DELIVERED GAS PURCHASE CONTRACT
The contract, dated December 1, 1985 effective upon the date designated
herein, is by and between:
GATEWAY ENERGY CORPORATION
P. O. Xxx 000
Xxxxxxxxx, Xxxxxxxx 00000
(hereinafter called "Seller" whether one or more) and THE MONTANA POWER COMPANY
(hereinafter called "Buyer").
W I T N E S S E T H:
WHEREAS, Seller owns or otherwise controls the rights to produce natural
gas from certain lands located in the State of Montana, on which Seller has
developed gas production; and
WHEREAS, Buyer is willing to buy gas which may be produced by Seller in
commercial quantities; and
WHEREAS, Seller has available commercial quantities of gas which Seller is
willing to sell to Buyer; and
WHEREAS, the parties hereto are desirous of entering into a contract
providing for the sale by Seller and purchase by Buyer of volumes of gas
developed by Seller;
NOW, THEREFORE, in consideration of the promises and the covenants herein
contained, Seller agrees to sell and deliver to Buyer and Buyer agrees to
purchase and receive from Seller, pursuant to the terms and conditions
hereinafter set forth, all of the gas produced by Seller from Seller's lands.
ARTICLE I. GENERAL PROVISIONS
SECTION 1 - TERM. This contract shall become effective on the effective
date hereof and shall continue in effect for
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a period of twenty (20) contract years and thereafter from year to year until
canceled by one (1) year's written notice from one party to the other.
SECTION 2 - EFFECTIVE DATE. The effective date of this contract is December
1, 1985.
SECTION 3 - TYPE OF CONTRACT. This contract is a Delivered Gas Purchase
Contract.
SECTION 4 - NOTICES. Notices to Buyer shall be addressed to:
The Montana Power Company
00 Xxxx Xxxxxxxx
Xxxxx, Xxxxxxx 00000
Notices to Seller shall be addressed to:
Gateway Energy Corporation
X. X Xxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Either party may change its address under this section at any time upon
written notice to the other party.
ARTICLE II. QUANTITY OF GAS
SECTION 1 - VOLUME OBLIGATION. Commencing with the initial delivery of gas
hereunder, the volume of gas which Buyer shall be obligated to take and pay for,
or pay for if available and not taken, shall be the daily contract quantity
(DCQ). The DCQ shall equal one million (1,000,000) cubic feet for each 7.3 Bcf
(7,300,000,000 cubic feet) of recoverable gas reserves, with a minimum DCQ of
two million (2,000,000) cubic feet per day, subject to Seller having available
for delivery 150 percent of the DCQ.
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SECTION 2 - INITIAL DCQ. The DCQ shall equal 66-2/3 percent of the daily
volume available for delivery by Seller up to a maximum of two million
(2,000,000) cubic feet, except as hereinafter provided.
The initial DCQ shall be established as soon as practical, but not more
than three months after initial delivery allowing Seller sufficient time to
solve any start-up problems. Seller shall notify Buyer when Seller is ready,
and a monthly production period will be used as a production test provided,
however, that under no circumstances will Buyer be required to conduct a
production test during the months of June, July or August. The initial DCQ
shall be equal to 66-2/3 percent of the average daily delivery during the
production test. For the period from initial delivery to the first day of the
initial production test, Buyer's take-or-pay obligation shall be equal to the
volume actually delivered and accepted.
Should Seller increase his deliverability and desire to increase the DCQ,
Seller may request a new production test for that purpose, provided that such
new production test shall be not less than six (6) months from the last
production test and provided further that under no circumstances will Buyer
be required to conduct a production test during the months of June, July or
August.
Establishment of DCQ based on 66-2/3 percent of deliverability during a
production test shall be applicable only for DCQ's up to two million (2,000,000)
cubic feet.
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XXXXXXX 0 - XXXXXXXXXXX XXX BASED UPON DETERMINATION OF RESERVES. At such
time as 66-2/3 percent of deliverability exceeds two million (2,000,000)
cubic feet, the DCQ shall be one million (1,000,000) cubic feet for each 7.3
Bcf (7,300,000,000 cubic feet) of recoverable gas reserves or two million
(2,000,000) cubic feet, whichever is greater.
SECTION 4 - LIMITATIONS UPON BUYER'S OBLIGATION TO PURCHASE GAS.
(a) DELIVERY CAPACITY OF SELLER. After commencement of initial delivery,
Buyer's obligations to purchase the annual contract volume during each contract
year is conditioned upon Seller having the capability at all times of delivering
a daily volume of gas equal to at least 150 percent of the DCQ.
(b) FAILURE TO DELIVER CONTRACT VOLUME. If the Seller fails for any
calendar month to deliver to Buyer the daily quantity of gas requested by Buyer
up to 150 percent of the DCQ, Buyer may notify Seller in writing of such
failure. Seller shall have such time as may be necessary, but in no event more
than twelve (12) months from the date of receipt by Seller of Buyer's notice, in
which to restore its ability to deliver such quantity, during which period the
DCQ shall be reduced to 66-2/3 percent of the average daily volume of gas Seller
delivered to Buyer during the calendar month on which Buyer's notice was based.
After Seller attempts to restore its ability to deliver 150 percent of the DCQ
in effect prior to such notice and reduction and after Seller
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gives written notice to Buyer that it is ready for a test, or following the end
of said twelve (12) month period, Buyer shall conduct a production test using a
monthly production period in which Seller must demonstrate delivery of 150
percent of the DCQ in effect prior to such notice and reduction on each day,
provided, however, that under no circumstances will Buyer be required to conduct
a production test during the months of June, July or August. In the event
Seller's efforts to restore its ability to deliver 150 percent of the DCQ in
effect prior to such notice are unsuccessful, as evidenced by said production
test, Buyer shall have the right to reduce the DCQ to a volume equal to 66-2/3
percent of the average daily volume of gas delivered to Buyer during the
calendar month of said delivery test. If 66-2/3 percent of deliverability
results in a DCQ less than l00 MCFD, the DCQ shall be assigned a value of zero.
If a zero DCQ is assigned, Seller shall nonetheless continue to produce and
deliver gas to Buyer and Buyer shall take and pay for gas delivered on a best
efforts basis.
ARTICLE III. RESERVES AND DELIVERABILITY
SECTION 1 - COMMITMENT OF GAS RESERVES. Seller hereby commits to the
performance of this contract all of the gas produced by Seller from the lands
specified and described on Schedule "A."
SECTION 2 - DETERMINATION OF GAS RESERVES. After the execution of this
contract, and thereafter from time to time as new xxxxx are completed or
discoveries of gas are made on
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Seller's lands, Seller will provide Buyer with the basic geological,
engineering, production and other data within Seller's possession which would be
needed in making a determination of gas reserves and deliverability of each
well.
One (1) month after Buyer has received said data, Buyer shall furnish
Seller an estimate of recoverable gas reserves. Within fifteen (15) days after
Buyer's furnishing its estimate of the recoverable gas reserves, Seller shall
advise Buyer whether Buyer's estimate is acceptable. If Buyer's estimate of such
recoverable gas reserves is not acceptable to Seller, and Seller and Buyer are
unable to negotiate an agreeable settlement, then the matter shall be determined
by arbitration as provided in Article XII. The recoverable gas reserves when
determined will form the basis for determining the DCQ and take-or-pay
obligations subject, however, to the provisions of Article II.
SECTION 3 - SUBSEQUENT REDETERMINATIONS OF RECOVERABLE GAS RESERVES. Either
party may request, in writing, a redetermination of recoverable gas reserves
between March 1 and June 30, inclusive, of every second contract year hereof.
After such request, Buyer shall, between July 1 and September 1, estimate the
quantity of Seller's recoverable gas reserves and promptly provide Seller with a
statement thereof. Within fifteen (15) days after Buyer's furnishing its
estimate of such reserves, Seller shall advise Buyer whether Buyer's estimate of
such reserves is acceptable. If Seller and Buyer reach agreement on Seller's
recoverable gas
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reserves, or the matter is determined by arbitration, then such reserve
agreement or determination shall form the basis for determining the DCQ
effective the following January 1, subject, however, to the provisions of
Article II.
SECTION 4 - RECOVERABLE GAS RESERVES. In making the determination of
recoverable gas reserves, all pertinent factors shall be considered and given
due weight, including but not limited to the production-pressure decline curve,
if sufficient data is available, and a volumetric determination of reserves
which is based upon the thickness of the gas bearing sands, the acres in which
the production occurs, the porosity and water saturation of said sands, the
pressures occurring in the formation and at which the gas is produced, and the
recovery factor.
SECTION 5 - ARBITRATION OF RESERVES. If Seller and Buyer are unable to
agree upon the Recoverable Gas Reserves and such disagreement cannot be resolved
by negotiation within sixty (60) days after Buyer has submitted its
determination of recoverable gas reserves, then the determination of such
reserves will, at the request of either party, be submitted to arbitration as
provided in Article XII.
ARTICLE IV. DELIVERY
SECTION 1 - DELIVERY PRESSURE. Delivery by Seller of gas shall be made at a
pressure that is sufficient to effect delivery of gas into Buyer's pipeline at
existing working pressure maintained therein from time to time not to exceed
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one thousand (1,000) pounds per square inch gauge. Maintenance by Seller of
sufficient pressure to enter Buyer's pipeline shall be a condition of Buyer's
obligation to purchase and receive from Seller the quantities of gas specified
in Article II hereof.
SECTION 2 - DELIVERY POINT. Delivery of natural gas hereunder shall be at a
mutually agreeable single point on Buyer's transmission line in the NE NE of
Xxxxxxx 00, X00X, XxX, Xxxxx Xxxxxx, Xxxxxxx. Additional delivery points may be
used upon the written agreement of the parties hereto.
SECTION 3 - NOTICE TO BUYER. Seller will advise Buyer at the earliest date
possible after Seller has determined it will connect a well of its best estimate
of the initial delivery date.
SECTION 4 - TITLE. Title to all gas shall pass at the point of delivery.
ARTICLE V. PRICE
SECTION 1 - AMOUNT. The price to be paid by the Buyer to the Seller for the
gas delivered to the Buyer at the delivery points or for take-or-pay payments
shall be the lesser of:
a) Two dollars and seventy-five cents ($2.75) per Mcf. This price will be
redetermined at two year intervals with the first price renegotiation effective
January 1, 1988. Price renegotiation shall be conducted as per Article V,
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Section 5 hereof. No adjustment will be made to this price for reimbursement of
production related taxes or any other NGPA Section 110 add ons; or
b) The applicable maximum lawful price established by the Natural Gas
Policy Act (NGPA) and the regulations promulgated thereunder (weighted according
to the respective volumes of gas subject to different maximum lawful prices) up
to a ceiling price of the maximum lawful price under Section 102 of the NGPA.
Proper adjustments shall be made monthly for pressure base and BTU content.
In the event Seller does not furnish Buyer with the statement required by
Article XI, Section 1(b), the price to be paid by Buyer shall be the applicable
maximum lawful price established by Section 109 of the NGPA without an allowance
for state severance taxes borne by the Seller.
SECTION 2 - BTU ADJUSTMENT. If the gas delivered hereunder has a gross
heating value of less than one thousand (1,000) BTU per cubic foot, then the
price payable for such gas shall be reduced. If the gas has a gross heating
value of more than one thousand (1,000) BTU per cubic foot, then the price
payable for such gas shall be increased. Such reduced or increased price shall
be determined by multiplying the price otherwise payable by a fraction, the
numerator of which is the actual gross heating value of the gas delivered,
expressed in BTU per cubic foot, and the denominator of which is one thousand
(1,000); provided, however such fraction
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shall not exceed 12/10 even though the gross heating value of the gas is found
to be in excess of one thousand two hundred (1,200) BTU per cubic foot.
SECTION 3 - TAKE-OR-PAY OBLIGATION. If during any calendar year Seller has
available for delivery 150 percent of the DCQ and Buyer does not take a total
volume of gas equal to the ACQ in said calendar year, then, on or before the
25th day of the following January Buyer shall mail payment to Seller, as a
take-or-pay payment, the value of such volume of gas not taken below the ACQ;
calculated with a unit price representing the average unit price applicable in
the preceding year. There shall be no BTU adjustment when calculating payment
for gas available but not taken.
SECTION 4 - MAKE-UP OF DEFICIENCIES IN PURCHASE.
(a) Beginning with initial delivery hereunder, all volumes of gas taken by
Buyer during a contract month in excess of the monthly contract quantity, up to
a total quantity having a total value (calculated at the price being paid
hereunder at the time such gas is so made up) equal to the payments theretofore
made by Buyer to Seller for gas not taken, shall be credited to the make-up of
take-or-pay deficiencies incurred in any of the contract years following the
contract year in which the deficiency occurred. Nothing contained in this
Section 4 shall reduce Buyer's obligation to take and pay for, or nevertheless
pay for, if available and not taken, the annual contract volume during each
contract year.
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(b) Gas taken in excess of the annual contract volume in any year shall
first be credited against amounts of gas paid for but not taken in any prior
year, and the balance, if any, shall be carried forward as a credit against
annual contract volume deficiencies occurring in any subsequent year; provided,
however, that no credit shall exist for a period longer than five (5) years.
(c) In the event that this contract terminates for any reason other than
the breach of the terms hereof by Buyer prior to the Buyer's recovery of any
volumes paid for but not taken hereunder, or if a zero DCQ is assigned, Seller
shall pay to Buyer 100 percent of the outstanding sums paid by Buyer for gas not
taken.
SECTION 5 - RENEGOTIATION OF PRICE. Either party shall have the right to
demand renegotiation, pursuant to this Article between March 1 and June 30,
inclusive, prior to the anniversary date of each second contract year. Failure
to make the demand in writing within the times allowed shall be deemed a waiver
of the right to renegotiate. The first price renegotiation hereunder will be
effective January 1, 1988.
SECTION 6 - FAIR MARKET PRICE. The price redetermined shall be the fair
market price of the gas which is subject to this agreement. The fair market
price of the gas is the price paid or value obtained for natural gas produced in
Montana under similar delivery conditions, or adjusted for similar delivery
conditions, on sales to, or for ultimate delivery to pipeline transmission
companies, or wellhead
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sales. In determining the fair market price, all, pertinent factors, such as
point of delivery, cost of gathering, quality, quantity and delivery pressure,
shall be considered and given due weight.
If the parties are successful in negotiating a price, as provided above, or
if the price is determined by arbitration, said price shall become effective on
the "anniversary date" for which such price negotiation is requested.
SECTION 7 - ARBITRATION DEMAND. If the parties are unable to agree upon the
fair market price by sixty (60) days prior to the appropriate "anniversary date"
then either party shall have the right to demand that the matter of
redetermination of price be submitted to arbitration as provided in Article XII,
provided that if no such demand is made and delivered within ten (10) days of
the date the right to invoke arbitration arises, the right shall be deemed
waived, and the price in effect on the "anniversary date" shall remain in
effect.
ARTICLE VI. DEFINITIONS
For the purpose of this contract, the following words and terms are defined
as follows:
1. The first "CONTRACT YEAR" means that period of time commencing on the
effective date hereof and extending to, but not including the following January
l, which date shall constitute the anniversary date of this contract.
Thereafter, each subsequent "contract year" shall mean that period of
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time commencing with an anniversary date of this contract and extending to, but
not including the following anniversary date.
2. The "ANNIVERSARY DATE" of this contract is deemed to be January l in
each contract year.
3. "DAY" means a period of twenty-four (24) consecutive hours beginning and
ending at 8:00 a.m., Mountain Standard Time. The reference date for any day
shall be the calendar date upon which said 24-hour period shall commence.
4. "MONTH" means the period of time beginning at 8:00 a.m., Mountain
Standard Time, on the first day of a calendar month and ending at 8:00 a.m.,
Mountain Standard Time, on the first day of the next calendar month.
5. "SELLER'S LANDS" means the real property and all natural gas production
from the real property described in Schedule "A" attached to this contract,
including all geologic zones and horizons underlying the property unless
otherwise limited on Schedule "A."
6. "LEASE" means any right of Seller to drill for, produce, and dispose of
gas in, under and from Seller's lands, and includes any document evidencing such
right now or hereafter acquired.
7. "GAS" means either natural gas obtained from the xxxxx or the residue
remaining after the natural gas has been treated by Seller for the removal of
any of its constituent parts other than methane and the removal of methane to
such
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extent as is necessary in removing other constituents, as the context may
require, but not including casinghead gas.
8. "RECOVERABLE GAS RESERVES" means the total quantity of gas which is
determined or redetermined at a future date to be economically recoverable from
each gas production unit and available for delivery as of the date of initial
delivery hereunder after processing, if any, to satisfy the quality
specifications hereof, less the quantities of gas reserved by the Seller
hereunder. Such reserves shall be computed by accepted reservoir engineering and
geological procedures, and shall consist of only those reserves owned or
controlled by Seller and underlying or attributable to Seller's lands listed on
Schedule "A." Recoverable gas reserves means original, NOT remaining,
recoverable reserves.
9. "RESERVOIR" means stratigraphic trap, or pool, from which gas is
produced, and one (1) or more "reservoirs" may be produced by means of a single
well.
10. "GAS PRODUCTION UNIT" means one governmental section (640 acres more or
less), unless otherwise agreed between the parties or established by the Montana
Oil and Gas Conservation Commission. As to the units on which there are xxxxx
completed in more than one producing formation, each such formation shall be
considered as a separate gas production unit.
11. "CUBIC FOOT OF GAS" is the unit of volume for purposes of measurement
hereunder, except for gross heating value, and means one cubic foot of gas at a
temperature of
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60 DEGREES F and at a pressure of 14.73 per square inch absolute. For
purposes of measurement, the atmospheric pressure shall be assumed to remain
constant at 13.0 pounds per square inch absolute.
12. "MCF" means one thousand (1,000) cubic feet.
13. "BTU" means British thermal unit.
14. "GROSS HEATING VALUE" means the total calorific value expressed in
Btu's obtained by the complete combustion at constant pressure of the amount
of gas which would occupy a volume of one cubic foot at a temperature of 60
DEGREES F if saturated with water vapor and under a pressure equivalent to
that of 30 inches of mercury at 32 DEGREES F and under standard gravitational
force (980.665 cm. per sec., per sec.) with air of the same temperature and
pressure as the gas, when the products of combustion are cooled to the
initial temperature of gas and air and when the water formed by combustion is
condensed to the liquid state.
15. "DCQ" means the Daily Contract Quantity and is defined in Article II of
this agreement.
16. "MONTHLY CONTRACT QUANTITY" or "MCQ" means the DCQ times the number of
days in any particular contract month.
17. "ANNUAL CONTRACT QUANTITY" or "ACQ" means the DCQ times the number of
days applicable to that DCQ within that particular contract year.
18. "INITIAL DELIVERY" means the date on which Buyer first receives gas
produced from a well on Seller's land.
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19. "DELIVERABILITY" means the average volume of gas
available for delivery.
ARTICLE VII. SELLER'S REPRESENTATIONS
SECTION 1 - LEASES. Seller represents and warrants that it is the owner of
valid oil and gas leases or other documents of title which grant to Seller the
right to produce and dispose of Seller's share of the natural gas from the land
described in Schedule "A" and agrees to maintain all of such right to produce
and sell gas in full force and effect, at its own expense; provided, that Seller
shall not be required to retain by payment of delay rentals any acreage which,
in Seller's judgment, will not be productive of gas in commercial quantities.
SECTION 2 - WARRANTY OF TITLE. Seller warrants that, to extent of
Seller's interest as indicated on Schedule "A," it has the right to produce
and sell to Buyer, and that Seller has merchantable title to, and that Seller
has authority to sell, Seller's share of gas which is produced from the xxxxx
on Seller's lands. Seller agrees to indemnify and save Buyer harmless from
any and all suits, claims and liens of any nature relating to such gas or the
title thereto.
If there is a defect in Seller's title, Seller shall, with reasonable
promptness, attempt to remedy said defect. If Seller's title shall at any
time be questioned, or involved in litigation, Buyer shall have the right to
(1) refuse to accept deliveries of gas hereunder, or (2) withhold (without
interest) the proceeds payable for the
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gas produced from the particular property in litigation or dispute during the
period of such litigation or until said title is freed from such question, or
until Seller shall furnish a bond, in form and with sureties acceptable to
Buyer, conditioned to save Buyer harmless.
Seller agrees, upon the reasonable request of Buyer, to furnish for
examination all abstracts of title which Seller has or may have covering acreage
committed hereunder, authentic copies of Seller's leases, delay rental receipts
covering such acreage, and any other title information pertaining to such
acreage which Seller may have.
ARTICLE VIII. BUYER'S & SELLER'S OBLIGATION
SECTION 1 - GAS TO BE PURCHASED AND SOLD. Subject to the provisions of this
agreement, during the term hereof the Seller shall gather, compress, sweeten, if
necessary, dehydrate, sell and deliver to the Buyer, and the Buyer shall
purchase and receive from the Seller at the delivery point the natural gas
produced from the Seller's lands described in Schedule "A."
(a) SELLER'S OBLIGATION TO DELIVER. Subject to the provisions of this
Article, the Seller shall deliver gas to Buyer's transmission system as provided
in Article IV hereof, in such volume and at such times as requested by Buyer,
provided that Seller shall not be required to produce gas from xxxxx in excess
of the lesser of (1) the legal capacity of each well as may be fixed from time
to time by law or regulatory bodies, or (2) the delivery capacity of each well.
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(b) LIMITATION ON SELLER'S OBLIGATIONS. Seller shall not be obligated to
deliver gas hereunder from any well at a rate which in the opinion of the
Seller, acting as a reasonably prudent operator, would be injurious to such well
or to the reservoir or reservoirs from which such well is produced.
(c) RESERVATION OF GAS BY THE SELLER: The Seller reserves the following
rights:
(1) the right, at Seller's option, to retain or allow others to retain such
quantities of gas produced from the lands described in Schedule "A" as the
Seller may need or require to fulfill the obligations of the Seller under the
terms of its lease or other document under which it derives title to its gas
rights;
(2) the right at Seller's option to such quantities of gas produced from
Seller's lands as Seller may need or require for development, production and
delivery of gas for sale under this contract.
(3) the right at Seller's option to process gas produced from Seller's
lands for the removal of any component, other than methane, prior to delivery of
such gas to the Buyer, which components so removed shall belong to the Seller;
provided, however, that the gas which is delivered to Buyer after such
processing shall meet the quality requirements of Article IX hereof.
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SECTION 2 - SELLER'S OBLIGATION TO MAINTAIN XXXXX. Seller shall use
diligence in maintaining said xxxxx and the appliances and machinery appurtenant
thereto in good and efficient working order at all times and in such manner that
each of said xxxxx will at all times be able to produce the amounts of gas
required to be delivered by Seller under this contract. The obligations of
Seller hereunder are subject to the ability of Seller's xxxxx to produce without
waste and in accordance with prudent oil and gas field practice. Seller reserves
the right, subject to this agreement, to control the Seller's lands and
leaseholds and the operations thereon producing gas to be sold to Buyer; such
reserved rights include, but are not limited to, the right to unitize or pool
its leases with its own or others, the right to determine when, where, or
whether to drill new xxxxx, to repair and rework old xxxxx, and to abandon any
well or surrender any lease when no longer deemed by Seller to be capable of
producing gas in paying quantities under normal methods of operation.
SECTION 3 - XXXXX. The gas xxxxx connected under this contract shall be
equipped and maintained in good operating condition, in accordance with approved
practices, without cost to Buyer. In the event liquids exist, requiring
separation from the gas, then Seller agrees to install, operate, and maintain,
without cost to Buyer, such liquid removal equipment operated at normal
temperature, as may be necessary to separate such liquids from the gas.
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SECTION 4 - SELLER'S OBLIGATION TO MAINTAIN THE GATHERING SYSTEM. Seller
shall diligently maintain the facilities used to produce and deliver the gas
from Seller's lands as described on Schedule "A" up to the point of delivery.
Seller shall be, at no expense to Buyer, responsible for the installation and
operation of all equipment, piping and Seller's gathering system up to the point
of delivery.
SECTION 5 - DRAINAGE. If a reservoir producing gas delivered to Buyer under
this contract is produced by anyone other than Seller at a rate which makes
imminent, in Seller's judgment, the drainage of gas from Seller's lands, then
Seller shall immediately notify Buyer in writing of the existence of such
situation and may request that Buyer, to the extent reasonably possible,
increase its takes from Seller by a volume sufficient to protect Seller from
drainage of the reservoir. If Buyer is unable to increase takes sufficiently to
protect Seller from drainage, Buyer agrees to permit Seller to seek another
purchaser for those volumes needed to avoid drainage.
ARTICLE IX. QUALITY OF GAS
SECTION 1 - GENERAL STANDARDS. Seller agrees that the gas delivered
hereunder shall be merchantable natural gas, at all times complying with the
following quality requirements:
(a) The gas shall be in its natural state as produced, including all
hydrocarbon constituents therein contained,
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except gas from which Seller has removed liquid or liquifiable hydrocarbons.
Seller shall also have the right to remove nonhydrocarbon constituents and
hydrocarbons as required to remove other constituents. Seller may enrich the gas
to the extent required to meet the gross heating requirements set forth in
paragraph (b) below, and may subject the gas, or permit the gas to be subjected
to compression, cooling, cleaning and other processes.
(b) The weighted average gross heating value of gas delivered to Buyer
hereunder shall not be less than nine hundred (900) Btu's per cubic foot, and
shall not be more than twelve hundred (1,200) Btu's per cubic foot as defined in
Article VI, Section 14. Buyer may reject delivery of gas having a weighted
average gross heating value of less than nine hundred (900) Btu's or more than
twelve hundred (1,200) Btu's.
(c) The gas shall be merchantable and usable by the ultimate consumers
thereof without further treatment. The terms merchantable and usable shall mean
conforming to the seven specifications stated below. In particular, the gas
delivered hereunder at the delivery point shall be commercially free of dust,
gum, gum-forming constituents, gasoline, and other solid or liquid matter that
may become separated from the gas during transportation thereof and shall
conform to the following specifications:
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1. Dust, rust or other solids None
2. Carbon dioxide Not more than 2% by volume
3. Oxygen Not more than 1% by volume
4. Hydrogen sulfide Not more than 1/4 grain per
100 cubic feet
5. Total sulfur Not more than 20 grains per
100 cubic feet
6. Liquid water None
7. Temperature Not more than 120 DEGREES F
SECTION 2 - DELIVERED CONTRACT QUALITY STANDARDS. In addition to the
quality standards set forth above in Section 1 of this Article, the gas
delivered by Seller under this Delivered Gas Purchase Contract shall have
been dehydrated by Seller for removal of water present therein in a vapor
state, and shall in no event contain more than four (4) pounds of water
vapor per one million (1,000,000) cubic feet of gas, and shall be free from
hydrocarbons liquifiable at temperatures in excess of fifteen degrees
Fahrenheit (15 DEGREES F) at pressures up to eight hundred (800) psig.
SECTION 3 - BUYER'S OPTION TO TREAT. Buyer, at its option, may refuse to
accept delivery of any gas not meeting the quality specifications set out in
this Article. Thereafter, Seller shall have the right to conform the gas to the
above specifications. If Seller does not elect to conform the gas to said
specifications, then Buyer may, at its option, accept gas tendered by Seller
hereunder which does not meet the specifications above, treat same to conform to
said specifications and charge Seller for the actual cost of such treating,
including (but not limited to) amortization, fuel and shrinkage.
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ARTICLE X. MEASUREMENT AND TESTS
SECTION 1 - UNIT OF VOLUME. The unit of volume for all gas hereunder shall
be one (1) cubic foot of gas as defined in Article VI, Section 11.
SECTION 2 - SALES UNIT. The sales unit of the gas delivered hereunder shall
be one thousand (1,000) cubic feet.
SECTION 3 - OWNERSHIP OF MEASURING EQUIPMENT. All measuring devices, and
materials required at the point or points of delivery shall be installed,
maintained, and operated, or furnished by Buyer at Buyer's expense. Seller may
install and operate check measuring equipment provided it does not interfere
with the use of Buyer's equipment in determining the volumes of gas delivered by
Seller to Buyer at the points of delivery.
SECTION 4 - METERING AND COMPUTATION OF VOLUME. The gas shall be metered by
orifice meters or other measurement facilities constructed, installed and
maintained by Buyer at or near the point or points of delivery. Such measurement
facilities of Buyer shall be constructed and installed in accordance with the
applicable provisions of the American Gas Association's "Gas Measurement
Committee Report No. 3," as revised March, 1978 and reprinted June, 1979. The
volumes of gas delivered to Buyer shall be computed from the meter records and
converted into the units of measurement specified herein in accordance with the
methods prescribed in Gas Measurement Committee Report No. 3 of the American Gas
Association, including the appendix thereto, as revised
-23-
March, 1978 and reprinted June 1979, or any subsequent revision thereof
acceptable to Buyer and Seller. Corrections shall be made for deviation from the
Ideal Gas Laws at the pressure and temperature at which the gas is metered. To
determine the factors for such correction, a quantitative analysis of the gas
shall be made at reasonable intervals with such apparatus as shall be agreed
upon by Buyer and Seller, and such factors shall be obtained from data contained
in Report NX-19, as published by the American Gas Association in December, 1962,
or any subsequent revision thereof acceptable to Buyer and Seller. For the
purpose of measurement and meter calibration, the atmospheric pressure shall be
assumed to be 13.0 pounds per square inch, irrespective of variations in natural
atmospheric pressure from time to time.
SECTION 5 - SPECIFIC GRAVITY. The specific gravity of the gas flowing
through the delivery meter, or meters, shall be determined by Buyer, or, at
Seller's election, by joint tests, at monthly intervals. All such determinations
of specific gravity shall be made by a standard gravity balance or by a
gravitometer employing the "Momentum Method" of specific gravity determinations
as described in Chapter VII, "Determination of Specific Gravity," of the
American Gas Association Gas Measurement Manual, 1963 edition. The specific
gravity of the gas flowing through each meter determined by either of the
above-mentioned methods shall be
-24-
used in computing the volume of gas delivered through such meter. The specific
gravity determined by any test shall apply from the date the test was taken
until the date of the next test.
SECTION 6 - TEMPERATURE. The temperature of the gas delivered at the points
of delivery hereunder shall be determined by means of a recording thermometer.
The arithmetic average of readings taken while gas is flowing during each chart
period shall be used in computing the volumes delivered hereunder.
SECTION 7 - EQUIPMENT TESTING. The accuracy of Buyer's measuring equipment
shall be verified by test, using means and methods generally acceptable in the
gas industry, at least annually or otherwise as agreed to by Buyer and Seller.
Seller shall have the right to witness and verify all tests of Buyer's measuring
equipment. Measuring equipment found to be registering inaccurately shall be
adjusted to read as accurately as possible. If Seller fails to witness any test,
the results of the test shall nevertheless be considered accurate until the next
test. All tests of such measuring equipment shall be made at Buyer's expense,
except that Seller shall bear the expense of tests made at its request if the
inaccuracy is found to produce an error of two percent (2%) or less in the
measurement of gas.
SECTION 8 - MEASURING EQUIPMENT OUT OF REPAIR. If, for any reason, any
measuring equipment is inoperative or inaccurate so that the volume of gas
delivered is not correctly
-25-
indicated by the reading thereof, and if such reading is in error by more than
two percent (2%) in the measurement of gas, then the volume of gas delivered,
during the period such measuring equipment is inoperative or inaccurate, shall
be determined by the parties hereto on the basis of the best data available
using the first of the following methods which is feasible:
(a) By using the registration of any check measuring equipment installed
and accurately registering;
(b) By correcting the error if the percentage of error is ascertainable by
calibration, test or mathematical calculations; or
(c) By comparing deliveries made during preceding periods under similar
delivery conditions when the meter was registering accurately.
An adjustment based on such determination shall be made for such period of
inaccuracy as may be definitely known, or if not known, then for one-half the
period since the date of the last meter test. In no event, however, shall any
adjustment extend back beyond six months from the date the error was first made
known by one party hereunder to the other.
SECTION 9 - INSPECTION OF EQUIPMENT. Buyer and Seller shall have the right
to inspect equipment installed or furnished by the other party, and the charts
and other measurement or test data of the other party, at all times during
business hours; but the reading, calibration, and
-26-
adjustment of such equipment and changing of charts shall be done only by the
party installing and furnishing the same. Unless the parties otherwise agree,
each party shall preserve all original test data, charts, and other similar
records in such party's possession for a period of at least five (5) years.
SECTION 10 - GROSS HEATING VALUE. The gross heating value per cubic foot of
gas shall be determined at least monthly by the Buyer at the Buyer's expense,
using an accurately calibrated Xxxxxx-Xxxxxx recording calorimeter, from samples
of the gas taken at the delivery point or points. The Seller shall have the
right to witness any and all tests of gross heating value made by the Buyer. The
Seller shall have the right at any time to make or to require the Buyer to make
a special test of the gross heating value of gas delivered hereunder, but the
Seller shall bear the expense of any special tests made at its request.
SECTION 11 - HYDROGEN SULPHIDE. Tests to determine hydrogen sulphide
content shall be made whenever necessary to determine whether the gas meets the
requirements of Article IX hereof. Such tests shall be made at the expense of
the Buyer. Seller shall have the right to witness and verify all tests.
SECTION 12 - DATA TO BE PROVIDED TO SELLER. Buyer shall provide Seller with
all information, data, test results, reservoir information, etc., immediately
upon receipt of same
-27-
by Buyer, to the end that at all times Seller shall have all information
relative to its xxxxx that is available to Buyer.
ARTICLE XI. STATEMENT AND PAYMENT
SECTION 1 - STATEMENTS.
(a) BUYER'S STATEMENT. On or before the fifteenth (15th) day of each
calendar month after deliveries of gas are commenced hereunder, the Buyer shall
render to Seller a statement showing the amount of gas delivered during the
preceding calendar month, together with sufficient information to explain and
support any adjustment by the Buyer with respect to the BTU value of gas
delivered in determining the amounts stated to be due.
(b) SELLER'S STATEMENT. On or before the fifteenth (15th) day of each
calendar month after deliveries of gas are commenced hereunder, the Seller shall
render to Buyer a statement showing the total volume of gas delivered to Buyer
during the preceding calendar month, together with sufficient information to
explain and support the application of particular NGPA maximum lawful prices to
particular volumes of gas, and to explain and support the amount of allowable
state severance taxes borne by the Seller. If Seller fails to render such
statement, Buyer shall nonetheless make payment under this Article at the
alternative price established by Article V, Section 1(b).
-28-
SECTION 2 - PROTEST OF STATEMENT.
(a) Seller shall have, upon request made within one year after receipt of
the Buyer's statement referred to in the previous section the right to examine
the meter charts and computations upon which such statements are based. If the
Seller deems such charts or computations to be inaccurate, Seller may protest
the statement within ninety (90) days of the receipt of the meter charts and
computations, and may request a check to be made of the meter installed,
pursuant to Article X hereof. Any statement not protested within ninety (90)
days of the receipt thereof shall, together with the underlying charts and
computations upon which statements are based, be deemed to be correct. The Buyer
shall make current charts available to the Seller for examination.
(b) Buyer shall have upon request the right to examine the meter charts,
records and computations upon which Seller's statement as to the application of
particular NGPA maximum lawful prices to particular volumes of gas and as to the
allowable state severance taxes borne by the Seller. If the Buyer deems such
charts, records and computations to be incorrect or inaccurate, Buyer may
protest and elect to receive a refund for any amount improperly or incorrectly
paid to Seller, under the procedures established by the NGPA and regulations
thereunder, or under the process of state law, whichever is applicable.
-29-
SECTION 3 - PAYMENT DUE DATE. For gas actually taken, Buyer shall mail
payment to Seller monthly, on or before the 25th day of the month in which the
statement was issued. If Buyer's statement is protested, Buyer shall nonetheless
render payment on the basis of the statement. If the protest is resolved in
favor of the Seller, payment shall be mailed within twenty-five (25) days of
resolution.
SECTION 4 - PAYMENT. All payments for gas shall be made to the Seller
designated in Section 4 of Article I for its own account.
ARTICLE XII. ARBITRATION
SECTION 1 - SCOPE OF ARBITRATION. Under the terms of this contract, only
the factual determinations involving the size and amount of "recoverable gas
reserves," and the "fair market price" can be submitted to arbitration. No legal
issues may be arbitrated. This arbitration provision does not preclude
consideration of law questions in connection with decisions on "recoverable gas
reserves" or "fair market price," provided that nothing in this contract shall
be construed as making final or binding the decision of the arbitrator or
arbitrators on a question of law, and further provided that the arbitrator or
arbitrators explain fully, in writing in the decision, the consideration given
to a question of law.
SECTION 2 - QUALIFICATIONS OF ARBITRATORS. In an arbitration involving the
determination of "recoverable gas reserves," the arbitrator or arbitrators
selected hereunder
-30-
shall be qualified by education, training and experience to determine gas
reserves.
In an arbitration involving the determination of "fair market price," the
arbitrator or arbitrators selected hereunder shall be qualified by education,
training and experience to determine the "fair market price" (as defined
hereunder) of the gas purchased hereunder.
The qualifications of any arbitrator or arbitrators selected hereunder
shall be subject to judicial review in accordance with the laws of Montana.
SECTION 3 - SELECTION OF ARBITRATOR(S). Upon the timely written demand of
either party, the parties shall meet and attempt to appoint a single arbitrator.
If the parties are unable to agree on a single arbitrator, then upon written
demand of either party and within ten (10) days of such demand, each party shall
name an arbitrator and the two arbitrators so named shall within ten (10) days
of their appointment choose a third arbitrator. If either party shall fail to
timely name an arbitrator, the American Arbitration Association shall be
requested to appoint the second arbitrator. If the two arbitrators shall fail
within ten (10) days from their appointment to appoint the third arbitrator,
then the American Arbitration Association shall be requested to appoint the
third arbitrator. The American Arbitration Association shall be bound, in any
event, to select an arbitrator in accordance with the provisions of Section 2 of
this Article.
-31-
SECTION 4. - ARBITRATION PROCESS. The arbitrator or arbitrators shall
proceed immediately to hear and determine either the "recoverable gas reserves"
or the "fair market price," as is appropriate. In making the determination of
"recoverable gas reserves," the arbitrator or arbitrators shall consider and
give due weight to the factors denominated in Section 4 of Article III. In
making the determination of "fair market price," the arbitrator or arbitrators
shall consider and give due weight to the factors denominated in Section 6 of
Article V.
SECTION 5 - ARBITRATOR(S) DECISION. The arbitrator or arbitrators shall
render a decision as soon as is reasonably possible following the submission of
the issue by the parties. The arbitrator or arbitrators shall decide only the
factual issue before them; that is, either the "recoverable gas reserves" or the
"fair market price," and no legal issues may be determined. The decision of the
arbitrator or a majority of the arbitrators shall be in writing, explain the
reasons therefore, and signed by the arbitrator or a majority of them. Only the
decision of the arbitrator, or a majority of the arbitrators, as to the factual
issue before he or them shall be final and binding upon the parties.
SECTION 6 - ARBITRATION EXPENSES. The compensation and expenses of the
single arbitrator shall be paid in equal proportions by Buyer and Seller. The
compensation and expenses of the arbitrators, be there more than one, shall be
-32-
paid by the party in whose behalf such arbitrator was appointed, and the
compensation and expenses of the third arbitrator shall be paid in equal
proportions by Buyer and Seller.
ARTICLE XIII. FORCE MAJEURE
If either party to this contract shall fail to perform any obligation
hereby imposed upon it and such failure shall be caused, or materially
contributed to by acts of God, strikes, lockouts, or other industrial
disturbances in the operation of Seller or Buyer or Buyer's customers, acts of
enemies of the State, sabotage, war, blockades, insurrections, riots, epidemics,
landslides, lightning, earthquakes, floods, storms, fires, washouts, arrests and
restraints of rulers and people, civil disturbances, explosions, breakage
or accident to machinery or lines of pipe, hydrate obstructions of line of pipe,
temporary failure of gas supply, freezing of xxxxx or delivery facilities, well
blowouts, craterings, inability to obtain pipe, materials or equipment, lack of
market, the order of any court or governmental authority, or by any act or
omission which is occasioned by any event or occurrence of the character
described in this Article as constituting force majeure, or by the necessity for
making repairs to or reconditioning xxxxx, a gas processing plant, machinery,
equipment, or pipelines, not resulting from the fault or negligence of such
party, or by any other cause, whether of the kind herein
-33-
enumerated or otherwise, all such causes being beyond the control of the party
invoking this Article and being such that by the exercise of due diligence such
party could not have prevented, such failure shall not give rise to any cause of
action based on breach of the obligation to such party hereunder, but such party
shall use reasonable diligence to put itself again in a position to carry out
its obligations hereunder. Nothing contained herein shall be construed to
require either party to settle a strike or lockout by acceding against its
judgment to the demands of opposing parties.
No such cause affecting the performance of this contract by either party
shall continue to avoid a cause of action after the expiration of a reasonable
period of time within which by the use of due diligence such party could have
remedied the situation preventing its performance, nor shall any such cause
relieve either party from its obligation to make payment for amounts then due
hereunder for gas already delivered, nor shall any such cause avoid a cause of
action unless such party shall give notice of such cause in writing to the other
party with reasonable promptness; and like notice shall be given upon
termination of such cause.
For purposes of determining the occurrence of performance of obligations
under this agreement, it is mutually agreed that, during a period of force
majeure the party affected shall be deemed to have performed all of its
-34-
obligations as if it had delivered or purchased the gas required to be delivered
or purchased during said period.
ARTICLE XIV. MISCELLANEOUS
SECTION 1 - REGULATORY JURISDICTION. This contract is subject to all valid
legislation and to all valid present and future orders, rules and regulations of
duly constituted authorities having jurisdiction.
SECTION 2 - ASSIGNMENT. This contract shall bind and inure to the benefit
of the parties hereto, their successors and assigns, and shall constitute a
covenant running with the land and leasehold estates covered hereby. Buyer shall
not be considered as notified of any transfer by Seller of any interest in the
leases, xxxxx, or property referred to on Schedule "A" hereof until Buyer shall
have been furnished with the original or certified copy of such conveyance or
transfer evidencing such transfer or an abstract of title to said property
showing such transfer of interest, and the effective date of such transfer shall
be considered to be the first day of the month following the day Buyer receives
such evidence of transfer.
SECTION 3 - EASEMENTS. Seller hereby grants and assigns to Buyer all
requisite easements and rights-of-way over, across and under any of the land
covered hereby that Seller has the right so to do under the terms of its Oil and
Gas Lease covering such lands, and the right to perform thereon any acts
necessary or convenient in carrying out the terms of this Contract and Buyer's
obligations hereunder.
-35-
SECTION 4 - TITLES. The numbering and titling of particular provisions of
this contract is for the purpose of facilitating administration and shall not be
construed as having any substantive effect on the terms of this contract
SECTION 5 - INTERPRETATION. The terms of this contract shall be construed
according to the laws of the State of Montana.
SECTION 6 - SEVERABILITY. The various articles, sections, provisions and
clauses of this contract are severable. The invalidity of any portion hereof
shall not affect the validity of any other portion of, nor the entire contract.
SECTION 7 - COUNTERPART EXECUTION. This Agreement may be signed in
counterpart, no one of which need be signed by all parties hereto.
IN WITNESS WHEREOF, this instrument is executed as of the day and dates as
noted below:
"BUYER"
ATTEST: THE MONTANA POWER COMPANY
/s/ ILLEGIBLE BY: /s/ Xxxxx X. Xxxxxxx
----------------------------- ------------------------------------
Vice President
DATE: December 12, 1985
----------------------------------
"SELLER"
GATEWAY ENERGY CORPORATION
---------------------------------------
ATTEST:
/s/ Xxxxxx X. Xxxxx BY: /s/ Xxxx X. Xxxxx
----------------------------- ------------------------------------
DATE: December 10, 1985
----------------------------------
-36-
SCHEDULE "A"
(Part of the Gas Purchase Contract dated December 1, 1985, between The Montana
Power Company, as Buyer, and Gateway Energy Corporation as Seller.)
DESCRIPTION OF SELLER'S LANDS
Seller dedicates to the performance of this contract 100 percent of Seller's
interest in the natural gas produced, purchased or otherwise obtained from the
following described lands:
SELLER'S
DESCRIPTION INTEREST
----------- --------
T32N - R1W
----------
Sections 4 through 9 - All 100%
Sections 16 through 19 - All 100%
T32N - R2W
----------
Sections 1 through 12 - All 100%
Sections 15 through 22 - All 100%
Sections 25 through 36 - All 100%
T33N - R1W
----------
Sections 2 through 11 - All 100%
Sections 14 through 22 - All 100%
Sections 28 through 33 - All 100%
T33N - R2W
----------
Sections 12 through 14 - All 100%
Sections 22 through 29 - All 100%
Sections 31 through 36 - All 100%
230212
-37-
[LETTERHEAD]
July 1, 1986
Xx. Xxxx X. Xxxxx
Gateway Energy Corporation
X.X. Xxx 000
Xxxxxxxxx, XX 00000
Re: Gas Purchase Contract Dated December 1, 1985; MPC
No. 156 (Contract)
Dear Xx. Xxxxx:
The Montana Power Company (hereinafter referred to as "Buyer") and Gateway
Energy Corporation (hereinafter referred to as "Seller") entered into the above
mentioned contract which provides for the sale and purchase of natural gas from
lands located in the State of Montana.
Buyer has requested that Seller amend the Contract to move the delivery
point. Buyer has also requested that Seller construct the transmission line
necessary to facilitate this move of the delivery point. Seller has requested
that Buyer assign its rights in certain easements or rights of way that cross
the interstate highway in Toole County, Montana. The following proposed
amendments are intended to accommodate these requests.
RECITALS
1. Seller intends to sell certain quantities of natural gas produced from
lands located in the State of Montana to Buyer under the terms and
conditions of the Gas Purchase Contract dated December 1, 1985
(Contract).
2. Buyer intends to purchase certain quantities of this natural gas from
Seller under the terms and conditions of the Contract.
3. Buyer and Seller intend to modify the existing delivery provisions in
the Contract to allow Buyer's meter installation to be located in a
location that is accessible all year. Seller agrees to install the
transmission pipeline necessary to facilitate this change in the
delivery point. Seller further agrees that this section of
transmission pipeline will be constructed in accordance with Buyer's
transmission
MPC No. 156 (Contract)
July 1, 1986
Page 2
system specifications. Buyer and Seller agree that once this section
of transmission pipeline is completed it will become the property of
the Buyer.
4. Buyer has agreed to assign to Seller its rights in certain easements
or rights of way that cross the interstate highway in Section 3 of
Township 32 North, Range 2 West in Toole County, Montana.
5. The Contract must be amended to accomplish this intent.
AGREEMENT
In consideration of the promises and covenants stated in this Letter
Agreement, Seller and Buyer agree to amend the Contract and to perform as
follows:
1. ARTICLE IV. DELIVERY
a. Delete Section 2 and replace it with the following:
SECTION 2 - DELIVERY POINT. Delivery of natural gas hereunder
shall be at a mutually agreeable single point on Buyer's
transmission line in the SE SE SE of Section 19, Township 33
North, Range 1 West, Toole County, Montana. This delivery point
is adjacent to the Xxxxxxx Road. Additional delivery points may
be used upon the written agreement of the parties hereto.
b. Add the following Section 5:
SECTION 5 - CONSTRUCTION OF ADDITIONAL TRANSMISSION LINE. Seller
agrees to construct an additional section of transmission line
between the original delivery point in the XX XX xx Xxxxxxx 00,
X00X, X0X to the delivery point stated in Article IV, Section 2
hereof. Seller agrees that this line will be constructed to
Buyer's specifications and that Buyer has the right to inspect
said line. When completed, this section of transmission line will
become the property of the Buyer. Buyer agrees that Buyer will
be responsible for the operation and maintenance of this section
of transmission line after said line becomes the property of the
Buyer.
MPC No. 156 (Contract)
July 1, 1986
Page 3
2. ARTICLE XIV. MISCELLANEOUS
Add the following Section 8:
SECTION 8 - ASSIGNMENT OF INTERSTATE HIGHWAY CROSSING. Buyer hereby
agrees to assign to Seller all of Buyer's rights in certain easements
or rights of way, hereinafter referred to as "Buyer's Easement," and
described as follows:
From St. Xxxx Oil Co. to Hope Engineering (Montana Power
successor in interest) crossing the N 1/2 NW 1/4 of Section 0,
Xxxxxxxx 00 Xxxxx, Xxxxx 0X, recorded Book 13, Page 141 records
of Toole County, Montana.
The assignment of easement is attached hereto.
These Contract amendments will become effective on July 1, 1986. Please
signify your acceptance in the space provided below and return the "Montana
Copy" to Xxxx Xxxxx'x attention.
THE MONTANA P0WER COMPANY
By /s/ Xxxxx X. Xxxxxxx
--------------------------------
Vice President, Gas Operations
AGREED TO AND ACCEPTED:
Gateway Energy Corporation
By: /s/ Xxxx X. Xxxxx
------------------------
Title: President
------------------------
Date: 8/7/86
------------------------
[LETTERHEAD]
November 19, 1987
CERTIFIED MAIL
Xx. Xxxx X. Xxxxx
Gateway Energy Corporation
X.X. Xxx 000
Xxxxxxxxx, XX 00000
W.C. #156
Dear Xx. Xxxxx:
Please refer to that certain Gas Purchase Contract dated December 1, 1985
as amended, (hereinafter referred to as the "Contract") between The Montana
Power Company (hereinafter referred to as "Buyer") and Gateway Energy
Corporation (hereinafter referred to as "Seller").
Buyer and Seller have agreed to amend the Price Section and the Schedule A
of the Contract as the result of a price renegotiation that is effective on
January 1, 1988.
AGREEMENT
In consideration of the representations and promises stated in this Letter
Agreement, Buyer and Seller agree to amend the Contract effective January 1,
1988 as follows:
1. ARTICLE V. PRICE
Delete Section 1 and replace it with the following:
SECTION 1:
The price to be paid by Buyer to Seller for gas delivered to Buyer at
the delivery points or for take-or-pay payments shall be two dollars
and ten cents ($2.10) per Mcf with no escalation. No adjustments to
this price will be made to provide for reimbursement of
production-related taxes or any other costs.
Gateway Energy Corporation
GPC Dated December 1, 1985
2. SCHEDULE A.
Add the following lands to the Contract Schedule A.
TOWNSHIP 33 NORTH, RANGE 3 WEST
Sections 25 through 27
Sections 34 through 36
Toole County, Montana
TOWNSHIP 32 NORTH, RANGE 3 WEST
Sections 1 through 3
Sections lO through 15
Sections 22 through 27
Toole County, Montana
These Contract amendments will become effective January 1, 1988. Please
signify your acceptance by signing in the space provided below and return the
"Montana Copy" to Xxxx Xxxxx.
THE MONTANA POWER COMPANY
/s/ Xxxxx X. Xxxxxxx
---------------------------------
Vice President Gas Operations
AGREED TO AND ACCEPTED:
GATEWAY ENERGY CORPORATION
BY: /s/ Xxxx X. Xxxxx
-----------------------
TITLE: President
-----------------------
DATE: December 3, 1987
-----------------------
[LETTERHEAD]
December 1, 1988
CERTIFIED MAIL
Xx. Xxxx X. Xxxxx
Gateway Energy Corporation
P. O. Xxx 000
Xxxxxxxxx, XX 00000
Re: W. C. #156
Dear Xx. Xxxxx:
Please refer to that certain Gas Purchase Contract dated December 1 1985 as
amended, (hereinafter referred to as the "Contract") between The Montana Power
Company (hereinafter referred to as "Buyer") and Gateway Energy Corporation
(hereinafter referred to as "Seller").
Buyer and Seller have agreed to amend the Schedule A of the Contract
effective on December 1, 1988.
AGREEMENT
In consideration of the representations and promises stated in this Letter
Agreement, Buyer and Seller agree to amend the Contract effective December 1,
1988 as follows:
SCHEDULE A.
Add the following lands to the Contract Schedule A.
TOWNSHIP 33 NORTH, RANGE 2 WEST
S.E. Qtr. of Section 1
This Contract amendment will become effective December 1, 1988. Please
signify your acceptance by signing in the space provided below and return the
"Montana Copy" to Xxxx Xxxxx.
THE MONTANA POWER COMPANY
/s/ Xxxxx X. Xxxxxxx
---------------------------------
Vice President, Natural Gas Utility
AGREED TO AND ACCEPTED:
GATEWAY ENERGY CORPORATION
BY: /s/ Xxxx X. Xxxxx
-----------------------
TITLE: President
-----------------------
DATE: December 14, 1988
-----------------------
[LETTERHEAD]
July 30, 1992
Xx. Xxxx Xxxxx
Gateway Energy Corporation
0000 Xxxxxx Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Dear Xx. Xxxxx:
Please refer to that certain Gas Purchase Contract dated December 1, 1985 as
amended, (hereinafter referred to as the "Contract") between The Montana Power
Company Buyer and Gateway Energy Corporation (hereinafter referred to as
"Seller"), to which Great Falls Gas Company (hereinafter referred to as "Buyer")
has become the successor in the Buyer's interest.
Buyer and Seller have agreed to amend the Price Section of the Contract
effective on June 1,1992.
AGREEMENT
In consideration of the representations and promises stated in this Letter
Agreement, Buyer and Seller agree to amend the Contract effective June 1,1992 as
follows:
1. ARTICLE V. PRICE
Delete Section 1 and replace it with the following:
SECTION 1:
The price to be paid by Buyer to Seller for gas delivered to Buyer at
the delivery points or for take-or-pay payments shall be one dollar
and ninety cents ($1.90) per Mcf with no escalation. No adjustments
to this price will be made to provide for reimbursement of
production~related taxes or any other costs. Price renegotiation
shall be conducted as per Article V, Section 5 hereof.
2. SCHEDULE A.
Add the following lands to the Contract Schedule A.
TOWNSHIP 32 NORTH, RANGE 2 WEST
Section 14: W/2
23: W/2, SE/4, S/2 NE/4
24: S/2, S/2 N/2
The addition of these lands to Schedule A can be used to maintain the current
(as of 1 /1/92) Annual Contract Quantity (ACQ) or the Daily Contract Quantity
(DCQ). The addition of these lands to Schedule A will not increase (prior to
1/1/94) the Annual Contract Quantity (ACQ) or the Daily Contract Quantity (DCQ)
from those levels present on 1/1/92.
This Contract amendment will become effective June 1, 1992. The effective date
(June 1, 1992) of this amendment in no way alters or affects other dates or
schedules contained in the Contract.
Please signify your acceptance by signing in the space provided below and return
both copies to Xxxx Xxxx.
GREAT FALLS GAS COMPANY
BY /s/ Xxxxx X. Xxxxx
-------------------
President and CEO
DATE: 8/6/92
-----------------
AGREED TO AND ACCEPTED:
GATEWAY ENERGY CORPORATION
BY: /s/ Xxxx X. Xxxxx
-------------------
TITLE: President
-----------------
DATE: July 31, 1992
-----------------
ASSIGNMENT, CONVEYANCE AND XXXX OF SALE
GATEWAY GATHERING FACILITY
THIS ASSIGNMENT, CONVEYANCE AND XXXX OF SALE (this "Assignment"), dated
effective as of January 1, 1993 (the "Effective Time"), is from GATEWAY ENERGY
CORPORATION, a Colorado corporation ("Assignor"), and SHELBY GATHERING PARTNERS,
a Colorado General Partnership composed of Interenergy Corporation and Xxxxxxx &
Associates, Inc. ("Assignee").
FOR TEN DOLLARS ($10.00), and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the parties hereto,
Assignor hereby transfers, grants, bargains, sells, conveys and assigns to
Assignee all of Assignor's rights in the following interests (collectively, the
"Interests"):
1. The personal property, fixtures and improvements (the "Gas Gathering
Facilities") described in Exhibit "A" including, without limitation, all
processing, refining and treatment plants, compression and metering equipment,
pipelines and gathering systems, electrical equipment, buildings, machinery,
piping, tanks, fencing, valves, tools, and all other equipment, appurtenances,
appliances and property of every kind and character, moveable or immovable,
located on the Land (as defined hereinafter), appurtenant thereto, or used or
obtained in connection therewith.
2. The gas agreements (the "Gas Agreements") described in Exhibit "B".
3. The pipeline easements, surface lease agreements, licenses and permits
(the "Pipeline Rights") described in Exhibit "C".
4. The operating licenses, permits and applications and agreements for
utilities and related services (the "Other Agreements") described in Exhibit
"D".
5. All rights, claims, titles, interests, estates and privileges granted
or conferred by the Surface Lease Agreements, Pipeline Easements, Operating
Licenses, Utility agreements, Gas Agreements or Gas Processing Facilities, or
the Land (as hereinafter defined), or appurtenant thereto, used or obtained in
connection therewith, or in any way relating thereto.
For purposes of this Assignment, the "Land" shall mean the lands covered by
the Surface Lease Agreements and Pipeline Easements described on Exhibit "C" to
this Assignment, including the recording information therefor. For a full and
complete description of the land, the legal description of the Land contained in
the Surface Lease Agreements and Pipeline Easements is hereby incorporated by
reference herein as if fully set forth in this Assignment.
TO HAVE AND TO HOLD the Interests unto Assignee, its successors and assigns
forever.
-2-
Assignee hereby accepts this assignment, and agrees to assume the
obligations of Assignor with respect to the Interests.
Assignor also hereby grants and transfers to Assignee, its successors and
assigns, to the extent so transferable, the benefit of and the right to enforce
the covenants and warranties, if any, which Assignor is entitled to enforce with
respect to the Interests against Assignor's predecessors in title to the
Interests.
Assignor hereby warrants and agrees to defend title to the Interests
against all defects, burdens, liens and claims arising by, through and under
Assignor, but not otherwise.
This Assignment shall not constitute an assignment of any Gas Contract,
Utility Agreement, Operating License or other agreement which, by its terms or
as a matter of law, is not assignable without the consent of a third party,
unless and until such third party shall have consented to such assignment.
This Assignment may be executed in any number of counterparts, and each
counterpart hereof shall be deemed to be an original instrument, but all such
counterparts shall constitute but one Assignment. Assignor and Assignee have
each retained a counterpart of this Assignment with complete Exhibits attached.
-3-
This Assignment shall be binding upon and inure to the benefit of Assignor
and Assignee, and their respective successors and assigns.
EXECUTED this 24th day of February, 1993, to be effective for all purposes
as of the Effective Date.
GATEWAY ENERGY CORPORATION
WITNESS: Assignor:
/s/ Xxxxxx X. Xxxxx By: /s/ Xxxx X. Xxxxx
--------------------- ---------------------------
Name: Xxxx X. Xxxxx
-------------------------
Title: President
------------------------
SHELBY GATHERING PARTNERS
By: Interenergy Corporation, its
Managing General Partner
ATTEST: Assignee:
/s/ Xxxxx X. Xxxx By: /s/ Xxxxxxx X. XxXxxxxx
--------------------- -------------------------
Secretary
Name: Xxxxxxx X. XxXxxxxx
-------------------------
Title: President
------------------------
-4-
STATE OF COLORADO )
CITY AND COUNTY OF DENVER )
Before me, the undersiqned, a Notary Public, in and for said County and
State on the 24th day of February, 1993, personally appeared Xxxx X. Xxxxx to me
known to be the identical person who subscribed the name of GATEWAY ENERGY
CORPORATION to the foregoing as its President, and acknowledged to me that he
executed the same as his free and voluntary act and deed and as the free and
voluntary act and deed of such corporation, for the uses and purposes therein
set forth.
Given under my hand and seal the day and year last above written.
/s/ Xxxxx X. Xxxxxxxxx
------------------------------
Notary Public
My commission expires: 2/19/95
-------
(SEAL)
STATE OF COLORADO )
CITY AND COUNTY OF DENVER )
Before me, the undersiqned, a Notary Public, in and for said County and
State on the 24th day of February, 1993, personally appeared Xxxxxxx X. XxXxxxxx
to me known to be the identical person who subscribed the name of INTERENERGY
CORPORATION, as the Managing General Partner of Shelby Gathering Partners, to
the foregoing as its President, and acknowledged to me that he executed the same
as his free and voluntary act and deed and as the free and voluntary act and
deed of such corporation, as managing general partner, for the uses and purposes
therein set forth.
Given under my hand and seal the day and year last above written.
/s/ Xxxxx X. Reinshardt
--------------------------------
Notaty Public
My commission expires: 2/19/95
---------
(SEAL)
gateway\assignmt.bos
revised 2/19/93
-5-
EXHIBIT "A" TO
ASSIGNMENT, CONVEYANCE AND XXXX OF SALE
THE GATEWAY PIPELINE FACILITY LOCATED IN
TWP 33N, RGES 1W AND 2W,
AND XXX 00X, XXXX 0X XXX 0X,
XXXXX XXXXXX, XXXXXXX
Compressor facility
- building 32' x 24'
- 2 Xxxxxx recording meters
- scrubber 16" x 7'
- Superior W-63 compressor with White 6G825 gas 650 HP engine,
with 18 1/2 x 9 3/4 x 5 3/4 Cylinders
Refrigeration plant
Dehydration plant
- building 10' x 16'
Meterhouses - 30 houses with concrete floors, Xxxxxx meters, catalytic heaters,
methanol drips with tanks
Materials - miscellaneous tubing, fittings, valves and regulators
- polyethylene pipe: 2000' of 3", 3000' of 2"
Pipeline Right-of-Way Easements, 30 miles, see Exhibit "C"
Pipeline - 47,400' 2" polyethylene
- 54,100' 3" polyethylene
- 32,800' 4" polyethylene
- 11,900' 6" polyethylene
- 14,800' 3-1/2" steel
- 8,000' 3-1/2" prime steel (assigned to Montana Power)
Tanks - 3 pipeline drips
- pressurized condensate, 210 barrel
- water disposal, 25 barrel concrete tank
EQUIPMENT EXCLUDED FROM INVENTORY
Worthington Cub OF-5HU-3 Compressor package, including 14 1/2, 6 and 5 inch
cylinders, Air exchanger, Westinghouse electric motor, and separate circuit
breaker panel.
EXHIBIT "B" TO
ASSIGNMENT, CONVEYANCE AND XXXX OF SALE
DATED THE 24TH DAY OF FEBRUARY, 1993,
BY AND BETWEEN GATEWAY ENERGY CORPORATION, SELLER
AND SHELBY GATHERING PARTNERS, BUYER
1. Wellhead Gas Purchase Agreements
a. Agreement dated the 1st day of December, 1985, by and between Inland
Energy, Seller, and Gateway Energy Corporation, Buyer
(i) Amendment dated November 15, 1988
b. Agreement dated the 1st day of December, 1985, by and between Crescent
Oil & Gas Corporation, Seller, and Gateway Energy Corporation, Buyer
(i) Amendment dated June 6, 1987
(ii) Amendment dated November 15, 1988
(iii) Amendment dated February 10, 1989
c. Agreement dated the 1st day of December, 1985, by and between
Xxxxxxxxx Operating Co., Inc., Seller, and Gateway Energy Corporation,
Buyer
d. Agreement dated the lst day of September, 1987, by and between Branch
Oil & Gas, Seller, and Gateway Energy Corporation, Buyer
(i) Amendment dated October 2, 1987
(ii) Amendment dated March 1, 1990
e. Agreement dated the 1st day of November, 1987, by and between Cavalier
Petroleum, Inc., Seller, and Gateway Energy Corporation, Buyer
(i) Amendment dated November 6, 1987
(ii) Amendment dated November 18, 1987
(iii) Amendment dated September 1, 1988
f. Agreement dated the 1st day of January, 1988, by and between CDM Oil &
Gas, Seller, and Gateway Energy Corporation, Buyer
g. Agreement dated the 1st day of November, 1988, by and between Keesun
Partners, a Wyoming partnership, Seller, and Gateway Energy
Corporation, Buyer
h. Agreement dated the 1st day of September, 1989, by and between
Trelexploration Limited, Seller, and Gateway Energy Corporation, Buyer
(i) Amendment dated February 19, 1990
(ii) Amendment dated August 18, 1992
i. Agreement dated the 1st day of October, 1989, by and between Keesun
Partners, a Wyoming partnership, Seller, and Gateway Energy
Corporation, Buyer
(i) Amendment dated July 30, 1991
(ii) Amendment dated July 21, 1992
2. Gas Sales Agreement
a. Agreement dated the 1st day of December, 1985, by and between Gateway
Energy Corporation, Seller, and Montana Power Company, Buyer
(i) Amendment dated July 1, 1986, between Montana Power Company,
Buyer, and Gateway Energy Corporation, Seller
(ii) Amendment dated November 19, 1987, made effective January 1,
1988, between Montana Power Company, Buyer, and Gateway
Energy Corporation, Seller
(iii) Amendment dated December 1, 1988, between Montana Power
Company, Buyer, and Gateway Energy Corporation, Seller
(iv) Assignment dated the 1st day of November, 1991, between
Montana Power Company, Assignor, and Great Falls Gas
Company, Assignee
(v) Amendment dated June 1, 1992, between Great Falls Gas
Company, Buyer, and Gateway Energy Corporation, Seller
EXHIBIT "C" TO
ASSIGNMENT, CONVEYANCE AND XXXX OF SALE
DATED THE 24TH DAY OF FEBRUARY, 1993,
BY AND BETWEEN GATEWAY ENERGY CORPORATION, SELLER
AND SHELBY GATHERING PARTNERS, BUYER
RIGHT-OF-WAY EASEMENTS
Toole Co. MT
Recording
Grantor Date Description Book & Page
------- ---- ----------- -----------
Xxx X. & Xxxxx Xxxxxx 2/27/91 133N-R2W:Sec. 27 86M/134
SESW, SWSE
Xxxxxx & Xxxxx Xxxxxx 0/ 0/00 X00X-X0X:Xxx. 2 86M/133
Xxx 0
Xxxxxx & Xxx Xxxxxxx 0/ 0/00 X00X-X0X:Xxx. 1 86M/132
Lots 1-4
Xxxxxx Xxxxx, Trustee 9/10/90 T32N-RlW:Sec. 6 86M/131
Xxx 0
Xxxxxx X. & Xxxxxxx 0/00/00 X00X-X0X:Xxx. 32 86M/130
Xxxxxxx X/0XX, 00 X/0XX
X00X-X0X:Xxx. 4
Xxx 0
Xxxx X. Xxxxx 0/00/00 X00X-X0X:Xxx. 26 84M/664
XXXX
Xxxxxx O. & Xxxxxxx 11/18/88 T32N-RlW:Sec. 5 83M/960
Gagner XX
Xxxxxx & Xxxxx Xxxxxx 11/10/88 T32N-RlW:Sec. 6 83M/961
S/2NE, SENW
T32N-R2W:Sec. 2
SENE
Xxxxxx Xxxxx, Trustee 11/10/88 T32N-RlW:Sec. 6 83M/962
Lot 5
Xxxxxx X. Xxxxxxx 11/10/88 T32N-R2W:Sec. 1 84M/11
X/0X/0
Xxxx X. Xxxxx 00/00/00 X00X-X0X:Xxx. 25 86M/137
SW, 26 XXXX
Xxxxxx & Xxxxx Xxxxxx 12/14/89 T33N-R2W:Sec. 35 86M/129
E/2E/2
Xxxxxx X. & Xxxxxxx 10/20/89 T32N-RlW:Sec. 5 86M/128
Gagner NESW
Xxxxxx & Xxxxx Xxxxxx 10/20/89 T32N-RlW:Sec. 5 86M/127
S/2NE, NWSE
Xxxxxx Xxxxx & Xxxxx 11/17/89 T32N-RlW:Sec. 4 86M/125,126
Gronik Xxx 0, 0 Xxx 0
X00X-XxX:Xxx. 00
X/0XX
Xxxxxx Xxxxx Xxxxxx 11/21/89 T33N-RlW:Sec. 32 86M/124
SWNE, W/2SE
Xxxxxx X. & Xxxxxxx X. 11/28/88 T33N-R2W:Sec. 12 NE 83M/955
Xxxxxxx
Xxx H. & Xxxxx Xxxxxx 11/18/88 T33N-R2W:Sec. 12 83M/954
NWSE
Xxxx & Sons Farm 11/19/88 T33N-R2W:Sec. 1 83M/953
SESE
Xxxxxx Xxxxx, Trustee 2/14/89 T32N-RlW:Sec. 6 84M/12
Xxxx 0, 0
Xxx X. & Xxxxx Xxxxxx 9/30/88 T33N-R2W:Sec. 34 83M/950
XXXX
Xxxxxx & Xxxxx Xxxxxx 10/ 4/88 T33N-R2W:Sec. 34 83M/951,952
E/2SE
Xxx X. & Xxxxx Xxxxxx 11/25/88 T33N-R2W:Sec. 13 83M/958
SWNE
Xxxxx X. Xxxxxxxx, 11/25/88 T33N-R2W:Sec. 13 83M/957
a widow; and Xxxx X. - S/2NW
Xxxxx and Xxxxx Xxx
Xxxxx
Xxxxxx Farms, Inc. 11/25/88 T33N-R2W:Sec. 14 83M/956
SENE
Xxxxx Xxxxxxxx, 5/20/92 T33N-RlW:Sec. 18 86M/135
a widow; and Xxxx X. NW/4
Xxxxx and Xxxxx Xxx
Xxxxx
Xxxxx X. Xxxxxx 7/12/92 T33N-RlW:Sec. 7 86M/136
S/2SW/4
Xxxxx X. Xxxxxxxx, 11/16/87 T33N-R2W:Sec. 24 NE 83M/230
a Widow; and Xxxx X.
Xxxxx and Xxxxx Xxx
Xxxxx
Xxx & Xxxxx Xxxxxx 10/29/87 T33N-R2W:Sec. 12 SE, 83M/228
13 NE, 23 NWNE
Xxxxxx X. & Xxxxxxx 10/29/87 T32N-R2W:Sec. 4 83M/229
Hasquet Xxxx 0-0, 0 Xxx 0
Xxxx. X. Xxxxxx, et al 9/15/87 T33N-R2W:Sec. 24 83M/226
XXXX
Xxxx F. & Xxxxxx Xxxxx 10/29/87 T33N-R2W:Sec. 23 83M/227
XXXX, 00 X/0XX
Xxxx. X. Xxxxxx, et al 12/ 4/86 T33N-R2W:Sec. 24 82M/815
SE, 25 NE
Xxxx X. Xxxxx 12/ 9/86 T33N-R2W:Sec. 25 SE 82M/816
Xxxxxxx Xxxxxxxx & 9/21/86 T32N-R2W:Sec. 4 82M/743
Xxxxxx Xxxxx Xxx 0, XXXX
Xxxxx Xxxxxxxx, 0/00/00 X00X-XxX:Xxx. 30 82M/745
a widow; and Xxxx X. NE, W/2
Xxxxx and Xxxxx Xxx
Xxxxx
Xxxx F. & Xxxxxx Xxxxx 8/15/86 T32N-R2W:Sec. 3 82M/746
E/2SE
Xxxxxx X. & Xxxxxxx 9/02/86 T33N-R2W:Sec. 33 82M/748
Hasquet E/2SW, W/2SE
T32N-R2W:Sec. 4
W/2E/2, SENW,
9 N/2N/2
Xxxxx Xxxxxxx Trust 9/02/86 T32N-R2W: Sec. 2 82M/744
S/2, 3 Xxx 0,
00 X/0XX,
00 X/0XX
Xxxxxx & Xxxxx Xxxxxx 8/15/86 T33N-R2W:Sec. 34 82M/747
S/2, 35 S/2
T32N-R2W:Sec. 2
E/2NE
Xxxxxx & Xxxxx Xxxxxx 5/31/85 T33N-R2W:Sec. 34 82M/709
NWSW
Xxx X. & Xxxxx Xxxxxx 5/30/85 T33N-R2W:Sec. 27 00X/000
X/0, 00 XXXX,
X/0XX
Xxxxx of Montana 9/10/87 T33N-R2W:Sec. 13 83M/231
NWSE, S/2SE
State of Montana 10/ 7/86 T33N-R2W:Sec. 36 82M/749
NENE, S/2NE,
NESW, S/2SW, NWSE
Montana Power Company 7/31/86 T32N-R2W:Sec. 3 NR
N/2NW
SURFACE LEASE - FOR PLANT
Xxxxxx & Xxxxx Xxxxxx 9/19/88 T33N-R2W:Sec. 35 82M/643
1 acre in SESE
OFF CONVEYANCE OF RIGHT-OF-WAY EASEMENT
Gateway Energy Corp. 12/10/88 XX/0, XX/0, X00-X00X-X0X 82M/870
NE/4 and W/2 S20-T33N-R2W
EXHIBIT "D" TO
ASSIGNMENT, CONVEYANCE AND XXXX OF SALE
DATED THE 24TH DAY OF FEBRUARY, 1993,
BY AND BETWEEN GATEWAY ENERGY CORPORATION, SELLER
AND SHELBY GATHERING PARTNERS, BUYER
1. Agreement dated the ______ day of _________ , 19___, between Seller and
Keesun pertaining to special gathering fees for recovery of cost of
gathering installation, to be executed.
[LETTERHEAD]
[LOGO]
March 8, 1993
Great Falls Gas Company
P. O. Xxx 0000
Xxxxx Xxxxx, XX 00000-0000
Attention: Xx. Xxxx Xxxxxx
RE: Gateway Gathering System
Dear Xx. Xxxxxx:
On February 24, 1993, Shelby Gathering Partners, a Colorado Partnership
composed of Interenergy Corporation, Managing Partner, and Xxxxxxx & Associates,
Inc., acquired the interest of Gateway Energy Corporation (being a 100%
interest) in and to the Gateway Gathering System.
The purchase was effective January 1, 1993 and the system will now be
operated under the name of Shelby Gathering Partners.
This letter shall constitute notice of assignment of any contract between
Gateway Energy Corporation and your company to Shelby Gathering Partners,
effective January 1, 1993.
Any questions concerning system operation should be addressed to: Xx. Xxxx
X. Xxxxxxx, Facilities Superintendent, 000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxx, XX
00000, telephone 307/000-0000, facsimile 307/347-2493. Any questions concerning
contract administration matters should be addressed to Xxxxx X. Xxxx, Executive
Vice President and General Counsel, Interenergy Corporation, P. O. Xxx 0000,
Xxxxxxxxx, XX 00000-0000. Should you have any questions or comments concerning
the above, please do not hesitate to contact us.
Sincerely,
INTERENERGY CORPORATION
By: /s/ Xxxxx X. Xxxx
------------------------------
Xxxxx X. Xxxx, Executive Vice
President and General Counsel
JPR:kde
[LETTERHEAD]
[LOGO]
October 21, 1993
Xx. Xxxx Xxxxxx
ENERGY WEST, INC.
Xxx Xxxxx Xxxx Xxxxx
X. X. Xxx 0000
Xxxxx Xxxxx, XX 00000-0000
RE: Delivered Gas Purchase Contract dated December 1, 1985 by and between
Gateway Energy Corporation, "Seller" and Montana Power Company, "Buyer", as
Amended by Letter Amendment dated July 30, 1992, Subsequently Assigned by
the Montana Power Company to Great Falls Gas Company Effective November 1,
1991, and Subsequently Assigned by Gateway Energy Corporation to Shelby
Gathering Partners, Effective January 1, 1993
Dear Xx. Xxxxxx:
This letter, when signed by the appropriate representative of Energy
West, Inc. ("EWI"), formerly known as Great Falls Gas Company, shall constitute
a letter amendment to the above captioned agreement currently between Great
Falls Gas Company and Interenergy Corporation ("Interenergy") under the
following terms and conditions:
1. It is acknowledged by and between the parties hereto as of this
amendment that Seller is Shelby Gathering Partners, a Colorado general
partnership composed of Interenergy Corporation, Managing Partner, and Xxxxxxx &
Associates, Inc., and that Buyer is Energy West, Inc.;
2. Insert new Article II, "Quantity of Gas", Section 5, "Base Load":
"Notwithstanding anything to the contrary contained herein in this
Article II, and subject to the price renegotiation provisions set
forth in Article V, Section 5, effective January 1, 1994, it is agreed
by and between the parties hereto that the minimum DCQ shall be equal
to 1,500 MMBtu per day averaged per month. Seller may deliver to Buyer
the DCQ volumes aforesaid from any on-system mainline
Xx. Xxxx Xxxxxx
October 21, 1993
Page 2
Montana Power delivery point, provided that Seller gives Buyer
reasonable notice in the event Seller desires to change the delivery
points herein. Nothing herein contained shall limit Buyer's ability to
make-up deficient take or pay purchase obligations as set forth in
Article V of the above captioned Delivered Gas Purchase Contract."
3. Delete in its entirety Section 1 of Article V, "Price", and insert
in its place the following:
"Section 1. AMOUNT. The price to be paid by the Buyer to the Seller
for gas delivered to Buyer at the delivery points or for take or pay
payments shall be:
a. $2.00 per MMBtu dry. This price will be redetermined at one year
intervals, with the first price renegotiation effective October 1,
1994. Price renegotiation shall be conducted as per Article V, Section
5 hereof. No adjustment will be made to this price for reimbursement
of production related taxes or any other NGPA Section 110 add-ons."
4. Delete in its entirety Section 5 of Article V, "Price", and insert
in its place the following:
"Section 5. RENEGOTIATION OF PRICE. Either party shall have the right
to demand renegotiation, pursuant to this Article V, between August 1
and September 30, inclusive, prior to the anniversary date of each
contract year. Failure to make the demand in writing within the time
allowed shall be deemed a waiver of the right to renegotiate. The
first price renegotiation hereunder will be effective October 1,
1994."
5. To the extent of any conflicts between the terms and conditions of
this letter amendment and the terms and conditions of the above captioned
Delivered Gas Purchase Contract and previous amendments thereto, the terms and
conditions of this letter amendment shall prevail.
Xx. Xxxx Xxxxxx
October 21, 1993
Page 3
If you are in agreement with the foregoing, please signify your
acceptance by returning one fully executed original of this letter amendment to
us, retaining the other for your files.
Sincerely,
INTERENERGY CORPORATION
By: /s/ Xxxxx X. Xxxx
------------------------------
Xxxxx X. Xxxx, Executive Vice President
and General Counsel
ACCEPTED AND AGREED TO, this
28 day of OCTOBER, 1993
ENERGY WEST, INC.
By: Xxxxx X. Xxxxx
---------------
Its President; CEO
--------------
GAS SALES CONTRACT
------------------
DATE: October 1, 1993
CONTRACT NUMBER: 2-93-10-066
SELLER: Interenergy Resources Corporation
BUYER: Energy West, Inc.
TRANSPORTER: Montana Power Company
EFFECTIVE DATE: October 1, 1993
CONTRACT TERM: October 1, 1993 - September 30, 1998 and year to
year thereafter, subject to annual price
renegotiation
DELIVERY POINT: Into Mainline facilities of Montana Power Company
at the following points:
MPC / Carway
Interenergy / Shelby system
Interenergy / Aloe system
WBI / Xxxxxx
CIG / Grizzley
NNG / Xxxxxx County #3
UNITS OF MEASUREMENT: One million (1,000,000) Btu, (MMBtu) dry.
1 MMBtu = 1 Decatherm (Dkt)
PURCHASE AND SALE
OBLIGATION: Firm
MAXIMUM DAILY
QUANTITY (MDQ): Up to 3,000 MMBtu per day. Minimum Annual
Quantity of 2,000 MMBtu per day from November 1
through February 28 of each year.
PRICE PER MMBtu: The price per MMBtu (dry) shall be the first issue
published during the month of delivery of Canadian
Gas Price Reporter "Canadian Natural Gas Supply
Prices - Alberta Border Spot Interruptible Avg."
price, converted to U.S. dollars, plus $.15. The
U.S./Canadian exchange rate to be used to convert
to U.S. dollars shall be the exchange rate first
published by THE WALL STREET JOURNAL during the
month of delivery.
Either party hereto shall have the right to demand
price renegotiation between August 1 and September
30, inclusive, prior to the Anniversary Date of
each contract year. The first Anniversary Date
hereunder shall be October 1, 1994. In the event
that the parties hereto are unable to agree upon a
renegotiated price during the period so specified,
then upon 30 days notice following the Anniversary
Date of each year, either party may terminate this
agreement.
NOMINATIONS: Buyer and Buyer's agent shall contact Seller, as
needed, by telephone or facsimile, as to Buyer's
estimated daily natural gas requirements.
BILLING AND PAYMENT: Buyer shall pay Seller on or before two (2) days
prior to the end of the month following the month
of deliveries via wire transfer to Seller's
account.
SELLER -
NOTICES: Interenergy Resources Corporation
0000 Xxxxxxxx - Xxxxx 0000
Xxxxxx, XX 00000
TELEPHONE: 303/000-0000 XXX: 303/000-0000
PAYMENTS: WIRE TRANSFER INSTRUCTIONS
Norwest Bank Denver ABA # 102-00-0076
For credit to:
Interenergy Resources Corporation
Acct. #101-8169612
BUYER -
NOTICES AND
INVOICES: Great Falls Gas Company
X.X. Xxx 0000
Xxxxx Xxxxx, XX 00000-0000
Attention: Xx. Xxxx Xxxxxx
TELEPHONE: 406/000-0000 XXX: 406/000-0000
OTHER PROVISIONS: To any given month hereunder, if Seller fails to
deliver to Buyer the MDQ as herein provided, or
Buyer fails to take the Minimum Annual Quantity as
herein provided, then the party so failing to
perform shall pay to the performing party $.25 per
MMBtu multiplied by the MMBtu's not delivered by
Seller or not taken by Buyer in that given month
(as the case may be) a liquidated damages for such
non-performance. In the event of conflict between
the provisions of this cover page and the
provisions of the General Terms and Conditions
attached hereto, the provisions of this cover page
shall prevail.
THIS CONTRACT CONSISTS OF TWO SUMMARY PAGES AND THE ATTACHED GENERAL TERMS AND
CONDITIONS.
ACCEPTED
Buyer: Seller:
Energy West, Inc. Interenergy Resources Corporation
/s/ Xxxxx X. Xxxx
------------------------------ ----------------------------------------
By: /s/ Xxxxx X. Xxxxx By: Xxxxx X. Xxxx
-------------------------
Its: President & CEO Its: Executive Vice President
-------------------------
Date: 10/28/93 Date: 10/20/93
------------------------- -----------------------------------
Federal Tax I.D. No.
00-0000000
GAS SALES CONTRACT
GENERAL TERMS AND CONDITIONS
1. TRANSPORTATION: Seller shall arrange and pay for transportation to the
Delivery Point(s) and Buyer shall arrange and pay for transportation
subsequent to the Delivery Point(s). Buyer's obligation to purchase and
take delivery of Seller's gas, and Seller's obligation to sell and deliver
gas to buyer, is on a firm basis.
2. QUANTITIES: If Buyer desires to purchase and receive gas in excess of the
Maximum Daily Quantities ("MDQ") listed in the Contract Summary section,
then Buyer shall notify Seller of the amount of additional gas required and
Seller will, on a best efforts basis, secure the gas and transportation
capacity to meet Buyer's requirements. Buyer and Seller must mutually
agree to the pricing of such incremental gas and this Contract shall be
amended to reflect any price changes and to increase the MDQ.
3. QUALITY: All deliveries made under this Contract are subject to
Transporter(s) pipeline specifications and therefore, cannot be regulated,
changed or altered in any way, shape or form. Any gas delivered by Seller
of a quality which is acceptable for transmission by transporter(s) shall
be conclusively deemed to be gas that is acceptable to Buyer.
4. METERS AND COMPUTATION OF VOLUMES SOLD: The unit of measurement of gas
delivered to Buyer at the Delivery Point shall be specified in the Contract
summary section. The parties agree that the volumes of gas sold to Buyer
shall be the volume of gas which Transporter(s) reports to Seller or buyer
for Transporter(s) meters installed, maintained and operated by
Transporter(s) at the Delivery Point and the parties shall accept the
reports of such volumes for all purposes. Seller and Buyer agree that
either party may request special meter tests, install check meters and
exercise such other rights as allowed under Transporter(s) tariff or
transportation service agreement with Seller.
5. BILLING AND PAYMENTS: Transporter(s) shall furnish Seller with monthly
statements detailing the volume of gas delivered to Buyer at the Delivery
Point(s). Seller shall prepare a statement showing the amount of payment
due from buyer directly to Seller, for said gas, based upon the price and
one-half (1.5%) per month shall accrue on payments not received by the due
date. If any payment has not been received by Seller within thirty (30)
days after the date of the statement, the Seller at its option, in addition
to all of the other remedies it may have, may at any time cease delivery of
gas to Buyer without breach of this Contract until such payment, together
with accrued interest, has been paid in full. Seller shall be entitled to
reasonable attorney's fees incurred by it in collecting all late payments.
6. FINANCIAL RESPONSIBILITY:
(a) It is agreed that if Seller, acting in good faith, shall have any
reason to doubt Buyer's financial responsibility, Seller may decline to
make delivery under this Agreement except for cash payable on delivery or
Letter of Credit acceptable in form and content to Seller. Seller shall so
advise Buyer in writing, whereupon buyer shall have the right to satisfy
Seller as to Buyer's financial responsibility by providing Letter of Credit
or other satisfactory assurance to Seller. If Seller is satisfied,
delivery may be resumed hereunder pursuant to the terms provided. Seller
may exercise its right under this paragraph at any time and from time to
time during the continuation of this Agreement.
(b) Buyer hereby grants Seller a security interest in and to (1) the
accounts receivable generated by Buyer's resale of the gas; and (2) any
proceeds received by Buyer in payment for Buyer's resale of the gas.
(c) Buyer hereby assigns to Seller all accounts receivable which are
generated from Buyer's resale of the gas to the extent required to pay
Seller the purchase price of the gas sold.
7. WARRANTIES: Seller warrants the title to the gas delivered pursuant to the
terms of this Contract and warrants that it has the right and lawful
authority to sell the same. Seller further warrants that it will indemnify
Buyer and save it harmless from suits, actions, debts, accounts, damages,
costs, losses and expenses arising from or out of adverse claims of any and
all persons to said gas or to royalties, production taxes, license fees or
charges thereon.
8. TITLE: Title to gas and risk of loss hereunder shall pass from Seller to
Buyer at the Delivery Point(s) and Buyer shall be responsible for the gas
after delivery at said point(s). Buyer shall have no responsibility to pay
for any gas hereunder until it is actually received at the Delivery
Point(s) unless otherwise agreed.
9. LIABILITIES: Seller and Buyer each assume full responsibility for the
operation and maintenance of their respective equipment and facilities and
each party shall indemnify and hold harmless the other party, its officers,
employees and agents from and against any and all claims, suits, causes of
action, damages, liability, costs and expenses, including attorney's fees,
incurred as a result of or related to the operation and maintenance of such
equipment and facilities by the responsible party.
10. DEFAULT: If either party fails to perform under the Contract except a
otherwise provided for in the contract, the other party may at its option
terminate this Contract. To terminate, the other party shall send written
notification stating specific reasons for termination. The party in
default shall have thirty-five (35) days to respond and notify the other
party of the remedies which will be made to remedy or remove the causes for
default. If the party in default does not remedy or indemnify the party
giving the notice within thirty (30) days, this contract shall become null
and void after the thirty (30) days. Any cancellation will also require
Seller to deliver to Buyer any gas for which it paid but did not receive.
A waiver by either party of a default in the performance of nay provision
of this Contract shall not operate or be construed as a waiver of any
future default, whether of a like or different kind.
11. FORCE MAJEURE: Neither party is liable to the other for any failure to
perform any provision or obligation to this Contract (except Buyer's
obligation to pay for gas previously delivered) if such failure is caused
or results directly or indirectly from any act of God; Federal, State or
Local legislation or regulation; fires, floods, storms or other natural
occurrences; strikes, was or accidents; the unwillingness of any pipeline
to accept gas for delivery or any other cause beyond the control of the
party failing to perform including, but not limited to, partial, or total
failure of gas supply.
12. APPLICABLE LAW AND REGULATIONS: This Contract shall be construed under the
laws of the State of Montana. In the event any provision of this Contract
is declared to be unlawful by a court of competent jurisdiction, the
remainder of this Contract shall remain in full force and effect. This
Contract is also subject to al governmental laws, orders, directives, rules
and regulations.
13. ASSIGNMENT: The rights or obligations of the parties under this Contract
may not be assigned without the written permission of the other party,
which permission shall not be unreasonably withheld. This Contract shall
bind and inure to the benefit of the parties hereto, and their respective
successors and assigns.
14. NOTICE: Any notice required herein shall be deemed to have been properly
served upon receipt if telecopied, delivered personally or sent by regular
or certified mail to the addresses stated o the face hereof.
15. TAXES: Buyer is responsible for paying any taxes, fees, tariffs and/or
charges imposed upon the sale of gas under this Contract, regardless of
which party hereto may be required to collect and pay such by law or
tariff. If Buyer is exempt from the obligation to pay certain taxes, then
Buyer shall provide Seller with documentation establishing that exemption.
16. INSPECTION OF BOOKS AND RECORDS: Each party hereto shall have, at his
expense, the right during normal business hours to examine the books and
records of the other party to the extent necessary to verify the accuracy
of any statement, charge, computation, or demand made upon or pursuant to
any of the provisions of this Contract. Any statement shall be final as to
both parties unless questioned within ninety (90) days from the date of
discovery of any error and in any event within two(2) years from the date
of the delivery of such statement. As to information furnished by
Transporters, any statement shall be final as of the date set forth in
Transporter tariffs. Statements shall be subject to adjustment based upon
adjustments made by Transporters. All books or accounts and records of
either party relating to this Contract, deliveries of gas hereunder and the
amount hereunder, or microfilm or microfiche copies thereof, shall be
preserved for a period of at least three (3) years.
17. ENTIRE AGREEMENT: This Contract supersedes, amends and modifies any prior
agreements, representations, warranties or contracts between the parties
for the purchase and sale of gas and contains all of the agreements of the
parties. Any and all prior representations, agreements, warranties or
contract shall conclusively be deemed to have been merged herein. This
Contract shall not be modified or amended except by a written instrument
specifically referencing this Contract which has been executed by the
parties hereto.
18. CONFIDENTIALITY: The terms of this agreement, including but not limited
to, the price paid for gas, term, volumes and all other material terms of
this Contract shall be kept confidential by the parties hereto, except to
the extent that the information which must be disclosed to a third party
for the purpose of effectuating transportation of the gas or which must be
disclosed to regulatory bodies.
INTERENERGY CORPORATION
[LOGO]
X.X. Xxx 0000
Xxxxxxxxx, XX 00000-0000
Tel. (000) 000-0000
Fax (000) 000-0000
October 18, 1994
ENERGY WEST, INC.
P. O. Xxx 0000
Xxxxx Xxxxx, XX 00000-0000
Attention: Xx. Xxxx Xxxxxx
RE: Gas Sales Contract #2-93-10-066 dated October 1, 1993 by and between
Interenergy Resources Corp. "Seller" and Energy West, Inc. "Buyer"
Dear Xx. Xxxxxx:
This letter, when signed by the appropriate representative of
Energy West, Inc. ("Buyer"), shall constitute a letter amendment to the
above referenced Gas Sales Contract between Interenergy Resources Corp.
("Seller") and Buyer, under the following terms and conditions:
1. Delete existing paragraph entitled "MDQ" and insert in its
place the following:
"Up to 3,000 MMBtu per day. From October 1, 1994
through September 30, 1995 there is no minimum
daily quantity. If Montana Power Company
designates a "System Stress Day", Buyer has the
right to call on 100% of Seller's daily gas
delivery available from the Aloe system during the
period of November 1, 1994 through February 28,
1995 only."
2. Delete existing paragraph entitled "Price per MMBtu" and
insert in its place the following:
"Deliveries from the Aloe system shall be priced
in U.S. Dollars per MMBtu on a daily basis at the
AECO C & N.I.T. Spot Price, Average, as reported
in the Canadian Gas Price Reporter, Natural Gas
Market Report plus twelve (12) cents. For any
other deliveries, the price will be negotiated at
the time of sale."
ENERGY WEST, INC.
October 18, 1994
Page 2
3. Delete existing paragraph entitled "Other Provisions" and
insert in its place the following:
"If Buyer needs incremental supply on a monthly or
daily basis, Buyer agrees to contact Seller to
request a quote on providing such incremental
supply."
4. In the event of a conflict between the terms and conditions
of this letter amendment and the terms and conditions of the above
referenced Gas Sales Contract, the terms and conditions of this letter
amendment shall prevail. To the extent that the above captioned Gas Sales
Contract has not been amended by this letter amendment, same shall be
ratified in all particulars.
If the foregoing is acceptable, please return one fully executed
original of this letter amendment, retaining the other for your records.
Interenergy appreciates the opportunity of being of service to Energy West,
Inc. Should you have any questions or comments, please do not hesitate to
contact me.
Very truly yours,
INTERENERGY RESOURCES CORP.
By: /s/ Xxxxx X. Xxxx
-----------------------------------
Xxxxx X. Xxxx
Executive Vice President
ACCEPTED AND AGREED TO, this
_____ day of _______________, 1994.
ENERGY WEST, INC.
By: /s/ Xxxxx X. Xxxxx
-----------------------------------
Its: President & CEO
------------------------------
INTERENERGY CORPORATION
[LOGO]
X.X. Xxx 0000
Xxxxxxxxx, XX 00000-0000
Tel. (000) 000-0000
Fax (000) 000-0000
January 30, 1995
Xx. Xxxx Xxxxxx
ENERGY WEST, INC.
Xxx Xxxxx Xxxx Xxxxx
X. X. Xxx 0000
Xxxxx Xxxxx, XX 00000-0000
RE: Delivered Gas Purchase Contract dated December 1, 1985 by and between
Gateway Energy Corporation, "Seller" and Montana Power Company,
"Buyer", Subsequently Assigned to Shelby Gathering Partners, "Seller"
and Great Falls Gas Company, Successor in Title to Energy West, Inc.
"Buyer"
Dear Xx. Xxxxxx:
This letter, when signed by the appropriate representative of
Energy West, Inc. ("EWI"), formerly known as Great Falls Gas Company, shall
constitute a letter amendment to the above captioned Contract currently EWI
and Shelby Gathering Partners under the following terms and conditions:
1. It is acknowledged by and between the parties hereto as of
this amendment that Seller is Shelby Gathering Partners, a Colorado general
partnership composed of Interenergy Corporation, Managing Partner, and
Xxxxxxx & Associates, Inc., and that Buyer is Energy West, Inc.
2. To the extent that the above captioned Delivered Gas
Purchase Contract dated December 1, 1985 is not amended by this Letter
Amendment, same is ratified in full in all particulars. Any conflict
between the terms of the aforedescribed Delivered Gas Purchase Contract
and subsequent amendments (with the exception of this Amendment), the terms
and conditions of the aforedescribed Delivered Gas Purchase Contract shall
prevail. In the event of any conflict between the terms of the Delivered
Gas Purchase Contract and this Letter Amendment, the terms and conditions
of this Letter Amendment shall prevail.
3. EFFECTIVE DATE. This amendment shall be effective from
October 1, 1994.
Xx. Xxxx Xxxxxx
January 30, 1995
Page 2
4. QUANTITY OF GAS. Effective October 1, 1994, the Daily
Contract Quantity ("DCQ") shall equal 839 MMBtu, resulting in an Annual
Contract Quantity ("ACQ") of 306,293 MMBtu. Upon thirty (30) days notice to
Buyer, Seller shall have the right to request a new production test for
purposes of establishing a new DCQ, which may result in a revised ACQ per
the above captioned Delivered Gas Purchase Contract.
5. RELEASE FOR VOLUMES NOT TAKEN. Within five (5) days prior to
the beginning of the month, Buyer shall provide written notice to Seller if
Buyer anticipates not taking gas during the upcoming month. Buyer agrees to
allow Seller to sell gas to third parties during periods where Buyer is not
taking gas. Buyer accordingly releases Seller on a temporary basis to
accomplish these sales.
6. PRICE PER MMBtu. $1.85 per MMBtu.
7. DELIVERY POINT. At the interconnection between Seller's
facilities and the Montana Power Company's transmission line in Toole
County, Montana, or other mutually agreeable delivery points.
8. RENEGOTIATION OF PRICE. Either party shall have the right to
demand renegotiation pursuant to Article V of the above captioned Delivered
Gas Purchase Contract between August 1 and September 30, inclusive, prior
to the anniversary date of each contract year. Failure to make the demand
in writing within the time allowed shall be deemed a waiver of the right to
renegotiate. The first price renegotiation hereunder will be effective
October 1, 1995.
9. Pursuant to a Letter Amendment dated October 21, 1993 and
effective January 1, 1994, to the above captioned Delivered Gas Purchase
Contract, the DCQ was amended to 1,500 MMBtu per day. Through September 30,
1994, Buyer accumulated a purchase deficiency of take or pay purchases of
approximately 60,000 MMBtu. As further consideration of the price to be
paid by Buyer to Seller for the term herein set forth, Seller does
Xx. Xxxx Xxxxxx
January 30, 1995
Page 3
hereby forever waive the purchase deficiency accumulated under said Letter
Amendment dated October 21, 1993.
Sincerely,
INTERENERGY CORPORATION
By: /s/ Xxxxx X. Xxxx
-----------------------------------
Xxxxx X. Xxxx, Executive Vice
President and General Counsel
ACCEPTED AND AGREED TO, this
____ day of _________________, 1995
ENERGY WEST, INC.
By: /s/ Xxxxx X. Xxxxx
------------------------------
Its
------------------------------
INTERENERGY CORPORATION
[LOGO]
X.X. Xxx 0000
Xxxxxxxxx, XX 00000-0000
Tel. (000) 000-0000
Fax (000) 000-0000
August 30, 1995
ENERGY WEST, INC.
P. O. Xxx 0000
Xxxxx Xxxxx, XX 00000-0000
Attention: Xx. Xxxx Xxxxxx
RE: Letter Amendment to that certain Natural Gas Supply Contract by and
between Cody Gas Company, as Buyer, and Interenergy Resources
Corporation, as Seller, dated May 1, 1995
Gentlemen:
Please accept this letter (Letter Amendment) as amending the
above-named agreement. Specifically, the parties agree to amend said
agreement as follows:
1. For the period April 1, 1996 through October 31, 1996, Seller
agrees to sell and deliver and Buyer agrees to purchase and
receive five hundred thousand (500,000) MMBtu, ratably over said
seven (7) month period.
2. In consideration therefor, Buyer agrees to prepay Seller an
amount equal to $695,000.00, which, on an MMBtu basis, shall be
comprised of $1.00 gas commodity charge, and $.39 charge for
transportation, storage and fuel. Said payment shall be made in
three equal installments which shall be due on or before August
31, 1995, September 30, 1995 and October 31, 1995.
3. In the event Buyer does not receive from Seller, for reasons
other than force majeure that are within the control of Buyer, at
least 71,400 MMBtu during any month during the above mentioned
seven month period, the parties shall meet in an effort to
negotiate a revised repayment schedule. Notwithstanding the
foregoing, Seller is obligated hereunder to supply 71,400 MMBTU
per month each month of the seven month period.
All other provisions set out in the May 1, 1995 Agreement not in
conflict with this Letter Agreement shall remain in full force and effect.
ENERGY WEST, INC.
August 30, 1995
Page 2
If the above reflects accurately your understanding of the transaction
contemplated, please so indicate by executing in the space provided below
and return one copy of this Letter Agreement to the undersigned.
Very truly yours,
INTERENERGY RESOURCES CORPORATION
By: /s/ Xxxxx X. Xxxx
-----------------------------------
Xxxxx X. Xxxx
Executive Vice President
AGREED AND ACCEPTED, this
____ day of August, 1995.
ENERGY WEST, INC.
By: /s/ Xxxxx X. Xxxxx
------------------------------
Title: President
----------------------------
INTERENERGY CORPORATION
[LOGO]
X.X. Xxx 0000
Xxxxxxxxx, XX 00000-0000
Tel. (000) 000-0000
Fax (000) 000-0000
October 3, 1995
Xx. Xxxx Xxxxxx
ENERGY WEST, INC.
Xxx Xxxxx Xxxx Xxxxx
X. X. Xxx 0000
Xxxxx Xxxxx, XX 00000-0000
RE: Delivered Gas Purchase Contract dated December 1, 1985 by and between
Gateway Energy Corporation, "Seller" and Montana Power Company,
"Buyer", Subsequently Assigned to Shelby Gathering Partners, "Seller"
and Great Falls Gas Company, Successor in Title to Energy West, Inc.
"Buyer"
Dear Xxxx:
This will confirm our understanding that the above captioned
agreement shall remain in full force and effect on a month to month basis
until either Energy West or Shelby Gathering Partners notifies the other of
its desire to negotiate a long-term price or to arbitrate per the terms of
the Agreement. The price for the month of October for gas delivered from
Shelby Gathering Partners' Shelby System in Toole County, Montana, shall be
$1.30 per MMBtu. If you are in agreement, please return one fully executed
version of this letter agreement to me, retaining the other for your files.
Sincerely,
INTERENERGY CORPORATION
By: /s/ Xxxxx X. Xxxx
-----------------------------------
Xxxxx X. Xxxx, Executive Vice
President and General Counsel
ACCEPTED AND AGREED TO, this
____ day of__________________, 1995.
ENERGY WEST, INC.
By: /s/ Xxxxx X. Xxxxx
------------------------------
It: President & CEO
-------------------------
INTERENERGY CORPORATION
[LOGO]
X.X. Xxx 0000
Xxxxxxxxx, XX 00000-0000
Tel. (000) 000-0000
Fax (000) 000-0000
October 31, 1995
Xx. Xxxx Xxxxxx
ENERGY WEST, INC.
Xxx Xxxxx Xxxx Xxxxx
X. X. Xxx 0000
Xxxxx Xxxxx, XX 00000-0000
RE: Delivered Gas Purchase Contract dated December 1, 1985 by and between
Gateway Energy Corporation, "Seller" and Montana Power Company,
"Buyer", Subsequently Assigned to Shelby Gathering Partners, "Seller"
and Great Falls Gas Company, Successor in Title to Energy West, Inc.
"Buyer"
Dear Xxxx:
This will confirm our understanding that the above captioned
agreement shall remain in full force and effect on a month to month basis
until either Energy West or Shelby Gathering Partners notifies the other of
its desire to negotiate a long-term price or to arbitrate per the terms of
the Agreement. The price for the month of November for gas delivered from
Shelby Gathering Partners' Shelby System in Toole County, Montana, shall be
$1.60 per MMBtu. If you are in agreement, please return one fully executed
version of this letter agreement to me, retaining the other for your files.
Sincerely,
INTERENERGY CORPORATION
By: /s/ Xxxxx X. Xxxx
-----------------------------------
Xxxxx X. Xxxx, Executive Vice
President and General Counsel
ACCEPTED AND AGREED TO, this
____ day of _________________, 1995.
ENERGY WEST, INC.
By: /s/ Xxxxx X. Xxxxx
------------------------------
Its: President & CEO
-------------------------
INTERENERGY CORPORATION
[LOGO]
X.X. Xxx 0000
Xxxxxxxxx, XX 00000-0000
Tel. (000) 000-0000
Fax (000) 000-0000
December 21, 1995
Xx. Xxxx Xxxxxx
ENERGY WEST, INC.
Xxx Xxxxx Xxxx Xxxxx
X. X. Xxx 0000
Xxxxx Xxxxx, XX 00000-0000
RE: Delivered Gas Purchase Contract dated December 1, 1985 by and between
Gateway Energy Corporation, "Seller" and Montana Power Company,
"Buyer", Subsequently Assigned to Shelby Gathering Partners, "Seller"
and Great Falls Gas Company, Successor in Title to Energy West, Inc.
"Buyer"
Dear Xxxx:
This will confirm our understanding that the above captioned
agreement shall remain in full force and effect on a month to month basis
until either Energy West or Shelby Gathering Partners notifies the other of
its desire to negotiate a long-term price or to arbitrate per the terms of
the Agreement. The price for the period of January 1, 1996 through March
31, 1996 for gas delivered from Shelby Gathering Partners' Shelby System in
Toole County, Montana, shall be $1.80 per MMBtu. If you are in agreement,
please return one fully executed version of this letter agreement to me,
retaining the other for your files.
Sincerely,
INTERENERGY CORPORATION
By: /s/ Xxxxx X. Xxxx
-----------------------------------
Xxxxx X. Xxxx, Executive Vice
President and General Counsel
ACCEPTED AND AGREED TO, this
____ day of _________________, 1995.
ENERGY WEST, INC.
By: /s/ Xxxxx X. Xxxxx
------------------------------
Its: President & CEO
-------------------------
INTERENERGY CORPORATION
Xxxx Xxxxxx Xxx 0000
Xxxxxxxxx, Xxxxxxxx 00000-0000
[LOGO]
000 000-0000
000 000-0000 Fax
April 25, 1996
Xx. Xxxx Xxxxxx
ENERGY WEST, INC.
Xxx Xxxxx Xxxx Xxxxx
X. X. Xxx 0000
Xxxxx Xxxxx, XX 00000-0000
RE: Delivered Gas Purchase Contract dated December 1, 1985 by and between
Gateway Energy Corporation, "Seller" and Montana Power Company, "Buyer",
Subsequently Assigned to Shelby Gathering Partners, "Seller" and Great
Falls Gas Company, Successor in Title to Energy West, Inc. "Buyer"
Dear Xxxx:
This will confirm our understanding that the price to be paid pursuant
to the above captioned agreement for the period of May 1, 1996 through September
30, 1996 for gas delivered from Shelby Gathering Partners' Shelby System in
Toole County, Montana, shall be $1.60 per MMBtu. Energy West agrees to take the
balance of the ACQ during this period. If you are in agreement, please return
one fully executed version of this letter agreement to me, retaining the other
for your files.
Sincerely,
INTERENERGY CORPORATION
By: /s/ Xxxxx X. Xxxx, (KDE)
-----------------------------------
Xxxxx X. Xxxx, Executive Vice
President and General Counsel
ACCEPTED AND AGREED TO, this
2 day of May, 1996.
ENERGY WEST, INC.
By: /s/ Xxxxx X. Xxxxx
-----------------------------------
Its President & CEO
------------------------------
INTERENERGY CORPORATION
Xxxx Xxxxxx Xxx 0000
Xxxxxxxxx, Xxxxxxxx 00000-0000
[LOGO]
000 000-0000
000 000-0000 Fax
January 29, 1997
Xx. Xxxx Xxxxxx
ENERGY WEST, INC.
Xxx Xxxxx Xxxx Xxxxx
X. X. Xxx 0000
Xxxxx Xxxxx, XX 00000-0000
RE: Delivered Gas Purchase Contract dated December 1, 1985 by and between
Gateway Energy Corporation, "Seller" and Montana Power Company, "Buyer",
Subsequently Assigned to Shelby Gathering Partners, "Seller" and Great
Falls Gas Company, Successor in Title to Energy West, Inc. "Buyer"
Dear Xxxx:
This will confirm our understanding that the price to be paid pursuant
to the above captioned agreement for the period beginning January 1, 1997
through December 31, 1997 for gas delivered from Shelby Gathering Partners'
Shelby System in Toole County, Montana, shall be $1.75 per MMBtu. Buyer shall
purchase 100% of Seller's deliverability from January 1, 1997 through May 31,
1997 and from October 1, 1997 through December 31, 1997 in satisfaction of the
ACQ for the year. To the extent of any inconsistencies between the above
captioned Contract and this letter agreement, the terms and conditions of this
letter agreement shall prevail. If you are in agreement, please return one fully
executed version of this letter agreement to me, retaining the other for your
files.
Sincerely,
INTERENERGY CORPORATION
By: /s/ Xxxxx X. Xxxx
-----------------------------------
Xxxxx X. Xxxx, Executive Vice
President and General Counsel
ACCEPTED AND AGREED TO, this
____ day of ________________, 1997.
ENERGY WEST, INC.
By: /s/ Xxxxx X. Xxxxx
-----------------------------------
Its President & CEO
------------------------------
INTERENERGY CORPORATION
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000-0000
[LOGO]
000 000-0000
000 000-0000 Fax
April 11, 1997
ENERGY WEST, INC.
a/k/a Great Falls Gas Company
Xxx Xxxxx Xxxx Xxxxx
X. X. Xxx 0000
Xxxxx Xxxxx, XX 00000-0000
Attention: Xx. Xxxx Xxxxxx
RE: Shelby Gathering Partners
Dear Xxxx:
Effective March 1, 1997, Shelby Gathering Partners sold the Shelby
Natural Gas Gathering System and associated assets to T&O, LLC. The following is
a list of names and addresses of various contact people in the T&O organization
with which you will be dealing in the future:
T&O, LLC
0000 X. Xxxxxxxxx, Xxxxx X-000
Xxxxxxx, XX 00000
602/912-9006
602/0000000 (FAX)
Attn: Xxxxxxx Xxxxxx, President
Pursuant to that certain Delivered Gas Purchase Contract dated
December 1,1985 by and between Gateway Energy Corporation, "Seller", and the
Montana Power Company, "Buyer", subsequently assigned to Great Falls Gas Company
as Buyer and Shelby Gathering Partners as Seller, specifically Article XIV,
Section 2 - "Assignment", enclosed herewith please find an original or certified
copy of the conveyance document transferring the assets of Shelby Gathering
Partners to T&O, LLC.
Should you have any questions regarding this acquisition and future
operations, please contact T&O, LLC.
Very truly yours,
SHELBY GATHERING PARTNERS,
by Interenergy Corporation,
Managing Partner
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Its Vice President
-----------------------------------
EXHIBIT "A" TO THAT CERTAIN ASSET PURCHASE AGREEMENT
BY AND BETWEEN SHELBY GATHERING PARTNERS,
A COLORADO GENERAL PARTNERSHIP, INTERENERGY CORPORATION,
MANAGING PARTNER, "SELLER", AND
T&O, LLC, "BUYER"
I. GAS SALES AGREEMENT
1. Agreement dated December 1, 1985 by and between Gateway Energy
Corporation, "Seller" and Montana Power Company, "Buyer", subsequently
assigned to Shelby Gathering Partners, "Seller" and Great Falls Gas
Company, Successor in Title to Energy West, Inc. "Buyer", and as most
recently amended by Amendment dated January 29, 1997.
II. WELLHEAD GAS PURCHASE AGREEMENTS
1. Agreement dated December 1, 1985 by and between Inland Energy,
"Seller", and Gateway Energy Corporation, "Buyer"
2. Agreement dated December 1, 1985 by and between Crescent Oil & Gas
Corporation, "Seller", and Gateway Energy Corporation, "Buyer"
3. Agreement dated December 1, 1985 by and between Xxxxxxxxx Operating
Co., Inc., "Seller", and Gateway Energy Corporation, "Buyer"
4. Agreement dated September 1, 1987 by and between Branch Oil & Gas,
"Seller", and Gateway Energy Corporation, "Buyer"
5. Agreement dated November 1, 1987 by and between Cavalier Petroleum,
Inc., "Seller", and Gateway Energy Corporation, "Buyer"
6. Agreement dated January 1, 1988 by and between CDM Oil & Gas,
"Seller", and Gateway Energy Corporation, "Buyer"
7. Agreement dated November 1, 1988 by and between Keesun Partners, a
Wyoming partnership, "Seller", and Gateway Energy Corporation, "Buyer"
8. Agreement dated September 1, 1989 by and between Trelexploration
Limited, "Seller", and Gateway Energy Corporation, "Buyer"
9. Agreement dated October 1, 1989 by and between Keesun Partners, a
Wyoming partnership, "Seller", and Gateway Energy Corporation, "Buyer"
- 13 -
III. FACILITY DATA - SHELBY GATHERING SYSTEM
PLANT EQUIPMENT:
Dew Point Control Unit
Glycol Dehydration Unit
COMPRESSORS:
Unit# Location Compressor Engine BHP Cylinders
----- -------- ---------- ------ --- ---------
1 Sales Superior W-64 Superior 6G-825 650 (1)5.75x6(1)9.75x6
2 Gathering Xxxxxxx RLC Ford 300 50 (1)18.50x6
---
Total: 700
PIPELINE EQUIPMENT:
Type Size Miles
---- ---- -----
Gathering
Steel 3" 3
Poly 6" 2
Poly 4" 8
Poly 3" 13
Poly 2" 8
--
Total 34
THROUGHPUT CAPACITY: 2,000 Mcf per day (Sales Compression
Limitation)
CATHODIC: Yes
SALES GAS DELIVERY PIPELINE: Montana Power Company
DELIVERY INTERCONNECT LOCATION: SEC19-T33N-R1W
- 14 -
METER STATIONS:
Master: 2
Gathering: 38
Fuel 1
--
Total: 41
DEHYDRATORS: 1
PIG LAUNCHERS/RECEIVERS: 0
VEHICLES: 0
NUMBER OF XXXXX: 38
- 15 -
EXHIBIT B
GENERAL CONVEYANCE
KNOW ALL MEN BY THESE PRESENTS:
THAT, the undersigned, SHELBY GATHERING PARTNERS, a Colorado general
partnership, Interenergy Corporation, Managing Partner, with an address at 0000
Xxxxxxxx - Xxxxx 0000, Xxxxxx, XX 00000, (herein "Assignor") for and in
consideration of Ten Dollars ($10.00) and other good and valuable
consideration, the receipt of which is hereby acknowledged, does hereby sell,
assign, transfer and convey unto T&O, LLC, (herein "Assignee"), with an address
of 0000 X. Xxxxxxxxx, Xxxxx X-000, Xxxxxxx, XX 00000, all of Assignor's right,
title and interest in and to the following properties, assets, contracts and
other rights, both real and personal, all of which together are herein called
the "Assets":
a. All of the right, title and interest in and to that certain
Shelby Gas Gathering System and Gas Processing Facility, located
in Toole County, Montana (the "System"), together with all
improvements, equipment, equipment leases, easements, permits,
licenses, servitude, rights-of-way, surface leases and other
surface rights used in connection with the System, all as more
particularly described on Exhibit "A";
b. All files, books, records, papers, and instruments, including all
of the Seller's counterparts of all conveyed contracts, all
documents of title relating to the Assets, blueprints,
specifications, plats, maps, surveys, accounting and financial
records and sales and property tax records directly related to
the System;
c. To the extent transferable, all licenses, certificates,
approvals, registrations, variances, exemptions, rights-of-way,
privileges, immunities, grants, permits, franchises, consents,
authorizations or other rights of every kind and character held
by Seller and directly related to the ownership or operation of
the Assets; and,
d. All other or additional privileges, rights, interests,
properties, contracts, agreements and assets of the Seller of
every kind and description and located upon the Assets that are
used or intended for use in connection with the continued conduct
of the Assets as presently being conducted.
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This Assignment is made expressly subject to and in accordance with
the terms and conditions of that certain Asset Purchase Agreement between
Assignor and Assignee, dated March 25, 1997 (the "Agreement") and all covenants,
indemnities and obligations of the parties under the Agreement shall survive the
execution and delivery of this Assignment strictly in accordance, and only in
accordance with the terms of the Agreement, it being expressly understood that
any and all representations or warranties of the parties contained in the
Agreement are terminated, extinguished and of no further force or effect upon
the delivery of this Assignment except to the extent expressly stated as
surviving the delivery of this Assignment. By acceptance hereof, Assignee agrees
to take and receive the Assets in accordance with the Agreement, including,
without limitation all assumptions of liabilities contained therein.
ASSIGNOR IS MAKING NO REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS
OR IMPLIED, BEYOND THOSE EXPRESSLY GIVEN HEREIN, AND IT IS UNDERSTOOD THAT WITH
RESPECT TO EQUIPMENT AND PERSONAL PROPERTY COMPRISING PORTIONS OF THE ASSETS,
ASSIGNEE SHALL TAKE THOSE "AS IS" AND "WHERE IS," WITH ALL FAULTS. WITHOUT
LIMITING THE GENERALITY OF THE IMMEDIATELY FOREGOING, ASSIGNOR HEREBY (I)
EXPRESSLY DISCLAIMS AND NEGATES ANY REPRESENTATION OR WARRANTY, EXPRESSED OR
IMPLIED, AT COMMON LAW, BY STATUTE OR OTHERWISE, RELATING TO (A) THE CONDITION
OF THE SYSTEM (INCLUDING WITHOUT LIMITATION ANY IMPLIED OR EXPRESS WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR OF CONFORMITY TO MODELS
OR SAMPLES OF MATERIALS) (B) THE ENVIRONMENTAL CONDITION OF ANY OF THE ASSETS,
(C) TITLE TO ANY OF THE ASSETS, OR (D) ANY INFRINGEMENT BY ASSIGNOR OR ANY OF
ITS AFFILIATES OF ANY PATENT OR PROPRIETARY RIGHT OF ANY THIRD PARTY; AND (II)
NEGATES ANY RIGHTS UNDER STATUTES TO CLAIM DIMINUTION OF CONSIDERATION AND ANY
CLAIMS FOR DAMAGES BECAUSE OF HIDDEN OR LATENT DEFECTS, WHETHER KNOWN OR
UNKNOWN, IT BEING THE INTENTION OF ASSIGNOR AND ASSIGNEE THAT THOSE PROPERTIES
ARE TO BE ACCEPTED BY ASSIGNEE IN THEIR PRESENT CONDITION AND STATE OF REPAIR.
All of the provisions of this Assignment shall be available to and
binding upon the respective successors and assigns of Assignor and Assignee
herein.
Assignor hereby warrants title to the Assets against all lawful claims
of persons claiming by, through, or under Assignor, but not otherwise.
EXECUTED this 25th day of March, 1997, but effective for all purposes
as of 7:00 a.m., MST on March 1, 1997.
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ASSIGNOR:
SHELBY GATHERING PARTNERS,
a Colorado general partnership,
Interenergy Corporation, Managing Partner
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Xxxxxx X. Xxxxxx
Vice President
ASSIGNEE:
T&O, LLC
By: /s/ Xxxxxxx Xxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxx
---------------------------------
Title: President
---------------------------------
This is a true and correct copy of the original.
/s/ Xxxxxx X. Xxxx 4/11/97
----------------------------------------
Notary Public
My Commission Expires 12-24-97
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THE STATE OF COLORADO )
--------
)
COUNTY OF DENVER )
------
The foregoing instrument was acknowledged before me this 25th day of
March, 1997, by Xxxxxx Xxxxxx, the Vice President of SHELBY GATHERING PARTNERS,
a Colorado general partnership, Interenergy Corporation, Managing Partner.
Witness my Hand and Official Seal.
My Commission expires: My Commission Expires 12-24-97
-----------------------------------
/s/ Xxxxxx X. Xxxx
----------------------------------------
Notary Public
THE STATE OF ARIZONA )
-------
)
COUNTY OF MARICOPA )
--------
The foregoing instrument was acknowledged before me this 25th day of
March, 1997, by Xxxxxxx Xxxxxx, the President of T&O, LLC.
Witness my Hand and Official Seal.
My Commission expires: 8/19/2000
---------------
[NOTARY SEAL] /s/ Xxxxxxxx X. Xxxxxxxx
----------------------------------------
Notary Public
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