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Crude Oil Marketing Agreement

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Sectors: Energy
Governing Law: Texas, View Texas State Laws
Effective Date: January 01, 1998
Related Agreement Types:
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CRUDE OIL MARKETING AGREEMENT


among


PLAINS RESOURCES INC.


PLAINS ILLINOIS INC.


STOCKER RESOURCES, L.P.


CALUMET FLORIDA, INC.


and


PLAINS MARKETING, L.P.


================================================================================


TABLE OF CONTENTS


ARTICLE I
DEFINITIONS -5-
1.1 Definitions -5-


ARTICLE II
PURCHASE AND SALE -3-
2.1 Purchase and Sale -3-
2.2 Addition or Release of Properties or Sellers -4-
2.3 Delivery -5-
2.4 Price -5-
2.5 Payment -5-
2.6 General Provisions -6-
2.7 No Restrictions -6-


ARTICLE III
RENEGOTIATION -6-


ARTICLE IV
ADDITIONAL SERVICES -7-
4.1 Additional Services -7-
4.2 Sellers Indemnity -7-


ARTICLE V
TERM -8-


ARTICLE VI
REPRESENTATIONS AND WARRANTIES -8-
6.1 Representations and Warranties of Sellers -8-
6.2 Representations and Warranties of Buyer -9-


ARTICLE VII
CREDIT REQUIREMENTS -9-


ARTICLE VIII
SPECIFIED EVENTS -10-
8.1 Buyer Specified Events -10-
8.2 Seller Specified Events -11-
8.3 Early Termination -12-
8.4 Specified Damages -12-


ARTICLE IX
FORCE MAJEURE -12-
9.1 Excuse for Nonperformance -12-
9.2 Definition -12-
9.3 Notice and Cure -13-


ARTICLE X
GENERAL PROVISIONS -13-
10.1 No Survival of Representations and Warranties -13-
10.2 Headings -13-
10.3 Rights and Remedies Cumulative -13-
10.4 Entire Agreement; Supersedure -13-
10.5 Severability -13-
10.6 Choice of Law; Submission to Jurisdiction -13-
10.7 Binding Agreement -14-
10.8 No Agency -14-
10.9 Notice -14-
10.10 Effect of Waiver or Consent -14-
10.11 Assignment -14-
10.12 Counterparts -14-
10.13 Amendment or Modification -15-
10.14 Further Assurances -15-
10.15 Withholding or Granting of Consent -15-
10.16 U.S. Currency -15-
10.17 Laws and Regulations -15-
10.18 Construction of Agreement -15-


CRUDE OIL MARKETING AGREEMENT


This CRUDE OIL MARKETING AGREEMENT (this "Agreement"), dated November ___, 1998, is by and between PLAINS RESOURCES INC., a Delaware corporation ("Plains Resources"), PLAINS ILLINOIS INC., a Delaware corporation ("Plains Illinois"), STOCKER RESOURCES, L.P., a California limited partnership ("Stocker"), CALUMET FLORIDA, INC., a Delaware corporation ("Calumet"), and PLAINS MARKETING, L.P., a Delaware limited partnership ("Buyer"). Plains Resources, Plains Illinois, Stocker, and Calumet are sometimes referred to herein individually as a "Seller" and collectively as the "Sellers." Sellers and Buyer are sometimes referred to herein individually as a "Party" and collectively as the "Parties."


R E C I T A L S:
- - - - - - - -

A. Sellers own and produce crude oil from properties located within the lower 48 states of the United States.


B. Sellers desire to sell and Buyer desires to purchase all of the crude oil which is produced and owned by Sellers from such properties.


NOW, THEREFORE, the Parties agree as follows:


ARTICLE I
DEFINITIONS


1.1 Definitions. As used herein, the following terms shall have the following meanings:


"Affiliate" means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, the Person in question. As used herein, the term "control" means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.


"Agreement" means this Agreement and all exhibits, schedules, amendments, modifications, and supplements to this Agreement.


"Anniversary Date" has the meaning assigned in Article III.


"Barrel" means forty-two (42) United States gallons of Crude Oil measured in accordance with the General Provisions.


"Business Day" means Monday through Friday of each week, except that a legal holiday recognized as such by the government of the United States of America or the states of New York or Texas shall not be regarded as a Business Day.


"Buyer Specified Event" has the meaning assigned in Section 8.1.


"Change of Control" has the meaning assigned in that certain Omnibus Agreement, dated as of the Closing Date (as defined therein), among Plains Resources, Buyer, General Partner, Plains All American Pipeline, L.P., a Delaware limited partnership, and All American, L.P., a Texas limited partnership.


"Conflicts Committee" means a committee of the Board of Directors of the General Partner composed entirely of two or more directors who are neither securityholders, officers nor employees of the General Partner nor officers, directors or employees of any Affiliate of the General Partner.


"Corporate Governance Documents" means, with respect to any Person, the Certificate or Articles of Incorporation, or Partnership Agreement (or their equivalents), the by-laws (or their equivalents), and the other corporate governance documents of such Person.


"Crude Oil" means crude oil meeting the specifications set forth in the General Provisions.


"Defaulting Party" means (a) in the case of a Buyer Specified Event, Buyer, and (b) in the case of a Seller Specified Event, any Seller affected by such Seller Specified Event.


"Delivery Point" has the meaning assigned in Section 2.3.


"Effective Date" means the date of execution of this Agreement.


"Existing Contract" has the meaning assigned in Section 2.2(g).


"Force Majeure" has the meaning assigned in Article IX.


"General Partner" means Plains All American Inc., a Delaware corporation, and its predecessors, successors and permitted assigns as general partner of the Buyer.


"General Provisions" has the meaning assigned in Section 2.6.


"Governmental Requirements" means all judgments, orders, writs, injunctions, decrees, awards, laws, ordinances, statutes, regulations, rules, franchises, permits, certificates, licenses, authorizations, and the like of any government, or any commission, board, court, agency, instrumentality, or political subdivision thereof.


"Marketing and Administrative Fee" has the meaning assigned in Section 2.4.


-2-


"Marketing Area" means the lower 48 states of the United States.


"Non-defaulting Party" means (i) in the case of a Buyer Specified Event, any Seller which is affected by such Buyer Specified Event, and (ii) in the case of a Seller Specified Event, Buyer.


"Person" means an individual or a corporation, limited liability company, partnership, joint venture, trust, unincorporated organization, association, government agency or political subdivision thereof or other entity.


"Platt's P+ Average" means the arithmetic average of the Platt's Prices for P-Plus WTI during a Trading Cycle.


"Platt's Difference" means the arithmetic average for a Trading Cycle of the difference between the Platt's Prices of the applicable grade of crude to be exchanged (i.e. WTS, LLS, HLS, Eugene Island, Bonito, etc.) and the prompt month WTI.


"Platt's Prices" means the average of the price range of a particular grade of crude oil as published in the Crude Price Assessments table of Platt's Oilgram Price Report.


"Purchase Price" has the meaning assigned in Section 2.4.


"Sales Price" has the meaning assigned in Section 2.4.


"Seller Specified Event" has the meaning assigned in Section 8.2.


"Specified Event" means a Buyer Specified Event or a Seller Specified Event, as the case may be.


"Trading Cycle" means for a particular month of delivery, a cycle beginning on the 26/th/ day of the second month preceding such month of delivery through the 25/th/ day of the month preceding such month of delivery.


"Trade Location" has the meaning assigned in Section 2.4(b).


ARTICLE II
PURCHASE AND SALE


2.1 Purchase and Sale. Buyer hereby agrees to purchase and receive and Sellers hereby agree to sell and deliver all of the Crude Oil produced and owned by Sellers from properties located within the Marketing Area. Currently, such properties are set forth on Exhibit A attached hereto and incorporated herein. Exhibit A shall be promptly updated to add or delete, as the case may be, Crude Oil production dedicated to this Agreement.


-3-


2.2 Addition or Release of Properties or Sellers. Crude Oil producing properties and Sellers shall be added or released from the terms and provisions of this Agreement upon the occurrence of the following events:


(a) If a Person who owns Crude Oil producing properties within the Marketing Area becomes an Affiliate of Plains Resources, Plains Resources shall cause such Affiliate to become a Seller hereunder by executing and delivering a ratification of this Agreement to Buyer as soon as practicable after the date such Person became an Affiliate of Plains Resources.


(b) If a Seller acquires additional Crude Oil properties within the Marketing Area, such additional properties and the Crude Oil owned and produced therefrom by such Seller shall become subject to this Agreement as soon as practicable after the date of acquisition of such properties.


(c) If a Seller, other than Plains Resources, ceases to be an Affiliate of Plains Resources, this Agreement shall terminate with respect to such Seller, its properties, and the Crude Oil produced therefrom, with such termination to be effective as soon as practicable following the date such Seller gives written notice to Buyer that it has ceased to be an Affiliate of Plains Resources.


(d) If a Seller sells, transfers or otherwise disposes of any of its properties or the interests therein which are within the Marketing Area, such properties or interests shall cease to be subject to this Agreement as soon as practicable following the date of such sale, transfer or disposition; but in no event shall such properties or interests cease to be subject to this Agreement prior to the termination of any agreement Buyer has previously entered into for the sale of Crude Oil attributable to production from such properties or interests.


(e) If a Seller and Buyer determine that it is impracticable for Buyer to purchase Crude Oil from any property owned by such Seller within the Marketing Area, such Seller and Buyer may, by mutual written agreement with the concurrence of the Conflicts Committee, terminate this Agreement with respect to such properties. Thereafter, neither such Seller nor Buyer shall have any further obligations under this Agreement with respect to such properties.


(f) Upon the occurrence of any of the foregoing events under subparagraphs (a), (b), (c), (d) or (e) above, the affected Seller shall give written notice to Buyer as soon as practicable and Exhibit A shall be revised to reflect the effect of such event. Upon request by any Party affected by such event, all Parties hereto shall execute and deliver to the requesting Party such documents and instruments as may be reasonably necessary to evidence additions or releases of Parties or properties to this Agreement.


(g) Notwithstanding the provisions of subparagraphs (a) and (b) above, the addition of any Seller or properties to this Agreement shall be subject to any crude oil sales contract to which such Seller or properties are bound at the time such Seller or properties would otherwise become subject to this Agreement (an "Existing Contract"). Accordingly, no Crude Oil shall be sold


-4-


hereunder in contravention of an Existing Contract by such Seller or from such properties until the Existing Contract has expired or been terminated.


2.3 Delivery. Delivery shall be made from the lease tankage on the properties, or such other point as is mutually agreed to and reflected on Exhibit A (a "Delivery Point"), into transportation facilities designated by Buyer.


2.4 Price. The price to be paid by Buyer for Crude Oil sold hereunder (the "Purchase Price") shall be equal to the Sales Price for each Barrel as determined in this Section 2.4, less the sum of (i) a marketing and administrative fee of $.20 for each Barrel sold (the "Marketing and Administrative Fee") and (ii) with respect to Crude Oil which is not sold by Buyer at a Delivery Point, the reasonable out-of-pocket expenses (if any) incurred by Buyer to transport or exchange each Barrel of such Crude Oil.


(a) For Crude Oil which Buyer resells at a Delivery Point, the Sales Price shall be the price received by Buyer for each Barrel sold at the Delivery Point.


(b) For Crude Oil which Buyer either (i) transports to a location other than a Delivery Point (a "Trade Location") or (ii) exchanges for other Crude Oil at a Trade Location, the Sales Price shall be determined as follows:


(x) if such Crude Oil is not aggregated with other Crude Oil owned by
Buyer, the Sales Price shall be equal to the price received by Buyer
for each Barrel sold at the Trade Location; or


(y) if such Crude Oil is aggregated with other Crude Oil owned by
Buyer, the Sales Price shall be equal to the sum of (i) the posted
price received by Buyer for each Barrel sold at the Trade Location and
(ii) a premium equal to the Platt's P+ Average and plus or minus, as
applicable, the Platt's Difference at the Trade Location. If the
Platt's P+ Average or the Platt's Difference is not published, then
the price shall be the weighted average for each Barrel of Buyer's
sales at such Trade Location.


2.5 Payment. Payments by Buyer for Crude Oil purchased hereunder shall be based on the applicable Purchase Price, the volumes delivered by Sellers, and 100% of the interest shown on Exhibit A attached hereto, less state taxes which are withheld by Buyer. All payments shall be wired to Plains Resources for the account of the Sellers in accordance with written instructions from Plains Resources. Such wire transfers shall be made on the twentieth day of the month following the month of actual receipt of Crude Oil; provided that, if the twentieth day of the month falls on a Sunday or a banking holiday, payment will be made on the following Business Day, or if the twentieth day of the month falls on a Saturday, payment will be made on the preceding Business Day.


-5-


2.6 General Provisions. Plains Marketing, L.P.'s General Provisions dated November 1, 1998, is attached hereto as Exhibit B and is incorporated by reference and made a part of this Agreement. If any conflict should arise between the General Provisions and the information stated herein, this Agreement shall apply.


2.7 No Restrictions. No provision contained in this Agreement shall in any way be interpreted as being a restriction on the ability of any Seller to convey or transfer Crude Oil to any other Seller, or to any of their subsidiaries. However, all such Crude Oil conveyed or transferred to a Seller or subsidiary is and shall remain subject to this Agreement including the obligations contained in this Article II.


ARTICLE III
RENEGOTIATION


Prior to the third anniversary of this Agreement, and the end of each successive three-year period thereafter (an "Anniversary Date"), either the Sellers or Buyer may request, in writing, to renegotiate the Marketing and Administrative Fee. Any such renegotiation request must be accompanied with documentation supporting the request to either increase or decrease the Marketing and Administrative Fee, and shall be in accordance with the following procedures:


(a) At least 120 days prior to the applicable Anniversary Date, either the Sellers or Buyer may request, in writing, to renegotiate the Marketing and Administrative Fee.


(b) Sellers and Buyer shall renegotiate the Marketing and Administrative Fee in good faith. If a revised Marketing and Administrative Fee has not been agreed upon at least 75 days prior to the applicable Anniversary Date, then Sellers may
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