EX-99 2 0002.txt Exhibit 10.7 EOTT ENERGY Operating Limited Liability Partnership 111 W. OCEAN BLVD., SUITE 1700 LONG BEACH CA 90802-4632 (562) 437-3577 FAX (562) 437-4935 PURCHASE AGREEMENT This agreement is made and entered into this lst day of February 2001, by and between EOTT ENERGY Operating Limited Partnership ("EOTT") and Hallador Production Company (Seller). 1. Background and Purpose: EOTT has been advised that Seller desires EOTT to purchase certain liquid hydrocarbon mixtures produced at the South Cuyama gas processing facility ("LHM"). EOTT is willing to purchase such LHM from Seller subject to the terms and conditions of this Agreement. 2. Term: The term of this Agreement shall be effective as of 12:01 A.M., February 1, 2001, and shall continue until 11:59 P.M., March 31, 2001. It shall continue month to month thereafter until cancelled my either party by giving thirty (30) days written notice to the other party. 3. Location: The sales and custody transfer point shall be at EOTT's North Coles Levee Plant 8 Fractionation Facility ("Facility"). 4. Delivery: Seller shall deliver to EOTT, at the Facility, the LHM production pursuant to any limitations 6-f Paragraph 5. of this Agreement. EOTT shall take delivery of such LHM at the Facility. 5. Limitation of Volumes: Volumes of LHM processed hereunder shall be limited to the fractionation capacity in the, Facility which exceeds the capacity required for fulfilling other EOTT processing requirements and commitments as of the effective date of this Agreement. 6. Determination of Volumes: EOTT shall gauge the incoming volume of Seller's LHM to EOTT's satisfaction, and will notify Seller of any discrepancy with the bill of lading provided by Seller. In the event of any discrepancy, EOTT's measurement shall control. EOTT's analysis of the incoming LHM shall determine the volume of methane, ethane, propane, butanes and gasoline delivered to the Facility. 7. Prices: EOTT shall pay Seller the following Base Prices for the LHM delivered to the Facility: OPIS Component Reference Price ($/Gal) --------- ------------- ------------------------- Propane Bakersfield OPIS average minus $0.075 Normal Butane Bakersfield OPIS average minus $0.075 ISO Butane L.A. OPIS average minus $0.115 C5+ Bakersfield OPIS average minus $0.075 Ethane $0.10 per gallon Seller agrees to pay for transporting such LHM to Facility, currently $0.02614/gallon. OPIS average posted price shall be the price published by Oil Price Information Service, Inc. on the first calendar day of the month of delivery or on the last Thursday of the month preceding the month of delivery, whichever is closest to the first workday of the month of delivery. The base price in this Agreement assumes a monthly fuel cost of $14.00/mmbtu. In the event that the Southern California Border Index Price ("Border") at Topock, as published by Natural Gas Weekly and Natural Gas Intelligence, exceeds $14.00/mmbtu, a fuel surcharge shall apply equal to an accumulative 7.1 % for each $1.00/mmbtu increase in Border. For example, fuel surcharges shall be assessed as follows: BORDER Cumulative Fuel (Price per mmbtu) Surcharge $15.00 7.1% $16.00 14.2% $17.00 21.3% $18.00 28.4% $19.00 35.5% $20.00 42.6% etc. If Border price ceases to be available from Natural Gas Weekly and Natural Gas Intelligence, the parties agree to negotiate an acceptable substitute to measure. Any fuel surcharge will be removed or reduced when monthly Border price remains below the price that triggers a specific surcharge. In no case will the price be reduced below the Base Price. Reductions will become effective as they become applicable. In no case will the application or removal of the fuel surcharge be retroactive. 8. Statements/Audits: Seller shall render EOTT a monthly statement showing the value of the component parts of the LHM stream. EOTT shall render Seller a statement showing the total LHM received in each transport load hereunder. Statements shall be sent to Seller at the following address: Hallador Production Company 1660 Lincoln Street, Suite 2700 Denver, CO 80264 FAX (303) 832-3013 Monthly statements/invoices shall be sent to EOTT at the following address: EOTT Energy Corp. 111 W. Ocean Blvd. Suite 1700 Long Beach, California 90802-4632 Attention: Dwight Simpson 9. Contaminants: EOTT may at its sole discretion refuse to accept delivery of any mixture that contains contaminants that, in EOTT's sole judgment, may be injurious to EOTT's Facilities or be undesirable in finished products. Seller shall reimburse EOTT for all charges associated with undesirable LHM, including, but not limited to, transportation charges to and from the Facility, disposal charges, and additional marketing fees. 10. No Dedication: Seller agrees and acknowledges that this Agreement is as accommodation by EOTT and not a dedication of any EOTT facility or assets to a public use. Seller shall never assert in any action or proceeding that the services provided by EOTT hereunder constitute a dedication for a public use or a common carriage of any kind whatsoever. 11. Force Majeure: The obligations hereunder of each party shall be suspended while and to the extent that such party is prevented from complying therewith in whole or in part by force majeure including without limitation strikes, lockouts, labor and civil disturbances, acts of GOD, unavoidable accidents, mechanical breakdown or failure, breakdown of plant equipment, including lack of storage capacity which is a result of any such breakdown or failures, laws, rules, regulations, orders or any other act or failure to act of any government or agent or instrumentality thereof(whether domestic of foreign) having at any time de facto or de jure control over any of the parties, the project area or the agreement, acts of war or conditions arising out of or attributable to war whether declared or undeclared, shortage of essential equipment, materials or labor or restrictions thereon or limitations upon the use thereof, unavoidable delays in transportation or communication, adverse weather conditions, or causes reasonably beyond the control of any party claiming force majeure hereunder. Where such condition results in suspension of performance of any of the obligations of any party hereunder, such party shall give the other party notice in writing of such suspension of performance as soon as reasonably possible, stating therein the date and extent of such suspension, whether in whole or in part, and specifying in reasonable detail the nature of the force majeure causing such suspension. Any party, the performance of whose obligations has been suspended as aforesaid, shall resume performance thereof as soon as reasonably possible after the circumstance preventing such performance as provided above shall have terminated or ceases to have such effect and shall so notify the other party. The provisions of this Paragraph shall not suspend the obligation of a party to make timely payment of any money due hereunder. 12. No Waiver: The failure of either party at any time to require performance by the other of any provision hereof shall not constitute a waiver of performance of the provision or any other provision at any time. 13. Governing Law: This Agreement shall be governed by and construed according to the law of the State of California. 14. Notices: All notices, demands, or requests from one party to the other may be personally delivered, sent via facsimile, sent by recognized overnight delivery service, or sent via United States mail, certified or registered, postage prepaid, to the addresses stated in this paragraph and shall be effective upon receipt thereof, or as mutually agreed. EOTT: EOTT Energy Corporation 111 West Ocean Blvd., Suite 1700 Long Beach, California 90802 Attention: Manager, NGL & Feedstock Acquisition Hallador: Hallador Production Company 1660 Lincoln Street, Suite 2700 Denver, CO 80264 Attention: Victor Stabio 15. Successors and as each and all of the covenants, condition, and restriction contained in the Agreement shall be binding on and inure to the benefit of the parties and their successors, assignees, and transferees. 16. Entire Agreement: This Agreement contains the entire agreement of the parties with respect to the matters covered by this Agreement, and no other agreement, statement, or promise made by any party, or to any employee, officer, or agent of any party, which is not contained in this Agreement shall be binding. Executed as of the date first written. EOTT Energy Operating Limited Partnership By: EOTT Energy Corp., its General Partner By:/s/Larry J. Garrett Title: Manager NGL & Feedstock Acquisition Hallador Production Company By:/s/VICTOR P. STABIO Name: VICTOR P. STABIO Title: PRESIDENT