Document:

exv10w10

 

Exhibit 10.10

NATURAL GAS LIQUIDS PURCHASE AGREEMENT

By and Between

KOCH HYDROCARBON, LP

and

PIONEER NATURAL RESOURCES USA, INC.

Dated: March 26, 2003

 

 

	 	 	 	 	 
	Section, Description	 	Page #
	Section 1., Definitions
	 	 	1	 
	Section 2., Term
	 	 	2	 
	Section 3., Delivery by Pioneer, Acceptance by KHLP
	 	 	2	 
	Section 3.A., Quantity
	 	 	2	 
	Section 3.B., Deliveries
	 	 	3	 
	Section 3.C., Quality
	 	 	3	 
	Section 3.D., Third Party NGL’s
	 	 	3	 
	Section 3.E., Marketing Agreements
	 	 	4	 
	Section 4., Purchase Price
	 	 	4	 
	Section 5., Base and Adjusted Fractionation Fees
	 	 	4	 
	Section 6., Other Fees, Quality Related Expenses
	 	 	5	 
	Section 7., Payments
	 	 	5	 
	Section 8., Termination of Prior Agreements
	 	 	5	 
	Section 9., Measurement, Sampling and Analysis
	 	 	5	 
	Section 10., Inspection by KHLP & the Pipelines
	 	 	5	 
	Section 11., Records
	 	 	5	 
	Section 12., Custody and Title
	 	 	6	 
	Section 13., Warranties
	 	 	6	 
	Section 14., Taxes
	 	 	6	 
	Section 15., Bankruptcy, Receivership, Breach
	 	 	6	 
	Section 16., Attorney’s Fees
	 	 	7	 
	Section 17., Force Majeure
	 	 	7	 
	Section 18., Material Safety Data Sheets
	 	 	7	 
	Section 19., KHLP’s System Shutdown
	 	 	7	 
	Section 20., Notices
	 	 	8	 
	Section 21., Laws.
	 	 	8	 
	Section 22., Entire Agreement
	 	 	8	 
	Section 23., Amendments
	 	 	9	 
	Section 24., Interpretation
	 	 	9	 
	Section 25., Governing Law
	 	 	9	 
	Section 26., Assignment
	 	 	9	 
	Section 27., Waiver
	 	 	9	 
	Section 28., Heading and Sections
	 	 	9	 
	Section 29., No Third Party Beneficiary
	 	 	9	 
	Section 30., No Partnership or Association
	 	 	9	 
	Section 31., Exhibits
	 	 	9	 
	Section 32., Joint Action
	 	 	10	 
	Section 33., Safe Handling
	 	 	10	 
	Section 34., KHLP’s Safety Regulations
	 	 	10	 
	Section 35., Use of Products
	 	 	10	 
	Section 36., Alternative Connections
	 	 	10	 

 

 

NATURAL GAS LIQUIDS PURCHASE AGREEMENT

     This Natural Gas Liquids Purchase Agreement (“Agreement”) is made on this 26th Day
of March, 2003, by and between PIONEER NATURAL RESOURCES USA, INC. (“Pioneer”), and Koch
Hydrocarbon, LP (“KHLP”).

     WHEREAS, Pioneer or its Affiliates (defined below) are in the business of producing and
marketing NGL’s (defined below), and Owns or Controls raw natural gas liquid production from the
Midkiff and Benedum Plants (“Plants”); and

     WHEREAS, Pioneer wishes to sell to KHLP all NGL’s Owned or Controlled by Pioneer or its
Affiliates from the Plants; and,

     WHEREAS, KHLP desires to purchase all such NGL’s from Pioneer pursuant to the terms and
conditions of this Agreement.

     NOW, THEREFORE, in consideration of the mutual covenants and promises herein contained, and
other good and valuable consideration, Pioneer and KHLP agree as follows:

     1. Definitions. In this Agreement, each of the following terms shall have the
meanings assigned as follows:

	A.	 	“Adjusted Base Fractionation Fee” shall have the meaning set forth in Section 5.
	 
	B.	 	“Affiliate” of a corporation, partnership, company, or other business enterprise or entity
(collectively “Person”) shall mean a Person which directly or indirectly controls, is
controlled by, or is under common control with such Person. As used herein, the term
“control” (including its derivatives and similar terms) means (i) owning, directly or
indirectly, at least fifty percent (50%) of the voting rights attributable to the outstanding
shares of the controlled Person if such voting rights confer upon the shareholder the power,
directly or indirectly, to direct, or cause to be directed, the management and policies of the
controlled Person, or (ii) with respect to a Person that is not a corporation, having the
power, directly or indirectly, to direct, or cause to be directed, the management and policies
of the controlled Person through the ownership of voting securities, other ownership
interests, by contract, or otherwise.
	 
	C.	 	“Alternate Facilities” shall have the meaning set forth in Section 19.
	 
	D.	 	“Barrel” shall mean forty-two U.S. Gallons.
	 
	E.	 	“Base Fractionation Fee” shall have the meaning set forth in Section 5.
	 
	F.	 	“Contract Year” shall mean each twelve (12) Month period during the term hereof beginning on
the first Day of the Original Contract Term.
	 
	G.	 	“Control”, “Controls”, or “Controlled” shall mean, when referring to NGL’s, NGL’s that
Pioneer or its Affiliates, as the case may be, has the right, directly or indirectly, to sell.

 

 

	H.	 	“Day” shall mean a period of twenty-four (24) consecutive hours commencing at 7:00 A.M.
Central Time.
	 
	I.	 	“Delivery Point” shall mean the interconnection between the pipeline accepting NGL’s for
KHLP’s account, at or near the tailgate of the Plant at issue.
	 
	J.	 	“Effective Date” shall mean May 1, 2003.
	 
	K.	 	“Force Majeure’’ shall have the meaning set forth in Section 17.
	 
	L.	 	“Gallon” shall mean a U.S. Gallon of 231 cubic inches of liquid corrected for temperature to
sixty degrees (60°) Fahrenheit, and at the equivalent vapor pressure of the liquid.
	 
	M.	 	“Month” shall mean a period of time commencing at 7:00 A.M. on the first Day of a calendar
Month and ending at 7:00 A.M. on the first Day of the next calendar Month.
	 
	N.	 	“NGL’s” shall mean the mixture of liquid hydrocarbons and non-hydrocarbon components that
are condensed, adsorbed and/or absorbed from or separated out of natural gas currently and
subsequently processed in the Plant(s). Unless otherwise mutually agreed, NGL’s shall not
include field condensate recovered in gas gathering systems.
	 
	O.	 	“Own”, “Owns” or “Owned” shall mean, when referring to NGL’s, NGL’s to which Pioneer holds
title.
	 
	P.	 	“Pipeline” or “Pipelines” shall mean the pipeline(s) accepting NGL’s and delivering such
NGL’s to Mt. Belvieu for KHLP’s account. Presently, the West Texas Pipeline is accepting
NGL’s from the Benedum Plant, and the Chaparral and Quanah Pipelines are accepting NGL’s from
the Midkiff Plant. The parties recognize and acknowledge that the carrier Pipelines may
vary during the term of this Agreement.
	 
	Q.	 	“Plant(s)” shall mean the New Western Gas Resources
Operated Midkiff Gas Processing Plant located in Reagan County, Texas, and
the Benedum Gas Processing Plant located in Upton County, Texas.
	 
	R.	 	“Year” shall mean a period of three hundred sixty-five (365) consecutive Days; provided,
however, that any Year which contains three hundred sixty-six (366) consecutive Days shall
also constitute one “Year.”

     2. Term. This Agreement shall begin on the Effective Date, and shall be effective
until August 1, 2005, at which time this Agreement shall expire.

     3. Delivery by Pioneer, Acceptance by KHLP.

	A.	 	Quantity. Subject to the provisions herein, Pioneer shall deliver and sell to KHLP
at the Delivery Points all of the NGL’s that Pioneer and its Affiliates Own or Control from
the Benedum Plant and the Midkiff Plant, such volume of NGL’s estimated to be 2,000 Barrels
per Day and 6,800 Barrels per Day, respectively.
	 
	 	 	Subject to the other provisions herein, KHLP shall accept and purchase NGL’s from Pioneer
in accordance with this Agreement; provided, however, KHLP shall have the right to not
accept any NGL’s in excess of the Estimated Production as specified above in this Section
for each Plant upon providing notice of such to Pioneer. If, for any period of one hundred
and eighty (180) consecutive Days (excluding periods of Force Majeure),

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	 	 	Pioneer fails to deliver and sell to KHLP at least ninety percent (90%) of the
then-effective Estimated Production from each of the Plants, then KHLP shall have the
right, within thirty (30) Days of such 180 consecutive Day period, by providing written
notice to Pioneer, to reduce the then-effective Estimated Production for the Plant with
the deficiency to the average daily NGL’s volume actually delivered and sold to KHLP from
such Plant during such 180 consecutive Day period (excluding periods of Force Majeure).
Such reduction is to be effective as of the date of KHLP’s notice.
	 
	 	 	If the volume of Pioneer’s Owned NGL’s and Controlled NGL’s available to be delivered
hereunder from a Plant increases to a level which is in excess of the then-effective
Estimated Production for such Plant, then Pioneer may request an increase in the
then-effective Estimated Production to the volume of Owned NGL’s and Controlled NGL’s that
Pioneer estimates to be available from such Plant, which request will be in writing and
detail the basis for the increase or anticipated increase in volume. KHLP shall respond, in
writing, to Pioneer’s request within fifteen (15) Days of KHLP’s receipt of Pioneer’s
request. If KHLP declines to increase the then-effective Estimated Production for the Plant
at issue, then the volume of Owned NGL’s and/or Controlled NGL’s which is in excess of the
then-effective Estimated Production for such Plant shall be permanently released from this
Agreement, and Pioneer shall be free to dispose of such excess NGL’s from the Plant in any
manner deemed appropriate by Pioneer.
	 
	B.	 	Deliveries. Pioneer has installed, or shall cause to be installed, and shall
operate, or cause to be operated, at its sole cost and expense, any facilities or equipment
necessary to deliver the NGL’s to the Delivery Points. Pioneer shall deliver the NGL’s
meeting the quality specifications, temperature and pressure requirements of the Pipelines.
	 
	C.	 	Quality. Pioneer shall deliver NGL’s which (a) are merchantable, (b) meet the more
stringent of the Pipelines’ or KHLP’s standard specifications as such specifications may
change from time to time, and (c) are free from dust, free of entrained water, and other
impurity. KHLP and the Pipelines shall have the right, but not the obligation, to modify such
specifications to meet or conform to downstream market revisions or requirements. All NGL’s
shall be received subject to KHLP’s and the Pipelines’ inspection and rejection. If KHLP or
the Pipelines determine Pioneer has delivered NGL’s that has contaminated the common fungible
stream, KHLP and/or the Pipelines may treat or otherwise dispose of the contaminated stream in
any reasonable commercial manner at Pioneer’s sole expense. Pioneer shall indemnify, reimburse
and hold KHLP harmless from and against all claims, penalties, treating or blending fees,
losses, costs, expenses, liabilities or damages of any kind or nature (including reasonable
attorney’s fees and court costs associated therewith) (collectively “Losses”) arising out of
or related to Pioneer’s delivery hereunder of product not meeting the aforementioned quality
standards.
	 
	D.	 	Third Party NGL’s. KHLP recognizes that, from time to time, Pioneer, by virtue of
its agreements with owners of a Plant(s) or otherwise, may acquire title to or obtain the
right under operating, processing or similar agreements to sell NGL’s recovered from natural
gas belonging to third parties. To the extent Pioneer so acquires such right, and subject to
the foregoing provisions of this Section 3, Pioneer shall deliver and sell to KHLP such NGL’s
under the terms and conditions of this Agreement.

3

 

	E.	 	Marketing Agreements. Pioneer shall not enter into any agreement that would
require or allow any NGL’s which are Owned or Controlled by Pioneer or its Affiliates from
the Plants to be marketed by a party other than Pioneer unless that party agrees that all
such NGL’s shall be subject to this Agreement.

4. Purchase Price. For the NGL’s purchased hereunder, KHLP shall pay Pioneer a price equal
to the monthly average price per Gallon (for the Month of actual delivery) applicable to each
component of the NGL’s as posted by OPIS for Mt. Belvieu, Non-TET prices (including “Purity
Ethane”), MINUS (i) the greater of the Base Fractionation Fee or the Adjusted Base Fractionation
Fee, and (ii) a transportation fee equal to all the fees and charges of the Pipelines charged KHLP
for the transportation of NGL’s from the Delivery Points to the fractionatior operated by an
Affiliate of KHLP and located in or near Mt. Belvieu, Texas. Such fees and charges may include,
but not be limited to charges for off-spec NGL’s, loss allowances, and the tariff rate incurred by
KHLP in moving NGL’s through the Pipelines to Mt. Belvieu. An example of this pricing is set forth
in Exhibit A, for illustrative purposes only.

	A.	 	If OPIS, or its successor publication, ceases to be published, or if it ceases to publish the
prices used in determining the purchase price herein, then the price(s) no longer published in
OPIS or its successor publication shall, if available, be obtained from an alternative
industry publication (private or government) which publishes the same pricing
information. If the OPIS price is no longer available, then KHLP and Pioneer shall, within
sixty (60) Days of the first Day of the Month that the cessation occurred, agree upon an
alternative pricing mechanism which will reflect the fair market price of the NGL’s delivered
hereunder. The alternative pricing mechanism agreed upon shall apply retroactively to the
first Day of the Month that the posting terminated. If the parties cannot agree upon an
alternate pricing mechanism within the period stipulated above, then the issue of how the
price applicable hereunder should be calculated shall be submitted to arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration Association.
	 
	B.	 	Allowable Methane. The allowable methane contained in the NGL’s will be purchased as
ethane, as such methane is credited as ethane by the Pipelines.

     5. Base and Adjusted Base Fractionation Fees. The Base Fractionation Fee shall be one
and six-tenths cents (1.6¢) per Gallon of the NGL’s delivered hereunder. Commencing on the
Effective Date, and the beginning of each Month thereafter, the Base Fractionation Fee shall be
adjusted to equal the sum of the following two components (the “Adjusted Base Fractionation Fee”):

1. Sixty-seven hundredths of a cent (0.67¢) per Gallon for fuel gas, which shall be
determined by (i) dividing the price per MMBtu of natural gas reflected by the Monthly
Houston Ship Channel/Beaumont, Texas, index (applicable to the first Day of the Month —
large packages only), for each current Month of actual delivery, as published in Inside
F.E.R.C.’s Gas Market Report, by $3.50/MMBtu, and (ii) multiplying the resulting ratio by
0.67¢ per Gallon, and

2. A base fee of ninety-three hundredths of a cent (0.93¢) per Gallon.

4

 

Notwithstanding anything to the contrary, the Adjusted Base Fractionation Fee shall not be reduced
below the Base Fractionation Fee of 1.6¢ per Gallon.

     6. Other Fees, Quality Related Expenses. In addition to any other fees and charges
deducted from the purchase price, the parties agree that if any third party charges a fee for
receiving products attributable to the NGL’s purchased hereunder (whether in connecting pipelines
or in storage facilities), KHLP shall deduct from the purchase price due Pioneer hereunder an
amount equal to such charges. Pioneer shall reimburse KHLP for the expenses and costs incurred by
KHLP or charged KHLP by the Pipelines in treating and handling the NGL’s delivered hereunder that
do not meet the quality specifications contained in this Agreement. Such expenses and costs may
include, but not be limited to, blending costs, filters, and discounts in sales prices required to
market contaminated Products.

     7. Payments. KHLP shall pay Pioneer by the fifteenth (15th) of the
Month for the NGL’s delivered in the previous Month via KHLP’s Automated Clearinghouse (“ACH”)
payment process. Such payments will reflect the purchase price due Pioneer hereunder and any
deductions therefrom, which may include but not be limited to Quality Adjustment Fees, and other
charges due KHLP hereunder.

     8. Termination of Prior Agreements. Effective on the Effective Date, all
previous agreements between the parties pertaining to the purchase or exchange of NGL’s from the
Plants shall terminate and be superseded by this Agreement.

     9. Measurement, Sampling and Analysis. The measurement systems used to measure NGL’s
delivered hereunder at the Delivery Points and the determination of volumes delivered at the
Delivery Points shall be determined and implemented by the Pipelines, in accordance with their
tariffs.

     10. Inspection by KHLP & the Pipelines. NGL’s delivered hereunder shall be subject
to the Pipelines’ and KHLP’s inspection, and rejection if such NGL’s fail to meet the quality
standards required by this Agreement. The Failure of the Pipelines or KHLP to exercise its right of
refusal from time to time shall not constitute a waiver of such right.

     11. Records. Each party shall retain all accounting records and documents related to
this Agreement and prepared by such party for a period of not less than two (2) Years after the
origination date of the document. As a condition precedent to either party’s right to challenge the
correctness of any invoice or payment under this Agreement, the challenging party must, within two
(2) Years following the date of any such invoice or the date of any such payment, as the case may
be, notify the other party in writing of the basis for such challenge. With respect to all
invoices or payments for which such notice is not timely given, such invoices and payments shall be
conclusively presumed correct.

5

 

     12. Custody and Title. Control of, title, and risk of loss to the NGL’s shall
pass from Pioneer to KHLP and vest in KHLP at the inlet flange connection at the Delivery Points.
Upon acceptance of the NGL’s, KHLP will be deemed to have exclusive ownership and control of said
NGL’s and shall be responsible for any injuries or damages caused thereby, except to the extent
caused by the acts or omission of the Pipelines, Pioneer and/or their agents. Prior to delivery
at the Delivery Points, Pioneer will be deemed to have exclusive ownership and control of said
NGL’s and shall be responsible for any injuries or damages caused thereby, except to the extent
caused by the acts or omissions of KHLP and/or its agents.

     13. Warranties. Pioneer warrants title to the NGL’s delivered to KHLP hereunder
and the right to sell the same, and further warrants that all such NGL’s are, at the time of
delivery, free from all liens, encumbrances, taxes, charges and adverse claims. Pioneer agrees to
indemnify and hold KHLP harmless from and against any and all claims, causes of action, judgments
or liabilities brought by or awarded to third parties arising out of or connected with any
allegation that Pioneer or its Affiliates did not have title or the authority to sell such NGL’s.
Said indemnity includes payments of attorney’s fees and expenses incurred in defense of said
claims or causes of action.

     14. Taxes. Pioneer shall assume liability for, and pay all taxes, including all new
taxes or increases in existing taxes including excise taxes, and any superfund petroleum taxes (but
excluding net income, excess profits, or corporate franchise taxes) imposed by any governmental
authority upon the processing, manufacture, sale, use, delivery, or receipt of the NGL’s purchased
hereunder. Pioneer agrees to indemnify and hold KHLP harmless from and against any and all
claims, causes of action, proceedings, judgments, interest, penalties, fees or other liabilities
brought by or awarded to third parties arising out of or connected with any taxes to be paid by
Pioneer pursuant to this Section. Said indemnity includes payments of attorney’s fees and expenses
incurred in defense of said claims, proceedings or causes of action.

     15. Bankruptcy,
Receivership, Breach. If either party shall:

	A.	 	Voluntarily petition under or otherwise seek the benefit of any bankruptcy, reorganization,
arrangement or insolvency law; or
	 
	B.	 	Make a general assignment for the benefit of creditors, or
	 
	C.	 	Be adjudicated bankrupt or insolvent; or
	 
	D.	 	Allow a receiver or trustee of the business to be appointed; or
	 
	E.	 	Fail to perform any part of this Agreement (except where such failure is excused under the
terms of this Agreement) and, upon written notice of such failure by the other party, fail to
either remedy the same within thirty (30) Days of such notice or fail to take reasonable steps
within thirty (30) Days to remedy the same;

then, should any of the events listed in (A) through (E) above occur, this Agreement may be
terminated forthwith by written notice at the option of the other party with such other party
retaining all its other rights and remedies at law or equity.

6

 

     16. Attorney’s Fees. In the event of a lawsuit arising out of the performance of this
Agreement, the prevailing party shall be entitled to its reasonable attorney’s fees and court costs
for prosecuting or defending such action from the non-prevailing party.

     17. Force Majeure.

	A.	 	If either party is rendered unable by Force Majeure to carry out its obligations under this
Agreement (other than the obligation to make payments of monies due hereunder), then that
party shall give prompt written notice of the Force Majeure stating facts supporting such
claim of inability to perform. Thereupon, the obligation to deliver or receive the
quantities so affected shall be suspended during the continuation of an inability so caused,
but for no longer period, but this Agreement shall otherwise remain unaffected. The party
claiming Force Majeure shall use due diligence to remove the cause with all reasonable
dispatch; provided, however, that this provision shall not require the settlement of strikes,
lockouts, or other labor difficulty of the party involved, when such course is determined
inadvisable by the party having the difficulty.

	B.	 	The term “Force Majeure,” as employed herein, shall include strikes, lockouts, or other
industrial disturbances; wars, sabotage, blockades, insurrections, or acts of the public
enemy; epidemics, landslides, lightning, earthquakes, tornadoes, fires, storms, floods,
washouts, or other acts of God; arrests or restraints of governments and people: compliance
(voluntary or involuntary) with federal, state or local laws, rules or regulations, permits,
acts, orders, directives, requisitions, or requests of any official or agency of the federal,
state, or local governments; rationing of, shortages of, or inability to obtain or use any
material or equipment; riots or civil disturbances, fires, explosions. failures, disruptions,
breakdowns, or accidents to machinery, facilities, or lines of pipe (whether owned, leased or
rented); the testing, making repairs, performing maintenance, alterations, enlargements or
connections to machinery, facilities, or lines of pipe (whether owned, leased or rented); the
necessity to not operate, or to reduce the operation of, equipment to protect the safety of
the public and/or environment; freezing of lines; embargoes, priorities, expropriation, or
condemnation by government or governmental authorities; interference by civil or military
authorities; any inability to either tender or accept NGL’s that is caused by pipeline
prorationing or lack of capacity, and any cause which is not reasonably within the control of
the party, or its Affiliates, claiming suspension.

     18. Material Safety Data Sheets. Pioneer shall supply KHLP on a timely basis with
Material Safety Data Sheets (MSDS) on the NGL’s, which MSDS shall be complete and accurate in
disclosing risks and dangers of the NGL’s and of the handling, transporting and processing the
same.

     19. KHLP’s System Shutdown. If, in the sole judgment of KHLP or its Affiliates, the
continued operation of a portion of, or all, of KHLP’s or its Affiliate’s system becomes
uneconomic, then KHLP shall have the right to shut down such uneconomic portion of its system on at
least ninety (90) Days prior written notice to Pioneer. For purposes of this Section, this

7

 

includes all NGL pipelines, fractionation facilities, loading or unloading facilities, or
other physical facilities (directly or indirectly) utilized in the performance of this
Agreement that are owned by KHLP or its Affiliates. If KHLP shuts down its entire system,
this Agreement shall terminate. If KHLP shuts down only a portion of its system, KHLP shall
have the right, to be exercised by written notice given to Pioneer within thirty (30) Days
after KHLP notifies Pioneer of the shut down, to continue to receive any NGL’s affected by
the shut down through other existing portions of KHLP’s System or new portions of KHLP’s
System to be built or acquired (the “Alternate Facilities”), and this Agreement shall
continue in full force and effect as to all unaffected volumes of NGL’s and as to any volumes
of NGL’s which KHLP notifies Pioneer it will continue to receive through the Alternate
Facilities. If the conditions set forth above are met, KHLP shall begin utilizing its
Alternate Facilities as soon as is reasonably practicable after notifying Pioneer that it
will shut down a portion of its system.

     20. Notices. Written notices, demands and statements shall be directed as
follows:

	 	 	 
	KHLP:	 	Pioneer:
	Koch Hydrocarbon, LP

	 	Pioneer Natural Resources USA, Inc.
	4111 East 37th Street North

	 	1400 Williams Square West
	Wichita, KS 67201

	 	5205 N. O’ Conner Blvd.
	Attn: NGL Accounting

	 	Irving, TX 75039-3746
	Telephone: (316)828-2247
	 	 
	Fax: (316)828-7972
	 	 
	E-mail: bagbyd@kochind.com
	 	 

Notices, demands, and statements shall be deemed received the Day after the Day of mailing if mailed by United States express or
certified mail, return receipt requested, and, in all other cases, deemed received upon actual Day of delicery or, if transmitted by
facsimile, on the Day the transmission is sent, if sent during normal business hours. Either party may change its address shown above
by notifying the other party, in writing, of such change in accordance with this Section. Invoices may be delivered via United
States mail, facsimile, E-mail, or other means, at KHLP’s discertion.

     21. Laws. This Agreement is in all respect subject to all federal, state and local laws and all directives, regulations and orders
issued or published by any federal, state and local boards, commission or agency, but nothing contained herein shall be construed
as a waiver of any right to question or contest any such order, law, rule or regulation. The parties shall be entitled to regard
all such laws, rules, regulations and orders as valid and may act in accordance therewith until such time as the same may be invalidated
by final judgment in a court of competent jurisdiction.

     22. Entire Agreement. This Agreement sets forth the final and complete agreement between the parties
with respect to this subject matter and supersedes all prior contracts, understandings, negotiations and dealings between the parties with
respect to this subject matter.

8

 

     23. Amendments. No modification of, addition to, or waiver of any of the terms of
this Agreement shall be binding upon either party unless in writing and signed by an authorized
representative of such party.

     24. Interpretation. Neither course of performance, nor course of dealing, nor usage
of trade shall be used to qualify, explain or supplement any of the terms of this Agreement.

     25. Governing Law. THIS AGREEMENT SHALL BE GOVERNED EXCLUSIVELY ACCORDING TO THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO ITS PRINCIPLES REGARDING
CONFLICTS OF LAWS.

     26. Assignment. The rights and obligations of this Agreement shall bind and inure
to the respective successors and assigns of the parties hereto. However, any assignment or
attempted assignment, except to an Affiliate, shall be void without the prior written consent of
the other Party, which consent shall not be unreasonably withheld, conditioned, delayed or denied
except for reasons which may include, but not be limited to the creditworthiness of the assignee.
Pioneer further agrees that it and its Affiliates will not sell or assign their interest in the
NGL’s subject to this Agreement or the Plants unless (i) they first obtain KHLP’s prior written
consent to such sale or assignment, which shall not be unreasonably withheld or delayed; (ii)
contemporaneously with such sale or assignment, this Agreement is assigned to such assignee; and
(iii) the buyer or assignee agrees, in a writing executed by an authorized representative of the
buyer or assignee and delivered to KHLP, that the NGL’s so sold or assigned shall be bound to, and
subject to this Agreement.

     27. Waiver. No waiver by either party of any breach by the other party of any of the
terms of this Agreement shall be construed as a waiver of any subsequent breach, whether of the
same or of a different term of Agreement.

     28. Headings and Sections. All references to “Sections” herein pertain to Sections of
this Agreement, unless expressly stated otherwise. Headings are for purposes of reference only
and shall not be used to construe the meaning of this Agreement.

     29. No Third Party Beneficiary. This Agreement is for the sole benefit of the
parties hereto and their respective successors and permitted assigns, and shall not inure to the
benefit of any other person whomsoever, it being the intention of the parties that no third
parties, other than Affiliates of the parties hereto, shall be deemed a third party beneficiary of
this Agreement or otherwise have any rights hereunder.

     30. No Partnership or Association. Nothing contained in this Agreement shall
be construed to create an association, trust, partnership, or joint venture or impose a trust or
partnership duty, obligation, or liability on or with regard to either party.

     31. Exhibits. Exhibit A, attached hereto, is hereby incorporated and made a part
of this Agreement.

9

 

     32. Joint Action. The parties acknowledge and agree that the language used in this
Agreement shall be deemed to be chosen by the joint action of the parties hereto to express their
mutual intent, and no rule of strict construction against any one party shall be applied hereto.

     33. Safe Handling. KHLP reserves the sole right (i) to reject any trucks or pipelines
presented for loading/unloading which would present an unsafe or potentially unsafe situation, and
(ii) to refuse to load/unload, transfer, or handle any NGL’s under any conditions it deems unsafe,
which is caused by, including without limitation, drivers, personnel, equipment, procedures,
and/or weather conditions.

     34. KHLP’s Safety Regulations. With regards to NGL’s delivered by Pioneer, its
customer or agent to KHLP’s facilities (if any), Pioneer agrees that it and its customers, agents
and employees will comply with KHLP’s safety regulations and rules when on KHLP’s premises. Pioneer
shall indemnify, defend and hold KHLP harmless from and against any and all liability occurring
from or arising out of any non-compliance with such safety regulations and rules or the negligence
of Pioneer, its agents or customers. If applicable, KHLP shall have the right to require Pioneer,
its agents and/or customers to execute an access agreement with KHLP for truck loading.

     35. Use of Products. Pioneer acknowledges the hazards associated with the
handling, storage, transportation, use, misuse, disposal or subsequent processing (the “Use”) of
the NGL’s and assumes the responsibility of advising those of its employees, agents, contractors,
and customers, who shall use, work or come in contact with the NGL’s, of the hazards to human
health or human or environmental safety, whether such NGL’s are used singly or in combination with
other substances or in any processes or otherwise. Pioneer shall indemnify, defend and hold KHLP
harmless from and against any and all liability occurring from or arising out of a breach of
Pioneer’s obligations under this Section and from and against claims, demands or cause of action
for personal injury, damage to the environment or property arising from or attributable to the
Pioneer’s Use of the NGL’s.

     36. Alternative Connections. Notwithstanding anything to the contrary contained
herein, if any or all of the Plants are shut down or the natural gas and NGL’s previously being
processed in a particular Plant are diverted to another gas plant(s), KHLP (or its Affiliate) shall
have the right, at its option, to connect to the new gas plant(s) in order to receive the NGL’s
Pioneer or its Affiliates Own or Control that would have otherwise been extracted at the Plant. In
the event of such a diversion, Pioneer shall, within thirty (30) Days prior to such diversion,
notify KHLP of the diversion. If KHLP wishes to exercise its option, it shall so notify Pioneer,
within thirty (30) Days of its receipt of Pioneer’s notice, of KHLP’s intent (or its Affiliate’s)
to so connect to the new gas plant(s), and shall, at KHLP’s (or its Affiliate’s) own cost and
expense, connect the new gas plant(s) as soon as is reasonably practicable. Upon such connection,
the NGL’s Owned or Controlled by Pioneer or its Affiliates which were diverted from the Plant and
produced at such new gas plant(s) shall be delivered, purchased and sold under the terms and
conditions of this Agreement. If KHLP (or its Affiliate) does not so connect the new gas
plant(s), the NGL’s Owned or Controlled by Pioneer or its Affiliates which are produced at such new
gas plant(s) shall be released from this Agreement. Provided, however, NGL’s which are diverted to
another gas plant connected and flowing NGL’s to KHLP, its Affiliate, or to a

10

 

Pipeline which has the capability to deliver NGL’s to Mt. Belvieu, or deliver to
other Pipelines which may deliver NGL’s to Mt. Belvieu, shall continue to be
delivered hereunder pursuant to the terms and conditions of this Agreement. The
interconnection between KHLP’s, its Affiliate’s, or the alternate Pipelines’
facilities and the new gas plant’s facilities shall be deemed an additional Delivery
Point under this Agreement.

     IN WITNESS WHEREFORE, the undersigned parties have executed this Agreement in
duplicate originals as of date first set forth above.

	 	 	 	 	 	 	 	 	 
	PIONEER:	 	 	 	KHLP:	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	PIONEER NATURAL RESOURCES USA, INC.	 	 	 	KOCH HYDROCARBON, LP
	 	 	 	 	 	 	By: NGL/GP, LLC, its General Partner
	 
	 	 	 	 	 	 	 	 
	By:

	/s/ Hershal K. Wolfe
	 	 	 	By:
	/s/ Kurt Burmeister
	 

	 
	 	 	 	 	 
	Printed Name:

	Hershal K. Wolfe
	 	 	Printed Name:
	Kurt Burmeister
	Title: 

	Director — Marketing
	 	 	 	Title:
	Vice President

11

 

EXHIBIT “A”

PRICE

The following, for illustrative purposes only, is an example of the pricing
computations in Section 5., Base and Adjusted Fractionation Fees.

Assume Pioneer delivers to KHLP 5,000 barrels of NGL’s hereunder in a particular
Month, with such volumes containing the following hydrocarbons and
non-hydrocarbons, as determined pursuant to the Delivery Point analysis of such
NGL’s. Further assume the corresponding components attributable to such NGL’s will
be priced as follows in this example (for illustrative purposes only). The prices
listed are the monthly average OPIS prices for each respective component, as
further specified in this Agreement (such prices may or may not approximate the
actual OPIS prices).

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	%	 	Volume	 	 	 	 	 	Methane	 	 	 	 	 	Less Gathering	 	Amount
	 	 	Composition	 	Bbls.	 	Gals.	 	Gals.*	 	Price**	 	Fee***	 	Payable
	Methane
	 	 	1.50	%	 	 	75	 	 	 	3150	 	 	 	1380	 	 	$	0.1675	 	 	$	0.0160	 	 	$	209.02	 
	CO2
	 	 	2.80	%	 	 	140	 	 	 	5880	 	 	 	 	 	 	 	N/A	 	 	 	N/A	 	 	 	N/A	****
	Ethane
	 	 	43.80	%	 	 	2190	 	 	 	91980	 	 	 	 	 	 	$	0.1675	 	 	$	0.0160	 	 	$	13,934.97	 
	Propane
	 	 	23.30	%	 	 	1165	 	 	 	48930	 	 	 	 	 	 	$	0.4175	 	 	$	0.0160	 	 	$	19,645.40	 
	Iso Butane
	 	 	7.00	%	 	 	350	 	 	 	14700	 	 	 	 	 	 	$	0.3675	 	 	$	0.0160	 	 	$	5,167.05	 
	Normal Butane
	 	 	8.10	%	 	 	405	 	 	 	17010	 	 	 	 	 	 	$	0.3675	 	 	$	0.0160	 	 	$	5,979.02	 
	Gasoline (C5+)
	 	 	13.50	%	 	 	675	 	 	 	28350	 	 	 	 	 	 	$	0.3675	 	 	$	0.0160	 	 	$	9,965.03	 
	 
	Total
	 	 	100.00	%	 	 	5,000	 	 	 	210,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	54,900.48	 

In this example, the “Amount Payable” is the gross payment due before the
deduction of any additional applicable fees and charges, which might
include, but not be limited to any applicable charges from the Pipelines.

 

			
	*	 	Estimate of the Pipelines’ allowance.
	 
	**	 	The price is determined by reference to the Monthly high and low
average OPIS postings, for the same Month in which the NGL stream was
actually delivered.
	 
	***	 	The Fractionation Fee is used in this example before adjustment and
escalation for fuel gas costs in Section 5.
	 
	****	 	KHLP is not obligated to pay for CO2 or other non-hydrocarbon substances.

 

 

AMENDMENT

     THIS AMENDMENT is made as of this 9th day of February, 2005, by and between
PIONEER NATURAL RESOURCES USA, INC., (“Pioneer”), and KOCH HYDROCARBON, LP (“KHLP”).

     WHEREAS, under that certain Natural Gas Liquids Purchase Agreement dated March 26, 2003 (the
“Agreement”), Pioneer sells and KHLP purchases certain volumes of natural gas liquids that
originate from the Midkiff and Benedum Plants as described therein; and,

     WHEREAS, said parties desire to amend the Agreement as hereinafter set forth.

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties mutually agree to amend the Agreement as follows in this
Amendment.

	1.	 	Section 2, Term, of the Agreement shall be deleted in its entirety, and the
following substituted in lieu thereof:

“2.
Term. This Agreement shall begin on the Effective Date, and shall be
effective until March 1, 2008, at which time this Agreement shall expire.”

	2.	 	Effective March 1, 2005, Section 5, Base and
Adjusted Base Fractionation Fees, shall
be deleted in its entirety, and the following substituted in lieu thereof:

     “5. Base and Adjusted Base Fractionation Fees. The
Base Fractionation Fee shall be one and five-tenths cents (1.5¢) per Gallon of the
NGL’s delivered hereunder. Commencing March 1, 2005, and the beginning of each
Month thereafter, the Base Fractionation Fee shall be adjusted to equal the sum of
the following two components (the “Adjusted Base Fractionation Fee”):

1. Seventy hundredths of a cent (0.70¢) per Gallon for fuel gas, which
shall be redetermined by (i) dividing the price per MMBtu of natural
gas reflected by the Monthly Houston Ship Channel/Beaumont,
Texas, index (applicable to the first Day of the Month — large packages
only), for each current Month of actual delivery, as published in Inside
F.E.R.C.’s Gas Market Report, by $3.50/MMBtu, and (ii) multiplying the
resulting ratio by 0.70¢ per Gallon, and

2. A base fee of eighty hundredths of a cent (0.80¢) per Gallon.

 

 

Notwithstanding anything to the contrary, the Adjusted Base Fractionation
Fee shall not be reduced below the Base Fractionation Fee of 1.5¢ per
Gallon.”

     This Amendment shall be effective as of the date first above written. Except as hereby
amended, the Agreement shall remain in full force and effect. Capitalized terms not otherwise
defined herein shall have the respective meanings assigned to such terms by the Agreement.

     IN WITNESS WHEREOF, the parties have executed this Amendment the day and year first above
written.

	 	 	 	 	 	 	 	 	 
	PIONEER:	 	 	 	KHLP:
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	PIONEER NATURAL RESOURCES USA, INC.	 	 	 	KOCH HYDROCARBON, LP
	 	 	 	 	 	 	By: NGL/GP, LLC, its General Partner
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Hershal K. Wolfe
	 	 	 	By:
	 	/s/ Steve Tatum
	 

	 	 
	 	 	 	 	 	 
	Printed Name: Hershal K. Wolfe

	 	 	 	Printed Name: Steve Tatum

	Title: Director of Marketing

	 	 	 	Title: President

2exv10w11

 

EXHIBIT 10.11

	 	 	 	 	 
	

	 	TEPPCO CRUDE OIL, LLC

100 N. BROADWAY, SUITE 2500

OKLAHOMA CITY, OK 73102

PHONE: (405) 239-7191

FAX: (405) 232-1815
	 	 

	 	 	 	 	 	 	 
	DATE OF CONTRACT:

	 	02/04/99
	 	TEPPCO
CRUDE OIL CONTRACT # P-990187
	 	 
	 

	 	 	 	TEPPCO CRUDE OIL CONTACT: GREG HAMBRICK	 	 
	 

	 	 	 	CUSTOMER CONTRACT #:	 	 

	 	 	 
	ATTN:

	 	NECIE TERRELL

 PIONEER NATURAL RESOURCES, INC.

 POST OFFICE BOX 3178

MIDLAND, TEXAS 79702-3178

PHONE: (915) 683-4768

 FAX: (915) 571-5062

THIS
AGREEMENT IS MADE BETWEEN TEPPCO CRUDE OIL, LLC (“TEPPCO CRUDE OIL ”) AND PIONEER NATURAL
RESOURCES, INC. (“PIONEER”) WHEREBY PIONEER AGREES TO SELL AND DELIVER AND TEPPCO CRUDE OIL
AGREES TO PURCHASE AND RECEIVE CRUDE OIL AND CONDENSATE UNDER THE TERMS AND CONDITIONS SET
FORTH HEREIN.

PIONEER’S SALE AND DELIVERY TO TEPPCO CRUDE OIL

	 	 	 
	QUALITY:

	 	WEST TEXAS INTERMEDIATE CRUDE OIL
	 
	 	 
	QUANTITY:

	 	EQUAL TO LEASES LISTED ON
ATTACHMENT I. APPROXIMATELY 700 BARRELS PER DAY
	 
	 	 
	DELIVERY:

	 	1) INTO TEPPCO CRUDE PIPELINE, AT THE LEASE
	 
	 	 
	 

	 	2) INTO TEPPCO CRUDE OIL TRUCKS, AT THE LEASE
	 
	 	 
	“PRICE:

	 	1) KOCH OIL COMPANY’S WEST TEXAS INTERMEDIATE POSTED PRICE PLUS PLATT’S P-PLUS, PLUS OR
MINUS PLATT’S MIDLAND DIFFERENTIAL MINUS THIRTY-SEVEN CENTS PER BARREL (-$0.37) PER BARREL
GATHERING AND HANDLING
	 
	 	 
	 

	 	2) KOCH OIL COMPANY’S WEST TEXAS INTERMEDIATE POSTED PRICE PLUS PLATT’S P-PLUS,
PLUS OR MINUS PLATTS MIDLAND DIFFERENTIAL MINUS FORTY-FOUR CENTS PER. BARREL
(-$0.44) PER BARREL GATHERING AND HANDLING
	 
	 	 
	 

	 	*THE P-PLUS VALUE WILL BE THE MEAN OF THE DAILY AVERAGE OF PLATT’S POSTING
PLUS WTJ PRICES QUOTED IN PLATT’S OILGRAM FROM THE 26TH OF THE MONTH TWO MONTHS
PRIOR TO THE MONTH OF DELIVERY THROUGH THE 25TH OF THE MONTH ONE MONTH PRIOR TO
DELIVERY (EXCLUDING WEEKENDS [ILLEGIBLE]).
	 
	 	 
	*TERM:

	 	COMMENCING JULY 1,1998, THROUGH JUNE 30,2001, THEREAFTER MONTH TO MONTH UNTIL
EITHER PARTY PROVIDES THIRTY (30) DAYS ADVANCE WRITTEN NOTICE OF CANCELLATION
	 
	 	 
	*PAYMENT:

	 	PURCHASER WILL PAY SELLER BASED ON SELLER’S 100% INDEMNIFYING DIVISION ORDER,
LESS TAXES. FUNDS WILL BE WIRED ON THE 20TH OR THE MONTH FOLLOWING DELIVERY TO BANK OF
SELLER’S CHOICE. IF PAYMENT DUE DATE FALLS ON A SUNDAY OR MONDAY BANKING HOLIDAY,
PAYMENT WILL BE EFFECTED ON THE FOLLOWING BUSINESS DAY. IF PAYMENT DUE DATE FALLS ON A
SATURDAY OR A BANKING HOLIDAY OTHER THAN A MONDAY, PAYMENT WILL BE EFFECTED ON THE
PRECEDING DAY.
	 
	 	 
	*SPECIAL 

PROVISIONS:

	 	

1) THE CONTRACT STIPULATES THAT TEPPCO CRUDE OIL WILL PAY PIONEER ON THE BASIS OF
ITS 100% DIVISION ORDER, LESS TAXES. TEPPCO CRUDE OIL AGREES TO HOLD THE BASIC DIVISION ORDER
AND DISBURSE TO THE INTEREST OWNERS AT PIONEER’S REQUEST, PROVIDED THAT BOTH PARTIES
MUTUALLY AGREE TO A FEE FOR THIS SERVICE.
	 
	 	 
	 

	 	2) PIONEER MAY, WITH ADEQUATE NOTICE TO TEPPCO CRUDE OIL, ELECT TO CHANGE THE PRICING
BASIS FROM THE “PLATT’S P-PLUS” FORMULA TO ANOTHER FORMULA MUTUALLY AGREEABLE TO BOTH
PARTIES. IN ANY CA THE TRANSPORTATION RATES STIPULATED IN THIS CONTRACT WILL NOT
CHANGE OVER THE SPECIFIED TERM.

GENERAL TERMS AND CONDITIONS — ALL OTHER TERMS AND CONDITIONS NOT SPECIFICALLY STATED SHALL BE
GOVERNED BY CONOCO, INC’S GENERAL PROVISIONS DATED JANUARY 1,1993, INCORPORATED HEREIN BY REFERENCE
AND MADE A PART HEREOF.

TEPPCO CRUDE OIL, LLC

100 N. BROADWAY, SUITE 2500

 OKLAHOMA CITY, OK 73102

 FAX: (405) 232-1815

THIS
INSTRUMENT CONTAINS THE COMPLETE AGREEMENT OF BOTH PARTIES AND CANNOT
BE MODIFIED UNLESS IN
WRITING. THIS FAXED COMMUNICATION WILL SERVE AS THE FORMAL CONTRACT. PLEASE EXECUTE YOUR AGREEMENT
BY RETURN FAX (405) 232-1815 TO TEPPCO CRUDE OIL, LLC, ATTN: KYLE LAFFOON, WITHIN FIVE (5)
BUSINESS DAYS.

TEPPCO CRUDE OIL, LLC

BY
/s/ Sam Brown        

                            

     SAM BROWN

     VICE PRESIDENT

PIONEER NATURAL RESOURCES, INC.

BY: /s/
Hershal K. Wolfe          

                            

TITLE: DIRECTOR OF MARKETING

DATE: 9/20/99

 

 

	 	 	 	 	 	 	 	 	 
	TEPPCO	 	 	 	 	 	 	 	 
	LSE # 	 	LEASE NAME	 	CNTY/TX	 	PRICE CODE	 	EFF. DATE
	 
	16123
	 	MURRAY L #1	 	MIDLAND	 	1	 	1/1/99
	16124
	 	MURRAY J	 	MIDLAND	 	1	 	1/1/99
	16125
	 	GOLLADAY S	 	MIDLAND	 	1	 	1/1/99
	16144
	 	BUCHANAN R  # 2	 	MIDLAND	 	1	 	1/1/99
	16145
	 	BEAL SNYDER HEIRS #3	 	MIDLAND	 	1	 	1/1/99
	16146
	 	FASKEN K # 2	 	MIDLAND	 	1	 	1/1/99
	16164
	 	BRANHAM	 	MIDLAND	 	1	 	1/1/99
	16165
	 	FRANKLIN C	 	MIDLAND	 	1	 	1/1/99
	16166
	 	GOLLADAY	 	MIDLAND	 	1	 	1/1/99
	16167
	 	GOLLADAY D	 	MIDLAND	 	1	 	1/1/99
	16168
	 	BUCHANAN  F	 	MIDLAND	 	1	 	1/1/99
	16171
	 	ROBERSON E	 	MIDLAND	 	1	 	1/1/99
	16182
	 	FASKEN G	 	MIDLAND	 	1	 	1/1/99
	16184
	 	TXL B	 	MIDLAND	 	1	 	1/1/99
	16194
	 	CRAWFORD F	 	MIDLAND	 	1	 	1/1/99
	16214
	 	TXL -C-	 	MIDLAND	 	1	 	1/1/99
	43502
	 	FASKEN H	 	MIDLAND	 	1	 	1/1/99
	43612
	 	FASKEN O	 	MIDLAND	 	1	 	1/1/99
	43760
	 	TEXAS TEN B	 	MIDLAND	 	2	 	1/1/99
	43761
	 	TEXAS TEN D	 	MIDLAND	 	2	 	1/1/99
	43762
	 	TEXAS TEN E	 	MIDLAND	 	2	 	1/1/99
	43763
	 	TEXAS TEN F	 	MIDLAND	 	2	 	1/1/99
	43764
	 	TEXAS TEN H	 	MIDLAND	 	2	 	1/1/99
	43765
	 	TEXAS TEN I	 	MIDLAND	 	2	 	1/1/99
	43766
	 	TEXAS TEN L	 	MIDLAND	 	2	 	1/1/99
	43767
	 	TEXAS TEN M	 	MIDLAND	 	2	 	1/1/99
	43768
	 	TEXAS TEN N	 	MIDLAND	 	2	 	1/1/99
	43769
	 	TEXAS TEN O	 	MIDLAND	 	2	 	1/1/99
	43770
	 	TEXAS TEN P	 	MIDLAND	 	2	 	1/1/99
	43771
	 	TEXAS TEN Q	 	MIDLAND	 	2	 	1/1/99
	43772
	 	BRADFORD A #1	 	MIDLAND	 	2	 	1/1/99
	43773
	 	BRADFORD  E &  I	 	MIDLAND	 	2	 	1/1/99
	43775
	 	BRADFORD K 1 & 2	 	MIDLAND	 	2	 	1/1/99
	43777
	 	BRADFORD N	 	MIDLAND	 	2	 	1/1/99
	43778
	 	BRADFORD #1	 	MIDLAND	 	2	 	1/1/99
	43779
	 	TEXAS TEN	 	MIDLAND	 	2	 	1/1/99

PRICE CODE:

         1     KOCH WTI + PLATT’S MIDLAND P+ AVG LESS $0.37

         2     KOCH WTI + PLATT’S MIDLAND P+ AVG LESS $0.44

 

 

			
	 	 	 
	TEPPCO CRUDE OIL, LLC
	 	PIONEER NATURAL RESOURCES
	ATTACHMENT I
	 	CONTRACT NO. P-990187
	 
	 	CONTRACT DATED: FEBRUARY 3, 1999

	 	 	 	 	 	 	 	 	 
	TEPPCO	 	 	 	 	 	 	 	 
	LSE #	 	LEASE NAME	 	CNTY/TX	 	PRICE CODE	 	EFF. DATE
	 
	16008
	 	BRYANT B	 	MIDLAND	 	1	 	1/1/99
	16014
	 	WINKLEMAN	 	MIDLAND	 	1	 	1/1/99
	16021
	 	WILLIS B	 	MIDLAND	 	1	 	1/1/99
	16022
	 	WINKLEMAN B	 	MIDLAND	 	1	 	1/1/99
	16025
	 	MRS. O.P. BUCHANAN, ETAL	 	MIDLAND	 	1	 	1/1/99
	16026
	 	FASKEN C	 	MIDLAND	 	1	 	1/1/99
	16027
	 	O.P. BUCHANAN	 	MIDLAND	 	1	 	1/1/99
	16028
	 	O.P. BUCHANAN A	 	MIDLAND	 	1	 	1/1/99
	16029
	 	O.P. BUCHANAN B	 	MIDLAND	 	1	 	1/1/99
	16030
	 	O.P. BUCHANAN C	 	MIDLAND	 	1	 	1/1/99
	16031
	 	FASKEN A/MURAY K UNIT	 	MIDLAND	 	1	 	1/1/99
	16033
	 	GOLLADAY C	 	MIDLAND	 	1	 	1/1/99
	16035
	 	GOLLADAY A	 	MIDLAND	 	1	 	1/1/99
	16036
	 	GOLLADAY B	 	MIDLAND	 	1	 	1/1/99
	16037
	 	GOLLADAY C-2	 	MIDLAND	 	1	 	1/1/99
	16038
	 	HUTT A	 	MIDLAND	 	1	 	1/1/99
	16039
	 	HUTT	 	MIDLAND	 	1	 	1/1/99
	16040
	 	FASKEN E	 	MIDLAND	 	1	 	1/1/99
	16041
	 	FASKEN F	 	MIDLAND	 	1	 	1/1/99
	16043
	 	TXL A	 	MIDLAND	 	1	 	1/1/99
	16044
	 	HUTT B	 	MIDLAND	 	1	 	1/1/99
	16045
	 	HUTT C	 	MIDLAND	 	1	 	1/1/99
	16046
	 	HUTT D	 	MIDLAND	 	1	 	1/1/99
	16047
	 	WINKLEMAN	 	MIDLAND	 	1	 	1/1/99
	16048
	 	GOLLADAY I	 	MIDLAND	 	1	 	1/1/99
	16049
	 	GOLLADAY K	 	MIDLAND	 	1	 	1/1/99
	16050
	 	GOLLADAY J	 	MIDLAND	 	1	 	1/1/99
	16051
	 	BEAL SNYDER B & C	 	MIDLAND	 	1	 	1/199
	16052
	 	FASKEN I	 	MIDLAND	 	1	 	1/1/99
	16053
	 	OLDHAM A	 	MIDLAND	 	1	 	1/1/99
	16054
	 	OLDHAM	 	MIDLAND	 	1	 	1/1/99
	16057
	 	OLDHAM B	 	MIDLAND	 	1	 	1/1/99
	16058
	 	ROBERSON A	 	MIDLAND	 	1	 	1/1/99
	16059
	 	FASKEN J	 	MIDLAND	 	1	 	1/1/99
	16060
	 	FASKEN K	 	MIDLAND	 	1	 	1/1/99
	16061
	 	FASKEN L	 	MIDLAND	 	1	 	1/1/99
	16062
	 	FASKEN N	 	MIDLAND	 	1	 	1/1/99
	16064
	 	EVANS B	 	MIDLAND	 	1	 	1/1/99
	16065
	 	EVANS C	 	MIDLAND	 	1	 	1/1/99
	16068
	 	BUCHANAN H	 	MIDLAND	 	1	 	1/1/99
	16070
	 	FRANK	 	MIDLAND	 	1	 	1/1/99
	16071
	 	ROBERSON D	 	MIDLAND	 	1	 	1/1/99
	16074
	 	CRAWFORD C	 	MIDLAND	 	1	 	1/1/99
	16075
	 	CRAWFORD A	 	MIDLAND	 	1	 	1/1/99
	16076
	 	SALLY	 	MIDLAND	 	1	 	1/1/99
	16077
	 	SALLY A	 	MIDLAND	 	1	 	1/1/99
	16078
	 	SALLY B	 	MIDLAND	 	1	 	1/1/99
	16079
	 	SALLY C	 	MIDLAND	 	1	 	1/1/99
	16080
	 	BEAL SNYDER G	 	MIDLAND	 	1	 	1/1/99
	16081
	 	BERMAN A & B	 	MIDLAND	 	1	 	1/1/99
	16082
	 	WILLIS D	 	MIDLAND	 	1	 	1/1/99
	16083
	 	MCALISTER P	 	MIDLAND	 	1	 	1/1/99
	16091
	 	BRANHAM A # 1	 	MIDLAND	 	1	 	1/1/99
	16092
	 	WILLIS  E	 	MIDLAND	 	1	 	1/1/99
	16093
	 	BEAL SNYDER H	 	MIDLAND	 	1	 	1/1/99
	16097
	 	BRIDGEWATER B 1 & 2	 	MIDLAND	 	1	 	1/1/99
	16098
	 	CRAWFORD J	 	MIDLAND	 	1	 	1/1/99
	16101
	 	LAY B	 	MIDLAND	 	1	 	1/1/99
	16102
	 	MCALISTER R	 	MIDLAND	 	1	 	1/1/99
	16103
	 	WILLIS A	 	MIDLAND	 	1	 	1/1/99
	16106
	 	WILLIS F	 	MIDLAND	 	1	 	1/1/99
	16108
	 	CRAWFORD K & L	 	MIDLAND	 	1	 	1/1/99
	16109
	 	MCALISTER “S”	 	MIDLAND	 	1	 	1/l/99
	16111
	 	TINNEY	 	MIDLAND	 	1	 	1/1/99
	16112
	 	WINKLEMAN “C”	 	MIDLAND	 	1	 	1/1/99
	16113
	 	CRESPI Q	 	MIDLAND	 	1	 	1/1/99
	16114
	 	FASKEN Z	 	MIDLAND	 	1	 	1/1/99
	16115
	 	CRESPI S	 	MIDLAND	 	1	 	1/1/99
	16116
	 	CASSIDY B & C	 	MIDLAND	 	1	 	1/1/99
	16117
	 	BEAL SNYDER F # 2	 	MIDLAND	 	1	 	1/1/99
	16120
	 	BUCHANAN V	 	MIDLAND	 	1	 	1/l/99
	16121
	 	GOLLADAY Q	 	MIDLAND	 	1	 	1/1/99
	16122
	 	BUCHANAN W	 	MIDLAND	 	1	 	1/1/99

 

 

	 	 	 
	

	 	210 [ILLEGIBLE], Suite 1800
	 	Oklahoma City, OK 73102
	 	Phone: (405) 239-7191
	 	FAX: (405) 502-1251

	 	 	 
	October 26, 2008

	 	TEPPCO Contact: Laynce Nix  

TEPPCO Contract #: PNR-P06118065-W

Pioneer Natural Resources, USA, Inc. Contract #: OIL-10570
	 

	 	(Please
Supply)

	 	 	 
	Company:

	 	Pioneer Natural Resources, USA, Inc.
	Marketer:

	 	Deb Stewart
	 

	 	P.O. Box 3178
	 

	 	Midland, TX 79702
	 
	 	 
	FAX Number:

	 	(972) 969-3587

Pioneer’s Sale and Delivery to TCO

This agreement (“Original Agreement”) is made between TEPPCO Crude Oil, L.P, (“TCO”)
and Pioneer Natural Resources, USA, Inc. (“Pioneer”) whereby Pioneer agrees to sell
and deliver and TCO agrees to purchase and receive crude oil and/or condensate under
the terms and conditions set forth herein:

	 	 	 
	1. Quality:

	 	West Texas Intermediate Crude Oil
	 
	 	 
	2. Quantity:

	 	Equal to leases listed on Exhibit A
	 
	 	 
	3. Delivery:

	 	Into TEPPCO trucks or pipeline, at the lease
	 
	 	 
	4. Price:

	 	ConocoPhillips Company’s West
Texas Intermediate Crude Oil Posted Price deemed 40°
gravity and
deemed delivered in equal daily quantities plus the average of the daily high and low
quotes for WTI P-Plus for the month of delivery in Platt’s Crude Oil Market Wire “Crude
Price Assessments” based on pricing assessed for the days the U.S. crude market is open
(weekends and U.S. holidays excluded) during the period beginning with the 26th day of
the month that is two months prior to the month of delivery through and including the
25th day of the month that is immediately prior to the month of delivery, provided,
however, that if the first day of the period falls on a day on which the U.S. crude oil
market is closed, the period shall begin on the first trading day thereafter, and if the
last day of the period falls on a day on which the U.S. crude oil market is closed, the
period shall end on the last trading day prior thereto, minus the Platt’s WTI (Midland)
vs WTI (Cushing) differential based on the same reported period minus twenty-five cents
($0.25) per barrel.
	 
	 	 
	5. Term:

	 	Commencing November 1, 2006 through April 30, 2007, thereafter month to month until
either party provides thirty (30) days advance written notice of cancellation.
	 
	 	 
	6. Payment:

	 	Payment shall be made by check via TCO’s Royalty System on or before the 20th of the
month following delivery
	 
	 	 
	7. General
Terms and
Conditions:

	 	All other terms and conditions not specifically stated shall be
governed by TEPPCO Crude Oil. L.P.’s General Provisions attached
hereto and made a part hereof.

Please acknowledge by return FAX/mail your acceptance and agreement to the terms stated herein.
Photocopies and faxes of signed copies of the Original Agreement shall have the same force and
effect as signed originals. Unless we receive from you written notice of objection within three (3)
business days, this Original Agreement shall constitute a final and complete contract binding upon
both parties, shall supersede all prior written and oral communications by either party and between
the parties regarding the subject matter of this contract and cannot
be modified unless in writing.
If you have any questions, please call Christy Borelll, (405) 239-5796.

	 	 	 	 	 	 	 
	TEPPCO Crude Oil, L.P.	 	TEPPCO Crude Oil, L.P.
	 
	 	 	 	 	 	 
	By TEPPCO Crude GP, LLC	 	By TEPPCO Crude GP, LLC
	Its general partner	 	Its general partner
	 
	By:

	 	/s/ Joe Simon	 	By
	 	/s/ Glen Smith
	 

	 	 
	 	 	 	 
	Joe Simon	 	Glen Smith
	Vice President, Crude Supply and Marketing	 	Vice President, Crude Supply and Marketing

	 	 	 	 	 
	Pioneer Natural Resources, USA, Inc.

	 	 
	 
	 	 	 	 
	By:

	 	/s/ Hershal K. Wolfe	 	 
	 

	 	 	 	 
	Tittle:

	 	Hershal K. Wolfe	 	 
	 

	 	Director of Worldwide	 	 
	 

	 	Marketing	 	 
	Date:

	12/21/06	 	 	 

 

 

	 	 	 
	TEPPCO
CRUDE OIL, L.P.

	 	PIONEER NATURAL RESOURCES
	EXHIBIT A

	 	CONTRACT DATED: OCTOBER 26, 2006
	 

	 	CONTRACT NO.I PNR-P06118065-W

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	LEASE
	TEPPCO	 	 	 	 	 	 	 	 	 	EFFECTIVE
	LEASE
# LEASE NAME	 	COUNTY	 	RRC#	 	TRANSPORTER	 	AMOUNT	 	DATE
	44885 BETH
A& BETH E
	 	MIDLAND	 	COMM 5747	 	TCO TRUCK	 	-$0.25	 	11/01/06
	16017 BUCHANAN J
	 	MIDLAND	 	22168	 	TCO PIPELINE	 	-$0.25	 	11/01/06
	43830 BUCHANAN M
	 	MIDLAND	 	33016	 	TCO TRUCK	 	-$0.25	 	11/01/06
	43831
BUCHANAN O
	 	MIDLAND	 	32972	 	TCO TRUCK	 	-$0,25	 	11/01/06
	44883 BUCHANAN P
	 	MIDLAND	 	33035	 	TCO TRUCK	 	-$0.25	 	11/01/06
	43832 BUCHANAN Q
	 	MIDLAND	 	32989	 	TCO TRUCK	 	-$0,25	 	11/01/06
	16090 CRESPI L
	 	MIDLAND	 	32110	 	TCO PIPELINE	 	-$0.25	 	11/01/06
	16105 CRESPI R
	 	MIDLAND	 	32941	 	TCO PIPELINE	 	-$0.25	 	11/01/06
	18180
DONOVAN C.
	 	MIDLAND	 	22255	 	TCO PIPELINE	 	-$0,25	 	11/01/06
	16098 DONOVAN E
	 	MIDLAND	 	32239	 	TCO PIPELINE	 	-$0.25	 	11/01/06
	18222 DONOVAN F
	 	MIDLAND	 	32560	 	TCO PIPELINE	 	-$0.25	 	11/01/06
	43892 GOLLADAY P
	 	MIDLAND	 	31605	 	TCO TRUCK	 	-$0.25	 	11/01/06
	43828
GOLLADAY P 3
	 	MIDLAND	 	31605	 	TCO TRUCK	 	-$0.25	 	11/01/06
	44884 HARTGROVE CTB A,B,C,D,E,F
	 	REAGAN	 	COMM 7344	 	TCO TRUCK	 	-$0.25	 	11/01/06
	43834 HEIDELBERG A
	 	MIDLAND	 	33074	 	TCO TRUCK	 	-$0.25	 	11/01/06
	44882 HUTCHISON D
	 	MIDLAND	 	33711	 	TCO TRUCK	 	-$0.25	 	11/01/06
	44887 JUDKINS C & JUDKINS D
	 	GLASSCOCK	 	COMM 5746	 	TCO TRUCK	 	-$0.25	 	11/01/06
	16086 KING A
	 	MIDLAND	 	31664	 	TCO PIPELINE	 	-$0.25	 	11/01/06
	49335 KING B
	 	MIDLAND	 	32498	 	TOC TRUCK	 	-$0.25	 	11/01/06
	43840 LEONARD B
	 	MIDLAND	 	34265	 	TCO TRUCK	 	-$0.25	 	11/01/06
	43838 MARION A
	 	MIDLAND	 	31429	 	TCO TRUCK	 	-$0.25	 	11/01/06
	43841 MARION B
	 	MIDLAND	 	33041	 	TCO TRUCK	 	-$0.25	 	11/01/06
	16055 MCALISTER H
	 	MIDLAND	 	28843	 	TCO PIPELINE	 	-$0.25	 	11/01/06
	18084
MCALISTER O
	 	MIDLAND	 	31576	 	TCO PIPELINE	 	-$0.25	 	11/01/06
	16095 MCALISTER Q
	 	MIDLAND	 	32225	 	TCO PIPELINE	 	-$0.25	 	11/01/06
	44895 NORTH PEMBROOK SPRAYBERRTY TR 26
	 	UPTON	 	03913	 	TCO TRUCK	 	-$0.25	 	11/01/06
	44902 NORTH
PEMBROOK SPRAYBERRYTR 26A
	 	UPTON	 	03913	 	TCO TRUCK	 	-$0.25	 	11/01/06
	44903 NORTH
PEMBROOK SPRAYBERRY TR 50A
	 	UPTON	 	03913	 	TCO TRUCK	 	-$0.25	 	11/01/06
	44904 NORTH
PEMBROOK SPRAYBERRY TR 72A
	 	UPTON	 	03913	 	TCO TRUCK	 	-$0.25	 	11/01/06
	44905 NORTH PEMBROOK SPRAYBERRY TR 91A
	 	UPTON	 	03913	 	TCO TRUCK	 	-$0.25	 	11/01/06
	44906 NORTH PEMBROOK SPRAYBERRY TR 92A
	 	UPTON	 	03913	 	TCO TRUCK	 	-$0.25	 	11/01/06
	44907 NORTH
PEMBROOK SPRAYBERRY TR 25A
	 	UPTON	 	03913	 	TCO TRUCK	 	-$0.25	 	11/01/06
	44908 NORTH
PEMBROOK SPRAYBERRY TR 49A
	 	UPTON	 	03913	 	TCO TRUCK	 	-$0.25	 	11/01/06
	44909 NORTH
PEMBROOK SPRAYBERRY TR 23A
	 	UPTON	 	03913	 	TCO TRUCK	 	-$0.25	 	11/01/06
	44910 NORTH
PEMBROOK SPRAYBERRY TR 63A
	 	UPTON	 	03913	 	TCO TRUCK	 	-$0.25	 	11/01/06
	44876 POWELL C 1
	 	UPTON	 	10571	 	TCO TRUCK	 	-$0.25	 	11/01/06
	16087 RAGGETT C
	 	MIDLAND	 	31475	 	TCO PIPELINE	 	-$0.25	 	11/01/06
	43837 RAGGETT D
	 	MIDLAND	 	33147	 	TCO TRUCK	 	-$0.25	 	11/01/06
	43848 STOUT B
	 	REAGAN	 	12184	 	TCO TRUCK	 	-$0,25	 	11/01/06
	44877 STOUT G
	 	REAGAN	 	12304	 	TCO TRUCK	 	-$0.25	 	11/01/06
	44880 TXL D
	 	MIDLAND	 	31816	 	TCO TRUCK	 	-$0.25	 	11/01/06
	44879 TXL QQ
	 	MIDLAND	 	06503	 	TCO TRUCK	 	-$0.25	 	11/01/06
	44878 TXL UU
	 	GLASSCOCK	 	33712	 	TCO TRUCK	 	-$0.25	 	11/01/06
	43849 WINDHAM Q
	 	UPTON	 	13053	 	TCO TRUCK	 	-$0.25	 	11/01/06
	44886 WRAGE
HENDERICKSON & WRANGE HENDERICKSON A
	 	GLASSCOCK	 	COMM 5651	 	TCO TRUCK	 	-$0.25	 	11/01/06

 

 

TEPPCO CRUDE OIL L.P.

GENERAL TERMS AND CONDITIONS

REVISED: AUGUST 24, 2005

	A.	 	Measurement and Tests:
	 
	 	 	
All measurements hereunder shall be made from static tank gauges on 100 percent tank table
basis or by positive displacement meters. All measurements and tests shall be made in
accordance with the latest ASTM or ASME-API (Petroleum PD Meter Code) published methods then
in effect, whichever apply. Volume and gravity shall be adjusted to 60 degrees Fahrenheit by
the use of Table 6A and 5A of the Petroleum Measurement Tables ASTM Designation D1250 in their
latest revision. The Product delivered hereunder shall be marketable and acceptable in the
applicable common or segregated stream of the Carriers involved but not exceed 1% S&W. Full
deduction for all free water and S&W content shall be made according to the API/ASTM Standard
Method then in effect. Either Party shall have the right to have a representative witness all
gauges, tests, and measurements. In the absence of the other Party’s representative, such
gauges, tests and measurements shall be deemed to be correct.
	 
	B.	 	Warranty:
	 
	 	 	
The Seller represents and warrants that: (1) it has good title to all Product sold and/or
delivered hereunder, (2) the Product is free from adverse claims of any kind whatsoever,
including but not limited to, royalties, liens, encumbrances and all applicable foreign,
federal, state and local taxes, (3) the Product has been produced, handled and transported in
accordance with all applicable laws, orders and regulations of all governmental authorities, and
(4) the Product delivered shall not be contaminated by chemicals foreign to virgin Product
including, but not limited to chlorinated and/or oxygenated hydrocarbons and lead. Buyer shall
have the right, without prejudice to any other remedy available to Buyer, to reject and return
to Seller any quantities of Product which are found to be so contaminated, even after delivery
to Buyer. Seller shall furnish, at no cost to Buyer, evidence of title satisfactory to Buyer. If
Seller receives proceeds hereunder on behalf of, on the account of or belonging or owing to any
other person or entity (including, without limitation, owners of working interest, royalty
interest, overriding royalty interests, production payments, otter interests in lands, leases or
production or governmental taxing authorities), it shall promptly make full and proper
settlement to each such person or entity. Seller shall defend, indemnify and hold Buyer and its
affiliated, directors, officers, employees, agents and harmless from and against any and all
claims, liabilities, demands, actions, causes of action, costs, losses, damages, and expenses of
every character (including, without limitation, court costs, reasonable attorneys’ fees, and
costs required to investigate, handle, respond to or defend any such claims, demands, or
actions) arising from or in any way relating to adverse claims regarding Seller’s title to or
ownership of the Product Buyer may withhold that portion of the proceeds due hereunder
reasonably related to any adverse claim to title to the Product, without interest or damages,
until such claim is finally determined. SUCH INDEMNIFICATION SHALL APPLY NOTWITHSTANDING SUCH
ACT MAY OCCUR IN THE FUTURE, IT BEING THE INTENT OF THE PARTIES HERETO THAT SUCH INDEMNIFICATION
SHALL APPLY TO ALL SUCH ACTS.
	 
	C.	 	Rules and Regulations:
	 
	 	 	The terms, provisions and activities undertaken pursuant to this Contract shall be subject to
all applicable laws, orders and regulations of all governmental authorities. If any time a
provision hereof violates any such applicable laws, orders or regulations, such provision shall
be voided and the remainder of this Contract shall continue in full force and effect unless
terminated by either Party upon giving written notice to the other Party hereto. If applicable,
the Parties shall comply with all provisions (as amended) of the Equal Opportunity Claused

Page 1 of 7

 

	 	 	prescribed in 41 C.F.R.60-1.4; the Affirmative Action Clause for disabled veterans and veterans
of the Vietnam Era prescribed in 41 C.F.R. 60-250.4; the Affirmative Action Clause for
Handicapped Workers prescribed in 41 C.F.R.60-741.4; 48 C.F.R. Chapter 1 Utilization of Labor
Surplus Area Concerns; Executive Order 12138 and regulations thereunder regarding subcontracts
to women-owned business concerns; Affirmative Action Compliance Program (41 C.F.R. 60-1,40);
annually file SF-100 Employer information Report (41 C.F.R. 60-1.7): 41 C.F.R. 60-1.8
prohibiting segregated facilities: and the Fair Labor Standards Act of 1938 as amended, all of
which are incorporated in this Contract by reference.
	 
	D.	 	Hazard Communication:
	 
	 	 	Seller shall provide its Material Safety Data Sheet (“MSDS”) to Buyer. Buyer acknowledges the
hazards and risks in handling and using Product. Buyer shall read the MSDS and advise its
employees, its affiliated, and third parties, who may purchase or come into contact with such
Product, about the hazards of Product, as well as the precautionary procedures for handling
Product, which are set forth in such MSDS and any supplementary MSDS or written warning(s)
which Seller may provide to Buyer from time to time.
	 
	E.	 	Force Majeure:
	 
	 	 	Except for payment due hereunder, either Party hereto shall be relieved from liability for
failure to perform hereunder for the duration and to the extent such failure is occasioned by
war, riots, insurrections, fire, explosions, sabotage, strikes, and other labor or industrial
disturbances, acts of God or the elements, governmental laws, regulations, or requests,
disruption or breakdown of production or transportation facilities, delays of pipeline Carrier
in receiving and delivering Product tendered, or by any other cause, whether similar or not,
reasonably beyond the control of such Party. Any such failures to perform shall be remedied
with all reasonable dispatch, but neither Party shall be required to supply substitute
quantities from other sources of supply. Failure to perform due to events of Force Majeure
shall not extend the terms of this Contract. Notwithstanding the above, and in the event that
this Contract is an associated purchase/sale, or exchange of Product, the Parties shall have
the rights and obligations described below in the following circumstances: (1) If, because of
Force Majeure, the Party declaring Force Marjeure (the “Declaring Party”) is unable to deliver
part or all of the quantity of Product which the Declaring Party is obligated to deliver under
this Contract, the other Party (the “Exchange Partner”) shall have the right but not the
obligation to reduce its deliveries of Product under the same agreement by an amount not to
exceed the number of Barrels of Product that the Declaring Party fails to deliver, and (2) If,
because of Force Majeure, the Declaring Party is unable to take delivery of part or all of the
quantity of Product to be delivered by the Exchange Partner under the agreement, the Exchange
Partner shall have the right but not the obligation to reduce its receipts of Product under the
agreement by an amount not to exceed the number of Barrels of Product which the Declaring Party
fails to take delivery.
	 
	F.	 	Payment:
	 
	 	 	Unless otherwise specified in this main body of this Contract: (1) Buyer shall
make payment against Seller’s invoice for the Product purchased hereunder to a
bank designated by Seller in U.S. dollars by telegraphic transfer in immediately
available funds, (2) Payments will be due on or before the 20th day of the month
following the month of delivery, (3) Payments will be made by wire transfer or
other manner agreed upon in writing, (4) If a payment due date is on a Saturday
or on a bank holiday other than a Monday, payment shall be due on the
preceding day or if the 20th is a Sunday or a Monday bank holiday, the payment
is due the succeeding banking day. (5) All past due payments hereunder shall
bear interest from the date due until paid at a rate equal to the lesser of (I) a per
annum rate equal to the prime rate of interest charged by Citibank, N.A. (or its
successors) plus five percent (5%) or (ii) the maximum non-usurious rate of
interest permitted to be charged under applicable law.

Page 2 of 7

 

	G.	 	Financial Responsibility:
	 
	 	 	Notwithstanding anything to the contrary in this Contract, should Seller reasonably believe it
necessary to assure payment, Seller may at any time require, by written notice to Buyer,
advance cash payment or satisfactory security in the form of a Letter or Letters of Credit at
Buyer’s expense in a form and from a bank acceptable to Seller to cover any or all deliveries
of Product. If Buyer does not provide the Letter of Credit on or before the date specified in
Seller’s notice under this Paragraph G, Seller or Buyer may terminate this Contract forthwith.
However, if a Letter of Credit is required under the main body of this Contract and Buyer does
not provide same, then Seller only may terminate this Contract forthwith. In no event shall
Seller be obligated to schedule or complete delivery of the Product until said Letter of Credit
is found acceptable to Seller. Each Party may offset any payments or deliveries due to the
other Party under this or any other Agreement between the Parties. If a Party to this Agreement
should (1) become the subject of bankruptcy or other insolvency proceedings, or proceedings for
the appointment of a receiver, trustee or similar official, (2) become generally unable to pay
its debts as they become due, or (3) make a general assignment for the benefit of creditors,
the other Party may withhold shipments without notice.
	 
	H.	 	Liquidation:

	 	(1)	 	Right to Liquidate. At any time after the occurrence of one or more of the
events described in the last sentence of Paragraph G above, the other Party
(the “Liquidating Party”) shall have the right, at is sole discretion, to
liquidate this Contract by terminating this Contract. Upon termination, the
Parties shall have no further rights or obligations with respect to this
Contract, except for the payment of the amount(s) (the “Settlement Amount”
or “Settlement Amounts”) determined as provided in Paragraph H(3).
	 
	 	(2)	 	Multiple Deliveries. If this Contract provided for multiple deliveries of one
or more types of Product in the same or different delivery months, or for the
purchase or exchange of Product by the Parties, all deliveries under this
Contract to the same Party at the same delivery location during a particular
delivery month shall be considered a single commodity transaction
(“Commodity Transaction”) for the purpose of determining the Settlement
Amount(s). If the Party elects to liquidate this Contract, the Liquidating
Parry must terminate all Commodity Transactions under this Contract
	 
	 	(3)	 	Settlement Amount. With respect to each terminated Commodity Transaction, the Settlement Amount shall be equal to the contract quantity
of Product, multiplied by the difference between the contract per Barrel
specified in this Contract (the “Contract Price”) and the market price per
Barrel of Product on the date the Liquidating Party terminates this Contract
(the “Market Price”). If the Market Price exceeds the Contract Price in a
Commodity Transaction, the selling Party shall pay the Settlement Amount
to the buying Party. If the Market Price is less than the Contract in a
Commodity Transaction, the buying Party shall pay the Settlement Amount
to the selling Party. If the Market Price is equal to the Contract Price in a
Commodity Transaction, no Settlement Amount shall be due.
	 
	 	(4)	 	Termination Date. For the Purpose of determining the Settlement Amount
the date on which the Liquidating Party terminates this Contract shall be
deemed to be (a) the date on which the Liquidating Parry sends written
notice of termination to the Defaulting Party, if such notice of termination is
sent by telex or facsimile transaction; or (b) the date on which the Defaulting
Party receives written notice of termination from the Liquidating Party, if
such notice of termination is given by United States mail or a private mail
delivery service.

Page 3 of 7

 

	 	(5)	 	Market Price, Unless otherwise provided in this Contract, the Market Price
sold or exchanged under this Contract shall be the price for Product for the
delivery month specified in this Contract and at the delivery location that
corresponds to the delivery locations specified in this Contract, as reported
in Platt’s Oilgram Price Report (“Platt’s”) for the date on which the
Liquidating Party terminates this Contract. If Platt’s reports a range of
prices for Product on that date, the Market Price shall be the arithmetic
average of the high and low prices reported by Platt’s If Platt’s does not
report prices for the Product being sold under this Contract, the Liquidating
Party shall determine the Market Price of such Product in a commercially
manner, unless otherwise provided in this Contract.
	 
	 	(6)	 	Payment of Settlement Amount. Any Settlement Amount due upon
termination of this Contract shall be paid in immediately available funds
within two business days after the Liquidating Party terminates this
Contract. However, if this Contract provides for more than one Commodity
Transaction, or if Settlement Amounts are due under other agreements
terminated by the Liquidating Party, the Settlement Amounts are due to
each Party for such Commodity Transactions and/or agreements shall be
aggregated. The Party owing the net amount after such aggregation shall
pay such net amount to the other Party in immediately available funds
within two business days after the date on which the Liquidating Party
terminates this Contract.
	 
	 	(7)	 	Miscellaneous. This paragraph H shall not; limit the rights and remedies
available the Liquidating Party by law or under other provisions of this
Contract. The Parties hereby acknowledge that this Contract constitutes a
forward contract for purposes of Section 556 of the U.S. Bankruptcy Code.

	I.	 	Equal Daily Deliveries:
	 
	 	 	For pricing purposes only, unless otherwise specified in the main body of this Contract, all
Product delivered hereunder during any calendar month shall be considered to have been
delivered in equal daily quantities during such calendar month.
	 
	J.	 	Exchange Balancing:
	 
	 	 	If volumes are exchanges, each Party shall be responsible for maintaining the exchange in
balance on a month-to-month basis, as near as pipeline or other transportation conditions will
permit. In all events upon termination of this Contract and after all monetary obligations under
this Contract have been satisfied, any volume imbalance existing at the conclusion of this
Contract, limited to the total contract volume, will be settled by the underdelivering Party,
unless mutually agreed to the contrary. The request to schedule all volume imbalances must be
confirmed in writing by one Party or both Parties. Volume imbalances confirmed by the
20th of the calendar month shall be delivered during the calendar month after the
volume imbalance is confirmed. Volume in balances confirmed after the 20th of the
calendar mouth shall be delivered during the second calendar month after the volume imbalance
is confirmed.
	 
	K.	 	Delivery, Title, and Risk of Loss:
	 
	 	 	For lease delivery locations, delivery of the Product to the Buyer shall be effected
as the Product passes the last permanent delivery flange and/or meter
connecting the Seller’s lease/unit storage tanks or processing facilities to the
Buyer’s Carrier. For delivery locations other than lease/unit delivery locations,
delivery facility designated by the Seller to the Buyer’s Carrier. If delivery is by
in-line transfer, delivery of the Product to the Buyer shall be effected at the
particular pipeline facility designated in this Contract. Title to and risk of loss
of the Product shall pass from the Seller to the Buyer upon delivery. Each Party
shall defend, indemnify and hold the other Party and its affiliated, directors,
officers, employees, and agents harmless from and against any and all claims,
liabilities, demands, actions, causes of action, costs, losses, damages, and
expenses of every character (including, without limitation, court costs,

Page 4 of 7

 

	 	 	reasonable attorney fees and costs required to investigate, handle, respond to or defend
any such claims, demands, or actions relating to the ownership, control and/or handling
of the Product while it has risk of loss, except to the extent caused by the other
Party’s negligence.
	 
	L.	 	Audit:
	 
	 	 	Each Party, on execution of the other’s confidentiality agreement, shall have the right to
review the records of the other during normal business hours to the extent necessary to verify
the accuracy of any statement, charge, computation, or demand made pursuant to this Contract,
and shall have the right to obtain payment for, or shall pay, as applicable, any verifiable
inaccuracy found; provided, however, any statement shall be final as to the Parties unless
questioned within two (2) years of the date of such statement. The sole and exclusive remedy and
measure of damages for any improper payments under this Contract shall be the amount of
overpayment or underpayment, as the case may be, during the two (2) year period immediately
preceding the date on which a statement delivered hereunder was questioned in writing.
	 
	M.	 	Necessary Documents:
	 
	 	 	Upon requests, each Party shall furnish all substantiating documents incident to the
transaction, including a Delivery Ticket for each volume delivered and an Invoice for any
month in which the sums are due.
	 
	N.	 	Division Orders:
	 
	 	 	If either Party signs a division order in favor of the other party pertaining to the object of
this Contract, the terms of this Contract shall control in the event of any conflict. If under
such division order or other agreement: (1) Seller is being disbursed 100% of the proceeds of
production, it hereby assumes liability and shall be responsible for payment of any and all
proceeds from the sale of production to all rightful owners, including, without limitation,
working interest, royalty and overriding royalty interest owners and other payments due or to
become due on the production and, if such disbursed proceeds are inclusive of taxes, all taxes
applicable to the production, purchase, sale, storage or transportation of production,
including, without limitation, severance taxes, to the proper governmental authorities and (2)
Seller has requested Buyer to disburse the proceeds of production, Buyer will disburse proceeds
as the Seller directs.
	 
	O.	 	Term:
	 
	 	 	Unless otherwise specified in the main body of this Contract, delivery months at 7:00 a.m. on the first day of the calendar month and end at 7:00 a.m. on the first day of the
following calendar month.
	 
	P.	 	Governing Law:
	 
	 	 	This Contract and the performance hereof shall be governed by and construed in accordance with
the laws of the State of Oklahoma, without regard to any conflict of laws provision thereof that
would otherwise require the application of the law of any other jurisdiction. THE PARTIES
HEREBY WAIVE ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY.
	 
	Q.	 	Attorney’s Fees:
	 
	 	 	In the event litigation arising out of this Contract is initiated by either Party, 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 order, all court costs, fees and expenses of such
litigation, including, without limitation, reasonable attorneys’ fees.
	 
	R.	 	Damage Waiver:
	 
	 	 	Both parties expressly agree that neither party shall be liable for special, indirect,
punitive or consequential damages whether under contract, tort, strict liability or otherwise,
except to the extent any such party

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	 	 	suffers damages to an unaffiliated third-party in connection with a third-party claim for
which a party is entitled to indemnification hereunder, in which event such damages shall
be recoverable.

	S.	 	Waiver:

	 	 	No course of dealing and no delay on the part of either Party in exercising any right, power or
remedy shall operate as a waiver thereof or otherwise prejudice such Party’s rights, powers or
remedies. No term or condition of this Contract shall be deemed to have been waived nor shall
there be any estoppel to enforce any provision of this Contract except by written instrument of
the Parties charged with such waiver or estoppel. The waiver of any breach of any term,
condition or provision of this Contract shall not be construed as a waiver of any prior,
concurrent or subsequent breach of the same or any other term, condition or provision hereof.

	T.	 	Assignment:

	 	 	This Contract shall inure to the benefit of and be binding upon the Parties and their
respective successors and permitted assigns, but neither this Contract nor any of the rights,
interests or obligations hereunder shall be assigned by either Party (whether by operation of
law, merger, consolidation or otherwise) without the prior written consent of the other Party,
such consent not to be unreasonably withheld, conditioned or delayed; provided, however, upon
the giving of written notice to the other Party, either Party may assign this Contract to an
affiliate of such Party without the consent of the other Party. No assignment of this Contract
shall in any way operate to enlarge, alter, or change any right or obligation of the other
Party hereto and shall not be effective or binding on the other Party until a copy of the same
has been delivered to the other Party. This Contract, including any and all renewals,
extensions, amendments and/or supplements hereto, shall be binding upon any purchaser or
assignee of the Leases, or any part thereof or interest therein. Any Party assigning its
interest shall remain responsible for any nonperformance hereunder. This Contract shall
constitute a real property right and covenant running with the Leases.

	U.	 	Captions:

	 	 	The headings of the paragraphs, sections and other subdivisions of this Contract are included
for convenience only and shall not constitute part of this Contract or affect the construction
or interpretation hereof or thereof.

	V.	 	Amendments:

	 	 	This Contract may not be effectively amended, changed, modified, altered or terminated, except
as provided herein, without the written consent of the Parties and such consent shall be
effective only in the specific instance and for the specific purpose for which it is given.

	W.	 	No Third Party Beneficiaries:

	 	 	This Contract shall be only for the benefit of the parties hereto and their respective legal
representatives, successors and permitted assigns, it being the intention of the parties hereto
that no third party shall be deemed a third party beneficiary of this Contract.

	X.	 	Entire Agreement:

	 	 	This Contract contains the entire agreement of the Parties. This Contract may not be
contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the
Parties. There are no oral agreements between the Parties.

	Y.	 	Survival:

	 	 	Any obligation owed by a Party to the other Party under this Contract, including
indemnification obligations, shall survive termination of this Contract.

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	Z.	 	Definition:

	 	 	Unless the context requires otherwise, terms defined in the text of this Contract shall have
the meaning indicated and the terms listed below have the following meanings:

	 	 	“API” - means the American Petroleum Institute.

	 	 	“ASME” - means the American Society of Mechanical Engineers.

	 	 	“ASTM” - means the American Society for Testing Materials.

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

	 	 	“Carrier” - means a pipeline, barge, truck or other suitable transporter of
Product.

	 	 	“Product”- means crude oil or condensate, as appropriate.

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

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

	 	 	“S&W”- means sediment and water.

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