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EXHIBIT 10.6
GAS PURCHASE AGREEMENT
THIS AGREEMENT, entered into this first day of November, 1997,
("Effective Date") by and between EASTERN STATES OIL & GAS, INC., a Virginia
corporation ("Seller"), and CNG ENERGY SERVICES CORPORATION, a Delaware
corporation ("Buyer").
WHEREAS, Seller has available a supply of natural gas at certain points
of connection on the pipeline system identified in Exhibit B, which are for
sale; and
WHEREAS, Buyer is seeking to purchase gas supplies; and
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, Seller and Buyer hereby mutually agree as follows:
ARTICLE I
DEFINITIONS
1.1 The term "Agreement" shall mean this Firm Gas Purchase Agreement
and the Confirmation(s) attached hereto as executed from time to time and made a
part hereof.
1.2 The term "Confirmation" shall mean the letter agreement, a form
copy of which is attached hereto as Exhibit "A", which may be executed by Buyer
and Seller from time to time and which shall bind Buyer and Seller to particular
transactions for the purchase and sale of the gas in accordance with the terms
thereof and this Agreement.
1.3 The term "Day" shall mean the twenty-four (24) hour period
commencing at eight o'clock (8:00) a.m. Eastern Time.
1.4 The term "Dth" shall mean the quantity of heat energy which is one
million British Thermal Units (MMBtu).
1.5 The term "Effective Period" shall mean the period of time (Days,
Months, or any portion thereof) specified on the then effective Confirmation.
1.6 The term "Gas" shall mean natural gas or any mixture of
hydrocarbons or of hydrocarbons and noncombustible gases, in a gaseous state.
1.7 The term "Mcf" shall mean one thousand (1,000) cubic feet of gas
measured at the temperature and pressure specified by the System identified in
Exhibit "B."
1.8 The term "Quantity" shall mean the amount of Gas set forth in the
Confirmation which Buyer agrees to purchase and receive pursuant to the terms
and conditions hereof at the Delivery Point(s) as defined in Article IV herein.
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1.9 The term "System" shall mean the pipeline system of an interstate
pipeline or local distribution company as identified on the applicable
Confirmation.
ARTICLE II
NATURE OF SERVICE
2.1 For all deliveries and receipts of gas hereunder, the obligations
of the parties shall be firm and subject to suspension only for the duration of
an event of Force Majeure, as defined herein. A non-performing party shall be
responsible for payment of those costs reasonably incurred by the performing
party, including incremental transportation costs, in securing alternate supply
(where Buyer is the performing party) or alternate market (where Seller is the
performing party).
ARTICLE III
CONFIRMATION
3.1 Buyer agrees to purchase the Quantity of Gas from Seller for the
Price at the Delivery Point(s) for the Effective Period. The Quantity, Price,
Delivery Point(s), Effective Period and other special provisions shall be
identified in the Confirmation.
3.2 Buyer and Seller agree that the specific terms associated with
Price, Quantity, Delivery Point(s), Effective Period and other special
provisions are subject to change from time to time upon mutual agreement of the
parties hereto by written execution of a "Confirmation" substantially in the
form of Exhibit "A".
3.3 The parties hereby consent to the tape recording of telephone
conversations in which agreement to a Transaction is reached. Any such tape
recording will be deemed a "writing" and "signed" by the parties and may be
introduced as evidence to prove the fact or terms of a Transaction.
ARTICLE IV
DELIVERY POINT(s)
4.1 The "Delivery Point(s)", as listed in an effective Confirmation,
are the points at which delivery of the Gas purchased herein are deemed to be
made at a point of the interconnection of Seller's gathering facilities with the
metering facilities of the System identified on Exhibit "B." Seller shall
arrange and be responsible for the delivery of the Gas to the Delivery Point(s)
as specified on the then effective Confirmation. Buyer shall arrange and be
responsible for the transportation of the Gas after delivery is made at the
Delivery Point(s).
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ARTICLE V
PRICE
5.1 The price ("Price") paid by Buyer during each Effective Period, for
the Gas delivered by Seller to the Delivery Point(s), shall be as specified on
the then effective Confirmation(s). The price is inclusive of all production,
severance, excise, ad valorem, royalties or similar taxes levied on the
production or transportation of the Gas prior to or at its delivery to Buyer
hereunder.
ARTICLE VI
TERM
6.1 The Agreement shall become effective on the Effective Date hereof
and shall remain in full force and effect for one year from the Effective Date
and thereafter until terminated by either party upon thirty (30) days' written
notice to the other party; however, in the event either party terminates this
Agreement during an Effective Period of a Confirmation, this Agreement shall
survive until the expiration of such Effective Period and the satisfaction of
all obligations thereunder.
ARTICLE VII
BILLING AND PAYMENT
7.1 Seller shall deliver to Buyer an invoice, including the delivery
statement provided by the System identified on Exhibit "B." By the fifty-fifth
(55th) day following deliveries, Buyer shall pay Seller for such deliveries. In
the event a dispute arises as to the amount payable in any invoice rendered
hereunder, Buyer shall nevertheless pay when due the amount not in dispute under
such invoice. Such payment shall not be deemed to be a waiver of the right by
Buyer to recoup any overpayment, nor shall acceptance of any payment be deemed
to be a waiver by Seller of any underpayment. In the event that a System issues
a prior period adjustment as to amounts delivered to Buyer, such adjustment
shall be invoiced or credited to Buyer's account at the price as of the month of
delivery.
7.2 In the event Buyer fails to forward the entire amount due, except
amounts disputed in good faith, to Seller when same is due, interest on the
unpaid portion shall accrue at a rate equal to one percent (1%) above the prime
rate charged by Chase Manhattan Bank, New York, from time to time, or the
maximum legal rate, whichever is the lesser, compounded daily from the date such
payment is due until the same is paid.
7.3 Each party hereto shall have the right at all reasonable times to
examine the books and records of the other party to the extent necessary to
verify the accuracy of any statement, charge, computation, invoice or demand
made under or pursuant to this Agreement. Any payment shall be final as to both
parties unless questioned within twelve (12) calendar months from the date of
such payment.
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ARTICLE VIII
MEASUREMENT AND QUALITY OF GAS
8.1 Quantities of Gas delivered to the Delivery Point(s) hereunder
shall be measured according to the measurement provisions contained in the
tariff of the applicable System.
8.2 On the 20th day of the month immediately preceding delivery, Seller
shall provide Buyer with estimates of volumes of Gas to be delivered and shall
update this as necessary prior to the close of the New York Mercantile Exchange
final settlement day. The parties agree that deliveries up to five percent (5%)
above or below the estimated volumes shall be acceptable and shall not be
subject to imbalance or other penalties.
8.3 Seller shall deliver Gas which meets the applicable System's
required quality specifications.
ARTICLE IX
TITLE AND WARRANTY OF TITLE
9.1 Except as provided by Section 4.1, title to and risk of loss of all
Gas delivered hereunder shall pass and vest in Buyer at the Delivery Point(s).
9.2 Seller warrants the title to the Gas delivered hereunder, that it
has good and lawful authority to sell such Gas, and that such Gas is free from
all liens and adverse claims of any kind or character. Seller agrees to
indemnify and hold Buyer harmless from all claims, suits, actions, debts,
accounts, damages, costs, losses and expenses of every kind and character
arising out of any adverse claim to or against such title. In the event an
adverse claim is brought against Gas which is subject to this Agreement, Buyer
may suspend payment for such Gas pending resolution of that claim.
ARTICLE X
FORCE MAJEURE
10.1 If, by reason of Force Majeure, either party is rendered unable,
wholly or in part, to carry out its obligations under this Agreement, such party
shall be excused from performance hereunder, except to the extent payment is due
for Gas delivered, during the continuance of any inability so caused. "Force
Majeure" shall mean acts of God; strikes, lockouts or industrial disturbances;
interruptions by government or court orders, present or future orders of any
regulatory body having jurisdiction; acts of the public enemy; wars; riots;
inability to secure materials or labor; inability to secure right-of-way;
epidemics, landslides; lightning; earthquakes; fires; storms; floods;
explosions; breakage or accident to machinery, pipelines, compressors or
equipment; unplanned outages of compressor equipment or pipelines; freezing of
xxxxx or pipelines; or any other situation, occurrence or condition not
reasonably within the control of the party claiming suspension, including,
without limitation, interruption of firm transportation, gathering, treating,
compression or services required of third parties. In the event either party is
unable to perform its obligations
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hereunder due to Force Majeure as defined herein, that party shall notify the
other party as soon as practicable and shall use due diligence to alleviate such
condition(s).
ARTICLE XI
TAXES
11.1 Seller shall pay, or cause to be paid, all royalties, overriding
royalties and payments out of production and all taxes including, without
limitation, severance and production taxes, imposed on or with respect to the
gas prior to or at its delivery at the Delivery Point; provided, however, if
state law requires Buyer to remit such taxes to the collecting authority, Buyer
shall do so and deduct the taxes so paid from payments otherwise due hereunder.
ARTICLE XII
MISCELLANEOUS
12.1 Notice. Any notice, request, or statement ("Notice") provided in
this Agreement between Buyer and Seller shall be in writing. Such Notice may be
transmitted via ordinary mail or telecopy.
Any such Notice shall be considered as duly delivered as of the earlier
of the receipt date indicated on the telecopy or the postmark date when mailed
by ordinary mail to the other party at the following address:
(a) NOTICE TO SELLER:
Attn: Contract Administration
Eastern States Oil and Gas, Inc.
0000 Xxxxxxxxxxxx Xxx.
Xxxxxxxxxx, XX 00000
Telecopy: 000-000-0000
Telephone: 000-000-0000
(b) PAYMENT TO SELLER:
Eastern States Oil & Gas, Inc.
ABA: 000-000-000
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Acct: 0245-1315
PNC Bank
Xxxxxxxxxx, XX 00000
Telecopy:
Telephone:
(c) NOTICE TO BUYER:
Attn: Contract Administration
CNG ENERGY SERVICES CORPORATION
Xxx Xxxx Xxxxx Xxxxxx
X.X. Xxx 00000
Xxxxxxxxxx, XX 00000-0000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
(d) STATEMENT TO BUYER:
Attn: Gas Accounting
CNG Energy Services Corporation
Xxx Xxxx Xxxxx Xxxxxx
X.X. Xxx 00000
Xxxxxxxxxx, XX 00000-0000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
12.2 Entire Agreement and Amendments. This written Agreement, including
the then effective Confirmation(s), contains the entire Agreement between the
parties and there are no other understandings or representations between the
parties hereto. This Agreement may not be amended except by an instrument in
writing.
12.3 Governing Law. This Agreement shall be governed and construed in
accordance with the substantive laws of the state of Pennsylvania, without
regard to the choice of law rules thereof.
12.4 Severability. If any provision of this Agreement shall be held
invalid, illegal, or unenforceable to any extent and for any reason by a court
of competent jurisdiction, the remainder of this Agreement shall not be affected
thereby and shall be enforceable to the full extent permitted by law.
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12.5 Waiver. The failure of either party at any time to exercise any
right or to require performance by the other party of any provision herein shall
in no way affect the right of such party thereafter to enforce the same, nor
shall the waiver by either party hereto of any breach of any provision herein by
the other party be a waiver of any other breach of such provision, or as a
waiver of the provision itself.
12.6 Headings. The title headings are for identification and reference
only and shall not be used in interpreting any part of this Agreement.
12.7 Joint Efforts. This Agreement shall be considered for all purposes
as prepared through the joint efforts of the parties, and shall not be construed
against one party or the other as a result of the preparation, submittal or
other event of negotiation drafting or execution thereof.
12.8 Assignment. This Agreement shall inure to and be binding upon the
successors and assigns of the parties hereto; provided, that neither party shall
assign this Agreement and the rights hereunder without first having obtained the
written approval of the other party which approval shall not be unreasonably
withheld.
IN WITNESS WHEREOF, the parties have duly executed this Agreement
effective as of the day and year first above written.
CNG ENERGY SERVICES CORPORATION
By: /s/ Xxxx Xxxxx
--------------------------------------
Name: Xxxx Xxxxx
Title:
EASTERN STATES OIL & GAS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Senior Vice President
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CNG FIELD SERVICES COMPANY
CONFIRMATION LETTER
================================================================================
SELLER: BLAZER ENERGY CORPORATION BUYER: CNG FIELD SERVICES COMPANY
0000 XXXXXXXXXX XXXXXX 000 XXXX XXXX XXXXXX
XXXXX 000 P.O. BOX 1570
ALEXANDRIA, VA 22314 XXXXXXXXXX, XX 00000-0000
ATTN: Xxxxxxx X. Xxxxxxxxx ATTN: Xxxx Xxxxxx
(000) 000-0000 (000) 000-0000
FAX #: (000) 000-0000 FAX #: (000) 000-0000
================================================================================
Quantity: 11/01/98 to 01/31/99 24,275 MMBtu Daily (Estimated)
02/01/99 to 10/31/99 29,275 MMBtu Daily (Estimated)
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Type of Service: FIRM
Seller shall be required to sell and Buyer shall be required to purchase the
quantities of Gas set forth herein. Either party may interrupt its performance
only to the extent that such performance is prevented for reasons of Force
Majeure or curtailment of firm transportation and/or storage, without liability
to the other party. If a party interrupts for any other reason or curtails a
Firm customer before curtailing similarly affected Interruptible customers, the
non-breaching party's exclusive remedy shall be that it may recover its Cover
Costs.
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Term: 11/1/98 through 10/31/99
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Price: 11/01/98 to 03/31/99 @IF-CNGApp plus $0.04 USD Per MMBtu
(Base) (Reference)
04/01/99 to 10/31/99 @IF-CNGApp plus $0.01 USD Per MMBtu
(Base) (Reference)
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Delivery Point: CNG TRANSMISSION CORPORATION @ HASTINGS GATHERING POOLS
CNG TRANSMISSION CORPORATION @ HASTINGS TRANSMISSION POOLS
CNG TRANSMISSION CORPORATION @ XXXXXXXX GATHERING POOLS
CNG TRANSMISSION CORPORATION @ XXXXXXXX TRANSMISSION POOLS
CNG TRANSMISSION CORPORATION @ BRIDGEPORT GATHERING POOLS
CNG TRANSMISSION CORPORATION @ HASTINGS TRANSMISSION POOLS
CNG TRANSMISSION CORPORATION @ MISCELLANEOUS TRANSMISSION POOLS
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Pipeline: CNG TRANSMISSION CORPORATION
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Special Provisions: LESS APPLICABLE GATHERING AND EXTRACTION FEES, BASED ON
ACTUAL VOLUMES CREDITED TO FSC POOL WITHIN 5% OF SELLER ESTIMATE.
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This purchase is subject to the existing contract between Buyer and Seller.
================================================================================
By: CNG FIELD SERVICES COMPANY
/s/ Xxxx Xxxxxx
BUYER --------------------------------------------------
Title: Manager--Appalachian Supply Date: 10/16/98
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By: EASTERN STATES OIL & GAS, INC.
SELLER /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------------------------
Title: Senior Vice President Date: 10/18/98
================================================================================
PLEASE EXECUTE AND RETURN BY FAX ASAP TO (000) 000-0000
This confirmation letter will be deemed accepted if no
response is received within two (2) days.
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CNG FIELD SERVICES COMPANY
CONFIRMATION LETTER
================================================================================
Deal ID: P-BLAZERENERGY-0004
SELLER: BLAZER ENERGY CORPORATION BUYER: CNG FIELD SERVICES COMPANY
0000 Xxxxxxxxxx Xxxxxx P.O. Box 1570
Alexandria, VA Xxxxxxxxxx, XX
Xxxxxx Xxxxxx 00000 Xxxxxx Xxxxxx 26302-1570
ATTN: Xxxxxxxxx, Xxxxx ATTN: Xxxxxxx Xxxxxxx
PHONE: (000) 000-0000 PHONE #: (000) 000-0000
FAX #: (000) 000-0000 FAX #: (000) 000-0000
================================================================================
TYPE OF SERVICE: Firm
Seller shall be required to sell and Buyer shall be required to purchase the
quantities of Gas set forth herein. Either party may interrupt its performance
only to the extent that such performance is prevented for reasons of Force
Majeure or curtailment of firm transportation and/or storage, without liability
to the other party. If a party interrupts for any other reason or curtails a
Firm customer before curtailing similarly affected Interruptible customers, the
non-breaching party's exclusive remedy shall be that it may recover its Cover
Costs.
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TERM: 11/01/1998 through 10/31/99
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DELIVERY POINT:
11/01/1998 to 10/31/1999: CNG Transmission Corporation @ GWFS -
GATHERING WET - FS POOL
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PRICE:
DEAL PRICES
11/01/1998 to 10/31/1999:
Purchase Gas @ Inside Ferc CNGT Appalachia USD Per MMBtu (Base) (Reference)
OTHER COSTS
11/01/1998 to 10/31/1999:
Gath/Extract @ Meter: GWFS GATHERING WET - FS POOL @ Appalachian Gathering
Wet Deduct USD Per MMBtu (Quantity)
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QUANTITY:
Effective: 11/01/1998 to 10/31/1999: 6,274 MMBtu Daily
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SPECIAL PROVISIONS: Less applicable gathering and extraction fees
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This purchase is subject to the existing contract between Buyer and Seller.
================================================================================
By: CNG FIELD SERVICES COMPANY
BUYER /s/ Xxxxxxx Xxxxxxx
--------------------------------------------------
Title: Date: 1/13/99
--------------------------------------------------------------------------------
By:
SELLER /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------------------------
Title: Senior Vice President Date: 3/16/99
================================================================================
PLEASE EXECUTE AND RETURN BY FAX ASAP TO (000) 000-0000
This confirmation letter will be deemed accepted if no
response is received within two (2) days.
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CNG FIELD SERVICES CORPORATION
CONFIRMATION LETTER
===================================================================================================================
DEAL ID: P-EASTERNSTATE-0005
SELLER: EASTERN STATES OIL & GAS, INC. BUYER: CNG FIELD SERVICES COMPANY
0000 Xxxxxxxxxx Xxxxxx P.O. Box 1570
Alexandria, VA Xxxxxxxxxx, XX
Xxxxxx Xxxxxx 00000 Xxxxxx Xxxxxx 26302-1570
ATTN: Xxxxxxxxx, Xxxxx ATTN: Xxxx Xxxxxx
PHONE: (000) 000-0000 PHONE #: (000) 000-0000
FAX #: (000) 000-0000 FAX #: (000) 000-0000
===================================================================================================================
TYPE OF SERVICE: FIRM
Seller shall be required to sell and Buyer shall be required to purchase the
quantities of Gas set forth herein. Either party may interrupt its performance
only to the extent that such performance is prevented for reasons of Force
Majeure or curtailment of firm transportation and/or storage, without liability
to the other party. If a party interrupts for any other reason or curtails a
Firm customer before curtailing similarly affected Interruptible customers, the
non-breaching party's exclusive remedy shall be that it may recover its Cover
Costs.
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TERM: 11/01/1999 through 10/31/2000
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DELIVERY POINT:
11/01/1999 to 10/31/2000: CNG Transmission Corporation @ GDFS - GATHERING DRY -
FS POOL
11/01/1999 to 10/31/2000: CNG Transmission Corporation @ GWFS - GATHERING WET -
FS POOL
11/01/1999 to 10/31/2000: CNG Transmission Corporation @ TWFS - TRANSMISSION
WET - FS POOL
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PRICE:
DEAL PRICES
11/01/1999 to 10/31/2000: Purchase Gas @ Inside Ferc CNGT Appalachia Increment:
$0.02 USD Per MMBtu (Base)(Reference)
OTHER COSTS
11/01/1999 to 10/31/2000: Extraction @ Meter: TWFS TRANSMISSION WET - FS POOL
@ Appalachian Transmission Wet Deduct USD Per MMBtu (Quantity)
11/01/1999 to 10/31/2000: Gath/Extract @ Meter: GWFS GATHERING WET - FS POOL @
Appalachian Gathering Wet Deduct USD Per MMBtu (Quantity)
11/01/1999 to 10/31/2000: Gathering @ Meter: GDFS GATHERING DRY - FS POOL @
Appalachian Gathering Dry Deduct USD Per MMBtu (Quantity)
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QUANTITY:
Effective: 11/01/1999 to 10/31/2000: 24,000 MMBtu Daily
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SPECIAL PROVISIONS: Less applicable gathering and extraction fees
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This purchase is subject to the existing contract between Buyer and Seller.
===================================================================================================================
BUYER CNG FIELD SERVICES COMPANY:
/s/ Xxxx Xxxxxx
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Title: Manager, Appalachian Supply Date:
-------------------------------------------------------------------------------------------------------------------
SELLER By: /s/ Xxxxxxx X. Xxxxxxxxx
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Title: Senior Vice President Date:
===================================================================================================================
PLEASE EXECUTE AND RETURN BY FAX ASAP TO (000) 000-0000.
This confirmation letter will be deemed accepted if no
response is received within two (2) days.
