Gas Gathering, Compression and Processing Agreement, dated October 25, 2021, between OMP Operating LLC, Oasis Petroleum North America LLC and Oasis Petroleum Marketing LLC
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EX-10.6 7 ex106-ompq3202110xq3q21mas.htm EX-10.6 Document
[Omitted.]
[Certain identified information has been excluded from this exhibit because it is both not material and is the type that the registrant treats as private or confidential.]
Execution Version
GAS GATHERING, COMPRESSION AND PROCESSING
AGREEMENT
AGREEMENT
BY AND AMONG
OASIS PETROLEUM NORTH AMERICA LLC,
OASIS PETROLEUM MARKETING LLC,
AND
OMP OPERATING LLC
DATED AS OF
OCTOBER 25, 2021
PAINTED WOODS / CITY OF WILLISTON
TABLE OF CONTENTS
Article 1 DEFINITIONS | 2 | ||||
Article 2 PRODUCER AND SHIPPER COMMITMENTS | 11 | ||||
Section 2.1 Producer’s Dedication | 11 | ||||
Section 2.2 Shipper’s Commitment | 12 | ||||
Section 2.3 Conflicting Dedications | 12 | ||||
Section 2.4 Producer’s and Shipper’s Reservations | 12 | ||||
Section 2.5 Covenant Running with the Land | 13 | ||||
Section 2.6 Priority of Dedicated Gas | 13 | ||||
Article 3 SERVICES; GATHERING SYSTEM EXPANSION AND CONNECTION OF WELLS | 13 | ||||
Section 3.1 Gatherer Service Commitment | 13 | ||||
Section 3.2 Development Plan; Facilities Plan; Exchange and Review of Information | 15 | ||||
Section 3.3 Expansion of Gathering System; Connection of Wells; Delivery Points | 16 | ||||
Section 3.4 Gas Processing | 18 | ||||
Section 3.5 Compression Facilities | 19 | ||||
Section 3.6 High Pressure Services | 20 | ||||
Section 3.7 Gas Removed for Lease Operations | 20 | ||||
Section 3.8 Timing for Completion and Placement into Service of Initial Gathering System | 20 | ||||
Section 3.9 Right of Way and Access | 20 | ||||
Section 3.10 Step-In Rights | 22 | ||||
Section 3.11 Cooperation | 23 | ||||
Article 4 TERM | 23 | ||||
Section 4.1 Term | 23 |
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Section 4.2 Post-Termination | 24 | ||||
Section 4.3 Survival | 24 | ||||
Article 5 FEES AND CONSIDERATION | 24 | ||||
Section 5.1 Fees | 24 | ||||
Article 6 ALLOCATIONS | 24 | ||||
Section 6.1 Allocation of Residue Gas | 24 | ||||
Section 6.2 Allocation of NGLs | 26 | ||||
Section 6.3 Fuel, Lost and Unaccounted for Gas and NGL Shrink | 26 | ||||
Section 6.4 Allocation of Fuel | 27 | ||||
Article 7 CERTAIN RIGHTS AND OBLIGATIONS OF PARTIES | 27 | ||||
Section 7.1 Operational Control of Gatherer’s Facilities | 27 | ||||
Section 7.2 Maintenance | 27 | ||||
Section 7.3 Capacity Allocations for the Facilities | 27 | ||||
Section 7.4 Arrangements After Redelivery | 28 | ||||
Section 7.5 Line Fill | 28 | ||||
Section 7.6 Temporary Releases | 28 | ||||
Section 7.7 Permanent Releases | 29 | ||||
Article 8 PRESSURES AT RECEIPT POINTS AND DELIVERY POINTS | 29 | ||||
Section 8.1 Pressures at Receipt Points | 29 | ||||
Section 8.2 Pressures at Delivery Points | 30 | ||||
Section 8.3 Shipper Facilities | 31 | ||||
Article 9 NOMINATION AND BALANCING | 31 | ||||
Section 9.1 Gatherer Notifications | 31 | ||||
Section 9.2 Nominations | 31 |
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Section 9.3 Balancing | 32 | ||||
Article 10 QUALITY | 32 | ||||
Section 10.1 Receipt Point Gas Quality Specifications | 32 | ||||
Section 10.2 Non-Conforming Gas | 33 | ||||
Section 10.3 Delivery Point Gas Quality Specifications | 34 | ||||
Section 10.4 Delivery Point NGL Quality Specifications | 34 | ||||
Section 10.5 Greenhouse Gas Emissions | 34 | ||||
Article 11 MEASUREMENT EQUIPMENT AND PROCEDURES | 34 | ||||
Section 11.1 Equipment | 34 | ||||
Section 11.2 Measurement Standards | 35 | ||||
Section 11.3 Gas Measurement | 36 | ||||
Section 11.4 Notice of Measurement Facilities Inspection and Calibration | 37 | ||||
Section 11.5 Measurement Accuracy Verification | 37 | ||||
Section 11.6 Special Tests | 38 | ||||
Section 11.7 Metered Flow Rates in Error | 38 | ||||
Section 11.8 Record Retention | 38 | ||||
Section 11.9 Summary Measurement Reports | 38 | ||||
Article 12 NOTICES | 39 | ||||
Section 12.1 Notices | 39 | ||||
Article 13 INVOICES AND PAYMENTS | 40 | ||||
Section 13.1 Statements and Invoices | 40 | ||||
Section 13.2 Right to Suspend on Failure to Pay | 41 | ||||
Section 13.3 Audit Rights | 41 | ||||
Section 13.4 Payment Disputes | 41 |
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Section 13.5 Interest on Late Payments | 41 | ||||
Section 13.6 Excused Performance | 41 | ||||
Article 14 FORCE MAJEURE | 42 | ||||
Section 14.1 Suspension of Obligations | 42 | ||||
Section 14.2 Definition of Force Majeure | 42 | ||||
Section 14.3 Settlement of Strikes and Lockouts | 42 | ||||
Section 14.4 Payments for Services Performed | 42 | ||||
Article 15 INDEMNIFICATION | 43 | ||||
Section 15.1 Gatherer | 43 | ||||
Section 15.2 Producer and Shipper | 43 | ||||
Article 16 CUSTODY AND TITLE | 43 | ||||
Section 16.1 Custody | 43 | ||||
Section 16.2 Shipper Warranty | 43 | ||||
Section 16.3 Title | 44 | ||||
Article 17 TAXES; ROYALTIES | 44 | ||||
Section 17.1 Taxes | 44 | ||||
Section 17.2 Royalties | 44 | ||||
Section 17.3 New Taxes | 45 | ||||
Article 18 MISCELLANEOUS | 46 | ||||
Section 18.1 Rights | 46 | ||||
Section 18.2 Applicable Laws | 46 | ||||
Section 18.3 Governing Law; Jurisdiction; Waiver of Jury Trial | 46 | ||||
Section 18.4 Successors and Assigns | 46 | ||||
Section 18.5 Severability | 47 | ||||
Section 18.6 Confidentiality | 48 |
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Section 18.7 Entire Agreement, Amendments and Waiver | 49 | ||||
Section 18.8 Limitation of Liability | 49 | ||||
Section 18.9 Headings | 49 | ||||
Section 18.10 Rights and Remedies | 49 | ||||
Section 18.11 No Partnership | 50 | ||||
Section 18.12 Rules of Construction | 50 | ||||
Section 18.13 No Third Party Beneficiaries | 50 | ||||
Section 18.14 Further Assurances | 51 | ||||
Section 18.15 Counterpart Execution | 51 | ||||
Section 18.16 Memorandum of Agreement | 51 |
EXHIBITS
Exhibit A Dedicated Acreage
Exhibit B Facilities
Exhibit C Delivery Points
Exhibit D Excluded Wells
Exhibit E Form of Right of Way Agreement
Exhibit F Producer’s Pipelines
Exhibit G Form of Memorandum of Agreement
Exhibit H Form of Monthly Statement
Exhibit I Standard Meter Facilities
Exhibit J Fees
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GAS GATHERING, COMPRESSION AND PROCESSING AGREEMENT
This GAS GATHERING, COMPRESSION AND PROCESSING AGREEMENT (this “Agreement”), dated as of October 25, 2021 (the “Effective Date”), is by and among OASIS PETROLEUM NORTH AMERICA LLC, a Delaware limited liability company (“Producer”), OASIS PETROLEUM MARKETING LLC, a Delaware limited liability company (“Shipper”), and OMP OPERATING LLC, a Delaware limited liability company ( “Gatherer”). Producer, Shipper and Gatherer may be referred to herein, each individually, as a “Party” or, collectively, as the “Parties”.
RECITALS
A. Producer and its Affiliates own or control Interests and intend to produce Gas from Wells on the Dedicated Acreage.
B. Shipper has contracted with Producer to purchase Gas produced by Producer and its Affiliates from Wells on the Dedicated Acreage, which Gas will be purchased at the Receipt Points.
C. In connection with the execution of this Agreement, Producer and Gatherer are also entering into a Purchase and Sale Agreement, pursuant to which Producer agrees to sell and assign, and Gatherer agrees to purchase and pay for, the pipelines shown on Exhibit F and associated facilities, on the terms and conditions set forth therein.
D. Gatherer owns (or will own, once constructed) – or has (or will obtain) rights to use from other entities with whom Gatherer has contracted for certain of the services contemplated by this Agreement (“Gatherer’s Designee”), [omitted] – the Gathering System, which gathers (or will gather, as applicable) Gas from certain Wells of Producer and its Affiliates. Gatherer anticipates the further build out and expansion of the Gathering System to connect additional Wells of Producer and its Affiliates.
E. Gatherer owns (or will own, once constructed) – or has (or will obtain) rights to use from Gatherer’s Designee – the Processing Plant(s), which will be connected to the Gathering System.
F. [Omitted].
G. Shipper desires to contract with Gatherer to provide the Services on the Gathering System and at the Processing Plant with respect to Dedicated Gas, including (i) gathering Dedicated Gas, (ii) compressing Dedicated Gas at the System Compressor Stations, (iii) processing Dedicated Gas, and (iv) either redelivering Residue Gas and NGLs to Shipper or marketing and remitting proceeds for such Residue Gas and NGLs to Shipper; and Gatherer desires to provide the Services to Shipper; in each case in accordance with the terms and conditions of this Agreement.
H. In consideration of Shipper’s obligations to purchase Gas from Producer and Gatherer’s obligations to provide the Services, Producer has agreed (i) to dedicate and commit Dedicated Gas under this Agreement, (ii) to provide to Gatherer the Development Plans to permit
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Gatherer to plan and expand the Gathering System to connect additional Wells of Producer, and (iii) to perform certain other obligations under this Agreement, in each case in accordance with the terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the premises and mutual covenants set forth in this Agreement, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
DEFINITIONS
Capitalized terms used, but not otherwise defined, in this Agreement shall have the respective meanings given to such terms set forth below:
Actual Total Residue Gas. As defined in Section 6.1(b).
Additional Processing Plant. As defined in Section 3.4(b).
Affiliate. Any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with another Person. (Affiliated shall have the correlative meaning.) Solely for purposes of this definition, “control” (and its correlative terms “controls” and “controlled by”) means possessing the power to direct or cause the direction of the management and policies of a Person, whether through ownership, by contract, or otherwise; provided that a Person shall be deemed to control any specified Person if such Person owns 50% or more of the voting securities of such specified Person, or if such specified Person owns 50% or more of the voting securities of such Person, or if 50% or more of the voting securities of such specified Person and such Person are under common control. Notwithstanding the foregoing, for all purposes hereunder, Gatherer and its subsidiaries shall not be Affiliates of Producer or Shipper or their respective subsidiaries, and neither Shipper nor Producer nor any of their respective subsidiaries shall be Affiliates of Gatherer and its subsidiaries.
Agreed Formation. The Bakken/Three Forks formation and any other formation which the Parties agree after the Effective Date will be subject to the dedication hereunder.
Agreement. As defined in the preamble hereof.
Applicable Law. Any law (including any Environmental Law), rule, regulation, ordinance, code, order, writ, judgment, decree or rule of common law or any judicial or administrative interpretation thereof or other legal or regulatory determination by a Governmental Authority of competent jurisdiction.
BTU. The amount of heat required to raise the temperature of one pound of pure water from 58.5 degrees Fahrenheit to 59.5 degrees Fahrenheit at a constant pressure of 14.73 psia.
Business Day. Any calendar day on which commercial banks in Houston, Texas are open for business.
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Bypass Gas. Gas delivered to the Plant Receipt Point that is bypassed around the Processing Plant and is therefore not processed.
CDP. A central delivery point at which Producer aggregates volumes of Gas produced from one or more Wells that will be connected to the Gathering System in accordance with this Agreement, including the Planned CDPs.
Closing Date. The date on which, in connection with a proposed sale or other transfer, directly or indirectly, of a Party’s interest or in connection with a merger or business combination, Gatherer, on the one hand, and Shipper and Producer, on the other hand, are no longer Affiliates (as such term is defined herein, but without taking into account and expressly exclude the last sentence of the definition thereof).
Completion Deadline. As defined in Section 3.3(b).
Compression Fee. As defined on Exhibit J.
Condensate. Gas that condenses in the Facilities at ambient temperatures and is recovered from the Facilities as a hydrocarbon liquid.
Confidential Information. As defined in Section 18.6(a).
Conflicting Dedication. Any gathering agreement or other commitment or arrangement that would require Dedicated Gas to be gathered and/or compressed on any gathering system other than the Gathering System, processed in any processing plant other than the Processing Plant, or delivered to any Person other than the Gatherer, with all Wells related thereto identified as Excluded Wells hereunder.
Connection Notice. As defined in Section 3.3(b).
Contract Year. Each of (a) the Effective Date through December 31, 2022, and (b) each calendar year thereafter.
Contractor. Any Person (including an Affiliate of Gatherer) that has a written agreement with Gatherer to provide services necessary for the completion or expansion of the Facilities.
CSA. Any contract for construction services with respect to the Facilities whether denominated as a construction agreement, construction services agreement, services agreement, engineering, procurement and construction (EPC) contract, or otherwise.
Cubic Foot. The volume of Gas in one cubic foot of space at a standard pressure and temperature base of 14.73 psia and 60 degrees Fahrenheit, respectively.
Day. A period commencing at 9:00 a.m., Central Prevailing Time, on a calendar day and ending at 9:00 a.m., Central Prevailing Time, on the next succeeding calendar day. Daily shall have the correlative meaning.
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Dedicated Acreage. The area identified on Exhibit A (and as Exhibit A may be amended from time to time).
Dedicated Gas. All Gas produced on or after the Effective Date (except for the Gas produced from the Excluded Wells) that Producer or any of its Affiliates owns, or has the right to control and deliver for gathering and processing services, and that is attributable to any Dedicated Property and is produced through a Well from an Agreed Formation.
Dedicated Properties. All Interests now owned or hereafter acquired by Producer or any of its Affiliates and located wholly within the Dedicated Acreage, including the Gas reserves associated with such Interests.
Delivery Point. Each of the Upstream Delivery Points and the Plant Delivery Points, as identified on Exhibit C (and as Exhibit C may be amended from time to time).
Design Recoveries. As defined in Section 3.4(a).
Development Plan. As defined in Section 3.2(a).
Diverted Gas. As defined on Exhibit J.
Downstream Pipeline. Any Gas or NGL pipeline or any facilities of any end-user or local distribution company, in each case immediately downstream of, and connected to, the Gathering System or the Processing Plant, as applicable, into which Gas or NGLs are delivered by or for the account of Shipper from the Gathering System or the Processing Plant.
DSU. With respect to each Well or planned Well, the actual spacing unit for such Well determined by the North Dakota Industrial Commission or the Montana Department of Natural Resources (as applicable) or, if no such determination has been made at the relevant time, an area of 1280 acres around such Well or planned Well within which the well bore for such Well is or is expected to be open.
Easement Notice. As defined in Section 3.9(b).
Effective Date. As defined in the preamble of this Agreement.
Emissions Charges. As defined in Section 10.5.
Environmental Laws. All Applicable Laws pertaining to the presence or release of environmental contaminants (including any Hazardous Materials), or relating to natural resources (including any protected species) or the environment (including the air, water, surface or subsurface of the ground) as same are in effect at any time and including the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), as amended by Superfund Amendments and Reauthorization Act (“SARA”), 42 U.S.C. §§ 9601 et seq.; Resource Conservation and Recovery Act (“RCRA”), as amended by the Solid Waste Disposal Act (“SWDA”), 42 U.S.C. §§6901 et seq.; Federal Water Pollution Control Act (“FWPCA”), as amended by the Clean Water Act (“CWA”), 33 U.S.C. §§ 1251 et seq.; Safe Drinking Water Act, 42 U.S.C. §§ 300f et seq.; Clean Air Act (“CAA”), 42 U.S.C. §§ 7401 et seq.; and Toxic
4
Substances Control Act (“TSCA”), 15 U.S.C. §§ 2601 et seq., as each are amended from time to time, and any similar state or local enactments by Governmental Authorities.
Excluded Wells. The Wells listed on Exhibit D (and as Exhibit D may be amended from time to time).
Existing Plants. As defined in Section 3.4(a).
Facilities. Collectively, the Gathering System and the Processing Plant.
Facilities Plan. As defined in Section 3.2(b).
Fees. As defined in Section 5.1.
Firm Capacity Gas. Gas that is accorded the highest level of service and priority for the Facilities with respect to all capacity allocations, interruptions or curtailments, specifically including (a) Dedicated Gas produced from the Wells delivered from the Receipt Points, and (b) Gas delivered to the Gathering System or the Processing Plant from any Person for which Gatherer is contractually obligated to provide the highest priority; [omitted].
FL&U. As defined in Section 6.3.
Force Majeure. As defined in Section 14.2.
Fuel. Gas and electric power used in the operation of the Facilities, including fuel consumed in System Compressor Stations and dehydration facilities.
Gallon. One U.S. gallon, which is equal to 231 cubic inches.
Gas. Any mixture of gaseous hydrocarbons, consisting essentially of methane and heavier hydrocarbons and inert and noncombustible gases, that is extracted from beneath the surface of the earth.
Gas Quality Specifications. As defined in Section 10.1.
Gatherer. As defined in the preamble of this Agreement.
Gatherer Owned Gathering System. The existing (if any facilities are in existence as of the Effective Date) and planned gathering system of Gatherer described on Exhibit B (and as Exhibit B may be amended from time to time), together with any additional System Segments constructed after the Effective Date by Gatherer, as such gathering system is constructed and expanded after the Effective Date, including, in each case, to the extent now in existence or constructed or installed in the future, low pressure Gas gathering pipelines, System Compressor Stations, Receipt Points, Upstream Delivery Points (including all interconnection facilities), Gas Measurement Facilities, Condensate handling facilities, pig receiving facilities, rights of way, fee parcels, surface rights and permits, and all appurtenant facilities upstream of the Delivery Points, in each case, that Gatherer owns (or will own, once constructed).
Gatherer’s Designee. As defined in the preamble of this Agreement.
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Gatherer’s Designee Owned Gathering System. The existing (if any facilities are in existence as of the Effective Date) and planned gathering system of Gatherer’s Designee described on Exhibit B (and as Exhibit B may be amended from time to time), together with any additional System Segments constructed after the Effective Date by Gatherer’s Designee, as such gathering system is constructed and expanded after the Effective Date, including, in each case, to the extent now in existence or constructed or installed in the future, High Pressure Gas gathering pipelines, rights of way, fee parcels, surface rights and permits, and all appurtenant facilities upstream of the Delivery Points, in each case, that Gatherer has (or will obtain) rights to use during the term of this Agreement.
Gathering Fee. As defined on Exhibit J.
Gathering System. Collectively, the Gatherer Owned Gathering System and the Gatherer’s Designee Owned Gathering System.
Governmental Authority. Any federal, state, local, municipal, tribal or other government; any governmental, regulatory or administrative agency, commission, body or other authority exercising or entitled to exercise any administrative, executive, judicial, legislative, regulatory or taxing authority or power (including the NASDAQ Exchange an any applicable securities exchange on which a Party or its Affiliates’ securities are listed or traded), having jurisdiction over any Party; and any court or governmental tribunal, including any tribal authority having or asserting jurisdiction.
Gross Heating Value. The number of BTUs produced by the complete combustion in air, at a constant pressure, of one Cubic Foot of Gas when the products of combustion are cooled to the initial temperature of the Gas and air and all water formed by combustion is condensed to the liquid state.
Hazardous Materials. Collectively, (a) materials defined as “hazardous substances” in CERCLA, or any successor statute, unless such term has been given broader meaning by Applicable Law with respect to the Services or the Parties (including Governmental Authorities establishing common law liability), in which case such broader meaning shall apply; (b) materials defined as “hazardous wastes” in RCRA, or any successor statute, unless such term has been given broader meaning by Applicable Law with respect to the Services or the Parties (including Governmental Authorities establishing common law liability), in which case such broader meaning shall apply; (c) petroleum or petroleum product; (d) any polychlorinated biphenyl and (e) any pollutant or contaminant or hazardous, dangerous or toxic chemical, material, waste or substance, including naturally occurring radioactive material, regulated under or within the meaning of any applicable Environmental Law.
High Pressure. Pipelines gathering Gas that has been compressed at the System Compressor Station(s), including pipelines from the discharge of any System Compressor Station to the relevant Delivery Point.
Ideal Gas Laws. The thermodynamic laws applying to perfect gases.
Imbalances. As defined in Section 9.3.
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Index Price. Inside FERC Gas Market Report (NNG Ventura Natural Gas) less the applicable transportation from the Processing Plant and the actual costs associated with all such transportation as expressed in $/MMBTU. If such index is not available, an index price determined by Shipper and Gatherer based on where such Gas production is being sold, or, if no appropriate index is available, a price based on a netback calculation determined by Shipper and reasonably acceptable to Gatherer.
Inferior Liquids. Mixed crude oil, slop oil, salt water, nuisance liquids and other liquids recovered by Gatherer in the Gathering System and/or the Processing Plant.
Interests. Oil and gas leasehold interests and oil and gas mineral fee interests, including working interests, overriding royalty interests, net profits interests, carried interests, and similar rights and interests.
Interruptible Gas. Gas that is accorded a lower level of service and priority on the Gathering System and/or at the Processing Plant with respect to capacity allocations, interruptions or curtailments as compared to Firm Capacity Gas.
Lost and Unaccounted For Gas. Gas received into the Gathering System that is released or lost through piping, equipment, operations or measurement losses or inaccuracies or that is vented, flared or lost in connection with the operation of the Facilities.
Maintenance. As defined in Section 7.2.
MAP. As defined in Section 8.1(b).
MAP Fee. As defined on Exhibit J.
Maximum DSU Volume. [Omitted].
MCF. 1,000 Cubic Feet.
Measurement Facilities. Facilities or equipment used to measure the volume of Gas or NGLs, which may include meter tubes, isolation valves, recording devices, communication equipment, buildings and barriers.
MMBTU. 1,000,000 BTUs.
MMCF. 1,000,000 Cubic Feet.
Month. A period commencing at 9:00 a.m., Central Prevailing Time, on the first Day of a calendar month and extending until 9:00 a.m., Central Prevailing Time, on the first Day of the next succeeding calendar month. Monthly shall have the correlative meaning.
[Omitted.]
New Taxes. All actual documented expenses and costs (including capital expenditures) incurred and paid by Gatherer (either as a one-time or periodic expenditure) as a result of any Applicable Law that (i) becomes effective after the Effective Date, and (ii) requires Gatherer or
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Gatherer’s Designee to incur additional expenses in order to comply with such Applicable Law (including to (a) make additions or modifications to the Facilities, (b) change methods of operation, (c) implement increased training, testing or verification programs with respect to the operation of the Facilities, or (d) comply with the conditions of any permit necessary to operate the Facilities); but in each case excluding any and all costs or expenses (including fines or penalties) that are levied against or incurred by Gatherer due to Gatherer’s violation of, or other failure to comply with, any Applicable Law; provided that, all changes to any Taxes or taxes levied or assessed against the facilities of Gatherer, including ad valorem tax (however assessed), used for the purpose of carrying out the provisions of this Agreement or against the income, net worth, or capital stock of Gatherer are expressly excluded.
New Well. Any Well spud after the Effective Date.
[Omitted.]
NGL Shrink. As defined in Section 6.3.
[Omitted.]
NGL Truck Loading Facility. The point at which Gatherer or Gatherer’s Designee will redeliver NGLs to or for the account of Shipper [omitted], with respect to Condensate recovered at the System Compressor Stations, at the System Compressor Stations.
NGLs. Natural gas liquids extracted and recovered from Gas after processing in the Processing Plant and any Condensate or Inferior Liquids recovered from Gas in the Gathering System or the Processing Plant prior to or during processing.
[Omitted.]
[Omitted.]
[Omitted.]
Parties. As defined in the preamble of this Agreement.
Party. As defined in the preamble of this Agreement.
Permit. Any permit, license (including seismic or geophysical licenses, where applicable), certification, concession, approval, consent, ratification, waiver, authorization, clearance, confirmation, exemption, franchise, designation, variance, qualification or accreditation issued, granted, given or otherwise made available by or under any Governmental Authority or pursuant to any Applicable Law.
Person. An individual, a corporation, a partnership, a limited partnership, a limited liability company, an association, a joint venture, a trust, an unincorporated organization, or any other entity or organization, including a Governmental Authority.
Planned CDP. As defined in Section 3.3(b).
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Plant Delivery Point. Each of the Residue Delivery Points and the NGL Delivery Points.
Plant Receipt Point. The point or points at which Gas first enters the Processing Plant from the Gathering System.
[Omitted.]
Previous Dedication Agreements. Any previous dedication of Gas executed prior to the Effective Date requiring the delivery of Gas to a third party, with all Wells related thereto identified as Excluded Wells hereunder.
Processing Fee. As defined on subpart (a)(iii) of Exhibit J.
[Omitted.]
Producer. As defined in the preamble of this Agreement.
psia. Pounds per square inch absolute.
psig. Pounds per square inch gauge.
Reasonable and Prudent Operator. A Person using reasonable efforts to perform its obligations under this Agreement exercising the degree of skill, diligence, prudence and foresight that would reasonably and ordinarily be expected from a skilled and experienced operator complying with all Applicable Laws and engaged in the same type of undertaking under the same or similar circumstances.
Receipt Point. The inlet valve at the Measurement Facilities located at or assigned to a CDP where one or more Wells are connected to the Gatherer Owned Gathering System.
[Omitted.]
Residue Gas. The portion of the Gas delivered to the Plant Receipt Point remaining after (a) processing at the Processing Plant (if processed) and (b) the reduction for FL&U. Residue Gas shall include Bypass Gas.
Services. As defined in Section 3.1.
Shipper. As defined in the preamble of this Agreement.
Shipper’s GHG Emissions. As defined in Section 10.5.
Shipper’s Net Quantities. As defined in Section 6.3.
Shipper’s Total FL&U. As defined in Section 6.3.
Step-In Notice. As defined in Section 3.10(a).
Step-In Rights. As defined in Section 3.10(a).
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System Compressor Stations. As defined in Section 3.5.
System High Pressure Lines. As defined in Section 3.6.
System Segment. A physically separate segment of the Gathering System that connects one or more Wells to a Plant Receipt Point or an Upstream System Delivery Point, including all Gas gathering pipelines (including low pressure and High Pressure gathering pipelines), System Compressor Stations, Receipt Points, Upstream Delivery Points, Plant Receipt Point, Gas Measurement Facilities, Condensate handling facilities, rights of way, fee parcels, surface rights and permits, and all appurtenant facilities.
Target Completion Date. As defined in Section 3.3(b).
Taxes. All gross production, severance, conservation, ad valorem and similar or other taxes measured by or based upon production, together with all taxes on the right or privilege of ownership of Gas, or upon the Services, including gathering, transportation, handling, transmission, compression, processing, treating, conditioning, distribution, sale, use, receipt, delivery or redelivery of Gas and NGLs, including gross receipts taxes, and including all of the foregoing now existing or in the future imposed or promulgated.
theoretical MMBTUs of Residue Gas remaining from Shipper’s Gas. As defined in Section 6.1(b).
Third Party Gas. Gas produced by Persons other than Producer or its Affiliates that is not Dedicated Gas.
Threshold. As defined in Section 17.3(d).
Transfer. Any sale, assignment, conveyance or other transfer, including pursuant to an exchange or farmout. Transfers and Transferred have the correlative meanings.
Transferee. Any Person to which a Transfer is made.
Undelivered Gas. As defined on Exhibit J.
Upstream Delivery Point. The point at which Gatherer or Gatherer’s Designee will redeliver unprocessed Gas to or for the account of Shipper, which shall be the point of interconnection of the Gathering System with the facilities of the applicable Downstream Pipeline, as more particularly described on Exhibit C (and as Exhibit C may be amended from time to time), or additional “Upstream Delivery Points” described pursuant to Section 3.3(e)).
Well. A well for the production of hydrocarbons in which Producer or any of its Affiliates owns or controls an interest and that is either (i) operated by Producer or any of its Affiliates, [omitted], which produces (or is intended to produce) Dedicated Gas or otherwise is connected to (or is required to be connected to) the Gathering System in accordance with this Agreement.
Well Pad. The surface installation on which one or more Wells are located.
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ARTICLE 2
PRODUCER AND SHIPPER COMMITMENTS
PRODUCER AND SHIPPER COMMITMENTS
Section 2.1 Producer’s Dedication. Subject to Section 2.3 through Section 2.5, Producer, on behalf of itself and its Affiliates, exclusively dedicates the Dedicated Properties, the Well Pads, and the Wells to the Gathering System and this Agreement for the performance of the Services under this Agreement and commits to deliver to the Receipt Points, for Shipper’s account, all Dedicated Gas as and when produced. The Parties agree and acknowledge that the Gas produced from the Excluded Wells is not subject to the dedication and commitment made by Producer (on behalf of itself and its Affiliates) under this Agreement. Producer hereby represents and warrants that it has the appropriate authority to make the dedication and commitment hereunder on such Affiliates’ behalf.
Section 2.2 Shipper’s Commitment. Subject to Section 2.3 through Section 2.5, Shipper exclusively commits to deliver to Gatherer at the Receipt Points, as and when purchased from Producer, all Dedicated Gas for the performance of the Services under this Agreement.
Section 2.3 Conflicting Dedications. Producer, its Affiliates, and Shipper shall have the right to comply with the Previous Dedication Agreements and each of the Conflicting Dedications entered into by a non-Affiliated predecessor-in-interest to Producer that is applicable as of the date of acquisition thereof to any Dedicated Property acquired after the Effective Date (but not any Conflicting Dedication entered into in connection with such acquisition); provided, however, that Producer, its Affiliates, and Shipper shall have the right to comply with Conflicting Dedications and Producer, its Affiliates or Shipper shall have the right to extend the term of such Conflicting Dedication beyond the minimum term provided for in the document evidencing such Conflicting Dedication or allow the term of such Conflicting Dedications to extend beyond its primary or initial term pursuant to the operation of an “evergreen” or other similar provision. The Parties agree and acknowledge that the Previous Dedication Agreements shall be considered Conflicting Dedications for purposes of this Agreement. If Dedicated Gas produced from a Well on a Well Pad is subject to a Conflicting Dedication that Producer and Shipper have the right to comply with under this Section 2.3, Producer, its Affiliates, and Shipper have the right, in complying with such Conflicting Dedication, to deliver the Dedicated Gas from such Well Pad in accordance with the Conflicting Dedication.
Section 2.4 Producer’s and Shipper’s Reservations. Producer (on behalf of itself and its Affiliates) and Shipper reserve the following rights with respect to Dedicated Gas for themselves and for the operator of the relevant Dedicated Properties: (a) to operate Wells producing Dedicated Gas as a reasonably prudent operator in its sole discretion, including the right, but never the obligation, to drill New Wells, to repair and rework then-existing Wells, to renew or extend, in whole or in part, any Interest covering any of the Dedicated Properties, and to cease production from or abandon any Well or surrender or release any such Interest, in whole or in part, whether or not capable of producing oil and gas under normal methods of operation; (b) to deliver or furnish to lessors and holders of other existing similar burdens on production such Gas as is required to satisfy the terms of the applicable leases or other applicable instruments; (c) to acquire Wells connected to existing gathering systems and to continue to deliver to such gathering systems Gas produced from such Wells; provided that, to the extent that Gas from such Wells constitutes Dedicated Gas and is not previously dedicated to a third party,
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then Producer or Shipper shall deliver a Connection Notice to Gatherer with respect to any such Well not later than 30 Days after its acquisition, and thereafter shall deliver Gas to such gathering system only until Gatherer has connected such Well to the Gathering System in accordance with Section 3.3; (d) to pool, communitize or unitize Producer’s or any of its Affiliate’s Interests with respect to Dedicated Gas; provided that the Producer’s or such Affiliate’s share of Gas produced from such pooled, communitized or unitized Interests shall be committed and dedicated to this Agreement; (e) to deliver Dedicated Gas that has been temporarily or permanently released from the dedication and commitment made by Producer and Shipper under this Agreement, including pursuant to Section 3.3, Section 3.9(c), Section 7.6, Section 7.7, Section 8.1(d) or Section 8.1(e), to any Person other than Gatherer; and (f) to use Dedicated Gas for operations (including reservoir pressure maintenance and drilling or hydraulic fracturing fuel), including the ability to deliver Dedicated Gas volumes to a Receipt Point hereunder and require Gatherer to redeliver such volumes at an Upstream Delivery Point to be determined by Producer in order to service operations of a DSU within the Dedicated Acreage. [Omitted].
Section 2.5 Covenant Running with the Land. The Parties hereby irrevocably agree that the dedication and commitment made by Producer and Shipper under this Agreement be a covenant running with (a) the Dedicated Properties, as a burden on Producer’s or its applicable Affiliate’s title thereto and binding on successors-in-interest in and to the Dedicated Properties, and (b) the Facilities, as a benefit accruing to Gatherer’s title thereto and inuring to the benefit of successors-in-interest to the Facilities. Neither Producer nor any of its Affiliates shall Transfer any or all of its interest in any Dedicated Property unless (i) Producer obtains and delivers to Gatherer a written acknowledgment by the Transferee in favor of Gatherer acknowledging that the Transferred Dedicated Property shall remain subject to this Agreement in all respects and (ii) each instrument of conveyance expressly so states. Notwithstanding the foregoing, Producer and its Affiliates shall be permitted to Transfer any Dedicated Property free of the dedication and commitment made by Producer and Shipper under this Agreement and without complying with the requirements of this Section 2.5 in a Transfer in which the number of net acres of Dedicated Properties that are Transferred, when added to the total of net acres of Dedicated Properties theretofore Transferred free and clear of the dedication and commitment made by Producer and Shipper under this Agreement, does not exceed the aggregate number of net acres of Dedicated Properties acquired by Producer or any its Affiliates after the Effective Date, including in a transaction in which Dedicated Properties are exchanged for other properties located in the Dedicated Acreage that would be subject to dedication hereunder; provided, however, that any such release of Dedicated Properties from such dedication and commitment shall not include any Dedicated Gas produced from any Well that is located on a Well Pad if the other Wells on such Well Pad are or have been connected to the Gathering System (whether producing, shut-in, temporarily abandoned or which has been spud or as to which drilling, completion, reworking or other well operations have commenced) or that is located on a Well Pad if a Connection Notice has previously been delivered by Producer for the Planned CDP through which Dedicated Gas will be produced in respect of such Well Pad.
Section 2.6 Priority of Dedicated Gas. Dedicated Gas tendered at the Receipt Points on the Gathering System on any Day shall be Firm Capacity Gas. Shipper’s Gas that is not Dedicated Gas that is tendered at the Receipt Points on any Day shall be Interruptible Gas unless otherwise agreed to by Gatherer.
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ARTICLE 3
SERVICES; GATHERING SYSTEM EXPANSION AND CONNECTION OF WELLS
SERVICES; GATHERING SYSTEM EXPANSION AND CONNECTION OF WELLS
Section 3.1 Gatherer Service Commitment. Subject to and in accordance with the terms and conditions of this Agreement, and following construction and startup of the initial portion of the Gathering System, Gatherer commits to provide (or to cause Gatherer’s Designee to provide) the following services (collectively, the “Services”) to Producer and Shipper:
(a) construct and expand the Gatherer Owned Gathering System to connect the Gathering System to each CDP that aggregates any Well or Wells that is or are producing or will produce Dedicated Gas and with respect to which Producer has delivered a Connection Notice in accordance with Section 3.3;
(b) provide, maintain and operate Measurement Facilities at or downstream of the separator and production treater at each CDP;
(c) receive, or cause to be received, into the Facilities, from or for the account of Shipper, at each Receipt Point, all Gas tendered by or on account of Shipper up to the Maximum DSU Volume per Day at the Receipt Points on each DSU;
(d) receive, or cause to be received, into the Facilities, from or for the account of Shipper, at each Receipt Point, all Interruptible Gas, if any, to the extent not curtailed in accordance with Section 7.3(a);
(e) compress Gas received from or on account of Shipper into the Gathering System at the System Compressor Station(s) and install, maintain and operate, or cause to be installed, maintained and operated, the System High Pressure Lines associated therewith;
(f) subject to Section 3.4, dehydrate and process, or cause to be processed, such Dedicated Gas at the Processing Plant(s);
(g) [omitted];
(h) [omitted]; and
(i) [omitted].
Gatherer shall act as a Reasonable and Prudent Operator in performing the Services and any of its other obligations under this Agreement. Gatherer shall comply with the provisions of Exhibit J.
Section 3.2 Development Plan; Facilities Plan; Exchange and Review of Information.
(a) [Omitted].
(b) Gatherer has previously provided Producer and Shipper with a copy of its current Facilities plan describing and/or depicting the Facilities, including all pipelines, all Receipt Points and Delivery Points, and all compression, dehydration, and processing facilities
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and other major physical facilities, together with their locations, sizes and other physical specifications, operating parameters, capacities, and other relevant specifications, and together with a schedule for completing the construction and installation of the planned portions thereof, in each case as currently in existence, under construction, or planned (such plan, as updated as hereinafter provided, the “Facilities Plan”). The Facilities Plan shall state, for each planned pipeline, the estimated volume of line fill that will be required in order to put such pipeline into operation. Based on the Development Plans and such other information about the expected development of the Dedicated Properties as shall be provided to Gatherer by Producer, as well as forecast Delivery Point nominations received from Shipper from time to time, Gatherer shall periodically update the Facilities Plan. Without limiting the generality of the foregoing, Gatherer shall ensure that the Facilities Plan reflects all Planned CDPs included in each Development Plan not later than 30 Days after such Development Plan is delivered to Gatherer. Gatherer shall provide a copy of the Facilities Plan to Producer and Shipper and their respective representatives from time to time and shall make representatives of Gatherer available to discuss the Facilities Plan from time to time with Producer and Shipper and their respective representatives. Gatherer shall provide Producer and Shipper updates not less frequently than Monthly on the progress of work on all facilities necessary to connect Planned CDPs to the Gathering System, to connect the Gathering System to the Upstream Delivery Points, and to provide the Services associated with such Gas, as set forth in the then-current Facilities Plan.
(c) The Parties recognize that all information provided by Producer to Gatherer or Shipper regarding its intentions with respect to the development of the Dedicated Properties, is subject to change and revision at any time at the discretion of Producer, and that such changes may impact the timing, configuration and scope of the planned activities of Gatherer. The exchange of such information and any changes thereto shall not give rise to any rights or liabilities as among the Parties except as expressly set forth in this Agreement, and Gatherer shall determine at its own risk the time at which it begins to work on and incur costs in connection with particular Gathering System expansion projects, including the acquisition of rights of way, equipment and materials. Without limiting the generality of the foregoing, Producer has no obligation to Shipper or Gatherer under this Agreement to develop or produce any hydrocarbons from the Dedicated Properties or to pursue or complete any drilling or development on the Dedicated Properties, other than the terms specifically stated in this Agreement.
Section 3.3 Expansion of Gathering System; Connection of Wells; Delivery Points.
(a) Gatherer shall design and develop or obtain rights to use the Facilities for the purpose of providing the Services as and when needed to support the upstream development of the Planned CDPs, and Gatherer shall be obligated, at its sole cost and expense, subject to the provisions of this Agreement, to procure, construct, install, own and operate the Gatherer Owned Gathering System so as to timely connect the Planned CDPs to the Gatherer Owned Gathering System, connect the Gathering System to (or cause the Gathering System to be connected to) the High Pressure pipeline connected to the Processing Plant, if any, and connect the Gathering System to (or cause the Gathering System to be connected to) the Upstream Delivery Points, connect the Processing Plant to (or cause the Processing Plant to be connected to) the Plant Delivery Points, and timely commence providing the full scope of the Services with respect to all Dedicated Gas produced from all CDPs, including the Planned CDPs from and after their
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completion, all in accordance with this Section 3.3; provided that the foregoing shall not preclude Gatherer from also designing and developing or obtaining the rights to use the Facilities to accommodate Third Party Gas.
(b) Producer shall from time to time give notice (a “Connection Notice”) to Gatherer (with a copy to Shipper) of each CDP that Producer intends to construct and install (or a CDP that is subject to a Conflicting Dedication that has expired or will expire, or that Producer or Shipper has terminated or will terminate, prior to the applicable Completion Deadline) through which Dedicated Gas will be produced (each, a “Planned CDP”). Each Connection Notice shall set forth the target completion date for drilling and completion of the initial Well to produce through such Planned CDP (the “Target Completion Date”). Following delivery of a Connection Notice with respect to a Planned CDP, Gatherer shall cause the necessary facilities to be constructed to connect such CDP to the Gatherer Owned Gathering System and to commence the Services with respect to Dedicated Gas produced from such Planned CDP by the date that is (i) in the case of a Planned CDP that (A) is located two miles or less from the then-existing Gatherer Owned Gathering System at the time of such Connection Notice and (B) the Target Completion Date for which is during the months of May through October, 90 Days after the date of Producer’s delivery of such Connection Notice and (ii) in the case of a Planned CDP that (A) is located greater than two miles from the then-existing Gatherer Owned Gathering System at the time of such Connection Notice or (B) the Target Completion Date for which is during the months of November through April, 180 Days after the date of Producer’s delivery of such Connection Notice (such date, the “Completion Deadline”). Gatherer shall provide Producer and Shipper notice promptly upon Gatherer’s becoming aware of any reason to believe that it may not be able to connect a Planned CDP to the Gatherer Owned Gathering System by the Completion Deadline therefor or to otherwise complete all facilities necessary to provide the full scope of the Services with respect to all Dedicated Gas produced through such Planned CDP by the Completion Deadline therefor. If and to the extent Gatherer is delayed in completing and making available such facilities by a Force Majeure event or any action of Producer that is inconsistent with the cooperation requirements of Section 3.11, then the Completion Deadline for such connection shall be extended for a period of time equal to that during which Gatherer’s completion and making available of such facilities was delayed by such events or actions. If such facilities are not completed and made available by the Completion Deadline (as may be extended in accordance with Section 3.9(b)), as Shipper’s and Producer’s sole and exclusive remedies for such delay:
(i) the Dedicated Gas produced from such CDP shall be temporarily released from the dedication and commitment made by Producer and Shipper under this Agreement until such time as such CDP is connected to the Gatherer Owned Gathering System and the Gatherer Owned Gathering System is ready to receive Dedicated Gas produced through such CDP and to commence the Services with respect thereto;
(ii) if such facilities are not completed and made available by the Completion Deadline, then, at Producer’s option, to be exercised in writing within 60 Days after the Completion Deadline or any extension thereof, the Dedicated Gas produced from the CDP and any future Wells drilled within the same DSU shall be permanently released from the dedication and commitment made by Producer and Shipper under this Agreement; and
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(iii) Producer may exercise the rights described in Section 3.10.
For the avoidance of doubt, Gatherer shall in all cases use reasonable efforts to cause the necessary facilities to be constructed to connect each Planned CDP to the Gatherer Owned Gathering System and to commence the Services with respect to Dedicated Gas produced from such Planned CDP in accordance with this Section 3.3(b), and the limited remedies of Shipper and Producer described immediately above do not limit Shipper’s and Producer’s rights for a failure by Gatherer to perform its obligations.
(c) To the extent that the CDP connection is required sooner than the Completion Deadline determined as set forth above, the Parties shall meet and discuss the issues and potential additional costs associated with acceleration of such connection, and shall use reasonable efforts to mutually agree upon an accelerated connection timing. If Producer is willing to pay for the additional costs involved with accelerating a connection, Gatherer shall use reasonable efforts to complete the CDP connection within such accelerated timing.
(d) The Parties agree and acknowledge that Producer has, as of the Effective Date, delivered Connection Notices to Gatherer with respect to certain Planned CDPs set forth in the Development Plan effective as of the Effective Date. Such Connection Notices shall be deemed to have been given for each such Planned CDP on the Effective Date.
(e) Gatherer shall be obligated, at Gatherer’s or Gatherer’s Designee’s cost, to provide connections to (or cause connections to be provided to) the Upstream Delivery Points, Residue Delivery Points and NGL Delivery Points set forth on Exhibit C or within the Facilities Plan. If Shipper specifies that Dedicated Gas, Residue Gas or NGLs allocated to Dedicated Gas are to be delivered to any delivery point not described on Exhibit C or within the Facilities Plan and that is not at such time connected to the Facilities, then Gatherer shall, at Shipper’s sole actual cost, risk and expense, provide a connection to (or cause a connection to be provided to) such delivery point. Such costs shall be allocated pro rata based on volume utilization by Shipper and each other third party shipper who requests utilization of such additional delivery point. Gatherer shall proceed with due diligence and as a Reasonable and Prudent Operator, to obtain (or cause to be obtained) the necessary governmental authorizations and to enter into (or cause Gatherer’s Designee to enter into) the necessary third party agreements (on terms acceptable to Gatherer in its sole discretion) to connect the Facilities to each such new delivery point. All such delivery points shall be provided with all interconnection facilities and other applicable facilities (including any Measurement Facilities), and with sufficient capacities, necessary to permit Dedicated Gas or NGLs allocated to Dedicated Gas to be redelivered at such delivery point in accordance with this Agreement. Subject to the foregoing, Gatherer shall connect each CDP to the Gatherer Owned Gathering System such that Gas from such CDP can be redelivered to the Upstream Delivery Points and Residue Delivery Points described in the Facilities Plan, and such that NGLs extracted from such Gas can be delivered to the NGL Delivery Points described in the Facilities Plan. Upon completion of the connection of the Facilities to such new delivery point pursuant to this Section 3.3(e) and such connection becoming operational, the point of interconnection between the Gatherer Owned Gathering System and such new delivery point shall thereafter be a Delivery Point under this Agreement. Such new Delivery Point shall be coordinated between Gatherer and Gatherer’s Designee subject to the relevant contract granting Gatherer to use the portion of the Facilities owned or controlled
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by such Gatherer’s Designee. The Parties shall discuss Shipper’s plans and timing for all new Delivery Point connections on a Monthly basis. Subject to Section 3.1(g), Gatherer shall have the right to flow volumes to the Processing Plant(s) prior to delivering volumes to any Upstream Delivery Point as long as such prioritization of flow does not cause the curtailment of Shipper’s volumes.
Section 3.4 Gas Processing.
(a) [Omitted].
(b) [Omitted].
Section 3.5 Compression Facilities. The Facilities Plan shall describe the compression facilities that will be required to compress Dedicated Gas in order for all of the Receipt Points on the Gathering System to be operated [omitted], such lower pressure as may be requested by Producer or Shipper and mutually agreed to by Gatherer or Gatherer’s Designee from time to time (“System Compressor Stations”). Gatherer shall install, operate and maintain (or use reasonable efforts to cause to be installed, operated and maintained) each System Compressor Station as a Reasonable and Prudent Operator. For the avoidance of doubt, Gatherer or Gatherer’s Designee shall have the right at any time to add additional compressor stations to the Gathering System, and to add compression capacity at any System Compressor Station in addition to the capacity that is reflected in the Facilities Plan, as it deems necessary or appropriate to provide the Services and such services as it is providing in respect of Third Party Gas.
Section 3.6 High Pressure Services. The Facilities Plan shall include the High Pressure gathering pipelines that Gatherer or Gatherer’s Designee determines are necessary or appropriate to connect the Gathering System to the Upstream Delivery Points and to redeliver the volumes of Dedicated Gas to such Delivery Points in the most efficient manner (“System High Pressure Lines”). Acting as a Reasonable and Prudent Operator, Gatherer or Gatherer’s Designee shall install each such System High Pressure Line, together with the associated System Compressor Station(s), and shall operate and maintain each System High Pressure Line with the capability to redeliver the Dedicated Gas at pressures required by the Delivery Points. For the avoidance of doubt, Gatherer or Gatherer’s Designee shall have the right at any time to add additional High Pressure gathering pipelines to the Gathering System as it deems necessary or appropriate to provide the Services and such services as it is providing in respect of Third Party Gas.
Section 3.7 Gas Removed for Lease Operations. Gatherer shall use commercially reasonable efforts to accommodate, at the actual cost and expense of Producer, any request by Producer or Shipper to redeliver to Shipper any Gas that has been received into the Gatherer Owned Gathering System prior to a System Compressor Station thereon and that Producer desires to use in lease operations, including for drilling, gas lift and hydraulic fracturing fuel. Producer and Shipper shall be responsible for the construction, ownership and operation of facilities to transport such Gas from the point of redelivery of such Gas from the Gathering System to the lease sites where such Gas will be used, and for the reimbursement of any capital costs incurred by Gatherer to install and connect such point of redelivery. Notwithstanding
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anything herein to the contrary, Gatherer makes no representations or warranties as to the quality of such redelivered Gas to the extent Gatherer redelivers such Gas as a Reasonable and Prudent Operator, and, notwithstanding Section 10.2(c), Producer and Shipper shall be solely liable for any claims or losses arising out of or related to such redelivered Gas from and after the outlet flange of the delivery facilities at which such Gas is redelivered to Producer. For the avoidance of doubt, any and volumes of such redelivered Gas shall be charged the Gathering Fee, but shall neither be compressed nor processed or charged the Compression Fee nor the Processing Fee.
Section 3.8 Timing for Completion and Placement into Service of Initial Gathering System. As of the Effective Date, Gatherer shall have completed, and shall have caused Gatherer’s Designee to complete, the initial design and preliminary engineering of the initial portion of the Gathering System. In addition to the Connection Notice as provided in Section 3.3(b) above, Producer shall provide Gatherer with 345 days prior written notice of the requirement for Gatherer to construct, startup and operate (or cause to be constructed, started up and operated) the initial Gathering System at Gatherer’s and Gatherer’s Designee’s, as applicable, sole cost and expense. Notwithstanding anything contained herein to the contrary, Gatherer shall have no obligation to provide the Services to Producer and Shipper hereunder unless and until Producer provides notice to Gatherer pursuant to this Section 3.8 for Gatherer to construct and startup the initial Gathering System.
Section 3.9 Right of Way and Access.
(a) Gatherer is responsible for the acquisition of rights of way, crossing permits, licenses, use agreements, access agreements, leases, fee parcels and other rights in land necessary to construct, own and operate the Gatherer Owned Gathering System, and all such rights in land shall be solely for use by Gatherer and shall not be shared with Producer, except as otherwise agreed by Gatherer; provided that Producer agrees to grant (or to cause its Affiliates to grant), without warranty of title, either express or implied, to the extent that it (or any of its Affiliates) has the right to do so without the incurrence of expense, an easement and right of way upon the lands covered by the Dedicated Properties, for the sole purpose of installing, using, maintaining, servicing, inspecting, repairing, operating, replacing, disconnecting and removing all or any portion of the Gatherer Owned Gathering System, including any pipelines, meters and other equipment necessary for the performance of this Agreement; provided, further, that the exercise of these rights by Gatherer shall not unreasonably interfere with Producer’s (or its Affiliates’) lease operations or with the rights of owners in fee, and will be subject to Producer’s (or its Affiliates’) safety and other reasonable access requirements applicable to Producer’s (or its Affiliates’) personnel. Producer (and its Affiliates) shall not have a duty to maintain the underlying agreements (such as leases, easements and surface use agreements) that such grant of easement or right of way to Gatherer is based upon, and such grants of easement or right of way will terminate if Producer (or its Affiliate) loses its rights to the property, regardless of the reason for such loss of rights. Notwithstanding the foregoing, (i) Producer will assist Gatherer to secure replacements for such terminated grants of easement or right of way, in a manner consistent with the cooperation requirements of Section 3.11, (ii) to the extent that Producer agrees that Gatherer’s Measurement Facilities may be located on Producer’s (or its Affiliate’s) Well Pad sites, Producer shall be responsible for obtaining (or causing to be obtained) any necessary rights to locate such Measurement Facilities on such Well Pad sites and (iii) Producer shall use reasonable efforts to involve Gatherer in Producer’s (or its applicable Affiliate’s) negotiations
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with the owners of lands covered by the Dedicated Properties so that Producer’s (or such Affiliate’s) surface use agreements and Gatherer’s rights of way with respect to such lands can be concurrently negotiated and obtained.
(b) If Gatherer cannot obtain the rights of way (on terms and conditions reasonably acceptable to Gatherer after diligent pursuit thereof) necessary to connect any Planned CDP within 45 Days of delivery of a Connection Notice, then Gatherer shall so notify Producer in writing (the “Easement Notice”) within 45 Days of delivery of the Connection Notice. Producer shall have the right (but not the obligation) to obtain (or cause to be obtained), at its sole cost and expense, such rights of way generally in the format of Gatherer’s standard right of way agreement within 45 Days of delivery of such Easement Notice. Gatherer’s form of right of way agreement is attached as Exhibit E. The right of way agreement utilized by Producer (or its applicable Affiliate) can have modifications to the Exhibit E format as long as such modifications do not materially change or reduce the rights or obligations under such right of way agreement. If Producer obtains (or causes to be obtained) such rights of way in accordance with the immediately preceding sentence, Producer shall assign (or cause to be assigned) such right of way to Gatherer, and Gatherer’s connection obligations for the applicable CDP shall continue in accordance with the terms of this Agreement; provided, however, that the time required for Gatherer to connect the applicable CDP shall be extended by a number of Days commencing on the date of delivery of the Easement Notice and ending on the date that Gatherer receives from Producer the assignment of all such rights of way so obtained by or for Producer (together with executed originals of all such rights of way). In such event, Gatherer shall pay Producer for such rights of way an amount per rod equal to the average price per rod paid by Gatherer for the purchase of rights of way in the Dedicated Acreage during the preceding 12 Month period. If Gatherer has not purchased rights of way within the Dedicated Acreage during the previous 12 Months, then Gatherer shall pay Producer for such rights of way an amount per rod equal to the amount per rod paid by Gatherer under its most recent purchase of rights of way in the Dedicated Acreage.
(c) In the event that Producer fails to obtain (or cause to be obtained) such rights of way during such 45 Day period described in the second sentence of Section 3.9(b), Producer shall have the option, upon written notice to Gatherer, to permanently release the entire DSU or any portion thereof associated with the Wells connected to such CDP from the dedication and commitment made by Producer and Shipper under this Agreement.
Section 3.10 Step-In Rights.
(a) Except with respect to a Planned CDP affected by Force Majeure declared by Gatherer (for which the dates for completion of a connection to a Planned CDP by the Completion Deadline or other service failure described in this Section 3.10 shall be deemed extended day-for-day by the duration of such Force Majeure event and for which a Step-In Right (as defined below) would not apply unless such Force Majeure exceeds either 30 consecutive Days or 45 non-consecutive days within any 365 Day period), in the event that Gatherer (i) fails to complete a connection to a Planned CDP by the Completion Deadline therefor, (ii) fails to provide the Services pursuant to the terms and conditions of this Agreement up to the Maximum DSU Volume, or (iii) fails to timely commence, diligently pursue and/or conduct the activities and operations required by Gatherer under this Agreement in a good and workmanlike manner as
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reasonably determined by Producer, then within 30 Days of Producer’s determination of the failure in clause (i), (ii) or (iii) above, Producer shall notify Gatherer in writing (such notice, a “Step-In Notice”) of such failure. Following receipt by Gatherer of such Step-In Notice, Gatherer will, within five Days following receipt of such Step-In Notice, respond to Producer with a detailed plan to cure the failure and the estimated timeline for completion thereof. Producer may, after receiving or failing to receive a response to such Step-In Notice from Gatherer within such five Day period, and within 15 Days thereafter, notify Gatherer in writing that Producer, either itself or through its designated Affiliate or representative, not earlier than the 30th Day after delivery of the applicable Step-In Notice and not later than the 45th Day after delivery of the applicable Step-In Notice, will (A) assume control of any CSA as necessary to cure the applicable failure including (1) payment of any past due amount then due to any Contractor by Gatherer as necessary to effectuate prompt completion of any delayed work, if applicable, and (2) payment of a bonus or incentive payment to such Contractor of up to 20% of the applicable CSA as necessary to effectuate prompt completion of the work by such Contractor, or (B) displace such Contractor for purposes of such work and itself or through its designated Affiliate or representative, cause completion of all work to cure the applicable failure (each, a “Step-In Right”). Payment by or commitment of Producer to a Contractor of any past due amount or bonus or incentive payment permitted under this Section 3.10(a) shall be for the sole account of Gatherer, and Gatherer shall reimburse Producer for any sums paid by Producer as provided in Section 3.10(f).
(b) Exercise of the Step-In Right shall confer to Producer no right of agency from Gatherer, and Producer shall have no right to (i) sell, alienate or encumber or permit any encumbrance of any property of Gatherer or (ii) unreasonably interfere with or delay Gatherer’s or Gatherer’s Designee’s other activities with respect to the Gathering System. Until Producer exercises the Step-In Right, Gatherer shall continue to exercise commercially reasonable efforts to complete the delayed connection or cure the other failure described above, as applicable, as soon as possible under the circumstances.
(c) Failure of Producer to timely exercise the Step-In Right with respect to a particular Gatherer failure within the period referenced in Section 3.10(a) shall constitute Producer’s waiver of the Step-In Right with respect thereto, provided that waiver of the Step-In Right with respect to one delayed connection or other failure shall not be construed as a waiver of the Step-In Right with respect to any other delayed connection or other failure, as long as the Step-In Right with respect thereto is timely exercised.
(d) Notwithstanding anything to the contrary in this Agreement, the Parties agree and acknowledge that nothing in this Section 3.10 shall preclude Producer or Shipper from asserting a claim against Gatherer or terminating this Agreement for breach or nonperformance of this Agreement by Gatherer.
(e) Notwithstanding any provision in this Agreement to the contrary, Producer shall have no obligation to exercise any Step-In Rights.
(f) To the extent that displacement of a Contractor or exercise of control of a CSA by Producer results in a change or increased cost to Gatherer under a CSA, such changes or increased costs shall be solely for the account of Gatherer, and Gatherer shall reimburse Producer
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and its Affiliates for any such changes or increased costs. In addition to Producer’s rights under Section 3.10(a), in the event that Producer exercises a Step-In Right, Gatherer shall reimburse Producer and its Affiliates for all reasonable, documented and direct, out-of-pocket costs (including reasonable attorneys’ fees) incurred in the exercise of the Step-In Right, not later than 30 Days after Gatherer’s receipt of written substantiation of amounts owed hereunder.
(g) In the event that Producer exercises a Step-In Right, Producer shall not retain control of a Contractor or performance of necessary work for longer than reasonably necessary to effectuate completion and cure thereof.
Section 3.11 Cooperation. Because of the interrelated nature of the actions of Producer and Gatherer required to obtain the necessary Permits from the appropriate Governmental Authorities and the necessary consents, rights of way and other authorizations from other Persons necessary to drill and complete each Well and construct the required extensions of the Gatherer Owned Gathering System to each Planned CDP, Producer and Gatherer agree to work together in good faith to obtain such Permits, authorizations, consents and rights of way as expeditiously as reasonably practicable. Producer and Gatherer further agree to cooperate with each other and to communicate regularly regarding their efforts to obtain such Permits, authorizations, consents and rights of way.
ARTICLE 4
TERM
TERM
Section 4.1 Term. This Agreement shall become effective on the Effective Date and, unless terminated earlier by mutual agreement of the Parties or otherwise in accordance with the term of this Agreement, shall continue in effect for a period of 15 Contract Years, and thereafter continue from Contract Year to Contract Year until such time as this Agreement is terminated, upon 270 Days’ prior notice from the terminating Party to the other Party, effective as of the end of the 15th Contract Year or any Contract Year thereafter, as applicable.
Section 4.2 Post-Termination. If this Agreement is terminated pursuant to the terms and conditions of this Agreement on or after December 31, 2036, then Shipper shall have the option (to be exercised by providing written notice to Gatherer prior to the termination of this Agreement) to continue to receive the Services or a portion of the Services, under a new agreement, for all or any portion of its volumes of Gas on a year-to-year basis on the same terms and conditions as the most favorable terms and conditions under a then-effective agreement with any third party pursuant to which Gatherer provides a basket of services for an initial term (excluding any renewals or extensions of any kind) of at least seven years plus one Day for volumes of Gas utilizing any segment of the Facilities located within the Dedicated Acreage (other than any pipeline facilities physically connected with or independent of such segment after the Effective Date, in each case, in connection with an acquisition, joint venture, or partnership by and between Gatherer and a third party), that are the same or substantially similar in nature to the basket of Services during the term hereunder, unless and until such third party agreement is terminated. For avoidance of doubt, the Services Gatherer is to offer Shipper in accordance with the proceeding sentence shall only apply to Services on the Gathering System.
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If the option to extend the term of this Agreement on a year-to-year basis pursuant to this Section 4.2 is exercised, any obligation of Gatherer to continue to provide the Services pursuant to such option shall not extend beyond December 31, 2050 in any event. Gatherer shall provide copies to Shipper of any such third party agreements applicable to volumes of Gas accessing the Facilities upon any notice of termination of this Agreement (whether such notice is delivered by Gatherer, Producer or Shipper); provided, however, that to the extent Gatherer is prohibited by an obligation of confidentiality from disclosing any such third party agreement to Shipper, then (a) Gatherer shall not be obligated to disclose such agreement to Shipper until Gatherer has obtained the right to disclose such agreement and (b) Gatherer shall exercise reasonable efforts to obtain the right to disclose such agreement to Shipper.
Section 4.3 Survival. Article 1, this Article 4, Section 10.5, Section 11.8, Article 12, Article 13, Article 15, Article 16, Article 17 and Article 18 shall survive termination or expiration of this Agreement. Additionally, any other indemnity and defense obligations shall survive the termination of this Agreement for the applicable statutory limitations period.
ARTICLE 5
FEES AND CONSIDERATION
FEES AND CONSIDERATION
Section 5.1 Fees. Subject to the other provisions of this Agreement, Shipper shall pay Gatherer each Month in accordance with the terms of this Agreement, for all Services provided by Gatherer during such Month, an amount equal to the sum of the fees set forth on Exhibit J (collectively, the “Fees”).
ARTICLE 6
ALLOCATIONS
ALLOCATIONS
Section 6.1 Allocation of Residue Gas.
(a) [Omitted].
(b) [Omitted].
(c) [Omitted].
Section 6.2 Allocation of NGLs.
(a) [Omitted].
(b) [Omitted].
Section 6.3 Fuel, Lost and Unaccounted for Gas and NGL Shrink. [Omitted].
Section 6.4 Allocation of Fuel. As a subset of the FL&U calculation, Gatherer shall calculate and provide to Shipper a break out of the volume and percentage of FL&U that was Fuel and that was Lost and Unaccounted For Gas.
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ARTICLE 7
CERTAIN RIGHTS AND OBLIGATIONS OF PARTIES
CERTAIN RIGHTS AND OBLIGATIONS OF PARTIES
Section 7.1 Operational Control of Gatherer’s Facilities. Gatherer or Gatherer’s Designee, as applicable, shall design, construct, own, operate and maintain the Facilities at its sole cost and risk. Gatherer shall be entitled to full and complete operational control of its facilities and shall be entitled to schedule deliveries and to operate and reconfigure its facilities in a manner consistent with its obligations under this Agreement.
Section 7.2 Maintenance. Gatherer or Gatherer’s Designee, as applicable, shall be entitled, without liability, to interrupt the Facilities’ performance hereunder to perform necessary or desirable inspections, pigging, maintenance, testing, alterations, modifications, expansions, connections, repairs or replacements to its facilities as Gatherer deems necessary (“Maintenance”), with reasonable advance notice provided to Producer and Shipper, except in cases of emergency where such notice is impracticable or in cases where the operations of Producer and Shipper will not be affected. Gatherer shall use reasonable efforts to schedule (or cause to be scheduled) any Maintenance to minimize the effect on providing the Services pursuant to this Agreement. Before the beginning of each calendar year, Gatherer shall provide Shipper in writing with a projected schedule of the Maintenance to be performed during the year and the anticipated dates of such Maintenance.
Section 7.3 Capacity Allocations for the Facilities. Subject to the capacity allocations set forth in this Section 7.3, Gatherer has the right to contract with other Persons for the delivery of Third Party Gas to the Facilities, including the delivery of Firm Capacity Gas. If the volume of Gas available for delivery into any System Segment exceeds the capacity of such System Segment at any point relevant to the provision of the Services to Shipper hereunder, then Gatherer shall interrupt or curtail receipts of Gas in accordance with the following:
(a) First, Gatherer shall curtail all Interruptible Gas prior to curtailing Firm Capacity Gas.
(b) Second, if additional curtailments are required beyond Section 7.3(a), Gatherer shall curtail Firm Capacity Gas. In the event Gatherer curtails some, but not all, Firm Capacity Gas on a particular Day, Gatherer shall allocate the capacity of the applicable point on the relevant System Segment available to such shippers of Firm Capacity Gas, including Dedicated Gas, on a pro rata basis based on the most recent previous Month’s Receipt Point volumes and allowing Gatherer in its sole discretion to include estimated volume from New Wells that are connected to a Receipt Point that were not producing during the previous Month.
[Omitted].
Section 7.4 Arrangements After Redelivery. [Omitted].
Section 7.5 Line Fill. To the extent that it is necessary for Gatherer to commence operations of new segments of the Gathering System for Gas to be used as line fill, Shipper shall provide such line fill to Gatherer on a pro rata basis based on the most recent previous Month’s Receipt Point volumes, but not to exceed for any pipeline the volume of such line fill specified for such pipeline in the Facilities Plan; provided that Gatherer must act as a Reasonable and
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Prudent Operator when allocating volumes to be used as line fill. All line fill will be redelivered to Shipper as determined by Gatherer in Gatherer’s reasonable discretion but no later than 45 days after termination of this Agreement.
Section 7.6 Temporary Releases. In addition to any other rights and remedies available to Producer or Shipper under this Agreement or at law or in equity, if Gatherer fails or is unable or unwilling for any reason (including Force Majeure declared by Gatherer) – other than a breach of this Agreement by Producer or Shipper, Force Majeure declared by Producer or Shipper, or Maintenance – to accept all volumes of Dedicated Gas tendered by or on account of Shipper pursuant to this Agreement and provide the Services in accordance therewith, then the volumes of Dedicated Gas in excess of what Gatherer is willing and able to accept shall be temporarily released from the dedication and commitment made by Producer and Shipper under this Agreement. Producer and Shipper may immediately deliver such volumes to any Person other than Gatherer, and Producer and Shipper shall have the right to enter into commitments to deliver such volumes of Dedicated Gas to other third party gatherers and/or processors, such commitments to be for no longer than reasonably necessary under the circumstances, but in no event longer than the period ending on the first Day of the first Month after the date on which Gatherer again accepts all volumes of Dedicated Gas tendered by or on account of Shipper pursuant to this Agreement and provides the Services in accordance therewith.
Section 7.7 Permanent Releases. [Omitted].
ARTICLE 8
PRESSURES AT RECEIPT POINTS AND DELIVERY POINTS
PRESSURES AT RECEIPT POINTS AND DELIVERY POINTS
Section 8.1 Pressures at Receipt Points.
(a) Subject to the provisions of this Section 8.1, Shipper shall deliver or cause to be delivered Gas to each Receipt Point at sufficient pressure to enter the Gatherer Owned Gathering System against its operating pressure; [omitted].
(b) [Omitted].
(c) [Omitted].
(d) [Omitted].
(e) [Omitted].
(f) [Omitted].
Section 8.2 Pressures at Delivery Points. [Omitted].
Section 8.3 Shipper Facilities.
(a) Shipper, at its own expense, shall construct, equip, maintain, and operate all facilities necessary to deliver Dedicated Gas to Gatherer at the Receipt Points. Shipper shall install and maintain sufficient pressure regulating equipment upstream of the Receipt Points in
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order to keep the pressure of the Gas delivered to Gatherer at the Receipt Points from exceeding the maximum allowable operating pressure at the applicable Receipt Point, as determined by Gatherer in its sole discretion and stated in the Facilities Plan.
(b) Shipper shall have the right to install facilities and flow volumes attributable to Shipper’s interests in operated and non-operated wells outside, but on DSUs that are contiguous with, the Dedicated Acreage, allowing such Wells to flow into existing Receipt Points or to new Receipt Points mutually agreed between Shipper and Gatherer where Gatherer will provide at Gatherer’s cost a meter and tap. Shipper shall provide a list of wells from outside, but on DSUs that are contiguous with, the Dedicated Acreage that will be connected to existing CDPs or to new CDPs in accordance with this Section 8.3(b).
(c) Shipper shall utilize conventional mechanical oil-gas separators installed by Producer upstream from the Receipt Point(s) to assist in keeping the Gas delivered hereunder entirely free of water, crude oil and/or Condensate in the liquid phase and other objectionable substances.
ARTICLE 9
NOMINATION AND BALANCING
NOMINATION AND BALANCING
Section 9.1 Gatherer Notifications. On or before the 17th Day prior to the end of each Month, Gatherer shall provide written notice to Shipper of Gatherer’s good faith estimate of any capacity allocations or curtailments for any System Segment, if any, that, based on then currently available information, Gatherer anticipates will be required or necessary during the next Month, including as a result of any Maintenance. Gatherer shall use all reasonable efforts to provide 48 hours advance notice of any actual event requiring allocation or curtailment, including Maintenance. On or before the 17th Day prior to the end of each Month, Gatherer shall notify Shipper of the estimated FL&U expected to be used in the Facilities for the following Month, expressed as a percentage of the MMBTUs of Gas delivered at the Receipt Points and the estimated recovery percentage by NGL component (using the allocation methodology set forth in Section 6.1 and Section 6.2), after taking into consideration the anticipated operational efficiencies and operational mode of the Facilities.
Section 9.2 Nominations. [Omitted].
Section 9.3 Balancing. Gatherer will maintain records of any Daily and Monthly variances (“Imbalances”) between the volume of Dedicated Gas received at the Receipt Points and the volumes of Residue Gas delivered at the Delivery Points (after FL&U and NGL Shrink allocated to Shipper). Shipper shall make such changes in its nominations as Gatherer may from time to time reasonably request to maintain Daily and Monthly balances or to correct an Imbalance. Shipper shall reimburse Gatherer for any cost, penalty or fee arising from any Imbalance assessed against Gatherer or Gatherer’s Designee by any Person receiving Dedicated Gas or NGLs downstream of the Delivery Points, except to the extent such Imbalance was caused by Gatherer or another shipper utilizing the Facilities. Upon the termination of this Agreement or at such other time as Shipper and Gatherer agree, Shipper and Gatherer shall volumetrically balance or cash out any cumulative Imbalance using the applicable Index Price for the prior Month.
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ARTICLE 10
QUALITY
QUALITY
Section 10.1 Receipt Point Gas Quality Specifications. Gas delivered by or for the account of Shipper to each Receipt Point shall meet the following specifications (collectively, the “Gas Quality Specifications”):
(a) less than two mole percent of carbon dioxide;
(b) not more than 1/4 grain H2S per 100 Cubic Feet, such 1/4 grain H2S per 100 Cubic Feet specification shall apply based on the aggregate volume weighted average Receipt Point quality as calculated upstream of each System Compressor Station [omitted];
(c) not more than 1/4 grain of mercaptan sulphur per 100 Cubic Feet, such 1/4 grain mercaptan sulphur per 100 Cubic Feet specification shall apply based on the aggregate volume weighted average Receipt Point quality as calculated upstream of each System Compressor Station;
(d) a Gross Heating Value per Cubic Foot of not less than 1,100 BTU;
(e) not more than a total of three mole percent of total inert or non-hydrocarbon gases (nitrogen, carbon dioxide, etc.) and contain no more than 2.0% by volume carbon dioxide; provided that for purposes of the total inert specification and carbon dioxide, such three mole percent total inert specification and 2.0% carbon dioxide specification shall apply based on the aggregate volume weighted average Receipt Point quality;
(f) not more than two grains of total sulfur per 100 Cubic Feet (including hydrogen sulfide and mercaptan), such two grains of total sulfur per 100 Cubic Feet specification shall apply based on the aggregate volume weighted average Receipt Point quality as calculated upstream of each System Compressor Station;
(g) an oxygen content not in excess of 0.001% by volume; provided that the Parties shall use every reasonable effort to keep the gas free from oxygen;
(h) a temperature not to exceed 100 degrees Fahrenheit; and
(i) free of water, crude and/or Condensate in the liquid phase, impurities and other objectionable substances;
provided that to the extent the quality specifications required from time to time by the Downstream Pipelines receiving Residue Gas are more restrictive than any of the foregoing requirements (except for water vapor content, Gross Heating Value and hydrocarbon dew point for such Downstream Pipelines), then the quality specifications required by the Downstream Pipeline shall apply instead of the foregoing applicable specification. Neither Gatherer nor Shipper will propose or support any changes to the Downstream Pipeline specifications that would result in more restrictive specifications. [Omitted].
Section 10.2 Non-Conforming Gas.
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(a) Gatherer shall test and monitor the Gas tendered by or for the account of Shipper at the Receipt Points as a Reasonable and Prudent Operator to ensure that it meets the Gas Quality Specifications in accordance with Section 11.3(b). If Gatherer determines at any time that any Gas tendered by or for the account of Shipper at any Receipt Point does not meet the Gas Quality Specifications, then Gatherer shall have the right, at its sole option and effective immediately upon notice to Shipper, to refuse to accept such Gas.
(b) If Shipper determines or otherwise becomes aware at any time prior to delivery that any Gas that will be tendered by or for the account of Shipper at any Receipt Point will not meet the Gas Quality Specifications, then Shipper shall provide written notice to Gatherer. Upon receipt of such notice, if Gatherer nevertheless accepts such Gas, then Producer and Shipper shall not be liable for any claims or losses arising out of or related to delivery of such Gas, including any damages or losses downstream of the applicable Receipt Point(s).
(c) Producer and Shipper shall not be liable for any claims or losses arising out of or related to delivery of Gas that does not meet the Gas Quality Specifications, including any damages or losses downstream of the applicable Receipt Point(s); provided that Shipper shall be liable for such claims or losses if Shipper determines or otherwise becomes aware at any time prior to delivery that any Gas that will be tendered by or for the account of Shipper at any Receipt Point will not meet the Gas Quality Specifications and Shipper fails to deliver written notice to Gatherer pursuant to Section 10.2(b).
Section 10.3 Delivery Point Gas Quality Specifications. [Omitted].
Section 10.4 Delivery Point NGL Quality Specifications. [Omitted].
Section 10.5 Greenhouse Gas Emissions. Notwithstanding anything contained in this Agreement to the contrary, in the event there is an enactment of, or change in, any Applicable Law after the Effective Date which, in Gatherer’s reasonable determination, results in (a) a Governmental Authority requiring Gatherer to hold or acquire emission allowances or their equivalent related to the carbon dioxide content or emissions or the greenhouse gas content or emissions attributable to Dedicated Gas and/or the gathering, compression, or processing of such Gas or entrained gas (collectively, “Shipper’s GHG Emissions”), or (b) Gatherer incurring any costs or expenses attributable to Dedicated Gas, including any costs or expenses for disposal or treating of carbon dioxide attributable to such Gas, or any other additional economic burden being placed on Gatherer, in connection with or related to Shipper’s GHG Emissions, including any tax, assessment, or other cost or expense (collectively, “Emissions Charges”), then (i) Shipper and Producer will use reasonable efforts to provide any required emissions allowances or their equivalent to Gatherer in a timely manner (and notwithstanding anything else provided to the contrary in Section 15.1 and Section 15.2, Shipper and Producer shall release, indemnify, defend and hold Gatherer harmless from and against all claims and losses, including any expenses incurred by Gatherer in acquiring such allowances in the marketplace, arising out of or related to the failure to timely provide any such required emission allowances or their equivalent), and (ii) Shipper and Producer shall be fully responsible for such Emissions Charges and shall reimburse Gatherer for any Emissions Charges paid by Gatherer within ten Days of receipt of Gatherer’s invoice.
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ARTICLE 11
MEASUREMENT EQUIPMENT AND PROCEDURES
MEASUREMENT EQUIPMENT AND PROCEDURES
Section 11.1 Equipment.
(a) Gatherer shall install, own, operate and maintain Measurement Facilities to measure Gas at all the Receipt Points, which Measurement Facilities shall consist of an electronic flow meter. Gatherer shall (or shall cause Gatherer’s Designee to) install, own, operate and maintain (or cause to be installed, owned, operated and maintained) Measurement Facilities at the Delivery Points for Gas and NGLs. Measurement Facilities at the Receipt Points shall meet current industry standards for custody transfer measurement. Shipper shall have the right to install check Measurement Facilities upstream of each Receipt Point, including the right to install check measurement equipment on Gatherer’s meter tubes and orifice unions.
(b) Gatherer shall provide Shipper with on-site and remote access to each Receipt Point meter site at which Shipper may access volume, temperature and pressure information on a near real-time basis; provided, however, that Gatherer shall only be obligated to provide such remote access to Shipper for those Receipt Points where Gatherer has installed the necessary facilities (including all communications infrastructure (e.g., towers, antennas, radios and repeaters) to gather such information) for Gatherer to remotely access such information on a near real-time basis. Gatherer shall use reasonable efforts to install such necessary facilities to allow the Parties to remotely access such information on a near real-time basis. For the avoidance of doubt, however, Shipper shall not interfere with or otherwise calibrate or adjust any of Gatherer’s facilities or equipment located at such Receipt Point meter sites.
(c) At Shipper’s request, for each CDP, Gatherer shall provide a meter for each Producer production separator and treater and a meter for each test separator and treater installation at a CDP. For example, if Producer has a production separator and production treater along with a test separator and test treater at a CDP, Gatherer shall provide two meters at Shipper’s request.
(d) For each Receipt Point where Shipper’s Gas is being delivered from a CDP where 120 volt AC power is available and being utilized by Producer, and where Shipper is accessing real-time data through a port on the meter provided by Gatherer, Producer shall provide, at its cost, 120 volt AC power to Gatherer for use strictly for the Measurement Facilities at such Receipt Point.
Section 11.2 Measurement Standards. The following standards shall apply to the measurement of Gas hereunder:
(a) the Receipt Points shall be measured by orifice meters with all fundamental constants, observations, records and procedures involved in the determination and/or verification of the quantity and other characteristics of the Gas delivered hereunder in accordance with the standards prescribed in the latest edition of A.G.A. Report No. 3 (ANSI/API 2530) “Orifice Metering of Natural Gas” with any revisions, amendments or supplements as may be mutually acceptable to Shipper and Gatherer;
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(b) the measurements of the volume and quality of all Gas, Residue Gas and NGLs, as applicable, delivered at the Delivery Points will be conducted in accordance with the regulations and procedures of the applicable Downstream Pipeline at such Delivery Points; and
(c) Gatherer shall utilize consistent measurement practices with all shippers connected to the Gatherer Owned Gathering System to insure a consistent allocation process.
Section 11.3 Gas Measurement.
(a) The unit of volume for measurement of Gas delivered hereunder shall be one MCF at a base temperature of 60 degrees Fahrenheit and at a pressure base of 14.73 psia without adjustment for water vapor content. It is agreed that for the purposes of measurement and computations hereunder, (i) the absolute atmospheric (barometric) pressure shall be assumed to be 14.73 psia regardless of the actual elevation or location of the CDP above sea level or of a variation of barometric pressure from time to time and (ii) all measurements and testing performed hereunder shall all be made by Gatherer in accordance with applicable rules, regulations and orders.
(b) Gatherer shall procure or cause to be procured a sample of Gas at each Receipt Point and analyze the samples by chromatographic analysis to determine the component content (mole percent), specific gravity and the Gross Heating Value thereof. These determinations shall be made utilizing the following standards: (i) Gas Processors Association Obtaining Natural Gas Samples for Analysis by Gas, Publication No. 2166 as amended or supplemented from time to time, (ii) Gas Processors Association Analysis for Natural Gas and Similar Gaseous Mixtures by Gas Chromatography, Publication No. 2161 as amended or supplemented from time to time, or (iii) any other tests that are mutually agreed by Shipper and Gatherer. Representative spot samples or continuous samplers shall be utilized as determined by Gatherer in accordance with standard industry practice to reasonably assure accurate determinations, but at least twice per year or at any time any Party requests a sample due to potential changes in Receipt Point volume quality. The Gross Heating Value and specific gravity so determined by Gatherer in accordance with this Section 11.3(b) shall be used in computations in the measurement of Gas received by Gatherer from the start of the Month in which the sample was collected until the next test.
(c) Gatherer shall receive Shipper’s Gas at the Receipt Points on an “As Delivered” BTU basis at actual flowing conditions. For purposes of this Section 11.3(c), “As Delivered” shall refer to the actual water vapor content measured at such point, to be used for calculating Gross Heating Value. For such purposes, Gas containing seven pounds or less of water vapor per MMCF shall be deemed to be delivered on a dry BTU basis at actual flowing conditions, and any Gas containing more than seven pounds of water vapor per MMCF shall be deemed to be delivered on a wet BTU basis at actual flowing conditions, where wet BTU basis shall mean to be assumed to be fully saturated with water vapor at the temperature and pressure at the point of measurement.
(d) The temperature of Gas shall be determined by means of a recording thermometer recording the temperature of such Gas flowing through each measurement meter.
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The average temperature to the nearest 0.01 degree Fahrenheit, obtained while Gas is being delivered, will be the applicable flowing Gas temperature for the period under consideration.
(e) The deviation of the Gas from Ideal Gas Laws shall be determined in accordance with the A.G.A. Par Research Project NX-19 Report “Manual for the Determination of Super compressibility Factors for Natural Gas”, Reprinted 1976, if the composition of the Gas is such to render this procedure applicable. Orifice measurement shall utilize the A.G.A. Report No. 8 gross characterization method II compressibility calculation.
(f) Physical constants required for making calculations hereunder shall be taken from the Gas Processors Association Table of Physical Properties for Hydrocarbons and Other Compounds of Interest to the Natural Gas Industry, Publication No. 2145 as amended or supplemented from time to time. Physical constants for the hexanes and heavier hydrocarbons portion of hydrocarbon mixtures shall be assumed to be the same as the physical constants for hexane.
Section 11.4 Notice of Measurement Facilities Inspection and Calibration. Each of Shipper and Gatherer shall give two Days’ notice to the other in order that the other may, at its option, have representatives present to observe any reading, inspecting, testing, calibrating or adjusting of Measurement Facilities used in measuring or checking the measurement of receipts or deliveries of Gas and NGLs under this Agreement. The official electronic flow data from such Measurement Facilities shall remain the property of the Measurement Facilities’ owner, but copies of such records shall, upon written request, be submitted, together with calculations and flow computer configurations therefrom, to the requesting Party for inspection and verification.
Section 11.5 Measurement Accuracy Verification.
(a) Orifice plate and tube inspection will be made at each meter calibration unless a facility shut-down is required, in which case the approval of both Parties shall be required for such inspection. The accuracy of Gatherer’s Measurement Facilities shall be verified by meter calibrations and orifice inspections shall be conducted, according to API 21.1 and API 14.3, once every three Months or more often as determined by Gatherer. Measuring equipment found to be measuring and/or reading inaccurately shall be adjusted to measure and read accurately. Gatherer shall give Shipper at least two Days’ notice of upcoming tests. If Shipper fails to have a representative present, the results of the test shall nevertheless be considered accurate until the next test. Gatherer shall, upon written request of Shipper, conduct a test of Gatherer’s measuring equipment and/or a chromatographic analysis, provided that in no event shall Gatherer be required to test its equipment or conduct a chromatographic analysis more frequently than once a Month. All tests of such measuring equipment or such chromatographic analysis shall be made at Gatherer’s expense, except that Shipper shall bear the expense of any tests or chromatographic analysis made at Shipper’s request.
(b) If, during any test of the Measurement Facilities, an adjustment or calibration error is found which results in an incremental adjustment to the calculated flow rate through each meter run in excess of two percent of the adjusted flow rate (whether positive or negative and using the adjusted flow rate as the percent error equation denominator), then any previous recordings of such equipment shall be corrected to zero error for any period during
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which the error existed (and which period is either known definitely or agreed to by Shipper and Gatherer) and the total flow for the period redetermined in accordance with the provisions of Section 11.7. If the period of error condition cannot be determined or agreed upon between Shipper and Gatherer, such correction shall be made over a period extending over the last one half of the time elapsed since the date of the prior test revealing the two percent error.
(c) If, during any test of any Measurement Facilities, an adjustment or calibration error is found which results in an incremental adjustment to the calculated hourly flow rate which does not exceed two percent of the adjusted flow rate, all prior recordings and electronic flow computer data shall be considered to be accurate for quantity determination purpose.
Section 11.6 Special Tests. If Shipper or Gatherer desires a test of any Measurement Facilities not scheduled by a Party under the provisions of Section 11.5, two Days’ advance notice shall be given to the other and both Shipper and Gatherer shall cooperate to secure a prompt test of the accuracy of such equipment. If the Measurement Facilities tested are found to be within the range of accuracy set forth in Section 11.5(b), then the Party that requested the test shall pay the costs of such test including any labor and transportation costs pertaining thereto. If the Measurement Facilities tested are found to be outside the range of accuracy set forth in Section 11.5(b), then the Party that owns such Measurement Facilities shall pay such costs and perform the corrections according to Section 11.7.
Section 11.7 Metered Flow Rates in Error. If, for any reason, any Measurement Facilities are (a) out of adjustment, (b) out of service or (c) out of repair and the total calculated flow rate through each meter run is found to be in error by an amount of the magnitude described in Section 11.5(b), the total quantity of Gas delivered shall be determined in accordance with the first of the following methods which is feasible:
(a) by using the registration of any mutually agreeable check metering facility, if installed and accurately registering (subject to testing as provided for in Section 11.5);
(b) where multiple meter runs exist in series, by calculation using the registration of such meter run equipment; provided that they are measuring Gas from upstream and downstream headers in common with the faulty metering equipment, are not controlled by separate regulators, and are accurately registering;
(c) by correcting the error by re-reading of the official charts, or by straightforward application of a correcting factor to the quantities recorded for the period (if the net percentage of error is ascertainable by calibration, tests or mathematical calculation); or
(d) by estimating the quantity, based upon deliveries made during periods of similar conditions when the meter was registering accurately.
Section 11.8 Record Retention. The Party owning the Measurement Facilities shall retain and preserve all test data, charts, and similar records for any calendar year for a period of at least 24 Months following the end of such calendar year unless Applicable Law requires a longer time period or the Party has received written notification of a dispute involving such records, in which case records shall be retained until the related issue is resolved.
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Section 11.9 Summary Measurement Reports. If Gatherer develops summary measurement reports for the Wells or the Facilities, Gatherer shall provide Shipper copies of such reports to Shipper upon Shipper’s request.
ARTICLE 12
NOTICES
NOTICES
Section 12.1 Notices. Unless otherwise provided herein, any notice, request, invoice, statement or demand which any Party desires to serve upon any other regarding this Agreement shall be made in writing and shall be considered as delivered (a) when hand delivered, (b) when delivery is confirmed by pre-paid delivery service (such as FedEx, UPS, DHL or a similar delivery service), (c) if mailed by United States certified mail, postage prepaid, three Business Days after mailing or (d) when sent via email; provided that if sent by email after normal business hours, receipt shall be deemed to be the next Business Day. Notwithstanding the foregoing, if a Party desires to serve upon another a notice of default under this Agreement, the delivery of such notice shall be considered effective under this Section 12.1 only if delivered by any method set forth in the foregoing clauses (a) through (b). Any notice shall be given to the other Party or Parties at the following address(es), or to such other address as any Party shall designate by written notice to the others:
Producer: | Oasis Petroleum North America LLC | ||||
1001 Fannin, Suite 1500 | |||||
Houston, Texas 77002 | |||||
Attn: Michael King | |||||
Phone: (713) 770-6450 | |||||
Email: mking@oasispetroleum.com | |||||
Shipper: | Oasis Petroleum Marketing LLC | ||||
1001 Fannin, Suite 1500 | |||||
Houston, Texas 77002 | |||||
Attn: Robert Eason | |||||
Phone: (281) 404-9697 | |||||
Email: reason@oasispetroleum.com | |||||
Gatherer: | OMP Operating LLC | ||||
1001 Fannin, Suite 1500 | |||||
Houston, Texas 77002 | |||||
Attn: Greg Hills | |||||
Phone: (281) 404-9431 | |||||
Email: ghills@oasispetroleum.com | |||||
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ARTICLE 13
INVOICES AND PAYMENTS
INVOICES AND PAYMENTS
Section 13.1 Statements and Invoices. Not later than the 35th Business Day following the end of each Month, Gatherer shall provide Shipper with a detailed statement in the form set forth on Exhibit H setting forth the following information for which payment for the Services is due hereunder for the preceding Month, to the extent applicable and all relevant supporting documentation, to the extent available on such 35th Business Day (with Gatherer being obligated to deliver any such supporting documentation that is not available on such 35th Business Day as soon as it becomes available):
[Omitted].
Section 13.2 Right to Suspend on Failure to Pay. If any undisputed amount due hereunder remains unpaid for 60 Days after the due date, Gatherer shall have the right to suspend or discontinue the Services hereunder until any such past due amount is paid.
Section 13.3 Audit Rights. Each Party, on not less than 30 Days’ prior written notice to the other, shall have the right, at its expense, at reasonable times during normal business hours, but in no event more than twice in any period of 12 consecutive Months, to audit the books and records of the other to the extent necessary to verify the accuracy of any statement, allocation, measurement, computation, charge, payment made under, or obligation or right pursuant to this Agreement. The scope of any audit shall be limited to transactions affecting Gas tendered by or on account of Shipper hereunder or the Services performed hereunder and shall be limited to the 24 Month period immediately prior to the Month in which the notice requesting an audit was given. All statements, allocations, measurements, computations, charges or payments made in any period prior to the 24 Month period immediately prior to the Month in which the audit is requested shall be conclusively deemed true and correct and shall be final for all purposes.
Section 13.4 Payment Disputes. In the event of any dispute with respect to any payment hereunder, Shipper shall make timely payment of all undisputed amounts, and the Parties will use good faith efforts to resolve the disputed amounts within 60 Days following the original due date. Any amounts subsequently resolved shall be due and payable within ten Days of such resolution.
Section 13.5 Interest on Late Payments. In the event that Shipper shall fail to make timely payment of any sums, except those contested in good faith or those in a good faith dispute, when due under this Agreement, interest will accrue from the date payment is due until the date payment is made at an annual rate equal to the lesser of (a) ten percent or (b) the maximum percentage permitted by Applicable Law.
Section 13.6 Excused Performance. Gatherer will not be required to perform or continue to perform the Services, and Producer and Shipper shall not be obligated to deliver Dedicated Gas to the Facilities in the event:
(a) a Party has voluntarily filed for bankruptcy protection under any chapter of the United States Bankruptcy Code;
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(b) a Party is the subject of an involuntary petition of bankruptcy under any chapter of the United States Bankruptcy Code, and such involuntary petition has not been settled or otherwise dismissed within 90 Days of such filing; or
(c) a Party otherwise becomes insolvent, whether by an inability to meet its debts as they come due in the ordinary course of business or because its liabilities exceed its assets on a balance sheet test; and/or however such insolvency may otherwise be evidenced.
ARTICLE 14
FORCE MAJEURE
FORCE MAJEURE
Section 14.1 Suspension of Obligations. In the event a Party is rendered unable, wholly or in part, by Force Majeure to carry out its obligations under this Agreement, other than the obligation to make payments then or thereafter due hereunder, and such Party promptly gives notice and reasonably full particulars of such Force Majeure in writing to the other Parties promptly after the occurrence of the cause relied on, then the obligations of the Party giving such notice, so far as and to the extent that they are affected by such Force Majeure, shall be suspended during the continuance of any inability so caused, but for no longer period, and such cause shall so far as reasonably possible be remedied with all reasonable dispatch by the Party claiming Force Majeure.
Section 14.2 Definition of Force Majeure. The term “Force Majeure” as used in this Agreement shall mean any cause or causes not reasonably within the control of the Party claiming relief and which, by the exercise of reasonable diligence, such Party is unable to prevent or overcome, including acts of God; strikes, lockouts or other industrial disturbances; acts of the public enemy, acts of terror, sabotage, wars, blockades, military action, insurrections or riots; epidemics or pandemics; landslides, subsidence, lightning, earthquakes, fires, storms or storm warnings; crevasses, floods or washouts; civil disturbances; explosions, breakage or accident to wells, machinery, equipment or lines of pipe; the necessity for testing or making repairs or alterations to wells, machinery, equipment or lines of pipe; freezing of wells, equipment or lines of pipe; inability of any Party hereto to obtain, after the exercise of reasonable diligence, necessary materials, supplies, easements, rights of way or Permits; or any action or restraint by any Governmental Authority (so long as the Party claiming relief has not applied for or assisted in the application for, and has opposed where and to the extent reasonable, such action or restraint, and as long as such action or restraint is not the result of a failure by the claiming Party to comply with Applicable Law). Notwithstanding anything herein to the contrary, a Force Majeure event declared by Gatherer’s Designee or a Downstream Pipeline shall be a Force Majeure event for Gatherer.
Section 14.3 Settlement of Strikes and Lockouts. It is understood and agreed that the settlement of strikes or lockouts shall be entirely within the discretion of the Party affected thereby, 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 sole discretion of the Party affected thereby.
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Section 14.4 Payments for Services Performed. Notwithstanding the foregoing, it is specifically understood and agreed by the Parties that an event of Force Majeure will in no way affect or terminate Shipper’s obligation to make payment for the Services performed prior to such event of Force Majeure.
ARTICLE 15
INDEMNIFICATION
INDEMNIFICATION
Section 15.1 Gatherer. Subject to Article 10, Section 16.1, Section 16.2 and Section 18.8, Gatherer shall release, indemnify, defend and hold harmless Producer, Shipper and their Affiliates, directors, officers, employees, agents, contractors, consultants, representatives and invitees from and against all claims and losses arising out of or relating to (a) the operations of Gatherer (except to the extent any such claims and losses arise out of the negligence, gross negligence or willful misconduct of any such indemnitee) or (b) any breach of this Agreement by Gatherer.
Section 15.2 Producer and Shipper. Subject to Article 10, Section 16.1, Section 16.2 and Section 18.8, each of Producer and Shipper shall release, indemnify, defend and hold harmless Gatherer and its Affiliates, directors, managers, officers, employees, agents, contractors, consultants, representatives and invitees from and against all claims and losses arising out of or relating to (a) the operations of Producer or Shipper (as applicable) (except to the extent any such claims and losses arise out of the negligence, gross negligence or willful misconduct of any such indemnitee) (b) any breach of this Agreement by Producer or Shipper (as applicable).
ARTICLE 16
CUSTODY AND TITLE
CUSTODY AND TITLE
Section 16.1 Custody. As among the Parties, (a) Producer shall be in custody, control and possession of Producer’s Gas hereunder until such Gas is delivered to the Receipt Points, and (b) Shipper shall be in custody, control and possession of Shipper’s Gas and NGLs allocated to Shipper after it is delivered to Shipper at the Upstream Delivery Points or the Residue Delivery Points, if applicable. As among the Parties, Gatherer or Gatherer’s Designee shall be in custody, control and possession of all Gas and NGLs in the Facilities at all other times. Notwithstanding anything else provided to the contrary in Section 15.1 and Section 15.2, the Person having custody and control of Gas and NGLs under the terms of this Agreement shall be responsible for, and shall defend, indemnify, release and hold the other Parties and their respective Affiliates, and its and their directors, managers, officers, employees, agents, consultants, representatives, invitees and contractors harmless from and against, all claims and losses of whatever kind and nature for anything that may happen or arise with respect to such Gas and NGLs when such Gas and/or NGLs are in its custody and control, including claims and losses resulting from any negligent acts or omissions of any indemnified party, but excluding any losses to the extent caused by or arising out of the negligence, gross negligence or willful misconduct of the party claiming indemnity.
Section 16.2 Shipper Warranty. Shipper represents and warrants that it owns, or has the right to deliver to the Gathering System and the Processing Plant, all Gas delivered under this
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Agreement. If the title to Gas delivered by Producer hereunder is disputed or is involved in any legal action, Gatherer shall have the right to cease receiving such Gas, to the extent of the interest disputed or involved in legal action, during the pendency of the action or until title is freed from the dispute, or until Producer furnishes, or causes to be furnished, defense and indemnification to save Gatherer harmless from all claims arising out of the dispute or action, with surety acceptable to Gatherer. Notwithstanding anything else provided to the contrary in Section 15.1 and Section 15.2, Shipper shall release, indemnify, defend and hold harmless Gatherer from and against all claims and losses arising out of or related to any liens, encumbrances or adverse claims on any of Shipper’s Gas delivered to the Receipt Points.
Section 16.3 Title.
(a) Title to all Gas delivered under this Agreement, including all constituents thereof, shall transfer from Shipper or the relevant third parties and pass to Gatherer immediately downstream of the Receipt Point.
(b) Title to all unprocessed Gas shall transfer back to Shipper or the relevant third party at the applicable Upstream Delivery Points, except for Gas used as FL&U, which are excluded and shall remain with Gatherer.
(c) [Omitted].
ARTICLE 17
TAXES; ROYALTIES
TAXES; ROYALTIES
Section 17.1 Taxes. Shipper shall pay or cause to be paid and agrees to hold Gatherer harmless as to the payment of all excise, gross production, severance, sales, occupation and all other Taxes, charges or impositions of every kind and character required by statute or by order of Governmental Authorities and levied against or with respect to any Gas delivered by or on account of Shipper under this Agreement. Gatherer shall not become liable for such Taxes, unless designated to remit those Taxes on behalf of Shipper by any duly constituted jurisdictional agency having authority to impose such obligations on Gatherer, in which event the amount of such Taxes remitted on Shipper’s behalf shall be (a) reimbursed by Shipper upon receipt of invoice, with corresponding documentation from Gatherer setting forth such payments, or (b) deducted from amounts otherwise due to Shipper under this Agreement. Gatherer shall pay or cause to be paid all Taxes, charges and assessments of every kind and character required by statute or by order of Governmental Authorities with respect to the Facilities or provision of the Services. No Party shall be responsible nor liable for any Taxes or other statutory charges levied or assessed against the facilities of any other Party, including ad valorem tax (however assessed), used for the purpose of carrying out the provisions of this Agreement or against the net worth or capital stock of such Party.
Section 17.2 Royalties. As among the Parties, Producer shall have the sole and exclusive obligation and liability for the payment of all Persons due any proceeds derived from Shipper’s Gas and NGLs allocated to Shipper hereunder (including all constituents and products thereof) delivered under this Agreement, including royalties, overriding royalties and similar interests, in accordance with the provisions of the leases or agreements creating those rights to proceeds. In no event will Gatherer have any obligation to those Persons due any of those
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proceeds of production attributable to any such Gas (including all constituents and products thereof) delivered under this Agreement. Although Shipper shall retain title to Gas as provided in this Section 17.2, Gatherer shall have the right to commingle Gas delivered by Shipper with Third Party Gas.
Section 17.3 New Taxes. In the event any New Taxes result in Gatherer incurring additional expenses to provide the Services, then Gatherer shall have the right to increase the then-current Fees hereunder or impose a separate surcharge on Shipper’s Gas in order to recover Shipper’s proportional share of the costs and expenses associated with such New Taxes in a manner that is reasonable and equitable to all shippers and customers on the Gathering System, subject to the following:
(a) Gatherer will notify Shipper, not fewer than 90 Days prior to the intended effective date of any proposed rate increase or surcharge under this Section 17.3, of the amount of such proposed rate increase or surcharge, reasonably detailed information to justify such proposed rate increase or surcharge together with reasonable supporting documentation therefor, and the method for calculating such proposed rate increase or surcharge.
(b) Following Shipper’s receipt of such notice from Gatherer, the Parties agree to promptly and in good faith enter into negotiations regarding, and shall agree on, whether should be a reasonable rate increase or surcharge and the amount thereof to address such New Taxes under this Section 17.3.
(c) If the Parties agree upon a rate increase or surcharge within 90 Days following Shipper’s receipt of Gatherer’s notice, then the Parties will promptly amend this Agreement to reflect such rate increase or surcharge.
(d) Notwithstanding anything in this Section 17.3 to the contrary, neither Party has any obligation to negotiate or agree on, and Shipper shall not be responsible for, any proposed rate increase or surcharge the total amount of which is less than or equal to $0.04 per Mcf (as escalated pursuant to subpart (b) of Exhibit J, the “Threshold”). If the total amount of any proposed rate increase or surcharge is greater than the Threshold, then Shipper shall be responsible for – pursuant to Section 17.3(b) – the entirety of the mutually agreed rate increase (including the Threshold).
(e) If the Parties are unable to agree upon a rate increase or surcharge (or the amount thereof) within 90 Days following Shipper’s receipt of Gatherer’s notice, then either Party may refer the dispute to the senior management of the Parties for further consideration, in which case the senior management of the Parties will negotiate the proposed rate increase or surcharge diligently and in good faith in order to reach agreement on a reasonable rate increase or surcharge. If the senior management of the Parties fail to agree upon a reasonable rate increase or surcharge within 30 Days after receiving notice of such dispute in accordance with the preceding sentence, then either Party shall have the right to exercise any and all rights it has – under this Agreement (pursuant to Section 18.3) and at law or in equity – with respect to the other Party’s failure to agree on a reasonable rate increase or surcharge.
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ARTICLE 18
MISCELLANEOUS
MISCELLANEOUS
Section 18.1 Rights. The failure of any Party to exercise any right granted hereunder shall not impair nor be deemed a waiver of that Party’s privilege of exercising that right at any subsequent time or times.
Section 18.2 Applicable Laws. This Agreement is subject to all valid present and future laws, regulations, rules and orders of Governmental Authorities now or hereafter having jurisdiction over the Parties, this Agreement, or the services performed or the facilities utilized under this Agreement.
Section 18.3 Governing Law; Jurisdiction; Waiver of Jury Trial.
(a) This Agreement shall be governed by, construed and enforced in accordance with the laws of the State of Texas, without regard to choice of law principles that would result in the application of the laws of a different jurisdiction.
(b) The Parties agree that the appropriate, exclusive and convenient forum for any disputes between the Parties arising out of this Agreement or the transactions contemplated hereby shall be in any state or federal court in Harris County, Texas, and each of the Parties irrevocably submits to the jurisdiction of such courts solely in respect of any proceeding arising out of or related to this Agreement. The Parties further agree that the Parties shall not bring suit with respect to any disputes arising out of this Agreement or the transactions contemplated hereby in any court or jurisdiction other than the above specified courts.
(c) EACH PARTY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ITS RIGHT TO TRIAL BY JURY IN ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
Section 18.4 Successors and Assigns.
(a) This Agreement shall extend to and inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns. Except as set forth in Section 18.4(b), no Party shall have the right to assign its respective rights and obligations in whole or in part under this Agreement without the prior written consent of the other Parties (such consent shall not be unreasonably withheld, conditioned or delayed) and any assignment or attempted assignment made otherwise than in accordance with this Section 18.4 shall be null and void ab initio.
(b) Notwithstanding Section 18.4(a):
(i) Gatherer shall have the right to assign its rights under this Agreement, in whole or in part, as applicable, without the consent of Producer and Shipper, if such assignment is made to any Person to which Gatherer’s interest in the Facilities or any part thereof has been or will be Transferred that assumes in writing all of
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Gatherer’s obligations hereunder (if applicable, to the extent that part of the Facilities being Transferred to such Person) and is an Affiliate of Gatherer;
(ii) Gatherer shall have the right to grant a security interest in this Agreement to a lender or other debt provider (or trustee or agent on behalf of such lender) of Gatherer; and
(iii) Producer and Shipper shall have the right to assign their collective rights under this Agreement, in whole or in part, as applicable, without the consent of Gatherer, to any Person with a credit rating equal to or better than Producer’s credit rating as of the Effective Date and to whom Producer sells, assigns or otherwise Transfers all or any portion of the Dedicated Properties and who assumes in writing all of Producer’s and Shipper’s obligations hereunder (if applicable, to the extent of the Dedicated Properties being Transferred to such Person) and, upon such assignment, each of Producer and Shipper shall be released from their respective obligations under this Agreement to the extent of such assignment. If the Person to whom Producer intends to sell, assign or otherwise Transfer all or any portion of the Dedicated Properties has a credit rating worse than Producer’s credit rating as of the Effective Date, then, Producer shall have the right to assign its rights under this Agreement, in whole or in part, as applicable, without the consent of Gatherer, to such Person if, as a condition precedent to such assignment, at Producer’s option, either: (A) Producer and the assignee execute an amendment to this Agreement with Gatherer that sets forth creditworthiness requirements to which Gatherer agrees such assignee will be subject under this Agreement for the remainder of the term, or (B) Producer grants Gatherer (or its designee) the exclusive right to market and sell all of such assignee’s Gas received into the Gathering System (thereby waiving all take-in-kind rights thereto) and to remit payment to such assignee, on a Monthly basis, of the net proceeds from the sale of such Gas (after deducting the Fees and any other applicable fees or costs incurred under this Agreement and any other agreement between such assignee and Gatherer (or its Affiliate)) during such Month in accordance with Article 13, or (C) Producer remains liable for its obligations under this Agreement to the extent of such assignment, or (D) the assignee agrees to provide a letter of credit from a major U.S. commercial bank for the benefit of Gatherer in an amount equal to 60 days of the aggregated Fees under this Agreement that are reasonably estimated to become due and payable by assignee upon the assignment; provided that, upon such assignment, in each case of (A), (B) and (D), Producer shall be released from its obligations under this Agreement to the extent of such assignment.
Section 18.5 Severability. If any provision of this Agreement is determined to be void or unenforceable, in whole or in part, then (a) such provision shall be deemed inoperative to the extent it is deemed void or unenforceable, (b) the Parties agree to enter into such amendments to this Agreement in order to give effect, to the greatest extent legally possible, to the provision that is determined to be void or unenforceable and (c) the other provisions of this Agreement in all other respects shall remain in full force and effect and binding and enforceable to the maximum extent permitted by law; provided, however, that in the event that a material term under this Agreement is so modified, the Parties will, timely and in good faith, negotiate to revise and amend this Agreement in a manner which preserves, as closely as possible, each Party’s business and economic objectives as expressed by this Agreement prior to such modification.
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Section 18.6 Confidentiality.
(a) Confidentiality. Except as otherwise provided in this Section 18.6, each Party agrees that it shall maintain all terms and conditions of this Agreement, and all information disclosed to it by another Party or obtained by it in the performance of this Agreement and relating to another Party’s business (including Development Plans, Facilities Plans and all data relating to the production of Producer, including well data, production volumes, volumes gathered, compressed, processed and delivered to the Delivery Points, and gas quality) (collectively, “Confidential Information”) in strictest confidence, and that it shall not cause or permit disclosure of this Agreement or its existence or any provisions contained herein without the express written consent of the disclosing Party.
(b) Permitted Disclosures. Notwithstanding Section 18.6(a) disclosures of any Confidential Information may be made by any Party (i) to the extent necessary for such Party to enforce its rights hereunder against another Party; (ii) to the extent to which a Party is required to disclose all or part of this Agreement by a statute or by the order or rule of a Governmental Authority exercising jurisdiction over the subject matter hereof, by order, by regulations or by other compulsory process (including deposition, subpoena, interrogatory or request for production of documents, or disclosure made as part of any filing, including filings made pursuant to any regulatory proceeding); (iii) to the extent required by the applicable regulations of a securities or commodities exchange; (iv) to a potential purchaser of any Party’s interests, assets or facilities that are subject to this Agreement or in connection with a merger or other business combination affecting such interests, assets or facilities (provided such third person agrees in writing to be bound by the terms of this Section 18.6); (v) to its own directors, officers, employees, agents and representatives; (vi) to an Affiliate; (vii) to financial advisors, attorneys and banks (provided that such Persons are subject to a confidentiality undertaking consistent with this Section 18.6(b)); (viii) to any current or prospective investors, lenders, or financing sources of any Party (provided that such Persons are subject to a confidentiality undertaking consistent with this Section 18.6(b)); or (ix) except for information disclosed pursuant to Article 3, to a royalty, overriding royalty, net profits or similar owner burdening Dedicated Gas (provided such royalty, overriding royalty, net profits or similar owner agrees in writing to be bound by the terms of this Section 18.6).
(c) Notification. If a Party is or becomes aware of a fact, obligation or circumstance that has resulted or may result in a disclosure of any of the terms and conditions of this Agreement authorized by Section 18.6(b)(ii) or (iii), it shall so notify in writing the disclosing Party promptly and shall provide documentation or an explanation of such disclosure as soon as it is available.
(d) Party Responsibility. Each Party shall be deemed solely responsible and liable for the actions of its directors, officers, employees, agents, representatives and Affiliates for maintaining the confidentiality commitments of this Section 18.6.
(e) Public Announcements. The Parties agree that prior to making any public announcement or statement with respect to this Agreement or the transaction represented herein permitted under this Section 18.6, the Party desiring to make such public announcement or statement shall provide the other Parties with a copy of the proposed announcement or statement
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prior to the intended release date of such announcement. The other Parties shall thereafter consult with the Party desiring to make the release, and the Parties shall exercise their reasonable efforts to (i) agree upon the text of a joint public announcement or statement to be made by all Parties or (ii) in the case of a statement to be made solely by one Party, obtain approval of the other Parties to the text of a public announcement or statement. Nothing contained in this Section 18.6 shall be construed to require any Party to obtain approval of any other Party to disclose information with respect to this Agreement or the transaction represented herein to any Governmental Authority to the extent required by Applicable Law or necessary to comply with disclosure requirements of the Securities and Exchange Commission, the New York Stock Exchange or any other regulated stock exchange.
(f) Survival. The provisions of this Section 18.6 shall survive any expiration or termination of this Agreement for a period of one year.
Section 18.7 Entire Agreement, Amendments and Waiver. The exhibits to this Agreement are hereby incorporated by reference into this Agreement. This Agreement, including all exhibits hereto, integrates the entire understanding among the Parties with respect to the subject matter covered and supersedes all prior understandings, drafts, discussions or statements, whether oral or in writing, expressed or implied, dealing with the same subject matter. This Agreement may not be amended or modified in any manner except by a written document signed by the Parties that expressly amends this Agreement. No waiver by a Party of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless expressly provided. No waiver shall be effective unless made in writing and signed by the Party to be charged with such waiver.
Section 18.8 Limitation of Liability. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR SPECIAL, INDIRECT, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES SUFFERED BY SUCH PARTY RESULTING FROM OR ARISING OUT OF THIS AGREEMENT OR THE BREACH THEREOF OR UNDER ANY OTHER THEORY OF LIABILITY, WHETHER TORT, NEGLIGENCE, STRICT LIABILITY, BREACH OF CONTRACT, WARRANTY, INDEMNITY OR OTHERWISE, INCLUDING LOSS OF USE, INCREASED COST OF OPERATIONS, LOSS OF PROFIT OR REVENUE, OR BUSINESS INTERRUPTIONS; PROVIDED, HOWEVER, THAT THE FOREGOING LIMITATION SHALL NOT APPLY TO ANY DAMAGE CLAIM ASSERTED BY OR AWARDED TO AN UNAFFILIATED THIRD PARTY FOR WHICH A PARTY WOULD OTHERWISE BE LIABLE UNDER ANY INDEMNIFICATION PROVISION SET FORTH HEREIN.
Section 18.9 Headings. The headings and captions in this Agreement have been inserted for convenience of reference only and shall not define or limit any of the terms and provisions hereof.
Section 18.10 Rights and Remedies. Except as otherwise provided in this Agreement, each Party reserves to itself all rights, counterclaims, other remedies and defenses that such Party is or may be entitled to arising from or out of this Agreement or as otherwise provided by law.
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Section 18.11 No Partnership. Nothing contained in this Agreement shall be construed to create an association, trust, partnership, or joint venture or impose a trust, fiduciary or partnership duty, obligation or liability on or with regard to any Party.
Section 18.12 Rules of Construction. In construing this Agreement, the following principles shall be followed:
(a) no consideration shall be given to the fact or presumption that one Party had a greater or lesser hand in drafting this Agreement;
(b) examples shall not be construed to limit, expressly or by implication, the matter they illustrate;
(c) the word “includes” and its syntactical variants mean “includes, but is not limited to,” “includes without limitation” and corresponding syntactical variant expressions;
(d) the plural shall be deemed to include the singular and vice versa, as applicable;
(e) references to any Person (including any Governmental Authority) shall include such Person’s successors and permitted assigns;
(f) reference to any agreement, document or instrument shall mean such agreement, document or instrument as amended, replaced, restated or modified and in effect from time to time in accordance with the terms thereof;
(g) references to any Applicable Law (including any statute referenced in this Agreement) means such Applicable Law as amended, modified, codified, replaced or re-enacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder, and references to any section or other provision of any Applicable Law means that provision of such Applicable Law from time to time in effect and constituting the substantive amendment, modification, codification, replacement or re-enactment of such section or other provision;
(h) references to any Exhibit, Article, Section or other sub-section shall be references to an Exhibit, Article, Section or other sub-section of this Agreement; and
(i) references to currency shall be references to the lawful money of the United States, unless otherwise indicated, and any payments and transfers of funds shall be made in immediately available funds.
Section 18.13 No Third Party Beneficiaries. This Agreement is for the sole benefit of the Parties and their respective successors and permitted assigns, and shall not inure to the benefit of any other Person whomsoever or whatsoever, it being the intention of the Parties that no third Person shall be deemed a third party beneficiary of this Agreement, other than the representatives of a Party for the limited purpose of Sections 15.1, 15.2, 16.1 and 16.2.
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Section 18.14 Further Assurances. Each Party shall take such acts and execute and deliver such documents as may be reasonably required to effectuate the purposes of this Agreement.
Section 18.15 Counterpart Execution. This Agreement may be executed in any number of counterparts, each of which shall be considered an original, and all of which shall be considered one and the same instrument. A signed copy of this Agreement delivered by e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
Section 18.16 Memorandum of Agreement. Contemporaneously with the execution of this Agreement, the Parties shall execute, acknowledge, deliver and record a “short form” memorandum of this Agreement in the form of Exhibit G attached hereto (as modified, including by the addition of any required property descriptions, required by local law and practice to put such memorandum of record and put third parties on notice of this Agreement), which shall be placed of record in each state and county in which the currently-existing Dedicated Properties are located. The Parties further agree that such memoranda shall be executed and delivered by the Parties from time to time at any Party’s reasonable request to evidence any additions or additional areas or Interests to, or permanent releases from, the dedication and commitment made by Producer and Shipper under this Agreement.
[Signature Page(s) Follows]
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IN WITNESS WHEREOF, the Parties have duly executed this Agreement to be effective for all purposes on the Effective Date.
OASIS PETROLEUM NORTH AMERICA LLC
By: /s/ Taylor Reid
Name: Taylor Reid
Title: President and Chief Operating Officer
Title: President and Chief Operating Officer
OASIS PETROLEUM MARKETING LLC
By: /s/ Michael Lou
Name: Michael Lou
Title: Executive Vice President and Chief Financial Officer
OMP OPERATING LLC
By: /s/ Richard Robuck
Name: Richard Robuck
Title: Senior Vice President and Chief Financial Officer
Gas Gathering, Compression and Processing Agreement
Signature Page – Painted Woods / City of Williston
Signature Page – Painted Woods / City of Williston
EXHIBIT A
DEDICATED ACREAGE
DEDICATED ACREAGE
[Omitted]
Exhibit A – Page 1
EXHIBIT B
FACILITIES
FACILITIES
[Omitted].
Exhibit B – Page 1
EXHIBIT C
DELIVERY POINTS
DELIVERY POINTS
[Omitted.]
Exhibit C – Page 1
EXHIBIT D
EXCLUDED WELLS
EXCLUDED WELLS
[Omitted]
Exhibit D – Page 1
EXHIBIT E
FORM OF RIGHT OF WAY AGREEMENT
RIGHT OF WAY AND EASEMENT AGREEMENT
RIGHT OF WAY AND EASEMENT AGREEMENT
KNOW ALL PERSONS BY THESE PRESENTS, _____________________, whose address is ________________ (“Owner”, whether one or more), for and in consideration of Twenty-Five Dollars ($25.00) and other good and valuable consideration in hand paid, the receipt and sufficiency of which are hereby acknowledged, does hereby GRANT, BARGAIN, SELL, CONVEY and WARRANT unto and OMP Operating LLC, whose address is 1001 Fannin Street, Suite 1500, Houston, Texas 77002, its successors and assigns (“Grantee”) a perpetual and permanent right-of-way and easement (the “ROW”) of Fifty feet (50’) in width for the placement of up to four (4) Pipelines (as defined herein). The ROW is granted for the purpose of laying, constructing, maintaining, operating, inspecting, repairing, replacing, protecting, changing the size of and removing pipelines and appurtenances thereto for the transportation of oil, gas, fresh water, production water, kindred substances and vapors or the products thereof (the “Pipelines”) upon and along a route to be selected by Grantee in consultation with Owner on, under and across lands of Owner, situated in the County of ___________, State of _______________, described as follows:
Township ___ _________, Range ___ ___________
Section __: ________________
More particularly shown on Plat marked Exhibit “A”, and by this reference made a part hereof.
In addition to the ROW described above, during any period of time that Grantee is installing or maintaining the Pipelines, Owner does HEREBY GRANT, BARGAIN, SELL, CONVEY AND WARRANT unto Grantee a temporary easement of Seventy-Five feet (75’) in width, except that such easement shall be to a width of One Hundred feet (100’) at all road, ditch, and waterway crossings and any areas of severely uneven ground.
The aforesaid rights and the ROW are granted as and from the date hereof, and shall be perpetual, on the following terms and conditions, which are hereby mutually agreed to by and between Owner and Grantee.
1. Together with an easement for restricted rights of ingress and egress to, from and along said pipeline(s) and facilities of Grantee on, over and across said lands and adjacent lands of Owner, and Grantee shall have all privileges necessary or convenient for the full use and enjoyment of the rights herein granted.
2. Grantee may record this Right of Way Agreement attaching a plat as Exhibit “A” (incorporated herein by reference) of the actual route of the facilities constructed hereunder and/or of the ingress/egress easement to further identify the locations thereof.
Exhibit E – Page 1
3. Grantee shall bury the top of its pipelines at or below Four feet (4’) in depth. Grantee shall restore the land as soon as practicable after the pipelines are completed. Restoration shall be made as near as practicable to the condition when Grantee first entered onto the land. Grantee’s agreement to bury all pipelines shall in no way restrict Grantee from installing above ground appurtenant facilities (markers, risers, headers, block valves, monitors, cathodic protection equipment, electrical power lines, etc.) necessary for the operations of said pipelines; however Grantee agrees to reasonably attempt to locate said appurtenant facilities so as to minimize the impact of same to Owner’s use of the land covered herein.
4. Owner and its successors and assigns reserves all oil, gas and minerals, if owned, on and under said lands and the right to farm, graze and otherwise fully use and enjoy said lands; provided that Owner agrees not to construct or create any obstruction, structure, or engineering work on the herein granted right of way that will interfere with rights and interests of Grantee herein granted, and provided further that Grantee shall have the right hereafter to keep clear obstructions from the herein granted right of way and ingress/egress easement. Grantee agrees to pay Owner or any tenant, as their interest may appear, for actual damages to crops, pasture, timber, livestock, fences and other improvements on said premises which may arise from exercise of the rights herein granted, provided Grantee shall not be liable for damages for future clearing of the right of way and ingress/egress easement in exercise of the rights herein granted.
5. Grantee shall be liable for reclamation and damages resulting from a breach or spill.
6. Grantee agrees to comply with all applicable state and local regulations.
7. This Agreement may be executed in several counterparts, each of which shall be an original of this Agreement but all of which, taken together, shall constitute one and the same Agreement and be binding upon the parties who executed any counterpart, regardless of whether it is executed by all parties named herein.
8. Owner agrees to grant additional lateral right of ways and perpetual easements that Grantee may need to connect to any well or wells, production facilities and/or compressor stations. This additional grant includes the pipelines needed to transport oil, gas, fresh water, production water, kindred substances and vapors. Owner will be paid for the additional lateral right of ways and perpetual easements based on the same terms agreed upon in the Payment Agreement of even date herewith. Grantee will have the right to amend this Right of Way and Easement Agreement by filing an amendment, executed solely by Grantee, with new plats showing the location of the additional lateral right of ways and perpetual easements.
9. This instrument together with the Payment Agreement for Right of Way and Easement dated ____________ constitutes the entire agreement and understanding of the parties and supersedes all prior understandings, negotiations and agreements of the parties related to the subject matter hereof. Each party agrees to give the other a 30 day right to cure after notice of any default before seeking termination or exercising any other remedy.
TO HAVE AND TO HOLD said right of way and easement unto said Grantee, its successors and assigns for so long as same are used for the purposes herein granted. All provisions hereof are appurtenant to, run with and burden the above described land, and are binding upon and inure to
Exhibit E – Page 2
the benefit of the successors, assigns, heirs, executors, administrators and other legal representatives of each of the parties.
Executed this _______ day of ___________, 20___. | |||||
Owner: | Grantee: | ||||
OMP Operating LLC | |||||
___________________________________ | |||||
Name: | |||||
Title: | |||||
Exhibit E – Page 3
ACKNOWLEDGEMENTS
STATE OF
COUNTY OF
On this ____ day of _________________, in the year _______, before me personally appeared ____________________________________________________, known to me (or proved to me on the oath of _____________) to be the person who is described in and who executed the within and foregoing instrument, and acknowledged to me that (he/she/they) executed the same.
(Seal) | |||||
Notary Public in and for the State of | |||||
Printed Name: | |||||
Commission Expires: |
STATE OF
COUNTY OF
On this ____ day of _________________, in the year _______, before me personally appeared ___________________, known to me (or proved to me on the oath of ______________) to be the _________________ of OMP Operating LLC, a Delaware limited liability company, on behalf of said entity.
(Seal) | |||||
Notary Public in and for the State of | |||||
Printed Name: | |||||
Commission Expires: |
Exhibit E – Page 4
PAYMENT AGREEMENT FOR RIGHT OF WAY AND EASEMENT AGREEMENT
This agreement entered into this _______ day of ________________, ____ between _____________________, husband and wife whose address is ___________________________________ (“Owner”), and OMP Operating LLC, whose address is 1001 Fannin, Suite 1500, Houston, Texas 77002, its successors or assigns (“Grantee”). In consideration of Twenty Five Dollars ($25.00) and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Owner hereby consents and agrees to the payment arrangement set out below regarding that certain Right of Way and Easement Agreement from Owner to Grantee (“ROW Agreement”) covering the following described lands located in ____________ County, ________:
Township ___ North, Range ____West, 5th P.M.
Section __: _______________
Section __: _______________
Owner acknowledges receipt of $500.00 as a down payment. The pipeline payment of $_____ per rod is to be paid per pipeline for up to four (4) pipelines. The down payment will be deducted from the calculation of the total payment. The balance of the consideration due, if any, will be paid within thirty (30) days of the completion of a final survey of the pipelines as installed. In the event it is necessary to place an additional line or lines, not to exceed four (4) lines, in a new lateral Right of Way, then Grantee agrees to pay Owner $_____ per rod for the placement of each additional pipeline that is placed in the lateral Right of Way.
Grantee agrees to pay, in addition to the aforementioned payment, either (i) One Thousand Dollars and no/100 ($1,000.00) per mile, or (ii) the established yield as determined by the Farm Service Agency office per mile of growing or planted crops, or hay land, where applicable, within the right of way under the ROW Agreement which were destroyed as a direct result of the initial construction and installation of the Facilities.
If said Owner owns less interest in the above described land than the entire and undivided fee simple estate therein, then the payments herein provided for shall be paid the said Owner only in the proportion which Owner’s interest bears to the whole and undivided fee.
It is expressly understood and agreed that the above specified payment for the ROW Agreement is contingent upon construction.
Owner: | Grantee: | ||||
OMP Operating LLC | |||||
Name: | |||||
Title: |
Exhibit E – Page 5
EXHIBIT F
PRODUCER’S PIPELINES
[Omitted]
Exhibit F – Page 1
EXHIBIT G
FORM OF MEMORANDUM OF AGREEMENT
MEMORANDUM OF AGREEMENT
This MEMORANDUM OF GAS GATHERING, COMPRESSION AND PROCESSING AGREEMENT (this “Memorandum”) is entered into effective October 25, 2021 (the “Effective Date”), by and among OASIS PETROLEUM NORTH AMERICA LLC (“Producer”), with an address of 1001 Fannin, Suite 1500 Houston TX 77002, OASIS PETROLEUM MARKETING LLC (“Shipper”), with an address of 1001 Fannin, Suite 1500 Houston TX 77002, and OMP OPERATING LLC, with an address of 1001 Fannin, Suite 1500 Houston TX 77002 (“Gatherer”), with an address of 1001 Fannin, Suite 1500 Houston TX 77002.
WHEREAS, Producer, Shipper, and Gatherer entered into that certain Gas Gathering, Compression and Processing Agreement effective as of the Effective Date (the “Agreement”), pursuant to which Gatherer will provide certain gathering, compression, processing, and other services as therein set forth;
WHEREAS, any capitalized term used, but not defined, in this Memorandum shall have the meaning ascribed to such term in the Agreement; and
WHEREAS, the Parties desire to file this Memorandum of record in the real property records of McKenzie County and Williams County, North Dakota and Roosevelt County, Montana, to give notice of the existence of the Agreement and certain provisions contained therein;
NOW THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. Notice. Notice is hereby given of the existence of the Agreement and all of its terms, covenants and conditions to the same extent as if the Agreement was fully set forth herein. Certain provisions of the Agreement are summarized in Sections 2 through 3 below.
2. Dedication and Commitment.
(i) Subject to the exceptions, exclusions and reservations set forth in the Agreement and the other terms and conditions of the Agreement, Producer (on behalf of itself and its Affiliates) exclusively dedicates all Interests now owned or hereafter acquired by Producer or any of its Affiliates and located wholly within the area described on Attachment 1 hereto (such area, the “Dedicated Acreage”), including the Gas reserves associated with such Interests (collectively, the “Dedicated Properties”) to the Gathering System and the Agreement for the performance of the Services under the Agreement and commits to deliver to the Receipt Points, for Shipper’s account, all Dedicated Gas, as and when produced.
(ii) Subject to the exceptions, exclusions and reservations set forth in the Agreement and the other terms and conditions of the Agreement, Shipper commits to deliver
Exhibit G – Page 1
to Gatherer, as and when produced and purchased from Producer, all Dedicated Gas into the Facilities for the performance of the Services under the Agreement.
3. Covenant Running with the Land. Subject to the exceptions, exclusions and reservations set forth in the Agreement and the other terms and conditions of the Agreement, the Parties hereby irrevocably agree that the dedication and commitment made by Producer (on behalf of itself and its Affiliates) and Shipper under the Agreement be a covenant running with (a) the Dedicated Properties, as a burden on Producer’s (and its Affiliates’) title thereto and binding on successors-in-interest in and to the Dedicated Properties, and (b) the Facilities, as a benefit accruing to Gatherer’s title thereto and inuring to the benefit of successors-in-interest to the Facilities. Neither Producer nor any of its Affiliates shall Transfer any or all of its interest in any Dedicated Property unless (i) Producer obtains and delivers to Gatherer a written acknowledgment by the Transferee in favor of Gatherer acknowledging that the Transferred Dedicated Property shall remain subject to the Agreement in all respects and (ii) each instrument of conveyance expressly so states.
4. No Amendment to Agreement. This Memorandum is executed and recorded solely for the purpose of giving notice and shall not amend or modify the Agreement in any way.
Exhibit G – Page 2
IN WITNESS WHEREOF, this Memorandum has been signed by or on behalf of each of the Parties as of the Effective Date.
OASIS PETROLEUM NORTH AMERICA LLC
By:
Name: Taylor Reid
Title: President and Chief Operating Officer
Name: Taylor Reid
Title: President and Chief Operating Officer
OASIS PETROLEUM MARKETING LLC
By:
Name: Michael Lou
Name: Michael Lou
Title: Executive Vice President and Chief Financial Officer
OMP OPERATING LLC
By:
Name: Richard Robuck
Name: Richard Robuck
Title: Senior Vice President and Chief Financial Officer
Exhibit G – Page 3
ACKNOWLEDGEMENTS
STATE OF [___________] | § | ||||
§ | |||||
COUNTY OF [_______] | § | ||||
§ |
The foregoing instrument was acknowledged before me on the day of October, 2021, by Taylor Reid, President and Chief Operating Officer of Oasis Petroleum North America LLC, a Delaware limited liability company, on behalf of said entity.
Notary Public in and for | ||||||||||||||
Printed or Typed Name of Notary | ||||||||||||||
STATE OF [___________] | § | |||||||||||||
§ | ||||||||||||||
COUNTY OF [_______] | § | |||||||||||||
§ |
The foregoing instrument was acknowledged before me on the day of October, 2021, by Michael Lou, Executive Vice President and Chief Financial Officer of Oasis Petroleum Marketing LLC, a Delaware limited liability company, on behalf of said entity.
Notary Public in and for | ||||||||||||||
Printed or Typed Name of Notary | ||||||||||||||
STATE OF [___________] | § | |||||||||||||
§ | ||||||||||||||
COUNTY OF [_______] | § | |||||||||||||
§ |
The foregoing instrument was acknowledged before me on the day of October, 2021, by Richard Robuck, Senior Vice President and Chief Financial Officer of OMP Operating LLC, a Delaware limited liability company, on behalf of said entity.
Notary Public in and for | |||||
Printed or Typed Name of Notary |
Exhibit G – Page 4
Attachment 1
DEDICATED ACREAGE
DEDICATED ACREAGE
[Omitted]
Exhibit G – Page 5
EXHIBIT H
FORM OF MONTHLY STATEMENT
FORM OF MONTHLY STATEMENT
[Omitted.]
Exhibit H – Page 1
EXHIBIT I
STANDARD METER FACILITIES
STANDARD METER FACILITIES
Exhibit I – Page 1
EXHIBIT J
FEES
(a) [Omitted].
Exhibit J – Page 1