Exhibit 10.30
CRUDE OIL PURCHASE AGREEMENT
This Agreement is made on the 8th day of March, 1999.
BETWEEN: XXXX PETROLEUM GROUP, L.P.
(hereinafter referred to as "Xxxx")
AND: XXXXX REFINING & MARKETING, INC.
(hereinafter referred to as "Xxxxx")
In consideration of the premises and of the mutual covenants, conditions and
agreements hereinafter set forth, the parties agree as follows:
1. DEFINITIONS
1.1 In this Agreement, the following terms used shall have the following
meanings, unless otherwise specified:
(a) "Agreement" means this Agreement, including the schedules and
attachments hereto, as amended from time to time, and expressions
"herein", "hereof", "hereby", "hereunder" and similar expressions
refer to this Agreement and not to any particular subdivision
hereof.
(b) "Business Day" means a day in which both the offices of Xxxxx and
Xxxx are open for business.
(c) "BPD" means barrels per day.
(d) "Adjustment Pricing Period" means the period during the Pricing
Period from the day after Xxxxx elects a Supply Volume Adjustment
and all Trading Days following, up to and including the expiration
of the prompt NYMEX Contract.
(e) "Domestic Sweet Crude Oil" means hydrocarbons produced in the United
States that are acceptable by Mid-Valley Pipeline Delivery System at
the time of delivery as domestic sweet crude oil.
(f) "Injection Month" means a calendar month in which Xxxx injects
Supply Volumes into the Mid-Valley Pipeline Delivery System.
(g) "Mid-Valley Pipeline Delivery System" means the delivery system
consisting of the Mesa Pipeline, the West Texas Gulf Pipeline and
the Mid-Valley Pipeline (or any successors in interest of such
pipelines).
(h) "Parties" means the parties to this Agreement, namely Xxxxx and
Xxxx.
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(i) "Pricing Period" means the period from the 26th day of the month
prior to the expiration of the prompt New York Mercantile Exchange
Contract ("NYMEX") for all Trading Days following, up to and
including the expiration of the prompt NYMEX Contract.
(j) "Trading Day" means any day that the NYMEX light sweet crude oil
contract is open.
2. TERM
2.1 This Agreement shall be effective from February 26, 1999, until such
time as the final Supply Volumes sold under this Agreement for
September 1999 are deemed delivered to Xxxxx (the "Initial Term");
and shall automatically renew for three Injection Months (the
"Renewal Term") at the end of the Initial Term and each successive
Renewal Term. Either Party may terminate this agreement upon three
months written notice to the other Party, effective when the Final
Supply Volumes from the final Injection Month are delivered. Such
notice shall be effective no earlier than the day following the
Initial Term.
3. PURCHASE/QUANTITY/QUALITY/TYPE
3.1 Xxxxx Linefill Volumes. On March 8, 1999, Xxxxx agrees to sell and
deliver, and Xxxx agrees to purchase and receive at the Points of
Delivery referenced in Schedule A, crude oil that Xxxxx utilizes as
linefill volumes on the Mid-Valley Pipeline Delivery System ("Xxxxx
Linefill Volumes"). Such volumes, qualities, and prices shall be
agreed upon by the Parties for the Xxxxx Linefill Volumes. Such
volumes shall be determined from inventory statements from the
pipelines of the Mid-Valley Pipeline Delivery System.
3.2 Injection Volumes. Prior to March 8, 1999, Xxxxx agrees to sell and
deliver, and Xxxx agrees to purchase and receive at the Points of
Delivery referenced in Schedule B, all crude oil that Xxxxx has
purchased and scheduled for shipment on the Mid-Valley Pipeline
Delivery System for calendar March ("Injection Volumes"). Such
volumes, qualities, and prices shall be agreed upon by the Parties.
Per Schedule B, the Parties shall also agree on the volumes,
qualities, and prices that shall apply to the sale of such Injection
Volumes from Xxxx to Xxxxx for March business.
3.3 Supply Volumes. Following the delivery of the Injection Volumes to
Xxxxx, and continuing for the duration of this Agreement, Xxxx
agrees to sell and deliver, and Xxxxx agrees to purchase and receive
a minimum of 80,000 barrels per day ("bpd") of crude oil (measured
on a monthly average basis) at Lima, Ohio ("Supply Volumes"). Xxxxx
agrees to promptly nominate its Supply Volume requirements to Xxxx
before the applicable Pricing Period begins. Xxxxx also agrees to
promptly notify Xxxx of a Supply Volume Adjustment (as described in
Section 5.4) within the applicable Pricing Period.
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3.4 Xxxx Linefill Volumes. On the termination date of this Agreement,
Xxxx agrees to sell and deliver, and Xxxxx agrees to purchase and
receive at the Points or Delivery and subject to the applicable
requirements referenced in Schedule A, crude oil volumes that Xxxx
utilizes as linefill volumes on the Mid-Valley Pipeline Delivery
System at the time of such termination ("Xxxx Linefill Volumes").
Such volumes shall be determined from inventory statements from the
pipelines of the Mid-Valley Pipeline Delivery System. The Parties
recognize that Xxxxx may request that the Xxxx Linefill Volumes be
sold to a third party that will provide crude oil supply to Xxxxx.
Upon such a request, the Parties will make commercially reasonable
efforts to agree to the terms of such a sale.
4. POINT OF DELIVERY/TITLE/RISK OF LOSS/TRANSPORTATION
4.1 Xxxxx Linefill Volumes. Xxxxx shall deliver or cause to be delivered
to Xxxx all the Xxxxx Linefill Volumes deliverable pursuant to this
Agreement by in-line transfer via the Mid-Valley Pipeline Delivery
System (the respective "Point of Delivery"). Title to all Xxxxx
Linefill Volumes purchased and sold hereunder shall pass from Xxxxx
to Xxxx within the Mid-Valley Pipeline Delivery System at the time
of such in-line transfer. Xxxxx shall maintain risk of loss of such
volumes.
4.2 Injection Volumes. Xxxxx shall deliver or cause to be delivered to
Xxxx all the Injection Volumes deliverable pursuant to this
Agreement by in-line transfer via the Mid-Valley Pipeline Delivery
System (the respective "Point of Delivery"). Title to all Injection
Volumes purchased and sold hereunder shall pass from Xxxxx to Xxxx
within the Mid-Valley Pipeline Delivery System at the time of
injection of the respective Injection Volumes. Xxxx shall deliver or
cause to be delivered to Xxxxx all Injection Volumes deliverable
pursuant to this Agreement to Lima, Ohio, via the Mid-Valley
Pipeline Delivery System (the respective "Point of Delivery"). Title
to all Injection Volumes purchased and sold hereunder shall pass
from Xxxx to Xxxxx as the oil passes through the Mid-Valley system
meters exiting the Mid-Valley tank farm at Lima, Ohio, to Xxxxx'x
facility. Xxxxx shall maintain risk of loss of such volumes.
4.3 Supply Volumes. Xxxx shall deliver or cause to be delivered to Xxxxx
all the Supply Volumes deliverable pursuant to this Agreement to
Lima, Ohio, via the Mid-Valley Pipeline Delivery System (the
respective "Point of Delivery"). Title to all Supply Volumes
purchased and sold hereunder shall pass from Xxxx to Xxxxx as the
oil passes through the Mid-Valley system meters exiting the
Mid-Valley tank farm at Lima, Ohio, to Xxxxx'x facility. Xxxxx shall
maintain risk of loss of such volumes.
4.4 Xxxx Linefill Volumes. Xxxx shall deliver or cause to be delivered
to Xxxxx all the Xxxx Linefill Volumes deliverable pursuant to this
Agreement by in-line transfer via the Mid-Valley Pipeline Delivery
System (the respective "Point of Delivery"). Title to all Xxxx
Linefill Volumes purchased and sold hereunder shall pass from Xxxx
to Xxxxx within the Mid-Valley Pipeline Delivery System at
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the time of such in-line transfer. Xxxxx shall maintain risk of loss
of such volumes.
4.5 Xxxx Linefill Volume Adjustments. The Parties recognize that during
the term of this Agreement, the linefill requirements on segments of
the Mid-Valley Pipeline Delivery System ("Linefill Requirements")
may change. If the Linefill Requirements increase during the term of
the Agreement, Xxxxx agrees to acquire such necessary volumes and
enter buy/sell agreement(s) with Xxxx under terms substantially
similar to those involving the Xxxxx and Xxxx Linefill Volumes under
this Agreement. If the Linefill Requirements decrease during the
term of the Agreement, Xxxxx agrees to purchase the relevant portion
of the Xxxx Linefill Volumes under terms substantially similar to
those involving the Xxxxx and Xxxx Landfill Volumes under this
Agreement.
4.6 Transportation Arrangements. Xxxx shall use commercially reasonable
efforts to schedule the transportation of crude oil sold to Xxxxx,
under, for and on behalf of Xxxxx, to meet the needs of Xxxxx'x
operations at Lima, Ohio. The Parties shall work with the relevant
pipeline companies to fulfill their obligations under this
Agreement, including passage of the historical pipeline space
associated with the supply of Xxxxx'x Lima refinery from Xxxxx to
Xxxx at the beginning of the term of this Agreement, and from Xxxx
to Xxxxx upon its termination. Xxxx shall utilize Xxxxx'x
transportation options with UNOCAL on the Mesa Pipeline, if the
terms of such arrangement are agreeable to Xxxx.
4.7 Exclusive Supplier. Xxxxx shall utilize Xxxx as Xxxxx'x exclusive
supplier of crude oil and condensate on the Mid-Valley Pipeline
Delivery System.
5. PRICE
5.1 Xxxxx and Xxxx Linefill Volumes. The price payable by Xxxx for the
Xxxxx Linefill Volumes and price payable by Xxxxx for Xxxx Linefill
Volumes shall be per Schedule A.
5.2 Injection Volumes. The price payable by Xxxx for the Injection
Volumes shall be per Schedule B.
5.3 Supply Volumes. Subject to Supply Volume Adjustment as addressed in
Section 5.4, the price payable per barrel by Xxxxx for the Supply
Volumes shall be determined according to the formula described and
defined below.
(a) Monthly Supply Volume Price Formula (See Schedule D for sample
calculation)
SVP = C + T + P + E + TF
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Where:
SVP = Monthly Supply Volume Price ($/bbl)
C = Calendar NYMEX Average ($/bbl)
T = Timing Adjustment ($/bbl)
P = Xxxxx'x Midland Adjustment ($/bbl)
E = EFP Adjustment ($/bbl)
TF = Transportation and Fee Adjustment ($/bbl)
(b) Definitions
1) Calendar NYMEX Average. The Calendar NYMEX Average is
defined as a price equal to the arithmetic daily average
of the NYMEX Light Sweet Crude Oil Futures contract
settlement price for the prompt month contract during the
calendar month of injection, Trading Days only.
2) Timing Adjustment. The Timing Adjustment is defined as the
arithmetic daily average of approximately two thirds (see
table below for exact split by Injection Month) of the
difference between the settlement prices of the first
nearby contract, and the second nearby contract plus
approximately one third (see table below) of the difference
between the settlement prices of the first nearby contract
and the third nearby contract over the Pricing Period for
the associated Injection Month. The Trading Day split for
each trading month shall be determined by the number of
days for which each of the associated nearby contracts
is/are open during the actual Injection Month.
April 1999 13 / 8
May 1999 14 / 6
June 1999 16 / 6
July 1999 13 / 8
August 1999 15 / 7
September 1999 14 / 7
* Based on the NYMEX Expiration Date for Each Calendar
Month Trading Days Only.
Pricing Example: Injection Month of April
Timing Adjustment Formula {[(13/21)*(April - May)] +
[(8/21)*(April - June)]}
3) Xxxxx'x Midland Adjustment. The Xxxxx'x Midland Adjustment
is defined as the average differential for Domestic Sweet
Crude Oil assessed for delivery at Arco Midland, and
Domestic Sweet Crude Oil assessed for delivery at Arco
Xxxxxxx, each based on the mean of the daily high and low
published prices, for all reported Trading Days during the
Pricing Period as published in Xxxxx'x Spot Crude Price
Assessments for the first NYMEX Light Sweet Crude Oil
contract month corresponding with the
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actual Injection Month, Trading Days only. As an example
for April Injection Month, the Xxxxx'x Midland Adjustment
would be calculated February 26, 1999, through and
including March 22, 1999.
4) EFP Adjustment. The EFP Adjustment shall be mutually
agreed upon on a monthly basis prior to nomination of
Supply Volumes pursuant to Schedule C. If the Parties
cannot agree to an EFP adjustment, Xxxx shall execute an
EFP in the marketplace. The value of such EFP shall be
used as the EFP Adjustment for the relevant time period.
5) Transportation and Fee Adjustment. The Transportation and
Fee Adjustment is defined as the total cost to transport
barrels from Arco Midland to Lima, Ohio, including all
associated pipeline tariff costs, fees, and other charges
as specifically described in Schedule C.
(c) Should the Parties mutually agree, alternate grades (domestic
or foreign) can be delivered instead of the Domestic Sweet
Crude Oil common stream. The pricing of these alternate grades
will utilize the Monthly Supply Volume Price formula adjusted
by a price differential mutually agreed to by both parties. For
example, should both Parties agree to the delivery of 500MB of
Bonny Light crude at an agreed premium of $0.20/barrel, the
invoice price for the month(s) during which the Bonny Light is
delivered to Lima, Ohio, will be adjusted up from the standard
price formula by a total of $100M (500MB x 0.20$/bbl). Xxxx
will arrange for importation of foreign barrels.
5.4 Supply Volume Adjustment. If during the Pricing Period, for a
calendar month of Supply Volume injections, Xxxxx elects to adjust
the Supply Volumes that Xxxxx nominates for such month ("Supply
Volume Adjustment") and such adjustment is approved by Xxxx, the
price payable for those Supply Volumes shall be determined according
to the following formula described and defined below:
(a) Monthly Supply Volume Adjustment (See Schedule D for sample
calculation)
SVPF = SVP(VT) + SVPA(VA)
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VT + VA
Where:
SVPF = Final Monthly Supply Volume Price in a Supply
Volume Adjustment month ($/bbl)
SVP = Monthly Supply Volume Price ($/bbl)
VT = The total Supply Volumes Xxxxx nominates with Xxxx
for the relevant calendar month (bbl)
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SVPA = Price for adjusted volumes in a Supply
Volume Adjustment month ($/bbl)
VA = The total Supply Volumes that Xxxxx elects to
add to or subtract from the nominated Monthly
Supply Volumes (expressed as a positive (+) number
if Xxxxx elects to add and expressed as a
negative (-) number if Xxxxx elects to
subtract)
SVPA = CA + TA + PA + EA + TFA
Where
CA = Calendar NYMEX Average for a Supply Volume
Adjustment Month ($/bbl)
TA = Timing Adjustment for a Supply Volume Adjustment
Month ($/bbl)
PA = Xxxxx'x Midland Adjustment for a Supply
Volume Adjustment Month ($/bbl)
EA = EFP Adjustment for a Supply Volume Adjustment Month
($/bbl)
TFA = Transportation and Fee Adjustment for a Supply
Volume Adjustment Month ($/bbl)
(b) Definitions
1) Calendar NYMEX Average. The Calendar NYMEX Average is
defined as a price equal to the arithmetic daily average
of the NYMEX Light Sweet Crude Oil Futures contract
settlement price for the prompt month contract during the
calendar month of injection, Trading Days only.
2) Timing Adjustment. The Timing Adjustment for a Supply
Volume Adjustment Month is defined as the arithmetic
daily average of approximately two thirds (see table below
for exact split by Injection Month) of the difference
between the settlement prices of the first nearby contract
and the second nearby contract plus approximately one
third (see table) of the difference between the settlement
prices of the first nearby contract and the third nearby
contract over the Adjustment Pricing Period for the
associated Injection Month. The Trading Day split for each
trading month shall be determined by the number of days
for which each of the associated nearby contract is open
during the actual Injection Month.
April 1999 13 / 8
May 1999 14 / 6
June 1999 16 / 6
July 1999 13 / 8
August 1999 15 / 7
September 1999 14 / 7
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* Based on the NYMEX Expiration Date for Each Calendar
Month Trading Days Only.
Pricing Example: Injection Month of April
Timing Adjustment Formula {[(13/21)*(April - May)] +
[(8/21)*(April - June)]}
3) Xxxxx'x Midland Adjustment. The Xxxxx'x Midland Adjustment
Average for a Supply Volume Adjustment Month is defined as
the average differential for Domestic Sweet Crude Oil
assessed for delivery at Arco Midland and Domestic Sweet
Crude Oil assessed for delivery at Arco Xxxxxxx each based
on the mean of the daily high and low published prices,
for all reported Trading Days during the Adjustment
Pricing Period as published in Xxxxx'x Spot Crude Price
Assessments for the first NYMEX Light Sweet Crude Oil
contract month corresponding with the actual Injection
Month, Trading Days only.
4) EFP Adjustment. The EFP Adjustment shall be mutually
agreed upon prior to the nomination of the Supply Volume
Adjustment pursuant to Schedule C. If the Parties cannot
agree to an EFP adjustment, Xxxx shall execute an EFP in
the marketplace. The value of such EFP shall be used for
the relevant time period.
5) Transportation and Fee Adjustment. The Transportation and
Fee Adjustment is defined as the total cost to transport
barrels from Arco Midland to Lima, Ohio, including all
associated pipeline tariff costs, fees, and other charges
as specifically described in Schedule C.
5.5 For pricing purposes, all Supply Volumes injected into the
Mid-Valley Pipeline Delivery System in a calendar month will be
priced (per barrel) pursuant to the applicable Monthly Supply Volume
Price Formula (in Sections 5.3 and 5.4) for that calendar month,
without regard to when such Supply Volumes are delivered or paid for
under the terms of this Agreement. An example follows:
Assume that during April 1999, Xxxx injects 2.4 million barrels of
Supply Volumes into the Mid-Valley Pipeline Delivery System for sale
and delivery to Xxxxx. Of those 2.4 million barrels of Supply
Volumes, 2.0 million are delivered to Xxxxx during April and 0.4
million are delivered during May. Assume also that Xxxx injects 2.6
million barrels of Supply Volumes during May, of which 2.1 million
barrels are delivered during May and 0.5 million barrels are
delivered during June. Pursuant to this Section and the payment
provisions in Section 6, Xxxxx would pay Xxxx for the 2.0 million
barrels of Supply Volumes based on the Monthly Supply Volume Price
formula for April by the 20th of May. Xxxxx would pay Xxxx for the
0.4 million barrels of Supply Volumes based on the Monthly Supply
Volume Price formula for April by the 20th of June. Furthermore,
Xxxxx would pay Xxxx for the 2.1 million barrels of Supply Volumes
based on the Monthly Supply Volume Price formula for May by the 20th
of June. Xxxxx would
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also pay Xxxx for the 0.5 million barrels of Supply Volumes based on
the Monthly Supply Volume Price formula for May, in addition to
Supply Volumes injected and delivered in June and based on the
Monthly Supply Volume Price formula for June, by the 20th of July.
5.6 Supply Volume Adjustments after the Pricing Period. After the
Pricing Period for a calendar month of Supply Volume injections,
Xxxxx may adjust the Supply Volumes that Xxxxx nominates for such
month only upon agreement between the Parties on all the terms of
such adjustment, including, but not limited to, price.
5.7 Pipeline Loss Allowance. Xxxx shall be entitled to charge Xxxxx for
pipeline loss allowances as incurred by Xxxx due to shipping Supply
Volumes to Xxxxx on the Mid-Valley Pipeline Delivery System when
such pipeline loss allowance costs are incurred by Xxxx.
6. PAYMENT
6.1 Xxxx shall invoice Xxxxx promptly after the end of each month for
deliveries made during that month and, subject to Section 6.2,
payment shall be made by Xxxxx by the twentieth (20th) day of the
month following delivery. Payment shall be wired to Xxxx'x bank
account according to Xxxx'x invoice instructions, or by any other
acceptable payment method as mutually agreed upon.
Xxxxx shall invoice Xxxx promptly after sale of the Linefill and
Injection Volumes for deliveries made during the relevant month.
Subject to Section 6.2, payment shall be made for the Linefill
Volumes by Xxxx on March 8, 1999, and for the March Injection
Volumes on April 20, 1999. Payment shall be wired to Xxxxx'x bank
account, or by any other acceptable payment method as mutually
agreed upon.
6.2 If the date for payment of any monies under this Agreement falls on
a Saturday or on a bank holiday other than Monday during which New
York Banks are closed for normal business transactions, then payment
shall be due on the first (1st) previous day on which the New York
Banks are open for normal business transactions. If the date for
payment of any monies under this Agreement falls on a Sunday or a
Monday bank holiday, then payment shall be due on the next day on
which the New York Banks are open for normal business transactions.
6.3 All respective invoices shall be forwarded promptly to:
Xxxxx Refining and Marketing, Inc.
Attn: Crude Oil Accounts Payable (Xxx Xxxxx)
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Facsimile Number: (000) 000-0000
Xxxx Petroleum Group, L.P.
Attn: Accounts Payable, Xxxx Xxxxxxxxx
X.X. Xxx 0000
Xxxxxxx, Xxxxxx 00000-0000
Facsimile Number: (000) 000-0000
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6.4 If either Party disputes the amount of any invoice provided by the
other Party, it shall notify the other Party promptly of such
disagreement including particulars thereof.
6.5 Credit Requirements. As a condition precedent to this Agreement,
Xxxxx agrees to establish an irrevocable standby letter of credit in
a format acceptable to Xxxx. The letter of credit shall be issued by
a first class bank acceptable to Xxxx. All banking charges related
to this letter of credit are for Xxxxx'x account. The letter of
credit shall be received by Xxxx three (3) business days prior to
the first day of the delivery date range.
7. TITLE AND WARRANTIES
7.1 Xxxxx warrants clear title to all crude oil delivered hereunder and
that the same is free from all liens, encumbrances and all
applicable taxes and royalties. Xxxxx additionally warrants that
Xxxxx has the exclusive right to receive payment, unless Xxxxx
advises to the contrary, in full for all crude oil sold or to be
sold hereunder by Xxxxx. Xxxxx agrees to indemnify and hold Xxxx
harmless against any and all loss, cost, damage and expense incurred
by reason of any failure of title to the extent of such warranty in
accordance with Section 9.1.
7.2 Xxxxx represents and warrants that it has provided notice to Bankers
Trust Company that Xxxxx has sold the Xxxxx Linefill Volumes and
Injection Volumes to Xxxx and, accordingly, has reduced its current
borrowing base with Bankers Trust Company to reflect the sale of
such volumes to Xxxx. Furthermore, Xxxxx covenants and agrees that
it shall not include the Xxxx Linefill Volumes or Injection Volumes
(while owned by Xxxx) in its borrowing base with Bankers Trust
Company or any other lender at any time during the term of this
Agreement, or thereafter, until the respective volumes are sold to
Xxxxx pursuant to Sections 3.2 and 3.4 hereof.
7.3 Xxxxx represents and warrants that Xxxxx has secured insurance
against all risks of loss including contamination and shortage,
howsoever caused, to cover the full fair market value of the
Injection Volumes, Xxxxx/Xxxx Linefill Volumes and Supply Volumes.
Xxxxx further agrees to list Xxxx as a loss payee for such
insurance.
7.4 The Parties make no other warranty, expressed or implied, concerning
the crude oil purchased and sold hereunder other than it shall meet
the specifications of the applicable carrier and this Agreement.
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8. TAXES
8.1 Xxxxx shall be liable for all taxes imposed on the crude oil prior
to delivery to Xxxx and after delivery to Xxxxx.
9. LIABILITY AND INDEMNITY
9.1 Xxxxx undertakes to defend, indemnify and save Xxxx harmless from
any and all liability, litigation, action, cause of action, dispute,
claim, costs and expenses, penalties, debt or demand and all loss or
damage whatsoever arising out of or in any way connected to the
title to the Linefill, Injection, or Supply Volumes delivered under
this Agreement, unpaid royalties, taxes or any other charges, liens
and encumbrances against any of such Volumes sold hereunder,
environmental contamination related to any such Volumes, and the
purchase, transportation and sale of such Volumes.
9.2 Xxxxx shall compensate Xxxx for all damages Xxxx incurs related to
any inability of Xxxx to acquire or deliver or Xxxxx to receive
crude oil under this Agreement (including, but not limited to,
proration on the Mid-Valley Pipeline Delivery System, operational
difficulties at Xxxxx'x facilities and operational difficulties on
the Mid-Valley Pipeline System) and for all damages Xxxx incurs
related to the loss of or damage to any Linefill, Injection or
Supply Volumes.
9.3 Except as specified in Section 9.2, neither Xxxxx nor Xxxx shall be
liable to the other for loss of prospective profits or special,
indirect or consequential damages.
10. APPLICATION OF LAW
10.1 This Agreement shall be interpreted in accordance with and governed
by the laws of the State of Texas.
11. FORCE MAJEURE
11.1 In the event of the occurrence of a Force Majeure event which
prevents Xxxx'x performance hereunder, Xxxx shall be relieved of any
obligation or liability under the terms of this Agreement until the
expiration of a reasonable time after termination of such
disability.
11.2 "Force Majeure" means an event which is unforeseen and beyond the
control of the party that either prevents the party from delivering
the affected volume or prevents the party from accepting delivery of
the affected volume. The following are the only instances that will
be recognized as Force Majeure events hereunder: earthquakes;
floods; landslides; civil disturbances; sabotage; acts of public
enemies; war; blockades; insurrections; riots; epidemics; the act of
any government or other authority or statutory undertaking; the
inability to obtain or the curtailment of electric power, water or
fuel; strikes, lockouts or other disruptions; fires; explosions;
breakdowns or failure of pipe, plant, machinery or
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equipment; and contamination or poisoning of catalyst and/or solvent
or biological treatment facilities.
11.3 For greater certainty, a lack of funds or the availability of a more
attractive market do not constitute events of Force Majeure.
11.4 Xxxx agrees to notify Xxxxx of the occurrence of the Force Majeure
event as soon as possible, but in any event within two (2) Business
Days.
12. NOTICES
12.1 Any notice permitted or required to be given under this Agreement
shall be in writing, either delivered, mailed or sent via
telecommunication and shall be addressed to the parties hereto as
follows:
Xxxxx: Xxxxx Refining and Marketing, Inc.
Attention: Xxxx Xxxxxxx
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Xxxx: Xxxx Petroleum Group, L.P.
Attention: Xxxx Xxxxx
0000 X. 00xx Xx. X.
Xxxxxxx, Xxxxxx 00000
Facsimile No.: 000-000-0000
12.2 Any notice shall:
i) if delivered, be deemed to have been given or made at the time
of delivery as acknowledged by signature of the receiving party;
and/or
ii) if sent by facsimile, telex, telecommunication device or other
similar form of communication, be deemed to have been given or
made on the working day following the day on which it was sent;
and/or
iii) if mailed, be deemed to have been given or made, four (4) days
after the postmarked date thereof.
13. ASSIGNMENT
13.1 Either party may assign this Agreement in whole or in part to an
Affiliate or may cause any or all of its obligations to be performed
by an Affiliate. Any attempt by either party to assign its rights or
delegate its duties under this Agreement in whole or in part to a
non-affiliate without the prior written consent of the other party,
such consent not to be unreasonably withheld, shall be ineffective.
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13.2 "Affiliate" means a corporation or partnership that is affiliated
with the party in respect of which the expression is being applied,
and, for the purpose of this definition:
(a) a corporation or partnership is an "Affiliate" of another
corporation or partnership if it directly or indirectly
controls or is controlled by that other corporation or
partnership, and for the purpose of determining whether a
corporation or partnership so controls or is so controlled, it
shall be deemed that
(i) a corporation is directly controlled by another
corporation or partnership if shares of the corporation to
which are attached more than 50% of the votes that may be
cast to elect directors of the corporation are
beneficially owned by that other corporation or
partnership and the votes attached to those shares are
sufficient, if exercised, to elect a majority of the
directors of the corporation;
(ii) a partnership is directly controlled by a corporation or
another partnership if that corporation or other
partnership beneficially owns more than a 50% interest in
the partnership;
(iii) a corporation or partnership is indirectly controlled by
another corporation or partnership if control, as defined
in a (i) or (ii) above, as the case may be, is exercised
through one or more other corporations or partnerships;
and
(b) where two or more corporations or partnerships are affiliated
at the same time with the same corporation or partnership, they
shall be deemed to be an "Affiliate" of each other.
14. GENERAL
14.1 Entire Agreement. This Agreement and the attached Xxxx Petroleum
Group Crude Oil Purchase General Provisions constitute the entire
agreement between the parties with respect to the sale of crude oil
hereunder and supersedes all prior negotiations and agreements
thereto, written or oral. Where the General Provisions are
inconsistent with the specific provisions of this Agreement, this
Agreement shall control.
14.2 Amendments. Unless otherwise provided herein, no changes, alteration
or modifications to this Agreement shall be effective unless in
writing and signed by the respective duly authorized representatives
of the parties hereto.
14.3 Headings. The headings in this Agreement are for convenience only
and shall not be considered in the interpretation of the Agreement.
14.4 Industry Practices. This Agreement shall be construed in accordance
with accepted oil industry terminology and practices.
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14.5 Severability. If any provision or any portion of any provision of
this Agreement or the application of any such provision or any
portion thereof to any person or circumstance, is held invalid or
unenforceable, the remaining portion of such provision and the
remaining provisions shall remain in full force and effect.
So agreed on this 8th day of March, 1999.
XXXX PETROLEUM GROUP, X.X. XXXXX REFINING & MARKETING, INC.
by KPG/GP, Inc., its General Partner
By: /s/ Xxxx Xxxxxxx
By: /s/ Xxx Xxxxxx ------------------------
---------------------- Printed Name: Xxxx Xxxxxxx
Printed Name: Xxx Xxxxxx Title: Vice President Crude
Title: President Oil Supply
By: /s/ Xxxx Xxxxx
----------------------
Printed Name: Xxxx Xxxxx
Title: Executive VP/Chief
Operating Officer
-14-
XXXX PETROLEUM GROUP
CRUDE OIL PURCHASE
GENERAL PROVISIONS
1. MEASUREMENT AND TESTS: All measurements of crude oil and/or condensate
(collectively "crude oil") purchased and delivered hereunder shall
represent one hundred percent (100%) volume, consisting of United States
barrels of forty-two (42) gallons, the quantity and gravity of which will
be adjusted to sixty degrees (60) Fahrenheit temperature. Procedures for
measuring and testing, except for delivery through positive displacement
type meters, shall be computed in accordance with the latest ASTM
published methods then in effect. Procedures for meter type deliveries
shall be in accordance with the latest ASME-API (Petroleum PD Meter Code)
published methods then in effect, or other mutually agreeable method. The
crude oil delivered hereunder shall be merchantable and acceptable to the
carriers involved but not to exceed one percent (1%) BS&W and full
deduction shall be made for all BS&W content according to the ASTM
Standard Method then in effect. Should either party hereto fail to have a
representative present during such measuring and testing, the measurement
and tests of the other party shall be accepted,
2. PAYMENT: Unless specifically stated otherwise in the agreement to which
these General Provisions are attached, Buyer agrees to make payment to
Seller for the crude oil purchased and delivered hereunder not later than
the 20th day of the month following the month of delivery. If payment is
made by wire transfer and the 20th day of the month falls on a Saturday
or a New York Bank Holiday other than a Monday, payment shall be due on
the immediately preceding New York Banking Day. If payment is made by
wire transfer and the 20th day of the month falls on a Sunday or a Monday
New York Bank Holiday, payment shall be due on the next succeeding New
York Banking Day. If payment is made by check and the 20th day of the
month falls on a Saturday, the check will be mailed on that Saturday. If
payment is made by check and the 20th day falls on a Sunday, the check
will not be mailed until the following Monday, unless that Monday is a
New York Bank Holiday, in which event the check will be mailed on the
next succeeding New York Banking Day.
If the financial responsibility of Buyer at any time becomes impaired,
unsatisfactory, or unacceptable to Seller, or if sales to Buyer by Seller
exceed approved credit lines, Buyer shall secure and deliver to Seller
such advance payments or other security, including in appropriate
instances an acceptable letter of credit, as required by Seller, and
deliveries of crude oil hereunder may be withheld until such security is
received. If such security is not received within the time specified by
Seller, then Seller shall have the right to cancel this agreement.
3. RULES AND REGULATIONS: All of the terms and provisions of this agreement
shall be subject to the applicable orders, rules and regulations
(hereinafter generically referred to as "Regulations") of all
governmental authorities having or purporting to have jurisdiction in the
premises. If at any time or from time to time such regulations should be
amended or should new regulations be adopted and the effect of such
amended or new regulation (a) is not covered by any other provision of
this agreement and (b) has an adverse economic effect upon either party
hereto or its suppliers or customers, the party affected shall have the
option to request renegotiation of the prices and other pertinent terms
provided for in this agreement. Said option may be exercised by such
party at any time after such amended or new regulation is promulgated
-15-
by giving written notice of the desire to renegotiate prior to the time
of delivery of the crude oil, such notice to contain the new prices and
terms desired by the affected party. If the parties do not agree upon new
prices and terms satisfactory to both within (30) days after such notice
is given, the affected party shall have the right to terminate this
agreement at the end of said thirty (30) day period.
4. ASSIGNMENT: Neither party shall assign this agreement or any rights
hereunder without first obtaining the written consent of the other party
hereto.
5. SAFETY: Each party agrees that its agents and employees will comply with
all known safety regulations of the other when such agents or employees
are upon the premises of the other in connection with the performance of
this agreement.
6. BUSINESS PRACTICES: Each party hereto agrees to comply with all laws and
regulations applicable to activities carried out in the name of or on the
behalf of the other party under provisions of this agreement.
Each party hereto agrees that all financial settlements, xxxxxxxx and
reports rendered to the other party as provided for in this agreement
will, to the best of its knowledge, reflect properly the facts about all
activities and transactions related to this agreement.
Each party agrees to notify the other party promptly upon discovery of
any instance where the notifying party fails to comply with either
provision above or whose conduct by the notified party is considered, by
the notifying party, to be in breach of this agreement.
7. ADDITIONAL TERMS. No waiver by either party hereto of a breach of an
obligation owed hereunder by the other party shall be construed as a
waiver of any other breach, whether of the same or a different nature.
Any provision hereof which is legally unenforceable shall be ineffective
only to the extent of such unenforceability without thereby invalidating
the remaining provisions hereof or affecting the validity of
enforceability of this agreement as a whole.
This agreement contains the entire agreement between the Seller and Buyer
with respect to the subject matter hereof, and there are no other
premises, representations, or warranties affecting it. The specific
provisions to which these General Provisions are attached govern these
General Provisions in the event of any conflict between the two.
This agreement shall not be modified or amended except by written
instrument duly executed by officers or other duly authorized
representatives of the respective parties.
-16-
SCHEDULE "A"
Xxxxx and Xxxx Linefill Volumes
XXXXX LINEFILL VOLUMES
Location/Point of Delivery Volume (bbl) Quality/Type Price
-------------------------- ------------ ------------ -----
Mesa Pipeline 567,399* Common Stream Sweet $12.56 - $0.25 / bbl [Average
of NYMEX settlements for
March 1, 2, 3 for April WTI]
West Texas Gulf Pipeline 922,812* Common Stream Sweet $12.56 - $0.15 / bbl
[Average of NYMEX
settlements for March 1, 2, 3
for April WTI]
Mid-Valley Pipeline 1,648,160* Common Stream Sweet $12.56 + $0.10 / bbl
[Average of NYMEX
settlements for March 1, 2, 3
for April WTI]
* These Volumes are listed provisionally to be adjusted once pipeline data for
inventories on March 8, 1999, is available.
A-1
XXXX LINEFILL VOLUMES
Note: Should this Contract be renewed, the terms of the Sale of the Xxxx
Linefill Volumes will be renegotiated and agreed to by the parties.
Location/Point Volume
of Delivery (bbl) Quality/Type Price**
----------- ----- ------------ -------
Mesa Pipeline * Common Stream Sweet A - $0.25 - B + C
West Texas Gulf Pipeline * Common Stream Sweet A - $0.15 - B + C
Mid-Valley Pipeline * Common Stream Sweet A + $0.10 - B + C
* These Volumes are to be the same as the final Xxxxx Linefill Volumes as
adjusted above unless additional buy/sells have taken place due to linefill
requirement changes by the relevant pipeline companies pursuant to Section
4.5 of this Agreement.
** Price Formula
Note: It is assumed that the sale of Xxxx Linefill Volumes to Xxxxx
will take place in mid-October 1999, unless this Agreement is
renewed. Prices for such sale will be priced using the following
variables:
A = Average of NYMEX settlements for October 13, 14, and 15, 1999, WTI.
B = Contango Credit.
Note: As Xxxx buys April WTI and sells November WTI, there is a
"Contango Credit" which will be applied for Xxxxx'x benefit. The
Parties agree that Xxxxx should received the benefit of the Contango
Credit since it is value that Xxxxx holds at the time the Xxxxx
Linefill Volumes are sold to Xxxx. At the time of this Agreement,
the Contango Credit is worth approximately $0.7233 per barrel.
C = $0.02 per barrel for Execution and Margin Costs.
A-2
SCHEDULE "B"
Injection Volumes
Injection Volumes sold to Xxxx
Volume Price
Location/Point of Delivery (bbl/day) Quality/Type ($/bbl)
-------------------------- --------- ------------ -------
Mesa Pipeline System 24,405 Common Stream Sweet 12.00
West Texas Gulf System
Colorado City 3,175 Common Stream Sweet 12.00
Wortham 400 Common Stream Sweet 12.00
Mid-Valley Pipeline System
East Texas Mainline at Longview 8,800 Quaiboe 12.00
Injection Volumes sold to Xxxxx
Volume Price
Location/Point of Delivery (bbl/day) Quality/Type ($/bbl)
-------------------------- --------- ------------ -------
Mesa Pipeline System 24,405 Common Stream Sweet 12.00 + TFA*
West Texas Gulf System Common Stream Sweet
Colorado City 3,175 Common Stream Sweet 12.00 + TFA*
Wortham 400 Common Stream Sweet 12.00 + TFA*
Mid-Valley Pipeline System
East Texas Mainline at Longview 8,800 Quaiboe 12.00 + TFA*
*See Schedule C for Injection Volume TFA value
B-1
SCHEDULE "C"
TFA and EFP Values
TRANSPORTATION AND FEE ADJUSTMENT
NYMEX Calendar Simulation
Floor Broker, Clearing and Margin
Finance 0.0200 0.0200
Cash Broker to buy Midland 0.0050 0.0050
Buy Midland/Sell Xxxxxxx:
Midland ILT Fee 0.0065 0.0065
Xxxxxxx ILT Fee 0.0065 0.0065
Arco/Chevron Pumpover at Midland 0.0800 0.0800
Mesa Tariff (first 27,500 MBD/Unocal)* 0.0490*
Mesa Tariff (all other shipments) 0.0917
WTG Xxxxxx 0.0000 0.0000
XxxXxxxxx Xxxxxx 0.5629 0.5629
Service Fee 0.2370**/0.1100*** 0.2370**
Total (US$/bbl) 1.2584**/1.1314*** 1.2157*
* This tariff rate and total shall apply to the first 27,500 bpd only if Xxxx
agrees to utilize Xxxxx'x transportation option on UNOCAL pursuant to Section
4.6 of this Agreement.
** This service fee and total shall apply to the first 80M bpd injected during
any Injection Month.
*** This service fee and total shall apply to any volumes injected in excess
of 80M bpd in any Injection Month.
EFP ADJUSTMENT TABLE
EFP 0.0200
EFP broker fee 0.0050
EFP inline fee at Xxxxxxx 0.0065
Total (US$/bl) 0.0315
C-1
INJECTION VOLUME TRANSPORTATION AND FEE
ADJUSTMENT
NYMEX Calendar Simulation
Floor Broker, Clearing and Margin Finance N/A N/A
Cash Broker to buy Midland N/A N/A
Buy Midland/Sell Xxxxxxx:
Midland ILT Fee N/A N/A
Xxxxxxx ILT Fee N/A N/A
Arco/Chevron Pumpover at Midland ** 0.0800 0.0800
Mesa Tariff (first 27,500 MBD/Unocal) */** 0.0490
Mesa Tariff (a11 other shipments) ** 0.0917
WTG Tariff ** 0.2488 0.2488
MidValley Tariff ** 0.5629 0.5629
Service Fee 0.0400 0.0400
Total (US$/bbl) 1.0234 0.9807*
* This tariff rate and total shall apply to the first 27,500 bpd only if Xxxx
agrees to utilize Xxxxx'x transportation option on UNOCAL pursuant to Section
4.6 of this Agreement.
** It remains to be determined which Party will be invoiced for March
shipments. Should Xxxx be invoiced, the relevant pipeline charges will be
applied.
C-2
SCHEDULE "D"
MONTHLY SUPPLY VOLUME PRICE SAMPLE CALCULATIONS
I. Example Calculation - Monthly Supply Volume Price (April 1999) without
Supply Volume Adjustment
Assume the following:
C = $12.50
T = $-0.1881
Where: April - May = $-0.15
April - June = $-0.25
T = $-0.1881 = {(13/21)*(-0.15)]+[(8/21)*(-0.25)]}
P = $-0.25
E = $0.0315
TF = $1.2584
SVP (April 1999) = $13.3518/bbl = $12.5000 + $-0.1881 + $-0.2500 + $0.0315 +
$1.2584
II. Example Calculation - Monthly Supply Volume Price (April 1999) with
Supply Volume Adjustment
Assume the following:
*Xxxxx advises Xxxx on 3/15 of election for Supply Volume Adjustment
from 2.4mm bbls to 1.8mm bbls for April 1999
SVP (April 1999) = $13.3518/bbl
VT = 2.4 mm bbls
VA = -0.6 mm bbls
SVPA = $13.1137 = $12.50 + $-0.3262 + $-0.35 + $0.0315 + $1.2584
Where: CA= $12.50
TA = $-0.3262
Where: April - May (3/16-3/22 Avg. Values) = $-0.25
April - June (3/16-3/22 Avg. Values) = $-0.45
TA = $-0.3262 = {(13/2l)*(-0.25))+[(8/2l)*(-0.45)]}
PA = $-0.35
EA = $0.0315
TFA = $1.2584
SVPF (April 1999) = $ 13.4312/bbl =
($13.3520)(2,400,000) + ($13.1137)(-600,000)
--------------------------------------------
2,400,000 + -600,000
