GAS PURCHASE AGREEMENT
Exhibit 10.7
The
Partnership has redacted certain confidential information in this agreement in
reliance upon its confidential treatment request that it has filed with the
Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934. In this agreement, we indicate each redaction by use of
asterisk *.
DATED AS
OF JUNE 1, 2006
between
▇▇▇▇▇▇▇▇
PRODUCTION RMT COMPANY
and
▇▇▇▇▇
NATURAL GAS COMPANY
and
PETROLEUM
DEVELOPMENT CORPORATION
Table of
Contents
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SECTION
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TITLE
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PAGE
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1.
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COMMITMENTS/PERFORMANCE
OBLIGATIONS
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1
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2.
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SERVICE
OPTIONS
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5
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3.
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STATEMENTS
AND PAYMENT
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5
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4.
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TITLE
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7
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5.
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TERM
AND TERMINATION
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7
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6.
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EXHIBITS
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10
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7.
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ENTIRE
AGREEMENT, CONSTRUCTION
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11
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EXHIBITS
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TITLE
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A.
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STANDARD
TERMS AND CONDITIONS
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B.
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INTENTIONALLY
OMITTED
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C.
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RECEIPT
POINT(S)
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D.
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DELIVERY
POINT(S)
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E.
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SERVICE
AND FEE DESCRIPTION
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F.
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GAS
VOLUMES COMMITTED
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G.
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TWO
YEAR MONTHLY MDQ SCHEDULE
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PAGE
1
THIS GAS
PURCHASE AGREEMENT ("Agreement") is made and entered into as of June 1, 2006 by and between
▇▇▇▇▇▇▇▇ PRODUCTION RMT COMPANY
("Buyer") and ▇▇▇▇▇
NATURAL GAS COMPANY ("▇▇▇▇▇") and PETROLEUM DEVELOPMENT CORPORATION
("PDC," and together with ▇▇▇▇▇, collectively, "Seller," and Seller,
together with Buyer, the "Parties," and individually, a "Party")
RECITALS
A. Seller
owns or controls a supply of Gas that it desires Buyer to
purchase.
B.
Buyer is
willing to purchase such Gas from Seller pursuant to the terms set forth
herein.
NOW,
THEREFORE, in consideration of the premises and mutual covenants set forth
herein, the Parties agree as follows:
AGREEMENT
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1.
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COMMITMENTS / PERFORMANCE
OBLIGATIONS
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1.1
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Seller's Commitment.
Seller commits to Buyer to sell and deliver to Buyer, on a Firm
basis, Seller's present and future right, title, and interest in the Gas
Volumes Committed to this Agreement and outlined on Exhibit F, that Seller
delivers to the Receipt Point(s) from the Area of Interest ("Seller's
Gas"), subject to the terms of this
Agreement.
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1.2
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Buyer's Commitment.
Buyer commits to Seller to buy and receive from Seller at the
Receipt Point(s), on a Firm basis, Seller's Gas, subject to the terms of
this Agreement, including, without limitation, Section
1.3.
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1.3
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Quantity.
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1.3.1
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Each
Day, Seller agrees to sell and deliver, and Buyer agrees to receive and
purchase, Seller's MDQ, subject to the terms of this
Agreement If Seller delivers more than Seller's MDQ to
Buyer at the Receipt Point(s) on any Day, Buyer shall take and purchase up
to 105% of Seller's MDQ for such Day, but shall not be obligated
to take or purchase more than 105% of Seller's MDQ for such Day
and shall take and/or purchase any such excess amounts
above 105% in its sole and absolute
discretion.
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1.3.1.1
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Seller's
MDQ may be reduced proportionately with other Shippers on the Gathering
System with Guaranteed Capacity pursuant to Section B.4 of Exhibit A to
this Agreement.
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1.3.2
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Should
either Party become aware that actual deliveries of Seller's Gas at the
Receipt Point(s) shall be greater than 105% of Seller's MDQ, such
Party shall promptly notify the other Party
thereof.
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PAGE
2
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1.3.3
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Seller
commits to deliver and sell Seller's Annual Volume to Buyer at the Receipt
Point(s). Notwithstanding the foregoing
provision:
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1.3.3.1
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if
Seller sells and delivers less than [ * ]% of Seller's Annual
Volume to Buyer for any given Contract Year (a "Shortfall"), and such
Shortfall is not due to or arising from the circumstances addressed in
Sections B.3, B.4 and/or B.7 of Exhibit A to this Agreement, Seller agrees
to pay to Buyer, within ten (10) Business Days of Seller's receipt of
Buyer's statement therefore, the Shortfall Fee for such Contract Year;
and
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1.3.3.2
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if
Seller delivers more than Seller's Annual Volume to Buyer at the Receipt
Point(s) ("Excess Volumes"), such Excess Volumes shall be included in the
calculation of Seller's Annual Volume for the immediately following
Contract Year,
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1.3.4
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Upon
written notice to Buyer given on or before July 1 of any calendar year but
no earlier than March 1 of such calendar year, Seller may request an
increase to Seller's Annual Volume for any given Contract Year, provided
that any such revision shall not be effective any earlier than twenty-four
(24) months after Buyer's receipt of such request. Within thirty (30) Days
of Buyer's receipt of such request, Buyer and Seller shall negotiate in
good faith to adjust Seller's MDQ for such Contract Years to accommodate
such projected increase to Seller's Annual Volume for such Contract Years,
and shall revise Exhibit F
accordingly.
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1.4
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Buyer's Processing Service. Seller's Gas
at the Receipt Point(s) may have a hydrocarbon dew point that exceeds the
most restrictive quality specification for hydrocarbon dew point required
from time to time by the Interconnecting Pipeline(s). Buyer shall Process
Seller's Gas to reduce its hydrocarbon dew point to a maximum of 20°F at
any pressure between 100 psia and 1,480 psia at the Delivery Point(s). The
fee for such Processing is incorporated into the Gathering and Processing
Fee, If the most restrictive quality specification for hydrocarbon dew
point of the interconnecting Pipeline(s) should ever be reduced below a
maximum of 20°F at any pressure between 100 psia and 1,480 psia, then the
Parties shall within thirty (30) Days of written notice thereof from
Buyer, renegotiate, subject to Section 1.9 of this Agreement, the
Gathering and Processing Fee. If the Parties are unable to renegotiate the
Gathering and Processing Fee, then Buyer may refuse to accept further
deliveries of Seller's Gas affected thereby or Buyer may, at its option,
upon thirty (30) Days' prior written notice to Seller, release such
affected Gas from the provisions of this Agreement, Buyer's right to
renegotiate the Gathering and Processing Fee or, upon the failure of such
renegotiation, to refuse to accept further deliveries of Seller's Gas
affected thereby or release such affected Gas from the provisions hereof,
shall apply to each successive reduction of the most restrictive quality
specification for hydrocarbon dew point of the Interconnecting Pipeline(s)
that is below a maximum of 20°F at any pressure between 100 psia and 1,480
psia.
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1.5
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Buyer's Dehydrating
Service. Seller's Gas at the Receipt Point(s) may have a
water vapor content that exceeds the most restrictive quality
specification for water vapor content required from time to time by the
Interconnecting Pipeline(s), Buyer shall Dehydrate Seller's Gas to reduce
its water vapor content to five (5) pounds per MMcf at the Delivery
Point(s). The fee for such Dehydrating is incorporated into the Gathering
and Processing Fee, If the most restrictive quality specification for
water vapor content of the Interconnecting Pipeline(s) should ever be
reduced below five (5) pounds per MMcf, then the Parties shall within
thirty (30) Days of written notice thereof from Buyer, renegotiate,
subject to Section 1.9 of this Agreement, the Gathering and Processing
Fee, If the Parties are unable to renegotiate the Gathering and Processing
Fee, then Buyer may refuse to accept further deliveries of Seller's Gas
affected thereby or Buyer may at its option, upon thirty (30) Days' prior
written notice to Seller, release such affected Gas from the provisions of
this Agreement Buyer's right to renegotiate the Gathering
and Processing Fee or, upon the failure of such renegotiation, to refuse
to accept further deliveries of Seller's Gas affected thereby or release
such affected Gas from the provisions hereof, shall apply to each
successive reduction of the most restrictive quality specification for
water vapor content of the Interconnecting Pipeline(s) that is below five
(5) pounds per
MMcf.
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1.6
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Buyer's Treating
Service. Seller's Gas at the Receipt Point(s) may have a
C02 content that exceeds the most restrictive quality specification for
C02 content required from time to time by the Interconnecting Pipeline(s).
Buyer shall Treat Seller's Gas to reduce its C02 content to no more
than two percent (2.00%) by volume at the Delivery Point(s),
provided the CO2 content of Seller's Gas does not exceed four
percent (4.00%) by volume at the Receipt Point(s) The
fee for such Treating is incorporated into the Gathering and Processing
Fee. In no event, however, is Buyer obligated to accept deliveries of
Seller's Gas at a given Receipt Point if the CO2 content of Seller's Gas
at that Receipt Point exceeds four percent (4.00%) by volume, If
the weighted arithmetic average quality specification for C02 content of
the Interconnecting Pipeline(s) should ever be reduced below two and
thirty-one hundredths percent (2.31%) per Mcf, then the Parties shall
within thirty (30) Days of written notice thereof from Buyer, renegotiate,
subject to Section 1 9 of this Agreement, the Gathering and Processing
Fee. If the Parties are unable to renegotiate the Gathering and Processing
Fee, then Buyer may refuse to accept further deliveries of Seller's Gas
affected thereby or Buyer may at its option, upon thirty (30) Days' prior
written notice to Seller, release such affected Gas from the provisions of
this Agreement. Buyer's right to renegotiate the Gathering and Processing
Fee or, upon the failure of such renegotiation, to refuse to accept
further deliveries of Seller's Gas affected thereby or release such
affected Gas from the provisions hereof, shall apply to each successive
reduction of the most restrictive quality specification for CO2 content of
the Interconnecting Pipeline(s) that is below two and thirty-one
hundredths percent (2.31%) per
Mcf
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1.7
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Fee for Low Volumes. In
the event the volume of Seller's Gas delivered to a Receipt Point operated
by Buyer falls below 1,000 MMBtu per Accounting Period (each, a "Low
Volume"), the Low Delivery Fee as set forth in Exhibit E shall
be payable from Seller to Buyer for each affected Receipt Point, in
addition to the Gathering and Processing Fee payable with respect to
Seller's Gas delivered thereto. No Low Delivery Fee shall be due and
payable from Seller to Buyer if a Low Volume was due to or arising from
the circumstances addressed in Sections B.3, B.4 and/or B.7 of Exhibit A
to this Agreement
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1.8
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FL&U. Buyer
shall retain FL&U attributable to Seller's Gas quantities received at
the Receipt Point(s). The initial FL&U of [ *
] percent ([ * ]%) for Low Pressure Receipt Point(s)
and [ * ] percent ([ * ]%) for High Pressure
Receipt Point(s) shall be effective for the initial Contract Year. The
applicable FL&U percentage shall be included in the calculation of
Seller's Annual! Volume for the purposes of determining Seller's
compliance with its delivery to Buyer of Seller's Annual Volume. Buyer
shall recalculate the FL&U at the beginning of each Contract Year and
shall notify Seller of the revised applicable percentage. The Parties
agree that the Lost and Unaccounted for Gas portion of the FL&U shall
not exceed [ * ] percent ([ * ]%) during the term of
this Agreement.
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1.9
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Renegotiation of Fees.
If any fee payable by Seller to Buyer hereunder requires renegotiation in
accordance with the terms of this Agreement because of changes in
Interconnecting Pipeline(s) specifications, Buyer will increase any such
fee in an amount not to exceed any applicable increases in its operating
costs due directly to such change in Interconnecting Pipeline(s)
specifications, with a guaranteed after-income-tax rate of return on
Buyer's additional capital costs of [ * ] percent ([ *
]%) over a five-year period (assuming a thirty-seven percent
(37%) income tax rate).
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1.10
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Price for Seller's Gas,
Deductions. As total and complete consideration for the purchase of
Seller's Gas and the processing rights and Plant Products attributable to
Seller's Gas, Buyer shall pay Seller for each Accounting Period an amount
equal to Seller's Allocable MMBtu for such Accounting Period multiplied by
a price equal to the CIG, Rocky Mountains as posted in Plaits Inside
FERC's Gas Market Report published monthly which is an estimate for the
Weighted Average Sale Price for such Accounting Period, This amount, in
accordance with Section 3.4, shall be reduced by (a) all relevant fees due
from Seller to Buyer listed on Exhibit E to
this Agreement and Incurred by Seller in such Accounting Period, and (b)
all other amounts due Buyer pursuant to this Agreement. All fee and fuel
deducts applicable hereunder shall be calculated on a dry basis and then
applied to the Seller's gross MMBtus of Gas received at the Receipt
Point(s). The amount paid to Seller for such Account Period will be
adjusted in the next Accounting Period using the actual Weighted Average
Sales Price once that price has been
calculated.
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1.11
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Seller's Right to Convert to
Gathering and Processing. Seller has, at its sole discretion, the
option to convert this Agreement to a Guaranteed Gathering and Processing
Agreement (the "Conversion Option"). Should Seller elect to exercise the
Conversion Option, the effective date of any Guaranteed Gathering and
Processing Agreement entered into by the Parties in accordance with this
Section shall be no later than twelve (12) months from the date of Buyer's
receipt of Seller's written notice and exercise of the Conversion Option.
This Agreement shall terminate on the effective date of such Guaranteed
Gathering and Processing Agreement. Buyer shall provide to Seller a form
of Guaranteed Gathering and Processing Agreement, which shall contain the
same fees set forth on Exhibit E to
this Agreement (adjusted as set forth in this Agreement) and capacity
allocation as outlined in B.4 of the attached Standard Terms and
Conditions, for acceptance and execution. It is the intent of the parties
that the Guaranteed Gathering and Processing Agreement will be in
substantially the same form as this Agreement, excluding provisions
regarding purchase of gas by
Buyer.
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1.12
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Delivery of Seller's Gas,
Seller shall have the sole responsibility for delivering Seller's
Gas to the Receipt Point(s).
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1.13
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Forward Contract. The
Parties agree that this Agreement is a "forward contract" and a "master
netting agreement" as such terms are defined in the United States
Bankruptcy Code, and that each Party is a "forward contract merchant" as
such term is defined in the United States Bankruptcy
Code.
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1.14
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Joint and Several Obligations.
All obligations of Seller hereunder are the joint and several
obligations of PDC and ▇▇▇▇▇.
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2.
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SERVICE
OPTIONS
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2.1
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Connection of Additional ▇▇▇▇▇
to Existing Receipt Point(s). Before commencement of deliveries of
Gas from ▇▇▇▇▇ connected after the Effective Date, Seller will give Buyer
thirty (30) Days' written notice, prior to commencing Gas deliveries from
such ▇▇▇▇▇, of the name of the well, the location of the well, the volumes
of Gas from such well anticipated to be delivered to Buyer and the manner
and point of connection of such well to a Receipt Point or to gathering
fines upstream of such Receipt
Point.
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2.2
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Addition of Receipt Point(s).
In addition to the Receipt Point(s) listed in Exhibit C on
the Effective Date, Seller may request that new Receipt Points be added to
Exhibit C
for the delivery of Seller's Gas. Buyer shall construct, or cause to be
constructed, at Buyer's sole cost, the facilities necessary to create
the first new Receipt Point. Buyer shall construct, or cause to be
constructed, the facilities necessary for the second new Receipt Point,
provided that Seller shall reimburse Buyer for all costs associated with
the construction of such second Receipt Point. For each additional Receipt
Point thereafter requested by Seller, Buyer and Seller
shall alternate between them the payment obligation for
the cost of construction of the necessary facilities for each such Receipt
Point. Buyer shall maintain records of such payment obligations, and such
records shall be prima
facie evidence of the amount owed by a Party pursuant to this
Section (absent manifest error). Seller and Buyer acknowledge and agree
that the addition of Receipt Point(s) pursuant to this Section 2.2 shall
not create an obligation on the part of Buyer to accept, or a right on the
part of Seller to require, any increase in Seller's Annual Volume or
Seller's MDQ under this Agreement; any such increase may occur only in
accordance with the terms of Section
1.3.4.
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3.
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STATEMENTS AND
PAYMENT
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3.1
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Report by Seller. Where
CTM is not being performed by Buyer, no later than the fifth (5th)
Business Day after the end of each Accounting Period, Seller's Operator
shall deliver to Buyer a report of the Day(s) of Seller's Gas production,
the applicable Accounting Period and year in which such production is to
be recognized, Mcf pressure base, Btu pressure base, Daily Mcf, Daily Btu,
Daily MMBtu and quality of Seller's Gas, all for such Accounting Period,
Such report shall be transmitted to Buyer electronically in a data file
format designated by Buyer, Buyer may request from Seller an additional
monthly electronic audit file with all of the hourly, Daily, configuration
and event/alarm data for such Accounting Period, which Seller shall
provide to Buyer within twenty (20) Business Days of Buyer's request
therefore.
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3.2
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Statements
by Buyer.
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(a)
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On
or before thirty (30) Days following the end of each Accounting
Period(provided
Buyer has received Seller's report under Section 3.1 above as required in
such Section), Buyer shall send Seller electronically and/or via U.S. mail
a statement setting forth the
following:
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3.2.a.1
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The
number of MMBtu of Seller's Gas received by Buyer at the Receipt Point(s)
during such Accounting
Period;
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3.2.a.2
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The
number of MMBtu of Seller's Gas retained by Buyer as FL&U during such
Accounting Period;
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3.2.a.3
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The
CIG, Rocky Mountains price as published monthly in ▇▇▇▇▇'▇ inside FERC's
Gas Market Report for such Accounting
Period;
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3.2.a.4
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The Weighted
Average Sales Price for the
previous Accounting Period;
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3.2.a.5
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Prior
Accounting Period adjustment for the price and amount paid to Seller
and
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3.2.a.6
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The
fees and any other amounts due and payable by Seller to Buyer for services
rendered by Buyer during such Accounting
Period.
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(b)
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On
or before the forty-five (45) Day following the end of each Contract Year,
Buyer shall send Seller electronically and/or via U.S. mail, a statement
setting forth the calculation of Seller's Annual Volume, and, if
applicable, the Shortfall Fee due for such
period.
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3.3
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Payment by Buyer. On or
before thirty (30) Days following each Accounting Period, Buyer shall pay
to Seller an amount due Seller as set forth in the statement delivered by
Buyer pursuant to Section 3.2(a) of this Agreement, by automated clearing
house (ACH) transfer of immediate available funds to [ * ]. If the
thirtieth (30th)
Day is not a Business Day, then payment shall be made on the Business Day
immediately following. Seller shall have the right to dispute the amounts
set forth in any statement as specified in Section F.1 of Exhibit A to
this Agreement.
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3.4
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Party's
Right to Offset.
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(a)
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Buyer
shall have the right to offset any amounts due Buyer (including amounts
for which Seller has indemnified Buyer hereunder) from amounts due to
Seller under this Agreement Any such offset, including the
balance remaining after such offset, shall be reflected in Buyer's
statement described in Section 3 2(a). The remaining balance due to Seller
shall be paid in accordance with Section
3.3.
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(b)
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To
the extent that any amounts payable by Seller to Buyer exceed the amounts
due to Seller from Buyer hereunder, Seller shall have the right to offset
any amounts due to Seller (including amounts for which Buyer has
indemnified Seller hereunder) from amounts due to Buyer under this
Agreement Any such offset, including the balance remaining
after such offset, shall be reflected in a statement, in detail reasonably
acceptable to Buyer, prepared by Seller and delivered with any remaining
balance due to Buyer, to Buyer's address specified in Section
3.5,
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3.5
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Notice. Any notice
called for in this Agreement shall be in writing and shall be considered
as having been given if delivered personally, by U.S. mail, by fax, or by
express courier, postage
prepaid, by either Party to the other at the addresses given below.
A notice received from either of ▇▇▇▇▇ or PDC shall be effective as notice
from Seller hereunder, and Buyer shall be entitled to act on any such
notice as notice from Seller. Routine communications, including monthly
statements, shall be considered as duly delivered when mailed by regular
U.S. mail. Unless changed upon written notice by a Party, the addresses
for notices to the Parties are as
follows:
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Notices and Statements to
Buyer:
▇▇▇▇▇▇▇▇
PRODUCTION RMT COMPANY
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇
▇▇▇▇▇
Attn: Director,
Gas Management- Mail Drop 26-4
Telephone: (▇▇▇)
▇▇▇-▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
Notices and Statements to
Seller:
PETROLEUM
DEVELOPMENT CORPORATION
▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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4.
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TITLE
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4.1
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Passage of Title, Unless
otherwise specifically agreed in writing by the Parties, title to Seller's
Gas shall pass from Seller to Buyer at the Receipt
Point(s)
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4.2
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Seller's Warranty of Title.
Seller warrants that ft (a) has (i) the authority to make the
commitment set forth in Section 1.1 of this Agreement, and (ii) good and
marketable title to ail Gas delivered to Buyer at the Receipt Point(s),
and (b) will have the right to convey, and will transfer good and
merchantable title to, all of Seller's Gas sold hereunder and delivered by
it to Buyer, free and clear of all liens, encumbrances and
claims.
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5. TERM AND
TERMINATION
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5.1
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Effective Date. This
Agreement shall become effective upon June 1, 2006 (the "Effective Date"),
and continue from and after the Effective Date through the end of the last
Contract Year for the period of volume commitment outlined on Exhibit
F
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5.2
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Termination Events.
Notwithstanding the foregoing Section
5.1:
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5.2.1
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in
the event a Regulatory Event occurs
that:
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5.2.1.1.
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renders
Buyer unable to continue to perform under this Agreement, Buyer shall be
entitled to terminate this Agreement upon thirty (30) Days' prior notice
to Seller, such notice to contain a reasonably detailed description of
such Regulatory Event and the cause for Buyer's inability to perform;
or
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GAS
PURCHASE AGREEMENT
PAGE
8
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5.2.1.2.
|
is
the sole cause of making a Party's continued performance uneconomic (the
"Affected Party"), the Affected Party shall notify the other Party (the
"Unaffected Party") of such event, and the Parties shall have forty-five
(45) Days from the Unaffected Party's receipt of such notice to negotiate,
in good faith, provisions that restore the economic benefit to the
Affected Party, consistent with the intent originally
reflected in this Agreement. If the Parties are unable to do so within
such forty-five (45) Day period, then either Party may thereafter
terminate this Agreement by giving the other Party written notice of
termination with an effective date no earlier than thirty (30) Days from
the date of such notice of termination;
or
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5.2.2.
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in
the event that a Party (the "Insolvent Party") files a petition or
otherwise commences, authorizes or acquiesces in the commencement of a
proceeding or case under any bankruptcy or similar law for the protection
of creditors, or has such petition filed or proceeding commenced against
it, or otherwise becomes bankrupt or insolvent (however evidenced), or has
a receiver, provisional liquidator, conservator, custodian, trustee or
other similar official appointed to it or with respect to substantially
alt of its assets (a "Bankruptcy Event"), then the other Party (the
"Solvent Party") shall have the right, at its sole election, to
immediately withhold and/or suspend performance under this Agreement
and/or to terminate and liquidate this Agreement in the manner provided in
Section 5.4 of this Agreement and as permitted by Sections 362(b)(6),
362(b)(27), 556 and 561 of the United States Bankruptcy Code, in addition
to any and all other remedies available to the Solvent Party hereunder,
under applicable law or in
equity.
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5.2.3.
|
For
the avoidance of doubt, (a) a Bankruptcy Event occurring with respect to
PDC shall not create any rights of termination and/or liquidation for
▇▇▇▇▇, (b) a Bankruptcy Event occurring with respect to ▇▇▇▇▇ shall not
create any rights of termination and/or liquidation for PDC hereunder, and
(c) a Bankruptcy Event occurring with respect to either of PDC or ▇▇▇▇▇
shall create rights of termination and/or liquidation for Buyer
hereunder.
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5.3
|
Additional Termination
▇▇▇▇▇▇.▇▇ addition to the
termination rights contained in Section 5.2, the Parties, as applicable,
have rights to terminate this Agreement pursuant to the terms of Sections
1.11 and 9 of this Agreement, and Sections J. 1 and J .3 of Exhibit A
hereto
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5.4
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Termination and Liquidation
Upona Bankruptcy
Event.
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5
4.1.
|
If
a Bankruptcy Event has occurred and is continuing, the Solvent Party shall
have the right to terminate this Agreement by giving written notice to the
Insolvent Party, with the date of the Insolvent Party's receipt of such
notice being the early termination date for the liquidation and
termination of this Agreement pursuant to this Section (the "Early
Termination Date") On the Early Termination Date, this Agreement shall
terminate,
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5
4.2.
|
As
of the Early Termination Date, the Solvent Party shall determine, in good
faith and in a commercially reasonable manner, the amount owed by each
Party with respect to all of Seller's Gas delivered and sold, and received
and purchased, between the Parties under this Agreement on and before the
Early Termination Date,
and all other applicable charges relating to such Seller's Gas, for which
payment has not yet been made by the
Parties.
|
GAS
PURCHASE AGREEMENT
PAGE 9
|
5.4.3.
|
The
Solvent Party shall liquidate and accelerate the remaining obligations
under this Agreement in the following
manner:
|
|
5.4.3.1.
|
If
the Solvent Party is Seller, Seller shall have a liquidated claim against
Buyer in the amount $[ * ] per MMBtu of Gas to be gathered and
purchased for a period of two years following the Early Termination Date,
as specified on Exhibit F in satisfaction of Buyer's remaining obligations
under this Agreement;
and
|
|
5.4.3.2.
|
If
the Solvent Party is Buyer, Buyer shall have a liquidated claim against
Seller in the amount $[ * ] per MMBtu of Gas remaining to be
delivered as specified on Exhibit F in satisfaction of Seller's remaining
obligations under this
Agreement,
|
|
5.4.4.
|
The
Solvent Party shall net or aggregate, as appropriate, any and all amounts
owing between the Parties under this Section so that all such amounts are
netted or aggregated to a single liquidated amount payable by one Party to
the other (the "Net Settlement Amount"). At its sole option, the Solvent
Party may setoff (a) any Net Settlement Amount payable to the Insolvent
Party against any amounts payable by the Insolvent Party to the Solvent
Party and/or its affiliates under any other agreement or arrangement
between the Insolvent Party and the Solvent Party and/or its affiliates
arising from or related to this Agreement, or (b) any Net Settlement
Amount payable to the insolvent Party against any amounts payable by the
Solvent Party or its affiliates to the Insolvent Party or its affiliates
under any other agreement or arrangement between the Insolvent Party and
its affiliates and the Solvent Party and its affiliates arising from or
related to this Agreement. The Solvent Party will give the Insolvent Party
notice of any set-off effected under this Section, provided that failure
to give such notice shall not affect the validity of the
set-off.
|
|
5.4.5.
|
The
rights provided by this Section are in addition to and not in limitation
of any other right or remedy (including any right to set-off,
counterclaim, claim or otherwise withhold payment) to which a Party may be
entitled (whether by operation of law, contract or
otherwise).
|
|
5.4.6.
|
If
any obligation that is to be included in any netting, aggregation or
setoff pursuant to this Section is unascertained, the Solvent Party may,
in good faith, estimate that obligation and net, aggregate or setoff, as
applicable, in respect of the estimate, subject to the Solvent Party's
accounting to the Insolvent Party when the obligation is ascertained, Any
amount not then due that is included in any netting, aggregation or setoff
pursuant to this Section shall be discounted to net present value in a
commercially reasonable manner determined by the Solvent
Party,
|
|
5
4.7.
|
As
soon as practicable after the Early Termination Date, the Solvent Party
shall notify the Insolvent Party of the Net Settlement Amount, and whether
the Net Settlement Amount is due to or from the Solvent Party. The notice
shall include a written statement explaining in reasonable detail the
calculation of the Net Settlement Amount The Net
Settlement Amount shall be paid by the Party owing such amount by the
close of business on the tenth (10th) Business Day following the Insolvent
Party's receipt of such notice, which date shall not be earlier than the
Early Termination Date. Interest on any unpaid portion of the Net
Settlement Amount shall accrue from such tenth (10th) Business Day until
the date of payment at a rate equal to the then-effective prime rate of
interest published under the "Money Rates" column of The Wall Street Journal
(or if there is more than one such rate, the average of such rates)
plus two percent (2.0%) per
annum
|
GAS
PURCHASE AGREEMENT
PAGE 10
|
5.4.8.
|
The
Insolvent Party may dispute the calculation of the Net Settlement Amount
by providing the Solvent Party with written notice of the dispute setting
forth the insolvent Party's calculation, within seven (7) Days of its
receipt of the Solvent Party's calculation. The Parties will use the
dispute resolution process set forth in Article I of Exhibit A to this
Agreement to resolve the
dispute
|
|
5
4.9.
|
The
Solvent Party's remedies under this Section 5.4 are the sole and exclusive
remedies of the Solvent Party with respect to the declaration of any Early
Termination Date, Each Party reserves to itself all other rights, setoffs,
claims, counterclaims and other defenses to which it is or may be entitled
arising from this
Agreement.
|
|
5.5
|
Release. Promptly after
any termination of this Agreement, Buyer agrees to record, as applicable,
any document reasonably required by Seller to effect the release of the
Memorandum of this Agreement that Buyer may have recorded pursuant to
Section 8 hereof
|
|
6
|
EXHIBITS
|
This
Agreement incorporates and is subject to the following
Exhibits:
|
Exhibit
A:
|
Standard
Terms and Conditions
|
|
Exhibit
B:
|
Intentionally
Omitted
|
|
Exhibit
C:
|
Receipt
Point(s)
|
|
Exhibit
D:
|
Delivery
Point(s)
|
|
Exhibit
E:
|
Service
and Fee Description
|
|
Exhibit
F:
|
Gas
Volumes Committed
|
|
Exhibit
G:
|
Two
Year Monthly MDQ Schedule
|
In the
event of a conflict between the terms of the Agreement (without reference to the
Exhibits) and the terms of the Exhibits, the terms of the Agreement (without
reference to the Exhibits) shall control.
|
7
|
ENTIRE AGREEMENT,
CONSTRUCTION
|
This
Agreement, together with its Exhibits, contains the entire agreement of the
Parties with respect to the matters addressed herein and supersedes all prior
and contemporaneous agreements, representations and understandings of the
Parties with respect to such matters. The Parties represent and acknowledge that
in executing this Agreement they do not rely on and have not relied on any
representation or statement, oral or written, which is not set forth in this
Agreement. This Agreement shall be considered for all purposes as prepared
through the joint efforts of the Parties, and the Parties agree that it shall
not be construed against one Party or the other as a result of the manner in
which this Agreement was actually negotiated, prepared, drafted or
executed
GAS
PURCHASE AGREEMENT
PAGE 11
IN
WITNESS WHEREOF, the Parties hereto have executed two duplicate original copies
of this Agreement.
| ▇▇▇▇▇▇▇▇ PRODUCTION RMT COMPANY | ▇▇▇▇▇ NATURAL GAS COMPANY | |||
| By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ | By: | /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | |
| Name: | Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | ||
| Title: | President | Title: | President | |
| PETROLEUM DEVELOPMENT CORPORATION | ||||
| By: | /s/ ▇▇▇▇ ▇ ▇▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇ ▇ ▇▇▇▇▇▇▇ | |||
| Title: | Exec VP | |||
|
STANDARD
TERMS AND CONDITIONS
|
PAGE
A-2
|
EXHIBIT
A
TO THE GAS PURCHASE
AGREEMENT
DATED AS OF JUNE 1,
2006
Between
▇▇▇▇▇▇▇▇ PRODUCTION RMT
COMPANY
and
▇▇▇▇▇ NATURAL GAS
COMPANY
and
PETROLEUM DEVELOPMENT
CORPORATION
STANDARD
TERMS AND CONDITIONS
A. DEFINITIONS
In
addition to the terms defined in the text of this Agreement, the following terms
shall have the meanings indicated:
A.1
Accounting Period shall mean a calendar month commencing on the first Day
of that calendar month and ending on the last Day of that calendar
month.
A.2
Bankruptcy Event shall have the meaning given such term in Section 5.2.2
of this Agreement.
A.3 British Thermal Unit or Btu shall mean the measurement
unit for the amount of heat required to raise the temperature of one (1) pound
of water, at 60 degrees Fahrenheit, one (1) degree
Fahrenheit.
A.4
Business Day shall mean a Day on which Buyer is open for business,
and a Business Day shall open at 8:00 am and close at 5:00 pm
CST.
A.5 CST shall mean Central
Standard Time.
A.6
Confirmed Receipt Nomination shall mean a Receipt Nomination that is
adjusted by Gatherer when historical production or current data from Gatherer's
Telemetering Facilities suggest that such Receipt Nomination is inaccurate.
A.7
Contract Year shall mean each consecutive twelve month period as detailed
on the attached Exhibit F beginning with the Effective Date hereof or, if the
Effective Date is not
the first Day of a month, then with the first Day of the month following the
Effective Date.
A.8 CTM shall mean custody
transfer measurement at the Receipt Point(s).
A.9
Cubic Foot shall mean the volume of Gas occupying one cubic foot of space
when such Gas is at a base temperature of sixty degrees ▇▇▇▇▇▇▇▇▇▇ (▇▇▇ F) and a
base pressure of 14.73 Psia and shall be calculated in accordance with ANSI/API
2530 where the factors for Fpwl and Fhgt shall each be equal to one
(1).
A.10 Day or
Daily shall mean
twenty-four (24) consecutive hours beginning at 9:00 am CST or as otherwise
designated by Buyer.
A.11 Dehydrate or
Dehydrating shall mean the removal of water vapor from
Gas.
|
STANDARD
TERMS AND CONDITIONS
|
PAGE
A-3
|
A.12 Delivery
Point(s) shall mean those point(s) of delivery of Seller's Gas to
Interconnecting Pipeline(s) as shown on Exhibit D to this
Agreement, together with such other Delivery Point{s) as may be added by Buyer
to such Exhibit
D and notified to Seller from time to time.
A.13 Early
Termination Date shall have the meaning given such term in Section 5.4.1
of this Agreement.
A.14 Effective Date shall have the meaning
given such term in Section 5.1 of this Agreement.
A.15 Excess Volumes
shall have the meaning given such term in Section 1.3.3.2 of this
Agreement.
A.16 Field shall
mean any point on the Gathering System upstream of a Plant.
A.17 Firm
shall mean that either Party may interrupt its performance under this
Agreement without liability only to the extent that such performance is
prevented by reasons of Force Majeure.
A.18 FL&U
shall mean Gathering Fuel, Plant Fuel, and Lost and Unaccounted for Gas
volumes.
A.19 Force Majeure shall have the meaning
given such term in Section B.3 of Exhibit A to this
Agreement.
A.20 Gas shall mean
any mixture of gaseous hydrocarbons or hydrocarbons and other gases, in a
gaseous state, consisting primarily of methane.
A.21 Gathering and
Processing Fee shall mean, collectively, the Gathering and Processing
Fees payable from Seller to Buyer for Buyer's services performed under this
Agreement and more specifically set forth on Exhibit £ to this
Agreement.
A.22 Gathering Fuel
shall mean that volume of Seller's Gas, expressed as a percentage of the
Receipt Point Gas quantities, used or consumed as fuel in the operation of field
compression on the Gathering System.
A.23 Gather,
Gathered or Gathering
shall mean the receipt of Gas at the Receipt Point(s).
A.24 Gatherer
shall mean Buyer's gatherer of Gas, Bargath Inc., or such other entity as
Buyer shall select from time to time to Gather Gas on behalf of Buyer under this
Agreement.
A.25 Gathering
System shall mean those facilities used by Buyer to Gather Seller's Gas
and provide any other service described in Section 1 in the
Field.
A.26 Gross Heating Value
shall mean the total Btu content for a Cubic Foot of Gas on a dry basis
as
determined by calculation from a compositional analysis using physical
properties of gases at fourteen and seventy-three hundredths (14.73) psia and
sixty degrees Fahrenheit (60°F), as prescribed by industry
standards.
A.27 Guaranteed Capacity
shall mean that Gatherer has guaranteed to a Shipper to have the capacity
available to Gather such Shipper's Gas in its Gathering System except during
times of capacity allocation pursuant to Section B.4 of Exhibit A to this
Agreement.
|
STANDARD
TERMS AND CONDITIONS
|
PAGE
A-4
|
A.28 High Pressure
Receipt Point shall mean any Receipt Point above three hundred and fifty
(350) psig.
A.29 Insolvent Party
shall have the meaning given such term in Section 5.2.2 of this
Agreement.
A.30 Interconnecting
Pipeline(s) shall mean any pipeline connected immediately downstream of
the Delivery Point(s).
A.31 Lost and
Unaccounted for Gas shall mean that volume of Seller's Gas, expressed as
a percentage of the Receipt Point Gas quantities, that is lost or unaccounted
for, which may include, but is not limited to, Gas flared or vented by Buyer or
Gatherer.
A.32 Low Pressure
Receipt Point shall mean any Receipt Point at or below three hundred and
fifty (350) psig.
A.33 Maximum Daily
Quantities shall mean, with respect to a Shipper, the maximum daily
quantity of Gas for which Gatherer has committed to provide service to such
Shipper.
A.34 MMBtu
shall mean one million (1,000,000) British Thermal
Units.
A.35 Mcf shall mean
one thousand (1,000) Cubic Feet of Gas and shall be the unit of volume typically
utilized under this Agreement.
A.35 MMcf
shall mean one million (1,000,000) Cubic Feet of Gas.
A.37 New Taxes shall mean any and
all governmental charges, licenses, fees, permits and assessments, or increases
of any thereof (excluding taxes described in Section H of Exhibit A to this
Agreement and taxes based on the net income or net worth of any Party) that are
imposed on a Party or the transactions contemplated under this Agreement that
(a) were not in effect on the Effective Date of this Agreement or (b) were not
imposed on a Party or the transactions contemplated under this Agreement on the
Effective Date of this Agreement.
A38 Non-Guaranteed
Capacity shall mean that Gatherer has not guaranteed to a Shipper to have
the capacity available to Gather such Shipper's Gas in its Gathering
System.
A.39 Plant shall
mean any of those facilities used by Buyer to Process Gas and provide any other
service described in Section 1 other than in the Field.
A.,40 Plant Fuel
shall mean the number of MMBtu of Gas or other hydrocarbons used or
consumed in the operation of the Plant including, but not limited to, fuel,
flared and vented Gas and such Gas as may be lost and unaccounted for despite
the prudent operation of the Plant.
A.41 Plant Products
shall mean those liquid hydrocarbons obtained by
Processing.
A.42 Process, Processed
or Processing shall mean the liquefaction and removal of hydrocarbons
from Gas at the Plant.
A.43 Receipt Nomination
shall mean a notification, submitted in writing or via Gatherer's
nomination and scheduling system, of the number of MMBtus of Gas that a Shipper
will deliver to the Gathering System.
|
STANDARD
TERMS AND CONDITIONS
|
PAGE
A-5
|
A.44 Receipt Point MMBtu shall
mean the number of MMBtu of Gas measured at the Receipt
Point(s).
A.45 Receipt Point(s) shall mean
the upstream flange(s) of the Gathering System at the point(s) of receipt shown
on Exhibit C to
this Agreement, as the same may be modified in accordance with Section 2.2 of
this Agreement.
A.46 Regulatory Event shall mean
any government action or potential action, such as necessity for compliance with
any court order, FERC order, FERC agreement, FERC settlement agreement, law,
statute, ordinance, regulation or policy having the effect of law, promulgated
by a governmental authority having jurisdiction, including the imposition of New
Taxes.
A.47 Seller's Allocable MMBtu shall
be an amount, for each Accounting Period, equal to the Receipt Point MMBtu for
such Accounting Period received by Buyer from Seller less applicable FL&U
for such Accounting Period.
A.48 Seller's Annual Volume shall
mean, for any Contract Year, the amount of Seller's Gas as shown on Exhibit F to
this Agreement, (as the same may be modified in accordance with Section 1.3.4 of
this Agreement or Section B7 of Exhibit A to this
Agreement) to be delivered by Seller to the Receipt Point(s) and purchased by
Buyer during such Contract Year.
A.49 Seller's Gas shall have
the meaning given such term in Section 1.1 of this Agreement.
A.50 Seller's-MDQ shall mean,
for any Contract Year or part thereof shown on Exhibit F to this
Agreement, the maximum Daily quantity of Seller's Gas as shown on such Exhibit F (as the
same may be modified in accordance with Section 1.3.4 of this Agreement or
Section B.7 of Exhibit
A to this Agreement) to be delivered by Seller to the Receipt Point(s)
and purchased by Buyer each Day during such Contract Year or part thereof, as
applicable, not to exceed Seller's Annual Volume for such Contract
Year.
A.51 Seller's Operator shall
mean the operator of the facilities upstream of a given Receipt Point Seller's
Operator, however, may also operate CTM equipment located downstream of a given
Receipt Point as provided in Section D of Exhibit A to this
Agreement. Seller's Operator may be either Seller or a third party acting on
Seller's behalf and notified to Buyer. When Seller's Operator is a third party
acting on Seller's behalf, it shall be Seller's responsibility to cause such
third party to comply with those terms of this Agreement which refer to Seller's
Operator.
A.52 Shipper shall mean any party
that delivers Gas into the Gathering System.
A.53 Shortfall Fee for any
Contract Year, if applicable under Section 1.3.3.1 of this Agreement ("SF"),
shall mean the amount calculated in accordance with the following
formula:
|
SF
=
|
(GPF
+ TF + TS) x (([*] x AV) - (AD + EV)), where
|
|
GPF
=
|
the
then –applicable Gathering and Processing Fee
|
|
TF
=
|
the
then –applicable Excess CO2
Treating Fee, provided that “TF” will equal [*][*] if the weighted
average CO2
content of Seller’s Gas from all Receipt Point(s) for the Contract
Year for which SF is being calculated is less than or equal to three
percent (3%).
|
|
TS
=
|
Firm
transport fee equal to [*] $[*] per
MMBtu
|
|
STANDARD
TERMS AND CONDITIONS
|
PAGE
A-6
|
|
AV
=
|
Seller’s
Annual Volume for such Contract Year
|
|
AD
=
|
actual
deliveries of Seller’s Gas at the Receipt Point(s) taken by Buyer for such
Contract Year
|
|
EV
=
|
any
Excess Volumes delivered by Seller in the Contract Year immediately
preceding the Contract Year for which SF is being
calculated
|
A.54 Telemetering
Facilities shall mean electronic monitoring facilities, including, but
not limited to, electronic flow measurement facilities, remote terminal units
and all other end devices and transmitters used to calculate pressure,
temperature, differential pressure, flow and valve position.
A.55 Treat, Treating
or Treatment
shall mean the removal, reduction or dilution of C02 in
Gas.
A.56 Weighted
Average Sales Price shall mean, for any specified period,
the weighted average sales price that Buyer [*] Gas produced from the Piceance
Basin to [*] markets
through its affiliate, ▇▇▇▇▇▇▇▇ Power Company, Inc., its successors or assigns
(the "Marketing Affiliate"), for such period, less the weighted average
[*] costs (including, but not limited to, demand, commodity and fuel fees )
incurred by Buyer or the Marketing Affiliate for the transport of such Gas from
the Delivery Point(s) to the point of sale to such [*] markets during such period. In the
event that Buyer makes sales directly to [*] markets or the Marketing Affiliate
purchases Buyers gas directly, then such amounts will be included in the
calculation of the Weighted Average Sales
Price.
|
B.
|
OPERATING
PROVISIONS
|
B.1 Operational
Control Buyer shall be entitled to complete operational
control of its facilities and shall operate its facilities in a manner that, in
Buyer's sole opinion, is consistent with its obligations under this Agreement,
However, this Section B 1 shall not be interpreted to relieve Buyer of its
obligations under this Agreement.
B.2
Maintenance, Gatherer shall, without liability, be entitled to
perform such maintenance, testing, alteration, modification, repair or
replacement of the Gathering System and/or Plant, or any part thereof, as would
be done by a prudent operator, even if it requires the allocation of capacity
pursuant to Section B 4 of Exhibit A to this
Agreement, Buyer shall provide or caused to be provided to Seller, thirty (30)
Days' advance written notice of scheduled maintenance to be performed on the
Gathering System and/or Plant.
B.3 Force
Majeure Neither Buyer nor Seller shall be liable in
damages to the other for its inability to perform under this Agreement due to an
event of Force Majeure As used herein, the term "Force Majeure" shall mean any
act, omission, or circumstance occasioned by or in consequence of any acts of
God, acts of terrorism, blockades, insurrections, riots, epidemics, flood,
washouts, landslides, mudslides, earthquakes, storms, threat of hurricanes and
tropical storms that result in the evacuation of the affected area, extreme hot,
cold, or freezing weather, lightning, restraint of rulers and peoples, civil
disturbances, war, explosions, fires, mechanical failure, structural failure,
breakage of or accident to, or the unavailability of supply of, machinery,
equipment, lines of pipe, platform or ▇▇▇▇▇, the inability or failure of
downstream or upstream pipelines to deliver or receive, the inability or failure
of downstream third-party markets to receive, the order of any court or
governmental authority having jurisdiction, any change in any applicable
regulation materially affecting the operation of the facilities or any other
cause of a similar nature, whether of the kind herein enumerated or otherwise,
and including, without limitation, any Regulatory Event, not reasonably within
the control of the Party claiming suspension and that, by the exercise of due
diligence, such Party is or should have been unable to prevent or overcome.
Failure to prevent or settle any strike or strikes shall not be considered a
matter within the control of the Party claiming suspension With
regard to the installation of new facilities or modifications to existing
facilities, delay or inability to obtain any necessary permits or rights-of-way
from a regulatory agency or landowner after an application or request by Buyer
shall be deemed to be a Force Majeure event, provided Buyer has given reasonable
notice of any planned suspension of service to Seller. Force Majeure shall not
relieve either Party of liability in the event of its concurring negligence and
shall only relieve the non-performing Party from liability for failure to
perform under this Agreement for so long as such Party is making reasonable
efforts to remedy the situation. Force Majeure shall not relieve either Party of
its obligation to pay money due under this Agreement.
|
STANDARD
TERMS AND CONDITIONS
|
PAGE
A-7
|
B.4
Allocation of Capacity, Notwithstanding any other term of this Agreement
if for any Day, Gatherer notifies Buyer that the capacity of its Gathering
System and/or Plant is constrained. Buyer shall cause Gatherer, without
liability to either Gatherer or Buyer, to allocate the available capacity as
follows:
|
|
(a)
|
Capacity
shall first be allocated pro rata to all Shippers with Guaranteed Capacity
based upon the lower of their respective (i) Maximum Daily Quantities,
(ii) Receipt Nominations or (iii) Confirmed Receipt Nominations;
and
|
|
(b)
|
Any
remaining capacity shall be allocated pro rata to all Shippers with
Non-Guaranteed Capacity based upon the lower of their respective (i)
Maximum Daily Quantities, (ii) Receipt Nominations or (iii) Confirmed
Receipt Nominations
|
However,
if Gatherer can identify the location of the constraint, then Buyer shall cause
Gatherer, without liability to either Gatherer or Buyer, to impose such
allocation only upon those Shippers whose Gas is affected, and only at such
location. That capacity will then be allocated pro rata based on the previous 24
hour physical flow through the location that is constrained. From time to time,
Seller may request from Buyer or Gatherer information regarding daily volumes of
Gas received or to be received by the Gathering System to determine available
capacity and capacity allocation on the Gathering System,
B.5 Access, Easements and
Rights-of-Way Seller shall provide Buyer and/or Gatherer such
access to its facilities as is necessary and convenient for Buyer and/or
Gatherer to perform the obligations of Buyer under this
Agreement Seller grants to Buyer and/or Gatherer, upon the execution
of a mutually agreeable form, the use of ail easements and rights-of-way held by
Seller, to the extent that Seller has the right to do so, that are necessary and
convenient for Buyer and/or Gatherer to perform Buyer's obligations under this
Agreement and for Gatherer to Gather Seller's Gas. Buyer shall cause Gatherer to
fulfill ail obligations of any kind whatsoever for such use as required under
any lease or agreement that pertains to such grant as outlined above utilized by
Gatherer. Such use and grant of rights shall include, but not be limited to,
those rights under Seller's oil and Gas lease(s) to construct, operate, and
maintain pipelines and appurtenant facilities for the purpose of Gathering Gas
from the Area of Interest, Any grant to or use by Buyer or Gatherer as
contemplated above shall be for the express and limited purpose of gathering
Seller's gas from the Receipt Points or otherwise allowing Buyer to meeting its
obligations under this Agreement. Any other use shall be prohibited unless
approved in writing by Seller and appropriate surface owner.
B.6
Seller's Delivery Pressure. Seller shall deliver Seller's Gas to the
Receipt Point(s) at pressure(s) sufficient to cause if to enter Gatherer's
facilities; however, such pressure(s) shall not exceed the Maximum Allowable
Operating Pressure of Gatherer's facilities ("MAOP"). The MAOP for a given
facility may be revised from time to time by Gatherer in its sole discretion,
such revision to be notified to Seller by Buyer promptly thereafter Any such
MAOP revisions shall be applied uniformly and not discriminately against
Seller Except as otherwise expressly provided in Section B.7 of Exhibit A to this
Agreement, neither Buyer nor Gatherer is obligated to modify the pressure(s) in
its facilities in order to cause the entry of Seller's Gas into its
facilities Seller shall equip its compression equipment, if
any, with:
|
STANDARD
TERMS AND CONDITIONS
|
PAGE
A-8
|
|
(a)
|
over
pressurization protection devices in accordance with ANSI B31.8 to prevent
delivery pressure in excess of the
MAOP;
|
|
(b)
|
Gas
cooling to prevent delivery temperatures in excess of 120°F into Buyer's
or Gatherer's facilities; and
|
|
(c)
|
Pulsation
dampening equipment, as necessary, to minimize pulsation induced
measurement errors to less than two percent (2%) peak-to-peak square root
error
|
B.7 Receipt
Point Pressure Maintenance Buyer shall cause Gatherer to use
reasonable efforts to maintain an average monthly operating pressure
of three hundred and fifty (350) psig or less (the "Target Pressure")
at the Low Pressure Receipt Point(s) into the Gathering System. Should the
average monthly pressure at any Low Pressure Receipt Point exceed the Target
Pressure for three (3) consecutive months for any Low Pressure Receipt Point,
then, beginning with the fourth month in which such average monthly pressure
exceeds the Target Pressure, Buyer shall reduce the Gathering and Processing Fee
by [ * ] ($[ * ]) per MMBtu. Buyer shall have nine (9) months in which
to install, or cause Gatherer to install, equipment necessary to reduce the
pressure at such Low Pressure Receipt Point to the Target Pressure. If Buyer or
Gatherer has not reduced the pressure at such Low Pressure Receipt Point after
such nine (9) month period to the Target Pressure, then Seller may, at its
option, upon thirty (30) Days' prior written notice to Buyer, release only the
affected Low Pressure Receipt Point and Seller's Gas delivered thereto from the
provisions of this Agreement In the event of any such release,
during such thirty (30) Day period, Buyer and Seller shall negotiate in good
faith to reduce Seller's MDQ and Seller's Annual Volume by an amount equal to
the Gas that was projected to have been delivered to the affected Low Pressure
Receipt Point, and shall revise Exhibit F
accordingly.
C.
GAS QUALITY
|
C.1
|
Gas Quality at Receipt
Point(s),Seller's Gas at the Receipt Point(s) shall be commercially
free of oxygen, hydrocarbons in their liquid state, water in its liquid
state, crude oil, brine, air, dust, gums, gum-forming constituents,
bacteria and other objectionable liquids and
solids,
|
|
(a)
|
with
not more than;
|
|
(1)
|
one
quarter (1/4) grain of H2S per
one hundred (100) Cubic Feet;
|
|
(2)
|
five
(5) grains of total sulfur per one hundred (100) Cubic
Feet;
|
|
(3)
|
one
(1) grain of mercaptan per one hundred (100) Cubic
Feet;
|
|
(4)
|
two
(2) mole percent of carbon
dioxide;
|
|
(5)
|
three
(3) mole percent of nitrogen;
|
|
(6)
|
five
(5) mole percent of combined carbon dioxide, nitrogen and oxygen;
and
|
|
(b)
|
meeting
the following additional quality
specifications:
|
|
(1)
|
not
exceeding 120°F in temperature at the Receipt
Point(s);
|
|
STANDARD
TERMS AND CONDITIONS
|
PAGE
A-9
|
|
(2)
|
having
a total heating value of at least 1,000 Btu per Cubic Foot;
and
|
|
(3)
|
not
exceeding seven (7) pounds of water vapor per
MMcf.
|
In
addition to the foregoing, unless otherwise expressly provided in Section 1 of
this Agreement, Seller's Gas shall conform to the most restrictive quality
specifications required from time to time by the Interconnecting Pipeline(s). If
at any ▇▇▇▇ ▇▇▇▇▇▇'▇ Gas at the Receipt Point(s) fails to conform to such
quality specifications, Buyer shall give Seller written notice of the deficiency
and Seller shall immediately remedy the deficiency. If Seller fails to
immediately remedy the deficiency, Buyer may refuse to accept further deliveries
of Seller's Gas or exercise such other remedies as are provided in Section 1 of
this Agreement, Any such refusal by Buyer to accept Seller's Gas pursuant to
this Section C.1 shall in no way release Seller from its obligations under this
Agreement or reduce Seller's commitment to sell and deliver to Buyer the
quantities of Seller's Gas specified in this Agreement.
|
C.2
|
Removal of Liquefiable
Hydrocarbons in the Field. Seller's Gas shall not be Processed for
removal of liquefiable hydrocarbons prior to its receipt by Buyer at the
Receipt Point(s) other than by the use of conventional mechanical
liquid-Gas separators operated at or above ambient temperatures. Seller
shall own and be responsible for any liquid hydrocarbons removed by this
method from Seller's
Gas.
|
|
C.3
|
Water Disposal. Buyer
shall dehydrate Seller's Gas. If Buyer's method of disposal of Seller's
water is ever disallowed for any reason or is deemed to be uneconomic by
Buyer, then Buyer shall notify Seller and Seller shall promptly make
alternate arrangements to dispose of Seller's water at Seller's sole cost
and expense, and Seller shall reimburse Buyer for any costs incurred by
Buyer in delivering Seller's water. Seller shall release, indemnify and
defend Buyer from and against any and all damages, claims, actions,
expenses, penalties and liabilities, including attorney's fees, arising
from personal injury, death, property damage, environmental damage,
pollution, or contamination relating to the disposal of Seller's water by
either evaporation or any alternate arrangement(s) selected by Seller.
This Section C.3 by itself does not obligate Buyer to Dehydrate Seller's
Gas
|
|
C.4
|
C02 Disposal. To the extent that Buyer
removes C02 from Seller's Gas, Buyer shall dispose of Seller's CO2 by
venting. If venting Seller's C02 is ever disallowed for any reason or is
deemed to be uneconomic by Buyer, Buyer shall notify Seller and Seller
shall promptly make alternate arrangements to dispose of Seller's CO2 at
Seller's sole cost and expense, and shall reimburse Buyer for any costs
incurred by Buyer in delivering Seller's C02. Seller shall release,
indemnify and defend Buyer from and against any and ail damages, claims,
actions, expenses, penalties and liabilities, including attorney's fees,
arising from personal injury, death, property damage, environmental
damage, pollution, or contamination relating to the disposal of Seller's
C02 by either venting or any alternate arrangement(s) selected by
Seller This Section C.4 by itself does not obligate Buyer
to Treat Seller's Gas
|
|
C.5
|
Gross Heating Value and
Component Analysis. The component analysis and Gross Heating Value
of the Gas shall be determined and calculated at least once each year by
whomever is operating the CTM equipment, The component analysis and Gross
Heating Value of the Gas shall be based on any of the following at the
choice of the operator of the CTM equipment: spot samples, continuous
samples, or on-line analysis The component analysis of the Gas
shall be performed by Gas chromatography in accordance with GPA 2261 or
any pertinent revision(s) thereto or replacement(s) thereof. If the
component percentages fall outside the limits of GPA 2261, then the
operator of the CTM equipment shall make a reasonable judgment as to the
accuracy of the component analysis. If neither Party objects in writing to
the results within sixty (60) Days after their delivery, such results
shall become conclusive. If either Party objects in writing to the results
within sixty (60) Days after their delivery, then: in the case of spot
samples, a re-sampling, redetermination and recalculation shall be
performed by a third party acceptable to both Parties and such third
party's results shall be used; and in the case of continuous samples or
on-line analysis, the analyzer shall be tested for accuracy according to
GPA 2261 and, if warranted, a recalculation of the components shall be
made by a means acceptable to the Parties. The cost of any re-sampling,
retesting, redetermination and/or recalculation shall be borne by the
objecting Party.
|
|
STANDARD
TERMS AND CONDITIONS
|
PAGE
▇-▇▇
|
|
▇.▇
|
Correction of Gross Heating
Value for Water Vapor, The Gross Heating Value of the Gas shall be
corrected for water vapor content in accordance with GPA 181 and 2172. Gas
having a water vapor content of greater than seven (7} pounds per MMcf at
CTM shall be considered fully saturated. Gas having a water vapor content
of less than or equal to seven (7) pounds per MMcf at CTM shall be
considered dry.
|
|
C.7
|
Computation Factors. The
specific gravity of the Gas shall be calculated by the operator of the CTM
equipment and shall be adjusted for the difference between the specific
gravity in the ideal state and in the real state in accordance with
ANSI/API 2530. The deviation of the Gas from ▇▇▇▇▇'▇ law shall also be
calculated by the operator of the CTM equipment and shall be determined in
accordance with AGA Transmission Measurement Committee Report No 8, Both
the specific gravity of the Gas and the deviation of the Gas from ▇▇▇▇▇'▇
law shall be based on the component analysis obtained pursuant to Section
C.5.
|
|
D.
|
VOLUME
|
|
D.1
|
Determination of Temperature
for Volume Calculation. The temperature of the Gas shall be
determined by a temperature recording device installed by the operator of
the CTM equipment in accordance with ANSI/API 2530 and other industry
standards. If the temperature of the Gas is recorded by chart, the
arithmetic average of the temperatures recorded during periods of Gas flow
shall be used in calculating the
Mcf.
|
|
D.2
|
Correction of Volume Due to
Calculation Error. An error in volume calculation for a given
Receipt Point shall be corrected for such period as the error is
determined to have existed, not to exceed one (1) year. In no event,
however, shall Buyer be obligated to correct an error in volume
calculation for a given Receipt Point unless it resulted in an error of
greater than ▇▇▇ ▇▇▇▇▇ per Accounting Period at the Receipt Point during
the correction period, Such correction shall only be processed by Buyer
prospectively with the current Accounting Period's
business
|
|
D.3
|
Custody Transfer Measurement,
CTM for any Receipt Point in existence as of the Effective Date
shall be performed by whomever is providing CTM at that Receipt Point as
of the Effective Date. However, if Buyer installs CTM equipment at any
Receipt Point after the Effective Date, then CTM at that Receipt Point
shall be performed by Buyer. Except as otherwise provided in this Section
D, all CTM and CTM equipment shall comply with ANSI/API 2530. Meter charts
may be rotated as determined by Buyer, Buyer may install and operate
electronic flow measurement equipment to perform CTM, in which case it
shall be installed and operated in accordance with the applicable methods
and standards that have been approved by the American Petroleum institute
or successor entity. When alternate methods and standards are permitted
for low volume ▇▇▇▇▇ by any applicable regulatory agency with
jurisdiction, then such alternate methods and standards shall apply to CTM
and CTM equipment serving such low volume
▇▇▇▇▇.
|
|
D.4
|
Notice of CTM Equipment
Tests.Tests of the CTM equipment shall be performed by the operator
of the CTM equipment at least once each calendar year. Where Buyer is
operating the CTM Equipment, Buyer shall give Seller's Operator
forty-eight (48) hours' notice of the time and location of any tests of
the CTM equipment so that Seller's Operator may be present. Where Seller's
Operator is operating the CTM Equipment, Seller's Operator shall give
Buyer forty-eight (48) hours' notice of the time and location of any tests
of the CTM equipment so that Buyer may be present if the
Party not operating the CTM equipment is unsatisfied with the test, it
shall notify the operator of the CTM equipment to perform a retest. The
cost of retesting shall be paid by the Party requesting the retest unless
the retest shows a difference between the registration of the CTM
equipment and test instrument of greater than two percent (2%) and 100
MMBtu, in which case the cost of retesting shall be paid by the Party who
did not request the retest. Any CTM equipment found to be measuring
inaccurately shall be promptly restored to accuracy by the operator of the
CTM equipment.
|
|
STANDARD
TERMS AND CONDITIONS
|
PAGE
A-11
|
|
D.5
|
Check Meter. Either
Party may install and operate a check meter at its own expense to check
the CTM equipment. Except as provided in Section D.6 or D.7, the readings
of the CTM equipment shall govern. The check meter shall be installed so
as not to interfere with the operation of the CTM equipment, Pulsation
filters may be required if unacceptable square root error or gauge line
error shift occurs as a result of the check meter, If a disagreement
arises regarding the source of pulsation, a third party consultant shall
be selected by the Parties to determine the source of the pulsation. The
Party responsible for the source of the pulsation shall pay all the
consulting fees and costs associated with identifying and eliminating the
source of the pulsation, Seller will use the alternate taps on the meter
run for check measurement If alternate taps do not
provide a viable option, Seller will seek a variance from any applicable
regulatory entities and Buyer to use Buyer's meter
taps.
|
|
D.6
|
Correction of CTM Equipment
Inaccuracies. If any test conducted pursuant to Section D.4 reveals
an inaccuracy of greater than two percent (2%) and ▇▇▇ ▇▇▇▇▇ in the
registration of the CTM equipment, the volume of Gas measured by such CTM
equipment shall be corrected for such period as the inaccuracy is
confirmed to have existed, not to exceed one (1) year, or, if not
confirmable, then for such period as the Parties can agree upon, not to
exceed one (1) year If the correction period is not
confirmable and cannot be agreed upon, then the correction period shall
extend back one-half (1/2) of the time elapsed since the CTM equipment was
last calibrated, not to exceed one (1) year, The volume of Gas actually
received per Day through the CTM equipment shall be determined on the
basis of the best data available using the first of the following methods
which is feasible:
|
|
(a)
|
by
using the registration of the other Party's check meter if registering
accurately; or
|
|
(b)
|
by
calibration, test, or mathematical calculation if the percentage of
inaccuracy is ascertainable with reasonable certainty;
or
|
|
(c)
|
by
estimating the volume of Gas received by comparison to receipts during
prior Accounting Periods under similar conditions when the CTM equipment
was registering accurately.
|
In no
event, however, shall Buyer be obligated to correct any volume measurement
inaccuracy for given CTM Equipment unless it resulted in an inaccuracy of
greater than two percent (2%) and ▇▇▇ ▇▇▇▇▇ per Accounting Period at the
affected Receipt Point during the correction period. Such correction shall only
be processed by Buyer prospectively with the current Accounting Period's
business,
|
D.7
|
Measurement During Periods of
CTM Equipment Failure. Upon the occurrence of any event of Force
Majeure that prevents Buyer from obtaining or recovering actual
measurement data from the CTM Equipment, Buyer shall have the right to
estimate the volume of Gas received by comparison to receipts during the
prior Accounting Period under similar conditions until such time as Buyer
is again able to obtain accurate data from the CTM Equipment, but in no
event for a period longer than ninety (90) days. Any estimated volumes
relied upon under such circumstances shall be considered actual volumes
for such period of time.
|
|
STANDARD
TERMS AND CONDITIONS
|
PAGE
A-12
|
E. SCHEDULING
|
E.1
|
Receipt Scheduling. Four
(4) Business Days prior to the beginning of each Accounting Period and two
(2) Business Days prior to any change thereof during an Accounting Period,
Seller's Operator, as directed by Buyer, shall submit electronically or in
writing as may be required by Gatherer, the number of MMBtu of Gas that
Seller's Operator will make available at each Receipt
Point.
|
|
F.
|
DISPUTED STATEMENTS,
AUDIT
|
|
F.1
|
Statement(s) Disputed by
Seller. in the event that Seller disputes any statement prepared by
Buyer pursuant to Section 3 2 of this Agreement, Seller shall provide
written notice of the dispute to Buyer within one (1) year from the date
of such statement. Notwithstanding such dispute, Buyer shall nonetheless
pay the portion of any such statement that Seller concedes to be correct
without prejudice to Seller's right to dispute the remaining portion of
such statement. If any statement is not disputed by Seller, if at all,
within one (1) year from the date of such statement, such statement shall
be conclusively deemed to be correct. This one (1) year period for
disputing statements does not extend the dispute period for any matter
whose dispute period is less than one (1) year, as expressly provided in
this Agreement, even if it otherwise impacts any such statement. Within
sixty (60) Days after timely disputing a statement, Seller shall assemble
all available documentation demonstrating the basis for the dispute and
furnish it to Buyer Failure of Seller to fully comply
with each of the terms of this Section F.1 for disputing a statement shall
constitute a waiver of Seller's right to dispute such
statement.
|
|
F.2
|
Audit. The Parties shall each preserve
all records relating to the performance of this Agreement for a period of
at least two (2) years, or such longer periods as shall be required by
law, regulation, rule or order. A Party shall have the right, at its own
expense, upon reasonable written notice to and during the normal business
hours of the other Party, to examine, audit and obtain copies of the
relevant portion of the books, records and telephone recordings of the
other Party, but only to the extent reasonably necessary to verify the
accuracy of any statement, charge, payment or computation made under this
Agreement The right to examine, audit and obtain copies of the
records of the other Party shall not apply to proprietary information of a
Party not directly relevant to the transactions under this
Agreement
|
|
G.
|
LIABILITY, INDEMNIFICATION AND
WARRANTY
|
|
G.1
|
Seller's Liability and
Indemnification. Seller shall be in control and possession of
Seller's Gas until delivered to Buyer at the Receipt Point(s) and shall be
fully responsible and liable for any and all damages, claims, actions,
expenses, penalties and liabilities, including attorney's fees, arising
from personal injury, death, property damage, environmental damage,
pollution, or contamination relating to Seller's Gas while in Seller's
control and possession, and Seller agrees to release, indemnify and defend
Buyer with respect thereto. Seller further agrees to release, indemnify
and defend Buyer from and against any and all damages, claims, actions,
expenses, penalties and liabilities, including attorney's fees, arising
from personal injury, death, property damage, environmental damage,
pollution, or contamination relating to Seller's ownership and/or
operation of the facilities delivering Gas to the Receipt Point(s) and/or
Seller's performance or nonperformance of its obligations under this
Agreement.
|
|
G.2
|
Buyer's Liability and
Indemnification. Buyer shall be in control and possession of
Seller's Gas from the time delivered to Buyer at the Receipt Point(s), and
shall be fully responsible and liable for any and all damages, claims,
actions, expenses, penalties and liabilities, including attorney's fees,
arising from personal injury, death, property damage, environmental
damage, pollution or contamination relating to Seller's Gas white in
Buyer's control and possession, and Buyer agrees to release, indemnify and
defend Seller with respect thereto. Buyer further agrees to release,
indemnify and defend Seller from and against any and all damages, claims,
actions, expenses, penalties and liabilities, including attorney's fees,
arising from personal injury, death, property damage, environmental
damage, pollution or contamination relating to Buyer's ownership,
operation, use or direction, as applicable, of the Gathering System and
Plant, and/or Buyer's performance or nonperformance of its obligations
under this Agreement.
|
|
STANDARD
TERMS AND CONDITIONS
|
PAGE
▇-▇▇
|
|
▇.▇
|
▇▇▇▇▇▇▇▇ of Title.
Seller warrants that at the time of delivery of Seller's Gas at the
Receipt Point(s), it will have title to such Gas, free and clear of all
liens, encumbrances, and claims whatsoever, and that it will, at the time
of such delivery, have the right to deliver such Gas. Seller shall
release, indemnify and defend Buyer against any and all damages, claims,
actions, expenses, penalties and liabilities, including attorney's fees,
arising from Seller's breach of the foregoing warranty and Seller's
warranties contained in Section 4.2 of this
Agreement.
|
|
G.4
|
Limitations,
Notwithstanding any language in this Agreement to the contrary,
neither Party shall be released, indemnified or defended with respect to
its own negligence or willful misconduct No language in
this Agreement is intended to provide indemnification greater than that
which is permitted by
applicable law. If any limitations upon indemnification are imposed
by applicable law, then such limitations are hereby incorporated by
reference and made a part of this Agreement. Except as necessary to
provide the indemnifications contemplated in this Agreement against third
party claim(s), neither Party shall be liable to the other for any
incidental, consequential or punitive
damages.
|
|
H.
|
ROYALTIES, TAXES, FEES AND
OTHER CHARGES
|
|
H.1
|
Royalties. Seller shall
be responsible and liable for ail payments due to royalty owners,
overriding royalty owners or any other persons whomsoever claiming any
right to payment on account of the production, gathering, dehydration,
treating and/or marketing of Seller's Gas, and agrees to make all such
payments prior to the delinquency thereof Buyer shall
have no responsibility or liability for such payments, and Seller shall
release, indemnify and defend Buyer against any and ail damages, claims,
actions, expenses, penalties and liabilities, including attorney's fees,
relating to any such
payments,
|
|
H.2
|
Taxes, Fees
and Other Charges. Seller shall be responsible and liable for the
payment of ail taxes, fees and other charges (including penalties and
interest thereon) now or hereafter levied or assessed by any municipal,
county, state, federal or tribal government relating to Seller's Gas or
Buyer's or Gatherer's services under or with respect to this Agreement. If
Buyer is required to pay any such taxes, fees or other charges (or
penalties or interest thereon), Seller shall immediately reimburse Buyer
therefore.
|
|
H.3
|
Limitation on Tax
Responsibility. Neither Party shall be responsible or liable for
the taxes now or hereafter levied or assessed by any municipal, county,
state, federal or tribal government upon the income, operations or
facilities of the other.
|
|
I.
|
ALTERNATIVE DISPUTE
RESOLUTION
|
Any
dispute arising out of or relating to this Agreement shall be resolved in
accordance with the procedures specified in this Article i, which shall be the
sole and exclusive procedures for the resolution of any such
disputes The Parties shall attempt in good faith to resolve any
dispute arising out of or relating to this Agreement promptly by negotiation
between senior executives of the Parties who have authority to settle the
controversy. Any Party may give the other Party written notice of any dispute
not resolved in the normal course of business. Within fifteen (15) Days after
delivery of the notice, the receiving Party shall submit to the other a written
response. The notice and the response shall include (a) a statement of each
Party's position and a summary of arguments supporting that position, and (b)
the name and title of the senior executive who will represent that Party and of
any other person who will accompany such executive. Within thirty (30) Days
after delivery of the disputing Party's notice, the designated senior executives
of both Parties shall meet at a mutually acceptable time and place, and
thereafter as often as they reasonably deem necessary, to attempt to resolve the
dispute. All reasonable requests for information made by one Party to the other
will be honored. All negotiations pursuant to this clause are confidential and
shall be treated as compromise and settlement negotiations for purposes of
applicable rules of evidence.
|
STANDARD
TERMS AND CONDITIONS
|
PAGE
A-14
|
If the
dispute has not been resolved by negotiation of the designated senior executives
of the Parties within sixty (60) Days of the receiving Party's receipt of the
disputing Party's notice, or if the Parties failed to meet within thirty (30)
Days of the receiving Party's receipt of the disputing Party's notice, the
Parties shall endeavor to settle the dispute by mediation under the then-current
CPR Institute for Dispute Resolution mediation procedure in effect on the date
of this Agreement. Unless otherwise agreed, the Parties will select a mediator
from the CPR Panels of Distinguished Neutrals. Notwithstanding the provisions of
this clause, either Party may seek from any court having jurisdiction hereof any
interim, provisional or injunctive relief that may be necessary to protect its
rights or property or maintain the status quo before, during or after the
pendency of the mediation proceeding. The institution and maintenance of any
judicial action or proceeding for any such interim, provisional or injunctive
relief shall not constitute a waiver of the right or obligation of either Party
to submit the dispute to negotiation and mediation as described above, including
any claims or disputes arising from the exercise of such interim, provisional or
injunctive relief. If the dispute has not been resolved by mediation as provided
herein within ninety (90) Days of the initiation of the above procedures, either
Party may initiate litigation upon thirty (30) Days' written notice to the other
Party; provided, however, that if one Party has requested the other to
participate in any of the above non-binding procedures and the other has failed
to participate, the requesting Party may initiate litigation before expiration
of the above period. The prevailing Party in the resolution of any dispute
hereunder shall be entitled to have its costs and expenses incurred in the
prosecution of such dispute (including, without limitation, reasonable
attorneys' fees and expenses) reimbursed by the other Party promptly after the
resolution thereof
|
J.
|
MISCELLANEOUS
|
|
J.1
|
New Requirements of
Interconnecting Pipeline(s).Buyer may from time to time become
subject to new requirements imposed by the Interconnecting
Pipeline(s) Buyer shall provide written notice to Seller
of any such new requirements. Thereafter, Seller shall promptly comply
with such new requirements or Buyer may suspend or terminate this
Agreement. If Buyer has not suspended or terminated this Agreement in
accordance with the foregoing clause of this Section J.1, Seller shall
release, indemnify, and defend Buyer from any claims, costs or expenses
incurred by Buyer resulting from Seller's failure to comply with such new
requirements.
|
|
J.3
|
Severability. Should any part of this
Agreement be found to be unenforceable or be required to be modified
bya
court or governmental authority, then only that part of this Agreement
shall be affected or so modified, The remainder of this Agreement shall
remain in force and unmodified. If the absence or modification of the
affected part of this Agreement substantially deprives Party of the
economic benefit of this Agreement or substantially impacts a Party's
economic benefit hereunder, the Parties shall negotiate reasonable and
enforceable provisions to restore the economic benefit to the Party so
deprived or impacted consistent with the intent originally reflected in
this Agreement. If the Parties are unable to do so, then either Party may
terminate this Agreement by giving the other Party written notice of
termination no later than sixty (60) Days after any provision of this
Agreement was determined to be unenforceable or modified by a court or
governmental authority.
|
|
STANDARD
TERMS AND CONDITIONS
|
PAGE
A-15
|
|
J.4
|
Waiver. A waiver by either Party of any
one or more defaults by the other Party shall not operate as a waiver of
any future default(s), whether of a like or different
character.
|
|
J.5
|
Confidentiality. The Parties and their
respective officers, directors, employees, agents and representatives
shall keep the terms of this Agreement confidential for the term hereof.
However, either Party may disclose the terms of this Agreement to the
following persons or entities in the following
circumstances:
|
|
(a)
|
To
financial institutions requiring such disclosure as a condition precedent
to making or renewing a loan or independent certified public accountants
for purposes of obtaining a financial audit; provided, however, that such
financial institutions or accountants have agreed in writing to keep the
terms of this Agreement
confidential;
|
|
(b)
|
To
courts or other governmental authorities, including persons or entities to
whom disclosure is required by such courts or other governmental
authorities, if such disclosure is required by law, regulation, rule or
order; provided, however, that the Party making such disclosure shall use
its best efforts to obtain a protective order or other reliable assurance
that confidential treatment will be accorded the terms of this
Agreement;
|
|
(c)
|
To
any purchaser, or any potential purchaser, of ail or any portion of the
Gathering System and to any of such purchaser's agents, attorneys, lenders
or their representatives, provided however that all such parties or
persons shall first have agreed in writing to maintain the confidentiality
of the terms and provisions of this Agreement;
and
|
|
(d)
|
To
any purchaser, or potential purchaser, of all or any portion of Seller's
interest in the ▇▇▇▇▇, leasehold estates or other rights to produce Gas
dedicated hereto and to any of such purchaser's agents, attorneys, lenders
or their representatives, provided however that all such parties or
persons shall first have agreed in writing to maintain the confidentiality
of the terms and provisions of this
Agreement.
|
Under no
circumstances shall the terms of this Agreement be disclosed to any other third
party, including any newspaper, magazine or other publication, without the prior
written consent of the other Party,
|
J.6
|
Transfer. Any transfer, whether voluntary
or involuntary, of all or any part of Seller's right, title, or interest
in the Gas committed to Buyer under this Agreement shall not impair its
commitment to Buyer. Seller shall notify in writing any potential
transferee that such Gas remains committed to Buyer pursuant to this
Agreement, and Seller shall ensure that such Gas when produced is
delivered to Buyer during the term of and in accordance with this
Agreement, Any such transfer shall not impair Buyer's rights under this
Agreement as against Seller. Seller shall notify Buyer of any such
transfer within ten (10) Business Days of the effective date thereof
Failure of Seller to so notify Buyer shall not impair Buyer's rights under
this Agreement.
|
Any
transfer, whether voluntary or involuntary, of all or any part of Buyer's
or Gatherer's right, title, or interest in the Agreement or Gatherer's
facilities shall not impair the duties and obligations of Buyer or its
transferee to Seller under the Agreement and shall be subject to this
Agreement Any such transfer shall not impair Seller's rights under
this Agreement as against Buyer, Buyer shall notify Seller of any such transfer
within ten (10) Business Days of the effective date thereof. Failure of Buyer to
so notify Seller shall not impair Seller's rights under this
Agreement.
|
STANDARD
TERMS AND CONDITIONS
|
PAGE
A-16
|
|
J.7
|
No Third Party Beneficiaries.
It is the intent of the Parties that no person or entity besides
Buyer, Seller and their respective successors and permitted assigns shall
be entitled to enforce any provision of this Agreement and that the
covenants and obligations set forth in this Agreement are solely for the
benefit of Buyer, Seller and their respective successors and permitted
assigns.
|
|
J.8
|
Amendment. Except as
expressly provided otherwise in this Agreement no amendment of this
Agreement shall be binding unless in writing and signed by the
Parties.
|
|
J.9
|
Counterparts, This
Agreement may be executed in any number of counterparts, each of which
when so executed and delivered shall be an original, and such counterparts
together shall constitute one
instrument
|
|
J.10
|
Further Assurances. Each
Party shall promptly execute, deliver, file or record such agreements,
instruments, certificates and other documents and take such actions as may
reasonably requested by the other Party or as may otherwise be necessary
or proper to carry out the terms and provisions of this Agreement and to
consummate the transactions contemplated
hereby.
|
|
J.11
|
Telephone Recordings.
The Parties agree that each Party may electronically record all
telephone conversations with respect to this Agreement between their
respective employees, upon notice to the other Party. Each Party shall
obtain any necessary consent of its agents and employees to such
recording,
|
|
K.
|
REPRESENTATIONS AND
WARRANTIES
|
|
K.1
|
Representations and Warranties
of the Parties. Each Party represents and warrants to and in favor
of the other Party, that:
|
|
(a)
|
it
is a corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation; and is duly qualified,
authorized to do business and in good standing in each jurisdiction where
the character of its properties or the nature of its activities makes such
qualification necessary;
|
|
(b)
|
it
has all requisite power and authority to own or hold under lease or
easement and operate the property it purports to own or hold under lease
or easement and to carry on its business as now being conducted and as
proposed to be conducted under this
Agreement;
|
|
(c)
|
it
has the requisite power and authority to execute, deliver and perform its
obligations under this
Agreement;
|
|
(d)
|
it
has duly authorized, executed and delivered this Agreement, and neither
its execution and delivery hereof nor its consummation of the transactions
contemplated hereby nor its compliance with the terms hereof or
performance of its obligations hereunder (i) does or will contravene any
of its organizational documents or, in any material respect, any law,
statute or other legal requirement applicable to or binding upon it or its
properties; (ii) does or will contravene or result in any material breach
of or constitute any material default under any agreement or instrument to
which it is a party or by which it or any of its properties may be bound
or affected; or (iii) does or will require the consent or approval of any
person or entity that has not already been
obtained;
|
|
STANDARD
TERMS AND CONDITIONS
|
PAGE
A-17
|
|
(e)
|
this
Agreement is its legal, valid and binding obligation, enforceable against
it in accordance with its terms, except to the extent that enforceability
may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting the enforcement of
creditors' rights and subject to general equitable principles (regardless
of whether such enforceability is considered in a proceeding in equity or
at law);
|
|
(f)
|
there
is no action, suit, proceeding, inquiry or investigation, at law or in
equity, before or by any court, governmental agency, public board or body,
pending or, to its knowledge, threatened against or affecting it or
contesting or affecting its execution, delivery or performance, or the
validity or enforceability, of this Agreement;
and
|
|
(g)
|
it
will be able to deliver and sell, or receive and buy, as applicable,
Seller's Gas in the quantities and for the prices specified in this
Agreement.
|
Each
Party (the "Warranting Party") shall release, indemnify and defend the other
Party against any and all damages, claims, actions, expenses, penalties and
liabilities, including attorney's fees, arising from the Warranting Party's
breach of any of the foregoing warranties, or any other representations or
warranties made by the Warranting Party under this Agreement.
EXHIBIT
B
TO
THE GAS PURCHASE AGREEMENT
DATED
AS OF JUNE 1, 2006
Between
▇▇▇▇▇▇▇▇
PRODUCTION RMT COMPANY
and
and
▇▇▇▇▇
NATURAL GAS COMPANY
and
PETROLEUM
DEVELOPMENT CORPORATION
INTENTIONALLY
OMITTED
EXHIBIT
C
TO
THE GAS PURCHASE AGREEMENT
DATED
AS OF JUNE 1, 2006
Between
▇▇▇▇▇▇▇▇
PRODUCTION RMT COMPANY
and
▇▇▇▇▇
NATURAL GAS COMPANY
and
PETROLEUM
DEVELOPMENT CORPORATION
RECEIPT
POlNT(S)
|
Meter
Number
|
Receipt
Point Name
|
Point
Type
|
Location
|
County
|
State
|
|
RTU
1224
|
PDC
▇▇▇▇▇▇▇ ▇
|
▇▇▇
▇▇▇▇▇▇▇▇
|
▇▇▇▇▇▇▇▇
|
▇▇
|
|
|
▇▇▇▇▇▇▇
|
PDC
▇▇▇▇▇▇▇ 2
|
Low
Pressure
|
|||
|
RTU
1508
|
PDC
▇▇▇▇▇▇▇ 3
|
Low
Pressure
|
|||
|
▇▇▇
▇▇▇▇
|
▇▇▇
▇▇▇▇▇
|
▇▇▇
▇▇▇▇▇▇▇▇
|
|||
|
▇▇▇
▇▇▇▇
|
PDC
Chevron
|
Low
Pressure
|
|||
|
▇▇▇
▇▇▇▇
|
▇▇▇
▇▇▇▇▇▇▇▇
|
▇▇▇
▇▇▇▇▇▇▇▇
|
|||
|
▇▇▇
▇▇▇▇▇
|
PDC
▇▇▇▇▇
|
Low
Pressure
|
|||
|
RTU
|
PDC
Garden Gulch
|
High
Pressure
|
EXHIBIT
D
TO
THE GAS PURCHASE AGREEMENT
DATED
AS OF JUNE 1, 2006
Between
▇▇▇▇▇▇▇▇
PRODUCTION RMT COMPANY
and
▇▇▇▇▇
NATURAL GAS COMPANY
and
PETROLEUM
DEVELOPMENT CORPORATION
DELIVERY
POINT(S)
|
Delivery
Point(s)
|
Location
|
EBB
Nom Loc.
|
County
|
State
|
|
Colorado
Interstate Gas Company (Parachute)
|
Sec.
8-T2S-R96W
|
PCH
|
Rio
▇▇▇▇▇▇
|
CO
|
|
Colorado
Interstate Gas Company (Roan Cliffs)
|
Sec.
2-T7S-R96W
|
RCL
|
Garfield
|
CO
|
|
Questar
Pipeline Company
|
Sec
18-T6S-R93W
|
MAP
106
|
Garfield
|
CO
|
|
TransColorado
Gas Transmission Co (Raccoon Hollow)
|
Sec
28-T8S-R97W
|
Pin
40412
|
Mesa
|
CO
|
|
TransColorado
Gas Transmission Co (Greasewood)
|
Sec
5-T2S-R96W
|
Pin
36101
|
Rio
▇▇▇▇▇▇
|
CO
|
EXHIBIT
E
TO THE GAS PURCHASE
AGREEMENT
DATED AS OF JUNE 1,
2006
Between
▇▇▇▇▇▇▇▇ PRODUCTION RMT
COMPANY
and
▇▇▇▇▇ NATURAL GAS
COMPANY
and
PETROLEUM DEVELOPMENT
CORPORATION
SERVICE
AND FEE DESCRIPTION
|
Gathering and Processing Fee
a/
|
Gathering and Processing Fee
a/
|
FL&U
(Low pressure
receipt points)
|
FL&U
(High pressure
receip points)
|
Low Delivery Fee
|
Excess C02 Treating Fee a/
|
|
$[ *
] per MMBtu Received at Low Pressure
Receipt
Point
|
$[ *
] per MMBtu Received at a High Pressure Receipt
Point
|
Actual
usage
(Initially [ *
]%)
|
Actual
usage
(Initially [ *
]%)
|
$[ *
] per Accounting
Period per
Receipt Point
|
$[ *
] per Mcf for each 1 00% Greater
than 3.00%
|
(
| a/ |
Annually,
at the beginning of each Contract Year, Buyer shall adjust the Gathering
and Processing Fee and the Excess C02 Treating Fee by a percentage equal
to the annual average percentage change, from the preceding Contract Year,
in the cumulative implicit Gross Domestic Product price deflator
("GDPDEF") computed and published by the U.S. Department of
Commerce.
|
EXHIBIT
F
TO
THE GAS PURCHASE AGREEMENT
DATES
AS OF JUNE 1, 2006
Between
▇▇▇▇▇▇▇▇
PRODUCTION RMT COMPANY
and
▇▇▇▇▇
NATURAL GAS COMPANY
and
PETROLEUM
DEVELOPMENT CORPORATION
GAS
VOLUMES COMMITTED
|
Contract Year
|
Seller’s Annual Volume
(In MMBtu)
|
Seller’s MDQ
(In MMBtu)
|
|
|
1
|
June
1, 2006-August 31, 2006
|
1,978,000
|
21,500
|
|
1
|
September
1, 2006-May 31, 2007
|
15,578,760
|
57,065
|
|
2
|
June
1, 2007 - May 31, 2008
|
22,890,878
|
63,585
|
|
3
|
June
1, 2008 - May 31, 2009
|
32,393,817
|
88,750
|
|
4
|
June
1, 2009 - May 31, 2010
|
35,164,648
|
96,342
|
|
5
|
June
1, 2010 - May 31, 2011
|
35,415,768
|
97,030
|
|
6
|
June
1, 2011 - May 31, 2012
|
36,204,441
|
99,190
|
|
7
|
June
1, 2012 - May 31, 2013
|
36,588,969
|
100,244
|
|
8
|
June
1, 2013 - May 31, 2014
|
31,880,469
|
87,344
|
|
9
|
June
1, 2014 - May 31, 2015
|
25,068,839
|
68,682
|
|
10
|
June
1, 2015 - May 31, 2016
|
19,328,393
|
52,955
|
|
11
|
June
1, 2016 - May 31, 2017
|
14,757,224
|
40,431
|
|
12
|
June
1, 2017 - May 31, 2018
|
11,877,191
|
32,540
|
|
13
|
June
1, 2018 - May 31, 2019
|
9,750,519
|
26,714
|
|
14
|
June
1, 2020 - May 31, 2021
|
7,695,618
|
20,920
|
|
15
|
June
1, 2021 - May 31, 2022
|
5,771,836
|
15,813
|
EXHIBIT
G
TO
THE GAS PURCHASE AGREEMENT
DATES
AS OF JUNE 1, 2006
Between
▇▇▇▇▇▇▇▇
PRODUCTION RMT COMPANY
and
▇▇▇▇▇
NATURAL GAS COMPANY
and
PETROLEUM
DEVELOPMENT CORPORATION
TWO YEAR MONTHLY MDQ
SCHEDULE
|
Month
|
MDQ
Mcf
|
MDQ
MMBtu
|
|
June
2006
|
20,000
|
21,500
|
|
July
2006
|
20,000
|
21,500
|
|
August
2006
|
20,000
|
21,500
|
|
September
2006
|
52,900
|
56,868
|
|
October
2006
|
55,280
|
59,426
|
|
November
2006
|
56,850
|
61,114
|
|
December
2006
|
54,290
|
58,362
|
|
January
2007
|
52,040
|
55,943
|
|
February
2007
|
50,040
|
53,793
|
|
March
2007
|
51,250
|
55,094
|
|
April
2007
|
52,000
|
55,900
|
|
May
2007
|
52,890
|
56,857
|
|
June
2007
|
59,460
|
63,920
|
|
July
2007
|
59,430
|
63,887
|
|
August
2007
|
63,910
|
68,703
|
|
September
2007
|
64,090
|
68,897
|
|
October
2007
|
64,550
|
69,391
|
|
November
2007
|
66,230
|
71,197
|
|
December
2007
|
63,650
|
68,424
|
|
January
2008
|
61,330
|
65,930
|
|
February
2008
|
59,200
|
63,640
|
|
March
2008
|
57,260
|
61,555
|
|
April
2008
|
61,300
|
65,898
|
|
May
2008
|
59,240
|
63,683
|