Common use of Production, Distribution Clause in Contracts

Production, Distribution. 14.2.1 After deducting the percentage that corresponds to royalties, the rest of the hydrocarbons produced from each Commercial Reservoir is the property of the Parties in a proportion of thirty per cent (30%) for ECOPETROL, and seventy per cent (70%) for THE ASSOCIATE, until the time in which the audited accumulated production in the respective Commercial Reservoir reaches sixty (60) million barrels of standard condition liquid hydrocarbons or nine hundred (900) cubic giga feet of standard condition gaseous hydrocarbons, whatever occurs first. (1 cubic giga feet = 1x10/9/ cubic feet). For Reservoirs exploited under the Sole Risk Method, the distribution of the production, after deducting the royalty percentage, is the property of the Parties in a proportion of (100%) for THE ASSOCIATE, and zero per cent (0%) for ECOPETROL, until the audited accumulated production from the respective Reservoir first reaches either one of the aforementioned production limits. 14.2.2 Regardless of the classification of the Commercial Reservoir granted by ECOPETROL upon declaring commerciality, above the limits defined in number 14.2.1 hereunder, the distribution of the production in each Commercial Reservoir (after deducting the percentage that corresponds to royalties) is the property of the Parties in the proportion resulting from applying the R Factor, as explained herein below: 14.2.2.1 If the Hydrocarbon that first reached the limit stated in number 14.2.1 in this Clause was the liquid hydrocarbon, the following table will apply:

Production, Distribution. 14.2.1 After deducting the percentage that corresponds to royalties, the rest of the hydrocarbons produced from each Commercial Reservoir is the property of the Parties in a proportion of thirty per cent (30%) for ECOPETROL, ECOPETROL and seventy per cent (70%) for THE ASSOCIATE, until the time in which the audited accumulated production in the respective Commercial Reservoir reaches sixty an amount of five (605) million barrels of standard condition liquid hydrocarbons or nine hundred seventy-five (90075) cubic giga feet of standard condition gaseous hydrocarbons, whatever occurs first. (1 cubic giga feet = 1x10/9/ 1x109 cubic feet). For Reservoirs exploited under the Sole Risk Methodmechanism, the distribution of the production, after deducting the royalty percentage, is the property of the Parties in a proportion of (100%) for THE ASSOCIATE, ASSOCIATE and zero per cent (0%) for ECOPETROL, until the audited accumulated production from the respective Reservoir first reaches either one of the aforementioned production limits. 14.2.2 Regardless of the classification of the Commercial Reservoir granted by ECOPETROL upon declaring commerciality, above the limits defined in number number 14.2.1 hereunder, the distribution of the production in each Commercial Reservoir (after deducting the percentage that corresponds to royalties) is the property of the Parties in the proportion resulting from applying the R FactorFactor R, as explained herein below: 14.2.2.1 If the Hydrocarbon that first reached the limit stated in number 14.2.1 in this Clause was the liquid hydrocarbon, the following table will apply:

Production, Distribution. 14.2.1 After deducting the percentage that corresponds to royalties, the rest of the hydrocarbons produced from each Commercial Reservoir is the property of the Parties in a proportion of thirty per cent (30%) for ECOPETROL, and seventy per cent (70%) for THE ASSOCIATE, until the time in which the audited accumulated production in the respective Commercial Reservoir reaches sixty (60) million barrels of standard condition liquid hydrocarbons or nine hundred (900) cubic giga feet of standard condition gaseous hydrocarbons, whatever occurs first. (1 cubic giga feet = 1x10/9/ cubic feet). For Reservoirs exploited under the Sole Risk Method, the distribution of the production, after deducting the royalty percentage, is the property of the Parties in a proportion of (100%) for THE ASSOCIATE, and zero per cent (0%) for ECOPETROL, until the audited accumulated production from the respective Reservoir first reaches either one of the aforementioned production limits. 14.2.2 Regardless of the classification of the Commercial Reservoir granted by ECOPETROL upon declaring commerciality, above the limits defined in number number 14.2.1 hereunder, the distribution of the production in each Commercial Reservoir (after deducting the percentage that corresponds to royalties) is the property of the Parties in the proportion resulting from applying the R Factor, as explained herein below: 14.2.2.1 If the Hydrocarbon that first reached the limit stated in number 14.2.1 in this Clause was the liquid hydrocarbon, the following table will apply: R Factor Production Distribution after Royalties (%) THE ASSOCIATE ECOPETROL 0.0 to 1.5 70 30 1.5 to 2.5 70/( R-0.5) 100 - [70 / R-0.5)] 2.5 or more 35 65 14.2.2.2 If the Hydrocarbon that first reached the limit stated in number 14.2.1 in this Clause was the gaseous hydrocarbon, the following table will apply: R Factor Production Distribution after Royalties (%) EMPRESA COLOMBIANA DE PETROLEOS ECOPETROL RIO ▇▇▇▇▇▇▇▇▇ ASSOCIATION CONTRACT Pag. 24 THE ASSOCIATE ECOPETROL 0.0 to 2.0 70 30 2.0 to 3.0 70 / (R - 1.0) 100 - [70 / (R - 1.0)] 3.0 or more 35 65 14.2.3 Regardless of the classification of the Reservoir granted by ECOPETROL when the commerciality is defined, above the limits set in number 14.2.1 hereunder, the production from each Commercial Reservoir exploited under the Sole Risk Method, as per Clause 9 (number 9.5), after deducting the percentage that corresponds to royalties, is the property of the Parties in the proportion resulting from applying the R Factor, as explained herein below: 14.2.3.1 If the Hydrocarbon that first reached the limit stated in number 14.2.1 in this Clause was the liquid hydrocarbon, the following table will apply: R Factor Production Distribution after Royalties (%) THE ASSOCIATE ECOPETROL 14.2.3.2 If the Hydrocarbon that first reached the limit stated in number 14.2.1 in this Clause was the gaseous hydrocarbon, the following table will apply R Factor Production Distribution after Royalties (%) THE ASSOCIATE ECOPETROL EMPRESA COLOMBIANA DE PETROLEOS ECOPETROL RIO ▇▇▇▇▇▇▇▇▇ ASSOCIATION CONTRACT Pag. 25 14.2.4 For purposes of the above tables, the R Factor shall be defined as the relation of accumulated income expressed in constant terms, over accumulated expenses, also expressed in constant terms, which correspond to THE ASSOCIATE for every Commercial Reservoir in the following terms: IA R = --------------------------- ID + A - B + GO where IA (THE ASSOCIATE's ACCUMULATED INCOME): This is the appraisal of the accumulated income corresponding to THE ASSOCIATE's Hydrocarbons yield produce after royalties, at the reference price agreed between the Parties except for Hydrocarbons reinjected in the Fields of the Contracted Area, those consumed in the operation, and the burnt gas. Hydrocarbons average price will be mutually agreed between the Parties. Monthly income will be the basis to determine the accumulated income that will be determined as the result of multiplying the average monthly reference price for the monthly production, in accordance with the forms that have been issued by the Ministry of Mines and Energy for such purpose. ID (Accumulated Development Investments): Seventy percent (70%) of the accumulated Development Investment approved by the Association's Executive Committee for each Commercial Field. A: These are the Exploration Direct Costs incurred by THE ASSOCIATE, in accordance with Clause 9 of this contract and adjusted in accordance to Paragraph in Clause 9 (Item 9. B: This is the accumulated reimbursement of the aforementioned direct exploration costs, according to Clause 9 of this contract. GO (Accumulated Operation Expenses): These are the accumulated operation expenses approved by the Association's Executive Committee, in the proportion that EMPRESA COLOMBIANA DE PETROLEOS ECOPETROL RIO ▇▇▇▇▇▇▇▇▇ ASSOCIATION CONTRACT Pag. 26 corresponds to THE ASSOCIATE, plus THE ASSOCIATE's accumulated transportation expenses. It is understood as transportation costs the investment and operation costs of Hydrocarbons produced in the Commercial Fields located in the Contracted Area, from the Contracted Area to the exportation port or the place that has been agreed to take the price to be used for IA income calculation. Such transportation costs will be agreed by the Parties upon commencement of the development phase of the Fields, whose commerciality has been accepted by ECOPETROL. Special contributions or the like that can be applied over Hydrocarbons production in the Contracted Area are included in the operation's expenses. All values included in the equation to determine the R Factor will be taken in constant terms and to such effect they will be updated monthly with the average consumer index prices in industrialized countries, as of its execution date to the last day of the month to which the R factor is being applied. For the monthly update, 1/12 of the value resulting of averaging the annual percentage variation during the last two years of the consumer index price in industrialized countries will be used, taken from "International Financial Statistics" of the International Money Market Fund (page S63 or its substitute), or in absence thereof, the publication agreed by the Parties. To such effect, expenses in Colombian currency must be exchanged to U.S. dollars at the representative rate in the market, duly approved by the Banking Superintendence, or its substitute, that is in force on the date that the respective reimbursements are made.