High Island Offshore System, L.L.C.

Third Revised Volume No. 1

Effective Date: 09/01/2006, Docket: RP06-244-001, Status: Effective

Substitute Second Revised Sheet No. 106 Substitute Second Revised Sheet No. 106 : Pending

Superseding: Substitute First Revised Sheet No. 106

GENERAL TERMS AND CONDITIONS

(Continued)

8.4 Monthly Cashout Procedures. Any portion of a Shipper's TMI remaining

after the end of the Trading Period will be cashed out on a tiered basis

pursuant to the following schedule:

OVERAGE UNDERAGE

IMBALANCE LEVEL (HIOS Pays Shipper) (Shipper Pays HIOS)

--------------- ------------------- -------------------

0% to 5% 100% x AMIP 100% x AMIP

Greater than

5% to 10% 90% x AMIP 110% x AMIP

Greater than

10% to 15% 80% x AMIP 120% x AMIP

Greater than

15% to 20% 70% x AMIP 130% x AMIP

Greater than

20% 60% x AMIP 140% x AMIP

(a) A Shipper's remaining TMI will be cashed out based on the

percentage of that remaining TMI compared to the total

deliveries for that Shipper during the month, provided however,

that any CUV quantities included in the TMI will be eliminated

from this calculation and cashed out at 100% of the AMIP. For

example, if the Total Deliveries were 1,000 Dth and the

remaining underage TMI was 101 Dth, (comprised of 100 Dth of

Shipper imbalance and 1 Dth of allocated CUV, for a tierable TMI

of 100 Dth), the total Imbalance Level would be 10% (calculated

as 100 Dth / 1,000 Dth). The first 5% (50 Dth), and allocated

CUV (1 Dth) would be cashed out at 100% of the AMIP, while the

remaining 5% (50 Dth) would be cashed out at 110% of the AMIP.