EXHIBIT 10.72
ISDA (R)
International Swaps and Derivatives Association, Inc.
NOVATION AGREEMENT
dated as of August 28, 2007 among:
X. Xxxx & Company (the "Remaining Party"),
Pacific Energy Resources Ltd. (the
"Transferor")
AND
Pacific Energy Alaska Operating, LLC (the "Transferee").
The Transferor and the Remaining Party have entered into a Transaction each
evidenced by a Confirmation attached as Annex 1 hereto (such Transaction, the
"Old Transaction" and such Confirmation, the "Old Confirmation") and subject to
an ISDA Master Agreement dated as of November 30, 2006 (the "Old Agreement").
The Remaining Party and the Transferee have entered into an ISDA (the "New
Agreement") dated as of August 27, 2007.
With effect from and including August 27, 2007 (the "Novation Date", the
Transferor wishes to transfer by novation to the Transferee, and the Transferee
wishes to accept the transfer by novation of, all the rights, liabilities,
duties and obligations of the Transferor under and in respect of the Old
Transaction, with the effect that the Remaining Party and the Transferee enter
into a new transaction (each a "New Transaction") between them having terms
identical to those of each Old Transaction, as more particularly described
below.
The Remaining Party wishes to accept the Transferee as its sole counterparty
with respect to the New Transaction.
The Transferor and the Remaining Party wish to have released and discharged, as
a result and to the extent of the transfer described above, their respective
obligations under and in respect of the Old Transaction.
Accordingly, the parties agree as follows: ---
1. Definitions.
Terms defined in the ISDA Master Agreement (Multicurrency-Cross Border) as
published in 1992 by the International Swaps and Derivatives Association, Inc.,
(the "1992 ISDA Master Agreement") are used herein as so defined, unless
otherwise provided herein.
2. Transfer, Release, Discharge and Undertakings.
With effect from and including the Novation Date and in consideration of the
mutual representations, warranties and covenants contained in this Novation
Agreement and other good and valuable consideration (the receipt and sufficiency
of which are hereby acknowledged by each of the parties):
(a) the Remaining Party and the Transferor are each released and
discharged from further obligations to each other with respect to the
Old Transaction and their respective rights against each other
thereunder are cancelled, provided that such release and discharge
shall not affect any rights, liabilities or obligations of the
Remaining Party or the Transferor with respect to payments or other
obligations due and payable or due to be performed on or prior to the
Novation Date, and all such payments and obligations shall be paid or
performed by the Remaining Party or the Transferor in accordance with
the terms of the Old Transaction;
(b) in respect of the New Transaction, the Remaining Party and the
Transferee each undertake liabilities and obligations towards the
other and acquire rights against each other identical in their terms
to the Old Transaction (and, for the avoidance of doubt, as if the
Transferee were the Transferor and with the Remaining Party remaining
the Remaining Party, save for any rights, liabilities or obligations
of the Remaining Party or the Transferor with respect to payments or
other obligations due and payable or due to be performed on or prior
to the Novation Date); and
(c) the New Transaction shall be governed by and form part of the New
Agreement and the Transferee and the Remaining Party shall enter into
a Confirmation specifying the terms of each New Transaction; provided,
however, that any failure of either the Transferee or the Remaining
Party to enter into such Confirmations shall not affect the rights and
obligations of the Transferor pursuant to this Novation Agreement. In
the event of such failure, the Old Confirmation (which, in conjunction
and as deemed modified to be consistent with this Novation Agreement,
shall be deemed to be a Confirmation between the Remaining Party and
the Transferee.
3. Representations and Warranties.
(a) On the date of this Novation Agreement and on each Novation Date:
(i) Each of the parties makes to each of the other parties those
representations and warranties set forth in Section 3(a) of the
1992 ISDA Master Agreement with references in such Section to
"this Agreement" or "any Credit Support Document" being deemed
references to this Novation Agreement alone.
(ii) The Remaining Party and the Transferor each makes to the other,
and the Remaining Party and the Transferee each makes to the
other, the representation set forth in Section 3(b) of the 1992
ISDA Master Agreement, in each case with respect to the Old
Agreement or the New Agreement, as the case may be, and taking
into account the parties entering into and performing their
obligations under this Novation Agreement.
(iii) Each of the Transferor and the Remaining Party represents and
warrants to each other and to the Transferee that:
(A) it has made no prior transfer (whether by way of security or
otherwise) of the Old Agreement or any interest or
obligation [in or under the Old Agreement or in respect of
the Old Transaction; and
(B) as of the Novation Date, all obligations of the Transferor
and the Remaining Party under the Old Transaction required
to be performed on or before the Novation Date have been
fulfilled.
(b) The Transferor makes no representation or warranty and does not assume
any responsibility with respect to the legality, validity,
effectiveness, adequacy or enforceability of any New Transaction or
the New Agreement or any documents relating thereto and assumes no
responsibility for the condition, financial or otherwise, of the
Remaining Party, the Transferee or any other person or for the
performance and observance by the Remaining Party, the Transferee or
any other person of any of its obligations under the New Transaction
or the New Agreement or any document relating thereto and any and all
such conditions and warranties, whether express or implied by law or
otherwise, are hereby excluded.
4. Counterparts.
This Novation Agreement (and each amendment, modification and waiver in
respect of it) may be executed and delivered in counterparts (including by
facsimile transmission), each of which will be deemed an original.
5. Costs and Expenses.
The parties will each pay their own costs and expenses (including legal
fees) incurred in connection with this Novation Agreement and as a result
of the negotiation, preparation and execution of this Novation Agreement.
6. Amendments.
No amendment, modification or waiver in respect of this Novation Agreement
will be effective unless in writing (including a writing evidenced by a
facsimile transmission) and executed by each of the parties or confirmed by
an exchange of telexes or electronic messages on an electronic messaging
system.
7. (a) Governing Law.
This Novation Agreement will be governed by and construed in
accordance with the laws of the State of New York without reference to
the conflict of laws provisions thereof.
(b) Jurisdiction.
The terms of Section 13(b) of the 1992 ISDA Master Agreement shall
apply to this Novation Agreement with references in such Section to
"this Agreement" being deemed references to this Novation Agreement
alone.
IN WITNESS WHEREOF the parties have executed this Novation Agreement on the
respective dates specified below with effect from and including the Novation
Date.
X. XXXX & COMPANY PACIFIC ENERGY RESOURCES LTD.
(Name of Remaining Party) (Name of Transferor)
By: /s/ Xxxxx Xxxxxxxxx By:
--------------------------------- ------------------------------------
Name: Xxxxx Xxxxxxxxx Name:
Title: Attorney In Fact Title:
Date: Date:
PACIFIC ENERGY ALASKA OPERATING, LLC
(Name of Transferee)
By:
---------------------------------
Name:
Title:
Date:
IN WITNESS WHEREOF the parties have executed this Novation Agreement on the
respective dates specified below with effect from and including the Novation
Date.
X. XXXX & COMPANY PACIFIC ENERGY RESOURCES LTD.
(Name of Remaining Party) (Name of Transferor)
By: By: /s/ Xxxxxx Xxxxx
--------------------------------- ------------------------------------
Name: Name: Xxxxxx Xxxxx
Title: Title: CFO
Date: Date: 8/28/07
PACIFIC ENERGY ALASKA OPERATING, LLC
(Name of Transferee)
By: /s/ Xxxxxx Xxxxx
---------------------------------
Name: Xxxxxx Xxxxx
Title: CFO
Date: 8/28/07
Annex 1
APAPAP00881388-61108ATATAT
To: PACIFIC ENERGY RESOURCES LTD. ("Counterparty")
Attention: Xxxxxx Xxxxx
Attention: XXXXX XXXXXXX
From: X. Xxxx & Company ("Xxxx")
The purpose of this confirmation letter (this "Confirmation") is to confirm the
terms and conditions of the following transaction (the "Transaction") entered
into on the Trade Date and Effective as of the Effective Date specified below
between Xxxx and Counterparty (each, a "Party" and collectively, the "Parties").
Subject to the last paragraph under "Other Terms" below, this Confirmation is
being provided pursuant to and in accordance with the ISDA Master Agreement and
Schedule to the ISDA Master Agreement dated as of November 30, 2006 (including
the other documents annexed thereto or incorporated therein, the "Master
Agreement") between Xxxx and Counterparty and constitutes part of and is subject
to the terms and provisions of such Master Agreement. This Confirmation
constitutes a "Confirmation" within the meaning of the Master Agreement that
supplements, forms part of and is subject to the Master Agreement. Terms used
but not defined herein shall have the meanings ascribed to them in the Master
Agreement.
We are pleased to confirm the following Transaction between Counterparty and
Xxxx.
Contract Reference Number: 900157389 1 1
Trade Date: 27 Aug 2007
Transaction Time: This is available upon request.
Commodity Type: Nymex West Texas Intermediate Crude Oil
Total Quantity: 3,410,375.00 U.S. Barrel(s)
Fixed Price Payer: Xxxx
Floating Price Payer: Counterparty
Effective Date: 01 Sep 2007
Termination Date: 30 Sep 2012
Determination Period(s): 61 Monthly Period(s) commencing with the Effective
Date and ending on the Termination Date
Quantity per month
Start Date End Date (U.S. Barrel(s)) Strike/Fixed Price
------------ ------------ ------------------ -------------------------
01 Sept 2007 30 Sept 2007 91,584.00 USD 69.75 per U.S. Barrel
01 Oct 2007 31 Oct 2007 96,389.00 USD 69.75 per U.S. Barrel
01 Nov 2007 30 Nov 2007 95,205.00 USD 69.75 per U.S. Barrel
01 Dec 2007 31 Dec 2007 94,045.00 USD 69.75 per U.S. Barrel
01 Jan 2008 31 Jan 2008 92,899.00 USD 68.16 per U.S. Barrel
01 Feb 2008 29 Feb 2008 91,779.00 USD 68.16 per U.S. Barrel
01 Mar 2008 31 Mar 2008 90,675.00 USD 68.16 per U.S. Barrel
01 Apr 2008 30 Apr 2008 89,588.00 USD 68.16 per U.S. Barrel
01 May 2008 31 May 2008 88,520.00 USD 68.16 per U.S. Barrel
01 Jun 2008 30 Jun 2008 87,465.00 USD 68.16 per U.S. Barrel
01 Jul 2008 31 Jul 2008 86,431.00 USD 68.16 per U.S. Barrel
01 Aug 2008 31 Aug 2008 85,406.00 USD 68.16 per U.S. Barrel
01 Sep 2008 30 Sep 2008 84,403.00 USD 68.16 per U.S. Barrel
01 Oct 2008 31 Oct 2008 83,414.00 USD 68.16 per U.S. Barrel
01 Nov 2008 30 Nov 2008 82,441.00 USD 68.16 per U.S. Barrel
01 Dec 2008 31 Dec 2008 81,482.00 USD 68.16 per U.S. Barrel
01 Jan 2009 31 Jan 2009 80,536.00 USD 67.21 per U.S. Barrel
01 Feb 2009 28 Feb 2009 79,609.00 USD 67.21 per U.S. Barrel
01 Mar 2009 31 Mar 2009 78,692.00 USD 67.21 per U.S. Barrel
01 Apr 2009 30 Apr 2009 77,790.00 USD 67.21 per U.S. Barrel
01 May 2009 31 May 2009 76,902.00 USD 67.21 per U.S. Barrel
01 Jun 2009 30 Jun 2009 76,024.00 USD 67.21 per U.S. Barrel
01 Jul 2009 31 Jul 2009 75,158.00 USD 67.21 per U.S. Barrel
01 Aug 2009 31 Aug 2009 74,308.00 USD 67.21 per U.S. Barrel
01 Sep 2009 30 Sep 2009 73,471.00 USD 67.21 per U.S. Barrel
01 Oct 2009 31 Oct 2009 72,650.00 USD 67.21 per U.S. Barrel
01 Nov 2009 30 Nov 2009 71,830.00 USD 67.21 per U.S. Barrel
01 Dec 2009 31 Dec 2009 71,029.00 USD 67.21 per U.S. Barrel
01 Jan 2010 31 Jan 2010 70,235.00 USD 67.21 per U.S. Barrel
01 Feb 2010 28 Feb 2010 69,459.00 USD 67.21 per U.S. Barrel
01 Mar 2010 31 Mar 2010 66,425.00 USD 67.21 per U.S. Barrel
01 Apr 2010 30 Apr 2010 63,391.00 USD 67.21 per U.S. Barrel
01 May 2010 31 May 2010 60,357.00 USD 67.21 per U.S. Barrel
01 Jun 2010 30 Jun 2010 57,322.00 USD 67.21 per U.S. Barrel
01 Jul 2010 31 Jul 2010 54,680.00 USD 67.21 per U.S. Barrel
01 Aug 2010 31 Aug 2010 52,038.00 USD 67.21 per U.S. Barrel
01 Sep 2010 30 Sep 2010 49,396.00 USD 67.21 per U.S. Barrel
01 Oct 2010 31 Oct 2010 46,753.00 USD 67.21 per U.S. Barrel
01 Nov 2010 3O Nov 2010 44,111.0O USD 67.21 per U.S. Barrel
01 Dec 2010 31 Dec 2010 41,255.00 USD 67.21 per U.S. Barrel
01 Jan 2011 31 Jan 2011 38,399.00 USD 67.21 per U.S. Barrel
01 Feb 2011 28 Feb 2011 35,542.00 USD 67.21 per U.S. Barrel
01 Mar 2011 31 Mar 2011 32,686.00 USD 67.21 per U.S. Barrel
01 Apr 2011 30 Apr 2011 29,830.00 USD 67.21 per U.S. Barrel
01 May 2011 31 May 2011 23,234.00 USD 67.21 per U.S. Barrel
01 Jun 2011 30 Jun 2011 16,638.00 USD 67.21 per U.S. Barrel
01 Jul 2011 31 Jul 2011 16,459.00 USD 67.21 per U.S. Barrel
01 Aug 2011 31 Aug 2011 16,276.00 USD 67.21 per U.S. Barrel
01 Sep 2011 30 Sep 2011 16,099.00 USD 67.21 per U.S. Barrel
01 Oct 2011 31 Oct 2011 15,924.00 USD 67.21 per U.S. Barrel
01 Nov 2011 30 Nov 2011 15,751.00 USD 67.21 per U.S. Barrel
01 Dec 2011 31 Dec 2011 15,578.00 USD 67.21 per U.S. Barrel
01 Jan 2012 31 Jan 2012 15,410.00 USD 67.21 per U.S. Barrel
01 Feb 2012 28 Feb 2012 15,243.00 USD 67,21 per U.S. Barrel
01 Mar 2012 31 Mar 2012 15,079.00 USD 67.21 per U.S. Barrel
01 Apr 2012 30 Apr 2012 14,915.00 USD 67.21 per U.S. Barrel
01 May 2012 31 May 2012 14,756.00 USD 67.21 per U.S. Barrel
01 Jun 2012 30 Jun 2012 14,595.00 USD 67.21 per U.S. Barrel
01 Jul 2012 31 Jul 2012 14,439.00 USD 67.21 per U.S. Barrel
01 Aug 2012 31 Aug 2012 14,285.00 USD 67.21 per U.S. Barrel
01 Sep 2012 30 Sep 2012 14,090.00 USD 67.21 per U.S. Barrel
Floating Price: For each Determination Period, the average of the closing
settlement price(s) on the New York Mercantile Exchange
for the Nearby Light Crude Futures Contract (referenced
below)
Nearby Contract: First
If, with respect to each Determination Period, the Fixed Price exceeds the
Floating Price, the Fixed Price Payer shall pay Floating Price Payer the
difference between the two such amounts multiplied by the quantity, and if the
Floating Price exceeds the Fixed Price, the Floating Price Payer shall pay the
Fixed Price Payer the difference between the two such amounts multiplied by the
quantity. If the Floating Price is equal to the Fixed Price, then no payment
shall be made.
Settlement Date(s): The last trading day of each Determination Period
Payment Date(s): 5 New York Business Day(s) after each Settlement Date via
wire transfer of Federal Funds
OTHER TERMS:
Additional Termination Event. It shall be an Additional Termination Event with
respect to Counterparty, within the meaning of section 5(b)(v) of the ISDA
Master Agreement, with Counterparty as the sole Affected Party if, by 12:00 PM
New York time on 29 August 2007 (such date referred to as the "Closing Date
Deadline"), Counterparty fails to (i) cause the borrower to the senior credit
facilities which constitute the Debt Financing as defined in the MIPA (defined
below) and on terms acceptable to Xxxx in its sole discretion (the "Borrower")
to execute and deliver to Xxxx an agreement acceptable to Xxxx in the form of
the 1992 ISDA Master Agreement
(Multicurrency-Cross Border), with such additional terms as are satisfactory to
Xxxx in its sole discretion, together with such supporting documentation (such
as a credit support annex, guaranties, security agreements and an intercreditor
agreement, if applicable) as may be required by Xxxx in its sole discretion (it
being understood that Xxxx shall in good faith consider a proposal by
Counterparty that would provide Xxxx with one or more liens on appropriate
assets and of a priority with other secured creditors acceptable to Xxxx in its
sole discretion and other relevant terms and conditions) (such agreement, the
"New ISDA Master Agreement") and (ii) assign this Transaction to the Borrower
under the New ISDA Master Agreement on terms and pursuant to documentation
acceptable to Xxxx in its sole discretion (including an amendment and
restatement of this Confirmation) so that the Borrower becomes the Counterparty
to this Transaction (provided, that in connection with such assignment in no
event shall Xxxx be responsible for the payment of any amounts to Counterparty
or the party to whom the assignment is made in consideration of or in relation
to the assignment specifically); provided however that such event shall not be
an Additional Termination Event if Counterparty has provided collateral to Xxxx
of a type and in an amount, and upon terms and conditions acceptable to Xxxx in
its sole discretion. For purposes of the foregoing, "MIPA" means the Membership
Interest Purchase Agreement dated May 24, 2007, as amended by Amendment No.l
dated July 31, 2007 by and among Counterparty, Forest Alaska Operating LLC, a
Delaware limited liability company (as the "Company"), Forest Alaska Holding
LLC, a Delaware limited liability company (as the "Seller"), and, for purposes
of Sections 7.6 and 10.1 and Article XII thereof only, Forest Oil Corporation, a
New York corporation (as "Seller"). For purposes of this Additional Termination
Event, Counterparty shall be the sole Affected Party and this Transaction the
sole Affected Transaction.
Upon execution of the New ISDA Master Agreement and assignment of this
Transaction to the New ISDA Master Agreement in accordance with the above, this
Confirmation shall constitute a supplement to, form a part of and be subject to
the New ISDA Master Agreement, and this Confirmation together with any other
confirmations entered into by the parties under the New ISDA Master Agreement
and together with the New ISDA Master Agreement, if and when executed, shall
constitute a single agreement between the parties.
Counterparty acknowledges that it and its affiliates are currently working with
Xxxx and/or its affiliates on financing terms in connection with the
transactions contemplated by the MIPA. Because information regarding the status
of the transactions contemplated by the MIPA is necessary to both price and risk
manage this Transaction, Counterparty will consult, both before and after the
execution of this Transaction, with the team providing the Counterparty and/or
its affiliates with financing services with regard to the ongoing status of the
transactions contemplated by the MIPA. With respect to this Transaction, Xxxx
will act only as arm's-length principal and counterparty, and neither Xxxx nor
any of its affiliates shall be an agent, fiduciary or advisor, to the
Counterparty in respect hereto. The Counterparty, together with its legal and
accounting advisors, and, if it deems appropriate, independent financial
advisors, has determined whether to accept the terms of the Transaction proposed
by Xxxx.
For the sake of good order, please note that the terms of this Transaction shall
be agreed solely between the parties.
Please confirm that the foregoing correctly sets forth the terms of our
agreement with respect to this Transaction (Contract Reference Number: 900157389
1 1) by signing this confirmation in the space provided below and immediately
returning a copy of the executed confirmation via facsimile to the attention of
Commodity Operations at:
New York: 0-000-000-0000 (X. Xxxx & Company)
London: 00-000-000-0000 (Xxxxxxx Sachs International)
Singapore: 00-0000-0000 (X. Xxxx & Company (Singapore) Pte.)
Regards,
X. Xxxx & Company
Signed on behalf of X. Xxxx & Company
By: /s/ Xxxxx Xxxxxx
---------------------------------
Xxxxx Xxxxxx
Vice President
X. Xxxx & Company
Signed on behalf of PACIFIC ENERGY RESOURCES, LTD.
By: /s/ Xxxxxx Xxxxx
---------------------------------
Name: Xxxxxx Xxxxx
Title: CFO
