**Exhibit10.3**

 

 

 

COMPRESSION SERVICES AGREEMENT

 

among

 

HILAND PARTNERS, LP

 

and

 

CONTINENTAL RESOURCES, INC.

 

Effective as of

 

January 28, 2005

 

 

 

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**TABLE OF CONTENTS**

 
| **ARTICLE I DEFINITIONS**                       |   |
|-------------------------------------------------|--------|
| **ARTICLE II  INDEPENDENCE OF THE PARTIES**     |   |
| **ARTICLE III  REPRESENTATIONS OF THE PARTIES** |   |
| **ARTICLE IV  RESPONSIBILITIES OF THE PARTIES** |   |
| **ARTICLE V OPERATING  FEE**                    |   |
| **ARTICLE VI BILLING  AND PAYMENT**             |   |
| **ARTICLE VII FORCE  MAJEURE**                  |   |
| **ARTICLE VIII  INDEMNITY AND INSURANCE**       |   |
| **ARTICLE IX TERM**                             |   |
| **ARTICLE X DEFAULT**                           |   |
| **ARTICLE XI  ASSIGNMENT**                      |   |
| **ARTICLE XII  ADDRESS**                        |   |
| **ARTICLE XIII  NON-WAIVER**                    |   |
| **ARTICLE XIV MERGER**                          |   |
| **ARTICLE XV  GOVERNING LAW, VENUE**            |   |
| **ARTICLE XVI  MUTUAL DRAFTSMANSHIP**           |   |
| **ARTICLE XVII  MISCELLANEOUS**                 |   |
|                                            |   |
|                                            |   |
| Exhibits                                        |   |
| “A”—Delivery Points              |   |
| “B”—Operating Fee                |   |
| “C”—Insurance                    |   |

 

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**COMPRESSION SERVICESAGREEMENT**

 

THIS COMPRESSION SERVICES AGREEMENT (“***Agreement***”), effective as ofJanuary 28, 2005 (the “***Effective Date***”), by and between Hiland Partners, LP (“***Hiland***”) andContinental Resources, Inc. (“***Continental***”). Hiland and Continental are sometimesreferred to herein individually as a “***Party***” or collectively as the “***Parties***.”

 

**RECITALS:**

 

A.                                   Continentaldesires to have Hiland provide compression services with respect to air andwater for use in its secondary recovery operations located in Bowman and SlopeCounties in North Dakota and in Fallon County, Montana (the “***Services***”).

 

B.                                     Hilandagrees to provide compression services with respect to air and water andContinental agrees to accept such compression services with respect to air andwater subject to the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreementsherein contained, Hiland and Continental agree as follows:

 

**ARTICLE I**

**DEFINITIONS**

 

“***AdjustedGuarantee Percentage***” shall have the meaning given to such termin Section 4.3(c)(iii).

 

“***AdjustedPerformance Guarantee***” shall have the meaning given to such termin Section 4.3(c)(ii).

 

“***Agreement***”shall have the meaning given to such term in the introduction.

 

“***Assets***”shall have the meaning given to such term in Section 9.2.

 

“***Business Day***”shall mean any day on which the banks in Houston, Texas are open.

 

“***Cedar Air***”shall mean the compressed air delivered from the Cedar Hills Air Injectionfacility listed on *Exhibit A*.

 

“***Cedar Water***”shall mean the pressurized water delivered from the Cedar Hills Water Injectionfacility listed on *Exhibit A*.

 

“***Commodity***”shall mean each of the Cedar Air, Cedar Water, and HC Air.

 

“***Continental***”shall mean Continental Resources Inc.

 

“***ContinentalPermit***” shall mean air permit number No. O97008 for the HorseCreek Compressor Station.

 

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“***day***”as used herein shall mean a period of 24 consecutive hours, beginning at 7:00a.m. Central Standard or Daylight time, as the case may be.

 

“***Delivery Point***”shall mean each of the points specified on *ExhibitA* attached hereto.

 

“***Dispute***”shall have the meaning given to such term in Section 17.5.

 

“***Due Date***”shall have the meaning given to such term in Section 6.1.

 

“***Entity***”shall mean a corporation, limited liability company, partnership (including ageneral partnership, joint venture, limited partnership, limited liabilitypartnership, or partnership association), trust (including a business trust),estate, Government Authority, or any other entity.

 

“***Effective Date***”shall have the meaning given to such term in the introduction.

 

“***Force Majeure***”shall have the meaning given to such term in Section 7.2.

 

“***GovernmentalAuthority***” shall mean a federal, state, local, or foreigngovernmental authority; a state, province, commonwealth, territory, or districtthereof; a county or parish; a city, town, township, village, or othermunicipality; a district, ward, or other subdivision of any of the foregoing;any executive, legislative, or other governing body of any of the foregoing;any agency, authority, board, department, system, service, office, commission,committee, council, or other administrative body of any of the foregoing; anycourt or other judicial body; and any officer, official, or otherrepresentative of any of the foregoing.

 

“***GuaranteePercentage***” shall have the meaning given to such term in Section4.3(a).

 

“***HC Air***”shall mean the compressed air delivered from the Horse Creek Compressor Stationlisted on *Exhibit A*.

 

“***HadleyCompressor Station***” shall mean that certain compressor stationowned by Hiland in Bowman County, North Dakota.

 

“***Hiland***”shall mean Hiland Partners, LP.

 

“***IndemnifiedParty***” shall have the meaning given to such term in Section 8.2.

 

“***IndemnifyingParty***” shall have the meaning given to such term in Section 8.2.

 

“***LD Cap***”shall have the meaning given to such term in Section 4.3(f).

 

“***LiquidatedDamages***” shall have the meaning given to such term in Section4.3(c).

 

“***MonthlyDelivery Notice***” shall have the meaning given to such term inSection 4.1(b).

 

“***Operating Fee***”shall mean individually each of the monthly fees set forth for a Commodity on *Exhibit B*.

 

“***Party***”or “***Parties***”shall have the meanings given to such terms in the introduction.

 

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“***PerformanceGuarantee***” and “***Performance Guarantees***” shall have the meaning given tosuch terms in Section 4.3(a).

 

“***Person***”shall mean a natural person or an Entity.

 

“***Prime Rate***”shall have the meaning given to such term in Section 6.2.

 

“***Proceeding***”shall mean a judicial, administrative, or arbitral proceeding (including alawsuit or an investigation by a Government Authority), commencing with theinstitution of such proceeding through the issuance, service, or delivery ofthe applicable claim or other applicable event.

 

“***Services***”shall have the meaning given to such term in Recital A.

 

**ARTICLE II**

**INDEPENDENCE OF THEPARTIES**

 

Hiland shall be an independent contractor and not an agent ofContinental, except to the limited extent and for those limited purposesspecifically set forth herein. Nothing in this Agreement or the arrangement forwhich it is written shall constitute or create a joint venture, partnership, orany other similar agreement between Hiland and Continental, nor shall it bedeemed to limit the Parties to perform similar activities with third partieseven while this Agreement is in full force and effect.

 

**ARTICLE III**

**REPRESENTATIONS OF THEPARTIES**

 

3.1                                 In order to induce Hiland to enter into thisAgreement, Continental represents and warrants to Hiland that, as of theEffective Date:

 

(a)                                  Continental is a corporation duly formed,validly existing and in good standing under the laws of the State of Oklahoma.Continental has the power to own its property and to execute, deliver andperform this Agreement and to carry on its business as it is currently beingconducted.

 

(b)                                 The execution, delivery and performance byContinental of this Agreement have been duly authorized by all necessary actionof Continental. This Agreement is the legal, valid and binding obligation ofContinental, duly enforceable against Continental in accordance with its terms(subject, however, to the effects of bankruptcy, insolvency, reorganization,moratorium, and similar laws from time to time in effect relating to the rightsand remedies of creditors as well as to general principles of equity).

 

(c)                                  The execution, delivery and performance byContinental of this Agreement do not and will not result in a violation of,conflict with or default under (i) the terms of Continental’s organizational,formation or governing documents; (ii) any applicable law; or (iii) anycontract, agreement, or other obligation or restriction to which Continentalmay be bound; nor, to the best of Continental’s knowledge after due inquiry,

 

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does there exist anycondition that, upon the passage of time, the giving of notice or both, wouldcause any such violation, conflict or default.

 

(d)                                 Except for the transfer of the ContinentalPermit to Hiland, no approval, consent, waiver, order or authorization of, orregistration, qualification, declaration, or filing with, or notice to, anyGovernmental Authority or other third party is required on the part ofContinental in connection with the execution of this Agreement or theconsummation of the transactions contemplated hereby.

 

(e)                                  There are no Proceedings pending or, to thebest of Continental’s knowledge after due inquiry, threatened againstContinental that would adversely affect its ability to execute, deliver andperform this Agreement.

 

3.2                                 In order to induce Continental to enter intothis Agreement, Hiland represents and warrants to Continental that, as of theEffective Date:

 

(a)                                  Hiland is a limited partnership duly formed,validly existing and in good standing under the laws of the State of Delaware.Hiland has the power to own its property and to execute, deliver and performthis Agreement and to carry on its business as it is currently being conducted.

 

(b)                                 The execution, delivery and performance byHiland of this Agreement have been duly authorized by all necessary action ofHiland. This Agreement is the legal, valid and binding obligation of Hiland,duly enforceable against Hiland in accordance with its terms (subject, however,to the effects of bankruptcy, insolvency, reorganization, moratorium, andsimilar laws from time to time in effect relating to the rights and remedies ofcreditors as well as to general principles of equity).

 

(c)                                  The execution, delivery and performance byHiland of this Agreement do not and will not result in a violation of, conflictwith or default under (i) the terms of Hiland’s organizational, formation orgoverning documents; (ii) any applicable law; or (iii) any contract, agreement,or other obligation or restriction to which Hiland may be bound; nor, to thebest of Hiland’s knowledge after due inquiry, does there exist any conditionthat, upon the passage of time, the giving of notice or both, would cause anysuch violation, conflict or default.

 

(d)                                 Except for the transfer of the ContinentalPermit to Hiland, no approval, consent, waiver, order or authorization of, orregistration, qualification, declaration, or filing with, or notice to, anyGovernmental Authority or other third party is required on the part of Hilandin connection with the execution of this Agreement or the consummation of thetransactions contemplated hereby.

 

(e)                                  There are no Proceedings pending or, to thebest of Hiland’s knowledge after due inquiry, threatened against Hiland thatwould adversely affect its ability to execute, deliver and perform thisAgreement.

 

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**ARTICLE IV**

**RESPONSIBILITIES OF THEPARTIES**

 

4.1                                 (a) Hiland agrees to provide the Services ina manner that results in the delivery to Continental at the Delivery Points, ona monthly basis, of the quantities of Cedar Air, Cedar Water, and HC Airrequested by Continental for each Commodity set forth in the Monthly DeliveryNotice. This monthly quantity at any one site will not exceed the maximumoutput from all equipment located at any one site, as determined from theoriginal design.

 

(b)                                 Continentalwill nominate the volumes of Cedar Air, Cedar Water, and HC Air that it willrequest at the Delivery Points for any calendar month on or before the 25th(23rd in the month of February) day of the preceding calendar month in an emailto a designated Hiland representative (the “***Monthly Delivery Notice***”).

 

4.2                                 (a) Continental agrees to provide, at no costto Hiland, all fuel, whether gas or electric, and water, in the quantitiesnecessary for Hiland to provide the Services required to deliver each of theCommodities as set forth in Section 4.1 above.

 

(b)                                 Hilandagrees to obtain written consent from the then designated Continental managerbefore starting up more than 4 of the 6 compressors at the Hadley CompressorStation. Should Hiland fail to obtain such consent, Hiland agrees to pay theactual excess demand and usage charges for electricity incurred by Continentalrelated to such start-up and operations.

 

4.3                                 (a) Subject to: (i) Article VII below; (ii)the provision of fuel (including, but not limited to, consent as necessary tostart-up additional compressors at the Hadley Compressor Station), and water byContinental as required in Section 4.2 above; Hiland guarantees the provisionof Services adequate to produce 96.5% (the “***Guarantee Percentage***”) of the quantitiesof Cedar Air, Cedar Water, and HC Air set forth in each Monthly Delivery Noticefor such calendar month (for each Commodity, the “***Performance Guarantee***,” and collectivelythe “***PerformanceGuarantees***”) as determined in accordance with Section 4.3(c)below.

 

(b)                                 Hilandwill use its best efforts to inform Continental 30 days in advance of the dateswhen it expects its equipment to be down for scheduled maintenance.

 

(c)                                  Inthe event that Hiland is not able to meet the Performance Guarantee for anyparticular Commodity in any month, Hiland shall credit or pay to Continental anamount determined as follows:

 

(i)                                     Within15 days after the end of each calendar month, the Continental Baker DistrictArea Supervisor (or designee) and the Hiland designee will perform a performancereview of each Hiland location that produces a Commodity;

 

(ii)                                  If,as a result of the performance review, it is determined that the quantity of aCommodity produced at such location for the preceding month was equal to orgreater than the Performance Guarantee for such Commodity for such month lessquantities attributable to the times during such month Hiland was

 

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unable to deliver such Commodity due to an event set forth in4.3(a)(i), (ii) above (the “***Adjusted Performance Guarantee***”), no further calculationwill be made and no Liquidated Damages will be assessed for such Commodity;

 

(iii)                               Ifthe quantity for a Commodity determined in accordance with Section 4.3(c)(ii)above is less than the Adjusted Performance Guarantee, and the run-time datafor the particular Hiland location which was used to produce such Commodity isequal to or greater than the Guarantee Percentage as adjusted for thepercentage of time during such month Hiland was unable to deliver suchCommodity due to an event set forth in 4.3(a)(i), or (ii) above (the “***Adjusted Guarantee Percentage***”),no further calculation will be made and no Liquidated Damages will be assessedfor such Commodity;

 

(iv)                              Ifthe quantity for a Commodity determined in accordance with Section 4.3(c)(ii)above is less than the Adjusted Performance Guarantee, and the run-time datafor the particular Hiland location which was used to produce such Commodity isless than the Adjusted Guarantee Percentage, Hiland will credit or pay (as setforth in Section 4.3(d) below) an amount determined by (I) subtracting from 1the amount determined by dividing the actual percentage of such Commoditydelivered during such month by the Adjusted Performance Guarantee for suchCommodity for such month and (II) multiplying such number times the OperatingFee for such Commodity, as liquidated damages (the “***Liquidated Damages***”).

 

(d)                                 TheLiquidated Damages, if any, shall be determined within 30 days after the end ofthe calendar month in which such occurred and credited on the next invoice fromContinental to Hiland after their determination, or paid to Continental within15 days after such determination at the address set forth in Section 12.1.

 

(e)                                  Thesums payable by Hiland to Continental as Liquidated Damages have beencalculated as representing the anticipated loss to Continental as a result ofany failure to achieve the Performance Guarantees and, except as provided inSection 10.2, shall be Continental’s sole and exclusive remedy for Hiland’sfailure to meet the Performance Guarantees. The Parties agree (i) thatContinental’s damages arising out of such performance failure are impossible tocalculate with precision and (ii) that the terms and amount set forth above forLiquidation Damages are reasonable.

 

(f)                                    Notwithstandinganything else in this Agreement to the contrary, Hiland shall not be obligatedto pay Liquidated Damages in any Contract Year in excess of the aggregate ofthe Operating Fees for each Commodity for such Contract Year (the “***LD Cap***”).

 

**ARTICLE V**

**OPERATING FEE**

 

In consideration for Hiland making available the necessary equipmentand labor to perform the Services, and for the actual provision of the Servicesin the manner and on the terms

 

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set forth in this Agreement, Continental shall pay toHiland the Operating Fees per month set forth on *Exhibit B* in accordance with the terms set forth in ArticleVI.

 

**ARTICLE VI**

**BILLING AND PAYMENT**

 

6.1                                 Hiland will invoice Continental for theOperating Fees less a credit for Liquidated Damages, if any, at the addressprovided in Section 12.1 on or before the 5th of each month for Servicesperformed in the preceding month, and Continental agrees to make payment toHiland by wire transfer to the account set forth in Section 12.1 or by othermeans to be received by Hiland within 15 days of the date of receipt of Hiland’sinvoice (the “***Due Date***”).When the Due Date falls on a day that is not a Business Day, Continental shallcause such payment to be actually received by Hiland on or before the nextBusiness Day after such date. In the event Hiland’s invoice is disputed,Continental shall pay the undisputed amounts on or before the Due Date and giveHiland written notification setting forth the disputed amounts and the basistherefor by the Due Date. Hiland and Continental shall use reasonable diligenceto resolve any disputed amounts. Any disputed amounts which become undisputedand due to one Party shall be subject to interest from the other Party asdescribed in Section 6.2 below from the original Due Date for such amounts.

 

6.2                                 If Continental fails to make timely paymentof all undisputed amounts so billed, simple interest on the unpaid portion ofthe invoice shall accrue at the lower of the Prime Rate plus 2% or the maximumlawful rate. For the purpose of this article, the term “***Prime Rate***” shallmean the rate charged by JPMorgan Chase Bank to their most credit worthycustomers for each month in which such payment is outstanding.

 

**ARTICLE VII**

**FORCE MAJEURE**

 

7.1                                 In the event that any Party hereto isrendered unable, wholly or in part, by Force Majeure to carry out itsobligations under this Agreement, other than the obligation to make payment ofamounts due hereunder, the obligations of such Party, so far as they areaffected by the Force Majeure, shall be suspended during the continuance of theForce Majeure. The Party impacted by a Force Majeure shall, upon suchoccurrence of a Force Majeure, (a) give verbal notice to the other Partyfollowed by written notice within a reasonable period of time of theparticulars of the Force Majeure and (b) take commercially reasonable steps toremedy the Force Majeure.

 

7.2                                 The term “***Force Majeure***” means any event outsidethe control of the affected Party that cannot, despite the exercise ofcommercially reasonable precautions, remediation and mitigation efforts, beprevented, avoided or removed and that prevents the total or partialperformance of the obligations of the affected Party under this Agreement. Thefollowing events, the list of which is not exhaustive, shall be considered tobe cases of Force Majeure to the extent they present the characteristicsdescribed above: (a) lightning, earthquake, hurricane, storm, cyclone, typhoon,tsunami, peril of the sea, wind, drought, abnormal weather condition, or othersimilar natural calamities or acts of God; (b) fire, explosion, chemicalcontamination, or vandalism; (c) epidemic or plague; (d) act of war (declaredor undeclared), invasion, armed

 

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conflictor act of foreign enemy, blockade, economic sanction or embargo, revolution,sabotage, riot, insurrection, civil unrest or disturbance, military or guerillaaction, banditry, terrorist activity or a threat of terrorist activity, ortribal, religious or sectarian unrest; (e) radioactive contamination; (f)strikes, lockouts and work stoppages; (g) damage to or failure of equipment;and (h) other acts or omissions of Governmental Authorities.

 

**ARTICLE VIII**

**INDEMNITY AND INSURANCE**

 

8.1                                 **AS BETWEEN CONTINENTAL ANDHILAND, HILAND SHALL BE DEEMED TO BE IN CONTROL AND POSSESSION OF THECOMPRESSED AIR AND PRESSURIZED WATER UNTIL SUCH TIME AS SAID PRODUCTS AREDELIVERED TO THE DELIVERY POINTS AND AFTER SUCH TIME CONTINENTAL SHALL BEDEEMED TO BE IN CONTROL AND POSSESSION OF THE COMPRESSED AIR AND PRESSURIZEDWATER.**

 

8.2                                 **EXCEPT AS EXPRESSLY SETFORTH IN SECTIONS 4.3, 8.3, 8.4 AND 8.5 BELOW, EACH PARTY (THE “*INDEMNIFYING PARTY*”) SHALL DEFEND,INDEMNIFY AND HOLD HARMLESS THE OTHER PARTY (THE “*INDEMNIFIED PARTY*”) FROM AND AGAINST ANY AND ALL LOSSES,COSTS, DAMAGES, INJURIES, LIABILITIES, CLAIMS, DEMANDS, AND PENALTIES(INCLUDING, BUT NOT LIMITED TO, REASONABLE ATTORNEYS’ FEES AND EXPENSES)SUSTAINED OR INCURRED BY THE INDEMNIFIED PARTY TO THE EXTENT (a) RESULTING FROMTHE NEGLIGENCE, GROSS NEGLIGENCE, OR WILLFUL MISCONDUCT OF THE INDEMNIFYINGPARTY OR (b) RELATING TO THE COMPRESSED AIR AND PRESSURIZED WATER DURING THEPERIOD THAT THE INDEMNIFYING PARTY HAS CONTROL AND POSSESSION OF SUCH INACCORDANCE WITH SECTION 8.1.**

 

8.3                                 **CONTINENTAL SHALL DEFEND,INDEMNIFY, AND HOLD HARMLESS HILAND FROM AND AGAINST ALL LOSSES, COSTS,DAMAGES, INJURIES, LIABILITIES, CLAIMS, DEMANDS, AND PENALTIES (INCLUDING, BUTNOT LIMITED TO, REASONABLE ATTORNEYS’ FEES AND EXPENSES) SUSTAINED OR INCURREDBY HILAND RELATING TO THE MANAGEMENT, MAINTENANCE, REPAIR, AND OPERATION OFEQUIPMENT FOR THE PROVISION OF SERVICES (INCLUDING, BUT NOT LIMITED TO, FAILURETO OBTAIN AND COMPLY WITH ALL NECESSARY PERMITS) BY CONTINENTAL OR ANY OTHERPERSON FOR CONTINENTAL PRIOR TO THE EFFECTIVE DATE.**

 

8.4                                 **EACH INDEMNIFYING PARTYSHALL DEFEND, INDEMNIFY, AND HOLD HARMLESS THE INDEMNIFIED PARTY FROM ANDAGAINST ANY AND ALL LOSSES, COSTS, DAMAGES, INJURIES, LIABILITIES, CLAIMS,DEMANDS, AND PENALTIES (INCLUDING, BUT NOT LIMITED TO, REASONABLE ATTORNEYS’FEES AND EXPENSES) FOR DAMAGE TO OR LOSS OF THE INDEMNIFYING PARTY’S PROPERTY,EXCEPT TO THE EXTENT CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OFTHE INDEMNIFIED PARTY.**

 

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8.5                                 **IN NO EVENT, WHETHER AS ARESULT OF BREACH OF CONTRACT, TORT LIABILITY (INCLUDING NEGLIGENCE AND GROSSNEGLIGENCE), STRICT LIABILITY, OR OTHERWISE, SHALL EITHER PARTY BE LIABLE TOTHE OTHER FOR SPECIAL, PUNITIVE, INCIDENTAL, INDIRECT, EXEMPLARY, ORCONSEQUENTIAL DAMAGES OF ANY NATURE WHATSOEVER, INCLUDING LOSS OF PROFITS. THEPARTIES ALSO INTEND AND AGREE THAT THE PROVISIONS OF THIS AGREEMENT WITHRESPECT TO INDEMNITIES AND LIMITATIONS SHALL CONTINUE IN FULL FORCE AND EFFECTNOTWITHSTANDING THE TERMINATION, SUSPENSION, CANCELLATION, OR EXPIRATION OFTHIS AGREEMENT. THE PROVISIONS OF THIS SECTION 8.5 SHALL NOT PRECLUDE THERECOVERY, WHERE APPLICABLE, OF LIQUIDATED DAMAGES.**

 

8.6                                 **IT IS THE PARTIES’ INTENTTHAT, EXCEPT AS PROVIDED IN SECTION 8.2, THE INDEMNITY OBLIGATIONS IN THISARTICLE VIII ARE WITHOUT REGARD TO THE CAUSES OF THE INDEMNIFIED CLAIMS,INCLUDING THE NEGLIGENCE (BUT WITH REGARD TO SECTION 8.4, NOT THE GROSSNEGLIGENCE OR WILLFUL MISCONDUCT) OF THE INDEMNIFIED PARTY, WHETHER SUCHNEGLIGENCE IS SOLE, JOINT, OR CONCURRENT, OR ACTIVE OR PASSIVE OR THE STRICTLIABILITY OF THE INDEMNIFIED PARTY.**

 

8.7                                 During the term of this Agreement and anyextension, Hiland shall maintain the insurances set forth on *Exhibit C*.

 

**ARTICLE IX**

**TERM**

 

The term of this Agreement shall be for a period of four yearscommencing on the Effective Date and ending at midnight Central time on the dayprior to the fourth anniversary of the Effective Date and thereafter thisAgreement shall automatically renew for additional one month terms unlessterminated by either Party by the giving of notice to the other Party of suchtermination no less than 15 days prior to the end of the then current term.

 

**ARTICLE X**

**DEFAULT**

 

10.1                           If Continental shall fail to pay Hiland anyamounts due under this Agreement within 10 days after notice from Hiland ofsuch failure, Hiland, in addition to any other rights and remedies it may have,shall have the right to terminate this Agreement.

 

10.2                           If Hiland fails to provide any Services, for20 consecutive days, and such failure is not the result of force majeure or ofContinental’s failure to provide the fuel and water as set forth in Section4.2, Continental may, upon 10 days notice to Hiland, terminate this Agreement.

 

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**ARTICLE XI**

**ASSIGNMENT**

 

This Agreement shall extend to and be binding upon the Parties hereto,their heirs, administrators, successors, and assigns. Neither Party shall beentitled to assign in whole or in part any of its rights and obligations underthis Agreement without the prior written consent of the other party.Notwithstanding such consent, no such transfer of the interest of one Partyhereunder, wholly or partially, shall affect or bind the other Party until ithas been furnished, at the address specified in Article XII below, with (a) acopy of the original documentation of such transfer or succession and (b) anacknowledgement and acceptance of the terms of this Agreement in a formreasonably acceptable to the non-assigning Party by the assignee of suchinterest.

 

**ARTICLE XII**

**ADDRESS**

 

12.1                           All notices or other communications betweenthe Parties given under or in relation to this Agreement shall be deliveredphysically or by facsimile to the respective parties at the following addressesor facsimile numbers:

 
| **Continental Resources, Inc.** |
|---------------------------------|
| P.O.  Box 1032                  |
| Enid,  Oklahoma 73702           |
| Attn:  General Counsel          |
| Phone:  (580) 548-5137          |
| Facsimile:  (580) 242-4703      |
|                            |
| **Hiland Partners, LP**         |
| P.O.  Box 5122                  |
| Enid,  Oklahoma 73702           |
| Attn:  Randy Moeder             |
| Phone:  (580) 234-0473          |
| Facsimile:  (580) 548-5188      |

 

12.2                           Any notice or other communication shall beeffective upon actual receipt if received during the recipient’s normalbusiness hours, or at the beginning of the next Business Day after receipt ifnot received during the recipient’s normal business hours.

 

12.3                           Either Party may change its address fornotice purposes by written notice to that effect delivered to the other Partyin accordance with this Article.

 

**ARTICLE XIII**

**NON-WAIVER**

 

The failure of either Party at any time to exercise any right or torequire performance by the other Party of any provision hereof shall in no wayaffect the right of such Party thereafter to enforce the same, nor shall thewaiver by either Party hereto of any breach of any provision

 

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hereof by the other Party be a waiver of any otherbreach of such provision, or as a waiver of the provision itself.

 

**ARTICLE XIV**

**MERGER**

 

This Agreement terminates and supersedes any prior agreementspertaining to equipment or services related to the compression of air or waterbetween the Parties hereto or their successors-in-interest effective as of theEffective Date (each a “***PriorAgreement***”). This Agreement does not release or discharge anyobligation or debt pertaining to any Prior Agreement (including, but notlimited to, any equipment leases) which arose prior to the Effective Date.

 

**ARTICLE XV**

**GOVERNING LAW, VENUE**

 

15.1                           This Agreement shall be governed by and construedand enforced in accordance with the laws of the State of Oklahoma, except forthe conflicts of laws provisions thereof which would refer resolution of anydispute to the laws of another jurisdiction.

 

15.2                           Each Party irrevocably and unconditionallysubmits, for itself and its property to the nonexclusive jurisdiction of thecourts of the State of Oklahoma sitting in Garfield County, Enid, Oklahoma, andof the United States District Court sitting in Western District of Oklahoma,Oklahoma City, Oklahoma, in any action or proceeding arising out of or relatingto this Agreement or for recognition or enforcement of any judgment, and eachParty hereto irrevocably and unconditionally agrees that all claims in respectof any such action or proceeding may be heard and determined in such OklahomaState Court or, to the fullest extent permitted by applicable law, in suchFederal Court. Each Party agrees that a final judgment in any such action orproceeding shall be conclusive and may be enforced in other jurisdictions bysuit on the judgment or in any other manner provided by law.

 

15.3                           Each Party irrevocably and unconditionallywaives, to the fullest extent permitted by applicable law, any objection thatit may now or hereafter have to the laying of venue of any action or proceedingarising out of or related to this Agreement in any court referred to in Section15.2 above. Each Party hereby irrevocably waives, to the fullest extentpermitted by applicable law, the defense of an inconvenient forum to the maintenanceof such action or proceeding in any such court.

 

**ARTICLE XVI**

**MUTUAL DRAFTSMANSHIP**

 

This Agreement was prepared jointly by the Parties hereto, and not byeither to the exclusion of the other.

 

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**ARTICLE XVII**

**MISCELLANEOUS**

 

17.1                           *Entire Agreement*. This Agreement constitutes the entireagreement between the Parties covering the subject matter hereof, and there areno other agreements, modifications, conditions, or understanding, written ororal, expressed or implied, pertaining to the subject matter hereof which arenot contained herein. Provided however, if there is any conflict between aprovision in the body of this Agreement and any Exhibit thereto, the provisionscontained in the body of this Agreement shall govern.

 

17.2                           *Headings and Subheadings*. The headings and subheadings contained inthis Agreement are used solely for convenience and do not constitute a part ofthe Agreement between the Parties hereto nor should they be used to aid in anymanner in construing this Agreement.

 

17.3                           *Rights Enforceable*. The provisions of this Agreement shall notimpart rights enforceable by any person, entity, or organization not a Partyhereto or not a successor or assignee of a Party to this Agreement.

 

17.4                           *Amendments*. All amendments and modifications to thisAgreement shall be in writing and shall be executed by duly authorizedrepresentatives of both Parties.

 

17.5                           *Disputes*. If any dispute or difference shall arisebetween the Parties out of or relating to this Agreement or a breach hereof,including any dispute or difference arising in connection with the existence ortermination of this Agreement (each a “***Dispute***”), the Parties shall attempt toresolve the same through referral to senior management of each Party. In theevent such Dispute is not resolved within 30 days after referral to the seniormanagement of each Party, the Parties may agree to mediation of the Dispute ina mutually acceptable manner, including, but not limited to selection of athird party mediator and establishment of the period of time for suchmediation. If the Dispute is not resolved by such mediation, either Party mayseek to resolve the Dispute in any lawful manner.

 

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IN WITNESS WHEREOF, this Agreement may be executed in any number ofcounterparts, each of which shall be considered an original.

 

 
| ** ** | **CONTINENTAL RESOURCES, INC.** |
|------------|---------------------------------|
|       |                            |
|       |                            |
|       | By:                             | /s/ G. B. SMITH |   |
|       |                            | G. B. Smith |
|       |                            | Sr. Vice President Drilling and Production |
|       |                            |
|       |                            |
| ** ** | **HILAND PARTNERS, LP**         |
| ** ** | ** **                      |
|       | By:                             | Hiland Partners, GP, LLC, |
|       |                            | its general partner |
|       |                            |
|       |                            |
|       | By:                             | /s/ RANDY MOEDER |   |
|       |                            | Randy Moeder |
|       |                            | Chief Executive Officer and President |

 

*[Signature Page to the Compression Services Agreement]*

 

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**EXHIBIT A**DELIVERY POINTS

 

| ** **                                                    | ** ** | **Location**                                                                                                                                            |
|---------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|
| Cedar Hills Air  Injection (“***Cedar Air***”)      |       | The five-4” main  discharge block valves immediately downstream of the compressors, located  inside the Hadley Compression Station Building        |
|                                                          |       |                                                                                                                                                    |
| Cedar Hills Water  Injection (“***Cedar  Water***”) |       | The 8” “2500 series”  flange located on the discharge line immediately downstream of the pumps  inside the Bradac Water Station Building |
|                                                          |       |                                                                                                                                                    |
| Horse Creek Compressor  Station (“***HC Air***”)    |       | The 4” high pressure  valve located on the North side of the Horse Creek Compression Station  Building                                             |

 

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**EXHIBIT B**OPERATING FEE

 
| **Commodity**                        | ** ** | **Fee per Month** | ** ** |
|--------------------------------------|------------|-------------------|------------|
| Cedar Air — Cedar Hills North   |       | $                 | 293,162.36 |   |
| Cedar Water — Cedar Hills North |       | $                 | 45,376.43  |   |
| HC Air — SMPHU                  |       | $                 | 63,085.42  |   |

 

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**EXHIBIT C**INSURANCE

 
| **Location**                        | ** ** | **Occupancy**                                  | ** ** | **Description of  Property** | ** ** | **Limit** | ** **     | **Insured Value** | ** ** |
|-------------------------------------|------------|------------------------------------------------|------------|------------------------------|------------|-----------|----------------|-------------------|------------|
|                                |       |                                           |       |                         |       |      |           |              |       |
| Cedar  Air—Cedar Hills North   |       |                                           |       |                         |       |      |           | $                 | 13,820,500 |   |
|                                |       | Five  Compressors—Ariel JGC/4 with Cooler |       | Compressor                   |       | $         | 5,453,000      |              |       |   |
|                                |       |                                           |       |                         |       |      |           |              |       |
|                                |       | Five  Compressors—Joy/Cooper TAE 100MR2   |       | Compressor                   |       | $         | 4,487,500      |              |       |   |
|                                |       |                                           |       |                         |       |      |           |              |       |
|                                |       | Motor  Control Center                          |       |                         |       | $         | 1,989,000      |              |       |   |
|                                |       |                                           |       |                         |       |      |           |              |       |
|                                |       | 115 KV/7.2  KV Substation                      |       | Substation                   |       | $         | 1,891,000      |              |       |   |
|                                |       |                                           |       |                         |       |      |           |              |       |
| Cedar  Water—Cedar Hills North |       |                                           |       |                         |       |      |           | $                 | 979,000    |   |
|                                |       | Compressor  Building                           |       | Building                     |       | $         | 274,000        |              |       |   |
|                                |       |                                           |       |                         |       |      |           |              |       |
|                                |       | Injection  Pumps                               |       | Pumps                        |       | $         | 525,000        |              |       |   |
|                                |       |                                           |       |                         |       |      |           |              |       |
|                                |       | Water  Injection Building                      |       | Building                     |       | $         | 180,000        |              |       |   |
|                                |       |                                           |       |                         |       |      |           |              |       |
| HC Air—SMPHU                   |       |                                           |       |                         |       |      |           | $                 | 2,000,000  |   |
|                                |       | Superior  Clean Burn II Model 16SGTB, 2650 HP  |       | Compressor                   |       | $         | 950,000        |              |       |   |
|                                |       |                                           |       |                         |       |      |           |              |       |
|                                |       | Superior  Clean Burn II Model 16SGTB, 2650 HP  |       | Compressor                   |       | $         | 950,000        |              |       |   |
|                                |       |                                           |       |                         |       |      |           |              |       |
|                                |       | Compressor  Building                           |       | Building                     |       | $         | 100,000        |              |       |   |
|                                |       |                                           |       |                         |       |      |           |              |       |
| **Total  Compression Assets**       | ** ** | ** **                                     | ** ** | ** **                   | ** ** | **$**     | **16,799,500** | ** **        |
|                                     |            |                                                |            |                              |            |           |                |                   |            |  |  |  |  |

 

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