Schedule 1 Scope of Work Upper String HGR



SCHEDULE 1

SCOPE OF SERVICES

TUBING CONVEYED PERFORATING

EQUIPMENT AND SERVICES

(HENRY GOODRICH)

1. Introduction 2

1.1 Project Overview 2

1.2 Project Objectives 2

1.3 Lead Service Supplier 2

1.4 Technical Risk and Program Time 2

2. General Conditions 2

3. Husky Atlantic Region Well Overview 5

3.1 Applicable Fields 5

3.2 Completion Fluid Composition 5

3.3 H2S 5

3.4 Well Ratings 5

4. Personnel 6

4.1 Contractor Representative 7

4.2 Dedicated Support Engineer 7

4.3 Offshore Worksite Personnel 8

5. TCP Equipment 9

5.1 TCP Equipment Specifications 9

6. Reporting 11

7. Offshore Chemical Management System (CMS) Guideline 12

Introduction 12

Scope of CMS 12

Chemical Selection Criteria 13

8. Containerization 16

9. Obligation Checklist 17

Introduction

1 Project Overview

This Agreement will govern the provision of Tubing Conveyed Perforating and associated equipment and services utilized onboard the Operator’s contracted Drilling Unit(s) offshore Newfoundland and Labrador.

Operator’s East Coast operations are managed from the local office and are supported using the established logistics infrastructure and resources in St John's, Newfoundland and Labrador.

The transport of personnel to and from St. John's and the Operating Area is conducted mainly through helicopter but, in isolated situations, supply boats may be used. The Operating Area, as defined in the Agreement, covers all of the Operator's land holdings off the East Coast of Canada.

Consistent with the legislative requirements of the Canada Newfoundland Atlantic Accord Implementation Acts, the Operator is committed to enhancing the business opportunities for Canada and Newfoundland and Labrador. Consequently, Contractor is encouraged to utilize the services of Newfoundland and Labrador and other Canadian companies and personnel wherever possible.

2 Project Objectives

The long-term goals of the Operator are:

• Execute a cost-effective program, while maintaining health, safety, quality and environmental responsibilities and meeting all due diligence requirements.

• Minimize and phase capital expenditure.

• Establish and maintain cost-effective relationships with suppliers and contractors, creating long term mutual benefits and a local infrastructure.

• Effectively conduct core business activities.

• Optimize synergy opportunities with other operators in the area.

• Conduct operations with a moderate, cost effective, risk profile.

• Develop synergies within product lines for completion services.

3 Lead Service Supplier

Contractor has been selected as the lead service supplier for the scope of supply for Tubing Coveyed Perforating (TCP). The lead service supplier for the upper string completion contract is expected to oversee and co-ordinate the equipment supply, preparation, mobilization and running of all components for the upper string.

4 Technical Risk and Program Time

Contract award included the consideration of equipment and service, technical specifications as well as completion program run time, risk and non-productive time. Any reduction in technical risk as well as any reduction in the completion program steps and/or time have been considered.

General Conditions

This Agreement will include the provision of Tubing Conveyed Perforating (TCP) personnel, equipment, materials and services in relation to drilling, completions and intervention operations from the Drilling Unit.

• All services shall be undertaken using current best practices and in compliance with any specifications or recommendations outlined in this document or subsequent attachments hereafter. These activities shall be carried out in accordance with the Canada Newfoundland & Labrador Offshore Petroleum Board (CNLOPB) regulations.

• Contractor must be demonstrably competent, independent, and adhere to the Contractor HSEQ (Health, Safety, Environmental and Quality) Requirements.

• Contractor shall work strictly in accordance with and at all times comply with all relevant provincial and federal regulations, codes and standards and authorities appropriate to the Scope of Services, the subject of this Agreement.

• The Contractor shall make the equipment and facilities to be allocated to this Agreement available for safety and operability inspection, and integration testing by the Operator or an Operator appointed representative at any time prior to termination of the contract.

• The contractor shall provide replacement equipment as required if contracted equipment is not readily available for operations due to maintenance or any other reason not outside of operator’s control excluding redress or damage during transit to operating area.

• Contractor shall be responsible to make themself fully aware of the Drilling Unit and local operating conditions and to specify any operational limits deemed necessary.

• Contractor shall ensure that all Contractor’s equipment shall, on delivery, be accompanied by all appropriate current certification and maintenance records.

• Contractor shall maintain a sufficient inventory of spares and consumables on board the Drilling Unit to ensure continued operation of all systems and ancillary equipment for seven days.

• Contractor shall maintain locally 100 % back up of critical items for the well being completed and allow for sufficient operating spares and consumables as required to provide continuous operations.

• Contractor shall store, preserve and maintain the materials and equipment until such time as they are mobilized.

• Contractor shall be responsible for the assembly, testing and installation of Contractor’s equipment and materials at the work site.

• The Operator shall notify the Contractor in writing in advance of the expected mobilization date.

o Equipment is to be ready for mobilization to the rig for 1-May-2017. All equipment maintenance, assembly, testing and certification is the contractor’s responsibility and must be complete prior to mobilization.

• Because of logistical and timing constraints of supplying items outside of the operating area preference will be given to optional or contingent equipment and supplies which will be on a call out basis and which will be situated in eastern Canada.

• The Operator reserves the right to contract alternative “best in class” services to compliment services provided by the Contractor. The Contractor will make available the necessary data to facilitate integration of alternate services.

• Contractor shall provide an offshore team of qualified, experienced personnel to ensure 24-hour operational and maintenance capabilities. Contractor shall also provide qualified relief personnel to work on a rotational basis as per the Operator’s preferred schedule. The anticipated preferred offshore rotation is 21 days. All personnel will be required to have and maintain all training and certifications required for working offshore Canada/Newfoundland.

• Contractor shall provide crew list containing the names, roles and experience of each crew member before commencement of operations for company approval.

• Contractor shall not change Contractor’s Personnel from their designated positions without prior written approval from the Operator as per MOC procedure outlined in the Drilling and Completions Operations Manual (available for review upon request).

• Contractor shall identify any reduction in personnel requirements associated with the utilization of more than one of the services identified in this Agreement.

• The Operator reserves the right to reject any Contractor’s Personnel that the Operator considers unsuitable. The Contractor must provide qualified replacements at no additional cost to the Operator.

• Contractor, where providing equipment and services sourced from a third party, shall clearly indicate these items and state the name of the third party vendor.

• During the term of this Agreement the Contractor is encouraged to submit alternative proposals or specifications, in addition to that required by the Operator, where Contractor considers that such an alternative would be a technical, commercial, economic or operational improvement over the Operator’s original specification. Such alternative proposals shall be clearly identified and clearly indicate and justify all technical, commercial, economic or operational benefits over the specification required by Operator.

• The Contractor shall provide a detailed description of the equipment that is proposed under this Agreement. Any additional items that are not identified in the proposal, but are necessary for the Contractor to conduct the Services, shall be provided free of charge.

• The Contractor is responsible for performing Design Qualification testing ( DQT) to ensure that any component not previously used under these or more strenuous conditions is fit for purpose. Contractor shall review proposed equipment and provide a list of components that require design qualification testing.

• The Contractor shall:

i. complete a review and approval of quality plan for equipment and services to be provided.

ii. complete a review and approval of manufacturing and inspection /testing procedures where required

iii. submit a project specific “design of service” manual for the services and equipment for approval and review by Operator within 90 days of contract award.

• The prices set forth in Schedule 2 - "Compensation for Services" will be applicable to any contract extension(s) subject to any pre-approved escalation of specific costs.

Husky Atlantic Region Well Overview

The following sections will provide background information that may be used in determining the equipment and services that will be required to fulfill the obligations of this Agreement.

1 Applicable Fields

This contract will extend over Husky’s expanding development and any potential exploration. The development areas include 3 significant extensions; the South White Rose Extension (SWRX), the North Amythest Extension and the West White Rose Extension (WWRX).

It is anticipated that these areas will be developed using four typical well types, though other designs may be possible in the future:

• Horizontal Oil Production Wells

• Deviated Gas Injection Wells

• Deviated Water Injection Wells

• Horizontal Water Injection Wells

2 Completion Fluid Composition

The proposed completion fluid shall vary depending on well type: formate brine, filtered brine with oxygen scavenger, biocide, and corrosion inhibitors containing organic amines or inhibited diesel.

3 H2S

Although the original concentration of H2S in the reservoirs is close to zero, with water injection wells are expected to sour. Because of this development wells are to be designed for 200 ppm H2S sour service. As such both carbon steel and 13 Chrome are suitable for Husky’s expected well conditions.

4 Well Ratings

The following table represents the well ratings for the SWRX field as it has the highest rating for the White Rose development:

Table 1 - Well Design Ratings

|Well Type |Well Rating |

|SWRX Poll Producers |41.5 MPA |

| |(6020 psi) |

|Gas Injectors |44.8 MPa |

| |(6500 psi) |

|Water Injectors |38.0 MPa |

| |(5510 psi) |

|Other Producers |The greater of: |

| |34.5 MPa or, |

| |Max SITHP + 3.5 MPa Kill Margin |

|Exploration Wells |The greater of: |

| |Max. SITHP + 7.0 MPa Kill Margin |

| |Max. Fracture Pressure |

| |Max. Pressure to Fire Perforating guns. |

The following tubing weights are found suitable for the various completion types:

Table 2 - Tubing Sizes and Weights

|Well Type |Tubing Size (mm) |Weight (kg/m) |

|Producer |139.7 x 177.8 |25.3 x 38.7 |

|Gas Injector |139.7 |29.76 |

|Water Injector |177.8 |38.7 |

6 Rock Properties

Table 3 - Avalon Formation Rock Properties

|Rock Property | |

|Es – Static Young’s Moduli (GPa) |22 |

|(s – Static Poisson’s Ratio |0.18 |

|(p – Peak Friction Angle |50 |

|Cp – Peak Cohesion (MPa) |13.5 |

Table 4 - Unconfined Compressive Strength for White Rose L-08

|Zone |UCS (MPa) |

|Gas |104 |

|Oil |74 |

|Oil-Water Transition |76 |

|Water |114 |

According to API standards (API RP 43) all perforation gun systems are tested in Berea sandstone with a typical strength of 45 MPa. Gun penetration in the White Rose formation will therefore be significantly reduced compared to API documented data.

Table 5 - In-situ Stress

|Minimum Horizontal Stress |45.8 MPa |

|Maximum Horizontal Stress |47.0 MPa |

|Vertical Stress |65.0 MPa |

The Contractor shall provide a statement of previous work experience, in close proximity to the Operating Area and over the last five years accompanied with the relevant reference contacts. If the Contractor has been dismissed from a job prior to conclusion of the contract, details of this dismissal should also be provided. Any work experience in offshore operations in eastern Canada should be Highlighted.

Provision of Equipment and Services

1 Facilities

Contractor shall maintain Operating Area Facilities in the environs of St. John’s, Newfoundland for the storage, preservation, maintenance and repair of equipment to be supplied under this contract..

The Contractor shall provide a description of all proposed facilities. It shall include the facility locations and capacities statements in regards to offered services and the capacity to supply contingency equipment and conduct any required maintenance. The facility should staffed by employees of the Contractor with suitable number and experience to provide timely support and maintenance on an as-needed basis.

Contractor to provide a climate controlled explosives bunker(s) suitable for storage of explosives in accordance with local legislation.

The Contractor is to provide a gun loading facility where TCP guns can be loaded and stored in advance of perforating job. The facility should be able to store up to 1000m of loaded TCP guns and the associated equipment for an upcoming job.

1 Perforation Test Facility

The Contractor should provide a Perforation Testing Facility to determine the effectiveness of various perforating equipment and techniques on Husky core. The following information regarding any perforation testing facility is required:

• Location

• Testing capabilities

• Accessibility timeline

• Cost of using the facility to perforate core samples

2 Personnel

Contractor shall supply personnel to supervise the assembly, preparation, testing, system integration and offshore service of all TCP and related handling equipment.

The Contractor will supply a Contractor Representative to provide technical support and coordinate activities. As well the Contractor will supply Offshore Work site Personnel to supervise and handle equipment, materials, and operation.

1 Contractor Representative

The Contractor will supply the name and resume of the Contractor’s Representative for the duration of the Services.

The Contractor Representative will perform but not be limited to the following minimum tasks:

• Liaise with the Operator to deal with equipment, personnel, scheduling, and operational issues.

• Provide recommendations with respect to the services being provided, both during the planning and execution phases of the service.

• Be available to attend pre-spud meetings and end of well meetings at the request of the Operator and attend operations meetings at the Operator’s, St. John’s office during the performance and preparation of the services.

• Prior to the commencement of each service a copy of the “Group Loading” will be sent to the Contractor’s Representative for input and comment.

• Interface with Operator’s other Contractors to coordinate equipment requirements and operating procedures.

• Shall maintain an interface register which shall list contractor’s interfaces with other major contractor’s equipment. The interface register shall include, but not be limited to; Marine riser, MODU, BOP, Wire line, Coil Tubing, Internal fluids, External fluids, THRT/TCRT, Control system, and Control fluid.

• Coordinate equipment, personnel and scheduling for preparation, mobilization, execution, demobilization and after action review of services.

• Coordinate with Operator for the transportation of equipment and materials to and from Operator’s Marine Base, and oversee handling at the dock facility.

• Coordinate the activities of Contractor’s Worksite personnel.

• Provide support 7 days a week and 24 hours a day. When unavailable the Contractor’s Representative will fax or e-mail the Operator with the name of the alternate representative (including all necessary contact numbers).

• Present Contractor’s End of Well Report to Operator.

Any costs associated with the Contractor’s Representative will be included in the daily equipment rate.

2 Dedicated Support Engineer

The Contractor will supply the name and resume of the Dedicated Support Engineer for the duration of the Services.

The Dedicated Support Engineer will perform but not be limited to the following minimum tasks:

• Liaise with the Operator to provide technical information or deal with technical issues.

• Review and provide perforating analysis/modeling, gun diagram sheets and end of well reports.

• Liase with Contractor’s global support engineering structure.

• Interface with certifying authority on all certification issues.

• Perform any required calculations.

• Attend any required HAZOPs and risk assessments.

• Provide technical specifications of equipment on an as needed basis.

• Be available locally during Completion Well on Paper, gun loading, job load out, execution and after action review.

Any costs associated with the Contractor’s Representative will be included in the daily equipment rate.

3 Offshore Worksite Personnel

The contractor shall supply a pool of possible candidates that will be made available for the Services. The Contractor will define their minimum qualifications in terms of education, training and experience for each position. The Contractor will supply a job description for the various designated offshore positions, which shall include specific responsibilities.

The Contractor shall ensure that all workers meet all Operator and regulatory training and certification requirements.

Prior to the commencement of work, the Contractor shall submit to the Operator, a list of personnel proposed to supply or undertake the work, their assigned offshore positions, along with their qualifications, for approval.

The Offshore Worksite Personnel will be responsible for, but not limited to, the following tasks, under the supervision of the Operator’s Completion Supervisor:

• Checking inventory, loading/unloading and storage of all equipment upon arrival at or departure from the Drilling Unit.

• Maintaining a current inventory and ensuring that the Contractor has adequate equipment and spares on site for the upcoming work.

• Have certified training for explosives handling in accordance with Canadian regulations.

• Supervision/handling during make-up and running of TCP guns, firing heads and ancillary equipment on the drill rig.

• Rigging up and supervising of any Contractor equipment above or below rotary.

• Prepare Transportation of Dangerous Goods (TDG) documentation as required.

• Supplying daily cost reports to Operator’s offshore representative.

• Preparing offshore calculations.

• Informing Operator’s on site representative of status of the equipment.

• Preparing job report at the end of the job.

• Contractor’s Offshore Work site personnel shall actively participate in safety drills, OH&S meetings and drilling contractor’s safety initiatives.

3 TCP Equipment

Contractor shall supply the TCP equipment for any requested production, gas injection, water injection and/or exploration wells. This equipment shall include the section of the string below any temporary or permanent production packer (including crossovers and surface handling equipment).

The contractor shall provide a detailed breakdown of all the equipment to be supplied.

The Contractor shall supply historical operational performance data on similar job types.

Contractor shall supply an engineering data sheet for all proposed equipment that shall where applicable include, but is not limited to - outer diameter, inner diameter, internal pressure rating, external pressure rating, load rating, weights, duration in hole prior to degradation, gun swell after perforation, material specifications, etc.

Contractor shall offer to the Operator, this equipment as direct purchase and rental units for supporting equipment. The options shall be clearly identified within the bid.

The TCP equipment offered by the contractor shall be comprised of but not limited to the following components:

1. Bullnose

2. Tubing Conveyed Perforating Guns

- Historically: 4-1/2 & 7” TCP Guns with 135/45 Phasing and 12 SPF

3. Auto Release / Gun Drop Device

4. Firing Heads (FH) – Intelligent/Smart or Standard Tubing Pressure Activated

- Please list the options for the activation, delay and detonation of each available firing head (hydraulic, intelligent pressure profile, etc.) not including drop device.

5. Fill Subs

6. Fluid Isolation / Debris Sub

7. Blast Joints / Safety Spacers

8. FH / TCP Specific Fishing equipment

9. Toolhouse – Compliant with DNV 2.7-2

10. Other (as required)

1 TCP Equipment Specifications

The vendor is to advise if they do not meet or object to any of the below equipment specifications.

1 All explosive shall meet the safety standard API RP 67.

2 All perforating systems shall be tested according to the API RP 19B Section 1, Recommended Practices for Evaluation of Well Perforators.

3 The equipment shall be designed for H2S and CO2 service where requested by Husky, as dictated by expected well conditions.

4 The gun system shall withstand the maximum expected bottom hole pressure.

5 The gun system shall be compatible with the well fluids both prior to and after firing.

6 The guns system shall be designed such that, with the detonating device/ firing head connected to the perforating guns, and with the string being rigged up/down or deployed across the rotary table, detonation (from any cause) of the guns is prevented by at least two independent safety devices/arrangements.

7 Time-Temperature charts are required for all explosives that specify a documented stability after the maximum exposure time at temperature to avoid auto detonation.

8 Swelling and bending of guns after perforating shall be documented by testing the gun systems with the actual charges in the intended environment (gas or liquid).

9 Only Explosive designated as “Secondary” may be utilized in the gun string. Primary explosives are only allowed in detonators to be installed in firing heads

10 Hollow carriers with scallops should be used when running non-oriented gun systems. Strip guns should only be used where inner diameter prevents a hollow carrier gun system.

11 Guns without scallops are to be clearly identified as such to differentiate them from pipe. This identification should be easily visible regardless of weather, time, rotation or position.

12 Guns assemblies shall be clearly marked on outside and sequentially numbered. The loading section shall be marked with top and bottom shot.

13 Gun body connectors shall be designed such that they can be broken to release trapped pressure prior to mechanical separation.

14 Gun string connections shall be designed having two seals each individually capable of preventing the ingress of well fluids.

15 Detonators that do not require radio silence shall be validated by an independent, recognized testing agency and approved by Husky prior to first-time use on Husky’s installations.

16 Percussion detonators exposed to well fluids or unprotected are not allowed.

17 Firing heads that use detonators or initiators that require radio silence shall not be permitted.

18 Explosives in the firing head assembly and guns shall be isolated from well fluids by at least two seals, each independently being capable to withstand the system design pressure at the system maximum design temperature.

19 Only top mounted firing heads are permitted. Bottom mounted firing head are prohibited. For selective firing of guns on electric line, one of the firing heads is allowed to be installed in the bottom of the string.

20 For oriented perforating systems, the orientation of the perforation tunnels shall be within ± 10 degrees of the specified guns phasing in a 10 degrees/30 m dogleg. The system shall include orientation confirmation devices.

21 A safety spacer shall be installed between the firing head and the top shot to ensure that when the firing head is installed, the top shot shall always be below the rotary table while the firing head is connected. The top firing head shall NEVER be run as part of the top gun. This means the safety spacer had to long enough to put the top shot below the rotary after the slips are in and the safety clamp is installed. A minimum 3m safety spacer shall be installed between the tubing conveyed perforating firing head and the guns. This is not applicable for electric safe-type (wire line) firing heads.

22 Perforating guns shall be transported and stored with end caps including a device permitting pressure relief in case the pressure inside the gun build up if exposed to excess heat or fire.

23 The perforating system should include an auto-release device to drop the guns after perforation. The remaining part of the gun release sub has to act as a wire line re-entry guide.

24 The maximum size of the debris left in the hole shall not exceed 10 mm in diameter. This shall be documented by an accepted test procedure.

4 Supporting Equipment

The Contractor shall supply the following equipment, as required to support the TCP equipment:

• Workshop containers with crane, work benches, vices, slings, etc.

• Spare parts and tools

• Explosive magazine / storage

• Contingency perforating system

• All consumable items

The Contractor shall provide all consumables, spare parts, maintenance and technical support as required to ensure that the Contractor’s equipment operates efficiently and reliably.

The Contractor shall provide all attendant equipment, such as centralizers, orienting devices, spacers, connections, handling tools, etc., required to perforate. This includes connections and equipment as required to interface with equipment not supplied by the Contractor.

The Contractor shall supply extra perforating equipment and accessories at the worksite (primary and backup) each time a perforating assembly is required. The Contractor shall:

• Provide 50% redundancy on perforating guns on each job unless otherwise requested.

• Provide 100% redundancy on all attendant equipment on each job.

5 Charge Types

The Contractor shall state recommended charge types (more than one potential recommendation is acceptable) based upon White Rose rock and reservoir properties. The Contractor shall justify recommendations and provide specifications of various charge types, including exposure thresholds at temperature, charge shape, depth of penetration, available shot densities for recommended gun sizes.

6 TCP Equipment and Procedures

The Contractor shall supply all tubing, pups, crossovers, and associated tools.

The Contractor shall propose TCP equipment and procedures for water and gas injector wells.

In addition to the above, the Contractor shall supply details of the proposed firing heads complete with detonation methods and failure contingencies. Smart/Intelligent firing heads will be weighted higher than conventional hydraulic activated firing heads.

1 Information/Data Requirements

The contractor shall supply:

• Track record of all proposed equipment and database of long horizontal well perforating on mobile offshore drilling units.

• Recommended tool string components, schematics and operating procedures.

• Perforating data including gun type and size, charge type and weight, shot density, penetration, perforation diameter and phasing. Provide API test data.

• Tool dimensions (OD, ID, length and weight, external drift).

• Design Specifications (burst, collapse, tensile ratings)

• Applicable certificates (e.g. MI).

• Material data sheets.

• Operating envelopes.

• Assembly drawings c/w parts listing.

• Complete technical description with running/pulling/operating procedures for all equipment proposed.

• Manufacturing lead-time.

• Lead-time required for delivery to Mobilization Point.

Reporting

The minimum reporting requirements to be conducted by the Contractor include:

The Contractor is required to submit a program before the start of each well, which should include but not be limited to:

• Cost estimate for all associated cost with the operation.

• Explosive Recommendation supported by perforation analysis

• TCP Engineering Data Sheets

• Draft gun loading sheets detailing loaded and blanked sections.

• Firing head(s) calculations and configuration(s) / command(s)

• Strapping sheets

• A draft tally

• Certificates for Shear Pins / Rupture Discs

• TCP Handling Procedures

• TCP contingency procedures (Pulling ro Dropping

• Group Loading

During TCP Operations offshore the Contractor shall provide:

• Certification Reports for surface equipment and tools

• Daily Reports to the Drilling Supervisor including at a minimum the daily sequence of events and daily costs

• As “As-Run” Tally and Gun Diagrams

• Summary of any failures and remedial actions taken.

The Contractor must provide an end-of-well report, for any services performed, within 14 days of completion of the work. A paper copy along with an electronic version of the report shall be submitted.

The end of well report must include but not be limited to:

• Evaluation of equipment performance.

• Detailed Sequence of Events.

• Details of any problems during the job and recommendations.

• Cost analysis showing planned costs against actual.

• Discussion of any failures or major variances from the well plan.

• Consumables used.

• Lessons learned and recommendations for improvement.

• Client Satisfaction Report / Survey

Offshore Chemical Management System (CMS) Guideline

Introduction

An Offshore Chemical Management System will be used to provide a consistent framework for responsible management, selection, treatment and disposal of identified chemicals as part of the Loss Control Management System for the White Rose oilfield development.

Legislative framework governing the CMS’s includes the following:

• Guidelines Respecting the Selection of Chemicals Intended to be used in Conjunction with Offshore Drilling and Production Activities on Frontier Lands (January 1999) (CNLOPB/CNSOPB/NSB).

• Fisheries Act

• Canadian Environmental Protection Act (CEPA)

• Transportation of Dangerous Goods Act (TDG)

• Hazardous Product Act

• Workplace Hazardous Materials Information System Regulations (WHMIS)

• Offshore Occupational Health and Safety Regulations

• International Commitments

– United Nations Law of the Sea Convention (1994)

– MARPOL 73/78 (International Convention for the Prevention of Pollution from Ships

– Agenda 21 (United Nations Conference on Environment and Development 1992)

– Convention of Biological Diversity (1992)

– Organization for Economic Cooperation and Development (OECD)’s Environment Directorate Guidelines on Harmonization of Classification and Labeling.

Scope of CMS

The Operator and the Contractor will use a number of chemicals during its East Coast drilling and production activities that may:

• be discharged into the marine environment

• require special handling and storage to minimize the safety and health risk

The operator will require all chemicals to be screened to satisfy the health safety and environmental risk criteria specified by the legislative framework outlined in the above section.

Chemical Selection Criteria

Chemical selection will be based on the following:

• Performance of the product

• Cost of the product

• Efficacy of the product

• MSDS attached and valid

• Product approved as per the OCSG Screening Flowchart (attached)

Operator representative, under the terms of the contract, will:

• maintain the chemical screening process as required by the Regulatory Offshore CMS Guidelines and provide to the Contractor as required.

• review and sign the attached Chemical Authorization Form (attached) as required for each chemical being used for offshore purposes and ensure copy of form is maintained for audit purposes.

• Maintain approved list for chemicals being used offshore.

Contractor, under the terms of the contract, will:

• provide to the Operator for review and approval, their Chemical Management System (CMS) procedure applicable to offshore activities and in accordance with the process provided by the operator.

• at the cost of the Contractor, make provisions for testing, where required under the attached screening process and provide results to operator representative through the attached Chemical Authorization Form for final approval.

• make provisions for any substitutions, at the Contractor’s cost, of products that may not be acceptable under the screening process and notify Client of changes.

• make provisions for the Operator to audit the Contractor’s CMS as required.

• make available to work site all up-to-date MSDS, with respect to controlled products

The Contractor’s Chemical Management System will be required to meet the Offshore Chemical Management System Guidelines as a minimum.

CHEMICAL AUTHORIZATION FORM No. __________

|Chemical Name: |Class: |

|PIN #: |MSDS required: YES NO |

|Purpose Chemical used for: |

| |

| |

|Transport Container Used (i.e. Bulk Container, Tote Tank, Pail, Bag, Box, Drum, etc.): |

| |

| |

|Manufacture Company: |Address: |

|Chemical Screening Process Complete YES NO PASS FAIL |

|Chemical Approved for Other Purposes YES NO (If YES, complete next line) |

|List other uses of chemical: |

| |

| |

| |

|Contractor Approval: |(Print Name) |(Signature) |(Date) |

|Ops Rep Approval: |(Print Name) |(Signature) |(Date) |

Containerization

The contractor shall provide any and all non-standard cargo carrying units (CCU) required to transport Contractor’s plant, equipment and materials between the Marine Base and offshore installation.

Such CCUs shall be designed, fabricated, certified and maintained in accordance with DNV 2.7-1 (-20(C) or DNV 2.7-3 (-20(C).

Contractor shall provide all slings and rigging equipment required for the transportation of Contractor’s equipment and materials. Contractor shall be required to ensure that all rigging equipment is inspected, maintained and fully certified and that a recognized and documented testing/management program is in place to ensure the continued integrity and safety of Contractor’s in-service rigging equipment.

Contract shall immediately remove from service and replace any and all rigging equipment that does not conform to established standards. Testing and certification of all rigging equipment shall conform to the requirements set forth in DNV, Rules for Certification of Lifting Appliances, 1994 and Guidelines for the Control and Handling of Offshore Containers in the Newfoundland Offshore Area.

Obligation Checklist

| | |Supplied by : |At Expense of : |

| |Obligation Description |Contractor |Operator |Contractor |Operator |

| |Supply and/or provide the equipment, materials, tools and consumables |⎫ | |⎫ | |

| |together with the Personnel as described in Schedules 1 and 2 to conduct | | | | |

| |the Services. | | | | |

| |All personnel and supervision necessary to operate the Contractor’s Items |⎫ | |⎫ | |

| |as specified according to Schedules 1 and 2. | | | | |

| |Suitably package, label and stow Contractor’s Items for transportation. |⎫ | |⎫ | |

| |Perform the Services and maintain Contractor’s Items in accordance with all|⎫ | |⎫ | |

| |applicable laws and regulations. | | | | |

| |(a)All transportation equipment required to mobilize the Contractor’s Items| |⎫ | |⎫ |

| |from the Contractor’s facilities to the Operator’s supplied marine shore | | | | |

| |base. | | | | |

| |(b) All slings and lifting equipment (including cranes) required to load |⎫ | |⎫ | |

| |Contractor’s Items at Contractor’s facilities on Operator supplied | | | | |

| |transportation. | | | | |

| |(c) All marine transportation equipment and services to mobilize the | |⎫ | |⎫ |

| |Contractor’s Items from Operator’s marine shore base to the Operating Area.| | | | |

| |(d) All marine transportation equipment and services to demobilize | | | | |

| |Contractor’s Items from the Operating Area to Operator’s marine shore base.| |⎫ | |⎫ |

| | | | | | |

| |(e) All transportation equipment required to demobilize the Contractor’s | | | | |

| |Items from Operator’s marine shore base to Contractor’s facilities. | |⎫ | |⎫ |

| |Maintain Contractor’s Items in optimum operating condition and make any |⎫ | |⎫ | |

| |necessary replacements, repairs and re-supply. | | | | |

| |(a) Transportation of all Contractor’s replacements, supplies, spare parts|⎫ | |⎫ | |

| |and defective Items from all locations to Operator’s marine shore base. | | | | |

| |(b) Transportation of all Contractor’s replacements, supplies, spare parts| | | | |

| |and defective Items from Operator’s marine supply base to Operating Area. |⎫ or |⎫ | |⎫ |

| |(c) Transportation of the Contractor’s replacements, supplies, spare parts| | | | |

| |and defective Items within the Operating Area as may be directed by | | | | |

| |Operator. | |⎫ | |⎫ |

| | | | | | |

| |All taxes, permits and fees required to be paid by the Contractor. |⎫ | |⎫ | |

| |(a) Transportation of Contractor’s Personnel between all locations and |⎫ | |⎫ | |

| |St. John’s, Newfoundland. | | | | |

| |(b) Transportation all Contractor’s Personnel between St. John’s, | | | | |

| |Newfoundland and the Operating Area. | |⎫ | |⎫ |

| |(c) Transportation of Contractor’s Personnel, within the Operating Area. | | | | |

| |(d) Accommodation and meals for Contractor’s Personnel due to the delay of| |⎫ | |⎫ |

| |Operator-supplied transportation to the Drilling Unit. | | | | |

| |(e) Accommodation and meals within the Operating Area for the Contractor’s| |⎫ | |⎫ |

| |Personnel during the performance of the Services. | | | | |

| | | | | | |

| | | |⎫ | |⎫ |

| |All income tax for expatriate and national personnel supplied by the |⎫ | |⎫ | |

| |Contractor. | | | | |

| |Work permits, fees, licenses, clearance, import tariffs or similar charges |⎫ | |⎫ | |

| |including brokerage and agent fees in connection therewith imposed on the | | | | |

| |Contractor’s Items, supplies and Personnel to be supplied by the | | | | |

| |Contractor. | | | | |

| |Comply with all requirements and restrictions regarding import, use, | ⎫ |and ⎫ | ⎫ | |

| |re-export and exemptions for Contractor’s Items. | | | | |

| |Re-Exportation of Contractor’s Items used in association with this | | | | |

| |Agreement. |⎫ |and ⎫ |⎫ | |

| |(a) All fuel for Contractor Items in the Operating Area while operating | |⎫ | |⎫ |

| |rate applies. | | | | |

| |(b) Transporting and maintaining fuel stocks at Operating Area. | |⎫ | |⎫ |

| |Oil, lubricants, and cleaning solvents for Contractor’s equipment. |⎫ | |⎫ | |

| |Soft rope, rags etc. |⎫ | |⎫ | |

| |Welding for rigging up Contractor’s Items. | |⎫ | |⎫ |

| |Equipment and Services for Contractor’s communication with Contractor’s | |⎫ | |⎫ |

| |base in St. John’s. | | | | |

| |Clean up Contractor’s supplies and rubbish prior to leaving site including |⎫ | |⎫ | |

| |pollutants oil spills etc. | | | | |

| |(a) The re-supply and restocking of Contractor’s Items due to the | | | | |

| |premature failure. This includes the rental charges of the failed equipment|⎫ | |⎫ | |

| |during demobilization and the replacement charges during mobilization. | | | | |

| |(b) The supply of additional Items above the initial quantities quoted in | | | | |

| |Schedule 1 and Schedule 2. This includes the cost of transport from the | | | | |

| |Contractor’s quoted stock point to the Operating Area. | | | | |

| |(c) Liability for loss or damage of the Contractor’s Items during |⎫ | | |⎫ |

| |Mobilization and Demobilization from the Operating Area and between the | | | | |

| |drilling locations. | | | | |

| |(d) Liability for loss or damage of the Contractor’s Items during the | | | | |

| |Services. | | | | |

| |(e) Liability for loss or damage of the Contractor’s Items during in-hole | | | | |

| |use. | |⎫ | |⎫ |

| |(f) The duty and customs fees on any imported Items which cannot be | | | | |

| |exported due to loss or damage (except during in-hole use). | | | | |

| |(g) The duty and customs fees on any imported Items that cannot be | | | | |

| |exported due to loss or damage resulting from in-hole use. | | | | |

| |(h) Redress and inspection services as Specified in Schedule 1 and 2. |⎫ | |⎫ | |

| | | | | | |

| | | | | | |

| | | |⎫ | |⎫ |

| | | | | | |

| | | | | | |

| | |⎫ | |⎫ | |

| | | | | | |

| | | | | | |

| | | | | |⎫ |

| | | |⎫ | | |

| | | | | | |

| | | | | |⎫ |

| | | | | | |

| | |⎫ | | | |

| |Repairs to tools rented by Contractor at Operator’s request. | | | | |

| | | |⎫ | |⎫ |

| |Inspection certificates according to API-IADC/ISO standards or required by | | | | |

| |the Certifying Authority for any applicable equipment supplied by the | | | | |

| |Contractor. | | | | |

| |(a) Immediately prior to Operator’s operations. | | | | |

| |(b) Subsequent to Operator’s operation at request of Operator. | | | | |

| | | | | | |

| | |⎫ | |⎫ | |

| | | | | | |

| | |⎫ |or ⎫ | |⎫ |

| |Cargo carrying units and slings for Contractor’s equipment which are | | | | |

| |designed, constructed, maintained and certified in accordance with DNV |⎫ | |⎫ | |

| |2.7-1 or DNV 2.7-3, using low temperature (-20 degrees C) construction | | | | |

| |materials deemed suitable for the prevailing weather conditions offshore | | | | |

| |Newfoundland. | | | | |

| |Safety equipment including overalls, hard hats and safety boots for | | | | |

| |Contractor’s Personnel. |⎫ | |⎫ | |

| |Offshore training and certification for all offshore personnel including, | | | | |

| |but not limited to medical fitness, basic survival training and H2S |⎫ | |⎫ | |

| |awareness | | | | |

| |Emergency transport to and from drilling location of equipment, personnel | | | | |

| |or services as a result of failure of the Contractor’s and Contractor’s |⎫ |or ⎫ |⎫ | |

| |third party equipment. | | | | |

| |Maintain the Products and quantities as specified in Schedules 1 and 2 at | | | | |

| |its supply base or mutually agreed upon stock point and for the use of |⎫ | |⎫ | |

| |Operator. | | | | |

| |Supply the necessary Products in case of emergency or unanticipated large | | | | |

| |usage or losses. | | | | |

| |Supply the Products within the specified time frame. | | | | |

| |Buy back all remaining Products supplied by the Contractor at the |⎫ | | |⎫ |

| |restocking prices specified in Schedule 2. | | | | |

| | | | | | |

| | |⎫ | |⎫ | |

| | | | | | |

| | | | | | |

| | |⎫ | |⎫ | |

| |Supply the following reports and notices as per the specified GSA Clause | | | | |

| |or Schedule: | | | | |

| |(a) All accidents or occurrences involving the Contractor’s Personnel or | | |⎫ | |

| |third party personnel, or damages to the Contractor’s Items or property of | | | | |

| |third parties. |⎫ | | | |

| |(b) All labour, equipment, materials, special tools, supplies or services | | |⎫ | |

| |furnished by the Contractor for which Operator is obliged to reimburse | | | | |

| |shall be recorded as provided on an API Report or other form as approved by| | | | |

| |Operator. | | | | |

| |(c) Seven (7) days after the end of each month a report must be submitted |⎫ | | | |

| |to Operator covering the total man-hours worked for the Contractor’s | | |⎫ | |

| |Personnel and third party personnel including details on loss time | | | | |

| |accidents. | | | | |

| |All pre-spud programs, end of well reports, weekly inventories, consumption| | | | |

| |reports and job tickets as specified in Schedules 1 and 2. | | | | |

| | | | | | |

| | |⎫ | |⎫ | |

| | | | | | |

| | | | | | |

| | | | | | |

| | | | | | |

| | | | | | |

| | | | | | |

| | |⎫ | | | |

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Figure 1 OCSG Screening Flowchart

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