As filed with the Securities and Exchange Commission on June 2, 2011

 Registration No. 333-173191

 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Amendment No. 2
to

Form S-1
 
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
 
American Midstream Partners, LP
(Exact Name of Registrant as Specified in its Charter)

Delaware	 	4922	 	27-0855785	
(State or Other Jurisdiction of
Incorporation or Organization)	 	(Primary Standard Industrial
Classification Code Number)	 	(I.R.S. Employer
Identification Number)	

1614 15th Street
Suite 300
Denver, Colorado 80202
(720) 457-6060
(Address, including Zip Code, and Telephone Number, including Area Code, of Registrant’s Principal Executive Offices)
 
Brian F. Bierbach
President and Chief Executive Officer
1614 15th Street
Suite 300
Denver, Colorado 80202
(720) 457-6060
(Name, Address, including Zip Code, and Telephone Number, including Area Code, of Agent for Service)
 
Copies to:

 	 	 	
G. Michael O’Leary
Timothy C. Langenkamp
Andrews Kurth LLP
600 Travis, Suite 4200
Houston, Texas
(713) 220-4200	 	William N. Finnegan IV
Brett E. Braden
Latham & Watkins LLP
717 Texas Avenue, Suite 1600
Houston, Texas 77002
(713) 546-5400	

 
Approximate date of commencement of proposed sale to the public:   As soon as practicable after this Registration Statement becomes effective.
 
If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.   o

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and the list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   o

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   o
 
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 	 	 	 	 	 	 	
Large accelerated filer  o	 	Accelerated filer  o	 	Non-accelerated filer  þ	 	Smaller reporting company  o	
 	 	 	 	(Do not check if a smaller reporting company)	 	 	

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 
Explanatory Note
 
This Amendment No. 2 to the Registration Statement on Form S-1 (File No. 333-173191) of American Midstream Partners, LP is being filed solely to amend Item 16 of Part II thereof and to transmit certain exhibits thereto. This Amendment No. 2 does not modify any provision of the preliminary prospectus contained in Part I or Items 13, 14, 15 or 17 of Part II of the Registration Statement. Accordingly, this Amendment No. 2 does not include a copy of the preliminary prospectus.

 

PART II
 
INFORMATION NOT REQUIRED IN THE PROSPECTUS

		
Item 13.   	Other Expenses of Issuance and Distribution.	

Set forth below are the expenses (other than underwriting discounts, commissions and structuring fees) expected to be incurred in connection with the issuance and distribution of the securities registered hereby. With the exception of the SEC registration fee, the FINRA filing fee and the NYSE listing fee, the amounts set forth below are estimates.

 	 	 	 	 	
SEC registration fee	 	$	8,708	 	
FINRA filing fee	 	 	8,000	 	
NYSE listing fee	 	 	*	 	
Fees and expenses of legal counsel	 	 	*	 	
Accounting fees and expenses	 	 	*	 	
Transfer agent and registrar fees	 	 	*	 	
Miscellaneous	 	 	*	 	
 	 	 	 	 	
Total	 	 	*	 	

 

			
*		To be filed by amendment.	

Item 14.   	Indemnification of Directors and Officers.	
 
American Midstream Partners, LP
 
Subject to any terms, conditions or restrictions set forth in the partnership agreement, Section 17-108 of the Delaware Revised Uniform Limited Partnership Act empowers a Delaware limited partnership to indemnify and hold harmless any partner or other person from and against any and all claims and demands whatsoever. The section of the prospectus entitled “The Partnership Agreement — Indemnification” discloses that we will generally indemnify officers, directors and affiliates of our general partner to the fullest extent permitted by the law against all losses, claims, damages or similar events and is incorporated herein by reference.
 
The underwriting agreement to be entered into in connection with the sale of the securities offered pursuant to this registration statement, the form of which will be filed as an exhibit to this registration statement, provides for indemnification of American Midstream Partners, LP and our general partner, their officers and directors, and any person who controls our general partner, including indemnification for liabilities under the Securities Act.
 
American Midstream GP, LLC
 
Subject to any terms, conditions or restrictions set forth in the limited liability company agreement, Section 18-108 of the Delaware Limited Liability Company Act empowers a Delaware limited liability company to indemnify and hold harmless any member or manager or other person from and against any and all claims and demands whatsoever.
 
Under the limited liability agreement of our general partner, in most circumstances, our general partner will indemnify the following persons, to the fullest extent permitted by law, from and against any and all losses, claims, damages, liabilities (joint or several), expenses (including legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts arising from any and all claims, demands, actions, suits or proceedings (whether civil, criminal, administrative or investigative):

 	• 	any person who is or was an affiliate of our general partner (other than us and our subsidiaries);	
 		
 	• 	any person who is or was a member, partner, officer, director, employee, agent or trustee of our general partner or any affiliate of our general partner;	

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 	• 	any person who is or was serving at the request of our general partner or any affiliate of our general partner as an officer, director, employee, member, partner, agent, fiduciary or trustee of another person; and	
 		
 	• 	any person designated by our general partner.	
 
Our general partner will purchase insurance covering its officers and directors against liabilities asserted and expenses incurred in connection with their activities as officers and directors of our general partner or any of its direct or indirect subsidiaries.

Item 15.   	Recent Sales of Unregistered Securities.	
 
On November 4, 2009, in connection with our formation, we issued (i) 200,000 general partner units representing a 2.0% general partner interest in us and all of our incentive distribution rights to our general partner in exchange for $2.0 million and (ii) 9,800,000 common units representing a 98.0% limited partner interest in us to AIM Midstream Holdings in exchange for $98.0 million. These transactions were exempt from registration under Section 4(2) of the Securities Act as they did not involve a public offering.
 
On September 27, 2010, we issued (i) 10,000 general partner units to our general partner in exchange for $100,000 and (ii) 490,000 common units to AIM Midstream Holdings in exchange for $4.9 million. These transactions were exempt from registration under Section 4(2) of the Securities Act as they did not involve a public offering.
 
On November 3, 2010, we issued (i) 14,000 general partner units to our general partner in exchange for $140,000 and (ii) 686,000 common units to AIM Midstream Holdings in exchange for $6.9 million. These transactions were exempt from registration under Section 4(2) of the Securities Act as they did not involve a public offering.

		
Item 16.   	Exhibits and Financial Schedules.	

The following documents are filed as exhibits to this registration statement:

 	 	 	 	 	
Number	 	Description	
 		
 	1	.1*	 	Form of Underwriting Agreement	
 	3	.1**	 	Certificate of Limited Partnership of American Midstream Partners, LP	
 	3	.2**	 	Amended and Restated Agreement of Limited Partnership of American Midstream Partners, LP	
 	3	.3*	 	Form of Second Amended and Restated Agreement of Limited Partnership of American Midstream Partners, LP	
 	3	.4**	 	Certificate of Formation of American Midstream GP, LLC	
 	3	.5**	 	Amended and Restated Limited Liability Company Agreement of American Midstream GP, LLC	
 	5	.1*	 	Form of Opinion of Andrews Kurth LLP as to the legality of the securities being registered	
 	8	.1*	 	Form of Opinion of Andrews Kurth LLP relating to tax matters	
 	10	.1*	 	Revolving and Term Loan Credit Agreement, dated as of October 5, 2009, by and among American Midstream, LLC, as the initial borrower, Comerica Bank, as the administrative agent, BBVA Compass Bank, as the documentation agent and Comerica Bank and BBVA Compass Bank as co-lead arrangers.	
 	10	.2*	 	First Amendment to Revolving and Term Loan Credit Agreement, dated effective as of October 5, 2009, among American Midstream, LLC, American Midstream Marketing, LLC, American Midstream (Alabama Gathering), LLC, American Midstream (Alabama Intrastate), LLC, American Midstream (Alatenn), LLC, American Midstream (Midla), LLC, American Midstream (Mississippi), LLC, American Midstream (Tennessee River), LLC, American Midstream Onshore Pipelines, LLC, Mid Louisiana Gas Transmission, LLC, American Midstream (Louisiana Intrastate), LLC, American Midstream (Sigco Intrastate), LLC and American Midstream Offshore (Seacrest) LP, as borrowers, the Lenders named therein, and Comerica Bank, as administrative agent.	

II-2

 

 	 	 	 	 	
Number	 	Description	
 		
 	10	.3*	 	Second Amendment and Waiver to Revolving and Term Loan Credit Agreement, dated July 30, 2010, among American Midstream, LLC, American Midstream Marketing, LLC, American Midstream (Alabama Gathering), LLC, American Midstream (Alabama Intrastate), LLC, American Midstream (Alatenn), LLC, American Midstream (Midla), LLC American Midstream (Mississippi), LLC, American Midstream (Tennessee River), LLC, American Midstream Onshore Pipelines, LLC, Mid Louisiana Gas Transmission, LLC, American Midstream (Louisiana Intrastate), LLC, American Midstream (Sigco Intrastate), LLC And American Midstream Offshore (Seacrest) LP, the Lenders named therein), and Comerica Bank, as administrative agent.	
 	10	.4*	 	Employment Agreement, dated November 2, 2009, by and between American Midstream GP, LLC and Brian Bierbach.	
 	10	.5*	 	Employment Agreement, dated November 2, 2009, by and between American Midstream GP, LLC and Marty W. Patterson.	
 	10	.6*	 	Employment Agreement, dated November 2, 2009, by and between American Midstream GP, LLC and John J. Connor.	
 	10	.7*	 	Amended and Restated American Midstream GP, LLC Long-Term Incentive Plan.	
 	10	.8*	 	Form of Phantom Unit Grant under American Midstream GP, LLC Long-Term Incentive Plan.	
 	10	.9*	 	Membership Interests Purchase and Sale Agreement, dated as of October 2, 2009, by and between Enbridge Midcoast Energy, L.P. and American Midstream, LLC.	
 	10	.10†	 	Firm Gas Gathering Agreement, dated as of August 1, 2008, by and between American Midstream (Seacrest) LP and Contango Resources Company.	
 	10	.11	 	Letter Agreement, dated December 10, 2009, between American Midstream Offshore (Seacrest) LP and Contango Operators, Inc.	
 	10	.12†	 	Base Contract for Sale and Purchase of Natural Gas, dated June 1, 2010, between ExxonMobil Gas & Power Marketing Company and Mid Louisiana Gas Transmission, LLC.	
 	10	.13†	 	Gas Processing Agreement, dated July 14, 2010, by and between American Midstream (Mississippi), LLC and Venture Oil & Gas, Inc.	
 	21	.1**	 	List of Subsidiaries of American Midstream Partners, LP.	
 	23	.1**	 	Consent of PricewaterhouseCoopers LLP.	
 	23	.2**	 	Consent of PricewaterhouseCoopers LLP.	
 	23	.3*	 	Form of Consent of Andrews Kurth LLP (contained in Exhibit 5.1).	
 	23	.4*	 	Form of Consent of Andrews Kurth LLP (contained in Exhibit 8.1).	
 	24	.1**	 	Powers of Attorney (contained on the signature page to this Registration Statement).	

 

			
*		To be filed by amendment.	
 		
**		Previously filed.	

			
†		Certain portions have been omitted pursuant to a confidential treatment request. Omitted information has been filed separately with the Securities and Exchange Commission.	

 
		
Item 17.   	Undertakings	

 
The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

 
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a

II-3

 

court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

 
The undersigned registrant hereby undertakes that:

 
(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

 
(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 
(3) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

 
(4) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

 
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

 
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

 
(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

 
(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

 
The undersigned registrant undertakes to send to each common unitholder, at least on an annual basis, a detailed statement of any transactions with American Midstream GP, our general partner, or its affiliates, and of fees, commissions, compensation and other benefits paid, or accrued to American Midstream GP or its affiliates for the fiscal year completed, showing the amount paid or accrued to each recipient and the services performed.

 
The undersigned registrant undertakes to provide to the common unitholders the financial statements required by Form 10-K for the first full fiscal year of operations of the company.

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SIGNATURES

Pursuant to the to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Houston, State of Texas, on June 2, 2011.

American Midstream Partners, LP

 	By: 	American Midstream GP, LLC
its general partner	

			
 	By:  	/s/   Brian F. Bierbach	

Name:     Brian F. Bierbach
			
 	Title: 	Chief Executive Officer and President	

Each person whose signature appears below appoints Brian F. Bierbach and William B. Mathews, and each of them, any of whom may act without the joinder of the other, as his true and lawful attorneys-in-fact and agents, with full power of substitution and re-substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement and any Registration Statement (including any amendment thereto) for this offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute and substitutes, may lawfully do or cause to be done by virtue hereof.

II-5

 

Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and the dates indicated.

 	 	 	 	 	 	 	
Signature	 	Title	 	Date	

/s/   Brian F. Bierbach

Brian F. Bierbach	 	Chief Executive Officer and President (Principal Executive Officer) and Director	 	June 2, 2011	
 	 	 	 	 	
*

Sandra M. Flower	 	Vice President of Finance
(Principal Financial Officer and Principal
Accounting Officer)	 	June 2, 2011	
 	 	 	 	 	
*

Robert B. Hellman	 	Director	 	June 2, 2011	
 	 	 	 	 	
*

Matthew P. Carbone	 	Director	 	June 2, 2011	
 	 	 	 	 	
*

Edward O. Diffenfal	 	Director	 	June 2, 2011	
 	 	 	 	 	
*

L. Kent Moore	 	Director	 	June 2, 2011	
 	 	 	 	 	
*

David L. Page	 	Director	 	June 2, 2011	
 	 	 	 	 	
/s/   Gerald A. Tywoniuk

Gerald A. Tywoniuk	 	Director	 	June 2, 2011	
 	 	 	 	 	 	 	
*By:	 	/s/   Brian F. Bierbach

Brian F. Bierbach
Attorney-in-Fact	 	 	 	 	

II-6

 
EXHIBIT INDEX

 	 	 	 	 	
Number	 	Description	
 		
 	1	.1*	 	Form of Underwriting Agreement	
 	3	.1**	 	Certificate of Limited Partnership of American Midstream Partners, LP	
 	3	.2**	 	Amended and Restated Agreement of Limited Partnership of American Midstream Partners, LP	
 	3	.3*	 	Form of Second Amended and Restated Agreement of Limited Partnership of American Midstream Partners, LP	
 	3	.4**	 	Certificate of Formation of American Midstream GP, LLC	
 	3	.5**	 	Amended and Restated Limited Liability Company Agreement of American Midstream GP, LLC	
 	5	.1*	 	Form of Opinion of Andrews Kurth LLP as to the legality of the securities being registered	
 	8	.1*	 	Form of Opinion of Andrews Kurth LLP relating to tax matters	
 	10	.1*	 	Revolving and Term Loan Credit Agreement, dated as of October 5, 2009, by and among American Midstream, LLC, as the initial borrower, Comerica Bank, as the administrative agent, BBVA Compass Bank, as the documentation agent and Comerica Bank and BBVA Compass Bank as co-lead arrangers.	
 	10	.2*	 	First Amendment to Revolving and Term Loan Credit Agreement, dated effective as of October 5, 2009, among American Midstream, LLC, American Midstream Marketing, LLC, American Midstream (Alabama Gathering), LLC, American Midstream (Alabama Intrastate), LLC, American Midstream (Alatenn), LLC, American Midstream (Midla), LLC, American Midstream (Mississippi), LLC, American Midstream (Tennessee River), LLC, American Midstream Onshore Pipelines, LLC, Mid Louisiana Gas Transmission, LLC, American Midstream (Louisiana Intrastate), LLC, American Midstream (Sigco Intrastate), LLC and American Midstream Offshore (Seacrest) LP, as borrowers, the Lenders named therein, and Comerica Bank, as administrative agent.	
 	10	.3*	 	Second Amendment and Waiver to Revolving and Term Loan Credit Agreement, dated July 30, 2010, among American Midstream, LLC, American Midstream Marketing, LLC, American Midstream (Alabama Gathering), LLC, American Midstream (Alabama Intrastate), LLC, American Midstream (Alatenn), LLC, American Midstream (Midla), LLC American Midstream (Mississippi), LLC, American Midstream (Tennessee River), LLC, American Midstream Onshore Pipelines, LLC, Mid Louisiana Gas Transmission, LLC, American Midstream (Louisiana Intrastate), LLC, American Midstream (Sigco Intrastate), LLC And American Midstream Offshore (Seacrest) LP, the Lenders named therein), and Comerica Bank, as administrative agent.	
 	10	.4*	 	Employment Agreement, dated November 2, 2009, by and between American Midstream GP, LLC and Brian Bierbach.	
 	10	.5*	 	Employment Agreement, dated November 2, 2009, by and between American Midstream GP, LLC and Marty W. Patterson.	
 	10	.6*	 	Employment Agreement, dated November 2, 2009, by and between American Midstream GP, LLC and John J. Connor.	
 	10	.7*	 	Amended and Restated American Midstream GP, LLC Long-Term Incentive Plan.	
 	10	.8*	 	Form of Phantom Unit Grant under American Midstream GP, LLC Long-Term Incentive Plan.	
 	10	.9*	 	Membership Interests Purchase and Sale Agreement, dated as of October 2, 2009, by and between Enbridge Midcoast Energy, L.P. and American Midstream, LLC.	
 	10	.10†	 	Firm Gas Gathering Agreement, dated as of August 1, 2008, by and between American Midstream (Seacrest) LP and Contango Resources Company.	
 	10	.11	 	Letter Agreement, dated December 10, 2009, between American Midstream Offshore (Seacrest) LP and Contango Operators, Inc.	
 	10	.12†	 	Base Contract for Sale and Purchase of Natural Gas, dated June 1, 2010, between ExxonMobil Gas & Power Marketing Company and Mid Louisiana Gas Transmission, LLC.	
 	10	.13†	 	Gas Processing Agreement, dated July 14, 2010, by and between American Midstream (Mississippi), LLC and Venture Oil & Gas, Inc.	
 	21	.1**	 	List of Subsidiaries of American Midstream Partners, LP.	

 

 	 	 	 	 	
Number	 	Description	
 		
 	23	.1**	 	Consent of PricewaterhouseCoopers LLP.	
 	23	.2**	 	Consent of PricewaterhouseCoopers LLP.	
 	23	.3*	 	Form of Consent of Andrews Kurth LLP (contained in Exhibit 5.1).	
 	23	.4*	 	Form of Consent of Andrews Kurth LLP (contained in Exhibit 8.1).	
 	24	.1**	 	Powers of Attorney (contained on the signature page to this Registration Statement).	

 

 
			
*		To be filed by amendment.	

 
			
**		Previously filed.	

 
			
†		Certain portions have been omitted pursuant to a confidential treatment request. Omitted information has been filed separately with the Securities and Exchange Commission.	

Exhibit 10.10
FIRM GAS GATHERING AGREEMENT
BETWEEN
AMERICAN MIDSTREAM (SEACREST) LP
AND
CONTANGO RESOURCES COMPANY
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

Contract No.                     
Private and Confidential
TABLE OF CONTENTS

ARTICLE I.	 	DEFINITIONS	 	 	1	 	
ARTICLE II.	 	FACILITIES	 	 	5	 	
ARTICLE III.	 	OPERATING TERMS AND CONDITIONS	 	 	5	 	
ARTICLE IV.	 	TENDER AND GATHERING OF GAS	 	 	5	 	
ARTICLE V.	 	FIRM CAPACITY MDQ	 	 	6	 	
ARTICLE VI.	 	CHARGES	 	 	7	 	
ARTICLE VII.	 	RECEIPT AND DELIVERY PRESSURES	 	 	7	 	
ARTICLE VIII.	 	TAXES AND ROYALTIES	 	 	8	 	
ARTICLE IX.	 	NOTICES	 	 	9	 	
ARTICLE X.	 	INDEMNITY, LIMITATION OF DAMAGES AND INSURANCE	 	 	9	 	
ARTICLE XI.	 	TERM AND TERMINATION	 	 	12	 	
ARTICLE XII.	 	REPRESENTATIONS AND WARRANTIES	 	 	13	 	
ARTICLE XIII.	 	MISCELLANEOUS	 	 	14	 	
 	 	 	 	 	 	 	
Exhibit A :	 	Omitted	 	 	 	 	
Exhibit B :	 	Point of Receipt and Point of Delivery	 	 	 	 	
Exhibit C :	 	Operating Terms and Conditions	 	 	 	 	
Exhibit D :	 	Firm Capacity MDQ	 	 	 	 	
Exhibit E :	 	Fees	 	 	 	 	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

Contract No.                     
Private and Confidential
FIRM GAS GATHERING AGREEMENT
     This Firm Gas Gathering Agreement is entered into as of August 1, 2008 (hereinafter the “ Effective Date ”), by and between Enbridge Offshore Pipelines (Seacrest) L.P. (“ Gatherer ”), a Texas limited partnership, and Contango Resources Company, a Delaware corporation (“ Contango ” or “ Shipper ”).
W I T N E S S E T H :
     WHEREAS, Gatherer desires to gather for Shipper, and Shipper desires for Gatherer to gather on a firm basis, certain quantities of Gas; and
     WHEREAS, Gatherer and Shipper wish to set forth in this agreement the specific terms and conditions under which Gatherer will provide such a firm gathering service to Shipper;
     NOW, THEREFORE, for and in consideration of the premises and mutual covenants herein contained, Shipper and Gatherer do hereby stipulate and agree as follows:
ARTICLE I.
DEFINITIONS
     1.1. Specific Terms . As used throughout this Agreement, including the exhibits and attachments hereto, the following capitalized terms shall have the meanings ascribed below.
“ Affiliate ” means, with respect to any relevant Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such relevant Person in question. As used herein, the term “ control ” (including its derivatives and similar terms) means owning, directly or indirectly, 50% or more of the interest in any such relevant Person. The term Affiliate shall also include member(s) of the Parties, their member(s) and any Affiliates of such Persons.
“ Agreement ” means this Firm Gas Gathering Agreement (including any exhibits, supplements or other attachments hereto), as amended, restated, supplemented or otherwise modified from time to time.
“ Authorized Overrun ” shall have the meaning set forth in Section 4.3 of Article IV .
“ British Thermal Unit ” or “ Btu ” means one British Thermal Unit and, where appropriate, shall mean the plural thereof. One Btu is defined as the amount of heat required to raise the temperature of one pound of pure water one degree Fahrenheit from a starting point of fifty-eight and five-tenths degrees Fahrenheit, under a constant pressure of 14.73 psia.
“ Claim ” means any claim, liability, loss, demand, damages, lien, cause of action of any kind, obligation, costs, royalty, fees, assessments, penalties, fines, judgment, interest and award
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
 1 of 21 

 

Contract No.                     
Private and Confidential
(including recoverable legal counsel fees and costs of litigation of the Person asserting the Claim), whether arising by law, contract, tort, voluntary settlement or otherwise
“ Contract Year ” means each consecutive twelve Month period beginning with the Effective Date of this Agreement or, if the Effective Date does not fall on the first Day of a Month, then with the first Day of the Month following the Effective Date.
“ Day ” means a period of twenty-four (24) consecutive hours, beginning at 9:00 a.m. Central Time, or at such other hour as the Gatherer and Shipper mutually agree.
“ Dekatherm ” or “ Dth ” means one million (1,000,000) Btus.
“ Demand Fee ” shall have the meaning set forth on Exhibit E.
“ Dispute ” means any dispute or controversy arising out of this Agreement or the performance of this Agreement, including a Claim under this Agreement and any dispute or controversy regarding the existence, construction, validity, interpretation, enforceability or breach of this Agreement.
“ Downstream Transportation ” means transportation or receipt of Gas immediately downstream of the Point of Delivery.
“ Downstream Transporters ” means any transporter or other receiving facility, including without limitation the Burns Point Processing Plant, immediately downstream of the Point of Delivery.
“ Effective Date ” means the date of this Agreement.
“ Equivalent Thermal Quantity ” means the quantity of Gas measured in Mcf received by Gatherer at the Point of Receipt during any given period of time, multiplied by the applicable Btu content of such Gas adjusted for the thermal equivalent of retainage by Gatherer of Shipper’s pro rata share of Fuel Usage Quantities and lost-and-unaccounted-for gas associated with the operation of the Gathering System.
“ Event of Default ” or “ Default ”, to the extent not otherwise excused herein pursuant to Article VII of Exhibit C hereto, means the failure by either Party to perform or comply with any material agreement, covenant, obligation or other provision contained in this Agreement when such failure has not been remedied within thirty (30) Days after receipt of written notice of such non-performance or non-compliance. Such Default may result in termination of this Agreement pursuant to Article XI of this Agreement.
“ Firm Capacity MDQ ” means, with respect to each Day during the term of this Agreement, the maximum daily quantity (expressed in Mcf/d) of Production during such Day that Gatherer shall be required to gather as a Firm Service on the Gathering System pursuant to this Agreement, as conditioned by the curtailment provisions of Article II of Exhibit C and as more particularly set forth in the production profile of Exhibit D hereto, as may be amended from time to time.
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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“ Firm Service ” shall have the meaning set forth in Section 4.2 of Article IV .
“ Force Majeure ” shall have the meaning set forth in Section 7.3 of Article VII of Exhibit C .
“ Fuel Usage Quantities ” means the quantity of fuel measured (in MMBTUs) and consumed in operating Gatherer’s System (defined below).
“ Gas ” or “ Natural Gas ” means gas produced from oil and gas wells, residue gas remaining after processing such gas for the removal of liquefiable hydrocarbons therefrom, and any other gaseous hydrocarbons.
“ Gatherer ” shall have the meaning set forth in the preamble.
“ Gathering Fee ” shall have the meaning set forth in Exhibit E .
“ Gathering System ” means the twelve-inch (12”) diameter pipeline owned and operated by Gatherer which extends approximately 23 miles from the Bayou Sale Yard, located in St. Mary’s Parish, Louisiana, to an interconnect with Chevron North American Exploration and Production Company located in Eugene Island Block 24, offshore Louisiana, Gulf of Mexico.
“ Laws ” means any laws, rules, regulations, decrees and orders of the United States of America and all other governmental bodies, agencies and other authorities having jurisdiction over or affecting the provisions contained in, or the transactions contemplated by, this Agreement or the Parties or their operations, whether such laws now exist or are hereafter amended or enacted.
“ MAOP ” means maximum allowable operating pressure which may be amended from time to time.
“ Mcf ” means one thousand (1,000) cubic feet of Gas at 14.73 pounds per square inch and sixty degrees (60 ° ) Fahrenheit.
“ MMS ” means the Minerals Management Service of the United States Department of the Interior, or any successor agency.
“ MMBtu ” means one million (1,000,000) Btus.
“ Month ” means a period of time beginning at 9:00 a.m. Central Time on the first Day of a calendar month and ending at 9:00 a.m. Central Time on the first Day of the next succeeding calendar month.
“ Party ” means, individually, either Gatherer or Shipper, collectively, the “ Parties ”.
“ Person ” means any individual or entity, including, without limitation, any corporation, limited liability company, partnership (general or limited), joint venture, association, joint stock company, trust, unincorporated organization or government (including any board, agency, political subdivision or other body thereof).
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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“ Point of Delivery ” means the existing Gas delivery point on the Gathering System for redelivery of Gas (which remains in a gaseous state) received at the Point of Receipt pursuant to this Agreement. The Point of Delivery is more fully described in Exhibit B of this Agreement.
“ Point of Measurement ” means the location of measurement equipment utilized to determine the quantities of Gas received for gathering hereunder as set forth on Exhibit B of this Agreement. Measurement shall be performed at the Point of Measurement pursuant to the provisions of Article IV of Exhibit C .
“ Point of Receipt ” means the point at which Shipper Tenders Production to the Gathering System for service hereunder. The Point of Receipt is more fully described in Exhibit B of this Agreement.
“Production ” means any Gas owned or controlled by Shipper during the term hereof that is Tendered to Gatherer by Shipper at the Point of Receipt.
“psia ” means pounds per square inch absolute.
“ psig ” means pounds per square inch gauge.
“ Shipper ” shall have the meaning set forth in the preamble.
“ Shipper Cause ” means acts or omissions by Shipper, including but not limited to Shipper’s failure to have adequate capacity from the Downstream Transporter or Shipper’s failure to comply with Articles III or V of Exhibit C, attached hereto.
“ Stated Rate ” means an annual rate of interest (compounded Monthly) equal to the lesser of:

 	(i)	 	the sum of the one year LIBOR rate quoted in the Wall Street Journal (or, in its absence, a similar publication) on the first Day of the applicable Month plus two percent (2%); or	

 	(ii)	 	the maximum lawful interest rate then in effect under applicable Laws.	
“ Tender ” means the act of making Gas available by Shipper to the Gathering System at the Point of Receipt or by Gatherer for Shipper’s account at the Point of Delivery, whichever is applicable, where the Party delivering the Gas is capable of delivering the specified quantities and has offered to deliver such quantities to or for the account of the other Party.
     1.2. Other Terms . Other capitalized terms used in this Agreement and not defined in Section 1.1 above shall have the meanings ascribed to them throughout this Agreement.
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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ARTICLE II.
FACILITIES
      Measurement Data . Gatherer, or its designee, shall be solely responsible for obtaining all necessary measurement data concerning Gatherer’s receipts of Shipper’s Gas at the Point of Receipt hereunder. The quantity of Gas measured at the Point of Measurement shall be measured in accordance with the provisions of Article IV of Exhibit C , subject to the receipt of all necessary regulatory approvals.
ARTICLE III.
OPERATING TERMS AND CONDITIONS
     Gatherer’s operating terms and conditions, as further set forth in Exhibit C attached hereto, are for all purposes incorporated herein.
ARTICLE IV.
TENDER AND GATHERING OF GAS
     4.1. Tender of Production . Subject to the provisions of this Agreement, Shipper may Tender to the Gathering System at the Point of Receipt all of its Production if, when and as produced, each Day during the term of this Agreement.
     4.2 . Firm Service . Subject to the terms of this Agreement, for each Day during the term of this Agreement, Gatherer shall gather on the Gathering System for Shipper at the fees set forth in Section 6.1 of Article VI , all of the Shipper’s Production produced and Tendered during such Day, up to a volume not to exceed the Firm Capacity MDQ and redeliver an Equivalent Thermal Quantity of Gas to or for the account of Shipper at the Point of Delivery (“ Firm Service ”). Gatherer’s obligation to provide Firm Service under this Agreement is fundamental to this Agreement. If the allocation priority system set out in Section 2.1 of Article II of Exhibit C ever causes Gatherer to curtail Shipper’s Production up to the Firm Capacity MDQ, Gatherer shall be excused only to the extent of Force Majeure events on the Gathering System, interruptions on Downstream Transporters, Shipper Cause, the scheduling of routine maintenance and/or operational activities by Gatherer required to maintain the integrity of the Gathering System, and/or to protect people or the environment.
     4.3. Authorized Overrun . Subject to the provisions of this Agreement, for each Day during the term of this Agreement, Shipper may Tender to the Gathering System, at the fee(s) set forth in Section 6.1 of Article VI , all of its Production in excess of the Firm Capacity MDQ (the “ Authorized Overrun ”). Subject to the provisions of this Agreement and after considering existing firm commitments and operations, Gatherer shall gather on the Gathering System any or all of such Authorized Overrun, on the priority set out in Section 2.1 of Article II of Exhibit C, attached hereto, to the extent Gatherer (in its sole discretion) determines the Gathering System has available capacity (including at the Point of Receipt and Point of Delivery).
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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ARTICLE V.
FIRM CAPACITY MDQ
     5.1. Production Profile . Shipper’s effective Firm Capacity MDQ during the term of this Agreement shall be that set forth on Exhibit D .
     5.2. Firm Capacity MDQ Increases . Shipper’s Firm Capacity MDQ shall be increased upon the request, made in good faith by Shipper only in the following circumstances:

 	(A)	 	To reflect developmental drilling plans including but not limited to subsequent re-drill, work-over, re-completion attempts or any other well intervention which Shipper, in its sole opinion, deems appropriate.	
 		
 	(B)	 	To reflect initial production projections for new wells that may be connected to the Point of Receipt.	
 		
 	(C)	 	Notwithstanding the above, Shipper’s Firm Capacity MDQ shall not be increased unless Shipper supplies Gatherer with substantiating documentation such as its drill plans, third party engineering studies and any other information which Shipper reasonably believes supports its good faith request for a Firm Capacity MDQ increase.	
Provided, however, that any such increase(s) are subject to the availability of uncommitted capacity in the Gathering System. In the event that capacity is not available, Gatherer shall have sixty (60) Days from the date on which the request for Firm Capacity MDQ increase is received to notify Shipper whether or not Gatherer will expand capacity for Firm Service to handle the requested increase.
     5.3 Firm Capacity MDQ Decreases . In the event that, for any ninety (90) consecutive Day period, the volumes of Shipper’s Production Tendered (plus any royalty-in-kind attributable to Shipper’s production) do not equal at least 80% of Shipper’s Firm Capacity MDQ, the following shall apply:

 	(A)	 	Shipper’s Firm Capacity MDQ may be reduced, at Gatherer’s sole option, prospectively to a level equal to ten percent (10%) over actual volumes of Shipper’s average Monthly Production during the past Contract Year, subject to Section 5.3(B) of this Article V .	
 		
 	(B)	 	Notwithstanding the foregoing subsection (A), if Shipper is able to demonstrate to Gatherer that prospective period volumes of Shipper’s Production is reasonably expected to occur at levels above actual volumes reflected during the past Contract Year period under review, such information will be considered in establishing any reductions to Shipper’s Firm Capacity MDQ.	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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ARTICLE VI.
CHARGES
     6.1 Gathering Fee . Shipper shall pay, on a monthly basis, an amount equal to:

 	 	the product of the Gathering Fee set forth in Exhibit E times the sum of the following quantity:	

 	 	All Production received and allocated to Shipper at the Point of Receipt.	
     6.2 Demand Fee: Shipper shall pay, on a monthly basis an amount equal to:

 	 	the amount of the Demand Fee as set forth on Exhibit E times the Firm Capacity MDQ as reflected on Exhibit D,	
provided, however, that no Demand Fee shall be due and payable to Gatherer for those Days during which an event of Force Majeure has caused Gatherer to be unable to gather Shipper’s Production.
     6.3 Fuel Usage Quantities . Each Month Shipper shall provide at the Point of Receipt its pro rata share of any Fuel Usage Quantities, initially estimated to be 0%. In the event the Fuel Usage Quantities become greater than zero (0), Gatherer shall notify Shipper regarding the Fuel Usage Quantities charge (and an explanation of such charges setting forth in detail the figures and calculations for such charges) that shall apply, on a throughput basis beginning with the first day of the next calendar Month, to Shipper with regard to volumes Shipper actually delivers for transmission through Gatherer’s Gathering System.
     6.4 Lost and Unaccounted-for Quantities . Each Month Shipper shall provide at the Point of Receipt its pro rata share of actual line loss and unaccounted-for quantities actually incurred by Gatherer.
ARTICLE VII.
RECEIPT AND DELIVERY PRESSURES
     7.1 Shipper shall deliver to Gatherer Gas Tendered pursuant to this Agreement at the Point of Receipt at operating pressures that exist from time to time in the Gathering System, not to exceed the MAOP of the Gathering System, as may be determined from time to time. If Shipper desires to deliver Gas at the Point of Receipt on any Day in excess of such operating pressure, then Gatherer shall have the right, but not the obligation, to receive such Gas at such higher operating pressure. Gatherer’s refusal to receive Shipper’s Gas at such higher operating pressure shall not relieve Shipper of any of its obligations under this Agreement; provided, however , that if an event of Force Majeure renders the Gathering System unable to receive Gas at the Point of Receipt at essentially the same operating pressure prevailing in the Gathering System immediately prior to the event of Force Majeure, Shipper shall be relieved of its obligations under this Agreement to the extent its firm capacity rights are curtailed consistent with the terms of Exhibit C, Section 2.1, until such time as
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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Shippers capacity rights are fully restored, when Shipper’s obligations will again be at one hundred percent (100%).
     7.2 Redeliveries of Gas by Gatherer to or for the account of Shipper at the Point of Delivery shall be at such pressures that may exist from time to time in the Gathering System at the Point of Delivery. Gatherer’s obligation to deliver Gas to the Point of Delivery shall be subject to the operational limitations of any Downstream Transporter receiving such Gas, including capacity, Gas measurement capability, and operating pressures. In no event shall Gatherer be required to redeliver Gas at the Point of Delivery at a pressure in excess of the maximum required delivery pressure at such Point of Delivery.
ARTICLE VIII.
TAXES AND ROYALTIES
     8.1 Shipper Taxes and Royalties . Shipper shall be responsible for all royalties and applicable occupation, production, severance, sales or first use Btu and ad valorem taxes and all taxes of similar nature or equivalent in effect on the Production gathered pursuant to this Agreement, regardless of whether Shipper or Gatherer is given the responsibility of collecting and paying such tax.
     8.2 Reimbursement of Taxes, Fees and Charges . Except as provided below, Shipper shall reimburse Gatherer for Shipper’s proportionate share (relative to other shippers on the Gathering System) of any future tax or any increase in an existing tax or other governmental exaction, including any exaction under existing or future statute(s) validly levied on and paid by Gatherer for, in respect of, or on account of the taking, gathering or delivery by Gatherer of the Gas provided for in this Agreement, and except to the extent resulting from a violation of Law by Gatherer, Shipper shall also be responsible for and reimburse Gatherer for Shipper’s proportionate share (relative to other shippers on the Gathering System) of any tax, fee, or other charge levied against Gatherer, pursuant to any applicable current or future Laws, for the purpose of creating a fund for the prevention, containment, clean up and/or removal of spills. Such obligation to reimburse shall specifically not include income, excess profits, capital stock or franchise taxes, Gatherer ad valorem taxes (or other similar taxes related to the Gathering System) or any fines, penalties or other fees, charges or amercements resulting from Gatherer’s failure to comply with any current or future Laws, except to the extent such failure results from Shipper’s failure to comply with current or future Laws.
     8.3. Right to Audit . For a period of twenty four (24) months following reimbursement of any taxes, fees or other costs made by Shipper to Gatherer under the provisions of Sections 8.1 and/or 8.2 , Shipper shall have the right to audit the books and records of Gatherer to the extent related to assessment of the taxes, fees or other costs reimbursed by Shipper. During such twenty four (24) month time period, Gatherer agrees to maintain its applicable books and records and to make the same available to Shipper or Shipper’s designated representatives during Gatherer’s normal business hours. Gatherer and
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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Shipper will endeavor to resolve any audit exceptions identified by Shipper within ninety (90) days following conclusion of such audit.
ARTICLE IX.
NOTICES
     9.1 Any notice, request, demand, statement or payment provided for in this Agreement, or any notice which a Party may desire to give to the other, shall be in writing, and shall be considered as duly delivered when actually received by Gatherer or Shipper at the following addresses:

 	1.	 	If to Shipper:	
 		
 	 	 	Contango Resources Company
ATTN: MARC DUNCAN
3700 Buffalo Speedway, Suite 960
Houston, TX 77098
Telephone: 713-960-1901
Fax: 713-960-1065	

 	2.	 	If to Gatherer:	
 		
 	 	 	Enbridge Offshore Pipelines (Seacrest) L.P.
Attn: Director, East Asset Team
1100 Louisiana, Suite 3300
Houston, Texas 77002
Telephone: 713-821-3357
Fax: 713-821-2188	
     9.2 Such addresses may from time to time be changed by mailing appropriate notice thereof to the other Party by certified or registered mail. Routine dispatching contacts and communications may be handled in writing or orally and confirmed in writing between the respective designated representatives of the Parties.
ARTICLE X.
INDEMNITY, LIMITATION OF DAMAGES AND INSURANCE
     10.1 Definitions . For purposes of this Article X and Exhibit C , the following definitions shall apply:

 	(A)	 	The term “ Shipper Group ” is used as a reference individually and collectively for Shipper, its shareholders, Affiliates, and contractors and its and their respective officers, directors, employees, agents, and representatives, and their insurers and underwriters in respect of actions brought directly against such insurers and underwriters.	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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 	(B)	 	The term “ Gatherer Group ” is used as a reference individually and collectively for Gatherer, its member(s), shareholders if applicable, Affiliates, and contractors and its and their respective officers, directors, employees, agents, and representatives, and their insurers and underwriters in respect of actions brought directly against such insurers and underwriters.	

 	(C)	 	The term “ Liabilities ” shall include, but not be limited to, any and all liabilities, costs, claims, demands, suits, legal or administrative proceedings, judgments, damages, losses and expenses (including, but not limited to, reasonable attorneys’ fees and other reasonable costs of litigation), and any and all fines, penalties and assessments, or any responsibility to governmental authorities in connection with or in any way arising out of, relating to, or incident to the activities contemplated under this Agreement.	

 	(D)	 	The term “ Environmental Liabilities ” shall mean all liabilities, costs, claims, demands, suits, legal or administrative proceedings, judgments, damages, losses and expenses (including, but not limited to, reasonable attorneys’ fees and other reasonable costs of litigation) for damage or harm to the environment (including spill response, environmental pollution and contamination, cleanup costs and fines, penalties and assessments, or any responsibility to governmental authorities) brought by or on behalf of any party including third parties in connection with or in any way arising out of, relating to, or incident to the activities contemplated under this Agreement.	
     10.2 Shipper’s Liability and Indemnification. Subject to the lost and unaccounted-for quantities set forth in Section 6.4 of Article VI of this Agreement , Shipper shall be in control and possession of Shipper’s Gas until delivered to Gatherer at the Point of Receipt and following its delivery by Gatherer at the Point of Delivery, and shall be fully responsible for and shall RELEASE, DEFEND, INDEMNIFY AND HOLD HARMLESS the Gatherer Group against any and all Liabilities for claims for personal injury, death, property damage and Environmental Liabilities relating to Shipper’s Gas while in Shipper’s control and possession, except to the extent attributable to the negligence, gross negligence or willful misconduct of any member of Gatherer Group. Shipper further agrees to RELEASE, DEFEND, INDEMNIFY AND HOLD HARMLESS Gatherer Group from and against any and all Liabilities arising from claims for personal injury, death, property damage and Environmental Liabilities relating to Shipper’s ownership and/or operation of the facilities delivering Gas to the Point of Receipt and/or Shipper’s performance or nonperformance of its obligations under this Agreement, except to the extent attributable to the negligence, gross negligence or willful misconduct of any member of Gatherer Group.
     10.3 Gatherer’s Liability and Indemnification. Subject to the lost and unaccounted-for quantities set forth in Section 6.4 of Article VI of this Agreement, Gatherer shall be in control and possession of Shipper’s Gas from the time delivered to Gatherer at the Point of Receipt until
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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it is delivered by Gatherer at the Point of Delivery, and shall be fully responsible for and shall RELEASE, DEFEND, INDEMNIFY AND HOLD HARMLESS the Shipper Group against any and all Liabilities for claims for personal injury, death, property damage and Environmental Liabilities relating to Shipper’s Gas while in Gatherer’s control and possession, except to the extent attributable to the negligence, gross negligence or willful misconduct of any member of Shipper Group. Gatherer further agrees to RELEASE, DEFEND, INDEMNIFY AND HOLD HARMLESS Shipper Group from and against any and all Liabilities arising from claims for personal injury, death, property damage and Environmental Liabilities relating to Gatherer’s ownership and/or operation of the Gathering Facilities and/or Gatherer’s performance or nonperformance of its obligations under this Agreement, except to the extent attributable to the negligence, gross negligence or willful misconduct of any member of Shipper Group.
     10.4 Responsibility for Gas . Notwithstanding anything to the contrary contained in Sections 10.2 and 10.3 of this Article, and subject to the lost and unaccounted-for quantities of Section 6.4 of Article VI of this Agreement , the Party in control and possession of the Gas affected by this Agreement shall be responsible and pay for any and all losses of Gas occurring while the Gas are in the possession and control of such Party, REGARDLESS OF THE NEGLIGENCE, STRICT LIABILITY, OR OTHER FAULT (EXCLUDING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT) OF THE NON-POSSESSING PARTY.
     10.5 Non-conforming Gas . Notwithstanding anything to the contrary contained in Sections 10.2, 10.3 and 10.4 of this Article, Shipper shall be responsible and pay for (including, but not limited to, the costs and expenses of repairing the Gathering System and returning the Gathering System to service) and RELEASE, DEFEND, INDEMNIFY AND HOLD HARMLESS the Gatherer Group from any and all Liabilities and/or Environmental Liabilities to the extent caused by or resulting from the failure of Shipper’s Gas delivered hereunder to meet the quality specifications set forth in Article III of Exhibit C , incurred by any member of the Gatherer Group resulting from the Tender of any such non-conforming Gas by Shipper, REGARDLESS OF THE NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT (BUT EXCLUDING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT) OF ANY MEMBER OF GATHERER GROUP .
     10.6 Interruptions of Service . Notwithstanding anything to the contrary contained in this Article, Shipper agrees to RELEASE, DEFEND, INDEMNIFY AND HOLD HARMLESS the Gatherer Group from and against any Liabilities for claims by any party with whom Shipper is in privity of contract as a result of any termination, suspension, or interruptions of service by Gatherer that is permitted under this Agreement, REGARDLESS OF THE NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT (BUT EXCLUDING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT) OF ANY MEMBER OF GATHERER GROUP.
     10.7 Limitation of Liability. NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR CONSEQUENTIAL DAMAGES, INDIRECT DAMAGES, LOSS OF PROFITS, LOSS OF USE, OR PUNITIVE DAMAGES, PROVIDED THAT THIS LIMITATION SHALL NOT APPLY TO ANY DAMAGE CLAIM ASSERTED BY OR AWARDED TO THIRD PARTIES THAT ARE NOT AN AFFILIATE FOR WHICH A
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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PARTY TO THIS AGREEMENT WOULD OTHERWISE BE RESPONSIBLE. No language in this Agreement is intended to provide indemnification greater than that which is permitted by applicable law. If any limitations upon indemnification are imposed by applicable law, then such limitations are hereby incorporated by reference and made a part of this Agreement.
     10.8 Notice . In the event a claim is filed against either Party regarding matters arising out of the activities contemplated under this Agreement, that Party shall promptly notify the other Party of such claim. Participation by either Party in the defense of any such claim or suit shall not constitute a waiver of that Party’s rights to indemnification hereunder.
     10.9 Insurance . Each Party shall procure and maintain insurance of such types, and in such amounts, or at such Party’s option, self-insure, as is necessary to support the Party’s indemnification obligations under this Agreement. To the extent permitted by law, each Party shall ensure that its respective insurers waive all rights of subrogation against the other Party to the extent of a Party’s indemnification obligations to the other Party under this Agreement.
     10.10 Anti-Indemnity . Each Party agrees that it will not, under any circumstances, object to any indemnification obligation it may owe to another Party under this Agreement on the grounds that such indemnification obligation is unenforceable under, or in conflict with, V.T.C.A. Civil Practice and Remedies Code Section 127.001 et. seq . (commonly known as the Texas Oilfield Anti-Indemnity Act).
ARTICLE XI.
TERM AND TERMINATION
     11.1 Effective Date and Term . Unless otherwise terminated or canceled in accordance with the terms hereof, the term of this Agreement is five (5) years (“Primary Term”) from the Effective Date and continuing from year to year thereafter unless terminated by either Party giving at least sixty (60) days written notice to the other Party prior to the end of the Primary Term or any Contract Year thereafter.
     11.2 Termination . Unless otherwise provided herein, this Agreement may be terminated or canceled prior to the term set forth above as follows, and in no other manner:

 	(A)	 	Upon the occurrence and during the continuation of any Default or Event of Default if the terminating Party is not itself in Default (other than a Default which occurs because such Party is rightfully withholding performance in response to the other Party’s Default); or	

 	(B)	 	By either Party upon and during the continuance of (i) the entry of the other Party into voluntary or involuntary bankruptcy, receivership or similar protective proceedings; (ii) the breach of any representation or warranty made by the other Party and contained in Article XII ; or	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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 	(C)	 	By the applicable Party pursuant to any provision of this Agreement expressly providing termination or cancellation rights; or	

 	(D)	 	By both of the Parties at any time upon mutual written agreement.	
     11.3 Rights and Obligations upon Termination . Termination or cancellation of this Agreement shall not relieve the Parties from any obligation accruing or accrued to the date of such termination or cancellation or deprive a Party not in default of any right or remedy otherwise available to such Party. Upon termination or cancellation of this Agreement, the Parties shall retain all other rights and remedies available at law or in equity.
ARTICLE XII.
REPRESENTATIONS AND WARRANTIES
     Shipper and Gatherer each represent and warrant to each other that on and as of the date hereof:

 	(A)	 	It is duly formed and validly existing and in good standing under the Laws of its state of jurisdiction or formation, with power and authority to carry on the business in which it is engaged and to perform its respective obligations under this Agreement;	

 	(B)	 	The execution and delivery of this Agreement by it have been duly authorized and approved by all requisite corporate, limited liability company, partnership or similar action;	

 	(C)	 	It has all the requisite corporate, limited liability company, partnership or similar power and authority to enter into this Agreement and perform its obligations hereunder;	

 	(D)	 	The execution and delivery of this Agreement does not, and consummation of the transactions contemplated herein will not violate any of the provisions of organizational documents, any agreements pursuant to which it or its property is bound or, to its knowledge, any applicable Laws; and	

 	(E)	 	This Agreement is valid, binding and enforceable against it in accordance with its terms subject to bankruptcy, moratorium, insolvency and other Laws generally affecting creditors’ rights and general principles of equity (whether applied in a proceeding in a court of law or equity).	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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ARTICLE XIII.
MISCELLANEOUS
     13.1. Entire Agreement . This Agreement constitutes the entirety of the understanding between the Parties with respect to the subject matter dealt with herein, and replaces and supersedes all prior agreements, conditions, understandings, representations and warranties made between the Parties with respect to the subject matter hereof, whether written or oral.
     13.2. Modifications . No modifications of the terms and provisions of this Agreement shall be or become effective except by the execution by each of the authorized representatives of Parties of a supplementary written agreement.
     13.3. Waiver . No waiver by either Party of any one or more defaults by the other Party in performance of any provisions of this Agreement shall operate or be construed as a waiver of any future default or defaults, whether of a like or a different character.
     13.4. No Third Party Beneficiaries . This Agreement is for the sole and exclusive benefit of the Parties hereto. Except as expressly provided herein to the contrary, nothing herein is intended to benefit any other Person not a Party hereto, and no such Person shall have any legal or equitable right, remedy or claim under this Agreement.
     13.5. Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the Parties and their respective permitted successors and assigns. Neither Party shall assign or transfer its rights or obligations hereunder without the prior written consent of the other Party; which consent shall not be unreasonably withheld; provided that consent shall not be required for:

 	(A)	 	an assignment or transfer of a Party’s rights or obligations under this Agreement to an Affiliate(s) of such Party, which remains an Affiliate(s), or	

 	(B)	 	a transfer, direct or indirect, of the equity ownership (including, without limitation, a merger, consolidation, share exchange or similar transaction) or a transfer of all or substantially all of the assets of the direct or indirect parent of any Party, or	

 	(C)	 	a sale of one hundred percent (100%) of Shipper’s equity ownership in a well to a third party that has executed an assignment document in which the assignee agrees to be bound by all terms and provisions of this Agreement	
     In the event of any assignment or transfer, whether or not consent is required hereunder, the assigning or transferring Party shall remain liable for such assigning or transferring Party’s liabilities, obligations, and performance accruing and arising under this Agreement prior to the effective dates of such assignment or transfer. No assignment or transfer of all or any portion of its rights, title, interest or obligations in and to this Agreement, as permitted herein, shall be effective as to the non-assigning Party until the
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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assignor or transferor has provided the non-assigning or non-transferring Party with a copy of such instrument. Any such assignment or transfer under this Agreement shall expressly provide in writing that (a) such assignment or transfer is made subject to the terms of this Agreement as to the interest transferred or assigned and (b) the assignee or transferee agrees to become a party to, and be bound by this Agreement as to the interest transferred or assigned. Any attempted assignment or transfer of any rights, title, interest, liabilities or obligations under this Agreement in violation of the terms of this Agreement may be treated by the other Party as null and void and of no force or effect.
     13.6 Confidentiality and Limited Disclosure . Each Party and its respective agents, employees, officers, directors, attorneys, auditors and other representatives (including individuals employed by lenders, accountants and other representatives of the disclosing party) (collectively, “ Representatives ”) shall keep and maintain the terms and provisions of this Agreement, but not the fact of its existence, in strict confidence, and shall not transmit, reveal, disclose or otherwise communicate any of the provisions of this Agreement to any Person without first obtaining the express written consent of the other Party, which consent shall not be unreasonably withheld. In addition, neither Party, without the prior written consent of the disclosing party, shall either (a) disclose the other Party’s Confidential Information, as defined herein below, to anyone other than those Representatives who need to know it in connection with the performance of this Agreement and have agreed to be bound by these obligations of confidentiality or (b) use the other Party’s Confidential Information for any purpose other than in the performance of this Agreement. For purposes of this Agreement, all data, maps, reports, drawings, specifications, records, technical or engineering information, and computer programs/software concerning a Party’s operations, processes or equipment that are provided and/or acquired in connection with this Agreement shall be deemed Confidential Information. Notwithstanding the foregoing, the receiving Party may disclose the Confidential Information without the disclosing Party’s prior written consent (i) in connection with the sale or disposition, farm out or trade of all or a portion of its interest in the Production; (ii) in connection with the sale or other disposition (directly or indirectly) of all or substantially all of the assets of a Party, (iii) in conjunction with a merger, consolidation, share exchange or other form of statutory reorganization involving a Party; (iv) to a reputable financial institution(s) for study prior to the commitment of funds; or (v) to the extent that such information:

 	(A)	 	is already in the possession of the receiving Party at the time of disclosure without binder of secrecy, or which is acquired independently from a third party that, to the receiving Party’s knowledge, has the right to disseminate said information at the time acquired by receiving Party; or	

 	(B)	 	is already in possession of the public or becomes available to the public other than through the act or omission of the receiving Party; or	

 	(C)	 	is required to be disclosed under law or governmental authority (provided that receiving party gives written notice to the disclosing Party prior to such disclosure); or	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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 	(D)	 	was independently developed by receiving party or its Representatives who have not had access to the Confidential Information furnished hereunder; and	

 	(E)	 	any Confidential Data made available, other than with respect to subparagraph (c) above shall not be removed from the custody or premises of the Party making the Confidential Data available to third Parties. A third party permitted access shall first agree in writing neither to disclose the Confidential Data to others nor to use the Confidential Data except for the purpose for which it was disclosed.	
     In the event any such Confidential Information is sought from a Party by any court or legislative or administrative body (whether by oral questions, interrogatories, subpoena, civil investigations, demand or similar process), that Party agrees to:

 	(i)	 	resist disclosure of said information on the grounds that it is under an obligation not to disclose the information to third parties; and	

 	(ii)	 	promptly notify the other Party of the attempt to compel the disclosure of the information in order to afford the disclosing Party an opportunity to resist disclosure or to seek an appropriate protective order on its own.	
     13.7. Exhibits and Attachments . All exhibits, attachments and the like contained herein or attached hereto are integrally related to this Agreement and are hereby made a part of this Agreement for all purposes. To the extent of any ambiguity, inconsistency or conflict between the body of this Agreement and any of the exhibits, attachments and the like attached hereto, the terms of the body of this Agreement shall prevail.
     13.8. Choice of Law . THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO ANY CHOICE OR CONFLICT OF LAWS RULES OR PRINCIPLES WHICH, IF APPLIED, MIGHT PERMIT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
     13.9. Further Assurances . Subject to the terms and conditions set forth in this Agreement, each of the Parties agrees to use all reasonable efforts to take, or cause to be taken, all actions, and to do, or to cause to be done, all things necessary, proper or advisable under applicable Laws and regulations to consummate and make effective the transactions contemplated by this Agreement. In case, at any time after the execution of this Agreement, any further action is necessary or desirable to carry out its purpose, the proper officers or directors of the Parties shall take or cause to be taken all such necessary actions.
     13.10. Survival . The representations, warranties, and indemnities given by the Parties shall survive this Agreement without regard to any action taken pursuant to this Agreement for a period of time coextensive with applicable statutes of limitations.
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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     13.11. Severability . Any term or provision of this Agreement that is invalid or unenforceable in any jurisdiction shall be ineffective as to such jurisdiction, to the extent of such invalidity or unenforceability, without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any terms and provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, each such provision shall be interpreted to be only so broad as is enforceable. A bankruptcy or similar trustee must accept or, to the extent permitted by Law, reject this Agreement in its entirety.
     13.12. Cumulative Rights, Obligations and Remedies . Except as expressly provided herein, the rights, obligations and remedies created by this Agreement are cumulative and in addition to any other rights, obligations or remedies otherwise available at law or in equity. Other than the obligation to mediate pursuant to Section 13.22 of this Article XIII , in lieu of seeking judicial remedies, nothing herein shall be considered an election of remedies. In addition, any successful Party is entitled to costs related to enforcing this Agreement, including without limitation, attorney’s fees and mediation expenses.
     13.13. Terminology . All personal pronouns used in this Agreement, whether used in the masculine, feminine or neuter gender, shall include all other genders; the singular shall include the plural, and vice versa. Articles, sections and other titles or headings are for convenience only, and neither limit nor amplify the provisions of the Agreement itself, and all references herein to articles, sections or subdivisions thereof shall refer to the corresponding article, section or subdivision thereof of this Agreement unless specific reference is made to such articles, sections or subdivisions of another document or instrument.
     13.14. Counterparts . This Agreement may be executed in multiple counterparts, each of which, when executed, shall be deemed an original, and all of which shall constitute but one and the same instrument.
     13.15. Time of the Essence . Time is of the essence with respect to any and all obligations arising pursuant to this Agreement.
     13.16. Joint Effort . This Agreement shall be deemed to have been prepared equally and jointly by the Parties.
     13.17. Economic Hardship. In the event that Gatherer’s cash outlays for operation and maintenance expenses of the Gathering System, plus overhead and reasonable return on capital, exceed the total of all Gathering System Fees received from Shipper and other shippers tendering Gas on the Gathering System, or the lateral of such system on which said Gas is gathered, then Gatherer shall have the right to request by written notice renegotiation of the Gathering Fee payable hereunder. Such notice by Gatherer shall set forth in detail the figures and calculations upon which Gatherer is relying on making its determination of such economic hardship. During the sixty (60) day period from Gatherer’s written notification, Gatherer and Shipper shall in good faith attempt to mutually agree upon a new Gathering Fee taking into account all fees received for the operation of the Gathering System. The Gathering Fee for billing purposes shall not change during the period of renegotiation. The new Gathering Fee agreed to through
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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renegotiation shall be effective sixty (60) days after the written notice requesting the renegotiation of the Gathering Fee. In the event the Parties hereto have not reached an agreement on a new Gathering Fee during said 60 day period, Gatherer shall provide service hereunder at a Gathering Fee not less than that which results in revenues received hereunder equal to the operation and maintenance expenses of Gatherer’s Gathering System (including overhead) and a reasonable profit margin consistent with that of other gas gathering companies providing similar services. Notwithstanding the foregoing or anything else in this Agreement to the contrary, Gatherer shall not be required to continue service hereunder, and may cancel this Agreement with thirty (30) days advance written notice, if a catastrophic event of Force Majeure renders the rebuilding or repair of Gatherer’s Gathering System uneconomic, in Gatherer’s reasonable judgment.
Gatherer reserves the right to refuse to provide service or to terminate existing service at the Point of Receipt and to terminate this Agreement upon thirty (30) days notice to Shipper, should Gatherer, in its reasonable judgment, determine that the operation of the Gathering System is uneconomic.
     13.18. [This section left blank intentionally.]
     13.19 Change in MMS Regulation . In the event at any time during the term of this Agreement, including any extension(s) thereof, there is a change in Law that requires Gatherer to reduce volumes of Production gathered on the Gathering System below the applicable Firm Capacity MDQ in order to accommodate requests for gathering service by other shippers, then the stated Firm Capacity MDQ for Shipper, as well as other shippers on the system with firm maximum daily quantities shall be reduced prospectively from the effective date of such change in Law, such that the Firm Capacity MDQ available for firm service during any Month, or such shorter time period as may be mandated under such change in law, shall equal Shipper’s pro rata share of capacity determined based upon the proportion that Shipper’s reasonable nomination bears to the total nominations of all shippers for the period in question. For purposes of this Section 13.19 , the term “change in Law” shall mean a change in applicable rules or regulations promulgated by the Minerals Management Service (“MMS”) or the Federal Energy Regulatory Commission (“FERC”) that precludes gatherers operating in the Outer Continental Shelf from acting as contract carriers that may offer shippers a quantity of reserved system capacity on a firm basis, and instead requires such gatherers to make their system capacity available on a pro rata basis to all shippers reasonably requesting access.
13.20 Laws :

 	(A) It is understood by the Parties that this Agreement and performance hereunder is subject to all present and future valid and applicable Laws.	

 	(B) The Parties are obligated to perform their respective duties under this Agreement unless excused by Force Majeure or the unexcused failure of the other Party’s performance. The Parties’ rights and obligations with respect to the matters addressed herein are fixed by the terms of this Agreement. However, if at any time during the Term	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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 	 	 	of this Agreement a new Law or interpretation of an existing Law renders a Party’s performance under this Agreement illegal, or effects a change in any substantive provision of this Agreement that has a material adverse effect upon a Party to this Agreement, then the affected Party shall notify the other in writing, and Gatherer and Shipper shall negotiate in good faith to amend this Agreement in a manner that will most nearly restore to the Parties the economic benefits and burdens of this Agreement as existed prior to such change.	

 		 	(C) If Gatherer and Shipper are not able to agree within six months after a Party first receives notice of the change from the affected Party on the terms of the appropriate amendment to restore the Parties to their respective position, then the Party adversely affected by the change may terminate this Agreement upon written notice delivered to the other Party within 30 days after the expiration of such six-month period.	

 	 	 	(D) Until such time as this Agreement is amended by mutual agreement, or terminated, as applicable, each Party will meet all obligations under this Agreement, unless otherwise prohibited by Law. In the event this Agreement is terminated as set forth in Section 13.20(C) above, neither Party shall have any further liability to the other Party except for any payments due or owing under this Agreement prior to such termination and accrued liabilities existing at the time of such termination.	
     13.21 Conflict of Interest. No director, employee, or agent of either Party, or any contractor, subcontractor or vendor of either Party, shall give to or receive from any director, employee or agent of the other Party, or any affiliate of the other Party, any commission, fee, rebate, gift, or entertainment of significant cost or value in connection with this Agreement.
     13.22 Dispute Resolution. Any Dispute shall be resolved in accordance with the procedures specified in this Section 13.22 , which shall be the sole and exclusive procedures for the resolution of any Disputes.

 	(A)	 	The Parties shall attempt in good faith to resolve any Dispute arising out of or relating to the this Agreement promptly by negotiation between senior management representatives who have authority to settle the controversy and who are at a higher level of management than the persons with direct responsibility for administration of this Agreement. Any Party may give the other Party written notice of any Dispute not resolved in the normal course of business. Within 21 Days after delivery of the notice, the receiving Party shall submit to the other a written response. The notice and the response shall include (a) a statement of each Party’s position and a summary of arguments and evidence supporting that position, and (b) the name and title of the senior management representative who will represent that Party and of any other person who will accompany the senior management representative. Within 30 Days after delivery of the disputing Party’s notice, the senior management representatives of both Parties shall meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary, to attempt to resolve the Dispute. All	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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 	 	 	reasonable requests for information made by one Party to the other will be honored.	

 	(B)	 	If the Dispute has not been resolved by negotiation within 60 Days of the disputing Party’s notice, or if the Parties failed to meet within the initial 30-Day period, the Parties shall endeavor to settle the Dispute by mediation under the then current International Institute For Conflict Prevention and Resolution (or if such association has ceased to exist, the principal successor thereto) (“ CPR ”) commercial mediation procedures. The mediation shall take place in Houston, Texas. Unless otherwise agreed, the Parties will select a mediator from the CPR Panels of Distinguished Neutrals, who will have experience in the natural gas industry.	

 	(C)	 	All negotiations pursuant to this clause are confidential and shall be treated as compromise and settlement negotiations for purposes of applicable rules of evidence.	

 	(D)	 	If the Dispute has not been resolved by mediation as provided herein within 90 Days of the initiation of the above procedures, either Party may initiate litigation upon 30 Days’ written notice to the other Party; provided, however, that if one Party has requested the other to participate in any of the above non-binding procedures and the other has failed to participate, the requesting Party may initiate litigation before expiration of the above period.	

 	(E)	 	Notwithstanding the provisions of this clause, either Party may seek from any court having jurisdiction hereof any interim, provisional or injunctive relief that may be necessary to protect the rights or property of any Party or maintain the status quo before, during or after the pendency of the mediation. The institution and maintenance of any judicial action or proceeding for any such interim, provisional or injunctive relief shall not constitute a waiver of the right or obligation of either Party to submit the Dispute to negotiation or mediation as described above, including any claims or disputes arising from the exercise of such interim, provisional or injunctive relief.	
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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     IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be signed by their respective duly authorized representatives effective as of the day and year first written in the preamble. This Agreement may be executed in multiple counterparts by the respective Parties.
 	 	 	 	 	
 	“ GATHERER ”

ENBRIDGE OFFSHORE PIPELINES (SEACREST) L.P.
 	 	
 	By:   	[Enbridge Holdings (Texas Systems)
L.L.C.], its general partner  	 	

 	By:  	/s/ John Loiacono  	 	
 	 	Title: Vice President - Commercial Activities  	 	
 	 	Name: John Loiacono 	 	
 	
 	“ SHIPPER ”

CONTANGO RESOURCES COMPANY
 	 	
 	By:   	/s/ Sergio Castro  	 	
 	 	Title: Vice President & Treasurer 	 	
 	 	Name: Sergio Castro 	 	
 	
Exhibit A : Omitted
Exhibit B : Point of Receipt and Point of Delivery
Exhibit C : Operating Terms and Conditions
Exhibit D : Firm Capacity MDQ
Exhibit E : Fees
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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EXHIBIT A

OMITTED
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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EXHIBIT B
POINT OF RECEIPT AND POINT OF DELIVERY
     1.  Point of Receipt . The meter facility on the Chevron North American Exploration and Production Company Eugene Island 24 Platform which Gatherer and Shipper agree shall serve as the Point of Receipt and Point of Measurement.
     2.  Point of Delivery . The existing interconnect between the Gathering System and Marathon Oil Company’s Burns Point Processing Plant inlet meter station located in the Bayou Sale Yard in St. Mary’s Parish, Louisiana.
     3.  Point of Measurement . Gatherer’s meter facility on the Chevron North American Exploration and Production Company Eugene Island 24 Platform.
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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EXHIBIT C
OPERATING TERMS AND CONDITIONS

I.	 	Definitions . Capitalized terms used herein and not defined herein shall have the meanings set forth in the Agreement.	
 		
II.	 	Nominations and Balancing	
2.1 Allocation . Gatherer agrees to notify Shipper by telephone and confirm in writing either electronically or via fax as soon as reasonably possible in the event that a capacity curtailment allocation or interruption occurs. If, on any Day, insufficient capacity exists on the Gathering System at either the Point of Receipt or Point of Delivery such that Gatherer must limit services being provided by Gatherer on such Day, then, subject to all applicable Laws, capacity on the Gathering System shall be allocated, if necessary and for purposes of both scheduling of nominated quantities and curtailment of flowing volumes, as follows, in descending order of priority:
(1) Firm Service MDQ capacity shall be allocated on a pro-rata basis among all firm service agreements based on their respective MDQ entitlement and confirmed nominations in effect at that time.
(2) Authorized Overrun services shall be allocated pro-rata based on confirmed nominations in effect at that time.
(3) All interruptible services shall be allocated pro-rata based on each shipper’s confirmed nominations for such services.
(4) All make-up quantities to correct imbalances shall have the lowest priority of service on Gatherer’s Gathering System. Priority within this class shall be determined on a first-come, first-served basis. For operational purposes, Gatherer shall have the right and sole discretion to schedule make-up quantities at a higher priority, without liability to Shipper or any other entity.
2.2 Nomination and Scheduling Procedures . Gatherer and Shipper shall adhere to the following nomination, scheduling and balancing procedures:
Gatherer shall have no obligation to gather Gas hereunder on any Day until Shipper has provided Gatherer with a written or electronic nomination containing the applicable information set forth in this Section.
Gatherer’s Gas Scheduling Department maybe contacted by Shipper as follows:
     Business Hours Telephone: (832) 214-9383
     After Hours Telephone: (888) 650-8099 (Gas Control — Houston, TX)
     Gas Scheduling Department’s Fax Number: (713) 353-1794
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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Each nomination submitted by Shipper will remain in effect until the earlier of (a) the effective date of a change or (b) the last Day of the calendar Month containing the effective flow date for the applicable nomination, unless otherwise stated in the applicable nomination.
(A) Timely Nominations
In the event that Shipper desires gathering service for the first Day of any Month, then Shipper’s written, timely nomination shall be due no later than 11:30 a.m. central clock time at least one (1) Day prior to the first Day of the Month.
In the event that Shipper desires to commence, change, or discontinue gathering service after the first Day of any Month, then Shipper’s written, timely nomination shall be due no later than 11:30 a.m. central clock time at least one (1) Day prior to the Day Shipper desires gathering service to commence, change, or discontinue.
(B) Late Nominations
Any nomination received after 11:30 a.m. central clock time on the Day established for a similar timely nomination shall be deemed a late nomination. Gatherer shall have no obligation to schedule such late nominations. Gatherer may, in its sole discretion, schedule late nominations if Gatherer determines, in its sole discretion, that such service would not be detrimental to its operations in any way. Such late nomination will be considered for scheduling on a first-nominated, first-served basis.
     Any nomination required by this Section shall include the following information:

 	•	 	Gatherer’s contract number and effective flow date;	
 		
 	•	 	Point(s) of Receipt: Gatherer’s meter number, well or upstream pipeline name, well or upstream pipeline operator, upstream shipper’s name and contract number (if applicable), and	
 		
 	•	 	Percent of wellstream to be transported (if applicable), nominated quantity (MMBtu/Day), and nominated imbalance make-up volume if any (MMBtu/Day),	
During the nomination confirmation process, if Shipper’s nomination is modified by an upstream or downstream party, Gatherer shall endeavor to timely inform Shipper of such modification in order to resolve or confirm the modification before deeming Shippers’ nomination modified; provided, however, if Gatherer can’t confirm Shipper’s nomination with an upstream or downstream party, Gatherer may deem Shipper’s nomination to be modified by such upstream or downstream party.
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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If Shipper repeatedly fails to provide Gatherer any written nomination in the manner required by this Section prior to delivery of Gas to Gatherer, or if Shipper repeatedly nominates Gas for delivery hereunder and then fails to deliver such Gas to Gatherer other than for reason(s) of Force Majeure, Gatherer may terminate this Agreement upon at least fifteen (15) Days prior written notice. Shipper will have five (5) Days in which to cure any defaults under this Section. The cure for any default hereunder shall be submitted to Gatherer in writing within said 5-Day period, and Gatherer shall have three (3) Days to either accept or reject such curative effort.
In the event that Shipper does not Tender sufficient Gas for gathering as nominated, Gatherer shall have the right to reduce Shipper’s nomination to match Gas volume tendered by Shipper and will notify Shipper of such cut in nominated volumes. Such notice may be made by telephone, fax or other electronic means. Gatherer shall have the right to void or adjust any nomination in the event Shipper does not Tender Gas for Gatherer as nominated.
Gas delivered to Gatherer hereunder during any Day shall be delivered at as nearly constant rate as operating conditions will permit.
Nothing contained herein shall preclude Gatherer from taking whatever reasonable action(s) it deems necessary, in good faith, to adjust receipts or deliveries hereunder in order to maintain the operational integrity of the Gathering System.
2.3 Audit . Shipper shall have the right to audit measurements related to Production made by Gatherer applicable to Gas delivered hereunder to the Point of Receipt for twenty-four (24) Months after the end of the Contract Year for the Month in which each such delivery occurs. Shipper shall not audit Gatherer’s measurement records more often than once every six (6) Months. Any measurements not contested with specificity in writing within twenty-four (24) Months after the end of the Contract Year for the Month in which such measurement occurs shall conclusively be deemed to be accurate.
2.4 Corrections . In the event Shipper’s timely audit determines inaccuracies or mismeasurement in the applicable audit period, then, Gatherer or Shipper as applicable, shall pay the undisputed difference to the other Party within 15 days of receipt of Shipper’s audit findings. Gatherer retains the right to question Shipper’s audit findings. Any unresolved disputes shall be subject to Dispute Resolution as provided for in Section 13.22 of the Agreement to which this Exhibit C is attached.
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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III. Quality .
3.1 All Gas gathered by Gatherer from any source will be intermixed and must be compatible with other Shippers’ Gas shipments and shall be subject to such changes in gravity, quality and other characteristics as may result from such intermixing.
3.2 Gas Tendered at the Point of Receipt under the terms of this Agreement shall conform to the following quality specifications:
(a) Hydrogen Sulphide: The Gas shall not contain more than four (4) parts per million of hydrogen sulphide per hundred (100) cubic feet as determined by a method generally acceptable for use in the gas industry.
(b) Total Sulphur: The Gas shall not contain more than one (1) grain of total sulphur per hundred (100) cubic feet of gas as determined by a method generally acceptable for use in the gas industry.
(c) Temperature: The Gas shall not have a temperature of less than forty degrees (40º) nor more than one hundred twenty degrees (120º) Fahrenheit.
(d) Carbon Dioxide: The Gas shall not contain in excess of two percent (2%) by volume of carbon dioxide.
(e) Total Inerts: The Gas shall not contain in excess of four percent (4%) by volume of total inerts.
(f) Oxygen: The Gas shall not contain in excess of two-tenths of one percent (0.2%) by volume of oxygen.
(g) Objectionable Liquids and Solids: The Gas shall be free of objectionable liquids and solids and other potentially harmful matter and be commercially free from dust, gums, gum-forming constituents or other liquid or solid matter which might become separated from gas in the course of transportation through pipelines.
(h) Btu: The Gas shall not have a Btu of less than nine hundred fifty (950) Btu’s per cubic foot.
(i) Water: The Gas shall in no event have in excess of seven (7) pounds of water vapor per million (1,000,000) cubic feet of gas. The gas shall contain no free water.
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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(j) Mercaptains: The mercaptan content shall not exceed five parts per million (5 ppm) by volume.
(k) Hazardous Waste: The Gas shall be free from all hazardous waste as that term is defined in the Resources Conservation and Recovery Act, 42 USC § 690 1, et seq.
(l) Substances in Violation of Applicable Law: Such Gas must not contain any substances in any amount which violate any applicable Laws of any jurisdictional authority with jurisdiction hereof.
3.3 Shipper and Gatherer, as applicable, shall monitor the quality of the Gas being tendered to the Gathering System. If Gas Tendered by Shipper for gathering hereunder shall fail at any time to conform to the specifications in Section 3.2 above or would cause the Gas tendered by Gatherer to any Downstream Transporter to not meet the specifications of such Downstream Transporter, then Gatherer shall immediately have the right to discontinue gathering services hereunder and shall notify Shipper of such non-conforming Gas from Shipper within a reasonable time after Gatherer has actual knowledge of such Tender of non-conforming Gas from Shipper. From time to time, Gatherer (in its sole discretion) may voluntarily waive such quality specifications and accept such non-conforming Gas but, such waiver shall not prejudice Gatherer’s rights to later discontinue its acceptance of non-conforming Gas.
3.4 Gatherer will use its reasonable efforts to ensure that no Gas received by Gatherer from any source into the Gathering System will cause the commingled Gas to fail to meet the quality specifications of the Gathering System.

IV.	 	Measurement	
4.1 Definitions . For purposes of this Article IV of this Exhibit C , the following capitalized terms shall have the meanings ascribed below:
“ British Thermal Unit ” or “ Btu ” is the basic unit of thermal energy measurement, which is referred to technically as the International Btu or Btu (IT), and is commonly stated as one thousand fifty-five and five hundred fifty-nine ten-thousandths Joules (1055.0559 J), (exact conversion 1055.055 852 62 J), as used for calculations throughout the industry under GPA 2145 and GPA 2172. This amount of heat was historically defined as that which will raise one (1) pound of water one degree Fahrenheit (1° F) near a temperature of sixty degrees Fahrenheit (60°F) under atmospheric pressure.
“ Standard Cubic Foot ” or “ scf ”, is the basic unit of Gas volume measurement and means the volume of Gas which will occupy one (1) cubic foot when corrected for real Gas behavior to standard temperature of sixty degrees Fahrenheit (60 o F), and standard pressure of fourteen and seventy-three hundredths pounds per square inch
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
 C-5 

 

Contract No. ______
Private and Confidential
absolute (14.73 psia). This conversion shall be done according to generally accepted engineering practice, using the latest revision of AGA Report No. 8.
“ Mscf ” means one thousand (1,000) scf.
“ MMscf ” means one million (1,000,000) scf.
4.2 Gatherer will own, operate and maintain the Point of Measurement equipment. Gatherer shall at its expense perform or cause to be performed all measurement and testing of Gas. Shipper may, at Shipper’s sole expense, install and operate Gas check-measuring equipment that does not interfere with Gatherer’s measurement and testing.
4.3 Measurement and mathematical treatment of data shall be done according to accepted industry practices, subject to standards set in the latest revisions of documents published by the following entities: American Gas Association (AGA), Gas Processors Association (GPA), American Petroleum Institute Manual of Petroleum Measurement Standards (API MPMS), American National Standards Institute (ANSI), and Gas Research Institute (GRI). These documents are often published by multiple organizations and are referenced here by one of the most common designations. These are: AGA Report No. 3 / API MPMS Chapter 14.3 / GPA 8185 / ANSI/API 2530 “Orifice Metering of Natural Gases”, AGA Report No. 7 “Measurement of Gas by Turbine Meters”, AGA Report No. 8 / API MPMS Chapter 14.2 / GRI publication “Compressibility Factors of Natural Gas and Other Related Hydrocarbon Gases”, AGA Report No. 9 “Measurement of Gas by Multipath Ultrasonic Meters”, API MPMS Chapter 21 “Flow Measurement Using Electronic Metering Systems”, GPA Standard 2145 “Table of Physical Constants for Hydrocarbons and Other Compounds of Interest to the Natural Gas Industry”, GPA Standard 2166 “Obtaining Natural Gas Samples for Analysis by Gas Chromatography”, GPA Standard 2172 / API MPMS Chapter 14.5 “Calculation of Gross Heating Value, Relative Density and Compressibility Factor for Natural Gas Mixtures from Compositional Analysis”, GPA Standard 2261 “Analysis for Natural Gas and Similar Gaseous Mixtures by Gas Chromatography”, GPA Standard 2286, “Tentative Method of Extended Analysis for Natural Gas and Similar Gaseous Mixtures by Temperature Programmed Gas Chromatography”.
4.4 Thermal energy associated with a quantity of Gas shall be that which is theoretically transferred from the complete, ideal combustion of real, dry Gas in air beginning and ending at standard temperature of sixty degrees Fahrenheit (60 o F), and standard pressure of fourteen and seventy-three hundredths pounds per square inch absolute (14.73 psia) with all water formed by the reaction condensed to liquid. This is commonly referred to as a gross, real, dry heating value when expressed in terms of the unit of thermal energy content per unit of gas, e.g. Btu/scf.
4.5 Gas volumes shall be measured, calculated, and recorded by an Electronic Flow Meter (“ EFM ”) operated according to API MPMS Chapter 21.
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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Contract No. ______
Private and Confidential
4.6 The EFM and end devices such as pressure transducers, temperature transducers, etc. shall be calibrated as a system, or the proper functionality verified by appropriate means on a monthly basis. This activity shall be open to representatives of the Parties upon request. If a Party requests a special test of any measuring equipment, a prompt verification shall be performed to ensure accuracy of the equipment. The expense of the special test shall be borne by the requesting Party if the tested equipment is found to produce an error of two percent (2%) or less in the Gas volume or energy content flow recordings. During any test, the EFM reading of any transducer shall be brought into agreement on a best-efforts basis to the calibration standard if the EFM reading is found to differ by an amount greater than the uncertainty of the standard or the EFM uncertainty.
4.7 If upon calibration or verification, any error in measurement is discovered which caused an error of two percent (2%) or less in the Gas volume or energy content, then the previously measured quantities shall be considered accurate in computing Gas flow, but the equipment shall be adjusted on a best-efforts basis to read accurately.
4.8 If upon calibration or verification, any error in measurement is discovered which caused an error of more than one percent (1%) in the Gas volume or energy content, then the previously measured quantities shall be corrected, and the equipment shall be adjusted on a best-efforts basis to read accurately. Any previous error in measurement shall be corrected to zero error for any period which is known definitely, but in the case where the period of error is not known or cannot be agreed upon, such correction shall be applied to the latter half of the period since the last test.
4.9 In the event a meter is out of service or registering inaccurately in excess of two percent (2%), the quantities of Gas shall be determined as follows:

 	(A)	 	By using the data recorded by any check measurement equipment installed and believed to be accurately registering the data which were recorded inaccurately by the custody transfer meter; or if this method is unavailable,	
 		
 	(B)	 	By correcting the erroneous data if the magnitude of error is ascertainable by calibration, test, or mathematical calculation; or if this method is also unavailable,	
 		
 	(C)	 	By estimating the quantities of Gas by inference based on best available data relating pipeline system performance to Gas quantities which flowed under similar conditions to those during the time period in question.	
4.10 Orifice meters shall be designed, installed, and operated according to the latest revision of AGA Report No. 3 in effect at the time of such activity, and shall be
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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Contract No. ______
Private and Confidential
updated to comply with revisions of AGA Report No. 3, as mutually agreed to by the Parties.
4.11. Gas turbine meters shall be designed, installed, and operated according to the latest revision of AGA Report No. 7 in effect at the time of such activity, and shall be updated to comply with revisions of AGA Report No. 7, as mutually agreed to by the Parties.
4.12 Ultrasonic meters shall be designed, installed, and operated according to the latest revision of AGA Report No. 9 in effect at the time of such activity, and shall be updated to comply with revisions of AGA Report No. 9, as mutually agreed to by the Parties.
4.13 Gas composition data shall be obtained from Gas chromatograph analysis of samples obtained following procedures in GPA Standard 2166. Gas chromatography shall be performed according to GPA Standard 2261 or GPA Standard 2286, as appropriate. Certain Gas property data required for calculation of Gas volume flow and thermal energy flow shall be calculated using methods described in GPA Standard 2172, while compressibility used for calculation of Gas volumes shall be obtained according to AGA Report No. 8.
4.14 Gas composition data shall be derived from samples obtained from a proportional-to-flow sampler, i.e. a sampling device set up to collect and aggregate a series of small samples in proportion to Gas volume flow, from on-site real time chromatographic analysis, or from other equipment or method as may be mutually agreed upon by the Parties. At a minimum, composition data pertinent to determining Gas volume and thermal energy flow shall be determined for the Point of Measurement(s) at least monthly.
4.15 Measurement data and calibration records shall be preserved in accordance with the applicable rules and regulatory bodies having jurisdiction with respect to retention of such records, and in any event, for at least twenty-four (24) Months after the end of the year to which such records pertain. These records shall be made available to any Party having audit rights to examine them under the terms and conditions governing such an audit.
4.16 If, at any time during the term hereof, a new method or technique is developed with respect to Gas measurement or to the determination of the factors used in such Gas measurement, such new method or technique may be substituted for the method set forth in this Article IV when, in the opinion of the Parties, employing such new method or technique is advisable.
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
 C-8 

 

Contract No. ______
Private and Confidential

V.	 	Billing	
5.1 Gatherer’s Statement . Gatherer shall render a statement to Shipper no later than the twenty fifth (25th) business Day of each Month setting forth the amounts due Gatherer, as provided for in Article VI of the Agreement to which this Exhibit C is attached, for gathering along with related services provided to Shipper during the preceding Month pursuant to this Agreement. If actual quantities are not available, Gatherer may utilize a reasonable, good faith estimated quantity based on confirmed nominations. As soon as the actual quantity becomes available, the estimated quantity shall be adjusted and the adjustment shall be reflected in subsequent Months’ business.
5.2 Payment . Shipper shall pay Gatherer the amount due in the form of immediately available federal funds by wire transfer to the bank account specified on the statement, or any other mutually agreed upon method, within ten (10) Days from receipt of such statement. Shipper must tender a timely payment even if the statement includes an estimated receipt or delivery volume.
5.3 Any payment shall not prejudice the right of Shipper to an adjustment of any bill with interest at the Stated Rate from the date of payment to the date of such refund to which it has taken written exception, provided that a claim therefore shall have been made within the audit period provided by Section 2.3 of Article II of this Exhibit C ; provided, however, that measurement adjustments determined as a result of an audit conducted pursuant to Section 2.3 of Article II of this Exhibit C may be made at any time prior to two (2) Months after the expiration of the applicable audit period. If Shipper fails to pay any statement in whole or in part when due, in addition to any other rights or remedies available to Gatherer, interest at the Stated Rate shall accrue on unpaid amounts.
5.4 Notwithstanding the foregoing, if a good faith Dispute arises between Shipper and Gatherer concerning a statement, Shipper shall pay that portion of the statement not in Dispute on or before such due date, and upon the ultimate determination that the disputed portion of the statement is in fact due, Shipper shall pay the remaining amount owed, if any, plus the interest accrued thereon at the Stated Rate.
5.5 Gatherer shall have the right to suspend service under this Agreement without liability in the event Shipper fails to pay undisputed amounts due within fifteen (15) days following receipt of written notice of any such delinquency.

VI.	 	Title and Warranty	
6.1. Shipper’s Warranty . Shipper hereby represents and warrants that it has title to, or the right and authority to deliver to Gatherer, all the Production. Shipper represents and warrants that such Gas shall be free and clear of all liens, encumbrances and claims whatsoever, and AGREES TO RELEASE, DEFEND, INDEMNIFY AND HOLD HARMLESS any member of Gatherer Group against all Liabilities incurred by Gatherer on account of any such liens, encumbrances and claims.
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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Contract No. ______
Private and Confidential
6.2. Gatherer’s Warranty . Gatherer represents and warrants that the Gas redelivered to Shipper shall be free and clear of all liens, encumbrances and claims whatsoever and AGREES TO RELEASE, DEFEND, INDEMNIFY AND HOLD HARMLESS any member of Shipper Group against all Liabilities incurred by Shipper on account of any such liens, encumbrances and claims.

VII.	 	Force Majeure	
7.1. Neither Party shall be liable to the other Party for failure to perform any of its obligations under this Agreement, other than the obligation to pay monies due hereunder, to the extent such performance is hindered, delayed or prevented by an event of Force Majeure (as defined in Section 7.3 of this Exhibit C ) that was not reasonably within the control of the Party affected or could not have been prevented or overcome by the exercise of due diligence by such Party. A Party which is unable, in whole or in part, to carry out its obligations under this Agreement due to Force Majeure shall promptly give written notice to that effect to the other Party stating in reasonable detail the circumstances underlying such Force Majeure. Such events affecting the performance under this Agreement by either Party, however, shall not relieve either Party of liability in the event of its concurring negligence.
7.2 A Party claiming Force Majeure shall: (i) diligently use all reasonable and prudent efforts to remove the cause, condition, or event or circumstance of such Force Majeure, (ii) promptly give written notice to the other Party of the termination of such Force Majeure, (iii) resume performance of any suspended obligation as soon as reasonably practicable after termination of such Force Majeure, and (iv) not be obligated to settle any labor Dispute except on terms acceptable to it in its sole discretion.
7.3 “ Force Majeure ”, as used in this Exhibit C and the Agreement to which this Exhibit C is attached, shall include the following, as long as such event is not reasonably within the control of the Party affected and that could not have been prevented or overcome by the exercise of due diligence by such Party:

 	(A)	 	acts of the public enemy, pirates, assailing thieves or other belligerents, civil unrest, riots or disorders, acts or threats of terrorism on facilities, wars (declared or undeclared), sabotage, revolutions, insurrections or labor disputes;	
 		
 	(B)	 	fires and explosions from whatever cause, lightning, maritime peril, collisions, storms, threat of hurricanes or tropical storms, earthquakes, floods, disease, pestilence, and other actions of the elements;	
 		
 	(C)	 	disruption or breakdown of production or transportation facilities, equipment, labor, or materials;	
 		
 	(D)	 	closing or restrictions on the use of necessary facilities by third parties;	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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Contract No. ______
Private and Confidential

 	(E)	 	any interruption in the source, transportation, or delivery of natural gas reasonably beyond the control of either Party;	
 		
 	(F)	 	hydrate obstruction or blockages of any kind;	
 		
 	(G)	 	the inability of either Party to acquire, or delay on the part of such Party in acquiring, at reasonable cost, servitudes, rights-of-way grants, permits, permissions, licenses, materials or supplies which are required to enable such Party to fulfill its obligations hereunder;	
 		
 	(H)	 	shutdowns for repairs, improvements, replacements or inspections of facilities;	
 		
 	(I)	 	the act of any court or governmental authority prohibiting a Party from discharging its obligations under this Agreement or resulting in diminutions in service and conduct which would violate any applicable Laws; or	
 		
 	(J)	 	any other cause whether or not of the same class or kind, reasonably beyond the control of the Party claiming suspension or by which the exercise of due diligence the affected Party is unable to overcome.	
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
 C-11 

 

EXHIBIT D
FIRM CAPACITY MDQ
MMBTU/D
 	 	 	 	 	
Contract Year	 	MDQ	 	
2008	 	 	100,000	 	
2009	 	 	100,000	 	
2010	 	 	100,000	 	
2011	 	 	50,000	 	
2012	 	 	50,000	 	
2013	 	 	0	 	

*	 	The Parties, in good faith, agree to amend this schedule, if needed, to provide for Production after 2013.	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
 D-1 

 

EXHIBIT E
FEES

1.	 	Gathering Fee . The fee for the gathering of Shipper’s Production at the Point of Receipt to the Point of Delivery shall be the rate as defined in the following table, multiplied by the MMBtu received by Gatherer from Shipper (as allocated by Chevron North American Exploration and Production Company, or any successor platform operator) at the Point(s) of Receipt (“ Gathering Fee ”):	

>= 50,000 MMBtu/Day	 	[*]	
25,000 to 49,999 MMBtu/Day	 	[*]	
5,000 to 24,999 MMBtu/Day	 	[*]	
2,500 to 4,999 MMBtu/Day	 	[*]	
1,000 to 2,499 MMBtu/Day	 	[*]	
<= 999 MMBtu/Day	 	[*]	

 	 	The MMBtu/Day shall be determined by dividing the total MMBtu received at the Point(s) of Receipt by the number of days in the Month.	
 		
2.	 	Demand Fee . In addition to Gathering Fee as described in Exhibit E, Section 1, the fee for the Shipper’s Firm Capacity MDQ demand shall be [*] per MMBtu (inclusive of add-ons and surcharges) (“Demand Fee”).	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
 E-1 

Exhibit 10.11
December 10, 2009
Contango Operators, Inc.
3700 Buffalo Speedway, Suite 960
Houston, TX 77098
Attn: President
Re: Amendment to Firm Gas Gathering Agreement between American Midstream Offshore (Seacrest) LP (formerly Enbridge Offshore Pipelines (Seacrest) L.P.) and Contango Operators, Inc. (formerly Contango Resources Company) dated as of August 1, 2008 (herein, the “Firm Agreement”)
Gentlemen:
This letter agreement, when executed below, evidences our agreement to amend the referenced Firm Agreement by substituting the attached Exhibit B and Exhibit D for the existing Exhibit B and Exhibit D attached to the Firm Agreement.
Additionally, Section 11.1 of the Firm Agreement shall be entirely deleted and replaced with the following:
“11.1 Effective Date and Term. Unless otherwise terminated or canceled in accordance with the terms hereof, the term of this Agreement shall commence on the Effective Date and shall end on November 30, 2014 (“Primary Term”) and continuing from year to year thereafter (each, a “Renewal Year”) unless terminated by either Party giving at least sixty (60) days written notice to the other Party prior to the end of the Primary Term or any Renewal Year thereafter.”

AMERICAN MIDSTREAM OFFSHORE (SEACREST) LP	 	CONTANGO OPERATORS, INC.	 	 	
 	 	 	 	 	 	 	 	 	
By:
Name:	 	/s/ John J. Connor
 
John J. Connor	 	By:
Name:	 	/s/ Kenneth R. Peak
 
Kenneth R. Peak	 	 	
Title:	 	Sr. VP Operations & Eng.	 	Title:	 	Chairman & CEO	 	 	

 

EXHIBIT B
POINT OF RECEIPT AND POINT OF DELIVERY
AS AMENDED EFFECTIVE DECEMBER 1, 2009
     1.  Point(s) of Receipt . 1) The meter facility on the Chevron North American Exploration and Production Company Eugene Island 24 Platform which Gatherer and Shipper agree shall serve as a Point of Receipt and Point of Measurement, 2) The future meter facility on the Contango Operators, Inc. Eugene Island 11H Platform which Gatherer and Shipper agree shall serve as a Point of Receipt and Point of Measurement (subject to agreement on construction cost).
     2.  Point of Delivery . The existing interconnect between the Gathering System and Marathon Oil Company’s Burns Point Processing Plant inlet meter station located in the Bayou Sale Yard in St. Mary’s Parish, Louisiana.
     3. Point(s) of Measurement . 1) Gatherer’s meter facility on the Chevron North American Exploration and Production Company Eugene Island 24 Platform, and 2) Gatherer’s meter facility on the Contango Operators, Inc. Eugene Island 11H Platform.

 

EXHIBIT D
FIRM CAPACITY MDQ
MMBTU/D
(AS AMENDED EFFECTIVE AS OF DECEMBER 1, 2009)
 	 	 	 	 	
Time Period	 	MDQ	 	
Effective Date through 11/30/09	 	 	100,000	 	
12/01/09 though 11/30/10	 	 	130,000	 	
12/01/10 though 11/30/11	 	 	130,000	 	
12/01/11 though 11/30/12	 	 	130,000	 	
12/01/12 though 11/30/13	 	 	75,000	 	
12/01/13 though end of term	 	 	50,000	 	
Gatherer will use commercially reasonable efforts to provide Shipper its Firm Capacity MDQ as described above in 2009 – 2012 of 130,000 MMBTU/D. Should Gatherer discover its pipeline capacity cannot fulfill Firm Capacity MDQ as described above because of Gatherer’s physical limitations (not because of commitments to any other shippers except for commitments of 1000 MMBTU/D to another shipper), the MDQ through 11/30/2012 shall thereafter be reduced to actual (subject to other shipper commitment) with other MDQ amounts unchanged and no refund obligation.

Exhibit 10.12
Base Contract for Sale and Purchase of Natural Gas
This Base Contract is entered into as of the following date June 1, 2010.
The parties to this Base Contract are the following:
 	 	 	 	 	 	 	
PARTY A	 	 	 	 	
ExxonMobil Gas & Power Marketing Company	 	 	 	PARTY B	
(a division of Exxon Mobil Corporation)	 	PARTY NAME	 	MID LOUISIANA GAS TRANSMISSION, LLC	
CORP-EMB-3573M	 	 	 	8300 FM 1960 West, Suite 225, Houston, TX 77070	
800 Bell Street	 	 	 	ADDRESS	 	 	
Houston, TX 77002	 	 	 	 	 	 	
 	 	 	 	 	 	 	
www.exxonmobil.com	 	BUSINESS WEBSITE	 	www.americanmidstream.com	
 	 	 	 	 	 	 	
 	 	 	 	CONTRACT NUMBER	 	 	
 	 	 	 	 	 	 	
00-121-3214	 	 	 	D-U-N-S® NUMBER	 	 	
 	 	 	 	 	 	 	
þ US FEDERAL: 13-5409005	 	 	 	þ US FEDERAL: 84-1074614	
o OTHER:	 	 	 	TAX ID NUMBERS	 	o OTHER:	
 	 	 	 	 	 	 	
New Jersey	 	 	 	JURISDICTION OF
ORGANIZATION	 	Delaware	
 	 	 	 	 	 	 	
þ Corporation	 	o LLC	 	 	 	o Corporation              þ LLC	
o Limited Partnership	 	o Partnership	 	COMPANY TYPE	 	o Limited Partnership   o Partnership	
o LLP	 	o Other:                            	 	 	 	o LLP                           o Other:	
 	 	 	 	 	 	 	
 	 	 	 	GUARANTOR	 	 	
 	 	 	 	(IF APPLICABLE)	 	 	
 	 	 	 	 	 	 	
 	 	 	 	CONTACT INFORMATION	 	 	
CORP-EMB-3562, P.O. Box 2180, Houston, TX 77252-2180	 	 	 	MID LOUISIANA GAS TRANSMISSION LLC	
ATTN: Gas Marketing Manager (West & Central U.S.) or	 	§     COMMERCIAL	 	ATTN : MARK HUGHES	
Gas Marketing Manager (Gulf Coast and East U.S.)	 	 	 	TEL#: 281-955-4817     FAX#: 281-955-4855	
TEL#: (713) 656-8354     FAX#: (713) 656-9276	 	 	 	EMAIL: mhughes@americanmidstream.com	
EMAIL:                                          	 	 	 	 	
 	 	 	 	 	 	 	
CORP-EMB-3562, P.O. Box 2180, Houston, TX 77252-2180	 	 	 	MID LOUISIANA GAS TRANSMISSION, LLC	
ATTN: Gas Control	 	§     SCHEDULING	 	ATTN: JESSE KLANKE	
TEL#: (713) 656-1168 or 1-800-473-9966 FAX#: (713) 656-4144	 	 	 	TEL#: 281-955-4812     FAX#: 713-589-7965	
EMAIL:                                          	 	 	 	EMAIL: jklanke@americanmidstream.com	
 	 	 	 	 	 	 	
CORP-EMB-3573M, P.O. Box 2180, Houston, TX 77252-2180	 	 	 	MID LOUISIANA GAS TRANSMISSION, LLC	
ATTN: Contract Administration, Natural Gas - Americas	 	§     CONTRACT AND LEGAL NOTICES	 	ATTN: MARY ANN GONZALES	
TEL#: (713) 656-8354     FAX#: (713) 656-9276	 	 	 	TEL#: 281-955-4815     FAX#: 281-955-4855	
EMAIL:                                          	 	 	 	EMAIL: mgonzales@americanmidstream.com	
 	 	 	 	 	 	 	
CORP-EMB-3771, 800 Bell Street, Houston, TX 77002	 	§     CREDIT	 	MID LOUISIANA GAS TRANSMISSION, LLC	
ATTN: Credit Manager	 	 	 	ATTN : SANDRA FLOWER	
TEL#: (713) 656-8049 FAX#: (713) 656-3557	 	 	 	TEL#: 720-457-6042     FAX#: 720-457-6040	
EMAIL:                                          	 	 	 	EMAIL: sflower@americanmidstream.com	
 	 	 	 	 	 	 	
CORP-EMB-3573M, P.O. Box 2180, Houston, TX 77252-2180	 	 	 	MID LOUISIANA GAS TRANSMISSION, LLC	
ATTN: Contract Administrator - Confirmations	 	§    TRANSACTION CONFIRMATIONS	 	ATTN: JESSE KLANKE	
TEL#: (713) 656-7854 FAX#: (713) 656-2727	 		 	TEL#: 281-955-4812     FAX#: 713-589-7965	
EMAIL:                                          	 	 	 	EMAIL: jklanke@americanmidstream.com	
 	 	 	 	 	 	 	
 	 	 	 	ACCOUNTING INFORMATION	 	 	
 	 	 	 	 	 	 	
CORP-BH4-9065D, Exxon Mobil Corporation,
P.O. Box 4721, Houston, TX 77210-4721	 	§    INVOICES	 	MID LOUISIANA GAS TRANSMISSION, LLC	
ATTN: Upstream Controller’s Gas Marketing	 	§    PAYMENTS	 	ATTN: PETER MCNAMARA	
TEL#: (713) 680-5721 FAX#: (713) 680-6909	 	§    SETTLEMENTS	 	TEL#: 281-955-4809     FAX#: 281-955-4855	
EMAIL:                                          	 	 	 	EMAIL: pmcnamara@americanmidstream.com	
 	 	 	 	 	 	 	
BANK: Citibank. N.A., New York. New York	 	 	 	 	
ABA: 0210-0008-9          ACCT: 30439217	 	WIRE TRANSFER	 	BANK: COMERICA BANK	
OTHER DETAILS: For Credit To: Exxon Mobil Corporation Gas Marketing
Remittance Account	 	NUMBERS	 	ABA: 111000753          ACCT: 1881319493	
	 	(IF APPLICABLE)	 	OTHER DETAILS: Beneficiary Acct - American Midstream, LLC	
 	 	 	 	 	 	 	
BANK: Not Applicable	 	ACH NUMBERS	 	BANK: Not Applicable	
ABA:                               ACCT:                     	 	( IF APPLICABLE)	 	ABA:                               ACCT:                     	
OTHER DETAILS:                                           	 	 	 	OTHER DETAILS:                                            	
ATTN: Not Applicable	 	 	 	ATTN: Not Applicable	
ADDRESS:                                                   	 	CHECKS	 	ADDRESS:                                                      	
 	 	 	 	(IF APPLICABLE)	 	 	
 	 	 	 	 	 	 	
ATTN: Manager Americas Gas Marketing	 	VERIFICATION OF	 	ATTN: Sandra Flower – VP, Finance & Controller	
ADDRESS: CORP-EMB-3573M, P.O. Box 2180 Houston. TX 77252-2180	 	CHANGE IN BANKING	 	ADDRESS: 1614 15 th Street, Suite 300, Denver, CO 80202
TEL#: 720-457-6042 FAX#: 720-457-6040	
TEL#: ( 713) 656-8354 FAX#: (713) 656-9276	 	INSTRUCTIONS
(IF APPLICABLE)	 		

Copyright © 2006 North American Energy Standards Board, Inc.	 	NAESB Standard 6.3.1	
All Rights Reserved	 	September 5, 2006	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

Base Contract for Sale and Purchase of Natural Gas
(Continued)
This Base Contract incorporates by reference for all purposes the General Terms and Conditions for Sale and Purchase of Natural Gas published by the North American Energy Standards Board. The parties hereby agree to the following provisions offered in said General Terms and Conditions. In the event the parties fail to check a box, the specified default provision shall apply. Select the appropriate box(es) from each section:

Section 1.2	 	o	 	Oral (default)	 	Section 10.2	 	þ	 	No Additional Events of Default (default)	
Transaction	 	OR	 	 	 	Additional	 	 	 	 	
Procedure	 	þ	 	Written	 	Events of
Default	 	o	 	Indebtedness Cross Default	
 	 	 	 	 	 	 	 	 	 	 	
Section 2.7	 	þ	 	2 Business Days after receipt (default)	 	 	 	 	 	o Party A:                     	
Confirm Deadline	 	OR	 	 	 	 	 	 	 		
 	 	o	 	      Business Days after receipt	 	 	 		 	o Party B:                     	
 		
 	 	 	 	 	 	 	 	o	 	Transactional Cross Default	
Section 2.8	 	o	 	Seller (default)	 	 	 	 	 	Specified Transactions:	
Confirming Party	 	OR	 	 	 	 	 	 	 	 	
 	 	o	 	Buyer	 	 	 	 	 	 	
 	 	þ	 	ExxonMobil Gas & Power Marketing Company
(a division of Exxon Mobil Corporation)	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	
Section 3.2	 	o	 	Cover Standard (default)	 	Section 10.3.1	 	þ	 	Early Termination Damages Apply (default)	
Performance	 	OR	 	 	 	Early	 	 	 	 	
Obligation	 	þ	 	Spot Price Standard	 	Termination	 	OR	 	 	
 	 	 	 	 	 	Damages	 	 	 	 	
 	 	 	 	 	 	 	 	o	 	Early Termination Damages Do Not Apply	
 	 	 	 	 	 	 	 	 	 	 	
Note: The following Spot Price Publication applies to both of the immediately preceding.	 	Section 10.3.2	 	þ	 	Other Agreement Setoffs Apply (default)	
	 		 		 	Other	 	 	 		
		
Section 2.31	 	[*]	 	Gas Daily Midpoint (default)	 	Agreement	 	 	 	þ      Bilateral (default)	
		
Spot Price	 	OR	 	 	 	Setoffs	 	 	 		
		
Publication	 	[*]	 	 	 	 	 		 	o      Triangular	
		
 	 	 	 	 	 	 	 	OR	 		
 	 	 	 	 	 	 	 	o	 	Other Agreement Setoffs Do Not Apply	
Section 6	 	þ	 	Buyer Pays At and After Delivery Point (default)	 	 	 	 	 	 	
Taxes	 	OR	 	 	 	 	 	 	 	 	
 	 	o	 	Seller Pays Before and At Delivery Point	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	
Section 7.2	 	þ	 	25 th Day of Month following Month of delivery	 	Section 15.5	 	 	 	Texas	
Payment Date	 	 	 	(default)	 	Choice Of Law	 	 	 	 	
 	 	OR	 	 	 	 	 	 	 	 	
 	 	o	 	Day of Month following Month of delivery	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	
Section 7.2	 	þ	 	Wire transfer (default)	 	Section 15.10	 	þ	 	Confidentiality applies (default)	
Method of Payment	 	o	 	Automated Clearinghouse Credit (ACH)	 	Confidentiality	 	OR	 	 	
 	 	o	 	Check	 	 	 	o	 	Confidentiality does not apply	
 	 	 	 	 	 	 	 	 	 	 	
Section 7.7	 	o	 	Netting applies (default)	 	 	 	 	 	 	
Netting	 	OR	 	 	 	 	 	 	 	 	
 	 	þ	 	Netting does not apply	 	 	 	 	 	 	
 		
þ Special Provisions Number of sheets attached: 3	 	 	 	 	 	 	
o Addendum(s):
 	
IN WITNESS WHEREOF, the parties hereto have executed this Base Contract in duplicate.

 	 	ExxonMobil Gas & Power Marketing Company
(a division of Exxon Mobil Corporation)	 	PARTY NAME	 	 	 	MID LOUISIANA GAS TRANSMISSION, LLC	
 	 	 	 	 	 	 	 	 	
	By:	/s/ Diaco Aviki	 	SIGNATURE	 		By:	/s/ Marty Patterson	
 	 	 	 	 	 	 	 	 	
 	 	Diaco Aviki 5/13/10	 	PRINTED NAME	 	 	 	MARTY PATTERSON	
 	 	Gas Marketing Manager (Gulf Coast & East U.S.)	 	TITLE	 	 	 	SR. VICE PRESIDENT	

Copyright © 2006 North American Energy Standards Board, Inc.	 	 	 	NAESB Standard 6.3.1	
All Rights Reserved	 	Page 3 of 14	 	September 5, 2006	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

General Terms and Conditions
Base Contract for Sale and Purchase of Natural Gas
SECTION 1. PURPOSE AND PROCEDURES
1.1. These General Terms and Conditions are intended to facilitate purchase and sale transactions of Gas on a Firm or Interruptible basis. “Buyer” refers to the party receiving Gas and “Seller” refers to the party delivering Gas. The entire agreement between the parties shall be the Contract as defined in Section 2.9.
The parties have selected either the “Oral Transaction Procedure” or the “Written Transaction Procedure” as indicated on the Base Contract.
Oral Transaction Procedure:
1.2. The parties will use the following Transaction Confirmation procedure. Any Gas purchase and sale transaction may be effectuated in an EDI transmission or telephone conversation with the offer and acceptance constituting the agreement of the parties. The parties shall be legally bound from the time they so agree to transaction terms and may each rely thereon. Any such transaction shall be considered a “writing” and to have been “signed”. Notwithstanding the foregoing sentence, the parties agree that Confirming Party shall, and the other party may, confirm a telephonic transaction by sending the other party a Transaction Confirmation by facsimile, EDI or mutually agreeable electronic means within three Business Days of a transaction covered by this Section 1.2 (Oral Transaction Procedure) provided that the failure to send a Transaction Confirmation shall not invalidate the oral agreement of the parties. Confirming Party adopts its confirming letterhead, or the like, as its signature on any Transaction Confirmation as the identification and authentication of Confirming Party. If the Transaction Confirmation contains any provisions other than those relating to the commercial terms of the transaction (i.e., price, quantity, performance obligation, delivery point, period of delivery and/or transportation conditions), which modify or supplement the Base Contract or General Terms and Conditions of this Contract (e.g., arbitration or additional representations and warranties), such provisions shall not be deemed to be accepted pursuant to Section 1.3 but must be expressly agreed to by both parties; provided that the foregoing shall not invalidate any transaction agreed to by the parties.
Written Transaction Procedure:
1.2. The parties will use the following Transaction Confirmation procedure. Should the parties come to an agreement regarding a Gas purchase and sale transaction for a particular Delivery Period, the Confirming Party shall, and the other party may, record that agreement on a Transaction Confirmation and communicate such Transaction Confirmation by facsimile, EDI or mutually agreeable electronic means, to the other party by the close of the Business Day following the date of agreement. The parties acknowledge that their agreement will not be binding until the exchange of nonconflicting Transaction Confirmations or the passage of the Confirm Deadline without objection from the receiving party, as provided in Section 1.3.
1.3. If a sending party’s Transaction Confirmation is materially different from the receiving party’s understanding of the agreement referred to in Section 1.2, such receiving party shall notify the sending party via facsimile, EDI or mutually agreeable electronic means by the Confirm Deadline, unless such receiving party has previously sent a Transaction Confirmation to the sending party. The failure of the receiving party to so notify the sending party in writing by the Confirm Deadline constitutes the receiving party’s agreement to the terms of the transaction described in the sending party’s Transaction Confirmation. If there are any material differences between timely sent Transaction Confirmations governing the same transaction, then neither Transaction Confirmation shall be binding until or unless such differences are resolved including the use of any evidence that clearly resolves the differences in the Transaction Confirmations. In the event of a conflict among the terms of (i) a binding Transaction Confirmation pursuant to Section 1.2, (ii) the oral agreement of the parties which may be evidenced by a recorded conversation, where the parties have selected the Oral Transaction Procedure of the Base Contract, (iii) the Base Contract, and (iv) these General Terms and Conditions, the terms of the documents shall govern in the priority listed in this sentence.
1.4. The parties agree that each party may electronically record all telephone conversations with respect to this Contract between their respective employees, without any special or further notice to the other party. Each party shall obtain any necessary consent of its agents and employees to such recording. Where the parties have selected the Oral Transaction Procedure in Section 1.2 of the Base Contract, the parties agree not to contest the validity or enforceability of telephonic recordings entered into in accordance with the requirements of this Base Contract.
SECTION 2. DEFINITIONS
The terms set forth below shall have the meaning ascribed to them below. Other terms are also defined elsewhere in the Contract and shall have the meanings ascribed to them herein.
2.1. “Additional Event of Default” shall mean Transactional Cross Default or Indebtedness Cross Default, each as and if selected by the parties pursuant to the Base Contract.
2.2. “Affiliate” shall mean, in relation to any person, any entity controlled, directly or indirectly, by the person, any entity that controls, directly or indirectly, the person or any entity directly or indirectly under common control with the person. For this purpose, “control” of any entity or person means ownership of at least 50 percent of the voting power of the entity or person.

Copyright © 2006 North American Energy Standards Board, Inc.	 	 	 	NAESB Standard 6.3.1	
All Rights Reserved	 	Page 4 of 14	 	September 5, 2006	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

2.3. “Alternative Damages” shall mean such damages, expressed in dollars or dollars per MMBtu, as the parties shall agree upon in the Transaction Confirmation, in the event either Seller or Buyer fails to perform a Firm obligation to deliver Gas in the case of Seller or to receive Gas in the case of Buyer.
2.4. “Base Contract” shall mean a contract executed by the parties that incorporates these General Terms and Conditions by reference; that specifies the agreed selections of provisions contained herein; and that sets forth other information required herein and any Special Provisions and addendum(s) as identified on page one.
2.5. “British thermal unit” or “Btu” shall mean the International BTU, which is also called the Btu (IT).
2.6. “Business Day(s)” shall mean Monday through Friday, excluding Federal Banking Holidays for transactions in the U.S.
2.7. “Confirm Deadline” shall mean 5:00 p.m. in the receiving party’s time zone on the second Business Day following the Day a Transaction Confirmation is received or, if applicable, on the Business Day agreed to by the parties in the Base Contract; provided, if the Transaction Confirmation is time stamped after 5:00 p.m. in the receiving party’s time zone, it shall be deemed received at the opening of the next Business Day.
2.8. “Confirming Party” shall mean the party designated in the Base Contract to prepare and forward Transaction Confirmations to the other party.
2.9. “Contract” shall mean the legally-binding relationship established by (i) the Base Contract, (ii) any and all binding Transaction Confirmations and (iii) where the parties have selected the Oral Transaction Procedure in Section 1.2 of the Base Contract, any and all transactions that the parties have entered into through an EDI transmission or by telephone, but that have not been confirmed in a binding Transaction Confirmation, all of which shall form a single integrated agreement between the parties.
2.10. “Contract Price” shall mean the amount expressed in U.S. Dollars per MMBtu to be paid by Buyer to Seller for the purchase of Gas as agreed to by the parties in a transaction.
2.11. “Contract Quantity” shall mean the quantity of Gas to be delivered and taken as agreed to by the parties in a transaction.
2.12. “Cover Standard”, as referred to in Section 3.2, shall mean that if there is an unexcused failure to take or deliver any quantity of Gas pursuant to this Contract, then the performing party shall use commercially reasonable efforts to (i) if Buyer is the performing party, obtain Gas, (or an alternate fuel if elected by Buyer and replacement Gas is not available), or (ii) if Seller is the performing party, sell Gas, in either case, at a price reasonable for the delivery or production area, as applicable, consistent with: the amount of notice provided by the nonperforming party; the immediacy of the Buyer’s Gas consumption needs or Seller’s Gas sales requirements, as applicable; the quantities involved; and the anticipated length of failure by the nonperforming party.
2.13. “Credit Support Obligation(s)” shall mean any obligation(s) to provide or establish credit support for, or on behalf of, a party to this Contract such as cash, an irrevocable standby letter of credit, a margin agreement, a prepayment, a security interest in an asset, guaranty, or other good and sufficient security of a continuing nature.
2.14. “Day” shall mean a period of 24 consecutive hours, coextensive with a “day” as defined by the Receiving Transporter in a particular transaction.
2.15. “Delivery Period” shall be the period during which deliveries are to be made as agreed to by the parties in a transaction.
2.16. “Delivery Point(s)” shall mean such point(s) as are agreed to by the parties in a transaction.
2.17. “EDI” shall mean an electronic data interchange pursuant to an agreement entered into by the parties, specifically relating to the communication of Transaction Confirmations under this Contract.
2.18. “EFP” shall mean the purchase, sale or exchange of natural Gas as the “physical” side of an exchange for physical transaction involving gas futures contracts. EFP shall incorporate the meaning and remedies of “Firm”, provided that a party’s excuse for nonperformance of its obligations to deliver or receive Gas will be governed by the rules of the relevant futures exchange regulated under the Commodity Exchange Act.
2.19. “Firm” shall mean that either party may interrupt its performance without liability only to the extent that such performance is prevented for reasons of Force Majeure; provided, however, that during Force Majeure interruptions, the party invoking Force Majeure may be responsible for any Imbalance Charges as set forth in Section 4.3 related to its interruption after the nomination is made to the Transporter and until the change in deliveries and/or receipts is confirmed by the Transporter.
2.20. “Gas” shall mean any mixture of hydrocarbons and noncombustible gases in a gaseous state consisting primarily of methane.
2.21. “Guarantor” shall mean any entity that has provided a guaranty of the obligations of a party hereunder.
2.22. “Imbalance Charges” shall mean any fees, penalties, costs or charges (in cash or in kind) assessed by a Transporter for failure to satisfy the Transporter’s balance and/or nomination requirements.
2.23. “Indebtedness Cross Default” shall mean if selected on the Base Contract by the parties with respect to a party, that it or its Guarantor, if any, experiences a default, or similar condition or event however therein defined, under one or more agreements or instruments, individually or collectively, relating to indebtedness (such indebtedness to include any obligation whether present or future, contingent or otherwise, as principal or surety or otherwise) for the payment or repayment of borrowed money in an aggregate amount greater than the threshold specified in the Base Contract with respect to such party or its Guarantor, if any, which results in such indebtedness becoming immediately due and payable.

Copyright © 2006 North American Energy Standards Board, Inc.	 	 	 	NAESB Standard 6.3.1	
All Rights Reserved	 	Page 5 of 14	 	September 5, 2006	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

2.24. “Interruptible” shall mean that either party may interrupt its performance at any time for any reason, whether or not caused by an event of Force Majeure, with no liability, except such interrupting party may be responsible for any Imbalance Charges as set forth in Section 4.3 related to its interruption after the nomination is made to the Transporter and until the change in deliveries and/or receipts is confirmed by Transporter.
2.25. “MMBtu” shall mean one million British thermal units, which is equivalent to one dekatherm.
2.26. “Month” shall mean the period beginning on the first Day of the calendar month and ending immediately prior to the commencement of the first Day of the next calendar month.
2.27. “Payment Date” shall mean a date, as indicated on the Base Contract, on or before which payment is due Seller for Gas received by Buyer in the previous Month.
2.28. “Receiving Transporter” shall mean the Transporter receiving Gas at a Delivery Point, or absent such receiving Transporter, the Transporter delivering Gas at a Delivery Point.
2.29. “Scheduled Gas” shall mean the quantity of Gas confirmed by Transporter(s) for movement, transportation or management.
2.30. “Specified Transaction(s)” shall mean any other transaction or agreement between the parties for the purchase, sale or exchange of physical Gas, and any other transaction or agreement identified as a Specified Transaction under the Base Contract.
2.31. “Spot Price” as referred to in Section 3.2 shall mean the price listed in the publication indicated on the Base Contract, under the listing applicable to the geographic location closest in proximity to the Delivery Point(s) for the relevant Day; provided, if there is no single price published for such location for such Day, but there is published a range of prices, then the Spot Price shall be the average of such high and low prices. If no price or range of prices is published for such Day, then the Spot Price shall be the average of the following: (i) the price (determined as stated above) for the first Day for which a price or range of prices is published that next precedes the relevant Day; and (ii) the price (determined as stated above) for the first Day for which a price or range of prices is published that next follows the relevant Day.
2.32. “Transaction Confirmation” shall mean a document, similar to the form of Exhibit A, setting forth the terms of a transaction formed pursuant to Section 1 for a particular Delivery Period.
2.33. “Transactional Cross Default” shall mean if selected on the Base Contract by the parties with respect to a party, that it shall be in default, however therein defined, under any Specified Transaction.
2.34. “Termination Option” shall mean the option of either party to terminate a transaction in the event that the other party fails to perform a Firm obligation to deliver Gas in the case of Seller or to receive Gas in the case of Buyer for a designated number of days during a period as specified on the applicable Transaction Confirmation.
2.35. “Transporter(s)” shall mean all Gas gathering or pipeline companies, or local distribution companies, acting in the capacity of a transporter, transporting Gas for Seller or Buyer upstream or downstream, respectively, of the Delivery Point pursuant to a particular transaction.
SECTION 3. PERFORMANCE OBLIGATION
3.1. Seller agrees to sell and deliver, and Buyer agrees to receive and purchase, the Contract Quantity for a particular transaction in accordance with the terms of the Contract. Sales and purchases will be on a Firm or Interruptible basis, as agreed to by the parties in a transaction.
The parties have selected either the “Cover Standard” or the “Spot Price Standard” as indicated on the Base Contract.
Cover Standard:
3.2. The sole and exclusive remedy of the parties in the event of a breach of a Firm obligation to deliver or receive Gas shall be recovery of the following: (i) in the event of a breach by Seller on any Day(s), payment by Seller to Buyer in an amount equal to the positive difference, if any, between the purchase price paid by Buyer utilizing the Cover Standard and the Contract Price, adjusted for commercially reasonable differences in transportation costs to or from the Delivery Point(s), multiplied by the difference between the Contract Quantity and the quantity actually delivered by Seller for such Day(s) excluding any quantity for which no replacement is available; or (ii) in the event of a breach by Buyer on any Day(s), payment by Buyer to Seller in the amount equal to the positive difference, if any, between the Contract Price and the price received by Seller utilizing the Cover Standard for the resale of such Gas, adjusted for commercially reasonable differences in transportation costs to or from the Delivery Point(s), multiplied by the difference between the Contract Quantity and the quantity actually taken by Buyer for such Day(s) excluding any quantity for which no sale is available; and (iii) in the event that Buyer has used commercially reasonable efforts to replace the Gas or Seller has used commercially reasonable efforts to sell the Gas to a third party, and no such replacement or sale is available for all or any portion of the Contract Quantity of Gas, then in addition to (i) or (ii) above, as applicable, the sole and exclusive remedy of the performing party with respect to the Gas not replaced or sold shall be an amount equal to any unfavorable difference between the Contract Price and the Spot Price, adjusted for such transportation to the applicable Delivery Point, multiplied by the quantity of such Gas not replaced or sold. Imbalance Charges shall not be recovered under this Section 3.2, but Seller and/or Buyer shall be responsible for Imbalance Charges, if any, as provided in Section 4.3. The amount of such unfavorable difference shall be payable five Business Days after presentation of the performing party’s invoice, which shall set forth the basis upon which such amount was calculated.

Copyright © 2006 North American Energy Standards Board, Inc.	 	 	 	NAESB Standard 6.3.1	
All Rights Reserved	 	Page 6 of 14	 	September 5, 2006	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

Spot Price Standard:
3.2. The sole and exclusive remedy of the parties in the event of a breach of a Firm obligation to deliver or receive Gas shall be recovery of the following: (i) in the event of a breach by Seller on any Day(s), payment by Seller to Buyer in an amount equal to the difference between the Contract Quantity and the actual quantity delivered by Seller and received by Buyer for such Day(s), multiplied by the positive difference, if any, obtained by subtracting the Contract Price from the Spot Price; or (ii) in the event of a breach by Buyer on any Day(s), payment by Buyer to Seller in an amount equal to the difference between the Contract Quantity and the actual quantity delivered by Seller and received by Buyer for such Day(s), multiplied by the positive difference, if any, obtained by subtracting the applicable Spot Price from the Contract Price. Imbalance Charges shall not be recovered under this Section 3.2, but Seller and/or Buyer shall be responsible for Imbalance Charges, if any, as provided in Section 4.3. The amount of such unfavorable difference shall be payable five Business Days after presentation of the performing party’s invoice, which shall set forth the basis upon which such amount was calculated.
3.3. Notwithstanding Section 3.2, the parties may agree to Alternative Damages in a Transaction Confirmation executed in writing by both parties.
3.4. In addition to Sections 3.2 and 3.3, the parties may provide for a Termination Option in a Transaction Confirmation executed in writing by both parties. The Transaction Confirmation containing the Termination Option will designate the length of nonperformance triggering the Termination Option and the procedures for exercise thereof, how damages for nonperformance will be compensated, and how liquidation costs will be calculated.
SECTION 4. TRANSPORTATION, NOMINATIONS, AND IMBALANCES
4.1. Seller shall have the sole responsibility for transporting the Gas to the Delivery Point(s). Buyer shall have the sole responsibility for transporting the Gas from the Delivery Point(s).
4.2. The parties shall coordinate their nomination activities, giving sufficient time to meet the deadlines of the affected Transporter(s). Each party shall give the other party timely prior Notice, sufficient to meet the requirements of all Transporter(s) involved in the transaction, of the quantities of Gas to be delivered and purchased each Day. Should either party become aware that actual deliveries at the Delivery Point(s) are greater or lesser than the Scheduled Gas, such party shall promptly notify the other party.
4.3. The parties shall use commercially reasonable efforts to avoid imposition of any Imbalance Charges. If Buyer or Seller receives an invoice from a Transporter that includes Imbalance Charges, the parties shall determine the validity as well as the cause of such Imbalance Charges. If the Imbalance Charges were incurred as a result of Buyer’s receipt of quantities of Gas greater than or less than the Scheduled Gas, then Buyer shall pay for such Imbalance Charges or reimburse Seller for such Imbalance Charges paid by Seller. If the Imbalance Charges were incurred as a result of Seller’s delivery of quantities of Gas greater than or less than the Scheduled Gas, then Seller shall pay for such Imbalance Charges or reimburse Buyer for such Imbalance Charges paid by Buyer.
SECTION 5. QUALITY AND MEASUREMENT
All Gas delivered by Seller shall meet the pressure, quality and heat content requirements of the Receiving Transporter. The unit of quantity measurement for purposes of this Contract shall be one MMBtu dry. Measurement of Gas quantities hereunder shall be in accordance with the established procedures of the Receiving Transporter.
SECTION 6. TAXES
The parties have selected either “Buyer Pays At and After Delivery Point” or “Seller Pays Before and At Delivery Point” as indicated on the Base Contract.
Buyer Pays At and After Delivery Point:
Seller shall pay or cause to be paid all taxes, fees, levies, penalties, licenses or charges imposed by any government authority (“Taxes”) on or with respect to the Gas prior to the Delivery Point(s). Buyer shall pay or cause to be paid all Taxes on or with respect to the Gas at the Delivery Point(s) and all Taxes after the Delivery Point(s). If a party is required to remit or pay Taxes that are the other party’s responsibility hereunder, the party responsible for such Taxes shall promptly reimburse the other party for such Taxes. Any party entitled to an exemption from any such Taxes or charges shall furnish the other party any necessary documentation thereof.
Seller Pays Before and At Delivery Point:
Seller shall pay or cause to be paid all taxes, fees, levies, penalties, licenses or charges imposed by any government authority (“Taxes”) on or with respect to the Gas prior to the Delivery Point(s) and all Taxes at the Delivery Point(s). Buyer shall pay or cause to be paid all Taxes on or with respect to the Gas after the Delivery Point(s). If a party is required to remit or pay Taxes that are the other party’s responsibility hereunder, the party responsible for such Taxes shall promptly reimburse the other party for such Taxes. Any party entitled to an exemption from any such Taxes or charges shall furnish the other party any necessary documentation thereof.
SECTION 7. BILLING, PAYMENT, AND AUDIT
7.1. Seller shall invoice Buyer for Gas delivered and received in the preceding Month and for any other applicable charges, providing supporting documentation acceptable in industry practice to support the amount charged. If the actual quantity delivered is not known by the billing date, billing will be prepared based on the quantity of Scheduled Gas. The invoiced quantity will then be adjusted to the actual quantity on the following Month’s billing or as soon thereafter as actual delivery information is available.

Copyright © 2006 North American Energy Standards Board, Inc.	 	 	 	NAESB Standard 6.3.1	
All Rights Reserved	 	Page 7 of 14	 	September 5, 2006	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

7.2. Buyer shall remit the amount due under Section 7.1 in the manner specified in the Base Contract, in immediately available funds, on or before the later of the Payment Date or 10 Days after receipt of the invoice by Buyer; provided that if the Payment Date is not a Business Day, payment is due on the next Business Day following that date. In the event any payments are due Buyer hereunder, payment to Buyer shall be made in accordance with this Section 7.2.
7.3. In the event payments become due pursuant to Sections 3.2 or 3.3, the performing party may submit an invoice to the nonperforming party for an accelerated payment setting forth the basis upon which the invoiced amount was calculated. Payment from the nonperforming party will be due five Business Days after receipt of invoice.
7.4. If the invoiced party, in good faith, disputes the amount of any such invoice or any part thereof, such invoiced party will pay such amount as it concedes to be correct; provided, however, if the invoiced party disputes the amount due, it must provide supporting documentation acceptable in industry practice to support the amount paid or disputed without undue delay. In the event the parties are unable to resolve such dispute, either party may pursue any remedy available at law or in equity to enforce its rights pursuant to this Section.
7.5. If the invoiced party fails to remit the full amount payable when due, interest on the unpaid portion shall accrue from the date due until the date of payment at a rate equal to the lower of (i) the then-effective prime rate of interest published under “Money Rates” by The Wall Street Journal, plus two percent per annum; or (ii) the maximum applicable lawful interest rate.
7.6. A party shall have the right, at its own expense, upon reasonable Notice and at reasonable times, to examine and audit and to obtain copies of the relevant portion of the books, records, and telephone recordings of the other party only to the extent reasonably necessary to verify the accuracy of any statement, charge, payment, or computation made under the Contract. This right to examine, audit, and to obtain copies shall not be available with respect to proprietary information not directly relevant to transactions under this Contract. All invoices and billings shall be conclusively presumed final and accurate and all associated claims for under- or overpayments shall be deemed waived unless such invoices or billings are objected to in writing, with adequate explanation and/or documentation, within two years after the Month of Gas delivery. All retroactive adjustments under Section 7 shall be paid in full by the party owing payment within 30 Days of Notice and substantiation of such inaccuracy.
7.7. Unless the parties have elected on the Base Contract not to make this Section 7.7 applicable to this Contract, the parties shall net all undisputed amounts due and owing, and/or past due, arising under the Contract such that the party owing the greater amount shall make a single payment of the net amount to the other party in accordance with Section 7; provided that no payment required to be made pursuant to the terms of any Credit Support Obligation or pursuant to Section 7.3 shall be subject to netting under this Section. If the parties have executed a separate netting agreement, the terms and conditions therein shall prevail to the extent inconsistent herewith.
SECTION 8. TITLE, WARRANTY, AND INDEMNITY
8.1. Unless otherwise specifically agreed, title to the Gas shall pass from Seller to Buyer at the Delivery Point(s). Seller shall have responsibility for and assume any liability with respect to the Gas prior to its delivery to Buyer at the specified Delivery Point(s). Buyer shall have responsibility for and assume any liability with respect to said Gas after its delivery to Buyer at the Delivery Point(s).
8.2. Seller warrants that it will have the right to convey and will transfer good and merchantable title to all Gas sold hereunder and delivered by it to Buyer, free and clear of all liens, encumbrances, and claims. EXCEPT AS PROVIDED IN THIS SECTION 8.2 AND IN SECTION 15.8, ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE, ARE DISCLAIMED.
8.3. Seller agrees to indemnify Buyer and save it harmless from all losses, liabilities or claims including reasonable attorneys’ fees and costs of court (“Claims”), from any and all persons, arising from or out of claims of title, personal injury (including death) or property damage from said Gas or other charges thereon which attach before title passes to Buyer. Buyer agrees to indemnify Seller and save it harmless from all Claims, from any and all persons, arising from or out of claims regarding payment, personal injury (including death) or property damage from said Gas or other charges thereon which attach after title passes to Buyer.
8.4. The parties agree that the delivery of and the transfer of title to all Gas under this Contract shall take place within the Customs Territory of the United States (as defined in general note 2 of the Harmonized Tariff Schedule of the United States 19 U.S.C. §1202, General Notes,
page 3); provided, however, that in the event Seller took title to the Gas outside the Customs Territory of the United States, Seller represents and warrants that it is the importer of record for all Gas entered and delivered into the United States, and shall be responsible for entry and entry summary filings as well as the payment of duties, taxes and fees, if any, and all applicable record keeping requirements.
8.5. Notwithstanding the other provisions of this Section 8, as between Seller and Buyer, Seller will be liable for all Claims to the extent that such arise from the failure of Gas delivered by Seller to meet the quality requirements of Section 5.
SECTION 9. NOTICES
9.1. All Transaction Confirmations, invoices, payment instructions, and other communications made pursuant to the Base Contract (“Notices”) shall be made to the addresses specified in writing by the respective parties from time to time.
9.2. All Notices required hereunder shall be in writing and may be sent by facsimile or mutually acceptable electronic means, a nationally recognized overnight courier service, first class mail or hand delivered.
9.3. Notice shall be given when received on a Business Day by the addressee. In the absence of proof of the actual receipt date, the following presumptions will apply. Notices sent by facsimile shall be deemed to have been received upon the sending party’s receipt of its facsimile machine’s confirmation of successful transmission. If the day on which such facsimile is received is

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not a Business Day or is after five p.m. on a Business Day, then such facsimile shall be deemed to have been received on the next following Business Day. Notice by overnight mail or courier shall be deemed to have been received on the next Business Day after it was sent or such earlier time as is confirmed by the receiving party. Notice via first class mail shall be considered delivered five Business Days after mailing.
9.4. The party receiving a commercially acceptable Notice of change in payment instructions or other payment information shall not be obligated to implement such change until ten Business Days after receipt of such Notice.
SECTION 10. FINANCIAL RESPONSIBILITY
10.1. If either party (“X”) has reasonable grounds for insecurity regarding the performance of any obligation under this Contract (whether or not then due) by the other party (“Y”) (including, without limitation, the occurrence of a material change in the creditworthiness of Y or its Guarantor, if applicable), X may demand Adequate Assurance of Performance. “Adequate Assurance of Performance” shall mean sufficient security in the form, amount, for a term, and from an issuer, all as reasonably acceptable to X, including, but not limited to cash, a standby irrevocable letter of credit, a prepayment, a security interest in an asset or guaranty. Y hereby grants to X a continuing first priority security interest in, lien on, and right of setoff against all Adequate Assurance of Performance in the form of cash transferred by Y to X pursuant to this Section 10.1. Upon the return by X to Y of such Adequate Assurance of Performance, the security interest and lien granted hereunder on that Adequate Assurance of Performance shall be released automatically and, to the extent possible, without any further action by either party.
10.2. In the event (each an “Event of Default”) either party (the “Defaulting Party”) or its Guarantor shall: (i) make an assignment or any general arrangement for the benefit of creditors; (ii) file a petition or otherwise commence, authorize, or acquiesce in the commencement of a proceeding or case under any bankruptcy or similar law for the protection of creditors or have such petition filed or proceeding commenced against it; (iii) otherwise become bankrupt or insolvent (however evidenced); (iv) be unable to pay its debts as they fall due; (v) have a receiver, provisional liquidator, conservator, custodian, trustee or other similar official appointed with respect to it or substantially all of its assets; (vi) fail to perform any obligation to the other party with respect to any Credit Support Obligations relating to the Contract; (vii) fail to give Adequate Assurance of Performance under Section 10.1 within 48 hours but at least one Business Day of a written request by the other party; (viii) not have paid any amount due the other party hereunder on or before the second Business Day following written Notice that such payment is due; or ix) be the affected party with respect to any Additional Event of Default; then the other party (the “Non-Defaulting Party”) shall have the right, at its sole election, to immediately withhold and/or suspend deliveries or payments upon Notice and/or to terminate and liquidate the transactions under the Contract, in the manner provided in Section 10.3, in addition to any and all other remedies available hereunder.
10.3. If an Event of Default has occurred and is continuing, the Non-Defaulting Party shall have the right, by Notice to the Defaulting Party, to designate a Day, no earlier than the Day such Notice is given and no later than 20 Days after such Notice is given, as an early termination date (the “Early Termination Date”) for the liquidation and termination pursuant to Section 10.3.1 of all transactions under the Contract, each a “Terminated Transaction”. On the Early Termination Date, all transactions will terminate, other than those transactions, if any, that may not be liquidated and terminated under applicable law (“Excluded Transactions”), which Excluded Transactions must be liquidated and terminated as soon thereafter as is legally permissible, and upon termination shall be a Terminated Transaction and be valued consistent with Section 10.3.1 below. With respect to each Excluded Transaction, its actual termination date shall be the Early Termination Date for purposes of
Section 10.3.1.
The parties have selected either “Early Termination Damages Apply” or “Early Termination Damages Do Not Apply” as indicated on the Base Contract.
Early Termination Damages Apply:
     10.3.1. As of the Early Termination Date, the Non-Defaulting Party shall determine, in good faith and in a commercially reasonable manner, (i) the amount owed (whether or not then due) by each party with respect to all Gas delivered and received between the parties under Terminated Transactions and Excluded Transactions on and before the Early Termination Date and all other applicable charges relating to such deliveries and receipts (including without limitation any amounts owed under Section 3.2), for which payment has not yet been made by the party that owes such payment under this Contract and (ii) the Market Value, as defined below, of each Terminated Transaction. The Non-Defaulting Party shall (x) liquidate and accelerate each Terminated Transaction at its Market Value, so that each amount equal to the difference between such Market Value and the Contract Value, as defined below, of such Terminated Transaction(s) shall be due to the Buyer under the Terminated Transaction(s) if such Market Value exceeds the Contract Value and to the Seller if the opposite is the case; and (y) where appropriate, discount each amount then due under clause (x) above to present value in a commercially reasonable manner as of the Early Termination Date (to take account of the period between the date of liquidation and the date on which such amount would have otherwise been due pursuant to the relevant Terminated Transactions).
For purposes of this Section 10.3.1, “Contract Value” means the amount of Gas remaining to be delivered or purchased under a transaction multiplied by the Contract Price, and “Market Value” means the amount of Gas remaining to be delivered or purchased under a transaction multiplied by the market price for a similar transaction at the Delivery Point determined by the Non-Defaulting Party in a commercially reasonable manner. To ascertain the Market Value, the Non-Defaulting Party may consider, among other valuations, any or all of the settlement prices of NYMEX Gas futures contracts, quotations from leading dealers in energy swap contracts or physical gas trading markets, similar sales or purchases and any other bona fide third-party offers, all adjusted for the length of the term and differences in transportation costs. A party shall not be required to enter into a replacement transaction(s) in order to determine the Market Value. Any extension(s) of the term of a transaction to which parties are not bound as of the Early Termination Date (including but not limited to “evergreen provisions”) shall not be considered in determining Contract Values and

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Market Values. For the avoidance of doubt, any option pursuant to which one party has the right to extend the term of a transaction shall be considered in determining Contract Values and Market Values. The rate of interest used in calculating net present value shall be determined by the Non-Defaulting Party in a commercially reasonable manner.

Early Termination Damages Do Not Apply:	
     10.3.1. As of the Early Termination Date, the Non-Defaulting Party shall determine, in good faith and in a commercially reasonable manner, the amount owed (whether or not then due) by each party with respect to all Gas delivered and received between the parties under Terminated Transactions and Excluded Transactions on and before the Early Termination Date and all other applicable charges relating to such deliveries and receipts (including without limitation any amounts owed under Section 3.2), for which payment has not yet been made by the party that owes such payment under this Contract.
The parties have selected either “Other Agreement Setoffs Apply” or “Other Agreement Setoffs Do Not Apply” as indicated on the Base Contract.
Other Agreement Setoffs Apply:
Bilateral Setoff Option:
     10.3.2. The Non-Defaulting Party shall net or aggregate, as appropriate, any and all amounts owing between the parties under Section 10.3.1, so that all such amounts are netted or aggregated to a single liquidated amount payable by one party to the other (the “Net Settlement Amount”). At its sole option and without prior Notice to the Defaulting Party, the Non-Defaulting Party is hereby authorized to setoff any Net Settlement Amount against (i) any margin or other collateral held by a party in connection with any Credit Support Obligation relating to the Contract; and (ii) any amount(s) (including any excess cash margin or excess cash collateral) owed or held by the party that is entitled to the Net Settlement Amount under any other agreement or arrangement between the parties.
Triangular Setoff Option:
     10.3.2. The Non-Defaulting Party shall net or aggregate, as appropriate, any and all amounts owing between the parties under Section 10.3.1, so that all such amounts are netted or aggregated to a single liquidated amount payable by one party to the other (the “Net Settlement Amount”). At its sole option, and without prior Notice to the Defaulting Party, the Non-Defaulting Party is hereby authorized to setoff (i) any Net Settlement Amount against any margin or other collateral held by a party in connection with any Credit Support Obligation relating to the Contract; (ii) any Net Settlement Amount against any
amount(s) (including any excess cash margin or excess cash collateral) owed by or to a party under any other agreement or arrangement between the parties; (iii) any Net Settlement Amount owed to the Non-Defaulting Party against any amount(s) (including any excess cash margin or excess cash collateral) owed by the Non-Defaulting Party or its Affiliates to the Defaulting Party under any other agreement or arrangement; (iv) any Net Settlement Amount owed to the Defaulting Party against any amount(s) (including any excess cash margin or excess cash collateral) owed by the Defaulting Party to the Non-Defaulting Party or its Affiliates under any other agreement or arrangement; and/or (v) any Net Settlement Amount owed to the Defaulting Party against any amount(s) (including any excess cash margin or excess cash collateral) owed by the Defaulting Party or its Affiliates to the Non-Defaulting Party under any other agreement or arrangement.
Other Agreement Setoffs Do Not Apply:
     10.3.2. The Non-Defaulting Party shall net or aggregate, as appropriate, any and all amounts owing between the parties under Section 10.3.1, so that all such amounts are netted or aggregated to a single liquidated amount payable by one party to the other (the “Net Settlement Amount”). At its sole option and without prior Notice to the Defaulting Party, the Non-Defaulting Party may setoff any Net Settlement Amount against any margin or other collateral held by a party in connection with any Credit Support Obligation relating to the Contract.
     10.3.3. If any obligation that is to be included in any netting, aggregation or setoff pursuant to Section 10.3.2 is unascertained, the Non-Defaulting Party may in good faith estimate that obligation and net, aggregate or setoff, as applicable, in respect of the estimate, subject to the Non-Defaulting Party accounting to the Defaulting Party when the obligation is ascertained. Any amount not then due which is included in any netting, aggregation or setoff pursuant to Section 10.3.2 shall be discounted to net present value in a commercially reasonable manner determined by the Non-Defaulting Party.
10.4. As soon as practicable after a liquidation, Notice shall be given by the Non-Defaulting Party to the Defaulting Party of the Net Settlement Amount, and whether the Net Settlement Amount is due to or due from the Non-Defaulting Party. The Notice shall include a written statement explaining in reasonable detail the calculation of the Net Settlement Amount, provided that failure to give such Notice shall not affect the validity or enforceability of the liquidation or give rise to any claim by the Defaulting Party against the Non-Defaulting Party. The Net Settlement Amount as well as any setoffs applied against such amount pursuant to Section 10.3.2, shall be paid by the close of business on the second Business Day following such Notice, which date shall not be earlier than the Early Termination Date. Interest on any unpaid portion of the Net Settlement Amount as adjusted by setoffs, shall accrue from the date due until the date of payment at a rate equal to the lower of (i) the then-effective prime rate of interest published under “Money Rates” by The Wall Street Journal, plus two percent per annum; or (ii) the maximum applicable lawful interest rate.
10.5. The parties agree that the transactions hereunder constitute a “forward contract” within the meaning of the United States Bankruptcy Code and that Buyer and Seller are each “forward contract merchants” within the meaning of the United States Bankruptcy Code.
10.6. The Non-Defaulting Party’s remedies under this Section 10 are the sole and exclusive remedies of the Non-Defaulting Party with respect to the occurrence of any Early Termination Date. Each party reserves to itself all other rights, setoffs, counterclaims and other defenses that it is or may be entitled to arising from the Contract.

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10.7. With respect to this Section 10, if the parties have executed a separate netting agreement with close-out netting provisions, the terms and conditions therein shall prevail to the extent inconsistent herewith.
SECTION 11. FORCE MAJEURE
11.1. Except with regard to a party’s obligation to make payment(s) due under Section 7, Section 10.4, and Imbalance Charges under Section 4, neither party shall be liable to the other for failure to perform a Firm obligation, to the extent such failure was caused by Force Majeure. The term “Force Majeure” as employed herein means any cause not reasonably within the control of the party claiming suspension, as further defined in Section 11.2.
11.2. Force Majeure shall include, but not be limited to, the following: (i) physical events such as acts of God, landslides, lightning, earthquakes, fires, storms or storm warnings, such as hurricanes, which result in evacuation of the affected area, floods, washouts, explosions, breakage or accident or necessity of repairs to machinery or equipment or lines of pipe; (ii) weather related events affecting an entire geographic region, such as low temperatures which cause freezing or failure of wells or lines of pipe; (iii) interruption and/or curtailment of Firm transportation and/or storage by Transporters; (iv) acts of others such as strikes, lockouts or other industrial disturbances, riots, sabotage, insurrections or wars, or acts of terror; and (v) governmental actions such as necessity for compliance with any court order, law, statute, ordinance, regulation, or policy having the effect of law promulgated by a governmental authority having jurisdiction. Seller and Buyer shall make reasonable efforts to avoid the adverse impacts of a Force Majeure and to resolve the event or occurrence once it has occurred in order to resume performance.
11.3. Neither party shall be entitled to the benefit of the provisions of Force Majeure to the extent performance is affected by any or all of the following circumstances: (i) the curtailment of interruptible or secondary Firm transportation unless primary, in-path, Firm transportation is also curtailed; (ii) the party claiming excuse failed to remedy the condition and to resume the performance of such covenants or obligations with reasonable dispatch; or (iii) economic hardship, to include, without limitation, Seller’s ability to sell Gas at a higher or more advantageous price than the Contract Price, Buyer’s ability to purchase Gas at a lower or more advantageous price than the Contract Price, or a regulatory agency disallowing, in whole or in part, the pass through of costs resulting from this Contract; (iv) the loss of Buyer’s market(s) or Buyer’s inability to use or resell Gas purchased hereunder, except, in either case, as provided in Section 11.2; or (v) the loss or failure of Seller’s gas supply or depletion of reserves, except, in either case, as provided in Section 11.2. The party claiming Force Majeure shall not be excused from its responsibility for Imbalance Charges.
11.4. Notwithstanding anything to the contrary herein, the parties agree that the settlement of strikes, lockouts or other industrial disturbances shall be within the sole discretion of the party experiencing such disturbance.
11.5. The party whose performance is prevented by Force Majeure must provide Notice to the other party. Initial Notice may be given orally; however, written Notice with reasonably full particulars of the event or occurrence is required as soon as reasonably possible. Upon providing written Notice of Force Majeure to the other party, the affected party will be relieved of its obligation, from the onset of the Force Majeure event, to make or accept delivery of Gas, as applicable, to the extent and for the duration of Force Majeure, and neither party shall be deemed to have failed in such obligations to the other during such occurrence or event.
11.6. Notwithstanding Sections 11.2 and 11.3, the parties may agree to alternative Force Majeure provisions in a Transaction Confirmation executed in writing by both parties.
SECTION 12. TERM
This Contract may be terminated on 30 Day’s written Notice, but shall remain in effect until the expiration of the latest Delivery Period of any transaction(s). The rights of either party pursuant to Section 7.6, Section 10, Section 13, the obligations to make payment hereunder, and the obligation of either party to indemnify the other, pursuant hereto shall survive the termination of the Base Contract or any transaction.
SECTION 13. LIMITATIONS
FOR BREACH OF ANY PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS PROVIDED, SUCH EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY. A PARTY’S LIABILITY HEREUNDER SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY PROVIDED HEREIN OR IN A TRANSACTION, A PARTY’S LIABILITY SHALL BE LIMITED TO DIRECT ACTUAL DAMAGES ONLY. SUCH DIRECT ACTUAL DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. UNLESS EXPRESSLY HEREIN PROVIDED, NEITHER PARTY SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR CONTRACT, UNDER ANY INDEMNITY PROVISION OR OTHERWISE. IT IS THE INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. TO THE EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED, THE PARTIES ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE, OR OTHERWISE OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT AND THE DAMAGES CALCULATED HEREUNDER CONSTITUTE A REASONABLE APPROXIMATION OF THE HARM OR LOSS.

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All Rights Reserved	 	Page 11 of 14	 	September 5, 2006	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

SECTION 14. MARKET DISRUPTION
If a Market Disruption Event has occurred then the parties shall negotiate in good faith to agree on a replacement price for the Floating Price (or on a method for determining a replacement price for the Floating Price) for the affected Day, and if the parties have not so agreed on or before the second Business Day following the affected Day then the replacement price for the Floating Price shall be determined within the next two following Business Days with each party obtaining, in good faith and from non-affiliated market participants in the relevant market, two quotes for prices of Gas for the affected Day of a similar quality and quantity in the geographical location closest in proximity to the Delivery Point and averaging the four quotes. If either party fails to provide two quotes then the average of the other party’s two quotes shall determine the replacement price for the Floating Price. “Floating Price” means the price or a factor of the price agreed to in the transaction as being based upon a specified index. “Market Disruption Event” means, with respect to an index specified for a transaction, any of the following events: (a) the failure of the index to announce or publish information necessary for determining the Floating Price; (b) the failure of trading to commence or the permanent discontinuation or material suspension of trading on the exchange or market acting as the index; (c) the temporary or permanent discontinuance or unavailability of the index; (d) the temporary or permanent closing of any exchange acting as the index; or (e) both parties agree that a material change in the formula for or the method of determining the Floating Price has occurred. For the purposes of the calculation of a replacement price for the Floating Price, all numbers shall be rounded to three decimal places. If the fourth decimal number is five or greater, then the third decimal number shall be increased by one and if the fourth decimal number is less than five, then the third decimal number shall remain unchanged.
SECTION 15. MISCELLANEOUS
15.1. This Contract shall be binding upon and inure to the benefit of the successors, assigns, personal representatives, and heirs of the respective parties hereto, and the covenants, conditions, rights and obligations of this Contract shall run for the full term of this Contract. No assignment of this Contract, in whole or in part, will be made without the prior written consent of the non-assigning party (and shall not relieve the assigning party from liability hereunder), which consent will not be unreasonably withheld or delayed; provided, either party may (i) transfer, sell, pledge, encumber, or assign this Contract or the accounts, revenues, or proceeds hereof in connection with any financing or other financial arrangements, or (ii) transfer its interest to any parent or Affiliate by assignment, merger or otherwise without the prior approval of the other party. Upon any such assignment, transfer and assumption, the transferor shall remain principally liable for and shall not be relieved of or discharged from any obligations hereunder.
15.2. If any provision in this Contract is determined to be invalid, void or unenforceable by any court having jurisdiction, such determination shall not invalidate, void, or make unenforceable any other provision, agreement or covenant of this Contract.
15.3. No waiver of any breach of this Contract shall be held to be a waiver of any other or subsequent breach.
15.4. This Contract sets forth all understandings between the parties respecting each transaction subject hereto, and any prior contracts, understandings and representations, whether oral or written, relating to such transactions are merged into and superseded by this Contract and any effective transaction(s). This Contract may be amended only by a writing executed by both parties.
15.5. The interpretation and performance of this Contract shall be governed by the laws of the jurisdiction as indicated on the Base Contract, excluding, however, any conflict of laws rule which would apply the law of another jurisdiction.
15.6. This Contract and all provisions herein will be subject to all applicable and valid statutes, rules, orders and regulations of any governmental authority having jurisdiction over the parties, their facilities, or Gas supply, this Contract or transaction or any provisions thereof.
15.7. There is no third party beneficiary to this Contract.
15.8. Each party to this Contract represents and warrants that it has full and complete authority to enter into and perform this Contract. Each person who executes this Contract on behalf of either party represents and warrants that it has full and complete authority to do so and that such party will be bound thereby.
15.9. The headings and subheadings contained in this Contract are used solely for convenience and do not constitute a part of this Contract between the parties and shall not be used to construe or interpret the provisions of this Contract.
15.10. Unless the parties have elected on the Base Contract not to make this Section 15.10 applicable to this Contract, neither party shall disclose directly or indirectly without the prior written consent of the other party the terms of any transaction to a third party (other than the employees, lenders, royalty owners, counsel, accountants and other agents of the party, or prospective purchasers of all or substantially all of a party’s assets or of any rights under this Contract, provided such persons shall have agreed to keep such terms confidential) except (i) in order to comply with any applicable law, order, regulation, or exchange rule, (ii) to the extent necessary for the enforcement of this Contract, (iii) to the extent necessary to implement any transaction, (iv) to the extent necessary to comply with a regulatory agency’s reporting requirements including but not limited to gas cost recovery proceedings; or (v) to the extent such information is delivered to such third party for the sole purpose of calculating a published index. Each party shall notify the other party of any proceeding of which it is aware which may result in disclosure of the terms of any transaction (other than as permitted hereunder) and use reasonable efforts to prevent or limit the disclosure. The existence of this Contract is not subject to this confidentiality obligation. Subject to Section 13, the parties shall be entitled to all remedies available at law or in equity to enforce, or seek relief in connection with this confidentiality obligation. The terms of any transaction hereunder shall be kept confidential by the parties hereto for one year from the expiration of the transaction.
In the event that disclosure is required by a governmental body or applicable law, the party subject to such requirement may disclose the material terms of this Contract to the extent so required, but shall promptly notify the other party, prior to disclosure,

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and shall cooperate (consistent with the disclosing party’s legal obligations) with the other party’s efforts to obtain protective orders or similar restraints with respect to such disclosure at the expense of the other party.
15.11. The parties may agree to dispute resolution procedures in Special Provisions attached to the Base Contract or in a Transaction Confirmation executed in writing by both parties
15.12. Any original executed Base Contract, Transaction Confirmation or other related document may be digitally copied, photocopied, or stored on computer tapes and disks (the “Imaged Agreement”). The Imaged Agreement, if introduced as evidence on paper, the Transaction Confirmation, if introduced as evidence in automated facsimile form, the recording, if introduced as evidence in its original form, and all computer records of the foregoing, if introduced as evidence in printed format, in any judicial, arbitration, mediation or administrative proceedings will be admissible as between the parties to the same extent and under the same conditions as other business records originated and maintained in documentary form. Neither Party shall object to the admissibility of the recording, the Transaction Confirmation, or the Imaged Agreement on the basis that such were not originated or maintained in documentary form. However, nothing herein shall be construed as a waiver of any other objection to the admissibility of such evidence.
DISCLAIMER: The purposes of this Contract are to facilitate trade, avoid misunderstandings and make more definite the terms of contracts of purchase and sale of natural gas. Further, NAESB does not mandate the use of this Contract by any party. NAESB DISCLAIMS AND EXCLUDES, AND ANY USER OF THIS CONTRACT ACKNOWLEDGES AND AGREES TO NAESB’S DISCLAIMER OF, ANY AND ALL WARRANTIES, CONDITIONS OR REPRESENTATIONS, EXPRESS OR IMPLIED, ORAL OR WRITTEN, WITH RESPECT TO THIS CONTRACT OR ANY PART THEREOF, INCLUDING ANY AND ALL IMPLIED WARRANTIES OR CONDITIONS OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY, OR FITNESS OR SUITABILITY FOR ANY PARTICULAR PURPOSE (WHETHER OR NOT NAESB KNOWS, HAS REASON TO KNOW, HAS BEEN ADVISED, OR IS OTHERWISE IN FACT AWARE OF ANY SUCH PURPOSE), WHETHER ALLEGED TO ARISE BY LAW, BY REASON OF CUSTOM OR USAGE IN THE TRADE, OR BY COURSE OF DEALING, EACH USER OF THIS CONTRACT ALSO AGREES THAT UNDER NO CIRCUMSTANCES WILL NAESB BE LIABLE FOR ANY DIRECT, SPECIAL, INCIDENTAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING OUT OF ANY USE OF THIS CONTRACT.

		
Copyright © 2006 North American Energy Standards Board, Inc.	 	 	 	NAESB Standard 6.3.1	
All Rights Reserved	 	Page 13 of 14	 	September 5, 2006	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

TRANSACTION CONFIRMATION
FOR IMMEDIATE DELIVERY
EXHIBIT A

	 	Date:                                          ,                                          
Transaction Confirmation #:                                         	
This Transaction Confirmation is subject to the Base Contract between Seller and Buyer dated                      . The terms of this Transaction Confirmation are binding unless disputed in writing within 2 Business Days of receipt unless otherwise specified in the Base Contract.

SELLER:	 	BUYER:	

 	

 	 	 
 	
Attn:
 	 	Attn:

Phone:
 	 	Phone:

Fax:
 	 	Fax:

Base Contract No.
 	 	Base Contract No.

Transporter:
 	 	Transporter:

Transporter Contract Number:
 	 	Transporter Contract Number:
 	
Contract Price: $             /MMBtu or                     
Delivery Period: Begin:                                          ,                          End:                      ,                     

Performance Obligation and Contract Quantity: (Select One)	

Firm (Fixed Quantity):	 	Firm (Variable Quantity):	 	Firm (Formula-Based Quantity):	 	Interruptible:	
                     MMBtus/day	 	                     MMBtus/dav Minimum	 	(specify formula)	 	Up to                      MMBtus/dav	
o EFP	 	                     MMBtus/dav Maximum	 	 
 	 	 	
 	 	subject to Section 4.2. at	 	                     MMBtus/dav	 	 	
 	 	election of o Buyer or o Seller	 	 	 	 	
Delivery Point(s):                                                              
(If a pooling point is used, list a specific geographic and pipeline location):
Special Conditions:

Seller: 	 	 	Buyer:	 	 	

By:
 	 	By:

Title:
 	 	Title:

Date:
 	 	Date:

		
	 	 	 	 	
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[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Exhibit 10.13
GAS PROCESSING AGREEMENT
THIS GAS PROCESSING AGREEMENT (“ Agreement ”) is made and entered into July 14, 2010 (“ Effective Date ”), by and between AMERICAN MIDSTREAM (MISSISSIPPI), LLC, having an office at 1614 15 TH Street, Suite 300, Denver, CO 80202 (“ Processor ”) and VENTURE OIL & GAS, INC., having an office at 222 Milbranch Road, Hattiesburg, MS 39402 (“ Producer ”) (also hereinafter each referred to as “ Party ” or collectively as “ Parties ”).
WITNESSETH:
WHEREAS, Producer desires to deliver to Processor all Gas from the Dedicated Properties described in Exhibit A, attached hereto and by reference made a part hereof, that Producer owns or controls and desires that Processor gather, compress, treat, process and condition the Gas; and
WHEREAS, Processor desires to gather, compress, treat and condition Producer’s Gas produced from the Dedicated Properties.
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein contained and expressed herein, Producer and Processor do hereby covenant and agree as follows:
ARTICLE I
DEFINITIONS

1.1	 	Acid Gas means the actual volume of H 2 S and C0 2 contained in Producer’s Gas.	
 		
1.2	 	AGA means the American Gas Association.	
 		
1.3	 	Applicable Laws means all valid and enforceable laws, statutes, ordinances, codes, rules, regulations, orders, judgments, decrees, requirements, or procedures enacted, adopted, promulgated, applied, or followed by any local, state, or federal government agency now or hereafter having any administrative, executive, judicial, legislative, regulatory, or taxing authority or jurisdiction of any nature,	
 		
1.4	 	Btu means one (1) British Thermal Unit and, where appropriate means the plural thereof. One (1) Btu is defined as the amount of heat required to raise the temperature of one (1) pound avoirdupois of pure water one degree Fahrenheit (1° F), from a starting point of fifty-eight and five-tenths degrees Fahrenheit (58.5° F), under a base pressure of 15.025 psia.	
 		
1.5	 	Btu/Gallon liquid Ratio Factor means the number of Btu contained in one (1) gallon of any component of the Liquefiable Hydrocarbons measured at sixty degrees Fahrenheit (60° F). The numerical values of such ratio for each component will be the numerical value shown in the Standard Table of Physical Constants of Paraffin Hydrocarbons and other components as published in the GPA publication 2145-77 , as amended from time to time. The numerical values of each component are currently as follows:	

Component	 	BTU/Gallon liquid	
Ethane	 	65,998	
Propane	 	91,065	
ISO-Butane	 	99,022	
N-Butane	 	102,989	
ISO-Pentane	 	108,790	
N-Pentane	 	110,102	
Hexane Plus	 	116,598	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
 1 

 

1.6	 	Cubic Foot or Standard Cubic Foot means the quantity of Gas that would occupy one cubic foot of space when such Gas is at a base temperature of 60° F and a base pressure of 15.025 psia.	
 		
1.7	 	Curtail or Curtailment will refer to periods of time when Processor is accepting less volumes of Gas than Producer tenders for gathering at the Receipt Point for operational reasons or as a result of Force Majeure.	
 		
 1.8	 	Day means a period of twenty-four (24) consecutive hours beginning at 9:00 a.m. Central Time.	
 		
1.9	 	Delivery Points means the points that interconnect with third party pipelines at the tailgate of the Processor Plant.	
 		
1.10	 	Effective Date means the date of this Agreement.	
 		
1.11	 	Fees shall include all actual costs, expenses, assessments or any other fees incurred by Processor in connection with marketing of a particular product and all taxes applicable thereto for any and all services provided by Processor on behalf of Producer hereunder, as well as any third party fees reasonably incurred by the affiliated third party in connection with transporting, fractionating and marketing of such product.	
 		
1.12	 	Force Majeure means periods of inability of either Party to perform as set forth in Article XXI of this Agreement.	
 		
1.13	 	Gas means the natural gas covered by this Agreement, including all processable substances contained in the natural gas in their natural state.	
 		
1.14	 	Gathering Fuel means the MMBtu of Gas used or consumed in the operation of the Gathering System and appurtenant compression and/or dehydration facilities, and lost and unaccounted for Gas that will be allocated to Producer’s Gas gathered hereunder.	
 		
1.15	 	Gathering System means an integrated set of facilities, including any facilities used directly or indirectly for compression and/or dehydration, used for gathering Producer’s Gas and other third party Gas from one or more receipt points to the Processor Plant.	
 		
1.16	 	Gross Heating Value means the total Btu content for a Standard Cubic Foot of Gas on a dry basis as determined by calculation from a compositional analysis using physical properties of gases at 15.025 psia and 60° F, as prescribed by the AGA.	
 		
1.17	 	Liquefiable Hydrocarbons means all hydrocarbons or any mixture thereof that Processor may condense from or absorb from or separate out of the Gas that is delivered to and processed at the Processor Plant.	
 		
1.18	 	Mcf means one thousand (1,000) Standard Cubic Feet of Gas.	
 		
1.19	 	MMBtu means one million (1,000,000) BTU and equates to one dekatherm.	
 		
1.20	 	Month means a calendar Month.	
 		
1.21	 	Persons means any natural persons, corporation, partnership, joint venture, association, cooperative, or other entity.	
 		
1.22	 	Psia means pipeline pressure expressed in pounds per square inch absolute.	
 		
1.23	 	Project means a new eight inch (8”) gathering pipeline and appurtenant equipment and facilities to be built from a location near the southern end of Producer’s Winchester Wells in Township 7 North, Range 6 West, Wayne County, Mississippi to a to-be-constructed interconnection with Processor’s Bazor Ridge Gathering System located in Township 8 North, Range 6 West in Wayne County, Mississippi.	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
 2 

 

 1.24	 	Processor Plant means Processor or its designee’s facilities utilized to compress, treat condition and/or process the Gas gathered hereunder.	
 		
1.25	 	PPI means the index reported by the United States Department of Labor covering intermediate materials, supplies, and components.	
 		
1.26	 	Receipt Points means each Well or wellhead (each a Receipt Point) at which Processor will receive Gas for gathering hereunder, as identified on Exhibit A, as Processor and Producer may agree from time to time to amend.	
 		
1.27	 	Residue Gas means the gas measured by Processor or its designee at the Delivery Point remaining after” accounting for (a) the actual shrinkage due to the extraction of Liquefiable Hydrocarbons; (b) fuel required for compression, operations, and incidental losses at the Processor Plant; and (c) Acid Gas removal.	
 		
1.28	 	Standard Base Conditions means a temperature of 60° F and a pressure of 15.025 psia.	
 		
1.29	 	Thermally Equivalent means an equal number of Btu.	
 		
1.30	 	Treat or Treating means the treating and conditioning of Gas at the Processor Plant, including the removal of Acid Gas.	
 		
1.31	 	Well means Producer’s working interest in the well or wells located on the Dedicated Properties and any interest now or hereafter owned or controlled by Producer in such wells or future wells during the term of this Agreement; provided the wells dedicated to this Agreement do not include properties dedicated to any agreement in effect between Producer and a third party as of June 1, 2007.	
 		
1.32	 	Year means a period of twelve (12) consecutive months.	
 		
1.33	 	Terms which are defined elsewhere in this Agreement:	

Adjusted Gas Volume	 	Section 6.1	
Capacity Rights	 	Section 5.3	
Dedicated Properties	 	Section 2.1	
Due Date	 	Section 11.1	
EFM	 	Section 16.5	
Event of Default	 	Section 22.1	
Facilities	 	Section 6.1	
Facility Fee	 	Section 8.3	
Frac Fee	 	Section 8.5	
GPM	 	Section 6.1	
Gross Theoretical Btu Content	 	Section 6.3	
Imaged Agreement	 	Section 23.6	
Minimum Production	 	Section 8.6	
Net Gallons of Liquefiable Hydrocarbons, by Component	 	Section 6.2	
Net Gallons of Liquefiable Hydrocarbons, by Component Percentage	 	Section 6.2	
Net Residue Gas Percentage	 	Section 6.3	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
 3 

 

 	 	 	
		
Net Theoretical Btu of Residue Gas	 	Section 6.3	
Periodic Test	 	Section 15.5	
Plant	 	Section 20.1	
Primary Term	 	Section 3.1	
Processing Tax	 	Section 12.1	
Renewal Term	 	Section 3.1	
Statement Date	 	Section 11.1	
Taxes	 	Section 12.1	
Temporary Release	 	Section 4.2	
Treating Fee	 	Section 8.1	
Uneconomic	 	Section 20.1	
Winchester Gathering Line	 	Section 20.2	
ARTICLE II
COMMITMENT

2.1	 	Subject to the provisions of this Agreement, Producer commits and dedicates to the performance of this Agreement and agrees to deliver to Processor at the Receipt Points all Gas produced during the term of this Agreement from the interest owned or controlled by Producer as of the Effective Date in the Wells or any future wells, units and leases included in the Dedicated Properties described on Exhibit A and shown on Exhibit A-1, that is not dedicated to any other agreement in effect between Producer and a third party as of June 1, 2007 (herein referred to as the “ Dedicated Properties ”).	
 		
2.2	 	Subject to the terms of this Agreement, Producer hereby assigns exclusively to Processor all rights and obligations to gather, treat, process, condition and purchase all of the Gas produced from the Dedicated Properties.	
 		
2.3	 	The Gas to be delivered to Processor will not be processed through any type of equipment for Liquefiable Hydrocarbons recovery by Producer or by any other party prior to delivery to Processor other than through a conventional mechanical oil-gas separator operating at ambient temperature and of the type generally acceptable in the gas industry.	
 		
2.4	 	Subject to Section 2.3, Producer hereby expressly reserves unto itself, and to its successor and assigns the following rights and privileges enumerated below:	

 	(a)	 	the right to use Gas as Producer may, in its sole determination, need or require for fuel or drilling on its leases;	
 		
 	(b)	 	the right to drill new wells, to repair or rework old wells, to renew or extend wholly or in part any lease covered by this Agreement, and to abandon any well or surrender, release or terminate any lease not deemed by Producer to be capable of producing Gas in commercial quantities;	
 		
 	(c)	 	the right to utilize Gas produced for injection or recycling to increase recovery of condensate and prevent waste;	
 		
 	(d)	 	the right to retain oil and condensate separated from Producer’s Gas prior to the Receipt Points; and	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
 4 

 

 	(e)	 	the right to pool or unitize all or any portion of the Well with other lands and leases in which event this Agreement will cover Producer’s interest in the pool or unit attributable to the Well.	

2.5	 	Producer agrees to deliver Gas to Processor under the applicable rules, regulations, and orders of regulatory bodies having jurisdiction over the services contemplated by this Agreement.	
ARTICLE III
TERM

3.1	 	Term . The term of this Agreement is five (5) years (“ Primary Term ”) from the first Day of the Month following the Effective Date and continuing thereafter for successive three (3) year renewal terms (each a “ Renewal Term ”) at either Party’s election. Either Party shall exercise its option to extend the term of this Agreement by giving at least thirty (30) days written notice to the other Party prior to the end of the Primary Term or any Renewal Term, as applicable; however, Producer will be released from the Agreement and the Agreement deemed terminated by Producer providing sixty (60) days prior written notice to Processor requesting termination of the Agreement if reserves attributable to the Dedicated Properties are not capable of producing in commercial quantities prior to the end of the Primary Term or Renewal Term, as applicable.	
ARTICLE IV
QUANTITY

4.1	 	Uniform Rate of Flow . The Parties hereto recognize the desirability of maintaining a uniform rate of flow of Gas to the Gathering System, and Producer agrees to regulate its producing schedule so that Gas will be delivered to the Gathering System from the Wells at as uniform a rate of flow as is practicable.	
 		
4.2	 	Curtailment . If Gas from a Well is Curtailed by Processor, then Processor will take all Gas at the Curtailed Well on a prorated basis with all other Gas from other affected receipt points. In the event Processor has Curtailed Producer’s Gas for thirty (30) consecutive days, Producer will have the right to temporarily commit and sell to another party the Gas from those Wells that Processor has Curtailed (“ Temporary Release ”). To the extent that Processor has capacity to do so without impacting its obligation to take all other Gas from other affected receipt points on a prorated basis, during such Temporary Release Producer will have the right to use the Winchester Gathering System for delivery of Curtailed Gas to another party, subject to Producer paying actual expenses associated therewith. Such Temporary Release will expire if, and when, on the first Day of the Month after which Processor has provided notice to Producer that Processor has remedied the Curtailment of Producer’s Gas. Provided, however, that in the event that Processor has curtailed Gas from any Wells for a period exceeding ninety (90) consecutive Days, Producer shall have the unilateral right to terminate this Agreement upon prior written notice to Processor, after which termination Producer shall have no further liability or responsibility whatsoever under this Agreement.	
ARTICLE V
FACILITIES

5.1	 	Production Facilities . At Producer’s sole risk, cost, and expense Producer shall own, operate, maintain, repair, and, if necessary, replace the pipeline and facilities necessary to deliver Producer’s Gas to Processor at the Receipt Point. Producer will be responsible for and will discharge and pay any and all assessments and Taxes applicable thereto.	
 		
5.2	 	Metering Facilities . Processor will install, own, operate, and maintain metering facilities to measure gas at the Receipt Points. The metering facilities and the Receipt Points applicable to Gas from each Well will be at or near the current Receipt Point.	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
 5 

 

5.3	 	Producer’s Capacity Right . Upon completion of the Project and subject to Applicable Laws, Processor will make available up to 11,000 Mcf per day of capacity in the Project and gathering system, including without limitation, the Winchester Gathering Line (“ Capacity Right ”). Processor may, but shall not be obligated to, provide capacity in excess of 11,000 Mcf per Day to Producer. If and to the extent that, at any time and from time to time, Producer is not utilizing all of its Capacity Right in the Project, Processor shall have the right to utilize such unused Capacity Right to provide gathering service for third parties; provided that, upon seven (7) Days prior notice by Producer to Processor, Processor shall make such unused capacity, up to the Capacity Right, available to Producer.	
ARTICLE VI
ALLOCATION OF PRODUCTS

6.1	 	Adjusted Gas Volume . Gas volumes measured at each Receipt Point utilizing compression or dehydration facilities (“ Facilities ”) will be reduced by such Receipt Point’s pro-rata share of the total Fuel consumed in operating said Facilities by multiplying the total volume of Gas measured at the discharge of such Facilities by a fraction, the numerator of which is the Gas volume measured at the particular Receipt Point and the denominator of which is the Gas volume measured at all points of receipt utilizing such Facilities. The product so determined will be deemed to be the “ Adjusted Gas Volume ” attributable to such Receipt Point.	
 		
6.2	 	Allocation of Liquefiable Hydrocarbons . The allocation of gallons of Liquefiable Hydrocarbons attributable to each Receipt Point, and of proceeds attributable thereto, will be determined as follows.	

 	(f)	 	A particular Receipt Point’s Adjusted Gas Volume will be multiplied by its Liquefiable Hydrocarbons, by component, as reflected by the analysis conducted under Section 15.5, expressed in gallons per thousand cubic feet (“ GPM ”), in order to arrive at the total theoretical gallons of Liquefiable Hydrocarbons, by component, contained at such Receipt Point.	
 		
 	(g)	 	The total gallons actually saved and sold of Liquefiable Hydrocarbons, by component, attributable to all Gas gathered in the Gathering System and delivered to the Processor Plant will be multiplied by a fraction, the numerator of which is the theoretical gallons of Liquefiable Hydrocarbons, by component, attributable to a particular Receipt Point and the denominator of which is the total theoretical gallons of Liquefiable Hydrocarbons, by component, attributable to all points of receipt on the Gathering System. The resultant gallons represented by said product will be deemed attributable to the Adjusted Gas Volume measured at a particular Receipt Point (“ Net Gallons of Liquefiable Hydrocarbons, by Component ”). The Net Gallons of Liquefiable Hydrocarbons, by Component attributable to a particular Receipt Point will then be multiplied by the applicable percentage based on the tiered schedule below to determine the “ Net Gallons of Liquefiable Hydrocarbons, by Component Percentage ”:	
 	 	 	 	
Average MMBtu/Day  	 	 	Percentage	
<500	 	 	[*]	
501 to 1,000	 	 	[*]	
1,001 to 1,500	 	 	[*]	
1,501 to 2,000	 	 	[*]	
2,001 to 2,500	 	 	[*]	
>2,500	 	 	[*]	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
 6 

 

6.3	 	Allocation of Residue Gas . The allocation of Residue Gas attributable to each Receipt Point and of proceeds attributable thereto will be determined as follows:	
 		
6.4	 	(a) Net Theoretical Btu of Residue Gas . A particular Receipt Point’s Adjusted Gas Volume will be multiplied by its Btu content to arrive at the “ Gross Theoretical Btu Content ” attributable to such Receipt Point. The Gross Theoretical Btu Content attributable to such Receipt Point will then be reduced by deducting therefrom the total Btu contained in the Liquefiable Hydrocarbons allocated to such Receipt Point pursuant to Section 6.2 above. The number of Btu to be so deducted from the Adjusted Gas Volume for such Receipt Point will be determined by converting the gallons of Liquefiable Hydrocarbons so allocated to such Receipt Point to their respective equivalents in Btu by multiplying the individual component gallons allocated to such Receipt Point by the Btu/Gallon Liquid Ratio Factor as set forth in Section 1.5 hereof. The resultant difference in Btu will be considered the “ Net Theoretical Btu of Residue Gas ” attributable to such Receipt Point.	
 		
6.5	 	(b) Net Residue Gas . The total Btu of Residue Gas actually saved and sold attributable to all the Gas gathered in the Gathering System and delivered to the Processor Plant (actual Btu) will be multiplied by a fraction, the numerator of which is the Net Theoretical Btu of Residue Gas attributable to a particular Receipt Point derived from calculations pursuant to paragraph 6.3(a) immediately above, and the denominator of which is the total Net Theoretical Btu of Residue Gas attributable to all points of receipt for which such calculations were made. The resultant Btu shall be the Net Residue Gas. The Net Residue Gas shall be multiplied by the applicable percentage below to determine the “ Net Residue Gas Percentage ”:	

Average MMBtu/Day	 	Percentage	
<500	 	[*]	
501 to 1,000	 	[*]	
1,001 to 1,500	 	[*]	
1,501 to 2,000	 	[*]	
2,001 to 2,500	 	[*]	
>2,500	 	[*]	
ARTICLE VII
PRICE

7.1	 	Sale of Gas and Hydrocarbons . As full and complete consideration for the Gas and all its components delivered to Processor by Producer each Month, the Net Residue Gas Percentage and Net Gallons of Liquefiable Hydrocarbons, by Component Percentage will be sold at such time and place and pursuant to such terms and conditions as Processor elects, acting in good faith as a prudent operator. The price Producer receives for such proceeds will be the same price Processor has sold the same for, and if there is a material change in the price associated with this Section 7.1 that is in effect on the Effective Date, Processor will notify Producer of such change. Processor will market Producer’s Gas based on applicable published indices reflecting a given Month’s price and will not lock Producer’s Gas into a fixed price for longer than one (1) Month unless Producer agrees with Processor in writing.	
 		
7.2	 	Net Residue Gas Percentage Price . The price per MMBtu Processor will pay to Producer for the Net Residue Gas Percentage as determined under Section 6.3 will be the price received for the Net Residue Gas Percentage less any Fees.	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
 7 

 

7.3	 	Net Gallons of Liquefiable Hydrocarbons, by Component Percentage Price . The price for the Net Gallons of Liquefiable Hydrocarbons, by Component Percentage to be paid by Processor to Producer attributable to Producer’s Gas will be the gallons attributable to each Receipt Point as calculated under Section 6.2 times the price received for the Liquefiable Hydrocarbons, by component, saved and sold hereunder, less any Fees.	
ARTICLE VIII
FEES

8.1	 	Treating Fee . The Treating Fee will be an amount per Mcf of Gas delivered hereunder at each Receipt Point equal to the result of the following formula:	

 	 	 	[*](A-B) = the Treating Fee, where	

 	 	A = The molecular percentage of Acid Gas contained in Producer’s Gas delivered hereunder (rounded to the nearest percent, “0.5” will be rounded up.)	
 		
 	 	B = Three (3) molecular percent; however, if Producer’s Gas delivered hereunder contains less than three (3) molecular percent of Acid Gas (after being rounded as described above), then Producer will not be charged a Treating Fee.	
 		
 	 	An example of the calculation of the above Treating Fee, for illustration purposes only, follows:	

 	 	Assume the molecular percent of Acid Gas contained in Producer’s Gas is 8.4%. The Treating Fee applicable to such Gas is calculated by deducting 3% from the percent of Acid Gas in Producer’s Gas, with 0.5% or greater being rounded up, and less than 0.5% being rounded down. Therefore, the Treating Fee applicable to Producer’s Gas would be [*] * (8 - 3) = $[*]/Mcf.	

8.2	 	The Treating Fee as described above will be adjusted annually beginning on January 1, 2012, pursuant to changes reflected in the PPI as it existed on January 1, 2010 as the basis for such adjustment; provided, however, any price and/or Fee provided for herein that is to be adjusted pursuant to adjustments reflected by the PPI will not decrease below the immediately preceding stated price then in effect. In the event that the PPI is discontinued or modified, another index most similar to the PPI will thereafter be used in lieu thereof.	

8.3	 	Facility Fee . In consideration of Processor constructing the Project and beginning on the Day that Processor notifies Producer that Processor is able to gather Producer’s Gas through the Project, Processor will charge Producer an additional [*] per Mcf of Gas delivered hereunder at each Receipt Point (“ Facility Fee ”) until, as more fully described in Exhibit C hereto, the total amount of the Facility Fee payments made by Producer equal fifty percent (50%) of the total cost of the Project.	

8.4	 	Compression . Where any field compression facility through which Gas attributable to Producer’s flow is being powered by electrical power or other fuel (not including Producer’s Gas delivered to Processor at the Receipt Point), Processor will charge Producer with Producer’s share of the power or fuel costs necessary to operate such compression facility. Such cost will be allocated to the Gas of a particular Receipt Point flowing through such compression facility by multiplying the total power or fuel cost of such field compression facility for a Month by a fraction, the numerator of which is the Adjusted Gas Volume measured at a particular Receipt Point and the denominator of which is the total Adjusted Gas Volumes attributable to the Gas of all points of receipt flowing through such compression facility during such Month. The product thereby determined will be deemed to be the share of the costs attributable to the Gas of a particular Receipt Point and will be deducted from the proceeds due Producer hereunder.	
 		
8.5	 	Fractionation Fee . In the event Processor elects to install its own fractionator and charge Producer a fee (“ Frac Fee ”), such Frac Fee will not exceed the then existing Fee incurred by Processor from	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
 8 

 

 	 	a third party. If there is a material change in the Fee that is in effect on the Effective Date, Processor will notify Producer of such change.	
 		
8.6	 	Maintenance of Facilities . Processor agrees to maintain its facilities for any Receipt Point for so long as the actual deliveries of Gas measured from such Receipt Point are at least one hundred MMBtu per day (100 MMBtud) (“ Minimum Production ”) averaged over any Month. If the actual deliveries measured for such Receipt Point should total less than the Minimum Production in any Month, if requested by Producer, Processor may, in its sole discretion, maintain its facilities and Producer will pay Processor, as an additional fee, three hundred dollars ($300.00) for each Month to maintain such Receipt Point.	
ARTICLE IX
PAYMENTS AND NOTICES

9.1	 	Addresses and Notices . Either Party may give notices to the other Party by first class mail postage prepaid, by overnight delivery service, or by facsimile with receipt confirmed at the addresses stated on Exhibit B or other addresses furnished by a Party by written notice.	
 		
9.2	 	Facsimile . Facsimile copies of all notices and correspondence hereunder, including signatures thereon, will constitute original copies thereof and will be as binding on the Parties hereto as the original. The sending Party will, within five (5) working days of the date of any facsimile transmission, send to the receiving Party an original of any notice or correspondence transmitted by facsimile.	
ARTICLE X
QUALITY

10.1	 	Gas delivered hereunder at the Receipt Points will meet the following quality specifications:	

 	(h)	 	be commercially free of grease, dust, gum, gum-forming constituents, and other foreign substances, and other solid and/or liquid matter that can be removed with dehydrators and ordinary field separators;	
 		
 	(i)	 	contain not more than two percent (2%) by volume of carbon dioxide;	
 		
 	(j)	 	contain not more than three percent (3%) by volume of nitrogen;	
 		
 	(k)	 	contain not more than ten parts per million (10 ppm) by volume of oxygen;	
 		
 	(l)	 	contain not more than five percent (5%) by volume total non-hydrocarbon gases;	
 		
 	(m)	 	contain a gross heating value of not less than one thousand (1,000) Btu per cubic foot of Gas on a saturated basis;	
 		
 	(n)	 	have a temperature of not more than one hundred twenty degrees Fahrenheit (120° F); and	
 		
 	(o)	 	contain not more than seven (7) pounds of water vapor per one thousand (1,000) Mcf.	

10.2	 	In the event the Gas delivered hereunder should fail to meet any of the quality specifications stated in Section 10.1, Processor may, in addition to any other remedy available at law or in equity, have the right to refuse to accept such Gas for so long as Producer is unable to deliver Gas conforming to such quality specifications.	
ARTICLE XI
STATEMENTS AND PAYMENT

11.1	 	Statements and Payments . On or before the twenty-fifth (25th) day (“ Statement Day ”) of each Month, Processor will provide to Producer a statement showing the amount due Producer in accordance with the terms hereof. Processor will make payment to Producer within fifteen (15)	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
 9 

 

 	 	days from the Statement Day (“ Due Date ”) by check or wire transfer to the address stated in Exhibit B of this Agreement.	
 		
11.2	 	Failure to Pay Amounts Due . If Processor fails to remit the full amount payable by Processor when due, interest on the unpaid portion will accrue from the Due Date until paid at a rate equal to the lower of (i) the then-effective Prime Rate of interest published under “Money Rates” by The Wall Street Journal plus two percent (2%) from the Due Date until the date of payment; or (ii) the maximum applicable lawful interest rate. If any undisputed amount remains unpaid for sixty (60) or more days after the Due Date, Producer will have the right, in addition to all of its other remedies at law or in equity, to suspend or discontinue Gas deliveries to Processor hereunder until such amount is paid in full with interest. Producer may notify Processor, in writing, after such sixty (60) day period, and Processor will have ninety (90) days from the date of notice to remedy such nonpayment. If any undisputed amount remains unpaid for ninety (90) or more days after Producer notifies Processor in writing of such nonpayment, Producer, in addition to all its other remedies at law or in equity, shall have the right to terminate this Agreement upon written notice to Processor.	
 		
11.3	 	Examination of Records . Each Party shall have the right, at its own expense, upon reasonable notice and at reasonable times, to examine the books and records of the other Party only to the extent reasonably necessary to verify the accuracy of any statement, charge, payment, or computation made under this Agreement. This examination right shall not be available with respect to proprietary information not directly relevant to transactions under this Agreement. Regardless of any mistake by the Parties or any subsequent change in Applicable Law, any claim by either Party of error as to any statement will be waived unless written notice of the claim is given to the other Party within two (2) years and one (1) day following the Statement Day for that statement. All retroactive adjustments will be paid in full by the Party owing payment within thirty (30) days of notice and substantiation of such inaccuracy.	
 		
11.4	 	Financial Responsibility . If reasonable grounds for insecurity arise as to the creditworthiness or financial responsibility of either Party at any time during which this Agreement is in effect, the other Party may require reasonable security before service is provided or Gas sales are made. In the event either Party (i) makes an assignment or any general arrangement for the benefit of creditors; (ii) materially default in the payment (other than amounts in good faith dispute) or performance of any obligation to the other Party under this Agreement; (iii) files a petition or otherwise commences, authorizes, or acquiesces in the commencement of a proceeding or cause under any bankruptcy or similar law for the protection of creditors or have such petition filed or proceeding commenced against it; (iv) fails to give adequate security for or assurance of its ability to perform its further obligations this Agreement within forty-eight (48) business hours of a reasonable request by the other Party, then the other Party shall have the right to suspend or withhold services or sales of Gas upon twenty-four (24) hours notice, in addition to all other remedies available hereunder or pursuant to law.	
 		
11.5	 	Monthly Reports . Processor will furnish to Producer monthly reports substantially in the form and providing the information as set forth in Exhibit D.	
ARTICLE XII
TAXES

12.1	 	Producer will bear and pay all severance, production and other taxes, fees, levies, penalties, licenses or charges imposed by any government authority (“ Taxes ”) on or with respect to the Gas and the handling thereof prior to delivery to Processor at the Receipt Points. It is understood and agreed that any tax in the nature of a processing tax, or any tax (collectively defined as “ Processing Tax ”) on Producer’s Gas and Liquefiable Hydrocarbons resulting from the gathering, sale or processing of Producer’s Gas or the sale of Liquefiable Hydrocarbons extracted therefrom, and any	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
 10 

 

 	 	Processing Tax now or hereafter levied, assessed or collected on Liquefiable Hydrocarbons extracted, saved and sold from the Gas, will be borne by Producer. If a Party is required to remit or pay Taxes or Processing Tax that are the other Party’s responsibility hereunder, the Party responsible for such Taxes or Processing Tax will promptly reimburse the other Party for such Taxes or Processing Tax. A Party entitled to an exemption from any such Taxes, Processing Tax or charges will furnish necessary documentation thereof to the other Party, and indemnify, release and hold such other Party harmless from such Tax or Processing Tax.	
 		
12.2	 	Greenhouse Gasses . With regard to Producer’s Gas, in the event that Processor incurs any costs or expenses including the assessment of any Taxes as the result of any Applicable Law to pay for, trade for, or otherwise minimize or mitigate greenhouse gasses (including, but not limited to CO 2 and methane, but excluding H 2 S) attributable to or as a result of any activity of or by Processor hereunder, including, but not limited to the sale or other disposition of the Producer’s Gas, Producer shall reimburse Processor for the cost thereof.	
ARTICLE XIII
EASEMENT/RIGHTS-OF-WAY

13.1	 	Rights-of-Way . To the maximum extent that it may lawfully do so, Producer hereby assigns and grants or subsequently assigns and grants to Processor an easement and right-of-way upon all lands covered by the Wells and the leases upon which the Wells are located, for the purpose of installing, using, maintaining, servicing, inspecting, repairing, operating, replacing, disconnecting and removing Processor’s Pipeline, meters and other equipment used or useful in the performance of this Agreement. Any property of Processor placed in or upon the leases on which the Wells are located will remain the personal property of Processor and may be disconnected and removed by Processor. Producer will, at its expense, maintain and provide all such easements, rights-of-way, lease roads and other access facilities upon the leases as may reasonably be deemed necessary by Processor for its performance of this Agreement. Processor will fully protect, indemnify, defend and hold harmless Producer from any and all claims, losses, damages, suits, causes of action liabilities, including, without limitation, liability for environmental damage to the leases, and related court costs and attorney’s fees arising out of or incident to Processor’s operations on and use of the easement and right-of-way hereunder granted. Unless Producer otherwise requests in writing, Processor will remove Processor’s Pipeline, meters and other equipment used or useful in the performance of this Agreement from the leases on which the Wells are located within one (1) year following termination of this Agreement, and Processor will restore said leases to as close to or as near to its original condition as reasonably practicable at Processor’s sole cost.	
ARTICLE XIV
INDEMNITY

14.1	 	Title: Possession and Responsibility . Title, possession, control, and risk of loss of all Gas and all constituent components contained therein delivered by Producer to Processor will remain with Producer prior to the Receipt Points. After receipt by Processor at the Receipt Points, possession, control, and risk of loss of all Gas and all constituent components contained therein will pass to Processor at the Receipt Point. The Party having possession and control of the Gas at any time, regardless of title, will be responsible for any related damage or injury caused by the Gas while in its possession and control, except for any damage or injury caused by the other Party’s negligence or intentional wrongdoing. Each Party hereto will fully protect, indemnify, defend, and hold harmless the other Party from any and all claims, losses, damages, demands, suits, causes of action and liabilities, including environmental liability, (including, without limitation, court costs and attorneys’ fees) arising while the Gas is in its possession and control, except to the extent such claims, losses, damages, demands, suits, causes of action and liabilities arise or are caused by the other Party’s negligence or fault, whether imposed by statute, rule or regulation.	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
 11 

 

ARTICLE XV
MEASUREMENT AND TESTING

15.1	 	Heating Value. For all purposes under this Agreement (including without limitation pricing and payment) the heating value of and the number of Btu contained in the Gas delivered hereunder will be measured in terms of, the gross number of Btu’s that would be contained in the volume of such Gas (measured in accordance with this Article) when saturated with water vapor and at Standard Base Conditions. The Btu contained in hydrogen sulfide or other non-hydrocarbon components will be excluded in any calculation of the number of Btu’s contained in Gas under this Agreement.	
 		
15.2	 	Standard Unit of Volume. For all purposes under this Agreement, volume will be measured in terms of, cubic feet of Gas at Standard Base Conditions. The temperature recorded during each day, the factor as determined in the latest test for specific gravity, and the correction for deviations from Boyle’s Law as determined in the latest test will be used to make proper computations of volume under this Agreement.	
 		
 	 	Measuring and Testing Equipment and Procedures. Processor will, at its expense, perform, or cause to be performed, all measurement and testing of Gas under this Agreement, including measurement at each Receipt Point:	

 	(p)	 	of volumes by continuous use of an orifice meter and computations made in accordance with the latest version accepted by Processor of the Gas Measurement Committee Report No. 3 of the AGA;	
 		
 	(q)	 	of Gas heating value by periodic testing of Gas samples by calorimeter, chromatography or other means commonly used in the gas industry;	
 		
 	(r)	 	of specific gravity to the nearest one thousandth (1/1000) by periodic testing of Gas;	
 		
 	(s)	 	of temperature by continuous use of a recording thermometer;	
 		
 	(t)	 	of deviations from Boyle’s Law;	
 		
 	(u)	 	of carbon dioxide, hydrogen sulfide and water content of the Gas by periodic tests using apparatus and methods approved by the AGA, the Gas Processing Association and the American Petroleum Institute or agreed upon by the Parties. Measuring and testing equipment of standard manufacture will be provided, maintained and periodically tested by reasonable means and methods at Processor’s expense; and	
 		
 	(v)	 	for the effect of supercompressibility.	

15.4	 	For all measurement and tests, the average atmospheric (barometric) pressure will be assumed to be the Assumed Atmospheric Pressure for Measurement and Tests. All charts used, if any, will be integrated within the accuracy prescribed by the manufacturer of the equipment producing the chart.	
 		
15.5	 	Periodic Sampling and Analysis. Processor will obtain at least once every six (6) months a sample and analysis of the Gas at each Receipt Point on the Gathering System (“ Periodic Test ”). Processor will make available a copy of such analysis to Producer. The results of each Periodic Test will, subject to the provisions of Section 15.3, be effective and used for all purposes under this Agreement no later than the first day of the Month following the Month in which the Periodic Test is conducted until the next similar Periodic Test is conducted. Producer shall have the right to observe all Periodic Tests, and Processor will give Producer at least three (3) days advance notice of the time and nature of each Periodic Test. If, after such notice, Producer fails to have a representative present, the Periodic Test will proceed and its results are used until the next similar test. If Producer requests the sample and analysis to be taken more frequently than once every six (6) months, Processor will comply with Producer’s request, provided, however, that Producer will	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
 12 

 

 	 	reimburse Processor for all cost and expense of the more frequent sample and analysis at each Receipt Point.	
 		
15.6	 	EFM Installation. Processor may install and operate electronic flow measurement (“ EFM ”) rather than use a mechanical chart and integration. The EFM will be of standard manufacture and programmed with the applicable factors and will be used in determining the volume of Gas delivered through the orifice meter on a real time basis. Calibration equipment and procedures used will be in accordance with the then current API Chapter 21 “Measurement Standards for Electronic Metering.”	
 		
15.7	 	Check Measurement. Producer may install and operate check-measuring equipment that does not interfere with Processor’s measurement and testing. Processor and Producer shall each have the right to inspect the equipment of the other, and the charts and other measurement and testing data of the other, at all times during business hours; but the reading, calibration and adjustment of any equipment and changing of charts shall be done only by the Party owning the equipment. Each Party will preserve all original test data, charts, and other similar records for a period of at least two (2) years.	
 		
15.8	 	Correction of Inaccuracies. If at any time any measuring or testing equipment is found to be malfunctioning, it will be adjusted at once to read accurately, within the limits prescribed by the manufacturer. If such malfunction is reasonably estimated to have resulted in inaccuracy exceeding two percent (2%) in the measurement of Gas at a Receipt Point during the period since the last preceding test, the Parties will (i) estimate the quantity of Gas actually delivered at such Receipt Point during that period using the data recorded by check-measuring equipment, if installed and accurately registering during the period; or (ii) if such check-measurement data is not available, by correcting the original measurement error by the percentage error found in the measuring and testing equipment; or (iii) if such check-measuring data is unavailable and correction for percentage error is not feasible, by estimating deliveries based upon deliveries under similar conditions during a period when the measuring and testing equipment was functioning properly. If the period of actual equipment malfunction is not definitely known or agreed upon by the Parties, it will be deemed to be the lesser of (a) forty-five (45) days or (b) one half of the elapsed time since the last preceding test. Such estimate will then be deemed the quantity of Gas actually delivered for all purposes under this Agreement.	
 		
15.9	 	No corrections will be made for measurement or testing inaccuracies of two percent (2%) or less.	
ARTICLE XVI
WARRANTY AND REPRESENTATIONS

16.1	 	Title. Producer hereby warrants title to or right to deliver and sell the Gas delivered hereunder, that Producer has good and lawful right to sell the same, and that Producer will transfer to Processor good title to all Gas sold and delivered by Producer to Processor hereunder free and clear of any and all liens, encumbrances, charges, and claims of every kind including without limitation claims by lessors for royalties or other monies owed under an oil and gas lease. Producer agrees to protect, indemnify, defend, and hold harmless Processor from any and all claims, losses, damages, suits, causes of action, and liabilities (including court costs and attorney’s fees) arising from or out of adverse claims of any and all Persons to said Gas or to payments therefore or to royalties, overriding royalties, taxes, license fees, or other charges applicable. If Processor has or receives notice that Producer’s title to the Gas hereunder is in dispute, then, upon notifying Producer of such, Processor reserves the right to suspend payment or acceptance of such Gas until such time that the Parties have resolved the dispute of title or until such time that Producer has provided Processor with a surety reasonably acceptable to Processor protecting Producer from such title dispute.	

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
 13 

 

16.2	 	Parties. Each Party represents and warrants to each other that on and as of the Effective Date:	

 	(w)	 	It is duly formed and validly existing and in good standing under the laws of its state of formation, with power and authority to carry on the business in which it is engaged and to perform its respective obligations under this Agreement; and	
 		
 	(x)	 	This Agreement is valid, binding and enforceable against it in accordance with its terms, except as affected by bankruptcy, moratorium, insolvency and other laws generally affecting creditor’s rights and general principles of equity (whether applied in a proceeding in a court of law or equity).	
ARTICLE XVII
NO INTERSTATE REGULATION

17.1	 	Producer represents that Processor’s receipt of Gas under this Agreement will not subject Processor, its facilities, or the Gas to regulation by the Federal Energy Regulatory Commission (or its successor) of Processor’s rates, charges, or terms of service under the Natural Gas Act, as amended, the Natural Gas Policy Act, as amended, or any other similar federal legislation.	
ARTICLE XVIII
ACCURATE INFORMATION

18.1	 	To the best of either Party’s knowledge, none of the information provided to the other Party in connection with this Agreement contains any untrue statement of a material fact or omits any material fact necessary to make such information not misleading.	
ARTICLE XIX
ASSIGNMENT

19.1	 	Assignment. This Agreement will be binding upon the permitted successors and assignors of the Parties hereto. Neither Party will assign this Agreement in whole or in part without the written consent of the other Party, which consent will not be unreasonably withheld; provided, however, that either Party may assign its interest hereunder to any affiliate without the prior written consent of the other Party, but no such assignment to any affiliate will relieve the assigning Party of any of its obligations or liabilities, whether accrued, or unaccred, hereunder. Any transfer or assignment in violation of this Article XIX will be void.	
ARTICLE XX
UNECONOMIC

20.1	 	Processor may cease processing and terminate this Agreement and thereby be discharged of any and all liability hereunder, less and except the payment of monies theretofore accrued and not yet paid to Producer, upon sixty (60) days written notice to Producer after, in Processor’s sole reasonable opinion, processing of Producer’s Gas and other third party Gas at the Processor Plant becomes uneconomic, or if any other cause beyond Processor’s control will render the operation of the Processor Plant uneconomic, in Processor’s sole opinion, for a period of not less six (6) consecutive Months. As used herein, the term “ uneconomic ” shall mean that Processor Plant operating expenses exceed Processor Plant processing revenues and that projected expenses over the next ensuing six (6) Months are reasonably expected to exceed projected revenues. Processor shall provide written documentation of the respective six (6) Months’ actual and projected revenue shortfall at the time it provides the aforementioned sixty (60) day written notice to Producer.	
 		
20.2	 	In the event that Processor has shut down the Processor Plant and (i) the Processor Plant remains shut down for six (6) consecutive Months and (ii) the reserves are not depleted from the Dedicated Properties, at no cost, Processor shall, if requested by Producer, transfer its title to Producer for the four inch (4”) pipeline lateral shown on Exhibit E and all easements associated therewith in the North and South Winchester Field areas constructed pursuant to that certain Gas Processing	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
 14 

 

 	 	Agreement by and between Enbridge Processing (Mississippi) L.L.C. and Petrohawk Energy Corp., as amended (“ Winchester Gathering Line ”); provided that, from the time that Processor shuts down the Processor Plant and the time when Processor transfers its title to the Winchester Gathering Line, Producer will have the right to utilize the Winchester Gathering Line; provided that Producer shall only be charged Processor’s actual expenses associated with the Winchester Gathering Line during this interim period. Producer may request and Processor agrees to use good faith efforts to provide gathering service on Processor’s other gathering lines provided that the Parties mutually agree upon gathering terms and fees for such service.	
ARTICLE XXI
FORCE MAJEURE

21.1	 	Except for obligations to make payments hereunder, neither Party hereto will be liable, for any failure to perform its obligations under this Agreement when such failure results from any of the following (“ Force Majeure ”): acts of God; strikes, lockouts or industrial disputes or disturbances; civil disturbances; arrests and restraint from rulers of people; interruptions by government or court orders; present and future orders of any governmental authority having jurisdiction; acts of the public enemy; wars; riots; blockades; insurrection^; inability to secure labor or inability to secure materials, including inability to secure materials by reason of allocations promulgated by governmental authorities; epidemics; landslides; lightning; earthquakes; fire; storm; floods; washouts; explosions; actual or potential environmental hazards; breakage, accident, repairs or alterations to lines of pipe or other equipment; freezing of wells or pipelines; failure of electronic or telephonic equipment; failure of third party transportation; failure of third party transportation; inability to obtain easements or rights-of-way; or any other cause, whether of the kind herein enumerated or otherwise, not reasonably within the control of the Party claiming Force Majeure; provided, that any such cause will, so far as possible, be remedied with all reasonable dispatch. The failure of a well or wells will not be a cause of Force Majeure in this Agreement. The settlement of strikes, lockouts or industrial disputes or disturbances will be entirely within the discretion of the Party having the difficulty, and the requirement that any Force Majeure cause will be remedied with all reasonable dispatch will not require the settlement of strikes, lockouts or industrial disputes or disturbances by acceding to any demands when such course is inadvisable in the discretion of the Party having the difficulty.	
 		
21.2	 	Upon the occurrence of any of the Force Majeure events described in this Section 21.1 herein, the Party claiming Force Majeure will notify the other Party promptly in writing of such event and, to the extent possible, inform the other Party of the expected duration of the Force Majeure event.	
ARTICLE XXII
DEFAULT AND REMEDIES

22.1	 	The occurrence of one or more of the following by a Party shall constitute an event of default as to the Party (an “ Event of Default ”):	
(a) Make an assignment or any general arrangement for the benefit of creditors; file a petition or otherwise commence, authorize, or acquiesce in the commencement of a proceeding or case under any bankruptcy or similar law for the protection of creditors or have such petition filed or proceeding commenced against it; otherwise become bankrupt or insolvent (however evidenced); be unable to pay its debts as they fall due; have a receiver, provisional liquidator, conservator, custodian, trustee or other similar official appointed with respect to it or substantially all of its assets; or
(b) The failure to make any payment to any other Party as and when due hereunder where such failure continues for twenty (20) days after written notice by the other Party of failure to make such payment; or
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
 15 

 

(c) The material breach of any other representation, warranty, covenant, agreement, obligation, duty or provision of this Agreement, where such breach continues for twenty (20) days after the breaching Party’s receipt of written notice thereof from any other Party; provided, however, that if the matter which is the subject of the breach cannot by its nature with due diligence be remedied by such Party within said twenty (20) day period, and such Party shall have prepared a plan for remedying such failure that is reasonably acceptable to the other Party and such Party is proceeding with diligence to implement such plan, such twenty (20) day period shall be extended by such additional time period as may be reasonably required to implement such plan, and, provided further, however, that the remedying of such potential default shall not affect any right provided hereunder of the other Party to terminate this Agreement if other Events of Default should occur before such potential default has been remedied.

22.2	 	Remedies upon an Event of Default. Upon the occurrence of an Event of Default and the expiration of any applicable cure or grace period provided herein, the non-defaulting party may exercise or seek any remedy it may have at law and/or in equity or as provided for in this Agreement, and/or the non-defaulting Party may terminate this Agreement,	
ARTICLE XXIII
CONFIDENTIALITY

23.1	 	Each Party agrees that it will maintain in strict confidence the terms of this Agreement, and that it will not cause or permit the disclosure to any third party without the express written consent of the other Party. However, disclosure is permitted to the extent the information has already become public through no act or omission on the part of either Party, or a Party is required to disclose by an order or regulation of a court or agency having jurisdiction over the subject matter. If either Party becomes aware of a judicial or administrative proceeding that has resulted or may result in such an order requiring disclosure, it will notify the other Party immediately. These confidentiality obligations terminate one (1) year after termination of this Agreement. Each Party agrees that monetary damages would not adequately compensate the other party for a breach of this Article. Therefore, each Party agrees that the other Party shall be entitled, in addition to any other rights it may otherwise have at law or equity, to seek injunctive relief against any breach or threatened breach of this Article.	
ARTICLE XXIV
MISCELLANEOUS

24.1	 	Limitation of Liability. NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN THIS AGREEMENT, IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY UNDER THIS AGREEMENT, WHETHER IN WARRANTY, CONTRACT, OR TORT (INCLUDING, WITHOUT LIMITATION, NEGLIGENCE AND STRICT LIABILITY) OR OTHERWISE, FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, OR PUNTTTVE DAMAGES WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING, WITHOUT LIMITATION THE NEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE.	
 		
24.2	 	Governing Law. THIS AGREEMENT AND EACH TRANSACTION AND THE RIGHTS AND DUTIES OF THE PARTIES ARISING OUT OF THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED, IN ACCORDANCE WITH THE LAWS’ OF THE STATE OF TEXAS, INCLUDING, WITHOUT LIMITATION, THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN THE STATE OF TEXAS, AS THE SAME MAY BE AMENDED FROM TIME TO TIME, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
 16 

 

24.3	 	Applicable Laws. This Agreement shall be subject to Applicable Laws and is subject to receipt of such authorizations from any governmental entity as may be required for the service contemplated herein.	
 		
24.4	 	Survival. The representations and warranties of the Parties herein, the indemnification provisions, the confidentiality provisions, and payment obligations set forth herein shall survive any termination of this Agreement.	
 		
24.5	 	There are no third party beneficiaries to this Agreement.	
 		
24.6	 	Any original executed Agreement or other related document may be digitally copied, photocopied, or stored on computer tapes and disks (the “ Imaged Agreement ”). The Imaged Agreement, if introduced as evidence-on paper, and all computer records of the foregoing, if introduced as evidence in printed format in any judicial, arbitration, mediation, or administrative proceedings will be admissible as between the Parties to the same extent and under the same conditions as other business records originated and maintained in documentary form. Neither Party shall object to the admissibility of the Imaged Agreement on the basis that such were not originated or maintained in documentary form. However, nothing herein shall be construed as a waiver of any other objection to the admissibility of such evidence.	
 		
24.7	 	This Agreement is a final, complete, and exclusive statement of the agreement between the Parties with respect to the subject matter of this Agreement, and it may be amended only in writing executed by both Parties.	
 		
24.8	 	Each Party to this Agreement represents and warrants that it has full and complete authority to enter into and perform this Agreement. Each person who executes this Agreement on behalf of either Party represents and warrants that it has full and complete authority to do so and that such Party will be bound thereby.	
 		
24.9	 	Waiver. No waiver of any default under this Agreement will constitute a waiver of any other default, whether of like or different character.	
 		
24.10	 	Construction and Interpretation. Each Party participated extensively in the drafting and review of this Agreement and any rule of construction to the effect that an ambiguity be construed against the drafting Party will not apply. The singular will include the plural, and the plural will include the singular.	
 		
24.11	 	Entire Agreement. This Agreement is a final, complete, and exclusive statement of the agreement between the Parties with respect to the subject matter of this Agreement, and it may be amended only in writing executed by all Parties.	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
 17 

 

ARTICLE XXV
COUNTERPART EXECUTION

25.1	 	Execution . This Agreement may be executed in multiple counterparts, each of which will constitute an original and all of which will constitute the same Agreement.	
IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the day and year first written above.

AMERICAN MIDSTREAM (MISSISSIPPI) LLC	 	VENTURE OIL & GAS, INC.	
 	 	 	 	 	 	 	 	 	 	 	
By:	 	/s/ Brian Bierbach	 	 	 	By	 	/s/ Jarvis Hensley	 	 	
 	 	 	 	 	 	 	 	 	 	 	
 	 	Brian Bierbach	 	 	 	Printed	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	
 	 	President and CEO	 	 	 	Name:	 	Jarvis Hensley	 	 	
 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	Title:	 	VP-Operations	 	 	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
 18 

 

EXHIBIT E
This Exhibit E is for all purposes attached to and made a part of that certain Gas Processing Agreement (“ Agreement ”) dated July 14, 2010 by and between American Midstream (MISSISSIPPI), LLC (“ Processor ”) and Venture Oil and Gas, Inc. (“Producer”).

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
 E-1 

 

EXHIBIT A
This Exhibit A is for all purposes attached to and made a part of that certain Gas Processing Agreement (“ Agreement ”) dated July 14, 2010 by and between American Midstream (MISSISSIPPI), LLC (“ Processor ”) and Venture Oil & Gas, Inc. (“Producer”).
DEDICATED PROPERTIES
The following lands in Wayne County, Mississippi:
Section 33, Township 9 North, Range 6 West
Section 4, Township 8 North, Range 6 West
Section 9, Township 8 North, Range 6 West
Section 16, Township 8 North, Range 6 West
Section 21, Township 8 North, Range 6 West
Receipt Points are at each Well prior to entering the Winchester Gathering System.
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
 A-1 

 

Exhibit A-1

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
 A-2 

 

EXHIBIT B
This Exhibit B is for all purposes attached to and made a part of that certain Gas Processing Agreement (“ Agreement ”) dated July 14, 2010 by and between American Midstream (MISSISSIPPI), LLC (“ Processor ”) and Venture Oil & Gas, Inc. (“ Producer ”).
ADDRESSES OF THE PARTIES

PROCESSOR:
Notices/Correspondence :
American Midstream (Mississippi), LLC
1614 15 th St, Suite 300
Denver, CO 80202
Attention: Contract Administration
Phone:   720-457-6060
FAX:     720-457-6040
For Accounting & Statements :
American Midstream (Mississippi), LLC
8300 FM 1960, Suite 225
Houston, TX 77077
Attention: American Midstream
                 Gas Accounting
Phone:   281-955-4800
Fax:       281-955-4855
For Payments by Wire :
Bank:      Comerica Bank
Address:   910 Louisiana, Suite 410
Houston, TX 77210
ABA Number: 111000753
Account Number:    1881319493
Other: Beneficiary:
American Midstream, LLC

Federal Tax ID:      27-0855925
PRODUCER:
Notices/Correspondence :
Venture Oil & Gas, Inc.
207 South 13 th Avenue
Laurel, MS 39440
Attention: Mr. Jay Fenton, President
Phone:   601-428-7725; ext. 105
Fax:       601-428-7738
For Accounting & Statements :
Venture Oil & Gas, Inc.
207 South 13 th Avenue
Laurel, MS 39440
Attention: Ms. Marths Watts
Phone:   601-428-7725; ext. 109
Fax:       601-428-7738
For Payments by Wire :
Bank: MS. Natl. Bankers Bank
Address: Ridgeland, MS
C/O Bank of Jones County
ABA Number: 065306192 for credit to Bank of
Jones County
Routing Number: 0065306079 for further credit
to Venture’s Account Number 120012182

Federal Tax ID: 64-0770344

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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EXHIBIT C
This Exhibit C is is for all purposes attached to and made a part of that certain Gas Processing Agreement (“ Agreement ”) dated July 14, 2010 by and between American Midstream (MISSISSIPPI), LLC (“ Processor ”) and Venture Oil & Gas, Inc. (“ Producer ”).
PROJECT PAYOUT METHODOLOGY
After Processor has completed the Project and determined the total Project cost, Processor will advise Processor of the final Project cost together with an explanation of such costs and expenses.
The Project costs will include all costs of Processor to build the Project, including, but not limited to:
Material and Equipment
  Pipe 8" steel .219 X42 ERW
  Pipe 8" steel .432 X42 ERW
  Valves — 8" ANSI 600
  ESD Valves — 8" ANSI 600
  Fittings
  Miscellaneous
  Chemical Pump & Accessories
Construction Cost
  Base Laying -8"
  Wetlands Bore
  Road Bore
  River Bore
  Site Preparation
  Station Installation
  Hydrostatic Test
  Survey & Mapping
  Inspection & Supervision
  Welding Inspection (x-ray)
  Engineering
  Environmental Clearance
  Painting
  Reseed ROW
  Trucking
Land & Right-of-way
  Right-of-way Payments
  Damages
  Surface Sites — 50' x 50'
Taxes
Agents Fee and Expenses
Outside Legal

25.2	 	For a period of one (1) year after Processor advises Producer regarding the total Project cost, Producer, at its sole cost and expense, shall have the right to audit Processor’s books and accounts relative to all or any portion of the Project cost.	
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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The Facility Fee will remain in effect until the total of all Facility Fee payments made by Producer to Processor equals fifty percent (50%) of either the total Project cost provided to Producer by Processor or the total Project cost agreed to by Processor and Producer upon the conclusion of Producer’s audit of Processor’s books and accounts provided for in this Exhibit C.
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
 C-2 

 

EXHIBIT D
This Exhibit D is for all purposes attached to and made a part of that certain Gas Processing Agreement (“ Agreement ”) dated July 14, 2010 by and between American Midstream (MISSISSIPPI), LLC (“ Processor ”) and Venture Oil & Gas, Inc. (“ Producer ”).
[*]
[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
 D-1