Strategic Customer Relationship Agreement
EXHIBIT 10.12
This Strategic Customer Relationship Agreement (this “Agreement”) is dated effective the 14th
day of October, 2004 (the “Effective Date”), and is entered into by and among Complete Energy
Services, Inc., a Delaware corporation (“Complete Energy”), CES Mid-Continent Xxxx, Inc. (together
with its subsidiaries, “Mid-Continent Xxxx”) and Continental Resources, Inc., an Oklahoma
corporation (“Continental”). Mid-Continent Xxxx and Continental are sometimes individually
referred to as a “Party” and are sometimes referred to collectively as the “Parties”. Complete
Energy is a party to this Agreement only with respect to Section 11 hereof.
WHEREAS, pursuant to that certain Stock Acquisition Agreement (the “Stock Acquisition
Agreement”) dated October 14, 2004, by and among Xxxx Co., Stride Well Service, Inc., Xxxx &
Xxxxxxxx Service Company, Guard, Inc., Rigmovers, Inc., Environmental Technicians of Oklahoma, LLC,
Rental Tools, Inc., Oil Tool Rentals, Inc., (collectively, the “Seller Entities”), Xxxxxx Xxxx,
Xxxxxx X. Xxxx, Xxxxxx Row, Complete Energy and Mid-Continent Xxxx, Mid-Continent Xxxx indirectly
acquired certain assets of the Seller Entities;
WHEREAS, prior to the execution of the Stock Acquisition Agreement, the Seller Entities
provided certain oil field related services to Continental and its subsidiaries in various areas on
a preferential basis; and
WHEREAS, Continental and Mid-Continent Xxxx desire to continue the mutually beneficial
supplier/customer relationship, on the terms set forth in this Agreement;
NOW THEREFORE, in return for valuable consideration and the mutual covenants set forth herein,
the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. | Preferred Customer Status | |
Mid-Continent Xxxx will use commercially reasonable efforts to provide Continental, as a preferred customer of Mid-Continent Xxxx, with Priority Access to any services or supplies that Mid-Continent Xxxx provides to its customers at competitive, market prices and under the terms of Mid-Continent Xxxx’x standard agreements (or such other terms as the Parties may mutually establish). “Priority Access” means that Mid-Continent Xxxx will provide services and supplies as from time to time requested by Continental on a timely basis within the time frame specified by Continental at competitive market prices; provided, however, if Mid-Continent Xxxx does not have any available capacity to provide the requested services and supplies on a timely basis, Mid-Continent Xxxx will respond to Continental’s request and will indicate when such capacity is expected to become available for Continental. In this regard, Mid-Continent Xxxx shall provide such requested supplies and services to Continental as soon as practicable, and ahead of and before any such supplies and services would |
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otherwise be provided by Mid-Continent Xxxx to any other customer who, at the time of Continental’s request, is not then being provided with such supplies and services pursuant to a binding agreement for such with Mid-Continent Xxxx. | ||
Mid-Continent Xxxx will not provide any services or supplies under this Agreement. Rather all services and supplies will be provided pursuant to separate service or supply agreements, and the terms and conditions of those separate agreements shall control the provision of those services and supplies. | ||
Further, Mid-Continent Xxxx may, from time to time, revise both the services and supplies that it sells and/or where its sells those services and supplies. Nothing in this Agreement is intended to require Mid-Continent Xxxx to provide services or supplies in any particular geographic region or to hold capacity idle for Continental’s potential use. Continental recognizes that Mid-Continent Xxxx may reduce or eliminate services in any geographic market from time to time. | ||
2. | Continental’s Preferential Utilization of Services to be Supplied by Mid-Continent Xxxx | |
In exchange for its preferred customer status and during the term of this Agreement, Continental will use commercially reasonable efforts to provide Mid-Continent Xxxx with the first right to provide any services or supplies required in Continental’s operations so long as such services or supplies can be supplied by Mid-Continent Xxxx on a timely basis and at competitive market prices. If Mid-Continent Xxxx is not able to provide the requested services or supplies within the time frame required by Continental, or if Mid-Continent Xxxx’x prices are not competitive, then Continental may obtain the requested services from any other provider, other than its affiliates, subsidiaries, or related entities. | ||
3. | Continental’s Right to Enter into a Long-Term Commitment | |
During the term of this Agreement, Continental shall have the right to enter into one or more long-term service agreements with Mid-Continent Xxxx covering the following equipment owned or operated by Mid-Continent Xxxx: (a) up to an aggregate of ten (10) rigs, (b) up to an aggregate of one hundred (100) frac tanks, (c) up to an aggregate of two super heaters, and (d) such other specialty equipment as may be reasonably requested by Continental. The terms of any such service agreement shall be mutually acceptable and adhere to the following terms and conditions: |
a. | The term of any such long term service agreement shall be established by Continental; provided, however, that the term of any such long term service agreement must be a minimum of six (6) months and may not extend beyond five years after the termination or expiration of this Agreement. |
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b. | The rigs and equipment to be supplied under the long term service agreement will be designated by Mid-Continent Xxxx from available rigs and equipment; provided that if rigs or equipment are not immediately available, Mid-Continental will give Continental priority to be provided with such rigs and equipment when they become available. Continental shall have the right to request specific rigs subject to availability. If Continental requests a rig or equipment that is located outside the region in which Continental requires service (Texas Panhandle, Oklahoma, Wyoming, South Dakota, North Dakota, and Montana), Continental may request that such rig or equipment be moved to the region required by Continental, in which case Continental will pay all costs associated with such move; provided however, that Mid-Continent Xxxx will not be required to provide services in any region where it is not then currently providing service to customers. | ||
c. | The rates for rigs and equipment will be based on Mid-Continent Xxxx’x then applicable rates for the location where Continental uses the applicable rigs and equipment, as set forth in its price book, but in no event greater than prevailing market rates for that location. The rates will be adjusted (up or down) from time to time during the term of any such long term service agreement by Mid-Continent Xxxx upon at least thirty (30) days advance written notice to Continental to reflect changes in its price book, but in no event greater than prevailing market rates for the location in which such rigs or equipment are utilized by Continental. | ||
d. | Subject to paragraph 3.e below, Continental will pay the following minimums for the rigs and equipment under the long-term service agreement: |
1. | Rigs and super heaters: 55 hours per week. | ||
2. | Frac tanks: daily rate. | ||
The above minimums are subject to customary field practices (e.g., with respect to weather policies) in the area in which the rigs or other equipment will be utilized as provided in the particular long term service agreement. |
e. | If, during the term of any such long term service agreement, Continental advises Mid Continent-Xxxx of Continental’s intention not to use any of the rigs or equipment, Mid Continent-Xxxx shall use commercially reasonable efforts to use the rigs or equipment to provide services to another customer. If the rig or equipment so released by Continental is used by Mid-Continent Xxxx for another customer, Continental’s minimum payment requirements shall be credited for the hours or days (as applicable) used for such service. In no event will Continental’s credit be greater than minimum obligations of Continental over the period such rigs |
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or equipment is released by Continental. Continental may request any released rig or equipment be returned to service Continental’s needs, and Mid-Continent Xxxx will provide such rig or equipment at the end of the job for which it has been committed to another customer. |
4. | Independent Contractor Status | |
Each Party acknowledges and agrees that it is an independent contractor in the performance this Agreement and nothing herein shall be construed to be inconsistent with that status. No agent, employee, servant, contractor or subcontractor of a Party shall be or shall be deemed to be the agent, employee or servant of the other Party or any of its affiliates by virtue of this Agreement. Neither Party nor any agent, employee, servant, contractor or subcontractor of that Party shall have the authority to bind the other Party to any contract or arrangement. | ||
5. | Waiver of Consequential Damages | |
Each Party hereby waives any right that it may have, or which it may in the future, to recover any incidental, exemplary, punitive, consequential, indirect or similar damages from the other Party, including but not limited to, lost profits or lost opportunities, regardless of whether either Party has been notified of the possibility of any such damages. | ||
6. | Term and Termination | |
This Agreement shall continue for five (5) years and thereafter the term of this Agreement shall automatically renew for consecutive one year terms. After the initial term of this Agreement, either Party may terminate this Agreement by providing written notice to the other Party of at least sixty (60) days. | ||
In the event that either Party materially defaults in performing any of its obligations hereunder, and the non-defaulting Party may give the defaulting Party notice of such default, and if the defaulting Party has not cured such default within thirty (30) days, the non-defaulting Party may terminate this Agreement by providing the defaulting Party written notice of termination. | ||
7. | Notices | |
Any notices to be given hereunder by either Party to the other may be effected either by personal delivery in writing or by registered or certified mail, postage prepaid, with return receipt requested. Mailed notices shall be addressed to the Parties at the addresses appearing below, but each Party may change its address by giving written notice in accordance with this paragraph. Notices not personally delivered shall be deemed communicated as of three (3) days after mailing. |
If to Mid-Continent Xxxx: | CES Mid-Continent Xxxx, Inc. | |||
c/o Mr. Xxx Xxxx | ||||
X.X. Xxx 0000 | ||||
Xxxx, XX 00000 |
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If to Continental: | Continental Resources, Inc. | |||
c/o Mr. Xxxxxx Xxxx | ||||
X.X. Xxx 0000 | ||||
Xxxx, XX 00000 |
8. | Entire Agreement | |
This Agreement supersedes any and all other agreements, either oral or in writing, and contains all the covenants and agreements between the parties pertaining to the subject matter hereof. Each Party to this Agreement acknowledges that no representations, inducements, promises or agreements, orally or otherwise, have been made by either Party or anyone acting on behalf of any Party hereto, which are not embodied herein, and that no other agreement, statement or promise not contained in this Agreement shall be valid or binding. Any modification of this Agreement will be effective only if it is in writing, signed by the Party to be charged. | ||
This Agreement does not cover the terms and conditions under which services and supplies will be supplied by Mid-Continent Xxxx to Continental; the terms and conditions of such service and supply arrangements will be covered under separate and independent agreements, and those separate and independent agreements will not be affected by this Agreement. | ||
9. | Governing Law | |
This Agreement shall be governed by and construed in accordance with the laws of the State of Oklahoma. Mid-Continent Xxxx and Continental agree that all disputes arising under the terms and conditions of this Agreement shall be determined in Enid, Garfield County, Oklahoma. | ||
10. | Assignment | |
This Agreement may not be assigned, whether by operation of law or otherwise, by either Party without the prior written consent of the other Party, which consent will not unreasonably be withheld. Any assignment of this Agreement by Mid-Continent Xxxx or Continental, whether by operation of law or otherwise, shall be conditioned upon the assignee’s agreement to be bound by the terms of this Agreement, and such assignment shall not relieve Mid-Continent Xxxx or Continental of any of its primary obligations or responsibilities under this Agreement. Any assignment made by Mid-Continent Xxxx or Continental hereunder shall not take away from Mid-Continent Xxxx or Continental any benefits contained in the Agreement. |
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11. | Complete Energy Guarantee | |
Complete Energy hereby guarantees the timely performance when due of the obligations of Mid-Continent Xxxx in connection with and to the extent provided for in the Agreement. | ||
12. | Multiple Counterparts | |
Multiple copies of this Agreement may be executed by the parties hereto. Each such copy shall have the full force and effect of an original. No Party shall file this Agreement of record. |
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their
respective authorized officers effective as of the date first written above.
CES MID-CONTINENT XXXX, INC.
By:
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/s/ Xxx X. Xxxx | |||
Xxx Xxxx President |
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COMPLETE ENERGY SERVICES, INC.
By:
|
/s/ Xxxxxx X. Xxxxx | |||
Xxxxxx X. Xxxxx | ||||
President | ||||
CONTINENTAL RESOURCES, INC.
By:
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/s/ Xxxxxx Xxxx | |||
Xxxxxx Xxxx President & Chief Executive Officer |
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