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EXHIBIT 99.4
CONTANGO OIL & GAS COMPANY
MARKETING AGREEMENT
This Marketing Agreement ("Agreement"), dated as of September 27, 2000,
is between Contango Oil & Gas Company, a Nevada corporation ("Contango), and
Aquila Energy Capital Corporation, a Delaware corporation ("Aquila").
RECITALS:
WHEREAS, Contango is in the business of exploring, acquiring and
selling oil and natural gas.
WHEREAS, concurrently herewith, Contango and Aquila are entering into a
Securities Purchase Agreement (the "Securities Purchase Agreement"), pursuant to
which Aquila shall purchase 5,000 shares of the Contango's Series B Senior
Convertible Cumulative Preferred Stock (the "Series B Preferred").
WHEREAS, in order to induce Aquila to enter into the Securities
Purchase Agreement, Contango has agreed to grant Aquila certain marketing rights
with respect to the sale of Contango's oil and natural gas.
In consideration of the mutual covenants set forth herein, the parties
agree as follows
1. DEFINITIONS.
(a) "Contango Prospects" shall mean oil and gas exploration and
development prospects in which Contango now holds, or may
hereafter acquire, a participation right.
(b) "Operating Agreement" shall mean the agreement for the
operation of leases and wells that govern the Contango
Prospects.
(c) "Participation Agreements" shall mean, collectively, any
participation agreements entered into by Contango and a third
party, including without limitation Juneau Exploration
Company, LLC and the Southern Ute Indian Tribe doing business
as Red Willow Production Company, whereby Contango has granted
such third parties participation rights with respect to the
Product generated from Contango Prospects.
(d) "Product" shall mean natural gas produced from all Contango
Prospects.
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2. SALES OF PRODUCT
(a) Subject to those agreements for the sale of Product which are
in effect as of the date hereof (none of which extend beyond
the production month of December 2000), Contango shall request
bids from prospective purchasers for the purchase of Product.
Prior to any sale of Product in excess of 1 mmcfd from any
single well, Contango shall give written notice (the "Notice")
to Aquila at least ten (10) days prior to the proposed closing
of the sale. The Notice shall describe in reasonable detail
the terms and conditions of the bid which Contango proposes to
accept (the "Competing Bid"), including, without limitation,
the location and amount of Product proposed to be purchased,
the consideration to be paid, the name and address of the
prospective purchaser and the material terms and conditions of
the Competing Bid.
(b) Aquila shall have the opportunity to submit a matching bid
(the "Aquila Bid") to purchase such Product upon written
notice to Contango within five (5) days after receipt of the
Notice. The Aquila Bid shall indicate the amount of Product
proposed to be purchased, the consideration to be paid, and
all terms and conditions thereof, including any pipeline
arrangements. Failure of Aquila to respond to the Notice
within such time period shall constitute a waiver of its
rights to submit a matching bid for such proposed sale of
Product.
(c) Provided that (i) the consideration offered under the Aquila
Bid exceeds that of the Competing Bid, and (ii) the terms and
conditions of the Aquila Bid are comparable or more favorable
to Contango in its reasonable discretion (including, without
limitation, volume considerations and gas pipeline
arrangements of the Competing Bid), Contango shall accept the
Aquila Bid and shall sell such Product to Aquila on the terms
and conditions set forth in the Aquila Bid; provided, that
Contango shall not be obligated to accept the Aquila Bid if
such acceptance would conflict with the terms of any
Participation Agreement or Operating Agreement.
3. TERM OF AGREEMENT. This Agreement shall terminate upon the later to occur of
(i) September 27, 2001, and (ii) the date upon which all shares of the Series B
Preferred have been converted to shares of Contango's common stock in accordance
with the Certificate of Designation of the Series B Preferred.
4. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of Nevada.
(b) AMENDMENT. Any provision of this Agreement may be amended and
the observance thereof may be waived (either generally or in a
particular instance and either retroactively or
prospectively), only by the written consent of each of the
parties hereto.
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(c) NOTICES. All notices required or permitted hereunder shall be
in writing and shall be deemed effectively given: (i) upon
personal delivery to the party to be notified, (ii) when sent
by confirmed telex or facsimile if sent during normal business
hours of the recipient; if not, then on the next business day,
(iii) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or
(iv) one (1) day after deposit with a nationally recognized
overnight courier, specifying next day delivery, with written
verification of receipt. All communications shall be sent to
the party to be notified at the address as set forth on the
signature page hereof or at such other address as such party
may designate by ten (10) days advance written notice to the
other party hereto.
(d) SEVERABILITY. In the event one or more of the provisions of
this Agreement should, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity,
illegality, or unenforceability shall not affect any other
provisions of this Agreement, and this Agreement shall be
construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
(e) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties relative to the specific subject
matter hereof. Any previous agreement among the parties
relative to the specific subject matter hereof is superseded
by this Agreement. This Agreement and the rights and
obligations of the parties hereunder shall inure to the
benefit of, and be binding upon, their respective successors,
assigns and legal representatives.
(f) COUNTERPARTS. This Agreement may be executed in counterparts
or by facsimile, all of said counterparts taken together shall
be deemed to be one and the same instrument.
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IN WITNESS WHEREOF, the undersigned have executed this Marketing
Agreement as of the date set forth above.
CONTANGO: CONTANGO OIL & GAS COMPANY
a Nevada corporation
Address: 3700 Buffalo Speedway
Suite 960 By: /s/ Kenneth R. Peak
Houston, TX 77098 -----------------------------
Kenneth R. Peak
President and Chief Executive
Officer
AQUILA: AQUILA ENERGY CAPITAL
CORPORATION, a Delaware corporation
Address: 2 Houston Center
909 Fannin, Suite 1850
Houston, Texas 77010 By: /s/ Kenneth F. Wyatt
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