AMENDMENT AND RESTATEMENT OF MASTER COOPERATION AND SAFETY AGREEMENT by and among CNX THERMAL HOLDINGS LLC CONSOL PENNSYLVANIA COAL COMPANY LLC CONRHEIN COAL COMPANY (COLLECTIVELY, “COAL PARTY”) and CNX GAS COMPANY LLC (“GAS PARTY”) and CONSOL ENERGY...
Exhibit 10.5
AMENDMENT AND RESTATEMENT OF
MASTER COOPERATION AND SAFETY AGREEMENT
by and among
CNX THERMAL HOLDINGS LLC
CONSOL PENNSYLVANIA COAL COMPANY LLC
CONRHEIN COAL COMPANY
(COLLECTIVELY, “COAL PARTY”)
and
CNX GAS COMPANY LLC
(“GAS PARTY”)
and
CONSOL ENERGY INC.
(“CEI”)
and
THE CEI SUBSIDIARIES
dated as of
[ ], 2015
ARTICLE I DEFINITIONS AND INTERPRETATION |
2 | |||||
1.1 |
Defined Terms |
2 | ||||
1.2 |
References and Rules of Construction |
2 | ||||
ARTICLE II SAFETY AND COOPERATION; STANDARD OF CARE |
2 | |||||
2.1 |
Safety and Cooperation |
2 | ||||
2.2 |
Standard of Care |
2 | ||||
2.3 |
Damage to Property; Liens and Encumbrances |
2 | ||||
2.4 |
Relationship of the Parties |
3 | ||||
2.5 |
Access to Certain Data |
3 | ||||
2.6 |
Unitization |
3 | ||||
2.7 |
Preservation of Certain Leasehold Interests |
3 | ||||
ARTICLE III OPERATIONS IN THE PENNSYLVANIA MINE AREA |
3 | |||||
3.1 |
Operations in the Coal Area |
3 | ||||
3.2 |
Operations in the Non-Coal Area |
4 | ||||
3.3 |
Plugging, Relocation, and Shut-In Rights and Expenses |
5 | ||||
3.4 |
Permits |
6 | ||||
3.5 |
Acquisitions in the Pennsylvania Mine Area |
6 | ||||
3.6 |
As-Built Drawings |
7 | ||||
ARTICLE IV COORDINATION COMMITTEE; DEVELOPMENT PLANS |
8 | |||||
4.1 |
Coordination Committee |
8 | ||||
4.2 |
Development Plans |
8 | ||||
4.3 |
Notices and Updates |
10 | ||||
ARTICLE V SURFACE USE |
10 | |||||
5.1 |
Surface Use Rights |
10 | ||||
5.2 |
Surface Easement Requests |
11 | ||||
5.3 |
Reimbursement of Certain Costs |
11 | ||||
5.4 |
Other Surface Facilities |
11 | ||||
5.5 |
License Use Rights |
12 | ||||
5.6 |
License Requests By Gas Party or Coal Party |
13 | ||||
5.7 |
Reimbursement of License Costs |
13 | ||||
5.8 |
Form of Licenses |
13 | ||||
ARTICLE VI LIABILITY OF THE PARTIES; INDEMNIFICATION |
13 | |||||
6.1 |
Release |
13 | ||||
6.2 |
Omnibus Agreement Indemnities |
13 | ||||
6.3 |
Disclaimer |
14 | ||||
6.4 |
Conspicuous |
14 | ||||
6.5 |
Subsidence |
14 |
i
ARTICLE VII TERM; TERMINATION |
14 | |||||
7.1 |
Term |
14 | ||||
7.2 |
Termination |
14 | ||||
7.3 |
Effect of Termination |
15 | ||||
ARTICLE VIII MISCELLANEOUS |
15 | |||||
8.1 |
Assignment |
15 | ||||
8.2 |
Notices |
15 | ||||
8.3 |
Further Assurances |
16 | ||||
8.4 |
Expenses |
17 | ||||
8.5 |
Waiver; Rights Cumulative |
17 | ||||
8.6 |
Entire Agreement; Conflicts |
17 | ||||
8.7 |
Amendment |
17 | ||||
8.8 |
Governing Law; Jurisdiction |
17 | ||||
8.9 |
Parties in Interest |
17 | ||||
8.10 |
Preparation of Agreement |
18 | ||||
8.11 |
Severability |
18 | ||||
8.12 |
Counterparts |
18 | ||||
8.13 |
Memorandum |
18 | ||||
8.14 |
General Principles—Litigation |
18 | ||||
8.15 |
Confidentiality |
18 | ||||
8.16 |
Amendment and Restatement of Prior Agreement |
19 | ||||
8.17 |
Choice of Law; Mediation; Submission to Jurisdiction |
19 | ||||
8.18 |
Coal Severance Notice (52 P.S. 1551) |
20 | ||||
8.19 |
“Red” Coal Notice (52 P.S. 1406.1451 |
20 |
APPENDIX:
Appendix I |
Definitions |
EXHIBITS:
Exhibit A |
Pennsylvania Mine Area | |
Exhibit B |
Insurance Requirements | |
Exhibit C |
Shared Information | |
Exhibit D |
Leasehold Release Provisions | |
Exhibit E |
Non-Protected Xxxxx | |
Exhibit F |
Protected Xxxxx | |
Exhibit G |
Existing Permits/Agreements |
SCHEDULES:
Schedule 1 |
CEI Subsidiaries | |
Schedule 3.3(a) |
Valuation Formula | |
Schedule 3.6 |
Drilling Procedures |
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AMENDMENT AND RESTATEMENT OF
MASTER COOPERATION AND SAFETY AGREEMENT
THIS AMENDMENT AND RESTATEMENT OF MASTER COOPERATION AND SAFETY AGREEMENT (as may be amended, revised, supplemented, or otherwise modified from time to time, this “Agreement”), dated as of , 2015 (the “Execution Date”), is by and between CNX THERMAL HOLDINGS LLC, a Delaware limited liability company (“CTH”), CONSOL PENNSYLVANIA COAL COMPANY LLC, a Delaware limited liability company (“CPCC”), CONRHEIN COAL COMPANY, a Pennsylvania general partnership (“Conrhein,” and together with CTH and CPCC, “Coal Party”), CNX GAS COMPANY LLC, a Virginia limited liability company (“Gas Party”), and each party designated as a subsidiary of CONSOL Energy Inc. (“CEI”) on Schedule 1 attached hereto (collectively, the “CEI Subsidiaries”). All of the foregoing Persons, excluding CEI, are referred to herein separately as a “Party” and collectively as the “Parties.”
RECITALS
WHEREAS, Coal Party now owns and operates, and may hereafter acquire, certain coal mines in Xxxxxx and Washington Counties, Pennsylvania, and Xxxxxxxx County, West Virginia, commonly known as the Xxxxxx Mine, the Xxxxx Fork Mine, the Xxxxxx Mine, and the related preparation plant commonly known as the Xxxxxx preparation plant (the “Pennsylvania Mine Complex”);
WHEREAS, Gas Party now owns, controls or operates, and may hereafter acquire, certain oil and gas interests located in or around the Pennsylvania Mine Area, as hereinafter defined (the “Gas Interests”);
WHEREAS, Coal Party and Gas Party each acknowledge and agree that they have overlapping interests with respect to the other’s operations in the area in and around the Pennsylvania Mine Complex (such area, as further described on Exhibit A attached hereto, the “Pennsylvania Mine Area”) and desire to cooperate with each other, as further provided herein, to maximize coal and gas production from the Pennsylvania Mine Area; and
WHEREAS, the CEI Subsidiaries now own, control or operate, and may hereafter acquire, various surface lands, rights of way, easements, roadways, and other surface rights within the Pennsylvania Mine Area, as hereinafter defined (the “Subsidiary Surface Rights”);
WHEREAS, the CEI Subsidiaries desire to make certain of the Subsidiary Surface Rights available for use by Gas Party and Coal Party in connection with their exploration, production, and development of the Gas Interests and the Coal Interests, respectively;
WHEREAS, the safety of each Party’s operations within the Pennsylvania Mine Area is a paramount objective of the Parties in entering into this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants, agreements, conditions, and obligations set forth herein, the Parties hereby agree as follows:
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ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 Defined Terms. For purposes hereof, the capitalized terms used herein and not otherwise defined have the meanings set forth in Appendix I or the Contribution Agreement.
1.2 References and Rules of Construction. All references in this Agreement to Exhibits, Appendices, Articles, Sections, subsections, and other subdivisions refer to the corresponding Exhibits, Appendices, Articles, Sections, subsections, and other subdivisions of or to this Agreement unless expressly provided otherwise. Titles appearing at the beginning of any Exhibit, Appendix, Article, Section, subsection, and other subdivision of this Agreement are for convenience only, do not constitute any part of this Agreement, and shall be disregarded in construing the language hereof. The words “this Agreement,” “herein,” “hereby,” “hereunder,” and “hereof,” and words of similar import, refer to this Agreement as a whole and not to any particular Exhibit, Appendix, Article, Section, subsection, or other subdivision unless expressly so limited. The word “including” (in its various forms) means “including without limitation.” All references to “$” or “dollars” shall be deemed references to United States dollars. Each accounting term not defined herein will have the meaning given to it under generally accepted accounting principles in the United States. Pronouns in masculine, feminine, or neuter genders shall be construed to state and include any other gender, and words, terms, and titles (including terms defined herein) in the singular form shall be construed to include the plural and vice versa, unless the context otherwise requires. References to any Law means such Law as it may be amended from time to time. If a date specified herein for providing any notice or taking any action is not a Business Day, then the date for giving such notice or taking such action shall be the next day which is a Business Day.
ARTICLE II
SAFETY AND COOPERATION; STANDARD OF CARE
2.1 Safety and Cooperation. In accordance with the terms and provisions of this Agreement, each Party shall comply with its own and, while on any other Party’s property, such other Party’s safety and access policies and shall cause all personnel engaged or directed by such Party and all subcontractors engaged in activities on behalf of such Party to similarly comply with such safety and access policies as required of the Parties themselves. The Parties shall cooperate in good faith to seek to maximize coal and gas production from the Pennsylvania Mine Area. The Parties further agree to comply with the insurance requirements set forth on Exhibit B hereto, which may be amended from time to time as agreed to by the Parties.
2.2 Standard of Care. Each Party shall conduct its operations in the Pennsylvania Mine Area in a good and workmanlike manner, in accordance with good and safe practices and standards for the type of work being conducted as a reasonably prudent operator operating under similar circumstances and in a manner that does not constitute gross negligence or willful misconduct.
2.3 Damage to Property; Liens and Encumbrances. Subject to Article III, each Party shall repair any damages it causes by its access, use or operations to the real or personal property of any other Party. No Party shall take any action to encumber or permit any lien on any other Party’s real or personal property.
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2.4 Relationship of the Parties. This Agreement is not intended to create an association, partnership, joint venture, or principal and agency relationship between the Parties. No Party is now, nor will any Party be, an employee, contractor, partner, joint venturer, agent, or representative of any other Party for any purpose under this Agreement.
2.5 Access to Certain Data. In connection with Gas Party’s and Coal Party’s cooperation and safety efforts, upon reasonable prior notice by either such Party (the “Requesting Party”), the other Party shall give the Requesting Party access to (a) the results of any core hole samples and desorption tests relating to the Gas Interests, Coal Gas, or coal, as applicable, (b) any title studies, opinions, or reports relating to the Gas Interests, Coal Gas, or coal, as applicable, in the Pennsylvania Mine Area, and (c) any information reasonably requested by the Requesting Party in connection with the drilling of any Protected Well or Non-Protected Well, in each case, to the extent permitted by Existing Permits/Agreements or other confidentiality restrictions of any agreement with a Third Party. Coal Party and Gas Party agree that the information provided hereunder is proprietary and confidential and will be protected as provided in Section 8.15 hereof, and each shall attempt to protect any attorney client privilege of any title studies, opinions, or reports that are made available to it by the other. Gas Party and Coal Party shall each use its commercially reasonable efforts to share, without formal request from the other, the information set forth on Exhibit C with respect to the drilling of any Protected Well or Non-Protected Well.
2.6 Unitization. Notwithstanding anything herein to the contrary, Gas Party shall have the right to unitize any Gas Asset as may be (i) established or prescribed by field rules or other regulatory order or (ii) as determined by Gas Party in its sole discretion.
2.7 Preservation of Certain Leasehold Interests. If (i) Coal Party wishes to release, surrender, terminate, or permit the termination or expiration of any Third Party leasehold in which Gas Party has a Gas Interest or (ii) Gas Party wishes to release, surrender, terminate, or permit the termination or expiration of any Third Party leasehold in which Coal Party has a Coal Interest, in each case, the Parties agree that the terms and conditions set forth in Exhibit D shall apply.
ARTICLE III
OPERATIONS IN THE PENNSYLVANIA MINE AREA
3.1 Operations in the Coal Area. With respect to the land in the Pennsylvania Mine Area that is, with respect to any calendar year, (i) currently being mined by Coal Party or (ii) identified in good faith by Coal Party as land to be mined during the following six (6) calendar years of the then-current Life of Mine Plan (such area, the “Coal Area”):
(a) If Coal Party determines, in its sole discretion, that venting of Coal Gas is necessary for mine safety considerations, Coal Party shall have the right to (i) drill, vent, and/or flare holes to vent such Coal Gas; (ii) install any necessary equipment on the surface or subsurface, including pipelines and facilities, to remove such Coal Gas, and/or (iii) cause Gas
3
Party to vent, flare, or Capture for processing and sale such Coal Gas from any existing Gas Party Well that is then Capturing Coal Gas from the Coal Gas seam or gob area in the mine at issue. Gas Party shall have the exclusive right to Capture any and all Coal Gas; provided, however, that in the event that Gas Party determines it shall not Capture sealed gob gas, then Coal Party may Capture such sealed gob gas at its discretion and sole risk and expense.
(b) Coal Party shall have the absolute right to Stimulate any coal seam to degas the Pennsylvania Mine Area; provided, however, that Gas Party may elect to Stimulate any coal seam, at its sole cost and expense, upon prior written notice to Coal Party. In the event Gas Party so elects, Gas Party shall employ only standard Stimulation techniques consistent with prudent industry practices for Stimulating coal seams and shall keep Coal Party reasonably informed of any such Stimulation activities. Notwithstanding the foregoing, Gas Party may employ experimental non-standard Stimulation techniques with respect to any coal seam only with the prior written consent of Coal Party, which consent may be withheld in Coal Party’s sole discretion.
(c) Gas Party shall have the right to locate and drill Xxxxx, and construct pipelines and facilities, attributable to the Gas Interests in the Coal Area, subject to Coal Party’s plugging, relocation, and shut-in rights pursuant to Section 3.3; provided, however, that Gas Party shall request the prior written consent of Coal Party with respect to the design and location of any Well prior to the drilling of any such Well, such consent not to be unreasonably withheld. Upon receiving a request from Gas Party to drill a Well, Coal Party may (i) consent to such Well and such proposed location; (ii) consent to such Well but not consent to such proposed location; or (iii) not consent to such Well and such proposed location. In the case of (i), such Well shall be a “Protected Well.” In the case of (ii) or (iii), the Parties shall meet to attempt a mutually agreeable solution, and if the Parties are unable to agree, Gas Party may nevertheless drill such Well without obtaining Coal Party’s consent, and such Well shall be a “Non-Protected Well.”
(d) As of the Execution Date, the existing Xxxxx set forth on Exhibit E shall be deemed Non-Protected Xxxxx.
3.2 Operations in the Non-Coal Area. With respect to the land in the Pennsylvania Mine Area other than the Coal Area (the “Non-Coal Area”):
(a) Gas Party shall have the right to locate and drill Xxxxx, and construct midstream pipelines and facilities, attributable to the Gas Interests in the Non-Coal Area, subject to Coal Party’s plugging, relocation, and shut-in rights pursuant to Section 3.3.
(b) Any Well drilled by Gas Party on a location that was in the Non-Coal Area at the time such Well was permitted shall be deemed a Protected Well. As of the Execution Date, the existing Xxxxx set forth on Exhibit F shall be deemed Protected Xxxxx.
(c) Gas Party and Coal Party shall use commercially reasonable efforts to cooperate with each other with respect to the location of Gas Party Xxxxx and operations in the Non-Coal Area; provided, however, that if the Parties do not agree on the location of a Well in the Non-Coal Area, Gas Party shall have the right to determine the location of any such Well.
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3.3 Plugging, Relocation, and Shut-In Rights and Expenses.
(a) Protected Xxxxx: Coal Party may require upon reasonable advance notice, but in no event upon less than twelve (12) months’ advance notice, that any Protected Well be (i) plugged and abandoned consistent with mine-through Laws and relocated, in which event Coal Party shall reimburse Gas Party for 100% of the costs associated with the plugging and abandoning of such Protected Well and compensate Gas Party for then-current fair market value, as determined by Schedule 3.3(a), of such Protected Well, taking into account the Gas Reserves (including proved developed and proved undeveloped) lost due to the relocation; provided, however, that at Coal Party’s request, Gas Party shall promptly transfer such Well to Coal Party or its designee for such plugging and abandoning consistent with mine-through Laws, and Coal Party shall compensate Gas Party for the then-current fair market value of such Protected Well, which, taking into account the Gas Reserves and the underlying leases if applicable, shall be determined pursuant to the procedures set forth on Schedule 3.3(a); or (ii) shut-in (including temporarily plugging) for a period of time, in which event Coal Party shall reimburse Gas Party for any damages reasonably incurred by Gas Party in connection with such shut-in, including any losses (including interest on such amounts) resulting from the delay in Gas Party receiving net revenues from production from such Protected Well caused by such shut-in. In addition, Coal Party shall compensate Gas Party for losses incurred by Gas Party due to any lessor’s claims for damages under this Section 3.3(a) that have been finally determined.
(b) Non-Protected Xxxxx: In the event Coal Party reasonably anticipates needing to mine through, or shut in (including temporarily plugging) to allow mine-by of, a Non-Protected Well, Coal Party may require upon reasonable advance notice, but in no event upon less than twelve (12) months’ advance notice, that any Non-Protected Well be (i) plugged and abandoned consistent with mine-through Laws and relocated, in which event Gas Party shall bear 100% of the costs associated with plugging and abandoning such Non-Protected Well and 100% of the loss of value of such Well; provided, however, at Coal Party’s request, Gas Party shall promptly transfer such Well to Coal Party or its designee for such plugging and abandoning consistent with mine-through Laws, and Gas Party shall reimburse Coal Party for all costs associated with such plugging and abandoning; or (ii) shut in, and Gas Party shall bear 100% of any damages incurred by Gas Party in connection with shutting in, including temporarily plugging, such Non-Protected Well, and if such Well can be reopened, in connection with the reopening of such Well. Coal Party shall not be liable to any other Party for any lost Gas Reserves or lost leases in the exercise of its rights under this Section 3.3(b). In addition, Gas Party shall compensate Coal Party for losses incurred by Coal Party due to any lessor’s claims for damages under this Section 3.3(b) that have been finally determined.
(c) Non-Well Operations: Coal Party may require at any time that Gas Party relocate (within a reasonable time, but in no event later than twenty-four (24) months following receipt of such notice) an easement, pipeline, facility, or other related equipment (other than a Well and associated Well equipment) (each, a “Non-Well Facility”) if any such Non-Well Facility is reasonably expected by Coal Party to interfere with Coal Party’s present or planned operations or uses in, on, or under any of the Coal Interests. Except with respect to the relocation of any Well (discussed above), all costs and expenses of Gas Party associated with a first relocation shall be borne 100% by Gas Party if at the time of construction it was within a Coal Area; otherwise, such costs and expenses shall be borne 50% by Gas Party and 50% by Coal Party. Coal Party may require a second or further relocation with respect to any Non-Well Facility; provided, however, that the costs of any such second or further relocation shall be borne
5
solely by Coal Party. With respect to any Non-Well Facility existing in the Pennsylvania Mine Area as of the Execution Date, this Agreement shall govern and supersedes the MCSA, and if such Non-Well Facility was located in the (i) Coal Area at the time it was constructed, relocation costs and expenses shall be borne 100% by Gas Party and (ii) Non-Coal Area at the time it was constructed, relocation costs and expenses shall be borne 50% by Gas Party and 50% by Coal Party.
(d) Replacement Xxxxx: Subject to Section 3.1 and Section 3.2, Gas Party shall have the right to drill replacement or recompletion Well(s) to Capture the remaining Gas Reserves on any lease(s) that are stranded as the result of a mine-through of a Well. Gas Party shall use reasonable efforts and work with Coal Party to locate the replacement Well or recompletion Well in a coal pillar or other location that will not jeopardize the health and safety of the Persons within any coal mine where operations are taking place. The replacement or recompletion Well will only be drilled after Coal Party’s written consent has been obtained, which shall not be unreasonably withheld, delayed, or conditioned. If the replacement or recompletion Well successfully establishes production from the lease(s), and Gas Party has received compensation from Coal Party under this Agreement, Gas Party shall reimburse Coal Party for the value Gas Party received to the extent production has been restored and Gas Reserves captured by such successful replacement or recompletion.
3.4 Permits. Each Party is responsible for obtaining all permits, title reports, licenses, and bonds related to its operations in and around the Pennsylvania Mine Complex. Provided that such other Party has complied with its obligations under this Agreement, each Party shall support any other Party’s permitting and regulatory activities and agrees it will not object, protest, appeal, or interfere with any applications submitted by the other for permits, approvals, or authorizations required by any federal, state, or local regulatory authority and will timely execute or submit applicable waivers, consents, or other documents as requested by such other Party in accordance with the aforementioned. Applications covered include not only initial applications for a mine permit or Well permit but also amendments or revisions to existing applications, renewals, six month map filings, or similar submissions after an original application; provided, however, that such supporting Party shall not be required to incur any costs in connection therewith other than as set forth herein. Each Party agrees, as applicable, to comply in all material respects with all applicable Existing Permits/Agreements burdening the Coal Interests and Gas Interests and to maintain its roads, pipelines and facilities to the extent that such Party’s failure to so comply or maintain would result in an adverse effect on any other Party.
3.5 Acquisitions in the Pennsylvania Mine Area.
(a) Gas Party’s Option to Purchase. Subject to and to the extent not prohibited by or covered under Existing Permits/Agreements, Coal Party grants to Gas Party the sole, exclusive, and irrevocable right and option (“Gas Party Option”) to purchase and acquire any Gas Interests to the extent such Gas Interest (including, for the avoidance of doubt, Coal Gas contained in any coal seam) is purchased, leased, or otherwise acquired by Coal Party after the Execution Date within the Pennsylvania Mine Area. Coal Party shall provide written notice to Gas Party not more than thirty (30) Business Days after Coal Party’s purchase, lease, or other acquisition of any Gas Interests within the Pennsylvania Mine Area (“Coal Notice”), and, at Gas Party’s written election delivered to Coal Party within thirty (30) Business Days after Gas
6
Party’s receipt of a Coal Notice, the Parties shall enter into an agreement for the purchase of such interests in a mutually agreeable form. The purchase price to be paid to Coal Party shall be determined by a good faith allocation of the consideration paid by Coal Party for each of the estates purchased, leased, or otherwise acquired, and the consideration allocated to such Gas Interests shall be the purchase price; provided, however, that if no consideration is paid, a good faith estimate of such consideration paid shall be utilized in the allocation; provided further, that to the extent such Gas Interests are not freely conveyable, assignable, or transferrable, Coal Party shall promptly offer to provide, the beneficial ownership of such Gas Interests to Gas Party, and Coal Party and Gas Party agree to attempt to negotiate in good faith a mutually acceptable means by which Gas Party will reimburse Coal Party for not more than Coal Party’s fair share of the costs associated with obtaining such Gas Interests.
(b) Coal Party’s Option to Purchase. Subject to and to the extent not prohibited by or covered under Existing Permits/Agreements, Gas Party and the CEI Subsidiaries grant to Coal Party the sole, exclusive, and irrevocable right and option (“Coal Party Option”) to purchase and acquire any coal seam and/or associated mining rights purchased, leased, or otherwise acquired by Gas Party or any of the CEI Subsidiaries after the Execution Date within the Pennsylvania Mine Area. Gas Party or the applicable CEI Subsidiary, as applicable, shall provide written notice to Coal Party not more than thirty (30) Business Days after such Party’s purchase, lease, or other acquisition of any seam and/or mining rights within the Pennsylvania Mine Area (“Gas Notice”), and, at Coal Party’s written election delivered to such Party within thirty (30) Business Days after Coal Party’s receipt of a Gas Notice, the applicable Parties shall enter into an agreement for the purchase of such coal seam and/or mining rights in a mutually agreeable form. The purchase price to be paid to Gas Party or the CEI Subsidiary, as applicable, shall be determined by a good faith allocation of the consideration paid by such Party for each of the estates purchased, leased, or otherwise acquired, and the consideration allocated to such coal seams and/or mining rights shall be the purchase price; provided, however, that if no consideration is paid, a good faith estimate of such consideration paid shall be utilized in the allocation; provided further, that to the extent such coal seams and/or mining rights are not freely conveyable, assignable, or transferrable, Gas Party or the CEI Subsidiary, as applicable, shall promptly offer to provide the beneficial ownership of such coal seam and/or mining rights to Coal Party, and Gas Party (or the CEI Subsidiary) and Coal Party agree to attempt to negotiate in good faith a mutually acceptable means by which Coal Party will reimburse Gas Party (or the CEI Subsidiary) for not more than such Party’s fair share of the costs associated with obtaining such coal seam and/or mining rights.
3.6 As-Built Drawings; Drilling Procedures. In the event any new surface facilities are constructed or surface real property improvements made by a Party, the constructing Party shall promptly provide any other Party with As-Built Construction Drawings showing the nature and location of such new construction or improvement as are available to the constructing Party. The procedures set forth in Schedule 3.6 will be followed when drilling Xxxxx in the Pennsylvania Mine Area after the Execution Date.
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ARTICLE IV
COORDINATION COMMITTEE; DEVELOPMENT PLANS
4.1 Coordination Committee.
(a) To facilitate cooperation and coordination of operations between the Parties, there is hereby established a coordination committee composed of representatives of the Parties (the “Coordination Committee”). Coal Party shall be entitled to appoint one operational representative to the Coordination Committee (the “Coal Party Representative”), and Gas Party shall be entitled to appoint one operational representative to the Coordination Committee (the “Gas Party Representative”). Each Party shall have the right to change its representative serving on the Coordination Committee at any time by giving notice of such change to the other Parties.
(b) The Coordination Committee shall have only the powers and duties expressly ascribed to it in this Agreement.
(c) The representative of a Party shall be authorized to represent and bind such Party with respect to any matter that is within the powers of the Coordination Committee hereunder and is properly brought before the Coordination Committee. On all matters coming before the Coordination Committee, the Coal Party Representative and the Gas Party Representative shall each have an equal vote.
(d) Unless otherwise agreed by the members of the Coordination Committee, the Coordination Committee shall meet at least once per calendar quarter to review and discuss (i) the then-current Gas Development Plan, the then-current Life of Mine Plan, the Annual Gas Development Plan, and the Annual Coal Development Plan, (ii) any updates to such plans provided by the Parties since the previous Coordination Committee meeting, (iii) any suggestions of the Operating Committee with respect to the operations of Coal Party and Gas Party and (iv) such other matters as may be reasonably proposed by Coal Party or Gas Party. All meetings shall be held during normal business hours, with the time and place of each meeting to be mutually agreed upon by the Parties, or if not mutually agreed to, then the selection of the time and place of each such meeting shall alternate between representatives. Members of the Coordination Committee shall be allowed to participate telephonically (or, to the extent available, by video conference) in any such meeting. Each Party may call a special meeting of the Coordination Committee on reasonable prior written notice.
(e) To the fullest extent permitted by Law and notwithstanding any provision of this Agreement to the contrary, no member of the Coordination Committee, in his or her capacity as a member of the Coordination Committee, shall have any duty, fiduciary or otherwise, to the Parties that did not appoint such member in connection with any act or omission by such member under this Agreement. Each Party agrees and acknowledges that each member of the Coordination Committee shall be entitled to determine whether or not to take any action under this Agreement by only considering the interests of the Party that designated such member to the Coordination Committee and not the interests of any other Party.
4.2 Development Plans.
(a) No later than sixty (60) days following the execution of this Agreement, (i) Coal Party shall provide Gas Party with a plan setting forth the mining operations anticipated by Coal Party in good faith to be conducted by Coal Party during the life of the mine and the Coal Area (as updated from time to time, the “Life of Mine Plan”) and (ii) Gas Party shall provide Coal Party with a three year plan generally describing the anticipated drilling and
8
development activities of Gas Party (as approved annually, the “Gas Development Plan”). The Parties acknowledge and agree that for the period from the Execution Date until the date Gas Party receives Coal Party’s Life of Mine Plan, the Parties shall continue their operations under the coal mining plan set forth under that certain Master Cooperation and Safety Agreement, by and between CEI and CNX Gas Corporation, dated August 1, 2005, as amended, including by Amendment No. 1 to the Master Cooperation and Safety Agreement dated May 30, 2008 (the “MCSA”).
(b) Other than with respect to calendar year 2015, on or before November 1st of each calendar year:
(i) Coal Party will submit to the Coordination Committee (A) an update to the Life of Mine Plan to extend such plan for an additional calendar year and to include any updates with respect to the calendar years already included in the Life of Mine Plan and (B) a plan for the anticipated mining activities of Coal Party during the following calendar year, which shall include, with respect to each mine, an accurate map of its current and completed mining areas, line projections to designate its planned and proposed mining development headings and full extraction mining areas, and the proposed timing of such mining activities within the Pennsylvania Mine Area (the “Annual Coal Development Plan”);
(ii) Gas Party will submit to the Coordination Committee (A) an update to the Gas Development Plan to extend such plan for an additional calendar year and to include any updates with respect to the calendar years already included in the Gas Development Plan and (B) a plan generally describing the anticipated drilling and development activities of Gas Party during the following calendar year, which shall include an accurate map of its current active and inactive Xxxxx and its proposed pad locations for proposed Xxxxx that it plans to drill within the Pennsylvania Mine Area (the “Annual Gas Development Plan”); and
(iii) Coal Party and Gas Party shall jointly prepare and develop a composite map of each such Party’s anticipated activities, which shall include identification, where possible, of locations for proposed Xxxxx in mains, longwall gate pillars, barriers, and/or other locations acceptable to Coal Party determined by them in good faith and in accordance with prudent mining activities to minimize conflicts between the Parties, and locations for Systems in locations reasonably likely to minimize the likelihood of any required relocation.
Each member of the Coordination Committee shall review and provide suggestions with respect to the coordination of the proposed drilling and development plans and the updates to the Life of Mine Plan and Gas Development Plan. No later than December 1st of each calendar year immediately preceding the relevant calendar year, the Coordination Committee shall meet to finalize an Annual Coal Development Plan and an Annual Gas Development Plan; provided, however, that the final Annual Coal Development Plan and the Annual Gas Development Plan shall be in the sole discretion of Coal Party and Gas Party, respectively.
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4.3 Notices and Updates.
(a) Coal Party and Gas Party shall each provide periodic updates, including at the Coordination Committee meetings, to the information, reports, and forecasts used in preparing the updates to the Life of Mine Plan and Gas Development Plan, as applicable, and shall prepare and submit to the Coordination Committee additional updates to the Life of Mine Plan and Gas Development Plan promptly upon (i) a material change that impacts the operations related to the Life of Mine Plan and the Gas Development Plan and/or (ii) upon reasonable request of the Coordination Committee.
(b) Coal Party and Gas Party shall each provide periodic notice to the other with respect to its anticipated development activities in the Coal Area and Non-Coal Area, and, in the event such activities are anticipated to differ materially from the activities contemplated under the Annual Gas Development Plan or Annual Coal Development Plan, as applicable, a detailed explanation of such activities.
(c) Coal Party and Gas Party shall each provide notices, as promptly as possible with respect to any written Claim or communication from a Governmental Authority that may impact the other’s operations.
ARTICLE V
SURFACE USE
5.1 Surface Use Rights. Each Party shall have the right, on a non-exclusive basis and, except as provided below, free of charge, to use and access any other Party’s surface rights to the extent reasonably necessary for such Parties’ operations (“Surface Use Rights”) within the Pennsylvania Mine Area or outside the Pennsylvania Mine Area, including, with respect to Gas Party, the right to transport Third Party Gas or the right to support operations of Gas Party, its partners, joint venturers, co-working interest owners, or any of its joint ventures. The Parties shall comply with reasonable requirements with respect to operations or activities that utilize Surface Use Rights. Notwithstanding anything herein to the contrary, any Party may sell any Surface Use Rights held by such Party; provided, however, such Party shall provide the other Parties with written notice of such intention on or before forty-five (45) days prior to the date such sale is to be consummated (a “Surface Sale Notice”). Each Surface Sale Notice shall include a description of those portions of the Surface Use Rights that will be sold pursuant to such proposed sale. Within thirty (30) days of its receipt of a Surface Sale Notice, each Party shall have the right to deliver a Surface Easement Request to the Representative of the Party proposing such sale with respect to the Surface Use Right that is subject to such Surface Sale Notice. Following its receipt of a Surface Easement Request pursuant to this Section 5.1, the Party proposing such sale shall use its reasonable discretion (exercised in good faith) to determine (prior to the date such Surface Use Right is to be sold) if such Surface Easement Request (i) is sufficiently specific in nature and (ii) would not materially impair the value of the Surface Use Right which is subject to such proposed sale. Should such Party be satisfied that both clause (i) and clause (ii) of this Section 5.1 are satisfied by such requested easement, and subject to (A) any restrictions under an applicable Existing Permit/Agreement and (B) the other terms of this Agreement, then such Party shall prepare and deliver such easement to the requesting Party prior to the date such Surface Use Right is sold.
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5.2 Surface Easement Requests.
(a) A Party may submit written requests to any other Party for specific easements and rights of way across the Surface Use Rights as reasonably necessary for such Party to develop its operations (“Surface Easement Request”), which such Surface Easement Request shall include (i) a description of the surface easement being requested, including its specific purpose, (ii) a plat showing the approximate location, scope, and length of such surface easement, and (iii) a description of the Surface Use Rights that would be affected by such surface easement.
(b) Following its receipt of a Surface Easement Request, not later than forty-five (45) calendar days after receipt thereof, the Party receiving such Surface Easement Request shall use reasonable discretion (exercised in good faith) to determine if such Surface Easement Request (i) is sufficiently specific in nature and (ii) would not materially impair the value of the surface right or other asset which is subject to such Surface Easement Request. Should the Party receiving such Surface Easement Request be satisfied that both clause (i) and clause (ii) of this Section 5.2(b) be satisfied by such Surface Easement Request, and subject to any restrictions under applicable Existing Permits/Agreements and the other terms of this Agreement, such Party shall prepare and deliver such surface easement to the requesting Party; provided, however, such surface easement shall contain language that it is subject to (i) any applicable restrictions under any Existing Permits/Agreements, (ii) the other terms of this Agreement, and (iii) any applicable Laws.
(c) Any surface easement delivered to a Party pursuant to this Section 5.2 shall be in recordable form and in form and substance reasonably satisfactory to the requesting Party. Any surface easement granted pursuant to this Section 5.2(c) shall survive the expiration or termination of this Agreement and shall be binding upon the Parties’ respective successors and assigns in accordance with its terms, which easement shall contain language that it is non-exclusive and revocable and subject to (i) any applicable restrictions under any Existing Permits/Agreements, (ii) any applicable terms of this Agreement, including a granting Party’s right to require relocation in accordance with this Agreement; provided, however, granting Party shall have no right to require relocation of, and the terms and conditions of any easements granted shall not include relocation provisions for, any slope, shaft, impoundment, overland belt, or substation easements granted to Coal Party, and (iii) any applicable Laws.
5.3 Reimbursement of Certain Costs. A Party granted Surface Use Rights (the “Grantee”) by any other Party (“Grantor”) shall (a) reimburse Grantor for certain maintenance and third party costs attributable to Grantee’s exercise of such Surface Use Rights, including, Third Party consultants’ fees, experts’ fees, bonding costs and fees, permit fees, demolition and disposal expenses and fees, and governmental and regulatory taxes and fees and (b) pay for any costs incurred with respect to Grantee’s usage of services arising out of such Surface Use Rights, including actual power used or fluid disposal costs. If the Surface Use Rights to be granted are on surface acquired by Grantor after the Execution Date, Grantee shall, prior to delivery of the Easement, pay to Grantor fair market value of the surface that is associated with the Surface Use Rights to be granted to Grantee.
5.4 Other Surface Facilities. The Parties shall cooperate to reach a mutually agreeable arrangement regarding the use of all other surface facilities.
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5.5 License Use Rights. The following non-exclusive, revocable licenses are granted, as set forth in Sections 5.5(a) and 5.5(b), below (collectively, such revocable licenses, the “License Use Rights”), to the extent such License Use Rights are reasonably necessary in connection with Gas Party’s operations with respect to its Gas Rights within the Pennsylvania Mine Area or Gas Party’s operations with respect to its Gas Interests or Gas operations outside of the Pennsylvania Mine Area, or with respect to Section 5.5(b) to the extent such License Use Rights are reasonably necessary in connection with Coal Party’s operations with respect to its Coal Rights within the Pennsylvania Mine Area, and the exercise of such License Use Rights will be subject to and limited by (i) the terms of this Agreement and all applicable Laws and (ii) the terms of all Existing Permits/Agreements.
(a) Disposal or Storage of Fluids. Subject to Article III herein and only to the extent such disposal or storage is permitted by applicable Laws, the terms of the instruments creating the Coal Interests, and the terms of all Existing Permits/Agreements, Coal Party grants to Gas Party a license for the purpose of disposing of (i) any fluid or liquid from any Well or System within the Pennsylvania Mine Area, or (ii) any fluid or liquid from any other Gas Well or System outside of the Pennsylvania Mine Area in which such Well or System Gas Party has an interest or control, in each case, into any void owned or controlled by any Coal Party that is located in any mine in the Pennsylvania Mine Area where the underground areas thereof have been permanently closed and where such disposal or storage will not, in Coal Party’s sole, reasonable discretion, determined in good faith in accordance with prudent mining activities, affect ongoing mining operations in any way. Coal Party agrees not to object to any permit or other regulatory filing or application of Gas Party with respect to the use of any such void, including cooperation on the resolution of all regulatory proceedings and litigation. Coal Party further agrees not to object to any permit or other regulatory filing or application of Gas Party with respect to the use of a void and to timely execute any waiver or consent with respect to such permit, regulatory filing, or application upon the written request of Gas Party; and in any event, to execute such waiver or consent not less than three (3) Business Days from Coal Party’s receipt of such written request for a written waiver or consent.
(b) Power Lines and Substations. Gas Party or Coal Party may access and draw electrical power from any power line or substation of the other when necessary or convenient for operations related to its rights hereunder but only if and to the extent a power line or substation owned, constructed, or controlled by the other in the Pennsylvania Mine Area has surplus power or has the capacity to provide surplus power, and to the extent permitted by all applicable Laws and the terms of all Existing Permits/Agreements; provided, however, that, upon demand, accessing Party shall reimburse at cost the other Party for any usage of power in connection with the foregoing. To the extent not already accomplished in other documents, Coal Party and Gas Party hereby grant to the other a license to access and draw electrical power from other’s power lines and substations consistent with the foregoing for the term of this Agreement. Gas Party and Coal Party shall, upon demand, pay to the other its ratable share of all operating expenses and, with respect to any power line or substation constructed after the Execution Date, Gas Party’s ratable share of all capital costs relating to power lines and substations owned, constructed, or controlled by Coal Party and benefiting Gas Party or Gas Party and benefiting Coal Party.
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5.6 License Requests By Gas Party or Coal Party. In order for Gas Party or Coal Party to exercise its License Use Rights, it shall request from the other specific, revocable licenses (each such revocable license, a “License”). Each such request (a “License Request”) made pursuant to this Section 5.6 shall be made in writing and shall include (i) a description of the License being requested, including its specific purpose, and (ii) a description of the surface rights or other assets, as applicable, that would be affected by such License. Following the receipt of a License Request pursuant to this Section 5.6 the Party receiving such License Request shall use reasonable discretion (exercised in good faith) to determine if such License Request (x) is sufficiently specific in nature and (y) would not materially impair the value of the surface right or other asset which is subject to such License Request. Should the Party receiving such License Request be satisfied that both clause (x) and clause (y) of this Section 5.6 be satisfied by such requested License, and subject to any restrictions under applicable Existing Permits/Agreements and the other terms of this Agreement, such Party shall prepare and deliver, without cost or fees to the other, such License; provided, however, such License shall contain language that it is non-exclusive and revocable and subject to (A) any applicable restrictions under any Existing Permits/Agreements, (B) the other terms of this Agreement, and (C) any applicable Laws.
5.7 Reimbursement of License Costs. With respect to any License Use Rights, Gas Party and Coal Party will reimburse the other for any costs (i) associated with the maintenance of that portion of the other assets pertaining to such License Use Rights (on the basis of usage or other allocation methodology reasonably calculated to reflect Gas Party’s use of such portion of the other assets held by Coal Party in proportion to the total use of such asset), (ii) any direct or Third Party costs payable under permits and/or any Third Party agreement burdening such portion of the other assets pertaining to the exercise of such License Use Rights, and (iii) any Third Party consultants’ fees, experts’ fees, bonding costs and fees, permit fees, demolition and disposal expenses and fees, governmental and regulatory taxes and fees, and other reasonable Third Party expenses paid by Coal Party to the extent directly attributable to Gas Party’s use of the other assets.
5.8 Form of Licenses. Any License delivered to Gas Party or Coal Party pursuant to Section 5.6 shall be in recordable form and otherwise in form and substance reasonably satisfactory to the Party to which it was delivered. For the avoidance of doubt, any License granted pursuant to Section 5.6 shall be non-exclusive and revocable and shall survive the expiration or termination of this Agreement and shall be binding upon the granting Party’s respective successors and assigns in accordance with its terms.
ARTICLE VI
LIABILITY OF THE PARTIES; INDEMNIFICATION
6.1 Release. Except as set forth in Section 6.2, each Party hereby releases, discharges, and forever waives any claims against any other Party with respect to any breach of this Agreement.
6.2 Omnibus Agreement Indemnities. The Parties hereby acknowledge and agree that except for the rights of the Parties to terminate this Agreement pursuant to Article VII, the indemnities set forth under the Omnibus Agreement shall be the Parties’ exclusive remedies with
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respect to any breach of this Agreement. For the avoidance of doubt, except as set forth in the Omnibus Agreement, in no event shall any Party have any liability under this Agreement or applicable Law for any claim, damage, loss, or liability sustained or incurred in connection with its operations with respect to the Pennsylvania Mine Area or any breach of any provision of this Agreement.
6.3 Disclaimer. NOTWITHSTANDING ANY OTHER TERM OF THIS AGREEMENT TO THE CONTRARY, NO PARTY MAKES ANY, AND EACH PARTY DISCLAIMS ANY, REPRESENTATIONS AND WARRANTIES, EXPRESS, IMPLIED, OR STATUTORY, WITH RESPECT TO THE PERFORMANCE OR RESULTS OF ITS OPERATIONS OR ANY DATA OR INFORMATION PROVIDED BY SUCH PARTY HEREUNDER.
6.4 Conspicuous. THE PARTIES AGREE THAT, TO THE EXTENT REQUIRED BY APPLICABLE LAW TO BE EFFECTIVE OR ENFORCEABLE, THE PROVISIONS IN THIS AGREEMENT IN ALL-CAPS FONT ARE “CONSPICUOUS” FOR THE PURPOSE OF ANY APPLICABLE LAW.
6.5 Subsidence. Coal Party shall not be liable to Gas Party for any damages, costs, fees, expenses, royalties, or other amounts resulting from damage to Gas Party’s operations where such damage is caused by mine subsidence; provided, however, Coal Party shall be liable to Gas Party for all damages, costs, fees, expenses, royalties, or other amounts resulting from mine subsidence damage to (a) any Protected Well, and the provisions of Section 3.3(a) shall be utilized to determine the damages due to Gas Party as compensation for the damaged Protected Well; and (b) any surface easements or Systems, including surface facilities, for which Gas Party has paid for its relocation as set forth in Section 3.3(c).
ARTICLE VII
TERM; TERMINATION
7.1 Term. Unless terminated earlier by express written agreement of the Parties, except for those provisions of this Agreement that expressly survive expiration or termination hereof and except for the rights and obligations under any surface easements and/or licenses granted prior to any termination pursuant to this Article VII, the term of this Agreement shall commence on the Execution Date and continue in full force and effect for as long as Coal Party and Gas Party each own and control any Coal Interests or Gas Interests, respectively, within the Pennsylvania Mine Area (the “Term”).
7.2 Termination. Gas Party may terminate this Agreement upon written notice to Coal Party and the CEI Subsidiaries following the occurrence of any one or more of the following: (a) a Change of Control of CNX Coal Resources LP, a Delaware limited partnership; (b) a sale of all or substantially all of the assets of CTH; (c) a Change of Control of Gas Party; or (d) a sale of all or substantially all of the assets of Gas Party. Gas Party or Coal Party may terminate this Agreement if, within the Pennsylvania Mine Area, there are (i) no active mining operations by Coal Party and (ii) no active gas operations by Gas Party.
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7.3 Effect of Termination. If this Agreement is terminated pursuant to this Article VII, this Agreement shall be of no further force or effect, except for the provisions of Sections 6.1, 6.2, 6.3, and 7.2, which, in each case, shall continue in full force and effect. The termination of this Agreement shall not relieve any Party from its obligations or liabilities arising hereunder prior to the date of such termination.
ARTICLE VIII
MISCELLANEOUS
8.1 Assignment. (a) Neither Coal Party nor any of the CEI Subsidiaries may Assign this Agreement or any rights or interests hereunder without the prior written consent of Gas Party, which consent may be withheld in Gas Party’s sole discretion and (b) Gas Party may not Assign this Agreement or any rights or interests hereunder without the prior written consent of Coal Party, which consent may be withheld in Coal Party’s sole discretion, unless such Assignment is in connection with the Assignment of all or substantially all of the assets of Gas Party; provided, however, that the Partnership Group may freely pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of the Partnership Group, including any pledge or assignment to secure obligations pursuant to one or more credit agreements, security agreements, and other security instruments with the administrative agent, collateral agent or other agent party thereto for the benefit of lenders to the Partnership Group; provided, further that no such pledge or assignment shall release the Partnership Group from any of its obligations hereunder or substitute any such pledgee or assignee for the Partnership Group as a party hereto. Any such permitted Assignment will not relieve the assigning Party of any liability hereunder. Any Assignment of this Agreement made in contravention of this Section 8.1 shall be void. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the Parties and their respective permitted successors and assigns. For the avoidance of doubt, this Section 8.1 shall not be construed as limiting and shall not limit any Party’s right to freely Assign any of the property interests held by such Party in the Pennsylvania Mine Area, subject, however, to Section 3.5 and Section 5.1.
8.2 Notices. For purposes of this Section 8.2, (a) each of CPCC and Conrhein hereby appoint CTH as representative for Coal Party and to act in the name and on behalf of each of CPCC and Conrhein, and (b) each of the CEI Subsidiaries hereby appoints CNX Land LLC as representative for the CEI Subsidiaries and to act in the name and on behalf of each of the CEI Subsidiaries, in each case, with respect to the receipt and delivery of any notice or communication hereunder. All notices and communications required or permitted to be given under this Agreement shall be sufficient in all respects if given in writing and delivered personally, or sent by bonded overnight courier, or mailed by U.S. Express Mail or by certified or registered U.S. Mail with all postage fully prepaid or by electronic mail with a PDF of the notice or other communication attached (provided that any such electronic mail is confirmed either by written confirmation or U.S. Express Mail), in each case, addressed to the appropriate Person at the address for such Person as follows:
If to Coal Party:
CNX Thermal Holdings LLC
0000 XXXXXX Xxxxxx Xxxxx
00
Xxxxxxxxxx XX, 00000
Attention: Chief Financial Officer
Email: xxxxxxxxxx@xxxxxxxxxxxx.xxx
With a copy to:
Attention: General Counsel
Email: xxxxxxxxxxxxx@xxxxxxxxxxxx.xxx
If to Gas Party:
CNX Gas Company LLC
0000 XXXXXX Xxxxxx Xxxxx
Xxxxxxxxxx XX, 00000
Attention: Xxxx Xxxxx
Email: xxxxxxxxx@xxxxxxxxxxxx.xxx
With a copy to:
Attention: Xxxxxxxxx Xxxx
Email: xxxxxxxxxxxxx@xxxxxxxxxxxx.xxx
If to any CEI Subsidiary:
CNX Land LLC
0000 XXXXXX Xxxxxx Xxxxx
Xxxxxxxxxx XX, 00000
Attention: Xxxx Xxxxx
Email: xxxxxxxxx@xxxxxxxxxxxx.xxx
With a copy to:
Attention: Xxxxxxxxx Xxxx
Email: xxxxxxxxxxxxx@xxxxxxxxxxxx.xxx
Any notice given in accordance herewith shall be deemed to have been given when (a) delivered to the addressee in person or by courier, (b) transmitted by electronic communications during normal business hours, or if transmitted after normal business hours, on the next Business Day, or (c) upon actual receipt by the addressee after such notice has either been delivered to an overnight courier or deposited in the U.S. Mail if received during normal business hours, or if not received during normal business hours, then on the next Business Day, as the case may be. Any Party may change their contact information for notice by giving notice to the other Parties in the manner provided in this Section 8.2.
8.3 Further Assurances. In connection with this Agreement and the transactions contemplated hereby, each Party shall execute and deliver, or cause to be executed and delivered, any additional documents and instruments and perform any additional acts that may be reasonably necessary or appropriate to effectuate and perform the provisions of this Agreement and the transactions contemplated herein.
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8.4 Expenses. Except as otherwise specifically provided, all fees, costs, and expenses incurred by the Parties in negotiating this Agreement shall be paid by the Party incurring the same, including legal and accounting fees, costs, and expenses.
8.5 Waiver; Rights Cumulative. Any of the terms, covenants, or conditions hereof may be waived only by a written instrument executed by or on behalf of the Party waiving compliance. No course of dealing on the part of any Party, or its respective officers, employees, agents, or representatives, nor any failure by any Party to exercise any of its rights under this Agreement shall operate as a waiver thereof or affect in any way the right of such Party at a later time to enforce the performance of such provision. No waiver by any Party of any condition, or any breach of any term or covenant contained in this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such condition or breach or a waiver of any other condition or of any breach of any other term or covenant. The rights of the Parties under this Agreement shall be cumulative, and the exercise or partial exercise of any such right shall not preclude the exercise of any other right.
8.6 Entire Agreement; Conflicts. This Agreement, the other Related Agreements, and the documents to be executed hereunder and thereunder, constitute the entire agreement of the Parties and their Affiliates relating to the transactions contemplated hereby and supersede all provisions and concepts contained in all prior letters of intent, memoranda, agreements, or communications between the Parties or their Affiliates relating to the transactions contemplated hereby. In the event of a conflict between (a) the terms and provisions of this Agreement and the terms and provisions of any Appendix hereto or (b) subject to the following sentence, the terms and provisions of this Agreement and the terms and provisions of any Pennsylvania Mine Complex Agreement, in each case, the terms and provisions of this Agreement shall govern and control; provided, however, that the inclusion of any terms and conditions in the Appendix hereto or the Related Agreements which are not addressed in this Agreement shall not be deemed a conflict. To the extent there is any conflict between the terms and conditions of the Omnibus Agreement or the Contribution Agreement and the terms and conditions of this Agreement, the Omnibus Agreement or Contribution Agreement, as applicable, shall control.
8.7 Amendment. This Agreement may be amended only by an instrument in writing executed by the Parties and expressly identified as an amendment or modification.
8.8 Governing Law; Jurisdiction. This Agreement shall be subject to and governed by the laws of the State of Pennsylvania, excluding any conflicts-of-law rule or principle that might refer the construction or interpretation of this Agreement to the laws of another state. The Parties hereby acknowledge and agree that Section 6.2(b) of the Omnibus Agreement shall apply to this Agreement mutatis mutandis.
8.9 Parties in Interest. Except as expressly set forth in this Agreement, nothing in this Agreement shall entitle any Person other than the Parties to any Claim, cause of action, remedy, or right of any kind.
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8.10 Preparation of Agreement. All of the Parties and their respective counsels participated in the preparation of this Agreement. In the event of any ambiguity in this Agreement, it is the intent of the Parties that no presumption shall arise based on the identity of the draftsman of this Agreement.
8.11 Severability. If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any adverse manner to any Party. Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.
8.12 Counterparts. This Agreement may be executed in any number of counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but all of such counterparts shall constitute for all purposes one agreement. Any signature hereto delivered by a Party by electronic mail shall be deemed an original signature hereto.
8.13 Memorandum. Upon request, the Parties shall execute and deliver a memorandum with respect to this Agreement which shall be filed in the real property records of the counties in which the assets covered by this Agreement are located. From and after such filing, upon request from any Party, each other Party shall execute and deliver any additions, deletions, modifications, or supplements to such memorandum that a proposing Party may reasonably request from time to time to cover any additions, deletions, modifications, or supplements to this Agreement or the assets covered by this Agreement.
8.14 General Principles—Litigation. Coal Party and Gas Party anticipate that legal issues and litigation hearings, proceedings, and appeals may arise involving Coal Interests and Coal Gas, including ownership issues, lease interpretation issues, title issues, and regulatory issues related thereto, all of which are contemplated by this Section 8.14. Therefore, the basic principles set forth below shall be followed to the extent, and only to the extent, that Coal Party and Gas Party have a joint and not adverse interest with respect to such Coal Interests and Coal Gas. Notice. Coal Party shall promptly notify Gas Party, and Gas Party shall notify Coal Party, of any challenge or threat to the title of its lessor(s), or claim of ownership to any Coal Gas, regardless of whether such challenge or claim is oral or written.
(b) No Compromise. Gas Party shall not release, terminate, exchange, assign, or in any manner compromise Coal Party’s claims to Coal Interests in the Pennsylvania Mine Area without the prior written approval of Coal Party. Coal Party shall not release, terminate, exchange, assign, or in any manner compromise Gas Party’s claims to Coal Gas within the Pennsylvania Mine Area without the prior written approval of Gas Party.
8.15 Confidentiality. Each Party shall keep confidential all information obtained from any other Party which information is nonpublic and confidential or proprietary in nature (including any information any Party specifically designates as confidential), except as provided
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below, and use such information only in connection with their respective capacities under this Agreement and for the purposes contemplated hereby. Each Party shall be permitted to disclose such information (i) to any Affiliates, outside legal counsel, accountants, and other professional advisors who need to know such information in connection with the administration and enforcement of this Agreement, or to any Person who is a prospective purchaser of an interest that may be subject to this Agreement, including any Coal Interest or Gas Interest, subject to agreement of such Persons to maintain the confidentiality thereof, (ii) to the extent required by applicable Law or by any subpoena or similar legal process, or in connection with any investigation or proceeding arising out of the transactions contemplated by this Agreement, (iii) if it becomes publicly available other than as a result of a breach of this Agreement or becomes available from a source not known to be subject to confidentiality restrictions, (iv) in connection with the exercise, preservation, or protection of any right or remedy hereunder, applicable Law, or equity, or (v) if such other Party shall have consented to such disclosure, such consent not to be unreasonably withheld, delayed, or conditioned.
8.16 Amendment and Restatement of Prior Agreement. The Parties hereby acknowledge and agree that the MCSA is hereby amended and restated in its entirety, to the extent and only to the extent of the Pennsylvania Mine Area. Except as otherwise expressly amended and restated herein as to the Pennsylvania Mine Area, the MCSA remains in full force and effect as to all other areas outside the Pennsylvania Mine Area.
8.17 Choice of Law; Mediation; Submission to Jurisdiction.
(a) To resolve disputes other than those disputes governed by Schedule 3.3(a), the Parties shall comply with the dispute resolution procedures in this Section 8.17. This Agreement shall be subject to and governed by the laws of the State of Pennsylvania, excluding any conflicts-of-law rule or principle that might refer the construction or interpretation of this Agreement to the laws of another state. The Parties shall inform one another promptly following the occurrence or discovery of any item or event that shall reasonably be expected to result in a dispute in connection with this Agreement. The Parties will attempt to resolve any such matters prior to submitting them to Senior Officers as contemplated by Section 8.17(b).
(b) Should a dispute arise that the Parties cannot resolve pursuant to Section 8.17(a) within ten (10) days after being informed thereof, a Party may deliver to the other Party written notice of the dispute with supporting documentation as to the circumstances leading to the dispute (“Notice of Dispute”). The Notice of Dispute shall include a schedule of the availability of the notifying Party’s senior officers duly authorized to settle the dispute, subject to any necessary company approvals that may be needed (“Senior Officers”), during the 30-day period following the delivery of the Notice of Dispute. Within seven (7) days after delivery of the Notice, the other Party shall provide a schedule of the availability of such other Party’s Senior Officers during the remainder of the 30-day period following the delivery of the Notice of Dispute. Following delivery of the Senior Officers’ schedules of availability, the Senior Officers shall meet and confer as often as they deem reasonably necessary during the remainder of the 30-day period in good faith negotiations to resolve the dispute amicably. The Parties in their sole discretion may also agree to utilize the service of a mediator pursuant to a joint engagement.
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(c) If the Parties cannot resolve any dispute or claim arising under this Agreement within thirty (30) days following the receipt of the Notice of Dispute, then no earlier than ten (10) days, nor more than sixty (60) days following written notice to the other Parties, any Party may initiate mandatory, non-binding mediation hereunder by giving a notice of mediation (a “Mediation Notice”) to the other Parties to the dispute or claim. In connection with any mediation pursuant to this Section 8.17, the mediator shall be jointly appointed by the Parties to the dispute or claim and the mediation shall be conducted in Canonsburg, Pennsylvania, unless otherwise agreed by the Parties to the dispute or claim. All costs and expenses of the mediator appointed pursuant to this Section 8.17 shall be shared equally by the Parties to the dispute or claim. The then-current Model ADR Procedures for Mediation of Business Disputes of the Center for Public Resources, Inc., either as written or as modified by mutual agreement of the Parties to the dispute or claim, shall govern any mediation pursuant to this Section 8.17. In the mediation, each Party to the dispute or claim shall be represented by one or more Senior Officers. If a dispute or claim has not been resolved within thirty (30) days after the receipt of the Mediation Notice by a Party, then any Party to the dispute or claim may refer the resolution of the dispute or claim to litigation.
(d) Subject to Section 8.17(c), to the fullest extent permitted by law, each Party agrees that it shall bring any action or proceeding in respect of any claim arising out of or related to this Agreement, whether in tort or contract or at law or in equity, exclusively in any federal or state courts located in Pittsburgh, Pennsylvania, and (i) irrevocably submits to the exclusive jurisdiction of such courts, (ii) waives any objection to laying venue in any such action or proceeding in such courts, (iii) waives any objection that such courts are an inconvenient forum or do not have jurisdiction over it, and (iv) agrees that, to the fullest extent permitted by Law, service of process upon it may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to it at its address specified in Section 8.2. The foregoing consents to jurisdiction and service of process shall not, to the fullest extent permitted by applicable Law, constitute general consents to service of process in the State of Pennsylvania for any purpose except as provided herein and shall not be deemed to confer rights on any Person other than the Parties.
8.18 Coal Severance Notice (52 P.S. 1551). NOTICE—This Agreement may not sell, convey, transfer, include, or insure the title to the coal and right of support underneath the surface land described or referred to herein, and the owner or owners of such coal may have the complete legal right to remove all of such coal and, in that connection, damage may result to the surface of the land and any house, building, or other structure on or in such land. The inclusion of this notice does not enlarge, restrict, or modify any legal rights or estates otherwise created, transferred, excepted, or reserved by this Agreement. THIS NOTICE IS INSERTED HEREIN TO COMPLY WITH THE ACT of July 17, 1957, P.L. 984, § 1 as Amended 1965, Sept. 10, X.X. 000, Xx. 000, § 0.
8.19 “Red” Coal Notice (52 P.S. 1406.1451).
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NOTICE
EACH GAS PARTY KNOWS THAT IT MAY NOT BE OBTAINING THE RIGHT OF PROTECTION AGAINST SUBSIDENCE RESULTING FROM COAL MINING OPERATIONS AND THAT THE SURFACE USE RIGHTS AND LICENSE USE RIGHTS, AND SURFACE EASEMENTS AND LICENSES MAY BE PROTECTED FROM DAMAGE DUE TO MINE SUBSIDENCE BY A PRIVATE CONTRACT WITH THE OWNERS OF THE ECONOMIC INTERESTS IN THE COAL. THIS NOTICE IS INSERTED HEREIN TO COMPLY WITH THE BITUMINOUS MINE SUBSIDENCE AND LAND CONSERVATION ACT OF 1966, AS AMENDED 1980, OCT. 10, X.X. 000, XX. 000 § 0.
[THE NEXT SUCCEEDING PAGE IS THE EXECUTION PAGE]
21
IN WITNESS WHEREOF, this Agreement has been signed by each of the Parties on the Execution Date.
GAS PARTY:
CNX GAS COMPANY LLC
| ||
By: | ||
Name: Title: | ||
COAL PARTY:
CNX THERMAL HOLDINGS LLC
By: Name: Title: | ||
CONRHEIN COAL COMPANY
By: Name: Title: | ||
CONSOL PENNSYLVANIA COAL COMPANY LLC
By: Name: Title: | ||
CEI SUBSIDIARIES:
| ||
CNX GAS CORPORATION
By: Name: Title: |
[Signature Page to Cooperation and Safety Agreement]
CONSOL AMONATE FACILITY LLC
By: Name: Title:
CONSOL AMONATE MINING COMPANY LLC
By: Name: Title:
| ||
CONSOL XXXXXXXX MINING COMPANY LLC
By: Name: Title:
| ||
CONSOL MINING COMPANY LLC
By: Name: Title:
| ||
CONSOL MINING HOLDING COMPANY LLC
By: Name: Title:
| ||
R&PCC LLC
By: Name: Title: |
[Signature Page to Cooperation and Safety Agreement]
CNX LAND LLC
By: Name: Title:
| ||
CNX RCPC LLC
By: Name: Title:
| ||
CNX MARINE TERMINALS INC.
By: Name: Title:
| ||
CONSOL ENERGY SALES COMPANY
By: Name: Title: | ||
CNX WATER ASSETS LLC
By: Name: Title:
| ||
CONSOL OF KENTUCKY INC.
By: Name: Title: |
[Signature Page to Cooperation and Safety Agreement]
HELVETIA COAL COMPANY
By: Name: Title: | ||
ISLAND CREEK COAL COMPANY
By: Name: Title: | ||
LAUREL RUN MINING COMPANY
By: Name: Title: | ||
XXXXXXXXXXX, INC.
By: Name: Title: | ||
MTB LLC
By: Name: Title: | ||
TERRA FIRMA COMPANY
By: Name: Title: |
[Signature Page to Cooperation and Safety Agreement]
WINDSOR COAL COMPANY
By: Name: Title: | ||
WOLFPEN KNOB DEVELOPMENT COMPANY
By: Name: Title: | ||
CONSOL OF CENTRAL PENNSYLVANIA LLC
By: Name: Title: | ||
CONSOL OF OHIO LLC
By: Name: Title: | ||
CNX FUNDING CORPORATION
By: Name: Title: | ||
CONSOL FINANCIAL INC.
By: Name: Title: |
[Signature Page to Cooperation and Safety Agreement]
CONSOL OF CANADA INC.
By: Name: Title: | ||
CONSOL ENERGY CANADA LTD.
By: Name: Title: | ||
CARDINAL STATES GATHERING COMPANY
By: Name: Title: | ||
By: Name: Title: | ||
CNX COAL RESOURCES GP LLC
By: Name: Title: | ||
CNX COAL RESOURCES OPERATING LLC
By: Name: Title: |
[Signature Page to Cooperation and Safety Agreement]
The Party set forth below hereby executes this Agreement as of the Execution Date solely with respect to its acknowledgement and agreement with the provisions of Section 8.16.
CONSOL ENERGY INC. | ||
By: | ||
Name: | ||
Title: |
[Signature Page to Cooperation and Safety Agreement]
APPENDIX I
Definitions
“Affiliate” as to Gas Party shall mean any entity, excluding CONE Gathering LLC, the CEI Subsidiaries, Coal Party, CPCC, Conrhein, CNX Coal Resources LP, CNX Coal Resources GP LLC, and CNX Coal Resources Operating LLC (i) which directly or indirectly controls, is controlled by, or is under common control with such Gas Party, (ii) which beneficially owns or holds ten percent (10%) or more of any class of the voting or other equity interests of Gas Party, or (iii) in which ten percent (10%) or more of any class of the voting or other equity interests is beneficially owned or held, directly or indirectly, by Gas Party. For purposes of this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise. “Affiliate” as to Coal Party shall mean CNX Coal Resources LP, CNX Coal Resources GP LLC, and CNX Coal Resources Operating LLC. “Affiliate” as to the CEI Subsidiaries shall mean any of the CEI Subsidiaries.
“Agreement” has the meaning set forth in the preamble.
“Annual Coal Development Plan” has the meaning set forth in Section 4.2(b)(i).
“Annual Gas Development Plan” has the meaning set forth in Section 4.2(b)(ii).
“As-Built Construction Drawings” shall mean drawings prepared at the end of a construction project depicting the structures, facilities, or improvements as actually built and/or installed.
“Assignment” means any sale, conveyance, transfer, assignment, lease, sublease, mortgage, encumbrance, or other disposition of interest, whether voluntarily or indirectly by operation of Law or otherwise (including by merger or sale of equity interests); provided, however, “Assignment” shall not include an encumbrance created pursuant to any borrowing arrangement entered into by a Party with an unaffiliated Third Party. The term “Assign” shall be construed accordingly.
“Business Day” means a day (other than a Saturday or Sunday) on which commercial banks in the State of Pennsylvania are generally open for business.
“Capture” shall mean to collect, use, produce, treat (if necessary), process (if necessary), transport, store (if necessary), market, and sell Gas that is available from any Well.
“CEI” has the meaning set forth in the preamble to this Agreement.
“CEI Subsidiaries” has the meaning set forth in the preamble to this Agreement.
“Change of Control” means CEI ceases to control, directly or indirectly, as to the Person at issue. For purposes of this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of the general partner of the Person at issue, whether through ownership of voting securities, by contract or otherwise.
APPENDIX I
PAGE 1
“Claim” shall mean any and all claims, demands, liabilities, damages, taxes, penalties, interest, judgments, losses, costs, charges, and expenses (including reasonable out-of-pocket fees and attorneys’ fees), whether direct or indirect, arising out of or as a consequence of a given transaction or occurrence.
“Coal Area” has the meaning set forth in Section 3.1.
“Coal Gas” shall mean occluded methane gas and all associated natural gas and other hydrocarbons of whatever quality or quantity produced or emitted from coalbeds or coal formations and seams and any related, associated, or adjacent rock material or strata. For the avoidance of doubt, the term “Coal Gas” shall expressly include all substances commonly known as “coalbed methane,” “coal mine methane,” and “gob gas.”
“Coal Interests” shall mean all of Coal Party’s interests in the Pennsylvania Mine Area, whether acquired prior to or after the Execution Date.
“Coal Notice” has the meaning set forth in Section 3.5(a).
“Coal Party” has the meaning set forth in the preamble to this Agreement.
“Coal Party Option” has the meaning set forth in Section 3.5(b).
“Coal Party Representative” has the meaning set forth in Section 4.1(a).
“Conrhein” has the meaning set forth in the preamble to this Agreement.
“Contribution Agreement” means that certain Contribution Agreement by and among CPCC, Conrhein, and CTH, dated as of the Execution Date.
“Coordination Committee” has the meaning set forth in Section 4.1(a).
“CPCC” has the meaning set forth in the preamble to this Agreement.
“CTH” has the meaning set forth in the preamble to this Agreement.
“Execution Date” has the meaning set forth in the preamble to this Agreement.
“Existing Permits/Agreements” means those (i) permits issued by any Governmental Authority and/or agreements that create and/or burden any of the Coal Interests, including any listed on or described in Exhibit G attached hereto; (ii) all instruments of record, including any coal, mining, gas, midstream, and surface use rights or easements heretofore granted pursuant to any of the agreements referenced on or described in Exhibit G attached hereto and as such agreement may be amended from time to time in the sole discretion of the parties to such agreements; (iii) any coal, mining, gas, midstream and surface use rights or easements heretofore
APPENDIX I
PAGE 2
granted to or exercised by any Person pursuant to any of the agreements referenced on or described in Exhibit G attached hereto and as such agreements may be amended from time to time in the sole discretion of the parties to such agreements, whether or not such rights or easements are recorded; and (iv) any other coal, mining, gas, midstream, and surface use rights heretofore granted, excepted, or leased that are apparent on an inspection of the property overlying the Pennsylvania Mine Area or recited in prior agreements, plans, or instruments, whether or not recorded.
“Gas” shall mean any natural gas and constituents thereof that can be extracted and produced from a Well by conventional or unconventional means and includes Coal Gas. For purposes of this Agreement, “Gas” shall include oil and any other liquid or liquefiable hydrocarbons produced from a Well.
“Gas Assets” shall mean the Gas Units, Xxxxx, Well sites, and all associated facilities, including Gas Reserves and Systems within the Pennsylvania Mine Area.
“Gas Interests” has the meaning set forth in the recitals to this Agreement.
“Gas Notice” has the meaning set forth in Section 3.5(b).
“Gas Party” has the meaning set forth in the preamble to this Agreement.
“Gas Party Option” has the meaning set forth in Section 3.5(a).
“Gas Party Representative” has the meaning set forth in Section 4.1(a).
“Gas Reserves” shall mean and include proved developed oil and gas reserves and proved undeveloped oil and gas reserves as defined by SEC Regulation S-X, Rule 4-10(a), or any replacement or modification thereof.
“Gas Unit” shall mean a “drilling unit,” as that term is commonly used in the Gas business, within the Pennsylvania Mine Area (i) established or prescribed by field rules or other regulatory order or (ii) otherwise designated by Gas Party.
“Governmental Authority” means any federal, state, local, municipal, tribal, or other government; any governmental, regulatory, or administrative agency, commission, body, or other authority exercising or entitled to exercise any administrative, executive, judicial, legislative, regulatory, or taxing authority or power; and any court or governmental tribunal, including any tribal authority, having or asserting jurisdiction.
“Grantee” has the meaning set forth in Section 5.3.
“Grantor” has the meaning set forth in Section 5.3.
“Law” means any applicable statute, law, rule, regulation, ordinance, order, code, ruling, writ, injunction, decree or other official act of or by any Governmental Authority.
APPENDIX I
PAGE 3
“License” has the meaning set forth in Section 5.6.
“License Request” has the meaning set forth in Section 5.6.
“License Use Rights” has the meaning set forth in Section 5.5.
“MCSA” has the meaning set forth in Section 4.2(a).
“Mediation Notice” has the meaning set forth in Section 8.17(c).
“Non-Coal Area” has the meaning set forth in Section 3.2.
“Non-Protected Well” has the meaning set forth in Section 3.1(c).
“Non-Well Facility” has the meaning set forth in Section 3.3(c).
“Notice of Dispute” has the meaning set forth in Section 8.17(b).
“Omnibus Agreement” means that certain Omnibus Agreement dated as of the Execution Date by and among CONSOL Energy Inc., a Delaware corporation, the CNX Coal Resources GP LLC, CNX Coal Resources LP and the other parties thereto, as may be amended, revised, supplemented or otherwise modified from time to time.
“Operating Agreement” means that certain Operating Agreement dated as of the Execution Date by and among CTH, CPCC, and Conrhein, as may be amended, revised, supplemented or otherwise modified from time to time.
“Operating Committee” has the meaning set forth in that certain Pennsylvania Mine Complex Operating Agreement by and among CPCC, Conrhein, and CTH, dated as of the Execution Date.
“Partnership” means CNX Coal Resources LP, a Delaware limited partnership.
“Partnership Group” means the Partnership and its Subsidiaries.
“Party” or “Parties” has the meaning set forth in the preamble to this Agreement.
“Pennsylvania Mine Area” has the meaning set forth in the recitals to this Agreement.
“Pennsylvania Mine Complex” has the meaning set forth in the recitals to this Agreement.
“Person” means any individual, corporation, company, partnership, limited partnership, limited liability company, trust, estate, Governmental Authority, or any other entity.
“Protected Well” has the meanings set forth in Section 3.1(c).
“Related Agreements” has the meaning set forth in the Omnibus Agreement.
APPENDIX I
PAGE 4
“Requesting Party” has the meaning set forth in Section 2.5.
“Senior Officers” has the meaning set forth in Section 8.17(b).
“Stimulate” or “Stimulation” shall mean the artificial fracture or stimulation of geological zones or strata to enhance Gas production.
“Subsidiary” means, with respect to any Person, (a) a corporation of which more than 50% of the voting power of shares entitled (without regard to the occurrence of any contingency) to vote in the election of directors or other governing body of such corporation is owned, directly or indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such Person or a combination thereof, (b) a partnership (whether general or limited) in which such Person or a Subsidiary of such Person is, at the date of determination, a general or limited partner of such partnership, but only if more than 50% of the general partner interests of such partnership is owned, directly or indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such Person or a combination thereof or (c) any other Person (other than a corporation or a partnership) in which such Person, one or more Subsidiaries of such Person, or a combination thereof, directly or indirectly, at the date of determination, has (i) at least a majority ownership interest or (ii) the power to elect or direct the election of a majority of the directors or other governing body of such Person.
“Subsidiary Surface Rights” has the meaning set forth in the recitals to this Agreement.
“Surface Easement Request” has the meaning set forth in Section 5.2(a).
“Surface Sale Notice” has the meaning set forth in Section 5.1.
“Surface Use Rights” has the meaning set forth in Section 5.1.
“System” shall mean all equipment within the Pennsylvania Mine Area that is necessary to Capture Gas produced from any Well, including compressors, treating facilities, storage facilities, processing plants, and gathering or transportation lines, but excluding equipment needed merely to vent Gas.
“Term” has the meaning set forth in Section 7.1.
“Third Party” means any Person which is not an Affiliate of a Party.
“Well” shall mean a Gas Party well that is, or will be, drilled and permitted, or later permitted, at Gas Party’s discretion for the commercial production of Gas by conventional or unconventional means.
APPENDIX I
PAGE 5
Exhibit A
Pennsylvania Mine Area
EXHIBIT A – PAGE 1
Exhibit B
Insurance Requirements
GENERAL LIABILITY (Comprehensive or Commercial Insurance) |
For bodily injury and property damage, including, without limitation, Products/Completed Operations, Independent Contractors, Contractual Liability, and Property Operations: $1,000,000 combined single limit per occurrence. | |
WORKERS’ COMPENSATION | Workers Compensation insurance for statutory limits or evidence that a party is a qualified self-insurer in accordance with the applicable jurisdiction, and employer’s liability insurance with limits of: $1,000,000 Bodily Injury by Accident each Accident $1,000,000 Policy Limit for Bodily Injury by Disease $1,000,000 Bodily Injury by Disease each Employee | |
COMMERCIAL AUTOMOBILE | For bodily injury and property damage covering owned, non-owned and hired automobiles with at least: $1,000,000 combined single limit per occurrence. | |
UMBRELLA/EXCESS LIABILITY | For (bodily injury and property damage) with contractual liability insurance to cover liability assumed under this Agreement, with at least $9,000,000 combined single limit per occurrence, Which must extend over and above the required Comprehensive or Commercial General Liability, Employer’s Liability, and Automobile Bodily Injury and Property Damage Liability limits |
ADDITIONAL INSURED(S)
Gas Party shall be named as additional insureds on all liability insurance specified above required of Coal Party, and Coal Party shall be named as additional insured on all liability insurance specified above required of the Gas Party.
POLICY REQUIREMENTS
All insurance policies shall be (i) primary and non-contributory, with the exception of the Umbrella/Excess Liability coverage; (ii) include a waiver of subrogation against any other Party where permitted by Law; (iii) maintained without interruption from the Execution Date until the end of the Term; and (iv) issued by insurance companies having an A.M. Best rating of at least A-VII or better, or equivalent rating from other financial rating organizations, and authorized to do business in the state where the property is located. All policies of insurance shall include a written undertaking from the insurer to notify all insureds and additional insureds in accordance with policy provisions prior to cancellation of coverage.
CERTIFICATE OF INSURANCE
Upon request, the Gas Party shall issue to Coal Party and Coal Party shall issue to Gas Party certificates of insurance or evidence of self-insurance (only to the extent permitted above) satisfying the foregoing insurance requirements and any self-insurance. The certificates of insurance, both current and renewals, shall be provided to the respective Parties from time to time upon request.
EXHIBIT B – PAGE 1
Exhibit C
Shared Information
Gas Party will make well related data from drilling and completion operations for both protected and non-protected xxxxx available to Coal Party. Gas Party may acquire any of the following data that is provided through commercially available oil and gas services:
• | Deviation surveys. |
• | Mud logs. |
• | Cement bond logs |
• | Commercially available logs that may or may not include gamma ray, neutron density, induction, image, sonic, latter, spontaneous potential, and specialty logs. |
• | Geosteering logs and reports. |
• | Core that may be acquired by rotary sidewall or full coring. |
• | Vertical seismic profile. |
• | Diagnostic fracture injection tests. |
• | Pressure build up tests. |
• | Microseismic data and interpreted reports. |
• | 2D or 3D seismic across the drilling area. |
EXHIBIT C – PAGE 1
Exhibit D
Leasehold Release Provisions
If Coal Party or Gas Party wishes to release, surrender, terminate, or permit the termination or expiration of any Third Party leasehold in which the other has an interest, such Party shall provide forty-five (45) days prior written notice to the other Party prior to such release, surrender, or termination of any Third Party leasehold or prior to permitting the termination or expiration of any Third Party leasehold. The Party receiving notice (the “Receiving Party”) of such release, surrender, termination or expiration shall have forty-five (45) days from its receipt of such notice to elect to have the other Party (i) assign its interest in such Third Party leasehold (if such Third Party leasehold is assignable) or (ii) maintain, extend, renew or otherwise preserve such interest as permitted under the applicable instruments, and if the Receiving Party elects either (i) or (ii), such Receiving Party shall assume in writing all obligations with respect to such interest at its sole risk, cost and expense. If the Receiving Party fails to respond within such forty-five (45) day period following its receipt of such notice, such Party shall have waived its right to, and shall be deemed to have elected not to, have such Third Party leasehold interest assigned or maintained, extended, renewed or otherwise preserved.
EXHIBIT D – PAGE 1
Exhibit E
Non-Protected Xxxxx
EXHIBIT E – PAGE 1
EXHIBIT E – PAGE 2
EXHIBIT E – PAGE 3
Exhibit E
Non-Protected Xxxxx - CMB Xxxxx
EXHIBIT E – PAGE 4
Exhibit F
Protected Xxxxx
EXHIBIT F – PAGE 1
Exhibit F
Protected Xxxxx - CBM Xxxxx
EXHIBIT F – PAGE 2
Exhibit G
Existing Permits/Agreements
A. | Existing Agreements |
1. | Surface Use Agreement, dated September 30, 2011, by and among CNX Gas Company LLC, Xxxxxxx-Xxxx Land and Minerals, Inc., CNX Land LLC (successor-by-merger to CNX Land Resources Inc.), CNX Marine Terminals Inc., Conrhein Coal Company, Consol Pennsylvania Coal Company LLC, CONSOL Mining Company LLC (successor in interest to Consolidation Coal Company, Eighty-Four Mining Company, Keystone Coal Mining Company, XxXxxxx Coal Company, Mon River Towing, Inc., and Southern Ohio Coal Company), Fairmont Supply Company, Helvetia Coal Company, Island Creek Coal Company, Laurel Run Mining Company, Xxxxxxxxxxx, Inc., Xxxxxxxx-Xxxx Land & Mineral, Inc., CNX RCPC LLC (successor-by-merger to Reserve Coal Properties Company), R&PCC LLC (successor-by-merger to Rochester & Pittsburgh Coal Company), Terra Firma Company, Xxxxx Eagle Limited Partnership, Windsor Coal Company, Wolfpen Knob Development Company, and CONE Gathering LLC. |
a. | First Amendment to Surface Use Agreement, dated effective October 26, 2013. |
b. | Second Amendment to Surface Use Agreement, dated effective November 15, 2013. |
c. | Corrective Addendum to Second Amendment to Surface Use Agreement, dated effective November 15, 2013. |
(such Surface Use Agreement, as amended and corrected, the “CONE SUA”)
2. | Surface Use Agreement, dated September 30, 2011, by and among CNX Gas Company LLC, Xxxxxxx-Xxxx Land and Minerals, Inc., CNX Land LLC (successor-by-merger to CNX Land Resources Inc.), CNX Marine Terminals Inc., Conrhein Coal Company, Consol Pennsylvania Coal Company LLC, CONSOL Mining Company LLC (successor in interest to Consolidation Coal Company, Eighty-Four Mining Company, Keystone Coal Mining Company, XxXxxxx Coal Company, Mon River Towing, Inc., and Southern Ohio Coal Company), Fairmont Supply Company, Helvetia Coal Company, Island Creek Coal Company, Laurel Run Mining Company, Xxxxxxxxxxx, Inc., Xxxxxxxx-Xxxx Land & Mineral, Inc., CNX RCPC LLC (successor-by-merger to Reserve Coal Properties Company), R&PCC LLC (successor-by-merger to Rochester & Pittsburgh Coal Company), Terra Firma Company, Xxxxx Eagle Limited Partnership, Windsor Coal Company, Wolfpen Knob Development Company, and Noble Energy, Inc. |
a. | First Amendment to Surface Use Agreement, dated effective October 26, 2013. |
b. | Second Amendment to Surface Use Agreement, dated effective November 15, 2013. |
c. | Corrective Addendum to Second Amendment to Surface Use Agreement, dated effective November 15, 2013. |
EXHIBIT G – PAGE 1
(such Surface Use Agreement, as amended and corrected, the “CNX/NBL SUA”)
3. | Agreement, dated December 1, 1993, between Columbia Gas Transmission Corporation and CONSOL Pennsylvania Coal Company LLC (successor in interest to Consol Pennsylvania Coal Company, as a signatory and successor-by-merger to Nineveh Coal Company and Greenon Coal Company). |
a. | Majorsville-Heard Storage Complex Letter Agreement, dated December 1, 1993, between Consolidation Coal Company, Xxxxx Fork Mining Company, and Conrhein Coal Company, and Columbia Gas Transmission Corporation. |
b. | Amendment to the Agreement, dated July 27, 2009, between CONSOL Pennsylvania Coal Company, Columbia Gas Transmission Corporation, CNX Gas Company LLC, and NiSource Energy Venture, LLC. |
c. | Storage Complex Agreement, dated December 19, 2014, between CONSOL Pennsylvania Coal Company LLC (f/n/a Consol Pennsylvania Coal Company), CNX Gas Company LLC, Conrhein Coal Company, CONSOL Energy Inc., and Xxxxxx Energy Corporation. |
d. | Reference to this Agreement includes any additional agreement(s) between any or all of the parties hereto on or prior to the date of this Amended and Restated Master Cooperation and Safety Agreement. |
4. | Surface Use Agreement, dated and effective December 5, 2013, between CNX Land LLC, Conrhein Coal Company, Consol Pennsylvania Coal Company LLC, Laurel Run Mining Company, CNX RCPC LLC, R&PCC LLC, Wolfpen Knob Development Company, CONSOL Mining Company LLC, Ohio Valley Resources, Inc., Consolidation Coal Company, XxXxxxx Coal Company, Eighty-Four Mining Company, Keystone Coal Mining Corporation, Mon River Towing, Inc., Twin Rivers Towing Company, CCC RCPC LLC and CCC Land Resources LLC (the “MEC SUA”). |
5. | Joint Cooperation Agreement, dated January 20, 2011, between Dominion Transmission, Inc. and CONSOL Energy Inc. and its coal mining subsidiaries and affiliates. |
6. | Agreement with Respect to Mine through of Existing and New CBM Xxxxx, dated January 16, 2009, between CONSOL Energy Inc. and CNX Gas Company LLC. |
7. | Amended and Restated Limited Liability Company Agreement of CONE Gathering LLC, dated September 30, 2011, between CNX Gas Company and Noble Energy, Inc. |
EXHIBIT G – PAGE 2
8. | Confidential Settlement Agreement, dated December 20, 2006, between Texas Eastern Transmission, L.P., Consol Pennsylvania Coal Company, in its own right and as successor by merger to Greenon Coal Company, Conrhein Coal Company. |
a. | Amendment to Confidential Settlement Agreement, dated December 18, 2007. |
9. | Confidential Settlement Agreement, dated January 20, 2005, between Texas Eastern Transmission, L.P., Consol Pennsylvania Coal Company, in its own right and as successor by merger to Greenon Coal Company, Conrhein Coal Company. |
a. | Mining Restriction Covenant, dated February 2, 2005. |
b. | First Amendment to Confidential Settlement Agreement, dated December 15, 2015. |
10. | Confidential Settlement Agreement, dated November 12, 1997, between Texas Eastern Transmission Corporation and Consol Pennsylvania Coal Company. |
11. | Agreement (Xxxxxxxx #1H), dated December 7, 2011, CONSOL Pennsylvania Coal Company LLC and Trans Energy, Inc. |
12. | Agreement (Xxxxxxxx #2H), dated December 7, 2011, between CONSOL Pennsylvania Coal Company LLC and Trans Energy, Inc. |
13. | Agreement (Xxxxxxxx #1H), dated May 4, 2011, between CONSOL Pennsylvania Coal Company LLC (f/k/a Consol Pennsylvania Coal Company) and Trans Energy, Inc. |
14. | Agreement (Xxxxxxxx #2H), dated July 12, 2013, between CONSOL Pennsylvania Coal Company LLC (f/k/a Consol Pennsylvania Coal Company) and Trans Energy, Inc. |
15. | Well Agreement (Xxxxx #1H), dated September 28, 2011, between CONSOL Pennsylvania Coal Company LLC and Trans Energy, Inc. |
16. | Undated Well Agreement (Xxxxx #2H) between CONSOL Pennsylvania Coal Company LLC and Trans Energy, Inc. |
17. | Substation and Power Line Agreement, dated and effective December 5, 2013, between Consolidation Coal Company and Consol Pennsylvania Coal Company LLC. |
18. | 13 Conservation Easement Agreements, each dated February 12, 2015, between First Pennsylvania Resource, L.L.C., and Consol Pennsylvania Coal Company LLC, formerly Consol Pennsylvania Coal Company and successor-by-merger to each of Greenon Coal Company and Rheinbraun U.S. Corporation. |
EXHIBIT G – PAGE 3
19. | Subordination Agreement (CONE), dated February 18, 2015, between CNX Gas Company LLC, Consol Pennsylvania Coal Company LLC, CONE Gathering LLC, CONE Midstream DevCo I LP, and First Pennsylvania Resource, L.L.C. |
20. | Settlement Agreement and Release, dated March 8, 2013, between the Commonwealth of Pennsylvania, acting by and through the Department of Conservation and Natural Resources and the Department of Environmental Protection, and CONSOL Energy Inc., and Consol Pennsylvania Coal Company LLC. |
21. | Subordination Agreement (NOBLE), dated February 12, 2015, between (a) CNX Gas Company LLC, Xxxxxxx-Xxxx Land and Minerals, Inc., CNX Land LLC (successor-by-merger to CNX Land Resources Inc.), CNX Marine Terminals Inc., CNX Water Assets LLC, CONE Gathering LLC, Conrhein Coal Company, CONSOL Pennsylvania Coal Company LLC, Helvetia Coal Company, Island Creek Coal Company, Laurel Run Mining Company, Xxxxxxxxxxx, Inc., Xxxxxxxx-Xxxx Land & Mineral, Inc., CNX RCPC LLC (successor-by-merger to Reserve Coal Properties Company), R&PCC LLC (successor-by-merger to Rochester & Pittsburgh Coal Company), Terra Firma Company, Xxxxx Eagle Limited Partnership, Windsor Coal Company, Wolfpen Knob Development Company, CONSOL Mining Company LLC (successor-in-interest to Former CONSOL Entities), (b) Noble Energy, Inc., and (c) First Pennsylvania Resource, L.L.C. |
22. | Master Subsidence Agreement, dated effective July 1, 2011, between Range Resources-Appalachia, LLC, CONSOL Mining Company LLC (successor in interest to Consolidation Coal Company), and CNX RCPC LLC (successor-by-merger to Reserve Coal Properties Company). |
23. | Rail Crossing and Pipeline Right-of-Way Agreement, dated July 1, 2011, between CONSOL Mining Company LLC (successor in interest to Consolidation Coal Company), CNX RCPC LLC (successor-by-merger to Reserve Coal Properties Company), and Range Resources-Appalachia, LLC. |
24. | Master Agreement, dated January 16, 2009, among CONSOL Mining Company LLC (successor in interest to Consolidation Coal Company), CNX RCPC LLC (successor-by-merger to Reserve Coal Properties Company), CONSOL Pennsylvania Coal Company LLC, Conrhein Coal Company, and Foundation Coal Resources Corporation, Pennsylvania Land Holdings Corporation, River Processing Corporation, and CNX Gas Company LLC (the “Foundation Master Agreement”). |
EXHIBIT G – PAGE 4
25. | Closing Land Letter Agreement (MEC), dated December 5, 2013, between CONSOL Energy Inc., Ohio Valley Resources, Inc., Consolidation Coal Company and Xxxxxx Energy Corporation. |
26. | Mining and Oil and Gas Rights Cooperation Agreement, dated January 16, 2009, by and among CONSOL Mining Company LLC (successor in interest to Consolidation Coal Company), CNX RCPC LLC (successor-by-merger to Reserve Coal Properties Company), Consol Pennsylvania Coal Company LLC, Conrhein Coal Company, Xxxxxxxxxxx, Inc., and Foundation Coal Resources Corporation and Pennsylvania Land Holdings Corporation (the “Foundation Cooperation Agreement”). |
27. | Adverse Coal Tracts Agreement, dated January 16, 2009, between CONSOL Mining Company LLC (successor in interest to Consolidation Coal Company), CNX RCPC LLC (successor-by-merger to Reserve Coal Properties Company), Consol Pennsylvania Coal Company LLC, Conrhein Coal Company, and Foundation Coal Resources Corporation and Pennsylvania Land Holdings Corporation, and CNX Gas Company LLC (the “Foundation Adverse Coal Tract Agreement”). |
28. | Memorandum of Understanding (Pennsylvania), dated May 22, 2009, between Consol Energy Inc. and Columbia Gas Transmission. |
29. | Memorandum of Understanding (West Virginia), dated November 29, 2010, between Consol Energy Inc. and Columbia Gas Transmission. |
30. | Unexecuted Conservation Easement, between Consol Pennsylvania Coal Company LLC and the Western Pennsylvania Conservancy. |
B. | Existing Permits |
The permits shall include those permits specifically set forth on this Exhibit G, as well as any other active, submitted, pending, and proposed or amended oil and gas Well permits or other permits for other activities or operations within the Pennsylvania Mine Area, including those of Third Parties, as of the Execution Date.
EXHIBIT G – PAGE 5
Schedule 1
CEI Subsidiaries
CNX Gas Corporation
CONSOL Amonate Facility LLC
CONSOL Amonate Mining Company LLC
CONSOL Xxxxxxxx Mining Company LLC
CONSOL Mining Company LLC
CONSOL Mining Holding Company LLC
R&PCC LLC
CNX Land LLC
CNX RCPC LLC
CNX Marine Terminals Inc.
CONSOL Energy Sales Company
CNX Water Assets LLC
CONSOL of Kentucky Inc.
Helvetia Coal Company
Island Creek Coal Company
Laurel Run Mining Company
Xxxxxxxxxxx, Inc.
MTB LLC
Terra Firma Company
Windsor Coal Company
Wolfpen Knob Development Company
CONSOL of Central Pennsylvania LLC
CONSOL of Ohio LLC
CNX Funding Corporation
CONSOL Financial Inc.
CONSOL of Canada Inc.
CONSOL Energy Canada Ltd.
Cardinal States Gathering Company
CNX Coal Resources GP LLC
CNX Coal Resources Operating LLC
SCHEDULE 1 – PAGE 1
Schedule 3.3(a)
Valuation Formula
Part I - Lost Reserves Producing Well:
1) | Xxxxx that are classified as a Protected Well will utilize a valuation amount based on the present value, discounted at eight percent (8%) from the most recent Reserves Database prior to the Protected Well being taken out of production (the “Producing Well Valuation Amount”). This will be based on the current forecast along with current future pricing at current operating costs with a three percent (3%) escalation and will have a valuation date equal to the first calendar day of the first month after the month in which such Protected Well is taken off production. |
2) | The commodity pricing to be used in determining the Producing Well Valuation Amount shall be the most current NYMEX Strip for gas and oil. The price for condensate liquids and natural gas liquids will be eighty percent (80%) and fifty percent (50%), respectively of the NYMEX Strip Oil Pricing. The NYMEX Strip Pricing is used for five (5) years and escalated at three percent (3%) thereafter, and adjusted for basis and hydrocarbon quality (gas BTU/Mcf). |
Part II – Underlying Lease / Undeveloped Well:
The Parties agree that Gas Party shall be entitled to compensation with respect to a lease or leases underlying a Protected Well which is required to be plugged and abandoned pursuant to Section 3.3 if, and only if, the following conditions are met (the “Lease Compensation Conditions”):
1) | The lease(s) underlying such Protected Well which is to be plugged and abandoned pursuant to Section 3.3(a), will, even after making any available delay rentals or shut-in payments, be lost due to such plugging and abandonment (such lease(s), the “Underlying Lease(s)”); |
2) | Gas Party is not able to drill another Well, paid for by the Coal Party, on the Underlying Lease which would hold such Underlying Lease while Coal Party’s operations are preventing Gas Party from conducting operations on such Underlying Lease (such period of time, the “P&A Period”); |
3) | Gas Party is not able to pool all or any portion of such Underlying Lease with any adjacent lands and/or an adjacent unit in order to hold the Underlying Lease by production during the P&A Period; and |
4) | The Underlying Lease is actually lost as a result of the plugging and abandonment of the related Protected Well pursuant to Section 3.3(a). |
SCHEDULE 3.3(A) – PAGE 1
If the Lease Compensation Conditions are met with respect to an Underlying Lease, Coal Party which requested the relocation of the Protected Well located on such Underlying Lease shall compensate Gas Party for such Underlying Lease through the payment to such Gas Party of the mutually agreed fair market value of such Underlying Lease (the “Lease Compensation Amount”).
The Gas Party will calculate the Lease Compensation Amount as outlined below.
1) | Leases lost as a result of a Protected Well being plugged and abandoned will utilize a valuation amount based on the present value, discounted at twelve percent (12%) from the most recent type curves (the “Underlying Lease Valuation Amount”). The type curves will be utilized for all potential formations at a seven thousand foot lateral length. The Underlying Lease Valuation Amount will be based on current future pricing at current operating costs with a three percent (3%) escalation. |
2) | Valuation date equal to the first calendar day of the first month after the month in which such Protected Well is taken off production. Production and cashflows will begin assuming the well is turned-in-iine 2 years after the valuation date. |
3) | Capital estimates will be based upon the most recent budget update associated with the seven thousand foot type curve for the area and formations. |
4) | The commodity pricing to be used in determining the Underlying Lease Valuation Amount shall be the most current NYMEX Strip for gas and oil. The price for condensate liquids and natural gas liquids will be eighty percent (80%) and fifty percent (50%), respectively of the NYMEX Strip Oil Pricing. The NYMEX Strip Pricing is used for five (5) years and escalated at three percent (3%) thereafter, and adjusted for basis and hydrocarbon quality (gas BTU/Mcf). |
5) | The Underlying Lease Valuation Amount as calculated from the above steps will be divided by the appropriate drainage area as defined by the type curves. This allows a determination of the per acre Lease Compensation Amount. The net acres for the lost lease is then multiplied by the per acre Lease Compensation Amount to determine a total Lease Compensation Amount. |
SCHEDULE 3.3(A) – PAGE 2
Schedule 3.6
Drilling Procedures
The following procedures will be followed when drilling Xxxxx in the Coal Area:
(a) Gas Party will plan and execute drilling operations in accordance with applicable Laws.
(b) Gas Party will immediately notify Coal Party should drilling operations lose circulation, have significant loss of pressure, have a casing failure, or suffer any other catastrophic event that occurs during drilling operations or during the life of the Well.
(c) Gas Party will provide Coal Party with written notification at least 5 business days prior to the commencement of Well drilling activities to provide sufficient time for Coal Party to verify that the surveyed location of the proposed Well is the same as the permitted location.
(d) Gas Party and Coal Party shall establish and maintain a base survey control to assure that Well drilling activities are conducted at the proper location in accordance with the terms of this Agreement. Gas Party will notify Coal Party of the Well location prior to commencement of the Well drilling activities. Gas Party and Coal Party will each be responsible for the associated costs of their respective surveying work.
(e) For Well drilling operations in the Coal Area, Gas Party will use water, water sprays, drilling soap, or other drilling fluids approved by Coal Party while drilling from the surface casing, if surface casing is installed in the Well, until the coal protection casing is effectively installed and cemented to the surface.
(f) Upon completion of drilling at 30 feet above the top of the coal seam, Gas Party will perform a deviation survey that includes gyroscopic reading within 100 feet of the top of the coal formation by an independent, qualified well service provider, which will determine the approximate location of the bottom of the wellbore. Gas Party will notify Coal Party of the deviation survey results before continuation of drilling.
(g) In the active mine area only, should the well deviation survey determine that the well is within 1% of the required area, Coal Party will notify Gas Party that all personnel have exited the mine area before drilling resumes. After notification is received that all personnel have exited the mine, Gas Party may continue drilling down to and through the active coal seam to a minimum of 10 feet below the bottom of the coal formation.
(h) In the active mine area, Gas Party will cease drilling operations should drilling lose circulation within the range of 30 feet above to 10 feet below the coal formation, and plug the Well with cement to surface. Gas Party will provide all records and certified results of the deviation survey to the Coal Party.
SCHEDULE 3.6 – PAGE 1
(i) In the active mine area, Gas Party will execute operations within the Well to correct deviation greater than 1%, as determined by the deviation survey, to assure the Well penetrates through the coal formation within the required 1% deviation. If Gas Party is unable to drill the Well through the coal formation within the 1% deviation limit, Gas Party will plug the Well with cement to surface.
(j) Gas Party will perform methane testing every 20 minutes while drilling within the range of 30 feet above to 10 feet below the coal formation. Drilling operations will cease should methane levels exceed 1% and procedures to reduce methane levels below 1% will commence.
SCHEDULE 3.6 – PAGE 2