Exhibit 10.5


 


AMENDED AND RESTATED
GAS DEDICATION AND GATHERING AGREEMENT 

BETWEEN

DAKOTA MIDSTREAM, LLC

AND

EMERALD OIL, INC. & EMERALD WB LLC


 




     


     


    

  


AMENDED AND
RESTATED GAS DEDICATION


AND GATHERING AGREEMENT


 


THIS AMENDEDAND
RESTATEDGAS DEDICATION AND GATHERING AGREEMENT ("Agreement') is
entered into on May 26, 2015, but effective
as of the 1st day of July, 2014 (the "Effective
Date" ) by and between DAKOTA MIDSTREAM, LLC (
"Gatherer"), and EMERALD OIL,
INC. and EMERALD WB LLC (collectively "Producer"). The
term "Producer" shall also include any other Affiliates
of Emerald Oil, Inc. or
Emerald WB LLC that own or control
leasehold interests or Gas from leasehold
interests located within the Area of Dedication
at any time while this Agreement remains in effect.
Producer and Gatherer are sometimes referred
to herein individually as a "Party" and
collectively as the "Parties".


 


RECITALS


 


A.           Producer
is a working interest owner
in certain oil and
gas leases, wells,
and/or lands
within the area described
in Exhibit "A" attached hereto and
by reference made a
part hereof (the "Area of
Dedication"), and may acquire additional interests in oil
and gas leases and/or
lands within the Area of Dedication during the term of this
Agreement (such current and future interests are referred
to as the "Leases").


 


B.           Producer
desires to have Gatherer receive, gather and redeliver
all of the Gas owned by Producer which is produced from
the Wells (as defined
herein) and Leases within the Area of
Dedication.


 


C.           Gatherer
desires to receive Producer's Gas at
the Receipt Points and redeliver Producer's Gas at the
Delivery Points (as such terms are defined herein),
utilizing the facilities
constructed, owned and operated by Gatherer.


 


D.           The
Parties entered into that certain
Gas Dedication and Gathering Agreement dated
effective July I , 2014,
as amended by that certain Amendment
No. 1 dated effective November 19, 2014
(the "Original Agreement"),and
desire now to amend and
restate the Original Agreement in its entirety,
effective as of July 1, 2014, to address and incorporate additional facilities to be constructed
and operated by Gatherer at the request
of Producer to receive Producer's Gas, from
the same Initial System
DSUs as identified in Exhibit B-1 herein at certain new
"Infill Receipt Points" in exchange for additional
consideration to Gatherer.


 


E.           The
Parties also desire now to name
and include Emerald WB LLC as
a Producer Party to this Agreement and
to have Emerald WB LLC ratify the Original Agreement.


 


Now
therefore, in consideration of the mutual covenants and
agreements contained in
this Agreement, the Parties agree as follows:


 




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ARTICLE I

REPRESENTATIONS
& COMMITMENTS OF PRODUCER


 


1.1           Producer's
Representations. Producer represents and warrants to Gatherer,
its successors and assigns, that Producer has the right
to operate the Wells listed on
Exhibit B-2 and owns
and has the right to dedicate and commit for physical delivery to and gathering by
Gatherer, Producer 's
Gas as defined in Section 1.2 below, and that Producer
has constructed, intends to construct, or shall cause
to be constructed, the facilities necessary, if any, to enable Producer to deliver to Gatherer
at the Receipt Points all of
Producer's Gas, in accordance with the terms and provisions of this
Agreement, as well as
any other facilities committed
to by Producer under this Agreement.


 


1.2           Dedication.
Producer hereby dedicates and commits to the performance of this
Agreement and all of the terms and conditions herein for
the Primary Term, as defined herein,
as a covenant running with the land the following: (i)
all of Producer's working interest share of Gas
produced from the Wells operated
by Producer; and (ii) all
of Producer's working interest
share of Gas from wells operated by parties other
than Producer in which Producer takes its share of production in kind, if applicable (collectively
"Producer's Gas"). Notwithstanding
the foregoing, Producer's Gas shall not include: (i)
Gas subject to a prior
Gas dedication as of the Effective Date of this Agreement
for the minimum duration of that prior Gas dedication;
(ii) Gas produced from any lands or Leases that Producer
in the future acquires
in the Area of Dedication that are subject to
a prior Gas dedication entered into by Producer's predecessor-in-interest
for the minimum duration of the prior Gas dedication; (iii)
Gas from Leases that
are subject to a Temporary Release (for so
long as such Temporary
Release remains in effect)
or a Permanent Release, all
in accordance with
the terms of this Agreement; and (iv) Gas
produced from any Leases
otherwise subject to
this Agreement that are
no longer held by production or upon their termination,
expiration or release if such
Leases are not cured,
renewed, top leased, re-acquired or newly acquired in
whole or in part by Producer, its successor-in-interest,
their respective Affiliates,
or any of their
respective officers, directors,
employees, agents or
representatives. Subject to the remaining terms of this
Agreement, including
the rights of Producer in the
event of a Temporary
Release or Permanent Release, as defined herein,
either exclusion
applies only for the remaining minimum duration of
the prior Gas dedication,
Producer will take all action necessary
not to extend the duration of
such prior Gas dedication,
and upon the expiration
of that prior Gas dedication,
such interest will
automatically be dedicated and committed hereunder. Producer shall
promptly furnish Gatherer with notices
of the termination of all prior Gas
dedication arrangements and the
anticipated date of first delivery of
those volumes to Gatherer's Gas System.
Producer covenants to deliver all of Producer's Gas to
Gatherer at the Receipt Points
without other disposition except as
otherwise provided in this Agreement.


 


1.3          Producer's
Reservations.




 


i.            Producer,
as a reasonable and prudent
operator, hereby expressly reserves
the following rights with respect to
Producer's Gas and the Leases subject
hereto:


 


a.           The
right to use and consume the Gas produced from the Leases
prior to delivery to
Gatherer for the following purposes:


 




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(i)          For
consumption as fuel in the development and operation of the Leases from
which the Gas is produced.


 


(ii)         For
delivery to the lessors and owners of overriding
royalties or other interests in the Leases,
if such lessors and owners are entitled to
use such Gas or take such Gas in kind under the terms of
the Leases and other definitive instruments creating their
interests entered into (1) prior to the Effective Date,
with respect to Leases owned by Producer at the
Effective Date, or (2) prior
to the date such Leases are acquired by Producer, with
respect to Leases acquired by
Producer after the
Effective Date.


 


(iii)        For
consumption as fuel in the operation of the facilities
which Producer may install in order to deliver Gas hereunder
in accordance with the terms
hereof.


 


(iv)        Reasonable
and customary amounts of Gas
for its operational needs including gas
lift (estimated not
to exceed 500 Mcfd as of the Effective Date)
and secondary or tertiary
recovery projects to the extent communicated to Gatherer
pursuant to Section 2.7.


 


b.           The
right to pool or unitize
the Leases (or any portion
thereof) with other lands and leases. In the event of any
such pooling or unitization, the Agreement will cover Producer's
interest in the pool or unit and the Gas attributable thereto to the extent that such interest
is derived from Producer's interest in
the Leases.


 


ii.         Producer
reserves the right to operate its Leases and Wells free
of any control by Gatherer and in such a manner as Producer,
in its sole discretion, may deem advisable,
including without limitation, the right to enter into
farmouts of any Lease subject
to this Agreement, to
abandon any Well and surrender any Lease. Producer reserves
the right to determine the maximum efficient rate of flow
for any Well (including
the right to curtail production due to low market demand for
Gas) and shall not be required to produce any Well or Wells in any manner which in its sole
judgment and discretion would not constitute good operating
practice, nor shall Producer be obligated to drill additional
Wells or to deepen, repair or
rework any existing Wells.


 




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1.4          Release
Rights.




 


i.            Temporary
Release. Notwithstanding any other provision
herein, during
any period after the Initial System In-Service Date, as
defined in Section 2.4,
when Gatherer
is
unable or
fails
to
accept delivery
of any
of Producer's
Gas in
accordance
with
the
terms
of this Agreement for
any reason
whatsoever,
including,
without
limitation,
curtailment, Force
Majeure or maintenance affecting Gatherer's Gas
System or any downstream pipeline or processing
plant, and there exists
no uncured material breach of this Agreement on
the part of
Producer,
then Producer m temporarily
elect to deliver
the quantities
of Producer's
Gas which
Gatherer has failed
to or is
unable to accept to alternative
gathering facilities, upon delivering written notice to
Gatherer of its
intent to do so (a "Temporary
Release"). Failure
of Gatherer
to respond (or accept delivery
of the Excess Volumes of Producer's Gas) within
twenty-four (24) hours to a waiver request
from Producer shall be deemed to be a
confirmation by Gatherer of a lack of capacity
on Gatherer's Gas System. The Temporary
Release of Producer's Gas shall only apply to
those certain volumes of Producer's Gas which Gatherer is unable to so accept
(the "Released Volumes"). Furthermore,
during any Accounting Period in which a
Temporary Release occurs, the
applicable Minimum Volume for such
Accounting Period shall be reduced by an
amount equal to the
total of Released Volumes for such
Accounting Period. Within thirty (30) days
after Gatherer's delivery of written
notice to Producer of its
ability to again accept delivery
of the Released Volumes in whole or
in part, the Temporary Release
will terminate as to the quantity Gatherer has specified
in its written notice that it is able to receive and Producer
shall resume delivery of such
Released Volumes to Gatherer.


 


ii.            Permanent
Release. Except for the six
(6) month period commencing
as of the Initial
System In-Service Date, and subject to
Section 2.5 in
the context of future expansion beyond the
Initial System, as
applicable, in the
event Gatherer has not accepted delivery of
the entire quantity
of Producer's Gas made available by Producer at
the Receipt Points for any
reason whatsoever, including, without limitation, curtailment,
Force Majeure or maintenance
affecting Gatherer's Gas System or any downstream pipeline
or processing plant, for a
continuous period of ninety
(90) consecutive days, or
one hundred and twenty
(120) days within
a one hundred eighty (180) day
period, Producer shall
have the right to have
the Leases and Wells affected thereby
permanently released from
this Agreement (a "Permanent Release ") by
delivering written notice thereof to Gatherer within
thirty (30) days after the expiration of any such ninety
(90) consecutive day period or one hundred eighty
(180) day period, as
applicable. Furthermore, the applicable Minimum Volume for
each Accounting Period remaining during the Commitment
Period shall be reduced by the estimated average daily
volumes subject to Permanent Release for
each such Accounting Period, in accordance with estimates
of anticipated volumes previously
provided by Producer pursuant to Section 2.7 that would have
been delivered to Gatherer's Gas System had the Permanent
Release not occurred (the "Permanently Released
Volumes").


 


1.5           Allocations.
Producer shall provide to Gatherer all information
reasonably requested by Gatherer to assist
Gatherer in making Receipt Point
allocations called for herein or
required by Gatherer's normal
and customary accounting or
contract administration practices. The Parties shall cooperate
in providing allocation information to
operators of facilities downstream of
the Delivery Point to assist such operators in
making allocations concerning Producer's Gas.


 


1.6           Memorandum
of Agreement. Upon execution of this Agreement, the Parties shall concurrently execute a new Memorandum of this Agreement, in
substantially the same form attached as Exhibit "D" including a legal description of the Area of Dedication that corrects
and replaces the Memorandum of the Original Agreement by expressly including Emerald WB LLC as a dedicating party, together with
any of Producer's other Affiliates which own or control leasehold interests or Gas from leasehold interests located within the
Area of Dedication, during the Primary Term or Extended Term of this Agreement. Such Memorandum shall be placed of record in each
county in which the Leases are located with Producer to bear all costs. In the event of any Permanent Release or termination of
this Agreement, in whole or in part, the Parties shall execute appropriate instruments to be placed of record in each county in
which the Leases are located, providing notice of the amended Area of Dedication or termination of this Agreement.


 




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1.7           Gas
Purchaser. It is understood that Producer may enter into arrangements with purchasers of Gas
under which Producer's Gas may be sold to
the purchaser ("Gas Purchaser" whether one or more) at or near the well pads and prior to delivery to Gatherer,
or downstream of the Delivery Points. If such arrangements
are entered into by Producer, Producer will require the Gas Purchaser to deliver all of Producer's
Gas to Gatherer under the terms of this Agreement and, subject to the terms and provisions hereof, all of Producer's Gas shall
remain dedicated and committed to this Agreement and subject
to all provisions contained
in this Agreement and Producer shall cause
the Gas Purchaser to execute
an adoption and ratification
of this Agreement in a
form and substance reasonably
acceptable to Gatherer.


 


1.8           Further
Arrangements. Producer commits that, during the term
of this Agreement, it will maintain, or cause its
Gas Purchasers, if applicable, to
maintain all necessary
arrangements to provide for
the further transportation
and disposition of Producer’s Gas at the Delivery
Points. Gatherer will use reasonable efforts to enter
into interconnect agreements at
the Delivery Points with third party pipelines to facilitate the further transport and disposition of Producer's Gas. Further,
Producer agrees that any connection fees, throughput fees
or similar charges to
flow Producer's Gas into a downstream interconnecting pipeline at the Delivery Points shall
be borne by Producer.


 


1.9           Other
Owner Gas.
It is expressly agreed by the Parties
that, except as
specifically provided herein, Producer does not dedicate
to the performance of this Agreement
any Gas attributable to the interests of other non-Affiliate
working interest owners, non-Affiliate overriding royalty owners or
royalty owners ("Other Owners")
in the Wells or Leases operated by
Producer within the Area of Dedication. However,
in the event Other Owners fail to take their shares of
production in kind from time to time and such shares of
production are not subject to prior dedications to third
party gatherers, and Producer elects to arrange for
the temporary disposition of the shares of
production of such Other Owners,
then the Gas attributable to such shares
of Other Owners ("Other
Owner Gas") shall be deemed to be "Producer's
Gas"; provided, however, that such Other Owner
Gas shall not thereby become dedicated to this Agreement
and shall not be entitled to receive the highest priority of
service afforded Producer's Gas pursuant
to Section 3.5 without ratification or other
formal agreement by the Other Owners, and such Other
Owners shall retain their right and obligation to take
their share of production in kind. To
the extent Producer tenders Other Owner Gas, Producer
represents and warrants to Gatherer, its successors and assigns, that
Producer bas the right
to deliver for gathering to
Gatherer, the allocated share
of Other Owner Gas
tendered by Producer and indemnifies Gatherer
accordingly.


 




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ARTICLE II

FACILITIES


 


2.1          Gatherer
's Gas System.
Gatherer will construct, operate and maintain
a Gas gathering system
comprised of the Initial System, and
any Future Receipt Points,
Future Delivery Points, additional Field
Compression and expansions
of Gatherer's Gas
System constructed pursuant to Section 2.5 (collectively
"Gatherer's Gas System" ) located
as necessary to enable Gatherer to receive
and gather Producer's Gas from the Area of Dedication at the Receipt Points and redeliver an equivalent Thermal Content of Producer's
Gas, less Fuel, Field Condensate, and Lost and Unaccounted
for Gas as defined herein, to Producer or Producer's designee
at the Delivery Points. Gatherer shall construct and operate Gatherer's Gas System in a workman-like manner and in accordance
with good oilfield practices and in compliance with any applicable permits and licenses and all applicable rules,
laws and regulations. Gatherer's Gas System will consist
of:


 


L
"Gathering Lines" means various pipeline gathering facilities from the Receipt
Points to the Delivery Points, together with appurtenances thereto, with sufficient capacity across Gatherer's Gas System
to receive, gather and deliver Producer's Capacity, as
defined in Section 3.1, attributable to such Receipt Point
(as defined immediately below).


 


ii.
"Receipt Points" shall be at the inlet
of Gatherer's metering facilities located at
the locations described on Exhibit "B" as RP1
through RP8 (the "Initial Receipt Points")
and as RP10 through RP14 and RP16 (the "Infill
Receipt Points"), together with any additional
locations installed as part of any expansion of Gatherer's Gas System beyond the Initial System (the "Future
Receipt Points"), and
shall mean the facilities needed to connect Producer's
Wells or Producer's facilities described below in Section 2.3 to the Gathering Lines, including
metering and telemetry equipment, as may be further depicted
on Exhibit "B"
and Exhibit "B-2".
Gatherer shall furnish, own and operate all Receipt Point meters.


 


iii.
"Delivery Points"
include the facilities required
to redeliver an equivalent Thermal Content of Producer's
Gas to Producer or its
designee at locations described on
Exhibit "B" (the "Initial Delivery Points"), together with any additional
locations installed as part of any expansion of Gatherer's Gas System beyond the Initial System
(the "Future Delivery Points"). Gatherer
will use its commercially
reasonable efforts and Producer will support
and assist Gatherer to obtain physical Delivery Point interconnections
with downstream third party facilities. Producer shall
bear its pro rata share of all
Actual Construct Costs of interconnection of
Gatherer's Gas System
with third party facilities with the interconnection to
be owned and operated by Gatherer. Gatherer shall furnish,
own and operate all Delivery Point meters if such meters
are not furnished, owned and
operated by third party operators of downstream
interconnecting third party facilities.


 


iv. "Field
Compression" includes compression
facilities appurtenant to Gatherer's
Gathering Lines, as needed
to provide the Nominal Average Pressure, as defined
herein, at the Initial and Infill
Receipt Points, and a pressure
with respect to
the transport of Gas on the Gathering Lines or the
redelivery of Gas at
the Initial Delivery Points at the
pressures prevailing at the
known interconnecting facilities as identified on
Exhibit "B" (the "Initial
Compression Facilities "), together
with any additional compression
installed as part of any expansion of Gatherer's
Gas System beyond the Initial System pursuant
to this Agreement. As part of the Field
Compression facilities, Gatherer may install, at its sole
cost and expense, which costs shall
be expressly excluded
from the Actual Construct Costs, a dehydration
system such as a
TEG or EG dehydration system
operating up to 740
Psig with stabilizer vessel and reboilers
to eliminate excess
water from the Gas
stream and minimize the hazards presented by
hydrate formation. Field
Compression shall be owned and operated by
Gatherer and Gatherer shall assess a "Compression Fee”" as further
described in this Agreement and Exhibit
"E".


 




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v.
The portion of Gatherer's Gas System that consists of the Initial System as described
below, will be designed and constructed to: (a) be capable of handling
the Gas volumes existing and anticipated from
the drilling spacing units
described on Exhibit "B-1" (the "Initial
System DSUs"); (b)
provide a nominal average operating pressure at the individual Initial Receipt Points, RP 1 through RP8 as described more specifically
on Exhibit "B",
of approximately 55 Psig (the "Nominal Average
Pressure" ) based on eight thousand
(8000) Mcfd in the aggregate across the Initial System; and (c) provide the Nominal Average
Pressure at the individual Receipt Points, RP10 through RP14 and RP16 as described more specifically
on Exhibit "B" so long as no single
Receipt Point exceeds one
thousand (1000) Mcfd. In the event the nominal average
operating pressure at any Receipt Point is in excess
of the Nominal Average Pressure
during any Accounting Period in which Producer's Gas
volumes are 8000 Mcfd
or less, Producer may provide written notice (a
"Compression Notice ") to Gatherer requesting that Gatherer
decrease the nominal
average operating pressure at
such Receipt Point. If the nominal average operating
pressure at such Receipt Point is not brought within the
range of the Nominal Average Pressure within forty-five (45)
days following receipt of
the Compression Notice, Producer shall
have the right to install compression facilities
upstream of such Receipt Point, at
Producer's sole cost and
expense, whereupon Producer shall not owe any Compression Fees for Producer's Gas delivered
to such Receipt Point, until such time as the amount of
Compression Fees otherwise attributable to such
Gas, but retained by Producer, is
equal to the total of Actual Construct
Costs incurred by Producer to install such compression
facilities. In the event
the nominal average operating pressure at any Receipt Point
is in excess of the
Nominal Average Pressure during any Accounting
Period in which Producer's
Gas volumes are more than 8000 Mcfd, Gatherer shall
propose a plan to modify or expand its Gas Gathering System
as necessary to achieve and maintain
the Nominal Average Pressure
at the affected Receipt
Points, and shall modify
or expand its Gas Gathering
System as necessary
to achieve and maintain the Nominal Average
Pressure at the affected
Receipt Points within forty-five
(45) days following receipt of the Compression
Notice. Subject to Force Majeure,
in the event Gatherer fails or elects not to modify or
expand its Gas Gathering System
as necessary to achieve and maintain the Nominal
Average Pressure at the affected Receipt
Points within forty-five (45) days
following receipt of the
Compression Notice, Producer shall
have the right to install compression facilities upstream of
such Receipt Point, at Producer's
sole cost and expense, whereupon Producer shall not owe
any Compression Fees for Producer's
Gas delivered to such
Receipt Point, until
such time as the
amount of Compression Fees otherwise attributable to such
Gas, but retained by Producer, is equal to
the total of Actual Construct Costs incurred by Producer
to install such compression
facilities.


 




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2.2            Rights-of-Way.
At the time of executing
this Agreement, Producer has
completed its acquisition of rights-of-way (the
"ROW" or
"ROWs") from certain landowners within
the Area of Dedication
("Landowners")
authorizing the construction,
installation and operation of multiple pipelines within
the same right-of-way corridor. Producer
shall be able to
assign the ROWs in part to Gatherer,
so as to grant Gatherer the
right to install a
single gas gathering line and related facilities in
the corridor of the ROW in connection with the construction,
installation and operation
 of the Initial System. Due to Producer's existing
relationship with the Landowners and
in an effort to maximize efficiency, Producer will continue to
interface directly with the Landowners until such time
as the ROWs have been partially assigned to Gatherer, except as described below. Producer has tendered compensation to the respective
Landowner and has recorded the respective ROW with the McKenzie County Clerk and Recorder. With respect to each ROW, until such
time as Producer assigns the ROWs to Gatherer, Producer
shall indemnify and hold harmless Gatherer, its Affiliates,
and their respective employees, officers, directors, contractors and subcontractors (collectively,
"Gatherer Indemnified Parties") from
and against any and all trespass claims or claims arising out of the invalidity of any ROW
brought by third party landowners arising from Gatherer's ingress
to, egress from, entry
upon, and use of such ROWs for survey, construction, installation
and operation of the Gas Gathering System except
to the extent arising
from the gross negligence
or willful misconduct of Gatherer Indemnified Parties.


 


Producer
shall use commercially reasonable efforts to obtain
any third party consents required to assign its
ROWs to Gatherer (each a "Consent to Assign "). In
the event Producer,
despite commercially reasonable
efforts is unable to obtain any Consent to Assign Producer shall continue to hold such ROW for the benefit of Gatherer until such
time as the Consent to
Assign is obtained. Concurrently with the execution of
this Agreement, Producer shall partially assign the ROWs
to Gatherer, pursuant to the form of assignment attached
hereto as Exhibit "G",
and within thirty (30)
days of receipt of detailed invoice and
reasonably requested supporting documentation, Gatherer shall
pay Producer twenty percent (20%) of the
actual and direct costs incurred in obtaining the ROWs (based on five (5) pipelines allowed within a ROW and adjusted up or down
for fewer or more pipelines properly
located within a
single ROW).


 


However,
if Gatherer determines that any
ROW is unnecessary for the
Initial System or is insufficient,
lacking, or otherwise defective,
such that Gatherer
in its reasonable discretion must acquire a
new right-of-way in
lieu thereof, such ROW
shall not be assigned to Gatherer and Gatherer
shall not pay any portion of the costs associated with
such ROW.


 


Gatherer may
proceed to interface with and acquire
the real property interests it requires, including additional
rights-of-way or amendments
to ROWs to serve the Infill Receipt Points directly from
the Landowners or other owners of
such interests ("Gatherer ROWs"). In
the event that Gatherer, despite commercially reasonable
efforts, is unable to
obtain any right-of-way deemed necessary for Gatherer
in its reasonable discretion to construct and install the portions of the Initial
System serving the
Infill Receipt Points prior to May 31,
2015 (an "Outstanding ROW''), Gatherer
may proceed with re-routing the
course of the affected portion of the Initial System and
acquire additional Gatherer ROWs to circumvent any uncooperative
third party landowners with Gatherer to bear such
Outstanding ROW costs and re-routing costs in
the aggregate up to Eighty-Three
Thousand Three Hundred and Thirty-Three dollars($83,333),
which costs shall not be included in the Actual Construct Costs.
In the event the Outstanding ROW costs are
anticipated to exceed $83,333 the Parties shall promptly meet to develop a
mutually agreeable plan
to complete acquisition of Outstanding
ROW. The Initial System Target In-Service Date shall
be extended, as
an Excused Delay as defined in Section 2.4
below, by the number
of days, if any, that the construction
and installation of the
Initial System is delayed in order to acquire Outstanding ROW or agree on
a course of action,
or otherwise due directly to the Outstanding ROW.


 




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2.3            Producer's
Facilities and Construction.
Producer, at its own
expense, shall
construct, equip,
maintain and operate all facilities upstream of the Receipt Points necessary to enable Producer to
deliver all of Producer's Gas to
Gatherer at the Receipt Points, including without
limitation, flowlines and pipelines to move Producer's
Gas from its
Wells to the
Receipt Points as
identified in Exhibits
"B" and "B-2"
and mechanical separation equipment and all necessary
facilities or equipment arising from any dual, split or additional
connects if Producer's Wells are subject,
in whole or in part,
to existing dedications and connections
to third party gatherers prior to
the Effective
Date. Producer shall be responsible for the delivery
of Producer's
Gas at pressures
sufficient to
enter the respective Receipt Point at the Nominal Average Pressure.


 


2.4            Initial
System. The "Initial System" will consist
of the initial facilities
of Gatherer, described
generally above and on Exhibit "B", as necessary
to connect the Initial Receipt Points and Infill Receipt Points with the Initial Delivery Points, also described on Exhibit
"B". The Parties have agreed upon the configuration,
design and construction of Gatherer's
Gas System and have deemed the Initial System as sufficient
to serve all of Producer's Minimum Volume commitment stated
in Exhibit "E", and that the Initial System is sufficient
to serve all of
Producer's anticipated volumes of
Producer's Gas from the Wells identified on
Exhibit "B-2" (collectively, the "Initial
System Wells")at the Initial Receipt Point
or Infill Receipt
Point listed in the column "Gatherer Receipt
Point Construction Responsibilities" next to each
such Well.


 


Subject
to events of
Force Majeure, severe
winter weather, frost laws, road restrictions
and other requirements or delays imposed by
government agencies including without limitation
delays in issuing ROWs on federal lands
needed for the portion of Gatherer's
Gas System serving the Infill Receipt
Points, whether or not
within the scope of Force Majeure that would make
the diligent pursuit of similar
construction or installation operations unreasonable for
a reasonably prudent McKenzie County North Dakota
gatherer faced with similar conditions (whether
one or more, "Excused
Delays "), Gatherer
shall diligently construct, install
and complete (y) the portion
of Gatherer's Gas System serving the
Initial Receipt Points as described on Exhibit
"B" and Exhibit "B-2" on or
before May 1, 2015 (the "Start-Up
Target Date "), and
(z) all of the
Initial System including the Initial and Infill Receipt Points, on
or before August 31, 2015,
as extended by the number of
Days equal
to any Excused
Delay event
(the "Initial System Target In-Service
Date"). The Parties each agree
that their respective obligations
to meet the Start-Up Target
Date are on
a reasonable commercial efforts
basis with no credits
or penalties applicable
to either Party for
non-achievement. Producer acknowledges and agrees
that any receipt, gathering and delivery
of Gas
by Producer prior
to the Initial System In-Service Date shall incur
the applicable Gas Gathering Fees and shall be provided on an interruptible
basis at
Gatherer's sole discretion as
Gatherer may be completing the installation and
construction of its Gas System and may also need to undertake calibration and other activities to achieve the Initial System
In-Service Date during that
period, provided however, that Gatherer
shall notify Producer 24 hours or as soon
as practicable
prior to any activities of Gatherer
that may reasonably be expected to
cause an interruption or otherwise prevent
Gatherer from
receiving Gas from any
Receipt Point from which Gatherer
has previously accepted Gas,
and Gatherer shall keep Producer fully informed
of the
progress of such activities
and any anticipated resumption of service
from such
Receipt Point(s). The date on
which Gatherer has completed
the construction and installation of
the Initial System, in its entirety
so as to be capable
of receiving Producer's Gas from all
of the Initial Receipt Points and Infill Receipt
Points identified on Exhibits "B"
and "B-2'', shall be
the "Initial System
In-Service Date" . For avoidance of doubt,
such completion by Gatherer shall
be a deemed
achievement of the Initial
System In-Service Date notwithstanding the Initial
System's partial or
complete inability to accept and flow Gas on the Initial
System when such inability arises solely from Producer's delay or
failure to complete its responsibilities and obligations
under this Agreement, as extended by Force
Majeure or in the case
of delay or failure to
complete re-run piping if caused by frost laws imposed by government agencies.


 




    	10 



     


    

  


i.            In
the event, subject
to Force Majeure or Excused Delay, Gatherer
fails to complete its construction of the Initial System, in its entirety per
Section 2.4, Exhibit "B" and Exhibit "B-2",
on or before the Initial System Target
In-Service Date, and
Producer has completed all facilities upstream of the
Initial and Infill Receipt
Points per Section 2.3, Exhibit "B" and
Exhibit "B-2",
and is otherwise ready, willing and able to deliver Producer's
Gas to that portion of the Initial
System that is not completed, the following shall occur:


 


a.           the
applicable Minimum Volume for each Accounting Period, or portion thereof, between
the Initial System Target In-Service
Date and the Initial System In-Service Date, shall be reduced by the estimated average daily
volumes of Producer's Gas from the
Initial System In-Service Date Wells for
each such Accounting
Period that would have been otherwise delivered to Gatherer's
uncompleted portion of the
Initial System during such Accounting Periods, in accordance
with estimates of anticipated volumes previously provided by Producer to Gatherer pursuant
to Section


2.7
(the "Gatherer's Initial System
Delay Pre-ln service Volumes"); and


 


b.           Producer
shall receive a credit
against the Gas Gathering Fees owed by Producer in that
Accounting Period (or if none are owed in that Accounting Period, beginning in the next occurring Accounting Period in which Gas
Gathering Fees are owed by Producer and continuing for
each successive Accounting Period until the credit is used
in full, with the credit
amount equal to Two dollars and Fifty
cents ($2.50) per Mcf for the Gatherer's
Initial System Delay Pre-In service Volumes, up to a maximum total credit of Two
Million dollars ($2,000,000) for all Gatherer's Initial System Delay Pre-In service Volumes
under this Agreement together with all "Gatherer's Initial System Delay Pre-In service Barrels" as defined under
the Related Dedication Agreements described in Section 8.3 herein
("Initial System Pre-ln service Credit'').


 


ii.            In
the event Gatherer has completed its construction of the
Initial System, in
its entirety per Section 2.4, Exhibit "B" and
Exhibit "B-2", on or before the Initial System
Target In-Service Date,
but, subject to
Force Majeure or in the case of delay or failure to complete
re-run piping if caused by
frost laws imposed
by government agencies, Producer has failed to complete all facilities upstream of the Initial and Infill Receipt Points per Section
2.3, Exhibit "B" and Exhibit
"B-2'', and Gatherer is otherwise ready, willing
and able to receive
and gather Producer's Gas on that
portion of the Initial System, then the following shall occur:


 




    	11 



     


    

 


 


a.           the
applicable Minimum Volume for each Accounting Period, or portion thereof,
between the Initial
System Target In-Service Date
and the Initial System In-Service Date, shall be reduced
by the estimated average daily volumes of Producer's Gas
from the Initial System In-Service Date Wells for each
such Accounting Period that would have been otherwise
delivered to the Initial System
during such Accounting Periods if
Producer had completed all facilities
upstream of the Initial
and Infill Receipt Points
in accordance with estimates of
anticipated volumes previously provided by Producer
to Gatherer pursuant to Section 2.7 (the
"Producer's Initial System
Delay Pre-In service Volumes").


 


b.           Producer
shall pay Gatherer
an amount equal to Two dollars
and Fifty cents ($2.50) per Mcf
for the Producer's Initial System Delay Pre-In
service Volumes beginning in the first
Accounting Period following the
Initial System In-Service
Date and continuing for each successive Accounting
Period until the payment is
satisfied in full, up to a maximum
total payment of Two Million dollars ($2,000,000)
for all Producer's Initial System Delay
Pre-In service Volumes under this Agreement
together with all "Producer's
Initial System Delay Pre-In
service Barrels" as defined under the Related Dedication
Agreements described in Section 8.3 herein ("Initial
System Pre-In service Fee").


 


111.            In
addition to Producer's remedies under Section 2.4(i), in
the event Gatherer fails
to complete its construction of the Initial System,
in its entirety per
Section 2.4, Exhibit "B"
and Exhibit "B-2'',
on or before the date
that is sixty (60) Days after
the Initial System Target In-Service Date, and Producer
has completed all facilities upstream of the
Initial and Infill Receipt
Points per Section 2.3, Exhibit "B" and
Exhibit "B-2" and is otherwise ready, willing and able to deliver
Producer's Gas to that portion of the Initial
System that is not completed, Producer shall have
the option, exercisable in its
sole discretion, to elect by written notice to Gatherer
to construct and install the remainder of the Initial System,
at Producer's sole cost and expense, whereupon Producer shall
not owe any Gas Gathering Fees for any Gas delivered to
the Initial and Infill Receipt Points
or flowing through that portion of
the Initial System constructed and installed by Producer,
until such time as
the amount of Gas Gathering Fees
otherwise attributable to such Gas, but retained
by Producer, is equal to one hundred and ten percent (110%)
of the total of Actual
Construct Costs incurred by Producer to complete the construction and installation of the remainder of the
Initial System.


 


iv.            Gatherer
shall keep Producer reasonably informed of the progress on the construction and installation of the Initial System, and any Excused
Delays in connection therewith. Producer shall have the right
to have its representative
present during any onsite construction or installation
operations of the Initial
System.


 


2.5           Future
Expansion Beyond
the Initial System. After installation of the Initial System, Gatherer will install
and connect such Future
Receipt Points, Future Delivery Points, additional Field Compression and expansions of Gatherer's
Gas System, including but not limited to,
installing additional or "looped" gathering lines
or a larger diameter pipe
that Gatherer in its sole
judgment determines are necessary
or desirable to gather Producer's
Gas dedicated under this Agreement
from subsequent completed
Wells drilled or acquired by Producer within the Area
of Dedication as set
forth in this Section
2.5. For avoidance of doubt, any expansion of Gatherer's Gas System to serve Producer's Wells located
outside of the Area of Dedication
is not contemplated
by or covered under the scope
of this Agreement. The
Parties agree that Gatherer
will own and operate any and
all future expansions to
Gatherer's Gas System including any
Producer Built Gathering Facility,
as defined in Section 2.6 herein.


 




    	12 



     


    

 


i.            In
addition to providing Gatherer
with annual drilling
plans and quarterly updates to those plans under Section 2.7 below, Producer shall give
Gatherer written notice (a
"Connection Notice") one hundred twenty
(120) to ninety (90) Days
prior to the completion of any new Well located within
the Area of Dedication but outside of the Initial System DSUs,
or within ten (l0) days after acquiring any such
completed Well, specifying:
the Well name; Well location; the location of the nearest Receipt Point or
proposed Future Receipt
Point, as applicable, for such Well; drilling,
completions and anticipated
recompletion details; the minimum anticipated initial and annual
volumes of Producer 's
Gas from such Well
together with the anticipated
available volumes of Producer's Gas
and Other Owner Gas from the drilling spacing unit ("DSU'
) in which the Well is located as may be requested
by Gatherer; and if
a Distant Expansion
under subsection (iv) below
applies, also specifying up to four (4)
DSUs that are each directly adjacent
to or cornering the DSU (the "Contiguous
DSUs ") of the Distant Well (defined below) for
possible Permanent Release at Producer's
sole discretion under subsection (iv)(a)
below if (iv)(a) applies and
the anticipated available volumes of Producer's
Gas from the four
(4) Contiguous DSUs as may be requested by Gatherer (the anticipated volumes
from the DSU of the
Distant Well and the four (4) Contiguous DSU volumes if
requested, are collectively the
"Connection Volumes").Concurrently
with its Connection Notice under
this Agreement , Producer shall
provide Gatherer with "Connection
Notices" concerning the Well as
required under the
Related Dedication Agreements
described in Section
8.3 of this Agreement. If a Well
that is the subject
of a Connection Notice is not completed within one hundred
twenty (120) days of the Connection Notice,
following good faith
discussions with Producer, Gatherer
shall then have the
option to deem the Connection Notice
as invalid and of no further effect.


 


ii.         In the
event the Well, or the Future
Receipt Point, if applicable,
as identified in the Connection Notice
requires less than or equal to a three
(3) mile expansion of Gatherer's Gas System
from an existing Receipt Point
or Delivery Point, as Gatherer's Gas System exists as of the date of the Connection
Notice (a "Nearby Well"), Gatherer shall have
the first option to construct, install and place
into operation an expansion of Gatherer's Gas System to connect to
the Nearby Well at Gatherer's sole cost and expense, in exchange
for Gatherer's ability to charge Producer an
additional fee per Mcf for any Gas from such Nearby
Well or any other Well Producer flows
through such expansion constructed by Gatherer based on the sample calculation
set forth in Exhibit "H," such
that Gatherer has recouped its Actual Construct Costs incurred
by Gatherer to construct the expansion
plus incremental operating expenses and capital
expenditures, including capital
expenditures needed
to modify or
upsize the Initial System or a prior expansion
of the Initial System to accommodate the
Connection Volumes, over a five (5) year period
and receive a seven
and a half percent (7.5%) internal
rate of return ("IRR" as calculated by the Microsoft Excel
IRR function :financial formula) and
trued up quarterly ( "Expansion Fee''). For the avoidance
of doubt the Expansion Fee shall be
in addition to all other Gas Gathering Fees due for the Connection
Volumes and such Expansion Fee shall be
reduced equitably if Gatherer, in
its sole discretion, elects to construct
and install an expansion
of larger size or greater
capacity than requested by Producer in its Connection
Notice or required to serve Producer's Connection Volumes.


 




    	13 



     


    

  


m.           Subject
to Force Majeure and the condition that Producer has in
fact completed such a Nearby Well, in
the event Gatherer fails to
timely construct, install
and make available for operation on
or before the later of ninety (90) days
from receipt of the Connection
Notice or the date
the Well identified in the respective Connection
Notice is completed, an expansion of Gatherer's Gas System to connect the Connection
Volumes from the Nearby Well,
following good faith discussions with Gatherer, Producer
shall then have the
option either to:


 


a.           Construct
and install an expansion of Gatherer's
Gas System to connect Gatherer's Gas
System existing at that
time to the Nearby Well, at Producer's sole
cost and expense, in
exchange for Producer receiving a
credit against any
Base Fee component of the Gas
Gathering Fees otherwise owed
Gatherer for any Gas
from such Nearby Well
or any other Well flowing through such
expansion constructed by
Producer, until such time as
the amount of the Base
Fee component of the Gas Gathering Fees otherwise
attributable to such Gas, but
retained by Producer, is equal to the total of Actual Construct Costs incurred
by Producer to construct the expansion based on the sample
calculation set forth in
Exhibit "H,"
such that Producer has recouped its Actual Construct Costs
incurred by Producer to construct the expansion plus incremental operating
expenses and capital expenditures, including
capital expenditures needed to modify or
upsize the Initial System or a prior
expansion of the Initial System to accommodate
the Connection Volumes,
over a five (5) year period
and receive a seven and a half percent (7.5%)
IRR and trued up quarterly
( "Expansion Credit");
or


 


b.           Subject
to Section 1.4(ii),
obtain a Permanent Release from
this Agreement of the
Nearby Well and any of
the Leases located within the same DSU
as the Nearby Well
but not located within an Initial System
DSU.


 


iv.         In
the event the Well, or the Future
Receipt Point or Delivery
Point, if applicable, as
identified in the Connection
Notice requires more than
a three (3) mile expansion
of Gatherer's Gas System,
as Gatherer's Gas System
exists as of the date
of the Connection Notice
("Distant Well"), or involves a connection
of Gatherer's Gas System with facilities
of third parties not connected to
Gatherer's Gas System as
of the date of the
Connection Notice (one or both situations,
a "Distant Expansion ") , the
Parties shall promptly pursue good
faith negotiations of mutually
agreeable terms and
conditions of such an expansion and strive to
enter into a definitive separate agreement or written
amendment setting forth a definitive agreement as to
such Distant Expansion.
In the event the Parties
have not reached agreement,
on or before the later of
ninety (90) days from receipt
of the Connection Notice
or the date the Well
identified in the respective Connection
Notice is completed, for the terms of such a Distant
Expansion of Gatherer's Gas
System, following good faith discussions
with Gatherer, Producer shall
have the option to:


 




    	14 



     


    

 


a.
   Subject to Section l .4(ii),
obtain a Permanent Release
from this Agreement of any
of the Leases located within the
DSU of the Distant Well, and
the four (4) Contiguous
DSUs but only if such
Leases are not located within
an Initial System DSU.


 


v.           Gatherer
shall keep Producer reasonably informed of the progress
on the construction and installation of any expansion
of Gatherer's Gas System.
Producer shall have the right to have its representative present during any onsite
construction or
installation operations of any expansion of Gatherer's
Gas System.


 


2.6           Construction
or Expansion by
Producer. In the
event Producer elects to
construct, install or expand
any portion of Gatherer's Gas System pursuant to an express right
provided under this Agreement, which express
right does not extend to a gas processing facility
or compression above
what is required for a
similar gas gathering facility (a "Producer
Built Gathering Facility"),the following shall apply:


 


i.            Each
Producer Built Gathering Facility shall be
constructed and installed by Producer according
to the reasonable design
and construction specifications of Gatherer. In constructing
and installing the Producer Built Gathering Facility, Producer
shall have the right to utilize any available gas pipeline right-of-way or easement rights
of Gatherer and any materials of
Gatherer, at cost.


 


ii.         Upon
completion of any Producer Built Gathering Facility, Producer
shall assign such Producer Built Gathering-
Facility to Gatherer,
at no charge to
Gatherer, but expressly
subject to the terms of this Agreement, whereupon it shall
become part of Gatherer's
Gas System.


 


iii.         If
Producer has incurred Actual Construct Costs
pursuant to Section 2.5(iii)(a),
once Producer has recouped all of such
Costs pursuant to Section 2.5, Gatherer
may begin to assess the applicable Base Fee component of Gas Gathering
Fees for all Gas delivered
by Producer into or flowing through such Producer Built
Gathering Facility. Gatherer may begin to assess all other
components of the Gas
Gathering Fees for all
Gas delivered by Producer beginning upon the commencement
of receipt into or flow through such
Producer Built Gathering Facility.


 


iv.         For
the avoidance of doubt, for purposes of determining whether
Producer has delivered the Minimum Volume in any Accounting
Period pursuant
to the terms and conditions
set forth on Exhibit "E", any Gas delivered
during such Accounting Period for
which Producer does not owe any Base Fee component of the
Gas Gathering Fees pursuant to its incurrence of Actual
Construct Costs pursuant to Article 2 of
this Agreement shall be
included in the Delivered Volume.


 




    	15 



     


    

 


2.7           Producer's
Anticipated Volumes. Upon the execution of
this Agreement, and thereafter by October first (1st) of each calendar
year, Producer shall communicate
its drilling, completion
and recompletion plans to Gatherer in writing, including
locations, anticipated
spud dates, together with anticipated volumes
to be delivered to Gatherer, for
the next calendar year. Additionally,
during Gatherer's construction of facilities to
serve the Infill Receipt
Points, Producer shall promptly notify Gatherer of any
delay in its drilling and
completion schedules for the
Wells identified in Exhibit
"B-2", including
without limitation delays in completion of any
Wells on Exhibit "B-2"
later than May 1, 2015. At all
other times during the Primary
Term or Extended Term,
no later than the last day of each calendar quarter, Producer
shall notify Gatherer in writing with reasonable detail of
any changes or additions to its drilling plans for the
succeeding twelve (12) Accounting Periods. In
addition to providing Connection
Notices, pursuant to Section 2.5(i), Producer
shall provide updates to Gatherer,
as needed, of specific drilling and completion
plans, actual initial production dates, and additional
volumes from Other Owner
Gas or from prior dedications.


 


2.8           Ownership
of Facilities. Producer
expressly does not by the terms of this Agreement,
sell, transfer or assign
unto Gatherer any title or interest whatsoever in the
Leases or any pipelines
or other equipment of any nature owned
or used by Producer in the operation
of Producer's Wells and
the Leases. Gatherer expressly does not
by the terms of this
Agreement, sell,
transfer or assign unto Producer any
title or interest whatsoever
in Gatherer's Gas System,
or any pipelines or other
equipment of any nature
owned and used by Gatherer
in the operation of Gatherer's
Gas System or its performance of services under
this Agreement.


 


ARTICLE
III

GATHERING SERVICE


 


3.1           Producer's
Capacity. Commencing
on the Initial System In-Service Date, Gatherer
shall make available Capacity equal to
Producer's anticipated volumes of Producer's Gas
to be delivered pursuant
to Sections 2.4 and
2.7 ("Producer's
Capacity")in the
aggregate, for the benefit of Producer's Gas,
subject to Force Majeure.
On a daily basis,
any capacity available in the Gatherer's
Gas System in excess
of the lesser of Producer
's Capacity or the
actual amount of Producer's
Gas nominated by Producer to Gatherer each
Day hereunder, shall
be available to Gatherer for Third
Party Gas volumes on
such Days. Producer's Capacity shall
be adjusted upward by additional Connection Volumes
served by expansions of
Gatherer's Gas System pursuant to Section 2.5 of this
Agreement, and downward by
Permanently Released
Volumes pursuant to Section l .4(ii) of this Agreement.


 


3.2           Gathering. Subject
to the terms and conditions of this Agreement, Gatherer
shall receive at the
Receipt Points and gather
Producer's Gas utilizing Gatherer's Gas System, up to
Producer's Capacity, and redeliver an equivalent Thermal
Content quantity of Gas, less Fuel,
Field Condensate, and Lost and Unaccounted for Gas,
to Producer or its designee at the
Delivery Points in consideration of Producer's payment
of the Gas Gathering Fees
provided on Exhibit "E".
To the extent of available
capacity, Gatherer also
agrees to receive and gather any of Producer 's
Gas in excess of Producer's
Capacity and Other Owner Gas on an interruptible
basis and to
redeliver to Producer or its designee the equivalent Thermal Content
quantity of such Gas, less Fuel,
Field Condensate, and Lost and Unaccounted
for Gas to Producer or its designee at the
Delivery Points in consideration
of Producer's payment of the Gas Gathering Fees provided
on Exhibit "E" for such
Producer's Gas and Other Owner Gas. For purposes of Thermal Content determination
under this Agreement, Gas will be
measured by Gatherer using an ABB
Flow Totalizer with volumes adjusted for gas composition and reported in Btus. Gas sample analysis will be made at
least quarterly and analysis results will be the composition basis for the period.


 




    	16 



     


    

 


3.3           No
Processing. Gatherer shall not process Producer's Gas for the removal of liquefiable hydrocarbons after receipt of Producer's Gas
at the Receipt Points and prior to its delivery to the Delivery Points, other than by the use of conventional mechanical type Gas
liquid separators commonly used in the industry to separate
liquid hydrocarbons and free water from Gas which shall include without limitation the dehydration
system identified in Section 2.1(iv). The Parties acknowledge
and agree that Field Condensate may separate from Producer's Gas as a result of Gatherer's normal gathering and compression operations
and that Gatherer shall be allowed to remove and retain for its own account such Field
Condensate.


 


3.4           Third
Party Gas. Producer acknowledges and understands that Gatherer
will receive Producer's Gas utilizing Gatherer's
Gas System which may also receive and commingle Producer's
Gas with Third Party Gas delivered to Gatherer by other parties,
at all times subject
to Producer's Capacity and such Third Party Gas meeting the Gas Quality Specifications set
forth in the attached Exhibit "F." Accordingly,
the Gas delivered to the Producer or Producer' s designee
at  the Delivery Points may not be the same
Gas, or have the same characteristics,
as Producer's Gas delivered to the Receipt Points.


 


3.5           Priority
of Service. Except for any Other Owner Gas that has
not been dedicated to this Agreement by ratification or other formal agreement entered into by such Other Owner, Producer 's
Gas, up to Producer's Capacity, shall be accorded highest priority on Gatherer's
Gas System with respect to capacity allocations, interruptions,
or curtailments. On a Receipt Point or Delivery Point
basis as applicable,
Producer's Gas will be the last Gas curtailed from Gatherer's Gas System in the event of an interruption or curtailment affecting
specific Receipt Points or Delivery Points rather than Gatherer's Gas System as a
whole, and all of Producer's Gas affected by a particular
Receipt Point or Delivery Point will be treated in the
same manner in the event
an allocation is necessary. Gatherer agrees not to contract to provide, at any time, gathering
service on Gatherer's Gas System on a basis that has a
priority higher than what Producer's Gas is entitled to
pursuant to this Section 3.5 and under this Agreement.


 


ARTICLE IV

EXHIBITS


 


4.1           Exhibits.
All Exhibits attached to this Agreement are incorporated into and made an integral part of this Agreement by reference including
the General Terms and Conditions set forth in the attached Exhibit "C"
(the "GT&C').


 


4.2           Order
of Precedence. In the event of any conflict between
the terms as set out in the body of this Agreement
and those set out in the GT&C, the terms in the body of this Agreement shall control.


 




    	17 



     


    

 


ARTICLE V


CON SIDERATION & FEES


 


5.1           Fees.
Gatherer shall charge and
Producer shall pay the applicable "Gas Gathering
Fees" and any "Shortfall Payment"
described on Exhibit "E"
based on the total Mcf of Gas delivered by Producer and
received at the Receipt Points. If and as
applicable under Section 2.4(ii)(b), Gatherer
shall charge and Producer shall
pay the Initial System Pre-In service Fee. If and
as applicable under Section 2.5,
Gatherer shall charge and Producer shall
pay the Expansion Fee.


 


5.2           Annual
Fee Adjustments. The Base Fee,
Meter Fee, Compression Fee, and
Expansion Fee components of
the Gas Gathering Fees may be adjusted annually during
the term of this Agreement,
for the prospective calendar year, the first prospective calendar year being
2020, based on the percentage change in the annual average
in the "Consumer Price Index
for All Urban Consumers (CPI-U)
: U.S. city average - All items"
which occurred in the preceding calendar year as
published by the United States Department of
Labor, Bureau of Labor
Statistics for the previous calendar year, but shall never
be less than the Base Fee, Meter Fee
or Compression Fee, as applicable, set
forth in Exhibit "E''.


 


5.3           Utilities. Producer shall furnish
utilities needed for Gatherer's Gas System at the Receipt
Points. In addition to the Gas Gathering Fees and utilities furnished by Producer, Gatherer
shall charge and Producer shall pay
its pro rata share of the actual
utility costs incurred
by Gatherer in connection with operating Gatherer's
Gas System including any necessary power costs incurred in
connection with Field Compression or with
the Delivery Points. The actual
utility costs shall be
allocated on a pro-rata basis to
each shipper of Gas on Gatherer's Gas System each Accounting
Period based upon throughput of all Gas through Gatherer's Gas System
during such Accounting Period.


 


5.4           Lost
and Unaccounted for
Gas. The difference
between the volume of Producer' s
Gas, as measured
in MMBtus at the Receipt Points and the measurements provided by
the interconnecting parties in MMBtus at the Delivery
Points, less Field
Condensate and Fuel,
shall be considered as Lost
and Unaccounted for Gas
sustained on Gatherer's
Gas System due
to evaporation, measurement and
other losses in transit. The Lost and Unaccounted for
Gas shall be allocated on a pro-rata
basis to each shipper of Gas
on Gatherer's Gas System
each Accounting Period based upon throughput of
all Gas through Gatherer's
Gas System during such Accounting Period. Gatherer shall
not be responsible to Producer for the
Lost and Unaccounted for Gas.


 


5.5           Fuel.
Gatherer may retain for its own
account so much Gas as reasonably
necessary for Gatherer to use and consume as
fuel to operate Gatherer's Gas System ("Fuel").
The Fuel shall
be allocated on a
pro-rata basis to each shipper of Gas on
Gatherer's Gas System each Accounting Period based upon throughput of all Gas through Gatherer's
Gas System during such
Accounting Period.


 


5.6           Limitation.
Notwithstanding anything to the contrary herein, the equivalent
Thermal Content quantity of Producer's
pro rata share of
the sum of (i) all Lost and Unaccounted for Gas,
and (ii) Fuel, for any Accounting Period,
shall not exceed four percent
(4.0%)
of the equivalent
Thermal Content quantity of Producer's Gas transported
on Gatherer's Gas System for such
Accounting Period .


 




    	18 



     


    

  


ARTICLE VI


NOTICES


 


6.1           Notice
Process. All notices and communications required
or permitted under this Agreement shall be
in writing and shall be considered as having been given if delivered
personally, or when
received by mail,
by electronic means (confirmed
as received before 5 p.m. at
the place of receipt), or
by express courier, postage prepaid, by either Party to
the other at the addresses given below. Routine communications,
including monthly statements, shall be
considered as duly
delivered when mailed by ordinary mail or by electronic means.


 


6.2           Addresses
for Notice. Unless changed upon written notice by either Party, the addresses for notice purposes are as follows:


 


	TO:	Emerald Oil, Inc.
	 	1600 Broadway, Suite 1360
	 	Denver, CO 80202
	 	Phone: 303-595-5629
	 	Contact:  James Muchmore
	 	 
	TO:	Dakota Midstream, LLC
	 	1600 Broadway, Suite 1330
	 	Denver, CO 80202
	 	Phone: 202-213-5998
	 	Contact:  Tim Reynolds


 


ARTICLE VII


TERM


 


7.1
   Primary and Extended Terms. This Agreement shall
commence as of the Effective Date and shall remain
in full force and
effect for a primary
term of fifteen (15) years (the "Primary Term")
and shall continue
year to year thereafter until terminated by either Party
(the "Extended Term") by
providing written notice of termination to
the other Party at least sixty
(60) days prior to the
expiration of the Primary Term or any subsequent annual
expiration date.


 


7.2
   Capacity Adjustment. During any Extended Term, Producer's
Capacity will be the average daily volume
of Producer's Gas delivered to Gatherer's Gas System during the prior twelve (12)
month period.


 




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7.3           Uneconomic
Operations. Subject to any Force Majeure event affecting Producer's obligations to deliver Gas hereunder, in addition
to all other rights of Gatherer
under this Agreement, in the event the sum of actual direct
costs (for the avoidance of doubt, excluding
overhead, depreciation, amortization and capital expenditures) incurred by Gatherer to operate
any portion of Gatherer's Gas System (the "Uneconomic Segment'') during any ninety (90) day period are in excess
of the total net revenue
attributable to the Uneconomic Segment (including
all Gas Gathering
Fees paid by Producer or any third
party attributable
to the Uneconomic Segment)
during such ninety (90) day period, Gatherer
shall have the right to send written notice (an
"Uneconomic Notice" ) to Producer
of its intent to terminate receipts of
Gas into the Uneconomic Segment unless the Gas Gathering
Fees owed by Producer for Producer 's
Gas delivered to the Uneconomic
Segment are increased such that Gatherer's total anticipated
net revenue attributable to the Uneconomic Segment is
projected to equal one hundred
ten percent (110%)
of Gatherer's actual direct costs
(for the avoidance
of doubt, excluding overhead, depreciation, amortization
and capital expenditures) incurred by Gatherer to operate
the Uneconomic Segment. Any increased Gas Gathering Fee
shall be borne pro-rata by
Producer and any third party shipper on the Uneconomic
Segment according to the anticipated volumes
of Producers Gas and Third Party Gas
to be delivered to or flowed
through the Uneconomic Segment. Within ten (10)
days of Producer's
receipt of notice from Gatherer,
Producer shall elect by written notice sent to
Gatherer either to:


 


i.        Accept
the increased Gas Gathering Fees, or portion thereof,
effective as of the
beginning to the next Accounting
Period, owed by
Producer for Producer's
Gas delivered to the
Uneconomic Segment, whereupon Gatherer shall not send another Uneconomic Notice pursuant
to this Section 7.3 for at least ninety
(90) days; or


 


ii.       Obtain
a Temporary Release of the Leases and Wells directly affected
by the Uneconomic Segment, with Producer able to elect,
by delivery of written notice to Gatherer,
to obtain a Permanent Release and terminate the Agreement,
insofar as it pertains to
the Uneconomic Segment after
one hundred eighty
(180) days of Producer's receipt of the
Uneconomic Notice under this
Section 7.3.


 


ARTICLE
VIII 


MISCELLANEOUS


 


8.1           Assignment.
This Agreement, including,
without limitation, any and all
renewals, extensions,
amendments and/or supplements hereto shall extend to and
inure to the benefit of and be binding upon the Parties, and
their respective successors and assigns, including any
purchaser of Producer's Gas or Producer's
interests in the Leases that
are dedicated under this Agreement or subsequent operator of the
Wells, and any purchaser of
Gatherer's Gas System, or any part or interest therein which
are subject to this Agreement; provided, however,
(i) this Agreement shall not be assigned by a Party
without the prior written
consent of the other Party,
such consent not to
be unreasonably withheld, conditioned or delayed, and
(ii) no sale, assignment, conveyance
or other transfer (collectively, a "Transfer") of Producer's Leases or Wells,
or any part thereof
or interest therein, or any
part of Gatherer's Gas
System, shall be made unless the transferee
thereof shall assume and agree to be bound by
this Agreement insofar
as the same shall
affect and relate to the Leases,
Wells, Gatherer's
Gas System or interests
so Transferred. Notwithstanding the conditions and restrictions
set forth on assignment in this
Section 8.1, each Party retains the right to freely assign
this Agreement to an Affiliate
within the first year
following the Effective Date. Interests owned in
the Area of Dedication by a
transferee of any of Producer's Leases or Wells
that were owned prior to
the effective date of such Transfer shall not
become subject to this
Agreement by virtue of such Transfer. Itis
further agreed, however, that
nothing herein contained shall in
any way prevent a
Party from pledging or mortgaging,
all or any part of
such Producer's Leases if Producer,
or Gatherer's Gas System if
Gatherer, as security under any mortgage,
deed of trust, or
other similar lien, or from pledging this
Agreement or any benefits accruing
hereunder to the Party
making the pledge without the assumption of obligations
hereunder by the mortgagee, pledgee or other
grantee under such instrument.


 




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8.2           No
Third Party Beneficiaries. Nothing in
this Agreement, expressed or implied, confers
any rights or remedies on any person or entity not a party hereto other
than successors and
assigns of the Parties.


 


8.3           Cooperation
Under Related Dedication Agreements. The Parties
expressly acknowledge
that this Agreement is one of several agreements
executed contemporaneously herewith by
Producer, Gatherer,
or an Affiliate of Gatherer pertaining to the gathering
or transportation of Crude
and water, and the
disposal of water from the same
Leases and Wells .and
covering the same Area
of Dedication (the "Related Dedication Agreements "), with
certain facilities to be located,
and services to be provided, under
this Agreement in proximity
to those covered under the Related Dedication Agreements.
The cooperation and
performance by the Parties and their
respective Affiliates of all of
the obligations under this Agreement and each
of the Related Dedication
Agreements is essential for the Parties
to receive the full benefit of their
bargain under this Agreement and the Related Dedication
Agreements. Subject to Force
Majeure and any other applicable provisions
under this Agreement or any Related Dedication Agreement,
Gatherer and each Affiliate of Gatherer which is a party
to a Related Dedication Agreement, shall construct,
install and put into service
the Initial System, pursuant
to this Agreement, and the corresponding
Initial Systems for Crude
transportation and water gathering as described in the
Related Dedication Agreements, in each case, in their entirety,
as to all of the Initial and Infill Receipt Points together
with any future expansions beyond the Initial System
undertaken pursuant to this Agreement and under
the corresponding provisions of the Related Dedication
Agreements.


 


8.4           Entirety;
Amendment. Subject to Section 8.3, this Agreement, together with the
Exhibits attached hereto, constitutes the entire agreement and understanding between the Parties
hereto and supersedes
and renders null and void and
of no further force and effect any
prior proposals, understandings,
negotiations or agreements between the Parties relating
to the subject matter
hereof, and all amendments and letter agreements
in any way relating thereto. No
provision of
this Agreement may be changed,
modified, waived or
discharged orally, and no change,
modification, waiver or amendment
of any provision will be effective except by written
instrument executed by the Parties.


 


8.5           Severability.
Should any part of this Agreement be found to be void,
unenforceable or be required
to be modified by a court or governmental authority, then
only that part of this
Agreement shall be voided,
unenforceable, or modified accordingly. The
remainder of this Agreement
shall remain in force and
unmodified, subject to
Section 7 of the GT&C.


 


8.6           Additional
Gas Services; Area of Interest. In the event Producer
desires to construct, install, operate or
perform gas delivery, gas quality enhancement,
gas lift or re-injection, compression
or other field services or Producer desires gas
gathering services in areas of McKenzie
County south of Township 150, Billings
County, or Stark County,
North Dakota ("Area of Interest ") (such additional
types of locations or desired services collectively "Additional
Gas Services"), Producer shall give
notice to Gatherer regarding such Additional Gas Services before soliciting
such Additional Gas Services or entering into
any binding agreements with any third parties to perform such Additional Gas
Services. The selection of Gatherer or
any third party to perform such Additional Gas Services shall be in the sole discretion of Producer,
and the performance of such Additional
Gas Services shall be governed by a separate
agreement containing mutually agreeable terms and
conditions.


 




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8.7           Audit
Rights.


 


i.          Except
for Actual Construct Costs for
which a process of
disclosure and agreement is
provided within Section 1(b) of the GT&C and Initial
System Costs which are further addressed in Exhibit
"E", upon ten (10) days
prior written notice, either Party shall have the right,
at reasonable times during normal
business hours,
but no more frequently
than once each calendar year, at
its own expense, to examine the
books and records of
the other Party to
the extent necessary to audit and verify the
accuracy of any statement,
charge, or computation made under or
pursuant to this Agreement. All statements,
allocations, measurement,
and payments made in any Accounting
Period prior to the
twenty-four (24) Month period preceding the Month in which notice of
audit is given by the auditing Party
shall be conclusively
deemed to be true and correct and the
scope of such audit shall be
limited to statements, allocations, measurements
and payments made during
such twenty-four (24) Month period.


 


ii.         The
auditing Party shall have ninety
(90) days after commencement of
the audit in which to submit a written claim, with supporting detail, for proposed adjustments. Ifthe auditing Party
fails to submit a written report
to the audited Party within the ninety (90)
day period, then all
statements, charges and computations made
under or pursuant to this
Agreement that were within the audit period shall be deemed
to be appropriate and accurate. Upon receipt of an audit report,
the audited Party shall have ninety (90) days
to make all recommended adjustments, or
to notify the auditing Party that it does not agree and its basis
for disagreement. Any unresolved disagreements shall be resolved pursuant
to Section 11 of the GT&C.


 


8.8           Amendment
and Restatem ent of
Original Agreement. Upon
execution of this Agreement by
Gatherer and Producer,
this Agreement shall amend, restate, supersede and replace
the Original Agreement, including any amendments thereto,
in its entirety and for all
purposes, effective as of the
Effective Date.


 


8.9           Governing
Law: Venue. TIDS
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE
OF NORTH DAKOTA WITHOUT
REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS. EXCLUSIVE VENUE FOR
ANY SUIT, ACTION OR
PROCEEDING BROUGHT BY EITHER
PARTY IN CONNECTION WITH THIS
AGREEMENT OR ARISING OUT OF THE EFFECTIVE
TERMS OR CONDITIONS HEREOF SHALL BE IN THE CITY
AND COUNTY OF DENVER, COLORADO
.


 


8.10         Counterparts.
This Agreement may be executed in
multiple counterparts, each of
which shall constitute an original
and all of which, when construed together,
shall constitute one and the
same instrument.


 




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8.11
    Ratification . Emerald
WB LLC hereby ratifies, confirms and approves the Agreement
in all respects and adopts it as Emerald WB LLC's act and deed to the same ex.tent as
if the Agreement had been executed by Emerald WB LLC on the date of its original execution,
effective as of the
Effective Date.


 


THE
PARTIES HERETO have executed this
Agreement effective as of the Day and year first above written.


 


	GATHERER	 
	DAKOTA MIDSTREAM, LLC	 
	 	 	 
	By:	/s/ Tim Reynolds	 
	Name: Tim Reynolds	 
	Title: Founding Partner	 
	Date: May 26, 2015	 
	 	 	 
	PRODUCER	 
	EMERALD OIL, INC.	 
	 	 	 
	By:	/s/ McAndrew Rudisill	 
	Name: McAndrew Rudisill	 
	Title: Chief Executive Officer and President	 
	Date: May 26, 2015	 
	 	 	 
	EMERALD WB LLC	 
	 	 	 
	By:	/s/ McAndrew Rudisill	 
	Name: McAndrew Rudisill	 
	Title: President	 
	Date: May 26, 2015	 


 




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