Ampla Mpejoa - Exposure Draft

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Model Petroleum Exploration Joint Operating Agreement - Exposure Draft

EXPLANATORY NOTE

The Board of AMPLA Ltd has prepared this Exposure Draft Model Petroleum Joint OperatingAgreement ( Model Exploration JOA ) following the recommendations of a representativeReference Group selected from knowledgeable and experienced AMPLA members working in oiland gas companies and in private practice.

The Model Exploration JOA is intended for use in non-complex oil and gas exploration projects principally onshore in Australia and has a traditional risk/reward/loss/indemnity regime with anOperator as agent for the parties. It can also be used for similar projects offshore, but parties maywish to consider an alternative risk/reward/loss/indemnity regime with the Operator as anindependent contractor.

This Model Exploration JOA is a basic 3 party joint venture agreement based on oil and gas JointOperating Agreements presently in use in Australia. It may be used under the law of any State orinternal Territory of Australia for all phases of oil and gas operations from initial exploration up tothe production and offtake of oil or gas products.

Schedule 1 of the Model Exploration JOA sets out the basic particulars such as the conditions precedent, relevant petroleum legislation, voting and financial provisions, agreed sole risk eventsand limits on the Operators discretionary contracting powers. The list of Petroleum Titles andtheir particulars is specified in Schedule 2. Optional dilution provisions are set out in Schedule 3.

The Model Exploration JOA is not intended as a rigid precedent to be adopted without amendment.Rather it is a guide which includes representative provisions across all matters normally covered in

such an agreement. It endeavours to strike a fair balance on contentious matters between the partiesto such agreement. It is drafted in a manner which allows for easy deletion or substitution of whatmay be contentious or undesired clauses, such as dispute resolution.

In any particular matter, a party may have its own preferred clauses or schedules which can bereadily inserted. Reference should also be made to the Model Alternative and Optional clauseswhich can be used with, or in substitution for, clauses in this Model Exploration JOA. These can

be inserted in the Model Exploration JOA with minimum amendment.

Note: This Model form document continues to be revised and updated. The AMPLAwebsite should be checked to ensure that you are using the latest version.

RELATED AMPLA MODEL DOCUMENTS

Petroleum Joint Operating Agreement Petroleum Joint Operating Agreement Alternative & Optional clauses

For a discussion of the legal principles underlying this Model Exploration JOA and its drafting,which are largely applicable to a petroleum joint operating agreement, see JG Grace, TheAMPLA Model Mining Joint Venture Agreement, [2009] AMPLA Yearbook 366 396 andJG Grace, The AMPLA Model Joint Venture Agreements and associated documents, [2007] AMPLA Yearbook 365- 384, and see also The AMPLA Model Petroleum Joint OperatingAgreement presented at the AMPLA Conference, Melbourne, 21 October 2011.

Users are also referred to the Association of International Petroleum Negotiators (AIPN) 2002Model Form International Operating Agreement and the very useful User Guide for adaption ofthat form for use in Commonwealth waters, Offshore Australia, dated 29 August 2008, firstedition. COPYRIGHT

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Model Petroleum Exploration Joint Operating Agreement - Exposure Draft

This Model Exploration JOA is the property of AMPLA Ltd which owns the copyright. AMPLAfinancial members are granted a royalty free licence to use this Model Exploration JOA forcommercial purposes on the basis set out below. Non-members may use this Model ExplorationJOA on a similar basis only if the applicable licence fee has been paid.

DISCLAIMER

AMPLA makes no warranty or guarantee or promise, express or implied, that this Exposure DraftModel Petroleum Joint Operating Agreement (Model Exploration JOA) is accurate, complete, upto date, or fit for any use whatsoever. It is made available on the AMPLA website for theinformation and use of AMPLA members only and for the use of non-members on payment ofthe applicable licence fee, on the condition that AMPLA Ltd is not engaged in rendering

professional advice. Readers should exercise their own skill and judgment in adopting oradapting any part of the Model Exploration JOA for their own use and, where necessary, seekadvice from a suitable qualified legal practitioner.

AMPLA accepts no responsibility for any loss, cost or expense arising from the use of this ModelExploration JOA and shall not be liable in any manner whatsoever for any direct, incidental,consequential, indirect or punitive damages arising out of the use of the Model Exploration JOA,or any errors or omissions in its contents.

IMPROVEMENTS

If you have any questions or suggestions for improvement concerning this Model, please contactthe AMPLA office at [email protected] or see www.ampla.org. The AMPLA Board wouldappreciate receiving all and any questions, comments and other feedback you have .

AMPLA Model Petroleum Exploration JOA, EXPOSURE DRAFT, 01.09.2011 ii
mailto:[email protected]:[email protected]://www.ampla.org/http://www.ampla.org/http://www.ampla.org/mailto:[email protected]


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Model Petroleum Exploration JOA - Exposure Draft

TABLE OF CONTENTS

Particulars [Insert name] Joint Ventur e 1

1 Definitions and interpretatio n 1

1.1 Definitions 1 1.2 Interpretation 7

2 Conditions precedent 7

2.1 Coming into effect of agreement 7 2.2 Satisfaction of Conditions Precedent 7 2.3 Failure to satisfy Conditions Precedent 8 2.4 Consequence of failure to satisfy Conditions Precedent 8

3 Joint Venture objectives and relationship s 8

3.1 Formation of the Joint Ventur e 8 3.2 Objects and scope of the Joint Ventur e 8 3.3 Rights, obligations and liabilities of Participant s 9 3.4 Participant covenants 9 3.5 Party warranties 10

4 Joint Venture Property 10

4.1 Participating Interests 10 4.2 Use and ownership of Joint Venture Property 10 4.3 JV Intellectual Propert y 10 4.4 No partition of Joint Venture Property 11 4.5 Perpetuity period 11 4.6 Disposal of Joint Venture Propert y 11 4.7 Abandonment of Well s 11

5 Operating Committee 11

5.1 Establishment of Operating Committee 11 5.2 Functions of Operating Committe e 12 5.3 Meetings of the Operating Committe e 13 5.4 Quoru m 13 5.5 Voting and decision makin g 14 5.6 Minutes 14

5.7 Sub-committees 14 5.8 Loss of rights of participation and votin g 14

6 Operator 14

6.1 Appointment of Operator 14 6.2 Term of appointment of Operator 15 6.3 Remuneration of the Operator 15 6.4 Appointment of new Operator 15 6.5 Liability of Operator 15 6.6 Full indemnity of Operator by Participants 16 6.7 Limited indemnity by Operator of Participants 16

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7 Functions, powers and duties of Operator 16

7.1 Functions of the Operator 16 7.2 Rights, powers and duties of Operator 16 7.3 Maintenance of the Joint Account 19 7.4 Limitations on Operators obligation s 19

7.5 Operator may delegat e 19 7.6 Agreement with an Affiliate or a Related Entity 19 7.7 Litigation 19 7.8 Trades 19

8 Programmes, Budgets and Cash Call s 20

8.1 Proposed Programmes and Budget s 20 8.2 Approved Programme and Budget 20 8.3 AFEs 21 8.4 Joint Expenditure not covered by Programme and Budget 22 8.5 Payment of Cash Calls 22

9 Completion, discovery and appraisal 22

9.1 Well Completion 22 9.2 Discovery and appraisal 23 9.3 Proposals for development 23

10 Accounts, reports, audit and access 24

10. 1 Joint Venture accountin g 24 10. 2 Reports to Participants 24 10. 3 Joint Account and audit 25

10. 4 Individual Participant recording responsibilities 25 10. 5 Participant access 26

11 Encumbrances 26

11. 1 No Encumbrances without consent 26

12 Surrender, Relinquishment, Withdrawal and Dilutio n 26

12. 1 Surrender 26 12. 2 Withdrawal 26 12. 3 Effect of withdrawal 27 12. 4 Dilution 28

13 Sole Risk 28

13. 1 Proposal for a Sole Risk Operation 28 13. 2 Sole Risk Election Notice and participation 28 13. 3 Sole Risk Operation 29 13. 4 Failure to commence Sole Risk Operation 30 13. 5 Sole Risk Participants indemnit y 30 13. 6 Sole Risk Operations report and buy-back 30 13. 7 Consequences of buy-back 31

14 Assignment 31 14. 1 Restriction on Assignment 31



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14. 2 Assignment to an Affiliate or a Related Entit y 32 14. 3 Permitted right of Assignment with pre-emption 32 14. 4 Selling Participant free to Assign 33 14. 5 Requirements of Assigne e 33 14. 6 Assignment on holding less than Minimum Interest 33 14. 7 Participant ceasing to be a Participant 34

15 Default 34

15. 1 Breach Default Event to be remedied 34 15. 2 Unpaid Monies Default Event to be remedied 35 15. 3 Interest and cost s 35 15. 4 Period of Unpaid Monies Default 36 15. 5 Failure to pay money or provide Security 36 15. 6 Buy-out Election 36 15. 7 Preservation of other rights 36

16 Enforcement of Buy-Out Election 37

16. 1 Consequence of Buy-Out Election 37 16. 2 Determination of fair market value and Completion Date 37 16. 3 Consequence of Buy-Out Election 37 16. 4 Release of Defaulting Participant 38 16. 5 Acknowledgement 38 16. 6 Attorney 38

17 Term, suspension and termination of Joint Ventur e 39

17. 1 Term of agreement 39 17. 2 Suspension or abandonment of Joint Operations 39 17. 3 Winding up of Joint Venture 39 17. 4 Certain obligations continue beyond terminatio n 40 17. 5 Extension of ter m 40

18 Confidentialit y 40

18. 1 Agreement is confidential 40 18. 2 No disclosure except as permitted 40 18. 3 Permitted disclosure by a Participant 40 18. 4 Permitted disclosure by Operator 41 18. 5 Confidential Information disclosed only as necessar y 41 18. 6 Publicity and disclosur e 41

18. 7 Obligations exist beyond terminatio n 41 18. 8 Access to Informatio n 41

19 Dispute Resolution 42

19. 1 Limitation on proceeding s 42 19. 2 Dispute Resolution Proces s 42 19. 3 Mediatio n 42 19. 4 Dispute Resolution Process not to interrupt Joint Operations 43 19. 5 Clause does not apply to matters where consent require d 43

20 Expert Determination 43

20. 1 Expert determinatio n 43 20. 2 Qualifications of Expert to determine disput e 44



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21 Force Majeure 44

21. 1 Meaning of Force Majeure 44 21. 2 Relief 45 21. 3 Labour disputes and Native Title matters 45 21. 4 Resumptio n 45

22 Goods and Services Ta x 46

22. 1 Participants registered for GST 46 22. 2 Supply of going concer n 46 22. 3 GST liability 46 22. 4 Reimbursement 46 22. 5 Definitions 47

23 Notices 47

23. 1 Form of Notice 47 23. 2 When Notices are taken to have been given and received 47

24 Ancillary provisions 47

24. 1 Entire agreement 47 24. 2 No reliance or inducement 47 24. 3 Enurement 48 24. 4 Amendment 48 24. 5 Severabilit y 48 24. 6 Waiver 48 24. 7 Applicable la w 48 24. 8 Fees and charges 48

24. 9 Counterparts 48 Schedule 1 49

Basic Particular s 49

Schedule 2 52

List of Petroleum Titles as at the Commencement Date 52

Schedule 3 53

Dilution Provisions Optional and Default Dilutio n 53

1. Dilution Notic e 53 2. Effect of Dilution Notice 53 3. Recalculation of Participating Interests 54 4. Additional Cash Calls 54 5. Re-assessment of Programme and Budget 55 6. Withdrawal of Dilution Notice 55

Signing page 56



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Particulars [Insert name] Joint Venture

Dated as of

Parties

Participant 1 Name

ABN

Address

Email

Fax

Authorised Officer

Participant 2 Name

ABN

Address

Email

Fax

Authorised Officer

Participant 3 Name

ABN

Address

Email

Fax

Authorised Officer

Operator Name

ABN

Address

Email

Fax

Authorised Officer



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Recitals A. The Participants are, or are entitled to be, registered as the holders andowners of the Petroleum Titles .

B. The Participants have agreed to enter into this agreement toexplore for and appraise Petroleum in the area of the PetroleumTitles on the terms and conditions set out in this agreement.

C. The Operator has agreed to act as the operator for the Participantin accordance with this agreement.

The parties agree:

in consideration of, among other things, the mutual promises contained in this agreement:

1 Definitions and interpretation 1.1 Definitions

Unless the context otherwise requires, the following expressions have the respective

meanings in this agreement (including the Recitals):Act means the legislation described in Schedule 1.

AFE means an authority for the Operator to incur Joint Expenditure under an Approved Programme and Budget or otherwise in accordance with this agreement.

Affiliate means, with respect to a particular entity, a related body corporate of that entity as defined in section 50 of the Corporations Act.

Agreed Interest Rate means the rate of interest which is the average bid rate for bills (as defined in the Bills of Exchange Act 1909 (Cth) ) having a tenor of 90 days which isdisplayed on the page of the Reuters Monitor System designated BBSY plus [3] per

cent calculated on a daily basis and compounded with monthly rests, or such otherinterest rate agreed by the Participants. If the interest rate is contrary to any applicableusury Law, the rate of interest to be charged is the maximum rate permitted by Law.

Appraisal Well means a well, not being an Exploration Well or a Development Well, commenced for the purpose of evaluating the extent or the volume of Petroleumreserves contained in an existing Discovery.

Approved Programme and Budget means a programme and budget relating to Joint Operations including the Minimum Work Obligations and an itemised budget of theestimated Joint Expenditure to be incurred for a Year or particular period, which has

been approved or deemed to have been approved by the Operating Committee.

Assignment means the sale, assignment, farm-in, farm-out, transfer, sub-lease or other dealing with, or creation of, an interest relating to the whole or any part of aParticipating Interest.

ASX means ASX Limited (ACN 008 624 691), or its lawful successor.

Auditor means a registered company auditor under the Corporations Act appointed by the Operating Committee at the cost of the Joint Venture to conduct an audit each Yearof the accounts of the Joint Venture.

Authorisation is any consent, authorisation, registration, filing, lodgement, notification, agreement, certificate, commission, lease, licence, permit, approval orexemption from, by or with an Authority (including the Petroleum Titles).

Authorised Officer means the person nominated by a party in its Particulars, or any person replacing the nominated person as its authorised officer by notice given in



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accordance with this agreement.

Authority is any government department, local government council, government or statutory authority or any other party under a Law which has a right to impose arequirement or whose consent is required with respect to Joint Operations.

Breach Default Event is the happening of an Insolvency Event in relation to a

Participant or the Operator, or a Participant or the Operator committing a material breach of any of its material obligations under this agreement (other than an UnpaidMonies Default Event), including where an Encumbrance (other than an Encumbranceapproved by the Participants under this agreement) is created over or attached to theParticipating Interest of a Participant.

Cash Call means the Percentage Share of funds required to be paid by a Participant from time to time in accordance with this agreement to finance Joint Expenditure.

Commencement Date means the date on which the last of the Conditions Precedent has been satisfied or waived in accordance with this agreement or, if there are noConditions Precedent, then the date of this agreement.

Completion means an operation intended to complete a well up to and including awing valve of the Christmas tree as a producer of Petroleum in one or more Zones,including the setting of production casing, perforating, stimulating the well and

production Testing conducted in such operation.

Conditions Precedent means the conditions specified in Schedule 1 which are required to be satisfied or waived for this agreement to be fully effective.

Corporations Act means the Corporations Act 2001 (Cth).

Deemed Sale Offer means an offer required to be made under this agreement by a Participant to sell all of its Participating Interest to the other Participants, free fromEncumbrances, at a Transfer Price.

Default Event means a Breach Default Event or an Unpaid Monies Default Event.

Defaulting Participant means a Participant which has committed a breach of this agreement, whether as an Unpaid Monies Default Event or a Breach Default Event orto which (or to an Affiliate of which) a Breach Default Event relates.

Discovery means the discovery of an accumulation of Petroleum by drilling whose existence until that moment was unproven by drilling.

Due Date means the date on which a payment is due under this agreement.

Emergency means a situation involving actual or reasonably apprehended substantial damage to or loss of Joint Venture Property or Joint Operations or serious injury to

persons or loss of life and includes where a well goes out of control or a fire, blow out,sabotage or other unplanned and uncontrolled event occurs.

Encumbrance means any security interest, mortgage, private royalty, free carried interest, assignment of income, production bonus, pledge, lien, charge, [title retentionarrangement, trust or power, or other form of security or interest having effect as asecurity for the payment of any monetary obligation or the observance of any otherobligation whether existing or agreed to be granted or created.

Expert means a person independent of the parties who is suitably qualified and capable of making an expert determination under this agreement.

Exploitation Area means that part of the Title Area under a Petroleum Title delineated as the exploitation area for a proposed development of a Discovery as a Joint Operationor as a Sole Risk Operation.



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Exploration Well means any well the purpose of which at the time of the commencement of drilling is to explore for an accumulation of Petroleum, whichaccumulation was at that time unproven by drilling.

Good Australian Oilfield Practice means recognised oilfield methods, proceduresand practices, together with the exercise of that degree of skill, diligence, prudence andforesight that reasonably would be expected from an experienced and competentcontractor in Australia under conditions comparable to those applicable to the relevantactivity in the light of known facts, or facts which should reasonably have been knownat the time, and consistent with applicable Laws and Authorisations and having regardto the need for:

(a) suitable and experienced personnel and adequate materials;

(b) ongoing monitoring and testing of plant and equipment performance, safeoperating procedures and appropriate maintenance procedures;

(c) the observance of relevant Australian and international standards; and

(d) in the case of design, engineering and construction, internationally accepted

design, engineering and construction practices that reasonably would beexpected from recognised designers, engineers and constructors of comparable plant, equipment and facilities in Australia.

GST Act means A New Tax System (Goods and Services Tax) Act 1999 (Cth.) and associated legislation.

Information means all information, data and records relating to the Title Area, the Petroleum Titles and Joint Operations including all surveys, maps, aerial photographs,data, drawings, notes, drill cores, drill cores logs, geophysical, geological or drill maps,and sampling reports, whether recorded or stored electronically or otherwise.

Insolvency Event means the happening of any of the following events in relation to a

body corporate: (a) it is unable to pay all its debts as and when they become due and payable or it

has failed to comply with a statutory demand as provided in section 459F (1) ofthe Corporations Act;

(b) a resolution is validly passed to wind up the body corporate voluntarily or toappoint an administrator;

(c) it, or any other person, makes an application to a court for its winding up, beingan application that is not stayed, withdrawn or dismissed within 7 days;

(d) an order is made for it to be wound up;

(e) the appointment of a controller as defined in section 9 of the Corporations Act)of any of its assets;

(f) it proposes to enter into or enters into any form of arrangement (formal orinformal) with its creditors or any of them, including a deed of companyarrangement; or

(g) it becomes an insolvent under administration as defined in section 9 of theCorporations Act.

Joint Account means the accounts denominated in the currency determined by the Operator on an accrual basis and maintained by the Operator on behalf of theParticipants in accordance with this agreement, containing a record of all charges and

credits that are attributable to the Joint Venture consistent with standard accounting procedures, expenditure classifications and reporting formats as approved by the



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Operating Committee.

Joint Expenditure means all costs reasonably and properly incurred by the Operator on behalf of the Participants in connection with Joint Operations pursuant to anApproved Programme and Budget or incurred in an Emergency or as a permitted costoverrun or as otherwise approved by the Operating Committee, and includes all theitems which may be charged to the Joint Account as permitted by this agreement.

Joint Operations means those operations and activities carried out by Operator pursuant to this agreement, the costs of which are chargeable to all Participants.

Joint Venture means the unincorporated joint venture established by and under this agreement to be known by the name specified in the Particulars.

Joint Venture Property means all rights, titles, interest, claims, benefits and all other property of whatever kind, real or personal, from time to time owned by anyParticipant for the purposes of the Joint Venture, and includes the Petroleum Titles, JVIntellectual Property, and all items listed in the Joint Venture Asset Register, andincludes Petroleum before delivery to a Participant at the Delivery Point.

JV Intellectual Property means Information, and all business names, trademarks, copyright, patents, patent applications, discoveries, inventions, and similar rightsdeveloped by the Operator and paid for from the Joint Account pursuant to anApproved Programme and Budget in the course of Joint Operations.

Law means Commonwealth and State legislation including regulations, by-laws, and other subordinate legislation, the requirements and guidelines of any Authority,including the Listing Rules, with which a party is legally required to comply, andcommon law and equity.

Listing Rules means the ASX Listing Rules or, to the extent that a party or its Affiliate is bound thereby, the listing rules of another recognised stock exchange.

Majority Vote means a resolution voted in favour by representatives entitled to vote and be present at the meeting held under this agreement which satisfies the Passmark,excluding for this purpose the votes held by a Defaulting Participant.

Minimum Interest means the Percentage Share specified in Schedule 1.

Minimum Work Obligations means that work and/or expenditure obligations specified in the Petroleum Titles or imposed under the Act which the Participants arerequired by Law to perform.

Native Title Claims means either:

(a) any claim, application or proceeding in respect of Native Title Rights which isaccepted by the Native Title Tribunal or the Registrar thereof pursuant to the

Native Title Act 1993 (Cth) or in relation to Native Title Interests; or

(b) any claim, application or proceeding in respect of Native Title Interests.

Native Title Interests includes those rights, interests and statutory protections of and relating to aboriginal persons as set out in the relevant legislation of the NominatedState or the Aboriginal and Torres Strait Islander Heritage Protection Act 1984 (Cth).

Native Title Rights has the same meaning as the expressions native title or native title rights and interests as defined in section 223 (1) of the Native Title Act 1993 (Cth) and includes Native Title Interests.

Nominated State is the State or Territory of Australia specified in Schedule 1.

Non-Defaulting Participant means a Participant which is not a Defaulting Participant and is not an Affiliate of a Defaulting Participant.



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Operating Committee means the committee of representatives of the Participants established under this agreement to supervise the management of the Joint Venture.

Operator means the person or entity named as Operator in Schedule 1 or such other person or entity as may be engaged or appointed by the Operating Committee asOperator from time to time under this agreement.

Operator Charge means the remuneration payable by the Participants to the Operator to reimburse its costs of carrying out the function of Operator under this agreement asspecified in Schedule 1.

Participant means a party which holds a Participating Interest, but does not include a party in its capacity as Operator.

Participating Interest means the following rights, benefits, liabilities and obligations of a Participant determined under this agreement:

(a) the obligation, subject to the terms of this agreement, to contribute itsPercentage Share of all Joint Expenditure;

(b) the beneficial ownership as a tenant in common of an undivided PercentageShare of Joint Venture Property; and

(c) its Percentage Share of any other right, benefit, liability and obligation accruingto or incurred by a Participant in or arising out of this agreement.

Particulars means the particulars of a party and the Joint Venture given on page 1 of this agreement, or any particular amended by the party by notice given in accordancewith this agreement.

Passmark means the requirements needed to be satisfied as specified in Schedule 1 to pass a resolution of the Operating Committee by a Majority Vote.

Paying Participant means a Participant, not being a Defaulting Participant, which

makes a payment of Unpaid Monies on behalf of Defaulting Participant in order toremedy an Unpaid Monies Default Event.

Percentage Share means the percentage Participating Interest which a Participant has in the Joint Venture in accordance with this agreement.

Petroleum has the meaning given to that term in the Act.

Petroleum Title means a title or licence listed in Schedule 2, and includes any other petroleum prospecting, exploration, retention, production or associated permit, licence,authority or lease issued or to be issued under the Act or any other Law on theapplication or authority of one or more of the Participants for the purposes of the JointVenture which confers or may confer a right to prospect, explore for or produce any

Petroleum in the Title Area, or which may facilitate the enjoyment of such right, andincludes any application for, and any extension, renewal, conversion or substitution of,any of those titles or licences.

Proposed Programme and Budget means a work programme and budget for the conduct of Joint Operations, including the Minimum Work Obligations and details ofany proposed wells, proposed in accordance with this agreement for a given Year, orother relevant period, containing sufficient details to enable each Participant to give it

proper consideration.

Related Entity means a related entity as defined in the Corporations Act.

Security means:

(a) a guarantee or standby letter of credit issued by a first class bank;

(b) an on-demand bond issued by a surety corporation;



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(c) a corporate or insurance guarantee;

(d) a financial security required under a Petroleum Title or this agreement; or

(e) any financial security agreed from time to time by the Participants

provided that the bank, surety or corporation issuing the guarantee, standby letter ofcredit, bond or other security (as applicable) has a credit rating indicating it has a

sufficient worth to pay its obligations in all reasonably foreseeable circumstances. Sole Risk Information means Information, and all business names, trademarks, copyright, patents, patent applications, discoveries, inventions, and similar rightsdeveloped by the Operator paid for by the relevant Participants in the course of SoleRisk Operations.

Sole Risk Operation means an operation of a type listed in Schedule 1 which less than all the Participants may undertake at their sole risk, benefit, cost and liability under thisagreement.

Third Party means a person not a party, or an Affiliate or a Related Entity of a party or an Affiliate, to this agreement.

Title Area means the whole of the area within the Petroleum Titles listed in Schedule 2 and depicted on the Title Area map annexed to Schedule 2 (if any), including the areawithin any other additional Petroleum Titles or areas applied for or acquired for the

purposes of this agreement.

Title Year means a period of 12 months commencing on the date of commencement of the relevant Petroleum Title.

Transfer Price means a fair market price for a Participating Interest as at the date of a Deemed Sale Offer on terms and conditions to be negotiated and agreed in good faith

by the Participants or, in default of agreement, as determined by an Expert appointedunder this agreement, less all amounts due by the transferring Participant to theOperator or the other Participants under this agreement, including interest at the AgreedInterest Rate, and the amount of all liability of the transferring Participant to meetexisting rehabilitation and abandonment obligations as reasonably determined by theOperator as at the date of payment.

Ultimate Holding Company means an ultimate holding company as defined in the Corporations Act.

Unanimous Vote means a resolution in respect of the matters specified in Schedule 1, or otherwise specified in this agreement, which is voted upon in favour by allrepresentatives entitled to vote and be present at a meeting held under this agreement,excluding for this purpose the votes held by a Defaulting Participant.

Unpaid Monies are monies due for payment under this agreement, and include monetary compensation and damages payable by a Defaulting Participant which areagreed, awarded or determined following an unremedied Breach Default Event for solong as it is unpaid, and interest and costs payable or reimbursable in accordance withthis agreement.

Unpaid Monies Default Event is the failure by a Participant to pay Unpaid Monies on or before the Due Date.

Wilful Misconduct means intentional or reckless conduct or action, or failure to act (whether sole, joint or concurrent) by any person or entity which was intended tocause, or which was in reckless disregard of or wanton indifference to, harmfulconsequences such person or entity knew, or should have known, such act or failurewould have on the safety or property of another person or entity, but does not include



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any error of judgement, omission or mistake made by the person or entity or any of itsdirectors, employees, agents or contractors in the exercise in good faith of anyfunction, authority or discretion conferred upon that person or entity.

Year means the year specified in Schedule 1.

1.2 Interpretation

In this agreement, unless the context otherwise requires:(a) the singular includes the plural and vice-versa;

(b) headings do not affect the interpretation of this agreement;

(c) a reference to a party means a party to this agreement as listed on page 1 of thisagreement and includes that partys executors, administrators, substitutes,successors and permitted assigns;

(d) references to a part, clause, Schedule, exhibit and annexure refers to a part,clause, Schedule, exhibit or annexure of, in or to this agreement;

(e) a reference to this agreement includes all Schedules, exhibits and annexures tothis agreement;

(f) a reference to an agreement, deed, instrument or other document includes thesame as amended, novated, supplemented, varied or replaced from time to time;

(g) a reference to a court is to an Australian court;

(h) a reference to any legislation or legislative provision includes any statutorymodification or re-enactment of, or legislative provision substituted for, andany subordinated legislation issued under, that legislation or legislative

provision;

(i) a reference to a day, month or year is relevantly to a calendar day, calendarmonth or calendar year;

(j) a reference to $, AUD or dollars is to the lawful currency of theCommonwealth of Australia;

(k) the expressions including, includes and include have the mean ing as iffollowed by without limitation;

(l) where a word or phrase is defined, its other grammatical forms have acorresponding meaning;

(m) a party may exercise a right or remedy or give or refuse its consent in itsabsolute and unfettered discretion (including by imposing conditions), unlessthis agreement expressly states otherwise; and

(n) no rule of construction is to apply to the disadvantage of a party on the basisthat that party drafted the whole or any part of this agreement.

2 Conditions precedent 2.1 Coming into effect of agreement

This clause 2 and clauses 1 (definitions), 18 (confidentiality), 24 (notices) and 25(ancillary) come into effect immediately. The remainder of this agreement comes intoeffect on the Commencement Date.

2.2 Satisfaction of Conditions Precedent

(a) Each party must use all reasonable endeavours (other than waiver) at its cost toensure that the Conditions Precedent are satisfied on conditions acceptable to it



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within the time specified in Schedule 1 ( Approvals Period ).

(b) Each party must keep each other informed of its progress in obtainingsatisfaction of any Condition Precedent it is required to obtain and anycircumstance that may result in any of those conditions not being satisfied inaccordance with its terms.

(c) Each party must give the other parties notice within 7 days after receivingnotice of the conditions whether the conditions for the satisfaction of aCondition Precedent (if any) are acceptable, or unacceptable, to it.

2.3 Failure to satisfy Conditions Precedent

If all Conditions Precedent are not satisfied, or otherwise waived, within the ApprovalsPeriod, or if a party gives notice to the other parties within the Approvals Period thatthe conditions of satisfaction of a Condition Precedent imposed by a Third Party areunacceptable to it, any party may terminate this agreement by notice to the others.

2.4 Consequence of failure to satisfy Conditions Precedent

If a party terminates this agreement by notice for failure to obtain satisfaction of aCondition Precedent for any reason, then each party is released from all furtherobligations under this agreement, other than the obligations of confidentiality, and no

party has any claim against another party as a consequence of the termination.

3 Joint Venture objectives and relationships 3.1 Formation of the Joint Venture

With effect from the Commencement Date the Participants agree to establish the JointVenture as an unincorporated joint venture under the terms of this agreement.

3.2 Objects and scope of the Joint Venture

(a) The objects of the Joint Venture are to undertake Joint Operations associatedwith the Title Area and, in particular, to:

(i) maintain the Petroleum Titles and explore and appraise the Title Area forreserves of Petroleum;

(ii) if exploration and appraisal indicates the probable existence of acommercial reservoirs of Petroleum in any part of the Title Area test thefeasibility of developing, producing and disposing of that Petroleum;

(iii) do all things incidental to any of the objects as resolved by the OperatingCommittee; and

(iv) undertake such other activities as the Participants unanimously agreefrom time to time,

upon the terms and conditions set out in this agreement.

(b) The scope of Joint Operations under this agreement do not include:

(i) development, production, offtake or marketing of Petroleum from theTitle Area or from any Discovery; or

(ii) acquisition of rights to explore for, appraise, develop or produce Petroleumoutside of the Title Area (other than as a consequence of unitisation withan adjoining area under the terms of the Petroleum Titles); or

(iii) exploration for, or appraisal, development or production of, minerals otherthan Petroleum, whether inside or outside of the Title Area.



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3.3 Rights, obligations and liabilities of Participants

(a) The rights, duties, obligations and liabilities of the Participants arising out ofthis agreement are several in proportion to their respective Percentage Sharesand are neither joint nor joint and several.

(b) Each Participant is severally liable, in proportion to its Percentage Share, for allobligations and liabilities incurred by or on behalf of the Participants in thecourse of carrying out Joint Operations.

(c) Unless otherwise provided in this agreement, the Participants, in theirPercentage Shares, must pay all liabilities and expenses incurred by theOperator in connection with Joint Operations or otherwise incurred, whether intort, contract or otherwise, as a result of the ownership, occupation or

possession of Joint Venture Property, and are entitled to share in all benefits,and all credits to the Joint Account.

(d) Each Participant, to the extent of its Percentage Share, indemnifies each otherParticipant from and against all loss, costs and damage arising from a claim by,or liability directly or indirectly to, a Third Party under or in connection withthis agreement, agreement, except for any loss, costs or damage arising fromthe other Participant's fraud or Wilful Misconduct.

(e) Notwithstanding any other provision of this agreement, and except in cases offraud of Wilful Misconduct, a Participant is not liable to, and is released fromany claim by, any other Participant for any consequential loss, loss of profits, orloss arising from special circumstances that are outside the ordinary course ofthings and are not stated in this agreement, arising as a result of a breach by theParticipant of any obligation or duty whatsoever under or in connection withthis agreement.

(f) Nothing in this agreement is to be construed or interpreted as constituting a

partnership between the parties, or making any Participant the agent orrepresentative of any other Participant, except when the Operator acts asOperator for the Participants, and not, if applicable, as a Participant.

3.4 Participant covenants

Each Participant covenants and agrees separately with each other Participant:

(a) to perform every obligation and commitment which it has in relation to theTitle Area and the Petroleum Titles under the Act or other applicable Law;

(b) to perform its obligations under or relating to the fulfilment of any contractwhich relates to the Joint Venture or Joint Operations;

(c) not to do or cause to be done any act matter or thing whereby the continuedenjoyment of the Petroleum Titles by any Participant might be jeopardised;

(d) to act co-operatively, honestly and reasonably in all its dealings with each otherand the Operator concerning the Joint Venture provided that, except asexpressly provided by this agreement, no Participant is under any fiduciaryduty to the other Participants or the Operator;

(e) not to engage either alone or in association with another or others or through anAffiliate or a Related Entity in any activity over the Title Area except as

provided or authorised by or under this agreement;

(f) that each Participant has the unrestricted right to engage in and receive the full benefit of any competing activities outside the Title Area; and

(g) subject to the confidentiality provisions of this agreement, that each Participant



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is entitled to use and apply Information and Sole Risk Information outside theTitle Area, provided that such activities are carried out in a manner which doesnot prejudice, impair or impede Joint Operations.

3.5 Party warranties

Each party warrants for the benefit of each other party that:

(a) (Incorporation ) it is validly incorporated, organised and subsisting inaccordance with the laws of its place of incorporation;

(b) (Power and capacity ) it has full power and capacity to enter into and performits obligations under this agreement;

(c) (Corporate authorisations ) all necessary authorisations for the execution,delivery and performance by it of this agreement in accordance with its termshave been obtained;

(d) (No legal impediment ) its execution, delivery and performance of thisagreement complies with its constitution and does not constitute a breach of anylaw or obligation, or cause a default under any agreement by which it is bound;

(e) (No trust ) it enters into and performs this agreement on its own account and notas trustee for or nominee of any other person; and

(f) (No encumbrances ) as at the date of this agreement, there are noEncumbrances affecting its Participating Interest.

4 Joint Venture Property 4.1 Participating Interests

The Participating Interests of the Participants as at the Commencement Date are :

Participant Participating Interest (Percentage Share)

Party 1 %

Party 2 %

Party 3 %

100.0 %

4.2 Use and ownership of Joint Venture Property

(a) All Joint Venture Property is owned by the Participants severally as tenants in

common in the proportions of their respective Percentage Shares from time totime.

(b) Each Participant must ensure that its Percentage Share of all Joint VentureProperty that it controls is available for the purpose of Joint Operations for theduration of the Joint Venture.

(c) To the extent that ownership of any Joint Venture Property is not registered orrecorded in the names of the individual Participants pro rata in proportion totheir respective Percentage Shares, then the person registered or recorded asowner holds the property on trust for all the Participants pro rata in proportionto their respective Percentage Shares.

4.3 JV Intellectual PropertyEach Participant and its Affiliates are entitled to use, on a non-exclusive world-wide



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royalty-free basis, JV Intellectual Property, including any modifications andenhancements, outside the Title Area in activities other than Joint Operations providedthat the intended use of such JV Intellectual Property is first disclosed to each of theother Participants and is subject to the obligations of confidentiality in this agreement.

4.4 No partition of Joint Venture Property

(a) Subject to any Law or this agreement, each Participant waives any right it mayhave to partition or divide the Joint Venture Property, whether by way of physical partition, judicial sale or otherwise.

(b) Nothing in this clause affects a Participants right to make an Assignment ordisposal as permitted by this agreement.

4.5 Perpetuity period

If the vesting of any interest of any Participant in any Joint Venture Property would, but for this clause, be void under the rule against perpetuities at common law or underany statute imposing perpetuity periods, then that interest terminates within themaximum time from the Commencement Date permitted by the law of the Nominated

State for that interest to be valid.1

4.6 Disposal of Joint Venture Property

(a) The Operator may, with the approval of the Operating Committee, dispose ofany item of Joint Venture Property it considers is no longer needed or suitablefor Joint Operations.

(b) If the Participants by Unanimous Vote decide to abandon any Joint Operations,the Operator must endeavour to dispose of the Joint Venture Property related tothose Joint Operations, as economically and reasonably as possible.

(c) The proceeds of recovery and disposal of Joint Venture Property, net of sellingand disposal costs, must be credited to the Participants pro rata in proportion totheir respective Percentage Shares.

4.7 Abandonment of Wells

(a) The Operating Committee must approve the plugging and abandonment of allwells drilled as a Joint Operation which are proposed to be plugged andabandoned by Majority Vote.

(b) If the Operating Committee approves the plugging and abandonment of a well,the Operator must give immediate notice to each Participant. Any Participantvoting against that decision may give notice to all other Participants and theOperator, within 3 days after receiving notice, that it will take over, at its risk,cost, expense and benefit, the entire well as a Sole Risk Operation. If aParticipant does not reply within 3 days after receiving notice under this sub-clause it is deemed to consent to the abandonment.

5 Operating Committee 5.1 Establishment of Operating Committee

(a) An Operating Committee is established on the Commencement Date. EachParticipant must appoint (and may remove) a representative to the OperatingCommittee in writing.

1 A perpetuity period of 80 years is applicable for WA, NSW, NT and ACT; for pre-emptive rights in Vic.and Qld. the period is 21 years; for pre-emptive rights in Tas. the period is 6 years; in SA clause 4.8 can bedeleted: see JD Merralls QC, The Rul e Against Perpetuiti es and H ow I t A pplies to Natur al Resources Agreements , [2007] AMPLA Yearbook 214-227.



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(b) The role of the Operating Committee is to supervise the Operator in themanagement of the Joint Venture and to make, subject to this agreement, allstrategic decisions relating to the conduct of Joint Operations, includingconsidering and approving any Proposed Programme and Budget and othermanagement plans, and any amendments to any Approved Programme andBudget and approved management plans.

(c) Unless the Participants otherwise agree by Unanimous Vote, the Participantwith the largest individual Participating Interest must appoint (and maydismiss) its representative to be chair of the Operating Committee. TheParticipant appointing the chair must cause the chair to preside at all meetingsof the Operating Committee.

(d) The Operator must appoint (and may dismiss) a person, who may be one of itsemployees, to be secretary of the Operating Committee. The Operator mustcause the secretary to prepare agendas for meetings, keep proper minutes of allmeetings and coordinate communications among the Participants regardingmeetings of the Operating Committee.

(e) For any meeting of the Operating Committee, a Participant may in writingappoint a person as an alternate representative for its representative and mayremove any person so appointed.

(f) At meetings of the Operating Committee each representative present must actsolely as representative of the Participant which appointed him or her but arepresentative may also represent the Operator at Operating Committeemeetings.

(g) Each representative has full power and authority to represent and bind theParticipant which appointed him or her in all matters decided by the OperatingCommittee, and the Participant is bound by all votes cast by its representative.

(h) If the Percentage Share of any Participant falls below the Minimum Interest:(i) that Participant is no longer entitled to have a representative on the

Operating Committee and may not vote individually at meetings of theOperating Committee; and

(ii) its vote may be taken into account only if added to the vote or votes ofanother Participant which holds more than the Minimum Interest and theParticipant appoints the other Participant in writing as its proxy prior tothe time of the vote.

(i) Any decision made by the Operating Committee under this agreement isdeemed to be a decision of all the Participants, and each Participant is bound as

if that decision was an agreement entered into by them.5.2 Functions of Operating Committee

Except as otherwise provided in this agreement, the Operating Committee may decideall matters relating to the conduct of Joint Operations, including:

(a) establishing policies from time to time covering Joint Operations;

(b) deciding on matters relating to:

(i) bids in relation to the acquisition of goods or services that will be usedin the carrying out of Joint Operations.

(ii) acquiring goods or services from persons that will be used in thecarrying out of Joint Operations;



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(iii) the allocation of contracts, arrangements or understandings to personssupplying goods or services that will be used in the carrying out ofJoint Operations; and

(iv) the price to be paid, or pricing formula to be applied, for goodsand services to be used in the carrying out of Joint Operations.

2

(c) approving cost overruns by the Operator under any Approved Programme andBudget; and

(d) appointing an Auditor.

5.3 Meetings of the Operating Committee

(a) All meetings of the Operating Committee must be held in the capital city of the Nominated State, unless otherwise agreed by the Participants and, in default of agreement, at the office of the Operator .

(b) The Operator must ensure that a meeting of the Operating Committee isconvened at least once each Year to approve a Proposed Programme andBudget for the next period and at least 1 additional meeting must be called bythe Operator or a Participant in each Year.

(c) The Operator must ensure that the secretary calls meetings and gives at least 15days prior written notice to the Operator and all Participants entitled to be

present specifying the nature of the business to be discussed and including alldocumentation required to be considered at the meeting. Meetings may be heldon less than 15 days notice if agreed in writing by all Participants entitled to be

present.

(d) Meetings may be convened in person, or by video meeting or conferencetelephone call at which all representatives of all Participants have theopportunity to be present. All persons participating in the video meeting or

conference telephone call must be able to hear each of the others.(e) If the existing chair of the Operating Committee is not present within 15

minutes after the time appointed for holding the meeting, the representatives present must elect one of themselves to be chair of the meeting.

(f) Each Participant must bear all expenses incurred by its representatives inattending meetings of the Operating Committee.

(g) A representative of the Operator must attend every meeting of the OperatingCommittee at the cost of the Participants, unless the Operating Committeeotherwise decides for a particular meeting or for a particular subject matter atany meeting.

5.4 Quorum

(a) A quorum for any meeting of the Operating Committee is present if therepresentative of each Non-Defaulting Participant is in attendance at suchmeeting.

(b) If a quorum is not present within 30 minutes from the time appointed for themeeting, the meeting must be adjourned to the same place, day and time in thenext week.

2 The need for a sub-clause along these lines has been necessitated by the passage of the Trade Practices Amendment (Cartel Conduct & Other Measures) Act 2009 on 24 July 2009. The scope and effect of these

provisions, especially as they apply to exploration joint ventures, is not yet clear. In any particular case, itis advisable for the draftsperson to check the current state of the law and practice before drafting.



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(c) If a quorum is not present at a reconvened meeting then, provided thereconvened meeting is conducted as a personal meeting (not by video ortelephone meeting) and all Participants were given at least 5 days notice of thereconvened meeting, the representatives present at the reconvened meeting aredeemed to constitute a quorum for the purposes of the business before thatmeeting.

5.5 Voting and decision making(a) On any resolution or at any meeting of the Operating Committee, a Participant

(other than a Defaulting Participant) may cast, through its representative, thenumber of votes equal to its Percentage Share.

(b) At meetings of the Operating Committee, the Operator or its representative isnot entitled to vote, and the chair does not have a second or casting vote.

(c) Unless otherwise specified in this agreement or in Schedule 1, all decisions ofthe Operating Committee must be determined by Majority Vote. A decisionspecified in Schedule 1 must be made by Unanimous Vote.

(d) A record of the votes of each Participant shall be made and signed by therepresentatives on behalf of the Participants prior to the end of any meeting.

(e) A resolution in writing (which may consist of one or several documents in thesame terms) signed by at least one representative of each of the Participants orapproved by facsimile or by authenticated email transmitted by at least onerepresentative of each Participant and subsequently confirmed in writing is asvalid and effectual as if it had been passed at a duly convened meeting of theOperating Committee.

5.6 Minutes

A copy of the minutes of each Operating Committee meeting must be given to each

Participant as soon as practicable, but no later than 14 days, after each meeting. Theminutes of a meeting must be submitted for approval at the next meeting held after that14 day period and, if approved, must be signed by the chair of the later meeting andwhen signed are evidence of the proceedings and the decisions of the meeting to whichthey relate. The Operator may act on any matter approved by the Operating Committeenotwithstanding that the minutes have not been approved.

5.7 Sub-committees

The Operating Committee may at any time create sub-committees (comprising such persons as the Operating Committee thinks fit) to consider and report back to theOperating Committee on any particular issues relating to Joint Operations.

5.8 Loss of rights of participation and votingUnless otherwise agreed by all Non-Defaulting Participants, a Defaulting Participant(through its representative and alternate) is entitled to receive the agenda, meeting

papers and minutes of meetings, but is not entitled to call, attend or to vote at anymeeting of the Operating Committee or any subcommittee formed under thisagreement or join in voting on a resolution, nor will the presence of the representativeof any such Participant be necessary to form a quorum at any meeting, until therelevant Default Event has been remedied.

6 Operator 6.1 Appointment of Operator

The Participants severally appoint the Operator to be the operator of the Joint Ventureand agent of the Participants for the purposes of this agreement from the



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Commencement Date, and the Operator accepts that appointment, on and subject to the provisions of this agreement.

6.2 Term of appointment of Operator

The appointment of the Operator continues:

(a) until this agreement is terminated for any reason;

(b) until the Operator resigns, having given at least 180 days notice to theParticipants of its intention to resign as Operator;

(c) if the largest Participating Interest is no longer held by the Operator, until theOperating Committee determines if and when a new Operator should beappointed; or

(d) until the Operator commits a Breach Default Event and fails to remedy thedefault within 60 days of receipt of a written notice of default served by aParticipant.

6.3 Remuneration of the Operator

(a) In consideration of the performance by the Operator of its obligations under thisagreement, each Participant must pay the Operator its Percentage Share of theOperator Charge payable as part of a Cash Call.

(b) The Operator Charge may be varied by the Operating Committee byUnanimous Vote.

(c) It is intended that the Operator will neither gain nor suffer a loss as a result ofacting as Operator in the conduct of Joint Operations.

6.4 Appointment of new Operator

(a) Upon the termination of the appointment of the Operator, the Participants must promptly appoint a new Operator under the terms of this agreement, if thisagreement is not otherwise terminated.

(b) The Participants must not reappoint a Operator removed for default orfollowing an Insolvency Event of the Operator.

(c) If a new Operator cannot be appointed and act immediately, the Participantholding the largest Participating Interest must act as interim operator until thenew Operator is appointed and commences its duties.

(d) Upon the new or interim Operator commencing its duties, the previousOperator must immediately deliver to the new or interim Operator all JointVenture Property and all documents, books, records and accounts relating tothe Joint Venture held by it or under its control.

(e) If title to any Joint Venture Property is held in the name of the previousOperator, it must promptly transfer such title to the new or interim Operator atthe cost of the Joint Venture.

6.5 Liability of Operator

Except as a Participant to the extent of its Percentage Share, the Operator is not liableto the Participants for any loss sustained or liability incurred in connection with theJoint Venture, even if arising from the negligence of the Operator or any person forwhom the Operator may be vicariously liable, except where, in the circumstances of the

particular case, the Operator (or that person) has committed fraud or Wilful

Misconduct.



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6.6 Full indemnity of Operator by Participants

Each Participant severally, to the extent of its Percentage Share, must indemnify andhold harmless the Operator, its Affiliates and their directors, employees and agents(Indemnified Persons ) from and against all damage, loss, expense or liability of anynature suffered or incurred by the Indemnified Persons (including any claims made byThird Parties) in connection with Joint Operations, including any personal injury,

disease, illness or death, or physical loss of or damage to property, of the IndemnifiedPersons or any Third Party, except, in respect of an Indemnified Person, where thatIndemnified Person has committed fraud or Wilful Misconduct.

6.7 Limited indemnity by Operator of Participants

The Operator must indemnify and hold harmless the Participants, its Affiliates and theirrespective directors, employees and agents ( JV Indemnified Persons ) from andagainst all damage, loss, expense or liability of any nature suffered or incurred by theJV Indemnified Persons (including any claims made by Third Parties) in connectionwith its management of Joint Operations while it is the Operator, including any

personal injury, disease, illness or death, or physical loss of or damage to property, of

the JV Indemnified Persons or any Third Party, caused by the fraud or WilfulMisconduct of the Operator, its directors, employees and agents.

7 Functions, powers and duties of Operator 7.1 Functions of the Operator

The Operator reports to the Operating Committee and must under the overallsupervision and control of the Operating Committee:

(a) by itself or through its employees, agents or contractors manage, direct andcontrol Joint Operations as agent for and on behalf of the Participants;

(b) exercise and discharge its powers and duties under this agreement inaccordance with Approved Programmes and Budgets and decisions made bythe Operating Committee;

(c) conduct Joint Operations in a good, workmanlike and commercially reasonablemanner in accordance with Good Australian Oilfield Practice;

(d) represent the Joint Venture in all dealings with all Authorities in respect of JointOperations and the Petroleum Titles, provided that each Participant may dealwith an Authority in matters affecting its own Participating Interest;

(e) report to the Operating Committee at the places and times determined by theOperating Committee;

(f) report to the Participants as soon as reasonably practicable on all JointOperations including all well and reservoir reports (to the extent charged to the Joint Account) agreed to be provided by the Operator; and

(g) act in utmost good faith in all its dealings, as Operator, with each Participant.

7.2 Rights, powers and duties of Operator

In the course of managing, supervising and conducting Joint Operations, the Operatoris entitled to have possession and control of all Joint Venture Property and must, eitheritself or through such third parties as it may engage:

(a) (Proposed Programmes and Budgets) prepare and submit to the Operating Committee for approval all Proposed Programmes and Budgets required toimplement any Joint Operations and other management plans so as to comply withall applicable Laws and Authorisations, and all amendments and variations



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to any Approved Programme and Budget;

(b) (Approved Programmes and Budgets) carry out effectively and efficiently the work required to implement all Approved Programmes and Budgetsincluding for such purpose, if required by the Operating Committee, engagingin any conduct described in the definition of "cartel provision" in section44ZZRD of the Australian Competition and Consumer Act 2010 ;

(c) (tenders and contracts) obtain, evaluate and accept competitive quotes and tenders (within the limits determined by the Operating Committee), and enterinto, administer and enforce, as agent of the Participants, all contracts requiredfor the performance of works and services necessary to perform this agreementand undertake Joint Operations;

(d) (personnel) engage, dismiss, supervise and control all management, technical and labour personnel necessary for performance of its obligations under thisagreement including determining the terms and conditions of such engagementand conducting all industrial relations;

(e) (payment and bank accounts) pay on behalf of the Participants out of funds provided by the Participants all costs and expenses incurred by the Operator in theconduct of Joint Operations and for such purpose open, maintain and operate oneor more separate bank accounts (within which its own funds are not commingled)on behalf of the Participants for the purposes of the Joint Venture;

(f) (Laws and Authorisations) comply with all Laws and Authorisations applicable to the conduct of Joint Operations, including those relating to health,safety, environmental protection, rehabilitation and abandonment, and ensurethat all Authorisations required to conduct Joint Operations are applied for,obtained and maintained;

(g) (Petroleum Titles) keep and renew those Petroleum Titles in good standing (including paying all rents, taxes, expenditures and other outgoings by the DueDate), and manage, administer, protect and enforce the rights and obligations ofthe holders under the Petroleum Titles;

(h) (Security Bonds) facilitate the provision by the Participants of any Security reasonably required for the performance of the Participants' obligations underany Petroleum Title, lease, contract, service agreement or other agreementauthorised by the Operating Committee;

(i) (statutory reports ) prepare, file and lodge all statutory reports as and whenrequired under the Act and any other applicable Laws in respect of the TitleArea (other than reports, such as royalty reports, required to be submitted bythe Participants in their individual capacities as Participants);

(j) (native title) act as the Participants representative in respect of Native Title Rights and Aboriginal heritage issues, negotiate and enter into agreements withany native title holder (as that term is defined in section 224 of the Native Title

Act 1993 (Cth)), any representative Aboriginal or Torres Strait Islander body (as that term is defined in section 253 of the Native Title Act 1993 (Cth)), andthe parties to Native Title Claims and in all other respects deal with issues ofthis kind as and when they arise, provided that the Operator may not recogniseany Native Title Rights or agree or settle any Native Title Claims, without the

prior approval of the Operating Committee;

(k) (insurances) effect and maintain all insurances appropriate in relation to Joint Venture Property and Joint Operations, or as required by Law, and anyadditional insurances which the Operating Committee requires to be effected,



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provided that the Operator must wherever possible procure that all suchinsurances include a provision that the insurer has no right of subrogationagainst any Participant or the Operator and that the Participants and Operatorare to be named, to the extent of their interests, on each policy of insurance;

(l) (insurance certificates) if requested, provide full details to a Participant of all insurances effected by the Operator under this agreement, including certificatesof currency;

(m) (no Encumbrances) keep the Joint Venture Property free and clear of all Encumbrances, except for those Encumbrances specifically permitted underthis agreement, or approved by the Operating Committee, or existing at thetime of, or created concurrent with, the acquisition of such Joint VentureProperty, or liens arising in the ordinary course of business which the Operatormust arrange to be released or discharged in a diligent manner;

(n) (litigation) institute, defend, compromise or settle any court or arbitration proceedings or insurance claims commenced or threatened by or against theOperator or a Participant affecting or relating to Joint Operations or Joint

Venture Property, provided that:(i) unless otherwise instructed by a Participant, the Operator may conduct

such proceedings or claims for and on behalf of and in the name of eachParticipant;

(ii) the Operator must regularly report to the Participants the conduct of suchcommenced or threatened proceedings and claims, including any

proceedings and claims related to environmental impacts, and keep theParticipants informed of the progress of such proceedings and claims; and

(iii) the Operator may not institute, compromise or settle any court orarbitration proceedings or insurance claims exceeding an amount

determined by the Operating Committee without the prior approval of theOperating Committee;

(o) (emergencies) take such action as the Operator may consider necessary or advisable to prevent or respond to an Emergency;

(p) (GST) act as the Participants representative for the purposes of seeking registration of the Joint Venture as a GST joint venture under the GST Act andmanage, administer and enforce the rights and obligations of the Participantsunder such GST joint venture; and

(q) (cartel exception) in accordance with any direction of the Operating Committee, and as agent for the Participants:

(i) bid for and acquire goods and services to be used in Joint Operationsincluding making such bids, on such terms and paying such prices, as theOperating Committee may direct;

(ii) select the persons from whom goods or services to be used in JointOperations will be acquired, including selecting any person whom theOperating Committee may direct;

(iii) allocate contracts, arrangements or understandings to persons supplyinggoods or services to be used in Joint Operations, including making anyallocation which the Operating Committee may direct;

3 and

3 See footnote 2 above AMPLA Model Petroleum Exploration JOA, EXPOSURE DRAFT, 01.09.2011 18


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(r) (other incidental) do all other acts and things that are reasonably necessary or desirable to fulfil its functions or are incidental to its powers and duties.

7.3 Maintenance of the Joint Account

(a) The Operator must maintain the Joint Account and the Joint Venture Propertyon behalf of the Participants in their Participating Interests.

(b) The Operator must make available to any Participant on request copies of theaccounting procedures, expenditure classifications and reporting formatsunderlying the Joint Account.

(c) The Operator must retain all receipts, vouchers and other documents relating toJoint Expenditure until directed otherwise by the Operating Committee.

7.4 Limitations on Operators obligations

Notwithstanding anything to the contrary elsewhere in this agreement, the performance by the Operator of its obligations under this agreement is subject to the Operator being provided with sufficient funds by the Participants to enable the Operator to performthose obligations.

7.5 Operator may delegate

The Operator may delegate to a Third Party, including an Affiliate, any of its rights,remedies, powers, discretions and obligations, provided that:

(a) the Operator may only delegate the whole of its rights, remedies, powers,discretions and obligations with the approval of the Operating Committee;

(b) any delegation does not relieve the Operator of any of its obligations orresponsibilities under this agreement;

(c) the Operator informs the Operating Committee at its next meeting of theidentity of the delegate and the matter which has been delegated; and

(d) the delegation is at no additional cost to the Participants.

7.6 Agreement with an Affiliate or a Related Entity

The Operator may not enter into an agreement with a Participant or an Affiliate or aRelated Entity of a Participant or the Operator for the supply of goods or services or

both under this agreement unless the proposed agreement is on terms and conditionswhich are no less favourable to the Participants than an arms length commercialagreement with a Third Party supplier, and the proposed agreement is approved by theOperating Committee.

7.7 Litigation

(a) A Participant has the right to participate separately, at its own expense, inlitigation or administrative proceedings initiated by the Operator on behalf ofthe Participants.

(b) If a Participant elects to participate separately in litigation, that Participant:

(i) is considered to have a divergent interest to the other Participants and isnot entitled to continue to receive reports or legally privileged material

prepared or supplied by the Operator in relation to that litigation; and

(ii) is not entitled to require external lawyers appointed by the Operator tocease to act on the basis of a former client conflict of interest.

7.8 Trades

(a) The Operator may, with approval of the Operating Committee, make well



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Property in good condition; and

(ii) perform and discharge all its existing obligations as Operator under thisagreement, the Act, the Petroleum Titles or to Third Parties or otherwise;and

all costs and expenses incurred by the Operator in maintaining the Petroleum

Titles and performing and discharging all its existing obligations is JointExpenditure and each Participant must pay its Percentage Share of those costsand expenses as a Cash Call when due when an AFE is delivered by theOperator.

8.3 AFEs

(a) On or before the 10 th day of each month (or such other date or period as theOperating Committee directs), the Operator must, and may at any other time,

before entering into any commitment or incurring any Joint Expenditure underan Approved Programme and Budget, submit an AFE for approval by theOperating Committee by Majority Vote, unless this agreement expressly

provides otherwise.

(b) In preparing an AFE for the drilling, testing or logging of a well, the Operatormust compile the AFE:

(i) for the drilling of an Exploration Well on a dry hole basis includingcontingencies; and

(ii) for the drilling of any other well on a case and suspend basis.

(c) Each AFE must:

(i) describe the work in detail and outline the proposed work programme;

(ii) identify the operation by specific reference to the applicable line items in

the Approved Programme and Budget;(iii) contain the Operators best estimate of the total funds, including charges

and credits, required to carry out the proposed work and provide atimetable of expenditures, if known;

(iv) be accompanied by such other supporting information as is necessary foran informed decision;

(v) specify the amount due and payable by each Participant; and

(vi) include the amount paid cumulatively by each Participant to date for thecurrent Year.

(d) Each Participant must:(i) within 24 hours of receipt of an AFE reasonably designated by the

Operator to require by its nature an urgent response; and

(ii) within 14 days in the case of receipt all other AFEs,

notify the Operator and the other Participants whether it approves of the AFEor not.

(e) A Participant is deemed to approve an AFE if it does not communicate itsdisapproval to the Operator:

(i) within 24 hours of receipt of the AFE by the Participant in respect of an AFE

designated by the Operator as urgent; or(ii) otherwise within 14 days of receipt of the AFE by the Participant. ..



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(f) If the Operating Committee approves an AFE for proposed Joint Operations:

(i) each Participant must pay its respective Percentage Share of the AFE tothe Operator in accordance with this agreement; and

(ii) the Operator is authorized to conduct the approved Joint Operation underthe terms of this agreement.

(g) If the Operating Committee fails to approve an AFE for the proposed JointOperation within the applicable time period, the operation is deemed rejected.

(h) The Operator must promptly notify the Participant if the proposed JointOperation has been rejected, and any Participant may thereafter propose toconduct the operation as a Sole Risk Operation under this agreement.

8.4 Joint Expenditure not covered by Programme and Budget

(a) The Operator must not undertake any Joint Operations which are notsubstantially in accordance with an Approved Programme and Budget except:

(i) in case of an Emergency, the Operator may make such immediateexpenditure as the Operator deems necessary for the protection of life or

property including the Joint Venture Property, in which case the Operatormust promptly notify the Participants of such expenditure; or

(ii) if the Operator expects there will be a cost overrun in carrying out anApproved Programme which cannot be avoided by Good AustralianOilfield Practice, the Operator may exceed a current Approved Budget bynot more than 10%; or

(iii) if otherwise permitted by this agreement or the Operating Committee.

(b) The Operator must report to the Participants as soon as reasonably practicableany unbudgeted expenditure incurred by the Operator for whatever reason.

8.5 Payment of Cash Calls(a) Approval of an AFE constitutes authority for the Operator to issue Cash Calls

to the Participants in respect of that expenditure. A Cash Call must include anestimate of the cash requirement for each of the next ensuing 3 months andinclude a cost break-up of the main expenditure components.

(b) A Participant must pay each Cash Call to the Operator within 7 days ofapproval of an AFE. If a Participant is late in paying a Cash Call, theParticipant must pay with interest on the late payment calculated from the duedate to date of payment at the Agreed Interest Rate in the next Cash Call

payable by it.

(c) The payment of any Cash Call or other monies under this agreement is without prejudice to the right of a Participant to later contest the payment.

(d) All payments must be in the currency determined by the Operator and made toa bank account in Australia nominated by the Operator.

9 Completion, discovery and appraisal 9.1 Well Completion

(a) When an Exploration Well or an Appraisal Well has reached its authorizeddepth, all logs, cores and other approved tests have been conducted and theresults furnished to the Participants, the Operator must submit to theParticipants an election to Complete such well and plug and abandon it, or caseit as a producing well ( Casing Point Election ). Such submission must include



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the Operators recommendation concerning the Casing Point Election and anAFE for the Completion costs.

(b) If the Operating Committee approves the casing and suspension of a well, theOperator is authorised to case and suspend the well as if such work, and its

proposed cost, had been approved as part of an Approved Programme andBudget.

(c) If the Operating Committee decides to plug and abandon the well but less thanall the Participants vote to plug and abandon the well, the Operator must notifythe Participants of the result of the vote and any Participant which voted for thecasing and suspension of the well rather than the plugging and abandonment ofthe well, has 24 hours to make Sole Risk Proposal in respect of that well. If noSole Risk Proposal is made within the 24 hour period, the Operator must plugand abandon the well.

9.2 Discovery and appraisal

(a) If a Discovery is made during the drilling of a well, the Operator must givenotice of Discovery required under the Act and the Petroleum Title and as soonas possible submit to the Participants a report containing available details of theDiscovery and the Oper ators recommendation as to whether the Discoverymerits appraisal.

(b) If the Operating Committee determines that the Discovery merits appraisal, theOperator must within 90 days deliver to the Participants a Proposed Programmeand Budget for appraisal of the Discovery. Within 30 days of such delivery, orearlier if necessary to meet any applicable deadline under the Petroleum Title,the Operating Committee must meet to consider, modify and either approve orreject the Proposed Appraisal Programme and Budget.

(c) If the Operating Committee approves the Appraisal Programme and Budget,

the Operator must secure all Authorisations required for the AppraisalProgramme and Budget as soon as possible. If an Authority requires changes toan Appraisal Programme and Budget, the matter must be resubmitted to theOperating Committee for further consideration.

9.3 Proposals for development

(a) The Operator or any Participant may propose to the Operating Committee thatthe Joint Venture undertake development of one or more pools of a Discoveryin a defined area of the Petroleum Titles ( Development Proposal ).

(b) If the Operating Committee decides by Majority Vote to accept theDevelopment Proposal and makes a final investment decision ( FID ) to

undertake the proposed development, each Participant must participate in anapplication for a production lease or licence over the Exploitation Area, andthe Participants which voted to proceed with the Development Proposal(Proceeding Participants) are deemed forthwith to be parties to a separatedevelopment and production joint venture agreement over the ExploitationArea on the same terms and conditions as the then current AMPLA Model Petroleum Joint Operating Agreement , with such modifications as the Proceeding Participants may agree, including:

(i) provisions dealing with development, financing the development,rehabilitation and abandonment;

(ii) provisions dealing with disposition of the Petroleum produced by theJoint Venture;



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(iii) the execution of cross securities in the form of the then current AMPLAModel Cross Security ; and

(iv) the Operator Charge to be payable to the Operator during developmentand production operations,

(c) If a FID is made by Majority Vote, a Participant which did not vote for theDevelopment Proposal ( Non-Proceeding Participant ):

(i) is deemed to have offered to sell its Participating Interest in theExploitation Area to the Proceeding Participants; and

(ii) within 30 days from the date the Majority Vote was passed theProceeding Participants may elect to acquire, and the Non-ProceedingParticipant must sell and transfer, such Participating Interest (and ifmore than one, in proportion to their Percentage Shares or in such other

proportions as they may agree in writing);

at a value agreed within the 30 day period or, failing agreement, at its marketvalue at that date as determined by an Expert appointed under this agreement,

who must make such determination within 30 days of his or her appointment.If all the Participating Interest of the Non-Proceeding Participant in theExploitation Area is not acquired by the Proceeding Participants, nodevelopment may proceed under that Development Proposal.

(d) Upon completion of the transfer of all the Non- Proceeding ParticipantsParticipating Interests in the Exploitation Area:

(i) the Exploitation Area is held by the Participants on trust for and at theexpense of the Proceeding Participants as beneficial owners; and

(ii) the Non-Proceeding Participants cease to have any beneficial rightswith respect to the Development Proposal or the Exploitation Area.

(e) If no Participant votes for the Development Proposal within the required period then the Development Proposal will not proceed, but this does not prevent a further proposal for development and production being latersubmitted to the Operating Committee for approval.

(f) The area of the Petroleum Titles (if any) outside an Exploitation Area remains subject to this agreement.

10 Accounts, reports, audit and access 10.1 Joint Venture accounting

(a) The Operator must maintain separate books, accounts and records for the JointVenture of Joint Expenditure in accordance with the Accounting Procedure andgenerally accepted accounting principles adopted from time to time by theInstitute of Chartered Accountants in Australia, consistently applied.

(b) The Operator must develop and provide to the Participants standard accounting procedures, expenditure classifications and reporting formats as appropriate tothe Joint Venture to satisfy the requirements of the Operating Committee andthe Auditor.

10.2 Reports to Participants

The Operator must keep the Participants informed of all Joint Operations by submittingin writing to the Participants:

(a) within one month of the end of each quarter as determined by the OperatingCommittee, quarterly progress reports which include statements of Joint



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Expenditure and comparisons of such expenditures to the Approved Programmeand Budget, including quarterly summaries of data acquired;

(b) within one month of the end of each Year or other relevant period, a detailedfinal report after completion of each Approved Programme and Budget, whichmust include comparisons between actual and budgeted Joint Expenditure;

(c) whether as part of the ot

Documents

Ampla Mpejoa - Exposure Draft