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EXHIBIT 10.16
[EOTT ENERGY OPERATING LIMITED PARTNERSHIP LETTERHEAD]
December 19, 2000
CRUDE OIL PURCHASE CONTRACT
Coho Resources, Inc.
00000 Xxxxxxx Xxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xx. Xxxx Xxxxxxx
Chief Financial Officer
Re: EOTT CONTRACT NO. TP00-1018776
COHO CONTRACT NO. ____________
Gentlemen:
When accepted by you in the manner hereinafter indicated, this shall evidence
the agreement ("Agreement") by and between COHO RESOURCES, INC., hereinafter
referred to as "COHO", and EOTT ENERGY OPERATING LIMITED PARTNERSHIP,
hereinafter referred to as "EOTT", under the terms of which, and in
consideration of the promises made hereunder and for other valuable
consideration received, such parties shall sell and buy the hereinafter
described crude oil and/or condensate ("crude oil") as follows:
I. TERM:
Commencing at 7:00 a.m. Central Time on November 1, 2000 to 7:00 a.m.
Central Time on December 31, 2001. Termination shall not affect rights
or obligations of either party accrued prior to the date of
termination.
II. TYPE OF OIL:
Subject to the terms hereof, COHO shall deliver to EOTT COHO's owned
or controlled production of Mississippi Light Sweet, Mississippi
Light Sour and Mississippi Heavy Sour types of crude oil as listed on
Attachment "A" hereto.
III. QUANTITY:
Volume to fluctuate with COHO's production from the Leases or Units
listed on Attachment "A." Production from the properties listed on
Attachment "A" currently averages eight thousand (8,000) barrels per
day.
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IV. DELIVERY:
COHO shall deliver to EOTT at various lease sites, per Attachment "A",
by tank gauges and/or meters into EOTT's designated carrier(s) with
title and risk of loss to pass to EOTT as the oil passes through the
outlet flange of COHO's tankage and/or meters. If Attachment "A" does
not list all applicable leases, said leases shall nevertheless be
covered hereunder and the parties hereto shall amend Attachment "A" as
needed.
V. PRICE:
For each barrel of crude oil delivered to EOTT hereunder during each
calendar month, EOTT shall pay EOTT's average daily posted price for
the applicable calendar month, with adjustment made for gravity
delivered, plus the applicable per barrel premium, as per Attachment
"A" incorporated herein and made a part hereof for all purposes. For
pricing purposes, all crude oil delivered hereunder during any
calendar month will be considered to have been delivered in equal
daily quantities during each such month.
VI. PAYMENT:
Payment shall be made by EOTT by open division order, less applicable
production and severance taxes, by check, except COHO shall receive
payment for its interest by wire transfer on the twentieth (20th) day
of the calendar month following the calendar month of delivery.
VII. DIVISION ORDERS:
All division orders, division order documents and division order
matters shall be sent to the following addresses:
EOTT Energy Operating Limited Coho Resources, Inc.
Partnership Attn: Division Order Department
Attn: Division Order Department 00000 Xxxxxxx Xxxx, Xxxxx 000
P.O. Box 4666 Dallas, Texas 75240
Houston, TX 77210-4666
If any division orders are executed pursuant to this Agreement, and in
the event of any irreconcilable conflict between the terms of any such
division orders and this Agreement, the terms of this Agreement shall
be deemed controlling, even if the division orders are dated
subsequent to this Agreement.
VIII. SPECIAL PROVISIONS:
(A) COHO shall fully defend and indemnify EOTT against, and hold
EOTT fully harmless from, any claim, action, suit, demand or
complaint (of any nature whatsoever) which any interest owner
in any well (on any lease which is covered or affected hereby)
may bring in connection with (i) COHO's ability to enter into
this Agreement with EOTT, or (ii) any production proceeds paid
out by EOTT to COHO pursuant to this Agreement. COHO warrants
unto EOTT that COHO has full right and authority to enter into
this Agreement for all of the crude oil committed by COHO
hereunder, and that COHO is violating no duty or obligation
which it may have to any third party in entering into this
Agreement, provided, however, EOTT acknowledges that under
certain agreements between COHO and other working interest
owners COHO's authority to market crude oil is limited to
periods not exceeding one year, but EOTT may rely upon COHO's
authority to market in the case of any and all crude oil
actually delivered to EOTT hereunder.
(B) All crude oil delivered to EOTT hereunder will be crude oil
delivered in accordance with the quality standards set forth
herein (including the General Provisions attached hereto), and
COHO will fully indemnify EOTT against and hold EOTT harmless
from any loss, damage, harm, liability, claim, action, suit,
demand or complaint, of any nature whatsoever, which EOTT may
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suffer as a result of receiving non-standard crude oil from
COHO at the point of title transfer set forth herein as a
consequence of COHO's intentional addition in such crude oil
of any contaminant.
(C) This Agreement is subject to the General Provisions which are
attached hereto and made a part hereof for all purposes.
IX. ADDITIONAL LEASE PRODUCTION:
XXXX agrees that any production which is subsequently owned,
developed, controlled, or acquired by COHO where XXXX has the right to
market the production, in the State of Mississippi during the Term of
this Agreement shall be automatically added to this Agreement,
provided the said production is a type of crude oil then being
purchased by EOTT and is located in an area from which EOTT then
makes crude oil purchases. The pricing for any additional production
added to this Agreement under this Paragraph IX shall be priced
according to crude oil grade as follows:
(i) For Mississippi Light Sweet type crude oil: EOTT's posted
price for South Louisiana Sweet, with adjustment made for
gravity delivered, plus $1.50 per barrel premium, based on
deemed equal daily deliveries during each calendar month.
(ii) For Mississippi Light Sour type crude oil: EOTT's posted price
for Mississippi Light Sour, with adjustment made for gravity
delivered, plus $1.70 per barrel premium, based on deemed
equal daily deliveries during each calendar month.
(iii) For Mississippi Heavy Sour type crude oil transported by
pipeline: EOTT's posted price for Mississippi Light Sour, with
adjustment made for gravity delivered, plus $1.70 per barrel
premium, based on deemed equal daily deliveries during each
calendar month. For Mississippi Heavy Sour type crude oil
transported by truck: EOTT's posted price for Mississippi
Light Sour, with adjustment made for gravity delivered, plus
$1.00 per barrel premium, based on deemed equal daily
deliveries during each calendar month.
X. OTHER PRODUCTION:
COHO also grants EOTT the right of first refusal to purchase any
"other" production which is owned, developed, controlled, or acquired
at any time by COHO where COHO has the right to market the production
in the states of Mississippi or Alabama during the Term of this
Agreement (meaning any crude oil type which is not being purchased by
EOTT or any crude oil in any area from which EOTT does not make crude
oil purchases). The notice period for the right of first refusal shall
be for a period of thirty (30) days from the date EOTT receives notice
from COHO of any offers. As to such "other" production, EOTT shall
have the right, but not the obligation, to add same to this Agreement.
The price structure for any other grade of Mississippi crude oil or
for any additional crude oil production in the State of Alabama which
becomes subject to this Agreement shall be negotiated at the time of
COHO's acquisition of such production. In the event EOTT and COHO
cannot agree upon the applicable pricing structure for any such
production, the matter shall be submitted to arbitration for binding
resolution.
XI. RIGHT TO SWITCH PRICING METHOD:
Reference is made to the one-time right to switch the pricing method
(which is described in parts I, II and III of Attachment "A"). Subject
to the same timing and other requirements set forth in Attachment "A,"
COHO shall have the same, one-time right to switch the pricing method
as to each of the crude types set forth in Paragraphs IX(i), IX(ii),
and IX(iii) above, as follows:
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(a) For the Mississippi Light Sweet type crude covered under
Paragraph IX(i) above, COHO may elect to switch the pricing to
the average of Plains Marketing's and EOTT's daily posted
prices for Louisiana Light Sweet crude oil during the
applicable calendar month of delivery hereunder, with
adjustment made for gravity delivered, plus $1.50 per barrel.
(b) For the Mississippi Light Sour type crude covered under
Paragraph IX(ii) above, COHO may elect to switch the pricing
to the average of Equiva's and EOTT's daily posted prices for
Mississippi Sour crude oil during the applicable calendar
month of delivery hereunder, with adjustment made for gravity
delivered, plus $1.70 per barrel.
(c) For the Mississippi Heavy Sour type crude covered under
Paragraph IX(iii) above, COHO may elect to switch the pricing
to the average of Equiva's and EOTT's daily posted prices
Mississippi Sour crude oil during the applicable calendar
month of delivery hereunder, with adjustment made for gravity
delivered, plus $1.70 per barrel for those barrels gathered by
pipeline or plus $1.00 per barrel for those barrels gathered
by truck.
This one-time right to switch the pricing method shall be exercisable
by thirty (30) days' written notice from COHO to EOTT, to be effective
on the first day of any calendar month after the notice period as
designated by COHO in such notice.
XII. RENEWAL TERMS:
Prior to the expiration of this Agreement, EOTT and COHO shall
endeavor to negotiate a new, mutually-agreeable agreement, or a
mutually-agreeable extension of this Agreement. Should the parties be
unable to agree upon the terms for a new agreement or an extension, or
should COHO notify EOTT that it does not wish to negotiate a new
agreement or an extension, EOTT and COHO shall be bound by the
following terms and conditions:
(i) COHO shall solicit bonafide competitive bids from other
purchasers (unrelated to COHO) for purchases to be made on or
after January 1, 2002, and EOTT shall have the right and
option, but not the obligation, to match any bonafide written
offer (from any bonafide crude oil purchaser) which COHO will
otherwise act upon. COHO shall submit any such bonafide
written offer to EOTT no later than December 1, 2001, and EOTT
shall advise COHO, no later than December 19, 2001, as to
whether EOTT will match such written offer.
(ii) If COHO proceeds under Paragraph XII(i) above, and if EOTT
elects not to match an applicable bonafide written offer from
a bonafide crude oil purchaser, EOTT shall, at COHO's option,
enter into a buy/sell agreement with COHO whereby EOTT shall
purchase a volume and quality of Mississippi/Alabama crude oil
equal to the lease production covered under this Agreement as
of December 31, 2001, and sell back to COHO a corresponding
volume of crude oil of the grade(s) and quality(ies) provided
below. Such delivery back to COHO shall be at either Genesis
Pipeline Company's Liberty, Mississippi Station or within
TEPPCO Pipeline's facilities at Cushing, Oklahoma, or any
combination of these locations, at COHO's option. In the case
of deliveries back to COHO at Genesis Pipeline Company's
Liberty, Mississippi Station, EOTT shall deliver back to COHO
substantially the same grades and qualities of crude oil as
are delivered by COHO to EOTT in the applicable calendar
month. In the case of deliveries back to COHO within TEPPCO
Pipeline's facilities at Cushing, Oklahoma, EOTT shall deliver
back to COHO West Texas Intermediate type crude oil. All
deliveries made by EOTT to COHO shall be subject to location
differentials (in favor of EOTT) and shall be established when
the buy/sell agreement is negotiated, with binding arbitration
to be used if such differentials cannot be agreed upon.
Subject to the location differentials described in the
preceding sentences of this Paragraph XII(ii), (a) pricing
for all deliveries made by COHO to EOTT pursuant to the
buy/sell agreement shall be based upon mutually-agreeable area
posted prices for the grades and qualities of crude oil
delivered by COHO to EOTT thereunder, (b) pricing for all
deliveries made by EOTT back to
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COHO at Genesis Pipeline Company's Liberty, Mississippi
Station pursuant to the buy/sell agreement shall be based
upon the same posted prices determined in accordance with
part (a) of this sentence, and (c) pricing for all
deliveries made by EOTT back to COHO within TEPPCO
Pipeline's facilities at Cushing, Oklahoma pursuant to the
buy/sell agreement shall be based upon mutually-agreeable
posted prices for West Texas Intermediate type crude oil. If
agreement cannot be reached on a specific posted price, then
an average of all market related area posted prices for
grade and quality of oil delivered shall be used.
XIII. ARBITRATION:
Wherever in this Agreement a provision is made for resolution of a
disagreement between the parties by arbitration, such arbitration
proceedings shall be conducted in accordance with the commercial
arbitration rules, then in effect, of the American Arbitration
Association. All such arbitration proceedings shall be conducted in
Houston, Texas unless otherwise agreed upon by the parties.
XIV. ASSIGNABILITY:
This Agreement, or any portion thereof, shall not be assignable by
either party without the prior written consent from the other party,
which consent shall not be unreasonably withheld. No assignment shall
be binding on either party unless and until the other party has
received written notice of the assignment and provided its written
consent.
XV. NO PARTNERSHIP OR JOINT VENTURE:
Nothing contained herein is intended to constitute a partnership or
joint venture between the parties.
If the foregoing accurately reflects our agreement, please execute
this document in the space provided below and return a fully executed
counterpart hereof to EOTT for its files.
Sincerely,
EOTT ENERGY OPERATING LIMITED PARTNERSHIP
By: EOTT Energy Corp., its General Partner
By: /s/ XXX X. XXXX
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Xxx X. Xxxx
General Manager
Gulf Coast Region
ACCEPTED AND AGREED TO THIS 18TH DAY OF JANUARY, 2001
BY: COHO RESOURCES, INC.
By: /s/ XXXX X. XXXXXXX
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Title: CFO
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