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keep the Sheikh and His London Representative fully informed as to the progress
and result of all of its operations but such information shall be treated as
confidential.

Article 3
In consideration of the rights granted by the Sheikh to the Company by this
Agreement and of the assistance and protection which the Sheikh hereby under­
takes to afTord by all means in His power to the Company and its operations,
employees and property, the Company shall pay to the Sheikh the following sums
and considerations: —
(a)—(i) On each anniversary of the date of signature of this Agreement prior
to the discovery of petroleum in commercial quantities, Royalty of
Two and One-Half United States Dollars ($2*50) for every English ton
(2,240 pounds) of petroleum won and saved by the Company in the
defined area during the year ended three (3) months prior to the
Anniversary of the date of signature.
(ii) On each anniversary of the date of signature of this Agreement after
petroleum has been discovered in commercial quantities in the defined
area either Royalty as provided in sub-clause 3 (a) (i) or the sum of
Two Hundred and Fifty Thousand United States Dollars ($250,000)
whichever shall be the greater sum.
(iii) On the anniversary following the discovery of oil in commercial quantities
or on the fifth (5th) anniversary of the date of signature hereof, which­
ever is the later, and on each subsequent anniversary of the date of
signature hereof, the sum of Fifty Thousand United States Dollars
($50,000).
Petroleum shall have been discovered in commercial quantities
when a well or wells have been completed and tested and found
capable of producing at least Two Thousand (2,000) tons of petroleum
a day for thirty (30) consecutive days.
For the purpose of this Agreement and to define the exact product
to which the Royalty stated above refers, it is agreed that the Royalty
is payable on each English ton (2,240 pounds) of net crude petroleum
won and saved by the Company from within the defined area that is
after deducting water, sand and other foreign substances and the oil
required for the customary operations of the Company’s installations
in the defined area.
(b) One-eighth of the gross proceeds received by the Company from the sale
of any natural gas or natural gas products, produced, manufactured
and sold from the defined area by the Company, less the cost of
handling and transportation of such natural gas or natural gas products
from the place of production to final destination or point of
consumption.
<c) Fifteen (15) percent of the shares of a subsidiary Company to be organized
by the Company, which subsidiary company will be formed for the
purpose of exploring and exploiting the defined area under the terms
of this Agreement. The shares owned by the Sheikh shall be non-
assessable and will represent a net interest of Fifteen (15) percent in
the above-mentioned subsidiary company, and shall involve no financial
contributions on the part of the Sheikh.
id) Any obligation hereunder to pay a specified sum in United States Dollars
shall be discharged by the payment of a sum in United States Dollars
equal to the official United States Government purchase price in force
at the date of payment of such quantity of gold, of the standard and
fineness prevailing at the date of signature hereof, as such specified sum
would have been sufficient to purchase at the date of signature of this
Agreement at the official United States Government price then in force
The principle underlying this paragraph is that the present value of the
United States Dollar shall be maintained throughout the term of this
Agreement.
(e) No money paid by the Company to the Sheikh shall, except in the case of
an error in accounting, be returnable in any circumstances whatever.