EXHIBIT 10.1
GAS PURCHASE AGREEMENT
AMENDED AND RESTATED CONTRACT 59
between
SEECO, INC.
SELLER
and
ARKANSAS WESTERN GAS COMPANY
BUYER
ARKANSAS WESTERN GAS COMPANY
GAS PURCHASE CONTRACT
SELLER: SEECO, INC.
CONTENTS
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Section Page
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1. Definitions................................................... 1
2. Term.......................................................... 3
3. Delivery...................................................... 3
4. Equipment..................................................... 3
5. Price......................................................... 3
6. Taxes......................................................... 4
7. Pressure...................................................... 4
8. Quantities.................................................... 5
9. Royalties..................................................... 7
10. General Terms and Conditions.................................. 8
11. Condensate.................................................... 8
Signature of the Parties........................................... 9
GENERAL TERMS AND CONDITIONS SUPPLEMENT
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(A) Measurement (H) Force Majeure
(B) Quality (I) Warranty
(C) Addresses and Notices (J) Termination on Default
(D) Successors and Assigns (K) Arbitration
(E) Multiple Completions (L) Commingled Stream
(F) Easements (M) Operation of Wells
(G) Government Regulations
EXHIBIT A
AMENDED AND RESTATED CONTRACT 59
THIS AGREEMENT, executed this 3rd day of February, 1995, by and between
ARKANSAS WESTERN GAS COMPANY, an Arkansas corporation, hereby referred to as
"Buyer," and SEECO, INC., an Arkansas corporation herein referred to as
"Seller."
WITNESSETH THAT:
1. Buyer and Seller have previously entered into a gas purchase contract
dated July 24, 1978, which is known to the parties as "Contract 59." As a
result of a certain stipulation and agreement entered into by the parties in
Arkansas Public Service Commission Docket No. 92-028-U, the parties desire to
amend and restate Contract 59 to include the terms contained herein. This
Amended and Restated Contract 59 constitutes the entire agreement of the parties
with respect to the subject matter hereof from the Effective Date forward and
supersedes all previous versions of Contract 59 and all previous amendments
thereto.
THEREFORE, for and in consideration of the premises and mutual covenants
herein contained, the parties hereby contract as follows:
Section 1: DEFINITIONS. As used in this contract, the following terms and
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phrases shall have the following particular meanings.
(A) "AWG Division" refers to Buyer's Northwest Arkansas gas utility
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operations but shall not include the operations of Buyer's Associated Natural
Gas Company Division in Northeast Arkansas and parts of Missouri.
(B) "Contract Year" shall be the same as the calendar year, except that the
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first Contract Year shall begin on the Effective Date and end on December 31,
1994, while the last Contract Year shall begin on January 1, 1998 and end on
July 24, 1998.
(C) "Contract Annual Volume" refers to an annual volume equal to 9.0
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billion cubic
1
feet ("Bcf"), however, for the period from the Effective Date to December 31,
1994, the Contract Annual Volume shall be 4.906 Bcf, and for the period January
1, 1998 to the Primary Expiration Date, the Contract Annual Volume shall be 5.25
Bcf.
(D) "Contract Daily Maximum" refers to 58,000 Mcf/d.
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(E) "Contract Price Schedule" refers to the price to be paid for gas
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delivered hereunder during the term hereof. Gas shall be assumed to be
delivered on a dry basis, subject to such adjustments as may be authorized by
the contract. The price per thousand cubic feet ("Mcf") payable for volumes
purchased hereunder shall be equal to the index as published in Inside FERC's
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Gas Market Report (Prices of Spot Gas Delivered to Pipelines, per MMBtu dry) for
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the first day of the applicable month for deliveries into NorAm Gas Transmission
Company from Arkansas and Oklahoma plus the premiums described below:
Contract Year Volume Premium
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1994 (July 1 - 3.816 Bcf $.95/Mcf
December 31) 1.09 Bcf $.50/Mcf
1995 7.0 Bcf $.95/Mcf
2.0 Bcf $.50/Mcf
1996 7.0 Bcf $.95/Mcf
2.0 Bcf $.50/Mcf
1997 7.0 Bcf $.95/Mcf
2.0 Bcf $.50/Mcf
1998 (January 1 - 4.083 Bcf $.95/Mcf
July 24) 1.167 Bcf $.50/Mcf
During each month of each Contract Year, the different premiums will be applied
on a pro rata basis to all purchases made hereunder throughout the Contract Year
up to the Contract Annual Volume. In the event that the above described index
ceases to be available, Buyer and Seller
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shall select a mutually agreeable replacement index as promptly as possible.
(F) "Effective Date" refers to the date July 1, 1994.
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(G) "Primary Expiration Date" refers to 7:00 a.m. on July 24, 1998.
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(H) "Point(s) of Delivery" refers to the inlet of Buyer's metering
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facilities to be located at or near each of the wells from which gas is
delivered hereunder or such other point or points as may be designated by Seller
from time to time. All Points of Delivery shall be either directly connected to
Buyer's system or deliverable to Buyer's system at no additional cost to Buyer.
Section 2: TERM.
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This contract shall continue in effect until the Primary Expiration Date.
Section 3: DELIVERY.
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The gas shall be delivered and title and responsibility shall pass to Buyer
at the Point of Delivery. Responsibility for damage caused by, or arising out
of possession of, the gas prior to its passage at the Point of Delivery shall be
borne by Seller.
Section 4: EQUIPMENT.
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Seller, at Seller's sole cost, risk and expense, shall be responsible for
the diligent and workmanlike construction, operation and maintenance of all
equipment and roads necessary to enable Seller to effect deliveries of gas in
accordance with the contract to Buyer at the Point of Delivery. Buyer shall be
responsible for the diligent and workmanlike construction, operation and
maintenance of all equipment necessary to receive deliveries of gas under this
contract at the Point of Delivery.
Section 5: PRICE.
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(A) Subject to the other provisions hereof, Buyer shall pay to Seller the
applicable price under the Contract Price Schedule for each Mcf of gas delivered
to Buyer hereunder.
(B) Buyer agrees to pay Seller on or before the twenty-fifth (25th) day of
each calendar month following Buyer's accounting month for all gas delivered
during such prior accounting month.
(C) Should the heating value of the gas delivered hereunder be found to be
more or less than one thousand (1,000) British thermal units ("Btu") per cubic
foot, the price provided for in this Section 5 shall be adjusted by multiplying
the price otherwise payable by a fraction whose numerator is the Btu content of
gas delivered hereunder, measured on a dry basis, and whose denominator is one
thousand (1,000). There shall be no other adjustments to the price payable
hereunder.
Section 6: TAXES.
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All taxes now or hereafter imposed in respect of any production from wells
from which gas is delivered hereunder shall be accounted for and paid to the
taxing authority by the party liable for such tax under the language of the
statute imposing same, provided that Buyer shall have the right, at Buyer's
option, to account for and pay to the taxing authority for Seller's account any
or all such taxes for which Seller may be liable. Buyer further agrees to
reimburse Seller for 100% of any new, increased or additional taxes (exclusive
of ad valorem or income taxes) imposed after July 24, 1978 on gas prior to
delivery to Buyer.
Section 7: PRESSURE.
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Seller shall deliver gas hereunder at the normal operating pressure
contained in Buyer's pipeline system from time to time.
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Section 8: QUANTITIES.
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(A) (1) Subject to the further provisions hereof, Buyer agrees to
purchase and receive during each Contract Year the Contract Annual volume.
(2) Buyer's receipts of gas hereunder will fluctuate from time to time
because of Buyer's fluctuating requirements for its system, and Buyer shall take
gas hereunder at a rate which matches as closely as reasonably possible the rate
of consumption of its AWG Division utility sales customers; provided, however,
that Buyer may take gas for injection into its storage facilities in such
volumes and at such times as Buyer reasonably deems necessary to meet the
requirements of its AWG Division utility customers. Buyer shall balance its
receipts hereunder over each Contract Year in order to receive the Contract
Annual Volume for that Contract Year, provided that to permit such balancing of
receipts Buyer shall have the right to require deliveries hereunder at a daily
rate of at least the Contract Daily Maximum. Nothing herein is intended to
limit Buyer's right to request deliveries from time to time at daily rates in
excess of the Contract Daily Maximum provided Seller is willing and able to sell
such excess volumes hereunder.
(B) The provisions of this section are subject to all the other terms and
conditions of this contract and the rules and regulations of any regulatory
authority having jurisdiction.
(C) Buyer may request to purchase hereunder, in addition to the Contract
Annual Volumes provided to be received hereunder, such additional volumes of gas
as Buyer may in the prudent operation of its business require from time to time
and which Seller is willing and able to sell hereunder. The price payable by
Buyer for such volumes shall be determined in the month of delivery using the
same index, assumptions, and adjustments described in the Contract
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Price Schedule plus a total premium over the index of $.50/Mcf.
(D) Seller recognizes that the efficient conduct of Buyer's business
requires the operation of Points of Delivery in accordance with the demands of
the system taking into consideration Buyer's take requirements under other gas
purchase contracts, and Seller agrees that Buyer shall operate any wells
designated as Points of Delivery and which are directly connected to Buyer's
pipeline system, as well as any other Points of Delivery which are directly
connected to Buyer's pipeline system, in accordance with the needs of its
utility system and with good field operating practices, and Buyer shall supply
at its sole cost and expense and by its own means and methods such labor as may
be required to operate said wells or other Points of Delivery and to perform
such other duties as are ordinarily required in the regular course of producing
and operating said wells or other Points of Delivery except that any remedial
work on wells such as a well workover or a recompletion shall be done by and
paid by Seller.
(E) Seller may designate additional wells to be connected to Buyer's
system, and Buyer shall promptly connect such wells; provided however, that
Buyer shall not be obligated, but shall have the right at its option, to connect
its system to and receive gas from any particular well or wells if Buyer's
estimate of the cost of the facilities necessary to connect the well to Buyer's
then existing system is more than $20,000 per Bcf of gas reserves. By "cost of
facilities" is meant the cost of the right of way, cost of pipe and other
equipment necessary, and cost of installing same. If it is not economically
feasible for Buyer to connect to a well under the foregoing cost standard,
Buyer, at Seller's request, shall make such connection if Seller shall agree to
contribute to Buyer the portion of the actual cost of the facilities in excess
of $20,000 per Bcf of gas reserves, as set forth above, or Seller may, at
Seller's option and at Seller's cost,
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risk and expense, install, own, operate and maintain the necessary facilities to
deliver gas from the particular well to Buyer at a mutually agreeable point
which is close enough to Buyer's then existing system so that it will be
"economically feasible" under the cost standard hereinabove set forth for Buyer
to connect to such mutually agreeable point; and, in such event, Buyer shall be
obligated to connect to that point, and the "Point of Delivery" for purposes of
this contract as to the gas from that particular well shall be the inlet of
Buyer's meter installation at that point.
Section 9: ROYALTIES.
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Seller shall bear all royalties, overriding royalties, production payments,
and other payments and settlements of whatsoever kind and nature due with
respect to production delivered hereunder or the failure to deliver, and shall
hold Buyer harmless against all claims, losses, damages and expenses on account
of such settlements. Seller further agrees to indemnify Buyer against any and
all royalty owner claims arising prior to July 1, 1994 or subsequently as a
result of any actions taken under a certain stipulation and agreement dated
October 31, 1994 in Arkansas Public Service Commission Docket No. 92-028-U or
this Amended and Restated Contract 59.
Seller will from time to time on request furnish to Buyer reasonable
evidence of title, including abstracts and division orders covering all
interests in gas subject to this agreement, but no examination, reliance, or
action of Buyer thereon or pursuant thereto shall impair Seller's warranties and
other agreements in this section contained. Buyer agrees to deduct from sums
owing by it hereunder the amounts due to the respective holders of royalty and
any overriding royalty interests and to holders of undivided leasehold or
mineral interests controlled but not
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owned by Seller and to pay such amounts direct to the persons entitled thereto
according to the applicable division orders, accounting to Seller only for the
remainder. It is understood that Buyer may from time to time deduct from any
monies payable hereunder on account of gas purchased, pro rata, and pay over to
governmental authorities, the amount of any and all taxes or other proper
charges due to governmental authorities on account of the production or sale of
natural gas purchased by Buyer hereunder, if required or permitted by applicable
law or regulation to be deducted from the purchase price of gas for purposes of
such payment over.
In the event that any of Seller's leasehold or mineral interests in any
well designated as a Point of Delivery or its right to sell gas hereunder or any
royalty, overriding royalty or other interest in subject gas shall be called in
question at any time by pending litigation, in law or in equity, or by formal
notice from one or more adverse claimants directed to Buyer, Buyer may withhold
without interest sums accruing hereunder on account of the interest or interests
so called in question until the question shall be finally adjudicated or
compromised or until there shall be furnished to Buyer a corporate surety bond
in form and amount satisfactory to Buyer protecting it from all loss or expense
it may suffer or incur by reason of the controversy; provided that no provision
of this section and no action taken pursuant thereto shall be construed to
relieve Seller of its warranties and other agreements in this section contained.
Section 10. GENERAL TERMS AND CONDITIONS.
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Additional terms and conditions are set forth in the "General Terms and
Conditions Supplement" which is attached hereto, identified herewith, and hereby
made part hereof by this reference, and said terms and conditions constitute
part of this contract.
Section 11. CONDENSATE.
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Seller shall have the right to operate standard type oil field separators
or low temperature separation equipment to separate condensate from the gas
prior to delivery hereunder, and the condensate thus separated shall be disposed
of by Seller free of this contract. No accounting shall be due Seller by Buyer
in respect of any liquefied or liquefiable hydrocarbons carried by or
recoverable from the gas delivered hereunder.
IN WITNESS WHEREOF, this contract has been executed in duplicate original
counterparts by the parties on the date first above written.
ARKANSAS WESTERN GAS COMPANY SEECO, INC.
By:_____________________________ By:________________________________
ATTEST: ATTEST:
________________________________ ___________________________________
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GENERAL TERMS AND CONDITIONS SUPPLEMENT
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This supplement is attached to and constitutes part of the Amended and
Restated Contract 59 between ARKANSAS WESTERN GAS COMPANY, as Buyer, and SEECO,
INC., as Seller, dated February 3, 1995.
(A) MEASUREMENT
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(1) Except as may be otherwise specifically provided elsewhere herein,
the measurement of gas delivered and received hereunder shall be in accordance
with the following.
(a) The unit of volume hereunder shall be 1,000 cubic feet of gas
(sometimes herein referred to as Mcf) as the standard temperature base and
standard pressure base specified in the Standard Gas Measurement Law of the
State in which the gas is delivered. Whenever the actual conditions of pressure
and temperature of the particular gas stream being measured differ from the
above standard bases, conversion of the volume from such actual conditions to
the above standard conditions shall be made in accordance with the Ideal Gas
Laws, corrected for supercompressibility as required under Standard Gas
Measurement Law of the State in which the gas is delivered in accordance with
the method customarily used by Buyer in that State. Buyer may use any
applicable findings and field rules of regulatory authorities with jurisdiction
for purposes of computations hereunder.
(b) Measurements of gas hereunder shall always be in accordance
with the requirements of law, and if the procedures, bases, or standards which
this contract contemplates will be used in the determination of gas volumes are
changed by law or regulatory action, then the price of gas hereunder and any
other provisions of this contract directly or indirectly affected by such change
shall be appropriately modified and adjusted to the extent necessary to the end
that calculations to determine sums of money due by either party to the other
under this contract after any such change or changes will reach the same end
result in dollars and cents as would have been reached hereunder in the absence
of such change.
(c) The volume of gas shall be measured at each Point of Delivery
by meters installed and operated and computations made as prescribed in the
latest accepted edition of The American Gas Association Gas Measurement
Committee Report No. 3, except as the parties may otherwise agree or may
otherwise have provided elsewhere herein. The values of the Reynolds number
factor, expansion factor, and manometer factor, or any of them, may be assumed
by Buyer to be one (1).
(d) The temperature of the gas at each Point of Delivery shall be
assumed to be 60 degrees Fahrenheit; however, either party may install a
recording thermometer to record the actual temperature.
(e) The specific gravity of the gas shall be determined for each
Point of Delivery in accordance with good engineering practice as often as found
necessary in actual
1
operation.
(f) Buyer shall install, own, operate and maintain standard type
measuring and testing equipment necessary hereunder and shall keep same accurate
and in repair. Readings, calibrations, tests, repairs and adjustments of said
equipment, and changing of charts, shall be done only by employees or agents of
Buyer and in accordance with sound engineering practice as often as found
necessary in actual operation. Any other party hereto shall have access to
Buyer's measuring and testing equipment at any reasonable time, and shall have
the right to have a representative present at tests, calibrations and
adjustments thereof. All tests shall be preceded by reasonable notice to the
operator of the well or wells affected or to such other party or parties hereto
as Buyer may be requested in writing to notify and shall be conducted at least
annually. Upon request by another party hereto for a special test of any meter
or auxiliary equipment, Buyer shall promptly verify the accuracy of same,
provided that the cost of such special test shall be borne by the requesting
party unless the percentage of inaccuracy is found to be more than two percent
(2%). If upon any test the total inaccuracy resulting from meter errors and
auxiliary equipment errors exceeds two percent (2%), then previous readings
shall be corrected to zero error for the period of time during which the
equipment was inaccurate, but not beyond the close of the preceding accounting
month; if said total inaccuracy is not more than two percent (2%), then previous
readings shall be considered correct but the equipment shall be adjusted to read
correctly.
(g) If any meter or auxiliary equipment is out of service or out
of repair for a period of time so that the amount of gas delivered cannot be
ascertained or computed from the reading thereof, then the gas delivered during
such period shall be estimated upon the basis of the best data available, using
the first of the following methods which is feasible: (i) by correcting the
error if the percentage of error is ascertainable by calibration, test, or
mathematical calculations; (ii) by using the registration of any check equipment
installed and accurately registering; or (iii) by estimating the volume on the
basis of deliveries during preceding periods under similar conditions when the
equipment was registering accurately.
(h) Upon request, Buyer shall submit its measurement charts and
records to any other party to this contract for examination, the same to be
returned within 20 days. Buyer's measurement charts and records for a given
accounting month shall be conclusively presumed correct if no written objection
thereto is served on Buyer within the 36-month period following the given
accounting month, and at the end of such 36-month period the same may be
destroyed.
(i) Any other party or parties hereto may install, operate and
maintain, at their own cost, risk, and expense, but in the same manner as is
required for Buyer's equipment hereunder, check measuring and testing equipment
of standard type, provided that the same does not interfere with the operation
of Buyer's equipment, but the measurement and testing of gas for purposes of
this contract shall only be by Buyer's equipment. Buyer shall have the same
rights with respect to check equipment as are granted the other party or parties
hereto with respect to Buyer's equipment.
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(B) QUALITY
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Gas delivered hereunder shall be clean, merchantable natural gas containing
not more than five grains of sulphur per hundred cubic feet of gas and not more
than one-fourth grain of hydrogen sulfide per hundred cubic feet of gas, and
shall be free of objectionable liquids and solids, oxygen and other deleterious
substances. The gas shall have an average Btu content of at least 975 Btu per
cubic foot. Buyer shall not be obligated to accept delivery of gas which either
does not conform to the standards of quality and heat content herein set forth
or contains corrosive products in quantities sufficient to impair the useful
life of Buyer's pipeline facilities or of any gasoline or other processing plant
processing the gas delivered, provided that, at Buyer's option, Buyer may from
time to time accept deliveries of any or all such gas and bring it up to
specification for Seller's account deducting the reasonable expense thereby
incurred from remittances otherwise due hereunder.
(C) ADDRESSES AND NOTICES
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Except as otherwise herein expressly provided, the parties may be addressed
for all purposes of this contract at the addresses set forth after their
respective signatures hereto, subject to change from time to time by written
notice to the other party. Written notices shall be deemed given to a party
when delivered to such party's address; written responses to such notices shall
be deemed given to a party when delivered to such party's address, or if sent by
United States mail, when deposited in the mail, properly addressed, with
sufficient postage affixed.
(D) SUCCESSORS AND ASSIGNS
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This contract shall extend to and be binding upon the successors, heirs,
legal representatives, and assigns of the parties. No transfer, assignment,
conveyance, or encumbrance, of any kind, of any interest whatsoever in respect
of which production is delivered to Buyer hereunder shall be binding upon Buyer
until Buyer shall have been given written notice thereof and furnished with a
duly certified copy of records evidencing same.
(E) MULTIPLE COMPLETIONS
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In the case of multiple completions, each separately completed and
producing zone shall be considered a separate well under this contract, and the
term "well" as used herein refers to each such separate completion except as may
otherwise appear clearly intended in context.
(F) EASEMENTS
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To the full extent that Seller is able to convey such rights, Buyer is
hereby granted and assigned an easement and servitude on the premises from which
gas is delivered hereunder for installing, operating, and maintaining pipelines
and equipment and for any other purposes connected herewith, with the right to
remove such lines and equipment before, or within a
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reasonable time after, the expiration of this contract. For any purpose
connected herewith, Buyer shall have free access to any part of Seller's leases
from which gas is delivered hereunder.
(G) GOVERNMENT REGULATIONS
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This contract shall be subject to all relevant present and future local,
state and federal laws, and all rules, regulations, and orders of any regulatory
authority having jurisdiction. Neither party shall be held in default for
failure to perform hereunder if such failure is due to good faith compliance
with such party's best understanding of the requirements of any such laws,
orders, rules or regulations. Seller warrants that production sold and
delivered hereunder has been and will be produced and handled in compliance with
the requirements of the Fair Labor Standards Act of 1938, and amendments
thereto, and any other applicable laws, orders, rules and regulations.
(H) FORCE MAJEURE
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In the event either party hereto is rendered unable wholly or in part by
force majeure to carry out its obligations under this agreement, other than to
make payments due hereunder, then on such party's giving notice and full
particulars of such force majeure in writing or by facsimile to the other party
(notice by Buyer to the operator of a well delivering gas hereunder shall
constitute notice to all parties hereunder owning interests in the production
from that well for purposes of this paragraph) as soon as possible after the
occurrence of the cause relied upon, the obligations of the party giving such
notice, so far as they are affected by such force majeure, shall be suspended
during the continuance of any inability so caused, and such cause shall, as far
as possible, be remedied with all reasonable dispatch. The term "force
majeure," as used herein, shall mean acts of God, strikes, lockouts, or
industrial disturbances, acts of the public enemy, wars, blockades,
insurrections, riots, epidemics, landslides, lightning, earthquakes, fires,
storms, floods, washouts, arrests and restraints of rulers and people, civil
disturbances, explosions, breakage of or accident to machinery, equipment, or
lines of pipe, the making of repairs, alterations or tests on machinery,
equipment or lines of pipe, the freezing of wells or lines of pipe, the partial
or entire failure of gas wells, the inability to acquire, or the delays in
acquiring, at reasonable cost and after the exercise of reasonable diligence,
such servitudes, right of way grants, permits, licenses, approvals and
authorizations by regulatory bodies, supplies and materials (or permission from
regulatory bodies to use supplies and materials on hand) as may be necessary in
order that obligations assumed hereunder may be lawfully performed in the manner
herein contemplated, any act or omission on the part of any purchaser or
purchasers of gas from Buyer by reason of force majeure affecting such purchaser
or purchasers, and any other causes, whether of the kind herein enumerated or
otherwise, which are not within the control of the party claiming suspension,
and which by the exercise of due diligence such party is unable to overcome,
provided that the exercise of due diligence shall never require the settlement
of labor disputes against the better judgment of the party having the dispute.
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(I) WARRANTY
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Seller warrants, and agrees to defend, title to production delivered
hereunder and the right of Seller to sell same. Seller further warrants that
all such production is delivered free and clear of all liens, encumbrances, and
adverse claims, including liens to secure payment of taxes. Seller shall bear
the economic burdens of, and except as may be otherwise herein provided shall
pay, all royalties, overriding royalties, production payments and other payments
and settlements of whatsoever kind and nature due in respect of production
delivered hereunder or the proceeds from the sale thereof under Seller's leases
and other contracts of record or otherwise binding on Seller, as well as
settlements with all other persons having any interest in production delivered
hereunder, and Seller agrees to indemnify Buyer and save it harmless from all
claims, suits, actions, debts, accounts, damages, costs, losses, and expenses
arising out of adverse claims of any and all persons to or against said
production. In the event any adverse claim is asserted, Buyer may retain
without interest, as security for the performance of Seller's obligations
hereunder with respect to such claim, any amount out of monies then or
thereafter payable to Seller hereunder up to the amount of such claim, until
such claim has been finally determined or until Seller shall have furnished bond
to Buyer in an amount and with sureties satisfactory to Buyer and conditioned
for the protection of Buyer with respect to such claim.
(J) TERMINATION ON DEFAULT
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If either party shall fail to perform any of the covenants or obligations
imposed upon it under this contract (except where such failure shall be excused
under the provisions hereof), the other party may, at its option, terminate this
contract by proceeding as follows: the party not in default shall cause a
written notice to be served on the party in default, stating specifically the
cause for terminating this contract and declaring it to be the intention of the
party giving the notice to terminate the same; thereupon the party in default
shall have thirty (30) days after the service of the notice in which to remedy
or remove the cause or causes stated in the notice for terminating the
contract,and, if within said period of thirty (30) days, the party in default
does so remedy and remove said cause or causes and fully indemnify the party not
in default for any and all consequences of such breach, then such notice shall
be withdrawn and this agreement shall continue in full force and effect. In
case the party in default does not so remedy and remove the cause or causes and
does not indemnify the party giving the notice for any and all consequences of
such breach, within said period of thirty (30) days, then this agreement shall
become null and void from and after the expiration of said period. Any
cancellation of this agreement pursuant to the provisions of this section shall
be without prejudice to the right of the party not in default to collect any
amounts then due it and without waiver of any other remedy to which the party
not in default may be entitled for violation of this contract.
(K) ARBITRATION
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Where specific provision, if any, is made in this contract for arbitration,
the following procedures shall be followed except as may be otherwise expressly
provided for the arbitration of a particular matter: Upon written notice from
either party to the other party, representatives
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of both parties shall meet and attempt to settle the matter first by mutual
agreement. If they are unable to do so, then the matter shall be submitted to
an impartial, qualified arbitrator whose decision shall be final and binding on
the parties and whose fee and expenses shall be borne equally by the parties.
If the parties have not settled the matter or agreed on an arbitrator within 30
days after the aforesaid written notice, then upon the application of either
party the arbitrator shall be designated by the then senior Federal judge for
the Western District of Arkansas.
(L) COMMINGLED STREAM
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If at any time gas from two or more wells from which gas is delivered
hereunder is commingled before delivery to Buyer, or if any gas subject to this
contract is commingled with gas not subject to this contract, whether from the
same well or other wells, before delivery to Buyer, then Buyer's take obligation
in either or both such situations shall be to receive from all sources at the
common point of delivery where Buyer receives the commingled stream a total
volume which can be allocated as among the wells or interests delivering at the
common point in such manner as to result in Buyer's receiving the volume Buyer
is obligated to receive from each under the contract or contracts covering same.
Under such circumstances, as between the parties Seller assumes responsibility
for allocating the volume received by Buyer at the common point as among the
various wells and interests delivering to Buyer at the common point and for
furnishing Buyer with such information as may be necessary to permit settlements
to be properly made hereunder.
(M) OPERATION OF WELLS
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(1) Seller, at Seller's expense shall:
(a) Complete, control, manage, operate and maintain any wells from
which gas is delivered hereunder in a workmanlike manner; and
(b) Conduct with Buyer's cooperation, or at Buyer's option,
cooperate with Buyer who shall conduct, such well tests as Buyer may require
from time to time, but not more often than once each six months, to determine
the open flow and rock pressure of the wells subject hereto, provided that in no
event shall any liability attach to Buyer in connection with the making of any
such tests except through the negligence of Buyer's agents.
(2) Buyer, at Buyer's expense shall:
(a) Install, operate and maintain such separators, heaters, and
other equipment as may be necessary to deliver gas under the terms and
conditions of this contract, and such testing connections as may be required;
(b) Equip, operate and regulate the pressures on, each of the
wells from which gas is delivered hereunder in such manner that the pressure and
the volume of gas delivered hereunder can be regulated in a safe and
satisfactory manner;
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(c) Regulate the volume of gas deliveries hereunder in accordance
with the needs of Buyer's gas system; and
(d) Keep as many attendants stationed in the area of the wells
from which gas is delivered hereunder as may be necessary in order that the
obligations assumed by Buyer hereunder may be efficiently performed at all
times.
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