Exhibit 10.1
OPERATION AND SERVICE AGREEMENT

THIS OPERATION AND SERVICE AGREEMENT (this “Agreement”), is executed on this
19th day of May, 2011, to be effective as of January 1, 2011 (the
“Effective Date”), by and between La Grange Acquisition, L.P. d/b/a Energy
Transfer Company, a Texas limited partnership (“Operator”), Regency GP LP, a
Delaware limited partnership (the “General Partner”), Regency Energy Partners
LP, a Delaware limited partnership (the “Partnership”), and Regency Gas Services
LP, a Delaware limited partnership (“Owner”).

W I T N E S S E T H:

WHEREAS, the General Partner is the general partner of the Partnership, and as
such conducts, directs and manages all activities of the Partnership;

WHEREAS, the Partnership is the direct and indirect owner of Owner, which is the
direct and indirect owner of the Facilities (defined below);

WHEREAS, the General Partner previously caused a certain affiliate of the
General Partner to provide services (including the Services) to the Partnership
and its subsidiaries (including Owner) on behalf of the General Partner pursuant
to the limited partnership agreement of the Partnership, and the General Partner
now desires to have Operator (which is an affiliate of the General Partner and
an “Indemnitee” under the limited partnership agreement of the Partnership)
provide the Services (defined below) on its behalf with respect to the operation
and maintenance of the Facilities on the terms set forth herein;

WHEREAS, the conflicts committee of the general partner of the General Partner
has reviewed this Agreement and granted “Special Approval” with respect hereto;

WHEREAS, Operator is willing to provide the Services to Owner and its
subsidiaries on the General Partner’s behalf; and

WHEREAS, the parties hereto desire to set forth their respective rights and
responsibilities with respect to the operation and maintenance of the
Facilities, the provision of the Services and any other matters addressed
herein.

NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements herein contained, as of the Effective Date, the parties agree as
follows:

ARTICLE 1
OPERATION OF FACILITIES

1.1           Conflicts Policy.  This Agreement and each party’s performance
hereunder shall at all times be in compliance with and subject to the Statement
of Policies Relating To Potential Conflicts Among Energy Transfer Partners,
L.P., Energy Transfer Equity, L.P. and Regency Energy Partners, LP dated August
10, 2010, and as may be amended from time to time (the “Conflicts Policy”) to
the extent applicable.  Operator represents and warrants that (a) Operator will
not use any information obtained in the course of its performance hereunder
regarding Owner or Owner’s current, past or future plans and operations in a
manner that is adverse to Owner, and (b) Operator will take all necessary
measures to ensure that Owner’s competitively sensitive information is only
disclosed to employees of Operator who have a need to know in order to perform
the Services hereunder.

1.2           The Services.   The Routine Services, Special Services and
Emergency Services (as defined below) shall constitute the Services provided by
Operator hereunder.

1.3           Description of the Facilities.  Subject to the terms hereof, the
facilities covered by this Agreement are more particularly identified in
Schedule 1.3(A) (the facilities, the personalty, fixtures and real property
associated therewith are referred to herein as, individually, a “Facility” and
collectively, the “Facilities,” and the real property on which such personalty
and fixtures are located may be singularly referred to as the “Premises”).  Upon
mutual agreement of the parties, other facilities and premises may be added to
the terms of this Agreement.  It is understood and agreed by the parties that
the Facilities described herein are for general reference purposes and that the
terms “Facility” and “Facilities” used herein are made in reference to all of
the above referenced assets directly or indirectly owned and/or operated or
leased by Owner, but specifically excluding Third Party Operator Assets as
defined and described in Schedule l.3(A).  Title to, and ownership of, the
Facilities and Premises shall remain vested in Owner, Owner’s subsidiary(ies) or
Owner’s lessee(s), as applicable.  Title to any new Facility or Premises or
improvement or replacement to any existing Facility which is obtained or
constructed pursuant to this Agreement, and with particularity Article 4, shall
vest automatically in Owner, Owner’s subsidiary(ies) or Owner’s lessee(s), as
applicable, without any other action necessary hereunder.

1.4           Services Provided by Operator.

(a) Subject to the terms hereof, Operator shall provide routine operations,
maintenance and related services reasonably required to operate and maintain the
Facilities, including but not limited to the services set forth on Schedule
1.4(A) (the “Routine Services”).

(b)           Special Services.  Either Owner or Operator may propose additional
services, other than the Routine Services, to be provided by Operator, such as
those set forth on Schedule 1.4(A) (and any such additional services are
referred to herein as the “Special Services”). The proposing party shall
identify in writing the proposed Special Service to be provided by Operator and
the proposed budget amount for such Special Service. In the event that Owner and
Operator agree in writing on a budget amount for such Special Service, the
Annual Operating Budget for the then current year shall be amended to include
such additional budget amount and Operator shall be authorized to provide such
Special Service pursuant to the terms of this Agreement.

(c)           Emergency Services.  In the case of an emergency which might
threaten life, property, or the environment, or render the Facility or any part
thereof incapable of continued operation, Operator shall immediately take such
reasonable steps and incur such operating and capital expenses as in its sole
opinion are required to deal with such emergency to render the site of the
emergency safe, including hiring of third parties to perform any and all repair,
reconditioning, overhaul or replacement work on any part of the Facilities (such
services are referred to herein as “Emergency Services”).  Operator shall adhere
to Operator’s Emergency Response Plan during an emergency and shall perform all
communications in accordance with such Emergency Response Plan or as permitted
in accordance with Section 1.4(C). As soon as practical after expenses to deal
with such emergency have been incurred, Operator shall report such expenses in
reasonable detail to Owner.  If practical, Operator shall notify Owner of the
expected expenses in advance of providing Emergency Services.  Owner will
provide an emergency contact person available 24 hours a day.  To the extent not
reimbursed in accordance with an Annual Operating Budget, the Partnership will
reimburse Operator for one hundred percent (100%) of the Expenses (including
labor) incurred by Operator in providing the Emergency Services under this
subparagraph (c).

(d)           Documentation Required by Regulatory Authorities.  Owner shall
provide for use by Operator, all existing and available design, construction,
operation and maintenance information, including "as built" drawings schematics
and flow diagrams, to allow Operator to perform its obligations
hereunder.  Operator will maintain and update all documentation as required by
applicable federal, state or local governmental laws, rules, regulations or
ordinances for the operation of the Facilities.  To the extent not reimbursed in
accordance with an Annual Operating Budget, the Partnership will reimburse
Operator for one hundred percent (100%) of the Expenses (including labor)
incurred by Operator in providing the Services under this subparagraph (d).

(e)           Pipeline Integrity and Operator Qualification.  To the extent not
reimbursed in accordance with an Annual Operating Budget, the Partnership will
reimburse Operator for one hundred percent (100%) of the Expenses (including
labor) on all work on or with respect to the Facilities related to meeting the
spirit, intent and guidelines of the Pipeline Integrity and Operator
Qualification Rules of the DOT/PHMSA or other State or Local governmental agency
with jurisdiction over the Facilities.

(f)           Capital Expenditures.  Subject to the provisions of Section 4,
Operator will procure and furnish all materials, equipment, services, supplies
and labor necessary to implement the items set forth in the Annual Capital
Budget (below defined), including, without limitation, the acquisition
of  materials, engineering, permits, project management and construction.

(g)           Reports to Owner.  Operator will provide Owner with the Reports
set forth in Schedule 1.4(H) attached hereto.

(h)           Accounting.  Operator will maintain accounting records and source
documentation substantiating the Services provided under this Agreement,
maintain such accounting records in compliance with the Subject Laws and in
accordance with generally accepted accounting principles and prepare, organize
and provide source data which will enable Owner (or the appropriate Partnership
subsidiary) to submit for reimbursement from third parties the costs of those
Services for which such third parties are liable under applicable agreements.
All accounting records shall be maintained in a manner prescribed by Owner on a
region by region and asset by asset basis.  Operator shall maintain separate
books and records by company for Partnership subsidiaries as required by Subject
Laws or Owner.

(i)           General.  Operator will perform any other services necessary or
proper or any other services reasonably requested by Owner for the operation,
maintenance and protection of the Facilities.

1.5           Standard of Conduct of Operator.

(a) General Standard.  Operator shall provide the Services under this Agreement
in (i) a good and workmanlike manner and (ii) as a reasonably prudent operator
conforming with the usual and customary practices of the natural gas pipeline
industry.

(b)           Compliance with Contracts, Laws and Conflicts Policy.  Operator
shall perform the Services under this Agreement in compliance with: (i) subject
to Owner’s obligations under Subsection 1.5(c) below, the terms and conditions
that directly or indirectly relate to, or affect, operations of the Facilities
(including, without limitation, any product or gas quality specification and/or
quantity provisions, subject to the capacity limitations of the Facility) in all
existing or future purchase, sale, exchange, marketing, storage, service,
gathering, transportation and/or any other agreements, including tariffs filed
with governmental agencies, covering the purchase, sale, storage, exchange or
transportation of goods, products or feedstock to, from, through, or in a
Facility or Facilities (collectively, the “Facilities Contracts”); (ii) all
laws, permits, rules, codes, ordinances, requirements and regulations of all
federal, state or local agencies, court and/or other governmental bodies, which
are now, or may in the future become applicable to (A) Owner’s direct or
indirect ownership of the Facilities, (B) the business of Owner or any of its
subsidiaries, (C) any Facility or Facilities, (D) equipment and personnel
engaged in the provision of Services covered by this Agreement, and/or (E) the
performance of Services or any other obligation of Operator hereunder (all
matters set forth in clause (ii) of this Subsection 1.5(b) are defined herein
collectively, as the “Subject Laws”); and (iii) Operator’s or its affiliates’
policies and procedures relating to operational matters at the Facilities as
specified in writing by Owner to Operator; (iv) the requirements of any
insurance policies and (v) the Conflicts Policy.

(c)           Copies of Facilities Contracts.  To assist Operator in compliance
with Subsection 1.5(b), Owner will identify on Schedule 1.5(B) all existing
Facilities Contracts entered into by Owner or its affiliates in which Owner
believes there are terms and conditions that may materially impact the manner of
operations of any of the Facilities and provide to Operator summaries or copies
of such provisions or documents.  With respect to new Facilities Contracts,
Owner will advise and furnish to Operator summaries of such applicable
provisions or copies of any new Facilities Contracts that may materially impact
the manner of operation of any Facility. Operator acknowledges and agrees that
the Facilities Contracts are owned by Owner or its affiliates and that Operator
shall have no authority, as agent or otherwise, to amend or modify existing
Facilities Contracts or to enter into new Facilities Contracts. The terms of the
Facilities Contracts are subject to Section 10.10.   Owner’s failure to identify
a material operating provision and/or any Facilities Contracts shall not affect
Operator’s obligation to comply with such operating provision once Operator has
been made aware of it.

(d)           LIMITS OF LIABILITY.  OPERATOR SHALL NOT BE LIABLE FOR ANY LOSSES
OR DAMAGES TO THE FACILITIES, OR LOSSES OR LIABILITIES OF THE OWNER GROUP
(DEFINED HEREIN) DUE TO THE FAILURE OF OPERATOR TO PROVIDE SERVICES IN
COMPLIANCE WITH THIS SECTION 1.5, OR LOSSES OR LIABILITIES OF OWNER RESULTING
FROM OPERATOR’S NON-COMPLIANCE WITH ANY OF THE FACILITIES CONTRACTS, EXCEPT AS
TO SUCH LOSSES, DAMAGES OR LIABILITIES RESULTING FROM THE BAD FAITH, FRAUD,
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT (OR, IN THE CASE OF A CRIMINAL MATTER,
ACTIONS TAKEN WITH KNOWLEDGE THAT SUCH ACTIONS WERE UNLAWFUL) OF ANY OF OPERATOR
GROUP (DEFINED HEREIN).

1.6           Emergencies.  While providing the Emergency Services set forth in
Subsection 1.4(c), Operator will follow its Emergency Response Procedures as
adopted and amended from time to time. Operator will not issue public statements
or communicate with any governmental authority regarding any emergency unless,
in the reasonable opinion of Operator, it is necessary and time does not allow
Owner or the appropriate Partnership subsidiary to issue such public statement
or undertake such communication.

1.7           Procedure for Notification and Reporting, Including Contact
Personnel.  All reporting and notifications required pursuant to this Agreement
shall be made to the contact personnel of Owner, or Operator, as the case may
be, and at the telephone, facsimile or address as set forth in Section 10.8
hereof or as otherwise provided by written notice from one party to the other
from time to time during the term of this Agreement.  Any change in personnel,
telephone, facsimile or address shall be effective under this Agreement one day
after the delivery by the party so changed of written notice of same to the
other party. Written and verbal reporting and notices shall be effective upon
receipt if received during regular business hours, except in respect of
emergency reporting and notifications which will be effective upon receipt
regardless of time of day.
 
 
1.8           Authority to Negotiate and Deliver Contracts. Subject to the
Annual Operating Budget, the Annual Capital Budget, the specific authorizations
for Special Services pursuant to Subsection 1.4(b), and Owner’s Limits of
Authority Policy, as well as any additional conditions, restrictions, or
limitations set forth or imposed by Owner, Owner hereby authorizes the Operator
to prepare, negotiate, execute, and deliver contracts in connection with the
performance of Services on its behalf, including contracts with subcontractors
to provide Services. To the extent practicable, all such contracts and other
agreements may be entered into in the name of the Owner or the applicable
Partnership subsidiary; provided, however, that to the extent that Operator uses
existing agreements already in Operator's name, without the need to enter into
new agreements in the name of Owner, Operator agrees to execute the rights and
obligations of such agreements on behalf of the applicable Partnership
subsidiary as if such subsidiary were an original signatory thereof. To the
extent that the Operator secures or obtains any permits, licenses, title
documents, contracts, warranties, and approvals for the benefit of the
Partnership or any of its subsidiaries or the Facilities at any time after the
date of this Agreement, Operator shall (a) secure or obtain all such documents,
instruments, and materials in the name of the Owner or the applicable
Partnership subsidiary and (b) deliver such documents, instruments, and
materials over to Owner within fifteen (15) Business Days after they are
received by the Operator (or as soon as reasonably practicable thereafter).

ARTICLE 2
RELATIONSHIP OF PARTIES

2.1           Independent Contractor.    The relationship of Operator and all of
its employees to the General Partner, the Partnership, and all of the
Partnership’s subsidiaries (including Owner) shall be that of an independent
contractor.  All of the employees of Operator performing Services shall, at all
times and in all places, be subject to the sole direction, supervision and
control of Operator.  Operator shall exercise control over the services and
manner in which it and its employees perform Services. Subject to the other
requirements provided herein, with particularity, insurance requirements,
Subsection 1.4(a) and any redistribution of the RGNC Prorata/Allocated Expense
(defined below) required as a result of subcontracting Services, Operator shall
have the right to prudently subcontract Services.  Owner shall have the right to
observe and consult with Operator in connection with Operator’s performance of
its obligations under this Agreement.  Further, Owner shall have the right to
witness all environmental, technical, quality, compliance and safety assessments
to be performed on or in connection with any of the Facilities.

2.2           Louisiana Operations.   Notwithstanding any other provision in
this Agreement, the parties hereto recognize, acknowledge and agree that, solely
for the purpose of the Louisiana Workers’ Compensation Act, that (i) the work
and services being performed by Operator and/or by the employees of Operator in
the State of Louisiana (and its suboperators, if any), whether direct or
statutory, borrowed or otherwise, (collectively, “Operator’s Employees”) are an
integral part and essential to the ability of Owner to generate Owner’s goods,
products and services and are part of Owner’s trade, business or occupation, and
(ii) Operator’s Employees are the statutory employees of Owner for the purposes
of La. R.S. 23:1061(A)(3), and Owner and its applicable affiliates shall be
entitled to the protections that are afforded a statutory employer under
Louisiana law.  Notwithstanding the foregoing sentence, the General Partner, the
Partnership and the Partnership’s subsidiaries (including Owner) will not be
vicariously responsible to a third Person for any acts of Operator’s Employees.
Operator shall primarily be responsible for and shall pay for all workers’
compensation benefits to any of Operator’s Employees, shall protect, indemnify,
defend and hold harmless Owner Group for any amounts owing with respect to any
of Operator’s Employees arising out of the Louisiana Workers’ Compensation Act,
and hereby waives, and shall not be entitled to seek, any contribution or
indemnity from Owner Group for any such payments by or on behalf of Operator.

ARTICLE 3
OPERATING BUDGET

3.1           Annual Operating Budget.  Each year Operator shall prepare and
present to Owner an “Annual Operating Budget” of all of the costs and expenses
(other than the costs and expenses set forth in Section 3.2 which are hereby
expressly excluded from such budget) that Operator expects to incur to perform
the Services for the next succeeding fiscal year commencing January 1.  The
Annual Operating Budget may include an allocated portion of costs expected to be
incurred by Operator to provide services to other owners for which Operator
performs services, provided that such costs are incurred, in part to provide
services hereunder.  Any such allocation shall be reasonably determined by
Operator and consistent with allocation methodologies used under generally
accepted accounting principles (the “RGNC Prorata/Allocated Expense”).  The
budget shall be prepared on a region by region and asset by asset basis as
reasonably determined by Owner. Without limitation, the following expenses
(hereafter referred to as the “Expenses”) shall be included in the Annual
Operating Budget:

(a)           Labor Costs.

(i)           The RGNC Prorata/Allocated Expense of salaries, wages and
reasonable benefits of Operator’s employees or employees of Operator’s
affiliates engaged by Operator in operating the Facilities and providing
Services under this Agreement, together with holiday, vacation, sickness, and
jury service benefits, bonuses, and other customary allowances paid to persons
whose salaries and wages are budgeted under this Subsection 3.1(a); and

(ii)           Expenditures or contributions made pursuant to assessments
imposed by governmental authorities which are applicable to salaries, wages and
costs budgeted in Subsection 3.1(a), including, without limitation, payroll
taxes.

(b)           Reimbursement Expenses of Employees.  Reasonable personal expenses
of persons whose salaries and wages are budgeted under Subsection 3.1(a), such
as the usual out-of-pocket expenditures incurred by such employees in the
performance of their duties in providing Services for which such employees are
reimbursed by Operator under its standard policy. Operator shall be responsible
for any cash advances to their employees and related recovery of unused funds.

(c)           Material, Equipment and Supplies.  The RGNC Prorata/Allocated
Expense of material, equipment, chemicals and supplies purchased by Operator or
furnished by Operator for use in providing Services under this Agreement,
together with associated sales taxes.

(d)           Transportation.  The RGNC Prorata/Allocated Expense of vehicles
utilized in the performance of the Services under this Agreement and associated
costs.

(e)           Third-Party Services.  The costs of contract services furnished by
parties other than affiliates of Operator and associated taxes; provided the
costs and associated taxes shall be allocated to the Annual Operating Budget
under this Agreement on a prorata basis of hours worked when such third-party
services are deployed for services other than the Services under this Agreement.

(f)           Permits, Licenses and Bonds.  Cost of permits and licenses for the
Facilities necessary in the performance of Operator’s duties hereunder.

(g)           Office Expenses.  RGNC Prorata/Allocated Expense attributable to
office expenses incurred to provide Services under this Agreement.

(h)           Taxes and Fees.  All sales, use and like taxes, and all fees and
all assessments properly levied or imposed by any federal, state or local
governmental authority, arising from the procurement of materials, equipment and
supplies in connection with the provision of Services hereunder.

(i)           Insurance.  The RGNC Prorata/Allocated Expense of the
comprehensive general liability insurance and workmen’s compensation insurance
and employer’s liability insurance required to be carried by Operator pursuant
to Article 7.

(j)           Technical Services.  The RGNC Prorata/Allocated Expense of
Services provided through Operations Technical Services related to the
Facilities (including SCADA functions from the Facilities to Gas Control, T1
circuit acquisitions, troubleshooting and maintenance); provided, Owner shall
not be obligated to reimburse Operator for any expenses related to the study or
development of standards for software modification and operational system design
modification unless Owner has in advance separately approved of the expense in
writing and no such expenses shall be included in the Annual Operating Budget.

(k)           Environmental Assessments.  The costs incurred by Operator for
environmental assessments, inspections, and mechanical or process upgrades or
changes to any Facility required by Subject Laws or by order of any governmental
authority.

(l)    Prior to September 30th of each calendar year, Operator shall prepare and
present to Owner a budget for the next succeeding fiscal year for all of those
Routine and Special Services to be provided by Operator hereunder.  Owner shall
on or before December 1st of the same year consider and, if acceptable, approve
same, after having made, in consultation with Operator, any necessary revisions,
additions or deletions.  If Owner fails to approve an Operating Budget with
respect to any calendar year, then (i) the Operating Budget previously approved
by Owner for the prior calendar year shall remain in effect after giving effect
to any dispositions or other material changes to the assets of Owner and its
subsidiaries during such prior calendar year, (ii) any items of the proposed
Operating Budget that have been approved by Owner shall become effective, and
(iii) the Operator will be entitled to expend funds, in any calendar quarter, in
an amount equal to the lesser of (1) the actual expenses incurred by the
Operator in such calendar quarter, and (2) the budgeted amount for the
corresponding calendar quarter in the Operating Budget previously approved by
Owner for the prior calendar year adjusted by the Wage Estimate Factor.  “Wage
Estimate Factor” shall mean the percentage increase (if any) in the NAICS 221200
– Natural Gas Distribution Occupational and Wage Estimate for All Occupations as
published by the Occupational Employment Statistics program (“Index”), since the
last determination of the number to which the Wage Estimate Factor is being
applied, subject to the following: in no event shall the Wage Estimate Factor
increase by less than 1.5% or more than 3.5 % for any single year.  If the Index
is discontinued, Owner shall select a successor or substitute, which, in Owner’s
reasonable opinion, is most nearly equivalent to such statistics.
The Annual Operating Budget for 2011 is attached as Schedule 3.1 .

3.2           Items of Costs and Expenses Excluded from Annual Operating
Budget.  The following items of costs and expenses shall be excluded from the
Expenses and the Annual Operating Budget:

(a)           all Facility lease payments payable by Owner;

(b)           all payments required by Financing Agreements and Facilities
Agreements payable by Owner;

(c)           all premiums payable by Owner for the casualty and business
interruption insurance coverage required to be maintained by Owner pursuant to
Article 7;

(d)           compression, flare, heater, incinerator, or other field and/or
process fuel payable or provided by Owner;

(e)           all reasonable wind-down and reasonable severance costs and
expenses of Operator’s employees associated with any termination pursuant to
Article 6, including, without limitation, relocation or reassignment costs
incurred by Operator to mitigate severance costs and expenses (collectively,
“Termination Costs”);

(f)           costs of emergency operations; and

(g)           payments made to Third Party Operators.

3.3           Adjustments to Annual Operating Budget.  From time to time either
party may propose that the then existing Annual Operating Budget be adjusted due
to non-routine extraordinary items such as the acquisition of additional
Facilities, the divestiture of a portion of the Facilities, expansion of any of
the Facilities, shutdown of any of the Facilities, destruction of any of the
Facilities, or other similar budget exception.  Such budget adjustment shall be
in writing and be presented to Owner or Operator, as the case may be.  Unless
the party to which such budget adjustment is presented sooner approves it in
writing, Owner and Operator shall meet within 30 days of the presentation of
such budget adjustment to obtain agreement regarding the proposal.  Upon written
approval of the proposed adjustment, the Annual Operating Budget shall be
adjusted accordingly.

ARTICLE 4
CAPITAL BUDGET

4.1           Annual Capital Budget.  Prior to September 15th of each year
Operator shall prepare and present to Owner an annual budget for the next
succeeding fiscal year with respect to capital items of which Operator is aware
and which Operator recommends be implemented to maintain the Facilities in good
working order or to expand the Facilities as previously directed by Owner (each
such budget hereafter referred to as an “Annual Capital Budget”).  Owner shall
on or before December 1st of the same year consider and, if acceptable, approve
same, after having made, in consultation with Operator, any necessary revisions,
additions or deletions.

4.2           Implementation of Items in Capital Budget.  Notwithstanding the
approval by Owner of the Annual Capital Budget pursuant to Section 4.1, Operator
shall not begin the implementation of any item in the Annual Capital Budget
(other than those items which may be necessary in response to an emergency
operation pursuant to Subsection 1.4(c)) until it has secured all approvals
required by the internal limits of authority policy applicable to the
Partnership.

4.3           Overruns.  The following Overrun Allowances shall apply only to
Work Orders/Authorizations for Expenditure (“WO/AFE”) for facilities that are
wholly-owned by Owner.  For any WO/AFE for facilities under joint ownership with
a third party, Operator shall be solely responsible for any overruns that are
not approved in writing by Owner in advance.  Commencing January 1, 2011, for
any capital project less than or equal to $166,666, Operator may not exceed the
aggregate of all WO/AFEs for such capital project by more than $25,000 (such
excess amount shall be referred to herein as the “Overrun Allowance”).  For any
capital project greater than $166,666 but less than $3,333,333, the Overrun
Allowance shall be 15% of the aggregate of all WO/AFEs for such project.  For
any capital project greater than $3,333,333, the Overrun Allowance shall be
$500,000.    Upon knowledge by Operator that the projected and/or actual costs
of implementing any item in the Annual Capital Budget is likely to exceed the
Overrun Allowance, Operator shall immediately notify Owner verbally of such
event followed with a written WO/AFE revision on or before seven days after the
verbal notice.  Operator shall provide Owner with the information necessary to
allow Owner to make a decision to proceed or cancel the implementation of such
capital item.  Upon receipt of such notification and information, Owner shall
promptly decide to proceed or cancel the implementation of the capital item and
notify Operator of its decision verbally or in writing.  If Owner decides to
proceed with the implementation of such item, Owner and Operator shall evidence
the agreed upon overrun expense by way of a WO/AFE revision signed by the
parties.  Notwithstanding anything to the contrary herein, Owner shall reimburse
Operator for any liabilities, costs and expenses reasonably incurred by Operator
in connection with the implementation of such item, even if incurred before
Owner notifies Operator of its decision.

4.4           Approved CapX.  The approved budgeted amount of any capital
expenditure as evidenced by a work order signed by Owner, as same may be revised
pursuant to Section 4.3, shall be the “Approved CapX.”

The RGNC Capital Budget for 2011 is attached as Schedule 4.

ARTICLE 5
FINANCIAL AND ACCOUNTING PRACTICES

5.1           Costs Payable by Operator.  Subject to the obligation of the
Partnership to reimburse Operator pursuant to Section 5.2, it shall be the
responsibility of Operator to pay or cause to be paid on its own account all
liabilities, costs and expenses (a) of the items set forth in Section 3.1 and
the Annual Operating Budget and (b) relating to the Emergency Services provided
by Operator in accordance with this Agreement.  Subject to Sections 4.2 and 4.3,
it shall be the responsibility of Operator to pay or cause to be paid on Owner’s
account all liabilities, costs and expenses incurred by Operator in the
implementation of approved capital budget items.  With respect to all items
payable by Operator on its own account or on Owner’s account, Owner shall have
the right to review all source documentation concerning any such liabilities,
costs and expenses upon reasonable notice and during regular business
hours.  Operator will ensure that no lien will ever be permitted to attach to
property of Owner or any of Owner’s subsidiaries, whether real or personal, and
Operator hereby agrees to DEFEND AND INDEMNIFY OWNER GROUP (DEFINED HEREIN) FOR
ANY AND ALL SUCH CLAIMS AND LIENS WHICH IN ANY WAY ARISE OUT OF OR ARE RELATED
TO ANY OPERATIONS BY OPERATOR HEREUNDER.

5.2           Reimbursement of Operator.  As expenses are incurred, Operator
shall submit an invoice(s) to Owner of (a) the actual cost of every item set
forth in the Annual Operating Budget incurred by Operator and (b) all operating
costs and expenditures incurred in connection with an emergency in the
immediately preceding month.  Subject to resolution of billing disputes, Owner
shall pay Operator the total amount of such invoice(s) on or before the last
Business Day of the month in which the invoice was delivered.  Payment of all
funds shall be made by wire transfer, in U. S. funds on a same day basis to the
Operator’s account.

5.3           Costs Payable by Owner.  It shall be the responsibility of Owner
to pay or cause to be paid all liabilities, costs and expenses of the items set
forth in Section 3.2.

ARTICLE 6
TERM AND TERMINATION

6.1           Term.  Subject to the terms hereof, commencing with the Effective
Date of this Agreement, this Agreement shall have an initial term of one year
(“Initial Term”).  Upon expiration of the Initial Term, this Agreement shall
automatically renew on a year to year basis, unless terminated by either party
by written notice of termination given no less than one hundred eighty (180)
days prior to the end of the Initial Term, or any subsequent year to year term,
as the case may be.

6.2           Partial Termination.                                           In
the event that Owner is not satisfied with Operator’s performance in any
respect, regardless of whether Operator is in default as provided below, Owner
shall notify Operator in writing of its concerns in writing and Operator shall
have thirty (30) days to bring its performance to a level that Owner finds
satisfactory.  If Operator fails to do so, Owner shall have the right to reduce
the scope of services performed hereunder to eliminate any that Owner finds
unsatisfactory and the fees due hereunder shall be adjusted to reflect the
change in scope.

6.3 Termination.  Notwithstanding Section 6.1, upon an Event of Default (defined
below) by either party, the other party may terminate this Agreement with
respect to any or all Services by written notice at the option of the party
serving such notice of Event of Default.  Notwithstanding Section 6.1 or any
other provision set forth in this Agreement, it is understood and agreed by the
parties that if at any time Owner or any of its subsidiaries agrees: (i) to sell
all or any of a portion of its interests in any or all of the Facilities to a
third party or to an affiliate; (ii) to enter into any type of joint venture,
business combination, management, service or other arrangement with a third
party or affiliate in respect of all or any of the Facilities or the Services or
other operation thereof or any related assets or the operation of such related
assets; (iii) to shut down a Facility permanently; (iv) upon destruction or
damage to any Facility, not to rebuild or repair such Facility; (v) to sell,
assign, transfer, convey, or exchange all or any portion of the stock of Owner
to or with a third party; or (vi) to purchase all or any portion of the stock of
a third party, then any Party shall have the right, within 30 days prior written
notice to the other Parties, to terminate this Agreement as to such Facility or
Facilities, or Service or Services, as applicable; provided, that in such
circumstance Owner shall be liable for Termination Costs related thereto. The
notice will set forth the date upon which this Agreement or any portion thereof
shall terminate.  Any partial termination of this Agreement will result in
budget adjustments as set forth in this Agreement and as otherwise agreed.

The Facilities set forth on Schedule 1.3(A) attached hereto are subject to the
agreement(s) indicated for each such Facility on such Schedule
1.5(B).  Notwithstanding Section 6.1, if at any time Owner is removed as
operator of any such Facility pursuant to the terms of such agreement(s), this
Agreement shall terminate as to such Facility at the same time as Owner is
removed as operator; provided, Owner shall be liable for Termination Costs
related thereto, unless the cause for Owner being removed as operator is based
upon any breach of this Agreement in which case Owner shall not be liable for
such Termination Costs.  Owner shall give Operator written notice of the date of
Owner’s removal within 10 days of having knowledge of the fact or intent of such
removal.

Termination or expiration of this Agreement shall not relieve either party from
any obligation incurred or accrued prior to the date of such termination or
expiration, or the right to audit, or deprive the party not in default of any
remedy otherwise available to it consistent with the terms of this Agreement.

6.4           Events of Default.  Each of the following events shall constitute
an “Event of Default” under this Agreement (whether the reason and whether any
such event shall be voluntary or involuntary or came about or shall be effected
by operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or of any order, rule or regulation of any administrative or
governmental body):

(a)           Operator shall fail to comply with the material terms and
conditions of any Facilities Contract in any material respect;

(b)           Owner shall fail to make a payment to Operator due under this
Agreement on or before 10 days after any such payment is due, provided such
payment is not the subject of a good faith dispute;

(c)           Either party shall fail to perform or observe any other material
covenant or material agreement to be performed or observed by it under this
Agreement in any material respect, written notice of such event is given by the
non-defaulting party to the defaulting party and such event is not cured within
30 days;

(d)           Either party hereto shall make an assignment or transfer in
contravention of Section 10.1; and

(e)           Either party shall (i) make an assignment or any general
arrangement for the benefit of creditors; (ii) file a petition or otherwise
commence, authorize, or acquiesce in the commencement of a proceeding or cause
under any bankruptcy or similar law for the protection of creditors, or have
such petition filed against it and such proceeding remains undismissed for sixty
days; (iii) otherwise become bankrupt or insolvent (however evidenced); or (iv)
be unable to pay its debts as they fall due.

6.5  
     Transition Services.

(a) If either Party notifies the other Party of its intention to terminate this
Agreement, whether as a result of default or otherwise, then from the period
commencing one hundred eighty (180) days before the end of such current term
until the date of termination of this Agreement, Operator shall in good faith
assist and cooperate with Owner to facilitate the transfer of the Services to
any Third Party designated by Owner; provided, that, during such transition
period, Owner shall pay to the Operator all fees properly due hereunder.

(b) The Operator will provide to Owner (or its designee) originals or copies of
all books and records pertaining to Owner and its subsidiaries, the Facilities
and/or the Services.

ARTICLE 7
INSURANCE

7.1           Owner’s Insurance Responsibilities.  Owner will obtain and
maintain insurance with respect to physical loss or damage to the Facilities and
the resultant business interruption in such amounts and with such insurers as
Owner requires from time to time.  Any such insurer shall be required to waive
any rights of subrogation against Operator, its officers, directors, employees,
representatives and agents, and any parent or affiliate (other than the General
Partner, the Partnership and the Partnership’s subsidiaries), and their
respective officers, directors, employees, representatives and agents.

7.2           Operator’s Insurance Responsibilities.  Operator shall obtain and
maintain (a) comprehensive general liability insurance with respect to the
Facilities in such amounts and with such insurers as Owner requires from time to
time and (b) the minimum insurance coverages required by Owner with respect to
workers’ compensation and employer’s liability insurance with respect to
Operator’s employees who perform Services under this Agreement.  Any such
insurer shall waive any rights of subrogation against the General Partner, the
Partnership and the Partnership’s subsidiaries, and each of their respective
officers, directors, managers, employees, representatives and agents.

7.3           Contractors and Sub-Contractors.  To further protect Owner and the
Facilities, Operator shall require all contractors and sub-contractors providing
Services to obtain appropriate insurance coverage with proper endorsements for
the work or service being performed. Owner shall have the right to specify the
required insurance coverage if it elects to do so.

ARTICLE 8
INDEMNITY

IT IS AGREED AND UNDERSTOOD THAT IT IS IN THE BEST INTERESTS OF THE PARTIES THAT
CERTAIN RISKS RELATING TO THE MATTERS GOVERNED BY THIS AGREEMENT SHOULD BE
IDENTIFIED AND ALLOCATED AS BETWEEN THEM.  IT IS THEREFORE THE INTENT AND
PURPOSE OF THIS AGREEMENT TO PROVIDE FOR INDEMNITIES TO THE MAXIMUM EXTENT
ALLOWED BY LAW.

WHEREVER “OWNER GROUP”  APPEARS IN THIS AGREEMENT SAID TERM SHALL INCLUDE (I),
REGENCY GP LLC, (II) THE GENERAL PARTNER, (III) THE PARTNERSHIP, (IV) THE
SUBSIDIARIES, AFFILIATES (BUT SPECIFICALLY EXCLUDING ENERGY TRANSFER EQUITY,
L.P. AND ITS SUBSIDIARIES AND AFFILIATES OTHER THAN ENTITIES LISTED IN (I) –
(IV) AND ENERGY TRANSFER PARTNERS, L.P. AND ITS SUBSIDIARIES AND AFFILIATES
OTHER THAN ENTITIES LISTED IN (I) – (IV)), PARTNERS, JOINT VENTURES, CO-OWNERS,
CONTRACTORS AND SUB-CONTRACTORS AT ANY TIER OF THE ENTITIES LISTED IN (I) –
(III), AND (V) THE AGENTS, OFFICERS, DIRECTORS, EMPLOYEES, REPRESENTATIVES AND
INSURERS THE ENTITIES LISTED IN (I) – (IV).

WHEREVER “OPERATOR GROUP”  APPEARS IN THIS SECTION SAID TERM SHALL INCLUDE
OPERATOR AND ITS PARENTS, SUBSIDIARIES, AFFILIATES (BUT SPECIFICALLY EXCLUDING
MEMBERS OF THE OWNER GROUP), PARTNERS, JOINT VENTURES, CO-OWNERS, CONTRACTORS
AND SUB-CONTRACTORS AT ANY TIER, AND THE AGENTS, OFFICERS, DIRECTORS, EMPLOYEES,
REPRESENTATIVES AND INSURERS OF ALL THE FOREGOING ENTITIES.

THE PARTNERSHIP AND OPERATOR AGREE TO INDEMNIFY AND HOLD HARMLESS (“INDEMNIFY”)
OPERATOR GROUP AND OWNER GROUP, RESPECTIVELY, FROM AND AGAINST ANY AND ALL
CLAIMS, DEMANDS, OR SUITS FOR DAMAGES TO PERSONS AND/OR PROPERTY (INCLUDING, BUT
NOT LIMITED TO, CLAIMS, DEMANDS, OR SUITS FOR BODILY INJURIES, ILLNESS, DISEASE,
DEATH, LOSS OF SERVICES, LOSS OF EARNING CAPACITY, LOSS OF INCOME, LOSS OF
CONSORTIUM, MAINTENANCE, CURE, PROPERTY DAMAGES, LOST PROFITS OR WAGES) WHICH
MAY BE BROUGHT AGAINST ONE PARTY’S GROUP BY EMPLOYEES AND AGENTS OF THE OTHER
PARTY’S GROUP INCIDENT TO, ARISING OUT OF, OR IN CONNECTION WITH WORK TO BE
PERFORMED, SERVICES TO BE RENDERED, OR MATERIALS TO BE FURNISHED BY SAME UNDER
THIS AGREEMENT WHETHER THE LIABILITY OR RESPONSIBILITY ARISES IN TORT, CONTRACT,
IS IMPOSED BY LAW OR OTHERWISE, WHETHER OCCASIONED, BROUGHT ABOUT, OR CAUSED IN
WHOLE OR IN PART BY THE NEGLIGENCE (OTHER THAN GROSS NEGLIGENCE), FAULT, OR
STRICT LIABILITY OF THE OTHER PARTY’S GROUP OR BY ANY DEFECT IN PROPERTY OR
EQUIPMENT OF SAME, OR PROPERTY OR EQUIPMENT OPERATED BY SAME, WHETHER SUCH
NEGLIGENCE OR DEFECT, BE ACTIVE OR PASSIVE, PRIMARY OR SECONDARY, WHETHER
PREDATING THIS AGREEMENT OR NOT. HOWEVER THIS SECTION SHALL NOT INCLUDE AND
SHALL NOT BE CONSTRUED AS AN INDEMNITY TO A PARTY WHOSE BAD FAITH, FRAUD, GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT (OR, IN THE CASE OF A CRIMINAL MATTER, ACTIONS
TAKEN WITH KNOWLEDGE THAT SUCH ACTIONS WERE UNLAWFUL) OCCASIONED, BROUGHT ABOUT
OR CAUSED, IN WHOLE OR IN PART, ANY SUCH DAMAGES.

THE PARTNERSHIP AND OPERATOR AGREE TO INDEMNIFY OPERATOR GROUP AND OWNER GROUP,
RESPECTIVELY, FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, OR SUITS FOR DAMAGES
TO PERSONS AND/OR PROPERTY (INCLUDING, BUT NOT LIMITED TO, CLAIMS, DEMANDS, OR
SUITS FOR BODILY INJURIES, ILLNESS, DISEASE, DEATH, LOSS OF SERVICES,
MAINTENANCE, CURE, PROPERTY, OR WAGES) INCIDENT TO, ARISING OUT OF, OR IN
CONNECTION WITH WORK TO BE PERFORMED, SERVICES TO BE RENDERED, OR MATERIALS TO
BE FURNISHED UNDER THIS AGREEMENT AND OCCASIONED, BROUGHT ABOUT, OR CAUSED IN
WHOLE OR IN PART BY THE BAD FAITH, FRAUD, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
(OR, IN THE CASE OF A CRIMINAL MATTER, ACTIONS TAKEN WITH KNOWLEDGE THAT SUCH
ACTIONS WERE UNLAWFUL) OF THE INDEMNIFYING PARTY’S GROUP.

ARTICLE 9
[Intentionally Deleted.]

ARTICLE 10
GENERAL

10.1           Assignment.  Operator, on one hand, and the General Partner, the
Partnership and the Owner, on the other hand, shall not assign any of its rights
or obligations hereunder without the prior written consent of the other, which
consent may be withheld or given entirely at the option of such non-assigning
party or parties; provided, (i) any party may assign, delegate or subcontract
all or any part of its rights and obligations hereunder to any affiliate that
remains an affiliate without the prior consent of the other applicable party or
parties, but no such assignment shall relieve the assigning party of any of its
obligations or liabilities, whether accrued or unaccrued, hereunder, and (ii)
nothing in this Section 10.1 shall, or is intended to, limit any party’s rights
set forth in Section 8 hereof which shall control as to the matters therein set
forth.

10.2           Successors and Assigns.  Subject to Section 10.1, this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective permitted successors and assigns.

10.3           Governing Law.  THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE
PARTIES ARISING OUT OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW.

10.4           Non-waiver of Future Default.  No waiver of any party of any one
or more defaults by the other in performance of any of the provisions of this
Agreement shall operate or be construed as a waiver of any other existing or
future default or defaults, whether of a like or different character.

10.5           Inspection and Access.  To assure Operator’s compliance with the
terms and conditions of this Agreement, Owner shall, at its sole risk and
expense, at all times have access to and the right to inspect the Facilities.

10.6           Audit and Maintenance of Records; Reporting.  Notwithstanding the
payment by Owner of any charges, Owner shall have the right to contest such
charges.  During the term of this Agreement and for period of four years from
the end of any calendar year, Owner shall have the right, upon reasonable notice
and at reasonable times, to inspect and audit all the records, books, reports,
data and processes related to the Services performed by Operator to ensure
Operator’s compliance with the terms of this Agreement, including, without
limitation, the verification of the accuracy of any statement, billing, charge
or computation made by Operator in connection with this Agreement.  The cost of
such audit shall be borne by Owner. Errors detected by such audit shall be
corrected by appropriate adjustments as soon as practicable.

10.7           Amendments and Schedules.  This Agreement constitutes the entire
agreement concerning the subject matter between the parties hereto and shall be
amended only by an instrument in writing executed by both parties hereto. Any
schedule, annex or exhibit attached hereto is by this reference made a part
hereof for all purposes.

10.8           Notices.  Any notice, request, statement or other communication
provided for in this Agreement shall be in writing and shall be given by
personal delivery or by United States mail, postage prepaid, or sent by
documented overnight delivery service or to the extent receipt is confirmed,
telecopy, telefax, or other electronic transmission to the appropriate address
or facsimile number set forth below.  Notices shall be addressed as follows:

If to Operator:

LA GRANGE ACQUISITION, L.P.,
dba Energy Transfer Company
711 Louisiana Street, Suite 900
Houston, Texas 77002
Attn: Mike Spears SVP, Operations

If to Owner:

Regency Gas Services L.P.
2001 Bryan, Suite 3700
Dallas, Texas 75201
Attn: Tom Long, Chief Financial Officer

10.9           Force Majeure.  In the event of either Operator or Owner being
rendered unable, wholly or in part, by force majeure to carry out its
obligations under this Agreement, except payment of money, it is agreed that
upon such party giving notice and reasonably full particulars of such force
majeure within a reasonable time after the occurrence of the cause relied on,
then the obligations of the party giving such notice, so far as it is 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
possible be remedied with all reasonable dispatch.  The term “Force Majeure,” as
employed herein, shall mean acts of God, strikes, lockouts or other industrial
disturbances, acts of the public enemy, wars, blockades, insurrections, riots,
epidemics, landslides, lightning, earthquakes, fires, storms, floods, high
water, washouts, arrests and restraints of governments and people, civil
disturbances, explosions, breakage or accident to machinery or lines of pipe,
and any other cause, whether of the kind herein enumerated or otherwise which is
not foreseeable and not reasonably within the control of the party claiming
suspension.

10.10           Confidentiality.  Each party shall keep this Agreement and its
terms confidential.  Each party shall keep all information obtained by the
relevant party pursuant to this Agreement, including, without limitation, the
terms of the Facilities Contracts, the Financing Agreements and any audit
conducted hereunder confidential.  Neither Party shall make any press release or
public disclosure, either written or oral, regarding the transactions
contemplated by this Agreement without the prior knowledge and written consent
of the other party hereto.  This Section 10.10 shall not prohibit any disclosure
(a) by press release, filing or otherwise that is required by any applicable
law, regulation, rule, order, judgment, or decree, and (b) to attorneys,
accountants, and other agents of the parties assisting the parties in connection
with the transaction contemplated by this Agreement.  Each party shall be
responsible for assuring that its attorneys, accountants, and other agents keep
this Agreement, its terms and all information obtained by the relevant party
pursuant to this Agreement confidential.  Upon termination by this Agreement,
each party agrees not to disclose or use any confidential information that it
may have concerning the affairs of the other party, except for information that
is required by law to be disclosed.

10.11           No Warranty.  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED
IN THIS AGREEMENT, IT IS EXPLICIT INTENT AND UNDERSTANDING OF EACH PARTY HERETO
THAT OWNER IS MAKING NO REPRESENTATION OR WARRANTY WHATSOEVER, WITH RESPECT TO
OWNER’S FACILITIES, EXPRESS OR IMPLIED, AND IT IS UNDERSTOOD THAT OPERATOR SHALL
TAKE POSSESSION OF OWNER’S FACILITIES AND ANY OTHER PROPERTIES OR FACILITIES
COVERED HEREUNDER “AS IS” AND “WHERE IS” WITH ALL FAULTS.  OWNER HEREBY
EXPRESSLY DISCLAIMS AND NEGATES ANY REPRESENTATION OR WARRANTY, EXPRESSED OR
IMPLIED, AT COMMON LAW, BY STATUTE OR OTHERWISE, RELATING TO THE CONDITION OF
OWNER’S FACILITIES (INCLUDING, WITHOUT LIMITATION, ANY IMPLIED OR EXPRESS
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE).

10.12           Consequential Damages Waiver.  IN NO EVENT SHALL EITHER PARTY
HEREUNDER BE LIABLE TO ANY OTHER PARTY HERETO FOR ANY LOST OR PROSPECTIVE
PROFITS OR REVENUES, OR ANY OTHER SPECIAL, PUNITIVE, EXEMPLARY, CONSEQUENTIAL,
INCIDENTAL OR INDIRECT LOSSES OR DAMAGES (IN TORT, CONTRACT, STRICT OR ABSOLUTE
LIABILITY, WARRANTY OR OTHERWISE) UNDER OR IN RESPECT OF THIS AGREEMENT OR FOR
ANY FAILURE OF PERFORMANCE RELATED HERETO HOWSOEVER CAUSED, WHETHER OR NOT
ARISING FROM SUCH PARTY’S SOLE, JOINT OR CONCURRENT NEGLIGENCE. THE PARTIES
SPECIFICALLY ACKNOWLEDGE THAT THE PRICING PROVISIONS OF THIS AGREEMENT REFLECT
SUCH ALLOCATION OF RISK AND LIMITATION ON LIABILITY. TO THE EXTENT ANY PAYMENT
REQUIRED TO BE MADE UNDER THIS AGREEMENT IS AGREED BY THE PARTIES TO CONSTITUTE
LIQUIDATED DAMAGES, THE PARTIES ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR
IMPOSSIBLE TO DETERMINE AND THAT SUCH PAYMENT CONSTITUTES A REASONABLE
APPROXIMATION OF SUCH DAMAGES, AND NOT A PENALTY.

10.13           Third Parties.  This Agreement is not intended to confer upon
any person not a party hereto any rights or remedies hereunder, and no person
other than the parties hereto is entitled to rely on or enforce any
representation, warranty or covenant contained herein.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
effective as of the Effective Date.

OPERATOR:

LA GRANGE ACQUISITION, L.P.,
d/b/a Energy Transfer Company
By:  LA GP, LLC, its general partner

By: /s/ Mike Spears                                              

Name: Mike Spears                                                        

Title: Senior Vice President

 
 

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OWNER:

REGENCY GAS SERVICES LP
By: Regency OLP GP LLC, its general partner

By: /s/ Michael J. Bradley
 
Name: Michael J. Bradley

Title: President, Chief Executive Officer and Director

THE PARTNERSHIP:

REGENCY ENERGY PARTNERS LP
By: Regency GP LP, its general partner
By: Regency GP LLC, its general partner

By: /s/ Michael J. Bradley
 
Name: Michael J. Bradley
 
Title: President, Chief Executive Officer and Director

THE GENERAL PARTNER:

REGENCY GP LP
By: Regency GP LLC, its general partner

By: /s/ Michael J. Bradley
 
Name: Michael J. Bradley
 
Title: President, Chief Executive Officer and Director

 
 

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SCHEDULE 1.3(A)
To the Operation and Service Agreement dated May 19, 2011 between
La Grange Acquisition, L.P., dba Energy Transfer Company, a Texas limited
partnership (“Operator”), and Regency Gas Services LP (“Owner”)

Facilities

(Maps on subsequent pages)

 
 

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[exhibit100b.jpg]

 
 

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[exhibit101a.jpg]

 
 

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[exhibit102a.jpg]
 
 
 

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Third Party Operator Assets

All assets owned by Owner’s subsidiary, WGP-KHC LLC, which are located in
Kearny, Finney, Haskell, Seward, Stevens, Grant, Stanton, and Morton Counties,
Kansas.

All facilities owned by Owner’s subsidiary Regency Field Services LLC that are
located in West Virginia.

 
 

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SCHEDULE 1.4 (A)

To the Operation and Service Agreement dated May 19, 2011 between
La Grange Acquisition, L.P., dba Energy Transfer Company, a Texas limited
partnership (“Operator”), and Regency Gas Services LP (“Owner”)

Services Provided by Operator

The following is a representative (not exclusive) list of Routine Services to be
performed by Operator.

1.  
Perform routine corrosion test point readings, atmospheric corrosion inspection
and monitoring at approximately annual intervals.

2.  
Perform routine pipe-to-soil readings and rectifier readings at approximately
annual intervals.

3.  
Maintain pipeline right-of-way on an annual basis, unless a shorter time period
is required i) for access to the right-of-way or Facilities, ii) by an agreement
between Owner and landowner(s), and iii) by Subject Laws.

 
 

4.  
Perform gas leak detection survey, cathodic protection survey and record and
analyze cathodic protection data at annual intervals.

5.  
Perform filter replacement at separator as necessary.

6.  
Maintain Maximum Allowable Operating Pressure (“MAOP”) records.

7.  
Perform and document inspections of regulator and relief valve equipment per
frequencies identified by applicable governmental regulatory agency.

8.  
Patrol the Facilities for the purpose of identifying any encroachments within
the pipeline right of way or the location of possible pipeline leaks.

9.  
Perform exposed pipe surveys and depth of cover surveys, annually.

10.  
Install and maintain pipeline markers along the pipeline right of way and
signage at Facilities in compliance with Subject Laws.

11.  
Coordinate utility encroachments with Owner.

12.  
Timely respond to citizen complaints regarding gas or liquid leaks, nuisance
odors, noise, or other community concerns and provide notice of the same to
Owner.

13.  
Perform or witness calibration of liquid and gas  meters (PD, turbine, orifice,
ultrasonic and other devices) on a frequency identified by Owner and, if
applicable, as required by Owner for the Facilities. This calibration or witness
testing will include differential pressure, static pressure, temperature,
calibration gas compatibility assessment,  a plate inspection, meter tube
internal inspection and other inspections of measurement, SCADA, electronic flow
measurement and other gas & liquid quality monitoring and alarm/shut-in
equipment.

14.  
Collect, analyze, and process measurement information for monthly accounting
cycle and volume reporting requirements.

15.  
Perform design capacity calculations of applicable measurement stations and
provide to Owner as required by Subject Laws.

16.  
Provide safety oversight of major Facility maintenance activities such as plant
turnarounds.

17.  
Maintain plant operation(s) logs and data.

18.  
Perform routine touch-up painting.

19.  
Maintain a spare parts inventory for critical and emergency spare parts,
equipment and materials.

20.  
Perform class location survey on an annual basis or such other frequency as
required.

21.  
Perform routine maintenance to all exchangers, turbines, control valves,
expanders, coolers, chillers, pumps, compressors, boilers, burners, and other
plant equipment requiring routine maintenance to a reasonable industry
standard.  Maintain appropriate maintenance records.

22.  
Establish and maintain a liaison with local emergency officials in compliance
with Subject Laws and Owner’s Public Awareness Program.

23.  
Review and update Owner’s operation and maintenance and emergency response
manuals which are applicable hereunder at minimum annual intervals and more
frequently as required by Subject Laws, subject to review and approval by the
Owner.

24.  
Respond to any calls received by Owner from a third party requesting the
pipeline to be marked or probed, including any one-call inquiries made through
the Texas Excavation Safety System (“TESS”) notification center, One Call
notification center or any other similar notification center.

25.  
Timely respond to inquiries, notices, or audits of governmental agencies having
jurisdiction over Owner’s Facilities regarding operational matters and provide
notice of the same to Owner, subject to Section 1.4 of the Agreement.

26.  
Perform injury or property damage incident investigation with associated root
cause analysis and recommended corrective actions.

27.  
Conduct monthly safety meetings and maintain employee database of safety
training records as required by Subject Laws and/or Owner’s operation and
maintenance and emergency manuals.

28.  
Review, update and implement Owner’s Public Awareness Program and presentations
in compliance with Subject Laws, subject to the review and approval by Owner.

29.  
Monitor, prepare and maintain routine operation and maintenance records and
reports required by applicable governmental pipeline safety regulations and
generated by the Services rendered hereunder and timely submit such records
and/or reports to the appropriate governmental agencies.

30.  
Prepare and timely submit to the appropriate governmental agencies any emergency
notices required by Subject Laws pertinent to spills, leaks, or releases and
timely provide a copy of the same to the Owner.

31.  
Perform all compliance activities related to Texas Statewide Rule 36 (Oil & Gas
Sour Gas Facilities), including, but not limited to, the acquisition of permits,
preparation and submittal of required reports to the appropriate agency and the
annual update of the phone contact list.

32.  
Perform all compliance activities related to Owner’s injection and disposal
wells, cathodic protection wells, and any other type of wells, including the
acquisition of permits and preparation and submittal of required reports to the
appropriate governmental agencies.

33.  
Perform all compliance activities associated with all local, state and federal
environmental regulations, permits, and/or authorizations, including the
acquisition and maintenance of required permits and preparation and submittal of
required reports to the appropriate governmental agencies.

34.  
Perform all compliance activities associated with Occupational Safety Health
Administration including compliance with Process Safety Management regulations
at applicable Facilities.

35.  
Perform all monitoring, testing, reporting, training and other compliance
activities required by the rules and regulations of the Department of
Transportation’s Pipeline Hazardous Materials Safety Administration
(“DOT/PHMSA”) and/or any State or Local laws and regulations regarding pipeline
safety.

36.  
At a minimum, prepare and implement environmental, safety & health, and
regulatory compliance training for employees required by Subject Laws and/or
Owner’s operation and maintenance and emergency manuals; and maintain
documentation of all such training.

37.  
Perform all compliance activities associated with routine operation of the
Facilities (including, but not limited to, the completion, preparation, and/or
submittal of permits, documents, plans, procedures, reports, communications
necessary to comply with regulations, or as otherwise required by Subject Laws),
except as specifically provided herein.

38.  
Provide verbal notice to Owner within 24 hours of Operator’s notification by any
State or Federal governmental agency of an inspection, audit or violation,
followed with a written copy of the same submitted to Owner within seven (7)
days of Operator’s receipt.

39.  
Provide Owner with operational data as reasonably required for Owner to generate
invoices and otherwise meet its obligations to customers.

The following is a representative (not exclusive) list of Special Services which
may be performed by Operator.

1.  
Manage any environmental mitigation and remediation measures.

2.  
Manage projects required to comply with Pipeline Integrity Rules of the
DOT/PHMSA or a State or Local governmental agency.

3.  
Manage Maintenance Capital projects.

4.  
Manage any projects arising as a result of a newly enacted law or regulation(s).

5.  
Manage new pipeline or other facility construction projects.

The following duties will be performed by Owner and shall not be considered part
of the Services:

1.  
All submittals, applications, petitions, communications, postings and reports
required by the Federal Energy Regulatory Commission (“FERC”), provided however,
Operator shall be responsible for all FERC environmental compliance
requirements, which shall be coordinated through Owner.

2.  
Company registrations and/or licenses at the Federal Energy Regulatory
Commission, Department of Energy, Railroad Commission of Texas, Louisiana Office
of Conservation, Oklahoma Corporation Commission, Colorado Oil and Gas
Commission and Kansas Corporation Commission.

3.  
All petitions, applications, filings, postings and reports related to rate
schedules, tariffs, services performed, terms of service, or gas utility service
or designation required by governmental agencies.

4.  
All new construction applications, petitions or filings applicable to Owner’s
intrastate and interstate pipelines required by the Federal Energy Regulatory
Commission or applicable state agency.

5.  
All throughput (volume), financial and tax reports required by governmental
agencies.

 
 

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

 

SCHEDULE 1.4 (H)

To the Operation and Service Agreement dated May 19, 2011 between
La Grange Acquisition, L.P. d/b/a   Energy Transfer Company, a Texas limited
partnership (“Operator”), and Regency Gas Services LP (“Owner”)

Reports to Owner

1.  
Monthly written reports on or before 30 days after the end of each month of
every year comparing month and year to date Capital and Operating Budgets to
actual performance, including, without limitation, adjusted Budgeted Base O&M to
adjusted Actual Base O&M, each as defined below, from the beginning of the
calendar year to the end of such calendar month on a region by region and asset
by asset basis and project by project or function by function (line item)
including any carry-over/carry-forward amounts. The reports shall include
variance explanations for differences in scope, schedules start and completion
dates, cost (actuals to date and forecasted), and cash & commitment flows. The
reports will also address safety and compliance performance for the work
performed hereunder.

2.  
Yearly written report on or before 45 days after the end of each calendar year
comparing capital and operating budgets to actual performance, including,
without limitation, Adjusted Budgeted Base O&M to Adjusted Actual Base O&M, for
such year on a region by region, asset by asset, basis; and project by project
or function by function (line item) including any carry-over/carry-forward
amounts. The reports shall include variance explanations for differences in
scope, schedules start and completion dates, cost (actuals to date and
forecasted), and cash & commitment flows. The reports will also address safety
and compliance performance for the work performed hereunder.

3.  
Monthly written report on or before 30 days after the end of each calendar month
of total gas throughput for such month on an asset basis.

4.  
Yearly written report on or before 45 days after the end of each calendar year
of total gas throughput for such year on an asset basis.

5.  
Monthly written report on or before 15 days after the end of a calendar month of
trailing-month Safety and Environmental results including TRIR, LTIR,
preventable vehicle accidents, notices of violation or enforcement, and plant
recordable/reportable emissions events.

6.  
Upon the occurrence of a non-scheduled interruption of operations at any of the
Facilities, verbal notice of such occurrence to Gas Control of Owner and
Operator’s proposed method of handling the same as soon as reasonably practical
followed with a written description of such occurrence and Operator’s proposed
method of handling the same on or before seven days after such occurrence.

7.  
Upon the occurrence of any emergency, release or other environmental incident or
accident, verbal notice of such occurrence as soon as reasonably practical
followed with a written description of such occurrence and a copy of any
required State or Federal regulatory agency correspondence filed by Operator
pertinent to such incident or accident on or before seven days after such
occurrence in accordance with Part 1.2 above.

8.  
Verbal notice within 24 hours of Operator having knowledge of any incident with
respect to any of the Facilities or any matters governed by this Agreement which
requires written notice by Operator or other filing with any governmental
authority, followed with a written description of such incident and a copy of
any required State or Federal regulatory agency correspondence filed by Operator
pertinent to such incident on or before seven days after such occurrence in
accordance with Part 1.2 above.

9.  
Verbal notice within one day of Operator having knowledge of any proceeding,
claim, lawsuit and/or investigation conducted or threatened with respect to any
of the Facilities or any matters governed by this Agreement, followed with a
written description of such proceeding, claim, lawsuit and/or investigation on
or before seven days after such occurrence.

10.  
Verbal notice within one day of Operator having knowledge of any damage (other
than routine wear and tear) to any of the Facilities, followed with a written
description of such damage on or before seven days after such occurrence.

11.  
Verbal notice within one day of Operator having knowledge of any notice, writ,
order or directive issued by any governmental authority with respect to any of
the Facilities or any matters governed by this Agreement, followed with a
written description of such occurrence on or before seven days after such
occurrence.

12.  
Routine notice of Operator having knowledge of changes in operating,
environmental or safety regulations or polices of any governmental authority
with respect to the Facilities or other matters governed by this Agreement.

13.  
Operation and maintenance item Work Orders in accordance with the Annual
Operating Budget or as otherwise requested.

14.  
Retirement or transfer Work Orders relative to the movement, retirement or
abandonment of Facilities.

15.  
Capital item Work Orders in accordance with the Annual Capital Budget or as
otherwise requested.

16.  
Capital item Work Order completion notices within 90 days after completion date
of the subject capital item.

17.  
Capital item reconciliation and ‘‘as built” material lists within 120 days after
completion date of the subject capital item; provided, with respect to
extraordinary items, within 180 days or as otherwise mutually agreed in writing;
as-built drawings and affected maps shall be updated within 60 days thereafter.

18.  
Routine system notification to Owner’s Gas Control of gas quality and violation
of standard gas quality specifications.

19.  
Immediate verbal notice to Owner’s Gas Control as soon as reasonably practical
of gas pressures at points operating at less than maximum allowable operating
pressure (“MAOP”) as a result of an action taken by Operator when such actions
subject the pipeline segment to a reduction of MAOP, followed with a written
description of such occurrence on or before seven days after such occurrence.

20.  
Immediate verbal notice to Owner’s Gas Control as soon as reasonably practical
of systems operating in excess of established and regulatory MAOP, followed with
a written description of such occurrence on or before seven days after such
occurrence.

21.  
Immediate verbal notice to Owner’s Gas Control as soon as reasonably practical
of any changes to the established MAOP of any pipeline segment and specific
reasons for any such change, followed with a written description of such
occurrence on or before seven days after such occurrence.

22.  
Verbal notice within one day of Operator having knowledge of any loss of
property rights or interests affecting the Facilities, and with particularity,
the Premises, whether such loss is occasioned by cancellation, termination,
expiration, abandonment or other action or non-action, followed with a written
description of same on or before seven days thereafter.

23.  
Verbal notice within 24 hours of any State or Federal regulatory audits or
inspections followed with a written copy of any audit or inspection results and
correspondence to be submitted to Owner within seven (7) days of Operator’s
receipt.

        24.
Monthly written report on or before 45 days prior to the start of each calendar
month of the scheduled maintenance for the Facilities and Premises for such
month.

        25.
Monthly written report on or before 45 days prior to the start of each calendar
month of the environmental assessments scheduled for the Facilities and Premises
for such month.

 
 

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

 

SCHEDULE 1.5 (B)

To the Operation and Service Agreement dated May 19, 2011 between
La Grange Acquisition, L.P. d/b/a   Energy Transfer Company, a Texas limited
partnership (“Operator”), and Regency Gas Services LP (“Owner”)

Initial Facilities Contracts

Amended and Restated Master Services Agreement dated December 18, 2009 between
Regency Employees Management LLC and RIGS Haynesville Partnership Company.

Construction and Operation Agreement dated January 18, 2008 between Regency
Field Services LLC and Edwards Lime Gathering LLC

Operation and Maintenance Agreement dated September 1, 2005 between Gulf States
Transmission Corporation, predecessor-in-interest to Gulf States Transmission
LLC and and Regency Intrastate Gas LLC, predecessor-in-interest to Regency
Employees Management LLC.

 
 

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

 

SCHEDULE 3.1

To the Operation and Service Agreement dated May 19, 2011 between
La Grange Acquisition, L.P. d/b/a   Energy Transfer Company, a Texas limited
partnership (“Operator”), and Regency Gas Services LP (“Owner”)

Annual Operating Budget

 
 

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

 

STX
                   
2011 Operating Expenses Budget
                     
Tilden Complex
 
STX Measurement Summary
 
STX Safety
 
Edwards Lime JV
 
South Texas
   
Year
 
Year
 
Year
 
Year
 
Year
                       
O&M Compensation & Benefits
  3,894,531     535,793     -     1,028,926     5,459,250  
O&M Employee Expenses
  363,592     87,250     -     52,540     503,382  
O&M Major Controllable
  3,269,272     2,400     -     698,675     3,970,347  
O&M Other Controllable
  (175,293 )   75,693     (500,000 )   (20,142 )   (619,742 )
O&M Controllable
  7,352,102     701,136     (500,000 )   1,759,999     9,313,237                
                 
O&M CDM Cost of Operations
  1,036,813     -     -     288,150     1,324,963  
O&M CDM Lease Units
  7,793,610     -     -     456,501     8,250,111  
O&M Envir, Health, & Safety
  506,700     -     226,324     -     733,024  
O&M Other Uncontrollable
  3,098,944     (701,690 )   (226,324 )   524,333     2,695,263  
O&M Accrued Expenses
  7,039     955     -     1,853     9,846  
O&M Non Controllable
  12,443,105     (700,735 )   (0 )   1,270,837     13,013,207                  
               
Operation & Maintenance
  19,795,207     401     (500,000 )   3,030,836     22,326,445                  
               

 
 

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

 
 
Gathering & Processing
                   
2011 Operating Expenses Budget
                                           
North Louisiana
 
Mid-continent
 
WTX Region
 
South Texas
 
GPT Operated Summary
   
Year
 
Year
 
Year
 
Year
 
Year
                       
O&M Compensation & Benefits
  5,269,628     2,240,098     3,281,052     5,459,250     16,250,028  
O&M Employee Expenses
  786,705     359,421     353,440     503,382     2,002,948  
O&M Major Controllable
  3,871,255     562,410     2,100,270     3,970,347     10,504,282  
O&M Other Controllable
  (414,900 )   (393,288 )   (554,212 )   (619,742 )   (1,982,141 )
O&M Controllable
  9,512,688     2,768,641     5,180,550     9,313,237     26,775,116            
                     
O&M CDM Cost of Operations
  2,844,420     2,621,421     2,205,174     1,324,963     8,995,978  
O&M CDM Lease Units
  3,761,656     2,030,899     5,011,633     8,250,111     19,054,299  
O&M Envir, Health, & Safety
  425,057     395,530     493,009     733,024     2,046,620  
O&M Other Uncontrollable
  3,661,248     2,303,290     3,191,056     2,695,263     11,850,857  
O&M Accrued Expenses
  9,445     3,892     6,875     9,846     30,058  
O&M Non Controllable
  10,701,826     7,355,032     10,907,748     13,013,207     41,977,813        
                         
Operation & Maintenance
  20,214,514     10,123,673     16,088,298     22,326,445     68,752,929        
                         

 
 
 
 

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

 

 
NLA
                   
2011 Operating Expenses Budget
                     
NLA - Other
 
Dubach Area
 
GSTC
 
Logansport
 
North Louisiana
   
Year
 
Year
 
Year
 
Year
 
Year
                       
O&M Compensation & Benefits
  107,626     3,866,210     -     1,295,791     5,269,628  
O&M Employee Expenses
  12,115     575,150     -     199,440     786,705  
O&M Major Controllable
  334,200     2,571,035     81,250     884,770     3,871,255  
O&M Other Controllable
  (3,663 )   (398,320 )   2,958     (15,876 )   (414,900 )
O&M Controllable
  450,278     6,614,075     84,208     2,364,126     9,512,688                  
               
O&M CDM Cost of Operations
  -     2,844,420     -     -     2,844,420  
O&M CDM Lease Units
  -     1,569,152     -     2,192,504     3,761,656  
O&M Envir, Health, & Safety
  500     379,157     -     45,400     425,057  
O&M Other Uncontrollable
  58,953     873,227     273,760     2,455,308     3,661,248  
O&M Accrued Expenses
  178     7,026     -     2,242     9,445  
O&M Non Controllable
  59,631     5,672,982     273,760     4,695,454     10,701,826                
                 
Operation & Maintenance
  509,909     12,287,057     357,968     7,059,579     20,214,514              
                   

 
 
 

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

 

 
Mid-Con
                       
2011 Operating Expenses Budget
                         
Hugoton Lakin
 
Mocane - Laverne
 
Greenwood
 
Midcon Meas
 
Midcon - SAFETY
 
Mid-continent
   
Year
 
Year
 
Year
 
Year
 
Year
 
Year
                           
O&M Compensation & Benefits
  725,479     558,526     189,491     766,601     -     2,240,098  
O&M Employee Expenses
  123,520     87,625     35,280     112,996     -     359,421  
O&M Major Controllable
  151,100     289,390     101,520     20,400     -     562,410  
O&M Other Controllable
  (15,272 )   (20,699 )   (7,230 )   149,913     (500,000 )   (393,288 )
O&M Controllable
  984,828     914,842     319,061     1,049,910     (500,000 )   2,768,641      
                                 
O&M CDM Cost of Operations
  1,637,034     296,757     687,631     -     -     2,621,421  
O&M CDM Lease Units
  1,724,660     157,558     148,681     -     -     2,030,899  
O&M Envir, Health, & Safety
  212,940     41,840     36,900     -     103,850     395,530  
O&M Other Uncontrollable
  2,265,409     699,202     493,510     (1,050,982 )   (103,850 )   2,303,290  
O&M Accrued Expenses
  1,158     1,035     332     1,368     -     3,892  
O&M Non Controllable
  5,841,201     1,196,392     1,367,053     (1,049,614 )   -     7,355,032      
                                 
Operation & Maintenance
  6,826,028     2,111,235     1,686,114     296     (500,000 )   10,123,673    
                                   

 
 

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

 

WTX
           
2011 Operating Expenses Budget
             
West Texas
 
Coyanosa asset
 
WTX Region
   
Year
 
Year
 
Year
               
O&M Compensation & Benefits
  3,196,436     84,616     3,281,052  
O&M Employee Expenses
  337,640     15,800     353,440  
O&M Major Controllable
  2,029,370     70,900     2,100,270  
O&M Other Controllable
  (546,541 )   (7,671 )   (554,212 )
O&M Controllable
  5,016,905     163,645     5,180,550                      
O&M CDM Cost of Operations
  1,837,974     367,200     2,205,174  
O&M CDM Lease Units
  4,753,619     258,014     5,011,633  
O&M Envir, Health, & Safety
  413,009     80,000     493,009  
O&M Other Uncontrollable
  3,533,730     (342,674 )   3,191,056  
O&M Accrued Expenses
  6,727     148     6,875  
O&M Non Controllable
  10,545,059     362,689     10,907,748                      
Operation & Maintenance
  15,561,963     526,334     16,088,298                      

 
 

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

 

RIGS
   
2011 Operating Expenses Budget
     
RIGS
   
2011 Budget
       
O&M Compensation & Benefits
  2,451,915  
O&M Employee Expenses
  422,902  
O&M Major Controllable
  2,235,320  
O&M Other Controllable
  (734,003 )
O&M Controllable
  4,376,134          
O&M CDM Cost of Operations
  5,926,529  
O&M CDM Lease Units
  439,557  
O&M Envir, Health, & Safety
  194,034  
O&M Other Uncontrollable
  10,534,068  
O&M Accrued Expenses
  4,385  
O&M Non Controllable
  17,098,573          
Operation & Maintenance
  21,474,707          

 
 

 
 

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

 

SCHEDULE 4
2011 Capital Budget

Maintenance Capital
2011 Total
 
Mid-Con
$ 1,500,000  
West Texas
$ 2,000,000  
South Texas
$ 2,600,000  
Logansport
$ 900,000  
Dubach Area
$ 2,000,000  
Gulf States
$ -  
Measurement
$ 700,000  
Total G&P
$ 9,700,000          
RIGS
$ 1,913,000