FOURTH AMENDMENT

﻿

TO

GAS SALE AND PURCHASE AGREEMENT

﻿

BETWEEN

﻿

HILCORP ALASKA, LLC

﻿

AND

﻿

CHUGACH ELECTRIC ASSOCIATION, INC.

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CEA-13-AMENDED

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Effective Date: December 31, 2019

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Delivery Commencement Date: April 1, 2020

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Termination Date: March 31, 2028

 

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TABLE OF CONTENTS

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SECTION

 

PAGE

PREAMBLE

 

1 

RECITALS

 

1 

AGREEMENT

 

1 

1.

DEFINITIONS & INTERPRETATIONS

 

1 

2.

GAS SALES

 

2 

7.

SALES PRICE; COST ALLOCATION; STATE’S ROYALTY SHARE

 

7 

15.

MISCELLANEOUS

 

7 

Exhibit B

 

9 

SIGNATURES

 

9 

﻿

﻿

 

Hilcorp Alaska, LLC, and Chugach Electric Association, Inc.

Fourth Amendment to GSPA CEA-13 effective December 31, 2019

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FOURTH AMENDMENT TO GAS SALE AND PURCHASE AGREEMENT

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This FOURTH AMENDMENT TO GAS SALE AND PURCHASE AGREEMENT (“Fourth Amendment”) is
made by Hilcorp Alaska, LLC, a Delaware limited liability company (“Seller”),
with offices located at 3800 Centerpoint Drive, Suite 100, Anchorage, Alaska
99503-5826, and Chugach Electric Association, Inc., an Alaska nonprofit electric
cooperative corporation (“Buyer”), with offices located at 5601 Electron Drive,
Anchorage, Alaska 99518-1074, collectively referred to as “Parties” and
individually as “Party,” dated as of December 31, 2019 (the “Effective Date”).

﻿

RECITALS

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A.

The Parties have entered into that certain Gas Sale and Purchase Agreement
(“Agreement’') dated as of July 1, 2013, and numbered for the Parties’
convenience as CEA-13. Buyer filed the Agreement with the RCA on July 12, 2013,
in Docket TA377-8. The Agreement was approved by the RCA by Letter Order No.
L1300429 dated September 10, 2013, in Docket TA377-8.

﻿

B.

The Parties have amended the Agreement three times. The First Amendment to the
Gas Sale and Purchase Agreement (“First Amendment”') was dated as of August 1,
2014. Buyer filed the First Amendment with the RCA on August 27, 2014, Tariff
Advise No. 391-8. The First Amendment was approved by the RCA by Letter Order
No. Ll400406 dated September 15, 2014. The Second Amendment to the Gas Sale and
Purchase Agreement (“Second Amendment”) was dated as of May 1, 2015. Buyer filed
the Second Amendment with the RCA on March 11, 2015, in Tariff Advise No. 401-8.
The Second Amendment was approved by the RCA by Letter Order No. Ll500220 dated
April 20, 2015. The Third Amendment to the Gas Sale and Purchase Agreement
(“Third Amendment”) was dated as of August 1, 2015. Buyer filed the Third
Amendment with the RCA on July 23, 2015, in Tariff Advice No. 408-8. The Third
Amendment was approved by the RCA by Letter Order No. L1500442 dated September
8, 2015.

﻿

C.

The Parties desire to provide for additional gas purchases and sales under the
Agreement in accordance with the terms of this Fourth Amendment.

﻿

﻿

AGREEMENT

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1.

DEFINITIONS & INTERPRETATION

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Section 1.1 is amended to modify the following definitions:

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“Monthly Additional Option Gas”  is defined in Section 2.3(A)(6).

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“Contract Year” is defined in the table in Section 2.3(A)(1).

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Fourth Amendment to GSPA CEA-13 effective December 31, 2019

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“Nomination Cycle” means four-hour segments throughout each 24-hour day (six
such segments), beginning at midnight (0:00) and ending at 23:59.

﻿

“Termination Date” means March 31, 2028.

﻿

(b)Section 1.1 is amended to add the following definition:

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“Scheduled CINGSA Outage” means a scheduled period during which CINGSA is unable
to receive and inject or withdraw and deliver Gas, which are anticipated to be
two periods each year during the Term, occurring for one week in each of the
Spring and the Fall of each year.

﻿

“Scheduled CINGSA Outage Adjusted Maximum Rate” is defined in Section 2.10 of
this Fourth Amendment.

﻿

2.

GAS SALES

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(a)

Section 2.3(A)(1) for Contract Years of Firm Gas sales is hereby deleted and
replaced in its entirety as follows:

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(1)

The Annual Contract Quantities under this Agreement are as follows:

﻿

﻿

 

 

 

 

 

 

Contract Year

Dates

 

Annual Contract

Quantity

(MMcf)

 

1

01/01/15 through 12/31/15

2,427.25

2

01/01/16 through 12/31/16

5,215.50

3

01/01/17 through 12/31/17

7,975.25

4

01/01/18 through 03/31/18

2,009.25

5

04/01/18 through 3/31/19

6,935

6

04/01/19 through 03/31/20

6,259

7

04/01/20 through 03/31/21

5,840

8

04/01/21 through 03/31/22

5,840

9

04/01/22 through 03/31/23

5,840

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10

04/01/23 through 03/31/24

3,660

11

04/01/24 through 03/31/25

3,650

12

04/01/25 through 03/31/26

3,650

13

04/01/26 through 03/31/27

3,650

14

04/01/27 through 03/31/28

3,660

﻿

(b)

Section 2.3(A)(4) of the Third Amendment is deleted in its entirety and the
following is inserted in its place:

﻿

(4)

Without limiting Buyer’s rights pursuant to Sections 2.3(A)(2) or 2.3(A)(3),
Buyer may, by notice per Section 13.1 to Seller on or before October 1, 2021,
increase the Average Daily Contract Quantity for each of Contract Years 10
through 14 by up to an additional 5.0 MMcfpd in each such Contract Year.

﻿

If Buyer provides notice as set forth in this Section 2.3(A)(4), then the
Average Daily Contract Quantity, the Monthly Contract Quantities and the Annual
Contract Quantity in the applicable Contract Year(s) shall be amended as
provided in such notice.

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(c)Section 2.3(A)(5) is deleted in its entirety and the following is inserted in
its place:

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(5)Without limiting Buyer’s rights pursuant to Sections 2.3(A)(2), 2.3(A)(3),
2.3(A)(4) or 2.3(E), with respect to each of Contract Year 6 through Contract
Year 14, by notice to Seller from time-to-time, Buyer may purchase up to 2.0
MMcfpd of Gas on a Firm basis and at the then-applicable Base Load Gas Price,
such purchase to be effective for the Day(s) for which such notice is given, and
which purchase shall not increase, decrease or otherwise affect the applicable
Annual Contract Quantity, Monthly Contract Quantity or Average Daily Contract
Quantity applicable to the Contract Year, Month or Day during which such
purchase is made. To purchase up to an additional 2.0 MMcfpd pursuant to this
Section 2.3(A)(5), (i) Buyer must notify Seller no later than three (3) Days
prior to the Day such Gas is first to be delivered and (ii) such purchase must
be for no fewer than seven (7) consecutive Days.

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(d)Section 2.3(A) is amended by adding a new subsection (6) as follows:

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(6)Without limiting Buyer’s rights pursuant to Sections 2.3(A)(2), 2.3(A)(3),
2.3(A)(4), 2.3(A)(5) or 2.3(E), with respect to each of

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Contract Year 7 through Contract Year 14, by notice to Seller from time-to-time,
Buyer may purchase up to 150 MMcf of Gas at the then-applicable Base Load Gas
Price to be sold and purchased over a monthly period (“Monthly Additional
Optional Gas”). Purchases of Monthly Additional Optional Gas shall: (i) require
fourteen (14) Days prior notice to Seller; (ii) be for a volume not less than 35
MMcf per month; (iii) be delivered during the applicable Month at a schedule
mutually agreed upon by the Parties; (iv) be Firm for sales and purchases made
during the months of April through November and be interruptible for sales and
purchases made during the months of December through March; and (v) shall not
increase, decrease or otherwise affect the applicable Annual Contract Quantity,
Monthly Contract Quantity or Average Daily Contract Quantity applicable to the
Contract Year, Month or Day during which such purchase is made. For clarity,
Seller may request the flexibility to deliver this gas at various rates for each
Nomination Cycle throughout each day, depending upon operational issues for each
day.

﻿

(c)

Section 2.3(B)  for the Average Daily Contract Quantity for the additional
Contract Years is hereby deleted and replaced in its entirety as follows:

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(B)Average Daily Contract Quantity:  The Average Daily Contract Quantity during
each Contract Year shall be as set forth in the following chart:

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Contract Year

Dates

Average Daily Contract Quantity

(MMcfd)

 

1

01/01/15 through 12/31/15

6.650

2

01/01/16 through 12/31/16

14.250

3

01/01/17 through 12/31/17

21.850

4

01/01/18 through 03/31/18

22.325

5

04/01/18 through 3/31/19

19.000

6

04/01/19 through 03/31/20

17.100

7

04/01/20 through 03/31/21

16.000

8

04/01/21 through 03/31/22

16.000

9

04/01/22 through 03/31/23

16.000

10

04/01/23 through 03/31/24

10.000

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﻿

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Contract Year

Dates

Average Daily Contract Quantity

(MMcfd)

 

11

04/01/24 through 03/31/25

10.000

12

04/01/25 through 03/31/26

10.000

13

04/01/26 through 03/31/27

10.000

14

04/01/27 through 03/31/28

10.000

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(f)Section 2.3(E) is deleted in its entirety and the following is inserted in
its place:

(E)Should Buyer desire to purchase Gas (other than such higher volumes as Buyer
may request on a Day-by-Day basis under Section 2.3(C)(1)(b) and other than
Emergency Load Gas under Section 2.3(D)) in addition to the Annual Contract
Quantity, Buyer in its sole discretion may submit a request to Seller for
Discretionary Gas and Seller in its sole discretion may agree to provide
Discretionary Gas. An agreement to purchase and sell Discretionary Gas shall be
confirmed by the Parties using a form substantially as set forth in Exhibit D.
All such Discretionary Gas (i) may be Firm or interruptible, as mutually agreed
by the Parties, (ii) shall be sold at a price not to exceed the Base Load Gas
Price applicable at the time of delivery, (iii) shall be considered sales in
addition to other Gas sold under this Agreement, (iv) shall not be included in
the Annual Contract Quantity, the Average Daily Contract Quantity, the Daily
Contract Quantity, or the Monthly Contract Quantity, and (v) shall be included
in the monthly calculation of the amount due from Buyer to Seller as provided in
Section 7.1(B)(4), and (vi) shall be shown as a separate line item on the
monthly invoice as provided in Section 8.1(A).

﻿

(g)Section 2.8 is deleted in its entirety and the following is inserted in its
place:

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2.8Gas Reserves Opinion and Development Plans.

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(A)Annually on or before May 31, Seller shall deliver to Buyer an opinion letter
from the Engineer regarding Seller’s Gas Reserves. The Engineer’s fees and
expenses shall be paid by Seller. The letter must be based on sound geologic,
economic, and other data, and must be consistent with sound engineering
principles. The letter must conclude that Seller’s Gas Reserves

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are sufficient to meet Seller’s obligations to deliver Annual Contract Quantity
each Year during the then-remaining Term, assuming reasonable and prudent
operations.

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(B)If requested by Buyer, Seller shall make an oral presentation to Buyer
outlining Seller’s Gas Reserves development plans in an annual meeting between
the Parties which shall take place annually on or before June 30. Buyer will
take reasonable steps to preserve the confidentiality of all information
received by Buyer from Seller or disclosed by Seller to Buyer under this Section
2.8.

﻿

(h)Section 2 is amended by adding a new Section 2.10 to read as follows:

﻿

2.10Scheduled CINGSA Outages.

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(A)

During any Scheduled CINGSA Outage, Seller and Buyer shall work together to
balance the receipt and deliveries of Gas to (i) maximize Buyer’s ability to
purchase and receive Gas hereunder and (ii) minimize changes in the Continuous
Rates between Days during such Scheduled CINGSA Outage. Without limiting the
generality of the foregoing, during any Scheduled CINGSA Outage, Seller shall
sell and deliver to Buyer, and Buyer shall purchase and receive from Seller,
load-following Gas on a Firm basis, subject to 2.10(B).

﻿

(B)If Buyer’s load-following Gas purchases due to a Scheduled CINGSA Outage
cause its purchases on a Day to exceed the sum of (i) the Average Daily Contract
Quantity for such Day plus (ii) up to 7.0 MMcfpd (for such Day, the “Scheduled
CINGSA Outage Adjusted Maximum Rate”), then (a) for all Gas up to the Scheduled
CINGSA Outage Maximum Rate, deliveries shall be made on a Firm basis and (b) for
all Gas in excess of the Scheduled CINGSA Outage Adjusted Maximum Rate,
deliveries shall be made on an interruptible basis.

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(C)If Buyer’s load-following Gas purchases due to a Scheduled CINGSA Outage
cause its purchases on a Day to be less than the Average Daily Contract Quantity
for such Day, then the Parties shall use commercially reasonable efforts to
reschedule purchases of Gas intended but unable to be made during the applicable
Scheduled CINGSA Outage to occur within the applicable month and in any event
within thirty (30) Days after the end of such Scheduled CINGSA Outage, in each
case at a rate that each Party is capable of delivering and receiving, as
applicable.

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7.SALES PRICE; COST ALLOCATION; STATE’S ROYALTY SHARE.

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(a)Section 7.1(A) for the Sales Price for Contract Years is deleted in its
entirety and replaced as follows:

﻿

﻿

 

 

 

 

 

 

 

 

 

 

 

 

 

Contract

Year

 

Dates

Base Load

Gas Price

(Dollars per

Mcf)

 

Swing Load

Gas Price

(Dollars per

Mcf)

 

Emergency

Load Gas Price

(Dollars per

Mcf)

1

01/01/15-12/31/15

7.13

8.91

10.70

2

01/01/16-12/31/16

7.42

9.28

11.13

3

01/01/17-12/31/17

7.72

9.65

11.58

4

01/01/18-03/31/18

8.03

10.04

12.04

5

04/01/18-03/31/19

7.35

9.19

11.02

6

04/01/19-03/31/20

7.50

9.37

11.25

7

04/01/20-03/31/21

7.49

7.49

7.49

8

04/01/21-03/31/22

7.55

7.55

7.55

9

04/01/22-03/31/23

7.61

7.61

7.61

10

04/01/23-03/31/24

7.69

7.69

7.69

11

04/01/24-03/31/25

7.78

7.78

7.78

12

04/01/25-03/31/26

7.86

7.86

7.86

13

04/01/26-03/31/27

7.95

7.95

7.95

14

04/01/27-03/31/28

8.04

8.04

8.04

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15.MISCELLANEOUS.

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(a)Agreement Remains in Force: Except as otherwise provided in this Fourth
Amendment, (i) the terms and conditions of the Agreement remain in full force
and effect, and (ii) the definitions set forth in the Agreement apply to this
Fourth Amendment.

﻿

(b)Approvals:  It is a condition precedent to the effectiveness of this Fourth
Amendment that it has received the approval of Buyer’s Board of Directors
(“Board Approval”) and RCA Approval (as defined below), as follows:

﻿

(i)Buyer intends to obtain Board Approval by December 18, 2019; and

﻿

(ii)Buyer will use commercially reasonable efforts to obtain RCA Approval of
this Fourth Amendment. Seller shall have no responsibility to take any action or
incur any cost to obtain regulatory approval of this Fourth Amendment. If the
RCA issues an order that approves (conditionally or otherwise) this Fourth
Amendment and imposes terms and conditions or modifications unacceptable to
Buyer to Seller, each as determined in its sole and absolute discretion, Buyer
or Seller may terminate this Fourth Amendment upon written notice to the other
Party, such termination to take effect on the date outlined in any such written
notice of termination. Buyer intended to submit

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a filing requesting RCA Approval by December 31, 2019. If RCA Approval has not
been obtained by the date that is six (6) months from the date that Buyer
submits such filing, either Party may terminate this Fourth Amendment upon
notice to the other Party, such termination to take effect on the date outlined
in any such written notice of termination.

﻿

“RCA Approval” will be deemed to have occurred on the date that an RCA order
approving the Fourth Amendment without conditions or modifications unacceptable
to the Parties becomes final and is not subject to further reconsideration or
appeal or on such other date as may be mutually agreed by the Parties in
writing.

﻿

(c)Valuation of State’s Royalty Share.  Pursuant to AS 38.05.180(aa) and (bb),
within thirty (30) Days after the execution of this Fourth Amendment, Seller
shall submit a written request to the Department of Natural Resources to enter
into an agreement with Seller to accept the price for the Gas established in
this Agreement for each of Contract Year 10 through Contract Year 14 as the
value of the State of Alaska's royalty share of Gas production sold by Seller in
each of Contract Year 10 through Contract Year 14. The Parties shall use
reasonable efforts and shall cooperate with one another and the State in seeking
the State's approval of the request.

﻿

(d)Confidentiality: Each Party will keep this Fourth Amendment and any
information, documents or materials produced for used in relation to this Fourth
Amendment (col1ectively, “Transaction Information”') confidential and will not
disclose such Transaction Information to any third party, except (1) to
contractors, subcontractors and consultants and their respective employees,
servants or agents actively engaged in the preparation for the performance, or
the actual performance, of the Fourth Amendment; (2) to the auditors, legal
advisers, insurers and affiliates of that Party, to whom this confidentiality
obligation will extend,  (3) where the Party is under a legal or regulatory
obligation to make such disclosure (including, with respect to Buyer, in
relation to obtaining RCA Approval, and, with respect to Seller, in relation to
obtaining the agreement of Department of Natural Resources regarding  the
valuation of the State's royalty share),  but limited to the extent of that
legal obligation, or (4) with the prior written consent of the other Party. 
“Transaction Information” shall not include any information that is in the
public domain, or which hereafter becomes in the public domain through no fault
of a Party, as (without limitation) through a filing by Buyer with the RCA.

﻿

(e)Counterparts: This Fourth Amendment may be executed by the Parties in any
number of counterparts and on separate counterparts, including electronic
transmittals, each of which when so executed will be deemed an original, but all
such counterparts, when taken together, will constitute but one and the same
Fourth Amendment. In the event one Party executes the Fourth Amendment, and the
other Party does not execute the Fourth Amendment within ten (10) Days of the
first Party's execution, the execution of the Fourth Amendment by the first
Party will be deemed null and void.

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Hilcorp Alaska, LLC, and Chugach Electric Association, Inc.

Fourth Amendment to GSPA CEA-13 effective December 31, 2019

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Exhibit B.Delivery Points and Delivery Point Meters.

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Exhibit B of the Agreement is hereby amended to add the following Delivery
Point:

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11.Kenai Beluga Pipeline Title Transfer

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[Signatures on following page]

Hilcorp Alaska, LLC, and Chugach Electric Association, Inc.

Fourth Amendment to GSPA CEA-13 effective December 31, 2019

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IN WITNESS WHEREOF, the Parties have executed this Fourth Amendment effective as
of the date set forth in the preamble.

﻿

﻿

 

 

HILCORP ALASKA, LLC

 

CHUGACH ELECTRIC ASSOCIATION, INC.

Signature:

 

Signature:

/s/ Greg Lalicker

 

/s/ Brian J. Hickey

Name: Greg Lalicker

 

Name: Brian J. Hickey

Title:   CEO

 

Title:  COO

Date:    12/30/19

 

Date:   12-20-19

﻿

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