exv10w25



 





Exhibit 10.25




Notice of Request for Confidential Treatment




     Certain confidential material contained in this exhibit has been omitted pursuant to a request
for confidential treatment and has been filed separately with the Securities and Exchange
Commission.



     The omitted material has been identified in the following exhibit by the insertion of three
asterisks (***) in the precise places in the exhibit where the registrant has deleted information.



 









 





LIN 0294 00*




GAS PURCHASE CONTRACT




Between COG OIL & GAS LP as Seller




And DUKE ENERGY FIELD SERVICES, LP as Buyer




Dated November 1, 2006 




INDEX




	 	 	 	 	 
	SECTION	 	PAGE
	1. COMMITMENT
	 	 	1	 
	2. DELIVERY POINTS
	 	 	1	 
	3. DELIVERY PRESSURE
	 	 	1	 
	4. QUANTITY
	 	 	3	 
	5. PRICE
	 	 	5	 
	6. TERM
	 	 	9	 
	7. ADDRESSES AND NOTICES
	 	 	9	 
	8. TERMINATION OF PRIOR CONTRACTS AND RELEASE
	 	 	10	 
	9. CONFIDENTIALITY
	 	 	11	 
	SIGNATURE PAGE
	 	 	12	 
	 
	 	 	 	 
	EXHIBIT A
	 	 	 	 
	GENERAL TERMS AND CONDITIONS
	 	 	 	 
	 
	 	 	 	 
	A. DEFINITIONS
	 	 	A-1	 
	B. DELIVERY DATE; COMPRESSION
	 	 	A-1	 
	C. RESERVATIONS OF SELLER
	 	 	A-2	 
	D. METERING AND MEASUREMENT
	 	 	A-2	 
	E. DETERMINATION OF GAS COMPOSITION AND HEATING VALUE
	 	 	A-3	 
	F. QUALITY OF GAS
	 	 	A-3	 
	G. BILLING AND PAYMENT
	 	 	A-4	 
	H. FORCE MAJEURE
	 	 	A-5	 
	I. WARRANTY OF TITLE
	 	 	A-5	 
	J. ROYALTY AND OTHER INTERESTS
	 	 	A-5	 
	K. SEVERANCE AND SIMILAR TAXES
	 	 	A-5	 
	L. INDEMNIFICATION AND RESPONSIBILITY FOR INJURY OR DAMAGE
	 	 	A-5	 
	M. RIGHT OF WAY
	 	 	A-6	 
	N. ASSIGNMENT
	 	 	A-6	 
	O. MISCELLANEOUS PROVISIONS
	 	 	A-7	 






SCHEDULE A – LOCO HILLS AREA

SCHEDULE B – NON-LOCO HILLS AREA

SCHEDULE C – PRIOR CONTRACTS





 









 








LIN 0294 00*




GAS PURCHASE CONTRACT




     This Gas Purchase Contract (“Contract”) is entered as of  November 1, 2006 (“Effective
Date”), between COG OIL & GAS LP (“Seller”) and DUKE ENERGY FIELD SERVICES, LP (“Buyer”).



     For and in consideration of the mutual covenants contained herein, the parties agree as
follows:



     1. COMMITMENT. Except as to lands and leases committed to another purchaser as of the
Effective Date, Seller will sell and deliver and Buyer will purchase and receive gas produced from
all wells now or later located on all oil and gas interests now or later owned or controlled by
Seller on or allocated to the following lands in Eddy and Lea Counties, New Mexico:



          See Schedules “A” and “B” attached hereto and incorporated by reference.
Definitions and General Terms and Conditions included in this Contract are attached as Exhibit A.
All Exhibits referenced herein are attached and incorporated by reference.




     2. DELIVERY POINTS. The Delivery Points for gas to be delivered by Seller to
Buyer for existing sources of production will be at the inlets of Buyer’s Facilities at a mutually
agreeable site at or near Seller’s sources of production. The Delivery Points for future sources
of production committed under this Contract will be established under Section B.2 of Exhibit A.
Title to the gas and all its components shall pass to and vest in Buyer at the Delivery Points
without regard to the purposes for which Buyer may later use or sell the gas or its components.



     3. DELIVERY PRESSURE.




     3.1 Delivery Pressure. Seller will deliver the Gas at the Delivery Points at a
pressure sufficient to enable it to enter Buyer’s Facilities against the working pressure at
reasonably uniform rates of delivery, not to exceed the maximum allowable operating pressure
established by Buyer or pressures that prevent others from producing ratably.



     3.2 Penalty for Exceeding Contract Pressure.




     (a) Notwithstanding any other provision of this Contract, including without limitation,
Section B.4 of Exhibit A, Buyer shall maintain (1) a System Average Working Pressure (as defined
below) of no greater than *** (***) psig for the Delivery Points located on the acreage described
in Schedule A (“Loco Hills Area Contract Pressure”), and (2) a System Average Working Pressure (as
defined below) of no greater than *** (***) psig for Delivery Points located on the acreage



 









 







described in Schedule B (“Non-Loco Hills Area Contract Pressure”). “Contract Pressure” shall
mean either the Loco Hills Area Contract Pressure or the Non-Loco Hills Area Contract Pressure, as
the case may be.



     Notwithstanding the foregoing, the following lands (the “Willow Lands”) shall, at Seller’s
option, be released from the terms of this Contract and deleted from Schedule B for all purposes
if for any Month after the second anniversary of the Effective Date the average pressure at the
Delivery Point located on such lands exceeds *** (***) psig: SE/4, Section 16, T-17S, R-31E, Eddy
County, New Mexico.



     Seller’s option to terminate this Contract as to the Willow Lands shall terminate on March
31, 2009, unless exercised in writing prior to such date. If Seller does not exercise such
option, then as of April 1, 2009, and thereafter, the Willow Lands shall be considered to be a
part of the Loco Hills Area and Schedules A and B shall be deemed amended by deleting the Willow
Lands from Schedule B and adding the Willow Lands to Schedule A for all purposes.



     (b) If the System Average Working Pressure in either the Loco Hills Area or the Non-Loco
Hills Area exceeds the applicable Contract Pressure on a monthly average basis for two consecutive
Months (a “System Default Occurrence”) , then Seller shall be paid a pressure penalty payment
(“Pressure Penalty Payment”). The Pressure Penalty Payment shall commence as of the first day of
the second Month of such System Default Occurrence, and continue for each month thereafter, and
end the first day of the Month during which Buyer provides a System Average Working Pressure below
the specified Contract Pressure. The System Pressure Penalty Payment shall be equal to ***
(***) percentage points added to the payment percentages due Seller under Paragraph 5.1 of this
Contract. The Pressure Penalty Payment shall only apply to the respective areas described in (a)
above in which there was a System Default Occurrence (i.e., Loco Hills Area Delivery Points shall
be paid a Pressure Penalty Payment only when the Loco Hills Area Contract Pressure is exceeded for
two consecutive Months, and Non-Loco Hills Area wells shall be paid a Pressure Penalty Payment
only when the Non-Loco Hills Area Contract Pressure is exceeded for two consecutive Months).



     (c) Buyer may make Pressure Penalty Payments due hereunder to Seller as either (1) an
increase in the payment percentages reflected on Seller’s Gas statement for the applicable Month,
or (2) in the form of a separate credit to Seller on Seller’s Gas statement for the applicable
Month.



- 2 -









 





     (d) “System Average Working Pressure” for the Loco Hills Area shall mean the volume-weighted
average pressure measured at the downstream static pressure tap of the meter at all Delivery
Points on acreage described in Schedule A of this Contract, calculated each Month by multiplying
the total daily volume for each day during the Month at each Delivery Point times the average
pressure for each corresponding day during such Month at such Delivery Point, summing the
resulting products for all such days and Delivery Points, and dividing the resulting sum by the
sum of such daily volumes. The “System Average Working Pressure” for the Non-Loco Hills Area
shall mean the volume-weighted average pressure measured at the downstream static pressure tap of
the meter at all Delivery Points on acreage described in Schedule B of this Contract, calculated
each Month by multiplying the total daily volume for each day during the Month at each Delivery
Point times the average pressure for each corresponding day during such Month at such Delivery
Point, summing the resulting products for all such days and Delivery Points, and dividing the
resulting sum by the sum of such daily volumes.



     (e) In the calculation of the System Average Working Pressure, Buyer may exclude any Day
during which a Force Majeure condition exists or there is any scheduled shutdown of Buyer’s
Facilities for maintenance; provided, however, for the purposes of this Paragraph 3, routine
maintenance and downtime associated with Buyer’s Loco Hills gathering system and associated
compressor stations shall not be considered Force Majeure incidents, and Days during which such
activities have occurred shall be included in the calculation of the System Average Working
Pressure in determining whether Buyer has exceeded Contract Pressure.



     (f) Within 30 days after the end of each Month, Buyer shall provide Seller an electronic
copy of all reports and calculations made in connection with the determination of System Average
Working Pressures and any Pressure Payment Penalties, together with all supporting data.



     4. QUANTITY.



     (a) Subject to the terms hereof, Seller shall deliver and Buyer shall purchase and take
Seller’s Gas, exercising commercially reasonable efforts to accept, process and market Gas for
resale and operate its facilities in an effort to maintain consistent takes of all quantities made
available by Seller during the term hereof. If Buyer takes less than the full quantities
available, subject to the terms hereof, Buyer will use commercially reasonable efforts to purchase
Gas from the lands covered by this Contract ratably with its purchases of similar Gas in each
common



- 3 -









 







gathering system or area in compliance with Buyer’s existing contracts and with applicable
laws and regulations, including ratable purchases from Buyer’s Affiliates. Should curtailment be
necessary, Buyer shall designate how much volume shall be curtailed. Seller shall then determine
which production shall undergo the curtailment.




	 	(i)	 	As of December 2006 and continuing each December thereafter for the term of
the Contract, Seller shall provide, in good faith, to Buyer with the following: 1) a
volume projection for the next two ensuing calendar years, such volume projection will
be exclusive of capital uplift volume and 2) Seller’s preliminary plans for capital
expenditures that are to be completed during the ensuing calendar year and that are
intended to increase or enhance production, provided that Buyer recognizes and
acknowledges that such information will be Seller’s good faith estimates only and that
Seller shall have no liability for any failure to achieve such projected production
volumes or expenditures. Such capital expenditures to include those for the drilling
of a new well, re-completion into a new formation, additions of pay zones in an
existing formation, work-overs, and new central delivery points. With such disclosure
of preliminary plans for capital expenditures, Seller shall provide Buyer with a
volume projection for the next ensuing calendar year. Such volume projection will be
inclusive of capital uplift volume.
	 
	 	(ii)	 	Commencing the first quarter 2007 and continuing quarterly thereafter for the
remaining term of this Contract, Seller and Buyer shall meet to confirm Seller’s plans
for capital expenditures to be completed during that calendar year. Likewise, at each
quarterly meeting, Buyer shall disclose Buyer’s (1) capital and maintenance program
contemplated on Buyer’s Facilities during that year, including that portion of Buyer’s
capital program pertinent to providing gathering and compression services for both then
existing volume and volume uplift attributable to Seller’s capital expenditures (if
any); and (2) schedule for maintenance of Buyer’s Facilities for the ensuing twelve
months, including any maintenance which will require a shut down of the Buyer’s
Facilities.




(b) In the event Buyer curtails or fails to take Seller’s production due to insufficient capacity
in Buyer’s facilities (other than capacity limitations caused by a Force Majeure event or any
scheduled


- 4 -









 






shut down of Buyer’s Facilities for maintenance), then the Base Volume (as defined
below) shall be reduced by the amount of Seller’s Gas which was curtailed or otherwise not taken
during such Month The amount of Gas curtailed or otherwise not taken by Buyer shall be estimated in good
faith by the parties based upon Seller’s production volumes during the period immediately prior to
the subject period. Buyer and Seller agree that for the purposes of this Paragraph 4(b), Buyer’s
failure to maintain System Average Working Pressures at or below the applicable Contract Pressure
specified in Paragraph 3.2(a), above, shall not constitute a curtailment of Seller’s production,
and that Seller’s sole remedy for exceeding the applicable Contract Pressure shall be the Pressure
Penalty Payment specified in Paragraph 3.2 (b) above.



(c) Seller may dispose of any Gas not taken by Buyer for any reason, including events of Force
Majeure, subject to Buyer’s right to resume purchases as provided herein. If Buyer does not take
Gas for 7 consecutive Days, Seller may secure a temporary market for a term of up to 60 days, and
Buyer may resume purchases only upon 30 Days advance written notice as of the beginning of a Month
following such term, unless otherwise agreed; provided, however, that this Paragraph (c) shall not
apply to any scheduled shut down of Buyer’s Facilities for annual maintenance.



(d) Seller will use commercially reasonable efforts to deliver Gas meeting the quality
requirements of Exhibit A Section F and to avoid delivery of Inferior Liquids as defined in
Exhibit A Section A(h). If the Gas at any Delivery Point becomes insufficient in volume, quality,
or pressure, Buyer may cease Gas takes at such Delivery Point for so long as the condition exists.
If Buyer fails to take or otherwise ceases taking Gas under this Paragraph 4(d) for 30
consecutive Days for reasons other than quality [Exhibit A Section F] or Force Majeure [Exhibit A
Section H], Seller may terminate this Contract with respect to the affected Delivery Points as to
the then productive zones upon 30 Days advance written notice to Buyer; provided that during the
notice period Buyer may resume consistent takes and purchases, and thereby avoid Contract
termination under Seller’s notice.




     5. PRICE.



     5.1 Consideration. As full consideration for the Gas and all its components delivered
by Seller and received by Buyer each Month, Buyer shall pay Seller:




(a) As to the first *** (***) Mcf per Day in the aggregate delivered under this
Contract each Month (the “Base Volume”):



- 5 -









 






(1) *** percent (***%) of the amount determined under
Paragraph 5.2 below for the sale of net Residue Gas allocated
to Seller’s Gas; and




(2) *** percent (***%) of the net proceeds determined under
Paragraph 5.3 below from the sale of any NGL’s saved and sold
in liquid form at Buyer’s Facilities and allocated to Seller’s
Gas.




(b) As to any incremental volume in excess of *** (***) Mcf per Day in the
aggregate delivered under this Contract each Month:




(1) *** percent (***%) of the amount determined under
Paragraph 5.2 below for the sale of Residue Gas allocated to
Seller’s Gas; and




(2) *** percent (***%) of the net proceeds determined
under Paragraph 5.3 below from the sale of any NGL’s saved and
sold in liquid form at Buyer’s Facilities and allocated to
Seller’s Gas.




Provided, that the total payment and consideration due Seller pursuant to this
Paragraph 5.1 shall be allocated to each Delivery Point as a weighted average for
the aggregate volumes purchased under this Contract.




No separate payment or value calculation is to be made under this Contract for
helium, sulfur, CO2, other non-hydrocarbons, or Inferior Liquids.



     5.2 Residue Gas Value. The net Residue Gas value will be determined by multiplying
the MMBtu’s of Residue Gas allocable to Seller, as determined in accordance with Paragraph 5.5
below, times the arithmetical average of the following two index prices per MMBtu published in
Inside F.E.R.C.’s Gas Market Report in its first publication of the Month in which the Gas is
delivered for “Prices of Spot Gas Delivered to Pipelines”: 1) El Paso – Permian Basin and 2)
Transwestern – Permian Basin. If the Index Price quotation is discontinued or materially
modified, Buyer and Seller will select another publication that enables calculation of an Index
Price closely comparable to that previously used. If a change in the Index Price becomes
necessary, Buyer will so inform Seller by written notice, setting forth its proposed changes.
Should the parties fail to agree upon a successor publication within a timely fashion, the price
utilized shall be Buyer’s plant(s) weighted average price of sales for the Month for which pricing
is being determined.



     5.3 NGL Value. The net value of any recovered NGLs attributable to Seller will be
determined by multiplying the quantity of each NGL component attributable to Seller’s Gas, as
determined in accordance with Paragraph 5.5 below, by the average price per gallon for each NGL




- 6 -









 







component f.o.b. Buyer’s plant or plants. “Average price per gallon for each NGL component f.o.b.
Buyer’s plant or plants” as to each NGL component will mean the simple average of the midpoint
of the daily high/low spot price for (i) ethane in E-P mix, (ii) Non-TET propane, (iii) Non-TET
isobutane, (iv) Non-TET normal butane, and (v) Non-TET natural gasoline (pentanes and heavier)
during the Month as reported for Mont Belvieu, Texas by the Oil Price Information Service (or in
its absence, a comparable successor publication mutually agreed to by Buyer and Seller) less a
transportation, fractionation, and storage (“TF&S”)
fee of 5.0¢ per gallon. As of the beginning
of each calendar year beginning with 2008, Buyer will adjust the current year’s TF&S fee upward or
downward as follows, but it will never be less than the initial fee. Buyer will adjust (i) 55% of
the TF&S fee by an amount equal to the annual percentage of change in the preliminary estimate of
the implicit price deflator, seasonally adjusted, for the gross domestic product (“GDP”) as
computed and most recently published by the U.S. Department of Commerce, rounded to the nearest
100th cent, or in its absence, a similar successor adjustment factor mutually agreed to
by Buyer and Seller, and (ii) 45% of the TF&S fee by the percentage difference between the yearly
average of the previous year’s Monthly Index Prices defined in Section 5.2 above and those for the
second previous year. Should the parties fail to agree upon a successor publication within a
timely fashion, the price utilized shall be Buyer’s plant(s) weighted average price of sales for
the month for which pricing is being determined.



     5.4 Low Volume Delivery Points. If the total volume made available to Buyer at any
Delivery Point is less than three hundred (300) Mcf per Month for three consecutive Months, Seller
will thereafter pay Buyer a low volume fee of $250.00 per Month per low volume Delivery Point.
The low volume fee will remain in effect for each Month until the quantity made available to the
Delivery Point is again at least three hundred (300) Mcf per Month. Buyer may deduct this fee
from any proceeds payable to Seller or may invoice Seller for the amount due, with such invoice to
be paid within 30 days of the invoice date.



     5.5 Allocation of Residue Gas and NGLs. Subject to the terms hereof, Buyer will
determine the Residue Gas and NGLs attributable to Seller using the following definitions and
procedures. Additional definitions are in Section A of Exhibit A.




     a. Field Compression. All compression downstream from the Delivery
Points, including that adjacent to the plant inlet, that compresses Gas to the plant
inlet pressure.



- 7 -









 






     b. Plant Inlet Gallons. The quantity of each NGL component attributable
to Seller delivered to the plant inlet will be determined by multiplying the gallons
of
each component contained in the Gas delivered by Seller at each Delivery Point by the
applicable percentage as follows:



	 	 	 
	Pressure	 	Percentage
	Low Pressure

	 	94%







     c. NGLs Attributable to Seller. The quantity of each NGL component
attributable to Seller’s Gas will be determined by multiplying Seller’s Plant Inlet
Gallons times the following fixed recovery percentages:



	 	 	 
	Ethane
	 	85%
	Propane
	 	90%
	Iso & Normal Butanes
	 	97%
	Pentanes & Heavier
	 	99%







     d. Residue Gas Attributable to Seller. The MMBtus of Residue Gas
attributable to Seller will be the sum of the MMBtus of methane and heavier
hydrocarbons contained in the Gas delivered at the Delivery Points by Seller, less
the MMBtus contained in the NGL gallons allocated to Seller’s Gas determined under
Paragraph 5.5(c) above, less the fixed percentage below of the MMBtus delivered at
each Delivery Point for field compression and plant fuel, losses, and
unaccountables:



	 	 	 
	Low Pressure
	 	12%







Whenever Force Majeure prevents normal gathering and processing operations for
Seller’s Gas, fixed recovery percentages will not apply, and Seller’s attributable
NGL gallons and Residue Gas will be based on Seller’s pro rata share of actual
gathering and processing results during those periods based on Gas compositions,
volumes from each common source, and an equitable distribution among suppliers of
fuel, losses, and unaccountables, in a manner similar to that used for Buyer’s
purchase contracts that call for allocations based on actual results, consistently
applied in good faith. Buyer will include the adjusted overall Monthly recoveries
in its Monthly Gas statement to Seller.




     e. Revenue from Inferior Liquids will be retained by Buyer to defray costs of
treating and handling; Buyer will not allocate or pay for Inferior Liquids.



     5.6 Minimum Margin. If the pricing terms of this Contract, other than this
Paragraph 5.6, and prior to consideration of any Pressure Payment Penalty, would result in a gross
margin to Buyer associated with the purchase, gathering, processing, and resale of Gas sold that
is less than



- 8 -









 







$*** per MMBtu for all of Seller’s Gas processed and sold, Buyer shall be entitled to
recover an amount hereunder sufficient to allow it a minimum gross margin of $*** per MMBtu
(“Minimum Margin”). The Minimum Margin is calculated as the gross NGL value plus the gross Residue
Gas value to Buyer under the terms of this Contract less the payment otherwise due Seller under this
Contract. The Minimum Margin shall be adjusted at the beginning of each calendar year beginning
with 2008 by an amount equal to the annual percentage change in the GDP inflation factor as
defined in Paragraph 5.3 above or any replacement for it. To collect the Minimum Margin, Buyer
will invoice Seller for the amounts due each Month, as applicable, showing all calculations and
enclosing all supporting documentation, with such invoice to be paid by Seller within 30 days of
receipt.



     6. TERM. This Contract shall be in force for a primary term expiring on
October 31, 2016, and from year to year thereafter until canceled by either party as of the end of
the primary term or any anniversary thereafter by giving the other party at least 60 Days’ advance
written notice of termination.



     7. ADDRESSES AND NOTICES. Either party may give notices to the other party
or parties by first class mail postage prepaid, by overnight delivery service, or by facsimile with
receipt confirmed at the following addresses or other addresses furnished by a party by written
notice. Payments due Seller hereunder shall be made at the address indicated below or such other
address furnished by Seller by written notice.



	 	 	 
	Notices to Seller — Correspondence

	 	COG Oil & Gas LP
	 

	 	Attn: Gas Contract Administration
	 

	 	550 W. Texas, Ste. 1300
	 

	 	Midland, TX 79701
	 

	 	Phone: (432) 683-7443
	 

	 	Fax: (432) 683-7441
	 
	 	 
	With copy to:

	 	COG Operating LLC
	 

	 	Attn: General Counsel
	 

	 	550 W. Texas, Ste. 1300
	 

	 	Midland, TX 79701
	 

	 	Phone: (432) 683-7443
	 

	 	Fax: (432) 683-7441
	 
	 	 
	Notices to Seller — Payments:

	 	Account Name: COG Operating LLC
	 

	 	Account Number: 004784057647
	 

	 	Bank Name: Bank of America, N.A.






- 9 -









 






	 	 	 
	 

	 	901 Main Street

	 

	 	Dallas, TX 74202

	 

	 	ABA Routing #: 026009593
	 
	 	 
	Notices to Buyer — Billings & Statements:

	 	Duke Energy Field Services, LP
	 

	 	Attn: Revenue Accounting
	 

	 	5718 Westheimer, Suite 2000
	 

	 	Houston, TX 77057
	 

	 	Phone (713) 627-6200
	 

	 	Fax: (713) 627-6272
	 
	 	 
	 

	 	Duke Energy Field Services, LP
	 

	 	Attn: Division Orders
	 

	 	6120 S. Yale, Suite 1100
	 

	 	Tulsa, OK 74136
	 

	 	Phone: (918) 524-0944
	 

	 	Fax: (918) 524-0997
	 
	 	 
	Buyer — Correspondence

	 	Duke Energy Field Services, LP
	 

	 	Attn: Contract Administration
	 

	 	10 Desta Drive, Suite 400-West
	 

	 	Midland, TX 79705
	 

	 	Phone: (432) 620-4000
	 

	 	Fax: (432) 620-4160






     8. TERMINATION OF PRIOR CONTRACTS AND RELEASE. 


8.1 Termination and Release. Except as provided in this Paragraph 8.1, this Contract
terminates and supersedes the contracts identified on Schedule C (“Prior Contracts”). In
consideration of the covenants contained herein, each party hereby releases the other party, its
affiliates, and its predecessors in interest under the Prior Contracts from any causes of action,
claims, and liabilities (a) that they failed to perform any obligation under the Prior Contracts,
and (b) arising from their relationship as parties to the prior contracts; provided that: (1) this
termination and release does not include, and the parties expressly retain, (i) the right to
receive payments under the Prior Contracts for gas production due and unpaid or for which payment
is not yet due and for which a party has not yet made payment in the ordinary course of business,
and (ii) all rights to audit the books of a party under any Prior Contract and recover any amount
due so long as said audit is conducted within twelve months from the Effective Date of this
Contract.; and (2) this termination and release also does not include matters relating to title to
gas and gas processing rights, Seller’s obligations for payment to third parties and severance
taxes, related interest and penalties, or gas imbalances under Prior Contracts.




- 10 -









 








     9. CONFIDENTIALITY. Each of Seller and Buyer agree that it (a) will maintain the
confidentiality of all information provided by the other party pursuant to the terms of this
Contract (the “Confidential Information”), and (b) will not use Confidential Information for any
purpose other than in connection with this Agreement; provided, however, that this provision shall
not apply to information which (i) at the particular time in question has entered the public
domain; (ii) has been independently developed without the use or incorporation of any Confidential
Information provided by the disclosing party; or (iii) is required to be disclosed by law or by any
order, rule, regulation or legal process of any court, governmental authority or securities
exchange. In the event that a party is required by applicable law, regulation or legal process to
disclose any Confidential Information of the other party, it will notify the other party promptly
so that the parties may jointly seek a protective order or other appropriate remedy. In the event
that no such protective order or other remedy is obtained, the party from whom disclosure is
required will furnish only that portion of the Confidential Information which it is advised by
counsel it is legally required to disclose, and will exercise all reasonable efforts to obtain
reliable assurance that confidential treatment will be accorded such information. Notwithstanding
any other provision of this Contract, the terms of this Paragraph 9 shall survive the termination
of this Contract for a period of three (3) years.



- 11 -









 





     The parties have signed this Contract by their duly authorized representatives on the dates
set forth below, but effective for all purposes as of the Effective Date.



	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	COG OIL & GAS LP	 	 
	 	 	By COG Operating LLC,	 	 
	 	 	General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ TIMOTHY A. LEACH	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Timothy A. Leach,	 	 
	 

	 	 	 	Chairman of the Board of Directors	 	 
	 

	 	 	 	and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	Signed on: October 23, 2006	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	        Seller	 	 
	 
	 	 	 	 	 	 
	 	 	DUKE ENERGY FIELD SERVICES, LP	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ RICHARD A. CARGILE	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Richard A. Cargile, Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	Signed on: October 20, 2006	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	        Buyer	 	 






Signature Sheet for Gas Purchase Contract Effective as of November 1, 2006




- 12 -









 








EXHIBIT A to GAS PURCHASE CONTRACT

Between COG OIL & GAS LP as Seller and

DUKE ENERGY FIELD SERVICES, LP as Buyer




Effective as of November 1, 2006




GENERAL TERMS & CONDITIONS




A. DEFINITIONS



Except where the context indicates a different meaning or intent, and whether or not
capitalized, the following terms will have meanings as follows:



a. Affiliate – a company (i) in which a party owns directly or indirectly 50% or more of
the issued and outstanding voting stock or other equity interests; (ii) which owns directly or
indirectly 50% or more of the issued and outstanding voting stock or equity interests of the party,
and (iii) in which a company described in (ii) owns, directly or indirectly, 50% or more of the
issued and outstanding voting stock or other equity interests.



b. Btu – British thermal unit, or the quantity of heat required to raise the temperature of
1 pound of water 1o F. at a starting temperature of 58.5o F. MMBtu — one million Btus.



c. Buyer’s Facilities – the gas delivered by Seller will be gathered in gathering systems
and may be redelivered to a gas processing plant or plants for the removal of NGLs together with
gas produced from other properties. The gathering systems and plant or plants, or successor
facilities, are “Buyer’s Facilities” whether owned by buyer, an affiliate of Buyer, or an
unaffiliated third party. No facilities downstream of the processing plant or plants other than
short connecting lines to transmission lines are included in “Buyer’s Facilities.”



d. Day or day – a period of 24 consecutive hours commencing at 12:01 a.m.



e. Delivery Points – whether one or more, see Sections 2, B.1 and B.2.



f. Force Majeure – see Section H.2 below.



g. Gas or gas – all natural gas that arrives at the surface in the gaseous phase, including
all hydrocarbon and non-hydrocarbon components, casinghead gas produced from oil wells, gas well
gas, and stock tank vapors.



h. Inferior Liquids – Mixed crude oil, slop oil, and salt water recovered by Buyer in its
gathering system or at plant inlet receivers which is of insufficient quality for delivery into NGL
lines.



i. Loco Hills Area —  All lands described on Schedule “A” .



j. Mcf – 1,000 cubic feet of gas at standard base conditions of 60oF and 14.65 psia.



k. MMcf – 1,000 Mcf.



l. Month or month – a calendar month beginning on the first Day of a month.



m. NGL or NGLs – natural gas liquids, drips, compression liquids, or ethane and
heavier liquefiable hydrocarbons separated from gas and any incidental methane in NGL after
processing.



n. Non-Loco Hills Area —  All lands described on Schedule “B”.



o. psi – pounds per square inch; psia – psi absolute; psig – psi gauge.



p. Residue Gas – merchantable hydrocarbon gas available for sale from Buyer’s Facilities
remaining after processing, and hydrocarbon gas resold by Buyer without first being processed.



q. TET – price quotes for NGL on the Texas Eastern Products Pipeline Company, LLC system.



r. TF&S – NGL transportation, fractionation, and storage, see Section 5.3.




B. DELIVERY DATE; COMPRESSION



B.1 Connected Sources Delivery Date. As to committed sources of production from
Seller already connected to Buyer’s Facilities, deliveries under this Contract will commence as of
November 1, 2006.



B.2 Additional Sources. As to sources not yet connected, Seller will commence and complete
with due diligence the construction of the facilities necessary to enable Seller to deliver the
committed gas at the Delivery Points and Buyer will cause prompt commencement and complete with due
diligence the construction of the facilities necessary and economically feasible to enable Buyer or
its gas gathering contractor to receive deliveries of gas at the Delivery Points. If Buyer
determines it is not profitable to construct the facilities, Seller will have the option to
construct facilities necessary to deliver gas into Buyer’s then existing facilities. If neither
Buyer nor Seller elect to construct the necessary facilities, either party may cancel this Contract
as to the affected gas upon 15 Days advance written notice to the other.




 









 







B.3 Delivery Rates. Seller will have agents or employees available at all reasonable times
to receive advice and directions from Buyer for changes in the rates of delivery of gas as required
from time to time.



B.4 Options to Compress. If Seller’s wells become incapable of delivering gas into Buyer’s
Facilities, neither party will be obligated to compress, but either party will have the option to
do so. If neither party elects to compress within a reasonable time after the need for compression
appears, Buyer upon written request of Seller will either arrange promptly to provide compression
or as Seller’s sole remedy, release the affected gas sources as to the then-producing formations
from commitment under this Contract.




C. RESERVATIONS OF SELLER



C.1 Reservations. Seller reserves the following rights with respect to its interests
in the oil and gas properties committed by Seller to Buyer under this Contract together with
sufficient gas to satisfy those rights:



a. To operate Seller’s oil and gas properties free from control by Buyer as Seller in Seller’s sole
discretion deems advisable, including without limitation the right, but never the obligation, to
drill new wells, to repair and rework old wells, renew or extend, in whole or in part, any oil and
gas lease covering any of the oil and gas properties, and to abandon any well or surrender any such
oil and gas lease, in whole or in part, when no longer deemed by Seller to be capable of producing
gas in paying quantities under normal methods of operation.



b. To use gas for developing and operating Seller’s oil and gas properties committed under this
Contract and to fulfill obligations to Seller’s lessors for those properties.



c. To pool, combine, and unitize any of Seller’s oil and gas properties with other properties in
the same field, and to alter pooling, combinations, or units, in which event this Contract will
cover Seller’s allocated interest in unitized production insofar as that interest is attributable
to the oil and gas properties committed under this Contract, and the description of property
committed will be considered to have been amended accordingly.



C.2 Exception. Notwithstanding Section C.1, Seller will not engage in any operation,
including without limitation reinjection, recycling, or curtailment, that would materially reduce
the amount of gas available for sale to Buyer except upon 120 Days advance written notice to Buyer,
or as much advance notice as is feasible under the circumstances. Buyer will own and be entitled to collect
and pay Seller for any NGLs that condense or are manufactured from gas during any of Seller’s
operations with respect to Seller’s gas committed under this Contract, excluding crude oil and
distillate recovered from gas by conventional type mechanical separation equipment and not
delivered to Buyer.




D. METERING AND MEASUREMENT



D.1 Buyer to Install Meters. Buyer will own, maintain and operate orifice meters or
other measuring devices of standard make at or near the Delivery Points. Except as otherwise
specifically provided to the contrary in this Section D, orifice meters or other measurement
devices will be installed and volumes computed in accordance with accepted industry practice. Buyer
may re-use metering equipment not meeting current standards but meeting 1985 or later published
standards for gas sources not expected to deliver in excess of 100 Mcf per Day. A party providing
compression facilities will also provide sufficient pulsation dampening equipment to prevent
pulsation from affecting measurement at the Delivery Points. Electronic recording devices may be
used. Seller will have access to Buyer’s metering equipment at reasonable hours, but only Buyer
will calibrate, adjust, operate, and maintain it.



D.2 Unit of Volume. The unit of volume will be one cubic foot of gas at a base temperature
of 60°F and at a pressure base of 14.65 psia. Computations of volumes will follow industry
accepted practice.



D.3 Pressure, Temperature. Buyer may measure the atmospheric pressure or may assume the
atmospheric pressure to be 13.2 psia. Buyer may determine the gas temperature by using a recording
thermometer; otherwise, the temperature will be assumed to be 60°F.



D.4 Check Meters. Seller may install, maintain, and operate in accordance with accepted
industry practice at its own expense pressure regulators and check measuring equipment of standard
make using separate taps. Check meters shall not interfere with operation of Buyer’s equipment.
Buyer will have access to Seller’s check measuring equipment at all reasonable hours, but only
Seller will calibrate, adjust, operate, and maintain it.



D.5 Meter Tests. Buyer will verify the accuracy of Buyer’s measuring equipment, and
Seller or its lease operator will verify the accuracy of any check measuring equipment on the
following basis:




	 	 	 	 	 
	Mcf/Day	 	Calibration	 	Gas Analysis
	Meters
3 1000
	 	Quarterly
	 	Quarterly
	Meters 100 to 999
	 	Semi-Annual
	 	Semi-Annual
	Meters 0 to 99
	 	Annually
	 	Annually






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Buyer and Seller will cooperate to secure a prompt verification of the accuracy of the equipment.
If either at any time observes a variation between the delivery meter and the check meter, it will
promptly notify the other, and both will then cooperate to secure an immediate verification of the
accuracy of the equipment. Buyer will give Seller reasonable advance notice of the time of all tests and
calibrations of meters and of sampling for determinations of gas composition and quality, so that
the Seller may have representatives present to witness tests and sampling or make joint tests and
obtain samples with its own equipment. Seller will give reasonable advance notice to Buyer of
the time of tests and calibrations of any check meters and of any sampling by Seller for
determination of gas composition and quality. Seller may request sampling and analysis of Buyer’s
measuring equipment more frequently than quarterly. If Seller so requests, Seller must be
present when the special sample is captured and authorize the test in writing. If new sample
differs materially (i.e. the stated methane or any NGL component’s result changes by more than 2%
from the most previous test), Buyer will absorb the cost of the sample and analysis. If the new
sample results do not differ materially from the most previous test , Seller will pay Buyer a
$250.00 sampling and testing fee per test within 30 Days following receipt of Buyer’s invoice.




D.6 Correction of Errors. If at any time any of the measuring or testing equipment is
found to be out of service or registering inaccurately in any percentage, it will be adjusted
promptly to read accurately within the limits prescribed by the manufacturer. If any measuring
equipment is found to be inaccurate or out of service by an amount exceeding the greater of (i) 2.0
percent at a recording corresponding to the average hourly rate of flow for the period since the
last test, or (ii) 100 Mcf per Month, previous readings will be corrected to zero error for any
known or agreed period. The volume of gas delivered during that period will be estimated by the
first feasible of the following methods:





(i) Using the data recorded by any check measuring equipment if registering accurately;




(ii) Correcting the error if the percentage of error is ascertainable by calibration, test,
or mathematical calculation; or




(iii) Using deliveries under similar conditions during a period when the equipment was
registering accurately.


No adjustment will be made for inaccuracies unless they exceed the greater of (i) 2.0 percent of
affected volumes, or (ii) 100 Mcf per Month.




D.7 Meter Records. The parties will preserve for a period of at least two years all test
data, charts and similar measurement records. The parties will raise metering questions as soon as
practicable after the time of production. No party will have any obligation to preserve metering
records for more than two years except to the extent that a metering question has been raised in
writing and remains unresolved.




E. DETERMINATION OF GAS

COMPOSITION, GRAVITY, AND

HEATING VALUE




     Buyer will obtain a representative sample of Seller’s Gas delivered at each Delivery
Point on the following basis, or more often as Buyer deems advisable; or Buyer may, in its sole
discretion, use continuous samplers.



	 	 	 	 	 
	Mcf/Day	 	Calibration	 	Gas Analysis
	Meters 3 1000
	 	Quarterly
	 	Quarterly
	Meters 100 to 999
	 	Semi-Annual
	 	Semi-Annual
	Meters 0 to 99
	 	Annually
	 	Annually





By chromatography or other accepted method in the industry, Buyer will determine the composition,
gravity and gross heating value of the hydrocarbon components of Seller’s gas in Btu per cubic foot
on a dry basis at standard conditions, then adjusting the result for the water vapor content of the
gas (by either the volume or Btu content method), using an industry accepted practice. No heating
value will be credited for Btus in H2S or other non-hydrocarbon components. The first
determination of Btu content for Seller’s deliveries will be made within a reasonable time after
deliveries of gas begin. If continuous samplers or on-line chromatography are used, the
determinations will apply to the gas delivered while the sampler was installed. If not, the
determination will apply until the first Day of the Month following the next determination




F. QUALITY OF GAS



F.1 Quality Specifications. The gas shall be merchantable natural gas, at all times
complying with the following quality requirements. The gas shall be commercially free of crude
oil, water in the liquid phase, brine, air, dust, gums, gum-forming constituents,


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bacteria, and
other objectionable liquids and solids, and not contain more than:



a. 1/4 grain of H2S per 100 cubic feet.



b. Five grains of total sulfur nor more than one grain of mercaptan per 100 cubic feet.



c. Two mole percent of carbon dioxide.



d. Three mole percent of nitrogen.



e. Ten parts per million by volume of oxygen, and not have been subjected to any treatment or
process that permits or causes the admission of oxygen, that dilutes the gas, or otherwise causes
it to fail to meet these quality specifications.
 

f. Five mole percent of combined carbon dioxide, nitrogen, and oxygen.



The gas shall:



g. Not exceed 120°F in temperature at the Delivery Point.



h. Have a total heating value of at least 1100 Btus per cubic foot.



i. If a third party pipeline receiving the gas delivered has more stringent quality specifications
than those stated above, Seller’s gas shall conform to the more stringent pipeline quality
standard.



F.2 Quality Tests. Buyer will make determinations of conformity of the gas with the above
specifications using procedures generally accepted in the gas industry as often as Buyer reasonably
deems necessary. If in the lease operator’s judgment the result of any test or determination is
inaccurate, Buyer upon request will again conduct the questioned test or determination. The costs
of the additional test or determination will be borne by Seller unless it shows the original test
or determination to have been materially inaccurate.



F.3 Separation Equipment. Seller will employ only conventional mechanical separation
equipment at all production sites covered by this Contract. Low temperature, absorption, and
similar separation facilities are not considered conventional mechanical separation equipment.
Except for liquids removed through operation of conventional mechanical separators and except for
removal of substances as required to enable Seller to comply with this Section F, no components of
the gas will be removed prior to delivery to Buyer.



F.4 Rights as to Off Specification Gas. If any of the gas delivered by Seller fails to
meet the quality specifications stated in this Section F, Buyer may at its option accept delivery
of and pay for the gas or discontinue or curtail taking of gas at any Delivery Point whenever its
quality does not conform to the quality specifications. If Buyer accepts delivery of off
specification gas from Seller or incurs costs relating to inferior gas quality in its gathering
system, Buyer will deduct from the proceeds otherwise payable a fee of $0.05/Mcf plus $0.02 times
the total mole percent, and any fraction of a mole percent, of H2S and CO2
times the Mcf quantity delivered at the affected off quality Delivery Points. If Buyer rejects
delivery, Buyer’s notice to that effect will terminate this Contract with respect to the off
specification gas named in the notice. If Buyer accepts delivery of gas from Seller that is off
specification for nitrogen content, Buyer will deduct a fee of $0.06/Mcf for each mole percent,
and each fraction of a mole percent, of nitrogen content over the allowed nitrogen specification
for all volumes delivered by Seller at the affected excess nitrogen Delivery Points. As of the
beginning of each calendar year beginning with 2007, Buyer will adjust the current year’s treating
fees upward or downward as follows, but they will never be less than the initial fees. The
current year’s treating fee shall be adjusted by an amount equal to the annual percentage change
in the preliminary estimate of the implicit price deflator, seasonally adjusted, for the gross
domestic product (“GDP”) as computed and most recently published by the U.S. Department of
Commerce, rounded to the nearest 100th cent, or in its absence, a similar successor
adjustment factor mutually agreed upon by Buyer and Seller.




G. BILLING AND PAYMENT



G.1 Statement and Payment Date. Buyer will render to Seller on or before the last Day
of each Month a statement showing the volume of gas delivered by Seller during the preceding Month.
Buyer will make payment to Seller on or before the last Day of each Month for all gas delivered
during the preceding Month. As between the parties, amounts unpaid hereunder beyond the applicable
due date will carry simple interest at the lower of 6% per annum or the maximum lawful interest
rate; provided that no interest will accrue as to Monthly principal amounts of less than $1,000 due
for less than one year when paid. The parties waive any rights to differing interest rates.
Except as limited in Section G.2 below, Buyer may recover any overpayments or collect any
undisputed amounts due from Seller to Buyer for any reason at any time under this Contract by
deducting them from proceeds payable to Seller.



G.2 Audit Rights; Time Limit to Assert Claims.



a. Each party will have the right during reasonable business hours to examine the books, records
and charts of the other party to the extent necessary to verify performance of this Contract and
the accuracy of any payment, statement, charge or computation upon execution of a reasonable
confidentiality agreement. If any audit examination or





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review of the party’s own records reveals an inaccuracy in any payment, the appropriate
adjustment will promptly be made.



b. No adjustment for any billing or payment shall be made, and payments shall be final after
the lapse of two years from payment except as to matters that either party has noted in a
specific written objection to the other party during the two year period, unless within the two
year period Buyer has made the appropriate correction. However, Seller’s responsibilities for
severance taxes and third party liabilities and related interest are not affected by this
subsection.



c. No party will have any right to recoup or recover prior overpayments or underpayments that
result from errors that occur in spite of good faith performance if the amounts involved do not
exceed $10/Month/meter. Either party may require prospective correction of such errors.




H. FORCE MAJEURE



H.1 Suspension of Performance. If either party is rendered unable, wholly or in part,
by Force Majeure to carry out its obligations under this Contract, other than to make payments due,
the obligations of that party, so far as they are affected by Force Majeure, will be suspended
during the continuance of any inability so caused, but for no longer period.



H.2 Force Majeure Definition. “Force Majeure” means acts of God, strikes, lockouts or
other industrial disturbances, acts of the public enemy, wars, blockades, insurrections, riots,
epidemics, landslides, lightning, earthquakes, storms, floods, washouts, arrests and restraints of
governments and people, civil disturbances, fires, explosions, breakage or accidents and other
causes, whether of the kind listed above or otherwise, not within the control of the party claiming
suspension and which by the exercise of reasonable diligence the party required to perform is
unable to prevent or overcome.



H.3 Labor Matters Exception. The settlement of strikes or lockouts will be entirely within
the discretion of the party having the difficulty, and settlement of strikes, lockouts, or other
labor disturbances when that course is considered inadvisable is not required.




I. WARRANTY OF TITLE 




     Seller warrants that it has good title and processing rights to the gas delivered, free
and clear of any and all liens, encumbrances, and claims, and that Seller has good right and lawful
authority to sell the same. Seller grants to Buyer the right to process Seller’s gas for
extraction of NGLs and other valuable components. If Seller’s title or right to receive any
payment is questioned or involved in litigation, Buyer will have the right to withhold the
contested payment without interest until title information is received, during the litigation,
until the title or right to receive the questioned payments is freed from question, or until Seller
furnishes security for repayment reasonably acceptable to Buyer. Without impairment of Seller’s
warranty of title to gas and gas processing rights, if Seller owns or controls less than full title
to the gas delivered, payments will be made only in the proportion that Seller’s interest bears to
the entire title to the gas.



J. ROYALTY AND OTHER INTERESTS




     Seller is responsible for all payments to the owners of all working interests, mineral
interests, royalties, overriding royalties, bonus payments, production payments and the like.
Buyer assumes no liability to Seller’s working or mineral interest, royalty, or other interest
owners under this Contract.



K. SEVERANCE AND SIMILAR TAXES



K.1 Included in Price. Reimbursement to Seller for Seller’s full liability for
severance and similar taxes levied upon Seller’s gas production is included in the prices payable
under this Contract, regardless of whether some included interests may be exempt from taxation.




K.2 Tax Responsibilities and Disbursements. Seller shall bear, and unless otherwise
required by law, will pay to taxing authorities all severance, production, excise, sales, gross
receipts, occupation, and other taxes imposed upon Seller with respect to the Gas on or prior to
delivery to Buyer. Buyer will bear and pay all taxes imposed upon Buyer with respect to the Gas
after delivery to Buyer; however, Buyer will charge to Seller and deduct from the proceeds
otherwise payable Seller’s pro rata share of taxes paid by Buyer and levied upon the gathering,
treatment, processing, or sale of the Gas and related products, including without limitation the
New Mexico Gas Processors Tax, but excluding ad valorem taxes and taxes based on Buyer’s net income
that are to be borne by Buyer.




L. INDEMNIFICATION AND RESPONSIBILITY FOR INJURY OR DAMAGE



L.1 Title, Royalty, and Severance Taxes. SELLER RELEASES AND AGREES TO DEFEND, INDEMNIFY,
AND SAVE BUYER,


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ITS AFFILIATES, AND THEIR OFFICERS, EMPLOYEES, AND AGENTS (“BUYER
INDEMNITEES”) HARMLESS FROM AND AGAINST ALL CLAIMS, CAUSES OF ACTION, LIABILITIES, AND COSTS
(INCLUDING REASONABLE ATTORNEYS’ FEES AND COSTS OF INVESTIGATION AND DEFENSE) RELATING TO (a)
SELLER’S TITLE TO GAS AND GAS PROCESSING RIGHTS, (b) PAYMENTS FOR WORKING, MINERAL, ROYALTY AND
OVERRIDING ROYALTY AND OTHER INTERESTS, AND (c) SALES, SEVERANCE, AND SIMILAR TAXES, THAT ARE THE
RESPONSIBILITY OF SELLER UNDER SECTIONS I, J, AND K ABOVE.




L.2 Responsibility for Injury or Damage. As between the parties, Seller will be in control
and possession of the gas deliverable hereunder and responsible for any injury or damage relating
to handling or delivery of gas until the gas has been delivered to Buyer at the Delivery Points;
after delivery, Buyer will be deemed to be in exclusive control and possession and responsible for
any injury or damage relating to handling or gathering of gas. THE PARTY HAVING RESPONSIBILITY
UNDER THE PRECEDING SENTENCE SHALL RELEASE, DEFEND, INDEMNIFY, AND HOLD THE OTHER PARTY, ITS
AFFILIATES, AND THEIR OFFICERS, EMPLOYEES, AND AGENTS HARMLESS FROM AND AGAINST ALL CLAIMS, CAUSES
OF ACTION, LIABILITIES, AND COSTS (INCLUDING REASONABLE ATTORNEYS’ FEES AND COSTS OF INVESTIGATION
AND DEFENSE) ARISING FROM ACTUAL AND ALLEGED LOSS OF GAS, PERSONAL INJURY, DEATH, AND DAMAGE
ATTRIBUTABLE TO CLAIMS ARISING ENTIRELY DURING SUCH PARTY’S CONTROL AND RESPONSIBILITY PROVIDED
ABOVE; PROVIDED THAT NEITHER PARTY WILL BE INDEMNIFIED FOR ITS OWN NEGLIGENCE OR THAT OF ITS
AGENTS, SERVANTS, OR EMPLOYEES.




M. RIGHT OF WAY




     Insofar as Seller’s lease or leases permit and insofar as Seller or its lease operator
may have any rights however derived (whether pursuant to oil and gas lease, easement, governmental
agency order, regulation, statute, or otherwise), Seller grants to Buyer and Buyer’s gas gathering
contractor, if any, and their assignees the right of free entry and the right, at Buyer’s sole risk
and cost to lay and maintain pipelines, meters, and any equipment on the lands or leases subject to
this Contract as reasonably necessary in connection with the purchase or handling of Seller’s gas
and at locations acceptable to Seller. Upon written request from Buyer to Seller, Seller shall
grant, in writing, to Buyer or Buyer’s designee, recordable rights of ingress and egress as
necessary or appropriate for the purposes of complying with the terms of this Contract. All
pipelines, meters, and other equipment placed by Buyer or Buyer’s contractors on the lands and
leases will remain the property of the owner and may be removed by the owner at any time. Without
limitation, Buyer or its gathering contractor may disconnect and remove measurement and other
facilities from any Delivery Point due to low volume, quality, term expiration, or other cause.



     Upon the termination of this Contract for any reason the rights granted by this Section M
shall be terminated without notice and Buyer will immediately remove any of such above ground
equipment from such lands and leases and take all other actions to restore such lands to the
original state prior to Buyer’s actions under this Contract, including the removal of underground
equipment, to the extent required by applicable law or regulation or any third party obligations
applicable to the lands and leases.



N. ASSIGNMENT




N.1 Binding on Assignees. Either party may assign this Contract. This Contract is
binding upon and inures to the benefit of the successors, assigns, heirs, personal representatives,
and representatives in bankruptcy of the parties, and, subject to any prior dedications by the
assignee, shall be binding upon any purchaser of Buyer’s Facilities and upon any purchaser of the
properties of Seller subject to this Contract. Nothing contained in this Section will prevent
either party from mortgaging its rights as security for its indebtedness, but security is
subordinate to the parties’ rights and obligations under this Contract.




N.2 Notice of Assignment. Any assignment or sublease by Seller of any oil and gas
properties or any gas rights contracted to Buyer will be made expressly subject to the provisions
of this Contract. No transfer of or succession to the interest of Seller, however



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made, will bind
Buyer unless and until the original instrument or other proper proof that the claimant is legally
entitled to an interest has been furnished to Buyer at its Division
Order address noted in the Notices Section or subsequent address.



O. MISCELLANEOUS PROVISIONS



O.1 Governing Law. THIS CONTRACT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS, without reference to those that might refer to the laws of
another state.



O.2 Default and Nonwaiver. A waiver by a party of any one or more defaults by the other in
the performance of any provisions of this Contract will not operate as a waiver of any future
default or defaults, whether of a like or different character.



O.3 Counterparts. This Contract may be executed in any number of counterparts, all of
which will be considered together as one instrument, and this Contract will be binding upon all
parties executing it, whether or not executed by all parties owning an interest in the producing
sources affected by this Contract. Signed copies of this Contract and facsimiles of it shall have
the same force and effect as originals.



O.4 Negotiations; Entire Agreement; Amendment; No Third Party Beneficiaries. The language
of this Contract shall not be construed in favor of or against either Buyer or Seller, but shall be
construed as if the language were drafted mutually by both parties. This Contract constitutes the
final and complete agreement between the parties. There are no oral promises, prior agreements,
understandings, obligations, warranties, or representations between the parties relating to this
Contract other than those set forth herein. All waivers, modifications, amendments, and changes to
this Contract shall be in writing and signed by the authorized representatives of the parties. The
relations between the parties are those of independent contractors; this Contract creates no joint
venture, partnership, association, other special relationship, or fiduciary obligations. There are
no third party beneficiaries of Buyer’s sales contracts or of this Contract.



O.5 Ratification and Third Party Gas. Notwithstanding anything contained herein to
the contrary, Buyer has no duty under this Contract to purchase or handle gas attributable to
production from interests of third parties that has been purchased by Seller for resale, except
that Buyer will purchase Other WI Gas. “Other WI Gas” means gas attributable to working and
mineral interests owned by third parties in wells operated by Seller that are subject to this
Contract that Seller has the right to market under an operating agreement. If Buyer requests in
writing that Seller obtain ratification of this Contract from owners of Other WI Gas, Seller will
use all reasonable commercial efforts to cause those Other WI Gas owners to execute and deliver to
Buyer an instrument prepared by Buyer for the purpose of ratifying and adopting this Contract with
respect to the owner’s Other WI Gas, and the ratifying owner will become a party to this Contract
with like force and effect as though the Other WI owner had executed this Contract as amended as of
the time of the ratification, and all of the terms and provisions of this Contract as then amended
will become binding upon Buyer and the ratifying owner.



O.6 Compliance with Laws and Regulations. This Contract is subject to all valid statutes
and rules and regulations of any duly constituted federal or state authority or regulatory body
having jurisdiction. Neither party will be in default as a result of compliance with laws and
regulations.



O.7 Fees and Costs; Damages. If a breach occurs, the parties are entitled to recover as
their sole and exclusive damages for breach of the price and quantity obligations under this
Contract the price for gas taken by Buyer in the case of Seller and the lost margin less avoided
costs in the case of Buyer. If mediation or arbitration is necessary to resolve a dispute other
than one arising under the indemnification obligations of this Contract, each party agrees to bear
its own attorneys’ fees and costs of investigation and defense, and each party waives any right to
recover those fees and costs from the other party or parties.



O.8 Mutual Waiver of Certain Remedies. Except as to the parties’ indemnification
obligations, NEITHER PARTY SHALL BE LIABLE OR OTHERWISE RESPONSIBLE TO THE OTHER FOR CONSEQUENTIAL
OR INCIDENTAL DAMAGES, FOR LOST PRODUCTION, OR FOR PUNITIVE DAMAGES AS TO ANY ACTION OR OMISSION,
WHETHER CHARACTERIZED AS A CONTRACT BREACH OR TORT, THAT ARISES OUT OF OR RELATES TO THIS CONTRACT
OR ITS PERFORMANCE OR NONPERFORMANCE.



O.9 Recording Memorandum. Upon request by either party, the parties shall execute and
place of record a reasonable short form recording memorandum of this Contract and any amendment.





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O.10 Waiver of Jury Trial. The parties hereby waive a right to a trial by jury.




END OF EXHIBIT A TO GAS PURCHASE CONTRACT




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SCHEDULE A (LOCO HILLS AREA )

to GAS PURCHASE CONTRACT

Between COG OIL & GAS LP as Seller and

DUKE ENERGY FIELD SERVICES, LP as Buyer




Dated as of November 1, 2006




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	        PROPERTY	 	COUNTY	 	STATE	 	T	 	R	 	SECTION	 	LANDS
	Big George State (Not SWD)

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	12	 	 	SE/4NE/4, N/2SE/4, SE/4SE/4 surface to the base of the
Wolfcamp formation
	Red Lake Sand Unit Tr 1

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	19	 	 	SE/4SE/4 surface to base of Premier Sand
	Red Lake Sand Unit Tr 16

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	19	 	 	N/2SE/4, SW/4SE/4 surface to base of Premier Sand
	Red Lake Sand Unit Tr 2

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	20	 	 	SE/4NE/4 surface to base of Premier Sand
	Red Lake Sand Unit Tr 5

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	20	 	 	NW/4NE/4, SE/4NW/4 surface to base of Premier Sand
	Red Lake Sand Unit Tr 6

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	20	 	 	NE/4NW/4, SW/4NW/4 surface to base of Premier Sand
	Red Lake Sand Unit Tr 7

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	20	 	 	NE/4NE/4, SW/4NE/4 surface to base of Premier Sand
	Red Lake Sand Unit Tr 14

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	20	 	 	SW/4 surface to base of Premier Sand
	Red Lake Sand Unit Tr 15

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	20	 	 	N/2SE/4 surface to base of Premier Sand
	Red Lake Sand Unit Tr 20

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	20	 	 	S/2SE/4 surface to base of Premier Sand
	Red Lake Sand Unit Tr 3

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	21	 	 	SW/4NW/4 surface to base of Premier Sand
	Red Lake Sand Unit Tr 11

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	21	 	 	NE/4SW/4 surface to base of Premier Sand
	Red Lake Sand Unit Tr 12

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	21	 	 	NW/4SW/4, SE/4SW/4 surface to base of Premier Sand
	Red Lake Sand Unit Tr 12

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	21	 	 	SW/4SW/4 Premier Sand only
	Red Lake Sand Unit Tr 12

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	21	 	 	SW/4SE/4 from 800’ to base of Premier Sand
	Red Lake Sand Unit Tr 13

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	21	 	 	NW/4SE/4 surface to base of Premier Sand
	Raptor State

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	21	 	 	SW/4SW/4 surface to top of Premier sand formation
	White Oak State

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	23	 	 	N/2NE/4, SE/4NE/4, NE/4SE/4, S/2SE/4 to all depths
	Red Lake Sand Unit Tr 9

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	28	 	 	NW/4SW/4 surface to base of Premier Sand
	Red Lake Sand Unit Tr 10

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	28	 	 	NW/4 surface to base of Premier Sand
	Red Lake Sand Unit Tr 10-A

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	28	 	 	NW/4NE/4 surface to base of Premier Sand
	Red Lake Sand Unit Tr 4

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	29	 	 	SE/4NW/4, SW/4NE/4 surface to base of Premier Sand
	Red Lake Sand Unit Tr 4-A

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	29	 	 	SW/4NW/4 surface to base of Premier Sand
	Red Lake Sand Unit Tr 8

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	29	 	 	NW/4NW/4 surface to base of Premier Sand






- Sch. A-1-









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	        PROPERTY	 	COUNTY	 	STATE	 	T	 	R	 	SECTION	 	LANDS
	Red Lake Sand Unit Tr 17

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	29	 	 	NE/4NE/4 surface to base of Premier Sand
	Red Lake Sand Unit Tr 23

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	29	 	 	NW/4NE/4, NE/4NW/4 surface to base of Premier Sand
	Red Lake Sand Unit Tr 24

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	29	 	 	SE/4NE/4 surface to base of Premier Sand
	Maple State

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	30	 	 	Lot 1 to all depths
	Red Lake Sand Unit Tr 18

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	30	 	 	NE/4NE/4 surface to base of Premier Sand
	Red Lake Sand Unit Tr 19

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	30	 	 	NW/4NE/4 surface to base of Premier Sand
	Red Lake Sand Unit Tr 21

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	30	 	 	SE/4NE/4 surface to base of Premier Sand
	Red Lake Sand Unit Tr 22

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	30	 	 	SW/4NE/4 surface to base of Premier Sand
	Carper Levers State

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	34	 	 	NE/4SW/4, SW/4SW/4 surface to top of Lovington Sand
formation
	Pinon Federal

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	15	 	 	SE/4 from 4000’ to 800’ below the top of the Abo formation
	GJ West Coop Unit

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	15	 	 	SW/4SW/4 to 5000’
	GJ West Coop Unit

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	15	 	 	NW/4SW/4 surface to 5000’
	GJ West Coop Unit

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	16	 	 	NW/4NW/4, S/2SW/4, NE/4SE/4, NW/4SW/4 to 5000’
	GJ West Coop Unit

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	16	 	 	NE/4, NE/4NW/4, SW/4NW/4, W/2SE/4, SE/4SE/4 surface to 5000’
	GJ West Coop Unit

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	16	 	 	SE/4NW/4 surface to 5000’
	GJ West Coop Unit

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	16	 	 	NE/4SW/4 surface to 5000’
	Federal KL 17

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	17	 	 	N/2 below 5000’
	Folk Federal

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	17	 	 	N/2, N/2SW/4 surface to 5000’
	State S-19 CP 19

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	19	 	 	Lot 3 from 2300’ to 10,896’
	State S-19 EMP ABO

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	19	 	 	SE/4SW/4 as to Abo formation only
	State S-19 4

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	19	 	 	SW/4SE/4 as to Abo formation only
	State S-19 Paddock

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	19	 	 	SW/4SE/4 surface to top of the Abo formation, N/2SE/4,
SE/4SE/4 surface to base of the Abo formation, All of SE/4
as to depths below the base of the Morrow formation
	State S-19 Paddock

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	19	 	 	SE/4SW/4 as to all depths except the Abo formation,
NE/4SW/4 as to all depths
	State S-19 Paddock

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	19	 	 	Lot 4 to all depths
	Mesquite State

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	20	 	 	W/2NW/4, NW/4SW/4, E/2SW/4 surface to top of the Abo
formation
	Rincon State

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	20	 	 	NW/4SE/4, SE/4SE/4 surface to 5000’
	Tenneco State

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	20	 	 	SW/4SW/4 surface to 5000’
	GJ West Coop Unit

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	21	 	 	S/2NE/4, E/2W/2, SE/4 surface to 5000’
	GJ West Coop Unit

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	21	 	 	N/2NE/4, W/2W/2 surface to 5000’
	GJ West Coop Unit

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	22	 	 	E/2NW/4, N/2SW/4, SW/4SW/4 surface to 5000’
	GJ West Coop Unit

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	22	 	 	NW/4NE/4, SW/4NW/4 surface to 5000’
	Pinon Federal

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	22	 	 	NE/4 NE/4, S/2 NE/4, NE/4 SE/4 from 4000’ to 800’ below the
top of the Abo formation






- Sch. A-2-









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	        PROPERTY	 	COUNTY	 	STATE	 	T	 	R	 	SECTION	 	LANDS
	GJ West Coop Unit

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	27	 	 	W/2SW/4 surface to 5000’
	RJ Unit

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	27	 	 	SE/4 surface to 3480’
	RJ Unit

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	27	 	 	NE/4, E/2W/2 surface to 3480’
	Diamondbacks State

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	28	 	 	N/2 below 5,000’
	GJ West Coop Unit

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	28	 	 	SE/4, SE/4SW/4 to 5000’
	GJ West Coop Unit

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	28	 	 	N/2, N/2SW/4, SW/4SW/4 surface to 5000’
	Schley Federal

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	29	 	 	NE/4SW/4 base of San Andres formation to 6550’
	Schley Federal

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	29	 	 	S/2NW/4, NW/4SW/4 surface to top of Abo formation
	State I

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	29	 	 	SE/4SE/4 surface to 5000’
	White Star Federal

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	29	 	 	N/2N/2, SW/4NE/4 surface to base of the Abo formation,
SE/4NE/4, NW/4SE/4 base of San Andres formation to base of
the Abo formation
	Cheyenne Federal

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	30	 	 	S/2SE/4 2628’ to top of Abo formation
	Continental A State

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	30	 	 	Lots 1, NE/4NW/4 from 2600’ to top of the Wolfcamp formation
Lot 2 2600’ to top of Abo formation
Lot 3, SE/4NW/4 surface to top of Abo formation
	Continental B State ARTQNGB

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	30	 	 	Lot 4, SE/4SW/4 surface to 2600’
	Continental B State

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	30	 	 	Lot 4, SE/4SW/4 2600’ to top of the Abo formation
	Gold Star Federal

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	30	 	 	NE/4NE/4 from base of San Andres formation to base of the
Abo formation, NW/4NE/4 from surface to base of Abo
formation
	Mimosa State

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	30	 	 	NE/4SW/4 surface to 4452’
	Navaho Federal

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	30	 	 	NE/4SE/4 from 2628’ to the top of the Abo formation,
NW/4SE/4 from 4000’ to the top of the Abo formation
	Western Federal

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	30	 	 	S/2NE/4 surface to top of Abo formation
	Green Federal

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	31	 	 	Lots 1 & 2 E/4, NW/4
	Adams Federal

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	34	 	 	E/2SW/4, W/2SE/4 surface to 3480’
	Jackson Federal

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	34	 	 	SE/4SE/4, surface to 3480’
	RJ Unit

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	34	 	 	NE/4 surface to 3480’
	RJ Unit

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	34	 	 	NE/4SE/4 surface to 3480’
	RJ Unit

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	34	 	 	NE/4NW/4 surface to 3480’
	Jackson Federal

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	35	 	 	NW/4SW/4 surface to 3480’
	Tyler Federal

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	35	 	 	SE/4SW/4, S/2SE/4 surface to 3480’
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	RJ Unit

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	35	 	 	W/2NW/4 surface to 3480’
	RJ Unit

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	35	 	 	NE/4, E/2NW/4, NE/4SW/4, N/2SE/4 surface to 3480’
	Westall A State

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	36	 	 	S/2NE/4, N/2SE/4 surface to 3600’






- Sch. A-3-









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	    PROPERTY	 	COUNTY	 	STATE	 	T	 	R	 	SECTION	 	LANDS
	Westall B State

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	36	 	 	SW/4NW/4 surface to 3600’
	Gissler Federal

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	5	 	 	Lots 3-4, S/2NW/4, S/2 to all depths
	Randall Federal

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	7	 	 	SE/4SE/4 surface to 5000’
	Holder CB Federal

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	9	 	 	W/2SW/4 below 5000’
	Holder CB Federal Paddock

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	9	 	 	W/2SW/4 surface to 5000’
	Electra Federal

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	10	 	 	SW/4 below 4000’
	Harvard Federal

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	11	 	 	E/2NE/4 to all depths
	Harvard Federal

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	12	 	 	W/2NW/4 to all depths
	Mohawk Federal

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	14	 	 	SW/4SW/4 to all depths
	Electra Federal

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	15	 	 	NW/4 below 4000’
	Shawnee Federal

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	15	 	 	NW/4SE/4 below 3600’
	Harper State

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	16	 	 	E/2SW/4, E/2SE/4 below 4000’
	Houma State

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	16	 	 	S/2NW/4 below 4000’
	Imperial State

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	16	 	 	W/2SE/4 below 4000’
	Juniper State

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	16	 	 	SW/4SW/4 to all depths
	Mesilla State

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	16	 	 	SE/4NE/4, N/2NW/4 below 4000’
	Pawnee State

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	16	 	 	SW/4NE/4 surface to the top of the Abo formation
	Texaco BE

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	16	 	 	N/2NE/4 to all depths
	Wichita State

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	16	 	 	NW/4SW/4 below 4000’
	Holder CB Federal

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	17	 	 	W/2NW/4 below 5000’
	Holder CB Federal Paddock

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	17	 	 	W/2NW/4 surface to 5000’
	Polaris B Federal

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	17	 	 	E/2NW/4 below 4000’
	Jenkins B Federal

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	20	 	 	NW/4 to all depths
	Loco SW

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	20	 	 	E/2SW/4 Abo formation only
	McIntyre A E & W Paddock

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	20	 	 	E/2SE/4 surface to base of Abo formation
	McIntyre A E & W Paddock

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	20	 	 	W/2SE/4 surface to base of Abo formation
	McIntyre A West 8 Abo

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	20	 	 	W/2SE/4 surface to base of Abo formation
	McIntyre B Paddock

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	20	 	 	W/2SW/4 surface to base of Abo formation
	W D McIntyre C Paddock

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	20	 	 	E/2NE/4 base of San Andres formation to top of Abo formation
	W D McIntyre E

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	20	 	 	E/2SW/4 surface to top of Abo formation
	Berry A Federal

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	21	 	 	S/2NW/4, NE/4NW/4 surface to the base of the San Andres
formation
	Berry A Federal Paddock

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	21	 	 	S/2NW/4, NE/4NW/4 below the base of the San Andres formation
	Brigham H

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	21	 	 	NW/4SW/4 surface to base of Abo formation
	W D McIntyre C Paddock

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	21	 	 	NW/4NW/4 base of San Andres formation to top of Glorieta
formation






- Sch. A-4-









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	    PROPERTY	 	COUNTY	 	STATE	 	T	 	R	 	SECTION	 	LANDS
	W D McIntyre E

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	21	 	 	SE/4NE/4, NE/4SE/4 surface to top of Glorieta formation
	Woolley Federal

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	21	 	 	E/2SW/4 from 4000’ to 7360’, SW/4SW/4 from 4000’ to the
base of the Abo formation
	Dexter Federal

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	22	 	 	NE/4SW/4, N/2SE/4 surface to top of Queen formation
	Dexter Federal Paddock

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	22	 	 	NE/4SW/4, N/2SE/4 from the top of the Queen formation to
the top of the Abo formation or 7360’, whichever is deeper,
less the Premier Sand formation
	Sinclair Parke

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	22	 	 	SE/4NW/4 base of San Andres formation to 7079’
	Melrose Federal

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	23	 	 	SW/4NW/4 surface to base of Abo formation, less the Premier
Sand of the Grayburg formation
	Beeson 1

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	29	 	 	NW/4NW/4 surface to 5000’
	Beeson D 2

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	29	 	 	E/2NW/4 surface to 5000’
	State CA

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	32	 	 	NW/4NW/4 surface to base of the Grayburg formation
	Non Producing

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	2	 	 	NE/4NW/4 surface to 1689’
	Non Producing

	 	Eddy
	 	NM
	 	17S
	 	28E
	 	 	30	 	 	Lot 2 and 4 from 650’ to 5000’
	Non Producing

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	15	 	 	SW/4SW/4 below 5000’
	Non Producing

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	15	 	 	NW/4SW/4 below 5000’
	Non Producing

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	16	 	 	NW/4NW/4, S/2SW/4, SE/4SE/4, NW/4SW/4 below 5000’
	Non Producing

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	16	 	 	NE/4, NE/4NW/4, SW/4NW/4, W/2SE/4, SE/4SE/4 below 5000’
	Non Producing

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	16	 	 	SE/4NW/4 below 5000’
	Non Producing

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	16	 	 	NE/4SW/4 from 5000’ to 10,912’
	Non Producing

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	21	 	 	S/2NE/4, E/2W/2, SE/4 below 5000’
	Non Producing

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	21	 	 	N/2NE/4, W/2W/2 below 5000’
	Non Producing

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	22	 	 	E/2NW/4, N/2SW/4, SW/4SW/4 below 5000’
	Non Producing

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	22	 	 	NW/4NE/4, SW/4NW/4 below 5000’
	Non Producing

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	22	 	 	SW/4NW/4, NW/4SE/4 below 5000’
	Non Producing

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	27	 	 	W/2SW/4 below 5000’
	Non Producing

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	28	 	 	SE/4, SE/4SW/4 below 5000’
	Non Producing

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	28	 	 	N/2SW/4, SW/4SW/4 below 5000’
	Non Producing

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	29	 	 	SE/4SE/4 from 5000’ to the base of the Wolfcamp formation
	Non Producing

	 	Eddy
	 	NM
	 	17S
	 	29E
	 	 	29	 	 	NE/4SE/4 surface to base of Wolfcamp formation
	Non Producing

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	3	 	 	Lots 3-4, S/2NW/4 below 4000’
	Non Producing

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	9	 	 	E/2SW/4, SE/4 below 4000’
	Non Producing

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	10	 	 	N/2 below 4000’
	Non Producing

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	21	 	 	NW/4SW/4 surface to the base of the Abo formation
	Non Producing

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	29	 	 	NW/4NW/4 5000’ to base of the Abo formation
	Non Producing

	 	Eddy
	 	NM
	 	17S
	 	30E
	 	 	29	 	 	E/2NW/4 5000’ to base of the Abo formation







- Sch. A-5-









 








SCHEDULE B (NON-LOCO HILLS AREA )

to GAS PURCHASE CONTRACT

Between COG OIL & GAS LP as Seller and

DUKE ENERGY FIELD SERVICES, LP as Buyer




Dated as of November 1, 2006




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	     PROPERTY	 	COUNTY	 	STATE	 	T	 	R	 	SECTION	 	LANDS
	Oryx State

	 	Eddy
	 	NM
	 	16S
	 	27E
	 	 	16	 	 	S/2 to all depths
	Elk 22 Federal

	 	Eddy
	 	NM
	 	16S
	 	28E
	 	 	22	 	 	N/2NE/4, NE/4NW/4, W/2W/2 to all depths
	Aztec State

	 	Eddy
	 	NM
	 	16S
	 	28E
	 	 	33	 	 	S/2SE/4 Surface to 2,360’
	Brown Bear Com No 1

	 	Eddy
	 	NM
	 	16S
	 	28E
	 	 	35	 	 	SE/4 below 3000’
	Brown Bear Com No 1

	 	Eddy
	 	NM
	 	16S
	 	28E
	 	 	35	 	 	SW/4 below the base of the Wolfcamp formation
	O’Neill Federal

	 	Eddy
	 	NM
	 	16S
	 	30E
	 	 	15	 	 	E/2, NW/4 surface to base of San Andres formation
	Yankee State #1

	 	Lea
	 	NM
	 	16S
	 	33E
	 	 	23	 	 	SE/4 NE/4 Limited to production from the surface
to 100’ below the Wolfcamp
	Monsanto 30 State

	 	Lea
	 	NM
	 	16S
	 	37E
	 	 	30	 	 	SE/4 surface to 11,450’
	Dogwood Federal

	 	Eddy
	 	NM
	 	17S
	 	27E
	 	 	25	 	 	SE/4NW/4 surface to base of the Wolfcamp formation
	Redbud Federal

	 	Eddy
	 	NM
	 	17S
	 	27E
	 	 	25	 	 	NE/4NW/4 surface to the base of the Wolfcamp
formation
	Beech Federal

	 	Eddy
	 	NM
	 	17S
	 	27E
	 	 	25	 	 	SW/4SW/4 base of San Andres formation to 100’
below base of Yeso formation, NW/4SE/4 base of
San Andres formation to base of Wolfcamp
formation
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Beech Federal #2

	 	Eddy
	 	NM
	 	17S
	 	27E
	 	 	25	 	 	NW/SE
	Red Bed #1

	 	Eddy
	 	NM
	 	17S
	 	27E
	 	 	25	 	 	NW/4
	Fir Federal

	 	Eddy
	 	NM
	 	17S
	 	27E
	 	 	25	 	 	NW/4SW/4 to all depths

	Spruce Federal

	 	Eddy
	 	NM
	 	17S
	 	27E
	 	 	25	 	 	NE/4SW/4 to all depths
	Choctaw State

	 	Eddy
	 	NM
	 	17S
	 	31E
	 	 	16	 	 	NE/4NE/4 to all depths
	Burkett State

	 	Eddy
	 	NM
	 	17S
	 	31E
	 	 	16	 	 	W/2NE/4, N/2NW/4 below 4,000’
	Willow State

	 	Eddy
	 	NM
	 	17S
	 	31E
	 	 	16	 	 	NE/4SE/4 from 4500’ to 5354’, NW/4SE/4 from 4500’
to 5296’,

SW/4SE/4 from 4500’ to 6182’, SE/4SE/4 from 4500’
to 5301’
	Yucca State

	 	Eddy
	 	NM
	 	17S
	 	31E
	 	 	16	 	 	NE/4SW/4 from 4500’ to 5309’, NW/4SW/4 from 4500’
to 5544’
	Antelope State

	 	Eddy
	 	NM
	 	17S
	 	31E
	 	 	36	 	 	SW/4 surface to base of San Andres formation






-Sch. B-1-









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	     PROPERTY	 	COUNTY	 	STATE	 	T	 	R	 	SECTION	 	LANDS
	Antelope 36 State Com

	 	Eddy
	 	NM
	 	17S
	 	31E
	 	 	36	 	 	SW/4 below the base of the San Andres formation
	Antelope 36 State Com

	 	Eddy
	 	NM
	 	17S
	 	31E
	 	 	36	 	 	N/2NW/4, SE/4NW/4 below the base of the San
Andres formation
	Antelope 36 State Com

	 	Eddy
	 	NM
	 	17S
	 	31E
	 	 	36	 	 	SW/4NW/4 from the base of the San Andres
formation to 12,596’
	Aoudad State

	 	Eddy
	 	NM
	 	17S
	 	31E
	 	 	36	 	 	SW/4NW/4 surface to base of San Andres formation,
NE/4NE/4 surface to 4176’, NW/4NE/4 surface to
4151’, SW/4NE/4 surface to 4278’
	Coyote State

	 	Eddy
	 	NM
	 	17S
	 	31E
	 	 	36	 	 	N/2NW/4, SE/4NW/4 surface to the base of the San
Andres formation, SE/4NE/4, N/2SE/4 to all depths
	Impala State

	 	Eddy
	 	NM
	 	17S
	 	31E
	 	 	36	 	 	SW/4SE/4 surface to 5011’, SE/4SE/4 surface to
5007’
	Safari 36 State Com #1

	 	Eddy
	 	NM
	 	17S
	 	31E
	 	 	36	 	 	990’ FSL & 660’ FEL
	Panther Federal

	 	Lea
	 	NM
	 	17S
	 	32E
	 	 	31	 	 	Lots 3-4, NE/4SW/4 surface to 5000’
	Fox Federal

	 	Lea
	 	NM
	 	17S
	 	32E
	 	 	31	 	 	S/2NE/4, SE/4NW/4, NW/4SE/4 surface to 5000’
	Weasel Federal

	 	Lea
	 	NM
	 	17S
	 	32E
	 	 	31	 	 	NE/4SE/4 surface to 5000’
	Barracuda State

	 	Lea
	 	NM
	 	17S
	 	33E
	 	 	9	 	 	NW/4NW/4 below 4600’
	Stingray 10

	 	Lea
	 	NM
	 	17S
	 	33E
	 	 	10	 	 	NW/4SE/4 below the base of the Grayburg formation
	Chinook State

	 	Lea
	 	NM
	 	17S
	 	33E
	 	 	10	 	 	SW/4NE/4 to all depths
	Petrus D State

	 	Lea
	 	NM
	 	17S
	 	33E
	 	 	10	 	 	NE/4SE/4 to all depths
	Petrus D State

	 	Lea
	 	NM
	 	17S
	 	33E
	 	 	11	 	 	E/2NE/4, N/2SW/4, S/2SE/4 to all depths
	Petrus D State

	 	Lea
	 	NM
	 	17S
	 	33E
	 	 	13	 	 	SW/4SE/4 to all depths
	Federal MA A

	 	Lea
	 	NM
	 	17S
	 	33E
	 	 	31	 	 	Lot 2, E/2NW/4 surface to 10,100’
	Fee MA B

	 	Lea
	 	NM
	 	17S
	 	33E
	 	 	31	 	 	W/2E/2 surface to 10,103’
	Fee MA B

	 	Lea
	 	NM
	 	17S
	 	33E
	 	 	31	 	 	W/2E/2 surface to 10,103’
	Fee MA B

	 	Lea
	 	NM
	 	17S
	 	33E
	 	 	31	 	 	E/2E/2 surface to 10,103’
	Fee MA B

	 	Lea
	 	NM
	 	17S
	 	33E
	 	 	31	 	 	E/2E/2 surface to 10,103’
	Lea KG State

	 	Lea
	 	NM
	 	17S
	 	33E
	 	 	35	 	 	SE/4 NE/4 NE/4
	State 35

	 	Lea
	 	NM
	 	17S
	 	33E
	 	 	35	 	 	SW/4
	State 20

	 	Lea
	 	NM
	 	17S
	 	35E
	 	 	20	 	 	NE/4SE/4 surface to 4966’
	Bassett Birney

	 	Lea
	 	NM
	 	18S
	 	32E
	 	 	5	 	 	Lot 4 surface to 5000’
	Crow State

	 	Lea
	 	NM
	 	18S
	 	34E
	 	 	9	 	 	N/2 SE/4, SW/4 SE/4
	B Lee State #1, 3, 4

	 	Lea
	 	NM
	 	18S
	 	35E
	 	 	7	 	 	S/3 NW/4, NW/4 SW/4
	New Mexico Z State

	 	Eddy
	 	NM
	 	19S
	 	28E
	 	 	12	 	 	N/2NE/4 surface to 3000’
	Charles Alves #5

	 	Lea
	 	NM
	 	19S
	 	35E
	 	 	7	 	 	W/2 NE/4, E/2 NW/4
	Sapphire State

	 	Lea
	 	NM
	 	23S
	 	36E
	 	 	11	 	 	NW/4SW/4 from base of Queen formation to base of
Abo formation







-Sch. B-2-









 








SCHEDULE C (“Prior Contracts”)

to GAS PURCHASE CONTRACT

Between COG OIL & GAS LP as Seller and

DUKE ENERGY FIELD SERVICES, LP as Buyer




Dated as of November 1, 2006




ART 0237 00A




ART 0579 00*




ART 0680 00*




EUN 0698 00*




LEE 0497 00*




LEE 0760 00*




LEE 0830 00R




LIN 0092 00R




LIN 0141 00*




LIN 0150 00*




LIN 0195 00R




LIN 0268 00*





-Sch. B-3-