EXPANDED SHALLOW WATER TANO BLOCK

OPERATOR:

Base Energy Limited – 67.5% interest in the block

OTHER CONTRACTING PARTIES:

GNPC Exploration and Production Company Limited (GNPC EXPLORCO) – 22.5% interest in block
Ghana National Petroleum Corporation (GNPC) –10% interest in block

Contract Area Size: 1500 sq.km

Effective Date: January 23, 2015

Exploration Period: 4 Years And 9 Months

Current Phase of Operations: Initial Exploration Period (2 years) [ January 23, 2015 – Jan 22, 2017]

Extension (s): + 1½ years [ January 22, 2017 to July 22, 2018]

Minimum Initial Exploration Programme

Reprocess existing 2D and 3D seismic
Drill one (1) exploration well
Minimum Expenditure: US$ 30,000,000

In addition, the Contractor is required to review and evaluate the commerciality of the North, South and West Tano discoveries within 9 months of effective date.

Status of Operations

Existing seismic data was not reprocessed but conditioned with various methods to improve quality. However, the imaging especially in Albian levels and lower was not improved. Contractor has elected to acquire new 3D data over the block.
Prospects and leads have been identified and mapped outside the discovery areas. These are being matured to select a drilling target
Contractor has reviewed and assessed the commerciality of the existing Tano Fields. A report was submitted to the then Minister of Petroleum and Petroleum Commission on commerciality of the discoveries. The Contractor has requested review of key fiscals to make the project commercial due to low oil price.

The Initial Exploration Period was extended by eighteen (18) months by the then Minister in June 2016.

FISCAL TERMS

Royalty: Twelve and one half percent (12.5%) of the Gross Production of Crude Oil shall be delivered to the State as Royalty.

Royalty to be delivered to the State on Natural Gas shall be at the rate of seven point five percent (7.5%) of the annual Gross Production of Natural Gas.

Income Tax: In accordance with the provisions of the Income Tax law, petroleum income tax shall be levied at thirty five percent (35%).

Withholding Tax: Contractor shall not be obliged to withhold any amount in respect of tax from any sum due from Contractor to any Subcontractor in respect of work and services for or in connection with this Agreement.

Surface Rental

Additional Oil Entitlement:
Refer to the Petroleum Agreement.