Exhibit 10.1
The Company has redacted certain confidential information in this agreement in reliance upon its confidential treatment request that it will file with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934. In this agreement, we indicate each redaction by use of asterisk *.
FIRST
AMENDMENT
to the
GAS PURCHASE AGREEMENT
between
WILLIAMS PRODUCTION RMT COMPANY LLC
and
RILEY NATURAL GAS COMPANY
and
PETROLEUM DEVELOPMENT CORPORATION
This First Amendment (“Amendment”) to the Gas Purchase Agreement dated June 1, 2006 by and betweenWILLIAMS PRODUCTION RMT COMPANY LLC,formerly known as WILLIAMS PRODUCTION RMT COMPANY (“Buyer”) andRILEY NATURAL GAS COMPANY(“Riley”) andPETROLEUM DEVELOPMENT CORPORATION(“PDC”) (the “Agreement”) is made and entered into effective as of the 1st day of June, 2011 (the “Effective Date of this Amendment”). PDC together with Riley, collectively, “Seller,” and Seller together with Buyer, may be referred to herein as the “Parties,” and individually, a “Party”. All initially capitalized terms used herein, but not defined herein, shall have the respective meanings given to such terms in the Agreement.
RECITALS
WHEREAS, Buyer and Seller are Parties to the Agreement concerning the purchase and commitment of Seller’s Gas; and
WHEREAS, Buyer and Seller desire to amend the Agreement as stated below.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Amendment, the Parties agree that the Agreement will be amended as follows:
AGREEMENT
| | 1. | | Seller’s Commitment.Section 1.1 shall be deleted in its entirety and replaced with the following: |
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| | | | Seller commits to Buyer to sell and deliver to Buyer, on a Firm basis, Seller’s present and future right, title, and interest in the Gas Volume Committed to this Agreement and outlined onExhibit F, that Seller delivers to the Receipt Point(s) from the Area of Interest (“Seller’s Gas”) described onExhibit B, subject to the terms of this Agreement. |
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| | 2. | | Area of Interest. Seller’s Area of Interest shall be as described onExhibit B, attached hereto and made a part hereof. |
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| | 3. | | Buyer’s Treating Service. Section 1.6 shall be deleted in its entirety and replaced with the following: |
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| | | | Seller’s Gas at the Receipt Point(s) may have a CO2 content that exceeds the most restrictive quality specification for CO2 content required from time to time by the Interconnecting Pipeline(s). Buyer shall Treat Seller’s Gas to reduce its CO2 content to no more than two percent (2.00%) by volume at the Delivery Point(s), provided the CO2 content of Seller’s Gas does not exceed four percent (4.00%) by volume at the Receipt Point(s). The fee for Treating Seller’s Gas that does not exceed three percent (3%) CO2 by volume at the Receipt Point(s) is incorporated into the Gathering and Processing Fee. In the event the CO2 content of Seller’s |
| | | | Gas exceeds three percent (3%) by volume at the Receipt Point(s), the Excess CO2 Treating Fee as set forth inExhibit E shall be payable from Seller to Buyer. In no event, however, is Buyer obligated to accept deliveries of Seller’s Gas at a given Receipt Point if the CO2 content of Seller’s Gas at that Receipt Point exceeds four percent (4.00%) by volume. If the weighted arithmetic average quality specification for CO2 content of the Interconnecting Pipeline(s) should ever be reduced below two and thirty-one hundredths percent (2.31%) per Mcf, then the Parties shall within thirty (30) Days of written notice thereof from Buyer, renegotiate, subject to Section 1.9 of this Agreement, the Gathering and Processing Fee. If the Parties are unable to renegotiate the Gathering and Processing Fee, then Buyer may refuse to accept further deliveries of Seller’s Gas affected thereby or Buyer may at its option, upon thirty (30) Days’ prior written notice to Seller, release such affected Gas from the provisions of this Agreement. Buyer’s right to renegotiate the Gathering and Processing Fee or, upon the failure of such renegotiation, to refuse to accept further deliveries of Seller’s Gas affected thereby or release such affected Gas from the provisions hereof, shall apply to each successive reduction of the most restrictive quality specification for CO2 content of the Interconnecting Pipeline(s) that is below two and thirty-one hundredths percent (2.31%) per Mcf. |
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| | 4. | | Service and Fee Description.Exhibit E shall be deleted in its entirety and replaced withExhibit E attached hereto and made a part hereof. |
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| | 5. | | Gas Volumes Committed.Exhibit F shall be deleted in its entirety and replaced withExhibit F attached hereto and made a part hereof. |
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| | 6. | | Standard Terms and Conditions.Exhibit A of the Agreement is amended to include the following new definition: |
| | A. | | 57 Area of Interestshall mean that surface area described onExhibit B. |
This Amendment may be executed in counterparts, each of which taken together shall constitute one and the same instrument.
This Amendment shall be governed by and construed and enforced in accordance with the laws of the same jurisdiction as apply to the Agreement.
Except as hereby amended, all terms and conditions contained in the Agreement shall remain in full force and effect. All future references to the Agreement shall be deemed to include this Amendment.
IN WITNESS WHEREOF, the Parties hereto have executed this Amendment to be effective as of the Effective Date of this Amendment.
| | | |
| “Buyer” | | “Seller” |
| WILLIAMS PRODUCTION RMT COMPANY LLC | | RILEY NATURAL GAS COMPANY |
| | | |
By: /s/ Neal Buck | | By: /s/George Courcier |
Printed Name: Neal Buck | | Printed Name: George Courcier |
Title: Vice President | | Title: Vice President |
| | | |
| | | “Seller”
PETROLEUM DEVELOPMENT CORPORATION |
| | | |
| | | By: /s/George Courcier |
| | | Printed Name: George Courcier |
| | | Title: Vice President |
EXHIBIT B
TO FIRST AMENDMENT
TO THE GAS PURCHASE AGREEMENT
DATED AS OF JUNE 1, 2006
between
WILLIAMS PRODUCTION RMT COMPANY LLC
and
RILEY NATURAL GAS COMPANY
and
PETROLEUM DEVELOPMENT CORPORATION
AREA OF INTEREST
All of Seller’s right, title, or interest in lands and the right to produce oil and/or Gas therefrom whether arising from fee ownership, working interest ownership, mineral ownership, leasehold ownership, or arising from any pooling, unitization or communitization of any of the foregoing rights in the acreage lying within the following townships in Garfield County, Colorado:
6S-97W
Section 12: S2
Section 13: NE
Section 24: ALL
Section 25: ALL
Section 36: Lot 1, Lot 2, Lot 3, Lot 4 (ada ALL)
7S-97W
Section 1: ALL
Section 2: E2E2
Section 12: N2, N2N2S2, N2N2S2N2S2
7S-96W
Section 6: S2, NE
Section 7: N2, SE
Section 13: Lot 4, Lot 10, Lot 11, Lot 12, Lot 13
Section 14: NESE, SESE
Section 24: Lot 2, Lot 3, Lot 4
Section 17: NW
Section 18: N2
6S-96W
Section 4: Part of Lot 1, Lot 5, Part of SENW, Part of SWNW, Part of NWSW, Part of NWSW, Lot 10,
Part of Lot 11, Lot 12
Section 5: Lot 1, Lot 8, Lot 9, Lot 16, Lot 17 (ada E2E2)
Section 7: ALL
Section 8: Lot 1, Lot 3, Lot 4, Lot 5, Lot 7, Lot 8, Lot 13, Lot 14, Lot 15
Section 9: Lot 10, Lot 11, Lot 12, Lot 13 (ada SW)
Section 16: Lot 13, Lot 14, NESW, SESW (ada SW)
Section 17: Lot 2, Lot 4, Lot 5, Lot 9, Lot 10, Lot 11, Lot 12, Lot 14, Lot 15, Lot 16, Lot 17 (ada W2)
EXHIBIT E
TO FIRST AMENDMENT
TO THE GAS PURCHASE AGREEMENT
DATED AS OF JUNE 1, 2006
between
WILLIAMS PRODUCTION RMT COMPANY LLC
and
RILEY NATURAL GAS COMPANY
and
PETROLEUM DEVELOPMENT CORPORATION
SERVICE AND FEE DESCRIPTION
| I. | | For deliveries from June 1, 2006 through May 31, 2009, the Gathering and Processing Fees and the Excess CO2 Fee will be fixed at the values actually charged in the applicable Settlement Statements for the respective months during that period. |
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| II. | | For deliveries from and after June 1, 2009, the following fees will apply, subject to the annual escalation of fees described in III. below: |
| | | | | | | | | | | |
| | | | | FL&U | | FL&U | | | | |
| Gathering and | | Gathering and | | (Low pressure | | (High pressure | | Low Delivery | | Excess CO2 |
| Processing Fee | | Processing Fee | | receipt points) | | receipt points) | | Fee | | Treating Fee |
| $ [*] per MMBtu Received at a Low Pressure Receipt Point | | $ [*] per MMBtu Received at a High Pressure Receipt Point | | Actual usage (initially [*] %) | | Actual usage (initially [*] %) | | $[*] per Accounting Period per Receipt Point | | $ [*] per Mcf for each 1.00%, or part thereof, Greater than 3.00% |
| III. | | Beginning on June 1, 2010, and annually at the beginning of each Contract Year thereafter, Buyer shall adjust the Gathering and Processing Fees and the Excess CO2 Treating Fee stated above by a percentage equal to the annual average percentage change, from the preceding Contract Year, in the cumulative implicit Gross Domestic Product price deflator (“GDPDEF”) computed and published by the U.S. Department of Commerce. Provided, however, that the adjustment shall never result in the Gathering and Processing Fees and the Excess CO2 Treating Fee being less than the fees stated in the table below. |
| | | | | | | | | | | |
| | | | | FL&U | | FL&U | | | | |
| Gathering and | | Gathering and | | (Low pressure | | (High pressure | | Low Delivery | | Excess CO2 |
| Processing Fee | | Processing Fee | | receipt points) | | receipt points) | | Fee | | Treating Fee |
| $ [*] per MMBtu Received at a Low Pressure Receipt Point | | $ [*] per MMBtu Received at a High Pressure Receipt Point | | Actual usage (initially [*] %) | | Actual usage (initially [*] %) | | $ [*] per Accounting Period per Receipt Point | | $ [*] per Mcf for each 1.00%, or part thereof, Greater than 3.00% |
Anexampleof the annual average percentage change in the GDPDEF factor calculation for the adjustment of rates is shown below:
| | | | | |
|
| Current Contract Year | | | | |
| That year (2nd Quarter) | | | 107.215 | |
| That year (1st Quarter) | | | 107.021 | |
| Prior year (4th Quarter) | | | 106.515 | |
| Prior year (3rd Quarter) | | | 105.942 | |
Annual Average GDPDEF: | | | 106.673 | |
| | | | | |
| Preceding Contract Year | | | | |
| That year (2nd Quarter) | | | 106.754 | |
| That year (1st Quarter) | | | 106.012 | |
| Prior year (4th Quarter) | | | 105.211 | |
| Prior year (3rd Quarter) | | | 104.262 | |
Annual Average GDPDEF: | | | 105.560 | |
| | | | | |
| Annual Average GDPDEF — Current Contract Year: | | | 106.673 | |
| Annual Average GDPDEF — Preceding Contract Year: | | | 105.560 | |
Annual Average Percentage Change Effective for the current Contract Year: | | | | |
106.673 / 105.560 = | | | 1.011 | |
Gathering and Processing Fee preceding Contract Year: | | $ | [*] | |
Adjusted Gathering and Processing Fee, current Contract Year; | | $ | [*] | |
EXHIBIT F
TO FIRST AMENDMENT
TO THE GAS PURCHASE AGREEMENT
DATED AS OF JUNE 1, 2006
between
WILLIAMS PRODUCTION RMT COMPANY LLC
and
RILEY NATURAL GAS COMPANY
and
PETROLEUM DEVELOPMENT CORPORATION
GAS VOLUMES COMMITTED
| | | | | | | | | | | | | | | | | |
| | | | | | | Seller's Original | | Adjustment to Seller’s | | Seller's Amended |
| | | | | | | Annual Volume | | Annual Volume | | Annual Volume |
| Contract Year | | (in MMBtu) | | (in MMBtu) | | (in MMBtu) |
| | 1. | | | June 1, 2006 — August 31, 2006 | | | 1,978,000 | | | no change | | no change |
| | 1. | | | September 1, 2006 — May 31, 2007 | | | 15,578,760 | | | no change | | no change |
| | 2. | | | June 1, 2007 — May 31, 2008 | | | 22,890,878 | | | no change | | no change |
| | 3. | | | June 1, 2008 — May 31, 2009 | | | 32,393,817 | | | no change | | no change |
| | | | | Sub Total: Contract Year 1-3 | | | 72,841,455 | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | 4. | | | June 1, 2009 — May 31, 2010 | | | 35,164,648 | | | | (15,164,648 | ) | | | 20,000,000 | |
| | 5. | | | June 1, 2010 — May 31, 2011 | | | 35,415,768 | | | | (15,415,768 | ) | | | 20,000,000 | |
| | 6. | | | June 1, 2011 — May 31, 2012 | | | 36,204,441 | | | | (16,204,441 | ) | | | 20,000,000 | |
| | 7. | | | June 1, 2012 — May 31, 2013 | | | 36,588,969 | | | | (16,588,969 | ) | | | 20,000,000 | |
| | 8. | | | June 1, 2013 — May 31, 2014 | | | 31,880,469 | | | | 12,300,000 | | | | 44,180,469 | |
| | 9. | | | June 1, 2014 — May 31, 2015 | | | 25,068,839 | | | | 12,300,000 | | | | 37,368,839 | |
| | 10. | | | June 1, 2015 — May 31, 2016 | | | 19,328,393 | | | | 12,300,000 | | | | 31,628,393 | |
| | 11. | | | June 1, 2016 — May 31, 2017 | | | 14,757,224 | | | | 12,300,000 | | | | 27,057,224 | |
| | 12. | | | June 1, 2017 — May 31, 2018 | | | 11,887,191 | | | | 12,300,000 | | | | 24,187,191 | |
| | 13. | | | June 1, 2018 — May 31, 2019 | | | 9,750,519 | | | | 12,300,000 | | | | 22,050,519 | |
| | 14. | | | June 1, 2019 — May 31, 2020 | | | 7,635,618 | | | | 12,300,000 | | | | 19,935,618 | |
| | 15. | | | June 1, 2020 — May 31, 2021 | | | 5,771,836 | | | | 12,300,000 | | | | 18,071,836 | |
| | | | | Sub Total: Contract Year 4-15 | | | 269,453,915 | | | | 35,026,174 | | | | 304,480,089 | |
