10164
NEW GAS
FIXED PRICE
LIFE OF WELL
GAS PURCHASE AGREEMENT
TABLE OF CONTENTS
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Page
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Article I Term 1
Article II Point(s) of Delivery and Quality of Gas 3
Article III Measurement 7
Article IV Obligations to Take and Deliver Gas 9
Article V Price 12
Article VI Force Majeure 13
Article VII Liability 14
Article VIII Notices 15
Article IX Production Period and Statement 15
Article X Further Obligations and Representations 16
Article XI Miscellaneous 20
Exhibit
-------
A - Dedicated Xxxxx
GPC-LOW 6/91
EXHIBIT 10.2
NEW GAS
LIFE OF WELL
FIXED PRICE
GAS PURCHASE AGREEMENT
----------------------
THIS AGREEMENT, (the "Agreement"), effective as of the 2nd day of
August, 1991, is entered into by and between Xxxxx Petroleum Corporation,
the "Seller," and The East Ohio Gas Company, an Ohio corporation, the
"Buyer."
RECITAL
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WHEREAS Seller desires to sell and deliver to Buyer, and Buyer desires
to purchase from Seller, at the Point(s) of Delivery specified in the
Agreement, all the natural gas produced from and during the life of the
Ohio well or xxxxx described in Exhibit A attached and made a part of the
Agreement, at the prices and upon and subject to the terms, conditions and
limitations provided in the Agreement;
NOW THEREFORE, in consideration of their mutual covenants and promises
contained in the Agreement, Seller and Buyer agree as follows:
ARTICLE I
TERM
----
1. The Agreement shall continue in force from its date for fifteen
years and for as long thereafter as gas from any well listed on Exhibit A
can be produced in paying and marketable quantities, provided, however,
that if at any time the delivery by Seller at the Point(s) of Delivery of
gas from any well
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Page 1
subject to the Agreement shall be less than an average of twenty thousand
cubic feet per day for any Production Period during which neither the
delivery nor receipt of gas has been interrupted pursuant to Articles II,
IV or VI of the Agreement, then Buyer, at its sole option, may terminate
the Agreement as to the gas produced from any such well, or from each of
such xxxxx if there are more than one, by giving Seller thirty days prior
written notice of such termination.
2. Additional xxxxx may be added to Exhibit A and existing xxxxx
listed on Exhibit A may be abandoned during the term of the agreement, but
such additions or abandonment shall only be permitted and become effective
after the execution of a written supplement to Exhibit A, executed by both
Buyer and Seller, specifying the effective date of any such additions or
abandonments. The execution of such supplements shall be at the sole
discretion of Buyer, which has no obligation to execute any such
supplement.
3. The Agreement shall not extend and become effective as to any
well listed on Exhibit A or on any supplement to Exhibit A unless such well
is turned on and gas from it is being received by Buyer at the Point(s) of
Delivery within ninety days of the date of either the Agreement or the
execution of the supplement to Exhibit A, whichever includes such well.
4. Termination for any cause shall not affect either party's rights
or duties arising prior to such termination.
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ARTICLE II
POINT(S) OF DELIVERY
AND QUALITY OF GAS
------------------
1. Seller shall promptly proceed with the construction of any
necessary pipe line extending from the well or xxxxx subject to the
Agreement to the terminal point or points determined by Buyer, hereinafter
referred to as the "Point(s) of Delivery." The Point(s) of Delivery shall
be measuring stations furnished, constructed, owned, operated and
maintained by Buyer, located on Buyer's pipe lines as now constructed or on
any extension which may later be constructed. The sites for said measuring
stations shall be furnished by Buyer, or, if by Seller, with rights of
ingress and egress granted to Buyer. As soon as practicable after
completion of a pipe line by Seller to a Point of Delivery, Buyer shall
construct the necessary gas measuring station. Buyer may at any time, at
its option, install additional measuring equipment so as to individually
meter the gas from any well subject to the Agreement. Seller may request
that Buyer change any Point of Delivery after its location has been
originally established. If Buyer, in its sole discretion, agrees to make
such a change, all costs incurred by Buyer for any alternate site, for the
movement of any measuring and regulating station equipment, or for any new
or additional metering facilities will be promptly reimbursed to Buyer by
Seller after receipt of an itemized invoice.
2. Seller's rights as Lessee under the terms of any lease pursuant to
which any well subject to the Agreement is drilled, for the purposes of
installing, operating, maintaining and
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removing any facilities and equipment, including measuring equipment, and
its rights of ingress and egress to the well and measuring station, shall
be extended to Buyer. Seller shall provide and maintain in good repair
access roads, suitable for use by Buyer's vehicles, to all well sites and
measuring stations. Should Seller not secure, provide and maintain both
physical and legal access to any well or xxxxx subject to the Agreement for
Buyer, then Buyer shall, in its sole discretion, have the right to
terminate the Agreement as to such well or xxxxx.
3. Seller may use such mechanical pressurization as it deems
necessary to deliver gas to Buyer at the Point(s) of Delivery, but the gas
shall be taken by Buyer against such pipe line pressures as Buyer in its
sole judgment deems necessary to maintain in its pipe line system either by
reason of its market demands and deliveries of gas into its pipe line
system from other sources of supply or in accordance with good safety
practices and requirements and the regulations of government authorities.
Should Seller compress and pump the gas to be delivered to Buyer at the
Point(s) of Delivery, Seller shall also install and maintain at its own
expense the necessary equipment for the elimination or suppression of
pulsations in the flowing gas that are created by compression equipment,
and, in addition, Seller will install the necessary equipment to insure a
flowing temperature not to exceed 120 degrees Fahrenheit at the Point(s) of
Delivery.
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4. Buyer may at any time suspend the taking of gas hereunder for
safety reasons or while making repairs or alterations to, or conducting
tests of, its pipelines or other facilities. When practicable Buyer shall
notify Seller in advance of its plans to suspend the taking of gas, giving
its best estimate of the duration of the suspension. Such repairs,
alterations or test; shall be completed with due diligence. Any period of
suspension of Purchases pursuant to this paragraph shall be in addition to
all other rights of Buyer to suspend purchases pursuant to the Agreement.
5. Seller shall install and maintain, at Seller's expense, the
necessary equipment for separating and removing oil, water, salt, crust,
sulphur or sulphur compounds, nitrogen or nitrogen compounds, and other
gaseous impurities, objectionable odors, and foreign matter or substances
and mechanical pulsations from the gas before its delivery to Buyer at
Point(s) of Delivery. Seller is obligated to deliver to Buyer at the
Point(s) of Delivery only such gas as is free from all substances or
flowing conditions which might affect or impair its marketability or cause
injury to or interference with the operation of the pipe lines, regulators,
meters or other equipment of Buyer or Buyer's customers. Buyer may refuse
at any time any gas which contains gaseous impurities or objectionable
odors or otherwise does not meet Buyer's gas quality standards. Other than
as provided for in this paragraph, however, the gas delivered to Buyer
hereunder shall be delivered in its natural state without any of its
component parts having been extracted.
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6. Seller at all times shall deliver to Buyer at the Point(s) of
Delivery gas having a gross heating value of not less than 1,000 British
thermal units per cubic foot at 14.73 pounds per square inch absolute
("PSIA"), sixty degrees Fahrenheit and saturated with water vapor. Seller
shall deliver only such gas which does not contain more than 1/4 grain of
hydrogen sulfide per 100 cubic feet of gas volume (8 ppm of sulfur, by
weight) nor contain more than 3/4 grain of total sulfur per 100 cubic feet
of gas volume (22 ppm of sulfur, by weight).
7. If, by reason of the presence of any impurities in the gas
delivered to Buyer, or as a result of any other act or failure to act which
is inconsistent with the provisions of this Article II, any of Buyer's
property or equipment is damaged or otherwise rendered inoperative, Buyer
shall xxxx Seller, and Seller shall pay within fifteen days of receipt of
an itemized invoice, for the cost of all necessary repairs, corrections and
replacements.
8. All pipe lines, fittings, and other properties furnished under the
Agreement shall remain the property of the party furnishing the same who
shall be solely responsible for the maintenance and operation thereof, and
each party may remove its property at the termination of the Agreement,
provided however, that any property the cost of which has been reimbursed
to Buyer by Seller pursuant to paragraph 1 of this Article II shall remain
the property of, and shall be operated and maintained by, Buyer.
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ARTICLE III
MEASUREMENT
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1. The unit of measurement for gas hereunder shall be one cubic foot
of gas, and the term "cubic foot of gas" means a cubic foot of gas at a
pressure of 14.73 pounds per square inch absolute and at a temperature of
sixty degrees (60) Fahrenheit. For purposes of measurement and meter
calibration, atmospheric pressure shall be assumed to be 14.4 PSIA. All gas
delivered to Buyer by Seller hereunder shall be measured by orifice or
other measurement facility of standard type to be selected and furnished by
Buyer. Orifice meters of Buyer shall be constructed and installed in
accordance with the applicable provisions of the American National Standard
"Orifice Metering of Natural Gas," ANSI/API 2530, First Edition, and any
amendments thereto. The volumes of gas delivered to Buyer at pipeline
pressures and temperatures shall be computed from meter records and
converted into the cubic foot or thousand cubic foot ("MCF") unit of
measurement specified here in accordance with standard industry practice.
Correction shall not be made for deviation from the Ideal Gas Laws. The
temperature of the gas flowing through each meter is assumed to be sixty
degrees (60) Fahrenheit, provided, however, that Buyer may at any time
install a recording thermometer to record the temperatures of the gas
flowing through the meter, in which event the arithmetic average of the
hourly temperatures recorded shall thereafter be used in correcting the
volumes delivered hereunder to the unit of measurement specified herein
above.
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2. Buyer shall furnish, install and maintain in good condition all
meters and regulating equipment at the Point(s) of Delivery. Buyer shall
read the meters, which shall be accessible to inspection and examination by
Seller at all reasonable times. If Seller challenges the accuracy of any
meter or measuring equipment in use under this Agreement and desires to
have the same tested, Buyer shall, if Seller desires, perform the test in
the presence of Seller or Seller's representative. The cost of testing the
meter shall be borne by Seller if the meter proves to be correct, and it
shall be deemed correct if there shall be no greater variation than three
percent (3%), either plus or minus. If the meter on test proves incorrect,
then the cost of testing shall be borne by Buyer. If a meter does prove
incorrect, as provided herein, the registration of such meter shall be
corrected at the rate of such inaccuracy for a period agreed upon by the
Buyer and Seller. In no event will the inaccuracy adjustment period exceed
the lesser of one half the period of time from the last test, or the period
from the first of the preceding Production Period prior to the date of
challenge by either party. For the purpose of testing, the meter shall be
tested and adjusted on the ground. During the time a meter is disconnected
from the line, the gas delivered may be estimated by Buyer until the meter
is again connected to the line, such estimate to be on the basis of the
amount of gas registered at like pressures for like periods of time when
the meter was registering accurately.
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ARTICLE IV
OBLIGATIONS TO TAKE
AND DELIVER GAS
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1. Subject the terms and conditions of the Agreement, Buyer shall buy
all the gas delivered to it by Seller at the Point(s) of Delivery, and
Seller shall, and is obligated to use its best efforts to, produce, deliver
and sell to Buyer all the gas owned, produced or purchased by Seller from
all xxxxx listed on Exhibit A on each day of the term of the Agreement, in
an efficient and expeditious manner, other than that required for drilling
operations with respect to such xxxxx. However, if required by the terms of
the oil and gas lease pursuant to which the gas subject to the Agreement is
produced, Seller may also provide up to 300 MCF per year to one dwelling on
the leased property from one well. Further, if required by the lease, each
additional dwelling on the leased property, if any, may also be provided
with up to 300 MCF per year if an additional well is producing gas on the
leased property for each such additional dwelling. In no event shall any
dwelling receive gas from more than one well, nor shall any well provide
gas for more than one dwelling, no matter how many dwellings or xxxxx are
located on the leased property. If any other or greater volumes are
diverted from Buyer, then, at buyer's option, the price per MCF set forth
in Article V will become, for all gas from each well from which the excess
volumes were diverted, the Short Term Spot Price being paid by Buyer at the
time of the diversion, as such price may be amended by Buyer. The adjusted
price shall continue for a period of one year and as long thereafter as the
unauthorized diversion
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continues. Further, if the unauthorized diversion continues beyond one
year, Buyer at its option may take any or all of the following actions:
invoice Seller for the cost of the measuring station, impose a fee of two
cents ($.02) per MCF to pay for the costs of measuring the gas, withhold
such fees or costs from payments for gas volumes associated with the well
or xxxxx, and treat the diversion as a breach of the Agreement and pursue
any or all legal and equitable remedies, including termination and specific
performance. Buyer will immediately notify Seller in writing of any
unauthorized diverted volumes it becomes aware of and its actions in
response thereto.
2. It is understood and agreed, however, that Buyer's obligation to
take gas from any well or xxxxx subject to the Agreement, in addition to
the limitations imposed elsewhere by the Agreement, is limited to one
hundred and eighty (180) days in each or any calendar year beginning
January 1 and ending December 31, except for the initial calendar year,
being the year in which gas from any well listed on Exhibit A is first
produced and delivered at the Point(s) of Delivery, during which period
Buyer agrees to take gas at least fifty percent (50%) of the time remaining
after the initial delivery date until the end of the initial calendar year.
Pursuant to this paragraph Buyer may suspend taking gas at any time and for
any reason, including price, but Buyer shall have the right to require
delivery or the resumption of delivery of gas on each day of every year,
subject to the terms of the Agreement.
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3. If Buyer wishes Seller to cease delivering gas from any or all
xxxxx subject to this Agreement pursuant to any provision of the Agreement,
Buyer shall notify Seller by telephone or letter, and Seller, on receipt of
such notice, shall immediately cease deliveries and shut in the well or
xxxxx as directed by Buyer. Should Seller fail to comply with Buyer's
instructions within a reasonable time in Buyer's sole judgment, Buyer may
take all action necessary to shut in such xxxxx or otherwise interrupt the
receipt of gas at the Point(s) of Delivery or elsewhere, without additional
notice. If Buyer is unable to, or elects not to, shut in the xxxxx or
otherwise interrupt receipt of the gas in the event Seller fails to do so
after receiving notice and instructions to do so pursuant to this
paragraph, any continuing deliveries to Buyer after such notice shall be
deemed to have been supplied by Seller to Buyer at no cost, and Buyer shall
not be obligated to make any payments to Seller therefor. Xxxxx shut in
pursuant to this Article shall remain shut in, and deliveries of gas from
such xxxxx shall not resume, until Buyer in its sole discretion notifies
Seller, by telephone or letter, that deliveries may be resumed. Buyer's
right to recall shut-in gas and to resume purchases shall be absolute. Upon
notice from Buyer, Seller shall resume deliveries as soon as practicable.
4. It is understood that Buyer has no obligation, implied or
expressed, to take gas on more than one hundred and eighty (180) days in
any year, nor on consecutive days, nor any obligation to take any specific
volume of gas, nor gas from any specific well or xxxxx during the periods
in which Buyer is
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taking gas, except as expressly provided for pursuant to the Agreement. It
is the intent of the Parties, by this provision, to recognize that the
nature, timing, frequency and duration of Buyer's shut-in of xxxxx or other
refusals to accept gas shall be at Buyer's sole discretion, subject only to
Buyer's express obligations to take gas in accordance with the terms of the
Agreement. Buyer shall not be liable for any damages, direct or indirect,
through loss of gas, or otherwise, sustained by Seller, its heirs,
executors, administrators or assigns, resulting from or arising out of the
failure or refusal of the Buyer to take gas, or out of any actions
incidental to its cessation of taking gas, or shutting in of xxxxx, if such
failure, refusal or action is contemplated or permitted by the terms of the
Agreement.
5. Buyer's rights to suspend the taking of gas pursuant to this
Article IV shall be in addition to its rights to suspend taking gas
pursuant to any other provisions of the Agreement.
ARTICLE V
PRICE
-----
Subject to the terms and conditions of the Agreement, the price to be
paid by Buyer for all volumes of gas from xxxxx subject to the Agreement
sold and delivered to the Point(s) of Delivery, shall be $2.50 MCF. In
addition, Buyer will pay $0.20/MCF to Seller as reimbursement for the cost
of delivering or transporting the gas to Buyer. The prices set forth in
this Article V represent: the full and complete price to be paid for gas
subject to the Agreement as delivered to the Point(s) of Delivery. Buyer is
not obligated to pay any additional or other
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price than the prices set forth here, regardless of what it may pay for any
other gas or transportation at any other time or date or pursuant to any
other agreement. The prices provided for in this Article shall be subject
to the provisions of Article IV, paragraph 1 and Article XI, paragraphs 2
and 4 of the Agreement.
ARTICLE VI
FORCE MAJEURE
-------------
1. The term "Force Majeure" as used herein, and as applied to either
party hereto, shall mean acts of the law, including governmental bodies
acting pursuant to law, acts of God, strikes, lockouts, or other labor
disturbances, acts of the public enemy, war, blockades, insurrections,
riots, epidemics, fires, lightning, storms, floods, washouts, arrests, and
restraint by government or people, civil disturbances, explosions, breakage
or accidents to machinery or lines of pipe, freezing of xxxxx or pipe
lines, partial or entire failure of such xxxxx, the necessity for making
repair to or alteration of machinery or line of pipe, or any other cause,
whether of the kind herein enumerated or otherwise, not reasonably within
the control of the party invoking Force Majeure. It is understood that
settlement of strikes, lockouts or labor disturbances shall be entirely
within the discretion of the party having the difficulty and that the above
requirement that any Force Majeure shall be remedied with all reasonable
dispatch shall not require the settlement of strikes, lockouts, or labor
disturbances by acceding to the demands of an opposing party when such
course is inadvisable in the discretion or judgment of the party having the
difficulty.
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2. Neither party to this Agreement shall be liable for any damage or
loss that may be occasioned by any failure, depletion, shortage, or
interruption in the production of gas from a well, or any decline in
natural pressure. In the event 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 payment of amounts due
hereunder, then the obligations of such party, so far as they are affected
by such Force Majeure, shall be suspended during the continuance of any
inability so caused. However, the party claiming the existence of Force
Majeure shall use all reasonable efforts to remedy promptly any situation
which may interfere with the performance of its obligations under the
Agreement.
3. Neither Force Majeure or other causes or contingencies recognized
pursuant to the Agreement shall relieve either party of liability or
responsibility unless notice and full particulars are given in writing to
the other by the party relying on such facts, as soon as reasonably
practicable after the occurrence of the facts relied upon. Such facts shall
not, however, in any event, release either party from liability in the
event of its concurring negligence, nor from its obligations to make
payments of amounts then due.
ARTICLE VII
LIABILITY
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1. Buyer and Seller shall each have responsibility for, and shall
indemnify and hold the other, its agents, employees, officers, directors
and parent, harmless from and against, any
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claim, demand, action, liability, cost, expense (including reasonable
attorneys' fees), damages or loss, arising from or because of anything
which may be done or may happen or arise with respect to the gas while it
is within its own control as defined in Article X, paragraph 2 of the
Agreement.
2. Neither Buyer nor Seller shall be liable in damages to the other
for any interruption in, or for any act, omission, or circumstance
occasioned by or in consequence of, or related to, any such interruption,
if such interruption is contemplated by any provision of the Agreement.
ARTICLE VIII
NOTICES
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Notices to Buyer required under or relating to the Agreement shall be
addressed to it at X.X. Xxx 0000, Xxxxxxxxx, Xxxx 00000-0000, Attention:
Manager, Appalachian Gas Procurement (216/736-5365). All notices and
payments to Seller required under or relating to the Agreement shall be
made and mailed to:
Xx. Xxxxxxx X. Xxxxx
Xxxxx Petroleum Corporation
0000 Xxxxxxxx Xxxxxx, Xxxxx X
Xxxxx Xxxxx, XX 00000
Telephone: 714/000-0000
ARTICLE IX
PRODUCTION PERIOD
AND STATEMENT
-------------
1. Deliveries of gas to the Point(s) of Delivery shall be measured
during Production Periods. Production Periods shall be periods of between
twenty-eight and thirty-five days. Production Periods shall be identified
by the name of the month in which the period ends.
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2. Once each month Buyer shall render a statement setting forth the
total quantity of gas received at the Point(s) of Delivery during the prior
month's Production Period, and any payment due to Seller. Any such payments
may be reduced by any amounts due to Buyer from Seller pursuant to any
provision of the Agreement.
ARTICLE X
FURTHER OBLIGATIONS
AND REPRESENTATIONS
-------------------
1. Seller warrants that all of the gas sold and delivered to buyer
has been produced from xxxxx in Ohio, that it has good, marketable title to
the gas sold as and when delivered to Buyer at the Point(s) of Delivery,
and that gas so delivered is free from all liens and encumbrances. Seller
covenants and agrees to indemnify Buyer, its officers and directors,
parents and affiliates, for, and save them harmless from, all suits,
actions, debts, accounts, damages, costs, losses and expenses arising from
or attributable to the adverse claims of any and all other persons or
parties to the gas delivered to Buyer hereunder; provided, however, that if
any person or party makes claim to any gas delivered to Buyer hereunder
adverse to Seller's claim of ownership thereof, or obtains a lien or
encumbrance against the same, Buyer may withhold payment for such gas
without liability for the payment of interest on the amounts withheld,
until such adverse claim or lien is released or disposed of by the parties
or by final court action and may pay such withheld amount or amounts to the
party or parties finally determined to be entitled thereto.
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2. Seller shall be deemed to be in control and possession of the gas
sold by it hereunder until it shall have been delivered to Buyer at the
Point(s) of Delivery, after which delivery Buyer shall be deemed to be in
control and possession thereof. Buyer shall have no responsibility with
respect to any gas sold to it hereunder until it is delivered at any such
delivery point, and no responsibility therefor because of anything which
may be. done, or may happen or arise with respect to said gas before
delivery to Buyer at such delivery point; and Seller shall have no
responsibility with respect to said gas after its delivery to Buyer and no
responsibility because of anything which may be done or may happen or arise
with respect to said gas after its delivery to Buyer at such delivery
point, except that nothing contained herein shall release Seller from its
obligations pursuant to Articles II and X of the Agreement.
3. Seller shall give thirty days notice in writing to Buyer of any
intended or anticipated expiration of any lease on which any well or xxxxx
subject to the Agreement are located, either by surrender, release,
cancellation, expiration of term, cessation of production, abandonment, or
otherwise, and of Seller's intention to abandon any xxxxx, casing, tubing,
pipelines or associated equipment or facilities (the "well property") on
the premises covered by any such lease.
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4. No action shall be brought by Seller against Buyer on account of
any claimed failure under the Agreement unless sixty days written notice of
such claim of failure shall be served upon Buyer and unless Buyer shall
have failed to remedy such claim within such sixty day period. Such notice
of claim shall specify in detail the respects in which it is claimed the
Buyer has failed to perform. Any such notice of claim must be served by
Seller upon Buyer within twelve months of the time such claim is or could
have been discovered, it being the intention of the parties to bar Seller's
assertion of any claim more than twelve months after it arises, and by
doing so, to supersede any otherwise applicable statute of limitations on
claims by Seller.
5. Seller warrants that neither all nor any part of the output,
production or reserves of any of the xxxxx listed on Exhibit A or any
supplement thereto has ever been previously produced, dedicated or sold to
or for Buyer or any other entity.
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6. In the event any tax is now or hereafter imposed on natural gas,
or the production, severance, gathering, transporting, sale, delivery or
use thereof, or upon the business or privilege of producing, severing,
gathering, transporting, selling, delivering, or using natural gas, or if
such tax is imposed in any other manner so as to constitute directly or
indirectly a charge upon the gas delivered to Buyer hereunder, then the
amount of such tax shall be borne by Seller so far as it affects or relates
to or is apportionable to the activities of Seller with respect to the gas
delivered to Buyer under the Agreement. In the event Buyer is required to
pay such tax, the amount thereof may be deducted from the payments accruing
to Seller under the Agreement.
7. Seller shall pay or cause to be paid any royalty payments due or
owed on the gas delivered under the Agreement, and shall indemnify and hold
Buyer harmless from any responsibility, liability or obligation for payment
of any such royalty. In the event Buyer is obligated by law to make any
royalty payment directly to royalty owners which payment obligation would
otherwise be, or is, the responsibility of Seller, Seller shall reimburse
Buyer for any such payment or costs associated with such payment. If Seller
fails to reimburse Buyer, Buyer may deduct the amounts of such payments and
any costs associated with such payments from any amounts accruing to Seller
under the Agreement.
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ARTICLE XI
MISCELLANEOUS
-------------
1. No waiver by either party of one or more failures or defaults of
the other party in the performance of any provisions of the Agreement shall
operate or be construed as a waiver of any future failures or defaults,
whether of a like or different character.
2. This Agreement and all of its provisions -- including the payment
of the prices stated in it -- are subject to all federal, state and local
laws and to the regulations or orders of any court or governmental agency
with jurisdiction over it, but the Agreement shall be governed by and
construed in accordance with the law of the State of Ohio, without giving
effect to the principles of conflicts of laws of the State.
3. This Agreement and its Exhibits constitute the entire agreement
between Buyer and Seller with respect to its subject matter, and no
modification of its terms and provisions shall be made or become effective
except by execution of a supplementary written agreement.
4. In the event any of the prices stated herein ever exceed the
applicable Maximum Lawful Price under the Natural Gas Policy Act of 1978 or
other legislation for the category of gas from any well subject to the
Agreement, Buyer will be required to pay only the Maximum Lawful Price for
the applicable category of gas.
5. Seller shall not assign the Agreement, in whole or in part,
without the written consent of Buyer which shall not be unreasonably
withheld. All the covenants and obligations of this agreement shall extend
to and be binding upon the successors and
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assigns of the respective parties. Any sale, assignment, farmout or other
disposition or agreement of or concerning the well or xxxxx described
herein shall be subject to and expressly made subject to, the Agreement.
6. Should any provision of the Agreement be determined by any court
or regulatory body having jurisdiction to be void, voidable or otherwise
invalid, such determination shall have no effect on the remaining
provisions of the Agreement to the extent the provision eliminated can be
reasonably construed as severable from the remainder of the Agreement
without materially altering the rights, obligations, and purposes of Buyer
and Seller as reflected in the Agreement.
IN WITNESS WHEREOF the parties have set their signatures by their
officers duly authorized to do so the day and year first above written.
WITNESS: SELLER:
/s/ XXXX X. XXXXXX By: /s/ XXXXXXX X. XXXXX
---------------------------- -------------------------------
/s/ XXXXXXX X. XXXXX President
---------------------------- -------------------------------
WITNESS: BUYER:
/s/ XXXXX YUGUAM By: /s/ XXXXX X. KLINH
---------------------------- -------------------------------
/s/ /s/ F.C. L
---------------------------- -------------------------------
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Xxxxx Petroleum Corp. Contract No. 10811
INTERMEDIATE TERM
GAS PURCHASE AGREEMENT
TABLE OF CONTENTS
-----------------
Page
Article I Term 1
Article 11 Points of Delivery and Quality of Gas 2
Article 111 Measurement 6
Article IV Obligations to Take and Deliver Gas 8
Article V Price 11
Article VI Force Majeure 12
Article VII Liability 13
Article VIII Notices 14
Article IX Production Period and Statement 14
Article X Further Obligations and Representations 14
Article XI Miscellaneous 17
Exhibit
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A - Dedicated Xxxxx 19
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10811
INTERMEDIATE TERM
GAS PURCHASE AGREEMENT
THIS AGREEMENT, (the "Agreement"), effective as of the 21st day of
March, 1995, is entered into by and between XXXXX PETROLEUM CORP. the
"Seller," and EAST OHIO GAS, an Ohio corporation, the "Buyer."
RECITAL
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WHEREAS Seller desires to sell and deliver to Buyer, and Buyer desires
to purchase from Seller, at the Point(s) of Delivery specified in the
Agreement, all the natural gas produced during the term of the Agreement
from the Ohio well or xxxxx described in Exhibit A attached and made a part
of the Agreement, at the prices and upon and subject to the terms,
conditions and limitations provided in the Agreement;
NOW THEREFORE, in consideration of their mutual covenants and promises
contained in the Agreement, Seller and Buyer agree as follows:
ARTICLE I
TERM
1. The Agreement shall continue in force for a term of two (2) years
commencing at the beginning of the May 1995 Production Period and
terminating at the end of the April 1997, Production Period, provided
however, (1) that if at any time the delivery by Seller at the Point(s) of
Delivery of gas from any well subject to the Agreement shall be less than
an average of twenty thousand cubic feet per day for any Production Period
in which the delivery or receipt of gas has not been interrupted pursuant
to Articles II, IV or VI of the Agreement, then Buyer, at its sole option,
may terminate the Agreement as to the gas produced from any such well, or
from
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each of such xxxxx if there are more than one, by giving Seller thirty days
prior written notice of such termination, and, (2) that either Buyer or
Seller may terminate the Agreement by giving the other thirty days written
notice prior to the end of any Production Period, if the price to be paid
pursuant to Article V has been frozen pursuant to the provisions of Article
V, paragraph 2. No notice of termination or cancellation because of
expiration of the term stated in this paragraph shall be required.
2. During the term of the Agreement, Seller may make additional xxxxx
subject to this Agreement only with Buyer's consent pursuant to the
execution by Buyer and Seller of supplements to Exhibit A identifying the
well or xxxxx to be added. The execution of such supplements shall be at
Buyer's sole discretion and Buyer shall have no obligation to execute any
such supplements. During the term of the Agreement, any abandonment of a
well or xxxxx listed on Exhibit A or any supplement thereto by Seller shall
only be with the written permission and at the sole discretion of Buyer.
Such permission shall not be unreasonably withheld.
3. The Agreement shall not extend to any well listed on Exhibit A
unless such well is turned on and gas from it is being received by Buyer at
the Point(s) of Delivery within ninety days of the date of the Agreement.
4. Termination for any cause shall not affect either party's rights or
duties arising; prior to such termination.
ARTICLE 11
POINT(S) OF DELIVERY AND QUALITY OF GAS
1. Seller shall promptly proceed with the construction of any
necessary pipe line extending from the well or xxxxx subject to the
Agreement to the terminal point or points determined by Buyer, hereinafter
referred to as the "Point(s) of Delivery." the Point(s) of Delivery shall
be
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measuring stations furnished, constructed, owned, operated and maintained
by Buyer, located on Buyer's pipe lines as now constructed or on any
extension which may later be constructed. The sites for said measuring
stations shall be furnished by Buyer, or, if by Seller, with rights of
ingress and egress granted to Buyer. As soon as practicable after
completion of a pipe line by Seller to a Point of Delivery, Buyer, at
Seller's expense, shall construct the necessary gas measuring stations at
the Point of Delivery, if no suitable measuring station then exists at the
Point of Delivery. Prior to its construction if possible Buyer shall
provide Seller with its best estimate of the costs of the measuring
station, including station site. Seller shall pay Buyer an amount equal to
the estimate provided by Buyer to Seller. Such payment, which will bear no
interest, will be applied by Buyer toward the actual construction costs of
the measuring station. Following the accumulation of all actual costs by
Buyer for the measuring station, the parties shall reconcile any
differences within thirty days. In the event construction of a new
measuring station is not necessary at any Point of Delivery, Seller agrees
to pay Buyer a meter use fee for all gas sold hereunder measured at such
Point of Delivery. The fee shall be two cents per thousand cubic feet
("MCF") for all volumes actually delivered to Buyer by Seller through
existing measuring equipment at the Point of Delivery. If no new measuring
station is needed, the fee of two cents ($0.02) per MCF will be waived only
if Seller paid previously for the construction of the existing measuring
station. Buyer may at any time, at its option, install additional measuring
equipment so as to individually meter the gas from any well subject to the
Agreement. Seller may request that Buyer change any Point of Delivery after
its location has been originally established. If Buyer, in its sole
discretion, agrees to make such a change, all costs incurred by Buyer for
any alternate site, for the movement of any measuring and regulating
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station equipment, or for any new or additional metering facilities, will
be promptly reimbursed to Buyer by Seller after receipt of an itemized
invoice.
2. Seller's rights as Lessee under the terms of any lease pursuant to
which any well subject to the Agreement is drilled, for the purposes of
installing, operating, maintaining and removing any facilities and
equipment, including measuring equipment, and its rights of ingress and
egress to the well and measuring station, shall be extended to Buyer.
Seller shall provide and maintain in good repair access roads, suitable for
use by Buyer's vehicles, to all well sites and measuring stations. Should
Seller not secure, provide and maintain both physical and legal access to
any well or xxxxx subject to the Agreement for Buyer, then Buyer shall, in
its sole discretion, have the right to terminate the Agreement as to such
well or xxxxx.
3. Seller may use such mechanical pressurization as it deems
necessary to deliver gas to Buyer at the Point(s) of Delivery, but the gas
shall be taken by Buyer against such pipe line pressures as Buyer in its
sole judgment deems necessary to maintain in its pipe line system either by
reason of its market demands and deliveries of gas into its pipe line
system from other sources of supply or in accordance with good safety
practices and requirement and the regulations of government authorities.
Should Seller compress and pump the gas to be delivered to Buyer at the
Point(s) of Delivery, Seller shall also install and maintain at its own
expense the necessary equipment for the elimination or suppression of
pulsations in the flowing gas that are created by compression equipment,
and, in addition, Seller will install the necessary equipment to insure a
flowing temperature not to exceed 120 degrees Fahrenheit at the Point(s) of
Delivery.
4. Buyer may at any time suspend the taking of gas hereunder for
safety reasons or while making repairs or alterations to, or conducting
tests of, its pipelines or other facilities. When practicable Buyer shall
notify Seller in advance of its plans to suspend the taking of gas, giving
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its best estimate of the duration of the suspension. Such repairs,
alterations or tests shall be completed with due diligence. Any period of
suspension of Purchases pursuant to this paragraph shall be in addition to
all other rights of Buyer to suspend purchases pursuant to the Agreement.
5. Seller shall install and maintain at Seller's expense, the
necessary equipment for separating and removing oil, water, salt, dust,
sulfur or sulfur compounds, nitrogen or nitrogen compounds and other
gaseous impurities, objectionable odors, and foreign matter or substances
and mechanical pulsations from the gas before its delivery to Buyer at
Point(s) of Delivery. Seller is obligated to deliver, to Buyer at the
Point(s) of Delivery only such gas as is free from all substances or
flowing conditions which might affect or impair its marketability or cause
injury to or interference with the operation of the pipe lines, regulators,
meters or other equipment of Buyer or Buyer's customers. Buyer may refuse
at any time any gas which contains gaseous impurities or objectionable
odors or otherwise does not meet Buyer's gas quality standards. Other than
as provided for in this paragraph, however, the gas delivered to Buyer
hereunder shall be delivered in its natural state without any of its
component parts having been extracted.
6. Seller at all times shall deliver to Buyer at the Point(s) of
Delivery gas having a gross heating value of not less than 1,000 British
thermal units per cubic foot at 14.73 pounds per square inch absolute
("PSIA"), sixty degrees Fahrenheit and saturated with water vapor. Seller
shall deliver only such gas which does not contain more than 1/4 grain of
hydrogen sulfide per 100 cubic feet of gas volume (8 ppm of sulfur, by
weight) nor contain more than 3/4 grain of total sulfur per 100 cubic feet
of gas volume (22 ppm of sulfur, by weight).
7. If, by reason of the presence of any impurities in the gas
delivered to Buyer, or as a result of any other act or failure to act which
is inconsistent with the provisions of this Article II, any of Buyer's
property or equipment is damaged or otherwise rendered inoperative, Buyer
shall xxxx
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Seller, and Seller shall pay within fifteen days of receipt of an itemized
invoice, for the cost of all necessary repairs, corrections and
replacements.
8. All pipe lines, fittings, and other properties furnished under the
Agreement shall remain the property of the party furnishing the same who
shall be solely responsible for the maintenance and operation thereof, and
each party may remove its property at the termination of the Agreement,
provided however, that any property the cost of which has been reimbursed
to Buyer by Seller pursuant to paragraph 1 of this Article II shall remain
the property of, and shall be operated and maintained by, Buyer.
ARTICLE III
MEASUREMENT
1. The unit of measurement for gas hereunder shall be one cubic foot
of gas, and the term "cubic foot of gas" means a cubic foot of gas at a
pressure of 14.73 PSIA and at a temperature of sixty degrees (60)
Fahrenheit. For purposes of measurement and meter calibration, atmospheric
pressure shall be assumed to be 14.4 pounds per square inch. All gas
delivered to Buyer by Seller hereunder shall be measured by orifice or
other measurement facility of standard type to be selected and furnished by
Buyer. Orifice meters of Buyer shall be constructed and installed in
accordance with the applicable provisions of the American National Standard
"Orifice Metering of Natural Gas," ANSI/API 2530, First Edition, and any
amendments thereto. The volumes of gas delivered to Buyer at pipeline
pressures and temperatures shall be computed from meter records and
converted into the cubic foot or MCF unit of measurement specified here in
accordance with standard industry practice. Correction shall not be made
for deviation from the Ideal Gas Laws. The temperature of the gas flowing
through each meter is assumed to be sixty
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degrees (60) Fahrenheit, provided, however, that Buyer may at any time
install a recording thermometer to record the temperatures of the gas
flowing through the meter, in which event the arithmetic average of the
hourly temperatures recorded shall thereafter be used in correcting the
volumes delivered hereunder to the unit of measurement specified herein
above.
2. Buyer shall furnish, install and maintain in good condition all
meters and regulating equipment at the Point(s) of Delivery. Buyer shall
read the meters, which shall be accessible to inspection and examination by
Seller at all reasonable times. If Seller challenges the accuracy of any
meter or measuring equipment in use under this Agreement and desires to
have the same tested, Buyer shall, if Seller desires, perform the test in
the presence of Seller or Seller's representative. The cost of testing the
meter shall be borne by Seller if the meter proves to be correct, and it
shall be deemed correct if there shall be no greater variation than three
percent (3%), either plus or minus. If the meter on test proves incorrect,
then the cost of testing shall be borne by Buyer. If a meter does prove
incorrect, as provided herein, the registration of such meter shall be
corrected at the rate of such inaccuracy for a period agreed upon by the
Buyer and Seller. In no event will the inaccuracy adjustment period exceed
the lesser of one half the period of time from the last test, or the period
from the first of the preceding Production Period prior to the date of
challenge by either party. For the purpose of testing, the meter shall be
tested and adjusted on the ground. During the time a meter is disconnected
from the line, the gas delivered may be estimated by Buyer until the meter
is again connected to the line, such estimate to be on the basis of the
amount of gas registered at like pressures for like periods of time when
the meter was registering accurately.
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ARTICLE IV
OBLIGATIONS TO TAKE AND DELIVER GAS
1. Subject to the terms and conditions of the Agreement, Buyer shall
buy all the gas delivered to it by Seller at the Point(s) of Delivery, and
Seller shall, and is obligated to use its best efforts to, produce, deliver
and sell to Buyer all the gas owned, produced or purchased by Seller from
all xxxxx listed on Exhibit A on each day of the term of the Agreement, in
an efficient and expeditious manner, other than that required for drilling
operations with respect to such xxxxx. However, if required by the terms of
the oil and gas lease pursuant to which the gas subject to the Agreement is
produced, Seller may also provide up to 300 MCF per year to one dwelling on
the leased property from one well. Further, if required by the lease, each
additional dwelling on the leased property, if any, may also be provided
with up to 300 MCF per year if an additional well is producing gas on the
leased property for each such additional dwelling. In no event shall any
dwelling receive gas from more than one well, nor shall any well provide
gas for more than one dwelling, no matter how many dwellings or xxxxx are
located on the leased property. If any other or greater volumes are
diverted from Buyer, then, at Buyer's option, the price per MCF set forth
in Article V will become, for all gas from each well from which excess
volumes were diverted, the Short Term Spot Price being paid by Buyer at the
time of the diversion, as such price may be amended by Buyer. The adjusted
price shall continue for a period of one year and as long thereafter as the
unauthorized diversion continues. Further, if the unauthorized diversion
continues beyond one year, Buyer at its option may take any or all of the
following actions: invoice Seller for the cost of the measuring station,
impose a fee of two cents ($0.02) per MCF to pay for the costs of measuring
the gas, if such fee is not already being charged, withhold such fees or
costs from payments for gas volumes associated with the well or xxxxx, and
treat the
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diversion as a breach of the Agreement and pursue any or all legal and
equitable remedies, including termination and specific performance. Buyer
will immediately notify Seller in writing of any unauthorized diverted
volumes it becomes aware of, and its actions in response thereto.
2. It is understood and agreed, however, that Buyer's obligation to
take gas from any well or xxxxx subject to the Agreement, in addition to
the limitations imposed elsewhere by the Agreement, is limited to two
hundred and seventy five (275) days in each or any calendar year beginning
January 1 and ending; December 31, except for the initial calendar year,
being the year in which gas from each well listed on Exhibit A is first
produced and delivered at the Point(s) of Delivery, during which period
Buyer agrees to take gas at least seventy-five percent of the time
remaining after the initial delivery date until the end of the initial
calendar year. Pursuant to this paragraph Buyer may suspend taking gas at
any time and for any reason, including price, but Buyer shall have the
right to require delivery or the resumption of delivery of gas on each day
of every year, subject to the terms of the Agreement.
3. If Buyer wishes Seller to cease delivering gas from any or all
xxxxx subject to this Agreement pursuant to any provision of the Agreement,
Buyer shall notify Seller by telephone or letter, and Seller, on receipt of
such notice, shall immediately cease deliveries and shut in the well or
xxxxx as directed by Buyer. Should Seller fail to comply with Buyer's
instructions within a reasonable time in Buyer's sole judgment, Buyer may
take all action necessary to shut in such xxxxx or otherwise interrupt the
receipt of gas at the Point(s) of Delivery or elsewhere, without additional
notice. If Buyer is unable to, or elects not to, shut in the xxxxx or
otherwise interrupt receipt of the gas in the event Seller fails to do so
after receiving notice and instructions to do so pursuant to this
paragraph, any continuing deliveries to Buyer after such notice shall be
deemed to have been supplied by Seller to Buyer at no cost, and Buyer shall
not be obligated to make
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any payments to Seller therefor. Xxxxx shut in pursuant to this Article
shall remain shut in and deliveries of gas from such xxxxx shall not resume
until Buyer in its sole discretion notifies Seller by telephone or letter
that deliveries may be resumed. Buyer's right to recall shut-in gas and to
resume purchases shall be absolute. Upon notice from Buyer Seller shall
resume deliveries as soon as practicable.
4. It is understood that Buyer has no obligation implied or expressed
to take gas on more than two hundred and seventy five (275) days in any
year nor on consecutive days nor any obligation to take any specific volume
of gas nor gas from any specific well or xxxxx during the periods in which
Buyer is taking gas except as expressly provided for pursuant to the
Agreement. It is the intent of the Parties by this provision to recognize
that the nature, timing, frequency and duration of Buyer's shut-in of xxxxx
or other refusals to accept gas shall be at Buyer's sole discretion subject
only to Buyer's express obligations to take gas in accordance with the
terms of the Agreement. Buyer shall not be liable for any damages direct or
indirect through loss of gas or otherwise sustained by Seller, its heirs,
executors, administrators or assigns resulting from or arising out of the
failure or refusal of the Buyer to take gas, or out of any actions
incidental to its cessation of taking gas or shutting in of xxxxx if such
failure refusal or action is contemplated or permitted by the terms of the
Agreement.
5. Buyer's rights to suspend the taking of gas pursuant to this
Article IV shall be in addition to its rights to suspend taking gas
pursuant to any other provisions of the Agreement.
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ARTICLE V
PRICE
1. The price to be paid by Buyer to Seller shall be $2.25 per MCF for
each MCF received at the Point(s) of Delivery. The prices set forth in this
Article V represent the full and complete prices to be paid for gas subject
to the Agreement as delivered to the Point(s) of Delivery. Buyer is not
obligated to pay any additional or other prices than the prices set forth
here, regardless of what it may pay for any other gas at any other time or
date. The prices provided for in this Article shall be subject to the
provisions of Article IV, paragraph 1; Article X, paragraph 1; and Article
XI, paragraphs 2 and 4 of the Agreement.
2. In no event shall the price paid hereunder ever exceed Buyer's
current GCR. In any period when the provisions of this Article would
produce that result, the price shall be frozen at the level of the current
GCR, until any subsequent adjustment of either price or current GCR which
results in the price pursuant to the Agreement being below the level of the
current GCR, until any subsequent adjustment of either price or current GCR
which results in the price pursuant to the Agreement being below the level
of the then current GCR. In such event, no make-up payments shall be due or
paid with-respect to amounts previously unpaid due to the GCR limit on the
prices to be paid hereunder.
3. If the method of calculating the GCR reflected in Buyer's rate
schedules is materially changed in accordance with PUCO procedures, or if
the use of a GCR is eliminated, then the price in effect as of the day of
such change or elimination shall remain in effect for the duration of the
term of the Agreement.
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ARTICLE VI
FORCE MAJEURE
1. The term "Force Majeure" as used herein, and as applied to either
party hereto, shall mean acts of the law, including governmental bodies
acting pursuant to law, acts of God, strikes, lockouts, or other labor
disturbances, acts of the public enemy, war, blockades, insurrections,
riots, epidemics, fires, lightning, storms, floods, washouts, arrests, and
restraint by government or people, civil disturbances, explosions, breakage
or accidents to machinery or lines of pipe, freezing of xxxxx or pipe
lines, partial or entire failure of such xxxxx, the necessity for making
repair to or alteration of machinery or line of pipe, or any other cause,
whether of the kind herein enumerated or otherwise, not reasonably within
the control of the party invoking Force Majeure. It is understood that
settlement of strikes, lockouts or labor disturbances shall be entirely
within the discretion of the party having the difficulty and that the above
requirement that any Force Majeure shall be remedied with all reasonable
dispatch shall not require the settlement of strikes, lockouts, or labor
disturbances by acceding to the demands of an opposing party when such course
is inadvisable in the discretion or judgment of the party having the
difficulty.
2. Neither party to this Agreement shall be liable for any damage or
loss that may be occasioned by any failure, depletion, shortage, or
interruption in the production of gas from a well, or any decline in
natural pressure. In the event 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 payment of amounts due
hereunder, then the obligations of such party, so far as they are affected
by such Force Majeure, shall be suspended during the continuance of any
inability so caused. However, the party claiming the existence of Force
Majeure shall use all
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reasonable efforts to remedy promptly any situation which may interfere
with the performance of its obligations under the Agreement.
3. Neither Force Majeure or other causes or contingencies recognized
pursuant to the Agreement shall relieve either party of liability or
responsibility unless notice and full particulars are given in writing to
the other by the party relying on such facts, as soon as reasonably
practicable after the occurrence of the facts relied upon. Such facts shall
not, however, in any event, release either party from liability in the
event of its concurring negligence, nor from its obligations to make
payments of amounts then due.
ARTICLE VII
LIABILITY
1. Buyer and Seller shall each have responsibility for, and shall
indemnify and hold the other, its agents, employees, officers, directors
and parent, harmless from and against, any claim, demand, action,
liability, cost, expense (including reasonable attorneys' fees), damages or
loss, arising from or because of anything which may be done or may happen
or arise with respect to the gas while it is within its own control as
defined in Article X, paragraph 2 of the Agreement.
2. Neither Buyer nor Seller shall be liable in damages to the other
for any interruption in, or for any act, omission, or circumstance
occasioned by or in consequence of, or related to, any such interruption,
if such interruption is contemplated by any provision of the Agreement.
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ARTICLE VIII
NOTICES
Notices to Buyer required under or relating to the Agreement shall be
addressed to it at X.X. Xxx 0000, Xxxxxxxxx, Xxxx 00000-0000, Attention:
Manager, Appalachian Gas Supply (216/736-5365). All notices and payments to
Seller required under or relating to the Agreement shall be made and mailed
to:
Xx. Xxxxxxx X. Xxxxx
Xxxxx Petroleum Corp.
000 X. Xxxxxxxx Xxxxx Xxxx.
Xxxxxxxxxxx XX 00000
(000) 000-0000
ARTICLE IX
PRODUCTION PERIOD AND STATEMENT
1. Deliveries of gas to the Point(s) of Delivery shall be measured
during Production Periods. Production Periods shall be periods of between
twenty-eight and thirty-five days. Production Periods shall be identified
by the name of the month in which the period ends.
2. Once each month Buyer shall render a statement setting forth the
total quantity of gas received at the Point(s) of Delivery during the prior
month's Production Period, and any payment due to Seller. Any such payments
may be reduced by amounts due to Buyer from Seller pursuant to any
provision of the Agreement.
ARTICLE X
FURTHER OBLIGATION AND REPRESENTATIONS
1. Seller warrants that all of the gas sold and delivered to Buyer
has been produced from xxxxx in Ohio, that it has good, marketable title to
the gas sold as and when delivered to Buyer at the Point(s) of Delivery,
and that gas so delivered is free from all liens and encumbrances. Seller
covenants and agrees to indemnify Buyer, its officers and directors,
parents and affiliates, for,
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and save them harmless from, all suits, actions, debts, accounts, damages,
costs, losses and expenses arising from or attributable to the adverse
claims of any and all other persons or parties to the gas delivered to
Buyer hereunder; provided, however, that if any person or party makes claim
to any gas delivered to Buyer hereunder adverse to Seller's claim of
ownership thereof, or obtains a lien or encumbrance against the same, Buyer
may withhold payment for such gas without liability for the payment of
interest on the amounts withheld, until such adverse claim or lien is
released or disposed of by the parties or by final court action and may pay
such withheld amount or amounts to the party or parties finally determined
to be entitled thereto.
2. Seller shall be deemed to be in control and possession of the gas
sold by it hereunder until it shall have been delivered to Buyer at the
Point(s) of Delivery, after which delivery Buyer shall be deemed to be in
control and possession thereof. Buyer shall have no responsibility with
respect to any gas sold to it hereunder until it is delivered at any such
delivery point, and no responsibility therefor because of anything which
may be done, or may happen or arise with respect to said gas before
delivery to Buyer at such delivery point; and Seller shall have no
responsibility with respect to said gas after its delivery to Buyer and no
responsibility because of anything which may be done or may happen or arise
with respect to said gas after its delivery to Buyer at such delivery
point, except that nothing contained herein shall release Seller from its
obligations pursuant to Articles II and X of the Agreement.
3. No action shall be brought by Seller against Buyer on account of
any claimed failure under the Agreement unless sixty days written notice of
such claim of failure shall be served upon Buyer and unless Buyer shall
have failed to remedy such claim within such sixty day period. Such notice
of claim shall specify in detail the respects in which it is claimed the
Buyer has failed to perform. Any such notice of claim must be served by
Seller upon Buyer within twelve
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months of the time such claim is or could have been discovered, it being
the intention of the parties to bar Seller's assertion of any claim more
than twelve months after it arises, and by doing so to supersede any
otherwise applicable statute of limitations on claims by Seller.
4. Seller warrants that if any of the output, production or reserves
of any of the xxxxx listed on Exhibit A has ever been previously produced,
dedicated or sold to or for Buyer or any other entity, as to such output,
production, and xxxxx, Seller has secured all necessary and appropriate
releases from all prior owners, producers, buyers or claimants.
5. In the event any tax is now or hereafter imposed on natural gas,
or the production, severance, gathering, transporting, sale, delivery or
use thereof, or upon the business or privilege of producing, severing,
gathering, transporting, selling, delivering, or using natural gas, or if
such tax is imposed in any other manner so as to constitute directly or
indirectly a charge upon the gas delivered to Buyer hereunder, then the
amount of such tax shall be borne by Seller so far as it affects or relates
to or is apportionable to the activities of Seller with respect to the gas
delivered to Buyer under the Agreement. In the event Buyer is required to
pay such tax, the amount thereof may be deducted from the payments accruing
to Seller under the Agreement.
6. Seller shall pay or cause to be paid any royalty payments due or
owed on the gas delivered under the Agreement, and shall indemnify and hold
Buyer harmless from any responsibility, liability or obligation for payment
of any such royalty. In the event Buyer is obligated by law to make any
royalty payment directly to royalty owners which payment obligation would
otherwise be, or is, the responsibility of Seller, Seller shall reimburse
Buyer for any such payment or costs associated with such payment. If Seller
fails to reimburse Buyer, Buyer may deduct the amounts of such payments and
any costs associated with such payments from any amounts accruing; to
Seller under the Agreement.
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ARTICLE XI
MISCELLANEOUS
1. No waiver by either party of one or more failures or defaults of
the other party in the performance of any provisions of the Agreement shall
operate or be construed as a waiver of any future failures or defaults,
whether of a like or different character.
2. This Agreement and all of its provisions - including the payment
of the prices stated in it - are subject to all federal, state and local
laws and to the regulations or orders of any court or governmental agency
with jurisdiction over it, but the Agreement shall be governed by and
construed in accordance with the law of the State of Ohio, without giving
effect to the principles of conflicts of laws of the State.
3. This Agreement and its Exhibits constitute the entire agreement
between Buyer and Seller with respect to its subject matter, and no
modification of its terms and provisions shall be made or become effective
except by execution of a supplementary written agreement.
4. In the event any of the prices stated herein ever exceed the
applicable Maximum Lawful Price under the Natural Gas Policy Act of 1978 or
other legislation for the category of gas from any well subject to the
Agreement, Buyer will be required to pay only the Maximum Lawful Price for
the applicable category of gas.
5. Seller shall not assign the Agreement, in whole or in part,
without the written consent of Buyer which shall not be unreasonably
withheld. All the covenants and obligations of this agreement shall extend
to and be binding upon the successors and assigns of the respective
parties. Any sale, assignment, farmout or other disposition or agreement
of or concerning the well or xxxxx described herein shall be subject to and
expressly made subject to, the Agreement.
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6. Should any provision of the Agreement be determined by any court or
regulatory body having jurisdiction to be void, voidable or otherwise
invalid, such determination shall have no effect on the remaining:
provisions of the Agreement to the extent the provision eliminated can be,
reasonably construed as severable from the remainder of the Agreement
without materially altering the rights, obligations, and purposes of Buyer
and Seller as reflected in the Agreement.
IN WITNESS WHEREOF the parties have set their signatures by their
officers duly authorized to do so the day and year first above written.
WITNESS: SELLER:
XXXXX PETROLEUM CORP.
/s/ By: /s/ XXXXXXX X. XXXXX
---------------------------- -------------------------------
/s/ XXXX XXXXXX President
---------------------------- -------------------------------
Title
WITNESS: BUYER:
EAST OHIO GAS
/s/ XXXXX YUGUAM By: /s/ XXXXX X. KLINH
---------------------------- -------------------------------
Vice President
/s/ /s/ F.C. L
---------------------------- -------------------------------
Secretary
GPA-INT
Page 18
Xxxxx Petroleum Corp. Contract 11286
INTERMEDIATE TERM
GAS PURCHASE AGREEMENT
TABLE OF CONTENTS
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RECITAL 1
ARTICLE I TERM 1
ARTICLE II POINT(S) OF DELIVERY AND QUALITY OF GAS 3
ARTICLE III MEASUREMENT 6
ARTICLE IV OBLIGATIONS TO TAKE AND DELIVER GAS 8
ARTICLE V PRICE 11
ARTICLE VI FORCE MAJEURE 12
ARTICLE VII LIABILITY 14
ARTICLE VIII NOTICES 14
ARTICLE IX PRODUCTION PERIOD AND STATEMENT 15
ARTICLE X FURTHER OBLIGATIONS AND REPRESENTATIONS 15
ARTICLE XI MISCELLANEOUS 18
EXHIBIT A DEDICATED XXXXX 20
INTERMEDIATE TERM
GAS PURCHASE AGREEMENT
THIS AGREEMENT, (the "Agreement"), effective as of the 4th day of
June, 1996, is entered into by and between XXXXX PETROLEUM CORPORATION, the
"Seller," and EAST OHIO GAS, an Ohio corporation, the "Buyer."
RECITAL
WHEREAS Seller desires to sell and deliver to Buyer, and Buyer desires
to purchase from Seller, at the Point(s) of Delivery specified in the
Agreement, all the natural gas produced during the term of the Agreement
from the Ohio well or xxxxx described in Exhibit A attached and made a part
of the Agreement, at the prices and upon and subject to the terms,
conditions and limitations provided in the Agreement;
NOW THEREFORE, in consideration of their mutual covenants and promises
contained in the Agreement, Seller and Buyer agree as follows:
ARTICLE I
TERM
1. The Agreement shall continue in force for a term of one (1) year,
commencing at the beginning of the June 1996 production period and
terminating at the end of the May 1997 production period, provided however,
(1) that if at any time the delivery by Seller at the Point(s) of Delivery
of gas from any well subject to the Agreement shall be less than an average
of twenty thousand cubic feet per day for any Production Period in which
the delivery or receipt of gas has not been interrupted pursuant to
Articles II, IV or VI of the Agreement, then Buyer, at its sole
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option, may terminate the Agreement as to the gas produced from any such
well, or from each of such xxxxx if there are more than one, by giving
Seller thirty (30) days prior written notice of such termination, and, (2)
that either Buyer or Seller may terminate the Agreement by giving the other
thirty (30) days written notice prior to the end of any Production Period,
if the price to be paid pursuant to Article V has been frozen pursuant to
the provisions of Article V, paragraph 2. No notice of termination or
cancellation because of expiration of the term stated in this paragraph
shall be required.
2. During the term of the Agreement, Seller may make additional xxxxx
subject to this Agreement only with Buyer's consent pursuant to the
execution by Buyer and Seller of supplements to Exhibit A identifying the
well or xxxxx to be added. The execution of such supplements shall be at
Buyer's sole discretion and Buyer shall have no obligation to execute any
such supplements. During the term of the Agreement, any abandonment of a
well or xxxxx listed on Exhibit A or any supplement thereto by Seller shall
only be with the written permission and at the sole discretion of Buyer.
Such permission shall not be unreasonably withheld.
3. The Agreement shall not extend to any well listed on Exhibit A
unless such well is turned on and gas from it is being received by Buyer at
the Point(s) of Delivery within ninety (90) days of the date of the
Agreement.
4. Termination for any cause shall not affect either party's rights
or duties arising prior to such termination.
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ARTICLE II
POINT(S) OF DELIVERY AND QUALITY OF GAS
1. Seller shall promptly proceed with the construction of any
necessary pipe line extending from the well or xxxxx subject to the
Agreement to the terminal point or points determined by Buyer, hereinafter
referred to as the "Point(s) of Delivery." The Point(s) of Delivery shall
be measuring stations furnished, constructed, owned, operated and
maintained by Buyer, located on Buyer's pipe lines as now constructed or on
any extension which may later be constructed. The sites for said measuring
stations shall be furnished by Buyer, or, if by Seller, with rights of
ingress and egress granted to Buyer. As soon as practicable after
completion of a pipe line by Seller to a Point of Delivery, Buyer, at
Seller's expense, shall construct the necessary gas measuring stations or
approve Seller's construction of the measuring station to Buyer's
specifications at the Point of Delivery, if no suitable measuring station
then exists at the Point of Delivery. Prior to its construction if possible
Buyer shall provide Seller with its best estimate of the costs of the
measuring station, including station site. Seller shall pay Buyer an
amount equal to the estimate provided by Buyer to Seller. Such payment,
which will bear no interest, will be applied by Buyer toward the actual
construction costs of the measuring station. Following the accumulation of
all actual costs by Buyer for the measuring station, the parties shall
reconcile any differences within thirty (30) days. In the event
construction of a new measuring station is not necessary at any Point of
Delivery, Seller agrees to pay Buyer a meter use fee for all gas sold
hereunder measured at such Point of Delivery. The fee shall be two cents
($0.02) per thousand cubic feet ("MCF") for all volumes actually delivered
to Buyer by Seller through existing measuring equipment at the Point of
Delivery. If no new measuring station is needed, the fee of two cents
($0.02) per MCF will be
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waived only if Seller paid previously for the construction of the existing
measuring station. Buyer may at any time, at its option, install additional
measuring equipment so as to individually meter the gas from any well
subject to the Agreement. Seller may request that Buyer change any Point of
Delivery after its location has been originally established. If Buyer, in
its sole discretion, agrees to make such a change, all costs incurred by
Buyer for any alternate site, for the movement of any measuring and
regulating station equipment, or for any new or additional metering
facilities, will be promptly reimbursed to Buyer by Seller after receipt of
an itemized invoice.
2. Seller's rights as Lessee under the terms of any lease pursuant to
which any well subject to the Agreement is drilled, for the purposes of
installing, operating, maintaining and removing any facilities and
equipment, including measuring equipment, and its rights of ingress and
egress to the well and measuring station, shall be extended to Buyer.
Seller shall provide and maintain in good repair access roads, suitable for
use by Buyer's vehicles, to all well sites and measuring stations. Should
Seller not secure, provide and maintain both physical and legal access to
any well or xxxxx subject to the Agreement for Buyer, then Buyer shall, in
its sole discretion, have the right to terminate the Agreement as to such
well or xxxxx.
3. Seller may use such mechanical pressurization as it deems
necessary to deliver gas to Buyer at the Point(s) of Delivery, but the gas
shall be taken by Buyer against such pipe line pressures as Buyer in its
sole judgment deems necessary to maintain in its pipe line system either by
reason of its market demands and deliveries of gas into its pipe line
system from other sources of supply or in accordance with good safety
practices and requirements and the regulations of government authorities.
Should Seller compress and pump the gas to be delivered to Buyer at the
Point(s) of
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Delivery, Seller shall also install and maintain at its own expense the
necessary equipment for the elimination or suppression of pulsations in the
flowing gas that are created by compression equipment, and, in addition,
Seller will install the necessary equipment to insure a flowing temperature
not to exceed 120 degrees Fahrenheit at the Point(s) of Delivery.
4. Buyer may at any time suspend the taking of gas hereunder for
safety reasons or while making repairs or alterations to, or conducting
tests of, its pipelines or other facilities. When practicable Buyer shall
notify Seller in advance of its plans to suspend the taking of gas, giving
its best estimate of the duration of the suspension. Such repairs,
alterations or tests shall be completed with due diligence. Any period of
suspension of Purchases pursuant to this paragraph shall be in addition to
all other rights of Buyer to suspend purchases pursuant to the Agreement.
5. Seller shall install and maintain at Seller's expense, the
necessary equipment for separating and removing oil, water, salt, dust,
sulfur or sulfur compounds, nitrogen or nitrogen compounds and other
gaseous impurities, objectionable odors, and foreign matter or substances
and mechanical pulsations from the gas before its delivery to Buyer at
Point(s) of Delivery. Seller is obligated to deliver, to Buyer at the
Point(s) of Delivery only such gas as is free from all substances or
flowing conditions which might affect or impair its marketability or cause
injury to or interference with the operation of the pipe lines, regulators,
meters or other equipment of Buyer or Buyer's customers. Buyer may refuse
at any time any gas which contains gaseous impurities or objectionable
odors or otherwise does not meet Buyer's gas quality standards. Other than
as provided for in this paragraph, however, the gas delivered to Buyer
hereunder shall be delivered in its natural state without any of its
component parts having been extracted.
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6. Seller at all times shall deliver to Buyer at the Point(s) of
Delivery gas having a gross heating value of not less than 1,000 British
thermal units per cubic foot at 14.73 pounds per square inch absolute
("PSIA"), sixty degrees (60) Fahrenheit and saturated with water vapor.
Seller shall deliver only such gas which does not contain more than 1/4
grain of hydrogen sulfide per 100 cubic feet of gas volume (8 ppm of
sulfur, by weight) nor contain more than 3/4 grain of total sulfur per 100
cubic feet of gas volume (22 ppm of sulfur, by weight).
7. If, by reason of the presence of any impurities in the gas
delivered to Buyer, or as a result of any other act or failure to act which
is inconsistent with the provisions of this Article II, any of Buyer's
property or equipment is damaged or otherwise rendered inoperative, Buyer
shall xxxx Seller, and Seller shall pay within fifteen (15) days of receipt
of an itemized invoice, for the cost of all necessary repairs, corrections
and replacements.
8. All pipe lines, fittings, and other properties furnished under the
Agreement shall remain the property of the party furnishing the same who
shall be solely responsible for the maintenance and operation thereof, and
each party may remove its property at the termination of the Agreement,
provided however, that any property the cost of which has been reimbursed
to Buyer by Seller pursuant to paragraph 1 of this Article II shall remain
the property of, and shall be operated and maintained by, Buyer.
ARTICLE III
MEASUREMENT
1. The unit of measurement for gas hereunder shall be one cubic foot
of gas, and the term "cubic foot of gas" means a cubic foot of gas at a
pressure of 14.73 PSIA and at a temperature of
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sixty degrees (60) Fahrenheit. For purposes of measurement and meter
calibration, atmospheric pressure shall be assumed to be 14.4 pounds per
square inch. All gas delivered to Buyer by Seller hereunder shall be
measured by orifice or other measurement facility of standard type to be
selected and furnished by Buyer. Orifice meters of Buyer shall be
constructed and installed in accordance with the applicable provisions of
the American National Standard "Orifice Metering of Natural Gas," ANSI/API
2530, First Edition, and any amendments thereto. The volumes of gas
delivered to Buyer at pipeline pressures and temperatures shall be computed
from meter records and converted into the cubic foot or MCF unit of
measurement specified here in accordance with standard industry practice.
Correction shall not be made for deviation from the Ideal Gas Laws. The
temperature of the gas flowing through each meter is assumed to be sixty
degrees (60) Fahrenheit, provided, however, that Buyer may at any time
install a recording thermometer to record the temperatures of the gas
flowing through the meter, in which event the arithmetic average of the
hourly temperatures recorded shall thereafter be used in correcting the
volumes delivered hereunder to the unit of measurement specified herein
above.
2. Buyer shall furnish, install and maintain in good condition all
meters and regulating equipment at the Point(s) of Delivery. Buyer shall
read the meters, which shall be accessible to inspection and examination by
Seller at all reasonable times. If Seller challenges the accuracy of any
meter or measuring equipment in use under this Agreement and desires to
have the same tested, Buyer shall, if Seller desires, perform the test in
the presence of Seller or Seller's representative. The cost of testing the
meter shall be borne by Seller if the meter proves to be correct, and it
shall be deemed correct if there shall be no greater variation than three
percent
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(3%), either plus or minus. If the meter on test proves incorrect, then the
cost of testing shall be borne by Buyer. If a meter does prove incorrect,
as provided herein, the registration of such meter shall be corrected at
the rate of such inaccuracy for a period agreed upon by the Buyer and
Seller. In no event will the inaccuracy adjustment period exceed the lesser
of one half the period of time from the last test, or the period from the
first of the preceding Production Period prior to the date of challenge by
either party. For the purpose of testing, the meter shall be tested and
adjusted on the ground. During the time a meter is disconnected from the
line, the gas delivered may be estimated by Buyer until the meter is again
connected to the line, such estimate to be on the basis of the amount of
gas registered at like pressures for like periods of time when the meter
was registering accurately.
ARTICLE IV
OBLIGATIONS TO TAKE AND DELIVER GAS
1. Subject to the terms and conditions of the Agreement, Buyer shall
buy all the gas delivered to it by Seller at the Point(s) of Delivery, and
Seller shall, and is obligated to use its best efforts to, produce, deliver
and sell to Buyer all the gas owned, produced or purchased by Seller from
all xxxxx listed on Exhibit A on each day of the term of the Agreement, in
an efficient and expeditious manner, other than that required for drilling
operations with respect to such xxxxx. However, if required by the terms of
the oil and gas lease pursuant to which the gas subject to the Agreement is
produced, Seller may also provide up to 300 MCF per year to one dwelling on
the leased property from one well. Further, if required by the lease, each
additional dwelling on the leased property, if any, may also be provided
with up to 300 MCF per year if an additional well is
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producing gas on the leased property for each such additional dwelling. In
no event shall any dwelling receive gas from more than one well, nor shall
any well provide gas for more than one dwelling, no matter how many
dwellings or xxxxx are located on the leased property. If any other or
greater volumes are diverted from Buyer, then, at Buyer's option, the price
per MCF set forth in Article V will become, for all gas from each well from
which excess volumes were diverted, the Short Term Spot Price being paid by
Buyer at the time of the diversion, as such price may be amended by Buyer.
The adjusted price shall continue for a period of one year and as long
thereafter as the unauthorized diversion continues. Further, if the
unauthorized diversion continues beyond one year, Buyer at its option may
take any or all of the following actions: invoice Seller for the cost of
the measuring station, impose a fee of two cents ($0.02) per MCF to pay for
the costs of measuring the gas, if such fee is not already being charged,
withhold such fees or costs from payments for gas volumes associated with
the well or xxxxx, and treat the diversion as a breach of the Agreement and
pursue any or all legal and equitable remedies, including termination and
specific performance. Buyer will immediately notify Seller in writing of
any unauthorized diverted volumes it becomes aware of, and its actions in
response thereto.
2. It is understood and agreed, however, that Buyer's obligation to
take gas from any well or xxxxx subject to the Agreement, in addition to
the limitations imposed elsewhere by the Agreement, is limited to two
hundred and seventy five (275) days in each or any calendar year beginning
January 1 and ending December 31, except for the initial calendar year,
being the year in which gas from each well listed on Exhibit A is first
produced and delivered at the Point(s) of Delivery, during which period
Buyer agrees to take gas at least seventy-five percent of the time
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remaining after the initial delivery date until the end of the initial
calendar year. Pursuant to this paragraph Buyer may suspend taking gas at
any time and for any reason, including price, but Buyer shall have the
right to require delivery or the resumption of delivery of gas on each day
of every year, subject to the terms of the Agreement.
3. If Buyer wishes Seller to cease delivering gas from any or all
xxxxx subject to this Agreement pursuant to any provision of the Agreement,
Buyer shall notify Seller by telephone, facsimile, or letter, and Seller,
on receipt of such notice, shall immediately cease deliveries and shut in
the well or xxxxx as directed by Buyer. Should Seller fail to comply with
Buyer's instructions within a reasonable time in Buyer's sole judgment,
Buyer may take all action necessary to shut in such xxxxx or otherwise
interrupt the receipt of gas at the Point(s) of Delivery or elsewhere,
without additional notice. If Buyer is unable to, or elects not to, shut in
the xxxxx or otherwise interrupt receipt of the gas in the event Seller
fails to do so after receiving notice and instructions to do so pursuant to
this paragraph, any continuing deliveries to Buyer after such notice shall
be deemed to have been supplied by Seller to Buyer at no cost, and Buyer
shall not be obligated to make any payments to Seller therefor. Xxxxx shut
in pursuant to this Article shall remain shut in, and deliveries of gas
from such xxxxx shall not resume, until Buyer in its sole discretion
notifies Seller, by telephone, facsimile, or letter, that deliveries may be
resumed. Buyer's right to recall shut-in gas and to resume purchases shall
be absolute. Upon notice from Buyer, Seller shall resume deliveries as soon
as practicable.
4. It is understood that Buyer has no obligation, implied or
expressed, to take gas on more than two hundred and seventy five (275) days
in any year, nor on consecutive days, nor any
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obligation to take any specific volume of gas, nor gas from any specific
well or xxxxx during the periods in which Buyer is taking gas, except as
expressly provided for pursuant to the Agreement. It is the intent of the
Parties, by this provision, to recognize that the nature, timing, frequency
and duration of Buyer's shut-in of xxxxx or other refusals to accept gas
shall be at Buyer's sole discretion, subject only to Buyer's express
obligations to take gas in accordance with the terms of the Agreement.
Buyer shall not be liable for any damages, direct or indirect, through loss
of gas, or otherwise, sustained by Seller, its heirs, executors,
administrators or assigns, resulting from or arising out of the failure or
refusal of the Buyer to take gas, or out of any actions incidental to its
cessation of taking gas, or shutting in of xxxxx, if such failure, refusal
or action is contemplated or permitted by the terms of the Agreement.
5. Buyer's rights to suspend the taking of gas pursuant to this
Article IV shall be in addition to its rights to suspend taking gas
pursuant to any other provisions of the Agreement.
ARTICLE
PRICE
1. The price to be paid by Buyer to Seller shall be NYMEX plus $0.45
per MCF for each MCF received at the Point(s) of Delivery. The NYMEX for
each month will be the settlement price of the NYMEX natural gas futures
contract (at the Xxxxx Hub) for the last day during which the contract is
traded for such month. The NYMEX contract for the calendar month will be
used to price the corresponding production month (i.e., the November NYMEX
contract will be used to price November production; the December NYMEX
contract will be used to price December production). The prices set forth
in this Article V represent the full and complete prices to be
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paid for gas subject to the Agreement as delivered to the Point(s) of
Delivery. Buyer is not obligated to pay any additional or other prices than
the prices set forth here, regardless of what it may pay for any other gas
at any other time or date. The prices provided for in this Article shall be
subject to the provisions of Article IV, paragraph 1; Article X, paragraph
1; and Article XI, paragraphs 2 and 4 of the Agreement.
2. In no event shall the price paid hereunder ever exceed Buyer's
current GCR. In any period when the provisions of this Article would
produce that result, the price shall be frozen at the level of the current
GCR, until any subsequent adjustment of either price or current GCR which
results in the price pursuant to the Agreement being below the level of the
current GCR. In such event, no make-up payments shall be due or paid with
respect to amounts previously unpaid due to the GCR limit on the prices to
be paid hereunder.
3. If the method of calculating the GCR reflected in Buyer's rate
schedules is materially changed in accordance with PUCO procedures, or if
the use of a GCR is eliminated, then the price in effect as of the day of
such change or elimination shall remain in effect for the duration of the
term of the Agreement.
ARTICLE VI
FORCE MAJEURE
1. The term "Force Majeure" as used herein, and as applied to either
party hereto, shall mean acts of the law, including governmental bodies
acting pursuant to law, acts of God, strikes, lockouts, or other labor
disturbances, acts of the public enemy, war, blockades, insurrections,
riots, epidemics, fires, lightning, storms, floods, washouts, arrests, and
restraint by government or people, civil disturbances, explosions, breakage
or accidents to machinery or lines of pipe,
XXX-XXX Xxxxxxxx Xx. 00000
Page 12
freezing of xxxxx or pipe lines, partial or entire failure of such xxxxx,
the necessity for making repair to or alteration of machinery or line of
pipe, or any other cause, whether of the kind herein enumerated or
otherwise, not reasonably within the control of the party invoking Force
Majeure. It is understood that settlement of strikes, lockouts or labor
disturbances shall be entirely within the discretion of the party having
the difficulty and that the above requirement that any Force Majeure shall
be remedied with all reasonable dispatch shall not require the settlement
of strikes, lockouts, or labor disturbances by acceding to the demands of
an opposing party when such course is inadvisable in the discretion or
judgment of the party having the difficulty.
2. Neither party to this Agreement shall be liable for any damage or
loss that may be occasioned by any failure, depletion, shortage, or
interruption in the production of gas from a well, or any decline in
natural pressure. In the event either xxxxx is rendered unable, wholly or
in part, by Force Majeure to carry out its obligations under this
Agreement, other than the obligation to make payment of amounts due
hereunder, then the obligations of such party, so far as they are affected
by such Force Majeure, shall be suspended during the continuance of any
inability so caused. However, the party claiming the existence of Force
Majeure shall use all reasonable efforts to remedy promptly any situation
which may interfere with the performance of its obligations under the
Agreement.
3. Neither Force Majeure or other causes or contingencies recognized
pursuant to the Agreement shall relieve either party of liability or
responsibility unless notice and full particulars are given in writing to
the other by the party relying on such facts, as soon as reasonably
practicable after the occurrence of the facts relied upon. Such facts shall
not, however, in any
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event, release either party from liability in the event of its concurring
negligence, nor from its obligations to make payments of amounts then due.
ARTICLE VII
LIABILITY
1. Buyer and Seller shall each have responsibility for, and shall
indemnify and hold the other, its agents, employees, officers, directors
and parent, harmless from and against, any claim, demand, action,
liability, cost, expense (including reasonable attorneys' fees), damages or
loss, arising from or because of anything which may be done or may happen
or arise with respect to the gas while it is within its own control as
defined in Article X, paragraph 2 of the Agreement.
2. Neither Buyer nor Seller shall be liable in damages to the other
for any interruption in, or for any act, omission, or circumstance
occasioned by or in consequence of, or related to, any such interruption,
if such interruption is contemplated by any provision of the Agreement.
ARTICLE VIII
NOTICES
Notices to Buyer required under or relating to the Agreement shall be
addressed to it at X.X. Xxx 0000, Xxxxxxxxx, Xxxx 00000-0000, Attention:
Manager, Appalachian Gas Supply (216/736-5365). All notices and payments to
Seller required under or relating to the Agreement shall be made and mailed
to:
Xx. Xxxxxxx X. Xxxxx
Xxxxx Petroleum Corp.
000 X. Xxxxxxxx Xxxxx Xxxx.
Xxxxxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
XXX-XXX Xxxxxxxx Xx. 00000
Page 14
ARTICLE IX
PRODUCTION PERIOD AND STATEMENT
1. Deliveries of gas to the Point(s) of Delivery shall be measured
during Production Periods. Production Periods shall be periods of between
twenty-eight (28) and thirty-five (35) days. Production Periods shall be
identified by the name of the month in which the period ends.
2. Once each month Buyer shall render a statement setting forth the
total quantity of gas received at the Point(s) of Delivery during the prior
month's Production Period, and any payment due to Seller. Any such payments
may be, reduced by amounts due to Buyer from Seller pursuant to any
provision of the Agreement.
ARTICLE X
FURTHER OBLIGATIONS AND REPRESENTATIONS
1. Seller warrants that all of the gas sold and delivered to Buyer
has been produced from xxxxx in Ohio, that it has good, marketable title to
the gas sold as and when delivered to Buyer at the Point(s) of Delivery,
and that gas so delivered is free from all liens and encumbrances. Seller
covenants and agrees to indemnify Buyer, its officers and directors,
parents and affiliates, for, and save them harmless from, all suits,
actions, debts, accounts, damages, costs, losses and expenses arising from
or attributable to the adverse claims of any and all other persons or
parties to the gas delivered to Buyer hereunder, provided, however, that if
any person or party makes claim to any gas delivered to Buyer hereunder
adverse to Seller's claim of ownership thereof, or obtains a lien or
encumbrance against the same, Buyer may withhold payment for such gas
without liability for the payment of interest on the amounts withheld,
until such adverse claim or lien is released or
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disposed of by the parties or by final court action and may pay such
withheld amount or amounts to the party or parties finally determined to be
entitled thereto.
2. Seller shall be deemed to be in control and possession of the gas
sold by it hereunder until it shall have been delivered to Buyer at the
Point(s) of Delivery, after which delivery Buyer shall be deemed to be in
control and possession thereof. Buyer shall have no responsibility with
respect to any gas sold to it hereunder until it is delivered at any such
delivery point, and no responsibility therefore because of anything which
may be done, or may happen or arise with respect to said gas before
delivery to Buyer at such delivery point; and Seller shall have no
responsibility with respect to said gas after its delivery to Buyer and no
responsibility because of anything which may be done or may happen or arise
with respect to said gas after its delivery to Buyer at such delivery
point, except that nothing contained herein shall release Seller from its
obligations pursuant to Articles II and X of the Agreement.
3. No action shall be brought by Seller against Buyer on account of
any claimed failure under the Agreement unless sixty (60) days written
notice of such claim of failure shall be served upon Buyer and unless Buyer
shall have failed to remedy such claim within such sixty day period. Such
notice of claim shall specify in detail the respects in which it is claimed
the Buyer has failed to perform. Any such notice of claim must be served by
Seller upon Buyer within twelve months of the time such claim is or could
have been discovered, it being the intention of the parties to bar Seller's
assertion of any claim more than twelve months after it arises, and by
doing so to supersede any otherwise applicable statute of limitations on
claims by Seller.
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4. Seller warrants that if any of the output, production or reserves
of any of the xxxxx listed on Exhibit A has ever been previously produced,
dedicated or sold to or for Buyer or any other entity, as to such output,
production, and xxxxx, Seller has secured all necessary and appropriate
releases from all prior owners, producers, buyers or claimants.
5. In the event any tax is now or hereafter imposed on natural gas,
or the production, severance, gathering, transporting, sale, delivery or
use thereof, or upon the business or privilege of producing, severing,
gathering, transporting, selling, delivering, or using natural gas, or if
such tax is imposed in any other manner so as to constitute directly or
indirectly a charge upon the gas delivered to Buyer hereunder, then the
amount of such tax shall be borne by Seller so far as it affects or relates
to or is apportionable to the activities of Seller with respect to the gas
delivered to Buyer under the Agreement. In the event Buyer is required to
pay such tax, the amount thereof may be deducted from the payments accruing
to Seller under the Agreement.
6. Seller shall pay or cause to be paid any royalty payments due or
owed on the gas delivered under the Agreement, and shall indemnify and hold
Buyer harmless from any responsibility, liability or obligation for payment
of any such royalty. In the event Buyer is obligated by law to make any
royalty payment directly to royalty owners which payment obligation would
otherwise be, or is, the responsibility of Seller, Seller shall reimburse
Buyer for any such payment or costs associated with such payment. If Seller
fails to reimburse Buyer, Buyer may deduct the amounts of such payments and
any costs associated with such payments from any amounts accruing to Seller
under the Agreement.
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ARTICLE XI
MISCELLANEOUS
1. No waiver by either party of one or more failures or defaults of
the other party in the performance of any provisions of the Agreement shall
operate or be construed as a waiver of any future failures or defaults,
whether of a like or different character.
2. This Agreement and all of its provisions -- including the payment
of the prices stated in it -- are subject to all federal, state and local
laws and to the regulations or orders of any court or governmental agency
with jurisdiction over it, but the Agreement shall be governed by and
construed in accordance with the law of the State of Ohio, without giving
effect to the principles of conflicts of laws of the State.
3. This Agreement and its Exhibits constitute the entire agreement
between Buyer and Seller with respect to its subject matter, and no
modification of its terms and provisions shall be made or become effective
except by execution of a supplementary written agreement.
4. In the event any of the prices stated herein ever exceed the
applicable Maximum Lawful Price under the Natural Gas Policy Act of 1978 or
other legislation for the category of gas from any well subject to the
Agreement, Buyer will be required to pay only the Maximum Lawful Price for
the applicable category of gas.
5. Seller shall not assign the Agreement, in whole or in part,
without the written consent of Buyer which shall not be unreasonably
withheld. All the covenants and obligations of this agreement shall extend
to and be binding upon the successors and assigns of the respective
parties. Any sale, assignment, farmout or other disposition or agreement of
or concerning the well or xxxxx described herein shall be subject to and
expressly made subject to, the Agreement.
GPA-INT Contract No. 11286
Page 18
6. Should any provision of the Agreement be determined by any court
or regulatory body having jurisdiction to be void, voidable or otherwise
invalid, such determination shall have no effect on the remaining
provisions of the Agreement to the extent the provision eliminated can be,
reasonably construed as severable from the remainder of the Agreement
without materially altering the rights, obligations, and purposes of Buyer
and Seller as reflected in the Agreement.
IN WITNESS WHEREOF the parties have set their signatures by their
officers duly authorized to do so the day and year first above written.
WITNESS: SELLER:
XXXXX PETROLEUM CORPORATION
/s/ By: /s/ XXXXXXX X. XXXXX
--------------------------- -------------------------------
/s/ XXXX XXXXXX PRESIDENT
--------------------------- -------------------------------
TITLE
WITNESS: BUYER:
EAST OHIO GAS
/s/ XXXXXX X. XXXXXXX By: /s/ XXXXX X. KLINH
--------------------------- -------------------------------
Senior Vice President
/s/ /s/
--------------------------- -------------------------------
Secretary
GPA-INT Contract No. 11286
Page 19
