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EXHIBIT 10.81
FIRST AMENDMENT TO THE PRODUCTION SHARING CONTRACT FOR
BLOCK F, OFFSHORE REPUBLIC OF EQUATORIAL GUINEA
This First Amendment to the Production Sharing Contract for Block F, offshore
Republic of Equatorial Guinea (this "Amendment") is entered into in Malabo,
Republic of Equatorial Guinea, as of the 1st day of January, 2000 (the "First
Amendment Date"), between Triton Equatorial Guinea, Inc., a Cayman Islands
company ("Triton"), Energy Africa Equatorial Guinea Limited, an Isle of Man
company ("Energy Africa"), and the Republic of Equatorial Guinea (the "STATE")
represented by the Ministry of Mines and Energy (the "MINISTRY"). Triton and
Energy Africa are hereinafter collectively referred to as the "CONTRACTOR" and
the CONTRACTOR and the STATE are sometimes, depending on the context hereinafter
individually referred to as a "Party" and collectively as the "Parties."
WHEREAS, Triton and the STATE entered into the Production Sharing Contract
covering Block F, offshore Republic of Equatorial Guinea, on March 26, 1997,
effective as of April 14, 1997;
WHEREAS, the Ministry at the request of Triton by a letter dated 29 September,
1998 granted a twelve month (12) extension to the first subperiod of the Initial
Exploration Period in Section 4.3(a) of the Production Sharing Contract (with
said extension, the "Contract");
WHEREAS, with the approval of the STATE, Triton assigned a fifteen percent (15%)
interest in its rights and obligations in the Contract to Energy Africa as of
June 1, 1999, so that currently Triton holds an eighty-five percent (85%)
interest and Energy Africa holds a fifteen percent (15%) interest in the
Contract; and
WHEREAS, at the request of the STATE, the Parties agreed to modify the Contract
for the purposes of aligning certain terms thereof with the revenue allocation
mechanisms for Production Sharing Contracts recently adopted by the STATE as
reflected in a Memorandum of Understanding between the Parties dated December 7,
1999 ("MOU").
NOW THEREFORE, in consideration of the terms and conditions set forth herein,
the Parties hereby agree as follows:
ARTICLE 1
SCOPE
Except as modified herein, the terms of the Contract shall remain valid and in
full force and effect.
ARTICLE 2
DEFINITIONS
The terms and phrases defined in the Contract and used herein shall have the
same meaning as in the Contract unless the context herein otherwise provides.
Section 1.2 (Definitions) of the Contract is amended as follows:
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2.1 Section 1.2(v) is deleted and replaced with the following: "Effective
Date means April 14, 1997."
2.2 Section 1.2(z) (definition of Royalty) of the Contract is deleted and
replaced with the following:
"Royalty means for each Field, the right of the State to a percentage
of the Crude Oil and Natural Gas produced, saved, sold and not
otherwise utilized in Petroleum Operations that is calculated based on
the daily production rate as reflected below:
Rates of Daily
Production of Field Royalty Per Tranche
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(calculated on an incremental basis of Crude Oil)
From 0 to 30,000 Barrels 11%
Above 30,000 to 60,000 Barrels 12%
Above 60,000 to 80,000 Barrels 14%
Above 80,000 to 100,000 Barrels 15%
More than 100,000 Barrels 16%
and ten percent (10%) of all the Natural Gas in each Field produced,
saved, sold and not otherwise utilized in Petroleum Operations."
2.3 The following definitions shall be added to Section 1.2 of the
Contract.
"(ah) First Amendment Date means January 1, 2000."
"(ai) LIBOR means the rate of interest known as the London Interbank
Offered Rate on one year U.S. dollar deposits as published by the
Financial Times (London) . If the Financial Times does not publish the
said rate during seven (7) consecutive working days, the rate published
by the Wall Street Journal shall apply. If neither of these two rates
are published, the Parties will mutually agree upon the rate to apply."
ARTICLE 3
RECOVERY OF PETROLEUM OPERATING COSTS
AND SHARING OF PRODUCTION
3.1 Sections 7.2 through 7.4 of the Contract shall be deleted and replaced
with the following:
"7.2 After making Royalty payments to the STATE in accordance with
the provisions of Section 6.1(n) of this Contract, CONTRACTOR
shall be entitled to recover the totality of the Petroleum
Operations Expenditures relating to a Field out of seventy
percent (70%) of the remaining sales proceeds or other
distribution of Crude Oil produced and saved hereunder and not
used in Petroleum Operations from such Field.
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It is expressly understood that the Exploration Expenditures
incurred by CONTRACTOR during any Calendar Year not
attributable to a particular Field and included in the Work
Program and Budget of Expenditures approved by the MINISTRY
for said year shall be recoverable against the production from
any Field in the Contract Area with priority given to the last
discovered Field.
The Petroleum Operation Expenditures attributable to a
determined Field not recoverable by CONTRACTOR, because the
insufficiency of available Crude Oil in said Field, shall not
be transferable nor recoverable from another Field, but such
Expenditures shall be deductible from income for purposes of
calculating CONTRACTOR's Income Tax."
"7.3 After payment of the Royalty to the STATE and the portion
allocated to CONTRACTOR for the recovery of recoverable
Petroleum Operation Expenditures by the CONTRACTOR, the
remaining Crude Oil produced, saved and sold from a particular
Field and not used in Petroleum Operations shall be referred
to as "Net Crude Oil".
"7.4 The percentage of Net Crude Oil to which the STATE and
CONTRACTOR are entitled in a particular Field will be
triggered when the cumulative Crude Oil production produced,
saved and sold from such Field reaches the corresponding
tranche shown below:
Cumulative Production STATE Share of CONTRACTOR Share of
Levels of Field Net Crude Oil Net Crude Oil
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From 0 to 200 MMBO 20% 80%
Above 200 to 350 MMBO 30% 70%
Above 350 to 450 MMBO 40% 60%
Above 450 to 550 MMBO 50% 50%
More than 550 MMBO 60% 40%"
MMBO means one million Barrels of Crude Oil."
3.2 In the first sentence of Section 8.1(b) of the Contract delete "Except
for the Royalty,".
3.3 Article II, paragraph 2(h) of Annex "C" (Accounting Procedure) to the
Contract is hereby deleted and replaced with:
"(h) The full amount of interest on loans shall be considered
deductible non-capital expenditures for purposes of the Income Tax;
however, such interest, prior to the First Amendment Date, shall be
recoverable to a maximum of three percent (3%). As of the First
Amendment Date such interest shall be recoverable to a maximum of LIBOR
plus four (4%) percentage points."
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3.4 A new paragraph 2(i) to Article II in Annex "C" (Accounting Procedure)
to the Contract will be added as follows:
"(i) Expenses of the MINISTRY personnel working on full-time basis in
CONTRACTOR's home office or other principal office or on temporary
assignment to such offices."
3.5 Article III, paragraph 3 of Annex "C" (Accounting Procedure) to the
Contract is amended as of the First Amendment Date by deleting the
first sentence and replacing it with the following:
"All interest on loans obtained by an entity comprising part of the
CONTRACTOR other than the STATE shall be considered deductible;
however, such interest will be recoverable only as permitted in Article
II.2(h) of this Annex "C"."
ARTICLE 4
PRODUCTION BONUSES
4.1 Sections 9.2 and 9.3 of the Contract shall be deleted and replaced with
the following:
"9.2 On the date of declaration of a Commercial Discovery with
respect to a Field, the CONTRACTOR shall pay the STATE the sum
of Seven Hundred Fifty Thousand United States Dollars (U.S.
$750,000). Such payment will not be cost recoverable."
"9.3 CONTRACTOR shall pay the STATE a one-time payment of Three
Million United States Dollars (U.S. $3,000,000) after daily
production from a Field averages for the first time thirty
thousand (30,000) Barrels per day for a period of sixty (60)
consecutive calendar days; CONTRACTOR shall make a further
one-time payment to the STATE of Three Million United States
Dollars (U.S. $3,000,000) after daily production from a Field
averages for the first time sixty thousand (60,000) Barrels
per day for a period of sixty (60) consecutive calendar days.
CONTRACTOR shall make an additional one-time payment to the
STATE of Four Million United States Dollars (U.S. $4,000,000)
after daily production from a Field averages for the first
time one hundred thousand (100,000) Barrels per day for a
period of sixty (60) consecutive calendar days.
All payments under this Section 9.3 shall be made within
thirty (30) calendar days following the last day of the
respective sixty (60) calendar day period and will be cost
recoverable."
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ARTICLE 5
ASSIGNMENT AND TRANSFER OF INTEREST
Sections 6.1(e) and 6.1(f) of the Contract shall be deleted and replaced with
the following:
"(e) have the right, with prior notification to the MINISTRY, to
sell, assign, transfer, convey or dispose of any part or all
of the rights and interests and obligations under this
Contract or in any Field in the Contract Area to any
Affiliated Company;"
"(f) have the right to sell, assign, transfer, convey or dispose of
all or any part of its rights and interests and obligations
under this Contract or in any Field in the Contract Area to
parties other than Affiliated Companies with the prior consent
of the MINISTRY, which consent shall not be unreasonably
withheld, and shall be deemed granted if the MINISTRY does not
respond to such entity within sixty (60) calendar days of the
date of confirmed receipt by the Ministry of the request for
its consent.
The gain, taxable profit or appreciation realized from any
transfer, sale or assignment shall be taxed in accordance with
the tax legislation and regulations in effect in the Republic
of Equatorial Guinea on the Effective Date. However, when said
transfers, sales or assignments by Triton Equatorial Guinea,
Inc. or Energy Africa Equatorial Guinea Limited or their
respective Affiliated Companies, as the transferor, involve a
cash consideration, then the gain, taxable profit or
appreciation realized from such transfer, sale or assignment
shall be taxed at a rate of fifteen percent (15%) payable by
the transferor;"
ARTICLE 6
TAXATION
6.1 Section 6.1(m) of the Contract shall be deleted and replaced with the
following language:
"(m) pay to the STATE the corresponding income taxes in
accordance with the Tax Law subject to the terms of Sections
6.1(f), 6.2(a) and 16.3 of this Contract as it is amended;"
6.2 A new paragraph 3 shall be added to Section 16 as follows:
"16.3 The STATE guarantees the stability of this Contract's fiscal
terms during the term of the Contract. Nevertheless, in the event of a
change in the currently existing tax conditions as of the Effective
Date in Equatorial Guinea or the sub-region of Central African Economic
and Monetary Community ("CEMAC"), then the Parties shall at the written
request of one Party meet promptly to resolve any imbalance resulting
from such changes.
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If the Parties are unable to reach a resolution within a period of six
(6) months from the date a Party first requests such resolution, the
arbitration and consultation provisions of Section XIII of this
Contract shall apply, whereby the arbitrators shall determine an
adjustment of the production share as determined under Section 7 of
this Contract to resolve the imbalance."
ARTICLE 7
OPERATIONS
7.1 Section 2.7 of the Contract shall be deleted and replaced with the
following language:
"2.7 This Contract will continue in existence with respect to each
Field for a period of thirty (30) years with respect to Crude Oil and
for forty (40) years with respect to Natural Gas starting from the date
the MINISTRY approves CONTRACTOR'S report or said report is considered
as approved, in accordance with the provisions of Section 2.6, and
CONTRACTOR receives approval from the MINISTRY.
In case of new Commercial Discoveries that underlie or overlie, in
whole or in part, the area of an existing Field or any extension
thereof, such new Commercial Discoveries together with such Field will,
subject to Section 2.6(a) of this Contract, constitute only one Field
subject to the following:
(a) The redefinition of any area of development of a Field shall
always be subject to the submittal by CONTRACTOR to the
MINISTRY of pertinent relevant technical evidence that
warrants said redefinition, the approval of which shall not be
unreasonably denied by the MINISTRY.
(b) In the case of any new Commercial Discovery which, at the time
of its being determined by the CONTRACTOR pursuant to Section
2.5 of this Contract to be a Commercial Discovery, underlies
or overlies, in whole or in part, the area of development of
an existing Field as it may by that time have been extended
pursuant to Section 2.6(a) of this Contract, shall be treated
as an integral part of such existing Field which will be
defined or redefined as may be necessary to incorporate all of
such new underlying and overlying Commercial Discoveries.
(c) In the case of any new Commercial Discovery which, at the time
of its being determined by the Contractor pursuant to Section
2.5 of this Contract to be a Commercial Discovery, does not
underlie or overlie, in whole or in part, the area of
development of an existing Field as it may by that time have
been extended pursuant to Section 2.6(a) of this Contract,
such new Commercial Discovery shall constitute a separate
Field.
(d) In the event of subsequent extensions to the area of any such
new Commercial Discovery as referred to in Section 2.7(c) as a
separate Field extending into an area overlying or underlying
an area of development of another Field, such subsequent
extensions shall not affect the new Commercial Discovery's
status as a separate Field.
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The provisions of Section 2.6 shall apply mutatis mutandis to any such
new Commercial Discovery."
7.2 Section 4.7 of the Contract is hereby amended by inserting language at
the end of this Section as follows:
"The Parties recognize that the results acquired as Petroleum
Operations advance or that certain changes of circumstances may justify
changes to the Work Program and Budget of Petroleum Operations
Expenditures. Under such circumstances, CONTRACTOR will submit a
revision to the approved Work Program and Budget for that Calendar Year
to the MINISTRY for approval in accordance with the terms of Section
4.6 of this Contract. Such approval will not be unreasonably withheld.
Upon approval as provided in Section 4.6 of this Contract by the
MINISTRY of such revision to the relevant Work Program and Budget, the
expenditures made by CONTRACTOR in relation to such revised Budget will
be considered Petroleum Operation Expenditures. Notwithstanding the
foregoing, CONTRACTOR's expenditures up to ten percent (10%) above the
total of the approved Budget amount (as may be revised and approved
from time to time) for said Calendar Year will be recoverable Petroleum
Operations Expenditures. CONTRACTOR's expenditures that exceed ten
percent (10%) above total of the approved Budget (as revised and
approved) will not be recoverable or deductible from income for
purposes of calculating CONTRACTOR's Income Tax."
ARTICLE 8
RIGHTS AND OBLIGATIONS OF THE PARTIES; TRAINING
8.1 As of the First Amendment Date, Section 6.1(j) of the Contract shall be
deleted and replaced by the following:
"(j) as of the First Amendment Date, include in the Annual Work
Program and Budget of Petroleum Operations Expenditures the
sum of Two Hundred Fifty Thousand United States Dollars (U.S.
$250,000) to be spent on (i) training personnel of the
MINISTRY and citizens of the Republic of Equatorial Guinea,
who are not personnel of CONTRACTOR at such time, for
professional, skilled and technical jobs in Petroleum
Operations or (ii) for all costs related to attendance at
professional or industry conferences, institutes or similar
events, whether regional or international, for the enhancement
of the knowledge or the skills of such persons or the
promotion of the oil and gas industry of the Republic of
Equatorial Guinea. In fulfillment of CONTRACTOR's obligation
under this Section 6.1(j), the CONTRACTOR will remit Sixty-Two
Thousand Five Hundred United States Dollars (U.S. $62,500) to
the MINISTRY at the beginning of each Calendar Quarter.
The MINISTRY agrees to be responsible for the implementation
and direct funding of the referenced training programs or
events. The sums paid by CONTRACTOR pursuant to this Section
6.1(j) will be included as cost recoverable Petroleum
Operations Expenditures.
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CONTRACTOR shall make all reasonable efforts to employ and
train citizens of the Republic of Equatorial Guinea in
Petroleum Operations. CONTRACTOR may employ non-citizens, if
in the opinion of CONTRACTOR and not contested by the
MINISTRY, no Equatorial Guinean citizens can be found with
sufficient skill and technical qualifications. CONTRACTOR
shall make similar requirements of any subcontractor. At
intervals of not more than one year CONTRACTOR shall submit to
the MINISTRY reports detailing the personnel employed, the
position or function they perform and their residence when
employed. CONTRACTOR shall provide, as CONTRACTOR deems,
necessary, on-the-job training for citizens of the Republic of
Equatorial Guinea to undertake skilled and technical jobs in
the Petroleum Operations. Costs and expenses of training
citizens of Equatorial Guinea as well as costs and expenses
for a program of training for the MINISTRY's personnel, shall
be included in Petroleum Operation Expenditures."
8.2 Effective from the date that the Parties hereto execute this Amendment
as indicated below, a Section 6.5 will be added to the Contract as
follows:
"6.5 If, in connection with CONTRACTOR's performance of its
obligations under this Contract, or if circumstances emerged
regarding this Contract other than as provided in Section
6.1(j) of this Contract, any employee or official of the
STATE, including the MINISTRY's personnel, is required to
travel to any location outside the Republic of Equatorial
Guinea, and the STATE agrees, through the MINISTRY, to permit
such employee or official to travel for such purposes,
CONTRACTOR agrees, subject to the prior mutual agreement of
the Parties to such travel, to pay the following amounts to
the MINISTRY, on behalf of the STATE, for the travel expenses
related to the participation of such employees or officials:
(a) the actual expenses incurred for travel to the
location outside of the Republic of Equatorial Guinea
and for travel to return to the Republic of
Equatorial Guinea and lodging of such employees or
officials at the foreign location, and
(b) an amount equal to the following for each day such
employee or official is out of the Republic of
Equatorial Guinea in accordance with the request of
CONTRACTOR:
(i) for a Minister or comparable or more senior
official of the government of the Republic
of Equatorial Guinea (the "Government"): US$
350.00;
(ii) for a Secretary of State or comparable
official of the Government: US$ 325.00;
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(iii) for a Director General, Secretary General,
Regional Delegate of the STATE or comparable
employee or official of the Government: US$
300.00;
(iv) for a Department Chief of the MINISTRY or
comparable official of the Government: US$
250.00; or
(v) for Engineers, Geo-scientists, Economists,
and Attorneys of the MINISTRY and all other
employees or comparable officials of the
Government: US$ 200.00.
The amounts contemplated pursuant to this Section 6.5 shall be payable by
CONTRACTOR by check made out to the MINISTRY in the resulting total amount.
Notwithstanding the foregoing, with respect to the actual travel and lodging
expenses provided by Section 6.5(a), CONTRACTOR may choose to pay such amounts
directly to the provider of such services for travel and lodging. The sums paid
by CONTRACTOR pursuant to this Section 6.5 will be included as cost recoverable
Petroleum Operations Expenditures."
ARTICLE 9
NOTICES
The notice provision of Section 15.1 of the Contract is amended to substitute
the Triton information below for notice purposes and to add Energy Africa as a
PARTY under CONTRACTOR as follows:
"Triton Equatorial Guinea, Inc.
c/o Triton Energy
6688 North Central Expressway, Suite 1400
Dallas, Texas 75206 USA
Attention: Mr. Brian Maxted
Telecopy: 1-214 365-9011
Telephone: 1-214 696-7554"
"Energy Africa Equatorial Guinea Limited
5 Parliament Square
Castletown
Isle of Man IM9 1LA UK
Attention: Rupert Worsdale
Telecopy: 44-1624827301
Telephone: 44-1624827310"
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ARTICLE 10
MISCELLANEOUS
10.1 Each of the Parties shall carry out all acts and measures as shall be
necessary to fully perform and carry out this Amendment.
10.2 This Amendment constitutes the entire agreement among the Parties and
may not be amended or modified except by a written document signed by
the Parties. In the event of any conflict between the provisions of
this Amendment and the Contract with respect to the subject matter
hereof, the provisions of this Amendment shall prevail.
10.3 This Amendment shall inure to the benefit of and be binding upon the
successors and assigns of the Parties.
10.4 This Amendment shall become effective as of the date it is signed by
the Parties and shall have the force of law with retroactive effect as
of 1 January 2000.
10.5 This Amendment is written and signed in six (6) copies, three (3) in
Spanish and three (3) in English that shall constitute a single
original. In the event of a conflict over the interpretation or
implementation of the contents of this Amendment, the Spanish text
shall prevail.
10.6 In the event of a dispute arising out of or related to the
interpretation or meaning of this Amendment, the Consultation and
Arbitration provisions of Section XIII of the Contract shall apply.
IN WITNESS WHEREOF, the Parties hereto execute this Amendment on the day and
year below indicated.
FOR THE REPUBLIC OF EQUATORIAL GUINEA
THE MINISTRY OF MINES AND ENERGY OF
THE REPUBLIC OF EQUATORIAL GUINEA
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CONTRACTOR:
TRITON EQUATORIAL GUINEA, INC.
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Name:
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Date:
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ENERGY AFRICA EQUATORIAL GUINEA LIMITED
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Name:
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