Document:

exv10w1

 

Exhibit 10.1

RELEASE OF CLAIMS

     This Release of Claims (“Release”) is made by and between McAfee, Inc. (the “Company”) and
George Samenuk (“Employee”).

RECITALS

     1. Employee was employed by the Company prior to his resignation and retirement on October 10,
2006.

     2. The Company and Employee (collectively referred to as “the Parties”) have previously
entered into an employment agreement specifying that certain severance benefits would be provided
to Employee upon certain terminations of employment (as amended through the date hereof, the
“Employment Agreement”).

     3. Notwithstanding the severance benefit provisions of the Employment Agreement, which are
hereby superseded in their entirety, the specific severance benefits that the Company shall provide
to Employee are listed on Appendix A to this Release.

     4. Unless otherwise defined herein, defined terms shall have the same meanings as set forth in
the Employment Agreement.

     NOW THEREFORE, in connection with the promises made herein and in the Employment Agreement,
the Company and Employee hereby agree as follows:

     1. Resignation. Employee hereby acknowledges that he resigned and retired as the
Company’s Chairman of the Board and Chief Executive Officer and from any and all positions he held
as an employee and director of the Company and/or any of its subsidiaries effective as of October
10, 2006 (the “Termination Date”).

     2. Confidential Information. Employee shall continue to maintain the confidentiality
of all confidential and proprietary information of the Company and shall continue to comply with
the terms and conditions of the Employee Inventions and Proprietary Rights Assignment Agreement
between Employee and the Company.

     3. Payment of Salary. The Company represents and Employee acknowledges and represents
that the Company has paid (or will pay pursuant to the terms of the applicable plan or program and
the Employment Agreement) all salary, wages, bonuses, commissions, accrued vacation and expense
reimbursements and any and all other benefits due to Employee through the Employee’s Termination
Date.

     4. Release of Claims. Employee agrees that the consideration set forth in Appendix A
to this Release represents settlement in full of all outstanding obligations owed to Employee by
the Company or any subsidiary of the Company. Employee , on behalf of himself and his respective
heirs, agents, representatives, immediate family members, executors, and assigns, hereby fully and
forever releases the Company and its directors, employees, attorneys, investors, shareholders,

 

 

administrators, affiliates, divisions, subsidiaries, parents, predecessor and successor
corporations, agents and assigns and agrees not to sue or otherwise institute or cause to be
instituted any legal or administrative proceedings concerning any claim, duty, obligation or cause
of action relating to any matters of any kind, whether presently known or unknown, suspected or
unsuspected, that Employee may possess against the Company from any omissions, acts or facts that
have occurred up until and including the Effective Date of this Release including, without
limitation,

          (a) any and all claims relating to or arising from Employee’s relationship with the Company or
any subsidiary of the Company and the termination of that relationship;

          (b) any and all claims relating to, or arising from, Employee’s right to purchase, or actual
purchase of shares of stock of the Company or any subsidiary of the Company, including, without
limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under
applicable state corporate law, and securities fraud under any state or federal law; provided,
however, that any claims, duties, obligations, or causes of action relating to Employee’s vested
stock rights are excluded from the release set forth in this Section 3;

          (c) any and all claims for wrongful discharge of employment; termination in violation of
public policy; discrimination; breach of contract, both express and implied; breach of a covenant
of good faith and fair dealing, both express and implied; promissory estoppel; negligent or
intentional infliction of emotional distress; negligent or intentional misrepresentation; negligent
or intentional interference with contract or prospective economic advantage; unfair business
practices; defamation; libel; slander; negligence; personal injury; invasion of privacy; false
imprisonment; and conversion;

          (d) any and all claims for violation of any federal, state or municipal statute, including,
but not limited to, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the
Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, the Fair
Labor Standards Act, the Employee Retirement Income Security Act of 1974, The Worker Adjustment and
Retraining Notification Act, Older Workers Benefit Protection Act; the Sarbanes-Oxley Act, the
California Fair Employment and Housing Act, and the California Labor Code, except as prohibited by
law, and all amendments to each such Act as well as the regulations issued thereunder;

          (e) any and all claims for violation of the federal, or any state, constitution;

          (f) any and all claims arising out of any other laws and regulations relating to employment or
employment discrimination; and

          (g) any and all claims for attorneys’ fees and costs.

Nothing in this Release is intended to relieve the Company of its obligations under Labor Code
Section 2802. Employee and the Company agree that the release set forth in this Section shall be
and remain in effect in all respects as a complete general release as to the matters released.
This release does not extend to any obligations incurred under this Agreement, under sections 7(g),
7(h) or 11, as applicable, of the Employment Agreement (to the extent not otherwise superseded by
this

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Agreement), and/or under the Indemnification Agreement by and between the Company and Employee.
This Release also does not extend to any claims Employee may have with respect to the termination
of his fully vested stock options unexercised at midnight on February 6, 2007.

     5. Acknowledgment of Waiver of Claims under ADEA. Employee acknowledges that he is
waiving and releasing any rights he may have under the Age Discrimination in Employment Act of 1967
(“ADEA”) and that this waiver and release is knowing and voluntary. Employee and the Company agree
that this waiver and release does not apply to any rights or claims that may arise under the ADEA
after the Effective Date of this Release. Employee acknowledges that the consideration given for
this waiver and Release is in addition to anything of value to which Employee was already entitled.
Employee further acknowledges that he has been advised by this writing that (a) he should consult
with an attorney prior to executing this Release; (b) he has at least twenty-one (21) days
within which to consider this Release; (c) he has seven (7) days following the execution of this
Release by the Parties to revoke the Release; (d) this Release shall not be effective until the
revocation period has expired; and (e) nothing in this Release prevents or precludes Employee from
challenging or seeking a determination in good faith of the validity of this waiver under the ADEA,
nor does it impose any condition precedent, penalties or costs for doing so, unless specifically
authorized by federal law. Any revocation should be in writing and delivered to Dale Fuller,
Interim Chief Executive Officer, at the Company’s principal place of business, by close of business
on the seventh day from the date that Employee signs this Release.

     6. Civil Code Section 1542. Employee represents that he is not aware of any claim
other than the claims that are released by this Release. Employee acknowledges that he has been
advised by legal counsel and is familiar with the provisions of California Civil Code Section 1542,
which provides as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

     Employee, being aware of said code section, agrees to expressly waive any rights they may have
thereunder, as well as under any other federal or state statute or common law principles of similar
effect.

     7. Covenants Not to Compete and Not to Solicit. Employee agrees that Paragraph 17 of
his Employment Agreement shall remain applicable to him, and acknowledges that notwithstanding
anything to the contrary in Paragraph 17, Employee’s non-competition and non-solicitation
obligations pursuant to that paragraph shall continue to be applicable to Employee for a period
equal to the lesser of (i) twenty-four (24) months following the Termination Date, or (ii) the date
upon which Employee notifies the Company in writing that he voluntarily elects to cease receiving
all severance benefits pursuant to Appendix A hereof. Employee’s right to receive and retain the
benefits set forth in Appendix A hereto are expressly conditioned upon Employee complying with such
obligations.

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     8. Employee’s Continuing Assistance to the Board. Employee agrees that for a period
of twenty-four (24) months following the Effective Date, Employee shall remain available to provide
transition consulting services to the Board of Directors, the Chief Executive Officer and the
Company as necessary. Employee agrees that he shall receive no compensation for any such
assistance other than reimbursement for reasonable out-of-pocket expenses consistent with the
Company’s policies and practices.

     9. Application for Employment. Employee understands and agrees that, as a condition
of this Release, he shall not be entitled to any employment with the Company, its parents, its
subsidiaries, or any successor, and he hereby waives any right, or alleged right, of employment or
re-employment with the Company, its parents, its subsidiaries and any successor. Employee also
waives any right to work as an independent contractor for the Company, its subsidiaries, its
parents and any successor. Employee further agrees that he will not apply for employment with the
Company, its subsidiaries, its parents, or related companies, or any successor and will not apply
to work as an independent contractor for the Company, its parents, its subsidiaries or any
successor.

     10. Tax Consequences. The Company makes no representations or warranties with respect
to the tax consequences of the payment of any sums to Employee under the terms of the Employment
Agreement and this Release. Employee agrees and understands that he is responsible for payment, if
any, of local, state and/or federal taxes on the sums paid thereunder by the Company and any
penalties or assessments thereon.

     11. Costs. The Parties shall each bear their own costs, expert fees, attorneys’ fees
and other fees incurred in connection with this Release.

     12. Arbitration. The Parties agree that any and all disputes arising out of the terms
of this Release, its interpretation, and any of the matters herein released, including any
potential claims of harassment, discrimination or wrongful termination shall he subject to binding
arbitration, to the extent permitted by law, as set forth in the Employment Agreement.

     13. Authority. The Company represents and warrants that the undersigned has the
authority to act on behalf of the Company and to bind the Company and all who may claim through it
to the terms and conditions of this Release. Employee represents and warrants that he has the
capacity to act on his own behalf and on behalf of all who might claim through him to bind them to
the terms and conditions of this Release. Each Party warrants and represents that there are no
liens or claims of lien or assignments in law or equity or otherwise of or against any of the
claims or causes of action released herein.

     14. No Representations. Each Party represents that it has had the opportunity to
consult with an attorney, and has carefully read and understands the scope and effect of the
provisions of this Release. Neither party has relied upon any representations or statements made
by the other party hereto which are not specifically set forth in this Release.

     15. Severability. In the event that any provision hereof becomes or is declared by a
court of competent jurisdiction to be illegal, unenforceable or void, this Release shall continue
in full force and effect without said provision.

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     16. Entire Agreement. This Release, the Employment Agreement (to the extent its terms
are not superseded by the terms of this Release and Appendix A hereto), the Employee Inventions and
Proprietary Rights Assignment Agreement, the 2000 Nonstatutory Stock Option Plan, as amended, the
1997 Stock Option Plan, the applicable equity compensation agreements, the Indemnification
Agreement, the employee and fringe benefit plans referred to in Section 2 of the Employment
Agreement and the golden parachute excise tax gross-up provisions of section 7(h) of the Employment
Agreement represent the entire agreement and understanding between the Company and Employee
concerning the subject matter herein, and supersede and replace any and all prior agreements and
understandings. The severance benefits provided for in Appendix A hereto replace and supersede in
their entirety any severance benefits to which Employee may otherwise have been entitled pursuant
to the Employment Agreement.

     17. No Oral Modification. This Release may only be amended in writing signed by
Employee and a duly authorized officer (other than Employee) of the Company.

     18. Effective Date. This Release is effective eight days after it has been signed by
both Parties (the “Effective Date”).

     19. Counterparts. This Release may be executed in counterparts, and each counterpart
shall have the same force and effect as an original and shall constitute an effective, binding
agreement on the part of each of the undersigned.

     20. Voluntary Execution of Release. This Release is executed voluntarily and without
any duress or undue influence on the part or behalf of the Parties hereto, with the full intent of
releasing all claims. The Parties acknowledge that:

          (a) They have read this Release;

          (b) They have been represented in the preparation, negotiation, and execution of this Release
by legal counsel of their own choice or that they have voluntarily declined to seek such counsel;

          (c) They understand the terms and consequences of this Release and of the releases it
contains;

          (d) They are fully aware of the legal and binding effect of this Release.

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     IN WITNESS WHEREOF, the Parties have executed this Release on the respective dates set forth
below.

	 	 	 	 	 
	 	McAFEE, INC.

 	 
	Dated:
2/06/07                 	/S/ DALE FULLER
 	 
	 	Dale Fuller, Interim President and Chief 	 
	 	
     Executive Officer 	 
	 

	 	 	 	 	 
	 	 	 
	Dated:
2/06/07                 	/S/ GEORGE SAMENUK
 	 
	 	George Samenuk 	 
	 	 	 
	 

6

 

APPENDIX A

TO

RELEASE OF CLAIMS

Subject to Employee’s discharging his obligations as set forth in the Release of Claims, to which
this Appendix is attached as Appendix A (the “Release”), the Company shall provide Employee with
the following benefits following the Effective Date. Defined terms shall have the same meanings as
set forth in Employment Agreement or the Release, as applicable.

	 	(1)	 	Effective as of the Termination Date, but subject to automatic revocation should
Employee fail to sign or revoke the Release, Employee’s outstanding options to purchase
common stock and restricted stock grants accelerate and vest immediately in full. For the
sake of clarity, no outstanding Restricted Stock Units shall vest and become exercisable.
The Company acknowledges that Employee, through his attorney, attempted to exercise all of
his outstanding stock options, including those accelerated hereby, prior to their
expiration. Employee acknowledges that the Company, through its outside attorney, declined
to accept such exercise because of the blackout imposed by the Company on all stock option
exercises pending the restatement of the Company’s financial statements.
	 
	 	(2)	 	Employee shall receive all Base Salary and accrued but unpaid vacation earned through
the Termination Date, shall receive a payment equal to his annual 2006 Target Bonus
multiplied by a fraction with the numerator equal to the number of 2006 calendar days up to
and including the Termination Date and the denominator equal to 365, and shall be
reimbursed for all reasonable expenses in accordance with Section 4 of the Employment
Agreement and for any other expenses pursuant to the Employment Agreement for which
reimbursement is still due.
	 
	 	(3)	 	Employee shall receive 24 monthly payments, each equal to 1/24th of the sum of 80% of
twice Employee’s Base Salary plus 80% of twice his Target Bonus, less applicable
withholding, and otherwise in accordance with the Company’s standard payroll practices;
provided, however, that no such payments shall be made until the date that is six months
and one day following the Termination Date, at which time such delayed payments shall be
paid in full in arrears; provided, further, that the pre-tax amount of $24,300 shall be
subtracted from the final installment payment to reflect Employee’s payment of the
increased exercise price of $.18 per share on the stock option with grant number 00032118
with respect to the 135,000 shares previously exercised by Employee.
	 
	 	(4)	 	The Company shall pay the group health, dental and vision plan continuation coverage
premiums for Employee and his covered dependents under COBRA through the lesser of (x)
eighteen (18) months from the date of Employee’s termination of employment, or (y) the date
upon which Employee and his covered dependents are covered by similar plans of Employee’s
new employer; and

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	 	(5)	 	The Company shall pay Employee cash equal to the pre-tax cost of providing all other
Company welfare plan and fringe benefits and continued life insurance and long-term
disability coverage (including the Prior Life and LTD coverage), in which Employee
participated prior to his termination for eighteen (18) months from the Termination Date;
provided, however, that no such payments shall be made until the date that is six months
and one day following the Termination Date, at which time such delayed payments shall be
paid in full in arrears.

     Except as provided for herein and in the Release, Employee acknowledges that he shall not be
entitled to any other severance payments or benefits, including any payments or benefits otherwise
provided for in the Amended and Restated George Samenuk Employment Agreement or the Second
Amendment to Amended and Restated George Samenuk Employment Agreement.

8exv10w5

 

GAS GATHERING AND PURCHASE AGREEMENT

BY AND BETWEEN

BURLINGTON RESOURCES OIL & GAS COMPANY LP,

BY BROG GP INC., ITS SOLE GENERAL PARTNER

&

BURLINGTON RESOURCES TRADING INC.

AND

DYNEGY MIDSTREAM SERVICES, LIMITED PARTNERSHIP

DYNEGY CONTRACT NO.: 014904 – Ref No. 095

 

 

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

Table of Contents

	 	 	 	 	 
	COMMERCIAL TERMS AND CONDITIONS
	 	 	1	 
	 
	 	 	 	 
	1. Parties’ Obligations
	 	 	1	 
	A. Delivery, Gathering & Processing
	 	 	1	 
	B. Supplier Representation Regarding Dedicated Production Interests
	 	 	1	 
	C. Dedicated Acreage
	 	 	1	 
	2. COMPENSATION TO SUPPLIER
	 	 	2	 
	A. Plant Products
	 	 	2	 
	B. Residue Gas
	 	 	2	 
	3. COMPENSATION TO COMPANY
	 	 	2	 
	A. Title to Products & Gas
	 	 	2	 
	B. Gathering Fee
	 	 	2	 
	4. TERM
	 	 	2	 
	5. DELIVERY POINTS
	 	 	2	 
	6. ALLOCATION METHODOLOGY
	 	 	3	 
	7. TESTING SCHEDULE
	 	 	3	 
	8. PRIOR AGREEMENTS
	 	 	3	 
	9. EXHIBITS
	 	 	3	 
	 
	 	 	 	 
	EXHIBIT A – GENERAL TERMS AND CONDITIONS
	 	 	1	 
	 
	 	 	 	 
	A.1. Definitions
	 	 	1	 
	A.2. Unprocessed Gas
	 	 	3	 
	A.3. Warranty and Title
	 	 	3	 
	A.4. Lease Expiration
	 	 	3	 
	A.5. Specifications
	 	 	4	 
	A.6. Payments to Supplier
	 	 	4	 
	A.7. Payments to Company
	 	 	5	 
	A.8. Royalties and Other Payments
	 	 	5	 
	A.9. Taxes
	 	 	5	 
	A.10. Delivery Pressure
	 	 	5	 
	A.11. Reservations by Supplier
	 	 	5	 
	A.12. Production in Conformance with Flow Schedule
	 	 	5	 
	A.13. Flush Gas and Curtailment Conditions
	 	 	6	 
	A.14. Settlement Tests
	 	 	6	 
	A.15. Meters and Measurement
	 	 	6	 
	A.16. Right Of Way
	 	 	7	 
	A.17. Indemnities
	 	 	7	 
	A.18. Reserve Information
	 	 	7	 
	A.19. Uneconomic Gas
	 	 	7	 
	A.20. Unacceptable Plant Economics
	 	 	8	 
	A.21. Termination
	 	 	8	 
	A.22. Post Termination Deliveries
	 	 	8	 
	A.23. Scope
	 	 	8	 
	A.24. Force Majeure
	 	 	8	 
	A.25. Assignment
	 	 	9	 
	A.26. Administrative Information
	 	 	9	 
	A.27. Notice
	 	 	9	 
	A.28. LIMITATION OF LIABILITY
	 	 	9	 
	A.29. Conflicts of Interest
	 	 	9	 
	A.30. GOVERNING LAW
	 	 	9	 
	A.31. Confidentiality 
	 	 	10	 
	A.32. TEXAS DECEPTIVE TRADE PRACTICES – CONSUMER PROTECTION ACT 
	 	 	10	 
	A.33. Miscellaneous Provisions 
	 	 	10	 

- i -

 

	 	 	 	 	 
	EXHIBIT B – DEDICATED ACREAGE AND/OR DEDICATED WELLS
	 	 	1	 
	 
	 	 	 	 
	EXHIBIT C – QUALITY SPECIFICATIONS
	 	 	1	 
	 
	 	 	 	 
	EXHIBIT D – ALLOCATION METHODOLOGY
	 	 	1	 
	 
	 	 	 	 
	EXHIBIT E – SPECIAL PROVISIONS
	 	 	1	 
	 
	 	 	 	 
	New Provisions
	 	 	1	 
	E.1. Partial Assignments & Scope of Partial Successors’ Delivery Commitment
	 	 	1	 
	E.2. Credit
	 	 	1	 
	E.3. Right of Set-Off
	 	 	1	 

- ii -

 

Gas Gathering and Purchase Agreement

Burlington Resources Oil & Gas Company LP (“BROG”), by BROG GP Inc., its Sole General Partner,
and Burlington Resources Trading Inc. (“BRTI”) (BROG and BRTI being collectively referred to herein
as “Supplier”) and Dynegy Midstream Services, Limited Partnership (“Company”) hereby enter into
this Gas Gathering and Purchase Agreement as of the Effective Date set forth in Section 4 below.
BROG is entering into this Agreement due to its capacity as owner of the “Dedicated Production
Interests” and BRTI is joining herein in its capacity as first purchaser of certain volumes of Gas
produced from the Dedicated Wells

For the purpose of this Agreement, all capitalized terms as used in this Gas Gathering and Purchase
Agreement, and its exhibits, schedules and other attachments, shall have the meaning specified
under “Definitions” in Exhibit A, General Terms and Conditions, which is attached hereto and made a
part hereof (the “General Terms and Conditions”).

COMMERCIAL TERMS AND CONDITIONS

1. PARTIES’ OBLIGATIONS

A. Delivery, Gathering & Processing

In consideration of the sum of one dollar ($1.00), and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Supplier hereby agrees to deliver and sell
to Company, and Company agrees to gather and purchase from Supplier, subject to the conditions and
stipulations set forth in this Agreement and the Exhibits attached hereto, all of “Supplier’s Gas”
(as hereinafter defined.)

B. Supplier Representation Regarding Dedicated Production Interests

BROG hereby represents and warrants that it owns the right to produce, receive and take Gas from
all wells currently producing or which are completed and producing in the future on areas subject
to leases which are held by production from the Dedicated Wells described in Exhibit B to this
Agreement under the section therein entitled “Current Dedicated Wells & Production Interests,” that
the portion of the total Gas production from such current and future Dedicated Wells which Supplier
is entitled to take and receive in-kind is equal to the Production Interests percentages set forth
that portion of said Exhibit B (the “Dedicated Production Interests”) and that it has full
authority to commit all Gas attributable to such Dedicated Production Interests for delivery to
Company under the terms of this Agreement for at least the Primary Term of this Agreement. The
percentages set forth as the Production Interests next to the respective current Dedicated Wells
described therein represent the percentage of production which BROG is entitled to receive in kind
as a result of BROG’s ownership of interests in the underlying oil and gas lease pursuant to which
the applicable Dedicated Well is maintained and operated and the subject lease is held by such
Dedicated Well’s production. This representation and warranty shall not be construed to, and shall
not, limit the volumes which Supplier is committed to deliver pursuant to Section 1.A. above and
BROG and BRTI shall be obligated to deliver hereunder all volumes of Gas which qualify as
“Supplier’s Gas” pursuant to the definition of such term set forth in Section A.1. of the General
Terms and Conditions, regardless of whether their ownership or control of any such volumes of Gas
arises from ownership of a Production Interest or for any other reason; including sale of same in
the capacity of operator on behalf of other Production Interest Owners, or purchase of same by
either Supplier party hereto from any Production Interest Owners, or by virtue of any other
contractual arrangements or rights of such Supplier entities which entitle them to take any Gas
in-kind.

C. Dedicated Acreage

BROG and BRTI mutually represent and warrant that the only Prior Contractual Commitment which
exists with regard to Production Interests owned or controlled by them as of the date of execution
of this Agreement within the Dedicated Area described in Exhibit B hereto is the dedication to
Cantera Resources, Inc. under a contract dated November 1, 2001 (the “Cantera Contract”) pursuant
to which

			
	 	 	 
	Commercial Terms and Conditions

DYNEGY CONTRACT NO.: 014904 — Ref No. 095
	 	Page 1

 

 

BRTI is obligated to deliver Gas produced from and attributable to Interests in wells located
within the area described in Part II of Exhibit B (Excluded Areas).

2. COMPENSATION TO SUPPLIER

In consideration for the compensation to be received by Company pursuant to the terms of this
Agreement (including, without limitation, that set forth in Section 3 below), and Supplier’s
covenants and performance of it obligations set forth in this Agreement, Company shall pay to
Supplier the amounts set forth below in this Section 2.

A. Plant Products

Company shall pay to Supplier the Proceeds attributable to the sale of (**) percent (**)% of
Supplier’s allocated share of Plant Products (“Supplier’s Plant Products Percentage”). Should
Supplier elect to exercise its option for a Renewal Term, as provided for in Section 4 below,
during the Renewal Term such Supplier’s Plant Products Percentage shall be (**) percent (**)%.

B. Residue Gas

Company shall pay to Supplier the Proceeds attributable to the sale of (**)% of Supplier’s
allocated share of Residue Gas (“Supplier’s Residue Gas Percentage”). Should Supplier elect to
exercise its option for a Renewal Term, as provided for in Section 4 below, during the Renewal Term
such Supplier’s Residue Gas Percentage shall be (**) percent (**)%.

3. COMPENSATION TO COMPANY

A. Title to Products & Gas

As compensation for gathering and Processing Supplier’s Gas hereunder, Company shall receive title
to Supplier’s Gas delivered under this Agreement and all the components and constituents contained
therein.

B. Gathering Fee

In addition to the compensation set forth in Section 3.A. immediately above, Supplier shall be
obligated to pay the following fee(s) (the “Fee,” whether one or more) to Company:

	 	•	 	A fee (the “Low Pressure Gathering Fee”) of (**)¢ (**) per MMBtu of Supplier’s Gas
delivered to each Delivery Point for which Low Pressure Service is provided. Should
Supplier elect to exercise its option for a Renewal Term, as provided for in Section 4
below, during the Renewal Term such Low Pressure Gathering Fee shall
be (**)¢ (**) per
MMBtu.

4. TERM

This Agreement will become effective on August 1, 2003 (the “Effective Date”) and shall continue in
full force and effect to and through July 31, 2015 (“Primary Term”). Supplier shall have a one-time option,
exercisable in Supplier’s sole discretion, to extend the Term for one additional term of ten (10) Years
effective from and after August 1, 2015 (the “Renewal Term). The Primary Term and the Renewal Term, if any,
together with any mutually agreed written extensions or modifications thereof, are referred to
collectively in this Agreement as the “Term.”

5. DELIVERY POINTS

Supplier shall deliver Supplier’s Gas to Company under this Agreement at the inlet of the gas
measurement facilities of Company or Company’s designee or Affiliate which are, or will be, located
at, near, and/or immediately downstream of Supplier’s separation or dehydration facilities, if same
are in use at the Dedicated Wells or at wells located within the Dedicated Acreage which are
producing any Supplier’s Gas, or other production facilities of Supplier located at such wells
and/or at any other mutually agreeable point (the “Delivery Points”). Upon agreement of the
Parties, any such Delivery Point may be a central delivery point to which Supplier shall deliver
Supplier’s Gas from multiple wells.

			
	 	 	 
	Commercial Terms and Conditions

DYNEGY CONTRACT NO.: 014904 — Ref No. 095
	 	Page 2

 

 

6. ALLOCATION METHODOLOGY

The portion of Plant Products and Residue Gas produced at the Plant that is attributable to
Supplier’s Gas delivered to the Delivery Points under this Agreement, for purposes of Section 2
above and all other portions of the Agreement, shall be determined in the manner set forth in
Exhibit D to this Agreement.

7. TESTING SCHEDULE

Company shall sample Supplier’s Gas at each Delivery Point, for purposes of conducting the tests
described under Section A.14, “Settlement Tests,” in the General Terms and Conditions, at least
semi-annually during the term of this Agreement.

8. PRIOR AGREEMENTS

This Agreement is being executed for the purpose of partially replacing, as of the
Effective Date, the following agreement currently in force between the Parties, which includes
within their scope the purchase, processing and/or gathering of Supplier’s Gas produced from the
Dedicated Acreage and/or Dedicated Wells:

	•	 	“Gas Gathering Agreement” between Dallas Production Inc. and Dynegy Midstream Services,
Limited Partnership, dated November 1, 1994, and referred to by Company as Agreement No.
014634, as amended various times prior hereto (the “Prior Agreement”).

With reference to the following terms as same are used and defined in the Prior Agreement, the
Prior Agreement is hereby replaced by this Agreement as to all “Gas” and all “Supplier’s Gas”
produced from all “Wells” and all “wells and properties” as dedicated thereto and as described in
Exhibit “A” to the Prior Agreement, less and except only all Gas produced from any
“Mitchell Gathered Wells” (as such term is defined in that certain “Consent and Amendment to Gas
Gathering Agreement (South Unit Wells) (Effective February 1, 2001),” as to which the Prior
Agreement shall continue to be in full force and effect and unaffected hereby.

9. EXHIBITS

The following Exhibits are incorporated herein by reference and made a part of this Agreement:

     Exhibit A – General Terms and Conditions

     Exhibit B – Dedicated Acreage and/or Dedicated Wells

     Exhibit C – Quality Specifications

     Exhibit D – Allocation Methodology

     Exhibit E – Special Provisions

In the event of any conflict between the provisions of the above Exhibits and the Commercial Terms
and Conditions set forth above, the Commercial Terms and Conditions shall control.

If you (Supplier) are in agreement with the terms and conditions set forth in this Agreement,
please so indicate by signing below and returning one copy of this Agreement to Company at the
address below.

	 	 	 	 	 
	 

	 	Supplier’s Address
	 	5051 Westheimer, Ste. 1400

Houston, TX 77056-5604
	 
	 	 	 	 
	 

	 	Supplier’s Contact
	 	Mike Wilkinson
	 
	 	 	 	 
	 

	 	Supplier’s Phone Number
	 	(713) 624-9033
	 
	 	 	 	 
	 

	 	Supplier’s Facsimile Number
	 	(713) 624-9622
	 
	 	 	 	 
	 

	 	Supplier’s E-Mail Address (not to be used for
notification purposes)	 	 

			
	 	 	 
	Commercial Terms and Conditions

DYNEGY CONTRACT NO.: 014904 — Ref No. 095
	 	Page 3

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	SUPPLIER:	 	COMPANY:	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Accepted and Agreed to:	 	Accepted and Agreed to:	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Burlington Resources Oil & Gas Company LP, by BROG GP Inc., its Sole General Partner

	 	Dynegy Midstream Services, Limited Partnership
By: Dynegy Midstream G.P., Inc., its General Partner
	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Printed Name:	 	 	 	Printed Name:	 	Steve Furbacher	 	 
	 

	 	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Title:	 	 	 	 	 	Title:	 	President	 	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Date:

	 	 	 	 	 	Date:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Supplier’s Federal Tax ID Number: 74-2986507	 	Company’s Federal Tax ID Number: 760507891	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Address:	1000 Louisiana
Suite 5800

Houston TX 77002	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Accepted and Agreed to:	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Burlington Resources Trading Inc.	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Printed Name:	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Supplier’s Federal Tax ID Number: 84-0890010	 	 	 	 	 	 	 	 

			
	 	 	 
	Commercial Terms and Conditions

DYNEGY CONTRACT NO.: 014904 — Ref No. 095
	 	Page 4

 

 

EXHIBIT A – GENERAL TERMS AND CONDITIONS

to

GAS GATHERING AND PURCHASE AGREEMENT

(Modified)

A.1. Definitions

As used in this Agreement, except in those certain instances where the context expressly states
another meaning, the following terms and expressions shall have the following meanings:

“Affiliate” shall mean any Person that directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with the Person specified. The term
“control” (including the terms “controlled by” or “under common control with”) means the
possession, directly or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through ownership, by contract, or otherwise. Any Person shall
be deemed to be an Affiliate of any specified Person if such Person owns fifty percent (50%) or
more of the voting securities of the specified Person, if the specified Person owns fifty percent
(50%) or more of the voting securities of such Person, or if fifty percent (50%) or more of the
voting securities of the specified Person and such Person are under common control.

“Agreement” shall mean this Gas Gathering and Purchase Agreement, including the Commercial Terms
and Conditions, the exhibits and schedules attached hereto or incorporated therein by reference,
and any amendments to this Gas Gathering and Purchase Agreement executed pursuant to the provisions
of Section A.33 (9).

“Btu” shall mean British thermal unit or units and shall be defined as the quantity of heat
required to raise the temperature of one (1) pound, avoirdupois, of pure water one (1) degree on
the Fahrenheit temperature scale (58.5 degrees to 59.5 degrees) at a constant pressure of 14.73
psia.

“Business Day” shall mean any Day in which Federal Reserve member banks in Houston, Texas are open
for business.

“Claims” shall mean any claim, demand, and causes of action of any kind and all losses, fines,
penalties, damages liabilities, interest, costs, and expenses (including court costs, expert fees,
expenses of investigation and reasonable attorneys’ fees) relating thereto.

“Commercial Terms and Conditions” shall mean the terms and conditions appearing under the heading
“Commercial Terms and Conditions” in the main body of this Agreement.

“CPI-U Index” shall be the Consumer Price Index, All Urban Consumers, U. S. city average, all
items, as determined and published by the United States Department of Labor Statistics (the “BLS”)
or any successor agency thereto. The CPI-U Index shall be taken from the data published by the BLS
electronically at the then current BLS internet site or as same is published in hardcopy form.

“Cubic Foot of Gas” shall mean the volume of Gas contained in one cubic foot of space at (1) a
pressure base of (a) 15.025 pounds per square inch absolute if produced from lands or water bottoms
situated in or off of the coast of Louisiana; or (b) 14.65 pounds per square inch absolute if
produced from lands or water bottoms situated in or off of the coast of any other state; and (2) a
temperature base of sixty degrees Fahrenheit (60°F). Whenever the conditions of pressure and
temperature differ from the above, conversion of the volume from such conditions to the standard
conditions shall be made in accordance with the Ideal Gas Laws, corrected for deviation due to
supercompressibility by the methods set forth in the American Petroleum Institute Manual of
Petroleum Measurement Standards (“API MPMS”), Chapter 14, Natural Gas Fluids Measurement, Section
3, Concentric, Square-Edged Orifice Meters, Parts 1, 2, 3 & 4, 1991 Edition or latest revision and
as further detailed in the latest revision of American Gas Association (AGA) Report Number 8,
“Compressibility Factors of Natural Gas and Other Related Hydrocarbon Gases.”

“Day” or “Daily” shall mean the period of twenty-four (24) consecutive hours commencing at nine
(9:00) o’clock a.m., in the time zone in which the Plant is located, on a calendar day and ending
at nine (9:00) o’clock a.m., in that same time zone, on the next succeeding calendar day.

“Dedicated Acreage” shall mean those lands described on Exhibit B.

“Dedicated Wells” shall mean both: i) those well(s) and wellbore(s) described on Exhibit B,
including any replacement(s) thereto; and ii) any other wells situated within the Dedicated Acreage
in which Supplier owns or acquires any Production Interest during the Term.

“Delivery Point” shall have the meaning set forth in the “Delivery Points” section of the
Commercial Terms and Conditions.

“Drip Liquids” shall mean any liquid hydrocarbons accumulating in drips, separators, equipment
and/or pipelines at any point between the Delivery Point and the initial inlet scrubber of the
Plant (including liquid hydrocarbons recovered by the inlet scrubber); including, without
limitation, dirty oil, line drip, scrubber oil, compression and separator liquids and condensate.

“Effective Date” shall have the meaning set forth in the “Term” section of the Commercial Terms and
Conditions.

“Fee” shall have the meaning specified in the Commercial Terms and Conditions.

“Fuel” shall mean the Monthly volume of Gas, in Mcf or MMBtu, utilized for Plant and/or Gathering
System operations, including any portions of Residue Gas retained by Company in compensation for
electrical power consumption in accordance with the allocation provisions of the Agreement used to
determine the portion of Residue Gas which is attributable to, and allocated to, Supplier’s Gas
delivered under the Agreement.

“Gallon” shall mean one (1) U.S. Standard Liquid Gallon of two hundred thirty-one (231) cubic
inches, adjusted to a temperature of sixty degrees Fahrenheit (60oF) and equilibrium pressure of
the Product measured.

“Gas” or “Natural Gas” shall mean all gaseous elements and compounds and mixtures thereof,
comprising the effluent vapor stream produced from a well

“Gathering System” shall mean the system of pipes and gathering lines upstream of the Plant which
are or will be connected to the Plant and all related equipment and systems which are or will be
connected to such pipes and gathering lines including, without limitation, meters, meter runs,
compressors, separators, drips and pigging stations.

			
	 	 	 
	Exhibit A — General Terms and Conditions
	 	Page 1
	DYNEGY CONTRACT NO.: 014904 — Ref No. 095	 	 

 

 

“GPM” shall mean U.S. Gallons per one thousand (1000) cubic feet of Gas or Gallons per Mcf.

“Gross Heating Value” or “Heat Content” shall mean the gross number of British Thermal Units
produced by the complete combustion at constant pressure of the amount of dry Gas which would
occupy a volume of one (1) Cubic Foot at a temperature of sixty (60) degrees Fahrenheit and under
pressure equivalent to:

	 	(1)	 	15.025 pounds per square inch absolute, if produced from lands or water bottoms
situated in or off of the coast of Louisiana or
	 
	 	(2)	 	14.65 pounds per square inch absolute if produced from lands or water bottoms situated
in or off of the coast of any other state,
	 
	 	 	 	and with air of the same temperature and pressure as the Gas, when the products of
combustion are cooled to the initial temperature of the Gas and air, and when the water
formed by combustion is condensed to the liquid state, corrected from the water vapor
content of the Gas under testing conditions to the actual water vapor content of the Gas as
received and delivered. Any Gas containing not more than seven (7) pounds of water vapor
per one million (1,000,000) Cubic Feet of Gas is considered to be dry for purposes of
correcting Heat Content. The number of Btus per unit volume of Gas, as determined above,
shall be converted to the same pressure base as the Gas volume.

“Interest Owners” shall have the meaning ascribed to such term in Section A.8 below.

“Mcf” shall mean one thousand (1,000) cubic feet of Gas (1) at a pressure of (a) 15.025 pounds
per square inch absolute, if produced from lands or water bottoms situated in or off of the coast
of Louisiana or (b) 14.65 pounds per square inch absolute if produced from lands or water bottoms
situated in or off of the coast of any other state, and (2) at a temperature of 60o
Fahrenheit.

“MMBtu” shall mean one million British thermal units.

“Month” shall mean a period beginning at the start of the first Day (as set forth in the definition
of “Day” above) of a calendar Month and ending at start of the first Day (also as set forth in the
definition of “Day” above) of the next succeeding calendar Month, except that the period from the
date of first deliveries to the first Day of the following calendar Month shall be deemed to be a
Month, and the period between the termination date and the first Day of the calendar Month in which
termination occurs shall be deemed to be a Month.

“Party” shall mean Company or Supplier individually. “Parties” shall mean Company and Supplier
collectively.

“Person” means any individual, corporation, partnership, limited liability company, association,
joint venture, trust, or other organization of any nature or kind.

“Plant” shall mean a gas processing plant and/or treating facility and other related facilities
utilized for Processing Supplier’s Gas. It is understood that Supplier’s commitment of Gas to
Company pursuant to this Agreement is not limited to a specific Plant, it being the intent that
Company shall have the right to cause Supplier’s Gas to be Processed in any Plant, whether or not
owned by Company or its Affiliates, but in a manner consistent with the terms of this Agreement.

“Plant Products” or “Products” shall mean the liquid hydrocarbons and non-hydrocarbon components
which are removed from Gas during Processing including ethane, propane, isobutane, normal butane,
natural gasoline and/or any mixture thereof and methane, to the extent removal thereof is necessary
in, or results from, removing other liquid hydrocarbons. Notwithstanding the foregoing, the term
Plant Products or Products shall not include sulfur, Drip Liquids or methane.

“Primary Term” shall have the meaning set forth in Section 3 of the Commercial Terms and
Conditions.

“Prior Contractual Commitments,” with regard to Production Interests in Dedicated Wells and/or the
Dedicated Acreage acquired by Supplier, or the Gas from which becomes available to Supplier, from
and after the date hereof shall mean any contractual commitment to which such a Production Interest
is subject at the time Supplier acquired ownership or control of same, excluding, however, any such
contractual commitments which were entered into in connection with or in contemplation of
Supplier’s acquisition of the applicable Production Interest.

“Proceeds” shall mean the total proceeds received from the sale of Plant Products and/or Residue
Gas, as applicable, adjusted to a F.O.B. Plant basis, unless a specific method for calculating
Proceeds is set forth in the Commercial Terms and Conditions. Said adjustments shall include, but
not be limited to, adjustments for

	•	 	a fee for the marketing of Plant Products equal to the greater of $** per Gallon, **% of the total Proceeds received by
Company from the sale of Plant Products or the sales commissions commensurate with the current commission being charged
in the industry by independent brokers handling like Products,
	 
	•	 	fractionation costs incurred by Company, unless a fixed fractionation fee is specified in the Commercial Terms and
Conditions, in which case, such fixed fee shall apply,
	 
	•	 	actual storage and loading costs incurred by Company, if any,
	 
	•	 	transportation costs incurred by Company, including pipeline tariff charges, pipeline losses, if any, rail car and
truck transportation costs, unless a fixed transportation fee is specified in the Commercial Terms and Conditions, in
which case, such fixed fee shall apply,
	 
	•	 	any freight differentials received or allowed to Third Parties and
	 
	•	 	Supplier’s allocated share of electricity power charges, if any, allocated in accordance with Exhibit D.

Company shall have the right to sell Products and/or Residue Gas to its Affiliate at a fair and
reasonable price and the price received from such sale shall be the basis for determining the
Proceeds as provided above.

“Process” or “Processing” shall mean the removal of Plant Products and/or impurities from
Supplier’s Gas using mechanical separation, extraction, condensation, compression, absorption,
stripping, refrigeration, cryogenic expansion or other Processing methods.

“Production Interests” means any ownership interests in oil and/or gas leaseholds or in the oil
and/or gas underlying any property which carry with them the right to take any production in kind.

“psia” shall mean pounds per square inch absolute.

			
	 	 	 
	Exhibit A — General Terms and Conditions
	 	Page 2
	DYNEGY CONTRACT NO.: 014904 — Ref No. 095	 	 

 

 

“psig” shall mean pounds per square inch gauge.

“Redelivery Point” shall mean the point at or near the tailgate of the Plant at which the Residue
Gas is returned to Supplier or Supplier’s designee if Supplier is taking its share of the Residue
Gas in kind.

“Residue Gas” shall mean that gaseous portion of Supplier’s Gas remaining after Processing (which
includes a reduction for Fuel and for all losses or other uses of Gas, including without
limitation, Gas which is flared and any Gas which is lost and unaccounted for).

“Supplier’s Gas” shall mean all Gas owned or controlled by Supplier now or hereafter produced from
the Dedicated Acreage (or any lands pooled, unitized or communitized therewith) and/or Dedicated
Wells, excluding only such Gas as is subject to Prior Contractual Commitments (as defined herein).

“Supplier’s Interest” or “Interest” shall mean any oil and gas leasehold, mineral fee, royalty or
other interest owned or controlled by Supplier.

“Specifications” shall mean the quality specifications set forth in Exhibit C hereto.

“Term” shall have the meaning set forth in the Commercial Terms and Conditions portion of this Agreement.

“Third Party” shall mean any Person other than Company or Supplier and their Affiliates.

A.2. Unprocessed Gas

Company shall have the exclusive right to Process Supplier’s Gas for the extraction of Plant
Products. Supplier agrees that prior to delivery to Company at the Delivery Point Supplier’s Gas
shall not be Processed other than in a conventional separator or separators operating with no
internal piping for heat interchange and which operate without any prior chilling or refrigeration
other than the cooling which takes place upon expansion of the Gas as it is produced across a choke
and into such separator or separators. Furthermore, Supplier agrees not to utilize units designed
to remove liquid hydrocarbons, including Products, by means of low temperature separation
equipment, lean oil absorption, turbo-expander or mechanical refrigeration equipment, dry bed
extraction equipment or any other type of equipment which would reduce the liquid hydrocarbon or
Btu content of Supplier’s Gas prior to delivery to Company at the Delivery Point.

A.3.Warranty and Title 

Supplier represents and warrants that:

	•	 	it has good and clear title to all Supplier’s Gas delivered to Company hereunder or, alternatively,
that it has the full right, power and authority to sell such Supplier’s Gas; and
	 
	•	 	such Supplier’s Gas is free and clear of all liens, encumbrances and adverse claims.

Supplier agrees to indemnify and defend Company and its Affiliates and the directors, officers,
agents, and employees of Company and its Affiliates and save them harmless from all Claims of any
and all Persons (other than Supplier) to any Supplier’s Gas delivered by Supplier under this
Agreement or to any compensation payable to Supplier under this Agreement, except for Claims
arising by, through or under Company.

In the event Supplier’s right to any compensation payable under this Agreement or title or right to
sell Supplier’s Gas is questioned by any Person, including Company, Company shall have the right to
withhold payment of any compensation payable to Supplier, without liability for interest, during
the period of time any action or claim regarding same is pending or until Supplier’s right to the
proceeds of sale of, or title and/or right to sell, Supplier’s Gas is freed from such question, or
until Supplier furnishes Company with a bond or other form of security acceptable to Company that
will save Company harmless from any Claims that may arise from Company having made payment of any
amounts to Supplier to which Supplier was not entitled or for Supplier’s Gas in which Supplier did
not have good and clear title and/or the right to sell hereunder.

Company shall have the right to demand, at any time and from time to time, and Supplier shall
furnish to Company, assurance of title and/or the right to sell Supplier’s Gas hereunder in a form
acceptable to Company, including:

	 	•	 	abstracts of title to the Dedicated Acreage or Dedicated Wells;
	 
	 	•	 	copies of the oil and Gas lease(s) covering the Dedicated Acreage or Dedicated Wells and
certified copies of any assignments of any Interests therein;
	 
	 	•	 	a certification of Supplier’s Interest covered hereunder including the names of all
other working interest owners and the gross working interest owned by Supplier and each of
the other working interest owners whose interests are included in this Agreement, if any;
	 
	 	•	 	division order title opinions, and executed division and/or transfer orders;
	 
	 	•	 	and such other documents as may be necessary or desirable to satisfy the attorneys of
Company that Supplier has good and clear title or right to Supplier’s Gas and/or the right
to commit same hereunder; and

Unless otherwise provided elsewhere in this Agreement, title to and risk of loss for Supplier’s Gas
(including any and all components and substances contained in or extracted therefrom) shall pass
from Supplier to Company at the Delivery Point. Supplier does hereby transfer, assign and convey
to Company, free of cost to Company, title to Supplier’s Gas consumed as Fuel in the Gathering
System and/or Plant and all Gas which is flared, leaked or otherwise lost in the operation of the
Plant and/or the Gathering System. Additionally, the compensation payable to Supplier which is set
forth in the Commercial Terms and Conditions is understood to include full compensation for, and
Company shall take full and clear title to, one hundred percent (100%) of the Products, Drip
Liquids and sulfur attributable to Supplier’s Gas, without any additional compensation being
required of Supplier for same.

A.4. Lease Expiration

In the event an oil, Gas and/or mineral lease or other type of interest pursuant to which
Supplier derives its Interest in all or portions of the Dedicated Acreage and/or Dedicated Wells
should terminate before the expiration of this Agreement, then this Agreement shall be canceled
contemporaneously with such termination, but only as to the lands and wells which were subject to
said lease or

			
	 	 	 
	Exhibit A — General Terms and Conditions
	 	Page 3
	DYNEGY CONTRACT NO.: 014904 — Ref No. 095	 	 

 

 

other type of interest. Should Supplier subsequently acquire an Interest in such lands, within a
period of six (6) Months of such cancellation then this Agreement shall cover and include
Supplier’s Interest in either: i) such lands to the extent they were originally within the
Dedicated Acreage; and/or ii) any wells which were Dedicated Wells prior to the termination of said
lease or other interest; from the date of Supplier’s acquisition of such Interest and Supplier
agrees to execute all instruments that Company may reasonably require in order to evidence such
fact.

Provided, however, the above provisions of this Section A.4. shall apply only to assignees
of Supplier which assignee acquired its interests pursuant to a Partial Assignment, as described in
Paragraph E.1. of Exhibit E to this Agreement; it being understood that any Interests held or
acquired by Supplier or its Affiliates within the Dedicated Acreage during the Term hereof (or by
their assignees other than pursuant to such a Partial Assignment) are subject to this Agreement,
excluding only Prior Contractual Commitments.

A.5. Specifications

Supplier’s Gas delivered to Company hereunder shall be merchantable, unprocessed Gas, at all
times complying with the Specifications.

The determination as to conformity of Supplier’s Gas with the Specifications shall be made by
Company in accordance with generally accepted procedures of the Gas industry including
chromatograph analysis. Such determinations shall be made as often as Company deems necessary and
Supplier may witness such determinations or make joint determinations with its own appliances. If
in Supplier’s judgment the result of any such test or determination is inaccurate, Company, at
Supplier’s request, will again conduct the questioned test or determination, and the costs of such
additional test or determination shall be borne by Supplier unless same shows the original test or
determination to be materially inaccurate.

Failure to Meet Specifications: Should any of Supplier’s Gas delivered by Supplier hereunder at a
given Delivery Point fail to meet any of the Specifications, Company may at its option accept, or
immediately discontinue or curtail receipt of Supplier’s Gas at such Delivery Point until such time
as Supplier’s Gas meets the required Specification(s). Company may elect to take Supplier’s Gas
not meeting the Specification(s); however, Company’s election to do so shall not constitute a
waiver of the Specification(s) as to any other Supplier’s Gas.

Should Supplier’s operations or any of Supplier’s Gas create a condition which in the judgment of
Company tends to endanger the Plant or other property of Company or the lives or property of
Company’s employees or any Third Party, Company may discontinue receipt of Supplier’s Gas so long
as such condition exists.

Company shall notify Supplier of such failure of Supplier’s Gas to meet the Specification(s) and
Supplier shall make diligent effort to deliver such Gas conforming to the Specification(s). If
Supplier fails and/or refuses to deliver Gas conforming to the Specifications, within a reasonable
time following Supplier’s receipt of Company’s notice, Company shall have the right to terminate
this Agreement as to the leases and/or wells producing Supplier’s Gas which fails to meet the
Specification(s) without any liability whatsoever to Supplier.

Fee: If Company accepts delivery of Supplier’s Gas which does not meet the Specifications, Company
may either: i) charge Supplier an agreed treating fee, if agreed to by Supplier’s representative,
for the purpose of recovering costs incurred by Company to monitor Supplier’s Gas quality and/or to
bring Supplier’s Gas within the Specification(s); or ii) if Supplier has not agreed to a treating
fee, may recover, and be fully reimbursed by Supplier for all actual and reasonable costs incurred
by Company to monitor Supplier’s Gas quality and/or to bring Supplier’s Gas within the
Specification(s). Supplier agrees that agreement of Supplier’s representative to a negotiated
treating fee, as provided for above, may be evidenced by electronic messages and Company may rely
on such method of confirmation of agreement to such fee. In addition, Supplier agrees to
indemnify, defend and hold Company harmless from and against any and all Claims arising out of,
relating to or in any way connected with, the delivery of Supplier’s Gas to Company which does not
meet the Specifications.

A.6. Payments to Supplier

Payment of amounts owed hereunder by Company to Supplier shall be made not later than the last
Business Day of each Month for all Supplier’s Gas delivered to Company during the preceding Month.
Supplier shall be furnished a separate statement showing full details of Supplier’s account. If
during any Month the amount payable hereunder shall be less than one hundred dollars ($100.00), or
such lower amount as may be required by applicable law, Company may withhold payment without
penalty or interest until such time as the amount payable to Supplier equals or exceeds such
amount, in which event, payment shall be made on the next regular Monthly payment date. Within
thirty (30) Days after expiration or termination of this Agreement, Company shall pay Supplier all
amounts which are due and owing under this Agreement.

Examination by the Supplier of the accounting records maintained by Company respecting Supplier’s
Gas shall be permitted by Company during normal business hours upon reasonable written request
delivered to Company within twenty-four (24) Months from the end of the Month in which such
statement or invoice was issued (“Transaction Month”). If any such examination reveals any
inaccuracy in any statement, charge or invoice which is agreed to by the Parties, the necessary
adjustment shall be made promptly. Supplier shall submit a written explanation of any adjustments
or other claims it wishes to assert as a result of its examination and the Parties shall endeavor
to resolve any disputes regarding such claims or adjustments within thirty (30) Months after the
end of the Transaction Month. The correctness of all such statements and/or invoices shall be
presumptively established and shall preclude the making of claims for adjustment thereon by either
Party in any manner whatsoever, whether by filing an action in a court of law or otherwise, upon
the expiration of thirty-six (36) Months from and after the end of the Transaction Month, unless
such an action in a court of law is filed prior to such expiration. The making of a written claim
for adjustment by either Party against the other within the above required 36 Month period shall
operate to suspend the running of the applicable statute of limitations for such claim only until
the end of such 36 Month period.

Notwithstanding any change in ownership of Supplier’s Interest, Company shall never be required to
make payments or to give notices required under the provisions of this Agreement to more than one
party, and, in the event Supplier’s Interest shall ever be owned by more than one party, Company
may withhold (without interest) further payments and notices until all of the owners thereof have
designated one party to act for them in all respects relating to Supplier’s Interest and this
Agreement, including the rendering of bills, the submission of charts, and the receipt of payments
and notices hereunder.

			
	 	 	 
	Exhibit A — General Terms and Conditions
	 	Page 4
	DYNEGY CONTRACT NO.: 014904 — Ref No. 095	 	 

 

 

A.7. Payments to Company

Company shall mail statements or invoices, as applicable, pertaining to Supplier’s Gas
delivered hereunder by the last Day of each Month for the preceding calendar Month. Supplier shall
pay each invoice rendered hereunder within fifteen (15) Days of Supplier’s receipt of the invoice.
Company shall have the option to deduct the Fees and any other amounts owed by Supplier to Company
hereunder from any payments otherwise due Supplier from Company hereunder, provided that should
Company elect to make such deductions Company shall include all amounts owed to and from Supplier
hereunder for the applicable period to determine the net amount owed by the Party that is the net
payor under for that period.

A.8. Royalties and Other Payments

Supplier hereby assumes sole responsibility for accounting to and paying the lessors, working
interest owners, royalty owners and all other Persons legally entitled thereto (the “Interest
Owners”) all royalties, overriding royalties, bonus payments, production payments and other
payments due on Supplier’s Gas and the Plant Products, Drip Liquids and sulfur extracted therefrom
(or the Proceeds attributable thereto) and Supplier agrees to and does hereby indemnify, defend and
hold Company and its Affiliates (including its Affiliates’ directors, officers, employees, agents
or representatives) harmless from and against any and all Claims arising out of, relating to or in
any way connected with, the payments provided for in this Section A.8 and/or Supplier’s failure to
make such payments.

A.9. Taxes

Supplier agrees to bear and to pay or cause to be paid all excise, severance, production,
sales, and other taxes applicable to Supplier’s Gas delivered to Company hereunder. In addition,
Supplier agrees to bear all taxes assessed on Supplier’s settlement share of the Plant Products and
Residue Gas extracted from Supplier’s Gas (or the Proceeds attributable thereto, as the case may
be) and any fuel use or Processing taxes which may be assessed against Company in respect of
Supplier’s Gas. If for any reason Company is required to disburse any such taxes, Company shall
deduct the amounts so paid from any amounts paid to Supplier hereunder or shall invoice Supplier
for same if no such payments are made by Company or if the payments made are insufficient to cover
such taxes and/or assessments. Each Party agrees to make all tax reports, which it is obligated to
make to the applicable taxing authorities.

Neither Party hereto shall be responsible or liable for any taxes or other statutory charges levied
or assessed against any of the facilities of the other Party used for the purpose of carrying out
the provisions of this Agreement. Each Party shall pay any and all ad valorem, employment,
occupation, income and other taxes of like nature levied, assessed or collected on or with respect
to that Party’s property, operations or income derived hereunder or shall furnish to the other
Party all tax exemption certificates exempting such Party from the obligation to pay any such
taxes.

A.10. Delivery Pressure

Supplier shall make delivery of Gas hereunder to Company at a pressure sufficient to enable
Supplier’s Gas to enter the Gathering System against the pressure maintained therein from time to
time, it being understood that such operating pressures may fluctuate substantially over the term
of this Agreement.

A.11. Reservations by Supplier

Supplier hereby expressly reserves the following rights with respect to Supplier’s Gas:

	•	 	the right to use Supplier’s Gas prior to delivery to Company for (1) developing and operating the
Dedicated Wells and/or the wells situated on the Dedicated Acreage and (2) to fulfill obligations to
Supplier’s lessors or royalty interest owners therein, including Gas delivered pursuant to the exercise
of any take-in-kind rights which such lessors and/or royalty owners may have and/or Gas delivered
pursuant to good faith settlement agreements with lessors concerning take-in-kind right claims or
demands;
	 
	•	 	the right to pool, combine, unitize or communitize the Dedicated Acreage (or any portion thereof)
committed hereto with other lands and leases so long as such action does not reduce Supplier’s Gas
reserves and, in the event of any such pooling, combination, unitization or communitization, this
Agreement will cover Supplier’s Interest in the pool or unit formed and the Gas attributable thereto;
and,
	 
	•	 	the right to operate Supplier’s properties free from any control by Company and in such manner as
Supplier, in its sole discretion, may deem advisable, including, without limitation, the right, but not
the obligation, to drill new wells, to repair and rework old wells, or to renew or extend, in whole or
in part, any Lease dedicated hereunder or to abandon any well or surrender any land or lease, in whole
or in part, when no longer deemed by Supplier to be capable of producing Gas in paying quantities.

A.12. Production in Conformance with Flow Schedule

In order to maintain maximum Plant efficiency on a (twenty-four) 24-hour operating schedule,
it is desired by the Parties hereto to maintain a reasonably uniform rate of flow of Gas to said
Plant over each (twenty-four) 24-hour period. Accordingly, Supplier shall, as reasonably
practical, regulate its producing schedule so that Supplier’s Gas shall be supplied from Supplier’s
well or wells at a reasonably uniform rate of flow or accept and follow a producing schedule to be
established by Company from time to time. Company shall take into consideration the wishes of
Supplier in establishing the producing schedule for Supplier’s well or wells. Anything else
contained in this Agreement to the contrary notwithstanding, Supplier hereby agrees that in the
event it fails to comply with the above provisions of this Article, such failure shall give Company
the right, at its option, to refuse to accept delivery of Supplier’s Gas during any period of such
non-compliance. Should Supplier produce and deliver Gas by intermitted or by stopcock production
methods, Company shall have the option to change the measuring facility to insure a constant
recording pattern for the delivery of Supplier’s Gas. These methods may include installation of
pressure restricting devices upstream of the facilities owned by Company or Company’s designee.
All costs associated with this conversion shall be borne by Supplier or Supplier shall provide
Company or Company’s designee with the appropriate equipment for such facilities. If Supplier
elects to furnish the equipment, the operation of said equipment shall remain the responsibility of
Company or Company’s designee.

			
	 	 	 
	Exhibit A — General Terms and Conditions
	 	Page 5
	DYNEGY CONTRACT NO.: 014904 — Ref No. 095	 	 

 

 

A.13. Flush Gas and Curtailment Conditions

A “Flush Gas Condition” exists whenever the Gathering System, if any, utilized to deliver Gas
to the Plant and/or the Plant is of insufficient capacity to gather and/or Process all of the Gas
connected thereto. During any period when a Flush Gas Condition exists, Company shall take
Supplier’s Gas ratably as to quantity with all other Gas of the same quality connected to the
Plant, but shall not be obligated to take any quantities of Gas in excess of such prorated volumes.

During any periods of curtailment by Residue Gas and/or Products purchasers or transporters (a
“Curtailment Condition”), Company shall only be obligated to take Supplier’s Gas to the extent that
such Residue Gas and/or Product purchasers or transporters are taking Residue Gas and/or Products.

Notwithstanding anything in this Agreement to the contrary, Company shall not be obligated to
expand the capacity of the Gathering System or Plant to accommodate Supplier’s Gas. Supplier shall
have the right to dispose of the excess Gas not taken by Company on a temporary basis during any
Flush Gas or Curtailment Condition, subject to Company’s right to take such Gas at any subsequent
time upon giving Supplier at least ten (10) Days’ written notice of its election to do so.

A.14. Settlement Tests

In accordance with the testing schedule as set forth in the section entitled “Testing Schedule”
of the Commercial Terms and Conditions, Company shall obtain a representative sample of Supplier’s
Gas at each Delivery Point and determine the composition in mole percent, theoretical Product
content in GPM, Gross Heating Value in Btu per cubic foot on a water saturated basis, gasoline
content (iC5+), if required, specific gravity and hydrogen sulfide by means of Gas
chromatography according to the latest edition of Gas Processors Association (GPA) Standard 2261,
“Analysis of Natural Gas and Similar Gaseous Mixtures by Gas Chromatography” or other generally
accepted methods in the industry. The Gas samples shall be taken at the actual flowing conditions,
in accordance with the latest edition of GPA Standard 2166, “Obtaining Natural Gas Samples for
Analysis by Gas Chromatography.” The Gross Heating Values for various hydrocarbon components shall
be determined from the latest edition of GPA Standard 2145, “Table of Physical Constants of
Paraffin Hydrocarbons and other Components of Natural Gas.” The specific gravity may be determined
by the use of a gravitometer of the Ranarex type. The hydrogen sulfide content shall be determined
according to the latest edition of GPA Standard 2377 entitled “Test for Hydrogen Sulfide and Carbon
Dioxide in Natural Gas Using Length of Stain Tubes” or by Gas chromatography according to the
latest edition of GPA Standard 2261. The calculations of Product GPMs determined from such
analysis shall be made by utilizing applicable conversion factors (corrected to the measurement
conditions herein stated) as contained in the latest edition of GPA Standard 2261. These methods
may be replaced, at Company’s discretion, by any method commonly used in the industry. All
analysis results shall be utilized for settlement purposes beginning with the Month following the
Month in which the results were obtained, and shall be effective until the next scheduled test.
The settlements tests shall be made by Company in accordance with the Testing Schedule except when,
in the opinion of either Party, a change in the method of operations of the lease will affect
materially Supplier’s Gas composition, Gross Heating Value, specific gravity and/or hydrogen
sulfide content, in which event, the tests shall be made at the demand of either Party upon ten
(10) Days’ notice to the other Party. If the Supplier makes such demand, the reasonable cost for
such settlement test shall be reimbursed by Supplier to Company. Company shall notify Supplier in
writing at least ten (10) Days’ prior to any settlement tests conducted hereunder in order that
Supplier may have a representative present to witness such tests and/or make joint tests with its
own appliances. If the Gas composition, Gross Heating Value, specific gravity and/or hydrogen
sulfide content as revealed by any analysis made in accordance with the Testing Schedule is
substantially the same as determined in the previous analysis, or if the volume of Gas delivered
hereunder is less than fifty thousand cubic feet per Day (50 Mcf per Day), then Company, in its
sole discretion, shall have the right to reduce the frequency of settlement tests. Notwithstanding
the testing schedule set forth in the section entitled “Testing Schedule” of the Commercial Terms
and Conditions, if a well subject to this Agreement produces less than a Monthly average rate of
(a) one hundred thousand cubic feet (100 Mcf) per Day, if the GPM content of the Gas delivered from
such well is 2 GPM or less or (b) twenty thousand cubic feet (20 Mcf) per Day, if the GPM content
is 2 GPM or more, Company, in its sole discretion, shall have the right to suspend all or a portion
of such tests until the well produces at the rates as set forth in (a) and (b) above, as applicable
for at least t
wo consecutive Months. If Company suspends any such testing, the most recent test
that was made shall be utilized for settlement purposes unless Company subsequently elects to test
such well, in which event, such test shall thereafter be used for settlement purposes.

A.15. Meters and Measurement

Supplier’s Gas delivered hereunder shall be measured by a suitable orifice meter, or meters, or
other generally accepted measuring devices, of standard make near the Delivery Point. Such
metering equipment shall be installed, operated and the volumes calculated in accordance with the
prescribed recommendations of American Petroleum Institute Manual of Petroleum Measurement
Standards (“API MPMS”), Chapter 14, Natural Gas Fluids Measurement, Section 3, Concentric,
Square-Edged Orifice Meters, Parts 1, 2, 3 & 4, 1991 Edition or latest revision. Revisions to such
Edition shall apply to computations and operation of meter installations but shall not be construed
to require modifications to, or replacement of, said equipment. The computation of all Gas volumes
measured by orifice meter shall also be made in accordance with API Chapter 20, as amended from
time to time; provided, however, that all factors involved in the computation of Gas volumes
measured hereunder shall be subject to and in accordance with applicable state laws. Company may,
at its option, install an electronic flow recorder to record the static and differential pressures,
flowing temperature and volume of such Gas. In the event the Gas is measured by positive
displacement meters, such meters shall be installed, maintained and operated in accordance with AGA
Report No. 7, 1985 edition (for turbine meters) or ANSI/ASC B109.3-1992 edition (for rotary
meters), as such publications may be supplemented and amended from time to time. All of Supplier’s
Gas volumes measured hereunder shall be computed to a standard pressure base of (1) 15.025 pounds
per square inch absolute, if the Gas is produced from properties situated in or off the coast of
Louisiana; and (2) 14.65 pounds per square inch absolute, if produced from properties situated in
or off the coast of any other State, at a standard base temperature of sixty (60) degrees
Fahrenheit.

Company shall periodically, but no less frequently than the schedule agreed to for Settlement Tests
which are performed as provided in the section entitled “Settlement Tests”, test the accuracy of
the measuring equipment operated by it hereunder using means and methods generally accepted in the
Gas industry. If, at any time, the Gas measuring or testing equipment is found to be out of
service or registering inaccurately in any percentage, it shall be adjusted at once to read
accurately, within the limits

			
	 	 	 
	Exhibit A — General Terms and Conditions
	 	Page 6
	DYNEGY CONTRACT NO.: 014904 — Ref No. 095	 	 

 

 

prescribed by the manufacturer. In case any question arises as to the accuracy of the meter
measurement, said meter or meters shall be tested upon the demand of either Party. The expense of
such tests shall be borne by the Party demanding such test if the meter is found to be correct and
by Company if found to be incorrect. Such equipment will be judged incorrect if inaccurate by an
amount exceeding two percent (2%) at a reading corresponding to the average rate of flow for the
period since the last test. If such equipment is out of service or incorrect, then any previous
readings of such equipment shall be corrected to zero error for any period which is known
definitely or agreed upon; but in case the period is not known definitely or agreed upon, such
correction shall be for a period equal to one-half (1/2) of the time elapsed since the last test,
which shall not exceed one hundred eighty (180) Days. No correction will be made for prior periods
for recorded inaccuracies of two percent (2%) or less. The volumes delivered during the period
such measuring equipment is out of service or incorrect shall be estimated by the Parties on the
basis of the best data available using the most feasible of the following methods:

	•	 	By using the registration of any check measuring equipment installed and accurately registering;

	•	 	By correcting the error if the percentage of error is ascertainable by calibration, test or mathematical calculations;

	•	 	By estimating the quantity of Gas delivered through the meter based on the quantity delivered through the same meter
during the preceding period under similar conditions when the meter was registering accurately; or

	•	 	Using other mutually agreeable methods.

Each Party shall preserve all charts, volumetric data, meter test data and applicable Gas analyses
for at least two years, unless a longer time period is prescribed by applicable regulations,
including any charts or test data covering any check meters that are installed. Should such data
be the property of Company’s designee, Company and Supplier shall be subject to the retention
practices (and availability of such data) of Company’s designee. At any time within such period,
upon reasonable advance written request by either Party, records and/or charts from the measuring
equipment, together with calculations therefrom, will be submitted for such requesting Party’s
inspection and verification at the offices of the Party maintaining such records during normal
business hours.

Supplier or Supplier’s designee shall have the right to install, maintain, and operate such check
measurement equipment as it may desire as long as such equipment does not interfere with or impede
in any way the operation of Company’s measurement or other equipment hereunder, and all calibrating
and adjusting of check meters and changing of charts shall be done by Supplier or its designees and
at its sole cost, risk and expense. Notice of the time and nature of each test shall be given by
Supplier to Company sufficiently in advance to allow Company the opportunity to have a
representative present during such tests, if Company so desires.

If Supplier elects to install compression near the measuring facilities installed by Company or
Company’s designee, it shall be the responsibility of Supplier to reduce or eliminate any sources
of pulsation in such metering facilities. This may include installation of pulsation plates,
acoustic filters, pulsation bottles or other types of pulsation dampening equipment prior to
delivery of Gas into the metering facilities.

A.16. Right Of Way

Insofar as Supplier has the right to do so, Supplier hereby grants to Company an easement
across the properties covered hereby to lay and maintain lines and install, maintain and operate
any equipment necessary to its operations and Company shall have the right of free entry for any
purposes incidental to Company’s operations so long as such operations do not materially interfere
with Supplier’s oil and Gas operations or the rights of the owners of such properties. Supplier
warrants to Company peaceable access of ingress and egress across such properties at all times for
the performance of Company’s operations. All lines of pipe and other equipment placed by Company
on said properties shall remain the property of Company, and, subject to the terms of this
Agreement, may be removed by Company at any time.

A.17. Indemnities

Each of the Parties hereto shall indemnify and hold the other harmless from and against any
Claims arising out of the operations conducted hereunder by such indemnifying Party to the extent
resulting from the negligence or willful misconduct of such indemnifying Party, its agents or its
employees.

A.18. Reserve Information

From time to time hereafter, Company may request information from Supplier regarding Supplier’s
geological and reserve information pertaining to the Dedicated Wells and any wells situated on the
Dedicated Acreage or on lands pooled, unitized or communitized therewith. Such information may be
required by Company to evaluate the amount of Gas that Supplier is capable of delivering in
connection with modifications to Company’s Processing facilities and for other business purposes.
Supplier will, in a timely manner provide such information as requested by Company, including
reasonable access to Supplier’s employed or contracted geological and engineering personnel. With
respect to any information supplied to Company, Supplier makes no warranties, express or implied,
as to the accuracy or reliability of such information. Company agrees to maintain the
confidentiality of the information supplied to Company by or on behalf of Supplier as provided
herein.

A.19. Uneconomic Gas

If, in Company’s sole judgment, the Gas available at any Delivery Point provided for hereunder
is or becomes uneconomic for Company to gather and/or Process due to insufficient volume, Plant
Product content, price, quality, changes in governmental regulations, or for any other reason,
either i) Company shall not be required to take such Gas so long as such condition exists, or ii)
Company shall have the option, exercisable in its sole discretion, to terminate this Agreement as
to any or all wells or any then–producing formations comprising such well(s) delivering Supplier’s
Gas to such a Delivery Point. If Company fails to accept or take Gas from Supplier due to Delivery
Point economics for a period of sixty (60) consecutive Days, then Supplier shall have the right to
have the affected well(s) released from this Agreement, as to the then producing formations only,
at any time thereafter upon at least thirty (30) Days’ prior written notice; in which event, such
well(s) shall be released from this Agreement at the end of said thirty (30) Day period unless on
or before the last Day thereof Company resumes taking or accepting Gas from such affected well(s).

			
	 	 	 
	Exhibit A — General Terms and Conditions
	 	Page 7
	DYNEGY CONTRACT NO.: 014904 — Ref No. 095	 	 

 

 

A.20. Unacceptable Plant Economics

If at any time the operation of the Plant, Gathering System and/or other related equipment is
rendered uneconomic, in Company’s sole judgment, due to the volume and/or Product content of all
Gas committed and being delivered to Company for Processing in the Plant or due to any other cause,
Company shall have the option to either: i) not take all or any portion of Supplier’s Gas so long
as such condition exists or ii) to terminate this Agreement upon thirty (30) Days’ prior written
notice to Supplier. If Company fails to accept or take some or all of Supplier’s Gas due to
unacceptable Plant and/or Gathering System economics for a period of sixty (60) consecutive Days,
then Supplier shall have the right to have the affected well(s) or volumes not taken released from
this Agreement at any time thereafter upon at least thirty (30) Days prior written notice, in which
event, such well(s) or volumes not taken, as applicable, shall be released from this Agreement at
the end of said thirty (30) Day period unless on or before the last Day thereof Company resumes
taking or accepting Gas from such affected well(s) or resumes taking the affected volumes, as
applicable.

A.21. Termination

Upon termination of this Agreement (either in its entirety or as to any specific lease or
well), this Agreement shall cease to have any force or effect except as to unsatisfied obligations
or liabilities of either Party attributable to the period prior to the Day immediately succeeding
the Day of termination, or arising thereafter as a result of such termination.

A.22. Post Termination Deliveries

In the event this Agreement terminates or is otherwise cancelled or terminated, and Company for
any reason continues to accept deliveries of Supplier’s Gas, in the absence of another agreement in
writing such transactions will be on a Day to Day basis under the same terms and provisions as
otherwise set forth in this Agreement, except that Company may, at its option and in lieu of the
original values set forth in Sections 2 and 3 of the Commercial Terms and Conditions, elect to pay
and charge alternative compensation as follows:

	 	 	 	 	 	 	 
	 

	 	•
	 	Supplier’s Plant Products Percentage:
	 	(**) Percent (**)%
	 
	 	 	 	 	 	 
	 

	 	•
	 	Supplier’s Residue Gas Percentage:
	 	(**) Percent (**)%
	 
	 	 	 	 	 	 
	 

	 	•
	 	Low Pressure Gathering Fee:
	 	(**) Per MMBtu

Any of the above elections by Company may be exercised as to any or all of the Delivery Points
hereunder and Company may modify its election of the above alternative compensation effective on
the beginning of any Month upon ten (10) or more Days written notice.

Neither Company’s continuing to accept delivery of Supplier’s Gas on a Day to Day basis nor
Company’s election of alternative compensation for any post-termination or post-cancellation
deliveries shall be construed to be, and shall not operate as, an agreement by Company to extend or
renew this Agreement on such terms or on any other terms, and Company may simultaneously pursue
whatever administrative or other legal proceedings may be required to allow Company to cease taking
deliveries of Gas hereunder.

No written communications by Supplier contrary to the provisions of this Section A.22 shall be
enforceable; including (without limitation) any written offers or counter-offers purporting to
create an obligation on Company to accept the terms thereof, or implying an acceptance of same by
Company, should Company continue to accept delivery of Supplier’s Gas after a given date or given
period of time thereafter.

A.23. Scope

In the event this Agreement covers more than one lease or well, this Agreement shall be
construed as a separate agreement covering each lease or well, as applicable.

A.24. Force Majeure

If either Party is rendered unable, wholly or in part, by reason of an event of force majeure
(as defined in this Section A.24 below) to carry out its obligations under this Agreement, other
than to make payments due hereunder, the obligations of the Party giving such notice, so far as and
to the extent that they are affected by such force majeure event, shall be suspended during the
continuance of any inability so caused, but for no longer period, and such cause shall so far as
possible be remedied with all reasonable dispatch. The Party suffering force majeure shall give
notice and full particulars of such force majeure in writing or by facsimile to the other Party as
soon as possible after the occurrence of the cause relied on.

The term “Force Majeure” shall mean any cause or event not reasonably within the control of the
Party whose performance is sought to be excused thereby; including, without limitation, acts of
God, strikes, lockouts or other industrial disputes or disturbances, acts of the public enemy,
wars, blockades, insurrections, riots, epidemics, landslides, lightning, earthquakes, fires,
tornadoes, hurricanes, storms, and warnings for any of the foregoing which may necessitate the
precautionary shut-down of wells, Plants, pipelines, Gathering Systems, or other related
facilities, floods, washouts, arrests and restraints of governments and people, civil disturbances,
explosions, sabotage, breakage or accidents to equipment, machinery, Gathering Systems, Plants,
facilities or lines of pipe, the making of repairs or alterations to lines of pipe, Gathering
Systems, Plants or equipment, inability to secure labor or materials, freezing of wells or lines of
pipe, partial or entire failure of wells or lines of pipe, partial or entire failure of gas supply,
electric power shortages, necessity for compliance with any court order, or any law, statute,
ordinance, regulation or order promulgated by a governmental authority having or asserting
jurisdiction, inclement weather that necessitates extraordinary measures and expense to construct
facilities and/or maintain operations and any other causes, whether of the kind enumerated herein
or otherwise, not reasonably within the control of the Party claiming suspension and which by the
exercise of due diligence such Party is unable to prevent or overcome. Such term shall likewise
include, in those instances where either Party hereto is required to obtain servitudes,
rights-of-way, grants, permits or licenses to enable such Party to fulfill its obligations
hereunder, the inability of such Party to acquire, or delays on the part of such Party in
acquiring, at reasonable cost and after the exercise of reasonable diligence, such servitudes,
rights-of-way, grants, permits or licenses, and in those instances where either Party hereto is
required to furnish materials and supplies for the purpose of constructing or maintaining
facilities or is required to secure permits or permissions from any governmental agency to enable
such Party to fulfill its obligations hereunder, the inability of such Party to acquire, or delays
on the part of such Party in acquiring, at reasonable cost and after the exercise of reasonable
diligence, such

			
	 	 	 
	Exhibit A — General Terms and Conditions
	 	Page 8
	DYNEGY CONTRACT NO.: 014904 — Ref No. 095	 	 

 

 

materials, supplies, permits and permissions. The term “Force Majeure” shall also include any
event of force majeure occurring with respect to the facilities or services of either Party’s
Affiliates or service providers providing a service or providing any equipment, goods, supplies or
other items necessary to the performance of such Party’s obligations.

The settlement of strikes or lockouts shall be entirely within the discretion of the Party having
the difficulty, and any obligation hereunder to remedy a Force Majeure event or situation 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 sole discretion of the Party
having the difficulty.

Either Party may briefly interrupt its performance hereunder for the purpose of making necessary or
desirable inspections, alterations and repairs; and the Party requiring such relief shall give to
the other Party reasonable notice of its intention to suspend its performance hereunder, except in
cases of emergency where such notice is impracticable or in cases where the operations of the other
Party will not be affected. The Party requiring such relief shall endeavor to arrange such
interruptions so as to inconvenience the other Party as little as possible. Service interruptions
on the part of either Party that are sanctioned by this provision are expressly included within the
definition of “Force Majeure” for the purpose of this Agreement.

A.25. Assignment

This Agreement shall extend to and be binding upon the Parties hereto, their heirs, successors
and assigns. If Supplier assigns or conveys all or any part of Supplier’s Interest, Supplier shall
provide in any instrument of assignment or conveyance that the Interests assigned are conveyed
subject to the terms and conditions of this Agreement and that the party or parties to whom such
assignment or conveyance is made shall be bound by the terms of this Agreement. No transfer of or
succession to the Interest of Supplier hereunder, wholly or partially, shall affect or bind Company
until Company shall have been furnished with written notice and the original instrument or a
certified copy or an acceptable photocopy of the recorded instrument or instruments effecting such
change of ownership, which Supplier agrees to provide to Company within ten (10) Days of recording
same. Any change of ownership shall be effective for purposes of this Agreement on the first Day
of the Month following the Month in which notice is received by Company.

A.26. Administrative Information

Should Company be required by applicable laws or regulations to withhold any taxes or other
governmental assessments unless and until any tax exemption certificates or other Supplier
information is received by Company, Company shall be authorized to withhold any payments Company is
obligated to make hereunder, without interest, only to the extent such withholdings are required by
the applicable laws and/or regulations and only until such tax exemption certificates or other
Supplier information is provided by Supplier to Company.

Supplier further agrees to provide to Company within a reasonable period of time any information
that Company needs to properly administer this Agreement including the following:

	•	 	Notice of any new wells, the
production from which will be subject to
this Agreement, including the well name,
well number, meter numbers (if assigned
and available), American Petroleum
Institute (API) Numbers, State
Identification Numbers, X and Y
coordinates, and latitude and longitude
information;
	 
	•	 	Notice of any change in the
operator, including any new operator’s
legal name and address, and a copy of
any change of operator notices filed
with the appropriate state or federal
agencies which Supplier agrees to send
to Company within ten (10) Days of
filing same; and
	 
	•	 	Copies of any plugging and
abandonment notices and reports filed
with the appropriate state or federal
agencies, which Supplier agrees to send
to Company within ten (10) Days of
filing same.

A.27. Notice

Any notice hereunder shall be in writing and shall be delivered personally, by mail (either U.
S. Express Mail, registered mail or certified mail) or by facsimile to the Party’s address set
forth in the Commercial Terms and Conditions. A notice sent by facsimile or telex shall be deemed
to have been received by the close of the Business Day following the Day on which it was
transmitted and confirmed by transmission report or such earlier time as confirmed orally or in
writing by the receiving Party. Notice by U. S. Mail, whether by U. S. Express Mail, registered
mail or certified mail, or by telegram or courier shall be deemed to have been received upon actual
receipt, or such earlier time as is confirmed orally or in writing by the receiving Party. Any
Party may change its address or facsimile number by giving notice of such change in accordance
herewith.

A.28. LIMITATION OF LIABILITY

Notwithstanding anything to the contrary in this Agreement, a Party’s damages resulting from a
breach or violation of any covenant, condition or provision contained in this Agreement by the
other Party shall be limited to actual direct damages, and neither Party shall be entitled to
recover from the other Party any other damages for such breach or violation, including, without
limitation, indirect, special, consequential, incidental or punitive damages, unless the Party
seeking reimbursement for such damages is legally required to pay same to a Third Party.

A.29. Conflicts of Interest

No director, employee or agent of either Party shall give or receive any commission, fee,
rebate, gift or entertainment of significant cost or value in connection with this Agreement. Any
representative(s) authorized by either Party may, at its sole expense, audit the applicable records
of the other Party solely for the purpose of determining whether there has been compliance with
this section.

A.30. GOVERNING LAW

This Agreement shall be subject to the jurisdiction of, governed by and construed in accordance
with the laws of the State of Texas without regard to any conflict of laws and/or rules that may
direct the application of the law of any other jurisdiction. In addition, this Agreement shall be
subject to and performed in accordance with all present and future, applicable and valid orders,
laws, rules and

			
	 	 	 
	Exhibit A — General Terms and Conditions
	 	Page 9
	DYNEGY CONTRACT NO.: 014904 — Ref No. 095	 	 

 

 

regulations of any duly constituted federal, state or local governmental authority now or hereafter
having jurisdiction over the Parties, their facilities, Supplier’s Gas and/or this Agreement.

A.31. Confidentiality

Supplier agrees that it will maintain the Commercial Terms and Conditions of this Agreement in
strictest confidence and that it will not cause or permit disclosure of those terms to any third
party without the express written consent of Company. Disclosures otherwise prohibited by this
Section A.31. may be made by Supplier (1) to the extent necessary for Supplier to enforce its
rights hereunder against Company, (2) to the extent Supplier is contractually or legally bound to
disclose financial information to a third party such as a royalty owner, partner, shareholder, or
commercial lender, or (3) only to the extent to which Supplier is required to disclose all or part
of the Commercial Terms and Conditions by a statute or by a court, agency, or other governmental
body exercising jurisdiction over the subject matter hereof, by order, by regulation or by other
compulsory process (including, but not limited to, deposition, subpoena, interrogatory, or request
for production of documents), (4) to the extent required by the applicable regulations of a
securities or commodities exchange, or (5) to an Affiliate (but only if such Affiliate agrees to be
bound by the provisions of this Section A.31).

A.32. TEXAS DECEPTIVE TRADE PRACTICES – CONSUMER PROTECTION ACT

The Parties certify that they are not “consumers” within the meaning of the Texas Deceptive
Trade Practices-Consumer Protection Act, Subchapter e of Chapter 17, Sections 17.41, et seq., of
the Texas Business and Commerce Code, as amended (“DTPA”). The Parties covenant, for themselves
and for and on behalf of any successor or assignee, that, if the DTPA is applicable to this
Agreement, (1) the Parties are “business consumers” as that term is defined in the DTPA, (2) other
than section 17.555 of the texas business and commerce code, each Party hereby waives and releases
all of its rights and remedies thereunder as applicable to the other Party and its successors and
assigns, and (3) EACH PARTY SHALL DEFEND AND INDEMNIFY THE OTHER PARTY FROM AND AGAINST ANY AND ALL
CLAIMS (as defined in Section A.1) OF OR BY THE INDEMNIFYING PARTY OR ANY OF ITS SUCCESSOR AND
ASSIGNS OR ANY OF ITS OR THEIR AFFILIATES OR SUBSIDIARIES BASED IN WHOLE OR IN PART ON THE DTPA
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.

A.33. Miscellaneous Provisions

1) Severability: Except as provided in the following sentence, the invalidity of any one or
more covenants or provisions of this Agreement shall not affect the validity of any other
provisions hereof or this Agreement as a whole, and in case of any such invalidity, this Agreement
shall be construed to the maximum extent possible as if such invalid provision had not been
included herein. If any provision of this Agreement is held to be illegal, invalid, or
unenforceable under the present or future laws effective during the term of this Agreement and such
invalidity or unenforceability has or would have a material and substantial negative impact on the
rights, duties or obligations of either Party, then the Parties shall meet in good faith to
determine if such negative impact can be eliminated or mitigated. If such negative impact can not
be eliminated or mitigated to the satisfaction of the Party affected thereby, that Party shall have
the right to terminate this Agreement.

2) No Third Party Beneficiary: Unless expressly provided for in this Agreement, nothing in this
Agreement shall entitle any Persons other than Supplier or Company, or their successors or assigns,
to any claim, cause of action, remedy or right of any kind relating to the transaction(s)
contemplated by this Agreement.

3) Relationship of Parties: The rights and obligations of the Parties hereto shall be defined
solely by the terms hereof and nothing herein shall be construed as creating a partnership of any
kind, joint venture, association or trust. Each Party in the performance of this Agreement is
engaged in an independent business and nothing herein contained shall be construed as giving either
Party any right to control the other Party in any way in the performance of the other Party’s
business. Neither Party shall have any right to exercise control over any of the other Party’s
employees, representatives, agents or contractors. All employees, representatives, agents or
contractors of a Party shall be entirely under the control and direction of that Party.

4) Waiver: No waiver by either Party of the performance of any provision, condition or requirement
herein shall be deemed to be a waiver of, or in any manner release the other Party from performance
of any other provision, condition or requirement herein; nor shall it be deemed to be a waiver of,
or in any manner release the other Party from future performance of the same provision, condition,
or requirement; nor shall any delay or omission of a Party in exercising any right hereunder in any
manner impair the exercise of any such right or any like right accruing to it thereafter. No
waiver shall be effective unless made in writing and signed by the Party to be charged with such
waiver.

5) Principles of Construction and Interpretation: In construing this Agreement, the following
principles shall be followed: (i) no consideration shall be given to the fact or presumption that
one Party had a greater or lesser hand in drafting this Agreement it being expressly
acknowledged by the Parties that they have reviewed, understand and agreed to all the provisions
contained in this Agreement and have had adequate opportunity to obtain review by legal counsel
regarding same; (ii) examples shall not be construed to limit, expressly or by implication,
the matter they illustrate; (iii) the word “includes” and its syntactical variants mean “includes,
but is not limited to” and corresponding syntactical variant expressions; and (iv) the plural shall
be deemed to include the singular and vice versa, as applicable.

6) Headings: The headings of the provisions, paragraphs, sections and exhibits of this Agreement
are for convenience of reference only and shall not constitute a part, nor modify, define or limit
any of the terms or provisions hereof.

7) Prior Agreements Superseded; Entire Agreement: This Agreement integrates the entire
understanding between the Parties with respect to the subject matter covered and supersedes all
prior understandings, drafts, discussions, or statements, whether oral or in writing, expressed or
implied, dealing with the same subject matter.

8) Counterparts: This Agreement, and/or any amendment thereto, may be executed in multiple
counterparts, each of which shall be deemed an original Agreement upon the signature by each of the
Parties on at least one counterpart, but all of which shall be deemed to be one and the same
document. This Agreement shall be considered valid and binding only after it has been executed by
an officer or duly appointed agent of each of the Parties, without any changes or modifications
hereto.

			
	 	 	 
	Exhibit A — General Terms and Conditions
	 	Page 10
	DYNEGY CONTRACT NO.: 014904 – Ref No. 095	 	 

 

 

9) Amendments: This Agreement may not be amended or modified in any manner except by a written
document signed by both Parties that expressly amends this Agreement.

10) Further Assurances: Each Party, upon the request of the other Party, agrees to perform any
further acts and execute and deliver any other documents which may be reasonably necessary to carry
out the provisions of this Agreement.

			
	 	 	 
	Exhibit A — General Terms and Conditions
	 	Page 11
	DYNEGY CONTRACT NO.: 014904 — Ref No. 095	 	 

 

 

EXHIBIT B – DEDICATED ACREAGE AND/OR DEDICATED WELLS

to

GAS PURCHASE AGREEMENT

DEDICATED ACREAGE – Part I

	 	 	 
	Counties 
	 	Denton and Wise Counties
	State 
	 	Texas
	Existing Wells: 
	 	See "Current Dedicated Wells" listed below
	Supplier’s Gross Working Interest 
	 	Varies.  Shown below for Current Dedicated Wells
	Legal Description: 
	 	Entire West Half (W/2) of Denton County and entire East Half (E/2) of Wise County

Company and Supplier agree that during the Term of this Agreement, all wells that Supplier
completes or acquires or in which Supplier acquires a Production Interest, or the Gas from which
becomes available for sale, gathering and/or Processing and which are located in the above
described Dedicated Area shall be Dedicated Wells committed to this Agreement (subject only to any
Prior Contractual Commitments and then only until such Prior Contractual Commitments expire or are
otherwise terminated as same may be amended or replaced from time to time); with the only such
Prior Contractual Commitment, as of the date hereof, being the Cantera Contract described in
Section Error! Reference source not found..C. of the Commercial Terms and Conditions, with the area
subject to such Cantera Contract, and excluded from the Dedicated Acreage hereunder, being that
described in Part II – Excluded Areas, immediately below.

DEDICATED ACREAGE – Part II – Excluded Areas

The areas shaded and labeled as the “Burlington Dedicated Acreage” in Exhibit “A” to the Cantera
Contract, a copy of which is attached hereto, initialed by the Parties for identification purposes,
and incorporated herein by reference as if fully set forth at length.

CURRENT DEDICATED WELLS & PRODUCTION INTERESTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	BROG Production
	Company Meter #	 	Dedicated Well - Common Name	 	County	 	Interest
	952286

	 	ADAMS ROSA #1 (DPI 1328)
	 	WISE
	 	 	50.0	%
	952101

	 	ANDERSON B UNIT #1 (DPI 570)
	 	DENTON
	 	 	96.9	%
	952399

	 	ANDERSON B UNIT #2
	 	DENTON
	 	 	96.9	%
	952365

	 	ANDERSON B UNIT #3
	 	DENTON
	 	 	96.9	%
	952378

	 	ANDERSON B UNIT #4
	 	DENTON
	 	 	96.9	%
	952387

	 	ANDERSON B UNIT #5
	 	DENTON
	 	 	96.9	%
	952402

	 	ANDERSON B UNIT #6
	 	DENTON
	 	 	96.9	%
	952018

	 	ASKEY B 1 (DPI 644)
	 	WISE
	 	 	92.5	%
	952236

	 	ASKEY C 1—APO (DPI 1276)
	 	WISE
	 	 	42.7	%
	952285

	 	BANKS #1 (DPI 1309)
	 	DENTON
	 	 	100.0	%

			
	 	 	 
	Exhibit B — Dedicated Acreage and/or Dedicated Wells	 	Page 1
	DYNEGY CONTRACT NO.: 014904 — Ref No. 095	 	 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	BROG Production
	Company Meter #	 	Dedicated Well - Common Name	 	County	 	Interest
	952355

	 	BANKS A 1 (DPI 1441)
	 	DENTON
	 	 	100.0	%
	952441

	 	BANKS A UNIT #2
	 	DENTON
	 	 	100.0	%
	952451

	 	BANKS A UNIT #3
	 	DENTON
	 	 	100.0	%
	952452

	 	BANKS A UNIT #4
	 	DENTON
	 	 	100.0	%
	952449

	 	BANKS A UNIT #5
	 	DENTON
	 	 	100.0	%
	952462

	 	BANKS A UNIT #6
	 	DENTON
	 	 	100.0	%
	952442

	 	BANKS A UNIT #7
	 	DENTON
	 	 	100.0	%
	952467

	 	BANKS UNIT #2
	 	DENTON
	 	 	100.0	%
	952013

	 	BARNETT #1 (DPI 589)
	 	DENTON
	 	 	24.2	%
	952227

	 	BARNETT #2 (DPI 1252)
	 	DENTON
	 	 	74.2	%
	952246

	 	BARNETT #3 (DPI 1232)
	 	DENTON
	 	 	24.2	%
	952321

	 	BARNETT #4 (DPI 1376)
	 	DENTON
	 	 	24.2	%
	952314

	 	BARNETT #5 (DPI 1375)
	 	DENTON
	 	 	24.2	%
	952351

	 	BARNETT ESTATE #1 (DPI 1437)
	 	DENTON
	 	 	100.0	%
	952417

	 	BARNETT ESTATES A #1
	 	DENTON
	 	 	100.0	%
	952004

	 	BICKLE #1 (DPI 584)
	 	DENTON
	 	 	96.9	%
	952319

	 	BICKLE #2 (DPI 1420)
	 	DENTON
	 	 	96.9	%
	952127

	 	BIG SKY #1—APO1 (DPI 1263)
	 	DENTON
	 	 	97.2	%
	952128

	 	BIG SKY #2—BPO (DPI 1352)
	 	DENTON
	 	 	96.3	%
	952311

	 	BIG SKY #3—BPO (DPI 1353)
	 	DENTON
	 	 	96.3	%
	952289

	 	BIG SKY #4—BPO (DPI 1318)
	 	DENTON
	 	 	96.3	%
	952207

	 	BISHOP A 2 (DPI 884)
	 	WISE
	 	 	100.0	%
	952011

	 	BOYD #1 (DPI 587)
	 	DENTON
	 	 	24.2	%
	952251

	 	BOYD #2 (DPI 1243)
	 	DENTON
	 	 	24.2	%
	89286

	 	BOYD #3 (DPI 1330)
	 	DENTON
	 	 	24.2	%
	89287-42

	 	BOYD #4 (DPI 1333)
	 	DENTON
	 	 	24.2	%
	89408

	 	BOYD #5—BPO (DPI 1418)
	 	DENTON
	 	 	11.7	%
	952271

	 	BOYD A #2 (DPI 1284)
	 	DENTON
	 	 	90.7	%
	952437

	 	BOYD A UNIT #3
	 	DENTON
	 	 	90.7	%
	952276

	 	BOYD S J #1 (DPI 1291)
	 	DENTON
	 	 	87.5	%
	952464

	 	BOYD S J #2
	 	DENTON
	 	 	87.5	%
	952053

	 	BUCKLEY #1 (DPI 566)
	 	DENTON
	 	 	85.9	%
	952278

	 	BUCKLEY #2 (DPI 1313)
	 	DENTON
	 	 	85.9	%

			
	 	 	 
	Exhibit B — Dedicated Acreage and/or Dedicated Wells
	 	Page 2
	DYNEGY CONTRACT NO.: 014904 — Ref No. 095	 	 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	BROG Production
	Company Meter #	 	Dedicated Well - Common Name	 	County	 	Interest
	952219

	 	BUCKLEY A 2 #2 (DPI 950)
	 	DENTON
	 	 	97.7	%
	952055

	 	BUCKLEY B #1 (DPI 568)
	 	DENTON
	 	 	89.3	%
	952429

	 	BUCKLEY C #2
	 	DENTON
	 	 	93.8	%
	952448

	 	BUCKLEY C #3
	 	DENTON
	 	 	93.8	%
	952415

	 	BUCKLEY C #4
	 	DENTON
	 	 	91.9	%
	952065

	 	BUCKLEY C 1 (DPI 713)
	 	DENTON
	 	 	84.4	%
	952454

	 	BUCKNER BAPTIST 1
	 	DENTON
	 	 	100.0	%
	952229

	 	BUREL #1 (dpi 1188)
	 	DENTON
	 	 	68.7	%
	952130

	 	BURKHALTER EWELL #2 (HESS) (dpi 1408)
	 	DENTON
	 	 	30.0	%
	952297

	 	BURKHALTER EWELL #3 (dpi 1351)
	 	DENTON
	 	 	30.0	%
	952312

	 	BURKHALTER EWELL #4 (dpi 1354)
	 	DENTON
	 	 	30.0	%
	952288

	 	BURNS BRANCH #1 (dpi 1317)
	 	DENTON
	 	 	50.0	%
	952324

	 	BURNS BRANCH #3 (dpi 1391)
	 	DENTON
	 	 	50.0	%
	952267

	 	CADDELL #2 (dpi 1346)
	 	DENTON
	 	 	96.9	%
	952273

	 	CADDELL #3 (dpi 1292)
	 	DENTON
	 	 	96.9	%
	952017

	 	CADDELL LESLIE (dpi 565)
	 	DENTON
	 	 	96.9	%
	952436

	 	CADDELL UNIT 4
	 	DENTON
	 	 	96.9	%
	952457

	 	CADDELL UNIT 5
	 	DENTON
	 	 	96.9	%
	952373

	 	COCANOUGHER UNIT #1
	 	WISE
	 	 	75.0	%
	952461

	 	COCANOUGHER UNIT B#1-REVISED
	 	WISE
	 	 	75.0	%
	952045

	 	COOK B-1 (dpi 609)
	 	WISE
	 	 	83.2	%
	89235

	 	COX #2 (dpi 1312)
	 	DENTON
	 	 	24.2	%
	89470-42

	 	COX #3 (DPI)
	 	DENTON
	 	 	24.2	%
	952006

	 	COX 1 (DPI 580)
	 	DENTON
	 	 	24.2	%
	952119

	 	CUFFMAN #1 (DPI 586)
	 	DENTON
	 	 	24.2	%
	952245

	 	CUFFMAN #2 (dpi 1231)
	 	DENTON
	 	 	24.2	%
	89335-42

	 	CUFFMAN #3 (dpi 1358)
	 	DENTON
	 	 	24.2	%
	89334

	 	CUFFMAN #4 (dpi 1359)
	 	DENTON
	 	 	24.2	%
	89300

	 	CUFFMAN #5A (dpi 1347)
	 	DENTON
	 	 	24.2	%
	952235

	 	DOWNE #2 (APO 1-01) (dpi 1261)
	 	WISE
	 	 	41.1	%
	952238

	 	DOWNE #3 (APO 2-01) (dpi 1277)
	 	WISE
	 	 	46.6	%
	952367

	 	DOWNE A UNIT 4
	 	DENTON
	 	 	99.2	%

			
	 	 	 
	Exhibit B — Dedicated Acreage and/or Dedicated Wells
	 	Page 3
	DYNEGY CONTRACT NO.: 014904 — Ref No. 095	 	 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	BROG Production
	Company Meter #	 	Dedicated Well - Common Name	 	County	 	Interest
	952358

	 	DOWNE A UNIT 3
	 	DENTON
	 	 	99.2	%
	952323

	 	DOWNE A-2 (dpi 1405)
	 	DENTON
	 	 	99.2	%
	952385

	 	EARNEST STOCKER 1
	 	DENTON
	 	 	100.0	%
	952474

	 	EARNEST STOCKER 2
	 	DENTON
	 	 	100.0	%
	952007

	 	EVERS #1 (DPI 577)
	 	DENTON
	 	 	24.2	%
	952195

	 	EVERS #2 (dpi 1279)
	 	DENTON
	 	 	24.2	%
	89288

	 	EVERS #3 (dpi 1331)
	 	DENTON
	 	 	24.2	%
	89290-42

	 	EVERS #4 (dpi 1332)
	 	DENTON
	 	 	24.2	%
	89320

	 	EVERS #5 (dpi 1361)
	 	DENTON
	 	 	24.2	%
	952418

	 	EVERS B 3
	 	DENTON
	 	 	96.9	%
	952541

	 	EVERS B UNIT 8
	 	DENTON
	 	 	96.9	%
	952424

	 	EVERS B UNIT 4
	 	DENTON
	 	 	96.9	%
	952425

	 	EVERS B UNIT 5
	 	DENTON
	 	 	96.9	%
	952105

	 	EVERS B-1 (dpi 569)
	 	DENTON
	 	 	96.9	%
	952213

	 	EVERS B-2 (dpi 947)
	 	DENTON
	 	 	96.9	%
	952458

	 	EVERS C UNIT 3
	 	DENTON
	 	 	96.9	%
	952433

	 	EVERS C UNIT 4
	 	DENTON
	 	 	96.9	%
	952435

	 	EVERS C UNIT 5
	 	DENTON
	 	 	96.9	%
	952021

	 	EVERS C-1 (dpi 579)
	 	DENTON
	 	 	96.9	%
	952269

	 	EVERS C-2 (dpi 1345)
	 	DENTON
	 	 	96.9	%
	952026

	 	FLINN (dpi 606)
	 	WISE
	 	 	95.8	%
	952146

	 	FOX #1 (dpi 612)
	 	WISE
	 	 	89.8	%
	952257

	 	GAGE #2 (BPO) (dpi 1256)
	 	WISE
	 	 	62.5	%
	952382

	 	GAGE-PITTS UNIT 1
	 	WISE
	 	 	100.0	%
	952388

	 	GOLDSTON FAMILY TRUST #1
	 	DENTON
	 	 	100.0	%
	952354

	 	GRIFFIN HUEY #1
	 	DENTON
	 	 	100.0	%
	952023

	 	HANCOCK (dpi 592)
	 	WISE
	 	 	100.0	%
	952029

	 	HARRISON #1 (dpi 585)
	 	DENTON
	 	 	96.9	%
	952262

	 	HARRISON #2 (dpi 1357)
	 	DENTON
	 	 	96.9	%
	952275

	 	HARRISON #3 (dpi 1280)
	 	DENTON
	 	 	96.9	%
	952263

	 	HARRISON #4 (dpi 1282)
	 	DENTON
	 	 	96.9	%
	952264

	 	HARRISON #5 (dpi 1283)
	 	DENTON
	 	 	96.9	%
	952283

	 	HAY JOHN #1 (dpi 1307)
	 	DENTON
	 	 	100.0	%

			
	 	 	 
	Exhibit B — Dedicated Acreage and/or Dedicated Wells
	 	Page 4
	DYNEGY CONTRACT NO.: 014904 — Ref No. 095	 	 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	BROG Production
	Company Meter #	 	Dedicated Well - Common Name	 	County	 	Interest
	952303

	 	HENDERSON-TINDLE #1 (dpi 1406)
	 	DENTON
	 	 	75.0	%
	952302

	 	HENDERSON-TINDLE #2
	 	DENTON
	 	 	81.3	%
	952247

	 	HUDGINS #1 (APO 8-01) (dpi 1327)
	 	DENTON
	 	 	71.9	%
	952079

	 	HUGHSTON #1 (dpi 581)
	 	DENTON
	 	 	25.2	%
	952404

	 	HUGHSTON UNIT 2
	 	DENTON
	 	 	99.2	%
	952369

	 	HUGHSTON UNIT 3 (DPI)
	 	DENTON
	 	 	99.2	%
	952371

	 	HUGHSTON UNIT 4 (DPI)
	 	DENTON
	 	 	99.2	%
	952383

	 	HUGHSTON UNIT 5 (DPI)
	 	DENTON
	 	 	99.2	%
	952392

	 	HUGHSTON UNIT 6
	 	DENTON
	 	 	99.2	%
	952434

	 	HUGHSTON UNIT 7
	 	DENTON
	 	 	99.2	%
	952471

	 	J C EARLES UNIT 1
	 	DENTON
	 	 	100.0	%
	952479

	 	J C EARLES UNIT 3
	 	DENTON
	 	 	100.0	%
	952409

	 	JAMES LOCHHEAD GU #1
	 	DENTON
	 	 	100.0	%
	952419

	 	JANA MILLER UNIT 1
	 	DENTON
	 	 	100.0	%
	952405

	 	JEAN YOUNG 2
	 	DENTON
	 	 	100.0	%
	952478

	 	JEAN YOUNG #3
	 	DENTON
	 	 	100.0	%
	952493

	 	JEAN YOUNG #4
	 	DENTON
	 	 	100.0	%
	952518

	 	JEAN YOUNG #5
	 	DENTON
	 	 	100.0	%
	952526

	 	JEAN YOUNG #6
	 	DENTON
	 	 	100.0	%
	952395

	 	KRUM JOINT VENTURE #1
	 	DENTON
	 	 	100.0	%
	952012

	 	LANGLEY #1 (DPI 564)
	 	DENTON
	 	 	68.8	%
	952255

	 	LANGLEY #2 (APO 6-01) (dpi 1325)
	 	DENTON
	 	 	87.5	%
	952473

	 	LANGLEY UNIT 3
	 	DENTON
	 	 	87.5	%
	952439

	 	LANGLEY UNIT 4
	 	DENTON
	 	 	87.5	%
	952001

	 	LEA 1 (DPI 573)
	 	DENTON
	 	 	24.2	%
	952249

	 	LEA #2 (dpi 1242)
	 	DENTON
	 	 	24.2	%
	952318

	 	LEA #3 (dpi 1393)
	 	DENTON
	 	 	24.2	%
	952325

	 	LEA #4 (dpi 1415)
	 	DENTON
	 	 	24.2	%
	952333

	 	LEA #5 (dpi 1421)
	 	DENTON
	 	 	24.2	%
	952466

	 	LEA B UNIT 4
	 	DENTON
	 	 	87.5	%
	952476

	 	LEA B UNIT 5
	 	DENTON
	 	 	87.5	%
	952081

	 	LEA B-2 (dpi 868)
	 	DENTON
	 	 	68.8	%
	952316

	 	LEA B-3 (dpi 1387)
	 	DENTON
	 	 	87.5	%

			
	 	 	 
	Exhibit B — Dedicated Acreage and/or Dedicated Wells
	 	Page 5
	DYNEGY CONTRACT NO.: 014904 — Ref No. 095	 	 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	BROG Production
	Company Meter #	 	Dedicated Well - Common Name	 	County	 	Interest
	952056

	 	MCCLENDON #1 (dpi 634)
	 	DENTON
	 	 	100.0	%
	952421

	 	MCCLENDON 2
	 	DENTON
	 	 	100.0	%
	952428

	 	MCCLENDON FARMS A 1
	 	DENTON
	 	 	100.0	%
	952431

	 	MCCLENDON FARMS B 1
	 	DENTON
	 	 	100.0	%
	952304

	 	MCCURDY #3 (dpi 1429)
	 	WISE
	 	 	68.7	%
	952253

	 	MCCURDY B 1—BPO (DPI 1250)
	 	WISE
	 	 	62.5	%
	952073

	 	MILLER UNIT 1 (DPI 582)
	 	DENTON
	 	 	96.9	%
	952386

	 	MILLER UNIT 2
	 	DENTON
	 	 	96.9	%
	952094

	 	MILLER-CUFFMAN #1 (dpi 559)
	 	DENTON
	 	 	68.8	%
	952292

	 	MILLER-CUFFMAN #2 (dpi 1324)
	 	DENTON
	 	 	81.2	%
	952403

	 	MUNSON 1
	 	DENTON
	 	 	50.0	%
	952069

	 	MYERS-TINDLE #1 (dpi 746)
	 	DENTON
	 	 	68.8	%
	952218

	 	MYERS-TINDLE #2 (dpi 949)
	 	DENTON
	 	 	68.8	%
	952301

	 	MYERS-TINDLE #3 (dpi 1388)
	 	DENTON
	 	 	87.5	%
	952201

	 	NORTH #1 (dpi 1426)
	 	WISE
	 	 	97.2	%
	952332

	 	OMNI-FRAZIER #1—BPO (DPI 1419)
	 	DENTON
	 	 	75.0	%
	952347

	 	OMNI-FRAZIER #2—BPO (DPI 1436)
	 	DENTON
	 	 	100.0	%
	952426

	 	OMNI-FRAZIER 3-BPO
	 	DENTON
	 	 	100.0	%
	952432

	 	OMNI-FRAZIER 4-BPO
	 	DENTON
	 	 	81.3	%
	952488

	 	OWENS UNIT 1
	 	DENTON
	 	 	100.0	%
	952077

	 	PARKEY #1 (dpi 563)
	 	DENTON
	 	 	68.8	%
	952364

	 	PARKEY B 1
	 	DENTON
	 	 	89.1	%
	952408

	 	PARKEY B 2
	 	DENTON
	 	 	89.1	%
	952044

	 	PITTS A-1 (dpi 611)
	 	WISE
	 	 	96.6	%
	952208

	 	PITTS A-2 (dpi 944)
	 	WISE
	 	 	96.6	%
	952031

	 	PITTS A-3 (FORMERLY PITTS C-1) (dpi 811)
	 	WISE
	 	 	96.6	%
	952027

	 	PITTS-WINDER 1 (DPI 608)
	 	WISE
	 	 	94.8	%
	952176

	 	PITTS-WINDER B-1 (dpi 814)
	 	WISE
	 	 	100.0	%
	952214

	 	PITTS-WINDER B-2A (dpi 951)
	 	WISE
	 	 	81.3	%
	952295

	 	PUGH #1 (dpi 1326)
	 	DENTON
	 	 	100.0	%
	952225

	 	RICKRICH #2 (dpi 1266)
	 	DENTON
	 	 	99.2	%
	952259

	 	ROSSON-HENDERSON #1 (APO)
	 	DENTON
	 	 	71.9	%

			
	 	 	 
	Exhibit B — Dedicated Acreage and/or Dedicated Wells
	 	Page 6
	DYNEGY CONTRACT NO.: 014904 — Ref No. 095	 	 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	BROG Production
	Company Meter #	 	Dedicated Well - Common Name	 	County	 	Interest
	952259

	 	ROSSON-HENDERSON #1—BPO (DPI 1273)
	 	DENTON
	 	 	71.9	%
	952261

	 	ROSSON-HENDERSON #2 (dpi 1281)
	 	DENTON
	 	 	100.0	%
	952487

	 	ROSSON-HENDERSON #3
	 	DENTON
	 	 	100.0	%
	952372

	 	SALLY HUEY 1
	 	DENTON
	 	 	87.5	%
	952472

	 	SALLY HUEY 2
	 	DENTON
	 	 	87.5	%
	952465

	 	SALLY HUEY 3
	 	DENTON
	 	 	87.5	%
	952239

	 	SATER #1 (dpi 1274)
	 	DENTON
	 	 	100.0	%
	952280

	 	SATER #2 (dpi 1308)
	 	DENTON
	 	 	100.0	%
	952015

	 	SCHLUTER 1 (DPI 572)
	 	DENTON
	 	 	24.2	%
	952254

	 	SCHLUTER #2 (dpi 1257)
	 	DENTON
	 	 	24.2	%
	952315

	 	SCHLUTER #3 (dpi 1402)
	 	DENTON
	 	 	24.2	%
	952338

	 	SCHLUTER #4 (dpi 1430)
	 	DENTON
	 	 	24.2	%
	952103

	 	SCHOOLFIELD #1 (dpi 588)
	 	DENTON
	 	 	68.8	%
	952234

	 	SCHOOLFIELD #2 (APO 2-01) (dpi 1275)
	 	DENTON
	 	 	66.1	%
	952282

	 	SCHOOLFIELD #3 (dpi 1306)
	 	DENTON
	 	 	87.5	%
	952446

	 	SCHOOLFIELD UNIT #4
	 	DENTON
	 	 	87.5	%
	952475

	 	SCHOOLFIELD UNIT #5
	 	DENTON
	 	 	87.5	%
	952489

	 	SCHOOLFIELD UNIT #6
	 	DENTON
	 	 	87.5	%
	952519

	 	SCHOOLFIELD UNIT #7
	 	DENTON
	 	 	87.5	%
	952406

	 	SHIFFLETT FAMILY #1
	 	DENTON
	 	 	100.0	%
	952411

	 	SHIFFLETT FAMILY A GU #1
	 	DENTON
	 	 	100.0	%
	952025

	 	SITZ 1 (DPI 591)
	 	WISE
	 	 	100.0	%
	952022

	 	SMITH-GENTRY #1 (dpi 558)
	 	WISE
	 	 	100.0	%
	952243

	 	STEWART-ENIS #1 (APO 2-01) (dpi 1278)
	 	DENTON
	 	 	70.0	%
	952477

	 	STEWART-ENIS #2
	 	DENTON
	 	 	100.0	%
	952492

	 	STEWART-ENIS #3
	 	DENTON
	 	 	100.0	%
	952401

	 	SUCCESSOR GENERATION #1
	 	DENTON
	 	 	97.1	%
	952463

	 	SUCCESSOR GENERATION A #1
	 	DENTON
	 	 	97.1	%
	952206

	 	TINDLE #2 (dpi 883)
	 	DENTON
	 	 	87.5	%
	952104

	 	TINDLE A-1 (dpi 562)
	 	DENTON
	 	 	68.8	%
	952398

	 	TINDLE B UNIT 3
	 	DENTON
	 	 	84.4	%

			
	 	 	 
	Exhibit B — Dedicated Acreage and/or Dedicated Wells
	 	Page 7
	DYNEGY CONTRACT NO.: 014904 — Ref No. 095	 	 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	BROG Production
	Company Meter #	 	Dedicated Well - Common Name	 	County	 	Interest
	952106

	 	TINDLE B-1 (dpi 561)
	 	DENTON
	 	 	65.6	%
	952322

	 	TINDLE B-2 (dpi 1392)
	 	DENTON
	 	 	84.4	%
	952008

	 	TINDLE J B (dpi 560)
	 	DENTON
	 	 	68.8	%
	952523

	 	TINDLE UNIT #5
	 	DENTON
	 	 	87.5	%
	952527

	 	TINDLE UNIT #7
	 	DENTON
	 	 	87.5	%
	952445

	 	TINDLE UNIT, 3
	 	DENTON
	 	 	87.5	%
	952244

	 	WEATHERBY #1 (dpi 1223)
	 	DENTON
	 	 	62.5	%
	952538

	 	WELDON YOUNG UNIT #3
	 	DENTON
	 	 	75.0	%
	952118

	 	WINDER A-1 (dpi 699)
	 	WISE
	 	 	100.0	%
	952148

	 	WRIGHT #1 (dpi 802)
	 	WISE
	 	 	100.0	%
	952281

	 	YOUNG JEAN #1 (DPI 1305)
	 	DENTON
	 	 	100.0	%
	952224

	 	YOUNG WELDON #1 (dpi 1146)
	 	DENTON
	 	 	75.0	%

			
	 	 	 
	Exhibit B — Dedicated Acreage and/or Dedicated Wells
	 	Page 8
	DYNEGY CONTRACT NO.: 014904 — Ref No. 095	 	 

 

 

EXHIBIT C – QUALITY SPECIFICATIONS

to

GAS PURCHASE AGREEMENT

In the event the Gas delivered hereunder does not meet any one or more of the following quality
specifications, Company reserves the right at any time to restrict delivery of, or cease taking,
such Gas for so long as such conditions exist. Company may elect to take Gas not meeting the
required quality specifications; however, Company’s election to do so shall not constitute a waiver
of the quality specifications described herein.

	 	 	 
	Hydrogen Sulfide

	 	Not more than 1/4 (0.25) grain or less per 100 cubic feet
	 
	 	 
	Carbon Dioxide

	 	2.0% or less by volume
	 
	 	 
	Oxygen

	 	The oxygen content shall not exceed ten parts per
million (10 ppm) by volume of uncombined oxygen, and the
parties shall make reasonable efforts to maintain the
gas free from oxygen.
	 
	 	 
	Water

	 	No free water
	 
	 	 
	Foreign Materials

	 	Commercially free from dust, gum, gum-forming
constituents, dirt, or other liquid or solid matter,
impurities and other objectionable substances that might
become separated from the Gas prior to entering the
Plant.
	 
	 	 
	Heating Value

	 	Not less than one thousand (1,000) Btus per cubic foot.
	 
	 	 
	Temperature

	 	Not less than 40o F or more than 120o F
	 
	 	 
	Total Inerts

	 	Not more than four percent (4%) by volume
	 
	 	 
	Nitrogen

	 	Not more than four percent (4.0%) by volume
	 
	 	 
	Total Sulfur

	 	Not more than four (4) grains per 100 cubic feet

Exhibit C — Quality Specifications

DYNEGY CONTRACT NO.: 014904 — Ref No. 095

 

 

EXHIBIT D – ALLOCATION METHODOLOGY

to

GAS PURCHASE AGREEMENT

Plant Products

The Plant Products attributable to the Gas delivered by Supplier hereunder during each Month shall
be the quantities of Plant Products obtained by multiplying the volume of Supplier’s Gas delivered
during such Month hereunder by the Recovered Plant Product GPM of such Gas for each Plant Product.
The “Recovered Plant Product GPM” as used herein shall be the “Plant Product GPM” for each Plant
Product, determined as provided for in the Section in the General Terms and Conditions entitled
“Settlement Tests”, multiplied by the Actual Plant Product Recovery Adjustment. The “Actual Plant
Product Recovery Adjustment” shall be a fraction, the numerator of which shall be the volume of
each Plant Product recovered and saved at the Plant during each Month; and the denominator of which
shall be the theoretical quantity of those same Plant Products contained in the total volume of Gas
delivered to Company from all sources during each Month. The total theoretical quantity of each
Plant Product shall be the summation of the volumes of each Plant Product attributable to all Gas
received by Company from all sources at all Delivery Point(s) as determined by multiplying the
volumes of such Gas each Month by the Plant Product GPM of such Gas.

Residue Gas

The Residue Gas attributable to the Gas delivered hereunder shall be allocated on a Btu basis,
based on a factor, the numerator of which will be the wellhead delivered Btus of Supplier’s Gas
delivered under this Agreement, reduced by subtracting (1) Supplier’s calculated Btus extracted as
Plant Products and (2) Supplier’s allocated Plant Fuel and hydrogen sulfide, and the denominator of
which will be the sum of all Plant wellhead delivered Btus, reduced by subtracting the calculated
Btus extracted as Plant Products, actual Btus of Plant Fuel, and hydrogen sulfide, such factor to
be multiplied by the total Plant Residue Gas available at the tailgate of the Plant.

Supplier may use Gas produced from the Dedicated Acreage and/or Dedicated Well(s) for the purpose
of developing and operating same, including the use of Gas for Gas lifting or for pressure
maintenance and/or cycling operations, but Company shall not be obligated to return Residue Gas to
Supplier’s lease for use in the development and operation of the Dedicated Acreage and/or Dedicated
Well(s); it being Supplier’s obligation to make arrangements to receive any such Residue Gas at the
tailgate of the Plant. In the event that the amount of Residue Gas taken by Supplier for in
connection with its operations on the Dedicated Acreage or on the Dedicated Well exceeds the amount
of Supplier’s share of such Residue Gas for such Month, Company shall charge Supplier for such
excess Residue Gas based on Company’s cost for and expenses to acquire such excess Residue Gas.

Allocation of Electrical Power

In the event Company elects to utilize electrical power in the operation of electrical powered
compressors on the Gathering System (i.e., upstream of the first inlet compressor at the Plant),
such electrical power costs will be recovered by Company by deducting from Supplier’s allocated
Residue Gas a volume of MMBtus of such Residue Gas equivalent in value (to Company, at the Plant
tailgate) to Supplier’s allocated share of such electrical power costs. Such Supplier’s share of
electrical power costs shall be determined by multiplying the Supplier’s total such electrical
power costs by a factor, the numerator of which will be Supplier’s wellhead delivered Btus and the
denominator of which will be the sum of all Plant wellhead delivered Btus.

Changes to Methodology

Notwithstanding anything in this Agreement to the contrary, Company may at any time and from time
to time change the allocation procedures utilized to allocate Supplier’s share of Products and
Residue Gas provided that such changes can be shown to increase the accuracy of such allocations.

Exhibit D — Allocation Methodology

DYNEGY CONTRACT NO.: 014904 — Ref No. 095

 

 

EXHIBIT E – SPECIAL PROVISIONS

to

GAS PURCHASE AGREEMENT

NEW PROVISIONS

The following new sections are added to the Agreement, and should same conflict with any other
provisions in the General Terms and Conditions, the below new provisions shall prevail.

E.1. Partial Assignments & Scope of Partial Successors’ Delivery Commitment 

Should the original Supplier party hereto or any of its Affiliates which are successors thereto
assign or convey a portion of Supplier’s Production Interests in the Dedicated Wells and/or
Dedicated Acreage less than all or substantially all of the Dedicated Wells and/or Dedicated
Acreage then subject hereto (a “Partial Assignment”) from and after the effectiveness of such
assignment, “Dedicated Acreage” shall thereafter (as to such successor Supplier only) mean only
those areas which are within leases on which any Dedicated Wells are located which Dedicated
Wells are within the scope of the conveyance to Supplier’s successor; and “Dedicated Wells”
shall mean those Dedicated Wells subject hereto in which Production Interests were so conveyed.

E.2. Credit

If, in the reasonable opinion of either Party hereunder (Party X) a material adverse change has
occurred with regard to the financial condition of the other Party (Party Y) after the date of
original execution hereof such that Party X has reasonable grounds for insecurity regarding the
ability of Party Y to perform any material obligation under this Agreement (whether or not then
due), Party X may demand Adequate Assurance of Performance from Party Y. “Adequate Assurance of
Performance” shall mean sufficient security or proof of capability of Party Y’s capability to
perform its obligations under this Agreement in the form of a standby irrevocable letter of
credit (in and amount and for a term reasonably acceptable to Party X), a prepayment or a cash
payment security deposit (to be held by Party X). No demand for Adequate Assurance of
Performance may include a demand for security for amounts which are subject to a good faith
dispute between the parties, but may include any undisputed amounts which appear on the same
invoices or statements which include any such disputed amounts.

E.3. Right of Set-Off

Should a Party (the “defaulting Party”) be in default of making any payments when same are due
to the other Party (the “non-defaulting Party”), the non-defaulting Party shall have the option
to deduct any amounts owed to it by the defaulting Party from any payments otherwise due by the
non-defaulting Party under this Agreement.

			
	 	 	 
	Exhibit E — Special Provisions
	 	Page 1
	DYNEGY CONTRACT NO.: 014904 — Ref No. 095	 	 

 

 

Attached To Gas Gathering And Purchase Agreement

By And Between Burlington Resources Oil & Gas Company LP,

By BROG GP Inc., Its Sole General Partner & Burlington Resources Trading Inc.

And

Dynegy Midstream Services, Limited Partnership

Effective Date: August 1, 2003

PARTIES INITIALS (FOR IDENTIFICATION PURPOSES):

			
	 	 	 
	SUPPLIER:                                              
	 	COMPANY:                                             

 

 

SPECIAL ADDENDUM

TO

GAS GATHERING AND PURCHASE AGREEMENT

BY AND BETWEEN

BURLINGTON RESOURCES OIL & GAS COMPANY LP,

BY BROG GP INC., ITS SOLE GENERAL PARTNER

&

BURLINGTON RESOURCES TRADING INC.

AND

DYNEGY MIDSTREAM SERVICES, LIMITED PARTNERSHIP

Effective Date: August 1, 2003

Amends Dynegy Contract No.: 014904 – Ref. 095

[DRAFT NO. 8 (Dynegy) (10/28/03) NOT FOR EXECUTION]

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	1. Nature and Operation of Addendum & Assignability 
	 	 	1	 
	 
	 	 	 	 
	2. Interpretation & Definitions 
	 	 	2	 
	 
	 	 	 	 
	3. Right to Take Plant Products and Residue Gas In-Kind 
	 	 	5	 
	A. Plant Products
	 	 	 5	 
	B. Residue Gas
	 	 	 7	 
	C. Parties’ Obligations and Title to Products & Gas – Amendments to Specific Agreement Terms
	 	 	 9	 
	 
	 	 	 	 
	4. Interim Settlement Terms 
	 	 	10	 
	 
	 	 	 	 
	5. System & Plant Capacity Expansions 
	 	 	11	 
	A. Company’s Initial Obligation To Expand
	 	 	11	 
	(1) Phase V Expansion
	 	 	11	 
	(2) Sub Phase Expansion Completion
	 	 	12	 
	(3) Excused Expansion Delays & Sub Phase Cancellations
	 	 	13	 
	(4) Unexcused Expansion Delays – Supplier Remedies
	 	 	14	 
	B. Capacity Availability
	 	 	14	 
	(1) Company’s Obligations
	 	 	14	 
	(2) Supplier Remedies
	 	 	15	 
	C. Force Majeure, Supplier Caused Delays & Residue Gas Constraints
	 	 	16	 
	 
	 	 	 	 
	6. Delivery Pressures 
	 	 	16	 
	A. Maximum Pressures
	 	 	16	 
	B. Supplier Remedies
	 	 	16	 
	 
	 	 	 	 
	7. New Well Connections
	 	 	17	 
	A. Notice & Time to Connect
	 	 	17	 
	B. Wellhead Pressures
	 	 	17	 
	C. Costs to Connect
	 	 	18	 
	 
	 	 	 	 
	8. Low Pressure Service 
	 	 	19	 
	A. Company Obligations
	 	 	19	 
	B. Supplier’s Remedies
	 	 	19	 
	C. Parties Obligation to Cooperate
	 	 	20	 
	 
	 	 	 	 
	9. Alternative Low Pressure Service 
	 	 	20	 
	 
	 	 	 	 
	10. Limitations 
	 	 	21	 
	A. Partial Election of Remedies & Cumulative Remedies
	 	 	21	 
	B. No General Duty to Expand or Modify
	 	 	21	 
	C. Damages Limitations
	 	 	21	 

-i-

 

	 	 	 	 	 
	11. Changes to Exhibit A – General Terms and Conditions 
	 	 	22	 
	A. Deleted Provisions
	 	 	22	 
	B. Amended Provisions
	 	 	22	 
	 
	 	 	 	 
	Attachment 1 – Gas Nominations 
	 	 	24	 
	A. General Provisions
	 	 	24	 
	(1) Company’s Duties
	 	 	24	 
	(2) Basis for Confirmations & Imbalances
	 	 	24	 
	(3) Residue Gas Nominations – Contents
	 	 	24	 
	B. First of Month Nominations:
	 	 	24	 
	C. Daily Nominations/Intra-Month Changes to Nominations
	 	 	25	 
	D. On-Going Reporting:
	 	 	25	 
	E. Pipeline Penalties:
	 	 	25	 
	 
	 	 	 	 
	Attachment 2 – Phase V Expansion Basis of Design 
	 	 	27	 
	A. Inlet Flow Rate to Plant
	 	 	27	 
	B. Inlet Pressure and Temperature to Plant
	 	 	27	 
	C. Inlet Composition to Plant
	 	 	27	 
	D. Gathering – East Side
	 	 	28	 
	(1) Pressure and Volume
	 	 	28	 
	(2) Inlet Gas Composition
	 	 	28	 

-ii-

 

SPECIAL ADDENDUM TO GAS GATHERING AND PURCHASE AGREEMENT

This Special Addendum to Gas Gathering and Purchase Agreement (the “Addendum”) is entered into
between Burlington Resources Oil & Gas Company LP, by BROG GP Inc., its Sole General Partner, and
Burlington Resources Trading Inc. (collectively, “Supplier”) and Dynegy Midstream Services, Limited
Partnership (“Company”).

Recitals

	A.	 	Burlington Resources Oil & Gas Company LP and Dynegy Midstream Services, Limited Partnership
are parties to the following two agreements:

	 	(i)	 	“Gas Gathering Agreement” between Dallas Production Inc. and Dynegy Midstream
Services, Limited Partnership, dated November 1, 1994, and referred to by Company as
Agreement No. 014634, as amended prior hereto (the “Prior Agreement”); and
	 
	 	(ii)	 	“Gas Gathering and Purchase Agreement” with the effective date of August 1,
2003 (“Agreement Effective Date”), to which Burlington Resources Trading Inc. is also a
party, executed simultaneously herewith (the “Agreement”).

	B.	 	The Agreement is being executed for the purpose of partially replacing and superseding the
Prior Agreement with regard to the Dedicated Acreage that is described in the Agreement. The
Parties acknowledge that neither of them are currently obligated to amend, modify or replace
the Prior Agreement but that the Parties have agreed to the terms of the Agreement subject to,
and in consideration for, simultaneous execution by them of this Addendum in order to
establish more certainty regarding availability of gathering and processing capacity to
support Supplier’s further development of its gas reserves within the Dedicated Acreage and
more economic certainty for Company with regard to its receipt of sufficient consideration for
its future capital expenditures and services to be provided pursuant to the Agreement and the
terms of this Addendum.
	 
	C.	 	The Parties acknowledge that the terms of this Addendum have been negotiated based on the
unique situation of the Supplier, Supplier’s substantial production ownership position and
development plan within the Dedicated Acreage and its current and projected future volumes of
Gas to be delivered under the Agreement, as well as for the purpose of resolving certain
uncertainties which might be claimed to arise from the terms of the Prior Agreement.

Now therefore, in consideration of the premises and other valuable consideration, Supplier and
Company agree as follows:

1. Nature and Operation of Addendum & Assignability

          This Addendum shall constitute a supplement to and form a part of the Agreement as between the
Company and the original Supplier named above and any conflict between the terms of this Addendum
and any of the other documents comprising a portion of the Agreement shall be resolved in favor of
the terms of this Addendum. The rights set forth in this Addendum shall only apply to Supplier and
Supplier’s Affiliates and neither this Addendum nor the rights set forth herein may be assigned in
whole or in part by Supplier to any other Person, except as follows: Supplier may assign
this Addendum, and Supplier’s rights arising hereunder, to no more than two (2) other Persons
(“Permitted Assignees”), each of whom must be contemporaneously receiving with such assignment an
assignment or other transfer of title to Production Interests subject to the Agreement to which can
be attributed at least (**) percent (**)% of the Supplier’s Gas delivered hereunder during the
three (3) full Months preceding the Month in which the assignment is effective.

          Any such a Permitted Assignee, however, shall not be allowed to further assign this Addendum
or any of the rights hereunder without Company’s prior written consent, which Company shall not be
obligated to grant. In the event Supplier does convey or assign all or a part of Supplier’s

 

 

			
	 	 	 
	Special Addendum to Dynegy Contract No. 014904 — Ref. No. 095
	 	Page 2

Interest to any Person other than as expressly provided for in this Section 1, the rights
provided for in this Addendum shall terminate and be of no further force and effect as to Gas
attributable to the portion of Supplier’s Interest which was so conveyed or assigned unless an
assignment of same is expressly provided for in this Section 1 above.

          No assignment expressly allowed above or otherwise consented to by Company shall be effective
until Company has received notice of such assignment and a copy of a writing in which assignee
assumes and agrees to perform Supplier’s obligations hereunder and agrees to be fully bound by the
terms of the Agreement and this Addendum, all only to the extent of the Production Interests
assigned to such assignee.

2. Interpretation & Definitions

          All references herein to “Sections” and “Attachments” shall be references to the Sections of
this Addendum and the Attachments hereto unless another document is expressly referenced. Any
capitalized terms used in this Addendum shall have the same meaning as ascribed to them in the
Agreement unless such term is expressly defined otherwise herein. The following terms, which are
specifically adopted for the purpose of enabling the terms of this Addendum, shall have the below
described meanings. To the extent any of the below defined terms have identical defined terms in
the Agreement, the below provisions shall replace and supersede such Agreement definitions:

“Available Gas” shall have the meaning ascribed to such term in Section 7.C(4).

“Available Product Volumes” shall have the meaning ascribed to such term in Section 3.A(6).

“Available Residue Gas” shall have the meaning ascribed to such term in Section 3.B(4).

“Barrel” shall mean forty-two (42) Gallons, as Gallons is defined in the General Terms and
Conditions.

“bpd” shall mean Barrels per Day.

“Cash Out Settlement” shall have the meaning ascribed to such term in Section 3.A(9)(ii).

“Commercial Terms and Conditions” shall mean the terms and conditions set forth in the first
part of the Agreement bearing the title of Commercial Terms and Conditions.

“Completion Date” shall mean the date by which a Sub Phase is required to be completed by
Company, which shall be the last Day of the Month designated as the “Completion Date” for such
Sub Phase in the table set forth in Section 5.A(1) as such is delayed, extended or otherwise
modified by the operation of the terms of Section 5.A(3) and/or Section 5.C or by mutual written
agreement of the Parties.

“Component” or “Components” shall mean any one or more of the individual hydrocarbon
constituents of Raw Product, including but not limited to: methane, ethane, propane, isobutane,
normal butane, isopentane, normal pentane, hexanes and heavier hydrocarbon components, as well
as other non-hydrocarbon components allowed by a Product Pipeline.

“Connect Costs” shall mean any costs and expenses incurred and any capital expended to cause the
connection of a new well to the Gathering System or to convert and provide any Dedicated Wells
and/or Delivery Points on the High Pressure System to Low Pressure Service, including any
Monthly rental or lease costs incurred for any rented or leased equipment, if any, utilized
either (i) in initial completion of such new well connections or well or Delivery Point
transfers; or (ii) in on going operation of a completed connection or provision of Low Pressure
Service; provided, however, that the costs incurred by Company for measurement
equipment and meter runs are expressly excluded from Connect Costs.

“Connection Notice” shall have the meaning ascribed to such term in Section 7.A.

“Cost Recovery Period” shall have the meaning ascribed to such term in Section 7.C(5).

“Current Dedicated Leases” shall mean the oil and gas leases that are, as of the date of
execution hereof, held by production from the current Dedicated Wells listed in Exhibit B to the
Agreement under the section therein entitled “Current Dedicated Wells & Production Interests.”

“Delivery Pressure Cure Period” shall have the meaning ascribed to such term in Section 6.B(1).

“Delivery Volume” shall have the meaning ascribed to such term in Section 5.B(1).

“Design Parameters” shall mean the Basis of Design assumptions or parameters for the Phase V
Expansion set forth in Attachment 2 to this Addendum.

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	Special Addendum to Dynegy Contract No. 014904 — Ref. No. 095
	 	Page 3

“Gathering System” shall mean the system of pipes and gathering lines which are located in
Denton and Wise Counties, Texas, and are upstream of, and currently connected to and gathering
Gas to, Company’s Chico Gas Processing Plant (together with future expansions and/or additions
thereto) together with all related equipment and systems which are or will be connected to such
pipes and gathering lines including, without limitation, meters, meter runs, compressors,
separators, drips and pigging stations.

“General Terms and Conditions” shall mean the terms and conditions set forth in Exhibit A to the
Agreement and bearing the title of General Terms and Conditions.

“High Pressure System” shall mean that portion of the Gathering System designed and operated by
Company to gather Gas at pressures not exceeding (**) (**) PSIG when measured at the Delivery
Points thereon; such system being understood to be that system as in existence on the date
hereof and as same is extended or modified from time to time during the Term.

“Low Pressure Conversion Date” shall have the meaning ascribed to such term in Section 8.A(1).

“Low Pressure Gathering Fee” shall have the meaning ascribed to such term in Section 3.B. of the
Commercial Terms and Conditions.

“Low Pressure Service” shall mean gathering of Gas from a Delivery Point either: (a) into the
Low Pressure System in compliance with the pressure maintenance provisions for such service set
forth in Section 6.A(ii) below; or (b) by providing additional compression to a Delivery Point
on the High Pressure System such that the Gas is received and gathered at such Delivery Point in
compliance with the pressure maintenance provisions for such service set forth in Section
6.A(iii).

“Low Pressure System” shall mean that portion of the Gathering System designed and operated by
Company to gather Gas at pressures not exceeding (**) PSIG when measured at the
Delivery Points thereon; such system being understood to be that system as in existence on the
date hereof and as same is extended or modified from time to time during the Term.

“Maximum Gathering Line Pressure” shall have the meaning ascribed to such term in Section 6.A.

“MMcf” shall mean one million cubic feet, as cubic feet are described in the definition of “Mcf”
in the General Terms and Conditions.

“MMcfd” shall mean one million cubic feet per Day, as cubic feet are described in the definition
of “Mcf” in the General Terms and Conditions

“Nominal Design Capacity” shall have the meaning ascribed to such term in Section 5.A(2).

“Notice Date” shall have the meaning ascribed to such term in Section 6.B(1).

“OPIS Index” shall mean the Monthly average of the daily high and low prices per Gallon, for the
applicable Month, as quoted by the Oil Price Information Service (“OPIS”) for “Any Current
Month” under “Mont Belvieu Spot Gas Liquids Prices” using (i) the Non-TET prices for the
Propane, Isobutane, Normal Butane and Natural Gasoline Specification Products (as defined in
this Section 2 below under “Specification Products”); and (ii) the purity ethane price for the
Ethane Specification Product. Should any of the indices referenced above be discontinued, the
parties shall mutually agree upon a comparable successor index and/or publication.

“Original Completion Date” shall mean the last Day of the Month designated as the “Completion
Date” for such Sub Phase in the table set forth in Section 5.A(1) without giving effect
to any delays or extensions in such Completion Date pursuant to the Section 5.A(3) and/or
Section 5.C or by mutual written agreement of the Parties.

“Payout Volume” shall have the meaning ascribed to such term in Section 7.C(5)(i).

“Permitted Assignee” shall have the meaning ascribed to such term in Section 1.

“Phase V Expansion” shall have the meaning ascribed to such term in Section 5.A(1).

“Plant F.O.B. Value” shall have the meaning ascribed to such term in Section 3.A(9)(ii)

“Plant” shall mean a gas processing plant and/or treating facility and other related facilities
utilized for Processing Supplier’s Gas. It is understood that Supplier’s commitment of Gas to
Company pursuant to the Agreement is not limited to a specific Plant, it being the intent that
Company shall have the right to cause Supplier’s Gas to be Processed in any Plant, whether or
not owned by Company or its Affiliates, but in a manner consistent with the terms of the
Agreement and this Addendum. Provided, however, that Company agrees that during the
Primary Term and Renewal Term, the Plant to be utilized to Process Supplier’s Gas under the
Agreement shall be Company’s Chico Gas Processing Facility located in Wise County, Texas (“Chico
Plant”). Supplier agrees that during the Renewal Term, however, that Company may

Section 2

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	Special Addendum to Dynegy Contract No. 014904 — Ref. No. 095
	 	Page 4

change the Plant hereunder through replacement of same at the same or a different location with
a different gas processing plant or through consolidation of such Chico Plant with another
existing plant through connection of the Gathering System thereto, upon Supplier’s prior written
consent, which consent shall be neither unreasonably withheld or delayed. The Parties agree
that the only grounds for Supplier’s withholding of Company’s request in the change of Plant
during the Renewal Term which shall be considered reasonable shall be: (i) if the Component
recovery efficiencies of the replacement or successor plant are materially less than those of
the Chico Plant at the time such request for consent is made; (ii) such replacement plant does
not have, or will not have as of the date of closure of the Chico Plant, sufficient available
processing capacity to Process the volume of Gas then being gathered and Processed for Supplier
under the Agreement; or (iii) physical access to Residue Gas markets that are materially the
same or greater market value at the time of such request for consent as those to which the Chico
Plant then has physical access. Relative “efficiency” of the proposed replacement plant
compared to the Chico Plant (as referenced in clause (i) immediately above) shall mean
capability to recover the same or greater percentages of Components from Supplier’s Gas as the
Chico Plant at materially equivalent or lower fuel consumption rates. Similarly, ability of the
replacement plant to recover greater percentages of Components from Supplier’s Gas shall not be
a basis for Supplier withholding its consent.

“Product Pipeline” shall mean, whether one or more, any pipeline accepting delivery of, and
transporting, Raw Product produced at the Plant.

“Production Interest Owner” means any Person who owns any Production Interests in any Dedicated
Wells and/or any Dedicated Acreage hereunder.

“Production Interest” means any ownership interest in oil and/or gas leaseholds or in the oil
and/or gas underlying any property which carry with them the right to take any production in
kind.

“Raw Product” shall mean a mixed stream of demethanized natural gas liquids produced at the
Plant.

“Readiness Date” shall have the meaning ascribed to such term in Section 7.A.

“Redelivery Points” shall have the meaning ascribed to such term in Section A of Attachment 1
hereto.

“Reimbursement Period” shall have the meaning ascribed to such term in Section 6.B(2).

“Specification Products” shall mean the following listed commercial specification products
theoretically recoverable from Raw Product based on the following compositions:

	 	(i)	 	Purity Ethane: a Product comprised of 100% of the ethane Component plus
methane Component up to 1.5 liquid volume percent of the ethane Component
	 
	 	(ii)	 	Propane: a Product comprised of 100% of the propane Component.
	 
	 	(iii)	 	Isobutane: a Product comprised of 100% of the isobutane Component.
	 
	 	(iv)	 	Normal Butane: a Product comprised of 100% of the normal butane Component.
	 
	 	(v)	 	Natural Gasoline: a Product comprised of 100% of the isopentane and heavier
hydrocarbon Components.

“Sub Phase Volume Requirement” shall have the meaning ascribed to such term in Section 5.A(3).

“Sub Phase” shall mean any one or more of the incremental portions of the Phase V Expansion, as
described in Section 5.A.

“Supplier’s Allocated Plant Products” shall have the meaning ascribed to such term in Section
3.A.

“Supplier’s Allocated Residue Gas” shall have the meaning ascribed to such term in Section 3.B.

“Supplier’s Plant Product Percentage” shall have the meaning ascribed to such term in Section
2.A. of the Commercial Terms and Conditions, as amended in Section 3.C. of this Addendum below
during such periods when that amendment is in effect.

“Supplier’s Residue Gas Percentage” shall have the meaning ascribed to such term in Section 2.B.
of the Commercial Terms and Conditions, as amended in Section 3.C. of this Addendum below during
such periods when that amendment is in effect.

“Unexcused Expansion Delay” shall have the meaning ascribed to such term in Section Error!
Reference source not found..

Section 2

Interpretation & Definitions

 

 

			
	 	 	 
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	 	Page 5

3. Right to Take Plant Products and Residue Gas In-Kind

A. Plant Products

          From time to time during the term of the Agreement, Supplier may elect to take its percentage
share of Plant Products in-kind at the tailgate of the Plant in lieu of payment of Proceeds
attributable thereto as set forth in the Commercial Terms and Conditions (when not giving effect to
any amendments set forth in this Addendum). The volume which Supplier will be entitled to receive
each Month during any period when such an election is in effect shall be equal to the volume of
Plant Products attributable to the Gas delivered by Supplier under the Agreement during such Month,
as determined pursuant to Exhibit D to the Agreement (Allocation Methodology) (“Supplier’s
Allocated Plant Products”) multiplied by the Supplier’s Plant Products Percentage. Such
take-in-kind rights shall be subject to the following terms and conditions:

	 	(1)	 	Supplier’s initial election, which shall be effective November 1, 2003, is to
take its percentage share of Plant Products in kind. Such initial election shall be
applicable from said November 1, 2003, date and shall remain in effect until Supplier
affirmatively elects to terminate such election, in the manner described below.
	 
	 	(2)	 	Should Supplier wish to change its then current election (to receive Plant
Products in–kind or the Proceeds attributable thereto, as applicable), Supplier shall
give Company at least sixty (60) Days advance written notice of such change. Any
change in Supplier’s election shall be effective on the first Day of the Month
following the expiration of said sixty (60) Day period. Supplier’s initial election
and any subsequent change in Supplier’s election shall remain in effect for a period of
at least six (6) consecutive Months.
	 
	 	(3)	 	Supplier shall be responsible for making its own arrangements for the
transportation and fractionation of its share of Plant Products from and at the point
of delivery into Product Pipelines at the tailgate of the Plant.
	 
	 	(4)	 	Supplier may only elect to take-in-kind the entire volume of Supplier’s
percentage share of Plant Products in the form of Raw Product and may not make such
election as to individual Components within a commingled stream.
	 
	 	(5)	 	Supplier shall receive its share of Plant Products in the form of Raw Product
which meets the specifications of the Product Pipeline and Supplier shall not, by
virtue of the Agreement or this Addendum, be entitled to fractionation services for
such Raw Product to be delivered to Supplier pursuant to this Section 3.A.
	 
	 	(6)	 	Subject to Supplier providing Company its nominations pursuant to Attachment 1
hereto and/or Section 3.A(10) below, Company shall timely advise Supplier of the
quantity of Supplier’s percentage share of Plant Products that will be available for
Supplier to receive from the Plant (“Available Product Volumes”). Company’s
determination of Available Product Volumes shall be based on Supplier’s nominations
tendered pursuant to the terms of Attachment 1 to this Addendum and historical
production volumes and gas composition for existing wells and current well test data
provided by Supplier for newly connected Dedicated Wells, projected new volume
deliveries expected to commence during the Month, all adjusted for any known upsets,
scheduled maintenance outages of which Supplier has provided notice and any other known
conditions which could reasonably be expected to have an impact on production volumes
in such a manner that the deviation could be reasonably estimated based on then
available data. Supplier acknowledges that Company’s estimates and determination of
Available Product Volumes will be based on production data provided

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	 	 	 	by Supplier and to the extent such data is inaccurate or does not coincide with
actual production flows, Company shall be allowed to adjust the Available Product
Volumes accordingly, provided a Supplier representative is advised of such
adjustments.
	 
	 	(7)	 	Should Supplier fail to arrange for receipt and disposition of some or all of
the Available Product Volumes from and at the tailgate of the Plant (as required in
Subsection (3) immediately above), Company shall have the right, but not the
obligation, to market any volumes with regard to which Supplier has not made such
arrangements and if Company elects to do so, Company shall pay Supplier the Proceeds
from the sale of such volumes of Supplier’s Plant Products at the tailgate of the
Plant. Notwithstanding anything in the definition of “Proceeds” in Section A.1,
DEFINITIONS, of the General Terms and Conditions (or any other terms in the Agreement)
to the contrary, Company shall retain (**) percent (**)% of the total
proceeds received by Company from the sale of any portions of Supplier’s Available
Product Volumes, provided same was sold in compliance with the terms of this Section
3.A(7), as Company’s fee for marketing such volumes of Plant Products. The provisions
of this Section 3.A(7) shall not be applicable to any volumes of Plant Products which
Supplier is entitled to take-in-kind which Company has not advised are available for
Supplier’s receipt; i.e., which are not within the Available Product Volumes.
	 
	 	(8)	 	Supplier shall account to and pay all Interest Owners for all royalties,
overriding royalties, bonus payments, production payments and other payments due on
Plant Products taken-in-kind by Supplier.
	 
	 	(9)	 	Supplier and Company recognize Company’s inability to redeliver Raw Product the
composition of which will exactly match the composition and quantities of the
Components attributable and allocable to Supplier’s Gas. Therefore, Company will
maintain an “over/short” account to account for the volumes of Components delivered to
Supplier each month as against the volumes of same to which Supplier was entitled
during such Month. Company and Supplier shall endeavor to keep the over and short
volumes as much in balance as possible by making delivery adjustments from time to
time. While the Parties may, by mutual agreement, resolve Component imbalances on a
volumetric basis, such balancing may be impractical due to the operating procedures and
practices of the Product Pipelines. Therefore, unless and until such a mutual
agreement is reached and is evidenced in writing, Component imbalances shall be
resolved through cash payments pursuant to this Section 3.A(9), as detailed below.

	 	(i)	 	If, for any reason, (i) the volume of any Component which
Supplier is entitled to receive hereunder for a given Month is greater than the
quantity of such Component actually delivered for Supplier’s account to the
Product Pipeline during such Month, Company shall pay to Supplier a “Cash Out
Settlement,” as defined below, or (ii) if the volume of any Component to which
Supplier is entitled for a given Month is less than the quantity of such
Component actually delivered for Supplier’s account to the Product Pipeline
during such month, then Supplier shall pay to Company such a Cash Out
Settlement. Company shall include with Supplier’s Monthly statement the volume
of any Component that was “over delivered” or “under delivered” during the
preceding Month along with a computation of the Cash Out Settlement due Supplier
or Company, as applicable with regard to each Component. Payment of any Cash
Out Settlement owed to either of the Parties shall be due no later than ten (10)
Days following the date of Company’s statement. To the extent Company owes a
Cash Out Settlement to Supplier for some Components while Supplier, for that
same time period, owes Company a Cash Out Settlement for other Components, the
Cash Out Settlements due by each Party shall be netted

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	 	 	 	against each other to determine one, positive Cash Out Settlement that will be
paid by the owing Party in the manner provided for above and such net
settlements shall not require Company to net all amounts due by each Party
under the Agreement as would otherwise be required under Section A.7 (Payments
to Supplier).
	 
	 	(ii)	 	A “Cash Out Settlement” shall be a payment by the owing Party, in
an amount determined as follows, to compensate either the Supplier, as to under
deliveries by Company, or the Company, as to over deliveries to Supplier. For
each Gallon of any Component that is “over delivered” or “under delivered”, the
Cash Out Settlement shall equal the volume, in Gallons, of such Component “over
delivered” or “under delivered,” as applicable, converted to the equivalent
volume of the applicable Specification Product(s) (determined in accordance with
the definition of Specification Products in Section 2 above) multiplied by the
“Plant F.O.B. Value” of such Specification Product. The “Plant F.O.B. Value” of
such Specification Products shall be equal to the OPIS Index therefor for the
Month in which the imbalance arose, less only the following and without
further or additional deductions therefrom:

	 	a.	 	a Fractionation Fee, in cents per Gallon, to be
calculated as follows:

	 	 	 
	 

	 	Fractionation
Fee   = (**)
	 
	 

	 	Where:

	 	 	 	 	 	 	 
	 

	 	  Fuel
	 	=
	 	A Gas fuel cost (in $/MMBtu)
equivalent to the average Houston Ship Channel Index of INSIDE
FERC’S GAS MARKET REPORT, for natural gas for the Month for which
the Fractionation Fee is to apply.

	 	b.	 	actual storage and loading costs incurred by
Company, if any;
	 
	 	c.	 	the then current standard published rates and
related costs charged by West Texas LPG Pipeline Limited Partnership or
its then current successor Product Pipeline (WTLP) for transportation of
Raw Product from the Plant to Mont Belvieu, Texas, including WTLP’s
standard pipeline tariff charges, pipeline losses, if any, and other
related charges imposed by WTLP, or, if rail car or truck transportation
is then in use by Company or its Affiliates, actual rail car and truck
transportation costs incurred by Company or its Affiliates, on a per
Gallon basis, during such Month.

	 	(10)	 	During any periods when Supplier is taking its share of Plant Products in kind
pursuant to this Section 3.A but is not taking its share of Residue Gas in kind,
Supplier shall still comply with the terms of Attachment 1 concerning Gas nominations,
excluding only those portions which expressly relate to Residue Gas redeliveries, in
order to provide procedures for scheduling Plant Product receipts by Supplier.

B. Residue Gas

          From time to time during the term of the Agreement, Supplier may elect to take its percentage
share of Residue Gas in-kind at the tailgate of the Plant in lieu of payment of Proceeds
attributable thereto as set forth in the Commercial Terms and Conditions (when not giving effect to
any amendments set forth in this Addendum). The volume which Supplier will be entitled to receive
each Month during any period when such an election is in effect shall be equal to the volume of
Residue Gas attributable to the Gas delivered by Supplier under the Agreement during such Month, as
determined pursuant to Exhibit D to the Agreement (Allocation Methodology) (“Supplier’s Allocated

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Residue Gas”) multiplied by the Supplier’s Residue Gas Percentage. Such take-in-kind rights
shall be subject to the following terms and conditions:

	 	(1)	 	Supplier’s initial election, effective as of the Agreement Effective Date set
forth above, is to take its percentage share of Residue Gas in kind. Such initial
election shall be applicable from the Effective Date and shall remain in effect until
Supplier affirmatively elects to terminate such election, in the manner described
below.
	 
	 	(2)	 	Should Supplier wish to change its then current election (to receive Residue
Gas in–kind or the Proceeds attributable thereto, as applicable), Supplier shall give
Company at least thirty (30) Days advance written notice of such change. Any change in
Supplier’s election shall be effective on the first Day of the Month following the
expiration of said thirty (30) Day period. The above initial election and any
subsequent change in Supplier’s election must each remain in effect for a period of at
least six (6) consecutive Months.
	 
	 	(3)	 	Supplier shall be responsible for making its own arrangements for the sale
and/or transportation of its share of Residue Gas from and at the tailgate of the
Plant. The receiving pipeline shall be responsible for the measurement of Supplier’s
Residue Gas.
	 
	 	(4)	 	The provisions attached hereto as Attachment 1 to this Addendum, “GAS
NOMINATIONS” shall be applicable when Supplier is taking-in-kind its percentage share
of Residue Gas. Company shall timely advise Supplier of any events or circumstances of
which Company has knowledge that will cause deliveries of Residue Gas to differ
materially from the quantities established and confirmed by Company to the receiving
gas pipelines pursuant to the procedures set forth in Attachment 1 (“Available Residue
Gas”).
	 
	 	(5)	 	Should Supplier fail to arrange for receipt and disposition of some or all of
the Available Residue Gas from and at the tailgate of the Plant (as required in
Subsection (4) immediately above), Company shall have the right, but not the
obligation, to market any volumes with regard to which Supplier has not made such
arrangements and if Company elects to do so, Company shall pay Supplier the Proceeds
from the sale of such volumes of Supplier’s Available Residue Gas at the tailgate of
the Plant. Notwithstanding anything in the definition of “Proceeds” in Section A.1,
DEFINITIONS, of the General Terms and Conditions (or any other terms in the Agreement)
to the contrary, Company shall retain (**) percent (**)% of the total
proceeds received by Company from the sale of any portions of Supplier’s Available
Residue Gas, provided same was sold in compliance with the terms of this Section
3.B(5), as Company’s fee for marketing such volumes of Residue Gas. The provisions of
this Section 3.B(5) shall not be applicable to any volumes of Residue Gas which
Supplier is entitled to take-in-kind which Company has not advised are available for
Supplier’s receipt; i.e., which are not within the Available Residue Gas volumes.
	 
	 	(6)	 	Supplier shall account to and pay all Interest Owners for all royalties,
overriding royalties, bonus payments, production payments and other payments due on
Residue Gas taken-in-kind by Supplier.
	 
	 	(7)	 	Company shall maintain an “over and short account” for Residue Gas deliveries
for Supplier’s account. By no later than the 25th Day of each Month (or the
first Business Day thereafter if the 25th is not a Business Day), Company
shall send a statement to Supplier which shall identify any over or short deliveries
for the preceding Month and the cumulative over and short deliveries to Supplier’s
receiving pipeline(s). Company

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	 	 	 	and Supplier shall endeavor to keep the over and short volumes as much in balance as
possible by making flow adjustments Monthly. Should an imbalance exist when the
take-in-kind rights provided for in this Section 3.B terminate, then same shall be
settled as follows:

	 	(a)	 	If Company owes Supplier Residue Gas, Company pay Supplier for
such volumes at Supplier’s weighted average sales price received at the Plant
for the prior three (3) Months; or
	 
	 	(b)	 	If Supplier owes Company Residue Gas, Supplier shall pay Company
for such volumes at Company’s weighted average sales price received at the Plant
for the prior three (3) Months.

C. Parties’ Obligations and Title to Products & Gas – Amendments to Specific Agreement
Terms

     During any period that Supplier has elected to take its percentage share of both Plant
Products and Residue Gas in kind, pursuant to the above provisions, then the following specific
provisions contained in the Agreement shall not be applicable and the following shall be deemed to
be substituted therefor during such periods:

SECTIONS 1, 2 AND 3.A. OF THE COMMERCIAL TERMS AND CONDITIONS: Are replaced with the
following (and Section 3.B. shall continue in full force and effect):

“1. PARTIES’ OBLIGATIONS

“Subject to the conditions and stipulations set forth in this Agreement, the Exhibits
attached hereto and that certain “Special Addendum” to this Agreement (the “Addendum”),
executed simultaneously herewith: Supplier agrees to deliver to Company all of “Supplier’s
Gas” (as hereinafter defined) and hereby assigns and transfers to Company the exclusive
right to Process all such Supplier’s Gas during the Term. Company agrees to gather
Supplier’s Gas from the Delivery Points hereunder, Process such Supplier’s Gas in the Plant
and redeliver to Supplier the volumes of Plant Products and Residue Gas to which Supplier is
entitled under Sections 2.A.and 2.B immediately below, all in accordance with the provisions
set forth in this Agreement and in Section 3 of the Addendum.

“2. COMPENSATION TO SUPPLIER

“In consideration for the compensation to be received by Company pursuant to the terms of
this Agreement (including, without limitation, that set forth in Section 3 below), and
Supplier’s covenants and performance of it obligations set forth in this Agreement, Company
shall Process Supplier’s Gas, extract Plant Products therefrom (in the form of Raw Product)
and redeliver to Supplier the below stated portions of such Plant Products and Residue Gas
as are attributable to and allocated to Supplier’s Gas.

A. Plant Products

Company shall deliver to Supplier, in-kind at the Plant tailgate, (**)% of Supplier’s
allocated share of Plant Products (“Supplier’s Plant Products Percentage”). Should Supplier
elect to exercise its option for a Renewal Term, as provided for in Section 4 below, during
the Renewal Term such Supplier’s Plant Products Percentage shall be (**) percent (**)%.

B. Residue Gas

Company shall deliver to Supplier, in-kind at the Plant tailgate, (**)% of Supplier’s
allocated share of Residue Gas (“Supplier’s Residue Gas Percentage”). Should Supplier elect
to exercise its option for a Renewal Term, as provided for in Section 4 below, during the
Renewal Term such Supplier’s Residue Gas Percentage shall be (**) percent (**)%.

“3. COMPENSATION TO COMPANY

“A. Title to Products & Gas

“As compensation for gathering and Processing Supplier’s Gas hereunder and redelivery of
Supplier’s share of Plant Products and Residue Gas, as provided for above, Company shall
receive title to, and retain: i) that portion of Supplier’s Allocated Plant Products and
Supplier’s Allocated Residue Gas not deliverable to Supplier pursuant to the terms of this
Addendum, i.e., the total volumes of same less the Supplier’s Plant Products Percentage and
the Supplier’s Residue Gas Percentage; and ii) one hundred

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percent (100%) of all Drip Liquids and any other substances or components attributable to
and/or recovered from Supplier’s Gas in connection with the gathering and Processing of same
(whether or not same is now or becomes in the future of commercial value). However, the
Parties confirm and acknowledge that at all times while Supplier’s Gas is in the possession
of Company, Supplier shall retain title thereto, and all Components, Plant Products and
Residue Gas contained therein or extracted therefrom, and Company shall only take title to
such quantities of same as expressly provided for in this Section 3.A, with title, risk of
loss and possession of such quantities passing to Company as and when provided for in
Section A.3 of the General Terms and Conditions as amended in the Addendum.”

SECTION A.3. OF THE GENERAL TERMS AND CONDITIONS (WARRANTY AND TITLE): Are replaced with
the following:

“A.3. Warranty and Title

Supplier hereby warrants title to all Supplier’s Gas delivered to Company hereunder, the
Processing rights associated therewith, all Plant Products, Residue Gas and Drip Liquids
recovered and to be recovered therefrom and other substances and components to which Company
is entitled pursuant to Section 3.A. of the Commercial Terms and Conditions (as amended by
the Addendum) (hereinafter the “Gas Products”). Further, Supplier warrants that Supplier’s
Gas, the Processing rights thereto and all Gas Products recovered and to be recovered
therefrom are free and clear of all liens, encumbrances and adverse claims, and that
Supplier has the right to deliver Supplier’s Gas to Company for Processing, free of all
liens, encumbrances and claims of every kind, and Supplier hereby agrees to indemnify and
save Company harmless against all claims, demands and causes of action of any kind, together
with all losses, damages, costs and expenses (including court costs and reasonable attorney
fees) arising out of or in any way resulting from adverse claims to Supplier’s Gas, the
Processing rights thereto and/or any Gas Products recovered therefrom. Supplier hereby
conveys to Company title to Supplier’s Gas consumed as Fuel in the Gathering System and/or
Plant and all Supplier’s Gas which is flared, leaked or otherwise lost in the operation of
the Plant and/or the Gathering System, such conveyance to be effective at the time such
Supplier’s Gas is so consumed or lost. Title to those portions of Plant Products and/or
other Gas Products (excluding Residue Gas) to which Company is entitled under the Agreement
shall pass from Supplier to Company as and when such Plant Products and/or other Gas
Products are extracted from Supplier’s Gas and title to Company’s share of Residue Gas shall
pass to Company at the tailgate of the Plant. If the right or title of Supplier to the
Supplier’s Gas and/or any Gas Products or Processing rights is involved in any litigation or
other action, Company shall have the right to withhold compensation up to the amount of such
claim (including an amount to cover interest, attorneys fees and other costs and expenses to
which the claimant may be entitled) during the pendency of such claim or litigation until
said title is freed from such question or until, and while, security acceptable to Company
is provided.”

4. Interim Settlement Terms

    The Parties acknowledge that the Agreement and this Addendum are being executed subsequent to
the Agreement Effective Date and that the Parties have been conducting business under the terms of
the Prior Agreement except that Supplier has been receiving, in kind, less than the full volume of
Residue Gas to which Supplier would otherwise be entitled under the terms of the Prior Agreement,
in anticipation of the lower volumes to which it will be entitled under the Agreement and this
Addendum. Therefore, to reconcile the activities of the Parties from the Agreement Effective Date
until the end of October 2003, the Parties agree to the following:

	A.	 	As to Residue Gas, the Parties will reconcile any imbalance between the volumes of Residue
Gas actually delivered to Supplier from and after the Agreement Effective Date and the volumes
to which Supplier is entitled hereunder, giving effect to Section 3.B above, and any such
imbalance shall be settled in the manner provided for in Section 3.B(7) above.
	 
	B.	 	As to Plant Products, which Supplier was unable to take in kind prior to execution hereof,
Company shall pay to Supplier the Proceeds attributable to Supplier’s Plant Products
Percentage with regard to Plant Products attributable to Supplier’s Gas received and purchased
under the Agreement for the period from the Agreement Effective Date up to, but excluding, the
Take-in-Kind Effective Date. Provided, however, in determining the Proceeds

Section 4

Interim Settlement Terms

 

 

			
	 	 	 
	Special Addendum to Dynegy Contract No. 014904 — Ref. No. 095
	 	Page 11

	 	 	attributable to Supplier’s allocated share of the Plant Products, “Proceeds” shall be based
on Company’s net weighted average sales price for the applicable Month, such net weighted
average sales price being based on the price Company receives from its Affiliated marketer,
Dynegy Liquids Marketing and Trade, net of deductions for transportation and fractionation
costs (such costs to include, without limitation, fractionation service fees incurred by
such Affiliated marketer).

5. System & Plant Capacity Expansions

A. Company’s Initial Obligation To Expand

	 	(1)	 	Phase V Expansion
	 
	 	 	 	To accommodate Supplier’s expected increase in Supplier’s Gas requiring gathering
through the Gathering System and processing in the Plant, Company agrees to complete
construction and modifications to the Gathering System and the current Plant under
the Agreement (which, as of the Effective Date, is the Company’s wholly-owned Chico
Gas Processing Plant), or arrange for such construction and modifications to be
completed, to expand the gathering capacity of the Gathering System servicing the
Dedicated Acreage and the processing capacity of the current Plant under the
Agreement, in the following phases (collectively the “Phase V Expansion”).

Chico Plant Phase V Expansion

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Nominal
Design Capacity (in
MMcfd)
 (1)
	 	 	 	 	Supplier Projected	 	East Side	 	West Side	 	 
	Sub	 	Completion	 	Available Gas (in	 	Gathering	 	Gathering	 	Plant
	Phase	 	Date	 	MMcfd) (2)	 	(3)	 	(4)	 	Processing
	5.1

	 	Eleven (11) Months
from and after date
of execution of the
Agreement and this
Addendum
	 	 	(**) 	 	 	 	(**) 	 	 	 	(**) 	 	 	 	(**) 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	5.2

	 	December 2004
	 	 	(**) 	 	 	 	(**) 	 	 	 	(**) 	 	 	 	(**) 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	5.3

	 	July 2005
	 	 	(**) 	 	 	 	(**) 	 	 	 	(**) 	 	 	 	(**) 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	5.4

	 	March 2006
	 	 	(**) 	 	 	 	(**) 	 	 	 	(**) 	 	 	 	(**) 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	5.5

	 	January 2007
	 	 	(**) 	 	 	 	(**) 	 	 	 	(**) 	 	 	 	(**) 	 

 

Notes to Table:

	 	 	 
	(n.1)

	 	Capacities referenced are total Gathering System or Plant capacities and
should not be construed to imply that Supplier has a firm or first priority right to
access; provided, however, that this n.1 shall not limit or modify Supplier’s
rights under Section 5.B below.
	 
	 	 
	(n.2)

	 	These volumes are set forth for the limited purposes for which they are
expressly referenced in this Addendum and will not constitute a guaranty of delivery
volumes by Supplier. The primary purposes for referencing these volumes are: i) to
disclose and evidence

Section 5

System & Plant Capacity Expansions

 

 

			
	 	 	 
	Special Addendum to Dynegy Contract No. 014904 — Ref. No. 095
	 	Page 12

	 	 	 	Supplier’s current estimate of total Gas from the Current
Dedicated Leases projected to be available for delivery under the Agreement by the
respective Completion Dates for each Sub Phase; and ii) to evidence the Parties’
agreement on the minimum volume of Gas deliveries from Dedicated Wells that is
necessary to justify the construction and completion of the respective Sub Phases.
	 
	 	(n.3) East Side Gathering includes both the High Pressure System and portions of the
Low Pressure System.
	 
	 	(n.4) West Side Gathering is included for reference purposes only.

	 	(2)	 	Sub Phase Expansion Completion
	 
	 	 	 	A particular listed Sub Phase of the Phase V Expansion shall be deemed to be complete
when the below described testing, modeling and calculations are performed and
demonstrate that the East Side portion of the Gathering System and the Plant have the
respective Nominal Design Capacity listed above for that Sub Phase. “Nominal Design
Capacity” shall mean a demonstrated capability to gather (at the pressures required
under Section 6.A below) and Process, as applicable, the volume of Gas described for
such Sub Phase, regardless of whether a volume of Gas equaling such volume is
available or was in fact so gathered or processed. Such gathering and processing
capabilities shall be deemed to have been demonstrated when the following procedures
have been completed:

	 	(i)	 	For the Gathering System, evidence of completion of modifications
to the affected portions of the Gathering System (including, without limitation
and by way of example only, installation of additional pipe, replacement of pipe
with larger diameter pipe and addition of compression and other equipment which
can increase the capacity of same), including completion of required and
industry standard integrity testing and Company specified operating tests for
all mechanical and electronic equipment, such that the modified Gathering System
can be demonstrated by calculation to be capable of carrying the applicable
volumes of Gas based on the Design Parameters applicable to the Gathering System
expansion.
	 
	 	(ii)	 	For the Plant, completion of performance tests designed and
implemented by Company, or its contractors or other designees, sufficient to
demonstrate the Plant’s ability to receive and Process the applicable volume of
Gas, based on the Basis of Design parameters applicable to the Plant set forth
in the Design Parameters applicable to the Plant expansion.

Any physical tests shall be scheduled for a time when the actual operating conditions
closely resemble the applicable Design Parameters. If the Gas volumes, Gas
composition, or other operating parameters are significantly different enough from
the applicable Design Parameters to not be able to determine if the Gathering System
or
the Plant, as applicable, is capable of the required capacities for the applicable
Sub Phase, as set forth in Section 5.A, then the test
shall be rescheduled to a time when the conditions more closely resemble the Design
Parameters. Or if it appears the actual conditions will not closely resemble the
Design Parameters anytime in the near future the capability of the Gathering System
or Plant, as applicable, shall be (i) calculated with regard to the Gathering System
and (ii) simulated, with regard to the Plant, through Supplier’s or its contractor’s
standard process simulator software using the available performance test data. After
the Plant has been simulated, using Company’s normally acceptable range of Product
recoveries and the Design Parameters, the Plant capacity shall be calculated using
this model and mutually acceptable engineering methods.

Section 5

System & Plant Capacity Expansions

 

 

			
	 	 	 
	Special Addendum to Dynegy Contract No. 014904 — Ref. No. 095
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	 	(3)	 	Excused Expansion Delays & Sub Phase Cancellations
	 
	 	 	 	Monitoring of Supplier’s projections and the rights of Company to either delay or
cancel a Sub Phase shall be governed by the terms of this
Section 5.A(3).

	 	(i)	 	Supplier’s current projected production of available Gas from the
Dedicated Wells agreed by the Parties to be necessary to justify the completion
of each Sub Phase (“Sub Phase Volume Requirement”) is set forth in the table in
Section 5.A(1) next to each Sub Phase under the
column “Supplier’s Projected Available Gas.” Supplier shall keep Company
reasonably informed of any changes to Supplier’s production projections and
shall notify Company promptly should Supplier develop or receive any data which
could reasonably be interpreted as indicating a material negative change or
error in either such projected volumes and/or the dates when same are expected
to be available for gathering and Processing under the Agreement such that the
Sub Phase Volume Requirement for that Sub Phase would not be met by the then
current Completion Date for that Sub Phase.
	 
	 	(ii)	 	Supplier shall update its production projections of expected
available Gas, with the best data then available to Supplier, when requested to
do so by Company, with such requests generally to be made prior to Company
making any major contractual, material or capital commitments to a Sub Phase.
In any request for such updated projections, Company shall advise Supplier of
the critical dates for Company to make such commitments in order to minimize the
risk of delay of the completion of the next Sub Phase beyond the applicable
Completion Date.
	 
	 	(iii)	 	Company shall be entitled to delay a Sub Phase and subsequent
Sub Phases if both the following conditions are not satisfied as of the date
Company must make any major contractual, material or capital commitments in
order to complete that Sub Phase by the then current Completion Date:

	 	(a)	 	Commencing with Sub Phase 5.2, the average Daily
volumes of Gas from all Dedicated Wells, averaged over the most recent
Month, equal or exceed the Sub Phase Volume Requirement for the most
recently completed Sub Phase; and
	 
	 	(b)	 	Supplier’s then current projected volumes of all
Gas from all Dedicated Wells to be available as of the Completion Date
equal or exceed the applicable Sub Phase Volume Requirement.

	 	 	 	Such a delay shall continue: until above condition “(a)” is satisfied and, as
to condition “(b),” to a date reasonably necessary to allow for completion of
same only when the volume of such Gas is then expected to equal or exceed the
applicable Sub Phase Volume Requirement. Company shall not be required to
proceed with a Sub Phase after such a delay if Supplier’s projections are
subsequently modified to reflect that Gas equal to or greater than the Sub
Phase Volume Requirement will be available for gathering and Processing under
the Agreement but the earliest date for availability of such volumes will be
three (3) Years or more after the Original Completion Date therefor.
	 
	 	(iv)	 	Should any Sub Phase be delayed in compliance with the terms of
this Section 5.A(3) the Completion Date shall be extended for a period equal to the
period of delay of the subject Sub Phase allowed under the terms of
this Section 5.A(3).

Section 5

System & Plant Capacity Expansions

 

 

			
	 	 	 
	Special Addendum to Dynegy Contract No. 014904 — Ref. No. 095
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	 	(v)	 	If Gas from Dedicated Leases is not available for gathering and
Processing hereunder in a volume equal to or greater than the Sub Phase Volume
Requirement for a particular Sub Phase by the third (3rd) anniversary
of the original scheduled Completion Date for such Sub Phase, Company may then
permanently cancel such Sub Phase and all subsequently scheduled Sub Phases
immediately upon written notice to Supplier.

	 	(4)	 	Unexcused Expansion Delays – Supplier Remedies

	 	(a)	 	(**)
	 
	 	 	 	(**)
	 
	 	 	 	(**)

	 
	 	(b)	 	Other Remedies
	 
	 	 	 	Subject to the provisions in Section 10, should Supplier serve a notice of
default on Company with regard to an Unexcused Expansion Delay and Company has
failed to cure same by the latter of ninety (90) Days after the applicable
Completion Date or thirty (30) Days after Company’s receipt of Supplier’s
written notice of default, Supplier shall have the following remedies
available in addition to the monetary compensation set forth in Section Error!
Reference source not found.:

	 	(i)	 	the right to compel Company’s specific performance
of its obligations under this Section 5.A to complete the applicable Sub Phase; and
	 
	 	(ii)	 	seek recovery of Supplier’s direct and actual
damages arising from such default by Company accruing from and after the
date of default and not the date of Supplier’s notice regarding same.

Should Company fail to cure the default by one (1) Year after the Completion
Date, then Supplier shall have the additional right to contract with third
parties to gather and Process all or any portion of Supplier’s Gas committed
under the
Agreement, and such volumes as are thereafter diverted to such a third party
gatherer shall be released from the Agreement; and/or to terminate the
Agreement partially or in its entirety.

	B.	 	Capacity Availability

	 	(1)	 	Company’s Obligations

Regardless
of any compensation to Supplier provided for in Section 5.A above for any delays in completion of the Phase V Expansion, commencing
with January 2007, Company shall be obligated to make available sufficient capacity
in the Gathering System and Plant, or arrange for such capacity to be made available
at the Plant, to

Section 5

System & Plant Capacity Expansions

 

 

			
	 	 	 
	Special Addendum to Dynegy Contract No. 014904 — Ref. No. 095
	 	Page 15

enable the gathering and processing of a Daily volume of Gas from
the Dedicated Wells equal to the “Delivery Volume,” averaged over any one Month. The
“Delivery Volume” shall be equal to the Sub Phase Volume Requirement for the last and
highest volume Sub Phase which Company is then obligated to have completed by January
2007 (after giving effect to any delays and/or cancellations of any Sub Phases
pursuant to Section 5.A(3)). Such Delivery Volume shall thereafter be adjusted upward
upon the adjusted Completion Date for any subsequent Sub Phases which Company is
obligated to complete after January 2007, with the Delivery Volume to thereafter be
the Sub Phase Volume Requirement for that subsequent Sub Phase. Provided, however,
Company shall not be in default of its obligations hereunder if any of the following
are the cause of Supplier’s inability to deliver or Company’s inability to receive
the Delivery Volume into the Gathering System:

	 	(i)	 	Supplier does not have a volume of Gas equal to or greater than
the Delivery Volume available for, or capable of, delivery to Company for
reasons other than (a) insufficient Gathering System and/or Plant capacity or
(b) Gathering System pressures at the Delivery Points being in excess of the
applicable Maximum Gathering Line Pressure;
	 
	 	(ii)	 	Supplier delivering a volume of Gas sufficiently in excess of the
Delivery Volume so as to increase the prevailing operating pressures on the
Gathering System to pressures in excess of the applicable Maximum Gathering Line
Pressure; or
	 
	 	(iii)	 	The then prevailing pressures on the Gathering System are in
excess of the applicable Maximum Gathering Line Pressure due to Supplier’s
demanding Company to provide Low Pressure Service pursuant to
Section 9 in a
particular manner which Company advised Supplier, in writing prior to the
provision of such service, could result in excessive operating pressures on the
Gathering System. The exception provided in this Subsection (iii) shall not apply
after such an Alternative Low Pressure Service project is in service for at
least one full Month and such service does not cause the prevailing pressure on
the Gathering System to exceed the applicable Maximum Gathering Line Pressure
during such Month, averaged over that Month.

	 	(2)	 	Supplier Remedies
	 
	 	 	 	Should Company not be in compliance with its obligations hereunder, Supplier shall
provide written notice to Company of same and Company shall have ninety (90) Days
from and after the date of Company’s receipt of such notice to remedy such non
compliance (excluding delays caused by events of Force Majeure or acts or omissions
of Supplier or Supplier’s Affiliates). Should Company thereafter continue to be in
non-
compliance with this provision, Company shall be deemed to be in default hereunder
and Supplier shall have the following remedies with respect to such default:

	 	(i)	 	the right to compel Company’s specific performance of its
obligations under this Section 5.B;
	 
	 	(ii)	 	seek recovery of Supplier’s direct and actual damages arising
from such default by Company accruing from and after the date of default and not
the date of Supplier’s notice regarding same; and

Should Company fail to cure the default by one (1) Year after the date of default,
then Supplier shall have the additional right to contract with third parties to
gather and Process all or any portion of Supplier’s Gas committed under the
Agreement, and such

Section 5

System & Plant Capacity Expansions

 

 

			
	 	 	 
	Special Addendum to Dynegy Contract No. 014904 — Ref. No. 095
	 	Page 16

volumes as are thereafter diverted to such a third party gatherer
shall be released from the Agreement; and/or to terminate the Agreement partially or
in its entirety.

	C.	 	Force Majeure, Supplier Caused Delays & Residue Gas Constraints
	 
	 	 	In addition to the delays and/or cancellations of a Sub Phase
allowed pursuant to Section 5.A(3)
above, the time periods governing Company’s performance of its obligations set forth in
various portions of Sections 5.A and 5.B shall be extended for
the period of any delay in a cure caused by (a) a force majeure event (which shall be
governed by Section A.24 of the General Terms and Conditions); or (b) a delay, breach, act
or omission to act of Supplier or any act or omission of any of Supplier’s Affiliates; or
(c) curtailments of Gas deliveries into the Gathering System due to insufficient capacity
being available, for any reason, in the pipelines accepting redeliveries of Residue Gas from
the tailgate of the Plant, such that all available Gas cannot then be processed due to such
Residue Gas redelivery constraints. Parties acknowledge that the above specific reference
to the applicability of force majeure events as qualifying Company’s time for performance
under this Section 5 shall not be construed to, and shall
not, limit the legal effect of force majeure events on any of the Parties’ other respective
obligations under the Agreement and this Addendum.
	 
	6.	 	Delivery Pressures
	 
	A.	 	Maximum Pressures
	 
	 	 	The Gas shall be delivered by Supplier at the Delivery Point(s) at a pressure sufficient to
enter the Gathering System against the pressure maintained therein from time to time;
provided however:

	 	(i)	 	the Company will maintain the Low Pressure System such that the pressure of
the Low Pressure System at each Delivery Point delivering to same shall not exceed
(**) (**) PSIG, when averaged over any Month, it being understood that such
operating pressures may fluctuate substantially within any one Month; and
	 
	 	(ii)	 	the Company will maintain its High Pressure System such that the pressure of
the High Pressure System at each Delivery Point delivering to same shall not exceed
(**) (**) PSIG, when averaged over any Month, it being understood that such
operating pressures may fluctuate substantially within any one Month; and
	 
	 	(iii)	 	with regard to any Delivery Point on the High Pressure System for which
Company is providing Low Pressure Service, in the manner contemplated
by Section 8.A(2) (in
lieu of physical transfer of same to the Low Pressure System), the Company will
maintain the pressure at that Delivery Point such that it shall not exceed
(**) (**) PSIG, when averaged over any Month, it being understood that such
operating pressures may fluctuate substantially within any one Month.

	 	 	The maximum pressures established in (i), (ii) and (iii) immediately above are hereinafter
each referred to as the “Maximum Gathering Line Pressure.” In no event shall Supplier
deliver Supplier’s Gas at a pressure in excess of the maximum allowable operating pressure
of the Gathering System.
	 
	B.	 	Supplier Remedies
	 
	 	 	Other than Company’s obligations to complete capacity expansions to comply with its
obligations under Section 5, this Section 6.B, sets forth
Supplier’s sole remedies for excessive line pressures at any Delivery Points on the
Gathering System.

	 	(1)	 	Notice & Cure: If the actual average Monthly pressure at a Delivery
Point exceeds the applicable Maximum Gathering Line Pressure on an average Daily basis
over any one (1) Month, Company shall have a period (the “Delivery Pressure Cure
Period”) within

Section 6

Delivery Pressures

 

 

			
	 	 	 
	Special Addendum to Dynegy Contract No. 014904 — Ref. No. 095
	 	Page 17

	 	 	 	which to complete a cure of such excessive pressure condition, such
period extending from and after the date of Company’s receipt of a written notice or
demand for cure by Supplier (“Notice Date”) to the end of the first full Month the
first Day of which is sixty (60) or more Days after such Notice Date. Any such
excessive pressure condition shall be cured or remedied for purposes
of this Section 6
when the actual average Monthly pressure at a Delivery Point does not exceed the
applicable Maximum Gathering Line Pressure on an average Daily basis over any one (1)
Month.
	 
	 	(2)	 	Failure to Cure: If such condition has not been so remedied by the end
of the Delivery Pressure Cure Period, as prescribed above, then effective as of the
Notice Date and until the earlier to occur of (i) such condition being cured by Company
in the manner required in (1) immediately above; or (ii) (**) .
	 
	 	(3)	 	Exceptions: Company shall not have any liability for, and the above
remedies shall not be available to Supplier, to the extent any excessive pressure
condition arises from: (i) a force majeure event (which shall be governed by Section
A.24 of the General Terms and Conditions attached hereto); (ii) any delay, breach, act
or omission to act of Supplier or any act or omission of any of Supplier’s Affiliates;
or (iii) the then prevailing pressure on the Gathering System is in excess of the
Maximum Gathering Line Pressure provided for in Section 6.A above due to Supplier’s
demanding Company to provide Alternative Low Pressure Service
pursuant to Section 9 in
a particular manner which Company has advised in writing prior to the provision of such
service could result in excessive operating pressures on the Gathering System, or (iv)
from insufficient capacity being available, for any reason, in the pipelines accepting
deliveries of Residue Gas from the tailgate of the Plant, such that all available Gas
cannot then be processed due to such Residue Gas delivery constraints. Such exception
as provided in (iii) above shall not apply after such an Alternative Low Pressure
Service project is in service for one full Month and such service does not cause the
prevailing pressure on the Gathering System to exceed the applicable Maximum Gathering
Line Pressure during such Month, averaged over that Month.

	7.	 	New Well Connections
	 
	A.	 	Notice & Time to Connect

     Company shall be obligated to extend the existing Gathering System to connect any newly
completed wells within the Dedicated Area after receipt of a written notice (the “Connection
Notice”) from Supplier that sets forth: (i) a date (the “Readiness Date”) on which Supplier
represents the well will be ready for connection to, and delivery of Gas into, the Gathering
System; (ii) the Supplier’s projected production rate and pressures expected to prevail after
connection to the Gathering System; and (iii) Supplier’s determination of whether the new well is
to be connected to the High Pressure
System or the Low Pressure System. Supplier shall not send the Connection Notice until
Supplier has received and accepted a Texas Railroad Commission drilling permit pursuant to which
Supplier intends to drill the well. Subject to any events of force majeure (which will be governed
by Section A.24 of the General Terms and Conditions), such connection shall be completed by the
latter of (i) (**) Days after Company’s receipt of Supplier’s Connection Notice if the
noticed Readiness Date is within that (**) day period; or (ii) the Readiness Date set forth
in such Connection Notice. (**) Supplier shall be responsible for obtaining and
delivering to Company, as promptly as administratively feasible, the appropriate Texas Railroad
Commission form indicating authorization for the connection of the newly connected well.

	B.	 	Wellhead Pressures

     All new wells shall be connected to the High Pressure System unless Company determines, in its
sole but reasonable judgment made only after consulting with Supplier, that the anticipated

Section 7

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	Special Addendum to Dynegy Contract No. 014904 — Ref. No. 095
	 	Page 18

volumes
and Delivery Point pressures for such new well are such as to make such a connection inadvisable
and in such case the new well will be connected to the Low Pressure System.

	C.	 	Costs to Connect

	 	(1)	 	Company shall bear the entire Connect Costs for new wells connected pursuant to
Section 7.A above if both: (i) Supplier’s Gas commences flowing through such new
connection within ninety (90) Days of Company’s completion of the connection; and (ii)
the total “Available Gas” (as defined in Section 7.C(4) below) from such well, after
completion of the new connection, equals at least (**) Mcf per Day for each
one mile of pipeline installed to complete such connection with a shut-in wellhead
pressure of at least (**) PSIG.
	 
	 	(2)	 	Supplier shall bear all Connect Costs incurred by Company, and reimburse
Company for same, if the conditions for Company to bear 100% of same set forth in
Section 7.C(1) above are not satisfied and either: (i) the Available Gas from such
well is less than (**) Mcf per Day for each one mile of pipeline installed to complete
such connection; or (ii) if the shut-in wellhead pressure of the well is less than (**)
PSIG.
	 
	 	(3)	 	If a new well has a shut-in wellhead pressure of at least (**) PSIG
but the Available Gas therefrom is equal to or greater than (**) Mcf per Day
but less than (**) Mcf per Day (both per each mile of pipeline installed to
complete the connection), then Supplier shall reimburse Company a prorated portion of
all Connect Costs incurred by the Company with regard to such well, with Supplier’s
prorated share of same being determined as follows: (x) divide the total Available Gas
by the number of miles of the pipeline installed (“MCF Per Mile”); (y) divide the MCF
Per Mile by (**) and then deduct the result of same from 1.0 (“Supplier’s
Share”); and (z) multiply the total Connect Costs by such Supplier’s Share.
	 
	 	(4)	 	“Available Gas,” for the purposes of this
Section 7, shall be determined based
on the actual average daily volumes of Gas delivered to the new Delivery Point during
the first 30 Days after the first date of flow of Gas therefrom into the Gathering
System.
	 
	 	(5)	 	If any of the Available Gas is attributable to a Production Interest in a
Dedicated Well other than those dedicated to the Agreement as listed in listed in
Exhibit B to the Agreement under “Current Dedicated Wells,” and any of the Gas
attributable to such non-dedicated Production Interests is diverted by the Production
Interest Owner during the first (**) Years from and after the date of
connection (“Cost Recovery Period”) of same to the Gathering System, Supplier shall
reimburse Company for the Connect Costs incurred by Company in connection with such
well, based on the following formulae:

	 	(i)	 	If the actual volume of Gas gathered and Processed by Company
from the subject well during the Cost Recovery Period equals or exceeds the
“Payout Volume” then Supplier shall not be obligated to make such reimbursement,
with the “Payout Volume” being equal to (**) Mcf multiplied by the
number of miles of pipeline installed to complete such connection (to the
nearest tenth of a mile), and the result thereof being multiplied by the number
of Days in the Cost Recovery Period.
	 
	 	(ii)	 	If the minimum volume requirement in (i) immediately above is not
met, Supplier shall reimburse Company a pro-rated portion of the Connect Costs
for such well based on the following: Supplier’s reimbursement shall be that
percentage of Connect Costs as is equal to the percentage calculated by

Section 7

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	Special Addendum to Dynegy Contract No. 014904 — Ref. No. 095
	 	Page 19

dividing
the volume of Gas actually received during the Cost Recovery Period by the
Payout Volume.

	 	(6)	 	Any Connects Costs for which Supplier is responsible pursuant to the above
terms shall be reimbursed by Supplier after receipt of an invoice with supporting
documentation from Company, which shall be rendered and payable in compliance with the
terms of Section A.7 of the General Terms and Conditions.

	8.	 	Low Pressure Service
	 
	A.	 	Company Obligations

	 	(1)	 	At any Delivery Points now or hereafter connected to the High Pressure System,
Company, (**) . Supplier shall be notified of Company’s intention to transfer
a connection of well to the Low Pressure System prior to doing so and Supplier may
direct Company to not complete such a transfer if Supplier advises that the lower
pressures from the well will not continue but are a temporary condition.
	 
	 	(2)	 	Alternatively, Company may, in its sole discretion, elect to provide Low
Pressure Service to such Delivery Point by providing additional compression to the
Delivery Point on the High Pressure System to maintain a pressure at the Delivery Point
therefor at the Maximum Gathering System Pressure required for Low Pressure Service and
the pressure at such Delivery Point shall be reduced and maintained by Company in
compliance with the terms of Section 6.A(iii) above. If Company so elects to provide
compression in lieu of physical transfer of a well to the Low Pressure System, same
shall be accomplished within the same time period as required in
Section 8.A(1) above for
physical transfers to the Low Pressure System.
	 
	 	(3)	 	Effective the first Day of the first full Month following the Month in which
Low Pressure Service commences for a Delivery Point pursuant to either of the above
Subsections (1) or (2) of this Section 8.A, Company shall be entitled to charge and receive
the Low Pressure Fee set forth in Section 3.B. of the Commercial Terms and Conditions
for each MMBtu of Supplier’s Gas received through such Delivery Point thereafter.
Should Company elect, as provided above, to provide Low Pressure Service through the
use of compression of Gas at the Delivery Point, rather than direct connection to the
Low Pressure System, the Low Pressure Gathering Fee shall be charged and received by
Company on each MMBtu of Supplier’s Gas received at such Delivery Point
regardless of the extent to which any provided compression is actually needed
to compress any of Supplier’s Gas to allow it to enter the Gathering System.
	 
	 	(4)	 	Company shall not be required to convert a Dedicated Well or Delivery Point to
Low Pressure Service if same was connected to the High Pressure System, pursuant to
Section 7 above, within the preceding sixty (60) Days.

	B.	 	Supplier’s Remedies
	 
	 	 	Should Company fail to initiate new Low Pressure Service for a Delivery Point pursuant to
its obligations under Section 8.A above by the Low Pressure Conversion Date, (**) :

	 	(i)	 	(**);
	 
	 	(ii)	 	(**); and
	 
	 	(iii)	 	(**).

Section 8

Low Pressure Service

 

 

			
	 	 	 
	Special Addendum to Dynegy Contract No. 014904 — Ref. No. 095
	 	Page 20

	C.	 	Parties Obligation to Cooperate

     The Parties recognize that unlimited transfers of Delivery Points from the High Pressure
System to the Low Pressure System over short time periods could result in the affected portions of
the Low Pressure System, and portions downstream of same, being incapable of being operated within
the delivery pressure specifications required under
Section 6.A(i) above for a commercially reasonable
cost. Additionally, Supplier acknowledges that physical extensions of the Low Pressure Gathering
System to Delivery Points then connected to the High Pressure System, as well as acquisition of
surface rights for placement of compression equipment and facilities, may require acquisition of
rights of ways and other surface use rights from third party landowners over which Company will
have no control and concerning which Company does not possess the right of condemnation and
inability to obtain same can, in certain instances, result in an event of force majeure (as
described in Section A.24 of the General Terms and Conditions).

     Therefore, the Parties agree to cooperate in good faith to mutually formulate Low Pressure
Service transition plans for Delivery Points with declining delivery pressures so as to use the
most efficient means of gathering the Supplier’s Gas for the purpose of efficiently maximizing
Supplier’s production while minimizing, to the extent reasonably feasible, disruptions to the
operation of the Gathering System and the pressure at the other Delivery Points thereon.

     Provided,
however, this Section 8.C is intended only to impose an obligation for
the Parties to exert proper good faith efforts in planning the transition of wells to Low Pressure
Service and unless an alternative is agreed to by the Parties in writing pursuant to the planning
process contemplated above, Company’s obligation under
Section 8.A above shall not be limited by the
provisions of this Section 8.C and time periods for Company’s performance of its obligations
thereunder shall not be deemed to have been modified or extended by
the provisions of this Section 8.C.

	9.	 	Alternative Low Pressure Service

     Should Supplier desire Low Pressure Service to be provided in a manner other than as set forth
in Section 8.A above, Supplier may request in writing that Company prepare and present alternative
plans for provision of Low Pressure Service to one or more Delivery Points then delivering into the
High Pressure System. Within fifteen (15) Days after receipt of Supplier’s written request,
Company shall present a plan to Supplier to provide such alternative Low Pressure Service for the
subject Dedicated Wells and/or Delivery Points. As a part of such plan, Company shall give written
notice of whether it is willing to provide such alternative Low Pressure Service based on either or
both of the following two options:

	(i)	 	Company converts the subject Delivery Points to Low Pressure Service at
Company’s sole cost and expense and collects the Low Pressure Gathering Fee for
Supplier’s Gas delivered therefrom after such conversion; or
	 
	(ii)	 	Company converts the subject Delivery Points to Low Pressure Service, bearing
only (**) percent (**)% of the Connect Costs incurred in connection with such
conversion (both initially and on a continuing basis for any Connect Costs that will be
incurred on an on going basis), with Supplier bearing the remaining (**) percent (**)%
thereof, in which case Company shall forego the collection of, and waive Supplier’s
obligation to pay, the Low Pressure Gathering Fee for Supplier’s Gas delivered
therefrom after such conversion.

Company may not be required to submit a proposal for such alternative Low Pressure Service for
conversion of a Dedicated Well or Delivery Point to Low Pressure Service if same has been connected
to the High Pressure System for less than sixty (60) Days. To the extent Company is entitled to
reimbursement by Supplier for any Connection Costs, Company shall invoice therefor, and same shall
be payable by Supplier, in accordance with Section A.7 of the General Terms and Conditions.

Section 9

Alternative Low Pressure Service

 

 

			
	 	 	 
	Special Addendum to Dynegy Contract No. 014904 — Ref. No. 095
	 	Page 21

	10.	 	Limitations
	 
	A.	 	Partial Election of Remedies & Cumulative Remedies

     To the extent Supplier elects to divert volumes of Supplier’s Gas to third parties for
gathering and/or elects to terminate the Agreement in whole or in part pursuant to its remedies set
forth in Section 5.A(4)(b), Section 5.B(2)
Section 8.B(iii), Supplier may not seek specific performance with regard to
the volumes of Gas subject to such third party gathering and/or terminations. Otherwise,
Supplier’s above described remedies shall be cumulative and not exclusive; provided, however, that
direct economic damages may be recovered only once regardless of whether same are claimed to be
recoverable under multiple sections of the Agreement and/or this Addendum or are otherwise claimed
to have been caused by multiple breaches of the terms of the Agreement and/or this Addendum;
including, without limitation, Sections 5.A and 5.B. Additionally,
should Supplier elect to divert Gas to third parties for gathering and/or terminate the Agreement
in whole or in part pursuant to the remedies set forth in such sections of this Addendum, Company
shall not thereafter be obligated to complete any additional Sub Phase or make modifications to the
Gathering System and/or Plant to provide the Delivery Volume if the volumes of Supplier’s Gas still
available for gathering and Processing under the Agreement after giving effect to such diversions
and/or terminations will not equal or exceed, respectively, either (i) the Sub Phase Volume
Requirement for the subject Sub Phase or (ii) the Delivery Volume.

	B.	 	No General Duty to Expand or Modify

     Sections
5 through 9 of this Addendum, inclusive, set forth
the sole and exclusive obligations pursuant to which Company is obligated to make modifications to
the Gathering System or Plant to accommodate Supplier’s Gas or any other Gas produced from the
Dedicated Wells and Company shall not be otherwise obligated to increase the available capacity of
the Gathering System and/or the Plant, or otherwise modify same, based on any other duty implied
from any other provisions of this Addendum or the Agreement or claimed to arise under any express
or implied duties under any applicable law; including, without limitation, any claimed duty to
expand or modify such facilities, other than as required in such Sections of this Addendum, to
accommodate any Supplier’s Gas in excess of the Delivery Volume.

	C.	 	Damages Limitations

     Notwithstanding anything to the contrary in this Addendum or the Agreement, a Party’s damages
resulting from a breach or violation of any covenant, condition or provision contained in this
Addendum or the Agreement by the other Party shall be limited to actual direct damages, and neither
Party shall be entitled to recover from the other Party any other damages for such breach or
violation, including, without limitation, indirect, special, consequential, incidental or punitive
damages, unless the Party seeking reimbursement for such damages is legally required to pay same to
a Third Party.

     With regard to recovery of actual and direct damages under any express remedies set forth in
this Addendum and/or the Agreement or alleged to arise otherwise under applicable law, Company’s
obligations hereunder are understood to be limited to direct and actual damages incurred by
Supplier which shall not be construed nor implied to be equivalent or similar to and damages based
on an obligation to either take or pay for any curtailed volumes of Supplier’s Gas and Supplier’s
damages arising from volumes of Supplier’s Gas being curtailed as a result of any breach or default
by Company hereunder shall be limited to loss of market value arising from delay in production,
time value of delays in production revenues to the extent arising from production and sales delays
caused by Company’s default under these provisions, or value of any Supplier’s Gas shown to be
permanently incapable of production to the extent same is shown to be directly caused by Company’s
default hereunder.

Section 10

Limitations

 

 

			
	 	 	 
	Special Addendum to Dynegy Contract No. 014904 — Ref. No. 095
	 	Page 22

	11.	 	Changes to Exhibit A – General Terms and Conditions
	 
	 	 	The General Terms and Conditions (Exhibit A to the Agreement) are amended as follows:
	 
	A.	 	Deleted Provisions
	 
	 	 	The following provisions are deleted in their entirety, hereafter left blank intentionally,
and the remaining sections thereafter are not renumbered but shall retain their current
numbers and headings:

	 	(i)	 	A.18. Reserve Information
	 
	 	(ii)	 	A.19. Uneconomic Gas
	 
	 	(iii)	 	A.20. Unacceptable Plant Economics

	B.	 	Amended Provisions
	 
	 	 	Section A.13 (Flush Gas and Curtailment Conditions) in Exhibit A to the Agreement is deleted
in its entirety and the following is substituted therefor:

A.13. Flush Gas and Curtailment Conditions

A “Flush Gas Condition” exists whenever the Gathering System, if any, utilized to
deliver Gas to the Plant and/or the Plant is of insufficient capacity to gather
and/or Process all of the Gas connected thereto. During any period when a Flush Gas
Condition exists, Company shall take Supplier’s Gas ratably as to quantity with all
other Gas of the same quality connected to the Plant, but shall not be obligated to
take any quantities of Gas in excess of such prorated volumes. Provided,
however, if the Flush Gas Condition is a result of a breach by Company under its
obligations under Section 5 (System & Plant Capacity Expansions) of that certain
“Special Addendum” to the Agreement executed between the Parties simultaneously with
this Agreement, the provisions of this paragraph shall not limit Supplier’s remedies
for any such a breach as same are set forth in that Section 5.

During any periods of curtailment by Residue Gas and/or Products purchasers or
transporters (a “Curtailment Condition”), Company shall only be obligated to take
Supplier’s Gas to the extent that such Residue Gas and/or Product purchasers or
transporters are taking Residue Gas and/or Products.

Section A.22 (Post Termination Deliveries) both in Exhibit A to the Agreement and as
amended in Exhibit E thereto, is deleted in its entirety and the following is substituted
therefor:

A.22. Post Termination Deliveries

In the event this Agreement terminates or is otherwise cancelled or terminated,
and Company for any reason continues to accept deliveries of Supplier’s Gas, in the
absence of another agreement in writing such transactions will be on a Day to Day
basis under the same terms and provisions as otherwise set forth in this Agreement,
except that Company may, at its option and in lieu of the original values set forth
in Sections 1 and 2 of the Commercial Terms and Conditions, elect to pay and charge
alternative compensation as follows:

	 	 	 	 	 	 	 
	 

	 	•
	 	Supplier’s Plant Products Percentage:
	 	(**) Percent (**)%
	 
	 	 	 	 	 	 
	 

	 	•
	 	Supplier’s Residue Gas Percentage:
	 	(**) Percent (**)%
	 
	 	 	 	 	 	 
	 

	 	•
	 	Low Pressure Gathering Fee:
	 	(**) Cents (**¢) ($**) per MMBtu

Any of the above elections by Company may be exercised as to any or all of the
Delivery Points hereunder and Company may modify its election of the above
alternative compensation effective on the beginning of any Month upon ten (10) or
more Days written notice.

Neither Company’s continuing to accept delivery of Supplier’s Gas on a Day to Day
basis nor Company’s election of alternative compensation for any post-termination or
post-cancellation deliveries shall be construed to be, and shall not operate as, an
agreement by Company to extend or renew this Agreement on such terms or on any other
terms, and Company may simultaneously pursue whatever administrative or other legal
proceedings may be required to allow Company to cease taking deliveries of Gas
hereunder.

No written communications by Supplier contrary to the provisions of this Section A.22
shall be enforceable; including (without limitation) any written offers or
counter-offers purporting to create an obligation on Company to accept the terms
thereof, or implying an acceptance of same by Company, should Company continue to
accept delivery of Supplier’s Gas after a given date or given period of time
thereafter.

The effective date of this Addendum is August 1, 2003.

All other provisions of the Agreement shall remain in full force and effect.

(Remainder of Page Intentionally Left Blank – Signature Page Follows)

Section 11

Changes to Exhibit A — General Terms and Conditions

 

 

			
	 	 	 
	Special Addendum to Dynegy Contract No. 014904 — Ref. No. 095
	 	Page 23

	 	 	 	 	 	 	 	 	 	 	 
	Accepted and Agreed to:	 	 	 	Accepted and Agreed to:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Burlington Resources Oil & Gas Company LP	 	 	 	Dynegy Midstream Services, Limited

Partnership	 	 
	By: BROG GP Inc., its sole General Partner	 	 	 	By: Dynegy Midstream G.P., Inc.,	 	 
	 	 	 	 	 	 	     its General Partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 
	 	By:	 	 	 	 
	 

	 	 

	 	 	 	 	 	 

	 	 
	Printed Name:

	 	 	 	 	 	Printed Name:
	 	Clark White	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 
	Title:

	 	 	 	 	 	Title:
	 	V. P. and Region Manager	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date:

	 	 	 	 	 	Date:	 	 	 	 
	 

	 	 

	 	 	 	 	 	 

	 	 
	Supplier’s Federal Tax ID Number: 74-2986507	 	 	 	Dynegy’s Federal Tax ID Number: 760507891	 	 
	Address	 	 	 	Address	 	 
	5051 Westheimer, Ste. 1400	 	 	 	1000 Louisiana Suite 5800	 	 
	Houston, TX 77056-5604	 	 	 	Houston, TX 77002	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Accepted and Agreed to:	 	 	 	 	 	 	 	 
	Burlington Resources Trading Inc.	 	 	 	 	 	 	 	 
	 
	By:
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Printed Name:
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Federal Tax ID Number: 84-0890010	 	 	 	 	 	 	 	 
	Address	 	 	 	 	 	 	 	 
	5051 Westheimer, Ste. 1400	 	 	 	 	 	 	 	 
	Houston, TX 77056-5604	 	 	 	 	 	 	 	 

Signature Page

 

 

	 	 	 
	Special Addendum to Dynegy Contract No. 014904 — Ref. No. 095

	 	Page 24

Attachment 1 – Gas Nominations

To

Special Addendum to Gas Gathering and Purchase Agreement

	A.	 	General Provisions

     The following shall establish the procedures and practices of the Parties with regard to
Supplier’s nominations regarding: (i) volumes of Gas to be received at the Delivery Points for
gathering and Processing by Company; and (ii) volumes of Residue Gas to be delivered for Supplier’s
account to the point of interconnection between the Plant tailgate and the receiving natural gas
pipelines (“Redelivery Points”).

	 	(1)	 	Company’s Duties

     Company agrees to be responsible for confirmation of Residue Gas volume nominations and
delivery of Residue Gas to the transporting pipeline at the Redelivery Point. In performing such
duties, Company shall act in accordance with the below terms. However, the Parties acknowledge
that Company does not have control over the pipelines’ final allocation of volumes of Gas among
parties shipping at the Redelivery Points (which are governed by such shipper’s arrangements with
that pipeline, over which Company has no control) and the below only governs Company’s actions in
confirming Company’s understanding of the proper allocation of such volumes of Residue Gas, and
Redelivery Point capacity, among the various shippers delivering Gas at such a Redelivery Point.
Therefore, the below terms do not guaranty or assure Shipper that the transporting pipeline(s) will
honor Company’s confirmations.

	 	(2)	 	Basis for Confirmations & Imbalances

     Under no circumstances shall Company be required to confirm or deliver more than the estimated
available volume of Supplier’s share of Residue Gas, as reasonably determined by Company, which
will be based on both (a) the historical production volumes (primarily considering the latest three
Months of production) and (b) projected new volume deliveries expected to commence during the Month
(based on reasonably sufficient evidence of same as required by Company). Any imbalance between
the volumes of Supplier’s Residue Gas available for redelivery at the Redelivery Points and the
volumes of such Gas actually delivered at the Redelivery Point shall be handled in accordance with
the provisions set forth in Section 3.B(7) of the Addendum.

	 	(3)	 	Residue Gas Nominations – Contents

     All Residue Gas nominations shall include, but not be limited to, the name of transporter,
name of purchaser, Transportation Service Contract Number, name and phone number of Supplier’s Gas
Control Contact, the nominated quantity of Gas that will be delivered by Supplier at the Delivery
Point, nominated quantity for redelivery at the Redelivery Point, and the effective dates of flow.

	B.	 	First of Month Nominations: 

     With regard to nominations to be effective as of the first of a Month, made and to be
confirmed prior to the first of such Month, the following provisions shall be applicable:

	 	(1)	 	Supplier shall provide Company with a written nomination of the volume per Day
of Gas that it desires Company to receive at the Delivery Points during the Month of
delivery and the volume of Supplier’s share of Residue Gas to be subsequently
redelivered to the respective transporting pipeline(s). Such nomination shall be due
from Supplier via facsimile transmission, or other mutually agreeable method, on or
before the earlier of (a) two (2) Business Days prior to the beginning of the Month of
delivery; or (b) at least twenty-four (24) hours before nominations to the downstream

Attachment 1 — Gas Nominations

 

 

	 	 	 
	Special Addendum to Dynegy Contract No. 014904 — Ref. No. 095

	 	Page 25

pipeline utilized by Supplier to transport Supplier’s allocated share of Residue Gas
from the Redelivery Point are due.

	 	(2)	 	If nominations received by Company for a particular Redelivery Point exceed the
capacity of such Redelivery Point due to Company’s redelivery constraints, Company
shall confirm nominations for such Redelivery Point to the applicable pipeline using a
prorata allocation of the capacity at same based on Company’s then current good faith
estimate of each nominating parties’ respective share of Residue Gas as a percentage of
all Residue Gas being produced at the Plant.

	C.	 	Daily Nominations/Intra-Month Changes to Nominations

	 	(1)	 	After confirming Redelivery Point nominations at the beginning of any Month,
Company will neither initiate nor confirm changes to nominations if such action would
cause a reduction in the capacity that has been allocated to and is being used by
Supplier except in the instance of: (i) Supplier having changed its nominations so as
to have reduced or terminated its then current nominations for a particular Redelivery
Point; or (ii) pipeline curtailments or other constraints on the operating capacity of
a Redelivery Point, in which case Company’s confirmations to the receiving pipeline
shall be allocated in the manner described in Section C.(3) of this Attachment 1 below.
	 
	 	(2)	 	If capacity at a Redelivery Point is available after giving effect to all first
of Month nominations, as provided for in Section B. and modified by Section C(1) of
this Attachment 1 above, and Company thereafter receives additional nominations in
excess of such excess capacity then available, due to Company’s redelivery constraints,
then Company shall confirm to the applicable pipeline nominations using a prorata
allocation of such excess capacity based on each nominating parties’ new nomination for
such excess capacity at that Redelivery Point as a percentage of all such new
nominations for that excess capacity.
	 
	 	(3)	 	If access to any Redelivery Point on any Day during a Month for which
nominations have already been confirmed becomes constrained, due to Company’s
redelivery constraints, to a level below the total of all then current nominations for
same, Company shall confirm to the pipelines an allocation of the reduced capacity at
such Redelivery Point using a prorata allocation based on each nominating party’s then
current nomination as a percentage of all nominations then in effect for that
Redelivery Point.

	D.	 	On-Going Reporting:

     Supplier shall timely notify Company in writing of any material changes in volume of Gas to be
received at the Delivery Points or a change in the designated pipeline carrier for its Residue Gas
upon Supplier’s knowledge of such changes. Except where arising from a force majeure event, should
Company, at any time, not Process substantially all of the Gas delivered to Company by Supplier,
Company will advise Supplier as soon as reasonably possible, and in no instance less than 24 hours
prior to the nomination deadline for the receiving pipeline for the next flow Day, in order that
Supplier may make proper nomination adjustments with Supplier’s designated pipeline carrier; unless
Company is notified by the pipeline that any imbalance needs to be corrected immediately, in which
case Company shall notify Supplier in sufficient time to allow adjustments to be made in the next
scheduling cycle.

	E.	 	Pipeline Penalties:

     Unless caused by Company’s improper actions (which shall not include operating imbalances
equal to or less than two percent (2%) of confirmed nominations or Company taking any action which

Attachment 1 — Gas Nomination

 

 

	 	 	 
	Special Addendum to Dynegy Contract No. 014904 — Ref. No. 095

	 	Page 26

it is entitled to take under the terms of the Agreement), Supplier shall be solely responsible
for any penalties or imbalance charges assessed by the receiving/transporting pipelines.

     Provided, however, if Company over or under delivers Residue Gas in volumes in excess of the
above referenced 2% operating imbalance tolerance to a receiving pipeline with which Company does
not have an Operational Balancing Agreement in effect (hereinafter “Non-OBA Pipeline”), Company
shall be responsible for penalties and imbalance charges, if any, assessed on Supplier by such
receiving pipeline and, additionally, shall reimburse Supplier any proven, actual and direct
monetary damages incurred by Supplier as a result of such over or under delivery of Residue Gas;
including, without limitation, reasonable attorneys fees should Company refuse to pay any amounts
properly invoiced by Supplier hereunder which are ultimately recovered by Supplier from Company
through settlement, voluntary payment, judgment or otherwise. With regard to Company’s liability
to Supplier under this paragraph, Company shall only be responsible for penalties, imbalances and
such actual and direct damages to the extent they relate to volumes of Residue Gas in excess of the
2% operating imbalance tolerance. Supplier shall use commercially reasonable efforts to mitigate
its damages arising from any imbalance within the scope of this paragraph to which Supplier is
responding; including, without limitation, in connection with any of Supplier’s efforts to dispose
of excess Residue Gas or purchase replacement Residue Gas. To be reimbursed for any pipeline
penalties, imbalance charges and/or any such damages recoverable from Company under the terms of
this paragraph, Supplier must present an invoice with supporting documentation sufficient to
evidence all such amounts incurred by Supplier as a result of the over or under delivery in
question by six (6) Months after the date on which the imbalance arose to which the penalties,
charges or damages in question relate or ninety (90) Days after same were incurred by Supplier,
whichever is later. Any invoice properly rendered hereunder shall be due and payable by Company
within thirty (30) Days of Company’s receipt thereof. Company shall have the right to audit the
accuracy of such invoice and the supporting documentation for a period of twenty-four (24) Months
from and after Company’s receipt thereof. Company shall not be responsible for any penalties or
charges which were improperly assessed by the pipeline in question and which Supplier voluntarily
paid. The terms of this paragraph shall not be applicable to any over or under delivery arising
from an event of force majeure, as defined in the Agreement.

Attachment 1 — Gas Nomination

 

 

	 	 	 
	Special Addendum to Dynegy Contract No. 014904 — Ref. No. 095

	 	Page 27

Attachment 2 – Phase V Expansion Basis of Design

To

Special Addendum to Gas Gathering and Purchase Agreement

	A.	 	Inlet Flow Rate to Plant

	 	 	 	 	 
	 	 	Design	 	Design
	 
	 	Cyro Plant II	 	Cyro Plant I
	Gas, MMcfd
	 	150	 	100
	 
	 	 	 	 
	Hydrocarbon liquid, bpd
	 	none	 	none
	 
	 	 	 	 
	Produced water, bpd
	 	none	 	none

	B.	 	Inlet Pressure and Temperature to Plant

	 	 	 	 	 	 	 	 	 
	 	 	Pressure, psig	 	Temperature, °F	 	Pressure, psig	 	Temperature, °F
	 
	 	Cyro II	 	Cryo II	 	Cyro I	 	Cyro I
	Design operating
	 	765	 	75 to 105	 	765	 	75 to 105
	 
	 	 	 	 	 	 	 	 
	Minimum operating
	 	765	 	75	 	765	 	75
	 
	 	 	 	 	 	 	 	 
	Maximum operating
	 	800	 	105	 	800	 	105
	 
	 	 	 	 	 	 	 	 
	Mechanical design
	 	1,100	 	—	 	900	 	—

	C.	 	Inlet Composition to Plant

	 	 	 	 	 	 	 	 	 
	Component	 	Mol Percent	 	Mol Percent
	 
	 	Cyro II	 	Cyro I
	Nitrogen
	 	 	2.142	 	 	2.640
	Carbon dioxide
	 	 	0.023	 	 	0.380
	Methane
	 	 	78.729	 	 	76.200
	Ethane
	 	 	10.461	 	 	10.290
	Propane
	 	 	5.432	 	 	6.360
	Isobutane
	 	 	0.734	 	 	0.700
	Normal butane
	 	 	1.442	 	 	1.730
	Isopentane
	 	 	0.320	 	 	0.680
	Normal pentane
	 	 	0.288	 	 	0.680
	Hexanes plus
	 	 	0.429	 	 	0.340
	Total
	 	 	100.000	 	 	100.00
	 
	 	 	 	 	 	 	 	 
	Trace components:
	 	 	 	 	 	 	 	 
	* Total CO2 
	 	 	<1.000	 	 	<1.000
	Water
	 	10 lbs per MMcf	 	Saturated
	Propylene
	 	Nil	 	Nil
	Butylenes
	 	Nil	 	Nil
	BTEX
	 	Nil	 	Nil
	Hydrogen sulfide
	 	Nil	 	Nil
	Mercaptans
	 	Nil	 	Nil
	Other sulfur species
	 	Nil	 	Nil
	Oxygen
	 	5 ppmv	 	5 ppmv

 

			
	*	 	NOTE – Total CO2 before treater.

Attachment 2 — Phase V Expansion Basis of Design

 

 

	 	 	 
	Special Addendum to Dynegy Contract No. 014904 — Ref. No. 095

	 	Page 28

	D.	 	Gathering – East Side

	 	(1)	 	Pressure and Volume

	 	 	 	 	 	 	 
	 	 	Suction	 	Discharge	 	 
	 	 	Pressure	 	Pressure	 	Volume
	Location	 	(psig)	 	(psig)	 	(MMcfd)
	Bryan
	 	(**)	 	(**)	 	(**)
	Denton
	 	(**)	 	(**)	 	(**)
	Sitz Low Pressure
	 	(**)	 	(**)	 	(**)
	Sitz High Pressure
	 	(**)	 	(**)	 	(**)
	Waggoner Low Pressure
	 	(**)	 	(**)	 	(**)
	Waggoner High
Pressure
	 	(**)	 	(**)	 	(**)
	Decatur
	 	(**)	 	(**)	 	(**)
	East Chico
	 	(**)	 	(**)	 	(**)

	 	(2)	 	Inlet Gas Composition

	 	 	 	 	 
	Component	 	Mol Percent	 
	Nitrogen
	 	 	0.601	 
	Carbon dioxide
	 	 	1.128	 
	Methane
	 	 	81.654	 
	Ethane
	 	 	9.929	 
	Propane
	 	 	3.317	 
	Isobutane
	 	 	0.667	 
	Normal butane
	 	 	0.989	 
	Isopentane
	 	 	0.368	 
	Normal pentane
	 	 	0.337	 
	Hexanes plus
	 	 	1.010	 
	Total
	 	 	100.000	 

Attachment 2 — Phase V Expansion Basis of Design

 

 

Amendment to Gas Gathering and Purchase Agreement

(High Pressure System Modifications)

Burlington Resources Oil & Gas Company (“BROG”) and Burlington Resources Trading Inc. (“BRTI”)
(BROG and BRTI being collectively referred to as “Supplier”) and Dynegy Midstream Services, Limited
Partnership (“Company”) entered into a Gas Gathering and Purchase Agreement with the effective date
of August 1, 2003 (the “Agreement”). Supplier and Company now wish to amend the Agreement, as set
forth herein.

Recitals

     The Parties have agreed to certain new terms and conditions under which Company is willing to
perform work to convert the pressure at which the High Pressure Gathering System operates and
gathers gas to a lower pressure than currently provided for in the Agreement.

     Supplier has agreed to pay an additional gathering fee to compensate Company for the work
necessary to lower the operating pressure of the High Pressure Gathering System. Additionally, the
Parties have agreed to certain amendments to the Agreement due to the inadvertent omission of
certain definitions required for the interpretation of the Commercial Terms and Conditions portion
of the Agreement.

     Now, therefore, in consideration of the premises and other valuable consideration, Supplier
and Company agree as follows:

	1.	 	Section 1.A (PARTIES’ OBLIGATIONS – Delivery, Gathering and Processing) is amended by
insertion of the following as a new grammatical second paragraph:

“Effective upon Company’s receipt from Supplier of an original, fully executed and
unaltered copy of that certain ‘Amendment to Gas Gathering and Purchase Agreement (High
Pressure System Modifications)’, Company shall commence efforts to make such modifications
to the High Pressure Gathering System as are reasonably necessary to reduce the operating
pressure at the Delivery Points into the High Pressure Gathering System to be (**) PSIG,
averaged over any Month; and Company shall use commercially reasonable efforts to prosecute
such modifications to completion as to all Delivery Points on the High Pressure System to
which Supplier delivers Gas under this Agreement.”

	2.	 	Section 3.B (COMPENSATION TO COMPANY — Gathering Fee) of the Agreement is deleted
in its entirety and the following Sections 3.B and 3.C are substituted therefor:

B. GATHERING FEE

In addition to the compensation set forth in Section 3.A immediately above, Supplier shall
be obligated to pay to Company one of the following two fees per MMBtu of Supplier’s Gas
delivered (which shall be “Fees” within the meaning of the terms of the Agreement, and shall
also be referred to in this Agreement as “Gathering Fees”):

	 	•	 	A fee (the “Low Pressure Gathering Fee”) of (**) per MMBtu of Supplier’s Gas
delivered to each Delivery Point for which Low Pressure Service is provided. Should
Supplier elect to exercise its option for a Renewal Term, as provided for in Section 4
below, during the Renewal Term such Low Pressure Gathering Fee shall be (**) per MMBtu.
	 
	 	•	 	A fee (the “High Pressure Gathering Fee”) of (**) per MMBtu of Supplier’s Gas
delivered to each Delivery Point for which High Pressure Service is provided. Should
Supplier elect to exercise its option for a Renewal Term, as provided for in Section 4
below, during the Renewal Term such High Pressure Gathering Fee shall be (**) per
MMBtu. The High Pressure Gathering Fee shall commence with regard to each Delivery
Point as of the first day of the Month in which High Pressure Conversion occurs with
regard to that Delivery Point.

			
	 	 	 
	Amendment to Gas Gathering and Purchase Agreement 

Dynegy Contract No. 014904 — Ref. No. 095
	 	Page 1

 

C. GATHERING FEE RELATED DEFINITIONS

In determining which Gathering Fee is applicable, and for all other purposes under this
Agreement, the following definitions shall be applicable:

“Gathering System” shall mean the system of pipes and gathering lines which are located in
Denton and Wise Counties, Texas, and are upstream of, and currently connected to and
gathering Gas to, Company’s Chico Gas Processing Plant (together with future expansions
and/or additions thereto) together with all related equipment and systems which are or will
be connected to such pipes and gathering lines including, without limitation, meters, meter
runs, compressors, separators, drips and pigging stations.

“High Pressure Conversion” shall mean, as to an individual Delivery Point on the High
Pressure System, completion of a period of operation of 30 consecutive Days during which the
delivery pressure at that Delivery Point was (**) PSIG or less, when averaged over that 30
consecutive Day period.

“High Pressure Service” shall mean gathering of Gas from a Delivery Point into the High
Pressure System from and after the occurrence of High Pressure Conversion as to that
Delivery Point and at pressures not exceeding (**) PSIG, averaged over any Month, when
measured at it being understood that such operating pressures may fluctuate substantially
within any one Month.

“High Pressure System” shall mean that portion of the Gathering System designed and operated
by Company to gather Gas from Delivery Points thereon at pressures not exceeding: (i) prior
to High Pressure Conversion, (**) PSIG; and (ii) after High Pressure Conversion, (**) PSIG;
when and as measured at those Delivery Points and averaged over any Month (it being
understood that such operating pressures may fluctuate substantially within any one Month);
such system being understood to be that system as in existence on the date of execution of
this Agreement and as same is extended or modified from time to time during the Term.

“Low Pressure Service” shall mean gathering of Gas from a Delivery Point either: (a) into
the Low Pressure System directly; or (b) by providing additional compression to a Delivery
Point on the High Pressure System such that the Gas is received and gathered at that
Delivery Point at pressures substantially equivalent (on a Monthly average basis) to the
pressures maintained at Delivery Points on the Low Pressure System.

“Low Pressure System” shall mean that portion of the Gathering System designed and operated
by Company to gather Gas at pressures not exceeding (**) PSIG when measured at the Delivery
Points thereon and when averaged over any Month; such system being understood to be that
system as in existence on the date hereof and as same is extended or modified from time to
time during the Term.

	3.	 	Section A.22 (Post Termination Deliveries), in the Commercial Terms and Conditions
portion of the Agreement, is amended by inserting the following as a fourth bulleted paragraph
immediately after the bulleted paragraph establishing the Lower Pressure Gathering Fee (upon
the occurrence of the conditions referenced in such Section A.22):

	 	•	 	High Pressure Gathering Fee                     (**) per MMBtu

	4.	 	Application of Terms of Amendment: This Amendment shall be binding on the Parties on the
date of execution by the last Party to sign below, subject to the above amended provisions of
Section 3.B and new Section 3.C with regard to the effective date of the High Pressure
Gathering Fee as to any particular Delivery Point. All provisions of the Agreement not
expressly amended above shall remain in full force and effect.

			
	 	 	 
	Amendment to Gas Gathering and Purchase Agreement 

Dynegy Contract No. 014904 — Ref. No. 095
	 	Page 2

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Accepted and Agreed to:	 	 	 	Accepted and Agreed to:
	Burlington Resources Oil & Gas	 	 	 	Dynegy Midstream Services, Limited
	Company LP	 	 	 	Partnership
	By: BROG GP Inc., its sole General	 	 	 	 	 	 	 	 
	Partner	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Printed Name:	 	 	 	 	 	Printed Name:	 	Clark White
	 

	 	 	 	 
	 	 	 	 	 	 	 	 
	Title:

	 	 	 	 	 	 	 	Title:
	 	 	 	Vice President
	 	 	 	 	 	 	 	 	 
	Date:

	 	 	 	 	 	 	 	Date:	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Accepted and Agree	 	d to:	 	 	 	 	 	 	 	 
	Burlington Resources Trading Inc.	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	Printed Name:	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 

			
	 	 	 
	Amendment to Gas Gathering and Purchase Agreement 

Dynegy Contract No. 014904 — Ref. No. 095
	 	Page 3

 

ASSIGNMENT OF CONTRACTS

     TARGA MIDSTREAM SERVICES LIMITED PARTNERSHIP, a Delaware limited partnership (formerly
known as Dynegy Midstream Services, Limited Partnership) (“Assignor”), with offices at 1000
Louisiana Street, Suite 4700, Houston, Texas 77002 for good and valuable consideration paid by
TARGA NORTH TEXAS LP, a Delaware limited partnership with offices at 1000 Louisiana Street, Suite
4700, Houston, Texas 77002 (“Assignee”), the receipt and sufficiency of which are hereby
acknowledged, has BARGAINED, SOLD, TRANSFERRED, ASSIGNED AND SET OVER, and by these presents does
BARGAIN, SELL, TRANSFER, ASSIGN AND SET OVER unto Assignee:

     All of its right, title and interest in, to and under the contracts
listed on Exhibit A attached hereto and incorporated herein by this
reference (the “Scheduled Contracts”).

     TO HAVE AND TO HOLD all of Assignor’s right, title and interest in, to and under the
Scheduled Contracts, together with all rights thereunto in anywise belonging to Assignor.

     ASSIGNOR HAS EXECUTED AND DELIVERED THIS ASSIGNMENT OF CONTRACTS AND HAS ASSIGNED THE
SCHEDULED CONTRACTS AND ASSIGNEE HAS ACCEPTED THE SCHEDULED CONTRACTS “AS IS”, “WHERE IS” AND
“WITH ALL FAULTS” AND WITHOUT REPRESENTATIONS OR WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED.

     By acceptance and execution hereof, Assignee assumes all of the obligations and duties
of Assignor under or in respect of the Scheduled Contracts.

     This Agreement is for the sole benefit of the parties hereto and nothing herein,
express or implied, is intended to or shall confer upon any other person or entity any legal or
equitable right, benefit or remedy of any nature whatsoever under or
by reason of this Agreement.

     Should
any of the Scheduled Contracts be subject to a valid consent to assign or other
restriction on transfer pursuant to which the assignment hereunder would be invalid or constitute
a breach of such obligation or result in the termination, cancellation or loss of such Scheduled
Contracts or any of the rights thereunder, then such Scheduled Contracts shall be deemed not to be
assigned or transferred unless and until such consent is obtained or such transfer restriction is
complied with or waived from or by the third party having such right.

     This Assignment of Contracts shall be governed by, and construed in accordance with, the laws
of the State of Texas without regard to any conflict or choice of law principles that would apply
the substantive law of another jurisdiction.

[Signature Page follows this page]

 

     EXECUTED as of March 22, 2006 but effective for all purposed as of December 1, 2005.

	 	 	 	 	 	 	 
	 	 	ASSIGNOR:	 	 
	 
	 	 	 	 	 	 
	 	 	TARGA MIDSTREAM SERVICES LIMITED	 	 
	 	 	PARTNERSHIP, a Delaware limited partnership	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Targa Midstream GP LLC, its General

Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Howard M. Tate
 

Howard M. Tate
	 	 
	 

	 	 	 	Vice President – Finance	 	 
	 
	 	 	 	 	 	 
	 	 	ASSIGNEE:	 	 
	 
	 	 	 	 	 	 
	 	 	TARGA NORTH TEXAS LP, a Delaware limited

partnership	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Targa North Texas GP LLC, its General

Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Howard M. Tate	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Howard M. Tate	 	 
	 

	 	 	 	Vice President – Finance	 	 

	 	 	 	 	 	 	 
	STATE OF TEXAS

	 	 	§	 	 	 
	 

	 	 	§	 	 	 
	COUNTY OF HARRIS

	 	 	§	 	 	 

     This instrument was acknowledged before me on this 22nd day of March, 2006, by
Howard M. Tate, Vice President – Finance of Targa Midstream GP, LLC, a Delaware limited liability
company, as general partner of Midstream Services Limited Partnership, a Delaware limited partnership, on behalf of
said limited liability company and limited partnership.

	 	 	 	 	 
	/s/ Laura R. Gamboa
 

Notary Public, State of Texas

	 	 
	 	
	 
	 	 	 	 
	My commission expires 08/25/06
	 	 	 	 

 

 

	 	 	 	 	 	 	 
	STATE OF TEXAS

	 	 	§	 	 	 
	 

	 	 	§	 	 	 
	COUNTY OF HARRIS

	 	 	§	 	 	 

     This instrument was acknowledged before me on this 22nd day of March, 2006, by
Howard M. Tate, Vice President – Finance of Targa North Texas GP LLC, a Delaware limited liability
company, as general partner of Targa North Texas LP, a Delaware limited partnership, on behalf of
said limited liability company and limited partnership.

	 	 	 	 	 
	/s/ Laura R. Gamboa
 

Notary Public, State of Texas

	 	 
	 	
	 
	 	 	 	 
	My commission expires 08/25/06
	 	 	 	 

 

 

EXHIBIT A

ASSIGNMENT OF CONTRACTS

TARGA NORTH TEXAS LP

	 	 	 	 	 
	Targa	 	 	 	 
	Contract	 	 	 	Contract
	Number	 	Contract Description	 	Date
	014904

	 	GAS GATHERING AND PURCHASE AGREEMENT between
BURLINGTON RESOURCES OIL & GAS CO, LP &
BURLINGTON RESOURCES TRADING, and DYNEGY
MIDSTREAM SERVICES, LIMITED PARTNERSHIP, as
amended
	 	11/03/2003

 

 

Amendment to Special Addendum to

Gas Gathering and Purchase Agreement

(High Pressure System Modifications)

Burlington Resources Oil & Gas Company (“BROG”) and Burlington Resources Trading Inc. (“BRTI”)
(BROG and BRTI being collectively referred to as “Supplier”) and Dynegy Midstream Services, Limited
Partnership (“Company”) entered into a “Gas Gathering and Purchase Agreement” with the effective
date of August 1, 2003 (the “Agreement”) and, in connection with the execution of the Agreement,
also entered into a “Special Addendum to Gas Gathering and Purchase Agreement” (the “Special
Addendum”). Supplier and Company now wish to amend the Agreement, as set forth in a certain
“Amendment to Gas Gathering and Purchase Agreement (High Pressure System Modifications)” executed
simultaneously herewith (the “Agreement Amendment”); and, therefore, also wish the amend the terms
of the Special Addendum to be consistent with the Agreement, as modified by the Agreement
Amendment.

Recitals

     The Parties have agreed to certain new terms and conditions under which Company is willing to
perform work to convert the pressure at which the High Pressure Gathering System operates and
gathers gas to a lower pressure than currently provided for in the Agreement and Supplier has
agreed to pay certain additional compensation Company in consideration for the described work, the
terms regarding which have been set forth in the Agreement Amendment.

     Due to the terms of the Agreement Amendment certain amendments to the terms of the Special
Addendum are required to maintain consistency between the terms of the Agreement and the Special
Addendum.

     Now, therefore, in consideration of the premises and other valuable consideration, Supplier
and Company agree as follows:

	1.	 	Section 2 (Interpretation & Definitions) is amended as follows:
	 
	 	 	Paragraph 2 of the Agreement Amendment amends the Commercial Terms and Conditions of the
Agreement by inserting therein new Section 3.C of the Commercial Terms and Conditions for the
purpose of incorporating definitions of certain terms relevant to the Gathering Fees provided
for in amended Commercial Terms and Conditions Section 3.B. To avoid any conflict between the
definitions set forth in that new Commercial Terms and Conditions Section 3.C. and definitions
appearing in Section 2 of the Special Addendum, the Parties agree to the following amendments to
Section 2 of the Special Addendum:

	 	•	 	The following definitions in the Special Addendum are deleted therefrom and the
definitions of those same terms now appearing in Section 3.C. of the Commercial Terms
and Conditions (as set forth in the Agreement Amendment) are incorporated
into the Special Addendum by reference: Gathering System, High Pressure System and Low
Pressure System.

	 	 	 
	Amendment to Special Addendum to Gas Gathering and Purchase Agreement

	 	Page 1
	Dynegy Contract No. 014904 — Ref. No. 095
	 	 

 

 

	 	•	 	As long as, and to the extent that, the Special Addendum remains in force and effect
between the Parties, the definition of the term Low Pressure Service set forth in the
Special Addendum shall govern in lieu of the definition thereof in the Agreement
Amendment.

	2.	 	Section 6.A.(ii) (Delivery Pressures – Maximum Pressures) is modified by deleting
the reference in that provision to “(**) PSIG”
and substituting therefor a reference to “(**)
PSIG.”
	 
	3.	 	Section 8.A.(1) (Low Pressure Service – Company Obligations) is deleted in its
entirety and the following is substituted therefor:
	 
	 	 	As to any Delivery Points now or hereafter connected to the High Pressure System,
Supplier may direct Company, at Company’s sole cost, to provide Low Pressure Service by
physically transferring the connection at a Delivery Point from the High Pressure System to
the Low Pressure System should the producing pressure of well(s) delivering to such Delivery
Point drop after initially being connected to the High Pressure System such that the pressure
of same, as measured at the Delivery Point therefor, averages less than the “LP Conversion
Pressure” (as defined in this paragraph below) over one (1) or more Months. Upon Company’s
receipt of notice from Supplier electing to have such qualifying Delivery Point converted to
the Low Pressure System, the transfer of the Delivery Point shall be completed by Company
within sixty (60) Days of the latter of (i) Company’s receipt of Supplier’s notice or (ii) the
end of the first Month in which the referenced average Daily pressure is less than the Low
Pressure Conversion Pressure (“LP Conversion Date”). For purposes of this paragraph, “LP
Conversion Pressure” shall be determined for each Delivery Point and it shall be either: (x)
(**) PSIG, if “High Pressure Conversion” (as defined in Section 3.C of the Agreement) has not
occurred with regard to the Delivery Point; or (y) (**) PSIG, if such High Pressure Conversion
has occurred with regard to the Delivery Point.
	 
	4.	 	The amended version of A.22 (Post Termination Deliveries) that appears in Special
Addendum Section 11(B) (Changes to Exhibit A – General Terms and Conditions – Amended
Provisions) is amended by inserting the following as a fourth bulleted paragraph immediately
after the bulleted paragraph establishing the Lower Pressure Gathering Fee (upon the
occurrence of the conditions referenced in such amended version of said Section A.22):

	 	•	 	High Pressure Gathering Fee                     (**) Cents (**¢ or $**) per MMBtu

	5.	 	Attachment 2 – Phase V Expansion Basis of Design is deleted from the Special Addendum and
the Amended Attachment 2 – Phase V Expansion Basis of Design attached to this Amendment to
Special Addendum is substituted therefor in its entirety.
	 
	6.	 	Application of Terms of Amendment: This Amendment to Special Addendum shall be binding on
the Parties on the date of the last to occur of the following: (i) execution of an unaltered
copy of this Amendment by the last Party to sign below and exchange between the Parties of
fully executed original copies of this Amendment; and (ii) likewise, execution of an unaltered
copy of the Agreement Amendment by the last Party to sign same and exchange between the
Parties of fully executed original copies of the Agreement Amendment. All provisions of the
Special Addendum not expressly amended above shall remain in full force and effect.

	 	 	 
	Amendment to Special Addendum to Gas Gathering and Purchase Agreement

	 	Page 2
	Dynegy Contract No. 014904 — Ref. No. 095
	 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Accepted and Agreed to:	 	 	 	 	 	 	 	 	 	 
	Burlington Resources Oil & Gas Company
LP	 	 	 	Accepted and Agreed to:	 	 
	By: BROG GP Inc.,
its sole General
 Partner	 	 	 	Dynegy Midstream Services, Limited Partnership	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	Printed Name:	 	 	 	 	 	Printed Name:	 	Clark White	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Title:

	 	 	 	 	 	 	 	Title:
	 	Vice President	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Date:

	 	 	 	 	 	 	 	Date:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Accepted and Agreed to:	 	 	 	 	 	 	 	 	 	 
	Burlington Resources Trading Inc.	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Printed Name

	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 

	 	 	 
	Amendment to Special Addendum to Gas Gathering and Purchase Agreement

	 	Page 3
	Dynegy Contract No. 014904 — Ref. No. 095
	 	 

 

 

Amended Attachment 2 – Phase V Expansion Basis of Design

To

Special Addendum to Gas Gathering and Purchase Agreement

A. Inlet Flow Rate to Plant

	 	 	 	 	 
	 	 	Design	 	Design
	 
	 	Cyro Plant II	 	Cyro Plant I
	Gas, MMcfd
	 	150	 	100
	Hydrocarbon liquid, bpd
	 	none	 	none
	Produced water, bpd
	 	none	 	none

B. Inlet Pressure and Temperature To Plant

	 	 	 	 	 	 	 	 	 
	 	 	Pressure, psig	 	Temperature, °F	 	Pressure, psig	 	Temperature, °F
	 
	 	Cyro II	 	Cryo II	 	Cyro I	 	Cyro I
	Design operating
	 	765	 	75 to 105	 	765	 	75 to 105
	Minimum operating
	 	765	 	75	 	765	 	75
	Maximum operating
	 	800	 	105	 	800	 	105
	Mechanical design
	 	1,100	 	—	 	900	 	—

C. Inlet Composition to Plant

	 	 	 	 	 	 	 	 	 
	Component	 	Mol Percent	 	Mol Percent
	 

	 	Cyro II
	 	Cyro I

	Nitrogen

	 	2.142	 	2.640
	Carbon dioxide

	 	0.023	 	0.380
	Methane

	 	78.729	 	76.200
	Ethane

	 	10.461	 	10.290
	Propane

	 	5.432	 	6.360
	Isobutane

	 	0.734	 	0.700
	Normal butane

	 	1.442	 	1.730
	Isopentane

	 	0.320	 	0.680
	Normal pentane

	 	0.288	 	0.680
	Hexanes plus

	 	0.429	 	0.340
	Total

	 	100.000	 	100.00
	 
	 	 	 	 	 	 	 	 
	Trace components:
	 	 	 	 	 	 	 	 
	* Total CO2 

	 	<1.000
	 	<1.000

	Water

	 	10 lbs per MMcf
	 	Saturated

	Propylene

	 	Nil
	 	Nil

	Butylenes

	 	Nil
	 	Nil

	BTEX

	 	Nil
	 	Nil

	Hydrogen sulfide

	 	Nil
	 	Nil

	Mercaptans

	 	Nil
	 	Nil

	Other sulfur species

	 	Nil
	 	Nil

	Oxygen

	 	5 ppmv
	 	5 ppmv

 

			
	*	 	NOTE – Total CO2 before treater.

	 	 	 
	Amended Attachment 2 — Phase V Expansion Basis of Design

	 	Page 1

 

 

D. Gathering – East Side

     (1) Pressure and Volume

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Suction Pressure	 	Discharge Pressure	 	Volume
	Location	 	(psig)	 	(psig)	 	(MMcfd)
	Bryan
	 	(**)	 	 	(**)	 	 	 	(**)	 
	Denton
	 	 	(**)	 	 	 	(**)	 	 	 	(**)	 
	Sitz Low Pressure
	 	 	(**)	 	 	 	(**)	 	 	 	(**)	 
	Sitz High Pressure
	 	 	(**)	 	 	 	(**)	 	 	 	(**)	 
	Waggoner Low Pressure
	 	 	(**)	 	 	 	(**)	 	 	 	(**)	 
	Waggoner High Pressure
	 	 	(**)	 	 	 	(**)	 	 	 	(**)	 
	Decatur
	 	 	(**)	 	 	 	(**)	 	 	 	(**)	 
	East Chico
	 	 	(**)	 	 	 	(**)	 	 	 	(**)	 

     (2) Inlet Gas Composition

	 	 	 	 	 
	Component	 	Mol Percent
	Nitrogen
	 	 	0.601	 
	Carbon dioxide
	 	 	1.128	 
	Methane
	 	 	81.654	 
	Ethane
	 	 	9.929	 
	Propane
	 	 	3.317	 
	Isobutane
	 	 	0.667	 
	Normal butane
	 	 	0.989	 
	Isopentane
	 	 	0.368	 
	Normal pentane
	 	 	0.337	 
	Hexanes plus
	 	 	1.010	 
	Total
	 	 	100.000	 

	 	 	 
	Amended Attachment 2 – Phase V Expansion Basis of Design

	 	Page 2

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