Summary

CLAIMANT'S NOTICE OF INTENT TO COMMENCE ARBITRATION UNDER THE UNITED STATES-PERU TRADE PROMOTION AGREEMENT

May 18, 2018

Table of Contents

I. Parties
II. Preliminary Statement
III. Factual Background
A. Maple's Investment in the Aguaytía Integrated Project
B. Former President PPK's High-Profile Dispute with Maple's Investor
C. The Government's Retaliation Against Maple
D. Recent Threat to Sue Maple and Terminate Maple's Lease Agreement
IV. Peru's Breaches of its TPA Obligations
A. Breach of Article 10.3: National Treatment
B. Breach of Article 10.5: Minimum Standard of Treatment
C. Breach of Article 10.7: Expropriation
V. Relief Sought and Approximate Amount of Damages Claimed

Pursuant to Article 10.16.2 of the United States-Peru Trade Promotion Agreement of 2006 ("TPA"), Claimant Worth Capital 27 LLC ("Worth Capital" or "Claimant"), on its own behalf and on behalf of Maple Gas Corporation del Perú S.R.L, a juridical person that the Claimant owns and controls ("Maple"), hereby serves notice ("Notice") to the Republic of Peru ("Peru") of its intention to submit to international arbitration claims arising out of its investments in the Aguaytía Integrated Project, including the Pucallpa Refinery and Sales Plant ("Refinery").

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II. PRELIMINARY STATEMENT

5. This dispute arises out of Peru's efforts to drive Maple out of business and take back the Pucallpa Refinery.

6. Peru has placed a stranglehold on Claimant's investment in Pucallpa through a variety of measures. In recent years, these have included depressing Maple's ability to compete with Petroperú (including through discriminatory tax measures), depriving it of feedstock to operate the Refinery, withdrawing on spurious grounds its previous approval for Maple to acquire another lucrative oil project, publicly disparaging Maple, and, most recently, attempting to invoke the "sudden death" clause to terminate the lease over the Refinery, thus sounding the death knell on Claimant's investment.

7. This campaign has played out against the backdrop of an embarrassing, high-profile arbitration loss for a company on whose Board former Peruvian President Pedro Pablo Kuczynski ("PPK") served, at the hands of an entity that was part of a group of companies that became one of Maple's upstream investors--making Maple an easy target for Peru's escalating campaign of retaliation.

8. Peru has been explicit about its objective to reassert control of the Refinery, including in open threats from the President of Petroperú, recorded in writing.

9. Claimant deeply regrets the Government's actions that prompt it to send this Notice. Attempts to seek a resolution with the Government of the issues facing the Refinery over the recent years and months have had little success.

Claimant continues to desire an amicable resolution of the Parties' dispute, and is hopeful that the recent change in Government since PPK's resignation may facilitate constructive negotiations to this effect. In light of the immediate danger to its investment, however, and failing such resolution, Claimant reserves its rights to initiate an arbitration against Peru asserting breaches of, at the least, Articles 10.3 (national treatment), 10.5 (minimum standard of treatment), and 10.7 (expropriation) of the TPA.

III. FACTUAL BACKGROUND

A. Maple's Investment in the Aguaytía Integrated Project

10. Maple's investment in Peru dates back to 1993, when US company Maple Resources Corporation ("Maple Resources") won the tender for the Aguaytía Integrated Project, an oil and gas project spanning exploration and development activities in Lots 31-B, C, D and E, thermoelectric power, and a refinery in Pucallpa. The Aguaytía Integrated Project sought to bring development and infrastructure-- along with liquid fuel and electricity--to the remote Ucayali region in the Peruvian Amazonian jungle region.

11. To enable Maple Resources to develop the Aguaytía Integrated Project, in 1994, the state-owned oil company PERUPETRO S.A. ("PERUPETRO") concluded several license agreements with Maple that granted Maple the right to (i) develop the natural gas in the Aguaytía deposit and liquid hydrocarbons from the Maquía - Agua Caliente deposit, and (ii) lease the Refinery and Sales Plant at Pucallpa, which refines liquid hydrocarbons created by processing natural gas and crude oil from the Ucayali region ("1994 License Agreements").1 PERUPETRO signed the 1994 License Agreements "in the name and in representation of the Peruvian State," and Maple Resources gave a parent company guarantee.2 In the 1994 License Agreements, Peru guaranteed that the Project would enjoy tax stability during the term of the License, which was meant to run for 30 years until 2024.3 Specifically, Section 9.6 of the License Agreements provides that:

The State, through the Ministry of Economy and Finance, guarantees the Contractor [Maple] the benefit of tax stability during the Term of the Contract, as a result of which it will be subject, exclusively, to the tax regime in effect on the Signature Date.4

12. Peru's assurance of tax stability was a cornerstone of the parties' contractual bargain and key to Maple's decision to invest in the Aguaytía Integrated Project.

13. In parallel, Maple and Petroperú also signed an accompanying lease agreement specifically for the Pucallpa Refinery ("1994 Lease Agreement") that formed an integral part of the 1994 License Agreements.5 The 1994 Lease Agreement was most recently updated through a March 2014 lease agreement with the same expiration date (March 28, 2024), with the possibility of an extension (the "2014 Lease Agreement").6

14. After the original 1994 agreements, the Aguaytía Integrated Project was split into two separate operations. In exchange for investments in infrastructure and production facilities, Maple retained the lease for the Refinery and the mature oil fields in Lots 31-B, D and E. Its then-affiliate, Aguaytía Energy del Perú S.A. ("Aguaytía"), retained the exploration and production in Lot 31-C. Aguaytía was subsequently spun off outside the Maple Resources Group. Having originally been part of the same project, Aguaytía's exploration and production facilities are physically connected to the Refinery.

15. Maple has invested approximately US$60 million in the oil fields and US$4.3 million in the Refinery and associated facilities, and it was entitled to operate the Refinery at least until the expiration of the Lease Agreement in 2024. By December 2017, however, as described below, Maple had no choice but to cease operations at the Refinery.

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59. Claimant sends this Notice reluctantly. Claimant and Maple have at all times preferred an amicable solution with the Government, and continue to do so. They remain ready to meet with Government representatives to explore solutions at the Government's earliest convenience.

60. However, should the Parties prove unable to find an amicable, mutually-agreeable solution to the dispute, Claimant will have no choice but to initiate arbitration against Peru, alleging breaches of Articles 10.3, 10.5 and 10.7 of the TPA. Claimant reserves its right to amend or supplement this Notice, including the requested relief and the amount claimed, and to seek relief for additional breaches arising from Peru's past, current, or future conduct.

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