- 10 -
testing procedures" for one of the wells. Arkla responded
to Malibu's claim by denying that it had a take or pay
obligation under the Contract.
To settle this dispute without litigation, Arkla and
Malibu entered into a "Settlement Agreement" on April 25,
1988, and Arkla issued a check to Malibu dated April 28,
1988, in the amount of $1,850,000. The Settlement
Agreement provides as follows:
SETTLEMENT AGREEMENT
THIS AGREEMENT, executed as of this 25th
day of April, 1988, by and between ARKLA ENERGY
RESOURCES, a division of Arkla, Inc., a Delaware
corporation (hereinafter referred to as "Buyer")
(formerly known as Arkansas Louisiana Gas
Company, a division of Arkla, Inc.), represented
herein by James M. Monk, its duly authorized
Vice President, and MALIBU PETROLEUM, INC., a
Texas corporation, (hereinafter referred to
as "Seller") represented herein by Stephen R.
Herbel , its duly authorized agent .
WITNESSETH THAT:
WHEREAS, by gas purchase contract identified
on Exhibit A hereto, Seller agreed to sell and
Buyer agreed to purchase production from certain
natural gas properties, which contract, as the
same may have heretofore been supplemented,
modified and amended, is hereinafter referred to
as the "Contract"; and
WHEREAS, a controversy has arisen between
Seller on the one hand and Buyer on the other
hand concerning the obligations of Buyer under
the Quantities provisions of the Contract; and
WHEREAS, after balancing their hope of
prevailing in, against the possibility of losing,
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