193
(8)
consolidated exploration and abandonment expense of the Issuer and its Restricted
Subsidiaries;
minus
(9)
non-cash items increasing such Consolidated Net Income for such period, other than items
that were accrued
in the ordinary course of business; and
minus
(10)
the sum of (a) the amount of deferred revenues that are amortized during such period and are attributable to
reserves that are subject to Volumetric Production Payments and (b) amounts recorded in accordance with
IFRS as repayments of principal and interest pursuant to Dollar-Denominated Production Payments, in each
case, on a consolidated basis and determined in accordance with IFRS.
"
Consolidated Net Income
" means, with respect to any specified Person for any period, the aggregate of the Net Income
of such Person and its Restricted Subsidiaries for such period, on a consolidated basis (excluding the Net Income (loss)
of any Unrestricted Subsidiaries), determined in accordance with IFRS;
provided
that:
(1)
the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the
equity method of accounting will be included only to the extent of the amount of dividends or similar
distributions paid in cash to the specified Person or a Restricted Subsidiary of the Person and the Person's
equity in a net loss of any such Person for such period will be included only to the extent such loss has been
funded with cash flow from the Person or a Restricted Subsidiary during such period;
(2)
solely for the purpose of determining the amount available for Restricted Payments under clause (3)(a) of the
first paragraph under the caption "—
Certain Covenants—Restricted Payments
", any net income (loss) of any
Restricted Subsidiary (other than any Guarantor) will be excluded if such Subsidiary is subject to restrictions,
directly or indirectly, on the payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to the Issuer (or any Guarantor that holds the Equity Interests of such
Restricted Subsidiary, as applicable) by operation of the terms of such Restricted Subsidiary's charter or any
agreement, instrument, judgment, decree, order, statute or governmental rule or regulation applicable to such
Restricted Subsidiary or its shareholders (other than (a) restrictions that have been waived or otherwise
released, (b) restrictions pursuant to the Notes or the Indenture, (c) contractual restrictions in effect on the
Issue Date with respect to the Restricted Subsidiary and other restrictions with respect to such Restricted
Subsidiary that taken as a whole, are not materially less favorable to the holders of the Notes than such
restrictions in effect on the Issue Date and (d) any restriction listed under clauses (1), (2), (3) or (11) of the
second paragraph of the covenant described above under the caption "—
Certain Covenants—Dividend and
Other Payment Restrictions Affecting Subsidiaries
") except that the Issuer's equity in the net income of any
such Restricted Subsidiary for such period will be included in such Consolidated Net Income up to the
aggregate amount of cash or Cash Equivalents actually distributed or that could have been distributed by such
Restricted Subsidiary during such period to the Issuer or another Restricted Subsidiary as a dividend or other
distribution (subject, in the case of a dividend to another Restricted Subsidiary (other than any Guarantor), to
the limitation contained in this clause);
(3)
the cumulative effect of a change in accounting principles will be excluded;
(4)
income resulting from transfers of assets (other than cash) between such Person or any of its Restricted
Subsidiaries, on the one hand, and an Unrestricted Subsidiary, on the other hand, will be excluded;
(5)
any gain (loss) realized upon the sale or other disposition of any property, plant or equipment of such Person
or its consolidated Restricted Subsidiaries (including pursuant to any sale or leaseback transaction) which is
not sold or otherwise disposed of in the ordinary course of business (as determined in good faith by a
responsible accounting or financial officer of the Issuer) and any gain (loss) realized upon the sale or other
disposition of any Capital Stock of any Person will be excluded;
(6)
any "ceiling limitation" or other asset impairment write-downs on oil and gas properties will be excluded;
(7)
any unrealized non-cash gains or losses in respect of Hedging Obligations or any ineffectiveness recognized in
earnings related to qualifying hedge transactions or the fair value or changes therein recognized in earnings for
derivatives that do not qualify as hedge transactions, in each case, in respect of Hedging Obligations will be
excluded;
(8)
any non-cash compensation charge or expense arising from any grant of stock, stock option or other equity-
based award will be excluded;
(9)
to the extent deducted in the calculation of Net Income, any non-cash or non-recurring charges associated with
any premium or penalty paid, write-off of deferred financing costs, fair value losses or other financial
recapitalization charges in connection with redeeming or retiring any Indebtedness prior to its Stated Maturity
will be excluded; and
(10)
(a) extraordinary, exceptional, unusual or non-recurring gains, losses or charges, (b) any asset impairment
charges or the financial impacts of natural disasters (including fire, flood and storm and related events) or (c)
any non-cash charges or reserves in respect of any restructurings, redundancy, integration or severance, in
each case will be excluded.]
