EXHIBIT 10.13
Specific Terms in this Exhibit have been redacted because confidential treatment for those terms has been requested. The redacted material has been separately filed with the Securities and Exchange Commission, and the terms have been marked at the appropriate place with three asterisks [***].
SECOND AMENDMENT TO GAS GATHERING AND TREATING AGREEMENT
THIS SECOND AMENDMENT TO GAS GATHERING AND TREATING AGREEMENT (this “Second Amendment”) is made by and between SWEPI LP (“Shipper”) and CENTERPOINT ENERGY FIELD SERVICES, INC. (“Gatherer”) effective this1st day ofApril, 2010.
Background
Gatherer and Shipper are parties to that certain Gas Gathering and Treating Agreement dated September 1, 2009, as amended by the First Amendment, datedJanuary 1, 2010 (as so amended, the “Agreement”);
Pursuant to the PSA, Gatherer has assumed or will assume the surface lease and operation of the amine treatment plant (the “Sustainable Plant Site Treating Facilities”) located at the Sustainable Plant Site, located in Desoto Parish, Louisiana, as more fully described in the PSA; and
Also pursuant to the PSA, Gatherer has assumed or will assume the surface lease and operation of the amine treatment plant at the General Posey Plant Site (the “General Posey Plant Site Treating Facilities”), and the Kinder Morgan amine treatment plant (the “Kinder Morgan Treating Facilities”), both located in Desoto Parish, Louisiana, as more fully described in the PSA; and
The parties now desire to further amend the Agreement as set forth herein; and
Capitalized terms used herein, if not defined herein, will have the meaning given to such terms in the Agreement.
NOW, THEREFORE, for adequate consideration received and acknowledged, the parties hereto agree as follows:
1. Gatherer and Shipper hereby amend the Agreement to add Section 6.5:
6.5Line AE-13.
Gatherer shall acquire the necessary rights-of-way and permits, and execute until complete, construction of approximately 8 miles of Gathering lines from a point in Sec. 1-11N- 13W to a point on the Magnolia Gathering System, as well as interconnecting facilities consisting of a meter and meter run capable of accepting delivery of a quantity of Gas equal to theLine AE-13 Preferential Gathering Capacity (collectively, and as shown by the dotted line on Exhibit M, “Line AE-13”). Gatherer shall bear all direct and incidental costs related to Gatherer’s acquisition of rights of way/easements and construction of Line AE-13 and the receipt point connected to Line AE-13 (the “Line AE-13 Receipt Point”). Gatherer shall have no obligation to provide any additional facilities other than those described above and shown on Exhibit M. Shipper is solely responsible for construction of all other facilities necessary to deliver its Gas to Line AE-13. Shipper and Gatherer shall use good faith efforts to coordinate
the integration of any other facilities necessary to deliver Shipper’s Gas to LineAE-13; provided, said other facilities do not interfere with or prevent Gatherer from meeting its Section 8.1 Pressure Requirements, unless otherwise agreed.
(b) Gatherer shall utilize commercially reasonable efforts to complete construction of LineAE-13 by or before April 1, 2010 and will comply with requirements of Section 5.5 as it relates to the construction of LineAE-13; provided however, LineAE-13 and the LineAE-13 Receipt Point:
(i) Are not subject to the Milestone Completion Dates of Section 5.2, the Remedies of Section 5.3, or the Timely Completion or Liquidated Damages of Sections 11(a) and (b); and
(ii) Are not subject to the Service Date of Section 5.6 (a) or the application of Section 5.3 Remedies for Gatherer’s failure to meet Service Dates.
(c) In addition to updates from Gatherer pursuant to Section 5.5, Gatherer will provide reasonable prior notice to Shipper of the estimated completion of LineAE-13 and the LineAE-13 Receipt Point. Notwithstanding the Term (as defined in Section 2 of this Agreement), Shipper’s right to deliver Gas through LineAE-13 will begin on completion of LineAE-13 and the LineAE-13 Receipt Point (the “LineAE-13 Completion Date”) and continue for a period of three {3) years from the first Day of the first Month following the LineAE-13 Completion Date (the “LineAE-13 Primary Term”). After expiration of the LineAE-13 Primary Term, Shipper’s rights to deliver Gas through LineAE-13 shall continue on amonth-to-month basis until terminated by either party upon thirty {30) days written notice to the other; provided however, that the termination notice shall not take effect until the last Day of the Month in which the thirtieth day after the written notice of termination occurs (the LineAE-13 Primary Term and the month to month periods thereafter are collectively the “LineAE-13 Term”). Upon termination of the LineAE-13 Term by either party: (i) Shipper’s LineAE-13 Preferential Treating Capacity and other preferential capacity rights on LineAE-13 shall terminate; and (ii) LineAE-13 shall not be included in or considered a part of the Magnolia Gathering System by the Parties.
(d) During the LineAE-13 Term, and subject to the other terms of this Agreement, Gatherer will accept Shipper’s Gas at the LineAE-13 Receipt Point and gather, compress, dehydrate and Treat Shipper’s Gas and redeliver such Gas at the Redelivery Points (“LineAE-13 Gathering”). Gatherer shall charge and Shipper shall pay a fee of [***] per MMBtu (the “LineAE-13 Gathering Fee”) for the LineAE-13 Gathering (the volumes of Shipper’s Gas charged the LineAE-13 Gathering Fee are not also subject to the Gathering Fee).
(e) During the LineAE-13 Term, unless otherwise mutually agreed by the Parties, Shipper shall provide Gas in kind to Gatherer as fuel an amount equal to [***], in terms of MMBtus, of the Gas delivered to Gatherer by Shipper for LineAE-13 Gathering each Day at the LineAE-13 Receipt Point, such amount to include all Lost and Unaccounted for Gas on LineAE-13. In addition to the fuel described in the preceding sentence, Shipper shall provide all actual plant fuel in kind attributable to the Gas Shipper delivers to LineAE-13 (calculated in accordance with the calculation of Plant Fuel in Section 3.4 of this Agreement) allocatedpro-rata based on the amount of Gas delivered by all shippers at the LineAE-13 Receipt Point during any given month, in terms of MMBtus.
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(f) Shipper covenants and agrees that during the LineAE-13 Primary Term it will deliver to Gatherer for Gathering and Treatment through LineAE-13 a minimum quantity of [***] MMBtu (the “LineAE-13 Volume Commitment”). If the quantity of Gas actually delivered into LineAE-13 by Shipper and Shipper Partner during the initial1-year period of the LineAE-13 Term fails to average [***], Gatherer shall have the right to request Shipper to renegotiate in good faith the LineAE-13 Gathering Fee. If the parties do not negotiate, or negotiate but fail to agree to a new LineAE-13 Gathering Rate for any reason, this Section 6.5 shall continue in full force and effect according to its terms.
(g) “LineAE-13 Volumes” means the sum of: (i) the quantity of Gas actually delivered into LineAE-13 by Shipper during the LineAE-13 Term; and (ii) all Gas delivered by any third party through LineAE-13 that is not attributed as third party Gas to Shipper Partner’s LineAE-13 Volume Commitment (on a 1:1 MMBtu basis). Third Party Gas shall be allocated in proportion to Shipper and Shipper Partner Gas delivered to LineAE-13.
(h) “LineAE-13 Volume Shortfall” means the amount in MMBtu’ s, if any, by which the LineAE-13 Volume Commitment exceeds the sum of: (i) the LineAE-13 Volumes delivered during the LineAE-13 Primary Term; (ii) upon Shipper’s election, any Excess Delivered Volumes (as calculated pursuant to Section 9 of this Agreement) for the then applicable Contract Year, provided however that such volumes shall not also apply towards Shipper’s Total Volume Commitment or Annual Volume Commitment in Section 9 of this Agreement; and (iii) any Gas that Gatherer is not able to receive from Shipper on any Day that Shipper is capable of delivering Gas through LineAE-13, whether or not such failure is caused by Force Majeure, so long as Gatherer’s failure to take such Gas is not because: (X) Shipper’s Gas contains more than 5% CO2 or 35 ppm H2S or otherwise fails to meet all other Gas Specifications, (Y) receiving Shipper’s Gas would interfere with or prevent Gatherer from meeting its Section 8.1 Pressure Requirements; or (Z) Shipper fails to obtain a market for its Gas.
(i) If a LineAE-13 Volume Shortfall exists, Shipper shall remit a payment to Gatherer calculated by multiplying the LineAE-13 Volume Shortfall by the LineAE-13 Gathering Fee (the “LineAE-13 Volume Shortfall Payment”). Gatherer shall perform the LineAE-13 Volume Shortfall calculation within sixty (60) days after the expiration of the LineAE-13 Primary Term, and the results of that calculation shall be promptly provided in writing to Shipper along with the amount, if any, of the LineAE-13 Volume Shortfall Payment. If there is a LineAE-13 Volume Shortfall, Shipper shall remit the LineAE-13 Volume Shortfall Payment within thirty (30) days of receipt of Gatherer’s written notice.
(j) Until the LineAE-13 Volumes of Shipper and Shipper Partner delivered during the LineAE-13 Primary Term collectively exceed [***] MMBtus (the “LineAE-13Threshold”), no LineAE-13 Volumes shall apply towards Shipper’s Total Volume Commitment or Annual Volume Commitment. Once the Shipper and Shipper Partner LineAE-13 Volumes collectively exceed the LineAE-13 Threshold, the excess (the “LineAE-13 Excess”) will apply to Shipper’s Total Volume Commitment or Annual Volume Commitment in proportion to Shipper and Shipper Partner LineAE-13 Volumes, regardless of where the volumes are shipped
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in the Magnolia Gathering System. In such case, Gatherer shall provide to Shipper an accounting of all volumes that have been shipped through the Magnolia Gathering System and LineAE-13 for the preceding Contract Year. Within thirty (30) days of Shipper’s receipt from Gatherer• of all the applicable information regarding volumes, Shipper shall provide to Gatherer, Shipper’s desired allocation of LineAE-13 Excess towards satisfaction the Annual Volume Commitment or Shipper’s Total Volume Commitment as the case may be.
(k) In addition to Shipper and Shipper Partner’s Preferential Capacity on the Magnolia Gathering System WOR contained in Section 9 of the Agreement, as may be amended from time to time, Shipper and Shipper Partner shall have a combined estimated 150 MMcf/d (75 MMcf/d for each Shipper and Shipper’s Partner) of gathering capacity on LineAE-13 (the “LineAE-13 Preferential Gathering Capacity”).
(l) In addition to Shipper and Shipper Partner’s Preferential Capacity rights to the capacity of the Treating Plants as set forth in Section 5.9 of this Agreement, from and after the LineAE-13 Completion Date, the Gas delivered by Shipper and Shipper Partner into the Magnolia Gathering System and LineAE-13 will have preference to all available capacity of the Kinder Morgan Treating Facilities, Sustainable Plant Site Treating Facilities, and the General Posey Site Treating Facilities which have a total combined estimated daily preferential treating capacity of up to 150 MMCf/d (75 MMCf/d for each of Shipper and Shipper’s Partner) (“Preferential Treating Capacity”), regardless of the Receipt Point or LineAE-13 Receipt Point at which such Gas is delivered, subject to the following:
(i) Shipper acknowledges that the quantity of the Preferential Treating Capacity will be impacted by the CO2 and H2S content in Shipper and Shipper Partner’s Gas. The estimated Preferential Treating Capacity of 150 MMcf/d assumes that Shipper and Shipper Partner’s Gas contains 5% CO2 and 35 ppm H2S. If Shipper and Shipper Partner’s Gas contains more or less than 5% CO2 or 35 ppm H2S, the Preferential Treating Capacity Gas may be reduced or increased. Additionally, Shipper and Shipper Partner’s LineAE-13 Preferential Gathering Capacity on LineAE-13 shall be reduced to the extent that Gatherer determines receiving Shipper or Shipper Partner’s Gas would interfere with or prevent Gatherer from meeting its Section 8.1 Pressure Requirements (unless otherwise agreed). Any reduction made pursuant to this section shall be made proportionately and in a manner as set forth in Section 3.3 of the General Terms and Conditions of this Agreement;
(ii) 25 MMCf/d for Gas with no more than 5% CO2 or 35 ppm H2S) of the Preferential Treating Capacity stated above is contingent upon Shipper and Shipper Partner delivering the corresponding amount of their Gas to the Sustainable Plant Site through gathering lines that originate upstream of the Sustainable Plant Site Treating Facilities as they exist on the date of this Amendment; and
(iii) Gatherer shall continue to maintain the current rented Kinder Morgan Treating Facilities, Sustainable Plant Site Treating Facilities, and the General Posey Site Treating Facilities (or replacement facilities in Gatherer’s discretion with the same Treating capacity as the rented facilities) through the LineAE-13 Term (defined above in subparagraph 1(c)).
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(m) LineAE-13 and the LineAE-13 Receipt Point are not subject to the Dedication, Sections 4.1 through 4.3, the Pressure Requirements in Section 8.1, Reduction in Gathering Fees in Section 8.1(c), or Permanent Release of Shipper’s Gas in Section 8.3. Gatherer will provide to Shipper at the periodic Section 5.5 meetings Gatherer’s updated estimated operating pressures based upon existing Magnolia System Gas volumes and projected LineAE-13 Gas volumes.
(n) The other provisions of Section 6 do not apply to LineAE-13 or the LineAE-13 Receipt Point.
(n) The nomination procedures of Section 6 of the General Terms and Conditions will apply to LineAE-13 Gathering, notwithstanding that such Section refers only to “Gathering”.
2. Clause (y) of Section 3.3 of the Agreement is deleted in its entirety and replaced with the following:
“(y) Gas from the specific Receipt Points or LineAE-13 Receipt Point not meeting the Plant Inlet Specifications, provided that in the event that more than one such Receipt Point or LineAE-13 Receipt Point has Gas that exceeds the Plant Inlet Specifications, the Receipt Point or LineAE-13 Receipt Point containing the greatest amount of CO2 and H2S will be curtailed first.”
3. The first sentence of Section 5.9 of the Agreement is hereby deleted in its entirety and replaced with the following:
“Shipper Partner and Shipper (Shipper Partner and Shipper shall collectively be referred to as “Preferential Capacity Shippers”) shall collectively have the exclusive preferential right over all third parties to the complete and total available capacity as provided herein, including, without limitation, blending capacity, of the Magnolia Gathering System, LineAE-13 Preferential Gathering Capacity, (inclusive of the Treating Plants, which shall included Preferential Treating Capacity, for the avoidance of doubt) in complete preference to and without any shared or proportional decrease in the Preferential Capacity Shippers’ Gas with any other shipper on the Magnolia Gathering System or LineAE-13 (inclusive of the Treating Plants, for the avoidance of doubt) in event of Force Majeure, Plant Maintenance or other partial or full curtailment (the “Preferential Capacity”).”
4. The defined terms “Preferential Capacity Gas” and “Shipper Gas or Shipper’s Gas” in Section 1 of the General Terms and Conditions are deleted in their entirety and replaced with the corresponding terms set forth below:
Preferential Capacity Gas. Gas delivered by a Preferential Capacity Shipper that is: (0 produced from the Committed Area and delivered onto the Magnolia Gathering System; or (ii) delivered into LineAE-13.
Shipper Gas or Shipper’s Gas. Gas that is subject to this Agreement.
5. For purposes of Sections 1.16, 2.1, 2.2, 3.3, 4.1, 4.2, 5.3, 6.2, 7.1, 7.2, 8.2, 8.4, 11.1 and 12.1 of the General Terms and Conditions, the words “Receipt Point,” “Receipt Points” and “Receipt Point(s)” will always be deemed to be followed by the words “and LineAE-13 Receipt Point”.
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6. The following defined terms are deemed to be added to the list of defined terms in Section 1 of the General Terms and Conditions: “LineAE-13”; “LineAE-13 Completion Date”; “LineAE-13 Excess”; “LineAE-13 Gathering Fee”; “LineAE-13 Preferential Treating Capacity”; “LineAE-13 Primary Term”; “LineAE-13 Receipt Point”; “LineAE-13 Term”; “LineAE-13 Threshold”; “LineAE-13 Volumes”; “LineAE-13 Volumes”; “LineAE-13 Volume Commitment”; “LineAE-13 Volume Shortfall”; “LineAE-13 Volume Shortfall” and “LineAE-13 Volume Shortfall Payment”.
Except as expressly amended hereby, the Agreement remains in effect as originally written.
IN WITNESS WHEREOF, this Second Amendment is executed as of the 13th day of April, 2010.
SHIPPER: SWEPI LP | ||
By: | /s/ Stephen Friedman | |
Name: | Stephen Friedman | |
Title: | Attorney-In-Fact |
GATHERER: CENTERPOINT ENERGY FIELD SERVICES, INC. |
By: | /s/ William H. May, Jr. | |
Name: | William H. May, Jr. | |
Title: | Sr. V.P. |
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EXHIBIT M
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