EXHIBIT 10.11
GAS PURCHASE AGREEMENT
This Agreement, made and entered into as of October 1, 1999, by and
between Ozark Gas Gathering, L.L.C. ("OGG") and Energas Corp. ("Producer").
WHEREAS, Producer currently owns or represents a working interest in
certain well(s) that it desires to connect to OGG's various gathering
system(s) located in the State of Oklahoma; and
WHEREAS, OGG agrees to install certain facilities to effect receipt
and purchase of natural gas production owned or marketed by Producer from
certain well(s), described on Exhibit "A" attached hereto and made a part
hereof, subject to the following terms and conditions.
NOW THEREFORE, in consideration of the mutual covenants and
agreements herein contained, OGG and Producer hereby agree as follows:
1. FACILITIES. OGG will, at its sole cost and expense, acquire, construct,
own, operate and maintain all taps, rights-of-way, measurement,
compression and dehydration equipment and related facilities
("Facilities") deemed necessary, in the sole discretion of OGG, to
install receipt points ("Receipt Point(s)") to effect receipt of
natural gas production from the well(s) into the OGG gathering system.
2. PRESSURE. OGG shall endeavor to provide and maintain, or cause to be
provided and maintained, a monthly average line pressure ("MALP") at
each Receipt Point not to exceed the contract maximum pressure ("CMP")
as specified on the attached Exhibit "A". The MALP for each Receipt
Point shall be derived solely from the data provided by OGG and
approved by Energas. If the MALP exceeds the CMP at a particular
Receipt Point for a period of thirty (30) consecutive days, Producer
may notify OGG in writing within (30) days of the occurrence
(Producer's Notification). OGG shall have thirty (30) days after
receipt of Producer's Notification to respond to Producer with OGG's
plan to reduce the MALP at the Receipt Point(s) to a pressure less than
or equal to the CMP and the proposed completion date of such plan (OGG
Response Period). If OGG has not reduced the MALP at the Receipt Point
to a pressure less than or equal to the CMP within a period of sixty
(60) days after OGG's receipt of Producer's Notification, Producer
shall have the option to either (1) request and receive a release of
the affected well(s) from this Agreement, effective the first day of
the month following the expiration of the OGG Response Period or (2)
continue to deliver gas to OGG pursuant to the terms and conditions of
this Agreement less a six cent (6 cent) reduction in the Service Fee
as stated on Exhibit "A" effective the first day of the month following
the expiration of the OGG Response Period. The initial Service Fee as
stated on Exhibit "A'" will be re-established effective the first day
of the month following the period when OGG has maintained the MALP at a
pressure less than or equal to the CMP.
3. PRIMARY TERM. The Primary Term of this Agreement shall commence on
October 1, 1999 under the terms of this Agreement, and shall continue
in effect for a period of six (6) months, until March 31, 2000.
Thereafter, this Agreement shall remain in effect on a month-to-month
basis until terminated by either party effective the first day of the
month following thirty (30) days written notice prior to the end of the
Primary Term or any annual extension thereto.
4. COMMITMENT. Producer covenants and agrees that all natural gas produced
from well(s) and/or dedicated acreage described on Exhibit "A" in which
Producer currently holds, represents, or markets shall at all times
throughout the Primary Term, or any extension thereof, be dedicated
exclusively to OGG under the terms of this Agreement. Producer, at its
sole discretion, shall have the right to dedicate additional ▇▇▇▇▇ or
acreage to this Agreement. The type of dedication is specified on
Exhibit "A". Furthermore, Producer commits to deliver 90,000 MMBtu in
natural gas to OGG from the well(s) described on Exhibit "A" during the
Primary Term of this Agreement as referenced above in Paragraph 1 to
compensate OGG for the cost of the metering facilities installed to
connect the well(s). At the end of the Primary Term, if the total
volume of natural gas delivered to OGG at the well(s) described on
Exhibit "A" is less than 90,000 MMBtu, Producer
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agrees to pay OGG a fee of $0.18 per MMBtu multiplied times the
deficit volume. Such payment shall be made within (15) days of
receipt of OGG's invoice. The deficit volume shall be calculated by
deducting the volume delivered to OGG from the well(s) described on
Exhibit "A" during the Primary Term from 90,000 MMBtu. It is
understood that all volumes measured at the well(s) described on
Exhibit "A" shall be credited toward the volume commitment.
5. PRICE. OGG shall pay to Producer on a monthly basis, as full
compensation for the natural gas and all of its components delivered to
OGG, an amount equal to the Index Price published in the first "Inside
F.E.R.C. Gas Market Report" issue of each month for Reliant Energy
Gas Transmission Co. (East Zone) multiplied by the MMBtu's delivered by
Producer at the Receipt Point. Payment shall be made on or before the
last day of the month following the production month. The price payable
hereunder shall be inclusive of all production, severance, excise and
similar taxes imposed or levied by the state or any other governmental
agency on the gas produced, sold or delivered hereunder. Producer shall
pay all royalty and taxes with respect to the gas delivered hereunder.
In the event OGG is required to remit taxes on behalf of Producer, the
amount paid shall be deducted from the payment due Producer.
6. FEES AND FUEL. For applicable services, OGG shall deduct eighteen cents
(18 cents) per MMBtu from the amount due Producer pursuant to
Paragraph 5. In addition, OGG shall deduct for fuel four percent (4%)
of the Price as described in Paragraph 5, multiplied by the volume in
MMBtu for gas delivered by Producer at the Receipt Point.
7. TRANSPORTER'S RESERVATIONS. All gas received by OGG pursuant to this
Agreement shall comply with the terms and provisions contained in the
Ozark Gas Transmission, L.L.C. FERC Gas Tariff ("Tariff"), as may be
amended from time to time, which is incorporated herein by reference.
In the event of a conflict between any provision of this Agreement and
the Tariff, this Agreement shall control.
8. QUALITY SPECIFICATIONS. OGG hereby expressly agrees to waive the
quality specification requirement for water vapor content as stated in
the Tariff. Furthermore, all gas purchased hereunder will be on a
saturated basis. With regard to the other quality specifications
contained in the Tariff, if any tests reveal that any gas does not
conform to said specifications, then Producer shall have the right to
promptly bring the gas into conformance. If Producer does not elect to
treat said non-conforming gas to effect conformance, OGG hereby
reserves the right to either (i) treat said gas, or cause it to be
treated, to effect conformance and/or take such action as OGG, in its
sole judgment, deems necessary to reduce or eliminate the effects that
may result from receiving non-conforming gas into the Facilities and
charge actual costs as determined by OGG, or (ii) continue to accept
said gas without treating, or (iii) refuse to accept gas not conforming
to the quality specifications. However, acceptance of non-conforming
gas shall not constitute any continuing waiver of OGG's rights to
accept or reject all or part of any gas under this Agreement not
conforming to the quality specifications. If OGG elects to treat the
gas as provided in Section (i) of this paragraph, OGG shall provide
Energas with a statement, in writing, estimating the cost to reduce or
eliminate the effects of the non-conforming gas. Energas shall have ten
(10) days from receipt of OGG's statement to notify OGG in writing of
it's election. If Energas rejects OGG's offer to treat the
non-conforming gas as provided in Section (i), the non-conforming gas
shall then be released from this Agreement within ten (10) days of
OGG's receipt of Energas' written rejection.
9. MODIFICATIONS. With the exception of the modifications contemplated
under the paragraphs with descriptive headings of "Transporter's
Reservations" and "Additional ▇▇▇▇▇" herein, modifications to this
Agreement will only be allowed through express written agreement
executed by authorized officers or representatives of both OGG and
Producer.
10. WARRANTY/INDEMNIFICATION. Each party hereby warrants to the other that
at the time of receipt or delivery of gas hereunder, it will have the
right to receive or deliver, as the case may be, such gas, and that
such gas shall be free and clear of all liens and adverse claims; and
each party agrees, with respect to the gas received or delivered by it,
to indemnify the other party against all
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suits, actions, debts, accounts, damages, costs (including attorney
fees), losses and expenses arising from or out of any adverse claim of
any and all persons to or against said gas while that party has
responsibility for the gas.
11. FORCE MAJEURE. If either party is rendered unable, wholly or in part,
by force majeure or any other cause of any kind not reasonably within
its control, other than financial, to perform or comply with any
obligation or condition of this Agreement, upon giving written notice
and reasonably full particulars to the other party as soon as
reasonably possible, such obligation or condition shall be suspended
during the continuance of the inability so caused and such party shall
be relieved of liability and shall suffer no prejudice for failure to
perform the same during such period; provided, obligations to make
payment then due for gas transported hereunder shall not be suspended
and the cause for suspension (other than labor disputes, strikes or
lockouts) shall be remedied so far as possible with reasonable
dispatch. Settlement of strikes, lockouts and labor disputes shall be
wholly within the discretion of the party having the difficulty. The
term "force majeure" shall include, without limitation by the following
enumeration, acts of God and the public enemy, the elements, fire,
accidents, breakouts, strikes and any other industrial, civil or public
disturbance, inability to obtain or delay in obtaining rights-of-way,
material, supplies, permits or labor, any act or omission by parties
not subject to control by the party having difficulty, and any laws,
orders, rules, regulations, acts or restraints of any government or
governmental body or authority, civil or military.
12. AUDIT RIGHTS. Either party hereto shall have the right at any and all
reasonable times to examine the books and records of the other party to
the extent necessary to verify the accuracy of any statement, charge,
computation or demand made under or pursuant to this Agreement. All
books and records shall be kept for two (2) years from the date of
production In addition, any claim by either party of error as to the
quantity, price, fees or deductions pursuant to this Agreement shall be
waived unless written notice of such claim is given to the other party
within two years (2) following the production month.
13. TRANSFER OF TITLE. Title to the gas shall transfer to OGG at the
Receipt Point(s). As between the parties hereto, Producer shall be in
control and in possession of the gas prior to such gas being received
hereunder by OGG at the Receipt Point(s) and responsible for any
damages, losses or injuries caused thereby, and upon OGG's physical
receipt of such gas at the Receipt Point(s), OGG shall thereafter be
deemed to be in exclusive control and possession of such gas, and
responsible for any injuries or damages caused thereby; provided,
however, neither party shall be indemnified for its own omissions or
negligent acts.
14. DESCRIPTIVE HEADINGS. The descriptive headings of the provisions of
this Agreement are formulated and used for convenience only and shall
not be deemed to affect the meaning or construction of any such
provision.
15. EXECUTION AND ASSIGNMENT. This Agreement shall not become a binding
contract between the parties unless and until it has been executed by
duly authorized officers or representatives of both Producer and OGG.
Upon full execution, this Agreement shall be binding upon the parties
hereto and their representatives, heirs, successors and assigns. All
references to the parties herein shall include any designee or agent of
the respective parties. This Agreement may be assigned by either party
hereto upon written notice to the other party, but no assignment shall
relieve either party of its obligations hereunder unless such party is
expressly released in writing from said obligations by the party to
which it is obligated. Such notice by the assigning party shall include
furnishing the other party with a copy of the fully executed
instrument(s) effecting such assignment, and any change in ownership
shall not become effective or binding until it receives said
document(s).
16. APPLICABLE LAW. This Agreement shall be governed by the laws of the
State of Oklahoma.
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17. NOTICES. Written notification, as provided for in this Agreement, shall
be deemed given when physically delivered to the other party in person,
when transmitted to the other party by confirmed facsimile or
electronic transmission, or when deposited in the U.S. Mail or with a
delivery service, postage prepaid, as follows:
PRODUCER OGG
Energas Corp. Ozark Gas Gathering, L.L.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇. ▇▇▇▇▇ ▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇ Attn: Contract Administration
Tel: (▇▇▇) ▇▇▇-▇▇▇▇ Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
IN WITNESS WHEREOF, the undersigned authorized officers or representatives of
OGG and Producer have executed this Agreement by signature below.
ENERGAS CORP.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇
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Title: Land Manager
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OZARK GAS GATHERING, L.L.C.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------
Title: Manager, Ozark Business Unit
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EXHIBIT "A"
This Exhibit "A" is for all purposes attached to and made a part of that
certain Agreement dated October 1, 1999 by and between OGG and Energas,
Corp. covering well(s) and/or dedicated acreage described below
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CONTRACT GROSS FEES
MAXIMUM REPRESENTED $/MMBTU
PRESSURE WORKING
STATION LEGAL DEDICATION ("CMP") INTEREST SERVICE FUEL
NUMBER WELL NAME DESCRIPTION COUNTY TYPE (PSIG) (%) FEE DEDUCTION
-------------- --------------- --------------- ------------ -------------- -------------- ---------------- ---------- --------------
▇▇▇▇ ▇▇▇▇▇ 28-09N-21E ▇▇▇▇▇▇▇ Wellbore 70 100.00 .18 4%
1-28
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