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April 6th, 2011
 
Quicksilver Resources Canada Inc.
One Palliser Square
2000, 125-9th Avenue SE
Calgary, AB T2G 0P8
 
Attention:   Tony Kuehne
     Marketing Manager
 
Dear Mr. Kuehne:
 
Re:
Commitment Letter Agreement (the “Commitment Letter Agreement”) to Support the
Proposed Installation of the Horn River Mainline (Komie North Section) from
a-66-A/94-O-15 to d-64-J/94-P-4 (the “Pipeline Project”)

 

NOVA Gas Transmission Ltd. (“NGTL”) and Quicksilver Resources Canada Inc. (the
“Customer”) have had discussions regarding the Horn River Mainline (Komie North
Section). Customer has requested that NGTL construct the Horn River Mainline
(Komie North Section). NGTL has, subject to certain terms and conditions, agreed
to construct the Horn River Mainline (Komie North Section), however, NGTL must
ensure the supply forecast used in the Horn River drainage area as set out in
Schedule A (“Horn River Drainage Area”) justifies the need, necessity, and long
term economics of the Horn River Mainline (Komie North Section). Customer has
agreed to support NGTL and the Horn River Mainline (Komie North Section) as
described in the Project and Expenditure Authorization dated April 6th, 2011
between NGTL and Customer (the “PEA”), and provide NGTL with a commitment that
proprietary natural gas production from the Horn River Drainage Area will
connect to a NGTL receipt point on the Horn River Mainline (Komie North Section)
on the following terms and conditions:
 
1.  
Subject to paragraph 2, Customer hereby agrees that, commencing on the
in-service date of the Pipeline Project:

 
 
a.  
proprietary natural gas production from the Horn River Drainage Area shall be
delivered to NGTL at a NGTL receipt point on the Horn River Mainline (Komie
North Section), excluding such gas that is currently subject to a firm gas
transportation contract with Spectra Energy Corp. and Westcoast Energy Inc.
(collectively, “Third Party Contracts”); and

 
 
b.  
future proprietary natural gas production from the Horn River Drainage Area,
shall be delivered to NGTL at a NGTL receipt point on the Horn River Mainline
(Komie North Section) commencing May 1, 2014 and ending the earlier of:

 
 
i.  
the date the cumulative revenue for the receipt services at receipt points on
the Horn River Mainline (Komie North Section) exceeds the cost of the Facilities
(as defined in the PEA) (the “Facilities End Date”); and

 
 
ii.  
the date the cumulative volume of natural gas received by NGTL through meter
stations connected to the Horn River Mainline (Komie North Section) equals 1 TcF
(the “TcF End Date”).

 
 
If NGTL determines that it does not have sufficient pipeline capacity on either
the Horn River Mainline (Komie North Section) or on downstream mainline
facilities for natural gas production from the Horn River Drainage Area such
that NGTL is unable to provide firm service receipt transportation service and
NGTL advises Customer in writing of such determination, then Customer may
transport such gas on alternative pipelines for the period of time that such
firm service receipt transportation service is not available.
 
 
2.  
Upon expiration of Customer’s Third Party Contracts, Customer agrees that all
Customer volumes of gas produced from the Horn River Drainage Area shall be
delivered to NGTL at a NGTL receipt point on the Horn River Mainline (Komie
North Section) until the earlier of the Facilities End Date or the Tcf End Date.

 
 
3.  
Notwithstanding paragraphs 1 and 2, if Customer renews existing Third Party
Contracts or executes new firm gas transportation contracts with other third
party service providers for volumes of gas produced from the Horn River Drainage
Area, and, if at least one year prior to the end of the term of the Schedules of
Service attached as Schedule “B” to the PEA (the “SOS”) neither the Facilities
End Date nor the TcF End Date have occurred, then Customer shall renew the SOS
in accordance with the NOVA Gas Transmission Ltd. Gas Transportation Tariff, on
an annual basis (the “Renewal SOS”) until the Facilities End Date or the TcF End
Date has been reached. The Renewal SOS shall be for the minimum volumes of 106
mmcf/d.

 
 
4.  
NGTL shall provide to Customer, at Customer’s request, but not more often than
annually, a reporting of the volumes received from Customer at NGTL receipt
points on the Horn River Mainline (Komie North Section).

 
 
5.  
If at any time Customer sells, assigns or transfers all or a portion of
Customer’s interests in the Horn River Drainage Area, Customer covenants and
agrees that such sale, assignment or transfer shall be subject to Customer
assigning its rights and obligations under this Commitment Letter Agreement in
whole or on a proportional basis, as applicable, to the new party, provided NGTL
has provided its written consent to such assignment, such consent not to be
unreasonably withheld. NGTL agrees that if NGTL provides its consent, Customer
shall have no further liability or obligation under this Commitment Letter
Agreement as of and after the effective date of the sale, assignment or transfer
in respect of such Customer’s interest that has been sold, assigned or
transferred. Customer agrees that Customer shall be liable to and shall pay to
NGTL within 5 business days of receipt of an invoice an amount equal to the loss
of profits or revenues NGTL may sustain or incur as a result of Customer’s
failure to comply with this provision.  

 
 
6.  
In the event that Customer elects to flow natural gas production from lands that
it acquires that are proximate or adjacent to, but not part of, the Horn River
Drainage Area, on the Horn River Mainline (Komie North Section), those volumes
and the NGTL receipt service revenue associated with those volumes will
contribute to the Tcf End Date or the Facilities End Date, as applicable.

 
 
7.  
This Commitment Letter Agreement shall terminate and be of no force and effect
if the PEA terminates for any reason, other than termination under Paragraph 13
(Completion of Work) of that agreement.

 
 
8.  
The terms and conditions of this Commitment Letter Agreement (the "Confidential
Information") shall be kept confidential by the Customer and NGTL, and no party
shall be permitted to disclose the Confidential Information without the prior
written consent of the non-disclosing party (which consent may be withheld in
the sole discretion of each non-disclosing party). Such prohibition does not
prevent the disclosure of such Confidential Information:

 
i.  
to Affiliates (as that term is defined in the PEA) and representative engaged by
any of the parties in connection with this Commitment Letter Agreement and who
are made aware of the confidential nature of the Confidential Information;

 
ii.  
customers of a party where such disclosure is reasonably required under
contracts with customers and who are made aware of the confidential nature of
the Confidential Information;

 
iii.  
which is ordered or required to be disclosed by a party pursuant to any  law,
statute, regulation, rule, official directive, guideline, ordinance, order or
directive enacted or issued by any governmental authority and includes the
provisions and conditions of any permit, license or other governmental or
regulatory authorization having jurisdiction over the parties, or the subject
matter of this Commitment Letter Agreement; or

 
iv.  
that is already generally available to the public through publication or
otherwise.

 
 
9.  
This Commitment Letter Agreement shall be governed by and construed in
accordance with the laws of the Province of Alberta applicable therein, and each
of the parties irrevocably submit to the jurisdiction of the courts of Alberta
for the interpretation and enforcement hereof.

 
 
10.  
Each of NGTL and Customer agree to comply with all laws, regulations, rules and
orders applicable to the observance or performance of their respective
obligations under this Commitment Letter Agreement.

 
 
11.  
Each of NGTL and Customer will, at the request of the other party and without
further consideration, do all further acts and execute and deliver all further
documents reasonably required to carry out the terms of this Commitment Letter
Agreement.

 
 
12.  
If any provision of this Commitment Letter Agreement is restricted, prohibited
or unenforceable, such provision shall be ineffective only to the extent of such
restriction, prohibition or unenforceability without invalidating the remaining
provisions of this Commitment Letter Agreement

 
 
13.  
This Commitment Letter Agreement may be executed in counterpart and a complete
set of counterpart pages shall be provided to each party.  A facsimile signature
shall be deemed to be an original.

 

Please indicate your agreement to the terms and conditions of this Commitment
Letter Agreement below. If you have any questions or would like to discuss this
further, please call Rob Swart, Customer Account Manager, at (403) 920-5590.

Yours truly,

NOVA GAS TRANSMISSION LTD.
 
    By:  
/s/ Stephen M.V. Clark
 
Name:Stephen M.V. Clark
  Title: Vice President, Commercial    
By:  
 /s/ Karl Johannson  
Name:Karl Johannson
 
Title: President

The terms and conditions of this Commitment Letter Agreement are hereby agreed
to this 12th day of April, 2011 by:
 
QUICKSILVER RESOURCES CANADA INC.
 
   Per:    /s/ Philip Cook  
Name: /s/ Philip Cook
 
Title: Vice President--Finance
       
 
   
 
 
 

 

 
 

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Schedule A

Horn River Drainage Area for Horn River Mainline (Komie North Section)

[see attached]

 
 

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