GAS GATHERING AGREEMENT
DATED SEPTEMBER 15, 2004
BY AND BETWEEN
COALFIELD PIPELINE COMPANY
AND
ATLAS AMERICA, INC.
TABLE OF CONTENTS
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PAGE
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1. Transportation; Coalfield Pipeline; Expansions...........................................................1
2. Receipt and Delivery Points; Pressures; Quality..........................................................3
3. Gathering Fee and Expenses...............................................................................4
4. Maintenance and Repair...................................................................................6
5. Measurement..............................................................................................6
6. Billing; Payment; Reports................................................................................9
7. Title; Possession........................................................................................9
8. No Public Use; Rules and Regulations.....................................................................9
9. Remedies in the Event of Bankruptcy......................................................................9
10. Assignment..............................................................................................10
11. Force Majeure...........................................................................................10
12. Notices.................................................................................................10
13. Governing Law...........................................................................................11
14. Successors in Interest..................................................................................11
15. Integration; Amendment; Interpretation..................................................................11
16. Severability............................................................................................12
17. Waivers.................................................................................................12
18. Further Assurances......................................................................................12
19. Attorneys' Fees.........................................................................................12
20. Counterpart; Fax........................................................................................12
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DEFINITIONS
TERM DEFINED AT:
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Agreement Page 1
AMI ss. 1.1
Btu ss. 5.1(e)
cubic foot of gas ss. 5.1(a)
Delivery Point(s) ss. 2.1(b)
Downstream Entity ss. 2.1(b)
Drilling and Operating Agreement Second Whereas clause, page 1
Drilling Cost ss. 1.2
force majeure ss. 11.1
Gas Purchaser ss. 3.1(a)
Heating Value ss. 5.1(c)
Leases Second Whereas clause, page 1
mcf ss. 5.1(b)
Measurement Equipment ss. 5.1(f)
Operator Page 1
psia ss. 5.1(d)
Receipt Point(s) ss. 2.1(a)
Third-Party Natural Gas ss. 5.13
Transporter Page 1
Xxxxx Fourth Whereas clause, page 1
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LIST OF EXHIBITS
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PRINCIPAL REFERENCE:
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Exhibit 1 - Coalfield Pipeline Map ss. 1.1
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GAS GATHERING AGREEMENT
This Gas Gathering Agreement (this "Agreement") is made and entered
into, effective as of the 15th day of September, 2004, by and between Coalfield
Pipeline Company, a Tennessee corporation, whose address is 000 Xxxxxxxx Xxxx,
Xxx Xxxxx, XX 00000 (hereinafter referred to as "Transporter") and Atlas
America, Inc., a Pennsylvania corporation, and not any other entity having the
name Atlas America, Inc. or any derivative thereof, whose address is 000 Xxxxxx
Xxxx, Xxxx Xxxxxxxx, Xxxxxxxxxx, XX 00000 (hereinafter referred to as
"Operator").
WHEREAS, one hundred percent (100%) of the issued and outstanding
capital stock of Transporter is owned by CNX Gas Company, LLC and New River
Energy, LLC, the sole members of Xxxx Energy, LLC; and
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, Operator has entered into a certain Drilling and Operating Agreement
dated September 15, 2004 (the "Drilling and Operating Agreement") with Xxxx
Energy, LLC for the purpose of exploring for and producing natural gas and/or
oil from the property subject to the Leases, as such term is defined in the
Drilling and Operating Agreement; and
WHEREAS, Transporter is the sole owner of a natural gas gathering
system known as the Coalfield Pipeline on, or in the vicinity of, the property
subject to the Leases; and
WHEREAS, Transporter and Operator have agreed that, subject to the
terms and conditions hereinafter set forth, Operator shall have the right to
have natural gas (including other gaseous hydrocarbons) produced from the Xxxxx
(as such term is defined in the Drilling and Operating Agreement) drilled on the
property subject to the Leases compressed and transported through the Coalfield
Pipeline, as it may be expanded pursuant hereto or otherwise.
NOW, THEREFORE, WITNESSETH, that for and in consideration of the
foregoing premises, and the mutual covenants herein contained, the parties
hereto mutually covenant and agree as follows:
1. Transportation; Coalfield Pipeline; Expansions.
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1.1 For so long as any Well produces natural gas, (a) Operator shall
have the right to have compressed and transported, and Transporter shall
compress and transport, through the presently existing Coalfield Pipeline as
depicted on Exhibit 1 attached hereto and made a part hereof, (i) on a firm
basis, any and all quantities of natural gas produced from the Xxxxx up to the
Excess Capacity (as such term is hereinafter defined) and (ii) on an
interruptible basis, quantities of such natural gas in excess of the Excess
Capacity and (b) Operator shall have the right, on a firm basis, to have
compressed and transported, and Transporter shall compress and transport,
through any expansions of the Coalfield Pipeline (including extensions and other
improvements), any and all quantities of natural gas produced from the Xxxxx.
For purposes of this Agreement, the term Excess Capacity shall mean the
quantities of natural gas which can be transported through the presently
existing Coalfield Pipeline, less (i) the quantities of natural gas compressed
and transported (both upstream and downstream of the presently existing
compressor) and produced from xxxxx which were drilled, or which were owned, by
Xxxx Energy, LLC prior to the date of this Agreement and which are located on
the AMI (as such term is defined in the Drilling and Operating Agreement), (ii)
up to two hundred fifty (250) mcf's per day of natural gas compressed and
transported (both upstream and downstream of the presently existing compressor)
pursuant to a transportation arrangement between Transporter and Xxxxxx Xxxxx,
as such arrangement may be modified or renewed from time to time, and (iii) up
to five hundred (500) mcf's per day of natural gas transported (only downstream
of the presently existing compressor) pursuant to a transportation arrangement
between Transporter and Ariana Energy, LLC, as such arrangement may be modified
or renewed from time to time; provided, however, that it is understood by the
parties that the Excess Capacity will be limited by the volumes of natural gas
accepted by the Downstream Entity (as such term is defined in Section 2.1(b)
hereof). If the delivery by Operator into the Coalfield Pipeline, as it may be
expanded from time to time, of natural gas produced from the Xxxxx has a
material, adverse effect upon the transportation of the quantities of natural
gas of Xxxx Energy, LLC, Xxxxxx Xxxxx or Ariana Energy, LLC set forth in clauses
(i), (ii) and (iii) above, respectively, and if Xxxx Energy, LLC, Xxxxxx Xxxxx
or Ariana Energy, LLC, as the case may be, has taken reasonable action
(including the installation of compressors) to eliminate such effect but such
action has not resulted in such elimination, Operator and Transporter shall, in
good faith, negotiate, and pursue, such operational and other activities as
shall be reasonable to them to achieve access to the Coalfield Pipeline by all
parties on an equitable basis; provided, however, that none of Xxxx Energy, LLC,
Xxxxxx Xxxxx or Ariana Energy, LLC shall be a third-party beneficiary with
respect to any matter set forth above or below in this Section 1.1. If Operator
purchases firm transportation from a Downstream Entity (as such term is defined
in Section 2.1(b) hereof), Operator's right to such transportation shall at no
time require Transporter to reduce the quantities of natural gas of Xxxx Energy,
LLC, Xxxxxx Xxxxx or Ariana Energy, LLC transported through the Coalfield
Pipeline below the quantities set forth in clauses (i), (ii) and (iii) above. If
any natural gas is proposed to be compressed and/or transported through the
Coalfield Pipeline, as it may be expanded from time to time, for a party in
addition to Operator, Xxxx Energy, LLC, Xxxxxx Xxxxx or Ariana Energy, LLC, such
compression and/or transportation shall be on an interruptible basis only,
subordinate to the right of Operator to compress and transport natural gas, and
Transporter shall give Operator prior written notice of such proposal, in such
detail as Operator may reasonably request, including the identity of the party,
the quantity of natural gas to be compressed and/or transported and the fee and
other charges for such compression and/or transportation; provided, however,
that if the compression and/or transportation of natural gas for such party has
an adverse effect, as reasonably determined by Operator, on the compression
and/or transportation of natural gas produced from the Xxxxx, Transporter shall
reduce, restrict or otherwise limit the quantities of natural gas which such
party may deliver into the Coalfield Pipeline, as it may be expanded from time
to time, as may be reasonably required by Operator.
1.2 At such time as in the reasonable judgment of Operator, the
Coalfield Pipeline, as it may be expanded from time to time, does not have
sufficient capacity to compress and transport natural gas produced from the
Xxxxx, Operator may propose to Transporter an expansion of the Coalfield
Pipeline, as it may have been previously expanded from time to time, such
proposal to be accompanied by reasonably detailed drawings and construction
plans including necessary rights-of-way and the anticipated dates the
construction of the expansion will begin and end. Transporter shall have the
right to expand the Coalfield Pipeline, at its sole cost and expense, as
proposed by Operator or having greater capacity than proposed by Operator, by
notifying Operator in writing, within sixty (60) days after receipt of
Operator's proposal, that it will do so. If such notice is not given by
Transporter within such sixty (60) day period, Operator shall have the right to
expand, at its sole cost and expense, the Coalfield Pipeline as proposed. Upon
completion of such expansion, Operator shall transfer to Transporter ownership
of all pipelines, compressor, meters and other equipment comprising, and
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rights-of-way for, such expansion, as part of the Coalfield Pipeline and upon
such transfer, free and clear of all liens and encumbrances except lease
payments, if any, for the rental of compressors, meters and other equipment
after such transfer, Transporter shall assume all obligations and other
liabilities of Operator in connection therewith (other than those which were
incurred, accrued or were payable prior to such transfer) including such lease
payments; provided, however, that Operator shall retain, and not transfer,
ownership of up to the first two thousand five hundred (2,500) feet of
flow/sales line from each Well to the Coalfield Pipeline if the cost of such
flow/sales line was billed as a Drilling Cost (as such term is defined in the
Drilling and Operating Agreement) for such Well. Operator shall indemnify and
hold Transporter harmless from all actions, damages, fines and suits of any kind
for all operations of such pipelines, compressors, meters and other equipment
prior to the transfer to Transporter.
In the event that Operator constructs an expansion of the Coalfield
Pipeline at its sole cost and expense and transfers ownership thereof to
Transporter, in consideration of such transfer of ownership by Operator,
Transporter shall pay to Operator an amount equal to twelve cents ($0.12) per
mcf of gas produced from the Xxxxx, and all other xxxxx if any, connected to the
expansion of the Coalfield Pipeline as measured at the well heads of the Xxxxx
(subject to the provisions of Section 3.1(a) hereof as to measurement at a
different point) and point(s) of delivery into the Coalfield Pipeline with
respect to such other xxxxx; provided, however, that if the expansion involves
only an improvement to the Coalfield Pipeline through which natural gas is then
flowing (for example, the installation of a "looped" line), the amount of twelve
cents ($0.12) per mcf shall be payable only with respect to quantities of
natural gas in excess of those flowing through such expansion immediately prior
to such expansion. Payment of such amount for gas transported through such
expansion in any month shall be made within sixty (60) days after the end of
such month and Transporter shall grant a valid and perfected first lien and
security interest in the property transferred to it by Operator to secure
payment of such amount. The amount of twelve cents ($0.12) per mcf shall be
fixed for a period of five (5) years from the date of this Agreement and
thereafter until such time as Operator may request, in a writing sent to
Transporter, a renegotiation of such amount. Promptly after such request,
Operator and Transporter shall negotiate in good faith adjustments to the amount
as suggested by Operator taking into consideration Operator's expectation to
receive from the amounts payable to it under this paragraph a minimum annual
return of ten percent (10%) on the investment of Operator in the property
transferred to Transporter, provided, however, that in no event shall any
adjustment be made more frequently than once every two (2) calendar years and no
adjustment shall reduce the difference between the gathering fee payable to
Transporter as set forth in Section 3.1(a) hereof (as such fee may be adjusted
pursuant to such Section) and the amount payable to Operator as set forth in
this paragraph (as it may be adjusted pursuant to this paragraph) below twenty
cents ($0.20). It is understood and agreed by the parties hereto that regardless
of the number of expansions of the Coalfield Pipeline constructed by Operator
and transferred to Transporter pursuant hereto through which natural gas, for
which Transporter is to make payment to Operator pursuant to this paragraph,
flows, the amount payable by Transporter pursuant to this paragraph shall not
exceed twelve cents ($0.12) cents per mcf of such natural gas (as it may be
adjusted pursuant to this paragraph).
2. Receipt and Delivery Points; Pressures; Quality.
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2.1 (a) Natural gas produced from the Xxxxx shall be delivered to
the Coalfield Pipeline at such point(s) ("Receipt Point(s)") as Transporter and
Operator shall both agree in the exercise of their reasonable judgment giving
due consideration to the location of the Xxxxx and the operation of the
Coalfield Pipeline and the transportation of all such natural gas.
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(b) Natural gas produced from the Xxxxx and transported through
the Coalfield Pipeline shall be delivered for the account of Operator at the
point(s) ("Delivery Point(s)") at which the Coalfield Pipeline is connected to
the facilities of an interstate pipeline, local distribution company or any
other person, corporation or entity and which are selected by Operator
("Downstream Entity"), subject to such terms and conditions as shall be required
by such Downstream Entity including quantity, quality and pressure requirements.
2.2 (a) All natural gas produced from the Xxxxx and delivered to
the Coalfield Pipeline shall be delivered at pressures sufficient to enter the
Coalfield Pipeline against the working pressures maintained therein from time to
time; provided, however, that neither party shall be obligated to compress such
natural gas to effect delivery into the Coalfield Pipeline and Transporter shall
not be obligated to receive such natural gas at pressures exceeding the maximum
allowable operating pressure of the Coalfield Pipeline as reasonably established
by Transporter or pursuant to any applicable governmental rules, regulations or
requirements.
(b) Subject to the provisions of Section 2.1(b) above, all
natural gas produced from the Xxxxx and transported through the Coalfield
Pipeline and delivered for the account of Operator to the facilities of a
Downstream Entity shall be delivered for the account of Operator at pressures
sufficient to enter such facilities against the working pressures maintained
therein from time to time.
2.3 The quality of the natural gas produced from the Xxxxx and
delivered to the Coalfield Pipeline shall at all times conform to accepted
industry practices for delivery of natural gas into a gathering system.
3. Gathering Fee and Expenses.
--------------------------
3.1 In consideration of the compression and transportation through
the Coalfield Pipeline of natural gas produced from the Xxxxx, Operator shall
pay to Transporter:
(a) a gathering fee of fifty-five cents ($0.55) per mcf of gas
transported as measured at the Delivery Point(s), provided, however, that if the
difference between mcf's of gas as measured at the well heads of the Xxxxx
(subject to the provisions of Section 3.1(a) hereof as to measurement at a
different point) and as measured at the Delivery Point(s) exceeds five percent
(5%) of the mcf's of gas measured at the Delivery Point(s) (after allocation of
compressor fuel) and such difference is not attributable to inaccuracies in the
meters measuring such gas, then the gathering fee shall be reduced by the price
payable by the Gas Purchaser (as such term is defined in the Drilling and
Operating Agreement) per mcf times the number of mcf's exceeding the five
percent (5%) difference subject to the following:
(i) there shall be no reduction in the gathering fee until
sixty (60) days after the difference is first
determined to exceed five percent (5%) so long as
Transporter takes reasonable action to reduce the
difference to five percent (5%) or less as soon as
reasonably practicable, and the reduction, if
applicable, shall apply only to gas compressed and
transported after such sixty (60) day period,
provided, however, that if at any time within five (5)
years after the expiration of such first sixty (60)
day period, the difference exceeds five percent (5%),
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the reduction in the transportation fee shall apply
immediately after the difference is determined to
exceed five percent (5%); and
(ii) in lieu of reducing the gathering fee, the Transporter
shall have the right to deliver to the Gas Purchaser,
or otherwise have the Gas Purchaser credit, for the
account of Operator for the applicable production
period the number of mcf's exceeding the five percent
(5%) difference.
If it is determined that the difference exceeding five percent
(5%) is attributable to one or more leaks in one or more lines running from the
Xxxxx to the Coalfield Pipeline there shall be no reduction in the gathering fee
during the period which it can be reasonably ascertained that such leaks
existed. Unless Operator repairs such leaks within a reasonable period after
becoming aware of the existence of such leaks, Transporter may require Operator
to set a meter, at the sole cost and expense of Operator, at the Receipt
Point(s).
The gathering fee of fifty-five cents ($0.55) per mcf shall be
fixed for a period of five (5) years from the date of this Agreement and
thereafter until such time as Transporter may request, in a writing sent to
Operator, a renegotiation of such fee. Promptly after such request, Transporter
and Operator shall negotiate in good faith adjustments to the transportation fee
as suggested by Transporter taking into consideration the recovery by
Transporter, over a reasonable period of time, of the costs incurred by
Transporter to maintain, repair and/or replace all or portions of the Coalfield
Pipeline, provided, however, that in no event shall any adjustment be made more
frequently than once every two (2) calendar years and no adjustment shall exceed
ten percent (10%) of the gathering fee of fifty-five cents ($0.55), as it may
have been previously adjusted pursuant hereto. The gathering fee shall be
payable with respect to all gas transported through the Coalfield Pipeline
including the property transferred to Transporter pursuant to Section 1.2
hereof; and
(b) a share of the actual expenses to operate the compressor,
meters, treatment and related facilities including normal lease payments and
costs of maintenance, lubrication and fuel (other than natural gas produced from
the Xxxxx used to fuel the compressor and related facilities), and wages and
benefits of attendants. The share shall be based upon the volumes of gas
produced from Xxxxx which is compressed and/or treated relative to the total
volumes of gas compressed and/or treated. It is understood and agreed by the
parties that any and all liquid hydrocarbons and other products from the
treatment of natural gas produced from the Xxxxx, and any and all revenues
therefrom and other proceeds thereof, shall be the property of, and paid, to
Operator.
3.2 If Transporter fails to deliver for the account of the Operator
at the Delivery Point(s) at least ninety-five percent (95%) of the volumes of
natural gas produced from the Xxxxx as measured at the well heads of the Xxxxx
(subject to the provisions of Section 3.1(a) hereof as to measurement at a
different point), Transporter shall be solely responsible for the payment of any
and all charges imposed by the Downstream Entity which arise from such failure;
provided, however, that Transporter shall have no such responsibility, and
Operator shall bear any and all such charges, if such failure results from
"force majeure" (as such term is defined in Section 11.1 hereof) or any other
cause except the negligence of Transporter.
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4. Maintenance and Repair.
----------------------
4.1 Transporter shall, at its sole cost and expense, maintain and
repair the Coalfield Pipeline, as it may be expanded from time to time.
5. Measurement.
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5.1 For purposes of this Agreement, the following terms shall have
the following meanings:
(a) "cubic foot of gas" shall mean the amount of natural gas
necessary to fill one cubic foot of space at a base pressure of fourteen and
seventy-three hundredths (14.73) psia and at a base temperature of sixty degrees
Fahrenheit (60(degree)F).
(b) "mcf" shall mean one thousand (1,000) cubic feet.
(c) "Heating Value" shall mean the gross number of Btu's
produced by the complete combustion, at constant pressure, of the amount of
natural gas which would occupy a volume of one cubic foot at a temperature of
sixty degrees Fahrenheit (60(degree)F) at a constant pressure of fourteen and
seventy-three hundredths (14.73) psia with air of the same temperature and
pressure as the natural gas when the products of combustion are cooled to the
initial temperature of the natural gas and air and when the water formed by
combustion is condensed to the liquid state.
(d) "psia" shall mean pounds per square inch absolute.
(e) "Btu" shall mean British Thermal Unit.
(f) "Measurement Equipment" shall mean the measurement and
testing equipment that is to be used pursuant hereto to measure and test natural
gas.
5.2 For the purpose of measurement, calculation and meter
calibration, the average absolute atmospheric (Barometric) pressure shall be
assumed to be fourteen and seventy-three hundredths (14.73) psia at the well
heads of the Xxxxx (and any other points of measurement pursuant to Section
3.1(a) hereof) and at the Delivery Point(s) hereof, irrespective of variations
in natural atmospheric pressure from time to time.
5.3 (a) Transporter shall install at the Delivery Point(s), at its
sole cost and expense, Measurement Equipment.
(b) Operator shall install at the well head of each Well (and
any other points of measurement pursuant to Section 3.1(a) hereof), at its sole
cost and expense, Measurement Equipment.
(c) Each party shall operate, test, calibrate, maintain and
repair all of its Measurement Equipment, and have all charts integrated at least
monthly, at its sole cost and expense and as a prudent well and pipeline
operator would do, using accepted industry practices and materials. Testing and
calibration shall be performed at least once a year. The parties agree to give
each other reasonable notice of such testing so that if Operator or Transporter,
as the case may be, desires, it may have its representative present. In the
event the Measurement Equipment is found to be inaccurate, it will be adjusted
to register accurately.
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(d) Each party shall have the right to challenge the accuracy
of any Measurement Equipment of the other party, and when challenged, such
equipment shall be tested. The cost of any such test shall be borne by the
non-challenging party if the percentage of inaccuracy is found to be more than
two percent (2%), but if the percentage of inaccuracy is found to be two percent
(2%) or less, the cost of such test shall be borne by the challenging party. If,
upon any such test, the percentage of inaccuracy is found to be in excess of two
percent (2%), the volumes of natural gas delivered and any payment based upon
such inaccuracy shall be corrected for a period extending back to the time when
such inaccuracy began, if such time is ascertainable, and if not ascertainable,
then back one-half (1/2) of the time elapsed since the last date of calibration.
(e) If, for any reason, any Measurement Equipment is out of
service or out of repair so that the volumes of natural gas delivered cannot be
ascertained or computed from the reading thereof, the natural gas delivered
during the period such Measurement Equipment is out of service or out of repair
shall be estimated and agreed upon by the Transporter and the Operator upon the
basis of the data available using the first of the following methods that is
feasible.
(i) By using the registration of any check meter or
meters if installed and accurately registering; or
in the absence of (i);
(ii) By correcting the error if the percentage of error
is ascertainable by calibration, special test or
mathematical calculation; or in the absence of both
(i) and (ii) then;
(iii) By estimating the volumes of natural gas received or
delivered based on receipts or deliveries during
preceding periods under similar conditions when such
Measuring Equipment was registering accurately.
5.4 All tests, calibrations, charts, integration reports and other
records relating to the Measurement Equipment and to Third-Party Natural Gas (as
such term is defined in Section 5.13 hereof), as well as all statements and
other records of the Gas Purchaser in the possession of either party, shall be
kept by the parties on file for a period of not less than three (3) years. At
any time within such period, either party shall, upon request of the other
party, furnish to the other party such records, or copies thereof, together with
calculations therefrom, for inspection and verification.
5.5 The volumes of natural gas shall be measured by orifice meters,
recording gauges or other types of meters of standard make and design commonly
accepted in the industry, so as to accomplish the accurate measurement of the
volumes of natural gas delivered and redelivered hereunder.
5.6 The Measurement Equipment shall be corrected for deviation from
Xxxxx'x Law at the pressures and temperatures under which natural gas is
delivered and redelivered hereunder.
5.7 The temperature of the natural gas shall be determined to the
nearest one degree Fahrenheit (1(degree)F) at the points of measurement by the
continuous use of recording thermometers of standard manufacture, to be
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installed in accordance with accepted industry practice and the arithmetical
average of hourly temperatures of the natural gas so determined each day shall
be used in computing temperatures of the natural gas during each day.
5.8 The specific gravity of the natural gas flowing through the
meters shall be determined with accuracy to the nearest one-thousandth by taking
samples of the natural gas at the points of measurement at such times as may be
determined necessary in practice by the use of an instrument commonly used and
accepted in the industry. Should the specific gravity vary more than
five-thousandths (.005), either party hereto may request the use of a recording
gravitometer of a type acceptable to both parties properly installed so as to
accurately record the specific gravity of the gas being measured. It is
understood that the party requesting the gravitometer shall pay the costs of the
instrument and its installation.
5.9 Tests for determining whether the natural gas produced from the
Xxxxx and delivered to the Downstream Entity meets the quality specifications of
the Downstream Entity shall be made by approved methods and the cost thereof
shall be borne by Transporter.
5.10 Adjustment for the effect of supercompressibility shall be
determined by mutual consent of the parties by such methods as shall be
acceptable to the parties.
5.11 Heating Value of the natural gas shall be determined by taking
samples of the gas at each of the Delivery Point(s) at such times as may be
designated by either party hereto, but not more than once each month, and by
having the Btu content per cubic foot determined by calorimeter or by other
means acceptable in the industry. For all purposes, the number of Btu's
contained in any volume of natural gas shall be determined by multiplying the
most recently determined Heating Value by the number of cubic feet of gas
contained in such volume. Notwithstanding the foregoing, the Heating Value of
natural gas delivered into the Coalfield Pipeline by Xxxxxx Xxxxx and Ariana
Energy, LLC shall be determined by taking samples of the gas at the points at
which such gas enters the Coalfield Pipeline and the Heating Value of all other
natural gas flowing through the Coalfield Pipeline, as it may be expanded from
time to time, and delivered and measured at the same Delivery Point(s) as the
natural gas of Xxxxxx Xxxxx and Ariana Energy, LLC shall be appropriately
adjusted.
5.12 Transporter and Operator, in the presence of each other, shall
have access to the other's Measurement Equipment at all reasonable times. Each
party shall give reasonable notice, and the party notified shall have the right
to be present at the time, of any installing, reading, cleaning, changing,
repairing, inspecting, testing, calibrating or adjusting done in connection with
the other's Measurement Equipment; provided, however, failure of either party so
notified to witness such an operation after due notification shall not affect
the validity of such operation in any way.
5.13 If natural gas produced from xxxxx other than the Xxxxx
("Third-Party Natural Gas") is transported through the Coalfield Pipeline, the
volumes of natural gas produced from the Xxxxx and transported through the
Coalfield Pipeline shall be determined at the Delivery Point(s) based upon the
relative volumes of natural gas, (i) produced from the Xxxxx as measured at the
well heads of the Xxxxx (subject to the provisions of Section 3.1(a) hereof as
to measurement at a different point) and (ii) Third-Party Natural Gas as
measured at the point(s) of delivery into the Coalfield Pipeline.
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6. Billing; Payment; Reports.
-------------------------
6.1 On or before the twentieth (20th) day of each month,
Transporter shall submit to Operator a statement, in such detail as Operator may
reasonably require, setting forth the amount due to Transporter hereunder for
the compression and transportation of natural gas produced from the Xxxxx, which
statement shall also set forth the total volumes, and Heating Value, of such gas
delivered at the Delivery Point(s) during the preceding month.
6.2 Subject to Section 6.3 hereof, Operator agrees to make payment
to Transporter in accordance with such statement on or before thirty (30) days
after receipt of such statement.
6.3 Operator shall have the right at all reasonable times to
examine the books and records and charts of the Transporter to the extent
necessary to verify the accuracy of any such statement. If any such examination
shall reveal, or if Operator shall discover, any error in any such statement,
then proper adjustments and correction thereof shall be made as promptly as
practicable.
7. Title; Possession.
-----------------
7.1 Operator warrants title to the natural gas produced from the
Xxxxx and transported through the Coalfield Pipeline and its ownership and
rights with respect thereto and agrees to indemnify, defend and save Transporter
harmless from and against all suits, actions, debts, damages, costs, losses and
expenses arising from adverse claims of any and all persons, corporations or
other entities with respect to title to such natural gas.
7.2 (a) Operator shall be in exclusive control and possession of
the natural gas, and responsible for any damage or injury caused thereby, prior
to delivery of such gas at the Receipt Point(s).
(b) After delivery of such natural gas at the Receipt Point(s),
and until redelivery by Transporter thereof at the Delivery Point(s),
Transporter shall be in exclusive control and possession thereof and responsible
for any injury or damage caused thereby.
8. No Public Use; Rules and Regulations.
------------------------------------
8.1 Transporter agrees to use its reasonable efforts to not
dedicate, or have deemed dedicated, the Coalfield Pipeline to public use.
8.2 (a) This Agreement is subject to all valid orders, laws, rules
and regulations of duly constituted governmental authorities and agencies having
jurisdiction or control over the parties, their facilities or gas supplies, or
this Agreement or any provision hereof.
(b) The parties agree to timely file all statements, notices
and petitions required by any governmental authority having appropriate and
applicable jurisdiction.
9. Remedies in the Event of Bankruptcy.
-----------------------------------
9.1 Nothing contained herein shall limit, restrict or otherwise
affect, in any way or manner whatsoever, the rights and remedies available to
either party in the event of the bankruptcy or insolvency of the other party
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including but not limited to the right of either party to recover damages, or
the amount of damages, if this Agreement is rejected by, or on behalf of, the
other party in any bankruptcy, insolvency or other proceeding or otherwise.
10. Assignment.
----------
10.1 This Agreement may not otherwise be assigned by Operator, or
Transporter, without the prior written consent of the other, not to be
unreasonably withheld. No assignment shall relieve any party of its obligations
accrued prior to assignment unless such party is expressly released in writing
from such obligations by the party to which it is obligated. Any assignment
shall not become effective or binding upon the Transporter or the Operator until
the non-assigning party receives a copy of the fully executed instrument
effecting such assignment.
11. Force Majeure.
-------------
11.1 If either party is rendered unable, wholly or in part, by
force majeure to carry out its obligations under this Agreement, other than the
obligation to make money payments or furnish security, that party shall give to
the other party prompt written notice of the force majeure with reasonably full
particulars concerning it; thereupon, the obligations of the party giving the
notice, so far as they are affected by the force majeure, shall be suspended
during, but no longer than, the continuance of the force majeure. The term
"force majeure", as here employed, shall mean an act of God, strike, lockout, or
other industrial disturbance, act of the public enemy, war, blockade, public
riot, lightning, fire, storm, flood or other act of nature, explosion,
governmental action, governmental delay, restraint or inaction, unavailability
of equipment, and any other cause, whether of the kind specifically enumerated
above or otherwise, which is not reasonably within the control of the party
claiming suspension.
The affected party shall use all reasonable diligence to remove the
force majeure situation as quickly as practicable. The requirement that any
force majeure shall be remedied with all reasonable dispatch shall not require
the settlement of strikes, lockouts, or other labor difficulty by the party
involved, contrary to its wishes; how all such difficulties shall be handled
shall be entirely within the discretion of the party concerned.
12. Notices.
-------
12.1 All notices or other correspondence required or made necessary
by the terms of this Agreement shall be in writing and shall be considered as
having been given to a party (i) if given by telecopy, at the time the telecopy
is transmitted to the following telecopier numbers and the appropriate answer
back is received or receipt is otherwise confirmed, (ii) if given by mail, two
(2) business days after being mailed by registered or certified mail, postage
prepaid, to the following addresses, or (iii) if given by any other means
(including but not limited to overnight delivery), when delivered at the
following addresses:
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(a) Transporter:
Coalfield Pipeline Company
X.X. Xxx 000 Xxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx Telecopier
No.: (000) 000-0000
with a copy to:
Coalfield Pipeline Company
000 Xxxxxxxx Xxxx
Xxx Xxxxx, XX 00000
Telecopier No.: (000) 000-0000
(b) Operator:
Atlas America, Inc.
000 Xxxxxx Xxxx
Xxxx Xxxxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Telecopier No.: (000) 000-0000
Each party shall have the right to change its address at any time, and from time
to time, by giving written notice thereof to the other party.
13. Governing Law.
-------------
13.1 This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania, without giving
effect to the principles of conflicts of laws of the Commonwealth of
Pennsylvania, provided, however, that as to real property issues, if any, this
Agreement shall be governed by and construed in accordance with the laws of the
State of Tennessee, without giving effect to the principles of conflicts of laws
of the State of Tennessee.
14. Successors in Interest.
----------------------
14.1 Each and all of the covenants, agreements, terms and
provisions of this Agreement shall be binding on and inure to the benefit of the
parties hereto and their successors and assigns.
15. Integration; Amendment; Interpretation.
--------------------------------------
15.1 This Agreement constitutes the entire agreement between the
parties pertaining to the subject matter hereof and supercedes all prior and
contemporaneous agreements and understandings of the parties in connection
herewith. Any amendment or supplement made hereto shall be in writing and signed
by all parties. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Terms such as "herein", "hereby", "hereto", "hereunder", and
"hereof" refer to this Agreement as a whole.
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16. Severability.
------------
16.1 If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any party. Upon any
binding determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable and legally enforceable manner, to the end
that the transactions contemplated hereby may be completed to the fullest extent
possible.
17. Waivers.
-------
17.1 No waiver by any party of any default hereunder by any other
party shall operate as a waiver of any other default or of the same default on a
subsequent occasion. No failure to exercise, and no delay in exercising, by any
party of any power, remedy or right shall operate as a waiver thereof, nor shall
any single or partial exercise of any power, remedy or right preclude other or
further exercise thereof or the exercise of any other power, remedy or right.
All powers, rights and remedies may be asserted concurrently, cumulatively,
successively or independently from time to time.
18. Further Assurances.
------------------
18.1 The parties agree to promptly execute and deliver, or cause to
be executed and delivered, at such times as shall be reasonably requested, any
additional instrument or take any further action as may be reasonably necessary
or appropriate that any party may reasonably request for the purpose of carrying
out the transactions contemplated by, and the purposes and intents of, this
Agreement.
19. Attorneys' Fees.
---------------
19.1 In any dispute between the parties hereto arising under this
Agreement, the prevailing party shall be entitled to recover from the other
party its reasonable attorney fees and other reasonable costs of litigation in
addition to all other remedies.
20. Counterpart; Fax
----------------
20.1 This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original and all of which together shall
constitute but one and the same agreement. It is agreed by the parties that
facsimile signature pages signed by the parties shall be binding to the same
extent as original signature pages.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Transporter and Operator, with the intent of being
legally bound hereby, have executed this Gas Gathering Agreement as of the 15th
day of September, 2004.
TRANSPORTER:
WITNESS: COALFIELD PIPELINE COMPANY, a
Tennessee corporation
____________________________ By:________________________________
Name:______________________________
Title:_____________________________
OPERATOR:
ATLAS AMERICA, INC., a Pennsylvania
corporation
WITNESS:
____________________________ By:________________________________
Name:______________________________
Title:_____________________________
