MAMM CREEK GAS GATHERING AGREEMENT
Exhibit 10.10
CERTAIN MATERIAL (INDICATED BY THREE ASTERISKS) HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
MAMM CREEK GAS GATHERING AGREEMENT
This Gas Gathering Agreement (“Agreement”) is made and entered into this 1st day of October, 2011 (the “Effective Date”) by and among Encana Oil & Gas (USA) Inc. (“Shipper”), Grand River Gathering, LLC (“Gatherer”) and, for the limited purposes set forth in Section 9.1, Summit Midstream Partners, LLC (“Buyer”). Shipper and Gatherer may be referred to individually as “Party,” or collectively as “Parties.”
BACKGROUND
A. Pursuant to that certain Purchase and Sale Agreement dated September 2, 2011 (the “PSA”), by and between Shipper, Gatherer and Buyer, Shipper (i) contributed and assigned the Gathering System (as such term is defined in the PSA) and related assets to Gatherer and (ii) conveyed 100% of the membership interest in Gatherer to Buyer.
B. Concurrently with the execution of this Agreement, Shipper and Gatherer have executed that certain (i) Future Development Gas Gathering Agreement and (ii) South Parachute and Orchard Gas Gathering Agreement dated as of the date of this Agreement.
C. Shipper desires Gathering services for certain Gas produced from the Mamm Creek area of the Piceance Basin northwestern Colorado, all in accordance with the terms and conditions of this Agreement.
Shipper and Gatherer wish to accomplish the foregoing, all pursuant to the terms of this Agreement. Accordingly, Shipper and Gatherer agree as follows:
SECTION 1: COMMITMENTS
1.1 Dedication. Shipper dedicates and agrees to deliver to Gatherer for Gathering at the Receipt Points the following: (i) all Gas now or hereafter produced from xxxxx completed to the depths of the base of the Mesa Verde formation (such depth being [***] feet as shown in the Type Log for the [***] well described in Exhibit “B”) and shallower located within the Dedication Area described on Exhibit “A” which is attributable to Interests now owned or hereafter acquired by Shipper; (ii) any Gas delivered to the K-28E Field Compressor Station up to its capacity as of the Effective Date, (iii) Gas attributable to an Interest of Shipper produced from certain xxxxx as listed on Exhibit “E” that are added to the Dedication from time to time as mutually agreed by Shipper and
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Gatherer; (iv) with respect to the xxxxx located within the Dedication Area in which Shipper is the operator, Gas produced from such xxxxx which is attributable to Interests of other working interest owners, overriding royalty interest owners, and royalty interest owners (x) which is not taken “in-kind” by such owners upstream of the Delivery Points and/or (y) for which Shipper has the right and/or obligation to market or deliver such Gas, including Gas attributable to an Interest of Xxxx Xxxxxxx Corporation (“BBC”) gathered pursuant to that certain Gas Exchange Agreement between BBC and Shipper dated January 1, 2005, as amended from time to time, (the “BBC Swap Agreement”) for as long as such BBC Swap Agreement is in effect, whereby each of BBC and Shipper are responsible for gathering the other party’s respective volumes of Gas in the greater Mamm Creek area and redeliver such volumes at the BBC High Pressure Delivery Point for each others’ account (“BBC Volumes”) (and Exhibit “D” details the associated lands and affected xxxxx with respect to which BBC holds an Interest in xxxxx operated by Shipper subject to the BBC Swap Agreement) and, (v) with respect to the xxxxx located within the Dedication Area in which Shipper is the operator, Gas produced from such xxxxx which is attributable to Interests of a certain working interest owner (referred to in this Agreement as the “Joint Venture Owner” or “JVO”) pursuant to the terms of that certain Carry and Earning Agreement between Shipper and Nucor Energy Holdings Inc. dated June 24, 2010 (the “C&E Agreement”) for which Shipper has the right and/or obligation to market or deliver such Gas, for only so long as such Gas is dedicated to Shipper (collectively, (i) through (v), the “Dedication”). Interests within the Dedication Area that are subject to prior commitments as of the Effective Date may, at Shipper’s option, be renewed with such prior parties or become part of the Dedication after expiration of such commitments. Interests hereafter acquired by Shipper within the Dedication Area that are subject to prior commitments at the time of acquisition pursuant to the PSA will become part of the Dedication after expiration of such commitments. By mutual agreement, the Parties may increase or decrease the Dedication. Notwithstanding anything to the contrary above, the following shall be excluded from the Dedication (unless the Parties mutually agree otherwise) and the Parties shall have no obligation to each other with respect thereto):
(a) Gas attributable to Shipper’s non-operating Interest in the xxxxx that Shipper does not take “in kind”; and,
(b) Gas produced by Shipper and reserved and/or utilized in accordance with Article 2.4 of the General Terms and Conditions.
For purposes of clarification and avoidance of doubt (but without in any way limiting Shipper’s obligations hereunder), it is understood by the Parties that the Gas volume dedicated to Gatherer but designated to be delivered at Delivery Points to Enterprise Gas Processing, LLC (“Enterprise”) are dedicated and/or committed to both Gatherer and Enterprise (unless released pursuant to the agreement with Enterprise) for their respective gathering service purposes.
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1.2 Gathering Services. Subject to the terms and conditions of this Agreement, Gatherer agrees to accept, Gather, Compress, measure, and dehydrate, as necessary, all of Shipper’s Gas tendered to Receipt Points and deliver such Gas to Delivery Points, less Fuel and L&U (“FL&U”). Gatherer shall also provide the foregoing services with respect to Gas tendered by Shipper on behalf of BBC pursuant to the exchange contemplated by Section 1.1 above and such Gas shall be accorded the same priority as Shipper’s Gas under the terms and conditions of this Agreement
1.3 Priority of Shipper’s Gas. Shipper’s Gas delivered under this Agreement shall be Firm Capacity Gas.
1.4 Priority of Undedicated Gas. Shipper shall be entitled to deliver, and Gatherer agrees to accept and Gather pursuant to the terms of this Section 1.4, Gas attributable of an Interests of Shipper that is not subject to the Dedication (“Undedicated Gas”). All such Undedicated Gas shall be Interruptible Gas, unless the Parties agree otherwise. Shipper shall be entitled to convert Undedicated Gas to Firm Capacity Gas by committing to deliver for Gathering such Undedicated Gas to the Receipt Points for a period of [***] years at the Gathering Fees described in Section 7 of this Agreement. In addition, all of Shipper’s Gas attributable to Shipper’s non-operating Interest in certain xxxxx and gathered by BBC pursuant to the BBC Swap Agreement (“BBC Gathered Shipper Volumes”) and delivered to the BBC High Pressure Delivery Point shall be Firm Capacity Gas. Shipper shall also have a right to match the terms of any other shipper (whether proposed by such shipper or Gatherer) to reserve any unutilized existing capacity in the Gathering System. Notwithstanding, Gatherer shall have no requirement under this Agreement to expand capacity for Undedicated Gas.
1.5 Gatherer’s Delivery Obligations. Subject to the terms and conditions of this Agreement, Gatherer shall deliver Shipper’s Gas to Shipper at the Delivery Points at a quality that meets the specifications required by the Interconnecting Pipelines receiving Shipper’s Gas and at a pressure sufficient to enter the Interconnecting Pipelines.
1.6 Shipper’s Obligation to Accept Gas. It shall be Shipper’s obligation to make the necessary arrangements with other parties to accept Gas at the Delivery Points. For the purposes of clarification, Shipper has contracted for capacity in downstream Interconnecting Pipelines and shall have capacity through the meters at the Delivery Points owned by such Interconnecting Pipelines up to such capacity, at any given time, as provided by the Interconnecting Pipeline. From time to time, Shipper may cause Interconnecting Pipelines to increase the capacity of any Delivery Point, and, in such event, no Person other than Shipper shall be entitled to such increased capacity without written approval of Shipper. For purposes of clarification and avoidance of doubt, the provisions
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of this Section 1.6 of this Agreement with respect to capacity through the meters at applicable Delivery Points shall only apply with respect to capacity at such points and shall not be interpreted to otherwise modify or amend the provisions of Article 3.3 of the General Terms and Conditions.
1.7 Integrated Transaction. The Parties acknowledge and agree that this Agreement, the Future Development Gas Gathering Agreement and the South Parachute and Orchard Gas Gathering Agreement are all part of a single, integrated, transaction and that in the event of a conflict between the terms and provisions of this Agreement and/or the Future Development Gas Gathering Agreement and the South Parachute and Orchard Gas Gathering Agreement, the Parties (or a court of law in the event of a dispute) shall attempt to harmonize, to the extent possible and practicable under the circumstances, the provisions of all three agreements in order to give effect to such agreements.
1.8 Covenant Running with the Land. This Agreement shall (a) be a covenant running with (i) the Gathering System and (ii) the Interests now owned or hereafter acquired by Shipper and its successors and assigns within the Dedication Area and (b) be binding on and enforceable by (i) Gatherer against Shipper and its successors and assigns and (ii) Shipper against Gatherer and it successors and assigns. In the event Shipper sells, transfers, conveys, assigns, grants or otherwise disposes of all or any Interests in the Dedication Area, then any such sale, transfer, conveyance, assignment or other disposition shall be made expressly subject to this Agreement and state such in any instrument of conveyance. In the event Gatherer sells, transfers, conveys, assigns, grants or otherwise disposes of all or any interest in the Gathering System, then any such sale, transfer, conveyance, assignment or other disposition shall be made expressly subject to this Agreement and state such in any instrument of conveyance. Contemporaneously with the execution of this Agreement, the Parties shall execute, acknowledge, deliver and record a “short form” memorandum of this Agreement in the form of Exhibit “G” attached hereto, which shall be placed of record in the counties in which the Dedication Area is located. Upon termination of this Agreement, Shipper and Gatherer shall file of record a release and termination of such memorandum.
SECTION 2: GENERAL TERMS AND CONDITIONS
This Agreement incorporates and is subject to the General Terms and Conditions attached hereto, together with all other Exhibits attached hereto.
SECTION 3: TERM
This Agreement shall take effect as of the Effective Date and continue thereafter for [twenty five] ([25]) years (each year, a “Primary Term Year” and such [twenty five] ([25]) year period, the “Primary Term”), unless terminated earlier in accordance with the
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terms and conditions of this Agreement. After expiration of the Primary Term, this Agreement will automatically renew for one (1) successive one (1) year renewal period (a “Renewal Term,” as applicable) unless terminated by Shipper upon written notice to Gatherer given no less than six (6) months prior to the expiration of the Primary Term. After expiration of the first Renewal Term, this Agreement will automatically renew for one (1) additional, successive one (1) year Renewal Term unless terminated by Shipper upon written notice to Gatherer no less than six (6) months prior to the expiration of the then current Renewal Term. This Agreement will renew every year for one year thereafter unless terminated by either Party upon written notice to the other Party no later than six (6) months prior to the expiration of the Renewal Term (the Primary Term and any Renewal Terms shall be collectively referred to as the “Term”).
SECTION 4: FACILITIES OPERATIONS AND AVAILABILITY
4.1 Operation of Facilities. Gatherer agrees to operate its Facilities as a prudent operator in a manner consistent with generally accepted industry practices with the goal, to the extent consistent with such practices, to reasonably and prudently minimize leaks, minimize downtime, and maximize service and Facilities availability. Accordingly, Gatherer agrees to implement prudent procedures that include regular pigging of the Gathering System and a reliable means of corrosion inhibition such as cathodic protection, injection of an inhibitor, or installation of field dehydration facilities. Shipper may also require that Gatherer use corrosion inhibition to control corrosion in the Gathering System consistent with previous operation of the Gathering System as directed by a third party corrosion control expert as described in Exhibit “K”. Additional requirements for the operation of the Facilities are included in Article 3 of the General Terms and Conditions.
4.2 Construction of Facilities. As described in Section 6.1, the Parties will meet periodically to plan and coordinate with respect to Shipper’s drilling operations in order to allow the Parties to comply with their obligations under this Agreement. Subject to and in accordance with the terms and conditions of this Agreement, during the Primary Term, Gatherer shall construct such new Facilities and expand the capacity of the Facilities, as necessary, in order to receive, Gather and deliver the total quantity of Shipper’s Gas tendered to Gatherer, less FL&U.
SECTION 5: PRESSURE REQUIREMENTS
5.1 Receipt Point Pressure Requirements. The Parties intend that Gatherer shall operate the Sub-Systems at a pressure not to exceed the applicable Target Pressure and that Gatherer shall design, upgrade, and operate the Facilities as necessary to meet such pressure obligation. The initial Average System Pressure Requirement and Maximum Allowable Receipt Point Pressure (jointly the “Base Pressure Requirements”) are designated on Exhibit “F” and are subject to periodic adjustment as provided for herein.
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The Parties will maintain a current revision to Exhibit “F” showing the current Average System Pressure Requirement and Maximum Allowable Receipt Point Pressure. The Parties agree that the provisions of this Section 5 shall be suspended to the extent provided in the Transition Services Agreement executed on October 27, 2011 between Gatherer and Shipper.
5.2 Average System Pressure Requirement.
(a) Gatherer shall maintain an average monthly pressure each Accounting Period on the Gathering System that does not exceed the Average System Pressure Requirement for each Sub-System.
(b) If, during any Accounting Period, for reasons other than Force Majeure, and after taking into account the waiver, as applicable, provided under Section 5.10 of this Agreement, the Average System Pressure Requirement is exceeded, Shipper shall be entitled to a reduction in the Gathering Fee for the Accounting Period with respect to the Gas tendered at all of the Receipt Points on the applicable system affected by such exceedance. The reduction in the Gathering Fee shall be determined as follows:
(i) For each month (up to [***] consecutive months) that the average pressure exceeds the applicable requirement during the Accounting Period, the reduction shall be equal to [***] percent ([***]%) of the Gathering Fees described in Section 7 for each affected Receipt Point per Mcf for each [***] percent ([***]%)(or portion thereof) that the average pressure exceeds the applicable requirement during the Accounting Period; provided, however, that in no event will the Gathering Fee reduction at a Receipt Point pursuant to this clause (i) be greater than [***] percent ([***]%) of the Gathering Fee described in Section 7.
(ii) For each consecutive month beyond the [***] consecutive month (up to [***] additional consecutive months) that the average pressure exceeds the applicable requirement during the Accounting Period, the reduction shall be equal to [***] percent ([***]%) of the Gathering Fees described in Section 7 for each affected Receipt Point per Mcf for each [***] percent ([***]%)(or portion thereof) that the average pressure exceeds the applicable requirement during the Accounting Period; provided, however, that in no event will the Gathering Fee reduction at a Receipt Point pursuant to this clause (ii) be greater than [***] percent ([***]%) of the Gathering Fee described in Section 7.
(iii) For each consecutive month beyond the [***] consecutive month that the average pressure exceeds the applicable requirement during the Accounting Period, the reduction shall be equal to [***] percent ([***]%) of the Gathering Fees described in Section 7 for each affected Receipt Point per Mcf for each [***] percent ([***]%)(or portion thereof) that the average pressure exceeds the applicable requirement during the Accounting Period; provided, however, that in no event will the Gathering Fee
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reduction at a Receipt Point pursuant to this clause (iii) be greater than [***] percent ([***]%) of the Gathering Fee described in Section 7.
(iv) If both an Average System Pressure Requirement Gathering Fee reduction hereunder and a Maximum Allowable Receipt Point Pressure Gathering Fee reduction under Section 5.3(b) apply to a Receipt Point for an Accounting Period, only the greater reduction of such Gathering Fee will apply to such Receipt Point.
5.3 Maximum Allowable Receipt Point Pressure.
(a) Gatherer shall maintain an average monthly pressure each Accounting Period at each Receipt Point that does not exceed the Maximum Allowable Receipt Point Pressure.
(b) If, during any Accounting Period, for reasons other than Force Majeure, and after taking into account the waiver, as applicable, provided under Section 5.10 of this Agreement, the Maximum Allowable Receipt Point Pressure is exceeded, Shipper shall be entitled to a reduction in the Gathering Fee for the Accounting Period with respect to the Gas tendered at any Receipt Point that suffers such an exceedance. The reduction in the Gathering Fee shall be determined as follows: The reduction in the Gathering Fee shall be determined as follows:
(i) For each month (up to [***] consecutive months) that the Maximum Allowable Receipt Point Pressure is exceeded during the Accounting Period, the reduction shall be equal to [***] percent ([***]%) of the Gathering Fees described in Section 7 for each affected Receipt Point per Mcf for each [***] percent ([***]%)(or portion thereof) that the average pressure exceeds the applicable Maximum Allowable Receipt Point Pressure during the Accounting Period; provided, however, that in no event will the Gathering Fee reduction at a Receipt Point pursuant to this clause (i) be greater than [***] percent ([***]%) of the Gathering Fee described in Section 7.
(ii) For each consecutive month beyond the [***] consecutive month (up to [***] additional consecutive months) that the average pressure exceeds the applicable Maximum Allowable Receipt Point Pressure during the Accounting Period, the reduction shall be equal to [***] percent ([***]%) of the Gathering Fees described in Section 7 for each affected Receipt Point per Mcf for each [***] percent ([***]%)(or portion thereof) that the average pressure exceeds the applicable Maximum Allowable Receipt Point Pressure during the Accounting Period; provided, however, that in no event will the Gathering Fee reduction at a Receipt Point pursuant to this clause (ii) be greater than [***]percent ([***]%) of the Gathering Fee described in Section 7.
(iii) For each consecutive month beyond the [***] consecutive month that the average pressure exceeds the applicable Maximum Allowable Receipt
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Point Pressure during the Accounting Period, the reduction shall be equal to [***]percent ([***]%) of the Gathering Fees described in Section 7 for each affected Receipt Point per Mcf for each [***] percent ([***]%)(or portion thereof) that the average pressure exceeds the applicable Maximum Allowable Receipt Point Pressure during the Accounting Period; provided, however, that in no event will the Gathering Fee reduction at a Receipt Point pursuant to this clause (iii) be greater than [***] percent ([***]%) of the Gathering Fee described in Section 7.
(iv) If both a Maximum Allowable Receipt Point Pressure Gathering Fee reduction hereunder and an Average System Pressure Requirement Gathering Fee reduction under Section 5.2(b) apply to a Receipt Point for an Accounting Period, only the greater reduction of such Gathering Fee will apply to such Receipt Point.
5.4 Daily Pressure Variances.
(a) Gatherer shall not allow the average daily variance in pressure at any Receipt Point on a Low Pressure System measured on an hourly basis within a Day to exceed [***] psig (the “Allowable Daily Pressure Variance”) for more than [***] consecutive Days or for any [***] Days in a [***] consecutive Day period (an exceedance for either such period, an “ADP Variance Exceedance Event”).
(b) If, during any Accounting Period, for reasons other than Force Majeure or planned Maintenance, and after taking into account the waiver, as applicable, provided under Section 6.2(c) of this Agreement, there is an ADP Variance Exceedance Event at any Receipt Point, Shipper shall be entitled to a reduction in the Gathering Fee of $[***] per Mcf with respect to Shipper’s Gas tendered to the applicable Receipt Point on any Day during such Accounting Period that (i) is after the date on which such ADP Variance Exceedance Event occurs and (ii) is a Day on which the average daily variance in pressure at such Receipt Point measured on an hourly basis within such Day exceeds the Allowable Daily Pressure Variance. The foregoing fee reduction shall be cumulative of the fee reductions provided for in Section 5.2(b) and 5.3(b) above; provided, however, the cumulative fee reductions provided for hereunder and under Sections 5.2(b) and 5.3(b) shall not be greater than [***] percent ([***]%) of the Gathering Fee for any Accounting Period.
5.5 Extended Failure to Comply with Pressure Requirements. If, for reasons other than Force Majeure, and after taking into account the waiver, as applicable, provided under Section 5.10 of this Agreement, the average of the daily pressure on any Sub-System exceeds the Average System Pressure Requirement and/or the Maximum Allowable Receipt Point Pressure, as applicable, by more than [***] percent ([***]%) for any four (4) Accounting Periods during any consecutive [***] Accounting Periods, such situation will constitute a “Material Pressure Condition.” In the event of the occurrence of a Material
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Pressure Condition, (a) prior to exercising any of the following remedies, Shipper shall notify Gatherer, and the Parties shall meet to discuss in good faith potential solutions to address the impact of such Material Pressure Condition on Shipper and (b) if such meetings fail to achieve mutual agreement between the Parties regarding a solution to such impacts, then (except in the case of the remedy described in clause (ii) below, which shall be the sole and exclusive remedy if elected) without limiting its rights and remedies under this Agreement or under applicable law, Shipper, at its election, shall be entitled to elect (but shall not be required to do so) one of the following:
(i) Require Gatherer to waive the Gathering Fee for all affected Receipt Points for [***] Accounting Period following the event of Material Pressure Condition and all subsequent Accounting Periods until Gatherer does not exceed the Average System Pressure Requirement and/or the Maximum Allowable Receipt Point Pressure, as applicable, by more than [***] percent ([***]%) for [***] Accounting Period (and in such event no fee reduction shall apply under Section 5.2(b) or 5.3(b) during such period); or
(ii) Permanently release [***] of Shipper’s Gas (such portion at Shipper’s election) from this Agreement; provided, however, in the case of a violation of only a Maximum Allowable Receipt Point Pressure, the release shall be limited to the volume of Gas that would otherwise be delivered to such Receipt Point in the absence of a Material Pressure Condition (and thereafter no fee reduction shall apply under Section 5.2(b) in respect of the released Gas). Any election to release such Gas from this Agreement shall be made in writing to Gatherer within thirty (30) days from the end of the Accounting Period during which Shipper was eligible to elect such release, and this release will become effective thirty (30) days after Shipper’s written notice to Gatherer. Following a release of any Gas as provided herein, Gatherer shall have the right to make available (as Firm Capacity Gas or Interruptible Gas) to other Persons any capacity on the Gathering System associated with such released Gas if sufficient capacity exists to enable Gatherer to maintain the Base Pressure Requirements.
5.6 Revisions to the Base Pressure Requirements. In the event Shipper requires a pressure lower than the Base Pressure Requirement in effect at any Receipt Point or group of Receipt Points, Shipper may request, in writing, that Gatherer provide such lower pressure. Gatherer may consider and offer to Shipper a change in the Gathering Fee to accommodate such request. In the event that Gatherer recommends a new Base Pressure Requirement and corresponding change to the Gathering Fee, if any, then the Parties shall amend the Agreement to document the new Base Pressure Requirement and Gathering Fee for any affected Receipt Points, as applicable. If Gatherer and Shipper cannot agree on any such amendment to the Agreement, then Shipper shall have the option to request such project be performed under, and a new fee calculated in accordance with, Section 6.4 and Section 7.2 of the Agreement.
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5.7 Compression Operation Requirements. During any Accounting Period, if the inlet suction pressure at the Field Compressor Stations is operated at less than [***] psig for the East Mamm Compressor Station, Pumba Compressor Station, or Hunter Mesa Compressor Station or the Rifle Booster Compressor Station is operated at less than [***] psig, unless otherwise approved by Shipper in writing, then (if applicable) Shipper shall be reimbursed its allocable share of such Fuel or electricity required for such lower operation as described below Shipper and Gatherer shall agree to such similar minimum suction pressures for any new compression services in addition to those listed above that may be installed for Shipper’s Gas during the term of this Agreement. In the event that the daily average of a minimum hourly reading of inlet suction pressures are lower than the pressures specified in this Section 5.7 for a period of [***] days or longer during a particular Accounting Period, then the additional Fuel or electricity consumed in connection with such operation shall not be allocated to Shipper’s Gas during the applicable Accounting Period. Such calculation of Fuel or electricity consumed shall be based on mutually agreeable estimation methods and sound engineering principles to determine the estimated amount of additional Fuel or electricity used allocable to Shipper’s Gas. Fuel will be valued at the [***]. Electricity, if applicable, will be valued at the average electrical cost for the particular compressor station in question for such Accounting Period. Gatherer shall provide read only signal available to Shipper to report the current operating pressure at each Field Compressor Station. Any dispute related to calculation or measurement of Fuel or electricity under this Section 5.7 will be submitted to a nationally recognized engineering firm having expertise in the design and operation of natural gas gathering systems to be agreed upon by the Parties (such firm, the “Technical Expert”) for resolution in accordance with the procedure specified for such referrals in Article 14.4 of the General Terms and Conditions.
5.8 Pressure Control Devices. Gatherer shall not install any pressure control or flow control devices downstream of Receipt Points, unless required by law, other than pressure or flow control equipment to enable delivery of Gas to Interconnecting Pipelines, customary compressor station or compressor inlet suction control devices designed to prevent high pressure alarms or shut down of compression equipment or allow venting of any Gas, such as control or rupture pin valves, rupture discs, or pressure relief devices, unless such device is used solely for the purpose of over pressure protection for the Gathering System and is set at the MAOP of the protected equipment.
5.9 Delivery Point Pressure Requirement. In addition to the requirements set forth in Section 1.5 above, Gatherer shall operate and maintain the Facilities to deliver Shipper’s Gas at a delivery pressure up to (but no greater than) [***] psig at the applicable Delivery Point.
5.10 Exclusion of New Xxxxx from Base Pressure Requirements. For the period of time commencing with the first deliveries of Gas to the Gathering System (in the case of a new well connected to the Gathering System or in the case of a recompletion of any
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existing well) for a period of [***] months, the pressures at the Receipt Point (and only at such Receipt Point) with respect to such well (an “Excluded Well”) shall not be included for purposes of determining compliance with the Base Pressure Requirements. Notwithstanding the foregoing, and for purposes of clarification and avoidance of doubt, the actual pressures measured on the Gathering System and at each Receipt Point (excluding the pressure measured at the Receipt Point for any Excluded Well) shall be included in the determination of the Base Pressure Requirements, irrespective of the impacts to the pressure on the Gathering System and at other Receipt Points as a result of increased deliveries of Gas from any such Excluded Well.
SECTION 6: NEW FACILITIES
6.1 Periodic Planning Meetings. The Parties shall meet no less often than quarterly to discuss operational issues, Shipper’s drilling plans (including an estimate of Shipper’s drilling schedule and a list of proposed well locations for the next quarter), Shipper’s good faith production forecasts, the facility requirements for Gatherer’s Gathering System, and any anticipated changes to the Base Pressure Requirements for any Receipt Points, in each case in a format mutually agreed by the Parties. Concurrently, Gatherer shall provide updates, plans of action, and expected timelines on all projects to support Shipper’s previous drilling plans, current operational data and updates, the most recent hydraulic models of the Gathering System used to support system planning, and a current update of unreserved capacity in the Facilities, in each case in a format mutually agreed by the Parties. In advance of each such periodic planning meetings, Shipper shall provide Shipper’s good faith and reasonable estimates as to the incremental volumes of Shipper’s Gas that are likely to be tendered for Gathering to the Gathering System over the next succeeding six quarters as well as an estimated drilling schedule and/or a proposed number of xxxxx to be drilled to support such forecast. The purpose of these meetings is to promote meaningful communication and advance planning for expansion or improvements of the Gathering System In addition, Gatherer shall designate a representative to participate in Shipper’s planning meetings and to serve as Gatherer’s single point of contact with respect to planning, operation, and coordination for purposes of implementing the terms of this Agreement. In addition to the foregoing provisions of this Section 6.1, the Parties agree that: (i) Gatherer shall attend, when reasonably requested by Shipper, any and all meetings with applicable government agencies and stakeholders relating to Shipper’s drilling operations and the need for additional Facilities to support Shipper’s planned operations, including, without limitation, meetings with the United States Bureau of Land Management; Colorado Oil and Gas Conservation Commission; city and local governments; and, the Colorado Division of Wildlife; and, (ii) Shipper shall attend, when reasonably requested by Gatherer, any and all meetings with applicable government agencies and stakeholders relating to Gatherer’s Gathering operations and the need for additional Facilities to support Shipper’s planned operations including, without limitation, meetings with the United States Bureau of Land Management; Colorado Oil and Gas
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Conservation Commission; city and local governments; and, the Colorado Division of Wildlife.
6.2 New Meter Facilities at Existing Well Pads. Immediately after the Effective Date, Gatherer shall begin the installation of approximately [***] new meter facilities to be owned and operated by Gatherer at Shipper’s existing well pads. These meters shall serve as Receipt Points on the Gathering System. Gatherer agrees to make a “read-only” signal available to Shipper at each Receipt Point. Until the new meter facilities are in place, Shipper agrees to make flow information available to Gatherer from its existing wellhead meters. Transition details shall be developed by mutual agreement of the Parties, but the new meters shall be installed and operational by or before December 31, 2013. The total costs, excluding overhead charges, to install such meters, and also the meters described in Section 6.2 of the South Parachute and Orchard Gas Gathering Agreement, will be recorded, and at such time that Gatherer has spent over $[***] (or $[***] in the event Shipper is able to obtain amendments to its surface leases related to the East Mamm and Hunter Mesa compressor stations in accordance with Section 8.8(g) of the PSA prior to the Closing Date (as defined in the PSA)) on the meters associated with this Section and Section 6.2 of the South Parachute and Orchard Gas Gathering Agreement, Shipper shall be obligated to pay the additional costs to Gatherer to install the remaining required meters, excluding overhead.
6.3 Connection of New Receipt Points. The Parties agree as follows with respect to new Receipt Points.
(a) If Shipper is drilling a new well, or xxxxx, that would require the addition of a new Receipt Point, Shipper shall provide notice to Gatherer (the “Receipt Point Notice”). The Receipt Point Notice shall include the desired location, the required completion date for Gatherer to have its Facilities in place in conjunction with Shipper constructing road access, if required, to the Receipt Point, the desired capacity of the Receipt Point, and an updated production forecast, if necessary, for the new Receipt Point as well as the applicable portions of the Gathering System. When reasonably practical, Shipper shall provide notice of its projected needs for new Receipt Points at least one hundred and twenty (120) Days prior to the need for such Receipt Point, but lack of such notice does not relieve Gatherer of its obligations hereunder. Shipper shall provide the Receipt Point Notice at least thirty (30) Days prior to the expected completion date for Gatherer to have its Facilities in place in conjunction with the completion of the construction of the access road. Within three (3) Business Days of the Receipt Point Notice, Gatherer shall begin the process of determining potential pipeline routes and the necessary right-of-way, permits, and materials to construct any new Facilities required to connect the new Receipt Point to the Gathering System. Within ten (10) Business Days of the Receipt Point Notice, Gatherer shall provide Shipper with a written response of the design and completion date of the new Receipt Point. If the design and completion date is acceptable to Shipper, Shipper will advise Gatherer in writing within three (3) Business
*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
Days after receiving such estimate, and Gatherer will complete construction of the new connection Facilities for such Receipt Point with due diligence. Gatherer shall be responsible for all costs, including overhead, associated with installation of the new lateral and required metering and sampling equipment. Provided that Shipper provides sufficient notice, Gatherer shall cooperate in good faith with Shipper to minimize the overall impact to landowners and the environment by coordinating, and cooperating with respect to, (i) installation (and related construction) by Gatherer of necessary pipelines for new Receipt Points and (ii) construction by Shipper of new access roads to access well and well pad locations. If a Receipt Point is not constructed within ten (10) Days of the expiration of the estimated completion date, and/or Gatherer is unable to receive and Gather volumes tendered by Shipper from such Receipt Point by such date, in either case other than as a result of Force Majeure, then provided that Shipper is ready and able to begin tendering volumes to Gatherer at such Receipt Point, for each Day thereafter that Shipper is unable to deliver volumes to the new Receipt Point under this Agreement, Shipper shall be entitled to [***] (plus, in the case of the first such Day thereafter, an additional ten (10 Days) of Gathering services without paying the associated Gathering Fee for such new Receipt Point beginning on the first Day when Gatherer is able to receive and Gather volumes from such new Receipt Point.
(b) If the design and schedule with respect to Receipt Points provided by Gatherer to Shipper is not acceptable to Shipper and the Parties are unable to reach agreement on an alternative, Shipper shall have the right, by notice to Gatherer, to construct and install, as Gatherer’s agent, the new connection facilities (including piping and meters). Shipper shall be able to connect such facilities to the Gathering System without delay, and Gatherer shall be required to accept the Gas delivered from these newly constructed facilities under the terms and conditions of this Agreement. If Shipper exercises this right, Shipper shall be entitled to utilize any right-of-way and/or materials obtained by Gatherer for the purpose of installing the connection facilities at cost, excluding any overhead, and Shipper shall be entitled to reimbursement from Gatherer, not to exceed Gatherer’s last proposed cost estimate, of its actual costs to install the connection facilities, including overhead of [***] percent ([***]%), at completion. Gatherer may, at its own cost, inspect (or cause another Person to inspect) such construction on a timely basis only to the extent necessary to ensure compliance with Gatherer’s specifications. Upon payment of the reimbursement described herein, Shipper shall convey to Gatherer, and Gatherer shall thereafter own and operate the facilities constructed by Shipper.
(c) Gatherer shall use commercially reasonable efforts to obtain from Persons other than Shipper all rights-of-way and other site access rights as it may require for completion of any Receipt Point. If, after exercising such efforts, Gatherer is unable to obtain any such rights, then Shipper shall grant to Gatherer any such rights it may have that it is permitted to grant to Gatherer and shall use commercially reasonable efforts to obtain or exercise on behalf of Gatherer any other such rights.
*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
6.4 Additional Services. The Parties understand that during the term of this Agreement new facilities may be required to optimize development of Shipper’s producing assets that provide services that are beyond the initial scope of this Agreement set forth in Section 1.2 (“Additional Services”). Additional Services may include, but are not limited to, (a) new compression facilities to lower pressure below the established pressure requirements, (b) Treating services for the removal of hydrogen sulfide or other sulfur compounds, (c) facilities to remove other potential contaminants that are not currently required or (d) new Delivery Points requested by Shipper. Additional Services do not include new connections of Receipt Points already provided for in this Agreement, nor do they include the expansion of any Gathering System or dehydration to accommodate additional volumes of Shipper’s Gas. In the event Additional Services are required, the Parties shall agree in writing on a scope of work, within ten (10) Business Days of Shipper notifying Gatherer of such need for Additional Services, and Gatherer no later than thirty (30) Business Days (but as soon as reasonably practicable) thereafter, shall provide Shipper with a proposed cost estimate (including estimate of the capital costs), completion date, and Gatherer’s proposed fee for the new Facilities (“Additional Services Facilities”) determined in accordance with Section 7.2 (the “Additional Services Proposal”). Within ten (10) Business Days of receipt of such information, Shipper will either (A) accept Gatherer’s proposal for Additional Services, (B) suggest an alternative, whereby Gatherer shall have an additional ten (10) Business Days to provide a proposal based on such alternative and containing the same information as the Additional Services Proposal, which proposal shall be treated as a new Additional Services Proposal hereunder or (C) notify Gatherer that Shipper, or a designee of Shipper, will construct, install, and operate the necessary Additional Services Facilities. As Additional Services Facilities are constructed in accordance with the provisions of this Section 6.4 by Gatherer, they shall become part of the Facilities. If Shipper selects (C) above, the Additional Services Facilities installed by Shipper shall not be installed (i) on or within the Facilities except as necessary to receive or return Shipper’s Gas to Gatherer if necessary for the completion and operation of the project and in such case the Parties shall enter into a customary interconnection agreement reasonably satisfactory to the Parties) or (ii) in such a way that interferes in any material respect with the operation or maintenance of the Facilities. If Gatherer undertakes the Additional Services project and such Additional Services Facilities are not constructed, for reasons other than Force Majeure, within (A) sixty (60) Days of the specified completion date provided for in the Additional Services Proposal for any Additional Services project that includes compression or (B) thirty (30) Days of the specified completion date provided for in the Additional Services Proposal for any Additional Services project that does not include compression, for each Day thereafter that Shipper is unable to use such Additional Services under this Agreement, Shipper shall be entitled to [***] Day of Additional Services without paying the daily pro rata portion of the associated fixed monthly payment beginning on the first Day when Gatherer is able to provide such Additional Service.
*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
SECTION 7: FEES AND CONSIDERATION
7.1 Gathering Fees. The Parties agree as follows with respect to the fees and consideration provided for under this Agreement (individually, as applicable, the “Gathering Fee” and, collectively, the “Gathering Fees”).
(a) Shipper Fees. For Gathering services performed by Gatherer, Shipper shall pay Gatherer the following fees with respect to Shipper’s Gas delivered pursuant to Sections 1.1(i)-(iii) of the Agreement:
(i) With respect to Gas delivered to a Receipt Point pursuant to Sections 1.1(i)-(iii) of the Agreement, Shipper shall pay Gatherer the amount of $[***] for each Mcf of such volume of Gas accepted at such Receipt Point;
(ii) If for any reason (x) only a portion of the Gathering System is utilized by Shipper’s Gas, or (y) the Parties agree to separate or apportion Gathering Fees, then the Gathering Fees shall be deemed to be divided as follows for purposes of this Section 7.1:
(aa) Low Pressure Gathering - $[***] for each Mcf of Shipper’s Gas delivered to and from the Low Pressure System. For clarification, this service would include any costs associated with the continued operation of the existing K28E capacity;
(bb) Field Compression and Dehydration - $[***] for each Mcf of Shipper’s Gas Compressed and dehydrated at the Field Compressor Stations;
(cc) High Pressure Gathering - $[***] for each Mcf of Shipper’s Gas delivered to and from the High Pressure System; and,
(dd) Rifle Booster Compression - $[***] for each Mcf of Shipper’s Gas that is Compressed at the Rifle Booster Station.
For the Gathering of the BBC Volumes, Shipper shall pay (aa) and (bb) above and for the Gathering of BBC Gathered Shipper Volumes, Shipper shall pay (cc) and (dd) above.
(b) Shipper Gathering Fee Adjustment. Beginning on January 1, 2013, and every year thereafter on such date, [***] percent ([***]%) of the total Gathering Fees set forth in Section 7.1(a) above shall be adjusted by the percentage increase or decrease, if any, in the Consumer Price Index for All Urban Consumers (“CPI-U”) between the immediately preceding December and the previous December. This percentage adjustment
*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
shall be calculated based upon the difference between the most recent calendar year and the previous calendar year, as published in the U.S. Department of Labor, Bureau of Labor Statistics. If the CPI-U ceases to be published, the parties shall use commercially reasonable efforts to negotiate a replacement index. The remaining [***] percent ([***]%) of such Gathering Fees shall remain fixed for the term of this Agreement.
(c) [***] Fees. For Gathering services performed by Gatherer, Shipper shall pay Gatherer the following fees with respect Gas delivered pursuant to Section 1.1(v) of the Agreement [***]:
(i) With respect to Gas delivered to a Receipt Point pursuant to Section 1.1(v) of the Agreement [***], Shipper shall pay Gatherer the amount of $[***] for each Mcf of such volume of Gas accepted at the Receipt Point;
(ii) If for any reason (x) only a portion of the Gathering System is utilized by [***], or (y) the Parties agree to separate or apportion Gathering Fees,then the Gathering Fees shall be deemed to be divided as follows for purposes of this Section 7.1(c):
(aa) Low Pressure Gathering - $[***] for each Mcf of [***] Gas delivered to and from the Low Pressure System;
(bb) Field Compression and Dehydration - $[***] for each Mcf of [***] Compressed and dehydrated at the Field Compressor Stations;
(cc) High Pressure Gathering - $[***] for each Mcf of [***] delivered to and from the High Pressure System; and,
(dd) Rifle Booster Compression - $[***] for each Mcf of [***] that is Compressed at the Rifle Booster Station.
(d) [***] Gathering Fee Adjustment. Effective [***], and every January 1 thereafter, the total Gathering Fees set forth in Section 7.1(c) above shall be adjusted for the calendar year based on the percentage increase or decrease, if any, in the [***] described below for the immediately preceding December and the previous December. For calendar years [***], the adjustment shall be calculated based upon a weighting of [***]. Index 1 shall be weighted [***] and Index 2 shall be weighted [***]. For calendar year [***], the adjustment shall be calculated based upon [***] of the percentage increase or decrease in Index 1. If [***], the Parties shall use commercially reasonable efforts to agree on a replacement index. In no event will such Gathering Fees be reduced below [***].
7.2 Additional Services Fee. For any Additional Services supplied by Gatherer, Shipper will pay a mutually agreeable fee (the “Additional Services Fee”) in addition to
*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
the Gathering Fee to enable Gatherer to recover its related capital costs, plus the return described below and all actual Operating Costs. Additional Services Fees are determined as follows:
(a) With respect to the capital cost as agreed to in accordance with Section 6.4, a fixed monthly fee will be calculated that returns to Gatherer over a period of time equal to the lesser of (i) [***] years and (ii) the remaining Term a return pre-tax, equal to [***] percent [***]% on an unleveraged basis (no cost of debt included). An example of such calculation is shown in Exhibit “I”. In addition to the fixed monthly fee, Shipper shall pay Gatherer’s Operating Costs associated with such Additional Services Facilities.
(b) Shipper shall pay Gatherer the Additional Services Fee as calculated in (a) above beginning with the first Day of the Accounting Period following the date the Additional Services Facilities are complete and capable of Gas service, and shall continue to pay such fee each month for a period of [***] years or remaining Term, as applicable, at which time the Additional Services Fee will be reduced to [***] percent ([***]%) of the Operating Costs associated with the Additional Services Facility for as long as such Additional Services Facility is in use for Shipper’s Gas. It is understood that multiple Additional Services Fees could be in effect simultaneously, as there may be requirements for multiple Additional Services Facilities.
(c) Shipper shall hold all Firm Capacity Gas rights through such Additional Services Facilities, and Gatherer shall not enter into any contracts to provide capacity to any additional Firm Capacity Shippers through such Additional Services Facilities. If Gatherer uses such Additional Services Facilities for the benefit of any Gas other than Shipper’s Gas in any form, the Additional Services Fee shall be reduced by [***] percent ([***]%) of the incremental portion of revenues received by Gatherer from such third party attributable to such Additional Services Facilities.
7.3 Fuel. Fuel shall be equal to the actual Fuel used and allocated in accordance with Article 8.2 of the General Terms and Conditions, except for additional Fuel as described in Section 5.7 that shall not be allocated to Shipper. Shipper’s allocated Fuel shall be deducted in-kind from the quantity of Gas received from Shipper at the Receipt Points. Gatherer shall also be able to deduct electricity as Fuel used and /or consumed at the Rifle Booster Compressor Station and the K28E Compressor Station if electrical driven compression is utilized at these compressor stations. No other deduction for Fuel shall apply. If Gatherer desires to use electricity in place of Fuel for additional Compression at stations other than described above, Gatherer shall gain prior approval from Shipper that such electricity costs may be deducted as Fuel. All other electricity utilized for Gathering of such Gas, including utility electricity at other compressor stations other than as allowed above shall be deemed included in the Gathering Fees set forth in this Section 7.
*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
7.4 Lost and Unaccounted For Gas. Actual Lost and Unaccounted For Gas allocated to Shipper’s Gas, up to a maximum of [***] percent ([***]%) in any Accounting Period, shall be deducted in-kind from the quantity of Gas received from Shipper at the Receipt Points. Gatherer shall retain any Condensate condensed and collected in the Gathering System. If Gatherer does not have sufficient quantities of Gas available to supply in-kind Gas to Shipper if the L&U exceeds the cap provided in this Section 7.4 for a particular Accounting Period, then Gatherer shall pay to Shipper an amount equal to the product of the (i) volume of Gas in excess of the cap and the (ii) applicable Index Price with respect to such volume of Gas in excess of the cap provided hereunder.
SECTION 8: VOLUME COMMITMENT
8.1 Volume Commitment. Pursuant to the terms and conditions of this Agreement, including, without limitation, the provisions of Section 8 below, Shipper agrees to deliver to an existing or new Receipt Point the minimum volume of Gas set forth on Exhibit “H” attributable to the Interest of Shipper and [***] (the “Volume Commitment”) from the Dedication Area or from xxxxx outside of the Dedication Area that are not subject to the Future Development Gas Gathering Agreement (unless otherwise allowed pursuant to the terms of the Future Development Gas Gathering Agreement). If only certain portions of the Gathering Fees are incurred for partial services as described in Section 7 (including Gas delivered from a well outside of the Dedication Area), the credit against the Volume Commitment shall be reduced by [***].
8.2 Calculation of Volume Shortfalls. The Volume Commitment shall commence on the Effective Date and shall continue until the [***] anniversary of such date. Subject to the provisions of Sections 8.5 below, if, during any Calendar Year Shipper fails to meet the Volume Commitment with respect Gas delivered either by Shipper or [***] (a “Volume Shortfall”) for such year on an aggregate basis, Shipper shall remit a payment to Gatherer calculated by multiplying the Volume Shortfall for the applicable Calendar Year by the total Gathering Fees described in Section 7.1(a)(i) then in effect applicable to Shipper (even if the shortfall occurs with respect to Gas delivered by [***]) during the corresponding Calendar Year (the “Volume Shortfall Payment”). Gatherer shall calculate the Volume Shortfall and Volume Shortfall Payment, if any, within sixty (60) days after the expiration of Calendar Year in which the shortfall occurred, and the results shall be promptly provided in writing to Shipper. Subject to the terms and conditions of this Agreement, Shipper shall remit the Volume Shortfall Payment, if any, within thirty (30) days of receipt of the invoice containing the Volume Shortfall Payment calculation. Subsequent Volume Shortfall and Volume Shortfall Payment calculations and payments shall be made in the same manner upon expiration of each successive Calendar Year. If at any time [***] fails to meet the Volume Commitment, as applicable with respect to [***], Shipper reserves the right to replace the Volume Shortfall with Excess Volumes delivered by Shipper at the Gathering Fee then in effect applicable to Shipper.
*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
8.3 Excess Volumes.
(a) Excess Volume Bank. In the event that Shipper delivers volumes of Shipper’s Gas to Gatherer in excess of Volume Commitment, as applicable with respect to Shipper, during any Calendar Year (“Excess Volumes”), such Excess Volume shall be [***] during the period of time applicable to the Volume Commitment. The Excess Volume in the [***] shall be utilized as follows and in the following order of priority: (i) first, [***]; (ii) second, [***].
(b) Future Volume Shortfall Credit. Excess Volumes remaining in the [***] shall be used to offset and reduce future Volume Shortfalls, but only [***].
8.4 Third Party Gas to be Applied to Volume Commitment. Any Gas delivered to the Gathering System by a Person other than a Firm Capacity Shipper (“Third Party Gas”) shall be credited to Shipper in the following manner for purposes of calculating any Volume Shortfall Payment: [***] percent of each Mcf of Third Party Gas shall be multiplied by the applicable fee for such Third Party Gas to reduce the Volume Shortfall Payment, if any, owed by Shipper.
8.5 Reduction in Volume Commitment. The Volume Commitment shall be reduced during any Calendar Year by the volume of Shipper’s Gas that Gatherer is unable to receive (and which is tendered or could have been tendered to Gatherer); provided, however, that no such reduction shall be made to the Volume Commitment to the extent that such failure is caused by (a) planned Maintenance; (b) Force Majeure or other event affecting Shipper or occurring upstream of any Receipt Point or downstream of any Delivery Point; or (c) Force Majeure affecting Gatherer, but in the case of this clause (c), the exception from the reduction in the Volume Commitment shall be limited in any Calendar Year to an aggregate loss of volumes under this Agreement and the Mamm Creek Gas Gathering Agreement, collectively, equal to [***] percent ([***]%) of the total Volume Commitment under this Agreement and the South Parachute and Orchard Gas Gathering Agreement, collectively, for such Calendar Year (and any volume losses in excess of such amount will result in a reduction in the Volume Commitment for such Calendar Year).
SECTION 9: GUARANTEE
9.1 Buyer Guarantee. By execution of this Agreement, Buyer hereby unconditionally and irrevocably guarantees to Shipper the performance when required of any and all obligations, whether related to payment or performance, of Gatherer now or hereafter existing under this Agreement, as may be supplemented, amended, renewed, extended or modified from time to time; provided, however, that Buyer shall be permitted
*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
to transfer or assign its obligations under this Section 9.1 from and after the Effective Date to either a New Public Company or other Person in accordance with clause (i)(B) or (i)(C) of Article 16.4(b), as applicable, of the General Terms and Conditions; provided further, that such New Public Company or Person, as applicable, (a) either: (i) has an Investment Grade Rating; (ii) provides a guaranty, in form and substance reasonably acceptable to Shipper, with respect to such Person’s obligations hereunder from a Person that has an Investment Grade Rating; (iii) (x) in the case of a New Public Company, has net assets in excess of $[***], or (y) in the case of a Person, has net assets in excess of $[***]; or, (iv) provides a letter of credit in an amount sufficient to perform the obligations under this Agreement reasonably acceptable to Shipper and (b) agrees in writing to assume the obligations of Buyer under this Section 9.1. Any transfer or assignment by Buyer in strict compliance with the foregoing requirements shall relieve Buyer of its obligations under this Section 9.1 (but not the New Public Company or Person with respect to which the obligations under this Section 9.1 will be transferred or assigned). For purposes of this Section 9.1, “net assets” means total assets less total funded indebtedness.
SECTION 10: NOTICES
10.1 Notices, Statements, and Invoices. All notices, statements, invoices or other communications required or permitted between the Parties shall be in writing and shall be considered properly given if delivered by mail, courier, hand delivery, or facsimile to the other Party at the designated address or facsimile numbers, as designated below. Normal operating instructions can be delivered by telephone or other agreed means. Notice of events of Force Majeure may be made by telephone and confirmed in writing within a reasonable time after the telephonic notice. Monthly statements, invoices, payments and other communications shall be deemed delivered when actually received. Either Party may change its address or facsimile and telephone numbers upon written notice to the other Party:
Gatherer: |
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Grand River Gathering, LLC |
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0000 Xxxxx Xxxxx Xxxxxxx, Xxxxx 000X |
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Xxxxxxx, XX 00000 |
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Fax: (000) 000-0000 |
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Attention: Xxxxx Xxxxx |
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With required copy to: |
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Xxxxxx & Xxxxxxx LLP |
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000 Xxxxx Xxxxxx |
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Xxx Xxxx, XX 00000 |
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Fax: (000) 000-0000 |
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Attention: Xxxxx Xxxxxxxx, Esq. |
*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
Buyer: |
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Summit Midstream Partners, LLC |
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0000 Xxxxx Xxxxx Xxxxxxx, Xxxxx 000X |
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Xxxxxxx, XX 00000 |
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Fax: (000) 000-0000 |
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Attention: Xxxxx Xxxxx |
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With required copy to: |
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Xxxxxx & Xxxxxxx LLP |
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000 Xxxxx Xxxxxx |
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Xxx Xxxx, XX 00000 |
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Fax: (000) 000-0000 |
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Attention: Xxxxx Xxxxxxxx, Esq. |
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Shipper: |
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Encana Oil & Gas (USA) Inc. |
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000 00xx Xxxxxx, Xxxxx 0000 |
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Xxxxxx, Xxxxxxxx 00000 |
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Attn: Midstream Contract Administration |
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Phone: (000) 000-0000 |
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Fax: (000) 000-0000 |
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Encana Oil & Gas (USA) Inc. |
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000 00xx Xxxxxx, Xxxxx 0000 |
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Xxxxxx, Xxxxxxxx, 00000 |
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Attention: Vice President, U.S. Midstream |
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Phone: (000) 000-0000 |
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Fax: (000) 000-0000 |
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With required copy to: |
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Encana Oil & Gas (USA) Inc. |
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000 00xx Xxxxxx, Xxxxx 0000 |
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Xxxxxx, Xxxxxxxx, 00000 |
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Attention: General Counsel |
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Phone: (000) 000-0000 |
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Fax: (000) 000-0000 |
*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
This Agreement may be executed in any number of counterparts, each of which shall be considered an original, and all of which shall be considered one instrument.
IN WITNESS WHEREOF, the Parties have executed this Agreement on the date first set forth above.
GATHERER: |
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Name: |
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BUYER: (for the limited purposes set forth in Section 9.1): |
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By: |
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*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
CERTAIN MATERIAL (INDICATED BY THREE ASTERISKS) HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT A
Mamm Creek Dedication Area
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Detail View
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*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
Mamm Creek Dedication Area:
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*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
XXXXXXX X
Xxxxxxx Xxxx 00-00XX Type Log
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*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
EXHIBIT C
Receipt & Delivery Points
Receipt Points:
Subject to revision, update and consolidation as new Receipt Points are added pursuant to the terms of this Agreement.
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*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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[***] |
*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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[***] |
*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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[***] |
*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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[***] |
*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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[***] |
*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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[***] |
*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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[***] |
*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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[***] |
*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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[***] |
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[***] |
*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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[***] |
*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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[***] |
*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
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[***] |
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[***] |
*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
[***]
[***]
[***]
*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
EXHIBIT D
[***] Interest in Shipper Operated Xxxxx
[***]
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[***] |
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[***] |
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[***] |
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[***] |
|
*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
Map of Encana and BBC Joint Operating Areas:
[***]
*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
EXHIBIT E
Additional Dedicated Xxxxx
None.
Subject to revision, update and consolidation as new xxxxx are added pursuant to the terms of Section 1.1(b).
*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
EXHIBIT F
[***]
[***]
[***] |
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[***] |
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[***] |
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[***] |
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[***] |
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[***] |
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[***]
[***]
[***]
*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
Fee Reduction Calculation Examples
[***]
1. [***]
2. [***]
3. [***]
*** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.
Pads in Mamm Creek Sub-Systems:
Subject to revision, update and consolidation as new Receipt Points are added pursuant to the terms of this Agreement.
Grass Mesa Sub-System
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
Hunter Mesa Sub-System
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
Mamm Creek East Sub-System
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
Mamm Creek Xxxxxx Sub-System
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
Mamm Creek South Sub-System
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
EXHIBIT G
MEMORANDUM OF SERVICES AGREEMENT
(Mamm Creek)
THIS MEMORANDUM OF SERVICES AGREEMENT (this “Memorandum”) is made and entered into as of October 1, 2011 (the “Effective Date”), by and between Encana Oil & Gas (USA) Inc. (“Shipper”), with an address of 000 00xx Xxxxxx, Xxxxx 0000 Xxxxxx, Xxxxxxxx, 00000 and Grand River Gathering, LLC (“Gatherer”), with an address of 0000 Xxxxx Xxxxx Xxxxxxx, Xxxxx 000X Xxxxxxx, Xxxxxxx, 00000.
WHEREAS, Shipper and Gatherer entered into that certain Gathering Services Agreement dated October 1, 2011 (the “Agreement”), pursuant to which Gatherer will provide to Shipper gathering and treating services for Shipper’s Gas (any capitalized term used, but not defined, in this Memorandum shall have the meaning ascribed to such term in the Agreement);
WHEREAS, Shipper and Gatherer are parties to that certain Purchase and Sale Agreement dated September 2, 2011 (the “PSA”), pursuant to which Shipper (i) contributed and assigned the Gathering System and related assets to Gatherer and (ii) conveyed 100% of the membership interest in Gatherer to an affiliate of Gatherer; and
WHEREAS, the Parties desire to file this Memorandum of record in the real property records of Garfield County, Colorado, to give notice of the existence of the Agreement and certain provisions contained therein, and to file this Memorandum of record in the real property records of such other counties as may, during the Term, be encompassed by the Area of Mutual Interest;
NOW THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. Notice. Notice is hereby given of the existence of the Agreement and all of its terms, covenants and conditions to the same extent as if the Agreement was fully set forth herein. Certain provisions of the Agreement are summarized in Sections 2 through 6 below.
2. Term. The term of the Agreement shall commence on October 1, 2011, and unless terminated earlier in accordance with the terms and conditions of the Agreement, shall continue in full force and effect through 8:00 a.m., Mountain Clock Time, on October 1, 2036, and shall continue in full force and effect for successive one (1) year periods thereafter unless or until terminated pursuant to the further terms and conditions of the Agreement.
3. Dedication. Subject to the terms and conditions of the Agreement, Shipper has dedicated for gathering and treating under the Agreement, and has agreed to deliver, or cause to be delivered, to Gatherer, at the Receipt Points, certain Gas produced from xxxxx located
within the areas more particularly described on Exhibit “A” (Xxxx Xxxxx Xxxxxxxxxx Xxxx) (the “Dedication Area”) as follows:
(i) all Gas now or hereafter produced from xxxxx completed to the depths of the base of the Mesa Verde formation ([***] the Type Log for the [***] well as depicted in the Agreement) and shallower located within the Dedication Area described on Exhibit “A” which is attributable to Interests now owned or hereafter acquired by Shipper;
(ii) any Gas delivered to the K-28E Field Compressor Station up to its capacity as of the Effective Date of the Agreement,
(iii) Gas attributable to an Interest of Shipper produced from certain xxxxx that are added to the Dedication from time to time as mutually agreed by Shipper and Gatherer;
(iv) with respect to the xxxxx located within the Dedication Area in which Shipper is the operator, Gas produced from such xxxxx which is attributable to Interests of other working interest owners, overriding royalty interest owners, and royalty interest owners (x) which is not taken “in-kind” by such owners upstream of the Delivery Points and/or (y) for which Shipper has the right and/or obligation to market or deliver such Gas; and
(v) with respect to the xxxxx located within the Dedication Area in which Shipper is the operator, Gas produced from such xxxxx which is attributable to Interests of [***] for which Shipper has the right and/or obligation to market or deliver such Gas, for only so long as such Gas is dedicated to Shipper (collectively, (i) through (v), the “Dedication”). Interests within the Dedication Area that are subject to prior commitments as of the Effective Date of the Agreement may, at Shipper’s option, be renewed with such prior parties or become part of the Dedication after expiration of such commitments. Interests hereafter acquired by Shipper within the Dedication Area that are subject to prior commitments at the time of acquisition pursuant to the PSA will become part of the Dedication after expiration of such commitments. By mutual agreement, the Parties may increase or decrease the Dedication.
4. Excluded From Dedication. Excluded from each such Dedication shall be Gas attributable to Shipper’s non-operating Interest in the xxxxx that Shipper does not take “in kind”; and Gas produced by Shipper and reserved and/or utilized in accordance with Article 2.4 of the Agreement’s General Terms and Conditions (Gas for Lease Operations).
5. Interests. Under the Agreement, the term “Interests” is defined as any right, title, or interest in lands and the right to produce oil and/or Gas therefrom whether arising from
fee ownership, working interest ownership, mineral ownership, leasehold ownership, or arising from any pooling, unitization or communitization of any of the foregoing rights.
6. Covenant Running with the Land. So long as the Agreement is in effect, the Agreement shall (a) be a covenant running with (i) the Gathering System and (ii) the Interests now owned or hereafter acquired by Shipper and its successors and assigns within the Dedication Area and (b) be binding on and enforceable by (i) Gatherer against Shipper and its successors and assigns and (ii) Shipper against Gatherer and it successors and assigns.
7. No Amendment to Agreement. This Memorandum is executed and recorded solely for the purpose of giving notice and shall not amend nor modify the Agreement in any way.
[Signature Pages Follow]
IN WITNESS WHEREOF, this Memorandum has been signed by or on behalf of each of the Parties as of the day first above written.
|
|
ENCANA OIL & GAS (USA) INC. | ||
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By: |
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Name: |
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Title: |
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STATE OF |
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§ |
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§ |
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COUNTY OF |
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§ |
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The foregoing instrument was acknowledged before me by , the of Encana Oil & Gas (USA) Inc. this day of , 2011.
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Notary Public in and for the State of |
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GRAND RIVER GATHERING, LLC | ||
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By: |
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Name: |
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Title: |
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STATE OF |
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§ |
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§ |
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COUNTY OF |
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§ |
| |
The foregoing instrument was acknowledged before me by , the of Grand River Gathering, LLC, this day of , 2011.
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Notary Public in and for the State of |
Attachments:
Exhibit “A”— Mamm Creek Dedication Area
EXHIBIT H
Volume Commitment
Year |
|
Calendar |
|
Volume |
|
2011 |
|
1 |
|
[***] |
|
2012 |
|
2 |
|
[***] |
|
2013 |
|
3 |
|
[***] |
|
2014 |
|
4 |
|
[***] |
|
2015 |
|
5 |
|
[***] |
|
2016 |
|
6 |
|
[***] |
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2017 |
|
7 |
|
[***] |
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2018 |
|
8 |
|
[***] |
|
2019 |
|
9 |
|
[***] |
|
2020 |
|
10 |
|
[***] |
|
2021 |
|
11 |
|
[***] |
|
2022 |
|
12 |
|
[***] |
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2023 |
|
13 |
|
[***] |
|
2024 |
|
14 |
|
[***] |
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2025 |
|
15 |
|
[***] |
|
2026 |
|
16 |
|
[***] |
|
EXHIBIT I
Additional Services Fee Example
For purposes of example only, volumes portrayed are not actual.
The following table outlines an example of an Additional Services Fee associated with a new interconnect.
Calendar |
|
Design |
|
Capital |
|
Fixed |
|
Operating |
|
3rd Party |
|
3rd |
|
3rd Party |
|
3rd Party |
|
ECA Payment |
|
ECA Total |
1 |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
— |
|
— |
|
— |
|
— |
|
[***] |
|
[***] |
2 |
|
[***] |
|
— |
|
[***] |
|
[***] |
|
— |
|
— |
|
— |
|
— |
|
[***] |
|
[***] |
3 |
|
[***] |
|
— |
|
[***] |
|
[***] |
|
— |
|
— |
|
— |
|
— |
|
[***] |
|
[***] |
4 |
|
[***] |
|
— |
|
[***] |
|
[***] |
|
— |
|
— |
|
— |
|
— |
|
[***] |
|
[***] |
5 |
|
[***] |
|
— |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
— |
|
[***] |
|
[***] |
6 |
|
[***] |
|
— |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
— |
|
[***] |
|
[***] |
7 |
|
[***] |
|
— |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
— |
|
[***] |
|
[***] |
8 |
|
[***] |
|
— |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
— |
|
[***] |
|
[***] |
9 |
|
[***] |
|
— |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
— |
|
[***] |
|
[***] |
10 |
|
[***] |
|
— |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
— |
|
[***] |
|
[***] |
11 |
|
[***] |
|
— |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
— |
|
[***] |
|
[***] |
12 |
|
[***] |
|
— |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
— |
|
[***] |
|
[***] |
13 |
|
[***] |
|
— |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
— |
|
[***] |
|
[***] |
14 |
|
[***] |
|
— |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
— |
|
[***] |
|
[***] |
15 |
|
[***] |
|
— |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
— |
|
[***] |
|
[***] |
16 |
|
[***] |
|
— |
|
— |
|
[***] |
|
[***] |
|
[***] |
|
— |
|
— |
|
— |
|
[***] |
* See following pages for Fixed Monthly Fee calculation details.
** Assumes 3rd Party fee of [***].
Fixed Monthly Fee Calculation
The following are directions for utilizing the mutually agreed-to spreadsheet to perform necessary calculations for the determination of the fixed payment portion of the Additional Service Fee to provide the agreed-to rate of return for associated capital costs. Attached is a print-out of an example model, along with a print-out showing the formulae used in creation of the spreadsheet.
Spreadsheet Instructions
Enter the capital costs for each month. If necessary, adjust the first month in which the monthly service fee will be due. Also ensure the service fee is in affect for [***] by adding or deleting months to Column B as necessary. If using Microsoft Excel 2003, utilize Goal Seek to determine the monthly service fee required to achieve an unleveraged [***] IRR of [***]. To perform the Goal Seek, select “Tools” from the options menu, then “Goal Seek.” As an example, the Goal Seek window would read as follows: “Set cell: $C$2, To value of 0, By changing cell: $D$14.” However, the “By changing cell” in the Goal Seek Window should be the row in Column D that correlates to the first month the service fee is in affect.)
The following pages show data as well as Excel programming formulae of the spreadsheet [***]
[***] Year IRR |
|
[***] |
|
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|
|
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|
|
|
|
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|
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|
|
|
|
|
|
|
|
NPV |
|
($0.00) |
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|
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|
|
|
|
|
2011 |
|
2012 |
|
2013 |
|
2014 |
|
2015 |
|
2016 |
|
2017 |
|
2018 |
|
2019 |
|
2020 |
|
2021 |
|
2022 |
|
2023 |
|
2024 |
|
2025 |
|
2026 |
|
Revenue |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
Capital Cost |
|
[***] |
|
$ — |
|
$ — |
|
$ — |
|
$ — |
|
$ — |
|
$ — |
|
$ — |
|
$ — |
|
$ — |
|
$ — |
|
$ — |
|
$ — |
|
$ — |
|
$ — |
|
$ — |
|
Net Cash Flow |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
[***] |
|
* Operating expense is passed through to the shipper
Date |
|
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