Exhibit 10.5

EXECUTION VERSION

GAS GATHERING AND COMPRESSION AGREEMENT

BY AND BETWEEN

RICE DRILLING B LLC,

AND

RICE MIDSTREAM PARTNERS LP

AND

ALPHA SHALE RESOURCES LP

(solely for the purpose of agreeing to its obligations under Section 2.5)

DATED AS OF

DECEMBER 22, 2014

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TABLE OF CONTENTS

 

ARTICLE 1

 

DEFINITIONS

     1   

ARTICLE 2

 

PRODUCER COMMITMENTS

     7   

Section 2.1

 

Producer’s Dedication

     7   

Section 2.2

 

Conflicting Dedications

     7   

Section 2.3

 

Producer’s Reservations

     7   

Section 2.4

 

Covenant Running with the Land

     8   

Section 2.5

 

Commitment of Alpha Shale; Commitment of Other Rice Subsidiaries

     8   

Section 2.6

 

Priority of Dedicated Gas

     9   

ARTICLE 3

 

SERVICES; GATHERING SYSTEM EXPANSION AND CONNECTION OF WELLS

     9   

Section 3.1

 

Gatherer Service Commitment

     9   

Section 3.2

 

Development Plan; Gathering System Plan; Exchange and Review of Information

     9   

Section 3.3

 

Expansion of Gathering System; Connection of Wells; Delivery Points

     11   

Section 3.4

 

Determination of Maximum Daily Quantity

     13   

Section 3.5

 

Compression

     14   

Section 3.6

 

High Pressure Services

     14   

Section 3.7

 

Gas Removed for Lease Operations

     14   

Section 3.8

 

Right of Way and Access

     15   

Section 3.9

 

Cooperation

     15   

ARTICLE 4

 

TERM

     16   

Section 4.1

 

Term

     16   

ARTICLE 5

 

FEES AND CONSIDERATION

     16   

Section 5.1

 

Fees

     16   

ARTICLE 6

 

ALLOCATIONS

     17   

Section 6.1

 

Allocation of Lost and Unaccounted For Gas

     17   

Section 6.2

 

Allocation of Fuel

     17   

Section 6.3

 

Allocation of Pipeline Drip Recovered from the Gathering System

     17   

ARTICLE 7

 

CERTAIN RIGHTS AND OBLIGATIONS OF PARTIES

     18   

Section 7.1

 

Operational Control of Gatherer’s Facilities

     18   

Section 7.2

 

Maintenance

     18   

Section 7.3

 

Firm Capacity Gas; Capacity Allocations on the Gathering System

     18   

Section 7.4

 

Arrangements After Redelivery

     19   

Section 7.5

 

Line Pack

     19   

ARTICLE 8

 

PRESSURES AT RECEIPT POINTS AND DELIVERY POINTS

     19   

Section 8.1

 

Pressures at Receipt Points

     19   

Section 8.2

 

Pressures at Delivery Points

     19   

Section 8.3

 

Producer Facilities

     19   

 

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ARTICLE 9

 

NOMINATION AND BALANCING

     20   

Section 9.1

 

Gatherer Notifications

     20   

Section 9.2

 

Nominations

     20   

Section 9.3

 

Balancing

     20   

ARTICLE 10

 

QUALITY

     20   

Section 10.1

 

Receipt Point Gas Quality Specifications

     20   

Section 10.2

 

Non-Conforming Gas

     21   

Section 10.3

 

Delivery Point Gas Quality Specifications

     21   

Section 10.4

 

Greenhouse Gas Emissions

     21   

ARTICLE 11

 

MEASUREMENT EQUIPMENT AND PROCEDURES

     22   

Section 11.1

 

Equipment

     22   

Section 11.2

 

Gas Measurement Standards

     22   

Section 11.3

 

Gas Measurement

     22   

Section 11.4

 

Notice of Measurement Facilities Inspection and Calibration

     23   

Section 11.5

 

Measurement Accuracy Verification

     24   

Section 11.6

 

Special Tests

     24   

Section 11.7

 

Metered Flow Rates in Error

     24   

Section 11.8

 

Record Retention

     25   

Section 11.9

 

Access

     25   

ARTICLE 12

 

NOTICES

     25   

Section 12.1

 

Notices

     25   

ARTICLE 13

 

PAYMENTS

     27   

Section 13.1

 

Invoices

     27   

Section 13.2

 

Right to Suspend on Failure to Pay

     27   

Section 13.3

 

Audit Rights

     27   

Section 13.4

 

Payment Disputes

     27   

Section 13.5

 

Interest on Late Payments

     27   

Section 13.6

 

Excused Performance

     28   

ARTICLE 14

 

FORCE MAJEURE

     28   

Section 14.1

 

Suspension of Obligations

     28   

Section 14.2

 

Definition of Force Majeure

     28   

Section 14.3

 

Settlement of Strikes and Lockouts

     29   

Section 14.4

 

Payments for Gas Delivered

     29   

ARTICLE 15

 

INDEMNIFICATION

     29   

Section 15.1

 

Gatherer

     29   

Section 15.2

 

Producer

     29   

ARTICLE 16

 

CUSTODY AND TITLE

     29   

Section 16.1

 

Custody

     29   

Section 16.2

 

Producer Warranty

     29   

Section 16.3

 

Title

     30   

 

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ARTICLE 17

 

TAXES; ROYALTIES

     30   

Section 17.1

 

Taxes

     30   

Section 17.2

 

Royalties

     30   

ARTICLE 18

 

MISCELLANEOUS

     31   

Section 18.1

 

Rights

     31   

Section 18.2

 

Applicable Laws

     31   

Section 18.3

 

Governing Law; Jurisdiction

     31   

Section 18.4

 

Successors and Assigns

     32   

Section 18.5

 

Severability

     33   

Section 18.6

 

Confidentiality

     33   

Section 18.7

 

Entire Agreement, Amendments and Waiver

     34   

Section 18.8

 

Limitation of Liability

     34   

Section 18.9

 

Headings

     35   

Section 18.10

 

Rights and Remedies

     35   

Section 18.11

 

No Partnership

     35   

Section 18.12

 

Rules of Construction

     35   

Section 18.13

 

No Third Party Beneficiaries

     35   

Section 18.14

 

Further Assurances

     35   

Section 18.15

 

Counterpart Execution

     36   

Section 18.16

 

Memorandum of Agreement

     36   

 

Exhibit A    Champion Acreage Exhibit B    Delivery Points Exhibit C   
Gathering System Exhibit D    Conflicting Dedications Exhibit E    Form of
Connection Notice Exhibit F    Memorandum of Agreement

 

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GAS GATHERING AND COMPRESSION AGREEMENT

This Gas Gathering and Compression Agreement (this “Agreement”), dated as of
December 22, 2014 (the “Effective Date”), is by and between RICE DRILLING B LLC,
a Delaware limited liability company (“Producer”), and RICE MIDSTREAM PARTNERS
LP, a Delaware limited partnership (“Gatherer”). Producer and Gatherer may be
referred to herein individually as a “Party” or collectively as the “Parties.”

RECITALS

A. Producer, directly and through its wholly-owned subsidiary Alpha Shale
Resources, LP (“Alpha Shale”), owns Interests and intends to produce Gas from
Wells in the Dedication Area.

B. Gatherer has acquired the Gathering System, which gathers Gas from certain
Wells of Producer. Gatherer anticipates the expansion of the Gathering System to
connect additional Wells of Producer.

C. Producer desires to contract with Gatherer to provide the Services on the
Gathering System with respect to Dedicated Gas, including compressing Dedicated
Gas at the System Compression Stations, and Gatherer desires to provide the
Services to Producer, in each case in accordance with the terms and conditions
of this Agreement.

D. Producer has agreed (i) to dedicate and commit Dedicated Gas under this
Agreement, (ii) to provide to Gatherer the Development Plans to permit Gatherer
to plan and expand the Gathering System to connect additional Wells of Producer,
and (iii) to perform certain other obligations under this Agreement, in each
case in accordance with the terms and conditions of this Agreement.

E. Gatherer and Producer acknowledge that the dedication and commitment by
Producer to Gatherer under this Agreement modifies and supersedes the
pre-existing dedication and commitment by Producer to Midstream’s subsidiary
Rice Poseidon Midstream LLC pursuant to the Dedication Agreement dated
January 29, 2014.

NOW THEREFORE, in consideration of the premises and mutual covenants set forth
in this Agreement, the Parties agree as follows:

ARTICLE 1

DEFINITIONS

Capitalized terms used, but not otherwise defined, in this Agreement shall have
the respective meanings given to such terms set forth below:

Affiliate. Any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with
another Person. Affiliated shall have the correlative meaning. The term
“control” (including its derivatives and similar terms) shall mean possessing
the power to direct or cause the direction of the management and policies of a
Person, whether through ownership, by contract, or otherwise. Notwithstanding
the

 

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foregoing, any Person shall be deemed to control any specified Person if such
Person owns fifty percent (50%) or more of the voting securities of the
specified Person, or if the specified Person owns fifty percent (50%) or more of
the voting securities of such Person, or if fifty percent (50%) or more of the
voting securities of the specified Person and such Person are under common
control.

Agreement. As defined in the preamble hereof.

Alpha Shale. As defined in Recital A.

Btu. The amount of heat required to raise the temperature of one pound of pure
water from 58.5 degrees Fahrenheit to 59.5 degrees Fahrenheit at a constant
pressure of 14.73 psia.

Business Day. Any calendar Day on which commercial banks in New York City are
open for business.

Champion Acreage. The area in Washington County, Pennsylvania, described in
Exhibit A.

Completion Deadline. As defined in Section 3.3(f).

Compression Fee. As defined in Section 5.1(a)(ii).

Confidential Information. As defined in Section 18.6(a).

Conflicting Dedication. Any gathering agreement or other commitment or
arrangement that would require Dedicated Gas to be gathered and/or compressed on
any gathering system other than the Gathering System.

Contract Year. Each of (i) the period from the Effective Date to the last Day of
the Month in which the first anniversary of the Effective Date occurs and
(ii) each period of twelve (12) Months thereafter.

Connection Notice. As defined in Section 3.3(b).

CPI. As defined in Section 5.1(b).

Cubic Foot. The volume of Gas in one cubic foot of space at a standard pressure
and temperature base of 14.73 psia and 60 degrees Fahrenheit, respectively.

Day. A period commencing at 10:00 a.m., Eastern Standard Time, on a calendar day
and ending at 10:00 a.m., Eastern Standard Time, on the next succeeding calendar
day. Daily shall have the correlative meaning.

Dedicated Gas. All Gas that is attributable to any Dedicated Property (including
all Gas attributable to third parties that is produced from a Well located on
such Dedicated Property) that Producer or a Rice Subsidiary has the right to
control and deliver for gathering and that is produced on or after the Effective
Date.

 

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Dedicated Properties. All Interests now owned or hereafter acquired by Producer
or a Rice Subsidiary and located wholly within the Dedication Area or pooled,
unitized or communitized with Interests located wholly within the Dedication
Area.

Dedication Area. Washington and Greene Counties, Pennsylvania, but excluding the
Champion Acreage.

Delivery Point. Each point at which point Gatherer will redeliver Gas to
Producer or for its account, which shall be the point of interconnection of the
Gathering System with the facilities of a Downstream Pipeline, including those
points more particularly described on Exhibit B.

Delivery Point Gas. A quantity of Gas having a Thermal Content equal to the
total Thermal Content of the Dedicated Gas received by Gatherer from Producer at
the Receipt Points, less (i) the Thermal Content of Gas used for Fuel, (ii) the
Thermal Content of Pipeline Drip recovered from the Gathering System, and
(iii) the Thermal Content of Lost and Unaccounted for Gas, in each case, as
allocated to Producer in accordance with this Agreement.

Development Plan. As defined in Section 3.2(a).

Downstream Pipeline. Any Gas pipeline or any facilities of any end-user or local
distribution company, in each case downstream of the Gathering System, into
which Gas is delivered by or for the account of Producer from the Gathering
System.

Dth. One dekatherm, i.e., one million (1,000,000) Btus.

Effective Date. As defined in the preamble of this Agreement.

Emissions Charges. As defined in Section 10.4.

FERC. As defined in Section 18.2.

Firm Capacity Gas. Gas that is accorded the highest priority on the Gathering
System with respect to capacity allocations, interruptions, or curtailments,
specifically including (i) Dedicated Gas produced from Required Connection Wells
up to the Maximum Daily Quantity at each Delivery Point and (ii) Gas delivered
to the Gathering System from any Person for which Gatherer is contractually
obligated to provide the highest priority. Firm Capacity Gas will be the last
Gas removed from the relevant part of the Gathering System in the event of an
interruption or curtailment and all Firm Capacity Gas, including Dedicated Gas
up to the Maximum Daily Quantity at each Delivery Point, will be treated equally
in the event an allocation is necessary.

Five Mile Perimeter. As defined in Section 3.1(a).

Force Majeure. As defined in Section 14.2.

Fuel. Gas and electric power used in the operation of the Gathering System,
including fuel consumed in System Compressor Stations and dehydration facilities
that are part of the Gathering System.

 

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Gallon. One U.S. gallon, which is equal to 231 cubic inches.

Gas. Any mixture of gaseous hydrocarbons, consisting essentially of methane and
heavier hydrocarbons and inert and noncombustible gases, that is extracted from
beneath the surface of the earth.

Gas Quality Specifications. As defined in Section 10.1.

Gatherer. As defined in the preamble of this Agreement.

Gathering Fee. As defined in Section 5.1(a)(i).

Gathering System. The gathering system described in Exhibit C, together with any
additional System Segments constructed after the date hereof, as such gathering
system is expanded after the date hereof, including, in each case, to the extent
now in existence or constructed or installed in the future, Gas gathering
pipelines (including High Pressure gathering pipelines), System Compressor
Stations, Gas dehydration facilities, Receipt Points, Delivery Points (including
all interconnection facilities), Measurement Facilities, Pipeline Drip handling
facilities, pig receiving facilities, rights of way, fee parcels, surface
rights, and permits, and all appurtenant facilities.

Gathering System Plan. As defined in Section 3.2(b).

Gross Heating Value. The number of Btus produced by the complete combustion in
air, at a constant pressure, of one Cubic Foot of Gas when the products of
combustion are cooled to the initial temperature of the Gas and air and all
water formed by combustion is condensed to the liquid state.

Governmental Authority. Any federal, state, local, municipal, tribal or other
government; any governmental, regulatory or administrative agency, commission,
body or other authority exercising or entitled to exercise any administrative,
executive, judicial, legislative, regulatory or taxing authority or power; and
any court or governmental tribunal, including any tribal authority having or
asserting jurisdiction.

High Pressure. Pipelines gathering or transporting Gas that has been dehydrated
and compressed at the System Compressor Stations, including pipelines from the
discharge of any System Compressor Station to the relevant Delivery Point.

Ideal Gas Laws. The thermodynamic laws applying to perfect gases.

Imbalance. As defined in Section 9.3.

Index Price. Inside FERC Gas Market Report (Dominion Transmission Inc.
Appalachia) as expressed in $/Dth.

Initial Development Plan. The Development Plan provided by Producer to Gatherer
and identified as the initial Development Plan.

 

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Interests. Oil and gas leasehold interests and oil and gas mineral fee
interests, including working interests, overriding royalty interests, net
profits interests, carried interests, and similar rights and interests.

Interruptible Gas. Gas that is accorded the lowest priority on the Gathering
System with respect to capacity allocations, interruptions, or curtailments.
Interruptible Gas will be the first Gas removed from the Gathering System in the
event of an interruption or curtailment.

Lost and Unaccounted For Gas. Gas received into the Gathering System that is
released or lost through piping, equipment, operations, or measurement losses or
inaccuracies or that is vented, flared or lost in connection with the operation
of the Gathering System.

Maintenance. As defined in Section 7.2.

Maximum Daily Quantity. As defined in Section 3.4.

Minimum Daily Quantity. As defined in Section 3.4.

Mcf. One thousand (1,000) Cubic Feet.

Measurement Facilities. Any facility or equipment used to measure the volume of
Gas, which may include meter tubes, isolation valves, recording devices,
communication equipment, buildings and barriers.

Monitoring Services Provider. As defined in Section 11.9(a).

Month. A period commencing at 10:00 a.m., Eastern Standard Time, on the first
Day of a calendar month and extending until 10:00 a.m., Eastern Standard Time,
on the first Day of the next succeeding calendar month. Monthly shall have the
correlative meaning.

Net Sales Price. As defined in Section 6.3.

Parties. As defined in the preamble of this Agreement.

Party. As defined in the preamble of this Agreement.

Person. An individual, a corporation, a partnership, a limited partnership, a
limited liability company, an association, a joint venture, a trust, an
unincorporated organization, or any other entity or organization, including a
Governmental Authority.

Pipeline Drip. That portion of the Gas that condenses in, and is recovered from,
the Gathering System as a liquid downstream of each Receipt Point. For the
avoidance of doubt, Pipeline Drip does not include wellhead condensate

Planned Well. As defined in Section 3.2(a).

Producer. As defined in the preamble of this Agreement.

Producer’s GHG Emissions. As defined in Section 10.4.

 

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psia. Pounds per square inch, absolute.

psig. Pounds per square inch, gauge.

Receipt Point. The inlet valve at the Measurement Facilities located at or
nearby or assigned to a Well Pad where one or more Wells are connected to the
Gathering System.

Required Connection Well. As defined in Section 3.1(a).

Rice Subsidiary. Alpha Shale and each other Affiliate of Producer that is a
direct or indirect subsidiary of Rice Energy, Inc.

Services. As defined in Section 3.1.

System Compressor Station. As defined in Section 3.5.

System Delivery Point. Each point at which Gatherer redelivers Gas from the
Gathering System, including the Delivery Points.

System High Pressure Line. As defined in Section 3.6.

System Receipt Point. Each point where Gas first enters the Gathering System,
including the Receipt Points.

System Segment. A physically separate segment of the Gathering System that
connects one or more Wells of Producer or a Rice Subsidiary to one or more
Delivery Points, including all Gas gathering pipelines (including High Pressure
gathering pipelines), System Compressor Stations, Gas dehydration facilities,
Receipt Points, Delivery Points, Measurement Facilities, Pipeline Drip handling
facilities, rights of way, fee parcels, surface rights, and permits, and all
appurtenant facilities.

Target Completion Date. As defined in Section 3.3(b).

Taxes. All gross production, severance, conservation, ad valorem and similar or
other taxes measured by or based upon production, together with all taxes on the
right or privilege of ownership of Gas, or upon the Services, including
gathering, transportation, handling, transmission, compression, processing,
treating, conditioning, distribution, sale, use, receipt, delivery or redelivery
of Gas, including, without limitation, gross receipts taxes, and including all
of the foregoing now existing or in the future imposed or promulgated.

Theoretical Volume of Pipeline Drip. As defined in Section 6.3.

Thermal Content. For Gas, the product of (i) a volume of Gas in Cubic Feet and
(ii) the Gross Heating Value of such Gas, as expressed in Dth. For Pipeline
Drip, the product of the measured volume in Gallons multiplied by the gross
heating value per Gallon determined in accordance with the GPA 2145-09 Table of
Physical Properties for Hydrocarbons and GPA 8173 Method for Converting Mass of
Natural Gas Liquids and Vapors to Equivalent Liquid Volumes, in each case as
revised from time to time, stated in Dth; provided, however, that if sufficient
data has not been obtained to make such calculation, the Thermal Content of
Pipeline Drip shall be deemed to be 0.115 Dth per Gallon.

 

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Third Party Gas. Gas produced by Persons other than Producer or a Rice
Subsidiary and not considered Dedicated Gas hereunder.

Transfer. Any sale, assignment, conveyance, or other transfer, including
pursuant to an exchange or farmout. Transfers and Transferred have the
correlative meanings.

Transferee. Any Person to which a Transfer is made.

Well. A well for the production of hydrocarbons in which Producer or a Rice
Subsidiary owns an interest that produces or is intended to produce Dedicated
Gas or otherwise is connected or is required to be connected to the Gathering
System in accordance with this Agreement.

Well Pad. The surface installation on which one or more Wells are located.

ARTICLE 2

PRODUCER COMMITMENTS

Section 2.1 Producer’s Dedication. Subject to Section 2.2 through Section 2.4
and Section 3.3(e), (a) Producer exclusively dedicates and commits to deliver to
Gatherer, as and when produced, all Dedicated Gas and (b) Producer agrees not to
deliver, or permit any Rice Subsidiary to deliver, any Dedicated Gas to any
other gathering system or compressor station.

Section 2.2 Conflicting Dedications. Producer and each Rice Subsidiary shall
have the right to comply with each of the Conflicting Dedications set forth in
Exhibit D hereto and any other Conflicting Dedication entered into by a
non-Affiliated predecessor-in-interest to Producer or such Rice Subsidiary that
is applicable as of the date of acquisition thereof to any Dedicated Property
acquired after the Effective Date (but not any entered into in connection with
such acquisition); provided, however, that Producer and each Rice Subsidiary
shall each have the right to comply with Conflicting Dedications only until the
last Day of the Month in which the termination of such Conflicting Dedication
occurs and shall not take any voluntary action (including the exercise of any
right to extend) to extend the term of such Conflicting Dedication beyond the
minimum term provided for in the document evidencing such Conflicting
Dedication. Producer represents that, except as set forth in Exhibit D,
Dedicated Gas is not as of the Effective Date subject to any Conflicting
Dedication. If Dedicated Gas produced from a Well on a Well Pad is subject to a
Conflicting Dedication that Producer or such Rice Subsidiary has the right to
comply with under this Section 2.2, Producer has the right, in complying with
such Conflicting Dedication, to deliver all Dedicated Gas from such Well Pad in
accordance with the Conflicting Dedication, even if all Wells on such Well Pad
are not subject to such Conflicting Dedication.

Section 2.3 Producer’s Reservations. Producer reserves the following rights with
respect to Dedicated Gas for itself and for the operator of the relevant
Dedicated Properties: (a) to operate Wells producing Dedicated Gas as a
reasonably prudent operator in its sole discretion, including the right, but
never the obligation, to drill new Wells, to repair and rework old Wells, to
renew or extend, in whole or in part, any Interest covering any of the Dedicated
Properties, and to cease production from or abandon any Well or surrender any
such Interest, in whole or in

 

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part, when no longer deemed by Producer to be capable of producing Gas in paying
quantities under normal methods of operation; (b) to use Dedicated Gas for
operations (including reservoir pressure maintenance and drilling or hydraulic
fracturing fuel); (c) to deliver or furnish to lessors and holders of other
existing similar burdens on production such Gas as is required to satisfy the
terms of the applicable leases or other applicable instruments; (d) to acquire
Wells connected to existing gathering systems and to continue to deliver to such
gathering systems Gas produced from such Wells, provided that, to the extent
that Gas from such Wells constitutes Dedicated Gas, Producer delivers a
Connection Notice to Gatherer with respect to any such Well not later than 30
Days after its acquisition and thereafter delivers Gas to such gathering system
only until Gatherer has connected such Well to the Gathering System in
accordance with Section 3.3; (e) to pool, communitize, or unitize Producer’s or
any Rice Subsidiary’s Interests with respect to Dedicated Gas, provided that the
share of Gas produced from such pooled, communitized, or unitized Interests
shall be committed and dedicated to this Agreement; and (f) to deliver Dedicated
Gas that has been temporarily released from dedication hereunder in accordance
with Section 3.3(f)(ii) to such gatherer as it may determine.

Section 2.4 Covenant Running with the Land. The dedication and commitment made
by Producer under this Article 2 is a covenant running with the land. Producer
shall not, and shall not permit any Rice Subsidiary to, Transfer any or all of
its interest in any Dedicated Property unless (1) Producer obtains and delivers
to Gatherer a written acknowledgment by the Transferee in favor of Gatherer
acknowledging that the Transferred Dedicated Property shall remain subject to
this Agreement in all respects and (2) each instrument of conveyance expressly
so states. Notwithstanding the foregoing, Producer and each Rice Subsidiary
shall be permitted to Transfer any Dedicated Property free of the dedication
hereunder and without complying with the requirements of the immediately
preceding sentence in a Transfer in which a number of net acres of Dedicated
Properties that, when added to the total of net acres of Dedicated Properties
theretofore and, where applicable, simultaneously Transferred free of dedication
hereunder pursuant to this Section 2.4, does not exceed the aggregate number of
net acres of Dedicated Properties acquired by Producer after the Effective Date,
including in a transaction in which Dedicated Properties are exchanged for other
properties located in the Dedication Area that would be subject to dedication
hereunder; provided, however, that any such release of Dedicated Properties from
dedication and commitment hereunder shall not include any Dedicated Gas produced
from any Well that is located on a Well Pad if other Wells on such Well Pad are
or have been connected to the Gathering System (whether producing, shut-in,
temporarily abandoned or which has been spud or as to which drilling,
completion, reworking or other well operations have commenced) or that is
located on a Well Pad if a Connection Notice has previously been delivered by
Producer for a Well on such Well Pad. At the request of Gatherer, Producer,
Gatherer, and Alpha Shale shall execute and record an amendment to the
memorandum of this Agreement previously entered into, as provided in
Section 18.16, to reflect additions to the Dedicated Properties.

Section 2.5 Commitment of Alpha Shale; Commitment of Other Rice Subsidiaries.
Alpha Shale agrees to be bound by and to comply with each agreement and
commitment made by Producer under this Article 2 with respect to Alpha Shale’s
Interests in the Dedication Area and all Dedicated Gas produced therefrom. Upon
any other Rice Subsidiary acquiring any Interests in the Dedication Area,
Producer shall cause such Rice Subsidiary to enter into a joinder to this
Agreement (and to any memoranda of this Agreement entered into pursuant to
Section 18.16

 

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or Section 2.4) whereby such Rice Subsidiary agrees to be bound by and to comply
with each agreement and commitment made by Producer under this Article 2 with
respect to such Rice Subsidiary’s Interests in the Dedication Area and all
Dedicated Gas produced therefrom.

Section 2.6 Priority of Dedicated Gas. Dedicated Gas tendered at the Receipt
Points on any Day up to the Maximum Daily Quantity applicable on such Day shall
be Firm Capacity Gas. Dedicated Gas tendered at the Receipt Points on any Day in
excess of the Maximum Daily Quantity applicable on such Day shall be
Interruptible Gas.

ARTICLE 3

SERVICES; GATHERING SYSTEM EXPANSION AND CONNECTION OF WELLS

Section 3.1 Gatherer Service Commitment. Subject to and in accordance with the
terms and conditions of this Agreement, Gatherer commits to providing the
following services (collectively, the “Services”) to Producer:

(a) construct and expand the Gathering System to connect to the Gathering System
each Well that is producing or will produce Dedicated Gas that (i) has been
completed as of the Effective Date, (ii) is included in the Initial Development
Plan, or (iii) is within 5 miles of the Gathering System (the “Five Mile
Perimeter”) as it exists as of the date of the Connection Notice, subject in
each case to the procedures set forth in Section 3.3 (such Wells, and such other
Wells that become Required Connection Wells in accordance with Section 3.3,
“Required Connection Wells”);

(b) receive, or cause to be received, into the Gathering System, from or for the
account of Producer, at each Receipt Point, all Firm Capacity Gas tendered by or
on behalf of Producer;

(c) receive, or cause to be received, into the Gathering System, from or for the
account of Producer, at each Receipt Point, all Interruptible Gas, to the extent
not curtailed in accordance with Section 7.3(a);

(d) compress and dehydrate Gas received from or on behalf of Producer into the
Gathering System at the System Compressor Stations in accordance with
Section 3.5;

(e) deliver, or cause to be delivered, to or for the account of Producer, at the
nominated Delivery Point, Delivery Point Gas allocated to Producer; and

(f) recover Pipeline Drip from the Gathering System and remit net proceeds pro
rata to Producer in accordance with Section 6.3.

Section 3.2 Development Plan; Gathering System Plan; Exchange and Review of
Information.

(a) The Initial Development Plan describes the planned development, drilling,
and production activities relating to the Dedicated Properties through
December 31, 2017 (such plan, as updated as hereinafter provided, the
“Development Plan”). Following the Effective Date, on or before the last Day of
each Month, Producer shall provide Gatherer an updated

 

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Development Plan describing the planned development, drilling, and production
activities relating to the Dedicated Properties for the 24-Month period
commencing on the date of such updated Development Plan. Each Development Plan
will include (i) information as to the Wells that Producer expects will be
drilled during such period (each such Well reflected in a Development Plan, a
“Planned Well”), information as to each Well Pad expected to be constructed
during such period and the approximate locations thereof, and the earliest date
on which one or more Planned Wells at each such Well Pad are expected to be
completed and turned-to-sales and (ii) good faith and reasonable production
forecasts for all Wells connected as of, and estimated to be connected to the
Gathering System during the 18-Month period following, the date of such
Development Plan (to the extent not previously provided or, if earlier provided,
as revised in Producer’s good faith estimation). Producer shall make its
representatives available to discuss the Development Plan from time to time with
Gatherer and their respective representatives, in order to facilitate advance
planning for expansion or improvement of the Gathering System and to address
other matters relating to the construction and installation of additions to the
Gathering System. Producer may provide updated or amended Development Plans to
Gatherer at any time and shall provide its then-current Development Plan to
Gatherer from time to time on or prior to the fifth (5th) Business Day after
Gatherer’s request therefor.

(b) Gatherer has provided to Producer a Gathering System plan describing and/or
depicting the Gathering System, including all pipelines, all Receipt Points and
Delivery Points, and all compression and dehydration facilities and other major
physical facilities, together with their locations, sizes and other physical
specifications, operating parameters, capacities, and other relevant
specifications, and together with a schedule for completing the construction and
installation of the planned portions thereof, in each case as currently in
existence, under construction, or planned (such plan, as updated as hereinafter
provided, the “Gathering System Plan”). The Gathering System Plan shall state,
for each planned pipeline, the anticipated volume of line pack that will be
required in order to place such pipeline into operation. Based on the
Development Plans and such other information about the expected development of
the Dedicated Properties as shall be provided to Gatherer by or on behalf of
Producer, as well as forecast Delivery Point nominations received from Producer
from to time, Gatherer shall periodically update the Gathering System Plan.
Without limiting the generality of the foregoing, Gatherer shall ensure that the
Gathering System Plan reflects all Required Connection Wells included in each
Monthly Development Plan not later than 30 Days after such Development Plan is
delivered to Gatherer. Gatherer shall make the Gathering System Plan available
for inspection by Producer and their respective representatives from time to
time and shall make representatives of Gatherer available to discuss the
Gathering System Plan from time to time with Producer and their respective
representatives. Gatherer shall provide Producer updates not less frequently
than monthly on the progress of work on all facilities necessary to connect
Required Connection Wells to the Gathering System and to connect the Gathering
System to the Delivery Points as set forth in the then-current Gathering System
Plan.

(c) The Parties recognize that the plans for the development of the Dedicated
Properties set forth in the Development Plans, as well as all information
provided by Producer to Gatherer regarding its intentions with respect to the
development of the Dedicated Properties, are subject to change and revision at
any time at the discretion of Producer, and that such changes may impact the
timing, configuration, and scope of the planned activities of Gatherer. The

 

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exchange of such information and any changes thereto shall not give rise to any
rights or liabilities as among the Parties except as expressly set forth in this
Agreement, and Gatherer shall determine at its own risk the time at which it
begins to work on and incur costs in connection with particular Gathering System
expansion projects, including the acquisition of rights of way, equipment, and
materials. Without limiting the generality of the foregoing, Producer has no
obligation to Gatherer under this Agreement to develop or produce any
hydrocarbons from the Dedicated Properties or to pursue or complete any drilling
or development on the Dedicated Properties, whether or not envisioned in the
Development Plan.

Section 3.3 Expansion of Gathering System; Connection of Wells; Delivery Points.

(a) Gatherer shall design and develop the Gathering System for the purpose of
providing Services as and when needed to support the upstream development of the
Required Connection Wells, and Gatherer shall be obligated, at its sole cost and
expense, subject to the provisions of this Agreement, to procure, construct,
install, own, and operate the Gathering System so as to timely connect the
Required Connection Wells to the Gathering System, connect the Gathering System
to Delivery Points, and timely commence providing the full scope of Services,
with respect to all Dedicated Gas produced from the Required Connection Wells
from and after their completion, all in accordance with this Section 3.3;
provided, that the foregoing shall not preclude Gatherer from also designing and
developing the Gathering System to accommodate Third Party Gas.

(b) Producer shall from time to time give notice, in the form of Exhibit E
hereto (or in such form as the Parties shall otherwise agree from time to time),
to Gatherer of each Planned Well that Producer intends to drill and complete
that will produce Dedicated Gas (a “Connection Notice”). Each Connection Notice
shall set forth the target completion date for drilling and completion and
turn-to-sales of such Well (the “Target Completion Date”).

(c) On or before the 30th Day after delivery of a Connection Notice for a
Planned Well, Gatherer shall, by notice to Producer, (i) (A) acknowledge that
the Planned Well covered by such Connection Notice is a Required Connection Well
or (B) acknowledge that such Planned Well is not a Required Connection Well but
nonetheless commit to connect such Planned Well to the Gathering System and
perform the Services in respect of Dedicated Gas produced from such Planned Well
for the Gathering Fee defined in Section 5.1(a) or (ii) state that it has
determined that such Planned Well is not a Required Connection Well and state
the Gathering Fee that it would charge for connecting such Planned Well to the
Gathering System and performing the Services in respect of Dedicated Gas
produced from such Planned Well.

(d) If Gatherer delivers the notice referred to in Section 3.3(c)(i) with
respect to a Connection Notice for a Planned Well, such Planned Well shall be
deemed a Required Connection Well. If Gatherer delivers the notice referred to
in Section 3.3(c)(ii) with respect to a Connection Notice for a Planned Well,
Producer may, by notice to Gatherer, accept Gatherer’s proposed Gathering Fee,
in which case such Planned Well shall be deemed a Required Connection Well from
and after the date of Producer’s notice, and the Gathering Fee proposed in
Gatherer’s notice shall be charged for Dedicated Gas delivered to the Receipt
Point at the Well Pad on which such Planned Well is located.

 

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(e) If Gatherer delivers the notice referred to in Section 3.3(c)(ii) with
respect to a Connection Notice for a Planned Well, and if Producer desires to
have such Planned Well connected to the Gathering System but does not agree to
the proposed Gathering Fee stated in such notice, the Parties shall negotiate in
good faith for a period not to exceed 30 Days from the date of such notice and
use reasonable efforts to reach agreement on a Gathering Fee that would be
applicable to the Services performed in respect of Dedicated Gas produced from
such Planned Well. If the Parties agree in writing on such Gathering Fee, such
Planned Well shall be deemed a Required Connection Well from and after the date
of such agreement, and the Gathering Fee agreed by the Parties shall be charged
for Dedicated Gas delivered to the Receipt Point at the Well Pad on which such
Planned Well is located. If the Parties do not reach agreement within such
30-day period, Producer may, at its option by notice to Gatherer, (i) withdraw
the Connection Notice with respect to such Planned Well, in which case such
Planned Well, together with the acreage to be drilled the same Well Pad on which
such Planned Well is to be located, shall be released from dedication and
commitment under this Agreement, and may be connected to such third party
gathering system as Producer may determine, or (ii) agree to pay the incremental
costs incurred by Gatherer to connect such Planned Well to the Gathering System
above the costs that would be incurred by Gatherer to connect such Planned Well
if it were located at the point on the Five Mile Perimeter, as of the date of
the Connection Notice for such Planned Well, that is nearest such Planned Well,
in which case such Planned Well shall become a Required Connection Well from and
after the date of Producer’s notice, and the Gathering Fee defined in
Section 5.1(a) shall apply to the Services performed in respect of Dedicated Gas
produced from such Planned Well.

(f) Gatherer shall cause the necessary facilities to be constructed to connect
each Required Connection Well to the Gathering System and to commence the
Services with respect to Dedicated Gas produced from such Required Connection
Well. Such facilities shall be available to receive Dedicated Gas from such
Required Connection Well as soon as reasonably practicable following the
Connection Notice with respect to such Well and in any event on or before the
later to occur of (1) the Target Completion Date with respect to such Well,
(2) the date that is 365 Days after the Connection Notice for such Well, and
(3) the date on which such Well is ready for completion (the later of such
dates, with respect to such Well, the “Completion Deadline”). Gatherer shall
provide Producer notice promptly upon Gatherer’s becoming aware of any reason to
believe that it may not be able to connect a Required Connection Well to the
Gathering System by the Target Completion Date therefor or to otherwise complete
all facilities necessary to provide the full scope of Services with respect to
all Dedicated Gas from such Well by the Target Completion Date therefor. If and
to the extent Gatherer is delayed in completing and making available such
facilities by a Force Majeure event or any action of Producer that is
inconsistent with the cooperation requirements of Section 3.9, then the
Completion Deadline for such connection shall be extended for a period of time
equal to that during which Gatherer’s completion and making available of such
facilities was delayed by such events or actions. If such facilities are not
completed and made available by the Completion Deadline, as Producer’s sole and
exclusive remedies for such delay,

(i) the Dedicated Gas from such Well shall be temporarily released from
dedication hereunder until such time as such Well is connected to the Gathering
System and the Gathering System is ready to receive Dedicated Gas produced from
such Well and to commence the Services with respect thereto; and

 

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(ii) Producer shall have the right to complete the procurement, construction
and/or installation of any rights or facilities necessary to connect the
relevant Well to the Gathering System, to connect the Gathering System to the
relevant Delivery Point, and/or to permit Dedicated Gas from such Required
Connection Well to be received into the Gathering System and delivered to the
relevant Delivery Point, in which case Gatherer shall pay to Producer an amount
equal to 115% of all reasonable costs and expenses incurred by Producer in so
procuring, constructing, and/or installing such rights and facilities, and
Producer shall convey all such rights and facilities to Gatherer and such rights
and facilities shall thereafter be part of the Gathering System.

The remedies set forth in clauses (i) and (ii) above shall be applicable to
Wells with Completion Deadlines that are 365 Days or more after the Effective
Date.

(g) Producer has as of the date hereof delivered a Connection Notice to Gatherer
with respect to certain Required Connection Wells. Such Connection Notice shall
be deemed to have been given for each such Required Connection Well 365 Days
prior to the Target Completion Date specified for such Well in such notice.

(h) The Gathering Plan shall reflect all Delivery Points and existing or
anticipated capacities and anticipated in-service dates. Gatherer shall be
obligated, at Gatherer’s cost, to provide connections to the Delivery Points set
forth on Exhibit B and expand each Delivery Point in accordance with
Section 3.3(h). If Producer specifies that Dedicated Gas is to be delivered to a
Delivery Point not described on Exhibit B that is not at such time connected to
the Gathering System, Gatherer shall, at Producer’s sole cost, risk, and
expense, provide a connection to such Delivery Point. For each such request,
Gatherer shall provide Producer with an estimated cost and in-service date,
which are subject to change, and all such costs shall remain the sole cost,
risk, and expense of the Producer. Producer shall provide at least eighteen
(18) Months’ notice prior to its anticipated need for expanded capacity at any
Delivery Point listed in Exhibit B or any new Delivery Point not listed in
Exhibit B. All such Delivery Points shall be provided with all interconnection
facilities and other Delivery Point facilities (including any Measurement
Facilities), and with sufficient capacities, necessary to permit Dedicated Gas
to be redelivered at such Delivery Point in accordance with this Agreement (with
all expansions of capacity at such Delivery Points, including the Delivery
Points described on Exhibit B, being at Producer’s sole, cost, risk, and
expense). Subject to the foregoing, Gatherer shall connect each Well to the
Gathering System such that Gas from such Well can be redelivered to the Delivery
Points described in the Development Plan.

Section 3.4 Determination of Maximum Daily Quantity. The “Maximum Daily
Quantity” for each System Segment (i) with respect to the initial Contract Year
shall be as set forth in Exhibit C and (ii) with respect to each Contract Year
thereafter shall be the maximum daily quantity of Dedicated Gas projected to be
produced during such Calendar Year, as projected in the Development Plan most
recently delivered to Gatherer on the first Day of such Calendar Year, or, if
greater, 110% of the average daily quantity of Dedicated Gas actually delivered
to the Receipt Points during the last six months of the prior Contract Year. The
aggregate Maximum Daily Quantity adjustment each year after the first Contract
Year shall be distributed among all existing Delivery Points and new Delivery
Points that are anticipated to commence in-service during the Contract Year as
mutually agreed upon between the parties.

 

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Gatherer’s Maximum Daily Quantity obligations to Producer for delivery of Gas to
any new Delivery Point or expansions of existing and planned Delivery Points
during any Contract Year shall not commence until Gatherer has given notice to
Producer that the Delivery Point is in-service. Parties shall mutually agree to
determine the annual distribution for the following Contract Year thirty
(30) Days prior to the end of the current Contract Year. In addition to the
Maximum Daily Quantity, Producer shall also be subject to the minimum daily
quantity (the “Minimum Daily Quantity”) at each Delivery Point as set forth in
Exhibit B. Gatherer shall not be responsible for delivering Producer’s Gas at a
volume less than the Minimum Daily Quantity.

Section 3.5 Compression. The Gathering System Plan will describe the centralized
compression and dehydration facilities that will be required to compress and
dehydrate Dedicated Gas upstream of the Delivery Points or any System High
Pressure Line in order for the Gathering System to be operated at a pressure not
to exceed 500 psig and water vapor content in accordance with Section 10.1 or,
subject to the provisions of this Section 3.5, such lower pressure as may be
specified by Producer from time to time and to permit Dedicated Gas to enter
such Downstream Pipelines or High Pressure gathering pipelines (“System
Compressor Stations”). Gatherer shall install and shall operate and maintain
each System Compressor Station. For the avoidance of doubt, Gatherer shall have
the right at any time to add additional compressor stations to the Gathering
System, and to add compression capacity at any System Compressor Station in
addition to the capacity that is reflected in the Gathering System Plan, as it
deems necessary or appropriate to provide the Services and such services as it
is providing in respect of Third Party Gas. Producer must pay the Compression
Fee with respect to all its Gas that is compressed and dehydrated using the
System Compressor Stations or any such additional compressor stations or using
such additional capacity. Notwithstanding the foregoing, Producer shall not be
obligated to pay the Compression Fee for more than one stage of compression
unless Producer (i) requests that the operating pressure of the Gathering System
or a relevant System Segment be reduced to below 500 psig and (ii) subsequently
approves in writing any additional stages of compression that Gatherer
determines would be required to achieve the lower pressure requested by
Producer. Until such additional stages of compression have been approved by
Producer in writing and have been installed and made operational, Gatherer shall
not be required to operate the Gathering System at pressure below 500 psig.
Prior to installation of any System Compressor Station, Producer shall be solely
responsible for dehydration facilities in accordance with Section 10.1.

Section 3.6 High Pressure Services. The Gathering System Plan will describe the
High Pressure gathering pipelines that Gatherer determines are necessary or
appropriate to connect the Gathering System to the Delivery Points and to
redeliver the volumes of Dedicated Gas to be redelivered at such Delivery Points
in the most efficient manner (“System High Pressure Lines”). Gatherer shall
install each such System High Pressure Line, together with the associated System
Compressor Stations, and shall operate and maintain each System High Pressure
Line. For the avoidance of doubt, Gatherer shall have the right at any time to
add additional High Pressure gathering pipelines to the Gathering System as it
deems necessary or appropriate to provide the Services and such services as it
is providing in respect of Third Party Gas.

Section 3.7 Gas Removed for Lease Operations. Gatherer shall use commercially
reasonable efforts to accommodate, at the cost and expense of Producer, any
request by Producer

 

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to redeliver to Producer any Gas that has been received into the Gathering
System that Producer desires to use in lease operations, including for drilling
and hydraulic fracturing fuel. Producer shall be responsible for the
construction, ownership, and operation of facilities to transport such Gas from
the point of redelivery of such Gas from the Gathering System to the lease sites
where such Gas will be used.

Section 3.8 Right of Way and Access. Gatherer is responsible for the acquisition
of rights of way, crossing permits, licenses, use agreements, access agreements,
leases, fee parcels, and other rights in land right necessary to construct, own,
and operate the Gathering System, and all such rights in land shall be solely
for use by Gatherer and shall not be shared with Producer, except as otherwise
agreed by Gatherer; provided that Producer agrees to grant and/or to cause each
Rice Subsidiary to grant, without warranty of title, either express or implied,
to the extent that it has the right to do so without the incurrence of material
expense, an easement and right of way upon all lands covered by the Dedicated
Properties, for the purpose of installing, using, maintaining, servicing,
inspecting, repairing, operating, replacing, disconnecting, and removing all or
any portion of the Gathering System, including all pipelines, meters, and other
equipment necessary for the performance of this Agreement; provided, further,
that the exercise of these rights by Gatherer shall not unreasonably interfere
with Producer’s or such Rice Subsidiary’s lease operations or with the rights of
owners in fee, and will be subject to Producer’s safety and other reasonable
access requirements applicable to Producer’s personnel. Neither Producer nor
such Rice Subsidiary shall have a duty to maintain the underlying agreements
(such as leases, easements, and surface use agreements) that such grant of
easement or right of way to Gatherer is based upon, and such grants of easement
or right of way will terminate if Producer or such Rice Subsidiary, as
applicable, loses its rights to the property, regardless of the reason for such
loss of rights. Notwithstanding the foregoing, (i) Producer will assist Gatherer
to secure replacements for such terminated grants of easement or right of way,
in a manner consistent with the cooperation requirements of Section 3.9, (ii) to
the extent that Producer agrees that Gatherer’s Measurement Facilities may be
located on Producer’s Well Pad sites, Producer shall be responsible for
obtaining any necessary rights to locate such Measurement Facilities on such
Well Pad sites, and (iii) Producer shall use reasonable efforts to involve
Gatherer in Producer’s negotiations with the owners of lands covered by the
Dedicated Properties so that Producer’s surface use agreements and Gatherer’s
rights of way with respect to such lands can be concurrently negotiated and
obtained.

Section 3.9 Cooperation. Because of the interrelated nature of the actions of
Producer and Gatherer required to obtain the necessary permits and
authorizations from the appropriate Governmental Authorities and the necessary
consents, rights of way and other authorizations from other Persons necessary to
drill and complete each Planned Well and construct the required extensions of
the Gathering System to each Planned Well, Producer and Gatherer agree to work
together in good faith to obtain such permits, authorizations, consents and
rights of way as expeditiously as reasonably practicable, all as provided
herein. Producer and Gatherer further agree to cooperate with each other and to
communicate regularly regarding their efforts to obtain such permits,
authorizations, consents and rights of way.

 

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ARTICLE 4

TERM

Section 4.1 Term. This Agreement shall become effective on the Effective Date
and, unless terminated earlier by mutual agreement of the Parties, shall
continue in effect until the fifteenth (15th) anniversary of the Effective Date
and from Month to Month thereafter (with the initial term of this Agreement
deemed extended for each of any such additional Month) until such time as this
Agreement is terminated, by notice from any Party to the other Parties,
effective on the last day of the Month specified in such notice, which notice
shall be given not less than 30 days before the effective date of such
termination.

ARTICLE 5

FEES AND CONSIDERATION

Section 5.1 Fees.

(a) Subject to the other provisions of this Agreement, Producer shall pay
Gatherer each Month in accordance with the terms of this Agreement, for all
Services provided by Gatherer during such Month, an amount equal to the sum of
the following:

(i) The product of (A) the aggregate quantity of Gas, stated in Dth, received by
Gatherer from Producer or for Producer’s account (including Dedicated Gas
produced by any Alpha Shale or any other Rice Subsidiary) at each Receipt Point
during such Month multiplied by (B) $0.30, or such other Gathering Fee as is
determined for a particular Required Connection Well pursuant to Section 3.3(d)
or Section 3.3(e) (provided that such fee shall be discounted by fifty percent
(50%) for Gas removed from the Gathering System for use as lease operations fuel
in accordance with Section 3.7) (as such fee may be increased or decreased in
accordance with Section 5.1(b), the “Gathering Fee”); and

(ii) The product of (A) the aggregate volume of Gas, stated in Dth, received
from Producer or for Producer’s account (including Dedicated Gas produced by
Alpha Shale or any other Rice Subsidiary) and compressed and dehydrated at each
System Compressor Station during such Month multiplied by (B) the number of
stages of compression installed at such System Compression Station (but, in the
case of any second or additional stage of compression, only if such second or
additional stage has been approved by Producer in accordance with in
Section 3.5) multiplied by (C) $0.07 (as may be increased or decreased in
accordance with Section 5.1(b), the “Compression Fee”).

(b) The Gathering Fee and the Compression Fee shall be adjusted up or down on an
annual basis in proportion to the percentage change, from the preceding year, in
the All Items Consumer Price Index for All Urban Consumers (CPI-U) for the U.S.
City Average, 1982-84 = 100, as published by the United States Department of
Labor, Bureau of Labor Statistics (“CPI”). Such adjustment shall be made
effective upon the first Day of each Contract Year commencing in the Contract
Year beginning in 2016, and shall reflect the percentage change in the CPI as it
existed for June of the preceding Contract Year from the CPI for the second
immediately preceding June; provided, however, that the Gathering Fee and the
Compression Fee shall never be less than the initial fees stated in
Section 5.1(a); nor shall such fees be increased or decreased by more than 3% in
any given Contract Year.

(c) Subject to the other provisions of this Agreement, Producer shall pay
Gatherer the actual cost of electricity used as Fuel and allocated to Producer
in accordance with Section 6.2.

 

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ARTICLE 6

ALLOCATIONS

Section 6.1 Allocation of Lost and Unaccounted For Gas. Lost and Unaccounted For
Gas shall be allocated, on a Monthly basis, among all System Receipt Points on
each System Segment pro rata based upon the Thermal Content of all Gas received
at all System Receipt Points on such System Segment during such Month. Total
Lost and Unaccounted For Gas with respect to each System Segment shall be
determined by subtracting from the sum of the total Thermal Content of Gas
received at all System Receipt Points on such System Segment during such Month
the sum of (i) the Thermal Content of Gas actually delivered to all System
Delivery Points on such System Segment during such Month, (ii) the Thermal
Content of Pipeline Drip recovered from such System Segment during such Month
(other than Pipeline Drip vaporized and reinjected into the Gas stream), and
(iii) the Thermal Content of Gas used for Fuel on such System Segment, if any,
during such Month. Lost and Unaccounted For Gas shall be allocated, on a Monthly
basis, to each Receipt Point based upon a fraction, the numerator of which is
the total Thermal Content of Gas measured at such Receipt Point during such
Month, and the denominator of which is the total Thermal Content of Gas measured
at all System Receipt Points on the System Segment on which such Receipt Point
is located during such Month.

Section 6.2 Allocation of Fuel. Gatherer shall allocate Fuel (included Gas used
as Fuel and the cost of electricity used as Fuel), on a Monthly basis, to each
Receipt Point upstream of a System Compressor Station on a pro rata basis, based
upon a fraction, the numerator of which is the total volume of Gas measured at
such Receipt Point during such Month, and the denominator of which is the total
volume of Gas measured at all System Receipt Points upstream of such System
Compressor Station during such Month. Gas consumed for Fuel shall be determined
based on actual measurements of Fuel consumption.

Section 6.3 Allocation of Pipeline Drip Recovered from the Gathering System.
Gatherer will recover Pipeline Drip from the Gathering System and Gatherer shall
be responsible for marketing and/or disposing of Producer’s Pipeline Drip.
Gatherer shall remit to Producer for such Pipeline Drip one-hundred percent
(100%) of the product of the Net Sales Price multiplied by the volume of
Producer’s Pipeline Drip sold by Gatherer, or if the cost of marketing and/or
disposing of Producer’s Pipeline Drip exceeds the amount received therefor, then
Producer shall pay Gatherer the difference between the cost of marketing and/or
disposing of the Pipeline Drip and the Net Sales Price of the Pipeline Drip.
Gatherer shall use commercially reasonable efforts to market and sell the
Pipeline Drip under the most favorable terms (including price) that Gatherer can
obtain, as determined in Gatherer’s commercially reasonable discretion and
taking into account all relevant factors and considerations including, without
limitation, the reliable operation of the Gathering System and the available
markets. As used herein, the “Net Sales Price” of Pipeline Drip attributable to
Producer’s Dry Gas shall be the weighted average of the

 

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net price per gallon received by Gatherer for the total volume of Pipeline Drip
sold at or from the Gathering System during the applicable Month. For purposes
of this calculation, the net price per gallon received by Gatherer for Pipeline
Drip shall be determined by deducting from the actual gross sales revenue of
Pipeline Drip sold at or from the Gathering System during the Month the direct
costs of transportation, tank car rentals, taxes (including gross receipts
taxes), offsite storage, water disposal, marketing and any other out-of-pocket
expenses incurred by Gatherer or its Affiliates from third parties who are not
Affiliates of Gatherer (unless such Affiliate expenses are approved by Producer,
which approval shall not be unreasonably withheld) prior to or in direct
connection with the sale of such Pipeline Drip, and dividing by the volume of
Pipeline Drip sold to determine a net price per gallon (FOB or netted back to
the Gathering System). Pipeline Drip shall be allocated to each Receipt Point
upstream of the applicable Pipeline Drip recovery point by multiplying the
volume (expressed in gallons) of Pipeline Drip recovered at the applicable
Pipeline Drip recovery point by a fraction, the numerator of which is the
Theoretical Volume of Pipeline Drip attributable to such Receipt Point and the
denominator of which is the Theoretical Volume of Pipeline Drip for all receipt
points upstream of the applicable Pipeline Drip recovery point. “Theoretical
Volume of Pipeline Drip” shall be the product of (i) the total volume of Gas (in
Mcf) received at each Receipt Point upstream of the applicable Pipeline Drip
recovery point during the applicable Month and (ii) the GPM of pentanes and
heavier components in such Gas, determined at the relevant Receipt Point. The
GPM shall be determined by the Gatherer using the sampling requirements in
Article 11 from each Receipt Point. Gatherer shall provide to Producer such
allocated GPMs in converted MMBtu for each Month for balancing.

ARTICLE 7

CERTAIN RIGHTS AND OBLIGATIONS OF PARTIES

Section 7.1 Operational Control of Gatherer’s Facilities. Gatherer shall design,
construct, own, operate, and maintain the Gathering System at its sole cost and
risk. Gatherer shall be entitled to full and complete operational control of its
facilities and shall be entitled to schedule deliveries and to operate and
reconfigure its facilities in a manner consistent with its obligations under
this Agreement.

Section 7.2 Maintenance. Gatherer shall be entitled, without liability, to
interrupt its performance hereunder to perform necessary or desirable
inspections, pigging, maintenance, testing, alterations, modifications,
expansions, connections, repairs or replacements to its facilities as Gatherer
deems necessary (“Maintenance”), with reasonable notice provided to Producer,
except in cases of emergency where such notice is impracticable or in cases
where the operations of Producer will not be affected. Before the beginning of
each calendar year, Gatherer shall provide Producer in writing with a projected
schedule of the Maintenance to be performed during the year and the anticipated
date of such Maintenance. On or before the 10th Day before the end of each
Month, Gatherer shall provide Producer with its projected maintenance schedule
for the following Month.

Section 7.3 Firm Capacity Gas; Capacity Allocations on the Gathering System.
Subject to the capacity allocations set forth in this Section 7.3, Gatherer has
the right to contract with other Persons for the delivery of Third Party Gas to
the Gathering System, including the delivery of Firm Capacity Gas. If the volume
of Gas available for delivery into any System

 

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Segment exceeds the capacity of such System Segment at any point relevant to
Gatherer’s service to Producer hereunder, then Gatherer shall interrupt or
curtail receipts of Gas in accordance with the following:

(a) First, Gatherer shall curtail all Interruptible Gas prior to curtailing Firm
Capacity Gas.

(b) Second, if additional curtailments are required beyond Section 7.3(a) above,
Gatherer shall curtail Firm Capacity Gas. In the event Gatherer curtails some,
but not all, Firm Capacity Gas on a particular Day, Gatherer shall allocate the
capacity of the applicable point on the relevant System Segment available to
such shippers of Firm Capacity Gas, including Dedicated Gas, on a pro rata basis
based upon the average nominations for Firm Capacity Gas for the 14-Day period
prior to the curtailments made by Producer and the other shippers on the
Gathering System.

Section 7.4 Arrangements After Redelivery. It shall be Producer’s obligation to
make any required arrangements with other parties for delivery of Dedicated Gas
to the Receipt Points and Delivery Point Gas following delivery by Gatherer at
the Delivery Points.

Section 7.5 Line Pack. To the extent that it is necessary, in order for Gatherer
to commence operations of new segments of the Gathering System, for Gas to be
used as line fill, Producer shall provide such line fill to Gatherer, but not to
exceed for any pipeline the volume of such line fill specified for such pipeline
in the Gathering Plan.

ARTICLE 8

PRESSURES AT RECEIPT POINTS AND DELIVERY POINTS

Section 8.1 Pressures at Receipt Points. Producer shall deliver or cause to be
delivered Gas to each Receipt Point at sufficient pressure to enter the
Gathering System against its operating pressure, except that Producer shall not
be obligated to deliver Gas at pressures in excess of the maximum allowable
operating pressure of the Gathering System at such Receipt Point, as determined
by Gatherer in its sole discretion.

Section 8.2 Pressures at Delivery Points. The Gathering System shall be designed
for and shall be operated at a pressure sufficient to effect delivery to the
relevant Downstream Pipeline.

Section 8.3 Producer Facilities. Producer, at its own expense, shall construct,
equip, maintain, and operate all facilities (including separation, line heaters,
dehydration and/or compression equipment) necessary to deliver Dedicated Gas to
Gatherer at the Receipt Points. Producer shall install and maintain sufficient
pressure regulating equipment upstream of the Receipt Points in order to keep
the pressure of the Gas delivered to Gatherer at the Receipt Points from
exceeding the maximum allowable operating pressure at the applicable Receipt
Point, as determined by Gatherer in its sole discretion.

 

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ARTICLE 9

NOMINATION AND BALANCING

Section 9.1 Gatherer Notifications. On or before the fifth (5th) Day prior to
the end of each Month, Gatherer shall provide written notice to Producer of
Gatherer’s good faith estimate of any capacity allocations or curtailments for
any System Segment, if any, that, based on then currently available information,
Gatherer anticipates will be required or necessary during the next Month,
including as a result of any Maintenance. Gatherer shall use all reasonable
efforts to provide 48 hours advance notice of any actual event requiring
allocation or curtailment, including Maintenance.

Section 9.2 Nominations. On or before the second (2nd) Day prior to the end of
each Month, Producer shall provide to Gatherer nominations for deliveries of
Dedicated Gas to the Receipt Points and the delivery of Delivery Point Gas to
the specified Delivery Points during the next Month. Producer shall have the
right to change such nominations at any time subject to the requirements of the
Persons receiving Delivery Point Gas at or downstream of the Delivery Points and
subject to changes in wellhead volumes being delivered into the system.

Section 9.3 Balancing. Gatherer will maintain records of any Daily and Monthly
variances (“Imbalances”) between the volume of Dedicated Gas received at the
Receipt Points and the volumes of Delivery Point Gas, plus Lost and Unaccounted
for Gas, Fuel, and Pipeline Drip allocated to Producer. Producer shall make such
changes in its nominations as Gatherer may from time to time reasonably request
to maintain Daily and Monthly balances or to correct an Imbalance. Producer
shall reimburse Gatherer for any cost, penalty, or fee arising from any
Imbalance assessed against Gatherer by any Person receiving Dedicated Gas
downstream of the Delivery Points, except to the extent such Imbalance was
caused by Gatherer. Upon the termination of this Agreement or at such other time
as Producer and Gatherer agree, Producer and Gatherer shall cash out any
cumulative Imbalance using the applicable Index Price for the prior Month.

ARTICLE 10

QUALITY

Section 10.1 Receipt Point Gas Quality Specifications. Gas delivered by or for
the account of Producer to each Receipt Point shall meet the following
specifications (collectively, the “Gas Quality Specifications”):

(a) The Gas shall not contain any of the following in excess of: one-quarter
(1/4) grain of hydrogen sulfide per hundred (100) Cubic Feet; one (1) grain of
total sulfur per hundred (100) Cubic Feet; two one-hundredths of one percent
(0.02%) by volume of oxygen; or two percent (2%) by volume of nitrogen.

(b) The total of all non-hydrocarbon gases shall not exceed three percent
(3%) by volume.

(c) The temperature of the Gas at the Receipt Point shall not be less than forty
(40) degrees Fahrenheit or in excess of one hundred twenty (120) degrees
Fahrenheit.

 

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(d) The Gas shall be free of solids, sand, salt, dust, gums, crude oil, and
hydrocarbons in the liquid phase, and other objectionable substances which may
be injurious to pipelines or which may interfere with the measurement,
transmission or commercial utilization of said Gas.

(e) The Gas shall have a Gross Heating Value of less than 1100 Btu per million
cubic feet of Gas.

(f) Prior to the installation of a System Compressor Station placing a Receipt
Points(s) on suction, each Receipt Point shall have a water vapor content of
five (5) pounds per Cubic Foot of Gas.

Except for items (a) through (f) above, such Gas shall meet the most restrictive
quality specifications required from time to time by the Downstream Pipelines
receiving Delivery Point Gas, except for water vapor content, for which there
shall be no specification applicable at the Receipt Points.

Section 10.2 Non-Conforming Gas. If any Gas delivered by or for the account of
Producer fails at any time to conform to the Gas Quality Specifications, then
Gatherer will have the right to immediately discontinue receipt of such
non-conforming Gas so long as such Gas continues to be non-conforming. Producer
agrees to undertake commercially reasonable measures to eliminate the cause of
such non-conformance. If Producer fails to remedy such non-conformance, but such
Gas conforms to all specifications other than hydrocarbon dew point and/or Gross
Heating Value, then Gatherer agrees to (i) use commercially reasonable efforts
to blend and commingle such Gas with other Gas in the Gathering System so that
it meets the applicable specifications and (ii) if such Gas cannot be brought
into compliance with such blending will continue to accept and redeliver such
Gas to the Delivery Points that will accept such non-conforming Gas as long as
(A) no harm is done to the Gathering System, (B) no harm is done to other
shippers or their Gas, and (C) other shippers are not prevented from nominating
Gas to their preferred Delivery Point. Producer agrees to be responsible for,
and to defend, indemnify, release, and hold Gatherer and its Affiliates,
directors, officers, employees, agents, consultants, representatives, and
invitees harmless from and against, all claims and losses of whatever kind and
nature resulting from non-conforming Gas delivered for or on account of Producer
to the Gathering System, unless Gatherer has accepted receipts of such
non-conforming Gas having actual knowledge of such nonconformity.

Section 10.3 Delivery Point Gas Quality Specifications. If Producer delivers Gas
to Gatherer at the Receipt Points that meets the Gas Quality Specifications,
Gatherer shall redeliver Delivery Point Gas to or for the account of Producer
that meets the Gas Quality Specifications.

Section 10.4 Greenhouse Gas Emissions. Notwithstanding anything contained in
this Agreement to the contrary, in the event there is an enactment of, or change
in, any law after the Effective Date of this Agreement which, in Gatherer’s
reasonable determination, results in (a) a Governmental Authority requiring
Gatherer to hold or acquire emission allowances or their equivalent related to
the carbon dioxide content or emissions or the greenhouse gas content or
emissions attributable to Dedicated Gas and/or the gathering, or transportation
of such Gas (collectively, “Producer’s GHG Emissions”) or (b) Gatherer incurring
any costs or expenses

 

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attributable to Dedicated Gas, including any costs or expenses for disposal or
treating of carbon dioxide attributable to such Gas, or any other additional
economic burden being placed on Gatherer in connection with or related to
Producer’s GHG Emissions, including any tax, assessment, or other cost or
expense (collectively, “Emissions Charges”), then (i) Producer will use
reasonable efforts to provide any required emissions allowances or their
equivalent to Gatherer in a timely manner (and Producer shall indemnify and hold
harmless Gatherer from against any Losses, including any expenses incurred by
Gatherer in acquiring such allowances in the marketplace, arising out of the
failure to so provide such allowances) and (ii) Producer shall be fully
responsible for such Emissions Charges and shall reimburse Gatherer for any
Emissions Charges paid by Gatherer within ten (10) Days of receipt of Gatherer’s
invoice.

ARTICLE 11

MEASUREMENT EQUIPMENT AND PROCEDURES

Section 11.1 Equipment. Gatherer shall install, own, operate, and maintain
Measurement Facilities to measure Gas at all the System Receipt Points and shall
ensure that the relevant Downstream Pipeline installs, owns, operates, and
maintains Measurement Facilities at the System Delivery Points (but downstream
of any slug catcher) for Gas. Measurement Facilities at the Receipt Points shall
meet current industry standards for custody transfer measurement. Producer shall
have the right to install check Measurement Facilities at each Receipt Point,
including the right to install check measurement equipment on Gatherer’s meter
tubes and orifice unions.

Section 11.2 Gas Measurement Standards. The following standards shall apply to
the measurement of Gas hereunder:

(a) Where measurement is by orifice meter, all fundamental constants,
observations, records, and procedures involved in the determination and/or
verification of the quantity and other characteristics of the Gas delivered
hereunder shall be in accordance with the standards prescribed in the latest
edition of A.G.A. Report No. 3 (ANSI/API 2530) “Orifice Metering of Natural Gas”
with any revisions, amendments or supplements as may be mutually acceptable to
Producer and Gatherer.

(b) Where measurement is by ultrasonic meter, all fundamental constants,
observations, records, and procedures involved in the determination and/or
verification of the quantity and other characteristics of the Gas delivered
hereunder shall be in accordance with the standards prescribed in the latest
edition of A.G.A. Report No. 9 “Measurement of Gas by Multi Path Ultrasonic
Meters” with any revisions, amendments or supplements as may be mutually
acceptable to Producer and Gatherer.

(c) The changing and integration of the charts (if utilized for measurement
purposes hereunder) and calibrating and adjusting of meters shall be performed
by Gatherer.

Section 11.3 Gas Measurement.

(a) The unit of volume for measurement of Gas delivered hereunder shall be one
Mcf at a base temperature of 60 degrees Fahrenheit and at a pressure base of
14.73 psia without adjustment for water vapor content. It is agreed that for the
purposes of measurement

 

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and computations hereunder, (i) the absolute atmospheric (barometric) pressure
shall be assumed to be 14.40 Psia regardless of the actual elevation or location
of the CDP above sea level or of a variation of barometric pressure from time to
time and (ii) all measurements and testing performed hereunder shall all be made
by Gatherer in accordance with applicable rules, regulations, and orders.

(b) The heating value and specific gravity of the gas shall be determined using
chromatographic methods as often as required, using representative spot samples
or continuous samplers as determined by Gatherer in accordance with standard
industry practice, to reasonably assure accurate determinations, but at least
twice per year. The tests shall determine the heating value and specific gravity
to be used in computations in the measurement of natural gas received by
Gatherer until the next regular test, or until changed by special test. In month
in which the sample is collected the new gas quality will be applied to the
start of the current measurement contract month. Gatherer shall procure or cause
to be procured a sample of Gas at each System Delivery Point and analyze the
samples by chromatographic analysis to determine the component content (mole
percent), specific gravity, and the Gross Heating Value thereof. These
determinations shall be made utilizing the following standards: (i) Gas
Processors Association Obtaining Natural Gas Samples for Analysis by Gas,
Publication No. 2166 as amended or supplemented from time to time and (ii) Gas
Processors Association Analysis for Natural Gas and Similar Gaseous Mixtures by
Gas Chromatography, Publication No. 2161 as amended or supplemented from time to
time, or (iii) any other tests that are mutually agreed by Producer and
Gatherer.

(c) The temperature of Gas shall be determined by means of a recording
thermometer recording the temperature of such Gas flowing through each
measurement meter. The average temperature to the nearest one one-hundredth
degree (0.01º) Fahrenheit, obtained while Gas is being delivered, will be the
applicable flowing Gas temperature for the period under consideration.

(d) The deviation of the Gas from Ideal Gas Laws shall be determined in
accordance with the A.G.A. Par Research Project NX-19 Report “Manual for the
Determination of Supercompressibilty Factors for Natural Gas”, Reprinted 1976,
if the composition of the Gas is such to render this procedure applicable.
Orifice measurement will utilize the A.G.A. Report No. 8 gross characterization
method II compressibility calculation.

(e) Physical constants required for making calculations hereunder shall be taken
from the Gas Processors Association Table of Physical Properties for
Hydrocarbons and Other Compounds of Interest to the Natural Gas Industry,
Publication No. 2145 as amended or supplemented from time to time. Physical
constants for the hexanes and heavier hydrocarbons portion of hydrocarbon
mixtures shall be assumed to be the same as the physical constants for hexane.

Section 11.4 Notice of Measurement Facilities Inspection and Calibration. Each
of Producer and Gatherer shall give reasonable notice to the other in order that
the other may, at its option, have representatives present to observe any
reading, inspecting, testing, calibrating or adjusting of Measurement Facilities
used in measuring or checking the measurement of receipts or deliveries of Gas
under this Agreement. The official electronic data from such Measurement

 

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Facilities shall remain the property of the Measurement Facilities’ owner, but
copies of such records shall, upon written request, be submitted, together with
calculations and flow computer configurations therefrom, to the requesting Party
for inspection and verification.

Section 11.5 Measurement Accuracy Verification.

(a) Gatherer shall calibrate meters as often as required, as determined by
Gatherer in accordance with standard industry practices to reasonably assure
accurate measurement, but at least twice per year. Calibrations of meters will
be made in the presence of representatives of Producer, if Producer chooses to
be represented. Orifice plate and tube inspection will be made at each meter
calibration unless a facility shut-down is required, in which case the approval
of both Parties shall be required.

(b) If, during any test of the Measuring Facilities, an adjustment or
calibration error is found which results in an incremental adjustment to the
calculated flow rate through each meter run in excess of two percent (2%) of the
adjusted flow rate (whether positive or negative and using the adjusted flow
rate as the percent error equation denominator), then any previous recordings of
such equipment shall be corrected to zero error for any period during which the
error existed (and which is either known definitely or agreed to by Producer and
Gatherer) and the total flow for the period redetermined in accordance with the
provisions of Section 11.7. If the period of error condition cannot be
determined or agreed upon between Producer and Gatherer, such correction shall
be made over a period extending over the last one half of the time elapsed since
the date of the prior test revealing the two percent (2%) error.

(c) If, during any test of any Measurement Facilities, an adjustment or
calibration error is found which results in an incremental adjustment to the
calculated hourly flow rate which does not exceed two percent (2%) of the
adjusted flow rate, all prior recordings and electronic flow computer data shall
be considered to be accurate for quantity determination purpose.

Section 11.6 Special Tests. If Producer or Gatherer desires a special test (a
test not scheduled by a Party under the provisions of Section 11.5) of any
Measurement Facilities, seventy-two (72) hours advance notice shall be given to
the other and both Producer and Gatherer shall cooperate to secure a prompt test
of the accuracy of such equipment. If the Measurement Facilities tested are
found to be within the range of accuracy set forth in Section 11.5(b), then the
Party that requested the test shall pay the costs of such special test including
any labor and transportation costs pertaining thereto. If the Measurement
Facilities tested are found to be outside the range of accuracy set forth in
Section 11.5(b), then the Party that owns such Measurement Facilities shall pay
such costs and perform the corrections according to Section 11.7.

Section 11.7 Metered Flow Rates in Error. If, for any reason, any Measurement
Facilities are (i) out of adjustment, (ii) out of service, or (iii) out of
repair and the total calculated flow rate through each meter run is found to be
in error by an amount of the magnitude described in Section 11.5, the total
quantity of Gas delivered shall be determined in accordance with the first of
the following methods which is feasible:

(a) By using the registration of any mutually agreeable check metering facility,
if installed and accurately registering (subject to testing as provided for in
Section 11.5);

 

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(b) Where multiple meter runs exist in series, by calculation using the
registration of such meter run equipment; provided that they are measuring Gas
from upstream and downstream headers in common with the faulty metering
equipment, are not controlled by separate regulators, and are accurately
registering;

(c) By correcting the error by re-reading of the official charts, or 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

(d) By estimating the quantity, based upon deliveries made during periods of
similar conditions when the meter was registering accurately.

Section 11.8 Record Retention. The Party owning the Measurement Facilities shall
retain and preserve all test data, charts, and similar records for any calendar
year for a period of at least twenty-four (24) Months following the end of such
calendar year unless applicable law or regulation requires a longer time period
or the Party has received written notification of a dispute involving such
records, in which case records shall be retained until the related issue is
resolved.

Section 11.9 Access.

(a) Gatherer shall contract with a provider of monitoring services reasonably
satisfactory to Producer (the “Monitoring Services Provider”) for remote
monitoring of Gas Measurement Facilities, including monitoring of measurement
data on an hourly (or more frequent) basis for flow rate, meter pressures, meter
temperature, orifice diameter, Gross Heating Value, and composition for
importation into production software reasonably satisfactory to Producer.

(b) Gatherer shall provide Producer 120 Days’ notice of any termination by
Gatherer of its contract with any Monitoring Services Provider.

ARTICLE 12

NOTICES

Section 12.1 Notices. Unless otherwise provided herein, any notice, request,
invoice, statement, or demand which any Party desires to serve upon any other
regarding this Agreement shall be made in writing and shall be considered as
delivered (i) when hand delivered, or (ii) when delivery is confirmed by
pre-paid delivery service (such as FedEx, UPS, DHL or a similar delivery
service), or (iii) if mailed by United States certified mail, postage prepaid,
three (3) Business Days after mailing, or (iv) if sent by facsimile
transmission, when receipt is confirmed by the equipment of the transmitting
Party, or (v) when sent via email; provided, if sent by email after normal
business hours or if receipt of a facsimile transmission is confirmed after
normal business hours, receipt shall be deemed to be the next Business Day.
Notwithstanding the foregoing, if a Party desires to serve upon another a notice
of default under this Agreement, or if Producer desires to serve upon Gatherer
and Producer a Connection Notice, the delivery of such notice shall be
considered effective under this Section 12.1 only if delivered by any method set

 

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forth in items (i) through (iv) above. Any notice shall be given to the other
Party or Parties at the following address, or to such other address as any Party
shall designate by written notice to the others:

 

Producer:  

RICE DRILLING B LLC

400 Woodcliff Drive

Canonsburg, PA 15317

  Attn: Jide Famuagun   Phone: 724-825-2600   Email:
Jide.Famuagun@RiceEnergy.com With copy to:   For gas control, nominations &
balancing:   Attn: Greg Nichols   Phone: 724-531-4920   Email:
Greg.Nichols@RiceEnergy.com   For accounting, financial, and legal:   Attn: Will
Jordan   Phone: 832-708-3432   Email: Will.Jordan@RiceEnergy.com Gatherer:  

RICE MIDSTREAM PARTNERS LP

400 Woodcliff Drive

Canonsburg, PA 15317

 

Attn: Mark Griffin

Phone: 412-616-8871

  Email: Mark.Griffin@RiceEnergy.com   For gas control, nominations & balancing:
  Attn: Greg Nichols   Phone: 724-531-4920   Email: Greg.Nichols@RiceEnergy.com
  For accounting, financial, and legal:   Attn: Will Jordan   Phone:
832-708-3432   Email: Will.Jordan@RiceEnergy.com

 

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ARTICLE 13

PAYMENTS

Section 13.1 Invoices. Not later than the tenth (10th) Day following the end of
each Month, Gatherer shall provide Producer with a detailed statement setting
forth the quantity of Gas, in Dth, received by Gatherer at the Receipt Points in
such Month, the quantity, in Dth, of Delivery Point Gas allocated to Producer,
the quantity of Gas, in Dth, and the cost of electricity used as Fuel allocated
to Producer in such Month, the quantity, in Dth, of Lost and Unaccounted For Gas
for such Month, and the Gathering Fee and the Compression Fee with respect to
such Month, together with measurement summaries and the amount of any Imbalances
and all relevant supporting documentation, to the extent available on such tenth
(10th) Day (with Gatherer being obligated to deliver any such supporting
documentation that is not available on such tenth (10th) Day as soon as it
becomes available). Producer shall make payment to Gatherer by the last Business
Day of the Month in which such invoice is received. Such payment shall be made
by wire transfer pursuant to wire transfer instructions delivered by Gatherer to
Producer in writing from time to time. If any overcharge or undercharge in any
form whatsoever shall at any time be found and the invoice therefor has been
paid, Gatherer shall refund any amount of overcharge, and Producer shall pay any
amount of undercharge, within thirty (30) Days after final determination
thereof, provided, however, that no retroactive adjustment will be made beyond a
period of twenty-four (24) Months from the date of a statement hereunder.

Section 13.2 Right to Suspend on Failure to Pay. If any undisputed amount due
hereunder remains unpaid for sixty (60) Days after the due date, Gatherer shall
have the right to suspend or discontinue Services hereunder until any such past
due amount is paid.

Section 13.3 Audit Rights. Either Producer or Gatherer, on not less than thirty
(30) Days prior written notice to the other, shall have the right, at its
expense, at reasonable times during normal business hours, but in no event more
than twice in any period of twelve (12) consecutive Months, to audit the books
and records of the other to the extent necessary to verify the accuracy of any
statement, allocation, measurement, computation, charge, payment made under, or
obligation or right pursuant to this Agreement. The scope of any audit shall be
limited to transactions affecting Dedicated Gas and Delivery Point Gas hereunder
and shall be limited to the twenty-four (24) Month period immediately prior to
the Month in which the notice requesting an audit was given. All statements,
allocations, measurements, computations, charges, or payments made in any period
prior to the twenty-four (24) Month period immediately prior to the Month in
which the audit is requested shall be conclusively deemed true and correct and
shall be final for all purposes.

Section 13.4 Payment Disputes. In the event of any dispute with respect to any
payment hereunder, Producer shall make timely payment of all undisputed amounts,
and Gatherer and Producer will use good faith efforts to resolve the disputed
amounts within sixty (60) Days following the original due date. Any amounts
subsequently resolved shall be due and payable within ten (10) Days of such
resolution.

Section 13.5 Interest on Late Payments. In the event that Producer shall fail to
make timely payment of any sums, except those contested in good faith or those
in a good faith dispute, when due under this Agreement, interest will accrue at
an annual rate equal to ten percent (10%) from the date payment is due until the
date payment is made.

 

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Section 13.6 Excused Performance. Gatherer will not be required to perform or
continue to perform services hereunder, and Producer shall not be obligated to
deliver Dedicated Gas to the Gathering System in the event:

(a) the other Party has voluntarily filed for bankruptcy protection under any
chapter of the United States Bankruptcy Code;

(b) the other Party is the subject of an involuntary petition of bankruptcy
under any chapter of the United States Bankruptcy Code, and such involuntary
petition has not been settled or otherwise dismissed within ninety (90) Days of
such filing; or

(c) the other Party otherwise becomes insolvent, whether by an inability to meet
its debts as they come due in the ordinary course of business or because its
liabilities exceed its assets on a balance sheet test; and/or however such
insolvency may otherwise be evidenced.

ARTICLE 14

FORCE MAJEURE

Section 14.1 Suspension of Obligations. In the event a Party is rendered unable,
wholly or in part, by Force Majeure to carry out its obligations under this
Agreement, other than the obligation to make payments then or thereafter due
hereunder, and such Party promptly gives notice and reasonably full particulars
of such Force Majeure in writing to the other Parties promptly after the
occurrence of the cause relied on, then the obligations of the Party giving such
notice, so far as and to the extent that they are affected by such Force
Majeure, shall be suspended during the continuance of any inability so caused,
but for no longer period, and such cause shall so far as reasonably possible be
remedied with all reasonable dispatch by the Party claiming Force Majeure.

Section 14.2 Definition of Force Majeure. The term “Force Majeure” as used in
this Agreement shall mean any cause or causes not reasonably within the control
of the Party claiming relief and which, by the exercise of reasonable diligence,
such Party is unable to prevent or overcome, including acts of God, strikes,
lockouts or other industrial disturbances, acts of the public enemy, acts of
terror, sabotage, wars, blockades, military action, insurrections, riots,
epidemics, landslides, subsidence, lightning, earthquakes, fires, storms or
storm warnings, crevasses, floods, washouts, civil disturbances, explosions,
breakage or accident to wells, machinery, equipment or lines of pipe, the
necessity for testing or making repairs or alterations to wells, machinery,
equipment or lines of pipe, freezing of wells, equipment or lines of pipe,
inability of any Party hereto to obtain, after the exercise of reasonable
diligence, necessary materials, supplies, rights of way, or government
authorizations, any action or restraint by any Governmental Authority (so long
as the Party claiming relief has not applied for or assisted in the application
for, and has opposed where and to the extent reasonable, such action or
restraint, and as long as such action or restraint is not the result of a
failure by the claiming Party to comply with applicable laws, rules,
regulations, or orders).

 

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Section 14.3 Settlement of Strikes and Lockouts. It is understood and agreed
that the settlement of strikes or lockouts shall be entirely within the
discretion of the Party affected thereby, and that the above requirement that
any Force Majeure shall be remedied with all reasonable dispatch 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 affected thereby.

Section 14.4 Payments for Gas Delivered. Notwithstanding the foregoing, it is
specifically understood and agreed by the Parties that an event of Force Majeure
will in no way affect or terminate Producer’s obligation to make payment for
quantities of Gas delivered prior to such event of Force Majeure.

ARTICLE 15

INDEMNIFICATION

Section 15.1 Gatherer. Subject to the terms of this Agreement, including
Section 18.8, Gatherer shall release, indemnify, defend, and hold harmless
Producer and its Affiliates, directors, officers, employees, agents,
consultants, representatives, and invitees from and against all claims and
losses arising out of or relating to (i) the operations of Gatherer and (ii) any
breach of this agreement by Gatherer.

Section 15.2 Producer. Subject to the terms of this Agreement, including
Section 18.8, Producer shall release, indemnify, defend, and hold harmless
Gatherer and its Affiliates, directors, officers, employees, agents,
consultants, representatives, and invitees from and against all claims and
losses arising out of or relating to (i) the operations of Producer and (ii) any
breach of this agreement by Producer.

ARTICLE 16

CUSTODY AND TITLE

Section 16.1 Custody. As among the Parties, (i) Producer shall be in custody,
control and possession of Dedicated Gas hereunder until such Gas is delivered to
the Receipt Points, and (ii) Producer shall be in custody, control and
possession of Dedicated Gas after it is delivered to Producer at the Delivery
Points, including any portion of any Delivery Point Gas which accumulates as
liquids. As among the Parties, Gatherer shall be in custody, control and
possession of all Gas in the Gathering System at all other times, including any
portion thereof which accumulates as liquids. The Party having custody and
control of Gas under the terms of this Agreement shall be responsible for, and
shall defend, indemnify, release and hold the other Parties and their respective
Affiliates, directors, officers, employees, agents, consultants,
representatives, and invitees harmless from and against, all claims and losses
of whatever kind and nature for anything that may happen or arise with respect
to such Gas when such Gas is in its custody and control, including losses
resulting from any negligent acts or omissions of any indemnified party, but
excluding any losses to the extent caused by or arising out of the negligence,
gross negligence, or willful misconduct of the indemnified party.

Section 16.2 Producer Warranty. Producer represents and warrants that it owns,
or has the right to deliver to the Gathering System, all Gas delivered under
this Agreement. If the title

 

29

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to Gas delivered by Producer hereunder is disputed or is involved in any legal
action, Gatherer shall have the right to cease receiving such Gas, to the extent
of the interest disputed or involved in legal action, during the pendency of the
action or until title is freed from the dispute, or until Producer furnishes, or
causes to be furnished, indemnification to save Gatherer harmless from all
claims arising out of the dispute or action, with surety acceptable to Gatherer.
Producer hereby indemnifies Gatherer against and holds Gatherer harmless from
any and all claims and losses arising out of or related to any liens,
encumbrances, or adverse claims on any of Producer’s Gas delivered to the
Receipt Points.

Section 16.3 Title. Title to all Gas delivered under this Agreement, including
all constituents thereof, shall remain with and in Producer or its customers at
all times; provided, however, title to Gas used as Fuel and Lost and Unaccounted
For Gas shall pass from Producer or its customer to Gatherer immediately
downstream of the Receipt Point. Title to Pipeline Drip that is recovered from
Producer’s Gas in the Gathering System pass to Gatherer. Title to water (i) that
is removed from Producer’s Gas in Gatherer’s dehydration facilities shall pass
to Gatherer immediately downstream of the point of recovery, and (ii) that
condenses from Producer’s Gas in the Gathering System shall pass to Gatherer
immediately downstream of the Receipt Point.

ARTICLE 17

TAXES; ROYALTIES

Section 17.1 Taxes. Producer shall pay or cause to be paid and agrees to hold
Gatherer harmless as to 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 order of Governmental Authorities and levied
against or with respect to Gas of Producer or any Rice Subsidiary, Delivery
Point Gas or the Services provided under this Agreement. Gatherer shall not
become liable for such Taxes, unless designated to remit those Taxes on behalf
of Producer by any duly constituted jurisdictional agency having authority to
impose such obligations on Gatherer, in which event the amount of such Taxes
remitted on Producer’s behalf shall be (i) reimbursed by Producer upon receipt
of invoice, with corresponding documentation from Gatherer setting forth such
payments, or (ii) deducted from amounts otherwise due Producer under this
Agreement. Gatherer shall pay or cause to be paid all Taxes, charges and
assessments of every kind and character required by statute or by order of
Governmental Authorities with respect to the Gathering System. No Party shall be
responsible nor liable for any Taxes or other statutory charges levied or
assessed against the facilities of any other Party, including ad valorem tax
(however assessed), used for the purpose of carrying out the provisions of this
Agreement or against the net worth or capital stock of such Party.

Section 17.2 Royalties. As among the Parties, Producer shall have the sole and
exclusive obligation and liability for the payment of all Persons due any
proceeds derived from Dedicated Gas or Delivery Point Gas (including all
constituents and products thereof) delivered under this Agreement, including
royalties, overriding royalties, and similar interests, in accordance with the
provisions of the leases or agreements creating those rights to proceeds. In no
event will Gatherer have any obligation to those Persons due any of those
proceeds of production attributable to any such Gas (including all constituents
and products thereof) delivered under this Agreement. Although Producer shall
retain title to Gas as provided in this Section 17.2, Gatherer shall have the
right to commingle Gas delivered by Producer with Third Party Gas.

 

30

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ARTICLE 18

MISCELLANEOUS

Section 18.1 Rights. The failure of any Party to exercise any right granted
hereunder shall not impair nor be deemed a waiver of that Party’s privilege of
exercising that right at any subsequent time or times.

Section 18.2 Applicable Laws. This Agreement is subject to all valid present and
future laws, regulations, rules and orders of Governmental Authorities now or
hereafter having jurisdiction over the Parties, this Agreement, or the services
performed or the facilities utilized under this Agreement. The Parties hereby
agree that, if (i) Gatherer’s facilities, or any part thereof, or the rates or
terms and conditions of the Services become subject to regulation by the Federal
Energy Regulatory Commission, or any successor agency thereto (“FERC”), or any
other Governmental Authority, (ii) Gatherer becomes obligated by FERC or any
other Governmental Authority to provide Services or any portion thereof on an
open access, nondiscriminatory basis as a result of Gatherer’s execution,
performance or continued performance of this Agreement or (iii) FERC or any
other Governmental Authority seeks to modify any rates under, or terms or
conditions of, this Agreement, then:

(a) to the maximum extent permitted by law, it is the intent of the Parties that
the rates and terms and conditions established by the FERC or such Governmental
Authority having jurisdiction shall not alter the rates or terms and conditions
set forth in this Agreement, and the Parties agree to vigorously defend and
support in good faith the enforceability of the rates and terms and conditions
of this Agreement;

(b) in the event that FERC or such Governmental Authority having jurisdiction
modifies the rates or terms and conditions set forth in this Agreement, the
Parties hereby agree to negotiate in good faith to enter into such amendments to
this Agreement and/or a separate arrangement in order to give effect, to the
greatest extent possible, to the rates and other terms and conditions set forth
herein; and

(c) in the event that the Parties are not successful in accomplishing the
objectives set forth in (a) or (b) above such that the Parties are in
substantially the same economic position as they were prior to any such
regulation, then either Party may terminate this Agreement upon the delivery of
written notice of termination to the other Party.

Section 18.3 Governing Law; Jurisdiction.

(a) This Agreement shall be governed by, construed, and enforced in accordance
with the laws of the Commonwealth of Pennsylvania without regard to choice of
law principles.

(b) The Parties agree that the appropriate, exclusive and convenient forum for
any disputes among any of the Parties arising out of this Agreement or the
transactions contemplated hereby shall be in any state or federal court in the
City and County of Washington,

 

31

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Pennsylvania, and each of the Parties irrevocably submits to the jurisdiction of
such courts solely in respect of any proceeding arising out of or related to
this Agreement. The Parties further agree that the Parties shall not bring suit
with respect to any disputes arising out of this Agreement or the transactions
contemplated hereby in any court or jurisdiction other than the above specified
courts.

Section 18.4 Successors and Assigns.

(a) This Agreement shall extend to and inure to the benefit of and be binding
upon the Parties and their respective successors and permitted assigns. Except
as set forth in Section 18.4(b) and Section 18.4(c), no Party shall have the
right to assign its respective rights and obligations in whole or in part under
this Agreement without the prior written consent of the other Parties, and any
assignment or attempted assignment made otherwise than in accordance with this
Section 18.4 shall be null and void ab initio.

(b) Notwithstanding the foregoing clause (a), Gatherer may perform all services
under this Agreement itself using its own gathering, compression, and other
facilities and/or perform any or all such services through third parties, in
which case references herein to the Gathering System shall be deemed to be
references to such facilities of the relevant third party.

(c) Notwithstanding the foregoing clause (a):

(i) Gatherer shall have the right to assign its rights under this Agreement, in
whole or in part, as applicable, without the consent of Producer if such
assignment is made to any Person to which the Gathering System or any part
thereof has been or will be transferred that assumes in writing all of
Gatherer’s obligations hereunder (if applicable, to the extent that part of the
Gathering System being transferred to such Person) and is (A) an Affiliate of
Gatherer or (B) a Person to which the Gathering System has been or will be
transferred who (1) hires (or retains, as applicable) operating personnel who
are then operating the Gathering System (or has similarly experienced operating
personnel itself), (2) has operated for at least two (2) years prior to such
assignment systems similar to the Gathering System, or (3) contracts for the
operation of the Gathering System with another Person that satisfies either of
the foregoing conditions (1) or (2) in this clause (B), provided in the case of
an assignment pursuant to this clause (B), the assignee has creditworthiness as
reasonably determined by Producer that is equal to the higher of Gatherer’s
creditworthiness as of the Effective Date and Gatherer’s creditworthiness as of
the date of the assignment.

(ii) Gatherer shall have the right to grant a security interest in this
Agreement to a lender or other debt provider (or trustee or agent on behalf of
such lender) of Gatherer.

(iii) Producer shall have the right to assign its rights under this Agreement,
in whole or in part, as applicable, without the consent of Gatherer, to any
Person to which it sells, assigns, or otherwise transfers all or any portion of
the Dedicated Properties and who (A) who assumes in writing all of Producer’s
obligations hereunder

 

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(if applicable, to the extent of the Dedicated Properties being transferred to
such Person) and (B) whose credit rating is equal to or greater than the greater
of Producer’s credit rating as of the Effective Date and Producer’s credit
rating as of the date of the assignment.

(d) Upon an assignment by Gatherer in accordance with Section 18.4(c)(i)(B)
Gatherer shall be released from its obligations under this Agreement to the
extent of such assignment. Upon an assignment by Producer in accordance with
Section 18.4(c)(ii), Producer shall be released from its obligations under this
Agreement to the extent of such assignment.

Section 18.5 Severability. If any provision of this Agreement is determined to
be void or unenforceable, in whole or in part, then (i) such provision shall be
deemed inoperative to the extent it is deemed void or unenforceable, (ii) the
Parties agree to enter into such amendments to this Agreement in order to give
effect, to the greatest extent legally possible, to the provision that is
determined to be void or unenforceable and (iii) the other provisions of this
Agreement in all other respects shall remain in full force and effect and
binding and enforceable to the maximum extent permitted by law; provided,
however, that in the event that a material term under this Agreement is so
modified, the Parties will, timely and in good faith, negotiate to revise and
amend this Agreement in a manner which preserves, as closely as possible, each
Party’s business and economic objectives as expressed by the Agreement prior to
such modification.

Section 18.6 Confidentiality.

(a) Confidentiality. Except as otherwise provided in this Section 18.6, each
Party agrees that it shall maintain all terms and conditions of this Agreement,
and all information disclosed to it by another Party or obtained by it in the
performance of this Agreement and relating to another Party’s business
(including Development Plans, Gathering System Plans, and all data relating to
the production of Producer, including well data, production volumes, volumes
gathered, transported, or compressed, and gas quality) (collectively,
“Confidential Information”) in strictest confidence, and that it shall not cause
or permit disclosure of this Agreement or its existence or any provisions
contained herein without the express written consent of the disclosing Party.

(b) Permitted Disclosures. Notwithstanding Section 18.6(a) disclosures of any
Confidential Information may be made by any Party (i) to the extent necessary
for such Party to enforce its rights hereunder against another Party; (ii) to
the extent to which a Party is required to disclose all or part of this
Agreement by a statute or by the order or rule of a Governmental Authority
exercising jurisdiction over the subject matter hereof, by order, by
regulations, or by other compulsory process (including deposition, subpoena,
interrogatory, or request for production of documents); (iii) to the extent
required by the applicable regulations of a securities or commodities exchange;
(iv) to a third person in connection with a proposed sale or other transfer of a
Party’s interest in this Agreement, provided such third person agrees in writing
to be bound by the terms of this Section 18.6; (v) to its own directors,
officers, employees, agents and representatives; (vi) to an Affiliate; (vii) to
financial advisors, attorneys, and banks, provided that such Persons are subject
to a confidentiality undertaking consistent with this Section 18.6(b), or
(viii) except for information disclosed pursuant to Article 3 of this Agreement,
to a royalty, overriding royalty, net profits or similar owner burdening
Dedicated Gas, provided such royalty, overriding royalty, net profits or similar
owner agrees in writing to be bound by the terms of this Section 18.6.

 

33

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(c) Notification. If a Party is or becomes aware of a fact, obligation, or
circumstance that has resulted or may result in a disclosure of any of the terms
and conditions of this Agreement authorized by Section 18.6(b)(ii) or (iii), it
shall so notify in writing the disclosing Party promptly and shall provide
documentation or an explanation of such disclosure as soon as it is available.

(d) Party Responsibility. Each Party shall be deemed solely responsible and
liable for the actions of its directors, officers, employees, agents,
representatives and Affiliates for maintaining the confidentiality commitments
of this Section 18.6.

(e) Public Announcements. The Parties agree that prior to making any public
announcement or statement with respect to this Agreement or the transaction
represented herein permitted under this Section 18.6, the Party desiring to make
such public announcement or statement shall provide the other Parties with a
copy of the proposed announcement or statement prior to the intended release
date of such announcement. The other Parties shall thereafter consult with the
Party desiring to make the release, and the Parties shall exercise their
reasonable best efforts to (i) agree upon the text of a joint public
announcement or statement to be made by all Parties or (ii) in the case of a
statement to be made solely by one Party, obtain approval of the other Parties
to the text of a public announcement or statement. Nothing contained in this
Section 18.6 shall be construed to require any Party to obtain approval of any
other Party to disclose information with respect to this Agreement or the
transaction represented herein to any Governmental Authority to the extent
required by applicable law or necessary to comply with disclosure requirements
of the Securities and Exchange Commission, New York Stock Exchange, or any other
regulated stock exchange.

(f) Survival. The provisions of this Section 18.6 shall survive any expiration
or termination of this Agreement; provided that other than with respect to
information disclosed pursuant to Article 3, as to which such provisions shall
survive indefinitely, such provisions shall survive only a period of one
(1) year.

Section 18.7 Entire Agreement, Amendments and Waiver. This Agreement, including
all exhibits hereto, integrates the entire understanding among the Parties with
respect to the subject matter covered and supersedes all prior understandings,
drafts, discussions, or statements, whether oral or in writing, expressed or
implied, dealing with the same subject matter. This Agreement may not be amended
or modified in any manner except by a written document signed by the Parties
that expressly amends this Agreement. No waiver by a Party of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless expressly provided. No waiver shall be
effective unless made in writing and signed by the Party to be charged with such
waiver.

Section 18.8 Limitation of Liability. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT
TO THE CONTRARY, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR SPECIAL,
INDIRECT, CONSEQUENTIAL, PUNITIVE OR

 

34

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EXEMPLARY DAMAGES SUFFERED BY SUCH PARTY RESULTING FROM OR ARISING OUT OF THIS
AGREEMENT OR THE BREACH THEREOF OR UNDER ANY OTHER THEORY OF LIABILITY, WHETHER
TORT, NEGLIGENCE, STRICT LIABILITY, BREACH OF CONTRACT, WARRANTY, INDEMNITY OR
OTHERWISE, INCLUDING LOSS OF USE, INCREASED COST OF OPERATIONS, LOSS OF PROFIT
OR REVENUE, OR BUSINESS INTERRUPTIONS; PROVIDED, HOWEVER, THAT THE FOREGOING
LIMITATION SHALL NOT APPLY TO ANY DAMAGE CLAIM ASSERTED BY OR AWARDED TO A THIRD
PARTY FOR WHICH A PARTY WOULD OTHERWISE BE LIABLE UNDER ANY INDEMNIFICATION
PROVISION SET FORTH HEREIN.

Section 18.9 Headings. The headings and captions in this Agreement have been
inserted for convenience of reference only and shall not define or limit any of
the terms and provisions hereof.

Section 18.10 Rights and Remedies. Except as otherwise provided in this
Agreement, each Party reserves to itself all rights, counterclaims, other
remedies and defenses that such Party is or may be entitled to arising from or
out of this Agreement or as otherwise provided by law.

Section 18.11 No Partnership. Nothing contained in this Agreement shall be
construed to create an association, trust, partnership, or joint venture or
impose a trust, fiduciary or partnership duty, obligation or liability on or
with regard to any Party.

Section 18.12 Rules of Construction. In construing this Agreement, the following
principles shall be followed:

(a) no consideration shall be given to the fact or presumption that one Party
had a greater or lesser hand in drafting this Agreement;

(b) examples shall not be construed to limit, expressly or by implication, the
matter they illustrate;

(c) the word “includes” and its syntactical variants mean “includes, but is not
limited to,” “includes without limitation” and corresponding syntactical variant
expressions;

(d) the plural shall be deemed to include the singular and vice versa, as
applicable; and

(e) references to Section shall be references to Sections of this Agreement.

Section 18.13 No Third Party Beneficiaries. This Agreement is for the sole
benefit of the Parties and their respective successors and permitted assigns,
and shall not inure to the benefit of any other Person whomsoever or whatsoever,
it being the intention of the Parties that no third Person shall be deemed a
third party beneficiary of this Agreement.

Section 18.14 Further Assurances. Each Party shall take such acts and execute
and deliver such documents as may be reasonably required to effectuate the
purposes of this Agreement.

 

35

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Section 18.15 Counterpart Execution. This Agreement may be executed in any
number of counterparts, each of which shall be considered an original, and all
of which shall be considered one and the same instrument.

Section 18.16 Memorandum of Agreement. Contemporaneously with the execution of
this Agreement, the Parties shall execute, acknowledge, deliver and record a
“short form” memorandum of this Agreement in the form of Exhibit F attached
hereto (as modified, including by the addition of any required property
descriptions, required by local law and practice to put such Memorandum of
record and put third parties on notice of this Agreement), which shall be placed
of record in each state and county in which the currently-existing Dedicated
Properties are located. Further such memoranda shall be executed and delivered
by Producer as Gatherer from time to time requests to evidence the dedication of
additional areas or Interests under this Agreement.

 

36

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IN WITNESS WHEREOF, the Parties have executed this Agreement on the date first
set forth above.

 

  RICE DRILLING B LLC   By:  

/s/ Daniel J. Rice IV

    Daniel J. Rice IV     Chief Executive Officer   RICE MIDSTREAM PARTNERS LP  
By:   RICE MIDSTREAM MANAGEMENT LLC, its General Partner     By:  

/s/ Rob Wingo

      Rob Wingo       Chief Operating Officer Executed solely to evidence its
obligations under Section 2.5:   ALPHA SHALE RESOURCES LP   By:   ALPHA SHALE
HOLDINGS LLC, its General Partner     By:  

/s/ Daniel J. Rice IV

      Daniel J. Rice IV       Chief Executive Officer

Gathering and Compression Agreement

Signature Page

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EXHIBIT A

CHAMPION ACREAGE

[attached]

 

Exhibit A – Page 1

--------------------------------------------------------------------------------

LOGO [g841943ex10_3pg039.jpg]

 

Exhibit A – Page 2

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EXHIBIT B

DELIVERY POINTS

 

System Name

  

Delivery Point

Name

  

Downstream

Pipeline

  

In-Service Date

  

Maximum Daily

Quantity

(Dth/Day)

Mojo    Mojo    TCO    Effective Date    25,000 AGS    California    DTI   
Effective Date    150,000    High Noon    TETCO       300,000* Denex East   
Shotski    EQT    Effective Date    125,000    Jaybird    EQT    Effective Date
   125,000    Lusk    DTI    Effective Date    75,000    High Noon    TETCO   
Effective Date    300,000* Denex West    Brova    EQT    Effective Date   
60,000    Kryptonite    TCO    Effective Date    200,000 ASR    Steinmiller   
DTI    Effective Date    130,000    Tau    TCO    Effective Date    60,000   
Upsilon    TCO    Effective Date    130,000    TETCO connect    TETCO   
12/1/2015    200,000** Whipkey    Whipkey    NFG    Effective Date    30,000   
TETCO connect    TETCO    12/1/20015    200,000**

 

* High Noon Delivery Point Maximum Daily Quantity in aggregate for Denex East
and AGS is 300,000 Dth/Day

** TETCO Connect Delivery Point Maximum Daily Quantity in aggregate for ASR and
Whipkey is 200,000 Dth/Day

 

Exhibit B – Page 1

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EXHIBIT C

GATHERING SYSTEM

[attached]

 

Exhibit C – Page 1

--------------------------------------------------------------------------------

LOGO [g841943ex10_3pg042.jpg]

 

Exhibit C – Page 2

--------------------------------------------------------------------------------

EXHIBIT D

CONFLICTING DEDICATIONS

Anchor Shipper Gas Gathering Agreement for Marcellus, by and between Rice
Drilling B LLC and Appalachia Midstream Services, L.L.C, covering the area
highlighted in the attached map.

 

Exhibit D – Page 1

--------------------------------------------------------------------------------

LOGO [g841943ex10_3pg044.jpg]

 

Exhibit D – Page 2

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EXHIBIT E

FORM OF CONNECTION NOTICE

Rice Midstream Partners LP

400 Woodcliff Drive

Canonsburg, PA 15317

 

  Re: Gas Gathering and Compression Agreement dated December 22, 2014, among
Rice Drilling B LLC, and Rice Midstream Partners LP (the “Gathering Agreement”)

Ladies and Gentlemen:

This is a Connection Notice for purposes of the Gathering Agreement. Capitalized
terms used but not defined in this Connection Notice have the meanings given
such terms in the Gathering Agreement.

Gatherer is hereby notified that Producer is planning to drill and complete the
following Planned Well at the stated Well Pad by the Target Completion Date, in
each case as set forth below:

 

Planned Well

  

Well Pad

  

Target Completion Date

     

 

Very truly yours, RICE DRILLING B LLC By:  

 

Name:  

 

Title:  

 

 

Exhibit E – Page 1

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EXHIBIT F

MEMORANDUM OF AGREEMENT

THIS MEMORANDUM OF GAS GATHERING AGREEMENT (this “Memorandum”) is entered into
effective [                    ] (the “Effective Date”), by and between RICE
DRILLING B LLC (“Producer”), with an address of 400 Woodcliff Drive, Canonsburg,
PA 15317, ALPHA SHALE RESOURCES LLC (“Alpha Shale”), a wholly-owned subsidiary
of Producer, with an address of 400 Woodcliff Drive, Canonsburg, PA 15317, and
RICE MIDSTREAM PARTNERS LP, with an address of 400 Woodcliff Drive, Canonsburg,
PA 15317 (“Gatherer”).

WHEREAS, Producer, Gatherer, and (for the limited purposes specified therein)
Alpha Shale entered into that certain Gas Gathering and Compression Agreement
effective December 22, 2014 (the “Agreement”), pursuant to which Gatherer will
provide certain gathering and other services as therein set forth;

WHEREAS, any capitalized term used, but not defined, in this Memorandum shall
have the meaning ascribed to such term in the Agreement; and

WHEREAS, the Parties desire to file this Memorandum of record in the real
property records of Washington and Greene Counties, Pennsylvania, excepting only
the area known as the Champion Acreage described on Attachment 1 hereto (the
“Dedication Area”), to give notice of the existence of the Agreement and certain
provisions contained therein;

NOW THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency
of which are hereby acknowledged, the Parties agree as follows:

1. Notice. Notice is hereby given of the existence of the Agreement and all of
its terms, covenants and conditions to the same extent as if the Agreement was
fully set forth herein. Certain provisions of the Agreement are summarized in
Sections 2 through 3 below.

2. Dedication. Subject to the exceptions, exclusions, and reservations set forth
in the Agreement and the other terms and conditions of the Agreement,
(a) Producer has exclusively dedicated and committed to deliver to Gatherer, as
and when produced, all Gas produced on or after the date of the Agreement that
is attributable to the Interests now owned or hereafter acquired by Producer or
Alpha Shale and located wholly within Washington and Greene Counties,
Pennsylvania, excepting only the area known as the Champion Acreage described on
Attachment 1 hereto (the “Dedication Area”), or pooled, unitized or communitized
with Interests located wholly within the Dedication Area (the “Dedicated
Properties”), together with all Gas attributable to third parties that is
produced from a Well located on the Dedicated Properties, which Gas Producer or
Alpha Shale has the right to control and deliver for gathering (“Dedicated
Gas”), for gathering through the Gathering System under the Agreement, and
(b) Producer agrees not to, and agrees to cause Alpha Shale not to, deliver any
Dedicated Gas to any other gathering system (the foregoing dedication and
commitment being herein referred to as the “Dedication”).

 

Exhibit F – Page 1

--------------------------------------------------------------------------------

3. Covenant Running with the Land. So long as the Agreement is in effect,
Dedication shall be a covenant running with the land and, subject to the
exceptions and reservations set forth in the Agreement, Producer shall not, and
shall not permit Alpha Shale to, sell, assign, convey, or otherwise transfer,
including pursuant to an exchange or farm-out, any or all of its interest in any
Dedicated Property unless (1) Producer obtains and delivers to Gatherer a
written acknowledgment by the Person to which such sale, assignment, conveyance,
or other transfer is made in favor of Gatherer acknowledging that such Dedicated
Property shall remain subject to the Agreement in all respects and (2) each
instrument of conveyance expressly so states.

4. Commitment of Alpha Shale. Alpha Shale agrees to be bound by and to comply
with each agreement and commitment made by Producer under this Memorandum with
respect to Alpha Shale’s Dedicated Properties in the Dedication Area and all
Dedicated Gas produced therefrom.

5. No Amendment to Agreement. This Memorandum is executed and recorded solely
for the purpose of giving notice and shall not amend nor modify the Agreement in
any way.

[remainder of page intentionally left blank]

 

Exhibit F – Page 2

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IN WITNESS WHEREOF, this Memorandum has been signed by or on behalf of each of
the Parties as of the Day first above written.

 

RICE DRILLING B LLC By:  

 

Name:  

 

Title:  

 

ALPHA SHALE RESOURCES LP By:   ALPHA SHALE HOLDINGS, its General Partner   By:  

 

  Name:  

 

  Title:  

 

RICE MIDSTREAM PARTNERS LP By:   RICE MIDSTREAM MANAGEMENT LLC, its General
Partner   By:  

 

  Name:  

 

  Title:  

 

 

Exhibit F – Page 3

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ACKNOWLEDGEMENTS

 

STATE OF PENNSYLVANIA    §          §       COUNTY OF WASHINGTON    §      

The foregoing instrument was acknowledged before me on the      Day of
            , 20[    ], by [                    ], [                    ] of
Rice Drilling B LLC, a Delaware limited liability company, on behalf of said
entity.

 

 

Notary Public in and for  

 

 

Printed or Typed Name of Notary

 

STATE OF PENNSYLVANIA    §          §       COUNTY OF WASHINGTON    §      

The foregoing instrument was acknowledged before me on the      day of
            , 20    , by [                    ], [                    ] of Alpha
Shale Holdings, LLC, a Delaware limited liability company, as general partner of
Alpha Shale Resources LP, a Delaware limited partnership, on behalf of said
limited liability company, as general partner of such limited partnership.

 

 

Notary Public in and for  

 

 

Printed or Typed Name of Notary

 

Exhibit F – Page 4

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STATE OF PENNSYLVANIA    §          §       COUNTY OF WASHINGTON    §      

The foregoing instrument was acknowledged before me on the      day of
            , 20    , by [                    ], [                    ] of Rice
Midstream Management LLC, a Delaware limited liability company, as general
partner of Rice Midstream Partners LP, a Delaware limited partnership, on behalf
of said limited liability company, as general partner of such limited
partnership.

 

 

Notary Public in and for  

 

 

Printed or Typed Name of Notary

 

Exhibit F – Page 5

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Attachment 1

CHAMPION ACREAGE

 

Attachment 1 – Page 1