High Island Offshore System, L.L.C.

Third Revised Volume No. 1

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Effective Date: 04/07/1999, Docket: GT99- 17-000, Status: Effective

Original Sheet No. 137 Original Sheet No. 137 : Effective

GENERAL TERMS AND CONDITIONS

(Continued)

-n

r X 1-(1+1) X u = Net Present Value

-------

i

Where: i = The interest rate per month

n = The number of months in the term

of the proposed agreement;

r = The proposed reservation charge

per unit per month or the

volumetric reservation charge, if

applicable; and

u = The maximum daily quantity of

capacity requested, in Dth.

(ii) In the event both a contingent Qualified Bid and a

non-contingent Qualified Bid generate the same Net

Present Value, HIOS shall reject the contingent

Qualified Bid.

(iii) The Qualified Bid or applicable Prearranged

Transaction with the highest Net Present Value

shall be the winning bid, except that any Qualified

Bid with a higher Net Present Value than a

Prearranged Transaction for the same capacity shall

be subject to the right of first refusal of the

Prearranged Shipper in that Prearranged Transaction

under subsection 17.7(c) of this Section 17.