99.2 Amendment to October 1, 2007 Gas Contract
AMENDMENT TO GAS PURCHASE CONTRACT
This Amendment is entered effective as of January 1, 2008, between SOUTH
TEXAS OIL COMPANY ("Seller") and DCP MIDSTREAM, LP ("Buyer").
In consideration of the premises and of the covenants contained herein,
the parties agree to amend the Gas Purchase Contract dated as of October 1,
2007 between the parties or their predecessors, Buyer's File No. GDS0822PUR
(the "Contract") covering various acreage and properties in Bastrop County,
Texas, as follows:
1. Revised Delivery Points. Section 2, DELIVERY POINTS, is deleted
in its entirety and is replaced with the following:
2. DELIVERY POINTS. (a) The Delivery Points for gas
to be delivered by Seller to Buyer for existing sources of
production will be at the inlets of Buyer's Facilities at
mutually agreeable site(s) on a 6" polyethylene pipeline
to be built by Buyer's Affiliate DCP Austin Gathering, LLC
("DCP Austin") from its existing pipeline in the J.H.
Bostick Survey, A-13, Bastrop County, Texas to a point at
or near the Marburger #1 Well in the R. N. Grimes Survey,
Bastrop County, Texas, a distance of approximately 2.08
miles ("Marburger Line"). Subject to acquisition of the
necessary rights of way and permits at reasonable costs,
Buyer will cause DCP Austin promptly to lay the Marburger
Line. Seller shall at its cost install a pipeline from the
Graeco No. 1 Well to the new Delivery Point near the
Marburger #1 Well.
(b) Seller also agrees to pay Buyer $180,000 upon
execution of this Amendment by Seller as reimbursement for
one third of the actual costs to procure and install the
Marburger Line. These actual costs shall include costs to
purchase any rights-of-way, including brokerage costs, and
all costs to purchase, install, and connect the Marburger
Line, including any other equipment deemed necessary by
Buyer or DCP Austin. Buyer will provide a full accounting
of the costs for the Marburger Line to Seller within 30
days following its completion and the availability of cost
information. If one third of the actual costs is less than
$180,000, Buyer shall refund to Seller the difference. If
one third of the actual costs exceeds $180,000, Seller
shall nevertheless have no further cost participation
liability for the line. If the Marburger Line is not
complete for any reason prior to July 31, 2008, Buyer
shall promptly refund to Seller the $180,000 cost
participation payment, and Seller will have no further
cost participation responsibility for the Marburger Line.
(c)If Seller and other working interest owners deliver in
excess of 220,000 Mcf during the first two (2) years of
deliveries that has been produced from the wells and
leases committed under this Contract or from other
production sources later added or that are otherwise
delivered through the Marburger Line, effective as of the
first of the following month, Buyer shall pay Seller an
additional $0.** per Mcf of gas delivered under this
Contract until Seller has received through those payments
all cost participation amounts that it previously paid to
Buyer under this Section, without interest.
(d) The Delivery Points for future sources of production
committed under this Contract will be established under
Section B.2 of Exhibit A, except that Buyer agrees to
cause DCP Austin to install measurement stations for all
future wells that are to be connected under this Contract.
These measurement stations are to be on DCP Austin's 4" or
6" pipelines or at other mutually agreeable locations, so
long as Seller can demonstrate continuous flow of at least
50 Mcf per Day and Seller installs the necessary pipeline
from the lease production points to each new Delivery
Point.
(e) Title to the gas and all its components shall pass to
and vest in Buyer at the Delivery Points without regard to
the purposes for which Buyer may later use or sell the gas
or its components.
2. Price. Section 5.1, CONSIDERATION, is deleted in its entirety, and
is replaced with the following:
5.1 CONSIDERATION. As full consideration for the
gas and all its components delivered to Buyer each month,
Buyer shall pay Seller (i) **% of the net value
determined under Section 5.2 below for Residue Gas
attributable to Seller's gas, and (ii) **% of the net
value under Section 5.3 below for any recovered NGLs
attributable to Seller's gas. If Seller's deliveries
exceed an average of 500 Mcf per Day during any month,
Buyer shall pay Seller (i) **% of the net value
determined under Section 5.2 below for Residue Gas
attributed to Seller's gas, and (ii) **% of the net value
under Section 5.3 below for any recovered NGLs attributed
to Seller's gas. No separate payment or value calculation
is to be made under this Contract for helium, sulfur,
CO2, other non- hydrocarbons, or for Inferior Liquids.
3. Scope. The Contract is amended to the extent provided above. In
all other respects, it is confirmed and shall continue in full force and
effect. This Amendment supersedes and fully replaces the previous Amendment to
the Contract between the parties that was also effective as of January 1, 2008.
4. Counterparts. This Amendment may be executed in any number of
counterparts, all of which shall be considered together as one instrument. This
Amendment is binding upon all parties executing it, whether or not it is
executed by all parties owning interests in the properties committed under the
Contract as amended.
The parties have signed this Amendment by their duly authorized representatives
as of the date stated above.
SOUTH TEXAS OIL COMPANY DCP MIDSTREAM, LP
By: ________________________________ By: __________________________
Managing Director, South and Central Texas Chief Executive Officer
Signed on: February 15, 2008