Document:

exv10w16

Exhibit 10.16

Execution Version

SECOND AMENDMENT TO

SIXTH AMENDED AND RESTATED

GAS GATHERING AND PROCESSING AGREEMENT

     This Second Amendment (this “Amendment”) to the Sixth Amended and Restated Gas
Gathering and Processing Agreement dated as of October 1, 2010, by and among Quicksilver
Resources Inc. (“Producer”), Cowtown Pipeline Partners L.P. (“Gatherer”) and Cowtown Gas
Processing Partners L.P. (“Processor”).

     WHEREAS, Producer, Gatherer and Processor are parties to the Sixth Amended and Restated Gas
Gathering and Processing Agreement, dated as of September 1, 2008, as amended by the First
Amendment and Addendum dated as of January 1, 2009 (the “Cowtown Agreement”);

     WHEREAS, pursuant to the Purchase Agreement, (the “Purchase Agreement”) dated as of July 22,
2010, as amended, by and among Producer, Crestwood Holdings LLC (f/k/a First Reserve Crestwood
Holdings LLC), Cowtown Pipeline L.P. and Cowtown Gas Processing L.P., Producer has agreed to
transfer its indirect ownership interests in Gatherer and Processor to Crestwood Holdings LLC; and

     WHEREAS, in connection with the transactions contemplated by the Purchase Agreement, the
parties hereto desire to enter into this Amendment in order to modify certain of the terms and
conditions of the Cowtown Agreement as set forth below.

     NOW, THEREFORE, in consideration of the mutual premises and benefits contained herein, the
adequacy, receipt and sufficiency of which are hereby acknowledged, the parties amend the Cowtown
Agreement as follows:

     1. Article II is amended by deleting the last sentence of Section 2.4 and adding the following
after the first sentence of Section 2.4:

“Processor shall operate the Plant in such manner as to extract and deliver at least 90% of the
Ethane Component in each MMBtu of the Gas; provided that:

	 	a.	 	Processor’s obligation to operate the Plant in the manner described in the foregoing
sentence is subject to the Gas received at the inlet of the Plant having a daily average Btu
content of not more than 1280.
	 
	 	b.	 	Processor and Producer shall maintain an account (the “Ethane Recovery Account”).

 

 

	 	c.	 	Calculated on a daily basis, on such days as the percentage of Ethane extracted from the
Gas (the “Ethane Recovery Efficiency”) is greater than 90%, Processor shall add to the
amounts already existing in the Ethane Recovery Account the amount of revenues received from
the sale of Plant Products that were recovered as a result of the Ethane Recovery Efficiency
being greater than 90%, less the amount of revenues that would have been received
for the MMBtu equivalent of Residue Gas that would have been delivered had the Ethane
Recovery Efficiency been less than 90%.
	 
	 	d.	 	Calculated on a daily basis, on such days as the Ethane Recovery Efficiency is less than
90%, Processor shall subtract from the amounts already existing in the Ethane Recovery
Account such amount of revenues as would have been received from the sale of Plant Products
had the Ethane Recovery Efficiency been equal to 90%, less the amount of revenues received
and attributable to the sale of Residue Gas with a Btu content higher than would have been
had the Ethane Recovery Efficiency been greater than or equal to 90%.
	 
	 	e.	 	On each anniversary of the Effective Date and the date of termination of this Agreement
(each an “Account Clearance Date”), if the amount in the Ethane Recovery Account on such
Account Clearance Date is less than zero, Processor shall pay to Producer the amount of such
deficiency within two business days of such Account Clearance Date. Following the
completion of such payment, the amount existing in the Ethane Recovery Account shall be set
to zero. For avoidance of doubt, on any Account Clearance Date, no party shall have an
obligation to pay under this Section 2.4(e) if the amount in the Ethane Recovery Account on
such Account Clearance Date is greater than zero.
	 
	 	f.	 	Upon written request from the Producer, such request to be made contemporaneously with
the nominations made pursuant to Section 6.2 below, Processor shall reject Ethane contained
in the Gas delivered at the Plant Delivery Point(s).

2.5 Processor agrees to deliver at the Residue Gas Delivery Point(s) to Producer or Producer’s
nominee the Residue Gas as determined under the provisions of
Section 10.2. ”

     2. Article XI is deleted in its entirety and replaced by the following:

2

 

“Producer shall take its Plant Products in-kind at the Plant Products Delivery Points upon the
terms and subject to the conditions set forth in the Take-in-Kind Procedures attached hereto as
Exhibit E.”

     3. Article XX is amended by replacing the words “August 10, 2017” with “December 31, 2020”.

     4. Exhibit E of this Amendment is attached as Exhibit E of the Cowtown
Agreement.

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

[Signature page follows.]

3

 

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

	 	 	 	 	 
	 	QUICKSILVER RESOURCES INC.

 	 
	 	By:  	/s/ Glenn Darden
 	 
	 	 	Name:  	Glenn Darden 	 
	 	 	Title:  	President & Chief Executive
Officer 	 
	 
	 	COWTOWN PIPELINE PARTNERS L.P.

 	 
	 	By:  	Quicksilver Gas Services Operating
 	 
	 	 	GP LLC, its general partner 	 
	 	 	 
	 	By:  	                                           Quicksilver Gas Services Operating
 	 
	 	 	LLC, its sole member 	 
	 	 	 
	 	By:  	                                           Quicksilver Gas Services LP, its
 	 
	 	 	sole member 	 
	 
	 	 	 
	 	By:  	                                           Quicksilver Gas Services GP LLC,
 	 
	 	 	its general partner 	 
	 	 	 
	 	By:  	
 /s/ Robert G. Phillips	 
	 	 	Name:  	 Robert G. Phillips	 
	 	 	Title:  	 President	 
	 

[Signature page to Cowtown GGPA Amendment]

 

 

EXHIBIT E

TAKE-IN-KIND PROCEDURES

     These TAKE-IN-KIND PROCEDURES (the “TIK Procedures”) are attached to the Gas Gathering
and Processing Agreement dated as of September 1, 2008 (the “Agreement”), by and among
Quicksilver Resources Inc., Cowtown Gas Processing Partners L.P., and Cowtown Pipeline
Partners L.P. Capitalized terms not expressly defined herein shall have the meaning given
such term in the Agreements.

     Producer shall take its Plant Products in-kind at the Plant Products Delivery Points subject
to the following terms and conditions:

     1. Designation of Volumes at Delivery Points. Producer shall designate the volume to be
delivered at each Plant Products Delivery Point.

     2. Producer Responsible for Transportation Arrangements. Producer shall be
responsible for making its own arrangements with the transporters accepting delivery at the
Plant Products Delivery Points for the receipt, transportation and fractionation of such
Plant Products. Control and possession of Producer’s Plant Products shall pass to Producer
when delivered at the Plant Products Delivery Points, and the indemnification provided by
Producer to Processor and Gatherer pursuant to Section 17.2 of the Agreement shall be
applicable at such time as the Plant Products pass through the Plant Products Delivery
Points.

     3. Balancing Accounting. Processor will maintain an “over/under” account to reflect
any imbalances as between the parties. Processor shall provide Producer with a statement
each Month setting forth the amounts of any imbalances for “over-delivered” or
“under-delivered” quantities during the preceding Month.

     4. Balancing of Deliveries. Producer and Processor recognize Processor’s inability
to redeliver Plant Products to Producer which exactly match the composition and quantities
of the Plant Products allocable to Producer’s Gas. In-kind quantities of Plant Products
due to Producer shall be delivered in, and as part of, the commingled stream of all plant
products produced or extracted at the Plant. Processor and Producer shall make a good
faith effort to keep the nominated and delivered quantities as much in balance as possible
by making delivery adjustments from time to time.

     5. Producer Responsible for Payments. Producer shall account to and pay all interest
owners for all royalties, overriding royalties, bonus payments, production payments and
other payments due on Plant Products taken in-kind by Producer, and the indemnification
provided by Producer to Gatherer and

 

 

Processor in Section 14.4 of the Agreement shall be applicable to and include any such
payments due with respect to same.

     6. Assignment. The TIK procedures set forth herein may not be severed and
assigned in part or separately from the Gas and the Contract Area.exv10w18

Exhibit 10.18

Execution Version

AMENDMENT TO

GAS GATHERING AGREEMENT

     This Amendment (this “Amendment”) to the Gas Gathering Agreement dated as of October 1, 2010,
by and between Quicksilver Resources Inc.
(“Producer”) and Cowtown Pipeline Partners L.P. (“Gatherer”).

     WHEREAS, Producer and Gatherer, as the assignee of Cowtown Pipeline L.P., are
parties to the Gas Gathering Agreement (the “Alliance Agreement”) dated as of
December 1, 2009;

     WHEREAS, pursuant to the Purchase Agreement (the “Purchase Agreement”) dated
as of July 22, 2010, as amended, by and among Producer, Crestwood Holdings LLC
(f/k/a First Reserve Crestwood Holdings LLC), Cowtown Pipeline L.P. and Cowtown
Gas Processing L.P., Producer has agreed to transfer its indirect ownership
interests in Gatherer to Crestwood Holdings LLC; and

     WHEREAS, in connection with the transactions contemplated by the Purchase
Agreement, the parties hereto desire to enter into this Amendment in order to
modify certain of the terms and conditions of the Alliance Agreement as set forth
below.

     NOW, THEREFORE, in consideration of the mutual premises and benefits
contained herein, the adequacy, receipt and sufficiency of which are hereby
acknowledged, the parties amend the Alliance Agreement as follows:

     1. Section 1 of the Alliance Agreement is amended to delete the following
definitions in their entirety:

b. “Actual Quarterly Volumes” means for any calendar quarter during the primary term of
this Agreement the sum of (a) the actual volumes (measured in Mcf) of Producer’s Gas
received by Gatherer and metered at any Receipt Points during such calendar quarter, (b)
the actual volumes (measured in Mcf) of Gas received by Gatherer from Eni and metered at
any Receipt Points during such calendar quarter pursuant to the Eni GGA, and (c) the actual
volumes (measured in Mcf) of Gas received by Gatherer from third parties (other than Eni)
and metered at any Receipt Points during such calendar quarter; provided, however, that
third party volumes that are included in the calculation pursuant to this clause (c) shall
never exceed the excess, if any, of (i) Producer’s Quarterly Modeled Volumes measured in
Mcf) for such calendar quarter over (ii) the sum of the volumes that are included in the
calculation pursuant to clauses (a) and (b) of this definition for such calendar quarter.

 

 

s. “Gross Quarterly Revenue” means for any calendar quarter during the primary term of this
Agreement the product of (i) the Actual Quarterly Volumes for such calendar quarter and (ii) a rate
equal to $0.55 per Mcf (as such rate is escalated during the primary term of this Agreement in
accordance with Section 11.2).

cc. “Producer’s Quarterly Modeled Revenue” means for any calendar quarter during the
primary term of this Agreement the product of (i) the Producer’s Quarterly Modeled
Volumes for such calendar quarter and (ii) a rate equal to $0.45 per Mcf (as such rate
is escalated during the primary term of this Agreement in accordance with Section
11.2).

dd. “Producer’s Quarterly Modeled Volumes” means for any calendar quarter during the
primary term of this Agreement the volume (measured in Mcf) for such calendar quarter set
forth under the column entitled “Producer’s Quarterly Modeled Volumes” in Annex 1 hereto.

hh. “Quarterly Revenue Minimum” means for any calendar quarter during the primary term of
this Agreement the product of (i) the Actual Quarterly Volumes for such calendar quarter
and (ii) a rate equal to $0.40 per Mcf (as such rate is escalated during the primary term
of this Agreement in accordance with Section 11.2).

     2. Section 7.1 is amended by adding the words “as more particularly described
in Exhibit C attached hereto” immediately after the words “dehydration and treating
services at its existing treating facility” and by removing Section 7.1(ii)(c)(iv)
in its entirety.

     3. Section 11.1 is deleted in its entirety and replaced by the following:

“ 11.1 Producer shall pay to Gatherer fifty-five cents ($0.55) per MCF of Producer’s Gas
received by Gatherer and metered at the Receipt Points, subject to adjustment as provided
in Section 11.2 (such rate, as so adjusted, the “Gathering Fee”).”

     4. Paragraph 18 is amended by replacing the words “for a primary term of
ten (10) years” with “until December 31, 2020”.

     5. Exhibit C attached hereto is added as Exhibit C of the Alliance
Agreement.

     6. Annex 1 of the Alliance Agreement is deleted in its entirety.

     Except as amended by this Amendment, which shall be effective as of the date
hereof, the terms and provisions of the Alliance Agreement are and shall remain in
full force and effect.

 

 

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

	 	 	 	 	 
	 	QUICKSILVER RESOURCES INC.

 	 
	 	By:  	/s/ Glenn Darden
 	 
	 	 	Name:  	Glenn Darden 	 
	 	 	Title:  	President & Chief Executive Officer 	 
	 
	 	COWTOWN PIPELINE PARTNERS L.P.

 	 
	 	By:  	Quicksilver Gas Services Operating

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

LLC, its sole member 	 
	 	 	 
	 	By:  	Quicksilver Gas Services LP, its

sole member 	 
	 	 	 
	 	By:  	Quicksilver Gas Services GP LLC,

its general partner 	 
	 	 	 
	 	By:  	 /s/
Robert G. Phillips	 
	 	 	Name:  	 Robert G. Phillips	 
	 	 	Title:  	 President	 
	 

[Signature page to Alliance GGA Amendment]

 

 

EXHIBIT C

     This Exhibit C is attached to the Gas Gathering Agreement (the “Agreement”)
dated as of December 1, 2009, by and between Quicksilver Resources Inc., as
Producer, and Cowtown Pipeline Partners, L.P., as Gatherer, and made a part thereof
for all purposes. All defined terms used herein shall have the same meaning as set
forth in the Agreement.

Dehydration
and CO2 Treating Services

The dehydration and CO2 treating services contemplate receiving the Gas at the
inlet flange of the applicable dehydration and/or CO2 treating facilities with
the following specifications:

     CO2 of less than 3.5% by volume;

and delivering the Gas at the outlet flange of the applicable dehydration and/or
CO2 treating facilities with the following specifications:

CO2 of less than 2.0% by volume, and

Not more than 7 pounds of water vapor per MMcf.

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