Uneconomic Operation Clause Samples
The Uneconomic Operation clause allows a party to cease or modify operations when continuing would result in financial losses or is no longer economically viable. Typically, this clause applies to long-term contracts, such as supply or service agreements, where market conditions, regulatory changes, or increased costs could make performance unprofitable. Its core function is to protect parties from being contractually bound to operate at a loss, thereby allocating risk and providing flexibility in response to changing economic circumstances.
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Uneconomic Operation. Notwithstanding anything contained herein to the contrary, if at any time Gatherer determines, in its sole discretion, that continued operation of all or any part of the Gathering System is not economically justified, Gatherer may cease receiving Shipper's Gas from the relevant part of the Gathering System and terminate this Agreement as to such part of the Gathering System (the "Terminated System") by giving at least ninety (90) days' notice to Shipper. In such event, and concurrently with such notice, Gatherer shall offer Shipper the right to purchase the Terminated System from Gatherer for $10.00. Shipper shall exercise such right on or before sixty (60) days after receipt of the termination notice. Shipper shall be responsible for all costs and expenses related to such purchase, including filing fees, and such purchase shall be without recourse, representation or warranty. Closing on the purchase shall be on the day specified in the termination notice as the termination date. If the Terminated System is acquired by Shipper and remains connected to any other portion of the Gathering System, Shipper shall have the right to deliver natural gas from the Terminated System to the Gathering System, and this Agreement shall continue in effect with respect to the natural gas so delivered by Shipper.
Uneconomic Operation. 6.2.1 Gatherer reserves the right, on a not unduly discriminatory or preferential basis, to reject or seek renegotiation of the terms under which Gatherer shall continue the gathering of Shipper’s Crude Oil on the Facilities should Gatherer determine that gathering Shipper’s Crude Oil at any CRP becomes Uneconomic because of insufficient volume, or if all or part of Gatherer’s Facilities receiving Shipper’s Crude Oil becomes Uneconomic to operate, maintain, or repair because of the delivery of insufficient volumes of Shipper’s Crude Oil. Gatherer has the right to deem a CRP and any associated part of the Facilities “Uneconomic” if the average BPD over a ninety (90) Day period at a particular CRP is less than twenty (20) BPD for a CRP with one production well behind such CRP and thirty (30) BPD for a CRP with more than one production well behind such CRP; provided, however, that no Initial CRP or any part of the Facilities connecting the Initial CRPs to the Delivery Point(s) as of the Commencement Date, as such Facilities and Initial CRPs are set forth on Exhibit C-1, shall ever be deemed Uneconomic during the Primary Term. In the event of a CRP or part of the Facilities being declared Uneconomic, Gatherer shall have the right to suspend receipt of Shipper’s Crude Oil at that CRP or part of the Facilities, without liability as long as such condition exists, by giving Shipper ninety (90) Days advance written Notice of such suspension. During the ninety (90) Day Notice period, the Parties agree to meet to discuss and negotiate in good faith new terms for the applicable CRP or part of the Facilities under which Gatherer would continue to gather Shipper’s Crude Oil for transportation on the Facilities. If the Parties are unable to reach agreement as to a remedy to such condition within thirty (30) Days of the end of the Notice period, either Shipper or Gatherer may cause the CRP(s) or part(s) of the Facilities in question and any part of the Dedication intended for delivery to such CRP(s) or part(s) of the Facilities shall be permanently released from this Agreement.
Uneconomic Operation. Notwithstanding anything contained herein to the contrary, if at any time Gatherer determines, in its sole discretion, that continued operation of all or any part of the Gathering System is not economically justified, Gatherer may cease receiving Shipper's Gas from the relevant part of the Gathering System and terminate this Agreement as to such part of the Gathering System (the "Terminated System") by giving at least ninety (90) days' notice to Shipper.
Uneconomic Operation. Notwithstanding Section 10.1, if at any time the MLP determines, in its sole discretion and whether or not based upon a recommendation by Atlas America, that continued operation of all or any part of the Gathering System is not economically justified, the MLP may cease receiving Resource Entities' Gas from the relevant part of the Gathering System and terminate this Agreement as to such part of the Gathering System (the "Terminated System) by giving at least ninety (90) days' notice to the Resource Entities. In such event, and concurrently with such notice, the MLP shall offer the Resource Entities the right to purchase the Terminated System from the MLP for $10.00. The Resource Entities shall exercise such right on or before sixty (60) days after receipt of the termination notice. The Resource Entities shall be responsible for all costs and expenses related to such purchase, including filing fees, and such purchase shall be without recourse, representation or warranty. Closing on the purchase shall be on the day specified in the termination notice as the termination date. If the Terminated System is acquired by the Resource Entities and remains connected to any other portion of the Gathering System, the Resource Entities shall have the right to deliver natural gas from the Terminated System to the Gathering System, and this Agreement shall continue in effect with respect to the natural gas so delivered by the Resource Entities.