Document:

exh-10.1x613

Exhibit 10.1
 
CERTAIN MATERIAL (INDICATED BY THREE ASTERISKS) HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.  THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
 
GAS PURCHASE AGREEMENT
 
THIS GAS PURCHASE AGREEMENT (“Agreement”) is entered into this 20th day of December, 2010 (the “Effective Date”) by and between Bear Tracker Energy, LLC., with offices at 1512 Larimer Street, Suite 540, Denver, CO 80202, hereinafter referred to as “Buyer”, and EOG Resources, Inc., a Delaware Corporation, whose corporate address is 1111 Bagby, Sky Lobby 2, Houston, Texas 77002, hereinafter referred to as “Seller”.
 
RECITALS
 
1.                                   Seller owns and holds, or has an interest or interests in certain oil and gas leases, wells, and/or lands within the area described in Exhibit “A” attached hereto and by reference made a part hereof (the “Area of Dedication”), and may own or hold additional interests in oil and gas leases, wells, and/or lands acquired by Seller within the Area of Dedication during the term of this Agreement that are not then dedicated to another purchaser or other facilities, said existing or subsequently acquired oil and gas leases, wells and/or lands and formations thereunder hereinafter referred to as the “Leases”.  Seller desires to commit to Buyer all of the Gas for sale owned by Seller which is produced and saved from wells operated by Seller (covered hereunder (“Seller’s Gas”) at or near Seller’s lease separation facilities.  “Third Party Gas” shall mean any Gas produced from wells operated by parties other than Seller.  Seller’s Gas shall not include any Third Party Gas.  Buyer recognizes that Seller’s commitment to Buyer shall require Buyer, under the terms and for the consideration herein expressed, to purchase all such Seller’s Gas.
 
2.                                    Buyer desires to purchase from Seller Seller’s Gas, at or near Seller’s lease separation facilities, utilizing the facilities constructed, owned and operated by Buyer under the terms and for the consideration herein expressed.
 
3.                                    Buyer acknowledges that:  (i) Seller’s commitment of the Area of Dedication and Seller’s Gas in return for construction and operation of Buyer’s Gathering System (as defined below) forms the basis of this Agreement, (ii) Seller’s commitments are enabling Buyer to build its Initial System (as defined below); and (iii) Priority Service (defined below) shall be provided by Buyer to all volumes of Seller’s Gas, up to Seller’s Capacity (as defined below) before Buyer gathers any volume of Third Party Gas.
 
4.                                     Buyer shall install, own, operate, and maintain a natural gas gathering system, compression facilities, Receipt Point metering, and related facilities to be located in [***], North Dakota.  Said facilities shall enable Buyer to purchase, and accept delivery of all of Seller’s Gas produced and saved from Seller’s Wells on the Leases, at Seller’s Receipt Points and make allocations of Field Condensate, Field Fuel and Flare Gas back to all of the Receipt Points, as such terms are defined herein.
 
__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.
 

 

1

5.                                     Contemporaneous with this Agreement, Buyer will enter into a gas purchase agreement with [***] (“[***]”), pursuant to which Buyer shall resell Purchased Gas hereunder to [***] (“[***]Contract”), and a Right of Way and Fee Lands Acquisition Services Agreement with [***].
 
NOW THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the parties hereto agree as follows:
 
ARTICLE I
 
REPRESENTATIONS OF SELLER
 
1.1                              Seller represents and warrants to Buyer, its successors and assigns, that Seller owns and has the right to market Seller’s Gas and that Seller has constructed, intends to construct, or shall cause to be constructed, the facilities necessary, if any, to enable Seller to sell and deliver to Buyer for sale at Seller’s Receipt Points, as hereinafter set forth, all of Seller’s Gas, except as provided in Section 2 of the GT&C, in accordance with the terms and provisions of this Agreement.  In the event other working interest parties in the wells operated by Seller within the Area of Dedication fail to take their share of production in kind from time to time, and Seller elects to temporarily market the shares of production of such working interest owners (the “Other Wl Owners”), then Seller shall have the right to tender such working interest owners’ share of Gas production under this Agreement (“Other Wl Owner Gas”) and Buyer, to the extent it has capacity in Buyer’s Gathering System and to the extent [***] purchases such Gas from Buyer, agrees to purchase such Other Wl Owner Gas, except as provided in Section 2 of the GT&C, on the same terms and conditions as it purchases Seller’s Gas; provided, however, that such Other Wl Owner Gas shall not thereby become dedicated to this Agreement and such Other WI Owners shall retain their right and obligation to take their share of production in kind.  To the extent Seller tenders Other Wl Owner Gas, Seller represents and warrants to Buyer, its successors and assigns, that Seller has the right to market same under the authority of joint operating agreements or other contracts with such working interest owners.
 
1.2                              It is expressly agreed by the Parties that Seller does not commit to the performance of this Agreement any Gas attributable to the interests of Other WI Owners in the wells operated by Seller within the Area of Dedication.  Furthermore, Buyer shall have the right but not the obligation to accept Gas attributable to Other WI Owners in the wells operated by Seller within the Area of Dedication hereunder.
 
ARTICLE II
 
COMMITMENT OF SELLER’S GAS
 
2.1                             Subject to Section 2 of the GT&C, Seller hereby commits to the performance of this Agreement all of Seller’s Gas produced and saved from the Leases and to ensure the faithful performance of the provisions of this Agreement, Seller covenants to sell and deliver same to Buyer at Seller’s Receipt Points to be installed in the Area of Dedication without other disposition except as herein otherwise provided.  Upon the execution of this Agreement, Seller shall have obtained a release from [***] of all dedications of Seller’s interests in the Area of
 
__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.
 

 

2

Dedication that had been subject to that certain Gas Purchase Agreement between Seller and [***] dated March 1, 2008.
 
2.2                              It is expressly agreed by the Parties that as to any leases within the Area of Dedication acquired by Seller during the Primary Term hereof which at the time of Seller’s acquisition are subject to commitments which conflict with Seller’s commitment herein (a “Conflicting Commitment”), Seller’s Gas attributable to the Conflicting Commitment shall be exempted from Seller’s commitment for the remaining term of the Conflicting Commitment which term shall not be extended by Seller unless and until Buyer has provided notice to Seller under subparagraph B below.  At least one hundred eighty (180) days prior to the expiration of the term of the Conflicting Commitment, Seller shall submit to Buyer all pertinent information in its possession regarding Seller’s Gas attributable to the Conflicting Commitment in order to allow Buyer to assess the viability of adding same to this Agreement upon expiration of the term of the Conflicting Commitment.
 
A.                                   If Buyer, at its sole discretion, elects to have Seller’s Gas attributable to the Conflicting Commitment added to this Agreement at the expiration of the term of the Conflicting Commitment, then Buyer shall submit to Seller the applicable amendment(s) to this Agreement to add Seller’s Gas attributable to the Conflicting Commitment to this Agreement.
 
B.                                   If Buyer, at its sole discretion, elects not to have Seller’s Gas attributable to the Conflicting Commitment added to this Agreement at the expiration of the term of the Conflicting Commitment, then Buyer shall so notify Seller within sixty (60) days after receipt of Seller’s information regarding Seller’s Gas attributable to the Conflicting Commitment and shall provide Seller with a release in recordable form of such Seller’s Gas attributable to the Conflicting Commitment, and neither party will have further obligation to the other with respect to Seller’s Gas attributable to the Conflicting Commitment.
 
ARTICLE III
CONSTRUCTION OF WELL CONNECT FACILITIES
 
3.1                               Facilities.  It shall be the obligation of Buyer to connect each of the wells within the Area of Dedication which Seller operates and in which Seller has an interest (“Seller’s Wells”) and to ensure the faithful performance of the provisions of this Agreement subject to the terms and provisions below:
 
A.                                    Buyer will construct, operate and maintain a natural gas gathering system located as necessary to enable Buyer to purchase Seller’s Gas from the Area of Dedication at the Receipt Points and gather and deliver such Gas to [***] for resale at a location mutually agreeable to Buyer and [***] at the inlet of [***] Plant located in the [***] of Section [***] in Township [***], Range [***],[***] County, North Dakota (the “[***] Delivery Point”), the foregoing gathering system being referred to as “Buyer’s Gathering System”, or the “Bakken Lite System”.  Buyer’s Gathering System will consist of a Trunkline and Lateral Lines, as described below:
 
(i)                                     “Trunkline” means the pipeline gathering facilities consisting of 3-inch, 4-
 
__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.
 

 

3

inch and 6-inch diameter steel pipe running from the [***] Delivery Point upstream within the Area of Dedication.
 
(ii)                                  “Lateral Lines” means the pipeline gathering facilities from the Receipt Point(s) to an interconnection with the Trunkline, together with appurtenances thereto, including metering facilities and valves.
 
B.                                    Buyer shall provide wellhead Receipt Point metering and telemetry (“Metering Equipment”) and shall permit Seller and [***] to have access to such Metering Equipment in accordance with reasonable procedures established, from time to time, by Buyer.
 
The initial Trunkline and the initial Lateral Lines, well connections, compressors, dehydrators, Metering Equipment, slug catchers at field compression facilities and related, appurtenant facilities described on Exhibit “C” are referred to as the “Initial System”.  It is understood that Buyer will not be responsible for the installation or costs of measuring equipment and slug catchers at the [***] Delivery Point, all of which shall be the responsibility of [***].
 
C.                                    Buyer’s Initial System will be designed and constructed to:
 
(i) be capable of handling the currently existing and anticipated Gas volumes provided by Seller to Buyer periodically in accordance with Seller’s drilling and development plans for Seller’s Wells to be drilled in the area described in Exhibit C-1, up to a number of wells comprising the Well Connection Commitment (as defined below);
 
(ii) provide a nominal average operating pressure at the Receipt Points of [***] psig;
 
(iii) provide a delivery pressure into [***]’s facilities at the pressures prevailing at the [***] Delivery Point ([***] exceed [***] psig);
 
(iv) provide compression and dehydration services as determined necessary by Buyer.
 
D.                                    Subject to any grant of specific capacity on any particular lateral or segment as may be provided pursuant to Section 3.1, I., below, in order to meet Buyer’s obligation to purchase Seller’s Gas hereunder, Buyer shall reserve capacity in Buyer’s Gathering System equal to at least [***]% of the then applicable Seller’s Minimum Monthly Volumes, in the aggregate, for the benefit of Seller (“Seller’s Capacity”).  Buyer shall provide the Seller’s Capacity on the Trunkline and although there will be no specific portion of Seller’s Capacity allocated to each of the Lateral Lines, Buyer will design the Lateral Lines to accommodate all of Seller’s Gas delivered to such Lateral Lines.  Any capacity available in the Buyer’s Gathering System in excess of the actual amount of
 
__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.
 

 

4

Gas tendered for sale by Seller to Buyer each Day hereunder, shall be available to Buyer for other volumes owned or controlled by Buyer on such Days.
 
E.                                     Upon the execution of this Agreement, and subject to events of Force Majeure, weather related construction delays and associated cost implications and the availability of raw materials, Buyer shall promptly commence the construction and installation of the Initial System, and shall use all commercially reasonable efforts to complete construction of the Initial System and be capable of receiving Seller’s Gas as soon as practical, anticipated within ten (10) months of the execution of this Agreement.
 
F.                                      The construction of Buyer’s Gathering System shall include the installation of Receipt Points for each of Seller’s Wells existing as of the date of this Agreement.
 
G.                                    After installation of the Initial System, Buyer will install and connect Receipt Points and Lateral Lines for subsequent wells operated by Seller within the Area of Dedication, subject to the other terms of this Agreement.  Subject to delays occasioned by conditions of Force Majeure, weather related construction delays and associated cost implications and the availability of raw materials, Buyer will use commercially reasonable efforts to install such facilities to begin receipts of Seller’s Gas from such additional wells within [***] days following written request from Seller for such connection.
 
H.                                   Seller shall pay a connection fee to Buyer equal to [***] for each well connected to Buyer’s Gathering System during each calendar year through 2012 (“Connection Fee”).  Buyer will invoice Seller for Connection Fees not more frequently than once each calendar quarter, and Seller shall pay the invoiced amounts within 30 days of receipt of the invoice.  Seller commits to provide for connection to Buyer’s Gathering System, and/or pay the Connection Fee, for the connection of [***] Seller’s Wells in the area described in Exhibit C-1 (“Well Connection Commitment”).  Seller anticipates that a total of [***] wells will be connected by the end of 2012.  Within ninety (90) days following the end of 2012, the parties shall determine the number of Seller’s Wells connected to Buyer’s Gathering System and the Connection Fees paid by Seller through 2012, and if such Connection Fees are less than [***], Seller shall pay Buyer the difference (“Well Connection Deficiency Payment”).  Payment shall be due no later than thirty (30) days after receipt of an invoice from Buyer to Seller.  After satisfaction of the Well Connection Commitment, Buyer shall connect all subsequent Seller’s Wells to Buyer’s Gathering System in the Area of Dedication at no cost to Seller except as provided in 3.1, I., below.
 
I.                                        In the event that Seller requests a well connection and the requested connection will require costs greater than [***], prior to such time as Seller has met the Well Connection Commitment, or [***], anytime thereafter, then upon agreement of the parties and completion of that well connection, Seller’s Gas utilizing such connection will be charged the Base Fee, without respect to what is then being charged for other Seller’s Gas, until Buyer recoups such actual costs above [***] or [***], as the case may be (“Excess Connection Cost”), as provided below.  Buyer shall be entitled to be reimbursed for the Excess Connection Cost, unless Seller or a third party drills additional wells that are connected to the same Lateral Line and Buyer recoups the Excess
 
__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.
 

 

5

Connection Cost of that Lateral Line from all service fees (including Seller’s Services Fee) assessed on Gas received from all wells connected to that Lateral Line within two (2) years following the date that the initial well on that Lateral Line is connected to Buyer’s Gathering System. It is provided, however, that service fees assessed to a third party for wells connected to the same Lateral Line shall only be applied to the recoupment of the Excess Connection Costs during the periods in which Seller is receiving a credit against Seller’s Minimum Monthly Volume obligation with respect to those Third Party Gas under the provisions of Section 4.3, below.  At the end of that two-year period, if Buyer has not recouped the Excess Connection Cost for that Lateral Line, Seller and any other third party connected to such Lateral Line shall pay their pro-rata share of the difference to Buyer within thirty (30) days of invoice from Buyer.  In the event Seller agrees to pay Buyer some or all of the Excess Connection Cost, or any connection fee after the satisfaction of the Well Connection Commitment, then Buyer and Seller shall mutually agree upon a specified firm capacity on such Lateral for Seller’s Gas and Buyer shall give Seller’s Gas priority over all other Gas in such Lateral.
 
J.                                        In the event that funding sources used by Buyer to fulfill its obligations hereunder should elect to not provide any further funding to Buyer, then within thirty (30) days following such event, Buyer shall submit a statement to Seller indicating the purchase price for Buyer’s Gathering System (“Purchase Price Statement”) and Seller shall have the right but not the obligation to purchase Buyer’s Gathering System in accordance with the following:
 
(i)                                     The purchase price shall be equal to [***]% of the Actual Costs incurred in constructing and installing all portions of Buyer’s Gathering System to the date of sale to Seller, less any Connection Fees and Well Connection Deficiency Payments paid by Seller to Buyer to date, if Seller so elects.
 
(ii)                                  Seller shall have ninety (90) days following receipt of the Purchase Price Statement in which to elect, in writing, whether or not to consummate the purchase of Buyer’s Gathering System.  During this period, the Parties shall discuss in good faith any questions that Seller has about the calculation of the purchase price as set forth in the Purchase Price Statement, and Seller shall have the right to conduct a due diligence review of any Buyer contracts that Seller may be required to assume in conjunction with its purchase of Buyer’s Gathering System and to review the Actual Costs.  If Seller fails to respond, in writing, within that ninety (90) day period, Seller will be deemed to have elected not to purchase Buyer’s Gathering System.
 
(iii)                               If Seller elected to consummate the purchase, then it must remit the purchase price to Buyer within thirty (30) days after the ninety (90) day period set forth in (ii), above, and upon such receipt Buyer will execute and deliver appropriate assignments and bills of sale to convey Buyer’s Gathering System, to Seller, which shall be on an “as is, where is” basis, with no warranties or representations; provided, Buyer will convey Buyer’s Gathering System free and clear of all liens, security interest or encumbrances arising by, through or under
 
__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.
 

 

6

Buyer.
 
(iv)                              If Seller elects, or is deemed to have elected, not to purchase Buyer’s Gathering System, then Buyer shall be relieved of any further obligations hereunder to install any portions Buyer’s Gathering System or to connect any additional Receipt Points hereunder; provided however, in such event Buyer shall release any portion of Seller’s Area of Dedication not then connected to Buyer’s Gathering System. In that event, for each of Seller’s Wells tendered to Buyer for connection that Buyer declines to connect, the Well Connection Commitment shall be eliminated by the number of such wells.  Further, the Minimum Monthly Volume shall be adjusted by multiplying the then applicable Minimum Monthly Volume by a fraction, the numerator of which is the total number of Seller’s Wells connected by Buyer and the denominator of which is the sum of the number of Seller’s Wells connected by Buyer plus the number of Seller’s Wells that Buyer declined to connect.
 
3.2                              Upon the execution of this Agreement, and thereafter by October 15th of each calendar year, Seller shall communicate its drilling plans in writing for the next calendar year to Buyer.  Additionally, on or before the last day of each Accounting Period, Seller shall notify Buyer of any changes or additions to its drilling plans for the succeeding twelve (12) Accounting Periods.  As to each of Seller’s Wells included in the drilling plans which Seller expects to have completed and ready for production within the next twelve (12) months and for which Seller requests connection, Buyer shall immediately proceed to acquire the necessary rights-of-way and other required permits.  Subject to conditions of Force Majeure, Buyer will use its commercially reasonable efforts to proceed with the construction and installation of the required facilities (including, but not limited to, gathering lines, measurement equipment and compression) necessary to receive Seller’s Gas from Seller’s Wells at the Receipt Points and to receive such Gas into Buyer’s Gathering System by the time the applicable well(s) become ready for initial production or [***] days following the date of Seller’s request to connect such wells, whichever is later.
 
3.3                              The Parties acknowledge that [***] shall acquire certain rights of way for that portion of Buyer’s Gathering System necessary for the connection of Seller’s operated wells within the Area of Dedication under the terms of that certain Right of Way and Fee Lands Acquisition Services Agreement of even date herewith, between [***] and Buyer.
 
ARTICLE IV
 
PRIORITY, ORDER OF CURTAILMENTS AND GAS RECEIPTS
 
4.1                              Seller shall deliver and sell all of Seller’s Gas to Buyer, and Buyer shall receive and purchase all of Seller’s Gas on a Priority basis, up to the Seller’s Capacity.  It is provided, however, that if [***] curtails receipts of Gas from Buyer under the [***] Contract, for any reason other than a default of Buyer under this Agreement or the [***] Contract or a breach of either agreement, Buyer shall have no liability for curtailment of Seller’s Gas; provided, the foregoing shall not relieve Seller of its obligations to deliver the Minimum Monthly Volumes.
 
__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.
 

 

7

4.2                              Commencing on the date that the Initial System is in service, Seller agrees to deliver a minimum monthly volume of gas from Seller’s Wells within the Area of Dedication, as measured at the Receipt Points, averaged on a calendar year basis, to Buyer for purchase as follows (“Minimum Monthly Volume”):
 
	
			
	Year
	 
	Minimum Monthly Volume

	 
	 
	(in Mcf)

	2011
	 
	[***]

	2012
	 
	[***]

	2013
	 
	[***]

	2014
	 
	[***]

	2015
	 
	[***]

	2016
	 
	[***]

	2017
	 
	[***]

	2018
	 
	[***]

	2019
	 
	[***]

	2020
	 
	[***]

 
Notwithstanding the foregoing, if the initial date that Buyer’s Initial System is in service, is not the first day of a month, then Seller’s Minimum Monthly Volume obligation for that month shall be pro-rated on a daily basis based on the number of days in the month beginning with the in-service date.
 
4.3                               For all volumes of Third Party Gas gathered by Buyer utilizing portions of Buyer’s Gathering System initially installed by Buyer to receive Seller’s  Gas, the following formula will be used to determine a credit to Seller against Seller’s commitment to deliver the Monthly Minimum Volume.  The credit against Seller’s Minimum Monthly Volume commitment shall incorporate, at a minimum, Buyer’s recovery of its incremental capital and direct operating and maintenance expenses expended by Buyer to connect the Third Party Gas, the fees charged by Buyer for the Third Party Gas, and an after tax rate of return to Buyer equal to [***] percent ([***]%).  The agreed upon credit to Seller (“Volume Credit”) shall be applied against Seller’s Minimum Monthly Volume obligation each year in accordance with the following formula:
 
Volume Credit = [***]
 
4.4                               Within ninety (90) days following the end of calendar year 2011, and within ninety (90) days following each calendar year thereafter, Buyer shall determine the aggregate volume of Seller’s Gas delivered to Buyer at the Receipt Points (“Actual Deliveries”) in comparison to the applicable aggregate Monthly Minimum Volumes for that calendar year.  To the extent that the aggregate of the Monthly Minimum Volumes for the calendar year exceed Actual Deliveries for that calendar year, the difference shall then be reduced by any applicable Excess Deliveries, as provided below, and any Volume Credits for Third Party Gas, with any resulting, positive net amount being the “Short-Fall Volumes”.  In the event of Short-Fall Volumes during any calendar year, Seller shall make a cash payment to Buyer (each, a “Short-Fall Payment”). The Short-Fall Payment shall be equal to the Short-Fall Volumes, in Mcf, multiplied by the Services
 
__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.
 

 

8

Fee in effect during the applicable calendar year.  Furthermore, any Short-Fall Payment shall be reduced by the product of the volume of any Gas that was curtailed or shut-in by Buyer, due to Buyer’s failure, fault or breach of the [***] Contract, but excluding any curtailments due to any portion of Seller’s Gas failing to meet the quality specifications set forth in this Agreement, if applicable, multiplied by the Services Fees in effect for the calendar year for which the Short-Fall Payment is due.
 
4.5                               Aggregate deliveries of Purchased Gas by Seller from Seller’s Wells within the Area of Dedication in any given calendar year that exceed the Monthly Minimum Volumes (each such occurrence, the “Excess Deliveries”) shall be credited to Seller as follows:
 
A.                                    In the event Seller made one or more Short-Fall Payments, Excess Deliveries will first be credited toward the first year for which a Short-Fall Payment had been made, and Buyer would refund to Seller that portion of the Short-Fall Payment, without interest, made-up by the subsequent year’s Excess Deliveries, by multiplying the Excess Deliveries, in Mcf, by the Services Fees in effect for the calendar year for which the Short-Fall Payment was made.  Credit for Excess Deliveries shall continue to be credited toward prior years’ Short-Fall Payments in the foregoing manner, with corresponding refunds of Short-Fall Payments, until the Excess Deliveries have been exhausted.
 
B.                                    To the extent all prior years’ Short-Fall Payments have been fully refunded by Buyer to Seller due to Excess Deliveries, any remaining Excess Deliveries shall be credited toward Seller’s next calendar year’s commitment of Monthly Minimum Volumes.
 
4.6                              Seller acknowledges and understands that Buyer will receive and purchase Seller’s Gas utilizing Buyer’s Gathering System which may also receive Third Party Gas delivered to Buyer by other parties.
 
4.7                               In the event Buyer lacks sufficient capacity in Buyer’s Gathering System due to Seller’s breach of this Agreement or [***]’s breach of the [***] Contract or Seller’s or [***]’s default under either Agreement, Buyer shall curtail Gas at its discretion.  In all other cases, the capacity on Buyer’s Gathering System, as such exists from time to time, shall be allocated first to any Priority Service agreements, second to any Firm Service agreements, and finally to any Interruptible Service agreements, and then, within each category of service, on the basis of contract effective date, where contracts with previous effective dates take priority over contracts with subsequent effective dates.  No curtailments of a higher priority service shall occur until all Gas from a lower priority service has been completely curtailed.  Buyer covenants that it will not enter into any Priority Service agreements with customers other than Seller or its affiliates.
 
4.8                               Buyer agrees that it will not process the Purchased Gas for the extraction of NGLs .
 
__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.
 

 
ARTICLE V
 
GENERAL TERMS AND CONDITIONS
 

9

5.1                              The General Terms and Conditions set forth in the attached Exhibit “B” are by this reference hereby incorporated into and made an integral part of this Agreement (the “GT&C”). In the event of any conflict between the terms as set out in the body of this Agreement and those set out in the GT&C, the terms in the body of this Agreement shall control.
 
ARTICLE VI
 
CONSIDERATION & FEES
 
6.1                              Effective on the date of first deliveries of Seller’s Gas under this Agreement, Seller shall receive as full consideration for all of Seller’s Gas and Other Wl Owner Gas purchased hereunder (the “Purchased Gas”) the following:
 
A.                                            Buyer’s covenant that all Purchased Gas will be resold by Buyer to [***] under the [***] Contract; and
 
B.                                            Payment by Buyer of all actual proceeds received by Buyer from [***] for the Purchased Gas resold to [***] under the [***] Contract, plus the net proceeds received by Buyer for all Field Condensate allocable to the Purchased Gas which Field Condensate was not delivered to [***] for the account of Seller, if applicable, taking into marketing and transportation costs, less an amount equal to the Services Fee, as determined and described in Section 6.4, below, multiplied by the volume (in Mcf) of Purchased Gas as measured at the Receipt Points.
 
6.2                              In addition to the proceeds received by Buyer from [***] for the Purchased Gas resold to [***] under the [***] Contract, Buyer shall, as agent for Seller, receive from [***] certain proceeds representing Plant Products Revenues and Field Condensate Revenues attributable to the NGLs and Field Condensate sold by Seller to [***] under separate agreement, and will disburse those Plant Products Revenues and Field Condensate Revenues along with Residue Gas and Bypassed Gas proceeds, net of fees to Seller, in accordance with Section 10., C., of the GT&C.  Buyer is acting as disbursement agent for the purpose of properly allocating Plant Products Revenues and Field Condensate Revenues to the Receipt Points where it receives EOG’s Gas and to the receipt points where Buyer receives Gas from third parties.  Seller shall have the right to terminate such agency arrangement for the disbursement of Plant Products and Field Condensate Revenues at any time, in its sole discretion, upon one (1) day’s prior written notice from Seller to Buyer and [***].  In the event Seller terminates such agency arrangement, then [***] shall disburse EOG’s Plant Products and Field Condensate Revenues directly to EOG; provided, however, the termination of such agency arrangement shall not relieve Buyer of its obligations to perform any of its required allocations hereunder or, in its role as “Seller,” under the [***] Contract.
 
6.3                              In the event the sum of the proceeds from the sale of the Purchased Gas and, when applicable, the proceeds of any “Field Condensate Revenues” for Field Condensate and the proceeds of any “Plant Products Revenues” for Plant Products sold by [***] (as each of those terms are defined in the [***] Contract) when Buyer is acting as Seller’s disbursement agent, is 
 
__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.
 

 

10

less than the amount of the Services Fee multiplied by the volume (in Mcf) of such Purchased Gas owed by Seller, each as referred to in Section 6.1 B, above, then Buyer shall invoice Seller for such difference.  Seller shall pay any such invoice within ten (10) days of receipt.
 
6.4                              The “Services Fee” shall be the lesser of the Base Fee or the Variable Fee.  The Base Fee and the Variable Fee are derived as follows:
A. Base Fee — the “Base Fee” shall be [***],
 
B. Variable Fee — the “Variable Fee” shall be a per Mcf fee derived by taking into account the following:
 
(1) the Actual Cost(s) incurred by Buyer to receive Seller’s Gas, as of the date of initial deliveries of Seller’s Gas into Buyer’s Gathering System  and mutually agreed upon estimated costs for completion of Buyer’s Gathering System,
 
(2) the Minimum Monthly Volumes,
 
(3) an annual operating cost and general and administrative cost in accordance with Exhibit “D”, attached hereto,
 
(4) a [***] percent ([***]%) after tax rate of return on capital amortized over a 10-year period, all as depicted in Exhibit “D”, attached hereto, and
 
(5) revenues received from Buyer during the period from initial deliveries to the date of determination.
 
6.5                              Service Fee Adjustments.
 
A.                                            [***] percent ([***]%) of the Services Fee shall be adjusted annually, up or down, during the term of this Agreement, for the prospective calendar year, the first prospective calendar year being 2012, based on the percentage change in the annual average in the “Consumer Price Index for All Urban Consumers (CPI-U) : U.S. city average  - All items “  which occurred in the preceding Calendar Year as published by the United States Department of Labor, Bureau of Labor Statistics for the previous calendar year.
 
B.                                            The Variable Fee shall be subject to adjustments in accordance with Exhibit “D”.  Each Variable Fee adjustment will occur within sixty (60) days of the end of each calendar year 2011 and 2012 only, taking into account the Actual Costs incurred by Buyer as of such dates, and the estimated capital costs to be incurred by Buyer in completing Buyer’s Gathering System, as then anticipated, but in any event as necessary to complete the connection of all of the wells subject to Seller’s Well Connection Commitment and the remaining facilities described on Exhibit “C”.  In order to calculate any Variable Fee adjustments, the highlighted portions of Exhibit “D” are subject to modification to reflect Actual Costs expended.  Further, the Variable Fee shall be adjusted to reflect any Services Fee over-collection by Buyer once Actual Costs are finally determined and the Variable Fee is calculated.
 
__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.
 

 
 

11

6.6                              Fuel.  Seller and all other third parties connected to Buyer’s Gathering System shall bear their proportionate share, as determined in Section 8, of the General Terms and Conditions, of actual Field Fuel, Flare Gas, Lost and Unaccounted For Gas or its equivalent
dollar amount in electric power cost incurred by Buyer in lieu of fuel, as applicable, and required to gather the Gas from the Receipt Points to the [***] Delivery Point.
 
ARTICLE VII
 
NOTICES
 
7.1                              All notices and communications required or permitted under this Agreement shall be in writing and shall be considered as having been given if delivered personally, or when received by mail, by fax (confirmed as received before 5 p.m. at the place of receipt), or by express courier, postage prepaid, by either party to the other at the addresses given below. Routine communications, including monthly statements, shall be considered as duly delivered when mailed by ordinary mail or by electronic means. Unless changed upon written notice by either party, the addresses are as follows:
 
TO:                                               SELLER:
 
	
			
	For Payment By Wire:
	[***]

	 
	 

	For Contract Notification:
	EOG Resources, Inc.

	 
	P. O. Box 4362

	 
	Houston, Texas 77210-4362

	 
	Attn.: Director, Marketing Administration

	 
	 

	 
	Telephone:
	[***]

	 
	Facsimile:
	[***]

	 
	 

	With copy to:
	 

	 
	 

	 
	EOG Resources, Inc.

	 
	600 17th Street, Suite 1000N

	 
	Denver, CO 80202

	 
	Phone:
	[***]

	 
	Fax:
	[***]

	 
	Attention: [***]

	 
	 

	For Accounting & Statements:
	EOG Resources, Inc.

	 
	P. O. Box 4362

	 
	Houston, Texas 77210-4362

	 
	Attn.: EOGR Revenue Accounting

	 
	 

	 
	Telephone:
	[***]

	 
	Facsimile:
	[***]

	 
	 

	Street Address:
	EOG Resources, Inc.

	 
	1111 Bagby, Sky Lobby 2

	 
	Houston, Texas 77002-4005

 
__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

12

 
 
TO:                         BUYER:
 
Bear Tracker Energy, LLC
1512 Larimer Street, Suite 540
Denver, CO 80202
Phone: [***]
Fax:  [***]
For Accounting Matters: Attention: VP Finance
For Operational Matter: Attention: VP Engineering
 
ARTICLE VIII
 
TERM
 
8.1                              This Agreement shall be in full force and effect as of the Effective Date and shall remain in full force and effect for a primary term of fifteen (15) years (the “Primary Term”) and shall continue year to year thereafter until terminated by either party by providing written notice to the other party at least sixty (60) days prior to the expiration of the Primary Term, or any subsequent annual expiration date.
 
ARTICLE IX
 
MISCELLANEOUS
 
9.1                              Assignment.  Respecting certain rights of the Parties hereto:
 
A.                                     This Agreement shall be binding upon and inure to the benefit of the Parties hereto, their successors, assigns, heirs, administrators and/or executors and shall constitute a real right and covenant running with the Leases.  Either Party may assign its right, title, and interest in, to and under this Agreement, including, without limitation, any and all renewals, extensions, amendments, and/or supplements hereto; provided, however, that no such assignment shall in any way operate to enlarge, alter, or change any right or obligation of the other Party or Parties hereto.  No assignment shall be effective or binding without the written consent of the other Party, which consent will not be unreasonably withheld or delayed, and until a fully executed copy of same has been furnished to the other Party.  Upon obtaining written consent, the party making the assignment shall be released from further obligations under this Agreement as to the interest so assigned.*
 
__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

13

B.                                   Further, this Agreement, including, without limitation, any and all renewals, extensions, amendments and/or supplements hereto shall be binding upon any purchaser of Buyer’s Gathering System and upon any purchaser of Seller’s Leases, or any part thereof or interest therein which are subject to this Agreement.  It is agreed that no sale of Seller’s Leases, or any part thereof or interest therein, or of all or substantially all of Buyer’s Gathering System, shall be made unless the purchaser thereof shall assume and agree to be bound by this Agreement insofar as the same shall affect and relate to the Leases, Buyer’s Gathering System or interests so sold or conveyed. Interests owned in the Area of Dedication by a purchaser of any of Seller’s Leases that was owned prior to the effective date of such purchase shall not become subject to this Agreement by virtue of such purchase.  It is further agreed, however, that nothing herein contained shall in any way prevent either Party hereto from pledging or mortgaging all or any part of such Party’s Leases or Buyer’s Gathering System as security under any mortgage, deed of trust, or other similar lien, or from pledging this Agreement or any benefits accruing hereunder to the Party making the pledge, without the assumption of obligations hereunder by the mortgagee, pledge or other grantee under such an instrument.
 
C.                                   Nothing in this Agreement, expressed or implied, confers any rights or remedies on any person or entity not a party hereto other than successors and assigns, or heirs, administrators or executors of the Parties hereto.
 
9.2                               Seller expressly does not by the terms of this Agreement, sell, transfer or assign unto Buyer any title or interest whatsoever in the Leases or any pipe, meters, lines or other equipment of any nature owned or used by Seller in the operation of Seller’s Wells and the Leases.
 
9.3                             This Agreement, the Exhibits attached hereto, the [***] Contract and the Right of Way and Fee Lands Acquisition Services Agreement constitutes the entire agreement and understanding between the parties hereto and supersedes and renders null and void and of no further force and effect any prior understandings, negotiations or agreements between the Parties relating to the subject matter hereof, and all amendments and letter agreements in any way relating thereto.  Except as provided for in Section 9.4, no provision of this Agreement may be changed, modified, waived or discharged orally, and no change, modification, waiver or amendment of any provision will be effective except by written instrument to be executed and approved by the Parties hereto.
 
9.4                              The North American Energy Standards Board (“NAESB”) has and will continue to issue standards to which interstate pipelines must comply. To the extent that a standard affects the operation of this Agreement, Buyer shall have the right, upon notice to Seller, to modify the terms and conditions of this Agreement to conform this Agreement to such NAESB standard; provided, however, that no change to any commercial term of this Agreement shall be effective without Seller’s consent.
 
9.5                               Memorandum of Agreement.  Upon execution of this Agreement, the Parties agree to execute a Memorandum of this Agreement to which shall be attached an exhibit containing a legal description of the Area of Dedication, which Memorandum shall recite that the Parties have entered into this Agreement and that this Agreement provides for the dedication by Seller 

__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

14

of Seller’s Gas produced and saved from the Leases,  the purchase of such Seller’s Gas by Buyer pursuant to the terms and conditions set forth in this Agreement.  Such Memorandum shall be placed of record in each County in which the Leases are located.
 
9.6                              Audits.  Respecting certain rights of the Parties hereto:
 
A.                                    Upon thirty (30) days prior written notice, either Party shall have the right, at reasonable times during normal business hours, but no more frequently than once each calendar year, at its own expense, to examine the books and records of the other Party to the extent necessary to audit and verify the accuracy of any statement, charge, or computation made under or pursuant to this Agreement.  All statements, allocations, measurement, and payments made in any period prior to the twenty-four (24) months period preceding the Month in which notice of audit is given by a Party shall be conclusively deemed to be true and correct and the scope of such audit shall be limited to statements, allocations, measurements and payments made during such twenty-four month period.
 
B.                                    The Party conducting the audit shall have 180 days after commencement of the audit in which to submit a written claim, with supporting detail, for proposed adjustments. If the Party conducting the audit fails to submit a written report to the other Party within the 180-day period, then all statements, charges and computations made under or pursuant to this Agreement that were within the audit period shall be deemed to be appropriate and accurate.  Upon receipt of an audit report, the Party being audited shall have one hundred eighty (180) days to make all recommended adjustments, or to notify the auditing party that it does not agree and its basis for disagreement.  Any unresolved disagreements shall be resolved pursuant to Section 15 of the GT&C.
 
9.7                      THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.  EXCLUSIVE VENUE FOR ANY SUIT, ACTION OR PROCEEDING BROUGHT BY EITHER PARTY IN CONNECTION WITH THIS AGREEMENT OR ARISING OUT OF THE TERMS OR CONDITIONS HEREOF SHALL BE IN HARRIS COUNTY, TEXAS.  THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT THEY MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION, OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN THE STATE AND FEDERAL COURTS SITUATED IN THE CITY OF HOUSTON, HARRIS COUNTY, TEXAS.
 

15

THE PARTIES HERETO have executed this Agreement as of the day and year first above written.
 
 
	
					
	Seller:
	 
	Buyer:

	 
	 
	 

	EOG Resources, Inc.
	 
	Bear Tracker Energy, LLC

	 
	 
	 
	 
	 

	By:
	 
	 
	By:
	 

	 
	 
	 
	 
	 

	Name:
	 
	 
	Name:
	 

	 
	 
	 
	 
	 

	Title:
	 
	 
	Title:
	 

 
[***]
 
Acknowledges and Agrees to the Provisions of Article VI Concerning the Agency Arrangement Referred to Therein:
 
By:                            [***]
Name:  [***]
Title:                    [***]
 
__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.
 

 

16

EXHIBIT “A”
 
ATTACHED TO AND MADE A PART OF THAT CERTAIN GAS PURCHASE AGREEMENT
by and between Bear Tracker Energy, LLC, as “Buyer” and
EOG Resources, Inc. as “Seller”
 
AREA OF DEDICATION
 
The following lands located in [***] Counties, North Dakota:
 
[***]
 
__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

17

EXHIBIT “B”
 
ATTACHED TO AND MADE A PART OF THAT CERTAIN
GAS PURCHASE AGREEMENT
by and between Bear Tracker Energy, LLC, as “Buyer” and
EOG Resources, Inc. as “Seller”
 
GENERAL TERMS AND CONDITIONS
 
1.                                      DEFINITIONS
 
For the purposes of the Agreement to which this Exhibit is attached, unless the context of the Agreement requires otherwise, the following terms and expressions used therein and in these GT&C shall be defined as follows:
 
1)                    “Accounting Period” shall mean a period of one calendar month, commencing at 9:00 a.m. Central Clock Time on the first day of each month, and ending at 9:00 a.m. Central Clock Time on the first day of the succeeding calendar month.
 
2)                    “Actual Costs” means the actual costs to install and construct Buyer’s Gathering System, including the Trunkline, or Lateral Lines, as applicable, together with appurtenant facilities, and shall include, all third party or field personnel costs of engineering, design and survey, easements and rights of way, procurement of pipe and appurtenances including any metering facilities, and construction and installation of the pipeline and the appurtenances, together with any other third party or field personnel costs or expenses incurred by Buyer in connection with the installation of the facilities that are normally capitalized pursuant to generally accepted accounting principles, together with administrative or overhead costs of Buyer.
 
3)                    “Adjusted Gas Volume” shall mean the quantity of Gas measured by Buyer at each Receipt Point as adjusted for any Field Condensate, Field Fuel, Lost and Unaccounted For Gas or Flare Gas removed from the raw Gas stream attributable to such Receipt Point upstream of the [***] Delivery Point.  Allocations shall be made by Buyer using Adjusted Gas Volumes as provided in Section 8 of these GT&C.
 
4)                    “Btu” (British thermal unit) shall mean the amount of heat required to raise the temperature of one (1) avoirdupois pound of pure water from fifty-eight and five-tenths degrees (58.5°) Fahrenheit to fifty-nine and five-tenths degrees (59.5°) Fahrenheit at [***] psia.
 
5)                    “Buyer’s Gathering System” shall mean the pipelines (including the Trunklines, the Lateral Lines, field compression, dehydration equipment, Metering Equipment, slug catchers located at the Buyer’s field compressor stations and related equipment) and appurtenances constructed or acquired by Buyer for the purpose of accepting delivery and transmitting Seller’s Gas from the Receipt Points to the [***] Delivery Point.
 
6)                    “Cubic Foot of Gas” shall mean the amount of Gas required to fill a cubic foot of space when the Gas is at a base pressure of [***] psia and at a base temperature of sixty degrees (60°) Fahrenheit.
 
__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.
 

 

18

7)                    “Day” or “day” shall mean the 24-hour period beginning and ending at 9:00 a.m. Central Clock Time.
 
8)                    “Field Condensate” shall mean any liquids or drip (condensed hydrocarbons), which have collected in and are removed from Buyer’s Gathering System upstream of the inlet to the [***] Delivery Point.
 
9)                    “Field Condensate Market Price” shall mean the price received by Buyer for any Field Condensate sold during the Accounting Period.
 
10)             “Field Fuel” shall mean any Gas consumed as fuel by Buyer for purposes of operating Buyer’s Gathering System.
 
11)             “Firm” or “Firm Service” shall mean any Gas purchase or transportation commitment by Buyer that is not subject to prior claim by any other Firm or Interruptible customer, subject, however, to maintenance, repair and non-routine operating conditions and Force Majeure.  Firm Service is the second highest priority service offered by Buyer.
 
12)             “Flare Gas” shall mean any Gas which is burned and/or released to the atmosphere. The quantity of Flare Gas may be reasonably estimated by Buyer.
 
13)             “Gas” shall mean the effluent vapor stream including all of the constituents thereof, including liquefiable hydrocarbons associated with the vapor stream, as produced from a well, whether a gas well or an oil well, and delivered into Buyer’s Gathering System by Seller and other producers at their respective Receipt Points.
 
14)             “GPM” shall mean gallons per Mcf as more fully described in Section 7.G. of these GT&C.
 
15)             “Gross Heating Value” shall mean the total or gross Btu’s produced by the complete combustion, at constant pressure, of the amount of Gas which would occupy a volume of one (1.0) cubic foot at a temperature of sixty degrees (60° F) Fahrenheit saturated with water vapor and under a pressure of [***] psia with air of the same temperature and pressure as the Gas, when the products of combustion are cooled to the initial temperature of the Gas and air and when the water formed by combustion is condensed to the liquid state.
 
16)             “Interruptible” or “Interruptible Service” shall mean any Gas purchase or transportation commitment by Buyer that is available after the provision of Priority and Firm Service, subject to (i) allocation or proration, (ii) the operational capacity of the Buyer’s Gathering System and (iii) Force Majeure.
 
17)             ‘Lost and Unaccounted For Gas” shall mean meter variance and any other quantities of Gas lost or otherwise not accounted for incident to or occasioned by the gathering or compressing and redelivery, as applicable of Gas, including Gas released through leaks, instrumentation, relief valves, unmeasured flares, ruptured pipelines, and blow downs of pipelines, vessels, and equipment.
 
18)             “MCF” or “Mcf” shall mean one thousand (1,000) cubic feet of Gas at a temperature of sixty degrees (60° F) Fahrenheit and under a pressure of [***] psia.
 
__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.
 

 

19

19)             “Mcfd” means MCF per day.
 
20)             “MMBtu” shall mean one million (1,000,000) Btu’s.
 
21)             “Month” or “month” shall mean the period beginning at 9:00 a.m. Central Clock Time on the first day of a calendar month and ending at 9:00 a.m. Central Clock Time on the first day of the next succeeding calendar month.
 
22)             “Natural Gas Liquids,” or “NGLs” shall mean such liquefiable hydrocarbons associated with the gas stream including, but not limited to,  ethane, propane, iso-butane, normal butane, natural gasoline and heavier hydrocarbon liquids but excluding: (i) liquid hydrocarbons separated from the gas stream by the use of mechanical separators at or prior to Seller’s Receipt Points; and (ii) any Field Condensate.
 
23)             “Other Wl Owner Gas” shall have the meaning set forth in Section 1.1 of the Agreement.
 
24)             “Party” or “Parties” shall mean one or both, respectively, of the signatories to this Agreement.
 
25)             “Priority” or “Priority Service” shall mean any Gas purchase or transportation commitment by Buyer that is not subject to prior claim by any other customer, subject, however, to maintenance, repair and non-routine operating conditions and Force Majeure.  Priority Service is the highest priority service offered by Buyer.
 
26)             “Psia” shall mean pounds per square inch absolute.
 
27)             “Psig” shall mean pounds per square inch gauge.
 
28)             “Purchased Gas” shall mean Seller’s Gas and any Other Wl Gas purchased by Buyer under the Agreement.
 
29)             “Receipt Points” shall mean all the points at which Gas is received into Buyer’s Gathering System.
 
30)             “Seller’s Gas” shall have the meaning set forth in Recital 1 of the Agreement.
 
31)             “Well Connect Facilities” shall have the meaning set forth in Section 3.1. of the Agreement.
 
2.                             RECEIPT POINTS, PRESSURE AND OWNERSHIP
 
A.                                    The Receipt Points for all Purchased Gas delivered under the Agreement shall be at the inlet of Buyer’s metering facilities located at Seller’s lease separation facilities or at such other Receipt Points as may be mutually agreed upon in writing by the Parties from time to time.  Title, possession, and control of all Purchased Gas, excluding NGL’s attributable thereto, shall pass from Seller to Buyer at the applicable Receipt Point(s). Title to such NGL’s shall remain with Seller, while risk of loss for such NGLs shall remain with Buyer until the Purchased Gas is delivered to the [***] Delivery Point.
 
__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.
 

 

20

B.                                    Seller, at its own expense, shall equip, maintain and operate all facilities to deliver the Purchased Gas to Buyer at Seller’s Receipt Points, including, but not limited to, installation and maintenance of Seller’s gathering facilities and mechanical separation equipment. Seller shall deliver the Purchased Gas at pressures sufficient to enter Buyer’s Gathering System as they exist from time to time.
 
C.                                    Buyer shall construct, maintain, own and operate all necessary facilities to accept Seller’s Gas and, to the extent Buyer has sufficient capacity, Other WI Gas tendered from Seller to Buyer at Seller’s Receipt Points.
 
D.                                    As between the Parties, Seller shall be in possession and control of the Seller’s Gas and Other WI Gas deliverable under the Agreement and responsible for any injury or damage caused thereby until the same shall have been delivered to Buyer at Seller’s Receipt Points, after which delivery Buyer shall be deemed to be in exclusive possession and control thereof and responsible for any injury or damage caused thereby until delivered at the [***] Delivery Point.
 
3.                             RESERVATIONS AND COVENANTS OF SELLER
 
A.                                    Seller, as a reasonable and prudent operator, hereby expressly reserves the following rights with respect to Seller’s Gas and the Leases subject hereto:
 
1)                                     The right to use the Gas produced from the Leases prior to delivery to Buyer for the following purposes:
 
a)                                     For fuel in the development and operation of the Leases from which the Gas is produced.
 
b)                                     For delivery to the lessors of the Leases of the Gas if such Lessors are entitled to use such Gas or take such Gas in kind under the terms of the Leases.
 
c)                                      For fuel in the operation of the facilities which Seller may install in order to deliver Gas hereunder in accordance with the terms hereof.
 
d)                                     Gas for secondary or tertiary recovery projects.
 
2)                                     The right to pool or unitize the Leases (or any portion thereof) with other lands and leases so long as such action does not reduce Seller’s Gas. In the event of any such pooling or unitization, the Agreement will cover Seller’s interest in the pool or unit and the Gas attributable thereto to the extent that such interest is derived from Seller’s Gas.
 
B.                                    Seller shall provide to Buyer all information reasonably requested by Buyer to assist Buyer in making the allocations called for herein or required by Buyer’s normal and customary accounting or contract administration practices.
 
C.                                    Seller shall operate the Leases free of any control by Buyer, including without limitation, the right to enter into farmouts of any Lease subject to this Agreement, and to abandon any well and surrender any Lease when Seller deems the same no longer
 
__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.
 

 

21

capable of producing Gas in commercial quantities under normal methods of operation.  Seller shall not be required to produce any well or wells in any manner which in its sole judgment and discretion would not constitute good operating practice, nor shall Seller be obligated to drill additional wells or to deepen, repair or rework any existing wells.
 
D.                                    In addition to Seller’s reservation provided in Section 2.A. above, Seller shall retain all liquid hydrocarbons separated from the Purchased Gas by the use of mechanical separators at or prior to Seller’s Receipt Points; provided however, that Seller shall not be permitted hereunder to remove or recover liquid hydrocarbons from the Purchased Gas other than such as can be removed through the use of conventional non-refrigerated type wellhead separators located at Seller’s well heads.
 
4.                             CAPACITY RESTRICTIONS AND CURTAILMENTS
 
During any period when (i) all or any portion of Buyer’s Gathering System is shut down because of mechanical failure, maintenance or repairs or non-routine operating conditions; or (ii) the Gas available for receipt exceeds the capacity of Buyer’s Gathering System; or (iii) Buyer determines that the operation of all or any portion of Buyer’s Gathering System will cause injury or harm to persons or property or to the integrity of Buyer’s Gathering System, Buyer will first curtail all Gas other than Gas representing Seller’s Capacity, on a ratable basis, and to the extent additional curtailments are required, will curtail receipts of Seller’s Capacity.  To the extent that curtailments of Seller’s Capacity occurs for more than [***] ([***) consecutive days or [***] ([***]) days in any [***] ([***]) day period, then Seller shall have the right to have Seller’s Gas that is curtailed to be released from this Agreement until the first day of the Month following the Month in which Buyer provides notice to Seller that the curtailments will not be required.  To the extent that curtailments of Seller’s Capacity occurs for more than [***] ([***]) consecutive days or [***] ([***) days in any [***] ([***]) day period, then Seller shall have the right to have Seller’s Gas that is curtailed to be permanently released from this Agreement.
 
5.                             SELLER’S WARRANTIES
 
Seller hereby warrants title to the Purchased Gas sold and delivered hereunder and the right of Seller to sell the same; and Seller warrants that all such Gas is owned by Seller, or that Seller has the right to market said Gas, free from all liens and adverse claims of title (“Adverse Claims”), excluding liens to secure payments of production taxes, severance taxes, and other taxes.  Seller agrees to indemnify Buyer and save it harmless from all suits, actions, debts, accounts, damages, costs, losses and expenses arising from or out of Adverse Claims, whether meritorious or not, of any and all persons, firms, or corporations to said Gas or to royalties, overriding royalties, taxes, license fees, or charges thereon.  Buyer shall be entitled to recover all reasonable costs and attorneys’ fees incurred by it as a result of its involvement in any action or claim involving Adverse Claims.  When it shall appear to Buyer by reason of receipt of written notice of claim or dispute that the ownership or title to all or part of the Leases, or the Purchased Gas, may be in a party or parties other than Seller or the Other Wl Owners, then Buyer may suspend payments hereunder, up to the amount of such claim and

__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.
 

22

without payment of interest, unless otherwise required by statute, and retain as security for the performance of Seller’s obligations with respect thereto, a dollar amount up to the amount of such disputed ownership interest or claim until it has been finally determined and satisfied, or until Seller shall have furnished a bond to Buyer in an amount and with sureties satisfactory to Buyer, conditioned upon the protection of Buyer with respect to such ownership or claim.
 
6.                            EASEMENTS
 
To the extent that it may contractually or lawfully do so under its leasehold interest without impairing its own similar right, Seller hereby assigns and transfers to Buyer a non-exclusive right to use any easement across the Seller’s Leases, and across any adjoining lands in which Seller may have an interest, for the purposes of installing, using, inspecting, repairing, operating, replacing, and/or removing Buyer’s pipe, meters, lines, and other equipment used or useful in the performance of the Agreement.  It is intended that any property of Buyer placed in or upon any of such land shall remain the personal property of Buyer, subject to removal by it upon the expiration or termination of the Agreement for any reason.  Buyer shall have a reasonable time after the expiration or termination of the Agreement to remove same. Buyer shall indemnify and hold Seller harmless of and from any and all claims and damages for all injuries to persons, including death, or damage to property arising out of or related to Buyer’s use of such easements and land.
 
7.                            GAS MEASUREMENT AND QUALITY
 
A.                                    Buyer, at its expense, shall furnish, install, operate and maintain suitable measurement equipment, including orifice meters, meter tubes and electronic flow measurement computers accessed by supervisory control and data acquisition equipment at all Receipt Points for the accurate measurement and real-time reporting of the volume of the Seller’s Gas and Other WI Gas tendered by Seller to Buyer for sale at the Receipt Points.  Buyer, at its expense, shall also furnish, install, operate and maintain suitable metering equipment as required for the accurate determination and allocation of Field Fuel, Field Condensate and Flare Gas volumes separated or removed from the Gas prior to delivery to the [***] Delivery Point.  Each meter installed by Buyer shall be a meter acceptable in the industry and each meter shall be installed and operated in accordance with the requirements of applicable provisions in ANSI/API 2530, “Orifice Metering of Natural Gas” (American Gas Association Gas Measurement Committee Report No. 3) of the Natural Gas Department of the American Gas Association, as amended from time to time, or by any other method commonly used in the industry and mutually acceptable to the Parties.  Buyer will have the right to utilize v-cone measurement facilities as considered acceptable in the industry; unless prohibited by statute or by any rule, regulation or order of any agency having jurisdiction over such issue.  Any meter installed hereunder shall be open to inspection by Seller, or its designee, at all reasonable times.  The charts and records pertaining to measurement hereunder shall be kept on file by Buyer, for the mutual use of the Parties, for a period of two (2) years after the Accounting Period to which such charts and records pertain.  Buyer shall furnish to Seller direct access to meter data on meters installed by Buyer, allowing Seller to use the communications infrastructure installed by Buyer or Buyer 
 
__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.
 

23

shall allow Seller to build a separate communications infrastructure which includes but is not limited to placing separate radios on meters and towers owned by Buyer.  If installing separate radios on towers owned by Buyer is not possible then, to the extent that Buyer’s rights- of-way and easements allow for same, Buyer will allow Seller to position separate towers on Buyer’s surface right-of-ways.  On or before the tenth (10th) day of each Accounting Period Buyer shall furnish to Seller a production statement for the prior Accounting Period, including the volume in Mcf and the Gross Heating Value in MMBtu of the Purchased Gas received by Buyer at each of Seller’s Receipt Points and allocations of Field Condensate, Field Fuel, Flare Gas and Lost and Unaccounted For Gas allocated between the [***] Delivery Point and all Receipt Points on Buyer’s Gathering System.
 
B.                                    Seller may, at its option and sole expense, install, maintain and operate check meters and other equipment to check Buyer’s meters; provided, however, that such check meters and other equipment shall be installed by Seller so as not to interfere with the operation of any of Buyer’s Gathering System and the Well Connect Facilities.  Buyer and Seller shall have access to each other’s measuring equipment at all times during business hours, but the reading, calibrating and adjustment thereof and the changing of charts shall be done only by the employees or agents of Buyer and Seller, respectively, as to meters or check meters so installed hereunder.
 
C.                                    For each new meter installed by Buyer, once each month during the first three (3) Accounting Periods and then semi-annually thereafter, unless otherwise required by statute, Buyer shall verify the calibration of such meter and make adjustments as necessary.  Buyer shall give notice to Seller of the time of such calibrations sufficiently in advance of holding same in order that Seller may have its representative present.  With respect to any test made hereunder, a registration within [***] percent ([***]%) of correct shall be considered correct.  However, the meter or meters shall be adjusted to read as accurately as practicable as soon as possible thereafter.  Either party at any time may request a special test of any meter.  The expense of any such special test shall be borne by the Party requesting same if the meter registration is found to be correct and by Buyer if found to be incorrect.  Settlement for any period during which the meter registration deviates by more than [***] percent ([***]%) and by more than [***] Mcf per Month shall be corrected at the rate of inaccuracy for any period of inaccuracy which is definitely known or agreed upon; but in case the period is not definitely known or agreed upon, then either for a period of fifteen (15) days prior to the date of said test, or for a period calculated from the beginning of the Accounting Period in which the test was conducted, whichever is longer.  The rate of the inaccuracy shall be estimated and agreed upon by the Parties hereto on the basis of the best available data, using the first of the following methods which is feasible:
 
1)                                     By using the registration of any check meter or meters if installed and accurately registering; or, in the absence thereof,
 
2)                                     By calibration, test, or mathematical calculation; or

__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.
 

24

3)                                     By estimation based on comparison of the quantity of deliveries with deliveries during preceding periods under similar conditions when the meter was registering accurately.
 
D.                                    All fundamental constants, observations, records and procedures involved in the determination and/or verification of the quantity and other characteristics of Gas measured hereunder, unless otherwise specified herein, shall be in accordance with the applicable provisions in ANSI/API 2530, “Orifice Metering of Natural Gas” (American
Gas Association Gas Measurement Committee Report No. 3) of the Natural Gas Department of the American Gas Association, as amended from time to time, or by any other method commonly used in the industry and mutually acceptable to the Parties.  The average local atmospheric pressure shall be assumed to be [***].  The temperature of Gas flowing through each meter shall be determined by a recording thermometer, installed by Buyer at its sole cost and expense to properly record the temperature of the flowing Gas, and the arithmetical average of the temperature recorded while the Gas is flowing during each meter chart interval shall be used in correcting amounts delivered hereunder to a temperature base of sixty degrees Fahrenheit (60° F) and to a pressure base of [***] pounds.  Should the recording thermometer malfunction, Buyer shall assume a reasonable temperature for the period in question.
 
E.                                     Seller agrees that all Gas delivered to Buyer under the Agreement shall:
 
(i) be free of hydrocarbons and water in the liquid state at the temperature and pressure at which the Gas was received by Buyer at each Receipt Point;
 
(ii) not exceed [***] of hydrogen sulfide per one hundred (100) cubic feet, nor more than [***] of total sulfur per hundred cubic feet;
 
(iii) contain less than [***] oxygen;
 
(iv) not exceed [***] percent ([***]%) by volume of carbon dioxide;
 
(v) not have a minimum temperature less than fifteen degrees Fahrenheit (15° F), nor a maximum temperature above 120oF;
 
(vi) contain a Gross Heating Value of at least [***] Btu per cubic foot;
 
(vii) be commercially free of all objectionable dust or other solid or liquid or gaseous matters which might interfere with its merchantability or cause injury to or interference with proper operations of Buyer’s Gathering System through which the Gas flows;
 
(viii) not exceed [***] psig to avoid over pressuring the Buyer’s Gathering System; and

__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.
 

25

(ix) meet the specifications of all downstream pipelines, as amended from time to time, subject to any waivers from such specifications granted to Buyer from time to time.
 
F.                                      Buyer may test Seller’s Gas delivered hereunder for adherence to the specifications above set forth, such testing to be in accordance with generally accepted industry standards and procedures.  Buyer shall give notice to Seller of the time of such testing sufficiently in advance in order that Seller may have its representative present.  If the Gas so delivered by Seller does not meet the specifications set forth above, Buyer, at its option, may refuse to accept delivery of said Gas into Buyer’s Gathering System.  If Seller shall deliver Gas to Buyer which exceeds the maximum pressure specifications, or fails to meet the quality specifications above-referenced, and Buyer elects to accept such non-conforming Gas, then Buyer shall be responsible for any damages caused thereby; provided, however, Seller will be responsible for any damages occurring prior to the time that Buyer became aware of the non-conformity.  If Buyer elects not receive such non-conforming Gas, Seller shall have the right to conform Seller’s Gas to the above specifications.  Should Seller fail to do so, Buyer, at its option, may elect to accept such non-conforming Gas, condition the same to conform to the above specifications and charge Seller a mutually acceptable conditioning fee.  If neither Party elects to condition the Gas to conform to the above specifications, then Seller, at its option, and upon sixty (60) days prior written notice to Buyer, shall have the right to obtain the release of such non-conforming Gas from the Agreement, but only as to the formation from which said Gas is produced.  Notwithstanding anything hereinabove to the contrary, should Buyer elect to accept and pay for non-conforming Gas, Buyer shall not be deemed to have waived any of its rights to reject any future non-conforming Gas and shall nevertheless be entitled, at any time and from time to time, to enforce the quality provisions hereof and refuse to accept delivery of any volumes of nonconforming Gas from Seller.
 
G.                                    At least semi-annually, unless otherwise required by statute, Buyer shall take samples at each of the meters described in Section 7.A. of these GT&C and have such samples analyzed by chromatograph analysis to determine the liquids content by component and the Gross Heating Value of such Gas.  Buyer shall have the right to take and analyze a spot sample prior to the regularly scheduled sampling.  Additionally, upon Seller’s written request to Buyer and at Seller’s sole cost, risk and expense, Buyer shall take and analyze samples more frequently.  All samples taken hereunder shall be taken at such times that are reasonably mutually agreeable, must be representative of the Gas produced, and shall be analyzed using the most current Industry Standards.  Buyer shall give notice to Seller of the time of such sampling sufficiently in advance of holding same in order that Seller may have its representative present.  Seller shall be permitted to take a split sample.  If Seller’s representative is not present, Buyer shall proceed with the taking and analysis of samples.  The test samples shall be analyzed through the use of a calorimeter (acceptable to both Parties) that employs the Thomas Principle of Calorimetry described in Research Paper #519, published by the U.S. Department of Commerce or by the use of gas chromatography equipment.  The Gross Heating Value calculation will use the Btu values assigned to the various hydrocarbon components as adjusted and updated from time to time by Buyer using as a base those values set forth in the most current GPA Publication 2145 in effect at the time the Gross Heating Value calculation is derived under the provisions of the Agreement.  Measurement shall be determined as delivered on a saturated basis or consistent with the basis applied to all 

26

producers delivering Gas to [***].  The percentages of the individual components through normal pentane shall be reported and heavier components shall be reported as hexanes plus.  The components shall be reported in mole percent and ethane and heavier components shall also be reported in gallons per Mcf.  All Third Party Gas which
may be delivered by Buyer to the [***] Delivery Point for condensate stabilization shall be tested and the hydrocarbon content thereof determined or caused to be determined by Buyer, using the same sampling and test methods.  Buyer shall provide a copy to Seller of the results of any sample analysis performed by Buyer pursuant to this Section 7.G.
 
H.                                   As long as the quality of Seller’s Gas at the Receipt Points meets the specifications set forth in E., above, the quality of the two-phase hydrocarbon mix gas delivered by Buyer to [***] at the [***] Delivery Point shall meet the quality specifications provided in the [***] Contract.
 
8.                             ALLOCATIONS
 
Allocations shall be made in accordance with all provisions of this Agreement and are based, in part, on allocations made by [***] to Buyer at the [***] Delivery Point.  Neither Seller nor [***] shall have any obligation or liability with respect to any allocations made by Buyer with respect to Gas delivered by Seller hereunder or Gas delivered by any third party to Buyer on Buyer’s Gathering System except to the extent resulting from the allocations made by [***] to Buyer at the [***] Delivery Point.
 
A.                                    On or before the 10th day following the end of each Accounting Period, Buyer will provide the following information to Seller and [***]:
 
(i)                                     Receipt Point measurements and analyses;
 
(ii)                                  Field Condensate volumes and analyses for Field Condensate removed from Buyer’s Gathering System prior to delivery at the [***] Delivery Point;
 
(iii)                               Field Condensate Market Price, including any applicable marketing and transportation deductions and expenses;
 
(iv)                              Field Fuel, Lost and Unaccounted For Gas and Flare Gas volumes on Buyer’s Gathering System to determine the Adjusted Gas Volume at each Receipt Point on Buyer’s Gathering System.
  
__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

27

B.                                    On or before ten (10) days after receiving the allocations to the [***] Delivery Point from [***] as provided in the [***] Contract, Buyer shall make the following allocations:
 
(i)                                     Buyer will make the following allocations to all Receipt Points hereunder and to all receipt points where Buyer receives Third Party Gas: (a) Plant Condensate Sales Revenue (b) Plant Products Revenues, (c) Residue Gas Revenues, (d) Bypass Gas Revenues, (e) Plant Fuel, (f) Flare Gas at or upstream of the [***] Delivery Point, (g) Lost and Unaccounted for Gas, and (h) all applicable marketing and transportation fees applicable to the Gas and NGLs.
 
C.                                    Gas Commingled at a Receipt Point
 
In the event the Purchased Gas delivered at a Receipt Point is less than the total Gas delivered at such Receipt Point, all allocations to such Receipt Point shall be further allocated by Buyer to Seller and the other owners of the Gas delivered at such Receipt Point based upon their working interest shares of production, except as otherwise agreed by Seller and the other owners of the Gas delivered at such Receipt Point in a writing delivered to Buyer at least thirty (30) days prior to the effective date: of such agreement.
 
9.                                      TAXES
 
A.                                    Buyer and Seller shall bear separately and be individually, responsible for any and all taxes imposed upon and/or attributable to each Party’s properties and/or operations hereunder except as otherwise explicitly provided for in paragraph B. of this Section 9.  These taxes shall include, but not be limited to, all state severance taxes, ad valorem taxes, franchise taxes, sales and use taxes and state and federal income taxes.
 
B.                                    Seller agrees to pay, or cause to be paid, when due, the taxes lawfully levied on Seller’s Gas prior to its delivery to Buyer at the Receipt Points.  To the extent required of Buyer by law or statute, Buyer shall, as first purchaser, withhold and pay to the appropriate taxing authority those taxes due under this paragraph and provide sufficient detail to Seller of same.
 
C.                                    Buyer agrees to pay, or cause to be paid, when due, the taxes lawfully levied on the Gas at and after its delivery to Buyer at the Receipt Points.
 
10.                                  PAYMENT
 
A.                                    After delivery of Seller’s Gas has commenced, Buyer shall mail a settlement statement to Seller on or before ten (10) days following the date upon which Buyer has received the appropriate settlement statements from [***]. Such statement shall include:
 
1)                                     All statements from [***] detailing the determination of the revenues payable to Buyer with respect to Seller’s Gas.
 
2)                                     The allocated Field Condensate (in Bbls) attributable to the Purchased Gas at each Receipt Point.
  
__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.
 

28

3)                                     The proceeds attributable to the Field Condensate allocated to the Purchased Gas at each Receipt Point,
 
4)                                     The costs to provide electric service allocated to the Purchased Gas,
 
5)                                     An itemization of the Services Fees, and
 
6)                                     Statements will also be provided in an electronic format if requested by the Seller.
 
B.                                    Buyer shall at all times have the right to deduct, retain and withhold from those amounts due Seller hereunder any and all undisputed amounts due Buyer from Seller for fees and/or expenses provided for under the terms of the Agreement.  In the event the amount due Buyer exceeds the amount due Seller, Buyer shall invoice Seller for such sums due and Seller shall pay the invoice in full within fifteen (15) days of receipt of such invoice.  Past due amounts shall accrue interest from the due date until paid in full at the rate equal to the lower of (i) the then-effective prime rate of interest published under “Money Rates” by The Wall Street Journal, plus two percent (2%) per annum; or (ii) the maximum applicable lawful interest rate.
 
C.                                    Buyer shall remit payment by wire transfer to Seller within ten (10) days following the date on which Buyer receives the proceeds from [***] with respect to the resale of Purchased Gas to [***].  Buyer shall have no liability or obligation to Seller to the extent that [***] fails or is unable to make payment of amounts due Buyer under the [***] Contract.  Past due amounts shall accrue interest from the due date until paid in full at the rate equal to the lower of (i) the then-effective prime rate of interest published under “Money Rates” by The Wall Street Journal, plus two percent (2%) per annum; or (ii) the maximum applicable lawful interest rate.
 
11.                               REGULATORY BODIES
 
The Agreement is subject to all present and future valid laws and lawful orders of all regulatory bodies now or hereafter having jurisdiction of the Parties, or either of them, and should either of the Parties, by force of such law or regulation imposed at any time during the term of the Agreement, be ordered or required to do any act inconsistent with the provisions of the Agreement, the Agreement shall continue nevertheless and shall be deemed modified to conform with the requirements of such law or regulation for that period only during which the requirements of such law or regulation are applicable.  Nothing in the Agreement or these GT&C shall prohibit either Party from obtaining or seeking to obtain modification or repeal of such law or regulation or restrict either party’s right to legally contest the validity of such law or regulation, and each Party reserves the right to file with such regulatory bodies any material necessary to implement the terms of the Agreement and these GT&C as they existed prior to the modification.  Notwithstanding the foregoing, in the event Buyer’s Gathering System and/or Buyer is deemed to be a public utility or FERC-regulated interstate pipeline company, and due to such determination, Seller’s rights to the firm gathering service, the Services Fee or any other benefit provided Seller herein are diminished or terminated, or Buyer’s rights or obligations, or its ability to charge and receive the Services Fees, or other conditions are   

__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

29

imposed on Buyer which adversely affects the economic benefits to Buyer originally contemplated hereunder, the affected party shall have the right to notify the other party that it has been adversely affected (“Adverse Effect Notice”).  Upon the other party receiving the Adverse Effect Notice, the parties shall negotiate in good faith upon modifications to this Agreement as necessary to put each party in the economic position that was originally provided under this Agreement.  If the parties are unable to agree on modifications within thirty (30) days following the date of the Adverse Effect Notice, then either party shall have the right to terminate this Agreement.
 
12.                              FORCE MAJEURE
 
A.                                    Except for the obligation to make payments, in the event either Buyer or Seller is rendered unable, by reason of an event of Force Majeure to perform, wholly or in part, any obligation or commitment set forth in the Agreement, then upon such Party giving notice and full particulars (including all supporting documentation) of such event as soon as practicable after the occurrence thereof, the obligations of both Parties shall be suspended to the extent and for the period of such Force Majeure provided that the Party claiming an event of Force Majeure shall make all commercially reasonable attempts to remedy the same with all reasonable dispatch.
 
B.                The term “Force Majeure”, as used herein, shall mean acts of God, strikes, lockouts or industrial disputes or disturbances, civil disturbances, arrest and restraint of rulers or people, interruptions by government or court orders, necessity for compliance with any present and future valid orders of court, or any law, statute, ordinance or regulation promulgated by any governmental or regulatory authority having proper jurisdiction, acts of the public enemy, wars, riots, blockades, insurrections, including inability or delays in obtaining materials, equipment, supplies, labor and services, epidemics, landslides, lightning, earthquakes, fires, storm, floods, washouts, inclement weather which necessitates extraordinary measures and expense to construct facilities and/or maintain operations, explosions, partial or entire failure of Gas supply, breakage or accident to machinery or lines of pipe, freezing of wells or pipelines,  the shutting in of facilities for the making of repairs, alterations or maintenance to wells, pipelines or plants, the interruption or suspension of the receipt of Gas deliveries hereunder by Buyer due to the declaration of Force Majeure by third- party transporters, or any other cause whether of the kind herein enumerated or otherwise, not within the reasonable control of the Party claiming Force Majeure.
 
C.                Neither Party shall be entitled to the benefit of the provisions of this Section 12 under either or both of the following circumstances;
 
1)                                     To the extent that the failure was caused by the Party claiming suspension having failed to remedy the condition by taking all reasonable acts, short of litigation, if such remedy requires litigation, and having failed to resume performance of such commitments or obligations with reasonable dispatch; or,
 
2)                                     If the failure was caused by lack of funds, or with respect to the payment of any amount or amounts then due hereunder.
 
D.                Settlement of strikes and lockouts shall be entirely within the discretion of the Party affected, and the duty that any event of Force Majeure shall be remedied with all reasonable dispatch shall not require the settlement of strikes and lockouts by acceding the demands of the parties directly or indirectly involved in such strikes or lockouts when such course is inadvisable in the discretion of the Party having such difficulty.
   

30

E.                 Notwithstanding the foregoing, if an event of Force Majeure continues for at least thirty (30) consecutive days, the Party who is not receiving performance as a result of such condition shall have the right to terminate this Agreement as to the affected Gas upon thirty (30) days written notice to the Party claiming Force Majeure.

13.                      DEFAULTS
 
A.                                    It is covenanted and agreed that if either Party shall fail to perform any of the covenants or obligations imposed upon it under and by virtue of the Agreement or these GT&C, in addition to its other rights and remedies, the other Party may terminate the Agreement by proceeding as follows:
 
1)                                     The Party not in default shall cause a written notice to be served on the other Party in default, stating specifically the cause for terminating the Agreement, and declaring it to be the intention of the Party giving notice to terminate the same; thereupon, the Party in default shall have thirty (30) days after the service of the aforesaid notice in which to remedy or remove the cause or causes stated in the notice for terminating the Agreement. If within said thirty (30) days the Party in default does so remove and remedy said cause or causes, or fully indemnifies the Party not in default for any and all consequences of such breach, then such notice shall be withdrawn and the Agreement shall continue in full force and effect.
 
2)                                     In case the Party in default does not remedy and remove the cause or causes, or does not indemnify the Party giving the notice for any and all consequences of such breach, within said period of thirty (30) days, then the party claiming default shall thereafter have the option to terminate this Agreement which option shall be exercised, if at all, by delivering written notice to the Party in default no later than ten (10) days after the end of such thirty-day period. In the event there is a dispute regarding whether a default exists, such dispute shall be governed by the arbitration provisions of Section 15 of these GT&C and the thirty-day cure period shall begin on the first day after the date of the arbitration award.
 
3)                                     Any cancellation of the Agreement pursuant to the provisions of this Section shall be without prejudice to the obligation of Buyer to make payments for Gas delivered to Buyer hereunder to the time of cancellation, and without waiver of any remedy to which the Party not in default may be entitled for violations of the Agreement.
 
B.                                    No waiver by either Seller or Buyer of any default of the other under the Agreement shall operate as a waiver of any future default, whether of like or different character or nature, nor shall any failure to exercise any right hereunder be considered as a waiver of such right in the future.
 
14.                      LITIGATION AND ATTORNEYS’ FEES
 
In the event of litigation to enforce the arbitration provisions of Section 15 of these GT&C or any arbitration award, the prevailing Party, after the entry of a final non-appealable order, shall be entitled to recover from the other Party, as a part of said judgment, all court costs, fees and expenses of such litigation, including reasonable attorneys’ fees.
 
15.                     DAMAGES AND ARBITRATION
   

31

A.                                    Whether or not occasioned by a default or other breach of the Agreement, neither Party shall be liable to the other for special, exemplary, incidental or consequential damages.
 
B.                                    Any claim, demand, cause of action, dispute or controversy exclusively between the Parties relating to the subject matter of this Agreement, whether sounding in contract, tort or otherwise, at law or in equity, for damages or other relief (“Dispute”) shall be resolved by binding arbitration if senior management of each of the Parties cannot resolve the Dispute within fifteen (15) days of a notice of arbitration (“Notice”) being served by one party upon the other.  Within twenty (20) days following service of the Notice (if the Dispute remains unresolved by senior management), the Parties shall either agree upon a single arbitrator, or if they have not done so, each Party shall select one arbitrator, who shall together select a third.  The third or the single arbitrator shall have more than eight (8) years professional experience in the natural gas gathering and processing industry, be neutral, and have not worked for a Party or affiliate.  The arbitration shall be conducted according to the rules of the Federal Arbitration Act, and to the extent an issue is not addressed thereby, by the Commercial Arbitration Rules of the American Arbitration Association.  The arbitration shall be conducted in Houston, Texas.  Each party shall be entitled to a reasonable amount of prehearing discovery as allowed by the arbitrator(s), provided the discovery period shall not exceed thirty (30) days; the parties and the arbitrators shall endeavor to hold the arbitration hearing within thirty (30) days thereafter and to render the decision within fifteen (15) days following the hearing.  Each party shall bear its own costs of arbitration. Interpretation of this Agreement to arbitrate and procedures shall be decided by the arbitrators.  The arbitration and the award shall be final, binding and confidential.
 
16.                     GENERAL
 
A.                                    The Parties hereto assume full responsibility and liability for the maintenance and operation of their respective properties and agree to indemnify and save harmless the other Party from all liability and expense on account of any damages, claims or actions, including bodily injury, death or damage to property (whether real or personal property) arising from any act or accident in connection with the installation, presence, maintenance or operation of the personal property or equipment of the indemnifying Party.
 
B.                                    The Parties agree that they will maintain the Agreement, and all parts and contents thereof, in strict confidence, and that they will not cause or permit disclosure of same to any third Party without the express written consent of the other Party; provided however, that disclosure by a Party is permitted in the event and to the extent:
 
1)                                     disclosing Party is required by a court or agency exercising jurisdiction over the subject matter thereof, by order or by regulation or law, to disclose; provided that in the event either Party becomes aware of a judicial or administrative proceeding that has resulted or may result in such an order requiring disclosure, it shall (i) so notify the other Party immediately  and (ii) support all actions of the non-disclosing party reasonably necessary to prevent disclosure to the public as a result of disclosure to the court or administrative body; or
 
2)                                     disclosure is required in the course of routine audit procedures; provided, however, that any such disclosure shall be made upon the condition that the 

32

recipient shall in turn hold such information confidential from further disclosure; or

3)                                     disclosure to royalty owners, overriding royalty owners, taxing authorities and non- operators on whose behalf Seller markets production from the Area of Dedication is required in connection with Seller’s distribution of revenues from the sale of production and payment of royalties and taxes on production.
 
C.                                    The Equal Employment Opportunity Clause required under Executive Order No. 11246, the affirmative action commitment for disabled veterans and veterans of the Vietnam Era, set forth in 41 CFR 60-250.4, the affirmative action clause for handicapped workers, set forth in CFR 650- 741.4, and the related regulations of the Secretary of Labor, 41 CFR Chapter 60, are incorporated by reference in the Agreement. By accepting the Agreement, Seller certifies that it complies with the authorities cited above and that it does not maintain segregated facilities or permit its employees to perform services at locations where segregated facilities are maintained, as required by 41 CFR 60.1.8.
 

 

33

EXHIBIT “C”
 
ATTACHED TO AND MADE A PART OF THAT CERTAIN GAS PURCHASE AGREEMENT
by and between Bear Tracker Energy, LLC, as “Buyer” and
EOG Resources, Inc. as “Seller”
 
INITIAL SYSTEM DESIGN, SELLER’S DRILLING AND DEVELOPMENT PLANS
 
The Buyers Initial System will include connections to [***] of Seller’s wells and five (5) compressor stations to be installed at mutually agreeable locations.  Each of the compressor stations will be fed by a local system of Lateral Lines which tie to the Seller’s well head receipt points.  Discharges from the compressor stations will tie in to the steel Trunkline that delivers Purchased Gas to [***] for resale.  These five (5) stations are spread across the initial development area.
 
The Lateral Lines local to a compressor station will bring Purchased Gas into a slug catcher at each field compressor station.  Gas from the slug catcher will feed electric motor driven compression.  Hydrocarbons collected in the slug catcher will be pumped to the Trunkline.  Slug catcher water will be collected in an atmospheric tank.  Gas will be compressed commensurate with the required [***] Delivery Point pressure of [***] psig.  Compressed gas will be dehydrated with a TEG system and then fed to the Trunkline.  Hydrocarbon liquid that forms in the compression train will be pumped or free flowed to the Trunkline as appropriate.
 
Buyer’s Initial System shall also include metering and telemetry equipment at all Receipt Points.
 
At this time the Initial System Lateral Lines total about 200 miles in length.  The total length of the Trunkline for the Initial System is approximately fifty-two (52) miles.
 
The Initial System design is also based on the Bakken Lite Production attached hereto as Exhibit “C-2” and the initial wells being located within the area depicted in Exhibit “C-1”.
 
  
__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

34

EXHIBIT C-1
 
INITIAL SYSTEM AND SELLER’S DRILLING PLANS
 
[***]
 

__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

35

EXHIBIT C-2 — EOG Bakken Lite Well Type Curve(1)
 
[***]
 

(1) The design of the Initial System was based on this production profile.  Significant changes in actual production characteristics of Seller’s Wells may necessitate changes to the design of the Initial System.

__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.
 

 

36

Exhibit D
 
[***]
 
__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.
 

37exh-10.2x613

Exhibit 10.2

CERTAIN MATERIAL (INDICATED BY THREE ASTERISKS) HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.  THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

GAS GATHERING AND COMPRESSION AGREEMENT
(Sherwood)

This Gas Gathering and Compression Agreement (“Agreement”) is made and entered into this 16th day of April, 2012, by and between MARKWEST LIBERTY MIDSTREAM & RESOURCES, L.L.C., a Delaware limited liability company (“MarkWest”), and ANTERO RESOURCES APPALACHIAN CORPORATION, a Delaware corporation (“Antero”). MarkWest and Antero may be referred to individually as a “Party,” or collectively as the “Parties.”

RECITALS:

A.    Antero owns or controls Gas produced from oil and gas leasehold rights or other oil and gas interests and rights, and Antero desires to develop such interests and rights for the production of oil and/or gas.

B.    Upon the development of Antero’s interests for the production of gas, Antero will require, and MarkWest is willing to provide, certain gas gathering and compression facilities for Antero’s Gas, upon the terms and conditions set forth in this Agreement.

AGREEMENT:

In consideration of the mutual covenants and agreements contained herein, Antero and MarkWest agree as follows:

1 

ARTICLE 1: DEFINITIONS

Accounting Period.  The period commencing at 10:00 a.m., Eastern Time, on the first (1st) day of a calendar month and ending at 10:00 a.m., Eastern Time, on the first (1st) day of the next succeeding month; provided that the first Accounting Period shall commence on the Gathering Effective Date of the Lateral whose Gathering Effective Date first occurs, and the last Accounting Period shall end on the date on which the term of this Agreement ends as provided in Section 2.1.  

Affiliate.  With respect to an entity, any other entity controlling, controlled by or under common control with such entity.  As used in this definition, the term “control,” including the correlative terms “controlling,” “controlled by” and “under common control with,” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of an entity, whether through ownership of voting securities, by contract or otherwise. 

Annex.  A Lateral Annex or Compressor Station Annex, as applicable.

Antero’s Gas.  Gas actually delivered by Antero to a Receipt Point.

Audit Period.  As defined in Section 9.2.

Btu.  A British Thermal Unit, which is the quantity of heat required to raise the temperature of one (1) pound avoirdupois of pure water from fifty-eight and five tenths degrees Fahrenheit (58.5°F) to fifty-nine and five tenths degrees Fahrenheit (59.5°F) at a pressure of fourteen and six hundred ninety-six thousandths pounds per square inch absolute (14.696 psia).

Business Day.  Any day other than Saturday, Sunday or a legal holiday in the State of West Virginia.

Compression Effective Date.  With respect to each Compressor Station, the date on which such Compressor Station has been constructed and made operational and is capable of operating at its design pressure and other design parameters, in each case in accordance with the Compressor Station Annex with respect to such Compressor Station, or, (a) if such Compressor Station is located on a Lateral and at such time the Gathering Effective Date for such Lateral has not occurred, such later date on which the Gathering Effective Date for such Lateral has occurred, or (b) in the case of the Sherwood Compressor Station or any other Compressor Station that is immediately upstream of the Processing Plant, if at such time the Processing Effective Date under the Processing Agreement has not occurred, such later date on which the Processing Effective Date under the Processing Agreement has occurred.

Compression Fee.  As defined in Section 4.2.b.

Gathering System Fuel.  All Gas and electric power measured and utilized as fuel or power for the Gathering System, including Gas and electric power utilized as fuel or power for Compressor Stations.

2

Compressor Station.  Each field compression station on a Lateral that is constructed and installed in accordance with a Compressor Station Annex and Section 4.2, including, for this purpose, the field compressor station that is to be constructed and installed at the Sherwood Plant even though it is not on a Lateral.

Compressor Station Annex.  The Compressor Station Annex for each Compressor Station attached to this Agreement as of the date hereof,  together with each additional Compressor Station Annex added to this Agreement by the mutual agreement of the Parties after the date hereof, containing each of the items contemplated by this Agreement to be set forth in a Compressor Station Annex and substantially in the form of the Compressor Station Annexes for the Zinnia, Middle Point and Sherwood Compressor Stations dated as of the date hereof and attached hereto.

CPI.  As defined in Section 8.2.

CPR Panel.  As defined in Section 16.3.

Dispute.  As defined in Section 16.3.

Dispute Notice.  As defined in Section 16.3.

Force Majeure.  Any cause or condition not within the reasonable control of the Party claiming suspension and which, by the exercise of reasonable diligence, such Party is unable to prevent or overcome, and, without limiting the generality of the foregoing, specifically includes major equipment failures, inabilities or delays in obtaining requisite permits, easements and rights of way (except as expressly set forth below in this paragraph), consents and authorizations, and delays occasioned by governmental actions; provided, that inabilities to obtain or delays in obtaining rights of way and easements for the construction of the Zinnia Lateral and Middle Point Lateral as set forth as of the date of this Agreement in the Lateral Annex therefor shall not constitute Force Majeure.  

Gas.  All hydrocarbon and non-hydrocarbon substances produced from gas and/or oil wells in a gaseous state at the relevant receipt point.

Gathering Effective Date.  With respect to each Lateral, the date on which such Lateral has been constructed and made operational and is capable of operating at its design pressure, in each case in accordance with the Lateral Annex for such Lateral, or, if at such time the Processing Effective Date under the Processing Agreement has not occurred, such later date on which the Processing Effective Date under the Processing Agreement has occurred.  

Gathering Fee.  With respect to each Lateral, the gathering fee per Mcf set forth in the Lateral Annex for such Lateral.

Gathering System.  Gas gathering facilities operated by MarkWest and used to transport Antero’s Gas from the Receipt Points to the Redelivery Points, including the Compressor Stations, and the associated tankage and separation and dehydration equipment.  The Gathering System includes the Laterals together with all valves, meters and appurtenant facilities, liquid and drip collection and 

3

handling facilities, and pigging facilities and equipment, and includes also all rights-of-way, permits and other rights acquired by MarkWest in furtherance of its gathering obligations under this Agreement.  The Gathering System also includes the interconnections to the Sherwood Plant and pig launchers, pig receivers, slug catchers, and other facilities to deliver High Pressure Condensate to the Sherwood Plant.

GPM.    The number of gallons of Plant Products per 1,000 Mcf of Gas.

Gross Heating Value.  The number of Btus produced by the combustion, on a dry basis and at a constant pressure, of the amount of Gas which would occupy a volume of 1 cubic foot at a temperature of [***] and at a pressure of [***], with air of the same temperature and pressure as the Gas, when the products of combustion are cooled to the initial temperature of the Gas and air and when the water formed by combustion is condensed to the liquid state. Hydrogen sulfide shall be deemed to have no heating value.
    
High Pressure Condensate.  That portion of the Gas that condenses in, and is recovered from, the Gathering System as a liquid.  

Indemnifying Party and Indemnified Party.  As defined in Section 11.3.

Interest(s).  Any right, title, or interest in and to oil and gas leases and mineral fee interests, together with any pooling, unitization or communitization of any of the foregoing rights. 

Lateral.  That portion of the Gathering System designated in a Lateral Annex as a Lateral and constructed and installed in accordance with a Lateral Annex and Section 4.1.

Lateral Annex.  The Lateral Annex for each Lateral attached to this Agreement as of the date hereof, together with each additional Lateral Annex added to this Agreement by the mutual agreement of the Parties after the date hereof, containing each of the items contemplated by this Agreement to be set forth in a Lateral Annex and substantially in the form of the Lateral Annex for the Zinnia and Middle Point Laterals dated as of the date hereof and attached hereto.

Losses.  Any actual loss, cost, expense, liability, damage, demand, suit, sanction, claim,  judgment, lien, fine or penalty asserted by a third party unaffiliated with the Party incurring

__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions. 

4

such, and which are incurred by the applicable Indemnified Party on account of injuries (including death) to any person or damage to or destruction of any property, sustained or alleged to have been sustained in connection with or arising out of the matters for which the Indemnifying Party has indemnified the applicable Indemnified Party.

Lost and Unaccounted For Gas.  Any Gas lost or otherwise not accounted for incident to or occasioned by the gathering, treating, compressing (if applicable), and redelivery, as applicable, of Gas, including Gas released through leaks, instrumentation, relief valves, unmeasured flares, ruptured pipelines, and blow downs of pipelines, vessels, and equipment.

Mcf.  1,000 cubic feet of Gas, measured at Standard Base Conditions.

Measurement Points.    With respect to each Receipt Point, the inlet flange of the measurement facilities of MarkWest located at such Receipt Point and, if applicable, which are downstream of the Compressor Station.  For clarification purposes, any measurement facilities installed upstream of a Compressor Station shall not be considered a Measurement Point.   

Minimum Compression Fee.  For each Compressor Station, for each Accounting Period, the amount set forth as the Minimum Compression Fee in the Compressor Station Annex for such Compressor Station.

Minimum Compression Fee Commencement Date.  For each Compressor Station, the first day of the Accounting Period following the end of the first (1st) 90-day period after the Compression Effective Date with respect to such Compressor Station.

Minimum Gathering Fee Commencement Date.  For each Lateral, the first day of the Accounting Period following the end of the first (1st) 90-day period after the Gathering Effective Date with respect to such Lateral. 

Minimum Gathering Fee.  For each Lateral, for each Accounting Period, the amount set forth as the Minimum Gathering Fee in the Lateral Annex for such Lateral.

MMBtu.  1,000,000 Btus.

MMcf.  1,000,000 cubic feet of Gas, measured at Standard Base Conditions.

Plant Products.  As defined in the Processing Agreement.

Primary Term.  As defined in Section 2.1.

Processing Agreement.  That certain Gas Processing Agreement dated as of March 31, 2011 between Processor and Antero, as amended or restated from time to time.

Processor.  MarkWest Liberty Midstream & Resources, L.L.C.

5

Receipt Point.  Each central delivery point on a Lateral where Antero’s Gas is delivered to MarkWest.  The initial Receipt Points on each Lateral shall be set forth in the Lateral Annex for such Lateral, and the initial Receipt Point for the Sherwood Compressor Station shall be the inlet of MarkWest’s two (2) phase separator immediately upstream of the Sherwood Compressor Station, which separator shall be at a mutually agreeable location at or near the property boundary of the Sherwood Compressor Station.  MarkWest shall add additional Receipt Points (at Antero’s cost) on a Lateral at Antero’s request; additional Receipt Points not on a Lateral and the terms and conditions relating thereto may be mutually agreed upon by the Parties in writing.  
 
Redelivery Point.  Each point at which Antero’s Gas is redelivered by MarkWest to Antero, or to Antero’s designee, or to others entitled thereto.  As of the date of this Agreement, the Redelivery Point shall be the “Receipt Point” as defined in the Processing Agreement.  Additional redelivery points and the terms and conditions relating thereto may be mutually agreed upon by the Parties in writing.

Required Effective Date.  As defined in Section 4.1.

Required Compression Effective Date.  As defined in Section 4.2.d.

Standard Base Conditions.  A pressure of [***] at a temperature of [***].

Sherwood Plant.  The “Processing Plant” as defined in the Processing Agreement.

Taxes.  All gross production, severance, conservation, ad valorem and similar or other taxes measured by or based upon production, together with all taxes on the right or privilege of ownership of the Gas, or upon the handling, transmission, compression, processing, treating, conditioning, distribution, sale, delivery or redelivery of the Gas, including all of the foregoing now existing or in the future imposed or promulgated.

Thermal Content.  For Gas, the product of the measured volume in Mcfs multiplied by the Gross Heating Value per Mcf, adjusted to the same pressure base and expressed in MMBtus; and for a liquid, the product of the measured volume in gallons multiplied by the gross heating value per gallon determined in accordance with the GPA 2145-09 Table of Physical Properties for Hydrocarbons and GPA 8173 Method for converting Mass of Natural Gas Liquids and Vapors to Equivalent Liquid Volumes, in each case as revised from time to time.

Tier 1 Capacity.  With respect to any Lateral, the amount of gathering capacity that MarkWest agrees to construct and maintain or otherwise make available with respect to such Lateral for Antero (as set forth in the applicable Lateral Annex) or for any third party to which MarkWest has granted Tier 1 Capacity in accordance with this Agreement.  Tier 1 Capacity does not include interruptible capacity.

__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions. 

6

ARTICLE 2:  TERM

2.1.    Term.    Unless earlier terminated in accordance with its terms, and subject to any extensions of the Primary Term or any renewal term pursuant to Section 8.1, this Agreement shall remain in full force and effect for a “Primary Term” commencing on the date of execution and continuing until March 31, 2026, and shall continue thereafter year to year, until terminated by either Party, upon twelve (12) months prior written notice to the other Party in advance of the expiration of the Primary Term or any renewal term thereof (the Primary Term together with any renewal term, the “Term”). This Agreement shall automatically terminate upon the termination of the Processing Agreement.

ARTICLE 3:    PRODUCER COMMITMENTS

3.1    Following the Gathering Effective Date for each Lateral, and following the Compression Effective Date for the Compressor Station that is located at the Sherwood Plant, Antero shall have the right to deliver such of Antero’s Gas from the wells connected to the Receipt Points for such Lateral or for such Compressor Station, as applicable, as Antero, from time to time, determines to deliver; provided that Antero shall be subject to and pay, subject to the terms and conditions of this Agreement, (a) the Minimum Gathering Fee from and after the Minimum Gathering Fee Commencement Date with respect to such Lateral, (b) the Minimum Compression Fee for each Compressor Station located on such Lateral from and after the Minimum Compression Fee Commencement Date with respect to such Compressor Station, and (c) the Minimum Compression Fee for the Compressor Station that is located at the Sherwood Plant from and after the Minimum Compression Fee Commencement Date with respect to such Compressor Station.

3.2    Subject to the further terms and provisions of this Agreement, Antero shall install all facilities necessary to effect the delivery of Antero’s Gas at the Receipt Points and at the pressure set forth in Article 5. 
 

ARTICLE 4:    MARKWEST’S RESPONSIBILITIES

4.1    Subject to and in accordance with the other provisions of this Agreement, including this Section 4.1, following the execution of a mutually agreed upon Lateral Annex, MarkWest shall design, construct, own, maintain and, following the Gathering Effective Date for the Lateral subject to such Lateral Annex, operate the Gathering System relating to such Lateral to connect the Receipt Points for such Lateral and to receive into the Gathering System Antero’s Gas that is delivered in accordance with Section 4.3.  

a.    MarkWest shall construct each Lateral generally along the routes identified in the Lateral Annex for such Lateral.  Each Lateral will (a) consist of pipe with a diameter of at least the diameter set forth in the Lateral Annex for such Lateral, (b) have a maximum allowable operating pressure set forth in the Lateral Annex for such Lateral, and (c) include facilities for delivering High Pressure Condensate to the Sherwood Plant, including pig 

7

launchers, pig receivers, slug catchers, and other necessary facilities.  Each Lateral Annex shall set forth the Tier 1 Capacity granted to Antero with respect to such Lateral.  If the Gathering Effective Date for such Lateral has not occurred by the date set forth in the Lateral Annex for such Lateral (with respect to such Lateral, the “Required Effective Date”), and such delay is not due to Force Majeure, then after the Gathering Effective Date with respect to such Lateral occurs, MarkWest will not charge Antero the Gathering Fee or, if applicable, the Compression Fee for any Compressor Station on such Lateral that is impacted by such delay (or any Minimum Gathering Fee or Minimum Compression Fee) with respect to such Lateral for a number of days equal to the number of days following the Required Effective Date for such Lateral until the Gathering Effective Date for such Lateral.  MarkWest shall keep Antero reasonably informed of the status of obtaining required permits and rights of way for such Lateral and in particular shall promptly notify Antero if MarkWest becomes aware or reasonably should have become aware, based on the facts and circumstances known to MarkWest at that time, that it is likely that delays in obtaining any such permits or rights of way will delay the Gathering Effective Date for such Lateral.  MarkWest shall carry out the design and construction of the Gathering System, including the interconnections with the Sherwood Plant, in such a manner as to cause no delay in the Processing Effective Date under the Processing Agreement.  

b.    If the actual footage for any Lateral is more than [***] above or below the estimated footage for such Lateral set forth in the Lateral Annex for such Lateral, to the extent that (in the case in which the actual footage is above the estimated footage) such difference is the result of a change in the route for the Lateral and there is a reasonable explanation for such route change, then the Gathering Fee and Minimum Gathering Fee for the affected Lateral shall be increased or decreased, as applicable, as follows:

i.    For any such Lateral that consists of a [***] pipeline, the Minimum Gathering Fee would increase or decrease, as applicable, by $[***] per Accounting Period, and the Gathering Fee for such Lateral would increase or decrease, as applicable, by $[***] per Mcf, for each [***] increase or decrease in footage; and

ii.    For any such Lateral that consists of a [***] pipeline, the Minimum Gathering Fee would increase or decrease, as applicable, by 
__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions. 

8

$[***] per Accounting Period, and the Gathering Fee for such Lateral would increase or decrease, as applicable, by $[***] per Mcf, for each [***] increase or decrease in footage.

4.2    Subject to and in accordance with the other provisions of this Agreement, including this Section 4.2, following the execution of a mutually agreed Compressor Station Annex, MarkWest shall design, construct, own, maintain and, following the Compression Effective Date for the Compressor Station subject to the Compressor Station Annex, operate such Compressor Station, and the following shall apply with respect to such Compressor Station:

a.    The Receipt Point for such Compressor Station or the Lateral connected to such Compressor Station, as applicable, shall be at the inlet flange to the suction scrubber immediately upstream of the Compressor Station.

b.    Commencing on the Compression Effective Date for such Compressor Station, Antero shall pay MarkWest a per Mcf compression fee set forth in the Compressor Station Annex for all of Antero’s Gas delivered to the Receipt Points on the Lateral on which such Compressor Station is located or to the Receipt Point for the Sherwood Compressor Station, as applicable, as measured at the Measurement Points (the “Compression Fee”); provided, however, that commencing on the Compression Fee Commencement Date for such Compressor Station and for a period of [***] ([***]) years thereafter (as may be extended for any event of Force Majeure in excess of thirty (30) days as described below in Section 8.1), in no event shall the aggregate Compression Fee actually paid to MarkWest hereunder, together with amounts credited to the Minimum Compression Fee as set forth in Section 8.1,  with respect to any Accounting Period with respect to such Compressor Station be less than the Minimum Compression Fee with respect to such Compressor Station.

c.    Each Compressor Station will (i) be capable of operating down to suction pressures of [***] psig, as measured at the inlet of the suction scrubber, while compressing the design volume of Gas equal to the inlet volume compression capacity (expressed in MMcf per day) set forth in the Compressor Station Annex for such Compressor Station, (ii) have the number of horsepower of compression and have the capacity to compress at least the volume (expressed in MMcf per day) in each case set forth in the Compressor Station Annex for such Compressor Station, (iii) have dehydration equipment with a capacity of at least the capacity (expressed in MMcf per day) set forth in the Compressor Station Annex for such Compressor Station, (iv) have two stages of compression unless otherwise set forth in the Compressor Station Annex for such Compressor Station, and (v) be capable of discharging a volume of Gas equal to the “Initial Inlet Volume Compression Capacity” set forth in the Compressor Station Annex for such Compressor Station at sufficient pressure to be delivered at the Redelivery Point 

__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions. 

9

at a pressure of at least [***] psig.  Unless otherwise set forth in the Compressor Station Annex, additional compression capacity may be installed at a Compressor Station upon terms mutually agreed upon by the Parties and set forth in a written amendment or addendum to this Agreement or the applicable Compressor Station Annex that is signed by the Parties.

d.    MarkWest shall complete the installation of any Compressor Station by the date set forth in the Compressor Station Annex (with respect to such Lateral Compression Station, the “Required Compression Effective Date”), subject to Force Majeure.  If the Compression Effective Date with respect to a Compressor Station has not occurred by the relevant Required Compression Effective Date and such delay is not due to Force Majeure, then after the relevant Compression Effective Date, MarkWest will not charge Antero the relevant Compression Fee (or the relevant Minimum Compression Fee) for a number of days equal to the number of days following such Required Compression Effective Date until the relevant Compression Effective Date has occurred.  MarkWest shall keep Antero reasonably informed of the status of obtaining required permits and rights of way for such Compressor Station and in particular shall promptly notify Antero if MarkWest becomes aware or reasonably should have become aware, based on the facts and circumstances known to MarkWest at that time, that it is likely that delays in obtaining any such permits or rights of way will delay the Compression Effective Date for such Compressor Station.  

e.    For any Compressor Station, at any time and from time to time after the [***] anniversary of the later of (i) the Compression Effective Date for such Compressor Station and (ii) the last date on which additional compression capacity was installed at such Compressor Station at Antero’s request (such later date, the “Capacity Election Reduction Date”), Antero shall have the right, by written notice to MarkWest, to require that MarkWest take out of service or otherwise not make available to Antero hereunder one or more of the compressor units installed at such Compressor Station for Antero pursuant to this Agreement, provided that in no event shall the amount of compression capacity installed at such Compressor Station for Antero pursuant to this Agreement be less [***], in the case of (1) and (2) as rounded up to take into account the capacity of individual compressor units (any such compressor units taken out of service or not made available to Antero in accordance with the foregoing, the “Removed Compressor Units”).  Commencing on the first day of the second Accounting Period beginning after the date such notice is deemed given pursuant to this Agreement, (i) the horsepower associated with such Removed Compressor Units shall not be made available to Antero and shall not be included for purposes of calculating the component of the Minimum Compression Fee for such Compressor Station which is based on the horsepower installed at such Compressor Station, (ii) MarkWest’s other capacity obligations with respect to such Compressor Station (including, without limitation, the obligations to provide 
__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions. 

10

and maintain capacity for inlet volume compression, dehydration equipment, and Low Pressure Condensate storage) shall be correspondingly reduced to reflect the actual compression capacity remaining at the affected Compressor Station, and (iii) the Compressor Station Annex for the affected Compressor Station shall automatically be deemed to be amended to reflect the adjustments set forth in the foregoing clauses (i) and (ii) and, at MarkWest’s request, the Parties shall execute a written amendment thereto reflecting such adjustments.  Except as specified in this Section 4.2.e, the Minimum Compression Fee shall not be affected by Removed Compressor Units.  Antero shall reimburse MarkWest for all reasonable out-of-pocket costs incurred by MarkWest in decommissioning and/or removing any Removed Compressor Units.

4.3    Subject to the remaining terms of this Agreement and each Annex hereto, (a) on and after the Gathering Effective Date for each Lateral, MarkWest shall receive at the Receipt Point(s) for such Lateral and gather on such portion of the Gathering System such portion of Antero’s Gas that Antero delivers hereunder and that meets the applicable conditions under this Agreement, up to an amount equal to Antero’s Tier 1 Capacity with respect to such Lateral plus such additional volumes of Antero’s Gas that Antero may deliver from time to time and which may be gathered on the Gathering System on an interruptible space available basis, (b) on and after the Compression Effective Date for the Compressor Station to be located at the Sherwood Plant, MarkWest shall receive at the Receipt Point at such Compressor Station and compress such portion of Antero’s Gas that Antero delivers hereunder and that meets the applicable conditions under this Agreement, up to the capacity of such Compressor Station as set forth in the relevant Compressor Station Annex, and (c) MarkWest shall redeliver to the Redelivery Points a quantity of Gas thermally equivalent to the quantity of Antero’s Gas delivered by or on behalf of Antero and received by MarkWest, as measured at the Measurement Points, less the thermal equivalent of the Gathering System Fuel, Lost and Unaccounted For Gas and High Pressure Condensate (other than High Pressure Condensate vaporized and reinjected into the Gas stream upstream of the Redelivery Point) allocated to Antero’s Gas in accordance with this Agreement.  

4.4    As between the Parties, MarkWest shall own all the appurtenances, additions, extensions, improvements, or expansions of or to the Gathering System that are constructed by MarkWest at the request of Antero pursuant to this Agreement, which additions shall become a part of the Gathering System and shall be subject to this Agreement.

4.5    During any period when (i) all or any portion of the Gathering System is shut down because of mechanical failure, maintenance or repairs, operating conditions outside of the design parameters of the Gathering System, or Force Majeure; or (ii) Antero’s Gas available for receipt, together with the non-interruptible Gas of third parties, exceeds the capacity of the Gathering System; or (iii) MarkWest determines reasonably and in good faith that the operation of all or any portion of the Gathering System will cause injury or harm to persons or property or to the integrity of the Gathering System, Antero’s Gas and the Gas of third parties may be curtailed or, if applicable, bypassed around the affected portion of the 

11

Gathering System.  In the event of a curtailment or bypass, available capacity in the affected portion of the Gathering System will be allocated in accordance with the following:  (a) first, available capacity will be allocated to the holders of Tier 1 Capacity in the affected facilities who are delivering Gas, on a pro rata basis in accordance with (and not to exceed) their respective Tier 1 Capacity in the affected facilities, and (b) second, available capacity will be allocated to all other Gas, including Antero’s Gas and Gas of other holders of Tier 1 Capacity that is in excess of Antero’s or such holder’s Tier 1 Capacity, on a pro rata basis.   

4.6    It is understood and agreed that either Party hereto may, without liability to the other Party, interrupt the operations of its facilities for the purpose of making necessary alterations, maintenance or repairs thereto or to comply with applicable regulatory requirements.  MarkWest will exercise reasonable diligence to schedule routine repair and maintenance so as to minimize disruption of service hereunder, and except in situations reasonably perceived by MarkWest to be emergencies, shall use commercially reasonable efforts to provide at least fourteen (14) days prior notice to Antero of such scheduled routine repair and maintenance.  In each case of such routine repair and maintenance, MarkWest shall coordinate with Antero in a commercially reasonable manner prior to giving the advance notice of any such service interruption.

4.7    MarkWest shall ensure that any conveyance, assignment, sale or other transfer of the Gathering System or any interest therein shall be subject to this Agreement. MarkWest shall require any purchaser, assignee or other transferee of the Gathering System or any interest therein to ratify this Agreement and to expressly assume and agree to the terms hereof to the extent of the interest in the Gathering System acquired by that party in a manner consistent with the provisions of Article 15. 

4.8    MarkWest shall not grant any priority rights to any third party to capacity in any Lateral that is superior to Antero’s Tier 1 Capacity rights.  With respect to any Lateral, the aggregate amount of Tier 1 Capacity granted to Antero and to any third party for such Lateral (the “Total Tier 1 Capacity”), shall not exceed [***] percent ([***]%) of the amount of Tier 1 Capacity granted to Antero for such Lateral, unless MarkWest installs pipe of a diameter greater than the minimum diameter set forth in the relevant Lateral Annex or installs additional or expanded facilities or otherwise modifies the relevant facilities to increase the capacity of such Lateral above the capacity that such Lateral would have had if it had been constructed to the minimum specifications, including minimum pipe diameters and minimum MAOP, set forth in the relevant Lateral Annex.  MarkWest shall notify Antero of any such increases to Lateral capacity. 

4.9    At each Receipt Point at which a Compressor Station is installed by MarkWest in accordance with this Agreement (“Compressor Receipt Point”), MarkWest will (i) separate condensate and other liquids from Antero’s Gas that is delivered at such Compressor Receipt Point (“Low Pressure Condensate”) and (ii) place Antero’s Low Pressure Condensate in tanks for delivery into trucks. Slug catchers, collection tanks, vapor recovery units, and associated piping for collecting Low Pressure Condensate from 
__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions. 

12

the Compressor Receipt Point facilities into the collection tanks shall be constructed by MarkWest at the Compressor Receipt Points at Antero’s cost.  Such facilities shall be constructed in accordance with design parameters mutually agreed upon by the Parties.  The Compressor Receipt Point sites will include space for such facilities in a manner that is mutually agreed upon by the Parties.

a.    Antero shall be responsible for all pigging operations relating to the delivery of the Low Pressure Condensate to the Compressor Receipt Points.  Antero shall conduct pigging for delivery of the Low Pressure Condensate to the Compressor Receipt Points at such frequencies as MarkWest shall reasonably request and in a manner that does not interfere with MarkWest’s operation of the Gathering System.  Antero shall not inject free liquids into pipelines upstream of the Compressor Receipt Points, but the Parties acknowledge that free liquids may naturally form or occur in such pipelines as a result of the gathering of Gas.

b.    Antero shall be responsible for the pickup, removal, transportation, marketing and disposal of Antero’s Low Pressure Condensate.  Antero shall pick up and remove its Low Pressure Condensate from the Compressor Stations by truck.  Antero shall coordinate with MarkWest regarding the scheduling of such truck pickups, and Antero shall provide reasonable prior notice to MarkWest of each such pickup.  Antero and its employees, agents and contractors shall comply with all applicable laws, rules, regulations and ordinances in connection with the pickup, removal, transportation, marketing and disposal of Antero’s Low Pressure Condensate and shall comply with MarkWest’s site, safety, security and operations requirements and standards with respect to the pickup and removal of Antero’s Low Pressure Condensate from the Compressor Stations.

c.    MarkWest’s ability to perform its obligations under this Agreement with respect to the receipt, compression and gathering of Antero’s Gas delivered at each Compressor Receipt Point is dependent upon and subject to the performance of Antero’s obligations under this Section 4.9.  

d.    Antero shall indemnify MarkWest and the MarkWest Indemnified Parties from and against any and all losses, damages, costs and expenses arising from or relating to Antero’s pigging operations described in Section 4.9.a. and the pickup, removal, transportation, marketing and disposal of Antero’s Low Pressure Condensate, including any breach of Antero’s obligations set forth in this Section 4.9.

ARTICLE 5:    RECEIPT POINTS AND CONDITIONS

5.1    Antero shall be responsible for delivering Antero’s Gas or causing Antero’s Gas to be delivered to MarkWest at the Receipt Points.

5.2    Antero shall deliver Antero’s Gas hereunder at a pressure sufficient to enter each Receipt Point in accordance with the following:

a.    in the case of each Receipt Point that is upstream of a Compressor Station, at the prevailing suction pressures as they exist from time to time; and

13

b.    in the case of all other Receipt Points, at the prevailing pressures as they exist from time to time, which pressure shall not be required to be greater than the maximum allowable operating pressure of the applicable Lateral set forth in the Lateral Annex for such Lateral.

MarkWest shall operate the Gathering System such that, during periods in which the deliveries of Antero’s Gas at the Compressor Receipt Points are within the inlet volume compression capacity for such Compressor Receipt Points specified in the applicable Compressor Station Annexes relating thereto, the inlet pressures at the Compressor Receipt Points will not exceed [***] psig and that during periods, if any, in which such deliveries exceed such inlet volume compression capacity, the inlet pressures at the Compressor Receipt Points are as low as is commercially and operationally practicable under the then current circumstances.  

ARTICLE 6:    GAS QUALITY

6.1    As measured at each Receipt Point, Gas delivered by Antero to the Receipt Points shall be of a quality that meets the specifications in the Processing Agreement and that, after such Gas is processed at the Sherwood Plant as it then exists in accordance with the Processing Agreement, meets the quality specifications of pipelines receiving Gas at the “Redelivery Point” under the Processing Agreement, as in effect from time to time, other than for water vapor content.

6.2    Additionally, at each Receipt Point, Gas delivered by Antero shall:

a.    be commercially free from dust, sand, gum, gum forming constituents, diluent, and other liquids and solids; 

b.    have a Gross Heating Value of not less than [***], unless mutually agreed upon; 

c.    not contain more than [***] of hydrogen sulfide per 100 Cubic Feet of Gas; 

d.    not contain more than [***]% by volume carbon dioxide; and

e.    at each Receipt Point that is not a Compressor Receipt Point, be commercially free of liquid hydrocarbons and free water.

__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions. 

14

6.3    If Gas tendered by Antero should fail to meet any one or more of the above specifications from time to time, then:

a.    MarkWest may take receipt of the non-conforming Gas, and that receipt shall not be construed as a waiver or change of standards for future Gas volumes; or 

b.    MarkWest may, at its sole discretion, cease receiving the non-conforming Gas from Antero, and shall notify Antero that it will cease receiving the non-conforming Gas.  In such event, such Gas shall not be considered as delivered to MarkWest for purposes of Section 4.2 or Section 8.1.  

c.    If the Gas as delivered contains contaminants not in conformance with the specifications in Article 6, then Antero shall be responsible for, and shall reimburse MarkWest for all actual expenses, damages and costs resulting therefrom.    

6.4    As long as Antero’s Gas meets the foregoing specifications, MarkWest shall be responsible for delivering Gas at the Redelivery Point that meets the Gas quality specifications applicable under the Processing Agreement.

6.5    Notwithstanding Section 6.3, if Antero’s Gas conforms to all specifications required by this Article 6 other than hydrocarbon dew point and/or Gross Heating Value, MarkWest shall use commercially reasonable efforts to accept such Gas and to blend and commingle such Gas with other Gas in the Gathering System so that it meets the applicable specifications, provided that MarkWest shall not be required to accept and to blend or commingle such Gas to the extent that MarkWest determines, in MarkWest’s sole but good faith discretion, that the acceptance, blending or commingling of such Gas is reasonably likely to (i) adversely affect (x) the safety, integrity or operation of the Gathering System or the Sherwood Plant, (y) the delivery of Gas to the Sherwood Plant or to other redelivery points that may be applicable from time to time, or (z) the Gas of third parties, or (ii) otherwise result in economic harm to third parties using the Gathering System or the Sherwood Plant.  

ARTICLE 7:   MEASUREMENT AND ALLOCATIONS

7.1    MarkWest shall measure the volume, heating content, and composition (including the GPM of each Plant Product) of the Gas hereunder using meters and other measurement equipment that MarkWest has installed or caused to be installed at each Measurement Point.  MarkWest shall also install, operate and maintain, or cause to be installed, operated and maintained, suitable meter or meters and/or other necessary equipment for the purpose of measuring Gathering System Fuel (including, with respect to Gas that is used as Gathering System Fuel, the volume and heating content thereof).  The Gathering Fee shall not be charged on such Gathering System Fuel.  In each case, the measurements above shall be made by MarkWest in accordance with the American Gas Association Gas Measurement Committee Report No. 3 standards or any revision thereof.  The measured volume and Btu content shall be calculated at Standard Base Conditions.

15

7.2    The accuracy of MarkWest’s measuring equipment shall be verified by tests using means and methods generally acceptable in the gas industry, at least quarterly.  Measuring equipment found to be registering inaccurately shall be adjusted to read as accurately as possible.  MarkWest shall give Antero two (2) Business Days notice of upcoming tests.  If Antero fails to have a representative present, the results of the test shall nevertheless be considered valid until the next test. MarkWest shall, upon written request of Antero, conduct a test of MarkWest’s measuring equipment, provided that in no event shall MarkWest be required to test its equipment more frequently than once a month.  All tests of such measuring equipment shall be made at MarkWest’s expense, except that Antero shall bear the expense of tests made at its request if the inaccuracy is found to be less than [***] percent ([***]%).

7.3    Antero may, at its option and expense, install check meters at any Receipt Point for checking MarkWest’s metering equipment and the same shall be so installed as not to interfere with the operation of the Gathering System.  The charts and records by which such measurements are determined shall be available for the use of both Antero and MarkWest in fulfilling the terms and conditions thereof.  Additional measurement facilities may be installed by Antero or, at Antero’s request, by MarkWest at or upstream of any Receipt Point. At Antero’s request, and at Antero’s expense, MarkWest shall, based on design parameters provided by Antero, engineer and install measurement equipment at any Compressor Station at or near the outlet flange on the downstream side of the 2-phase separator located upstream of the compressor unit.  Such measurement equipment shall be accessible to and shall be operated and maintained by Antero or its designee.  

7.4    If, for any reason, any measuring equipment is inoperative or inaccurate by more than [***] percent ([***]%) in the measurement of Gas, then the volume of Gas delivered during the period of such inaccuracy shall be determined on the basis of the best data available using the first of the following methods which is feasible:

		
	(a)
	By using the registration of any check measuring equipment installed and accurately registering; or

		
	(b)
	By using a percentage factor to correct the error if the percentage of error is ascertainable by calibration, test, or mathematical calculations; or

		
	(c)
	By comparing deliveries made during preceding periods under similar delivery conditions when the meter was registering accurately.

__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions. 

16

7.5    An adjustment based on such determination shall be made for such period of inaccuracy as may be definitely known, or if not known, then for one half the period since the date of the last meter test.  In no event, however, shall any adjustment extend back beyond [***] from the date the error was first made known by one Party hereunder to the other.

7.6    Each Party shall have the right to inspect the other Party’s equipment, charts, and other measurement or test data during business hours; but the reading, calibration, and adjustment of such equipment and changing of charts shall be done by the Party installing and furnishing same.  Unless the Parties otherwise agree, each Party shall preserve all its original test data, charts, and other similar records for a period of at least [***].

7.7    MarkWest shall obtain or cause to be obtained flow proportional representative samples of Antero’s Gas measured at the Measurement Point(s) in accordance with generally accepted industry standards; provided, however, that for any Receipt Points that deliver less than [***] (***) Mcf per day, in lieu of the foregoing, MarkWest may obtain quarterly spot samples of Antero’s Gas measured at the Measurement Points. MarkWest shall obtain or cause to be obtained analyses of all such samples.  All analyses shall determine the composition of the Gas by component in mole percent, Thermal Content, and specific gravity, all by means of chromatographic or other methods accepted in the industry.  

7.9    MarkWest’s measurement equipment at each Measurement Point shall include a reasonably sufficient number of data ports, and MarkWest shall permit Antero to connect to such data ports, as shall be required to provide to Antero on a real-time basis all measurement data generated by such measurement equipment.  Antero shall be responsible at its own cost for obtaining equipment and/or services to connect to such data ports and receive and process such data.

7.10    Allocations required for determining payments or fees due under this Agreement shall be made by MarkWest in accordance with accepted industry standards and this Section 7.10 and shall be based upon the measurements taken and quantities determined for the applicable Accounting Period.  

a.    The following definitions shall be applicable:

i.    “Fuel Point” means a point on the Gathering System where Gathering System Fuel is consumed;

ii.    “receipt point” means all receipt points at which Gas is delivered into the Gathering System, including the Receipt Points; and

iii.    “measurement point” shall mean all measurement points on the Gathering System, including the Measurement Points.
__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions. 

17

b.    Lost and Unaccounted For Gas shall be allocated to each measurement point pro rata based upon the Thermal Content of all Gas received at all measurement points during the applicable Accounting Period.  Total Lost and Unaccounted For Gas shall be determined by subtracting from the sum of the total Thermal Content of Gas received at all measurement points during such Accounting Period the sum of (i) the Thermal Content of Gas actually delivered to the Redelivery Point(s) during such Month, (ii) the Thermal Content of Gas consumed as Gathering System Fuel measured at all Fuel Points during such Accounting Period, and (iii) the Thermal Content of all High Pressure Condensate recovered from the Gathering System during such Accounting Period (other than High Pressure Condensate vaporized and reinjected into the Gas stream).  Lost and Unaccounted For Gas for each Accounting Period shall be allocated to each measurement point based upon a fraction, the numerator of which is the total Thermal Content of Gas measured at such measurement point during such Accounting Period, and the denominator of which is the total Thermal Content of Gas measured at all measurement points during such Accounting Period.

c.    Gathering System Fuel shall be allocated to each measurement point upstream of the applicable Fuel Point by multiplying the Gathering System Fuel measured at the applicable Fuel Point during the applicable Accounting Period by a fraction, the numerator of which is the volume of Gas in Mcfs received into the Gathering System at such receipt point (as measured at the applicable measurement point) during such Accounting Period, and the denominator of which is the aggregate volume of Gas in Mcfs received into the Gathering System at all receipt points (as measured at the relevant measurement points) upstream of the applicable Fuel Point during such Accounting Period.  

d.    High Pressure Condensate shall be allocated in accordance with the Processing Agreement.

7.11    MarkWest shall not permit any third party to deliver any Gas to a Receipt Point unless (a) MarkWest has constructed measurement points upstream of such Receipt Point sufficient to separately measure such third party’s Gas and Antero’s Gas delivered at such Receipt Point for purposes of making the above allocations to such measurement points and (b) MarkWest and Antero have agreed on procedures to measure and allocate any Low Pressure Condensate collected at Compressor Stations at which such third party Gas is compressed.

7.12    With respect to each Accounting Period, Antero hereby directs MarkWest to provide to Processor, and MarkWest will provide to Processor with respect to each third party shipper on the Gathering System, such measurement and allocation information as Processor may reasonably request to permit Processor to make the allocations in the Processing Agreement to each Measurement Point under this Agreement for such Accounting Period.  

18

ARTICLE 8:  FEES AND CONSIDERATION

8.1    Subject to Section 8.2, (a) commencing on the Gathering Effective Date for each Lateral, MarkWest will charge Antero the per Mcf Gathering Fee for such Lateral for all of Antero’s Gas delivered to the Receipt Points on such Lateral, as measured at the Measurement Points, provided, however, that commencing on the Minimum Gathering Fee Commencement Date for such Lateral and for a period of [***] thereafter (as may be extended for any event of Force Majeure in excess of thirty (30) days as described below in this Section 8.1), in no event shall the Gathering Fee actually paid to MarkWest hereunder, together with amounts credited to the Minimum Gathering Fee as set forth in this Section 8.1, with respect to any Accounting Period for such Lateral be less than the Minimum Gathering Fee for such Lateral and (b) commencing on the Compression Effective Date for each Compressor Station, the Compression Fees provided for in Section 4.2.b, including the Minimum Compression Fee for the period of time set forth in Section 4.2.b.  Notwithstanding the foregoing Antero shall receive a credit against the Minimum Gathering Fee and/or the Minimum Compression Fee for a Lateral or Compressor Station, as applicable, in the following circumstances:

a.    to the extent that such Lateral or Compressor Station is affected by an event of Force Majeure lasting longer than [***]; provided that, in the event of such an event of Force Majeure, (i) the period of time during which the Minimum Gathering Fee and/or Minimum Compression Fee for the affected Lateral and/or Compressor Station shall be payable shall automatically be extended for the duration of such Force Majeure event that is in excess of [***] and (ii) if the then current Primary Term or renewal term of this Agreement would end prior to the extended date set forth in clause (i), the Primary Term or then current renewal term, as applicable, shall automatically be extended to end on the date set forth in clause (i).  Upon the request of either Party, the Parties shall promptly execute an amendment to this Agreement reflecting any extensions set forth in the foregoing sentence; or

b.    to the extent of any volumes of Antero’s Gas that Antero tenders for delivery to the applicable Receipt Point but which volumes are not gathered through the affected Lateral or compressed through the affected Compressor Station, as applicable, as determined in accordance with the remaining provisions of this subparagraph (such volumes, “Rejected Volumes”), in either case as a result of any material breach by MarkWest of this Agreement lasting longer than [***]. The Rejected Volumes shall be reasonably demonstrated by Antero to MarkWest based upon recent representative production data for Antero’s Gas for the applicable Receipt Point.  Any credit provided pursuant to this Section 8.1.b. shall be equal to the Rejected Volumes of Antero’s Gas multiplied by the Gathering Fee for the affected Lateral or Compression Fee for the Compressor Station, as applicable.  
__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions. 

19

8.2    [***] percent ([***]%) of each of the Gathering Fees and, if applicable, the Compression Fees shall be adjusted up or down on an annual basis in proportion to the percentage change, from the preceding year, in the Consumer Price Index – All Urban Consumers (Series ID CUUR0000SA0), Not Seasonally Adjusted, U.S. city average, All items (Base Period 1982‐84=100), as published by the United States Department of Labor, Bureau of Labor Statistics (“CPI”). Such adjustment shall be made effective upon each January 1 beginning on January 1, 2014 and shall reflect the percentage change in the CPI as it existed for the immediately preceding June from the CPI for the second immediately preceding June; provided, neither the Gathering Fees nor the Compression Fees, if applicable, shall ever be less than the initial fees stated in Sections 8.1 and 4.2, respectively.

8.3     The Gathering Fee and, if applicable, the Compression Fee on a Lateral shall never be higher than the lowest gathering fee or compression fee, as applicable, charged by MarkWest to any similarly situated Tier 1 Capacity customer of MarkWest on such Lateral.  MarkWest shall determine in good faith which Tier 1 Capacity customers shall be considered similarly situated based on a number of factors, including but not limited to contract term, volume, and level of commitment.  If such a similarly situated Tier 1 Capacity customer on a Lateral receives gathering or compression service on such Lateral at a lower rate than the Gathering Fee or, if applicable, Compression Fee charged to Antero in accordance with this Agreement for service on such Lateral, such Gathering Fee or, if applicable, Compression Fee shall immediately be lowered to such lower rate and shall remain at such lower rate as long as service is provided to such other similarly situated Tier 1 Capacity customer at such lower rate, at which time the relevant Gathering Fee or Compression Fee shall increase again to such Gathering Fee or Compression Fee as is applicable in accordance with this Agreement.

ARTICLE 9:  PAYMENTS

9.1    MarkWest shall provide Antero with a statement explaining fully how all consideration due (including deductions) under the terms of this Agreement was determined not later than the last day of the Accounting Period following the Accounting Period for which the consideration is due.  Any sums due MarkWest under this Agreement shall be paid no later than 30 days following receipt of the statement furnished under this Section 9.1.  If the amount owed by one Party to another is the subject of a good faith dispute, the Party with the payment obligation shall be obligated to pay only the undisputed portion of such amount pending the resolution of such dispute in accordance with this Agreement.  Late payments of undisputed amounts shall accrue interest at the rate of 1.5% per month until paid.  Amounts due to either Party hereunder may be netted against amounts due to either Party under the Processing Agreement, and if at any time MarkWest is not the Processor under the Processing Agreement but the Processor is an Affiliate of MarkWest, then Antero shall direct Processor to net payments due to MarkWest hereunder from any payments due to Antero under the Processing 
__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions. 

20

Agreement and to pay such amounts due to MarkWest hereunder directly to MarkWest on Antero’s behalf.  

9.2    Either Party, on thirty (30) days prior written notice, shall have the right at its expense, at reasonable times during business hours, to audit the books and records of the other Party to the extent necessary to verify the accuracy of any statement, allocation, measurement, computation, charge, or payment made under or pursuant to this Agreement.  The scope of any audit shall be limited to the [***] period immediately prior to the month in which notice is given (“Audit Period”). However, no audit may include any time period for which a prior audit hereunder was conducted, and no audit may occur more frequently than [***]. The Party conducting the audit shall have ninety (90) days after concluding the audit in which to submit a written claim for adjustments, with supporting detail.  The audited Party shall respond to the written claim within forty-five (45) days after receiving the written claim.  All volumes, statements, allocations, measurements, computations, charges, or payments made in any period prior to the Audit Period, or made for charges during the Audit Period but for which a written claim for adjustments is not made within ninety (90) days after the information that has been reasonably requested in connection with such audit has been provided or made available to the requesting party, shall be conclusively deemed true and correct and shall be final for all purposes.  To the extent that the foregoing varies from any applicable statute of limitations, the Parties expressly waive all such other applicable statutes of limitations.  The Parties acknowledge and agree that, in connection with any audit hereunder, MarkWest shall not be required to disclose to Antero the names of other MarkWest customers or the settlement terms for those customers.

ARTICLE 10:  FORCE MAJEURE

10.1    In the event a Party is rendered unable, wholly or in part, by Force Majeure, to carry out its obligations under this Agreement, other than the obligation to make any payments due hereunder, the obligations of that Party, so far as they are affected by Force Majeure, shall be suspended from the inception and during the continuance of the inability, and the cause of the Force Majeure, as far as possible, shall be remedied with reasonable diligence.  The Party affected by Force Majeure shall provide the other Party with written notice of the Force Majeure event, with reasonably full detail of the Force Majeure within a reasonable time after the affected Party learns of the occurrence of the Force Majeure event.  The settlement of strikes, lockouts, and other labor difficulty shall be entirely within the discretion of the Party having the difficulty and nothing herein shall require the settlement of strikes, lockouts, or other labor difficulty.  

__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions. 

21

ARTICLE 11:    LIABILITY AND INDEMNIFICATION

11.1    As among the Parties hereto, Antero and any of its designees shall be in custody, control and possession of the Gas hereunder, including any portion thereof which accumulates as liquids, until that Gas is delivered to a Receipt Point, and after any portion of the Gas is redelivered to Antero or for Antero’s account at a Redelivery Point. 

11.2    As among the Parties hereto, MarkWest and any of its designees shall be in custody, control and possession of the Gas hereunder, including any portion thereof which accumulates as liquids, after that Gas is delivered at a Receipt Point and until that Gas is redelivered to Antero or for Antero’s Account at a Redelivery Point. 

11.3    Each Party (“Indemnifying Party”) hereby covenants and agrees with the other Party, and its Affiliates, and each of their directors, managers, members, officers and employees (“Indemnified Parties”), that except to the extent caused by the Indemnified Parties’ gross negligence or willful misconduct, the Indemnifying Party shall protect, defend, indemnify and hold harmless the Indemnified Parties from, against and in respect of any and all Losses incurred by the Indemnified Parties to the extent those Losses (i) arise from claims brought by any of the Indemnifying Party’s employees, its contractors or subcontractors, or their employees for Losses due to bodily injury, death, or damage to property or (ii) are not covered by clause (i) and arise from or are related to:  (a)  the Indemnifying Party’s facilities; or (b) the Indemnifying Party’s custody, possession and control of the Gas.  The foregoing indemnities are intended to apply regardless of the cause of any Losses, even though caused in whole or in part by a pre-existing condition, the negligence, strict liability, or other legal fault of an Indemnified Party (other than the gross negligence or willful misconduct of an Indemnified Party), or the unseaworthiness or defective condition of vessels, craft or premises owned, supplied, hired, chartered or borrowed by an Indemnitee.

ARTICLE 12:        TITLE

12.1    Antero represents and warrants that it owns, or has the right to deliver, all of the Gas that is delivered under this Agreement to the Receipt Points for the purposes of this Agreement, free and clear of all liens, encumbrances and adverse claims.  If the title to Gas delivered by Antero hereunder is disputed or is involved in any legal action, MarkWest shall have the right to withhold payment (with interest at the Prime Rate as published in the Wall Street Journal, under “Money Rates”), or cease receiving  the Gas, to the extent of the interest disputed or involved in legal action, during the pendency of the action or until title is freed from the dispute, or until Antero furnishes, or causes to be furnished, indemnification to save MarkWest harmless from all claims arising out of the dispute or action, with surety acceptable to MarkWest.  Antero hereby indemnifies MarkWest against and holds MarkWest harmless from any and all Losses arising out of or related to any breach of the foregoing representation and warranty.  

12.2    Title to all of Antero’s Gas and all Low Pressure Condensate attributable to Antero’s Gas shall remain in Antero.  Title to High Pressure Condensate allocated to 

22

Antero’s Gas pursuant to the Processing Agreement shall remain in Antero until title thereto transfers to Processor pursuant to the Processing Agreement and the Natural Gas Liquids Exchange Agreement dated as of March 31, 2011 between Antero and Processor, as amended or restated from time to time.

ARTICLE 13:    ROYALTY AND TAXES

13.1    Antero shall have the sole and exclusive obligation and liability for the payment of all persons due any proceeds derived from the Gas delivered under this Agreement, including royalties, overriding royalties, and similar interests, in accordance with the provisions of the leases or agreements creating those rights to proceeds.  In no event will MarkWest have any obligation to those persons due any of those proceeds of production attributable to the Gas under this Agreement.

13.2    Antero shall pay and be responsible for all Taxes levied against or with respect to Antero’s Gas delivered or services provided to Antero under this Agreement, except for any MarkWest local, state or federal income taxes associated with payments by Antero in cash or in kind to MarkWest for such services.  MarkWest shall under no circumstances become liable for those Taxes, unless designated to remit those Taxes on behalf of Antero by any duly constituted jurisdictional agency having authority to impose such obligations on MarkWest, in which event the amount of those Taxes remitted on Antero’s behalf shall (a) be reimbursed by Antero upon receipt of invoice, with corresponding documentation from MarkWest setting forth such payments, or (b) deducted from amounts otherwise due Antero under this Agreement.

13.3    Antero hereby agrees to defend and indemnify and hold MarkWest harmless from  and against any and all Losses arising from the payments made by Antero in accordance with  Sections 13.1 and 13.2, including, without limitation, Losses arising from claims for the nonpayment, mispayment, or wrongful calculation of those payments.
 
ARTICLE 14:    RIGHTS-OF-WAY

14.1    Antero hereby grants to MarkWest, insofar as Antero has the right to do so, all requisite easements and rights-of-way over, across, and under the lands covered by the Antero Interests, with full right of ingress and egress, for the purposes of constructing, operating, repairing, replacing and maintaining communication facilities, measurement facilities, pipeline gathering facilities, compression facilities, dehydration facilities, treating facilities, processing facilities and other underground and surface equipment necessary for the performance of MarkWest’s obligations set forth in this Agreement; provided, the exercise of those rights by MarkWest will not interfere with Antero’s lease operations or with the rights of owners in fee.  All facilities and other equipment acquired, placed, or installed by MarkWest for the purposes of this Agreement pursuant to the provisions of this Article, shall remain the property of MarkWest and may be removed by MarkWest at any time. 

23

14.2    To the extent permitted under applicable easements and subject to the remaining provisions of this Section 14.2, Antero will have the right to install and operate, within the Gathering System right-of-way and compressor sites (collectively, the “MarkWest Land Rights”), low pressure pipeline facilities and related compression facilities that are delivering Antero’s Gas to the Gathering System and water distribution systems; provided, however, that Antero may not lay any gathering lines or install other facilities that unreasonably interfere with MarkWest’s present or future use of the MarkWest Land Rights as determined by MarkWest in its reasonable discretion.  Prior to any shared use of the MarkWest Land Rights, the Parties shall enter into a shared use agreement setting forth the terms under which such shared use will occur, including without limitation, costs and maintenance responsibilities and the terms set forth in this Section 14.2.  Any such shared use by Antero shall be at Antero’s cost and expense, and MarkWest shall not incur any costs with respect thereto.  With regard to any construction or operations by or on behalf of Antero on the MarkWest Land Rights, (i) Antero may not unreasonably disturb MarkWest’s safe and orderly operation of the Gathering System, (ii) Antero must comply with MarkWest’s reasonable requirements and specifications in connection with the construction, installation and operation of such facilities within the MarkWest Land Rights (including, without limitation, line spacing requirements), (iii) Antero must return the surface area of the MarkWest Land Rights to their original state after such installation, and (iv) Antero must conduct any such operations in accordance with MarkWest’s construction and safety procedures.  Antero shall indemnify, defend and hold harmless MarkWest for and against any losses, damages, claims, demands or actions arising from or related to Antero’s (or that of its employees, agents or contractors) use of, activities on, and operations within the MarkWest Land Rights.  Antero shall have the right to assign its rights under this Section 14.2 and under any shared use agreement to any third party with whom Antero contracts to provide low-pressure gathering service to Antero for delivery of Antero’s Gas to the Receipt Points hereunder, provided that, notwithstanding any assignment to and assumption by such third party of the rights and obligations under this Section 14.2 and any shared use agreement, Antero shall remain responsible and liable to MarkWest for such third party’s use of, activities on and operations within the MarkWest Land Rights as set forth in this Section 14.2 and in the shared use agreement, as though such activities and operations were performed by Antero hereunder and thereunder, unless such third party is a Qualified Service Provider (as hereinafter defined), in which event Antero shall be released from its obligations under this Section 14.2 and the shared use agreement solely to the extent of the assignment to and assumption by the Qualified Service Provider, effective as of the effective date of such assignment and assumption.  Except as set forth above or as may otherwise be agreed upon by the Parties, Antero (or any assignee thereof) may not assign its rights under this Section 14.2 or the shared use agreement except in connection with the assignment of this Agreement by Antero in accordance with Article 15.  A “Qualified Service Provider” means a natural gas midstream services provider (a) that is experienced in the industry and performs such services in accordance with the standards that would be followed and complied with by a prudent operator under similar conditions, and in compliance with applicable laws, rules and regulations, as determined by MarkWest in its reasonable good faith discretion, and (b) which, if requested by MarkWest, provides sufficient security of performance in a form, for an amount and a 

24

term, and from a creditworthy issuer, all as reasonably acceptable to MarkWest, including, but not limited to an irrevocable letter of credit or guaranty. 

ARTICLE 15: ASSIGNMENTS

15.1    This Agreement shall extend to and be binding upon the parties hereto, their successors, and assigns. Subject to the provisions below, this Agreement and the rights, duties or obligations of the parties hereunder may be assigned or conveyed in whole or in part; provided, however, that except as set forth in the following sentence or in Section 14.2, neither Party shall assign or transfer this Agreement and any rights, duties or obligations hereunder, without the prior written consent of the other Party, which consent shall not be unreasonably withheld.  Either Party may make such an assignment or transfer to an Affiliate without seeking the prior written consent of the other Party.  A reasonable basis for withholding consent may include (i) the financial condition of the assignee raising reasonable concern relating to its ability to perform under this Agreement or (ii) concerns regarding the administration of this Agreement among multiple assignees of Antero unless the assignees appoint an agent to represent them in connection with this Agreement in a manner reasonably satisfactory to the other Party. All assignments and conveyances of the Gathering System shall be subject to this Agreement, including the foregoing provisions of this Article 15.    No transfer of, or succession to, the interest of any Party hereto, either in whole or partially, shall affect or bind the other Party until the first (1st) day of the month following the month in which the other Party shall have received written notification thereof.  

ARTICLE 16:   MISCELLANEOUS

16.1    The failure of any Party hereto to exercise any right granted hereunder shall not impair nor be deemed a waiver of that Party’s privilege of exercising that right at any subsequent time or times.

16.2    This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Colorado without regard to choice of law principles.  EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.  

16.3    This Section 16.3 shall apply to all disputes between the Parties arising under this Agreement except for disputes pertaining to claims for indemnification which arise in connection with or grow out of claims asserted against either Party by a third party.  A dispute that is subject to this Section 16.3 is referred to herein as a “Dispute.”  When a Dispute has arisen, either Party may give the other Party written notice of the Dispute (“Dispute Notice”).  In the event a Dispute Notice is given, the Parties shall attempt to resolve the Dispute promptly by negotiation between executives who have authority to settle the controversy and who are at a higher level of management than the persons with direct responsibility for the matter.  Within ten (10) days after delivery of the Dispute 

25

Notice, the receiving Party shall submit to the other a written response.  Thereafter, the executives shall confer in person or by telephone promptly to attempt to resolve the Dispute.  All reasonable requests for information made by one Party to the other will be honored.  If the Dispute has not been resolved by negotiation within twenty (20) days of the Dispute Notice, or if the Parties have failed to confer within twenty (20) days after the Dispute Notice, the Parties shall endeavor to settle the Dispute by non-binding mediation under the CPR Mediation Procedure in effect on the date of this Agreement.  Unless otherwise agreed, the Parties will select a mediator from the CPR Panels of Distinguished Neutrals (“CPR Panel”).  If the Parties cannot agree on a mediator, CPR, upon receipt of advice from any of the Parties that they cannot agree on a mediator, will promptly appoint a mediator from the CPR Panel.  All negotiations and proceedings pursuant to this Section 16.3 are confidential and shall be treated as compromise and settlement negotiations for purposes of applicable rules of evidence and any additional confidentiality protections provided by applicable law.  If the Dispute has not been resolved by mediation as provided herein within forty-five (45) days following submission of the Dispute Notice, either Party may pursue any and all remedies that may be available under this Agreement, applicable law or in equity.

16.4    The Parties agree that (a) MarkWest shall keep all information provided by Antero to MarkWest pertaining to Antero’s exploration and development plans, production forecasts, acreage positions and other non-public information of Antero, and (b) the Parties shall keep the terms of this Agreement, confidential and not disclose the same to any other persons, firms or entities without the prior written consent of Antero (in the case of (a)) or the other Party (in the case of (b)); provided, the foregoing shall not apply to disclosures that a Party determines, based on advice of counsel, it is compelled by law or court order to make; or to disclosures to a Party’s Affiliates or such Party’s or its Affiliates’ employees, directors, officers, partners, prospective partners or financing sources, purchasers or prospective purchasers of a Party’s assets or businesses, financial advisors, consultants, attorneys, banks, or institutional investors, provided those persons, firms or entities likewise agree to keep this Agreement and/or such information, as applicable, confidential.  

16.5    Any change, modification or alteration of this Agreement shall be in writing, signed by the Parties; and, no course of dealing between the Parties shall be construed to alter the terms of this Agreement.

16.6    All exhibits and appendices to this Agreement are hereby incorporated into and made part of this Agreement for all purposes.  This Agreement, including all exhibits and appendices, contains the entire agreement between the Parties with respect to the subject matter hereof, and there are no oral or other promises, agreements, warranties, obligations, assurances, or conditions precedent, affecting it.

16.7    The terms and provisions of this Agreement are for the sole benefit of MarkWest and Antero, and no third party is intended to benefit herefrom other than the Indemnified Parties.

26

16.8    NO BREACH OF THIS AGREEMENT OR CLAIM FOR LOSSES UNDER ANY INDEMNITY OBLIGATION CONTAINED IN THIS AGREEMENT SHALL CAUSE ANY PARTY TO BE LIABLE FOR, NOR SHALL LOSSES INCLUDE, ANY DAMAGES OTHER THAN ACTUAL AND DIRECT DAMAGES, AND EACH PARTY EXPRESSLY WAIVES ANY RIGHT TO CLAIM ANY OTHER DAMAGES, INCLUDING, WITHOUT LIMITATION, CONSEQUENTIAL, SPECIAL, INDIRECT, PUNITIVE OR EXEMPLARY DAMAGES.

16.9    This Agreement shall be subject to all applicable federal, state, and local laws, rules, regulations, and orders affecting either Antero or MarkWest and that pertain to the Gathering System or the operation thereof.  In the event any one or more of the provisions of this Agreement shall be found to be violative of any applicable order, rule, or regulation of any regulatory body having jurisdiction, or of any valid law of the United States or any state or other governmental entity having jurisdiction, such provision or provisions shall be deemed to be modified to the extent necessary to comply with such order, rule, regulation, or law; provided, however, that in the event that a material term under this Agreement is so modified, the Parties will, timely and in good faith, revise and amend this Agreement in a manner which preserves, as closely as possible, each Party’s business and economic objectives as expressed by the Agreement prior to such modification.

16.10    Unless otherwise provided herein, any notice, request or demand which either Party desires to serve upon the other regarding this Agreement shall be made in writing and shall be considered as delivered when hand delivered, or when delivery is confirmed by pre-paid delivery service (such as FedEx, UPS, DHL or a similar delivery service), or when sent via email, or, if mailed by United States certified mail, postage prepaid, three (3) days after mailing, or, if sent by facsimile transmission, when receipt is confirmed by the equipment of the transmitting Party; provided, if sent by email after normal business hours or if receipt of a facsimile transmission is confirmed after normal business hours, receipt shall be deemed to be the next Business Day.  Such notice shall be given to the other Party at the following address, or to such other address as either Party shall designate by written notice to the other:

If to Antero:

ANTERO RESOURCES APPALACHIAN CORPORATION
1625 17th Street
Denver, Colorado  80202
Attn: Vice President—Marketing
Phone: [***]
Fax: [***]

With a copy to:

27

For general notices:
[***]
[***]

For gas control, nominations & balancing:
[***]

For accounting, legal & financial:
[***]

If to MarkWest:

MARKWEST LIBERTY MIDSTREAM & RESOURCES, L.L.C.
1515 Arapahoe Street
Tower 1, Suite 1600
Denver, CO    80202
Attn:  Chief Operating Officer
Phone:  [***]
Facsimile:  [***]

With a copy to:

MarkWest Liberty Midstream & Resources, L.L.C.
1515 Arapahoe Street
Tower 1, Suite 1600
Denver, CO    80202
Attn:  General Counsel
Phone:  [***]
Facsimile:  [***]

16.11    In the event any published price index referred to in this Agreement ceases to be published, the Parties shall mutually agree to an alternative published price index representative of the published price index referred to in this Agreement.

16.12    This Agreement may be executed in any number of counterparts, each of which shall be considered an original, and all of which shall be considered one instrument.

28

[signature page follows]

29

IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date set forth above. 

	
		
	ANTERO RESOURCES APPALACHIAN CORPORATION

	MARKWEST LIBERTY MIDSTREAM & RESOURCES, L.L.C.

	

By:               
	

By:               

	

Name:               
	

Name:               

	

Title:               
	

Title:               

30

LIST OF ANNEXES

Lateral Annex – Zinnia and Middle Point Laterals
Compressor Station Annex – Zinnia Compressor Station
Compressor Station Annex – Middle Point Compressor Station
Compressor Station Annex – Sherwood Compressor Station

31

LATERAL ANNEX TO GAS GATHERING AND COMPRESSION AGREEMENT (SHERWOOD) – ZINNIA AND MIDDLE POINT LATERALS

This Lateral Annex (“Annex”) dated April 16, 2012 to Gas Gathering and Compression Agreement (Sherwood) is between MarkWest Liberty Midstream & Resources, L.L.C. (“MarkWest”) and Antero Resources Appalachian Corporation (“Antero”).

A.    Antero and MarkWest are parties to that certain Gas Gathering and Compression Agreement (Sherwood) dated as of April 16, 2012 (as amended or restated, the “Agreement”). 
B.    This Annex is a Lateral Annex entered into pursuant to the Agreement.
C.    Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Agreement.
NOW THEREFORE, MarkWest and Antero hereby agree as follows:

1.The Parties hereby agree to the addition of the following Lateral(s) to the Agreement and to the terms set forth below relating to such Lateral(s), as contemplated by the Agreement:

	
			
	Lateral(s)

	Zinnia Lateral and Middle Point Lateral

	Route

	As reflected in the attached Schedule 1

	Initial Receipt Points
	1.    The inlet of MarkWest’s two (2) phase separator  immediately upstream of the Zinnia Compressor Station, which separator shall be at a mutually agreeable location at or near the property boundary of the Zinnia Compressor Station;
2.    The inlet of MarkWest’s two (2) phase separator immediately upstream of the Middle Point Compressor Station, which separator shall be at a mutually agreeable location at or near the property boundary of the Middle Point Compressor Station;
3.    The inlet of the meter installed by MarkWest downstream of the compression facilities installed by or on behalf of Antero and known as the “ETC Tichenal Receipt Point”; and 
4.    The inlet of the meter installed by MarkWest downstream of the compression facilities installed

	
			
	Pipe diameter
	Zinnia Lateral:  At least [***]
Middle Point Lateral:  At least [***]

	Estimated footage
	Zinnia Lateral:  [***]
Middle Point Lateral:  [***]

	Measurement Facility Capacities
	MarkWest shall construct measurement facilities at the Measurement Points for the following Receipt Points, with capacities equal to at least [***]]% of the quantities set forth for such Receipt Points below, but in any event not to exceed [***] MMcf per day at any such Receipt Point:

	Zinnia Compressor Station:
	[***] MMcf per day

	Middle Point Compressor Station:
	[***] MMcf per day

	ETC Tichenal Receipt Point:
	[***] MMcf per day

	 
	Enerven Tichenal Station Receipt Point:
	[***] MMcf per day

	Maximum allowable operating pressure
	At least [***] psig

	Required Effective Date
	December 31, 2012

	Gathering Fee
	$[***] per Mcf

	Minimum Gathering Fee
	$[***] per Accounting Period in the aggregate for the Zinnia and Middle Point Laterals

	Tier 1 Capacity
	Antero’s aggregate combined Tier 1 Capacity for the Zinnia Lateral and Middle Point Lateral is [***] MMcf per day, subject to the following:

__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions. 

2

	
		
	 
	1.  Of this aggregate amount:
a.  The Tier 1 Capacity allocated to the Zinnia Lateral at any time shall not exceed [***] MMcf per day, and MarkWest shall not be obligated to take delivery of Antero’s Gas in excess of [***] MMcf per day in the aggregate at all Receipt Points on the Zinnia Lateral (excluding, for the avoidance of doubt, Gas entering the Zinnia Lateral through the Middle Point Lateral) (it being understood that Antero’s Tier 1 Capacity on the Zinnia Lateral downstream of the junction of the Zinnia Lateral and the Middle Point Lateral is [***] MMcf per day);
b.  The Tier 1 Capacity allocated to the Middle Point Lateral shall not exceed [***] MMcf per day, and MarkWest shall not be obligated to take delivery of Antero’s Gas in excess of [***] MMcf per day in the aggregate on all Receipt Points on the Middle Point Lateral; and
c.  MarkWest shall not be obligated to take delivery of Antero’s Gas in excess of [***] MMcf per day in the aggregate at all Receipt Points on the Zinnia Lateral and the Middle Point Lateral; and
2.  The amount of Antero’s Gas that MarkWest may receive at the Receipt Points for the Zinnia Lateral and the Middle Point Lateral located at the Zinnia Compressor Station and Middle Point Compressor Station (the “Applicable Compressor Stations”) at any time is dependent upon and limited by the amount of compression capacity installed at the Applicable Compressor Stations pursuant to the Compressor Station Annexes for the Applicable Compressor Stations.  Until Antero has elected to increase the 

__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions. 

3

	
		
	 
	compression capacity at the Applicable Compressor Stations to equal the Tier 1 Capacity for each Lateral set forth above, the actual amount of Antero’s Gas that MarkWest can receive at such Receipt Points will be limited to the amount of the compression capacity at the Applicable Compressor Stations.

2.This Annex may be executed in any number of counterparts, each of which shall be considered an original, and all of which shall be considered one instrument.  The Agreement, as modified by this Annex, remains in full force and effect.  In the event of a conflict between the Agreement and this Annex, the terms of this Annex shall control.
[signature page follows]

4

IN WITNESS WHEREOF, the Parties have duly executed this Annex as of the date set forth above. 

	
		
	ANTERO RESOURCES APPALACHIAN CORPORATION

	MARKWEST LIBERTY MIDSTREAM & RESOURCES, L.L.C.

	

By:               
	

By:               

	

Name:               
	

Name:               

	

Title:               
	

Title:               

Signature Page
Lateral Annex – Zinnia and Middle Point Laterals

Schedule 1
to
Lateral Annex for Zinnia and Middle Point Laterals

[***]

__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions. 

COMPRESSOR STATION ANNEX TO GAS GATHERING AND COMPRESSION AGREEMENT (SHERWOOD) – ZINNIA LATERAL COMPRESSOR STATION

This Compressor Station Annex (“Annex”) dated April 16, 2012 to Gas Gathering and Compression Agreement (Sherwood) is between MarkWest Liberty Midstream & Resources, L.L.C. (“MarkWest”) and Antero Resources Appalachian Corporation (“Antero”).

A.    Antero and MarkWest are parties to that certain Gas Gathering and Compression Agreement (Sherwood) dated as of April 16, 2012 (as amended or restated, the “Agreement”). 
B.    This Annex is a Compressor Station Annex entered into pursuant to the Agreement.
C.    Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Agreement.
NOW THEREFORE, MarkWest and Antero hereby agree as follows:

1.The Parties hereby agree to the addition of the following Compressor Station to the Agreement and to the terms set forth below relating to such Compressor Station, as contemplated by the Agreement:
	
		
	Compressor Station

	Zinnia Compressor Station

	Location

	As reflected in the attached Schedule 1

	Number of Stages of Compression

	[***]

	Approximate Horsepower to be Installed Initially

	[***] hp, subject to paragraph 2 below

	Initial Inlet Volume Compression Capacity

	[***] MMcf per day, subject to paragraph 2 below

	Initial Dehydration Equipment Capacity
	[***] MMcf per day

	 
	 

	Required Compression Effective Date

	December 31, 2012

__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions. 

	
		
	Compression Fee

	$[***] per Mcf

	Minimum Compression Fee

	For each Accounting Period, the sum of (i) $[***] plus (ii) the product of $[***] multiplied by [***].

	Installation of Additional Compression
	During the first [***] ([***]) years after the date of the Agreement, Antero may request that additional compression be installed at the Zinnia Compressor Station to compress additional volumes on the terms set forth in this Annex and in the Agreement.  Any additional compression that is requested by Antero during such [***]period shall be installed by MarkWest at MarkWest’s cost on the terms set forth in this Annex and in the Agreement, and MarkWest will use commercially reasonable efforts to install such additional compression as soon as reasonably practicable and consistent with such timeframe as may be mutually agreed upon by the Parties.  After such [***] period, additional compression may be installed at the Zinnia Compressor Station upon the mutual agreement of the Parties as set forth in Section 4.2.c. of the Agreement.

2.The Parties acknowledge that of the [***] compressor unit skids necessary to achieve the initial installed horsepower of [***] hp and the initial inlet volume compression capacity of [***] MMcf per day, each as specified above, only [***] of such compressor unit skids will be installed by the Required Compression Effective Date of December 31, 2012.  Accordingly, until the [***] compressor unit skid is installed and made operational, the initial installed horsepower of the Zinnia Lateral Compressor Station shall be [***] hp and the initial inlet volume compression capacity of the Zinnia Lateral Compressor Station shall be [***] MMcf per day for all purposes of the Agreement, including the satisfaction of the requirements for the Compression Effective Date of the Zinnia Lateral Compressor Station, and including the number of installed horsepower for calculating the Minimum Compression Fee for the Zinnia Lateral Compressor Station; provided, however, that from the Minimum Compression Fee Commencement Date for the Zinnia Lateral Compressor Station until the first day of the Accounting Period following the end of the first 90-day period after such [***] compressor unit skid has been installed and made operational and is capable of [***], the component of the Minimum Compression Fee set forth in item (i) above shall be reduced from $[***] per Accounting Period to $[***] per Accounting Period.  MarkWest shall use all reasonable efforts to ensure that such [***] compressor unit skid is installed and made operational and capable of [***].   
__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions. 

2

3.This Annex may be executed in any number of counterparts, each of which shall be considered an original, and all of which shall be considered one instrument.  The Agreement, as modified by this Annex, remains in full force and effect.  In the event of a conflict between the Agreement and this Annex, the terms of this Annex shall control.
[signature page follows]

3

IN WITNESS WHEREOF, the Parties have duly executed this Annex as of the date set forth above. 

	
		
	ANTERO RESOURCES APPALACHIAN CORPORATION

	MARKWEST LIBERTY MIDSTREAM & RESOURCES, L.L.C.

	

By:               
	

By:               

	

Name:               
	

Name:               

	

Title:               
	

Title:               

Signature Page
Compressor Station Annex – Zinnia Compressor Station

Schedule 1
to
Compressor Station Annex for Zinnia Compressor Station

[***]

__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions. 

COMPRESSOR STATION ANNEX TO GAS GATHERING AND COMPRESSION AGREEMENT (SHERWOOD) – MIDDLE POINT LATERAL COMPRESSOR STATION

This Compressor Station Annex (“Annex”) dated April 16, 2012 to Gas Gathering and Compression Agreement (Sherwood) is between MarkWest Liberty Midstream & Resources, L.L.C. (“MarkWest”) and Antero Resources Appalachian Corporation (“Antero”).

A.    Antero and MarkWest are parties to that certain Gas Gathering and Compression Agreement (Sherwood) dated as of April 16, 2012 (as amended or restated, the “Agreement”). 
B.    This Annex is a Compressor Station Annex entered into pursuant to the Agreement.
C.    Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Agreement.
NOW THEREFORE, MarkWest and Antero hereby agree as follows:

1.The Parties hereby agree to the addition of the following Compressor Station to the Agreement and to the terms set forth below relating to such Compressor Station, as contemplated by the Agreement:
	
		
	Compressor Station

	Middle Point Compressor Station

	Location

	As reflected in the attached Schedule 1

	Number of Stages of Compression

	[***]

	Approximate Horsepower to be Installed Initially

	[***] hp

	Initial Inlet Volume Compression Capacity

	[***] MMcf per day

	Initial Dehydration Equipment Capacity
	[***] MMcf per day

	 
	 

	Required Compression Effective Date

	December 31, 2012

__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions. 

	
		
	Compression Fee

	$[***] per Mcf

	Minimum Compression Fee

	For each Accounting Period, the sum of (i) $[***] plus (ii) the product of $[***] multiplied by [***].

	Installation of Additional Compression
	During the first [***] ([***]) years after the date of the Agreement, Antero may request that additional compression be installed at the Middle Point Compressor Station to compress additional volumes on the terms set forth in this Annex and in the Agreement.  Any additional compression that is requested by Antero during [***] shall be installed by MarkWest at MarkWest’s cost on the terms set forth in this Annex and in the Agreement, and MarkWest will use commercially reasonable efforts to install such additional compression as soon as reasonably practicable and consistent with such timeframe as may be mutually agreed upon by the Parties.  After [***], additional compression may be installed at the Middle Point Compressor Station upon the mutual agreement of the Parties as set forth in Section 4.2.c. of the Agreement.

	 
	 

a.This Annex may be executed in any number of counterparts, each of which shall be considered an original, and all of which shall be considered one instrument.  The Agreement, as modified by this Annex, remains in full force and effect.  In the event of a conflict between the Agreement and this Annex, the terms of this Annex shall control.
[signature page follows]

2

IN WITNESS WHEREOF, the Parties have duly executed this Annex as of the date set forth above. 

	
		
	ANTERO RESOURCES APPALACHIAN CORPORATION

	MARKWEST LIBERTY MIDSTREAM & RESOURCES, L.L.C.

	

By:               
	

By:               

	

Name:               
	

Name:               

	

Title:               
	

Title:               

Signature Page
Compressor Station Annex –Middle Point Compressor Station

Schedule 1
to
Compressor Station Annex for Middle Point Compressor Station

[***]

__________
***Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00222-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00222-of-00352.parquet"}]]