16th June, 20031

PPWG Industry Wide Master Deed

J.C. Skipper Asst. General Counsel, BP plc Upstream, UK

16th June, 20032

PILOT/PPWG – To Reduce Barriers to Licence Trading

PPWG Operators Final Report – Jan ’02

Commercial Code of Practice

Pre-emption under JOAs

Streamlined UKCS Transfer/Novation Process

Standard SPA & 20th Round JOA

16th June, 20033

Industry-wide Master Deed (‘IMD’) Creates new pre-emption regime for all existing UKCS

Operating Agreements Enables accelerated transfer and novation process by

power of attorney to UKOOA subsidiary (UKCS Administrator Ltd).

Execution service provided by LOGIC on behalf of UKCS Administrator Ltd.

Industry (> 20 UKOOA & NOF reps) & DTI engaged - completion May ’03 with sign up by 99% of Industry.

16th June, 20034

IMD – Pre-emption (‘PrE’)

New PrE arrangements add to and supplement provisions of existing JOAs

Do not apply to JOAs with PrE arrangements expressed : to apply to share sales or changes in control of Licensees; or to provide for calculation of compensating value in

something other than money (incl. License exchanges) Seller right to trigger optional 7 day PrE waiver request 30 day PrE right triggered by notice containing :

(i) 3rd party ID; (ii) effective date of proposed disposal; (iii) applicable cash

or cash equivalent; and (iv) any/all material conditions

16th June, 20035

Preliminary “Optional” Notice

Disposing Party decides to dispose of interest under

existing JOA

Free to dispose to the third party

Yes

Non-Disposing Parties have seven business days to elect to either reserve or waive pre-

emption rights under existing JOA

Pre-emption rights under existing JOA reserved by at least one of Non-Disposing Parties

Pre-emption rights under existing JOA reserved

All of the Non-Disposing Parties expressly waive

pre-emption rights under existing JOA

Pre-emption rights under existing JOA disapplied –

no need to go to Mandatory stage

Serve Notice on Non-Disposing Parties of such

intention?

Pre-emption rights under existing JOA deemed to be

reserved

No response from Non-Disposing Party within

seven business days

Go to Mandatory Stage (Stage 2)

No

Go straight to Mandatory Stage (Stage 2)

16th June, 20036

The “Mandatory” Stage

Non-Disposing Parties have 30 day period to exercise or waive rights of pre-emption under existing JOA

Mandatory Notice by Disposing Party to Non-Disposing Parties detailing main terms of proposed disposal

Agreement reached between Disposing Party and the third party as to the main terms of the proposed disposal

None of the Non-Disposing Parties exercises its rights of pre-emption under existing JOA within 30 days

Rights of pre-emption under existing JOA exercised by more than one Non-Disposing Party within the 30 days period

Rights of pre-emption under existing JOA exercised by only one Non-Disposing Party within the 30 days period

No pre-emption rights under existing JOA will apply to the proposed disposal

The Disposing Party shall transfer the relevant interest to the Non-Disposing Parties which exercised their pre-emption rights under existing JOA in the proportions in which their respective interests bear to the aggregate of their respective interests or as otherwise agreed

The Disposing Party shall transfer the whole of the relevant interest to the relevant Non-Disposing Party

Free to dispose to the third party

16th June, 20037

IMA – New Transfer Arrangements (‘NTAs’) NTAs add to and supplement provisions of existing

Petroleum Agreements (‘PAs’) Enable future transfer arrangements to be completed by

Seller, Buyer and Registration Agent(s) through formal Execution Deed (s)

Execution Deed(s) : ID relevant agreements and affirm due adherence to consent

& notice provisions Constitute release of Seller, assumption of Buyer & effect

transfers under PAs on behalf of other parties Provide for Seller liability on default

16th June, 20038

New Transfer Arrangements

Each RP consents or does not object

Disposing Participant (“DP”) serves Notice of Transfer on Remaining Participants (“RP”) together with draft Execution Documents (“ED”)

* Notice of transfer * Draft ED * Consent to transfer * Further information as required under Existing Transfer Arrangements * The above collectively will be the Relevant Information, (“RI”)

Action Documents

RP are not to unreasonably object to the intended transfer Does any RP reasonably object?

Yes * RP with objection to notify the DP with reasons as soon as reasonably practicable after receipt of RI * New Transfer Arrangements (“NTA”) not to apply to the intended transfer

* Consenting RPs complete and return the Consent to Transfer and the appropriate ED to the DP * DP to prepare Execution Documents in the agreed form *DP to submit ED to Administrator * DP to request Administrator to execute the ED * DP to send each RP a certified copy of the ED

* Execution Documents including schedule to the Execution Deed * ED to be in the form agreed with the RP * Certified copies of all consents to transfer and notices of transfer

Action Documents

Do EDs comply in all respects with the requirements of the New Transfer Arrangements? AND Are they in the agreed form?

No * Ensure compliance with New transfer Arrangements

1 Administrator as Attorney for the RP 2 Disposing Participant 3 Acquiring Person (“AP”)

1 Execution Documents executed by Administrator 2 Administrator returns ED after execution to DP 3 DP and AP execute ED

Parties Action

Maximum period of ten business days after the DP and AP enter into the ED

* DP notifies the Administrator and each RP of the entry into the ED by the DP and the AP

* DP to provide a certified copy of the duly executed and dated ED to the Administrator and the RPs

Action Documents

1 Formal assignment of Licences 2 Novation of Affected Petroleum Agreements other than Licences

Effect

16th June, 20039

Standard SPA & 20th Round JOA Pro-Forma Sale and Purchase Agreement and 20th Round

JOA now available for voluntary use on UKOOA & PILOT websites

Industry wide participation in formulating templates which borrow from arrangements current in the UKCS

Documents will be maintained/reviewed by a practitioners group reporting to the UKOOA Legal Sub Committee

16th June, 200310

Standard SPA & 20th Round JOA (cont) Both documents provide useful starting points for a range

of issues and contain a number of [square bracketed] alternatives

20th Round JOA contains 180+ pages and various clauses special clauses

SPA provides a number of hints for practitioners keen to reach alacrity in closure

16th June, 200311

Conclusion

When combined with other PPWG initiatives, the changes contained in the IMD, should: materially reduce transaction times; and reduce many of the frustrations experienced by existing and

new UKCS entrants Application of the pro forma SPA & 20th Round JOA - a

useful starting point which highlights issues for negotiation

Practitioners have already begun to grasp the tools now provided

16th June, 200312

The UK Oil/Gas Industry Collaborative Solution Provider

16th June, 200313

What is LOGIC?

Independent industry organisation with initial funding from 5 Trade Associations & UK Government

Board of 12 Directors most represent Trade Associations, Government etc

Full time staff - 1 to 17 in 3 years Many pan-industry groups (15 - 25 each) SCM ‘Centre of Excellence’

“LOGIC aims to help the industry embrace industry-wide co-operation, new ways of working and contracting, supply chain improvements, and greater utilisation of innovative technology”

16th June, 200315

LOGIC’s Mission“Helping the (UK) Oil & Gas Industry to work together to get things done”

• Co-operation Projects

• Business improvement Consultancy

• e-Business Advice & MSP

• ‘Independent’ Industry Facilitation

• Events

16th June, 200316

Co-operation Projects

Marine Logistics UTR agreed 2001 (> £350k savings in 2001)

Aviation Logistics AVMHH agreed 2002 (After 20 years!) Common safety standards (almost!) Heliseat.com - !

IMHH Launch 2002 managed by LOGIC Website

Standard Contracts Available on website 2002

Vantage POB Assists delivery of Step Change ‘Vision’ Development (£1.2m) managed by LOGIC System to be managed by LOGIC

UKCS Master Deed Launched 2003 Website

Would NOT have happened without

LOGIC Facilitation & support……….

Brownfield Benchmark Study – Phases 1 &

2 Showcases & Workshops

Satellite Accelerator 7 projects & solutions proposed

for all 5 have teams selected Latest Don

Innovative finance New equity partner Development team

16th June, 200317

LOGIC Works with All Companies

16th June, 200318

Contacts

Aberdeen AB23 8GXTelephone +44 1224 853420Email: LOGIC@logic-oil.com

Admin@masterdeed.com

www.logic-oil.comwww.masterdeed.com