PUT RIGHT AGREEMENT
EXHIBIT
10.29
THIS PUT RIGHT AGREEMENT (“Agreement”) is made effective June 29, 2006 by and among
PRIMEENERGY CORPORATION, a Delaware corporation (“PEC”) and PRIME OFFSHORE L.L.C., a Delaware
limited liability corporation (“POS”).
WHEREAS, POS holds a net 60.25% interest in proved shut-in natural gas reserves in South
Padre Island Block 1113 (OCS 24302)
(“SPI-1113”);
(“SPI-1113”);
WHEREAS, following the installation during the fourth quarter of 2006 of production facilities
and a flow-line, POS expects to commence production from SPI-1113 at initial gross production rates
of approximately 19 million cubic feet per day (“mcfpd”);
WHEREAS, POS on or before July 15, 2006 anticipates entering into a Master Agreement with
Shell Trading (US) Company (“Shell”) and according to the terms and conditions contained therein,
fixed price commodity swap transactions with Shell for volumes of natural gas not to exceed
monthly volumes listed in Exhibit I (the “Gas Swap Agreement”);
WHEREAS, POS desires, on the terms and conditions more specifically set forth below, the
right to put and assign to PEC its rights and obligations under the Gas Swap Agreement (the “Put
Right”); and
WHEREAS, in the event POS exercises its Put Right, PEC desires to accept the rights and
obligations of POS under the Gas Swap Agreement.
NOW, THEREFORE, for and in consideration of the premises set forth above, the
representations, warranties and covenants set forth below and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, PEC and POS hereby
agree as follows:
Section 1. Put Conditions. If POS and Shell enter into the Gas Swap Agreement and one of the
following additional conditions (“Put Conditions”) is met,;
(a) Production from SPI-1113 has not commenced and, in the sole judgment of POS, is reasonably
not expected to commence on or before December 15, 2006, and POS does not forecast having natural
gas production net to its interest from SPI-1113 and other sources equal to or exceeding 125% of
the monthly quantities contained in the Gas Swap Agreement; or
(b) Production from SPI-1113 has commenced and POS does not forecast having natural gas
production net to its interest from SPI-1113 and other sources equal to or exceeding 125% of the
monthly quantities contained in the Gas Swap Agreement; or
(c) POS and PEC agree in writing;
then POS shall have the right but not the obligation to exercise the Put Right and PEC shall
accept the rights and obligations of POS under the Gas Swap Agreement if POS exercises such right.
Section 2. Put Right. Provided POS and Shell enter into the Gas Swap Agreement and one of the
Put Conditions occurs, POS may exercise on or after November 15, 2006, the Put Right.
Section 3. Exercise of Put Right. If and when POS decides to exercise its Put Right, it shall
do so by giving written notice (“Put Notice”) to PEC on or before December 15, 2006, stating its
decision to exercise its Put Right and stating a proposed effective date for the put and
assignment, which effective date shall be no sooner than five (5) days after the date of the Put
Notice and no later than fifteen (15) days after the date of the Put Notice (the “Assumption
Date”).
Section 4. Put Settlement Payment. As of the Assumption Date, POS and PEC shall mutually
agree, which agreement will not be unreasonably withheld, on the fair xxxx-to-market value of the
Gas Swap Agreement (“Put Settlement Amount”) based on market quotes obtained from Shell or another
reliable counterparty. Within five (5) days after the Assumption Date, POS shall pay PEC the Put
Settlement Amount.
Section 5. Effective Date of Assumption. The assignment by POS of its rights and obligations
under the Gas Swap Agreement pursuant to its exercise of the Put Right and the acceptance of such
assignment and assumption of said rights and obligations by PEC (the “ Assumption”) shall be
effective on the Assumption Date at the time and place specified in the Put Notice, unless PEC and
POS mutually agree otherwise in writing. On the Assumption Date PEC shall deliver notice to Shell
that it has assumed the rights and obligations of POS under the Gas Swap Agreement.
Section 6. Governing Law and Venue. This Agreement and all rights and obligations hereunder,
including matters of construction, validity and performance, shall be governed by the laws of the
state of Texas without giving effect to the principles of conflicts of laws thereof and is entered
into and to be performed in Xxxxxx County, Texas. Any legal action or other legal proceeding or
dispute arising out of or relating to this Agreement shall be resolved in the District Court of
Xxxxxx County, Texas. The parties expressly and irrevocably consent and submit to the jurisdiction
of the District Court of Xxxxxx County, Texas and agree not to assert, by way of motion, as a
defense or otherwise, in any such proceeding any claim that such party is not subject personally to
the jurisdiction of such court, that such proceeding has been brought in an inconvenient forum,
that the venue of such proceeding is improper or that this Agreement or the subject matter hereof
may not be enforced in or by such court.
Section 7. Amendment. This Agreement may be modified or amended only by a writing duly
executed by or on behalf of all of the parties hereto.
Section 8. Binding Effect. This Agreement shall be binding upon and inure to the benefit of
the parties and their respective successors and assigns; provided, however,
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that this Agreement or any right or part hereunder shall not be assigned by any party hereto
without the prior written consent of the other parties hereto.
Section 9. Headings. The headings contained in this Agreement are for convenience of
reference only, shall not be deemed to be a part of this Agreement and shall not be referred to in
connection with the construction or interpretation of this Agreement.
Section 10. Notices. All notices to which this Agreement refers shall be in writing and shall
be delivered by hand or by reputable overnight courier service, charges prepaid, and shall, unless
otherwise stated in this Agreement, be deemed to have been given when received by the party to
whom it is addressed at the addresses set forth below:
If to PEC:
Facsimile: (203) 35-5786
Telephone: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Xx.
Telephone: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Xx.
If to POS:
Prime Offshore L.L.C.
0000 Xxxx Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
0000 Xxxx Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxx X. Xxxxx
Telephone: (000) 000-0000
Attention: Xxx X. Xxxxx
Section 11. Rights of Third Parties. All provisions herein are imposed solely and exclusively
for the benefit of PEC and POS. No other persons shall have any right, benefit, priority, or
interest hereunder or as a result hereof or having standing to require satisfaction of provisions
hereof in accordance with their terms. Notwithstanding the foregoing, Guaranty Bank, FSB will
retain its rights under the Security Agreement dated June 29, 2006, between Prime Offshore L.L.C.
and Guaranty Bank, FSB.
Section 12. Counterparts. This Agreement may be executed in separate counterparts, each of
which, when so executed and delivered, shall be an original, but all such counterparts shall
together constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day first written above.
| PRIMEENERGY CORPORATION | ||||||
| By: | /s/ Xxxxxxx X. Xxxxxxxx | |||||
| Name: Xxxxxxx X. Xxxxxxxx | ||||||
| Title: Executive Vice President & CFO | ||||||
| PRIME OFFSHORE L.L.C. | ||||||
| By: | /s/ Xxx X. Xxxxx | |||||
| Name: Xxx X. Xxxxx | ||||||
| Title: President & CFO | ||||||
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EXHIBIT I
Maximum Fixed Price Swap Volumes
(In Thousand Cubic Feet)
(In Thousand Cubic Feet)
| Month | Volume | |||
January 2007 |
285,000 | |||
February 2007 |
260,000 | |||
March 2007 |
285,000 | |||
April 2007 |
270,000 | |||
May 2007 |
275,000 | |||
June 2007 |
260,000 | |||
July 2007 |
265,000 | |||
August 2007 |
235,000 | |||
September 2007 |
145,000 | |||
October 2007 |
67,000 | |||
November 2007 |
67,000 | |||
December 2007 |
66,000 | |||
