exv10w26



 





Exhibit 10.26




Suite 600

505 N. Big Spring Street (79701)

P.O. Box 791

Midland, TX 79702

phone 915.682.8241

fax 915.686.7922




ConocoPhillips




			
	 	 	 
	Mr. David Badley
	 	LEASE CRUDE OIL PURCHASE AGREEMENT
	Approach Operating LLC
	 	Dated: May 1, 2004

	6300 Ridglea Place, Suite 1107	 	 
	Ft. Worth, Texas 76116	 	 






Dear David:




     THIS AGREEMENT is between ConocoPhillips, herein called “Buyer” and Approach Operating LLC,
herein called “Seller”, covering the sale and delivery by Seller and the purchase and receipt by
Buyer of the specified oil and condensate herein called “Production” upon the following terms and
conditions:



1. SOURCE AND LOCATION




     See Exhibit “A” attached and Incorporated by reference.



2. QUANTITY




     Seller agrees to sell to Buyer and Buyer agrees to take such quantities of Production as may
be determined in accordance with the field or pipeline run ticket, subject to state allowables and
the termination provided for herein.



3. QUALITY




     West Texas Intermediate Type Crude Oil



4. PRICE




     For those leases listed on Exhibit “A”, a price equal to ConocoPhillips Company’s Posting for
West Texas Intermediate, gravity deemed 40°, EDQ, plus the average Platt’s mean quotation for
“P-Plus WTI” for the applicable trading month at Cushing, less the average difference between
Platt’s WTI Cushing and WTI Midland quotations for the applicable trading month, less
transportation and handling as listed on Exhibit “A”.



5. BILLING




     All payments due Seller under this Agreement shall commence with the initial date of delivery,
which shall be the effective date of this Agreement. On or before the fifteenth (15th) day of the
month following the month of deliveries, Buyer shall render to Seller a statement showing total net
quantity delivered from each well covered hereunder during the preceding month.



6. DELIVERY




     Title to all Production sold and delivered to Buyer shall pass from Seller to Buyer as such
Production passes the outlet flange of Seller’s tankage on the lease or leases from which such



 









 





			
	 	 	 
	 
	 	Page 2 of 3 to Contract Between

ConocoPhillips Company and

Approach Operating LLC

Dated: May 1, 2004





Production is being purchased. Buyer agrees to promptly take delivery of the Production upon
availability from the Seller’s tanks or through a pipeline. If Buyer takes delivery by a third
party common carrier, Buyer shall immediately notify Seller of the carrier’s name and address.




7. WARRANTY AND INDEMNITY




     Seller warrants title, free and clear of all taxes, liens and encumbrances, to the Production
delivered hereunder and warrants that Production has been produced, handled and transported to the
delivery point in accordance with the laws, rules and regulations of all local, state or federal
authorities having jurisdiction.



     Prior to the delivery of Production Seller will hold Buyer harmless against any loss from any
claim or cause of action arising out of the sale and delivery of the Production. Buyer agrees that
after delivery of the Production Seller will be held harmless against any loss from any claim or
cause of action arising out of the sale and delivery of the Production.



8. TERM




     Initial term of this contract shall be for one month, beginning May 1, 2004 through June 1,
2004, and continuing thereafter from month to month until cancelled by either party upon 30 days
written notice.



9. FORCE MAJEURE




     Neither party hereto shall be liable for failure or delay in making or accepting deliveries
hereunder to the extent such failure or delay may be due to compliance with acts, orders,
regulations or requests of any federal, state or local civilian or military authority, or any
person purporting to act therefor, riots, strikes, labor difficulties, action of the elements,
disruption or breakdown of production or transportation facilities, or any other cause, whether or
not to the same class or kind, reasonably beyond control of such party. If such a failure or delay
extends beyond any reasonable period for the performance of this Agreement, then either party may
terminate this Agreement.



10. ASSIGNMENT




     No assignments of this Agreement shall be valid or binding on either Buyer or Seller unless
the written consent of both parties has been obtained.



11. MEASUREMENT AND TESTS




     Quantities of crude oil delivered hereunder shall be delivered from tank gauges on 100% tank
table basis, or by the use of mutually acceptable automatic measuring equipment. Volume and gravity
(API) of said quantities shall be corrected for temperature to 60 degrees Fahrenheit in accordance
with the latest-A.S.T.M.-I.P. Petroleum Measurement Tables. The crude oil delivered hereunder shall
be merchantable and acceptable to the carriers involved, but not to exceed 2% BS&W. Full deduction
shall be made for all BS&W content as determined by tests conducted according to the latest
A.S.T.M. Standard Method then in effect. Each party shall have the right to have a representative
present to witness all gauges, tests and measurements; however, in the absence of either party’s
representative, the gauges, tests and measurements of the other party shall be deemed to be
correct.



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	 	Page 3 of 3 to Contract Between

ConocoPhillips Company and

Approach Operating LLC

Dated: May 1, 2004






12. SPECIAL PROVISIONS




     N/A



13. DIVISION ORDER AND TAXES




     The basic division order will be held by Approach Operating LLC. ConocoPhillips will remit
100% of proceeds, less state taxes, to Approach. State taxes will be paid by ConocoPhillips.
Division Order information including pay list, title opinion and/or assignments, should be sent to
Vicki Catlin 860G POB, ConocoPhillips, P. O. Box 5400, Bartlesville, Oklahoma 74005.



14. PAYMENTS




     Buyer agrees to make payment on or before the twenty-fifth (25th) day of the month following
the month of delivery. In an effort to improve our service to our customers, ConocoPhillips has a
program that will provide you the option of having your crude oil payments directly deposited to
the financial institution of your choice. You may take advantage of the direct deposit service by
completing the enclosed form and returning the form to the following address:



15. REGULATORY




     N/A



16. LOGISTICS




     N/A



17. MISCELLANEOUS




     Any matter not specifically covered herein arising in connection with this Agreement shall be
handled in accordance with customs and practice in the industry.



     This letter evidences our understanding of the entire agreement and shall constitute the
formal contract. Unless we receive written notice of your objections within ten (10) business days,
we will consider the agreement as final and binding on both parties.



CONOCOPHILLIPS COMPANY




/s/ Karl G. Stuckey




Karl G. Stuckey

Representative, Lease Operations

West Texas and New Mexico




KS/ss















 








			
	 	 	 
	 
	 	Exhibit “A” to Contract Between

ConocoPhillips Company, and

Approach Operating LLC

Dated: May 1, 2004






EXHIBIT “A”




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	COP	 	 	 	 	 	Crude	 	 	 	 	 	 	 	 
	Lease No.	 	Operator	 	Lease Name	 	Type	 	Differential	 	Transporter	 	County	 	State
	2877308
	 	Approach Operating LLC
	 	Clayton 1001
	 	WTI
	 	($1.25)
	 	Sentinel Trucks
	 	Crockett
	 	Texas