Initial Public Offering (IPO): Registration Statement (General Form) — Form S-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-1 Registration Statement (General Form) 99 560K
2: EX-3.1 Certificate of Incorporation 8 30K
3: EX-3.2 Bylaws 14 55K
4: EX-10.1 Reorganization Agreement 21 93K
13: EX-10.10 Gas Treating and Processing Agreement 48 131K
14: EX-10.11 Gas Gathering, Treating and Processing Agreement 36 99K
15: EX-10.12 Gas Gathering, Treating and Processing Agreement 32 104K
16: EX-10.13 Products Exchange Agreements 3 20K
17: EX-10.14 Gas Processing and Treating Agreement 11 44K
18: EX-10.15 Processing Agreement 30 66K
19: EX-10.16 Natural Gas Liquids Purchase Agreement 7 31K
20: EX-10.17 Purchase and Demolition Agreement 25 52K
21: EX-10.18 Purchase and Demolition Agreement 25 53K
22: EX-10.19 Agreement to Design and Construct New Facilities 21 43K
5: EX-10.2 Modification Agreement 6 34K
23: EX-10.20 Sales Acknowledgement 3 18K
24: EX-10.21 Loan Agreement Dated November 20, 1992 202 752K
25: EX-10.23 Natural Gas Liquids Purchase Agree. (Boldman) 14 46K
26: EX-10.25 1996 Incentive Compensation Plan 5 23K
27: EX-10.26 1996 Stock Incentive Plan of Registrant 13 52K
28: EX-10.27 1996 Nonemployee Director Stock Option Plan 9 40K
29: EX-10.28 Form of Non-Compete With J.M. Fox & Markwest 1 10K
6: EX-10.3 Amended and Restated Mortgage 41 166K
7: EX-10.4 Secured Guaranty, Dated May 2, 1996 23 62K
8: EX-10.5 Security Agreement, Dated May 2, 1996 23 78K
9: EX-10.6 Pledge Agreement, Dated May 2, 1996 21 70K
10: EX-10.7 Participation, Ownership and Operating Agreement 83 290K
11: EX-10.8 Second Amended and Restated Agreement 10 45K
12: EX-10.9 Subordination Agreement 13 47K
30: EX-11 Computation of Per Share Earnings 1 9K
31: EX-23.1 Consent of Price Waterhouse LLP 1 9K
32: EX-23.2 Consent of Bdo Seidman, LLP 1 10K
EX-10.11 — Gas Gathering, Treating and Processing Agreement
Exhibit Table of Contents
GAS GATHERING, TREATING AND PROCESSING AGREEMENT
THIS AGREEMENT is made and entered into this 2nd day of May, 1996; by and
between OCEANA ACQUISITION COMPANY, L.L.C., hereinafter referred to as
"Producer", and WEST SHORE PROCESSING COMPANY, LLC.
RECITALS:
A. Producer owns and holds or may own or hold certain valid and subsisting
oil and gas lease(s) or interests therein, covering lands situated and being
within the Dedication Area; and
B. Producer desires to have gathered, treated and processed the gas which
may hereafter be produced from wells now or hereafter located within the
Dedication Area; and
C. Processor operates, or has contracted with third parties to operate, gas
gathering, treating and processing related facilities and desires to gather,
treat and process that gas for the purpose of extracting liquid and liquefiable
hydrocarbon products therefrom.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
Producer and Processor agree as follows:
ARTICLE I
DEFINITIONS
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The following definitions of terms shall apply for all purposes of this
Agreement:
1.1 "Accounting Period" means a period of one month, commencing at
seven (7) o'clock a.m. local time on the first day of a calendar month and
ending at seven (7) o'clock a.m. local time on the first day of the next
succeeding month.
1.2 "Basin" means Basin Pipeline Limited Liability Company, an affiliate
of West Shore Processing Company, LLC.
1.3 "BTU" means British Thermal Unit and is the amount of
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heat required to raise the temperature of one (1) pound of pure water from
fifty-nine degrees Fahrenheit (59 degrees F) to sixty degrees Fahrenheit (60
degrees F); and, "MMBTU" means one million British Thermal Units.
1.4 "Cubic Foot" or "Cubic Feet" means the volume of gas contained in
one cubic foot of space at a standard pressure base of fourteen-and-sixty-five-
hundredths (14.65) pounds per square inch absolute (psia) and a standard
temperature base of sixty degrees Fahrenheit (60 degrees F).
1.5 "Dedication Area" means initially Manistee, Mason and Oceana
Counties, Michigan; and, at such time as Processor has extended its facilities
into Muskegon County, Michigan, then that county shall be included in the
Dedication Area effective as of the date upon which Processor gives Producer
notice that it has facilities in that county capable of receiving gas; provided,
however, with respect to Muskegon County, only as to wells, lands and leases not
then dedicated to other gatherers, treaters and processors.
1.6 "Gross Heating Value" means the number of BTU's produced by the
combustion, at a constant pressure, of the amount of the gas which would occupy
a volume of one (1) Cubic Foot at a temperature of sixty degrees Fahrenheit (60
degrees F), if saturated with water vapor and under a pressure equivalent to
that of thirty (30) inches of mercury at thirty-two degrees Fahrenheit (32
degrees F) and under standard gravitational force (acceleration 980.665
centimeters per second squared) with air of the same temperature and pressure as
the gas, when the products of combustion are cooled to the initial temperature
of the gas and air and when the water formed by combustion is condensed to the
liquid state.
1.7 "Inlet Volume" means the aggregate volume of gas measured at the
Receipt Point.
1.8 "Liquid Hydrocarbons" is used herein to refer to liquefiable
hydrocarbons present in the vapor phase in the gas stream and to refer to
hydrocarbons in a liquid state after the extraction by the Plant from the gas
stream, but shall in either case mean natural gasoline (pentane plus heavier
hydrocarbons), butanes, propane and ethane (including such incidental methane as
may be extracted from the gas under normal operation of processing
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facilities).
1.9 "MCF" means one-thousand (1,000) Cubic Feet and "BCF" means one
billion cubic feet.
1.10 "Pipeline Drip" means condensate and liquefied hydrocarbons which
separate from Producer's gas in the pipeline facilities of Processor.
1.11 "Plant" means Processor's gas plant (or the processing and treating
facilities of third parties with whom Processor contracts for services
applicable to Producer's gas) and Processor's gathering system behind the plant,
now or hereafter existing, including without limitation, all tanks, equipment,
pipe, valves, and material of any kind, including appropriate gas and liquid
measurement facilities, pipeline gathering and compression facilities, storage,
shipping, dehydration, gas treating and delivery facilities for Plant Products;
all structures located, or to be located, on the site(s) at which the
compression, treating and processing facilities of Processor are now or
hereafter located; all easements pertaining to the site(s) and operation of
those facilities; and any and all facilities located, or to be located, on or
away from the site(s) deemed by Processor to be necessary for its performance
under this Agreement.
1.12 "Plant BTU Reduction" or "PBR" means the sum of the gas used as
Plant Fuel, Unmeasured Gas Uses and Losses, and the BTU equivalent of the Plant
Products as determined in accordance with Article V.
1.13 "Plant Delivery Point" means the point(s) at which Producer's share
of the Residue Gas is delivered by Processor to Producer at the tailgate of the
Plant, as described on Schedule II. Measurement facilities at the Plant Delivery
Point shall be installed, maintained, and operated by Processor, or its
designee, at its sole cost, risk, and expense.
1.14 "Plant Fuel" means all gas, expressed in BTU's, utilized by
Processor as fuel in the Plant.
1.15 "Plant Products" means finished commercial products and other
products, or any mixtures thereof, other than Residue Gas, which Processor from
time to time extracts or separates from gas
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processed in the Plant, including, but not limited to ethane, propane, iso-
butane, normal butane, and natural gasoline.
1.16 "Processing" means the activities extraction and recovery of Plant
Products.
relating to the
1.17 "Processor" means West Shore Processing Company, LLC, and its
affiliate, Basin Pipeline Limited Liability Company.
1.18 "Receipt Point" means the point(s) where gas is delivered by
Producer to Processor for gathering, treating and processing in the Plant.
Measurement facilities at the Receipt Point shall be installed, maintained, and
operated by Processor, or its designee, under the terms hereof.
1.19 "Residue Gas" means gas, expressed in MMBTU's, remaining after the
extraction of Liquid Hydrocarbons, Plant Fuel, sulfur, hydrogen sulfide and
carbon dioxide, and after other Unmeasured Gas Uses and Losses incident to or
occasioned by the treating, gathering and processing of gas and redelivery to
Producer. The portion of the Residue Gas attributable to Producer's gas is to be
delivered to Producer at the Plant Delivery Point.
1.20 "Subordinated Liens" means liens in favor of that Producer's secured
creditors which liens are subject to and subordinate to the rights of Processor
under this Agreement in a manner acceptable to Processor.
1.21 "Thermal Content" for gas means the product of the measured volume
in dry MCF's and the Gross Heating Value in dry BTU's per MCF, adjusted to the
same pressure base; for Plant Products means the product of the gross heat of
combustion per gallon multiplied by the total gallons of the product stream.
Numerical values for gross heat per gallon shall be those published in the
Standard Table of Physical Constants of Paraffin Hydrocarbons in GPA Publication
2145-93, as revised.
1.22 "Treating" means the activities relating to the removal of hydrogen
sulfide and carbon dioxide from the gas.
1.23 "Unmeasured Gas Uses and Losses" means any gas used, lost or not
otherwise accounted for in the gas plant incident to the operation of the gas
plant and gas lost in Processor's
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gathering system (to the extent not allocable to specific receipt points,
including Producer's), including volumes of gas released through relief valves,
ruptured pipelines, blow down of vessels, etc., and fuel for gathering system
compressors which for each compressor shall be reasonably allocated on a Thermal
Content basis to the receipt points, including Producer's served by such
compressor.
ARTICLE II
COMMITMENT, RECEIPT AND DELIVERY CONDITIONS
-------------------------------------------
2.1 Subject to the other provisions of this Agreement, Producer commits
to this Agreement:
a. all gas attributable to the interests of Producer in the leases
described in Schedule I; and,
b. all of Producer's interests hereafter acquired by Producer, whether
acquired directly or earned under farming or similar agreements covering
lands within the Dedication Area;
c. Provided, however, this Agreement shall not pertain to any gas
production attributable to interests of Producer which contains less than
fifteen (15) grains of hydrogen sulfide per 100 cubic feet and less than
---
two (2) mol percent carbon dioxide.
Producer agrees that the foregoing dedication shall be a covenant running with
the land and that any assignment, sale or other transfer of all or a portion of
Producer's interests shall include and be subject to the dedication under this
Agreement, and that Producer shall cause any purchaser, assignee or other
transferee of any portion of those interests to ratify this Agreement and to
expressly assume and agree to the terms hereof to the extent of the portion of
those interests acquired from Producer by that party. Producer also agrees that
should Producer subsequently grant any security interest (whether by pledge,
collateral assignment, mortgage, deed of trust, or other instrument) in those
interests, such security interest shall be granted expressly subject to the
foregoing dedication and to Processor's rights and obligations under this
Agreement. At Processor's request, Producer agrees to execute a recording
memorandum of this Agreement, in the form attached hereto as Schedule III, to
give notice of Producer's
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dedication hereunder.
2.2 a. Subject to the other provisions hereof, Producer agrees to deliver
to Processor, and Processor agrees to receive from Producer, at the Receipt
Point(s), as designated by Processor, and gather, treat and process at the Plant
all of the gas now or hereafter produced attributable to Producer's interests in
the lease(s) covered by this Agreement (which specifically excludes any gas
production attributable to interests of Producer which contains less than
fifteen (15) grains of hydrogen sulfide per 100 cubic feet and less than two (2)
---
mol percent carbon dioxide. Notwithstanding that Receipt Points are to be
designated by Processor, Producer shall have the right to notify Processor, at
anytime and from time to time, that Producer intends to drill additional well(s)
in the Dedication Area which will not be served by then existing Receipt
Point(s). Within 14 days after receipt of that notice, Processor will designate
the Receipt Point(s) for those additional well(s). The purpose of that notice
and designation is to enable Producer to complete its economic projections for
the new wells before commencing drilling. Processor agrees to designate those
new Receipt Point(s) along its gathering lines in a manner that will enable
Producer to construct its lateral gathering lines for the new wells across the
shortest practicable and most economically practicable route, taking into
account operational considerations of Processor. Processor agrees to give due
consideration to recommendations of Producer but shall not be bound by those
recommendations.
b. Producer shall be responsible for arranging for all gathering
services and the installation of all facilities necessary to cause the gas
hereunder to be delivered to Processor at the Receipt Point(s); provided,
however, notwithstanding the foregoing, Producer and Processor may enter into a
mutually agreeable arrangement under which Processor will install and pay for
some or all of those facilities subject to subsequent reimbursement by Producer.
Nothing in the foregoing is intended to impose any obligation on Producer in
favor of Processor to produce gas from any of Producer's wells or connect any of
Producer's wells within the Dedication Area to Processor's facilities (provided,
however, Producer may not deliver gas from these wells or connect those wells to
any other party). Without limiting the scope of the foregoing sentence, Producer
may, in its sole discretion, elect not to produce gas from any well and elect
not to connect any well to
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Processor's facilities at any time that Producer, in its sole discretion,
believes that such well is or has become incapable of producing in paying
quantities; provided, upon making that election, Producer may not deliver gas
from those wells or connect those wells to any other party.
2.3 a. Processor will accept gas delivered by Producer at the Receipt
Points, in compliance with this Agreement, produced from all wells on the leases
and lands covered by this Agreement. Producer shall reimburse Processor for all
actual costs (together with overhead at the rate of 15%) incurred by Processor
in installing metering facilities at each Receipt Point. Notwithstanding that
reimbursement, Processor shall at all times own the metering facilities
installed by Processor.
b. Producer shall notify Processor of the estimated spud and
completion dates for wells to be drilled on lands within the Dedication Area and
committed under this Agreement.
2.4 Prior to initial deliveries of gas from a well dedicated hereunder,
Producer shall furnish to Processor reasonable documentation showing the
ownership of the relevant operating rights. Promptly after Producer receives an
assignment of any interests in existing wells which are, or by virtue of that
acquisition become subject to the terms of this Agreement, Producer will provide
notification of that acquisition to Processor together with a copy of the
assignment or other instruments conveying those interests to Producer; and, upon
recording of those instruments, Producer will provide Processor a copy of the
recorded instrument showing the recording information. Upon acquisition of any
such additional interests, Schedule I hereto shall be deemed amended to include
those interests and the parties shall execute appropriate documents to evidence
that amendment, including additional recording memoranda. With respect to oil
and gas leasehold interests acquired by Producer within the Dedication Area,
upon the earlier of (i) Producer's transfer of all of its interests in any oil
and gas leasehold within the Dedication Area, or (ii) upon Producer obtaining a
permit to drill on that leasehold, Producer will provide Processor with
information regarding Producer's ownership in that leasehold.
2.5 Producer agrees to install, at its sole cost and expense, whatever
separators, heaters, dehydration equipment and other usual
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lease facilities as may be deemed prudent by Producer to separate crude oil,
free water and condensate from the gas and necessary to meet the quality
specifications below; provided, however, any separation equipment to be
installed by Producer which shall handle gas to be delivered hereunder shall be
only conventional mechanical type field separators of a type then commonly used
in the industry. Producer shall have the right to install compression facilities
upstream of each Receipt Point. Any wellhead compression installed by Producer
shall be operated in a manner that does not adversely affect Processor's
measurement facilities. Producer shall make reasonable efforts to supply gas
from Producer's wells at a uniform rate of flow.
2.6 a. Gas delivered by Producer to Processor at each Receipt Point
shall:
1) be commercially free from dust, gum, gum-forming constituents,
condensate, diluent, and other liquids and solids which may become
separated from the gas;
2) contain less than ten parts per million (10 ppm) by volume of oxygen,
and Producer shall make every effort to keep gas free from oxygen;
3) have a temperature less than one hundred twenty degrees Fahrenheit
(120 degrees F);
4) not contain measurable quantities of mercury;
5) have a minimum Gross Heating Value of not less than i0-~0 BTU per Cubic
Foot;
6) contain not more than five (5) pounds of water vapor per million Cubic
Feet.
b. Further, the composite of all gas delivered by Producer at all
Receipt Points shall:
1) contain not more than two (2) mol percent of hydrogen sulfide;
2) contain not more than 500 ppm (weight) of total COS, CS2: and
mercaptans;
3) contain less than three percent (3%) by volume of nitrogen;
4) contain less than six percent (6%) by volume carbon dioxide; and less
than seven percent (7%) by volume of total acid gases (carbon dioxide and
hydrogen sulfide;
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2.7 In the event the gas tendered by Producer to Processor should fail
to meet any one or more of the above specifications from time to time, then
either Processor or Producer may treat the gas to bring it within
specifications. If neither elects to treat, Processor can cease receiving the
non-conforming gas from Producer so long as such conditions exist. Processor, at
its option, may take receipt of such non-conforming gas, and such receipt shall
not be construed as a waiver or change of standards for future gas volumes. In
the event Processor rejects any non-conforming gas on any day, Processor shall
notify Producer in writing immediately upon rejecting such gas, and Producer
shall have ninety (90) days to bring the non-conforming gas into compliance.
Until Producer brings that non-conforming gas into compliance, Producer agrees
that it will cease deliveries of the gas containing the highest concentration of
hydrogen sulfide as necessary to bring the composite of all gas delivered by
Producer into compliance. if Producer is unable to bring that non-conforming gas
into compliance within the ninety (90) day period, and Processor continues to
elect to reject the non-conforming gas, then Processor shall determine the
treating facilities deemed necessary to cause the gas to conform to the
specifications and Producer will pay Processor a mutually agreeable treating fee
for that additional treatment which shall be in addition to the otherwise
applicable fees hereunder.
2.8 Producer shall deliver gas hereunder to Processor at the Receipt
Point(s) at a pressure sufficient to cause that gas to enter Processor's
facilities, as the pressure therein may exist from time to time, but not to
exceed a pressure of 1200 psig. Producer agrees to compress its gas prior to
delivery hereunder, as necessary, in order to affect the delivery of that gas to
Processor.
ARTICLE III MEASUREMENT FACILITIES
----------------------
3.1 All gas measurement equipment installations shall be of standard
make and be furnished, installed, operated, and maintained by Processor in
accordance with the published specifications of the American Gas Association
(AGA). Producer or others having Producer's consent may, at its option and
expense, install and operate meters to check processor's meter(s) provided such
meter
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installation in no way interferes with the operation of Processor's meter. Any
check meters installed by Producer shall be located upstream of Processor's
meters. Processor shall have access to such check measuring equipment at all
reasonable hours, but the reading, calibration and adjusting thereof shall be
done only by the Producer.
3.2 The computation of all gas volumes measured shall be based on the
latest factors published by the AGA corrected to a base pressure of fourteen-
and-sixty-five-hundredths (14.65) psia and a base temperature of sixty degrees
Fahrenheit (60 degrees F). The assumed atmospheric pressure shall be 14.-- psia,
regardless of actual atmospheric pressure at which the gas is measured. The
flowing temperature shall be measured by an industry accepted recording device,
and said temperature measurement shall be used to correct gas volumes as
measured in Article !!I hereof. Corrections for supercompressibility deviation
from Boyle's Law shall be made for all gas metered hereunder. Such corrections
shall be made by use of the AGA Manual for the Determination of Super
Compressibility Factors for Natural Gas (PAR Project NX-19), as amended. The
Reynold's Number Factor and Expansion Correction Factor shall each be assumed to
be one (1). The specific gravity of the gas shall be determined by
chromatographic analysis or any other method adopted as standard by the Gas
Processor's Association (GPA).
3.3 In the event a meter is out of service, or registering inaccurately,
the volume of gas delivered hereunder shall be calculated in the following
order: (i) by correcting the error if the percentage of error is ascertainable
by calibration, test, or mathematical calculations, or in the absence of (i),
(ii) by using the registration of any check meter or meters if installed and
accurately registering, or, in the absence of both (i) and (ii), then, (iii) by
estimating the quantity of delivery by deliveries during periods of similar
conditions when the meter was registering accurately.
3.4 Representative determinations for Liquid Hydrocarbon content shall be
made at the Receipt Point by chromatographic analysis, or by some other mutually
acceptable method adopted by the parties for testing Producer's gas for
fractional analysis and Liquid Hydrocarbon content. The chromatographic analysis
shall be utilized in the determination of the Liquid Hydrocarbons
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composition and shall be used as the basis for allocating Plant Products to the
different Receipt Points. The Gross Heating Value of the Inlet Volume shall be
determined periodically by test samples obtained from the various wells. Gross
Heating Value of Residue Gas shall be that determined by the receiving pipelines
at the tailgate of the Plant.
3.5 Processor shall take or have taken for it, a representative sample of
the Plant Products to be obtained from the truck, tank car, or pipeline
deliveries during each calendar month and shall analyze or cause to be analyzed
such samples. The analysis of the individual samples shall be used to determine
the components of the Plant Products delivered.
3.6 Each party hereto shall have access at all reasonable hours to all
facilities and data which are related to gas measurement, Gross Heating Value
determination, product composition determination, gas sampling and gas gravity
determination, along with all facilities utilized and data to determine Plant
Products quantities in the Plant or sold therefrom.
3.7 Processor shall verify the accuracy of its measuring equipment
monthly, or more often if deemed necessary by Processor. Processor shall give
Producer reasonable prior notice of any check or adjustment of any measuring
equipment.
3.8 Each party shall have the right to be present for any installing,
reading, cleaning, changing, repairing, testing, calibrating and/or adjusting of
either party's measuring equipment used in measuring deliveries hereunder. The
records from each party's measuring equipment shall remain the property of the
party owning such measuring equipment, but, upon request, each party will submit
to the other all records and/or charts, together with calculations therefrom,
for inspection and verification, subject to return within thirty (30) days after
receipt thereof.
3.9 If either party shall notify the other that it desires a special test
on any measuring equipment the parties shall cooperate to secure a prompt
verification of the accuracy of such equipment. If, upon test, any measuring
equipment is found to be in error by not more than two percent (2%), previous
recordings of such equipment shall be considered correct in computing deliveries
hereunder, but if such equipment shall be found to be inaccurate by
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an amount exceeding two percent (2%), at a recording rate corresponding to the
average rate of flow for the period since the last preceding test, then any
preceding recordings of such equipment shall be corrected to zero error for any
period which is known definitely or agreed upon; if the period is not known or
definitely agreed upon, such correction shall be for a period extending up to
one-half (1/2) of the time elapsed since the date of last test, but not to
exceed a correction period of forty-five (45) days. Any measuring equipment
found to be in error shall be corrected to read accurately. If any such test
indicates that no inaccuracy of more than two percent (2%) exists, then the
party requesting such test shall reimburse the testing party for all its costs
in connection with such test within fifteen (15) days following receipt of a
detailed invoice setting forth such costs.
3.10 Each party shall preserve for a period of two (2) years all test
data, charts, and other similar records for auditing. Thereafter, same shall be
conclusively deemed true and correct.
ARTICLE IV
OPERATION OF THE PLANT
----------------------
4.1 Processor has prior contracts and agreements, and in the future may
obtain other contracts and agreements, with other parties to gather, treat and
process at the Plant all of the other parties' gas delivered to Processor at the
various other receipt points. If during the term of this Agreement, the gas
available from all sources for gathering, treating and processing exceeds the
Plant capacity, Processor shall only be obligated to receive gas ratably from
each receipt point delivering gas to the Plant.
ARTICLE V
ALLOCATION OF LIQUID HYDROCARBONS AND RESIDUE GAS; FEES
-------------------------------------------------------
5.1 a. For the services provided herein, Processor shall receive
compensation equal to a fee payable by Producer, of (Confidential Treatment
Requested) of Producer's gas delivered to Processor, measured at the
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Receipt Point(s), which fee shall be inclusive of all transportation charges
incurred by Processor in transporting Producers' gas on the pipeline of Basin.
b. (Confidential Treatment Requested) of the compensation specified
in 5.1 a., above, as adjusted herein, shall be adjusted on an annual basis in
proportion to the percentage change, from the preceding year, in the Producer
Price Index for oil and gas field services (SIC 138) as published by the
Department of Labor. The compensation adjustment shall be made effective upon
January 1st of each year and shall reflect the percentage change in the
foregoing index as it existed for January of the immediately preceding year
from the index for January for the second immediately preceding year. In no
event will the compensation, as adjusted, be less than (Confidential Treatment
Requested).
c. For each Accounting Period, Processor shall (i) pay to Producer an
amount equal to (Confidential Treatment Requested) of the Net Sales Price per
gallon, times the gallons of individual Plant Product recovered by Processor and
attributable to Producer's gas processed at the Plant and allocated to each
Receipt Point, minus the fee payable to Processor under Section 5.1, a., and
5.1, b., above; and (ii) shall deliver (Confidential Treatment Requested) of the
Residue Gas attributable to Producer's gas processed at the Plant and allocated
to each Receipt Point to the Plant Delivery Point for the account of Producer.
d. Plant Products shall be sold by Processor's marketing department.
The "Net Sales Price" per gallon of each individual Plant Product allocated to
Producer's gas shall be the weighted average of the net price per gallon
received by Processor for the total volume of each individual Plant Product sold
from Processor's Plant, in arms-length transactions, during the Accounting
Period. Such Net Sales Price may include a deduction from the actual gross sales
price of such Plant Produces of the actual third party cost of pipeline, truck
or rail transportation, terminating fees, fractionation outside the Plant, truck
or tank car rentals and taxes (excluding income taxes) and actual third party
marketing costs and similar costs and expenses as incurred by the Processor to
determine a net price for such sale, and further less a marketing fee to be
retained by Processor of (Confidential Treatment Requested) per gallon of Plant
Products attributable to Producer.
5.2 That portion of an individual Plant Product at
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Processor's Plant which is attributable to Producer shall be determined by
multiplying the total volume, expressed in gallons, of each individual Plant
Product recovered in the Plant during such Accounting Period by a fraction, the
numerator of which shall be the "Theoretical total Gross Heating Value" of that
Plant Product contained in Producer's gas delivered during the Accounting
Period, and the denominator of which shall be the "Theoretical total Gross
Heating Value" of that Plant Product contained in all gas supplying the Plant
during such Accounting Period. The "Theoretical total Gross Heating Value" of a
Plant Product in any stream of gas shall be calculated by multiplying the Gross
Heating Value of that Plant Product determined from the chromatographic analysis
specified in Article III by the quantity of gas in that gas stream.
5.3 The PBR shall be separately calculated as to each receipt point
(including Producer's) and shall be the sum of the following:
a. The Thermal Content of the Plant Products allocated to the gas stream
from such receipt point; plus
b. The Thermal Content of Producer's gas consumed as Plant Fuel in
treating, gathering and processing such gas, which shall be determined by
multiplying the Thermal Content of the Plant Fuel used in such Accounting Period
by a fraction, the numerator of which is the Thermal Content of Producer's Inlet
Volume and the denominator of which is the Thermal Content of all gas inlet
volumes, including Producer's, received by Processor from all parties delivering
gas to the Processor; plus
c. The Thermal Content of Producer's gas consumed as Unmeasured Gas Uses
and Losses in gathering, treating and processing Producer's gas.
5.4 The Residue Gas, as determined by measurement at the Plant Delivery
Point, shall be allocated among the various producers delivering gas to
Processor by multiplying the total actual measured Thermal Content of gas
remaining after gathering, treating and processing from all gas delivered to
Processor by a fraction, the numerator of which is the "Theoretical Volume of
Residue Gas" remaining from Producer's gas and the denominator of which is the
"Theoretical Volume of Residue Gas" remaining from all gas, including Producer's
gas, delivered to Processor during the Accounting Period. The "Theoretical
Volume of Residue Gas" shall
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be determined by subtracting the PBR, as determined above, from the Thermal
content determined at such receipt point attributable to the applicable volumes
of gas delivered to Processor.
5.5 Producer will inform Processor of the amount of gas to be delivered
by Producer at each Receipt Point, in accordance with Processor's Nomination
Procedures, attached hereto as Schedule IV. If Producer nominates gas volumes in
a greater or lesser amount than Producer's actual deliveries at the Receipt
Point(s), then a condition of imbalance shall exist. A Positive Imbalance shall
exist in those cases where the Producer's deliveries are in excess of the
volumes nominated by Producer or Producer's designee. A Negative Imbalance shall
exist in those cases where the Producer's deliveries are less than the volumes
nominated by Producer or Producer's designee. Processor and Producer shall work
to minimize any imbalance and agree to exchange pertinent information in writing
in good faith in an attempt to minimize the imbalance. As soon as possible
Processor shall provide Producer written notice that Producer has a condition of
imbalance during any Accounting Period, and Producer shall take immediate
corrective action to conform Producer's nominations to Producer's physical
flows.
ARTICLE VI
ROYALTY AND TAXES
-----------------
6.1 Producer agrees to account for and pay all the royalties due on the
gas delivered under this Agreement in strict accordance with the provisions of
those leases or agreements creating those royalties.
6.2 Producer shall pay all gross production, severance, and similar taxes
levied against or with respect to gas delivered under this Agreement. The
Processor shall under no circumstances become liable for those taxes, unless
designated to remit those taxes on behalf of Producer by any duly constituted
jurisdictional agency having authority to impose such obligations on Processor,
in which event the amount of those taxes remitted by Processor on Producer's
behalf shall be deducted from the amounts otherwise due Producer hereunder.
ARTICLE VII
Page - 15
TERM
----
7.1 Subject to Section 7.2, this Agreement shall remain in full force and
effect for a primary term of twenty (20) years following the date of initial
deliveries hereunder, and thereafter for the life of the leases from time to
time covered hereby.
7.2 If, the continued receipt of all or any portion of Producer's gas
renders Processor's operations hereunder unprofitable to Processor, in
Processor's sole judgment, it shall have the right to notify Producer of that
circumstance, which notice shall include sufficient documentation to
substantiate the claim of unprofitability. The parties shall then meet to
discuss the course of such unprofitability and to determine if a good faith
solution can be reached. Absent a viable good faith solution, this Agreement
shall be terminated upon sixty (60) days following the date of Processor's
written notice of unprofitability. As used hereunder, Processor's operations
hereunder are unprofitable if Processor's revenues attributable to that portion
of Producer's gas at issue do not exceed the expenses of operating Processor's
facilities attributable to portion of Producer's gas. Upon a termination under
this Section 7.2, Processor will (i) make settlement for gas already delivered,
and (ii) release all wells and lands from the terms hereof and will execute and
deliver to Producer a recordable memorandum of that termination.
ARTICLE VIII
STATEMENTS AND PAYMENTS
-----------------------
8.1 Payment shall be made by Processor to Producer of the Net Sales Price
for Plant Products, less the fees due Processor under Section 5.1, not later
than the last day of each month for Producer's gas received during the preceding
Accounting Period, and at the time payment is made a statement showing full
details of the account shall be transmitted to Producer. Further, the deduction
of fees owed by Producer to Processor, under Section 5.1, from the Net Sales
Price for Plant Products attributable to Producer's gas shall not relieve
Producer for the liability to Processor for those fees, and should the full
amount of those fees not be recovered from the Net Sales Price for Plant
Products attributable to Producer's gas, then Producer shall pay Processor the
deficiency within ten (10) days following receipt of Processor's statement.
Page - 16
8.2 Either party, upon thirty (30) days prior written notice, shall have
the right, at reasonable times during business hours but no more frequently than
once each calendar year, at its expense, to examine the books and records of the
other party to the extent necessary to audit and verify the accuracy of any
statement, charge or computation made under or pursuant to this Agreement. The
scope of such audit shall be limited to the twenty-four (24) month period prior
to the month in which such audit commences; provided, no audit may include any
time period subject to a prior audit hereunder and no audit may occur more
frequently than once each six (6) months. All statements, allocations,
measurements and payments made in any period prior to the twenty-four (24)
months preceding such month shall be conclusively deemed true and correct. The
party conducting the audit shall have six (6) months after commencement of the
audit in which to submit a written claim, with supporting detail, for
adjustments. Should any audit conducted by Producer disclose required
adjustments exceeding $75,000, then Processor shall reimburse Producer for its
reasonable and necessary third party costs incurred in performing that audit.
ARTICLE IX
RIGHTS-OF-WAY
-------------
9.1 Producer hereby grants to Processor, insofar as Producer has the
right to do so, all requisite easements, and rights-of-way over, across, and
under the lands or the leases covered hereunder, with full right of ingress and
egress for the purpose of constructing and operating gas pipelines, meter
stations, and other equipment necessary for convenience of carrying out the
terms of this Agreement and Processor's obligations hereunder. All lines and
other equipment placed by Processor in, on or under said land shall remain the
property of Processor and may be removed at any time. In the exercise of its
rights under this Section 9.1, Processor shall comply with all laws and with the
terms and conditions of leases, licenses and easements binding on Producer (to
the extent disclosed to Processor) with respect to those lands.
ARTICLE X NOTIFICATION
------------
10.1 Any notice or other communication provided for in this Agreement
shall be given in writing and shall be considered as duly delivered when either
mailed certified, return receipt requested,
Page - 17
postage prepaid by United States mail, by delivery service (with confirmation)
or sent via facsimile transmission (with confirmation), addressed to the party
to whom such notice is given as follows:
Producer: Oceana Acquisition Company, L.L.C.
1100 Louisana Suite 3150
Houston, Texas 77002
Ph. (713) 659-6100 Fax(713)659-6130
Processor: West Shore Processing Company LLC
5613 DTC Parkway, Suite 400
Englewood, Colorado 80111
ATTN:
Ph. (303) 290-8700
Fax. (303) 290-8769
Notice shall be effective when received, except notice sent by mail shall be
deemed received three (3) days after mailing. Either party may change its
address for notice purposes by written notice to that effect.
ARTICLE XI
LIABILITY AND WARRANTIES
------------------------
11.1 As between the parties hereto, Producer, or its designee shall be in
control and possession of the gas hereunder until such gas is delivered at the
Receipt Point and as to the Residue Gas, after it is redelivered at the Plant
Delivery Point. Processor shall be in control and possession of the gas
delivered hereunder from the time such gas is delivered at the Receipt Point and
as to the Residue Gas, until it is returned to Producer at the Plant Delivery
Point.
11.2 Processor hereby covenants and agrees with Producer that except to
the extent caused by Producer's gross negligence or willful misconduct,
Processor shall protect, defend, indemnify and hold harmless Producer and its
affiliates, the contractors, sub-contractors, agents or representatives of
Producer and its affiliates, and the directors, managers, officers or employees
of Producer, its affiliates or the contractors, subcontractors, agents or
representatives of same (hereinafter referred to as "Producer Indemnified
Parties") from, against and in respect of any and all
Page - 18
Losses (as hereinafter defined) incurred by any Producer Indemnified Party to
the extent such Losses arise from or are related to: (a) processor's ownership
and operation of its facilities from and after the Receipt Point; and (b)
Processor's possession and control of Producer's gas.
11.3 Producer hereby covenants and agrees with Processor that except to
the extent caused by Processor's gross negligence or willful misconduct,
Producer shall protect, defend, indemnify and hold harmless Processor and its
affiliates, the contractors, sub-contractors, agents or representatives of
Processor and its affiliates, and the directors, managers, officers or employees
of Processor, its affiliates or the contractors, subcontractors, agents or
representatives of same (hereinafter referred to as the "Processor Indemnified
Parties") from, against and in respect of any and all Losses incurred by any
Processor Indemnified Party to the extent such Losses arise from or are related
to: (a) Producer's possession and control of the gas prior to the Receipt
Point(s) and as to the gas returned to Producer, after the Plant Delivery Point;
and (b) Producer's ownership and operation of its facilities before the Receipt
Point.
11.4 For the purposes of this Article XI, "Loss(es)" shall mean any actual
loss, cost, expense, liability, damage, demand, suit, sanction, claim,
settlement, judgment, lien, fine, penalty, interest of every kind and character
(including reasonable fees and expenses of attorneys, technical experts and
expert witnesses reasonably incident to same) which are suffered by indemnified
Parties (as herein defined), or any third parties, and any expenses incurred in
enforcing this indemnity provision, incurred by, imposed upon or rendered
against one or more of the applicable Indemnified Parties, on account of
injuries (including death) to any person or damage to or destruction of any
property, sustained or alleged to have been sustained in connection with or
arising out of or incidental to the matters for which the Indemnifying Party has
indemnified the applicable Indemnified Parties, and whether based on contract,
tort or pursuant to any then existing laws, rules or regulations of any
governmental body having jurisdiction with respect thereto, and regardless of
whether the Losses are foreseeable or unforeseeable or founded in whole or in
part upon the (i) breach of contract or (ii) the sole, joint, concurrent
contributory or comparative (a) negligence, (b) breach of legal duty other than
those expressly imposed under this agreement or (c)
Page - 19
strict liability of one or more of the Producer Indemnified Parties or Processor
Indemnified Parties, including, but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, the
Resource Conservation and Recovery Act of 1976, as amended, the Toxic Substances
Control Act, and other federal and state equivalents. Despite the foregoing to
the contrary, Loss(es) shall not include consequential, indirect, prospective,
punitive or exemplary damages as between Producer and Processor.
11.5 Procedure. The indemnifications contained in this Article XI. shall
----------
be implemented as follows:
(A) Notice of Claim. The party seeking indemnification under the terms of
----------------
this Agreement ("indemnified Party") shall submit a written "Claim Notice" to
the other party ("indemnifying Party") which, to be effective, must state: (i)
the amount of each Loss claimed by an Indemnified Party, (ii) the basis for such
claim, with supporting documentation, (iii) a list identifying to the extent
reasonably possible each separate item of Loss for which payment is so claimed.
The amount claimed shall be paid by such Indemnifying Party as and to, and only
to, the extent required herein within thirty (30) days after receipt of the
Claim Notice or after the amount of such payment has been finally established,
whichever last occurs.
(B) Claims Involving Litigation. Within thirty (30) days after notification
----------------------------
to any indemnified Party with respect to any claim or legal action or other
matters that may result in a Loss for which indemnification may be sought under
this Article XI., but in any event in time sufficient for the indemnifying Party
to contest any action, claim, proceeding or other matter that has become the
subject of proceedings before any court or tribunal, such Indemnified Party
shall give written notice of such claim, legal action or other matter to the
Indemnifying Party and, at the request of such Indemnifying Party, shall furnish
the Indemnifying Party or its counsel with copies of all pleadings and other
information with respect to such claim, legal action or other matter. The
failure to provide that notice within the time specified shall not relieve an
Indemnifying Party of its indemnity obligations hereunder except to the extent
of any Losses which are attributable to that delay. Upon the election of the
Indemnifying Party made within sixty (60) days after receipt of such notice, to
Page - 20
the indemnifying Party, Indemnifying Party shall have the right to assume
control of such claim, legal action or other matter (to the extent only that
such claim, legal action or other matter relates to a Loss for which the
Indemnifying Party is liable), including the determination of all appropriate
actions, the negotiation of settlements on behalf of the Indemnified Party, and
the conduct of litigation through attorneys of the Indemnifying Party's choice,
provided, however, that no such settlement can result in any liability or cost
to the Indemnified Party for which it is entitled to be indemnified hereunder
without its consent. If the Indemnifying Party elects to assume control, (i) any
expense incurred by the Indemnified Party thereafter for investigation or
defense of the matter shall be borne by the Indemnified Party and (ii) the
Indemnified Party shall give all reasonable information and assistance, other
than pecuniary, that the Indemnifying Party shall deem necessary to the proper
defense of such claim, legal action, or other matter. In the absence of such an
election, the Indemnified Party will use good faith efforts to defend, at the
Indemnifying Party's expense any claim, legal action or other matter to which
such other party's indemnification under this Article XI. applies until the
Indemnifying Party assumes such defense, and, if the indemnifying Party fails to
assume such defense within the time period provided above, settle the same in
the Indemnified Party's reasonable discretion at the Indemnifying Party's
expense.
11.6 In no event will either party be liable to the other party hereunder
for consequential, prospective, indirect, punitive or exemplary damages as
between Producer and Processor.
11.7 Producer warrants and represents that it has good title to and/or the
full right to deliver, for the purposes stated herein, all gas (including all
Liquid Hydrocarbons contained therein) delivered hereunder and that all gas
delivered hereunder will be free from all adverse claims, encumbrances and liens
of any nature, and Producer will defend and indemnify Processor against all
claims of any nature arising as a result of Producer's breach of the foregoing
warranty. Title to all Liquid Hydrocarbons recovered by Processor shall be in
Processor, and except for those Liquid Hydrocarbons, title to Producer's gas
shall remain in Producer.
11.8 Processor agrees that it will allow no liens or other
Page - 21
adverse claims, including liens to secure payment of taxes, to attach to the gas
delivered and redelivered hereunder, and warrants that the Residue Gas delivered
to Producer at the Plant Delivery Point will be as free from all liens and other
adverse claims, including liens to secure payment of taxes (except with respect
to production taxes, ad valorem taxes, conservation taxes, severance taxes
applicable to Producer's Gas, and taxes based upon production of Producer's gas,
Producer remains responsible and for which Processor has no liability) as was
the gas delivered by Producer at the Receipt Point.
ARTICLE XII
LAWS, REGULATIONS AND FORCE MAJEURE
-----------------------------------
12.1 This Agreement shall be subject to all applicable state, federal and
local laws, rules and regulations, and the parties hereto shall be entitled to
regard all such laws, rules and regulations as valid, and may act in accordance
therewith until such time as the same may be invalidated by final judgment in a
court of competent jurisdiction.
12.2 The term "Force Majeure" means any cause, or condition (other than
financial inability) not reasonably within the control of the party claiming
suspension and which by the exercise of due diligence, such party is unable to
prevent or overcome. A party claiming Force Majeure shall give prompt notice to
the other party specifying the cause and anticipated period of Force Majeure and
the plans of the affected party to remedy the condition of Force Majeure.
12.3 In the event either Producer or Processor is rendered unable, wholly
or in part, by Force Majeure, to carry out its obligations under this Agreement,
other than to make any payments due hereunder, it is agreed that upon such
party's giving notice and reasonable full particulars of such Force Majeure in
writing or by telegraph to the other parties affected within a reasonable time
after the occurrence of the cause relied on, then the obligations of the party
giving such notice, so far as they are affected by such Force Majeure shall be
suspended during the continuance of the inability, and the cause of the Force
Majeure, as far as possible, shall be remedied with all reasonable dispatch.
Notwithstanding the foregoing, if a Force Majeure condition results in any well
or wells being shut-in or production therefrom being curtailed for any
Page - 22
period of 15 consecutive months, Producer shall be entitled to notify Processor,
in writing, that it elects to have such well(s) released from this Agreement,
and if that notice is received before the Force Majeure condition is remedied,
then each of the well(s) designated in that notice shall be released from this
Agreement.
12.4 The settlement of strikes, lockouts, and other labor difficulty shall
be entirely within the discretion of the party having the difficulty. The above
requirement that any Force Majeure shall be remedied with all reasonable
dispatch shall not require the settlement of strikes, lockouts, or other labor
difficulty by acceding to the demands of opponents therein when that is
inadvisable in the discretion of the party having the difficulty.
ARTICLE XIII
INSPECTION
----------
13.1 Each party hereto shall have the right to witness any measuring,
testing, sampling, analysis or other operation required for settlement
hereunder. The parties shall designate in writing the person to be notified in
connection with the operation of this Section 13.1. Such written designation
shall include the name, address and telephone number of the person to be
notified. Adequate notice shall be given to allow such witness to be present.
13.2 Upon written request, each party shall furnish to the other party all
meter charts and/or measurement data obtained from electronic gas measurement
devices and other records relating to settlements to be made hereunder. All such
items shall be returned to the party supplying them within sixty (60) days of
receipt. The books and records of each party, insofar as they pertain to
settlement hereunder, shall be open and available to the other party at all
reasonable hours. All statements rendered to Producer by Processor during any
calendar year shall be conclusively presumed true and correct after twenty-four
(24) months following the end of any such calendar year, unless within the said
twenty-four (24) month period Producer takes written exception thereto and makes
claim on Processor for adjustment. Failure on the part of Producer to make claim
on Processor for adjustment within such period shall establish the correctness
thereof and preclude the filing of exceptions thereto or making of claims for
adjustment
Page - 23
thereof.
ARTICLE XIV
RESERVATIONS OF PRODUCER
------------------------
14.1 Producer reserves the right to withhold from delivery any gas as the
lessee is required to deliver to its lessors under the terms of the lease(s)
subject to this Agreement or to other parties under other contractual
agreements.
14.2 Producer has the right to use sufficient gas for the development
and/or operation on Producer's premises, together with similar properties of
Producer in the immediate vicinity, including the use of gas for drilling,
workover and production operations, and compressor fuel.
14.3 Producer has the right to pool, communitize and unitize, and to
dissolve units, communitized areas and depool, the lands, leases and properties
covered hereby with other lands, leases, and properties of Producer or others
located in the field in which the premises covered hereby are located; and all
of Producer's interest in such pool, units or areas, and all of Producer's gas
produced therefrom attributable to the interest of Producer committed hereto,
shall be covered by this Agreement, provided that the exercise of such right by
Producer shall not diminish Processor's rights nor increase its obligations with
respect to Producer's new interest in the gas produced from the lands covered
hereby.
14.4 Producer may, at any time, without liability to Processor, clean out,
rework, deepen, abandon or otherwise perform operations on any well(s) on
Producer's leases, or may use any efficient, modern or improved method for the
production of gas; provided however, that before any well(s) are taken out of
service for any reason, Producer agrees to first shut-off the well(s) connection
with Processor's facilities.
14.5 Producer may relinquish or surrender any lease that Producer does not
desire to maintain. Producer may use conventional separation equipment prior to
the Receipt Points.
ARTICLE XV
PRODUCER'S REPRESENTATIVE
-------------------------
Page - 24
15.1 To the extent Producer's rights hereunder now or hereafter may be
owned by more than one party or to the extent a third party owning an interest
in a well covered hereby ratifies this Agreement, Producer will appoint a
Representative with respect to all matters under this Agreement, including but
not limited to the following:
a. To give and receive all notices;
b. To receive all payments;
c. To make and witness any tests to be made of the gas and measuring
equipment and adjustments to such equipment;
d. To obtain, execute and, deliver to Processor such division order title
opinions and division orders as may be required by Processor hereunder;
and
e. To comply with the requirements, rules and regulations of any duly
constituted authority having jurisdiction.
f. To nominate and schedule deliveries of gas to downstream markets, as
applicable.
15.2 Processor may act, and shall be fully protected in acting, in
reliance upon any and all representations and acts of that Representative on
behalf of Producer as fully and with the same effect as though Producer had made
or performed those. Producer may change any Representative from time to time by
delivery of written notice of change and designation of Representative to
Processor, provided that any such new Representative shall be the same party as
designated by all Producers under this Agreement. The Representative so
designated shall have and may exercise all power and authority therein granted
with like effect as though named as such Representative herein in the first
instance.
ARTICLE XVI
MISCELLANEOUS
-------------
16.1 The failure of any party hereto to exercise any right granted
hereunder shall not impair nor be deemed a waiver of such party's privilege of
exercising such right at any subsequent time or times.
16.2 This Agreement shall extend to and inure to the benefit of and be
binding upon the parties hereto, their respective successors and assigns,
including affiliates and subsidiaries, on
Page - 25
and after the effective date of this Agreement. No assignment shall be binding
on either of the parties hereto, other than the party selling, transferring,
assigning or conveying its interests in the properties covered by this
Agreement, until the first day of the month following the date a certified copy
of the instrument evidencing such sale, transfer, assignment or conveyance has
been delivered to the other party.
16.3 Nothing herein contained shall be deemed to constitute the parties
hereto to be a partnership, mining partnership, joint venture or an association
and each shall be deemed to act herein and in connection with performance of
this Agreement for itself, and not for the other, and no party hereto shall be
liable, or responsible for any acts of the other by virtue of the relationship
created under this Agreement.
16.4 Insofar as it may have the right to do so, each party shall allow any
other party, its agents and employees, access to and the right of ingress and
egress upon the lands or property of the other party relating to plants and
pipelines herein referred to, for the purpose of carrying out any provisions
hereof, including the taking of samples, making of tests and witnessing thereof.
While any party, its agents or employees, is upon the property of another party
hereto, the entering party shall hold the other party whole and harmless for all
losses, damages and liabilities resulting from or arising out of such entry,
except to the extent occasioned by the negligence of such other party, its
agents or employees.
16.5 This Agreement shall be deemed to be a contract made under the laws
of the State of Michigan and for all purposes shall be construed in accordance
with the laws of said State without regard to choice of law principles.
16.6 Any dispute arising under this Agreement which cannot be resolved by
the parties by good faith negotiations within thirty (30) days following the
assertion of the dispute, shall be resolved by binding arbitration to be
conducted by and in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. All arbitration hearings shall be conducted in
Denver, Colorado. Any award of the arbitrator may be reduced to a judgment in
any court of competent jurisdiction.
Page - 26
16.7 This Agreement, including all Schedules contains the entire agreement
of the parties hereto with respect to the matters addressed herein and shall be
amended only by an instrument in writing signed by both parties.
IN WITNESS WHEREOF, this Agreement may be executed in any number of
counterparts, each of which shall be considered an original.
PRODUCER:
OCEANA ACQUISITION COMPANY, L.L.C.
By: /s/ Michael V. Ronca
Name: Michael V. Ronca
Title: Manager
PROCESSOR:
WEST SHORE PROCESSING COMPANY, LLC
By: MarkWest Michigan LLC, its Manager
By: MarkWest Hydrocarbon Partners, Ltd., its manager
By: MarkWest Hydrocarbon, Inc., its general partner
By: /s/ Arthur J. Denney
Name: Arthur J. Denney
Title: Vice President
Page - 27
THE STATE OF TEXAS
COUNTY OF HARRIS
The foregoing instrument was acknowledged before me this the 2nd day of May
1996, by Michael Ronea the Manager of Oceana Acquisition Company, L.L.C
Witness my hand and official seal.
My Commission expires: 2/13/97
/s/ Bronia E. Koch
Notary Public
THE STATE OF TEXAS
COUNTY OF HARRIS
The foregoing instrument was acknowledged before me this the 2nd day of May
1996, by Arthur J. Denney, the Vice President of MarkWest Hydrocarbon, Inc., as
general partner of MarkWest Hydrocarbon Partners, Ltd, as manager of MarkWest
Michigan LLC.
Witness my hand and official seal.
My Commission expires: 2/13/97
Notary Public
/s/ Bronia E. Koch
Page - 28
SCHEDULE I
Attached to and made a part of Gas Gathering, Treating and Processing Agreement,
dated May 2, 1996, between OCEANA ACQUISITION COMPANY, L.L.C., Producer, and
WEST SHORE PROCESSING COMPANY, LLC.
DEDICATED LEASES AND LANDS
--------------------------
Page - 29
SCHEDULE II
Attached to and made a part of Gas Gathering, Treating and Processing Agreement,
dated May 2, 1996, between OCEANA ACQUISITION COMPANY, L.L.C., Producer, and
WEST SHORE PROCESSING COMPANY, LLC.
PLANT DELIVERY POINTS
---------------------
1. The interconnection of the MichCon Dry Header at the Brown 19 gas
treating plant.
2. The tailgate of Shell Western E & P, Inc.'s Kalkaska gas processing
facility.
3. The tailgate of Processor's NGL extraction plant to be located in the
vicinity of Shell Western E & P, Inc.'s Shell 23 Treating Plant.
Page - 30
SCHEDULE III
RECORDING MEMORANDUM OF GAS GATHERING & PROCESSING AGREEMENT
KNOW ALL MEN BY THESE PRESENTS
That OCEANA ACQUISITION COMPANY, L.L.C., (Producer), with offices at____________
_________, and WEST SHORE PROCESSING COMPANY LLC, (Processor), with offices at
5613 DTC Parkway, Suite 400, Englewood, Colorado 80111, have entered into that
certain Gas Gathering, Treating and Processing Agreement dated____________,
1996, under which Producer has committed to its performance. Of its obligations
to Processor certain leases 'and lands, as described on Exhibit A, attached
hereto, and, further, that Producer agrees that the foregoing dedication shall
be a covenant running with those leases and lands, and that any assignment, sale
or other transfer of all or a portion of Producer's interests thereunder shall
include and be subject to the dedication under the Gas Gathering, Treating and
Processing Agreement referred to herein.
In witness whereof, the parties hereto have executed this instrument
effective as of________________, 1996.
PRODUCER:
OCEANA ACQUISITION COMPANY, L.L.C.
By:
Name:
Title:
PROCESSOR:
WEST SHORE PROCESSING COMPANY, LLC
By: MarkWest Michigan LLC, its Manager
By: MarkWest Hydrocarbon Partners, Ltd., its manager
By: MarkWest Hydrocarbon, Inc., its general partner
By:
Name:
Title:
Page - 31
THE STATE OF
COUNTY OF
the
The foregoing instrument was acknowledged before me this_____day of_______1996,
by_____________the___________________of OCEANA ACQUISITION COMPANY., L.L.C.
Witness my hand and official seal.
My Commission expires:
Notary Public
STATE OF COLORADO
COUNTY OF ARAPAHOE
The foregoing instrument was acknowledged before me this
_____day of_________1996, by_____________________________the_________________ of
MarkWest Hydrocarbon, inc., as general partner of MarkWest Hydrocarbon Partners,
Ltd, as manager of MarkWest Michigan LLC.
Witness my hand and official seal.
My Commission expires:
Notary Public
Page 32
SCHEDULE IV
NOMINATION PROCEDURES
---------------------
Pursuant to the terms of this Agreement, the Nomination Procedures detailed in
this Schedule IV will be utilized to cover all nominations made by Producer on
Processor's system. All nominations must be made by Producer or Producer's
designee. Processor and Producer agree to minimize imbalances and sustain the
flow of gas on the system. Should transporters receiving Producer's Gas revise
their requirements, the parties agree to meet and negotiate upon changes to the
Nomination Procedures herein as are reasonably required.
MONTHLY SCHEDULING OF GAS
-------------------------
By 1:00 P.M. (MT), at least five (5) business days prior to the start of
each Accounting Period or initial delivery of Gas, Producer will inform
Processor's Gas Control Department ("GCD") of the amount of Gas to be
delivered by Producer at each Receipt Point and of Producer's nomination
for Gas to be delivered at the Plant Delivery Point. Such nomination shall
be submitted to Processor by facsimile in a form acceptable to Processor.
Incomplete nominations will not be accepted.
By 1:00 P.M. (MT), four (4) business days prior to the start of each
Accounting Period or initial delivery of Gas, Processor will notify
Producer if the nomination from Producer specified above is different from
the volume that Processor will confirm at the Plant Delivery Point on
behalf of Producer. Processor will use its best efforts to work closely
with Producer to arrive at a confirmed nomination that best estimates
Producer's current production.
Processor will not be required to confirm any nomination that is greater or
less than Processor's estimate of Producer's Gas availability. If,
following the initial nomination, Processor determines, using the best
information available, including, but not limited to, measurement charts,
electronically transmitted data from EFM's, and pipeline confirmations,
that Producer should adjust its nominations, then Processor will notify
Producer and Producer will be required to adjust nominations in accordance
with Processor's request. Both
Page - 33
parties will use their best efforts to keep Producer's Gas position in
balance while maintaining Gas flow, including without limitation, such
periodic reporting of relevant data as may be required to timely adjust
nominations.
DAILY SCHEDULING OF GAS
-----------------------
Daily nomination changes must be conveyed by facsimile to Processor's GCD
on a completed nomination request form, or such other form acceptable to
Processor, by 9:30 A.M. (MT) on the business day prior to the effective
date of said nomination.
Processor will not be required to confirm any daily nomination that is
greater or less than Processor's estimate of Producer's availability for
that particular day, except as may be necessary to correct any imbalance
which may be determined to exist at that time.
Producer will promptly advise Processor when Producer's gas availability,
gas resale market(s) or other dispositions of Producer's Gas are
interrupted or curtailed and Producer shall change its nominations
accordingly.
AUTHORIZATION FOR WELLHEAD TURN-ONS
-----------------------------------
Producer must request and receive authorization from Processor's GCD prior to
new wells being turned on by Producer to produce into the system. Producer, or
its designee, shall provide Processor's GCD an entitlement percentage
(working interests and other controlled interests) for each new well at least
two (2) business days prior to the turn-on date. Authorization for each well
will be provided by Processor's GCD, by facsimile or telephone as agreed upon by
Processor's GCD and Producer.
The entitlement percentage provided by Producer, or its designee, shall remain
in effect for the entire Accounting Period. Any changes to the entitlement
percentage must be received by Processor in writing at least ten (10) business
days prior to the start date of the next Accounting Period.
Page - 34
COMMUNICATION WITH PROCESSOR'S GAS CONTROL DEPARTMENT
-----------------------------------------------------
Communication with Processor's GCD should be directed as follows:
West Shore Processing Company, L.L.C.
c/o MarkWest Michigan LLC
5613 DTC Parkway, Suite 400
Englewood, Colorado 80111
Telephone: (303) 290-8700
Facsimile: (303) 290-8769
Page - 35
RECORDING MEMORANDUM OF GAS GATHERING & PRO
KNOW ALL MEN BY THESE PRESENTS
That OCEANA ACQUISITION COMPANY, L.L.C., (Producer), with offices at 1100
----
Louisiana, Suite 3150, Houston, Texas 77002 and WEST SHORE PROCESSING COMPANY
-------------------------------------------
LLC, (Processor), with offices at 5613 DTC Parkway, Suite 400, Englewood,
Colorado 80111, have entered into that certain Gas Gathering, Treating and
Processing Agreement dated May 2, 1996, under which Producer has committed to
-----
its performance of its obligations to Processor certain leases and lands, as
described on Exhibit A, attached hereto, and, further, that Producer agrees that
the foregoing dedication shall be a covenant running with those leases and
lands, and that any assignment, sale or other transfer of all or a portion of
Producer's interests thereunder shall include and be subject to the dedication
under the Gas Gathering, Treating and Processing Agreement referred to herein.
In witness whereof, the parties hereto have executed this
instrument effective as of May 2, 1996.
-----
PRODUCER:
OCEANA ACQUISITION COMPANY, L.L.C.
By:
Name: Michael V. Ronca
Title: Manager
-------
PROCESSOR:
WEST SHORE PROCESSING COMPANY, LLC
By: MarkWest Michigan LLC, its Manager
By: MarkWest Hydrocarbon Partners, Ltd., its manager
By: MarkWest Hydrocarbon, Inc., its general partner
By:
Name: Arthur J. Denney
----------------
Title: Vice President
---------------
Page - 36
Dates Referenced Herein
| Referenced-On Page |
|---|
| This ‘S-1’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| Filed on: | | 8/2/96 | | | | | | | None on these Dates |
| | 5/2/96 | | 29 | | 36 |
| List all Filings |
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