DATED 21 May 2013 ENDEAVOUR ENERGY UK LIMITED - and - CIDOVAL S.À R.L. ______________________________________________________________________ SUPPLEMENTAL DEED OF AMENDMENT AND RESTATEMENT in respect of: (i) a Sale and Purchase Agreement dated 5 March 2013 as novated and amended on 28 March 2013; (ii) a Deed of Grant dated 30 April 2013; and (iii) a Completion Security Agreement dated 30 April 2013 _______________________________________________________________________

1.

ENDEAVOUR ENERGY UK LIMITED, a company incorporated in England and Wales (registered number 05030838) whose registered office is at 33rd  Floor, CityPoint, One Ropemaker Street, London EC2Y 9UE (the “Grantor”); and

2.

CIDOVAL S.À R.L., a private limited liability company (société à responsabilité limitée) incorporated and existing under the laws of the Grand Duchy of Luxembourg, with its registered office at 40, avenue Monterey, L 2163 Luxembourg, having a share capital of $20,425 and being registered with the Luxembourg trade and companies register under number B175673 (the “Grantee”),

1.

DEFINITIONS AND INTERPRETATION

1.1

Unless otherwise defined herein (including the Recitals) capitalised terms have the meaning ascribed to them in the SPA.    In addition, as used in this Deed:

1.2

A reference to a Clause is a reference to a clause of the SPA or the Deed of Grant, as the context specifies, and a reference to a Section is a reference to the relevant section of this Deed (unless the context otherwise specifies).

1.3

All headings in this Deed are inserted for convenience only and shall not affect the meaning or construction of this Deed.

1.4

A “person” includes a natural person, corporate or unincorporated body (whether or not having separate legal personality). A reference to a “company” shall include any company, corporation or other body corporate, whatever and however incorporated.

1.5

A reference to any statute, statutory provision or subordinate legislation is a reference to it as it is in force from time to time, provided that, as between the Parties, no amendment or re-enactment shall apply for the purposes of this Deed to the extent that it would impose any new or extended obligation, liability or restriction on, or otherwise adversely affect the rights of, any Party.

1.6

A reference to “writing” or “written” includes faxes but not email.

1.7

Where the words “include(s)”, “including” or “in particular” are used in this Deed, they are deemed to have the words “without limitation” following them.

1.8

Where the context permits, “other” and “otherwise” are illustrative and shall not limit the sense of the words proceeding them.

1.9

Unless the context otherwise requires, references to documents and agreements shall be construed as references to those documents or agreements as may be amended, supplemented and / or novated from time to time.

2.

SUPPLEMENTAL PURCHASE PRICE UNDER THE SPA 

2.1

The SPA is supplemented as provided in this Section 2.

2.2

In consideration of the amendments agreed to the Deed of Grant set out in Section 3 below and the Completion Security Agreement set out in Section 4 below, the Grantee has agreed and shall pay to the Grantor an amount equivalent to seventeen million and three hundred and twenty five thousand Dollars ($17,325,000) (the “Supplemental Purchase Price”),  such amount representing additional proceeds to be paid to the Grantor in respect of the sale and purchase of the Production Payment.  Taking together the Deposit paid pursuant to Clause 3.1 of the SPA, the remainder of the Purchase Price (as defined in the Original SPA) paid at Completion and the Supplemental Purchase Price, the Grantee shall have paid to the Grantor a total of one hundred and twenty three million seven hundred and fifty thousand Dollars ($123,750,000) for the purchase of the Production Payment.

2.3

The Supplemental Purchase Price shall be promptly paid by the Grantee upon execution of this Deed by wire transfer in same day funds to the Seller’s Account.

3.

AMENDMENTS TO THE DEED OF GRANT

3.1

The definition of “Production Payment Security Documents” in Clause 1.1 of the Deed of Grant shall be deleted in its entirety and replaced with the following:

3.2

The following new definition shall be included in Clause 1.1 of the Deed of Grant as follows:

3.3

The following new definition shall be included in Clause 1.1 of the Deed of Grant as follows:

3.4

The following new definition shall be included in Clause 1.1 of the Deed of Grant as follows:

3.5

The first sentence of Clause 2.1 of the Deed of Grant shall be deleted in its entirety and replaced with the following:

3.6

Clause 4.1 of the Deed of Grant shall be deleted in its entirety and replaced with the following:

3.7

Clause 4.15 of the Deed of Grant shall be deleted in its entirety and replaced with the following:

3.8

Clause 4.16 of the Deed of Grant shall be deleted in its entirety and replaced with the following:

3.9

Schedule 1 to the Deed of Grant will be deleted in its entirety and replaced with the agreed form of schedule 1 set out in Schedule A attached hereto.  

3.10

Schedule 2 to the Deed of Grant will be deleted in its entirety and replaced with the agreed form schedule 2A and schedule 2B set out in Schedule B attached hereto.

4.

AMENDMENT AND RESTATEMENT OF THE COMPLETION SECURITY AGREEMENT

4.1

With effect on and from the date hereof, the Completion Security Agreement shall be amended and restated in the form set out in Schedule C  (Form of Amended and Restated Completion Security Agreement).

4.2

The provisions of the Completion Security Agreement shall, save as amended by this Deed, continue in full force and effect.

5.

REPRESENTATIONS AND WARRANTIES 

5.1

The Grantee hereby warrants to the Grantor as follows as at the date of this Deed by reference to the facts subsisting as at the date hereof:

(a)

The Grantee is duly organised as a private limited liability company and validly existing under the laws of Luxembourg and is tax resident in Luxembourg.

(b)

The Grantee has the corporate power and all necessary corporate action has been taken on the part of the Grantee to enter into the SPA, the Deed of Grant and this Deed and to perform the transactions contemplated by the SPA, the Deed of Grant and this Deed.

(c)

The signing and delivery of this Deed does not and the performance of any of the transactions contemplated by the SPA, the Deed of Grant and this Deed do not and will not contravene or constitute a material default under any provisions contained in any agreement, instrument, law, judgment, order, licence, permit or consent by which the Grantee or any of its assets is bound or affected or which would result in the Grantee being unable to perform its obligations under the SPA, the Deed of Grant or this Deed.

(d)

No litigation, arbitration, administrative proceeding, claim or dispute in respect of which a writ or summons or other formal pleading has been served or judgment issued against the Grantee or to which the Grantee is a party which is likely by itself or together with any such other proceedings to have a material adverse

effect on its ability to observe or perform its obligations under the SPA, the Deed of Grant or this Deed and the transactions contemplated hereby is subsisting or, to the best of the Grantee’s knowledge, threatened or pending against the Grantee or any of its assets.

(e)

Neither the Grantee is Insolvent and no Insolvency Proceedings with respect to it or any of its assets have been commenced.

5.2

The Grantor hereby warrants to the Grantee as follows as at the date of this Deed by reference to the facts subsisting as at the date hereof:

(a)

The Grantor is a licensee under each of the Licences and, subject to the Permitted Encumbrances and the Completion Security Agreement, is the sole legal and beneficial owner of the Subject Interests, and following fulfilment of any conditions to the entry into this Deed, including any notification to the Secretary, the Grantor will have the right to grant the Production Payment to the Grantee.

(b)

Each of the Licences and all rights of the Grantor and interests thereunder or deriving therefrom are in full force and effect.  No act or omission of the Grantor has occurred which would entitle the Secretary to revoke either of the Licences and no written notice has been received by the Grantor from the Secretary of any intention to revoke either of the Licences.

(c)

To the best of the Grantor’s knowledge, no act or omission of any other licensee of the Licences has occurred which would entitle the Secretary to revoke either of the Licences and no written notice has been received by the Grantor from the Secretary of any intention to revoke either of the Licences.

(d)

Neither of the Licences is in the course of being surrendered in whole or in part.

(e)

Other than the security granted in favour of the Grantee pursuant to the Completion Security Agreement, no Encumbrance has been created over the Subject Interests nor is there in effect any agreement or commitment to create the same.

(f)

Each of the JOAs is in full force and effect and the Grantor is not in breach of any material obligation thereunder nor has it received written notice that it has committed any breach or default thereunder which breach or default is of a material nature and subsisting.

(g)

The Grantor has not given any written notice of withdrawal under either of the JOAs nor has the Grantor received any such written notice of withdrawal.

(h)

The Grantor has not received any written notice of unitisation of either of the Subject Interests.

(i)

The Grantor is not a party to any litigation, arbitration or administrative proceeding in respect of which a writ or summons or other formal pleading has

been served or judgment issued, nor is there any claim or dispute in relation to, and which is likely by itself or together with any such other proceeding to materially prejudice or detrimentally affect in any material manner, the Subject Interests and/or the Grantor’s ability to perform its obligations under the SPA, the Deed of Grant or this Deed, and to the best of the Grantor’s knowledge, no such litigation, arbitration or administrative proceeding, claim or dispute is threatened or pending either by or against the Grantor and there are no facts which have been made known to the Grantor which indicate that any person has a claim which is likely to materially prejudice or detrimentally affect in any material manner the Subject Interests and/or the Grantor’s ability to observe or perform its obligations under the SPA, the Deed of Grant or this Deed.

(j)

The Grantor is duly incorporated with limited liability and validly exists under the laws of England and Wales and is resident for Tax purposes solely in the United Kingdom.

(k)

The Grantor has the corporate power and all necessary corporate action has been taken on the part of the Grantor to enter into the SPA, the Deed of Grant and this Deed and to perform the transactions contemplated by the SPA, the Deed of Grant and this Deed.

(l)

The signing and delivery of this Deed does not and the performance of any of the transactions contemplated by the SPA, the Deed of Grant and this Deed do not and will not contravene or constitute a material default under any provisions contained in any agreement, instrument, law, judgment, order, licence, permit or consent by which the Grantor or any of its assets is bound or affected and which would result in the Grantor being unable to perform its obligations under the SPA, the Deed of Grant or this Deed.

(m)

The Grantor has obtained all material permits, licences and other authorisations which are required under applicable Environmental Laws relating to the Subject Interests and such permits, licences and authorisations remain in full force and effect.

(n)

The Grantor is not Insolvent and no Insolvency Proceedings with respect to it or its assets have been commenced.

(o)

The Production Payment will be treated as a liability in accordance with US GAAP.

6.

COSTS AND EXPENSES

6.1

Subject to Section 6.2, all costs and expenses in connection with the negotiation, preparation, execution and performance of this Deed, and any documents referred to herein, shall be borne by the Party that incurred the cost.

6.2

The Grantor must pay to Cidoval the amount of all reasonable legal fees, supported by an invoice or other evidence of incurrence, directly incurred by Cidoval in connection with

the negotiation, preparation and execution of this Deed; provided, that, in no event shall the Grantor be responsible for the payment of any costs and expenses by any lender in connection with the transactions contemplated in this Deed whether or not Cidoval has agreed to be or is otherwise liable for such costs and expenses.

6.3

The Grantor shall, on demand, pay to the Grantee the amount of all costs and expenses (including legal fees) incurred by the Grantee in connection with the enforcement of or preservation of any rights under this Deed.

7.

ANNOUNCEMENTS AND CONFIDENTIALITY

7.1

Neither Party nor any Affiliate of either Party shall make any announcements with regard to this Deed or any transactions contemplated herein unless prior thereto it furnishes the other Party with a copy of such announcement and obtains the prior written consent of the other Party to such announcement (such consent not to be unreasonably withheld or delayed) except to the extent either Party (or an Affiliate) is required by law, the Licence Interest Documents, or the requirements of a competent government agency or other regulatory body, or any recognised stock exchange or exchange regulated market in compliance with their rules and regulations to make any such announcement otherwise than in compliance with this Section 7 in which case such Party will use all reasonable endeavours to provide to the other Party notification and a copy of such announcement two (2) Business Days prior to the date the announcement is to be made.

7.2

The terms of this Deed and all discussions and information exchanged between the Parties in connection with the transactions contemplated herein (the “Confidential Information”) shall be held confidential by the Parties and shall not be divulged in any way to any third party other than solely to the extent necessary to satisfy any conditions to the signing of this Deed including any notification to the Secretary, by one Party without the prior written approval of the other Party; provided that either Party may, without such approval, disclose such Confidential Information to:

(a)

any Affiliate of such Party, provided that such Affiliate is bound by the provisions of this Section 6 and that such Party is responsible for any violation of this provision by its Affiliate;

(b)

any professional consultants or other professional advisers, provided they are under existing confidentiality obligations or the disclosing Party obtains a similar undertaking of confidentiality (but excluding any right to make further disclosure) from such consultants or advisers;

(c)

any independent legal advisors engaged, or proposed to be engaged, by or on behalf of a Party or an Affiliate where such legal advisors are bound by an obligation of confidentiality;

(d)

any bank, financial institution or investor from whom such Party is seeking or obtaining finance, financial advice or an investment, provided the disclosing Party obtains a similar undertaking of confidentiality (but excluding any right to make further disclosure) from such bank, financial institution or investor;

(e)

to the extent required by any applicable laws, the Licences, the other Licence Interest Documents or the requirements of any recognised stock exchange in compliance with its rules and regulations;

(f)

a bona fide prospective transferee of a Party’s interest, or portion thereof in a Licence to the extent appropriate in order to allow the assessment of such interest (including an entity with whom a Party and/or its Affiliate are conducting bona fide negotiations directed towards a merger, consolidation or sale of the majority of its or an Affiliate’s shares);

(g)

any government agency (including any Tax authority) reasonably requesting such information; or

(h)

any court of competent jurisdiction acting in pursuance of its powers.

7.3

The above undertaking of confidentiality shall not extend to any Confidential Information which is:

(a)

generally available to the public other than as a result of a wrongful disclosure by a Party; or

(b)

available to a Party on a non-confidential basis from a source other than the other Party if such source is entitled to disclose such information.

7.4

The provisions of this Section 7 shall survive for two (2) years from the date of any termination of the SPA.

8.

GENERAL PROVISIONS

8.1

The following Clauses of the SPA are hereby incorporated into this Deed by reference and shall be deemed to apply to this Deed,  mutatis mutandis, as though specifically set out in this Deed:  Clause 12 (Notices), Clause 13 (Further Assurance), Clause 14 (Assignment), Clause 15 (Whole Agreement), Clause 16 (Variation and Waiver), Clause 17 (Severance), Clause 18 (Governing Law and Jurisdiction),  Clause 19 (Successors), Clause 20 (Third Party Rights) and Clause 21 (Counterparts).

8.2

Subject as expressly provided in this Deed, all other provisions of the SPA and the Deed of Grant shall remain in full force and effect and binding on the Parties thereto, insofar as the same are in full force and effect and binding on those Parties immediately prior to the Effective Date.

(1)

ENDEAVOUR ENERGY UK LIMITED (a company registered in England and Wales with registration number  ###-###-####) whose registered office is at 33rd Floor, City Point, One Ropemaker St, London EC2Y 9UE (the “Company”); and

(2)

CIDOVAL S.À R.L., a private limited liability company (société à responsabilité limitée) incorporated and existing under the laws of the Grand Duchy of Luxembourg, with its registered office at 40, avenue Monterey, L 2163 Luxembourg, having a share capital of USD20,425 and being registered with the Luxembourg trade and companies register under number B175673 (the “Secured Party”).

1.

Definitions, Construction and Incorporation of Terms 

1.1

Definitions

(a)

Terms defined, or by reference in, in the Deed of Grant shall, unless otherwise defined in this Agreement or unless a contrary intention appears, bear the same meaning when used in this Agreement and the following terms shall have the following meanings:

(i)

‘Permitted Liens’, as such term is defined in the Revolving Credit Agreement, and so that references to the “Administrative Agent” and the “Borrower” in that definition shall be construed as references to the Secured Party and the Company; and

(ii)

Liens (as defined in the Revolving Credit Agreement) to secure any Indebtedness (as defined in the Revolving Credit Agreement) of Endeavour International Corporation or any of its Restricted Subsidiaries (as defined in the Revolving Credit Agreement) incurred or issued in exchange for, or the net proceeds of which shall be used to extend, refinance, renew, replace, defease, discharge, refund or otherwise retire for value the Indebtedness constituted by the Revolving Credit Agreement and the New Pearl Reimbursement Agreement.

(i)

each of the contracts, agreements and documents listed in Schedule 2  (Project Contracts) together with all Related Property Rights and all documents which are supplemental to, or are expressed to be collateral with, or are entered into pursuant to or in connection with, any  such contracts, agreements and documents; and

(iii)

any joint operating agreements or unitisation or unit operating agreements, in each case relating to paragraph (ii) of the definition of “Project Licences”, which are entered into (or in respect of which the Company acquires an interest) after the date of this Agreement together with all Related Property Rights and all documents which are supplemental to, or are expressed to be collateral with, or are entered into pursuant to or in connection with, any such contracts, agreements and documents.

(i)

each of the licences listed in Schedule 1  (Project Licences) together with all Related Property Rights and all documents which are supplemental to, or are expressed to be collateral with, or are entered into pursuant to or in connection with, any  such licences; and

(iv)

any petroleum production licences for material oil and gas reserves of the Company which are entered into (or in respect of which the Company acquires an interest) after the date of this Agreement together with all Related Property Rights and all documents which are supplemental to, or are expressed to be collateral with, or are entered into pursuant to or in connection with, any such licences.

(i)

the proceeds of sale and/or other realisation of that property or asset (or any part thereof or interest therein);

(ii)

all Security, options, agreements, rights, easements, benefits, indemnities, guarantees, warranties or covenants for title held by the Company in respect of such property or asset; and

(iii)

all the Company’s rights under any lease, licence or agreement for lease, sale or use in respect of such property or asset.

(a)

Unless a contrary intention appears, words defined in the Companies Act 2006 have the same meanings in this Agreement.

1.2

Construction

(a)

terms defined in the Revolving Credit Agreement shall be construed as having the meaning given to those terms in the Revolving Credit Agreement in force as at the date of this Agreement;

(b)

the “Secured Party” or the “Company” shall be construed so as to include its successors in title, permitted assigns and permitted transferees;

(c)

“assets” includes present and future properties, revenues and rights of every description;

(d)

“indebtedness” includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;

(e)

a “person” includes any individual, firm, company, corporation, government, state or agency of a state or any association, trust, joint venture, consortium or partnership (whether or not having separate legal personality) or two or more of the foregoing;

(f)

a “regulation” includes any regulation, rule, official directive, request or guideline (whether or not having the force of law but, if not having the force of law, being of a kind that is normally complied with by those to whom it is addressed) of any governmental,

intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;

(g)

a “guarantee” includes any form of indemnity or other assurance against financial loss (including any obligation to pay, purchase or provide funds for the purchase of any liability) and the verb “to guarantee” shall be construed accordingly;

(h)

a provision of law is a reference to that provision as amended or re-enacted;

(i)

any matter “including” specific instances or examples of such matter shall be construed without limitation to the generality of that matter (and references to “include” shall be construed accordingly);

(j)

a “modification” includes an amendment, supplement, novation, re-enactment, restatement, variation, extension, replacement, modification or waiver or the giving of any waiver, release, consent having the same commercial effect of any of the foregoing (and “modify” shall be construed accordingly);

(k)

the “winding-up”, “dissolution” or “administration” of a person shall be construed so as to include any equivalent or analogous proceedings under the law of the jurisdiction in which such person is incorporated or established, or any jurisdiction in which such person carries on business including the seeking of liquidation, winding-up, reorganisation, dissolution, administration, arrangement, adjustment, protection or relief of debtors;

(l)

the words “other”, “or otherwise” and “whatsoever” shall not be construed eiusdem generis or be construed as any limitation upon the generality of any preceding words or matters specifically referred to; and

(m)

“the date of this Agreement” shall be a reference to 30 April 2013.

1.3

Implied covenants for title

1.4

Effect as a Deed

1.5

Law of Property (Miscellaneous Provisions) Act 1989

1.6

Intercreditor Agreement

2.

Covenants to Pay

2.1

Covenant to pay Secured Liabilities

(a)

the full and prompt payment when due (whether scheduled, upon termination or otherwise) of all obligations, liabilities and indebtedness of the Company to the Secured Party (both actual and contingent), whether now existing or incurred after the date of this Agreement under, arising out of, or in connection with, the Deed of Grant and the due performance and compliance by the Company with all the terms, conditions and agreements contained in the Deed of Grant;

(b)

any and all sums advanced by the Secured Party in order to preserve the Charged Assets or preserve its security interest in the Charged Assets; and

(c)

in the event of any proceeding for the collection or enforcement of any indebtedness, obligations or liabilities of the Company referred to in sub-paragraph (a) above, on and from the Enforcement Date, the reasonable expenses of retaking, holding, preparing for sale of lease, selling or otherwise disposing of or realising on the Charged Assets of any exercise by the Secured Party of its rights under this Agreement, together with reasonable attorneys’ fees and court costs,

2.2

Potential invalidity

3.

Representation

4.

Security 

4.1

General

(a)

All the Security created under this Agreement:

(i)

is created in favour of the Secured Party;

(ii)

is security for the payment of all the Secured Liabilities; and

(iii)

is subject to the security granted under the Existing Security Documents.

(b)

If the Company is not entitled to grant any Security over its rights and/or interests under any document without the consent of a party to that document:

(i)

the Company must notify the Secured Party as soon as it becomes aware of the same;

(ii)

the Security constituted under this Agreement will include and extend to all amounts which the Company may receive, or has received, under that document but shall, until the date on which the relevant consent is obtained by the Company, not extend to and exclude the document itself and its rights and/or interests under such document;

(iii)

unless the Secured Party otherwise requires, the Company must use reasonable endeavours to obtain the consent of the relevant party to enable the Company to grant Security over that document under this Agreement; and

(iv)

on and from the date on which such consent is obtained, the Security constituted under this Agreement shall extend to and include that document.

4.2

Creation of fixed charge over Collateral Accounts

4.3

Creation of fixed charge over Project Licences

4.4

Assignments

(a)

the Project Contracts; and

(b)

any present or future Insurances,

5.

Floating Charge

5.1

Creation of floating charge

(a)

The Company charges to the Secured Party by way of floating charge with full title guarantee and as a continuing security for the payment and discharge of the Secured Liabilities all of the Company’s rights to and title and interest from time to time in the whole of its property, assets (including, without limitation, any Account), rights and revenues, whatsoever and wheresoever, present and future, other than any assets validly and effectively charged or

assigned (whether at law or in equity) pursuant to Clauses 4.2  (Creation of fixed charge over Collateral Accounts), 4.3  (Creation of fixed charge over Project Licences) or 4.4 (Assignments). 

(b)

Except as otherwise agreed in writing by the Secured Party and subject to the Existing Security Documents, the floating charge hereby created ranks in priority to any Security which shall subsequently be created or permitted to arise by the Company or any Security created by a Receiver appointed under this Agreement and is a qualifying floating charge for the purposes of paragraph 14 of Schedule B1 to the Insolvency Act 1986.

(c)

Without prejudice to Clause 5.1(a)  (Creation of floating charge), the Secured Party reserves any rights it may have to appoint an administrative receiver on and following the Enforcement Date in accordance with Sections 72B to H (inclusive) of the Insolvency Act 1986.

5.2

Automatic crystallisation of floating charge

(a)

the Company creates or attempts to create any Security over all or any of the Charged Assets (save as permitted or contemplated under the Credit Agreement or the Sale and Purchase Agreement) without the prior written consent of the Secured Party;

(b)

any person levies or attempts to levy any distress, execution or other process against any of the Charged Assets;

(c)

a resolution is passed or a petition is presented for the winding‑up or administration in relation to the Company which is not discharged within 14 days (in the case of a winding‑up petition) or 5 days (in the case for an administration order) or in any event before such petition is heard or an order is made for the winding up, dissolution, administration or other reorganisation of the Company; or

(d)

an Administrator or Receiver is appointed in respect of the Company or any step intended to result in such appointment is taken pursuant to paragraphs 15 or 26 of Schedule B1 of the Insolvency Act in respect of the Company,

5.3

Crystallisation on notice of floating charge

(a)

on or after the Enforcement Date;

(b)

if it considers in good faith that any of the Charged Assets are in danger of being seized or sold as a result of any legal process, or are otherwise in jeopardy; or

(c)

if it reasonably believes that steps likely or intended to lead to the presentation of a petition for the administration or winding up of or the appointment of an Administrator in respect of the Company are being, or have been, taken,

5.4

Fixed and Floating Security

5.5

Retention of Documents

5.6

Project Contracts

(a)

The Security created by this Agreement in relation to each Project Contract shall, to the extent required by that Project Contract, in each case as that agreement may have been subsequently assigned, transferred or novated, be:

(i)

without prejudice to the provisions of that Project Contract;

(ii)

subordinated to the express rights specified under that Project Contract of the parties thereto from time to time (other than the Company); and

(iii)

subject to the liabilities and obligations of the Company relating to the interest of the Company in and under that Project Contract,

(b)

The Company and the Secured Party acknowledge that:

(i)

in the event of the Secured Party exercising any rights created under this Agreement in respect of the Enoch PLTPA, the Secured Party will continue to fulfil the obligations of the Company under the Enoch PLTPA; and

(ii)

notwithstanding Clause 25  (Third Parties), BP may rely on the undertaking given by the Security Agreement under Clause 5.6 (b)(i) (Project Contracts) above.

5.7

Gas sales agreements

6.

Further Assurance

(a)

perfecting and/or protecting (by registration or in any other way) the Security created or intended to be created by this Agreement;

(b)

conferring upon the Secured Party such Security as it may require over the assets of the Company outside of England and Wales which if in England and Wales would form part of or be intended to form part of the Charged Assets;

(c)

facilitating the realisation of all or any part of the Charged Assets; and/or

(d)

for exercising all powers, authorities and discretions conferred on the Secured Party.

7.

Undertakings with Respect to the Charged Assets

7.1

Negative Pledge

(a)

not create or allow to exist any Security on, over, or affecting, any of the Charged Assets; and

(b)

procure that no member of the Group creates or allows to exist any Security on, over, or affecting, any of the Charged Assets,

7.2

Disposals

(a)

as permitted under the Existing Security Documents or, on and following the Relevant Date, for a Permitted Disposal, or otherwise with the prior written consent of the Secured Party (such consent not to be unreasonably withheld or delayed); and

(b)

in relation to the disposal of the whole or any part of the Charged Assets that are Subject Interests, with the prior written consent of the Secured Party (such consent not to be unreasonably withheld or delayed);

7.3

Subsequent charge

7.4

Supplemental Agreement

7.5

Prejudicial Action

7.6

Consents and Other Necessary Action

8.

Further Undertakings

8.1

Calls

8.2

Notices of charge and/or assignment

(a)

The Company shall deliver to the Secured Party and serve on any relevant person (a “Relevant Counterparty”) as required by the Secured Party:

(i)

notices of assignment in respect of any of the assets assigned pursuant to this Agreement, and shall use its reasonable endeavours to procure that each such notice is acknowledged by that Relevant Counterparty; and

(ii)

notice of charge in respect of any of the assets charged pursuant to this Agreement and shall use its reasonable endeavours to procure that each notice is acknowledged by that Relevant Counterparty.

(b)

The notices of charge and/or assignment and/or acknowledgement referred to in Clause 8.2(a) shall be in a form substantially similar to that contained in Schedule 3 (Form of Notices) hereto or such other form as the Secured Party may reasonably require.

(c)

With respect to the persons listed in Schedule 4 hereto (such persons being parties who hold an interest in the Licences or the JOAs as at the date of this Agreement), the Company shall

promptly notify the Secured Party of a change in the identity of any such person upon becoming aware of such change.

8.3

Further Assignments

(a)

for the purposes of granting security over:

(i)

any Insurances;

(ii)

any Project Contract; or

(iii)

any Project Licence;

(b)

to record the interests of the Secured Party in any registers relating to registered intellectual property rights.

9.

Accounts and Receipts

9.1

Accounts General

(a)

The Company will:

(i)

deliver to the Secured Party on the date of this Agreement details of each of its Accounts;

(ii)

deliver to the Secured Party details of any change in such detail (including any renewal or redesignation of any such Account) that occurs after the date of this Agreement on the date of such change;

(iii)

deliver to the Secured Party details of any new Account opened after the date of this Agreement, on the date of such opening; and

(iv)

open such new Collateral Accounts, as the Secured Party shall require (at any time on or after the Enforcement Date) for the purposes of Clause 9.2  (Book and Other Debts after Security Becomes Enforceable).

(b)

Without prejudice and in addition to Clause 7.1  (Negative pledge), the Company agrees that:

(i)

the benefit of each Account shall not be capable of assignment or charge in whole or in part (save pursuant to this Agreement or the Existing Security Documents); and

(ii)

it will not assign (whether by way of sale or mortgage), charge or otherwise seek to deal with or dispose of all or any part of any Collateral Account without the prior written consent of the Secured Party subject to the Intercreditor Agreement.

(c)

The Company shall, subject to Clause 9.3  (Accounts after Security becomes Enforceable), be entitled to withdraw any credit amount from the Accounts (other than a Collateral Account), including, for the avoidance of doubt, from the Payment Account.

9.2

Book and Other Debts after Security becomes Enforceable

9.3

Accounts after Security becomes Enforceable

(a)

Upon the Security becoming enforceable, the Secured Party shall be deemed to have designated in writing all Accounts as Assigned Accounts and at any time thereafter the Secured Party may:

(i)

in relation to such new Assigned Accounts, require the Company to, and the Company shall immediately on request, serve a notice of assignment (in a form substantially similar to that contained in Schedule 3 (Form of Notices) hereto or such other form as the Secured Party may reasonably require) on each bank or other financial institution with which any such Account is maintained and the Company shall comply with its obligation under Clause 8.2  (Notices of charge and/or assignment) to obtain an acknowledgement of each such notice of assignment; and

(ii)

exercise from time to time, all rights, powers and remedies of the Company in relation to any or all of its Accounts, including to demand and receive all and any monies standing to the credit of any such Accounts.

(b)

On and from the Enforcement Date, the Company shall not be entitled to be paid, withdraw or otherwise transfer any credit amount from the Accounts.

10.

RIGHTS OF the Secured Party

10.1

Enforcement

(a)

enforce all or any part of the Security created by this Agreement and take possession of or dispose of all or any of the Charged Assets in each case at such times and upon such terms as it sees fit; and

(b)

whether or not it has appointed a Receiver, exercise all of the powers, authorities and discretions:

(i)

conferred from time to time on mortgagees by the LPA (as varied or extended by this Agreement) or by law; and

(ii)

granted to a Receiver by this Agreement or by law.

10.2

Restrictions on consolidation of mortgages

10.3

Restrictions on exercise of power of sale

10.4

Leasing powers

10.5

No prior notice needed

10.6

Right of appropriation

(a)

Without prejudice to the other provisions of this Agreement, to the extent that any of the Charged Assets constitute “financial collateral”, and this Agreement and the obligations of the Company hereunder constitute a “security financial collateral agreement” (in each case as defined in, and for the purposes of, the Financial Collateral Arrangements (No. 2) Regulations 2003 (SI 2003/3226) (the “Regulations”), the Secured Party shall at any time on and after the Enforcement Date have the right to appropriate all or any part of those Charged Assets in or towards discharge of the Secured Liabilities.  For this purpose, the parties agree that the value of any such Charged Assets so appropriated shall be the market price of such Charged Assets at the time the right of appropriation is exercised as determined by the Secured Party by reference to such method or source of valuation as the Secured Party may select, including by independent valuation.  The Parties agree that the methods or sources of valuation provided for in this Clause 10.6 (Right of appropriation) or selected by the Secured Party in accordance with this Clause 10.6 (Right of appropriation) shall constitute a commercially reasonable method of valuation for the purposes of the Regulations.

(b)

The Secured Party shall notify the Company as soon as reasonably practicable of the exercise of its rights of appropriation as regards such of the Charged Assets as are specified in such notice.

11.

Exoneration

11.1

Exoneration

11.2

Indemnity

12.

Appointment of Receiver or Administrator 

12.1

Appointment

(a)

At any time on or after the Enforcement Date, at the request of the Company or its directors, the Secured Party may, without prior notice to the Company, in writing (under seal, by deed or otherwise under hand) appoint:

(i)

a Receiver in respect of the Charged Assets or any part thereof and may in like manner from time to time (and insofar as it is lawfully able to do) remove any Receiver and appoint another in his stead; or

(ii)

one or more persons to be an Administrator in accordance with paragraph 14 of Schedule B1 to the Insolvency Act 1986.

(b)

Nothing in Clause 13.1 (Powers) shall restrict the exercise by the Secured Party of any one or more rights of a Secured Party under Schedule B1 to the Insolvency Act 1986 and the rules thereunder or at common law.

12.2

More than one receiver

12.3

Receiver as agent

12.4

Receiver’s remuneration

12.5

Actions of an Administrator

13.

Receiver’s Powers 

13.1

Powers

(a)

all of the powers of a receiver or an administrative receiver set out in Schedule 1 to the Insolvency Act 1986 (whether or not the Receiver is an administrative receiver);

(b)

all of the powers conferred from time to time on receivers, mortgagors and mortgagees in possession by the LPA or any applicable law;

(c)

all the powers and rights of a legal and beneficial owner and the power to do or omit to do anything which the Company itself could do or omit to do; and

(d)

the power to do all things which, in the opinion of the Receiver, are incidental to any of the powers, functions, authorities or discretions conferred or vested in the Receiver pursuant to this Agreement or upon receivers by statute or law generally (including, without limitation, the bringing or defending of proceedings in the name of, or on behalf of, the Company, the collection and/or realisation of Charged Assets in such manner and on such terms as the Receiver sees fit; and the execution of documents in the name of the Company (whether under hand, or by way of deed or by utilisation of the company seal of the Company)).

13.2

Powers may be restricted

14.

Protection of Purchasers

14.1

Absence of enquiry

14.2

Receipt: conclusive discharge

15.

Power of Attorney and Delegation

15.1

Power of Attorney: General

(a)

to execute and deliver any documents or instruments which the Secured Party or such Receiver may require for perfecting the title of the Secured Party to the Charged Assets or for vesting the same in the Secured Party, its nominee or any purchaser;

(b)

to sign, execute, seal and deliver and otherwise perfect any further security document which the Company is required to enter into pursuant to this Agreement; and

(c)

otherwise generally to sign, seal, execute and deliver all deeds, assurances, agreements and documents and to do all acts and things which (i) may be required for the full exercise of all or any of the powers conferred on the Secured Party or any Receiver under this Agreement; (ii) the Company is required to do pursuant to this Agreement; or (iii) may be deemed expedient by the Secured Party or a Receiver in connection with (A) any preservation, disposition, realisation or getting in by the Secured Party or such Receiver of the Charged Assets or any part thereof or (B) any other exercise of any other power under this Agreement.

15.2

Power of Attorney: Ratification

15.3

General delegation

(a)

The Secured Party and any Receiver (acting in good faith) shall have full power to delegate the powers, authorities and discretions conferred on it or him by this Agreement (including the power of attorney) on such terms and conditions as it or he shall see fit which shall not preclude exercise of those powers, authorities or discretions by it or him or any revocation of the delegation or any subsequent delegation.

(b)

Any such delegation may be made upon such terms, consistent with the terms of the Deed of Grant (including power to sub‑delegate) as the Secured Party may think fit.

(c)

Save in the case of gross negligence or wilful misconduct (in each case as determined by a court of competent jurisdiction in a final and non-appealable decision) by the Secured Party in the exercise of its right to delegate, the Secured Party shall not be in any way liable to the Company or any other person for any losses, liabilities or expenses arising from any act, default, omission or misconduct on the part of any Delegate.

16.

Application of Monies Received Under this Agreement

16.1

Order of application

16.2

Suspense account

17.

Release of Security

17.1

Release of Security at the end of the Security Period

17.2

Release of Security upon Disposal

(a)

the Charged Asset is disposed of in compliance with the terms of the Existing Security Documents, or otherwise in accordance with Clause 7.2  (Disposals); or

(b)

the Charged Asset is disposed of by any Receiver or other person in accordance with the powers granted under this Agreement.

17.3

Avoidance of payments

(a)

No amount paid, repaid or credited to a Secured Party shall be deemed to have been irrevocably paid if the Secured Party (acting reasonably) considers that the payment or credit of such amount is capable of being avoided or reduced because of any laws applicable on bankruptcy, insolvency, liquidation or any similar laws. 

(b)

If any amount paid, repaid or credited to a Secured Party is avoided or reduced because of any laws applicable on bankruptcy, insolvency, liquidation or any similar laws then any release, discharge or settlement between the Secured Party and the Company shall be deemed not to have occurred and the Secured Party shall be entitled to enforce this Agreement subsequently as if such release, discharge or settlement had not occurred and any such payment had not been made.  The Company shall on demand indemnify the Secured Party against any funding or other cost, loss, liability or expense incurred by the Secured Party as a result of the Secured Party being required for any reason to refund all or part of any amount received by it in respect of any of the Secured Liabilities.

18.

Power of Severance

19.

New Accounts

20.

Miscellaneous

20.1

The Company

20.2

Assignment and transfer

20.3

Property

20.4

Continuing Security

(a)

This Agreement shall be a continuing security and shall not be discharged by any intermediate payment or satisfaction of the whole or any part of the Secured Liabilities.

(b)

If any purported obligation or liability of the Company to the Secured Party which if valid would have been the subject of any obligation or charge created by this Agreement is or becomes unenforceable, invalid or illegal on any ground whatsoever whether or not known to the Secured Party, the Company shall nevertheless be liable in respect of that purported obligation or liability as if the same were fully valid and enforceable and the Company was the principal debtor in respect thereof.  The Company hereby agrees to keep Secured Party fully indemnified against all damages, losses, costs and expenses arising from any failure of the Company to carry out any such purported obligation or liability.

20.5

Waiver of defences

(a)

any time, waiver or consent granted to, or composition with, the Company or any other person;

(b)

the release of the Company or any other person under the terms of any composition or arrangement with any creditor of any person;

(c)

the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, the Company, the Secured Party or any person or any non‑presentation or non‑observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;

(d)

any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of any person;

(e)

any amendment (however fundamental) or replacement of the Sale and Purchase Agreement, the Deed of Grant or any other document or security;

(f)

any unenforceability, illegality or invalidity of any obligation of any person under the Sale and Purchase Agreement, the Deed of Grant or any other document or security;

(g)

any insolvency or similar proceedings;

(h)

the existence of any claim, set‑off or other right which the Company may at any time have against the Secured Party or any other person; or

(i)

the making or absence of any demand for payment of any Secured Liabilities or other obligations on the Company or any other person, whether by the Secured Party or any other person.

20.6

Additional Security

20.7

Variation of Security

20.8

Enforcement of other Security

20.9

Custody

20.10

Costs and expense

21.

Notices

21.1

Communications in writing

21.2

Addresses

21.3

Delivery

(a)

Any communication or document made or delivered by one person to another under or in connection with this Agreement will only be effective:

(i)

if by way of fax, when received in legible form; or

(ii)

if by way of letter, when it has been left at the relevant address or five Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address,

(b)

Any communication or document to be made or delivered to the Secured Party will be effective only when actually received by it and then only if it is expressly marked for the attention of the department or officer identified with the Secured Party’s name in Clause 21.2  (Addresses) (or any substitute department or officer as it shall specify for this purpose).

22.

Certificates AND Determinations

23.

Partial Invalidity

24.

Counterparts

25.

Third Parties

26.

Governing Law

27.

Enforcement

27.1

Jurisdiction

(a)

The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement (including a dispute regarding the existence, validity or termination of this Agreement or any non‑contractual obligation arising out of or in connection with this Agreement) (a “Dispute”).

(b)

The Parties agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary.

(c)

This Clause 27.1 (Jurisdiction) is for the benefit of the Secured Party only.  As a result, the Secured Party shall not be prevented from taking proceedings relating to a Dispute in any

other courts with jurisdiction.  To the extent allowed by law, the Secured Party may take concurrent proceedings in any number of jurisdictions.

27.2

Waiver of immunity

(a)

agrees not to claim any immunity from proceedings brought by a Secured Party against it in relation to this Agreement and to ensure that no such claim is made on its behalf;

(b)

consents generally to the giving of any relief or the issue of any process in connection with those proceedings; and

(c)

waives all rights of immunity in respect of it or its assets.

Project LICENCES

1.

The Petroleum Production Licence P.592 dated 3 June 1987; 

2.

The Petroleum Production Licence P.361 dated 16 December 1980;

3.

The Petroleum Production Licence P.213 dated 15 March 1972;

4.

The Petroleum Production Licence P.218 dated 15 March 1972;

5.

The Petroleum Production Licence P.588 dated 3 June 1987;

6.

The Petroleum Production Licence P.226 dated 15 March 1972;

7.

The Petroleum Production Licence P.339 dated 16 December 1980;

8.

The Petroleum Production Licence P.219 dated 15 March 1972;

9.

The Petroleum Production Licence P.1314 dated 22 December 2005;

10.

The Petroleum Production Licence P.255 dated 30 November 1977;

11.

The Seaward Production Licence P.1615 dated 21 July 2009; and

12.

Any licence which is issued in substitution or replacement of any of the licences referred to in paragraphs 1 to 11 above.

Project CONTRACTS

1.

The joint operating agreement for P.592 Block 20/4b dated 2 September 1999;

2.

The Goldeneye unitisation and unit operating agreement dated 15 March 2002;

3.

The joint operating agreement for P.361 Block 29/1b dated 23 November 1988;

4.

The Triton joint facilities operating agreement dated 14 April 2000;

5.

The Bittern unitisation and unit operating agreement dated 23 January 2002;

6.

The Rochelle Field Unitisation and Unit Operating Agreement dated 1 July 2011;

7.

The joint operating agreement for P.213 Block 16/26a (Area A – “Alba Field Area”) dated 10 October 1990;

8.

The joint operating agreement for P.218 and P.588 Blocks 15/21f and 15/21b dated 13 August 1987 (as it applies to the Ivanhoe Area, the Rob Roy Area and the Hamish Area by virtue of a Supplemental Agreement dated 31 December 1987);

9.

The joint operating agreement for P.226 Block 15/27 dated 21 January 1998 as it applies in the manner of a separate contract to Area A – “Renee” (as described in the agreement entitled “Amendment to the Joint Operating Agreement for United Kingdom Petroleum Production Licence P.226 for Block 15/27” dated 25 February 2000 (the “Amendment Agreement”));

10.

The joint operating agreement for P.226 Block 15/27 dated 21 January 1998 (as amended under the terms of the Amendment Agreement) as it applies in the manner of a separate contract to Area Beta – “Rochelle” (as defined in an agreement dated 23 December 2009 entitled “Amendment to the Joint Operating Agreements for United Kingdom Petroleum Production Licence P.226 for Block 15/27 Area B and United Kingdom Petroleum Production Licence P.226 for Block 15/27 Area C” under which Areas B and C (each as defined in the Amendment Agreement) were merged and a new Area Beta was created);

11.

The joint operating agreement for P.339 Block 15/28b (“Rubie Field Area”) dated 26 January 1999;

12.

The joint operating agreement for P.219 Block 16/13a & 16/13e – “Enoch” dated 7 March 1986;

13.

The Enoch unitisation and unit operating agreement dated 1 July 2005;

14.

The Enoch PL Transport and Processing Agreement dated 24 February 2006;

15.

The joint operating agreement for P.1314 Block 23/16f – “Columbus” dated 27 September 2006;

16.

The joint operating agreement for P.255 Block 22/06a North – “Bacchus” dated 15 September 2006; and

17.

The joint operating agreement for P.1615 Block 15/26c dated 17 September 2010.

Form of NoticeS

1.

[on written request from the Secured Party to make all payments due to us in respect of the [Assigned Property] / [Charged Property] to the Secured Party instead at a bank account designated by the Secured Party unless and until the Secured Party notifies you otherwise; and]

2.

to disclose to the Secured Party such information regarding the [Assigned Property] / [Charged Property] as it may from time to time reasonably request and to send copies of all notices relating to the [Assigned Property] / [Charged Property] to the Secured Party.

1.

[save in respect of the Prior [Assignment] / [Charge] [and the Deposit Security Agreement,] ] you have not received any other notice of the interest of any third party relating to the [Assigned Property] / [Charged Property];

3.

you are not aware of any dispute between ourselves and yourselves relating to the [Assigned Property] / [Charged Property]; and

4.

you shall not raise any set off, defence or counter claim against the Secured Party in respect of any payments now or in future expressed to be payable under the [Assigned Property] / [Charged Property].  

LIST OF ALBA AND BACCHUS LICENCES AND JOAS COUNTERPARTIES