Document:

KWK 10-Q 2014.09.30 EX10.2

Exhibit 10.2

Third Amendment
To Sixth Amended and Restated Gas Gathering and Processing Agreement
(Cowtown Gas Facilities)

This Third Amendment to Sixth Amended and Restated Gas Gathering and Processing Agreement (Cowtown) (this “Third Amendment”) is made and entered into this 9th day of July, 2014, but effective January 1, 2014 (“Effective Date”), by and among Quicksilver Resources Inc. (“Quicksilver”), TG Barnett Resources LP (“TG”) (Quicksilver and TG may be collectively referred to herein as “Producers”), Cowtown Gas Processing Partners L.P. (“Processor”) and Cowtown Pipeline Partners L.P. (“Gatherer”).  Producers, Processor and Gatherer may be individually referred to as a “Party”, and collectively, as the “Parties”.
Recitals:
Whereas, Quicksilver, Processor, and Gatherer are the original parties to that certain Sixth Amended and Restated Gas Gathering Agreement dated September 1, 2008 (the “Original Agreement”), as amended by: (i) that certain Addendum and Amendment to Gas Gathering and Processing Agreement – Mash Unit Lateral dated as of January 1, 2009, (ii) that certain Amendment No. 1 to Addendum and Amendment to Gas Gathering and Processing Agreement – Mash Unit Lateral dated as of August 1, 2010, (iii) that certain Second Amendment to Sixth Amended and Restated Gas Gathering and Processing Agreement dated as of October 1, 2010, and (iv) that certain Amended and Restated Second Amendment to Sixth Amended and Restated Gas Gathering and Processing Agreement dated October 1, 2010 (collectively, (i) through (iv) immediately preceding are referred to herein as the “Prior Amendments”; the Original Agreement and the Prior Amendments are referred to herein collectively as the “Agreement”);
Whereas, by virtue of that certain Assignment, Bill of Sale and Conveyance, by and between Quicksilver and TG, dated the 30th day of April 2013,  effective September 1, 2012, TG has been assigned an interest in the Agreement and is therefore a Producer party (as that term is defined in the Agreement) thereto; and
Whereas, Producers, Processor and Gatherer desire to amend the Agreement, as set forth herein.
Now     therefore, in consideration of the mutual covenants herein, Producers, Processor, and Gatherer agree as follows:  
		
	1.
	A new section 27 shall be added to the Agreement as follows:

“Section 27    Liquid Nominations and Imbalances
27.1Plant Products Delivery Point(s) Nominations. No later than 12:00PM, four (4) business days prior to the beginning of each Month, Processor shall notify Quicksilver of the volumes of Plant Products per day that Processor anticipates will be made available for delivery to Producers at the Plant Products Delivery Point(s). No later than 12:00 PM, two (2) business days prior to the start of such Month, Quicksilver shall notify Processor of the Plant Products Delivery Point(s) where Plant Products are to be delivered by Processor and the specific amount of barrels associated therewith. At any time during the term hereof, Producers may adjust its nominations prospectively for the remainder of such Month by providing Processor notice prior to the nomination deadline of the applicable pipeline at the Plant Products Delivery Point(s) for making such changes. 

27.2Because of dispatching and other causes outside of Processor’s reasonable control, imbalances may occur between the Plant Products delivered at the Plant Products Delivery Point(s) for Producers’ account and the Plant Products allocated to Producers as determined in Article 10 of the Agreement. Processor and Producers shall both use commercially reasonable efforts to manage daily receipts and deliveries so that any imbalances shall be kept as near to zero as practicable. Any imbalances described above shall be resolved in the following manner:

a.At the same time that Processor provides Quicksilver a statement pursuant to Section 14.1, Processor shall submit to Quicksilver a statement reflecting the “Liquid Volume Variance” for the previous Month which shall include the following information: (x) a comparison of (A) the volume of each Plant Product delivered for Producers’ account to the Plant Products Delivery Point(s), to (B) Producers’ allocated Plant Products as determined in Article 10 of the Agreement, (y) the value, using the pricing in Section 27.2(b) below, of the volume differences determined in such comparison, and (z) such other information and detail as may be mutually agreeable to the Parties. If there are amounts owed by each party pursuant to the Liquid Volume Variance calculation, then Processor shall net such amounts and reflect on the statement the net payment owed by the party with the greater payment obligation. In addition, Processor shall net such amount against the amount owed pursuant to Section 14.1 and reflect 

on the statement the net payment amount owed by the party with the greater payment obligation, and any payment owed shall be due as provided in Section 14.1, but paid as provided above. 
b.The value to be used for each Plant Product volume imbalance for the production Month shall be the Oil Price Information Service (OPIS) average monthly prices, using purity ethane, NON-TET propane, normal butane, ISO-butane, and natural gasoline, as applicable, less a “Transportation Fee” and a “Fractionation Fee”. For purposes of this Section 27.2(b), the Transportation Fee shall be $0.02091846/gallon and the Fractionation Fee shall be the higher of (A) 6.6678 cents per gallon or (B) (0.25 X “Fuel”) + 5.5, where Fuel = Houston Ship Channel First of the Month Index as published by Platts Gas Daily. The Transportation Fee and the fixed portion of the Fractionation Fee shall be adjusted each January during the term hereof, commencing January 1, 2015 using the most recent "F.E.R.C. Oil Pipeline Index - Multiplier to Use" as published online by the Federal Energy Regulatory Commission.  Gatherer and Processor will provide Producers notice of yearly escalation prices.

27.3In the event Producers, Gatherer, or Processor reasonably determines that the prices used in either the Transportation Fee or the Fractionation Fee above in Section 27.2(b) are no longer representative of current market prices, then such Party shall notify the other Parties in writing and propose a new price it reasonably believes to reflect current market value and the effective date of implementing said new price. Upon receipt of said proposal, the receiving Parties shall have 10 days to accept or reject the proposal or deliver a counter proposal to the proposing Party. If the receiving Parties reject the proposal or the proposing Party rejects the receiving Parties’ counter proposal within 10 days from the receipt thereof, then the proposing Party may invoke the dispute resolution procedures set forth in Article 23 to resolve such matter; provided, however, in no event shall the arbitrator(s) establish and set a price for the Fractionation Fee that would be less than 6.375  cents per gallon; provided, further, no Party may invoke this price renegotiation mechanism more than once per any 12 month period. For purposes of this Section 27.3, if the receiving Party fails to reject the proposed price in the proposal within its respective 10 day deadline or if the proposing Party fails to reject the proposed price in the counter proposal from the receiving Parties within its respective 10 day deadline, then such failure shall be deemed acceptance by such Party of the applicable fee.” 

IN WITNESS WHEREOF, the Parties hereto have executed and delivered this Third Amendment as of the Effective Date.
	
		
	Quicksilver:

	Quicksilver Resources Inc.

	By:
	/s/ C.C. Rupnow

	 
	Name:   Cliff Rupnow    

	 
	Title:     Vice President - Product Marketing & Transportation

	
		
	TG:

	TG Barnett Resources LP

	By:
	/s/ Koji Yoshizaki

	 
	Name:   KOJI YOSHIZAKI    

	 
	Title:     Vice President and Secretary

	
		
	Gatherer:

	Cowtown Pipeline Partners L.P.

	By:
	Crestwood Gas Services Operating GP LLC,
its general partner

	By:
	/s/ J. Heath Deneke

	 
	Name:   Heath Deneke    

	 
	Title:     President Natural Gas Business Unit

	
		
	Processor:

	Cowtown Gas Processing Partners L.P.

	By:
	Crestwood Gas Services Operating GP LLC,
its general partner

	By:
	/s/ J. Heath Deneke

	 
	Name:   Heath Deneke    

	 
	Title:     President Natural Gas Business UnitKWK 10-Q 2014.09.30 EX10.3

Exhibit 10.3

FOURTH AMENDMENT TO 
SIXTH AMENDED AND RESTATED 
GAS GATHERING AND PROCESSING AGREEMENT 
(Cowtown Gas Facilities)
This Fourth Amendment  to the Sixth Amended and Restated Gas Gathering and Processing Agreement (this “Fourth Amendment”) is executed July 9, 2014 and effective as of June 1, 2014 (the “Fourth Amendment Effective Date”), by and among Quicksilver Resources Inc. (“Quicksilver”), TG Barnett Resources LP (“TG”) (Quicksilver and TG are collectively referred to herein as “Producer”), Cowtown Pipeline Partners L.P. (“Gatherer”), and Cowtown Gas Processing Partners L.P. (“Processor”).  Capitalized terms not otherwise defined shall have the meaning given such terms in the Cowtown Agreement.
WHEREAS, Quicksilver, Gatherer and Processor are parties to the Sixth Amended and Restated Gas Gathering and Processing Agreement, dated as of September 1, 2008, as amended by the (i) Addendum and Amendment (Mash Unit Lateral), dated as of January 1, 2009, as amended by Amendment No. 1 To Gas Gathering and Processing Agreement Mash Unit Lateral dated July 22, 2010 but effective August 1, 2010, (ii) the Amended and Restated Second Amendment to Sixth Amended and Restated Gas Gathering and Processing Agreement executed August 13, 2012, effective October 1, 2010, and (iii) Third Amendment to Sixth Amended and Restated Gas Gathering and Processing Agreement executed July 9, 2014, effective January 1, 2014 (collectively, the “Cowtown Agreement”);
Whereas, by virtue of that certain Assignment, Bill of Sale and Conveyance, by and between Quicksilver and TG, dated the 30th day of April 2013,  effective September 1, 2012, TG has been assigned an interest in the Cowtown Agreement; and
WHEREAS, the parties hereto desire to amend certain of the terms of the Cowtown Agreement as provided in this Third Amendment; 
NOW, THEREFORE, in consideration of the mutual premises and benefits contained herein, the adequacy, receipt and sufficiency of which are hereby acknowledged, Producer, Gatherer and Processor agree as follows:
1.The first paragraph of the Cowtown Agreement is amended to add TG as a Producer Party, such that Quicksilver and TG are collectively deemed to be “Producer” as of September 1, 2012.  
2.Article I “Definitions” Section 1.1 is amended by adding the additional definitions as follows:  
‘ “Qualifying Well(s)” shall mean (i) new wells drilled in the Contract Area that are requested by Producer to be added as such after Gatherer has provided the cost for the required pipeline, meter and appurtenant facilities  connecting such Qualifying Well to Gatherer’s Gathering System, and (ii), the wells currently shut-in, as identified on the list provided by Producer on May 8, 2014; such shut-in wells being listed on Exhibit B, attached 

hereto, under the heading “Qualifying Well(s).”  Once a new well is determined to be a Qualifying Well, such a well, as well as the shut-in wells listed as Qualifying Wells on Exhibit B, shall remain a Qualifying Well(s), for the remaining term of this Agreement.  Further, each party's existing obligations and responsibilities in the Cowtown Agreement, as amended by the provisions herein, shall apply to any and all Qualifying Well(s).
“Incentive Rate Period” shall mean  the time period consisting of a primary term of two (2) years commencing upon first delivery of gas from the first of the Qualifying Well(s), to Gatherer, and ending two (2) years after the date of such commencement, with a secondary term month-to-month after the end of the primary term, such secondary term subject to termination by Gatherer by giving one-hundred eighty (180) days prior written notice of such termination to Producer.’
3.Article IV, Section 4.4 is deleted in its entirety and replaced with the following:
“a.    In the event that the Producer has elected to classify a well as a Qualifying Well, Producer shall provide written notice to Gatherer of Producer’s election to classify a well as a Qualifying Well, and within 45 days of Gatherer’s receipt of Producer’s notice, Gatherer shall  notify Producer of Gatherer’s decision to construct or not to construct a pipeline, meter and appurtenant facilities  connecting such Qualifying Well to Gatherer’s Gathering System. Gatherer, in its sole and absolute discretion, may elect to construct such Gathering System expansion to the Qualifying Well. In such an event Producer shall reimburse Gatherer all actual pipeline and appurtenant facilities’ design and construction costs associated with the Gathering System expansion, and such Gathering System expansion shall, at all times, be owned and operated by Gatherer.  If Gatherer, in its sole and absolute discretion, declines to construct a Gathering System expansion, Producer may elect to construct a Gathering System expansion at its sole cost and expense. Any such Gathering System expansion must meet all of Gatherer’s specifications, and Gatherer will be responsible for a meter station and connection to the then existing Gathering System.  Gatherer may, at its election, but within two (2) years of the initial delivery of production from such Gathering System expansion acquire the ownership of the Gathering System expansion installed by the Producer by reimbursing Producer for the actual cost of the Gathering System expansion with no allowance for inflation or depreciation.  In such an event, Producer agrees to execute all assignments or contracts deemed necessary by Gatherer to accomplish the transfer to Gatherer of title to the Gathering System expansion, including rights-of-way and easements.  In the event that neither Gatherer nor Producer elects to construct a Gathering System expansion to connect to Gatherer’s Gathering System, this Agreement shall terminate as to the gas from such well or wells and such gas will be deemed released from this Agreement.  
b.    In the event that Producer elects to not classify a well as a Qualifying Well, Producer shall provide written notice to Gatherer of Producer’s election to not classify a well as a Qualifying Well, and within 45 days of Gatherer’s receipt of Producer’s notice, Gatherer shall notify Producer of Gatherer’s decision to construct or not to construct a pipeline, meter and appurtenant facilities connecting such non-Qualifying Well to Gatherer’s Gathering System. Gatherer, in its sole and absolute discretion, may elect to construct such Gathering 

System expansion at its sole cost and expense and such gas produced as a result of such Gathering System expansion shall be subject to the fees and terms applicable under the Cowtown Agreement for a Gathering System Delivery Point(s) and shall not be considered a Qualifying Well.  If Gatherer, in its sole and absolute discretion, declines to construct a Gathering System expansion, Producer may elect to construct a Gathering System expansion at its sole cost and expense.  Any such Gathering System expansion must meet all of Gatherer’s specifications, and Gatherer will be responsible for a meter station and connection to the then existing Gathering System.  Gatherer may, at its election, but within two (2) years of the initial delivery of production from such Gathering System expansion acquire the ownership of the Gathering System expansion installed by the Producer by reimbursing Producer for the actual cost of the Gathering System expansion with no allowance for inflation or depreciation.  In such an event, Producer agrees to execute all assignments or contracts deemed necessary by Gatherer to accomplish the transfer to Gatherer of title to the Gathering System expansion, including rights-of-way and easements.  In the event that neither Gatherer nor Producer elects to construct a Gathering System expansion to connect to Gatherer’s Gathering System, this Agreement shall terminate as to the gas from such well or wells and such gas will be deemed released from this Agreement.”  
4.A new section 4.6 shall be added as follows:
“Producer agrees to provide Gatherer its forward-looking twelve (12) month drilling program, as updated internally, on a quarterly basis or as often as the parties may mutually agree from time to time, during the term of this Agreement.”
5.Article XII, Section 12.1 is deleted in its entirety and replaced with the following: 
“Producer shall pay to Gatherer 46.193 cents ($0.46193) per MMBtu of Gas gathered pursuant to this Agreement; provided with respect to Gas gathered from any Qualifying Well, Producer shall pay 25 cents ($0.25) per MMBtu (as applicable, the Gathering Fee).”  
6.Article XII, Section 12.2 is deleted in its entirety and replaced with the following:
“Producer shall pay to Processor 57.74 cents ($0.5774) per MMBtu of Gas processed pursuant to this Agreement; provided with respect to Gas processed from any Qualifying Well, Producer shall pay 35 cents ($0.35) per MMBtu (as applicable, the Processing Fee).”  
7.In Article XII, Section 12.3, the first sentence is deleted in its entirety and replaced by the following:
“Producer shall pay to Gatherer the applicable compression fee or fees  
(the “Compression Fee”), computed by multiplying the MMBtu’s of Producer’s Gas metered at each Gathering System Delivery Point by the compression rate applicable to such Gathering System Delivery Point, which shall be based upon the average monthly operating pressure registered at such Gathering System Delivery Point as more particularly provided and described in Exhibit D, attached hereto and incorporated herein.” 

8.Article XII, Section 12.4 is deleted in its entirety and replaced with the following: 
“In the event Gas is treated as provided by Section 7.3, Producer shall pay a treating fee (the “Treating Fee”) computed by multiplying 3.65 cents ($0.0365) per mole percent of CO2 in excess of the two percent (2%) specification set forth in Section 7.1d(iii) (based on tests conducted pursuant to Section 8.1), per MMBtu of Gas metered at the applicable Gathering System Delivery Point where such Gas was delivered.”
   
9.Exhibit B is amended to add the list of wells attached to this Third Amendment under the heading, “Qualifying Well(s).”  Further, at such time as new wells drilled become Qualifying Well(s) pursuant to the terms of Section 4.4 as amended herein, Exhibit B will be deemed amended to include such Qualifying Wells(s), and a new Exhibit B evidencing the addition of such new Qualifying Well(s) shall be provided by Gatherer to Producer.
10.Exhibit D is amended to add another heading “Compression Fees for Qualifying Well(s),” and the pressure ranges and fees applicable thereto, as follows:
	
		
	“Compression Fees for Qualifying Well(s)

	 
	 

	Monthly Avg. Psia
	Rate/MMBtu

	<=69.9
	$0.40

	79.9-70
	$0.32

	99.9-80
	$0.24

	149.9-100
	$0.16

	299.9-150
	$0.08

	>300
	$0.00''

Except as amended by this Amendment, which shall be effective as of the Fourth Amendment Effective Date, the terms and provisions of the Cowtown Agreement are, and shall remain, in full force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this Fourth Amendment to be duly executed by their respective authorized officers as of the date first written above.
	
		
	QUICKSILVER RESOURCES INC.

	By:
	/s/ C.C. Rupnow

	 
	Name:   Clifford Rupnow

	 
	Title:     VP Product Mktg & Transp.

	
		
	TG BARNETT RESOURCES LP

	By:
	/s/ Koji Yoshizaki

	 
	Name:   KOJI YOSHIZAKI    

	 
	Title:     Vice President and Secretary

	
		
	COWTOWN PIPELINE PARTNERS L.P.

	By:
	Crestwood Gas Services Operating GP LLC,
its general partner

	By:
	/s/ J. Heath Deneke

	 
	Name:   Heath Deneke

	 
	Title:     President Natural Gas Business Unit

	
		
	COWTOWN GAS PROCESSING PARTNERS L.P.

	By:
	Crestwood Gas Services Operating GP LLC,
its general partner

	By:
	/s/ J. Heath Deneke

	 
	Name:   Heath Deneke

	 
	Title:     President Natural Gas Business Unit

Exhibit B 
Qualifying Well(s)
	
							
	 
	Well Number  
	 
	  Well Name
	 
	TRRC #
	 

	 
	1
	 
	Station Branch 7
	 
	248143
	 

	 
	2
	 
	Sass 6
	 
	237625
	 

	 
	3
	 
	Yosemite 3
	 
	238048
	 

	 
	4
	 
	Yosemite 5
	 
	237968
	 

	 
	5
	 
	Smelley 2
	 
	235679
	 

	 
	6
	 
	Smelly B 1
	 
	237980
	 

	 
	7
	 
	Lucy 2
	 
	228695
	 

	 
	8
	 
	Charca 3
	 
	214659
	 

	 
	9
	 
	Speed Racer 2
	 
	239823
	 

	 
	10
	 
	Possum Holler 3
	 
	233374
	 

	 
	11
	 
	Possum Holler 4
	 
	231905
	 

	 
	12
	 
	Lafrance 2
	 
	215448
	 

	 
	13
	 
	Goldsmith Hilton 3
	 
	237975
	 

	 
	14
	 
	McPherson 2
	 
	241032
	 

	 
	15
	 
	East Cletus 3
	 
	249244
	 

	 
	16
	 
	Colonel Flagg 5
	 
	237638
	 

	 
	17
	 
	Colonel Flagg 7
	 
	239495
	 

	 
	18
	 
	Ralph Wiggum 14
	 
	248883
	 

	 
	19
	 
	Dugger Hewlitt 9
	 
	252129
	 

	 
	20
	 
	Thelonius Monk 2
	 
	237181
	 

	 
	21
	 
	Branham Keller 2
	 
	265735
	 

	 
	22
	 
	Apu 1
	 
	231422
	 

	 
	23
	 
	Apu 2
	 
	231405
	 

	 
	24
	 
	Carl Carlson 3
	 
	232020
	 

	 
	25
	 
	Waylon Smithers 1
	 
	235527
	 

	 
	26
	 
	Waylon Smithers 2
	 
	235462
	 

	 
	27
	 
	Bob Denver 2
	 
	221658
	 

	 
	28
	 
	Bob Denver 4
	 
	231694
	 

	 
	29
	 
	Parker 1
	 
	231397
	 

	 
	30
	 
	Parker 6
	 
	239914
	 

	 
	31
	 
	Bubbs 6
	 
	246881
	 

	 
	32
	 
	Deborah Lou 5
	 
	240196
	 

	 
	33
	 
	Stewart 3
	 
	237667
	 

	 
	34
	 
	Campos A3
	 
	232455

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