Common use of Work Program and Budget Clause in Contracts

Work Program and Budget. (a) Not less than 10 days nor more than 60 days before the end of each calendar year, the executive management shall prepare and submit to the Board for approval, a work program and budget for the Cooperative and the Colombia Business (having regard to, among other things, the capital requirements and financial obligations of the Relevant Companies) (“Work Program and Budget”). (b) Each annual Work Program and Budget shall, with respect to the applicable calendar year, contain: (i) a reasonably detailed list of the operations and activities to be conducted, described in sufficient detail to afford ready identification of the nature, scope, location, and expected timing and duration of each such activity; (ii) an estimate of the costs corresponding to each line item or category; (iii) reasonable and necessary supporting information; and (iv) such additional information and detail, if any, as the executive management of the Cooperative may deem suitable. (c) Each of the Members acknowledges that, as it is the case for any oil and gas operation, the Work Program and Budget will include a number of assumptions, estimates and projections provided by the Cooperative using its best judgment and knowledge. Actual development of results within the operations may differ from the anticipated Work Program and Budget for many reasons, including but not limited to: (i) changes in oil and gas prices, (ii) changes in well production rates, (iii) drilling results, (iv) decisions made by operators or partners in Blocks where any Relevant Company does not operate and has limited voting rights, (v) necessary changes to drilling schedules given issues that are beyond any Relevant Company’s control such as drilling results, local communities, road access, land access, availability of environmental permits from Governmental Entities, availability of adequate drilling and work-over rigs, among others, (vi) availability of equipment and services, and (vii) facts, circumstances or events that may cause immediate harm to human health, safety, property or the environment or that otherwise constitute emergencies. (d) The Members must use all reasonable endeavors and will empower the Cooperative’s executive management to ensure that during the calendar year to which a Work Program and Budget relates, the Cooperative and each Relevant Company conducts the Colombia Business in accordance with such Work Program and Budget, including any necessary deviation or modification to such Work Program and Budget given unanticipated changes as described in Section 4.08(c), provided however that any such deviation that is significant, shall be informed by the Cooperative to the Board with sufficient detail and explanations. In the event that the Board does not approve the Work Program and Budget, 100% of the relevant costs set forth in the Work Program and Budget for the previous year shall apply until the Work Program and Budget for the current calendar year is approved. (e) Subject to Section 4.08(f), the Board shall consider the draft Work Program and Budget received from the executive management and make a decision on whether to approve it (in accordance with Section 4.02(a)(xii)) ten (10) days before the commencement of the relevant calendar year. (f) During each calendar year, the Members shall ensure that the Board (irrespective of any ongoing review of other parts of the Work Program and Budget) approves as part of the Work Program and Budget, funding of sufficient sums so as to enable the Cooperative and each Relevant Company to: (i) meet their contractual obligations and expenditure requirements required under any Consent or the law; and (ii) maintain the Blocks in good standing. (g) In the event that variances from the Work Program and Budget result in (i) an overall increase in the funding needs for the Cooperative with respect to the approved Work Program and Budget of greater than fifteen percent (15%) or (ii) a line-item or category change of more than twenty-five percent (25%), the Cooperative shall submit a revised Work Program and Budget to the Board, with sufficient detail and explanation for the variances and deviations, which shall require approval of the LGI Member or the Director nominated by the LGI Member in accordance with Section 4.02(a)(xii).

Work Program and Budget. (a) Not less than 10 days nor more than 60 days before the end of each calendar year, the executive management shall prepare and submit to the Board for approval, a work program and budget for the Cooperative Company and the Colombia Business (having regard to, among other things, the capital requirements and financial obligations of the Relevant Companies) (“Work Program and Budget”). (b) Each annual Work Program and Budget shall, with respect to the applicable calendar year, contain: (i) a reasonably detailed list of the operations and activities to be conducted, described in sufficient detail to afford ready identification of the nature, scope, location, and expected timing and duration of each such activity; (ii) an estimate of the costs corresponding to each line item or category; (iii) reasonable and necessary supporting information; and (iv) such additional information and detail, if any, as the executive management of the Cooperative Company may deem suitable. (c) Each of the Members Shareholders acknowledges that, as it is the case for any oil and gas operation, the Work Program and Budget will include a number of assumptions, estimates and projections provided by the Cooperative Company using its best judgment and knowledge. Actual development of results within the operations may differ from the anticipated Work Program and Budget for many reasons, including but not limited to: (i) changes in oil and gas prices, (ii) changes in well production rates, (iii) drilling results, (iv) decisions made by operators or partners in Blocks where any Relevant Company does not operate and has limited voting rights, (v) necessary changes to drilling schedules given issues that are beyond any Relevant Company’s control such as drilling results, local communities, road access, land access, availability of environmental permits from Governmental Entities, availability of adequate drilling and work-over rigs, among others, (vi) availability of equipment and services, and (vii) facts, circumstances or events that may cause immediate harm to human health, safety, property or the environment or that otherwise constitute emergencies. (d) The Members Shareholders must use all reasonable endeavors and will empower the CooperativeCompany’s executive management to ensure that during the calendar year to which a Work Program and Budget relates, the Cooperative Company and each Relevant Company conducts the Colombia Colombian Business in accordance with such Work Program and Budget, including any necessary deviation or modification to such Work Program and Budget given unanticipated changes as described in Section 4.08(c), provided however that any such deviation that is significant, shall be informed by the Cooperative Company to the Board with sufficient detail and explanations. In the event that the Board does not approve the Work Program and Budget, 100% of the relevant costs set forth in the Work Program and Budget for the previous year shall apply until the Work Program and Budget for the current calendar year is approved. (e) Subject to Section 4.08(f), the Board shall consider the draft Work Program and Budget received from the executive management and make a decision on whether to approve it (in accordance with Section 4.02(a)(xii)) ten (10) days before the commencement of the relevant calendar year. (f) During each calendar year, the Members Shareholders shall ensure that the Board (irrespective of any ongoing review of other parts of the Work Program and Budget) approves as part of the Work Program and Budget, funding of sufficient sums so as to enable the Cooperative Company and each Relevant Company to: (i) meet their contractual obligations and expenditure requirements required under any Consent or the law; and (ii) maintain the Blocks in good standing. (g) In the event that variances from the Work Program and Budget result in (i) an overall increase in the funding needs for the Cooperative Company with respect to the approved Work Program and Budget of greater than fifteen percent (15%) or (ii) a line-item or category change of more than twenty-five percent (25%), the Cooperative Company shall submit a revised Work Program and Budget to the Board, with sufficient detail and explanation for the variances and deviations, which shall require approval of the LGI Member Shareholder or the Director nominated by the LGI Member Shareholder in accordance with Section 4.02(a)(xii).