Exhibit 10.1

 

CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED AND ARE THE SUBJECT OF A
CONFIDENTIAL TREATMENT REQUEST PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934.  REDACTED PORTIONS ARE MARKED WITH [*****] AND HAVE BEEN
FILED SEPARATELY WITH THE

SECURITIES AND EXCHANGE COMMISSION.

 

AMENDMENT

TO

AMENDED AND RESTATED GAS GATHERING AGREEMENT

 

This Amendment (the “Amendment”) is effective as of September 1, 2015, between
SM Energy Company (“Producer”) and Regency Field Services LLC (“Gatherer”).

 

WHEREAS, Producer and Gatherer (the “Parties”) are parties to that certain
Amended and Restated Gas Gathering Agreement dated May 31, 2011 (the
“Agreement”); and

 

WHEREAS, the Parties desire to amend the Agreement as set forth below.

 

NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the Parties agree as follows:

 

1.              Exhibit “A-1” to the Agreement is hereby deleted and replaced in
its entirety by the Exhibit “A-1” attached to this Amendment.

 

2.              Effective as of the In-Service Date (defined below), Exhibit “C,
Revision 1” (and any other previous versions of Exhibit C) to the Agreement is
hereby deleted and replaced in its entirety by the Exhibit “C, Revision 2”
attached to this Amendment.

 

3.              In Article I, Definitions, the definition of Dedicated Area is
deleted and replaced in its entirety with the following definition: “Dedicated
Area means the lands described and depicted by plat solely within the green
shaded area and noted as the “Rich Gas Area” on Exhibit “A-1”, strictly limited
to the formations between the surface of such lands and the base of the Eagle
Ford Formation underlying such lands and shall include the Lease(s) and Well(s)
within the Dedicated Area.”

 

4.              In Article I, Definitions, in the definition of “Maximum Daily
Quantity or MDQ” the reference to “600,000 Mcf of Gas per Day” will be deleted
and replaced with “980,000 Mcf of Gas per Day” upon the In-Service Date as
defined in Article III, System Facilities, Section 10.

 

5.              In Article I, Definitions, the following definition is added:
“Prospective Dedicated Area means the lands depicted (by map) in the red shaded
area noted as the “Lean Gas Area” on Exhibit “A-1”, strictly limited to the
formations between the surface of such lands and the base of the Eagle Ford
Formation underlying such lands.”

 

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6.              In Article II, Dedication and Quantity, a new Section 1(d) is
added, as follows:

 

(d)                                 Producer’s Dedicated Gas shall include,
without limitation, all Gas produced (i) from wells in the Prospective Dedicated
Area containing a Gross Heating Value of at least [*****] Btu per standard cubic
foot, and (ii) from all wells drilled in the Prospective Dedicated Area prior to
February 1, 2016.  If Producer drills and completes any oil or gas well within
the Prospective Dedicated Area on or after February 1, 2016, and the Gas
produced therefrom contains a Gross Heating Value of less than [*****] Btu per
standard cubic foot, and if Producer elects to have the Gas produced from such
well processed, then Gatherer will have the right, but not the obligation, to
require all Gas produced from such well to be considered as Producer’s Dedicated
Gas for purposes of this Agreement. Producer will promptly deliver Gatherer
written notice of its determination to have such Gas processed, and Gatherer
will have [*****] Days following receipt of such notice to respond with its
election.  If Gatherer fails to respond within the [*****] Day period, Gatherer
will be deemed to have failed to exercise its option concerning such well.

 

7.              In Article III, System Facilities, of the Agreement, a new
Section 10 is added, as follows:

 

10.                               Gathering Expansion Project.  Gatherer shall
design and construct the facilities necessary to expand the capacity of the
System from approximately 580 MMcf/d to not less than 980 MMcf/d, as set forth
below (collectively, the “Expansion Facilities”).

 

Facilities.  Gatherer shall install approximately 13 miles of predominately 16”
gathering line, to (a) loop L15 to the suction side of B1LTE, (b) link South
Briscoe from the L11 lateral to the G2LT via west and east extension of the
existing 16” LP loop line, and (c) extend L4 to the G3LT crossover.  Gatherer
shall also make compressor and battery modifications to allow for 200 psig
suction pressure at each of B4LTW, B4LTE, B5LTE and G1LT, and install four CAT
3606 compressor units and associated equipment at B2LTW.  At the Boldt Ranch
Delivery Point, Gatherer shall add two 100 MMcf/d dehydration units to increase
the capacity of that Delivery Point to 450 MMcf/d.  At or near Latitude 27.9766
and Longitude -99.8460, Gatherer shall construct and install a new Delivery
Point (the “South Export Delivery Point”), with the capacity to deliver 450
MMcf/d of Gas, including two phase and three phase inlet separation, dehydration
units capable of throughput rates of at least 450 MMcf/d, an MCC building and
area lighting.

 

Condensate Facilities.  At the existing Briscoe A-1 Delivery Point, Gatherer
shall combine the two 2,000 barrel bullet tanks, and install a back-up flash gas
compressor for the tank vapors from the new Briscoe A-2 Condensate Delivery
Point.  At the existing Boldt Ranch Delivery Point, Gatherer shall replace the
existing VRU, install an emergency flare, and install a back-up flash gas
compressor for the tank vapors from the new Boldt Ranch-2 Condensate Delivery
Point.  At the South Export Delivery Point, Gatherer shall install two 2,000
barrel bullet tanks for Condensate storage, a flash gas compressor, a truck
Condensate loading facility, a positive displacement pump to deliver Condensate
into the Condensate Facilities, a 450-barrel gun barrel storage tank, a VRU and
an emergency flare.  At or near Latitude 28.1828 and Longitude -99.8911,
Gatherer shall construct and install a new Briscoe A-2 Condensate Delivery
Point, including a 4-bay truck load out rack, an inlet line heater with rerun
option, 25,000 barrels of Condensate storage, a 450-barrel gun barrel storage
tank, a redundant VRU, an MCC building,

 

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an emergency flare, area lighting, and Gas line and Condensate line extensions
from the Briscoe A-1 Delivery Point.  Similarly, at or near Latitude 28.0703 and
Longitude -99.6035, Gatherer shall construct and install a new Boldt Ranch-2
Condensate Delivery Point, including a 4-bay truck load out rack, piping and
related facilities for the future installation of an inlet line heater with
rerun option, 20,000 barrels of Condensate storage, a 450-barrel gun barrel
storage tank, a redundant VRU, an emergency flare, area lighting, and Gas line
and Condensate line extensions from the old Boldt Ranch Condensate Delivery
Point.  Once these facilities are installed, the new Briscoe A-2 and Boldt
Ranch-2 Condensate Delivery Points shall be capable of delivering 21,000 and
13,000 barrels per Day of Condensate, respectively.

 

Producer shall cause to be installed the necessary flow control valves and
meters at the expanded Boldt Ranch and the new South Export Delivery Points, and
the necessary pumps, meters and downstream pipelines at the new Briscoe A-2 and
Boldt Ranch-2 Condensate Delivery Points.  The first Day of the first Month
following the date all of the Expansion Facilities are completed and ready to be
placed in commercial service and are fully operational shall be the “In-Service
Date” hereunder; provided, however, such date shall not be dependent upon
installation of any necessary flow control valves, pumps, meters or downstream
pipelines at any Delivery Point or Condensate Delivery Point.  Subject to Force
Majeure, Gatherer shall cause the In-Service Date to occur on or before March 1,
2017.  As of the In-Service Date, both of the existing Briscoe A-1 and Boldt
Ranch Condensate Delivery Points shall be deleted as Condensate Delivery Points,
and replaced by the new Briscoe A-2 and Boldt Ranch-2 Condensate Delivery
Points, respectively.

 

In the event, other than due to Force Majeure, that Gatherer is unable to cause
the In-Service Date to occur on or before March 1, 2017, then for each day until
the In-Service Date occurs, Producer will be entitled to a credit (the “Delay
Credit”) in an amount equal to (A) the volume of Gas (measured in MMBtus)
curtailed as a result of the Expansion Facilities not being fully operational
and placed in commercial service multiplied by (B) the EV Gathering Fee
multiplied by [*****].  The Delay Credit will offset any fees or other costs
owed to Gatherer by Producer for the Month(s) in which the Delay Credit occurs.

 

8.              In Article V, Compensation and Disposition, of the Agreement, a
new Section 5 is added, as follows:

 

5.                                      Expansion Volume Gathering Fee and
Throughput Commitment.

 

Expansion Volume Gathering Fee.  For purposes of this Section 5, “Expansion
Volume” shall mean the volume of Gas, if any, delivered to the Delivery Points
each Day that is greater than 580,000 Mcf, beginning with the In-Service Date. 
With respect to the Expansion Volume each Day, in lieu of the Gathering Fee,
Producer shall pay Gatherer a fee equal to the Gathering Fee as of the
In-Service Date (such equivalent fee shall be the “Base EV Gathering Fee”) plus
$[*****] per Delivery Point MMBtu (the “Expansion Adder” and such sum, the “EV
Gathering Fee”).  The Base EV Gathering Fee and the Expansion Adder shall be
adjusted in accordance with the formula set forth in Article V, Section 2,
above.  Upon the earlier to occur of (x) the total Expansion Volume delivered to
the Delivery Points hereunder exceeding [*****] Mcf, or (y) upon the first Day
of the first Month following five years from the In-Service Date, (A) the

 

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Expansion Adder shall be eliminated from the EV Gathering Fee, such that the EV
Gathering Fee shall equal the Base EV Gathering Fee, and (B) the Base EV
Gathering Fee shall be reduced by [*****].  For the avoidance of doubt, this
Section 5 shall not impact the fees paid to Gatherer on the first 580,000 Mcf of
Gas delivered each Day.

 

Expansion Volume Throughput Commitment.  As consideration for construction of
the Expansion Facilities, Producer agrees to tender quantities of Expansion
Volume each Expansion Year that at least equal the Annual Expansion Throughput
Commitment for such Expansion Year set forth below, and to make a payment to
Gatherer after each Expansion Year (the “Expansion Annual Shortfall Payment”) as
set forth below if the Annual Expansion Throughput Commitment is not met for
such Expansion Year.  For purposes of this paragraph, “Expansion Year” shall
mean a period of twelve (12) consecutive Months commencing on the later of (A)
March 1, 2017 and (B) the In-Service Date, and each subsequent period of twelve
(12) consecutive Months up to a maximum of five (5) Expansion Years.

 

Expansion Year

 

Annual Expansion Throughput Commitment

1

 

[*****] MMBtu

2

 

[*****] MMBtu

3

 

[*****] MMBtu

4

 

[*****] MMBtu

5

 

[*****] MMBtu

 

The Expansion Annual Shortfall Payment shall be calculated as follows:

 

[((A – B) – C) – D] x E  =  Expansion Annual Shortfall Payment (in Dollars)

 

Where:

 

A  =  the Annual Expansion Throughput Commitment (in MMBtu); and

 

B  =  the actual quantity (in MMBtu) of Expansion Volume measured at the
Delivery Points during the Expansion Year, if such amount was less than the
Annual Expansion Throughput Commitment; and

 

C  =  the quantity (in MMBtu) by which the previous Expansion Year’s actual
deliveries (including credits) of Expansion Volumes exceeded the Annual
Expansion Throughput Commitment applicable to such Expansion Year, if any.  For
the avoidance of doubt, any quantities of Expansion Volume delivered and/or
credited under this paragraph during an Expansion Year in excess of the Annual
Expansion Throughput Commitment for such Expansion Year will be credited against
the Annual Expansion Throughput Commitment for the succeeding Expansion Year.

 

D  =  the quantity of credits (in MMBtu) applied to the Annual Expansion
Throughput Commitment pursuant to the paragraph of this Section 5 below
concerning Gatherer’s failure to receive Gas volumes tendered by Producer; and

 

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E  =  the sum of the average EV Gathering Fee for the applicable Expansion Year
plus the average Compression Fee for the applicable Expansion Year plus the
average Dehydration Fee for the applicable Expansion Year, in Dollars per MMBtu.

 

Gatherer shall invoice Producer for any Expansion Annual Shortfall Payment no
later than the end of the third full Month after the completion of the Expansion
Year to which the Annual Expansion Throughput Commitment applies.  Payment shall
be due in accordance with the payment terms hereof.  The Parties agree that
Producer’s obligation to tender the Annual Expansion Throughput Commitment or to
make any Expansion Annual Shortfall Payment when due will not be excused for any
reason, including, but not limited to, Force Majeure affecting any Well(s) or
the failure or rescission of any Lease(s).

 

In determining whether any Annual Expansion Throughput Commitment has been met,
Producer shall receive a one (1) MMBtu credit against such Annual Expansion
Throughput Commitment for each one (1) MMBtu of Expansion Volume Gas which
Producer was ready and able to deliver hereunder in accordance with this
Agreement during the applicable Expansion Year, but which Gatherer failed to
receive for any reason other than Force Majeure; provided, however, such credit
shall not exceed, for any Day, a quantity of Gas equal to 400,000 Mcf per Day
(in MMBtu), less the quantity of Gas (in MMBtu) which was delivered hereunder
during such Day to the applicable Facilities system(s).  For purposes of this
paragraph, determination of the quantity of Expansion Volume Gas which Producer
was ready and able to deliver hereunder shall be made by reference to the
weighted average daily quantity of Expansion Volume Gas (in MMBtu) delivered to
the applicable Receipt Point(s) during the five (5) Days immediately preceding
Gatherer’s failure to receive such Gas, assuming a weighted average volume
allocation of Expansion Volume Gas among all Receipt Points during such five (5)
Day period.  Notwithstanding anything to the contrary, the credit under this
paragraph shall not apply to Connection Delays, delays in connection of an
Offset Well that is not a DA Offset Well, or Gas not taken as a result of an
Excess Pressure Event.

 

9.              In Article VI, Receipt and Delivery Pressures and Rate of Flow,
of the Agreement, a new Section 4 is added, as follows:

 

4.                                      Tank Battery Suction Pressures. 
Gatherer shall maintain a pressure of 200 psig or less on the suction side of
the compression facilities at each of the B4LTE, B4LTW, B5LTE, G1LT, G13LT,
G12LT, G10LT, G9LT, G8LT, G6LT, G5LT, G4LT, and G2LT Tank Batteries.  If the
actual operating pressure at the inlet control valve at such locations exceeds
200 psig (“Excess Suction Pressure”), and Producer gives Gatherer notice of
same, then Gatherer shall promptly use reasonable efforts to reduce such
pressure at such locations to a pressure at or below 200 psig within forty-eight
(48) hours after delivery of such notice.  If there is Excess Suction Pressure
at a Tank Battery as averaged over a period of fourteen (14) or more consecutive
Days, excluding any Days during such fourteen (14) day period on which an event
of Force Majeure caused, in whole or in part, such Excess Suction Pressure, and
excluding the first two days of Excess Suction Pressure caused in whole or in
part by the completion and connection of a Well upstream of the affected Tank
Battery (an “Excess Suction Pressure Event”), then Producer shall provide
gatherer with written notice containing the applicable dates of the Excess
Suction Pressure

 

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Event, and Gatherer shall issue Producer an “Excess Suction Pressure Credit”
calculated as follows:

 

(P x Q)  =  Excess Suction Pressure Credit

 

Where:

 

P  =  $[*****] per MMBtu; and

 

Q  =  the quantity of Gas (in MMBtu) delivered to the Tank Battery during all
days of the Excess Suction Pressure Event plus the quantity of Gas (in MMBtu)
delivered to the Tank Battery during a period immediately following the Excess
Suction Pressure Event equal to the number of days of the Excess Suction
Pressure Event.

 

The foregoing $[*****] per MMBtu credit rate will be annually adjusted as
provided in Article V, Section 2.

 

Except as amended herein, all other terms and conditions of the Agreement shall
remain in full force and effect.

 

The Parties have caused this Amendment to be executed by their duly authorized
representatives as of the date first set forth above.

 

Regency Field Services LLC

 

SM Energy Company

By: Regency Gas Services LP, its sole member

 

 

By: Regency OLP GP LLC, its general partner

 

 

 

 

 

By: 

/s/ Brian Beebe

 

By: 

/s/ Dave Whitcomb

 

 

 

Name: Brian Beebe

 

Name: Dave Whitcomb

 

 

 

Title: Senior Vice President

 

Title: Vice President – Marketing

 

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Exhibit A-1

To that certain Amended and Restated Gas Gathering Agreement dated May 31, 2011

between SM Energy Company (“Producer”) and Regency Field Services LLC
(“Gatherer”)

 

Dedicated Area Plat

 

On Following Page

 

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EXHIBIT “C, Revision 2”

To that certain Amended and Restated Gas Gathering Agreement dated May 31, 2011

between SM Energy Company (“Producer”) and Regency Field Services LLC
(“Gatherer”)

 

Delivery Point(s)

 

Delivery Point

 

Meter Number-
Counter Party

 

Pressure
(psig)

 

Maximum
Daily
Quantity
(MMSCFD)

 

Lat. / Long.

 

County /
State

Briscoe A-1(1)

 

6045-RFS
11712-EFG, LLC
11712B-EFG, LLC
0969003-10-ETC

 

1200

 

250

 

28.182037
-99.873273

 

Webb, Texas

Boldt Ranch(2)

 

11709-EFG, LLC
11709B-EFG, LLC
0969020-10-ETC

 

1200

 

250/450(3)

 

28.064314
-99.604006

 

Webb, Texas

Brask CRP

 

6036-RFS

 

450

 

21

 

28.026701
-99.863584

 

Webb, Texas

Galvan G-6 Export

 

6048-RFS

 

1200

 

90

 

28.049946
-99.736603

 

Webb, Texas

Bella Vista CRP

 

6040-RFS

 

1200

 

36

 

28.138037
-99.594894

 

Webb, Texas

South Export Delivery Point

 

TBD

 

1200

 

450

 

27.9766,
-99.8460

 

Webb, Texas

 

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(1) Briscoe A-1 Delivery Point(s) shall include interconnects with Eagle Ford
Gathering LLC (“EFG, LLC”), Regency Field Services LLC (“RFS”), and ETC Texas
Pipeline Ltd. (“ETC”)

(2) Boldt Ranch Delivery Point(s) shall include interconnects with Eagle Ford
Gathering LLC and ETC Texas Pipeline Ltd.

(3) The MDQ for the Boldt Ranch Delivery Point shall be increased from the
current 250 MMscf/d to 450 MMscf/d upon the In-Service Date

 

As additional delivery point(s) are installed on the Facilities for delivery of
Gas from the Facilities, the Parties shall add the same to this Exhibit by
amendment.

 

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