Contract analysis

1. Introduction and Purpose This letter serves as the periodic status update provided to Beaufort Litigation Capital LLP ("Beaufort") in accordance with our obligations under Clause 7.2 of the Funding Agreement dated 28 February 2022 between Dunmore Energy Holdings Ltd. and Beaufort. We write to bring you current on all material developments — and, equally important, on the absence of certain developments — in the ab

2. Summary of the Claim For ease of reference and completeness of the record, we set out below a brief recapitulation of the factual and legal basis of DEH's claim. 2.1 The Claimant and the Concession DEH, through its wholly-owned Valderian subsidiary Dunmore Valderia upstream S.A. ("DVU"), was the named concessionaire of Concession No. HYD-2012-047, a 1,240 km² onshore concession area located in the Valderian Orinoc

3. Procedural History and Current Status of ICSID Proceedings 3.1 Pre-Arbitral Steps A Notice of Dispute was sent to the Republic of Valderia on 14 October 2021 in accordance with Article 8 of the UK-Valderia BIT. That notice triggered the mandatory six-month cooling-off period prescribed by the treaty. The cooling-off period expired on 14 April 2022 without any resolution or substantive engagement by the Respondent.

4. Status of Diplomatic Consultations The state-to-state diplomatic consultations between the UK FCDO and the Valderian Ministry of Foreign Affairs, conducted principally through Ambassador Diego Fuentes Castillo (Valderian Ambassador to the Court of St. James's), remain formally ongoing. However, we must report candidly that these consultations have not produced any meaningful progress towards a resolution of the un

5. Funding Agreement — 24-Month Dormancy Threshold 5.1 Contractual Position We draw your attention to an important contractual milestone that has now been reached under the Funding Agreement. As you will be aware, Clause 12.3(b) of the Funding Agreement dated 28 February 2022 provides Beaufort with a termination right exercisable upon 90 days' written notice to DEH in the event that the funded proceedings "remain dor

6. Adverse Costs Insurance We confirm that the adverse costs insurance policy procured in connection with the ICSID proceedings remains in full force and effect. The relevant details are as follows: Insurer: Oakshield Underwriting Syndicate Ltd. (Lloyd's Syndicate) Policy Number: OUS-2022-ARB-4417 Coverage Limit: GBP 3,000,000 Named Insured: Dunmore Energy Holdings Ltd. Effective Date: 1 March 2022 Policy Period: Sub

7. Related Matters — Commonwealth Capital Bank plc Standstill We wish to bring to Beaufort's attention the current status of DEH's arrangements with its project finance lender, Commonwealth Capital Bank plc ("CCB"), as this matter has a direct bearing on the recoverable position and is therefore relevant to Beaufort's exposure and interests under the Funding Agreement. 7.1 Background. DVU was the borrower under a USD

8. Expert Retention Status We provide below a summary of the current status of expert retentions in the arbitration. 8.1 Damages/Quantum Expert Pemberton Valuation Advisory LLC (New York) remains retained as DEH's damages and quantum expert. The lead expert is Dr. Elaine Cho, CFA, ASA, supported by Marcus Whitfield as the principal supporting analyst. Pemberton's engagement has been placed on a work-on-hold basis dur

9. Assessment of Merits and Recovery Prospects 9.1 Merits. C&H's assessment of the merits of DEH's claim remains strong and has not materially changed since our last periodic update. We summarise our views below. Direct expropriation (Article 5, UK-Valderia BIT): The claim of direct expropriation is, in our assessment, well-founded and presents favourable prospects for success. The taking of the Concession was effect

10. Next Steps and Recommendations In light of the matters discussed in this letter, and in particular the reaching of the 24-month dormancy threshold, the continued absence of progress in diplomatic consultations, and the approaching December 2024 dormancy review date, C&H recommends the following near-term steps:

1. Strategy call with DEH principals and Beaufort. We recommend scheduling a strategy call at the earliest convenient opportunity among C&H, Beaufort, and DEH's principals — specifically, Sir Malcolm Dunmore, KBE (Chairman) and Priya Nandakumar (CEO) — to discuss whether to continue the dormancy of the proceedings or to seek reactivation at the 12 December 2024 review date. We propose the weeks of 8 July or 15 July 2

2. Formal written confirmation from Beaufort. As discussed in Section 5 above, we would be grateful to receive formal written confirmation from Beaufort regarding its position on the termination right under Clause 12.3(b) of the Funding Agreement. A brief letter or email from you confirming that Beaufort does not presently intend to exercise the termination right would be sufficient and would be greatly appreciated.

3. CCB standstill extension. C&H intends to prepare and submit a standstill extension request to Commonwealth Capital Bank plc well in advance of the current standstill expiry on 31 March 2025. We will seek a further 12-month extension to 31 March 2026. We will coordinate with Helen Okafor at CCB and will keep Beaufort informed of the outcome.

4. Evaluation of strategic alternatives. In connection with the recommended strategy call, C&H will prepare a comprehensive analysis of the strategic alternatives available to DEH, including: (i) reactivation of the ICSID proceedings, with constitution of the tribunal and progression to the memorial phase; (ii) parallel approaches to PetroValderia S.A. for direct negotiation of a commercial resolution; and (iii) cons

5. Update to DCF model. C&H will instruct Pemberton Valuation Advisory LLC to update its DCF model to reflect current commodity prices and forward curves. The original model assumed a Brent crude oil price of USD 65 per barrel. As at the date of this letter, Brent crude is trading at approximately USD 85 per barrel. While any update will be subject to further refinement at the time of memorial preparation, a prelimin

6. Monitoring of diplomatic consultations. C&H will continue to monitor the UK-Valderia diplomatic consultations through FCDO channels and through our local contacts in Valderia. We will report any material developments immediately to Beaufort and to DEH. In addition to the above, C&H will prepare a separate internal memorandum on dormancy risks and strategic options, which we anticipate will be completed in July 202

11. Costs Update In accordance with Clause 7.4 of the Funding Agreement, we provide a summary overview of costs incurred to date and amounts drawn from Beaufort's GBP 8,500,000 funding commitment. As Beaufort will appreciate, costs have been modest during the dormancy period, reflecting the limited substantive work required while the proceedings have been suspended. The principal costs incurred during the dormancy pe

12. Closing We are grateful for Beaufort's continued support and patience during what has been an unexpectedly extended period of dormancy. We appreciate that the passage of time without substantive progress is a source of legitimate concern, and we share that concern. At the same time, we remain confident in the strength of DEH's claim — both on the merits and on quantum — and in the prospect of a favourable recover

1. Copy of the fourth dormancy renewal letter to the ICSID Secretary-General dated 12 June 2024 (co-signed by Vivienne St. Claire and Charles Winterbottom QC)

2. Summary table of dormancy renewal chronology This letter and its enclosures are privileged and confidential and are subject to litigation privilege. They are intended solely for the addressee. If you have received this letter in error, please notify Calderwood & Harkness LLP immediately and destroy all copies. Unauthorised use, disclosure, or distribution is strictly prohibited. Category | Amount (USD) Exploration