Pipeline Capacity Lease Agreement [Modification and Extension] - LaGloria Oil and Gas Co. and Plains Marketing LP
MODIFICATION AND EXTENSION OF PIPELINE CAPACITY LEASE AGREEMENT
WHEREAS, LaGloria Oil & Gas Company ("LaGloria") and Plains Marketing,
L.P. ("Plains") as successor to Scurlock Permian LLC executed that certain
Pipeline Capacity Lease Agreement ("Lease") dated April 12, 1999, for an initial
term of five (5) years commencing January 1, 2004 through December 31, 2004, a
copy of which is attached hereto and incorporated herein in its entirety; and
WHEREAS, Delek Refining, Ltd. as successor in interest to LaGloria Oil &
Gas Company and Plains Marketing, L.P. executed that certain One-Year
Renewal of Pipeline Capacity Lease Agreement attached hereto and incorporated
herein in its entirety renewing the Lease for one (1) additional lease year
commencing on January 1, 2005 through December 31, 2005; and
WHEREAS, Plains Marketing, L.P. and Delek Refining, Ltd., hereinafter
referred to as "Parties", executed an Amendment to the One-Year Renewal of
Pipeline Capacity Lease Agreement changing the Monthly Rental payable by Delek
Refining, Ltd. to Plains Marketing, L.P. in Section 4 from September 1, 2005
through December 31, 2005; and
WHEREAS, the One (1) year renewal of the Pipeline Capacity Lease Agreement
was subsequently extended through April 30, 2006 by an Extension of Pipeline
Capacity Lease Agreement ("Agreement") attached hereto and incorporated herein;
and
WHEREAS, the Parties desire to again amend the rental provisions of
Section 4 and extend the Agreement for three (3) years and provide for
renegotiation of this Agreement in the event of extraordinary increases in
maintenance and operating costs (See "Renegotiation Criteria" paragraph below)
by Plains Marketing, L.P.;
NOW, THEREFORE, in consideration of the mutual benefits of the Parties
hereto, by execution below Plains Marketing, L.P. and Delek Refining, Ltd.
modify the Lease as follows:
The term of the Lease is hereby extended for an additional three (3) year
term beginning May 1, 2006, and ending April 30, 2009.
For the first year of this Agreement commencing May 1, 2006 through April
30, 2007 the rental will be as follows:
For each calendar month in which the average deliveries is 27,000 barrels
per day of crude oil or less, the monthly rental shall be calculated as follows:
Monthly Rental = Days in the month x the actual volume delivered up to and
including 27,000 barrels per day x $[***] per barrel.
For the period commencing May 1, 2007 through April 30, 2008 the rental
shall be calculated as follows:
[***] CONFIDENTIAL TREATMENT REQUESTED
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Monthly Rental = Days in the month x the actual volume delivered up to and
including 27,000 barrels per day x $[***] per barrel.
For the period commencing May 1, 2008 through April 30, 2009 the rental
shall be calculated as follows:
Monthly Rental = Days in the month x the actual volume delivered up to and
including 27,000 barrels per day x $[***] per barrel.
For each calendar month during the period May 1, 2006 through April 30,
2009 in which the average daily deliveries of crude oil exceeds 27,000 per day,
the monthly rental on the barrels in excess of 27,000 barrels per day shall be
calculated as follows:
Monthly Rental = Volume in excess of the 27,000 barrels per day x $[***]
per barrel.
RENEGOTIATION CRITERIA
The above rental schedule includes normal operation and maintenance
performed by Plains Marketing, L.P. including routine leak repair, cleanup,
right of way issues and elective pipe replacement. However, if major repairs or
an integrity upgrade are required due to regulatory compliance or significant
pipe integrity loss between May 1, 2006 and April 30, 2009, the Parties shall
negotiate an agreement to pay for such additional costs over and above the
aforementioned rental schedule. In such event, Plains Marketing, L.P. will
present to Delek Refining, Ltd. in writing the anticipated extraordinary costs
and a proposed method of cost recovery. The Parties agree to negotiate in good
faith and in a timely manner to resolve the method and period of cost recovery.
This Modification and Extension of Pipeline Capacity Agreement is executed
in duplicate each of which is deemed an original for all purposes on the dates
set forth below but effective May 1, 2006.
Plains Marketing, L.P. Delek Refining, Ltd.
By Plains Marketing GP Inc. By Its General Partner
Its General Partner Delek U.S. Refining GP, LLC
By: /s/ George R. Coiner By: /s/ Tony McLarty
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Name: George R. Coiner Name: Tony McLarty
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Title: Senior Group Vice President Title: VP of Human Resources
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Date: April 6, 2006 Date: 3/29/06
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By: /s/ Frederec Green
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Name: Frederec Green
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Title: COO
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[***] CONFIDENTIAL TREATMENT REQUESTED