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Confidential

GAS GATHERING AGREEMENT

BETWEEN

KINETICA MIDSTREAM ENERGY, LLCAND

_____________________________________________ (“PRODUCER”)

KME document.docx 042013 1

TABLE OF CONTENTS

1. Definitions.......................................................................................................................................4

2. Gas Supply Connected to Gathering Area......................................................................................8

3. Producer’s Reservations of Rights...................................................................................................9

4. Possession of Gas and Condensate at Receipt Point(s) and Delivery Point(s)...............................9

5. System Operations and Imbalances Procedures...........................................................................10

6. Nominations and Scheduling.........................................................................................................10

7. Quality...........................................................................................................................................11

8. Tests...............................................................................................................................................11

9. Measurement and Meter Testing.................................................................................................11

10. Allocation of Gains, Fuel and Loss.................................................................................................12

11. Fees and Other Consideration.......................................................................................................12

12. Accounting, Payments and Credit Assurances..............................................................................12

13. Warranty........................................................................................................................................14

14. Taxes..............................................................................................................................................14

15. Indemnity and Damages................................................................................................................14

16. Force Majeure................................................................................................................................15

17. No Obligation to Expand...............................................................................................................16

18. Term...............................................................................................................................................16

19. Reserved........................................................................................................................................16

20. Disputes.........................................................................................................................................16

21. Notices and Payments...................................................................................................................16

22. Insurance.......................................................................................................................................17

23. Assignment....................................................................................................................................18

24. Miscellaneous................................................................................................................................19

EXHIBIT A - GATHERING AREA AND RECEIPT POINTSEXHIBIT B - DELIVERY POINTSEXHIBIT C - GATHERER’S GAS AND CONDENSATE SPECIFICATIONSEXHIBIT D - BLENDING SERVICESEXHIBIT E - GATHERING SYSTEMEXHIBIT F - RESERVEDEXHIBIT G -RESERVEDEXHIBIT H -GATHERING FEESEXHIBIT I – NOMINATIONS CONTACT INFORMATIONEXHIBIT J – NOMINATIONS PROCEDURESEXHIBIT K – STANDARDS FOR MEASUREMENT AND MEASUREMENT EQUIPMENT TESTING



THIS GAS GATHERING AGREEMENT (this “Agreement”) for Gathering Service is made by and between KINETICA MIDSTREAM ENERGY, LLC, a Texas limited liability company (“Gatherer”), and _______________________________, a ______________________ (“Producer”). (Individually a “Party” and collectively the “Parties.”) This Agreement shall be effective upon the Effective Date.

For good and valuable consideration the adequacy and receipt of which are hereby acknowledged, and in consideration of the representations, warranties and covenants below, Gatherer and Producer agree as follows:

1. Definitions

Capitalized terms in this Agreement shall have the meaning provided above and in the following:

“Affiliate or Affiliated” means, with respect to any specified Person, any other Person which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person. For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.

“Blending Fee” shall have the meaning set forth in Exhibit D.

“Blending Services” shall have the meaning set forth in Exhibit D.

“Btu” shall mean one British thermal unit, which is the quantity of heat required to raise one pound avoirdupois of pure water from 58.5 degrees Fahrenheit to 59.5 degrees Fahrenheit at a constant pressure of 14.73 pounds per square inch absolute.

“Business Day” shall mean a day other than Saturday or Sunday, on which the commercial banks are open for business in Houston, Texas.

“Central Clock Time and CCT” shall mean central daylight time when daylight savings is in effect and central standard time when daylight savings time is not in effect.

“Component” shall mean those hydrocarbon and non-hydrocarbon molecular constituents which are definable in mole percent as set forth in the GPA Hydrocarbon Standards 2145-3 by industry standards and procedures. Such Components as used in this Agreement shall be:

N2 - NitrogenCO2 - Carbon DioxideH2S - Hydrogen SulfideC1 - MethaneC2 - EthaneC3 - PropaneiC4 - Iso-butanenC4 - Normal ButaneiC5 - Iso-pentanenC5 - Normal PentaneC6+ - Hexanes and Heavier Compounds


“Condensate” shall mean the liquid hydrocarbon that is separated from a gas stream as part of the separation process at S&D Plants located on or downstream of the Gathering System and shall include Production Condensate and Pipeline Condensate. Notwithstanding the foregoing, for the purposes of this Agreement, all hydrocarbon liquids measured at an injection point shall be considered and treated as Production Condensate.

“Condensate Delivery Points” shall mean the outlet flange of the barge loading facilities, liquids pipelines, or truck loading facilities at the S&D Plant(s) or into the Transporter’s system if the Condensate is not recovered at a S&D Plant(s) located on the Gathering System.

“Condensate Fees” shall have the meaning set forth on Exhibit G.

“COPAS Index” shall mean the Wage Index Adjustment as published by the United States Department of Labor, Bureaus of Labor Statistics and further published by the Council of Petroleum Accountants Society.

“Current Nomination” shall mean change(s) to nominations which occur subsequent to the Initial Nomination submitted prior to the first Gas Day of a Month.

“Daily Volume” shall mean the Gas volumes nominated, scheduled, and confirmed daily resulting in an equal balance between receipts and deliveries of Producer’s Gas or Producer’s Aggregator’s [G]as on a daily basis.

“Decatherm” or “Dth” shall mean one million (1,000,000) Btus.

“Dehydrating” or “Dehydration” shall mean the removal of entrained water from the Gas such that the Gas contains no more than seven (7) pounds of water per million cubic feet, at a pressure base of 14.73 pounds per square inch and a temperature of sixty (60) degrees Fahrenheit.

“Dehydration Fee” shall have the meaning set forth in Section 11.2 or Exhibit F.

“Delivery Point(s)” shall mean the Gas Delivery Point or the Condensate Delivery Point as applicable.

“Electronic Gas Scheduling System” or “EGS” shall mean Gatherer’s electronic gas scheduling system used by Producer or Producer’s Aggregator to nominate Gas, make Gas processing elections, and balance Producer’s or Producer’s Aggregator’s account.

“EGM” shall mean the electronic gas measurement equipment, including pressure and temperature transmitters, gas flow computers and communication equipment.

“Effective Date” shall mean 9:00 a.m. CCT on the day that Gatherer acquires ownership of the Gathering System and the authorized representatives of both Parties have executed the Agreement. After the date that Gatherer acquires ownership of the Gathering System then the Effective Date shall be the date that the authorized representatives of both Parties have executed the Agreement

“Escalation Date” shall mean January 1, 2016 and each January 1st thereafter during the Term.

“Force Majeure” shall have the meaning set forth in Section 16.

“Fuel and Loss” shall mean the actual gas volumes used or consumed in the operation of the Individual Pipeline System, which shall include, but shall in no way be limited to, (i) gas used as fuel for dehydration, compression, conditioning, blending, treating, or recompression, (ii) gas vented during operations, (iii) lost and unaccounted for gas, and (iv) any Liquefiable Hydrocarbons that become separated from the gas while the gas is in the Individual Pipeline System unless otherwise allocated to the Producer pursuant to a measurement, allocation or other similar agreement.

“Gas” shall mean natural gas which is owned or controlled by Producer or Producer’s Aggregator and produced from lands within the Gathering Area, including casinghead gas produced with crude oil, gas from gas


wells produced in association with crude oil (associated gas), and gas from condensate wells (non-associated gas), and shall include any other gaseous hydrocarbons contained therein.

“Gas Day” shall mean a period of twenty-four (24) consecutive hours beginning and ending at nine o’clock a.m. Central Clock Time.

“Gas Delivery Points” shall mean the point(s) of interconnect between the Individual Pipeline System on which the Gas first flows and the Transporter receiving Producer’s Gas, which existing Gas Delivery Point(s) are listed on Exhibit B which is attached hereto and made a part hereof for all purposes and which will be modified by Gatherer from time to time as additional downstream Transporters are connected to the Individual Pipeline System.

“Gas Processing Plant” shall mean any plant located on or downstream of the Gathering System for the purpose of extracting Liquefiable Hydrocarbons from the Gas received by the Gathering System.

“Gathering Area” shall mean the blocks and/or meters listed on Exhibit A, including the lands or leases pooled or unitized therewith, connected to the Gathering System, which may be amended from time to time by mutual written agreement of the Parties.

“Gathering Fee” shall have the meaning set forth in Section 11 and Exhibit H.

“Gatherer Group” shall have the meaning set forth in Section 15.1.

“Gathering Service” shall mean the service provided by Gatherer to Producer (or Producer’s Aggregator) for the gathering of Producer’s Gas and Condensate on a not unduly discriminatory basis and subject to the terms and conditions of this Agreement and applicable Law.

“Gathering System” shall have the meaning set forth in Exhibit E.

“GPM” shall mean gallons per thousand cubic feet.

“Governmental Authority” shall mean the United States and any state, county, parish, city or other political subdivision, agency, court or instrumentality having jurisdiction.

“Individual Pipeline System” shall mean those individual groups of pipelines as described and listed on Exhibit E.

“Law” means any law, statute, code, ordinance, order, determination, rule, regulation, judgment, decree, injunction, franchise, permit, certificate, license, authorization or other directive or requirement of (i) the United States of America including the United States Department of Interior and United States Department of Transportation, (ii) any state, county, parish, municipality, or other governmental subdivision within the United States of America, and (iii) any court or any governmental department, commission, board, bureau, agency, or other instrumentality of the United States of America or of any state, county, parish, municipality, or other governmental subdivision within the United States of America.

“Liquefiable Hydrocarbons” shall mean ethane, propane, iso-butanes, normal butanes, iso-pentanes, normal pentanes, hexanes and heavier hydrocarbons, and incidental methane, or any mixtures thereof, which may be recovered or extracted from the Gas.

“MOP” shall mean the maximum operating pressure of an Individual Pipeline System.

“MCF” shall mean 1,000 standard cubic feet of gas.

“MMBtu” shall mean 1,000,000 Btus.


“MMCF” shall mean 1,000,000 standard cubic feet of gas.

“MMCFD” shall mean 1,000,000 standard cubic feet of gas per Gas Day.

“Month” shall mean the period beginning at nine o’clock a.m. on the first Gas Day of a calendar month and ending at nine o’clock a.m. on the first Gas Day of the next succeeding calendar month.

“Nomination” shall mean Producer’s notification to Gatherer to set out the quantity of Gas (in MMBtus) to be delivered to Gatherer at the Receipt Point(s), that Producer, Producer’s Aggregator, or Producer’s Transporter or nominee are to accept at the Gas Delivery Point(s), report Gas processing elections, and deliver any Gas necessary to balance Producer’s or Producer’s Aggregator’s account.

“OBA” shall mean any operational balancing agreement or similar agreement executed between Gatherer and a Transporter as may be amended from time to time.

“OPP” shall mean the overpressure protection equipment installed to protect Gatherer’s pipeline system from exceeding the MOP.

“Person” means any natural person, corporation, limited liability company, partnership, joint venture, association, cooperative, Governmental Authority, or other entity.

“Pipeline Condensate” shall mean that hydrocarbon liquid which condenses from the gas in a pipeline as pipeline conditions change from the gas injection point(s) to facilities at the S&D Plant(s), and is recovered as a liquid at the S&D Plant(s).

“Producer’s Aggregator” shall mean a Person which purchases Gas and Liquefiable Hydrocarbons at the wellhead from the Producer and moves such Gas and Liquefiable Hydrocarbons on the Gathering System to a Gas Processing Plant or to a Transporter.

“Production Condensate” shall mean the liquid hydrocarbon that is separated from a gas stream as part of the separation process and injected as a liquid into the Gathering System.

“Producer’s Gas” means Gas owned or controlled by Producer (including lift gas attributable to Gas owned or controlled by Producer) lawfully produced from wells now or hereafter drilled on the lands within the Gathering Area or lands, areas, or leases pooled or unitized therewith).

“Producer Group” shall have the meaning set forth in Section 15.1.

“psia” shall mean pounds per square inch absolute.

“psig” shall mean pounds per square inch gauge.

“Plant Thermal Reduction” or “PTR” shall mean the reduction in the thermal content of the Gas (Btu) resulting from the recovery of Liquefiable Hydrocarbons at a Gas Processing Plant.

“Receipt Point(s)” shall mean the inlet flange of the first point of connection to Gatherer’s Individual Pipeline System on which the Gas is nominated to flow located near or downstream of each of Producer’s wells, or at meters owned by Gatherer, and located within the Gathering Area or such other point as may be mutually agreed upon by the Parties. The existing Receipt Point(s) are identified by the designated Gas meter number listed on Exhibit A to this Agreement which is attached hereto and made a part hereof for all purposes and which may be amended from time to time to reflect the addition or deletion of a Receipt Point.

“Redeliver” Gas or Condensate shall be deemed to have been Redelivered to Producer, Producer’s Aggregator or representative, or to the nominated Transporter on Producer’s behalf at the Gas Delivery Point(s) or


Condensate Delivery Point(s), and deemed to have passed through Delivery Point(s), when it passes through the upstream flange of the metering facility at the Delivery Point(s) or such other point designated by Gatherer as the custody transfer point.

“REGARDLESS OF FAULT” SHALL MEAN HOWSOEVER CAUSED, INCLUDING THE UNSEAWORTHINESS OR UNAIRWORTHINESS OF ANY CRAFT, OR THE NEGLIGENCE (WHETHER SOLE OR CONCURRENT, GROSS, ACTIVE OR PASSIVE) OR OTHER LEGAL FAULT (INCLUDING STRICT LIABILITY AND ANY PRE-EXISTING DEFECT).

“Scheduler” shall mean the Person identified by each Party to provide electronic or verbal Gas flow information to the other Party in accordance with Gatherer’s policy and procedures and the terms and conditions of this Agreement.

“SCF” or “standard cubic foot of gas” shall mean the amount of gas necessary to fill a cubic foot of space when the gas is at a pressure of 14.65 pounds per square inch absolute and a temperature of 60 degrees Fahrenheit.

“S&D Plant(s)” shall mean the separation and dehydration plants located in Cameron, Vermilion, Lafourche, and Plaquemines Parishes, Louisiana, which may include, but are not limited to separators, dehydrators, meters, surge tank, storage tanks, safety controls, valve regulators, flare lines, drain lines, skimmer tank, slug catcher, pumps, flash gas recovery and compression, LACT meters, piping, valves, and fittings installed on the surface lease, including all auxiliary or incidental equipment used in connection therewith, and all additional equipment that may be installed and which is required for the sole purpose of separating, stabilizing, storing, and Redelivering the Condensate and dehydrating the Gas.

“Senior Officers” shall have the meaning set forth in Section 20.1.

“Separation” shall mean the removal and handling of Condensate from the Gas stream, in accordance with applicable Law, such that the Gas stream is free from liquid hydrocarbons and, where Gatherer allows the injection of Condensate into the Gathering System, the Condensate complies with liquid quality specifications applicable to the S&D Plant(s) where such Condensate is removed from the Gas.

“Term” shall have the meaning set forth in Section 18.

“Third Party” shall mean any Person not a member of Gatherer’s Group or Producer’s Group.

“Transporter” shall mean the receiving pipeline(s) downstream of the Gathering System into which the Gas and Condensate gathered hereunder is to be delivered at the Delivery Point(s).

2. Gas Supply Connected to Gathering Area

2.1 Subject to the terms of this Agreement, Producer dedicates and agrees to cause to be delivered to Gatherer at the Receipt Point(s) specified in Exhibit A the total volume of Gas and/or Condensate owned or controlled by Producer lawfully produced from wells now or hereafter drilled within the Gathering Area (including lands or leases pooled or unitized therewith). Producer agrees that all Gas and Condensate delivered to Gatherer shall meet the requirements set forth in Exhibit C, Gas and Condensate Specifications.

2.2 Any transfer by Producer of its right, title, or interest in Gas or Condensate, or in an oil and gas lease, fee mineral interest or other such agreement, interest or right, whether by farmout, contract, or otherwise, shall be specifically made subject to this Agreement. Producer will notify any Person to whom Producer transfers any portion of such right, title, or interest that such Gas and Condensate is dedicated to this Agreement, and Producer shall obtain such Person’s agreement to continue delivering such Gas and Condensate to Gatherer in accordance with this Agreement. Producer shall notify Gatherer of the transfer within ten (10) days of its effective date.

2.3 Gatherer agrees that it will provide open access Gathering Service on a not unduly discriminatory basis to Producer to: receive Gas on the Individual Pipeline System from the Receipt Point(s); and, Redeliver Gas


and Condensate, less Producer’s applicable pro rata share of Fuel and Loss, and Liquefiable Hydrocarbons at the Delivery Point(s).

2.4 Gatherer agrees that, subject to the terms of the applicable allocation and liquids agreements, it will accept and receive Condensate from the Receipt Points, where that part of the Gathering System has been specifically identified as part of an allocation system, and will cause the Redelivery of such Condensate to the Condensate Delivery Points. Producer agrees to execute all necessary agreements to effectuate the Redelivery and to comply with any Condensate handling requirements and all applicable Laws.

2.5 Producer will notify Gatherer in a timely manner of any plans to decommission, abandon, and/or remove Producer’s owned or operated wells and/or facilities which are connected to the Gathering System and shall reasonably cooperate with Gatherer if requested, to coordinate any abandonment of their respective facilities.

3. Producer’s Reservations of Rights

3.1 Producer reserves all liquid hydrocarbons, oil, or Condensate removed by Producer by means of mechanical gas-liquid separators (including heater-treaters), drips, and/or lines from the Gas prior to delivery at the Receipt Point(s). Producer reserves all Condensate recovered at the S&D Plant(s) and allocated to Producer or Producer’s designee in accordance with the Condensate allocation procedures applicable to the S&D Plant.

3.2 Producer reserves all Gas that may be required for cycling, repressuring, pressure maintenance, and gas lift operations; provided, however, that the Gas used in such operations shall be subject to the terms of this Agreement (to the extent that such Gas can be economically saved) and delivered to Gatherer following the cessation of such operations. Producer also reserves that amount of Gas required for above ground development and operation activities within the Gathering Area.

3.3 Producer shall have the right to process, or cause to be processed, the Gas delivered hereunder for the extraction of Liquefiable Hydrocarbons, and other valuable components. Producer shall notify Gatherer, using Gatherer’s EGS, of; its election to process at least three (3) Business Days before the first day of the Month in which it intends to process Gas; the specific processing plant to which such Gas is committed; and, the downstream Transporter, if any. Producer shall be responsible for meeting the requirements of any downstream Transporter. If Producer elects not to process the Gas, fails to timely notify Gatherer as required in this Section 3.3, or fails to meet the requirements of a downstream Transporter, the right to process the Gas and retain the Liquefiable Hydrocarbons in kind or the proceeds thereof shall vest in Gatherer.

4. Possession of Gas and Condensate at Receipt Point(s) and Delivery Point(s)

4.1 Producer shall be solely liable for making all arrangements and constructing and operating all facilities necessary, excluding Gatherer’s EGM, OPP, valving and hot taps, and to deliver the Gas and Condensate to Gatherer at the Receipt Point(s). Producer shall also be solely liable for ensuring that such delivered Gas and Condensate fully complies with Section 7 and Exhibit C, Gas and Condensate Quality, is at pressures required by Individual Pipeline Systems, but not to exceed the maximum operating pressure for such Individual Pipeline System as set forth on Exhibit E, MOP, and for all nominations.

4.2 Gatherer shall only be deemed to be in control and possession of Producer’s Gas and Condensate from the time it is received at the Receipt Point, until the Gas and Condensate is Redelivered for Producer’s account. While it is in control and possession, Gatherer then shall be responsible for any demands, claims, damages, losses, injuries or deaths caused thereby to any Third Party until such Gas and Condensate has been Redelivered, but only to the extent of the Gatherer’s negligence or willful misconduct.

4.3 Producer shall retain title to the Gas and Condensate at all times even when in the control and possession of Gatherer under Section 4.2 above. Producer shall be deemed to be in control and possession of the Gas and Condensate prior to receipt by Gatherer and after Redelivery by Gatherer, and shall be solely responsible for any demands, claims, damages, losses injuries, or deaths caused thereby to any Third Party.


5. System Operations and Imbalances Procedures

5.1 Gatherer shall retain full operational control of the Gathering System and shall at all times be entitled to schedule deliveries, interrupt gathering, operate, modify, maintain or repair its Gathering System facilities in its sole discretion as it deems prudent. Producer agrees that it will cooperate in good faith with Gatherer to regulate the flow rate of Gas and to establish a schedule to deliver Gas on a commercially reasonable efforts basis at a uniform and continuous flow rate. Producer further agrees to be bound by the terms of Gatherer’s OBA’s with Transporters.

5.2 The Parties acknowledge that imbalances may occur between the thermal content of Gas at the Delivery Point(s) and the thermal content of Gas at the Receipt Point(s). All imbalances shall be cashed out as soon as practical and in accordance with Transporter’s OBA and tariff provisions at the Gas Delivery Point(s) if applicable. Producer agrees to reimburse Gatherer for any difference in the market value of the Gas at cashout and for any penalties charged by Transporter resulting from imbalances caused by Producer’s failure to comply with its Nominations to Gatherer. Any imbalance remaining at the expiration or termination of this Agreement shall be resolved by the next Month.

5.3 Producer authorizes the operator of each of Producer’s wells to be its agent for the purpose of providing Gatherer with instructions to adjust allocations of Gas attributable to that well for gas balancing purposes. Producer warrants that the operator of each of Producer’s well has the right to make any such adjustments and that such adjustments are correct and binding on Producer. Gatherer may, but shall not be obligated to, adjust the Gas allocated to that well in accordance with those instructions.

5.4 The Parties agree that Gatherer may require Producer to comply with the requirements of Transporters to which its facilities are connected and with which Gatherer must comply. PRODUCER AGREES TO RELEASE, INDEMNIFY, DEFEND, AND HOLD GATHERER HARMLESS FROM PRODUCER’S FAILURE TO COMPLY WITH SUCH TRANSPORTER’S REQUIREMENTS REGARDLESS OF FAULT.

5.5 Producer agrees that the injection of undehydrated Gas and Production Condensate is only allowed at certain points on the Gathering System. Producer shall be solely liable for obtaining all necessary agreements prior to making such injections into the Gathering System, including those set forth in Section 11.2 and 11.3 of this Agreement. Producer shall provide Gatherer prior written confirmation of such agreements from the S&D Plant owner or operator.

5.6 Production Condensate and Pipeline Condensate will be recovered at the S&D Plant(s) and allocated to the various Receipts Points. Producer agrees to compensate Gatherer for its prorata allocation of any Gas recovered as Pipeline Condensate by means of a reduction to Producer’s Redelivered Gas volumes.

5.7 For S&D Plant(s) owned by Gatherer, Gatherer agrees to make available to Producer or Producer’s designee, Producer’s allocated share of Condensate at the Condensate Delivery Points, in accordance with the allocation procedures in place at the S&D Plant. The Condensate shall be deemed to have been delivered to Producer or to Producer’s designee at the Condensate Delivery Point.

6. Nominations and Scheduling

6.1 Subject to the terms of this Agreement and the availability of capacity on the Individual Pipeline System, Gatherer shall gather that volume of Gas and Condensate attributable to the interest owned or controlled by Producer in wells drilled within the Gathering Area or lands or leases pooled or unitized therewith; provided, Producer, or Producer’s Aggregator or Transporter or nominee will accept the Condensate and Gas Redelivered on Producer’s behalf at the respective Delivery Point(s).

6.2 Producer or its Aggregator shall make all Nominations, including modifications thereto, via EGS and in accordance with Gatherer’s and Transporter’s Nomination procedures. All other arrangements necessary for Transporter to receive Producer’s Gas at the Gas Delivery Point(s) shall be Producer’s sole responsibility. Producer


or Producer’s Aggregator shall complete and execute the EGS authorization form and receive written approval from Gatherer prior to submitting electronic Nominations.

6.3 Subject to the operating conditions of the Gathering System and the gas quality specifications set forth in Section 7 below, Gatherer shall receive, schedule and deliver the Nominations, plus any required Gas for Fuel and Loss, Pipeline Condensate. The Nomination for receipt, net of applicable Fuel and Loss, Pipeline Condensate, shall equal the Nomination for delivery, unless the Nomination includes make-up quantities to correct imbalances or is authorized by Gatherer under its Nomination procedures.

6.5 Notwithstanding any other provision of this Agreement, Gatherer shall have the right to refuse any Nomination to the extent it threatens the operational integrity of the Gathering System or is denied by Transporter.

6.6 The Parties’ contact information for Nominations and scheduling is set forth in Exhibit J.

7. Quality

7.1 Gatherer shall not be obligated to receive, gather, or Redeliver Gas or Production Condensate that fails to meet the quality specifications of (i) the Transporter at any Gas Delivery Point(s), or (ii) the specifications set forth in Exhibit “C”. In the event of any conflict as between a Transporter’s specifications and those in Exhibit C, the more stringent shall apply.

7.2 If Gas or Production Condensate delivered by Producer or Producer’s Aggregator fails to meet the specifications in Section 7.1 above, Gatherer may: (i) accept such Gas or Production Condensate; (ii) accept, but blend, treat and/or condition such Gas or Production Condensate at an additional cost as set forth in Exhibit D or as specified in applicable measurement, allocation and liquids handling agreements, or (iii) refuse to accept such Gas or Production Condensate. Gatherer shall be entitled, at any time and from time to time, to reject Gas or Production Condensate not meeting the specifications.

8. Tests

8.1 Gatherer shall sample Gas at each Receipt Point and Delivery Point, and analyze the samples by chromatographic analysis and determine its Component content (mole percent), specific gravity, and Btu content. Tests provided above shall be made at least once in each six (6) month period. All such tests shall be performed in accordance with generally accepted engineering practices and applicable Law. Producer shall be entitled to witness such tests, and shall give reasonable advance written notice to Gatherer of its intention to do so.

8.2 Physical constants required for making calculations hereunder shall be taken from the Gas Processors Association Physical Constants Publication No. 2145-03 (as amended from time to time). Physical constants for the hexanes and heavier hydrocarbon portions of hydrocarbon mixtures shall be assumed to be the same as for hexane.

8.3 Production Condensate, testing and analysis shall be in accordance with the measurement, allocation and liquids handling agreements applicable to the specific part of the Gathering System in which the Receipt Point is located.

9. Measurement and Meter Testing

9.1 Measurement and Testing shall be in accordance with Exhibit K.

9.2 If less than two thousand (2,000) Dth of Gas is received at a Receipt Point (except for reasons of Force Majeure) during a Month, then Gatherer shall charge a meter fee applicable to any such Receipt Point equal to one thousand and five hundred dollars ($1500.00) each time that Gatherer reads the meter. Such fee shall be invoiced to Producer and payable thirty (30) days after receipt of the invoice. Such fee shall be escalated effective as of January 1st of each year using the index specified in Section 11.2 hereunder.


10. Allocation of Gains, Fuel and Loss

10.1 The Parties understand and agree that some volumetric gains and losses will occur between Gas Receipt and Delivery Points as a result of Gas used or consumed in the operation of Individual Pipeline Systems, which is defined in this Agreement as Fuel and Loss. Fuel and Loss shall be shared proportionally among each Producer. To calculate Fuel and Loss, Gatherer may conclusively rely on any determination, report or statement received by Gatherer from any operator of a well regarding the number of MMBtus delivered from such well into the Individual Pipeline System at a Receipt Point.

10.2 Producer’s pro rata share of Fuel and Loss shall equal the product of the total Fuel and Loss utilized, consumed or incurred by the Gathering System, multiplied by a fraction, the numerator of which is Producer’s MMBtus of Gas metered into the Gathering System at the Receipt Point(s) and the denominator of which is the total number of MMBtus of gas metered into the Gathering System upstream of all Receipt Points.

11. Fees and Other Consideration

11.1 Producer shall pay to Gatherer the fee set forth on Exhibit H for Producer’s Gas received by Gatherer and metered at the Receipt Points ( the “Gathering Fee”).

11.2 In the event that Gatherer is Dehydrating Producer’s Gas pursuant to an agreement, the dehydration fee as established by Gatherer shall be subject to escalation by the COPAS Index on each Escalation Date. (“Dehydration Fee”).

11.3 Nothing in this Agreement shall affect Producer’s obligation to pay all fees or charges as specified in any applicable measurement, allocation, liquids handling or other similar agreement for Condensate moved on the Individual Pipeline System. If such an agreement has not been executed by the Parties or is no longer in effect, the Parties shall negotiate and execute such an agreement contemporaneously with the execution of this Agreement as required by Section 5.5 of this Agreement.

12. Accounting, Payments and Credit Assurances

12.1 Gatherer shall furnish to Producer on or before the twenty-fifth (25th) day of each Month an invoice including a statement of the Gas delivered for Producer’s account to its Transporter, the total volume of Gas in MCF and in MMBtu measured at the Receipt Point(s), Producer’s pro rata share of Fuel and Loss and the amounts due Gatherer for the services provided hereunder. Producer shall remit the amounts due Gatherer within five (5) days after the receipt of Gatherer’s statement by wire transfer according to the instructions provided by Gatherer. Should Producer fail to timely pay all of the amounts due under this Agreement, the unpaid amounts shall accrue interest at the lesser of one and one half percent (1.5%) per Month or the maximum rate permitted by applicable Law, until the balance is paid in full. If such failure to pay continues for fifteen (15) days after payment is due, Gatherer shall have the right without further notice, in addition to all other rights available to Gatherer under this Agreement or applicable Law, to suspend service under this Agreement until all past due sums have been paid or to terminate this Agreement. PRODUCER SHALL RELEASE, DEFEND, INDEMNIFY AND HOLD GATHERER HARMLESS FROM ANY AND ALL CLAIMS, DEMANDS, CHARGES, PENALTIES, COSTS AND EXPENSES OF ANY NATURE ARISING FROM OR RELATED TO PRODUCER’S FAILURE TO TIMELY MAKE SUCH PAYMENTS, INCLUDING COSTS AND EXPENSES OF ANY LITIGATION, INCLUDING REASONABLE ATTORNEYS’ FEES.

12.2 If Producer in good faith disputes the amount of any invoice or part thereof, Producer shall timely pay all undisputed amounts and shall provide with such payment a detailed statement as to the basis for its dispute; and, Producer shall, if requested by Gatherer, provide Gatherer a surety bond or letter of credit acceptable to Gatherer in the full amount disputed no later than five (5) days from such request. Gatherer shall have no right to terminate service to Producer based on past due sums so long as the surety bond or letter of credit is maintained.


12.3 Each Party shall have the right during reasonable hours to examine the relevant records of the other Party to the extent necessary to verify the accuracy of any statement, charge, credit, computation, test, or delivery made under this Agreement. If any such examination reveals any inaccuracy the necessary adjustment shall be promptly made without interest or penalty. Neither Party will have any right to recoup or recover prior overpayments or under payments resulting from errors that occur in spite of good faith performance if the amounts involved do not exceed fifty dollars ($50.00) per Month per Receipt Point.

12.4 Producer shall be responsible for the payment of all royalties, taxes and other assessments due on the Gas, Condensate and/or Components. PRODUCER SHALL RELEASE, DEFEND, INDEMNIFY AND HOLD GATHERER HARMLESS FROM ANY AND ALL DEMANDS, CLAIMS, LOSSES, ACTIONS, CAUSES OF ACTION, DAMAGES, PENALTIES, COSTS OR EXPENSES INCLUDING REASONABLE ATTORNEYS FEES, LIABILITY, OR OBLIGATIONS ARISING OUT OF OR IN ANY WAY RELATED TO THE PAYMENT OF SUCH ROYALTIES, TAXES, OR ANY OTHER ASSESSMENT, BURDEN OR ENCUMBRANCE AFFECTING THE GAS, CONDENSATE OR COMPONENTS.

12.5 Unless otherwise agreed in writing, Gatherer shall not be required to make payments or to give notices required under the provisions of this Agreement to more than one Person. Gatherer may withhold (without interest) payments and notices until all of the owners of Producer’s properties have designated one Person to act for them in all respects relating to this Agreement, including the rendering of bills, the submission of charts, and the receipt of payments and notices hereunder.

12.6 All accounting records and documents directly related to this Agreement prepared by any Party shall be retained for a period of not less than two (2) years following the end of the calendar year of their origination. The Parties further agree that all matters relating to the accounting hereunder for any calendar year shall be considered correct and not subject to further audit or legal challenge after two years following the end of the calendar year of their origination.

12.7 Producer, or their permitted successor or assign, must maintain such creditworthiness as Gatherer shall reasonably require. Gatherer’s creditworthiness requirements are as follows:

(a) Producer will be deemed creditworthy if (i) its long-term unsecured debt securities are rated at least BBB- by Standard & Poor’s Corporation (“S&P”) and at least Baa3 by Moody’s Investor Service (“Moody’s”) (provided, however, that if the Producer’s rating is at BBB- or Baa3 and the short-term or long-term outlook is Negative, Gatherer may require further analysis as discussed below); and (ii) the sum of all fees under the Agreement is less than 15% of Producer’s tangible net worth. “Tangible net worth” shall mean the value of Producer’s assets less the value of all liabilities and intangible assets such as intellectual property or, in other words, the liquidation value if the enterprise were shut down and assets sold. In comparing the overall value of a Producer’s agreement to tangible net worth for credit evaluation purposes, Gatherer will compare the net present value of the fee obligations under this Agreement to Producer’s current tangible net worth.

(b) If Producer does not meet the criteria in (a) above, then Producer may request that Gatherer evaluate its creditworthiness based upon the level of service requested relative to the Producer’s current and future ability to meet its obligations. Producer will be considered creditworthy for so long as it provides Gatherer an irrevocable guaranty of payment in form acceptable to Gatherer, or an irrevocable letter of credit from a financial institution rated at least A- by S&P or at least A3 by Moody’s, in a form and amount acceptable to Gatherer. As an alternative, Producer may deposit and maintain with Gatherer a sum equal to Producer’s average total flow of Gas for the previous two (2) Months multiplied by the Gathering Rate. If Producer fails to provide a guaranty, letter of credit or deposit within two (2) days of notice of the requirement to do so, Gatherer shall have the right, in addition to all other rights available under this Agreement or applicable Law, to suspend service under this Agreement until such time as the requirement is met.


13. Warranty

13.1 Producer warrants for itself, its successors and assigns as follows:

(a) that it will have, at the time of delivery of Gas and Production Condensate for gathering hereunder, good title or the good right to deliver the Gas and Production Condensate;

(b) that it has the power and authority to enter into this Agreement regarding such Gas and Production Condensate;

(c) that such Gas and Production Condensate are free from all liens and adverse claims; and

(d) that it will make settlement for all payments including all royalties, overriding royalty interests, and/or production payments due and payable on the Gas and Production Condensate delivered to Gatherer hereunder.

PRODUCER FURTHER AGREES TO RELEASE, INDEMNIFY, DEFEND AND HOLD GATHERER HARMLESS FROM AND AGAINST ANY AND ALL DEMANDS, CLAIMS, SUITS, ACTIONS, LOSSES, DEBTS, ACCOUNTS, DAMAGES, PENALTIES, COSTS AND EXPENSES INCLUDING WITHOUT LIMITATION ATTORNEYS FEES ARISING FROM OR OUT OF ANY BREACH OF PRODUCER’S WARRANTIES SET FORTH IN THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO, ANY ADVERSE CLAIMS BROUGHT BY ANY PERSON OR GOVERNMENT ENTITY OR THROUGH A MINERAL INTEREST, A MINERAL INTEREST OWNER OR ROYALTY OWNER, TO OR AGAINST THE GAS OR CONDENSATE.

13.2 If any warranty made by Producer in this Agreement is disputed or involved in any action, Gatherer may refuse to accept the related Gas or Condensate and/or withhold any payments due Producer hereunder without interest until such dispute or action is resolved or until Producer furnishes a bond in form and from a surety satisfactory to Gatherer conditioned to save Gatherer harmless, or furnishes such other financial guaranties or assurances as are satisfactory to Gatherer.

14. Taxes

14.1 Producer shall pay or cause to be paid all production, severance and ad valorem taxes, assessments, and other charges levied or assessed against the Gas, Condensate and Components gathered hereunder, and all taxes and statutory charges levied or assessed against any of Producer’s properties, facilities, or operations. Producer shall reimburse Gatherer to the extent of any severance or other such taxes paid by Gatherer on behalf of Producer.

14.2 Gatherer shall pay all taxes and statutory charges levied or assessed against the Gathering System and operations concerning such system.

15. Indemnity and Damages

15.1 Producer’s Obligations. PRODUCER SHALL RELEASE, PROTECT, DEFEND, INDEMNIFY AND HOLD HARMLESS GATHERER, ITS PRINCIPALS, MEMBERS, MANAGERS, SUBSIDIARIES AND RELATED OR AFFILIATED ENTITIES AND CO-OWNERS, AND ITS AND THEIR CONTRACTORS AND SUBCONTRACTORS OF EVERY TIER (EXCEPT FOR CONTRACTORS AND SUBCONTRACTORS OF EVERY TIER THAT ARE MEMBERS OF PRODUCER GROUP AS DEFINED BELOW), AND ITS AND ALL OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, SERVANTS AND UNDERWRITERS (INDIVIDUALLY AND COLLECTIVELY THE "GATHERER GROUP"), FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION AND LAWSUITS OF EVERY KIND AND CHARACTER (WHETHER MERITORIOUS OR NOT AND INCLUDING CLAIMS FOR CONSEQUENTIAL DAMAGES AND PUNITIVE DAMAGES) BROUGHT


BY ANY PERSON OR ENTITY, AND ALL RELATED LOSSES, DAMAGES, COSTS AND EXPENSES, INCLUDING ATTORNEYS FEES AND COURT COSTS, FOR LOSS OR DAMAGE TO PROPERTY, OR PERSONAL OR BODILY INJURY, DEATH, DISEASE OR ILLNESS, WHENEVER OCCURRING, THAT HAS BEEN SUFFERED OR INCURRED BY ANY MEMBER OF PRODUCER GROUP (INDIVIDUALLY AND COLLECTIVELY THE “PRODUCER, ITS PARENT, SUBSIDIARY, AND RELATED OR AFFILIATED ENTITIES AND CO-OWNERS OR CO-LESSEES, ITS AND THEIR CONTRACTORS AND SUBCONTRACTORS OF EVERY TIER, AND THE DIRECTORS, OFFICERS, EMPLOYEES, AGENTS AND SERVANTS OF ANY OF THEM”), ARISING OUT OF OR IN ANY WAY DIRECTLY OR INDIRECTLY RELATED TO THIS AGREEMENT OR ANY INGRESS, EGRESS, LOADING OR UNLOADING OF PERSONNEL OR CARGO OR ANY PRESENCE ON ANY PREMISES (WHETHER LAND, BUILDING, VEHICLE, PLATFORM, AIRCRAFT, VESSEL OR OTHERWISE) OWNED, OPERATED, CHARTERED, LEASED, USED, CONTROLLED OR HIRED BY ANY MEMBER OF GATHERER GROUP OR ANY MEMBER OF PRODUCER GROUP, REGARDLESS OF FAULT INCLUDING BUT NOT LIMITED TO THE FAULT OF ANY MEMBER OF GATHERER GROUP.

15.2. Gatherer’s Obligations. GATHERER SHALL RELEASE, PROTECT, DEFEND, INDEMNIFY AND HOLD HARMLESS PRODUCER GROUP FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION AND LAWSUITS OF EVERY KIND AND CHARACTER (WHETHER MERITORIOUS OR NOT AND INCLUDING CLAIMS FOR CONSEQUENTIAL DAMAGES AND PUNITIVE DAMAGES) BROUGHT BY ANY THIRD PARTY, AND ALL RELATED LOSSES, DAMAGES, COSTS AND EXPENSES, INCLUDING ATTORNEYS FEES AND COURT COSTS, FOR LOSS OR DAMAGE TO PROPERTY, OR PERSONAL OR BODILY INJURY, DEATH, DISEASE OR ILLNESS, WHENEVER OCCURRING, THAT HAS BEEN SUFFERED OR INCURRED BY ANY MEMBER OF GATHERER GROUP ARISING OUT OF OR IN ANY WAY DIRECTLY OR INDIRECTLY RELATED TO THIS AGREEMENT OR ANY INGRESS, EGRESS, LOADING OR UNLOADING OF PERSONNEL OR CARGO, OR ANY PRESENCE ON ANY PREMISES (WHETHER LAND, BUILDING, VEHICLE, PLATFORM, AIRCRAFT, VESSEL OR OTHERWISE) OWNED, OPERATED, CHARTERED, LEASED, USED, CONTROLLED OR HIRED BY ANY MEMBER OF GATHERER GROUP OR ANY MEMBER OF PRODUCER GROUP REGARDLESS OF FAULT INCLUDING BUT NOT LIMITED TO THE FAULT OF ANY MEMBER OF PRODUCER GROUP.

15.3 The Parties agree to support their indemnity obligations as assumed in this Agreement with available liability insurance in favor of the other Party and its Group as indemnitees with coverages, endorsements and minimum amounts not less than those required under Section 22. The Parties further agree that such insurance shall support, but not limit, their indemnity obligations, except to the extent mandated by applicable law.

15.4 Consequential Damages. SUBJECT TO SECTION 15.1 AND SECTION 15.2 BUT NOTWITHSTANDING ANYTHING CONTAINED IN THIS AGREEMENT TO THE CONTRARY, EACH PARTY AGREES TO WAIVE ALL CLAIMS FOR PUNITIVE DAMAGES [AND/OR] ITS OWN CONSEQUENTIAL DAMAGES AGAINST THE OTHER PARTY AND ITS GROUP FROM AND AGAINST ANY INDIRECT OR CONSEQUENTIAL DAMAGES OR LOSSES (INCLUDING LOSS OF PRODUCTION, REVENUES, PROFITS OR LOSSES FROM BUSINESS INTERRUPTION), OR PUNITIVE DAMAGES SUSTAINED BY SUCH PARTY, REGARDLESS OF THE CAUSE OR CAUSES THEREOF, INCLUDING THE UNSEAWORTHINESS OR UNAIRWORTHINESS OF ANY CRAFT, OR THE NEGLIGENCE (WHETHER SOLE OR CONCURRENT, GROSS, ACTIVE OR PASSIVE) OR OTHER LEGAL FAULT (INCLUDING STRICT LIABILITY) BY ANY MEMBER OF GATHERER GROUP OR ANY MEMBER OF PRODUCER GROUP.

16. Force Majeure

To the extent any Party is rendered unable by Force Majeure to carry out its obligations under this Agreement, other than the obligation to make payments due hereunder, it is agreed that if such Party gives timely notice and reasonably full particulars of such inability in writing or by telephone (followed up timely by notice in writing) to the other Parties immediately after the occurrence of the cause relied on, then the obligations of the Party so affected shall be suspended during such occurrence, but for no longer period, and only for so long as the inability


is ameliorated to the extent reasonably possible. The term “Force Majeure” shall mean any act or event which wholly or partially prevents or delays the performance of obligations arising under this Agreement if such act or event is not reasonably within the control of the Party claiming Force Majeure, including, without limitation: acts of God; strikes; lockouts; or other industrial disturbances; acts of the public enemy; wars; blockades; insurrections; riots; epidemics; landslides; lightning; earthquakes; fires; storms; floods; washouts; arrests and restraints of governments, government regulations, and; civil disturbances; explosion, breakage, or accidents to machinery, plant facilities, or lines of pipe; freezing of wells or lines of pipe; partial or entire failure of wells; and the inability of either Producer or Gatherer to acquire, or the unavoidable delays in acquiring, at reasonable cost and after the exercise of reasonable diligence: (a) any servitude, rights-of-way grants, permits, or licenses; (b) any materials or supplies for the construction, maintenance, or repair of machinery, facilities, or pipelines; and (c) any permits or permissions from any governmental agency if such are required. It is understood and agreed that the settlement of strikes or lockouts shall be entirely within the discretion of the Party having the difficulty.

17. No Obligation to Expand

17.1 Nothing herein shall be construed to require Producer to drill any well or to continue to operate any well which a prudent operator would not in like circumstances drill or continue to operate.

17.2 Gatherer shall not be obligated to expand or modify the Gathering System in order to provide capacity hereunder. To the extent that an Individual Pipeline System or any portion thereof is constrained and Gas volumes being tendered exceed the capacity of the Individual Pipeline System or any portion thereof and Gatherer does not expand or modify the capacity of the relevant pipeline within twelve (12) months, Producer shall be released from its commitments in Section 2 but only for such additional Gas volumes unable to be gathered on the Individual Pipeline System or portion thereof and Producer shall have no claims against Gatherer related to the failure to gather such Gas or Condensate volumes.

18. Term

18.1 This Agreement shall be binding as of the Effective Date. The term of this Agreement shall begin on the Effective Date and, subject to the other provisions hereof, shall continue in full force and effect for a primary term of ten (10) years and shall be automatically renewed for one (1) year periods thereafter unless ninety (90) days prior to expiration of the primary or renewal term, one Party provides written notice of termination to the other Party (the “Term”). In any event, however, the confidentiality obligations of Producer under Section 24.11 shall continue for a period of three (3) years after termination of this Agreement.

18.2 If Gatherer does not acquire ownership of the Gathering System, neither Party shall have any obligation under this Agreement.

19. Reserved

20. Disputes

20.1 Should a dispute arise between the Parties in connection with this Agreement, the Parties shall promptly seek to resolve any such dispute by negotiations among the Senior Officers of the Parties who have the authority to settle such dispute (“Senior Officers”) prior to the initiation of any legal action. The Senior Officers shall meet at a mutually acceptable time and place within fifteen (15) days after notice of such dispute and thereafter as often as they reasonably deem necessary to exchange relevant information and to attempt to resolve the dispute. All negotiations and communications pursuant to this Section shall be treated as compromise and settlement negotiations for purposes of the federal and state Rules of Evidence. If the dispute has not been resolved within sixty (60) days after the initial meeting of the Senior Officers, or such longer period as may be mutually agreed upon, either Party may pursue any other remedies they may have.


21. Notices and Payments

Except for the initial telephonic notice of Force Majeure permitted under Section 16 and for nomination and scheduling pursuant to Section 6, any notice, request, demand, statement, or bill provided under this Agreement shall be in writing and delivered by hand, mail, e-mail or facsimile. All such written communications shall be sent to the address of the Parties as follows:

Producer

Statements: [Name of Company] Attn:

Payments: Name of Company(address)

Contractual: Name of Company(address)

Gatherer

Statements: Kinetica Midstream Energy, LLC440 Louisiana, Suite 425Houston, Texas 77002

Attn: Controller

Payments: Kinetica Midstream Energy, LLC440 Louisiana, Suite 425Houston, Texas 77002

Attn: Controller

Contractual: Kinetica Midstream Energy, LLC440 Louisiana, Suite 425Houston, Texas 77002

Attn: Vice President

Any of the Parties may designate a different address by giving written notice to the other Parties. Each such notice or other communication shall be sent by personal delivery, by registered or certified mail (return receipt requested), by courier service (such as Federal Express or United Parcel Service) or electronic mail; provided, that, any notice sent by electronic mail must be followed by notice sent by personal delivery, by registered or certified mail (return receipt requested), or by national, reputable courier service. Any notice or other Communication shall be deemed given and effective as follows: (i) when delivered, if delivered personally, (ii) upon confirmation of receipt, if sent by electronic mail, subject to a copy being delivered as set forth below in (iii) or (iv), (iii) if given by registered or certified mail (return receipt requested), as of the third (3rd) Business Day after the date deposited with


the U.S. Postal Service, fees prepaid, (iv) the second (2nd) Business Day after deposit, fees prepaid, with a courier service.

22. Insurance

22.1 Gatherer agrees to maintain liability insurance against claims for bodily injury, loss of life, or property damage arising out of or in connection with this Agreement, with such insurance policy having limits of no less than Ten Million Dollars ($10,000,000.00) per occurrence. Upon written request, but only to the extent of the risks and liabilities assumed in this Agreement by Gatherer, Gatherer shall cause Producer Group to be named as an additional insured on all of its liability insurance policies with waivers of subrogation and, upon written request, provide to Producer insurance certificates demonstrating compliance with this Section 22.1 and providing that such insurance policy shall not be canceled or modified without at least thirty (30) days (10 days if due to non-payment of premium) prior written notice to Producer. In addition, to the extent of the risks and liabilities assumed in this Agreement by Gatherer, such insurance shall be primary to any liability insurance providing any coverage to Producer Group.

22.2 Gatherer agrees to maintain, or cause to be maintained, Workers’ Compensation insurance or its equivalent as required by law and Employer’s Liability insurance in the amount of $500,000.00 for each accident, each employee, and Policy Limit. If there is an exposure of injury or illness under the U. S. Longshore and Harbor Workers Act (including the Outer Continental Shelf Lands Act), coverage shall be included for such injuries or claims. Such coverage shall also include a maritime coverage endorsement, if applicable. To the extent of the risks and liabilities assumed in this Agreement by Gatherer, such insurance shall be endorsed to provide a waiver of subrogation or equivalent endorsement in favor of Producer Group.

22.3 Producer agrees to maintain, or cause to be maintained, liability insurance against claims for bodily injury, loss of life, or property damage arising out of or in connection with this Agreement, with such insurance policy having limits of no less than Ten Million Dollars ($10,000,000.00) per occurrence. To the extent of the risks and liabilities assumed in this Agreement by Producer, Producer shall cause Gatherer Group to be named as an additional insured on all of its liability insurance policies with waivers of subrogation and, upon written request, provide to Gatherer insurance certificates demonstrating compliance with this Section 22.3 and providing that such insurance policy shall not be canceled or modified without at least thirty (30) days (10 days if due to non-payment of premium) prior written notice to Gatherer. In addition, to the extent of the risks and liabilities assumed in this Agreement by Producer, such insurance shall be primary to any liability insurance providing any coverage to Gatherer Group.

22.4 Producer agrees to maintain, or cause to be maintained, Workers’ Compensation insurance or its equivalent as required by law and Employer’s Liability insurance in the amount of $500,000.00 for Each Accident, Each Employee, and Policy Limit. If there is an exposure of injury or illness under the U. S. Longshore and Harbor Workers Act (including the Outer Continental Shelf Lands Act), coverage shall be included for such injuries or claims. Such coverage shall also include a maritime coverage endorsement, if applicable. To the extent of the risks and liabilities assumed in this Gathering Agreement by Producer, such insurance shall be endorsed to provide a waiver of subrogation or equivalent endorsement in favor of Gatherer Group.

22.5 The insurances coverages and requirements above shall not limit the indemnity obligations of the Parties under this Agreement.

23. Assignment

23.1 This Agreement shall be binding upon and inure to the benefit of the heirs, executors, administrators, successors, and assigns of the respective Parties, but no transfer of or succession to the interest of any Party, either wholly or partially, shall affect or bind the other Party until it shall have been furnished with the original instrument or acceptable proof that the claimant is legally entitled to such interest; provided, however, that in the case of any assignment by Producer (i) such assignment shall be further subject to the satisfaction by Producer’s assignee of the creditworthiness requirements of Section 12.7, and (ii) Producer’s assignee shall be required to expressly agree under such assignment to assume and be bound by all of the obligations of Producer


under this Agreement. Unless otherwise agreed in writing executed by all Parties hereto, such assignment shall not relieve either Party of any obligations incurred prior to such assignment. Within sixty (60) days of any assignment of this Agreement, the assigning Party must provide written notification of such assignment to the non-assigning Party. The effective date of any assignment of this Agreement shall be the first day of the Month following the compliance by the assignee with all requirements set forth in this Agreement.

23.2 Either Party also may, without the consent of the other Party, assign or pledge this Agreement and all rights and obligations hereunder under the provision of any mortgage, deed of trust, indenture, or other instrument it has executed or may execute hereafter as security for its indebtedness.

24. Miscellaneous

24.1 No waiver by any Party of any one or more defaults in the performance of any provision of this Agreement shall operate or be construed as a waiver of any other default or future defaults, whether of a like or different character.

24.2 No modification or amendment of the terms and provisions of this Agreement shall be made except by the execution of a written agreement by the Parties. This Agreement contains the entire agreement between the Parties regarding the subject matter hereof. This Agreement supersedes and replaces any other contract(s) or agreements(s) which may exist between the Parties covering the gathering of the Gas dedicated hereunder.

24.3 The headings in this Agreement are used for convenience only and shall not be deemed to affect the meaning or construction of any provisions of this Agreement. All Exhibits and Schedules referred to in this Agreement are incorporated herein by reference as if fully set forth.

24.4 Should any section, subsection, paragraph, subparagraph, or other portion of this Agreement be found invalid as a matter of Law, then the remainder of this Agreement shall remain in full force and effect and shall be amended as necessary to accomplish its purpose as set forth herein.

24.5 The indemnity, payment, accounting, and cashout provisions and any other provisions which by their nature contemplate an action or forbearance of any action after termination of this Agreement shall survive termination.

24.6 This Agreement, and all questions relating to its validity, interpretation, performance, and enforcement (including, without limitation, provisions concerning limitations of actions), shall be governed by and construed in accordance with the laws of the state of Texas, notwithstanding any conflict-of-laws doctrines of such state or other jurisdiction to the contrary. All matters litigated by or between the parties that involve this agreement, the relationship of the parties, or any related documents or matters hereunder shall be brought only in Houston, Texas.

24.7 This Agreement was prepared jointly by the Parties and not by any Party to the exclusion of the other. In the event an ambiguity or question of intent or interpretation arises, no presumption or burden of proof will arise favoring or disfavoring any Party by virtue of the authorship, or any greater involvement in the drafting, of any of the provisions of this Agreement.

24.8 This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute but one instrument.

24.9 Except as expressly set forth to the contrary in this Agreement, it is expressly understood and agreed that there are no third party beneficiaries of this Agreement.

24.10 Any reference to any Law will be deemed to refer to such Law, as amended, and also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. Any reference to a Party will


also include such Party’s permitted successors and assigns. All defined terms in this Agreement shall be equally applicable to the singular and plural forms, as well as other grammatical forms, of the terms so defined so long as such forms are also capitalized. The words “including,” “includes,” and “include” will be deemed to be followed by the phrase “without limitation.” All personal pronouns used in this Agreement, whether used in the masculine, feminine or neuter gender, will include all other genders; the singular will include the plural, and vice versa, unless the context requires otherwise. All references herein to an Exhibit, Schedule, Section, subsection, paragraph, subparagraph or other subdivision will refer to the corresponding Exhibit, Schedule, Section, subsection, paragraph, subparagraph or other subdivision of this Agreement unless specific reference is made to an Exhibit, Schedule, Section, subsection, paragraph, subparagraph or other subdivision of another document or instrument. The terms “herein,” “hereby,” “hereunder,” “hereof,” “hereinafter,” and other equivalent words refer to this Agreement in its entirety and not solely to the particular portion of the Agreement in which such word is used.

24.11 Confidentiality. Except as otherwise provided herein, Producer agrees to maintain the confidentiality of this Agreement and each of the terms and conditions hereof including but not limited to the fees, rates and other charges of Gatherer and not to use such confidential information for any purpose other than the performance of its obligations under this Agreement. Producer may divulge such confidential information to any Person as required for the performance of Producer’s obligations under this Agreement, or as may be required by law, rule or regulation. Producer shall obtain, in writing, from such Person(s) an agreement to be bound by the obligation of confidentiality, non-disclosure and limited use set forth in this Agreement provided; however, Producer shall remain liable to Gatherer for the disclosure or misuse of such information by any Person to whom Producer discloses such information.

IN WITNESS WHEREOF, the Parties have executed this Agreement in several originals as of the date and year written above.

PRODUCER

ENTITY NAME:___________________________________

By: __________________________________

Name: __________________________________

Title: __________________________________

Date: __________________________________

GATHERER

KINETICA MIDSTREAM ENERGY, LLC

By: ___________________________________

Name: __________________________________

Title: __________________________________

Date: __________________________________


GATHERING AREA AND RECEIPT POINTS

EXHIBIT Ato the


This Exhibit A is attached to the Gas Gathering Agreement dated as of ____________________, by and between Kinetica Midstream Energy, LLC, as Gatherer, and _________________, as Producer, and made a part thereof for all purposes. All defined terms used herein shall have the same meaning as set forth in the Agreement.

Contract Area – Meters Connected to Gathering System

The leases located in GOM federal, state and onshore

_________________________ (Individual Pipeline System Name)

Meter #/Receipt Points Block/Lease Name Operator WI %


DELIVERY POINTS

EXHIBIT Bto the


This Exhibit B is attached to the Gas Gathering Agreement dated as of _____________, 20__, by and between ________________________, as Producer, and Kinetica Midstream Energy, LLC, as Gatherer, and made a part thereof for all purposes. All defined terms used herein shall have the same meaning as set forth in the Agreement.

____________________________(Individual Pipeline System Name)

Delivery Point/Meter No. Transporter/Processing Plant Operator


GATHERER’S GAS AND CONDENSATE SPECIFICATIONS

EXHIBIT Cto the


This Exhibit C is attached to the Gas Gathering Agreement dated as of __________ by and between _________________________, as Producer, and Kinetica Midstream Energy, LLC, as Gatherer, and made a part thereof for all purposes. All defined terms used herein shall have the same meaning as set forth in the Agreement.

GAS QUALITY

All Gas and Condensate delivered by Producer to Gatherer shall meet the most stringent of either the specifications of the downstream Transporter to which such Gas and Condensate are delivered or the following:

1. All Gas delivered by Producer to Gatherer, shall meet the following specifications:

a) Gross heating value of at least nine hundred sixty-seven (967) BTUs per cubic foot (Btu/CF) of and a maximum of one thousand one hundred and ten (1110) Btu/CF max at 14.73 psia saturated.

b) Contain a maximum of twenty (20) grains of total sulfur, and one-quarter (1/4) grain of hydrogen sulfide per one hundred (100) standard cubic feet of Gas.

c) Be commercially free of dust, gum, gum forming constituents, and solid matter.

d) Contain a maximum of two tenths of one percent (0.2%) by volume of oxygen. Every reasonable effort shall be made to keep the Gas free of oxygen.

e) Have a maximum temperature of one hundred twenty degrees Fahrenheit (120oF).

f) Contain a maximum of four percent (4%) by volume of a combined total of carbon dioxide and nitrogen compounds; provided, however, that the total carbon dioxide content shall not exceed three percent (3%) by volume.

g) Have a maximum of seven (7) pounds of entrained water per million cubic feet of Gas, unless such Gas is delivered upstream of the Johnson Bayou, Grand Chenier, Cocodrie or Pecan Island separation and dehydration facilities. Gas delivered upstream of such facilities may deliver saturated gas but shall not have any free water.

h) Be delivered to the Receipt Point(s) after standard mechanical separation by Producer for the removal of free water and free liquid hydrocarbons.

2. All Gas delivered by Producer to Gatherer upstream of a Gas Processing Plant, shall meet the following additional or alternative specifications:

a) Gas delivered upstream of and being processed by a Gas Processing Plant may deliver gas with Gross Heating Value in excess of 1110 Btu/CF, subject to the specifications of any intermediary pipeline. Gas Redelivered downstream of the Gas Processing Plant shall comply with any downstream pipeline’s gas quality specifications.

b) Producer shall, subject to all the provisions of this Agreement, make reasonable efforts to deliver Gas with a Gross Heating Value in excess of 1000 BTU/CF but Producer shall not be required to treat such gas in order to raise the Gross Heating Value to 1000 BTU/CF.


3. The Parties recognize that the point of Gas measurement shall be the point at which Gas volume and thermal content determination shall be made, and where Gas quality shall be determined and enforced.

The Gas quality standards in this Exhibit may be amended by Gatherer upon five (5) business days’ notice to the other Party and posting such changes to Gatherer’s EBB.

PRODUCTION CONDENSATE QUALITY 1. Production Condensate injected hereunder shall conform to the following specifications:

a) be classified as a Condensate, have an API gravity of not less than 40° and not contain any asphalt or any other heavy organic fractions of crude oil;

b) not contain more than one percent (1%) S&W expressed as a fraction of the total measured stream as determined in accordance with API Standard 2542;

c) not include any soft or hard paraffin in a solid state, asphaltene, solid salts, metals or hazardous metals; sand shall be removed to the extent possible;

d) have a temperature of not more than 120° F and not less than 40° F;

e) when tested in accordance with ASTM Procedure No. D130, not exceed a 1A grouping;

f) not contain more than one-tenth of one percent (0.1%) by weight total sulfur;

g) not exceed 100 colonies of acid producing bacteria per milliliter of produced water or 100 colonies of sulfate reducing bacteria per milliliter of produced water as determined in accordance with the latest version of Gatherer’s testing procedures for microbiologically influenced corrosion (MIC);

h) not contain polychlorinated biphenols (PCBs);

i) not contain any agents causing emulsions or foaming in the combined stream or that would create emulsions, foaming or operational problems at the onshore separation and dehydration facilities;

j) not contain any entrained gas that violates any specification for gas, if any, and/or gathering agreement or transportation agreement to the extent that such gas is not treated and/or corrected at the separation and dehydration facilities or gas processing plant downstream;

k) not damage or restrict flow in the pipeline or any related facilities;

l) be free of any other objectionable matter, regardless of the source or cause;

2. When the blended gas stream at the delivery to any downstream Gas Processing Plant or any interstate or intrastate pipeline exceeds such Gas Processing Plant's gas quality specifications or such Transporter’s FERC Gas Tariff, or Gatherer experiences any operational problems from the excess CO2 or nitrogen in the natural gas received at the meter station, Producer agrees that the Gas production may, at Gatherer’s sole discretion and as directed by Gatherer, be immediately reduced or shut-in. The duration of any such reduction or cessation shall be for so long as any of these conditions exist.

3. The Parties recognize that the point of Production Condensate measurement shall be the point at which quality shall be determined and enforced.

The Production Condensate quality standards in this Exhibit may be amended by Gatherer upon five (5) business days’ notice to the other Party and posting such changes to Gatherer’s EBB.


BLENDING SERVICES

EXHIBIT Dto the


This Exhibit D is attached to the Gas Gathering Agreement dated as of __________ by and between _________________________, as Producer, and Kinetica Midstream Energy, LLC, as Gatherer, and made a part thereof for all purposes. All defined terms used herein shall have the same meaning as set forth in the Agreement.

Description of Blending Services

Blending Services shall mean the acceptance of natural gas with components and properties that are not in compliance with the gas quality specifications required under this Agreement (“Specifications”) such that, when combined with other gas flowing on Gathering System and with the performance of or compliance with other requirements, will either comply with the Specifications or be acceptable to Gatherer, in its sole discretion.

Blending Fee shall mean the charge by Gatherer to Producer for the Blending Services.

The Blending Fee and the requirements for Blending Services shall be determined by Gatherer based upon the non-compliant natural gas component(s) or property(ies), gas volumes proposed for Blending Services and existing flowing gas volumes available for blending, the operations of the Gathering System, and such other parameters as Gatherer determines relevant. Gatherer shall provide such requirements to Producer prior to the acceptance of such non-compliant natural gas and shall prepare a separate agreement that specifies the Blending Fee and the requirements for Blending Services.


GATHERING SYSTEM

EXHIBIT Eto the


The Gathering System is the five (5) Individual Pipeline Systems listed below and shall include but in no way be limited to, the gas gathering pipelines and measurement facilities including the rights to the property on which any part of such facilities or equipment is located, necessary to gather gas from the Receipt Point(s) to the Delivery Point(s), from the inlet flange of the pipeline metering facility installed at the Receipt Point(s) up to the upstream flange of the metering facility at the Delivery Point(s) of the following pipeline systems:

Sabine Pass Gathering SystemThis group of offshore pipelines has the configuration of an inverted "Y" with a platform located in Sabine Pass Block 18, offshore Texas (SX 18). At the Sabine Pass 18 platform 12-inch diameter and 24-inch diameter upstream lines feed into a 30-inch diameter jurisdictional pipeline (Line 821E-100) that extends to the onshore separation, dehydration and processing facilities. This system consists of approximately 26 miles. The MOP is 1440 psig.

Cameron Gathering SystemThe Cameron Gathering System consists of WC 68 platform as a central aggregation point for gathering on upstream facilities; EC 49 A/B platforms perform the gathering function for all upstream facilities. A producer-owned platform in EC 33 at the connection of Line 507A-5200 performs the gathering function for all upstream facilities. This system consists of approximately 120 miles. The MOP is 999 psig.

South Marsh Island Gathering SystemThe South Marsh Island Gathering System begins upstream of Lines 823X-1300 and 823X-300 at South Marsh Island Blocks 249 and 243 respectfully and includes the jumper Line 823X-600. The System terminates at South Marsh Island 252 and 257. This system consists of approximately 15 miles. The MOP is 1250 psig.

South Timbalier, Grand Isle and Bay Marchand Gathering SystemsThis system consists of 24 miles of 12-16 inch diameter pipe extending northward from Leeville on the onshore arm of Line 524A-100. These facilities constitute a spine-and lateral configuration, with receipt points and additional pipelines located along the entire length of the spine. The MOP is 980 psig The offshore portion begins at South Timbalier 37 and terminates at South Timbalier Blocks 53, 50, and 34. This system consists of approximately 63 miles. The MOP is 1200 psig.

South Pass Gathering SystemThis system has a central point of aggregation located at a Platform in South Pass Area (SP) 55. All upstream facilities, including Line 527A-900 and 527A-700 perform a gathering function. The MOP is 1265 psig. In addition, Line 526A-600 and Lines 526A-2000 and 526A-700 and all upstream pipeline facilities perform a gathering function. This system consists of approximately 100 miles. The MOP is 1133 psig.

The MOP standards in this Exhibit may be amended by Gatherer upon notice to the other Party by posting such changes to Gatherer’s EBB.


EXHIBIT Fto the


RESERVED


EXHIBIT Gto the


RESERVED


GATHERING FEES

EXHIBIT Hto the



NOMINATIONS CONTACT INFORMATION

EXHIBIT Ito the


Contact Information - Gatherer:

Gatherer’s Gas Scheduling Department may be contacted by Producer or Producer’s Aggregator as follows:

Schedulers: Contacts and telephone numbers are posted on Gatherer’s web site at

www.Kineticallc.com

Business Hours Telephone: (713) 228-334724-Hour Telephone: (713) ___-____- Ask for Gatherer Gas Scheduling DepartmentAfter Hours Emergency Telephone: (337) 312-2101 (Gas Control - TX or LA)

Contact Information – Producer/Producer’s Aggregator:

Producer/Aggregator’s Gas Scheduling Department may be contacted as follows:

Schedulers: Contacts and telephone numbers are posted on Producer/Aggregator’s web site at www._____________________.com

Business Hours Telephone: (___)___-____24-Hour Telephone: (___) ___-____ - Ask for Gas Scheduling DepartmentAfter Hours Emergency Telephone: (___) ___-____ (Gas Control)

The contact information in this Exhibit may be amended by either Party upon five (5) business days’ notice to the other Party.


http://www._____________________.com/

http://www.Kineticallc.com/

NOMINATION PROCEDURES

EXHIBIT Jto the


1 Subject to the terms of this Agreement and the availability of capacity on the Individual Pipeline System, Gatherer shall gather that volume of Gas and Condensate attributable to the interest owned or controlled by Producer in wells drilled within the Gathering Area or lands or leases unitized therewith; provided, Producer, or Producer’s Aggregator or Transporter or nominee will accept the Condensate and Gas Redelivered on Producer’s behalf at the respective Delivery Point(s).

2 Producer or its Aggregator shall make all Nominations, including modifications thereto, via EGS and in accordance with Gatherer’s and Transporter’s Nomination procedures. All other arrangements necessary for Transporter to receive Producer’s Gas at the Gas Delivery Point(s) shall be Producer’s sole responsibility. Producer or Producer’s Aggregator shall complete and execute the EGS authorization form and receive written approval from Gatherer prior to submitting electronic Nominations.

3 Subject to the operating conditions of the Gathering System and the gas quality specifications set forth in Section 7, Gatherer shall receive, schedule and deliver the Nominations, plus any required Gas for Fuel and Loss and Pipeline Condensate. The Nomination for receipt, net of applicable Fuel and Loss and Pipeline Condensate, shall equal the Nomination for delivery, unless the Nomination includes make-up quantities to correct imbalances or is authorized by Gatherer under its Nomination procedures.

4 In the event that EGS is unavailable, a Nomination or modification may be submitted by e- mail or fax, which shall include at a minimum:

(i) Producer or Producer’s Aggregator’s name and Gatherer’s Contract Number; (ii) Daily quantity of Gas to be gathered under this Agreement (in MMBtus);(iii) The quantities of Gas to be received by Gatherer at a Point(s) of Receipt and delivered by Gatherer

to Point(s) of Delivery;(iv) The beginning and ending dates for the modification of the Nomination; (v) Changes with respect to the Transporter and/or any contract(s) with downstream connected

Persons; and(vi) Such other information as Gatherer deems necessary or desirable.

5 Notwithstanding any other provision of this Agreement, Gatherer shall have the right to refuse any Nomination to the extent it threatens the operational integrity of the Gathering System or is denied by Transporter.

6 The Parties’ contact information for Nominations and scheduling is set forth in Exhibit I.

The Nominations procedures in this Exhibit may be amended by Gatherer from time to time upon five (5) business days’ notice to the other Party and posting the new procedures to Gatherer’s EBB.


MEASUREMENT AND TESTING

EXHIBIT K

to the


Standards for Measurement and Measurement Equipment Testing

1 The unit of volume for measurement of Gas delivered hereunder shall be one thousand (1,000) cubic feet of Gas (or MCF) at a base temperature of 60 degrees Fahrenheit and at an absolute pressure of 14.73 psia. The unit of energy shall be one (1) dekatherm (Dth). All fundamental constants, observations, records, and procedures involved in determining the quantity of Gas measured hereunder shall be in accordance with the standards prescribed in Report Nos. 3, 8, and 9 of the American Gas Association, as applicable and as amended or supplemented from time to time, respectively. It is agreed that for the purpose of measurement and computations hereunder, the atmospheric pressure shall be assumed to be 14.73 psia regardless of the atmospheric pressure at which the Gas is measured and that the Gas obeys the Ideal Gas Laws as to variations of volume with pressure and specific gravity, including the deviation from Boyle’s Law, and shall all be made by Gatherer in accordance with applicable rules, regulations, and orders. It is also agreed that Gatherer will apply a correction factor for water vapor to correct to seven (7) pounds per MMCF.

2 Gatherer shall operate, or cause to be operated, a measuring station located at each Receipt Point. Said measuring station(s) shall be so equipped with electronic gas measurement equipment, orifice meters, turbines or ultrasonic meters, or other types of meters and equipment of standard make and design commonly acceptable in the industry, and of suitable size and design, and recording gauges, to accomplish the accurate measurement of Gas. The calibrating and adjusting of measurement equipment shall be done by Gatherer. The Parties agree to utilize Gatherer's electronic gas measurement for volumetric determination and recognize that such calculations and analyses shall be used for custody transfer measurement purposes. The owner of the measuring station shall be responsible for the maintenance, repair or replacement of the measuring station, all in accordance with Gatherer’s specifications.

3 Producer may, at its option and expense, install check measurement equipment at each Receipt Point installed so as not to interfere with the operation of the primary measurement.

4 The temperature of the Gas flowing through the measurement equipment shall be determined by the continuous use of a recording thermometer or device installed so that it will properly record the temperature of the Gas. Special tests to determine sulphur, hydrogen sulfide, oxygen, carbon dioxide, and nitrogen content shall be made by approved standard methods in general use by the gas industry.

5 The specific gravity of the Gas flowing through the measurement equipment shall be determined by methods commonly accepted in the industry. Specific gravities so determined will be used in calculating Gas volumes until the next specific gravity test is made.

6 Each Party shall have the right to be present at the time of any installation, reading, sampling, cleaning, changing, repair, inspection, testing, calibration, or adjustment done in connection with the measurement equipment used hereunder. The records from such measuring equipment shall remain the property of their owner, but upon request, each Party will provide its records, together with calculations therefrom which shall be returned within thirty (30) days of receipt. All measurement data shall be retained for at least two (2) years, or such longer period as required by applicable Law. Gatherer shall, during the first production Month, and thereafter at least semi-annually, or as required by applicable Law, calibrate or caused to be calibrated the measurement equipment used to


determine the volume and/or quality of Gas. Gatherer shall give Producer at least ten (10) days advance notice of such tests so that Producer may observe any adjustments.

7 If the measurement equipment is found to be inaccurate by two percent (2%) or more, the previous readings shall be corrected for any period of inaccuracy known or agreed upon, or if not known or agreed upon, then for one-half of the period since the last calibration date. Unless conclusively determined to be inaccurate by two percent (2%) or more, such measurement shall be deemed correct for all purposes hereunder, and no adjustment shall be made to the previous volumes. Any measurement equipment found to be inaccurate shall be adjusted to measure accurately. If for any reason any measurement equipment is out of service or out of repair so that the quantity of Gas delivered through such measurement equipment cannot be ascertained or computed from the readings thereof, the quantity of Gas so delivered during such period shall be estimated and agreed upon by the Parties upon the basis of the best available data using the first of the following methods which is feasible:

a. By using the registration of any check measurement equipment, if installed and registering accurately;

b. By correction if the percentage error is ascertainable by calibration, test, or mathematical calculation;

c. By estimation using prior deliveries under similar conditions when the measurement equipment was registering accurately.

8 If at any time a special test of any measurement equipment is desired, the Parties shall cooperate to secure an immediate verification of the accuracy of such equipment and joint observation of any adjustments. All routine tests of measurement equipment shall be made at Gatherer’s expense, except that the Producer shall bear the expense of tests made at its request if the inaccuracy found is less than two percent (2%). Expense as used in this Section 9.8 shall be limited to Gatherer’s actual costs of such testing.

9 The Parties acknowledge that technological advances may occur during the term of this Agreement which may render certain measurement equipment obsolete, or less accurate. In such event, the owner of the equipment, may repair or replace such measurement equipment after providing sufficient advance notice so that the other Party may inspect, test and/or witness the installation. Producer shall execute any agreements required by Gatherer prior to the installation of any new measurement equipment.

10 If for any reason Gas is delivered to Gatherer at a Receipt Point with pulsations that affect the accuracy of the measurement, Producer shall be responsible for installing necessary pulsation dampeners, or other devices, to eliminate or reduce the pulsations to a level determined acceptable by Gatherer.

11 With regards to Production Condensate, facilities requirements, measurement, testing and analysis shall be in accordance with the measurement, allocation and liquids handling agreements applicable to the specific part of the Gathering System in which the Receipt Point is located.

12 Notwithstanding anything to the contrary, the Parties recognize that the point of Gas measurement shall continue to be the point at which Gas volume and thermal content determinations shall be made and where Gas quality shall be determined and enforced, all in accordance with the terms and conditions of this Agreement.

The measurement and testing standards in this Exhibit may be amended by Gatherer upon five (5) business days’ notice to the other Party and posting such changes to Gatherer’s EBB.


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