PRODUCTION SHARING SECTION FIVE RECOVERY AS COST OIL – Right to Recovery as Cost Oil Exclusively in case of a Commercial Discovery, the Contractor shall be entitled to receive, as Cost Oil, a share of the Oil and Gas Production, according to the deadlines, criteria, and conditions established in Annex VII. Calculation and Recovery as Cost Oil The expenditures below shall be recovered as Cost Oil, according to the methodology and procedures provided for in Annex VII: expenditures previously approved by the Operating Committee, except for those which approval is waived by this Agreement; and expenditures recognized by the Manager. The expenditures incurred by the Contractors during the period preceding the execution of the Agreement and up to the creation of the Operation Committee may be recovered as Cost Oil as long as they are, cumulatively: Related to acquisition of data and information, obtaining licenses, authorizations, and governmental permits; Subject to recovery according to the criteria set forth in Annex VII; Ratified by the Operation Committee, prior to its effective recovery as Cost Oil. Recovery as Cost Oil Expenditures to be recovered as Cost Oil shall be registered in proper account, referred to as Cost Oil account. During the Production Phase, the Contractor shall, every month, receive the Production share corresponding to the Cost Oil, observing the limit of the Gross Production Value, defined in Annex XII. Costs exceeding the limits defined and not being recovered as Cost Oil at a certain calendar year shall be accrued for appropriation in the subsequent years. Expenditures recognized as Cost Oil shall be annually adjusted preferably by the Extended National Consumer Price Index (IPCA) of the Brazilian Institute of Geography and Statistics IBGE, or by another – index that better reflects expenditures of the industry, at the Manager’s discretion, and return on equity is prohibited.
PRODUCTION SHARING SECTION FIVE – RECOVERY AS COST OIL Right to Recovery as Cost Oil Exclusively in case of a Commercial Discovery, the Contractor shall be entitled to receive, as Cost Oil, a share of the Oil and Gas Production, according to the deadlines, criteria, and conditions established in Annex VII. Calculation and Recovery as Cost Oil The expenditures below shall be recovered as Cost Oil, according to the methodology and procedures provided for in Annex VII: expenditures previously approved by the Operating Committee, except for those which approval is waived by this Agreement; and expenditures recognized by the Manager. The expenditures incurred by the Contractors during the period preceding the execution of the Agreement and up to the creation of the Operation Committee may be recovered as Cost Oil as long as they are, cumulatively: Related to acquisition of data and information, obtaining licenses, authorizations, and governmental permits; Subject to recovery according to the criteria set forth in Annex VII; Ratified by the Operation Committee, prior to its effective recovery as Cost Oil. Recovery as Cost Oil Expenditures to be recovered as Cost Oil shall be registered in proper account, referred to as Cost Oil account. During the Production Phase, the Contractor shall, every month, receive the Production share corresponding to the Cost Oil, observing the limit of the Gross Production Value, defined in Annex XII. Costs exceeding the limits defined and not being recovered as Cost Oil at a certain calendar year shall be accrued for appropriation in the subsequent years. Expenditures recognized as Cost Oil shall be annually adjusted preferably by the Extended National Consumer Price Index (IPCA) of the Brazilian Institute of Geography and Statistics – IBGE, or by another index that better reflects expenditures of the industry, at the Manager’s discretion, and return on equity is prohibited.