GAS GATHERING AGREEMENT LEGACY APPALACHIAN SYSTEM
[Redacted
Copy]
Specific
terms in this exhibit have been redacted, as marked three asterisks
(***), because confidential treatment for those terms has been
requested. The redacted material has been separately filed with the
Securities and Exchange Commission.
For
Natural Gas on the
Legacy
Appalachian System
DATED
AS OF JUNE 1, 2009
between
LAUREL
MOUNTAIN MIDSTREAM, LLC
and
ATLAS
AMERICA, LLC
ATLAS
ENERGY RESOURCES, LLC
ATLAS
ENERGY OPERATING COMPANY, LLC
ATLAS
NOBLE LLC
RESOURCE
ENERGY LLC
VIKING
RESOURCES, LLC
ATLAS
PIPELINE PARTNERS, L.P.
ATLAS
PIPELINE OPERATING PARTNERSHIP, LP
| GAS GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM) |
PAGE 2
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TABLE OF
CONTENTS
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Section
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Title
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Page
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1.
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COMMITMENTS
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3
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2.
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SERVICE OPTIONS
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7
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3.
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CONDITIONING OF GAS
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13
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4
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STATEMENTS AND PAYMENT
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14
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5.
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TERM
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15
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7.
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EXHIBITS AND SCHEDULES
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17
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8.
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SUPERSEDED AGREEMENT
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17
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10.
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ENTIRE AGREEMENT
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18
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| GAS GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM) |
PAGE 3
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THIS GAS
GATHERING AGREEMENT (“Agreement”) is made and
entered into by and between LAUREL MOUNTAIN MIDSTREAM, LLC, a Delaware limited
liability company (“LMM”), and ATLAS ENERGY
RESOURCES, LLC, a Delaware limited liability company, ATLAS ENERGY OPERATING
COMPANY, LLC, a Delaware limited liability company, ATLAS AMERICA, LLC, a
Pennsylvania limited liability company, ATLAS NOBLE LLC, a Delaware limited
liability company, RESOURCE ENERGY LLC, a Delaware limited liability company,
and VIKING RESOURCES, LLC, a Pennsylvania limited liability company (each
individually a “Shipper”
or collectively, the “Shippers”), and only as to
Section 8, below, ATLAS PIPELINE PARTNERS, L.P. and ATLAS PIPELINE OPERATING
PARTNERSHIP, LP (hereinafter “APL” and “APL Operating,”
respectively).
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RECITALS
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A.
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Shippers
each own or control a supply of Gas that they desire LMM to Gather for
Shippers’ account.
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B.
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LMM
owns a natural gas gathering system and related facilities as further
defined in Exhibit “A” hereto, which, together with any expansions of same
pursuant to this Agreement, shall be generally referred to as the “Legacy Appalachian Gathering
System,” or “Gathering System,” and
is willing to Gather such Gas for Shippers’ account on the Legacy
Appalachian Gathering System pursuant to the terms set forth
herein.
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C.
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LMM
and Shippers will simultaneously with this Agreement be entering into a
gathering agreement for the gathering of natural gas on a higher pressure
system to be developed by LMM within the Area of Interest (the “Expansion Gathering
Agreement”), which together with this Agreement constitutes the
Parties’ entire agreement regarding gathering services in the Area of
Interest.
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D.
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Capitalized
terms used in this Agreement and not defined in the body hereof shall have
the meanings ascribed to them in Exhibit “A” hereto and made a part
hereof.
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NOW,
THEREFORE, in consideration of the premises and mutual covenants set forth
herein, the parties agree as follows:
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AGREEMENT
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1.
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COMMITMENTS
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1.1
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Shippers’
Dedication.
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(a)
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Each Shipper, on behalf
of itself, its Affiliates, and each Investment Program, dedicates to LMM
for Gathering all of such Shipper’s, Shipper’s Affiliates’, and such
Investment Programs’ present and future right, title, and
interest in Gas, including without limitation Gas produced from such
Shipper’s Existing Well Interests, Existing Third Party Well Interests and
Investment Program Well Interests, from the Area of Interest described in
Exhibit “B” (collectively “Shippers’ Gas”),
provided that the following interests in Gas shall be excluded from
dedication hereunder:
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(i)
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any
Minority Interest in Subsequently Acquired Gas (as defined below) from any
production or acreage in which Shipper neither controls nor operates the
production. For purposes of this Section 1.1, a “Minority Interest” shall
be any production or acreage in which any other party or parties, in the
aggregate, not an Affiliate of Shipper owns a greater interest, by
percentage, than Shippers;
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(ii)
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any
interest in Subsequently Acquired Gas which, prior to acquisition by
Shipper, is dedicated to or is flowing through another gathering system
which is owned by an entity from whom Shipper acquired such interest in
Gas (a “Producer
System”), provided that such Gas will be dedicated to LMM in the
event LMM purchases the Producer System in accordance with the terms of
Section 2.4(c), below, or Section 2.5, as
applicable;
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| GAS GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM) |
PAGE 4
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(iii)
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any
interest in Subsequently Acquired Gas which prior to acquisition is
dedicated to a third party gatherer, provided that such Gas will be
dedicated to LMM in the event LMM exercises its option in accordance with
the terms of Section 2.4(c) or Section 2.5, as applicable, below;
and
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(iv)
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those
existing interests (including future interests set forth in the areas of
mutual interest described in the area of mutual interest agreements
identified on Exhibit “F,” provided, however, that Shipper shall not
agree to expand any such area of mutual interest from and after the
Effective Date (as defined in Section 5, below)), that are
subject to any of the agreements or produced from any of the xxxxx listed
in Exhibit “F”.
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It is
understood and agreed between the parties that all interests in Gas as described
above, unless expressly excluded in this Section 1.1, are dedicated to LMM by
this Agreement, and by the Expansion Gathering Agreement. LMM, at its
discretion, shall determine whether the Gas will be considered dedicated to this
Agreement or to the Expansion Gathering Agreement. For the avoidance of doubt,
to the extent any Shipper’s Affiliate ceases to be an Affiliate, such entity
shall no longer be considered a “Shipper’s Affiliate”
hereunder.
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(b)
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Each
Shipper, for itself and for its Affiliates, represents and warrants. that
it has the authority to make such dedication as to its Gas, and agrees
that LMM may file memoranda of this agreement in local land records
substantially in the form shown in Exhibit “G”. Each Shipper
covenants that it will not request or solicit any potential seller of any
interest in Gas to create any dedication of the Gas prior to Shipper’s
acquisition. Shippers further warrant that the contracts listed
on Exhibit “F” (other than the leases listed as being subject to the joint
venture or farmout agreements listed on Exhibit “F”, in each case only to
the extent the lessee under each such lease is not a Shipper or an
Affiliate of a Shipper) have not been amended or otherwise modified in any
way between April 1, 2009 and the Effective
Date.
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(c)
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Each
Shipper, for itself and for its Affiliates, covenants that no subsequent
transfer of any interest in its Gas shall be made without being made
subject to this dedication obligation herewith. Each Shipper
shall provide LMM prompt notice of any such transfer and shall obtain and
provide to LMM transferee’s acknowledgement of the
dedication. LMM may file memoranda of this Agreement in local
land records substantially in the form shown in Exhibit “G” as of the
Effective Date and as of the date of development and production of
Gas.
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(d)
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Subject
to the prior written consent of LMM, such consent not to be unreasonably
withheld, each Shipper may remove acreage from the dedication obligation
described in Section 1.1(a) above in connection with an acreage swap with
a third party or third parties (“Removed Acreage”)
provided (i) all of the acreage received by that Shipper in exchange for
the Removed Acreage (the “Replacement Acreage”) is
dedicated hereunder; (ii) all of the Replacement Acreage is within the
Area of Interest; (iii) the area of such Replacement Acreage is, or the
estimated reserves or resources included under the Replacement Acreage are
equivalent or superior to the Removed Acreage, and (iv) the Replacement
Acreage is located such that it will improve gathering
efficiency. LMM agrees to file of record amendments to such
memorandum, or execute filings of record at any Shipper’s reasonable
request, to reflect such acreage swaps consented to by
LMM.
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(e)
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Shippers
and LMM acknowledge and agree that neither LMM nor Shipper shall have any
obligation whatsoever hereunder with respect to Gas or acreage not subject
to the foregoing dedication.
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| GAS GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM) |
PAGE 5
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1.2
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LMM’s Gathering
Service. LMM shall Gather on a Guaranteed Capacity basis
that quantity of Shipper’s Gas, subject to the provisions set forth in
Exhibit “E”, which is necessary to fulfill Shipper’s Scheduled
Nomination(s) and Shipper’s commitment to provide Gathering Fuel, subject
only to Force Majeure and Maintenance; Shipper shall be entitled to submit
volume projections to LMM on a Monthly basis. Unless and until
LMM shall have installed measurement equipment (such as EFM) reasonably
necessary or appropriate to track imbalances associated with such
third-party Gas, LMM shall provide Shipper with *** Days’ prior written
notice before agreeing to accept any third party Gas for Gathering in the
Legacy Appalachian Gathering System. LMM shall have the right
to commingle Shipper’s Gas with other natural gas in the Gathering System,
provided, however, that LMM shall provide to Shipper first priority
service up to the MDQ, and the other natural gas in the Gathering System
shall not impair LMM’s obligations to Shippers hereunder, including
specifically the obligations to maintain Gathering System pressures
pursuant to Section 1.6.
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1.3
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Full Capacity
Area. Notwithstanding any other provision of this
Agreement, for a period of *** years after the Effective Date, LMM hereby
reserves for the sole benefit of the Shippers one hundred percent (100%)
of the capacity of the Gathering System (as currently existing and in the
future expanded) in the following townships located in ***, Pennsylvania:
***.
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1.4
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[INTENTIONALLY
DELETED]
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1.5
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Gathering
Fuel. Shipper shall provide to LMM Shipper’s share of
Gathering Fuel. LMM shall calculate Shipper’s Gathering Fuel
based upon actual usage and Shipper’s pro-rata share of all Gas Gathered
through the relevant portion of the Gathering System. Shipper’s
Gathering Fuel will be calculated Monthly by LMM by allocating such
quantities of actual Gathering System fuel requirements and lost or
unaccounted for Gas among all shippers using the relevant portion of the
Gathering System. LMM may retain and use Shipper’s Gathering
Fuel as fuel for compression and other operations on the Gathering
System.
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In the
event LMM utilizes electric power in lieu of gas fuel for operation of any of
the LMM Facilities, Shipper’s Fuel for such facility shall then be each
Shipper’s pro rata share of eighty-four percent (84%) of such power required,
and shall be billed in addition to other fuel requirements or fees
hereunder.
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1.6
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Gathering
System Pressures.
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(a)
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LMM
shall maintain a Target Suction Pressure as set forth in Exhibit “E” for
each Delivery Point on the Gathering System. The “Actual Suction Pressure”
shall be the average Daily suction pressure measured at a static pressure
tap immediately upstream of the last compressor before the Delivery
Point. The Actual Suction Pressure shall be calculated by
summing the actual average Daily suction pressure for each included Day in
the Month for which pressures were taken, and dividing the resulting sum
by the number of Days in that Month for which pressures were taken, and
rounding the quotient to the nearest whole number. In the
calculation of Actual Suction Pressure, LMM may exclude any Day when any
of the following conditions occur (“Excluded
Days”): (i) Force Majeure, (ii) Maintenance, or (iii)
when Shipper’s Gas exceeds Shipper’s MDQ or does not meet the Gas Quality
requirements in Exhibit “A” part C. Any Gas at any Delivery
Point for which the Target Suction Pressure is not maintained during any
Month will be subject to a reduction in the Gathering Fee or the Reduced
Fee for the Month during which such pressures are not at the Target
Suction Pressure, and after the Target Suction Pressure is restored, the
rate shall return to the Gathering Fee set forth in Exhibit
“E”.
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(b)
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The
Gathering Fee shall be subject to modification based on the Actual Suction
Pressure for each Month as follows, and as referenced on Exhibit
“E”:
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| GAS GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM) |
PAGE 6
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Actual
Suction Pressure
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Fee
Modification
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Greater
than Target Suction Pressure but less than A psig
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no
modification
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Greater
than A psig but
less than B
psig
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minus
$*** per Dth*
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Greater
than B
psig
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modification
to the Reduced Rate and Remedy described in
Section 1.6(c)
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*
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Such
modification, if any, shall be in the form of a credit on the LMM
statement to Shipper for the first Month following the subject
Month.
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(c)
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In
the event that the Actual Suction Pressure exceeds the pressure designated
as [B] in
Exhibit “E” for the relevant Delivery Point for *** Days in any ***
Day period, and provided that LMM is not proceeding with diligence toward
steps to cure its failure to maintain the pressures, then, at Shipper’s
election, (i) Shipper may construct such improvements as Shipper may
deem necessary to remedy LMM’s failure to maintain the Actual Suction
Pressure below pressure designated as [B] in Exhibit “E”
for the relevant Delivery Point, in which case all Gas gathered through
such improvement (which improvement shall be the sole property of Shipper)
shall be Gathered by LMM at the Reduced Rate, or (ii) each well
constrained by the Actual Suction Pressure being above [B] and all Gas produced
from such well will no longer be subject to this Agreement. For
avoidance of doubt, no Excluded Days will be counted for purposes of
determining the *** Day and *** Day periods described
above.
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(d)
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The
remedies as stated in this Section 1.6 shall be Shipper’s sole remedy for
LMM’s failure to achieve or maintain the Target Suction
Pressure.
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1.7
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LMM
shall undertake commercially reasonable measures on the Gathering System,
taking into account the economic interests of LMM and Shippers, to
maintain the operating pressure on the Gathering System. If Shipper
reasonably determines that LMM has failed to undertake commercially
reasonable measures to maintain the operating pressures on the Gathering
System, and the failure to maintain such operating pressures is not
related to any issue or condition at the well, or any problem on any part
of the Flow Line, or otherwise caused by any act or inaction of Shipper,
Shipper may so notify LMM, and request that LMM undertake a remedy
proposed by Shipper to maintain the operating pressure. Such
proposed remedy shall be specific enough and contain sufficient detail to
allow LMM to evaluate its commercial and engineering reasonableness. If
LMM elects to not undertake Shipper’s proposed remedy, Shipper may
proceed, at its sole cost and expense, to undertake such remedy as
proposed. If it is later determined that Shipper’s remedy was
in the economic interest of LMM to pursue, then, LMM shall reimburse
Shipper (i) its costs in undertaking such measures, plus
(ii) *** percent (***%) per annum of the costs set forth in the
foregoing clause (i), plus (iii) *** percent (***%) of the costs
set forth in the foregoing clause (i). Such remedy will be
deemed to be “in the economic interest of LMM” when the increased volumes,
based upon an average production for *** Days prior to the completion of
the measures compared to an average production *** Days following the
completion of such measures, have generated an annualized rate of return
of more than *** percent (***%) taking into consideration (x) the
applicable gathering fee then in effect (regardless of whether the
Gathering Fee or Reduced Fee is in effect), (y) the costs of the
improvements to be made and (z) the volume of Gas through that portion of
the Gathering System on which the proposed improvements are to be made. If
the parties disagree on the conclusion that the remedy was economic, they
may resolve the dispute through Alternative Dispute Resolution in
accordance with this
Agreement.
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| GAS GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM) |
PAGE 7
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2.
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SERVICE
OPTIONS
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2.1
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Increase in the MDQ.
Shippers shall have a one-time election to increase the MDQ based
upon the actual increase in the capacity of the Gathering System resulting
from any improvement to or expansion of the Gathering System that is
substantially completed (whether or not such improvement or expansion is
actually placed into service) during calendar year 2009. (the “Increased Capacity”)
upon completion of such Increased Capacity. Shippers shall
request in writing such increase in the MDQ, and shall provide such backup
documentation as necessary to confirm the Increased Capacity to be
completed pursuant to that APL plan. Upon confirmation of such
Increased Capacity by LMM, the Agreement will be unilaterally amended by
LMM to increase the MDQ by the amount of Increased Capacity, which
amendment shall be effective upon notice to Shippers. In the
event the parties agree on a subsequent additional increase in the MDQ,
Shippers agree that the additional Gas which makes up the increase in the
MDQ shall flow under the terms and conditions of the Expansion Gathering
Agreement. In the event the parties do not agree on a
subsequent additional increase in the MDQ and if LMM declines to Gather
such additional Gas under the Expansion Gathering Agreement, then such
additional Gas will no longer be subject to this
Agreement.
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2.2
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[INTENTIONALLY
DELETED]
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2.3
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LMM’s Obligation and Option to
Receive Shipper’s Gas from Future Xxxxx in the Area of
Interest.
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(a)
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Future Connectable Xxxxx in
Area of Interest. If Shipper owns any right title or
interest in Gas that is to be produced from any future Connectable Well in
the Area of Interest, Shipper shall at its sole cost and expense construct
a Flow Line from such Connectable Well to the Gathering System at a
location to be determined by LMM to allow the connection to be made at a
point with current or planned capacity sufficient for the expected
production while attempting to minimize Shipper’s Flow Line length, but
the timing of drilling such future Connectable Well will be within
Shipper’s sole discretion. Such Flow Lines shall be the
property of the owner of the associated well, and the Flow Lines and
related facilities shall be operated and maintained by that
owner. Subject to Shipper’s construction of a Flow Line, LMM
shall connect the Connectable Xxxxx to the Gathering System at the Receipt
Point location agreed to by the parties. If LMM fails to connect such Flow
Line to the Gathering System on the later of (i) the Day when the Flow
Line is available, (ii) the Day the Flow Line is scheduled for connection
as scheduled in the Drilling Plan for such Project as defined in
Section 2.6 (or as otherwise reasonably scheduled by Shipper in
consultation with LMM if not subject to a Drilling Plan), or (iii) the Day
fracturing operations are scheduled to commence as scheduled in the
Drilling Plan for such Project as defined in Section 2.6 (or as
otherwise reasonably scheduled by Shipper in consultation with LMM if not
subject to a Drilling Plan), then LMM shall waive the Gathering Fee for
any Gas delivered to the Gathering System from such Flow Line *** Days for
each Day that the connection is delayed; provided, however, that should
such delay in connection last more than *** Days, then such Connectable
Well and all remaining uncompleted xxxxx in the Project will no longer be
subject to this Agreement. This Agreement shall be amended to
include the Receipt Point at which the Gas associated with each such
Connectable Well will be received by LMM, which amendment shall be
effective the date the well is connected to the Gathering
System.
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(b)
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Future Expansion Xxxxx in Area
of Interest. If during the term of this Agreement
Shipper owns any right, title or interest in Gas that is to be produced
from any future well that is not a Connectable Well in the Area of
Interest, (each an “Expansion Well”), then
Shipper shall, at least ten (10) Business Days prior to drilling the well,
give LMM written notice identifying the name of the well, the location of
the well, and a reasonable estimate of the well’s first date of
production. Failure of Shipper’s Operator to so notify LMM
shall not impair LMM’s rights under this Section 2.3(b). Such Expansion
Well will be subject to the provisions of Section 2.6, below, provided
that Shipper shall at its sole cost and expense construct the Flow Line up
to a total of 2,500 linear feet from the wellhead. If Shipper,
by constructing its portion of the Flow Line is able to bring the Flow
Line to within 1,000 feet of the Gathering System, LMM shall have the
obligation, not the option, to connect the Flow Line to the Gathering
System.
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| GAS GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM) |
PAGE 8
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2.4
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LMM’s Option to Receive
Shipper’s Subsequently Acquired Interest in Gas from Existing and Future
Xxxxx in the Area of Interest. If after the Effective
Date Shipper acquires any right, title or interest in Gas that is being
produced, or is to be produced, from any existing or future well in the
Area of Interest, Shipper shall give LMM written notice identifying:
Shipper’s right, title or interest in such Gas (“Subsequently Acquired
Gas”); the name of the well; the location of the well; the well’s
historical production or estimated future production; whether the well
will require connection to the Gathering System in order for LMM to
receive the Subsequently Acquired Gas; and whether the Subsequently
Acquired Gas was acquired by Shipper subject to previously existing
dedication (and if so provide LMM a copy of the agreement identifying the
person or entity to whom it is dedicated and the remaining primary term of
such previously existing dedication). Each Shipper covenants
that it will not request or solicit any potential seller of any interest
in Gas to create any dedication of the Gas prior to Shipper’s
acquisition.
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(a)
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Existing
Xxxxx. If the Subsequently Acquired Gas is to be
produced from an existing well that is not subject to previously existing
dedication, then Shipper shall give LMM such written notice at least ten
(10) Business Days (a “Business Day” is any Day
that is not a Saturday, Sunday, or federal holiday) prior to the
Subsequently Acquired Gas being produced for Shipper’s
account. Failure of Shipper to so notify LMM shall not impair
LMM’s option under this Section
2.4.
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(b)
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Gas Not Subject to Previously
Existing Dedication. If the Subsequently Acquired Gas is
not subject to previously existing dedication and is from a Connectable
Well, such well shall be connected to the Gathering System consistent with
the provisions of Section 2.3(a) above. If the Subsequently
Acquired Gas is not subject to previously existing dedication but is from
an Expansion Well, then such Expansion Well will be subject to the
provisions of Section 2.3(b),
above.
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(c)
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Gas Subject to Previously
Existing Dedication. If
the Subsequently Acquired Gas is subject to a previously existing
dedication to a Third Party Gathering System at the time Shipper acquires
the Gas, Shipper shall give LMM an additional *** Days’ written notice
preceding the expiration or termination of the primary term of the
previously existing dedication. *** Subsequently Acquired Gas
as described in this paragraph 2.4(c) shall be connected to the Gathering
System at LMM’s sole cost and expense (including, without limitation, the
cost of any Flow Line), which cost and expense will not be subject to the
provisions of Section 2.8,
below.
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2.5
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Acquisition
of Target Business
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(a)
|
If
Shipper identifies a possible acquisition of interests in production or
acreage that would fall within the Area of Interest, whether by acquiring
assets or equity interests with respect thereto (a “Target Business”), and
if the Gas from the interests in the Target Business is gathered by a
Producer System (“Gathering Assets”) that
will be acquired in connection with Shipper’s proposed acquisition of the
Target Business (the “Proposed Acquisition”),
Shipper shall give LMM written notice (the “Offer Notice”) of the
Proposed Acquisition as soon as practicable, but in any event not less
than *** Days prior to making any binding offer in respect of the Proposed
Acquisition. The Offer Notice shall identify (i) the Gathering
Assets, (ii) the proposed seller of the Gathering Assets, (iii) the
anticipated schedule to be followed in the Proposed Acquisition
transaction, including, without limitation, the date on which Shipper
intends to make its offer in respect of the Proposed Acquisition (as
determined by Shipper, but in any event such anticipated offer date shall
be no earlier than ***Days from the date of the Offer Notice) and (iv) any
other information that may be necessary for the parties to evaluate
whether to jointly pursue the Proposed Acquisition (for the avoidance of
doubt, LMM shall have no right to pursue any Proposed Acquisition
separately from Shipper absent the prior written consent of Shipper, which
shall not be unreasonably withheld). Not less than *** Days
prior to the date identified by Shipper as the date Shipper will make its
offer in respect of the Proposed Acquisition, LMM shall notify Shipper of
whether it has elected to offer to participate in the Proposed Acquisition
and the terms of LMM’s offer (including, without limitation, if there is
no gathering fee and no allocation by seller upon which to determine a
gathering fee for Gas Gathered on the Gathering Assets following the
closing of the Proposed Acquisition, LMM’s proposed gathering fee for the
time period following the closing of the Proposed Acquisition); failure by
LMM to timely make an offer to participate shall be deemed to be an
election by LMM not to participate in the Proposed
Acquisition. Shipper may either accept or reject LMM’s timely
offer in its sole discretion. If LMM elects not to participate,
then LMM shall not have any rights in respect of the Proposed Acquisition
or the Target Business.
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| GAS GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM) |
PAGE 9
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(b)
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In
the event the nature of the Proposed Acquisition requires that an offer be
made by Shipper before the expiration of *** Days from the date of
Shipper’s Offer Notice, Shipper shall include such statement in its Offer
Notice, and Shipper and LMM shall attempt to negotiate a shorter time
period by which LMM has to elect to participate in the Proposed
Acquisition. If the parties cannot agree on a shorter time period, Shipper
shall have the right to proceed with its offer, provided that if Shipper
is successful in acquiring the Target Business, LMM and Shipper may,
following Shipper’s closing on the Target business, continue to discuss
under what terms LMM may be allowed to purchase the Producer System that
is part of the Target
Business.
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|
(c)
|
Exception for Marcellus Shale
Formation Gas. Any Gas produced from the Marcellus Shale
formation from xxxxx spudded following Shipper’s acquisition of the Target
Business and within the acreage acquired as part of the acquisition of the
Target Business shall be subject to the dedication described in Section
1.1 above.
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(d)
|
Limitation on Operation of
Gathering Assets by Shipper. In the event that LMM does
not participate with Shipper in a given Proposed Acquisition pursuant to
this Section 2.5, Shipper may acquire, own and operate such Gathering
Assets; provided, that Shipper (i) may utilize such Gathering Assets
solely to gather Gas produced from xxxxx on the acreage acquired by
Shipper in the related Proposed Acquisition and may not transport any
third-party volumes through such Gathering Assets except to the extent
that such third-party Gas was being transported on the Gathering Assets
prior Shipper’s acquisition of the Gathering Assets, and (ii) may not
expand or improve the operating capacity of such Gathering Assets except
to the extent necessary to Gather Shipper’s Gas from the acreage acquired
as part of Shipper’s acquisition of the Target Business.
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2.6
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Gathering
System Expansions.
|
|
(a)
|
Shippers
shall provide to LMM at the start of each calendar quarter a plan
forecasting drilling and development activity within the Area of Interest
for the immediately ensuing *** Months (the “Scoping Plan”) and a
plan forecasting drilling and development activity for the immediately
ensuing *** Months (the “Drilling Plan”)
(together the “Scoping Plan” and the “Drilling Plan” may be referred to as
the “Plans”). Each
Drilling Plan shall include a description of each individual project
(which may be limited to a single well, each a “Project”), which Project
description shall at a minimum include ***; and any other information
reasonably requested by LMM. Upon request, and provided such
document is available, Shipper shall provide LMM with a copy of any of
Shipper’s authority for expenditure documents relating to any well or
Project. The parties shall meet no less frequently than once a
Month to review the Plans, discuss any changes to the Plans, and to
discuss alternatives with regard to the possible expansion of LMM’s
Gathering System. Upon receipt of the Drilling Plan, LMM shall,
within *** Days, provide Shippers for each Project described in the
Drilling Plan, either a proposal (the “Expansion Proposal”)
outlining the recommended facilities to be installed in order to Gather
Shippers’ Gas from a Project (the “Expansion”) or, at LMM’s
election, notice to Shipper that it has elected to not expand the
Gathering System to connect a Project. The Expansion Proposal
for each Project with respect to which LMM has elected to build an
Expansion will include (i) a detailed description of the facilities that
will comprise the Expansion, including without limitation ***, (ii) all
hydraulic modeling results and assumptions relating to the Expansion;
(iii) ***; (iv) the estimated throughput capacity of the Expansion; (v)
***, (vi) construction milestones including the date on which construction
of the Expansion will commence, the date for completion of installation of
all proposed compression and processing plants, if any, to be included in
the Expansion, and the date on which the expanded Gathering System will be
available to receive the Gas and (vii) any other information reasonably
requested by Shipper.
|
| GAS GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM) |
PAGE 10
|
|
(b)
|
Upon
receipt of each Expansion Proposal, Shippers shall have *** Days to
either:
|
|
(i)
|
accept
the recommendations as presented in an Expansion Proposal, in which case
LMM shall proceed with the development and construction of the Expansion
as described in the Expansion Proposal, and Shippers shall be liable for
the recovery of the costs to construct the facilities as set forth in
Section 2.8, above; or
|
|
(ii)
|
reject
the recommendations as presented in an Expansion Proposal, and instead
propose an alternative(s) to the recommendations as
proposed. If Shippers propose an alternative to the recommended
facilities and construction plan, LMM shall have the option, within ***
Business Days to either:
|
|
(A)
|
elect
to build the Expansion in accordance with Shipper’s proposed
alternative;
|
|
(B)
|
work
with Shippers to revise the recommendation into a mutually agreeable
alternative;
|
|
(C)
|
reject
the alternative and elect to construct LMM’s originally recommended
facilities, provided that in this instance, LMM’s recovery pursuant to
Section 2.8 shall be limited to the estimated cost of Shippers’
alternative; or
|
|
(D)
|
reject
the proposed alternative without electing to construct either LMM’s or
Shippers’ recommendations, and instead opt to enlist a neutral third party
(Project Arbitrator) to determine which of the conflicting alternatives is
based upon the most optimal system design that is specific to the Project
for which the recommendations were proposed in terms of cost and scope of
the Project, taking in to account the cost to Shipper to connect to the
Legacy Gathering System, the Marcellus Gathering System, or a third party.
The Project Arbitrator shall be chosen by agreement between LMM and
Shippers and shall have relevant engineering and project development
experience in the natural gas industry. Shippers and LMM will each pay
one-half of the cost of the Project Arbitrator. Shipper and LMM shall each
provide their proposed recommendations to the Project Arbitrator upon his
or her retention and shall meet together with the Project Arbitrator at a
time designated by such Project Arbitrator, which time shall be within ***
Days of his or her retention (or such other time as LMM and Shipper may
agree) to present their respective recommendations, and the Project
Arbitrator shall have *** Days to choose one or the other of the
recommendations. The Project Arbitrator shall have no authority
to revise either recommendation prior to selection, but must make his or
her selection on the basis of the recommendations presented by LMM and
Shippers. If the Project Arbitrator chooses Shipper’s
recommendation, then LMM shall construct the Expansion in accordance with
the selected recommendation and the recovery of the costs of construction
pursuant to Section 2.8 shall be limited to the estimated cost of
Shipper’s recommendation as chosen by the Project Arbitrator,
but if Shipper’s recommendation is based upon connecting to a third party,
then LMM may nonetheless elect to construct LMM’s originally recommended
Expansion, provided that in this instance, LMM’s recovery pursuant to
Section 2.8 shall be limited to
***.
|
| GAS GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM) |
PAGE 11
|
|
(c)
|
If
LMM fails to construct the Expansion in accordance with the schedule
described in the Expansion Proposal as such Expansion Proposal may be
modified pursuant to Section 2.6(b), above, then after a well is
ultimately connected, Shipper shall pay the Reduced Fee for a period that
equals ***. Notwithstanding the foregoing, if such well remains
unconnected for *** Days beyond the scheduled completion date, then
Shipper will have the option to either connect the well to the Gathering
System at its own cost and expense and pay the Reduced Fee thereafter or
such gas shall be released from dedication
hereunder.
|
|
(d)
|
If
the constructed Expansion materially fails to perform in accordance with
the Expansion Proposal, as the Expansion Proposal may be modified pursuant
to Section 2.6(b), above, but excluding failures by LMM to maintain Target
Suction Pressures and operating pressures for which Shipper would be
covered under Section 1.6, then Shipper shall pay the Reduced Fee during
any period of such nonperformance and thereafter return to the Gathering
Fee set forth in Exhibit “E”. Notwithstanding the foregoing, if
such expansion continues to materially fail to perform for *** Days in the
aggregate in any *** Day period, then Shipper will have the option to
either (i) continue to cause Gas to be Gathered through the nonperforming
expansion into the Gathering System at the Reduced Fee during the time of
nonperformance, (ii) construct at its own cost and expense a separate
connection to the Gathering System to Gather the Gas that the
nonperformance of the expansion stranded from the Gathering System, and
pay the Reduced Fee with respect to such Gas, or (iii) remove such Gas
from the dedication.
|
|
2.7
|
Connections where LMM Elects to
Not Connect well in Drilling Plan. If LMM does not exercise its
option to connect an Expansion Well (including where such Expansion Well
is not part of a Project), then LMM will be deemed to have elected not to
connect such Expansion Well or Project to the Gathering
System. If LMM elects not to connect an Expansion Well or
Project to the Gathering System, then Shipper may, in Shipper’s sole
discretion, connect such Expansion Well or Project, at its sole cost and
expense, to: (i) the Gathering System, subject to the terms and conditions
of this Section 2.7; or (ii) to a third party, provided that any such
Expansion Well or Project connected to a third party will no longer be
subject to this Agreement. For the avoidance of doubt, if LMM does not
exercise its option to connect an Expansion Well that is part of a
Project, then the foregoing remedy described in Section 2.7 (i) and (ii)
shall apply to that well and to all remaining uncompleted xxxxx in the
Project. If Shipper elects to connect such Expansion Well or
Project to the Gathering System, then, when Shipper has developed a
reasonable estimate for the connection of such Expansion Well or Project
(“Shipper’s
Estimate”), Shipper shall provide the Shipper’s Estimate to LMM,
and LMM shall have *** Days to elect to connect such Expansion Well or
Project, as the case may be, on the basis of Shipper’s
Estimate. If LMM again chooses to not make the connection after
review of Shipper’s Estimate, and if Shipper elects to proceed to connect
such Expansion Well or Project to the Gathering System, Shipper shall pay
to LMM only the Reduced Fee as set forth in Exhibit “E” for all volumes
from such Expansion Well or Project which are received into the Gathering
System through the Shipper-constructed connection. Shipper
shall retain title to all Flow Lines or other lines and equipment
installed by Shipper in order to connect such Expansion Well or Project in
accordance with this Section 2.7. In the event there is any
increase in the drilling activity within *** years of Shipper connecting
to the Gathering System which results in a greater number of xxxxx within
the area of connection constructed by Shipper hereunder, or if the ratio
of the xxxxx’ formations or depth objectives (e.g., Devonian or Marcellus)
varies from that shown in the Drilling Plan, then LMM shall have option to
purchase such gathering assets for ***. Should LMM purchase such gathering
assets, Shipper shall pay the Gathering Fee set forth in Exhibit
“E”.
|
| GAS GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM) |
PAGE 12
|
|
2.8
|
Recovery
of Costs.
|
|
(a)
|
If
LMM connects an Expansion Well to the Gathering System in accordance with
Section 2.6, and after the *** Months following the connection (“Recovery Period”), to
the extent LMM’s Actual Cost exceeds the Recovered Cost (as defined
below), LMM shall be entitled to recover its Actual Cost from
Shipper. LMM’s “Recovered Cost” shall be
determined by multiplying the allocated volumes of Gas from Shippers and
third parties, in Dth, Gathered by LMM during the Recovery Period by the
Gathering Fee and multiply that product by ***. If at the end
of the Recovery Period the Recovered Cost is less than the Actual Cost,
Shipper shall, within *** Days of the receipt of a statement from LMM
detailing LMM’s Actual Cost, pay LMM an amount equal to the difference
between the Actual Cost and the Recovered Cost, with such difference being
divided by ***, to the extent that Shipper does not dispute LMM’s
calculation of its Actual Cost. If this Agreement should
terminate or expire prior to the end of the Recovery Period for the well
and the Recovered Cost through such termination or expiration is less than
the Actual Cost, Shipper shall, within *** Days of the receipt of a
statement from LMM, pay LMM an amount equal to the difference between the
Actual Cost and the Recovered Cost, to the extent that Shipper does not
dispute LMM’s calculation of its Actual Cost. For purposes of
this Section 2.8, “Actual
Cost” shall be defined as the actual third-party costs incurred by
LMM to connect the Expansion Well, but shall be limited to the facilities
on and installation of pipeline *** inches (***”) in diameter or less
upstream of any compression facilities on the Gathering
System.
|
|
(b)
|
Shipper
shall make a good faith effort to timely complete each Project. In the
event LMM has incurred costs building an Expansion to connect a Project,
which costs are not otherwise subject to Section 2.8(a), and if Shipper
fails to complete such Project in good faith, then LMM shall have the
right to recover its direct costs allocated to Shipper in accordance with
Section 2.6(a) incurred in connection with building the Expansion for the
Project, as described in Section 2.8(a), subject to LMM’s obligation to
mitigate such costs. Notwithstanding the foregoing, LMM shall have the
right to recover its costs as described in this Section 2.8(b) in the
event Shipper does not complete a Project due to any reason other than (i)
an adverse change in the economics of the Project, (ii) an event of Force
Majeure, including without limitation and in addition to any other
definition of Force Majeure herein, regulatory limitations, deficiencies
in title or other impediments to access, inability to market gas (provided
such inability is outside the reasonable control of Shipper and can be
cured at reasonable cost to Shipper), gas quality, or unexpected
geological conditions, or (iii) any act of or failure to act by
LMM. For purposes of this Agreement, the phrase “an adverse
change in the economics of the Project” shall mean that the Project, as
set forth in the relevant Drilling Plan and modified as required by
then-current assumptions relating to operating parameters, Gas pricing and
other considerations adversely affecting the Project, does not have a
positive after-tax net present value (i) when the analysis is
performed using the criteria outlined in Exhibit “H”, (ii) using a
*** percent (***%) discount rate and (iii) using a per annum Gas price
assumption equal to the average *** price adjusted for any basis
differential then in effect at the time of determination fixed for the
useful life of each well in the
Project.
|
|
|
2.9
|
Standard of Construction and
Operation. All Flow Lines and well connections performed
by Shipper to Shipper xxxxx and to the Gathering System shall be in
accordance with industry standards and consistent with the methods and
standards employed with respect to other xxxxx connected to the Gathering
System. Any such well shall be required to adhere to all of the operating,
safety, pressure, and measurement provisions contained in this Agreement
or otherwise reasonably required by LMM from time to time in the ordinary
course of LMM’s gathering
business.
|
|
2.10
|
Shipper’s Liability for Failure
to Abide by Dedication. Unless LMM ultimately declines
to exercise any option to connect any well under this Article 2, or such
xxxxx have been released from dedication pursuant to this Agreement,
Shipper shall be liable to LMM for any and all damages resulting from
Shipper’s connection of xxxxx to any gathering system other than the
Gathering System.
|
| GAS GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM) |
PAGE 13
|
|
2.11
|
Initial Drilling Plan and
Initial Connection Plan. The parties agree that the
initial Drilling Plan attached hereto as Exhibit “I-1” and the
initial connection plan attached hereto as Exhibit “I-2” (the “Initial Connection
Plan”) establish the preliminary agreed upon activities and
schedule for the period described therein (for the avoidance of doubt, and
not withstanding anything else in this Agreement to the contrary,
Exhibits “I-1” and “I-2” need not necessarily cover a twelve (12)
Month period). Those portions of the Initial Connection Plan
addressing Expansion Xxxxx (if any), shall be deemed to be a timely given
and fully accepted Expansion Proposal for the period described in
Exhibit “I-2.”
|
|
3.
|
CONDITIONING
OF GAS
|
|
3.1
|
Gas Failing to Meet Certain
Specifications. In the event that Shipper’s Gas does not
meet the quality specifications set forth in Exhibit “A”, part C of this
Agreement, LMM shall, without cost to Shipper or LMM, blend such Gas with
existing production so that the Gas meets the applicable specifications
or, in the event blending does not resolve the issue, LMM may shut in the
well or xxxxx from which the off-specification Gas is produced and provide
Shipper with a temporary release from dedication under this Agreement with
respect to such xxxxx.
|
|
3.2
|
Installation of Conditioning
Facilities by LMM. LMM shall provide written notice to
Shipper within *** Days following the receipt of all information that LMM
has reasonably requested that Shipper provide (which request shall be made
within *** Business Days of the Day on which the well or xxxxx were
shut-in pursuant to Section 3.1 above) to evaluate whether the
construction of facilities or the utilization of existing available
facilities (either owned by LMM or by any third party) is
necessary to bring Gas back into the required specifications. If LMM fails
to timely provide notice to Shipper as set forth above, Shipper’s Gas
which has been shut in shall be released from dedication
hereunder. In the event LMM elects to construct and operate
conditioning facilities to handle the off-specification Gas, or otherwise
utilizes existing available facilities, LMM may choose on a well-by-well
basis to condition the Gas either (a) on a Dth/keep whole basis, in which
case LMM shall retain the natural gas liquids processed from Shipper’s Gas
and will make available for Shipper’s account one hundred percent (100%)
of Shipper’s allocated plant inlet Dth at the Delivery Point(s) (in which
case, LMM shall install sampling mechanisms at each plant inlet and draw
samples from the Gas at each plant inlet at least semi-annually, and
Shipper shall also have access to such sampling mechanisms to draw samples
in its discretion) or (b) for a fee, which conditioning fee shall be
sixteen percent (16%) of the sale of the processed natural gas
liquids. If LMM elects to condition Shipper’s Gas on a keep
whole basis, as described above, and if gas is unavailable for LMM to
deliver to Shipper’s account in order to keep Shipper whole, then LMM may
make payment to Shipper to account for the dekatherms of Shipper’s Gas
that were shrunk out of the processing of Shipper’s Gas with reference to
pricing and volumes at the relevant Delivery Point; provided, however,
that in no event shall LMM remove natural gas liquids to the extent that
Shippers’ Gas delivered at any Delivery Point is below the minimum heating
value specification, if any, required by the Interconnecting Pipeline at
such Delivery Point. Regardless of the conditioning option chosen by or
for LMM, Shipper shall continue to pay the Gathering Fee on the Gas
conditioned.
|
|
3.3
|
Failure by LMM to
Condition. LMM shall use commercially reasonable efforts
to diligently pursue installation of conditioning facilities or the use of
existing facilities (including third party facilities) where such
installation or utilization has been determined to be
necessary. If, after the later of (a) *** Months of the
xxxxx first being subject to temporary release, or (b) *** Months after
receiving the required permits for the installation of conditioning
facilities, the xxxxx are still subject to temporary release as set forth
in Section 3.1, above, and LMM is not conditioning all of the
off-specification Gas in order to bring the Gas in compliance with the
applicable specifications set forth in Exhibit “A”, part C, the xxxxx
which are producing the off-specification Gas shall be permanently
released from dedication hereunder upon written notice from
Shipper.
|
| GAS GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM) |
PAGE 14
|
|
|
3.4
|
Processing
Facilities. When it appears that certain xxxxx or
Projects will likely require processing of the Gas for removal of
commercially viable volumes of natural gas liquids, Shipper will include
such anticipated processing requirements in the Plans and the Project
descriptions as provided in Section 2.6. LMM shall have the
exclusive option to provide processing services to Shippers for the
proposed Projects as follows. If LMM elects to install
Processing Facilities under a Project described pursuant to Section 2.6 to
provide processing services, or to provide processing services through
utilization of existing facilities (including third party facilities), it
shall so notify Shippers in its Expansion Proposal (provided that Shipper
has given LMM all information reasonably requested by LMM to make an
informed decision). Prior to the commercial operation of the
processing facilities, LMM shall designate, in its sole discretion,
whether the processing services shall be provided pursuant to a Dth/keep
whole structure or a percent of liquids structure, at LMM’s sole
option.
|
|
(a)
|
If
LMM elects to process Shipper’s Gas pursuant to the Dth/keep whole
structure, LMM will retain one hundred percent (100%) of the natural gas
liquids Processed from Shippers’ Gas and LMM will either (i) deliver one
hundred percent (100%) of Shippers’ allocated plant inlet Dth to the
Delivery Points(s) or (ii) make a cash payment to Shippers equal to the
wholesale market price for natural gas at the time and the location,
multiplied by the Dths of Shippers’ Gas that were consumed as Shrink in
the processing of Shippers’ Gas during the prior Month. Such processing
will be performed under a separate agreement mutually acceptable to
Shipper and LMM.
|
|
(b)
|
If
LMM elects to process Shipper’s Gas under a percent of liquids structure,
Shippers shall receive *** percent (***%) of the gross plant products
processed from Shippers’ Gas and Shippers shall provide
*** percent (***%) of the shrink attributable to the gross
plant products processed from Shippers’ Gas. Such processing
will be performed under a separate agreement mutually acceptable to
Shipper and LMM.
|
Regardless
of
the processing option chosen by LMM, Shipper shall continue to pay the Gathering
Fee on the Gas processed.
If LMM
elects to not process Shippers’ Gas for xxxxx associated with the proposed
Project, then Shippers may seek processing services from a third party provider,
and the Gas associated with that Project shall be released from dedication
hereunder.
|
4.
|
STATEMENTS
AND PAYMENT
|
|
4.1
|
Report and Statement by
Shipper. Where CTM is not being performed by LMM,
Shipper shall report to LMM (a) the Day(s) of production, the Month and
year in which such production is to be recognized, Dth pressure base, Btu
pressure base, Daily Mcf, Daily Btu, Daily Dth and quality of Shipper’s
Gas and (b) the Gross Sales Price and the amount and calculation of any
Gathering Fee determined using the Gross Sales Price, together with
reasonable and appropriate supporting documentation. Whether or
not CTM is being performed by LMM or by Shipper, Shipper shall report to
LMM the Gross Sales Price for calculation of the Gathering
Fee. Such report shall be transmitted to LMM by telephone,
e-mail, text message or facsimile on or before the later to occur of ***
(the “Initial Report
Deadline”). Shipper shall also send to LMM via mail not
later than five (5) Business Days following the Initial Report Deadline a
written statement confirming such report. Any adjustments to
such report shall be sent as a net adjustment identified by the Day of
production. LMM may request an additional Monthly electronic
audit file with all of the hourly, daily, configuration and event/alarm
data.
|
|
4.2
|
Statement by
LMM. Not later than *** Business Days following the
Initial Report Deadline with respect to each Month, LMM shall make
available to Shipper electronically and/or via mail a statement setting
forth the following:
|
|
(a)
|
The
number of Dth of Shipper’s Gas allocated to Shipper at the Receipt
Point(s) during the relevant Month, based upon the volume of Gas delivered
at the Delivery Point(s);
|
|
(b)
|
The
number of Dth delivered by LMM for Shipper’s account to the Delivery
Point(s) during the relevant
Month;
|
| GAS GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM) |
PAGE 15
|
|
(c)
|
The
number of Dth of Shipper’s Gas retained by LMM as Gathering Fuel during
the relevant Month;
|
|
(d)
|
Gains/losses
of Shipper’s Dth;
|
|
(e)
|
The
fees and any other amounts due and payable by Shipper for services
rendered during the relevant Month(s);
and
|
|
(f)
|
Any
interest due and payable.
|
|
4.3
|
Payment by
Shipper. LMM shall provide Shipper with the necessary
information and authorization to allow electronic payment to LMM’s
designated account. On or before the ***, Shipper shall remit
payment electronically for all amounts due LMM as set forth on the
statement described in Section 4.2. If *** is a Saturday,
Sunday or legal holiday, then payment shall be *** on a Day which is not a
Saturday, Sunday or legal
holiday.
|
|
4.4
|
Notice. Any
notice called for in the Agreement shall be in writing and shall be
considered as having been given if delivered personally, by mail, by fax,
or by express courier, postage prepaid, by either party to the other at
the addresses given below or by electronic means. Routine
communications, including Monthly statements, shall be considered as duly
delivered when mailed by ordinary mail or otherwise sent in accordance
with the Agreement. Unless changed upon written notice by
either party, the addresses are as
follows:
|
LAUREL
MOUNTAIN MIDSTREAM, LLC
***
Notices and Statements to
Shipper:
***
With a copy of Notices
to:
***
|
5.
|
TERM
|
This
Agreement shall become effective June 1, 2009 (“Effective Date”) and continue
through the later of (a) for so long as Gas is produced or able to be
produced from any well on Shipper’s Existing Well Interests, Future Well
Interests, Existing Third Party Well Interests, or Investment Program Well
Interests in economic quantities without a lapse of more than *** Days; (b) as
long as Gas which is Subsequently Acquired Gas is produced or able to be
produced from xxxxx within the Area of Interest subject to this Agreement in
economic quantities without a lapse of more than *** Days; or (c) so long as any
Shipper has any interest in or controls reserves within the Area of
Interest.
|
6.
|
ASSIGNMENT
OF RIGHTS
|
|
6.1
|
Successors and
Assigns. This Agreement shall be binding upon and,
subject to the limitations on transfer hereafter provided, inure to the
benefit of the respective successors and assigns of the parties, and this
Agreement and the terms and provisions hereof shall constitute covenants
running with the land.
|
|
6.2
|
Restrictions on
Assignment. Except as expressly provided in this Article
and in Section 1.1 above, no Party may transfer this Agreement or any of
its rights hereunder or interest(s) in the leases dedicated
hereunder. Any transfer or attempted transfer not in accordance
with this Agreement shall be wholly void and shall not be recognized for
any purpose, and the party attempting the transfer shall remain liable and
a party hereto just as if no attempted transfer had been made, and all of
the parties shall continue to deal with the party purporting to transfer
to the exclusion of the purported
transferee.
|
| GAS GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM) |
PAGE 16
|
|
6.3
|
Permitted Transfers by
LMM. Subject to compliance with Section 6.5 herein, (i)
LMM may transfer all, but not less than all, of its rights, titles and
interests under this Agreement to an Affiliate without the approval of the
other parties, (ii) ***; and (iii) LMM may transfer all, but not less than
all, of its rights, titles and interests under this Agreement to any other
person that is not an Affiliate upon the prior written consent of the
other parties hereto, which consent shall not be unreasonably withheld,
conditioned nor delayed.
|
|
6.4
|
Permitted Transfers by
Shippers. Except for acreage swaps described in Section
1.1(d) above, and subject to compliance with Section 6.5 herein, (i) a
Shipper may transfer any of its rights, titles and interests under this
Agreement and in the Gas subject to dedication hereunder to an Affiliate
without the prior approval of LMM, and (ii) a Shipper may transfer all,
but not less than all, of its rights, titles and interests under this
Agreement and in the leases subject to dedication hereunder to a person
that is not an Affiliate upon the prior written consent of LMM, which
consent shall not be unreasonably withheld, conditioned nor delayed,
provided, in no event may a Shipper make any transfer of this Agreement or
its interest in the Gas subject to dedication hereunder which would have
the effect of separating the rights and obligations of such Shipper
hereunder from such Shipper’s ownership of its interest in the Gas
dedicated hereunder.
|
|
6.5
|
Other Conditions for
Transfer. Except for acreage swaps described in Section
1.1(d) above, and notwithstanding the provisions of Section 6.3 and 6.4,
no transfer of any interest hereunder shall be effective or recognized
unless the transferee expressly assumes and agrees to discharge all of the
obligations of the transferor under this Agreement applicable to the party
whose interest is transferred. Any such assumption and
agreement to discharge shall be by appropriate written instrument for the
express benefit of, and enforceable by, LMM (in the case of a transfer by
a Shipper) or by the Shippers (in the case of a transfer by LMM), as may
be applicable. If a transfer fully complies with all of the
requirements of this Section, the transferor party shall be relieved of
all obligations and liabilities under this Agreement pertaining to the
period after the effective date of such transfer, but in no event shall
the transferor party be relieved of any obligations under this Agreement
pertaining to the period prior to the effective date of such
transfer. No transfer by a party shall be binding or effective
upon the other parties until the first Day of the Month next following
receipt of written notice of such transfer by all other parties, together
with transferor’s and transferee’s compliance with all other terms and
provisions of this Section 6.
|
|
6.6
|
Definition and Other
Provisions. For the purposes of this Section 6, “transfer” shall include
any sale, assignment or other transfer, whether voluntary or involuntary,
by operation of law or otherwise, provided it shall not include the grant
of a lien or security interest on a Shipper’s interest hereunder so long
as the same shall remain inferior to the rights of LMM, but it shall
include any transfer by reason of foreclosure or other realization upon
such lien and security
interest.
|
| GAS GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM) |
PAGE 17
|
|
7.
|
EXHIBITS
AND SCHEDULES
|
This
Agreement incorporates and is subject to the following Exhibits and
Schedules:
|
Exhibit
|
First Reference
|
Content
|
||
|
Exhibit “A”
|
Recital B
|
Standard
Terms and Conditions
|
||
|
Exhibit “B”
|
Section 1.1
|
Area
of Interest
|
||
|
Exhibit “C”
|
Section A.28
|
Shipper’s
Existing Well Interests
|
||
|
Exhibit “D”
|
Section A.16
|
Delivery
Points
|
||
|
Exhibit “E”
|
Section 1.2
|
I. MDQ
and Target Suction Pressures
|
||
|
II. Gathering
Fee for Shippers’ Gas
|
||||
|
III. Alternative
Gathering Fees for Certain Gas
|
||||
|
Exhibit “F”
|
Section 1.1(a)(iv)
|
Excluded
Interests
|
||
|
Exhibit “G”
|
Section 1.1(b)
|
Memorandum
of Contract Form
|
||
|
Exhibit “H”
|
Section 2.8(b)
|
Criteria
for Determining “A Change in the Economics of the
Project”
|
||
|
Exhibit “I-1”
|
Section 2.11
|
initial
Drilling Plan
|
||
|
Exhibit “I-2”
|
Section 2.11
|
Initial
Connection
Plan
|
|
8.
|
SUPERSEDED
AGREEMENT
|
As of the
Effective Date, each of the Shippers, APL and APL Operating (collectively the
“Terminating Parties”)
agree that the following agreement shall be terminated and of no further force
or effect as to any Person:
Omnibus
Agreement dated February 2, 2000, as amended
Master
Gathering Agreement dated February 2, 2000, as amended
Natural
Gas Gathering Agreement dated January 1, 2002, as amended
Each of
the Terminating Parties shall indemnify LMM from and against any claim arising
from or related to the foregoing terminations, including without limitation any
claim that such terminations are in breach of any other agreement or ineffective
as to any person or provision of the terminated agreements.
|
9.
|
JOINT
AND SEVERAL OBLIGATIONS
|
|
9.1
|
Joint and Several Liability and
Indemnity. Each Shipper acknowledges and agrees that it
shall be jointly and severally responsible for the payment, performance,
and discharge of the obligations of all Shippers under this
Agreement. If any Shipper chooses to contest the joint and several
nature of the obligations of the Shippers hereunder, each other Shipper
agrees to indemnify and hold LMM harmless from and against all reasonable
costs and expense, including reasonable attorneys’ fees, expended or
incurred by LMM in connection therewith, including without limitation, any
litigation with respect
thereto.
|
|
9.2
|
Change of Control
Exception. Notwithstanding any other provision of this
Agreement, including the foregoing, if there is a change of control of any
Shipper, then, all liabilities hereunder shall be several, and not joint
as between any such Shipper and any other Shipper for which there is a
change of control, and as between any such Shipper and any Shipper not
subject to a change in control if such liability arises after the change
of control.
|
|
9.3
|
Definition of Change of
Control. For purposes of this Agreement, the term “change of control” means
the occurrence of any of the following: (i) the
acquisition of ownership, directly or indirectly, beneficially or of
record, by any “person” (as that term is
used in Section 13(d)(3) of the Securities Exchange Act of 1934) of equity
interests representing more than fifty percent (50%) of the aggregate
ordinary voting power represented by the issued and outstanding equity
interests of a Shipper; (ii) the adoption of a plan relating to the
liquidation or dissolution of a Shipper; (iii) Atlas America, Inc., a
Delaware corporation, and/or one or more of its directly or indirectly
wholly-owned subsidiaries ceases to own more than fifty percent (50%) of
the issued and outstanding voting equity interests of Atlas Energy
Management, Inc., a Delaware corporation; or (iv) within a period of
twelve (12) consecutive calendar Months, individuals who were board
members of a Shipper on the first Day of such period or persons who were
appointed or nominated by such persons shall cease to constitute a
majority of the board members of that
Shipper.
|
| GAS GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM) |
PAGE 18
|
|
9.4
|
Exception for Sale of Shipper
Interests Subject to Dedication. If a Shipper assigns to
a non-Affiliate third party interests that are subject to the dedication
described in Section 1.1 of this Agreement, then all liabilities hereunder
shall be several and not joint as between Shippers and any such third
party shall be several and not joint if such liability arises after such
assignment.
|
|
10.
|
ENTIRE
AGREEMENT
|
This
Agreement, together with the Expansion Gathering Agreement constitutes the
entire agreement of LMM and the Shippers regarding gathering services in the
Area of Interest. This Agreement, together with its Exhibits,
contains the entire agreement of the parties with respect to the matters
addressed herein and supersedes all prior and contemporaneous agreements,
representations and understandings of the parties with respect to such
matters. The parties represent and acknowledge that in executing this
Agreement they do not rely on and have not relied on any representation or
statement, oral or written, which is not set forth in this
Agreement. The foregoing is not intended to affect the validity of
the Expansion Gathering Agreement, referenced above in recital C.
[Remainder
Of Page Intentionally Left Blank; Signatures Follow On Next Page]
IN
WITNESS WHEREOF, and intending to be legally bound, the parties hereto have
executed two duplicate original copies of this Agreement.
|
LMM:
|
SHIPPERS:
|
||||
|
LAUREL
MOUNTAIN MIDSTREAM, LLC,
|
ATLAS
ENERGY RESOURCES, LLC, a
|
||||
|
a
Delaware limited liability company
|
Delaware
limited liability company
|
||||
|
By:
|
Xxxxxxxx Xxxxxx Mountain, LLC, its | ||||
| operating member | |||||
|
By:
|
|||||
|
By:
|
Name:
|
Xxxxxxx
X. Xxxxx
|
|||
| Name: |
Xxxx
X. Xxxxxxxxx
|
Title:
|
President
and COO
|
||
| Title: |
Senior
Vice President
|
||||
|
ATLAS
ENERGY OPERATING COMPANY,
LLC,
a Delaware limited liability company
|
|||||
|
By:
|
|||||
|
Name:
|
Xxxxxxx
X. Xxxxx
|
||||
|
Title:
|
President
and COO
|
||||
|
ATLAS
AMERICA, LLC, a Pennsylvania
limited
liability company
|
|||||
|
By:
|
|||||
|
Name:
|
Xxxxxxx
X. Xxxxx
|
||||
|
Title:
|
President
|
||||
|
ATLAS
NOBLE LLC, a Delaware limited
liability
company
|
|||||
|
By:
|
|||||
|
Name:
|
Xxxxxxx
X. Xxxxxxx
|
||||
|
Title:
|
President
|
||||
|
RESOURCE
ENERGY LLC, a Delaware limited
liability
company
|
|||||
|
By:
|
|||||
| Name: |
Xxxxxxx
X. Xxxxxxx
|
||||
| Title: |
President
|
||||
Signature
Page to Legacy Gathering Agreement
|
VIKING
RESOURCES, LLC, a Pennsylvania
limited
liability company
|
|||
|
By:
|
|||
|
Name:
|
Xxxxxxx
X. Xxxxxxx
|
||
|
Title:
|
President
|
||
|
APL:
(solely for the purpose of Section 8)
|
|||
|
Atlas
Pipeline Partners, L.P., a Delaware
|
|||
|
limited
partnership
|
|||
|
By: Atlas
Pipeline Partners GP, LLC, its
general
partner
|
|||
|
By:
|
|||
|
Name: Xxxxxxx
X. Xxxxxxx
|
|||
|
Title: Vice
President
|
|||
|
APL
Operating: (solely for the purpose of
Section
8)
|
|||
|
Atlas
Pipeline Operating Partnership, LP, a
Delaware
limited partnership
|
|||
|
By: Atlas
Pipeline Partners GP, LLC, its
general
partner
|
|||
|
By:
|
|||
|
Name: Xxxxxxx
X. Xxxxxxx
|
|||
|
Title: Vice
President
|
|||
Signature
Page to Legacy Gathering Agreement
|
GAS
GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM)
|
PAGE
1
|
EXHIBIT
“A”
to
the
GAS
GATHERING AGREEMENT
For
Natural Gas on the
Legacy
Appalachian System
DATED
AS OF JUNE 1, 2009
between
LAUREL
MOUNTAIN MIDSTREAM, LLC
and
ATLAS
AMERICA, LLC
ATLAS
ENERGY RESOURCES, LLC
ATLAS
ENERGY OPERATING COMPANY, LLC
ATLAS
NOBLE LLC
RESOURCE
ENERGY LLC
VIKING
RESOURCES, LLC
ATLAS
PIPELINE PARTNERS, L.P.
ATLAS
PIPELINE OPERATING PARTNERSHIP, LP
STANDARD TERMS AND
CONDITIONS
|
A.
|
DEFINITIONS
|
This
Section A
defines only terms that are not defined in the text of this Agreement:
|
A.1
|
“Affiliate” (and its
derivatives) shall mean any person or entity that controls, is controlled
by or is under common control with the referenced person or entity at
issue. For the purposes of this definition, “control” means the
ownership, directly or indirectly, of more than fifty percent (50%) of the
Voting Stock, of such person or entity or, in the case of a person or
entity that is a limited partnership, the general partner of such person
or entity; and the terms “controlling” and “controlled” have
meanings correlative to the foregoing. “Voting Stock” shall mean
the securities or other ownership interest in any person or entity which
have ordinary voting power under ordinary circumstances for the election
of directors (or the equivalent) of such person or entity; provided in the
case of a person or entity that is a limited partnership, Voting Stock
shall mean the general partner interests of such limited
partnership. A person or entity shall not be deemed to be an
Affiliate solely by virtue of being a working interest partner, or an
operator of a well or a group of xxxxx, except that an Investment Program
shall in all instances be considered an Affiliate of Shippers,
hereunder.
|
|
A.1.A
|
“Area of Interest” shall
mean those counties described in Exhibit “B” under the heading “Area of
Interest”.
|
|
A.2
|
“British Thermal Unit” or
“Btu” shall mean
the measurement unit for the amount of heat required to raise the
temperature of one (1) pound of water one (1) degree Fahrenheit at 60
degrees Fahrenheit.
|
|
A.3
|
“Contract Year” shall
mean each consecutive twelve (12) Month period beginning with the
Effective Date hereof or, if the Effective Date is not the first Day of a
Month, then with the first Day of the Month following the Effective
Date.
|
|
A.3.A
|
“Confidential
Information” shall have the meaning set forth in Section L.6
of this Exhibit “A”.
|
|
A.4
|
“Connectable Well” means
a well owned or controlled by Shipper or an Affiliate of Shipper
(including without limitation any Shipper’s Future Well Interest and any
Investment Program Well Interest) that is within 2,500 feet of the
Gathering System such distance to be measured from the outlet of the
wellhead measurement facilities to the nearest point of interconnection
with the Gathering System.
|
|
GAS
GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM)
|
PAGE
2
|
|
|
A.5
|
“CTM” shall mean custody
transfer measurement which shall occur at the Delivery Point unless
otherwise expressly noted in this
Agreement.
|
|
|
A.6
|
“Cubic Foot” shall mean the
volume of Gas occupying one cubic foot of space when such Gas is at a base
temperature of sixty degrees Xxxxxxxxxx (00x F) and a base pressure of
14.73 Psia and shall be calculated in accordance with ANSI/API 2530 where
the factors for Fpwl
and Fhgt
shall each be equal to one (1).
|
|
|
A.7
|
“Day” or “Daily” shall mean
twenty-four (24) consecutive hours beginning at 9:00 am CST or as
designated by LMM.
|
|
|
A.8
|
“Decatherm” or “Dth” shall mean one
million (1,000,000) British Thermal
Units.
|
|
|
A.9
|
“Dehydrate” or “Dehydrating” shall mean
the removal of water vapor from
Gas.
|
|
A.9.A
|
“Delivery Point” shall
mean the upstream side of the inlet flange of the metering facilities
delivering Gas to an Interconnecting
Pipeline.
|
|
|
A.10
|
“Existing Third Party Well
Interests” means all existing xxxxx and working interest Gas owned
by any person not a Shipper or an Affiliate of a Shipper producing into
the Gathering System as of the Effective
Date.
|
|
A.10.A
|
“Expansion Well” shall
have the meaning set forth in Section 2.3 of the
Agreement.
|
|
|
A.11
|
“Field” shall mean any
point on the Gathering System upstream of a Delivery
Point.
|
|
|
A.12
|
“Flow Lines” means small
diameter sales or flow lines from a well, or such other type of line as
may connect a well to a gathering system in accordance with standard
industry practice; the term “Flow Line” shall include a meter of a type to
be determined by Shippers located at the wellhead (for the avoidance of
doubt, in no event shall Shipper be required to install any meter
downstream of the wellhead).
|
|
|
A.13
|
“Gas” shall mean any
mixture of gaseous hydrocarbons or of hydrocarbons and other gases, in a
gaseous state, consisting primarily of
methane.
|
|
|
A.14
|
“Gather”, “Gathered” or “Gathering” shall mean
the receipt of Gas at the Receipt Point(s) and the delivery of Gas at the
Delivery Point(s).
|
|
|
A.15
|
“Gathering Fuel” shall
mean the number of Dth of Gas used or consumed in the operation of the
Gathering System including, but not limited to, fuel, flared and vented
Gas and such Gas as may be lost and unaccounted for despite the prudent
operation of the Gathering System.
|
|
|
A.16
|
“Gathering System” shall mean the
Legacy Appalachian Gathering System, including those facilities used by
LMM to Gather Shipper’s Gas and which deliver Shipper’s Gas to the
Delivery Points outlined in Exhibit “D”, attached hereto, and used to
provide any other service in the Field, as set forth in Section
1.
|
|
|
A.17
|
“Gross Heating Value”
shall mean the total Btu content for a standard cubic foot of gas on a dry
basis as determined by calculation from a compositional analysis using
physical properties of gases at 14.73 psia and sixty degrees Fahrenheit
(60o
F), as prescribed by industry
standards.
|
|
A.17.A
|
“Gross Sales Price” shall mean the
price, per Dth, actually received by Shipper for Shippers’ Gas including,
or as adjusted to take into account, proceeds received or payments made
pursuant to financial hedging arrangements entered into by Shipper at
Shipper’s discretion, but LMM will have the right to participate in and
have one vote in Shipper’s hedging committee
meetings.
|
|
GAS
GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM)
|
PAGE
3
|
|
|
A.18
|
“Guaranteed Capacity”
shall mean that LMM guarantees to have the capacity available to provide
the Gathering identified in Section 1 except during times of capacity
allocation pursuant to
Section B.4.
|
|
|
A.19
|
“Interconnecting
Pipeline(s)” shall mean any pipeline connected immediately
downstream of the Delivery
Point(s).
|
|
|
A.20
|
“Investment Program”
means any entity (whether individual, corporation, limited liability
company, partnership, trust, unincorporated organization, association or
other entity) for whom Shipper or an Affiliate of Shipper acts as a
general partner, managing partner, manager, or over whom Shipper or an
Affiliate of Shipper otherwise has control, and the securities of which
have been offered and sold to
investors.
|
|
|
A.21
|
“Investment Program Well
Interests” means all existing xxxxx and all xxxxx drilled or
acquired after the Effective Date by or for the benefit of any Investment
Program, except for acquired xxxxx to the extent such acquired xxxxx are
subject to an existing dedication or commitment to another gathering
system at the time of Shipper’s or its Affiliate’s
acquisition.
|
|
|
A.22
|
“Mcf” shall mean one
thousand (1,000) Cubic Feet of Gas.
|
|
|
A.23
|
“MDQ” or “Maximum Daily Quantity”
shall mean maximum daily quantity of gas LMM commits to provide service
for under this Agreement, as described in Part I of Exhibit
“E”.
|
|
|
A.24
|
“MMcf” shall mean one
million (1,000,000) Cubic Feet of
Gas.
|
|
|
A.25
|
“Month” shall mean a
calendar month commencing on the first Day of that calendar month and
ending on the last Day of that calendar
month.
|
|
|
A.26
|
“Non-Guaranteed Capacity”
shall mean that LMM does not at any time guarantee to have the capacity
available to provide the Gathering identified in Section
1.
|
|
A.26.A
|
“Receipt Point” shall mean the
upstream flange(s) at the point of interconnection between LMM’s Gathering
System and the facilities owned by Shippers where LMM will receive
Shipper’s Gas for Gathering.
|
|
|
A.27
|
“Receipt Point Dth” shall
mean the number of Dth received for Shipper’s account at the Receipt
Point(s).
|
|
|
A.28
|
“Shipper’s Existing Well
Interests means the xxxxx so designated on Exhibit
“C”.
|
|
|
A.29
|
“Shipper’s Future Well
Interests” means xxxxx drilled or acquired after the Effective Date
by Shipper or its Subsidiaries in the Area of Interest, except for
acquired xxxxx to the extent such acquired xxxxx are subject to an
existing dedication or commitment to another gathering system at the time
of Shipper’s or its Affiliate’s
acquisition.
|
|
|
A.30
|
“Shipper’s Operator”
shall mean the operator of the facilities upstream of a given Receipt
Point. Shipper’s Operator, however, may also operate CTM
equipment located downstream of a given Receipt Point as provided in
Section D.4. Shipper’s Operator may be either Shipper or a
third party acting on Shipper’s behalf. When Shipper’s Operator
is a third party acting on Shipper’s behalf, it shall be Shipper’s
responsibility to cause such third party to comply with those terms of
this Agreement which refer to Shipper’s
Operator.
|
|
A.30.A
|
“Shrink” shall mean the
Btu reduction of Gas attributable to lost or unaccounted for
Gas.
|
|
GAS
GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM)
|
PAGE
4
|
|
|
A.31
|
“Subsequently Acquired
Gas” shall have the meaning set forth in Section 2.4 of the
Agreement.
|
|
A.31.A
|
“Subsidiaries” shall mean
any Affiliate that is controlled by the person at issue. For
purposes of this definition of “Subsidiary”, the term
“control” shall
mean the ability to elect a majority of the board of directors or similar
body.
|
|
|
A.32
|
[INTENTIONALLY
DELETED]
|
|
|
A.33
|
“Third Party Gathering
System” shall mean any
system of pipelines and other facilities used for the Gathering of Gas
which is not owned or under the direct control of
LMM.
|
|
|
A.34
|
“Treat”, “Treating” or “Treatment” shall mean the
removal, reduction or dilution of CO2 in
Gas.
|
|
|
A.35
|
“LMM’s Nomination System”
shall mean, LMM’s nomination and scheduling system, including any
modification or replacement thereof which LMM may unilaterally require
after providing thirty (30) Days prior written notice to
Shipper.
|
|
B.
|
OPERATING
PROVISIONS
|
|
|
B.1
|
Operational
Control. LMM shall be entitled complete operational
control of its facilities (including the operation and configuration of
the Gathering System) and shall operate its facilities in a commercially
reasonable manner that is consistent with its obligations under this
Agreement and its operational (including without limitation environmental
and safety) policies and procedures. However, this Section B.1
shall not be interpreted to relieve LMM of its obligations under this
Agreement.
|
|
|
B.2
|
Maintenance. LMM
shall, without liability, except as specified herein, be entitled to
perform such maintenance, testing, alteration, modification, repair or
replacement of the Gathering System, or any part thereof, as would be done
(including prior written notice, as applicable) by a prudent operator
(“Maintenance”),
even if it requires the allocation of capacity pursuant to Section
B.4.
|
|
|
B.3
|
Force Majeure. Except
with respect to the obligation to pay amounts owing hereunder, neither LMM
nor Shipper shall be liable in damages or otherwise to the other for
inability to perform any obligation under this Agreement, including
without limitation any obligation associated with the failure to meet any
deadline established herein, due to an event of Force Majeure. Without
limitation of the foregoing, any deadline otherwise established by this
Agreement shall be extended for the same amount of time during which LMM’s
or Shipper’s performance (as applicable) was prevented by an event of
Force Majeure. As used herein, the term “Force Majeure” shall
mean any act, omission, or circumstances occasioned by or in consequence
of any Acts of God, blockades, insurrections, riots, epidemics, flood,
washouts, landslides, mudslides, earthquakes, unusually severe weather
conditions, threat of hurricanes and tropical storms, lightning, civil
disturbances, war, explosions, mechanical failure, structural failure,
breakage of or accident to machinery, line of pipe, platform or xxxxx, the
inability or failure of downstream or upstream pipelines to deliver or
receive, the order of any court or governmental authority having
jurisdiction or any change in any applicable regulation materially
affecting the operation of the facilities or any other cause of a similar
nature (provided that such order or change in regulation was not sought or
supported by the party claiming suspension), whether of the kind herein
enumerated or otherwise, not reasonably within the control of the Party
claiming suspension, not contributed to by the negligence of, willful
misconduct by, or breach of this Agreement by the party claiming
suspension, and which by the exercise of due diligence such Party is
unable to prevent or overcome. Failure to prevent or settle any
strike or strikes shall not be considered a matter within the control of
the Party claiming suspension. With regard to the installation
of new facilities or modifications to existing facilities, delay or
inability to obtain any necessary permits or rights-of-way from a
regulatory agency or landowner after an application or request by a party
shall be deemed to be a Force Majeure event, provided that party has given
reasonable notice of any planned suspension of service to Shipper. Force
Majeure shall not relieve either Party of liability in the event of its
concurring negligence and shall only relieve the non-performing party from
liability for failure to perform under this Agreement for so long as such
party is making reasonable efforts to remedy the
situation. Force Majeure shall not relieve either party of its
obligation to pay money due under this
Agreement.
|
|
GAS
GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM)
|
PAGE
5
|
|
|
B.4
|
Allocation of
Capacity. Subject to LMM’s obligation to provide to
Shipper first priority service up to the MDQ as described in
Section 1.2 of the Agreement, if for any Day LMM determines that the
capacity of its Gathering System is constrained through Force Majeure or
as the result of Maintenance, LMM shall, without liability, allocate the
available capacity as follows:
|
|
|
(a)
|
Capacity
shall first be allocated pro rata to all shippers with Guaranteed Capacity
based upon the lower of their respective (i) Maximum Daily Quantities,
(ii) Available Supplies or (iii) Adjusted Available Supplies (to the
extent such terms apply to any shipper);
and
|
|
|
(b)
|
Any
remaining capacity shall be allocated pro rata to all shippers with
Non-Guaranteed Capacity based upon the lower of their respective (i)
Maximum Daily Quantities, (ii) Available Supplies or (iii) Adjusted
Available Supplies.
|
However,
if LMM can identify the location of the constraint, then LMM shall, without
liability, endeavor to impose such allocation upon only those shippers whose Gas
is affected by the constraint.
For
purposes of this Section B.4, “Available Supplies” shall mean
the number of Dth of Gas that a shipper will make available at each Receipt
Point for the account of that shipper, through nomination to the Gathering
System, and “Adjusted Available
Supplies” shall mean an Available Supply that may be adjusted by LMM to
the extent LMM finds the nominated Available Supply inaccurate.
|
|
B.5
|
Access, Easements and
Rights-of-Way. To the extent either party has the right
to allow access by the other party, the party with access rights shall
provide the other party such access to its facilities as is necessary and
convenient for that party to perform its obligations under this
Agreement. To the extent either party has the right
to do so, such party grants to the other party the use of all easements
and rights-of-way held by that party that are necessary and convenient for
the other party to perform its obligations under this
Agreement. Such use shall include, but not be limited to, those
rights under Shipper’s oil and Gas lease(s) to construct, operate, and
maintain pipelines and appurtenant facilities for the purpose of Gathering
Gas from the leasehold, and any rights of way held by LMM. Each
party shall be responsible for maintaining its access, easements and
rights-of-way at its sole cost and expense, provided that the
party relying on another party’s access rights shall indemnify, defend and
hold harmless the other party against any and all claims or liabilities
for damages arising from their access to any
site.
|
|
|
B.6
|
Shipper’s Delivery
Pressure. Shipper shall deliver Shipper’s Gas to the
Receipt Point(s) at pressure(s) sufficient to cause it to enter LMM’s
facilities against the pressures of LMM is obligated to maintain in
Section 1 of this Agreement. However, Shipper shall not
deliver Gas at a pressure exceeding the Maximum Allowable Operating
Pressure of LMM’s facilities (“LMM’s MAOP”). If Shipper
has the potential to deliver Gas above LMM’s MAOP, Shipper, at its sole
expense, shall implement pressure controls which eliminate this potential
and meet acceptable industry standards. LMM’s MAOP for a given
facility may be revised from time to time by LMM in its sole
discretion. Unless otherwise expressly provided in Section 1,
LMM is not obligated to modify the pressure(s) in its facilities in order
to cause the entry of Shipper’s Gas into its
facilities. Shipper shall equip its compression equipment, if
any, with:
|
|
|
(a)
|
over
pressurization protection devices in accordance with ANSI B31.8 to prevent
delivery pressure in excess of LMM’s
MAOP;
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|
|
(b)
|
Gas
cooling to prevent delivery temperatures in excess of 120° F into LMM’s
facilities; and
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|
GAS
GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM)
|
PAGE
6
|
|
|
(c)
|
pulsation
dampening equipment, as necessary, to minimize pulsation induced
measurement errors to less than two percent (2%) peak-to-peak square root
error.
|
|
|
B.7
|
LMM’s Delivery
Pressure. LMM shall, deliver Gas to the Delivery
Point(s) at sufficient pressure to cause the entry of Gas into the
Delivery Point(s).
|
|
C.
|
GAS
QUALITY
|
|
|
C.1
|
Gas Quality at Delivery
Points. Except as otherwise provided in this
Agreement:
|
|
|
(a)
|
Shipper’s
Gas at the Delivery Point(s) shall conform to the quality specifications
required from time to time by the Interconnecting
Pipelines.
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|
|
(b)
|
If
at any time Shipper’s Gas at the Delivery Point(s) fails to conform to
such quality specifications, Shipper may seek waivers of such quality
specifications from the Interconnecting Pipelines and LMM, as reasonably
requested by Shipper, shall cooperate in a reasonable manner in Shipper’s
efforts to secure such waivers; failing Shipper’s prompt receipt of such a
waiver for any reason, LMM shall give Shipper written notice of the
deficiency and Shipper shall immediately remedy the
deficiency.
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|
|
(c)
|
If
Shipper fails to immediately remedy the deficiency, LMM may refuse to
accept further deliveries of Shipper’s Gas that is causing the deficiency
at the Delivery Point.
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|
|
(d)
|
Shipper
shall be responsible for all damages to the Gathering System, including
costs of repair, due to its failure to comply with this Section
C.1.
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|
C.2
|
Removal of Liquefiable
Hydrocarbons in the Field. Except as otherwise provided
in this Agreement, Shipper’s Gas shall not be processed for removal of
liquefiable hydrocarbons prior to its receipt by LMM at the Receipt
Point(s) other than by the use of conventional mechanical liquid-Gas
separators operated at or above ambient temperatures. Shipper
shall own and be responsible for any liquid hydrocarbons removed by this
method from Shipper’s Gas. LMM shall own and be responsible for
any liquid hydrocarbons that condense in the Gathering System or are
otherwise removed between the Receipt Point and the Delivery
Point.
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C.3
|
Water Disposal. LMM
shall Dehydrate Shipper’s Gas as necessary and dispose of Shipper’s water
by evaporation. If evaporating Shipper’s water is ever
disallowed for any reason or is deemed to be uneconomic by LMM, Shipper
shall make alternate arrangements to dispose of Shipper’s water at
Shipper’s sole cost and expense and Shipper shall reimburse LMM for any
costs incurred by LMM in delivering Shipper’s water. Except to
the extent caused by LMM’s negligence or willful misconduct, Shipper shall
release, indemnify and defend LMM from and against any and all damages,
claims, actions, expenses, penalties and liabilities, including attorney’s
fees, arising from personal injury, death, property damage, environmental
damage, pollution, or contamination relating to the disposal of Shipper’s
water by either evaporation or the alternate arrangement(s) selected by
Shipper.
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|
|
C.4
|
CO2 Disposal. To
the extent that LMM removes CO2 from
Shipper’s Gas or otherwise generates CO2 from
stationary sources which are part of the Gathering System in providing
services to Shipper as set forth herein, and disposes of Shipper’s CO2 by
venting, if venting Shipper’s CO2 is
ever disallowed for any reason, is taxed, or is deemed to be uneconomic by
LMM, Shipper shall make alternate arrangements to dispose of Shipper’s
CO2 at
Shipper’s sole cost and expense and shall reimburse LMM for any costs
incurred by LMM in delivering Shipper’s CO2. Except
to the extent caused by LMM’s negligence or willful misconduct, Shipper
shall release, indemnify and defend LMM from and against any and all
damages, claims, actions, expenses, penalties and liabilities, including
attorney’s fees, arising from personal injury, death, property damage,
environmental damage, taxes, pollution, or contamination relating to the
disposal of Shipper’s CO2 by
either venting or the alternate arrangement(s) selected by
Shipper. The foregoing shall not apply to the extent that LMM
takes title to Shipper’s CO2
pursuant to separate written
agreement.
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|
GAS
GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM)
|
PAGE
7
|
|
|
C.5
|
Gas Quality at Delivery
Point(s). Subject to Shipper’s performance under Section
C.1 and Article 3 of this Agreement, Gas delivered by LMM at the Delivery
Point(s) shall conform to the most restrictive quality specifications
required from time to time by the Interconnecting
Pipeline(s).
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|
|
C.6
|
Gross Heating Value and
Component Analysis. The component analysis and Gross
Heating Value of the Gas shall be determined and calculated at least
semi-annually by whomever is operating the CTM equipment, as determined in
Section D.4, but either party may conduct such analysis at its discretion
and cost. The component analysis and Gross Heating Value of the
Gas shall be based on any of the following at the choice of the operator
of the CTM equipment; continuous samples, or on-line
analysis. The component analysis of the Gas shall be performed
by Gas chromatography in accordance with GPA 2261 or any pertinent
revision(s) thereto or replacement(s) thereof. If the component
percentages fall outside the limits of GPA 2261, then the operator of the
CTM equipment shall make a reasonable judgment as to the accuracy of the
component analysis. If neither party objects in writing to the
results within sixty (60) Days after their delivery, such results shall
become conclusive. If either party objects in writing to the
results within sixty (60) Days after their delivery, then: in the case of
spot samples, a re-sampling, redetermination and recalculation shall be
performed by a third party acceptable to both parties and such third
party’s results shall be used; and in the case of continuous samples or
on-line analysis, the analyzer shall be tested for accuracy according to
GPA 2261 and, if warranted, a recalculation of the components shall be
made by a means acceptable to the parties. The cost of any
re-sampling, retesting, redetermination and/or recalculation shall be
borne by the objecting party.
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|
|
C.7
|
Correction of Gross Heating
Value for Water Vapor. The Gross Heating Value of the
Gas shall be corrected for water vapor content in accordance with GPA 181
and 2172. Gas having a water vapor content of greater than ***
pounds per MMcf at CTM shall be considered fully saturated. Gas
having a water vapor content of less than or equal to *** pounds per MMcf
at CTM shall be considered dry.
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|
|
C.8
|
Computation
Factors. The specific gravity of the Gas shall be
calculated by the operator of the CTM equipment and shall be adjusted for
the difference between the specific gravity in the ideal state and in the
real state in accordance with ANSI/API 2530 . The deviation of
the Gas from Xxxxx’x law shall also be calculated by the operator of the
CTM equipment and shall be determined in accordance with AGA Transmission
Measurement Committee Report No. 8 Both the specific gravity of
the Gas and the deviation of the Gas from Xxxxxx’ law shall be based on
the component analysis obtained pursuant to Section
C.6.
|
|
D.
|
VOLUME
|
|
|
D.1
|
Determination of Temperature
for Volume Calculation. The temperature of the Gas shall
be determined by a temperature recording device installed by the operator
of the CTM equipment in accordance with ANSI/API 2530 and other industry
standards. If the temperature of the Gas is recorded by chart,
the arithmetic average of the temperatures recorded during periods of Gas
flow shall be used in calculating the
Dth.
|
|
|
D.2
|
Correction of Volume due to
Calculation Error. An error in volume calculation for a
given Delivery Point shall be corrected for such period as the error is
determined to have existed, not to exceed one (1) year. In no
event, however, shall LMM be obligated to correct an error in volume
calculation for a given Delivery Point unless it resulted in an error of
greater than *** percent (***%) and *** Dth per Month at the Delivery
Point during the correction period. Such correction shall only
be processed by LMM prospectively with the current Month’s business based
upon Shipper’s current allocation of the Available Supply at that Delivery
Point as provided by Shipper’s
Operator.
|
|
GAS
GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM)
|
PAGE
8
|
|
|
D.3
|
Correction of Volume due to
Reallocation by Shipper’s Operator. Shipper’s Operator
shall make prospectively any correction of volume due to a reallocation of
the Available Supply at a given Receipt
Point.
|
|
|
D.4
|
Custody Transfer Measurement or
“CTM”. CTM for any Receipt Point or Delivery Point in
existence as of the Effective Date shall be performed by whoever is
providing CTM at that Receipt point or Delivery Point as of the Effective
Date. For all Receipt Point(s) and Delivery Point(s) where LMM
does not provide CTM and check meters, Shipper shall make all measurement
and Gas quality data from such CTM and check meters available to
LMM. However, if LMM installs CTM equipment at any Receipt
Point or Delivery Point after the Effective Date, then CTM at that Receipt
Point or Delivery Point shall be performed by LMM. Except as
otherwise provided in this Section D, all CTM and CTM equipment shall
comply with ANSI/API 2530. Meter charts may be rotated as
determined by LMM. LMM may install and operate electronic flow
measurement equipment to perform CTM, in which case it shall be installed
and operated in accordance with the applicable methods and standards that
have been approved by the API. When alternate methods and
standards are permitted for low volume xxxxx by the regulatory agency with
jurisdiction, then such alternate methods and standards shall apply to CTM
and CTM equipment serving such low volume
xxxxx.
|
|
|
D.5
|
Notice of CTM Equipment
Tests. Tests of the CTM equipment shall be performed by
the operator of the CTM equipment at least once each calendar
quarter. Where LMM is operating the CTM Equipment, LMM shall
give Shipper’s Operator *** notice of the time and location of any tests
of the CTM equipment so that Shipper’s Operator may be
present. Where Shipper’s Operator is operating the CTM
Equipment, Shipper’s Operator shall give LMM *** notice of the time and
location of any tests of the CTM equipment so that LMM may be
present. If the party not operating the CTM equipment is
unsatisfied with the test, it shall notify the operator of the CTM
equipment to perform a retest. The cost of retesting shall be
paid by the party requesting the retest unless the retest shows a
difference between the registration of the CTM equipment and test
instrument of greater than *** percent (***%) and *** Dth, in which case
the cost of retesting shall be paid by the party who did not request the
retest. Any CTM equipment found to be measuring inaccurately
shall be promptly restored to accuracy by the operator of the CTM
equipment.
|
|
|
D.6
|
Check
Meter. Either party may install and operate a check
meter at its own expense to check the CTM equipment. Except as
provided in Section D.7, the readings of the CTM equipment shall
govern. The check meter shall be installed so as not to
interfere with the operation of the CTM equipment. Pulsation
filters may be required if unacceptable square root error or gauge line
error shift occurs as a result of the check meter. If a
disagreement arises regarding the source of pulsation, a third party
consultant shall be selected by the parties to determine the source of the
pulsation. The party responsible for the source of the
pulsation shall pay all the consulting fees and costs associated with
identifying and eliminating the source of the
pulsation. Shipper will use the alternate taps on the meter run
for check measurement. If alternate taps do not provide a
viable option, Shipper will seek a variance from the regulatory entities
and LMM to use LMM’s meter taps.
|
|
|
D.7
|
Correction of CTM Equipment
Inaccuracies. If any test conducted pursuant to Section
D.5 reveals an inaccuracy of greater than *** percent (***%) and *** Dth
in the registration of the CTM equipment, the volume of Gas measured by
such CTM equipment shall be corrected for such period as the inaccuracy is
confirmed to have existed, not to exceed ***, or, if not confirmable, then
for such period as the parties can agree upon, not to exceed
***. If the correction period is not confirmable and cannot be
agreed upon, then the correction period shall extend back one-half (1/2)
of the time elapsed since the CTM equipment was last calibrated, not to
exceed ***. The volume of Gas actually received per Day through
the CTM equipment shall be determined on the basis of the best data
available using the first of the following methods which is
feasible:
|
|
|
(a)
|
by
using the registration of the other party’s check meter if registering
accurately; or
|
|
GAS
GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM)
|
PAGE
9
|
|
|
(b)
|
by
calibration, test, or mathematical calculation if the percentage of
inaccuracy is ascertainable with reasonable certainty;
or
|
|
|
(c)
|
by
estimating the volume of Gas received by comparison to receipts during
prior Months under similar conditions when the CTM equipment was
registering accurately.
|
In no
event, however, shall LMM be obligated to correct any volume measurement
inaccuracy for given CTM Equipment unless it resulted in an inaccuracy of
greater than *** percent (***%) and *** Dth per Month at the affected Delivery
Point during the correction period. Such correction shall only be
processed by LMM prospectively with the current Month’s business based upon
Shipper’s current allocation of the Available Supply at the affected Delivery
Point as provided by Shipper’s Operator.
|
|
D.8
|
Measurement During Periods of
CTM Equipment Failure. In the event of any Force Majeure
event which prevents LMM from obtaining or recovering actual measurement
data from the CTM Equipment, the volume of Gas received shall be estimated
by comparison to receipts during the prior Months under similar conditions
until such time as LMM is again able to obtain accurate data from the CTM
Equipment, but in no event for a period longer than ***
Days. Any estimated volumes relied upon under such
circumstances shall be considered actual volumes for such period of
time.
|
|
E.
|
NOMINATIONS
AND SCHEDULING
|
|
|
E.1
|
[INTENTIONALLY
DELETED]
|
|
|
E.2
|
Monthly Nomination
Procedure. For each Month, Shipper shall submit
nomination(s) via LMM’s Nomination System of the number of Dth of
Shipper’s Gas that Shipper desires LMM to deliver at the Delivery
Point(s). The total of such nomination(s) shall not exceed the
MDQ unless LMM otherwise consents in
writing.
|
|
|
E.3
|
Scheduling
Nominations. LMM shall have no obligation to schedule
deliveries of Shipper’s Gas into the Interconnecting
Pipelines. Shipper or Shipper’s agent shall be solely
responsible for scheduling Shippers Gas into the Interconnecting Pipelines
and shall be responsible for any imbalance or other obligation related
thereto including, without limitation, any obligation, penalties, or fees
imposed by the Interconnecting
Pipelines.
|
|
F.
|
REPRESENTATIONS AND
WARRANTIES. Each of the Shippers, APL and APL Operating
represents and warrants to LMM that, and LMM represents and warrants to
each of the Shippers, APL and APL Operating
that:
|
|
|
(1)
|
it
has full power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby and to perform all of the
terms and conditions hereof to be performed by it. The
execution and delivery by it of this Agreement, the consummation of the
transactions contemplated hereby and the performance of all of the terms
and conditions hereof to be performed by it have been duly authorized and
approved by all requisite action on the part of it. This
Agreement has been duly executed and delivered by it and constitute the
valid and legally binding obligation of it, enforceable against it in
accordance with their terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws affecting the enforcement of creditors’
rights and remedies generally and by general principles of equity (whether
applied in a proceeding at law or in equity);
and
|
|
GAS
GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM)
|
PAGE
10
|
|
|
(2)
|
the
execution, delivery and performance of this Agreement by it does not, and
the fulfillment and compliance with the terms and conditions hereof and
thereof and the consummation of the transactions contemplated hereby will
not, (i) violate, conflict with any of, result in any breach of, or
require the consent of any person under, the terms, conditions or
provisions of the charter documents, bylaws or equivalent governing
instruments of it or any of its Affiliates, (ii) violate any provision of
any law applicable to either it or any of its Affiliates, its business or
that of any of its Affiliates in the Areas of Interest; (iii) conflict
with, result in a breach of, constitute a default under (whether with
notice or the lapse of time or both), or accelerate or permit the
acceleration of the performance required by, or require any consent,
authorization or approval under, or result in the suspension, termination
or cancellation of, or in a right of suspension, termination or
cancellation of, any agreement or other instrument to which it or any of
its Affiliates is a party or by which it or its business or that of any of
its Affiliates in the Areas of Interest are bound; or (iv) result in the
creation of any lien on any its business or that of any of its Affiliates
in the Areas of Interest under any agreement or other instrument;
and
|
|
|
(3)
|
no
consent, approval, license, permit, order or authorization of any
governmental authority or other person is required to be obtained or made
by it or any Affiliate in connection with the execution, delivery, and
performance of this Agreement or the consummation of the transactions
contemplated hereby, except as have been waived or obtained or with
respect to which the time for asserting such right has
expired.
|
|
G.
|
[INTENTIONALLY
DELETED]
|
|
H.
|
DISPUTED
OR UNPAID STATEMENTS
|
|
|
H.1
|
Statement(s) Disputed by
Shipper. In the event that Shipper disputes any
statement, Shipper shall nonetheless be required to pay any undisputed
amount to LMM. Any statement or payment must be disputed, if at
all, by providing written notice of the dispute to the other party within
two (2) years from the date of such statement or payment; otherwise such
statement or payment shall be conclusively deemed to be correct as to both
parties.
|
|
|
H.2
|
Unpaid
Statement(s). Should Shipper fail to pay all of the
amount of any statement when the same becomes due, Shipper shall pay
interest on the unpaid balance which shall accrue on each Day
after the due date at the prime rate announced by Citibank in New York
City, New York on the due date; provided that if such rate exceeds the
applicable maximum rate permitted by law, the rate shall equal the
applicable maximum rate. Such interest shall be compounded
Monthly. If any undisputed amount plus interest remains unpaid
for *** Days after the due date, LMM shall have the right to (i) suspend,
in whole or in part, its obligations to Shipper under this Agreement until
such undisputed amount plus interest is paid and/or (ii) offset, in whole
or in part, the same against any amount due or owing by LMM to Shipper or
its Subsidiaries under this Agreement or any other
agreement.. Upon the rendering of a final unappealable order,
the prevailing party in any suit, mediation, arbitration, and/or appeal
therefrom for the collection of any amounts due under any statement shall
be entitled to recover all costs incurred, including but not limited to
reasonable attorney’s fees, court costs, and
disbursements.
|
|
|
H.3
|
***
|
|
I.
|
LIABILITY,
INDEMNIFICATION AND WARRANTY
|
|
|
I.1
|
Shipper’s Liability and
Indemnification. Shipper shall be in control and
possession of Shipper’s Gas until delivered to LMM at the Receipt Point(s)
and following its delivery by LMM at the Delivery Point(s), and shall be
fully responsible and liable for any and all damages, claims, actions,
expenses, penalties and liabilities, including attorney’s fees, arising
from personal injury, death, property damage, environmental damage,
regulatory penalty, pollution, or contamination relating to Shipper’s Gas
while in Shipper’s control and possession, and Shipper agrees to release,
indemnify and defend LMM with respect thereto. Shipper further
agrees to release, indemnify and defend LMM from and against any and all
damages, claims, actions, expenses, penalties and liabilities, including
attorney’s fees, arising from (i) personal injury, death, property damage,
environmental damage, regulatory penalty, pollution, or contamination
relating to Shipper’s ownership and/or operation of the facilities
delivering Gas to the Receipt Point(s), (ii) personal injury, death,
property damage, environmental damage, regulatory penalty, pollution or
contamination arising (a) from the construction, installation, operation,
maintenance or existence, known or unknown, of any lines, pipes or
pipelines connected to the Gathering System as of the Effective Date
hereof which deliver Shipper’s Gas to a third party end user,
or (b) the movement, delivery or use of Gas from such
facilities and/or (iii) Shipper’s performance of its
obligations under this Agreement.
|
|
GAS
GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM)
|
PAGE
11
|
|
|
I.2
|
LMM’s Liability and
Indemnification. LMM shall be in control and possession
of Shipper’s Gas from the time delivered to LMM at the Receipt Point(s)
until it is delivered by LMM at the Delivery Point(s), and shall be fully
responsible and liable for any and all damages, claims, actions, expenses,
penalties and liabilities, including attorneys fees, arising from personal
injury, death, property damage, environmental damage, regulatory penalty,
pollution or contamination relating to Shipper’s Gas while in LMM’s
control and possession, and LMM agrees to release, indemnify and defend
Shipper with respect thereto. LMM further agrees to release,
indemnify and defend Shipper from and against any and all damages, claims,
actions, expenses, penalties and liabilities, including attorney’s fees,
arising from (i) personal injury, death, property damage, environmental
damage, pollution or contamination relating to LMM’s ownership and/or
operation of the Gathering System and/or (ii) LMM’s performance of its
obligations under this Agreement.
|
|
|
I.3
|
Warranty of
Title. Shipper warrants that at the time of delivery of
Gas for its account at the Receipt Point(s), it will either have title to
such Gas free and clear of all liens, encumbrances, and claims whatsoever,
or that it will at the time of such delivery have the right to deliver
such Gas. Shipper shall release, indemnify and defend LMM
against any and all damages, claims, actions, expenses, penalties and
liabilities, including attorney’s fees, arising from Shipper’s breach of
the foregoing warranty. Subject to Shipper’s warranty herein,
LMM warrants that at the time of delivery of such Gas at the Delivery
Point(s), it will deliver such Gas free and clear of all liens,
encumbrances, and claims whatsoever. LMM shall release,
indemnify and defend Shipper against any and all damages, claims, actions,
expenses, penalties and liabilities, including attorney’s fees, arising
from LMM’s breach of the foregoing
warranty.
|
|
|
I.4
|
Limitations. Notwithstanding
any language in this Agreement to the contrary, neither party shall be
released, indemnified or defended to the extent of its own negligence or
willful misconduct. Nor is any language in this Agreement
intended to provide indemnification greater than that which is permitted
by applicable law. If any limitations upon indemnification are
imposed by applicable law, then such limitations are hereby incorporated
by reference and made a part of this Agreement. Except as
expressly provided in Section 2, or as necessary to provide the
indemnifications contemplated in this Agreement against third party
claims, neither party shall be liable to the other for any incidental,
special, consequential or punitive
damages.
|
|
J.
|
ROYALTIES,
TAXES, FEES AND OTHER CHARGES
|
|
|
J.1
|
Royalties. Shipper
shall be responsible and liable for the payment of all royalties relating
to Shipper’s Gas LMM shall have no responsibility or liability for such
royalties, and Shipper shall release, indemnify and defend LMM against any
and all damages, claims, actions, expense, expenses, penalties and
liabilities, including attorneys’ fees, relating to such
royalties.
|
|
|
J.2
|
Service
Taxes. Subject to Section J.3 below, Shipper shall
be responsible and liable for the payment of all taxes, fees and other
charges (including penalties and interest thereon) now or hereafter levied
or assessed by any municipal, county, state, federal or tribal government
relating to Shipper’s Gas or LMM’s Gathering and/or processing services
under this Agreement. If LMM is required to pay any such taxes,
fees or other charges (or penalties or interest thereon), Shipper shall
immediately reimburse LMM therefor.
|
|
|
J.3
|
Limitation on Tax
Responsibility. Neither party shall be responsible or
liable for the taxes now or hereafter levied or assessed by any municipal,
county, state, federal or tribal government upon the income, property,
equipment, or facilities of the other, including, without limitation, any
income tax or ad
valorem tax.
|
|
GAS
GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM)
|
PAGE
12
|
|
K.
|
ALTERNATIVE
DISPUTE RESOLUTION
|
Any
dispute arising out of or relating to this Agreement shall be resolved in
accordance with the procedures specified in this Article K, which shall be the
sole and exclusive procedures for the resolution of any such disputes. The
parties shall attempt in good faith to resolve any dispute arising out of or
relating to this Agreement promptly by negotiation between executives who have
authority to settle the controversy and who are at a higher level of management
than the persons with direct responsibility for administration of this contract.
Any party may give the other party written notice of any dispute not resolved in
the normal course of business. Within fifteen (15) Days after delivery of the
notice, the receiving party shall submit to the other a written response. The
notice and the response shall include (a) a statement of each party’s position
and a summary of arguments supporting that position, and (b) the name and title
of the executive who will represent that party and of any other person who will
accompany the executive. Within thirty (30) Days after delivery of the disputing
party's notice, the executives of both parties shall meet at a mutually
acceptable time and place, and thereafter as often as they reasonably deem
necessary, to attempt to resolve the dispute. All reasonable requests for
information made by one party to the other will be honored. All
negotiations pursuant to this clause are confidential and shall be treated as
compromise and settlement negotiations for purposes of applicable rules of
evidence. If the matter has not been resolved by these persons within
forty-five (45) Days of the disputing party’s notice, the dispute shall be
referred to more senior executives of both parties who have authority to settle
the dispute and who shall likewise meet to attempt to resolve the
dispute.
If the
dispute has not been resolved by negotiation within sixty (60) Days of the
disputing party’s notice, or if the parties failed to meet within the thirty
(30) Day period set forth above, the parties shall endeavor to settle the
dispute by mediation under the then current CPR Institute for Dispute Resolution
mediation procedure in effect on the date of this Agreement. Unless otherwise
agreed, the parties will select a mediator from the CPR Panels of Distinguished
Neutrals. Notwithstanding the provisions of this clause, either Party
may seek from any court having jurisdiction hereof any interim, provisional or
injunctive relief that may be necessary to protect the rights or property of any
party or maintain the status quo before, during or after the pendency of the
mediation proceeding. The institution and maintenance of any judicial action or
proceeding for any such interim, provisional or injunctive relief shall not
constitute a waiver of the right or obligation of either Party to submit the
dispute to negotiation and mediation as described above, including any claims or
disputes arising from the exercise of such interim, provisional or injunctive
relief. If the dispute has not been resolved by mediation as provided
herein within ninety (90) Days of the initiation of the above procedures, either
party may initiate litigation upon thirty (30) Days’ written notice to the other
party; provided, however, that if one party has requested the other to
participate in any of the above non-binding procedures and the other has failed
to participate, the requesting party may initiate litigation before expiration
of the above period.
|
L.
|
MISCELLANEOUS
|
|
|
L.1
|
New Requirements of
Interconnecting Pipeline(s). LMM may from time to time become
subject to new requirements imposed by the Interconnecting
Pipeline(s). LMM shall provide written notice to Shipper of any
such new requirements. Except as provided in Section C.1,
above, thereafter, Shipper shall comply with such new requirements or LMM
may suspend or terminate this Agreement. In addition, Shipper
shall release, indemnify, and defend LMM from any claims resulting from
Shipper’s failure to comply with such new
requirements.
|
|
|
L.2
|
Governing Law/Jury
Waiver. This Agreement shall be interpreted, construed,
and governed by the laws of the State of New York, without regard to
choice of law principles thereof. The parties hereby waive any
right to a jury trial before any court having jurisdiction
hereunder.
|
|
|
L.3
|
Severability. Should
any part of this Agreement be found to be unenforceable or be required to
be modified by a court or governmental authority, then only that part of
this Agreement shall be affected. The remainder of this
Agreement shall remain in force and unmodified. If the absence
or modification of the affected part of this Agreement substantially
deprives either party of the economic benefit of this Agreement, the
parties shall negotiate reasonable and enforceable provisions to restore
the economic benefit to the party so deprived consistent with the intent
originally reflected in this
Agreement.
|
|
GAS
GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM)
|
PAGE
13
|
|
|
L.4
|
Waiver. A
waiver by either party of any one or more defaults by the other party
shall not operate as a waiver of any future default(s), whether of a like
or different character.
|
|
|
L.5
|
Audit. The
parties shall each preserve all records relating to the performance of
this Agreement for a period of at least two (2) years, or such longer
periods as shall be required by law, regulation, rule or
order. During such period, each party, or its designated
representative, shall have access to such records of the other party upon
reasonable notice during regular business
hours.
|
|
|
L.6
|
Confidentiality and
Non-Use. The parties and their respective officers,
directors, employees, agents and representatives shall (1) keep the
terms of this Agreement and any proprietary information provided hereunder
(including, without limitation and information relating to Shippers’ oil
and gas acreage position, drilling schedules, or well production
estimates, including any information provided as part of any Scoping Plan
or Drilling Plan) (collectively, the “Confidential
Information”) confidential whether or not such Confidential
Information is marked “confidential” and (2) without the prior
written consent of the other parties, which may be withheld in any party’s
sole discretion, refrain from using any Confidential Information for any
purpose other than the fulfillment of each party’s contractual obligations
under this Gathering Agreement. However, either party may
disclose Confidential Information to the following persons or entities in
the following circumstances:
|
|
|
(a)
|
To
financial institutions requiring such disclosure as a condition precedent
to making or renewing a loan or independent certified public accountants
for purposes of obtaining a financial audit; provided, however, that LMM
shall first obtain the consent of Shipper prior to providing any
Confidential Information, and that such financial institutions or
accountants have agreed in writing to keep the Confidential Information
confidential; provided, however, LMM may provide the Agreement to such
financial institutions without seeking such
consent.
|
|
|
(b)
|
To
courts or other governmental authorities, including persons or entities to
whom disclosure is required by such courts or other governmental
authorities, or as otherwise required by law, regulation, rule, order or
stock exchange listing standard; provided, however, that the party making
such disclosure shall use its best efforts to obtain a protective order or
other reliable assurance that confidential treatment will be accorded the
Confidential Information.
|
|
|
(c)
|
To
prospective purchasers of an interest in a party or a parties’ assets,
subject to such prospective purchaser being bound by a nondisclosure
agreement. provided, however, that LMM shall first obtain the consent of
Shipper prior to providing any Confidential Information to a prospective
purchaser, and that such prospective purchasers have agreed in writing to
keep the Confidential Information confidential; provided, however, LMM may
provide the Agreement to such prospective purchasers without seeking such
consent.
|
|
|
Except
as
provided above, under no circumstances shall the terms of this Agreement
be disclosed to any other third party, including any newspaper, magazine
or other publication, without the prior written consent of the other
party.
|
|
|
L.7
|
[INTENTIONALLY
DELETED]
|
|
|
L.8
|
[INTENTIONALLY
DELETED]
|
|
|
L.9
|
No Third Party
Beneficiaries. It is the intent of the parties that no
person or entity besides LMM, its principals, each of the Shippers and
their respective successors and permitted assigns shall be entitled to
enforce any provision of this Agreement and that the covenants and
obligations set forth in this Agreement are solely for the benefit of
(a) LMM, (b) each Shipper and their respective working interest
partners, and (c) the respective successors and permitted assigns of
each of the persons and entities described in the foregoing clauses (a)
and (b).
|
|
GAS
GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM)
|
PAGE
14
|
|
|
L.10
|
Amendment. Except
as expressly provided otherwise in this Agreement, no amendment of this
Agreement shall be binding unless in writing and signed by the
parties.
|
|
|
L.11
|
Counterparts. This
Agreement may be executed in any number of counterparts, each of which
when so executed and delivered shall be an original, and such counterparts
together shall constitute one
instrument.
|
|
GAS
GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM)
|
|
EXHIBIT
“B”
to
the
GAS
GATHERING AGREEMENT
For
Natural Gas on the
Legacy
Appalachian System
DATED
AS OF JUNE 1, 2009
between
LAUREL
MOUNTAIN MIDSTREAM, LLC
and
ATLAS
AMERICA, LLC
ATLAS
ENERGY RESOURCES, LLC
ATLAS
ENERGY OPERATING COMPANY, LLC
ATLAS
NOBLE LLC
RESOURCE
ENERGY LLC
VIKING
RESOURCES, LLC
ATLAS
PIPELINE PARTNERS, L.P.
ATLAS
PIPELINE OPERATING PARTNERSHIP, LP
AREA OF
INTEREST
The
following counties:
|
The
following counties, collectively known as the “Ohio Area of
Interest”:
|
***
|
***
|
GAS
GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM)
|
|
EXHIBIT
“C”
to
the
GAS
GATHERING AGREEMENT
For
Natural Gas on the
Legacy
Appalachian System
DATED
AS OF JUNE 1, 2009
between
LAUREL
MOUNTAIN MIDSTREAM, LLC
and
ATLAS
AMERICA, LLC
ATLAS
ENERGY RESOURCES, LLC
ATLAS
ENERGY OPERATING COMPANY, LLC
ATLAS
NOBLE LLC
RESOURCE
ENERGY LLC
VIKING
RESOURCES, LLC
ATLAS
PIPELINE PARTNERS, L.P.
ATLAS
PIPELINE OPERATING PARTNERSHIP, LP
SHIPPER’S EXISTING WELL
INTERESTS
[remainder
of page intentionally left blank; schedule
of
Shipper’s Existing Well Interests begins on following page]
*** [872
pages redacted]
|
GAS
GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM)
|
|
EXHIBIT
“D”
to
the
GAS
GATHERING AGREEMENT
For
Natural Gas on the
Legacy
Appalachian System
DATED
AS OF JUNE 1, 2009
between
LAUREL
MOUNTAIN MIDSTREAM, LLC
and
ATLAS
AMERICA, LLC
ATLAS
ENERGY RESOURCES, LLC
ATLAS
ENERGY OPERATING COMPANY, LLC
ATLAS
NOBLE LLC
RESOURCE
ENERGY LLC
VIKING
RESOURCES, LLC
ATLAS
PIPELINE PARTNERS, L.P.
ATLAS
PIPELINE OPERATING PARTNERSHIP, LP
DELIVERY
POINTS
[remainder
of page intentionally left blank; schedule
of
Delivery Points begins on following page]
*** [6
pages redacted]
|
GAS
GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM)
|
PAGE
1
|
EXHIBIT
“E”
to
the
GAS
GATHERING AGREEMENT
For
Natural Gas on the
Legacy
Appalachian System
DATED
AS OF JUNE 1, 2009
between
LAUREL
MOUNTAIN MIDSTREAM, LLC
and
ATLAS
AMERICA, LLC
ATLAS
ENERGY RESOURCES, LLC
ATLAS
ENERGY OPERATING COMPANY, LLC
ATLAS
NOBLE LLC
RESOURCE
ENERGY LLC
VIKING
RESOURCES, LLC
ATLAS
PIPELINE PARTNERS, L.P.
ATLAS
PIPELINE OPERATING PARTNERSHIP, LP
FEE & VOLUME
SCHEDULE
I. MDQ AND TARGET
SUCTION PRESSURES
For
purposes of this Agreement, the term “Target Suction Pressure” shall
mean the pressure, on a Delivery Point-by-Delivery Point basis, that can be
consistently achieved at the defined MDQ for the defined period as determined by
the methodology defined in this Exhibit “E”. Shippers and LMM
agree that MDQ, Target Suction Pressures and the values [A] and [B] as
described in Section 1.6 on a Delivery Point-by-Delivery Point basis will be
established for the Gathering System following execution and delivery of this
Agreement. The parties agree that the principles and methodology set
forth below will govern the process of establishing such values. Once
complete, the Parties shall replace this Section I of this Exhibit “E”
with a chart listing the Delivery Points, associated MDQ, and associated Target
Suction Pressure for each Delivery Point of the Gathering System.
|
|
***
|
II. GATHERING FEE
FOR SHIPPERS’ GAS
Subject
to the provisions of Section III of this Exhibit “E”, the Gathering Fee for
Gathering Shipper’s Gas under this Agreement shall be the greater of thirty-five
cents ($0.35) or sixteen percent (16%) of the Gross Sale Price for each Mcf of
Gas, as measured at the Delivery Point, with no surcharges or fees.
The
Reduced Fee, where applicable in this Agreement, is the greater of *** or ***
percent (***%) of the Gross Sale Price for each Mcf of Gas, as measured at the
Delivery Point, with no surcharges or fees.
III. ALTERNATIVE
GATHERING FEES FOR CERTAIN GAS
The
attached Exhibits E-1 and E-2 list the alternative gathering fees
for the
respective xxxxx. To the extent LMM determines that any
entry
in
Exhibit E-1 or E-2 is inaccurate, LMM shall have the right to
modify
the entry
so that it is accurate, and if such correction is to an inaccurate
alternative
gathering fee, to charge the accurate gathering fee thereafter.
|
GAS
GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM)
|
PAGE
2
|
[remainder
of page intentionally left blank; schedule of
alternative
gathering fees for certain Gas begins on following page]
*** [38
pages redacted]
|
GAS
GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM)
|
|
EXHIBIT
“F”
to
the
GAS
GATHERING AGREEMENT
For
Natural Gas on the
Legacy
Appalachian System
DATED
AS OF JUNE 1, 2009
between
LAUREL
MOUNTAIN MIDSTREAM, LLC
and
ATLAS
AMERICA, LLC
ATLAS
ENERGY RESOURCES, LLC
ATLAS
ENERGY OPERATING COMPANY, LLC
ATLAS
NOBLE LLC
RESOURCE
ENERGY LLC
VIKING
RESOURCES, LLC
ATLAS
PIPELINE PARTNERS, L.P.
ATLAS
PIPELINE OPERATING PARTNERSHIP, LP
EXCLUDED
INTERESTS
[remainder
of page intentionally left blank; schedule
of
Excluded Interests begins on following page]
*** [90
pages redacted]
|
GAS
GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM)
|
PAGE
1
|
EXHIBIT
“G”
to
the
GAS
GATHERING AGREEMENT
For
Natural Gas on the
Legacy
Appalachian System
DATED
AS OF JUNE 1, 2009
between
LAUREL
MOUNTAIN MIDSTREAM, LLC
and
ATLAS
AMERICA, LLC
ATLAS
ENERGY RESOURCES, LLC
ATLAS
ENERGY OPERATING COMPANY, LLC
ATLAS
NOBLE LLC
RESOURCE
ENERGY LLC
VIKING
RESOURCES, LLC
ATLAS
PIPELINE PARTNERS, L.P.
ATLAS
PIPELINE OPERATING PARTNERSHIP, LP
MEMORANDUM OF CONTRACT
FORM
MEMORANDUM
OF AGREEMENT
|
THE
COMMONWEALTH OF PENNSYLVANIA
|
§
|
|
§
|
|
|
COUNTY
OF _____________
|
§
|
This
Memorandum of Agreement (“Memorandum”) is entered into
effective as of ________________, 2009, by and between LMM, a Delaware limited
liability company (“LMM”), and ATLAS ENERGY
RESOURCES, LLC, a Delaware limited liability company, and ATLAS ENERGY OPERATING
COMPANY, LLC, a Delaware limited liability company, and ATLAS AMERICA, LLC, a
Pennsylvania limited liability company, and ATLAS NOBLE LLC, a Delaware limited
liability company, and RESOURCE ENERGY LLC, a Delaware limited liability
company, and VIKING RESOURCES, LLC, a Pennsylvania limited liability
company,(“Shippers”). Capitalized
terms used but not defined herein shall have the meaning given to them in that
certain Gas Gathering Agreement dated effective as of ____________, 2009, by and
between LMM and Shippers (the “Agreement”).
|
1.
|
Pursuant
to the Agreement, Shipper has agreed to dedicate and deliver for gathering
and transportation by LMM certain gas volume owned or controlled by
Shipper lawfully produced from xxxxx now or hereafter drilled on the lands
within an Area of
Interest as more fully described in the
Agreement.
|
|
2.
|
Term. The
Agreement is effective as of _____________, 2009 and, subject to the other
provisions thereof, shall continue in full force and effect through the
later of (a) for so long as Gas is produced from any well
on Shippers’ interests in economic quantities without a lapse
of more than ninety (90) Days, (b) as long as Gas which is acquired
subsequent to the effective date of the Agreement is produced from either
Existing Xxxxx or Future Xxxxx, as each are defined in the Agreement; or
so long as Shippers own reserves within the Area of
Interest.
|
|
3.
|
Notice. The
addresses of the parties are as
follows:
|
|
Shippers:
|
________________________
|
LMM:
|
________________________
|
|
|
________________________
|
________________________
|
|||
|
________________________
|
________________________
|
|||
|
Attn:
______________________
|
Attn:
______________________
|
|
GAS
GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM)
|
PAGE
2
|
|
4.
|
Miscellaneous. This
Memorandum in no way modifies or amends the terms and provisions of the
Agreement. This Memorandum is executed solely for the purpose
of providing record notice of the Agreement and is to be recorded in the
real property records of the respective counties in the Area of
Interest. This Memorandum may be executed in separate
counterparts, all of which shall together constitute one and the same
instrument. The terms of this Memorandum may only be modified
or amended by an instrument in writing, fully executed by LMM and
Shippers.
|
IN
WITNESS WHEREOF, the undersigned have each caused this Memorandum to be duly
executed as of the date shown on the acknowledgments set forth below with the
intention that they will be delivered and effective as of the Day and year first
above written.
|
SHIPPERS:
|
LAUREL MOUNTAIN MIDSTREAM,
LLC:
|
|
|
ATLAS
ENERGY RESOURCES, LLC
|
LAUREL MOUNTAIN MIDSTREAM, LLC, a | |
|
ATLAS
ENERGY OPERATING COMPANY, LLC
|
Delaware
limited liability company
|
|
|
ATLAS
AMERICA, LLC
|
||
|
ATLAS
NOBLE LLC
|
By:
|
________________________________________
|
|
RESOURCE
ENERGY LLC
|
Name:
|
________________________________________
|
|
VIKING
RESOURCES, LLC
|
Title:
|
________________________________________
|
|
ATLAS
PIPELINE PARTNERS, L.P.
|
||
|
ATLAS
PIPELINE OPERATING PARTNERSHIP, LP
|
||
|
By:
|
_______________________________
|
|
Name:
|
______________________________
|
|
Title:
|
______________________________
|
|
THE
COMMONWEALTH OF PENNSYLVANIA
|
§
|
|
§
|
|
|
COUNTY
OF ______________________________
|
§
|
This
instrument was acknowledged before me on the day of
_____________, 2009, by ___________________, ___________________ of all
Shippers, on behalf of said entities.
|
__________________________________________________
|
|
Notary
Public in and for
|
|
The
State of ________________________________________
|
|
My
Commission Expires:
______________________
|
|
THE
STATE OF OKLAHOMA
|
§
|
|
§
|
|
|
COUNTY
OF TULSA
|
§
|
This
instrument was acknowledged before me on the day of
_______________, 2009, by __________________, _________________ of LAUREL
MOUNTAIN MIDSTREAM, LLC, on behalf of said limited liability
company.
|
__________________________________________________
|
|
Notary
Public in and for
|
|
The
State of ________________________________________
|
|
My
Commission Expires:
_________________________
|
|
GAS
GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM)
|
|
EXHIBIT
“H”
to
the
GAS
GATHERING AGREEMENT
For
Natural Gas on the
Legacy
Appalachian System
DATED
AS OF JUNE 1, 2009
between
LAUREL
MOUNTAIN MIDSTREAM, LLC
and
ATLAS
AMERICA, LLC
ATLAS
ENERGY RESOURCES, LLC
ATLAS
ENERGY OPERATING COMPANY, LLC
ATLAS
NOBLE LLC
RESOURCE
ENERGY LLC
VIKING
RESOURCES, LLC
ATLAS
PIPELINE PARTNERS, L.P.
ATLAS
PIPELINE OPERATING PARTNERSHIP, LP
CRITERIA FOR DETERMINING “A
CHANGE IN THE ECONOMICS OF THE PROJECT”
***
|
GAS
GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM)
|
|
EXHIBIT
“I-1”
to
the
GAS
GATHERING AGREEMENT
For
Natural Gas on the
Legacy
Appalachian System
DATED
AS OF JUNE 1, 2009
between
LAUREL
MOUNTAIN MIDSTREAM, LLC
and
ATLAS
AMERICA, LLC
ATLAS
ENERGY RESOURCES, LLC
ATLAS
ENERGY OPERATING COMPANY, LLC
ATLAS
NOBLE LLC
RESOURCE
ENERGY LLC
VIKING
RESOURCES, LLC
ATLAS
PIPELINE PARTNERS, L.P.
ATLAS
PIPELINE OPERATING PARTNERSHIP, LP
DRILLING
PLAN
[remainder
of page intentionally left blank; schedule
of
Drilling Plan begins on following page]
*** [4
pages redacted]
|
GAS
GATHERING AGREEMENT (LEGACY APPALACHIAN SYSTEM)
|
|
EXHIBIT
“I-2”
to
the
GAS
GATHERING AGREEMENT
For
Natural Gas on the
Legacy
Appalachian System
DATED
AS OF JUNE 1, 2009
between
LAUREL
MOUNTAIN MIDSTREAM, LLC
and
ATLAS
AMERICA, LLC
ATLAS
ENERGY RESOURCES, LLC
ATLAS
ENERGY OPERATING COMPANY, LLC
ATLAS
NOBLE LLC
RESOURCE
ENERGY LLC
VIKING
RESOURCES, LLC
ATLAS
PIPELINE PARTNERS, L.P.
ATLAS
PIPELINE OPERATING PARTNERSHIP, LP
INITIAL CONNECTION
PLAN
[remainder
of page intentionally left blank; schedule
of
Initial Connection Plan begins on following page]
*** [4
pages redacted]
