-. First Anicndnlcnt Agl-ccmcnt to Production Sharing Agrcenlcnt ?. Befiveen - - hiinistry of Oil and Xiineral Rcsources -, And . . - . Ansan Wilds (Hadramaut) Ltd of (Cayman Islands), Xorsk Hydro Yemen a.s . , of (Osl4, Nonvay), DSO ASA of (Oslo, Xorway) and Transglobe Energy f .- Corporation of (British CoIuru bia, Canada); This First Amendment Agreement is made and cntered into in Sana'a on the day of 22nd Rabi'a Al-Thani 1420 H, Correspoilding to the 4th August 1999, Between: 1) Ministry of Oil and Mineral Resources of the Republic of Yemen hereinafter referred to as (the "Ministry "or " MOMR"). 2) Ansan Wikfs (Hadramaut) Ltd of (Cayman Islands), Norsk Hydro Yemen a.s of (Oslo, Nonvay), DNO ASA of (Oslo, Norway), and Transglobe Energy Corporation of (British Columbia, Canada), Jointly are hereinafter referred to c~lle:cti\~ely as ("CONTRACTOR") and represented herein by DNO ASA (1710 "Operator"). \WEREAS the MINISTRY and the CONTRACTOR are Parties to a certain Production Sharing Agreement ("PSA") made and entered into in Sana'a on the 16" day of Rabi'a Awal 14 12 H corresponding to the 24" day of September 199 1, and app;ioved by the Law issued by the Republican Resolution no. 18 for the Year 1992. WHEREAS, on currently available technical and economic evaluation data for The Apeerr) ent Area, Block 3 2 ((HOWARIME), Hadramaut Governorate, ROY) the Parties hereto agee that the developlnent potential of Block 32 is marginal. WHEREAS the MINISTRY and the CONTRACTOR have agreed to ainend the PSA in the manner provided in the First Amendment Agreement, approval of I~hich is subject to the Constitutional procedures of the Republic of Yemen. . Page 1 NOW THEREFORE the Parties llerci~l agree to the following:- - ~ Tlle Parties agree to make the following amendments to the PSA: a) RovaIty Percentace (Article 3,2 of the PSA): Royalty Percentage is amended to become Three (3%) percent of the total icrude oil produced, saved, and not used in Petroleur~i Operations, for :Production rates behveen Zero (0.00) BBLIday to 25,000 BBLIday only. !For all levels exceeding Twenty Five Thousands (25,000) BBLS/day, the ;Royalty percentages shall remain Ten (10%) Percent. - \ b) Cost Oil Percentage (.Article 7.1.1 of PS.4): :Cost Oil Percentage is amended to become up to Sixty (60%) Percent I lllaximu~n. c). Recoverable Rates (~rticle 7.1.1 of the PSA): : The Recoverable Rates for Exploration and Development Expenditures : from rnaximuln Cost Oil percentage allocated for recovery of costs shall : be amended to become; - . a) Exploration Expenditures: At rate of (50%) per amurn. b) Development Expenditures: At rate of (50%) per amum. - . dl Production Sharin~ Oil (Article 7.2 of the PSA) i The percentages with regard to Production Sharing Oil, to be shared and disposed of by become; MOh4R and CONTRACTOR, shall be amended to hnionthly Average Daily Net Production hlOhiR Sharc Contractor Share Zero BBLSIDay to 65% 35% 25,000 BBLSIday Page 2 -, T11is A~nend~tlent shall not apply to level of Monthly Averagc daily net -. Production exceeding 25,003 BBLSIday, to which the original Tenns and -. Provisions of the PSA sl~all continue to apply. . -. In case and to the extent that; - , a) Proven Recoverable Resenfes exceeds Thirty (30) rnillioxl Barrels, or, -, bj Monthly Average Daily Net Production exceeds Twenty Five Thousands r* (25,000) BBLIDay, -, then the amendments described in the Paragraphs: a,b,c, and d of Article (1) of this First Anendment Agreement above, shall cease to apply and the oiiginal Tenns of Articles (3.2, 7.1.1 and 7.2) of the PSA sha1.l prevail and ccjntinue to apply. he MINISTRY and the CONTRACTOR will jointly ask an independent company wit11 intenlatio~lal oil and gas esperience (as lnutually agreed) to perform the reserve calculation . Tl~e fust certification of Proven Recoverable Reserves should be available bjfore ;lie start of corn~nercial production. T)le definition of Proven Recoverable Reserves shall be the saine as that used by the Securities and Exchange Coinmission in their regulations. The evaluation of Proven Recoverable Reserves will be revised at the end of egch two (2) Year period coinlnencing with the date of the first crude oil ptoduction . The costs of carrying out the Proven Recoverable Reserves evaluations sllall bc born by the CONTRACTOR wl~icli costs shall be fully recoverable according to the PSA. Article 43): Excppt as provided in Paragapl~s: a, b, c, and d of Article (1) of this First Amendment Ag~eement, all Tenns, Conditions and Provisions of the PSA alldoits Annexes will remain in full legal force and effect. Page 3 Article (3): Terl~ls written with capital 1 etters, in this First Anendment Agecru ent, shall have the sairle meaning as defined in the PSA. Articlc f5): This First Amendment Agreemerit is written in the Arabic and English languages both of \vhich shall have equal legal force and effect, provided hotever, before GOVERhNENT authorities in the ROY The Arabic version sliall be referred to in interpreting this Agreement, and in any arbitration proceeding under the PSA the Arabic and English versions shall be referred to in interpreting this First Amendment Agreement. Articlc $6~ ~bis First Amendment Agreement shall become effective only froin the date of its enaotment as a law according to constitutional procedures of the Republic of Yemen. Signed :for and on behalf of the Signed for and on h.Iinistr-y of Oil and Mineral behalf of Rcsourres of the Republic of Yemen. CONTRACTOR By: hldhammed Al-IChadem Al-\Frajih By: Magne H. Normann Minister of Oil and Mineral Resourccs General hlanager DSO emen Signat~re : Signature : ,_ t - dew Date: I L DNO-AM, YEI\IPIN. P.O.Box.16133 Sam's ROY Tcl. 248457,243388 1 DNO ASA Yemen Phone P.O. BOX 16133 +967-1-248457 Sana'a +Q67-1-243388 Republic of Yemen Fax +Q67-1-267761 E Mail:- magne@dnoyemen.com.ye Fax Transmission Ta: DNO - H EidelSE Lie Fax: Ansan WiMs - Dr. Don Sheridan Transglobe - Ross Clarkson Hydro - Per Songstad Norsk -- CC: Fmmr Magne H Normann Ccz Date: 19.9.99 Ca Total pages: 5 Dear Slrs, Attached please find the approval of First Amendment of PSA for Block 32 signed by the President and wlth coverletter issued by Minister of 011. Bept Regards, Translation REPUBLIC OF YEMEN Ministry of Legal -4 ffairs and Parliament A ffairs Republican Resolution for the Law No. 42 for the year 1999 approving the First Amendment of the PSA betwccn MOMR and the Nonvegian (DSO), the (operator) on behalf of thc contractor of plock 32 (Howarime, Governorate of Hadramauf) The President. the Republic of Yemen. According to the Constitution of And according to the Presidential Resolution for the Law No. 18 year 1992 approving the PSA between the Yemen Government and Clyde Expro Company and Norsk Hydro a.s. Company and Orange Nassav Yemen and Ansan Wikfs (Hadramaut) limited in Hadaramaut Governorate. Resolution Anicle (I) We agree to the First Amendment Agreement of the PSA between MOMR and the Norwegian Company @NO) the (operator) on behalf of the contractor in Block (32) Howarime Governorate of Hadramaut signed in Sana'a city on 22 Rabi Awal 1420 corresponding to August 4, 1999 (and the agreement for this resolution by the law). Article (2) This resolution is to be valid from the date of issue and circulated on the official paper issued at thc Presidential ofice in Sana'a on: 12 Jumad Awal 1420 corresponding to: 23 August 1999. . Dr. Abdul Karim Al-Iriani Ali Abdulla Saleh (Signed) (Signed) Prime Minister President of the Republic ' Translation REPUBLIC OF YEMEN Ministry of Oil and Mineral Resources To , The General Manager of DNO ASA, Yemen Attention : Magne Nonnann Date ; 13/09/99 Our Ref No. : 62/40 1 Subiect : A~proval of First Amendment for PSA Block 32 Dear Sir. Please find attached a copy of the Presidential Resolution for the Law No. 42 year 1999 approving the First Amendment between the Ministry and the Company on behalf of the contractor for Block 32 (Howarime), Governorate of Hadramaut. For your attention and necessary action. Wishing you luck in the execution of all the approved programs and success in your work. Please accept our outmost greetings. Sincerely, Mohamed K. Al-Wajih Minister of Oil and Mineral Resources CC: Deputy Minister Chairman PEPB Chairman Consultative Office General Legal Affair (v*v~\r/~-vr\-/~avv-q) ++I &u.v-vr\t.+u-.~\. :+* -+pp-.vv~v8+-~~~pP~~~ Cablc : hfomr Sana'a - TIx :2257 Iriomr Ye - P.o. Box : (01) Sana'a - Swich Fax: (202314) Trl r ( 202313 I 202310 i20UM Translation from Al mwrn Official News~aner Issne No. 12704 Tuesday 241h August 1999,13Ch Jumad A1 Awol 1420 Ilea Republican Decree Sabn'n News Agency First Amendment to the Production Sharing Agreement in Block 32 (Howarime) Hadramout was approved by the Republican Decree Law number 42 of 1999 declared yesterday. Article (1). First Amendment to the Production Sharing Agreement between DNO ASA, Yemen (the Norwegian Oil Company, operator of Block 32 - Howarime, Hadramout Governorate) was signed in Sana'a on ~2"~ Rabie A1 Thani 1420 H, 14" August 1999. This article is valid from the date issued on the official newspaper. ernj\ i 4 R~~PUBLPC OF YE3f EN . . Jfittlrtry of Oil --! Atrd Mifreral Resources . . I (~'~~~~/V*V?~*/f*V~*\)~~~&~ct*tt\~r+~-a~~m:+~-~+.~ Cable : hfornr Stna'r nx :2U7 Fiomr Ye Pa. Bor : 181) Slnr'r Srlch Fur I TcrrndPti6n REPUBLIC OF YEMEN M'Ltr~y of OII and MInerol Resorrrces Minister Office I To : The General Mmager of DNO ASA, Yemen From : Mohammed Khadm Al Wuih Minister of 011 and Mineral Rtwws Our Ref' No. : WNM 384 162 . . I Reference is made to your lmer ref. DNO/MOMW0(142-99 dated I? July 1999 regardinn the above I subject and your nd for extra iimc to finish your work program and drill tho commitment oil wells. I I Ministry of Oil and Minerel Resources hereby agree to provide with an extra extension period for two : months starting &om la oQOctobtt 99 to 30 November 1999. (Signed and rtamped) I I Mohrmmed Khodrn Al Wqih ! Minister of Oil and Mineral Rcmurcca