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ITEM 14(a)3, EXHIBIT 10.21
TERMINATION AGREEMENT
THIS TERMINATION AGREEMENT (hereinafter "Termination Agreement") is
made, entered into and effective as of October 1, 1996, by and between Tesoro
E&P Company, L.P., acting through its General Partner, Tesoro Exploration and
Production Company (hereinafter "Tesoro"), Coastal Oil & Gas Corporation and
Coastal Oil & Gas USA, L.P. (collectively referred to as "Coastal"), and
Tennessee Gas Pipeline Company (hereinafter "Tennessee"), as follows:
WITNESSETH
WHEREAS, Tesoro and Coastal (collectively referred to as "Sellers") are
Sellers pursuant to a Gas Purchase and Sales Agreement dated January 16, 1979
by and between Tennessee, as buyer, National Exploration Company and Eton
Partnership, as seller, and Gulf Energy & Development, as gatherer, covering
certain leases in the Bob West Field and Falcon Field, Zapata County, Texas and
identified as Tennessee's Contract No. 805 (the "Contract");
WHEREAS, in 1990 and 1991, Sellers created two 352-acre gas units known
as the Tesoro Exploration and Production Company Guerra 352 Acre Gas Unit
(Guerra A Unit) and the Tesoro Exploration and Production Company U.S.A.-Guerra
352 Acre Gas Unit (Guerra B Unit) (collectively referred to as "the Guerra
Units");
WHEREAS, the Guerra Units are composed of certain acreage and leases,
limited to particular depths, including certain of the leases that were
originally dedicated to the Contract (such leases insofar as they cover the
particular depths in the Guerra Units are referred to as the "Dedicated
Leases") and other leases and acreage that were not originally dedicated to the
Contract, all of which is more specifically set forth and described in the
Declarations of Unit recorded at Vol. 617, p. 550, and at Vol. 626, p. 168,
respectively, in the official records of Starr County, Texas, and at Vol. 429,
p. 529, and at Vol. 436, p. 210, respectively, in the official records of
Zapata County, Texas, together with any amendments thereto (including the
Amendment recorded in Vol. 516, p. 263 of the official records of Zapata
County, Texas, and at Vol. 719, p. 531 of the official public records of Starr
County, Texas), which acreage and leases are collectively referred to herein as
"the Unitized Acreage;" and
WHEREAS, the Federal Energy Regulatory Commission ("Commission") issued
Order No. 636, III FERC Stats & Regs. paragraph 30,939 (1992), which, among
other things, requires interstate pipelines that provided bundled sales service
to unbundle the sales, transportation, and storage services offered to
customers and to provide such unbundled services on a non-discriminatory basis;
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WHEREAS, Tennessee has determined that it must terminate, assign or
otherwise realign its existing gas supply contracts with producers, including
but not limited to the Contract, in connection with implementing the
requirements of Order No. 636 in order to provide the unbundled services
contemplated by the Commission in Order No. 636 and to mitigate any costs
resulting from the realignment of Tennessee's existing gas supply contracts.
NOW, THEREFORE, for and in consideration of the mutual covenants,
promises and agreements herein contained Sellers and Tennessee hereby agree to
terminate the Contract and do hereby terminate the Contract as between Sellers
and Tennessee effective as of October 1, 1996 insofar as the Contract covers
Sellers' interest.
Executed this 24th day of December, 1996.
TENNESSEE GAS PIPELINE COMPANY COASTAL OIL & GAS USA, L.P.
By Coastal Oil & Gas Corporation
its Managing Partner
By: /s/ JOHN W. SOMERHALDER II By: /s/ R. D. ERSKINE
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Name: John W. Somerhalder II Name: R.D. Erskine
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Title: President Title: V.P. Production
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TESORO E&P COMPANY, L.P. COASTAL OIL & GAS CORPORATION
By Tesoro Exploration and Production
Company, its General Partner
By: /s/ BRUCE A. SMITH By: /s/ R. D. ERSKINE
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Name: Bruce A. Smith Name: R. D. Erskine
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Title: Chairman of the Board Title: V. P. Production
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ACKNOWLEDGMENTS
STATE OF TEXAS )
)
COUNTY OF HARRIS )
This instrument was acknowledged before me on this 9th day of January,
1997, by John W. Somerhalder II, President of Tennessee Gas Pipeline Company,
a Delaware corporation, on behalf of said company.
[SEAL] /s/ ANN C. MEYER
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Notary Public in and for the State of Texas
STATE OF TEXAS )
)
COUNTY OF BEXAR )
This instrument was acknowledged before me on this 13th day of January,
1997, by Bruce A. Smith, Chairman of the Board of Tesoro Exploration and
Production Company, a Delaware corporation, general partner of Tesoro E&P
Company, L.P., a limited partnership, on behalf of said partnership.
[SEAL] /s/ LINDA IDEN
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Notary Public in and for the State of Texas
STATE OF TEXAS )
)
COUNTY OF HARRIS )
This instrument was acknowledged before me on this 23rd day of December,
1996 by R.D. Erskine, Sr. Vice President of Coastal Oil & Gas Corporation, a
Delaware corporation, on behalf of said corporation.
[SEAL] /s/ SHIRLEY A. COOPER
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Notary Public in and for the State of Texas
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STATE OF TEXAS )
)
COUNTY OF HARRIS )
This instrument was acknowledged before me on this 23rd day of December,
1996 by R. D. Erskine, Sr. Vice President of Coastal Oil & Gas Corporation, a
Delaware corporation, general partner of Coastal Oil & Gas of Texas, L.P., a
limited partnership, on behalf of said partnership.
[SEAL] /s/ SHIRLEY A. COOPER
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Notary Public in and for the State of Texas
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