Assignment Approval, (dated as of January 13, 2003)

EX-10.27 11 k02906exv10w27.txt ASSIGNMENT APPROVAL, (DATED AS OF JANUARY 13, 2003) EXHIBIT 10.27 ASSIGNMENT APPROVAL BY ALASKA PIPELINE COMPANY AND JOINDER AND RATIFICATION BY AURORA GAS, LLC OF THE GAS SALES AGREEMENT BETWEEN AND AMONG ANADARKO PETROLEUM CORPORATION, PHILLIPS ALASKA, INC., AND ALASKA PIPELINE COMPANY This Assignment Approval by Alaska Pipeline Company and Joinder and Ratification by Aurora Gas, LLC ("Assignment") of the Gas Sales Agreement Between and Among Anadarko Petroleum Corporation, Phillips Alaska, Inc., and Alaska Pipeline Company ("Agreement") is entered into by and among ConocoPhillips Alaska, Inc. (formerly known as Phillips Alaska, Inc.) ("CPA"), Aurora Gas, LLC ("Aurora"), and Alaska Pipeline Company ("APC"). WHEREAS, under Section 13.12 of the Agreement, CPA's obligations are independent of those of Anadarko Petroleum Corporation ("Anadarko"); WHEREAS, CPA has agreed to assign to Aurora, effective September 27, 2002, all of its lease interests in the Field, as defined in Exhibit E to the Agreement, a copy of which is attached as Exhibit 1 and incorporated in full by reference, which lease interests will be assigned in a separate instrument or instruments; WHEREAS, CPA has agreed to assign all of its rights, duties, obligations, responsibilities, and interests in and under the Agreement to Aurora; WHEREAS, Aurora desires to assume CPA's rights, duties, obligations, responsibilities, and interests in and under the Agreement, and to join and ratify the Agreement and dedicate the gas in the Field to the performance of the Agreement; WHEREAS, the Agreement provides at Section 13.2 that any assignment of obligations under the Agreement must receive the consent in writing by the other party, which consent may not be unreasonably withheld; WHEREAS, the Agreement provides at Section 13.3 that upon assignment by CPA of any lease that is used to supply gas under the Agreement, the assignee must ratify and join in the Agreement by executing an instrument describing the lease and dedicating the gas to the performance of the Agreement; and WHEREAS, Cook Inlet Region, Inc., the owner of the mineral rights in the Field, has consented to an assignment of the leases to Aurora as evidenced by attached Exhibit 2. Page 1 of 3 NOW THEREFORE, the parties desire to provide for approval, ratification, and joinder as provided in the Agreement, and agree for good and valuable consideration, the receipt and sufficiency of which are acknowledged, as follows: 1. CPA assigns all of its rights, duties, obligations, responsibilities, and interests in and under the Agreement to Aurora, excepting only the contingent responsibilities and duties for Backup as defined below. 2. Aurora hereby accepts and assumes CPA's rights, duties, obligations, responsibilities, and interests in and under the Agreement as described in paragraph 1 above, and agrees to fully and faithfully perform the Agreement in accordance with its terms and conditions and this Assignment. 3. Aurora ratifies and joins in the Agreement as a party seller and dedicates the gas in the Field to performance of the Agreement. 4. APC consents to the assignment of CPA's rights, duties, obligations, responsibilities, and interests in and under the Agreement to Aurora as described in paragraph 1 above, and agrees to accept Aurora's performance of those rights, duties, obligations, and responsibilities. 5. This Assignment shall be effective upon the date of the recording in the Anchorage Recording District of the instruments conveying CPA's lease interests in the Field to Aurora. 6. Aurora has received the February 2002 Production Schedule (attached as Exhibit 3) required by paragraph 3.3.6 of the Agreement and acknowledges and agrees that the Production Schedule sets the maximum amount of gas APC is required to take under the Agreement. 7. Aurora agrees that the Agreement is amended to prohibit assignment by Aurora except in the sole discretion of APC, and that APC may withhold for any reason its agreement to an assignment. 8. Aurora agrees that it will promptly, and in no event later than October 31, 2003, build a pipeline to connect the Moquawkie Field to a pipeline which connects with APC's pipeline system so that gas deliveries can be made to APC under the Agreement. 9. CPA acknowledges its obligation to supply all gas necessary to meet the supply obligation under paragraph 3.1.1 of the Agreement (subject to Anadarko's right to supply gas), as amended by a letter agreement between APC and CPA dated September 17, 2002 (attached as Exhibit 4), to the extent Aurora does not meet the Page 2 of 3 obligation with gas from the Field or another field, and CPA agrees that this obligation survives and is not affected by the Assignment. 10. CPA agrees to Backup the daily and annual volumes in the 2002 Production Schedule (Exhibit 3) until the later of: a. connection of the Field by pipeline to a pipeline which connects with APC's pipeline system and delivery of gas in the volumes required by the Agreement for twelve (12) consecutive months. If gas in the volumes required by the Agreement is available in any month but APC does not take it, the gas shall be deemed delivered for purposes of this provision; or b. March 31,2006, but in any event, not after January 1, 2008 (that is, if not terminated earlier, no Backup obligation exists after January 1, 2008). "Backup" means to supply annually and daily one-half of any gas volume required to be supplied by the 2002 Production Schedule which APC requires but Aurora does not supply for any reason. For example, the 2002 Production Schedule provides for a Daily Peak Rate of 13 MMcf in 2005. If on a given day in 2005 APC requires 12 MMcf and Aurora supplies only 10 MMcf, CPA would be required to supply 1 MMcf. IN WITNESS WHEREOF, the parties hereto have executed this Assignment on the dates indicated below. ConocoPhillips Alaska, Inc. Aurora Gas, LLC By /s/ Joseph O. Leonard By /s/ G. Scott Pfoff --------------------------- -------------------------------- Its Vice President Its President Date 1/7/03 Date 12/23/02 Alaska Pipeline Company By /s/ Daniel M. Dieckgraeff ---------------------------- Its Vice President Date 1-13-03 Page 3 of 3 EXHIBIT 1 to Assignment Approval by Alaska Pipeline Company and Joinder and Ratification by Aurora Gas, LLC of the Gas Sales Agreement Between and Among Anadarko Petroleum Corporation, Phillips Alaska, Inc., and Alaska Pipeline Company EXHIBIT E TO THE GAS SALES AGREEMENT BETWEEN AND AMONG ANADARKO PETROLEUM CORPORATION, PHILLIPS ALASKA, INC., AND ALASKA PIPELINE COMPANY THE FIELD LEGAL DESCRIPTION Seward Meridian, Township 11 North, Range 11 West: The following lands within U.S. Survey 1865: Sections 3-10 (protracted), all; Sections 15-19 (protracted) (fractional), all; and All tidelands and submerged lands within the following sections: Sections 15-22 (protracted). Seward Meridian, Township 11 North, Range 12 West: The following lands within U.S. Survey 1865: Sections 1-2 (protracted), all; Section 3 (protracted) (fractional),all; Section 10 (protracted) (fractional), all; Sections 11-14(protracted), all; Section 15 (protracted) (fractional), all; Section 22 (protracted) (fractional), all; Section 23 (protracted),all; Sections 24-27 (protracted) (fractional), all (not including any tidelands or submerged lands); and GAS SALES AGREEMENT Page 52 EXHIBIT E Page 1 of 4 Pages Exhibit 1 Page 2 of 4 The following lands outside U.S. Survey 1865: Tract A, comprising the following: Section 3 (fractional), all; Sections 4-9, all; Section 10(fractional), all; Section 15 (fractional), all; Sections 16-18, all; Section 21, all; Section 22 (fractional), all; Section 27 (fractional), all (not including USS 1808, USS 4548 (Lot 1), USS 4548 (Lot 2), USS 3895, or any tidelands or submerged lands); Section 28 (fractional), all (not including USS 3895, USS 4549 (Lot 1), USS 4549 (Lot 2), USS 4549 (Lot 3), USS 4549 (Lot 4), USS 4550, or any tidelands or submerged lands). and U.S. Survey 1808; U.S. Survey 3895; U.S. Survey 3895; U.S. Survey 4548 (Lots land 2); U.S. Survey 4549 (Lots 1, 2, 3 and 4); U.S. Survey 4550. Seward Meridian, Township 12 North, Range 11 West: The following lands outside U.S. Survey 1865: Tract A, comprising the following: Sections 3-10, all; Sections 15-18, all; Section 19 (fractional), all; Section 20 (fractional), all (not including USS 4547); Sections 21-22, all; Sections 27-28 (fractional), all; Section 29 (fractional), all (not including USS 4547); GAS SALES AGREEMENT Page 53 EXHIBIT E Page 2 of 4 Pages Exhibit 1 Page 3 of 4 and U.S. Survey 4547; and The following lands within U.S. Survey 1865: Sections 19-20 (protracted) (fractional), all; Sections 27-29 (protracted) (fractional), all; Sections 30-34 (protracted), all. Seward Meridian, Township 12 North, Range 12 West: The following lands outside U.S. Survey 1865: Tract A, comprising the following: Sections 1-21, all; Sections 22-24 (fractional), all; Section 27 (fractional), all; Sections 28-33, all; Section 34 (fractional), all; and The following lands within U.S. Survey 1865: Sections 22-24 (protracted) (fractional), all; Sections 25-26 (protracted), all; Section 27 (protracted) (fractional), all; Section 34 (protracted) (fractional), all; Sections 35-36 (protracted), all. GAS SALES AGREEMENT Page 54 EXHIBIT E Page 3 of 4 Pages Exhibit 1 Page 4 of 4 Seward Meridian, Township 13 North, Range 11 West: The following lands within Tract A: Section 13, SE4; Sections 19-36, all (not including USS 3964); and The lands within U.S. Survey 3964 (Lots 1 and 2). GAS SALES AGREEMENT Page 55 EXHIBIT E Page 4 of 4 Pages Exhibit 2 to Assignment Approval by Alaska Pipeline Company and Joinder and Ratification by Aurora Gas, LLC of the Gas Sales Agreement Between and Among Anadarko Petroleum Corporation, Phillips Alaska, Inc., and Alaska Pipeline Company APPROVED ASSIGNMENTS OF OIL AND GAS LEASES Recording Information (Anchorage Recording District)

State of Alaska Oil and Gas Leases ADL-386064 ADL-338176 ADL-388233 Exhibit 2 Page 2 of 2 [PHILLIPS ALASKA, INC. LOGO] EXHIBIT 3 to Assignment Approval by Alaska Pipeline Company and Joinder and Ratification by Aurora Gas, LLC of the Gas Sales Agreement Between and Among Anadarko Petroleum Corporation, Phillips Alaska, Inc., and Alaska Pipeline Company P.O. BOX 100360 ANCHORAGE, ALASKA ###-###-#### January 31,2002 Joseph C. Falcone Commercial Consultant Kuparuk and Cook Inlet Business Group ATO Room 1168 Phone ###-###-#### Fax ###-###-#### E-mail ***@*** Mr. Dan Dieckgraeff Vice President, Finance and Rates Enstar Natural Gas Company 3000 Spenard Road Anchorage, Alaska ###-###-#### Via Facsimile Transmission to ###-###-#### RE: MOQUAWKIE FIELD PRODUCTION SCHEDULE Dear Dan: Per Article 3.3.2 of the Alaska Pipeline/Anadarko/Phillips gas contract for Moquawkie gas, we are providing Alaska Pipeline with a revised Production Schedule. Other than the start date, the Engineer's Report you received last year still reflects a reasonable production profile of the 2400' sand that was tested. There are indications that other sands in the Lone Creek #l well may be productive, but we have no new data to support this hypothesis. We recognize there have been delays compared to the Moquawkie project as originally conceived, but we will stand behind our backstop agreement to insure your requirements are met. The present target for Moquawkie start up is October 1, 2002. As such, our basis for the revised Production Schedule for Moquawkie remains the DeGolyer and MacNaughton report as of December 31, 2000. For our Production Schedule we have "time shifted" the start of the production profile 273 days from January 1 to October 1. If you have any questions, please give me a call. Yours truly, /s/ Joseph Falcone Joseph Falcone Attachment: 2002 Production Schedule cc: Scott Jepsen, Phillips Dave Anderson, Anadarko PHILLIPS ALASKA, INC. IS A SUBSIDIARY OF PHILLIPS PETROLEUM COMPANY Exhibit 3 Page 2 of 2 PROVED PLUS PROBABLE RESERVES AS OF DECEMBER 31, 2000 ATTRIBUTABLE TO THE CARYA 2-4.2 RESERVOIR IN THE MOQUAWKIE FIELD (Gas volumes are expressed at 60 degrees Fahrenheit and 14.65 psia)

- ---------- Notes: 1. Probable reserves have not been risk adjusted. 2. N/A = Not applicable [ENSTAR LOGO] EXHIBIT 4 to Assignment Approval by Alaska ALASKA PIPELINE COMPANY Pipeline Company and Joinder and 3000 Spenard Road Ratification by Aurora Gas, LLC of the Gas P.O. Box 190288 Sales Agreement Between and Among Anchorage, AK ###-###-#### Anadarko Petroleum Corporation, Phillips ###-###-#### Alaska, Inc., and Alaska Pipeline September 17, 2002 Company Mr. Joseph Falcone Kuparuk and Cook Inlet Business Group Phillips Alaska, Inc. P.O. Box 100360 Anchorage, Alaska ###-###-#### Re: Agreement Between and Among Anadarko Petroleum Corporation, Phillips Alaska, Inc. and Alaska Pipeline Company Dated May 15, 2000 (the "Moquawkie Contract") Dear Joe: We have exchanged correspondence and have had discussions concerning the Unmet Requirements for 2003 under the above referenced Moquawkie Contract. In your letter dated April 18, 2002, you indicated that Phillips and Anadarko "would be willing to agree to a revised Backstop volume of 29.8 MMcf per day Deliverability in 2003 with all other terms and conditions of the Agreement remaining unchanged." The 29.8 MMcf per day was the Unmet Requirement for Deliverability in 2003 in the October 1, 2001 "Buyer's Forecast of Requirements". This letter confirms Alaska Pipeline Company's agreement that Phillips and Anadarko will provide the 2003 Unmet Requirements, both in terms of the Maximum Deliverability and the Annual Purchase Obligation as a revised Backstop, with all the other terms and conditions of the Moquawkie Contract remaining unchanged. As you know, Alaska Pipeline is in the process of preparing its October 1, 2002 "Buyer's Forecast of Requirements". The new Forecast may change the estimate of the 2003 Unmet Requirements, although Total Requirements are not expected to change materially. A Subsidiary of [LOGO SEMCOENERGY] Mr. Joseph Falcone Exhibit 4 Phillips Alaska, Inc. Page 2 of 2 September 17, 2002 Page 2 of 2 If you are in agreement with the forgoing, please so indicated by signing the enclosed copy of this letter and return it to me. Sincerely, /s/ Daniel M. Dieckgraeff Daniel M. Dieckgraeff Vice President Accepted and agreed to this 25 day of September, 2002. Phillips Alaska, Inc. By: /s/ Joseph Falcone ---------------------------- Title: Commercial Consultant cc: David Anderson, Anadarko