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Exhibit 10.19
Contract No. 33206000
Firm Transportation Service Agreement
Rate Schedule TF-1
between
COLORADO INTERSTATE GAS COMPANY
and
PETROGLYPH ENERGY, INC.
Dated: JULY 1, 1998
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FIRM TRANSPORTATION SERVICE AGREEMENT
RATE SCHEDULE TF-1
- -------------------------------------------------------------------------------
The Parties identified below, in consideration of their mutual
promises, agree as follows:
1. TRANSPORTER: COLORADO INTERSTATE GAS COMPANY
2. SHIPPER: PETROGLYPH ENERGY, INC.
3. APPLICABLE TARIFF: Transporter's FERC Gas Tariff, First Revised Volume
No. 1, as the same may be amended or superseded from time to time ("the
Tariff").
4. CHANGES IN RATES AND TERMS: Transporter shall have the right to propose to
the FERC changes in its rates and terms of service, and this Agreement
shall be deemed to include any changes which are made effective pursuant to
FERC Order or regulation or provisions of law, without prejudice to
Shipper's right to protest the same.
5. TRANSPORTATION SERVICE: Transportation Service at and between Primary
Point(s) of Receipt and Primary Point(s) of Delivery shall be on a firm
basis. Receipt and Delivery of quantities at Secondary Point(s) of Receipt
and/or Secondary Point(s) of Delivery shall be in accordance with the
Tariff.
6. POINTS OF RECEIPT AND DELIVERY: Shipper agrees to Tender gas for
Transportation Service, and Transporter agrees to accept Receipt Quantities
at the Primary Point(s) of Receipt identified in Exhibit "A." Transporter
agrees to provide Transportation Service and Deliver gas to Shipper (or for
Shipper's account) at the Primary Point(s) of Delivery identified in
Exhibit "A."
7. RATES AND SURCHARGES: As set forth in Exhibit "B."
8. NEGOTIATED RATE AGREEMENT: N/A
9. PEAK MONTH MDQ:
MDQ (DTH/D) EFFECTIVE DATE FROM IN-SERVICE DATE*
- ------------ ---------------------------------------------
2,000 In-Service Date through month 3
3,000 Month 4 through month 6
4,000 Month 7 through month 9
5,000 Month 10 through month 12
6,000 Month 13 through month 15
7,000 Month 14 through month 18
8,000 Month 19 through month 21
10,000 Month 22 through month 24
16,000 Month 25 through year 10
14,000 10 years through 10 years, 3 months
13,000 10 years, 4 months through 10 years, 6 months
12,000 10 years, 7 months through 10 years, 9 months
11,000 10 years, 10 months through 11 years
10,000 11 years through 11 years, 3 months
9,000 11 years, 4 months through 11 years, 6 months
8,000 11 years, 10 months through 12 years
6,000
*The "In-Service Date" of the Cucharas Lateral is defined as the first day of
the month following the date the Cucharas Lateral is completed and in service.
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If, at any time after the second anniversary date of the In-Service Date (but
prior to the tenth anniversary date of the In-Service Date), there is
insufficient Available Production to fill Shipper's MDQ, then Shipper shall
have the one-time option to reduce the MDQ under this Agreement to the level of
Available Production. To exercise such option, Shipper shall provide
Transporter with 60 days' prior written notice and shall pay Transporter the
prepaid reservation charges (PRC) amount described below. "Available
Production" means the monthly average daily volume of gas produced from the
leases and lease positions owned, hereafter acquired or controlled by
operation, by Shipper or a Shipper affiliate in the geographic area described
on Exhibit "C" hereto, excluding lease use gas, line loss, and gas used as
gathering fuel. Notwithstanding anything to the contrary in this Agreement,
Shipper shall have the full and complete right to determine when and to what
extent such leases and lease positions will be developed and gas produced
therefrom.
In the event Shipper elects to reduce the MDQ under this Agreement pursuant
to the provisions of the paragraph above, the PRC amount shall equal the
result of the following formula:
[16,000 - X] Where X = the new MDQ (in Dth/day) under
$6,400,000 x ------------ this Agreement, after reduction by Shipper
16,000
10. TERMS OF AGREEMENT: The term of this Agreement shall commence on the
first of the month following the In-Service Date of
the Cucharas Lateral and shall remain in effect for
12 years thereafter. However, each incremental
increase in MDQ shall be effective for a period of
10 years as shown in paragraph 9.
11. NOTICES, STATEMENTS, AND BILLS:
TO SHIPPER:
INVOICES FOR TRANSPORTATION:
Petroglyph Energy, Inc.
P.O. Box 1839
Hutchinson, Kansas 67504-1839
Attention: Theresa Sotomayor
ALL NOTICES:
Petroglyph Energy, Inc.
1302 North Grand
Hutchinson, Kansas 67501
Attention: Craig Saldin
TO TRANSPORTER:
See Payments, Notices, Nominations, and Points of Contact sheets
in the Tariff.
12. SUPERSEDES AND CANCELS PRIOR AGREEMENT: N/A
13. ADJUSTMENT TO RATE SCHEDULE TF-1 AND/OR GENERAL TERMS AND CONDITIONS: Any
conveyance or other assignment by Shipper, its successors or assigns of an
interest in all or substantially all the leases or other gas rights
underlying Available Production shall include an assignment of this
Agreement to the extent of the interests conveyed. Shipper's rights and
obligations under this Agreement shall not otherwise be assignable without
Transporter's written consent, which consent shall not be unreasonably
withheld. Shipper agrees to execute an instrument suitable for recording in
the real property records of Huerfano and Las Animas counties reflecting
this provision.
14. INCORPORATION BY REFERENCE: This Agreement in all respects shall be subject
to the provisions of Rate Schedule TF-1 and to the applicable provisions of
the General Terms and Conditions of the Tariff as
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filed with, and made effective by, the FERC as same may change from time to
time (and as they may be amended pursuant to Section 13 of the Agreement).
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
TRANSPORTER: SHIPPER:
COLORADO INTERSTATE GAS COMPANY PETROGLYPH ENERGY, INC.
By /s/ Thomas L. Price By /s/ S.K. Smith
------------------------------- -------------------------------
Thomas L. Price
Vice President
Approved S.K. Smith
for Execution -----------------------------------
(Print or type name)
By [illegible] Executive Vice President
---------------------- -----------------------------------
Legal Dept. (Print or type title)
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EXHIBIT "A"
Firm Transportation Service Agreement
between
COLORADO INTERSTATE GAS COMPANY
and
PETROGLYPH ENERGY, INC.
Dated: JULY 1, 1998
1. Shipper's Maximum Delivery Quantity ("MDQ"): See Paragraph 9.
PRIMARY POINT(S) OF MAXIMUM RECEIPT
PRIMARY POINT(S) OF RECEIPT RECEIPT QUANTITY PRESSURE
(NOTE 1) (DTH PER DAY) (NOTE 2) P.S.I.G.
- -------------------------------------- ---------------------- --------------------
New meter station to be constructed by Same as MDQ At a pressure
Transporter in the north half of sufficient to enter
Township 29S, Range 67W, the Cucharas Lateral
Huerfano County, CO (up to the MAOP of
the Cucharas
Lateral)
PRIMARY POINT(S) OF MAXIMUM RECEIPT
PRIMARY POINT(S) OF RECEIPT RECEIPT QUANTITY PRESSURE
(NOTE 1) (DTH PER DAY) P.S.I.G.
- -------------------------------------- ---------------------- --------------------
Dumas (Note 3) Same as MDQ 650
NOTES: (1) Information regarding Point(s) of Receipt and Point(s) of Delivery,
including legal descriptions, measuring parties, and
interconnecting parties, shall be posted on Transporter's
electronic bulletin board. Transporter shall update such
information from time to time to include additions, deletions, or
any other revisions deemed appropriate by Transporter.
(2) Each Point of Receipt Quantity may be increased by an amount equal
to Transporter's Fuel Reimbursement percentage. Shipper shall be
responsible for providing such Fuel Reimbursement at each Point of
Receipt on a pro rata basis based on the quantities received on any
Day at a Point of Receipt divided by the total quantity Delivered
at all Point(s) of Delivery under this Transportation Service
Agreement.
(3) Shipper shall not be restricted from designating another delivery
point(s) as Primary Delivery Point(s) should another point(s)
become available during the term of this Agreement as specified in
the Tariff. However, unless otherwise agreed, the rate for
transportation service to another Point(s) of Delivery shall be
Transporter's maximum rate.
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Page 1 of 3
EXHIBIT "B"
Firm Transportation Service Agreement
between
COLORADO INTERSTATE GAS COMPANY
and
PETROGLYPH ENERGY, INC.
Dated: JULY 1, 1998
PRIMARY PRIMARY R1
POINT(S) OF POINT(S) OF RESERVATION COMMODITY FUEL
RECEIPT DELIVERY RATE RATE TERM OF RATE REIMBURSEMENT SURCHARGES
- -------------- ----------- ----------- --------- --------------- ------------- ----------
New meter Dumas (Notes 1 (Notes 1 12 years from (Note 2) (Note 3)
station to be and 5) and 5) first of the
constructed by month following
Transporter in the date the
the north half Cucharas
of Township Lateral is
29S, Range completed and
67W, in service
Huerfano
County, CO
SECONDARY SECONDARY R1
POINT(S) OF POINT(S) OF RESERVATION COMMODITY FUEL
RECEIPT DELIVERY RATE RATE TERM OF RATE REIMBURSEMENT SURCHARGES
- -------------- ------------- ----------- --------- --------------- ------------- ----------
New meter Barbwire, Big (Notes 1 (Notes 1 12 years from (Note 2) (Note 3)
station to be Blue, and 5) and 5) first of the
constructed by Cattleguard, month following
Transporter in Sherman the date the
the north half County, Cucharas
of Township Tannery, Lateral is
29S, Range Tumbleweed completed and
67W, in service
Huerfano
County, CO
All All (Note 4) (Note 4) 12 years from (Note 2) (Note 3)
first of the
month following
the date the
Cucharas
Lateral is
completed and
in service
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EXHIBIT "B"
NOTES: (1) (a) Except as provided in subparagraph (b) below, the rate for
service under this Agreement ("Fixed Rate") shall be 32.50
cents per Dth (computed on a 100 percent load factor basis),
plus fuel, L&U, GRI, if applicable, and ACA and all other
surcharges applicable to Transporter's Rate Schedule TF-1.
Should Transporter's Maximum Rate as defined below, when
computed on a 100% load factor basis exceed 32.50 cents per Dth
except as provided in subparagraph (b) below, the Fixed Rate
shall nevertheless be applicable. Should Transporter's Maximum
Rate or rate components be set at a level such that Transporter
is unable to collect the Fixed Rate, then Shipper agrees to an
increase in the MDQ or to other lawful arrangements, such that
the Parties are placed in the same economic position as if
Transporter had collected the Fixed Rate.
(b) Transporter and Shipper agree that no reserve dedication, well
dedication, or acreage dedication exists. However, Transporter
is agreeing to the Fixed Rate in recognition of Shipper's
agreement to tender to Transporter for transportation under
this Agreement: (i) all Available Production (other than Local
Consumption) up to the MDQ volume set forth in paragraph 9; and
(ii) only Available Production. For any period of time in which
Shipper fails to satisfy both conditions (i) and (ii) above, at
Transporter's option, the rate for service under this Agreement
shall be the ten-effective maximum reservation and commodity
rates for firm transportation service under Transporter's Rate
Schedule TF-1, plus fuel, L&U, GRI (if applicable), ACA, and
all other surcharges applicable to Transporter's Rate Schedule
TF-1 ("Maximum Rate"). "Local Consumption" means a volume of
Available Production which Shipper delivers from its gathering
system for local consumption.
(2) Fuel Reimbursement shall be as stated on Transporter's Schedule of
Surcharges and Fees in the Tariff, as they may be changed from time
to time, unless otherwise agreed between the Parties.
(3) Surcharges, If Applicable: All applicable surcharges, unless
otherwise specified, shall be the maximum surcharge rate as
stated in the Schedule of Surcharges and Fees in The Tariff, as
such surcharges may be changed from time to time.
GQC:
The Gas Quality Control Surcharge shall be assessed pursuant to
Article 20 of the General Terms and Conditions as set forth in
The Tariff.
GRI:
The GRI Surcharge shall be assessed pursuant to Article 18 of
the General Terms and Conditions as set forth in The Tariff.
HFS:
The Hourly Flexibility Surcharge shall be assessed pursuant to
Article 20 of the General Terms and Conditions as set forth in
The Tariff.