Final of 16 April 07

TERM SHEET FOR 2006 AIPN INTERNATIONAL STUDY AND BID GROUP AGREEMENT
GUIDANCE NOTES
Introduction
This Term Sheet is designed to support the development and negotiation of an international study
and bid group agreement using the 2006 AIPN Model Form International Study and Bid Group
Agreement (the “Study and Bid Group Agreement”) as the basic form.
The Guidance Notes are intended to assist the oil and gas industry professional in utilizing the Term
Sheet as a preliminary step toward negotiating and consummating a Study and Bid Group
Agreement. The items included in the Guidance Notes are not all-inclusive; instead, they reflect the
drafting committee’s assessment of certain points that may warrant consideration by parties using
the Term Sheet.
The Term Sheet strictly follows the provisions of the Study and Bid Group Agreement. It does not
include alternative provisions or options that are not included therein, but if the parties wish to vary
the terms from those offered in the Study and Bid Group Agreement, then such provisions can be
set out in this Term Sheet as appropriate.
Rather than a contract summary, the Term Sheet provides a summary outline or checklist of
significant business provisions of the Study and Bid Group Agreement which, in the opinion of the
drafting committee, would be key points of discussion prior to the implementation of an actual
Study and Bid Group Agreement. Certain provisions identified below were not included in the
Term Sheet because, in the view of the committee, such provisions were not key to the description
of the business arrangement to be reached in the Study and Bid Group Agreement. To the extent the
parties deem that any such provision is of critical importance to the contemplated business
transaction, that provision can be added to the Term Sheet.
Structure
Areas of the Study and Bid Group Agreement not covered in this Term Sheet include:
Article 10. Audit
Article 16. Assignment
Article 18. Non-Waiver
Article 19. Notices
Article 22. Counterparts
Article 23. Entirety
In developing this Term Sheet, the drafting committee applied the following standards:
(i) Assumed that the objective of the term sheet is to facilitate reaching a final agreement
based on the Study and Bid Group Agreement.

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 (ii) Followed the Study and Bid Group Agreement without additions or variations. Assumed
that the practitioner would edit the Term Sheet for any unique or deal-specific terms;
certain of those issues are discussed in these Guidance Notes for the Study and Bid
Group Agreement.
(iii) Followed the Study and Bid Group Agreement in showing provisions in the Term Sheet
as standard terms or as alternative or optional provisions.
(iv) Created a “stand-alone” Term Sheet which provides enough information from the Study
and Bid Group Agreement so that there is no need to refer to the Study and Bid Group
Agreement to understand or discuss the provisions of the Term Sheet.
(v) Assumed that oil and gas professionals using the Term Sheet are familiar with the
concepts and essential issues in the Study and Bid Group Agreement.
(vi) Included only essential or primary business terms from the Study and Bid Group
Agreement in the Term Sheet.
(vii) Did not necessarily follow the exact article and section numbering from the Study and
Bid Group Agreement in the Term Sheet. A correlation table is contained herein to assist
the user in relating the Term Sheet provisions to the corresponding provisions of the
Study and Bid Group Agreement.
(viii) Prepared the Term Sheet in an effort to facilitate readability and promote discussion.
(ix) Formatted the Term Sheet so that the provisions are clearly visible and recognizable, and
there is space for working notations during discussions.
Although the Term Sheet is intended to stand alone without reference to the Study and Bid Group
Agreement, the drafting committee incorporated by reference defined terms from the Study and Bid
Group Agreement. The user may wish to use more generic terminology in this Term Sheet.
In order to facilitate the use of the Term Sheet, certain matters listed herein are in a different order
than their counterpart provisions in the Study and Bid Group Agreement, e.g., the Definitions
(Article 1) are found in Paragraph 16 of the Term Sheet.
In addition, certain items in this Term Sheet cover provisions from more than one section or article
of the Study and Bid Group Agreement, e.g., the identification of the parties (Page 1), the Study
Area (Page 1), the Operator (Article 2) and the Participating Interests (Article 4), are combined in
Paragraph 1 of the Term Sheet in order to simplify and streamline the Term Sheet.
Various optional or alternative terms under each article or section in the Study and Bid Group
Agreement have been grouped together in the Term Sheet to simplify and streamline the Term
Sheet.
Specific Provisions.
Other practice notes that were raised in drafting committee discussions include the following:
Paragraph 1. Operator, Parties, Participating Interests, and Study Area.
In the view of the drafting committee, consolidating these provisions of the Study and Bid
Group Agreement into a single paragraph appeared to fit the purposes of the Term Sheet. To the
extent a more detailed description of the Study Area is appropriate or desired for a particular
transaction; the parties can easily provide such a description in an exhibit to the Term Sheet.
In addition, the parties may wish to include in the Term Sheet a general recital of the purpose
of the Study and Bid Group Agreement. Such a statement of purpose can be added to Paragraph 1.
Paragraph 2. Disclosure of Information.
This provision offers two alternatives for disclosure of information. The broader definition,
providing for full disclosure (alternative 1), is generally recommended so as to ensure free flow of

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information in the spirit of joint cooperation (to the extent legally possible) for the mutual benefit of
the parties.
Paragraph 3. Responsibilities of the Parties.
This provision offers two alternatives defining the extent of Operator’s liability for its Gross
Negligence. The drafting committee noted that this is one of several instances in the Term Sheet
that the Operator / Non-operator distinction is quite important.
Paragraph 4. Application Procedure.
If a bidding procedure has been published by the Government, then parties using the Term
Sheet should confirm that the time-line set forth in Paragraph 4 is consistent with the time line set
out in the required bidding procedure.
Paragraph 5. Applications and Contracts.
This provision offers two alternatives defining the extent of Operator’s control of, and the
extent of Non-operators’ participation in, Negotiations with the Government. The drafting
committee noted that the parties should be wary of multi-party negotiations which may become
unfocused and ultimately unproductive.

The standard provision regarding Joint Operating Agreements is designed to promote the
timely execution of a Joint Operating Agreement after a Government Contract has been awarded.
The optional provisions provide a mechanism for governing the parties’ relationship based on
certain operating principles during the period between award of the Government Contract and
execution of the Joint Operating Agreement. Such operating principles are not as comprehensive
and do not provide the same level coverage of issues as a fully-negotiated Joint Operating
Agreement. The drafting committee noted that the parties’ reliance on the operating principles could
result in a failure to agree upon and implement a Joint Operating Agreement.

Paragraph 6. Invoicing.
The Term Sheet offers a choice of U.S. Dollars or Euros as the functional currency of the
Agreement. An alternative currency should be selected if required by the host country or at the
request of the Parties.
Paragraph 8. Default.
This provision provides for deemed withdrawal and automatic proportionate assumption by
the Non-Defaulting Parties in the event of a Party’s default, unless otherwise agreed. The drafting
committee noted that the parties could consider a mechanism to allow the Non-Defaulting Parties to
determine the percentage of the defaulting party’s Participating Interest that each is willing to
assume.
Paragraph 9. Exclusivity.
This provision prevents the Parties from submitting a bid or application over the Study Area
for a specific period of time following termination of the Agreement or the withdrawal or deemed
withdrawal of any Party. The Study and Bid Group Agreement provides for a one (1) year
exclusivity term as the default. The drafting committee noted that the parties may want to modify
the exclusivity period.
Paragraph 10. Withdrawal.
Although the standard provisions prohibit the withdrawal of a Party after it has received its
allocated participating Interest under an Application, or after an Application has been submitted to
the Government, the provision contains an option whereby a party may withdraw (i) if the

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Government unilaterally changes the bidding rules after the Application has been submitted, or (ii)
if the Government has not accepted the Application with a certain time period. The drafting
committee noted that the option permits a greater level of flexibility, particularly if the Parties
believe that either of such events under (i) or (ii) above is likely to occur.
Paragraph 11. Confidentiality.
The Study and Bid Group Agreement provides for a three (3) year confidentiality period as
the default. The drafting committee noted that the parties may want to modify such time period.
Paragraph 12. Press Releases.
This provision provides that Operator prepares and releases all public statements after
securing the unanimous approval of the Parties. The drafting committee noted that the Non-
operators may prefer an alternative that does not give Operator this responsibility.
Paragraph 13. Termination.
This paragraph provides the scenarios under which the Agreement will terminate including
the Parties’ refusal to submit any Applications for a certain period. The Study and Bid Group
Agreement provides for a one 1) year confidentiality period as the default. The drafting committee
noted that the parties may want to modify such time period.
Paragraph 16. Definitions.
Paragraph 16 of the Term Sheet contains the defined terms in the Study and Bid Group
Agreement which contain blanks, options, or alternatives which should be completed.

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 TERM SHEET FOR AIPN 2006 MODEL FORM INTERNATIONAL
STUDY AND BID GROUP AGREEMENT
GUIDANCE NOTES

Correlation Table

Term Sheet Provision Section in AIPN Model Form

1. Operator, Parties, Participating Cover Page and Page 1 Heading, Article 2,

Interests and Study Area Article 4

2. Disclosure of Information Article 3

3. Responsibilities of the Parties Article 5

4. Application Procedure Article 6

5. Applications and Contracts Article 7

6. Invoicing Article 9

7. Application and Negotiation Costs Article 8

8. Default Article 11

9. Exclusivity Article 12

10. Withdrawal Article 13

11. Confidentiality Article 14

12. Press Releases Article 15

13. Termination Article 17

14. Applicable Law / Dispute Article 20

Resolution

15. Warranties as to No Payments, Article 21

Etc.

16. Definitions Article 1