Exhibit 10.1


SPECIFIC TERMS IN THIS EXHIBIT HAVE
BEEN REDACTED BECAUSE CONFIDENTIAL

TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL

HAS BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,

AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH

TWO ASTERISKS (**).


 















 


 


 


CONSTRUCTION,
OPERATION AND

GAS GATHERING AGREEMENT


 


Entered into by and between


Newfield
Exploration Mid-Continent Inc.,

as
Producer


and


MarkWest Western
Oklahoma Gas Company, L.L.C.,

as
Gatherer


 


 


Effective
as of the 21st day of September, 2006.


 



 5














 


 


TABLE
OF CONTENTS


	
  

  	
   

  	
   

  	
   

  	
  Page

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I.

  	
   

  	
  Definitions

  	
   

  	
  2

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II.

  	
   

  	
  Scope of Agreement

  	
   

  	
  6

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III.

  	
   

  	
  Services Provided by
  Gatherer

  	
   

  	
  7

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IV.

  	
   

  	
  Construction of the
  System and Acquisition and Sale of Producer’s System

  	
   

  	
  8

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  V.

  	
   

  	
  Receipt and Delivery of
  Gas

  	
   

  	
  11

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VI.

  	
   

  	
  Operational Imbalance
  and Cash Balancing

  	
   

  	
  14

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VII.

  	
   

  	
  Receipt Pressures and
  Remedies

  	
   

  	
  16

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VIII.

  	
   

  	
  Measurement

  	
   

  	
  19

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IX.

  	
   

  	
  Gas Quality and
  Specifications

  	
   

  	
  20

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  X.

  	
   

  	
  Gathering, Compression,
  Treating Fees, Line Loss and Fuel Charge

  	
   

  	
  22

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XI.

  	
   

  	
  Billing, Payment and
  Reporting

  	
   

  	
  23

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XII.

  	
   

  	
  Taxes

  	
   

  	
  24

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XIII.

  	
   

  	
  Control, Possession,
  Title and Additional Indemnification

  	
   

  	
  25

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XIV.

  	
   

  	
  Acquisitions

  	
   

  	
  26

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XV.

  	
   

  	
  Representations and
  Warranties

  	
   

  	
  28

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  




 i
 






 



 


	
  XVI.

  	
   

  	
  Force Majeure

  	
   

  	
  29

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XVII.

  	
   

  	
  Term

  	
   

  	
  30

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XVIII.

  	
   

  	
  Assignments and Sale of
  Gatherer’s System

  	
   

  	
  31

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XIX.

  	
   

  	
  Notices

  	
   

  	
  32

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XX.

  	
   

  	
  Guaranty by Gatherer’s
  Parent Entity

  	
   

  	
  34

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXI.

  	
   

  	
  Miscellaneous

  	
   

  	
  34

  	
   

  



 



 ii














 


 


CONSTRUCTION,
OPERATION AND GAS GATHERING AGREEMENT


THIS CONSTRUCTION, OPERATION AND GAS GATHERING AGREEMENT (this “Agreement”) is made and
entered into as of this 21st day of September 2006 (the “Effective Date”), by
and between Newfield Exploration Mid-Continent Inc., hereinafter referred to as
“Producer”, and MarkWest Western Oklahoma Gas Company, L.L.C.  hereinafter referred to as “Gatherer.” (Producer and Gatherer may at times be referred to herein as a “Party”
or, collectively, as “Parties”).


W I T N E S S E T H


WHEREAS,
Producer owns or controls certain Gas to be produced and saved from the wells,
lands, leaseholds and other sources within the Woodford Shale Project Area (as
defined below);


WHEREAS,
Producer owns, operates, and maintains certain gas gathering facilities in the Woodford Shale Project
Area;


WHEREAS,
Producer desires Gatherer to acquire and take over the expansion,
operation, maintenance, and control of Producer’s System;


WHEREAS,
Producer desires that Gatherer construct, and Gatherer intends to cause to be constructed, gas gathering facilities to receive and gather Producer’s Gas at the Receipt Points and
deliver Producer’s Gas to Producer or for Producer’s account at the Delivery
Points under the terms and conditions herein.


WHEREAS, Gatherer intends to acquire Producer’s System and to further
construct and install additional gas gathering, compression, Treating,
dehydration and related facilities, in Woodford Shale Project Area ; and


NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, Gatherer and Producer hereby agree as follows:


 


Article I.

DEFINITIONS


Except as otherwise provided, the following terms, when capitalized,
whether in the singular, plural or possessive, shall have the meaning set forth
below:


1.1           “Actual Costs” shall
mean the costs and expenses recorded in a Party’s records, in accordance with
GAAP as defined below.


1.2           “BTU” shall mean
British Thermal Unit, which is the quantity of heat required to raise the
temperature of one (1) pound avoirdupois of pure water from fifty-eight and
five tenths degrees Fahrenheit (58.5°F) to fifty-nine and five tenths degrees
Fahrenheit (59.5°F) at 



 2
 






 



a
pressure of fourteen and six hundred and ninety-six thousandths pounds per
square inch absolute (14.696 psia).


1.3           “Business Day”
shall mean the days of a week excluding weekends, federal holidays and any
additional days on which federal banks are not open for business.


1.4           “Cash Flow” shall mean the sum of the
monthly revenues from the System less all Operating Expenses attributable to
the System recorded in accordance with GAAP.


1.5           “Commitment Area” shall mean the Woodford
Shale Project Area (as defined below).


1.6           “Day” shall mean a period of
twenty-four (24) consecutive hours which shall commence for operational issues
at 9:00 o’clock a.m. Central Standard Time on one calendar day and end at 9:00
o’clock a.m. Central Standard Time on the following calendar day; and, for any
other issues (including, but not limited to, non-operational contract issues),
such twenty-four (24) consecutive hour period shall commence at 12:01 a.m.
Central Standard Time on one calendar day and end at 12:01 a.m. Central
Standard Time on the following calendar day.


1.7           “Deemed Fuel,” “Deemed System Loss,”
and “Measured Treating Fuel and Loss” shall have the meanings set forth in
Article X and/or in Exhibit G herein.


1.8            “Delivery Points” shall mean the outlet
flange of the measurement facilities at the points of interconnection between
(A) Producer’s System and/or Gatherer’s System (some components of which are presently Producer’s System but
will ultimately  become part of Gatherer’s System) and (B) the existing interstate and
intrastate pipelines within the Commitment Area of the following entities and
any of their related or affiliated persons or entities: **. The term “Delivery
Points” shall have the same meaning with respect to any additional Pipeline
Carriers, and shall apply to any other future delivery points on the System
that Producer may designate within the Commitment Area.


1.9           “Fees” refers collectively to the “Gathering Fee,” “Compression Fee,” and “Treating Fee.”
The terms “Gathering Fee,” “Compression
Fee,” and “Treating Fee” shall have the meanings set forth in Article X and in Exhibit G.


1.10         “GAAP” shall mean U.S. generally
accepted accounting principles.


1.11         “Gas” includes gas well gas produced
from wells classified as gas wells by any governmental authority having
jurisdiction, casinghead gas produced from oil wells so classified, and flash
gas vaporized from crude oil and condensate therefrom after production.


1.12         “BTUs”, “Heating Content” or “Heating
Value” shall mean the gross ideal heating value of and the number of BTUs
measured in the Gas in accordance with GPA Standards 2145 & 2172 at Standard
Base Conditions.


1.13          “Inferior
Liquids” shall mean mixed crude oil, slop oil, salt water, nuisance
liquids, and other liquids that condense in the System and are recovered by Gatherer from its System.



 3
 






 



1.14         Monthly Average Pressure (“MAP”) shall have
the meaning set forth in Section 7.1 of this Agreement.


1.15         “MSCF” or “mscf” shall mean one thousand
(1,000) Standard Cubic Feet of Gas at Standard Base Conditions.


1.16         “MMBTU” or “mmbtu” shall mean one
million BTU (1,000,000 BTUs).


1.17         “Month” shall mean a calendar month.


1.18         “Net Book Value”
shall mean the depreciated book value of the assets comprising the System as
reflected in the books and records of the company that owns the System in
accordance with GAAP.  The depreciation
method used for calculating Net Book Value shall be twenty (20) years straight
line with zero percent salvage value.


1.19         “Operating Expenses”
shall mean normal direct operating expenses of the System, which term expressly
excludes any payments imposed on Gatherer as a result of non-performance or
delayed performance under this Agreement.


1.20         “Pipeline Carriers” means the following
pipelines receiving Producer’s Gas at the Delivery Points: the interstate and
intrastate pipelines of **, and any other interstate or intrastate pipeline
receiving Producer’s Gas at any Delivery Point.


1.21         “Processing” shall mean the conversion
of gaseous hydrocarbons from a natural gas stream into liquefied form (“Natural
Gas Liquids” or “NGLs”), and/or the removal of NGLs from the gas, through refrigeration,
absorption, adsorption, chemical means or other industry accepted
processes.  Processing may be invoked for
the purposes of reducing Heating Value of the natural gas stream for purposes
of meeting pipeline specifications, or for economic benefit.  Processing does not include the recovery of
NGLs through mechanical separation, filtering or coalescing.


1.22         “Producer’s Gas” shall include all Gas
owned or controlled by Producer, or its wholly-owned or controlled
subsidiaries, which is produced from Well(s) in which Producer is the
Operator.  “Producer’s Gas” shall not
include gas that is subject to pre-existing commitments as listed on Exhibit E
or addressed herein.


1.23           “Producer’s
System” shall mean those certain existing or later constructed facilities
located within the Woodford Shale Project Area (as defined below) for the
delivery, compression, gathering,
measurement, Treating, and dehydration of Producer’s Gas during the term of
this Agreement, and other related facilities, all as may be further expanded,
constructed or added during the transitional period before Gatherer fully acquires and operates the entire
System, as provided for in the subsequent provisions of this Agreement.


1.24         “Receipt Points”
shall be the points located within the Commitment Area where Producer elects in
its sole and reasonable discretion to deliver Producer’s Gas to Gatherer and where Gatherer may receive Producer’s Gas in accordance
with the terms of this Agreement.  At
Producer’s election, a Receipt Point for particular volumes of Producer’s Gas
may be the 



 4
 






 



interconnection
of Producer’s central production facilities with the System or may be at the
interconnection with the System of Producer’s individual well separation
equipment located downstream of Producer’s Wells.


1.25         “Section of Land”
shall mean, and be comprised of, the lands within the geographical area
designated by state governmental authority as being a “section” for purposes of
describing real property.


1.26         “Standard Base Conditions” shall mean a
pressure of fourteen and sixty five hundredths pounds per square inch absolute
(14.65 psia) at a temperature of sixty degrees Fahrenheit (60°F).


1.27         “Standard Cubic Foot”
shall mean the volume of gas contained in one cubic foot of space at Standard
Base Conditions.


1.28         “System” shall mean all delivery,
compression, gathering,
measurement, Treating, Processing and dehydration facilities, and other related
facilities constructed, acquired or used by Gatherer to fulfill its obligations under this
Agreement with respect to Producer’s Gas. 
“System” shall also be construed to include all of Gatherer’s delivery,
compression, gathering, measurement, Treating, Processing, dehydration
facilities, and other related facilities constructed by or used by Gatherer in
connection with Gas received by Gatherer from other parties on pipelines
contiguously connected to pipelines used by Gatherer in connection with
Producer’s Gas.   Also for the purposes
of Article XIV, “System” shall also be construed to include all of Gatherer’s
associated and related gas gathering, gas purchase, gathering, compressor
lease, equipment lease, gas sales, rights-of-way, easements, surface use lease,
and real property agreements and/or contracts as well as all permits, imbalance
positions, and working capital adjustments used in connection with the
operation of the physical assets of the System.


1.29         “Treating” or “Treat” shall mean the
removal of unwanted components
from a natural gas stream, including, but not limited to, water,
Hydrogen Sulfide (“H2S”),
Carbon Dioxide (“CO2”),
and/or Nitrogen (“N2”) by utilizing industry accepted processes
including, but not limited to, mechanical separation, chemical reaction,
adsorption and absorption.


1.30         “Well” shall mean any well productive
of Gas, from any formations, which is now or hereafter completed within the
Commitment Area and in which Producer owns an interest.  The commitments
and obligations of Gatherer
under this Agreement shall extend to and include all of Producer’s Gas from
such a Well.


1.31         “Woodford Shale
Project Area” means all of that area of Atoka, Coal, Hughes and Pittsburg
Counties, Oklahoma, shown on Exhibit A. 
The Woodford Shale Project Area, as such term is used in this Agreement,
includes all lands shown in Exhibit A, whether inside or outside the bold-lined
or bracketed areas shown on such Exhibit A. 
The segments shown on Exhibit A relate to the development requirements
set forth on Exhibit B and any other provisions of this Agreement which reference
those segments.



 5
 






 



Article II.

SCOPE OF AGREEMENT


2.1           Gatherer
hereby agrees, at its sole cost and expense, to design, construct and acquire
(to the extent not acquired as part of Producer’s System), and to maintain and
operate (or cause others to construct, maintain and operate) all gathering
pipelines, compression, dehydration and Treating equipment and related
facilities required to enable Gatherer
to fulfill and perform its obligations under this Agreement including, but not
limited to, (a) Gatherer’s
receipt of Producer’s Gas at the Receipt Points within the Commitment Area, (b)
the delivery of a thermally equivalent quantity of Producer’s Gas less only
Deemed Fuel, Deemed System Loss and Measured Treating Fuel and Loss in
accordance with the terms of this Agreement and in accordance with the
requirements of the Pipeline Carriers, and (c) the Treating of Producer’s Gas,
if such Gas is treated in connection with this Agreement.


2.2           Gatherer
shall have the sole responsibility for the construction, maintenance, and
operation of the System consistent with performing its obligations under this
Agreement.  Gatherer
will extend the System, and may add to or remove components from the System,
and operate the System in the manner Gatherer
determines to be best, so long as such operations are consistent with both Gatherer’s
performance of its obligations under this Agreement and all applicable laws,
rules and regulations of governmental entities. 
Gatherer shall operate
the System or cause it to be operated, as the System may exist from time to time,
in a manner consistent with general industry practice, but shall not be
prevented thereby from being innovative or achieving cost efficiencies as it
may deem necessary or desirable, so long as such actions are consistent with
both Gatherer’s
performance of its obligations under this Agreement and all applicable laws,
rules and regulations of governmental entities.


2.3           Prior to the completion of all or
portions of the System by Gatherer
such that, following the purchase of Producer’s System, Gatherer
can gather,
compress, dehydrate, and if required, Treat Producer’s Gas delivered into such
completed portion(s) of the System and connect such completed portions of the
System to portions of Producer’s System, Producer may at its option construct,
maintain, and operate (or may cause others to construct, maintain, and operate)
pipelines and related facilities on Producer’s System to enable Producer’s Gas
from the Wells to be delivered to pipelines owned and controlled by the
Pipeline Carriers.  It is expressly understood
and agreed that Producer has no obligation to construct any additional
facilities for the enlargement of Producer’s System, nor does Producer have any
obligation to drill any Wells and/or connect any future Wells to Producer’s
System prior to incorporation into Completed Segments (as defined in 4.2
below), of Gatherer’s System;
rather, all of those actions shall be left to the sole discretion of
Producer.  However, prior to the
completion of Gatherer’s
System, Producer shall continue Producer’s operation and maintenance of
Producer’s System, including Producer’s existing Treating facilities.


2.4           Producer and Gatherer
understand and agree that the design and operation of Producer’s System by
Producer, and the design and operation of Gatherer’s
System by Gatherer shall be
performed in such a manner as to allow Producer to meet its delivery and other
commitments to Gatherer
in accordance with the terms of this Agreement.


2.5          Subject to those existing dedications
and contractual obligations owing to third parties as described in Exhibit E,
which shall take priority over the provisions of this Section 2.5, and subject
to the subsequent provisions of this Agreement which provide for the future
termination of, or release of Wells from, this Agreement, Producer hereby
commits all of 



 6
 






 



Producer’s Gas
to this Agreement.  Producer’s oil and
gas leases within the Commitment Area, whether now or hereafter acquired, shall
be subject to the terms and obligations of this Agreement which terms shall run
with the land, subject to Section 14.4.  Gatherer
may record a recording memorandum of this Agreement in the real property
records in the offices of the County Clerks for the applicable Counties where
Producer’s Gas leasehold interests or Wells within the Commitment Area and any
parts of the System are located, provided that such recording memorandum
shall only disclose information that Producer has previously approved for
inclusion in the recording memorandum.  Upon written request from Gatherer, but no
more often than once each calendar year, Producer shall
advise Gatherer of
after-acquired leases and consent to further supplements to the recording
memorandum be filed against those leases. 
Notwithstanding the preceding provisions of this Section 2.5 and any
other terms and provisions of this Agreement that might appear to be to the
contrary, it is expressly understood and agreed that, as to additional leases,
Wells and other assets that may be acquired by Producer after the effective
date of this Agreement, such assets shall not be subject to this Agreement to
the extent that  Producer acquires such
assets subject to any then-existing contractual or other obligations or
encumbrances that are inconsistent with the obligations of this Agreement.


 


Article III.

SERVICES PROVIDED BY GATHERER


3.1           Gatherer shall,
at Gatherer’s
sole cost and expense, acquire and/or
install all facilities that are needed or required to perform Gatherer’s obligations
under this Agreement, including, but not limited to, Gatherer’s
receipt of all of Producer’s Gas delivered by Producer at the Receipt Points in
accordance with the terms of this Agreement and the gathering
and compression of all of Producer’s Gas to a pressure such that Producer’s Gas
can be delivered at the Delivery Points into the pipelines owned and/or
controlled by the Pipeline Carriers.  In order
to maximize
the value
of Producer’s
Gas, Gatherer and Producer shall continue
to explore opportunities to participate in or otherwise support pipeline
expansions by Pipeline Carriers and
other pipeline
companies. Producer and Gatherer will discuss
the options to mutually determine which and to what extent, if any, pipeline
expansions Producer and Gatherer
may participate in.  It is expressly
agreed that Gatherer is obligated under this Agreement to provide at Gatherer’s
sole cost ** Delivery Points, with one (1) such Delivery Point being
established for each of the ** Pipeline Carriers which are specifically named
in the above definition of “Pipeline Carriers,” at locations to be reasonably designated
by Producer on each of those pipelines. 
At such time as Gatherer acquires Producer’s System or segments thereof,
Gatherer shall maintain all then existing Delivery Points on such acquired
portions of the System, and such existing Delivery Points and the **, shall
satisfy the foregoing obligation of Gatherer to provide Delivery Points to the
Pipeline Carriers.  The Parties agree
that Gatherer
shall provide up to ** Delivery Points on currently
existing and/or future pipelines within the
Commitment Area, at locations within the Commitment Area to be reasonably
designated by Producer on such pipelines, at Gatherer’s
sole cost and expense, but that any additional Delivery Points beyond **
referred to above will be at Producer’s cost and expense.  The Parties understand that if any additional
Delivery Points beyond ** referred to above require that Producer’s Gas be
compressed to in excess of a Monthly average of 1,100 psig to meet the Pipeline
Carrier’s pressure requirements at the Delivery Points, then Producer’s Gas
actually delivered to those Delivery Points will be subject to Compression Fees
and Deemed Fuel during such Month for one additional stage of compression.



 7
 






 



3.2           Gatherer
shall install all facilities needed or required to dehydrate Producer’s Gas as
necessary to cause Producer’s Gas to meet the water content specifications of
the pipelines owned and/or controlled by the Pipeline Carriers.


3.3           Gatherer
shall install all CO2 Treating facilities needed or required to
remove CO2 such that the CO2 content in Producer’s Gas at the Delivery
Points shall meet the specifications of the pipelines owned and/or controlled
by the Pipeline Carriers, provided that the CO2
content in Producer’s Gas delivered to
the Receipt Point(s) shall not exceed 10%. 
Gatherer shall endeavor
to maintain the average CO2 content
in Producer’s Gas delivered to each Pipeline Carrier at levels below the
specifications required by the Pipeline Carriers by blending Producer’s Gas
with a high CO2 content
with Gas with a low CO2 content
per the provisions of Section 9.3.


3.4           It is expressly agreed that Gatherer
will have no duty under this Agreement to Treat Producer’s Gas for the purpose
of removing H2S or N2.


 


Article IV.

CONSTRUCTION OF THE SYSTEM AND ACQUISITION

AND SALE OF PRODUCER’S SYSTEM


4.1           Recognizing that time is of the
essence with regard to the performance required under this Agreement, Gatherer
shall construct, or cause to be constructed, in accordance with the timing,
prioritization and performance schedule that is included as a part of Exhibit B, at its sole risk, cost,
and expense, such additions and/or extensions of the System (including all
associated Receipt Points) as are necessary and adequate to receive Producer’s
Gas for the services provided for under this Agreement.  **  Exhibit A shows the four (4)
segments into which the System project has been divided for purposes of
constructing the System in phases.  **  Additionally, Producer may at its option
construct, or cause to be constructed at its sole risk, cost and expense,
certain additional facilities that are useful for the delivery of Producer’s
Gas into the System at certain Receipt Points.  Producer and Gatherer
agree that Gatherer shall
construct and complete the System in segments and that Producer may at its
option expand, operate and maintain Producer’s System for the gathering,
compression and treatment of Producer’s Gas prior to the completion of the
System by Gatherer.


4.2           When Gatherer
has (i) completed a segment of the System (“Completed Segment”), and (ii)
connected the Completed Segment to Producer’s System, with the result that Gatherer
can gather,
compress, dehydrate and, if required, Treat Producer’s Gas delivered into such
Completed Segment, then Gatherer
shall immediately acquire and assume the operation, maintenance and control of
the applicable portion of Producer’s System that Gatherer
has connected to the Completed Segment, and such portion of Producer’s System
shall thereafter be included in the definition of Completed Segment and all of
the terms of this Agreement shall be applicable for such Completed
Segment.  For all Wells connected at the
time of acquisition to the section of Producer’s System being acquired pursuant
to the foregoing 



 8
 






 



provisions, the Receipt Points for such
Wells shall be considered to be located in accordance with the provisions of
Section 1.24, above, which define “Receipt Points.”


4.3           The parties
expressly agree that the categories of assets, rights and interests referred to
on Exhibit B-1 to this Agreement, whether now owned by Producer or hereafter
acquired by Producer after the execution of this Agreement, are excluded from
the meaning of the term “Producer’s System,” and Gatherer shall have no right
under this Agreement, under any circumstances, to acquire any portion of those
assets, rights and interests.  The
parties expressly understand and agree that, notwithstanding any other
provision of this Agreement that may appear to be to the contrary in any
respect, any rights Gatherer
has under this Agreement to acquire all or portions of Producer’s System are
expressly limited to facilities and assets of Producer that are physically
connected to the System between the Receipt Points and the Delivery
Points.  Gatherer
shall have no right to acquire any facilities or other assets of Producer
located upstream of the Receipt Points.


4.4           The
sale by Producer and the acquisition by Gatherer
of all or any part of Producer’s System under this Article IV shall occur on an
“as-is, where-is” basis with no express or implied representations or
warranties provided by Producer to Gatherer,
except that Producer agrees to transfer Producer’s System, or applicable
portions thereof, free and clear of any mortgages,
mechanics’ liens, tax liens and other forms of security interests or financial
encumbrances or past due payments of any kind created by, through and under
Producer but not otherwise (and Gatherer
shall not pay Producer any purchase price until being reasonably assured that
there are no such encumbrances), and shall be deemed to represent and warrant
to Gatherer
that Producer has good and clear title to the personal property associated with
the acquired portion of Producer’s System. 
The acquisition shall be consummated by special warranty assignment or
transfer of necessary or relevant equipment leases or other facility leases,
permits, rights of way, easements, surface use leases and real property
interests, to the extent that both (a) such items are assignable by Producer to
Gatherer
without unreasonable expense, and with a representation that to the best
of Producer’s knowledge, such leases,
permits, rights of way and easements are valid and in full force and effect,
and Producer’s operations are in material compliance with the same and (b)
Producer does not need to retain such items for the continued operations or
business activities of Producer. 
Producer will make reasonable efforts to obtain all governmental and
third party consents and approvals necessary to complete the transactions
contemplated by this Section.  If
Producer is unable to obtain any required consents, or the interests are not
assignable or transferable, or if Producer determines that such items are
required by Producer for the continued operations or business activities of
Producer, Producer shall, to the extent Producer may lawfully and validly do
so, “partially” grant to Gatherer
a non-exclusive right and license to use any such equipment leases and other
facility leases, permits, easements, surface use leases, rights of way and/or
real property interests associated with the acquired portion of Producer’s
System, the intent of the Parties being to provide Gatherer, to
the extent the same can be reasonably done,
with the same access and ability to utilize such items as if Producer had assigned
such items to Gatherer.
Producer shall further sign and deliver to Gatherer
a bill of sale conveying the equipment and personal property that comprise the
acquired portion of Producer’s System. 
The acquisition price for the acquired segment of Producer’s System
shall be **.  The Parties shall have a
period of 180 days after the acquisition of any portion of Producer’s System
within which to conduct post-closing accountings, in order to account for any
remaining sums to be paid by Gatherer to Producer as a result of such
acquisition.


 



 9














 


4.5           Producer
shall bring all facility leases or other related contracts that are acquired in
whole or in part by Gatherer
from Producer current in all payments and obligations due and owing as of the
date of assignment, and Gatherer
shall assume sole liability for all ongoing payments and obligations due and
owing after the date of Producer’s assignment and shall indemnify and hold
Producer harmless with respect to any future payments and obligations under
such assigned facility leases or other related contracts with respect to the
period after the date of transfer to Gatherer. 
Producer shall not be required to assign easements, rights-of-way,
leases or other related contracts to Gatherer, either whole or in part, if doing
so would incur liabilities unless Gatherer bears all costs and burdens
associated with such liabilities. Producer shall indemnify and hold Gatherer
harmless from and against any payments, liabilities and obligations arising or
accruing under such assigned facility leases or other related contracts with
respect to the period prior to the date of transfer to Gatherer,
or any obligations, liabilities, duties or damages related to the operations of
Producer’s System, prior to the date of transfer to Gatherer,
including any environmental liabilities. 
Gatherer shall indemnify and hold Producer harmless from and against any
payments, liabilities and obligations arising or accruing under such assigned
facility leases or other related contracts with respect to the period after the
date of transfer by Producer, or any obligations, liabilities, duties or
damages related to the operations of Producer’s System, after the date of
transfer to Gatherer, including any environmental liabilities.


4.6           The Parties agree that Producer has
entered into, or intends to enter into, 
contracts with certain manufacturers
of compression packages, as listed in Exhibit
F,
(“Compressor Contract”), under which Producer shall be obligated to receive and
lease certain compression packages. The Parties also agree and understand that
when Gatherer
purchases segments of Producer’s System as set forth in this Agreement, that
Producer may have received and installed one or more of the subject compression
packages associated with such Compressor Contract. At the time that Gatherer
purchases a segment of Producer’s system, Producer will assign, and Gatherer
will assume, the duties of the lessee under the leases and any other
obligations associated with such compression packages that are associated with
the segment of Producer’s System.  At the
time that Gatherer purchases the
final segment of Producer’s System, Producer shall assign to Gatherer and
Gatherer shall assume the Compressor Contract and
the rights and obligations associated with the Compressor Contract.  All compressors then being used and/or
remaining to be delivered under the terms of the Compressor Contract assigned
by Producer to Gatherer shall be used as part of the System to fulfill Gatherer’s
obligations under this Agreement.


4.7           Immediately following the receipt of
Producer’s Gas at the Receipt Points associated with the Completed Segment
(and, if applicable, after the acquisition of the associated portion of
Producer’s System by Gatherer),
all of the terms of this Agreement shall apply to the Completed Segment, except
that, in order for Gatherer
to evaluate the new System hydraulics and modify such hydraulics as necessary,
and in acknowledgement that Producer’s System may exceed the Receipt Point
pressure requirements under this Agreement, each Receipt Point which was part
of Producer’s System prior to connection to Gatherer’s
System, shall be allowed a period of one hundred twenty 



 10
 






 



(120)
days after such connection, before it shall be subject to the Receipt Point
pressure requirements of this Agreement, provided, however, that the Receipt
Point pressures shall not, even during such one hundred twenty (120) day
period, exceed the MAP that existed with respect to that Receipt Point during
the Month prior to connection to Gatherer’s
System.


 


Article V.

RECEIPT AND DELIVERY OF GAS


5.1           All of Producer’s Gas delivered under
this Agreement shall be delivered to Gatherer
at the Receipt Points and redelivered to Producer (or on behalf of Producer) at
the Delivery Points as closely as is practicable to uniform hourly and daily
rates of flow.


5.2           Producer shall deliver Producer’s Gas
to Gatherer
at the Receipt Points at a pressure sufficient to effect delivery into Gatherer’s
System, against the pressure prevailing therein from time to time; provided,
however, that subject to those items set forth in Section 7.8 referencing this
Agreement’s provisions allowing higher Receipt Point pressures for a temporary
period, Producer shall not be required to deliver Producer’s Gas at a pressure
greater than **.  Producer shall be
responsible for making timely arrangements for the further disposition of
Producer’s Gas at and from the Delivery Points.


5.3           The Heating Content of the gas
measured at the Receipt Points shall be determined on a water-saturated MMBTU
basis at Standard Base Conditions.


5.4           Gatherer shall redeliver on behalf of
Producer, to the Pipeline Carrier(s) designated by Producer at the Delivery
Point(s), a thermally equivalent quantity of Producer’s Gas equal to the
quantity received from Producer at the Receipt Points, less the Deemed Fuel,
Deemed System Loss, and Measured Treating Fuel and Loss, and if Producer’s Gas
is processed prior to delivery, less the actual fuel and shrinkage resulting
from the Processing of Producer’s Gas.   Gatherer
shall redeliver Producer’s Gas at each Delivery Point on a dry MMBTU basis at
Standard Base Conditions.


5.5           Producer’s Gas shall be given a
higher priority by Gatherer
than any other Gas delivered into the System. 
As such, and subject to applicable laws and regulations, Gatherer
shall gather
Gas owned by persons other than Producer only to the extent that excess gathering
and compression capacity exists within the System.  Gatherer
further agrees that, except to the extent it can do so without adversely
affecting the Fees and costs to be borne by Producer and/or the ability of Gatherer
to receive and/or deliver Producer’s Gas, it will not accept from any third
parties Gas that does not meet the quality specifications of the Pipeline
Carriers to which Producer’s Gas is to be redelivered by Gatherer,
it being the intention that Gatherer
retain to the maximum extent as is reasonable, its ability to blend with other
conforming Gas in its lines any of Producer’s Gas that does not meet the
quality specifications of the Pipeline Carriers to which Producer’s Gas is
redelivered.


5.6           Gatherer
shall, on no less frequently than a monthly basis, measure the quantity and
Heating Value of Producer’s Gas received at each Receipt Point and shall
redeliver a thermally equivalent quantity of Gas, less the Deemed Fuel, Deemed
System Loss and Measured Treating Fuel and Loss as set forth in Article X and
Exhibit G.  If Producer’s Gas is
processed prior to delivery, an adjustment shall be made based on the
Processing arrangements such that any additional actual volume and heating
value (MMBTU) reductions 



 11
 






 



that result from such Processing shall
further reduce the MMBTUs that Gatherer
is obligated to redeliver for Producer’s account at the Delivery Points.


5.7           Producer shall provide estimates to Gatherer
as to the expected maximum flow and timing of such flow at each Receipt Point
to assist Gatherer in selecting
the proper pipeline size required for the connection of the Receipt Point;
provided, however, that each set of such information provided by Producer is
only an estimate, and Producer shall have no liability to Gatherer
for any differences between the estimates provided by Producer in good faith,
and the actual maximum flow and timing of such flow at the Receipt Points.


5.8           Gatherer
shall construct such pipelines, measurement equipment and other facilities as
may be reasonably needed in order for Gatherer
to promptly receive all of Producer’s Gas from Well(s) within the Commitment
Area at the Receipt Points after such Wells have been completed and are ready
to flow Gas to a Completed Segment.    With
respect to any Completed Segment
of the System, Producer shall provide Gatherer
with prior written notice, as set forth in Exhibit D, advising Gatherer
of the location of the Well and the location of the Receipt Point designated by
Producer (a “Well Notice”).]  It is
expressly understood and agreed that all risks and expenses associated with all
aspects of the timely construction of the pipelines and other facilities,
including but not limited to the procurement of the rights-of-way needed or
useful in connection therewith, shall be the sole risk and expense of Gatherer.


5.9           If Gatherer
has not completed the installation of the pipelines and other facilities
required or useful in order for Gatherer
to be prepared to fulfill its obligations under this Agreement with regard to
Producer’s Gas from any Well or central production facility within the period
of time set forth in Exhibit D, Producer shall have the option to do any of the
following:


5.9.1        Install,
or cause to be installed, such pipelines and/or other facilities.  Upon the completion of such pipeline and/or
other facilities, Gatherer
shall be obligated to immediately commence receiving into its System Producer’s
Gas delivered by Producer through the newly-constructed facilities.  Additionally, Gatherer
shall be obligated to promptly acquire such pipeline and/or other facilities
from Producer ** Costs incurred by Producer in connection with the installation
of such pipeline and/or other facilities. 
Payment shall be due from Gatherer
as to each invoice within thirty (30) days of Gatherer’s
receipt of such invoice from Producer. 
In order to invoke this option, Producer shall send to Gatherer
one or more invoices (i.e., Producer may invoice Gatherer
multiple times, as the costs are being incurred) showing Actual Costs incurred
by Producer in connection with such pipelines and/or other facilities, with
copies of supporting materials showing that the costs have actually been
incurred, **.  In the event Producer
chooses to install such pipelines and/or other facilities, Producer shall not
be obligated to pay Gatherer
any Fees for Producer’s Gas delivered to the applicable and related Receipt
Point(s) for a period of ** by Gatherer,
which time period shall be deemed to commence to run from the date of first
delivery of Producer’s Gas into the facilities in question; or


5.9.2        Elect
to have such Well or central production facility released from the terms of
this Agreement at the sole option of Producer by providing Gatherer
with three (3) days written notice of such election, at the end of which period
Producer shall be free to enter into any arrangements it may choose for the
provision of alternative 



 12
 






 



services by any third party of Producer’s
choosing, and Producer shall have no further obligations to Gatherer
under this Agreement with regard to the Well(s), central production facilities
and Receipt Point(s) in question; or


5.9.3        As
an alternative to 5.9.1 and 5.9.2, above, Producer may instead elect to take no
action and await Gatherer’s
delayed performance of the particular obligations that have not been timely
performed.  In the event Producer elects
this third option, then for every one (1) day of delay in Gatherer’s
ultimate completion of the installation of the applicable pipelines and/or
other facilities, then Gatherer
shall pay to Producer the following compensation per well for Gatherer’s
delay in such performance under this Agreement:


(A) 
For each day up through the ** of delay beyond the date on which
performance was due by Gatherer,
Gatherer
shall pay to Producer the sum of **


(B) 
For each day beginning with ** continuing through the ** beyond the date
on which performance was due by Gatherer, Gatherer
shall pay to Producer the sum of **


(C) 
For each day beginning with ** beyond the date on which performance was
due by Gatherer, Gatherer shall pay
Producer the sum of **;


provided, however, that Producer may elect at
any time that is governed by this Section 5.9.3 to instead proceed reasonably
and in good faith under the alternative procedures set forth in either 5.9.1 or
5.9.2, above, subject to the condition that such election not result in an
unreasonable or disproportionate incurrence of liability. For example, Producer
cannot install only the final 100 feet of pipe under 5.9.3 to avoid paying Gatherer
any Fees for Producer’s Gas delivered to the applicable and related Receipt
Point for a period of one hundred eighty (180) days following the acquisition
of such facilities by Gatherer.


5.9.4        Should
Gatherer determine that it will be unable to be fulfill its obligations under
this Agreement with regard to Producer’s Gas from any Well or central
production facility within the period of time indicated on Exhibit D due to the
inability to obtain necessary rights of way, easements, surface use or other
real property agreements for consideration of less than 2 times the prevailing
market rate, Gatherer shall notify Producer and Producer agrees to meet to
discuss in good faith a mutually agreeable remedy to such situation. However,
such discussion shall not alter or suspend any of the requirements and
provisions under 5.9 through 5.9.3 unless agreed to in writing by the Parties.


5.10         Producer shall have
the following additional remedies in the event that Gatherer engages in repetitive (applying the standard
set forth in this Section) failures to perform under this Agreement.  The remedies set forth in this Section shall
become applicable at such point in time when Producer has drilled, during the
term of this Agreement, at least ** are capable of flowing Gas to Gatherer in Completed Segments of the System, and as to which Producer sent
Well Notices to Gatherer.  At each subsequent point in time that the
cumulative number of new Wells in which Gatherer has failed to have the facilities completed and commence receipt of 



 13
 






 



Producer’s
Gas on a timely basis in accordance with the times set forth in Section 5.8 and
Exhibit D, exceeds ** in the Commitment Area after the date of this Agreement,
and as to which Producer sent Well Notices to Gatherer, then Producer may elect, on each such
occurrence, to terminate this Agreement in its entirety and acquire the System
pursuant to Article XIV.


5.11         Should Producer choose to install
pipelines and/or other facilities under Section 5.9.1 in order for Gatherer
to fulfill its obligations under this Agreement, Producer shall use
substantially the same standards of design as Gatherer
has used to construct the System.


5.12         If Gatherer
has been provided with a Well Notice, but Producer fails to complete the Well
referred to in the Well Notice (or a Well that is the functional substitute for
such Well) within ** of the necessary System facilities to be prepared to
receive Producer’s Gas from such Well, then Producer shall at the Gatherer’s
request, reimburse Gatherer
for all of Gatherer’s reasonable and
Actual Costs that are directly and solely related to the installation of such
facilities, and Gatherer shall at the same time assign and convey to
Producer, through appropriate and valid documentation, all of the rights,
interests and assets, the cost of which have been reimbursed by Producer.


 


Article VI.

OPERATIONAL IMBALANCE AND CASH BALANCING


6.1           The parties recognize that following
the completion of the System and the purchase by Gatherer of Producer’s system,
Gatherer shall be designated by the Pipeline Carriers as the point operator and
shall be considered by the Pipeline Carriers to be responsible for the
operation of the System’s pipeline interconnections to the Pipeline Carriers.
As such, with respect to operational balancing agreements or similar agreements
with all Pipeline Carriers (“OBA(s)”) related to the existing pipeline
interconnects, Gatherer shall either be appointed and act as agent of Producer,
accept assignment of Producer’s agreements, or enter into independent OBA’s.
Furthermore, with respect to any subsequent pipeline interconnects to the
System as set forth in the Agreement, Gatherer shall likewise either be
appointed and act as agent of Producer under its OBA’s or enter into
independent OBA’s for such interconnections. Upon entering into all such
arrangements for the OBA’s, Gatherer shall be responsible for the
administration of all such OBA’s and for all terms and conditions of any such
OBA subject to the terms of this Article VI.


6.2           The parties recognize that certain
Gas imbalances may occur between the quantity of Producer’s Gas received by
Gatherer less Deemed Fuel, Deemed System Loss, and Measured Treating Fuel and
Loss (and if the Gas is required to be processed prior to delivery, the volume
adjustment provided for in this Agreement) (“Net Receipt”) and the quantity of
Producer’s Gas nominated by Producer for delivery by Gatherer to Producer or
for Producer’s account at the Delivery Point(s) (“Net Nomination”).  Throughout each Month the parties agree to
actively communicate and cooperate with each other, and with any
interconnecting pipeline, to review appropriate data to identify any imbalance,
and to eliminate or remedy any imbalance as soon as either party becomes aware
of an imbalance.  The parties further
agree to manage daily receipts and deliveries so that the imbalances shall be
kept as near to zero as practicable.  At
the end of each Month, any imbalance in MMBTUs between the Net Receipt and the
Net Nominations (with such difference being referred to as the “Imbalance”)
shall be balanced by 



 14
 






 



means of a payment to Producer from
Gatherer or a payment to Gatherer from Producer, as applicable, valued at the “Cash-Out
Price.”  To the extent that the Monthly
Net Receipt amounts are greater than the Monthly Net Nomination amounts, a
payment shall be due Producer, and Gatherer will make such payment to Producer
for the imbalance based on the difference between the Monthly Net Receipt
amounts and the Monthly Net Nomination amounts, multiplied by the Cash-Out
Price.  To the extent the Monthly Net
Receipt amounts are less than the Monthly Net Nomination amounts, a payment
shall be due Gatherer, and Gatherer will invoice Producer for the imbalance
based on the difference between the Monthly Net Receipt amounts and the Monthly
Net Nomination amounts, multiplied by the Cash-Out Price during the applicable
Month in which the volume imbalance was generated.  As used in this Agreement, the “Cash-Out
Price” shall be determined as to each applicable Month and shall mean  a price per MMBTU equal to either (1) if the
receiving pipeline’s applicable cash-out price is not imposed for the
applicable Month(s), the price will be the daily index price averaged for such
Month for the applicable receiving pipeline as published in the Daily Price
Survey section of Platt’s Gas Daily, or (2) if the receiving pipeline’s
applicable cash-out price is imposed is imposed for the applicable Month(s),
that price will be the “Cash-Out Price” . 
Should the information necessary to calculate the “Cash-Out Price” not
exist for the receiving pipeline or cease to be available, Gatherer and
Producer shall work in good faith to determine a comparable substitute
publication and/or daily posting(s) or other indexes providing equivalent data.


6.3           Producer shall be solely responsible
for submitting appropriate nominations to Gatherer for the redelivery of
Producer’s Gas, less the applicable fuel and loss, at the Delivery Point and
shall be responsible for any and all delivery imbalances occurring with respect
to Producer’s Gas which is moving under applicable OBA’s or Producer’s Pipeline
Carrier transportation agreement(s) or other agreement(s) to the extent that
such imbalances are caused by Producer’s failure to make proper and timely
nominations. Producer shall indemnify and hold Gatherer harmless from any and
all costs, expense, liabilities, or damages (including without limitation,
pipeline imbalances, penalties, court costs, and attorney fees) arising due to
any such pipeline imbalances on under applicable OBA’s or Producer’s Pipeline
Carrier transportation agreement(s) or other agreement(s) caused by Producer’s
failure to make proper and timely nominations, provided such indemnification
shall apply without duplication of the Cash-Out payments to Gatherer provided
for in Section 6.2 above.  Gatherer shall
indemnify and hold Producer harmless from and against any and all costs,
expense, liabilities, or damages (including without limitation, pipeline
imbalances, penalties, court costs, and attorney fees) arising due to any such
pipeline imbalances under applicable OBA’s or Producer’s Pipeline Carrier
transportation agreement(s) or other agreement(s) caused by Gatherer’s failure
to properly and timely give effect to Producer’s nominations, however, Gatherer
shall not be responsible for eliminating any imbalances between Producer and
any third party. Furthermore, Gatherer shall not be obligated to materially
deviate from its normal operating and accounting procedures to reduce or eliminate
any such imbalances.



 15
 






 



Article VII.

RECEIPT PRESSURES AND REMEDIES


7.1           Gatherer agrees to maintain the monthly average
pressure (“MAP”) at each Receipt Point at **. The MAP shall be determined
individually as to each Receipt Point, and the MAP at each Receipt Point shall
be determined by dividing the sum of daily average Receipt Point pressures as
continuously measured using EFM’s (as defined in Section 8.1, below) during any
Month by the number of days in the subject Month.   Gatherer shall maintain for at least seven (7) years, the records that demonstrate the appropriate MAP for each
Receipt Point as to any given month. 
Producer shall have the right to have access at all reasonable times to Gatherer’s SCADA system information related to the
pressure and flows at each Receipt Point. 
It is expressly agreed by Gatherer that Gatherer will not destroy any of
the foregoing categories of records without first providing Producer with sixty
(60) days prior written notice of both its intention to do so and its offer to
send and relinquish such materials to Producer in lieu of destroying them.


7.2           Producer and Gatherer understand that the pressure at each Receipt
Point may be affected by the initial production from Wells recently connected
to the System. As a result, all the Receipt Points within a single Section of Land in which the  combined volume from all the wells within that Section of Land ** be excluded from the determination of the
MAP during the period of time that is the lesser of (A) the period that the
combined volume of all wells within that Section of Land are delivering ** and such production is causing
the MAP at any Receipt Point in such Section ** (B) ** provided, however,
that in no event may the MAP at any Receipt Point within such Section of
Land **.


7.3           In
the event the MAP at any Receipt Point **, then the following shall apply:


7.3.1        In the event the MAP at any Receipt
Point **, then Gatherer
shall pay to Producer, within fifteen (15) days from and after the end of the
applicable Month, **.


7.3.2        In the event the MAP at any Receipt
Point **, then, in lieu of the payments outlined in paragraph 7.3.1 above, Gatherer shall pay to Producer, within fifteen (15)
days from and after the end of the applicable Month, **.


7.3.3        In the event the MAP at any Receipt
Point exceeds **, in addition to the payments outlined in paragraph
7.3.2 above, Gatherer
shall pay to Producer monthly, within fifteen (15) days from and after the end
of the applicable Month, for each Well attached to the Receipt Point, **.


By
way of illustration of the manner in which the sums under Sections 7.3.1 and
7.3.2 are to be calculated:  **.


7.4           Should the MAP at any specific
Receipt Point **, or should the MAP at such Receipt Point **, Producer may at
its option (to be exercised at any point in time prior to the Gatherer’s
restoration of the MAP **:


7.4.1        Elect
to have such Receipt Point released from the terms of this Agreement by
providing Gatherer with three (3)
days written notice of such election, at the end of which period Producer shall
be free to enter into any arrangements it may choose for the provision of
alternative services by any third party of Producer’s choosing, and Producer
shall have no further obligations to Gatherer
under this Agreement with regard to the Receipt Point(s) in question. In the
event that Producer elects to invoke the provisions of this Section 7.4.1 with
respect to a Receipt Point(s), Producer shall not connect more than 16
wells to each affected Receipt Point.;
or



 16
 






 



7.4.2        Producer
may elect to receive the same compensation as is provided for in Section 7.3
above except that the dollar amounts applicable to the stated fact situations
shall be doubled.


7.5           Should the MAP at any Receipt Point
**, Producer may at its option (to be exercised at any point in time prior to
the Gatherer’s
restoration of the MAP for the Receipt Point to 45 psig), do the following:


7.5.1        Elect
either of the options set forth in Sections 7.4.1 and 7.4.2, above; or


7.5.2        Install,
or cause to be installed, such facilities as are reasonably needed in order to
eliminate the pressure problems.  Upon
the completion of such facilities, Gatherer
shall be obligated to immediately commence receiving into its System Producer’s
Gas delivered by Producer.  Additionally,
Gatherer
shall be obligated to promptly acquire such facilities from Producer **
incurred by Producer in connection with the installation of such
facilities.  Payment shall be due from
Gatherer as to each invoice within thirty (30) days of Gatherer’s receipt of
such invoice from Producer.  In order to
invoke this option, Producer shall send to Gatherer one or more invoices (i.e.,
Producer may invoice Gatherer multiple times, as the costs are being incurred)
showing Actual Costs incurred by Producer in connection with such pipelines
and/or other facilities, with copies of supporting materials showing that the
costs and expenses have actually been incurred, **.


7.6           Gatherer
shall provide to Producer, on or before the 15th day of each Month, a written statement
indicating the MAP for each Receipt Point during the preceding Month, together
with a statement advising Producer of the percentage of Receipt Points during
such Month as to which the MAP **.


7.7           Beginning in June, 2007,  whenever either of the following occur:


(a) more than **


(b) more than **


with such occurrence extending for a
period of ** provisions of this Article VII, Gatherer
shall provide Producer with written notice of such occurrence no later than **,
as applicable, together with a description of Gatherer’s
proposed plan and timetable for correcting the excessive System pressure
problems.  Producer may thereafter elect
to terminate this Agreement **.  The
provisions of this Section shall apply each time the above conditions are
present.


7.8           Any Receipt Point where the increase
in pressure is a result of (i) the delivery of gas in excess of the volume set forth
in Section 7.2 above, (ii) the delivery of gas from wells that were connected
to Producer’s System prior to the connection to Gatherer’s
System for a period of one hundred twenty (120) days following the purchase of
any portion of Producer’s System as set forth in Article IV,
above, (iii) the operations of any third party providing Processing or
additional treating for Producer’s Gas, or (iv)
the delivery of free liquids or Inferior 



 17
 






 



Liquids by Producer, such Receipt Point
shall be excluded from the determination of Receipt Point MAP’s as set forth
above.



 18














 


Article VIII.

MEASUREMENT


8.1           Gatherer
shall measure the Producer’s Gas delivered by Producer hereunder using
electronic flow meters (“EFM”), which Gatherer
shall install, or caused to be installed, at the Receipt Points and Delivery
Points. Measurement shall be made by Gatherer
in accordance with the requirements of applicable provisions in ANSI/API 2530, “Orifice Metering of Natural Gas” (American Gas Association
Gas Measurement Committee Report No. 3) of the Natural Gas Department of
the American Gas Association, as amended from time to time, or by any other
method commonly used in the industry and mutually acceptable to the
parties.  EFM equipment shall be designed
and installed in accordance with the procedures set forth in the Manual of
Petroleum Standards, Chapter 21.1 (Latest Revision).  Producer shall have access to Gatherer’s
metering equipment and information received from such metering equipment at
reasonable hours.  In addition, Producer
shall have the right to install check measurement / monitoring equipment at the
Receipt Points and Delivery Points - including the right to install Producer’s
check measurement equipment on the Gatherer’s
meter tube(s) and/or orifice unions.  All
such check measurement equipment shall be installed so such equipment shall not
interfere with the operations of Gatherer’s
equipment.


8.2           The accuracy of Gatherer’s
measuring equipment shall be verified by meter calibrations and orifice
inspections, and a chromatographic analysis shall be conducted, using means and
methods generally acceptable in the gas industry once every six (6) Months for
Receipt Points which average less than 500 MSCF per day, every three (3) Months
for Receipt Points which average between 501 — 1000 MSCF per day, and every one
(1) Month for Receipt Points that average 1001 MSCF per day or more. Measuring
equipment found to be measuring and/or reading inaccurately shall be adjusted
to measure and read accurately. Gatherer
shall give Producer two (2) days notice of upcoming tests. If Producer fails to
have a representative present, the results of the test shall nevertheless be
considered accurate until the next test. Gatherer
shall, upon written request of Producer, conduct a test of Gatherer’s
measuring equipment and/or a chromatographic analysis, provided that in no
event shall Gatherer be required to
test its equipment more frequently than once a Month. All tests of such
measuring equipment shall be made at Gatherer’s
expense, except that Producer shall bear the expense of any additional tests
made at Producer’s request.


8.3           If for any reason, any measuring
equipment is inoperative or inaccurate by more than two percent (2%) in the
measurement of Gas, then the volume of Producer’s Gas delivered by Producer to Gatherer
during the period of such inaccuracy shall be determined on the basis of the
best data available using the first of the following methods which is feasible:


(a)                                  By
using the registration of any check measuring equipment installed and
accurately registering; or


(b)                                 By
using a percentage factor to correct the error, if the percentage of error is
ascertainable by calibration, test, or mathematical calculations; or


(c)                                  By
comparing deliveries made during preceding periods under similar delivery
conditions when the meter was registering accurately.



 19
 






 



8.4           Any adjustment based on such
determination shall be made for such period of inaccuracy as may be definitely
known or, if not known, then for one half (1/2) the period since the date of
the last meter test. In no event, however, shall any adjustment based on
measurement of quantities, pressure or quality, extend back to transactions
beyond six (6)  months  from the date the error was first made known
by one party hereunder to the other.


8.5           Each party shall have the right to
inspect the other party’s equipment, and other measurement or test data during
business hours; but the reading, calibration, and adjustment of such equipment
shall be done by the party installing and furnishing same. Unless the parties
agree otherwise, each party shall preserve for seven (7) years, all of its
original test data, accounting materials and other records pertinent to the
actions taken, and the performance delivered, under this Agreement. It is
expressly agreed by Gatherer that Gatherer will not destroy any of the foregoing
categories of records without first providing Producer with sixty (60) days
prior written notice of both its intention to do so and its offer to send and
relinquish such materials to Producer in lieu of destroying them.


 


Article IX.

GAS QUALITY AND SPECIFICATIONS


9.1           Producer shall deliver to Gatherer
at the Receipt Points Gas which is commercially free of dust, rust, gum and gum
forming constituents, dirt, paraffin, impurities, and other solid or liquid
matter which might cause injury to or interference with the proper operation of
the lines, meters, regulators and other appliances through which it flows.
Subject to the other provisions of this Article IX, Producer’s Gas as delivered
to the Receipt Points, shall also conform to the following specifications (the “Specifications”):


	
  

  	
  (i)

  	
   

  	
  Oxygen

  	
   

  	
  No oxygen

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
   

  	
  Free Water

  	
   

  	
  No free water

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
   

  	
  H2S

  	
   

  	
  No more than one quarter (1/4) grain per one hundred
  (100) Standard Cubic Feet of Gas

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (iv)

  	
   

  	
  Total Sulfur

  	
   

  	
  Including mercaptan and hydrogen sulfide, not to
  exceed one half (1/2) grain per one hundred (100) Standard Cubic Feet of Gas

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (v)

  	
   

  	
  Temperature

  	
   

  	
  No more than one hundred twenty degrees Fahrenheit
  (120°F) and no less
  than sixty degrees Fahrenheit (60°F)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (vi)

  	
   

  	
  Carbon Dioxide

  	
   

  	
  **

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (vii)

  	
   

  	
  Nitrogen

  	
   

  	
  No more than two percent (2%) by volume

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (viii)

  	
   

  	
  Other

  	
   

  	
  Any additional or more stringent specification
  imposed by the Pipeline Carriers (other than the specification for Carbon
  Dioxide)

  




 20
 






 



9.2           If, at any time during the term of
this Agreement, either party ascertains that Producer’s Gas fails to meet the
Specifications, notwithstanding efforts to blend the Gas as provided for below
in Section 9.3 below, such party shall immediately notify the other of the
extent of the deviation from the Specifications. Producer shall determine the
expected duration of such failure and notify the Gatherer
of the efforts Producer is undertaking to remedy such deficiency. In the event
Producer cannot (or elects not to) remedy such deficiency, Gatherer
may refuse to accept delivery of Producer’s Gas, or accept delivery of Producer’s
Gas pursuant to mutually agreed upon increased Fees or other adjustments to revenues
by Gatherer
to compensate Gatherer
for addressing such deficiencies. In such case, Gatherer
and Producer shall work in good faith to determine a solution to the
Specification deficiencies.


9.3           If Gatherer
can blend any of Producer’s Gas that either fails to meet the Specifications
set forth in Section 9.1, above, or fails to meet any other required
specifications, with other Gas in the System, and such blending will cause the
composite Gas composition to meet such Specifications, Gatherer
will accept such non-conforming Producer’s Gas, without any additional payment
from or detriment to the Producer as long as such blending does not cause undue
operational problems or impacts.


9.4           In the event Gatherer
cannot accept, after application of Section 9.3, any of Producer’s Gas that
fails to meet the Specifications set forth in Section 9.1, above, then
Producer, or an affiliate of Producer, Gatherer,
or a third party contracted by Producer for such purpose, shall have the right
to tie-in to the System at no cost to Gatherer
for the purpose of providing such additional Treating as
may be required for Producer’s Gas, provided that the additional Treating
will not cause or result in a decrease in pressure of the Gas.  The additional Treating
of Producer’s Gas by Producer, its affiliates, or any third party, will not
include the **.  In the event Producer,
or an affiliate of Producer, Gatherer
or a third party contracted by Producer installs such additional Treating
facilities, Gatherer shall install
all required measurement and other equipment on the gas streams entering and
exiting the additional Treating
facilities, and all associated fuel gas pipelines to accurately measure the
actual fuel and loss associated with the additional Treating.  Producer shall reimburse Gatherer
for the reasonable and Actual Costs
of installing such additional equipment and the actual fuel and loss associated
with the additional Treating
shall be included in the calculation of the Measured Treating Fuel and Loss.


9.5           If Producer determines that there is
a need or a desire to perform any activity with respect to Producer’s Gas for
any purpose deemed reasonably necessary by Producer, other than for services
already to be provided by Gatherer hereunder and for additional Treating for
non-conforming gas, as per Section 9.4, then Producer, an affiliate of
Producer, and/or a third party contracted by Producer shall have the right to
tie-in to the System to remove Producer’s Gas from and redeliver Producer’s Gas
to the System.  Any removal and redelivery
pursuant to this Section shall be subject to the requirement that the Gas be
delivered back into the System at a pressure not less than that existing prior
to its removal from the System.  Gatherer
shall install all required measurement and other equipment to measure the
quantity of Producer’s Gas removed from and redelivered to the System.  Producer shall reimburse Gather for the
reasonable and Actual Costs of installing such additional equipment.  The difference between the quantity of gas
removed and the quantity of gas redelivered shall be included in the
calculation of the Measured Treating Fuel and Loss. All Treating to remove 



 21
 






 



CO2 from Producer’s Gas, other than additional
treating as set forth in Section 9.4 above, shall be provided by Gatherer.


9.6           Producer shall reimburse Gatherer
the reasonable and Actual Costs to dispose of any water from Producer’s Wells
that is inadvertently flowed into the System. 
Any such costs shall be invoiced to Producer on a Monthly basis.


 


Article X.

GATHERING, COMPRESSION, TREATING FEES, LINE LOSS, AND FUEL CHARGE


10.1         For the gathering services provided by
Gatherer hereunder, Producer shall pay Gatherer a gathering fee (“Gathering Fee”)
for each MSCF of Producer’s Gas delivered to Gatherer by Producer at the
Receipt Points equal to the per MSCF rate set forth in Exhibit G.


10.2         For the compression services provided
by Gatherer hereunder, Producer shall pay Gatherer a compression fee (“Compression
Fee”) equal to the per MSCF rate set forth in Exhibit G.


10.3         Subject to Section 9.3, if the average
CO2 content in the Producer’s Gas delivered by Producer at any Treating
facility installed or acquired by Gatherer exceeds the CO2 content permitted by
the applicable Pipeline Carriers, then Producer shall pay a Treating fee (“Treating
Fee”) with respect to that Gas. The Treating Fee shall be the per MSCF rate set
forth in Exhibit G.  Because it will be
difficult to anticipate how much of Producer’s Gas will be consumed as fuel and
loss, how much of Producer’s Gas will need to be treated, and what the CO2
content of Producer’s Gas will be, Gatherer will install all required
measurement and other equipment on the gas streams entering and exiting the
treating facilities, and all fuel gas pipelines to accurately measure the
actual Treating fuel and loss at each Treating plant location (“Measured
Treating Fuel and Loss” which term may include fuel and loss associated with
Processing or additional treating of Producer’s Gas).


10.4         Producer and Gatherer agree that
**.  However, **, and annually
thereafter, the Gathering Fee, total applicable Compression Fee and Treating
Fee  specified above, shall be subject to
being increased on an annual basis, **, in the Consumer Price Index as published
by the Department of Labor, in the subsection titled “Not Seasonally Adjusted
U.S. City Average All Items” (“CPI”); provided, however, that no such increase
in Fees **


10.5         As to time periods prior to **, the
parties specifically agree as follows: 
If during any month the “Last Three-Day price” for natural gas, as
published in the above-referenced section of Platts, exceeds the price set
forth on Exhibit H, then Producer agrees to pay Gatherer an additional fee for
services provided by Gatherer during such applicable month.  ** that such published “last three-day”
average closing prices exceed the natural gas prices set forth in Exhibit
H.  This increase in Fees shall not
change the base Fees; rather, the increase is an additional payment obligation
that may be effective, or not, from month-to-month if and when the
circumstances that give rise to such additional payment (as described in the
preceding sentence of this paragraph) occur.


10.6         Gatherer shall assess, as set forth in
Exhibit G, a charge for deemed compression fuel (“Deemed Fuel”) and for lost
and unaccounted for Gas (“Deemed System Loss”).



 22
 






 



10.7         The dehydration services shall be
provided without additional compensation from Producer to Gatherer, and fuel
utilized in dehydration shall be considered as part of the Deemed Fuel set
forth above.


 


Article XI.

BILLING, PAYMENT, AND REPORTING


11.1         On or before the fifteenth (15th) day of each Month, Gatherer
shall render an invoice to Producer for the preceding Month’s services by Gatherer.  Gatherer
shall provide Producer with information to support Gatherer’s
invoice identified on a “Receipt Point by Receipt Point” basis, and shall also
show the cumulative information indicating the total quantity of Producer’s Gas
delivered hereunder, the amount due therefore, and information sufficient to
explain and support any adjustments made by Gatherer
in determining the amount billed. Except where other provisions of this
Agreement provide shorter deadlines for the payment of certain sums and/or
invoices under the terms of this Agreement, Producer shall pay Gatherer
or Gatherer
shall pay Producer, as the case may be, at the address shown hereunder within
thirty (30) days of receipt of invoice. 
If the correct amount is not paid when due,
interest on any unpaid and undisputed portion shall accrue at an annual
effective interest rate  equal to the
prime rate, as quoted by the Wall Street Journal, plus two percent (2%) or at
the highest rate permitted by applicable law, whichever is lower, from due date
until date paid, with such interest to be compounded monthly.  If Producer does not pay Gatherer all undisputed amounts within the later of (i) ninety (90) days following receipt of invoice or (ii) thirty
(30) days following notice from Gatherer that undisputed amounts are due, then Gatherer may suspend receipt of Gas hereunder without
prejudice to any other available remedies at law or in equity.  Whenever
Producer is entitled to be paid any sums by Gatherer
under the terms of this Agreement, then unless specifically provided otherwise
with regard to specific situations under the terms of this Agreement, payment
shall be due from Gatherer
and interest shall be owing under the same time frames and procedures set forth
above in this paragraph 11.1 in relation to sums owing by Producer to Gatherer.


11.2         Either party may, at its option, recoup
any sums (or portions thereof) owing by the other party by netting out of such
party’s payments to the other party all or part of the sums owed by the other
Party under this Agreement.  When a party
elects to net out certain indebtedness of the other party, such party shall
promptly send to the other party a description of (a) the source or nature of
the indebtedness of the other party that has been recouped in whole or in part
by such party in the above-referenced manner, including the dollar amount of
such recoupment, and (b) the indebtedness of the party that has been reduced
through such recoupment.


11.3         When Gatherer
owes to Producer any additional sums under this Agreement by virtue of Gatherer’s
delay in performance, or non-performance, of any of Gatherer’s
obligations under this Agreement, Gatherer
shall, at the same time as Gatherer
sends Producer its invoices for sums owing by Producer as to a given Month,
both (a) calculate any such sums that Gatherer
owes to Producer for the same month, and (b) reflect a credit thereon or remit
such sums to Producer by the due date of the invoice.



 23
 






 



11.4         If any overcharge or undercharge due to
clerical or arithmetic error shall at any time be found relative to any invoice
or other statement delivered by Gatherer
in connection with this Agreement, whether outstanding or paid, Gatherer
shall refund any amount of overcharge, or Producer shall pay any amount of
undercharge, as the case may be, within thirty (30) days after final
determination thereof; provided, however, that all statements that have not
been challenged in writing or corrected in writing, within twenty-four (24)
Months from the end of the Month in which the statement was received by the
party for whom it was intended, shall be conclusively deemed to be correct and
accurate, and no retroactive adjustment shall be made beyond such twenty-four
(24) Month period with regard to any such statements.


11.5         Both parties hereto shall have the
right at any and all reasonable times to examine the books and records of, and
to audit, the other party to the extent necessary to verify the accuracy of any
statement, charge, computation, or demand made pursuant to this Agreement.
Prior to such examination, the party requesting confidential information of the
other party shall, if requested by the other party, execute a confidentiality
agreement of reasonable form and scope after giving the other party 15 days
written notice.


 


Article XII.

TAXES


12.1         Gatherer
shall have no duties or liabilities under this Agreement with regard to the
reporting of production taxes imposed with respect to the Producer’s Gas
delivered and gathered
hereunder, except to the extent that any such reporting obligations are
specifically imposed by statutes, rules and regulations and/or other laws on Gatherer.


12.2         Gatherer
shall file all reports and pay all ad valorem or other similar taxes, fees, or
assessments imposed by any governmental authority with respect to the System
and ownership thereof.  Producer shall
pay or bear all severance or other similar taxes, fees, or assessments imposed
by any governmental authority on Producer’s Gas delivered hereunder, except to
the extent that any portion of such taxes is to be borne by other persons or
entities under the terms of applicable statutes, rules and regulations and/or
other laws.  Further, Producer represents
that it has timely filed, or shall in the future timely file, any and all
reports which it was, or may be, required to file with respect to production or
severance taxes to be paid on Producer’s Gas. 
Producer shall indemnify and hold Gatherer
harmless with respect to any claims that may be made against Gatherer
by virtue of any failure on the part of Producer to file any and all of such
reports, or with respect to Producer’s failure to pay or bear any and all taxes
which Producer is obligated to pay, under the above provisions of this Section
12.2.  Gatherer
likewise shall indemnify and hold Producer harmless with respect to any claims
that may be made against Producer by virtue of either (a) any failure on the
part of Gatherer to file any
and all of the reports provided for above in this Section 12.2, and/or (b) any
failure on the part of Gatherer
to pay any and all taxes which Gatherer
is obligated to pay pursuant to the above provisions of this Section 12.2.



 24
 






 



Article XIII.

CONTROL, POSSESSION, TITLE AND ADDITIONAL INDEMNIFICATION


13.1         Producer shall indemnify and hold Gatherer
harmless from liability with respect to Producer’s Gas or
Producer’s operations for the delivery of such Gas prior to the Gas being
delivered into Gatherer’s
System and with respect to the operations of any third party providing
Processing or additional treating of Producer’s Gas on Gatherer’s
System.  Gatherer
shall indemnify and hold Producer harmless from liability with respect to
Producer’s Gas delivered into the System and prior to delivery thereof at the
Delivery Point, except for any such liability relating to the title to Producer’s
Gas, which liability shall remain with Producer.


13.2         Producer warrants that it possesses
either title to, or the right to deliver to Gatherer,
all of Producer’s Gas delivered or caused to be delivered hereunder.  Producer warrants that Producer’s Gas is free
from all liens and adverse claims of every kind and agrees to indemnify Gatherer
from all suits, actions, debts, accounts, damages, costs, losses, and expenses
arising from or out of adverse claims of any or all persons, including
governmental entities, as to title to Producer’s Gas or as to royalties or
charges thereof.  Notwithstanding the
indemnification of Producer by Gatherer
for all of Producer’s Gas delivered into the System after receipt thereof by Gatherer
and prior to delivery thereof at the Delivery Point, title to the Producer’s
Gas delivered or caused to be delivered by Producer to Gatherer
hereunder at the Receipt Points shall remain with Producer and shall not pass
to nor vest in Gatherer
at any point under this Agreement.


13.3         Gatherer
shall be entitled to and shall own all condensate and pipeline drip collected
in the System at locations beyond the Receipt Point.


13.4         Producer agrees to
defend, indemnify and hold Gatherer, its parent, subsidiary and affiliate companies, their agents,
employees, directors, officers, servants, invitees and insurers (together, the “Gatherer Group”), harmless from and against any and
all losses, claims, demands, liabilities or causes of action of every kind and
character, in favor of any person or party, for loss or damage to property of
Producer Group (as defined below) or injury to or illness or death of any
employee of Producer Group, which loss, damage, injury, illness or death
relates to, arises out of or is incident to the work or services performed by
Producer under this Agreement, and regardless of the cause of such loss,
damage, injury, illness or death, except to the extent that any such losses,
claims, demands, liabilities or damages, are the result of the negligence or
willful misconduct of Gatherer,
or its officers, employees, contractor, agents or representatives. Producer
shall fully defend any such claim, demand or suit at its sole expense, even if
the same is groundless.  This indemnity
shall be limited to the extent necessary for compliance with applicable State
and Federal laws.


13.5         Gatherer agrees to defend,
indemnify and hold Producer, its joint interest owners, and their respective
parent, subsidiary and affiliate companies, and the agents, employees,
directors, officers, servants, invitees and insurers of each such entity
(together, the “Producer Group”), harmless from and against any and all losses,
claims, demands, liabilities or causes of action of every kind and character,
in favor of any person or party, for loss or damage to property of Gatherer
Group or injury to or illness or death of any employee of Gatherer Group or any
employee of subcontractors of Gatherer, which loss, damage, injury, illness or
death relates to, arises out of or is incident to the work or services
performed by Gatherer under this Agreement, and regardless of the cause of such
damage, injury, illness or death, except to the extent that any such losses,
claims, demands, liabilities or damages, are the result of the negligence or
willful misconduct of Producer, or its officers, employees, contractor, agents
or representatives. Gatherer shall fully defend any such claim demand or suit
at its sole 



 25
 






 



expense,
even if the same is groundless.  This
indemnity shall be limited to the extent necessary for compliance with
applicable State and Federal laws.


 


Article XIV

ACQUISITIONS


**



 26
 






 


 27
 






 



Article XV

REPRESENTATIONS AND WARRANTIES


15.1         Gatherer
represents and warrants that:


15.1.1      Gatherer is a limited liability company validly
existing and in good standing under the laws of the State of Oklahoma, with the
requisite power and authority to own its properties and assets and to carry on
its business as now being conducted.


15.1.2      Gatherer has the power and requisite authority to
execute and deliver this Agreement and to consummate and perform the
transactions contemplated hereby.  The
execution and delivery of this Agreement by Gatherer and the consummation and performance of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of Gatherer.  This Agreement constitutes the valid and
binding obligation of Gatherer,
enforceable against it in accordance with the terms hereof, subject to the
effects of bankruptcy, insolvency, reorganization, moratorium and similar laws
in effect from time to time, and no other act, approval or proceeding on the
part of Gatherer or any other
party is required to authorize the execution and delivery of this Agreement by Gatherer or the consummation of the transactions
contemplated hereby.


15.1.3      Gatherer has not incurred any liability, contingent
or otherwise, for brokers’ or finders’ fees relating to the transactions
contemplated by this Agreement for which Producer shall have any responsibility
whatsoever.


15.1.4      Except as set forth on Exhibit C attached hereto, to the
best of Gatherer’s
knowledge and belief, there are no actions, suits or proceedings pending
against Gatherer which might
materially delay, prevent or hinder the consummation of the transactions
contemplated hereby.


15.1.5      To the best of Gatherer’s knowledge and belief, there is no
bankruptcy, reorganization or arrangement proceedings pending, being
contemplated by or threatened against Gatherer.



 28
 






 



15.2                           Producer
represents and warrants that:


15.2.1      Producer is a  corporation validly existing and in good
standing under the laws of the State of Delaware, with the requisite power and
authority to own its properties and assets and to carry on its business as now
being conducted.


15.2.2      Producer has the power and requisite
authority to execute and deliver this Agreement and to consummate and perform
the transactions contemplated hereby. 
The execution and delivery of this Agreement by Producer and the
consummation and performance of the transactions contemplated hereby have been
duly authorized by all necessary action on the part of Producer.  This Agreement constitutes the valid and
binding obligation of Producer, enforceable against it in accordance with the
terms hereof, subject to the effects of bankruptcy, insolvency, reorganization,
moratorium and similar laws in effect from time to time, and no other act,
approval or proceeding on the part of Producer or any other party is required
to authorize the execution and delivery of this Agreement by Producer or the
consummation of the transactions contemplated hereby.


15.2.3      Producer has not incurred any liability,
contingent or otherwise, for brokers’ or finders’ fees relating to the
transactions contemplated by this Agreement for which Producer shall have any
responsibility whatsoever.


15.2.4      Except as set forth on Exhibit C attached hereto, to the
best of Producer’s knowledge and belief, there are no actions, suits or
proceedings pending against Producer which might materially delay, prevent or
hinder the consummation of the transactions contemplated hereby.


15.2.5      To
the best of Producer’s knowledge and belief, there is no bankruptcy,
reorganization or arrangement proceedings pending, being contemplated by or
threatened against Producer.


 


Article XVI.

FORCE MAJEURE


16.1         If either party is rendered unable,
wholly or in part by Force Majeure, to carry out its obligations under this
Agreement, then the obligations of the affected party, except for any payments
due in accordance with this Agreement, so far as the performance of such
obligations is prevented or delayed by such Force Majeure, shall be suspended
during the continuance of any inability so caused, but for no longer period.
Such cause as well as its impacts shall, to the extent possible, be remedied
and/or mitigated with all reasonable dispatch. The affected party shall give
notice and full particulars of such Force Majeure in writing by mail or
telecopy or other electronic facility to the other party as soon as practicable
after the occurrence of the cause relied on.


16.2         The term Force Majeure as employed
herein shall mean acts of God; strikes, lockouts, or other industrial
disturbances; acts of the public enemy, wars, sabotage, blockades, military
action, earthquakes, fires, storms or storm warnings, floods; arrests and
restraints of governments and people; civil disturbances; explosions; the
physical damage of essential parts 



 29
 






 



of Gatherer’s System, which materially
interferes with the performance of Gatherer’s obligations hereunder, and which
is caused by the acts of third parties who, with respect to the incident
causing such damage, have no relation as an officer, director, employee, agent,
affiliated entity, contractor, subcontractor or the like, with Gatherer; the
inability of any party hereto to obtain necessary materials, supplies, or
permits, only where such inability is due to, existing or future rules, regulations,
orders, laws, or proclamations of governmental authorities (Federal State or
local) including both civil and military; or changes in environmental laws, or
the application thereof, which prevent Gatherer from complying with it’s duties
hereunder.


16.3         It is understood and agreed that the
settlement of strikes or lockouts shall be entirely within the discretion of
the party having the difficulty, and that the above requirement that any Force
Majeure shall be remedied with all reasonable dispatch shall not require the
settlement of strikes or lockouts by acceding to the demands of the opposing
party when such course is inadvisable in the discretion of the party having the
difficulty.


16.4         Should an event of Force Majeure render
Gatherer unable to take delivery of any of Producer’s Gas at any Receipt Point
for a period exceeding five (5) consecutive calendar days, then Producer may,
upon not less than three (3) days prior written notice to Gatherer, temporarily
deliver Producer’s Gas from such Receipt Point to a third party for gathering
and/or Processing; provided, however, that Producer’s Gas shall be delivered to
Gatherer upon the earlier of the end of the temporary sale or on the first Day
of the Month following the Month that the Force Majeure event is rectified to
allow delivery to Gatherer.


16.5         Should an event of Force Majeure render
Gatherer
unable to take delivery of any of Producer’s Gas at any Receipt Points for a
period exceeding thirty (30) consecutive calendar days, then unless Gatherer
reimburses Producer, within 5 days of receipt of an invoice from Producer, for
all out of pocket third party costs incurred by Producer to acquire and
construct the required facilities to move Producer’s Gas to an alternate market
during the Force Majeure event, Producer may, upon not less than three (3) days
prior written notice to Gatherer,
permanently deliver Producer’s Gas from those Receipt Points impacted by the
Force Majeure event  to an alternate
party for gathering, compression
and Treating, and will be released from further obligation with respect to
those impacted Receipt Points under this Agreement.


 


Article XVII.

TERM


17.1         This Agreement shall continue in full
force and effect for a period of 15 years from the Effective Date (“Primary
Term”).  If Producer does not provide Gatherer
with written notice, at least ninety (90) days prior to the end of the Primary
Term, advising of Producer’s election to terminate this Agreement, this
Agreement shall be deemed to be renewed for ** from and after the end of the
Primary Term.  **.



 30














 


Article XVIII.

ASSIGNMENTS AND SALE OF GATHERER’S SYSTEM


18.1         This Agreement shall extend to and be
binding upon the parties hereto, their successors, and assigns. Subject to the
provisions of paragraph 18.2, this Agreement and the rights, duties or obligations
of the parties hereunder may be assigned or conveyed in whole; provided,
however, neither party shall assign or transfer this Agreement and any rights,
duties or obligations hereunder, without the prior written consent of the other
party, which consent shall not be unreasonably withheld.  A reasonable basis for withholding consent
may include the financial condition of the assignee raising reasonable concern
relating to its ability to perform under this Agreement.  All assignments and conveyances of either all
the wells and leaseholds that are ultimately covered by this Agreement or the
System shall be subject to this Agreement and shall not relieve the assignor of
its duties hereunder.  No transfer of, or
succession to, the interest of any party hereto, either in whole or partially,
shall affect or bind the other party until the first Day of the Month following
the Month in which the other party shall have received written notification
thereof. The acquisition provisions of Article XIV shall not transfer to an
assignee or transferee of this Agreement except to the extent provided in
Article XIV.


18.2         If Gatherer
determines to sell Gatherer’s
System to a party other than an affiliate of Gatherer,
Gatherer and Producer shall first meet to
negotiate in good faith in an effort to arrive at a definitive purchase and
sale agreement. If Gatherer
and Producer are not able to agree on a definitive purchase and sale agreement
after negotiating in good faith for at least sixty (60) days, Gatherer
shall have the right to seek offers from other third parties in accordance with
the following procedures:


**



 31
 






 



**


18.2.8       If only
a portion of the System is addressed in the Third-Party Offer, this right of
first refusal shall continue to be applicable to and continue in effect for
those portions or elements not part of the Third-Party Offer.


18.2.9       Gatherer will notify all third parties that any proposal,
bid or offer for the purchase
and sale of any part of Gatherer’s System is subject to Producer’s right of first
refusal and will inform such third parties of any applicable requirements of
this Agreement related to the purchase and sale of the System.


18.2.10     In no
event will the right of first refusal granted to Producer above entitle
Producer to match any terms of a sale of all or a portion of Gatherer’s System to an affiliate of Gatherer; rather, the right of first refusal shall apply
only to Third Party Offers.


 


Article XIX.

NOTICES


19.1         Except as herein otherwise provided,
any notice, request, demand, payment, invoice, statement, or bill provided for
in this Agreement or any notice which either party may desire to give to the
other shall be in writing and shall be sent by United States Mail (by regular mail,
express mail, certified mail, registered mail or any other available form of
United States Mail delivery or other express delivery service that delivers
with a speed the same or more rapid than United States Mail, at the election of
the sending party) to the below-indicated address of the party intended to
receive the same, as the case may be, or to such other address as either party
shall designate by future written notice to the other party.  Notice shall be considered to have been given
as of the date it is received at the applicable and approved address for the
recipient thereof.


If to PRODUCER:


For Notices and Requests:


 


NEWFIELD EXPLORATION
MID-CONTINENT INC.


110 West 7th, Suite 1300


Tulsa, Oklahoma 74119



 32
 






 



Attn:  Operations Manager


 


Statements, Bills, or
Invoices:


 


NEWFIELD EXPLORATION
MID-CONTINENT INC.


110 West 7th, Suite 1300


Tulsa, Oklahoma 74119


Attn: Accounts Payable


 


Wire Transfer Payments:


**


 


If to GATHERER:


For Notices and Requests:


 


MARKWEST WESTERN OKLAHOMA GAS
COMPANY, L.L.C.


2500 City West, Ste.
740


Houston, Texas 77042


Attn: Operations Manager


With a copy to:


 


MARKWEST ENERGY PARTNERS, L.P.


1515 Arapahoe Street, Suite 700


Denver, CO 
80202


Attn: Sr. Vice President of Southwest Business
Unit


 


For Statements, Bills, or Invoices


 


MARKWEST WESTERN OKLAHOMA GAS
COMPANY, L.L.C.


6655 S. Lewis, Ste. 350


Tulsa OK 74136


Attn: Accounts Payable



 33
 






 



For Payments


 


Wire:


**


 


Article XX.

GUARANTY BY GATHERER’S PARENT ENTITY


20.1         MarkWest Energy Partners, L.P., (“MEPLP”)
the parent entity of Gatherer  hereby
guarantees to Producer, absolutely, unconditionally and irrevocably, the prompt
performance and payment of all the liabilities, obligations and indebtedness
owing by Gatherer under this Agreement, and MEPLP is executing and delivering
to Producer simultaneously with this Agreement a Guaranty Agreement in the form
attached hereto as Exhibit I.


 


Article XXI.

MISCELLANEOUS


21.1         The interpretation and performance of
this Agreement shall be governed by and construed in accordance with the laws
of the State of Oklahoma.


21.2         This Agreement contains the entire
understanding of the parties superseding all other agreements, whether oral or
written, express or implied, except that the confidentiality agreement dated
April 7, 2006, previously entered into by the Parties shall not be superseded,
but rather shall remain in force and effect. 
As a result of the Parties entering into this Agreement, all prior
agreements between the Parties hereto that relate to the subject matter of this
Agreement have (except as qualified in the preceding sentence) been terminated
and replaced by this Agreement.  This
Agreement may not be changed orally, but only by an agreement in writing signed
by the Party against whom enforcement of any waiver, change, modification, extension,
or discharge is sought.  Every covenant,
term, and provision of the Agreement shall be construed simply according to its
fair meaning and not strictly for or against any Party.  Any waiver of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach by Producer or Gatherer.


21. 3        Gatherer and Producer intend for this
Agreement to be enforceable and valid to the fullest extent permitted by
applicable law.  If any part or any
provision of this Agreement is invalid or unenforceable under applicable law,
the invalidity or the unenforceability of that part or that provision shall not
affect the validity or the unenforceability of the other parts or the other
provisions of this Agreement, and the part or the provision that would
otherwise be invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be enforceable and valid under applicable law.



 34
 






 



21.4         Producer, to the
extent it may legally and validly do so (and with no representation or
warranty  being made by Producer that it
has such ability), hereby quitclaims to Gatherer the non-exclusive and concurrent right to
use (including the right to ingress and egress) Producer’s leaseholds,
properties, and premises underlying the System in order to carry out the
provisions of this Agreement with the right to remove same before or after the
expiration of this Agreement and the right to free access at all reasonable
times to any part of said leaseholds, properties, and premises.


21.5         The circumstances of
this Agreement are such that Producer will be exposed to substantial injury if Gatherer does not timely perform under this
Agreement, and the injuries that may occur to Producer could take a variety of
forms. Where this Agreement imposes on Gatherer an obligation to pay Producer certain monetary sums, or provide other
value to Producer, as a result of certain non-performance or delayed
performance under this Agreement, such sums or other value are intended to
serve as liquidated damages for certain of the injuries to Producer.  The parties stipulate and agree that (a) the
injury that would be caused to Producer as a result of Gatherer’s non-performance or delayed performance would
be difficult to estimate accurately, (b) the sums or other value to be provided
to Producer under this Agreement in such circumstances are intended to serve as
a liquidated damages and not as a penalty, and (c) such sums or other value
represent the parties’ reasonable estimate at this time of the probable loss
that would be suffered by Producer in the various scenarios addressed in this
Agreement.


21.6         The application or
the consent by either Gatherer or Producer for or to the appointment of a
receiver, a trustee, a custodian or a liquidator for such party or any assets
of such party, the admission by Gatherer or Producer of the inability of such
party to pay the debts of such entity as such debts become due, the making by
Gatherer or Producer of a general assignment for the benefit of creditors, the
commencement by Gatherer or Producer of any proceeding relating to bankruptcy,
reorganization, liquidation, receivership, conservatorship, insolvency or
readjustment of debt or the sufferance by Gatherer or Producer of any such
appointment or commencement of any such proceeding not terminated or discharged
within     days shall be an event of default under,
and a material breach of, this Agreement.


Gatherer and Producer acknowledge and agree that, in any bankruptcy
case commenced against or by Gatherer or Producer as debtor, (a) the debtor
shall not contest or in any way take any action to oppose the lifting of the
automatic stay under Section 362 of the United States Bankruptcy Code to permit
the other party to enforce its rights hereunder; (b) the debtor waives all
rights that it may have under Section 362 of the United States Bankruptcy Code;
(c) the debtor consents to entry of an ex parte order lifting the automatic
stay pursuant to Section 362(f) of the United States Bankruptcy Code; and (d)
the debtor shall execute, at the option of the other party and upon 48 hours’
written notice, an agreed order lifting the automatic stay.


In addition, in any bankruptcy case commenced against or by Gatherer or
Producer as debtor, the debtor shall, at the option of the other party and upon
48 hours’ prior written notice, file a motion to assume this Agreement pursuant
to Section 365 of the United States Bankruptcy Code and shall diligently
prosecute such motion, using its best efforts to obtain the approval by the
relevant bankruptcy court of such motion as soon as practicable.



 35
 






 



21.7         Any dispute, claim or
controversy arising out of or relating to this Agreement, or any of the
transactions contemplated hereby or thereby, or the breach, termination,
enforcement, interpretation or validity thereof, including the determination of
the scope or applicability of this Section of the Agreement, shall be
adjudicated in, at the election of the party filing the action, either the
state district courts or the federal district court in Houston, Texas.  Each party hereby irrevocably submits to the
exclusive jurisdiction of the state district courts of Harris County, Texas,
located in the City of Houston, for purposes of any litigation that may be
brought concerning the subject matters referred to above in this Section;
provided, however, that such consent to jurisdiction is solely for the purpose
referred to in this Section and shall not be deemed to be a general submission
to the jurisdiction of said courts or in the State of Texas other than for such
purpose.  Each party hereby irrevocably
waives, to the fullest extent permitted by law, any objection that it may now
or hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.


21.8         During any time that
Producer has delivered an average of greater than 200,000 MSCF per day of gas
to Gatherer during the immediately prior three (3) month period, then, subject
to applicable laws and regulations, Gatherer agrees not to enter into a
contract with a third party for similar services and similar terms and
conditions as provided under this Agreement, at Fees and rates that are less
than those Fees and rates in effect at such time under this Agreement. In addition,
subject to applicable laws and regulations, in no event shall Gatherer enter
into a contract with a third party prior to January 2009 for similar services
and similar terms and conditions as provided under this Agreement, at Fees and
rates that are less than those Fees and rates in effect at such time under this
Agreement.


21.9         The captions, titles or headings in
this Agreement are for the convenience of the parties in identification of the
provisions hereof and shall not constitute a part of this Agreement nor be
considered in the interpretation of this Agreement, and the following shall
apply:  This Agreement was prepared
jointly by the parties hereto and not by any party to the exclusion of the
other.


21.10       The failure either Party to exercise any
right or rights hereunder shall not be considered a waiver of such right or
rights in the future.


21.11       Except for the right of each Party to, at
its option, record a recording memorandum of this Agreement in the real
property records of the offices of the County Clerks for the applicable
Counties where Producer’s Gas leasehold interests or Wells within the
Commitment Area and any parts of the System are located in order to impart
constructive notice of the existence of this Agreement to third parties, each
Party agrees that it shall maintain this Agreement and the contents thereof in
strict confidence, and that it shall not cause or permit disclosure thereof to
any third party without the express written consent of the other party;
provided, however, that disclosure is permitted in the event and to the extent
such party is required by a court or agency exercising jurisdiction over the
subject matter thereof, by order or by regulation.


21.12       This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.



 36
 






 



21.13       The terms and
provisions of this Agreement are intended solely for the benefit of each party
hereto and their respective successors or permitted assigns, and it is not the
intention of the parties to confer third-party beneficiary rights upon any
other person or entity other than any person or entity entitled to indemnity
under this Agreement.


IN WITNESS WHEREOF, the parties hereto
have caused this Agreement to be duly executed in several counterparts, each of
which is an original, as of the date first written above.




PRODUCER:


	
  

  	
   

  	
  NEWFIELD EXPLORATION MID-CONTINENT INC.

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Lee Boothby

  	
   

  
	
  Title:

  	
   

  	
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 


GATHERER:


 


	
  

  	
   

  	
  MARKWEST WESTERN OKLAHOMA GAS COMPANY, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Frank Semple

  	
   

  
	
   

  	
   

  	
  Frank Semple

  	
   

  
	
  Title:

  	
   

  	
  President and CEO

  	
   

  



 


GUARANTOR:


The undersigned hereby joins in this Agreeement to further
evidence its guaranty commitments under Section XX, above, and under the
Guaranty Agreement referenced therein.


	
  

  	
   

  	
  MARKWEST ENERGY PARTNERS L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Frank Semple

  	
   

  
	
  Title:

  	
   

  	
  President and CEO

  	
   

  



 



 37














 


ATTACHMENTS:


	
  Exhibit A:

  	
   

  	
  Map showing
  geographical scope of the Commitment Area

  	
   

  
	
  Exhibit
  B:

  	
   

  	
  System Schematic,
  Priorities and Construction Schedule for Construction of Pipeline and Other
  Facilities

  	
   

  
	
  Exhibit
  B-1:

  	
   

  	
  Categories of Assets,
  Rights and Interests Excluded from the term Producer’s System

  	
   

  
	
  Exhibit
  C:

  	
   

  	
  Exhibit of Certain Actions,
  Suits or Proceedings of Producer and Gatherer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Exhibit
  D:

  	
   

  	
  List of Certain of the
  Reporting and Notification Obligations

  	
   

  
	
  Exhibit
  E:

  	
   

  	
  NFX System Commitments

  	
   

  
	
  Exhibit
  F:

  	
   

  	
  NFX Compressor
  Agreements

  	
   

  
	
  Exhibit
  G:

  	
   

  	
  Fee Schedule

  	
   

  
	
  Exhibit
  H:

  	
   

  	
  Limits referred to in
  Section 10.4

  	
   

  
	
  Exhibit I:

  	
   

  	
  Guaranty Agreement (from parent company)

  	
   

  



 



 38














 


 


Exhibit “A”


 


 


**


 



 39
 






 



 


GAS GATHERING AGREEMENT


 


Exhibit “B”


 


 


**


 



 40
 






 



 


EXHIBIT “B-I”


 


 


**


 



 41
 






 



 


EXHIBIT “C”


 


 


MarkWest Eastern Oklahoma Gas
Company, LLC Lawsuits


 


None


 


 


 


 


Newfield Exploration
Mid-Continent, Inc. Lawsuits


 


None


 



 42
 






 



 


EXHIBIT “D”


 


 


**


 



 43
 






 



 


 



 44
 






 



 


EXHIBIT “E”


 


 


**


 



 45
 






 



 


EXHIBIT F


 


 


**


 



 46
 






 



 


EXHIBIT G


 


 


**


 



 47
 






 



 


EXHIBIT H


 


 


**


 



 48














 


EXHIBIT I


GUARANTY


THIS GUARANTY dated as of September 21, 2006, is
made by MarkWest Energy Partners, L.P., a Delaware limited partnership whose
address is 1515 Arapahoe Sheet, Suite 700 Denver, Colorado 80202 (“Guarantor”),
in favor of Newfield Exploration Mid-Continent Lnc., a Delaware corporation (“Newfield”),
whose address is 110 West 7th Street, Suite 1300 Tulsa, Oklahoma 74119.


WITNESSETH:


WHEREAS, Guarantor owns directly, or indirectly
through one or more subsidiaries, all of the outstanding shares of stock in
MarkWest Western Oklahoma Gas Company, L.L.C, an Oklahoma limited liability
company whose address is 2500 City West, Ste. 740 Houston, Texas 77042 (the “Company”);
and


WHEREAS, the Company has entered into one or
more agreements with Newfield described on Schedule I hereto (such agreements
described on Schedule I, as they may be &om time to time amended, including
all other mutual agreements entered into in substitution, renewal or extension
therefore or thereof, in whole or in part, being herein collectively called the
“Agreements”);


WHEREAS, it is a condition precedent to Newfield’s
execution of transactions with the Company pursuant to the Agreements that
Guarantor execute and deliver to Newiield a satisfactory guaranty of the
Company’s obligations under the Agreements;


WHEREAS, Guarantor and the Company are mutually
dependent on each other in the conduct of their respective businesses as an
integrated operation; and


WHEREAS, Guarantor’s general partner or general
partners have determined that Guarantor’s execution, delivery and performance
of this Guaranty may reasonably be expected to benefit Guarantor, directly or
indirectly, and are in the best interest of Guarantor;


NOW, TIIEREFORE, in consideration of the
premises and of the benefits to be received by Guarantor by virtue of Newfield’s
entering into the Agreements, and in consideration of the payment to Guarantor
of Ten Dollars and other good and valuable consideration, the receipt and
sufficiency of which consideration is hereby acknowledged, and in order to
induce Newfield to enter into the Agreements, Guarantor hereby agrees with
Newfield as follows:


Section 1.              Definitions. As used herein the following terms
shall have the following meanings:


“Obligations”
means collectively all of the obligations and undertakings which are guaranteed
by Guarantor and described in subsections (a) and (b) of Section 2 hereof.



 49
 






 



“Obligors”
means the Company, Guarantor and any other endorsers, guarantors or obligors,
primary or secondary, of any or all of the Obligations.


“Person”
means any individual, firm, corporation, partnership, limited liability
company, trust, joint venture, governmental entity or other entity.


Section 2.               Guaranty.


(a)           Guarantor hereby irrevocably,
absolutely, and unconditionally guarantees to Newfield the prompt, complete,
and full payment when due, and no matter how the same shall become due, of:


(i)                                     all
amounts due Newfield by the Company under the Agreements; and


(ii)                                  any
and all other indebtedness or liabilities which the Company may at any time owe
to Newfield on account of or relating to the Agreements or any of them, whether
incurred heretofore or hereafter or concurrently herewith, voluntarily, whether
owed alone or with others, and whether fixed, contingent, absolute, inchoate, liquidated
or unliquidated.


(b)           Guarantor hereby irrevocably,
absolutely and unconditionally guarantees to Newfield the prompt, complete and
full performance, when due, and no matter how the same shall become due, of aU
obligations and undertakings of the Company to Newfield under, by reason of, or
pursuant to any of the Agreements.


(c)           If the Company shall for any reason
fail to pay any Obligation, as and when such Obligation shall become due and
payable, Guarantor will, forthwith upon demand by Newfield, pay such
Obligations in full to Newfield. If the Company shall for any reason fail to
promptly perform any Obligations, Guarantor will, foahwith upon demand by
Newfield, as applicable (to be determined by the action demanded of Guarantor
by Newfield), perform the Obligations or pay the amount of damages recoverable
under the Agreements, if any, on account of such non-performance.


(d)           Guarantor shall be primarily liable
hereunder for the payment and performance of the Obligations.


Section 3.               Unconditional
Guaranty.


(a)           No action which Newfield may take or
omit to take in connection with any of the Agreements or any of the
Obligations, and no course of dealing of Newfield with any Obligor or any other
Person, shall release or diminish Guarantor’s Obligations, liabilities,
agreements, or duties hereunder, nor shall the same affect this Guaranty in any
way or afford Guarantor any recourse against Newfield, regardless of whether
any such action or inaction may increase the risks to or liabilities of
Newfield or any Obligor. Without limiting the foregoing, Guarantor hereby
expressly agrees that Newfield may, from time to time, without notice to or the
consent of Guarantor:



 50
 






 



(i)            amend, change or modify, in whole or
in part, any one or more of the Agreements (with the agreement of the Company),
and give or refuse to give any waivers or other indulgences with respect
thereto;


(ii)           neglect, delay,
fail, or refuse: to take or prosecute any action for the enforcement of any of
the Obligations, to bring suit against any Obligor or any other Person, or to
take any other action concerning the Obligations or the Agreements


(iii)          change, rearrange,
extend, or renew the time, terms, or manner for payment or performance of any
one or more of the Obligations (with the agreement of the Company);


(iv)          compromise or settle
any unpaid or unperformed Obligation or any other Obligation or amount due or
owing, or claimed to be due or owing, under any one or more of the Agreements
(with the agreement of the Company);


(v)           apply all monies
received from any Obligor in any manner permitted under the Agreements as
Newfield may determine to be in Newfield’s best interest, without in any way
being required on account of this Guaranty to inarshall security or assets or
to apply all or any part of such monies upon any particular Obligations.


(b)           No action or inaction of any Obligor
or any other Person, and no change of law or circumstances, shall release or
diminish Guarantor’s obligations, liabilities, agreements or duties hereunder,
affect this Guaranty in any way, or afford Guarantor any recourse against
Newfield. Without limiting the foregoing, the obligations, liabilities,
agreements, and duties of Guarantor under this Guaranty shall not he released,
diminished, impaired, reduced, or affected by the occurrence of any of the
following, from time to time, even if occurring without notice to or without
the consent of Guarantor:


(i)            any voluntary or involuntary
liquidation, dissolution or sales of all or substantially all assets,
marshalling of assets or liabilities, receivership, conservatorship, assignment
for the benefit of creditors, insolvency, bankruptcy, reorganization,
arrangement, or composition of any Obligor or any of the assets of any Obligor
under laws for the protection of debtors, or any discharge, impairment,
modification, release, or limitation of the liability of, or stay of actions or
lien enforcement proceedings against, any Obligor, any properties of any
Obligor, or the estate in bankruptcy or any Obligor in the course of or
resulting from any such proceedings;


(ii)           the failure by Newfield to file or
enforce a claim in any proceeding described in the immediately preceding
subsection (i) or to take any other action in any proceeding to which any
Obligor is a party;



 51
 






 



(iii)          the release by operation of law of the
Company in any proceeding described in subsection (i) or any similar
proceeding, or the release of any other Obligor from any of the Obligations or
any other obligations to Newfield; or


(iv)          the fact that Guarantor may have
incurred directly part of the Obligations or is otherwise primarily liable
therefor.


(c)           Newfield may invoke the benefits of
this Guaranty before pursuing any remedies against any Obligor or any other
Person for the payment or performance of any of the Obligations. Newfield may
maintain an action against Guarantor on this Guaranty without joining any other
Obligor therein and without bringing separate action against any other Obligor.


(d)           If payment to Newfield of any
Obligation is held to constitute a preference or a voidable transfer under
applicable state or federal laws, or if for any other reason Newfield is
required to refund such payment to the payor thereof or to pay the amount
thereof to any other Person, such payment to Newfield shall not constitute a release
of Guarantor from any liability hereunder, and Guarantor agrees to pay such
amount to Newfield on demand and agrees and acknowledges that this Guaranty
shall continue to be effective or shall be reinstated, as the case may be, to
the extent of any such payment or payments.


(e)           This is a continuing guaranty and
shall apply to and cover all Obligations and renewals and extensions thereof
and substitutions therefor from time to time.


Section 4.               Waiver. Guarantor hereby
waives, with respect to the Obligations and this Guaranty:


(a)          notice of the incurrence
of any Obligation by the Company;


(b)         notice that Newfield, any Obligor, or any other Person has
taken


relating thereto or that any Obligor is in
default under any of the Agreements;


(c)   demand, presentment for payment, and notice
of demand, dishonor, nonpayment, or nonperformance; and


(d)         all
other notices whatsoever.


Section 5.              Exercise
of Remedies. Newfield shall have the right to enforce, from time to time,
in any order and at Newfield’s sole discretion, any rights, powers and remedies
which Newfield may have under the Agreements or otherwise, including, but not
limited to, issues and profits, the exercise of remedies against personal
property, or the enforcement of any assignment of leases, rentals, oil or gas
production, or other properties or rights, whether real or personal, tangible
or intangible; and Guarantor shall be liable to Newfield hereunder for any
deficiency 



 52
 






 



resulting
from the exercise by Newfield of any such right or remedy even though the
rights which Guarantor may have against the Company or other Person may be
destroyed or diminislied by the exercise of any such right or remedy. No
failure on the part of Newfield to exercise, and no delay in exercising, any
right hereunder or under any other Agreements shall operate as a waiver hereof
or thereof, nor shall any single or partial exercise of any right preclude any
other or further exercise thereof or the exercise of any other right. The
rights, powers and remedies of Newfield provided herein and in the other are
cumulative and are in addition to, and not exclusive of, any other rights,
powers or remedies provided by law or in equity. The rights of Newfield
hereunder ace not conditional or contingent on any attempt by Newfield to
exercise any of its rights under any other Agreements against any Obligor or
any other Person.


Section 6.              No
Subrogation. Insofar as Guarantor and the Company are concerned, any
payment hereunder by Guarantor shall be deemed a contribution to the capital of
the Company, and Guarantor shall have no right of subrogation, contribution,
reimbursement, indemnification exoneration and any other remedy which Guarantor
may have against Company or any other Person with respect to this Guaranty or
the duties of Guarantor under the other Agreements or applicable law. Guarantor
hereby irrevocably agrees, to the fullest extent permitted by law, that it will
not exercise (and herein waives) any rights against any Company or any other
Person which it may acquire by way of subrogation, contribution, reimbursement,
indemnification or exoneration under or with respect to this Guaranty, the
other Agreements or applicable law, by any payment made hereunder or otherwise.
If the foregoing waivers are adjudicated unenforceable by a court of competent
jurisdiction, then Guarantor agrees that no liability or obligation of the
Company that shall accrue by virtue of any right to subrogation, contribution,
indemnity, reimbursement or exoneration shall be paid, nor shall any such
liability or transaction be deemed owed, until all of the Obligations shall
have been paid in full.


Section 7.              Successors
and Assigns. Guarantor’s rights or obligations hereunder may not be
assigned or delegated, but this Guaranty and such obligations shall pass to and
be fully binding upon the successors of the Guarantor, as well as Guarantor.
This Guaranty shall apply to and inure to the benefit of Newfield and its
successors or assigns. Without limiting the generality of the immediately
preceding sentence, Newfield may assign, grant a participation in, or otherwise
transfer any Obligation held by it or any portion thereof under any Agreements,
to any other Person, and such other Person shall thereupon become vested with
all of the benefits in respect thereof granted to Newfield hereunder with
respect to the Obligation or portion thereof assigned by Newfield to such other
Person.


Section 8.              Representations
and Warranties. Guarantor hereby represents and warrants as follows:


(a)      the “WHEREAS” recitals at the beginning of
this Guaranty are true and correct in all respects;


(b)     the
execution, delivery and performance of this Guaranty by the Guarantor has been
duly authorized in all material respects by all necessary limited partnership
action on the part of Guarantor pursuant to the Guarantor’s certificate of
limited partnership, limited partnership agreement, other constituent documents
and/or applicable law, the execution and delivery of this Guaranty by the
general partner executing this Guaranty oil behalf of the General Partner below
has been duly authorized in all material 



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respects by all necessary corporate or
similar action on the part of the general partner or general partners of the
Guarantor, and written documentation (in the form of certified resolutions,
other certificates or other documentation reasonably satisfactory to Newfield)
shall be provided to Newfield upon its request;


(c)      the value of the consideration received and to be received by
Guarantor in connection herewith is reasonably worth at least as much as the
liability and Obligations of Guarantor hereunder, and the incurrence of such
liability and obligations in return for such consideration may reasonably be
expected to benefit Guarantor, directly or indirectly; and


(d)     Guarantor is not “insolvent” on the date hereof (that is, the
sum of Guarantor’s absolute and contingent liabilities, including the
Obligations, does not exceed the fair market value of Guarantor’s assets).
Guarantor’s capital is adequate for the business in which Guarantor is engaged
and intends to be engaged. Guarantor has not hereby incurred, nor does
Guarantor intend to incur or believe that it will incur, debts which will be
beyond its ability to pay as such debts mature.


Section 9.              Governing
Law. This Guaranty is to be performed in the state of Texas and shall be
governed by and construed and enforced in accordance with the laws of such
state applicable to contracts made to be performed entirely within such state.
Guarantor hereby irrevocably submits itself to the non-exclusive jurisdiction
of the state and federal courts of the State of Texas, County of Harris, and
agrees and consents that service of process may be made upon it in any legal
proceeding related hereto by serving the Secretary of State of the State of
Texas (or by other service) in accordance with applicable provisions of the
Texas revised civil statutes, as amended, governing service of process upon
foreign limited partnerships.


Section 10.            Invalidity
of Particular Provisions. If any term or provision of this Guaranty shall be
determined to be illegal or unenforceable, all other terms and provisions
hereof shall nevertheless remain effective and shall be enforced to the fullest
extent permitted by applicable law.


Section 11.            Headings
and References. The headings used herein are for purposes of convenience
only and shall not be used in construing the provisions hereof. The words “hereof”,
“herein” and similar words refer to this Guaranty as a whole and not to any
particular subdivision unless expressly so limited. The word “or” is not
exclusive. Pronouns in masculine, feminine and neuter genders shall be
construed to include any other gender, and words in the singular form shall be
construed to include the plural and vice versa, unless the context otherwise
requires.


Section 12.            Term.
This Guaranty shall be irrevocable until all of the Obligations have been
completely and finally paid and performed.


Section 13.            Limitation
on Interest. Newfield and Guarantor intend to contract in strict compliance
with applicable usury law from time to time in effect, and provisions of the
Agreement limiting the interest for which Guarantor is obligated are expressly
incorporated herein by reference.


Section 14.            Counterparts. This Guaranty may be executed in any
number of counterparts, each of which when so executed shall he deemed to
constitute one and the same 



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Guaranty.



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IN WITNESS WHEREOF, Guarantor has executed and
delivered this Guaranty as of the date first written above.


	
  

  	
  MARKWEST ENERGY PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
  By: MarkWest Energy GP, LLC, its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ Frank Semple

  
	
   

  	
   

  	
  Name: 

  	
  Frank Semple

  
	
   

  	
   

  	
  Title: 

  	
  President & CEO

  




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SCHEDULE 1


TO


Guaranty dated of


MarkWest Energy Partners, L.P. in favor
of Newfield Exploration Mid-Continent Inc.


 


AGREEMENTS


 


CONSTRUCTION, OPERATION AND GAS GATHERING AGREEMENT dated
entered into by and between Newfield Exploration Mid-Continent Inc., as
Producer, and MarkWest Western Oklahoma Gas Company, L.L.C., as Gatherer.


 



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