Document:

exv10w26

 

Exhibit 10.26

January 15, 2007

COG Operating LLC

306 W. Wall, Suite 1209

Midland, TX 79701

Revision #1

Attn: Necie Terrell,

This agreement, by and between Navajo Refining Company, L.P. herein called “Navajo” and COG
Operating LLC, herein called “COG”, covers the outright purchase of crude oil, by Navajo under the
following conditions.

DELIVERIES BY COG

	 	 	 
	QUALITY:

	 	West Texas/ New Mexico Intermediate and West Texas/ New Mexico Sour Crude Oil.
	 
	 	 
	QUANTITY:

	 	Production from the leases listed on the attached Exhibit A, B, C, D, E, F, G, H, AND I.
	 
	 	 
	TERM:

	 	Effective January 1, 2007 through January 31, 2007 and continuing on a 30 day evergreen basis until cancelled by
either party upon 30 day advanced written notice.
	 
	 	 
	DELIVERY:

	 	COG will delivery barrels at the flange as the barrels enter Navajo’s trucks or Navajo’s designated carrier.
	 
	 	 
	PRICE:

	 	A) Navajo agrees to pay COG the average of Flint Hills Resources posted price for West Texas Intermediate type crude
oil, gravity deemed 40 degrees API, for the month of delivery, plus the average of Platt’s Oil gram (Platt’s) spot
crude price assessments for Posting Plus (P+) WTI at Crushing, plus or minus the Platt’s Cushing WTI/Midland WTS
(WTI/WTS) differential, based on equal daily quantities, minus the applicable deduct listed on the attached Exhibit
“A”
	 
	 	 
	 

	 	The P+ and the WTI/WTS differential value will be the mean of the daily average of the Platt’s P+ WTI prices quote in
the Platt’s Oil gram from the 26th day of the month two months prior to the month of delivery through the
25th day of the month one month prior to the month of delivery (excluding weekends and holidays). The
posted price average includes weekends and holidays, the prices in effect on the day prior to a Saturday, Sunday or
holiday will be price for Saturday, Sunday, or holiday.
	 
	 	 
	 

	 	B) Navajo agrees to pay COG the higher of Navajo’s New Mexico Sour Pipeline posting
of the ConocoPhillps’ New Mexico Sour Posting or the average of Flint Hill’s
Resources posted price for West Texas Intermediate type crude oil, gravity deemed 40
degrees API, for the month of delivery, plus the average of Platt’s Oil gram
(Platt’s) spot crude price assessments for Posting Plus (P+) WTI at Crushing, plus or
minus the Platt’s Crushing WTI/ Midland WTS (WTI/WTS) differential, based on equal
daily quantities, minus the applicable deduct listed on the attached Exhibit “B”.

 

 

	 	 	 
	 

	 	The P+ and the WTI/WTS differential value will be the mean of the daily average of
the Platt’s P+ WTI prices quote in the Platt’s Oil gram from the 26th day
of the month two months prior to the month of delivery through the 25th
day of the month one month prior to the month of delivery (excluding weekends and
holidays). The posted price average includes weekends and holidays, the prices in
effect on the day prior to a Saturday, Sunday or holiday will be price for Saturday,
Sunday, or holiday.
	 
	 	 
	 

	 	C) Navajo agrees to pay COG the base price plus/minus the roll component minus
Platt’s Cushing WTI/Midland WTI spread less the applicable deduct shown on attached
Exhibit ”C”.
	 
	 	 
	 

	 	BASE PRICE- The base price shall be average of the Merc settlement price during the
calendar month of the delivery month. Weekends and Holiday shall carry the price of
the previous Merc settlement price.
	 
	 	 
	 

	 	ROLL COMPONENT- The settlement prices shall be averaged for the entire MERC trade
month while the delivery month is the Merc prompt month. The roll component for the
prompt month/second month shall be the difference between the prompt month average
minus the second month average times a decimal factor determined by dividing the
number of calendar days in the delivery month that the second month trades on the
Merc by the number of calendar days in the delivery month. The roll component for
the month average times a decimal factor that is one (1) minus the decimal factor for
the prompt month /second month. If the second month Merc trading in the delivery
month expires on a Friday, then the weekend and any holidays shall be deemed as
second month days for determining the decimal factor for the prompt month/second
month.
	 
	 	 
	 

	 	CUSHING WTI/MIDLAND WTI SPREAD- Platt’s daily high/low average fro WTI Cushing minus
Platt’s daily high/low average for Midland WTI is the daily WTI/WTI spread. Note:
	 

	 	All Platt’s pricing is for the delivery month as published by Platt’s during the
period beginning on the 26th of the second month proceeding the delivery
month and ending on the 25th of the second month proceeding the delivery
month.
	 
	 	 
	 

	 	D) Navajo agrees to pay COG the base price plus/minus the roll component minus
Platt’s Cushing WTI/Midland WTI spread less the applicable deduct shown on the
attached Exhibit “D”.
	 
	 	 
	 

	 	BASE PRICE- The base price shall be average of the Merc settlement price during the
calendar month of the delivery month. Weekends and Holiday shall carry the price of
the previous Merc settlement price.
	 
	 	 
	 

	 	ROLL COMPONENT- The settlement prices shall be averaged for the entire Merc trade
month while the delivery month is the Merc prompt month. The month averaged shall be
the prompt (delivery) difference between the prompt month average minus the second
month average times a decimal factor determined by dividing the number of calendar
days in the delivery month that the second month trades on the Merc by the number of
calendar days in the month. The roll component for the prompt month/third month shall
be the difference between the prompt month average minus the third month average
times a decimal factor that is one (1) minus the decimal factor for the prompt
month/second month. If the second month Merc trading in the delivery month expires
on a Friday, then the weekend and any holidays shall be deemed as second month days
for determining the decimal factor for the prompt month/second month.
	 
	 	 
	 

	 	CUSHING WTI/MIDLAND WTI SPREAD- Platt’s daily high/low average fro WTI Cushing minus
Platt’s daily high/low average for Midland WTI is the daily WTI/WTI spread. Note:
	 

	 	All Platt’s pricing is for the delivery month as published by Platt’s during the
period beginning on the 26th of the second month proceeding the delivery
month and ending on the 25th of the second month proceeding the delivery
month.

 

 

	 	 	 
	 

	 	E) Navajo agrees to pay COG the base price plus/minus roll component minus Platt’s
Cushing WTI/Midland WTS Spread less the applicable deduct on the attached Exhibit “E”
	 
	 	 
	 

	 	BASE PRICE- The base price shall be average of the Merc settlement price during the
calendar month of the delivery month. Weekends and Holiday shall carry the price of
the previous Merc settlement price.
	 
	 	 
	 

	 	ROLL COMPONENT- The settlement prices shall be averaged for the entire MERC trade
month while the delivery month is the Merc prompt month. The month averaged shall be
the prompt (delivery) month and the next two months. The roll component for the
prompt month/second month shall be the difference between the prompt month average
minus the second month average times a decimal factor determined by dividing the
number of calendar days in the delivery month that the second month trades on the
Merc by the number of calendar days in the delivery month. The roll component for
the month average times a decimal factor that is one (1) minus the decimal factor for
the prompt month /second month. If the second month Merc trading in the delivery
month expires on a Friday, then the weekend and any holidays shall be deemed as
second month days for determining the decimal factor for the prompt month/second
month.
	 
	 	 
	 

	 	CUSHING WTI/MIDLAND WTI SPREAD- Platt’s daily high/low average fro WTI Cushing minus
Platt’s daily high/low average for Midland WTI is the daily WTI/WTI spread. Note:
	 

	 	All Platt’s pricing is for the delivery month as published by Platt’s during the
period beginning on the 26th of the second month proceeding the delivery
month and ending on the 25th of the second month proceeding the delivery
month.
	 
	 	 
	 

	 	F) Navajo agrees to pay COG the base price plus/minus roll component minus Platt’s
Cushing WTI/Midland WTS spread less the applicable deduct as listed on the attached
Exhibit “F”
	 
	 	 
	 

	 	BASE PRICE- The base price shall be average of the Merc settlement price during the
calendar month of the delivery month. Weekends and Holiday shall carry the price of
the previous Merc settlement price.
	 
	 	 
	 

	 	ROLL COMPONENT- The settlement prices shall be averaged for the entire MERC trade
month while the delivery month is the Merc prompt month. The months averages shall be
the prompt (delivery) month and the next two months. The roll component for the
prompt month/second month shall be the difference between the prompt month average
minus the second month average times a decimal factor determined by dividing the
number of calendar days in the delivery month that the second month trades on the
Merc by the number of calendar days in the delivery month. The roll component for
the month average times a decimal factor that is one (1) minus the decimal factor for
the prompt month /second month. If the second month Merc trading in the delivery
month expires on a Friday, then the weekend and any holidays shall be deemed as
second month days for determining the decimal factor for the prompt month/second
month.
	 
	 	 
	 

	 	CUSHING WTI/MIDLAND WTI SPREAD- Platt’s daily high/low average fro WTI Cushing minus
Platt’s daily high/low average for Midland WTI is the daily WTI/WTI spread. Note:
	 

	 	All Platt’s pricing is for the delivery month as published by Platt’s during the
period beginning on the 26th of the second month proceeding the delivery
month and ending on the 25th of the second month proceeding the delivery
month.
	 
	 	 
	 

	 	G) Navajo agrees to pay COG Navajo Refining Company’s posted price for New Mexico
Trucked Sour Crude Oil, gravity deemed 34 degrees API, on leases attached to Exhibit
“G”, based on equal daily quantities.
	 
	 	 
	 

	 	H) Navajo agrees to pay COG Navajo Refining Company’s posted price for West Texas
Trucked intermediate crude oil based on equal daily quantities .

 

 

	 	 	 
	I)

	 	Navajo agrees to pay COG the average for Platt’s posted prices
for West Texas Intermediate, gravity deemed 40 degrees API, for the month of
delivery, plus the average of Platt’s Oil Gram (Platt’s) spot crude price
assessment for posting Plus (P+) WTI Cushing, plus or minus the Platt’s
Midland/Cushing WTI (Mid/Cush) differential, based on equal daily quantities,
minus the applicable deduct listed on the attached Exhibit “I”.
	 
	 	 
	 

	 	The P+ and the WTI differential value will be the mean of the daily average of
the Platt’s P+ WTI prices quoted in the Platt’s Oil gram from the
26th day of the month two month prior to the month of delivery
through the 25th day of the month one month prior of delivery
(excluding weekends and holidays). The posted average includes weekends and
holidays, the price in effect on the day prior to a Saturday, Sunday or
holiday will be the price for Saturday, Sunday or holiday.

PROVISION APPLICABLE TO BOTH PARTIES

			
	PAYMENT:	 	Payment shall be made via wire transfer on or about the 20th of
the month following the month of delivery.

GENERAL PROVISIONS: ConocoPhillps General Provisions dated January 1, 1993 apply.

If the foregoing is in accordance with your understanding of our agreement, please indicate your
acceptance by signing in the space provided below and return one copy for our records.

Sincerely,

Navajo Refining Company LP

	 	 	 	 	 	 	 
	/s/
Bryan L. Mason

	 	 	 	/s/ Curt Kamradt
	 	 
	 

	 	 	 	 	 	 
	Manager Crude Supply

	 	 	 	Curt Kamradt	 	 
	Navajo
Refining Company, L.P. 

	 	 	 	COG Operating LLC	 	 

 

 

EXHIBIT ‘A’

NEW MEXICO SOUR LEASES

	 	 	 	 	 	 	 
	NRC LSE#	 	LEASE NAME	 	COUNTY, ST	 	DEDUCT/BONUS
	12252	 	CARPERS LEVERS
	 	EDDY, NM	 	-0.20
	14056	 	HOLDER CB FEDERAL
	 	EDDY, NM	 	-0.20
	14124	 	MCINTYRE A EAST
	 	EDDY, NM	 	-0.20
	14522	 	ETZ STATE UNIT
	 	EDDY, NM	 	-0.20
	14523	 	BERRY A FEDERAL
	 	EDDY, NM	 	-0.20
	14557	 	RJ UNIT (SOUTH BATTERY)
	 	EDDY, NM	 	-0.20
	15923	 	BERRY A FEDERAL (PADDOCK)
	 	EDDY, NM	 	-0.20
	16001-001	 	MCINTYRE A EAST (NW PADDOCK)
	 	EDDY, NM	 	-0.20
	16001-002	 	MCINTYRE A WEST (NW PADDOCK)
	 	EDDY, NM	 	-0.20
	16002	 	WD MCINTYRE C (PADDOCK)
	 	EDDY, NM	 	-0.20
	16200	 	MCINTYRE DK FEDERAL #1-13
	 	EDDY, NM	 	-0.20
	16201-001	 	JENKINS B FEDERAL (PADDOCK)
	 	EDDY, NM	 	-0.20
	16201-002	 	JENKINS B FEDERAL (SAN ANDRES)
	 	EDDY, NM	 	-0.20
	16235-001	 	MCINTYRE A EAST (SW PADDOCK)
	 	EDDY, NM	 	-0.20
	16235-002	 	MCINTYRE A WEST (SW PADDOCK)
	 	EDDY, NM	 	-0.20
	16236	 	W D MCINTYRE E
	 	EDDY, NM	 	-0.20
	16237	 	MCINTYRE B
	 	EDDY, NM	 	-0.20
	16238	 	JUNIPER STATE (PADDOCK)
	 	EDDY, NM	 	-0.20
	16258-001	 	STATE S-19 (E-4201)
	 	EDDY, NM	 	-0.20
	16258-002	 	STATE S-19 (E-742)
	 	EDDY, NM	 	-0.20
	16258-003	 	STATE S-19 (B-7677)
	 	EDDY, NM	 	-0.20
	16289	 	CONTINENTAL A STATE
	 	EDDY, NM	 	-0.20
	16491	 	DEXTER FEDERAL (PADDOCK)
	 	EDDY, NM	 	-0.20
	16496	 	SINCLAIR PARK #2 & 3
	 	EDDY, NM	 	-0.20
	16552	 	CONTINENTAL B STATE (YESO)
	 	EDDY, NM	 	-0.20
	16582	 	SCHLEY FEDERAL
	 	EDDY, NM	 	-0.20
	16599	 	MOHAWK FEDERAL
	 	EDDY, NM	 	-0.20
	16607	 	SHAWNEE FEDERAL
	 	EDDY, NM	 	-0.20
	16609	 	RINCON STATE
	 	EDDY, NM	 	-0.20
	16627	 	WICHITA STATE #1
	 	EDDY, NM	 	-0.20
	16632	 	WOOLLEY FEDERAL (PADDOCK)
	 	EDDY, NM	 	-0.20
	16665	 	HARPER STATE
	 	EDDY, NM	 	-0.20
	16679	 	BRIGHAM H NORTH
	 	EDDY, NM	 	-0.20
	16689	 	BRIGHAM H SOUTH
	 	EDDY, NM	 	-0.20
	16691	 	NAVAHO FEDERAL
	 	EDDY, NM	 	-0.20
	16704	 	IMPERIAL STATE #1-5
	 	EDDY, NM	 	-0.20
	16736	 	CHEYENNE FEDERAL
	 	EDDY, NM	 	-0.20
	16781	 	PAWNEE STATE
	 	EDDY, NM	 	-0.20
	16796	 	MESILLA STATE
	 	EDDY, NM	 	-0.20
	16846	 	ELECTRA FEDERAL
	 	EDDY, NM	 	-0.20
	16850	 	HOUMA STATE
	 	EDDY, NM	 	-0.20
	16856	 	POLARIS B FEDERAL 1,2,3
	 	EDDY, NM	 	-0.20
	19903	 	G J WEST COOP UNIT
	 	EDDY, NM	 	-0.20
	40159	 	HOLDER CB FEDERAL (PADDOCK)
	 	EDDY, NM	 	-0.20
	41989	 	HARPER STATE #5
	 	EDDY, NM	 	-0.20
	17418	 	BROWN FEDERAL (MALJAMAR)
	 	LEA, NM	 	-0.20

EXHIBIT ‘B’

NEW MEXICO SOUR LEASES

	 	 	 	 	 	 	 
	NRC LSE#	 	LEASE NAME	 	COUNTY, ST	 	DEDUCT/BONUS
	10200	 	RLSU (RED LAKE SAND UNIT)
	 	EDDY, NM	 	-0.60

 

 

	 	 	 	 	 	 	 
	NRC LSE#	 	LEASE NAME	 	COUNTY, ST	 	DEDUCT/BONUS
	12040	 	EAST HIGH LONESOME FEDERAL)
	 	EDDY, NM	 	-0.60
	12105	 	Y D FEDERAL
	 	EDDY, NM	 	-0.60
	14159	 	WELCH FEDERAL #1
	 	EDDY, NM	 	-0.60
	14517	 	W D MCINTYRE C
	 	EDDY, NM	 	-0.60
	14556	 	JACKSON FEDERAL
	 	EDDY, NM	 	-0.60
	15253	 	BIG GEORGE STATE
	 	EDDY, NM	 	-0.60
	15288	 	TYLER FEDERAL
	 	EDDY, NM	 	-0.60
	15291	 	ADAMS FEDERAL
	 	EDDY, NM	 	-0.60
	15491	 	WESTALL A STATE
	 	EDDY, NM	 	-0.60
	15496	 	WILLOW STATE
	 	EDDY, NM	 	-0.60
	15518	 	CONTINENTAL B STATE
	 	EDDY, NM	 	-0.60
	15598	 	YUCCA STATE
	 	EDDY, NM	 	-0.60
	16219	 	CHOCTAW STATE
	 	EDDY, NM	 	-0.60
	17036	 	STATE “I”
	 	EDDY, NM	 	-0.60
	17100	 	VS UNIT
	 	EDDY, NM	 	-0.60
	17462	 	DEXTER 1, 2 & 3
	 	EDDY, NM	 	-0.60
	17769	 	GISSLER FEDERAL
	 	EDDY, NM	 	-0.60
	18021	 	DAVIS FEDERAL
	 	EDDY, NM	 	-0.60
	18307	 	RV STATE
	 	EDDY, NM	 	-0.60
	18339	 	FARMER FEDERAL
	 	EDDY, NM	 	-0.60
	18375	 	WILSON FEDERAL
	 	EDDY, NM	 	-0.60
	18810	 	BEESON NO. 1
	 	EDDY, NM	 	-0.60
	19034	 	HIGH LONESOME PENROSE
	 	EDDY, NM	 	-0.60
	19138	 	SIVLEY FEDERAL
	 	EDDY, NM	 	-0.60
	19158	 	DENTON FEDERAL
	 	EDDY, NM	 	-0.60
	19322	 	WESTALL B STATE
	 	EDDY, NM	 	-0.60
	19427	 	BEESON D FED #2
	 	EDDY, NM	 	-0.60
	19932	 	FOLK FEDERAL
	 	EDDY, NM	 	-0.60
	40322	 	STATE S 19 (YESO)
	 	EDDY, NM	 	-0.60
	40835	 	REDBUD FEDERAL
	 	EDDY, NM	 	-0.60
	41432	 	NEW MEXICO Z STATE
	 	EDDY, NM	 	-0.60
	41481	 	S & T STATE
	 	EDDY, NM	 	-0.60
	41504	 	RAPTOR STATE #1
	 	EDDY, NM	 	-0.60
	41786	 	DOVE STATE
	 	EDDY, NM	 	-0.60
	41926	 	STATE CA
	 	EDDY, NM	 	-0.60
	41983	 	MESILLA STATE #3
	 	EDDY, NM	 	-0.60
	42090	 	RJ UNIT (NORTH BATTERY)
	 	EDDY, NM	 	-0.60
	41478-001	 	ALSCOTT FEDERAL #1
	 	EDDY, NM	 	-0.60
	41478-002	 	ALSCOTT FEDERAL #2
	 	EDDY, NM	 	-0.60
	42120	 	POLARIS B FEDERAL #5
	 	EDDY, NM	 	-0.60
	12417	 	GRACE MITCHELL B
	 	LEA, NM	 	-0.60
	13201	 	LEAKER CC
	 	LEA, NM	 	-0.60
	14500	 	PEARSALL “BX”
	 	LEA, NM	 	-0.60
	15540	 	MONSANTO 30 STATE
	 	LEA, NM	 	-0.60
	16631	 	BATE FEDERAL #1
	 	LEA, NM	 	-0.60
	17360	 	FEDERAL 18 TONTO SWD
	 	LEA, NM	 	-0.60
	17596	 	PETRUS D
	 	LEA, NM	 	-0.60
	17633	 	PEARSALL “AX” #3
	 	LEA, NM	 	-0.60
	17771	 	EDWARD STATE
	 	LEA, NM	 	-0.60
	17847	 	PEARSALL QUEEN SAND UNIT
	 	LEA, NM	 	-0.60
	17936	 	BROWN FEDERAL (PEARSALL)
	 	LEA, NM	 	-0.60
	18483	 	JOHNS B #1
	 	LEA, NM	 	-0.60
	19054	 	WALLINGFORD
	 	LEA, NM	 	-0.60
	19697	 	WALKER FEDERAL #1 & #2
	 	LEA, NM	 	-0.60
	19812	 	BASSETT BIRNEY #1
	 	LEA, NM	 	-0.60
	40682	 	SAPPHIRE STATE
	 	LEA, NM	 	-0.60
	40917	 	PEARSALL AX
	 	LEA, NM	 	-0.60
	40925	 	WALKER FEDERAL #3
	 	LEA, NM	 	-0.60
	41430	 	ANTEATER FEDERAL
	 	LEA, NM	 	-0.60
	42059	 	CENTURY STATE #1
	 	LEA, NM	 	-0.60

 

 

	 	 	 	 	 	 	 
	NRC LSE#	 	LEASE NAME	 	COUNTY, ST	 	DEDUCT/BONUS
	13499-001	 	MILLER “B”
	 	LEA, NM	 	-0.60
	13499-002	 	MILLER BX
	 	LEA, NM	 	-0.60
	15965-001	 	ELLIOTT 31 FEDERAL #6
	 	LEA, NM	 	-0.60
	15965-002	 	ELLIOTT 31 FEDERAL #8
	 	LEA, NM	 	-0.60

EXHIBIT ‘C’

WEST TEXAS INTERMEDIATE LEASES

	 	 	 	 	 	 	 
	NRC LSE#	 	LEASE NAME	 	COUNTY, ST	 	DEDUCT/BONUS
	5276	 	BARNETT
	 	LOVING, TX	 	-0.98
	4397	 	DICKENSON 19
	 	MIDLAND, TX	 	-0.98
	40120	 	CLARENCE SCHARBAUER ET AL
	 	MIDLAND, TX	 	0.00
	31394	 	ATHEY STATE #1
	 	PECOS, TX	 	0.00
	42073	 	NEAL JO 49 #1
	 	PECOS, TX	 	0.00
	3837360	 	TENNECO MENDEL 38 #1,2 & 3
	 	PECOS, TX	 	-1.00
	3837382	 	TENNECO ROGERS 35 #1 & #2
	 	PECOS, TX	 	-1.00
	3838512	 	TEXACO ATA #1
	 	REEVES, TX	 	-1.00
	2561	 	UNIVERSITY 41 & 5
	 	ANDREWS, TX	 	-0.85
	31383	 	LOCKHART & BROWN #3
	 	ANDREWS, TX	 	0.00
	3381471	 	HUMBLE KING #1E & #2D
	 	ANDREWS, TX	 	-0.85
	3571243	 	HAYDEN MILES “A”
	 	ANDREWS, TX	 	-0.85
	5651-003	 	BITLERLOWE (COG) TRACT #2
	 	ANDREWS, TX	 	-0.85

EXHIBIT ‘D’

NEW MEXICO INTERMEDIATE LEASES

	 	 	 	 	 	 	 
	NRC LSE#	 	LEASE NAME	 	COUNTY, ST	 	DEDUCT/BONUS
	1660	 	GOLDRUSH 30 FEDERAL #7, 2 & 31 FED #1,2,3
	 	EDDY, NM	 	-0.95
	5213	 	STATE 11 COM #1
	 	EDDY, NM	 	-0.95
	5267	 	GOLDRUSH 30 FEDERAL #1,3,4,5,6
	 	EDDY, NM	 	-0.95
	5278	 	KEYSTONE BATTERY #1,2,5
	 	EDDY, NM	 	-0.95
	5279	 	KEYSTONE BATTERY #4 & HONDO STATE COM #1
	 	EDDY, NM	 	-0.95
	5280	 	GR 30 STATE #1,2,3
	 	EDDY, NM	 	-0.95
	5286	 	COCHITI 5 FEDERAL COM
	 	EDDY, NM	 	-0.95
	5295	 	DC 30 STATE #1
	 	EDDY, NM	 	-0.95
	5411	 	HANSON FEDERAL
	 	EDDY, NM	 	-0.95
	42103	 	BLUE THUNDER 5 #1
	 	EDDY, NM	 	-0.95
	15986	 	WHITE OAK STATE
	 	EDDY, NM	 	-0.85
	16202	 	G J WEST COOP UNIT (COM)
	 	EDDY, NM	 	-0.85
	16203	 	FEDERAL KL-17 #1
	 	EDDY, NM	 	-0.85
	18017	 	SINCLAIR PARK #1
	 	EDDY, NM	 	-0.85
	19092	 	WOOLLEY FEDERAL
	 	EDDY, NM	 	-0.85
	40271	 	BROWN BEAR COM #1
	 	EDDY, NM	 	-0.85
	40297	 	ANTELOPE 36 STATE COM
	 	EDDY, NM	 	-0.85
	40302	 	KODIAK FEDERAL
	 	EDDY, NM	 	-0.85
	40476	 	BARBARY 17 COM
	 	EDDY, NM	 	-0.85
	40929	 	IMPALA STATE
	 	EDDY, NM	 	-0.85
	41071	 	DOGWOOD FEDERAL
	 	EDDY, NM	 	-0.85
	41128	 	MAPLE STATE #1
	 	EDDY, NM	 	-0.85
	41293	 	DIAMONDBACKS STATE #1
	 	EDDY, NM	 	-0.85
	41840	 	ELECTRA FEDERAL #5
	 	EDDY, NM	 	-0.85
	41951	 	MESQUITE 17-19 BATTERY
	 	EDDY, NM	 	-0.85
	42011	 	MCINTYRE B #10
	 	EDDY, NM	 	-0.85
	42049	 	IMPERIAL STATE #7
	 	EDDY, NM	 	-0.85
	42097	 	REINDEER FEDERAL #1
	 	EDDY, NM	 	-0.85
	16626-001	 	MESQUITE STATE (EMPIRE YESO)
	 	EDDY, NM	 	-0.85
	16626-002	 	MESQUITE STATE (SAN ANDRES)
	 	EDDY, NM	 	-0.85
	17952-001	 	STATE S 19 #4 (ABO)
	 	EDDY, NM	 	-0.85
	17952-002	 	STATE S 19 #1 (ABO)
	 	EDDY, NM	 	-0.85

 

 

	 	 	 	 	 	 	 
	NRC LSE#	 	         LEASE NAME	 	COUNTY, ST	 	DEDUCT/BONUS
	42048-001	 	STATE S-19 #23 & #25
	 	EDDY, NM	 	-0.85
	42048-002	 	STATE S-19 #28
	 	EDDY, NM	 	-0.85
	42157	 	BLUE RIDGE 28 STATE #1
	 	EDDY, NM	 	-0.85
	16451	 	SCHLEY FEDERAL
	 	EDDY, NM	 	-0.78
	16478	 	WESTERN FEDERAL
	 	EDDY, NM	 	-0.78
	16565	 	MIMOSA STATE
	 	EDDY, NM	 	-0.78
	16581	 	TENNECO STATE
	 	EDDY, NM	 	-0.78
	16593	 	SPRUCE FEDERAL
	 	EDDY, NM	 	-0.78
	16870	 	ELK 22 FEDERAL
	 	EDDY, NM	 	-0.78
	19140	 	MCINTYRE A WEST (ABO)
	 	EDDY, NM	 	-0.78
	40051	 	BEECH FEDERAL
	 	EDDY, NM	 	-0.78
	40125	 	LOCO SW #1
	 	EDDY, NM	 	-0.78
	40337	 	FIR FEDERAL
	 	EDDY, NM	 	-0.78
	40431	 	ANTELOPE STATE
	 	EDDY, NM	 	-0.78
	40701	 	COYOTE STATE
	 	EDDY, NM	 	-0.78
	42002	 	CONTINENTAL A STATE #11 & 12
	 	EDDY, NM	 	-0.78
	41792	 	GOLDRUSH 29 FEDERAL #2
	 	EDDY, NM	 	0.00
	41863	 	BLUE THUNDER 4 FEDERAL #1
	 	EDDY, NM	 	0.00
	41874	 	STATE 11 COM #2
	 	EDDY, NM	 	0.00
	41932	 	WD MCINTYRE C #8
	 	EDDY, NM	 	0.00
	41996	 	HARVARD FEDERAL #5
	 	EDDY, NM	 	0.00
	42072	 	MOSLEY CANYON 6 STATE #1
	 	EDDY, NM	 	0.00
	15761	 	STATE K 33 COM #3
	 	LEA, NM	 	-1.00
	16667	 	STINGRAY 10 STATE
	 	LEA, NM	 	-0.85
	17867	 	LANGLEY A FEDERAL #1
	 	LEA, NM	 	-0.85
	18316	 	JON BOB #1
	 	LEA, NM	 	-0.85
	40127	 	BARRACUDA STATE
	 	LEA, NM	 	-0.85
	40311	 	CHINOOK STATE
	 	LEA, NM	 	-0.85
	40926	 	FOX FEDERAL
	 	LEA, NM	 	-0.85
	41104	 	PEARSALL A #2
	 	LEA, NM	 	-0.85
	41121	 	PEARSALL BX #7 & 9
	 	LEA, NM	 	-0.85
	41249	 	WEASEL FEDERAL #4
	 	LEA, NM	 	-0.85
	41372	 	RHINO FEDERAL #1
	 	LEA, NM	 	-0.85
	40911-001	 	PANTHER FEDERAL #1
	 	LEA, NM	 	-0.85
	40911-002	 	PANTHER FEDERAL #3
	 	LEA, NM	 	-0.85
	40911-003	 	PANTHER FEDERAL #5
	 	LEA, NM	 	-0.85
	40911-004	 	PANTHER FEDERAL #2
	 	LEA, NM	 	-0.85
	40911-005	 	PANTHER FEDERAL #4
	 	LEA, NM	 	-0.85
	41131-001	 	FEE MA B #4
	 	LEA, NM	 	-0.85
	41131-002	 	FEE MA B #5
	 	LEA, NM	 	-0.85
	41131-003	 	FEE MA B #6
	 	LEA, NM	 	-0.85
	41131-004	 	FEE MA B #7
	 	LEA, NM	 	-0.85
	5296	 	LOWE 20 #1,2
	 	LEA, NM	 	-0.75
	31382	 	BILBREY 34 FED #001
	 	LEA, NM	 	0.00
	31385	 	WILDTURKEY 9 STATE & 10 STATE
	 	LEA, NM	 	0.00
	31386	 	PROHIBITION FEDERAL UNIT #3
	 	LEA, NM	 	0.00
	31387	 	EMERALD FEDERAL #1
	 	LEA, NM	 	0.00
	31391	 	PROHIBITION FEDERAL UNIT #1
	 	LEA, NM	 	0.00
	31392	 	PROHIBITION #4 & #6
	 	LEA, NM	 	0.00
	41898	 	PROHIBITION 12 FEDERAL #7 & #8
	 	LEA, NM	 	0.00
	42054	 	PROHIBITION 12 FEDERAL #10, 12
	 	LEA, NM	 	0.00

 

 

EXHIBIT ‘E’

WEST TEXAS SOUR LEASES

	 	 	 	 	 	 	 
	NRC LSE#	 	LEASE NAME	 	COUNTY, ST	 	DEDUCT/BONUS
	3571241	 	MILES HAYDEN A & MILES B
	 	ANDREWS, TX	 	-0.88
	1025	 	SOUTHLAND ROYALTY D #1 & C #2
	 	ANDREWS, TX	 	-0.85
	1026	 	SOUTHLAND ROYALTY C #1,3,4 & D #4
	 	ANDREWS, TX	 	-0.85
	5651-002	 	BITLERLOWE (COG) TRACT #2 & 3
	 	ANDREWS, TX	 	-0.85
	3179119	 	DEEP ROCK A
	 	ANDREWS, TX	 	-0.85
	3635700	 	OGDEN A & B
	 	ANDREWS, TX	 	-0.85
	31393	 	WHITE #2
	 	ANDREWS, TX	 	0.00
	31395	 	BITLERLOWE B
	 	ANDREWS, TX	 	0.00
	42038	 	M R LOWE 15 #1
	 	ANDREWS, TX	 	0.00
	3659	 	L B RUSSELL
	 	GAINES, TX	 	-0.86
	1508	 	STRAUCH HAMMOND CUNNINGHAM
	 	GAINES, TX	 	-0.68
	2604	 	FIELDS #1-3 & ANCELL
	 	GAINES, TX	 	-0.68
	31396	 	NORTHRUP-LINDSEY
	 	GAINES, TX	 	0.00
	40090	 	HOPKINS UNIT
	 	GAINES, TX	 	0.00
	42014	 	WINKLES #1
	 	GAINES, TX	 	0.00

EXHIBIT ‘F’

NEW MEXICO SOUR LEASES

	 	 	 	 	 	 	 	 	 	 	 
	NRC LSE#	 	LEASE NAME	 	COUNTY, ST	 	 	DEDUCT/BONUS	 
	31384	 	M D SELF #3, #5, #6
	 	 	 	LEA, NM	 	 	0.00	 
	40615	 	WEST CORBIN 13, 13A, UNCLE SAM 13
	 		 	LEA, NM	 	 	0.00	 
	42031	 	CHOLLA STATE #1
	 	 	 	LEA, NM	 	 	0.00	 

EXHIBIT ‘G’

NEW MEXICO SOUR LEASES

	 	 	 	 	 	 	 
	NRC LSE#	 	LEASE NAME	 	COUNTY, ST	 	DEDUCT/BONUS
	15318	 	PRONGHORN SWD #1
	 	LEA, NM	 	0.00
	42058	 	BARREL STATE #1
	 	LEA, NM	 	0.00

EXHIBIT ‘H’

NEW MEXICO INTERMEDIATE LEASE

	 	 	 	 	 	 	 
	NRC LSE#	 	LEASE NAME 	 	COUNTY, ST	 	DEDUCT/BONUS
	42012	 	HANSON 33 FEDERAL #4
	 	EDDY, NM	 	0.00

EXHIBIT ‘I’

WEST TEXAS INTERMEDIATE LEASE

	 	 	 	 	 	 	 
	NRC LSE#	 	LEASE NAME	 	COUNTY, ST	 	DEDUCT/BONUS
	3296000	 	FULLER
	 	HOWARD, TX	 	-0.84
	3765450	 	J B RYAN 1-10
	 	HOWARD, TX	 	-0.84
	3765680	 	T P RYAN
	 	HOWARD, TX	 	-0.84
	3831320	 	TALBOT #2 & #4
	 	HOWARD, TX	 	-0.84
	3832320	 	TATE D #1 & #2
	 	HOWARD, TX	 	-0.84

 

 

GENERAL PROVISIONS

DOMESTIC CRUDE OIL AGREEMENTS

A. Measurement and Tests: All measurements hereunder shall be made from static tank gauges on 100
percent tank table basis or by positive displacement meters. All measurements and tests shall be
made in accordance with the latest ASTM or ASME-API (Petroleum PD Meter Code) published methods
then in effect, whichever apply. Volume and gravity shall be adjusted to 60 degrees Fahrenheit by
the use of Table 6A and 5A of the Petroleum Measurement Tables ASTM Designation D1250 in their
latest revision. The crude oil delivered hereunder shall be marketable and acceptable in the
applicable common or segregated stream of the carriers involved but not to exceed 1% S&W. Full
deduction for all free water and S&W content shall be made according to the API/ASTM Standard
Method then in effect. Either party shall have the right to have a representative witness all
gauges, tests and measurements. In the absence of the other party’s representative, such gauges,
tests and measurements shall be deemed to be correct.

B. Warranty: The Seller warrants good title to all crude oil delivered hereunder and warrants that
such crude oil shall be free from all royalties, liens, encumbrances and all applicable foreign,
federal, state and local taxes.

     Seller further warrants that the crude oil delivered shall not be contaminated by chemicals
foreign to virgin crude oil including, but not limited to chlorinated and/or oxygenated
hydrocarbons and lead. Buyer shall have the right, without prejudice to any other remedy available
to Buyer, to reject and return to Seller any quantities of crude oil which are found to be so
contaminated, even after delivery to Buyer.

C. Rules and Regulations: The terms, provisions and activities undertaken pursuant to this
Agreement shall be subject to all applicable laws, orders and regulations of all governmental
authorities. If at any time a provision hereof violates any such applicable laws, orders or
regulations, such provision shall be voided and the remainder of the Agreement shall continue in
full force and effect unless terminated by either party upon giving written notice to the other
party hereto. If applicable, the parties hereto agree to comply with all provisions (as amended)
of the Equal Opportunity Clause prescribed in 41 C.F.R. 60-1.4; the Affirmative Action Clause for
disabled veterans and veterans of the Vietnam Era prescribed in 41 C.F.R. 60-250.4; the Affirmative
Action Clause for Handicapped Workers prescribed in 41 C.F.R. 60-741.4; 48 C.F.R. Chapter 1 Subpart
19.7 regarding Small Business and Small Disadvantaged Business Concerns; 48 C.F.R. Chapter 1
Subpart 20.3 regarding Utilization of Labor Surplus Area Concerns; Executive Order 12138 and
regulations thereunder regarding subcontracts to women-owned business concerns; Affirmative Action
Complicance Program (41 C.F.R. 60-1.40); annually file SF-100 Employer Information Report (41
C.F.R. 60-1.7); 41 C.F.R. 60-1.8 prohibiting segregated facilities; and the Fair Labor Standards
Act of 1938 as amended, all of which are incorporated in this Agreement by reference.

D. Hazard Communication: Seller shall provide its Material Safety Data Sheet (“MSDS”) to Buyer.
Buyer acknowledges the hazards and risks in handling and using crude oil. Buyer shall read the
MSDS and advise its employees, its affiliates, and third parties, who may purchase or come into
contact with such crude oil, about the hazards of crude oil, as well as the precautionary
procedures for handling said crude oil, which are set forth in such MSDS and any supplementary MSDS
or written warning(s) which Seller may provide to Buyer from time to time.

E. Force Majeure: Except for payment due hereunder, either party hereto shall be relieved from
liability for failure to perform hereunder for the duration and to the extent such failure is
occasioned by war, riots, insurrections, fire, explosions, sabotage, strikes, and other labor or
industrial disturbances, acts of God or the elements, governmental laws, regulations, or requests,
acts in furtherance of the International Energy Program, disruption or breakdown of production or
transportation facilities, delays of pipeline carrier in receiving and delivering crude oil
tendered, or by any other cause, whether similar or not, reasonably beyond the control of such
party. Any such failures to perform shall be remedied with all reasonable dispatch, but neither
party shall be required to supply substitute quantities from other sources of supply. Failure to
perform due to events of Force Majeure shall not extend the terms of this Agreement.

     Notwithstanding the above, and in the event that the Agreement is an associated purchase/sale,
or exchange of crude oil, the parties shall have the rights and obligations described below in the
circumstances described below:

     (1) If, because of Force Majeure, the party declaring Force Majeure (the “Declaring Party”) is
unable to deliver part or all of the quantity of crude oil which the Declaring Party is obligated
to deliver under the Agreement or associated contract, the other party (the “Exchange Partner”)
shall have the right but not the obligation to reduce its deliveries of crude oil under the same
Agreement or associated contract by an amount not to exceed the number of barrels of crude oil that
the Declaring Party fails to deliver.

     (2) If, because of Force Majeure, the Declaring Party is unable to take delivery of part or
all of the quantity of crude oil to be delivered by the Exchange Partner under the Agreement or
associated contract, the Exchange Partner shall have the right but not the obligation to reduce its
receipts of crude oil under the same Agreement or associated contract by an amount not to exceed
the number of barrels of crude oil that the Declaring Party fails to take delivery of.

F. Payment: Unless otherwise specified in the Special Provisions of this Agreement, Buyer agrees
to make payment against Seller’s invoice for the crude oil purchased hereunder to a bank designated
by Seller in U.S. dollars by telegraphic transfer in immediately available funds. Unless otherwise
specified in the Special Provisions of this Agreement, payment will be due on or before the 20th of
the month following the month of delivery. If payment due date is on a Saturday or New York bank
holiday other than Monday, payment shall be due on the preceding New York banking day. If payment
due date is on a Sunday or a Monday New York bank holiday, payment shall be due on the succeeding
New York banking day.

     Payment shall be deemed to be made on the date good funds are credited to Seller’s account at
Seller’s designated bank.

     In the event that Buyer fails to make any payment when due, Seller shall have the right to
charge interest on the amount of the overdue payment at a per annum rate which shall be two
percentage points higher than the published prime lending rate of Morgan Guaranty Trust Company of
New York on the date payment was due, but not to exceed the maximum rate permitted by law.

Effective January 1, 1993

Supersedes November 1983 General Provisions

 

 

G. Financial Responsibility: Notwithstanding anything to the contrary in this Agreement, should
Seller reasonably believe it necessary to assure payment, Seller may at any time require, by
written notice to Buyer, advance cash payment or satisfactory security in the form of a Letter or
Letters of Credit at Buyer’s expense in a form and from a bank acceptable to Seller to cover any or
all deliveries of crude oil. If Buyer does not provide the Letter of Credit on or before the date
specified in Seller’s notice under this section, Seller or Buyer may terminate this Agreement
forthwith. However, if a Letter of Credit is required under the Special Provisions of this
Agreement and Buyer does not provide same, then Seller only may terminate this Agreement forthwith.
In no event shall Seller be obligated to schedule or complete delivery of the crude oil until said
Letter of Credit is found acceptable to Seller. Each party may offset any payments or deliveries
due to the other party under this or any other agreement between the parties.

     If a party to this Agreement (the “Defaulting Party”) should (1) become the subject of
bankruptcy or other insolvency proceedings, or proceedings for the appointment of a receiver,
trustee, or similar official, (2) become generally unable to pay its debts as they become due, or
(3) make a general assignment for the benefit of creditors, the other party to this Agreement may
withhold shipments without notice.

H. Liquidation:

     (1) Right to Liquidate. At any time after the occurrence of one or more of the events
described in the third paragraph of Section G, Financial Responsibility, the other party to the
Agreement (the “Liquidating Party”) shall have the right, at its sole discretion, to liquidate this
Agreement by terminating this Agreement. Upon termination, the parties shall have no further
rights or obligations with respect to this Agreement, except for the payment of the amount(s) (the
“Settlement Amount” or “Settlement Amounts”) determined as provided in Paragraph (3) of this
section.

     (2) Multiple Deliveries. If this Agreement provides for multiple deliveries of one or more
types of crude oil in the same or different
delivery months, or for the purchase or exchange of crude oil by the parties, all deliveries under
this Agreement to the same party at the same delivery location during a particular delivery month
shall be considered a single commodity transaction (“Commodity Transaction”) for the purpose of
determining the Settlement Amount(s). If the Liquidating Party elects to liquidate this Agreement,
the Liquidating Party must terminate all Commodity Transactions under this Agreement.

     (3) Settlement Amount. With respect to each terminated Commodity Transaction, the Settlement
Amount shall be equal to the contract quantity of crude oil, multiplied by the difference between
the contract price per barrel specified in this Agreement (the “Contract Price”) and the market
price per barrel of crude oil on the date the Liquidating Party terminates this Agreement (the
“Market Price”). If the Market Price exceeds the Contract Price in a Commodity Transaction, the
selling party shall pay the Settlement Amount to the buying party. If the Market Price is less
than the Contract Price in a Commodity Transaction, the buying party shall pay the Settlement
Amount to the selling party. If the Market Price is equal to the Contract Price in a Commodity
Transaction, no Settlement Amount shall be due.

     (4) Termination Date. For the purpose of determining the Settlement Amount, the date on
which the Liquidating Party terminates this Agreement shall be deemed to be (a) the date on which
the Liquidating Party sends written notice of termination to the Defaulting Party, if such notice
of termination is sent by telex or facsimile transaction; or (b) the date on which the Defaulting
Party receives written notice of termination from the Liquidating Party, if such notice of
termination is given by United States mail or a private mail delivery service.

     (5) Market Price. Unless otherwise provided in this Agreement, the Market Price of crude oil
sold or exchanged under this Agreement shall be the price for crude oil for the delivery month
specified in this Agreement and at the delivery location that corresponds to the delivery location
specified in this Agreement, as reported in Platt’s Oilgram Price Report (“Platt’s”) for the date
on which the Liquidating Party terminates this Agreement. If Platt’s reports a range of prices for
crude oil on that date, the Market Price shall be the arithmetic average of the high and low prices
reported by Platt’s. If Platt’s does not report prices for the crude oil being sold under this
Agreement, the Liquidating Party shall determine the Market Price of such crude oil in a
commercially reasonable manner, unless otherwise provided in this Agreement.

     (6) Payment of Settlement Amount. Any Settlement Amount due upon termination of this
Agreement shall be paid in immediately available funds within two business days after the
Liquidating Party terminates this Agreement. However, if this Agreement provides for more than one
Commodity Transaction, or if Settlement Amounts are due under other agreements terminated by the
Liquidating Party, the Settlement Amounts due to each party for such Commodity Transactions and/or
agreements shall be aggregated. The party owing the net amount after such aggregation shall pay
such net amount to the other party in immediately available funds within two business days after
the date on which the Liquidating Party terminates this Agreement.

     (7) Miscellaneous. This section shall not limit the rights and remedies available to the
Liquidating Party by law or under other provisions of this Agreement. The parties hereby
acknowledge that this Agreement constitutes a forward contract for purposes of Section 556 of the
U.S. Bankruptcy Code.

I. Equal Daily Deliveries: For pricing purposes only, unless otherwise specified in the Special
Provisions, all crude oil delivered hereunder during any calendar month shall be considered to have
been delivered in equal daily quantities during such month.

J. Exchange Balancing: If volumes are exchanged, each party shall be responsible for
maintaining the exchange in balance on a month-to-month basis, as near as pipeline or other
transportation conditions will permit. In all events upon termination of this Agreement
and after all monetary obligations under this Agreement have been satisfied, any volume
imbalance existing at the conclusion of this Agreement of less than 1,000 barrels will be
declared in balance. Any volume imbalance of 1,000 barrels or more, limited to the total
contract volume, will be settled by the underdelivering party making delivery of the total
volume imbalance in accordance with the delivery provisions of this Agreement applicable to
the underdelivering party, unless mutually agreed to the contrary. The request to schedule
all volume imbalances must be confirmed in writing by one party or both parties. Volume
imbalances confirmed by the 20th of the month shall be delivered during the calendar month
after the volume imbalance is confirmed. Volume imbalances confirmed after the 20th of the
month shall be delivered during the second calendar month after the volume imbalance is
confirmed.

Effective January 1, 1993

Supersedes November 1983 General Provisions

 

 

K. Delivery, Title, and Risk of Loss: Delivery, title, and risk of loss of the crude oil delivered
hereunder shall pass from Seller to Buyer as follows:

     For lease delivery locations, delivery of the
crude oil to the Buyer shall be effected as the crude oil passes the last permanent delivery flange
and/or meter connecting the Seller’s lease/unit storage tanks or processing facilities to the
Buyer’s carrier. Title to and risk of loss of the crude oil shall pass from Seller to Buyer at the
point of delivery.

     For delivery locations other than lease/unit delivery locations, delivery of the crude oil to
the Buyer shall be effected as the crude oil passes the last permanent delivery flange and/or meter
connecting the delivery facility designated by the Seller to the Buyer’s carrier. If delivery is
by in-line transfer, delivery of the crude oil to the Buyer shall be effected at the particular
pipeline facility designated in this Agreement. Title to and risk of loss of the crude oil shall
pass from the Seller to the Buyer upon delivery.

L. Term: Unless otherwise specified in the Special Provisions, delivery months begin at 7:00 a.m.
on the first day of the calendar month and end at 7:00 a.m. on the first day of the following
calendar month.

M. Governing Law: This Agreement and any disputes arising hereunder shall be governed by the laws
of the State of Texas.

N. Necessary Documents: Upon request, each party agrees to furnish all substantiating documents
incident to the transaction, including a Delivery Ticket for each volume delivered and an invoice
for any month in which the sums are due.

O. Waiver: No waiver by either party regarding the performance of the other party under any of the
provisions of this Agreement shall be construed as a waiver of any subsequent performance under the
same or any other provisions.

P. Assignment: Neither party shall assign this Agreement or any rights hereunder without the
written consent of the other party unless such assignment is made to a person controlling,
controlled by or under common control of assignor, in which event assignor shall remain responsible
for nonperformance.

Q. Entirety of Agreement: The Special Provisions and these General Provisions contain the entire
Agreement of the parties; there are no other promises, representations or warranties. Any
modification of this Agreement shall be by written instrument. Any conflict between the Special
Provisions and these General Provisions shall be resolved in favor of the Special Provisions. The
section headings are for convenience only and shall not limit or change the subject matter of this
Agreement.

R. Definitions: When used in this Agreement, the terms listed below have the following meanings:

     “API” means the American Petroleum Institute.

     “ASME” means the American Society of Mechanical Engineers.

     “ASTM” means the American Society for Testing Materials.

     “Barrel” means 42 U.S. gallons of 231 cubic inches per gallon corrected to 60 degrees
Fahrenheit.

     “Carrier” means a pipeline, barge, truck, or other suitable transporter of crude oil.

     “Crude Oil” means crude oil or condensate, as appropriate.

     “Day,” “month,” and “year” mean, respectively, calendar day, calendar month, and calendar
year, unless otherwise specified.

     “Delivery Ticket” means a shipping/loading document or documents stating the type and quality
of crude oil delivered, the volume delivered and method of measurement, the corrected specific
gravity, temperature, and S&W content.

     “Invoice” means a statement setting forth at least the following information: The date(s) of
delivery under the transaction; the location(s) of delivery; the volume(s); price(s); the specific
gravity and gravity adjustments to the price(s) (where applicable); and the term(s) of payment.

     “S&W” means sediment and water.

Effective January 1, 1993

Supersedes November 1983 General Provisionsexv10w27

 

Exhibit 10.27

Execution Version

FIRST AMENDMENT TO CREDIT AGREEMENT

     THIS FIRST AMENDMENT TO CREDIT AGREEMENT (hereinafter referred to as this “Amendment”)
dated as of July 6, 2006, by and among CONCHO RESOURCES INC., a Delaware corporation (the
“Borrower”), CERTAIN SUBSIDIARIES OF BORROWER, as Guarantors (the “Guarantors”),
the LENDERS party hereto (the “Lenders”), JPMORGAN CHASE BANK, N.A., a national banking
association, as Administrative Agent (in such capacity, “Administrative Agent”). Unless
the context otherwise requires or unless otherwise expressly defined herein, capitalized terms used
but not defined in this Amendment have the meanings assigned to such terms in the Credit Agreement
(as defined below).

WITNESSETH:

     WHEREAS, Borrower, Guarantors, Administrative Agent and Lenders entered into that certain
Credit Agreement dated as of February 24, 2006, (as amended, supplemented or otherwise modified
from time to time, the “Credit Agreement”); and

     WHEREAS, Borrower has requested that Administrative Agent and Lenders amend the Credit
Agreement to permit the Borrower to obtain additional financing in the form of a $40,000,000 second
lien term loan; and Administrative Agent and Lenders (or at least the required percentage thereof)
have agreed to do so on the terms and conditions hereinafter set forth; and

     NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein
contained and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged and confessed, Borrower, Guarantors, Administrative Agent and Lenders, hereby
agree as follows:

SECTION 1. Amendments to Credit Agreement. Subject to the satisfaction or waiver in writing of
each condition precedent set forth in Section 3 hereof, and in reliance on the
representations, warranties, covenants and agreements contained in this Amendment, the Credit
Agreement shall be amended in the manner provided in this Section 1.

     1.1 Additional Definitions. Section 1.01 of the Credit Agreement shall be and it
hereby is amended by inserting the following definitions in appropriate alphabetical order:

     “Base CD Rate” means the sum of (a) the Three-Month Secondary CD Rate
multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.

     “Borrowing Base Deficiency” means, as of any date, the amount, if any,
by which the Aggregate Credit Exposure on such date exceeds the Borrowing Base in
effect on such date; provided, that, for purposes of determining the
existence and amount of any Borrowing Base Deficiency, L/C Obligations will not be
deemed to be outstanding to the extent such obligations are secured by cash in the
manner contemplated by Section 2.04(j).

First Amendment to Credit Agreement — Page 1

 

     “Intercreditor Agreement” means the Intercreditor Agreement dated as of
July 6, 2006, among the Administrative Agent, the Term Agent, the Borrower and each
Guarantor.

     “Second Priority Obligations” has the meaning assigned to such term in
the Intercreditor Agreement.

     “Term Agent” means, Bank of America, N.A. in its capacity as
contractual representative of the financial institutions and other Persons from time
to time a party to the Term Facility and any successor agent appointed pursuant to
the terms of the Term Facility Documents.

     “Term Facility” means the term loan facility evidenced by the Term
Facility Documents.

     “Term Facility Documents” means that certain Credit Agreement dated
July 6, 2006, by and among Borrower, the financial institutions named therein
(including Bank of America, N.A.) and the Term Agent and any promissory notes
executed in connection therewith, security instruments and any other agreements
executed in connection with such Credit Agreement as the same may be amended,
modified, supplemented or restated from time to time to the extent permitted under
this Agreement.

     “Term Loans” means the term loans made under the Term Facility.

     1.2 Amended Definitions. The following definitions in Section 1.01 of the Credit
Agreement shall be and they hereby are amended and restated in their entirety to read as follows:

     “Borrowing Base Properties” means, at any time, the properties and
reserves (which properties and reserves shall be free of any Liens other than Liens
permitted under Section 7.01) of Borrower and its Restricted Subsidiaries that were
evaluated in the most recent Engineering Report delivered to the Administrative
Agent pursuant to this Agreement and other information provided by the Borrower
pursuant to Section 3.01 for the calculation of the Borrowing Base in effect at such
time.

     “Consolidated Net Income” means, for any period, for the Borrower and
its Subsidiaries on a consolidated basis, the net income of the Borrower and its
Subsidiaries (excluding extraordinary gains and extraordinary losses and the net
income of any Person (other than the Borrower or a Restricted Subsidiary) for that
period, except to the extent of the amount of dividends and distributions actually
received by the Borrower or a Restricted Subsidiary), provided that the
calculation of Consolidated Net Income shall exclude any non-cash charges or losses
and any non-cash income or gains, in each case required to be included in net income
of the Borrower and its Subsidiaries as a result of the application of Financial
Accounting Standard Board Statements 133 or 143, but shall expressly include any
cash charges or payments that have been incurred as a result of the termination of
any Swap Contract.

First Amendment to Credit Agreement — Page 2

 

     “Disqualified Stock” means any Equity Interest which, by its terms (or
by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable in cash, pursuant to a sinking fund obligation or otherwise, or is
redeemable at the sole option of the holder thereof, in whole or in part, on or
prior to the Maturity Date; provided, that any Equity Interest that would
not constitute Disqualified Stock but for provisions thereof giving holders thereof
the rights to require the issuer of such Equity Interest to repurchase or redeem
such Equity Interest upon the occurrence of (x) an “asset sale” or a “change of
control” that also results in a Change in Control shall not constitute Disqualified
Stock or (y) a “default” or an “event of default” shall not constitute Disqualified
Stock; provided further, that in each case with respect to the
foregoing clauses (x) and (y), the obligations of the Borrower to repurchase or
redeem such Equity Interest is required only if permitted under the terms of this
Agreement or with the consent of the Required Lenders or such obligations are
subordinated to the Obligations on terms and conditions reasonably satisfactory to
the Required Lenders.

     “GAAP” means those generally accepted accounting principles and
practices that are recognized as such by the Financial Accounting Standards Board
(or any generally recognized successor). If any change in any accounting principle
or practice is required by the Financial Accounting Standards Board (or any such
successor) in order for such principle or practice to continue as a generally
accepted accounting principle or practice, all reports and financial statements
required hereunder with respect to the Borrower or with respect to the Borrower and
its Subsidiaries must be prepared in accordance with such change. In the event any
changes in GAAP materially affect the calculation of the Consolidated Leverage
Ratio, Consolidated Current Assets or Consolidated Current Liabilities, the
Borrower and the Lenders agree to enter into good faith negotiations for an
agreement to revise such tests to take into account such changes in GAAP; until the
Borrower and the Lenders have entered into such an agreement, such financial
calculation shall continue to be made in accordance with GAAP as in effect
immediately preceding the date of such change.

     “LIBO Rate” means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Telerate (or on any
successor or substitute page of such Service, or any successor to or substitute for
such Service, providing rate quotations comparable to those currently provided on
such page of such Service, as determined by the Administrative Agent from time to
time for purposes of providing quotations of interest rates applicable to dollar
deposits in the London interbank market) at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period, as the rate for
dollar deposits with a maturity comparable to such Interest Period. In the event
that such rate is not available at such time for any reason, then the “LIBO
Rate” with respect to such Eurodollar Borrowing for such Interest Period shall
be the rate at which dollar deposits of $5,000,000 and for a maturity comparable to
such Interest Period are offered by the principal London

First Amendment to Credit Agreement — Page 3

 

office of the Administrative Agent in immediately available funds in the London
interbank market at approximately 11:00 a.m., London time, two Business Days prior
to the commencement of such Interest Period.

     “Obligations” means all advances to, and debts, liabilities,
obligations, covenants and duties of, any Loan Party arising under any Loan Document
or otherwise with respect to any Loan or Letter of Credit, whether direct or
indirect (including those acquired by assumption), or under any Swap Contract with
any Lender Counterparty (including obligations under the Existing Swap Contracts and
obligations arising under any transaction under any other Swap Contract with any
Person that was, at or after the time such transaction was entered into, a Lender
Counterparty), absolute or contingent, due or to become due, now existing or
hereafter arising and including interest and fees that accrue after the commencement
by or against any Loan Party of any proceeding under any Debtor Relief Laws naming
such Person as the debtor in such proceeding, regardless of whether such interest
and fees are allowed claims in such proceeding.

     “Permitted Family Partnerships” means the S. Beal Family Partnership,
Ltd. and Leach Properties, Ltd; provided such partnerships are controlled by Steven
L. Beal and Timothy A. Leach, respectively, or their respective spouses or lineal
descendants or trusts created solely for the benefit of such Persons.

     “Required Lenders” means, at any time, Lenders having Revolving Credit
Exposures and Unused Commitments representing at least 66-2/3% of the sum of the
Aggregate Credit Exposure and all Unused Commitments of all Lenders at such time or,
if the Aggregate Commitment has been terminated, Lenders having Revolving Credit
Exposures representing at least 66-2/3% of the sum of the Aggregate Credit Exposure
of all Lenders at such time; provided that the Commitment of and the Revolving
Credit Exposures held or deemed held by any Defaulting Lender shall be excluded for
purposes of making a determination of the Required Lenders.

     “Security Instruments” shall mean the agreements or instruments
described or referred to in Schedule 1.01, the Intercreditor Agreement and any other
Guaranties, Mortgages, Pledge Agreements, security agreements and any and all other
agreements or instruments previously, now or hereafter executed and delivered by any
Loan Party or any other Person to guaranty, or provide security for the payment or
performance of, the Obligations, this Agreement, the Guaranties or any other Loan
Document, as any such instrument or agreement may be supplemented, amended, renewed,
extended or restated from time to time.

     1.3 Deleted Definitions. Section 1.01 of the Credit Agreement shall be and it hereby
is amended by deleting the definitions of “Audited Financial Statements,” “Capitalized Lease” and
“Operating Budget.”

     1.4 Accounting Terms. Section 1.03 of the Credit Agreement shall be and it hereby is
amended to read in its entirety as follows:

First Amendment to Credit Agreement — Page 4

 

     1.03 Accounting Terms. All accounting terms not specifically or
completely defined herein shall be construed in conformity with, and all financial
data (including financial ratios and other financial calculations) required to be
submitted pursuant to this Agreement shall be prepared in conformity with, GAAP
applied on a consistent basis, as in effect from time to time, except as
otherwise specifically prescribed herein.

     1.5 Binding Effect. Section 5.04 of the Credit Agreement shall be and it hereby is
amended to read in its entirety as follows:

     5.04 Binding Effect. This Agreement has been, and each other Loan
Document, when delivered hereunder, will have been, duly executed and delivered by
each Loan Party that is party thereto. This Agreement constitutes, and each other
Loan Document when so delivered will constitute, a legal, valid and binding
obligation of such Loan Party, enforceable against each Loan Party that is party
thereto in accordance with its terms subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights generally and
subject to general principles of equity, regardless of whether considered in a
proceeding in law or in equity.

     1.6 Equity Interests. Section 5.13 of the Credit Agreement shall be and it hereby is
amended to read in its entirety as follows:

     5.13 Subsidiaries; Equity Interests. As of the Closing Date, the
Borrower has no Subsidiaries other than those specifically disclosed in Part(a) of
Schedule 5.13, and all of the outstanding Equity Interests in such
Subsidiaries have been validly issued, are fully paid and nonassessable (except for
such Equity Interests consisting of partnership interests and membership interests)
and are owned by a Loan Party as specified, and in the amounts specified, on Part(a)
of Schedule 5.13, free and clear of all Liens (except for Liens created by
the Loan Documents and the Liens permitted under Section 7.03(g)). The Borrower has
no Equity Interests in any other corporation or entity other than those specifically
disclosed in Part(b) of Schedule 5.13. After giving effect to the
Transactions, and prior to the IPO Date, a majority of the outstanding Equity
Interests in the Borrower are owned by the Control Group.

     1.7 Budgets. Section 6.01(c) of the Credit Agreement shall be and it hereby is
amended to read in its entirety as follows:

     (c) On or before April 1 of each Fiscal Year (i) commencing April 1, 2007, an
engineering report prepared or audited by a Designated Engineer, dated as of the
preceding January 1, covering oil and gas reserves attributable to the Borrowing
Base Properties, including a calculation of PV 10 Value (the present value of the
Borrowing Base Properties discounted at 10%); and (ii) commencing April 1, 2007, an
annual operating budget prepared by the Borrower in reasonable detail, based upon
reasonable assumptions made in good faith by the Borrower, which sets forth
quarterly financial projections for the then current

First Amendment to Credit Agreement — Page 5

 

Fiscal Year and annual financial projections for each Fiscal Year thereafter
through the Maturity Date; and

     1.8 Additional Guarantors. The penultimate sentence of Section 6.12 of the Credit
Agreement shall be and it hereby is amended to read in its entirety as follows:

     As and when requested by the Administrative Agent, (1) the Borrower will cause
such Restricted Subsidiary to execute a Mortgage (to the extent it owns Borrowing
Base Properties and such Mortgage is necessary to cause the Borrower to comply with
Section 6.16(c)) or other security agreement in form and substance acceptable to
Administrative Agent (to the extent it owns personal property and such security
agreement is necessary to cause the Borrower to comply with Section 6.16(c)) and
promptly take such actions to create and perfect Liens on such Restricted
Subsidiary’s assets to secure the Obligations as Administrative Agent, the L/C
Issuer or the Required Lenders shall reasonably request, and (2) if any stock,
membership interest, partnership interest or other equity interest in, or
Indebtedness of, such Restricted Subsidiary is owned by the Borrower or any other
Restricted Subsidiary, the Borrower will cause such stock, membership interest,
partnership interest or other equity interest, and promissory notes evidencing such
Indebtedness, to be pledged pursuant to a Pledge Agreement delivered to the
Administrative Agent promptly after such Restricted Subsidiary is formed or acquired
or within such other time frame as acceptable to the Administrative Agent and
promptly take such actions to create and perfect Liens on such assets to secure the
Obligations as the Administrative Agent or the Required Lenders shall reasonably
request.

     1.9 Title Information. Section 6.14 of the Credit Agreement shall be and it hereby is
amended to read in its entirety as follows:

     6.14 Delivery of Title Information. As and when requested by the
Administrative Agent, deliver to the Administrative Agent such reports, opinions of
counsel (which opinions are not required to be addressed to the Administrative
Agent) and other evidence of title as the Administrative Agent shall deem necessary
or appropriate to verify (i) clear and valid title of the Borrower and its
Restricted Subsidiaries to not less than eighty percent (80%) of the Engineered
Value of the Borrowing Base Properties that are subject to a Mortgage and at least
the working interest and net revenue interest in such oil and gas properties set
forth in the most recent Engineering Report and (ii) the validity, perfection and
priority of the Liens created by the Mortgages and Security Instruments and such
other matters regarding such Mortgages as Administrative Agent shall reasonably
request, except that opinions of counsel regarding priority of the Liens shall not
be required.

     1.10 Further Assurances. Section 6.16(c) of the Credit Agreement shall be and it
hereby is amended to read in its entirety as follows:

First Amendment to Credit Agreement — Page 6

 

     (c) The Borrower shall, and shall cause each of its Restricted Subsidiaries to
take such actions and execute and deliver such documents and instruments as
Administrative Agent shall reasonably require to ensure that the Administrative
Agent shall, at all times, have received currently effective, duly executed
Mortgages as may be necessary or, in the reasonable opinion of Administrative Agent,
desirable to effectively create a valid, perfected and first priority Lien against
Borrowing Base Properties representing at least 80% of the Engineered Value of all
proved Borrowing Base Properties included in the most recent Engineering Report
provided to the Lenders, and the Borrower and its Restricted Subsidiaries shall, at
the request of Administrative Agent, execute and deliver such additional Mortgages
as may be necessary or, in the reasonable opinion of Administrative Agent, desirable
to effectively create a valid, perfected and first priority Lien, subject only to
the Liens permitted under Section 7.01, against 80% of the Engineered Value of the
proved Borrowing Base Properties included in the most recent Engineering Report
provided to the Lenders.

     1.11 Liens. Section 7.01 of the Credit Agreement shall be and it hereby is amended by
deleting the word “and” at the end of clause (e) of such Section, deleting the period “.” at the
end of clause (f) of such Section and inserting “; and” at the end of such clause (f) and by adding
the following at the end of such Section as clause (g):

     (g) Subject to the Intercreditor Agreement, Liens securing Indebtedness
permitted by clause (f) of Section 7.03; provided that such Liens (i) shall not
encumber any asset or property that is not subject to a Lien of the appropriate
priority in favor of, or for the benefit of, the Lenders to secure the Obligations,
and (ii) shall be contractually subordinate to the Liens created pursuant to the
Security Instruments on the terms set forth in the Intercreditor Agreement or on
terms otherwise reasonably satisfactory to the Administrative Agent.

     1.12 Indebtedness. Section 7.03 of the Credit Agreement shall be and it hereby is
amended by deleting the word “and” at the end of clause (d) of such Section, deleting the period
“.” at the end of clause (e) of such Section and inserting “; and” at the end of such clause (e)
and by adding the following at the end of such Section as clause (f):

     (f) Indebtedness under the Term Facility in an aggregate principal amount not
exceeding $40,000,000 at any time outstanding and any refinancing of such
Indebtedness so long as (i) any such refinancing is in an aggregate principal amount
no greater than the principal amount of such Indebtedness outstanding at the time of
such refinancing and (ii) such refinancing is permitted under the Intercreditor
Agreement.

     1.13 Restricted Payments. Section 7.06 of the Credit Agreement shall be and it hereby
is amended by deleting “and” at the end of clause (c) thereof, inserting “; and” at the end of
clause (d) thereof and inserting the following as clause (e) at the end of such Section:

     (e) on or within 10 days after the IPO Date and so long as no Default or Event
of Default has occurred and is continuing or would be caused by such

First Amendment to Credit Agreement — Page 7

 

Restricted Payment, the Borrower may make Restricted Payments in an aggregate
amount not to exceed $200,000,000 to redeem or purchase Equity Interests of the
Borrower owned by the Chase Group with proceeds of the Initial Public Offering.

     1.14 Burdensome Agreements. Section 7.09 of the Credit Agreement shall be and it
hereby is amended to read in its entirety as follows:

     7.09 Burdensome Agreements. Enter into any Contractual Obligation
(other than this Agreement, any other Loan Document or, subject to the Intercreditor
Agreement, any Term Facility Document) that, whether expressly or in effect, (a)
limits the ability (i) of any Restricted Subsidiary to make Restricted Payments to
the Borrower or any Guarantor or to otherwise transfer property to the Borrower or
any Guarantor, (ii) of any Restricted Subsidiary to Guarantee the Indebtedness of
the Borrower or (iii) of the Borrower or any Restricted Subsidiary to create, incur,
assume or suffer to exist Liens in favor of the Administrative Agent or the Lenders
on property of such Person; provided, however, that this clause
(iii) shall not prohibit any negative pledge incurred or provided in favor of any
holder of Indebtedness permitted under Section 7.03 solely to the extent any such
negative pledge relates to the property financed by or the subject of such
Indebtedness; or (b) requires the grant of a Lien to secure an obligation of such
Person if a Lien is granted to secure another obligation of such Person.

     1.15 Consolidated Leverage Ratio. Section 7.11(a) of the Credit Agreement shall be
and it hereby is amended to read in its entirety as follows:

     (a) Consolidated Leverage Ratio. Permit the Consolidated Leverage
Ratio of the Borrower, as of the last day of any period of four consecutive fiscal
quarters (commencing with the four consecutive fiscal quarter period ended June 30,
2006) for which the financial statements required under Section 6.01(a) or 6.01(b)
are available, to be greater than 3.50 to 1.00.

     1.16 Term Facility Restrictions. Article VII of the Credit Agreement shall be and it
hereby is amended by adding the following as Section 7.15 of such Article:

     7.15 Term Facility Restrictions. Prior to the First Priority
Obligations Payment Date (as defined in the Intercreditor Agreement), the Borrower
will not, nor will it permit any Restricted Subsidiary to, (a) except for the
regularly scheduled payments of principal and interest required under the Term
Facility Documents, directly or indirectly, retire, redeem, defease, repurchase or
prepay prior to the scheduled due date thereof any part of the principal of, or
interest on, the Term Loans, or (b) enter into or permit any modification or
amendment of, or waive any material right or obligation of any Person under any Term
Facility Document if the effect of any such modification or amendment is to (i)
increase the maximum principal amount of the Indebtedness evidenced by the Term
Facility Documents or the rate of interest on any such Indebtedness (other than as a
result of the imposition of a default rate of interest in accordance with the terms

First Amendment to Credit Agreement — Page 8

 

of the Term Facility Documents), (ii) change or add any event of default or any
covenant with respect to the Indebtedness evidenced by the Term Facility Documents
if the effect of such change or addition is to cause any one or more of the Term
Facility Documents to be more restrictive on any Loan Party than such Term Facility
Documents were prior to such change or addition (unless such change or addition is
deemed to have been made to the Term Facility Documents pursuant to the
Intercreditor Agreement), (iii) change the dates upon which payments of principal or
interest on the Indebtedness evidenced by the Term Facility Documents are due, (iv)
change any redemption or prepayment provisions of the Indebtedness evidenced by the
Term Facility Documents, or (v) grant any Liens in any assets or properties of any
Loan Party, other than the Liens permitted under the Intercreditor Agreement.
Notwithstanding the foregoing, so long as no Default shall have occurred and be
continuing or would result from the making of such payment, the Borrower may retire,
redeem, defease, repurchase or prepay the Indebtedness evidenced by the Term
Facility Documents (x) on the IPO Date or at any time after the IPO Date and prior
to the first anniversary of the IPO Date and (y) on, or within five (5) Business
Days following the receipt thereof, with the proceeds of cash equity contributions
received by the Borrower in exchange for common stock.

     1.17 Certain Payment Defaults. Clause (a) of Section 8.01 of the Credit Agreement shall be
and it hereby is amended in its entirety to read as follows:

     (a) Non-Payment. The Borrower or any other Loan Party fails to pay (i)
when and as required to be paid herein, any amount of principal of any Loan or any
L/C Obligation (including any payments required pursuant to Section 2.11(a) or
Section 2.11(b)), or (ii) within three days after the same becomes due, any interest
on any Loan or on any L/C Obligation, or any fee due hereunder, or (iii) within five
days after the same becomes due, any other amount payable hereunder or under any
other Loan Document; or

     1.18 Cross Default. Clause (e) of Section 8.01 of the Credit Agreement shall be and it hereby
is amended in its entirety to read as follows:

     (e) Cross-Default. (i) The Borrower or any Restricted Subsidiary (A)
fails to make any payment when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or
Guarantee (other than Indebtedness hereunder and obligations under Swap Contracts)
having an aggregate principal amount (including undrawn committed or available
amounts and including amounts owing to all creditors under any combined or
syndicated credit arrangement) of more than the Threshold Amount, or (B) fails to
observe or perform any other agreement or condition relating to any such
Indebtedness or Guarantee or contained in any instrument or agreement evidencing,
securing or relating thereto, the effect of which default is to cause, or to permit
the holder or holders of such Indebtedness or the beneficiary or beneficiaries of
such Guarantee (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the giving of notice if

First Amendment to Credit Agreement — Page 9

 

required, such Indebtedness to be demanded or to become due or to be
repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer
to repurchase, prepay, defease or redeem such Indebtedness to be made by the
Borrower or any Restricted Subsidiary prior to its stated maturity, or such
Guarantee to become payable or cash collateral in respect thereof to be required; or
(ii) there occurs under any Swap Contract an Early Termination Date (as defined in
such Swap Contract or any other event analogous thereto) resulting from any event of
default under such Swap Contract as to which the Borrower or any Restricted
Subsidiary is the Defaulting Party (as defined in such Swap Contract) and the Swap
Termination Value owed by the Borrower or such Restricted Subsidiary as a result
thereof is greater than the Threshold Amount; or

     1.19 Change in Control. Section 8.01(k) of the Credit Agreement shall be and it
hereby is amended to read in its entirety as follows:

     (k) Change in Control. There occurs any Change in Control.

     1.20 Application of Funds. Section 8.03 of the Credit Agreement shall be and it
hereby is amended to read in its entirety as follows:

     8.03 Application of Funds. After the exercise of remedies provided for
in Section 8.02 (or after the Loans have automatically become immediately due and
payable and the L/C Obligations have automatically been required to be Cash
Collateralized as set forth in the proviso to Section 8.02), any amounts received on
account of the Obligations shall be applied by the Administrative Agent in the
following order:

     First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including fees, charges and disbursements
of counsel to the Administrative Agent and amounts payable under ARTICLE
III) payable to the Administrative Agent or the trustee under the Mortgage, in
each case, in its capacity as such;

     Second, to payment of that portion of the Obligations constituting
fees, indemnities and other amounts (other than principal and interest) payable to
the Lenders and the L/C Issuer (including fees, charges and disbursements of counsel
to the respective Lenders and the L/C Issuer and amounts payable under ARTICLE
III), ratably among them in proportion to the amounts described in this clause
Second payable to them;

     Third, to payment of that portion of the Obligations constituting
accrued and unpaid interest on the Loans, L/C Disbursements and other Obligations,
ratably among the Lenders and the L/C Issuer in proportion to the respective amounts
described in this clause Third payable to them;

     Fourth, to payment of that portion of the Obligations constituting
unpaid principal of the Loans and L/C Disbursements or the Swap Termination Value
owed to any Lender Counterparty, ratably among the Lenders, the Lender

First Amendment to Credit Agreement — Page 10

 

Counterparties and the L/C Issuer in proportion to the respective amounts
described in this clause Fourth held by them;

     Fifth, to the Administrative Agent for the account of the L/C Issuer,
to Cash Collateralize that portion of L/C Obligations comprised of the aggregate
undrawn amount of Letters of Credit;

     Sixth, if any Second Priority Obligations are then outstanding, to the
Term Agent in accordance with the terms of the Intercreditor Agreement for
application to the Second Priority Obligations in accordance with the terms of the
Term Facility Documents; and

     Last, the balance, if any, after all of the Obligations and the Second
Priority Obligations have been indefeasibly paid in full, to the Borrower or as
otherwise required by Law.

     Subject to Section 2.02(c), amounts used to Cash Collateralize the aggregate
undrawn amount of Letters of Credit pursuant to clause Fifth above shall be applied
to satisfy drawings under such Letters of Credit as they occur. If any amount
remains on deposit as Cash Collateral after all Letters of Credit have either been
fully drawn or expired, such remaining amount shall be applied to the other
Obligations and the Second Priority Obligations, if any, in the order set forth
above.

     1.21 First Priority Creditors. Section 10.13 of the Credit Agreement shall be and it hereby
is amended in its entirety to read as follows:

     10.13 First Priority Creditors. The Secured Parties shall be and they
hereby are designated as “First Priority Creditors” for purposes of the
Intercreditor Agreement.

     1.22 Table of Contents. The Schedules section of the Table of Contents in the Credit
Agreement shall be and it hereby is amended by deleting “7.03 Existing Indebtedness” and replacing
it with “7.08 Affiliate Transactions” and Schedule 7.03 shall be and it hereby is deleted from the
Credit Agreement.

SECTION 2. Waiver. Section 6.01(b) of the Credit Agreement requires Borrower to deliver to
Administrative Agent and each Lender unaudited consolidated and consolidating financial statements
for Borrower and its Subsidiaries for each fiscal quarter within 45 days after the end of such
fiscal quarter. Borrower has failed to deliver the financial statements required under Section
6.01(b) for the fiscal quarter ending March 31, 2006. Borrower has requested that Lenders waive
the default arising as a result of its failure to deliver such financial statements and that the
deadline for delivery of such financial statements be extended to August 15, 2006. As requested by
the Borrower, the Lenders (or at least the required percentage thereby) hereby waive the Default
arising under Section 8.01(c) of the Credit Agreement as a result of the Borrower’s failure to
timely deliver the quarterly financial statements required under Section 6.01(b) of the Credit
Agreement for the fiscal quarter ending March 31, 2006; provided that such financial statements are
delivered to the Administrative Agent and each Lender on or before

First Amendment to Credit Agreement — Page 11

 

August 15, 2006. The foregoing waiver is expressly limited as follows: (a) such waiver is limited
to Section 6.01(b) for the fiscal quarter ending March 31, 2006, and nothing contained herein shall
obligate any Lender to grant any additional or future waiver of Section 6.01(b) of the Credit
Agreement or of any other provision of the Credit Agreement or any other Loan Document.

SECTION 3. Conditions. The amendments to the Credit Agreement contained in Section 1 of
this Amendment shall be effective upon the satisfaction of each of the conditions set forth in this
Section 3.

     3.1 Execution and Delivery. Each Loan Party shall have executed and delivered this Amendment.

     3.2 Intercreditor Agreement. The Second Priority Representative (as such term is defined in
the Intercreditor Agreement) and each Loan Party shall have executed and the Administrative Agent
shall have received a fully executed Intercreditor Agreement dated as of the date hereof.

     3.3 Term Facility Documents. The Administrative Agent shall have received copies of all the
Term Facility Documents.

     3.4 Receipt of Term Loan Proceeds. The Administrative Agent shall have received reasonably
satisfactory evidence that the Borrower has received $40,000,000 in cash proceeds from the
incurrence of the Indebtedness evidenced by the Term Facility Documents and otherwise on terms and
conditions satisfactory to the Lenders.

     3.5 No Default. No Default shall have occurred and be continuing.

     3.6 Bylaws. The Administrative Agent shall have received true and correct copies of the
bylaws of the Borrower certified by a Responsible Officer of the Borrower.

     3.7 Other Documents. The Administrative Agent shall have received such other instruments and
documents incidental and appropriate to the transaction provided for herein as the Administrative
Agent or its special counsel may reasonably request, and all such documents shall be in form and
substance satisfactory to the Administrative Agent.

SECTION 4. Representations and Warranties of Borrower. To induce the Lenders to enter into
this Amendment, each Loan Party hereby represents and warrants to the Lenders as follows:

     4.1 Reaffirmation of Representations and Warranties/Further Assurances. After giving effect
to the amendments herein, each representation and warranty of such Loan Party contained in the
Credit Agreement or in any other Loan Document is true and correct in all material respects on the
date hereof (except to the extent such representations and warranties relate solely to an earlier
date).

     4.2 Corporate Authority; No Conflicts. The execution, delivery and performance by such Loan
Party of this Amendment and all documents, instruments and agreements contemplated herein are
within such Loan Party’s corporate or other organizational powers, have

First Amendment to Credit Agreement — Page 12

 

been duly authorized by necessary action, require no approval, consent or action by or in
respect of, or filing with, any court or agency of government and do not violate or constitute a
default under any provision of any applicable law or other agreements binding upon such Loan Party
or result in the creation or imposition of any Lien upon any of the assets of such Loan Party
except for Liens permitted under Section 7.01 of the Credit Agreement.

     4.3 Enforceability. This Amendment constitutes the valid and binding obligation of such Loan
Party enforceable in accordance with its terms, except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditor’s rights generally, and (ii)
the availability of equitable remedies may be limited by equitable principles of general
application.

SECTION 5. Miscellaneous.

     5.1 Reaffirmation of Loan Documents and Liens. Any and all of the terms and provisions of the
Credit Agreement and the Loan Documents shall, except as amended and modified hereby, remain in
full force and effect. Each Loan Party hereby agrees that the amendments and modifications herein
contained shall in no manner affect or impair the liabilities, duties and obligations of any Loan
Party under the Credit Agreement and the other Loan Documents or the Liens securing the payment and
performance thereof and each Guarantor hereby reaffirms that its Guaranty remains in full force and
effect.

     5.2 Parties in Interest. All of the terms and provisions of this Amendment shall bind and
inure to the benefit of the parties hereto and their respective successors and assigns.

     5.3 Legal Expenses. Each Loan Party hereby agrees to pay all reasonable fees and expenses of
special counsel to the Administrative Agent incurred by the Administrative Agent in connection with
the preparation, negotiation and execution of this Amendment and all related documents.

     5.4 Counterparts. This Amendment may be executed in one or more counterparts and by different
parties hereto in separate counterparts each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one and the same
instrument; signature pages may be detached from multiple separate counterparts and attached to a
single counterpart so that all signature pages are physically attached to the same document.
However, this Amendment shall bind no party until each Loan Party, the Lenders (or at least the
required percentage thereof), and the Administrative Agent have executed a counterpart. Delivery
of photocopies of the signature pages to this Amendment by facsimile or electronic mail shall be
effective as delivery of manually executed counterparts of this Amendment.

     5.5 Complete Agreement. THIS AMENDMENT, THE CREDIT AGREEMENT, AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.

First Amendment to Credit Agreement — Page 13

 

     5.6 Headings. The headings, captions and arrangements used in this Amendment are, unless
specified otherwise, for convenience only and shall not be deemed to limit, amplify or modify the
terms of this Amendment, nor affect the meaning thereof.

[Signature Pages Follow]

First Amendment to Credit Agreement — Page 14

 

     IN WITNESS WHEREOF, the parties have caused this First Amendment to Credit Agreement to
be duly executed as of the date first above written.

	 	 	 	 	 
	 	BORROWER:

CONCHO RESOURCES INC.,

a Delaware corporation

 	 
	 	By:  	/s/ Curt F. Kamradt
 	 
	 	 	Name:  	Curt F. Kamradt 	 
	 	 	Title:  	Vice President and Chief Financial Officer 	 
	 
	 	GUARANTORS:

CONCHO EQUITY HOLDINGS CORP.,

a Delaware corporation

 	 
	 	By:  	/s/ Curt F. Kamradt
 	 
	 	 	Name:  	Curt F. Kamradt 	 
	 	 	Title:  	Vice President and Chief Financial Officer 	 
	 
	 	CONCHO ENERGY SERVICES LLC,

a Texas limited liability company

 	 
	 	By:  	/s/ Curt F. Kamradt
 	 
	 	 	Name:  	Curt F. Kamradt 	 
	 	 	Title:  	Vice President and Chief Financial Officer 	 
	 
	 	COG OPERATING LLC,

a Delaware limited liability company

 	 
	 	By:  	/s/ Curt F. Kamradt
 	 
	 	 	Name:  	Curt F. Kamradt 	 
	 	 	Title:  	Vice President and Chief Financial Officer 	 
	 

First Amendment to Credit Agreement — Signature Page

 

 

	 	 	 	 	 
	 	CONCHO LP LLC,

a Delaware limited liability company

 	 
	 	By:  	/s/ David W. Copeland
 	 
	 	 	Name:  	David W. Copeland 	 
	 	 	Title:  	President 	 
	 
	 	COG OIL & GAS LP,

a Texas limited partnership

 	 
	 	By:  	    COG Operating LLC, its sole general partner
 	 
	 	 	 
	 	By:  	    /s/ Curt F. Kamradt
 	 
	 	 	Name:  	Curt F. Kamradt 	 
	 	 	Title:  	Vice President and Chief Financial Officer 	 
	 
	 	COG REALTY LLC,

a Texas limited liability company

 	 
	 	By:  	/s/ Curt F. Kamradt
 	 
	 	 	Name:  	Curt F. Kamradt 	 
	 	 	Title:  	Vice President and Chief Financial Officer 	 
	 

First Amendment to Credit Agreement — Signature Page

 

 

	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

 	 
	 	By:  	/s/ Wm. Mark Cranmer
 	 
	 	 	Name:  	Wm. Mark Cranmer 	 
	 	 	Title:  	Senior Vice President 	 
	 
	 	JPMORGAN CHASE BANK, N.A.,

as a Lender, L/C Issuer and Swing Line Lender

 	 
	 	By:  	/s/ Wm. Mark Cranmer
 	 
	 	 	Name:  	Wm. Mark Cranmer 	 
	 	 	Title:  	Senior Vice President 	 
	 

First Amendment to Credit Agreement — Signature Page

 

 

	 	 	 	 	 
	 	BANK OF AMERICA, N.A.,

as Syndication Agent and a Lender

 	 
	 	By:  	/s/ Jeffrey H. Rathkamp
 	 
	 	 	Name:  	Jeffrey H. Rathkamp 	 
	 	 	Title:  	Principal 	 
	 

First Amendment to Credit Agreement — Signature Page

 

 

	 	 	 	 	 
	 	BNP PARIBAS,

as a Documentation Agent and a Lender

 	 
	 	By:  	/s/ Brian M. Malone
 	 
	 	 	Name:  	Brian M. Malone 	 
	 	 	Title:  	Managing Director 	 
	 
	 	 	 
	 	By:  	                          /s/ Robert Long
 	 
	 	 	Name:  	Robert Long 	 
	 	 	Title:  	Vice President 	 
	 

First Amendment to Credit Agreement — Signature Page

 

 

	 	 	 	 	 
	 	WACHOVIA BANK, NATIONAL ASSOCIATION,

as a Documentation Agent and a Lender

 	 
	 	By:  	/s/ Jay Buckman
 	 
	 	 	Name:  	Jay Buckman 	 
	 	 	Title:  	Vice President 	 
	 

First Amendment to Credit Agreement — Signature Page

 

 

	 	 	 	 	 
	 	BANK OF SCOTLAND,

as a Lender

 	 
	 	By:  	/s/ Karen Weich
 	 
	 	 	Name:  	Karen Weich 	 
	 	 	Title:  	Assistant Vice President 	 
	 

First Amendment to Credit Agreement — Signature Page

 

 

	 	 	 	 	 
	 	THE FROST NATIONAL BANK,

as a Lender

 	 
	 	By:  	/s/ John S. Warren
 	 
	 	 	Name:  	John S. Warren 	 
	 	 	Title:  	Senior Vice President 	 
	 

First Amendment to Credit Agreement — Signature Page

 

 

	 	 	 	 	 
	 	BANK OF TEXAS, N.A.

as a Lender

 	 
	 	By:  	/s/ J. Michael Delbridge
 	 
	 	 	Name:  	J. Michael Delbridge 	 
	 	 	Title:  	Senior Vice President 	 
	 

First Amendment to Credit Agreement — Signature Page

 

 

	 	 	 	 	 
	 	CITIBANK TEXAS, N.A.

as a Lender

 	 
	 	By:  	/s/ Frank K. Stowers
 	 
	 	 	Name:  	Frank K. Stowers 	 
	 	 	Title:  	Senior Vice President 	 
	 

First Amendment to Credit Agreement — Signature Page

 

 

	 	 	 	 	 
	 	COMERICA BANK,

as a Lender

 	 
	 	By:  	/s/ Matthew J. Purchase
 	 
	 	 	Name:  	Matthew J. Purchase 	 
	 	 	Title:  	Vice President 	 
	 

First Amendment to Credit Agreement — Signature Page

 

 

	 	 	 	 	 
	 	FORTIS CAPITAL CORP.,

as a Lender

 	 
	 	By:  	/s/ Michele Jones
 	 
	 	 	Name:  	Michele Jones 	 
	 	 	Title:  	Senior Vice President 	 
	 
	 	 	 
	 	By:  	                       /s/ Darrell Holley
 	 
	 	 	Name:  	Darrell Holley 	 
	 	 	Title:  	Managing Director 	 
	 

First Amendment to Credit Agreement — Signature Page

 

 

	 	 	 	 	 
	 	NATEXIS BANQUES POPULAIRES,

as a Lender

 	 
	 	By:  	/s/ Donovan C. Broussard
 	 
	 	 	Name:  	Donovan C. Broussard 	 
	 	 	Title:  	Vice President & Group Manager 	 
	 
	 	 	 
	 	By:  	                     /s/ Louis P. Laville, III
 	 
	 	 	Name:  	Louis P. Laville, III 	 
	 	 	Title:  	Vice President & Group Manager 	 
	 

First Amendment to Credit Agreement — Signature Page

 

 

	 	 	 	 	 
	 	SCOTIABANC INC.

as a Lender

 	 
	 	By:  	/s/ Christopher J. Allen
 	 
	 	 	Name:  	Christopher J. Allen 	 
	 	 	Title:  	Managing Director 	 
	 

First Amendment to Credit Agreement — Signature Page

 

 

	 	 	 	 	 
	 	STERLING BANK

as a Lender

 	 
	 	By:  	/s/ Jeff A. Forbis
 	 
	 	 	Name:  	Jeff A. Forbis 	 
	 	 	Title:  	Senior Vice President 	 
	 

First Amendment to Credit Agreement — Signature Page

 

 

	 	 	 	 	 
	 	U.S. BANK NATIONAL ASSOCIATION

as a Lender

 	 
	 	By:  	/s/ Justin M. Alexander
 	 
	 	 	Name:  	Justin M. Alexander 	 
	 	 	Title:  	Vice President 	 
	 

First Amendment to Credit Agreement — Signature Page

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