FIRST AMENDMENT to the GAS PURCHASE AGREEMENT between WILLIAMS PRODUCTION RMT COMPANY LLC and RILEY NATURAL GAS COMPANY and PETROLEUM DEVELOPMENT CORPORATION

Contract Categories: Business Finance - Purchase Agreements
EX-10.1 2 d83934exv10w1.htm EX-10.1 exv10w1
Exhibit 10.1
The Company has redacted certain confidential information in this agreement in reliance upon its confidential treatment request that it will file with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934. In this agreement, we indicate each redaction by use of asterisk *.
FIRST
AMENDMENT
to the
GAS PURCHASE AGREEMENT
between
WILLIAMS PRODUCTION RMT COMPANY LLC
and
RILEY NATURAL GAS COMPANY
and
PETROLEUM DEVELOPMENT CORPORATION
     This First Amendment (“Amendment”) to the Gas Purchase Agreement dated June 1, 2006 by and between WILLIAMS PRODUCTION RMT COMPANY LLC, formerly known as WILLIAMS PRODUCTION RMT COMPANY (“Buyer”) and RILEY NATURAL GAS COMPANY (“Riley”) and PETROLEUM DEVELOPMENT CORPORATION (“PDC”) (the “Agreement”) is made and entered into effective as of the 1st day of June, 2011 (the “Effective Date of this Amendment”). PDC together with Riley, collectively, “Seller,” and Seller together with Buyer, may be referred to herein as the “Parties,” and individually, a “Party”. All initially capitalized terms used herein, but not defined herein, shall have the respective meanings given to such terms in the Agreement.
RECITALS
     WHEREAS, Buyer and Seller are Parties to the Agreement concerning the purchase and commitment of Seller’s Gas; and
     WHEREAS, Buyer and Seller desire to amend the Agreement as stated below.
     NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Amendment, the Parties agree that the Agreement will be amended as follows:
AGREEMENT
  1.   Seller’s Commitment. Section 1.1 shall be deleted in its entirety and replaced with the following:
 
      Seller commits to Buyer to sell and deliver to Buyer, on a Firm basis, Seller’s present and future right, title, and interest in the Gas Volume Committed to this Agreement and outlined on Exhibit F, that Seller delivers to the Receipt Point(s) from the Area of Interest (“Seller’s Gas”) described on Exhibit B, subject to the terms of this Agreement.
 
  2.   Area of Interest. Seller’s Area of Interest shall be as described on Exhibit B, attached hereto and made a part hereof.
 
  3.   Buyer’s Treating Service. Section 1.6 shall be deleted in its entirety and replaced with the following:
 
      Seller’s Gas at the Receipt Point(s) may have a CO2 content that exceeds the most restrictive quality specification for CO2 content required from time to time by the Interconnecting Pipeline(s). Buyer shall Treat Seller’s Gas to reduce its CO2 content to no more than two percent (2.00%) by volume at the Delivery Point(s), provided the CO2 content of Seller’s Gas does not exceed four percent (4.00%) by volume at the Receipt Point(s). The fee for Treating Seller’s Gas that does not exceed three percent (3%) CO2 by volume at the Receipt Point(s) is incorporated into the Gathering and Processing Fee. In the event the CO2 content of Seller’s

 

 

      Gas exceeds three percent (3%) by volume at the Receipt Point(s), the Excess CO2 Treating Fee as set forth in Exhibit E shall be payable from Seller to Buyer. In no event, however, is Buyer obligated to accept deliveries of Seller’s Gas at a given Receipt Point if the CO2 content of Seller’s Gas at that Receipt Point exceeds four percent (4.00%) by volume. If the weighted arithmetic average quality specification for CO2 content of the Interconnecting Pipeline(s) should ever be reduced below two and thirty-one hundredths percent (2.31%) per Mcf, then the Parties shall within thirty (30) Days of written notice thereof from Buyer, renegotiate, subject to Section 1.9 of this Agreement, the Gathering and Processing Fee. If the Parties are unable to renegotiate the Gathering and Processing Fee, then Buyer may refuse to accept further deliveries of Seller’s Gas affected thereby or Buyer may at its option, upon thirty (30) Days’ prior written notice to Seller, release such affected Gas from the provisions of this Agreement. Buyer’s right to renegotiate the Gathering and Processing Fee or, upon the failure of such renegotiation, to refuse to accept further deliveries of Seller’s Gas affected thereby or release such affected Gas from the provisions hereof, shall apply to each successive reduction of the most restrictive quality specification for CO2 content of the Interconnecting Pipeline(s) that is below two and thirty-one hundredths percent (2.31%) per Mcf.
 
  4.   Service and Fee Description. Exhibit E shall be deleted in its entirety and replaced with Exhibit E attached hereto and made a part hereof.
 
  5.   Gas Volumes Committed. Exhibit F shall be deleted in its entirety and replaced with Exhibit F attached hereto and made a part hereof.
 
  6.   Standard Terms and Conditions. Exhibit A of the Agreement is amended to include the following new definition:
  A.   57 Area of Interest shall mean that surface area described on Exhibit B.
     This Amendment may be executed in counterparts, each of which taken together shall constitute one and the same instrument.
     This Amendment shall be governed by and construed and enforced in accordance with the laws of the same jurisdiction as apply to the Agreement.
     Except as hereby amended, all terms and conditions contained in the Agreement shall remain in full force and effect. All future references to the Agreement shall be deemed to include this Amendment.
IN WITNESS WHEREOF, the Parties hereto have executed this Amendment to be effective as of the Effective Date of this Amendment.
     
“Buyer”   “Seller”
WILLIAMS PRODUCTION RMT COMPANY LLC   RILEY NATURAL GAS COMPANY
 
    
By: /s/ Neal Buck
  By: /s/George Courcier
Printed Name: Neal Buck
  Printed Name: George Courcier
Title: Vice President
  Title: Vice President
 
    
 
  “Seller”
PETROLEUM DEVELOPMENT CORPORATION
 
    
 
  By: /s/George Courcier
 
  Printed Name: George Courcier
 
  Title: Vice President

 

 

EXHIBIT B
TO FIRST AMENDMENT
TO THE GAS PURCHASE AGREEMENT
DATED AS OF JUNE 1, 2006
between
WILLIAMS PRODUCTION RMT COMPANY LLC
and
RILEY NATURAL GAS COMPANY
and
PETROLEUM DEVELOPMENT CORPORATION
AREA OF INTEREST
All of Seller’s right, title, or interest in lands and the right to produce oil and/or Gas therefrom whether arising from fee ownership, working interest ownership, mineral ownership, leasehold ownership, or arising from any pooling, unitization or communitization of any of the foregoing rights in the acreage lying within the following townships in Garfield County, Colorado:
6S-97W
Section 12: S2
Section 13: NE
Section 24: ALL
Section 25: ALL
Section 36: Lot 1, Lot 2, Lot 3, Lot 4 (ada ALL)
7S-97W
Section 1: ALL
Section 2: E2E2
Section 12: N2, N2N2S2, N2N2S2N2S2
7S-96W
Section 6: S2, NE
Section 7: N2, SE
Section 13: Lot 4, Lot 10, Lot 11, Lot 12, Lot 13
Section 14: NESE, SESE
Section 24: Lot 2, Lot 3, Lot 4
Section 17: NW
Section 18: N2
6S-96W
Section 4: Part of Lot 1, Lot 5, Part of SENW, Part of SWNW, Part of NWSW, Part of NWSW, Lot 10,
Part of Lot 11, Lot 12
Section 5: Lot 1, Lot 8, Lot 9, Lot 16, Lot 17 (ada E2E2)
Section 7: ALL
Section 8: Lot 1, Lot 3, Lot 4, Lot 5, Lot 7, Lot 8, Lot 13, Lot 14, Lot 15
Section 9: Lot 10, Lot 11, Lot 12, Lot 13 (ada SW)
Section 16: Lot 13, Lot 14, NESW, SESW (ada SW)
Section 17: Lot 2, Lot 4, Lot 5, Lot 9, Lot 10, Lot 11, Lot 12, Lot 14, Lot 15, Lot 16, Lot 17 (ada W2)

 

 

EXHIBIT E
TO FIRST AMENDMENT
TO THE GAS PURCHASE AGREEMENT
DATED AS OF JUNE 1, 2006
between
WILLIAMS PRODUCTION RMT COMPANY LLC
and
RILEY NATURAL GAS COMPANY
and
PETROLEUM DEVELOPMENT CORPORATION
SERVICE AND FEE DESCRIPTION
I.   For deliveries from June 1, 2006 through May 31, 2009, the Gathering and Processing Fees and the Excess CO2 Fee will be fixed at the values actually charged in the applicable Settlement Statements for the respective months during that period.
 
II.   For deliveries from and after June 1, 2009, the following fees will apply, subject to the annual escalation of fees described in III. below:
                     
        FL&U   FL&U        
Gathering and   Gathering and   (Low pressure   (High pressure   Low Delivery   Excess CO2
Processing Fee   Processing Fee   receipt points)   receipt points)   Fee   Treating Fee
$ [*] per MMBtu Received at a Low Pressure Receipt Point
  $ [*] per MMBtu Received at a High Pressure Receipt Point   Actual usage (initially [*] %)   Actual usage (initially [*] %)   $[*] per Accounting Period per Receipt Point   $ [*] per Mcf for each 1.00%, or part thereof, Greater than 3.00%
III.   Beginning on June 1, 2010, and annually at the beginning of each Contract Year thereafter, Buyer shall adjust the Gathering and Processing Fees and the Excess CO2 Treating Fee stated above by a percentage equal to the annual average percentage change, from the preceding Contract Year, in the cumulative implicit Gross Domestic Product price deflator (“GDPDEF”) computed and published by the U.S. Department of Commerce. Provided, however, that the adjustment shall never result in the Gathering and Processing Fees and the Excess CO2 Treating Fee being less than the fees stated in the table below.
                     
        FL&U   FL&U        
Gathering and   Gathering and   (Low pressure   (High pressure   Low Delivery   Excess CO2
Processing Fee   Processing Fee   receipt points)   receipt points)   Fee   Treating Fee
$ [*] per MMBtu Received at a Low Pressure Receipt Point
  $ [*] per MMBtu Received at a High Pressure Receipt Point   Actual usage (initially [*] %)   Actual usage (initially [*] %)   $ [*] per Accounting Period per Receipt Point   $ [*] per Mcf for each 1.00%, or part thereof, Greater than 3.00%
An example of the annual average percentage change in the GDPDEF factor calculation for the adjustment of rates is shown below:

 

 

         
Current Contract Year
        
That year (2nd Quarter)
     107.215  
That year (1st Quarter)
     107.021  
Prior year (4th Quarter)
     106.515  
Prior year (3rd Quarter)
     105.942  
Annual Average GDPDEF:
     106.673  
 
        
Preceding Contract Year
        
That year (2nd Quarter)
     106.754  
That year (1st Quarter)
     106.012  
Prior year (4th Quarter)
     105.211  
Prior year (3rd Quarter)
     104.262  
Annual Average GDPDEF:
     105.560  
 
        
Annual Average GDPDEF — Current Contract Year:
     106.673  
Annual Average GDPDEF — Preceding Contract Year:
     105.560  
Annual Average Percentage Change Effective for the current Contract Year:
        
106.673 / 105.560 =
     1.011  
Gathering and Processing Fee preceding Contract Year:
   $ [*]  
Adjusted Gathering and Processing Fee, current Contract Year;
   $ [*]  

 

 

EXHIBIT F
TO FIRST AMENDMENT
TO THE GAS PURCHASE AGREEMENT
DATED AS OF JUNE 1, 2006
between
WILLIAMS PRODUCTION RMT COMPANY LLC
and
RILEY NATURAL GAS COMPANY
and
PETROLEUM DEVELOPMENT CORPORATION
GAS VOLUMES COMMITTED
                                 
            Seller's Original   Adjustment to Seller’s   Seller's Amended
            Annual Volume   Annual Volume   Annual Volume
Contract Year   (in MMBtu)   (in MMBtu)   (in MMBtu)
  1.    
June 1, 2006 — August 31, 2006
    1,978,000     no change   no change
  1.    
September 1, 2006 — May 31, 2007
    15,578,760     no change   no change
  2.    
June 1, 2007 — May 31, 2008
    22,890,878     no change   no change
  3.    
June 1, 2008 — May 31, 2009
    32,393,817     no change   no change
       
Sub Total: Contract Year 1-3
    72,841,455                  
       
 
                        
  4.    
June 1, 2009 — May 31, 2010
    35,164,648       (15,164,648 )     20,000,000  
  5.    
June 1, 2010 — May 31, 2011
    35,415,768       (15,415,768 )     20,000,000  
  6.    
June 1, 2011 — May 31, 2012
    36,204,441       (16,204,441 )     20,000,000  
  7.    
June 1, 2012 — May 31, 2013
    36,588,969       (16,588,969 )     20,000,000  
  8.    
June 1, 2013 — May 31, 2014
    31,880,469       12,300,000       44,180,469  
  9.    
June 1, 2014 — May 31, 2015
    25,068,839       12,300,000       37,368,839  
  10.    
June 1, 2015 — May 31, 2016
    19,328,393       12,300,000       31,628,393  
  11.    
June 1, 2016 — May 31, 2017
    14,757,224       12,300,000       27,057,224  
  12.    
June 1, 2017 — May 31, 2018
    11,887,191       12,300,000       24,187,191  
  13.    
June 1, 2018 — May 31, 2019
    9,750,519       12,300,000       22,050,519  
  14.    
June 1, 2019 — May 31, 2020
    7,635,618       12,300,000       19,935,618  
  15.    
June 1, 2020 — May 31, 2021
    5,771,836       12,300,000       18,071,836  
       
Sub Total: Contract Year 4-15
    269,453,915       35,026,174       304,480,089