents or representatives


contributed to the losses, in which case such costs as are


attributable to the action or failure on the part of NPDC shall be


recoverable by ATLANTIC ;


(i) have the right to lift, in accordance with Annex and freely





export and retain abroad the receipts from the sale of its share of


Available Crude Oil and Available Natural Gas subject to Article


10;


(j) have full access, at all reasonable times during usual business hours





to all books, records, inventories and accounts of any kind or


nature maintained by Operator in relation to Petroleum


Operations;





(k) have the right of access to the Contract Area at all reasonable


times to inspect and observe Petroleum Operations of every kind


and character carried on in the Contract Area. OPERATOR shall


provide NPDC with necessary facilities to gain such access


provided that the provision of such facilities shall not unduly


interfere with the conduct of Petroleum Operations hereunder;








SAA.OML 30_NPDC_ATLANTIC_2011 Page 11





 (I) have the right to nominate pursuant to Article 6 of this Agreement,


professional staff to occupy defined functional positions in the


agreed organizational structure for Petroleum Operations for as


long as this Agreement subsists;








4.2 In accordance with this Agreement, NPDC shall:








(a) furnish ATLANTIC with copies of all geophysical, geological, drilling,


well, production.





(b) furnish ATLANTIC with cash call request and other data and





information relating to the Contract Area;








(c) ensure the renewal of the Oil Mining Lease under the Petroleum


Act CAP P10 LFN 2004, as amended, and








(d) have a right of first refusal in the event ATLANTIC wishes to assign


any interest under this Agreement to a third party.








Article 5








POWERS AND OBLIGATIONS OF THE OPERATOR








5.1 NPDC shall be designated as the Operator of the Contract Area subject


to the direction of the Operating Committee. NPDC shall undertake the


following duties:








(a) conduct all Petroleum Operations with utmost good faith and in a


good workmanlike manner in accordance with good industry


practice and all applicable laws and regulations;








(b) maintain full and accurate records of all Petroleum Operations


performed under this Contract;








(c) be always mindful in the conduct of its operations of the rights


and overall interests of Nigeria;

















SAA.0ML 30_NPDC_ATLANT!C_2011 Page 12


to





 (d) give preference to such goods and services which are available in


Nigeria and can be rendered by Nigerian citizens provided they


meet the required specifications and are competitive in price;








(e) For the purpose of arriving at Profit Oil and Profit Gas, carry out the


estimated and final PPT calculation In accordance with the PPT


Act and submit same on a timely basis to ATLANTIC for record


purposes;








(f) Allocate to each Party the right to lift, in accordance with Annex


«<£«<.








(g) give to ATLANTIC full access, at all reasonable times during usual


business hours to ail books, records, inventories and accounts of


any kind or nature maintained relating to Petroleum Operations,





provided that the Party gives the Operator not less than seven (7)


days prior notice in writing;








(h) give ATLANTIC the right of access to the Contract Area at all


reasonable times to inspect and observe Petroleum Operations of


every kind and character carried on in the Contract Area.


Operator shall provide ATLANTIC with necessary facilities to gain


such access provided that the provision of such facilities shall not


unduly interfere with the conduct of Petroleum Operations


hereunder;








(i) consult freely with and make full and frank disclosure to ATLANTIC


concerning Petroleum Operations and keep them currently


advised of all matters of importance arising in connection


therewith;











0) except as otherwise provided in this Agreement or as may be


authorized by the Operating Committee, NPDC shall not permit or


suffer any lien or other encumbrance to be filed or to remain


against any material, physical equipment, real or personal


property thereon or related thereto, nor against Crude Oil and


Natural Gas produced and saved as a result of its operations


hereunder, unless such lien is imposed by a Court of competent


jurisdiction;








(k) have the right to assign and retain such technical, administrative


and supervisory personnel as deployed to it and consultants as











SAA_OML 30_NPDC_ATLANTIC_2011 Page 13


CA


 may be necessary for the conduct of Petroleum Operations,


subject to approval of the Operating Committee;








(I) keep accurate records and books of accounts with respect to


Petroleum Operations, which shall be available during normal


business hours to ATLANTIC'S authorized representatives. Such


records and books shall comply with Annex "C" and generally


accepted Accounting Principles and Procedure and with due


regard to the requirements of the laws and regulations;








(m) promptly provide ATLANTIC with copies of all Operating


Committee approvals for any expenditure, when requested by


ATLANTIC;








(n) not without the written approval of the Operating Committee


dispose of, sell, or re-export any property of such historic cost


exceeding One Hundred Thousand Naira (N 100,000.00) per unit or


batch or such other value as may, from time to time, be


determined by Operating Committee. Notwithstanding the


provision herein, NPDC shall furnish ATLANTIC quarterly returns of


all items of property disposed of regardless of value;








(o) utilize in Petroleum Operations, equipment exclusively owned and


made available by a Party and the charges thereafter to the


operations shall be as specified In the Accounting Procedure;





(p) Litigation and settlement of claims in connection with the





Contract Area, or Petroleum Operations shall be conducted for


and on behalf of the Parties


(q) by Operator subject to supervision of the Operating Committee;


provided however, that Operator shall have authority to settle


claims and litigation not exceeding $4300,000.00 (Three Hundred


Thousand Naira) or the foreign currency equivalent without the


approval of Operating Committee. Operator, however, shall


promptly report any such aforesaid settlement to ATLANTIC.


Operator shall notify ATLANTIC of any process served upon it or of


any process it intends to serve in any action in relation to


Petroleum Operations. Nothing contained in this Article shall


preclude ATLANTIC from acting on its own behalf (and at its own


expense) if, in its opinion, it considers such action advisable or


necessary to protect its particular interest hereunder. However,


ATLANTIC shall not pursue a course of action contrary to the


course of action then being undertaken for the Petroleum


Operations with respect to such litigation.








SAA_0ML 30_NPDC_ATLANTIC_2011 Page 14


 ARTICLE 6





PARTICIPATION OF ATLANTIC IN PETROLEUM OPERATIONS





Operator shall ensure efficient conduct of Petroleum Operations in the Contract





Area. To this effect, Operator shall utilize professionals seconded by ATLANTIC


pursuant Article III (4) of Annex B.








ARTICLE 7








OPERATING COMMITTEE








7.1 A Operating Committee shall be established within thirty (30) days from


the Effective Date of this Agreement for the purpose of providing orderly


direction on all matters pertaining to Petroleum Operations and Work


Programme. The powers and duties of the Operating Committee shall


include but not be limited to the following:








a) the revision, amendment and approval of all proposed Work


Programme and Budget;


b) the revision, amendment and approval of any proposed





recommendations made by either Party or by any sub-Committee,


with respect to Petroleum Operations;


c) ensuring that Operator canies out the decisions of the Operating


Committee and also to ensure that Petroleum Operations is


conducted in accordance with the relevant Nigerian laws;


d) the revision or approval of the sale or disposal of any items or


movable property relating to Petroleum Operations in accordance


with the provisions of this Agreement;


e) resolution of all audit observations;


f) the consideration of periodic performance in respect of approved


Work Programme and Budget;


g) review of the award of contracts for Petroleum Operations with


individual value of Five Hundred Thousand United States Dollars


(U$D$ 500,000} and above;


h) approval of qualified contractors and subcontractors list;


i) any other matters relating to Petroleum Operations.














SAA.0ML 30_NPDC_ATLANTIC_2011 Page 15


 7,2 (a) The Operating Committee shall consist of eight (8) persons


appointed by the Parties as follows:


NPDC - 4





ATLANTIC - 4








(b) Each Party shall designate by notice in writing to the other Party,


the names of its representatives to serve as members of the


Operating Committee as provided in Article 7.2(a) hereof and their


respective alternates, which, members or alternates shall be


authorised to represent that Party with respect to the decisions of


the Operating Committee. Such notice shall give the names, titles


and addresses of the designated members and alternates.








(c) At least fourteen (14) days prior to each scheduled Operating


Committee meeting, the secretary (Secretary) shall notify members


of the meeting and deliver to each member an agenda of matters





with briefs to be considered during each meeting. Matters which


are not delivered within the period stated shall not be considered


unless otherwise agreed by the Operating Committee. However,


no agenda shall be required in the event of an emergency


meeting.








(d) Either Party may change any of its respective members or


alternates from time to time by notifying the other Party in writing


not less than ten (10) days in advance of the effective date of such


change.








(e) NPDC shall appoint the chairman (Chairman) of the Operating


Committee. ATLANTIC shall appoint the Secretary who shall have


no voting rights. The Secretary shall keep minutes of all meetings


and records of all decisions of the Operating Committee. The


minutes of each meeting shall be approved by the Operating


Committee at the next meeting and signed by the Chairman and


Secretary and copies thereof delivered to each Party.








7.3 Unless otherwise agreed by the Parties, the Operating Committee


shall meet at the Operator's office once every three (3) calendar


months or at such other intervals or venue as may be agreed by the


Operating Committee. The quorum for any meeting of the


Operating Committee shall consist of three (3) representatives of


NPDC and three (3) representatives of ATLANTIC. The Chairman or


his alternate and the ATLANTIC'S Managing Director or his alternate


must be present at every Operating Committee meeting for a


quorum to be formed.





SAA_0ML 30_NPDC_ATLANTIC_2011 Page 16


7.4(a) Except as otherwise expressly provided in this Agreement all


decisions of the Operating Committee shall be reached by the


unanimous vote of the Parties. If unanimity is not obtained on any


matter (including any matter pertaining to a Work Programme or


Budget) proposed to the Operating Committee, then the Operating


Committee shall meet again to attempt to resolve such matter not


later than fourteen (14) days after the meeting in which the


proposed matter was rejected by a negative vote. Any portion of


such proposal that is not rejected shall insofar as possible be carried


out. At least seven (7) days prior to such second meeting, the Party


casting the dissenting vote shall provide to the other Party in writing


in reasonable detail the reasons for such dissenting vote. If such


written reasons are not provided at least seven (7) days prior to such


second meeting, then the proposal shall be deemed approved. In


such second meeting the agenda shall comprise such written


reasons as provided by the dissenting Party. If unanimity is not


obtained in the second meeting, then the Operating Committee


shall meet a third time within fourteen (14) days after the second


meeting. If unanimity is not obtained during the third meeting then


NPDC and ATLANTIC may agree to appoint an independent


qualified expert to advice on the matter, which advice shall be


binding on the Parties. In the event of failure of the Parties to agree


to the appointment of the said expert the provisions of Article 23


shall apply.








(b) The Parties shall be bound and abide by each decision of the


Operating Committee duly made in accordance with the provisions


of this Agreement.








7.5 The Operating Committee shall establish technical sub-committee and


any other advisory sub-committees from time to time as it considers


necessary such as finance and budget and legal/services sub¬


committees:








(a) Each sub-committee established pursuant to this Article 7.5 shall be


given terms of reference by the Operating Committee and shall be


subject to such direction and procedures as the Operating


Committee may give or determine.








(b) The Operating Committee shall appoint the members of the sub¬


committees which shall comprise equal representation from the


Parties. The chairmen and the secretaries of the sub-committees


shall be appointed by the Operating Committee.











SAA.OML 30_NPDC_ATLANT1C_2011 Page 17


tb











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 (c) The deliberations and recommendations of any sub-committee


shall be advisory only and shall become binding and effective


upon acceptance by the Operating Committee.











ARTICLE 8








FUNDING OF PETROLEUM OPERATIONS








8.1 ATLANTIC shall provide all the funds required for NPDC's 55% share of


Petroleum Operation Costs, subject to Article 8.2 and in accordance with


approved Work Programme and Budget. A review of the Work


Programme shall be carried out by the technical sub-committee subject


to approval of the Operating Committee within fifty (50) days from the


Effective Date to estimate the capital investments for the Development.


Based on this review the Operating Committee shall within seven (7) days


approve the amount for the capital investments, which shall be covered


by the parent company guarantee.











8.2 The costs incurred by the Parties in carrying out Petroleum Operations shall


be recovered by the Parties through Cost Oil or Cost Gas, in accordance


with Article 10 and the Accounting Procedure as set out in Annex *C\








8.3 All bank transactions shall be made through bank accounts opened and


maintained by NPDC exclusively for the Petroleum Operations.








8.4 NPDC shall open and maintain project bank account(s) exclusively for


funding Petroleum Operations and shall procure that ATLANTIC shall


have unlimited inquiry and audit mandate and a right to copies of all


information and transactional documents including all accounts records


and balances as they occur from bank accounts and project bank


accounts referred to in Articles 8.3 and 8.4.








8.5 If additional Development Costs are required to add facilities not included


in the development programme, including but not limited to in-fill well,





secondary recovery facilities, additional processing facilities, deeper wells


and artificial lift, ATLANTIC shall provide NPDC’s share of Petroleum


Operations Costs required to carry out such additional development


activities.








8.6 The additional capital investments referred to in Article 8.5 hereof shall be


recovered by ATLANTIC through Cost Oil and Cost Gas in accordance


with Article 10 and the Accounting Procedure, and ATLANTIC shall be ^





SAA_0ML 30 NPDC ATLANTIC_2011 Page 18


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 entitled to receive a share of Profit Oil and Profit Gas over the additional


production as provided for in Article 10.2 hereof.








8.7 ATLANTIC shall bear all losses associated with funding NPDC's 55% share


of Petroleum Operations under this Agreement.








ARTICLE 9








DEVELOPMENT PROGRAMME AND BUDGETS











9.1 Operator shall submit to the Operating Committee for approval within 60


days of the Effective Date, the development plan which shall include the


development programme and relevant Budget appropriately


apportioned into yearly phases.








9.2 At the meetings of the Operating Committee to consider and approve


the Work Programme and Budget for each year, Operator shall submit a


report on organizational structure to be utilized -for conduct of Petroleum


Operations in accordance with Annex B. During such meetings, Operator


shall report on the actual performance of the organizational structure for


the previous year.








9.3 The Development plan shall include the Work Programme and Budget,


apportioned into quarterly phases, to be carried out under the


Development plan during the remainder of the financial year. In respect


of subsequent financial years, the Work Programme and Budget shall be


submitted not later than 31s1 August of the preceding financial year. Such


Work Programme and Budget shall comprise all requisite services


including, but not limited to, environmental studies, drilling and


completion programmes, construction and assembling of field installations


and equipment, as may be necessary to permit the production, storage,


transportation and delivery of Crude Oil and Natural Gas from the


Contract Area. The Development programme and Budget shall be


detailed as necessary.








9.4 Operator shall submit to Operating Committee any revision of the annual


Development programme and Budget. Any such revision of the approved


Development Budget shall be made by agreement of the Operating


Committee, in the event of emergency or extraordinary circumstances


that require immediate action. Operator may take actions it deems


necessary to protect life and property and the interest of the Parties and


shall promptly notify the Parties in writing within forty-eight (48) hours











SAA.OML 30_NPDC_ATLANTIC_2011 Page 19


a


 notwithstanding the provisions of this Article 9.4 any cost so incurred shall


be recoverable.








ARTICLE 10








RECOVERY OF PETROLEUM OPERATIONS COSTS AND CRUDE OIL AND NATURAL


GAS ALLOCATION








lO.l Crude Oil and Natural Gas Allocation








The allocation of Available Crude Oil and Available Natural Gas shall be


in accordance with Annex “C", Annex "D" and this Article 10, as follows:








(a) Royalty Oil and Royalty Gas shall be allocated to NPDC in such


quantum as will generate an amount of proceeds equal to NPDC’s


Royalty applicable to the Contract Area.








(b) Cost Oil and Cost Gas shall be allocated to NPDC in such quantum


as will generate an amount of proceeds sufficient to recover the


following:








I. Un-depreciated costs associated to Capital Costs as


defined in the Accounting Procedures incurred prior to


execution of this Agreement shall be allocated to NPDC:


II. Development Costs and Production Costs related to the


Production of PI Developed reserves as agreed in the


production profile attached hereto as Annex H shall be


allocated to ATLANTIC ;





III. Incremental Investment (Development Costs and Production


Costs), made by ATLANTIC shall be recovered from


incremental volumes (i.e. the monthly production from 2P


reserves less the PI Developed reserves as indicated in the


production profile attached hereto as Annex H) shall be


allocated to ATLANTIC .





Costs expended in United States Dollars will be recovered in United


States Dollars through Cost Oil allocation and Cost Gas proceeds;





costs expended in currencies other than United States Dollars will


be converted to United States Dollars at the last available


exchange rate and recovered through Cost Oil and Cost Gas


allocation.











SAA OML 30 NPDC ATLANTJC_2011 Page 20


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 (c) Tax Oil and Tax Gas shall be allocated to NPDC in such quantum as





will generate an amount of proceeds equal to the PPT [and CIT]


liability relevant to the production in the Contract Area.





(d) Profit Oil being the balance of Available Crude Oil after deducting





Royalty Oil, Cost Oil and Tax Oil and Profit Gas being the balance


of Available Natural Gas after deducting Royalty Gas, Cost Gas


and Tax Gas respectively shall be shared by the Parties pursuant to


the Accounting Procedure as follows:








Profit Oil and Profit Gas attributable to un-depreciated costs


associated to Capital Costs incurred prior to execution of


this Agreement as indicated in the production profile


attached hereto as Annex H shall be allocated in the


following ratio:








NPDC - Ninety per cent (90%)


ATLANTIC -Ten per cent (10%)











II. Up to the full recovery of Development Costs by ATLANTIC


Profit Oil shall be allocated in the following ratio:








NPDC - Forty per cent (40%)


ATLANTIC - Sixty per cent (60%)








Thereafter, Profit Oil shall be allocated in the following ratio:








NPDC - Seventy per cent (70%)


ATLANTIC - Thirty per cent (30%)











III. Up to the full recovery of Development Costs related to the


contingent resources development. Profit Oil shall be


allocated in the following ratio:








NPDC - Forty per cent (40%)


ATLANTIC - Sixty per cent (60%)














SAA.0ML 30_NPDC_ATLANTIC_2011 Page 21


 Thereafter, Profit Oil shall be allocated in the following ratio:





NPDC - Seventy per cent (70%)


ATLANTIC - Thirty per cent (30%)


iv. Up to the full recovery of Development Costs regarding non





associated gas by ATLANTIC, Profit Gas shall be allocated in


the following ratio:





NPDC-Thirty per cent (30%)


ATLANTIC - Seventy per cent (70%)





Thereafter, Profit Gas shall be allocated in the following ratio:


NPDC - Seventy per cent (70%)





ATLANTIC - Thirty per cent (30%)


v. Up to the full recovery of the Development Costs for the





development of contingent resources. Profit Gas shall be


allocated in the following ratio:





NPDC - Thirty per cent (30%)


ATLANTIC - Seventy per cent (70%)





Thereafter, Profit Gas shall be allocated in the following ratio:





NPDC - Seventy per cent (70%)


ATLANTIC - Thirty per cent (30%)





10.3 Each Party shall take in kind, lift and dispose of its allocation of Cost Oil,


and Profit Oil in accordance with the Lifting Procedure (Annex D).


The PPT and Tax Gas payable under this Agreement represents the


NPDC's tax obligations as Concessionaire. ATLANTIC'S tax obligations


which shall be paid under CITA shall be paid by ATLANTIC from its profit.








SAA.0ML 30_NPDC_ATLANTIC_2011 (A Page 22





10.4 Either Party may at the request of the other, lift the other Party's Cost Oil


and Profit Oil pursuant to Article 10.1 and the lifting Party shall within thirty


(30) days transfer to the account of the non-lifting Party the proceeds of


the sale to which the non-lifting Party is entitled. Overdue payments shall


bear interest at the annual rate of three (3) months LIBOR.





10.5 Either Party may, with the consent of the other Party, purchase any


portion of the other Party’s respective allocation of Cost Oil and Profit Oil


from the Contract Area.








10.6 Parties shall meet on a monthly basis as may be agreed to reconcile


all Crude Oil allocated and lifted during the period as per Annex "E".








ARTICLE 11








VALUATION OF AVAILABLE CRUDE OIL





11.1 Available Crude Oil shall be valued in accordance with the following


procedures:








(a) On the commencement of production from new reservoirs, NPDC


shall engage the services of an independent laboratory of good


repute to determine the assay of the new Crude Oil.





(b) When a new Crude Oil stream is produced, liftings shall be made





for a trial marketing period of three (3) calendar months or the


period required to lift the first three (3) cargoes, whichever is


shorter. During the trial marketing period NPDC shall:








(i) collect samples of the new Crude Oil upon which the assay


shall be performed as provided in Article 11.1 (a) above;








(ii) determine quality and yield pattern of the new Crude Oil;


(iii) share in the marketing such that each Party markets





approximately their proportionate share of the new Crude


Oil, notwithstanding the fact that a Party's share of Available


Crude Oil may be lifted in the process; payments thereafter


shall be made in accordance with Article 10.5;








SAA_0ML 30_NPDC_ATIANTIC_2011 Page 23














|-k* ' »:!«{>


 (iv) exchange information regarding the marketing of the new


Crude Oil including documents which verify the sales price


and terms of each lifting;








(v) apply the actual Free On Board (F.O.B.) sales price to


determine the price of each lifting. Such F.O.B. sales pricing


for each lifting shall continue after the trial marketing period


until a valuation of the new Crude Oil has been completed


but in no event shall it be longer than ninety (90) days after


conclusion of the trial marketing period.








(c) As soon as practicable but in any event not later than sixty (60)


days after the end of the trial marketing period. Operator shall


review the assay, yield, and actual sales data. Operator shall


present a proposal for the valuation of the new Crude Oil. A


valuation method either spot related or any other method


acceptable to the Parties shall be established for determining the


price for each lifting of Available Crude Oil. Such valuation method


shall be in accordance with the Official Selling Price published by


NNPC or relevant government authority. It is the intention of the





Parties that such prices shall reflect the true market value of the


new Crude Oil. The valuation method determined hereunder


(including the product yield values) shall be mutually agreed within





thirty (30) days from the aforementioned meeting failing which;


determination of such valuation shall be referred to an


independent consultant.








(d) upon the conclusion of the trial marketing period, the Parties shall


be entitled to lift their share of Available Crude Oil pursuant to


Article 10 and the Lifting Procedure.








(e) when a new Crude Oil stream is produced from the Contract Area


and is co-mingled with an existing Crude Oil produced in Nigeria


which has an established Official Selling Price basis then such basis


shall be applied to the extent practicable for determining the


Official Selling Price of the new Crude Oil. Operating Committee


shall meet and decide on any appropriate modifications to such


established valuation basis which may be required to reflect any


change in the market value of the Crude Oil as a result of co¬


mingling.

















SAA.OML 30_NPDC_ATLANTICJ2011 Page 24


11.2 If in the opinion of either Party an agreed price valuation method fails to


reflect the market value of the Crude Oil produced in the Contract Area,


then such Party shall propose to the other Party modifications to such


valuation method once in every six (6) months but in no event more than


twice in any year. The Parties shall then meet within thirty (30) days of such


proposal and mutually agree on any modifications to such valuation


within thirty (30) days from such meeting failing which, determination of


such valuation shall be referred to an independent consultant.








ARTICLE 12








PAYMENTS








12.1 In each accounting period, enough Crude Oil shall be allocated to meet


Cost Oil obligations and enough Natural Gas proceeds shall be made


available to meet Cost Gas obligations.








12.2 The method of payment of any sum due from ATLANTIC to NPDC and


vice versa shall be in accordance with the prevailing guidelines of the


Federal Ministry of Finance of Nigeria, the Central Bank of Nigeria and in


accordance with Annex C.








12.3 Unless otherwise provided herein, any payments which NPDC is required


to make to ATLANTIC or which ATLANTIC is required to make to NPDC


pursuant to this Agreement shall be made within forty five (45) days


following the end of the month in which the obligation to make such


payments occurs. Overdue payments shall bear interest at the annual


rate of three (3) months LIBOR.





12.4 If any of the Parties engages in activities or business outside Petroleum





Operations, the cost of the facilities, assets and personnel, if any, used for


such business or activities shall not be chargeable to the operations.





ARTICLE 13








UTILISATION OF NATURAL GAS








13.1 NPDC's share of Natural Gas proceeds from the Contract Area pursuant


to Development shall be shared in accordance with Article 10. The field


development programme shall address gas utilization for the Contract


Area and shall be subject to the approval of the Operating Committee.








SAAOML 3CLNPDC_ATLANT1C_2011 Page 25


ch





13.2 Notwithstanding the provisions of Article 13.1 hereof, the associated


Natural Gas produced with Crude Oil may be utilized at no cost to the


operations as fuel for Production Operations, gas recycling, secondary


recovery by gas injection, gas lift, or any other economical secondary


recovery schemes, stimulation of wells or artificial lifts necessary for the


Contract Area's full Development. Such usage shall be with the prior


written consent of NPDC, such consent shall not be unreasonably


withheld.








13.3 The Development plan to be approved pursuant to Article 9.1 will contain


plans to use Natural Gas both for operational and commercial purposes,


to meet the objective of zero flaring.








13.4 In the event that gas is flared in the course of production, the penalty shall


be treated as part of Production Cost.








ARTICLE 14








TRAINING OF NPDC PERSONNEL











I4.l Each year ATLANTIC shall submit a detailed programme for training for


the following year in respect of NPDC and NNPC personnel. The final


training programme shall be mutually agreed by the Parties and shall


reflect any specific requirement of NPDC for implementation by ATLANTIC.








14.2 Costs and expenses incurred by ATLANTIC in training NPDC and NNPC


personnel, both on the job training and work attachment, shall be


included in Development Costs or Production Costs, depending on the


period at which the relevant costs are incurred and recovered through


Cost Oil and Cost Gas.








14.3 ATLANTIC shall also provide for training facilities, in accordance with


Article .4.1 (d)
































SAA.OML 30_NPDC_ATUNTIC_2011 Page 26


 ARTICLE 15





SUB-CONTRACTORS








15.1 Within ninety (90) days of the Effective Date and at the commencement


of every financial year or as may be required at any other time, Operator


shall prepare and submit to Operating Committee for approval, a list of


contractors and sub-contractors who may, as Petroleum Operations


demand, be invited by Operator to bid for contracts.








15.2 Subject to the provisions of this Article 15.5, Operator has the right upon


the prior approval of Operating Committee to engage contractors and


sub-contractors for performing services which Operator is obliged to


perform under the terms of this Contract. Such services, however, shall be


performed for and on behalf of Operator who shall remain directly


responsible for the performance of these services. Such contracts/ sub


contracts shall be in the name of Operator.





15.3 (a) . Approval shall not be required for contracts whose price is less than


One Hundred Thousand (100,000) United States Dollars or its


equivalent in Naira or other currencies;


(b) Operator shall promptly deliver to Operating Committee a copy of


each of the contracts referred to in this Article 15.3 following the


execution thereof.








15.4 Notwithstanding the provision of this Article 15 all contract awards shall be


by competitive tendering process.


15.5 In any event, for contracts whose contract price is equal to or exceeds


One Hundred Thousand (100,000) United States Dollars or the equivalent in


Naira, or other currencies. Operator shall select its contractors from the list


of approved qualified contractors as provided for in Article 15.1 hereof


and such selection shall be by means of' competitive bidding with


preference being given to Nigerian persons and entities, as provided for in


Annex F of this Contract. The contract recommendation shall be


considered and approved by the Operating Committee.








15.6 Subject to Article 15.4 hereof, Operator shall, wherever possible, utilize/


extend for Petroleum Operations existing/valid contracts/agreements with


ATLANTIC and/or ATLANTIC'S Affiliates by direct negotiations subject to


prior approval of the Operating Committee.








SAA.OML 3 0_N PD C_ ATL ANTI C_2 011 Page 27


 ARTICLE 16








BOOKS AND ACCOUNTS. AUDIT AND OVERHEAD CHARGES











16.1 Books and Accounts








Operator shall keep complete books of accounts for which they are


responsible which shall be consistent with modern petroleum industry and


generally accepted accounting principles and procedures. The statutory


books and accounts of this Agreement shall be kept in Naira and United


States Dollars. All other books of accounts as may be considered


necessary shall be kept in columnar form in both Naira and United States


Dollars. Officials of ATLANTIC shall have access to such books and


accounts during business hours.











16.2 Audits








ATLANTIC and its external auditors shall have the right to inspect and


audit the books and accounts relating to this Agreement for any year by


giving thirty (30) days written notice to the Operator. Operator shall


facilitate the work of such inspection and auditing, provided, however,


that the costs of such inspection and auditing shall be met by ATLANTIC,


and provided also that if such inspection and auditing have not been so


carried out within three (3) years following the end of the year in


question, the books and accounts relating to such year shall be deemed


to be accepted by the Parties as satisfactory. Any exception must be





made in writing ninety (90) days following the end of such audit and


failure to give such written notice within such time shall establish the


correctness of the books and accounts.








ARTICLE 17








TAXES. ROYALTIES. RATES AND DUTIES








17.1 Customs duties and other duties levied on imports and services by reason


of Operator's activities in performing Development and Production


Operations hereunder, pursuant to Articles 8.1 and 8.2 shall be regarded


as Development Costs and Production Costs, as the case may be and


shall be recovered by the Parties in the manner provided for in this





Agreement.











SAA OML 30 NPDC ATLANTIC_2011 Page 28














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17.2 Taxes due on ATLANTIC’S income, in accordance with CITA shall be borne


by ATLANTIC and shall not under any circumstances be reimbursable to


ATLANTIC .








17.3 NPDC shall pay its share of PPT and Royalty arising from the production of


Crude Oil won and saved in the Contract Area.








17.4 The Official Selling Price as advised by the relevant government authorities


and established by this Agreement shall be used in determining NPDC's


share of PPT and Royalty in respect of Available Crude Oil and Available


Natural Gas produced and lifted from the Contract Area.








17.5 ATLANTIC shall take all the necessary steps to ensure that the taxes which


ATLANTIC must pay in accordance with this Article 17 shall be accurately


paid, as and when due.





ARTICLE 18








INSURANCE











18.1 All property acquired under the provisions of this Agreement shall be


adequately insured with an insurance company of good repute in the


name of NPDC with limits of liability not less than those required by


Nigerian laws and regulations. The premium for such policies shall be


included in Petroleum Operations Costs.








18.2 In case of loss of or damage to property, indemnifications paid by the


insurance companies shall be entirely received by NPDC for which


prompt report shall be made to Operating Committee not later than


seventy two (72) hours. The amount so received shall be lodged in an


account of and in the name of NPDC that it shall nominate. Operating


Committee shall determine whether the lost or damaged property should


be repaired, replaced or abandoned. If the decision of Operating


Committee is to repair or replace with the proceeds from such


indemnification, NPDC shall immediately replace or repair such lost or


damaged property. In the event that the loss or damage is attributable


to NPDC’s Gross Negligence such cost of replacement or repair shall be


borne by NPDC.








18.3 NPDC shall take out and maintain an insurance policy covering any and


all damages caused to third parties as a direct or indirect result of


Petroleum Operations in the name of NPDC. NPDC shall defend and hold


ATLANTIC harmless from damages and losses caused to third parties as a





SAA.OML 3CLNPDCJVTLANT1CL2011 Page 29


 consequence of NPDC's Gross Negligence or Willful Misconduct in the


performance of this Article.








18.4 All insurance policies under this Article 18 shall be based on good


international petroleum industry practice and shall be taken out in the


Nigerian market except for those risks for which NPDC cannot obtain


coverage in Nigeria which shall be taken out abroad, to the extent


required by law.


18.5 In entering into contracts with any sub-contractor for the performance of


Petroleum Operations, NPDC shall require such sub-contractor to take


adequate insurance in accordance with Article 18.1 and 18.3 above and


to properly indemnify the Parties for any damage done and to properly


indemnify and hold the Parties harmless against claims from third parties.





18.6 NPDC shall maintain other insurance policies in the name of NPDC and





ATLANTIC required under Nigerian law.








ARTICLE 19








CONFIDENTIALITY AND PUBLIC ANNOUNCEMENTS





19.1 The Parties shall keep information mutually exchanged and all plans,


maps, drawings, designs, data, scientific, technical and financial reports


and other data and information of any kind or nature relating to


Petroleum Operations including any discovery of hydrocarbons as strictly


confidential, at all times, and shall ensure that their entire or partial


contents shall under no circumstances be disclosed by the Parties in any


announcement to the public or to any third party without the other Party’s


prior written consent.


The provisions of this Article 19 shall not apply to disclosure to:








(a) sub-contractors. Affiliates, assignees, auditors, legal advisers,


provided that such disclosures are required for the effective


performance of the aforementioned recipients' duties related to


Petroleum Operations':








(b) comply with statutory obligation or the requirements of any


governmental agency in which case NPDC will notify ATLANTIC


of any information so disclosed,








SAA.OML 30_NPDC_ATLANTIC_201'1 Page 30


 (c) finance institutions involved in the provision of finance for the


operations hereunder provided, in all such cases, that the


recipients of such data and information agree in writing to keep


such data and information strictly confidential,





(d) a third party for the purpose of negotiating an assignment of





interest hereunder provided such third party executes an


undertaking to keep the information disclosed confidential.








19.2 Parties shall take all necessary measures in order to make their employees,


agents, representatives, proxies and in the case of NPDC, sub-contractors


comply with the same obligations of confidentiality provided for in this


Article 19.








19.3 The provisions of this Article 19 shall not be voided by the expiry or


termination of this Agreement on any grounds whatsoever and these


provisions constitute a continuing obligation and accordingly the


restrictions arising therefrom shall be in force at all times.








19.4 The Parties shall use their best endeavours to ensure that their servants,


employees, agents and in the case of NPDC, subcontractors shall not


make any reference in public or publish any notes in newspapers,


periodicals or books nor divulge, by any other means whatsoever any


information on the activities under NPDC’s responsibility, or any reports,


data or any facts and documents that may come to their knowledge by


virtue of this Agreement, without the prior written consent of the other


Party.


19.5 NPDC shall submit to ATLANTIC copies of all statutory reports and


information for submission to Government and other statutory bodies.








ARTICLE 20





FORCE MAJEURE








20.1 Any failure or delay on the part of either Party in the performance of its


obligations or duties under this Agreement shall be excused to the extent


attributable to Force Majeure. A Force Majeure situation shall include


delays, defaults or inability to perform under this Agreement due to any


event beyond the reasonable control of either Party. Such event may be,


but is not limited to, any act, event, happening, or occurrence due to


natural causes; and acts or perils of navigation, fire, hostilities, war


(declared or undeclared), blockade, labour disturbances, strikes, riots,


insurrection, civil commotion, quarantine restrictions, epidemics, storms,








SAAOML 30.NPDC.ATLANTIC.2011 Page 31


 floods, earthquakes, accidents, blowouts, lightning, and acts of or orders


of Government.








20.2 If operations are delayed, curtailed or prevented by Force Majeure, then


the time for carrying out the obligation and duties thereby affected, and


obligations hereunder, shall be extended for a period equal to the period


thus involved.











20.3 The Party whose ability to perform its obligations is so affected shall


promptly notify the other Party thereof not later than forty-eight (48) hours


after the establishment of the start of Force Majeure stating the cause,


and the Parties shall do all that is reasonably within their powers to remove


such cause.








ARTICLE 21








LAWS AND REGULATIONS








21.1 This Agreement shall be governed by and construed in accordance with


the laws of the Federal Republic of Nigeria and any dispute arising


therefrom shall be determined in accordance with such laws.








21.2 In the event that any enactment of or change in the laws or regulations


of Nigeria or any rules, procedures, guidelines, instructions, directives, or


policies, pertaining to the Agreement introduced by any government


department or parastatals or agencies occurs subsequent to the Effective


Date of this Agreement which materially and adversely affects the rights


and obligations or the economic benefits of Parties, the Parties shall use


their best efforts to agree to such modifications to this Agreement as will


compensate for the effect of such changes. If the Parties fail to agree on


such modifications within a period of ninety (90) days following the date


on which the change in question took effect, the matter shall thereafter


be referred at the option of either Party to arbitration under Article 22


hereof. Following arbitrator's determination, this Agreement shall be


deemed forthwith modified in accordance with that determination.



































SAA OML 30 NPDC ATLANTIC_2011 Page 32


to


 ARTICLE 22








ARBITRATION AND CONCILIATION








22.1 If a difference or dispute arises between NPDC and ATLANTIC


concerning the interpretation or performance of this Agreement, and if


the Parties fail to settle such differences or dispute by amicable


agreement, then either Party may serve on the other a demand for


arbitration. Within thirty (30) days of such demand being served, each





Party shall appoint an arbitrator and the two arbitrators thus appointed


shall within a further thirty (30) days appoint a third arbitrator and if the


arbitrators do not agree on the appointment of such third arbitrator, or if


either Party fails to appoint the arbitrator to be appointed by it, such an


arbitrator or third arbitrator shall be appointed by the Head of the


Nigerian branch of Chartered Institute of Arbitrators in accordance with


the provision of the Arbitration and Conciliation Act Cap A18 LFN 2004.


Notice of the intention to apply to the Chartered Institute of Arbitrators


shall be given in writing by the applicant Party, to the other Party, and


when appointed, the third arbitrator shall convene meetings and act as


chairman thereat. If an arbitrator fails or is unable to act, a successor shall


be appointed by the respective Party or by the arbitrators in the event the


chairman must be succeeded. The arbitration award shall be binding


upon the Parties and the expenses shall be borne by the Parties in such


proportion and manner as may be provided in the award. The venue of


the arbitration shall be anywhere in Nigeria as agreed by the Parties.








ARTICLE 23








REPRESENTATIONS AND WARRANTIES








23.1 In consideration of the entering into this Agreement, the Parties warrant as


follows:








(a) that they have the power to enter into and perform this Agreement





and have taken all necessary action to execute, deliver and


perform the Agreement in accordance with the terms herein


contained.











(b) the execution, delivery and performance of this Agreement by the


Parties will not contravene in any respect, any of the provisions of:














SAA.OML 30_NPDC.ATLANTIC.2011 Page 33


Cb











r;rrr;!'T^yr[7fr^r^p':rrT^”‘v'.’'’''‘’^ns'


 (J) any law or regulations or order of any government authority.


Agency or Court applicable to or by which the Parties may


be bound.








[2] any mortgage, agreement or other undertaking or


instrument to which they are a party or which is binding


upon them or any of their respective revenues or assets.





(c) In addition to the above, ATLANTIC further warrants that:


(1) full disclosure has been made to NPDC prior to the Effective





Date of all facts in relation to ATLANTIC and its financial


condition and affairs as is material and ought properly to be


made known to NPDC; and








(3) has the requisite funds both in foreign and local currencies


to carry out NPDC’s 55% share of Petroleum Operations


under the Contract Area.








(dj The representations and warranties set out above shall survive the


execution of this Agreement.








ARTICLE 24








TERMINATION








24.1 NPDC shall be entitled to terminate this Agreement if any of the following


events occur:








(aj ATLANTIC defaults in the performance of its material obligations


set forth in Article 4.1(a).








(bj ATLANTIC defaults in the performance of its obligations as set forth


in, 4.1 (b) of this Agreement.





(c) ATLANTIC assign its rights and interests under this Agreement





without prior written notice and prior written consent of NPDC.























SAA.OML 30„NPDC_ATLANTIC_2011 Page 34


to








1 u


J'* 1'


_ ......... i - ■1-t-t .........---■in«iiwn«mw


 (d) ATLANTIC is adjudged insolvent bankrupt or to have made


restitution to its creditors by a Court of competent jurisdiction in


Nigeria.


(e) ATLANTIC liquidates or terminates its corporate existence.





(f) There is a breach of ATLANTIC'S parent company guarantee.





(g) The disposal of ATLANTIC'S rights and interests under this Agreement





through the sale of its parent company;


(h) The attainment of 451.6 Million Barrels subject to Article 3.1.








24.2 Termination for any of the events specified in this Article 24.1 (c-i) above;


shall be with immediate effect and NPDC may by written notice to


ATLANTIC declare the Agreement terminated.





24.3 If the cause for termination is an event specified in Article 24.1 (a) and (b),


NPDC may give written notice thereof to ATLANTIC to remedy such


default within a period not less than thirty (30) working days of receipt of


NPDC's notice. If upon the expiration of such period such default has not


been remedied or removed, the Agreement shall automatically


terminate.








24.4 Except such rights of ATLANTIC that may have accrued prior to the date


of termination, ATLANTIC'S rights shall cease upon termination of this


Agreement. Such termination shall take place without prejudice to any


other rights or remedies which may be available to either Party.






































SAA.OML30.NPDC.ATLANTIC_2011 Page 35


 ARTICLE 25





NOTICES


25.1 Any notices required to be given by either Party to the other shall be in


writing and shall be deemed to have been duly given if sent and


received by e-mail, mail, fax, telegram or cable (confirmed by mail) or


registered post to, or hand delivered at the following registered offices:


NIGERIAN PETROLEUM DEVELOPMENT COMPANY LIMITED,


62, SAPELE ROAD,


BENIN CITY, NIGERIA


ATLANTIC :


ATLANTIC ENERGY DRILLING CONCEPTS NIGERIA LIMITED,


50D GLOVER ROAD,


IKOYI, LAGOS, NIGERIA.





25.2 Either Party shall notify the other promptly of any change in the above


address.


















































SAA.OML 30_NPDC_ATLANTIC_2011 Page 36


 ARTICLE 26








GENERAL PROVISIONS











26.1 In consultation with ATLANTIC , NPDC shall obtain and pay for all


necessary permits or authority for the use of any patent, device,


instrument and the like not belonging to NPDC, necessary for the


operations and such cost shall be paid for by ATLANTIC and recovered


through Cost Oil. NPDC agrees to defend after consultation with ATLANTIC


, all legal proceedings brought against it or ATLANTIC claiming


infringement of a patent on any method or equipment selected or


furnished by NPDC or in its performance of the obligations under this


Agreement, provided NPDC notifies ATLANTIC promptly in writing of any


such infringement or claim against it and ATLANTIC gives NPDC authority,


information and assistance for the defense or assistance in defense of


such proceeding. ATLANTIC may be represented by its own counsel and


may participate in proceedings to which it and NPDC are defendants,


provided however that NPDC shall control the defense thereof.








26.2 This Agreement is drawn up in the English Language and the affairs of the


Agreement shall be conducted in the English Language.





26.3 Except as provided in Articles 3, 24 and 26.9, this Agreement shall not be


terminated, amended or modified in any respect except by mutual


consent in writing of the Parties hereto.








26.4 The title of this Agreement, the sequence and headings of the Articles of


this Agreement have been adopted for identification and reference


purposes only, and do not and shall not affect the meaning or


interpretation of this Agreement.








26.5 If at any time, any provision of this Agreement is or becomes illegal,


invalid, or unenforceable in any respect under the laws of any relevant


jurisdiction, neither the legality, validity or enforceability of the remaining


provisions nor the legality, validity or enforceability of such provisions


under any other laws, shall in any way be affected or impaired thereby


and the remaining provisions of this Agreement shall be construed and


enforced as if the Agreement did not contain such invalid, illegal or


unenforceable provisions.








26.6 This Agreement together with attached Annexes shall constitute the entire


agreement between the Parties in respect of the transaction


contemplated herein and shall supersede all previous arrangements.








SAA.OML 30_NPDC_ATLANTIC_2011 Page 37


 promises, agreements, correspondences, etc. made in relation to this


Agreement.








ATLANTIC hereby represents and warrants that they have not engaged


and shall not engage any person,' firm or company as a commission


agent for purposes of this Agreement and that they have not given or


offered to give (directly or Indirectly) to any person any bribe, gift,


gratuity, commission or other thing of value, as any inducement or reward


for doing or forbearing to do any action or take any decision in relation to


this Agreement or for showing or forbearing to show favour or disfavour to


any person in relation thereto.





26.7 ATLANTIC further represent they have not either directly or indirectly give


to any person, director, employee, representative or agent of the other


Party or any Government official any commission, fee, rebate, gift or any


entertainment of significant cost or value and shall not procure the


services of any commission agent or other third party to give any such gift,


fee, reward, concession, bribe, entertainment of significant cost or value


or anything of a similar nature, for the purposes of influencing or inducing


positively or adversely the execution of this Agreement or the doing of any


act in connection with this Agreement.


26.8 If ATLANTIC or any of their personnel, representatives, agents or sub¬


contractors gives or offers to give (directly or indirectly) to any person any


such inducement or reward or anything of value, the other Party may


terminate this Agreement immediately without prior notification. It is


hereby expressly stated that the termination of this Agreement under this


provision shall not be deemed a.breach of the Agreement and shall not


give rise to any claim for cost or compensation or loss of profit on the part


of the other Party.


26.9 NPDC agrees to indemnify, keep indemnified and hold harmless ATLANTIC


against any costs, decommissioning liabilities and environmental liabilities


of whatsoever nature and howsoever arising and any costs, expenses,


liabilities or other charges incurred as a result of or in connection with any


termination, dismissal or redundancy of any person employed or engaged


by NPDC arising prior to the Effective Date.


26.10 In the event that ATLANTIC acquires a participating interest in the OML,


Parties shall negotiate and execute a joint operating agreement ("Joint


Operating Agreement" or "JOA") to govern their relationship in the OML.

















SAA.OML 3(LNPDC_ATLANTIC_2011 Page 38


IN WITNESS WHEREOF THE PARTIES herein have caused this agreement to be


executed the day and year first above written.


Signed for and on behalf of NIGERIAN PETROLEUM DEVELOPMENT COMPANY


LIMITED by:


Signature:....


Nam.:.................


D.,i0™«ore..............bi/Z££3rfL.





In the presence of;


Signature:...,





firphrmw, /9‘ 0~


Name:..........................................................................


Designation:...^..^..:.....^


Signed for and on behalf of ATLANTIC ENERGY DRILLING CONCEPTS NIGERIA


LIMITED by:





Signature:. '








Designation:.. ...................


In the presence of:


Signature:... QJJA





Name:. C&'-ycb-'-........tfipjii.................














SAA.OML 30_NPDC_ATLANT1C_2011 % a Page 39





i-v«WS!W^ 1 -V! ,y‘"f- __________-


 ANNEX A








(INSERT COORDINATES OF OML 301




























































































































































































SAA_OML30_NPDC_ATLANTIC_2011 Page 40A











 ANNEX B





TO THE STRATEGIC ALLIANCE AGREEMENT BETWEEN NPDC AND ATLANTIC FOR THE


DEVELOPMENT AND PRODUCTION OF CRUDE OIL AND NATURAL GAS FROM QML 30


DATED THIS ....................................................





ARTICLE I





APPLICATION





1. This Annex "B" defines the obligations of NPDC to ATLANTIC in the conduct of


Petroleum Operations.


2. In the event of a conflict between the terms of this Annex “B" and the


Agreement the terms of the Agreement shall prevail.


3. This Annex “B” may be amended from time to time by mutual consent of the


Parties.





ARTICLE II


DEFINITIONS


1. The definitions contained in this Agreement shall apply to any and all purposes in


this Annex “B" and shall have the same meanings.


2. "Operator” shall be as defined in the Agreement.


ARTICLE III


CONDUCT OF PETROLEUM OPERATIONS





1. The Parties acknowledge that the two main objectives to be achieved


through this Agreement are:


(a) the funding of NPDC’s 55% share of Petroleum Operation Cost in relation


to the Contract Area: and





(b) the conduct of Petroleum Operations and training of NNPC/NPDC staff.























SAA_OML30_NPDC_ATLANT1C_2011 Page 40B


 2. NPDC shall conduct Petroleum Operations through its own staff and


professionals seconded by ATLANTIC who shall occupy well defined


and mutually agreed positions. The manning level and tenure of


secondment shall be agreed by the Parties.


3. ATLANTIC shall give one month prior written notice of de-secondment


of any personnel. Any agreed replacement personnel shall work with


de-seconded staff for a reasonable handover period.


4. The position of Head of Pipelines and Facilities and Head of Gas


Marketing shall each be manned by a ATLANTIC nominee for training


and capacity building of NPDC personnel for a maximum period of


three (3} years after which such position shall revert to NPDC.


ARTICLE IV





RIGHTS AND DUTIES OF OPERATOR


1. In the conduct of Petroleum Operations, Operator shall:


(a) perform Petroleum Operations in accordance with the provisions


of this Agreement;


(b) carry out the decisions of the Operating Committee;


(c) conduct all Petroleum Operations in a diligent, safe and efficient


manner in accordance with good and prudent oil field practices


generally followed by the international petroleum industry;


(d) prepare and submit to the Operating Committee the proposed


Work Programme and Budgets as provided in Article 8 of the


Agreement;


(e) acquire ail permits, consents, approvals, surface or other rights


which may be required for or In connection with the conduct of


Petroleum Operations;


(f) permit the representatives of ATLANTIC to have at all reasonable


times and at their own risk and expenses reasonable access to the


Petroleum Operations with the right to observe such Petroleum


Operations;


(g) prepare and furnish such reports, records and information as may


be required pursuant to the Agreement;


(h) take all necessary and proper measures for the safety or the


protection of life, health, environment, and property in the case of


an emergency; provided, however, Operator shall promptly notify


ATLANTIC of the details of such emergency and measures.





SAA.OML 30_NPDC.ATLANTIC_.2011 Page 41


 ARTICLE V





INFORMATION SUPPLIED BY OPERATOR





Operator shall consult freely with, and shall make full and frank disclosure to


ATLANTIC concerning Petroleum Operations and keep them currently advised


of all matters of importance arising in connection therewith.


Operator shall promptly furnish ATLANTIC with the following reports and data in


hard and digital copies as available and compiled from Petroleum Operations.


(a) raw stack data and final stack and migrated seismic data (after


routine and special processing), associated velocity and


navigation data in a mutually agreed standards format for 20


seismic and in digital format only for 3D seismic;


(b) final geological and geophysical maps, evaluation reports,


prospect listings and reports including representative interpreted


sections and work station files where appropriate;


(c) well proposals, location reports, site sutvey reports and drilling


programmes prior to or concurrent with Government filing or at


such earlier time as may be specified by the Agreement;


(d) daily (seven days a week) drilling progress reports to include basic


drilling information and weekly drilling summary reports to include


an estimate of cumulative cost. Mudlog data, MWD and other


similar data gathered during drilling to be forwarded after


validation by Operator;


(e) all well logs at mutually agreed scales and format together with


data on plugging, coring, testing, deviation surveys, velocity


surveys and samples;


(f) intermediate and final geotechnical reports, drill stem and well


test reports, core analysis reports and final well reports;


(g) provide ATLANTIC with daily production figures;


(h) weekly production summary and engineering activity reports;


(i) monthly reports on engineering studies, development schedules


and progress reports on development projects, which shall at


least, depict the status of each such project from inception to


date, its cumulative costs to date and the commitments taken;








SAA_OML 3 0_N P D C_ATL A NTIC_2 Oil Page 42


 (j) monthly reports on production with performance data listed by


field, wells and reservoir;


(k) annual reserves reports including proved developed reserves;





(l) long term production forecasts submitted with the annual Work


Programme and Budget on a yearly basis with the budget year


shown on a quarterly basis;


(m) prompt reports on well developments of significance such as


blowout and prompt notice of special events of importance to the


Petroleum Operations, such as fire, accident, sabotage or acts of


God involving loss of life or serious property damage, strikes and


riots, changes in production level affecting quota or relevant


government actions. Such reports or notices shall be given by


telex, telefax, telephone or equivalent means and confirmed in


writing;


(n) copies of accounting reports;


(o) a quarterly report detailing and comparing approved budgeted





amounts to actual amounts with an explanation for significant


variations;


(p) copies of all reports relating to Petroleum Operations (including





safety performance statistics and incident report) furnished by


Operator to the Government;





(q) other reports as frequently as is justified by the activities or as


instructed by the Operating Committee;


(r) a monthly report on key operating performance data with a


summary of all Petroleum Operations with updated schedules of


events. These should include safety and environmental statistics,


oil spills, produced water discharged, flaring volumes and related


data. One such report shall be an annual summary and should


include summary statistics reported on a monthly basis and a


discussion of significant events during the year including current


programmes, current and emerging issues, status of regulatory


compliance parameters used to monitor performance, plans and


objectives for the coming year;


(s) as soon as available, on request, an individual set of washed or





unwashed well drill cutting samples or access to cuttings if


insufficient samples exist; and


(t) as soon as available, allotments of core, formation water, and





hydrocarbons or access to samples if insufficient amounts remain


after Operator’s analyses.





SAA.OML 30_NPDC.ATLANT1C.2011 Page 43


 (u) Operator shall promptly supply io ATLANTIC as soon as available :


(i) a copy of all logs and surveys made including a complete





log, electrical or otherwise, of each well from surface to final


depth;


(ii) a copy of all drill stem tests and analytical reports including,





without limitation, bottom hole or recombined fluid sample


analyses, descriptions of core and cuttings, samples and


analyses, Crude Oil and or Natural Gas analyses and any


and all data obtained and interpretations thereof;


(iii) a copy of the plug-back record in the event that any will or


part thereof is abandoned;


(iv) a copy of the final geological report and the drilling,


completion and work over report on all wells;


(v) copies of all geological and geophysical surveys and





reports, maps relating to drilling proposals and final well


reports made by the Operator or its contractors;





(vi) field and well performance data;


(vii) monthly statements of Petroleum won and saved from the


Contract area including Crude Oil and Natural Gas stocks


and tanker loadings;


(viii) weekly well progress reports which include, for the week


concerned, a brief description of the work performed, the


interval drilled, the type and depth of formation penetrated,


the size and landed depth of any casing, the type and


results of any tests made and such other well information


and data as each Party may, from time to time, reasonably


specified; and


(ix) such additional reports as ATLANTIC may require including


a copy of all reports on technical studies and research


conducted or commissioned by Operator in respect of


Petroleum Operations.


(x) Copies of major contracts for the execution of Petroleum


Operations as may be requested by ATLANTIC.

















SAA.OML 30„NPDC_ATLANTIC_2011 Page 44


 ANNEX C





TO THE STRATEGIC ALLIANCE AGREEMENT BETWEEN NPDC AND ATLANTIC FOR


THE DEVELOPMENT AND PRODUCTION OF CRUDE Oil AND NATURAL GAS


FROM OML 30





DATED THIS








ACCOUNTING PROCEDURE








ARTICLE 1








GENERAL PROVISIONS





1. Definitions








This Accounting Procedure attached to and forming a part of the Agreement is


to be followed and observed in the performance of either Party's obligations


thereunder. The defined terms appearing herein shall have the same meaning


as is ascribed to them in the Agreement.


2. Accounts and Statements


NPDC shall keep accounting records and books as provided under Article 16.1


of the Agreement in accordance with generally accepted accounting


principles consistent with modern petroleum industry practices and


procedures.


All original books of accounts together with original supporting documentation


shall be kept and maintained in Nigeria in compliance with ail Nigerian laws and


regulations.


3. Other


In the event of a conflict of the terms of this Procedure and the Agreement, the


terms of the Agreement shall prevail.


ARTICLE II





PETROLEUM OPERATIONS COSTS





Petroleum Operations Costs shall be defined as all costs, expenses paid and





obligations incurred by the Operator in carrying out Petroleum Operations and


shall consist of {1} Non-Capital Costs, and (2) Capital Costs.





SAA.0ML 3 0_N PD C_ATLANTI C_2 Oil Page 45


1. Non-Capital Costs








“Non-Capital Costs" means, those Petroleum Operations Costs incurred that are


chargeable to the current year’s operations. Non-Capital Costs include, but are


not limited to the following:


(a) General office expenses - office, services and general





administration services pertaining to Petroleum Operations including


but not limited to, services of legal, financial, purchasing, insurance,


accounting, computer, and personnel department,


communications, transportation, rental of specialized equipment,


charitable contributions and approved community related


expenses.


(b) Labour and related costs - salaries and wages, including bonuses,


of employees of the Parties who are directly engaged in the


conduct of Petroleum Operations, whether temporarily or


permanently assigned, irrespective of the location of such


employee including but not limited to, the costs of employee


benefits, customary allowances and personal expenses incurred


under each Party’s practice and policy and amounts imposed by


applicable Governmental authorities which are applicable to such


employees. These costs and expenses which shall be disclosed to


the Parties shall include:





(i) Cost of established plans for employee group life insurance,


hospitalization, pension, retirement, savings and other


benefit plan;





(ii) Cost of holidays, vacations, sickness and disability benefits;





(iii) Cost of living, housing and other customary allowances;


(iv) Reasonable personal expenses which are reimbursable





under each Party's standard personnel policies;


(v) Obligations imposed by Governmental authorities;





(vi) Cost of transportation of employees, other than as provided


in paragraph (c) below, as required in the conduct of


Petroleum Operations; and








m


SAA.OML 30_NPDC_ATLANrnC_2011 to Page 46





 (vii) Charges in respect of employees temporarily engaged in


Petroleum Operations which shall be calculated to reflect


the actual costs thereto during the period or periods of such


engagement.


( c) Employee relocation costs - costs for relocation, transportation and


transfer of employees of the Parties engaged in Petroleum


Operations including, but not limited to the cost of freight and


passenger service of such employees' families and their personal


and household effects together with meals, hotel and other


expenditures related to such transfer incurred with respect to:





(i) employees of the Parties within and or outside Nigeria,


including expatriate employees, engaged in Petroleum


Operations;





(ii) transfer to or from Nigeria for engagement in Petroleum


Operations;





(iii) relocation costs and other expenses incurred in the final


repatriation or transfer of each Party's employees and


families.





Provided always that:


a) such relocations are pre-approved by the Operating


Committee;


b) relocation costs incurred in moving an employee and his





family beyond his point of origin, established at the time


of his transfer to the project, in Nigeria will not be


recoverable as Petroleum Operations Cost, and


c} no charge shall be made to the Petroleum Operation


with respect to the expenses incurred in the final


repatriation or transfer of the expatriate employees and


families to other areas outside of the Contract Area.


(iv) Nigerian employees on training assignments outside Nigeria.








(d) Services provided by third parties - cost of professional,


technical, consultation, utilities and other services procured


from third party sources pursuant to any contract or other


arrangements between such third parties and the Operator for


the purpose of Petroleum Operations.








SAA.OML 30_NPDC_ATLANT1C_2011 Page 47


&


 (e) Legal expenses - All costs or expenses of handling, investigating,


asserting, defending, and settling litigation or claims arising out


of or relating to Petroleum Operations or necessary to protect or


recover property used in Petroleum Operations including, but


not limited to, legal fees, court costs, arbitration costs, cost of


investigation or procuring evidence and amounts paid in


settlement or satisfaction of any such litigation, arbitration or


claims in accordance with the provision of the Agreement.


(f) Services provided by Affiliates of the Parties - professional,





administrative, scientific, technical services for the direct benefit


of Petroleum Operations including, but not limited to, services


provided by the exploration, production, legal, financial,


purchasing, insurance, accounting and computer services


departments of such Affiliates. Charges for providing these


sen/ices shall reflect the actual cost only and must be consistent


with international market prices and shall not include any


element of profit.





(g) Insurance premiums and settlements - premiums paid for


insurance normally required to be carried for the Petroleum


Operations together with all expenditures incurred and paid in


settlement of any and all losses, claims, damages, judgments,


and other agreed expenses.


(h) Duties and taxes - all duties and taxes, fees and any


Government assessments, including but not limited to, gas flare


charges, license fees, customs duties, and any other payments


to the Government, other than taxes due on ATLANTIC ’s


income.





(k) Intangible drilling costs - expenditures for labour, fuel, repairs,


maintenance, hauling and supplies and materials (not


including, casing and other well fixtures) which are for or


incidental to drilling, cleaning, deepening or completing wells


or the preparation thereof incurred in respect of:


(i) determination of well locations, geological, geophysical,





topographical and geographical surveys for site evaluation


preparatory to drilling including the determination of near


surface and near sea bed hazards, cleaning, draining and


leveling land, road-building and the laying of foundations,


1. drilling, shooting, testing and cleaning wells, and





2. erection of rigs and tankage assembly and installation of


pipelines and other plan and equipment required in the





SAAOML 30_NPDC_ATLANTIC_2011 Page 48


 preparation or drilling of wells producing Crude Oil and


Natural Gas.








(l) Geological and geophysical surveys - labour, materials and services used


in aerial, geological, topographical, geophysical and seismic surveys


incurred in connection with Petroleum Operations.


(m) Operating expenses - labour, materials and services used in day to day oil


and gas well operations, oil and gas field production facilities operations,


secondary recovery operations; storage, transportation, delivery and


marketing operations; and other operating activities, including repairs,


well workovers, maintenance and related leasing or rental of all materials,


equipment and supplies.


(n) Exploration and appraisal drilling - all expenditures incurred in connection


with exploration drilling and the drilling of appraisal wells and drilling of


development wells, including costs incurred in respect of casing, well


cement and well fixtures.


(o) Abandonment/Decommissioning - a provision for all expenditures


incurred in connection with the plugging of wells; the removal and


disposal of equipment and facilities including well heads, processing and


storage facilities, platforms, pipelines, transport and export facilities, roads,


buildings, wharves, plants, machinery, fixtures, the restoration of sites and


structures including the payment of damages to property lessors. The


expenditures will be estimated on the basis of technical studies by the


Operator and shall be approved by the Operating Committee. Annual


budget provisions for such expenditure shall be made after full recovery of


all Development Cost or at the expiration of three (3) years whichever


comes first taking into account the relationship between estimated total


abandonment cost and anticipated remaining production reserves from


the Contract Area. Following establishment of such funds, yearly


contributions from Cost Oil and Cost Gas shall be made into an account


to be opened and maintained by NPDC. Any balance on the fund after


total abandonment shall revert to NPDC.


Capital Costs


“Capital Costs" means, without limitations, expenditures which are subject to a


Capital Allowance under the PPT Act. Such expenditures normally have a useful


life beyond the year incurred and include but are not limited to the following:


(a) Plant expenditures - expenditures in connection with the design,


construction and installation of plant facilities (including machinery,


fixtures, and appurtenances) associated with the production and


processing of Crude Oil and Natural Gas (except such costs properly


allocable to intangible drilling costs) including offshore platforms,





SAA.OML 30_NPDC_ATLANTICJ2011 Page 49


secondary or enhanced recovery systems, gas injection, water disposal,


expenditures for equipment, machinery and fixtures purchased to


conduct Petroleum Operations such as office furniture and fixtures, office


equipment, automotive equipment, petroleum operational aircraft,


construction equipment, miscellaneous equipment.


(b) Pipeline and storage expenditures ~ expenditures in connection with the


design, installation, construction of pipeline, transportation, storage and


terminal facilities associated with Petroleum Operations including tanks,


metering and export lines.


(c) Building expenditures - expenditures incurred in connection with the


construction of buildings, structures or works of a permanent nature


including workshops, warehouses, offices, roads, wharves, furniture and


fixtures related to employee housing and recreational facilities and other


tangible property incidental to construction.


(d) Drilling expenditures - expenditures for tangible goods in connection with


drilling wells such as casing, tubing, surface and sub-surface production


equipment, flow lines, instruments; costs incurred in connection with the


acquisition of rights over the Contract Area pursuant to paragraph 1 (d) {i)


of the Second Schedule of the PPT Act except any bonuses paid under


Article 2 of the Agreement.


(e) Pre-Production expenditures - all costs (including those otherwise falling


within Non-Capital Costs described in paragraph 1 of this Article II)


incurred before the first accounting period relevant to PPT calculation.


(f) Material inventory - cost of material purchased and maintained as


inventory items solely for Petroleum Operations subject to the following


provisions:


i) The Operator shall source and purchase any materials


required for Petroleum Operations, including those required


in the foreseeable future. Inventory stock levels shall take


account of the time necessary to provide the replacement,


emergency needs and similar considerations.


ii) Materials purchased by the Operator for use in Petroleum


Operations shall be valued so as to include invoice price


(less prepayment discounts, cash discounts, and other


discounts if any) plus freight and forwarding charges


between point of supply and point of destination but not


included in the invoice price, inspection costs, insurance,


customs fees and taxes, on imported materials required for


this Agreement.











SAA_OML 30_NPDC_ATLANTIC_2011 Page 50


to


 iii) Materials not available in Nigeria supplied by ATLANTIC or


from its Affiliates' stocks shall be valued at the current


competitive cost in the international market.





iv) The Operator shall maintain physical and accounting


controls of materials in stock in accordance with general


practice in the international petroleum industry. The


Operator shall make a total inventory at least once a year.


Each Party may however carry out partial or total inventories


at its own expense, whenever it considers necessary,


provided such exercise does not unreasonably disrupt


Petroleum Operations.





ARTICLE III


COMPUTATION OF ROYALTY AND PPT


1. The Operator shall compute the amount of Royalty payable by NPDC


pursuant to Article 17 of this Contract. Such amounts shall be computed


as provided under the Petroleum Act, CAP PI0 LFN 2004 and the


Petroleum Profits Tax Act, CAP P13 LFN 2004 ("PPT Act") and the provisions


of this Agreement. For purposes of Article IV of this Accounting Procedure,


Operator shall compute the Royalty payment in a given month based on


the prevailing fiscal value of the Crude Oil and/or Natural Gas produced


during the second preceding month. The applicable Royalty rate shall be


in accordance with the applicable legislation.


2(a) The Operator shall compute the PPT payable by NPDC pursuant to Article


17 of the Agreement in accordance with the provisions of the PPT Act and


any prevailing Government fiscal incentives.


(b) The PPT rate is currently 65.7% for the first five (5) years from the


commencement date.





ARTICLE IV





ACCOUNTING ANALYSES








1. A monthly accounting analysis in the form of Schedule C-l attached to


this Accounting Procedure shall be prepared by the Operator and


furnished to ATLANTIC within sixty (60) days of the end of the period


covered by such analysis for consideration and approval.





2. The Market Price and the quantities actually lifted by the Parties shall be


used to compute the proceeds as reflected in Section A of each


Schedule C-1 and the allocation of such proceeds in the categories








SAA.OML 30_NPDC_ATLANTIC_20ll Page 51


 described under Article 10.2 of this Agreement shall be reflected in


Section B thereof.





3. The allocation of the quantity of Available Crude Oil and Available


Natural Gas shall be in accordance with the percentages in Article 10 of


this Agreement and the provisions of the Allocation Procedure.





4. The priority of allocation of the total proceeds for each period shall be as


follows:


(a) Royalty Oil/Royalty Gas,





(b) Cost Oil/Cost Gas,


(c) Tax Oil/Tax Gas


(d) Profit Oil/Profit Gas.


5. The amount chargeable to and recoverable from Royalty Oil/Royalty Gas,





Cost Oil/Cost Gas, Tax Oil/Tax Gas to be entered in Section B of Schedule


C-l shall be determined as follows:





(a) Royalty Oil/Royalty Gas - The sum of royalties payable during such


month,


(b) Cost Oil/Royalty Gas - The Petroleum Operations Costs applicable





to such month for purposes of Cost Oil and/or Cost Gas as follows:





(i) Non-Capital Costs shall be the amount recorded in the


books and accounts of the Operator for such month In


accordance with this Accounting Procedure.





(ii) Capital Costs recorded in the books and accounts of


Operator shall be recoverable in full and chargeable in


equal installments over a five (5) year period or the


remaining life of this Agreement, whichever is less.


Amortization of such costs shall be in accordance with the


method prescribed under the Second Schedule of the PPT


Act, or over the remaining life of this Agreement, whichever


is less.








(iii) Qualifying Pre-Production Costs for the Contract Area shall


be in accordance with the PPT Act and CITA as applicable.





(c) Tax Oil/Tax Gas - The sum of the PPT or CIT payable for such month


as provided under Article III (2) of this Accounting Procedure, for


purposes of Tax Oil/Tax Gas.











$AA_0ML 30 NPDC ATLANTIC_2011 Page 52


U>








■'-«lV - ''P-IMptfcuuiirw |. rv


 (d) Any carryover from previous months as provided under paragraph


6 of this Article.








6. Any amounts chargeable and recoverable in excess of the allocation of


proceeds for the month to Royalty Oil/Royalty Gas, Cost Oil/Royalty Gas


and Tax Oil/Tax Gas shall be carried forward to subsequent months.


Carryovers shall be determined as follows:


(a) A Royalty Oil/Royalty Gas value carryover results when the


proceeds for such month are insufficient for recovery of the Royalty


Oil/Royalty Gas due for the month.


(b) A Cost Oil/Cost Gas value carryover results when the proceeds


remaining after allocating a portion of the Proceeds to Royalty


Oil/Royalty Gas is insufficient for recovery of Cost Oil/Royalty Gas


due for the month.


(c) A Tax Oil/Tax Gas value carryover results when the Proceeds


remaining after allocating a portion of the Proceeds to Royalty


Oil/Royalty Gas and Cost Oil/Cost Gas are insufficient for recovery


of the Tax Oil/Tax Gas due for the month.


7. Profit Oil/Profit Gas results where Proceeds remain after allocations to


Royalty Oil/Royaity Gas, and Cost Oil/Cost Gas and Tax Oil/Tax Gas


pursuant to paragraph 5 of this Article IV. Profit Oil shall be allocated and


Profit Gas shall be shared by the Parties in accordance with Article 10 of


this Agreement.





A computation of Profit Oil/Profit Gas shares in the form of Schedule C-2


attached to this Accounting Procedure shall be submitted monthly.








ARTICLE V





OTHER PROVISIONS








1(a). For as long as the conduct of Petroleum Operations subsists, the


Operator shall open and keep a project development bank


accountfs) exclusively for this Agreement where all funds remitted


by ATLANTIC shall be deposited for the purpose of meeting


Petroleum Operations Costs subject to the provisions of Article 8.1


of the Agreement. For purposes of keeping the books of accounts,


any Foreign Currency remitted by ATLANTIC into Nigeria shall be


converted into Naira at the monthly exchange rates advised by


the Central Bank of Nigeria.





SAA.0ML 30_NPDC_ATLANTIC_2011 Page 53


ih


 Mb) The Operator shall also open and maintain a Production


Operations account to receive proceeds of Cost Oil allocated to


1(c) finance Production Operations


NPDC shall open and maintain an abandonment account to





receive Cost Oil/Cost Gas allocated to finance abandonment and


decommissioning costs.





2. The Operator shall prepare financial accounting and budget


statements in accordance with the agreed reporting format. The


Operator shall report on the cumulative production in the Contract


Area in the Form on Schedule C-3 attached.


3. Invoices not duly certified by both Parties as part of Petroleum


Operations cost shall not be admitted into records and accounts


for the purposes of cost recovery.





Schedule C-1


Monthly Accounting Analysis








Month of








Section A - lifting Summary





Lifting Crude RP/Market Volume Proceed Proceeds Received By:


Date Type Price Bbls sU$$





US$/Bbl NPDC ATLANTIC

















»


Totals





(?/

















SAA.OML 30_NPDC_ATLANTIC_2Oil Page 54


 Section B - Allocation of Proceeds - Expressed in U.S. Dollars





CATEGORY PRIOR MONTH CURREN RECOVERABLE .





CARRYOVER MONTH THIS


CHARGES MONTH














Royalty


Oil/Royalty


Gas





Cost Oil/


Cost Gas





Tax Oil/


Tax Gas





NPDC Profit


Oil/


'Profit Gas





ATLANTIC


Profit





Oil/


Profit Gas





Totals





















































SAA.OML 30_NPDC_ATLANTIC_2Oil Page 55


 Schedule C-2


Profit Oil/Profit Gas Shares





Month of_____











Section A - Total Production for the Month Section B - Total Profit for the Month


Field_Total Net Barrels/Mcf Category _US|_


____ Proceeds ___


__ Royalty Oil/Rovaltv Gas_


_ Cost Oil/Cost Gas_


_ Tax Oil/Tax Gas__


_ Profit Oil/Profit Gas_


Section C - Calculation of Profit Oil/Profit Gas Shares











Barrels/Day Monthly production % of Total Monthly Monthly Profit


Profit Share NPDC ATLANTIC Produced for Barrels


Production US$ Profit Profit


month US$ $












































SAA_OML 30_NPDC_ATLANTIC_2011 Page 56


 SCHEDULE C-3





Cumulative Production Analysis


Section A - Monthly Production








Crude/Gas Planned Planned Cumulative Actual Production Actual


Type Production Cumulative


For Month For Quarter For Month For Quarter


Bbls/Mcf Bbls/Mcf Bbls/Mcf Bbls/Mcf


BBIs/Mcf Bbls/Mcf Bbls/Mcf Bbls/Mcf








Totals





SECTION B - Cumulative Production





Crude/Gas Type Cumulative Previous Quarter Cumulative


Production Cumulative Production to


For Quarter Bbls/Mcf Production B/F date Bbls/Mcf





Bbls/Mcf











TOTALS








SECTION C - Cumulative Production/Liftings/Storages


Crude/Gas Type Cumulative Cumulative Liftings in Storage





Production














TOTALS














SAA.OML 3 0_N P D C_ATL A NTI C_2 Oil Page 57











■ tnmgTM #<•%«*%.


 ANNEX D





To The STRATEGIC ALLIANCE AGREEMENT Between NPDC and ATLANTIC


Dated Q.5&.. ikuA. 11





ALLOCATION PROCEDURE








ARTICLE I


APPLICATION








1. This Allocation Procedure (“this Procedure") sets out the methods for the


allocation of Available Crude Oil from the Contract Area and the Parties


shall allocate all lifting of Available Crude Oil in accordance with this


Procedure and the Agreement.





2. In the event of a conflict between the terms of this Annex and this


Agreement, the terms of this Agreement shall prevail.


3. The procedures set forth herein may be amended from time to time by





agreement of the Parties.


ARTICLE II








1. The words and expressions defined in this Agreement when used herein


shall have the meaning ascribed to them in this Agreement. In addition,


the following words shall have the meanings set forth below:





(a) "Current Quarter" means, the calendar quarter within which the


relevant Schedules are prepared and submitted;


(b) “Forecast Quarter" means, the first calendar quarter succeeding


the Current Quarter;


(c) "Lifting Allocation" means, the quantity of Available Crude Oil


which each Party has the right to take in kind, lift and dispose of in


accordance with Article 10 of the Contract;


(d) “Off Take Quantity" means, the quantity of Natural Gas which the


Parties have the right to dispose off in accordance with Article 10


of this Agreement.


eBBa-sasasssssagHBasBssaes





SAAJ3ML 30_NPDC_ATIANTIC_2011 Page 58


i

















(e) "Primary Nomination" means, written statement issued by each


Party to the other at least twenty-five (25) days prior to the


commencement of each quarter declaring the volume by grade


of its estimated Lifting Allocation and Off take Quantity which the


Party desires to lift or off take during the Forecast Quarter;


(f) “Proceeds Imbalance" means, the difference between each





Party’s Proceeds to which it is entitled and the Proceeds which


each Party has actually received, as reflected in each quarter’s


Schedule D-2 of this Annex.





ARTICLE IN








LIFTING ALLOCATION








1. On or before September 30 of every year. Operator shall advise ATLANTIC


of its forecast of the Available Crude Oil and to be produced by grades


during each month of the first six (6) months of the next ensuing year.





2. On or before March 31 of every year, Operator shall advise ATLANTIC of its


forecast of Available Crude Oil and Available Natural Gas fo be produced


during each month of the six (6) months commencing July 1, of the year,





3. Thirty-five (35) days before commencement of production from the Contract


Area and thereafter thirty-five (35) days prior to the beginning of the


Forecast Quarter, Operator shall notify ATLANTIC the estimated Lifting


Allocation and Off Take Quantity which can be produced and made


available for disposal during the Forecast Quarter. Such estimated Lifting


Allocation and Off Take Quantity shall take into account any Proceeds


Imbalance for the quarter first preceding the Current Quarter and any


estimated Proceeds Imbalance for the Current Quarter computed in


accordance with paragraph 3 of Article IV. Such notice shall be in the form


of Schedule D-l attached hereto indicating the estimated quantities of


Royalty Oil/Royalty Gas, Tax Oil/Tax Gas, Cost Oil/Cost Gas and Profit


Oil/Profit Gas, each Party's estimated Lifting Allocation and Off Take


Quantity, the estimated Realizable Price used to prepare such estimated


Lifting Allocation.





4. Not later than twenty-five (25) days before the beginning of Forecast


Quarter, each Party shall notify the other of its Primary Nomination of


Available Crude Oil which it intends to lift during the Forecast Quarter which


shall not exceed its estimated Lifting Allocation. Such notice shall include the





SAA.OML 30_NPDC.ATLANTIC_ 2Oil Page 59


 information described in Article IV, paragraph 1 of this Annex D -


Nomination, Ship Scheduling and Lifting Procedure.


5. The estimated Market Price to be used by Operator to prepare Schedule D-l





(Estimated Quarterly Lifting Allocation) shall be the Market Price.


6. Each Party shall be obliged to lift its own allocation in accordance with the





Nomination, Ship Scheduling and Lifting Procedure (Annex E). In the event


that one Party lifts the other Party's allocation, pursuant to Article 10.5 of this


Agreement the lifting Party shall pay to the non-lifting Party the applicable


proceeds pursuant to Article 10.5 of this Agreement. In such case, the non¬


lifting Party shall be treated for all other purposes under this Agreement as


though it had lifted the allocation itself.





ARTICLE IV








On or before thirty-fifth (35) day prior to the last day of the Current Quarter,


the Lifting Allocation for the first preceding quarter thereto shall be


computed and the Proceeds Imbalance determined and agreed to by


NPDC in the form of Schedule D-2 attached hereto. Section A of such


Schedule D-2 shall be based on the actual liftings made by the Parties and


the Proceeds therefrom. For the actual liftings of the months in the quarter


Schedule C-l (of the Accounting Procedure) shall be utilized.





2. On or before thirty-fifth (35) day prior to the last day of the Current Quarter,


the Proceeds Imbalance for the Current Quarter shall be estimated, taking


into account the actual Proceeds Imbalance computed for the first


preceding quarter under paragraph l of this Article IV.


3. The Proceeds Imbalance for the first preceding quarter computed under


paragraph 1 above and the estimated Proceeds Imbalance for the


Current Quarter computed under paragraph 2 above shall be taken into


account by the Parties by debiting or crediting such Proceeds Imbalances


to each Party's share of the estimated Lifting Allocation reflected in


Schedule C-l of Annex "C" for the Forecast Quarter field by dividing the


respective Proceeds Imbalance by the Market Price applicable for the


period in question.


4. Notwithstanding the reports required to be kept by Operator pursuant to


Article IV in Annex E, Operator shall keep complete records of all liftings. At


the end of each quarter, the Parties will meet to reconcile the Lifting


Allocations and the actual lifting with a view to making adjustments as


appropriate. If any disagreement arises with respect to such reconciliation,


the area of disagreement shall be mutually resolved by the Parties, in











SAAJ5ML 3 0_N PDC_ATLANTIC_2011 Page 60


 accordance with the official records of the Ministry of Petroleum


Resources.





5. All Lifting Allocations and actual lifting shall be audited at the end of


each calendar year by a mutually acceptable independent auditor.


SCHEDULE D-1





ESTIMATED QUARTERLY LIFTING ALLOCATION


_ QUARTER f - V_


SECTION A - ESTIMATED TOTAL PROCEEDS











Crude Type Estimated Estimated RP Estimated


Lifting Volume US$/Bbl Proceeds US$





Bbls











Totals

































































SAA OML30_NPDCJ\TLANTIC_2011 Page 61


$





 SECTION B - ALLOCATION OF ESTIMATED PROCEEDS - EXPRESSED IN U.S.DOLLARS











CATEGORY PRIOR MONTH ESTIMATED RECOVERABLE ALLOCATION OF


CARRYOVER QUARTER THIS MONTH EST. PROCEEDS:


CHARGES











NPDC





ATLANTIC





Royalty Oil/


Royalty Gas





Cost Oil/


Cost Gas





Tax Oil/


Tax Gas








NPDC Profit





Oil/


Profit Gas





ATLANTIC





Profit


Oil/





Profit Gas





Totals





Prior Quarter's Proceeds Imbalance (over) Under





Current Quarter's Estimated Proceeds Imbalance


(Over)/Under








Estimated Proceeds Allocation For Quarter









































SAA.OML 30_NPDC_ATLANTIC_2011 Page 62


 SECTION C -ESTIMATED LIFTING ALLOCATION








Crude Type NPDC Allocation ATLANTIC Allocation











Proceeds Bbls Proceeds Bbls

















/






































































































































SAA.OML 30_NPDC_ATLANTIC_2011 Page 63











»■ "r


jkt{pyniv-rs^niw■ i *•*“


 SCHEDULES D-2





ACTUAL QUARTERLY LIFTINGS ALLOCATION





QUARTER (_1


SECTION A - LIFTING SUMMARY


Crude Volume Proceeds Proceeds Received By Proceeds Received





Type (Bbls) (US$) NPDC By ATLANTIC























Totals





































































































I SAA.OML 3 0_N PDC.ATLANTI C_2011 Page 64


\ CJ>








■.Kn-stiwpB'piw^isei'.i'fJM r-.i^rinyjj! ; P'rVJ*!,‘-r;T''”T'rT»r-


I.'., ■- « . < * >• «'


 ANNEX E


To The Strategic Alliance Agreement Between NPDC and ATLANTIC Dated...





UNIFORM NOMINATION. SHIP SCHEDULING AND LIFTING PROCEDURE





ARTICLE I





APPLICATION








1. This Annex E sets out the procedure for the nomination, ship


scheduling and lifting of Available Crude Oil from the Contract


Area.


2. Pursuant to Article 10.2 of the Contract, NPDC and the ATLANTIC


shall


have the right to nominate, lift and separately dispose of their


agreed share of Available Crude Oil produced and saved from the


Contract Area.





3. The procedures set herein may be amended from time to time by


agreement of the Parties.


4. In the event of a conflict between the terms of this Annex E and the





Agreement, the terms of this Agreement shall apply.


ARTICLE II








DEFINITION AND TERMINOLOGY








2. Words and expressions in this Annex shall have the meanings ascribed to


them in the Agreement. In addition, the following words shall have the


following meanings:





(a) "Available Production" means, the quantity of petroleum which can


be efficiently and economically produced and saved from the


producing wells subject to any limitations imposed by Government


or other technical limitations resulting from operations.


(b) "Available Monthly Scheduling Quantity" means, each Party's share


of the Available Production for the calendar month plus Opening


Stock.








SAA.0ML 30_NPDC_ATLANTIC_2011 Page 65


 (c) "Actual Production" means, the quantity of petroleum which is


produced and saved from the Contract Area on a


monthly/quarterly basis.


(e) "Combined Lifting Schedule" means, the lifting programmes of the


Parties for a given calendar month/quarter as prepared by


Operator and agreed to by the Parties.


(f) "Commercial Production Quota" means, the quantity of Crude Oil


from time to time fixed or advised by NNPC as the permissible


quantity that may be produced from the Contract Area on a


crude stream basis for a particular month/quarter.


(g) "Opening Stock" means, the balance of each Party's available


monthly scheduling quantity carried forward to the succeeding


month after each month's lifting. The quantity includes


credits/debits accruing to each Party after reconciliation of


available production with lifting. This quantity is same as closing


stock for the current month.


(h) (g)"Primary Nomination” means, a written statement issued by


each Party to Operator at least twenty-five (25) days prior to the


commencement of each calendar month of its proposed lifting


schedule based on its share of commercial production quota plus


opening stock by grade.


(i) "Technical Allowable" means, the quantity of petroleum


determined and advised to Operator by DPR as being the


maximum quantity of Crude Oil that may be technically produced


from the Contract Area on a well by well basis for a particular


period.


(j) "Combined Monthly Lifting Schedule" means a lifting programme





made and advised to each Party by Operator based on each


Party’s Primary Nomination and lifting entitlement.








ARTICLE 111


PRODUCTION/NOTICE OF AVAILABILITY


1. Operator shall ensure the production of the aggregate volume of Crude


Oil nominated by the Parties as provided in this Agreement.





2. In the event that Available Crude Oil is segregated into two or more


grades the provisions of this Annex E shall apply separately to each such


grade, to the extent that distribution on such a basis is impracticable,


separate arrangement for sharing of such Available Crude Oil shall be


agreed upon by the Parties.





SAAJDML 30_NPDC_ATLANTIC_2011 Page 66











.... ; . .. ,, n,:; .(-p" T C? pflNpJVj'fl


3. On or before September 30 of every year, Operator shall advise ATLANTIC


of its forecast of the Available Production to be produced by grades


during each month of the first six (6) months of the next ensuing year.


4. On or before March 31 of every year, Operator shall advise ATLANTIC of


its forecast of the Available Production to be produced by grades during


each month of the six months commencing July 1 of the year.


5. Where for operational reasons Operator cannot exactly produce at the


anticipated Commercial Production Quota, Operator shall notify


ATLANTIC promptly of any required changes exceeding 2% of the


quantities originally notified. In any event, when the actual production for


the month/quarter is known, each Party's share will be determined in line


with the procedures contained in Article VI herein.


6. Twenty-five (25) days before the commencement of production from the


Contract Area and thereafter not later than twenty-five (25) days before


the beginning of each month, each Party shall notify Operator of its


Primary Nomination of Available Crude Oil which it intends to lift during


the ensuing month, which shall not exceed its monthly allocation of


Commercial Production Quota plus Opening Stock.


7. At the end of each month or quarter, as may be agreed, Parties will meet to


reconcile Available Monthly Scheduling Quantities with actual Available


Crude lifted and adjustments made where necessary. All entitlements shall


be audited at the end of each calendar year by a mutually acceptable


independent auditor.


8. Operator shall keep complete records of all liftings and provide same to


ATLANTIC in accordance with Articles III & IV of this Annex "E".








ARTICLE IV





THE OPERATOR'S REPORTS


1. Operator shall, not more than fifteen (15) working days after the end of


each calendar month, and quarter, prepare and furnish to ATLANTIC a


written statement showing in respect of the month and quarter


respectively:


a) Each Party's share of Opening Stock.


b) Each Party’s share of Commercial Production Quota/Available Crude


Oil:


c) Actual Crude Oil quantity lifted by each Parly.











SAA.OML 30_NPDC_ATLANTIC_2011 Page 67


d) Quantity of Crude Oil in Stock for each Party at the end of the said


calendar month or quarter;


e) Any production losses attributable to Crude Oil, condensate or





associated gas used in Petroleum Operations.


f) Cumulative production.


2. In the event ATLANTIC disagree with any of Operator's reports, the area


of disagreement shall be mutually resolved by the Operating Committee.


Operator shall thereafter prepare a revised report to reflect the changes


agreed.


3. Operator shall send consistent statistical data to the different reporting


bodies and should adhere to agreed formats of reporting.





ARTICLE V





SCHEDULING DETAILS


1. Scheduling Notification - At least twenty-five (25) days prior to the


beginning of a calendar month, each Party shall notify Operator of its


proposed tanker schedule for that calendar month specifying the


following:


(a) A loading date range of ten (10) days for each tanker lifting;


(b) The desired parcel size for each lifting in Barrels, subject always to


change within a range of plus or minus five percent (5%) by the


Party so nominating:


(c) The tanker’s name or To Be Named (TBN) for each tanker lifting.


Tanker nominations made as TBN shall be replaced at least five (5)


working days prior to the accepted date range, unless a shorter


time is acceptable to Operator; and


(d) Documentation instructions shall be given for each lifting not later


than four (4) days prior to the first day of the accepted date range


for the tanker in question.


4. Tanker Substitution - Either Party may substitute another tanker to lift its


nominated volume of Crude Oil provided such substituted tanker has the


same arrival date range as the originally scheduled tanker and all other


provisions of this Annex E are compiled with.


3. Overlapping Date Ranges - In the event the Combined Lifting Schedule


contains overlapping accepted date ranges, the tanker which gives its


Notice of Readiness (NOR) and has provided all documentation and





SAAOML 3 0_N P D C_ATLANTIC_2 Oil Page 68


obtained clearances first within such accepted date ranges shall be


loaded first, unless urgent operational requirements dictate otherwise in


which case demurrage shall be borne by Petroleum Operations and


charged to Petroleum Operations Costs.


4. Confirmation of lifting Schedules - At least fifteen (15) days prior to the


beginning of a calendar month Operator shall either confirm the feasibility


of the proposed month, lifting schedules or, alternatively, advice


necessary modifications to such schedules. Such confirmation which shall


be in the form of Combined Lifting Schedule should include a loading


date range of two (2) days for each lifting, the first day being the earliest


date of arrival and the second day being the latest date of arrival.


Operator shall use its best endeavors to accommodate each Party's


Primary Nomination.





5. Operational Delays - The Parties recognize that occasionally


environmental and technical problems in the Contract Area may cause


delays and/or disruptions in the Combined Lifting Schedule. Operator


shall promptly notify ATLANTIC of such delays and/or disruptions, and


the projected termination of each of such delays and/or disruptions and


advise ATLANTIC of the revised Combined Lifting Schedule. In the event


such notification does not allow for a revised Combined Lifting Schedule


on the part of the Parties, then any resultant costs will be charged to


Petroleum Operation Costs.





6. Estimated Delayed Arrival of a Tanker - Whenever it becomes apparent


that a tanker will not be available as scheduled or will be delayed, the


Party nominating such tanker shall notify the> other Party of the


circumstances and expected duration of the delays. Upon assessing the


impact that the delay will have upon the Combined Lifting Schedule and


production during the current and/or next month, Operator shall make


appropriate revision(s) to the Combined Lifting Schedule to avoid


disruption in production. In the event that any Party fails to lift its


nominated share of production in any month due to circumstances


beyond the Party's control, in maintaining the lifting schedule, that Party


shall have the right during the following quarter to lift the said un-lifted


quantities to the extent reasonably possible.





7. Tanker Standards - All tankers nominated for lifting by any Party pursuant to


this Annex E shall conform to the international regulations and standards


concerning size, equipment, safety, maintenance and the like adopted by


Operator for the terminal in question and by the appropriate government


authority. Failure of a tanker to meet such standards shall not excuse the


nominating Party from the applicable consequences provided in the


Agreement. Operator shall keep ATLANTIC advised as to the current


Regulations and standards in use at the terminals operated by the Operator.





8. Destlnotion of Crude Oil - Operator shall at all times disclose the destination


of the Crude Oil lifted under this Agreement. fC











SAA.OML 3 0_N P D C_ATL ANTIC.2 Oil Page 69


 ARTICLE VI





PRODUCTION DECREASES/INCREASES SUBSEQUENT TO NOMINATION


1. Production decreases occurring after lifting nominations have been


scheduled and not resulting from the fault of either Party shall be shared


by the Parties in proportion to their respective share of production.


2. Production increases occurring after lifting nominations have been


confirmed by Operator shall be shared by the Parties, in proportion to their


respective share of production.


3. To the extent that field operations permit a Party shall have the right to


adjust its nomination during a month following confirmation of lifting


schedule provided that the nominations, entitlements and lifting of the


other Party are not affected thereby without their express written consent.


Adjusted nomination shall always be within the limits of the Party's


allocated portion of the Commercial Production Quota plus Opening


Stock.


4 For the avoidance of doubt each Party's agreed share shall be based on


Actual Production.





ARTICLE VII





DELIVERY TERMS AND CONDITIONS


1. Tanker Notification - The Parties shall report or cause the tankers





nominated for lifting pursuant to this Annex E to report by e-mail/


radio/telex to the Operator of each tanker’s Scheduled arrival date and


hour as follows:


(a) Seven (7) days before estimated time of arrival (ETA) or upon


clearing at last port if there is less than seven (7) days steaming


time before ETA;





(b) Seventy-two (72) hours before ETA;


(c) Forty-eight (48) hours before ETA;





(d) Twenty-four (24) hours before ETA; and


(e) At any other time(s) between the seventy-two (72) hours notice,


forty-eight (48) hours notice and twenty-four (24) hours notice when


ETA is to be revised by more than twelve (12) hours from that most


recently notified or after that twenty-four (24) hours notice when


ETA has to be revised by more than one-half hour.


Parties shall also cause such tanker so nominated, or their agent, to report


by radio/telex/e-mail to the Nigerian Government Port Health Official at





SAA.OML 30_NPDC_ATLANTIC_2011 Page 70


the port at least seventy-two (72) hours before each tanker’s scheduled


arrival date giving the tanker’s name, call sign, ETA at the port(s), cargo


tonnage to be loaded, number of crew and health status, whether or not


a doctor is on board and a request for "Free Pratique".


2. Notice of Readiness - Upon arrival at the designated safe anchorage at


the port or upon the time of boarding of the Mooring master, whichever is


earlier, the Master of the tanker shall give Operator a NOR by radio or by


letter, as appropriate, confirming that the tanker is ready to load cargo,


berth or no berth. Laytime, as herein provided, shall commence upon the


expiration of six (6) running hours after receipt by the loading terminal of


such notice, or upon the tanker's completion of mooring at the sea


loading terminal, whichever first occurs. However, where delay is caused


to the tanker getting into berth after giving NOR for any reason over which


neither Operator nor the loading terminal has control, such delay shall not


count as used laytime. In addition, time used by tanker while proceeding


to berth or awaiting entry and Free Pratique by customs after the


expiration of six (6) running hours free time, shall not count as used laytime.


3. Early Tanker Arrival - Notwithstanding the provisions of Article VII (2)


above, if the tanker arrives and tenders NOR to load prior to its agreed


date range. Operator shall endeavor to load such tanker on arrival or as


soon thereafter as possible and laytime shall only commence when


loading of the tanker commences. If, however, Operator is unable to


accept such tanker for loading prior to the agreed date range, Operator


shall endeavour to load such tanker on arrival or as soon thereafter as


possible and laytime shall commence ai 0600 hours, local time on the first


day of the agreed date range or when loading commences, whichever


occurs first.


4. Late Tanker Arrival - If tanker arrives and tenders NOR to load after its


accepted date range and other tankers (having arrived during their


accepted date-range), are either loading or waiting to load, the loading


of such tanker shall be governed by the earliest availability of crude and


loading slot and best endeavour laytime shall commence only when


loading commences.


5. Laytime - Operator shall be allowed laytime in running hours equal to


one-half of the voyage laytime permitted under Worldscale or such other


freight scale that is issued in replacement thereof, for loading a full cargo


and pro rata thereof for a part cargo, with a minimum of eighteen (18)


hours, Sundays and holidays included. Any delay due to the fault of the


tanker or its facilities to load cargo within the time allowed shall not count


as used laytime. If rules of the Owner of the vessel or Regulations of


Government or appropriate government agencies prohibit loading of the


cargo at any time, the time so lost shall not count as used laytime. Time


consumed loading or discharging ballast or discharging slops shall not


count as used laytime. Laytime shall continue until hoses have been


disconnected. Laytime allowed for loading a full cargo is "36 Running








SAA.OML 3 0_N P DC_ATLAN T1 C_2 Oil Page 71


Hours" with a provision for pro-rating the laytime in the case of vessels


loading part cargo. When a vessel is loading one parcel only and


operations commence ahead of the acceptance date there is no


demurrage involved unless the vessel completes cargo after the


permissible laytime, commencing 0001 hours on the agreed acceptance


date. In cases where a vessel loads more than one parcel and more than


one acceptance date is awarded, then demurrage will not count unless


the total loading is completed after the expiry of the permissible laytime


for the last parcel, counting from 0001 hours on the last acceptance date.


6. Demurrage - If Operator is unable to load within the time allowed.


Operator shall apply demurrage per running hour (pro rata for a part


thereof) for laytime exceeding the allowed laytime as specified herein.


The rate of demurrage will be calculated by multiplying the time by the


Average Freighi Rate Assessment (AFRA) as determined by the London


Tanker Brokers Panel. In the event such determination is no longer


available, a freight rate assessment shall be mutually agreed by the


Parties; which rate shall be appropriate in relation to the size of the tanker


and in demurrage rate according to tanker size as specified in the


Worldwide Tanker Nominal Freight Scale or such other freight scale that is


issued in replacement thereof. If however, demurrage shall be incurred


by reason of fire, storm, explosion, or by strike, picketing, lockout,


stoppage or restraint or labour difficulties, or disturbances or by


breakdown of machinery or equipment in or about the loading terminal,


the rate of demurrage as calculated in accordance with the above shall


be governed by Force Majeure and shall not attract any demurrage.


Demurrage claims must be notified within ninety (90) days from Bill of


Lading date.


7. Change of Berth - Operator shall have the right to shift any vessel from


one berth to another. Charges of running lines on arrival at and leaving


the berth, wharfage and dockage charges at that berth and any other


extra port charges or port expenses incurred by reason of such shifting at


Operator's request shall be borne by Petroleum Operations Costs and


shall count as used laytime. If, however, it is necessary to shift the vessel


from the berth because of breakdown of the tanker, machinery or other


deficiency of the vessel or its crew, the resulting expenses shall be borne


by the Party whose Crude Oil is being lifted. The time consumed in such


circumstances, shall not count as used laytime. However, the vessel shall


lose its regular turn in berth. When the vessel is ready to recommence


loading, it shall so advise Operator and await its turn for reberthing and


such time after notice is given shall not count as used laytime.


8. Tanker Departure - Tanker shall vacate the berth upon disconnection of


the hoses and thereafter go to anchor awaiting documentation. The Party


that scheduled such tanker shall indemnify Operator for any direct loss or


damage incurred as a result of tanker's failure to vacate the berth


promptly including such loss or damage as may be incurred due to








SAA.0ML 30_NPDC_ATLANTIC_2011 Page 72


resulting delay in the docking of the tanker awaiting the next turn to load


at such berth.


9. Loading Hoses - Hoses for loading shall be furnished by Operator and shall


be connected and disconnected by the tanker's crew under the


supervision of a suitably qualified Ship’s Officer acting on the advice of


the Operator's Mooring Master.


10 Partial Cargo- Should Operator supply less than full cargo for any reasons,


the tanker shall not be required to proceed to sea until all of her tanks are


filled with a combination of cargo and ballast as will place her in a


seaworthy condition.








ARTICLE Vill








CRUDE OIL QUANTITY AND MEASUREMENT








1. Certification - The quantity and origin of each shipment of Crude Oil shall


be determined by the appropriate government authority at the loading


terminal and set forth in the standard "Certificates of Quantity, Quality


and Origin". Each Party shall have the right to designate a representative


at its own expense, who shall have the right to witness the determination


of quantity, quality and origin. All reasonable facilities shall be supplied by


Operator as necessary, to such Party’s representatives at the Port to


enable such representatives to witness the measurements taken at the


loading terminal and the taking of the sample to be used to the


representative of the Party.





2. Acceptance of Certificate - If the Party in question does not appoint a


representative or if such representative appointed as aforesaid agrees


with the Certificate of Quantity, Quality and Origin of a shipment of Crude


Oil (in which event he shall so indicate by signing the Certificate of


Quantity, Quality and Origin), such determinations shall be final and


binding on the Parties.


3. Dispute on Certificate - If the determination of quantity, quality and origin


by the appropriate government authority has not been approved by such


a representative in accordance with Article VIII (2) above and dispute


arises concerning the quantity, quality and origin of Crude Oil, recourse


shall be had to a mutually agreed independent expert to resolve the


dispute on the basis of his expertise. Claims about quantity and or quality


of the Crude Oil delivered shall be notified within forty-five (45) days from


Bill of Lading date. The expert shall be selected on the basis of his special


knowledge of the subject matter in this regard and shall be appointed by


mutual agreement of the Parties. Such expert shall file his conclusions


within thirty (30) days after his date of appointment. Any conclusions of





SAA.OML 30_NPDC_ATLANTIC_2011 Page 73


such expert shall be binding upon the Parties. The cost incurred on the


services of such expert shall be shared equally by the Parties. Pending the


determination of the dispute, the tanker may sail, unless the Parties agree


otherwise.


4. Quantity Determination - The quantity of Crude Oil lifted shall be


determined at the time of loading on the basis of gauging the terminal


tanks before and after the lifting of such Crude Oil, or otherwise by meter


readings installed on the loading line from the tanks, as approved by


appropriate government authority. The quantity in Barrels of-Crude Oil


determined pursuant to the foregoing procedure shall be corrected to a


temperature of sixty degree Fahrenheit (60°F) in accordance with the


most currently published ASTM-IP Petroleum Measurement Tables. A copy


of the conversion calculation, if any, shall be submitted to the lifting Party


through its representative. In addition, the Basic Sediment and Water


("BS&W") content, determined in accordance with Article Vlll (5) hereof,


shall be deducted from the quantity loaded, for purposes of preparing


the Bill of Lading for such shipment and for the purpose of substantiating


claims about quantity and quality. Any substantiated loss of Crude Oil


occurring in transit between the point of such determination and delivery


point shall be borne by Petroleum Operations Cost provided such losses


do not result due to differences in method of determining BS&W between


the loading and discharge terminals. For differences occurring where


same method of determination at both points are used, provisions of


Article Vlll (3) above shall apply. The retained sample shall be used in


determining such loss claims.


5. Quality Determination - The determination of API Gravity and BS&W


content shall be made of each shipment of Crude Oil. BS&W content and


API Gravity shall be determined according to standard international


practices acceptable to the relevant Government authorities.


6. Samples - A sample of each shipment of Crude Oil shall be taken. The


sample shall be sealed and retained by Operator for a maximum of ninety


(90) days. The lifting Party or its representative shall have the right to


receive one (1) gallon sealed sample of the Crude Oil loaded which shall


be placed on board the tanker, if so requested.






































SAAJDML 30_NPDC-ATLANTIC_2011 Page 74


C6


 ANNEX F





TO THE STRATEGIC ALLIANCE AGREEMENT BETWEEN NPDC AND ATLANTIC


Dated I





PROCUREMENT AND PROJECT IMPLEMENTATION PROCPDIIPFS








ARTICLE 1





APPLICATION


1. These Procurement and Project Implementation Procedures


(“Procedures") shall be followed and observed in the performance of


either Party's obligations under the Agreement. Words and expressions


defined under the Agreement when used herein, shall have the


meanings ascribed to them in the Agreement. In the event of a


conflict between the terms of these Procedures and the Agreement,


the terms of the Agreement shall prevail.


2. These Procedures shall be applicable to all contracts and purchase


orders whose values exceed the respective limits set forth in Article 15


of the Agreement and which, pursuant thereto, require the prior


concurrence of the Operating Committee. These Procedures may be


amended from time to time by the Parties.


3. Operator shall have the authority, subject to any limitations or


restrictions established by the Operating Committee to enter into any


contract or place any purchase order in its own name for the


performance of services or the procurement of facilities, equipment,


materials or supplies, provided that:


(a) Prior approval of the Operating Committee shall be obtained for all


foreign contracts and foreign purchase orders awarded to third


parties where the cost exceeds One Hundred Thousand U.S. Dollars


($100,000.00);


(b) Prior approval of the Operating Committee shall be obtained for all


local contracts and purchase orders where the cost exceeds Ten


Million Naira (N 10,000,000.00);


(c) The amounts set forth in Article 15 of this Agreement will be


reviewed by the Operating Committee whenever it becomes


apparent to either Party that such limits create unreasonable


constraints on Petroleum Operations. In the event of a significant


change in the exchange rate of Naira to U.S. Dollar compared to


that which existed on the Effective Date, the Operating Committee


shall review the limits sets forth in Article 15;





SAA.0ML 30_NPDC_ATLANTIC_2011 Page 75


(d) Such contracts shall be entered into, and such purchase orders


shall be placed with third parties which in Operator's opinion are


technically and financially able to properly perform their


obligations;


(e) Approved procedures customary to the industry for securing


competitive prices shall prevail;


(f) Operator shall give preference to sub-contractors that are


companies organized under the laws of Nigeria to the maximum


extent possible provided they meet the required standards.


(g) Operator shall give preference to such goods which are


manufactured or produced in Nigeria or services rendered by


Nigerians provided they meet specifications and standards.


(h) In such cases of replenishment of stock and or procurement of


long lead items, approved tendering process will be followed.


ARTICLE II


PROJECT IMPLEMENTATION PROCEDURE


2.1 Operator realizing the need for a project or contract to which these


Procedures apply pursuant to Article 1.3 herein above, shall introduce it as


part of the proposed Work Programme and Budgets to be developed


and submitted to the Operating Committee pursuant to Article 7 of this


Agreement.


(a) Operator shall provide adequate information with respect to the


project including, without limitation, the following:


(i) clear definition of the necessity and objectives of the project;


(ii) Scope of the project; and


(iti) Cost estimate thereof.


(b) Operator shall transmit the project proposal along with all related


documentation to the Operating Committee for consideration.


(c) The Operating Committee shall consider the proposal and the


recommendations and shall take decision on the matter in


accordance with Article 7 of this Agreement.


2.2 The project as approved pursuant to Article 2.1 above shall form part of


the Work Programme and Budget for the Petroleum Operations. Such


approval shall also constitute authorizations by the Operating Committee





SAA.OML 30_NPDC_ATLANTIC_2011 Page 76


<1.














to Operator to initiate contracts and purchases relevant to the project


proposal, subject to the provisions of Article 15 of this Agreement.


2.3 The resources for the project design, supervision, and management shall


first be drawn from the Parties available in-house expertise, if the Operator


approves, such may be performed by a Party's Affiliate under the


approved budget for the project. Competent Nigerian


Engineering/Design companies shall be given priority over others by the


Operating Committee for such project.


2.4 After approval of the project/budget, Operator shall prepare and transmit





to ATLANTIC complete details of the project including, without limitation,


the following:


(a) Project definition;





(b) Project specification;





(c) Flow diagrams;


(d) Projects implementation schedule showing all phases of the project


including without limitation, engineering design,


material/equipment procurement, inspection, transportation,


fabrication/construction, installation, testing and commissioning;


(e) Major equipment specifications;





(f) Cost estimate of the project;


(g) An activity status reports.





The Operating Committee shall consider the proposal and the


recommendations and shall take decision on the matter in accordance with


Article 7 of this Agreement for approval.








ARTICLE III


CONTRACT TENDER PROCEDURE





3.1 The following tender procedure shall apply to work/services/supply not


directly undertaken by a Party or its Affiliate:





(a) Operator shall maintain a list of approved sub-contractors for the


purposes of contracts for Petroleum Operations, (the "Approved


Contactors’ List") which shall be approved from time to time by the


Operating Committee. Each Party shall have the right to nominate


sub-contractors to be included/deleted in the list. NPDC and








SAA OML 30 NPDC ATLANTIC.2011 Page 77


Ch





...... ............ ................... ........... (............... .-pp;.....■ ■■■]'■ • ■■■; -f55’’Tl"1”THt'"


ATLANTIC shall be responsible for pre-qualifying any sub¬


contractor to be included in the Approved Contractor’s List.


(b) Sub-contractors included in the Approved Contractors' List shall be


both local and/or overseas sub-contractors or entities. Where


regulations require, they shall be registered with the DPR.


(c) Operator shall issue invitations to bid to prospective sub-contractors


thereafter. Contract specifications shall be in English and in a


recognized format used in the international petroleum industry.


(d) Operator shall within its limits in Article 15 establish a tender


committee who shall be responsible for pre-qualifying bidders,


sending out bid invitations, receiving and evaluating bids,


determining successful bidders to whom contracts shall be


awarded.


3.2 Analyses and recommendations of bids received and opened by the


tender committee shall be presented by Operator to the Operating


Committee for approval before a contract is signed with the selected


contractor.


3.3 Prospective vendors/sub-contractors for work estimated in excess of one


hundred thousand U.S. Dollars ($100,000.00) shall submit the commercial


summary of their bids to Operator in three properly sealed envelopes to


the Operator and the Operator shall forward one of the sealed envelope


to ATLANTIC for record purposes.


3.4 In all cases in which an offshore sub-contractor or its Nigerian Affiliate is


invited to bid, a Party shall make full disclosure to the other Party of its


relationship, if any, with such sub-contractors.


3.5 These Procedures may be waived and Operator may negotiate directly


with the sub-contractor and promptly inform the other Party of the


outcome of such negotiations in the following cases:


(a) emergency situations; and


(b) in work requiring specialized skills, or when special circumstances


warrant, upon the approval of the Operating Committee.


























SAA_0ML 30_NPDC.ATLANT!CJZ011 Page 78


&


 ARTICLE IV





GENERAL CONDITIONS OF CONTRACTS


4.1 The payment terms shall provide, without limitation, that:


(a) A minimum of 10% of contract price shall be heid as a retention fee


until after the end of a guarantee period agreed with the sub


contractor which shall vary between six months and twelve


months, depending on the project, with the exception of drilling


and seismic data acquisition, well surveys and other such services;


provided that, a sub contractor may be given the option to


provide other guarantee equivalent to the 10% retention fee such


as letter of credit or performance bond; and


(b) Provisions shall be made for appropriate value added tax as may


be applicable.


4.2 The governing law of all agreements signed with sub- contractors shall be


Nigerian law for work to be carried out within Nigeria and to the extent


feasible, for work outside Nigeria.


4.3 Nigerian law shall apply to sub contractors performing in Nigeria and, as


far as practicable; they shall use Nigerian resources both human and


material.


4.4 All contracts shall include a provision whereby the sub contractor shall


hold Operator harmless and indemnify Operator from and against all


liabilities, losses, damages and claims resulting from claims and suits by


third parties.


4.5 Each sub-contractor shall provide for early termination upon notice and


Operator shall use all reasonable endeavors to obtain a termination


provision with minimal penalty.


4.6 Contractor shall provide, in the case of a foreign sub-contractor, that the


local part of the work, in all cases, shall be performed by contractor’s


local subsidiary.





























SAA.OML 30_NPDC_ATLANTIC_2011. Page 79


 ARTICLE V





MATERIALS AND EQUIPMENT PROCUREMENT


5.1 A Party may, through own in-house or a Party's parent company, procure


materials and equipment subject to conditions set forth in this Article 5.


5.2 The provisions of this Article 5 shall not apply to lump sum or turnkey


contracts/projects.


5.3 In ordering the equipment/materials, Operator shall obtain from


vendors/manufacturers such rebates/discounts and such


warranties/guarantees that such vendors/manufacturers normally offer,


and all rebates, discounts, guarantees and all other grants and


responsibilities shall be for the benefit of Petroleum Operations.


5.4 Operator shall:


(a) By means of established policies and procedures ensure that its


procurement efforts provide the best total value, with proper


consideration of quality, service, price, delivery and operating costs


to the benefits of Petroleum Operations;


(b) Maintain appropriate records, which shall be kept up to date,


clearly documenting procurement activities;


(c) Provide quarterly and annual inventory of materials in stock;


(d) Provide a quarterly listing of excess materials in its stock list to


ATLANTIC ; and


(e) Check the excess material listings from other companies, to identify


materials available in the country prior to initiating any foreign


purchase order.


5.5 Operator shall initiate and maintain policies and practices which provide


a competitive environment/climate amongst local and/or overseas


suppliers. Competitive quotation processes shall be employed for all local


procurement where the estimated value exceeds the equivalent of one


hundred thousand U.S. Dollars ($100,000.00).


(a) Fabrication, wherever practicable shall be done locally. To this


effect, Operator recognizes and shall accommodate local offers at


a premium not exceeding 10%.


(b) Subject to Article 3.1 (a) herein, Operator shall give preference to


Nigerian indigenous sub-contractors in the award of contracts.


Contracts within the agreed financial limit of Operator shall be


awarded to only competent Nigerian indigenous sub-contractors.





SAA_0ML 30_NPDC.ATLANTIC_2Oil Page 80


Where there are no Nigerian indigenous sub-contractors possessing


the required skill/capability for the execution of such contracts,


Operator shall notify ATLANTIC accordingly.


5.6 Analyses and recommendations of competitive quotations of a value


exceeding the limits established in Article 15 of this Agreement shall be


transmitted to the Operating Committee for approval before a contract


or purchase order is issued to the selected vendor/manufacturer.


5.7 Pre-inspection of rig, equipment/stock materials of reasonable value shall


be jointly carried out at factory site and quay before shipment at the


request of either Party.





ARTICLE VI





PROJECT MONITORING


6.1 Operator shall provide a project report monthly to ATLANTIC .


6.2 For major projects exceeding one hundred thousand U.S. Dollars


($100,000.00) or equivalent, Operator shall provide to ATLANTIC a


detailed quarterly report which shall include:


(a) Approved budget total for each project:


(b) Expenditure on each project;


(c) Variances and explanations;


(d) Number and value of construction change orders;


(e) Bar chart of schedule showing work in progress and work already


completed and schedule of miles-stones and significant .events;


and


(f) Summary of progress during the reporting period, summary of


existing problems, if any, and proposed remedial action,


anticipated problems, and percentage of completion.


6.3 Each Party shall have the right to send its own representatives to assess


the project based on the report.


6.4 In the case of an increase in cost in excess of 10% on the project.


Operator shall promptly notify ATLANTIC and obtain necessary budget


approval.


6.5 Not later than six (6) months following the physical completion of any


major project whose cost exceeds one hundred thousand U.S. Dollars





SAA.0ML 30_NPDC_ATLANTIC_2011 Page 81


 ($100,000.00) or equivalent, Operator shall prepare and deliver to


ATLANTIC a project completion report which shall include the following:





(a) Cost performance of the project In accordance with the work


breakdown at the commencement of the project;





(b) Significant variations in any item or sub-items;


{c) Summary of problems and unexpected events encountered during





the project; and





(d) List of excess project materials.





































































































SAA.OML 30„NPDC_ATLANTIC_2011 Page 82


 ANNEX G





TO THE STRATEGIC ALLIANCE AGREEMENT BETWEEN NPDC AND ATLANTIC





AFFILIATE COMPANY GUARANTEE











Parent Company Guarantee


To: Nigerian Petroleum Development Company Limited.


62, Sapele Road,


Benin City,


Nigeria.


Guarantee from SPOG PETROCHEMICAL NIGERIA LIMITED (hereinafter referred to


as “the Guarantor1’) of the performance by ATLANTIC (hereinafter referred to as


“the Obligor") of the obligor’s obligations following the execution of the Strategic


Alliance Agreement (hereinafter referred to as the “Agreement") dated


........2011 and made between NPDC and Obligor under the Agreement.


Pursuant to the said Agreement and the performance of the obligations therein,


the Guarantor will directly and indirectly benefit from the said Agreement,


wherein the Guarantor hereby agrees and covenants as follows:


1. The Guarantor unconditionally and irrevocably guarantees to NPDC the


performance of all the obligations of the Obligor, its Nigerian affiliate,


which is organized under the laws of the Federal Republic of Nigeria and


any and all its successors and assigns under the Agreement.


2. Subject to Article 8.5 of the Agreement and the terms of this Guarantee,


the Guarantor shall unconditionally fulfill the obligations of the Obligor


under the Agreement forthwith upon receiving written notice from NPDC.


3. The Guarantor absolutely, irrevocably and unconditionally guarantees to


NPDC the full, due and punctual payment to NPDC by Obligor of all


monies which Obligor is or shall become obliged to pay to NPDC pursuant


to the Agreement (the “Obligations") and, subject to the other provision


of this Guarantee, irrevocably and unconditionally agrees to indemnify


and hold harmless NPDC (but only to the extent of the Guaranteed


Amount) in respect of any and all failure by Obligor to pay such monies


PROVIDED always that the maximum aggregate liability of Guarantor


under this Guarantee shall not exceed [ ] million US ([ ]) (the


“Guaranteed Amount"!.











SAA.0ML 30_NPDCj\TLANTlC_2011 Page 83


4. This Guarantee shall terminate on the fifth (5th) anniversary of the date on


which the Agreement is terminated or otherwise expires (whichever is


earlier).


5. No document proof or other action other than herein is necessary as a


condition of the Guarantor honoring any and all unfulfilled obligations of


the Obligor pursuant to the provisions of the Agreement. The Guarantor


therefore waives any right to require as a condition of its obligations


hereunder that presentment or demand be made upon Obligor.


6. Neither the Guarantor nor NPDC may assign or transfer (whether by way


of security or otherwise) this Guarantee nor any interest or obligation in or


under this Guarantee without the prior written consent of NPDC or the


Guarantor respectively. Any purported assignment or transfer that is not in


accordance with this Clause 6 shall be void. Subject to the foregoing this


Guarantee shall be binding upon and ensure to the benefit of and be


enforceable by the respective successors, assigns and transferees of


Guarantor and NPDC.


7. This Guarantee embodies the entire understanding between the


Guarantor and NPDC and supersedes all prior arrangements and


understandings relating to the subject matter hereof.


8. The obligations of the Guarantor hereunder shall in no way be affected or


impaired by reason, and the Guarantor, waives its right to prior notice, of


the happening from time to time of any of the following:


i. extensions (whether or not material) of the time for performance of all


or any portion of the Obligations;


ii. the modification or amendment in any manner (whether or not


material) of the Agreement or the Obligations;


iii. any failure, delay or lack of diligence on the part of NPDC, or any


other person or entity to enforce, assert or exercise any right, privilege,


power or remedy conferred on NPDC or any other person or entity


under the Agreement or at law or any action on the part of NPDC or


such other person or entity granting indulgence or extension of any


kind; and


iv. a change of status, composition, structure or name of Obligor,


including, without limitation, by reason of bankruptcy, liquidation,


insolvency, merger, dissolution, consolidation or reorganization.


9. With the prior written consent of NPDC, which consent shall not be


unreasonably withheld, this Guarantee may be replaced by a guarantee


or guarantees in substantially similar form made by a guarantor of equal


or better creditworthiness.








SAAJDML 30_NPDC_ATLANTIC_2011 Page 84


r *•














10. This Guarantee may be executed in any number of counterparts, each of


which shall be an original but all of which together shall constitute one


document.


The Guarantor shall make payment in US Dollars and without deductions


n.


to NPDC immediately by making available funds of all sums due


hereunder within ten (10) business days of written demand for the same


by NPDC (which demand shall set forth the basis and the calculation of


the amount for which demand is made and which shall in the absence of


manifest error be conclusive).


The Guarantor warrants that this Guarantee is its legally binding obligation


12.


enforceable in accordance with its terms and further warrants that all


necessary consents and authorizations for the giving and implementation


of this Guarantee have been obtained.


13. If a difference or dispute arises between the Guarantor and NPDC,


concerning the interpretation or performance of this Guarantee, and if the


parties fail to settle such difference or dispute by amicable agreement,


either Party may serve on the other a demand for arbitration.





13.1 Within thirty (30) days of such demand being served, each Party to


this Guarantee shall appoint an arbitrator and the two arbitrators


thus appointed shall within a further thirty (30) days appoint a third


arbitrator, who shall be of a nationality which is different from that


of the parties and of the arbitrators (the nationality of a company


shall be deemed to be that of the country under the laws of which


it and/or its owners are incorporated). If the arbitrators do not


agree on the appointment of such third arbitrator, or if either Party


fails to appoint the arbitrator to be appointed by it, such arbitrator


or third arbitrator shall be appointed by the Chief Judge of the


Federal High Court, Abuja on the application of the other Party


(notice of the intention to apply having been duly given in writing


by the applicant Party to the other Party). The third arbitrator when


appointed shall convene meetings of the arbitration panel and act


as chairman. If an arbitrator refuses or neglects to act or is


incapable of acting or dies, a new arbitrator shall be appointed in


his place and the above provisions of appointing arbitrators shall


govern the appointment of any such new arbitrator or arbitrators.





13.2 The arbitral award shall be binding upon the parties to this


Guarantee. The Arbitration and Conciliation Act Cap A18, LFN,


2004 shall apply to this Guarantee and the award rendered by the


arbitrators may be entered in a court having jurisdiction thereof.


Each Party shall pay Its own attorney’s fees and costs.





13.3 The venue of the arbitration shall be anywhere in Nigeria as ma>


agreed by the parties.








SAA.0ML 30.NPDC_ATLANT1C.2011 Page 85


&





14. All notices required or permitted shall be in writing and shall be deemed


given when delivered in person, or, if sent by facsimile or other means of


electronic transmission on the second business day following transmission,


or if mailed on the second business day after being consigned to Federal


Express or similar courier, at the address for notice provided below:











To the Guarantor:


SPOG PETROCHEMICAL NIGERIA LIMITED


50D Glover Road


Ikoyj, Lagos


Nigeria





To NPDC:


Nigerian Petroleum Development Company Limited


62, Sapeie Road,


Benin City,





Nigeria





15. This Guarantee shall in ail respects be governed by and construed in


accordance with, the laws of the Federal Republic of Nigeria.








FOR AND ON BEHALF OF:


Name:


Title:



















































































SAAJ3ML 30_NPDC_ATLANTIC_2Q11 Page 86


to











•■wsrrTjs"*- ~ TSpJaFr-rna?.


A





if








ANNEX H


TO THE STRATEGIC ALLIANCE AGREEMENT BETWEEN NPDC AND ATLANTIC


Dated ,/A^Vy, I. -





PRODUCTION PROFILE FOR THE CONTRACT AREA































































































SAA.OML 30_NPDC_ATLANTIC_2011 Page 87


to