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Exhibit 4.5    
    

 
 

[FORM OF GLOBAL IDS]    
    

        THIS SECURITY IS A GLOBAL INCOME DEPOSIT SECURITY ("IDS") AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY)
MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. 

        UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO. HAS AN INTEREST HEREIN. 

        EACH
IDS CONSISTS OF $            PRINCIPAL AMOUNT OF THE            % SENIOR SUBORDINATED NOTES DUE 2019 (THE "NOTES") OF
OTELCO INC. (THE "COMPANY") AND ONE SHARE OF CLASS A COMMON STOCK, $0.01 PAR VALUE, OF THE COMPANY (SUBJECT TO ADJUSTMENT IN CASE OF A STOCK
SPLIT, STOCK DIVIDEND OR RECLASSIFICATION OF THE CLASS A COMMON STOCK). THE CLASS A COMMON STOCK AND NOTES EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED SEPARATELY AND MAY BE
TRANSFERRED OR EXCHANGED ONLY TOGETHER UNTIL SEPARATED IN ACCORDANCE WITH THE TERMS OF THIS CERTIFICATE. 

 
 

OTELCO INC.    
    

IDS

	No.	 	CUSIP NO.

        Otelco Inc., a Delaware corporation (the "Company"), hereby certifies that Cede & Co., or registered
assigns, is the owner of the number of Income Deposit Securities (the "IDS") listed on Schedule A
hereto. 

        Each
IDS consists of a            % senior subordinated note with
$                              principal amount due 2019 of the Company (the
"Note") and one share of Class A Common Stock, par value $0.01 per share, of the Company (the "Class A Common
Stock") (subject to adjustment in case of a stock split, stock dividend or reclassification of the Class A Common Stock as reflected on  Schedule B hereto). The global
Note and global Class A Common Stock Certificate constituting part of this IDS Certificate are each
attached hereto. The terms of the Notes are governed by an Indenture (the "Indenture") dated as
of                        , 2004, among the Company, the
guarantor subsidiaries and Wells Fargo Bank, National Association, as trustee (the "Trustee"), and are subject to the terms and provisions contained
therein, to all of which terms and provisions the holder of this IDS Certificate consents by acceptance hereof. The Company will furnish to any holder of this IDS Certificate upon written request and
without charge a copy of the Indenture. 

        Upon
the occurrence of a stock split, stock dividend or reclassification of the Class A Common Stock, the Company will notify in writing the IDS Transfer Agent and DTC of such
event and instruct them to reflect the resulting changes on Schedule B hereof. 

        This
IDS Certificate is not valid unless countersigned and registered by the Transfer Agent and Registrar. 

Automatic Separation:  

        Each IDS will automatically separate into one (1) share of Class A Common Stock (subject to adjustment in case of a stock split, stock dividend or
reclassification of the Class A Common Stock as reflected on Schedule B hereto) and
$                  principal amount of Notes upon
(i) the date on which principal on the Notes becomes due and payable, whether at the stated maturity of the Notes or upon acceleration thereof, (ii) any redemption of the Notes (whether
in whole or in part), (iii) the continuance (without cure) of a payment default on the Notes for 90 days or (iv) if DTC no longer makes the IDSs eligible for deposit or ceases to
be a registered clearing agency under the Securities Exchange Act of 1934 and the Company is unable to find a successor depository. 

        In
addition, upon a notice by the Company of the issuance by the Company of additional Notes pursuant to        of the Indenture (the "New
Notes") (i) the IDSs represented by this IDS Certificate will be automatically separated into the Class A Common Stock and the Notes represented hereby,
(ii) this IDS Certificate shall be canceled, and (iii) a new IDS Certificate(s) will be issued to the holder of this Certificate representing the same number of IDSs (the
"New IDS"). Each New IDS will consist of one share of Class A Common Stock (subject to adjustment in case of a stock split, stock dividend or
reclassification of the Class A Common Stock as reflected on Schedule B hereto) and $                      principal amount of a
combination of the Notes and the New Notes in
proportion to the aggregate principal balances thereof. 

Voluntary Separation:  

        The registered holder of this Certificate is entitled, at any time and from time to time, after the earlier of (i)
                   , 2005 and
(ii) the occurrence of a Change of Control (as defined in the Indenture), to separate the IDSs represented by this Certificate or any portion thereof for one (1) share of Class A
Common Stock (subject to adjustment in case of a stock split, stock dividend or reclassification of the Class A Common Stock as reflected on  Schedule B hereto) and
$                  principal amount of Notes for each IDS. 

Recombination:  

        A registered holder of Class A Common Stock and Notes is entitled, at any time, to combine the applicable number of shares of Class A Common Stock
and Notes to form IDSs unless the IDSs have previously been automatically separated as a result of the redemption or maturity of any Notes or upon a payment default on the Notes continuing for
90 days. 

	Dated:                        , 2004	 	 	 
	

 	

 	
 	

OTELCO INC.
	

 	

 	
 	

By:	

    

	 	 	 	 	Name:

Title:
	

Countersigned and registered:	
 	

 	

 
	

WELLS FARGO BANK, NATIONAL ASSOCIATION

    as Trustee
	

By:	

    
	
 	

 	

 
	 	Name:

Title:	 	 	 

 
 

SCHEDULE A    
    

 
 

NUMBER OF IDSs    
    

        The number of IDSs initially represented by this global IDS Certificate
is                        . The following increases or decreases have been made: 

	Number of

IDSs

prior to Adjustment
	 	Increase

in Amount

of IDSs
	 	Deacrese

in Amount

of IDSs
	 	Signature
	 	Date

	

 	
 	

 	
 	

 	
 	

 	
 	

 

 

 
 

SCHEDULE B    
    

 
 

NUMBER OF SHARES OF CLASS A COMMON STOCK    
    

        The number of shares of Class A Common Stock included in each IDS represented by this IDS Certificate is initially one (1). The following adjustments have
been made: 

	Number of Shares

of Class A

Common Stock

included in each

IDS prior to

Adjustment
	 	Event Triggering

Adjustment
	 	Number of Shares

of Class A

Common Stock

included in each

IDS following

Adjustment
	 	Signature
	 	Date

	

 	
 	

 	
 	

 	
 	

 	
 	

 

 

QuickLinks

Exhibit 4.5

[FORM OF GLOBAL IDS]

OTELCO INC.

SCHEDULE A

NUMBER OF IDSs

SCHEDULE B

NUMBER OF SHARES OF CLASS A COMMON STOCKQuickLinks
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Exhibit 10.7    
    

PAGES
WHERE CONFIDENTIAL TREATMENT HAS BEEN REQUESTED ARE MARKED "CONFIDENTIAL TREATMENT REQUESTED." THE REDACTED MATERIAL HAS BEEN SEPARATELY FILED WITH THE COMMISSION, AND THE APPROPRIATE SECTION
HAS BEEN MARKED AT THE APPROPRIATE PLACE AND IN THE MARGIN WITH AN ASTERISK (*). 

 
 

AMENDED AND RESTATED GAS PROCESSING CONTRACT    
    

 
 

BETWEEN    
    

 
 

KINDER MORGAN TEXAS PIPELINE, L.P. AND    
    

 
 

COPANO PROCESSING, L.P.    
    

 
 

JANUARY 1, 2004    
    

 
 

AMENDED AND RESTATED GAS PROCESSING CONTRACT
  BETWEEN
  KINDER MORGAN TEXAS PIPELINE, L.P.
  AND
  COPANO PROCESSING, L.P.    
    

 
 

TABLE OF CONTENTS    
    

	ARTICLE 1. — DEFINITIONS	2
	 	1.1.	Words and Terms	2
	ARTICLE 2. — CERTAIN OBLIGATIONS OF THE PARTIES	5
	 	2.1.	Commitments of the Parties	5
	 	2.2.	Bypass; Suspension of Processing	5
	 	2.3.	Hydrocarbon Dew Point Control	5
	 	2.4.	Termination of KMTP Conditioning and Blending Fees	6
	 	2.5.	Termination of Live Oak PCL	6
	ARTICLE 3. — ALLOCATION OF INLET GAS	6
	 	3.1.	KMTP Information	6
	 	3.2.	KMTP Gas Calculations	6
	ARTICLE 4. — PAYMENTS BY COPANO TO KMTP	7
	 	4.1.	Processing Payment — KMTP Gas	7
	 	4.2.	Processing Payment — PCL Gas	8
	ARTICLE 5. — PAYMENTS BY KMTP TO COPANO	8
	 	5.1.	Determination of the Processing Margin	8
	 	5.2.	Conditioning Month Payments	9
	ARTICLE 6. — PRESSURES	9
	 	6.1.	Delivery Pressure	9
	 	6.2.	Pressure Drop	9
	ARTICLE 7. — CONTENT TESTS	9
	 	7.1.	Sampling	9
	 	7.2.	Notices of Tests	9
	 	7.3.	Btu Content	10
	ARTICLE 8. — PRODUCT AND PTR ALLOCATION	10
	 	8.1.	Procedures for Allocating Products and PTR	10
	ARTICLE 9. — RESIDUE GAS REDELIVERY	10
	 	9.1.	Residue Gas Allocation to KMTP Gas	10
	 	9.2.	Transfer of Custody and Responsibility for Residue Gas	10
	 	9.3.	Residue Gas Volumes	10
	ARTICLE 10. — MAKE-UP OF PTR	10
	 	10.1.	Obligation	10
	 	10.2.	PTR Make-up Gas Balancing	11

 

	 	10.3.	Notice of Volumes	11
	ARTICLE 11. — MEASUREMENT	11
	 	11.1.	Assumed Atmospheric Pressure	11
	 	11.2.	Unit of Volume	11
	 	11.3.	Adjustment for Supercompressibility	12
	 	11.4.	Determination of Heating Value	12
	 	11.5.	Determination of Flowing Temperature	13
	 	11.6.	Determination of Specific Gravity	13
	ARTICLE 12. — MEASURING EQUIPMENT AND TESTING	13
	 	12.1.	Equipment	13
	 	12.2.	Calibration and Tests of Meters	14
	 	12.3.	Access to Meters and Records	15
	 	12.4.	Correction of Metering Errors	15
	 	12.5.	Failure of Meters	15
	 	12.6.	Check Measuring Equipment	16
	 	12.7.	New Measurement Techniques	16
	 	12.8.	Liquid Measurement	16
	ARTICLE 13. — QUALITY	16
	 	13.1.	Gas Quality Specifications	16
	 	13.2.	Testing	18
	 	13.3.	Failure to Meet Quality Specifications	18
	ARTICLE 14. — ACCOUNTING	18
	 	14.1.	Statements	18
	 	14.2.	Payments	18
	 	14.3.	Auditing	18
	 	14.4.	Failure to Pay	19
	ARTICLE 15. — FORCE MAJEURE	19
	 	15.1.	Definition	19
	 	15.2.	Strikes and Lockouts	20
	 	15.3.	Plant Loss	20
	ARTICLE 16. — TAXES	20
	 	16.1.	Taxes	20
	ARTICLE 17. — LIABILITY; TITLE AND WARRANTIES	21
	 	17.1.	Transfer of Custody of and Responsibility For Gas	21
	 	17.2.	Title to Products	21
	 	17.3.	Title to PTR	21
	 	17.4.	Liability	21
	 	17.5.	Warranties	21
	ARTICLE 18. — SUCCESSORS AND ASSIGNS	21
	 	18.1.	Binding of Terms	21
	 	18.2.	Conditions	21
	 	18.3.	Pledged Rights	22

ii

 

	ARTICLE 19. — NOTICES	22
	 	19.1.	Addresses	22
	ARTICLE 20. — TERM	23
	 	20.1.	Term	23
	ARTICLE 21. — MISCELLANEOUS	24
	 	21.1.	Upstream Processing	24
	 	21.2.	Indemnity	24
	 	21.3.	Waiver	24
	 	21.4.	Performance	25
	 	21.5.	Drafting	25
	 	21.6.	Headings	25
	 	21.7.	Third Party Beneficiaries	25
	 	21.8.	Renegotiation Rights	25
	 	21.9.	Prior Contract	25

iii

 
 

AMENDED AND RESTATED GAS PROCESSING CONTRACT
  BETWEEN
  KINDER MORGAN TEXAS PIPELINE, L.P.
  AND
  COPANO PROCESSING, L.P.    
    

        THIS AMENDED AND RESTATED GAS PROCESSING CONTRACT, made and entered into as of January 1, 2004 (the "Effective Date"), by and between KINDER MORGAN TEXAS
PIPELINE, L.P. ("KMTP") and COPANO PROCESSING, L.P. ("COPANO"). 

 
 

W I T N E S S E T H:    
    

        WHEREAS, COPANO owns and operates a natural gas processing plant known as the Houston Central Plant located in the
O.K. Winn and Francis Mayhar Surveys, Colorado County, Texas (the "Plant"), and 

        WHEREAS, KMTP owns and operates a 30-inch pipeline system extending from the vicinity of Laredo, Texas, to the Plant (said
pipeline system and any extensions and loops thereof shall be referred to herein as the "KMTP Line"); and 

        WHEREAS, COPANO and/or its Affiliates (defined below) own natural gas pipeline facilities that deliver gas into the KMTP Line (the "Copano
Pipeline Facilities") which gas is delivered to the Plant for Processing (all such gas so delivered from the Copano Pipeline Facilities shall be referred to herein as "Copano Pipeline Gas"); and 

        WHEREAS, subject to KMTP's written consent, COPANO and/or its Affiliates (as defined below) may enter into gas Processing or gas
conditioning arrangements with producers or other third parties delivering gas to the KMTP Line pursuant to which COPANO shall have the right to Process or condition gas produced, delivered or
supplied by such third parties (such gas may be referred to herein as "Copano Contract Gas", and together with the Copano Pipeline Gas, shall be referred to herein as "Copano Gas"); and 

        WHEREAS, KMTP transports certain quantities of Gas other than Copano Gas ("KMTP GAS") in the KMTP Line that is delivered to the Plant and
desires that such gas be Processed in the Plant, and 

        WHEREAS, COPANO desires to Process the KMTP Gas for KMTP, and 

        WHEREAS, COPANO and KMTP are parties to that certain Gas Processing Contract entered into as of September 1, 2001 which 

 

provides
for the Processing of Gas by COPANO at the Plant (the "2001 Gas Processing Agreement"), and 

        WHEREAS, COPANO and KMTP desire to amend and restate the 2001 Gas Processing Agreement in its entirety to: (i) revise the
hydrocarbon dew point specifications, and (ii) effectuate certain in other amendments and modifications as provided herein. 

        NOW, THEREFORE, for and in consideration of the premises and the mutual covenants and benefits contained herein, KMTP and COPANO hereby
agree as follows: 

 
 
ARTICLE 1.—DEFINITIONS

        1.1.    Words and Terms    

        Unless
the context indicates a different meaning, the following words and terms shall have the meanings set out below: 

        "2001
Gas Processing Agreement" has the meaning set forth in the recitals above. 

        "Affiliate"
means, as to any Person, any other Person that directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, such
Person. The term control means the possession, directly or indirectly, of the power to direct or cause direction of the management and policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise. 

        "Alternate
Redelivery Point" means the flange or weld on the downstream side of the emergency shut down valve installed downstream of the Plant at the point of connection to any pipeline
connected to the Plant as of the Effective Date other than the KMTP pipeline. 

        "Btu"
means British thermal unit. 

        "Business
Day" means a day other than a Saturday, Sunday or legal holiday for commercial banks under either the laws applicable to national banking associations or those applicable to
Texas state chartered banks. 

        "Conditioning
Month" has the meaning set forth in Section 5.2. 

        "COPANO"
has the meaning set forth in the preamble. 

        "Copano
Contract Gas" has the meaning set forth in the recitals above. 

        "Copano
Gas" has the meaning set forth in the recitals above. 

2

 

        "Copano
Pipeline Facilities" has the meaning set forth in the recitals above. 

        "Copano
Pipeline Gas" has the meaning set forth in the recitals above. 

        "Creditor
Party" has the meaning set forth in Section 14.2. 

        "Day"
means a period beginning at 9:00 a.m. (local time) on a calendar day and ending at 9:00 a.m. (local time) on the next succeeding calendar day. The date of a day shall
be that of its beginning. 

        "Debtor
Party" has the meaning set forth in Section 14.2. 

        "Delivery
Point" means the flange or weld on the upstream side of the emergency shut-down valve installed upstream of the Plant. 

        "Effective
Date" has the meaning set forth in the preamble above. 

        "Forward
Month Gas Price" means the closing price of the NYMEX Henry Hub gas futures contract for the prompt Month adjusted by the NYMEX Houston Ship Channel Basis Swap for the same
closing. 

        "Gas",
as used herein, means natural gas, as produced in its natural state from oil wells or from gas wells or gas condensate wells. 

        "GPM"
means the amount of gallons of ethane and/or heavier Products per Mcf. 

        "Inlet
Gas" means all Gas delivered into the Plant from the KMTP Line, being the Copano Gas and the KMTP Gas. 

        "KMTP"
has the meaning set forth in the preamble. 

        "KMTP
Gas" has the meaning set forth in the recitals above. 

        "KMTP
Line" has the meaning set forth in the recitals above. 

        "Mcf"
means one thousand (1,000) cubic feet, and "MMcf" means one million (1,000,000) cubic feet. 

        "MMBtu"
means one million (1,000,000) Btu. 

        "Month"
means a period beginning at 9:00 a.m. (local time) on the first day of a calendar month and ending at 9:00 a.m. (local time) on the first day of the next succeeding
calendar month. 

3

 

        "Payment
Date" has the meaning set forth in Section 14.2. 

        "PCL"
or "Process Confirmation Letter" has the meaning set forth in Section 4.2. 

        "PCL
Gas" means that portion of the KMTP Gas that is processed under a PCL. 

        "Person"
means any individual, corporation, business trust, association, company, partnership, joint venture, governmental authority, or other entity. 

        "Plant"
has the meaning set forth in the recitals above. 

        "Process"
or "Processing" means the processing of Gas for the recovery of liquefiable hydrocarbons and/or the control of hydrocarbon dew point. 

        "Processing
Margin" shall have the meaning set forth in Section 5.1. 

        "Products"
means commercial products fractionated either in the Plant or elsewhere, including, but not limited to, condensate, natural gasoline, butane, isobutane, propane and ethane. 

        "Psia"
means pounds per square inch absolute. 

        "Psig"
means pounds per square inch gauge. 

        "PTR"
means plant thermal reduction, that is, the amount (expressed in MMBtu) by which inlet Gas is reduced by reason of shrinkage (including recovered condensate), fuel, flares and
other losses in the Plant during operations. 

        "PTR
Make-up Gas" has the meaning set forth in Section 10.1. 

        "Residue
Gas" means the Gas remaining at the outlet of the Plant after the reduction of Inlet Gas by PTR. 

        "Residue
Gas Redelivery Point" means the flange or weld on the downstream side of the emergency shut-down valve installed downstream of the Plant and connecting to KMTP's
pipeline. 

        "Ship
Channel Index" means the Index published in Inside F.E.R.C.'s Gas Market Report for the first of each month under the heading
"Market Center Spot-Gas Prices," subheading "East Texas, Houston Ship Channel" or if Inside F.E.R.C.'s Gas Market Report ceases to be
published or fails to publish said index price, an alternative index price that is comparable selected by the parties. 

4

 

*
CONFIDENTIAL TREATMENT REQUESTED. THE REDACTED MATERIAL HAS BEEN SEPARATELY FILED WITH THE COMMISSION, AND THE APPROPRIATE SECTION HAS BEEN MARKED AT THE APPROPRIATE PLACE AND IN THE MARGIN WITH AN
ASTERISK (*). 

 
 

ARTICLE 2.—CERTAIN OBLIGATIONS OF THE PARTIES

	2.1.
	Commitments of the Parties

        Subject
to the terms and conditions herein, KMTP agrees to deliver or cause to be delivered to COPANO at the Delivery Point all of the Gas in the KMTP Line available for
delivery at the Delivery Point. COPANO shall have the exclusive right and option to Process all such Gas in the Plant. 

        Notwithstanding
the foregoing, KMTP shall have the right to require COPANO to bypass the Plant with all or part of the Inlet Gas during any period in which the threat of
hurricanes or freezing weather in the U. S. Gulf Coast area in imminent, present or recent, if, in KMTP's sole opinion, such Inlet Gas is needed to fulfill KMTP's contract obligations. During such
period, COPANO's payment obligations under Article 4, KMTP's payment obligations under Article 5, and COPANO's performance obligations under Section 2.3 shall be deemed suspended
and waived by both KMTP and COPANO. 

	2.2.
	Bypass; Suspension of Processing.

        Subject
to the provisions of the immediately succeeding sentence, COPANO shall have the right to: (i) bypass the Plant with all or a portion of the KMTP Gas,
(ii) suspend processing, or (iii) suspend or curtail the operation of the Plant at any time and from time to time during the term of this Agreement. However, notwithstanding such bypass,
suspension or curtailment, unless such bypass, suspension or curtailment is the result of force majeure or KMTP's request to bypass the KMTP Gas, COPANO shall: (i) pay KMTP the fees provided
for in Sections 4.1 and 4.2, and (ii) condition Gas hereunder as required by Section 2.3. 

	2.3.
	Hydrocarbon Dew Point Control.

	*
	COPANO
shall condition Gas delivered to the Plant such that all Gas in the KMTP Line immediately downstream of the Plant shall have a hydrocarbon dew point
no greater than [REDACTED] degrees ([REDACTED]°) Fahrenheit at the pressures existing in the KMTP Line from time to time. COPANO shall
provide such gas conditioning service by any means it determines, including but not limited to the Processing of a partial quantity of Inlet Gas sufficient to enable it to meet the specifications set
out above. Notwithstanding the foregoing, COPANO shall not be obligated to Process more than a total of 550 MMcf of Gas per day. If the volume of Gas delivered by KMTP to the Plant exceeds 550 MMcf
per day, COPANO may, but shall not be obligated to Process volumes in excess of 550 MMcf per day. In such case, the hydrocarbon dew point of Gas in the KMTP Line immediately downstream to the Plant
may exceed [REDACTED] degrees ([REDACTED]°) Fahrenheit to the extent resulting from the delivery by KMTP of Inlet Gas in excess of 550 MMcf
Per day. 

5

 

	2.4.
	Termination of KMTP Conditioning and Blending Fees

        From
and after the Effective Date, notwithstanding any prior agreement or agreements between the parties hereto or any of their Affiliates to the contrary, COPANO and its
Affiliates shall not be obligated to bear or pay, and KMTP and its Affiliates shall not charge COPANO or any or its Affiliates, or deduct from any payments made to COPANO or any of its Affiliates, any
fees to condition or blend COPANO Gas to meet KMTP's hydrocarbon dew point specifications. From and after the Effective Date, notwithstanding any prior agreement or agreements between KMTP and any of
its Affiliates and any third party to the contrary, no third party shall be obligated to bear or pay, and KMTP and its Affiliates shall not charge any third party, or deduct from payments made to any
third party, any fees to condition or blend COPANO Gas to meet KMTP's hydrocarbon dew point specifications unless COPANO and KMTP agree in writing that such charges or deductions may be made by KMTP
or its Affiliates. KMTP and COPANO shall amend any existing agreements between them and/or execute any new agreement(s) necessary to effectuate the agreement set forth in this Section 2.4. 

	2.5.
	Termination of Live Oak PCL

        KMTP
and COPANO are parties to a PCL dated                        , relating to Gas delivered at PIN 905796 on the KMTP Line from the
Live Oak Gas Gathering System owned by Copano
Field Services/Live Oak, L.P. Effective as of the Effective Date, said PCL shall be terminated. The termination of the PCL shall not alter or affect rights or obligations of the parties under said PCL
that accrued prior to the Effective Date. 

	2.6.
	Copano Contract Gas

        Copano
may only enter into agreements for the processing or conditioning of Copano Contract Gas after obtaining the written consent of KMTP thereto. 

 
 

ARTICLE 3.—ALLOCATION OF INLET GAS    
    

	3.1.
	KMTP Information

        KMTP
shall provide COPANO with the volume, average Btu per Mcf, average GPM, and any other information necessary for the processing allocation of the KMTP Gas and the
Copano Gas by the fifth Business Day of each month following the month of production. Such information shall be provided separately for (i) PCL Gas, (ii) Inlet Gas; (iii) Copano
Contract Gas; and (iv) Copano Pipeline Gas. 

	3.2.
	KMTP Gas Calculations

        KMTP
shall calculate the Mcf, MMBtu, Btu factor, and average GPM by component of the KMTP Gas as follows: 

KMTP
Gas Btu factor =Heating Value of KMTP Gas (expressed in MMBtu)/Volume of KMTP Gas (expressed in Mcf) 

6

 

*
CONFIDENTIAL TREATMENT REQUESTED. THE REDACTED MATERIAL HAS BEEN SEPARATELY FILED WITH THE COMMISSION, AND THE APPROPRIATE SECTION HAS BEEN MARKED AT THE APPROPRIATE PLACE AND IN THE MARGIN WITH AN
ASTERISK (*). 

KMTP
Gas MMBtu=Heating Value of Inlet Gas (expressed in MMBtu) minus the Heating Value of Copano Gas (expressed in MMBtu) 

KMTP
Gas Mcf =Volume of Inlet Gas (expressed in Mcf) minus the Volume of Copano Gas (expressed in Mcf) 

KMTP
Gas GPM by component = (Inlet Gas theoretical gallons by component minus the Copano Gas theoretical gallons by component)/Volume of KMTP Gas Mcf (expressed in Mcf) 

Sum
of each Copano Gas theoretical gallons by component = the sum of each Copano Gas GPM by component times the applicable Copano Gas Mcf 

Inlet
Gas theoretical gallons by component = Inlet Gas GPM by component times the Inlet Gas (expressed in Mcf) 

            An
example of the foregoing procedure for the calculation of Mcf, MMBtu, Btu factor, and average GPM by component for the KMTP Gas is set forth in
Exhibit A attached hereto. 

 
 

ARTICLE 4.—PAYMENTS BY COPANO TO KMTP    
    

	4.1.
	Processing Payment—KMTP Gas

	*
	Subject
to the provisions of Section 4.2 which may provide for an alternate fee for PCL Gas, COPANO shall pay KMTP a fee of
[REDACTED] cents ($[REDACTED]) for each theoretical gallon of Product contained in the KMTP Gas, unless (i) the KMTP Gas contains less than
[REDACTED] GPM on average for the Month; or (ii) the Month is a Conditioning Month, in either of which case no payment shall be made to KMTP. The payment hereunder shall
be calculated as follows.  

 
	*
	 Volume of KMTP Gas (expressed in Mcf) × Average GPM of KMTP Gas × $[REDACTED] per
gallon  

	*
	Subject
to the provisions of Section 4.2 which may provide for an alternate fee for PCL Gas, COPANO shall pay KMTP a fee in addition to that specified in this Section 4.1
above when the average GPM of the Inlet Gas is [REDACTED] or greater in any calendar month that COPANO operates the Plant. The additional fee shall be
$[REDACTED] per Mcf of Inlet Gas calculated as follows: 

 
	*
	 Volume of Inlet Gas (expressed in Mcf) X $[REDACTED] per Mcf  

COPANO
shall retain one hundred percent (100%) of the Products and replace one hundred percent (100%) of the PTR attributable to the processing of the KMTP Gas. 

7

 

*
CONFIDENTIAL TREATMENT REQUESTED. THE REDACTED MATERIAL HAS BEEN SEPARATELY FILED WITH THE COMMISSION, AND THE APPROPRIATE SECTION HAS BEEN MARKED AT THE APPROPRIATE PLACE AND IN THE MARGIN WITH AN
ASTERISK (*). 

	4.2.
	Processing Payment—PCL Gas

        The
parties acknowledge that it may be necessary to structure processing arrangements other than as set forth in Section 4.1 to attract rich gas
supplies to the KMTP Line and the Plant. A Process Confirmation Letter ("PCL") in substantially the form of Exhibit B hereto shall set forth the terms for processing such Gas,
referred to herein as PCL Gas, as mutually agreed upon by COPANO and KMTP. The PCL shall set forth the procedure for determining the Products and PTR attributable to the PCL Gas. In the absence of
entry by the parties into a PCL, the terms contained in the body of this contract shall control regard to all processing carried out pursuant hereto. 

 
 

ARTICLE 5.—PAYMENTS BY KMTP TO COPANO    
    

	5.1.
	Determination of the Processing Margin

	*
	On
the third Business Day prior to the beginning of each Month during the term hereof, KMTP and COPANO shall calculate the processing margin for the
following Month (the "Processing Margin") in accordance with the formulae set forth in Part 1 of Exhibit D hereto and the provisions of this Section 5.1. Part 2 of
Exhibit D is an example of the Processing Margin calculation for a month in which: (i) GPM values are assumed to be those set forth in cells C13 through C19, (ii) the Forward
Month Gas Price is assumed to be $[REDACTED] per MMBtu (cell H7), (iii) Product prices are assumed to be those set forth in cells L13 through L19; and
(iv) the Heating Value of KMTP Gas is assumed to be [REDACTED] MMBtu/Mcf (cell D23). For the purpose of calculating the Processing Margin for the following Month,
the Parties shall use: (i) the most recent available full month GPM values for each Product attributable to the KMTP Gas as reported by KMTP to COPANO pursuant to Section 3.2 hereof; and
(ii) the most recent available full month KMTP Gas Btu factor as reported by KMTP to COPANO pursuant to Section 3.2 hereof. COPANO shall use the Forward Month Gas Price (cell H7)
for the Business Day prior to the day the calculation of the Processing Margin is required herein. For the ethane price (cell L13) and the propane price (cell L14), the parties shall use
[REDACTED] and [REDACTED], respectively, [REDACTED] as published by Oil Price Information Service (OPIS) for Mont Belvieu
[REDACTED] Business Day before the calculation of the Processing Margin. For iso-butane (cell L15) and normal-butane (cell L16), the parties shall use
[REDACTED] and [REDACTED], respectively, for the [REDACTED] as published by OPIS for Mont Belvieu
[REDACTED] Business Day before the calculation of the Processing Margin. For iso-pentane (cell L17), normal-pentane (cell L18) and Hexanes+ (cell L19), the
parties shall use [REDACTED] for [REDACTED], for the [REDACTED] as published by OPIS for Mont Belvieu
[REDACTED] Business Day before the calculation of the Processing Margin. 

8

 

*
CONFIDENTIAL TREATMENT REQUESTED. THE REDACTED MATERIAL HAS BEEN SEPARATELY FILED WITH THE COMMISSION, AND THE APPROPRIATE SECTION HAS BEEN MARKED AT THE APPROPRIATE PLACE AND IN THE MARGIN WITH AN
ASTERISK (*). 

	5.2.
	Conditioning Month Payments

	*
	For
each Month for which the Processing Margin determined pursuant to Section 5.1 is less than [REDACTED] cents
($[REDACTED]) per gallon (each a "Conditioning Month"), KMTP shall pay COPANO the sum of: (i) [REDACTED] Dollars
($[REDACTED]), plus (ii) an amount equal to the product of: (A) [REDACTED] MMBtu, times (B) the number of days in said Conditioning
Month, times (C) the [REDACTED] Index for the first day of said Conditioning Month [REDACTED] per MMBtu.
 
 

ARTICLE 6.—PRESSURES  

	6.1.
	Delivery Pressure

        Inlet
Gas shall be delivered to COPANO at the Delivery Point at the pressure that exists in the KMTP Line. Although the pressure in the KMTP Line may vary, KMTP will make
reasonable efforts to effect deliveries of Gas at the Delivery Point at a pressure of not less than 750 psig and not more than 1000 psig. COPANO will accept Gas at the Delivery Point at the KMTP Line
pressures; provided, however, that if KMTP effects deliveries that are outside of the range of pressures listed above, then COPANO may refuse to accept such deliveries of KMTP Gas for processing,
bypassing all or a part of said Gas as COPANO deems necessary for safe and efficient operation of the Plant. 

	6.2.
	Pressure Drop

        COPANO
shall deliver and KMTP shall receive Residue Gas at the Residue Gas Redelivery Point or the Alternate Redelivery Point at a pressure that is not more than 50 psig
less than the pressure at which KMTP Gas was delivered at the Delivery Point, unless KMTP will accept a lesser pressure at the Residue Gas Redelivery Point or the Alternate Redelivery Point. 

 
 

ARTICLE 7.—CONTENT TESTS

	7.1.
	Sampling

        The
inlet and outlet gas metering and sampling facilities at or near the Delivery Point and the Residue Gas Redelivery Point shall be owned and operated by KMTP. Such
facilities shall be equipped with chromatographs to provide a continuous chromatographic analysis of KMTP Gas and Residue Gas returned to KMTP on a daily basis. KMTP shall be responsible for
determining the contents of the Copano Gas by taking samples and analyzing with a chromatograph or by use of a continuous chromatographic analysis. 

        7.2.    Notices of Tests    

        KMTP
shall give COPANO sufficient notice in advance of each test of the gas chromatographs in order to permit COPANO to have a representative present to witness such tests,
and KMTP shall 

9

 

furnish
COPANO in writing the results of each such test of the gas chromatographs. 

	7.3.
	Btu Content

        Heating
value determination shall be done according to methods prescribed in Article 11. Daily MMBtu shall be calculated and accumulated using continuous data from a
chromatograph when available. The average monthly Btu per cubic foot shall be calculated by dividing the sum of the daily total MMBtu for the month by the sum of the daily total Mcf for the month. 

 
 

ARTICLE 8.—PRODUCT AND PTR ALLOCATION    
    

	8.1.
	Procedures for Allocating Products and PTR

        Each
month COPANO shall determine the Products and PTR attributable to each source of Inlet Gas. The procedure for determining the Products and PTR attributable to KMTP Gas
is set forth in Exhibit "C' attached hereto. COPANO may change the procedure described in Exhibit C hereto upon written consent of KMTP, which consent shall not be unreasonably withheld. The
procedure for determining the Products and PTR for PCL Gas shall be set forth in the applicable PCL. 

 
 

ARTICLE 9—RESIDUE GAS REDELIVERY

	9.1.
	Residue Gas Allocation to KMTP Gas

        The
volume of KMTP Gas at the Delivery Point, less the volumes of PTR allocated pursuant to Section 8.1, shall be the volume of Residue Gas attributable to KMTP Gas
each month. 

	9.2.
	Transfer of Custody and Responsibility for Residue Gas

        COPANO
agrees to deliver Residue Gas attributable to KMTP Gas to KMTP or its designee at the Residue Gas Redelivery Point or the Alternate Redelivery Point as directed by
KMTP from time to time. Custody of and responsibility for Residue Gas attributable to KMTP shall pass from COPANO to KMTP at such points. 

        9.3.    Residue Gas Volumes    

        COPANO
shall use reasonable commercial efforts each day to deliver Residue Gas attributable to KMTP Gas in the same day as such Gas was delivered to the Plant. Any
imbalances in deliveries of Residue Gas shall be cashed out each month in the same manner specified for PTR Make-Up Gas in Section 10.2 below. 

 
 

ARTICLE 10.—MAKE-UP OF PTR

        10.1.    Obligation    

        COPANO
agrees to deliver or cause to be delivered to KMTP, or its designee, a volume of Gas with an MMBtu content equal to one hundred percent (100%) of the difference
between the number 

10

 

*
CONFIDENTIAL TREATMENT REQUESTED. THE REDACTED MATERIAL HAS BEEN SEPARATELY FILED WITH THE COMMISSION, AND THE APPROPRIATE SECTION HAS BEEN MARKED AT THE APPROPRIATE PLACE AND IN THE MARGIN WITH AN
ASTERISK (*). 

of
MMBtu contained in KMTP Gas and the number of MMBtu contained in Residue Gas attributable to KMTP Gas. Gas so delivered is herein called "PTR Make-up Gas". COPANO also agrees to deliver
or cause to be delivered to KMTP, or its designee, COPANO's share of the PTR
Make-up Gas attributable to the PCL Gas in accordance with the terms of the particular PCL. 

	10.2.
	PTR Make-up Gas Balancing

        COPANO
shall use reasonable commercial efforts each month to deliver PTR Make-up Gas due KMTP in the same month as such Gas was delivered to the Plant. The
number of MMBtu delivered by COPANO as PTR Make-up Gas may not equal to amount due from time to time, and COPANO shall maintain an account of the over-and under-deliveries of
PTR Make-up Gas. Any imbalance in deliveries of PTR Make-up Gas shall be cashed out each month in accordance with the following: 

	*
	(a)        Over-delivery
of PTR Make-up Gas shall be sold to KMTP at a price equal to
[REDACTED] for: (i) the month in which the Gas was processed which gave rise to the PTR Make-up Gas obligation, and (ii) the following month.

	*
	(b)        Under-delivery
of PTR Make-up Gas shall be purchased from KMTP by COPANO at a price equal to
[REDACTED] for: (i) the month in which the Gas was processed which gave rise to the PTR Make-up Gas obligation, and (ii) the following month.

	10.3.
	Notice
of Volumes 

        On
or before the third work day preceding the end of each month, KMTP will provide COPANO with KMTP's reasonable estimate of Gas volume anticipated to be delivered to the
Plant from the KMTP Line during the next succeeding month, and shall make reasonable efforts to give COPANO advance notice of expected material changes in this volume. Following each month, COPANO
will provide KMTP by the eighth (8th) workday with a complete listing of PTR Make-up Gas and Residue Gas deliveries. 

 
 

ARTICLE 11.—MEASUREMENT

	11.1.
	Assumed Atmospheric Pressure

        The
average atmospheric pressure shall be assumed to be fourteen and seven tenths pounds per square inch (14.7 psi), irrespective of actual elevation or location of the
delivery point(s) above sea level or variations in such atmospheric pressure from time to time, unless specified otherwise. 

	11.2.
	Unit of Volume

        The
unit of volume for measurement of Gas for all purposes shall be one (1) cubic foot of Gas at a base temperature of 

11

 

sixty
degrees Fahrenheit (60° F.) and at a base pressure of fourteen and seventy-three hundredths pounds per square inch absolute (14.73 psia). Where measurement is by orifice meter, all
fundamental constants, observations, records and procedures involved in the determination and/or verification of the quantity and other characteristics of Gas delivered hereunder shall be made
according to the latest revision of ANST/API 2530-92 Chapter 14.3, Part 1-4 (AGA Report No. 3), with any revisions, amendments or supplements as may be mutually
acceptable to KMTP and COPANO, unless otherwise specified herein. Measurement by turbine meter, unless specified otherwise, shall be in accordance with A.G.A. Report No. 7, with any revisions,
amendments or supplements as may be mutually agreeable to the parties hereto. When
positive displacement or turbine meters are used for the measurement of Gas, the flowing temperature of the Gas shall be assumed to be sixty degrees Fahrenheit (60° F.) and no correction
shall be made for any variation therefrom; provided, however, KMTP shall have the option of installing or causing to be installed a recording thermometer, should chart measurement be used, and if KMTP
exercises such option and installs or causes to be installed such thermometer, correction shall be made for each degree variation in the average flowing temperature for each meter recording. Where
measurement is by other than orifice, turbine or positive meter, standards commonly acceptable in the natural gas industry shall be used in the determination of all factors involved in the computation
of Gas volumes. 

        11.3.    Adjustment for Supercompressibility    

        Adjustment
to measured Gas volumes for the effects of supercompressibility shall be made according to accepted AGA standards. Measuring party shall obtain representative
relative density, gas composition, carbon dioxide and nitrogen mole fraction values, from the Gas samples obtained for the Gas delivered or received as may be required to compute such adjustments
according to standard testing procedures. Equations for the calculation of supercompressibility will be taken from the latest revision of AGA Report No. 8, Compressibility for Natural Gas and
Other Hydrocarbon Gases. Each month, the supercompressibility will be calculated using the latest gas analysis and the monthly average of the flowing temperature and pressure. 

        11.4.    Determination of Heating Value    

        At
the mutual agreement of KMTP and COPANO, the heating value of the Gas may be determined by recording calorimeter or by the use of a chromatograph, a continuous gas
sampler or by taking spot Gas samples. The arithmetical average of the hourly heating value recorded by a recording instrument during periods of flow each day shall be considered as the heating value
of the Gas delivered hereunder during such day. If spot or continuous samples are taken, the samples shall be analyzed on the measuring party's calorimeter or chromatograph. The result of a 

12

 

sample
shall be applied to Gas deliveries on the first day of the month the sample is removed and for all succeeding months until a new sample is taken. All heating value determinations made with a
chromatograph shall use physical gas constants for gas compounds as outlined in the latest revision of GPA 2172 or revisions to related reports to which the parties may mutually agree. Heating value
shall be determined to the nearest whole Btu. 

        11.5.    Determination of Flowing Temperature    

        The
temperature of the Gas flowing through the meter or meters shall be determined by the continuous use of a recording thermometer installed so that it will properly
record the temperature of the Gas flowing through the meter or meters should chart measurement be used. The average of the temperature recorded each day shall be used in computing the volumes of Gas
for that day. Temperature shall be determined to the nearest whole degree in Fahrenheit. 

        11.6.    Determination of Specific Gravity    

        The
specific gravity of the Gas flowing through the meter or meters may be determined by the use of a recording gravitometer or chromatograph so that it will properly
record the specific gravity of the Gas flowing through the meter or meters. The average of specific gravity recorded each day shall be used in computing the volume of Gas for that day. At the mutual
agreement of KMTP and COPANO, the specific gravity of the Gas flowing through the meter or meters may be determined by means of a portable gravitometer or chromatograph, by taking Gas samples or by
the use of a continuous gas sampler in lieu of a recording gravitometer. In the event Gas samples are taken or a continuous gas sampler is installed, the samples shall be run on the measuring party's
gravitometer or chromatograph at another location. If spot or continuous samples are taken, to determine specific gravity of the Gas, the result of such sample shall be applied to Gas deliveries on
the first day of the month the sample is removed and for all succeeding months until a new sample is taken. All specific gravity determinations made with a chromatograph shall use physical constants
for gas compounds as outlined in the latest revision of GPA 2172 or revisions to related Reports to which the parties may mutually agree. Specific gravity shall be determined to the nearest one
thousandth (0.001). 

 
 

ARTICLE 12.—MEASURING EQUIPMENT AND TESTING

        12.1.    Equipment    

        At
or near each point at which either KMTP Gas or COPANO Gas is measured, KMTP, or its designee, shall, at its expense, operate and maintain in accurate working order, the
meters, instruments and equipment of standard type necessary to measure the Gas to be delivered hereunder. KMTP shall likewise furnish, 

13

 

install,
operate and maintain, or cause the same to be done, such instruments and equipment as may be necessary at points other than such point(s) of delivery and other than any Alternate Redelivery
Point to obtain the information to measure the Gas to be delivered hereunder. The metering and other equipment installed, together with any buildings erected for such equipment, shall be and remain
the property of KMTP. 

        As
specified by KMTP, all measuring stations provided hereunder shall be equipped with orifice meter runs, orifice meter gauges, recording gauges or other types of meter or
meters of standard make and design commonly accepted in the natural gas industry in order to accurately measure the Gas delivered hereunder. At KMTP's and COPANO's mutual agreement, a computer,
transducers and other associated sensing devices may be installed to accurately measure the Gas delivered hereunder in accordance with A.G.A. Report Nos. 3,5,6 and 7, as appropriate, in lieu of
mechanical devices with charts. If a computer and associated devices are installed, the values for gross heating value and specific gravity may be entered either manually (but not more frequently than
once per month) or as real time data if such data is available. Values for carbon dioxide and nitrogen used in supercompressibility correction determinations shall be entered as real time data if such
data is available or shall be entered manually at intervals mutually agreed upon, but at least once every six (6) months. 

        12.2.    Calibration and Tests of Meters    

        The
measuring party shall calibrate chromatographs, if used, at least once each month against a standard gas sample. All other measuring equipment shall be calibrated and
adjusted as necessary by the measuring party or as frequently as deemed necessary by KMTP but not less frequently than once each month. COPANO may, at its option, be present for such calibration and
adjustment. KMTP shall give COPANO notice of the time of all tests sufficiently in advance of conducting same so that both parties may conveniently have their representatives present. Following any
test, any measuring equipment found to be inaccurate to any degree shall be adjusted immediately to measure accurately. Each party shall have the right, at any time, to challenge the accuracy of any
measuring equipment used hereunder and may request additional tests. If, upon testing, the challenged equipment is found to be in error, then it shall be repaired and calibrated. The cost of any such
special testing, repair and calibration shall be borne by the party requiring the special test if the percentage of inaccuracy is found to be two percent (2%) or less (one percent
[1%] if electronic flow measurement equipment is utilized). Otherwise, the cost shall be borne by the party operating the challenged measuring equipment. 

14

 

        12.3.    Access to Meters and Records    

        The
other party shall have access at all reasonable times to the measuring equipment and all other instruments used by the measuring party in determining the measurement
and quality of the Gas
delivered hereunder, but the reading, calibrating, and adjusting thereof shall be done only by employees, agents or representatives of the measuring party. The measuring party shall keep on file
copies of original records for a period of three (3) years for mutual use of KMTP and COPANO. Upon request, the measuring party shall submit to the other party copies of original records from
such equipment, subject to return by the party within sixty (60) days after receipt thereof. 

        12.4.    Correction of Metering Errors    

        If,
upon any test, the measuring equipment, in the aggregate for any measurement facility, is found to be inaccurate by more than two percent (2%) (one percent
[1%] if electronic flow measurement equipment is utilized), registration thereof and any payments based upon such registration shall be corrected at the rate of such inaccuracy
for any period of inaccuracy which is definitely known or agreed upon; provided, however, if such period is not definitely known or agreed upon, then such registration and payment shall be corrected
for a period extending back one-half (1/2) of the time elapsed since the last day of calibration. 

        12.5.    Failure of Meters    

        If,
for any reason, the measuring equipment is out of service or out of repair so that the quantity of Gas delivered hereunder through such measuring equipment cannot be
ascertained or computed from the readings thereof, the quantity of Gas so delivered during the period such equipment is out of service or out of repair shall be estimated and agreed upon by KMTP and
COPANO upon the basis of the best available data, using the first of the following methods which is feasible: 

        (a)   By
using the registration of any duplicate measuring equipment installed by the measuring party, if installed and registering correctly; 

        (b)   By
using the registration of any check measuring equipment of the other party O, if installed and registered accurately; 

        (c)   By
correcting the error if the percentage of error is ascertainable by calibration, test or mathematical calculation; 

        (d)   By
estimating the quantity of deliveries by using the volumes delivered under similar conditions during preceding periods when the measuring equipment was registering
accurately. 

15

 

        12.6.    Check Measuring Equipment     

        COPANO
may install, maintain and operate at its own expense, at or near the Delivery Point hereof, such check measuring equipment as desired; provided, however, that such
equipment shall be installed so as not to interfere with the operation of any other measuring equipment. KMTP shall have access to such check measuring equipment at all reasonable times, but the
reading, calibration and adjusting thereof and the changing of charts shall be done only by COPANO. 

        12.7.    New Measurement Techniques    

        If,
at any time during the term hereof, a new method or technique is developed with respect to gas measurement or liquids measurement or to the determination of the factors
used in such measurements, such new method or technique may be substituted for the method set forth in this Article 12 when the party employing such new method or technique receives consent
from the other party. 

        12.8.    Liquid Measurement    

        COPANO
shall measure Products and condensate by utilizing meters operated and maintained in accordance with recognized industry standards. Measurement procedures and
calculations will be in accordance with the API Manual of Petroleum Measurement. Meter tests and calibration will be conducted as determined by COPANO, but at least once each month. Procedures used in
testing and calibration will be in accordance with the aforementioned API Manual of Petroleum Measurement to ensure measurement accuracy to within one-half of one percent. Consecutive
meter factors differing by more than 50/10,000 will result in an adjustment to recorded volumes. KMTP shall have access to the measuring equipment at all reasonable times, but readings, calibrations
and adjustments thereof shall be done by employees or agents of COPANO. COPANO shall notify KMTP in advance of the performance of tests and calibrations so that KMTP may have its representative
present as a witness. 

 
 

ARTICLE 13.—QUALITY

        13.1.    Gas Quality Specifications    

        All
KMTP Gas delivered to the Plant, and PTR Make-up Gas and Residue Gas returned to KMTP hereunder shall meet
the following specifications: 

        (a)   The
Gas shall be free of water and other objectionable liquids at the temperature and pressure at which the Gas is delivered and the Gas shall not contain any
hydrocarbons which might condense to free liquids in the pipeline under normal pipeline conditions and shall in no event contain water vapor in excess of seven (7) pounds per one million
(1,000,000) cubic feet, measured at fourteen and seventy—three hundredths pounds per square inch 

16

 

        absolute
(14.73 psia) at a standard temperature of sixty degrees Fahrenheit (60° F.). 

        (b)   The
Gas shall not contain more than one-quarter (1/4) grain of hydrogen sulphide per one hundred (100) cubic feet as determined by quantitative
methods in general use within the natural gas industry and as mutually acceptable to the parties hereto. 

        (c)   The
Gas shall not contain more than two (2) grains of total sulphur per one hundred (100) cubic feet as determined by quantitative methods in general use
within the natural gas industry and as mutually acceptable to the parties hereto. 

        (d)   The
Gas shall not contain more than one-quarter (1/4) grain of mercaptan per one hundred (100) cubic feet as determined by quantitative methods in
general use within the natural gas industry and as mutually acceptable to the parties hereto. 

        (e)   The
Gas shall not contain in excess of: 

        (1)   Three
percent (3%) by volume of carbon dioxide (CO2) 

        (2)   Ten
parts per million (10 ppm) by volume of oxygen (O2); 

        (3)   Three
percent (3%) by volume of nitrogen (N2), 

        (f)    The
Gas shall contain no carbon monoxide, halogens or unsaturated hydrocarbons and not more than four hundred parts per million (400 ppm) of hydrogen. 

        (g)   The
Gas shall have a temperature of not more than one hundred and twenty degrees Fahrenheit (120° F) nor less than forty degrees Fahrenheit
(40° F). 

        (h)   The
Gas shall contain a daily average heating content of not less than nine hundred fifty (950) Btu per cubic foot and not more than one thousand one hundred
seventy-five (1,175) Btu per cubic at 14.73 psia, dry. 

        (i)    The
Gas shall be commercially free from dust, gum, gum forming constituents or other objectionable liquid or solid matter that might become separated from the Gas in the
course of transmission through pipelines. 

17

 

        13.2.    Testing    

        Tests
to determine the quality of Gas shall be conducted by either party at its sole expense and shall be made as often as mutually agreed upon and as reasonably required
by approved standard methods in general use by the gas industry. The testing party shall promptly furnish the other party with copies of all test results. The testing party shall give the other party
reasonable notice of all such tests in order that the other party may have its representatives present if it so desires. 

        13.3.    Failure to Meet Quality Specifications    

        If
any Gas subject hereto fails to meet an applicable quality specification, the receiving party shall have the right to waive such failure and to continue to receive such
Gas. If the receiving party refuses to receive such Gas and if the delivering party does not elect to treat the Gas so as to cause the same to meet such quality specification, then such delivering
party shall stop the delivery of Gas that fails to meet such quality specification. 

 
 

ARTICLE 14.—ACCOUNTING

        14.1.    Statements    

        COPANO
shall provide KMTP by the twentieth (20th) day of each calendar month a statement for the previous month setting forth the payments due KMTP pursuant to
Article 4, the payments due COPANO pursuant to Article 5 and any amounts owed to or by KMTP for Residue Gas pursuant to Section 9.3 and for PTR Make-up Gas pursuant to
Section 10.2. 

        14.2.    Payments    

        The
party that is owed the greater amount as reflected in a statement referred to in Section 14.1 (the "Creditor Party") shall net its obligation against the
obligation of the other party (the "Debtor Party"). Specifically, the Debtor Party shall make payment of the difference between amounts owed by the Creditor Party hereunder and amounts owed by the
Debtor Party hereunder. Payment of such difference shall be made not later than the twenty-fifth (25th) day of the month following the month of delivery (the "Payment Date"). If the
amounts owed by each party to the other are equal, neither party shall make payment. If the Payment Date falls on a Saturday, or a bank holiday other than Monday, payment shall be made on the
preceding banking day. If the Payment Date falls on a Sunday or a Monday bank holiday, payment shall be made on the succeeding banking day. 

        14.3.    Auditing    

        Each
party shall have the right at reasonable hours to examine the books, records, and charts of the other party to the extent necessary to verify the accuracy of any
statement, payment, calculation, or determination made pursuant to the 

18

 

provisions
of this Contract. If any such examination shall reveal, or if either party shall discover, any error or inaccuracy in its own or the other party's statement, payment, calculation, or
determination, then proper adjustment and correction thereof shall be made as promptly as practicable thereafter,
provided that all statements, payments, calculations and determinations shall be final unless questioned within three (3) years of the date thereof. 

        14.4.    Failure to Pay    

        If
either party fails to pay any amount payable to the other hereunder when due, interest thereon shall accrue and be payable from the date on which payment was due until
the date payment is made. The rate of such interest shall be the prime rate of interest quoted by Fleet National Bank; provided, that the interest rate provided herein shall never exceed the highest
rate of interest permitted by applicable law. If any such failure to pay continues for thirty (30) days after protest in writing, the aggrieved party may suspend deliveries or acceptance of
deliveries of Gas hereunder and, in addition, may terminate this Contract upon written notice to the non-paying party as applicable. The exercise of any such right by either party shall be
in addition to any and all other remedies available to such party. 

 
 

ARTICLE 15.—FORCE MAJEURE

        15.1.    Definition    

        If
either party is rendered unable, wholly or in part, by force majeure to carry out its obligations (except financial obligations) under this Contract, it is agreed that,
on such party's giving notice and reasonably full particulars of such force majeure in writing or by telegraph to the other party within a reasonable time after the occurrence of the cause relied on,
then the obligations of the party giving such notice, so far as they are affected by force majeure, shall be suspended during the continuance of any inability so caused, but for no longer period, and
such cause shall so far as possible be remedied with all reasonable dispatch. The term "force majeure," as employed herein, means acts of God, strikes, lockouts or other industrial disturbances, acts
of the public enemy, wars, blockades, insurrections, riots, epidemics, landslides, lightning, earthquakes, fires, storms, hurricanes, floods, high water, washouts, arrests and restraints of government
and people, civil disturbances, explosions, breakage or accident to machinery or lines of pipe, freezing of wells or lines of pipe, partial or entire failure of wells, and any other causes, whether of
the kind herein enumerated or otherwise, not reasonably within the control of the party claiming suspension; 

19

 

such
term shall likewise include (a) in those instances where either party hereto is required to obtain servitudes, rights-of-way grants, permits or licenses to enable
such party to perform hereunder, the inability of such party to acquire, or the delays on the part of such party in
acquiring, at reasonable cost and after the exercise of reasonable diligence, such servitudes, rights-of-way grants, permits or licenses, and (b) in those instances
where either party hereto is required to furnish materials and supplies for the purpose of constructing or maintaining facilities or is required to secure permits or permissions from any governmental
agency to enable such party to perform hereunder, the inability of such party to acquire, or the delays on the part of such party in acquiring, at reasonable costs and after the exercise of reasonable
diligence, such materials and supplies, permits and permissions. 

        15.2.    Strikes and Lockouts    

        It
is understood and agreed that the settlement of strikes or lockouts shall be entirely within the discretion of the party having the difficulty, and that the above
requirement that any force majeure shall be remedied with all reasonable dispatch shall not require the settlement of strikes or lockouts by acceding to the demands of an opposing party when such
course is inadvisable in the discretion of the party having the difficulty. 

        15.3.    Plant Loss    

        In
the event of loss of or damage to all or a substantial part of the Plant or the KMTP Line for any cause, COPANO and KMTP shall have no obligation to repair, rebuild, or
replace same unless each party determines, in its sole discretion, to do so, and the above requirement that any force majeure shall be remedied with all reasonable dispatch shall not apply in such
event. 

 
 

ARTICLE 16.—TAXES

        16.1.    Taxes    

        As
between the parties hereto, KMTP shall be responsible for all taxes and assessments levied on facilities owned by KMTP and activities prior to the delivery of COPANO Gas
and KMTP Gas at the Delivery Point and after the redelivery at the Residue Gas Redelivery Point or Alternate Redelivery Point. COPANO shall be responsible for all taxes and assessments levied on
facilities owned by COPANO and activities from the time Copano Gas and/or KMTP Gas is so delivered to Copano until the redelivery of Gas to KMTP at the Residue Gas Redelivery Point or the Alternate
Delivery Point. 

20

 
 
 

ARTICLE 17.—LIABILITY; TITLE AND WARRANTIES    
    

        17.1.    Transfer of Custody of and Responsibility For Gas    

        As
between KMTP and COPANO, KMTP shall be in control and possession of the Gas until such Gas has been delivered to COPANO at the Delivery Point and after it has been
redelivered to KMTP at the Residue Gas Redelivery Point or Alternate Redelivery Point. As between COPANO and KMTP, COPANO shall be in control and possession of the Gas after it has been delivered to
COPANO at the Delivery Point and until it is redelivered to KMTP at the Residue Gas Redelivery Point or Alternate Redelivery Point. Nothing in this Section 17.1 shall affect title to the Gas,
which will remain with the owner thereof. 

        17.2.    Title to Products    

        Title
to Products attributable to KMTP Gas shall be transferred to COPANO at the Delivery Point. 

        17.3.    Title to PTR    

        Title
to PTR Make-up Gas shall be transferred to KMTP at the point at which said PTR Make-Up Gas is delivered to KMTP. 

        17.4.    Liability    

        Neither
Party shall be liable to the other for punitive or exemplary damages under this Agreement. 

        17.5.    Warranties    

        KMTP
hereby warrants that it has the right to have processed all KMTP Gas delivered from the KMTP Line and agrees, if notified by COPANO, to
indemnify COPANO against all suits, actions, debts, accounts, damages, costs (including attorneys' fees), losses and expenses arising from or out of any adverse legal claims of any and all persons
with respect to such processing rights. COPANO hereby warrants that it has the right to process COPANO Gas and warrants title to PTR Make-up Gas and agrees, if
notified by KMTP, to indemnify KMTP against all suits, actions, debts, accounts, damages, costs (including attorneys' fees), losses and expenses arising from or out of any
adverse legal claims of any and all persons with respect to such right to process and/or title.

 
 

ARTICLE 18.—SUCCESSORS AND ASSIGNS

        18.1.    Binding of Terms    

        All
the terms and conditions of this Contract shall extend to and be binding upon the respective successors and assigns of the parties hereto. 

        18.2.    Conditions    

        No
assignment of an interest in this Contract shall be made by either party without the prior written consent of the other 

21

 

party;
which consent shall not be unreasonably withheld, provided, that prior written consent shall not be required: (i) for an assignment to an Affiliate of a party in connection with a
corporate consolidation, amalgamation, merger or reorganization or (ii) for an assignment by either party to a purchaser in connection with a sale of the KMTP Line by KMTP or the Plant by
COPANO. 

        18.3.    Pledged Rights    

        Notwithstanding
any provision hereof to the contrary, any party hereto shall have the right to pledge, mortgage or grant a security interest in its rights hereunder to
secure the indebtedness of such party
and the consent of the other party shall not be required in connection with the foreclosure of any liens, security interests created by any such pledge, mortgage or security agreement. 

 
 

ARTICLE 19.—NOTICES

        19.1.    Addresses    

        All
notices to be given hereunder shall be in writing and shall be delivered personally or by prepaid mail, overnight delivery service, telefacsimile, or telegram to the
respective parties at the addresses stated below or to such other addresses as they shall respectively designate hereafter in writing from time to time: 

To
KMTP: 

Address
for Notices: 

KINDER
MORGAN TEXAS PIPELINE, L.P.

One Allen Center

500 Dallas Street, Suite 1000

Houston, Texas 77002

ATTN: Accounting Dept. (For Accounting Matters)

Telephone: (713) 369-9000

Facsimile: (713) 369-9385 

KINDER
MORGAN TEXAS PIPELINE, L.P.

One Allen Center

500 Dallas Street, Suite 1000

Houston, Texas 77002

ATTN: Vice President, Gas Supply & Processing (For all other matters)

Telephone: (713) 369-8860

Facsimile: (713) 369-9395 

22

 

*
CONFIDENTIAL TREATMENT REQUESTED. THE REDACTED MATERIAL HAS BEEN SEPARATELY FILED WITH THE COMMISSION, AND THE APPROPRIATE SECTION HAS BEEN MARKED AT THE APPROPRIATE PLACE AND IN THE MARGIN WITH AN
ASTERISK (*). 

Address
for Payments: 

	*
	KINDER
MORGAN TEXAS PIPELINE, L.P.

The Chase Manhattan Bank, New York

ABA No. [REDACTED]

Acct. No. [REDACTED] 

To
COPANO: 

Address
for Notices: 

Copano
Processing, L.P.

ATTN: Contract Services (For Contract Matters)

2727 Allen Parkway, Suite 1200

Houston, Texas 77019-2154

Telephone: 713-621-9547

Facsimile: 713-621-9553 

Copano
Processing, L.P.

ATTN: Plant Accounting (For Accounting Matters)

2727 Allen Parkway, Suite 1200

Houston, Texas 77019-2154

Telephone: 713-621-9547

Facsimile: 713-621-9545 

Copano
Processing, L.P.

ATTN: Vice President Gas Processing (For all other matters)

2727 Allen Parkway, Suite 1200

Houston, Texas 77019-2154

Telephone: 713-621-9547

Facsimile: 713-621-9545 

Address
for Payments: 

	*
	Copano
Processing, L.P.

Comerica Bank—Texas

ABA No. [REDACTED]

Acct No. [REDACTED] 

 
 

ARTICLE 20.—TERM    
    

        20.1.    Term    

        This
Contract shall be effective as of the Effective Date and shall continue in full force and effect for a primary term ending on August 31, 2006, and year to year
thereafter, unless 

23

 

canceled
by either party giving advance written notice to the other at least 180 days before the date of termination of the primary term or any subsequent anniversary date thereof. 

 
 

ARTICLE 21.—MISCELLANEOUS

        21.1.    Upstream Processing    

        KMTP
shall not process or arrange for processing of any of the Gas in the KMTP Line upstream of the Plant or prior to delivery of such Gas into the KMTP Line with a third
party processor except that KMTP shall have the sole option to process or arrange for processing of any Gas upstream of the Plant from any pipeline or plant that KMTP or any Affiliate of KMTP acquires
after the date of this Agreement if such Gas was subject to a processing agreement on the effective date of the acquisition of such pipeline or plant by KMTP or its Affiliate. Arrangements for
processing by a third party seller or transporter of Gas delivered into the KMTP Line shall not, for purposes hereof, be deemed arrangements by KMTP. 

        21.2.    Indemnity    

        KMTP
and COPANO each hereby releases, relinquishes and discharges and, at the sole cost and expense of each, shall indemnify, protect, save harmless and defend the other of
and from any and all claims, demands, causes of actions, damages, liabilities and costs, (including reasonable attorneys' fees,) of any and every nature whatsoever arising out of the performance of
this Contract which are asserted against the indemnitee by any person, whether they be third persons or employees of either of the parties hereto, for personal injury, death, or loss of or damage to
property where such personal injury, death, or loss of or damage to property is due to the sole negligence or sole willful misconduct of the indemnitor, its employees, agents, contractors or
subcontractors. Where personal injury, death, or loss of or damage to property is the result of joint negligence or willful misconduct of KMTP and COPANO, their employees, agents, contractors or
subcontractors, the indemnitor's duty of indemnification shall be in the same proportion that the indemnitor's negligent acts or omissions contributed thereto. If KMTP or COPANO is held strictly
liable under law, the indemnitor's duty of indemnification shall be in the same proportion that the indemnitor's negligent acts or omissions contributed to the personal injury, death, or losses of or
damage to property for which the indemnitee is held strictly liable. 

        21.3.    Waiver    

        No
waiver by KMTP or COPANO of any default of the other party under this Contract shall operate as a waiver of any subsequent default, whether of a like or a different
character. 

24

 

*
CONFIDENTIAL TREATMENT REQUESTED. THE REDACTED MATERIAL HAS BEEN SEPARATELY FILED WITH THE COMMISSION, AND THE APPROPRIATE SECTION HAS BEEN MARKED AT THE APPROPRIATE PLACE AND IN THE MARGIN WITH AN
ASTERISK (*). 

        21.4.    Performance    

        Any
provision herein that requires action by either party where a performance date is not specified shall require performance of such action within a reasonable time. 

	21.5.
	Drafting

        As
between the parties hereto, it shall be conclusively presumed that each and every provision of this Contract was drafted jointly by KMTP and COPANO. 

	21.6.
	Headings

        The
Table of Contents and headings contained in this Contract are used solely for convenience and do not constitute a part of the agreement between the parties hereto, and
they should not be used to aid in any manner in construing this Contract. 

	21.7.
	Third Party Beneficiaries

        It
is the specific intention of the parties hereto that the provisions of this Contract shall not impart rights enforceable by any person, firm, or organization not a party
or not a successor or assignee of a party to this Contract and, therefore, that there be no third party beneficiary to this agreement. 

	21.8.
	Renegotiation Rights

	*
	If
significant changes to the conditioning fees or services contemplated herein, ([REDACTED]), either party shall have
the right to require the other to enter into negotiations to amend this agreement to the mutual satisfaction of the parties.

	21.9.
	Prior Contract

        This
Agreement supersedes and replaces the 2001 Gas Processing Agreement as of the Effective Date. This Agreement shall not alter or affect any rights or obligations of the
parties under the 2001 Gas Processing Agreement that accrued prior to the Effective Date. 

	21.10
	Replacement Indices.

        Should
any index utilized by the parties be unavailable or cease to be published, the parties shall promptly meet and in good faith determine an alternative index or
payment methodology that will place each in a comparable economic position to that 

25

 

they
would have been in had the original index have been available and utilized. Should the parties be unable to so reach agreement, either may submit the matter for arbitration pursuant to the
expedited rules of the American Arbitration Association. 

        IN WITNESS WHEREOF, this Contract is executed in multiple originals as of the dates signified below, effective as of the  date first above written. 

	 	COPANO PROCESSING, L.P.

by Copano Processing (Texas), L.L.C.

its Managing General Partner
	

 	

By:	

/s/ Brian D. Eckhart

	 	Title:	Senior Vice President
	 	Date:	1/30/04

	

 	

KINDER MORGAN TEXAS PIPELINE, L.P.

By Kinder Morgan Tejas Pipeline GP LLC
	

 	

By:	

/s/ [ILLEGIBLE]

	 	Title:	VICE PRESIDENT
	 	Date:	2/4/04

26

 
 

EXHIBIT B    
    

 
  PROCESSING CONFIRMATION LETTER (PCL)    

KMTP
METER STATION NO.            

Name
of Producer: 

Field(s):

County:

Quantity:

Quality:

Effective
Date: 

Term
of Contract: 

Renewal: 

KMTP
share of: 

Products: 

PTR: 

Direct
Operating Costs: 

Allocation
Procedure: To be attached 

Other
Fees Paid: 

Other
Provisions: 

This
Processing Confirmation Letter is accepted by and agreed to by: 

Kinder
Morgan Texas Pipeline, L.P. COPANO PROCESSING, L.P. 

	This            day of                    ,
200    	 	This            day of                    ,
200    
	

By:	

 	
 	

By:	

 
	 	
	 	 	

 
 

EXHIBIT C    
    

 
 

DETERMINATION OF PLANT PRODUCTS, PTR AND RESIDUE GAS    

	A.
	Determination of Plant Products

        The
quantity of Products attributable to the KMTP Gas delivered to COPANO hereunder shall be determined by multiplying the total quantity of each such Product contained as a component in
the KMTP Gas by the recovery factor for each Product. The Recovery Factor shall equal a fraction, the numerator of which is the quantity of each such Plant Product recovered and saved in the Plant,
and the denominator of which is the total quantity of each such Plant Product contained as a component of Gas from all sources delivered to the Plant for processing. 

	B.
	Determination of PTR

        The
PTR shall be the sum of the Plant fuel and shrinkage as determined below: 

	(i)
	The
quantity of the KMTP Gas, stated in MMBtu's, that is consumed as Plant fuel, flare and vent in the processing of the KMTP Gas during a given Month shall be
determined by multiplying the total quantity of MMBtu's consumed as Plant Fuel, flare and vent in Plant operations during such Month by a fraction, the numerator of which is the total quantity of KMTP
Gas in MMBtu and the denominator of which is the total quantity in MMBtu of Gas from all sources delivered to the Plant for processing; and

	(ii)
	Shrinkage
shall be calculated each Month by multiplying the number of gallons of each component recovered and allocated to the KMTP Gas by the Btu equivalent of each
such component as set forth in the GPA Technical Standards Publication No. 2145-96, as revised from time to time and as adjusted to sixty degrees Fahrenheit (60°) and
14.73 psia pressure base; the aggregate Btu's of all such components shall constitute the shrinkage hereunder. 

 

	C.
	Determination of Residue Gas

        The
quantity of Residue Gas shall be determined by subtracting the quantity of PTR in MMBtu attributable to the KMTP Gas from the quantity of KMTP Gas in MMBtu delivered for processing
at the Plant. 

2

*
CONFIDENTIAL TREATMENT REQUESTED. THE REDACTED MATERIAL HAS BEEN SEPARATELY FILED WITH THE COMMISSION, AND THE APPROPRIATE SECTION HAS BEEN MARKED AT THE APPROPRIATE PLACE AND IN THE MARGIN WITH AN
ASTERISK (*). 

EXHIBIT D PART 1 FORMULAE

Processing Margin Calculation  

	PRODUCER

PLANT

  
 
	 	KMTP

HOUSTON

CENTRAL

  
 
	 	 
	 	 
	 	Forward Month Gas Price

 
 
	 	[REDACTED]

 
 
	 	 
	 	 
	 	 
	 	 

	*COMPONENT
	 	GPM
	 	RECOVERY

%
	 	RECOVERED

GPM
	 	LIQUID VOLUME

%
	 	LIQUID PRICE

$/GAL
	 	COMPOSITE PRICE

$/GAL
	 	COMPONENT

Btu/GAL
	 	COMPOSITE

Btu/GAL
	 	Mt.Belvleu Price

$/GAL
	 	T&F Fee

$/GAL

	Ethane	 	[REDACTED]	 	[REDACTED]	 	=(C13*D13)/100	 	=E13/E$21	 	=L13-M13	 	=F13*G13	 	66369	 	=F13*I13	 	[REDACTED]	 	[REDACTED]
	Propane	 	[REDACTED]	 	[REDACTED]	 	=(C14*D14)/100	 	=E14/E$21	 	=L14-M14	 	=F14*G14	 	91599	 	=F14*I14	 	[REDACTED]	 	[REDACTED]
	l-Butane	 	[REDACTED]	 	[REDACTED]	 	=(C15*D15)/100	 	=E15/E$21	 	=L15-M15	 	=F15*G15	 	99652	 	=F15*I15	 	[REDACTED]	 	[REDACTED]
	n-Butane	 	[REDACTED]	 	[REDACTED]	 	=(C16*D16)/100	 	=E16/E$21	 	=L16-M16	 	=F16*G16	 	103724	 	=F16*I16	 	[REDACTED]	 	[REDACTED]
	l-Pentane	 	[REDACTED]	 	[REDACTED]	 	=(C17*D17)/100	 	=E17/E$21	 	=L17-M17	 	=F17*G17	 	109584	 	=F17*I17	 	[REDACTED]	 	[REDACTED]
	n-Pentane	 	[REDACTED]	 	[REDACTED]	 	=(C18*D18)/100	 	=E18/E$21	 	=L18-M18	 	=F18*G18	 	110946	 	=F18*I18	 	[REDACTED]	 	[REDACTED]
	Hexanes+	 	[REDACTED]	 	[REDACTED]	 	=(C19*D19)/100	 	=E19/E$21	 	=L19-M19	 	=F19*G19	 	121000	 	=F19*I19	 	[REDACTED]	 	[REDACTED]
	

Totals	
 	

=SUM(C13:C20)	
 	

 	
 	

=SUM(E13:E20)	
 	

=SUM(F13:F20)	
 	

 	
 	

=SUM(H13:H20)	
 	

 	
 	

=SUM(J13:J20)	
 	

 	
 	

 
	

KMTP GAS (Btu/cf)	
 	

[REDACTED]	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

GAS SALES VALUE ($/MMBtu)	
 	

=H7[REDACTED]	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

SHRINKAGE VALUE ($/Gal)	
 	

=(J21/1000000)*D25	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

FRAC MARGIN ($/Gal)	
 	

=H21-D27	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

FUEL CONSUMPTION (MMBtu/Gal)	
 	

=[REDACTED]D23/1000)/E21	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

FUEL COST ($/Gal)	
 	

=D31*D25	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

PROCESSING MARGIN ($/Gal)	
 	

=D29-D33	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 

* CONFIDENTIAL TREATMENT REQUESTED. THE REDACTED MATERIAL HAS BEEN SEPARATELY FILED WITH THE COMMISSION, AND THE APPROPRIATE SECTION HAS BEEN MARKED AT THE
APPROPRIATE PLACE AND IN THE MARGIN WITH AN ASTERISK (*). 

EXHIBIT D PART 2 EXEMPLAR WITH REPRESENTATIVE VALUES

Processing Margin Calculation  

	PRODUCER

PLANT

  
 
	 	KMTP

HOUSTON

CENTRAL

  
 
	 	 
	 	 
	 	Forward Month Gas Price

 
 
	 	[REDACTED]

 
 
	 	 
	 	 
	 	 

	*COMPONENT
	 	GPM
	 	RECOVERY

%
	 	RECOVERED

GPM
	 	LIQUID VOLUME

%
	 	LIQUID PRICE

$/GAL
	 	COMPOSITE PRICE

$/GAL
	 	COMPONENT

Btu/GAL
	 	COMPOSITE

Btu/GAL
	 	Mt.Belvleu Price

$/GAL
	 	T&F Fee

$/GAL

	Ethane	 	[REDACTED]	 	[REDACTED]	 	[REDACTED]	 	0.47278	 	[REDACTED]	 	0.17635	 	66,369	 	31,378	 	[REDACTED]	 	[REDACTED]
	Propane	 	[REDACTED]	 	[REDACTED]	 	[REDACTED]	 	0.24354	 	[REDACTED]	 	0.13005	 	91,599	 	22,308	 	[REDACTED]	 	[REDACTED]
	l-Butane	 	[REDACTED]	 	[REDACTED]	 	[REDACTED]	 	0.07195	 	[REDACTED]	 	0.04957	 	99,652	 	7,170	 	[REDACTED]	 	[REDACTED]
	n-Butane	 	[REDACTED]	 	[REDACTED]	 	[REDACTED]	 	0.06036	 	[REDACTED]	 	0.04309	 	103,724	 	6,261	 	[REDACTED]	 	[REDACTED]
	l-Pentane	 	[REDACTED]	 	[REDACTED]	 	[REDACTED]	 	0.03436	 	[REDACTED]	 	0.02539	 	109,584	 	3,765	 	[REDACTED]	 	[REDACTED]
	n-Pentane	 	[REDACTED]	 	[REDACTED]	 	[REDACTED]	 	0.01910	 	[REDACTED]	 	0.01411	 	110,946	 	2,119	 	[REDACTED]	 	[REDACTED]
	Hexanes+	 	[REDACTED]	 	[REDACTED]	 	[REDACTED]	 	0.09791	 	[REDACTED]	 	0.07235	 	121,000	 	11,847	 	[REDACTED]	 	[REDACTED]
	

Totals	
 	

[REDACTED]	
 	

 	
 	

[REDACTED]	
 	

1.00000	
 	

 	
 	

0.51092	
 	

 	
 	

84,848	
 	

 	
 	

 
	

KMTP GAS (Btu/cf)	
 	

[REDACTED]	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

GAS SALES VALUE ($/MMBtu)	
 	

[REDACTED]	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

SHRINKAGE VALUE ($/Gal)	
 	

[REDACTED]	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

FRAC MARGIN ($/Gal)	
 	

[REDACTED]	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

FUEL CONSUMPTION (MMBtu/Gal)	
 	

[REDACTED]	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

FUEL COST ($/Gal)	
 	

[REDACTED]	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
	

PROCESSING MARGIN ($/Gal)	
 	

$0.0347	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 

QuickLinks

Exhibit 10.7

AMENDED AND RESTATED GAS PROCESSING CONTRACT

BETWEEN

KINDER MORGAN TEXAS PIPELINE, L.P. AND

COPANO PROCESSING, L.P.

JANUARY 1, 2004

AMENDED AND RESTATED GAS PROCESSING CONTRACT BETWEEN KINDER MORGAN TEXAS PIPELINE, L.P. AND COPANO PROCESSING, L.P.

TABLE OF CONTENTS

AMENDED AND RESTATED GAS PROCESSING CONTRACT BETWEEN KINDER MORGAN TEXAS PIPELINE, L.P. AND COPANO PROCESSING, L.P.

W I T N E S S E T H

ARTICLE 1.—DEFINITIONS

ARTICLE 2.— CERTAIN OBLIGATIONS OF THE PARTIES

ARTICLE 3.— ALLOCATION OF INLET GAS

ARTICLE 4.— PAYMENTS BY COPANO TO KMTP

ARTICLE 5.— PAYMENTS BY KMTP TO COPANO

ARTICLE 6.—PRESSURES

ARTICLE 7.— CONTENT TESTS

ARTICLE 8.— PRODUCT AND PTR ALLOCATION

ARTICLE 9— RESIDUE GAS REDELIVERY

ARTICLE 10.— MAKE-UP OF PTR

ARTICLE 11.—MEASUREMENT

ARTICLE 12.— MEASURING EQUIPMENT AND TESTING

ARTICLE 13.—QUALITY

ARTICLE 14.—ACCOUNTING

ARTICLE 15.— FORCE MAJEURE

ARTICLE 16.—TAXES

ARTICLE 17.—LIABILITY; TITLE AND WARRANTIES

ARTICLE 18.— SUCCESSORS AND ASSIGNS

ARTICLE 19.—NOTICES

ARTICLE 20.—TERM

ARTICLE 21.—MISCELLANEOUS

EXHIBIT B

PROCESSING CONFIRMATION LETTER (PCL)

EXHIBIT C

DETERMINATION OF PLANT PRODUCTS, PTR AND RESIDUE GAS

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