Exhibit 10.1

PURCHASE AND SALE AGREEMENT

BETWEEN

ANADARKO E&P ONSHORE LLC

AS SELLER

AND

ENCORE ENERGY PARTNERS OPERATING LLC

AS PURCHASER

Executed on December 23, 2013

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TABLE OF CONTENTS

PURCHASE AND SALE AGREEMENT
6
RECITALS
6
ARTICLE 1 PURCHASE AND SALE
6
Section 1.1
Purchase and Sale
6
Section 1.2
Assets
6
Section 1.3
Excluded Assets
7
Section 1.4
Effective Time; Proration of Costs and Revenues
8
Section 1.5
Delivery and Maintenance of Records
9
ARTICLE 2 PURCHASE PRICE
10
Section 2.1
Purchase Price
10
Section 2.2
Adjustments to Purchase Price
10
Section 2.3
Code Section 1060 .
11
Section 2.4
Deposit
11
ARTICLE 3 TITLE MATTERS
11
Section 3.1
Seller’s Title
11
Section 3.2
Definition of Defensible Title
12
Section 3.3
Definition of Permitted Encumbrances
13
Section 3.4
Notice of Title Defect Adjustments
14
Section 3.5
Casualty or Condemnation Loss
17
Section 3.6
Limitations on Applicability
18
Section 3.7
Government Approvals Respecting Assets
18
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLER
19
Section 4.1
Generally
19
Section 4.2
Existence and Qualification
20
Section 4.3
Power
20
Section 4.4
Authorization and Enforceability
20
Section 4.5
No Conflicts
20
Section 4.6
Liability for Brokers’ Fees
20
Section 4.7
Litigation
20
Section 4.8
Taxes and Assessments
21
Section 4.9
Compliance with Laws
21
Section 4.10
Payments for Hydrocarbon Production
21
Section 4.11
Payout Balances
21
Section 4.12
Outstanding Capital Committments
22
Section 4.13
Imbalances
22
Section 4.14
Material Contracts
22
Section 4.15
Bankruptcy
23
Section 4.16
Preference Rights and Transfer Requirements
23
Section 4.17
Environmental Matters
23
Section 4.18
Royalties
23

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ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PURCHASER
23
Section 5.1
Existence and Qualification
23
Section 5.2
Power
23
Section 5.3
Authorization and Enforceability
24
Section 5.4
No Conflicts
24
Section 5.5
Liability for Brokers’ Fees
24
Section 5.6
Litigation
24
Section 5.7
Financing
24
Section 5.8
Limitation
24
Section 5.9
SEC Disclosure
25
Section 5.10
Bankruptcy
25
Section 5.11
Qualification
25
ARTICLE 6 COVENANTS OF THE PARTIES
25
Section 6.1
Access
25
Section 6.2
Government Reviews
26
Section 6.3
Notification of Breaches
26
Section 6.4
Public Announcements
26
Section 6.5
Operation of Business
27
Section 6.6
Preference Rights and Transfer Requirements
27
Section 6.7
Tax Matters
29
Section 6.8
NORM, Wastes and Other Substances
30
Section 6.9
Further Assurances
30
Section 6.10
Parent Company Guaranty
30
Section 6.11
Audit Rights
31
Section 6.12
Litigation
31
ARTICLE 7 CONDITIONS TO CLOSING
31
Section 7.1
Conditions of Seller to Closing
31
Section 7.2
Conditions of Purchaser to Closing
32
ARTICLE 8 CLOSING
32
Section 8.1
Time and Place of Closing
32
Section 8.2
Obligations of Seller at Closing
32
Section 8.3
Obligations of Purchaser at Closing
33
Section 8.4
Closing Payment & Post-Closing Purchase Price Adjustments
33
ARTICLE 9 TERMINATION
35
Section 9.1
Termination
35
Section 9.2
Effect of Termination
35
Section 9.3
Distribution of Deposit Upon Termination
36
ARTICLE 10 POST-CLOSING OBLIGATIONS; INDEMNIFICATION; LIMITATIONS; DISCLAIMERS
AND WAIVERS
37
Section 10.1
Receipts
37
Section 10.2
Expenses
37
Section 10.3
Assumed Seller Obligations
37
Section 10.4
Indemnities
38

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Section 10.5
Indemnification Actions
40
Section 10.6
Release
41
Section 10.7
Limitation on Actions
42
Section 10.8
Disclaimers
42
Section 10.9
Waiver of Deceptive Trade Practices Act
43
Section 10.10
Recording
44
ARTICLE 11 MISCELLANEOUS
44
Section 11.1
Counterparts
44
Section 11.2
Notice
44
Section 11.3
Sales or Use Tax Recording Fees and Similar Taxes and Fees.
45
Section 11.4
Expenses
45
Section 11.5
Replacement of Bonds, Letters of Credit and Guarantees
45
Section 11.6
Governing Law and Venue
46
Section 11.7
Captions
46
Section 11.8
Waivers
46
Section 11.9
Assignment
46
Section 11.10
Entire Agreement
46
Section 11.11
Amendment
47
Section 11.12
No Third-Party Beneficiaries
47
Section 11.13
References
47
Section 11.14
Construction
47
Section 11.15
Limitation on Damages
48
Section 11.16
Conspicuousness
48
Section 11.17
Severability
48
Section 11.18
Time of Essence
48

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EXHIBITS

Exhibit A        Leases
Exhibit A-1        Wells and Allocated Values
Exhibit B        Conveyance
Exhibit D        Parent Company Guaranty

SCHEDULES

Schedule 4.1    Seller’s Knowledge
Schedule 4.7(a)    Litigation
Schedule 4.7(b)     Notice of Non-Compliance
Schedule 4.8     Taxes and Assessments
Schedule 4.9    Compliance with Laws
Schedule 4.10     Payments for Hydrocarbon Production
Schedule 4.11     Payout Balances
Schedule 4.12    Outstanding Capital Commitments
Schedule 4.13    Imbalances
Schedule 4.14    Material Contracts
Schedule 4.16    Preference Rights and Transfer Requirements
Schedule 6.4    Purchaser Press Release
Schedule 10.3    Suspense Funds

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PURCHASE AND SALE AGREEMENT

This Agreement is executed on December 23, 2013, by and between ANADARKO E&P
Onshore LLC, a Delaware limited liability company (“Seller”), and Encore Energy
Partners Operating LLC, a Delaware limited liability company (“Purchaser”).

RECITALS

A.    Seller owns various non-operated wells and leasehold interest in the
Pinedale and Jonah fields, more fully described in the exhibits hereto.
B.    Seller desires to sell to Purchaser and Purchaser desires to purchase from
Seller the properties and rights of Seller hereafter described, in the manner
and upon the terms and conditions hereafter set forth.
C.    Capitalized terms used herein shall have the meaning ascribed to them in
this Agreement as such terms are defined in the Definitions section attached as
Appendix A hereto.
NOW, THEREFORE, in consideration of the premises and of the mutual promises,
representations, warranties, covenants, conditions and agreements contained
herein, and for other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally bound
by the terms hereof, agree as follows:
ARTICLE 1
PURCHASE AND SALE

Section 1.1    Purchase and Sale.
At the Closing, and upon the terms and subject to the conditions of this
Agreement, Seller agrees to sell, transfer and convey the Assets to Purchaser
and Purchaser agrees to purchase, accept and pay for the Assets and to assume
the obligations attributable to the Assets.
Section 1.2    Assets.
As used herein, the term “Assets” means, subject to the terms and conditions of
this Agreement, all of Seller’s right, title and interest, real or personal,
recorded or unrecorded, in and to the following (but excluding the Excluded
Assets):
(a)    All of the oil and gas leases described on Exhibit A, subject to such
depth limitations and other restrictions as may be set forth on Exhibit A
(collectively, the “Leases”), together with all carried working interests and
convertible interests and any other interests of a similar nature that are
attributable to, or otherwise relate to, the interests described in Exhibit A,
together with all right, title, and interest that Seller has in and to the
Leases or the lands currently pooled, unitized, communitized or consolidated
therewith (the “Lands”);
(b)    All oil and gas wells located on the Lands, whether producing, shut-in,
or temporarily abandoned, including the interests in the wells shown on Exhibit
A-1 attached hereto (the “Wells”);

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(c)    All unitization, communitization and pooling declarations, orders and
similar agreements (including all units formed by voluntary agreement and those
formed under the rules, regulations, orders or other official acts of any
Governmental Body having jurisdiction) to the extent they relate to any of the
interests described in Exhibits A and A‑1 (collectively, the “Units”) (the
Units, together with the Leases, Lands and Wells are hereinafter referred to as
the “Properties”);
(d)    All contracts, agreements and instruments by which the Properties are
bound, or that relate to or are otherwise applicable to the Properties, only to
the extent applicable to the Properties, including but not limited to, operating
agreements, unitization agreements, joint venture agreements, farmin and farmout
agreements, exploration agreements, participation agreements, exchange
agreements, transportation or gathering agreements, agreements for the sale and
purchase of oil, gas, casinghead gas or processing agreements to the extent
applicable to the Properties or the production of Hydrocarbons produced in
association therewith from the Properties (hereinafter collectively referred to
as “Contracts”), but excluding any contracts, agreements and instruments to the
extent transfer is restricted by third-party agreement or applicable Law and the
necessary consents to transfer are not obtained pursuant to Section 6.6 and
provided that “Contracts” shall not include the instruments constituting the
Leases;
(e)    All equipment, machinery, fixtures and other tangible personal property
and improvements located on the Properties or used or held for use primarily in
connection with the operation of the Properties;
(f)    All Hydrocarbons produced from or attributable to the Leases, Lands, and
Wells from and after the Effective Time, together with Imbalances associated
with the Properties; and
(g)    All lease files; land files; well files; division order files; abstracts;
title opinions; land surveys; non-confidential logs; maps; engineering data and
reports; and other books, records, data, files, and accounting records and
proprietary seismic and geologic data, including any interpretations, analyses
and reports related thereto, in each case to the extent related primarily to the
Assets, or used or held for use primarily in connection with the maintenance or
operation thereof, but excluding (i) any books, records, data, files, maps and
accounting records to the extent disclosure or transfer is restricted by
third-party agreement or applicable Law, unless such restriction may be waived
upon payment of a fee, and Purchaser has agreed to pay such fee, (ii) computer
or communications software or intellectual property (including tapes, codes,
data and program documentation and all tangible manifestations and technical
information relating thereto) except software or intellectual property used for
the operation of the Assets and located on the Properties, (iii) attorney-client
privileged communications and work product of Seller’s legal counsel (other than
title opinions), (iv) reserve studies and evaluations and projections, and (v)
records relating to the negotiation and consummation of the sale of the Assets
(subject to such exclusions described in clauses (i) through (v), the
“Records”); provided, however, that Seller may retain the originals of such
Records as Seller has determined may be required for litigation, tax,
accounting, and auditing purposes and provide Purchaser with copies thereof at
Purchaser’s cost.
Section 1.3    Excluded Assets.
Notwithstanding the foregoing, the Assets shall not include, and there is
excepted, reserved and excluded from the purchase and sale contemplated hereby
(collectively, the “Excluded Assets”):

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(a)    all corporate, financial, income and franchise tax and legal records of
Seller that relate to Seller’s business generally (whether or not relating to
the Assets), and all books, records and files that relate to the Excluded Assets
and those records retained by Seller pursuant to Section 1.2(g) and copies of
any other Records retained by Seller pursuant to Section 1.5;
(b)to the extent not expressly included in Section 1.2(g), all logs,
interpretive data, technical evaluations, technical outputs, reserve estimates
and economic estimates;
(c)all rights to any refund of Taxes or other costs or expenses borne by Seller
or Seller’s predecessors in interest attributable to periods prior to the
Effective Time;
(d)all trade credits, account receivables, note receivables, take-or-pay amounts
receivable, and other receivables attributable to the Assets with respect to any
period of time prior to the Effective Time;
(e)royalties, overriding royalties, and net profits interests;
(f)all right, title and interest of Seller in and to vehicles used in connection
with the Assets;
(g)all rights, titles, claims and interests of Seller or any Affiliate of Seller
to or under any policy or agreement of insurance or any insurance proceeds;
except to the extent provided in Section 3.5; and
(h)any patent, patent application, logo, service mark, copyright, trade name or
trademark of or associated with Seller or any Affiliate of Seller or any
business of Seller or of any Affiliate of Seller.
Section 1.4    Effective Time; Proration of Costs and Revenues.
(a)    Subject to Section 1.5, possession of the Assets shall be transferred
from Seller to Purchaser at the Closing, but certain financial benefits and
burdens of the Assets shall be transferred effective as of 7:00 A.M., local
time, where the respective Assets are located, on October 1, 2013 (the
“Effective Time”), as described below.
(b)    Purchaser shall be entitled to all Hydrocarbon production from or
attributable to the Leases, Units and Wells at and after the Effective Time (and
all products and proceeds attributable thereto), and to all other income,
proceeds, receipts and credits earned with respect to the Assets at or after the
Effective Time, and shall be responsible for (and entitled to any refunds with
respect to) all Property Costs incurred at and after the Effective Time. Seller
shall be entitled to all Hydrocarbon production from or attributable to Leases,
Units and Wells prior to the Effective Time (and all products and proceeds
attributable thereto), and to all other income, proceeds, receipts and credits
earned with respect to the Assets prior to the Effective Time, and shall be
responsible for (and entitled to any refunds with respect to) all Property Costs
incurred prior to the Effective Time. “Earned” and "incurred,” as used in this
Agreement, shall be interpreted in accordance with generally accepted accounting
principles and Council of Petroleum Accountants Society (COPAS) standards.
“Property Costs” means all costs attributable to the ownership and operation of
the Assets (including without limitation costs of insurance and ad valorem,
property, severance, Hydrocarbon production and similar Taxes based upon or
measured by the ownership or operation

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of the Assets or the production of Hydrocarbons therefrom, but excluding any
other Taxes) and capital expenditures incurred in the ownership and operation of
the Assets in the ordinary course of business and, where applicable, in
accordance with the relevant operating or unit agreement, if any, and overhead
costs charged to the Assets, but excluding, without limitation, liabilities,
losses, costs, and expenses attributable to (i) Claims for personal injury or
death, property damage or violation of any Law, (ii) obligations to plug wells
or dismantle, abandon and salvage facilities, (iii) obligations to remediate any
contamination of groundwater, surface water, soil, equipment or pipelines under
applicable Environmental Laws, (iv) obligations to furnish make-up gas according
to the terms of applicable gas sales, gathering or transportation contracts, (v)
gas balancing obligations except Imbalances existing as of the Effective Time
and (vi) obligations to pay working interests, royalties, overriding royalties
or other interests held in suspense, all of which are addressed in Article 10.
For purposes of this Section 1.4, determination of whether Property Costs are
attributable to the period before or after the Effective Time shall be based on
when services are rendered, when the goods are delivered, or when the work is
performed. For purposes of allocating Hydrocarbon production (and accounts
receivable with respect thereto), under this Section 1.4, (i) liquid
Hydrocarbons shall be deemed to be “from or attributable to” the Leases, Units
and Wells when they pass through the pipeline connection into the storage
facilities into which they are run and (ii) gaseous Hydrocarbons shall be deemed
to be “from or attributable to” the Leases, Units and Wells when they pass
through the delivery point sales meters on the pipelines through which they are
transported. Seller shall utilize reasonable interpolative procedures to arrive
at an allocation of Hydrocarbon production when exact meter readings or gauging
and strapping data is not available. Seller shall provide to Purchaser, no later
than five (5) Business Days prior to Closing, all data necessary to support any
estimated allocation, for purposes of establishing the adjustment to the
Purchase Price pursuant to Section 2.2 hereof that will be used to determine the
Closing Payment (as defined in Section 8.4(a)). Taxes, right-of-way fees,
insurance premiums and other Property Costs that are paid periodically shall be
prorated based on the number of days in the applicable period falling before,
and the number of days in the applicable period falling at or after, the
Effective Time, except that Property Taxes measured by production shall be
prorated based on the number of units actually produced, purchased or sold or
proceeds of sale, as applicable, before, and at or after, the Effective Time. In
each case, Purchaser shall be responsible for the portion allocated to the
period at and after the Effective Time and Seller shall be responsible for the
portion allocated to the period before the Effective Time.
Section 1.5    Delivery and Maintenance of Records.
(a)    Seller, at Purchaser’s cost, shall use reasonable efforts to deliver the
Records (FOB Seller's office) to Purchaser within thirty (30) days following
Closing. Seller may retain original Records of those items set forth in Section
1.2(g) and/or copies of any Records. If Seller elects to retain original files,
Purchaser will be provided with copies of same, at Purchaser’s cost.

(b)    Purchaser, for a period of seven (7) years following Closing, will (i)
retain the Records, (ii) provide Seller, its Affiliates, and its and their
officers, employees and representatives with access to the Records during normal
business hours for review and copying at Seller’s expense, and (iii) provide
Seller, its Affiliates, and its and their officers, employees and
representatives with access, during normal business hours, to materials received
or produced after Closing relating to any Indemnity Claim made under Section
10.4 of this Agreement for review and copying at Seller’s expense.

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ARTICLE 2
PURCHASE PRICE

Section 2.1    Purchase Price.
The purchase price for the Assets (the “Purchase Price”) shall be Five Hundred
Eighty-One Million Dollars ($581,000,000.00) adjusted as provided in Section
2.2.

Section 2.2    Adjustments to Purchase Price.
The Purchase Price for the Assets shall be adjusted as follows with all such
amounts being determined in accordance with generally accepted accounting
principles and Council of Petroleum Accountants Society (COPAS) standards:
(a)    Reduced by the aggregate amount of the following proceeds received by
Seller between the Effective Time and the Closing Date (with the period between
the Effective Time and the Closing Date referred to as the “Adjustment Period”):
(i) proceeds from the sale of Hydrocarbons (net of any royalties, overriding
royalties or other burdens on or payable out of Hydrocarbon production,
gathering, processing and transportation costs and any Hydrocarbon production,
severance, sales or excise Taxes not reimbursed to Seller by the purchaser of
Hydrocarbon production) produced from or attributable to the Properties during
the Adjustment Period, and (ii) other proceeds earned with respect to the Assets
during the Adjustment Period;
(b)    Reduced to the extent provided in Section 6.6 with respect to Preference
Rights and Retained Assets;
(c)    (i) If Seller makes the election under Section 3.4(d)(i) with respect to
a Title Defect, subject to the Individual Title Deductible and the Aggregate
Title Deductible, reduced by the Title Defect Amount with respect to such Title
Defect if the Title Defect Amount has been determined prior to Closing and (ii)
increased by the Title Benefit Amount with respect to each Title Benefit,
subject to the Individual Title Deductible and the Aggregate Title Deductible,
for which the Title Benefit Amount has been determined prior to Closing;
(d)    Increased by the amount of all Property Costs and other costs
attributable to the ownership and operation of the Assets which are paid by
Seller and incurred at or after the Effective Time (including any prepayments
relating to the time period from and after the Effective Time), except any
Property Costs and other such costs already deducted in the determination of
proceeds in Section 2.2(a);
(e)    Increased by the amount of merchantable Hydrocarbons stored in tanks and
pipelines above the pipeline connection or upstream of the sales meter (as
evidenced by tank straps and/or gauge sheets) attributable to the ownership and
operation of the Assets that belong to Seller as of the Effective Time; and
(f)    Increased or reduced, as appropriate, by the aggregate amount of
Imbalances reflected on Schedule 4.13 as of the Effective Time, multiplied by
$3.00 per mcf;
(g)    Reduced by the amount required to pay working interests, royalties,
overriding royalties and other interests held in suspense and not paid to
Purchaser; and

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(h)    Increased or reduced as agreed upon in writing by Seller and Purchaser or
as otherwise provided in Section 8.4.
Each adjustment made pursuant to Section 2.2(a) shall serve to satisfy, up to
the amount of the adjustment, Purchaser’s entitlement under Section 1.4 to
Hydrocarbon production from or attributable to the Properties during the
Adjustment Period, and to the value of other income, proceeds, receipts and
credits earned with respect to the Assets during the Adjustment Period, and as
such, Purchaser shall not have any separate rights to receive any Hydrocarbon
production or income, proceeds, receipts and credits with respect to which an
adjustment has been made. Similarly, the adjustment described in Section 2.2(c)
shall serve to satisfy, up to the amount of the adjustment, Purchaser’s
obligation under Section 1.4 to pay Property Costs and other costs attributable
to the ownership and operation of the Assets which are incurred during the
Adjustment Period, and as such, Purchaser shall not be separately obligated to
pay for any Property Costs or other such costs with respect to which an
adjustment has been made.
Section 2.3    Code Section 1060.
Each party will comply with the allocation and reporting requirements of Section
1060 of the Internal Revenue Code, as amended (the “Code”), and the Treasury
Regulations thereunder, to the extent applicable to the transactions under this
Agreement.
Section 2.4    Deposit.
Concurrently with the execution of this Agreement, Purchaser has paid to Seller
an earnest money deposit in an amount equal to ten percent (10%) of the Purchase
Price (the "Deposit"). The Deposit shall accrue interest at the rate of two
percent (2%) per annum and shall be applied with accrued interest against the
Purchase Price if the Closing occurs or shall be otherwise distributed in
accordance with the terms of this Agreement.
ARTICLE 3
TITLE MATTERS

Section 3.1    Seller’s Title.
(a)    Except for the special warranty of title referenced herein, Seller makes
no warranty or representation, express, implied, statutory or otherwise, with
respect to Seller’s title to any of the Assets and Purchaser hereby acknowledges
and agrees that Purchaser’s sole remedy for any defect of title, shall be
pursuant to such special warranty of title. The conveyance to be delivered by
Seller to Purchaser shall be substantially in the form of Exhibit B hereto (the
“Conveyance”) and contain a special warranty of Defensible Title by, through and
under Seller but not otherwise to the Leases, Units and Wells shown on Exhibit A
and Exhibit A‑1, subject to the Permitted Encumbrances, but shall otherwise be
without warranty of title of any kind, express, implied or statutory or
otherwise.
(b)    Purchaser shall not be entitled to protection under Seller’s special
warranty of title in the Conveyance against any Title Defect reported under this
Article 3 and/or any Title Defect disclosed to or known by Purchaser prior to
the Title Claim Date.

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(c)    Notwithstanding anything herein provided to the contrary, if a Title
Defect under this Article 3 results from any matter which could also result in
the breach of any representation or warranty of Seller set forth in Article 4,
then Purchaser shall only be entitled to assert such matter (i) before Closing,
as a Title Defect to the extent permitted by this Article 3, or (ii) after
Closing, as a breach of Seller’s special warranty of title contained in the
Conveyance to the extent permitted by this Section 3.1, and shall be precluded
from also asserting such matter as the basis of the breach of any such
representation or warranty.

Section 3.2    Definition of Defensible Title.
As used in this Agreement, the term “Defensible Title” means that title of
Seller with respect to the Units or Wells shown in Exhibit A-1 that, except for
and subject to Permitted Encumbrances:
(a)    Entitles Seller to receive a share of the Hydrocarbons produced, saved
and marketed from any Unit or Well shown in Exhibit A-1 throughout the duration
of the productive life of such Unit or Well (after satisfaction of all
royalties, overriding royalties, net profits interests or other similar burdens
on or measured by production of Hydrocarbons) (a “Net Revenue Interest”), of not
less than the Net Revenue Interest shown in Exhibit A-1 for such Unit or Well,
except decreases in connection with those operations in which Seller may after
the Effective Time be a non-consenting co-owner, decreases resulting from the
establishment or amendment after the Effective Time of pools or units, and
decreases required to allow other working interest owners to make up past
underproduction or pipelines to make up past under deliveries, and except as
stated in such Exhibit A-1;
(b)    Obligates Seller to bear a percentage of the costs and expenses for the
maintenance and development of, and operations relating to any Unit or Well
shown in Exhibit A-1 not greater than the “working interest” shown in Exhibit
A-1 for such Unit or Well without increase throughout the productive life of
such Unit or Well, except as stated in Exhibit A-1 and except increases
resulting from contribution requirements with respect to non-consenting
co-owners under applicable operating agreements and increases that are
accompanied by at least a proportionate increase in Seller’s Net Revenue
Interest; and
(c)    Is free and clear of liens, encumbrances, obligations, security
interests, irregularities, pledges, or other defects.
As used in this Agreement, the term “Title Defect” means any lien, charge,
encumbrance, obligation (including contract obligation), defect, or other matter
(including without limitation a discrepancy in Net Revenue Interest or working
interest) that causes Seller not to have Defensible Title in and to the Units or
Wells shown in Exhibit A‑1 as of the Effective Time. As used in this Agreement,
the term “Title Benefit” shall mean any right, circumstance or condition
discovered by Seller after the date of this Agreement that operates to increase
the Net Revenue Interest of Seller in any Unit or Well shown on Exhibit A-1,
without causing a greater than proportionate increase in Seller’s working
interest above that shown in Exhibit A-1 as the Effective Time. Notwithstanding
the foregoing, the following shall not be considered Title Defects:

1.
defects based solely on (i) lack of information in Seller’s files, or (ii)
references to a document(s) if such document(s) is not in Seller’s files;

2.
defects in the chain of title prior to January 1, 1950;

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3.
defects arising out of lack of corporate or other entity authorization unless
Purchaser provides affirmative evidence that the action was not authorized and
results in another party’s actual and superior claim of title to the relevant
Property;

4.
defects based on failure to record Leases issued by any state or federal
Governmental Body, or any assignments of such Leases, in the real property,
conveyance or other records of the county in which such Property is located;

5.
defects based on a gap in Seller’s chain of title in the county records as to
Leases, unless such gap is affirmatively shown to exist in such records by an
abstract of title, title opinion or landman’s title chain which documents shall
be included in a Title Defect Notice;

6.
defects that have been cured by applicable Laws of limitation or prescription;

7.
any delay in delivering an assignment earned under a farmout, participation or
similar agreement unless Purchaser provides affirmative evidence that the farmor
or other third party record title holder has refused to deliver such assignment;
and

8.
defects disclosed to or known by Purchaser and/or its Affiliates prior to the
execution of this Agreement.

Section 3.3    Definition of Permitted Encumbrances.
As used herein, the term “Permitted Encumbrances” means any or all of the
following:
(a)    Royalties and any overriding royalties, reversionary interests and other
burdens to the extent that the net cumulative effect of such burdens does not
reduce Seller’s Net Revenue Interest below that shown in Exhibit A-1 or increase
Seller’s working interest above that shown in Exhibit A-1 without a
corresponding increase in the Net Revenue Interest;
(b)    All Leases, unit agreements, pooling agreements, operating agreements,
Hydrocarbon production sales contracts, division orders and other contracts,
agreements and instruments applicable to the Assets, to the extent that the net
cumulative effect of such instruments does not reduce Seller’s Net Revenue
Interest below that shown in Exhibit A-1 or increase Seller’s working interest
above that shown in Exhibit A-1 without a corresponding increase in the Net
Revenue Interest;
(c)    Preference Rights applicable to the Assets;
(d)    Third-party consent requirements and similar restrictions;
(e)    Liens for current Taxes or assessments not yet delinquent or, if
delinquent, being contested in good faith by appropriate actions;
(f)    Materialman’s, mechanic’s, repairman’s, employee’s, contractor’s,
operator’s and other similar liens or charges arising in the ordinary course of
business for amounts not yet delinquent (including any amounts being withheld as
provided by Law), or if delinquent, being contested in good faith by appropriate
actions;
(g)    All rights to consent by, required notices to, filings with, or other
actions by Governmental Bodies in connection with the sale or conveyance of the
Assets or interests therein if they are not required or customarily obtained
prior to the sale or conveyance;

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(h)    Rights of reassignment arising upon final intention to abandon or release
the Assets, or any of them;
(i)    Easements, rights-of-way, servitudes, permits, surface leases and other
rights in respect of surface operations to the extent that they do not
commercially unreasonably interfere with the operation of the Assets and do not
individually reduce Seller’s Net Revenue Interest below that shown in Exhibit
A-1 or increase Seller’s working interest above that shown in Exhibit A-1
without a corresponding increase in Net Revenue Interest;
(j)    Calls on Hydrocarbon production under existing Contracts;
(k)    All rights reserved to or vested in any Governmental Body to control or
regulate any of the Assets in any manner and all obligations and duties under
all applicable laws, rules and orders of any such Governmental Body or under any
franchise, grant, license or permit issued by any such Governmental Body;
(l)    Any encumbrance on or affecting the Assets which is expressly assumed,
bonded or paid by Purchaser at or prior to Closing or which is discharged by
Seller at or prior to Closing;
(m)    Any matters shown on Exhibit A-1 and Schedule 4.7(a);
(n)    Any other liens, charges, encumbrances, defects or irregularities which
do not, individually or in the aggregate, materially interfere with the use or
ownership of the Assets subject thereto or affected thereby (as currently used
or owned), which would be accepted by a reasonably prudent purchaser engaged in
the business of owning and operating oil and gas properties, and which do not
reduce Seller’s Net Revenue Interest below that shown in Exhibit A-1, or
increase Seller’s working interest above that shown in Exhibit A-1 without a
corresponding increase in Net Revenue Interest;
(o)    Imbalances associated with the Assets; and
(p)    Liens granted under applicable joint operating agreements.
Section 3.4    Notice of Title Defect Adjustments.
         
(a)    To assert a claim of a Title Defect, Purchaser must deliver claim notices
to Seller (each a “Title Defect Notice”) on or before January 15, 2014 (the
“Title Claim Date”). Each Title Defect Notice shall be in writing and shall
include (i) a description of the alleged Title Defect(s), (ii) the Units or
Wells affected by the Title Defect (each a “Title Defect Property”), (iii) the
Allocated Value of each Title Defect Property, (iv) supporting documents
reasonably necessary for Seller (as well as any title attorney or examiner hired
by Seller) to verify the existence of the alleged Title Defect(s), and (v) the
amount by which Purchaser reasonably believes the Allocated Value of each Title
Defect Property is reduced by the alleged Title Defect(s) and the computations
and information upon which Purchaser’s belief is based. Notwithstanding any
other provision of this Agreement to the contrary, Purchaser shall be deemed to
have waived its right to assert Title Defects under this Agreement of which
Seller has not been given notice on or before the Title Claim Date provided,
however, such waiver shall have no effect or limitation on the special warranty
of title in the Conveyance. For purposes of this Agreement, the term “Allocated
Value” shall mean the portion of the Purchase Price that has been allocated to a
Unit or Well in Exhibit A‑1.

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(b)    Seller shall have the right, but not the obligation, to deliver to
Purchaser on or before the Title Claim Date with respect to each Title Benefit a
notice (a “Title Benefit Notice”) including (i) a description of the Title
Benefit, (ii) the Units or Wells affected, (iii) the Allocated Values of the
Units or Wells subject to such Title Benefit and (iv) the amount by which the
Seller reasonably believes the Allocated Value of those Units or Wells is
increased by the Title Benefit, and the computations and information upon which
Seller’s belief is based. Seller shall be deemed to have waived all Title
Benefits of which it has not given notice on or before the Title Claim Date.

(c)    Seller shall have the right, but not the obligation, to attempt, at its
sole cost, to cure or remove at any time prior to Closing (the “Cure Period”),
unless the parties otherwise agree, any Title Defects of which it has been
advised by Purchaser.

(d)    In the event that any Title Defect is not waived by Purchaser or cured on
or before Closing, Seller shall, at its sole election, elect to:

(i)    subject to the Individual Title Deductible and the Aggregate Title
Deductible, reduce the Purchase Price by an amount agreed upon ("Title Defect
Amount") pursuant to Section 3.4(g) by Purchaser and Seller as being the value
of such Title Defect, taking into consideration the Allocated Value of the
Property subject to such Title Defect, the portion of the Property subject to
such Title Defect and the legal effect of such Title Defect on the Property
affected thereby; provided, however, that the methodology, terms and conditions
of Section 3.4(g) shall control any such determination;

(ii)    indemnify Purchaser against all liability, loss, cost and expense
resulting from such Title Defect ;

(iii)    retain the entirety of the Property that is subject to such Title
Defect, together with all associated Assets, in which event the Purchase Price
shall be reduced by an amount equal to the Allocated Value of such Property; or

(iv)    if applicable, terminate this Agreement.

(e)    With respect to each Unit or Well affected by Title Benefits reported
under Section 3.4(b), the Purchase Price shall be increased by an amount (the
“Title Benefit Amount”) equal to the increase in the Allocated Value for such
Unit or Well caused by such Title Benefits, as determined pursuant to Section
3.4(h).

(f)    Section 3.4(d) shall be the exclusive right and remedy of Purchaser with
respect to Title Defects asserted by Purchaser pursuant to Section 3.4.

(g)    The Title Defect Amount resulting from a Title Defect shall be the amount
by which the Allocated Value of the Title Defect Property affected by such Title
Defect is reduced as a result of the existence of such Title Defect and shall be
determined in accordance with the following methodology, terms and conditions:

(i)    if Purchaser and Seller agree on the Title Defect Amount, that amount
shall be the Title Defect Amount;

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(ii)    if the Title Defect is a lien, encumbrance or other charge which is
undisputed and liquidated in amount, then the Title Defect Amount shall be the
amount necessary to be paid to remove the Title Defect from the Title Defect
Property;

(iii)    if the Title Defect represents a discrepancy between (A) the Net
Revenue Interest for any Title Defect Property and (B) the Net Revenue Interest
stated on Exhibit A-1, then the Title Defect Amount shall be the product of the
Allocated Value of such Title Defect Property multiplied by a fraction, the
numerator of which is the Net Revenue Interest decrease and the denominator of
which is the Net Revenue Interest stated on Exhibit A-1;

(iv)    if the Title Defect represents an obligation, encumbrance, burden or
charge upon or other defect in title to the Title Defect Property of a type not
described in subsections (i), (ii) or (iii) above, the Title Defect Amount shall
be determined by taking into account the Allocated Value of the Title Defect
Property, the portion of the Title Defect Property affected by the Title Defect,
the legal effect of the Title Defect, the potential economic effect of the Title
Defect over the life of the Title Defect Property, the values placed upon the
Title Defect by Purchaser and Seller and such other factors as are necessary to
make a proper evaluation; and

(v)    notwithstanding anything to the contrary in this Article 3, the aggregate
Title Defect Amounts attributable to the effects of all Title Defects upon any
Title Defect Property shall not exceed the Allocated Value of the Title Defect
Property.

(h)    The Title Benefit Amount for any Title Benefit shall be the product of
the Allocated Value of the affected Unit or Well multiplied by a fraction, the
numerator of which is the Net Revenue Interest increase and the denominator of
which is the Net Revenue Interest stated on Exhibit A-1.
(i)    Notwithstanding anything to the contrary, (i) in no event shall there be
any adjustments to the Purchase Price or other remedies provided by Seller for
individual Title Defects that do not exceed $50,000.00 (“Individual Title
Deductible”); and (ii) in no event shall there be any adjustments to the
Purchase Price or other remedies provided by Seller for Title Defects unless the
amount of all such Title Defects, in the aggregate, excluding any Title Defects
cured by Seller, exceeds a deductible in an amount equal to two percent (2%) of
the Purchase Price (“Aggregate Title Deductible”), after which point Purchaser
shall be entitled to adjustments to the Purchase Price or other remedies only
with respect to Title Defects in excess of such Aggregate Title Deductible.
(j)    Notwithstanding anything to the contrary, (i) in no event shall there be
any adjustments to the Purchase Price or other remedies provided by Purchaser
for individual Title Benefits that do not exceed $50,000.00 (“Individual Title
Deductible”); and (ii) in no event shall there be any adjustments to the
Purchase Price or other remedies provided by Purchaser for Title Benefits unless
the amount of all such Title Benefits, in the aggregate, exceeds a deductible in
an amount equal to two percent (2%) of the Purchase Price (“Aggregate Title
Deductible”), after which point Seller shall be entitled to adjustments to the
Purchase Price or other remedies only with respect to Title Benefits in excess
of such Aggregate Title Deductible.

(k)    Seller and Purchaser shall attempt to agree on all Title Defect Amounts
and Title Benefit Amounts prior to Closing. If Seller and Purchaser are unable
to agree by Closing, the Title Defect Amounts and Title Benefit Amounts in
dispute shall be exclusively and finally resolved by

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arbitration pursuant to this Section 3.4. The Parties shall exchange their final
proposed Title Defect Amounts or Title Benefit Amounts with respect to any
unresolved Title Defects or Title Benefits. There shall be a single arbitrator,
who shall be a title attorney with at least ten (10) year’s experience in oil
and gas titles involving properties in the regional area in which the Properties
are located, as selected by mutual agreement of Purchaser and Seller within
fifteen (15) Business Days after the end of the Cure Period, and absent such
agreement, by the Houston office of the American Arbitration Association (the
“Title Expert”). The arbitration proceeding shall be held in Houston, Texas and
shall be conducted in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, to the extent such rules do not conflict with
the terms of this Section. The Title Expert’s determination shall be made within
fifteen (15) Business Days after submission of the matters in dispute and shall
be final and binding upon both parties, without right of appeal. In making a
determination, the Title Expert shall be bound by the rules set forth in
Sections 3.4(g) and 3.4(h) and may consider such other matters as in the opinion
of the Title Expert are necessary or helpful to make a proper determination.

Section 3.5    Casualty or Condemnation Loss.
(a)    Purchaser shall assume all risk of loss with respect to, and any change
in the condition of the Assets from the Effective Time until Closing for
production of Hydrocarbons through normal depletion (including but not limited
to the watering out of any Well, collapsed casing or sand infiltration of any
Well) and the depreciation of personal property due to ordinary wear and tear.
(b)    If, after the date of this Agreement but prior to the Closing Date, any
portion of the Assets is destroyed by fire or other casualty or is taken in
condemnation or under right of eminent domain, and the loss as a result of such
individual casualty or taking exceeds five percent (5%) of the Purchase Price,
Purchaser shall nevertheless be required to close and Seller shall elect by
written notice to Purchaser prior to Closing either (i) to cause the Assets
affected by any casualty or taking to be repaired or restored to at least its
condition prior to such casualty, at Seller’s sole cost, as promptly as
reasonably practicable (which work may extend after the Closing Date), (ii) to
indemnify Purchaser against any costs or expenses that Purchaser reasonably
incurs to repair the Assets subject to any casualty or taking, or (iii) to treat
such casualty or taking as a Title Defect with respect to the affected Property
or Properties under Section 3.4. In each case, Seller shall retain all rights to
insurance and other claims against third parties with respect to the casualty or
taking except to the extent the parties otherwise agree in writing.
(c)    If, after the date of this Agreement but prior to the Closing Date, any
portion of the Assets is destroyed by fire or other casualty or is taken in
condemnation or under right of eminent domain, and the loss as a result of such
individual casualty or taking is five percent (5%) or less of the Purchase
Price, Purchaser shall nevertheless be required to close and Seller shall, at
Closing, pay to Purchaser all sums paid to Seller by third parties by reason of
such casualty or taking and shall assign, transfer and set over to Purchaser or
subrogate Purchaser to all of Seller’s right, title and interest (if any) in
unpaid awards, and other rights against third parties (other than Affiliates of
Seller and its and their directors, officers, employees and agents) arising out
of the casualty or taking. In addition, Seller shall make Purchaser as loss
payee under the Seller's Oil Insurance Limited (OIL) insurance policy in
accordance with this Section 3.5.

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Section 3.6    Limitations on Applicability.

The right of Purchaser to assert a Title Defect under this Agreement shall
terminate as of the Title Claim Date, provided there shall be no termination of
Purchaser’s or Seller’s rights under Section 3.4 with respect to any bona fide
Title Defect properly reported in a Title Defect Notice on or before the Title
Claim Date. Thereafter, Purchaser’s sole and exclusive rights and remedies with
regard to title to the Assets shall be as set forth in, and arise under, the
Conveyance transferring the Assets from Seller to Purchaser.

Section 3.7    Government Approvals Respecting Assets.
(a)    Federal and State Approvals. Purchaser, within thirty (30) days after
Closing, shall file for approval with the applicable government agencies all
assignment documents and other state and federal transfer documents required to
effectuate the transfer of the Assets. Purchaser further agrees promptly after
Closing to take all other actions reasonably required of it by federal or state
agencies having jurisdiction to obtain all requisite regulatory approvals with
respect to this transaction, and to use its reasonable commercial efforts to
obtain the approval by such federal or state agencies, as applicable, of
Seller’s assignment documents requiring federal or state approval in order for
Purchaser to be recognized by the federal or state agencies as the owner of the
Assets. Purchaser shall provide Seller with approved copies of the assignment
documents and other state and federal transfer documents, as soon as they are
available.
(b)    Title Pending Governmental Approvals. Until all of the governmental
approvals provided for in Section 3.7(a) have been obtained, the following shall
occur with respect to the affected portion of the Assets:
(i)    Seller shall continue to hold record title to the affected Leases and
other affected portion of the Assets as nominee for Purchaser;
(ii)    Purchaser shall be responsible for all assumed obligations with respect
to the affected Leases and other affected portion of the Assets as if Purchaser
were the record owner of such Leases and other portion of the Assets as of the
Effective Date; and
(iii)    Seller shall act as Purchaser’s nominee but shall be authorized to act
only upon and in accordance with Purchaser’s instructions, and Seller shall have
no authority, responsibility or discretion to perform any tasks or functions
with respect to the affected Leases and other affected portion of the Assets
other than those which are purely administrative or ministerial in nature,
unless otherwise specifically requested and authorized by Purchaser in writing.
(c)    Denial of Required Governmental Approvals. If the federal or state agency
fails to grant approval within twenty-four (24) months after the Closing, Seller
may continue to hold record title to the affected Leases and other affected
Assets as Purchaser’s nominee or at Seller’s option it may terminate this
Agreement and all its obligations hereunder as to the affected Leases and other
affected portion of the Assets by giving sixty (60) days written notice to
Purchaser. Upon such termination: (i) this Agreement shall be null and void and
terminated as to the affected Leases and other affected portion of the Assets,
(ii) Purchaser shall immediately reassign and return to Seller the assignment
documents and any and all other documents, materials and data previously

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delivered to Purchaser with respect to the affected Leases and other affected
portion of the Assets, and (iii) Seller shall pay to Purchaser the Allocated
Value of the affected Property, without interest, less the proceeds of
Hydrocarbon production received by Purchaser (which shall be retained by
Purchaser as its sole property) net of all expenses, overhead, royalties, and
costs of operations (including plugging and abandonment expenses but excluding
mortgage interest and any burdens, liens, or encumbrances created by Purchaser
which must be released prior to this payment) attributable to the affected
Leases or other affected portion of the Assets from the Effective Date forward.
In no event, however, shall Seller ever be required to reimburse Purchaser for
any expenditures associated with workovers, recompletions, sidetracks, or the
drilling, completion or plugging and abandonment of wells drilled or work
performed by Seller.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER

Section 4.1    Generally.
(a)    Any representation or warranty qualified “to the knowledge of Seller” or
“to Seller’s knowledge” or with any similar knowledge qualification is limited
to matters within the actual knowledge of the individuals listed on Schedule
4.1. “Actual knowledge” for purposes of this Agreement means information
actually personally known by such individuals listed on Schedule 4.1.
(b)    Inclusion of a matter on a Schedule to a representation or warranty which
addresses matters having a Material Adverse Effect shall not be deemed an
indication that such matter does, or may, have a Material Adverse Effect.
Likewise, the inclusion of a matter on a Schedule in relation to a
representation or warranty shall not be deemed an indication that such matter
necessarily would, or may, breach such representation or warranty absent its
inclusion on such Schedule. Matters may be disclosed on a Schedule to this
Agreement for purposes of information only.
(c)    With respect to the representations and warranties of each Party
contained in this Agreement, Seller shall have the right until five (5) Business
Days before Closing to supplement or modify the Schedules (but not the Exhibits)
with respect to matters that arise from circumstances first occurring after the
Execution Date. For all purposes of this Agreement, including for purposes of
determining whether the conditions set forth in Article 7 have been fulfilled,
the Schedules shall be deemed to include only that information contained therein
on the Execution Date and shall be deemed to exclude all information contained
in any supplement or modification thereto, but if the Closing shall occur, then
all matters disclosed pursuant to any such supplement or modification at or
prior to the Closing shall be taken into account.
(d)    The Parties agree and acknowledge that Exhibits A and A-1 to this
Agreement may be incomplete or subject to revision prior to the Closing. As soon
as practicable, but no later than five (5) Business Days prior to Closing,
Seller may deliver to Purchaser a replacement for Exhibits A and A-1.
(e)    Subject to the foregoing provisions of this Section 4.1, the disclaimers
and waivers contained in Sections 10.8 and 10.9 and the other terms and
conditions of this Agreement, Seller represents and warrants to Purchaser the
matters set out in Sections 4.2 through 4.18.

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Section 4.2    Existence and Qualification.
Seller is a limited liability company duly organized, validly existing and in
good standing under the laws of the State of Delaware and is duly qualified to
do business in Wyoming.
Section 4.3    Power.
Seller has the corporate power to enter into and perform this Agreement and
consummate the transactions contemplated by this Agreement.
Section 4.4    Authorization and Enforceability.
The execution, delivery and performance of this Agreement, and the performance
of the transactions contemplated hereby, have been duly and validly authorized
by all necessary corporate action on the part of Seller. This Agreement has been
duly executed and delivered by Seller (and all documents required hereunder to
be executed and delivered by Seller at Closing will be duly executed and
delivered by Seller) and this Agreement constitutes, and at the Closing such
documents will constitute, the valid and binding obligations of Seller,
enforceable against Seller in accordance with their terms except as such
enforceability may be limited by applicable bankruptcy or other similar laws
affecting the rights and remedies of creditors generally as well as to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
Section 4.5    No Conflicts.
To Seller’s knowledge, subject to compliance with Preference Rights and Transfer
Requirements, the execution, delivery and performance of this Agreement by
Seller, and the transactions contemplated by this Agreement will not (i) violate
any provision of the certificate of formation or limited liability company
agreement of Seller, (ii) result in default (with due notice or lapse of time or
both) or the creation of any lien or encumbrance or give rise to any right of
termination, cancellation or acceleration under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license or agreement to which
Seller is a party or which affect the Assets, (iii) violate any judgment, order,
ruling, or decree applicable to Seller as a party in interest, (iv) violate any
Laws applicable to Seller or any of the Assets, except for (a) rights to consent
by, required notices to, filings with, approval or authorizations of, or other
actions by any Governmental Body where the same are not required prior to the
assignment of the related Asset or they are customarily obtained subsequent to
the sale or conveyance thereof and (b) any matters described in clauses (ii),
(iii) or (iv) above which would not have a Material Adverse Effect.
Section 4.6    Liability for Brokers’ Fees.
Purchaser shall not directly or indirectly have any responsibility, liability or
expense, as a result of undertakings or agreements of Seller, for brokerage
fees, finder’s fees, agent’s commissions or other similar forms of compensation
in connection with this Agreement or any agreement or transaction contemplated
hereby.
Section 4.7    Litigation.
Except as set forth in: (a) Schedule 4.7(a), to Seller’s knowledge, no
investigation, proceeding, action, suit, or other legal proceeding of any kind
or nature before any Governmental

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Body which could have a Material Adverse Effect is pending or, to Seller’s
knowledge, threatened to which Seller is a party and which relates to the
Assets; and (b) Schedule 4.7(b), to Seller’s knowledge, no notice in writing
from any Governmental Body which could have a Material Adverse Effect has been
received by Seller claiming any violation of or noncompliance with any Law with
respect to the Assets (including any such Law concerning the conservation of
natural resources).
Section 4.8    Taxes and Assessments.
With respect to all Taxes related to the Assets, to the knowledge of Seller, (a)
all reports, returns, statements (including estimated reports, returns or
statements), and other similar filings (the “Tax Returns”) relating to the
Assets required to be filed by Seller with respect to such Taxes have been
timely filed with the appropriate Governmental Body in all jurisdictions in
which such Tax Returns are required to be filed; and (b) such Tax Returns are
true and correct in all material respects, and (c) all Taxes reported on such
Tax Returns have been paid, except those being contested in good faith.
To Seller’s knowledge, with respect to all Taxes related to the Assets, except
as set forth on Schedule 4.8, (a) there are not currently in effect any
extension or waiver of any statute of limitations of any jurisdiction regarding
the assessment or collection of any such Tax; (b) there are no administrative
proceedings or lawsuits pending against the Assets or Seller by any taxing
authority; and (c) there are no Tax liens on any of the Assets except for liens
for Taxes not yet due.
Section 4.9    Compliance with Laws.
Except as disclosed on Schedule 4.9, to the knowledge of Seller, the Assets are,
and the operation of the Assets is, in compliance with the provisions and
requirements of all Laws of all Governmental Bodies having jurisdiction with
respect to the Assets, or the ownership, operation, development, maintenance, or
use of any thereof, except where the failure to so comply would not have a
Material Adverse Effect. Notwithstanding the foregoing, Seller makes no
representation or warranty, express or implied, under this Section relating to
any Environmental Liabilities or Environmental Law.
Section 4.10    Payments for Hydrocarbon Production.
Except as set forth on Schedule 4.10, to the knowledge of Seller, (a) all
rentals, royalties, excess royalty, overriding royalty interests, Hydrocarbon
production payments, and other payments due and/or payable by Seller to
overriding royalty holders and other interest owners on or prior to the
Effective Time under or with respect to the Assets and the Hydrocarbons produced
therefrom or attributable thereto, have been paid, and (b) Seller is not
obligated under any contract or agreement for the sale of gas from the Assets
containing a take-or-pay, advance payment, prepayment, or similar provision, or
under any gathering, transmission, or any other contract or agreement with
respect to any of the Assets to gather, deliver, process, or transport any gas
without then or thereafter receiving full payment therefor.
Section 4.11    Payout Balances.
Schedule 4.11 is a complete and accurate list of the “payout” balances as
provided by the operator of the Wells and Units listed on Exhibit A-1, as of
October 29, 2013.

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Section 4.12    Outstanding Capital Commitments.
As of the date hereof, there are no outstanding AFEs or other commitments to
make capital expenditures which are binding on the Assets and which Seller
reasonably anticipates will individually require expenditures by the owner of
the Assets after the Closing Date in excess of $50,000 other than those shown on
Schedule 4.12.
Section 4.13    Imbalances.
To Seller’s knowledge, Schedule 4.13 accurately sets forth the latest available
of Seller’s Imbalances provided by the operators, arising with respect to the
Assets and, except as disclosed in Schedule 4.13 and except for Imbalances for
production months subsequent to those disclosed on Schedule 4.13, (i) no Person
is entitled to receive any material portion of the Seller’s Hydrocarbons
produced from the Assets or to receive material cash or other payments to
“balance” any disproportionate allocation of Hydrocarbons produced from the
Assets under any operating agreement, gas balancing or storage agreement, gas
processing or dehydration agreement, gas transportation agreement, gas purchase
agreement, or other agreements, whether similar or dissimilar, (ii) Seller is
not obligated to deliver any material quantities of gas or to pay any material
penalties or other amounts, in connection with the violation of any of the terms
of any gas contract or other agreement with shippers with respect to the Assets,
and (iii) Seller is not obligated to pay any material penalties or other
material payments under any gas transportation or other agreement as a result of
the delivery of quantities of gas from the Wells in excess of the contract
requirements.
Section 4.14    Contracts.    
To the knowledge of Seller, Seller has paid its share of all costs payable by it
under the contracts and agreements listed in Schedule 4.14, except those being
contested in good faith. Schedule 4.14 sets forth all Contracts of the type
described below to which Seller is a party and that relate to the Assets
(collectively, the “Material Contracts”):
(a)    any Contract that can reasonably be expected to result in aggregate
payments by or revenues to Seller of more than $250,000 (net to the interest of
Seller) during the current or any subsequent fiscal year of Seller (based solely
on the terms thereof and without regard to any expected increase in volumes or
revenues);
(b)    any Hydrocarbons transportation and processing or similar Contract that
is not terminable without penalty on 90 Days or less notice;
(c)    any Contract for the purchase, sale or exchange of any Hydrocarbons that
is not terminable without penalty on 90 Days or less notice; or
(d)    any Contract with an Affiliate of Seller that will not be terminated
prior to or in connection with the Closing.
Except as set forth on Schedule 4.14 and except for such matters that would not
have a Material Adverse Effect, the Material Contracts are in full force and
effect in accordance with their respective terms, there exist no material
defaults thereunder by Seller, and no event has occurred that with notice or
lapse of time or both would constitute any material default under any such
Material Contract by Seller.

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Section 4.15    Bankruptcy.
There are no bankruptcy, reorganization, or similar arrangement proceedings
pending, or to Seller’s knowledge, being contemplated by or threatened against
Seller or any Affiliate of Seller.
Section 4.16    Preference Rights and Transfer Requirements.

To Seller’s knowledge, Schedule 4.16 lists the Preference Rights and Transfer
Requirements affecting the Assets.

Section 4.17    Environmental Matters.

To Seller’s knowledge, Seller has not received written notice from any Person of
any release or disposal of any hazardous substance giving rise to any
Environmental Liabilities concerning any land, facility, asset or property
included in the Assets that: (i) interferes with or prevents compliance by
Seller with any Environmental Law or the terms of any license or permit issued
pursuant thereto and (ii) would have a Material Adverse Effect. Seller has not
entered into, and is not subject to, any agreements, consents, orders, decrees,
judgments, license or permit conditions, or other directives of any Governmental
Body that are in existence as of the date of this Agreement, and are based on
any Environmental Laws, that relate to the future use of any of the Assets and
that require any change in the present conditions of any of the Assets.

Section 4.18 Royalties.

To Seller’s knowledge, with respect to Seller’s ownership and operation of the
Assets, Seller has paid all royalties due with respect to its interests in the
Properties, or if not paid, is contesting such costs and royalties in good faith
in the normal course of business.

ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser represents and warrants to Seller the following:

Section 5.1    Existence and Qualification.
Purchaser is a limited liability company duly organized, validly existing and in
good standing under the laws of the state of its formation; and Purchaser is
duly qualified to do business as a foreign limited liability company in every
jurisdiction in which it is required to qualify in order to conduct its business
except where the failure to so qualify would not have a material adverse effect
on Purchaser or its properties; and Purchaser is duly qualified to do business
in Wyoming.
Section 5.2    Power.
Purchaser has the corporate power to enter into and perform this Agreement and
consummate the transactions contemplated by this Agreement.

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Section 5.3    Authorization and Enforceability.
The execution, delivery and performance of this Agreement, and the performance
of the transaction contemplated hereby, have been duly and validly authorized by
all necessary corporate action on the part of Purchaser. This Agreement has been
duly executed and delivered by Purchaser (and all documents required hereunder
to be executed and delivered by Purchaser at Closing will be duly executed and
delivered by Purchaser) and this Agreement constitutes, and at the Closing such
documents will constitute, the valid and binding obligations of Purchaser,
enforceable in accordance with their terms except as such enforceability may be
limited by applicable bankruptcy or other similar laws affecting the rights and
remedies of creditors generally as well as to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
Section 5.4    No Conflicts.
The execution, delivery and performance of this Agreement by Purchaser, and the
transactions contemplated by this Agreement will not (i) violate any provision
of the certificate of formation or limited liability company agreement of
Purchaser, (ii) result in a default (with due notice or lapse of time or both)
or the creation of any lien or encumbrance or give rise to any right of
termination, cancellation or acceleration under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license or agreement to which
Purchaser is a party, (iii) violate any judgment, order, ruling, or regulation
applicable to Purchaser as a party in interest, or (iv) violate any Law
applicable to Purchaser or any of its assets, or (v) require any filing with,
notification of or consent, approval or authorization of any Governmental Body
or authority, except any matters described in clauses (ii), (iii), (iv) or (v)
above which would not have a material adverse effect on Purchaser or the
transactions contemplated hereby.
Section 5.5    Liability for Brokers’ Fees.
Seller shall not directly or indirectly have any responsibility, liability or
expense, as a result of undertakings or agreements of Purchaser, for brokerage
fees, finder’s fees, agent’s commissions or other similar forms of compensation
in connection with this Agreement or any agreement or transaction contemplated
hereby.
Section 5.6    Litigation.
There are no actions, suits or proceedings pending, or to the actual knowledge
of Purchaser’s officers, threatened in writing before any Governmental Body
against Purchaser or any Affiliate of Purchaser which are reasonably likely to
impair materially Purchaser’s ability to perform its obligations under this
Agreement.
Section 5.7    Financing.
Purchaser has sufficient cash, available lines of credit or other sources of
immediately available funds (in United States dollars) to enable it to pay the
Closing Payment to Seller at the Closing.

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Section 5.8    Limitation.
Except for the representations and warranties expressly made by Seller in
Article 4 of this Agreement, or in any certificate furnished or to be furnished
to Purchaser pursuant to this Agreement, Purchaser represents and acknowledges
that (i) there are no representations or warranties, express, statutory or
implied, as to the Assets or prospects thereof, and (ii) Purchaser has not
relied upon any oral or written information provided by Seller. Without limiting
the generality of the foregoing, Purchaser represents and acknowledges that
Seller has made and will make no representation or warranty regarding any matter
or circumstance relating to Environmental Laws, Environmental Liabilities, the
release of materials into the environment or protection of human health, safety,
natural resources or the environment or any other environmental condition of the
Assets. Purchaser further represents and acknowledges that it is sophisticated
in the evaluation, purchase, ownership and operation of oil and gas properties
similar to the Properties and that it has had access to the Assets, the officers
and employees of Seller, and the books, records and files of Seller relating to
the Assets, and in making the decision to enter into this Agreement and
consummate the transactions contemplated hereby, Purchaser has relied solely on
the basis of its own independent due diligence investigation of the Assets.
Section 5.9    SEC Disclosure.
Purchaser is acquiring the Assets for its own account for use in its trade or
business, and not with a view toward or for sale associated with any
distribution thereof, nor with any present intention of making a distribution
thereof within the meaning of the Securities Act of 1933, as amended and
applicable state securities laws.
Section 5.10    Bankruptcy.
There are no bankruptcy, reorganization or receivership proceedings pending
against, being contemplated by, or threatened against Purchaser.
Section 5.11    Qualification.
Purchaser is now, and hereafter shall continue to be, qualified to own and
assume operatorship of federal and state oil, gas and mineral leases in all
jurisdictions where the Assets to be transferred to it are located, and the
consummation of the transactions contemplated in this Agreement will not cause
Purchaser to be disqualified as such an owner or operator. To the extent
required by the applicable state and federal government, Purchaser currently
has, and will continue to maintain, lease bonds, area-wide bonds or any other
surety bonds as may be required by, and in accordance with, such state or
federal regulations governing the ownership and operation of such leases.
ARTICLE 6
COVENANTS OF THE PARTIES

Section 6.1    Access.
Between the date of execution of this Agreement and continuing until five (5)
Business Days prior to the Closing Date, Seller will give Purchaser and its
representatives physical access to the Assets as well as access to the Records
in Seller’s possession, for the purpose of conducting

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an investigation and title review of the Assets, but only to the extent that
Seller may do so without violating any obligations to any third party and to the
extent that Seller has authority to grant such access without breaching any
restriction binding on Seller. Such access by Purchaser shall be limited to
Seller’s normal business hours, and Purchaser’s investigation shall be conducted
in a manner that minimizes interference with the business of Seller. All
information obtained by Purchaser and its representatives under this Section
shall be subject to the terms of Section 10.4(b)(vi) and the terms of that
certain confidentiality agreement between Seller and Purchaser dated October 21,
2013 (the "Confidentiality Agreement"). Purchaser acknowledges that its access
to the Properties may be subject to releases or other agreements required by the
operators of the Properties and compliance with the operator’s policies and
procedures.
Section 6.2    Government Reviews.
Seller and Purchaser shall in a timely manner (a) make all required filings, if
any, with and prepare applications to and conduct negotiations with, each
governmental agency as to which such filings, applications or negotiations are
necessary or appropriate in the consummation of the transactions contemplated
hereby specifically including but not limited to the HSR Act, if applicable (b)
provide such information as each may reasonably request to make such filings,
prepare such applications and conduct such negotiations, and (c) if applicable,
request early termination or waiver of any applicable waiting period under the
HSR Act. Each party shall cooperate with and use all commercially reasonable
efforts to assist the other with respect to such filings, applications and
negotiations.
Section 6.3    Notification of Breaches.
Until the Closing,
(a)    Purchaser shall notify Seller promptly after Purchaser obtains actual
knowledge that any representation or warranty of Seller contained in this
Agreement is untrue in any material respect or will be untrue in any material
respect as of the Closing Date or that any covenant or agreement to be performed
or observed by Seller prior to or on the Closing Date has not been so performed
or observed in any material respect.
(b)    Seller shall notify Purchaser promptly after Seller obtains actual
knowledge that any representation or warranty of Purchaser contained in this
Agreement is untrue in any material respect or will be untrue in any material
respect as of the Closing Date or that any covenant or agreement to be performed
or observed by Purchaser prior to or on the Closing Date has not been so
performed or observed in any material respect.
(c)    If any of Purchaser’s or Seller’s representations or warranties is untrue
or shall become untrue in any material respect between the date of execution of
this Agreement and the Closing Date, or if any of Purchaser’s or Seller’s
covenants or agreements to be performed or observed prior to or on the Closing
Date shall not have been so performed or observed in any material respect, but
if such breach of representation, warranty, covenant or agreement shall (if
curable) be cured by the Closing (or, if the Closing does not occur, by the date
set forth in Section 10.1), then such breach shall be considered not to have
occurred for all purposes of this Agreement.

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Section 6.4    Public Announcements.
Until the Closing, neither party shall make any press release or other public
announcement regarding the existence of this Agreement, the contents hereof or
the transactions contemplated hereby without the prior written consent of the
other, except that Purchaser may issue a press release upon the execution of
this Agreement substantially in the form set forth in Schedule 6.4; provided,
however, the foregoing shall not restrict disclosures by Purchaser or Seller
which are required by applicable securities or other laws or regulations or the
applicable rules of any stock exchange having jurisdiction over the disclosing
party or its Affiliates. At or after Closing, the content of any press release
or public announcement shall be subject to the prior review and reasonable
approval of Seller and Purchaser.
Section 6.5    Operation of Business.
Seller (i) shall cause the Properties to be operated and maintained in
accordance with its past practices in all material respects, (ii) conduct their
business, activities and practices with respect to such Properties in all
material respects only in the ordinary course of business and consistent with
past practice or as otherwise permitted by this Agreement, (iii) will not,
without the prior written consent of Purchaser, which consent shall not be
unreasonably withheld, commit to any operation, or series of related operations,
reasonably anticipated by Seller to require future capital expenditures by the
owner of the Assets in excess of $150,000.00, proportionate to Seller’s working
interest, or make any capital expenditures in excess of $150,000.00,
proportionate to Seller’s working interest, or terminate, materially amend,
execute or extend any material agreements affecting the Assets, (iv) will
maintain insurance coverage on the Assets presently furnished by nonaffiliated
third parties in the amounts and of the types presently in force, (v) will use
commercially reasonable efforts to maintain in full force and effect all Leases,
(vi) will not transfer, farmout, sell, hypothecate, encumber or otherwise
dispose of any material Assets except for sales and dispositions of Hydrocarbon
production and equipment made in the ordinary course of business consistent with
past practices and (vii) will not commit to do any of the foregoing. Purchaser’s
approval of any action restricted by this Section 6.5 shall be considered
granted within ten (10) days (unless a shorter time is reasonably required by
the circumstances and such shorter time is specified in Seller’s written notice)
of Seller’s notice to Purchaser requesting such consent unless Purchaser
notifies Seller to the contrary in writing during that period. In the event of
an emergency, Seller may take such action as a prudent owner would take and
shall notify Purchaser of such action promptly thereafter.
Notwithstanding anything to the contrary in this Agreement, Seller shall have no
liability to Purchaser for the incorrect payment of delay rentals, royalties,
shut-in payments or similar payments made during the period from the Effective
Time to the Closing Date or for failure to make such payments through mistake or
oversight (including Seller's negligence).
Purchaser acknowledges that Seller owns an undivided interest in the Assets and
Purchaser agrees that the acts or omissions of the other working interest owners
who are not affiliated with Seller shall not constitute a violation of the
provisions of this Section 6.5 nor shall any action required by a vote of
working interest owners constitute such a violation so long as Seller has voted
its interest in a manner consistent with the provisions of this Section 6.5.

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Section 6.6    Preference Rights and Transfer Requirements.
(a)    Purchaser’s purchase of the Assets is expressly subject to all validly
existing and applicable Preference Rights and Transfer Requirements. Prior to
the Closing Date, Seller shall initiate all procedures which in Seller’s good
faith judgment are reasonably required to comply with or obtain the waiver of
the Preference Rights and Transfer Requirements set forth in Schedule 4.16 part
1 with respect to the transactions contemplated by this Agreement. Seller shall
not be obligated to pay any consideration to (or incur any cost or expense for
the benefit of) the holder of any Preference Right or Transfer Requirement in
order to obtain the waiver thereof or compliance therewith.
(b)    The portion of the Purchase Price to be allocated to any Asset or portion
thereof affected by a Preference Right (a “Preference Property”) or that becomes
a Retained Asset shall be the portion of the Purchase Price allocated thereto in
Exhibit A-1. If a Preference Property or a Retained Asset affects only a portion
of a Property and a portion of the Purchase Price has not been allocated
specifically to such portion of a Property in Exhibit A-1, then the portion of
the Purchase Price to be allocated to such Preference Property or Retained Asset
shall be determined in a reasonable manner taking into account the net acreage
(or net acre feet, as appropriate) that the portion of such Property affected by
such Preference Property or Retained Asset bears to the net acreage (or net acre
feet, as appropriate) in the entire Property. Any Preference Property or
Retained Asset that is a Property shall include a pro rata share of all of
Seller’s right, title and interest in, to and under all equipment, Hydrocarbon
production and Records included in the Assets that are directly related or
attributable to such Preference Property or Retained Asset.
(c)    If the holder of a Preference Right who has been offered a Preference
Property pursuant to Section 6.6(a) elects prior to Closing to purchase such
Preference Property in accordance with the terms of such Preference Right, and
Seller and Purchaser receive written notice of such election prior to the
Closing, such Preference Property will be eliminated from the Assets and the
Purchase Price shall be reduced by the portion of the Purchase Price allocated
to such Preference Property pursuant to Section 6.6(b). If for any reason the
purchase and sale of the Properties covered by a Preference Right which has been
exercised by the holder thereof is not or cannot be consummated with the holder
of the Preference Right in accordance with the agreement under which the
applicable Preference Right arises, or the holder of the applicable Preference
Right is unable to satisfy the conditions to closing contained therein, Seller
shall promptly notify Purchaser and, if the Closing has not yet occurred, the
affected Property shall be included in the Closing or, if the Closing has
previously occurred, then within ten (10) Business Days after Purchaser’s
receipt of such notice, the Parties shall conduct an additional closing whereby
Seller shall sell, assign and convey to Purchaser, and Purchaser shall purchase
and accept from Seller, such Property pursuant to the terms of this Agreement
and for the Allocated Value with respect to such Property in Exhibit A-1 (except
“Closing Date” with respect to any such Property shall mean the date of
assignment of such Property from the applicable Seller to Purchaser), subject to
any Purchase Price adjustments consistent with this Agreement.
(d)    If
(i)    the time for election with respect to a Preference Right has not expired
prior to the Closing Date and such Preference Right is not waived; or

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(ii)    an Asset is subject to a Transfer Requirement that provides that
transfer of such Asset without compliance with such Transfer Requirement will
result in termination or other material impairment of any rights in relation to
such Asset, and such Transfer Requirement is not waived, complied with or
otherwise satisfied prior to the Closing Date,
then, unless otherwise mutually agreed by Seller and Purchaser, the Asset or
portion thereof affected by such Preference Right or Transfer Requirement (a
“Retained Asset”) shall be held back from the Assets to be transferred and
conveyed to Purchaser at Closing and the Purchase Price to be paid at Closing
shall be reduced by the portion of the Purchase Price which is allocated to such
Retained Asset pursuant to Section 6.6(b). Any Retained Asset so held back at
the initial Closing will be conveyed to Purchaser at a delayed Closing (which
shall become the new Closing Date with respect to such Retained Asset), within
ten (10) days following the date on which Seller complies with, obtains a waiver
of or notice of election not to exercise or otherwise satisfies, all remaining
Preference Rights and Transfer Requirements with respect to such Retained Asset
as contemplated by this Section. At the delayed Closing, Purchaser shall pay
Seller a purchase price equal to the amount by which the Purchase Price was
reduced on account of the holding back of such Retained Asset (as adjusted
pursuant to Section 2.2 through the new Closing Date therefor).
(e)    Purchaser acknowledges that Seller desires to sell all of the Assets and
would not have entered into this Agreement but for Purchaser’s agreement to
purchase all of the Assets as herein provided. Accordingly, it is expressly
understood and agreed that Seller does not desire to sell any Preference
Property unless the sale of all of the Assets is consummated by the Closing Date
in accordance with the terms of this Agreement. In furtherance of the foregoing,
Seller’s obligation hereunder to sell the Preference Properties to Purchaser is
expressly conditioned upon the consummation by the Closing Date of the sale of
all of the Assets in accordance with the terms of this Agreement, either by
conveyance to Purchaser or conveyance pursuant to an applicable Preference
Right; provided that, nothing herein is intended or shall operate to extend or
apply any Preference Right to any portion of the Assets which is not otherwise
burdened thereby. Time is of the essence with respect to the parties’ agreement
to consummate the sale of the Assets by the Closing Date (or by the delayed
Closing Date pursuant to Section 6.6(d)).
Section 6.7    Tax Matters.
(a)    Subject to the provisions of Section 11.3, Seller shall be responsible
for all Taxes related to the Assets (other than ad valorem, property, severance,
Hydrocarbon production and similar Taxes based upon or measured by the ownership
or operation of the Assets or the production of Hydrocarbons therefrom, which
are addressed in Section 1.4 and below) attributable to any period of time at or
prior to the Closing Date, and Purchaser shall be responsible for all such Taxes
related to the Assets attributable to any period of time after the Closing Date.
Regardless of which party is responsible, Seller shall handle payment to the
appropriate Governmental Body of all Taxes with respect to the Assets which are
required to be paid prior to Closing (and shall file all Tax Returns with
respect to such Taxes). Ad valorem, real property, personal property, severance,
production, and similar Taxes attributable to the Properties (“Property Taxes”)
shall be prorated as of the Effective Time (as determined pursuant to the
following sentences), with the portion of Property Taxes attributable to the
period ending immediately prior to the Effective Time being allocated to Seller,
and the portion of Property Taxes attributable to the period beginning at the
Effective Time being allocated to Purchaser. The Parties understand and agree
that Property Taxes based on production during a calendar year, including any
severance Taxes, shall be prorated based upon production before and at and after
the Effective Time. Thus, for example, tax year

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2013 taxes (as based on 2012 production) are solely the responsibility of Seller
under this Section, and tax year 2014 taxes (based on 2013 production) shall be
prorated based upon production before the Effective Time (which shall be the
responsibility of Seller) and at and after the Effective Time (which shall be
the responsibility of Purchaser). Seller shall file Tax Returns for tax year
2013 Property Taxes. The Parties further acknowledge that, absent the transfer
of the Properties by Seller to Purchaser pursuant to the terms hereof, Seller
would be permitted to recoup in the normal course of business a portion of
Property Taxes based on production from the Properties that is attributable to
interest owners on whose behalf Seller paid such Property Taxes, and that after
such transfer Seller may be unable to exercise, or otherwise enforce, its rights
with respect to such recoupment. Purchaser agrees to use its commercially
reasonable efforts to recoup any such Property Taxes and shall cooperate with
Seller, to the extent reasonably requested by Seller, in the recoupment of any
such Property Taxes. All other Property Taxes (i.e., Property Taxes not based on
production) shall be prorated based upon the percentage of the assessment period
occurring before and after the Effective Time. Seller shall deliver to Purchaser
within thirty (30) days of filing copies of all Tax Returns filed by Seller
after the Closing Date relating to the Assets and any supporting documentation
provided by Seller to taxing authorities, excluding Tax Returns related to
income tax, franchise tax, or other similar Taxes.
(b)    Purchaser agrees to cooperate (at no cost or liability to Purchaser) with
Seller so that Seller’s transfer of the Assets to Purchaser shall, at Seller’s
election, be accomplished in a manner enabling the transfer to qualify as a part
of a like-kind exchange of property by Seller within the meaning of Section 1031
of the Code. If Seller so elects, Purchaser shall reasonably cooperate with
Seller to effect such like-kind exchange, which cooperation shall include,
without limitation, taking such actions as Seller reasonably requests in order
to pay the Purchase Price in a manner which enables such transfer to qualify as
part of a like-kind exchange of property within the meaning of Section 1031 of
the Code, and Purchaser agrees that Seller may assign its rights (but not its
obligations) under this Agreement to a qualified intermediary as defined in
Treasury Regulations Section 1.1031(k) – 1(g)(4)(iii) under United States
Treasury Regulations, to qualify the transfer of the Assets as a part of a
like-kind exchange of property within the meaning of Section 1031 of the Code.
Section 6.8    NORM, Wastes and Other Substances.
Purchaser acknowledges that the Assets have been used for exploration,
development, and production Hydrocarbons and that there may be petroleum,
produced water, wastes, or other substances or materials located in, on or under
the Properties or associated with the Assets. equipment and sites included in
the Assets may contain asbestos, hazardous substances, or NORM. NORM may affix
or attach itself to the inside of wells, materials, and equipment as scale, or
in other forms. The wells, materials, and equipment located on the Properties or
included in the Assets may contain NORM and other wastes or hazardous
substances. NORM containing material and/or other wastes or hazardous substances
may have come in contact with various environmental media, including without
limitation, water, soils or sediment. Special procedures may be required for the
assessment, remediation, removal, transportation, or disposal of environmental
media, wastes, asbestos, hazardous substances, and NORM from the Assets.
Section 6.9    Further Assurances.
After Closing, Seller and Purchaser each agrees to take such further actions and
to execute, acknowledge and deliver all such further documents as are reasonably
requested by the other

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party for carrying out the purposes of this Agreement or of any document
delivered pursuant to this Agreement.
Section 6.10    Parent Company Guaranty.
On or before Closing, Purchaser shall provide Seller with a Parent Company
Guaranty in a form substantially similar to that attached as Exhibit D
acceptable to Seller as to obligation and guarantor.
Section 6.11    Audit Rights.
Purchaser, at Purchaser’s expense, may engage an auditing firm to conduct an
audit of the revenues and expenses of Seller attributable to the Assets for the
period of up to three (3) calendar years prior to the Effective Time through the
Closing Date. Seller agrees, from the date of this Agreement until one hundred
eighty (180) days after Closing, that Seller will cooperate and assist such
auditors, including making available (at Purchaser’s sole cost and expense)
books, records and personnel of Seller reasonably requested by such auditing
firm; provided, however, that in no event shall Seller or its Affiliates be
required to provide any representation letters to any Person as a result of its
obligations under this Section 6.11; and provided further, however, that nothing
in this Section 6.11 shall require any such cooperation or assistance on the
part of Seller to the extent it would interfere unreasonably with the business
or operations of Seller.
Section 6.12    Litigation.
Purchaser acknowledges that certain of the Assets are subject to the outcome of
the litigation disclosed on Schedule 4.7 and that, inter alia, the proceeds of
production from, and the interests of Sellers in, the Properties that are
subject of such litigation may be reduced.
ARTICLE 7
CONDITIONS TO CLOSING

Section 7.1    Conditions of Seller to Closing.
The obligations of Seller to consummate the transactions contemplated by this
Agreement are subject, at the option of Seller, to the satisfaction on or prior
to Closing of each of the following conditions:
(a)    Representations. The representations and warranties of Purchaser set
forth in Article 5 shall be true and correct in all material respects as of the
Closing Date as though made on and as of the Closing Date;
(b)    Performance. Purchaser shall have performed and observed, in all material
respects, all covenants and agreements to be performed or observed by it under
this Agreement prior to or on the Closing Date;
(c)    Pending Litigation. No suit, action or other proceeding by a third party
(including any Governmental Body) seeking to restrain, enjoin or otherwise
prohibit the consummation of the transactions contemplated by this Agreement
shall be pending before any Governmental Body; and

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(d)    Adjustments. The adjustments to the Purchase Price on account of the sum
of all Title Defects discovered prior to the Closing, plus the aggregate losses
from casualties to the Assets and takings of Assets under right of eminent
domain that shall have been made, shall be less than twenty percent (20%) of the
Purchase Price; and

(e)    HSR Act. Any waiting period applicable to the consummation of the
transaction contemplated by this Agreement under the HSR Act shall have lapsed
or terminated (by early termination or otherwise).
Section 7.2    Conditions of Purchaser to Closing.
The obligations of Purchaser to consummate the transactions contemplated by this
Agreement are subject, at the option of Purchaser, to the satisfaction on or
prior to Closing of each of the following conditions:
(a)    Representations. The representations and warranties of Seller set forth
in Article 4 shall be true and correct in all material respects as of the
Closing Date as though made on and as of the Closing Date (other than
representations and warranties that refer to a specified date which need only be
true and correct on and as of such specified date), except for such breaches, if
any, as would not have a Material Adverse Effect;
(b)    Performance. Seller shall have performed and observed, in all material
respects, all covenants and agreements to be performed or observed by it under
this Agreement prior to or on the Closing Date;
(c)    Pending Litigation. No suit, action or other proceeding by a third party
(including any Governmental Body) seeking to restrain, enjoin or otherwise
prohibit the consummation of the transactions contemplated by this Agreement
shall be pending before any Governmental Body;
(d)    Adjustments. The adjustments to the Purchase Price on account of the sum
of all Title Defects discovered prior to the Closing, plus the aggregate losses
from casualties to the Assets and takings of Assets under right of eminent
domain that shall have been made, shall be less than twenty percent (20%) of the
Purchase Price; and

(e)    HSR Act. Any waiting period applicable to the consummation of the
transaction contemplated by this Agreement under the HSR Act shall have lapsed
or terminated (by early termination or otherwise).
ARTICLE 8
CLOSING

Section 8.1    Time and Place of Closing.
(a)    Consummation of the purchase and sale transaction as contemplated by this
Agreement (the “Closing”), shall, unless otherwise agreed to in writing by
Purchaser and Seller, take place at the offices of Seller located at 1201 Lake
Robbins Dr, The Woodlands, TX 77380, at 10:00 a.m., local time, on January 31,
2014 or if all conditions in Article 7 to be satisfied prior to Closing have not
yet been satisfied or waived, as soon thereafter as such conditions have been
satisfied or waived, subject to the rights of the parties under Article 9.

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(b)    The date on which the Closing occurs is herein referred to as the
“Closing Date.”
Section 8.2    Obligations of Seller at Closing.
At the Closing, upon the terms and subject to the conditions of this Agreement,
Seller shall deliver or cause to be delivered to Purchaser, the following:
(a)    the Conveyance and official forms for transfer of state and federal
leases, in sufficient duplicate originals to allow recording in all appropriate
jurisdictions and offices, duly executed by Seller;
(b)    letters-in-lieu of transfer orders covering the Assets, duly executed by
Seller; and
(c)    a certificate duly executed by an authorized corporate officer of Seller,
dated as of Closing, certifying on behalf of Seller that the conditions set
forth in Sections 7.2(a) and 7.2(b) have been fulfilled.
(d)    one (1) original executed statement described in Treasury Regulation
§1.1445-2(b)(2) certifying that Seller is not a foreign person within the
meaning of the Code.
(e)    releases of any liens created by Seller on the Properties, executed in
recordable form, in form and substance reasonably agreeable to Purchaser.
Section 8.3    Obligations of Purchaser at Closing.
At the Closing, upon the terms and subject to the conditions of this Agreement,
Purchaser shall deliver or cause to be delivered to Seller, the following:
(a)    a wire transfer of the Closing Payment in same-day funds;
(b)    the Conveyance and official forms for transfer of state and federal
leases, duly executed by Purchaser;
(c)    letters-in-lieu of transfer orders covering the Assets, duly executed by
Purchaser;
(d)    a certificate by an authorized corporate officer of Purchaser, dated as
of Closing, certifying on behalf of Purchaser that the conditions set forth in
Sections 7.1(a) and 7.1(b) have been fulfilled; and
(e)    a duly executed original of the Parent Company Guaranty described in
Section 6.10.
Section 8.4    Closing Payment & Post-Closing Purchase Price Adjustments.
(a)    Not later than three (3) Business Days prior to the Closing Date, Seller
shall prepare and deliver to Purchaser, based upon the best information
available to Seller, a preliminary settlement statement estimating the Adjusted
Purchase Price after giving effect to all Purchase Price adjustments provided
for in this Agreement and application of the Deposit. The estimate delivered in
accordance with this Section 8.4(a) shall constitute the dollar amount to be
paid by Purchaser to Seller at the Closing (the “Closing Payment”).

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(b)    Within one hundred twenty (120) days after the Closing Date, Seller will
prepare and deliver to Purchaser, in accordance with customary industry
accounting practices, (i) the “Final Settlement Statement,” setting forth each
adjustment to or payment that was not reflected in, or was estimated for
purposes of, the preliminary settlement statement and showing the calculation
thereof and (ii) reasonable backup documentation to verify the accuracy of the
Final Settlement Statement. Within thirty (30) days after receipt of the Final
Settlement Statement, Purchaser shall deliver to Seller a written report
containing all of the changes (including explanations therefor) that Purchaser
proposes to be made to the Final Settlement Statement. If Purchaser does not
deliver a written report to Seller within such 30-day period, the Final
Settlement Statement shall be deemed correct. The Parties shall reasonably agree
with respect to the changes proposed, if any, no later than thirty (30) days
after Seller’s delivery of the proposed Final Settlement Statement to Purchaser.
Any amounts owed as a result of the Final Settlement Statement shall be paid
within fifteen (15) Business Days after the date when the amounts are agreed
upon by the Parties, are deemed correct as provided above or the Parties receive
the decision of the Accounting Expert, and the amounts included in the Final
Settlement Statement shall be final and binding between the Parties and not
subject to further audit or other legal proceeding.
(c)    If the Parties are unable to resolve any dispute concerning the Final
Settlement Statement, each Party shall have the right to submit its final
position regarding the Final Settlement Statement to expert determination
pursuant to this Section 8.4. Any such expert determination shall be commenced,
if at all, no later than sixty (60) days after Purchaser’s receipt of the Final
Settlement Statement.
(d)    The Accounting Expert shall be KPMG LLP (the “Accounting Expert”).
(e)    In the event the Accounting Expert named in Section 8.4(d) is unavailable
due to death, disability or incapacity, or is unwilling to serve as the
Accounting Expert, then the Parties shall endeavor to mutually agree on an
alternate Person to serve as the Accounting Expert within ten (10) Business Days
after receiving notice that the initial Accounting Expert is unavailable or
unwilling to serve. If the Parties cannot so agree, then the Parties shall
request that the CPR select an Accounting Expert who the Parties acknowledge and
agree is a neutral accountant that does not represent and has not recently
represented either Party and who has at least 10 years of experience in oil and
gas acquisition and divestiture accounting.
(f)    Within ten (10) Business Days after the selection of the Accounting
Expert, the Parties shall provide to the Accounting Expert the following
materials:
(i)    The list of disputed amounts, each Party’s final proposal with respect to
each disputed amount under Section 8.4(c), and each Party shall provide such
evidence as its deems appropriate to support its position with respect to each
disputed amount; and
(ii)    Article 2 and this Article 8 together with any definitions of terms used
in such Articles and Sections, but no other provisions of this Agreement.
(g)    The Accounting Expert, once appointed, shall have no ex parte
communications with any Party concerning the determination required hereunder.
All communications between any Party and the Accounting Expert shall be
conducted in writing, with copies sent simultaneously to the other Party in the
same manner, or at a meeting in Denver, Colorado, to which the

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representatives of both Parties have been invited and of which such parties have
been provided at least five days’ notice.
(h)    The Accounting Expert shall make its determination and provide to the
Parties written findings within 30 days after it has received the materials
under Section 8.4 (f). The decision of the Accounting Expert shall be final,
binding on the Parties and non-appealable and shall be limited to awarding only
the final proposal of one Party or the other Party with respect to each disputed
amount (as exchanged by the Parties under Section 8.4(c). The Accounting Expert
shall make a separate determination with respect to each disputed amount
submitted and shall provide a detailed written finding supporting such
determination in accordance with Section 8.4(j).
(i)    Each Party shall each bear its own legal fees and other costs of
preparing and presenting its case. Seller shall bear one-half and Purchaser
shall bear one-half of the costs and expenses of the Accounting Expert,
including any costs incurred by the Accounting Expert that are attributable to
the consultation of any third party.
(j)    The written finding of the Accounting Expert will set forth the
Accounting Expert’s finding as to each disputed amount, including the Accounting
Expert’s rationale for the award.
(k)    The Accounting Expert shall act as an expert for the limited purpose of
determining the specific matters disputed and shall not act as an arbitrator and
may not award damages, interest or penalties to either Party with respect to any
matter. The Parties intend that the procedures set forth in this Section 8.4
shall not constitute or be handled as arbitration proceedings under the Federal
Arbitration Act or any applicable state arbitration act, and that the provisions
of this Section 8.4 shall be specifically enforceable.
(l)    Neither Party shall be entitled to conduct discovery of the other Party
in connection with the determinations and proceeding set forth in this Section
8.4. In making its findings, the Accounting Expert shall be bound by and shall
resolve any dispute in accordance with the substantive law of the State of
Wyoming and federal law as enunciated by the federal courts situated in the
Tenth Circuit, except that the Accounting Expert shall not be bound by the rules
of evidence and may consider any documentation it determines is relevant and
credible.
(m)    All payments made or to be made hereunder to Seller shall be by
electronic transfer of immediately available funds to the account of Anadarko
E&P Onshore LLC for the credit of Seller or to such other bank and account as
may be specified by Seller in writing. All payments made or to be made hereunder
to Purchaser shall be by electronic transfer of immediately available funds to a
bank and account specified by Purchaser in writing to Seller.
ARTICLE 9
TERMINATION

Section 9.1    Termination.
Unless terminated earlier pursuant to other provisions provided herein, this
Agreement may be terminated at any time prior to Closing: (i) by the mutual
prior written consent of Seller and Purchaser; (ii) by Seller if the conditions
in Section 7.1 are not satisfied on the Closing Date; (iii) by Purchaser if the
conditions in Section 7.2 are not satisfied on the Closing Date; or (iv) by
Seller

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or Purchaser, if Closing has not occurred on or before February 17, 2014. A
Party shall not have the right to terminate this Agreement under this Section
9.1 if it is then in breach of this Agreement.
Section 9.2    Effect of Termination.
If this Agreement is terminated pursuant to Section 9.1, this Agreement shall
become void and of no further force or effect (except for the provisions of
Sections 4.6, 5.5, 6.4, 9.3, 10.4(b)(vi), 10.8, 10.9, 11.6, 11.12 and 11.15 of
this Agreement all of which shall continue in full force and effect) and Seller
shall be free immediately to enjoy all rights of ownership of the Assets and to
sell, transfer, encumber or otherwise dispose of the Assets to any party without
any restriction under this Agreement. Notwithstanding anything to the contrary
in this Agreement, except as provided in Section 9.3, the termination of this
Agreement under Section 9.1(i) or 9.1(ii) shall not relieve any party from
liability for any willful or negligent failure to perform or observe in any
material respect any of its agreements or covenants contained herein which are
to be performed or observed at or prior to Closing. In the event this Agreement
terminates under Section 9.1(i) or 9.1(ii) because a Party has willfully or
negligently failed to perform or observe in any material respect any of its
agreements or covenants contained herein which are to be performed at or prior
to Closing, then the other Party shall be entitled to all remedies available at
law or in equity and shall be entitled to recover court costs and attorneys’
fees in addition to any other relief to which such Party may be entitled, except
as provided in Section 9.3.
Section 9.3    Distribution of Deposit Upon Termination.
(a)    If Seller terminates this Agreement (i) because Purchaser wrongfully
fails to tender performance at Closing; or (ii) as the result of any default or
breach by Purchaser of Purchaser's obligations hereunder, and Seller is ready to
tender performance at Closing and is not in default or breach of this Agreement,
then Seller may retain the Deposit plus accrued interest as liquidated damages,
free of any claims by Purchaser or any other Person with respect thereto.
Purchaser’s failure to close shall not be considered wrongful if Purchaser has
validly terminated this Agreement under Section 9.1(iii) or Section 9.1(iv)
(provided in the case of termination pursuant to Section 9.1(iv) that Purchaser
has not wrongfully failed to tender performance). The remedy set forth herein
shall be Seller’s sole and exclusive remedy for Purchaser’s failure to close the
transactions described in this Agreement and Seller expressly waives any and all
other remedies, legal and equitable, that it otherwise may have had for
Purchaser’s failure to close. It is expressly stipulated by the parties that the
actual amount of damages resulting from such a termination would be difficult if
not impossible to determine accurately because of the unique nature of this
Agreement, the unique nature of the Assets, the uncertainties of applicable
commodity markets and differences of opinion with respect to such matters, and
that the liquidated damages provided for herein are a reasonable estimate by the
parties of such damages.
(b)    If this Agreement is terminated for any reason other than the reasons set
forth in Section 9.3(a), then Seller shall deliver the Deposit plus accrued
interest to Purchaser within five (5) Business Days following such termination,
free of any claims by Seller or any other Person with respect thereto, and
neither Party shall have any right or remedy against the other Party as a result
of such termination; provided, however, that the provisions of Sections 4.6,
5.5, 6.4, 9.2, 10.4(b)(vi), 10.8, 10.9, 11.6, 11.12 and 11.15 of this Agreement
shall continue in full force and effect.

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ARTICLE 10
POST-CLOSING OBLIGATIONS; INDEMNIFICATION;
LIMITATIONS; DISCLAIMERS AND WAIVERS

Section 10.1    Receipts.
Except as otherwise provided in this Agreement, any Hydrocarbons produced from
or attributable to the Assets (and all products and proceeds attributable
thereto) and any other income, proceeds, receipts and credits attributable to
the Assets which are not reflected in the adjustments to the Purchase Price
following the final adjustment pursuant to Section 8.4(b) shall be treated as
follows: (a) all Hydrocarbons produced from or attributable to the Assets (and
all products and proceeds attributable thereto) and all other income, proceeds,
receipts and credits earned with respect to the Assets to which Purchaser is
entitled under Section 1.4 shall be the sole property and entitlement of
Purchaser, and, to the extent received by Seller (and not accounted for in the
Final Settlement Statement), Seller shall fully disclose, account for and remit
the same promptly to Purchaser, and (b) all Hydrocarbons produced from or
attributable to the Assets (and all products and proceeds attributable thereto)
and all other income, proceeds, receipts and credits earned with respect to the
Assets to which Seller is entitled under Section 1.4 shall be the sole property
and entitlement of Seller and, to the extent received by Purchaser (and not
accounted for in the Final Settlement Statement), Purchaser shall fully
disclose, account for and remit the same promptly to Seller.
Section 10.2    Expenses.
Except as otherwise provided in this Agreement, any Property Costs which are not
reflected in the adjustments to the Purchase Price following the final
adjustment pursuant to Section 8.4(b) shall be treated as follows: (a) all
Property Costs for which Seller is responsible under Section 1.4 shall be the
sole obligation of Seller and Seller shall promptly pay, or if paid by
Purchaser, promptly reimburse Purchaser for (to the extent not accounted for in
the Final Settlement Statement) and hold Purchaser harmless from and against
same; and (b) all Property Costs for which Purchaser is responsible under
Section 1.4 shall be the sole obligation of Purchaser and Purchaser shall
promptly pay, or if paid by Seller, promptly reimburse Seller for (to the extent
not accounted for in the Final Settlement Statement) and hold Seller harmless
from and against same. Seller is entitled to resolve all joint interest audits
and other audits of Property Costs (including Property Taxes) covering periods
for which Seller is in whole or in part responsible, provided that Seller shall
not agree to any adjustments to previously assessed costs for which Purchaser is
liable without the prior written consent of Purchaser, such consent not to be
unreasonably withheld. Seller shall provide Purchaser with a copy of all
applicable audit reports and written audit agreements received by Seller and
relating to periods for which Purchaser is partially responsible.
Section 10.3    Assumed Seller Obligations.
Without limiting Purchaser’s rights to indemnity under this Article 10, on the
Closing Date Purchaser shall assume and hereby agrees to fulfill, perform, pay
and discharge (or cause to be fulfilled, performed, paid or discharged),
regardless of whether such obligations or liabilities arose prior to, on or
after the Effective Time, all of the obligations and liabilities of Seller,
known or unknown, with respect to the Assets, including but not limited to
obligations to (i) furnish makeup gas according to the terms of applicable gas
sales, gathering or transportation contracts, and to satisfy all other gas
balancing obligations, if any, (ii) comply with the terms of the Amended Gas

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Gathering and Conditioning Agreement (K8605) dated October 1, 2009 between
Mountain Gas Resources LLC and Lance Oil and Gas Company, Inc. as it relates to
the NGL Purchase Agreement dated November 22, 2013 between Seller and Anadarko
Energy Services Company, (iii) pay working interests, royalties, overriding
royalties and other interests held in suspense to the extent set forth in
Schedule 10.3, (iv) pay its share of the costs to properly plug and abandon any
and all wells, including inactive wells or temporarily abandoned wells, drilled
on the Properties or otherwise pursuant to the Assets, (v) pay its share of the
costs to replug any well, wellbore, or previously plugged well on the Properties
to the extent required by Governmental Body, (vi) pay its share of the costs to
dismantle, salvage and remove any equipment, structures, materials, platforms,
flowlines, and property of whatever kind related to or associated with
operations and activities conducted on the Properties or otherwise pursuant to
the Assets, (vii) pay its share of the cost to clean up, restore and/or
remediate the premises covered by or related to the Assets in accordance with
applicable agreements and Laws, (viii) pay its share of the costs to remediate
any contamination of groundwater, surface water, soil, equipment or pipelines
under applicable Environmental Laws, and (ix) perform all obligations applicable
to or imposed on the lessee or owner under the Leases and related contracts, or
as required by applicable Laws (all of said obligations and liabilities, subject
to the exclusions below, herein being referred to as the “Assumed Seller
Obligations”); provided, however, that Purchaser does not accrue any rights or
assume any obligations or liabilities of Seller to the extent that they are the
continuing responsibility of the Seller under Sections 10.1 and 10.2. or with
respect to which Purchaser is entitled to indemnification from Seller under this
Agreement.
Section 10.4    Indemnities.
(a)    Definitions.
“Claim” or “Claims” means, unless specifically provided otherwise, all claims
(including, but not limited to, those for damage to property, bodily injury and
death, personal injury, illness, disease, maintenance, cure, loss of parental
and spousal consortium, wrongful death, loss of support, and wrongful
termination of employment), damages, liabilities, losses, demands, liens,
encumbrances, fines, penalties, causes of action of any kind (including actions
for indirect, consequential, punitive and exemplary damages), obligations, costs
(including payment of all reasonable attorneys’ fees and costs of litigation),
judgments, interest, and awards or amounts, of any kind or character, whether
under judicial proceedings, administrative proceedings, investigation by a
Governmental Body or otherwise, or conditions in the premises of or attributable
to any Person or Persons or any party or parties, breach of representation or
warranty (expressed or implied), under any theory of tort, contract, breach of
contract (including any Claims which arise by reason of indemnification or
assumption of liability contained in other contracts entered into by an
Indemnified Party hereunder), at law or in equity, under statute, or otherwise,
arising out of, or incident to or in connection with this Agreement or the
ownership or operation of the Assets.
The phrase “REGARDLESS OF FAULT” means WITHOUT REGARD TO THE CAUSE OR CAUSES OF
ANY CLAIM, INCLUDING, WITHOUT LIMITATION, EVEN THOUGH A CLAIM IS CAUSED IN WHOLE
OR IN PART BY:
THE NEGLIGENCE (WHETHER SOLE, JOINT, CONCURRENT, COMPARATIVE, CONTRIBUTORY,
ACTIVE, PASSIVE, OR OTHERWISE), STRICT LIABILITY, OR OTHER FAULT OF PURCHASER
INDEMNITEES, SELLER INDEMNITEES, INVITEES AND/OR THIRD

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PARTIES, BUT EXCLUDING THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SELLER;
AND/OR
A PRE-EXISTING DEFECT, WHETHER PATENT OR LATENT, OF THE PREMISES OF PURCHASER’S
PROPERTY OR SELLER’S PROPERTY (INCLUDING WITHOUT LIMITATION THE ASSETS),
INVITEES AND/OR THIRD PARTIES.
(b)    Purchaser Indemnity Obligation. Subject only to Section 10.4(c) and the
limitations contained in Section 10.7, Purchaser shall be responsible for and
indemnify, defend, release and hold harmless Seller Indemnitees from and against
all Claims caused by, arising out of or resulting from:
(i)    the Assumed Seller Obligations, REGARDLESS OF FAULT;
(ii)    the ownership, use or operation of the Assets from and after the
Effective Time, REGARDLESS OF FAULT;
(iii)    Purchaser’s breach of any of Purchaser’s covenants or agreements
contained in Article 6, REGARDLESS OF FAULT;
(iv)any breach of any representation or warranty made by Purchaser contained in
Article 5 of this Agreement or in the certificate delivered by Purchaser at
Closing pursuant to Section 8.3(d), REGARDLESS OF FAULT;
(v)    Environmental Laws, Environmental Liabilities, the release of materials
into the environment or protection of human health, safety, natural resources or
the environment, or any other environmental condition of the Assets, REGARDLESS
OF FAULT; and
(vi)    Purchaser Indemnitees’ access under Section 6.1, or otherwise, to the
Assets, the Records and other related activities or information prior to the
Closing, REGARDLESS OF FAULT.
(c)    Seller Indemnity Obligation. Seller shall be responsible for and
indemnify, defend, release and hold harmless Purchaser Indemnitees from and
against all Claims caused by, arising out of or resulting from:
(i)    the ownership, use or operation of the Excluded Assets;

(ii)    Seller’s breach of any of Seller’s covenants or agreements contained in
Article 6;

(iii)    any breach of any representation or warranty made by Seller contained
in Article 4 of this Agreement or confirmed in the certificate delivered by
Seller at Closing; and

(iv)    Claims (A) arising from Seller’s gross negligence or willful misconduct
prior to the Effective Time; (B) relating to any personal injury or death
arising from or attributable to any event occurring prior to the Effective Time;
(C) relating to amounts owed to Seller’s employees, officers, directors or
Affiliates prior to the Effective Time; or (D) arising from or attributable to
any pending or threatened litigation against Seller as of the Closing Date,
except that the indemnification in provision (D) shall not apply to the any
amounts owed

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as a result of a judgment or order in the litigation disclosed on Schedule 4.7
that are attributable to proceeds of production for periods after the Effective
Time or a reduction in the interest owned in a Property as a result of such
judgment or order and (2) the portion of attorneys’ fees and expenses for
motions or other proceedings filed in such litigation that relate to periods
after the Effective Time; provided, that, for avoidance of doubt, the
indemnification in provision (D) shall apply to any amounts owed as a result of
any pending motion, judgment, order, appeal or other proceeding in the
litigation disclosed on Schedule 4.7 that are attributable to proceeds of
production for, or disallowed expenses relating to, periods before the Effective
Time.
(d)    Additional Provisions.
It is the intention of the parties that this Article 10 shall govern the
allocation of risks and liabilities between Purchaser and Seller except to the
extent that it is expressly stated (whether elsewhere in this Article 10 or in
some other Article hereof) that the provisions of such other Article (or part
thereof) shall control over the terms of all or part of this Article 10.
Notwithstanding anything to the contrary contained in this Agreement, this
Section 10.4 contains the parties’ exclusive remedy against each other with
respect to breaches of the representations, warranties, covenants and agreements
of the parties contained in Articles 4, 5 and Sections 6.1, 6.2, 6.3, 6.4 and
6.5 and the affirmations of such representations, warranties, covenants and
agreements contained in the certificate delivered by each party at Closing
pursuant to Sections 8.2(c) or 8.3(d), as applicable.
Claims for Property Costs shall be exclusively handled pursuant to the Purchase
Price adjustments in Section 2.2, and pursuant to Section 10.2, and shall not be
subject to indemnification under this Section 10.4.
In connection with Purchaser Indemnitees’ access to the Assets prior to Closing,
the parties acknowledge that such access may be subject to boarding agreements,
releases or other agreements required by Seller or the operator of non-Seller
Operated Properties. In the event of a conflict between the provisions of such
agreements and Section 10.4(b)(vi) of this Agreement, Section 10.4(b)(vi) of
this Agreement shall control.
Section 10.5    Indemnification Actions.
All claims for indemnification under Section 10.4 shall be asserted and resolved
as follows:
(a)    For purposes of this Article 10, the term “Indemnifying Party” shall mean
the party or parties having an obligation to indemnify another party or parties
pursuant to the terms of this Agreement. The term “Indemnified Party” shall mean
the party or parties having the right to be indemnified by another party or
parties pursuant to the terms of this Agreement.
(b)    To make a claim for indemnification (“Indemnity Claim”) under Section
10.4, and/or any other Article (or part thereof) expressly stating that it
controls over the terms of this Article 10, an Indemnified Party shall notify
the Indemnifying Party in writing of its Indemnity Claim, including the specific
details of and specific basis under this Agreement for its Indemnity Claim (the
“Claim Notice”). The Indemnified Party shall provide its Claim Notice promptly
after the Indemnified Party has actual knowledge of the Claim for which it seeks
indemnification and shall enclose a copy of all papers (if any) served with
respect to the Claim; provided that the failure of

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any Indemnified Party to give notice of a Claim as provided in this Section 10.5
shall not relieve the Indemnifying Party of its obligations under Section 10.4
except to the extent such failure results in insufficient time being available
to permit the Indemnifying Party to effectively defend against the Claim or
otherwise prejudices the Indemnifying Party’s ability to defend against the
Claim. In the event that the Indemnity Claim is based upon an inaccuracy or
breach of a representation, warranty, covenant or agreement, the Claim Notice
shall specify the representation, warranty, covenant or agreement which was
inaccurate or breached.
(c)    The Indemnifying Party shall have thirty (30) days from its receipt of
the Claim Notice to notify the Indemnified Party whether it admits or denies its
liability to defend the Indemnified Party against the relevant Claim at the sole
cost and expense of the Indemnifying Party. The Indemnified Party is authorized,
prior to and during such 30-day period, to file any motion, answer or other
pleading that it shall deem necessary or appropriate to protect its interests or
those of the Indemnifying Party and that is not prejudicial to the Indemnifying
Party.
(d)    If the Indemnifying Party admits its liability to indemnify the
Indemnified Party, it shall have the right and obligation to diligently defend,
at its sole cost and expense, the Claim. The Indemnifying Party shall have full
control of such defense and proceedings, including any compromise or settlement
thereof. If requested by the Indemnifying Party, the Indemnified Party agrees to
cooperate in contesting any Claim which the Indemnifying Party elects to
contest. The Indemnified Party may participate in, but not control, any defense
or settlement of any Claim controlled by the Indemnifying Party pursuant to this
Section 10.5(d). An Indemnifying Party shall not, without the written consent of
the Indemnified Party, (i) settle any Claim or consent to the entry of any
judgment with respect thereto which does not include an unconditional written
release of the Indemnified Party from all liability in respect of such Claim, or
(ii) settle any Claim or consent to the entry of any judgment with respect
thereto in any manner that may materially and adversely affect the Indemnified
Party (other than as a result of money damages covered by the indemnity). For
avoidance of doubt, the provisions of this paragraph (d) shall apply to
indemnification for the proceedings in Doyle Hartman, et. al., Plaintiffs v.
Lance Oil & Company, et. al. and any related cases.
(e)    If the Indemnifying Party does not admit its liability to indemnify the
Indemnified Party or admits its liability but fails to diligently prosecute or
settle the Claim, then the Indemnified Party shall have the right to defend
against the Claim at the sole cost and expense of the Indemnifying Party, with
counsel of the Indemnified Party’s choosing, subject to the right of the
Indemnifying Party to admit its liability and assume the defense of the Claim at
any time prior to settlement or final determination thereof. If the Indemnifying
Party has not yet admitted its liability for a Claim, the Indemnified Party
shall send written notice to the Indemnifying Party of any proposed settlement
and the Indemnifying Party shall have the option for ten (10) Business Days
following receipt of such notice to (i) admit in writing its liability to
indemnify the Indemnified Party from and against the Claim and (ii) if liability
is so admitted, reject, in its reasonable judgment, the proposed settlement.
Section 10.6    Release.
(a)    EFFECTIVE WITH CLOSING, PURCHASER RELEASES, REMISES AND FOREVER
DISCHARGES SELLER INDEMNITEES FROM ANY AND ALL CLAIMS, KNOWN OR UNKNOWN, WHETHER
NOW EXISTING OR ARISING IN THE FUTURE, CONTINGENT OR OTHERWISE, WHICH PURCHASER
MIGHT NOW OR SUBSEQUENTLY MAY HAVE AGAINST

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SELLER INDEMNITEES, INCLUDING WITHOUT LIMITATION CLAIMS ARISING OUT OF OR
INCIDENT TO ENVIRONMENTAL LAWS, ENVIRONMENTAL LIABILITIES, THE RELEASE OF
MATERIALS INTO THE ENVIRONMENT OR PROTECTION OF HUMAN HEALTH, SAFETY, NATURAL
RESOURCES OR THE ENVIRONMENT, INCLUDING, WITHOUT LIMITATION, RIGHTS TO
CONTRIBUTION UNDER THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION, AND
LIABILITY ACT OF 1980, AS AMENDED, REGARDLESS OF FAULT BUT EXCLUDING MATTERS FOR
WHICH PURCHASER IS ENTITLED TO INDEMNITY FROM SELLER.
(b)    Purchaser covenants and agrees that it will not attempt to avoid the
effect of the release made by it hereinabove by later arguing that at the time
of the release it did not fully appreciate the extent of any such Claims,
including without limitation, Claims arising under Environmental Laws.
Section 10.7    Limitation on Actions.
(a)    The representations, warranties, covenants and agreements provided for in
this Agreement shall survive Closing and terminate six (6) months after Closing
except that Sections 4.5, 4.6, 5.5 and 5.10 and covenants and agreements
contemplated to be complied with or performed following the Closing shall
survive indefinitely. Representations, warranties, covenants and agreements
shall be of no further force and effect after the date of their expiration,
provided that there shall be no termination of any bona fide Claim asserted
pursuant to this Agreement with respect to the breach of such a representation,
warranty, covenant or agreement on or before its expiration date.
(b)    The indemnities in Sections 10.4(b)(iii), 10.4(b)(iv), 10.4(c)(ii) and
10.4(c)(iii) shall terminate as of the termination date of each respective
representation, warranty, covenant or agreement that is subject to
indemnification, except in each case as to Claims asserted pursuant to this
Agreement with respect to the breach of such representation, warranty, covenant
or agreement on or before such termination date. Purchaser’s indemnities in
Sections 10.4(b)(i), 10.4(b)(ii), 10.4(b)(v), and 10.4(b)(vi) shall continue
without time limit.
Section 10.8    Disclaimers.
(a)    EXCEPT AS AND TO THE EXTENT EXPRESSLY SET FORTH IN ARTICLE 4 OF THIS
AGREEMENT, OR IN THE CERTIFICATE OF SELLER TO BE DELIVERED PURSUANT TO SECTION
8.2(c), OR IN THE CONVEYANCE, (I) SELLER MAKES NO REPRESENTATIONS OR WARRANTIES,
EXPRESS, STATUTORY OR IMPLIED, AND (II) SELLER EXPRESSLY DISCLAIMS ALL LIABILITY
AND RESPONSIBILITY FOR ANY REPRESENTATION, WARRANTY, STATEMENT OR INFORMATION
MADE OR COMMUNICATED (ORALLY OR IN WRITING) TO PURCHASER OR ANY OF ITS
AFFILIATES, EMPLOYEES, AGENTS, CONSULTANTS OR REPRESENTATIVES (INCLUDING,
WITHOUT LIMITATION, ANY OPINION, INFORMATION, PROJECTION OR ADVICE THAT MAY HAVE
BEEN PROVIDED TO PURCHASER BY ANY OFFICER, DIRECTOR, EMPLOYEE, AGENT,
CONSULTANT, REPRESENTATIVE OR ADVISOR OF SELLER OR ANY OF ITS AFFILIATES).
(b)    EXCEPT AS EXPRESSLY REPRESENTED OTHERWISE IN ARTICLE 4 OF THIS AGREEMENT,
OR IN THE CERTIFICATE OF SELLER TO BE DELIVERED PURSUANT TO SECTION 8.2(c), OR
IN THE CONVEYANCE, AND WITHOUT LIMITING THE GENERALITY OF

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THE FOREGOING, SELLER EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY,
EXPRESS, STATUTORY OR IMPLIED, AS TO (I) TITLE TO ANY OF THE ASSETS, (II) THE
CONTENTS, CHARACTER OR NATURE OF ANY DESCRIPTIVE MEMORANDUM, OR ANY REPORT OF
ANY PETROLEUM ENGINEERING CONSULTANT, OR ANY GEOLOGICAL OR SEISMIC DATA OR
INTERPRETATION, RELATING TO THE ASSETS, (III) THE QUANTITY, QUALITY OR
RECOVERABILITY OF PETROLEUM SUBSTANCES IN OR FROM THE ASSETS, (IV) ANY ESTIMATES
OF THE VALUE OF THE ASSETS OR FUTURE REVENUES GENERATED BY THE ASSETS, (V) THE
PRODUCTION OF HYDROCARBONS FROM THE ASSETS, (VI) THE MAINTENANCE, REPAIR,
CONDITION, QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF THE ASSETS, (VII)
THE CONTENT, CHARACTER OR NATURE OF ANY DESCRIPTIVE MEMORANDUM, REPORTS,
BROCHURES, CHARTS OR STATEMENTS PREPARED BY THIRD PARTIES, (VIII) ANY OTHER
MATERIALS OR INFORMATION THAT MAY HAVE BEEN MADE AVAILABLE OR COMMUNICATED TO
PURCHASER OR ITS AFFILIATES, OR ITS OR THEIR EMPLOYEES, AGENTS, CONSULTANTS,
REPRESENTATIVES OR ADVISORS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT OR ANY DISCUSSION OR PRESENTATION RELATING THERETO, AND FURTHER
DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS, STATUTORY OR IMPLIED, OF
MERCHANTABILITY, FREEDOM FROM REDHIBITORY VICES OR DEFECTS, FITNESS FOR A
PARTICULAR PURPOSE OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OF ANY
EQUIPMENT, IT BEING EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES HERETO THAT
PURCHASER SHALL BE DEEMED TO BE OBTAINING THE ASSETS IN THEIR PRESENT STATUS,
CONDITION AND STATE OF REPAIR, “AS IS” AND “WHERE IS” WITH ALL FAULTS AND THAT
PURCHASER HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS AS PURCHASER DEEMS
APPROPRIATE, OR (IX) ANY IMPLIED OR EXPRESS WARRANTY OF FREEDOM FROM PATENT OR
TRADEMARK INFRINGEMENT.
(c)    SELLER HAS NOT AND WILL NOT MAKE ANY REPRESENTATION OR WARRANTY REGARDING
ANY MATTER OR CIRCUMSTANCE RELATING TO ENVIRONMENTAL LAWS, ENVIRONMENTAL
LIABILITIES, THE RELEASE OF MATERIALS INTO THE ENVIRONMENT OR THE PROTECTION OF
HUMAN HEALTH, SAFETY, NATURAL RESOURCES OR THE ENVIRONMENT, OR ANY OTHER
ENVIRONMENTAL CONDITION OF THE ASSETS, AND NOTHING IN THIS AGREEMENT OR
OTHERWISE SHALL BE CONSTRUED AS SUCH A REPRESENTATION OR WARRANTY, AND PURCHASER
SHALL BE DEEMED TO BE TAKING THE ASSETS “AS IS” AND “WHERE IS” FOR PURPOSES OF
THEIR ENVIRONMENTAL CONDITION.
Section 10.9    Waiver of Deceptive Trade Practices Act.
(a)    It is the intention of the parties that Purchaser's rights and remedies
with respect to this transaction and with respect to all acts or practices of
Seller, past, present or future, in connection with this transaction shall be
governed by legal principles other than the Texas Deceptive Trade Practices –
Consumer Protection Act, Tex. Bus. & Com. Code Ann. §17.41 et seq. (the "DTPA").
As such, Purchaser hereby waives the applicability of the DTPA and the to this
transaction and any and all duties, rights or remedies that might be imposed by
the DTPA , whether such duties, rights and remedies are applied directly by the
DTPA itself or indirectly in connection with other statutes; provided, however,
Purchaser does not waive §17.555 of the DTPA. Purchaser acknowledges, represents
and warrants that it is purchasing the goods and/or services covered by this
Agreement for commercial or business use; that it has assets of $25 million or
more according

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to its most recent financial statement prepared in accordance with generally
accepted accounting principles; that it has knowledge and experience in
financial and business matters that enable it to evaluate the merits and risks
of a transaction such as this; and that it is not in a significantly disparate
bargaining position with Seller.
(b)    Purchaser expressly recognizes that the price for which Seller has agreed
to perform its obligations under this Agreement has been predicated upon the
inapplicability of the DTPA and this waiver of the DTPA. Purchaser further
recognizes that Seller, in determining to proceed with the entering into of this
Agreement, has expressly relied on this waiver and the inapplicability of the
DTPA.
Section 10.10    Recording.
As soon as practicable after Closing, Purchaser shall record the Conveyance in
the appropriate counties and/or parishes and provide Seller with copies of all
recorded or approved instruments.
The conveyance in the form attached as Exhibit B is intended to convey all of
the Properties being conveyed pursuant to this Agreement. Certain Properties or
specific portions of the Properties that are leased from, or require the
approval to transfer by, a governmental entity are conveyed under the Conveyance
and also are described and covered other separate assignments made by Seller to
Purchaser on officially approved forms, or forms acceptable to such entity, in
sufficient multiple originals to satisfy applicable statutory and regulatory
requirements. The interests conveyed by such separate assignments are the same,
and not in addition to, the interests conveyed in the Conveyance attached as
Exhibit B. Further, such assignments shall be deemed to contain the special
warranty of title of Seller and all of the exceptions, reservations, rights,
titles, power and privileges set forth herein and in the Conveyance as fully and
only to the extent as though they were set forth in each such separate
assignment.
ARTICLE 11
MISCELLANEOUS

Section 11.1    Counterparts.
This Agreement may be executed in counterparts, each of which shall be deemed an
original instrument, but all such counterparts together shall constitute but one
agreement.
Section 11.2    Notice.
All notices which are required or may be given pursuant to this Agreement shall
be sufficient in all respects if given in writing and delivered personally, by
telecopy or by registered or certified mail, postage prepaid, as follows:

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If to Seller:            Anadarko E & P Onshore LLC
1201 Lake Robbins Dr
The Woodlands, TX 77380
Attn:     Joe Carroll
Phone: (832) 636-3088
E-mail:    joe.carroll@anadarko.com
            
Anadarko E & P Onshore LLC
1099 18th Street, Suite 1800
Denver, Colorado 80202
And            Attn: Susan Aldridge
Phone: (720) 929-6505
Email: susan.aldridge@anadarko.com

 

If to Purchaser:        Encore Energy Partners Operating LLC
                5847 San Felipe, Suite 3000
                Houston, Texas 77057
                Attention: Mark Carnes
                Phone: 832-327-2206
Email:    mcarnes@vnrllc.com
                

With a copy to:        Doherty & Doherty LLP
1717 St. James Place, Suite 520
Houston, Texas 77057
Attention: J. Patrick Doherty
                Phone: 713-572-1163
Email:    Pat@Doherty-law.com
    
                
Either party may change its address for notice by notice to the other in the
manner set forth above. All notices shall be deemed to have been duly given at
the time of receipt by the party to which such notice is addressed.
Section 11.3    Sales or Use Tax Recording Fees and Similar Taxes and Fees.
Purchaser shall bear any sales, use, excise, real property transfer or gain,
gross receipts, goods and services, registration, capital, documentary, stamp or
transfer Taxes, recording fees and similar Taxes and fees incurred and imposed
upon, or with respect to, the property transfers or other transactions
contemplated hereby. Seller will determine, and Purchaser agrees to cooperate
with Seller in determining, sales tax, if any, that is due in connection with
the sale of Assets and Purchaser agrees to pay any such tax to Seller at
Closing. If such transfers or transactions are exempt from any such taxes or
fees upon the filing of an appropriate certificate or other evidence of
exemption, Purchaser will timely furnish to Seller such certificate or evidence.

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Section 11.4    Expenses.
Except as provided in Section 11.3, all expenses incurred by Seller in
connection with or related to the authorization, preparation or execution of
this Agreement, the Conveyance delivered hereunder and the Exhibits and
Schedules hereto and thereto, and all other matters related to the Closing,
including without limitation, all fees and expenses of counsel, accountants and
financial advisers employed by Seller, shall be borne solely and entirely by
Seller, and all such expenses incurred by Purchaser shall be borne solely and
entirely by Purchaser.
Section 11.5    Replacement of Bonds, Letters of Credit and Guarantees.
The parties understand that none of the bonds, letters of credit and guarantees,
if any, posted by Seller with Governmental Bodies and relating to the Assets may
be transferable to Purchaser. Promptly following Closing, Purchaser shall
obtain, or cause to be obtained in the name of Purchaser, replacements for such
bonds, letters of credit and guarantees, to the extent such replacements are
necessary to permit the cancellation of the bonds, letters of credit and
guarantees posted by Seller or to consummate the transactions contemplated by
this Agreement.
Section 11.6    Governing Law and Venue.
THIS AGREEMENT AND THE LEGAL RELATIONS BETWEEN THE PARTIES SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF WYOMING WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS OTHERWISE APPLICABLE TO SUCH DETERMINATIONS.
JURISDICTION AND VENUE WITH RESPECT TO ANY DISPUTES ARISING HEREUNDER SHALL BE
PROPER ONLY IN COLORADO DISTRICT COURT FOR THE CITY AND COUNTY OF DENVER OR
FEDERAL COURT LOCATED IN DENVER, COLORADO, AND EACH PARTY IRREVOCABLY AGREES
THAT ALL DISPUTES PERMITTED TO BE COMMENCED IN COURT SHALL BE HEARD AND
DETERMINED EXCLUSIVELY IN SUCH COURTS. THE PARTIES HEREBY IRREVOCABLY WAIVE, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH THEY MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY BROUGHT IN SUCH COURT
OR ANY DEFENSE OF INCONVENIENT FORUM FOR THE MAINTENANCE OF SUCH DISPUTE. EACH
PARTY AGREES THAT A JUDGMENT IN ANY SUCH DISPUTE MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
Section 11.7    Captions.
The captions in this Agreement are for convenience only and shall not be
considered a part of or affect the construction or interpretation of any
provision of this Agreement.
Section 11.8    Waivers.
Any failure by any party or parties to comply with any of its or their
obligations, agreements or conditions herein contained may be waived in writing,
but not in any other manner, by the party or parties to whom such compliance is
owed. No waiver of, or consent to a change in, any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of, or consent to a
change in, other provisions hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver unless otherwise expressly provided.

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Section 11.9    Assignment.
Subject to Section 6.7(b), no party shall assign all or any part of this
Agreement, nor shall any party assign or delegate any of its rights or duties
hereunder, without the prior written consent of the other party and any
assignment or delegation made without such consent shall be void. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
Section 11.10    Entire Agreement.
The Confidentiality Agreement, this Agreement and the Exhibits and Schedules
attached hereto, and the documents to be executed hereunder constitute the
entire agreement between the parties pertaining to the subject matter hereof,
and supersede all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties pertaining to the subject
matter hereof.
Section 11.11    Amendment.
(a)    This Agreement may be amended or modified only by an agreement in writing
executed by both parties.
(b)    No waiver of any right under this Agreement shall be binding unless
executed in writing by the party to be bound thereby.
Section 11.12    No Third-Party Beneficiaries.
Nothing in this Agreement shall entitle any Person other than Purchaser and
Seller to any Claims, remedy or right of any kind, except as to those rights
expressly provided to Seller Indemnitees and Purchaser Indemnitees (provided,
however, any claim for indemnity hereunder on behalf of a Seller Indemnitee or a
Purchaser Indemnitee must be made and administered by a party to this
Agreement).
Section 11.13    References.
In this Agreement:
(a)    References to any gender includes a reference to all other genders;
(b)    References to the singular includes the plural, and vice versa;
(c)    Reference to any Article or Section means an Article or Section of this
Agreement;
(d)    Reference to any Exhibit or Schedule means an Exhibit or Schedule to this
Agreement, all of which are incorporated into and made a part of this Agreement;
(e)    Unless expressly provided to the contrary, “hereunder”, “hereof’,
“herein” and words of similar import are references to this Agreement as a whole
and not any particular Section or other provision of this Agreement; and

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(f)    “Include” and “including” shall mean include or including without
limiting the generality of the description preceding such term.
Section 11.14    Construction.
Purchaser is a party capable of making such investigation, inspection, review
and evaluation of the Assets as a prudent purchaser would deem appropriate under
the circumstances including with respect to all matters relating to the Assets,
their value, operation and suitability. Each of Seller and Purchaser has had
substantial input into the drafting and preparation of this Agreement and has
had the opportunity to exercise business discretion in relation to the
negotiation of the details of the transactions contemplated hereby. This
Agreement is the result of arm’s-length negotiations from equal bargaining
positions. In the event of a dispute over the meaning or application of this
Agreement, it shall be construed fairly and reasonably and neither more strongly
for nor against either party.
Section 11.15    Limitation on Damages
Notwithstanding any other provision contained elsewhere in this Agreement to the
contrary, the parties acknowledge that this Agreement does not authorize one
party to sue for or collect from the other party its own punitive damages, or
its own consequential or indirect damages in connection with this Agreement and
the transactions contemplated hereby and each party expressly waives for itself
and on behalf of its Affiliates, any and all Claims it may have against the
other party for its own such damages in connection with this Agreement and the
transactions contemplated hereby.
Section 11.16    Conspicuousness.
The parties agree that provisions in this Agreement in "bold" type satisfy any
requirements of the "express negligence rule" and any other requirements at law
or in equity that provisions be conspicuously marked or highlighted.
Section 11.17    Severability.
If any term or other provisions of this Agreement is held invalid, illegal or
incapable of being enforced under any rule of law, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in a materially adverse manner with respect to either
party.
Section 11.18    Time of Essence.
Time is of the essence in this Agreement. If the date specified in this
Agreement for giving any notice or taking any action is not a Business Day (or
if the period during which any notice is required to be given or any action
taken expires on a date which is not a Business Day), then the date for giving
such notice or taking such action (and the expiration date of such period during
which notice is required to be given or action taken) shall be the next day
which is a Business Day.
[SIGNATURES BEGIN ON THE FOLLOWING PAGE]

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IN WITNESS WHEREOF, this Agreement has been signed by each of the parties hereto
on the date first above written.

SELLER:
 
PURCHASER:
ANADARKO E&P ONSHORE LLC
 
ENCORE ENERGY PARTNERS OPERATING LLC

 
 
 
 
By:
/s/ Robert Abendschein
 
By:
/s/ Scott W. Smith
Name:
Robert Abendschein
 
Name:
Scott W. Smith
Title:
VP Corporate Development
 
Title:
President & CEO
 
 
 
 
 

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APPENDIX A
DEFINITIONS

“Accounting Expert” has the meaning set forth in Section 8.4(d).
“Adjustment Period” has the meaning set forth in Section 2.2(a).
“Adjusted Purchase Price” means the Purchase Price after calculating and
applying the adjustments set forth in Section 2.2.
"AFE" means authority for expenditure.
“Affiliates” with respect to any Person, means any person that directly or
indirectly controls, is controlled by or is under common control with such
Person.
“Agreement” means this Purchase and Sale Agreement.
“Aggregate Title Deductible” has the meaning set forth in Section 3.4(i).
 
“Allocated Value” has the meaning set forth in Section 3.4(a).

“Assets” has the meaning set forth in Section 1.2.

“Assumed Seller Obligations” has the meaning set forth in Section 10.3.
“Business Day” means each calendar day except Saturdays, Sundays, and Federal
holidays.
“Claim” or “Claims” has the meaning set forth in Section 10.4(a).
“Claim Notice” has the meaning set forth in Section 10.5(b).
“Closing” has the meaning set forth in Section 8.1(a).
“Closing Date” has the meaning set forth in Section 8.1(b).
“Closing Payment” has the meaning set forth in Section 8.4(a).
“Code” has the meaning set forth in Section 2.3.
“Confidentiality Agreement” has the meaning set forth in Section 6.1.
“Contracts” has the meaning set forth in Section 1.2(d).
“Conveyance” has the meaning set forth in Section 3.1(a).
“CPR” means the Institute for Conflict Prevention and Resolution.
“Cure Period” has the meaning set forth in Section 3.4(c).

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“Defensible Title” has the meaning set forth in Section 3.2.
“Deposit” has the meaning set forth in Section 2.4.
"DTPA" has the meaning set forth in Section 10.9
“Effective Time” has the meaning set forth in Section 1.4(a).
“Environmental Laws” means, as the same may have been amended, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et
seq.; the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq.; the
Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Clean Air
Act, 42 U.S.C. § 7401 et seq. the Hazardous Materials Transportation Act, 49
U.S.C. § 1471 et seq.; the Toxic Substances Control Act, 15 U.S.C. §§ 2601
through 2629; the Oil Pollution Act, 33 U.S.C. § 2701 et seq.; the Emergency
Planning and Community Right-to-Know Act, 42 U.S.C. § 11001 et seq.; the Safe
Drinking Water Act, 42 U.S.C. §§ 300f through 300j; the Federal Insecticide,
Fungicide and Rodenticide Act, 7 U.S.C. § 136 et seq.; the Occupational Safety
and Health Act, 29 U.S.C. § 651 et seq.; the Atomic Energy Act, 42 U.S.C. § 2011
et seq.; and all applicable related law, whether local, state, territorial, or
national, of any Governmental Body having jurisdiction over the property in
question addressing pollution or protection of human health, safety, natural
resources or the environment and all regulations implementing the foregoing.
“Environmental Liabilities” means any and all environmental response costs
(including costs of remediation), damages, natural resource damages,
settlements, consulting fees, expenses, penalties, fines, orphan share,
prejudgment and post-judgment interest, court costs, attorneys’ fees, and other
liabilities incurred or imposed (i) pursuant to any order, notice of
responsibility, directive (including requirements embodied in Environmental
Laws), injunction, judgment or similar act (including settlements) by any
Governmental Body or court of competent jurisdiction to the extent arising out
of any violation of, or remedial obligation under, any Environmental Laws which
are attributable to the ownership or operation of the Assets prior to the
Effective Time or (ii) pursuant to any claim or cause of action by a
Governmental Body or other Person for personal injury, property damage, damage
to natural resources, remediation or response costs to the extent arising out of
any violation of, or any remediation obligation under, any Environmental Laws
which is attributable to the ownership or operation of the Assets prior to the
Effective Time.
“Excluded Assets” has the meaning set forth in Section 1.3.
“Execution Date” means the date on the first page of this Agreement.
“Final Settlement Statement” has the meaning set forth in Section 8.4(b).
“Governmental Body” or “Governmental Bodies” means any federal, state, local,
municipal, or other governments; any governmental, regulatory or administrative
agency, commission, body or other authority exercising or entitled to exercise
any administrative, executive, judicial, legislative, police, regulatory or
taxing authority or power; and any court or governmental tribunal.
"HSR Act" means the Hart-Scott Rodino Antitrust Improvements Act of 1976.
“Hydrocarbons” means oil, gas, condensate and other gaseous and liquid
hydrocarbons or any combination thereof and sulphur extracted from hydrocarbons.

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“Imbalance” or “Imbalances” means over-production of Hydrocarbons or
under-production of Hydrocarbons or over-deliveries or under-deliveries with
respect to Hydrocarbons produced from or allocated to the Assets, regardless of
whether such over-production of Hydrocarbons or under-production of Hydrocarbons
or over-deliveries or under-deliveries arise at the platform, wellhead,
pipeline, gathering system, transportation or other location.
“Indemnified Party” has the meaning set forth in Section 10.5(a).
“Indemnifying Party” has the meaning set forth in Section 10.5(a).
“Indemnity Claim” has the meaning set forth in Section 10.5(b).
“Individual Title Deductible” has the meaning set forth in Section 3.4(i).

“Lands” has the meaning set forth in Section 1.2(a).
“Laws” means all statutes, laws, rules, regulations, ordinances, orders, and
codes of Governmental Bodies.
“Leases” has the meaning set forth in Section 1.2(a).
“Material Adverse Effect” means any effect that is material and adverse to the
ownership, operation or value of the Assets, taken as a whole, and as currently
operated; provided, however, that “Material Adverse Effect” shall not include
(i) any effect resulting from entering into this Agreement or the announcement
of the transactions contemplated by this Agreement; (ii) any effect resulting
from changes in general market, economic, financial or political conditions or
any outbreak of hostilities or war, (iii) any effect that affects the
Hydrocarbon exploration, production, development, processing, gathering and/or
transportation industry generally (including changes in commodity prices or
general market prices in the Hydrocarbon exploration, production, development,
processing, gathering and/or transportation industry generally), and (iv) any
effect resulting from a change in Laws or regulatory policies.
“Material Contracts” has the meaning set for in Section 4.14.
“Net Revenue Interest” has the meaning set forth in Section 3.2(a).
"NORM" means naturally occurring radioactive material.
“Permitted Encumbrances” has the meaning set forth in Section 3.3.
“Person” means any individual, firm, corporation, partnership, limited liability
company, joint venture, association, trust, unincorporated organization,
Governmental Body or any other entity.
“Preference Property” has the meaning set forth in Section 6.6(b).
“Preference Right” means any right or agreement that enables any Person to
purchase or acquire any Asset or any interest therein or portion thereof as a
result of or in connection with (i) the sale, assignment or other transfer of
any Asset or any interest therein or portion thereof or (ii) the execution or
delivery of this Agreement or the consummation or performance of the terms and
conditions contemplated by this Agreement.

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“Properties” has the meaning set forth in Section 1.2(c).
“Property Costs” has the meaning set forth in Section 1.4(b).
“Property Taxes” has the meaning set forth in Section 6.7.
“Purchase Price” has the meaning set forth in Section 2.1.
“Purchaser” means Encore Energy Partners Operating LLC.
"Purchaser Indemnitees" means Purchaser, Purchaser’s Affiliates, and each of
their respective officers, directors, employees, agents, representatives,
insurers, subcontractors, successors and permitted assigns.
“Records” has the meaning set forth in Section 1.2(g).
“REGARDLESS OF FAULT” has the meaning set forth in Section 10.4(a).
“Retained Asset” has the meaning set forth in Section6.6(c).
“Seller” means Anadarko E & P Onshore, LLC.
"Seller Indemnitees" means Seller, Seller’s Affiliates and each of their
respective officers, directors, employees, agents, representatives, insurers,
subcontractors, successors and permitted assigns.
“Taxes” means all federal, state, local, and foreign income, profits, franchise,
sales, use, ad valorem, property, severance, production, excise, stamp,
documentary, real property transfer or gain, gross receipts, goods and services,
registration, capital, transfer, or withholding taxes or other governmental fees
or charges imposed by any taxing authority, including any interest, penalties or
additional amounts which may be imposed with respect thereto.
“Tax Returns” has the meaning set forth in Section 4.8.
“Title Benefit” has the meaning set forth in Section 3.2.

“Title Benefit Amount” has the meaning set forth in Section 3.4(e).

“Title Benefit Notice” has the meaning set forth in Section 3.4(b).

“Title Claim Date” has the meaning set forth in Section 3.4(a).

“Title Defect” has the meaning set forth in Section 3.2.

“Title Defect Amount” has the meaning set forth in Section 3.4(d)(i).

“Title Defect Notice” has the meaning set forth in Section 3.4(a).

“Title Defect Property” has the meaning set forth in Section 3.4(a).

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“Transfer Requirement” means any consent, approval, authorization or permit of,
or filing with or notification to, any Person which is required to be obtained,
made or complied with for or in connection with any sale, assignment or transfer
of any Asset or any interest therein, other than any consent of, notice to,
filing with, or other action by Governmental Bodies in connection with the sale
or conveyance of oil and/or gas leases or interests therein, if they are not
required prior to the assignment of such oil and/or gas leases, or interests or
they are customarily obtained subsequent to the sale or conveyance (including
consents from state agencies).
“Units” has the meaning set forth in Section 1.2(c).
“Wells” has the meaning set forth in Section 1.2(b).

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