While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards: PS1: Social and Environmental Assessment and Management Systems PS2: Labor and Working Conditions PS3: Pollution Prevention and Abatement PS4: Community Health, Safety and Security Although currently the Company does not anticipate that its drilling service activities will trigger issues related to land acquisition, resettlement, indigenous people, and cultural heritage, it is nevertheless possible that some of the Company’s future projects may trigger the following Performance Standards: PS5: Land Acquisition and Involuntary Resettlement PS6: Biodiversity Conservation and Sustainable Natural Resources Management PS7: Indigenous peoples PS8: Cultural Heritage The role of the Company in managing particular aspects related to these Performance Standards may be limited due to the fact that main responsibilities for assessing, minimizing, mitigating, and compensating for impacts are, according to Brazilian regulations, are assumed by the exploration concession owner and client, i.e. Petrobras. However, the Company, as service provider, must comply with the environmental, health and safety regulations that are required by the Brazilian government and incorporated into its service contracts with Petrobras.

This is a Category B project according to IFC’s Environmental and Social Review Procedures. The Company will acquire new deepwater drilling rigs and FPSOs and continue to provide onshore and offshore drilling services to Petrobras. It must comply with project specifications and environmental mitigation measures mandated by Petrobras and approved by the Brazilian government. Actual projects in which the Company will be involved and locations of anticipated concessions for drilling are unknown at this moment but are expected to be deep-water drilling in the Brazilian pre-salt basin, which has depths of more than 2,100 meters and is at least 200 km offshore. The Company will have limited responsibilities for assessing the environmental and social impacts and, therefore, the main critical issue for the Company is to establish and maintain a comprehensive environmental, health and social management system (EHSMS) that will allow it to successfully comply with the local requirements and use best available practices in providing onshore and offshore drilling services.

Petrobras has been operating in Brazil for over 50 years. They are considered a leader in state-of-the-art offshore deepwater developments, starting with projects in the Campos Basin. During the past ten years, it has shown a strong commitment to health, safety and environment (HSE) with fifteen guidelines outlined in its corporate program which has led to its inclusion in the Dow Jones Global Sustainability Index. As of January 2009, thirty-eight (38) of its operating units have been certified for both ISO 14001 and OHSAS 18001 standards. Constellation has been working as an offshore drilling contractor for Petrobras since 1990 and has consistently demonstrated good EHS performance. Their performance in achieving environmental, health and safety targets is closely monitored by Petrobras by various means, including periodic HSE audits of the Company’s facilities and operations. Review of Constellation’s records and HSE audits by Petrobras has shown that they are a contractor in good standing. IFC has been assessing their EHS&S performance since 2003 (when QGOG signed a loan agreement with IFC) through Annual Monitoring Reports and supervision missions. QGOG has so far complied with IFC standards. QGOG has been working on the implementation of its own EHSMS for drilling and workover operations which has been integrated with an existing ISO 9001 Quality Management System. The new management system was designed and certified according to the following standards: ISO 14001 and OHSAS 18001. Key environmental and social issues relating to the Company’s expansion project are summarized below along with specific information about how potential impacts will be addressed by the Company. Upon implementation of the featured mitigation measures described below and in the attached Environmental, Health, Safety and Social Action Plan, the project will comply with environmental and social requirements, namely the laws and regulations of Brazil, IFC’s Policy and Performance Standards on Social and Environmental Sustainability and applicable World Bank/IFC environment, health and safety guidelines. PS1 Social and Environmental Assessment and Management System The Company’s main client with drilling contracts for both on and offshore Brazil is Petrobras. Before Constellation can start any drilling activity, Petrobras as the operator must obtain an environmental license from the Brazilian Federal Environmental Agency (“IBAMA”). As part of the licensing process, an Environmental and Social Impact Assessment (ESIA) is required and IBAMA requires that such ESIA is conducted, consultations with affected and nearby communities are held, and an Environmental and Social Management Program (ESMP) is prepared that contains specific management measures such as waste and effluent management procedures, emergency response, including spills and training requirements. IBAMA will inspect the drill rig prior to issuing the license, to assure that operational control elements on the rig adequately satisfy the environmental agency's standards. The Company developed its EHS&S procedures in accordance with international standards and has integrated all of their existing procedures, monitoring programs and management components into a single integrated management system. As a Petrobras contractor, Constellation is contractually obligated to comply with Petrobras’ EHS requirements. Petrobras has a certified ISO 14001 and OHSAS 18001 EHS&S management system and each contractor’s compliance with their EHS&S procedures is regularly audited (including each drilling rig). IFC reviews during 2007 and 2008 showed that Constellation complies with Petrobras’ requirements through the implementation of their existing procedures. The Company has a dedicated EHS manager that assists and coordinates the implementation of the EHS management measures supported by a team of environmental and social consultant services. Constellation HSE representatives are based both onshore and offshore to monitor performance and provide advice during activities and operations. Constellation will need to continue to implement the EHS&S procedures while maintaining an adequate level of management and staff dedicated to this function. It will need to scale-up its Environmental and Social Management System (ESMS) to reflect the growing level of activities and increased number of drilling projects. As a part of the ESMS, the Company will need to undertake a screening of each potential drilling project for applicability of the various IFC Perfornance Standards and develop necessary risk mitigation measures in accordance with IFC requirements. Also, as a part of their ESMS, an appropriate training program needs to be developed to facilitate the increase in the Company’s operations and staffing. Current development plans for Constellation include the construction of additional new deepwater drilling rigs and FPSOs. The Company is currently developing procedures for monitoring HSE performance of its shipbuilding contractors. The Company will conduct environmental, social, health and safety screening of potential contractors (suppliers) of these assets and establish a monitoring mechanism for their HSE practices to mitigate the environmental, social, health and safety risks related to drilling rig and FPSO construction. HSE reviews of shipyards that will be contracted to deliver new drilling rigs and FPSOs will be conducted prior to signing of construction contracts and periodically during work on the Company’s orders to ensure contractors’ use of good international practices and sound HSE performance. Community engagement is implemented by the Company for its onshore and offshore activities, as required by Brazilian regulations and contractual obligations with Petrobras. Communities that are in proximity to the onshore operations and offshore projects (fishermen or coastal settlements) are involved in consultations for drilling projects that are conducted by Petrobras jointly with IBAMA and local governments. PS2 Labor and Working Conditions: Currently the Company has about 1100 employees and plans to expand its workforce with the increase of its operations. All employees are subject to a corporate labor policy which is in compliance with the local laws and HR function in the Company is shared between its headquarters and local operations. The Company has negotiated and signed an agreement with the industry trade union and maintains dialogue with union representatives and the Brazilian Ministry of Labor. Company’s employees are provided with appropriate personal protective equipment (PPE). Constellation’s employees and its contractors receive training related to all the requirements necessary for offshore and onshore activities, and the EHS representative on board will be responsible for ensuring implementation of the EHS Procedures. Health and Safety inspections take place to assure compliance with the standards. These inspections are carried out by the Company’s internal auditors and by Petrobras. Monthly QHSE meetings with the workforce take place to verify and act upon health and safety issues. The rig units and their associated equipment will be designed with controls in place to ensure that there are no significant risks to personnel health and safety. Rig specifications ensure safe operations in marine environments like those in Brazil. In addition and under their contract with Petrobras, the Company is required to have in place plans for PPE and an occupational health and medical control program (PCMSO). A plan for setting up of an accident prevention group is also required (the Accident Prevention Internal Commission or CIPA). This group identifies health and safety risks, identifies awareness and training needs and investigates incidents. Training is being routinely provided by the Company to its employees ranging from operations safety briefs to more expanded operations safety courses and professional development courses. All employees going to the onshore or offshore operations must attend safety presentations by safety engineers or technicians before commencing their work. Safety is of utmost importance for the Company and they have developed a number of incentives for its operational units and employees to maintain high levels. This includes prizes and awards to the teams that maintain highest safety records. PS3: Pollution Prevention and Abatement: A waste management plan for all hazardous and non-hazardous wastes generated onshore and offshore is to be developed and implemented for each drilling project. A supervision visit by IFC to the onshore drilling activities in late 2008 showed that the Company meets the Brazilian requirements and is consistent with the IFC 2007 guidelines. Excluding drilling wastes and waste waters, all other wastes generated on the rigs offshore will be transported to shore for disposal by licensed and approved waste management contractors. Drilling muds and drill cuttings treatment and disposal procedures will follow Petrobras requirements which are approved by the IBAMA. For water-based muds in offshore environmentally sensitive areas, overboard disposal of muds and cuttings is not allowed if the water depth is shallower than 1,000 meters. In all other areas, overboard discharge of water-based muds and cuttings is allowed provided that toxicity testing demonstrates no harm to the marine environment. The Company’s deepwater assets will operate at depths of more than 2,100 meters. For drilling projects that utilize non-water-based drilling muds, the cuttings must be treated under specified conditions to remove the drilling fluid to an acceptable and approved concentration before its disposal overboard. All offshore discharges will meet the toxicity testing and discharge requirements contained in the IFC Oil and Gas (Offshore) Guidelines, 2007 as well as the MARPOL requirements. A marine sanitation device for sewage treatment prior to discharge will be installed on each drilling rig. A comprehensive monitoring procedure (including waste waters, drainage water, sewage, noise, and toxicity tests among other environmental parameters) has been consistently applied by the Company for its offshore drilling operations. Air emissions (both on and offshore) must match the Brazilian requirements as outlined by the permit issued by IBAMA. Air emissions during offshore drilling activities will result in minimal impact, considering the distance to shore (normally more than 200 km). PS4 Community Health, Safety and Security: The Company routinely develops and implements emergency response plans and spill prevention and liquidation plans for all its operations in accordance with the local regulations and IFC requirements. The plans are consistent with the requirements established by Petrobras. These emergency response plans will be adapted to apply to the new drill rigs and FPSOs. Emergency response arrangements cover natural hazards, man overboard, fire and explosion, well blowouts and the response to spills as well as coordination with local communities. Training for emergency response is routinely implemented for the employees. The Company’s offshore base camp at Macae is an existing facility and specific procedures to manage hazardous substances and fuels stored at the base are applied. An onshore base camp at Manaus was visited by IFC in late 2008, including drilling operations in Urucu. No issues were noted which were inconsistent with the expectations of PS4. PS6 Biodiversity Conservation and Sustainable Natural Resource Management: Although currently the Company does not anticipate that its activities for performing drilling services for Petrobras will trigger issues related to biodiversity conservation and sustainable natural resource management, it will conduct screening of all its future projects and, if such issues will be applicable, the Company will follow the requirements of IFC PS 6 in mitigating the related risks. Petrobras has a commitment to sustainable development and is a member of IPIECA, the global oil & gas industry group which has a biodiversity initiative. Therefore their contractors, including Constellation, are expected to meet the expectations of Petrobras for biodiversity conservation and sustainable conservation. Operations in potentially sensitive locations are identified by Petrobras during the EIA process carried out for each drilling program. Projects in sensitive areas of biodiversity are subject to additional environmental management measures and monitoring programs which are requested and approved by IBAMA. To date, Constellation has been able to adapt their existing procedures and plans to satisfy any additional requirements. Although currently the Company does not anticipate that its activities for performing drilling services for Petrobras will trigger issues related to land acquisition and involuntary resettlement, indigenous peoples, and cultural heritage (IFC Performance Standards 5, 7, and 8), it will conduct screening of all its future projects and if such issues will be applicable, the Company will follow the requirements of these Standards in mitigating the related risks.

As a part of mandated licensing process with IBAMA, the operator of a concession, in this case Petrobras, has to conduct public consultations, and organize, together with IBAMA, public hearings for the local stakeholders (including fishermen affected by its operations). Interactions between communities and drilling contractors, such as Constellation, are managed according to the local regulatory requirements (in cases when the Company is an operator of the field) and according to the mandated requirements of the service contracts with Petrobras. The Company, as service provider, usually establishes a telephone hotline for submitting inquiries concerning its activities in fulfilling the contract and impacts of its operations on local communities. A plan of periodic communication with local fishermen and coordination of offshore activities (when applicable) with the harbor authorities also will be implemented to keep disturbance at minimum level. The Company has recently established a Social Department which is responsible for the development of the Company-wide social responsibility program and integration of the existing community and stakeholder engagement and support programs under an umbrella of an integrated corporate strategy. The new department liaises closely with Human Resources department and Communications department as well as with regional units of the Company to coordinate its activities. The Company conducted a review of its social responsibility practices for compliance with NBR 16001, a Brazilian equivalent of SA 8000 and developed plans for compliance with elements of its social responsibility system. The Company, together with other entities within QGOG, implements a range of community engagement programs and sponsors a number of social programs that benefit its workers and the communities where it operates. These include an anti-drug education program for young people, and local alphabetization and education program (to help people complete secondary education).

Queiroz Galvão Óleo e Gás S.A. Address: Av. Presidente Antônio Carlos No. 51, 6th Floor. City: Estado do Rio de Janeiro, RJ Phone.: (21) 3231-2500 Fax.: (21) 2215-1739 Att.: Mr. Guilherme Lima E-mail: glima@qgog.com.br www.qgog.com.br