Exhibit 10.2

 

GATHERING AND COMPRESSION AGREEMENT

 

BY AND BETWEEN

 

ANTERO RESOURCES CORPORATION

 

AND

 

ANTERO MIDSTREAM LLC

 

DATED AS OF

 

November 10, 2014

 

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TABLE OF CONTENTS

 

ARTICLE 1

DEFINITIONS

1

 

 

 

ARTICLE 2

SHIPPER COMMITMENTS

9

Section 2.1

Shipper’s Dedication

9

Section 2.2

Conflicting Dedications

9

Section 2.3

Shipper’s Reservations

9

Section 2.4

Covenant Running with the Land

10

Section 2.5

Additional Oil and Gas Interests or Gathering Facilities

10

Section 2.6

Priority of Dedicated Production

12

 

 

 

ARTICLE 3

SERVICES; GATHERING SYSTEM EXPANSION AND CONNECTION OF WELLS

12

Section 3.1

Gatherer Service Commitment

12

Section 3.2

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

13

Section 3.3

Expansion of Gathering System; Connection of Well Pads; Delivery Points

14

Section 3.4

Compression

16

Section 3.5

High Pressure Services

17

Section 3.6

Liquids Gathering

18

Section 3.7

Production Removed for Lease Operations

18

Section 3.8

Right of Way and Access

18

Section 3.9

Cooperation

19

 

 

 

ARTICLE 4

TERM

19

Section 4.1

Term

19

 

 

 

ARTICLE 5

FEES AND CONSIDERATION

19

Section 5.1

Fees

19

 

 

 

ARTICLE 6

ALLOCATIONS

22

Section 6.1

Allocation of Lost and Unaccounted For Gas

22

Section 6.2

Allocation of Fuel

22

Section 6.3

Allocation of Condensate Recovered from the Gathering System

22

Section 6.4

Allocation of Liquid Hydrocarbons

23

 

 

 

ARTICLE 7

CERTAIN RIGHTS AND OBLIGATIONS OF PARTIES

23

Section 7.1

Operational Control of Gatherer’s Facilities

23

Section 7.2

Maintenance

23

Section 7.3

Firm Capacity Production; Capacity Allocations on the Gathering System

24

Section 7.4

Arrangements After Redelivery

24

Section 7.5

Line Pack

24

 

 

 

ARTICLE 8

PRESSURES AT RECEIPT POINTS AND DELIVERY POINTS

24

Section 8.1

Pressures at Receipt Points

24

 

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Section 8.2

Pressures at Delivery Points

24

Section 8.3

Shipper Facilities

24

 

 

 

ARTICLE 9

NOMINATION AND BALANCING

25

Section 9.1

Gatherer Notifications

25

Section 9.2

Nominations

25

Section 9.3

Balancing

25

 

 

 

ARTICLE 10

QUALITY

25

Section 10.1

Receipt Point Gas Quality Specifications

25

Section 10.2

Non-Conforming Gas

26

Section 10.3

Delivery Point Gas Quality Specifications

26

Section 10.4

Liquid Hydrocarbons Quality Requirements

26

Section 10.5

Greenhouse Gas Emissions

27

 

 

 

ARTICLE 11

MEASUREMENT EQUIPMENT AND PROCEDURES

27

Section 11.1

Equipment

27

Section 11.2

Gas Measurement Standards

27

Section 11.3

Liquid Hydrocarbons Measurement Standards

28

Section 11.4

Gas Measurement

28

Section 11.5

Notice of Measurement Facilities Inspection and Calibration

29

Section 11.6

Measurement Accuracy Verification

30

Section 11.7

Special Tests

30

Section 11.8

Metered Flow Rates in Error

31

Section 11.9

Record Retention

31

Section 11.10

Access

31

 

 

 

ARTICLE 12

NOTICES

32

Section 12.1

Notices

32

 

 

 

ARTICLE 13

PAYMENTS

33

Section 13.1

Invoices

33

Section 13.2

Right to Suspend on Failure to Pay

33

Section 13.3

Audit Rights

33

Section 13.4

Payment Disputes

34

Section 13.5

Interest on Late Payments

34

Section 13.6

Credit Assurance

34

Section 13.7

Excused Performance

35

 

 

 

ARTICLE 14

FORCE MAJEURE

35

Section 14.1

Suspension of Obligations

35

Section 14.2

Definition of Force Majeure

35

Section 14.3

Settlement of Strikes and Lockouts

36

Section 14.4

Payments for Gas Delivered

36

 

 

 

ARTICLE 15

INDEMNIFICATION

36

Section 15.1

Gatherer

36

 

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Section 15.2

Shipper

36

 

 

 

ARTICLE 16

CUSTODY AND TITLE

36

Section 16.1

Custody

36

Section 16.2

Shipper Warranty

37

Section 16.3

Title

37

 

 

 

ARTICLE 17

TAXES; ROYALTIES

37

Section 17.1

Taxes

37

Section 17.2

Royalties

38

 

 

 

ARTICLE 18

MISCELLANEOUS

38

Section 18.1

Rights

38

Section 18.2

Applicable Laws

38

Section 18.3

Governing Law; Jurisdiction

39

Section 18.4

Successors and Assigns

39

Section 18.5

Severability

40

Section 18.6

Confidentiality

40

Section 18.7

Entire Agreement, Amendments and Waiver

41

Section 18.8

Limitation of Liability

42

Section 18.9

Headings

42

Section 18.10

Rights and Remedies

42

Section 18.11

No Partnership

42

Section 18.12

Rules of Construction

42

Section 18.13

No Third Party Beneficiaries

43

Section 18.14

Further Assurances

43

Section 18.15

Counterpart Execution

43

Section 18.16

Memorandum of Agreement

43

 

Exhibit A

Excluded Wells

 

Exhibit B

Delivery Points

 

Exhibit C

Gathering System

 

Exhibit D

Initial Development Plan

 

Exhibit E

Conflicting Dedications

 

Exhibit F

Initial Gathering System Plan

 

Exhibit G

Form of Connection Notice

 

Exhibit H

Deemed Connection Notices

 

Exhibit I

Cost of Service Fee

 

Exhibit J

Memorandum of Agreement

 

 

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GATHERING AND COMPRESSION AGREEMENT

 

This Gathering and Compression Agreement (this “Agreement”), dated as of 
November 10, 2014 (the “Effective Date”), is by and between ANTERO RESOURCES
CORPORATION, a Delaware corporation (“Shipper”), and ANTERO MIDSTREAM LLC, a
Delaware limited liability company (“Gatherer”).  Shipper and Gatherer may be
referred to herein individually as a “Party” or collectively as the “Parties.”

 

RECITALS

 

A.                                    Shipper owns Oil and Gas Interests and
intends to produce Gas and/or Liquid Hydrocarbons from Wells in the Initial
Dedication Area and may from time to time own Oil and Gas Interests and may
produce Gas and Liquid Hydrocarbons from Wells in other areas.

 

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

 

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

 

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:

 

Adequate Assurance of Performance.  As defined in Section 13.6(a).

 

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 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.

 

Barrel.  Forty-two Gallons.

 

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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 that commercial banks in New York City are open
for business.

 

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

 

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

 

Condensate.  Gas that condenses at the wellhead or in the Gathering System at
ambient temperatures and is recovered from the Gathering System or at the
wellhead as a hydrocarbon liquid.

 

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

 

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

 

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

 

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.

 

Cost of Service Fee.  As defined in Section 5.1(e).

 

CPI.  As defined in Section 5.1(b).

 

CS Facility.  As defined in Section 5.1(e).

 

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.  Gas constituting Dedicated Production.

 

Dedicated Production.  All Production that is attributable to any Dedicated
Property (including all Production attributable to third parties that is
produced from a Well located on such Dedicated Property) that Shipper has the
right to control and deliver for gathering and that is produced on or after the
Dedication Effective Date with respect to such Dedicated Property, except for
Gas being produced from the wells identified in Exhibit A.

 

Dedicated Properties.  All Oil and Gas Interests now owned or hereafter acquired
by Shipper and located wholly or partly within the Dedication Area or pooled,
unitized or

 

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communitized with Oil and Gas Interests located wholly or partly within the
Dedication Area; provided that Dedicated Properties shall not include any Oil
and Gas Interests that are unitized or pooled with the properties of third
parties that are not Dedicated Properties if Shipper is not the operator of such
unit.

 

Dedication Area.  The Initial Dedication Area and any other area that becomes
part of the Dedication Area pursuant to Section 2.5.

 

Dedication Effective Date.  With respect to Dedicated Properties owned by
Shipper as of the Effective Date, the Effective Date; and with respect to
Dedicated Properties acquired by Shipper after the Effective Date, the date such
Oil and Gas Interests become Dedicated Properties pursuant to Section 2.5.

 

Delivery Point.  Each point at which point Gatherer will redeliver Production to
Shipper or for its account, which shall be (i) in the case of Gas, the point of
interconnection of the Gathering System with the facilities of a Processing
Plant or Downstream Pipeline, including those points more particularly described
on Exhibit B, (ii) in the case of Liquid Hydrocarbons recovered at the wellhead,
the inlet flange of the storage tank at the facilities nominated by Shipper into
which such Liquid Hydrocarbons are delivered from the Gathering System or from
the truck, including those points more particularly described on Exhibit B, and
(iii) in the case of Condensate that is recovered from Gas gathering facilities
at a System Compressor Station, the outlet flange of the storage tank at such
System Compressor Station into which such Condensate is delivered.

 

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 Shipper at
the Receipt Points, less (i) the Thermal Content of Gas used for Fuel, (ii) the
Thermal Content of Condensate recovered from the Gathering System, and (iii) the
Thermal Content of Lost and Unaccounted for Gas, in each case, as allocated to
Shipper 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 Shipper’s Gas is delivered from the Gathering System or a Processing
Plant.

 

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

 

Emissions Charges.  As defined in Section 10.5.

 

Fair Market Value.  With respect to any asset, the price that would be paid by a
willing buyer of such asset to a willing seller, as determined by an independent
nationally known investment banking firm selected by Gatherer and reasonably
acceptable to Shipper.

 

FERC.  As defined in Section 18.2.

 

Firm Capacity Production.  Production that is accorded the highest priority on
the Gathering System with respect to capacity allocations, interruptions, or
curtailments, specifically

 

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including (i) Dedicated Production and (ii) Production delivered to the
Gathering System from any Person for which Gatherer is contractually obligated
to provide the highest priority. Firm Capacity Production will be the last
Production removed from the relevant part of the Gathering System in the event
of an interruption or curtailment and all Firm Capacity Production, including
Dedicated Production, will be treated equally in the event an allocation is
necessary.

 

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.

 

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 being acquired by
Gatherer from Shipper as of the date hereof, 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, Low Pressure Gas gathering pipelines,
Liquid Hydrocarbons gathering pipelines, High Pressure Gas gathering pipelines,
System Compressor Stations, Gas dehydration facilities, Receipt Points, Delivery
Points (including all interconnection facilities), Measurement Facilities,
Condensate handling facilities, pig receiving facilities, slug catchers and
other inlet facilities at Processing Plants, 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.

 

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High Pressure.  Pipelines gathering or transporting Gas that has been dehydrated
and compressed to the pressure of the Downstream Pipelines or Processing Plants
at the Delivery Points.

 

High Pressure Gathering Fee.  As defined in Section 5.1(a)(ii).

 

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

 

Imbalance.  As defined in Section 9.3.

 

Index Price.  For Gas produced from the Marcellus formation in West Virginia,
the “Midpoint Average” price published in Platt’s Gas Daily Price Guide for
“Columbia Gas/Appalachia”.  For Gas produced from  the Utica formation in Ohio,
the “Midpoint Average” price published in Platt’s Gas Daily Price Guide for
“Texas Eastern M-2 Receipts”.  For other Gas production, an index price
determined by Shipper and reasonably acceptable to Gatherer based on where such
Gas production is being sold, or, if no appropriate index is available, a price
based on a netback calculation determined by Shipper and reasonably acceptable
to Gatherer.

 

Initial Dedication Area.  For Gas, the states of Pennsylvania, West Virginia,
and Ohio; for Liquid Hydrocarbons, the states of West Virginia and Ohio.

 

Initial Development Plan.  The Development Plan attached hereto as Exhibit D.

 

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

 

Liquids Gathering Fee.  As defined in Section 5.1(a)(iv).

 

Liquid Hydrocarbons.  Oil, Condensate, natural gasoline and all the liquid
hydrocarbon production from wells, or a blend of such, in its natural form, not
having been processed, other than for removal of water at the wellhead.

 

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.

 

Low Pressure.  Pipelines gathering Gas at or near wellhead pressure that has yet
to be compressed (other than by well pad gas lift compression or dedicated well
pad compressors) and dehydrated.

 

Made Available for Delivery.  In connection with deliveries of Dedicated
Production under this Agreement, Dedicated Production that is unable to be
delivered to the applicable point as a result of Gatherer’s failure to perform
its obligations under this Agreement.

 

Maintenance.  As defined in Section 7.2.

 

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Mcf.  One thousand (1,000) Cubic Feet.

 

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

 

Minimum Compression Volume Commitment.  With respect to any Contract Year from
the Contract Year in which the first System Compressor Station is placed in
service through the earlier of the Contract Year in which occurs the tenth
(10th) anniversary of the placement in service of the last System Compressor
Station to be placed in service or the expiration or termination of the term of
this Agreement, a volume of Dedicated Gas, stated in Mcf, equal to the sum of
all such volumes calculated at each System Compressor Station that has been in
service for ten (10) years or less, each of which shall be calculated as
follows: the product of (i) the total design capacity, stated in Mcf per Day, of
the relevant System Compressor Station, multiplied by (ii) subject to the
immediately following sentence, the number of Days in such Contract Year,
multiplied by (iii) 0.70.  For purposes of the foregoing calculation the design
capacity of a particular System Compressor Station shall be included (1) only to
the extent that such capacity has been installed at the direction of the Shipper
in accordance with Section 3.4(a) and does not represent additional capacity
installed at such System Compressor Station by Gatherer as permitted by Section
3.4(a), (2) for not more than the 10 year period after it is first placed in
service, (3) in the Contract Year in which it is placed in service, only for the
number of Days in such Contract Year after it has been placed in service, and
(4) if arising prior to the expiration or termination of the term of this
Agreement, in the Contract Year in which the 10th anniversary of its placement
in service occurs, only for the number of Days through such 10th anniversary.

 

Minimum High Pressure Volume Commitment.  With respect to any Contract Year from
the Contract Year in which the first System High Pressure Line is placed in
service through the earlier of the Contract Year in which occurs the tenth
(10th) anniversary of the placement in service of the last System High Pressure
Line to be placed in service or the expiration or termination of the term of
this Agreement, a volume of Dedicated Gas, stated in Mcf, equal to the sum of
all such volumes calculated at each System High Pressure Line that has been in
service for ten (10) years or less, each of which shall be calculated as
follows: the product of (i) the total design capacity, stated in Mcf per Day, of
the relevant System High Pressure Line, as reasonably calculated by Gatherer
based on the capacity of the relevant System Compressor Station and the length
and diameter of such System High Pressure Line, multiplied by (ii) subject to
the immediately following sentence, the number of Days in such Contract Year,
multiplied by (iii) 0.75.  For purposes of the foregoing calculation the design
capacity of a particular System High Pressure Line shall be included (1) for not
more than the 10 year period after it is first placed in service, (2) in the
Contract Year in which it is placed in service, only for the number of Days in
such Contract Year after it has been placed in service, and (3) if arising prior
to the expiration or termination of the term of this Agreement, in the Contract
Year in which the 10th anniversary of its placement in service occurs, only for
the number of Days through such 10th anniversary.

 

MMBtu.  One million (1,000,000) Btus.

 

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MMcf.  One million (1,000,000) Cubic Feet.

 

Monitoring Services Provider.  As defined in Section 11.10(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.

 

Oil and Gas 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.

 

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.

 

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

 

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

 

Production.  Gas and/or Liquid Hydrocarbons.

 

Processing Plant. Any Gas processing facility downstream of any portion of the
Gathering System to which Shipper has dedicated Gas for processing or at which
Shipper has arranged for Gas to be processed prior to delivery to a Downstream
Pipeline.

 

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 or, in the case of Liquid Hydrocarbons, the outlet of the pump
connected to one or more of Shipper’s tanks receiving Liquid Hydrocarbons from
such Wells,.

 

Remote Monitoring Data.  As defined in Section 11.10(a).

 

Required Compressor Station.  As defined in Section 3.4(a).

 

Required High Pressure Lines.  As defined in Section 3.5.

 

Services.  As defined in Section 3.1.

 

Shipper.  As defined in the preamble of this Agreement.

 

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Shipper’s GHG Emissions.  As defined in Section 10.5.

 

System Compressor Station.  As defined in Section 3.4(a).

 

System Delivery Point.  Each point at which Gatherer redelivers Production from
the Gathering System to or for the account of shippers, including the Delivery
Points.

 

System High Pressure Line.  As defined in Section 3.5.

 

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

 

System Segment.  A physically separate segment of the Gathering System that
connects one or more of Shipper’s Wells to one or more Delivery Points,
including all Low Pressure Gas gathering pipelines, Liquid Hydrocarbons
gathering pipelines, High Pressure Gas gathering pipelines, System Compressor
Stations, Gas dehydration facilities, Receipt Points, Delivery Points,
Measurement Facilities, Condensate handling facilities, rights of way, fee
parcels, surface rights, and permits, and all appurtenant facilities.

 

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

 

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 Production, or upon the Services, including
gathering, transportation, handling, transmission, compression, processing,
treating, conditioning, distribution, sale, use, receipt, delivery or redelivery
of Production, including, without limitation, gross receipts taxes, and
including all of the foregoing now existing or in the future imposed or
promulgated.

 

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 MMBtus.  For
Condensate, 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; provided, however, that if sufficient data
has not been obtained to make such calculation, the Thermal Content of
Condensate shall be deemed to be 0.115 MMBtu per Gallon.

 

Third Party Production.  Production produced by Persons other than Shipper and
not considered Dedicated Production hereunder.

 

Well.  A well for the production of hydrocarbons in which Shipper owns an
interest that produces or is intended to produce Dedicated Production 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.

 

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ARTICLE 2
SHIPPER COMMITMENTS

 

Section 2.1                                   Shipper’s Dedication.  Subject to
Section 2.2 through Section 2.4, (a) Shipper exclusively dedicates and commits
to deliver to Gatherer, as and when produced, all Dedicated Production for
gathering through the Gathering System under this Agreement, including (in the
case of Dedicated Gas) High Pressure gathering and compression in the System
Compressor Stations, and (b) Shipper agrees not to deliver any Dedicated
Production to any other gathering system or compressor station.

 

Section 2.2                                   Conflicting Dedications.  Shipper
shall have the right to comply with each of the Conflicting Dedications set
forth in Exhibit E hereto and any other Conflicting Dedication entered into by a
non-Affiliated predecessor-in-interest to Shipper 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 Shipper shall have the right to comply with Conflicting
Dedications only until the first Day of the Month following the termination of
such Conflicting Dedication 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.  Shipper represents that, except as set forth in Exhibit
E, Dedicated Production is not as of the Effective Date subject to any
Conflicting Dedication.  If Dedicated Production produced from a Well on a Well
Pad is subject to a Conflicting Dedication that Shipper has the right to comply
with under this Section 2.2, Shipper has the right, in complying with such
Conflicting Dedication, to deliver all Dedicated Production 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                                   Shipper’s Reservations.  Shipper
reserves the following rights with respect to Dedicated Production for itself
and for the operator of the relevant Dedicated Properties:  (a) to operate Wells
producing Dedicated Production 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 Oil
and Gas Interest covering any of the Dedicated Properties, and to cease
production from or abandon any Well or surrender any such Oil and Gas Interest,
in whole or in part, when no longer deemed by Shipper to be capable of producing
Production in paying quantities under normal methods of operation; (b) to use
Dedicated Production for operations (including reservoir pressure maintenance
and drilling or fractionation fuel); (c) to deliver or furnish to Shipper’s
lessors and holders of other existing similar burdens on production such
Production 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 Production produced
from such Wells, provided that, to the extent that Production from such Wells
constitutes Dedicated Production, Shipper delivers a Connection Notice to
Gatherer with respect to any such Well not later than 30 Days after its
acquisition and thereafter delivers Production 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 Shipper’s Oil and Gas
Interests with respect to Dedicated Production, provided that the share of
Production produced from such pooled, communitized, or unitized Oil and Gas
Interests shall be committed and dedicated to this

 

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Agreement; and (f) to gather Liquid Hydrocarbons produced from the Marcellus
formation in trucks.

 

Section 2.4                                   Covenant Running with the Land. 
The dedication and commitment made by Shipper under this Article 2 is a covenant
running with the land. For the avoidance of doubt and in addition to that which
is provided in Section 18.4, in the event Shipper sells, transfers, conveys,
assigns, grants, or otherwise disposes of any or all of its interest in the
Dedicated Properties, then any such sale, transfer, conveyance, assignment,
grant, or other disposition shall be expressly subject to this Agreement and any
instrument of conveyance shall so state.  Notwithstanding the foregoing, Shipper
shall be permitted to sell, transfer, convey, assign, grant, or otherwise
dispose of Dedicated Properties free of the dedication hereunder (i) in a sale
or other disposition 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 disposed of free of dedication hereunder
pursuant to this Section 2.4, does not exceed the aggregate number of net acres
of Dedicated Properties acquired by Gatherer 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 or (ii) in a sale of Wells located on Dedicated Properties that are
pooled or unitized with the properties of third parties that are not Dedicated
Properties if Shipper is not the operator of such unit; provided, however, that
any such sale, transfer, conveyance, assignment, grant or other disposition of
Dedicated Properties shall not include, and there shall be expressly excluded
therefrom, any Well that is or has 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 which is located on a Well Pad for which a Connection Notice has
previously been delivered by Shipper (unless the completion of such Well has
been delayed and Shipper has paid the costs and expenses incurred by Gatherer in
connection therewith in accordance with Section 3.3(d)).  At the request of
Gatherer, the Parties 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                                   Additional Oil and Gas Interests
or Gathering Facilities.

 

(a)                                 If Shipper acquires any existing gathering
facilities gathering Production from any Oil and Gas Interests, it shall, by
notice to Gatherer on or before the 10th Day after such acquisition, which
notice shall include a reasonable description of such gathering facilities and
such Oil and Gas Interests (including an update to the Development Plan
reflecting such Oil and Gas Interests) and the price paid by Shipper for such
gathering facilities, including any liabilities assumed by Shipper, offer to
sell to Gatherer such gathering facilities, including all Low Pressure Gas
gathering pipelines, High Pressure Gas gathering pipelines, Liquid Hydrocarbons
gathering pipelines, compressor stations, Gas dehydration facilities, receipt
points, delivery points, measurement facilities, Condensate handling facilities,
rights of way, fee parcels, surface rights, and permits, and all appurtenant
facilities, as well as any third party shipper contracts for Production gathered
on such gathering facilities, at the same price at which such gathering
facilities were acquired by Shipper, including the assumption of any liabilities
with respect thereto assumed by Shipper.  Gatherer shall have the right, to be
exercised by notice to Shipper on or before the 60th Day after Shipper’s notice
of its acquisition of such gathering facilities, to acquire such gathering
facilities at such price (including the assumption of such

 

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liabilities).  If Gatherer does not give such notice to Shipper on or before
such 60th Day, Gatherer shall be deemed to have waived its right to acquire such
gathering facilities, except in the case of a third party gathering offer as
provided below, and (i) Shipper shall have the right to own and operate such
facilities to gather the Production from the Oil and Gas Interests described in
such notice and/or (ii) Shipper shall have the right to solicit proposals from a
third party gatherer to acquire, own, and operate such facilities to gather the
Production from the Oil and Gas Interests described in such notice on the basis
that Shipper will dedicate to such gatherer all Oil and Gas Interests owned by
Shipper the Production from which is being gathered by such gathering facilities
as well as the area (including all geological strata and production zones)
within two miles of any such Oil and Gas Interest.  If Shipper obtains any such
third party proposal, it shall, by notice to Gatherer, provide Gatherer with all
the terms and conditions thereof, and Gatherer shall have the right to elect, by
notice to Shipper on or before the 60th Day after its receipt of Shipper’s
notice containing the terms and conditions of such proposal, to acquire such
gathering facilities and provide such services on the same terms and conditions
as those offered by the third party gatherer.  If Gatherer does not so elect on
or before such 60th Day, Gatherer shall be deemed to have waived its right to
acquire such gathering facilities and provide such services, and Shipper shall
have the right to contract with such third party gatherer to acquire such
facilities and to provide such services on such terms and conditions and to
dedicate to such gatherer all Oil and Gas Interests owned by Shipper the
Production from which is being gathered by such gathering facilities as well as
the area (including all geological strata and production zones) within two miles
of any such Oil and Gas Interest.  If Gatherer elects to acquire such gathering
facilities, the closing of Gatherer’s purchase of such gathering facilities from
Shipper shall take place as soon as reasonably practicable following Gatherer’s
exercise of its right to acquire such gathering facilities.  From and after the
closing of such purchase by Gatherer, all Oil and Gas Interests owned by Shipper
the Production from which is being gathered by such gathering facilities shall
be Dedicated Properties, the area (including all geological strata and
production zones) within two miles of any such Dedicated Property shall become
part of the Dedication Area, and such gathering facilities shall be deemed to be
part of the Gathering System.  In any transaction in which Shipper so acquires
gathering facilities, Shipper shall use reasonable efforts to cause the
transaction documents for such acquisition to state a separate purchase price
(and separately state any assumed liabilities) for such gathering facilities. 
If notwithstanding such reasonable efforts the transaction documents for such
acquisition do not state a separate purchase price, the purchase price to be
paid by Gatherer to Shipper for such gathering facilities shall be equal to the
Fair Market Value of such gathering facilities, and Gatherer shall assume all
liabilities in respect of such gathering facilities to the extent arising from
the ownership and operation of such gathering facilities and/or any occurrence
from and after the closing of the purchase of such gathering facilities by
Gatherer.

 

(b)                                 If at any time Shipper desires to construct,
own, and operate, or to have constructed and operated, gathering facilities to
gather Production from Oil and Gas Interests located outside the then-existing
Dedication Area, Shipper shall, by notice to Gatherer specifying (i) the
facilities it desires and the receipt points and delivery points it plans to
connect, (ii) the Oil and Gas Interests acquired by Shipper the Production from
which will be gathered using such facilities, and (iii) a proposed update to the
Development Plan reflecting the Wells to be drilled on such Oil and Gas
Interests during the period of at least 18 Months after such notice, including
production forecasts for all such Wells, offer to Gatherer the opportunity to
construct, own, and operate such facilities as part of the Gathering System on
the terms set forth in this Agreement.

 

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Gatherer shall have the right, to be exercised by notice to Shipper on or before
the 60th Day after Shipper’s notice, to elect to construct, own, and operate
such facilities.  If Gatherer exercises such right, from and after the date of
Gatherer’s notice of exercise, all Oil and Gas Interests owned by Shipper
described in Gatherer’s notice shall be Dedicated Properties, the area
(including all geological strata and production zones) within two miles of any
such Dedicated Property shall become part of the Dedication Area, such gathering
facilities as they are constructed shall be deemed to be part of the Gathering
System, and the proposed development plan included in Shipper’s notice shall
become part of the Development Plan.  If  Gatherer does not give such notice to
Shipper on or before such 60th Day, Gatherer shall be deemed to have waived its
right to construct, own, and operate the facilities set forth in Shipper’s
notice as part of the Gathering System on the terms set forth in this Agreement,
except in the case of a third party gathering offer as provided below, and (1)
Shipper shall have the right to construct, own, and operate such facilities to
gather the Production from the Oil and Gas Interests described in such notice or
(2) Shipper shall have the right to solicit proposals from a third party
gatherer to construct, own, and operate such facilities to gather the Production
from the Oil and Gas Interests described in such notice on the basis that
Shipper will dedicate to such gatherer all Oil and Gas Interests described in
such notice as well as the area (including all geological strata and production
zones) within two miles of any such Oil and Gas Interest.  If Shipper obtains
any such third party proposal, it shall, by notice to Gatherer, provide Gatherer
with all the terms and conditions thereof, and Gatherer shall have the right to
elect, by notice to Shipper on or before the 60th Day after its receipt of
Shipper’s notice containing the terms and conditions of such proposal, to
construct, own, and operate such facilities to gather the Production from the
Oil and Gas Interests described in such notice on the same terms and conditions
as those offered by the third party gatherer.  If Gatherer does not so elect on
or before such 60th Day, Gatherer shall be deemed to have waived its right to
provide such services, and Shipper shall have the right to contract with such
third party gatherer to provide such services on such terms and conditions and
to dedicate to such gatherer the Oil and Gas Interests described in such notice
as well as the area (including all geological strata and production zones)
within two miles of any such Oil and Gas Interest.

 

Section 2.6                                   Priority of Dedicated Production. 
Dedicated Production tendered under this Agreement shall be Firm Capacity
Production.

 

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 Shipper:

 

(a)                                 receive, or cause to be received, into the
Gathering System, from or for the account of Shipper, at each Receipt Point, all
Dedicated Production tendered by Shipper;

 

(b)                                 compress and dehydrate Dedicated Gas
received into the Gathering System at the System Compressor Stations;

 

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

 

(d)                                 make available for delivery, to or for the
account of Shipper, at each Delivery Point for Liquid Hydrocarbons, the Liquid
Hydrocarbons received into the Gathering System or into Gatherer’s trucks and
gathered to or delivered into storage tanks at such Delivery Point allocated to
Shipper in accordance with Section 6.4.

 

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 the date that is 18 months after the Effective Date
(such plan, as updated as hereinafter provided, and including any proposed
development plan that becomes part of the Development Plan pursuant to Section
2.5(b), the “Development Plan”).  Following the Effective Date, Shipper shall
provide Gatherer an updated Development Plan describing the planned development,
drilling, and production activities relating to the Dedicated Properties for the
18-Month period commencing on the date of such updated Development Plan on or
before the last Day of each Month.  Each Development Plan will include (i)
information as to the Wells that Shipper 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
(each such Well Pad reflected in a Development Plan, a “Planned Well Pad”) and
the approximate locations thereof, the earliest date on which one or more Wells
at each such Well Pad are expected to be completed, and the Delivery Points at
which Production produced from such Wells is to be redelivered to Shipper 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 Shipper’s good faith
estimation).  Shipper shall make its representatives available to discuss the
Development Plan from time to time with Gatherer and its 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.  Shipper 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)                                 Attached hereto as Exhibit F is 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”).  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
Shipper, Gatherer shall periodically update the Gathering System Plan.  Without
limiting the generality of the foregoing, Gatherer shall ensure that the
Gathering System Plan reflects each

 

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Monthly Development Plan not later than 30 Days after such Development Plan is
delivered. Gatherer shall make the Gathering System Plan available for
inspection by Shipper and its representatives from time to time and shall make
representatives of Gatherer available to discuss the Gathering System Plan from
time to time with Shipper and its representatives.  Gatherer shall provide
Shipper updates not less frequently than monthly on the progress of work on all
facilities necessary to connect Planned 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 Shipper 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 Shipper, and
that such changes may impact the timing, configuration, and scope of the planned
activities of Gatherer.  The exchange of such information and any changes
thereto shall not give rise to any rights or liabilities as between 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, Shipper 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 Well Pads; Delivery Points.

 

(a)                                 The Gathering System shall be designed,
developed, and constituted for the purpose of providing Services as and when
needed to support the upstream development of the Dedicated Properties, and
Gatherer shall be obligated, at its sole cost and expense, subject to the
provisions of this Agreement, to plan, procure, construct, install, own, and
operate the Gathering System so as to timely connect the Planned Wells to the
Gathering System, connect the Gathering System to Delivery Points on the
Downstream Pipelines, at the Processing Plants, or other facilities specified by
Shipper, and timely commence providing the full scope of Services, with respect
to all Dedicated Production produced from the Planned 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, developing and
constituting the Gathering System to accommodate Third Party Production.

 

(b)                                 In planning the Gathering System, Gatherer
shall use its discretion in determining when to construct and install separate
and segregated facilities in the same geographical area for the purposes of
handling Production with different characteristics (for example, hydrocarbon-dry
versus hydrocarbon-wet Gas); provided, however, that if Shipper requests that
Gatherer construct and install separate facilities, Gatherer shall, subject to
all of the terms and conditions of this Agreement, do so.

 

(c)                                  Gatherer shall be obligated to connect
Wells at a particular Well Pad to the Gathering System only if Gatherer has
received from Shipper a notice in the form of Exhibit G hereto (or in such form
as Shipper and Gatherer shall otherwise agree from time to time) stating

 

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that Shipper intends to drill and complete such Wells at such Well Pad (a
“Connection Notice”) and setting forth the target completion date for drilling
and completion of such Wells (the “Target Completion Date”), and the expected
production from such Well Pad over the next eighteen (18) months.  Following
receipt of a Connection Notice, Gatherer shall cause the necessary facilities to
be constructed to connect the Planned Wells referred to in such Connection
Notice to the Gathering System and to commence the Services with respect to
Dedicated Production produced from such Planned Wells.  Such facilities shall be
available to receive Dedicated Production from Planned Wells on the Planned Well
Pad on which such Planned Wells are to be located as soon as reasonably
practicable following the Connection Notice and in any event on or before the
later to occur of (1) the Target Completion Date with respect to such Planned
Well Pad, (2) the date that is 180 Days after the Connection Notice, and (3) the
date on which the initial Planned Well(s) at such Planned Well Pad has reached
its projected depth and is ready for completion (the later of such dates, with
respect to such Planned Well Pad, the “Completion Deadline”).  Gatherer shall
provide Shipper notice promptly upon Gatherer’s becoming aware of any reason to
believe that it may not be able to connect a Planned Well Pad 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 Production from Wells on such Planned Well Pad 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 Shipper 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
Shipper’s sole and exclusive remedies for such delay,

 

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

 

(ii)                                  Shipper shall have the right to complete
the procurement, construction and/or installation of any rights or facilities
necessary to connect the relevant Planned Well Pad to the Gathering System, to
connect the Gathering System to the relevant Delivery Point, and/or to permit
Dedicated Production from Planned Wells at the Planned Well Pad to be received
into the Gathering System and delivered to the relevant Delivery Point, in which
case Gatherer shall pay to Shipper an amount equal to 115% of all reasonable
costs and expenses incurred by Shipper in so procuring, constructing, and/or
installing such rights and facilities, and Shipper 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 180 Days or more after the Effective
Date.

 

(d)                                 If the actual completion of the initial
Planned Well at a particular Planned Well Pad is delayed more than 30 Days after
the Target Completion Date for such Planned Well

 

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Pad and the Gathering System is connected to such Planned Well Pad and available
to commence providing the Services with respect to all Dedicated Production from
such Planned Well prior to the date such initial Planned Well has reached its
projected depth and is ready for completion, Gatherer shall be entitled to a fee
equal to interest per annum at the Wall Street Journal prime rate on the
incremental cost and expense incurred by Gatherer to procure, construct and
install the relevant rights and facilities to connect to such Planned Well Pad
and to cause such facilities to be available to commence providing Services
thereto for the number of Days after the Target Completion Date until the Day
that the first Well at such Planned Well Pad is completed; provided, however,
that if such first Well has not been completed by the date that is six months
after the Target Completion Date for such Well or, as of an earlier date,
Shipper notifies Gatherer that it has elected not to complete any Planned Wells
at such Planned Well Pad, Shipper shall pay to Gatherer an amount equal to 115%
of all reasonable incremental costs and expenses incurred by Gatherer in
procuring, constructing and installing such rights and facilities to connect the
Gathering System to such Planned Well Pad and to cause such facilities to be
available to commence providing Services thereto, and Gatherer shall assign,
transfer, and deliver to Shipper all rights and facilities (including equipment,
materials, work in progress, and completed construction) the costs and expenses
of which have so been paid by Shipper, to Shipper.  If Shipper so pays Gatherer
and later completes a Well at such Planned Well Pad, or if such facilities are
later used to connect a completed Well at a different Planned Well Pad or for a
third party, Gatherer shall refund to Shipper such amount paid by Shipper, and
Shipper shall retransfer such rights and facilities to Gatherer.

 

(e)                                  A Connection Notice shall be deemed to have
been given for the Planned Wells set forth on Exhibit H hereto, the Target
Completion Date for which shall be as set forth Exhibit H.  Such Connection
Notice shall be deemed to have been given for each such Planned Well 180 Days
prior to such Target Completion Date.

 

(f)                                   Shipper shall have right to specify in the
Development Plan or in a Connection Notice that Dedicated Production produced
from a particular Well be redelivered to Shipper at a particular Delivery Point,
including a Delivery Point on any Downstream Pipeline.  Gatherer shall be
obligated, at Gatherer’s cost, to provide connections to the Delivery Points set
forth on Exhibit B.  If Shipper specifies that Shipper’s Production 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 Shipper’s sole cost,
risk, and expense, provide a connection to such Delivery Point.  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 Shipper’s Production 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 Shipper’s sole, cost, risk, and expense). 
Subject to the foregoing, Gatherer shall connect each Well to the Gathering
System such that Production from such Well can be redelivered to the Delivery
Point described in the Development Plan.

 

Section 3.4                                   Compression.

 

(a)                                 The Gathering System Plan will describe the
compression facilities that will be required to compress Dedicated Gas upstream
of the Delivery Points or any System High Pressure Line in order for the
Gathering System to be operated at the pressures specified in

 

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Section 8.1 and to permit Dedicated Gas to enter the facilities of the
Downstream Pipelines or Processing Plants, as applicable (“Required Compressor
Stations”).  Gatherer shall install each such Required Compressor Station as
directed by Shipper and shall operate and maintain each Required Compressor
Station (each such Required Compressor Station so installed by Gatherer, a
“System Compressor Station”).  Notwithstanding the foregoing, Gatherer shall not
be obligated to install any Required Compressor Station during the ten year
period immediately prior to the scheduled termination of this Agreement unless
Shipper agrees that this Agreement shall remain in effect beyond the scheduled
termination thereof as to such Required Compressor Station only and the amount
determined under Section 5.1(d)(ii)(A) with respect thereto until the
10th anniversary of the placement in service of such Required Compressor
Station.  To the extent that Shipper does not direct Gatherer to install any
Required Compressor Station as, when, and where described in the Gathering
System Plan and as a consequence the Gathering System is not capable of
operating in accordance with the obligations of Gatherer with respect to
pressures that are set forth in Sections 8.1 and 8.2, Gatherer shall be relieved
from such obligations.  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 Shipper has directed to be installed at such System Compressor
Station, as it deems necessary or appropriate to provide the Services and such
services as it is providing in respect of Third Party Production.  Shipper must
pay the Compression Fee with respect to all its Gas that is compressed using
such additional compressor stations or using such additional capacity, but such
additional compressor stations or additional capacity shall not be included for
purposes of calculating the Minimum Compression Volume Commitment, and the
Compression Fee paid by Gatherer for its Gas compressed using such additional
compressor stations or additional capacity shall not count toward the amount
determined under Section 5.1(d)(ii)(A).

 

(b)                                 The Parties acknowledge that inlet
Measurement Facilities and a slug catcher have not been installed at the System
Compressor Station referred to in the Initial Gathering Plan as the Bluestone
Compressor Station.  Shipper agrees that if it sells or otherwise transfers any
Well upstream of the Bluestone Compressor Station such that Gas owned by a third
party is being gathered to the Bluestone Compressor Station, Gatherer will
install such Measurement Facilities and a slug catcher at the Bluestone
Compressor Station, and Shipper will reimburse Gatherer’s reasonable costs of
doing so.

 

Section 3.5                                   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 Gas Delivery Points required by Shipper and to redeliver the volumes of
Dedicated Gas to be redelivered at such Delivery Points in the most efficient
manner (“Required High Pressure Lines”).  Gatherer shall install each such
Required High Pressure Line, together with the associated Required Compressor
Stations, as directed by Shipper and shall operate and maintain each Required
High Pressure Line (each such Required High Pressure Line so installed by
Gatherer, a “System High Pressure Line”).  Notwithstanding the foregoing,
Gatherer shall not be obligated to install any Required High Pressure Line
during the ten year period immediately prior to the scheduled termination of
this Agreement unless Shipper agrees either that this Agreement shall remain in
effect beyond the scheduled termination thereof as to such Required High
Pressure Line only and the amount determined under Section 5.1(d)(i)(A) with
respect thereto until the 10th anniversary of the placement in service of such

 

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Required High Pressure Line.  To the extent that Shipper does not direct
Gatherer to install any Required High Pressure Line as, when, and where
described in the Gathering System Plan and as a consequence the Gathering System
is not capable of operating in accordance with the obligations of Gatherer with
respect to pressures that are set forth in Sections 8.1 and 8.2, Gatherer shall
be relieved from such obligations.  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
Production.  Shipper must pay the High Pressure Gathering Fee with respect to
all its Gas that is gathered through such additional High Pressure gathering
pipelines, but such additional High Pressure Gathering Pipelines shall not be
included for purposes of calculating the Minimum High Pressure Volume
Commitment, and the High Pressure Gathering Fee paid by Gatherer for its Gas
gathered through such additional High Pressure gathering pipelines shall not
count toward the amount determined under Section 5.1(d)(i)(A).

 

Section 3.6                                   Liquids Gathering.  Shipper is
responsible for the construction, ownership, and operation of (a) all facilities
for the separation and/or collection of Liquid Hydrocarbons at the wellhead and
the Well site storage of such liquids and (b) the pumps located at each Receipt
Point to transfer Liquid Hydrocarbons from such storage into the Gathering
System or into Gatherer’s trucks.  Shipper shall ensure that pumps have
sufficient capacity and are operated in a manner sufficient to cause the Liquid
Hydrocarbons received into the Gathering System to be redelivered into the tanks
located at the Liquid Hydrocarbons Delivery Points.  Shipper shall cause Liquid
Hydrocarbons to be received into the Gathering System at reasonably uniform
rates of flow and to provide Gatherer reasonable notice of material increases or
decreases in such rates of flow.  To the extent that any facilities for the
stabilization of such Liquid Hydrocarbons are required at the Liquid
Hydrocarbons Delivery Points, Gatherer will provide such facilities and required
stabilization services to Shipper on a cost-of-service basis as provided in
Section 5.1(e).

 

Section 3.7                                   Production Removed for Lease
Operations.  Gatherer shall use commercially reasonable efforts to accommodate,
at the cost and expense of Shipper, any request by Shipper to redeliver to
Shipper any Production that has been received into the Gathering System that
Shipper desires to use in lease operations, including for drilling and
fractionation fuel.  Shipper shall be responsible for the construction,
ownership, and operation of facilities to transport such Production from the
point of redelivery of such production from the Gathering System to the lease
sites where such Production 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 Shipper, except as otherwise agreed by Gatherer; provided that Shipper
hereby grants, 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

 

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interfere with Shipper’s lease operations or with the rights of owners in fee,
and will be subject to Shipper’s safety and other reasonable access requirements
applicable to Shipper’s personnel.  Shipper shall not 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 Shipper
loses its rights to the property, regardless of the reason for such loss of
rights.  Notwithstanding the foregoing, (i) Shipper 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 Shipper agrees that Gatherer’s Measurement Facilities may be located
on Shipper’s Well Pad sites, Shipper shall be responsible for obtaining any
necessary rights to locate such Measurement Facilities on such Well Pad sites,
and (iii) Shipper shall use reasonable efforts to involve Gatherer in Shipper’s
negotiations with the owners of lands covered by the Dedicated Properties so
that Shipper’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 the Parties 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
Pad, the Parties 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.  The Parties further agree to cooperate
with each other and to communicate regularly regarding their efforts to obtain
such permits, authorizations, consents and rights of way.

 

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 twentieth (20th)
anniversary of the Effective Date and from year to year thereafter (with the
initial term of this Agreement deemed extended for each of any such additional
year) until such time as this Agreement is terminated, effective upon an
anniversary of the Effective Date, by notice from either Party to the other
Party on or before the one hundred eightieth (180th) Day prior to such
anniversary.

 

ARTICLE 5
FEES AND CONSIDERATION

 

Section 5.1                                   Fees.

 

(a)                                 Subject to the other provisions of this
Agreement, including Section 5.1(d), Shipper 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:

 

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(i)                                     The product of (A) the aggregate volume
of Gas, stated in Mcf, received by Gatherer from Shipper or for Shipper’s
account at each Receipt Point during such Month multiplied by (B) $0.30
(provided that such fee shall be discounted by fifty percent (50%) for Gas
removed from the Gathering System for use 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”);

 

(ii)                                  The product of (A) the aggregate volume of
Gas, stated in Mcf, received from Shipper or for Shipper’s account entering any
System High Pressure Line during such Month multiplied by (B) $0.18 (as may be
increased or decreased in accordance with Section 5.1(b), the “High Pressure
Gathering Fee”);

 

(iii)                               The product of (A) the aggregate volume of
Gas, stated in Mcf, received from Shipper or for Shipper’s account and
compressed and dehydrated at each System Compressor Station during such Month
multiplied by (B) $0.18 (as may be increased or decreased in accordance with
Section 5.1(b), the “Compression Fee”); and

 

(iv)                              The product of (A) the aggregate volume of
Liquid Hydrocarbons, stated in Barrels, received from Shipper or for Shipper’s
account entering the Gathering System or loaded into Gatherer’s trucks during
such Month multiplied by (B) $4.00 (as may be increased or decreased in
accordance with Section 5.1(b), the “Liquids Gathering Fee”).

 

(b)                                 After each of the first five (5) Contract
Years, one hundred percent (100%), and after the sixth (6th) Contract Year and
each Contract Year thereafter, fifty-five percent (55%), of the Gathering Fee,
High Pressure Gathering Fee, Compression Fee, and Liquids Gathering 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 2015, 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, High Pressure Gathering Fee, Compression Fee, and
Liquids Gathering 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, including Section 5.1(d), Shipper shall pay Gatherer the actual cost
of electricity used as Fuel and allocated to Shipper in accordance with Section
6.2.

 

(d)                                 Notwithstanding the foregoing provisions of
this Section 5.1; regardless of whether Shipper has any Firm Capacity
Production:

 

(i)                                     If, with respect to any Contract Year in
which there is a Minimum High Pressure Volume Commitment, Shipper shall pay to
Gatherer, on or before the 30th Day after receipt of Gatherer’s invoice therefor
(which shall be delivered not more than

 

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sixty (60) Days after the end of the relevant Contract Year), an amount equal to
the excess, if any, of:

 

(A)                               the product of the Minimum High Pressure
Volume Commitment for such Contract Year multiplied by the High Pressure
Gathering Fee in effect for such Contract Year, over

 

(B)                               the product of the High Pressure Gathering Fee
in effect for such Contract Year multiplied by the aggregate of the volumes of
Dedicated Production, stated in Mcf, delivered or Made Available for Delivery at
each System High Pressure Line during such Contract Year.

 

(ii)                                  If, with respect to any Contract Year in
which there is a Minimum Compression Volume Commitment, Shipper shall pay to
Gatherer, on or before the 30th Day after receipt of Gatherer’s invoice therefor
(which shall be delivered not more than sixty (60) Days after the end of the
relevant Contract Year), an amount equal to the excess, if any, of:

 

(A)                               the product of the Minimum Compression Volume
Commitment for such Contract Year multiplied by the Compression Fee in effect
for such Contract Year, over

 

(B)                               the product of the Compression Fee in effect
for such Contract Year multiplied by the aggregate of the volumes of Dedicated
Production, stated in Mcf, delivered or Made Available for Delivery at each
System Compressor Station during such Contract Year.

 

(e)                                  All Services for which specific prices are
not set forth in Section 5.1(a), including any required treating of Production,
the handling and treatment of Condensate recovered from the Gathering System,
and the stabilization of Liquid Hydrocarbons, shall be priced on a cost of
service basis as set forth in this Section 5.1(e).  In addition, notwithstanding
the foregoing provisions of this Section 5.1 or any other provision to the
contrary in this Agreement, Gatherer shall have the right to elect to be paid
for some or all Services, on a cost of service basis to the extent set forth in
this Section 5.1(e).  Gatherer shall have the right to elect to be paid on a
cost of service basis (i) for any Services other than Services offered in
respect of the Wells and Planned Wells set forth in the Initial Development
Plan, all of which Services shall be performed for the volumetric fees, subject
to the minimum volumes, set forth in Section 5.1(a) and Section 5.1(d), and (ii)
any compression services in respect of the Wells and Planned Wells set forth in
the Initial Development Plan if Gatherer determines in good faith that, if such
services were to be performed for the volumetric fees, and subject to the
minimum volumes, set forth in Section 5.1(a) and Section 5.1(d), it would
receive a rate of return on its capital expenditures for such System Compressor
Station of less than 13% over the period of 84 months after such System
Compressor Station is placed into service.  With respect to such Services,
Gatherer may elect, by notice to Shipper at least three (3) Months prior to the
placement in service of the relevant facilities or parts of the Gathering
System, or, in the case of any gathering facilities by Gatherer acquired
pursuant to Section 2.5(a), in the notice given by Gatherer in accordance with
such Section that Gatherer will acquire such gathering facilities, to be paid on
a

 

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cost of service basis for the Services specified in such notice commencing with
their placement in service or with the acquisition of such facilities, as
applicable, and continuing for the remaining term of this Agreement, but only
with respect to the facilities so acquired and/or discrete parts of the
Gathering System (each, a “CS Facility”) that are placed into service after such
notice.  The Services specified in such notice may be of any scope determined by
Gatherer in its sole discretion and may include all eligible Services or any
part thereof and may include, by way of example only, gathering Services with
respect to a particular Well or group of Wells, compression Services and/or High
Pressure Services with respect to a particular System Compressor Station and/or
System High Pressure Line, all Services of a particular type, and any other
subset of the Services determined by Gatherer, in each case subject to the
foregoing sentence.  All Services provided from time to time on a cost of
service basis shall be bundled together for purposes of calculating a single
Monthly cost of service fee (the “Cost of Service Fee”), which shall be
calculated with respect to each Contract Year as set forth in Exhibit I attached
hereto.

 

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 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 Condensate recovered from such System Segment
during such Month (other than Condensate 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 actual measurements of
Fuel consumption.

 

Section 6.3                                   Allocation of Condensate Recovered
from the Gathering System.  Gatherer shall allocate the volume of Condensate
collected from any System Segment (or from facilities at compressor stations
downstream of System Delivery Points on such System Segment and allocated to the
Gathering System by the operator of such compressor station) to each System
Receipt Point on such System Segment during the applicable Month based on a
fraction,

 

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the numerator of which is the theoretical volume of Condensate attributable to
such System Receipt Point during such Month and the denominator of which is the
total theoretical volume of Condensate for all such System Receipt Points on
such System Segment during such Month.  The theoretical volume of Condensate at
each System Receipt Point shall be determined by multiplying the total volume of
Gas (in Mcf) received at the applicable System Receipt Point during the
applicable Month by the Gallons per Mcf of pentanes and heavier components in
such Gas determined at the relevant System Receipt Point on such System Segment.

 

Section 6.4                                   Allocation of Liquid Hydrocarbons.

 

(a)                                 Subject to Section 6.4(b), Gatherer shall
allocate the volume of Liquid Hydrocarbons gathered to or delivered into storage
tanks at each Delivery Point to each System Receipt Point upstream of such
Delivery Point during the applicable Month based on a fraction, the numerator of
which is the volume of Liquid Hydrocarbons received at such System Receipt Point
and the numerator of which is the total volumes of Liquid Hydrocarbons received
at all such System Receipt Points during such Month.

 

(b)                                 Gatherer shall not commingle Shipper’s
Liquid Hydrocarbons received at the Receipt Points with Liquid Hydrocarbons
constituting Third Party Production if the resulting commingled stream would
have a market value that is materially less than the market value a stream
composed solely of Shipper’s Liquid Hydrocarbons would have, unless Gatherer has
provided by notice to Shipper a written allocation methodology that ensures that
Shipper is allocated a portion of the commingled stream that would enable it to
realize a market value that reasonably approximates the market value of such
stream composed solely of Shipper’s Liquid Hydrocarbons.  From and after the
delivery of such notice, Gatherer shall have the right to commingle such Liquid
Hydrocarbons and shall apply such allocation methodology to such commingled
stream.

 

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 Shipper, except in cases of emergency where such notice is
impracticable or in cases where the operations of Shipper will not be affected. 
Before the beginning of each calendar year, Gatherer shall provide Shipper 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 Shipper with its projected
maintenance schedule for the following Month.

 

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Section 7.3                                   Firm Capacity Production; 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 Production to the Gathering System, including
the delivery of Firm Capacity Production.  If the volume of Gas or Liquid
Hydrocarbons, as applicable, available for delivery into any System Segment
exceeds the capacity of such System Segment at any point relevant to Gatherer’s
service to Shipper hereunder, then Gatherer shall interrupt or curtail receipts
of Production in accordance with the following:

 

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

 

(b)                                 Second, if additional curtailments are
required beyond Section 7.3(a) above, Gatherer shall curtail Firm Capacity
Production.  In the event Gatherer curtails some, but not all Firm Capacity
Production 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 Production, including Dedicated Production, on a pro rata basis
based upon Shipper’s and the other shippers’ of Firm Capacity Production average
of the confirmed nominations for the previous fourteen (14) Day period of Firm
Capacity Production prior to the event causing the curtailment.

 

Section 7.4                                   Arrangements After Redelivery.  It
shall be Shipper’s obligation to make any required arrangements with other
parties for delivery of Shipper’s Production to the Receipt Points and Delivery
Point Gas and Liquid Hydrocarbons 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 Production to be used as line fill, Shipper shall
provide such line fill to Gatherer.

 

ARTICLE 8
PRESSURES AT RECEIPT POINTS AND DELIVERY POINTS

 

Section 8.1                                   Pressures at Receipt Points. 
Gatherer shall not operate the Gas Gathering System in such a manner as to cause
the average pressure at any Receipt Point in any Month to exceed the lower of
(a) two hundred (200) psig and (b) fifty (50) psig above the average suction
pressure, as measured at the first separator or slug catcher upstream of any
compression suction valve or any other valve that can be partially closed, at
the nearest System Compressor Station downstream of such Receipt Point during
such Month.  Subject to the foregoing, Shipper shall deliver or cause to be
delivered Gas to each Receipt Point at sufficient pressure to enter the
Gathering System against its operating pressure.

 

Section 8.2                                   Pressures at Delivery Points.  All
System Compressor Stations (a) shall be designed for a suction pressure of from
one hundred (100) psig to one hundred forty (140) psig and (b) shall be designed
for and shall be operated at a discharge pressure sufficient to effect delivery
to the relevant Downstream Pipeline or Processing Plant.

 

Section 8.3                                   Shipper Facilities.  Shipper, at
its own expense, shall construct, equip, maintain, and operate all facilities
(including separation, line heaters, and/or compression

 

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equipment) necessary to deliver Dedicated Production to Gatherer at the Receipt
Points.  Shipper 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.  Gatherer shall
design the Gas Gathering System to ANSI 300 standards or higher such that the
maximum allowable operating pressure at each Receipt Point shall be not less
than 740 psig.

 

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 Shipper of Gatherer’s good faith estimate of any
capacity allocations or curtailments for the 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, Shipper shall provide to
Gatherer nominations for deliveries of Dedicated Production to the Receipt
Points and the delivery of Delivery Point Gas and Liquid Hydrocarbons to the
specified Delivery Points during the next Month.  Shipper shall have the right
to change such nominations at any time subject to the requirements of the
Persons receiving Delivery Point Gas or Liquid Hydrocarbons 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 Condensate allocated to
Shipper.  Shipper 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.  Shipper shall reimburse Gatherer for any cost,
penalty, or fee arising from any Imbalance assessed against Gatherer by any
Person receiving Dedicated Production 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 the Parties agree the Parties 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 Shipper to the Receipt Points 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

 

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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 in excess of one hundred twenty (120) degrees Fahrenheit.

 

(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.

 

Except for items (a) through (d) 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 Shipper 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.  Shipper agrees to undertake commercially reasonable measures to
eliminate the cause of such non-conformance.  If Shipper 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.  In the event that Gatherer takes receipt of non-conforming Gas, Shipper
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 such non-conforming Gas.

 

Section 10.3                            Delivery Point Gas Quality
Specifications.  Gatherer shall redeliver the Delivery Point Gas that it is
required to redeliver to Shipper at the Delivery Points meeting the Gas Quality
Specifications, provided that Shipper delivers Gas to Gatherer at the Receipt
Points which meets the Gas Quality Specifications.

 

Section 10.4                            Liquid Hydrocarbons Quality
Requirements.  Liquid Hydrocarbons delivered by Shipper to the Receipt Points
shall have gravity, viscosity, and other properties such that it is readily
susceptible to gathering and handling through Gatherer’s existing facilities and
such that it will not adversely affect the quality of Liquid Hydrocarbons
received from other shippers or cause any material disadvantage to other
shippers or Gatherer.  If any Liquid Hydrocarbons delivered by Shipper fails at
any time to conform to the foregoing requirements,

 

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then Gatherer will have the right to immediately discontinue receipt of such
non-conforming Liquid Hydrocarbons so long as such Liquid Hydrocarbons continues
to be non-conforming.  Shipper agrees to undertake commercially reasonable
measures to eliminate the cause of such non-conformance.  Gatherer shall ensure
that the Liquid Hydrocarbons of other shippers are also required to meet the
foregoing standards.

 

Section 10.5                            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 Shipper’s
Production and/or the gathering, or transportation of such Production
(collectively, “Shipper’s GHG Emissions”) or (b) Gatherer incurring any costs or
expenses attributable to Shipper’s Production, including any costs or expenses
for disposal or treating of carbon dioxide attributable to such Production, or
any other additional economic burden being placed on Gatherer in connection with
or related to Shipper’s GHG Emissions, including any tax, assessment, or other
cost or expense (collectively, “Emissions Charges”), then (i) Shipper will use
reasonable efforts to provide any required emissions allowances or their
equivalent to Gatherer in a timely manner (and 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 Shipper’s failure
to so provide such allowances) and (ii) Shipper 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 Production at all the
System Receipt Points and shall ensure that the relevant Downstream Pipeline or
Processing Plant 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.  Shipper 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 the Parties.

 

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(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 the Parties.

 

(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                            Liquid Hydrocarbons Measurement
Standards.  The following standards shall apply to the measurement of Liquid
Hydrocarbons hereunder:

 

(a)                                 Measurement Devices used in the measurement
of Liquid Hydrocarbons shall be designed, installed, and operated in accordance
with specifications of the American Petroleum Institute Manual of Petroleum
Measurement Standards or other applicable industry standards, as amended from
time to time.

 

(b)                                 The quality and gravity of Liquid
Hydrocarbons shall be determined from laboratory analyses of representative
samples following the calculation procedures in American Petroleum Institute
Manual of Petroleum Measurement Standards or other applicable industry standards

 

Section 11.4                            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 an absolute pressure of 14.73 psia and without adjustment for
water vapor content.  It is agreed that for the purposes of measurement and
computations hereunder, (a) the atmospheric pressure shall be based on the
atmospheric pressure determined and used by Downstream Pipelines at the Delivery
Point(s) regardless of the atmospheric pressure at which the Gas is measured and
(b) all measurements and testing performed hereunder shall all be made by
Gatherer in accordance with applicable rules, regulations, and orders.

 

(b)                                 Gatherer’s Measurement Facilities at the
System Receipt Points shall be spot samplers, continuous samplers, or gas
chromatographs, as Gatherer shall in its discretion determine, subject to the
minimum requirements set forth in the following three sentences.  Gatherer shall
at least take monthly spot samples at all Measurement Facilities located at
System Receipt Points where Gas is received into the Gathering System from a
single Well.  At all Measurement Facilities located at System Receipt Points
where Gas is received into the System from more than one Well, Gatherer shall at
least (i) take monthly spot samples if such Measurement Facilities measure less
than five thousand (5,000) Mcf per Day, (ii) use continuous samplers if such
Measurement Facilities measure from five thousand (5,000) to twenty thousand
(20,000) Mcf per Day, and (iii) use gas chromatographs if such Measurement
Facilities measure more than twenty thousand (20,000) Mcf per Day.  Measurement
at the System Delivery Points shall be done using continuous samplers (for
Measurement Facilities metering less than twenty thousand (20,000) Mcf per Day)
and online gas chromatographs (for Measurement Facilities

 

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metering twenty thousand (20,000) Mcf or more per Day).  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 Thermal Content 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 Shipper and Gatherer.

 

(c)                                  The specific gravity of Gas shall be
measured by a standard gravity balance in accordance with the provisions of the
Natural Gas Processors Association Publication No. 3130, entitled “Standard
Method for Determining the Specific Gravity of Gas”, or by a gravitometer
employing the “Momentum Method” as described in Chapter VII, “Determination of
Specific Gravity”, of the American Gas Association Gas Measurement Manual, 1963,
in each case, as such may be amended from time to time.  The specific gravity
will be determined and calculated to the nearest one-thousandth (0.001).

 

(d)                                 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 degree (1º) Fahrenheit, obtained while Gas is being delivered, will be the
applicable flowing Gas temperature for the period under consideration.

 

(e)                                  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.

 

(f)                                   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 11.5                            Notice of Measurement Facilities
Inspection and Calibration.  Each Party shall give reasonable notice to the
other Party in order that the other Party 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 Production under this Agreement.  The
official electronic data from such Measurement 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.

 

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Section 11.6                            Measurement Accuracy Verification.

 

(a)                                 Each Party shall verify the accuracy of all
Measurement Facilities owned by such Party at intervals based upon the following
schedule:

 

(i)                                     semi-annually for Gas Measurement
Facilities metering less than one thousand (1,000) Mcf per Day;

 

(ii)                                  quarterly for Gas Measurement Facilities
metering between one thousand (1,000) and five thousand (5,000) Mcf per Day;

 

(iii)                               monthly for Gas Measurement Facilities
metering more than five thousand (5,000) Mcf per Day; and

 

(iv)                              quarterly for Liquid Hydrocarbons Measurement
Facilities.

 

Neither Party shall be required to cause adjustment or calibration of such
equipment more frequently than once per Month, unless a special test is
requested pursuant to Section 11.7.

 

(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 one percent (1%) 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 the Parties) and the total flow for the period
redetermined in accordance with the provisions of Section 11.8.  If the period
of error condition cannot be determined or agreed upon between the Parties, 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 one percent (1%)
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
one percent (1%) of the adjusted flow rate, all prior recordings and electronic
flow computer data shall be considered to be accurate for quantity determination
purpose.

 

Section 11.7                            Special Tests.  In the event a Party
desires a special test (a test not scheduled by a Party under the provisions of
Section 11.6) of any Measurement Facilities, seventy-two (72) hours advance
notice shall be given to the other Party and both Parties shall cooperate to
secure a prompt test of the accuracy of such equipment.  If the Measurement
Facilities tested are found to be within the range of accuracy set forth in
Section 11.6(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 11.6(b), then the Party that owns such
Measurement Facilities shall pay such costs and perform the corrections
according to Section 11.8.

 

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Section 11.8                            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 11.6, the total quantity of Production 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 11.6);

 

(b)                                 Where multiple meter runs exist in series,
by calculation using the registration of such meter run equipment; provided that
they are measuring Production 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 11.9                            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 11.10                     Access.

 

(a)                                 Gatherer shall contract with eLynx
Technologies or a provider of comparable services reasonably satisfactory to
Shipper (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
PRAMS Plus production software or comparable production software (“Remote
Monitoring Data”).

 

(b)                                 Gatherer shall (i) provide the Monitoring
Services Provider access to all of Gatherer’s radio and telephone infrastructure
to access and gather all Remote Monitoring Data and (ii) cause the Monitoring
Services Provider to allow Shipper to view and access all Remote Monitoring Data
on the Monitoring Service Provider’s system, including the ability to poll for
Remote Monitoring Data through the Monitoring Services Provider’s system.

 

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

 

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ARTICLE 12
NOTICES

 

Section 12.1                            Notices.  Unless otherwise provided
herein, any notice, request, invoice, statement, or demand which either Party
desires to serve upon the 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 the other
a notice of default under this Agreement, or if Shipper desires to serve upon
Gatherer a Connection Notice, the delivery of such notice shall be considered
effective under this Section 12.1 only if delivered by any method set forth in
items (i) through (iv) above.  Any notice shall be given to the other Party at
the following address, or to such other address as either Party shall designate
by written notice to the other:

 

Shipper:

ANTERO RESOURCES CORPORATION

 

1615 Wynkoop Street

 

Denver, Colorado 80202

 

 

 

Attn: Chief Financial Officer

 

Phone: (303) 357-7310

 

Fax Number: (303) 357-7315

 

 

With copy to:

For gas control, nominations & balancing:

 

Manager of Gas Marketing

 

Phone: (303) 357-7310

 

Fax Number: (303) 357-7315

 

 

 

For accounting, financial, and legal:

 

Controller

 

Phone: (303) 357-7310

 

Fax Number: (303) 357-7315

 

 

Gatherer:

ANTERO MIDSTREAM LLC

 

1615 Wynkoop

 

Denver, Colorado 80202

 

 

 

Attn: Chief Financial Officer

 

Phone: (303) 357-7310

 

Fax Number: (303) 357-7315

 

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For gas control, nominations & balancing:

 

Manager of Gas Marketing

 

Phone: (303) 357-7310

 

Fax Number: (303) 357-7315

 

 

 

For accounting, financial, and legal:

 

Controller

 

Phone: (303) 357-7310

 

Fax Number: (303) 357-7315

 

ARTICLE 13
PAYMENTS

 

Section 13.1                            Invoices.  Not later than the tenth
(10th) Day following the end of each Month, Gatherer shall provide Shipper with
a detailed statement setting forth the volume and Thermal Content of Gas and, if
applicable, the volume of Liquid Hydrocarbons received by Gatherer at the
Receipt Points in such Month, the volume and Thermal Content of Delivery Point
Gas allocated to Shipper and, if applicable, the volume of Liquid Hydrocarbons
redelivered to Shipper in such Month, the quantity of Gas and the cost of
electricity used as Fuel allocated to Shipper in such Month, the volume and
Thermal Content of Lost and Unaccounted For Gas for such Month, and the
Gathering Fee, the High Pressure Gathering Fee, the Compression Fee, the Liquids
Gathering Fee, and the Cost of Service 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). 
Shipper 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 Shipper 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 Shipper 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 Party, on not less
than thirty (30) Days prior written notice to the other Party, 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 Party 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
Production 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

 

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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, Shipper shall make timely payment
of all undisputed amounts, and Gatherer and Shipper 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 Shipper 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.

 

Section 13.6                            Credit Assurance.  Gatherer shall apply
consistent evaluation practices to all similarly situated shippers to determine
the new Shipper’s financial ability to perform its payment obligations under
this Agreement.

 

(a)                                 If Gatherer has reasonable grounds for
insecurity regarding the performance of any obligation by Shipper under this
Agreement (whether or not then due), Gatherer may demand Adequate Assurance of
Performance from Shipper, which Adequate Assurance of Performance shall be
provided to Gatherer within five (5) Days after written request.  If Shipper
fails to provide such Adequate Assurance of Performance within such time, then
Gatherer may suspend its performance under this Agreement until such Adequate
Assurance of Performance is provided.  However, any action by Gatherer shall not
relieve Shipper of its payment obligations.  The exercise by Gatherer of any
right under this Section 13.6 shall be without prejudice to any claims for
damages or any other right under this Agreement.  As used herein, “Adequate
Assurance of Performance” means any of the following, in Gatherer’s reasonable
discretion:

 

(i)                                     an irrevocable standby letter of credit
in an amount not to exceed an amount that is equal to sixty (60) Days of
Shipper’s payment obligations hereunder from a financial institution rated at
least A- by S&P or at least A3 by Moody’s in a form and substance satisfactory
to Gatherer;

 

(ii)                                  cash collateral in an amount not to exceed
an amount that is equal to sixty (60) Days of Shipper’s payment obligations
hereunder to be deposited in an escrow account as designated by Gatherer;
Gatherer is hereby granted a security interest in and right of set-off against
all cash collateral, which is or may hereafter be delivered or otherwise
transferred to such escrow account in connection with this Agreement; or

 

(iii)                               a guaranty in an amount not to exceed an
amount that is equal to sixty (60) Days of Shipper’s payment obligations
hereunder reasonably acceptable to Gatherer.

 

(b)                                 The term of any security provided under this
Section 13.6 shall be as reasonably determined by Gatherer, but it shall never
exceed sixty (60) Days, after which the

 

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security shall terminate (or in the case of cash collateral, be immediately
returned by Gatherer to Shipper without further action by either Party). 
Nothing shall prohibit Gatherer, however, from requesting additional Adequate
Assurance of Performance following the end of any such term, so long as the
conditions triggering such a request under this Section 13.6 exist.

 

(c)                                  Should Shipper fail to provide Adequate
Assurance of Performance within five (5) Days after receipt of written demand
for such assurance (which shall include reasonable particulars for the demand
and documentation supporting the calculation of such amount demanded), then
Gatherer shall have the right (notwithstanding any other provision of this
Agreement) to suspend performance under this Agreement until such time as
Shipper furnishes Adequate Assurance of Performance.

 

Section 13.7                            Excused Performance.  Gatherer will not
be required to perform or continue to perform services hereunder, and Shipper
shall not be obligated to deliver Dedicated Production to the Gathering System
(or make any payments required under Section 5.1(d)(i) and Section 5.1(d)(ii))
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 Party
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 suspension 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,

 

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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, or government authorizations, any action or restraint by
any Governmental Authority (so long as the Party claiming suspension 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), and, in the case of Gatherer as
the claiming party, any breach of any representation or warranty of Shipper or
any failure by Shipper to perform any obligation of Shipper under that certain
Contribution Agreement dated November 10, 2014, by and between Shipper and
Gatherer.

 

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 having the difficulty, 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 having the difficulty.

 

Section 14.4                            Payments for Production 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
Shipper’s obligation to make payment for quantities of Production 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 Shipper 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                            Shipper.  Subject to the terms of this
Agreement, including Section 18.8, Shipper 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 Shipper and (ii)
any breach of this agreement by Shipper.

 

ARTICLE 16
CUSTODY AND TITLE

 

Section 16.1                            Custody.  As among the Parties, Shipper
shall be in custody, control and possession of (i) Shipper’s Production
hereunder until such Production is delivered to the Receipt Points and (ii) the
Delivery Point Gas and Liquid Hydrocarbons after they are delivered to Shipper
at the Delivery Points, including any portion of any Delivery Point Gas which

 

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accumulates as liquids.  As among the Parties, Gatherer shall be in custody,
control and possession of all Production in the Gathering System at all other
times, including any portion thereof which accumulates as liquids. The Party
having custody and control of Production under the terms of this Agreement shall
be responsible for, and shall defend, indemnify, release and hold the other
Party and its 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 Production when such Production 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                            Shipper Warranty.  Shipper represents
and warrants that it owns, or has the right to deliver to the Gathering System,
all Production delivered under this Agreement, free and clear of all liens,
encumbrances and adverse claims.  If the title to Production delivered by
Shipper hereunder is disputed or is involved in any legal action, Gatherer shall
have the right to cease receiving such Production, 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 Shipper 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.  Shipper hereby
indemnifies Gatherer against and holds Gatherer harmless from any and all claims
and losses arising out of or related to any breach of the foregoing
representation and warranty..

 

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

 

ARTICLE 17
TAXES; ROYALTIES

 

Section 17.1                            Taxes.  Shipper 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 Shipper’s
Production, 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 Shipper by any duly constituted jurisdictional agency
having authority to impose such obligations on Gatherer, in which event the
amount of such Taxes remitted on Shipper’s behalf shall be (i) reimbursed by
Shipper upon receipt of invoice, with corresponding documentation from Gatherer
setting forth such payments, or (ii) deducted from amounts otherwise due
Gatherer 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. 
Except as

 

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provided in Exhibit I attached hereto, neither Party shall be responsible nor
liable for any Taxes or other statutory charges levied or assessed against the
facilities of the 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 between the Parties,
Shipper shall have the sole and exclusive obligation and liability for the
payment of all Persons due any proceeds derived from Shipper’s Production 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 Production (including all constituents and products thereof)
delivered under this Agreement.  Although Shipper shall retain title to
Production as provided in this Section 16.3,  Gatherer shall have the right to
commingle Production delivered by Shipper with Third Party Production.

 

ARTICLE 18
MISCELLANEOUS

 

Section 18.1                            Rights.  The failure of either 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, in the event that (i) Gatherer’s
facilities, or any part thereof, become subject to regulation by the Federal
Energy Regulatory Commission, or any successor agency thereto (“FERC”), or any
other Governmental Authority of the rates, terms and conditions for service,
(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 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 the 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

 

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(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 State of Colorado
without regard to choice of law principles.

 

(b)                                 The Parties agree that the appropriate,
exclusive and convenient forum for any disputes between the Parties arising out
of this Agreement or the transactions contemplated hereby shall be in any state
or federal court in City and County of Denver, Colorado, 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), neither 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 Party (which such consent shall not be unreasonably
withheld, conditioned or delayed), 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 Shipper 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

 

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(B), the assignee has creditworthiness as reasonably determined by Shipper 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)                               Shipper 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 Shipper’s obligations hereunder (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 Shipper’s credit rating
as of the Effective Date and Shipper’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 Shipper
in accordance with Section 18.4(c)(ii), Shipper 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
the other Party or obtained by it in the performance of this Agreement and
relating to the other Party’s business (including Development Plans, Gathering
System Plans, and all data relating to the production of Shipper, 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
other Party.

 

(b)                                 Permitted Disclosures.  Notwithstanding
Section 18.6(a) disclosures of any Confidential Information may be made by
either Party (i) to the extent necessary for such Party to enforce its rights
hereunder against the other Party; (ii) to the extent to which a Party is

 

40

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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 Production,
provided such royalty, overriding royalty, net profits or similar owner, agrees
in writing to be bound by the terms of this Section 18.6.

 

(c)                                  Notification.  If either 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
other 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 Party with a copy of the proposed announcement or statement
prior to the intended release date of such announcement.  The other Party 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 both such Parties or (ii)
in the case of a statement to be made solely by one Party, obtain approval of
the other Party to the text of a public announcement or statement.  Nothing
contained in this Section 18.6 shall be construed to require either Party to
obtain approval of the 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 between the Parties with respect to the subject matter covered and
supersedes all prior understandings, drafts, discussions, or statements,

 

41

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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 either 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
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 either 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

 

42

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(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.

 

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 J 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 Shipper as Gatherer from time to time
requests to evidence the dedication of additional areas or Oil and Gas Interests
under this Agreement.

 

43

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

 

 

ANTERO RESOURCES CORPORATION

 

 

 

 

By:

/s/ Alvyn A. Schopp

 

Name:

Alvyn A. Schopp

 

Title:

Chief Administrative Officer and Regional Vice President

 

 

 

 

ANTERO MIDSTREAM LLC

 

 

 

 

By:

/s/ Alvyn A. Schopp

 

Name:

Alvyn A. Schopp

 

Title:

Chief Administrative Officer and Regional Vice President

 

Gathering and Compression Agreement

Signature Page

 

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EXHIBIT A

 

EXCLUDED WELLS

 

All gathering to Bluestone and ExCo vertical wells and all gathering to Davis
Well and McKinley 1 & 2 H Wells.

 

1

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EXHIBIT B

 

PLANNED GAS DELIVERY POINTS

 

Low Pressure Delivery Points

 

West Virginia

 

1.              Antero Mountain Compressor Station (1)

 

2.              Antero Pennington Compressor Station (2)

 

3.              Antero Middlebourne Compressor Station(3)

 

4.              Antero North Canton Compressor Station(4)

 

5.             Antero White Oak Compressor Station

 

6.              Crestwood Appalachia Pipeline LLC (Crestwood) West Union
Compressor Station

 

7.              Crestwood Victoria Compressor Station

 

Ohio

 

1.              E2 Crum Compressor Station(5)

 

2.              E2 Miller Compressor Station(6)

 

3.              E2 Appalachian Compression, LLC, (E2) Upper Hill Compressor
Station

 

4.              E2 Batesville Compressor Station

 

5.              E2 Reusser Compressor Station

 

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

(1)  Planned

(2)  Under construction

(3)  Planned

(4)  Planned

(5)  Under construction

(6)  Under construction

 

1

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High Pressure Delivery Points

 

West Virginia

 

Receipt Points

 

Delivery Points

Antero Mountain Compressor Station

 

MarkWest Sherwood Plant

Antero Middlebourne Compressor Station

 

Magnum Hunter or MarkWest Sherwood Plant

Antero North Canton Compressor Station

 

Summit Pike Fork lateral

Antero White Oak Compressor Station

 

MarkWest Sherwood Plant

Crestwood West Union Compressor Station

 

MarkWest Sherwood Plant

Crestwood Victoria Compressor Station

 

Summit Pike Fork lateral

Antero New Milton Compressor Station

 

MarkWest Sherwood Gas Processing Plant

EXLP Operating LLC Pike Fork Compressor

 

Columbia Gas Transmission

 

Ohio

 

Receipt Points

 

Delivery Points

Antero Sanford well gathering line

 

Dominion East Ohio

E2 Crum Compressor Station

 

MarkWest Seneca Plant

E2 Miller Compressor Station

 

MarkWest Seneca Plant

E2 Upper Hill Compressor Station

 

MarkWest Seneca Plant

E2 Batesville Compressor Station

 

MarkWest Seneca Plant

E2 Reusser Compressor Station

 

MarkWest Seneca Plant

 

2

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Liquid Hydrocarbons Receipt and Delivery Points

 

Receipt Points

 

Delivery Points

Robert Pad, Ardith Pad, Miley Pad, Rich Pad, Wayne Pad, Myron Pad, Cynthia Pad,
Smierciak Pad, Justice Pad

 

E2 Upper Hill Stabilizer

Roe Pad, Ervin Pad, J.R. Tyler Pad, Price Pad, Schultz Pad

 

E2 Batesville Station

Krupa Pad, Bond Pad, Roosen Pad, Bates Pad

 

E2Crum Stabilizer

 

3

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EXHIBIT C

 

GATHERING SYSTEM

 

Any Low Pressure and High Pressure Gathering Systems gathering Gas from Shipper
in the following counties and states:

 

Washington, PA;

 

Doddridge, WV;

 

Harrison, WV;

 

Tyler, WV;

 

Ritchie, WV;

 

Noble, OH;

 

Monroe, OH;

 

Guernsey, OH; and

 

Belmont, OH,

 

excluding facilities owned by Summit, Crestwood, ETC, M3, EQT, and MarkWest.

 

1

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EXHIBIT D

 

INITIAL DEVELOPMENT PLAN

 

[attached]

 

1

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EXHIBIT E

 

CONFLICTING DEDICATIONS

 

1.                                      Second Amended and Restated Gas
Gathering Agreement between Shipper and M3 Appalachia Gathering, LLC, dated July
1, 2013

 

2.                                      Gathering and Compression Agreement
between Shipper and Crestwood Marcellus Midstream LLC dated effective as of
January 1, 2012.

 

3.                                      Gas  Gathering Agreement between Shipper
and ETC Northeast Pipeline, LLC, dated January 1, 2010, as amended through the
Effective Date.

 

1

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EXHIBIT F

 

INITIAL GATHERING SYSTEM PLAN

 

[attached]

 

1

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EXHIBIT G

 

FORM OF CONNECTION NOTICE

 

Antero Midstream LLC
1615 Wynkoop Street
Denver, Colorado 80202

 

Re:                             Gathering and Compression Agreement dated
November 10, 2014, between Antero Resources Corporation and Antero Midstream LLC
(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 Shipper is planning to drill and complete the
Planned Wells at the Planned Well Pads by the Target Completion Dates, in each
case as set forth below:

 

Planned Well

 

Planned Well Pad

 

Target Completion Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Very truly yours,

 

 

 

ANTERO RESOURCES CORPORATION

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

1

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EXHIBIT H

 

DEEMED CONNECTION NOTICES

 

[attached]

 

1

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EXHIBIT I

 

COST OF SERVICE FEE

 

The Monthly Cost of Service Fee shall be calculated separately for each CS
Facility for each Contract Year or, in the case of a CS Facility that is placed
into service or acquired during a Contract Year, for the period from the first
Day of the Month following the Month in which such CS Facility is placed into
service or acquired through the end of such Contract Year, and for each Contract
Year thereafter.  The Cost of Service Fees for all CS Facilities for each Month
shall be summed to result in the total Cost of Service Fee payable for such
Month.  The Monthly Cost of Service Fee for each Contract Year (or portion
thereof, if applicable) for each CS Facility is determined as follows:

 

Monthly Capex Fee + Monthly O&M Fee = Monthly Cost of Service Fee.

 

The “Monthly Capex Fee” for each CS Facility is an amount equal to the product
of (i) the amount that, if paid to Gatherer with respect to each Month remaining
in the Recovery Term for such CS Facility, when taken together with all Prior
Capex Fees paid to Gatherer for such CS Facility, would result in Gatherer
recovering all of Gatherer’s capital expenditures for such CS Facility
(including the cost of acquisition of such CS Facility from Shipper, if
applicable) over a period of 84 Months commencing with the placement in service
or acquisition of such CS Facility (the “Recovery Term”), with a return on
capital invested of 13% per annum. “Prior Capex Fees” means, with respect to any
Contract Year and any CS Facility, the aggregate of the Monthly Capex Fees with
respect to such CS Facility paid in all prior Contract Years.  For purposes of
determining the Monthly Capex Fee for any CS Facility, if such CS Facility is
specified or sized to gather, compress, or otherwise handle volumes of
Production in excess of those volumes of Dedicated Production projected in the
Development Plan to be put through such CS Facility, only such portion of such
capital expenditures that would be required to build facilities specified and
sized to gather, compress, or otherwise the volumes of Dedicated Production
projected in the Development Plan to be put through such CS Facility shall be
considered.

 

The “Monthly O&M Fee” for any Contract Year (or portion thereof, if applicable)
is an amount equal to:

 

(i)                                     the sum of:

 

(a)                                 the operations and maintenance costs and
expenses, including the costs and expenses of repairs and replacements in kind,
that Gatherer estimates it will incur with respect to the CS Facility during
such Contract Year (or such portion thereof, if applicable); plus

 

(b)                                 the O&M True Up Amount, if any,

 

(ii)                                  divided by 12 (or by the number of Months
in such portion of such Contract Year, if applicable).

 

1

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The “O&M True Up Amount” means, with respect to any Contract Year (or portion
thereof, if applicable) and any CS Facility,

 

(i)                                     the positive or negative difference
resulting from the following calculation:

 

(a)                                 the actual operations and maintenance costs
and expenses, including the costs and expenses of repairs and replacements in
kind,  incurred by Gatherer in the immediately prior Contract Year with respect
to such CS Facility;

 

Minus

 

(b)                                 the sum of the aggregate Monthly O&M Fees
paid to Gatherer with respect to such CS Facility with respect to the
immediately prior Contract Year,

 

(ii)                                  plus 13% per annum.

 

The Monthly O&M Fee includes Gatherer’s allocation to the CS Facility of
Gatherer’s overhead and general and administrative expenses together with Taxes
payable by Gatherer with respect to the CS Facility or the Services performed in
connection with the CS Facility (but excluding in any event Gatherer’s income
taxes), to the extent not otherwise paid or reimbursed by Shipper pursuant to
this Agreement.  For purposes of determining the Monthly O&M Fee for any CS
Facility, if such CS Facility also used to gather, compress, or otherwise handle
Third Party Production, only the portion of such operating expenses that are
fairly allocable to gathering Dedicated Production shall be considered.

 

2

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EXHIBIT J

 

MEMORANDUM OF AGREEMENT

 

THIS MEMORANDUM OF GATHERING AGREEMENT (this “Memorandum”) is entered into
effective [                        ], 201[    ] (the “Effective Date”), by and
between ANTERO RESOURCES CORPORATION (“Shipper”), with an address of 1615
Wynkoop Street, Denver, Colorado 80202, and ANTERO MIDSTREAM LLC, with an
address of 1615 Wynkoop Street, Denver, Colorado 80202 (“Gatherer”).

 

WHEREAS, Shipper and Gatherer entered into that certain Gathering and
Compression Agreement effective November 10, 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 [counties/states], 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) Shipper has exclusively dedicated and committed
to deliver to Gatherer, as and when produced, all Production produced on or
after the date of the Agreement that is attributable to the Oil and Gas
Interests now owned or hereafter acquired by Shipper and located wholly or
partly within the states of Pennsylvania, West Virginia, and Ohio, and certain
other areas, or on lands pooled, unitized or communitized wholly or partly
within any portion of the Dedication Area (the “Dedicated Properties”), together
with all Production attributable to third parties that is produced from a Well
located on the Dedicated Properties, which Production Shipper has the right to
control and deliver for gathering (“Dedicated Production”), for gathering
through the Gathering System under the Agreement, and (b) Shipper agrees not to
deliver any Dedicated Production to any other gathering system (the foregoing
dedication and commitment being herein referred to as the “Dedication”).

 

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,
(a) in the event Shipper sells, transfers, conveys, assigns, grants, or
otherwise disposes of any or all of its interest in the Dedicated Properties,
then any such sale, transfer, conveyance, assignment, grant, or other
disposition shall be expressly subject to this Agreement and any instrument of
conveyance shall so state, and (b) in the event Gatherer sells, transfers,
conveys, assigns, grants, or otherwise disposes of any or all of its interest in
the Gathering

 

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System, then any such sale, transfer, conveyance, assignment, grant, or other
disposition shall be expressly subject to this Agreement and any instrument of
conveyance shall so state.

 

4.                                      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.

 

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

 

 

ANTERO MIDSTREAM LLC

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

ANTERO RESOURCES CORPORATION

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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ACKNOWLEDGEMENTS

 

STATE OF COLORADO

§

 

§

CITY AND COUNTY OF DENVER

§

 

The foregoing instrument was acknowledged before me on the              Day of
                , 2014, by [                        ],
[                        ] of Antero Midstream LLC, a Delaware limited liability
company, on behalf of said entity.

 

 

 

 

 

Notary Public in and for

 

 

 

 

 

 

 

 

 

Printed or Typed Name of Notary

 

 

STATE OF COLORADO

§

 

§

CITY AND COUNTY OF DENVER

§

 

The foregoing instrument was acknowledged before me on the              Day of
              , 2014, by [                        ], [                        ]
of Antero Resources Corporation, a Delaware corporation, on behalf of said
entity.

 

 

 

 

 

Notary Public in and for

 

 

 

 

 

 

Printed or Typed Name of Notary

 

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