STEPHENS ENERGY CORP. - The Railroad Commission of Texas

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$G:\WP\Jmd\pfd\PFD-Nowak MIPA.wpd - The Railroad Commission ...$

- sucn uammallon reveals any inaccuracy in a statanmt or payment. the necessary adjuammls lo such statement or payment will be made; proridcd, however, no adjur~mcntr for any slamcnt tn payment will k made for any inaccuracy claimed unless wilten notice of such claim for a~wlnmn ia furnished In the nther pmy within ZS months fran the ~dition of the ualcmml for whrh such rdjuE(mmt is requaled (b) M notices, rquesls, demands, nmmcnts md pymentr provided for in this Apemen1 must bc yivca in writing dinucd to the party lo whom liven, and mailed to or delivd ar such pnny's ddrurr set fmh bdow, and will be dmicd properly and suficien~ly given when: (i) delivered in pumm wAh recoipc acknwlcdpcd in writing by the mciving party; (ii) sent by regirtend or cenificd mail. mum necipl rcqucstd. lo lk addrsu specified klow: (iii) nceived st Ihe cl8dmnlc lMil U~WSK, if any. rpcciikd Mow; or (iv) sml by telephonic. docummr transfer to tbe tdempier numher, ifmy. rpciticd klow:
March 24, 2003 ~.06rmu B 1 T H b h Dear Pmducar hwbm nnn- Endod with this comqmndance is a notlce of unsanomlc condilkms (br me a mom of your conhds. The purpow of thii ewrrspondence is to dimes some of h masons that Devon Gas St?rvlc~s. LP. CDsvon') has ~iven thii nolice. There have been a numbsr'of changes in the available markets and pipelines in Nccth Texas. Effective June 1. 2002, a bog term premium conbad covering a eigdkant poction d the gas sauced from the Norlh Texas system expired. Gas previously associated with that cDnbecl must nmu be sdd into other markets at dramatically lower prices. The ability of the markets in the Fort Worth basin to absorb additional supply has changed as wall. The premium local markets (hat have been available for years are MI. As you are probably aware. the Lone Star WA' intrastate pipeline has been curlailing gas for a nmber of months. Fort Worth basin gas is being faced badc into the intrastate pipeline markets. Devon's North Texas system has connections with lwo intrastate pipelines (TXULone Star 'X' line and TXU-El Paso 3B line) near Morgan MiU. Wile c a w exists in those 36' lines, the market price dative to the Houston Ship Channel Index has and mntinuas to deteriorate. For example. only a few years ago, the sales price we could expect for gas we der~ered at Morgan Mill was in the range of Houston Ship Channel index less $0.06-$0.08 cents. Today. that price can range anywhere from $0.21 to $0.35 cents om of the HSCI. Devon's North Texas gathering and processing system has been designed to indude the cost of cMdioning and preparing your gas f a delivery to a transmission pipeline. As you kow, il the gas is not ppnxzssed and conditioned. it can not be mwed infa the next market. Ccsk associated wkh the gathering, processing, and conditioning of your gas continue to rise. The resun is that Dem's North Texas system is and has been unprotitable under these condions for a number of months. In addition to determining ways of reducing our cost of operations. Devm must also take steps to inbure that the gas purchase contracts take into account the cost of gathering and preparing your gas for the malket h light of such conditions. We do wan1 to continue to purchase your gas. Enclosed with your notice and this correspondence is an amendment to Gas Purchase Agreemenl at a price which we are wilWng to continue to putchase the gas. Essentially, &ere are two awnponents of the new pricing structure- the resale market basis wmponent ('HSC - 50.213 end the gathering, umdrtioning, pepsreti, and hopehrlly, pmfit componenl (the % of HSC retained) This is a new pricing SUuchm, for us in North Taxas but il is a pieing structure that we, and many other purchase= have used for a number of years throughout Texas. We ewd that you may have other questiw regarding the change in price. In this regard. p!ease feel free to contact our gas buyer6 (toll ftw) aI1800.6!564533 or directly: Mlck~ ~imm&s. m&g& ~ asup* r (713) 3TIS162 Bill Ward. Superviror Gas Supply. W t Turas (west of Pab Pmto Co.) (713) 377-6745 Dam Md(eeva. Suwvkar Gas Supply. Narth Texas (713) 377-7232 J~rn m m . Q= suw R-.. NO* T- nia 3775637 - sncerely, DNON GAS SERVICES. L.P. - Donald F. McGee General Manager
Page 1 and 2: STEPHENS ENERGY CORP. RANDAL M. STE
Page 3 and 4: months of excessive fuel+LUG deduct
Page 5 and 6: allocating LUG proportionately as r
Page 7 and 8: CONTRACT REVIEW BELOW OmnlCManenb ~
Page 9 and 10: - cM@#&g& May 29,2003 P.O. Box 1JC
Page 11 and 12: Re: - Due lo the changing industry
Page 13 and 14: inmhangubitity, subjc* to TXU GAS'
Page 15 and 16: "POINT DESIGNEE" (Nouca and invoice
Page 17 and 18: Auyst 13,2001 Re: 4^ Opnating Agree
Page 19: Imcrchmgeabillty, subject to TXU GA
Page 23 and 24: 3.2 lbrthiagtothceon~bminconlaincdn
Page 25 and 26: RE: RoposedGasPmdmseAgrsmwt~CitoriO
Page 28 and 29: --- mu- OUlg.mn1PMI ~P-9gcofRwadsdP
Page 30 and 31: Unaccounted Gas (LUG), which is gas
Page 32: magically go away, and in& fa will
Page 35 and 36: a&essment of th-e bpe andlor Intern
Page 37 and 38: March 2,2005 Chairman Houde Energy
Page 39 and 40: New Horizon Investments, Ltd. P.O.
Page 41: ~ ~ f ,316 El Dorado Drive Fc t Wor
Page 44 and 45: The logic of all this is, a long as
Page 46 and 47: u RUSSOI N. TAYLOR am Texas Allianc
Page 48: If -one hu read a Yn: eoatraec. h g

STEPHENS ENERGY CORP. - The Railroad Commission of Texas

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