EQUITY PURCHASE AGREEMENT among TIDELANDS OIL & GAS CORPORATION, FRONTERA PIPELINE, LLC, and GRAND CHENIERE PIPELINE LLC and TERRANOVA ENERGIA, S. DE R.L. DE C.V. (as joinder party) Dated as of September 28, 2007 TABLE OF CONTENTS

			Page
Article I DEFINITIONS			5
	1.1	Certain Definitions	5
	1.2	Interpretation	10
Article II PURCHASE AND SALE OF LLC INTERESTS, CONSIDERATION AND CLOSING			10
	2.1	Purchase and Sale of Equity Interests	10
	2.2	Consideration	10
	2.3	Use of Purchase Price Proceeds	10
	2.4	Closing	10
	2.5	Purchase Price Adjustments	10
	2.6	Assignment of Project Documents	10
	2.7	Cheniere Deliveries	11
	2.8	Deliveries of TOG and the Company	11
Article III REPRESENTATIONS AND WARRANTIES RELATING TO TOG			13
	3.1	Due Organization and Power of TOG	13
	3.2	Authorization and Validity of Agreement	13
	3.3	Non-Contravention.	13
	3.4	Governmental Approvals; Consents and Actions	13
	3.5	Litigation	13
	3.6	LLC Interests	13
	3.7	Finders; Brokers	13
	3.8	Bankruptcy	13
Article IV REPRESENTATIONS AND WARRANTIES RELATING TO THE ACQUIRED COMPANIES			14
	4.1	Due Organization and Power of the Acquired Companies	14
	4.2	Authorization and Validity of Agreement	14
	4.3	Non-Contravention	14
	4.4	Governmental Approvals	14
	4.5	Capitalization	14
	4.6	Financial Statements	14
	4.7	Absence of Undisclosed Liabilities, Absence of Changes	15
	4.8	Litigation	15
	4.9	Labor Relations	15
	4.10	Books of Accounts	15
	4.11	Bank Accounts	15
	4.12	Corporate Records	15
	4.13	Insurance	15
	4.14	Ethical Practices	16
	4.15	No Other Representations or Warranties	16
	4.16	Compliance with Laws	16
	4.17	Taxes	16
	4.18	Environmental	17
	4.19	Material Contracts	18
	4.20	Real Property	18
	4.21	Subsidiaries and Investments	18
	4.22	Related Party Transactions	18

 

 

 

Article V REPRESENTATIONS OF BUYER			19
	5.1	Due Organization and Power of Cheniere	19
	5.2	Authorization and Validity of Agreement	19
	5.3	Non-Contravention	19
	5.4	Governmental Approvals; Consents and Action	19
	5.5	Litigation	19
	5.6	Independent Decision	19
	5.7	Purchase for Investment	19
	5.8	Financial Capacity; No Financing Condition	19
	5.9	Finders; Brokers	20
	5.10	No Other Representations or Warranties	20
Article VI AGREEMENTS OF THE COMPANY, TOG AND Cheniere			20
	6.1	Transfer of the Mexican Project Entities	20
	6.2	Operation of the Business	20
	6.3	Pre-Mexican Project Closing Date Investigation	22
	6.4	Confidentiality.	22
	6.5	Efforts; Cooperation; No Inconsistent Action	23
	6.6	Public Disclosures	23
	6.7	Exclusivity	23
	6.8	Tax Treatment of Transaction.	23
Article VII INDEMNIFICATION			23
	7.1	Survival of Representations and Warranties	23
	7.2	Indemnification	24
	7.3	Indemnification Procedures	25
Article VIII MISCELLANEOUS			26
	8.1	Notices	27
	8.2	Expenses	27
	8.3	Assignability	27
	8.4	Amendment; Waiver	27
	8.5	No Third Party Beneficiaries	27
	8.6	Governing Law	27
	8.7	Consent to Jurisdiction	27
	8.8	Entire Agreement	27
	8.9	Severability	27
	8.10	Counterparts	27
	8.11	Further Assurances	28
	8.12	Schedules, Annexes and Exhibits	28
	8.13	Specific Performance; Limitation on Damages	28
	8.14	Waiver of Jury Trial	28
	8.15	Time	28
	8.16	Attorneys Fees	28

 

Exhibit A	Form Consulting Agreement
Exhibit B	Form Operating Agreement
Schedule 1.1(a)	Excluded Assets
Schedule 1.1(b)	Knowledge Parties
Schedule 1.1(c)	Reorganization
Schedule 2.3	Use of Purchase Price Proceeds
Schedule 2.8(f)	TOG’s Governmental Approval
Schedule 3.3	TOG’s Non-Contravention; Permits and Third-Party Approvals
Schedule 3.4	TOG’s Governmental Approvals; Consents and Actions
Schedule 3.5	TOG’s Litigation
Schedule 3.6	Permitted LLC Interests Liens
Schedule 4.3	Company’s Non-Contravention; Permits and Third Party Approvals
Schedule 4.4	Company’s Actions and Orders
Schedule 4.5	Company Interests
Schedule 4.6	Company’s Financial Statements
Schedule 4.7(a)	Certain Liabilities
Schedule 4.7(b)	Company’s Non-Ordinary Course of Business
Schedule 4.8	TOG’s and the Company’s Litigation
Schedule 4.9	Labor Relations
Schedule 4.11	Company’s Bank Accounts
Schedule 4.13	Company’s Insurance
Schedule 4.16	Company’s Compliance with Laws; Permits
Schedule 4.17(a)	Tax Returns
Schedule 4.17(h)	Partnership Treatment
Schedule 4.18	Company’s Environmental
Schedule 4.19(a)	Company’s Material Contracts
Schedule 4.19(b)	Affected Material Contracts
Schedule 4.20(a)	Company’s Real Property Leases
Schedule 5.3	Cheniere’s Non-Contravention; Permits and Third Party Consents
Schedule 5.5	Cheniere’s Litigation
Schedule 6.2	Operation of the Business
Schedule 6.2(k)	Capital Expenditure

 

 

            (a)  a certificate confirming the good standing of Cheniere from the Secretary of State of the State of Delaware, dated within ten (10) Business Days of the Closing;

 

            (b)  a copy of the certificate of formation of Cheniere, as amended, certified as of a date not earlier than ten (10) Business Days prior to the Closing;

 

            (c)  a duly executed resolution of the managers of Cheniere approving the transactions contemplated in this Agreement;

 

            (d)  a receipt acknowledging receipt of the LLC Interests being transferred by the TOG;

 

            (e)  a certificate confirming the delivery of wire instructions for the delivery of one-hundred percent (100%) of the Purchase Price to TOG’s account as provided in Section 2.2 or to the creditors in the respective amounts listed on Schedule 2.3;

 

            (f)  a signed counterpart to the Consulting Agreement;

 

            (g)  a signed counterpart to the Operating Agreement; and

 

            (h)   other agreements, documents and instruments as are reasonably required to be delivered by Cheniere at or prior to the Closing pursuant to this Agreement or otherwise reasonably required in connection herewith, including all such other instruments as TOG, the Company or their respective counsel may reasonably request in connection with the purchase and sale of the LLC Interests contemplated hereby. 

            

            (a)  a certificate confirming the good standing of TOG from the Secretary of State of the State of Nevada, dated within ten (10) Business Days of the Closing;

            

            (b)  a copy of the bylaws of TOG, as amended, certified as of a date not earlier than ten (10) Business Days prior to the Closing;

 

            (c)  a certificate confirming the good standing of the Company from the Secretary of State of the State of Delaware, dated within ten (10) Business Days of the Closing;

 

            (d)  a duly executed resolution of the directors of TOG approving the transfer of the LLC Interests and the Mexican Project Entities;

            

            (e)  a duly executed certificate of the LLC Interests in a form and substance reasonably satisfactory to Cheniere, free and clear of all Liens other than Permitted LLC Interest Liens;

 

            (f)        a receipt acknowledging receipt of one-hundred percent (100%) of the Purchase Price at Closing pursuant to Section 2.2;

 

            (g)  a signed counterpart to the Operating Agreement;

 

 

            (h)       a signed counterpart to the Consulting Agreement;

 

            (i)        a written release executed by Julio Bastarrachea and KIINERA acknowledging: (i) the non-existence of a current or past employee/employer relationship with the Acquired Companies and (ii) payment in full of all consulting fees performed on behalf of the Acquired Companies, and releasing the Acquired Companies and Cheniere from any Liabilities whatsoever in connection with such services;

 

            (j)        unanimous written resolutions approving the transfers of interests in the Mexican Project Entities, in form and substance reasonably satisfactory to Cheniere, as required to undertake the Reorganization upon the written approval of the CRE allowing for Cheniere’s indirect participation in the Project;

 

            (k)  an irrevocable power of attorney of Terranova, in form and substance reasonably satisfactory to Cheniere, pursuant to which Terranova grants to Cheniere and its designees a broad power of attorney to perform all obligations of Terranova under Section 6.5(a) of this Agreement. As required under the applicable provisions of the Mexican Codigo Civil Federal, the granting and delivery of this irrevocable power of attorney to Cheniere and its designees will be a condition precedent for the validity of this Agreement;

 

            (l)        the books and records of the Acquired Companies, including updated Corporate Records;

 

            (m)      an affidavit of non-foreign status that complies with Section 1445 of the Code and Treasury Regulations Section 1.1445-2(b)(2);

 

            (n)      originals of all Permits (including all applications filed by any of the Acquired Companies with any Governmental Entity, whether or not such filings resulted in the issuance or denial of a permit) and Project Documentation;

 

            (o)       certificates of account status issued by the Comptroller of the State of Texas for all Acquired Companies (other than any Acquired Company that is a limited partnership) doing business in Texas;

 

            (p)       copy of IRS Form 8832 executed on behalf of Terranova electing to treat that entity as a disregareded entity for U. S. tax purposes under Treasury Regulations Section ###-###-####-3 of the Code, as amended; and

 

            (q)       such other agreements, documents and instruments as are reasonably required to be delivered by TOG or the Acquired Companies at or prior to the Closing pursuant to this Agreement or otherwise reasonably required in connection herewith, including all such other instruments as Cheniere or its counsel may reasonably request in connection with the purchase and sale of the LLC Interests contemplated hereby.

.

            

            (a)  The LLC Interests being sold by TOG to Cheniere have been validly issued and are fully paid and nonassessable.  TOG has the full company power, right and authority to issue and convey such LLC Interests to Cheniere and the LLC Interests are not being transferred in violation of any purchase or call option, right of first refusal, subscription right, preemptive right or any similar rights.

 

            (b)  Except for Permitted LLC Interest Liens, there are no outstanding options, warrants or other rights of any kind including any restrictions on transfers, relating to the sale, issuance or voting of such LLC Interests or any securities convertible into or evidencing the right to purchase such LLC Interests.

 

            (c)  Upon Closing, Cheniere shall have good and indefeasible title to such LLC Interests, free and clear of any Liens, restrictions on transfer and voting or preemptive rights, other than Permitted LLC Interest Liens.
 

 

            (a)  The Acquired Companies have no Liabilities that would be required to be reflected on the Financial Statements in accordance with GAAP, other than those: (i) set forth in the Most Recent Balance Sheet; (ii) incurred in the Ordinary Course of Business since the date of the Most Recent Balance Sheet; and (iii) specified in Schedule 4.7(a).

 

            (b)  Except as expressly contemplated by this Agreement or as set forth on Schedule 4.7(b), since the date of the Most Recent Balance Sheet (i) the Acquired Companies have conducted their business only in the Ordinary Course of Business and (ii) there has not been any event, change, occurrence or circumstance that, individually or in the aggregate with any such events, changes, occurrences or circumstances, has had or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. 

            (a)  EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE III AND THIS ARTICLE IV, NEITHER OF TOG OR THE COMPANY MAKE ANY OTHER REPRESENTATION OR WARRANTY, WHETHER EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, ON BEHALF OF TOG OR THE COMPANY, INCLUDING AS TO THE PROBABLE SUCCESS OR PROFITABILITY OF THE OWNERSHIP, USE OR OPERATION OF THE ACQUIRED COMPANIES OR THE PROJECT, BY CHENIERE AFTER THE CLOSING, INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.

 

            (b)  IN NO EVENT SHALL THE STIPULATIONS PROVIDED IN SUBSECTION (A) ABOVE, BE CONSTRUED TO NEGATE ANY COMMON LAW TORT CLAIMS FOR FRAUD OR INTENTIONAL MISREPRESENTATION. 

 

            (a)  (i) All Tax Returns required to be filed by or on behalf of the Acquired Companies have been duly and timely filed with the appropriate Governmental Entity in all jurisdictions in which such Tax Returns are required to be filed (after giving effect to any valid extensions of time in which to make such filings), and all such Tax Returns are true, complete and correct in all material respects; and (ii) all Taxes payable by or on behalf of the Acquired Companies have been fully and timely paid or are being contested in good faith as set forth in Schedule 4.17(a).  With respect to any period for which Tax Returns have not yet been filed or for which Taxes are not yet due or owing, the Acquired Companies have made due and sufficient accruals for such Taxes in their books and records.

 

            (b)  The Acquired Companies have complied in all material respects with all applicable Laws relating to the payment and withholding of Taxes and have duly and timely withheld and paid over to the appropriate Governmental Entity all amounts required to be so withheld and paid under all applicable Laws.

 

            (c)  All deficiencies asserted or assessments made as a result of any examinations by any Governmental Entity of the Tax Returns of, or including, the Acquired Companies have been fully paid or satisfied, and there are no other audits or investigations by any Governmental Entity in progress, nor has any Acquired Company or TOG received any written notice from any Governmental Entity that it intends to conduct such an audit or investigation.

 

            (d)  No Acquired Company has (i) requested any extension of time within which to file any Tax Return, which Tax Return has since not been filed, or (ii) granted any extension for the assessment or collection of Taxes, which Taxes have not since been paid.

 

            (e)  No Acquired Company is a party to any tax sharing, allocation, indemnity or similar agreement or arrangement (whether or not written) pursuant to which it will have any obligation to make any payments after the Closing.

 

           

             (f)  There are no Liens as a result of any unpaid Taxes upon any of the assets of the Acquired Companies, other than Liens for Taxes not yet due and payable or taxes being contested in good faith by appropriate proceedings.

 

            (g)  The Acquired Companies have disclosed on their Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income tax within the meaning of Section 6662 of the Code.

 

            (h)  Except as set forth on Schedule 4.17(h), each Acquired Company is, and has been, since its inception, an entity disregarded as separate from its owner within the meaning of Treasury Regulations Section ###-###-####-2(c)(2)(i) for U.S. Tax purposes and (ii) no Person has ever made any election to have any Acquired Company treated other than as an entity disregarded as separate from its owner within the meaning of Treasury Regulation Section ###-###-####-2(c)(2)(i) for U.S. Tax purposes or has taken a position inconsistent with such treatment.

 

            (i)  There have been no sales or exchanges (within the meaning of Section 708(b) of the Code) of any interest in any Acquired Company in the twelve-month period preceding the Closing.

 

            (j)  Marea Associates L.P. is a US Tax resident covered by the protections afforded under the US-Mexico Tax Treaty.

 

            (k)  Rio Bravo LLC is a disregarded entity for US Tax purposes and any prior Tax filing for Marea Associates L.P. was erroneously filed.

            

            (l)  The representations and warranties set forth in this Section 4.17 are the exclusive representations and warranties with respect to Taxes.  Other provisions of this Article IV shall be interpreted to apply only to matters other than Taxes. 

            (a)  Schedule 4.19(a) sets forth each Contract to which an Acquired Company is a party or by which any of it or its respective assets or properties are bound (collectively, the “Material Contracts”).

 

            (b)  Each of the Material Contracts is in full force and effect and is the legal, valid and binding obligation of the applicable Acquired Company, and to the Knowledge of the Company and TOG, enforceable against the counter parties to such contracts each of them in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency or other similar Laws affecting the enforcement of creditors’ rights generally and subject to general principles of equity and, upon consummation of the transactions contemplated by this Agreement, shall, except as otherwise stated in Schedule 4.19(b), continue in full force and effect without penalty.  The Acquired Companies are not in default under any Material Contract, nor is any other party to any Material Contract in breach of or default thereunder, and no event has occurred that with the lapse of time or the giving of notice or both would constitute a breach or default on the Acquired Companies or any other party thereunder.  No party to any of the Material Contracts has exercised any termination rights with respect thereto, and no party has given notice of any significant dispute with respect to any Material Contract.  TOG has delivered to Cheniere true, correct and complete copies of all of the Material Contracts, together with all amendments, modifications or supplements thereto.

 

 

            (a)  Schedule 4.20(a) sets forth a complete list of all real property and interests in real property owned or leased by the Acquired Companies (individually, a “Real Property Interest” and collectively, the “Real Property Interests”) as owner, lessee or lessor, including a description of each such Real Property Interest (including the name of the third party lessor or lessee and the date of the lease or sublease and all amendments thereto).  The Real Property Interests constitute all interests in real property currently used, occupied or currently held for use in connection with the business of the Acquired Companies and that are necessary for the continued operation of the Project.  None of the improvements erected by an Acquired Company and located on the Real Property Interests constitutes a legal non-conforming use or otherwise require any special dispensation, variance or special permit under any Laws.  TOG has delivered to Cheniere true, correct and complete copies of the Real Property Interests, together with all amendments, modifications or supplements, if any, thereto.  

 

            (b)  There does not exist any actual or, threatened or contemplated condemnation or eminent domain proceedings that affect any Acquired Company Property or any part thereof, and neither the Company nor TOG has received any notice, oral or written, of the intention of any Governmental Entity or other Person to take or use all or any part thereof.

 

            (c)  The Company does not own, hold, is not obligated under or a party to, any option, right of first refusal or other contractual right to purchase, acquire, sell, assign or dispose of any real estate or any portion thereof or interest therein 

            (a)  amend its certificate of formation, limited liability company agreement, estatutos sociales or similar governing document, or issue or agree to issue any additional membership interests (or other equity interests) of any class or series, or any securities convertible into or exchangeable or exercisable for membership interests (or other equity interests), or issue any options, warrants or other rights to acquire any membership interests (or other equity interests);

 

            (b)  sell, transfer or otherwise dispose of or encumber any assets other than in the Ordinary Course of Business;

 

            (c)  conduct the business of the Mexican Project Entities other than in the Ordinary Course of Business;

 

            (d)  fail to maintain all of the assets and properties of, or used by, the Mexican Project Entities in their current condition, ordinary wear and tear excepted;

 

            (e)  (i) fail to maintain the books, accounts and records of the Mexican Project Entities (including the Corporate Records) in the Ordinary Course of Business  or (ii) fail to comply with all contractual and other obligations of the Mexican Project Entities;

 

            (f)        fail to comply in all material respects with all applicable Laws;

 

            (g)  cancel any material debts or waive any material claims or rights pertaining to the Mexican Project Entities;

 

           

             (h)  incur, assume or guarantee any material indebtedness for borrowed money, or issue any notes, bonds, debentures or other similar securities, or grant any option, warrant or right to purchase any of the same, or issue any security convertible or exchangeable or exercisable for debt securities of the Mexican Project Entities;

 

            (i)        make or change any material Tax elections (except any election to treat Terranova as an entity disregarded as separate from its owner within the meaning of Treasury Regulation Section ###-###-####-2(c)(2)(i) or as required by Law), adopt or change any accounting method with respect to Taxes except as may be required as a result of a change in Law, file any amendment to a Tax return, enter into any closing agreement with respect to Taxes, settle any material claim or assessment with respect to Taxes, consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect to Taxes, or settle or compromise any material Tax liability;

 

            (j)        except as may be required as a result of a change in Law or GAAP, change any of the accounting principles or practices used by the Mexican Project Entities;

 

            (k)   make any capital expenditure or make any commitment to make any capital expenditure other than (i) pursuant to existing commitments or business plans described in Schedule 6.2(k), or (ii) to repair, maintain or replace any assets, properties or facilities in the Ordinary Course of Business, provided in both cases it has obtained first Cheniere’s written consent;

 

            (l)        declare or pay any dividend with respect to the securities of the Mexican Project Entities or make any distribution or payment to any member of the Mexican Project Entities;

 

            (m)  adopt a plan of complete or partial liquidation, dissolution, recapitalization or other restructuring;

 

            (n)  pledge or mortgage the assets of the Mexican Project Entities or otherwise cause or permit a Lien (other than a Permitted Exception) to exist against the assets of the Mexican Project Entities;

 

            (o)  effect any split, combination or reclassification of the securities of the Mexican Project Entities or any like change in the capitalization of the Mexican Project Entities, or amend the terms of any outstanding securities of the Mexican Project Entities;

 

            (p)  redeem, repurchase or otherwise acquire, directly or indirectly, any securities of the Mexican Project Entities;

 

            (q)  acquire (by purchase, merger or otherwise) any equity interest in or substantially all of the assets of, or otherwise make any investment in any other Person, or enter into any joint venture, partnership or similar arrangement;

 

            (r)  knowingly allow any material Permits held by the Mexican Project Entities to terminate or lapse or fail to comply with any material term of a Permit held by the Mexican Project Entities;

 

            (s)  enter into any agreement or amend, modify or terminate any contract or Permit to which any Mexican Project Entity is a party or by which any of its assets are bound, except in the Ordinary Course of Business consistent with past practices;

 

            (t)  repay any indebtedness outstanding;

 

            (u)  pay for any trade payables or other obligations incurred in the Ordinary Course of Business, including servicing existing debt);

 

            (v)  increase the salary or other compensation of any manager, officer or employee, consultant or independent contractor of the Mexican Project Entities;

 

            (w)  grant any unusual or extraordinary bonus, benefit or other direct or indirect compensation to any manager, officer, employee, consultant or independent contractor;

 

           

             (x)  increase the coverage or benefits available under any (or create any new) severance pay, termination pay, vacation pay, company awards, salary continuation for disability, sick leave, deferred compensation, bonus or other incentive compensation, insurance, pension or other employee benefit plan or arrangement made to, for, or with any of the managers, officers, employees, agents or representatives of the Mexican Project Entities or otherwise modify or amend or terminate any such plan or arrangement;

 

            (y)  enter into any employment, deferred compensation, severance, special pay, consulting, non-competition or similar agreement or arrangement with any managers or officers of the Mexican Project Entities (or amend any such agreement to which the Mexican Project Entities is party); or

 

            (z)  agree, whether in writing or otherwise, to do any of the foregoing; 

 

            (a)  Subject to the terms and conditions of this Agreement and the Confidentiality Agreement, each of the Parties will use its best efforts to take or cause to be taken, all action, and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws to consummate the transactions contemplated by this Agreement, including using its reasonable efforts to ensure satisfaction of Section 6.1 hereunder and complete the Reorganization.  Each of Cheniere, the Company, TOG, Terranova and their respective Affiliates shall timely and promptly make all filings which may be required by any of them in connection with the consummation of the transactions contemplated hereby.  Each Party shall furnish to the other Party such necessary information and assistance as such other Party may reasonably request in connection with the preparation of any necessary filings or submissions by it to any Governmental Entity.  Each Party shall provide the other Party the opportunity to make copies of all correspondence, filings or communications (or memoranda setting forth the substance thereof) between such Party and its representatives, and any Governmental Entity and members of their respective staffs with respect to this Agreement and the transactions contemplated hereby.  With the exception of payment of the required filing fees and the Parties’ costs and expenses necessary to prosecute such filings, neither TOG, the Company, nor Cheniere shall be required to make any material monetary expenditures, commence or participate in any material litigation, or offer or grant any material accommodation (financial or otherwise) to any third Person in connection therewith; provided, that TOG shall be responsible for expenses incurred by the Mexican Project Entities prior to the Mexican Project Closing Date.  For purposes of this Section 6.5, TOG shall have caused Rio Bravo L.L.C., Marea Associates L.P. and Terranova to grant those irrevocable powers of attorney to Cheniere in accordance with Sections 2.8(j) and 2.8(k).  Except as provided in this Section 6.5(a), nothing contemplated in this Section 6.5 shall be construed by a Party as a grant of authority or consent by the other Party to submit correspondence, filings or communications on behalf of such Party with any Governmental Entity.

 

           

             (b)     From time to time after the Closing, without further consideration, TOG and its Affiliates will, at their own expense, execute and deliver such documents to Cheniere as Cheniere may reasonably request in order to more effectively consummate the transactions contemplated by this Agreement.  From time to time after the Closing, without further consideration, Cheniere will, at its own expense, execute and deliver such documents as TOG and its Affiliates may reasonably request in order to more effectively consummate the transactions contemplated by this Agreement.

 

            (c)  TOG and Cheniere shall notify and keep the other advised as to any litigation or administrative proceeding pending and known to such Party, or to their Knowledge, threatened, which challenges the transactions contemplated hereby.  TOG and Cheniere shall act in good faith and shall not take any action inconsistent with its obligations under this Agreement or which would materially hinder or delay the consummation of the transactions contemplated by this Agreement, or the prompt receipt of required consents or approvals under applicable Laws.

 

            (d)  After the Closing and after the Mexican Project Closing Date and continuing for a commercially reasonable period of time thereafter, each Party shall have reasonable access to the employees of the other Party and its Affiliates, for purposes of consultation or otherwise, to the extent that such access may reasonably be required in connection with matters relating to or affected by the operations of the Company and the Subsidiaries prior to the Closing.  The Parties agree to cooperate in connection with any audit, investigation, hearing or inquiry by any Governmental Entity, litigation or regulatory or other proceeding which may arise following the Closing and which relates to the ownership of the Company, the Subsidiaries or operation of the Project, prior to the Closing.  Notwithstanding any other provision of this Agreement to the contrary, each of Cheniere, TOG and the Company shall bear its own expenses including fees of attorneys or other representatives, in connection with any such matter described in this Section 6.5 in which TOG, the Company and Cheniere are subjects or Parties or in which they have a material interest. 

            (a)  Subject to this Section 7.2 hereof, TOG hereby agrees, to indemnify and hold Cheniere, the Company, and their respective managers, officers, employees, Affiliates, members, stockholders, agents, attorneys, representatives, successors and assigns (collectively, the “Cheniere Indemnified Parties”) harmless from and against, and pay to the applicable Cheniere Indemnified Parties the amount of any and all losses, Liabilities, claims, interest, obligations, deficiencies, demands, judgments, damages, interest, fines, penalties, claims, suits, actions, causes of action, assessments, awards, costs and expenses (including costs of investigation and defense and attorneys’ and other professionals’ fees), whether or not involving a third party claim (individually, a “Loss” and, collectively, “Losses”) based upon, attributable to or resulting from:

 

(i)           the failure of any of the representations or warranties made by TOG in this Agreement to be true and correct in all respects at and as of the date hereof;

 

(ii)           the Reorganization (including costs, expenses, and Taxes arising in connection or associated with the Reorganization), or Taxes related to the transfer of the LLC Interests to Cheniere;

 

(iii)           any liability for Taxes with respect to any Tax year or portion thereof ending on or before the Closing (or any Tax year beginning before and ending after the Closing to the extent allocable to the portion of such period beginning before and ending on the Closing); provided that to the extent Cheniere causes the Acquired Companies to take a Tax position following the Closing (other than the supplemental Tax Returns of Terranova amending the deductions for unpaid inter-company debt for the years ending 2005 and 2006) that results in an increase in Taxes owed for the period prior to the Closing, TOG shall not be liable for the amount of any such increase and Cheniere shall indemnify TOG for any such increase paid by TOG;

 

(iii)           the Excluded Assets and Excluded Liabilities; and

 

(iv)           the breach of any covenant or other agreement on the part of TOG, the Company or Terranova under this Agreement, provided, however, that this indemnity shall not cover the Company and Terranova after such entities are under the Control of Cheniere.

 

            (b)   Without limiting any other remedies available under this Agreement and applicable Law, a Cheniere Indemnified Party shall have the right to set off any Losses incurred by such Cheniere Indemnified Party from any Third Party Claim against the Phase I FID Milestone Payment, the Phase II FID Milestone Payment, the Phase III FID Milestone Payment, the Phase I Royalty, Phase II Royalty, and the Phase III Royalty.  The Company shall have the right to set off any Losses incurred by the Company against the Phase I FID Milestone Payment, the Phase II FID Milestone Payment, the Phase III FID Milestone Payment, the Phase I Royalty, Phase II Royalty, and the Phase III Royalty.  For avoidance of doubt, any indemnifiable Losses suffered solely by Cheniere, shall not be subject to the set off rights as provided for in this Section 7.2(b).

 

            (c)  Subject to Sections 7.2, Cheniere hereby agrees to indemnify and hold TOG its managers, officers, employees and Affiliates and their respective members, agents, attorneys, representatives, successors and permitted assigns (collectively, the “TOG Indemnified Parties”) harmless from and against, and pay to the applicable TOG Indemnified Parties the amount of any and all Losses:

 

(i)           based upon, attributable to or resulting from the failure of any of the representations or warranties made by Cheniere in this Agreement to be true and correct in all respects at the date hereof; and

 

(ii)           based upon, attributable to or resulting from the breach of any covenant or other agreement on the part of Cheniere under this Agreement.

 

            

            (a)  A claim for indemnification for any matter not involving a third party claim may be asserted by notice to the party from whom indemnification is sought; provided, however, that failure to so notify the indemnifying party shall not preclude the indemnified party from any indemnification which it may claim in accordance with this Article VII, except to the extent that the indemnifying party can demonstrate actual loss and prejudice as a result of such failure.

 

            (b)  In the event that any Action shall be instituted or that any claim or demand shall be asserted by any third party in respect of which indemnification may be sought under Section 7.2 (a “Third Party Claim”), the indemnified party shall promptly cause written notice of the assertion of any Third Party Claim of which it has knowledge which is covered by this Article VII to be forwarded to the indemnifying party.  The failure of the indemnified party to give reasonably prompt notice of any Third Party Claim shall not release, waive or otherwise affect the indemnifying party’s obligations with respect thereto except to the extent that the indemnifying party can demonstrate actual loss and prejudice as a result of such failure.  Subject to the provisions of this Section 7.3, the indemnifying party shall have the right, at its sole expense, to be represented by counsel of its choice, which must be reasonably satisfactory to the indemnified party, and to defend against, negotiate, settle or otherwise deal with any Third Party Claim which relates to any Losses indemnified against hereunder; provided that the indemnifying party shall have acknowledged in writing to the indemnified party its unqualified obligation to indemnify the indemnified party as provided hereunder.  If the indemnifying party elects to defend against, negotiate, settle or otherwise deal with any Third Party Claim which relates to any Losses indemnified by it hereunder, it shall within five (5) days of the indemnified party’s written notice of the assertion of such Third Party Claim (or sooner, if the nature of the Third Party Claim so requires) notify the indemnified party of its intent to do so; provided, that the indemnifying party must conduct the defense of the Third Party Claim actively and diligently thereafter in order to preserve its rights in this regard.  If the indemnifying party elects not to defend against, negotiate, settle or otherwise deal with any Third Party Claim which relates to any Losses indemnified against hereunder, fails to notify the indemnified party of its election as herein provided or contests its obligation to indemnify the indemnified party for such Losses under this Agreement, the indemnified party may defend against, negotiate, settle or otherwise deal with such Third Party Claim.  If the indemnified party defends any Third Party Claim, then the indemnifying party shall reimburse the indemnified party for the expenses of defending such Third Party Claim upon submission of periodic bills.  If the indemnifying party shall assume the defense of any Third Party Claim, the indemnified party may participate, at his or its own expense, in the defense of such Third Party Claim; provided, however, that such indemnified party shall be entitled to participate in any such defense with separate counsel at the expense of the indemnifying party if (i) so requested by the indemnifying party to participate or (ii) in the reasonable opinion of counsel to the indemnified party, a conflict or potential conflict exists between the indemnified party and the indemnifying party that would make such separate representation advisable; and provided, further, that the indemnifying party shall not be required to pay for more than one such counsel for all indemnified parties in connection with any Third Party Claim.  The parties hereto agree to provide reasonable access to the other to such documents and information as may be reasonably requested in connection with the defense, negotiation or settlement of any such Third Party Claim.  Notwithstanding anything in this Section 7.3 to the contrary, neither the indemnifying party nor the indemnified party shall, without the written consent of the other party, settle or compromise any Third Party Claim or permit a default or consent to entry of any judgment unless the claimant or claimants and such party provide to such other party an unqualified release from all liability in respect of the Third Party Claim.  If the indemnifying party makes any payment on any Third Party Claim, the indemnifying party shall be subrogated, to the extent of such payment, to all rights and remedies of the indemnified party to any insurance benefits or other claims of the indemnified party with respect to such Third Party Claim.

 

            (c)  After any final decision, judgment or award shall have been rendered by a Governmental Entity of competent jurisdiction and the expiration of the time in which to appeal therefrom, or a settlement shall have been consummated, or the indemnified party and the indemnifying party shall have reached an agreement, in each case with respect to an indemnifiable claim hereunder, the indemnified party shall forward to the indemnifying party notice of any sums due and owing by the indemnifying party pursuant to this Agreement with respect to such matter.
 

On August 24, 2007, Sonora Pipeline, L.L.C. and Rio Bravo Energy, LLC executed a quitclaim conveyance in which  they conveyed all ownership and rights in pipelines and other facilities located in Dimmit and Zavala Counties, TX to Reef International, L.L.C.

See attachment.

Sonora
BNC Engineering, LLC	$15,189.85
607 River Bend Dr.
Georgetown, TX 78628
Tax ID 76-0578524
Project Consulting Services, Inc.	$4,700.83
3300 W Esplanade Ave. S., Suite 500
Metarie, LA 70002-7406
Tax ID 72-1206233
Ross, Marsh, & Foster	$89,721.38
2001 L Street, N.W.
Suite 400
Washington, D.C. 20036
Tax ID 53-0214335
Thomas R. Hughes & Associates, Inc.	$14,231.25
9 Buxton Lane
Riverside, CT 06878
Tax ID 06-1159849
Strasburger & Price LLP	$5,527.63
300 Convent, Suite 900
San Antonio, TX 78205
Tax ID 75-0838805
Sonora Total	$129,370.94

 

 

 

Terranova
Hanhausen, Domenech y Asociados	$3,185.50
Jorge Eliot 12-701, Col. Polanco Chapultepec
Mexico DF 11560
Asociacion Mexicana de Gas Natural	$1,400.00
Av. Revolucion 468, Piso 2B, Col. San Pedro de los Pino
Mexico DF 03800
Reynaldo Morado Dimas	$5,700.00
Tepic 90-402, Col. Roma Sur
Mexico DF 06760
Ritch Mueller, S.C.	$905.63
Blvd. Avila Camacho No. 24, Piso 20, Col. Lomas de Chapultepec
Mexico DF 11000
Kiinera SA de CV	$52,785.00
Jorge Eliot 12-701, Col. Polanco Chapultepec
Mexico DF 11560
Strasburger & Forastieri, S.C.	$8,357.57
Prolongación Paseo de la Reforma 600, Desp. 201-A
Col. Santa Fe
Mexico DF 01210
Secretaria de Hacienda y Crédito Publico	$58,095.87
Terranova Total	$130,429.57

After Closing, the Company will have to file a new Form P-5 (Organization Report) with the Railroad Commission of Texas (RRC) for Sonora Pipeline, LLC.  The contact person at the RRC is Ms. Linda Turk, (512) 463-6777, ***@*** .

Terranova has filed the request for CRE to approve the ownership changes.  The request letter explains that TOG will transfer 80% of its interest in Terranova to Cheniere by forming a new company to which TOG will transfer all its interests in Terranova.  TOG and Cheniere will jointly own the new company 20%-80%, respectively.

The CRE response is expected by the middle of October, 2007.

 

The contact person at the CRE is the Director General of Natural Gas, Dr. Alejandro Brena, (52-55) 5283-1515, ***@***

 

Terranova Pipeline. Terranova was awarded a CRE transportation permit G/186/TRA2006 on May 23, 2006, which expires 24 months after such issuance date (May 22, 2008). Terranova may request a permit extension beyond the expiration date or file for a permit amendment extending the expiration date.  Terranova plans to file for an extension of the pipeline permit in March 2008.  The extension will cover from the point known as Station 19 to the reception station in Monterrey, known as the GIMSA Terminal Station (190 Kms).  The CRE will likely take between six to nine months to process the amendment application.

Terranova Underground Natural Gas Storage. Terranova submitted a permit application on August 7, 2005.  To date, Mexico has no underground natural gas storage facilities and this was the first permit application for a facility based on the use of a depleted reservoir.

Since Mexico had no policy on the use of depleted reservoirs for storage purposes and current legislation is not clear on the ownership of depleted reservoirs, Terranova has been advised that the CRE, in collaboration with the Secretary of Energy and Pemex Exploration and Production (PEP), are working towards a Mexican national policy for the use of depleted reservoirs, differing from exploration and production, and that Terranova will be advised as soon as a policy is officially in place.

SCHEDULE OF REQUIREMENTS RELATIVE TO THE

PIPELINE PROJECT BASED ON

THE CRE RESOLUTION RES/104/2006 AND CRE PERMIT G/183/TRA/2006

BOTH ISSUED ON MAY 23, 2006

I           If the construction of the pipeline as permitted goes ahead, within 60 days before construction begins, or at least 24 months from the permit issuing date (May 23, 2006):

a.	File for CRE approval the corresponding Maximum Revenue and the corresponding transmission tariff.

II           If the pipeline project changes, by May 22, 2008:

b.	File with CRE an application to amend the permit G/183/TRA/2006, or file an a letter requesting an extension to such permit for another 12 months.

III           Prior to commencement of pipeline construction:

a.	Conduct an Open Season.

IV           Within 10 days after commencing construction:

V           Within 30 days after construction completed and service commenced:

a.

File a written notice of such completion and commencement date.

VI	At the end of 5 years of actual operation, file either a cost and revenue study under the published CRE guidelines for the 5-year tariff evaluation.

Authorization, License or Permit	Government office	Description
Permiso de transporte de gas natural para acceso abierto.	CRE	Permiso requerido para el transporte de gas natural para acceso abierto. Art. 32 RGN.
Permiso de Uso de Suelo.	Municipio afectado	Autorización para que determinados predios o zonas puedan destinarse a fines particulares. Art. 9 LAH.
Licencia de Construcción.	Municipio afectado	Autorización para la ejecución de obras. Art. 9 LAH.
Caminos de acceso.	SCT o JFC Gobierno del Estado	Autorización para la construcción de los caminos de acceso en terrenos o caminos de jurisdicción estatal.
Revisión y aprobación del sistema eléctrico.	SE	Solicitud por escrito acompañada de planos del proyecto. Memoria descriptiva y memoria de cálculo.
Autorización para Uso de Explosivos.	SEDENA	Permiso requerido para el uso de explosivos en caso de ser necesario en la construcción del gasoducto. Art. 37 de LFAFE.
Adquisición o posesión de terrenos por expropiación.	SENER SAGARPA	Procedimiento para la obtención de terrenos que no haya sido posible adquirir a través de negociaciones con sus propietarios.
Permiso de Ocupación de Vía Pública.	Municipio afectado	Planos de trazo y perfil.
Permiso de Ocupación de Zonas Adyacentes. Permiso de Cruzamiento.	Gobierno del Estado	Presentación de planos de trazo y perfil (donde se localice la carretera) y planos de cruzamiento de la carretera.
Permiso de construcción de accesos, cruzamientos e instalaciones en el derecho de vía de caminos y carreteras federales.	SCT En la capital del Estado, o en México, D.F.	Permiso requerido para el tendido de ductos a 2.5 m. dentro del derecho de vía. Art. 8 LCPAF, Art. 2 RADVCF
Permiso para el Uso de Frecuencia de Radio y Comunicación Vía Satélite.	SCT	Permiso para instalar, operar o explotar estaciones terrestres transmisoras en comunicación vía satélite.  Se requiere de concesión para utilizar bandas de frecuencia del espectro.
Permiso de Cruzamiento de Vías de Ferrocarril. Permiso de Ocupación de Zonas Adyacentes.	SCT En las oficinas de Ferronales.	Permiso requerido para construir accesos, cruzamientos e instalaciones en el derecho de vía de las vías férreas.  Se requerirán planos de trazo y perfil y memorias, entre otros. Art. 15, LRSF.
Permiso de Ocupación Marginal y Permiso de Cruzamiento.	CNA. Gerencias Estatales.	Para el uso o aprovechamiento de bienes nacionales a cargo de la CNA se requiere de concesión por parte de la misma. Se requerirán diferentes planos. Art. 118 LAN. 174 RLAN.
Autorización de la Manifestación de  Impacto Ambiental que se presente (Autorización de la MIA)	SEMARNAT Dirección General de Impacto Ambiental	Autorización para llevar a cabo actividades u obras que pudiesen tener un impacto adverso en el medio ambiente. Art. 28 LGEEPA.
Estudio de riesgo.	SEMARNAT Dirección General de Impacto Ambiental	Estudio tendiente a reducir las probabilidades de accidente que afecten a poblaciones cercanas y a las instalaciones mismas.
Licencia de Funcionamiento	SEMARNAT Delegaciones Estatales.	Si se califica como fuente fija de emisiones a la atmósfera, se necesita autorización para que la fuente pueda emitir olores, gases o partículas sólidas o líquidas a la atmósfera. Art. 18 RLGEEPAA
Cédula de operación	SEMARNAT	Obligación de la fuente fija de remitir a la SEMARNAT en febrero de cada año, la cédula de operación de la instalación. Art. 19 y 21 RLGEEPAA
Inventario de emisiones a la atmósfera	SEMARNAT. Delegaciones Estatales.	Obligación de remitir a SEMARNAT un inventario de las emisiones contaminantes a la atmósfera, en los formatos correspondientes. Art. 17 RLGEEPAA
Permiso de combustión a cielo abierto en prácticas de contra incendio	SEMARNAT. Delegaciones Estatales.	Es el permiso otorgado para la realización de adiestramiento para el combate de incendios con combustión a cielo abierto. Art. 27 del RLGEEPAA
Autorización para cambio de uso de terreno forestal	SEMARNAT	Autorización para el cambio de destino de terrenos forestales. Art. 5 LF, 19-22 RLF
Título de Concesión o Asignación de Aguas Nacionales	CNA Gerencias Estatales	Concesión de la CNA necesaria para hacer uso o explotación de aguas nacionales para la construcción y/u operación de Gasoducto.
Título de Concesión o Asignación para aguas del subsuelo en zonas reglamentadas o de veda	CNA Gerencias Estatales	Remitir a la autoridad el volumen anual de agua usada o aprovechada como promedio en los dos años inmediatamente anteriores al decreto respectivo.
Registro Público de Derechos de Aguas	CNA Gerencias Estatales	Obtener el certificado de las inscripciones y documentos referentes a los títulos de concesión, asignación y permisos.
Registro de Descarga de Aguas Residuales	CNA Gerencias Estatales	Inscripción del permiso requerido para la descarga de aguas residuales en cuerpos receptoras propiedad de la Nación.
Permiso de Descarga de Aguas Residuales	CNA Gerencias Estatales	Permiso que autoriza a realizar descargas de aguas residuales en cuerpos receptoras de jurisdicción federal.
Pago de Derechos por Descargas de Aguas Residuales	CNA Gerencias Estatales	Pago de derechos por la descarga de aguas residuales a cuerpos receptoras propiedad de la Nación, conforme al volumen de descarga y cumplimiento de los parámetros de D.Q.O., y S.S.T. o de condiciones particulares de descarga o de la norma oficial aplicable.
Registro como empresa generadora de residuos peligrosos	SEMARNAT   Delegaciones Estatales.	Si se generan de manera constante residuos peligrosos, se debe registrar como empresa generadora de residuos peligrosos. Si sólo se generan de manera esporádica, debe registrarse como generador eventual de residuos peligrosos.
Reporte semestral de residuos peligrosos enviados para su reciclaje, tratamiento, incineración o confinamiento	SEMARNAT   Delegaciones Estatales.	Reporte semestral ante la autoridad  sobre la generación de residuos y sus movimientos.
Aviso de Contingencias	CRE	Notificación de cualquier hecho que derivado de las actividades del transportista ponga en peligro la salud y seguridad públicas. Art. 70 RGN
Informe de Siniestros	CRE	Informe detallado de causas y medidas tomadas en una contingencia.  Art. 70 RGN
Programa de Mantenimiento del Sistema	CRE	Anualmente, se debe presentar el programa ante la CRE en los términos de las Normas Oficiales Mexicanas aplicables. Art. 70 del RGN.
Bitácora para la supervisión, operación y mantenimiento de obras e instalaciones	CRE	Libro que debe llevar el transportista y debe siempre estar a disposición de la CRE.

 

 

 

CNA	Comisión Nacional del Agua
CRE	Comisión Reguladora de Energía
Ferronales	Ferrocarriles Nacionales de México
JFC	Junta Federal de Caminos
LAH	Ley de Asentamientos Humanos
LAN	Ley de Aguas Nacionales
LCPAF	Ley de Caminos Puentes y Autotransporte Federal
LF	Ley Forestal
LFAFE	Ley Federal de Armas de Fuego y Explosivos
LGEEPA	Ley General de Equilibrio Ecológico y Protección al Ambiente
LRSF	Ley Reglamentaria del Servicio Ferroviario
MIA	Manifestación de Impacto Ambiental
RADVCF	Reglamento para el Aprovechamiento del Derecho de Vía de las Carreteras Federales y Zonas Aledañas
RGN	Reglamento de Gas Natural
RPLAN	Reglamento de la Ley de Aguas Nacionales
RLF	Reglamento de la LF
RLGEEPAA	Reglamento de la LGEEPA en Materia de Prevención y Control de la Contaminación de la Atmósfera
SAGARPA	Secretaría de Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentos
SCT	Secretaría de Comunicaciones y Transportes
SENER	Secretaría de Energía
SE	Secretaría de Economía
SEDENA	Secretaría de la Defensa Nacional
SEMARNAT	Secretaría del Medio Ambiente y Recursos Naturales

Sonora Pipeline L.L.C. needs to file for a permit from the U.S. Corps of Engineers to bore under the Rio Grande River.  This permit will expire after six months, therefore, Sonora Pipeline L.L.C., or the applicable entity, needs to apply for this permit not more than six months prior to construction.  Sonora Pipeline L.L.C. must also apply for a permit with the U.S. Boundary and Water Commission for permission to drill under dykes in the pipeline ROW.  This permit also expires after six months, therefore, Sonora Pipeline L.L.C., or the applicable entity, needs to apply for this permit not more than six months prior to construction.

Additionally:

SCHEDULE OF REQUIREMENTS

RELATIVE TO

FERC AUTHORIZATIONS

I           By August 9, 2007:

a.	File Application for Rehearing relative to authorizations, if necessary  (Section 19 of the Natural Gas Act).  This was not necessary.

b.	File acceptance of Section 7 certificate; an automatic extension is provided if rehearing requested. (Ordering Paragraph (E) (2) referencing § 157.20(1) of FERC’s Regs.) Filed acceptance of Presidential Permit with FERC on August 8, 2007. See attachment.

c.	File acceptance of Presidential Permit, OR file for an extension if rehearing is requested.  [Ordering Paragraph (H)]. Filed with FERC on August 8, 2007. See attachment.

II           Within 60 days of certificate acceptance and before construction begins

a.

File an Initial Implementation Plan relative to the environment.  [Appendix  B, ¶ 7], OR get an extension of time. Filed for and received the attached extension

III           Prior to commencement of pipeline construction:

IV           Within 10 days after commencing construction:

a.

File a written notice under oath of the date that construction commenced.  [Ordering Paragraph (E)(2) referencing §157.20(c) of FERC’s regs.].

V           By July 10, 2008:

a.	Complete pipeline construction and make facilities available for service, OR have requested and obtained an extension of this requirement. [Ordering Paragraph (E)(1)].

VI	Not less than 30 days, nor more than 60 days prior to the commencement of interstate service:

a.

File revised pro forma tariff sheets [Ordering Paragraphs (E)(3) & (4)], together with a redline version [Text ¶ 31], that:

1.	Use billing determinants of 1Dth/d. [Text ¶ 23].

2.	Reflect a 14% ROE.  [Text ¶ 26].

3.	Incorporate an interruptible revenue crediting mechanism.  [Text ¶ 28].

4.	Obligates Sonora to advise a shipper within 10 days of Sonora’s determination that the shipper is not creditworthy and provide the shipper recourse to challenge the findings.  [Text ¶ 34].

5.	Incorporate matrix identifying language in Tariff that complies with NAESB creditworthiness standards.  [Text ¶ 35].

6.	Complies with Order 587-S and NAESB requirements in effect at the time of filing.  [Text ¶ 36].

7.	Includes cross-reference matrix for all NAESB requirements.  [Text ¶ 37]

8.	Awards reservation credits in force majeure situations.  [Text ¶ 39].

9.	Incorporates the tariff changes listed in Appendix A to the certificate order.

VII	Within 10 days after construction completed and service commenced:

a.

File a written notice under oath of such completion and commencement date.  [Ordering Paragraph (E)(2) referencing § 157.20(c)(2)].

VIII           Within 6 months after construction completed:

IX	Within 3 years of the in-service date, file either a cost and revenue study or a Section 4 rate change filing.  [Text ¶ 30].

FEDERAL ENERGY REGULATORY COMMISSION

WASHINGTON, D.C. 20426

                                                                                               

OFFICE OF ENERGY PROJECTS

In Reply Refer To:

OEP/DG2E/Gas Branch 1

Sonora Pipeline, LLC

Burgos Hub Export/Import Project

Docket Nos. CP07-74-000, et al

 

August 27, 2007

Bernard Foster, III

2001 L Street, NW, Suite 400

Washington, DC  20036

Dear Mr. Foster:

I approve Sonora Pipeline, LLC’s (Sonora) request filed on August 17, 2007, for an extension of time for filing its initial Implementation Plan required by condition 7 of the Commission’s November 10, 2007 Order Issuing Certificate (Order), to a date sixty days prior to commencement of construction.  Sonora requests the extension due to a delay in its planned construction dates.

I remind you that Sonora must comply with all applicable terms and conditions of the Order in the above-referenced docket.

Sincerely,

Signed MJB 8/27/07

Michael J. Boyle, Chief

Gas Branch 1, Division of Gas - Environment and Engineering

cc:           Public File, Docket Nos. CP07-74-000, et al.

All Parties

James B. Smith

Sonora Pipeline, LLC

1862 West Bitters, Bldg. 1

San Antonio, TX 78248