Section 10: OBLIG TIONS OF THE COMPANIES

()The Companjes undertake to commence exploration operation not later th n six (6) months after the Effective Date: to pursue these operations to the maximum extent consistent with good petroleum industry practice; and to commenc the drilling of at least one well for Petroleum not later than twenty four (24) months after the Effective Date. Such well will be drilled to a depth sufficient to test the Devonian Strata (estimated at 7,000 feet), to basement, or to the depth at which commer cial production is found, whichever comes first. Nevertheless, if in the opinion of the Companies drilling of such a well is not feasible due to a lack of a drilling prospect, it shall not be necessary to drill such well and the Conpanies may revert the concession to the Government. (ii) Previous notice shall be given to the Government concern ing the commencementof any drillings, with a description of the location of the proposed welI, and work on drilling shall not be started before consulting with the Government. (iü) When a productive field has been discovered, the Con panies shall exert its utmost efforts for developing it to the maximum extent consistent with good potroleum industry practice, and shall conduct production operations as e peditiously as possible. (iv) No well shall be abandoned without first consulting with the Government. All wells so abandoned shallbe plugged only with the consent of the Government and in accordance with specifi cations to be proposed by the Companies and approved by the Government. (v) The Companies undertake to carry ou all Authorised Opera tions with due diligance, eficiency and economy; to observe sound technical and engineering principles, in particular in regard to the conservation of hydrocarbon deposits; and to take atall times every reasonable precaution and adopt all reasonable safety measures to prevent injury to person and property, the occurence of blow-out and fire, the contamination of water through the escape of petroleum or other injurious substances, the pollution of the air by liberation of gas and in general all avoidable waste. (vi) All Petroleum produced shall be measured or weighed by methods used in good oil industry practice. The Companies shall propose the methods to be adopted to the Government for approval. (vii) The Companies shall enable duly nominated representatives of the Government to inspect at all reasonable times the operations conducted under this Agreement, to control and test the methods and apparatus used for measuring or weigh ing Petroleum, and to examine all books and records connected with Companies' operations. No. 2 Exploration, Mining and Processing Mineral 1982 15 (vii) The Companies shall keep in Sierra Leone ooks of accounts and maintain full records of operations in accordance with a system which it shall propose to the Government for its approval. Such system shall conform to generally accepted accounting principles and procedures in international petro leum industry, and the books of accounts and records of operations shall be opened to the Government's inspection at all times, upon reasonable notice. (ix) The Companies shall give the Government notice of the erectionof all fxed installation and shall kecPe of all fixed installation and shall keep the Government informed ony discOvery ofof the progress of operations as well as of any discovery of materials other than Petroleum which may come to light in the course of Authorised Operations. The Companies shall furnish the Government with characteristic samples, duly labelled, of strata as well as of Petroleum or of any other minerals which may be discovered in the course of operation. (x) The Companies shall submit to the Government within thirty (30) days of the end of cach calendar quarter reports contain ing information in respect of operations carried out and within thirty (30) days of the end of cach calendar year a yearly report containing all information required by the Government inres pect of operations carried out by the Companies. These reports shall be accompanied by accurate copies of maps, sections, well logs, and other data relating to topographical, geological, geophysical with its interpretation, drilling, producing and other relevant matters. In addition, monthly progress reports shall be submitted by the Companies concerning allwells being drilled. (xi) Any plans, maps, records and general technical information except statistical information, obtained by the Companies shall be treated as confidential in the sense that neither party shall disclose the same to third parties without the other party's con sent which shall not be unreasonably withheld. However, the duration of such confidentiality shall be limited to three (3) years, except for seismic information which shall only be released with consent of the Companies. (xii) In the event of discovery of a gasficld the reserves of which are not deemed by the Companies to be of sufficient size to warrant its commercial development, then such field will be offered to the Government free of charge and if accepted, the Companies will have no further responsibilitiesfor that gasficld. (xiii) If additional facilities are required for the purpose of enabling the Government to take delivery of Natural Gas under Sub clause 10 (xii) the capital for tbe creation of such facilities shal be providod by the Government. 16 No. 2 Exploration, Mining and Processing Mineral (xiV) The Companics shall supply to the Government or to refiners to be nominated by the Government such quantities of Petro leum, to be determined by the Government from time to time, as may be necessary for internal consumption in Sierra Leone, such consumption to include the bunkering of vesseis and fuel ling of aircrat. Such supplies shall besubject to the following provisions : (a) The Companies shall not be called upon to supply Petroleum the Government tothe extent that such Petroleum is required for the conduct of Authorised Operations. (6) The Companiesshall not be required,in order to meet the require ments provided for in this Clause to produce Petroleunt at a rate higher than the maximum efficient rate of production. (c) The Government shall notify the Companies of its requirements under this Clause in respect of each quarter of the calendar year namely three months ending on Maroh 31st, June 30th, September 30th and December 31st; cach notification to be given not less than two (2) months before the beginning of the quarter during which delivery is to be made. ()Deliveries of Petroluem under this Clause shall be made at the Companies' export terminal. The price to be paid to the Companies for Petroleum supplied under the terms of Clause 14 shall be an amount equivalent to the of the prices ex terminal at which the Companies have sold Petroleum to Nonaffiliates during that quarter. In the event no sales of crude ol were mado during the said quarter to other than Afiliates the price shall be equivalent to the minimum unit price exterminal as obtained by producers of crude oil in West Africa (owned directly or beneficially by persons or entities foreign to Nigeria) (for the pur poses hereof West African producing countries are deemed to b those along the coast of West Africa commencing with Spanish Sahara and extending to Gabon) for the sale of crude oil during the immediately preceding quarter, taking into consideration quantity and quality of the crude oil in question and any other relevant factors.