Exhibit 10.1
GAS GATHERING AND PROCESSING AGREEMENT
          THIS GAS GATHERING AND PROCESSING AGREEMENT (this “Agreement”),
effective March 1, 2010 (the “Effective Date”), is by and between Monarch
Natural Gas, LLC, a Delaware Limited Liability Company whose address is 5445 DTC
Parkway, Suite P-4, Greenwood Village, Colorado 80111 (“Gatherer”) and (ii)
Gasco Production Company, a Delaware Corporation whose address is 8 Inverness
Drive East, Suite 100, Englewood, Colorado 80112 (“Producer”). Gatherer and
Producer are sometimes referred to herein individually as a “Party” and
collectively as the “Parties.”
Recitals:
          A. Gatherer owns and operates a natural gas gathering system and
related facilities in Uinta and Duchesne Counties, Utah.
          B. Producer has an interest in certain oil and gas leases and lands
described in Schedule 3 (the “Leases”).
          C. Producer owns, and has the right to deliver to Gatherer’s gathering
system, natural gas produced and saved from wells located on the Leases and more
particularly described in Schedule 2 (the “Wells”).
          D. Gatherer desires to gather, compress and process such gas, on the
terms and subject to the conditions in the Agreement.
Agreements:
          NOW, THEREFORE, for good and valuable consideration, Gatherer and
Producer agree as follows:
Article 1
Definitions
     1.1 Definitions. The following capitalized terms used in this Agreement and
the attached exhibits and schedules shall have the meanings set forth below:
     “Agreement” is defined in the preamble.
     “Affiliate” means, as to any Person, any other Person that, directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with such Person, whether by contract, voting power, or
otherwise. As used in this definition, the term “control,” including the
correlative terms “controlling,” “controlled by,” and “under

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common control with,” means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of an entity,
whether through ownership of voting securities, by contract, or otherwise.
     “AMI” means the geographic area described in Schedule 1.
     “Ancillary Agreements” means the related agreements as listed on Schedule
4.
     “Applicable Law” means any applicable law, statute, rule, regulation,
ordinance, order, or other pronouncement, action, or requirement of any
Governmental Authority.
     “Bcf” means one million Mcf’s.
     “Btu” means the amount of heat energy needed to raise the temperature of
one pound of water from 58.5 degrees Fahrenheit to 59.5 degrees Fahrenheit at a
constant pressure of 14.65 pounds per square inch absolute.
     “Business Day” means any day except Saturday, Sunday, or Federal Reserve
Bank holidays.
     “Day” means a period of 24 consecutive hours, coextensive with a “day” as
defined by the Receiving Transporter.
     “Dedicated Reserves” means the working interest of Producer in all Gas
reserves in and under, and all Gas owned by Producer and produced or delivered
from, (i) the Leases and (ii) other lands within the AMI, whether now owned or
hereafter acquired, along with the processing rights and any and all additional
right, title, interest, or claim of every kind and character of Producer or its
Affiliates in (x) the Leases or (y) lands within the AMI, and Gas production
therefrom, and all interests in any wells, whether now existing or drilled
hereafter, on, or completed on, lands covered by a Lease or within the AMI.
Dedicated Reserves shall include Gas under contract with Producer from or
otherwise attributable to (i) NFR Uinta Basin LLC under the Agreement dated
July 25, 2007, and (ii) Halliburton Energy Services, Inc. under the Agreement
dated May 1, 2005, and (iii) MBG Trust under the Agreement dated August 1, 2008,
as they currently exist. Dedicated Reserves shall not include Gas acquired after
the Effective Date of this Agreement by Producer through other means including,
but not limited to, marketing arrangements or joint operating agreements.
     “Delivery Points” means (i) the points identified in Schedule 2 at which
Gas is delivered to a Receiving Transporter by Gatherer and (ii) any additional
delivery point that, from time to time, may be added by

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Gatherer to the Gathering System after the Effective Date to permit delivery of
Gas to other Receiving Transporters.
     “Drip Liquid” means that portion of the Gas that condenses in, and is
removed from, the Gathering System as a liquid by Gatherer.
     “Equivalent Quantity” means, on any Day, a quantity of Gas (in MMBtu’s)
that is thermally equivalent to the quantity of Producer’s Gas received from
Producer at the Receipt Points on the Gathering System on that Day.
     “Effective Date” is defined in the preamble.
     “Force Majeure” is defined in Article 10.2.
     “FL&U” shall mean the combination of Fuel Gas and Lost and Unaccounted For
Gas.
     “Fuel Gas” means Gas used by Gatherer to operate compressors, processing
plants, dehydrators, and related equipment and facilities on the Gathering
System.
     “Gas” means any mixture of hydrocarbons and noncombustible gases in a
gaseous state consisting primarily of methane.
     “Gatherer” is defined in the preamble.
     “Gathering and Processing Fees” means the fees pursuant to Sections 4.1,
4.2, and 4.3.
     “Gathering System” means the gas gathering facilities of Gatherer extending
generally from the Receipt Points to the Delivery Points, including any
facilities for compression, treating, and processing, and all modifications,
alterations, replacements, extensions, or expansions made by Gatherer, from time
to time.
     “Governmental Authority” means any court, government (federal, state,
local, or foreign), department, political subdivision, commission, board,
bureau, agency, official, or other regulatory, administrative, or governmental
authority.
     “Gross Heating Value” means the total calorific value (expressed in Btu’s)
obtained by the complete combustion, at constant pressure, of the amount of Gas
which would occupy a volume of one cubic foot at a temperature of 60o F, if
saturated with water vapor and under a pressure equivalent to 14.65 psia and
under standard gravitational force (980.665 cm per second per second) with air
of the same temperature and pressure as the Gas, when the products of combustion
are cooled to the initial

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temperature of the Gas and air and when the water formed by combustion is
condensed to the liquid state.
     “High Pressure Line” is defined in Section 5.13.
     “Leases” is defined in the Recitals.
     “Losses” means all losses, liabilities, damages, claims, fines, penalties,
costs, or expenses, including reasonable attorneys’ fees and court costs.
     “Lost and Unaccounted for Gas” means the volumetric gains or losses in Gas
that occur on the Gathering System, including any system blowdowns for
maintenance, emergency, or repair, and losses through the emergency shutdown
system and flare stack, other than Gas used for Fuel Gas.
     “Market Price” shall mean, in the case of Residue Gas, the weighted average
commodity price per MMBtu, received by Producer for the amounts of Residue Gas
(excluding any storage amounts) sold and otherwise accounted for on
substantially the same terms as Producer sells its Gas and other Third Party
Gas. “Market Price” shall mean, in the case of Plant Products, the weighted
average commodity price per gallon received by Gatherer for the amounts of Plant
Product (excluding any storage amounts) sold under arm’s-length agreements at
the best price then obtainable in Gatherer’s reasonable judgment and discretion,
less any allocated transportation, handling and storage fees incurred and paid
by Producer in association therewith.
     “Maximum Operating Pressure” is defined in Section 5.13.
     “Mcf” means one thousand cubic feet of Gas at a temperature of 60 oF and a
pressure of 14.65 pounds per square inch absolute.
     “Mcf/d” means Mcf’s per Day.
     “Minimum Volume Period” means the period beginning on the Effective Date
and ending on the 5th anniversary of the Effective Date, as such date may be
adjusted pursuant to Section 5.2.
     “MMBtu” means one million Btu’s, which is equivalent to one dekatherm.
     “Month” means the period beginning on the first Day of the calendar month
and ending immediately prior to the commencement of the first Day of the next
calendar month.
     “New Well Connection Expenditure” is defined in Section 5.11(i).

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     “Notice” is defined in Section 13.1.
     “Other Delay” is defined in Section 10.2.
     “Party” and “Parties” are defined in the preamble.
     “Person” means any individual, corporation, partnership, joint venture,
limited liability company, association (whether incorporated or unincorporated),
joint-stock company, trust, Governmental Authority, unincorporated organization,
or other entity.
     “Plant” means the Riverbend Gas Processing Plant, Section 36, Township 9
South, Range 18 East, Uintah County, Utah, together with any facilities
connecting the Plant to Questar.
     “Plant Products” means the raw mix of liquefiable hydrocarbons, including
without limitation, ethane, propane, butane, and natural gasoline, extracted and
saved at the Plant from all of Producer’s Gas delivered to and processed by
Gatherer.
     “Plant Shrinkage” means the thermal content of Plant Products removed from
Gas as a result of processing at the Plant.
     “Producer” is defined in the preamble.
     “Producer’s Gas” means the Dedicated Reserves committed hereunder by
Producer.
     “Producer Price Index” means the index covering intermediate materials,
supplies and components; as determined and published by the United States Bureau
of Labor Statistics (“BLS”) or any successor agency thereto.
     “Producer’s Reservations” is defined in Section 3.4.
     “Quarterly Minimum Volume” means, for each calendar quarter in the Minimum
Volume Period, a minimum volume of Producer’s Gas equal to 22,800 Mcf per Day
multiplied by the number of Days in each such calendar quarter
     “Questar” means Questar Pipeline Company and any successor thereto.
     “Receipt Points” means the outlet flange of the metering facilities at each
of the existing receipt points as of the Effective Date, for which the Producer
owns the meters and which are described in Schedule 2 and (ii) the inlet flange
of the metering facilities for any new or existing receipt points that may, from
time to time, be added by Gatherer to the Gathering

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System after the Effective Date to permit Producer to deliver Producer’s Gas to
the Gathering System.
     “Receiving Transporter” means the intrastate or interstate pipeline
company, local distribution company, or other party taking delivery or custody
of Producer’s Gas at, or immediately downstream of, the Delivery Points.
     “Residue Gas” means that portion of Producer’s Gas remaining after
processing at the Plant, and of Producer’s Gas bypassed around the Plant.
     “Scheduled Gas” means, for a specified period of time, the quantity of
Producer’s Gas scheduled by Producer and confirmed by Gatherer for delivery and
gathering on the Gathering System.
     “Services” is defined in Section 3.1.
     “Term” is defined in Section 2.1.
     “Third Party Gas” means all Gas under contract with Gatherer from or
otherwise attributable to the Leases, other than Producer’s Gas.
     “Wells” is defined in the Recitals.
     “Year” means the period of time beginning on one Day and ending on the same
Day the following year.
     1.2 Attachments. Each exhibit, schedule, or other attachment to this
Agreement is a part of this Agreement and incorporated herein for all purposes.
When the term “Agreement” is used herein, it means this Agreement and all of the
exhibits, schedules, and other attachments hereto. A list of the exhibits,
schedules, and other attachments to this Agreement is attached behind the
signature page.
Article 2
Term
     2.1 Term. The term of this Agreement (“Term”) shall commence on the
Effective Date and continue in effect through the close of the last Day of the
Month following the 15th anniversary of the Effective Date. For Wells already
connected to the Gathering System on the last Day of the Month following the
15th anniversary of the Effective Date, the Term as to those Wells shall
continue in effect for so long as Producer’s Gas can be produced in commercial
quantities from such Wells.

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Article 3
Gathering of Producer’s Gas
     3.1 Gatherer shall provide gathering, compression and processing services
as further detailed in this Agreement and as can be provided by the existing
Gathering System (the “Services”) for Producer’s Gas delivered by Producer to
the Receipt Point(s) for receipt into the Gathering System. Gatherer shall
redeliver Producer’s Gas to Producer at the Delivery Point(s) and, subject to
Article 3 of Exhibit A hereto, Producer’s Gas so delivered will meet the dew
point and other quality specifications of the Downstream Transporter, as those
quality specifications may change from time to time.
     The Parties hereto acknowledge that Producer’s Gas produced in the Gate
Canyon area does not currently require processing, and is gathered in a separate
gathering system that has no processing facilities. Should processing be
required in the future for such Gas, Gatherer may first choose to process such
Producer’s Gas pursuant to this Agreement. If Gatherer chooses to not process
such Producer’s Gas pursuant to this Agreement, the Parties agree to work in
good faith to evaluate the alternatives available to Gatherer, including
construction of a new processing plant, connection of the Gate Canyon system to
the Plant, or a short-term processing arrangement on Questar. After evaluation,
if Gatherer elects not to provide processing, Producer may process Producer’s
Gas, and Gatherer shall continue to waive the fees under Sections 4.1 (ii) and
(iii) for that Gas.
     3.2 Dedicated Reserves. Subject to Producer’s Reservations and to the other
terms and conditions of this Agreement, Producer (i) exclusively dedicates and
commits to the performance of this Agreement the Dedicated Reserves,
(ii) represents that the Dedicated Reserves are not otherwise subject to any
other gas gathering agreement or commitment and (iii) agrees not to deliver any
Gas produced from the Dedicated Reserves and owned by Producer to any other gas
gatherer, processor, or gas gathering system. Producer possesses the right to
deliver the Dedicated Reserves to the Gathering System. Producer agrees to cause
any existing or future Affiliates of Producer holding Dedicated Reserves to be
bound by, and to execute and join as a party, this Agreement. The dedication and
commitment made by Producer under this Agreement is a covenant running with the
land.
     3.3 Producer shall not tender for gathering any Gas other than Producer’s
Gas, which is not part of Producer’s working interest, whether controlled
through a joint operating agreement, marketing agreement, or the like, without
first obtaining Monarch’s written approval.
     3.4 Producer’s Reservations. Producer reserves the following rights (and
reasonable quantities of Gas to satisfy same) (“Producer’s Reservations”):
(i) to operate Wells producing from the Dedicated Reserves as a reasonably
prudent operator, (ii) to separate or process Gas using only mechanical, ambient
temperature equipment located at surface production facilities on or near Wells
producing from

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the Dedicated Reserves, (iii) to use Gas produced from the Dedicated Reserves
for lease operations, and (iv) to pool, communitize, or unitize Producer’s
interests in the Dedicated Reserves. If Producer should commence Gas flow from
any new Well or if Producer repairs, reworks, curtails, or plugs and abandons
any existing Well, written Notice thereof shall be given to Gatherer no later
than 5 Business Days prior to delivering or curtailing deliveries of Gas from
such Well to a Receipt Point.
     3.5 Prudent Operator. Producer and Gatherer shall each perform their
obligations under this Agreement in a good, efficient and workmanlike manner, in
their best judgment as prudent operators, in conformity with the best practices
of the industry and in accordance with all valid and applicable laws, rules, and
regulations of governmental authorities.
Article 4
Gathering and Processing Fees
     4.1 Gathering and Processing Fees. As consideration for the Services
provided hereunder by Gatherer, Producer shall pay Gatherer:

  (i)   $0.435 per MMBtu for Producer’s Gas received at the Receipt Points each
Month, as provided herein. Of the $0.435 per MMBtu fee, $0.25 shall represent
consideration for gathering service and $0.185 shall represent consideration for
the current two stages of compression service, however, in no event shall the
fee for Producer’s Gas received at the Receipt Points be less than $0.435 per
MMBtu, as adjusted in Section 4.3 herein; and     (ii)   For any of Producer’s
Gas processed by Gatherer, 5% of the Residue Gas revenues attributable to
Producer’s Gas. Producer shall market, at no fee to Gatherer, all Residue Gas,
and shall make all arrangements, on a timely basis, for the further
transportation, marketing and disposition of such Residue Gas, which shall be
done and accounted for on substantially the same terms as Producer transports,
markets and disposes of its Gas and Third Party Gas; and     (iii)   For any of
Producer’s Gas processed by Gatherer, 5% of the Plant Products revenue
attributable to Producer’s Gas. Gatherer shall market, at no fee to Producer,
all Plant Products, and shall make all arrangements, on a timely basis, for
further transportation, marketing and disposition of such Plant Product, and    
(iv)   $250 per active meter per Month on the Gathering System; and     (v)  
100% of the Drip Liquids attributable to Producer’s Gas (net of any royalty
thereon).

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     4.2 High-Volume Fee Discount. In any Month in which Gatherer receives an
aggregate volume of Producer’s Gas that exceeds a daily average rate of 35,000
Mcf, the fee charged for Producer’s Gas pursuant to Section 4.1 (i) above shall
be reduced to $0.30 per MMbtu for each Mcf of Producer’s Gas gathered in excess
of 35,000 Mcf per Day during such Month. Of the $0.30 per MMBtu fee in this
Section 4.2, $0.17 shall represent consideration for gathering service and $0.13
shall represent consideration for compression service. The Gathering and
Processing Fees described in Sections 4.1 (ii), (iii), (iv), and (v) shall
remain unchanged.
     4.3 Adjustment of Fees. On each January 1 during the Term, the Gathering
and Processing Fees then in effect in Sections 4.1 (i) and (iv), and Section 4.2
of this Agreement, shall be increased by multiplying the fees then in effect by
the percentage increase in the Producer Price Index as published by the U.S.
Department of Labor for the prior 12-Month period. If the change in the Producer
Price Index shows a percentage decrease, the Gathering and Processing Fees then
in effect shall be reduced by such percentage change in the Producer Price
Index, but in no event shall the Gathering and Processing Fees drop below the
fees in effect as of the Effective Date. In no event shall the Gathering Fee in
Section 4.1 (i) be adjusted, up or down, by greater than 5% in any single Year,
or exceed $0.65 per MMBtu during the Term. In no event shall the metering fee be
adjusted, up or down, by greater than 5% in any single Year, or exceed $375
during the Term. If the Producer Price Index ceases publication, the parties
hereto shall negotiate in good faith a replacement index. For purposes of
splitting out the gathering and compression components of the Gathering and
Processing Fees, any fee adjustment carried out pursuant to this Section 4.3 or
Section 5.13 (ii) will automatically establish a proportional adjustment of the
underlying gathering and compression components of the Gathering and Processing
Fees.
     4.4 Payment. Payment of the Gathering and Processing Fees shall be made in
accordance with the procedures set forth in Article 9.
Article 5
Gas Delivery
     5.1 Receipt and Delivery. Producer agrees to tender, or cause to be
tendered, to the Receipt Points, Producer’s Gas, each Day, and Gatherer agrees
to accept Producer’s Gas at the Receipt Points and redeliver Producer’s Gas, to
the Delivery Points, subject to the terms hereof. Producer shall endeavor to
deliver the daily quantities of Gas at each Receipt Point at a reasonably
constant rate.
     5.2 Minimum Volume Commitment.
     (a) Producer’s Obligation. Producer commits to deliver to Gatherer for
gathering on the Gathering System in each calendar quarter during the Minimum
Volume Period no less than the Quarterly Minimum Volume for each such calendar
quarter. Such commitment shall be suspended by events of Force

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Majeure (but not by events of Other Delay) and prorated during periods of high
pipeline pressure pursuant to Section 5.13. The Parties shall act in good faith
such that the Gathering System can be operated in a manner that will not unduly
hinder Producer’s ability to so tender such Quarterly Minimum Volumes to
Gatherer, which good faith practices shall include prudent maintenance and
repair of the Gathering System, compliance with Gatherer’s Maximum Operating
Pressure obligations, and avoidance of free liquids being introduced into the
Gathering System as set out in Section 3(a)(1) of Exhibit A hereunder. To the
extent that Producer tenders, in accordance with the terms of this Agreement,
Producer’s Gas at a Receipt Point during any calendar quarter of the Minimum
Volume Period, and Producer is unable to effect delivery of such Gas due to
Gatherer’s failure to comply with its Maximum Operating Pressure obligation, the
Minimum Volume Commitment applicable to each such calendar quarter shall be
reduced by an amount equivalent to the volume shortfall so caused.
     (b) Deficit Volumes. If the total aggregate volume of 1) Producer’s Gas, 2)
Third Party Gas, and 3) Gas from any Dedicated Reserves caused to be drilled by
Producer either through acreage farm-out or non-consent Wells, delivered to the
Gathering System in a calendar quarter of the Minimum Volume Period is less than
the Quarterly Minimum Volume, then Producer shall pay Gatherer in cash, no later
than 30 Days following the end of such calendar quarter, an amount equal to the
shortfall quantity for such calendar quarter (in Mcf’s) multiplied by the
then-current Gathering and Processing Fees, as applicable (including any
possible adjustment under Section 5.13 (ii)), for such calendar quarter, as
liquidated and agreed damages for Producer’s failure to deliver the Quarterly
Minimum Volume in such calendar quarter.
     (c) Excess Volumes. If the volume of (i) Producer’s Gas, (ii) Third-Party
Gas, and (iii) Gas from any Dedicated Reserves caused to be drilled by Producer
either through acreage farm-out or non-consent Wells, delivered to the Gathering
System in a calendar quarter of the Minimum Volume Period is greater than the
Quarterly Minimum Volume, then such excess volume will be credited to the last
volumes due during the Minimum Volume Period. Such crediting shall thereby
shorten the Minimum Volume Period by one Day for each 22,800 Mcf of excess
volumes so credited.
     5.3 Ratable Takes. Producer acknowledges and understands that Gatherer may
be providing gathering, processing, and other services to third parties. In the
event of a capacity restriction, Gatherer shall treat each party ratably in its
Gathering System, or any portion thereof, and shall not grant to any third party
a higher priority to capacity on the Gathering System than the priority granted
hereunder to Producer. In the event and to the extent that Gatherer’s ratable
takes prevent Producer from delivering its full Quarterly Minimum Volume
obligation in such calendar quarter, then the Quarterly Minimum Volume for that
calendar quarter shall be reduced by the amount of such shortfall.

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     5.4 Scheduling. Producer shall notify Gatherer not less than 5 Business
Days before the last Day of each Month of the total volume of Gas (in Mcf/d and
MMBtu) that Producer expects to deliver in the following Month, specifying the
volumes to be delivered to or by Gatherer at each of the Receipt Points and the
Delivery Points. Producer may modify its nominations at any time upon at least
24 hours advance Notice. The Parties shall coordinate their nomination
activities, giving sufficient time to meet the deadlines of the receiving
transporter. Each Party shall give the other Party timely prior Notice,
sufficient to meet the requirements of the Receiving Transporter involved in the
transaction, of the quantities of Producer’s Gas to be delivered to the Delivery
Points each Day. If either Party becomes aware that actual deliveries at the
Receipt Points or Delivery Points are greater or lesser than the quantities of
Scheduled Gas, then such Party shall promptly notify the other Party. Throughout
the term of this Agreement, the Parties agree to work together to refine and
improve the scheduling, nominating, and balancing procedures applicable to
Producer’s Gas to accommodate the Receiving Transporter’s nomination procedures
(or changes to such procedures) and the operational requirements of both
Gatherer and Producer. If Gatherer incurs any liabilities, costs, or expenses as
a result of Producer not scheduling deliveries of Producer’s Gas at the Delivery
Points in accordance with the receiving transporter’s requirements, then
Producer shall promptly reimburse Gatherer for such liabilities, costs, or
expenses, including all imbalance charges assessed in respect of the delivery of
Producer’s Gas to the receiving transporter.
     5.5 Thermally Equivalent Quantity. Subject to this Agreement, Gatherer
shall, as nearly as practicable each Day, receive at the Receipt Points and
deliver for Producer’s account, at the Delivery Points, an Equivalent Quantity
of Producer’s Gas, less FL&U, Plant Shrinkage (as applicable) and Drip Liquid
shrinkage. Producer’s allocated share of Fuel Gas shall be rendered to Gatherer
by Producer for Gatherer’s use at no cost to Gatherer. All receipts and
deliveries of Producer’s Gas hereunder shall be balanced on an MMBtu basis, less
Producer’s allocated share of FL&U, Plant Shrinkage (as applicable) and Drip
Liquid shrinkage.
     5.6 Equal Receipt and Delivery. The Parties intend that Producer’s Gas will
be received and delivered hereunder at the same rates, and Producer shall not,
in any manner, use the Gathering System for storage or peaking purposes. If, on
any Day, Producer delivers a quantity of Producer’s Gas in excess of the
quantity of Producer’s Gas being concurrently redelivered by Gatherer at the
Delivery Points, Gatherer shall have the right to reduce or discontinue its
receipts of Producer’s Gas at the Receipt Points until such time as arrangements
have been made by Producer to balance such excess. If on any Day Producer
delivers a quantity of Producer’s Gas less than the quantity of Producer’s Gas
being concurrently redelivered by Gatherer at the Delivery Points, then Gatherer
shall have the right to reduce or discontinue deliveries of Producer’s Gas to
the Receiving Transporter until arrangements have been made by Producer to
balance such under delivery. An exact daily balancing of receipts and deliveries
may not be possible due to the inability of the Parties to control precisely
such receipts and

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deliveries. However, Gatherer, to the extent reasonably practicable, will
deliver each Day an Equivalent Quantity, less FL&U, Plant Shrinkage (as
applicable) and Drip Liquids shrinkage, to the Delivery Points.
     5.7 Information. Each Party will furnish or cause to be furnished to the
other Party hereto all data required to accurately account for all Producer’s
Gas received and delivered hereunder.
     5.8 Third Party Arrangements. Producer shall make, or cause to be made, all
necessary arrangements with other pipelines or third parties at or upstream of
the Receipt Points and at or downstream of the Delivery Points to effect
Gatherer’s receipt and delivery of Producer’s Gas. Such arrangements affecting
Receipt and Delivery shall be coordinated between Producer and Gatherer.
     5.9 Commingling. Although Producer shall retain title to Producer’s Gas
delivered to Gatherer at the Receipt Points hereunder, Producer’s Gas received
by Gatherer shall constitute part of the supply of Gas from all sources in the
Gathering System, and as such Gatherer shall, subject to its obligation to
deliver an Equivalent Quantity, less FL&U, Plant Shrinkage (as applicable), and
Drip Liquids shrinkage, as provided in Section 5.4, have the absolute and
unqualified right to commingle Producer’s Gas and to deliver molecules different
from those received and to handle the molecules received in any manner.
     5.10 Lost and Unaccounted for Gas and Fuel Gas. Gatherer agrees to use
ordinary care in gathering Producer’s Gas from the Receipt Points to the
Delivery Points. However, Producer acknowledges that certain volumetric gains
and losses in Producer’s Gas will occur, and such gains and losses attributable
to Lost and Unaccounted For Gas and Fuel Gas shall be shared and allocated among
the Producer and other third parties whose Gas is gathered on the Gathering
System, on a Btu basis, in the proportion that each party delivers Gas to the
Gathering System and, consistent with Gatherer’s facilities, in proportion to
the Services provided.
     5.11 New Well Connections. For any Well located in Area “A” on Schedule 1,
Producer shall provide Gatherer with written Notice of any additional Well
dedicated to this Agreement to be connected to the Gathering System hereunder,
including the Producer’s working interest, Well name, Well location, and
Producer’s best estimate of Well deliverability.

  (i)   Within 10 Days of receipt of such Notice, Gatherer shall provide
Producer with a written estimate of the cost of connecting such new Well to the
Gathering System, which shall include any necessary facilities to accommodate
the Gas in the Gathering System (“New Well Connection Expenditure”). Gatherer
shall proceed with connection of such new Well 10 Days after the estimate is
received by Producer, unless advised otherwise pursuant to this Section 5.11
(ii) below. Such New Well

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      Connection Expenditure shall be subject to the Indemnity in Section 5.11
(iii).

  (ii)   Producer’s Option. If Producer’s estimate for the cost of the new Well
Connection Expenditure is less than Gatherer’s, Producer may, within 10 Days of
receipt of Gatherer’s estimate, give Notice to Gatherer to not proceed with such
connection, which Notice shall include Producer’s estimate of the New Well
Connection Expenditure, and Producer shall proceed with such construction. All
facilities constructed shall comply with Gatherer’s specifications. Upon
completion of the construction by Producer, Producer shall invoice Gatherer for
the actual cost of the New Well Connection, not to exceed 110% of Producer’s
estimated cost, along with the transfer of title of the newly-constructed
facilities. Gatherer shall pay the invoice within 30 Days of receipt and
concurrently obtain title. Such reimbursed actual cost shall be subject to the
Indemnity in Section 5.11 (iii).     (iii)   Indemnity. For the first 2 Years
after construction of a New Well Connection and the other necessary facilities,
the Producer shall guarantee adequate volume from each new Well according to the
following procedure: during each 3-Month period, if the Gathering and Processing
Fees derived from the all Gas contracted and received from the new Well does not
equal 1/8 of 130% of the actual cost of the New Well Connection, then Gatherer
shall invoice Producer for the deficiency on its next regular Monthly invoice.
Excess volume in any 3-Month period shall apply to any subsequent 3-Month
period(s).

     5.12 For any Well located in Area “B” on Schedule 1, Producer shall provide
Gatherer with written notice of any additional Well dedicated to this Agreement
that is to be gathered hereunder, including Producer’s working interest, Well
name, and Well location. Within 10 Days of receipt of such notice, Gatherer
shall provide written notice to Producer whether Gatherer will provide gathering
services hereunder for such Well. If Gatherer elects to provide such gathering
service, the costs of connecting the Well to Gatherer’s central point of the
Area “B” acreage will be indemnified by Producer under Section 5.11(iii) above;
however, any costs incurred by Gatherer in connecting Gatherer’s central point
of the Area “B” acreage to the Riverbend system, in the event Gatherer elects to
construct such a connection, shall not be indemnified by Producer under Section
5.11(iii). The Maximum Operating Pressure for the system in Area “B” shall be
125 psig as measured at Gatherer’s central point in Area “B;” provided, however,
that all other terms and conditions related to Section 5.13 shall apply. The
location of the central point in the Area “B” acreage shall be determined by the
Parties in a manner that fairly apportions cost responsibility between the
Parties and best serves the objectives of each Party under this Agreement. If

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Gatherer elects not to provide gathering services for that Well, that Well shall
be released from dedication hereunder.
     5.13 Pressures. Producer’s Gas shall be delivered at the Receipt Points at
pressures sufficient to effect delivery into the Gathering System at the Receipt
Points, but not to exceed the maximum allowable operating pressure of the
Gathering System from time to time. Gatherer shall provide a maximum operating
pressure of 125 psig at the suction of the compression located at the Plant site
(“Maximum Operating Pressure”). The Parties acknowledge that a portion of
Gatherer’s pipeline facilities upstream of the Plant inlet is designated by
Gatherer as a high pressure line and is operated by Gatherer without compression
at pressures consistently higher than 125 psig (the “High Pressure Line”). At
its option, Producer may request the connection, to such High Pressure Line, of
Wells that are capable of delivering Producer’s Gas at pressures sufficient to
effect delivery into the High Pressure Line, and Gatherer agrees to provide such
connection; provided, however, that upon 60 Day’s Notice to Gatherer, Producer
may request that such Wells be disconnected from Gatherer’s High Pressure Line
and, instead, be connected to a lower pressure portion of the Gathering System.
Adequate time will be allowed Gatherer to accommodate these volumes, pursuant to
this Agreement, into its lower pressure system. Such Gas shall be excluded from
the provisions of Section 5.13(ii) during the period that such Gas is connected
to the High Pressure Line. Gatherer agrees to provide such disconnection and
reconnection with as little disruption to Gas flow as reasonably practicable.

  (i)   If Gatherer’s operating pressures exceed 110% of the Maximum Operating
Pressure, as measured as the daily operating pressure averaged over each Month,
excluding events of Force Majeure and Other Delay, Producer shall have the
right, within 30 Days following that Month, to notify Gatherer in writing of
such occurrence. Upon receipt of such Notice, Gatherer shall immediately take
steps to reduce the operating pressure to meet the Maximum Operating Pressure.  
  (ii)   If, after notification by Producer pursuant to Section 5.13 (i),
Gatherer fails to reduce the operating pressure within 90 Days following the
30-Day period referenced in Section 5.13 (i) (such period to be extended for
delivery of needed equipment, rights-of-way, permitting, and the like, and for
Force Majeure and Other Delay), then for those volumes of Producer’s Gas that,
despite Gatherer’s failure to meet its Maximum Operating Pressure obligation,
Gatherer is nonetheless able to deliver into the Gathering System, Producer
shall receive a reduction in rate under Section 4.1 (i) to $0.25 per MMBtu,
unadjusted pursuant to Section 4.2, until such time as Gatherer has reduced its
operating pressure to meet its Maximum Operating Pressure obligation.

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Article 6
Taxes and Warranties
     6.1 Taxes. Producer shall pay or cause to be paid, and agrees to indemnify
and hold harmless Gatherer from and against the payment of, all excise, gross
production, severance, sales, occupation, and all other taxes, charges, or
impositions of every kind and character required by statute or by any
Governmental Authority with respect to Producer’s Gas and the handling thereof
prior to receipt thereof by Gatherer at the Receipt Points. Gatherer shall pay
or cause to be paid all taxes and assessments, if any, imposed upon Gatherer for
the activity of gathering of Producer’s Gas after receipt and prior to
redelivery thereof by Gatherer at the Delivery Points. Neither Party shall be
responsible or liable for any taxes or other statutory charges levied or
assessed against the facilities of the other Party used for the purpose of
carrying out the provisions of this Agreement.
     6.2 Title and No Liens. Producer warrants to Gatherer good title to
Producer’s Gas delivered to the Receipt Points, free from all liens, charges,
and other adverse claims or encumbrances. Producer shall indemnify, defend, and
hold harmless Gatherer from and against all Losses arising from all such liens,
charges, and adverse claims and encumbrances, including Losses arising from
claims (i) by co-working interest owners, royalty or overriding royalty owners,
or other purported owners of interests or rights in Producer’s Gas or in the
Dedicated Reserves or (ii) by Persons from whom Producer purchased or otherwise
acquired Producer’s Gas prior to the Receipt Points.
     6.3 Other Warranties. EXCEPT AS SET FORTH IN THIS ARTICLE 6 AND THE OTHER
PROVISIONS OF THIS AGREEMENT AND ITS ATTACHMENTS, NEITHER PARTY MAKES ANY OTHER
WARRANTIES, EXPRESSED OR IMPLIED, AND SPECIFICALLY DISCLAIMS ANY WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO THE GAS
DELIVERED AND REDELIVERED HEREUNDER.
Article 7
Control, Possession, and Waiver
     7.1 Control and Possession. As between the Parties, Producer shall be
deemed to be in exclusive control and possession of Producer’s Gas delivered
hereunder and responsible for any damage or injury caused thereby prior to the
time Producer’s Gas shall have been delivered to Gatherer at the Receipt Points
and after Producer’s Gas is redelivered to or on behalf of Producer at the
Delivery Points. After delivery of Producer’s Gas to Gatherer at the Receipt
Points, Gatherer shall be deemed to be in exclusive control and possession
thereof and responsible for any injury or damage caused thereby until
redelivered to or on behalf of Producer at the Delivery Points.

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     7.2 Indemnity. Producer agree to indemnify, defend, and hold harmless
Gatherer and its Affiliates from any and all Losses arising from or out of
(i) personal injury or property damage attributable to Producer’s Gas when
Producer shall be deemed to be in control and possession of Producer’s Gas as
provided in Section 7.1 and (ii) the delivery by Producer of Producer’s Gas that
does not meet the quality specifications in this Agreement. Except to the extent
a Loss (or Losses) is covered by the indemnity in the preceding sentence,
Gatherer agrees to indemnify, defend, and hold harmless Producer and their
Affiliates from all Losses arising from or out of personal injury or property
damage attributable to Producer’s Gas when Gatherer shall be deemed to be in
control and possession of Producer’s Gas as provided in Section 7.1. THE
INDEMNITIES SET FORTH IN THIS SECTION 7.2 ARE TO BE CONSTRUED WITHOUT REGARD TO
THE CAUSES THEREOF, INCLUDING THE NEGLIGENCE OF ANY INDEMNIFIED PARTY, WHETHER
SUCH NEGLIGENCE BE SOLE, JOINT, OR CONCURRENT, OR ACTIVE OR PASSIVE, OR THE
STRICT LIABILITY OF ANY INDEMNIFIED PARTY OR OTHER PERSON.
     7.3 Waiver of Damages. A PARTY’S LIABILITY HEREUNDER SHALL BE LIMITED TO
DIRECT ACTUAL DAMAGES ONLY. SUCH DIRECT ACTUAL DAMAGES SHALL BE THE SOLE AND
EXCLUSIVE REMEDY, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE
WAIVED. NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY OR ITS AFFILIATES FOR
CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY, OR INDIRECT DAMAGES, LOST
PROFITS, OR OTHER BUSINESS INTERRUPTION OR SIMILAR DAMAGES, BY STATUTE, IN TORT,
OR CONTRACT, UNDER ANY INDEMNITY PROVISION OR OTHERWISE. IT IS THE INTENT OF THE
PARTIES THAT THE LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF
DAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING THE
STRICT LIABILITY OR NEGLIGENCE OF ANY PARTY, WHETHER SUCH STRICT LIABILITY OR
NEGLIGENCE BE SOLE, JOINT, OR CONCURRENT, OR ACTIVE OR PASSIVE. TO THE EXTENT
ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED, THE PARTIES
ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE, OR
OTHERWISE OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT, AND THE DAMAGES
CALCULATED HEREUNDER CONSTITUTE A REASONABLE APPROXIMATION OF THE HARM OR LOSS.
Article 8
Allocation of Residue Gas, Plant Product, and Drip Liquids Revenue

  A.   The Residue Gas volume attributable to a particular Receipt Point for an
Accounting Period shall be determined by subtracting from the measured volume at
each Receipt Point the allocated Fuel Gas and L&U and also subtracting the
allocated thermal equivalent of

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      Plant Products and other shrinkage, if any, attributed to a particular
Receipt Point for each Accounting Period.     B.   The quantity of Plant
Products (in gallons) of a particular Component Plant Product recovered and
attributable to a particular Receipt Point shall be determined by multiplying
the Component Plant Product recovered by a fraction, the numerator of which is
the theoretical test gallons of the particular Component Plant Product contained
in the Gas delivered at such Receipt Point and the denominator of which is the
total quantity of theoretical test gallons of the particular Component Plant
Product contained in all of the Gas delivered at the receipts points on the
Gathering System, excluding transportation-only Gas.     C.   The Drip Liquids
attributable to Producer’s Gas shall be owned by Gatherer.     D.   The Residue
Gas Revenue attributable to Producer’s Gas for each Accounting Period shall be
calculated by multiplying the quantity of Residue Gas (in MMBtu’s) during such
Accounting Period that is attributable to Producer’s Gas delivered to Gatherer
during such Accounting Period by the Market Price per MMBtu of Residue Gas
realized by Producer during such Accounting Period for such Residue Gas.     E.
  The Plant Products Revenue attributable to Producer’s Gas for each Accounting
Period shall be the sum of the products obtained by multiplying the volume of
each Component Plant Product recovered during such Accounting Period that is
attributable to Producer’s Gas delivered to Gatherer during such Accounting
Period by the Market Price realized by Gatherer at the tailgate of the Plant
during such Accounting Period for such Component Plant Product.     F.   The
Drip Liquids attributable to Producer’s Gas shall be owned by Gatherer and any
revenue derived by Gatherer from the sale of such Drip Liquids shall be kept by
Gatherer for Gatherer’s own account.

Article 9
Billing and Payments
     9.1 Billing. As soon as practicable each Month, Gatherer shall invoice
Producer for volumes of Producer’s Gas received, gathered and/or processed
hereunder in the preceding Month, including any other applicable charges, and
provide a statement setting forth (i) the volumes and quantities (in Mcf’s and
MMBtu’s) of Producer’s Gas received at each Receipt Point and redelivered to
each

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Delivery Points, (ii) any adjustments for prior periods, (iii) all allocations
made pursuant to Article 8 and (iv) all amounts due hereunder. In the event
Producer receives, pursuant to Section 4.2 or Section 5.2 (c)(3), one or more
adjustments in the Gathering and Processing Fees set forth in Section 4.1 (i),
the statement will reflect a single, blended Section 4.1(i) Gathering and
Processing Fee which prorates all fees and discounts accorded Producer during
the relevant Month across all volumes of Producer’s Gas assessed Gathering and
Processing Fees in such Month. If actual measurements of volumes of Producer’s
Gas are not available in any Month, Gatherer may prepare and submit its invoice
based on estimated volumes, which estimated volumes shall be corrected to actual
volumes in the following Month or Months.
     9.2 Payment for Gathering. Subject to the Letter Agreement dated
February 26, 2010, which is hereby incorporated by reference and attached as
Schedule 6, Producer shall otherwise remit to Gatherer the remaining amount due
under Section 9.1, in immediately available funds, by the 25th Day of each Month
or 10 Days from the date of Gatherer’s invoice, whichever is later. If such due
date is not a Business Day, payment is due on the next Business Day following
such date.
     9.3 Payment for Residue Gas and Plant Products. Producer shall remit to
Gatherer the amount due for Residue Gas under Section 4.1 (ii), and Gatherer
shall remit to Producer the amount due for Plant Products under Section 4.1
(iii), in immediately available funds, by the 25th of each Month.
     9.4 Dispute. If Producer, in good faith, disputes the amount of any such
invoice or any part thereof, Producer will pay such amount as it concedes to be
correct. If Producer disputes the amount due, it must provide supporting
documentation acceptable in industry practice to support the amount disputed
within 20 Days of the date of such invoice. If the Parties are unable to resolve
such dispute, either Party may pursue any remedy available at law or in equity
to enforce its rights under this Agreement.
     9.5 Late Payments. If either Party fails to pay the amount of any invoice
rendered by the other Party hereunder when such amount is due, interest thereon
shall accrue from, but excluding, the due date to, and including, the date
payment thereof is actually made at the lesser of the “Prime Rate” plus 12%,
computed on an annualized basis and compounded Monthly, or the maximum rate of
interest permitted by Applicable Law, not to exceed the maximum legal rate.
“Prime Rate” means the prime rate on corporate loans at large U.S. money center
commercial banks as set forth in the Wall Street Journal “Money Rates” table
under the Heading “Prime Rate,” or any successor thereto, on the first date of
publication for the Month in which payment is due. The Party which is due
payment shall render a late payment charge invoice and payment shall be due
within 10 Days of the date of such invoice.
     9.6 Audit. A Party shall have the right, at its own expense, upon
reasonable Notice and at reasonable times, to examine and audit and to obtain

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copies of the relevant portion of the books, records, and telephone recordings
of the other Party to the extent reasonably necessary to verify the accuracy of
any statement, charge, payment, or computation made under this Agreement. This
right to examine, audit, and to obtain copies shall not be available with
respect to proprietary information not directly relevant to transactions under
this Agreement. All invoices and billings shall be conclusively presumed final
and accurate and all associated claims for underpayments or overpayments shall
be deemed waived unless such invoices or billings are objected to in writing,
with adequate explanation and/or documentation, within 2 Years after the Month
of Gas delivery. All retroactive adjustments under this Section 9.5 shall be
paid in full by the Party owing payment within 30 Days of Notice and
substantiation of such inaccuracy.
     9.7 Minor Adjustments. No adjustments, retroactive or prospective, shall be
made to volumes for prior periods, whether the result of volume allocation
errors or any other reason other than meter calibration error, that involve
changes that would be less than 50 Mcf’s per Month.
     9.8 Financial Responsibility. If Producer fails to pay any amounts when due
under this Agreement, then Gatherer, at its option and without limiting any
other rights available to it under this Agreement or otherwise, may, by giving
Notice to Producer, (i) suspend gathering services hereunder, (ii) require
Producer to pay for the gathering of Producer’s Gas hereunder in cash in advance
of Gatherer performing such gathering services, or (iii) require Producer’s to
provide other security satisfactory to Gatherer.
Article 10
Force Majeure
     10.1 Non-Performance. If a Party is rendered unable, wholly or in part, by
reason of Force Majeure to perform its obligations under this Agreement (other
than the obligation to make payments when due hereunder), then such Party’s
obligations shall be suspended to the extent affected by Force Majeure or by
Other Delay.
     10.2 “Force Majeure” means any cause or event not reasonably within the
control of the Party whose performance is sought to be excused thereby;
including acts of God, strikes, lockouts, or other industrial disputes or
disturbances, acts of the public enemy, wars, blockades, insurrections, riots,
epidemics, landslides, lightning, earthquakes, fires, tornadoes, hurricanes,
storms, and warnings for any of the foregoing which may necessitate the
precautionary shut-down of wells, plants, pipelines, gathering systems, or other
related facilities, floods, washouts, arrests and restraints of governments and
people, civil disturbances, explosions, sabotage, breakage or accidents to
equipment, machinery, gathering systems, plants, facilities or lines of pipe,
the making of repairs or alterations to lines of pipe, gathering systems, plants
or equipment, freezing of wells or lines of pipe, electric power shortages,
necessity for compliance with any court order, or any law, statute, ordinance,
regulation or order promulgated by a Governmental

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Authority having or asserting jurisdiction, inclement weather that necessitates
extraordinary measures and expense to construct facilities or maintain
operations and any other causes, whether of the kind enumerated herein or
otherwise, not reasonably within the control of the Party claiming suspension.
“Other Delay” shall include Producer’s inability to comply with the quality
specifications herein, the inability to secure labor or materials, the inability
to obtain servitudes, rights-of-way, grants, permits, or licenses to enable such
Party to fulfill its obligations hereunder, the inability of such Party to
acquire, or delays on the part of such Party in acquiring, at reasonable cost
and after the exercise of reasonable diligence, such servitudes, rights-of-way,
grants, permits or licenses, and in those instances where either Party hereto is
required to furnish materials and supplies for the purpose of constructing or
maintaining facilities or is required to secure permits or permissions from any
Governmental Authority to enable such Party to fulfill its obligations
hereunder, the inability of such Party to acquire, or delays on the part of such
Party in acquiring, at reasonable cost and after the exercise of reasonable
diligence, such materials, supplies, permits, and permissions. “Force Majeure
Event” also includes any event of force majeure occurring with respect to the
facilities or services of either Party’s Affiliates or service providers
providing a service or providing any equipment, goods, supplies or other items
necessary to the performance of such Party’s obligations hereunder.
     10.3 Strikes. The settlement of strikes or lockouts shall be entirely
within the discretion of the Party having the difficulty, and any obligation
hereunder to remedy a Force Majeure Event or Other Delay shall not require the
settlement of strikes or lockouts by acceding to the demands of the opposing
Party when such course is inadvisable in the sole discretion of the Party having
the difficulty.
     10.4 Notice. The Party whose performance is affected by a Force Majeure or
Other Delay Event must provide Notice to the other Party. Initial notice may be
given orally, but written Notice with reasonably full particulars of the Force
Majeure or Other Delay Event is required as soon as reasonably possible after
the occurrence of the Force Majeure or Other Delay Event.
     10.5 Maintenance and Other Operations. Gatherer may interrupt its
performance hereunder for the purpose of making necessary or desirable
inspections, alterations, and repairs and Gatherer shall give to Producer
reasonable Notice of its intention to suspend its performance hereunder, except
in cases of emergency where such Notice is impracticable or in cases where the
operations of Producer will not be affected. Gatherer shall endeavor to arrange
such interruptions so as to inconvenience Producer as little as possible.
Service interruptions on the part of either Party that are covered by this
provision are included within the definition of “Force Majeure or Other Delay
Event” for the purpose of this Agreement.

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Article 11
Assignment
     11.1 Restriction on Assignment. Except as provided below, neither Party may
assign or delegate any of its rights or obligations under this Agreement, by
operation of law, change of control, or otherwise, without the prior written
consent of the other Party, which consent shall not be unreasonably withheld.
     11.2 Inurement. Subject to Section 10.1, this Agreement binds and inures to
the benefit of the Parties and their respective successors and assigns.
Article 12
Jurisdiction
     This Agreement is subject to, and each Party will comply with, all
Applicable Laws of any Governmental Authority now or hereafter having
jurisdiction over either or both Parties or their facilities.
Article 13
Notices
     13.1 Notice. All notices, invoices, payments, and other communications made
under this Agreement (“Notice”) shall be in writing and sent to:
To Producer:
Gasco Production Company
8 Inverness Drive East, Suite 100
Englewood, Colorado 80112
Attention: Mr. Michael K. Decker
Telephone: 303-483-0044
Facsimile: 303-483-0011
To Gatherer:
Monarch Natural Gas, LLC
5445 DTC Parkway, Suite P-4
Greenwood Village, Colorado 80111
Attention: Mr. Keith R. Finger
Telephone: 303-486-6904
Facsimile: 303-486-6994
     13.2 Method. All Notices required hereunder may be sent by facsimile or
mutually acceptable electronic means, a nationally recognized overnight courier
service, first class mail, or hand delivered.

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     13.3 Delivery. Notice shall be given when received on a Business Day by the
addressee. In the absence of proof of the actual receipt date, the following
presumptions will apply. Notices sent by facsimile shall be deemed to have been
received upon the sending Party’s receipt of its facsimile machine’s
confirmation of successful transmission. If the Day on which such facsimile is
received is not a Business Day or is after five p.m. on a Business Day, then
such facsimile shall be deemed to have been received on the next following
Business Day. Notice by overnight mail or courier shall be deemed to have been
received on the next Business Day after it was sent or such earlier time as is
confirmed by the receiving Party. Notice by first class mail shall be considered
delivered 5 Business Days after mailing.
Article 14
Other Provisions
     14.1 Additional Terms. The measurement terms and conditions set forth in
Exhibit A are incorporated herein by reference.
     14.2 Governing Law. This Agreement shall be construed, enforced, and
interpreted according to the laws of the State of Colorado, without regard to
the conflicts of law rules thereof. Each Party hereby irrevocably submits to the
jurisdiction of the courts of the State of Colorado and the federal courts of
the United States of America located in Arapahoe County, Colorado over any
dispute or proceeding arising out of or relating to this Agreement or any of the
transactions contemplated hereby, and each Party irrevocably agrees that all
claims in respect of such dispute or proceeding shall be heard and determined in
such courts. Each Party hereby irrevocably waives, to the fullest extent
permitted by Applicable Law, any objection which it may now or hereafter have to
the venue of any dispute arising out of or relating to this Agreement or any of
the transactions contemplated hereby brought in such court or any defense of
inconvenient forum for the maintenance of such dispute or action. Each Party
agrees that a judgment in any dispute heard in the venue specified by this
section may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by Applicable Law.
     14.3 WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY
WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT.
     14.4 Representations. Each Party represents to the other Party during the
term hereof as follows: (i) there are no suits, proceedings, judgments, or
orders by or before any governmental authority that materially adversely affect
its ability to perform this Agreement or the rights of the other Parties
hereunder, (ii) it is duly organized, validly existing, and in good standing
under the laws of the jurisdiction of its formation, and it has the legal right,
power and authority and is qualified to conduct its business, and to execute and
deliver this Agreement and perform its obligations hereunder, (iii) the making
and performance by it of this Agreement is

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within its powers, and has been duly authorized by all necessary action on its
part, (iv) this Agreement constitutes a legal, valid, and binding act and
obligation of it, enforceable against it in accordance with its terms, subject
to bankruptcy, insolvency, reorganization and other laws affecting creditor’s
rights generally, and with regard to equitable remedies, to the discretion of
the court before which proceedings to obtain same may be pending, and (v) there
are no bankruptcy, insolvency, reorganization, receivership or other arrangement
proceedings pending or being contemplated by it.
     14.5 Integrated Transaction. This Agreement is being executed and delivered
by the Parties contemporaneous with, and as a condition precedent to, the
execution and delivery of the Ancillary Agreements by the Persons that are party
thereto. The Parties acknowledge that the execution and delivery of this
Agreement and the rights and obligations of the Parties hereto are part of an
integrated transaction being affected pursuant to the terms of this Agreement
and the Ancillary Agreements.
     14.6 Waiver. No waiver of any breach of this Agreement shall be held to be
a waiver of any other or subsequent breach.
     14.7 Rules of Construction. In construing this Agreement, the following
principles shall be followed:

  (i)   no consideration shall be given to the fact or presumption that one
Party had a greater or lesser hand in drafting this Agreement;     (ii)  
examples shall not be construed to limit, expressly or by implication, the
matter they illustrate;     (iii)   the word “includes” and its syntactical
variants mean “includes, but is not limited to” and corresponding syntactical
variant expressions;     (iv)   a defined term has its defined meaning
throughout this Agreement, regardless of whether it appears before or after the
place in this Agreement where it is defined;     (v)   the plural shall be
deemed to include the singular, and vice versa; and     (vi)   each gender shall
be deemed to include the other genders.

     14.8 No Third Party Beneficiaries. There is no third party beneficiary to
this Agreement.
     14.9 Headings. The headings and subheadings contained in this Agreement are
used solely for convenience and do not constitute a part of this

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Agreement between the Parties and shall not be used to construe or interpret the
provisions of this Agreement.
[Remainder of page intentionally left blank]

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          IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
Effective Date.

            Producer:

GASCO PRODUCTION COMPANY
      By:   /s/ W. King Grant       Name:   W. King Grant      Title:  
President and Chief Financial Officer        Gatherer:

MONARCH NATURAL GAS, LLC
      By:   /s/ C. Judson Williams       Name:   C. Judson Williams     
Title:   Chief Financial Officer     

Signature Page to Gas Gathering & Processing Agreement

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List of Exhibits and Schedules

     
Exhibit A
  - Additional Terms and Conditions.
 
   
Schedule 1
  - Description of AMI.
Schedule 2
  - Receipt Points, Well Names and Locations, and Delivery Points.
Schedule 3
  - Leases.
Schedule 4
  - Other Agreements.
Schedule 5
  - Purchase Option
Schedule 6
  - Letter Agreement Regarding Payment

Gas Gathering & Processing Agreement

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Exhibit A
ADDITIONAL TERMS AND CONDITIONS
     The following terms and conditions shall apply to the gathering of
Producer’s Gas on the Gathering System.
1. Measurement and Testing.
     (a) Receiving Transporters. The ultimate custody transfer point for
Producer’s Gas will be at the interconnection between the facilities of Gatherer
and the Receiving Transporter and therefore the volume attributable to Producer
will be an allocated volume based on Producer’s pro rata portion of all Gas
delivered to the Receiving Transporter less Producer’s allocated share of FL&U,,
Plant Shrinkage, Drip Liquids shrinkage, and any other adjustments hereunder.
     (b) Meters. Producer shall own, maintain and operate custody transfer
meters at each Receipt Point installed as of the Effective Date. Electronic data
from those meters shall be provided to Gatherer at no cost, and shall be the
basis for custody transfer at those Receipt Points. Such electronic data shall
be available to Gatherer on a real time basis, but in no event shall the
necessary production information be provided to Gatherer later than 5 Days after
the end of each Month. For meters installed after the Effective Date, Gatherer,
or its designee, shall own, maintain and operate those receipt meters, when
installed, and also the measuring stations at the Delivery Points. Either
Gatherer or Producer may install, maintain, and operate, at their own expense,
such check measuring equipment as desired and where appropriate. Such equipment
shall be installed so as not to interfere with the operation of the other
Party’s measuring equipment. At any time during the Term hereof, Gatherer shall
have the right to install its own meters at any of the Receipt Points existing
as of the Effective Date. In that event, for those Receipt Points, (i)
Gatherer’s meters will become the custody transfer meters, and (ii) the Receipt
Point location will transfer from the outlet flange to the inlet flange of the
meter run.
     (c) Practices. All meters, whether owned and operated by Producer or
Gatherer, shall be constructed, installed, and operated in accordance with the
following standards depending on the type of meters used.
     (1) Orifice Meters — In accordance with American Gas Association Report
Number 3, dated 2000 or the most recent edition as agreed to by Gatherer and
Producer. If Gas pulsation problems occur upstream of the Receipt Points or
downstream of the Delivery Points, Producer, or their designee, shall take
whatever steps necessary to mitigate such pulsation.
     (2) Positive Meters — In accordance with American National Standards
Institute B109.2, dated 2000 or the most recent edition as agreed to by Gatherer
and Producer.
     (3) Turbine Meters — In accordance with American Gas Association Report
Number 7, dated 1996 or the most recent edition as agreed to by Gatherer and
Producer.
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     (4) Electronic Transducers and Flow Computers (solar and otherwise) — in
accordance with the applicable American Gas Association standards, including but
not limited to American Gas Association Measurement Committee Report Nos. 3, 5,
6 and 7 and any subsequent amendments, revisions, or modification thereof.
     (5) Ultrasonic Meters — In accordance with American Gas Association Report
Number 9, dated 2003 or the most recent edition as agreed to by Gatherer and
Producer.
Notwithstanding anything contained in this Section 1(c) to the contrary, neither
Party shall be required to replace or make any alterations to its measuring
equipment as a result of any subsequent amendments, revisions, or modifications
of the American Gas Association Reports cited in Subparagraphs (1) through
(5) of this Section 1(c), unless the Parties mutually agree to such replacement
or alteration.
     (d) Testing. Either Party shall give reasonable Notice to the other Party
of any cleaning, changing, repairing, inspecting, testing, calibrating, or
adjusting of its receipt meters or the measuring equipment at the Delivery
Points to permit both Parties to have a representative present. The official
records from the measuring equipment shall remain the property of Gatherer. Upon
request, Gatherer will submit its records, together with calculations therefrom,
to Producer for inspection and verification, subject to return to Gatherer or
its designee within 30 Days after receipt thereof.
     (e) Accuracy of Meters. All meters shall be verified (and calibrated) by
its owner at the following intervals: (i) if the deliveries of Gas through the
meter average less than 100 Mcf/d, at least once each Year, (ii) if the
deliveries of Gas through the meter average between 100 Mcf/d and 500 Mcf/d, at
least once every 6 Months, (iii) if the deliveries of Gas through the meter
average between 500 Mcf/d and 5,000 Mcf/d, at least once every 3 Months, or
(iv) if the deliveries of Gas through the meter average more than 5,000 Mcf/d,
at least once each Month. If, upon any test, the measuring equipment is found to
be inaccurate by 2% or less, previous readings of such equipment will be
considered correct in computing the deliveries of Producer’s Gas hereunder, but
such equipment shall immediately be adjusted to record accurately. If, upon any
test, the measuring equipment is found to be inaccurate by more than 2% of the
average flow rate since the last test, then any previous recordings of such
equipment shall be corrected to zero (0) error for any period which is known
definitely or agreed upon, using the procedure set forth in Section 1(f). If
such period is not known or agreed upon, such correction shall be made for a
period covering 1/2 of the time elapsed since the date of the latest test, but
not to exceed 16 Days when the equipment is tested every Month and not to exceed
45 Days when the equipment is tested every 3 Months. If either Party desires a
special test of any measuring equipment, at least 72 hours advance Notice shall
be given to the other Party, and both Parties shall cooperate to secure a prompt
test of the accuracy of such equipment. If the measuring equipment so tested is
found to be inaccurate by 2% or less, the testing Party shall have the right to
bill the requesting Party for the costs incurred due to such special test,
including any labor and transportation cost, and Producer shall pay such costs
promptly upon invoice thereof.
     (f) Adjustments. If, for any reason, any measurement equipment is out of
adjustment, out of service, or out of repair and the total calculated hourly
flow rate through each meter run is found to be in error by an amount of the
magnitude described in Section 1(e), the
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total quantity of Producer’s Gas delivered shall be redetermined in accordance
with the first of the following methods which is feasible:
     (1) by using the registration of any check meters, if installed and
accurately registering (subject to testing as described in Section 1(e)), or
     (2) where parallel multiple meter runs exist, by calculation using the
registration of such parallel meter runs; provided that they are measuring
Producer’s Gas from upstream headers in common with the faulty metering
equipment, are not controlled by separate regulators, and are accurately
registering; or
     (3) by correcting the error by straightforward application of a correcting
factor to the quantities recorded for the period (if the net percentage of error
is ascertainable by calibration, tests, or mathematical calculation); or
     (4) by estimating the quantity, based upon deliveries made during periods
of similar conditions when the meter was registering accurately.
     (g) Meter Records Retention. Gatherer shall retain and preserve for a
period of at least 2 Years all measurement results, test data and other similar
records.
2. Measurement Specifications.
     (a) Units. The unit of volume for measurement shall be 1 cubic foot. Such
measured volumes shall be multiplied by their Gross Heating Value per cubic foot
and divided by 1,000,000 to determine MMBtu’s delivered hereunder.
     (b) Practices. Computations for Gas measurement shall be made in accordance
with the following depending on the type of meters used:
     (1) Orifice Meters — In accordance with American Gas Association Report
Number 3, dated 2000 or the most recent edition as agreed to by Gatherer and
Producer.
     (2) Positive Meters — In accordance with American National Standards
Institute B109.2, dated 2000 or the most recent edition as agreed to by Gatherer
and Producer.
     (3) Turbine Meters — In accordance with American Gas Association Report
Number 7, dated 1996 or the most recent edition as agreed to by Gatherer and
Producer.
     (4) Electronic Transducers and Flow Computers (solar and otherwise) — in
accordance with the applicable American Gas Association standards, including but
not limited to American Gas Association Measurement Committee Report Nos. 3, 5,
6 and 7 and any subsequent amendments, revisions, or modification thereof.
     (5) Ultrasonic Meters — In accordance with American Gas Association Report
Number 9, dated 2003 or the most recent edition as agreed to by Gatherer and
Producer.
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     (c) Temperature. The temperature of Producer’s Gas typically shall be
determined by a temperature measurement device installed as part of the selected
meter and flow computer combination, or such other means of recording
temperature as may be mutually agreed upon by the Parties. The temperature so
recorded, obtained while Producer’s Gas is being delivered, shall be the
applicable flowing Gas temperature for purposes of calculating the actual gas
flow.
     (d) Product Composition of Producer’s Gas. Gatherer shall obtain a
continuous flow monthly composite sample or a monthly spot sample of the Gas
delivered by Producer hereunder while the Gas is being produced under normal
operating conditions. Analysis of such sample shall be made by Gatherer, at
Gatherer’s election, by gas chromatography or other industry approved method,
and the results reported as mol percent along with other composition parameters.
     (e) Pressure. For purposes of measurement and meter calibration, the
atmospheric pressure for each of the Receipt Points and Delivery Points shall be
assumed to be the pressure value determined by Gatherer, or its designee, for
the county elevation in which such point is located pursuant to generally
accepted industry practices irrespective of the actual atmospheric pressure at
such points from time to time. For the purposes herein, such atmospheric
pressure will be assumed to be 14.65 pounds per square inch absolute.
     (f) Gross Heating Value, Specific Gravity, and Compressibility. The Gross
Heating Value, Specific Gravity, and Compressibility of the Gas delivered at the
Receipt Points and Delivery Points shall be determined from compositional
analysis as described in Section 2(d) above as outlined in Gas Processors
Association Standard 2172 Calculation of Gross Heating Value, Relative Density,
and Compressibility of Natural Gas Mixtures from Compositional Analysis.
     (g) Other Contaminants. Other tests to determine water content, sulfur,
hydrogen sulfide, inert gases, and other impurities in Producer’s Gas shall be
conducted whenever requested by either Party and shall be conducted in
accordance with standard industry testing procedures.
3. Quality Specifications.
     (a) Producer’s Gas. Producer’s Gas delivered at each Receipt Point shall
meet the quality specifications imposed by the Receiving Transporter, but in no
event shall exceed the specifications as follows (except for hydrocarbon
dewpoint specifications for Producer’s Gas connected to the Plant):
     (1) Water: No free water.
     (2) Hydrogen Sulfide: Producer’s Gas shall not contain more than 1/4 grain
of hydrogen sulfide per 100 cubic feet of Gas at the Receipt Points, as
determined by quantitative tests. Gatherer is not generally waiving the hydrogen
sulfide specification; however, the Parties acknowledge that: 1) Producer and
Gatherer have existing hydrogen sulfide treating capabilities on their
respective systems, and 2) Producer’s Gas may occasionally and from time-to-time
exceed this specification at the Receipt Point. Gatherer agrees to operate and
maintain the existing treating facilities on its Gathering
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System, and to cooperate with the downstream transporter, to minimize the affect
of hydrogen sulfide.
     (3) Total Sulfur: Producer’s Gas shall not contain more than 5 grains of
total sulfur per 100 cubic feet of Gas at the Receipt Points.
     (4) Temperature: Producer’s Gas shall not have a temperature less than 40ºF
or more than 120 ºF.
     (5) Carbon Dioxide: Producer’s Gas shall not contain more than 2% by volume
of carbon dioxide.
     (6) Oxygen: Producer’s Gas shall contain no oxygen.
     (7) Nitrogen: Producer’s Gas shall not contain more than 2% by volume of
nitrogen.
     (8) Total Inert Gas: Producer’s Gas shall not contain more than 3% by
volume of total inert gases.
     (9) Objectionable Liquids and Solids and Dilution: Producer’s Gas shall be
free of all objectionable liquids and solids, including any free liquids at the
Receipt Point, and shall not contain any hydrocarbons which might condense to
free liquids in the pipeline under normal pipeline conditions and shall be
commercially free from dust, gums, gum-forming constituents, and other liquids
or solid matter which might become separated from Producer’s Gas in the course
of transportation through pipelines.
     (10) Gross Heating Value: Producer’s Gas shall not have a Gross Heating
Value less than 950 Btu’s per cubic foot of Gas.
     (b) Change in Receiving Transporter’s Specifications. Notwithstanding the
Gas specifications above, if a Receiving Transporter notifies Gatherer or
Producer of different or additional quality specifications required at the
Delivery Points and different from those outlined in Section 3(a) or (b) above,
Gatherer will notify Producer of any such different or additional specifications
as soon as practicable after being notified of such specifications. Such revised
specifications will be considered as the quality specifications for Producer’s
Gas under this Agreement for as long as required by the Receiving Transporter.
     (c) Failure to Meet Specifications. If Producer’s Gas delivered hereunder
fails to meet any of the quality specifications stated in Section 3(a), (b) or
(c) above, Gatherer (i) may install equipment, at Producer’s expense, on the
Gathering System to treat such nonconforming Producer’s Gas or (ii) may refuse
to accept such Producer’s Gas for so long as Producer is unable to deliver
Producer’s Gas conforming to such specifications. If Gatherer, in its sole
discretion, accepts Producer’s Gas that fails to meet any of the quality
specifications stated above, Gatherer shall not be deemed to have waived
Gatherer’s right to refuse to accept non-specification Gas at a subsequent time.
In addition, if Producer continues to flow any Gas that fails to meet the
quality specifications under this Section 3, Producer shall be responsible for
(i) any fees charged
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by any Receiving Transporter and (ii) any costs, expenses, damages incurred by
Gatherer or caused by such non-specification Producer’s Gas.
4. Easements.
     (a) Access. To the extent that Producer may contractually or lawfully do so
under its leasehold interests and other property rights in the Leases, Producer
hereby grants, convey, assign, and transfer to Gatherer a right of way and
easement across the Leases, and across adjoining lands in which Producer may
have an interest, for the purposes of installing, using, inspecting, repairing,
operating, replacing, and removing Gatherer’s facilities (including installation
of new custody transfer meters and other equipment) used or useful in the
performance of this Agreement. Any property of Gatherer placed in or on any of
such land shall remain the property of Gatherer, subject to removal by Gatherer
when necessary or desirable, in Gatherer’s sole judgment, or upon the expiration
or termination of this Agreement. Gatherer shall have a reasonable time after
the expiration or termination of this Agreement to remove its property.
     Gatherer and Producer shall cooperate to establish separate rights-of-way
in Gatherer’s name for its facilities.
     (b) Further Assurances. Producer shall execute and deliver such additional
instruments and other documents, and shall take such further actions as may be
reasonably necessary or appropriate, to effectuate, carry out, and comply with
the terms of this Section 4.
5. Uneconomic Segments. At any time, Gatherer shall have the right to declare,
acting reasonably and in good faith, that the operation of all or part of any
segment or segments of the Gathering System has become uneconomic by giving
Notice to Producer. Upon receipt of such Notice by Producer, Gatherer and
Producer shall negotiate in good faith to reach agreement on additional
gathering fees to be paid by Producer for Producer’s Gas gathered on such
segment or segments that would cause the operation of that segment or segments
of the Gathering System to become economic to Gatherer. If the Parties fail to
reach agreement on such additional gathering fees within a reasonable period of
time, then Gatherer will have the right, upon no less than 90 Days advance
Notice to Producer, to discontinue gathering Producer’s Gas on such segment or
segments of the Gathering System. As to such discontinued services on those
segment or segments of the Gathering System, there shall be no further
obligation to Producer under this Agreement, and that portion of Producer’s Gas
so affected shall be released. To the extent that any of Producer’s Gas is so
released, there shall be a corresponding proportional decrease in the Quarterly
Minimum Volume obligation for the remainder of the Term.
Gas Gathering & Processing Agreement