EXHIBIT 99.4
GAS PURCHASE AGREEMENT
THIS AGREEMENT, dated as of the 24th day of, April 1998 by and between
Cross Timbers Oil Company, a Delaware corporation, hereinafter referred to as
"Seller," and EEX Corporation, A Texas corporation, hereinafter referred to as
"Buyer,' each hereinafter referred to from time to time as "Party" or
collectively as "Parties."
WITNESSETH:
WHEREAS, Buyer is seeking to purchase supplies of natural gas for resale;
and
WHEREAS, Seller has available for sale supplies of natural gas;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, Seller and Buyer mutually agree and covenant as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the words, phrases and terms used herein
shall be used in their ordinary meaning unless this Agreement clearly indicates
otherwise or unless same is hereinafter defined, in which instance, such word,
phrase or term shall have the meaning clearly attributable to it or as defined
below:
1.1 The term "Btu" shall mean British thermal unit, and shall be the
quantity of heat required to raise the temperature of one (1) pound of water one
degree Fahrenheit (1 degree F.) at sixty degrees Fahrenheit (60 degrees).
1.2. The term "Date of Initial Delivery" shall mean May 1, 1998.
1.3 The term "Day" shall mean a period of twenty-four (24) consecutive
hours beginning at 8:00 A.M., Central Time.
1.4 The term "Delivery Point(s)" shall have the meaning given it in
Article IV.
1.5 The term "gas" shall mean natural gas, including gas-well gas,
casinghead gas, and/or residue gas resulting from processing consisting
primarily of methane.
1.6 The term "MMBtu" shall mean one million (1,000,000) British thermal
units.
1.7 The term "Opelika Properties" shall mean Seller's interest in the
lands and xxxxx located in Opelika Field, Xxxxxxxxx County, Texas described on
Exhibit "A" attached to that certain Conveyance of Production Payment dated
April 24, 1998 between Seller, as Grantor, and Buyer, as Grantee.
ARTICLE II
DEDICATION AND TERM
All of the gas reserves produced attributable to Seller's interest in the
Opelika Properties are hereby dedicated to this Agreement for the term hereof,
which shall be until the earlier of (i) December 31, 2001 or (ii) until a total
of 36,000,000 MMBtu have been delivered to Buyer under the terms of this
Agreement.
ARTICLE III
QUANTITY
3.1 Subject to the terms and conditions of this Agreement, Seller agrees to
deliver at the Delivery Point(s), and Buyer agrees to purchase and receive or
cause to be received at the Delivery Point(s), all of the gas production
attributable to the Opelika Field each day during the term of this Agreement.
3.2 The parties shall coordinate their nomination activities and the
quantities of gas to be delivered and purchased each day by giving sufficient
time to meet the deadlines of the affected transporter(s), but in no event less
than one hour prior to such deadlines. Should either party become aware that
actual deliveries at the Delivery Point(s) are greater or less than the
scheduled gas, such party shall promptly notify the other party. For purposes
of nominating deliveries of natural gas pursuant to this Article III, Buyer
shall, until notified otherwise by Seller, provide instructions by telephonic
notice to Seller's designees; provided, that such telephonic notice shall be
promptly confirmed in writing. Notwithstanding anything contained in this
Agreement to the contrary, Buyer shall not be obligated to take any volumes in
excess of 46,500 MMBtu of gas per day.
ARTICLE IV
DELIVERY POINTS
The Delivery Point(s) for all gas sold and purchased hereunder shall be (1)
at the inlet to Lone Star Gas Company's Meter No. 00-0000-00 and/or Lone Star
Gas Company's Meter No. 00-0000-00, or (2) at any other point on Lone Star's Gas
Company's pipeline system, or (3) such other point as the parties may mutually
agree by negotiating in good faith, all such points being hereinafter referred
to as "Delivery Points." If Seller elects to deliver the gas at a point on Lone
Star's pipeline as set forth in (2), Seller shall reimburse Buyer for all
transportation expenses actually incurred by Buyer in excess of those that Buyer
would have otherwise incurred if Seller had delivered said gas to the Delivery
Points set forth in (1) above.
2
ARTICLE V
PRICE
The price for all gas sold and purchased under this Agreement on a monthly
basis shall be the Houston Ship Channel Index Price (large packages only) per
"Inside FERC's Gas Market Report" less $0.08/MMBtu.
ARTICLE VI
BILLING AND PAYMENT
6.1 Seller shall submit a statement to Buyer on or before the fifteenth
(15th) day of each calendar month showing the quantity of gas delivered during
the preceding calendar month to Buyer hereunder and a calculation of charges for
such gas. If the actual total quantities are not available by the billing date,
billing will be on an estimated basis on the fifteenth (15/th/) day of the
month. The estimates will then be corrected to actual totals on the following
month's billing or as soon thereafter as available.
6.2 Payment by Buyer to Seller shall be due by wire transfer on or before
the twenty-fifth (25th) day of the month in which said xxxx is received by
Buyer. Payment shall be made by Buyer to Cross Timbers Energy Services Inc.,
NationsBank., Dallas, Texas ABA #000000000, Acct #5050623264. If any information
required to compute such payment is not available by the payment date, payment
will be on Seller's estimate, with such estimate corrected to an actual total on
the following month's payment or as soon thereafter as available. Either Party
will bring any adjustments it deems necessary to the immediate attention of the
other Party and neither Party shall have the right to question or contest any
charge or credit if the matter is not brought to the attention of the other
Party in writing in any event no later than twenty-four months after receipt of
the statement in question. If Buyer is entitled to a refund of amounts paid to
Seller, Buyer shall also receive interest at the rate set forth in Paragraph
6.3. If Buyer disputes any part of a statement billed above before paying same,
Buyer shall pay the undisputed amount and notify Seller of the disputed amount
and the reasons for the dispute. Seller shall not suspend further sale and
delivery under paragraph 6.3 below as a result of Buyer's failure to pay the
disputed amount. If Seller is ultimately found to be entitled to the payment of
disputed amounts, Seller shall also receive interest at the rate set forth in
Paragraph 6.3. If the Parties are unable to resolve the dispute within sixty
(60) days, then the matter will be submitted to arbitration in accordance with
Article VIII.
6.3 Should Buyer fail to remit the undisputed amount when due, interest on
the unpaid portion shall accrue at a rate equal to the then effective "Prime
Rate" plus 2% of interest for large U. S. money center commercial banks
published under "Money Rates" by the Wall Street Journal from the date due until
the date of payment.
3
ARTICLE VII
QUALITY AND PRESSURE
Subject to Article 8.4 below, all gas delivered by Seller hereunder shall
conform to the following specifications:
a. The gas delivered hereunder shall not contain more than five (5)
grains of total sulfur, and shall not contain more than one-fourth (
1/4) grain of hydrogen sulfide and one (1) grain of mercaptan sulfur
per one hundred (100) cubic feet of gas.
b. The gas delivered hereunder shall contain no oxygen, shall not
contain more than three percent (3%) by volume of carbon dioxide,
shall not contain more than seven pounds (7#) of water vapor per
million cubic feet and shall be commercially free from crude oil,
mineral seal oil, distillate and other impurities, or noncombustible
gases. The gas delivered hereunder shall be at temperatures not in
excess of one hundred twenty degrees (120 degrees) Fahrenheit.
c. The gas delivered hereunder shall be at a pressure which is
sufficient to enter the transporting pipeline at the point of delivery
to Buyer; provided, however, that Seller's delivery pressure into the
transporting pipeline shall not exceed the transporting pipeline's
maximum allowable operating pressure.
d. The gas delivered hereunder shall have a heat content of not less
than nine hundred fifty (950) nor more than eleven hundred fifty
(1150) Btu's per cubic foot under the conditions of measurement
contained in Article IX. and specific gravity with ranges that will
permit efficient utilization thereof, and Buyer shall not be obligated
to take any gas tendered to it hereunder which , in the judgment of
Buyer, is not interchangeable with the gas in that portion of the
pipeline system to which Seller's delivery line is connected.
ARTICLE VIII
MEASUREMENT
8.1 Whenever the conditions of pressure and temperature differ from those
set out herein, the volume of gas delivered shall be converted to the pressure
base of 14.65 psia and temperature base of sixty degrees (60 degrees) Fahrenheit
and properly corrected for deviation from the Ideal Gas Laws. Gas measurement
computations shall be made in accordance with the American Gas Association
Report No. 3 "Orifice Metering of Natural Gas" and applicable state regulations.
Flowing temperature may be obtained by periodic tests conducted by Buyer or
Buyer's Agent
4
(provided, however, either party may at its expense properly install and operate
a recording thermometer of standard make, and in this event the flowing
temperature as recorded shall be used). A specific gravity may be obtained by
periodic tests to be conducted by Buyer or Buyer's Agent with a specific gravity
instrument of standard type (provided, however, either party may at its expense
properly install and operate a recording gravitometer of standard make and in
this event the specific gravity as recorded shall be used). All of the gas
received hereunder shall be measured by means of a meter or meters of standard
type, which shall be installed operated and maintained by Buyer or Buyer's Agent
and placed at the aforesaid Delivery Point(s). The accuracy of Buyer's or
Buyer's Agent's measuring equipment shall be verified by test, using means and
methods generally acceptable by the gas industry, at least every sixty (60)
days. When any test shows an error of more than one percent (1%) in the
measurement, correction shall be made for the period during which the
measurement instruments were in error, first, by using the registration of
Seller's check meter, if installed and registering accurately; if no check meter
is installed and registering accurately or if this period cannot be ascertained,
correction shall be made for one-half ( 1/2) of the period elapsed since the
last date of test, and this measurement instrument shall be adjusted immediately
to measure accurately; provided, however, no adjustment or corrections for meter
inaccuracy or failure shall be made for a period longer than ninety (90) days.
8.2 The Btu heat content shall be computed on the basis of a temperature
of sixty degrees (60 degrees) Fahrenheit and pressure equivalent to 14.65 psia
and adjusted for the actual water vapor content of the gas as delivered
hereunder; provided, however, if actual water vapor content of the gas delivered
is not more than 7# per Mcf, the gas shall be assumed to be dry. Such
determination shall be made by Buyer or Buyer's Agent promptly following initial
deliveries and on each succeeding January 1 and July 1 thereafter, or at such
intervals as may be mutually agreed upon or found necessary in practice. The
determination shall be made by, at Buyer's option, fractional analysis, manually
operated calorimeter of a type approved by the United States Bureau of Standards
and operated in accordance with the methods recommended by said Bureau, or a
recording calorimeter of a type acceptable to both parties installed at the
point of deliver, in which case the gross heating value of the gas delivered
each day shall be determined by the arithmetical average of the daily records of
such recording calorimeter.
8.3 Seller may at its option and expense install and operate check meters
to check Buyer's or Buyer's Agent's meters. Such meters shall be for check
purposes only and shall not be used in the measurement of gas for the purposes
of this Agreement. Check meters shall be subject at all reasonable times to
inspection and examination by Buyer. The installation and operation thereof
shall, however, be done entirely by Seller.
8.4 Notwithstanding anything contained herein to the contrary, all gas
delivered by Seller hereunder shall meet the quality, pressure and temperature
requirements of the transporting pipeline(s) and all gas delivered hereunder
shall be measured at the Delivery Point by the pipeline receiving the gas at
that point. Such determinations shall be accepted and used by Buyer and Seller
for all purposes under this Agreement.
5
ARTICLE IX
POSSESSION AND TITLE
9.1 As between the parties, hereto, Seller shall be deemed to be in
exclusive control and possession of the gas delivered hereunder and responsible
for any damage or injury caused thereby until the same shall have been delivered
to Buyer at the Delivery Point(s), after which Buyer shall be deemed to be in
exclusive control and possession of the gas and responsible for any damage or
injury caused thereby.
9.2 Seller warrants title to the gas delivered hereunder free and clear
of all liens, encumbrances and claims whatsoever arising by, through and under
Seller, but not otherwise. Seller will indemnify Buyer and hold it harmless from
any and all suits, actions, debts, accounts, damages, costs, losses, and
expenses arising from or out of adverse claims of any or all persons to said gas
arising by, through and under Seller, but not otherwise.
ARTICLE X
FORCE MAJEURE
10.1 If either party, because of force majeure, is rendered wholly or
partly unable to perform any of its obligations under this agreement, that party
shall be excused from whatever performance is affected by the force majeure to
the extent so affected provided that: (i) the non-performing party, as soon as
possible and in any event not more than within two (2) weeks after the
occurrence of the force majeure, gives the other party written notice describing
the particulars of the occurrence, the date of its commencement, its estimated
duration, and its effect to date; provided, however, that verbal notice of any
such event is given to the performing party within three (3) business days of
the occurrence of such event; (ii) the suspension of performance is of no
greater scope and of no longer duration than is required by the force majeure;
and (iii) the non-performing party uses its best efforts to remedy its inability
to perform.
10.2 The term "force majeure," as used herein, means acts of God,
including sudden or unusually severe actions of the elements, such as floods,
hurricanes, windstorms, freezes, or tornadoes, strikes, lockouts or other
industrial disturbances, actions by federal, state, county, municipal or any
other government or quasi-government authority, entity or agency, sabotage,
terrorist action, fire, earthquake, exercise of eminent domain, explosion,
radiation contamination, toxic fumes, falling objects, train wrecks, war, or
riots, equipment malfunction(s), breakage or accident to machinery or lines of
pipe, the necessity for making repairs or alterations to machinery or lines of
pipe, freezing of xxxxx or lines of pipe, partial or entire failure of xxxxx,
loss, interruption, or curtailment of firm transportation of gas hereunder on
Lone Star Gas Company's (or its successor) pipeline system, but only to the
extent such events do not result from the intentional or grossly negligent acts
or failures of the non-performing party; and all other sudden interferences or
causes beyond the reasonable control of and not attributable to gross negligence
or intentional breach of this Agreement by the party relying thereon as
justification for not performing an obligation hereunder. Such term shall also
include the inability to acquire, or the delays in acquiring, at reasonable cost
and after the exercise of reasonable diligence, any servitudes, right-of-way
grants, permits or licenses required to be obtained to enable a party
6
hereto to fulfill its obligation hereunder. Notwithstanding anything to the
contrary contained herein, "force majeure" does not include any changes in
market conditions or governmental action that affect the cost or price of gas,
or market conditions which affect availability of gas, but shall include
domestic governmental action which directly limits Seller's ability to deliver
said gas. Further, except as provided above, the term "force majeure" does not
include the loss, interruption or curtailment of firm or interruptible
transportation. Any excuse of performance by reason of a force majeure shall not
extend for a time period greater than six (6) months except upon the written
consent of the performing party, which consent will not be unreasonably
withheld; provided, however, that if the force majeure is not removed within
eighteen (18) months, then the force majeure shall cease to excuse the failure
to perform, and the performing party may terminate this Agreement. Provided,
that the performing party may, in its sole unfettered discretion, agree to
further extend the period of excuse of performance by reason of a force majeure.
Provided further, that if, because of an event of force majeure, Buyer is unable
to take delivery of gas under the terms of this Agreement, any such gas not
taken by Buyer shall be released from dedication under this Agreement and made
available for sale by Seller to third parties.
ARTICLE XI
COVENANTS OF SELLER
Seller shall conduct and direct and have full control of all operations in
the Opelika Properties. Seller covenants that during the term hereof, and at its
own cost, it will cause the Opelika Properties to be developed and continuously
operated for the lifting and delivery of gas in a good and workmanlike manner
and in accordance with sound field practice, all applicable operating
agreements, contracts and other instruments and all applicable laws, rules and
regulations, and all to be done according to the most approved practices of
prudent operators in the industry;
ARTICLE XII
ARBITRATION
Pursuant to the Federal Arbitration Act, the parties hereby agree that any
controversy, claim, or alleged breach, including but not limited to torts and
statutory claims, arising out of or related to this Agreement shall be settled
by binding arbitration administered by the American Arbitration Association
("AAA") in accordance with its Commercial Arbitration Rules. Demand for
arbitration may be made no later than the time that such action would be
permitted under the applicable Texas statute of limitation. Any disputes
regarding the timeliness of the demand for arbitration shall be decided by the
arbitrator(s). Judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof in order to obtain compliance
therewith. Any case in which any claim, or combination of claims, exceeds
$500,000 shall be subject to the AAA's Large, Complex Case Procedures and
decided by the majority of a panel of three (3) neutral arbitrators. In
rendering the award, the arbitrator(s) shall determine the rights and
obligations of the parties according to the laws of the State of Texas. The
arbitration proceedings and hearing shall be conducted at the Houston Regional
Office of the AAA or at such
7
other place as may be selected by mutual agreement. No party nor the
arbitrator(s) may disclose the existence, content, or results of any arbitration
hereunder with the prior written consent of all parties.
ARTICLE XIII
GOVERNMENT REGULATION
13.1 This Agreement and all provisions herein shall be subject to all
applicable and valid statutes, rules, orders and regulations of any federal,
state, or local governmental authority having jurisdiction over the parties,
their facilities, or gas supply, this Agreement or any provisions thereof.
13.2 Neither party shall be held in default for failure to perform
thereunder if such failure is due to compliance with such rules, regulations,
laws, orders or directives of any state, federal or other governmental
regulatory authority.
13.3 Should either of the parties by law or regulation be ordered or
required to do any act inconsistent with the provisions of this Agreement, this
Agreement shall be deemed modified to conform with such law or regulations.
Nothing in this Agreement shall prevent either party from contesting the
validity of any such law, order, rule or regulation, nor shall anything in this
Agreement be construed to require either party to waive its right to assert the
lack of jurisdiction over such regulatory body, governmental entity, or agency
over this Agreement or any party thereto.
34.4 Each of the parties understands that should any governmental agency
or body with jurisdiction over the transaction require approval for the sale and
purchase of gas (or transportation, or receipt of supply) under this Agreement,
then each of the parties shall make any necessary applications or filings and
shall submit any records or data to the regulatory body so that requisite
regulatory authorization may be granted.
ARTICLE XIV
MISCELLANEOUS
14.1 Waiver of Breach: The waiver of either party of any breach of any of
the provisions of this Agreement shall not constitute a continuing waiver of
other breaches of the same or other provisions of this Agreement.
14.2 Notices: All notices provided for herein shall be in writing and
shall be deemed to be delivered to Buyer when addressed to EEX Corporation, 0000
XxxxXxxx Xxxx., Xxxxx 0000, Xxxxxxx, Xxxxx 00000, Attention: Marketing
Department, and deposited in the United States mail, postage prepaid, and shall
be deemed delivered to Seller when addressed to Cross Timbers Oil Company, 000
Xxxxxxx Xxxxxx, Xxxxx 0000, Xx. Xxxxx, Xxxxx 00000-0000, Attention: Gas
Marketing, and deposited in the United States mail, postage prepaid.
8
45.3 Captions: The captions or headings preceding the various parts of
this agreement are inserted and included solely for convenience and shall never
be considered or given any effect in construing this Agreement or any part
hereof in connection with the intent, duties, obligations or liabilities of the
respective parties hereto.
14.4 Assignments: The provisions of this Agreement shall extend to the
parties hereto and to their successors and assigns, but neither party shall
assign any of its rights or obligations hereunder without the consent of the
other party. No assignment by a party shall relieve such party of its
obligations hereunder unless agreed to in writing by the other party. Nothing
in this paragraph shall in any way prevent Buyer from mortgaging or assigning
its interest in this Agreement as security. Seller shall not assign its
interest in the Opelika Properties without Buyer's prior written consent, which
consent shall not be unreasonably withheld.
14.5 Complete Agreement: Except for the Assignment and Conveyance, this
Agreement supersedes any and all previous agreements, written or oral, between
the parties relating to the subject matter hereof and the terms and conditions
hereof contain the entire and complete agreement of the parties hereto, and no
other agreements, covenants, conditions, warranties or representations, either
written or oral, made prior to the date hereof, regarding the subject matter
hereof shall be binding on the parties hereto. Any amendments to this Agreement
shall be in writing and executed by the parties hereto of their successors and
assigns.
14.6 Governing Law: THE INTERPRETATION AND PERFORMANCE OF THIS GAS
PURCHASE AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS, EXCLUDING ANY CONFLICT OF LAWS RULES THAT WOULD REQUIRE THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the
day and year first above written.
SELLER
CROSS TIMBERS OIL COMPANY
By: /s/ XXXXX X.VENEERBER, II
-------------------------------------
Name: Xxxxxx X. Xxxxxxxxxx, XX
Title: Senior Vice President - Land
9
BUYER
EEX Corporation
By: /s/ XXXXXX X. XXXXX
-------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Attorney-In-Fact
10
