Specific Terms in this Exhibit have been redacted because confidential treatment for those terms has been requested. The redacted material has been separately filed with the Securities and Exchange Commission, and the terms have been marked at the appropriate place with three asterisks [***]

THIS GAS GATHERING AND PROCESSING AGREEMENT (this “Agreement”) is made and entered into effective as of this 1st day of October, 2012 (the “Effective Date”), by and between BP AMERICA PRODUCTION COMPANY (“Owner”) and EAGLE ROCK FIELD SERVICES, L.P. (“Gatherer”). Owner and Gatherer may at times be referred to herein as a “Party” or, collectively, as “Parties”. Capitalized terms used herein are defined in Article I hereto.

WHEREAS, Owner and Gatherer have entered into the Purchase and Sale Agreement;

WHEREAS, as a result of the closing under the Purchase and Sale Agreement, Gatherer owns, operates, and maintains a Natural Gas gathering system, compression, and dehydration facilities and Gas Processing facilities. Gatherer has constructed or shall cause to be constructed gathering and measurement facilities to receive and gather Owner's Gas at the Receipt Point(s) and compress, dehydrate, treat for removal of H₂S, if applicable, Process and redeliver Residue Gas to Owner or for Owner's account at the Delivery Point(s) under the terms and conditions herein;

WHEREAS, Owner desires that Gatherer receive at the Receipt Point(s), gather, compress, dehydrate, treat for removal of H₂S, if applicable, and Process and redeliver the Residue Gas, NGLs, and helium for Owner's account at the Delivery Point(s), as defined below, all subject to Article III and upon the terms and for the consideration herein expressed;

WHEREAS, Owner has the exclusive right to have Owner's Gas gathered and Processed, and desires to grant Gatherer an exclusive right to Process such Gas delivered to Gatherer at the Receipt Point(s); and

WHEREAS, Owner, through the operation of Owner farm-out programs may elect to have one or more farmees drill and complete Well(s) covered by the Dedication and Owner has the obligation to require any such farmee to dedicate the Farmee Gas to Gatherer's System as set forth in Article XV.

1.DEFINITIONS

Except as otherwise provided, the following terms as used herein shall have the meaning set forth below:

 

    

  

2.    COMMITMENTS OF GATHERER

2.1    Gatherer owns and operates, and shall, as set forth herein, design, construct, install, operate and maintain, or cause others to design, construct, install, operate, and maintain all at its sole risk, cost, and expense all gathering pipelines, compression, treating for the removal of H₂S (if applicable), dehydration, Processing and all related equipment and facilities as required to enable Gatherer to fulfill and perform its obligations under this Agreement including, but not limited to, (a) Gatherer's receipt of Owner's Gas at the Receipt Point(s), (b) Processing of Owner's Gas at the Processing facilities of Gatherer as necessary to meet Pipeline Carriers Gas quality specifications, (c) the redelivery of Residue Gas, helium, and NGLs at the Delivery Point(s), (d) the payment to Owner, if applicable, for the allocated NGLs and helium, and (e) meeting the pressure obligations as set forth in Article VI. Gatherer shall have the right, subject to the limitations set forth herein, to use Owner's Gas and Residue Gas allocated to Owner for Fuel, provided that where feasible and economic, Gatherer shall utilize residue Gas, either belonging to Owner or purchased by Gatherer from a third party, in lieu of Owner's unprocessed Gas.

2.2    Gatherer shall have sole responsibility for construction, maintenance, and operation of Gatherer's System consistent with performing Gatherer's obligations hereunder, wherein Gatherer can extend the System, add to or remove components from the System, and operate the System in the manner Gatherer determines to be in Gatherer's best interest. Gatherer shall operate the System or cause the System to be operated, as the System may exist from time to time, in a manner consistent with general industry practice, but shall not be prevented thereby from being innovative or achieving cost efficiencies as Gatherer may deem necessary so long as Gatherer does not breach the terms and conditions of this Agreement. Gatherer shall be responsible for carrying out all obligations stated in this Agreement; provided, however, if Owner believes Gatherer is in default of any obligation contained herein, Owner shall so notify Gatherer in writing giving full particulars thereof. In such event, Gatherer shall have thirty (30) Days after receipt of such notice from Owner in which to cure such default, if any.

2.3    Owner may require that Gatherer construct, own, operate, and maintain, at Gatherer's expense, additional gathering pipelines, flowlines, compression, measurement facilities, and dehydration needed to connect to and Process additional Gas from Owner's Wells covered by the Dedication. Gatherer's obligations with respect to the foregoing shall be governed by the following:

reimburse Gatherer one hundred percent (100%) of Gatherer's direct expenses attributable to said Well to construct the associated facilities and Gatherer shall maintain ownership of such facilities and the Well shall remain subject to the Dedication under this Agreement.

2.4    To ensure Owner is able to meet contractual obligations existing as of the Effective Date, Gatherer shall provide Owner with first-priority rights at Delivery Points that correspond to those obligations. Owner's rights for each Delivery Point will be granted by Gatherer for as long as each contractual obligation exists.

2.5    Owner shall, to the extent it has the authority to do so and to the extent it does not unreasonably interfere with Owner's operations, grant to Gatherer (and, if requested by Gatherer, to its affiliates and/or its or their respective contractors and/or successors and assigns), from time to time, as requested by Gatherer, a non-exclusive right-of-way, servitude and/or surface use or other right on, over, under and through Owner's assets (including pipeline, utility and surface usage rights, facilities sharing arrangements and all reasonable rights of use and ingress and egress) as reasonably appropriate to allow Gatherer and its successors and assigns to  conduct operations on, over, under and across the Owner's assets in connection with performance of Gatherer's obligations under this Agreement. Owner shall, at the request of Gatherer, execute instruments in recordable form deemed appropriate by Gatherer to further delineate or evidence the rights granted herein.

3.1    Owner, at its sole cost and expense, shall have the option to equip, install, own, maintain and operate all lease facilities required to deliver Owner's Gas to Gatherer at the Receipt Point(s) including, but not limited to, installation and maintenance of mechanical separation equipment.

3.2    Owner shall deliver Owner's Gas to Gatherer at the Receipt Point(s) at a pressure sufficient to affect delivery into Gatherer's System against the pressure prevailing therein from time to time; provided, however, that Owner shall not be required to deliver Owner's Gas at a pressure greater than set forth in Article VI.

3.3    Owner shall deliver or cause to be delivered Owner's Gas at the Receipt Point(s), without any Processing upstream of the receipt point(s) other than associated with the installation of mechanical separation equipment, where applicable. Notwithstanding anything contained herein, Owner expressly reserves the following rights, without limitation, on Owner's Gas:

3.4    Any transfer of Owner's interest in the Wells shall be subject to the Dedication.

4.1    Owner commits to the performance of this Agreement and for each Month during the term of this Agreement, Owner shall deliver to Gatherer at the Receipt Points one hundred percent (100%) of Owner's Gas and Gatherer agrees to receive all of Owner's Gas. Owner shall be responsible for all arrangements necessary to deliver Owner's Gas to Gatherer hereunder at the Receipt Point(s). Gatherer commits to the performance of this Agreement and for each Month during the term of this Agreement, Gatherer shall receive Gas from Owner at each Receipt Point in accordance with the terms of this Agreement, and shall be responsible for delivering Owner's allocated Residue Gas, helium, and NGLs at the Delivery Point(s).

4.2    For each Month during the term of this Agreement, Owner shall provide Gatherer or Gatherer's designee with a written schedule (a “Nomination”) showing the volume of Residue Gas stated in MMBTU per Day, which Owner intends to have available for redelivery during such Month at each Delivery Point. Each such Nomination shall be made at least three (3) Days prior to the deadline when Monthly nominations with respect to such Month must be submitted to the pipeline receiving Owner's Gas at the Delivery Point(s). Each such Nomination shall specify the Receipt Point(s), nominated volume (MMBTU/Day), and percent of Well stream to be delivered by Owner. Gatherer recognizes that Owner's Nomination may not reflect Owner's actual daily volumes throughout the Month. Gatherer agrees that Owner may make adjustments to such Nomination in order to minimize Owner's Monthly imbalance, however, it is understood such adjustments shall only be made to reflect changes in production which have a relevant effect on Owner's Monthly imbalance. Such daily changes to Owner's Nomination shall be submitted by Owner to Gatherer or to Gatherer's designee no later than 9:00 o'clock a.m. in the Central Time Zone on the designated pipeline's nomination deadline for the Day such change is to be effective. In turn, Gatherer shall nominate a volume of Gas for delivery to Owner or to Owner's designee at the Delivery Point(s). It is expressly agreed that Owner shall not produce and deliver on any Day any such Gas unless Owner has arranged for receipt of Residue Gas from Gatherer at the Delivery Point(s) on the same Day. It is further agreed that Owner shall not nominate for delivery at the Delivery Point(s) on any Day any such Gas that Owner has not produced and delivered at the Receipt Point(s) on the same Day unless Gatherer agrees to allow Owner to deliver a volume greater or less than nominations for the purpose of eliminating Imbalances on the System or at the Delivery Point(s). Minimization of Monthly imbalances shall be Owner's responsibility. Gatherer or Gatherer's designee reserves the right, with prior written notification to Owner, to adjust Owner's Nomination

for deliveries where Gatherer or Gatherer's designee deems it necessary to reduce any imbalance conditions on the System.

4.3    Notwithstanding anything to the contrary contained in this Agreement, Owner shall be solely responsible for submitting appropriate Nominations for redelivery of Residue Gas and NGLs at the Delivery Point(s) and for any and all delivery imbalances occurring with respect to Owner's Gas, and Owner's NGLs, which is moving under Owner's pipeline transportation agreement to the extent that such imbalances are caused by Owner's failure to make proper and timely Nominations. Owner shall indemnify and hold Gatherer harmless from any and all costs, expenses, liabilities, or damages (including without limitation, pipeline imbalances, penalties, court costs, and attorney fees) arising due to any such pipeline imbalances on Owner's pipeline transportation agreement(s) caused by Owner's failure to make proper and timely Nominations. Gatherer shall indemnify and hold Owner harmless from and against any and all costs, expense, liabilities, or damages (including without limitation, pipeline imbalances, penalties, court costs, and attorney fees) arising due to any such pipeline imbalances under applicable operational balancing agreements (“OBAs”) or Owner's Pipeline Carrier transportation agreement(s) or other agreement(s) caused by Gatherer's failure to properly and timely give effect to Owner's nominations, however, Gatherer shall not be responsible for eliminating any imbalances between Owner and any third party. Furthermore, Gatherer shall not be obligated to deviate from Gatherer's standard operating and accounting procedures to reduce or eliminate any such imbalances.

4.4    “Delivery Point(s)” shall mean, as applicable:

4.5    Owner is responsible for any fees or fuel charged by Pipeline Carriers that apply to the volumes nominated and scheduled for Owner's account on the Pipeline Carrier(s). The Parties agree that Owner shall have the right to alter or modify quantities scheduled to each Delivery Point provided such election does not violate the terms of this Agreement. The Parties agree that either the Owner or the Gatherer, together or separately, may seek the establishment of additional Delivery Points; however, the construction of additional Delivery Points must be approved by Gatherer.

5.1    The Parties recognize that Gatherer shall be designated by the Pipeline Carriers as the point operator and shall be considered by the Pipeline Carriers to be responsible for the operation of Gatherer's System's pipeline interconnections to the Pipeline Carriers at the Delivery Point(s). Furthermore, Gatherer shall be responsible for the administration of all OBAs with Pipeline Carriers and for all terms and conditions of any such OBA.

5.2    The Parties recognize that certain Residue Gas imbalances may occur between the quantity in MMBTUs of Owner's Residue Gas received by Gatherer (“Net Receipt”) and the quantity in MMBTUs of Owner's Residue Gas nominated by Owner (“Net Nomination”) for redelivery by Gatherer to Owner or for Owner's account at the Delivery Point(s) (an “Imbalance”). Throughout each Month the Parties agree to actively communicate and cooperate with each other, and with any interconnecting pipeline, to review appropriate data to identify any Imbalance, and to eliminate or remedy such Imbalance as soon as either Party becomes aware of such Imbalance. The Parties further agree to use their commercially reasonable efforts to manage daily receipts and deliveries so that any Imbalance shall be kept as near to zero as practicable. At the end of each Month, any Imbalance shall be balanced by means of a payment to Owner from Gatherer or a payment to Gatherer from Owner, as applicable, valued at the “Cash-Out Price”, as defined below. To the extent that the Monthly Net Receipt amount is greater than the Monthly Net Nomination amount, a payment shall be due from Gatherer to Owner and Gatherer will make such payment to Owner for the Imbalance based on the difference between the Monthly Net Receipt amount and the Monthly Net Nomination amount, multiplied by the Cash-Out Price. To the extent the Monthly Net Receipt amount is less than the Monthly Net Nomination amount, a payment shall be due from Owner to Gatherer, and Gatherer will invoice Owner for the Imbalance based on the difference between the Monthly Net Receipt amount and the Monthly Net Nomination amount, multiplied by the Cash-Out Price during the applicable Month in which the Imbalance was generated. As used in this Agreement, the “Cash-Out Price” shall be determined as to each applicable Month, for each applicable Delivery Point, and shall mean a price per MMBTU equal to either, (a) if the receiving pipeline's applicable cash-out price is not imposed for the applicable Month, the price will be the daily index price averaged for such Month for the applicable receiving pipeline as published in the Daily Price Survey Paragraph of Platt's Gas Daily, or (b) if the receiving pipeline's applicable cash-out price is imposed for the applicable Month, that price will be the “Cash-Out Price”. Gatherer will include in the Cash-Out Price any applicable pipeline imbalance penalty calculation for Owners Imbalance at the Delivery Point, provided that Gatherer has made a good faith effort to monitor and balance the Delivery Point with Owner. Then Gatherer will determine Owner's Delivery Points when Owner nominates to multiple Delivery Points each Month, subject to Gatherer's commitments in Section 2.4 and commercially standard prorata allocation methodology. Should the information necessary to calculate the “Cash-Out Price” not exist for the receiving pipeline or cease to be available, Gatherer and Owner shall work in good faith to determine a comparable substitute publication and/or daily posting(s) or other indexes providing equivalent data. Cash-Out Price payments shall be netted against amounts owed by Owner to Gatherer, or Gatherer to Owner, as applicable under this Agreement.

6.1    Gatherer agrees that it will maintain a Monthly average operating Gathering System pressure, calculated for all Receipt Points in an Area, at or below the Maximum Allowable Pressures listed in the Table in Section 6.2 or elsewhere in this Article VI, whichever is applicable. Owner agrees that it will use its commercially reasonable efforts to deliver Gas to Gatherer on a ratable, consistent basis.

6.2    The Monthly average operating Gathering System pressure shall be calculated as an average

of wellhead pressure considering all Receipt Points within each Area contained in the Table below, without weighting for volume, and the Maximum Allowable Pressure shall be as set forth in the Table with respect to each Area contained in the Table. The designated Sections for each Area listed in the Table are provided in Exhibit B.

6.3    For all Sections in the Sweet Gas System not specifically designated in Exhibit B to the Table in Section 6.2 (collectively, the “Sweet Gas Area”), the Monthly average operating Gathering System pressure shall be calculated as a simple average each Month considering only Receipt Points of Wells with first Gas within the prior one hundred and twenty (120) Months to the calculation Month, without weighting for volume, but shall exclude Wells within Areas listed in the Table above. For the Sweet Gas Area, the Maximum Allowable Pressure shall be: (i) as of the Effective Date through the 3^rd anniversary of the Effective Date, set by good faith, commercially reasonable agreement of Owner and Gatherer immediately following the Transition Period; provided, however, if Owner and Gatherer cannot reach agreement, then equal to 105% of the actual simple average operating Gathering System pressure during the Transition Period, calculated as described earlier in this Section 6.3 under operating conditions not involving a Force Majeure; or (ii) as of the 3^rd anniversary of the Effective Date through end of the Agreement, [***] psig.

6.4    For all Sections in the Sour Gas System not specifically designated in Exhibit B to the Table in Section 6.2, the Monthly average operating Gathering System pressure shall be calculated as a simple average each Month considering only Receipt Points of Wells with first Gas within the prior one hundred

and twenty (120) Months to the calculation Month, without weighting for volume, and as applied specifically to those of such Wells:

6.5    Beginning within two (2) months of the Effective Date, both Parties shall meet every six (6) Months and more often as may be required and agreed between the Parties, to review Owner's written forecasted production profile (“Production Profile”) for the subsequent six (6) calendar quarters. Upon good faith, commercially reasonable mutual agreement by both Parties, where the Production Profile indicates that a change in the Maximum Allowable Pressures would be required to enable Gatherer to support Owner's production without exceeding Maximum Allowable Pressures, the Maximum Allowable Pressures will be amended or Owner, at its sole discretion, may elect to temporarily waive Liquidated Damages for the Area. Otherwise, the Maximum Allowable Pressures in each Area, and any associated Liquidated Damages shall continue in full force for the duration of the Primary Term and any Renewal Term under this Agreement.

6.6    Beginning nine (9) Months after the Effective Date, if the Monthly average operating Gathering System pressure for an Area, having been determined as described in Section 6.2, 6.3 or 6.4, as applicable, exceeds the applicable Maximum Allowable Pressure, then Gatherer shall be assessed Liquidated Damages; provided, however, that such Liquidated Damages will not be assessed during any event of Force Majeure. The Liquidated Damages shall be equal to [***] percent ([***]%) of the Fee multiplied by the sum of Owner's average daily equity production (and not Farmee Gas) from the affected Area(s) for each Day during the Month that the average pressure for all Wells in the affected Area(s) exceeded the applicable Maximum Allowable Pressure. The Parties agree that the damages that the Owner would sustain if the Monthly average operating Gathering System pressure for an Area exceeds the applicable Maximum Allowable Pressures will be difficult, if not impossible, to ascertain and that the liquidated damages provided for in this Section 6.6 are a reasonable approximation of what within industry an owner would accept if such event were to occur. The Parties further agree that the remedy (i.e. Liquidated Damages, if any) provided for in this Section 6.6 shall be the exclusive remedy for any breach by Gatherer of its obligations set forth in this Article VI, including any obligation to maintain pressures at or below the applicable Maximum Allowable Pressure.

For the avoidance of doubt and notwithstanding anything to the contrary in the foregoing, the Parties agree that if the Monthly average operating Gathering System pressure for an Area exceeds the applicable Maximum Allowable Pressure due to a meaningful breach by Owner, then Gatherer will not be assessed Liquidated Damages for that Area under this Section 6.6 for the duration of such breach.

6.7    In the event Owner's Gas production for an individual Well, or Wells, is unable to produce in paying quantities due to System pressures, and the Well, or Wells, in question hold a lease for Owner, then in addition to applicable Liquidated Damages, if any, Gatherer shall provide, within [***] ([***]) days from written notification from Owner, a plan for Gatherer to, at Gatherer's expense, construct, own, operate, and maintain compression, and/or pipeline facilities to serve said Receipt Point and alleviate flow restrictions. Gatherer's plan shall conform to the specific requirements of the lease, which Owner shall provide in their written notification. If the Well does not hold a lease for Owner, then, in addition to applicable Liquidated Damages, if any, Gatherer shall have [***] ([***]) months to alleviate flow restrictions. If Gatherer does not comply within these time periods, Owner has the sole right to request and obtain full release of the impacted Well and the Section where that Well is located from the Dedication under this Agreement, or to construct facilities on the lease which alleviate the flow restrictions. If Owner constructs facilities, Owner may pass through to Gatherer prudent and reasonable actual costs, without markup. For avoidance of doubt, if a Well or Wells is unable to produce in paying quantities due to Well performance, Owner is solely responsible for resolution and associated costs.

6.8    Gatherer shall not be allowed to restrict production from Owner Well(s) as a means to meet pressure targets.

7.3    The accuracy of Gatherer's measuring equipment shall be verified by test using means and methods generally acceptable in the Gas industry, at a minimum of once every year. Measuring equipment found to be registering inaccurately shall be adjusted to read as accurately as possible. Gatherer shall give written notice at the beginning of each Month of upcoming tests and the Parties shall agree on the dates of such test planned for such Month. If Owner fails to have a representative present for such test, the results of the test shall nevertheless be considered accurate until the next test. Gatherer shall, upon written request of Owner, conduct a test of Gatherer's measuring equipment, provided that in no event shall Gatherer be required to test Gatherer's equipment more frequently than once a Month. All tests of such measuring equipment shall be made at Gatherer's expense, except that Owner shall bear the expense of tests made at Owner's request, unless such test reveal that the measurement equipment is inaccurate by more than two percent (2%).

7.4    If for any reason, any measuring equipment is inoperative or inaccurate by more than two percent (2%) in the measurement of Owner's Gas, then the volume of Gas delivered by Owner to Gatherer during the period of such inaccuracy shall be determined on the basis of the best data available using the first of the following methods which is feasible:

7.5    An adjustment based on such determination shall be made for such period of inaccuracy as may be definitely known or, if not known, then for one half (1/2) the period since the date of the last meter test. In no event, however, shall any adjustment extend back beyond ninety (90) Days from the date the error was first made known by one Party hereunder to the other.

7.6    Each Party shall have the right to inspect the other Party's equipment, charts, and other measurement or test data during business hours; but the reading, calibration, and adjustment of such equipment and changing of charts shall be done by the Party installing and furnishing same. Unless the Parties agree otherwise, each Party shall preserve all its original test data, charts, and other similar records for a period of six (6) years.

7.7    Gatherer shall obtain or cause to be obtained at a minimum of once every twelve (12) Months, samples of Owner's Gas measured at each Receipt Point in accordance with the GPA 2166 and API 14.1 standards for collecting Gas samples. Gatherer shall obtain or cause to be obtained analyses of all such samples. All analyses shall determine the composition of Owner's Gas by component in mole percent and shall include helium and NGL (by component). Gatherer shall bear all costs associated with its obligations in this Section 7.7. Gatherer shall provide results of annual analysis of each Receipt Point to Owner for the purpose of Owner to download into Owners RTU for check measurement and for proper well control.

8.1    The Gas shall meet the following applicable specifications (the “Specifications”) based on whether the Gas is delivered into the “Sweet Gas System” or the “Sour Gas System”. As used herein, the Sweet Gas System is the portion of the System which only accepts Gas meeting the requirements of the Pipeline Carriers with respect to the H₂S content when delivered to Gatherer, and the Sour Gas System is the portion of the System which accepts Gas that requires treating for the removal of H₂S to meet the requirements of the Pipeline Carriers.

8.2    With respect to the Gas delivered into the Sweet Gas System, the Gas shall conform to the following specifications, except as modified by Exhibit “C”, and shall be commercially free of Inferior Liquids:

8.3    With respect to the Gas delivered into the Sour Gas System, the Gas shall conform to the following specifications, except as modified by Exhibit “C”, and shall be commercially free of Inferior Liquids:

8.4    If either Party determines that Owner's Gas at any individual Receipt Point fails to meet the Specifications, then such Party shall immediately notify the other of the extent of the deviation from the Specifications. Owner shall determine the expected duration of such failure and notify the Gatherer of the efforts Owner is undertaking to remedy such deficiency. In the event Owner cannot (or elects not to) remedy such deficiency within thirty (30) Days, Gatherer may refuse to accept delivery of Owner's Gas at such Receipt Point(s), or accept delivery of Owner's Gas pursuant to mutually agreed upon increased fees or other adjustments to revenues by Gatherer to compensate Gatherer for reasonable costs to address such deficiencies. In such case, Gatherer and Owner shall work in good faith to determine a solution to the Specification deficiencies.

  

8.5    Owner and Gatherer acknowledge that future drilling of new reservoirs may result in Gas of a materially different quality in regards to H₂S. In the event this occurs, Owner and Gatherer agree to establish a treating fee for only those Well(s) if Gas from those Well(s) cannot be processed at a Plant without additional treating. Treating fee shall be calculated to allow Gatherer to recover its reasonable actual costs plus a return on such costs of [***]%.

9.1    For the services provided by Gatherer hereunder, Owner shall pay Gatherer a gathering and Processing fee (“Fee”) equal to $[***] per MMBTU of Delivered Volume for all Owner Gas Processed at the Plant(s).

9.2    If Gatherer elects to install Additional Compression, then Gatherer shall submit to Owner a commercial proposal prior to installation of Additional Compression. Gatherer and Owner shall enter into good faith negotiations in order to finalize terms and payment for such Additional Compression applicable to Owner Gas.

9.3    The Fee shall be adjusted on an annual basis, either up or down, in proportion to the percentage change, from the preceding year, in the Consumer Price Index - All Urban Consumers as published by the Department of Labor (“CPI”). The first adjustment of the Fee shall be made January 1, 2014, and subsequent adjustments shall occur each January 1st thereafter and shall reflect the percentage change in the CPI as it existed for the immediately preceding January from the CPI for the second immediately preceding January, provided that the Fee shall never be less than the Fee on the Effective Date.

10.1    The volumes of Gas processed pursuant to this Agreement for the account of Owner and the theoretical content of NGLs and helium in such Gas at the respective Receipt Points of Owner will be used as the basis for allocating each NGL component to such Receipt Points and to Owner, using fixed Recoveries. Such method contemplates that:

 

10.2    There will be a reduction in Heating Value (PTR) between the Gas delivered by Owner to the System at the Receipt Point and the Residue Gas returned to Owner at the Delivery Point because of the extraction of NGLs, Condensate, Plant Fuel use, Flare Gas and Plant Electricity incident to processing, and the gas component of Gathering System Fuel.

System will be measured by meters. The Heating Value of the metered purchased gas will be assumed to be the same as Residue Gas. Total Gathering System Fuel Thermal Reduction will be the sum of the Heating Value of attributible to the use of raw gas plus the Heating Value attributable to purchased fuel gas. That portion of Total Gathering System Fuel Thermal Reduction attributable to each Receipt Point will be allocated in the ratio that the volume of Gas measured in Heating Value from each Receipt Point bears to the total volume of gas measured in Heating Value from all receipt points.

10.3    Gatherer shall furnish Owner with a Monthly statement displaying the allocation of each of the NGLs and Residue Gas recovered in the System, which shall include a statement in substantially the same form attached hereto as Exhibit “A”. This Monthly statement shall include, without limitation, the following for each Receipt Point:

10.4    Residue Gas shall be owned one hundred percent (100%) by Owner, or its designee.

10.5     Disposition of Owner's allocated NGLs, and helium shall be in accordance with the following provisions:

11.1    On or before the end of each Month, Gatherer shall render to Owner a statement in substantially the same form attached hereto as Exhibit “A”, for the preceding Month identified as to the Receipt Point(s) and at minimum showing the items listed in Exhibit “A”, including, but not limited to: (a) the total quantity of Gas delivered to the Receipt Point(s) hereunder and the amount due thereon for the Fees and electric power charges; (b) the component and total quantities of NGLs allocated hereunder; (c) the allocated Residue Gas MMBTU volume to be delivered to the Delivery Point(s); (d) information sufficient to explain and support any adjustments made by Gatherer in determining the amount billed or payable; and (e) any other required details as provided in Section 10.3 (a “Statement”). Gatherer shall supply Statements in electronic transmission format suitable to be automatically loaded into Owner's accounting systems provided that Gatherer shall not be required to incur any costs or expenses in connection with providing Statements in such electronic format. Owner shall pay Gatherer at the addresses shown in Article XVII hereunder no later than the last Day of the Month after the Month of production by wire transfer or ACH wire. If the undisputed amount is not paid when due, interest on any unpaid portion shall accrue at an interest rate equal to two percent (2%) plus the prime rate as quoted in the most recent edition of the Wall Street Journal or at the highest rate permitted by applicable law, whichever is lower, from due date until date paid. If default continues after ninety (90) Days written notice from Gatherer to Owner, the Gatherer may suspend receipt or delivery of Owner's Gas hereunder without prejudice to any other available remedies at law or in equity. In the event of any good faith dispute as to the amounts payable hereunder (the “Disputed Amount”), the Parties shall work in good faith to agree on such Disputed Amount. If the Parties are unable to agree on payment of the Disputed Amount within thirty (30) Days, then any Party may refer such dispute to a firm of independent public accountants, mutually acceptable to Owner and Gatherer, which firm shall make a final and binding determination as to the Disputed Amount on a timely basis and promptly notify the Parties in writing of its resolution. Such firm handling resolution of the Disputed Amount shall not have the power to modify or amend any term or provision of this Agreement. Owner and Gatherer shall bear and pay one-half of the fees and other costs charged by such firm. Interest shall begin to accrue as set forth herein on the Disputed Amount if it is not paid within twenty (20) Days following the date of resolution of the dispute as provided herein.

11.2    If any clerical or accounting error resulting in overcharge or undercharge in any form whatsoever shall at any time be found relative to any invoice delivered whether outstanding or paid, Gatherer shall refund any amount of overcharge or Owner shall pay any amount of undercharge, as the case may be, within thirty (30) Days after final determination thereof; provided, no retroactive adjustment shall be made beyond a period of twenty four (24) Months from the Month of production for which the overcharge or undercharge was made.

11.3    Both Parties hereto shall have the right, upon thirty (30) Days prior written notice during the other Party's normal business hours, to examine the books and records of the other Party to the extent necessary to verify the accuracy of any statement, charge, computation, or demand made pursuant to this Agreement. Prior to such examination, the Party requesting such examination shall execute a mutually acceptable confidentiality agreement if requested to do so.

12.1    Owner shall pay or cause to be paid all production taxes, payments due to mineral interests, royalties, overriding royalties, bonus payments, production payments and the like, that may be imposed with respect to Owner's Gas delivered and gathered hereunder.

12.2    Owner shall pay all other severance, gathering or other similar taxes, fees, or assessments imposed by any state or federal authority with respect to Owner's Gas delivered hereunder. Further, Owner represents that it has timely filed, or shall timely file, any and all reports which Owner is required to file with respect to production or severance taxes to be paid hereunder. Owner shall indemnify and hold Gatherer harmless with respect to Owner's failure to file any and all such reports or with respect to Owner's failure to pay any and all taxes which Owner is obligated to pay pursuant to the terms of this Agreement.

13.1    Owner shall indemnify and hold Gatherer harmless from liability with respect to Owner's Gas or Owner's operations to deliver such Gas prior to the Gas being delivered into the System. Gatherer shall indemnify and hold Owner harmless from liability with respect to the Gas delivered into the System after receipt thereof by Gatherer and prior to delivery thereof at the Delivery Point except for any such liability relating to the title to such Gas, which shall remain with Owner.

13.2    Owner warrants title to or the right to deliver all Owner's Gas, helium, and Owner's NGLs delivered or caused to be delivered to Gatherer hereunder. Owner warrants that such Gas, helium, and NGLs are free from all liens and adverse claims of every kind and agrees to indemnify Gatherer from all suits, actions, debts, accounts, damages, costs, losses, and expenses arising from or out of adverse claims of any or all persons, including governmental entities, as to said Gas or as to royalties or charges thereof. Title to the Gas, and its constituents, including NGLs, delivered or caused to be delivered by Owner to Gatherer hereunder at the Receipt Point(s) shall remain with Owner and shall not pass to nor vest in Gatherer except (a) for portions thereof utilized by Gatherer for Fuel, (b) any NGLs, or helium, purchased by Gatherer pursuant to Section 10.5, title to which shall vest in Gatherer at the outlet of the Plant, and (c) any Condensate purchased by Gatherer pursuant to Section 10.5, title to which shall vest in Gatherer at the outlet of the Plant.

13.3    It is understood that, subject to applicable laws, regulations, and other authority, Owner's Gas shall represent only a portion of the combined throughput on the System hereunder and the same may be commingled with Gas from other producer's or Gatherer's Gas after Owner's delivery to Gatherer at the Receipt Point(s) such that molecules delivered at the Receipt Point(s) will be different from those received by Owner at the Delivery Point(s).

14.1    If either Party is rendered unable, wholly or in part by Force Majeure, to carry out its obligations under this Agreement, then the obligations of the affected Party, except for payment due, so far as they are affected by such Force Majeure, shall be suspended during the continuance of any inability so caused, but for no longer period. Such cause shall, to the extent possible, be remedied with all reasonable dispatch. The affected Party shall give notice and full particulars of such Force Majeure in writing by mail or telecopy or other electronic facility to the other Party as soon as practicable after the occurrence of the cause relied on.

14.2    The term “Force Majeure” shall mean acts of God; strikes, lockouts, or other industrial disturbances; acts of the public enemy, wars, blockades, military action, earthquakes, fires, storms or storm warnings, crevasses, floods, or washouts; arrests and restraints of governments and people; civil disturbances; explosions, breakage or accident to machinery or lines of pipe (including any compression or Processing facilities located on the System); the planned or unplanned necessity for testing or making repairs or alterations to machinery or lines of pipe; planned or unplanned reductions in allocation or in capacity in downstream gas or NGL infrastructure; freezing of wells or lines of pipe; inability to obtain easements and/or rights-of-way; inability of any Party hereto to obtain necessary materials, supplies, or permits due to existing or future rules, regulations, orders, laws, or proclamations of governmental authorities (both Federal and State) including both civil and military; and any other causes whether of the kind herein enumerated or otherwise, and whether caused or occasioned by or happening on account of the act or omission of one of the Parties

hereto or some persons or concern not a Party hereto, not within the control of the Party claiming suspension and which by the exercise of due diligence such Party is unable to avoid.

14.3    It is understood and agreed that the settlement of strikes or lockouts shall be entirely within the discretion of the Party having the difficulty, and that the above requirement that any Force Majeure shall be remedied with all reasonable dispatch shall not require the settlement of strikes or lockouts by acceding to the demands of the opposing Party when such course is inadvisable in the discretion of the Party having the difficulty.

14.4    Notwithstanding the provisions of Section 14.1, should an event of Force Majeure render Gatherer unable to take delivery under normal System operating procedures of any of Owner's Gas at any Receipt Point(s) then, at the sole discretion of Owner, Gatherer shall be obligated, to utilize alternative operating procedures, including but not limited to offloading Gas to third parties, to maintain flow assurance of Owner's Gas.

15.1    This Agreement shall be effective on the Effective Date, and shall continue in full force and effect for a period of twenty (20) years thereafter (the “Primary Term”) and thereafter for successive five (5) year renewal terms (each, a “Renewal Term”), until terminated by either Party by giving at least three hundred and sixty-five (365) Days written notice of termination to the other Party, (a) if within the Primary Term, prior to the end of the Primary Term or (b) if in a Renewal Term, prior to the end of such Renewal Term. Gatherer further agrees that upon written termination as prescribed in the preceding sentence, the Primary Term or Renewal Term, as applicable, shall be automatically extended by one (1) year to allow Owner sufficient time to secure alternative gathering and Processing capacity.

15.2    Owner hereby dedicates to Gatherer, subject to this Agreement, all producing well(s) with Owner's Gas connected to the System on the Effective Date for the Primary Term of this Agreement, and all future Well(s) drilled by Owner, or on Owner's behalf by a farmee, that are spudded or completed on or prior to December 31, 2014, provided that the future Well(s) are within two (2) miles of the System as it may exist at the time the new well is drilled (collectively, the “Dedication”). Owner and Gatherer may mutually agree to extend in twenty four (24) Month increments the time frame for inclusion of completed new Wells under the Dedication. For avoidance of doubt, said extension shall provide Owner with the right to amend Article VI to include new Areas and pressure requirements for those Areas. Owner will not be held to a volume commitment requirement. Should Owner transfer, sell or otherwise assign the right to operate any Well, existing or drilled during the term of this Agreement, whether operated by Owner or by a farmee of Owner, then such Well shall remain subject to the terms of this Agreement. The commitments and obligations of Gatherer under this Agreement shall extend to and include all of Owner's Gas from all Wells.

15.3    Owner commits that all farmees under the Dedication shall enter into an agreement with Gatherer for the gathering and processing of Farmee Gas, and Gatherer commits to gather and process Farmee Gas, under substantially the same terms and conditions, and the same Fee, as for Owner. Notwithstanding the foregoing, it is expressly understood and agreed by the parties that such agreement between Gatherer and any such farmee shall become an exhibit to the farm-out agreement(s) used by Owner to effectuate farmouts and shall not contain (i) confidentiality restrictions that would limit Owner's full right to review and include the document as an exhibit to the farm-out agreement(s), or (ii) any of the pressure requirements or Liquidated Damages provided in Article VI or elsewhere herein.

16.1    This Agreement shall extend to and be binding upon the Parties hereto, their successors, and assigns. The rights of the Parties may be assigned or conveyed in whole or in part from time to time; provided, however, neither Party shall assign this Agreement without the prior written consent of the other Party, which consent shall not be unreasonably withheld, delayed or conditioned. Notwithstanding the foregoing, with respect to Owner only (and not a permitted successor and assign to Owner) satisfaction by Gatherer of the terms of Section 12.18 of the Purchase and Sale Agreement shall be deemed to constitute Owner's consent to Gatherer's assignment of this Agreement. No transfer of, or succession to, the interest of any Party hereto, either in whole or partially, shall affect or bind the other Party until the first Day of the Month following the Month in which the other Party shall have received written notification thereof.

If to OWNER:

[***]

[***]

[***]

If to GATHERER:

[***]

[***]

 

[***]

Notice given by scanned email, personal delivery, mail or overnight courier pursuant to this Article XVII shall be effective upon physical receipt. Notice given by facsimile pursuant to this Article XVII shall be effective as of the date of confirmed delivery if delivered before 5:00 p.m. Central Time on any Day that is not a weekend or federal holiday.

18.1    The interpretation and performance of this Agreement shall be governed by and construed in accordance with the laws of the State of Texas. The Parties hereto irrevocably and unconditionally consent

and submit themselves to the exclusive jurisdiction of the courts of the State of Texas and the courts of the United States of America located in Harris County, Texas, (collectively, the “Agreed Courts”) with respect to any actions, suits, or proceedings arising out of or in connection with this Agreement, and the transactions contemplated hereby, and the Parties hereto agree not to commence any action, suit, or proceeding relating thereto except in such Agreed Courts. The Parties hereto irrevocably and unconditionally waive any objection to the laying of venue of any action, suit, or proceeding arising out of this Agreement or the transactions contemplated hereby in the Agreed Courts and hereby further irrevocably and unconditionally waive and agree not to plead or claim that any such action, suit, or proceeding brought in any of the Agreed Courts has been brought in an inconvenient forum. Each Party hereby irrevocably and unconditionally waives to the fullest extent permitted by law trial by jury in any legal action or proceeding relating to this Agreement and for any counterclaim therein.

18.2    This Agreement contains the entire understanding of the Parties superseding all other agreements, whether oral or written, express or implied. It may not be changed orally, but only by an agreement in writing signed by the Party against whom enforcement of any waiver, change, modification, extension, or discharge is sought. Every covenant, term, and provision of the Agreement shall be construed simply according to its fair meaning and not strictly for or against any Party.

18.3    The captions in this Agreement are for the convenience of the Parties in identification of the provisions hereof and shall not constitute a part of this Agreement nor be considered in the interpretation of this Agreement, and the following shall apply:

18.4    Each Party agrees that it shall maintain this Agreement and the contents thereof, including any information supplied in connection with this Agreement, in strict confidence, and that it shall not cause or permit disclosure thereof to any third party without the express written consent of the other Party which consent shall not be unreasonably withheld, conditioned or delayed; provided, however, that disclosure is permitted (a) in the event and to the extent such Party is required by a court or agency exercising jurisdiction over the subject matter thereof, by order or by regulation, and (b) to a Party's affiliates or such Party's or its affiliates' employees, directors, members, managers, officers, partners, prospective partners or financing sources, prospective purchasers of a Party or such Party's or its affiliate's assets, financial advisors, consultants, attorneys, banks, or institutional investors so long as those persons, firms or entities likewise agree to keep this Agreement confidential.

18.5    EACH PARTY EXPRESSLY WAIVES ANY RIGHT TO CLAIM DAMAGES OTHER THAN ACTUAL AND DIRECT DAMAGES. SUCH DAMAGES WAIVED INCLUDE, WITHOUT LIMITATION, CONSEQUENTIAL, SPECIAL, INDIRECT, PUNITIVE AND EXEMPLARY DAMAGES. THIS SECTION 18.5 DOES NOT APPLY TO AND DOES NOT LIMIT INDEMNIFICATION REGARDING ANY CLAIMS BY UNAFFILIATED THIRD PARTIES.

18.6    NEITHER PARTY (“INDEMNITOR”) SHALL BE LIABLE TO THE OTHER PARTY (“INDEMNITEE”) FOR LOSSES SUSTAINED OR LIABILITIES INCURRED BY INDEMNITEE IN CONNECTION WITH OR AS A RESULT OF THIS AGREEMENT, EVEN IF ACTUALLY OR ALLEGEDLY CAUSED BY THE SOLE OR CONCURRENT NEGLIGENCE, STRICT LIABILITY, OR

OTHER LEGAL FAULT OF INDEMNITOR, EXCEPT TO THE EXTENT SUCH LOSSES OR LIABILITIES WERE SUSTAINED OR INCURRED AS A RESULT OF INDEMNITOR'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT IN WHICH CASE INDEMNITOR SHALL INDEMNIFY AND DEFEND INDEMNITEE AGAINST ALL SUCH LOSSES AND LIABILITIES.

18.7    If any term or provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic and legal substance of the transactions contemplated hereby is not affected in any adverse manner to either Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.

18.8    This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. Any facsimile or pdf copies hereof or signature thereon shall, for all purposes, be deemed originals.

18.9    Nothing contained in the Agreement entitles any person or entity of any kind, other than Owner and Gatherer or their permitted successors and assigns to any claim, remedy or right of any kind whatsoever.

IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officer of each Party as of the date first written above.

OWNER: BP AMERICA PRODUCTION COMPANY    

GATHERER: EAGLE ROCK FIELD SERVICES, L.P.

Attached to and made a part of Gas Gathering and Processing Agreement as of this 1^st day of ______________________ by and between BP AMERICA PRODUCTION COMPANY (“Owner”) and EAGLE ROCK FIELD SERVICES, L.P. (“Gatherer”).

Attached to and made a part of Gas Gathering and Processing Agreement as of this 1^st day of ______________________ by and between BP AMERICA PRODUCTION COMPANY (“Owner”) and EAGLE ROCK FIELD SERVICES, L.P. (“Gatherer”).

Note: All Sections in a given Area are adjacent. Mislabeling of a Section's County, Block, Survey or Section Number shall not prevent its inclusion in the Area, provided that a) the total number of Sections in an Area is not increased beyond that in the Table above and b) the correctly labeled Section, once corrections are made, is an adjacent Section.

a) Owner Well(s) that follow are “grandfathered” and specifically excluded from the requirements of Section 8.2 f through 8.2 h

Gatherer gives notice to Owner that the services provided under this section 2.d. are no longer required. File will be provided to Gatherer on a fileshare hosted by Gatherer.