1
EXHIBIT 10.7
GAS PURCHASE AGREEMENT
THIS AGREEMENT entered into this first day of August 1998, ("Effective
Date") by and between STATOIL ENERGY, INC. a Virginia corporation ("Seller"),
and CNG Producing Company, a Delaware corporation ("Buyer").
WHEREAS, Seller has available a supply of natural gas at certain points
of connection on the pipeline system identified in Exhibit A, which are for
sale; and
WHEREAS, Buyer is seeking to purchase gas supplies; and
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, Seller and Buyer hereby mutually agree as follows:
ARTICLE I
DEFINITIONS
1.1 The term "Agreement" shall mean this Gas Purchase Agreement and the
Confirmation(s) attached hereto as executed from time to time and made a part
hereof.
1.2 The term "Confirmation" shall mean the letter agreement, a form
copy of which is attached hereto as Exhibit "A", which may be executed by Buyer
and Seller from time to time and which shall bind Buyer and Seller to particular
transactions for the purchase and sale of the gas in accordance with the terms
thereof and this Agreement.
1.3 The term "Day" shall mean the twenty-four (24) hour period
commencing at eight o'clock (8:00) a.m. Eastern Time.
1.4 The term "Dth" shall mean the quantity of heat energy which is one
million British Thermal Units (MMBtu).
1.5 The term "Effective Period" shall mean the period of time (Days,
Months, or any portion thereof) specified on the then effective Confirmation.
1.6 The term "Gas" shall mean natural gas or any mixture of
hydrocarbons or of hydrocarbons and noncombustible gases, in a gaseous state.
1.7 The term "Mcf" shall mean one thousand (1,000) cubic feet of gas
measured at the temperature and pressure specified on Buyer's gathering system
set forth herein.
1.8 The term "Quantity" shall mean the amount of Gas set forth in the
Confirmation which Buyer agrees to purchase and receive pursuant to the terms
and conditions hereof at the Delivery Point(s) as defined in Article IV herein.
2
1.9 The term "Gathering System" shall mean CNG Transmission's
Appalachian gathering system.
ARTICLE II
NATURE OF SERVICE
2.1 For all deliveries and receipts of gas hereunder, the obligations
of the parties shall be firm and subject to suspension only for the duration of
an event of Force Majeure. A non-performing party shall be responsible for
payment of those costs reasonably incurred by the performing party, including
incremental transportation costs, in securing alternate supply (where Buyer is
the performing party) or alternate market (where Seller is the performing
party). However, a non-performing party shall not be required to pay
consequential damages.
ARTICLE III
CONFIRMATION
3.1 Buyer agrees to purchase the Quantity from Seller for the Price at
the Delivery Point(s) for the Effective Period. The Quantity, Price, Delivery
Point(s), Effective Period and other special provisions shall be identified in
the Confirmation.
3.2 Buyer and Seller agree that the specific terms associated with
Price, Quantity, Delivery Point(s), Effective Period and other special
provisions are subject to change from time to time upon mutual agreement of the
parties hereto by written execution of a "Confirmation" substantially in the
form of Exhibit "A".
3.3 The parties hereby consent to the tape recording of telephone
conversations in which agreement to a Transaction is reached. Any such tape
recording will be deemed a "writing" and "signed" by the parties and may be
introduced as evidence to prove the fact or terms of a Transaction.
ARTICLE IV
DELIVERY POINT(S)
4.1 The "Delivery Point(s)", as listed in an effective Confirmation,
are the points at which delivery of the Gas purchased hereunder are deemed to be
made at a point of the interconnection of Seller's gathering facilities with the
metering and Gathering System of CNG Transmission. Seller shall arrange and be
responsible for the delivery of the Gas to the Delivery Point(s) as specified on
the then effective Confirmation. Buyer shall arrange and be responsible for the
transportation of the Gas after delivery is made at the Delivery Point(s).
2
3
ARTICLE V
PRICE
5.1 The price ("Price") paid by Buyer during each Effective Period, for
the Gas delivered by Seller to the Delivery Point(s), shall be as specified on
the then effective Confirmation(s). The price is inclusive of all production,
sales, severance, excise, ad valorem, royalties or similar taxes levied on the
production or transportation of the Gas prior to or at its delivery to Buyer
hereunder.
ARTICLE VI
TERM
6.1 The Agreement shall become effective on the Effective Date hereof
and shall remain in full force and effect for one year from the Effective Date
and thereafter until terminated by either party upon thirty (30) days' written
notice to the other party; however, in the event either party terminates this
Agreement during an Effective Period of a Confirmation, this Agreement shall
survive until the expiration of such Effective Period and the satisfaction of
all obligations thereunder.
ARTICLE VII
BILLING AND PAYMENT
7.1 Seller shall render an invoice not later than 30 days after the
month of production and Buyer shall pay Seller not later than 60 days after the
month of production. In the event a dispute arises as to the amount payable in
any invoice rendered hereunder, Buyer shall nevertheless pay when due the amount
not in dispute under such invoice. Such payment shall not be deemed to be a
waiver of the right by Buyer to recoup any overpayment, nor shall acceptance of
any payment be deemed to be a waiver by Seller of any right to collect the
unpaid potion of any underpayment.
7.2 In the event Buyer fails to forward the entire amount due, except
amounts disputed in good faith, to Seller when same is due, interest on the
unpaid portion shall accrue at a rate equal to one percent (1%) above the prime
rate charged by Chase Manhattan Bank, New York, from time to time, or the
maximum legal rate, whichever is the lesser, compounded daily from the date such
payment is due until the same is paid.
7.3 Each party hereto shall have the right at all reasonable times to
examine the books and records of the other party to the extent necessary to
verify the accuracy of any statement, charge, computation, invoice or demand
made under or pursuant to this Agreement. Any payment shall be final as to both
parties unless questioned within two (2) years from the date of such payment. In
the event of a pipeline reallocation involving the gas sold hereunder, the
payment shall be considered final two (2) years from the date of such
reallocation.
3
4
ARTICLE VIII
MEASUREMENT AND QUALITY OF GAS
8.1 Quantities of Gas delivered to the Delivery Point(s) hereunder
shall be measured according to the measurement provisions as contained in the
tariff of CNG Transmission for measuring gas into CNG Transmission's Gathering
System.
8.2 Seller shall deliver Gas which meets the CNG Transmission's quality
specifications for it's Gathering System as contained and updated in CNG
Transmission's FERC Gas Tariff, but in no event less than the following:
a. The Gas delivered shall not contain an amount of water vapor
exceeding the quantity that is required for saturation of the gas at the flowing
temperature and pressure of the gas, whichever is less, provided, however, that
such gas shall not contain any water in its liquid state. Such gas shall not
contain air, nor more than one grain of hydrogen sulfide, 20 grains of total
sulfur per 100 cubic feet, three (3) percent carbon dioxide or a total of five
(5) percent of inert gases. All gas delivered shall be commercial in quality and
be free from any foreign material such as dirt, dust, iron particles and other
similar matter.
b. If the Gas delivered fails to meet the quality specifications
set forth herein, then Buyer may either elect to continue to receive such gas or
refuse to take all or any portion of such gas until the Seller brings the gas
into conformity with such specifications. Such election to continue to receive
nonconforming gas shall not waive Buyer's right to refuse to take nonconforming
gas in the future.
c. Seller shall not install compression or any other mechanical or
accessory equipment to aid in delivery of the gas without first obtaining the
consent of Buyer and CNG Transmission Corporation. Buyer makes no representation
or warranty concerning the pressure which will be maintained in CNG
Transmission's Gathering System from time to time or other conditions which may
affect the quantity of Gas which Seller may be able to deliver to Buyer.
d. Buyer may require Seller to reduce its flow of gas ratably, by
rotational shut-in or complete shut-in of Seller's xxxxx for excessive pressure
on CNG Transmission's Gathering System or maintenance or repair of lines,
equipment, compressors or other facilities essential to the operation of CNG
Transmission's Gathering System.
e. Seller shall not process or cause the processing of any gas
delivered hereunder prior to the point of delivery, for the extraction of
ethane, propane, butane, pentane or other heavier hydrocarbons without first
obtaining the express written authorization of Buyer.
4
5
ARTICLE IX
TITLE AND WARRANTY OF TITLE
9.1 Except as provided by Section 4.1, title to and risk of loss of all
Gas delivered hereunder shall pass and vest in Buyer at the Delivery Point(s).
9.2 Seller warrants the title to the Gas delivered hereunder, that it
has good and lawful authority to sell such Gas, and that such Gas is free from
all liens and adverse claims of any kind or character. Seller agrees to defend,
indemnify and hold Buyer harmless from all claims, suits, actions, debts,
accounts, damages, costs, losses and expenses of every kind and character
arising out of any adverse claim to or against such title. In the event an
adverse claim is brought against Gas which is subject to this Agreement, Buyer
may suspend payment for such Gas pending resolution of that claim.
ARTICLE X
FORCE MAJEURE
10.1 If, by reason of Force Majeure, either party is rendered unable,
wholly or in part, to carry out its obligations under this Agreement, such party
shall be excused from performance hereunder, except to the extent payment is due
for Gas delivered, during the continuance of any inability so caused. "Force
Majeure" shall mean acts of God, strikes, lockouts or industrial disturbances,
interruptions by government or court orders, present or future orders of any
regulatory body having jurisdiction, acts of the public enemy, wars, riots,
inability to secure materials or labor, inability to secure right-of-way,
epidemics, landslides, lightning, earthquakes, fires, storms, floods,
explosions, breakage or accident to machinery, pipelines, and equipment, loss of
Buyer's principal resale market or any other situation, occurrence or condition
not reasonably within the control of the party claiming suspension. In the event
either party is unable to perform its obligations hereunder due to Force Majeure
as defined herein, that party shall notify the other party as soon as
practicable and shall use due diligence to remedy such condition(s).
ARTICLE XI
TAXES
11.1 Seller shall pay, or cause to be paid, all royalties, overriding
royalties and payments out of production and all taxes including, without
limitation, sales, severance and production taxes, imposed on or with respect to
the gas prior to or at its delivery at the Delivery Point; provided, however, if
state law requires Buyer to remit such taxes to the collecting authority, Buyer
shall do so and deduct the taxes so paid from payments otherwise due hereunder.
5
6
ARTICLE XII
MISCELLANEOUS
12.1 Notice. Any notice, request, or statement ("Notice") provided in
this Agreement between Buyer and Seller shall be in writing. Such Notice may be
transmitted via ordinary mail or telecopy.
Any such Notice shall be considered as duly delivered as of the earlier
of the receipt date indicated on the telecopy or the postmark date when mailed
by ordinary mail to the other party at the following address:
(a) NOTICE TO SELLER:
Attn: Statoil Energy
Contract Administration
0000 Xxxxxxxxxxxx Xxx.
Xxxxxxxxxx, XX 00000
Telecopy: 000-000-0000
Telephone: 000-000-0000
(b) PAYMENT TO SELLER:
Eastern States Oil & Gas, Inc.
ABA: 000-000-000
Acct: 0245-1315
PNC Bank
Xxxxxxxxxx, XX 00000
(c) NOTICE TO BUYER:
Attn: CNG Producing Company
Attn: Xx. Xxxxxx X. Xxxxxx
00000 Xxxxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000-0000
6
7
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
(d) STATEMENT TO BUYER:
Attn: CNG Producing Company
Attn: Xx. Xxxxxxx X. X. Xxxxxxx
0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
12.2 Entire Agreement and Amendments. This written Agreement, including
the then effective Confirmation(s), contains the entire Agreement between the
parties and there are no other understandings or representations between the
parties hereto. This Agreement may not be amended except by an instrument in
writing.
12.3 Governing Law. This Agreement shall be governed and construed in
accordance with the substantive laws of the state of West Virginia, without
regard to the choice of law rules thereof.
12.4 Severability. If any provision of this Agreement shall be held
invalid, illegal, or unenforceable to any extent and for any reason by a court
of competent jurisdiction, the remainder of this Agreement shall not be affected
thereby and shall be enforceable to the full extent permitted by law.
12.5 Waiver. The failure of either party at any time to exercise any
right or to require performance by the other party of any provision herein shall
in no way affect the right of such party thereafter to enforce the same, nor
shall the waiver by either party hereto of any breach of any provision herein by
the other party be a waiver of any other breach of such provision, or as a
waiver of the provision itself.
12.6 Headings. The title headings are for identification and reference
only and shall not be used in interpreting any part of this Agreement.
12.7 Joint Efforts. This Agreement shall be considered for all purposes
as prepared through the joint efforts of the parties, and shall not be construed
against one party or the other as a result of the preparation, submittal or
other event of negotiation drafting or execution thereof.
12.8 Assignment. This Agreement shall inure to and be binding upon the
successors and assigns of the parties hereto; provided, that neither party shall
assign this Agreement and the rights hereunder without first having obtained the
written approval of the other party which approval shall not be unreasonably
withheld.
7
8
IN WITNESS WHEREOF, the parties have duly executed this Agreement effective as
of the day and year first above written.
CNG PRODUCING COMPANY
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Director, Gas Contracts
STATOIL ENERGY, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Senior Vice President
8
9
CNG PRODUCING COMPANY
CONFIRMATION LETTER
================================================================================
SELLER: STATOIL ENERGY, INC. BUYER: CNG PRODUCING COMPANY
0000 XXXXXXXXXX XXXXXX 00000 XXXXXXXXXX XXXXX
XXXXXXXXXX, XX 00000 XXXXX 0000
XXXXXXX, XX 00000-0000
ATTN: XXXXX XXXXXXXXX ATTN: XXXX XXXXXX
(000) 000-0000 (000) 000-0000
FAX #: (000) 000-0000 FAX #: (000) 000-0000
================================================================================
Quantity: Up to 4,500 dth per day
--------------------------------------------------------------------------------
Type of Service: Firm
--------------------------------------------------------------------------------
Term: August 1, 1998 through July 31, 1999
--------------------------------------------------------------------------------
Price: CNG Appalachian Inside FERC First of Month Index plus $0.02
--------------------------------------------------------------------------------
Delivery Point: Xxxxxxxx Transmission Pool
--------------------------------------------------------------------------------
Pipeline: CNGT
--------------------------------------------------------------------------------
Special Provisions:
--------------------------------------------------------------------------------
This purchase is subject to the existing contract between Buyer and Seller.
================================================================================
By: CNG PRODUCING COMPANY
BUYER /s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
Title: Director, Gas Contracts Date: 7/30/98
--------------------------------------------------------------------------------
By: STATOIL ENERGY, INC.
SELLER /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------------------------
Title: Senior Vice President Date: 8/4/98
================================================================================
PLEASE EXECUTE AND RETURN BY FAX ASAP TO (000)000-0000.
This confirmation letter will be deemed accepted if no response
is received within two (2) days.
10
CNG PRODUCING COMPANY
CONFIRMATION LETTER
===================================================================================================================
SELLER: STATOIL ENERGY, INC. BUYER: CNG PRODUCING COMPANY
0000 XXXXXXXXXX XXXXXX 00000 XXXXXXXXXX XXXXX
XXXXXXXXXX, XX 00000 XXXXX 0000
XXXXXXX, XX 00000-0000
ATTN: XXXXX XXXXXXXXX ATTN: XXXX XXXXXX
(000) 000-0000 (000) 000-0000
FAX #: (000) 000-0000 FAX #: (000) 000-0000
===================================================================================================================
Quantity: Up to 10,000 dth per day
-------------------------------------------------------------------------------------------------------------------
Type of Service: Firm
-------------------------------------------------------------------------------------------------------------------
Term: November 1, 1998 through October 31, 1999
-------------------------------------------------------------------------------------------------------------------
Price: CNG Appalachian Inside FERC First of Month Index plus $0.02
-------------------------------------------------------------------------------------------------------------------
Delivery Point: Xxxxxxxx Transmission Pool
-------------------------------------------------------------------------------------------------------------------
Pipeline: CNGT
-------------------------------------------------------------------------------------------------------------------
Special Provisions:
-------------------------------------------------------------------------------------------------------------------
This purchase is subject to the existing contract between Buyer and Seller.
===================================================================================================================
BUYER By: CNG PRODUCING COMPANY
/s/ Xxxx Xxxxxx
-------------------------------------------------------------------------------------
Title: Date:
Gas Marketer 11/9/98
-------------------------------------------------------------------------------------------------------------------
By: STATOIL ENERGY, INC.
SELLER /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------------------------------------------------------------
Title: Senior Vice President Date: 11/13/98
===================================================================================================================
PLEASE EXECUTE AND RETURN BY FAX ASAP TO (000) 000-0000.
This confirmation letter will be deemed accepted if no response
is received within two (2) days.
11
CNG PRODUCING COMPANY
CONFIRMATION LETTER
===================================================================================================================
SELLER: STATOIL ENERGY, INC. BUYER: CNG PRODUCING COMPANY
0000 XXXXXXXXXX XXXXXX 00000 XXXXXXXXXX XXXXX
XXXXXXXXXX, XX 00000 XXXXX 0000
XXXXXXX, XX 00000-0000
ATTN: XXXXX XXXXXXXXX ATTN: XXXX XXXXXX
(000) 000-0000 (000) 000-0000
FAX #: (000) 000-0000 FAX #: (000) 000-0000
===================================================================================================================
Quantity: Up to 10,000 dth per day
-------------------------------------------------------------------------------------------------------------------
Type of Service: Firm
-------------------------------------------------------------------------------------------------------------------
Term: November 1, 1999 through October 31, 2000
-------------------------------------------------------------------------------------------------------------------
Price: CNG Appalachian Inside FERC First of Month Index plus $0.02
-------------------------------------------------------------------------------------------------------------------
Delivery Point: Xxxxxxxx Transmission Pool
-------------------------------------------------------------------------------------------------------------------
Pipeline: CNGT
-------------------------------------------------------------------------------------------------------------------
Special Provisions:
-------------------------------------------------------------------------------------------------------------------
This purchase is subject to the existing contract between Buyer and Seller.
===================================================================================================================
BUYER By: CNG PRODUCING COMPANY
/s/ Xxxxxx Xxxxxx
-------------------------------------------------------------------------------------
Title: Director, Gas Contracts Date:
-------------------------------------------------------------------------------------------------------------------
By: STATOIL ENERGY, INC.
SELLER /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------------------------------------------------------------
Title: Senior Vice President Date: 8/31/99
===================================================================================================================
PLEASE EXECUTE AND RETURN BY FAX ASAP TO (000) 000-0000.
This confirmation letter will be deemed accepted if no response is received
within two (2) days.
12
CNG PRODUCING COMPANY
CONFIRMATION LETTER
===================================================================================================================
SELLER: STATOIL ENERGY, INC. BUYER: CNG PRODUCING COMPANY
0000 XXXXXXXXXX XXXXXX 00000 XXXXXXXXXX XXXXX
XXXXXXXXXX, XX 00000 XXXXX 0000
XXXXXXX, XX 00000-0000
ATTN: XXXXX XXXXXXXXX ATTN: XXXX XXXXXX
(000) 000-0000 (000) 000-0000
FAX #: (000) 000-0000 FAX #: (000) 000-0000
===================================================================================================================
Quantity: Up to 4,500 dth per day
-------------------------------------------------------------------------------------------------------------------
Type of Service: Firm
-------------------------------------------------------------------------------------------------------------------
Term: August 1, 1999 through July 31, 2000
-------------------------------------------------------------------------------------------------------------------
Price: CNG Appalachian Inside FERC First of Month Index plus $0.02
-------------------------------------------------------------------------------------------------------------------
Delivery Point: Xxxxxxxx Transmission Pool
-------------------------------------------------------------------------------------------------------------------
Pipeline: CNGT
-------------------------------------------------------------------------------------------------------------------
Special Provisions:
-------------------------------------------------------------------------------------------------------------------
This purchase is subject to the existing contract between Buyer and Seller.
===================================================================================================================
BUYER By: CNG PRODUCING COMPANY
/s/ Xxxxxx Xxxxxx
-------------------------------------------------------------------------------------
Title: Director, Gas Contracts Date:
-------------------------------------------------------------------------------------------------------------------
By: STATOIL ENERGY, INC.
SELLER /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------------------------------------------------------------
Title: Senior Vice President Date: 8/31/99
===================================================================================================================
PLEASE EXECUTE AND RETURN BY FAX ASAP TO (000) 000-0000.
This confirmation letter will be deemed accepted if no response is
received within two (2) days.
