2001 Bryan Street


Suite 3700


Dallas, Texas 75201


www .regenyenergy.com


 


January 25, 2010


 


Osman Kaldirim, Jr.


E&Pco, LLC


2500 Tanglewilde


Suite 260


Houston, Texas 77063


 





	 	Re:	Regency Intrastate Gas LP
	 	 	Facility Construction and Reimbursement Agreement
	 	 	Tap, Valve and Meter Installation
	 	 	IPCO #1 Interconnect, Section 21-T14N-R5E
	 	 	Caldwell Parish, Louisiana







 


Dear Mr.Kaldirim:


 


This Facility Agreement shall indicate the mutual agreement
of Regency Intrastate Gas LP ('RIGS"), and E&Pco, LLC ("E&Pco") to install a tap, valve and metering facilities
for the receipt of gas by RIGS from E&Pco under the following terms and conditions:


 


		1.	Facilities: Prior to the construction of any facilities contemplated hereunder, RIGS must
obtain all permits and approvals as required by any agencies having jurisdiction over RIGS. Upon receipt of all necessary permits
or regulatory approvals, RIGS will install, own, and maintain on or a new meter station consisting of a 6" tap and a 3"
meter tube and associated piping, valves, flow control, over pressure protection valve, flanges and fittings ("Meter Station")
to be located near Section 21-Tl4N-R5E on Regency's existing 30" pipeline in Caldwell Parish, Louisiana (the "Facilities").
Exhibit A attached hereto sets forth in detail the responsibilities of Regency Intrastate and E&Pco.



 





	 	2.	Reimbursement: E&Pco shall reimburse RIGS for all costs actually incurred by RIGS associated with the construction of the Facilities. All costs and charges shall be paid in advance of any work performed by RIGS. RIGS has estimated the total costs hereunder to be $221,000 ("Estimate"). E&Pco and RIGS recognize that the Estimate may not be equivalent to the total actual RIGS costs and, that E&Pco shall be solely responsible for and shall reimburse RIGS for the total actual RIGS costs, if any, that exceed the Estimate. RIGS shall promptly notify E&Pco in writing if RIGS reasonably anticipates that the actual costs will exceed the Estimate. Within sixty (60) days after completion of the installation of the Facilities, RIGS shall either (a) invoice E&Pco for the total actual costs incurred by RIGS in excess of the Estimate if actual costs exceed the Estimate or (b) refund to E&Pco any amounts paid that exceeded the actual costs if the actual costs were less than the Estimate; provided, however, that RIGS shall not be obligated to invoice or refund amounts less than $100. E&Pco shall pay the full Estimate prior to installation of the Facilities.







 





 




    	 



    	 



    

 


		3.	Operations and Maintenance: RIGS shall have the
on-going right to perform, or to have performed, any future construction, inspections, repairs, additions, modifications, upgrades,
replacements, removal, disconnect, abandonment, and, if necessary, retirement of the Facilities deemed necessary by RIGS, and
any associated costs shall be reimbursed by E&Pco. E&Pco shall provide RIGS or its representatives full access, rights,
permission, and authority for ingress to and egress from the.Facilities as long as such Facilities are in service.



 


If
E&Pco materially fails to comply with any provision of this Agreement (excluding by reason of force majeure), then RIGS
shall have the right, upon reasonable notification to E&Pco and subject to any necessary regulatory authorizations , to suspend
the flow of gas through the Facilities. E&Pco shall reimburse RIGS for any costs incurred as a result of such suspension, and
for reestablishing the flow of gas through the Facilities. RIGS shall not be required to resume gas flow through the Facilities
until E&Pco has corrected, in RIGS's reasonable judgment , the area(s) of noncompliance with this Agreement.


 


		4.	Other Agreement(s): Nothing in this Agreement shall be construed to grant E&Pco any
transmission rights on RIGS pipeline system. RIGS' receipt of Gas at the new receipt point will be subject to the terms and conditions
of the applicable Transportation Agreement(s) and the Operating Statement of Regency Intrastate Gas LP ("RIGS Operating Statement").



 


		5.	Indemnity



 


		a.	Indemnity by E&Pco: E&Pco shall defend, indemnify and hold harmless RIGS, its parent,
subsidiaries and affiliates, and their respective agents, officers, directors, representatives and employees (collectively "RIGS
Indemnified Parties") from and against any and all claims, demands, causes of action, settlements, liabilities, losses, costs,
damages, fines, judgments or expenses (including without limitation, fees and disbursements of counsel incurred by the RIGS Indemnified
Parties in any action or proceeding between the indemnifying party and the RIGS Indemnified Parties or between the RIGS Indemnified
Parties and any third party or otherwise) (collectively "Claims") arising from or related in any way to (i) an actual
or asserted failure of E&Pco or its designee to comply with this Agreement and/or any law, ordinance, code, rule or regulation
of any governmental body, or (ii) injury to or death of persons arising in whole or in part and directly or indirectly out of the
acts or omissions of E&Pco or its designees, agents, or contractors , but excepting, in the case of either clause (i) or clause
(ii) above, injury or death of persons or damage to or loss of property to the extent caused
by the gross negligence or willful misconduct of the RIGS Indemnified Parties.



 


		b.	Indemnity by RIGS: RIGS shall defend, indemnify and hold harmless E&Pco, its parent
, subsidiaries and affiliates, and their respective agents, officers, directors, representatives and employees (collectively "E&Pco
Indemnified Parties") from and against any and all claims, demands, causes of action, settlements, liabilities, losses,costs,
damages, fines, judgments or expenses (including without limitation, fees and disbursements of counsel incurred by the E&Pco
Indemnified Parties in any action or proceeding between the indemnifying party and the E&Pco Indemnified Parties or between
the E&Pco Indemnified Parties and any third party or otherwise) (collectively "Claims") arising from or related in
any way to (i) an actual or asserted failure of RIGS or its designee to comply with this Agreement and/or any law, ordinance, code,
rule or regulation of any governmental body, or (ii) injury to or death of persons arising in whole or in part and directly or
indirectly out of the acts or omissions of RIGS or its designees, agents, or contractors, but excepting, in the case of either
clause (i) or clause (ii) above, injury or death of persons or damage to or loss of property to the extent caused by the gross
negligence or willful misconduct of the E&Pco Indemnified Parties.



 


 


 




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		6.	Insurance: E&Pco will carry or cause to be carried
and maintained in force throughout the entire term of this Agreement
insurance as described below with reliable insurance companies. The limits set forth are minimum limits and will not be construed
to limit E&Pco's liability.



 


Workers' Compensation insurance
with statutory limits in compliance with all applicable state and federal laws having jurisdiction over each employee and Employer's
Liability insurance with limits of $1,000,000 each accident, $1,000,000 disease each employee and $1,000,000 disease policy limit.


 


Commercial General Liability insurance
on an occurrence form with a combined single limit of $1,000,000 each occurrence and annual aggregates of $1,000,000, for bodily
injury and property damage, including coverage for contractual liability, independent contractors, broad form property damage,
products/completed operations and explosion, collapse and underground.


 


Automobile Liability insurance with a combined single
limit of $1,000,000 each occurrence for bodily injury and property damage to include coverage for all owned, non-owned and hired
vehicles.


 


Excess or Umbrella Liability insurance with a combined
single limit of $1,000,000 each occurrence, and annual aggregates of $1,000,000 for bodily injury and property damage covering
excess of Employer's Liability, General Liability, and Automobile Liability insurance described above.


 


In each policy of the above-described insurance, E&Pco,
with respect to its obligations, agrees to waive and will require its insurers to waive any rights of subrogation or recovery they
may have against RIGS.


 


E&Pco agrees to submit a certificate(s) of insurance
evidencing compliance with the insurance requirements set forth in this article.


 


 


 




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		7.	Force Majem:e: In the event of either Party
                                                                hereto being rendered unable, wholly or in part, by force majeure to carry out its obligations under this Agreement , the
                                                                obligations (other than the obligation to pay money) of such
                                                                Party, so far as they are affected by such force majeure, shall be suspended during the continuance of any inability so
                                                                caused, but for no longer period, and such cause shall be remedied with all reasonable dispatch. It is agreed that such Party
                                                                shall give notice and full particulars of such force majeure in writing by U.S. mail, e-mail or by facsimile to the other
                                                                Party as soon as reasonably possible after the occurrence of the cause relied on.



 


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, washouts, arrests and restraints of governments and
people, civil disturbances, explosions, breakage or accident to natural gas processing and/or treating facilities, wells, machinery
or lines of pipe, the necessity for making repairs or alterations to wells, equipment or lines of pipe, freezing of wells or lines
of pipe, or any other causes, whether of the kind herein enumerated or otherwise, not within the control of the Party claiming
suspension, and which by the exercise of reasonable diligence, such Party is unable to prevent or overcome. It
is understood and agreed that the settlement of strikes or lockouts shall be entirely within the discretion of the Party
experiencing the strike or lockout.


 


		8.	Pressure and Quality: Deliveries of gas to RIGS by E&Pco shall be at a pressure sufficient
to allow gas to enter RIGS's pipeline against the pressure existing therein from time to time, provided that the pressure of the
gas delivered to RIGS at the point of interconnection shall not exceed the maximum allowable operating pressure ("MAOP")
set forth in RIGS Operating Statement. E&Pco warrants that the quality of the gas that will flow through the Facilities will
conform to the gas quality specifications of the RIGS Operating Statement. If
gas delivered through the Facilities at any time fails to conform to any of the specifications set forth in RIGS Operating
Statement, RIGS shall give notice to E&Pco of such nonconforming gas and may, in its discretion, immediately discontinue receiving
gas at the Facilities until such nonconforming gas is remedied. E&Pco shall be liable for and pay all costs that the RIGS incurs
as a result of any nonconforming gas and any penalties imposed on RIGS for any nonconforming gas. E&Pco shall be liable for
and pay all costs arising from any damage caused by the nonconforming gas to RIGS's facilities or the facilities of third parties
directly connected to RIGS. Failure to give such notice or discontinue service relating to nonconforming gas shall not constitute
a waiver of RIGS's rights hereunder.



 


		9.	Governing Law: This Agreement, and all terms and provisions contained herein, and the respective
obligations of the Parties are subject to valid laws, orders, rules, and regulations of duly constituted authorities having jurisdiction.
This Agreement shall be governed by and interpreted in accordance with the laws of the state of Texas without regard to conflicts
of law provisions . The Parties irrevocably submit to the exclusive jurisdiction of the state and federal courts located in Dallas,
Texas in any action or proceeding arising out of or relating to this Agreement and waive any objection to such jurisdiction on
the grounds that it is an inconvenient forum or any similar grounds.



 


		10.	Assignment: This Agreement may not be assigned without prior written consent of the other
Party, such consent not to be unreasonably withheld. All the terms, covenants and agreements hereof
shall run in favor of and be binding upon the Parties hereto, their successors and assigns.



 


 


 




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		11.	Term: This Agreement shall extend
from the date of full execution hereof until the Facilities are removed,
disconnected, or abandoned . The indemnification provisions, however, shall survive any termination hereof.



 


		12.	Entire Agreement: This Agreement contains the entire agreement between the Parties and except
as stated herein there are no oral promises, agreemnts or warranties affecting it.



 


		13.	Waiver: The failure of either Party
hereto at any time to require performance by the other Party of any provision
hereof shall in no way affect the right of such Party thereafter to enforce the same, nor shall the waiver by any Party hereto
of any breach of any provision hereof by the other Party be taken or held to be a waiver by such Party of any succeeding breach
of such provision, or as a waiver of the provisions itself.



 


If you are in agreement with the foregoing please so indicate
by signing and returning one copy of this Facility Construction and Reimbursement Agreement along with payment of the Estimate.


 


Sincerely,


 


REGENCY INTRASTATE GAS LP


By: RIGS GP LLC, its general partner


By: RIGS Haynesville Partnership Co., its sole member


 


 


L. Patric


Executive Vice President         


 


Agreed To and Accepted


This 26 day of January, 2010


 


E&Pco, LLC


 


	By:	/s/ Charles E.
    Edwards	 	By:	/s/ Osman
    Kaldirim
	Name:	Charles E. Edwards	 	Name:	Osman Kaldirim, Jr.
	Title:	EC Member	 	Title:	Vice President


 




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EXHIBIT A


 


Facility Construction
and Reimbursement Agreement


Between


Regency Intrastate Gas LP ("RIGS")
and E&Pco, LLC ( "E&Pco")


 


RESPONSIBILITY MATRIX


 


	DESCRIPTION	 	OWN	 	DESIGN/INSTALL	 	OPERATE	 	MAINTAIN
	 	 	 	 	 	 	 	 	 
	Interconnect Site	 	RIGS	 	RIGS	 	RIGS	 	RIGS
	 	 	 	 	 	 	 	 	 
	Regency Intrastate Hot Tap(s)	 	RIGS	 	RIGS	 	RIGS	 	RIGS
	 	 	 	 	 	 	 	 	 
	Connecting Pipeline/Lateral {If required)RIGS taps to Meter Station Outlet	 	RIGS	 	RIGS	 	RIGS	 	RIGS
	 	 	 	 	 	 	 	 	 
	Meter (Custody Transfer)	 	RIGS	 	RIGS	 	RIGS	 	RIGS
	 	 	 	 	 	 	 	 	 
	EFM(Including Gas Chromatograph, Moisture Analyzer & H2S Monitor)	 	RIGS	 	RIGS	 	RIGS	 	RIGS
	 	 	 	 	 	 	 	 	 
	Flow Control Valve	 	RIGS	 	RIGS	 	RIGS	 	RIGS
	 	 	 	 	 	 	 	 	 
	OPP Valve	 	RIGS	 	RIGS	 	RIGS	 	RIGS
	 	 	 	 	 	 	 	 	 
	Filter-Separator/Coalescer	 	E&Pco	 	E&Pco	 	E&Pco	 	E&Pco
	 	 	 	 	 	 	 	 	 
	Connecting  Pipeline/Lateral TBD taps to Meter Station Inlet	 	E&Pco	 	E&Pco	 	E&Pco	 	E&Pco
	 	 	 	 	 	 	 	 	 
	Site prep.Fencing,& Lighting	 	RIGS	 	RIGS	 	RIGS	 	RIGS
	 	 	 	 	 	 	 	 	 
	AC power, Telephone	 	E&Pco	 	E&Pco	 	E&Pco	 	E&Pco


 


 


 




    	 



    	 



    

 


 


 






    	 



    	 



    

 


 


 






    	 



    	 



    

 


 


 






    	 



    	 



    

 


 


 






    	 



    	 



    

 


 


 






    	 



    	 



    

 


 


 



    	 



    	 



    

 


 


 






    	 



    	 



    

 


 


 






    	 



    	 



    

 


 


 






    	 



    	 



    

 


 


 






    	 



    	 



    

 


 


 






    	 



    	 



    

 


 


 






    	 



    	 



    

 


 


 






    	 



    	 



    

 


 


 






    	 



    	 



    

 


 


 






    	 



    	 



    




 


 


 






    	 



    	 



    



  


SPECIAL PROVISIONS ATTACHED TO AND FORMING
PART OF THE BASE CONTRACT FOR SALE AND PURCHASE OF NATURAL GAS


 


Dated November 20, 2009


By and between


Regency Gas Marketing LLC


And


E &
P Co.,., LLC


 


Regency Gas Marketing LLC and
E & P Co., LLC hereby agree to amend the Base Contract for Sale and Purchase of Natural Gas referenced above to incorporate
t17e modifications set forth below.


 


Section
1.        PURPOSES
AND PROCEDURES


 


Section 1.2 is amended by replacing the first two
sentences with the following:


 


'Theparties will use
the following Transaction Confirmation procedure . Any Gas purchase and sale transaction may be effectuated in an EDI transmission
or telephone conversation or a conversation using an instant messenger program ("JM Conversation"}, with the offer and
acceptance constituting the agreement of the parties. "


 


Section 1.2 is further amended
by add the word "in writing;" in the last sentence after the words "both parties" and before "provided"
so that the sentence reads:


 


"such provisions
shall not be deemed to be accepted pursuant to Section 1.3 but must be expressly agreed to
by both parties in writing; provided that the foregoing shall not invalidate any transaction agreed to by the parties ."


 


Section
7        BILLING,
PAYMENT,AND AUDIT


 


Section 7.5 is deleted in its entirety and replaced
by the following:


 


"If the invoiced
party fails to remit the full amount payable when due, a late fee shall be assessed on the unpaid portion and shall accrue from
the date due until the date of payment in an amount equal to the then standard rate applied by Regency Gas Marketing LLC. 11


 


Section
10.        FINANCIAL
RESPONSIBILITY


 


Section 10.1is hereby amended
by (i) adding the word "or" in the second sentence, after the comma following the word "prepayment'' and before
"a security interest'', and is further amended by deleting the final two sentences of the paragraph so that it reads:


 


"If
either party ( "X ") has reasonable grounds for insecurity regarding the performance of any obligation under this Contract
(whether or not then due) by the other party ("Y") (including, without limitation, the occurrence of a material change
in the creditworthiness of Y or its


 




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Guarantor, if applicable},
X may demand Adequate Assurance of Performance. 'Adequate Assurance of Performance ' shall mean sufficient security in the form,
amount, for a term, and from an issuer, all as reasonably acceptable to X, including, but not limited to cash, a standby irrevocable
letter of credit, a prepa yment, or a security interest in an asset or guaranty. 11


 


Section 10.2
(vii) is amended by removing the words "but at least one Business Day" from the sentence, and by replacing the
words "48 hours" with "72 hours" :


 “fail to
give Adequate Assurance of Performance under Sect.ion 10.1
within 72 hours of a written request by the other party;"


 


Section 10.3.1is
amended by deleting the final sentence and replacing it with the following sentence :


 


"The discount rate
used in calculating net present value shall be determined by the Non Defaulting Party in a commercially reasonable manner.11


 


Section 10.4
is hereby amended by deleting the last sentence of the paragraph and replacing it with the following:


 


"Latefees on any
unpaid portion of the Net Settlement Amount as adjusted by setoffs, shall accrue from the date due until the date of payment in
an amount equal to the then standard rate ap plied by Regency Gas Marketing LLC."


 


Section 11.        FORCE
MAJEURE


 


Section 11.3
(iv) is hereby amended by deleting subsection (iv) in its entirety and replacing it with the following:


 


"(iv) the loss
of Buyer's market(s) or Buyer's inability to use or resell Gas purchased hereunder, except, in either case, as a result of events
that qualify as a Force Majeure as provided in Section 11.2; or''


 


Section 11.3(v)
is hereby amended by deleting subsection (v) in its entirety and replacing it with the following :


 


"(v) the loss orfailure
of Seller's gas supply or depletion of reserves, except, in either case, as a result of events that qualify as a Force Majeure
as provided in Section 11.2.11


 




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Section
12.        TERM


 


Section 12
is hereby amended by replacing the number "30" with
the number "60" so the sentence reads as follow :


 



"This Contract
may be terminated on 60 Day's written Notice, but shall remain in effect until the expiration of the latest Delivery Period of
any transaction(s)."


 


Regency Gas Marketing LLC


By: Regency Gas Services LP, its sole member


By: Regency OLP GP LLC, its general partner


 


	 	By:	 	 
	 	Pat Giroir	 
	 	Vice President 	 
	 	Date:	 	 
	 	 	 
	E & P Co., LLC	 
	 	 	 
	 	By:	/s/ Charles E. Edwards	 
	 	Name:
    Charles E. Edwards	 
	 	Title: Member/Manager 	 
	 	Date: November 20, 2009	 
	 	 	 
	 	By:	/s/ Osman Kaldirim, Jr	 
	 	Name:
    Osman     Kaldirim, Jr.	 
	 	Title: Member/Manager Date: November 20, 2009	 


 




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