Sample Business Contracts

Gas Purchase Agreement - Western Gas Resources Inc. and Big Basin Petroleum LLC

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                            GAS PURCHASE AGREEMENT

     THIS  AGREEMENT  is made and  entered  into as of this 28th day of January,
2000, to be effective on January 1, 2000 (the  Effective  Date),  by and between
WESTERN GAS  RESOURCES,  INC.,  a Delaware  corporation  (Buyer),  and Big Basin
Petroleum,  LLC (Seller). Buyer and Seller shall also be hereinafter referred to
individually as the "Party" and jointly as the "Parties."

     In  consideration  of the Agreement and of the mutual  covenants  contained
herein,  Seller  agrees  to sell and  deliver  to  Buyer,  gas  under  the terms
specified in this Agreement.

1. Definitions. The following terms have the following meanings:

1.1 Accounting Period. The period commencing at 7:00 a.m., Mountain Time, on the
first day of a calendar  month and ending at 7:00 a.m.,  Mountain  Time,  on the
first day of the next succeeding month.

1.2 BTU. The amount of heat  required to raise the  temperature  of one pound of
water from 59 degrees Fahrenheit to 60 degrees Fahrenheit.

1.3 Compression Design Capacity or CDC. Compression capability,  in MCF per day,
at the following operational criteria:

          (i) 5 psig  suction  pressure  at  the  compressor  suction  pulsation

          (ii) 12.7 psia barometric pressure;

          (iii) 80 degrees Fahrenheit ambient air temperature;

          (iv) 60 degrees Fahrenheit inlet gas temperature.

1.4 Cubic  Foot.  The  volume of gas  contained  in one cubic foot of space at a
standard  pressure  base of 14.73 pounds per square inch  absolute  (psia) and a
standard temperature base of 60 degrees Fahrenheit.

1.5 Delivery  Point.  The inlet  flange of Western's  meters to be located in or
near  Section 28,  Township 47 North,  Range 72 West,  or at mutually  agreeable

1.6 Excess Gas. Gas from the Lands,  deliverable to a Delivery  Point, in excess
of the firm CDC Buyer is committed to make available hereunder to Seller at that
Delivery Point.

1.7 Force Majeure.  Any cause or condition not reasonably  within the control of
the Party claiming  suspension and which by the exercise of due diligence,  that
Party is unable to prevent or overcome.


1.8 Gas. All hydrocarbon and non-hydrocarbon substances produced from gas and/or
oil wells in a gaseous state

1.9 Gross Heating Value.  The number of BTU's produced by the  combustion,  on a
dry basis  and at a  constant  pressure,  of the  amount of the gas which  would
occupy a volume of one Cubic Foot at a temperature of 60 degrees  Fahrenheit and
at a pressure of 14.73 psia,  with air of the same  temperature  and pressure as
the gas, when the products of combustion  are cooled to the initial  temperature
of the gas and air and when the water formed by  combustion  is condensed to the
liquid state.

1.10 Losses. Any loss, cost, expense,  liability,  damage,  demand, suit, claim,
sanction,  claim,  settlement,  judgment,  lien, fine, penalty,  and interest of
every kind and character (including reasonable fees and expenses of attorneys).

1.11  Purchasing  Facilities.  Any  facility,   including  but  not  limited  to
dehydration,  pigging equipment, pipelines, and compressors,  acquired hereby or
contemplated  hereunder to be  installed,  operated  and/or  maintained by Buyer
regardless  of whether  Buyer owns,  operates,  leases or contracts for any such
facilities,  including  facilities  installed,  owned and operated by MIGC, Inc.
and/or Fort Union Gas Gathering, LLC.

1.12 Retained  Fuel.  All fuel that is either  consumed or assessed  between the
Delivery Point and the outlet of Purchasing  Facilities.  Fuel will be allocated
to the gas that Buyer  delivers to Seller by  multiplying  the total quantity of
fuel  consumed or assessed at the points  where fuel is consumed for the benefit
of that gas by a fraction,  the  numerator  of which is the quantity of gas that
Buyer delivers to Seller that flowed through the facility using the fuel and the
denominator of which is the total of all gas, including Buyer's, flowing through
that facility.  For purposes of this agreement,  Retained Fuel shall include any
gain or loss from the Delivery  Point  through the  discharge of all  Purchasing
Facilities where Seller's gas is compressed.

1.13 Lands.  The lands in which Seller owns  leasehold  interests,  described on
exhibit A attached  hereto and made a part  hereof,  together  with any wells in
which Seller owns interests which are now or hereafter drilled on the lands.

2.       Terms of Purchase and Sale.

2.1 Delivery. Seller shall deliver gas to Buyer at the Delivery Point(s) against
the  operating  pressures  at the  Delivery  Point(s)  as they from time to time
exist;  provided,  Buyer agrees that it shall not cause the Delivery Point(s) to
be operated at an average  pressure  during any Accounting  Period which exceeds
the suction  pressure  set forth in Section 1.3 at volumes less than or equal to
the CDC provided at that Delivery Point.

2.2 Commitment and Quantity.

          a. Seller hereby commits,  sells,  and agrees to deliver to Buyer, and
     Buyer agrees to purchase  and receive,  or cause to be received for Buyer's
     account,  from Seller,  all gas attributable to the leasehold  interests of
     Seller and produced  from  formations  from the surface of the earth to the


     base of the tertiary Age Coal Formations from well now or hereafter located
     on the Lands  described  on Exhibit A.  Seller  agrees  that the  foregoing
     deduction  shall  be  a  covenant  running  with  the  land  and  that  any
     assignment,  sale  or  other  transfer  of all  or a  portion  of  Seller's
     interests in the Lands shall include and be subject to the dedication under
     this  Agreement.

          b. Buyer  agrees to make  available  for the  purchase of Seller's gas
     from the  Lands a firm CDC of 2,500 MCF per day at the  Delivery  Point(s).
     Buyer  will use  reasonable  efforts  to make such CDC  available  after an
     acceptable  production test demonstrating  production equal to at least 75%
     of the 2,500  Mcf CDC to be  provided  and  within  30 days  following  the
     receipt of all  necessary  permits.  Buyer  agrees to make  available on an
     interruptible basis an additional CDC of 1,500 MCF per day.

          c. Seller  agrees to make a reasonable  effort to drill,  complete for
     production,  and  connect  sufficient  additional  wells  within  3  months
     following the date that the CDC is made available hereunder to utilize 100%
     of such CDC.  Seller  acknowledges  that Buyer is relying on the  foregoing
     representation  of Seller as a material  inducement  in entering  into this

          d. If, during the 48-month  period  following the  three-month  period
     after  installation  of the CDC, the average  daily volume of gas delivered
     during  any  Accounting  Period is less than 90% of the CDC made  available
     hereunder, Buyer shall collect a Deficiency Payment as set forth below.

Deficiency = ((CDC X Days) x .90) - (Actual Deliveries)


CDC = The amount of firm CDC provided hereunder.

Days=               The total number of days in the Accounting Period,  less any
                    days Buyer was unable to provide  the firm CDC  (subject  to
                    variations from design conditions under Paragraph 1.3 above)
                    and less any days Seller was prevented  from  delivering gas
                    due to conditions of Force Majeure.

Actual              The total deliveries of gas by Seller during the  Accounting
Deliveries =        Period if Mcf.

If a Deficiency  exists for any Accounting  Period,  then Seller shall be liable
for a Deficiency  Payment equal to the Deficiency (in Mcf) multiplied by the Fee
in effect at the time the  deficiency  occurred.  All payments for  Deficiencies
hereunder shall be due within fifteen (15) days following  receipt of invoice by


          e. If Seller  has Excess Gas at any  Delivery  Point for which  Seller
     desires  firm CDC,  Seller may  request  Buyer,  in  writing,  to cause the
     expansion of the Purchasing Facilities to provide such firm CDC. Buyer will
     then have thirty (30) days after such  request to  determine  whether it is
     economic for Buyer, in Buyer's sole judgment, to cause the expansion of the
     Purchasing  Facilities  under the terms of this Agreement,  considering the
     amount of additional  gas available  from Seller and all other physical and
     economic conditions then existing.  In the event that Buyer determines that
     it is  economic  for  Buyer  to  cause  the  expansion  of  the  Purchasing
     Facilities  under  the  terms of this  Agreement,  Buyer  shall  cause  the
     expansion of the Purchasing Facilities under the terms of this Agreement in
     a timely and diligent  fashion.  Seller will be responsible  for Deficiency
     Payments  for this new firm CDC as set forth  above.

          f. In the event that Buyer  determines  that the requested  additional
     firm CDC is uneconomic in Buyer's sole judgment,  then the Excess Gas shall
     be released from the terms of this Agreement upon the request of Seller.

          g. During  periods when gas production  from all wells  (including the
     Wells  hereunder and wells of third party sellers)  connected to a Delivery
     Point exceeds the capacity  available at that Delivery  Point,  Buyer shall
     curtail  receipts  of all Excess Gas,  on a ratable  basis  pursuant to the
     capacity committed to all sellers connected to the Delivery Point.

          h. During periods when gas production  from all wells connected to all
     Purchasing  Facilities  (including  the Wells  hereunder and wells of third
     party sellers)  exceeds the capacity  available to Buyer from third parties
     to receive, transport, redeliver and/or sell gas, then Buyer shall take gas
     ratably from all sources unstream of the capacity restriction. Gas shall be
     curtailed  ratably from wells  producing  gas not in  association  with oil
     first and then,  if capacity is still  restricted,  gas shall be  curtailed
     ratably from wells producing gas together with oil ("Associated Gas").

          i. If the average  daily volume of gas  delivered  hereunder for three
     consecutive  Accounting  Periods  is less  than  90% of the  firm  CDC made
     available hereunder, Buyer shall have the right to reduce the firm CDC made
     available  to the  average  volume  of gas  delivered  during  those  three
     Accounting  Periods.  Buyer  shall not,  however,  reduce the firm CDC made
     available  hereunder until after 48-month period that Seller is responsible
     for Deficiency Payments, as set forth in Section 2.2d above, has ended.

2.3 Price and Fees.

          a. Buyer shall pay Seller for Seller's  gas  delivered to the Delivery
     Point(s)   hereunder,   less  Retained  Fuel.  It  is  understood  that  no
     compensation  is due from Buyer,  or any other party,  for  Retained  Fuel.
     Buyer shall use  reasonable  efforts to minimize fuel use in its Purchasing



          b. The total  amount paid for  Seller's  gas shall be equal to (I) the
     quantity of Seller's gas delivered to Buyer,  less Retained Fuel, in MMBtu,
     multiplied  by the Index,  less (ii) the quantity of Seller's gas delivered
     to Buyer,  in MCF,  multiplied  by a Fee.  The Fee  applicable  to firm CDC
     volumes shall be  forty-seven  cents ($0.47) per MCF. The Fee applicable to
     interruptible CDC volumes shall be forty-two cents ($0.42) per Mcf. "Index"
     shall be equal to the "Inside FERC's GAS MARKET REPORT,  Prices of Spot Gas
     Delivered  to  Pipelines"  index for  Colorado  Interstate  Gas Co.,  Rocky
     Mountains,  in the first  publication of the applicable month. If the Index
     is no  longer  published  or,  in  the  opinion  of  either  Party,  is not
     representative  of the gas market at Glenrock,  Wyoming,  the Parties shall
     mutually agree as to an alternative  pricing formula  representative of the
     foregoing. If the parties cannot agree on such alternative pricing formula,
     Seller shall  purchase the Gas delivered  hereunder from Buyer at Glenrock,
     Wyoming  for a price  equal to the Index.

          c. The Fee  specified  in 2.3.b.  above shall be adjusted on an annual
     basis  (beginning  on the first day of the second year of the Primary Term)
     in proportion to the  percentage  change,  from the preceding  year, in the
     Producer  Price Index for oil and gas field services (SIC 138) as published
     by the  Department  of Labor.  The  adjustment of the Fee shall reflect the
     percentage  change in the foregoing index as it existed for the immediately
     preceding  January  from the index  for the  second  immediately  preceding

3. Term.

3.1 The term of this Agreement shall extend,  subject to 3.2 below, for a period
of ten (10) years from the Effective Date (the Primary Term) and  month-to-month
thereafter  until  canceled by either Party upon 30 days prior written notice in
advance  of the  expiration  of the  Primary  Term or of any  monthly  extension

3.2 If it becomes  uneconomic  for Buyer to  continue  to receive  and  purchase
Seller's Gas, at any Delivery Point(s),  then Buyer shall have the right to give
Seller a  written  notice of that  condition  ("Uneconomic  Notice").  Upon that

          a. The Parties shall then attempt in good faith to negotiate  mutually
     acceptable  terms to provide for continued  delivery of gas at the affected
     Delivery Point(s).

          b. If the Parties cannot agree on those terms within 30 days following
     the date of the Uneconomic  Notice,  then either Party shall have the right
     to terminate this Agreement upon 10 days' written notice.

4.  Measurement.  Measurement  and  determination  of gas  delivered,  including
quantity  and  Gross  Heating  Value,  shall be  calculated  by  Buyer  from the
measurements  taken at the meter installed,  operated and maintained by Buyer at
the  Delivery  Point,  and  from  the  Gross  Heating  Value  determined  by gas
chromatography,  all in accordance with the recommendations set forth in the AGA


measurement  Committee  Report Number 3, including any amendments or superseding
standards agreeable to the parties. The unit of measurement shall be one million
British Thermal Units (MMBtu).

5.  Quality.  In the event that any gas delivered by Seller fails to meet any of
the  quality  specifications  set forth on Exhibit B, then Buyer  shall have the
right to cease  receiving that gas as long as that condition  exists,  provided,
however, Buyer shall not cease receiving  non-conforming gas hereunder unless it
also ceases  receipts  of all other gas which fails to a similar  extent to meet
the same quality  specifications.  In the event that Buyer ceases to receive gas
as  herein  provided  and if Seller  does not  treat  the gas prior to  delivery
hereunder  to conform to the  quality  specifications,  then so long as that gas
fails to conform to the quality  specifications,  Seller shall have the right to
deliver the non-conforming gas to any other party.

6.  Taxes  and  Royalty.  Buyer  shall  have no  responsibility  for  any  taxes
applicable  to the gas  delivered  hereunder,  prior to its  delivery  to Buyer,
including  all  production,  severance,  excise,  ad valorem  and other taxes of
whatever  nature and  Seller  shall  have no  responsibility  for any such taxes
applicable to the gas delivered  hereunder after its delivery  hereunder.  Buyer
shall have no  responsibility  for any royalty  applicable  to the gas delivered
hereunder  and Seller shall remain fully  responsible  for the timely and proper
payment of all royalties due on gas delivered hereunder.

7. Title and Indemnity.

7.1 Seller hereby  warrants  title to all gas sold hereunder and that Seller has
the  right and full  authority  to sell the same to  Buyer,  receive  all of the
proceeds  from  that  sale,  and that all gas is free from any and all liens and
adverse claims. Seller will indemnify Buyer against and hold Buyer harmless from
any and all Losses arising out of or related to Seller's breach of the foregoing
warranty.  Buyer shall have no  obligation  to make  payments for gas  delivered
hereunder  until Seller has furnished  Buyer with an executed  division order or
title  opinion  (addressed  to Buyer) in form and  content  acceptable  to Buyer
indicating  that  payments  for all gas  delivered  hereunder  are to be made to

7.2 Seller shall indemnify,  defend and hold Buyer harmless from and against all
Losses arising out of Seller's  operation  hereunder or arising while the gas is
in Seller's exclusive control and possession.  Buyer shall indemnify, defend and
hold  Seller  harmless  from and  against  all  Losses  arising  out of  Buyer's
operation hereunder or arising while the gas is in Buyer's exclusive control and

8. Payment.  Payments shall be made by Buyer not later than the last day of each
month for all gas purchased during the preceding Accounting Period.  Payment and
a statement  showing full details of the account shall be  transmitted to Seller
at the address stated herein.  Examination by Seller of books of account kept by
Buyer  respecting  the account shall be permitted by Buyer at  reasonable  times
during  business hours upon thirty (30) days advance written notice from Seller.
The scope of any audit  shall be limited to the  twenty-four  (24) month  period


immediately  prior to the month in which the audit is  requested;  provided,  no
audit  may  include  any time  period  for  which a prior  audit  hereunder  was
conducted,  and no audit may occur more  frequently  than once each  twelve (12)
months. All statements and records  pertaining to the purchases  hereunder shall
be retained  for at least two (2) years.

9.  Succession  and  Assignment.  This  Agreement  and  each  of its  terms  and
conditions,  shall bind and inure to the  benefit of the  Parties  hereto and to
their respective successors and assignees.  However, any such assignment must be
in writing and shall not be binding on the other  Party  unless and until a copy
is provided to the other  party,  and  further,  shall not be binding upon Buyer
until  Buyer  has  been   furnished   with   appropriate   transfer   orders  or
letters-in-lieu of transfer or division orders.

10. Force Majeure

10.1  Except for  payment due  hereunder,  neither  Party shall be liable to the
other for failure or delay in making or accepting deliveries or performing other
obligations  hereunder  to the  extent  that the  failure or delay may be due to
Force Majeure conditions.

10.2  Notwithstanding  the  foregoing,  for  a  Party  to  claim  force  majeure
suspension,  that Party must first give notice by  telephone or facsimile to the
other  Party  within  twenty  four  (24)  hours  of  occurrence  specifying  the
conditions  or  causes  of  force  majeure  and the  particular  performance  or
obligation affected by the force majeure.

11.  Regulatory  Bodies.  In the event any regulatory body asserts  jurisdiction
over  the sale of  natural  gas  hereunder,  either  Party  may  terminate  this
Agreement upon 10 days advance written notice.

12. Confidentiality. The terms of this Agreement, including, but not limited to,
the price paid for gas,  the  volumes of gas  purchased  or sold,  and all other
material  terms of this  Agreement  shall be kept  confidential  by the  Parties
hereto, except to the extent that information which must be disclosed by law.

13. Miscellaneous.

13.1 This Agreement  shall be governed in accordance  with the laws of the State
of Colorado, without regard to choice of law principles.

13.2 This Agreement,  including all exhibits and appendices,  contain the entire
agreement  between the Parties,  and except as stated herein,  there are no oral
promises,  agreements,  warranties,   obligations,   assurances,  or  conditions
precedent, affecting it.

13.3 Any  change,  modification  or  alteration  of this  Agreement  shall be in
writing,  signed by the  Parties,  and no course of dealing  between the Parties
shall be construed to alter the terms hereof, except as expressly stated herein.


13.4 A waiver by either  Party of any one or more  defaults  by the other in the
performance of any provisions of this Agreement shall not operate as a waiver of
any future default, whether of a like or different character.


14. Notices. Any notice, request, demand, statement or bill provided for in this
Agreement, or any notice which a Party may desire to give to the other, shall be
in  writing  and  shall  be  considered  as  duly  delivered  as of the  date of
transmittal if mailed by ordinary mail,  telecopied,  wired or courier expressed
to the other Party at the following address:

         Notices to Buyer:
         Western Gas Resources, Inc.
         12200 N. Pecos Street
         Denver, Colorado  80234
         ATTN:  Contract Administration

         Telephone No. (303) 452-5603
         Telecopy No. (303) 452-0186

         Notices to Seller:
         Big Basin Petroleum, LLC
         3105 E. 2nd Avenue
         Gillette, WY  82717

         ATTN:  Matt Murphy

         Telephone:  (307) 685-4210
         Telecopy No. (307) 685-4211

         Either Party may change its address for purposes of notice by giving
         notice to the other Party.

IN WITNESS WHEREOF,  the Parties have duly executed this Agreement as of the day
and year first above written.

SELLER                                      BUYER:
------                                      -----

By: /s/ Matt Murphy                 By: /s/ J. Burton Jones
    --------------------                -------------------
Name: Matt Murphy                   Name:  J. Burton Jones
Title: Managing Member/Owner        Title:  V.P.-Business Development
Date:  12/21/99                     Date:  1/28/00


                                    EXHIBIT A

To Gas  Purchase  Agreement  between  Western Gas  Resources,  Inc.  (Buyer) and
_______________________  Petroleum,  LLC (Seller)  dated  January 28, 2000 to be
effective January 1, 2000.

The Lands committed to this Agreement shall include all of Seller's  interest in
the following:

Sections          Township          Range            County            State
--------          --------          -----            ------            -----
28.33             47 North         72 West          Campbell          Wyoming

limited to formations  from the surface of the earth to the base of the Tertiary
Age Coal Formations.


                                    EXHIBIT B

To Gas Purchase  Agreement  between Western Gas Resources,  Inc. (Buyer) and Big
Basin Petroleum, LLC (Seller) dated January 28, 2000, to be effective January 1,

                             QUALITY SPECIFICATIONS

Gas delivered by Seller hereunder to Buyer shall:

(a) be reasonably free from dust,  gum,  gum-forming  constituents,  condensate,
free water,  diluents,  and other liquids and solids which may become  separated
from the gas;

(b) contain not more than ten (10) ppm (parts per million) oxygen by volume (and
Seller shall make every effort to keep gas free from oxygen);

(c) contain  not more than  one-fourth  (1/4) grain of hydrogen  sulfide per one
hundred (100) Cubic Feet of Gas;

(d) contain not more than twenty (20) grains of total sulphur, including sulphur
in hydrogen sulfide and mercaptan, per one hundred (100) Cubic Feet of Gas;

(e) contain not more than three percent (3%) carbon dioxide, by volume;

(f)  have a  temperature  less  than  or  equal  to one  hundred  (100)  degrees

(g) have a heating value not less than nine hundred  sixty-eight (968) BTU's per
Cubic Foot of Gas, dry basis.