EXHIBIT 15
GATHERING AGREEMENT
This Agreement is made and entered into this 29th day of May, 1987, by and
between Mesa Operating Limited Partnership ("Mesa") and Colorado Interstate Gas
Company ("CIG"), to be effective August 1, 1987.
WHEREAS, Mesa and CIG have been involved in various disputes concerning the
operation of and the charges made to Mesa by CIG regarding the West Panhandle
Field Gathering System (the "Gathering System"), through which natural gas which
is produced under the agreement, as amended and supplemented, entered on January
3, 1928, between Canadian River Gas Company, as predecessor in interest to CIG,
and Amarillo Oil Company, as predecessor in interest to Mesa (the "'B'
Contract") is gathered and delivered; and
WHEREAS, the parties have resolved their disputes and have agreed upon the
appropriate gathering fees to be charged in the past, and the method of
calculating such fees in the future, for gathering and delivering such gas
through the Gathering System; and
WHEREAS, the parties have agreed upon certain procedures to be followed in
order to avoid the recurrence of certain disputes regarding the operation of the
Gathering System in the future;
NOW, THEREFORE, Mesa and CIG, in consideration of mutual promises,
covenants, releases and agreements contained herein, do agree as follows:
I.
For all natural gas delivered through the Gathering System to Mesa or its
predecessor, Amarillo Oil Company, under the 'B' Contract for the period
commencing October 1, 1984, through the Settlement Date as determined pursuant
to the Agreement of Compromise and Settlement between the parties (the
"Settlement Date"), the amounts which Mesa or its predecessor, Amarillo Oil
Company, has paid to CIG shall be considered to be full and complete
compensation for such gathering services. No further amounts shall be payable by
Mesa, nor shall any refunds be owed by CIG, for such gathering services during
such period, except for volumes delivered prior to the Settlement Date for which
payment has not been made by that date. Mesa and CIG agree that Mesa shall pay
CIG, as full and complete compensation for such volumes delivered, at the same
rate per Mcf that Mesa has been paying for deliveries during prior months in
1987, without regard to amounts invoiced by CIG.
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II.
CIG shall deliver to Mesa at the inlet to the Xxxx Processing Plant or such
alternate delivery point as Mesa shall request (subject to CIG's right to reject
such request, in whole or in part, in the reasonable exercise of its discretion
giving due consideration to the interests of both parties), the natural gas Mesa
is entitled to receive under the 'B' Contract. For all such deliveries to Mesa
for the period from the Settlement Date through December 31, 1989, the gathering
fee payable by Mesa to CIG shall be 44 cents per Mcf.
III.
For all natural gas produced under the 'B' Contract and delivered through
the Gathering System to Mesa on and after January 1, 1990, CIG shall calculate a
gathering fee which will be based upon its annual costs, which shall be the sum
of (a) its actual, direct out-of-pocket expenses (including all taxes not
related to income taxes) reasonably incurred in operating the Gathering System;
(b) 20% of such actual, direct out-of-pocket expenses to compensate CIG for
general and administrative expenses; (c) depreciation on the original cost of
the Gathering System at the applicable depreciation rate for gathering
facilities owned by CIG, as approved in a final order of the Federal Energy
Regulatory Commission (the "FERC"), with such depreciation not to accumulate
beyond the gross plant cost; and (d) a return (including taxes relating to
return on equity) on net book value (original cost less accumulated depreciation
for the Gathering System) at the applicable overall rate of return provided to
CIG in a final order of the FERC. Items (c) and (d) will be adjusted
retroactively, as appropriate, to reflect the effect of any final order of the
FERC. Mesa shall provide its prorata share of fuel actually used at its own cost
(including any necessary facilities) for the gathering of all gas delivered to
Mesa, and such fuel so provided by Mesa shall not be included in CIG's
calculations of cost in operating the Gathering System. Mesa and CIG shall
pursue with diligence the obtaining of any necessary regulatory approvals to
carry out the terms of this Article III. CIG shall calculate and Mesa shall pay
to CIG each month a gathering fee for the volumes gathered for Mesa and
redelivered from the Gathering System during that month. Such gathering fee
shall be estimated for each Mcf so delivered on the basis of the prior year's
actual costs, as set forth above, divided by the total volumes of gas gathered
and redelivered through the Gathering System for the prior year. Such estimate
shall take into account any significant known and measurable changes expected to
occur during the next billing year, if so agreed to by both parties. The
estimated billing basis will be furnished to Mesa on or before November 20th of
the prior year. On or before the April 30th succeeding each billing year, CIG
shall account to Mesa for actual costs and volumes, with any necessary payment
by one party to the other party due 30 days after such accounting is received by
Mesa.
IV.
In the event that the FERC shall allocate or assign costs, by a final order
in any proceeding involving rates charged by CIG, to deliveries of natural gas
to Mesa through the Gathering System, or otherwise treat the gathering fee
payable by Mesa, as if the gathering fee were greater than the amount otherwise
payable by Mesa to CIG, Mesa shall increase as of the effective date of the FERC
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action the fee payable to CIG by an amount equal to 50 percent of the increase,
as allocated to Mesa in the determination of CIG's rates. In the event that such
final order of the FERC shall have the effect of treating the gathering fee as
if it were greater than 20 cents per Mcf more than the gathering fee otherwise
payable by Mesa to CIG under this Agreement, then Mesa, upon request by CIG,
agrees to meet with CIG and enter into good-faith negotiations to determine what
new arrangements, if any, are equitable and reasonable under the circumstances
in existence.
V.
CIG shall operate the Gathering System in a fair and equitable manner as a
prudent operator and without undue discrimination so as to reasonably assure
that Mesa receives in the natural gas and drip liquids, if any, delivered to
Mesa an average Btu content ("Delivered Btu") representative of the average Btu
content found in the natural gas produced from all xxxxx committed under the 'B'
Contract ("'B' Contract Btu"). In the event that the Delivered Btu during any
fiscal year exceeds two percent (2%) greater or less than the 'B' Contract Btu
during that fiscal year, CIG shall correct the imbalance in the Delivered Btu to
the extent such imbalance exceeds two percent greater or less than the 'B'
Contract Btu by delivering natural gas containing a higher or lower average Btu
content than that contained in the 'B' Contract Btu during the next fiscal year
and thereafter until such time as the imbalance has been reduced to within such
two percent of the average. To the extent any additional facilities are
reasonably necessary to correct such imbalance, Mesa shall have the option to
request the installation of such facilities, provided that Mesa agrees to
reimburse CIG for all costs reasonably incurred in constructing and installing
same. If Mesa chooses not to request installation of such facilities, CIG's
obligation to Mesa, if any, to deliver natural gas containing Delivered Btu
within two percent (2%) of the 'B' Contract Btu shall be suspended to the extent
such additional facilities are necessary.
VI.
CIG acknowledges that Mesa is involved in a pending lawsuit. (Mapco
Westpan, Inc. v. Pioneer Corp., Case No. 62,922-A, 47th Judicial District Court,
Potter County, Texas). CIG agrees, based upon Mesa's claims of ownership to
certain drip liquids asserted in such lawsuit, to collect such drips, over which
it has control, on a monthly basis, and to use reasonable efforts for the
marketing of such drips to achieve the highest net value. As soon as reasonably
possible, CIG agrees to file with the District Court of Potter County, Texas, an
appropriate interpleader action wherein CIG shall tender on a continuing basis
the net revenues attributable to the sale of such drips, into the registry of
such Court; and petition such Court to ascertain the lawful owner of such drips
and the revenues attributable thereto. In consideration of CIG's filing the
interpleader suit as required herein, Mesa hereby agrees to defend, indemnify,
and hold CIG harmless from and against any and all claims, damages, losses,
causes of actions, judgments or other actions, including costs of suit and
attorneys fees, if any, which may arise directly from the interpleader suit to
be filed by CIG, and which may be brought about, through and by virtue of,
claims and/or demands with Mapco Westpan, Inc., its predecessors and successors
in interest allege to have suffered as a result of the denial to it of the
possession of the drips as aforesaid. Upon the conclusion of such interpleader
action, CIG and Mesa shall enter into a new arrangement, if applicable,
consistent with the court's judgment.
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VII.
CIG and Mesa shall keep records sufficient to document requests or
nominations by Mesa for gas deliveries from CIG, and deliveries by CIG to Mesa.
Each party shall have the right at all reasonable times to examine the books,
records and charts of the other party to the extent necessary to verify the
accuracy of any request or nomination, statement, payment calculation or
determination made pursuant to the provisions of this Agreement. If any error
shall be discovered, proper adjustment and correction thereof shall be made and
any refunds due shall be made as promptly as practicable thereafter.
IN WITNESS WHEREOF, the parties hereto have caused these presents to be
executed by their duly authorized representatives as of the date first written
above.
MESA OPERATING LIMITED PARTNERSHIP
By: Xxxxxxx Operating Co.,
General Partner
By: /s/ Xxxx X. Xxxx
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Xxxx X. Xxxx
President
COLORADO INTERSTATE GAS COMPANY
By: /s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx
President
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