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Exhibit 10.1
 
Confidential Portions Redacted and Filed with the Commission pursuant to 17 CFR
200.83.  “***” Symbolizes Language Omitted Pursuant to an Application For
Confidential Treatment

Date: 3/20/2009

TESORO Contract No: BEC09TP0003
Berry Petroleum Company Contract No: Please Advise

FAX: 1-303-999-4141

Berry Petroleum Company 1999 Broadway Ste 3700 Denver, CO 80202

Attn: Ron Cross

This Agreement confirms the transaction previously discussed between TESORO
REFINING AND MARKETING COMPANY, a Delaware Corporation (hereinafter referred to
as "TESORO" or “Buyer”), and Berry Petroleum Company (hereinafter referred to as
"Seller”) TESORO agrees to purchase, and Seller agrees to sell, Crude Oil under
the terms and conditions set forth herein and Conoco's General Provisions for
Domestic Crude Oil Agreements dated January 1, 1993.

1.            IDENTIFICATION OF CRUDE OIL BATCHS, DELIVERY POINTS, QUANTITIES
AND PRICES: The Crude Oil being purchased hereunder is a crude petroleum oil, in
its natural produced state after normal oilfield separation, as specified and
identified below.  The Crude Oil will be delivered and sold in four separate
batched deliveries, with the tems of sale of each batch as follows:

A.
Delivery 1

QUALITY:  San Joaquin Valley Heavy

QUANTITY:  Approximately 5,000 Barrels Per Day

DELIVERY:  Delivery to the point of destination, SMWS Berry Central, CA, Into
Pipe, Book Transfer, In-tank, or Pumpover.

TITLE/RISK OF LOSS:  Except as otherwise specified in this agreement, title and
risk of loss or damage shall pass to TESORO as the crude oil enters the
ConcoPhillips (Unocal) Pipeline or other common carrier pipeline through the
inlet flange of metering facilities at SMWS Berry Central, CA.

PRICE:  TESORO agrees to pay Seller based on the following price formula:
The price shall be the higher of the two following calculations, to be
determined at the end of each month.

1)   The average of the four posters (Chevron, Union 76, Shell, and Exxon) for
Midway Sunset crude oil for the calendar month average (Including Weekend &
Holiday) adjusted for actual gravity, plus a differential of $*** United States
Dollars per Barrel.

2)   NYMEX's daily settle quoted price for Light Sweet Crude Future for the
calendar month average (Excluding Weekend & Holiday) less $*** United States
Dollars per Barrel.

For pricing purposes, any crude oil delivered hereunder shall be deemed to have
been delivered in equal daily quantities during the calendar month in which
delivery occurs.

B.
Delivery 2

QUALITY:  San Joaquin Valley Heavy

QUANTITY: Approximately 1,000 Barrels Per Day

DELIVERY: Delivery to the point of destination, Berry Ethel D, CA, Into Pipe,
Book Transfer, In-tank, or Pumpover.

TITLE/RISK OF LOSS: Except as otherwise specified in this agreement, title and
risk of loss or damage shall pass to TESORO as the crude oil enters the Pacific
Plains Pipeline through the inlet flange of metering facilities at Berry Ethel
D, CA.

 
 

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Confidential Portions Redacted and Filed with the Commission pursuant to 17 CFR
200.83.  “***” Symbolizes Language Omitted Pursuant to an Application For
Confidential Treatment

PRICE: TESORO agrees to pay Seller based on the following price formula:
The price shall be the higher of the two following calculations, to be
determined at the end of each month:

1) The average of the four posters (Chevron, Union 76, Shell, and Exxon) for
Midway Sunset crude oil for the calendar month average (Including Weekend &
Holiday adjusted for actual gravity), plus a differential of $*** United States
Dollars per Barrel.

2) NYMEX's daily settle quoted price for Light Sweet Crude Future for the
calendar month average (Excluding Weekend & Holiday) less $*** United States
Dollars per Barrel.

For pricing purposes, any crude oil delivered hereunder shall be deemed to have
been delivered in equal daily quantities during the calendar month in which
delivery occurs.

C.
Delivery 3

QUALITY: San Joaquin Valley Heavy

QUANTITY: Approximately 3,500 Barrels Per Day

DELIVERY: Delivery to the point of destination, NMWS Fairfield, CA, Into Pipe,
Book Transfer, In-tank, or Pumpover.

TITLE/RISK OF LOSS: Except as otherwise specified in this agreement, title and
risk of loss or damage shall pass to TESORO as the crude oil enters the Pacific
Plains Pipeline through the inlet flange of metering facilities at NMWS
Fairfield, CA.

PRICE: TESORO agrees to pay Seller based on the following price formula:
The price shall be the higher of the two following calculations, to be
determined at the end of each month:

1) The average of the four posters (Chevron, Union 76, Shell, and Exxon) for
Midway Sunset crude oil for the calendar month average (Including Weekend &
Holiday adjusted for actual gravity) plus a differential of $*** United States
Dollars per Barrel.

2) NYMEX's daily settle quoted price for Light Sweet Crude Future for the
calendar month average (Excluding Weekend & Holiday) less $*** United States
Dollars per Barrel.

For pricing purposes, any crude oil delivered hereunder shall be deemed to have
been delivered in equal daily quantities during the calendar month in which
delivery occurs.

D.
Delivery 4

QUALITY: San Joaquin Valley Heavy

QUANTITY: Approximately 2,400 Barrels Per Day

DELIVERY: Delivery to the point of destination, Berry Formax, CA, Into
Pipe/BT/IT/PO

TITLE/RISK OF LOSS: Except as otherwise specified in this agreement, title and
risk of loss or damage shall pass to TESORO as the crude oil enters the
ConocoPhillips (Unocap) Pipeline through the inlet flange of metering facilities
at Berry Formax, CA.

PRICE: TESORO agrees to pay Seller based on the following price formula:
The price shall be the higher of the two following calculations, to be
determined at the end of each month:

1) The average of the four posters (Chevron, Union 76, Shell, and Exxon) for
Midway Sunset crude oil for the calendar month average (Including Weekend &
Holiday) adjusted for actual gravity, plus a differential of $*** United States
Dollars per Barrel.

2) NYMEX's daily settle quoted price for Light Sweet Crude Future for the
calendar month average (Excluding Weekend & Holiday) less $*** United States
Dollars per Barrel.

 
 

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Confidential Portions Redacted and Filed with the Commission pursuant to 17 CFR
200.83.  “***” Symbolizes Language Omitted Pursuant to an Application For
Confidential Treatment

For pricing purposes, any crude oil delivered hereunder shall be deemed to have
been delivered in equal daily quantities during the calendar month in which
delivery occurs.

2.
TERM: This Agreement shall extend for an initial term from 4/1/2009 to
9/30/2009.

3.
PAYMENT: Payment due on the 20th day of the month after the month of delivery.

Payment shall be made by electronic funds transfer in United States Dollars.

Payments due on Saturday shall be paid the preceding Friday, and payments due on
Sunday shall be paid on the following Monday. Similarly, payments due on a
federal bank holiday shall be paid the preceding business day except when a
federal bank holiday falls on a Monday, when payment shall be due the following
day.

All payments made under this agreement shall be made without offset, deduction
or counterclaim except as provided herein, by separate written agreement between
the parties, or within the GENERAL PROVISIONS attached hereto or previously
provided, incorporated into and made part of this Agreement by reference.

If applicable, net-out invoices shall be according to the established netting
agreement between Buyer and Seller.

Send Invoices to:
Tesoro Refining and Marketing Company 300 Concord Plaza Drive San Antonio, TX
78216

Attn: Crude Accounting, Fax (210) 881-6435
Email: TSOCrudeinvoices@tsocorp.com

Attn: Accounts Payable, Fax (210) 579-4573 Email: apayable@tsocorp.com

4.
OTHER TERMS AND CONDITIONS:

A. The terms stated in the ConocoPhillips General Provisions for Domestic Crude
Oil Agreements effective January 1, 1993 (“GP”), attached hereto as Exhibit A
and incorporated herein by reference, will be applicable to the extent that they
are not in conflict with any of the terms in this Agreement, provided, however:

1. The fourth sentence of Paragraph A of the GP shall be changed to read as
follows: The crude oil delivered hereunder shall be merchantable and acceptable
in the applicable common or segregated stream of the carriers involved, but not
to exceed 3% S&W merchantable liquid hydrocarbons are defined as unrefined
liquid hydrocarbons which are suitable for normal refinery processing, meet
specifications of delivering carriers and are free of foreign contaminant
chemicals including, but not limited to, chlorinated and oxygenated
hydrocarbons.

2. The second paragraph of Paragraph B of the GP shall be changed to read as
follows: Seller further warrants the crude oil delivered shall be merchantable.

3. The parties do not agree to comply with the specific laws, orders or
regulations identified in Paragraph C of the GP unless such party is otherwise
subject to such laws, orders or regulations.

4.  In the first sentence of Paragraph E of the GP the phrase “acts in
furtherance of the International Energy Program,” shall be deleted.  The
following shall be added at the end of the first paragraph of Paragraph E: The
parties acknowledge that there is no associated purchase/sale, or exchange of
crude oil, related to this Agreement.”

5. In the last paragraph of Paragraph F of the GP the reference to Morgan
Guaranty Trust Company of New York shall be deleted and Wells Fargo Bank, San
Francisco shall be substituted.

6. Paragraph H (1) shall be amended to read as follows:  “H.  Termination:  (1)
Right to Terminate.  If a party to this Agreement (a) becomes the subject of
bankruptcy or other insolvency proceedings, or proceedings for the appointment
of a receiver, trustee or similar official, (b) becomes generally unable to pay
its debts as they become due, (c) makes a general assignment for the benefit of
creditors, (d) if Buyer defaults in the payment of any funds due under this
Agreement, or (e) if Buyer fails to accept and purchase any crude oil delivered
by Seller under this Agreement, then the other party to this Agreement (the
“Terminating Party”) may terminate this Agreement by giving written notice of
termination.  Such a termination shall be deemed to be effective immediately
prior to any of the events described in clauses (a), (b) or (c) of this Section
H(1) and, in the case of termination for reasons described in clauses (d) or (e)
immediately upon the Buyer’s receipt of Seller’s notice of termination.  If this
Agreement is associated with a separate agreement contemplating a corresponding
purchase or sale of crude oil, all related agreements shall be deemed to be
terminated at the same time as this Agreement is terminated.  All of the
references to Liquidating Party in this Paragraph H shall be substituted by
Terminating Party.  Upon termination, the parties shall have no further rights
or obligations with respect to this Agreement, except for the payment of the
amount(s) (the ‘Settlement Amount’ or ‘Settlement Amounts’) determined as
provided in Paragraph(3) of this Section.”

 
 

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Confidential Portions Redacted and Filed with the Commission pursuant to 17 CFR
200.83.  “***” Symbolizes Language Omitted Pursuant to an Application For
Confidential Treatment

7. The following sentence shall be added to Paragraph H (3) of the GP: “In the
event of a contract termination, the Settlement Amount shall be calculated using
the estimated contract quantity of crude oil multiplied by the remainder of the
term of this Agreement except as such Settlement Amount may be limited by the
provisions of Paragraph H (8).”

8. Paragraph H(5) Market Price is hereby amended to read as follows:  “Unless
otherwise provided in this Agreement, the Market Price of crude oil sold or
exchanged under this Agreement shall be the price for crude oil for the delivery
month as specified in this Agreement and at the delivery location that
corresponds to the delivery location specified in this Agreement.”

9. The governing law set forth in Paragraph M of the GP shall be California law.

10. Any modification of any of the referenced documents shall only be by written
instrument signed by both parties. Any conflict between the General Provisions
and this Agreement shall be resolved in favor of this Agreement. The section
headings are for convenience only and shall not limit or change the subject
matter of this Agreement.

12. Tesoro agrees to immediately provide to Seller upon Seller’s request from
time to time copies of Tesoro’s financial statements for the period requested
either certified as to accuracy by Tesoro’s chief financial officer or audited
by Tesoro’s independent accounting firm in form and as to date reasonably
acceptable to Seller; provided however that Tesoro shall not be required to 1)
prepare any financial statements, 2) issue any certifications for Seller’s
benefit, or  3) be required to provide any information that is not suitable for
public disclosure in accordance with applicable securities laws and regulations
applicable to Tesoro as a publicly traded entity.

B. In the event of any claim, dispute or controversy arising out of or relating
to this Agreement, including an action for declaratory relief, the prevailing
party in such action or proceeding shall be entitled to recover its court costs
and reasonable out-of-pocket expenses not limited to taxable costs, including
but not limited to phone calls, photocopies, expert witness, travel, etc., and
reasonable attorneys fees to be fixed by the court. Such recovery shall include
court costs, out-of-pocket expenses and attorneys fees on appeal, if any. The
court shall determine who is the prevailing party, whether or not the dispute or
controversy proceeds to final judgment. If either party is reasonably required
to incur such out-of-pocket expenses and attorneys fees as a result of any claim
arising out of or concerning this Agreement or any right or obligation derived
hereunder, then the prevailing party shall be entitled to recover such
reasonable out-of-pocket expenses and attorneys fees whether or not an action is
filed.

CONFIDENTIALITY: The parties will treat all information contained within or
produced pursuant to this Agreement as confidential and will use it only for the
purposes of this Agreement. Such confidential information specifically includes,
without limitation, the prices specified in this Agreement. Neither party will
disclose the other party's confidential information to any third party or in any
public statement without the other party's express prior written consent,
provided however, that the parties shall disclose such information (other than
prices) to carriers and the operators of terminals and pipelines, as might be
required to arrange for delivery of Crude Oil being sold hereunder. Nothing
contained herein shall prevent a party from disclosing confidential information
when necessary to enforce provisions of this Agreement or when such party's
counsel determines in good faith that such disclosure is required to comply with
applicable law, judicial or administrative process or regulatory requirement,
including without limitation disclosures by Seller about the existence of the
Agreement and identifying the parties and other general information as may be
deemed material for disclosure under applicable securities regulations, but not
including the price being sold hereunder unless approximations thereof are
required to be disclosed under applicable securities laws and regulations or
unless ordered disclosed by the applicable government agency after
confidentialty protection has been requested. In the event of any such
disclosure, the party making such disclosure pursuant to law, process or
regulatory requirement shall provide the other party with notice of and a
reasonable opportunity to object to such disclosure. This confidentiality
provision will remain in full force and effect for the term of this Agreement
and for a period of one year thereafter.

ADDRESSES: The following address shall be used for notices under this Agreement.

 
 

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Confidential Portions Redacted and Filed with the Commission pursuant to 17 CFR
200.83.  “***” Symbolizes Language Omitted Pursuant to an Application For
Confidential Treatment

To TESORO
To Seller
       
Tesoro Refining and Marketing Company
Berry Petroleum Company
 
300 Concord Plaza Drive
1999 Broadway Ste 3700
 
San Antonio, Texas 78216-6999
Denver, CO 80202
             
Attn: Commercial Contract Administration
Attn: Ron Cross
       
PHONE # 1-210-626-7157
PHONE # 1-303-999-4041
 
FAX # 1-210-579-4578
FAX # 1-303-999-4141
       
Email: smanagment@tsocorp.com
rfc@bry.com
             
ADDITIONAL TESORO CONTACTS:
         
OPERATIONS Crude Scheduling
Phone: (210) 626-4036
Fax: (210) 745-4565
CREDIT Brian Randecker
Phone: (210) 626-4757
Fax: (210) 745-4673
ACCOUNTING Mid-Office Accounting
Fax: (210) 881-6435
   
E-mail: sat-tsocrudeinvoices(a)tsocorp.com
           
INTERNATIONAL TRADE COMPLIANCE
Direct questions for international shipments to
appropriate person below:
         
Pipeline Imports Kevin Wilder
Phone: (210) 626-4843
Cell: (210) 315-6192
Marine Imports Audra Hanley
Phone: (210) 626-4446
Cell: (210) 315-6324
Exports Gary Wilson
Phone: (210) 626-4787
Cell: (210) 241-5333

Regards,

Damon M Van Zandt
Director, North American Crude Trading Tesoro Refining and Marketing Company

Agreed and accepted as of the date first above written.

BERRY PETROLEUM COMPANY

By:
/s/ Michael Duginski
   
Michael Duginski,
 
Executive Vice President and
 
Chief Operating Officer

 
 

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Confidential Portions Redacted and Filed with the Commission pursuant to 17 CFR
200.83.  “***” Symbolizes Language Omitted Pursuant to an Application For
Confidential Treatment

EXHIBIT A
TO MARCH __, 2009 CRUDE OIL PURCHASE AGREEMENT
(JANUARY 1, 1993 CONOCO GENERAL PROVISIONS FOR
DOMESTIC CRUDE OIL AGREEMENTS)

GENERAL PROVISIONS
DOMESTIC CRUDE OIL AGREEMENTS

A.  Measurement and Tests:  All measurements hereunder shall be made from static
tank gauges on 100 percent tank table basis or by positive displacement
meters.  All measurements and tests shall be made in accordance with the latest
ASTM or ASME-API (Petroleum PD Meter Code) published methods then in effect,
whichever apply.  Volume and gravity shall be adjusted to 60 degrees Fahrenheit
by the use of Table 6A and 5A of the Petroleum Measurement Tables ASTM
Designation D1250 in their latest revision.  The crude oil delivered hereunder
shall be marketable and acceptable in the applicable common or segregated stream
of the carriers involved but not to exceed 1% S&W.  Full deduction for all free
water and S&W content shall be made according to the API/ASTM Standard Method
then in effect.  Either party shall have the right to have a representative
witness all gauges, tests and measurements.  In the absence of the other party's
representative, such gauges, tests and measurements shall be deemed to be
correct.

B. Warranty:  The Seller warrants good title to all crude oil delivered
hereunder and warrants that such crude oil shall be free from all royalties,
liens, encumbrances and all applicable foreign, federal, state and local taxes.

Seller further warrants that the crude oil delivered shall not be contaminated
by chemicals foreign to virgin crude oil including, but not limited to
chlorinated and/or oxygenated hydrocarbons and lead.  Buyer shall have the
right, without prejudice to any other remedy available to Buyer, to reject and
return to Seller any quantities of crude oil which are found to be so
contaminated, even after delivery to Buyer.

C. Rules and Regulations:  The terms, provisions and activities undertaken
pursuant to this Agreement shall be subject to all applicable laws, orders and
regulations of all governmental authorities.  If at any time a provision hereof
violates any such applicable laws, orders or regulations, such provision shall
be voided and the remainder of the Agreement shall continue in full force and
effect unless terminated by either party upon giving written notice to the other
party hereto.  If applicable, the parties hereto agree to comply with all
provisions (as amended) of the Equal Opportunity Clause prescribed in 41 C.F.R.
60-1.4; the Affirmative Action Clause for disabled veterans and veterans of the
Vietnam Era prescribed in 41 C.F.R. 60-250.4; the Affirmative Action Clause for
Handicapped Workers prescribed in 41 C.F.R. 60-741.4; 48 C.F.R. Chapter 1
Subpart 19.7 regarding Small Business and Small Disadvantaged Business Concerns;
48 C.F.R. Chapter 1 Subpart 20.3 regarding Utilization of Labor Surplus Area
Concerns; Executive Order 12138 and regulations thereunder regarding
subcontracts to women-owned business concerns; Affirmative Action Complicance
Program (41 C.F.R. 60-1.40); annually file SF-100 Employer Information Report
(41 C.F.R. 60-1.7); 41 C.F.R. 60-1.8 prohibiting segregated facilities; and the
Fair Labor Standards Act of 1938 as amended, all of which are incorporated in
this Agreement by reference.

D. Hazard Communication:  Seller shall provide its Material Safety Data Sheet
("MSDS") to Buyer.  Buyer acknowledges the hazards and risks in handling and
using crude oil.  Buyer shall read the MSDS and advise its employees, its
affiliates, and third parties, who may purchase or come into contact with such
crude oil, about the hazards of crude oil, as well as the precautionary
procedures for handling said crude oil, which are set forth in such MSDS and any
supplementary MSDS or written warning(s) which Seller may provide to Buyer from
time to time.

E. Force Majeure:  Except for payment due hereunder, either party hereto shall
be relieved from liability for failure to perform hereunder for the duration and
to the extent such failure is occasioned by war, riots, insurrections, fire,
explosions, sabotage, strikes, and other labor or industrial disturbances, acts
of God or the elements, governmental laws, regulations, or requests, acts in
furtherance of the International Energy Program, disruption or breakdown of
production or transportation facilities, delays of pipeline carrier in receiving
and delivering crude oil tendered, or by any other cause, whether similar or
not, reasonably beyond the control of such party.  Any such failures to perform
shall be remedied with all reasonable dispatch, but neither party shall be
required to supply substitute quantities from other sources of supply.  Failure
to perform due to events of Force Majeure shall not extend the terms of this
Agreement.

Notwithstanding the above, and in the event that the Agreement is an associated
purchase/sale, or exchange of crude oil, the parties shall have the rights and
obligations described below in the circumstances described below:

(1) If, because of Force Majeure, the party declaring Force Majeure (the
"Declaring Party") is unable to deliver part or all of the quantity of crude oil
which the Declaring Party is obligated to deliver under the Agreement or
associated contract, the other party (the "Exchange Partner") shall have the
right but not the obligation to reduce its deliveries of crude oil under the
same Agreement or associated contract by an amount not to exceed the number of
barrels of crude oil that the Declaring Party fails to deliver.

 
 

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Confidential Portions Redacted and Filed with the Commission pursuant to 17 CFR
200.83.  “***” Symbolizes Language Omitted Pursuant to an Application For
Confidential Treatment
 
(2) If, because of Force Majeure, the Declaring Party is unable to take delivery
of part or all of the quantity of crude oil to be delivered by the Exchange
Partner under the Agreement or associated contract, the Exchange Partner shall
have the right but not the obligation to reduce its receipts of crude oil under
the same Agreement or associated contract by an amount not to exceed the number
of barrels of crude oil that the Declaring Party fails to take delivery of.

F. Payment:  Unless otherwise specified in the Special Provisions of this
Agreement, Buyer agrees to make payment against Seller's invoice for the crude
oil purchased hereunder to a bank designated by Seller in U.S. dollars by
telegraphic transfer in immediately available funds.  Unless otherwise specified
in the Special Provisions of this Agreement, payment will be due on or before
the 20th of the month following the month of delivery.  If payment due date is
on a Saturday or New York bank holiday other than Monday, payment shall be due
on the preceding New York banking day.  If payment due date is on a Sunday or a
Monday New York bank holiday, payment shall be due on the succeeding New York
banking day.

Payment shall be deemed to be made on the date good funds are credited to
Seller's account at Seller's designated bank.

In the event that Buyer fails to make any payment when due, Seller shall have
the right to charge interest on the amount of the overdue payment at a per annum
rate which shall be two percentage points higher than the published prime
lending rate of Morgan Guaranty Trust Company of New York on the date payment
was due, but not to exceed the maximum rate permitted by law.
 
G. Financial Responsibility:  Notwithstanding anything to the contrary in this
Agreement, should Seller reasonably believe it necessary to assure payment,
Seller may at any time require, by written notice to Buyer, advance cash payment
or satisfactory security in the form of a Letter or Letters of Credit at Buyer's
expense in a form and from a bank acceptable to Seller to cover any or all
deliveries of crude oil.  If Buyer does not provide the Letter of Credit on or
before the date specified in Seller's notice under this section, Seller or Buyer
may terminate this Agreement forthwith.  However, if a Letter of Credit is
required under the Special Provisions of this Agreement and Buyer does not
provide same, then Seller only may terminate this Agreement forthwith.  In no
event shall Seller be obligated to schedule or complete delivery of the crude
oil until said Letter of Credit is found acceptable to Seller. Each party may
offset any payments or deliveries due to the other party under this or any other
agreement between the parties.

If a party to this Agreement (the "Defaulting Party") should (1) become the
subject of bankruptcy or other insolvency proceedings, or proceedings for the
appointment of a receiver, trustee, or similar official, (2) become generally
unable to pay its debts as they become due, or (3) make a general assignment for
the benefit of creditors, the other party to this Agreement may withhold
shipments without notice.
H.
Liquidation:

(1) Right to Liquidate.  At any time after the occurrence of one or more of the
events described in the third paragraph of Section G, Financial Responsibility,
the other party to the Agreement (the "Liquidating Party") shall have the right,
at its sole discretion, to liquidate this Agreement by terminating this
Agreement.  Upon termination, the parties shall have no further rights or
obligations with respect to this Agreement, except for the payment of the
amount(s) (the "Settlement Amount" or "Settlement Amounts") determined as
provided in Paragraph (3) of this section.

(2) Multiple Deliveries.   If this Agreement provides for multiple deliveries of
one or more types of crude oil in the same or different delivery months, or for
the purchase or exchange of crude oil by the parties, all deliveries under this
Agreement to the same party at the same delivery location during a particular
delivery month shall be considered a single commodity transaction ("Commodity
Transaction") for the purpose of determining the Settlement Amount(s).  If the
Liquidating Party elects to liquidate this Agreement, the Liquidating Party must
terminate all Commodity Transactions under this Agreement.

(3) Settlement Amount.   With respect to each terminated Commodity Transaction,
the Settlement Amount shall be equal to the contract quantity of crude oil,
multiplied by the difference between the contract price per barrel specified in
this Agreement (the "Contract Price") and the market price per barrel of crude
oil on the date the Liquidating Party terminates this Agreement (the "Market
Price").  If the Market Price exceeds the Contract Price in a Commodity
Transaction, the selling party shall pay the Settlement Amount to the buying
party.  If the Market Price is less than the Contract Price in a Commodity
Transaction, the buying party shall pay the Settlement Amount to the selling
party.  If the Market Price is equal to the Contract Price in a Commodity
Transaction, no Settlement Amount shall be due.

 
 

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Confidential Portions Redacted and Filed with the Commission pursuant to 17 CFR
200.83.  “***” Symbolizes Language Omitted Pursuant to an Application For
Confidential Treatment
 
(4) Termination Date.   For the purpose of determining the Settlement Amount,
the date on which the Liquidating Party terminates this Agreement shall be
deemed to be (a) the date on which the Liquidating Party sends written notice of
termination to the Defaulting Party, if such notice of termination is sent by
telex or facsimile transaction; or (b) the date on which the Defaulting Party
receives written notice of termination from the Liquidating Party, if such
notice of termination is given by United States mail or a private mail delivery
service.

(5) Market Price.   Unless otherwise provided in this Agreement, the Market
Price of crude oil sold or exchanged under this Agreement shall be the price for
crude oil for the delivery month specified in this Agreement and at the delivery
location that corresponds to the delivery location specified in this Agreement,
as reported in Platt's Oilgram Price Report ("Platt's") for the date on which
the Liquidating Party terminates this Agreement.  If Platt's reports a range of
prices for crude oil on that date, the Market Price shall be the arithmetic
average of the high and low prices reported by Platt's.  If Platt's does not
report prices for the crude oil being sold under this Agreement, the Liquidating
Party shall determine the Market Price of such crude oil in a commercially
reasonable manner, unless otherwise provided in this Agreement.

(6) Payment of Settlement Amount.   Any Settlement Amount due upon termination
of this Agreement shall be paid in immediately available funds within two
business days after the Liquidating Party terminates this Agreement.  However,
if this Agreement provides for more than one Commodity Transaction, or if
Settlement Amounts are due under other agreements terminated by the Liquidating
Party, the Settlement Amounts due to each party for such Commodity Transactions
and/or agreements shall be aggregated.  The party owing the net amount after
such aggregation shall pay such net amount to the other party in immediately
available funds within two business days after the date on which the Liquidating
Party terminates this Agreement.

(7) Miscellaneous.   This section shall not limit the rights and remedies
available to the Liquidating Party by law or under other provisions of this
Agreement.  The parties hereby acknowledge that this Agreement constitutes a
forward contract for purposes of Section 556 of the U.S. Bankruptcy Code.

I. Equal Daily Deliveries:  For pricing purposes only, unless otherwise
specified in the Special Provisions, all crude oil delivered hereunder during
any calendar month shall be considered to have been delivered in equal daily
quantities during such month.

J. Exchange Balancing:  If volumes are exchanged, each party shall be
responsible for maintaining the exchange in balance on a month-to-month basis,
as near as pipeline or other transportation conditions will permit.  In all
events upon termination of this Agreement and after all monetary obligations
under this Agreement have been satisfied, any volume imbalance existing at the
conclusion of this Agreement of less than 1,000 barrels will be declared in
balance.  Any volume imbalance of 1,000 barrels or more, limited to the total
contract volume, will be settled by the underdelivering party making delivery of
the total volume imbalance in accordance with the delivery provisions of this
Agreement applicable to the underdelivering party, unless mutually agreed to the
contrary.  The request to schedule all volume imbalances must be confirmed in
writing by one party or both parties.  Volume imbalances confirmed by the 20th
of the month shall be delivered during the calendar month after the volume
imbalance is confirmed.  Volume imbalances confirmed after the 20th of the month
shall be delivered during the second calendar month after the volume imbalance
is confirmed.
 
K. Delivery, Title, and Risk of Loss:  Delivery, title, and risk of loss of the
crude oil delivered hereunder shall pass from Seller to Buyer as follows: For
lease delivery locations, delivery of the crude oil to the Buyer shall be
effected as the crude oil passes the last permanent delivery flange and/or meter
connecting the Seller's lease/unit storage tanks or processing facilities to the
Buyer's carrier.  Title to and risk of loss of the crude oil shall pass from
Seller to Buyer at the point of delivery.

For delivery locations other than lease/unit delivery locations, delivery of the
crude oil to the Buyer shall be effected as the crude oil passes the last
permanent delivery flange and/or meter connecting the delivery facility
designated by the Seller to the Buyer's carrier.  If delivery is by in-line
transfer, delivery of the crude oil to the Buyer shall be effected at the
particular pipeline facility designated in this Agreement.  Title to and risk of
loss of the crude oil shall pass from the Seller to the Buyer upon delivery.

L. Term:  Unless otherwise specified in the Special Provisions, delivery months
begin at 7:00 a.m. on the first day of the calendar month and end at 7:00 a.m.
on the first day of the following calendar month.
M. Governing Law: This Agreement and any disputes arising hereunder shall be
governed by the laws of the State of Texas.

 
 

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Confidential Portions Redacted and Filed with the Commission pursuant to 17 CFR
200.83.  “***” Symbolizes Language Omitted Pursuant to an Application For
Confidential Treatment

N. Necessary Documents:  Upon request, each party agrees to furnish all
substantiating documents incident to the transaction, including a Delivery
Ticket for each volume delivered and an invoice for any month in which the sums
are due.

O. Waiver:  No waiver by either party regarding the performance of the other
party under any of the provisions of this Agreement shall be construed as a
waiver of any subsequent performance under the same or any other provisions.

P. Assignment:  Neither party shall assign this Agreement or any rights
hereunder without the written consent of the other party unless such assignment
is made to a person controlling, controlled by or under common control of
assignor, in which event assignor shall remain responsible for nonperformance.

Q. Entirety of Agreement:  The Special Provisions and these General Provisions
contain the entire Agreement of the parties; there are no other  promises,
representations or warranties.  Any modification of this Agreement shall be by
written instrument.  Any conflict between the Special Provisions and these
General Provisions shall be resolved in favor of the Special Provisions.  The
section headings are for convenience only and shall not limit or change the
subject matter of this Agreement.

R. Definitions:  When used in this Agreement, the terms listed below have the
following meanings:
"API" means the American Petroleum Institute.
"ASME" means the American Society of Mechanical Engineers.
"ASTM" means the American Society for Testing Materials.
"Barrel" means 42 U.S. gallons of 231 cubic inches per gallon corrected to 60
degrees Fahrenheit.
"Carrier" means a pipeline, barge, truck, or other suitable transporter of crude
oil.
"Crude Oil" means crude oil or condensate, as appropriate.
"Day," "month," and "year" mean, respectively, calendar day, calendar month, and
calendar year, unless otherwise specified.
"Delivery Ticket" means a shipping/loading document or documents stating the
type and quality of crude oil delivered, the volume delivered and method of
measurement, the corrected specific gravity, temperature, and S&W content.
"Invoice" means a statement setting forth at least the following
information:  The date(s) of delivery under the transaction; the location(s) of
delivery; the volume(s); price(s); the specific gravity and gravity adjustments
to the price(s) (where applicable); and the term(s) of payment.
"S&W" means sediment and water.
 
 

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