EXHIBIT 10.27
ASSIGNMENT APPROVAL BY ALASKA PIPELINE COMPANY AND JOINDER AND
RATIFICATION BY AURORA GAS, LLC OF THE GAS SALES AGREEMENT
BETWEEN AND AMONG ANADARKO PETROLEUM CORPORATION,
PHILLIPS ALASKA, INC., AND ALASKA PIPELINE COMPANY
This Assignment Approval by Alaska Pipeline Company and Joinder and
Ratification by Aurora Gas, LLC ("Assignment") of the Gas Sales Agreement
Between and Among Anadarko Petroleum Corporation, Phillips Alaska, Inc., and
Alaska Pipeline Company ("Agreement") is entered into by and among
ConocoPhillips Alaska, Inc. (formerly known as Phillips Alaska, Inc.) ("CPA"),
Aurora Gas, LLC ("Aurora"), and Alaska Pipeline Company ("APC").
WHEREAS, under Section 13.12 of the Agreement, CPA's obligations are
independent of those of Anadarko Petroleum Corporation ("Anadarko");
WHEREAS, CPA has agreed to assign to Aurora, effective September 27, 2002,
all of its lease interests in the Field, as defined in Exhibit E to the
Agreement, a copy of which is attached as Exhibit 1 and incorporated in full by
reference, which lease interests will be assigned in a separate instrument or
instruments;
WHEREAS, CPA has agreed to assign all of its rights, duties, obligations,
responsibilities, and interests in and under the Agreement to Aurora;
WHEREAS, Aurora desires to assume CPA's rights, duties, obligations,
responsibilities, and interests in and under the Agreement, and to join and
ratify the Agreement and dedicate the gas in the Field to the performance of the
Agreement;
WHEREAS, the Agreement provides at Section 13.2 that any assignment of
obligations under the Agreement must receive the consent in writing by the other
party, which consent may not be unreasonably withheld;
WHEREAS, the Agreement provides at Section 13.3 that upon assignment by
CPA of any lease that is used to supply gas under the Agreement, the assignee
must ratify and join in the Agreement by executing an instrument describing the
lease and dedicating the gas to the performance of the Agreement; and
WHEREAS, Cook Inlet Region, Inc., the owner of the mineral rights in the
Field, has consented to an assignment of the leases to Aurora as evidenced by
attached Exhibit 2.
Page 1 of 3
NOW THEREFORE, the parties desire to provide for approval, ratification,
and joinder as provided in the Agreement, and agree for good and valuable
consideration, the receipt and sufficiency of which are acknowledged, as
follows:
1. CPA assigns all of its rights, duties, obligations, responsibilities,
and interests in and under the Agreement to Aurora, excepting only the
contingent responsibilities and duties for Backup as defined below.
2. Aurora hereby accepts and assumes CPA's rights, duties, obligations,
responsibilities, and interests in and under the Agreement as described in
paragraph 1 above, and agrees to fully and faithfully perform the Agreement in
accordance with its terms and conditions and this Assignment.
3. Aurora ratifies and joins in the Agreement as a party seller and
dedicates the gas in the Field to performance of the Agreement.
4. APC consents to the assignment of CPA's rights, duties, obligations,
responsibilities, and interests in and under the Agreement to Aurora as
described in paragraph 1 above, and agrees to accept Aurora's performance of
those rights, duties, obligations, and responsibilities.
5. This Assignment shall be effective upon the date of the recording in
the Anchorage Recording District of the instruments conveying CPA's lease
interests in the Field to Aurora.
6. Aurora has received the February 2002 Production Schedule (attached as
Exhibit 3) required by paragraph 3.3.6 of the Agreement and acknowledges and
agrees that the Production Schedule sets the maximum amount of gas APC is
required to take under the Agreement.
7. Aurora agrees that the Agreement is amended to prohibit assignment by
Aurora except in the sole discretion of APC, and that APC may withhold for any
reason its agreement to an assignment.
8. Aurora agrees that it will promptly, and in no event later than October
31, 2003, build a pipeline to connect the Moquawkie Field to a pipeline which
connects with APC's pipeline system so that gas deliveries can be made to APC
under the Agreement.
9. CPA acknowledges its obligation to supply all gas necessary to meet the
supply obligation under paragraph 3.1.1 of the Agreement (subject to Anadarko's
right to supply gas), as amended by a letter agreement between APC and CPA dated
September 17, 2002 (attached as Exhibit 4), to the extent Aurora does not meet
the
Page 2 of 3
obligation with gas from the Field or another field, and CPA agrees that this
obligation survives and is not affected by the Assignment.
10. CPA agrees to Backup the daily and annual volumes in the 2002
Production Schedule (Exhibit 3) until the later of:
a. connection of the Field by pipeline to a pipeline which connects
with APC's pipeline system and delivery of gas in the volumes required by the
Agreement for twelve (12) consecutive months. If gas in the volumes required by
the Agreement is available in any month but APC does not take it, the gas shall
be deemed delivered for purposes of this provision; or
b. March 31,2006,
but in any event, not after January 1, 2008 (that is, if not terminated earlier,
no Backup obligation exists after January 1, 2008).
"Backup" means to supply annually and daily one-half of any gas volume
required to be supplied by the 2002 Production Schedule which APC requires but
Aurora does not supply for any reason. For example, the 2002 Production Schedule
provides for a Daily Peak Rate of 13 MMcf in 2005. If on a given day in 2005 APC
requires 12 MMcf and Aurora supplies only 10 MMcf, CPA would be required to
supply 1 MMcf.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment on
the dates indicated below.
ConocoPhillips Alaska, Inc. Aurora Gas, LLC
By /s/ Joseph O. Leonard By /s/ G. Scott Pfoff
--------------------------- --------------------------------
Its Vice President Its President
Date 1/7/03 Date 12/23/02
Alaska Pipeline Company
By /s/ Daniel M. Dieckgraeff
----------------------------
Its Vice President
Date 1-13-03
Page 3 of 3
EXHIBIT 1
to Assignment Approval by Alaska Pipeline Company and Joinder and Ratification
by Aurora Gas, LLC of the Gas Sales Agreement Between and Among Anadarko
Petroleum Corporation, Phillips Alaska, Inc., and Alaska Pipeline Company
EXHIBIT E
TO THE GAS SALES AGREEMENT BETWEEN AND AMONG
ANADARKO PETROLEUM CORPORATION, PHILLIPS ALASKA, INC., AND
ALASKA PIPELINE COMPANY
THE FIELD
LEGAL DESCRIPTION
Seward Meridian, Township 11 North, Range 11 West:
The following lands within U.S. Survey 1865:
Sections 3-10 (protracted), all;
Sections 15-19 (protracted) (fractional), all;
and
All tidelands and submerged lands within the following sections:
Sections 15-22 (protracted).
Seward Meridian, Township 11 North, Range 12 West:
The following lands within U.S. Survey 1865:
Sections 1-2 (protracted), all;
Section 3 (protracted) (fractional),all;
Section 10 (protracted) (fractional), all;
Sections 11-14(protracted), all;
Section 15 (protracted) (fractional), all;
Section 22 (protracted) (fractional), all;
Section 23 (protracted),all;
Sections 24-27 (protracted) (fractional), all (not including
any tidelands or submerged lands);
and
GAS SALES AGREEMENT
Page 52
EXHIBIT E
Page 1 of 4 Pages
Exhibit 1
Page 2 of 4
The following lands outside U.S. Survey 1865:
Tract A, comprising the following:
Section 3 (fractional), all;
Sections 4-9, all;
Section 10(fractional), all;
Section 15 (fractional), all;
Sections 16-18, all;
Section 21, all;
Section 22 (fractional), all;
Section 27 (fractional), all (not including USS 1808, USS 4548
(Lot 1), USS 4548 (Lot 2), USS 3895, or any tidelands or
submerged lands);
Section 28 (fractional), all (not including USS 3895, USS 4549
(Lot 1), USS 4549 (Lot 2), USS 4549 (Lot 3), USS 4549
(Lot 4), USS 4550, or any tidelands or submerged lands).
and
U.S. Survey 1808;
U.S. Survey 3895;
U.S. Survey 3895;
U.S. Survey 4548 (Lots land 2);
U.S. Survey 4549 (Lots 1, 2, 3 and 4);
U.S. Survey 4550.
Seward Meridian, Township 12 North, Range 11 West:
The following lands outside U.S. Survey 1865:
Tract A, comprising the following:
Sections 3-10, all;
Sections 15-18, all;
Section 19 (fractional), all;
Section 20 (fractional), all (not including USS 4547);
Sections 21-22, all;
Sections 27-28 (fractional), all;
Section 29 (fractional), all (not including USS 4547);
GAS SALES AGREEMENT
Page 53
EXHIBIT E
Page 2 of 4 Pages
Exhibit 1
Page 3 of 4
and
U.S. Survey 4547;
and
The following lands within U.S. Survey 1865:
Sections 19-20 (protracted) (fractional), all;
Sections 27-29 (protracted) (fractional), all;
Sections 30-34 (protracted), all.
Seward Meridian, Township 12 North, Range 12 West:
The following lands outside U.S. Survey 1865:
Tract A, comprising the following:
Sections 1-21, all;
Sections 22-24 (fractional), all;
Section 27 (fractional), all;
Sections 28-33, all;
Section 34 (fractional), all;
and
The following lands within U.S. Survey 1865:
Sections 22-24 (protracted) (fractional), all;
Sections 25-26 (protracted), all;
Section 27 (protracted) (fractional), all;
Section 34 (protracted) (fractional), all;
Sections 35-36 (protracted), all.
GAS SALES AGREEMENT
Page 54
EXHIBIT E
Page 3 of 4 Pages
Exhibit 1
Page 4 of 4
Seward Meridian, Township 13 North, Range 11 West:
The following lands within Tract A:
Section 13, SE4;
Sections 19-36, all (not including USS 3964);
and
The lands within U.S. Survey 3964 (Lots 1 and 2).
GAS SALES AGREEMENT
Page 55
EXHIBIT E
Page 4 of 4 Pages
Exhibit 2
to Assignment Approval by Alaska Pipeline Company and Joinder and Ratification
by Aurora Gas, LLC of the Gas Sales Agreement Between and Among Anadarko
Petroleum Corporation, Phillips Alaska, Inc., and Alaska Pipeline Company
APPROVED ASSIGNMENTS OF OIL AND GAS LEASES
Recording Information (Anchorage Recording District)
CIRI Lease Number Record Number Date of Recording
- ----------------- ------------- -----------------
C-061387 2002-092405-0 December 6, 2002
C-061388 2002-092406-0 December 6, 2002
C-061389 2002-092407-0 December 6, 2002
C-061390 2002-092408-0 December 6, 2002
C-061391 2002-092409-0 December 6, 2002
C-061392 2002-092410-0 December 6, 2002
C-061393 2002-092411-0 December 6, 2002
C-061394 2002-092412-0 December 6, 2002
C-061395 2002-092413-0 December 6, 2002
C-061396 2002-092414-0 December 6, 2002
C-061452 2002-092415-0 December 6, 2002
C-061453 2002-092416-0 December 6, 2002
C-061500 2002-092417-0 December 6, 2002
C-061501 2002-092418-0 December 6, 2002
C-061502 2002-092419-0 December 6, 2002
State of Alaska Oil and Gas Leases
ADL-386064
ADL-338176
ADL-388233
Exhibit 2
Page 2 of 2
[PHILLIPS ALASKA, INC. LOGO] EXHIBIT 3
to Assignment Approval by Alaska Pipeline Company
and Joinder and Ratification by Aurora Gas, LLC of
the Gas Sales Agreement Between and Among
Anadarko Petroleum Corporation, Phillips Alaska,
Inc., and Alaska Pipeline Company
P.O. BOX 100360
ANCHORAGE, ALASKA 99510-0360 January 31,2002
Joseph C. Falcone
Commercial Consultant
Kuparuk and Cook Inlet Business Group
ATO Room 1168
Phone 907-265-1686
Fax 907-263-4486
E-mail jfalcone@ppco.com
Mr. Dan Dieckgraeff
Vice President, Finance and Rates
Enstar Natural Gas Company
3000 Spenard Road
Anchorage, Alaska 99519-0288
Via Facsimile Transmission to 276-6696
RE: MOQUAWKIE FIELD PRODUCTION SCHEDULE
Dear Dan:
Per Article 3.3.2 of the Alaska Pipeline/Anadarko/Phillips gas contract for
Moquawkie gas, we are providing Alaska Pipeline with a revised Production
Schedule. Other than the start date, the Engineer's Report you received last
year still reflects a reasonable production profile of the 2400' sand that was
tested. There are indications that other sands in the Lone Creek #l well may be
productive, but we have no new data to support this hypothesis.
We recognize there have been delays compared to the Moquawkie project as
originally conceived, but we will stand behind our backstop agreement to insure
your requirements are met.
The present target for Moquawkie start up is October 1, 2002. As such, our basis
for the revised Production Schedule for Moquawkie remains the DeGolyer and
MacNaughton report as of December 31, 2000. For our Production Schedule we have
"time shifted" the start of the production profile 273 days from January 1 to
October 1.
If you have any questions, please give me a call.
Yours truly,
/s/ Joseph Falcone
Joseph Falcone
Attachment:
2002 Production Schedule
cc: Scott Jepsen, Phillips
Dave Anderson, Anadarko
PHILLIPS ALASKA, INC. IS A SUBSIDIARY OF PHILLIPS PETROLEUM COMPANY
Exhibit 3
Page 2 of 2
PROVED PLUS PROBABLE RESERVES AS OF DECEMBER 31, 2000
ATTRIBUTABLE TO THE CARYA 2-4.2 RESERVOIR
IN THE MOQUAWKIE FIELD
(Gas volumes are expressed at 60 degrees
Fahrenheit and 14.65 psia)
Full Daily
Wellstream Annual Average Daily Peak
Production Shrinkage Sales Sales Rate
(MMcf) (MMcf) (MMcf) (MMcf) (MMcf)
2001 0 0 0 0 0
2002 486 8 478 5.2 13.0
2003 1,929 31 1,898 5.2 13.0
2004 1,929 31 1,898 5.2 13.0
2005 1,929 31 1,898 5.2 13.0
2006 1,858 31 1,827 5.0 12.5
2007 1,540 31 1,509 4.1 10.3
2008 1,139 31 1,108 3.0 7.6
2009 849 31 818 2.2 5.6
2010 638 31 607 1.7 4.2
2011 485 31 454 1.2 3.1
2012 374 31 343 0.9 2.3
2013 292 31 261 0.7 1.8
2014 247 31 216 0.6 1.5
2015 193 23 170 0.6 N/A
TOTAL 13,888 403 13,484
- ----------
Notes:
1. Probable reserves have not been risk adjusted.
2. N/A = Not applicable
[ENSTAR LOGO]
EXHIBIT 4
to Assignment Approval by Alaska ALASKA PIPELINE COMPANY
Pipeline Company and Joinder and 3000 Spenard Road
Ratification by Aurora Gas, LLC of the Gas P.O. Box 190288
Sales Agreement Between and Among Anchorage, AK 99519-0288
Anadarko Petroleum Corporation, Phillips (907)277-5551
Alaska, Inc., and Alaska Pipeline September 17, 2002
Company
Mr. Joseph Falcone
Kuparuk and Cook Inlet Business Group
Phillips Alaska, Inc.
P.O. Box 100360
Anchorage, Alaska 99510-0360
Re: Agreement Between and Among Anadarko Petroleum Corporation, Phillips
Alaska, Inc. and Alaska Pipeline Company Dated May 15, 2000 (the
"Moquawkie Contract")
Dear Joe:
We have exchanged correspondence and have had discussions concerning the
Unmet Requirements for 2003 under the above referenced Moquawkie Contract.
In your letter dated April 18, 2002, you indicated that Phillips and
Anadarko "would be willing to agree to a revised Backstop volume of 29.8 MMcf
per day Deliverability in 2003 with all other terms and conditions of the
Agreement remaining unchanged." The 29.8 MMcf per day was the Unmet Requirement
for Deliverability in 2003 in the October 1, 2001 "Buyer's Forecast of
Requirements".
This letter confirms Alaska Pipeline Company's agreement that Phillips and
Anadarko will provide the 2003 Unmet Requirements, both in terms of the Maximum
Deliverability and the Annual Purchase Obligation as a revised Backstop, with
all the other terms and conditions of the Moquawkie Contract remaining
unchanged.
As you know, Alaska Pipeline is in the process of preparing its October 1,
2002 "Buyer's Forecast of Requirements". The new Forecast may change the
estimate of the 2003 Unmet Requirements, although Total Requirements are not
expected to change materially.
A Subsidiary of [LOGO SEMCOENERGY]
Mr. Joseph Falcone Exhibit 4
Phillips Alaska, Inc. Page 2 of 2
September 17, 2002
Page 2 of 2
If you are in agreement with the forgoing, please so indicated by signing
the enclosed copy of this letter and return it to me.
Sincerely,
/s/ Daniel M. Dieckgraeff
Daniel M. Dieckgraeff
Vice President
Accepted and agreed to this 25 day of September, 2002.
Phillips Alaska, Inc.
By: /s/ Joseph Falcone
----------------------------
Title: Commercial Consultant
cc: David Anderson, Anadarko