DELIVERED GAS PURCHASE CONTRACT
FEBRUARY 23, 1977
CASCADE GAS CO.
SELLER
THE MONTANA POWER COMPANY
BUYER
DELIVERED GAS PURCHASE CONTRACT
Index
Page
Article Title Number
------- ----- ------
I Definitions 1
II Commitment of Gas Reserves 2
III Seller's Obligations 2
IV Quantity of Gas 6
V Determinations of Gas Reserves 10
VI Delivery Pressure and Delivery Points 13
VII Quality of Gas 14
VIII Measurement and Tests 15
IX Price and Payment 21
X Seller's Representations 27
XI Title to Gas 28
XII Force Majeure 29
XIII Term 31
XIV Miscellaneous 31
DELIVERED GAS PURCHASE CONTRACT
(Montana)
THIS CONTRACT, EFFECTIVE and agreed to by the parties hereto this 23rd of
February, 1977, is by and between CASCADE GAS CO., P. O. Box 577, Xxxxxx,
Montana, 59474 (hereinafter called "Seller") and THE MONTANA POWER COMPANY
(hereinafter called "Buyer").
WITNESSETH:
WHEREAS, Seller is the contract purchaser of gas produced from those lands
situated in the State of Montana, and described on Schedule "A" attached hereto,
on which gas production has been developed; and
WHEREAS, Xxxxx is willing to buy gas which may be purchased by Xxxxxx from
said lands in commercial quantities; 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
delivered by Seller;
NOW, THEREFORE, in consideration of the premises and the covenants herein
contained, Xxxxxx agrees to sell and deliver to Xxxxx and Xxxxx agrees to
purchase and receive from Seller, pursuant to the terms and conditions
hereinafter set forth, all of the gas purchased, produced or otherwise obtained
by Seller from acreage described on Schedule "A" attached hereto.
-1-
ARTICLE I
DEFINITIONS
For the purpose of the Contract, the following words and terms are defined
as follows:
1. "CONTRACT YEAR" means a calendar year except that the first "Contract
Year" is deemed to commence on the date of initial delivery of gas hereunder and
extending to, but not including the following January 1.
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 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 Time
on the first day of a calendar month and ending at 8:00 a.m., Mountain Time on
the first day of the next calendar month.
5. "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 extent as is necessary in removing other constituents, as the context may
require, but not including casinghead gas.
6. "CASINGHEAD GAS" means gas which has its rate of production controlled
by the amount of oil simultaneously produced therewith.
-2-
7. "RECOVERABLE GAS RESERVES" means the quantity of gas which is determined
or redetermined at a future date to be economically recoverable and deliverable
during the initial term of this Contract from all Gas Production Units connected
to Seller's gathering system 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 controlled by
Seller and underlying or attributable to the lands listed on Schedule "A", but
shall not include casinghead gas.
8. "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.
9. "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 60 DEG. F. and at a pressure of 14.73 pounds per square inch
absolute. For purposes of measurement, the atmospheric pressure shall be assumed
to remain constant at 13 pounds per square inch absolute.
10. "MCF" means one thousand (1,000) cubic feet.
11. "BTU" means British Thermal Unit. "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
-3-
a temperature of 60 DEG. F. if saturated with water vapor and under a pressure
equivalent to that of 30 inches of mercury at 32 DEG. F. and under standard
gravitational force (980.665 c.m. per sec. 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.
12. "DCQ" means Daily Contract Quantity, and is defined in Article IV,
Section 1, of this agreement.
13. "ANNUAL CONTRACT VOLUME" means the DCQ multiplied by the number of
calendar days in the Contract Year.
ARTICLE II
COMMITMENT OF GAS RESERVES
Seller hereby commits to the performance of the Contract all of the gas
purchased, produced or otherwise obtained by Seller from the lands specified and
described on Schedule "A".
ARTICLE III
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, dehydrate, sell and
deliver to Buyer, and the Buyer shall purchase and receive from the Seller at
the delivery point the natural gas purchased, produced or otherwise obtained by
Seller from xxxxx on the lands described in Schedule "A".
-4-
SECTION 2:
(a) SELLER'S OBLIGATION TO DELIVER. Seller shall available for delivery
all volumes requested by not to exceed 125% of the DCQ, provided however,
Seller shall not be required to demand that the owners produce any xxxxx in
excess of the legal of such xxxxx as may be fixed from time to time
regulatory bodies or in excess of any rate which, judgment of the well
owners, may damage the well.
(b) LIMITATION ON SELLER'S OBLIGATIONS.
(i) RATE OF DELIVERY. Seller shall not be obligated to demand delivery
of gas from any well at a rate which in the opinion of the well owner,
acting as a reasonably prudent operator, would be injurious to such well or
to the reservoir or reservoirs from which such well is produced.
(ii) RESERVATION OF GAS BY THE SELLER. The Seller reserves the
following rights:
(1) the right to retain or allow others to retain title and
possession to such quantities of gas produced from the lands described
in Schedule "A" as may be required to fulfill the obligations of the
Seller under the terms of the Agreement or other document by which
Seller derives its right to sell the gas to be sold hereunder;
(2) the right to use such quantities of gas as may be needed or
required for delivery of gas for
-5-
sale under this Contract from the lands described in Schedule "A";
(3) the right to process or allow others to process gas produced
from any one or more of the xxxxx located on the lands described in
Schedule "A" 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 or other processor; provided however, that
the gas which is delivered to Buyer after such processing shall meet
the quality requirements of Article VII hereof.
ARTICLE IV
QUANTITY OF GAS
SECTION 1
VOLUME OBLIGATION. Commencing on the date that Seller notifies Buyer in
writing that Seller is prepared, pursuant to the terms of this Delivered Gas
Purchase Contract, to deliver gas to Buyer at the discharge side of Seller's
plant and facilities located in the NW1/4 NW1/4 NE1/4 of Section 34, Township 34
North, Range 2 West, Toole County, Montana, (Delivery Point), the volume of gas
which Buyer shall be obligated to take and pay for, or pay for if available and
not taken, and which Seller shall be obligated to have available for delivery,
shall be the Daily Contract Quantity (DCQ).
-6-
Until such time as Seller has available for delivery to Buyer in excess of
ten million (10,000,000) cubic feet of gas per day, the DCQ shall be eighty
percent (80%) of the daily volume available for delivery by Seller, whether or
not taken by Buyer. However, at such time as the DCQ so computed equals or
exceeds eight million (8,000,000) cubic feet per day, the DCQ shall be one
million (1,000,000) cubic feet per day for each five billion five hundred
million (5,500,000,000) cubic feet of Recoverable Gas Reserves as defined
herein.
The parties have agreed that, at the date of inception of Buyer's
obligation to take or pay for gas under the terms of this Contract, and until
initial delivery of gas to Buyer, the DCQ shall equal one million two hundred
thousand (1,200,000) cubic feet of gas per day.
SECTION 2:
CASINGHEAD GAS. Subject to the Quality Provisions of Article VII, Seller
may deliver to Buyer, in addition to the volumes of gas determined under Section
1 of the Article IV, Casinghead Gas purchased by Seller from the lands described
in Schedule "A". Buyer shall be obligated to accept delivery of such
Casinghead Gas only to the extent that the daily volume delivery thereof does
not exceed the DCQ (that is the total daily volume delivered does not exceed
two times the DCQ). Buyer, at its option, may accept Casinghead volumes in
excess of the DCQ.
SECTION 3:
DRAINAGE. If a reservoir producing gas delivered to Buyer under this
Contract is produced by anyone other than a well owner
-7-
selling to Seller at a rate which makes imminent, in Seller's judgment, the
drainage of gas from land under Seller's purchase contracts, then Seller shall
immediately notify Buyer in writing of the existence of such situation and may
request that Buyer, to the extent reasonabley possible, increase its takes from
Seller by a volume sufficient to protect Seller and Seller's well owners from
drainage of the reservoir.
SECTION 4:
MAKE-UP OF DEFICIENCIES IN PURCHASE.
(a) Beginning with initial delivery hereunder, all volumes of gas taken by
Xxxxx during a contract year in excess of the Annual Contract Volume 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 limited to the five (5) contract
years immediately following the later of: (1) the contract year in which
the deficiency occurred, or (2) the contract year in which all take or pay
deficiencies which occurred prior to initial delivery have been recouped.
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.
(b) In the event that this Contract terminates for any
-8-
reason other than the breach of the terms hereof by Xxxxx prior to the
Buyer's recovery of any volumes paid for but not taken hereunder, and
Xxxxxx begins deliveries of gas to another purchaser, Seller shall pay to
Buyer one-third (1/3) of the then current sales value of such gas each
month until the Buyer has recovered in full the sums paid by Buyer for gas
not taken.
SECTION 5:
LIMITATIONS UPON BUYER'S OBLIGATION TO PURCHASE GAS.
(a) DELIVERY CAPACITY OF SELLER. Xxxxx's obligation 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 125% 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 125% 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 period the DCQ shall be reduced temporarily to a volume
equal to 80% of the average daily volume of gas Seller delivered to Buyer
during the calendar month on which Xxxxx's notice was based. In the event
Xxxxxx's attempts to restore its ability to deliver 125% of the DCQ
-9-
in effect prior to such notice are unsuccessful, as evidenced by Seller's
failure to deliver such quantity on each day of a calendar month test
conducted by Seller and Buyer for the period commencing on the day
following the end of said twelve (12) month period, or at such earlier time
as Seller may request, Buyer shall have the right to reduce the DCQ to a
volume equal to 80% of the average daily volume of gas delivered to Buyer
during the calendar month of said delivery test.
ARTICLE V
DETERMINATION OF GAS RESERVES
At such time as the DCQ is equal to eight million (8,000,000) cubic feet
per day, and thereafter, from time to time as new xxxxx are completed or
discoveries of gas are made for which Seller is the contract purchaser, 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.
SECTION 1:
RECOVERABLE GAS RESERVE DETERMINATION: One (1) month prior to the expected
initial delivery of gas from any such new well hereunder, Buyer shall furnish
Seller an estimate of Recoverable Gas Reserves. The estimate shall not include
nor be based in any manner upon volumes of casinghead gas.
-10-
Within fifteen (15) days after Xxxxx's furnishing its estimate of the
Recoverable Gas Reserves, Seller shall advise Buyer whether Buyer's estimate is
acceptable. If Xxxxx'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
this Article V. The Recoverable Gas Reserves when determined will form the basis
for determining the DCQ and take or pay obligations. Such DCQ shall be effective
until superseded by a subsequent redetermination of Recoverable Gas Reserves or
until changed under the provisions of Article IV, Section 5.
The fact that Buyer and Seller cannot agree on the Recoverable Gas Reserves
for any well and find it necessary to submit such matter to arbitration shall
not prevent the connection of such well and the commencement of production
therefrom. The Recoverable Gas Reserves as finally determined by arbitration
shall be used to determine the DCQ retroactive to the date of initial delivery
from such well.
SECTION 2:
SUBSEQUENT REDETERMINATIONS OF RECOVERABLE GAS RESERVES. Either party may
request a redetermination of Recoverable Gas Reserves during the month of July
of every second contract year hereof. Upon request Buyer shall, between July 1
and September 1 of each such year, estimate the quantity of Seller's Recoverable
Gas Reserves and promptly provide Seller with a statement thereof.
-11-
Within fifteen (15) days after Xxxxx's furnishing its estimate of such
reserves, Seller shall advise Buyer whether Xxxxx's estimate of such reserves is
acceptable. If Seller and Buyer reach agreement on Recoverable Gas Reserves,
then such reserve agreement shall form the basis for determining the DCQ
effective the following January 1, unless limited by the provisions of Article
IV, Section 5. If Xxxxx's estimate of such reserves is not acceptable to Seller,
and Seller and Xxxxx are unable to negotiate an agreeable settlement, then the
matter shall be determined by arbitration as provided in this Article V.
SECTION 3:
ARBITRATION OF RESERVES. If Seller and Buyer are unable to agree upon the
Recoverable Gas Reserves in any of the foregoing instances and such disagreement
cannot be resolved by negotiation within sixty (60) days after Xxxxx 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 hereinafter set forth.
Upon written demand of either party, the parties shall meet and attempt to
appoint a single arbitrator. If the parties fail to name an arbitrator within
ten (10) days from such demand, then the arbitrator shall be appointed by the
American Arbitration Society.
The arbitrator selected to act hereunder shall be qualified by education,
training and experience to determine gas reserves.
The arbitrator so chosen shall proceed immediately to hear
-12-
and determine Recoverable Gas Reserves. The decision of the arbitrator shall be
made within thirty (30) days after his appointment, subject to any reasonable
delay due to unforeseen circumstances. Notwithstanding the foregoing, in the
event the arbitrator fails to make a decision within sixty (60) days after his
appointment, then either party may elect to have a new arbitrator chosen in like
manner as if none had previously been selected. If such election is made, the
decision of the previous arbitrator shall be null and void.
The decision of the arbitrator shall be in writing and signed by the
arbitrator and shall be final and binding upon the parties hereto as to
Recoverable Gas Reserves hereunder, until such time as a redetermination may be
made as herein provided.
The compensation and expenses of the arbitrator shall be paid in equal
proportions by Xxxxx and Seller.
An initial determination of a redetermination of Recoverable Gas Reserves
rendered by an arbitrator shall form the basis of determining the DCQ effective
January 1 of the year following the year in which such arbitration was
requested, subject to the provisions of Article IV, Section 5.
ARTICLE VI
DELIVERY PRESSURE AND DELIVERY POINTS
SECTION 1:
DELIVERY PRESSURE. Delivery by Seller of gas shall be made at a pressure
that is sufficient to effect delivery of gas into
-13-
Buyer's pipeline but not in excess of one thousand (1,000) pounds
per square inch. 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 III hereof.
SECTION 2:
DELIVERY POINT. Delivery of natural gas hereunder shall be
at the discharge side of Seller's plant and facilities located in
the NW 1/4 NW 1/4 NE 1/4 of Section 34, Township 34 North, Range 2 West,
Toole County, Montana.
SECTION 3:
TITLE: Title to all gas shall pass at the point of delivery.
ARTICLE VII
QUALITY OF GAS
SECTION 1:
Xxxxxx 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, except gas from which Seller
has removed liquid hydrocarbons under the provisions of Article III,
Section 2(b)(ii)(3) hereof. Seller shall also have the right to remove
nonhydrocarbon constituents and hydrocarbons as required to
-14-
remove other constituents. Seller may enrich the gas to the extent required
to meet the gross heating requirement 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) British Thermal Units
per cubic foot, and shall not be more than one thousand two hundred (1,200)
British Thermal Units per cubic foot. Buyer may reject delivery of gas
having a weighted average gross heating value of less than nine hundred
(900) British Thermal Units or more than one thousand two hundred (1,200)
British Thermal Units.
(c) The gas shall be commercially free from sand, dust, gums, liquid water,
crude oil, impurities and other objectionable substances and shall have
been dehydrated by Seller for removal of water present therein in a vapor
state, and 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
(15 DEG) Fahrenheit at pressures up to 800 psig.
(d) The gas shall not contain more than one-quarter (1/4) grain of hydrogen
sulphide per one hundred (100) cubic feet of gas.
-15-
(e) The gas shall not contain in excess of three percent (3%) by volume of
carbon dioxide.
(f) The temperature of the gas at the delivery point or delivery points
shall not be in excess of one hundred twenty degrees (120 DEG) Fahrenheit.
ARTICLE VIII
MEASUREMENT AND TESTS
SECTION l:
UNIT OF VOLUME. The unit of volume for all gas hereunder shall be one (l)
cubic foot of gas, and the term "Cubic foot of Gas" wherever used in the
Contract shall mean a cubic foot of gas at a temperature of sixty degrees
(60 DEG) Fahrenheit and at a pressure of 14.73 pounds per square inch absolute.
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
-16-
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, dated April, 1955". 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 published April, 1955, 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 Xxxxx and Seller, and such factors shall be
obtained from data contained in "Supercompressibility Factors for Natural Gas",
Volumes 1 through 6, inclusive, or in "Tables for Determination of
Supercompressibility Factors for Natural Gas Containing Nitrogen and/or Carbon
Dioxide", Volume 7, as published by the American Gas Association in 1955, 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 pounds per square inch, irrespective of variations in natural atmospheric
pressure from time to time. Seller agrees
-17-
to provide sufficient pulsation dampening equipment so that measurement at the
point of delivery will not be affected by pulsation.
SECTION 5:
SPECIFIC GRAVITY. The specific gravity of the gas flowing through the well
meter, or meters, shall be determined by Buyer, or, at Seller's election, by
joint tests, at intervals of appoximately twelve (12) months as may be
practicable under the circumstances. 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
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 an indicating thermometer. The
arithmetic average of readings taken at the beginning and end of 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
-18-
generally acceptable in the gas industry, at least annually or upon the written
request of Seller. Notice of the time and nature of each test shall be given by
Buyer to Seller sufficiently in advance to permit convenient arrangement for
Seller's representative to be present. Measuring equipment found to be
registering inaccurately shall be adjusted to read as accurately as possible.
If, after notice, Seller fails to have a representative present, 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 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
date 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
-19-
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 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 perserve 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 from time to time by the Buyer at the Buyer's expense, using an
accurately calibrated Xxxxxx-Xxxxxx 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
-20-
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. Tests of
gross heating value of gas delivered hereunder shall be made by the Buyer after
giving Seller ten (10) days written notice thereof.
SECTION 11:
HYDROGEN SULPHIDE. Tests to determine hydrogen sulphide content shall be
made whenever necessary, but not oftener than two (2) times during any calendar
year, to determine whether the gas meets the requirements of Article VII,
Section 1 (d) hereof. Such test 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 by Xxxxx, to the end that at all times Seller shall have all
information relative to its xxxxx that is available to Buyer.
-21-
ARTICLE IX
PRICE AND PAYMENT
SECTION 1:
(a) Buyer shall pay the Seller on or before the 25th day of each month for
gas volumes delivered and actually taken in the preceding month. If during
any calendar month Seller has available for delivery 125% of the DCQ and
Buyer does not take a total volume of gas equal to the DCQ multiplied by
the number of days in said calendar month, then, on or before the 25th day
of the succeeding month Buyer shall pay Seller, as take-or-pay payment, the
value of such volume of gas not taken. If Buyer shall have taken a total
volume of gas in excess of the DCQ multiplied by the number of days in any
calendar month, and if said excess has not been credited to make up of
deficiencies pursuant to Article IV, Section 4(a) hereof, then Buyer shall
be entitled to credit such excess against any deficiency in take occurring
in any subsequent month in the same calendar year.
(b) The price to be paid by the Buyer to the Seller for gas delivered to
the Buyer at the delivery point or for take or pay payments shall be in
U. S. funds and shall be at all times equivalent to the Canadian Border
price for gas produced in Alberta and delivered to Buyer at the
Canadian-Montana border at Xxxx, Xxxxxxx. Proper adjustments shall be made
monthly for Pressure Base,
-22-
BTU Content, (none required at present since this Contract and the Canadian
Border price are both stated at 14.73 psia and 1000 BTU), and currency
adjustment between Canandian and U. S. currency. The currency adjustment
shall be based on the arithmetic average of the daily exchange rate of
Canadian currency and United States currency as published at Twelve O'clock
(12:00) noon by the Royal Bank of Canada at the City of Ottawa.
In the event deliveries of gas produced in Alberta at the Aden border
export point cease but Buyer continues to import gas produced in Alberta at
the Carway border export point, then the Canadian Border price at Carway
will determine the price hereunder.
(c) 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, express in
BTU per cubic foot, and the denominator of which is one thousand (1,000);
provided, however, such fraction 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.
-23-
SECTION 2:
(a) If Buyer ceases to import gas produced in the Province of Alberta, then
the price per MCF to be paid pursuant to Section 1 of this Article IX
shall, upon demand by either party, be renegotiated, effective the day
Canadian gas produced in Alberta ceases to flow into Buyer's Montana
system, pursuant to the provisions of this Section. Either party shall also
have the right to demand renegotiation, pursuant to this Section, on the
second (2nd) anniversary date following the date on which gas produced in
Alberta ceases to flow into Buyer's Montana system and on each second
anniversary date thereafter.
(b) Upon demand made at least six (6) months but not more than ten (10)
months prior to the second (2nd) "anniversary date", and/or at least six
(6) months but not more than ten (10) months prior to the "anniversary
date" of each second (2nd) year thereafter, as appropriate, the parties
shall renegotiate the price to be paid pursuant to this Contract. Failure
to make the demand within the times allowed shall be deemed a waiver of the
right to renegotiate.
(c) Such renegotiation shall arrive at the fair market price of the gas
hereunder based upon similar sales of gas, irrespective of whether such
sales are delivered or wellhead sales, for ultimate delivery to pipeline
transmission companies or upon sales of gas derived from field sales of gas
to pipeline transmission companies, produced
-24-
from fields and reservoirs located in the State of Montana. 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, said price shall become effective on the "anniversary date" for which
such price renegotiation is requested.
If the parties are unable to agree upon such fair market price by sixty
(60) days prior to the appropriate "anniversary date", then either party shall
have the right to refer the matter to arbitration to determine the price of gas
to be delivered hereunder.
Upon 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 therafter choose a third. If either party shall
fail to name an arbitrator within ten (10) days from the date of such demand,
then the second arbitrator shall be appointed by the American Arbitration
Society. If the two arbitrators shall fail within ten (10) days from their
appointment to agree upon and appoint the third arbitrator, then upon written
application by either party such third arbitrator shall be appointed by the
American Arbitration Society.
The arbitrator or arbitrators selected to act hereunder shall be qualified
by education and training to determine the appropriate price for gas delivered
hereunder.
-25-
The single arbitrator or the arbitrators so chosen shall proceed
immediately to determine the price for gas delivered hereunder. The cecision of
the single arbitrator shall be made within thirty (30) days after his
appointment, subject to any reasonable delay due to unforeseen circumstances.
The decision of the arbitrators, or a majority of them, shall be made within
forty-five (45) days after the appointment of the third arbitrator, subject to
any reasonable delay due to unforeseen circumstances. Notwithstanding the
foregoing, in the event the single arbitrator fails to make a decision within
sixty (60) days after his appointment or if the arbitrators, or a majority of
them, fail to make a decision within sixty (60) days after the appointment of
the third arbitrator, then either party may elect to have a new single
arbitrator or arbitrators chosen in like manner as if none had previously been
selected.
The decision of the single arbitrator or the decision of the arbitrators,
or a majority of them shall be drawn up in writing and signed by the single
arbitrator or by the arbitrators, or a majority of them and shall be final and
binding upon the parties as to the price of gas delivered hereunder, effective
on the "anniversary date" for which such price renegotiation was requested.
The compensation and expenses of the single arbitrator shall be paid in
equal proportions by Xxxxx and Seller.
If each party has named an arbitrator, and the third has been appointed as
provided herein, the compensation and expenses of such arbitrator shall be paid
by the party appointing him or
-26-
in whose behalf such arbitrator was appointed, and the compensation and expenses
of the third arbitrator shall be paid in equal proportions by Xxxxx and Seller.
SECTION 3:
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 value of gas delivered in
determining the amounts stated to be due. Payment shall be made by Buyer to
Seller on or before the twenty-fifth (25th) day of said month.
SECTION 4:
Seller shall have, upon request within one (l) year after receipt of the
statement referred to in Section 3 of this Article IX, the right to examine the
meter charts and computations upon which such statements are based. If the
Seller deems such charts for computations to be inaccurate, Seller may protest
the statement within one (l) year of the examination thereof, and may request a
check to be made of the meter installed pursuant to Article VIII hereof. Any
statement not protested within one (l) year of the examination of meter charts
and computations thereof shall be deemed to be correct. The Buyer shall make
current meter charts available to the Seller for examination.
ARTICLE X
SELLER'S REPRESENTATIONS
-27-
SECTION 1:
AGREEMENT. Seller represents and warrants that it is the purchaser of and
has the right to sell gas to be produced from the land described in Schedule "A"
and agrees to maintain its purchase contracts in full force and effect, at its
own expense.
SECTION 2:
XXXXX. Seller's gathering system and the xxxxx connected thereto shall be
equipped and operated as required to meet the Quality provisions of Article VII
hereof and shall be 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
temperatures, as may be necessary to separate such liquids from the gas.
SECTION 3:
NOTICE TO BUYER. Seller will advise Buyer, at the earliest possible date,
its best estimate of the initial delivery date of gas from any new xxxxx
connected to Seller's gathering system.
ARTICLE XI
TITLE TO GAS
Seller warrants that it has title to all gas delivered to Buyer under this
Contract and that Seller has authority to sell the same, and Xxxxxx agrees to
indemnify and save Buyer harmless from any and all suits, claims, and liens of
whatsoever nature
-28-
relating to such gas or the title thereto. If the title to any property or
interest in any property from which gas is purchased by Seller and sold to Buyer
hereunder shall at any time be involved in litigation, Buyer shall have the
right to withhold (invested in certificates of deposit, short-term government
securities or similar obligations or deposited in an interest bearing account,
such interest to be paid along with the principal sum) the proceeds payable for
the gas produced from the particular property or interest in property in
litigation during the period of such litigation or until Seller shall furnish a
bond, in form and with sureties acceptable to Buyer, conditioned to save Buyer
harmless.
If it should be finally determined that there is a defect in Seller's right
to or ownerhsip of the gas to be sold hereunder, Seller shall, with reasonable
promptness, attempt to remedy such defect. Until the defect to such title shall
have been remedied, Buyer shall have the right either to refuse to accept
deliveries of gas hereunder and withhold (invested in certificates of deposit,
short-term government securities or similar obligations or deposited in an
interest bearing account, such interest to be paid along with the principal sum)
the proceeds otherwise payable to Seller hereunder.
Title to the gas delivered hereunder shall pass to the Buyer at the
Delivery Point.
ARTICLE XII
FORCE MAJEURE
If either party to this Contract shall fail to perform any
-29-
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 their customers, acts of
enemies of the State, sabotage, wars, blockades, insurrections, riots,
epidemics, landslides, lightning, earthquakes, floods, storms, fires, washouts,
arrests and restraints of rulers and people, civil disturbances, explosions,
breakage of or accident to machinery or lines of pipe, hydrate obstructions to
lines of pipe, temporary failure of gas supply, freezing of xxxxx or delivery
facilities, well blowouts, craterings, inability to obtain pipe, materials or
equipment, 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 XII as constituting force majeure, or by the necessity
for making repairs to or reconditioning xxxxx, a gas processing plant,
machinery, equipment, or pipe lines, not resulting from the fault or negligence
of such party, or by any other cause, whether of the kind herein enumerated or
otherwise, all such causes being beyond 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 obligations 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.
-30-
No such cause affecting the performance of the 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 of 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
obligations as if it had delivered or purchased the gas required to be delivered
or purchased during said period.
ARTICLE XIII
TERM
SECTION 1:
This Contract shall become effective on the Effective Date hereof and shall
continue in effect for a period of fifteen (15) Contract Years (initial term)
from the date of initial delivery of gas hereunder and thereafter from year to
year until cancelled by one (1) year's written notice from one party to the
other.
-31-
ARTICLE XIV
MISCELLANEOUS
SECTION 1:
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:
Cascade Gas Co.
P. O. Box 577
Shelby, Montana 59474
Either party may change its address under this Section at any time upon
written notice.
SECTION 2:
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.
Should Buyer propose to transport, sell or use gas purchased hereunder in
such a manner that would, in Seller's opinion, subject Seller to jurisdiction of
the Federal Power Commission with respect to Seller's performance of this
Agreement, Seller may terminate this Agreement prior to consummation of such
proposals of Buyer upon written notice of such termination to Buyer. Such notice
must be given to Buyer not more than thirty (30) days after Buyer provides
Seller with written notice of any such proposal; provided Buyer shall not
inaugurate any such proposals prior to the effective date of any termination
Seller may elect pursuant to this paragraph. After any
-32-
such termination, Seller shall not sell or contract to sell such gas under
circumstances which would render Seller subject to jurisdiction of the Federal
Power Commission respecting such sale or contract without first offering the gas
to Buyer on the same terms, which offer shall be in writing and shall be open
for thirty (30) days after given. Thereafter, unless such offer is accepted
within said time, Seller may sell or contract to sell such gas to any person.
SECTION 3.
This Contract shall bind and inure to the benefit of the parties hereto,
their successors and assigns.
SECTION 4:
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 the Agreement
covering such lands, and the right to perform thereon any acts necessary or
convenient in carrying out the terms of this Contract and Xxxxx's obligations
hereunder.
SECTION 5.
TITLES. The numbering and titling of particular provisions of the 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 6.
INTERPRETATION. The terms of this Contract shall be construed according to
the laws of the State of Montana.
-33-
SECTION 7.
The effective date of this Contract is the day and date first above
written.
SECTION 8.
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 9.
TIME. Time is of the essence in this Agreement.
SECTION 10.
PAYMENT. All take-or-pay payments or payments for gas taken shall be made
to:
Cascade Gas Co.
P. O. Box 577
Shelby, Montana 59474
SECTION 11:
EXECUTED at Butte, Montana, the day and year first above written.
THE MONTANA POWER COMPANY
By /s/ [ILLEGIBLE]
-----------------------
ATTEST:
/s/ X.X. XxXxxxxx
-----------------------------------
ASSISTANT SECRETARY
BUYER
-34-
EXECUTED at Shelby, Montana, as of the day and year first
above written.
CASCADE GAS CO.
ATTEST: By /s/ Xxxxx X. Xxxxxx
--------------------------
/s/ [ILLEGIBLE]
---------------------------
ASSISTANT SECRETARY
SELLER
-35-
SCHEDULE A
A part of the Delivered Gas Purchase
Contract dated February 23, 1977,
between The Montana Power Company as
Buyer and Cascade Gas Co. as Seller.
DESCRIPTION OF LANDS
Toole County, Montana
Township 34 North, Range 2 West
Section 14, 15, 16, 20, 21, 22, 23, 26,
27, 28, 29, 32, 34 and 35
Township 33 North, Range 2 West
Sections 3 and 4
[LETTERHEAD]
LETTER AGREEMENT AMENDING
GAS PURCHASE CONTRACT
March 9, 1982
Cascade Gas Company
P. O. Box 577
Shelby, MT 59474
Gentlemen:
Please refer to that certain Delivered Gas Purchase Contract dated February 23,
1977 (hereinafter called the "Contract") by and between The Montana Power
Company (hereinafter called "Buyer") and Cascade Gas Company (hereinafter called
"Seller").
Because Cascade Gas Company has obtained the rights to produce gas from
lands not originally covered by the Contract, and as a consequence The
Montana Power Company will receive an additional gas supply, The Montana
Power Company hereby proposes to amend the Contract as follows, subject to
the terms and conditions hereinafter set forth:
1. SCHEDULE A
Add T33N-R2W - All Sections
Add T33N-R3W - Sections 23, 24, 25, 26, 35, 36
2. Whenever Seller's deliverability reaches 1000 MCFD or more under the
Contract then whenever it appears in the Contract, Seller's obligation
to deliver 125% of the DCQ shall be changed to 150% and Buyer's right
to reduce the DCQ to 80% of average daily volume of gas shall be
changed to 66-2/3%.
3. Whenever Seller's deliverability is less than 1000 MCFD under the
Contract then Seller's obligation to deliver 125% of the DCQ and
Buyer's right to reduce the DCQ to 80% of average daily volume of gas
shall be reinstated. In this case Buyer will use its best efforts to
take delivery of all the gas Seller is capable of delivering.
Page Two
LETTER AGREEMENT AMENDING
GAS PURCHASE CONTRACT
4. Under no circumstances will the Buyer be required to conduct a
deliverability test during the month of June, July and August under
the Contract.
5. These contract amendments will be effective October 1, 1981. These
amendments make no changes to the Contract other than those specified
herein.
If these contract amendments are satisfactory, please signify your acceptance by
signing in the space provided and return the "Montana Copy" to me.
THE MONTANA POWER COMPANY
BY: /s/ X.X. Xxxxxxx
-----------------------
TITLE: MGR, GAS SUPPLY
--------------------
AGREED TO AND ACCEPTED
CASCADE GAS COMPANY
BY: /s/ Xxxxx X. Xxxxxx
-----------------------------
TITLE: Manager
--------------------------
DATE: April 23, 1982
---------------------------
AMENDMENT TO
DELIVERED GAS PURCHASE CONTRACT
Dated February 23, 1977
Cascade Gas Co. - Seller
The Montana Power Company - Buyer
THE UNDERSIGNED, CASCADE GAS CO. (hereinafter SELLER) and THE MONTANA POWER
COMPANY (hereinafter BUYER), in consideration of the mutual benefits to accrue
to each Party, do hereby agree that that certain Delivered Gas Purchase Contract
between the Parties hereto, dated February 23, 1977, is hereby amended as
follows:
I.
The amendments herein set forth shall be applicable as of 8:00 o'clock A.M.
on March 20, 1986.
II.
Section 1, Delivery Pressure, of Article VI, Delivery Pressure and Delivery
Points, appearing on pages 13 and 14 of said Contract of February 23, 1977 shall
be deleted in its entirety and the following inserted in place thereof:
"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 but not in
excess of one thousand (1,000) pounds per square inch. However, Xxxxx agrees
that it will not operate its pipeline at a pressure greater than eight hundred
(800) pounds per square inch unless Buyer gives Seller one (1) year's advance
written notice of the need to increase the pipeline pressure to more than eight
hundred (800) pounds per square inch (but not more than one thousand (1,000)
pounds per square inch) and, pursuant to such written notice Buyer does, in
fact, at the stated time increase its pipeline pressure to the pressure set
forth in the written notice. 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 III hereof."
1
III.
Sections 1 and 2 of Article IX, Price and Payment, beginning on page 22 and
continuing to page 27 of said Contract of February 23, 1977, shall be deleted in
their entirety and the following inserted in place thereof:
"SECTION 1:
(a) Buyer shall pay the Seller on or before the 25th day of each month
for gas volumes delivered and actually taken in the preceding month.
If during any calendar month Seller has available for delivery 125% of
the DCQ and Buyer does not take a total volume of gas equal to the DCQ
multiplied by the number of days in said calendar month, then, on or
before the 25th day of the succeeding month Buyer shall pay Seller, as
take-or-pay payment, the value of such volume of gas not taken. If
Buyer shall have taken a total volume of gas in excess of the DCQ
multiplied by the number of days in any calendar month, and if said
excess has not been credited to make up of deficiencies pursuant to
Article IV, Section 4(a) hereof, then Buyer shall be entitled to
credit such excess against any deficiency in take occurring in any
subsequent month in the same calendar year.
(b) The price to be paid by the Buyer to the Seller for gas delivered
to Buyer at the delivery point or for take-or-pay payments, for the
period of time expiring on December 31, 1987, shall be Two Dollars and
25/lOOths ($2.25) in U.S. funds per MCF.
(c) 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,
2
such fraction 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 2:
(a) Either party shall have the right to demand renegotiation of the
price to be paid for gas hereunder as hereinafter provided.
(b) Upon demand made at least six (6) months but not more than ten
(10) months prior to the anniversary date of January 1, 1988, and/or
at least six (6) months but not more than ten (10) months prior to
each second anniversary date thereafter (i.e., January 1, 1990, et
seq.), the parties shall renegotiate the price to be paid pursuant to
this Contract. Failure to make the demand within the times allowed
shall be deemed a WAIVER OF THE right to renegotiate.
(c) Such renegotiation shall arrive at the fair market price of the
gas hereunder based on similar sales of gas, irrespective of whether
such sales are delivered or wellhead sales, for ultimate delivery to
pipeline transmission companies or upon sales of gas derived from
field sales of gas to pipeline transmission companies, produced from
fields snd reservoirs located in the State of Montana. In determining
the fair market price, all pertinent facts, 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, said price shall become effective on the "anniversary date" for
which such price renegotiation is requested.
If the parties are unable to agree upon such fair market price by
sixty (60) days prior to the appropriate "anniversary date", then either
party shall have the right to refer the matter to arbitration to determine
the price of gas to be delivered hereunder. If written demand for
arbitration is not delivered or mailed, certified mail with postage
prepaid, on or before November 15 prior to such "anniversary date", the
right shall be deemed waived, and the price in effect on the "anniversary
date" shall remain in effect.
3
Upon written demand of either perty, the parties shall meet end
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 thereafter choose a
third. If either party shall fail to name an arbitrator within ten (10)
days from the date of such demand, then the second arbitrator shall be
appointed by the American Arbitration Society. If the two arbitrators shall
fail within ten (10) days from their appointment to agree upon and appoint
the third arbitrator, then upon written application by either party such
third arbitvator shall be appointed by the American Arbitration Society.
The arbitrator or arbitrators selected to act hereunder shall be
qualified by education and training to determine the appropriate price for
gas delivered hereunder.
The single arbitrator or the arbitrators so chosen shall proceed
immediately to determine the price for gas delivered hereunder. The
decision of the single arbitrator shall be made within thirty (30) days
after his appointment, subject to any reasonable delay due to unforeseen
circumstances. The decision of the arbitrators, or a majority of them,
shall be made within forty-five (45) days after the appointment of the
third arbitrator, subject to any reasonable delay due to unforeseen
circumstances. Notwithstanding the foregoing, in the event the single
arbitrator fails to make a decision within sixty (60) days after his
appointment or if the arbitrators, or a majority of them, fail to make a
decision within sixty (60) days after the appointment of the third
arbitrator, then either party may elect to have a new single arbitrator or
arbitrators chosen in like manner as if none had previously been selected.
The decision of the single arbitrator or the decision of the
arbitrators, or a majority of them, shall be drawn up in writing and signed
by the single arbitrator or by the arbitrators, or a majority of them and
shall be final and binding upon the parties as to the price of gas
delivered hereunder, effective on the "anniversary date" for which such
price renegotiation was requested.
4
The compensation and expenses of the single arbitrator shall be paid
in equal proportions by Xxxxx and Seller.
If each party has named an arbitrator, and the third has been
appointed as provided herein, the compensation and expenses of such
arbitrator shall be paid by the party appointing him or in whose behalf
such arbitrator was appointed, and the compensation and expenses of the
third arbitrator shall be paid in equal proportions by Xxxxx and Seller."
IV.
Section 1 of Article XIII, Term, appearing on page 31 of said Contract of
February 23, 1977, shall be deleted in its entirety and the following inserted
in place thereof:
"SECTION 1:
This Contract shall become effective on the Effective Date hereof and
shall continue in effect for a period of twenty-five (25) Contract Years
(initial term) from the date of initial delivery of gas hereunder and
thereafter from year to year until canceled by one (1) year's written
notice from one party to the other. The twenty-five (25) Contract Years
(initial term) shall expire on December 31, 2001."
V.
Schedule A attached to said Contract of February 23, 1977 shall be deleted
in its entirety and the following inserted in place thereof:
"SCHEDULE A
A part of the Delivered Gas Purchase Contract
dated February 23, 1977 between The Montana
Power Company as Buyer and Cascade Gas Co. as
Seller
DESCRIPTION OF LANDS
Toole County, Montana
TOWNSHIP 34 NORTH, RANGE 1 WEST
Sections: All (being 1 through 36 inclusive)
TOWNSHIP 34 NORTH, RANGE 2 WEST
Sections: All (being 1 through 36 inclusive)
5
TOWNSHIP 34 NORTH, RANGE 3 WEST
Sections E1/2 (being Sections 1, 2, 3, 10, 11, 12, 13
14, 15, 22, 23, 24, 25, 26, 27, 34, 35, 36
TOWNSHIP 33 NORTH, RANGE 1 WEST
Sections: All (being 1 through 36 INCLUSIVE)
TOWNSHIP 33 NORTH, RANGE 2 WEST
Sections: All (being 1 through 36 inclusive)
TOWNSHIP 33 NORTH. RANGE 3 WEST
SECTIONS E1/2 (being Sections 1, 2, 3, 10, 11, 12, 13,
14, 15, 22, 23, 24, 25, 26, 27, 34, 35, 36
TOWNSHIP 32 NORTH, RANGE 1 WEST
Sections: N1/2 (being Sections 1 through 18 inclusive)
TOWNSHIP 32 NORTH. RANGE 2 WEST
Sections: N1/2 (being sections 1 through 18 inclusive)
TOWNSHIP 32 NORTH, RANGE 3 WEST
Sections: NE1/4 (being Sections 1, 2, 3, 10, 11, 12,
13, 14 & 15 inclusive)"
VI.
With respect to Articles III, IV and IX of the Delivered Gas Purchase
Contract dated February 23, 1977, whenever reference is made to Seller's
obligation to deliver 125% OF DCQ, SAID reference shall be changed to 150% of
the DCQ. Likewise, whenever reference is made to Buyer's right to reduce the DCQ
to 80% of average daily volume of gas, said reference shall be changed to 66
2/3%. The changes hereinabove specified shall be effective to and including
December 31, 1987. Commencing January 1, 1988 and thereafter during the term of
said Delivered Gas Purchase Contract, whenever reference is made to Seller's
obligation to deliver 125% of the DCQ, said reference shall be changed to 133
1/3% of the DCQ and, likewise, whenever reference is made to Buyer's right to
reduce the DCQ to 80% of AVERAGE DAILY volume of gas, said reference shall be
changed to 75%.
VII.
Except as herein specifically modified, the terms and conditions of that
certain Delivered Gas Purchase Contract, dated February 23, 1977, between the
Parties hereto are hereby ratified and confirmed in all respects as being and
remaining in full force and effect.
6
IN WITNESS WHEREOF, the Parties hereto have caused execution of this
Amendment to Delivered Gas Purchase Contract to be made as of the date
hereinafter specified beside the execution of each party, but effective as
provided in Paragraph I hereof.
CASCADE GAS CO.
DATED:
May 2, 1986 By /s/ Xxxxx Xxxxxx
-------------------------- ---------------------------------
Xxxxx Xxxxxx, President
SELLER
THE MONTANA POWER COMPANY
DATED:
5-12-86 By /s/ Xxxxx X. Xxxxxxx
-------------------------- ---------------------------------
Xxxxx X. Xxxxxxx
Vice President, Gas Operations
BUYER
7
State of Montana )
: ss
County of Toole )
On this 2nd day of May, 1986, before me, the undersigned, a Notary Public
in and for the State of Montana, personally appeared XXXXX XXXXXX known to me to
be the President of CASCADE GAS CO., and acknowledged to me that he executed the
foregoing document for and on behalf of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Notarial
Seal the day and year first hereinabove written.
/s/ Xxxxxxx X. Xxxxxxxxxxxx
--------------------------------------
Notary Public for the State of Montana
Residing at Shelby, MT
My Commission expires 1/22/89
State of Montana )
: ss
County of Silver Bow )
On this 12th day Of May, 1986, before me, the undersigned, a Notary Public
in and for the State of Montana, personally appeared XXXXX X. XXXXXXX, known to
me to be the Vice President, Gas Operations, of THE MONTANA POWER COMPANY, a
corporation, and acknowledged to me that he executed the foregoing document for
and on behalf of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Notarial
Seal the day and year first hereinabove written.
/s/ Xxxxxxxx X. Xxxxxx
--------------------------------------
Notary Public for the State of Montana
Residing at Butte, Montana
My Commission expires 11-13-87
8
RELEASE AND SETTLEMENT AGREEMENT
THIS AGREEMENT, Made, entered into and effective as of the date hereinafter
provided is by and between CASCADE GAS CO. hereinafter FIRST PARTY, and THE
MONTANA POWER COMPANY, hereinafter SECOND PARTY,
WITNESSETH:
WHEREAS, a controversy exists between the Parties as to amounts of money
allegedly owed by Second Party to First Party, said controversy having arisen by
differences in interpretation of the effect of the provisions of Section 110 of
the Natural Gas Policy Act of 1978 when applied to the terms of that certain
Delivered Gas Purchase Contract dated February 23, 1977 (wherein First Party
appears as Seller and Second Party appears as Xxxxx), and
WHEREAS, without admission by either Party of the validity of the position
advanced by the other, the Parties hereto have agreed to compromise and resolve
all of said disputed issues in the manner hereinafter set forth,
NOW, THEREFORE, in consideration of the payments and performances
hereinafter provided to be made, and the mutual agreements and releases as
hereinafter set forth, the Parties do hereby agree as follows:
I.
Second Party agrees to pay to First Party the sum of Five Hundred
Sixty-five Thousand Nine Hundred Seventy-five and no/lOOths Dollars
($565,975.00) payable as follows:
(A) The sum of One Hundred Twenty-three Thousand Seven Hundred Twenty-five
and no/lOOths Dollars ($123,725.00) payable simultaneously with
execution hereof, receipt of which is hereby acknowledged;
(B) The sum of Four Hundred Forty-two Thousand Two Hundred Fifty and
no/lOOths Dollars ($442,250.00) payable in nineteen (19) monthly
installments, without interest, beginning with an installment due June
15, 1986, with subsequent installments due on the 15th day of each
month thereafter, through and including November 15, 1987, and the
final installment due December 27, 1987. Each of the first eighteen
(18) monthly installments shall be calculated as follows:
(i) Fifty cents ($.50) per mof times the first 1,450 mcfd of gas
delivered to Second Party by First
1
Party during the preceding calendar month; provided, however,
that in the event total deliveries during any calendar month
shall be less than an average of 1,450 mcfd for said month, then
the payment shall be calculated upon the DCQ then in effect or
1,450 mcfd, whichever is the lesser.
In the further event that any monthly payment so calculated
should be less than an amount calculated at the rate of fifty
cents (5.50) per mcf times 1,450 mcfd, then the underpayment
shall be carried forward into the next succeeding month or
months, as necessary, so that said underpayment will be made up
against gas delivered in each subsequent month or months wherein
deliveries exceed the average of 1,450 mcfd.
(ii) Any remaining unpaid balance of said sum of Four Hundred
Forty-two Two Hundred Fifty Dollars and no/lOOths Dollars
($442,250.00) will be paid in the final monthly installment due
December 27, 1987.
(iii) Recoupment of underpayments pursuant to subparagraphs (i) and
(ii) above shall be permitted only so long as First Party
complies with the best efforts provisions of Paragraph II
hereinafter set forth. In the event First Party does not comply
with the provisions of Paragraph II hereof, Second Party shall
not be obligated to pay the underpayment amounts referred to in
subparagraphs (i) and (ii) above.
II.
First Party agrees that, during the period of time from effective date
hereof to and including December 31, 1987, it will manage and operate the
Cascade Gas Go. compressor ano related facilities in a good and workmanlike
manner, in accordance with accepted oil and gas field practices, to the end
that it shall exercise absolute good faith to attempt to deliver to Second as
Second Party, from time to time, the rights granted Second Party under the
terms of the Delivered Gas Purchase Contract dated February 23, 1977. It is
the intent of this Paragraph II that First Party will exercise all good faith
in delivery of volumes of properly requested gas and will not unilaterally
attempt, by any means, to reduce the volumes of delivered gas below those
properly requested by Second Party pursuant to said Delivered Gas Purchase
Contract. Both Parties recognize that mechanical breakdowns, shutdowns for
normal maintenance and repair, factors
2
that constitute items of force majeure under said contract or other similar
causes can or might interrupt delivery of requested gas volumes by First Party.
Such type of interruptions shall not be deemed to be in contravention of First
Party's good faith obligations herein set forth.
III.
Second Party shall, simultaneously with execution hereof, assign and convey
unto First Party, without warranty of title and without warranty of fitness for
use, all right, title and interest in and to that portion of a certain gas
pipeline, together with attendent rights-of-way or easements, more particularly
described as follows, to-wit:
The portion of a certain gas pipeline which originates in
Section 30, Township 34 North, Range 2 West; thence
proceeding southeasterly through Sections 29, 32 and 33,
Township 34 North, Range 2 West; thence proceeding on into
Sections 3, 4 and 10 of Township 33 North, Range 2 West,
Toole County, Montana.
First Party shall be solely responsible for payment of personal property
taxes for the year 1986 and all years subsequent thereto attributable to the
above referenced portion of said gas pipeline, or if appropriate, will reimburse
Second Party for such taxes for the year 1986.
First Party further agrees to hold harmless and indemnify Second Party of
and from any and all liability of whatsoever nature arising from or attributable
to First Party's usage of said gas pipeline from and after the effective date
hereof.
IV.
Except for the payments and performances herein above set forth to be made
and performed by each respective Party hereto, the Parties do hereby agree that
all of the claims heretofore existing by either Party against the other arising
by virtue of the application of the provisions of Section 110 of the Natural Gas
Policy Act of 1978 to the Delivered Gas Purchase Contract dated February 23,
1977 are hereby fully and finally compromised and settled in all respects. Each
Party does hereby relieve, release and discharge the other Party of and from any
and all claims heretofore existing or alleged to exist, contingent or accrued,
of any nature whatsoever relative to or arising under or out of the application
of the provisions of Section 110 of the Natural Gas Policy Act of 1978 to the
Delivered Gas Purchase contract dated February 23, 1977, and each Party agrees
to indemnify and hold the other Party harmless of and from any and all liability
arising from any such claims.
3
V.
This Release and Settlement Agreement shall be effective as of the date of
execution hereof by the last of the Parties signatory hereto.
IN WITNESS WHEREOF, the Parties hereto have caused execution of this
Release and Settlement Agreement to be made as of the date hereinafter specified
beside the execution of each Party.
CASCADE GAS CO.
DATED:
May 2, 1986 By /s/ Xxxxx Xxxxxx
-------------------------- ---------------------------------
Xxxxx Xxxxxx, President
FIRST PARTY
THE MONTANA POWER COMPANY
DATED:
5-12-86 By /s/ Xxxxx X. Xxxxxxx
-------------------------- ---------------------------------
Xxxxx X. Xxxxxxx
Vice President, Gas Operations
SECOND PARTY
4
State of Montana )
: ss
County of Toole )
On this 2nd day of May, 1986, before me, the undersigned, a Notary Public
in and for the State of Montana, personally appeared XXXXX XXXXXX, known to me
to be the President of CASCADE GAS CO. and acknowledged to me that he executed
the foregoing document for and on behalf of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Notarial
Seal the day and year first hereinabove written.
/s/ Xxxxxxx X. Xxxxxxxxxxxx
--------------------------------------
Notary Public for the State of Montana
Residing at Shelby, MT
My Commission expires 1/22/89
State of Montana )
: ss
County of Silver Bow )
On this 12th day Of May, 1986, before me, the undersigned, a Notary Public
in and for the State of Montana, personally appeared XXXXX X. XXXXXXX, known to
me to be the Vice President, Gas Operations, of THE MONTANA POWER COMPANY, a
corporation, and acknowledged to me that he executed the foregoing document for
and on behalf of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Notarial
Seal the day and year first hereinabove written.
/s/ Xxxxxxxx X. Xxxxxx
--------------------------------------
Notary Public for the State of Montana
Residing at Butte, Montana
My Commission expires 11-13-87
5
[LETTERHEAD]
December 18, 1986
Cascade Gas Company
P. O. Box 488
Cut Bank, MT 59427
Gentlemen:
Please refer to that certain Gas Purchase Contract dated February 23, 1977,
as amended (hereinafter referred to as the "Contract") by and between The
Montana Power Company (hereinafter referred to as "Buyer") and Cascade Gas
Company (hereinafter referred to as "Seller").
Xxxxx and Seller have agreed to amend the Price and Quantity sections of
the Contract as the result of an agreement between the parties whereby Seller
buys gas from Buyer and redelivers said gas to Buyer at the Contract delivery
point.
AGREEMENT
In consideration of the representations and promises stated in this Letter
Agreement, Seller and Xxxxx agree to amend the Contract effective October 1,
1986 as follows:
1. ARTICLE IV QUANTITY OF GAS
Add the following Section 6:
Section 6:
LIMITATION UPON GAS GATHERED BY SELLER FOR BUYER.
Seller has agreed by separate Gathered Gas Purchase Contract dated
October 1, 1986 (hereinafter referred to as "Gathered Contract") to
gather and compress gas for the Buyer from the Buyer's existing
gathering system in the Xxxxx area. This gas is to be delivered to
Buyer in a common stream with Seller's gas under the Contract. The gas
delivered to the Buyer by the Seller that was originally delivered to
the Seller by the Buyer under the Gathered Contract will not be viewed
as production by Seller at anytime, including production test periods
and the subsequent calculation of the Contract DCQ.
Cascade Gas Company
Gas Purchase Contract
Dated February 23, 1977
2. ARTICLE IX. PRICE AND PAYMENT
Delete Section 1, paragraph (b) of the Contract amendment that was
effective on March 20, 1986 and replace it with the following:
b. PRICE
(i) AMOUNT TO BE PAID FOR BUYER'S GAS DELIVERED BY SELLER. From
the effective date hereof, and thereafter as specified in
the Gathered Contract, the price to be paid by the Buyer to
the Seller for gas originally sold to the Seller under said
Gathered Contract and subsequently redelivered to the Buyer
at the Contract delivery point shall be (in U.S. funds) the
amount specified in Article V of the Gathered Contract.
This gas will always represent the first increment that is
purchased and payment will be based on Buyer's meters in
accordance with the Gathered Contract.
(ii) AMOUNT TO BE PAID FOR SELLER'S PRODUCTION.
From the effective date hereof, and thereafter until January
1, 1988, the price to be paid by the Buyer to the Seller for
gas from Seller's production delivered to the Buyer at the
delivery point or for take-or-pay payment shall be (in U.S.
funds) two dollars and twenty five cents ($2.25) per Mcf.
These contract amendments will become effective on October 1, 1986.
Please signify your acceptance by signing in the space provided below and
return the fully executed "Montana Copy" to Xxxx Xxxxx.
THE MONTANA POWER COMPANY
BY /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Vice President, Gas Supply
AGREED TO AND ACCEPTED
CASCADE GAS COMPANY
BY /s/ [ILLEGIBLE]
----------------------------------------
DATE September 18, 1987
--------------------------------------
[LETTERHEAD]
April 12, 1988
Adobe Gas Gathering & Processing Co.
000 Xxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Gentlemen:
Please refer to that certain Gas Purchase Contract dated February 23, 1977,
as amended (hereinafter referred to as the "Contract") between The Montana Power
Company (hereinafter referred to as "Buyer") and Adobe Gas Gathering &
Processing Company (hereinafter referred to as "Seller").
Xxxxx and Seller have agreed to amend the Seller's Obligations, Quantity of
Gas, Price and Payment and Schedule A Sections of the Contract as the result of
a price renegotiation that is effective January 1, 1988.
AGREEMENT:
In consideration of the representations and promises stated in this Letter
Agreement, Xxxxx and Seller agree to amend the Contract effective January 1,
1988 as follows:
1. ARTICLES III, IV AND IX
With respect to Articles III, IV and IX of the Contract, whenever reference
is made to Seller's obligation to deliver 133-1/3% of DCQ, said reference shall
be changed to 125% of the DCQ. Likewise, whenever reference is made to Buyer's
right to reduce the DCQ to 75% of average daily volume of gas, said reference
shall be changed to 80%. The changes hereinabove specified shall be effective
from January 1, 1988 to and including December 31, 1989. Commencing January 1,
1990 and thereafter during the term of said Contract, whenever reference is made
to Seller's obligation to deliver 125% of the DCQ, said reference shall be
changed to 133-1/3% of the DCQ and, likewise, whenever reference is made to
Buyer's right to reduce the DCQ to 80% of average daily volume of gas, said
reference shall be changed to 75%.
2. ARTICLE IV
Add the following paragraph to Section 5:
(c) MONTHLY NOMINATIONS. Buyer shall nominate monthly for a volume of gas
to be delivered by Seller at the delivery point. When calculating whether
Xxxxx has complied with the obligation to purchase the Annual Contract
Volume under this Contract, Buyer will take credit for the greater of the
volume of gas nominated by Buyer or the volume of gas delivered by Seller.
The determination as to whether the Seller has delivered the volume of gas
requested by Xxxxx is done on a monthly basis.
3. ARTICLE IX
Delete paragraphs (a) and (b) of Section 1 and replace them with the
following:
SECTION 1:
(a) Buyer shall pay the Seller monthly for gas volumes delivered and
actually taken in the preceding month. Buyer shall pay Seller for all deficiency
volumes on or before the 25th day of February in the year following the year in
which a deficiency volume occurred. The payment shall equal the deficiency
volumes times the average unit price applicable in the preceding year. A
deficiency volume is calculated by subtracting the greater of purchased volumes
or nominated volumes from the Annual Contract Volume. If the nominated volume or
purchased volume exceeds the Annual Contract Volume, a deficiency has not
occurred.
(b) The price to be paid by the Buyer to the Seller for gas delivered to
the Buyer at the delivery points or for take-or-pay payment shall be two dollars
and ten cents ($2.10) per MCF with no escalation. No adjustment to this price
will be made to provide for reimbursement of production-related taxes or any
other NGPA Section 110 add-ons.
4. SCHEDULE A.
Add the following lands to Schedule A:
Township 35 North, Range 2 West: All Sections
Township 35 North, Range 1 West: All Sections
Township 35 North, Range 1 East: All Sections
Township 34 North, Range 1 East: All Sections
Delete the following lands from Schedule A:
Township 32 North, Range 2 West, Sections: N 1/2
(being sections 1 through 18 inclusive).
Township 32 North, Range 3 West, Sections: NE 1/4
(being sections 1, 2, 3, 10, 11, 12, 13, 14, and 15 inclusive).
THE MONTANA POWER COMPANY
BY: /s/ Xxxxx X. Xxxxxxx
---------------------------------
Vice President, Gas Operations
AGREED TO AND ACCEPTED:
Adobe Gas Gathering & Processing Company
BY /s/ [ILLEGIBLE]
-------------------------
TITLE President
----------------------
DATE: 4-23-88
----------------------
Northland Royalty Operating Company
[GRAPHIC] 0000 0xx Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
(000) 000-0000
Fax(406) 000-0000
April 28, 1992
Xx. Xxxxxxx X. Xxxx
Great Falls Gas Company
P.O. Box 2229
Great Falls, MT 59403-2229
Dear Xx. Xxxx,
Please refer to that certain Gas Purchase Contract dated February 23, 1977,
as amended, (hereinafter referred to as the "Contract") between the Montana
Power Company as Buyer and Cascade Gas Gathering Company as Seller, to which
Great Falls Gas Company (hereinafter referred to as "Buyer") has become the
successor in the Buyer's interest and to which Northland Royalty Operating
Company (hereinafter referred to as "Seller") has become the successor in the
Seller's interest.
Xxxxx and Seller have agreed to amend Article II-Commitment of Gas Reserves
and Article IX-Price and Payment as the result of a price renegotiation that is
effective on January 1st, 1992.
AGREEMENT
In consideration of the representations and promises stated in this Letter
Agreement, Xxxxx and Seller agree to amend the Contract effective January 1,
1992 as follows:
1. ARTICLE II. COMMITMENT OF GAS RESERVES
Delete Article II and replace it with the following:
ARTICLE II. COMMITMENT OF GAS RESERVES
With respect to all of the gas purchased, produced or otherwise obtained by
Seller from the lands specified and described on Schedule A, Buyer shall
have the right to all such gas except as follows:
In each month of the contract period, Seller shall have the right to
sell gas it produces, in excess of that required by Buyer, to third
parties on an interruptible basis. Nothing herein shall limit Buyer
from its right to purchase the total production of Seller at any time.
Furthermore, in months when Seller makes such third party sales,
Xxxxx's volumes for the month shall be considered the first volumes
through the meter, on a daily basis.
2. ARTICLE IX. PRICE AND PAYMENT
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 shall be one dollar and ninety cents ($1.90) per mcf with
no escalation. No adjustment to this price will be made to provide for
reimbursement of production-related taxes or any other costs.
Signed this 29th day of April, 1992.
Agreed to and accepted by:
Northland Royalty Operating Company Great Falls Gas Company
By: /s/ X.X. Xxxxxxx, XXX By: /s/ Xxxxx X. Xxxxx
---------------------------- ---------------------------
Title: Secretary Title: President
------------------------- ------------------------
Northland Royalty Operating Company
[GRAPHIC] 0000 0xx Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
(000) 000-0000
Fax(406) 000-0000
March 14, 1996
Xxxx X. Xxxxxx
Assistant Vice President
Great Falls Gas Company
Energy West, Incorporated
P.O. Box 2229
Great Falls, MT 59403-2229
RE: Cascade Gas Contract Price Negotiations
Dear Xx. Xxxxxx,
Please find enclosed an executed original of your gas price offer to
Northland Royalty Operating Company on the Cascade gas System Contract.
Since we have been unable to arrive at a mutually acceptable and beneficial
"Pre-Buy" purchase and development program, Northland has no other alternative
at this time with Great Falls Gas Company than to execute the enclosed offer and
return it to you.
Northland will be willing to meet with Great Falls Gas Company at a
mutually convenient time to have what we believe could be a jointly profitable
and beneficial contract for the sale of summertime gas and for delivering a
larger quantity of gas in the winter peak months.
Yours Truly,
Northland Royalty Operating Company
/s/ X. X Xxxxxxx, III
X. X. Xxxxxxx, XXX
[LETTERHEAD]
December 7, 1995
Mr. Xxxxxxx Xxxxxxx XXX
Northland Royalty Operating Company
0000 0xx Xxx. X.
Xxxxxxxx, MT 59101
Re: Requested Price Renegotiation
Dear Xx. Xxxxxxx:
Great Falls Gas Company, agrees that arbitration in determining a price for your
Cascade gas would be costly and should be unnecessary. I have little doubt that
such arbitration would result in a two year price of $1.60. This is the price
that we have contracted for with other suppliers on MPC's system. Please
consider the following proposal.
1. For Jan, Feb, Mar, Nov & Dec of 1996 and 1997, $1.80/MMBtu.
2. For Apr through Oct of 1996 and 1997, the monthly Aeco Storage Hub Index
(US/MMBtu) plus transport to Carway (currently $.09 US/MMBtu) plus a premium of
$.05/MMBtu, but not less than $1.40/MMBtu.
3. Prior to each of these months (Apr-Oct), if seller has a higher offer from
another buyer, Great Falls Gas will have the option to match the offer or to
release the deliverability for that month. Any released deliverability will
apply to the ACQ. Seller would have the option to shut-in for any of these
months.
At 1029 Btu/cf, $1.80/MMBtu is the same as $1.85/Mcf @ 14.9#.
The above should guarantee seller a floor average price of over $1.60/MMBtu with
the ability to improve that average price by taking advantage of stronger market
conditions as they develop.
If the above meets with your approval, please indicate so by your signature
below, return an original to us and keep one for your records.
Very truly yours,
/s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx
Assistant Vice President
Agreed to this 14th day of March, 1996
Northland Royalty Operating Company
By: /s/ X. X. Xxxxxxx XXX
-------------------------------
[LETTERHEAD]
April 15, 1996
Xx. X.X. Xxxxxxx III
Northland Royalty Company
0000 0xx Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Dear Xx. Xxxxxxx,
This letter is intended to resolve the arbitration of the contract between
Northland Royalty Company and Great Falls Gas Company held by Great Falls Gas
Company by assignment from Montana Power Company. If the contents of this letter
adequately reflect your understanding of our settlement please sign both copies
of this letter and return one for our records. This settlement is intended to
supersede and replace any of the conditions and terms of the contract which was
entered into between Northland Royalty Company (NRC) and Montana Power Company
(MPC) and which has subsequently been assigned to Great Falls Gas Company, a
division of ENERGY WEST Incorporated (GFG). That contract will be referred to
throughout this agreement as the "Contract". The terms of that contract will
continue in full force and effect except when a provision of this agreement is
inconsistent with the terms of the Contract. In that event the terms of this
agreement are intended to prevail as the binding agreement of the parties.
1. GFG will prepay for gas in the amount of $500,000 upon final execution by
both parties of the settlement agreement. The $500,000 has been placed in escrow
at Norwest Investment Management & Trust Company (Norwest). NRC may receive
disbursement of the funds so placed according to the following instruction which
GFG agrees to include in it's escrow agreement with Norwest:
Upon execution of this agreement, NRC will receive a disbursement of
$250,000. After copies of paid invoices are presented that exceed $250,000
in aggregate, the remaining escrow balance will be available for the
funding of expenditures directly related to increasing the deliverability
of natural gas from the fields identifiecl in the Contract between NRC and
GFG. Norwest is hereby instructed to disburse to NRC amounts corresponding
to expenditures which have been submitted to and approved by GFG which
approval shall not be unreasonably denied.
2. The DCQ under Article IV Section I will be reduced to 50% of the daily
contract quantity available for delivery by NRC, but will increase to 62.5%
should the outstanding prepayment
balance be extinguished by NRC. Quantities of gas available for delivery but not
taken by GFG are hereby released to NRC for resale to third parties.
3. The price paid for gas delivered would be the monthly AECO Storage Hub Index
(US/MMBtu) plus transport to Carway (currently $.09 US/MMBtu) plus a premium of
$.05 per MMBtu, but not less than $1.40/MMBtu for the months of April through
September and $1.80 per MMBtu for the months of October through March. This
pricing provision will be in effect from January 1, 1996 until January 1, 1998
or until such time as any outstanding prepayment has been extinguished whichever
occurs latest in time.
4. GFG would pay NRC for 60% of the delivered gas at prices established in
paragraph 3, above, 40% of the gas taken each year will be credited against the
prepayment. Payments will be apportioned each month between the gas credited
against prepayment and the gas paid in cash until such time as the prepayment
amount is extinguished when the entire amount shall be paid in cash. NRC may
elect from time to time to make cash payments to GFG to be applied against the
prepayment balance.
5. GFG would have the option to prepay for additional gas each six months of the
contact beginning six months from the date of the first prepayment. GFG will
notify NRC within 30 days of the six month anniversary of its desire to prepay.
If GFG prepays, its prepayment will be limited to an amount equal to $1.60
multiplied by 50% of the gas taken by GFG during the previous six months. GFG
may elect to make such prepayments (which would be paid pursuant to the pricing
provisions of #4 above) until such time as the Contract expires. At the
expiration of the Contract, GFG would be entitled to an amount of gas equivalent
to the amount of prepayment balance divided by $1.60. If in any six month period
GFG does not elect to prepay, either party will have the option to continue
according to the provisions of this agreement or to notify the other party of
its intention to renegotiate the contract terms pursuant to provisions of
Article IX of the Contract. However, such notice must be received by the other
party by July 1 of ANY calendar year. When notice is so given the parties agree
that the effective date of the price renegotiated pursuant to such notice shall
be January 1 of the year following the giving of such notice.
This agreement is subject to satisfactory review by GFG of appropriate financial
statements of NRC.
Agreed to this 17th day of April, 1996.
Great Falls Gas Company Northland Royalty Company
By: /s/ [ILLEGIBLE] By: /s/ X.X. Xxxxxxx XXX
----------------------- -------------------------
[LETTERHEAD]
April 15, 1996
Xx. Xxxxxxx X. Xxxxxxx XXX
Northland Royalty Company
0000 0xx Xxxxxx Xxxxx
Xxxxxxxx, Xx. 00000
Dear Xx. Xxxxxxx,
This letter when signed by you is intended to constitute an agreement between
Northland Royalty Company (NRC) and Energy West Resources, Incorporated.
1. NRC agrees to sell 100% of its released output from its contract with Great
Falls Gas Company (GFG) to Energy West Resources (EWR). EWR agrees to purchase
100% of such gas at a price 10% under the monthly Aeco Storage Hub Index
(US/MMBtu) plus transport to Carway (currently $.09 US/MMBtu) index at Empress
as published in the Canadian Gas Price Reporter.
2. Northland will produce its fields at full capability, (which is interpreted
to mean 90% of the ACQ, as that term is defined in the contract between Great
Falls Gas Company and NRC for the term of this agreement. This is intended to
mean that NRC will shut in its xxxxx only for required maintenance and not for
economic considerations. Further, NRC will conduct its scheduled maintenance in
the months of June, July or August to allow for the utilization of the gas when
it will be in greatest demand by EWR customers.
3. The term of this agreement is effective on the date of NRC's settlement
agreement with GFG and will continue for the term of that settlement agreement.
Agreed to this 17th day of April, 1996
Energy West Resources, Incorporated Northland Royalty Company
By: /s/ [ILLEGIBLE] By: /s/ X.X. Xxxxxxx XXX
----------------------- -------------------------
Northland Royalty Operating Company
[GRAPHIC] 0000 0xx Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
(000) 000-0000
Fax(406) 000-0000
Energy West Incorporated
No.0 Xxxxx Xxxxxx Xxxxx
P.O. Box 2229
Great Falls, MT 59403-2229
Attention: Xx. Xxxx Xxxxxx, Assistant Vice President
Fax: 000-000-0000
February 18, 1997
Dear Xx. Xxxxxx,
Pursuant to Gas Contract Between Great Falls Gas and the Northland Royalty
Operating Company (MPC #93) we hereby request that future payment for gas sold
under this contract be made to the Northland Royalty Company rather than
Northland Royalty Operating Company. A recent change in our accounting
procedure requires us to make this change.
Thank you for your assistance and if you have any questions concerning this
request please contact me in our Billings offfice.
Sincerely,
/s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Northland Royalty Operating Company
[LETTERHEAD]
April 1, 1997
VIA FEDERAL EXPRESS: 8830183283
Energy West Resources
Xx. 0 Xxxxx Xxxxxx Xxxxx
X.X. Box 2229
Great Falls, MT 59403-2229
ATTN: Xxx Xxxxx
RE: Northland Royalty Company and Northland Royalty Operating Company; KeyBank
of Wyoming
Dear Xx. Xxxxx
This firm represents KeyBank of Wyoming (the "Bank") with respect to loans
which it has made to Northland Royalty Company and Northland Royalty Operating
Company ("Northland"). Pursuant to the enclosed Mortgage, Assignment of
Proceeds, Security Agreement and Financing Statement ("Mortgage") between the
Bank and Northland, the Bank is the assignee of the production and proceeds from
the properties encumbered by the Mortgage which are therefore the property of
the Bank. In addition, pursuant to the enclosed Notice of Assignment ("Notice"),
Northland has directed any purchaser of oil or gas pertaining to the lands or
contracts described in the Notice to pay all proceeds attributable to the
interests of Northland to the Bank. Please note that the lands and contracts set
forth in the Notice correlate with the lands and contracts set forth in each
respective Exhibit A to the Mortgage.
The purpose of this letter is to place you on notice of the Bank's claim of
first priority to payment of proceeds attributable to the interests of Northland
arising from the purchase and sale of oil or gas attributable to the lands or
contracts described in the Mortgage and/or the Notice and located in the
following counties within the State of Montana:
5. Glacier; and
6. Toole.
Energy West Resources
Page two
April 1, 1997
Please make payment directly to the following address:
KeyBank of Wyoming
0000 Xxxxx Xxxxxx
P.O. Box 924
Cheyenne, WY 82001
ATTN: Xxxxx Xxxx, Assistant Vice-President
Special Assets Department
If for whatever reason funds are placed in suspense and not paid directly
to the Bank as set forth above, please contact the undersigned directly.
Very truly yours,
XXXXXXX, XXXXX & XXXXXXXX, LLC
/s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
WFL/kak
Enclosures
xc: KeyBank of Wyoming
ATTN: Xxxxx Xxxx
NOTICE OF ASSIGNMENT
NOTICE IS HEREBY GIVEN, that effective February 26, 1993, Northland Royalty
Company and Northland Royalty Operating Company have assigned to Key Bank of
Wyoming all right, title and interest in:
A. All proceeds of production from oil and gas xxxxx located on the
following described lands:
1. Glacier County, Montana
Township 36 North, Range 6 West, MPM
Sections: 11, 13, 14, 22, 23, 24, 25, 26, 27, and 34.
2. Toole County, Montana
Township 34 North, Range 2 West, MPM
Sections: 4, 9, 10, 14, 15, 16, 17, 19, 20, 21, 22, 23, 26, 27,
28, 32, 33, 34, and 35.
Township 33 North, Range 2 West, MPM
Sections: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 14, 15, 16, 17,
19, 20, 21, 22, 23, 26, 27, 28, and 30.
B. That certain Gathered Gas Purchase Contract, dated December 18,
1979, MPC Contract No. 327, wherein originally Fourem Company is "Seller" and
The Montana Power Company is "Buyer" and Northland Royalty Operating Company
is now "Seller", together with all prior amendments, as well as all future
renewals, modifications, amendments, substitutions or replacements thereof
pertaining to the lands described above and those referenced in said contract.
C. That certain Delivered Gas Purchase Contract, dated February 23,
1977, wherein originally Cascade Gas Co. is "Seller" and The Montana Power
Company is "Buyer" and Northland Royalty Operating Company is now "Seller"
and Great Falls Gas Company is now "Buyer", together will all prior
amendments, as well as all future renewals, modifications, amendments,
substitutions or replacements thereof pertaining to the lands described above
and those referenced in said contract.
IT IS HEREBY DIRECTED that all rights, benefits and privileges pertaining
to the above described items are hereby transferred to Key Bank of Wyoming and
any purchaser of oil or gas pertaining to the lands or contracts described above
is to pay all proceeds attributable to the interests of Northland Royalty
Company or Northland Royalty Operating Company to:
Key Bank of Wyoming
Attention: Xxxx X. Xxxx
0000 Xxxxxxxx Xxxxxx
Xxxx, Xxxxxxx 00000
until further notice from Key Bank of Wyoming.
DATED this 26th day of February, 1993.
NORTHLAND ROYALTY COMPANY
By /s/ X. X. Xxxxxxx, Xx.
---------------------------
Name: Xxxxxxx X. Xxxxxxx, Xx.
-------------------------
Title: President
--------------------------
NORTHLAND ROYALTY OPERATING COMPANY
By /s/ X. X. Xxxxxxx, Xx.
---------------------------
Name: Xxxxxxx X. Xxxxxxx, Xx.
-------------------------
Title: President
--------------------------
CORPORATE ACKNOWLEDGMENT
STATE OF MONTANA )
) SS.
COUNTY OF YELLOWSTONE )
On this 26th day of February, 1993, before me Xxxxxx X. Xxxxxxx, a
notary public personally appeared Xxxxxxx X. Xxxxxxx, Xx. known to me to be
the President of Northland Royalty Company and Northland Royalty Operating
Company and acknowledged to me that he executed the within instrument on
behalf of such corporations.
Given under my hand and notarial seal this 26th day of February, 1993.
/s/ Xxxxxx X. Xxxxxxx
--------------------------------------
NOTARY PUBLIC
My Commission Expires:
10-27-95
--------------------------------
-------------------------------------------------------------------------------
ACKNOWLEDGMENT
The undersigned hereby acknowledges receipt of a copy of the above and
foregoing Notice of Assignment and consents to the terms thereof.
DATED this ______________ day of __________________, 199__.
Company Name
--------------------------
By
------------------------------------
Name
----------------------------------
Title
---------------------------------
