Exhibit 10.19

 

Execution Version

 

$750,000,000

 

HALCÓN RESOURCES CORPORATION

9.75% SENIOR NOTES DUE 2020

 

PURCHASE AGREEMENT

 

June 29, 2012

 

BARCLAYS CAPITAL INC.

 

As Representative of the several
Initial Purchasers named in Schedule I attached hereto,

 

c/o Barclays Capital Inc.
745 Seventh Avenue
New York, New York 10019

 

Ladies and Gentlemen:

 

Halcón Resources Corporation, a Delaware corporation (the “Company”), proposes,
upon the terms and conditions set forth in this agreement (this “Agreement”), to
issue and sell to you, as the initial purchasers (the “Initial Purchasers”),
$750,000,000 in aggregate principal amount of its 9.75% Senior Notes due 2020
(the “Notes”).  The Notes will (i) have terms and provisions that are summarized
in the Offering Memorandum (as defined below), and (ii) are to be issued
pursuant to an Indenture (the “Indenture”) to be entered into among the Company,
the Guarantors (as defined below) and U.S. Bank Trust National Association, as
trustee (the “Trustee”).  The Company’s obligations under the Notes, including
the due and punctual payment of interest on the Notes, will be irrevocably and
unconditionally guaranteed (the “Guarantees”) by the guarantors listed in
Schedule II hereto (together the “Guarantors”).  As used herein, the term
“Notes” shall include the Guarantees, unless the context otherwise requires. 
This Agreement is to confirm the agreement concerning the purchase of the Notes
from the Company by the Initial Purchasers.

 

1.             Purchase and Resale of the Notes.  The Notes will be offered and
sold to the Initial Purchasers without registration under the Securities Act of
1933, as amended (the “Securities Act”), in reliance on an exemption pursuant to
Section 4(2) under the Securities Act.  The Company and the Guarantors have
prepared a preliminary offering memorandum, dated June 25, 2012 (the
“Preliminary Offering Memorandum”), a pricing term sheet substantially in the
form attached hereto as Schedule III (the “Pricing Term Sheet”) setting forth
the terms of the Notes omitted from the Preliminary Offering Memorandum and
certain other information and an offering memorandum, dated June 29, 2012 (the
“Offering Memorandum”), setting forth information regarding the Company, the
Guarantors, the Notes and the Exchange Notes (as defined herein) and the
Guarantees and the Exchange Guarantees (as defined herein).  The

 

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Preliminary Offering Memorandum, as supplemented and amended as of the
Applicable Time (as defined below), together with the Pricing Term Sheet and any
of the documents listed on Schedule IV(A) hereto are collectively referred to as
the “Pricing Disclosure Package”.  The Company and the Guarantors hereby confirm
that they have authorized the use of the Pricing Disclosure Package and the
Offering Memorandum in connection with the offering and resale of the Notes by
the Initial Purchasers. “Applicable Time” means 3:00 p.m. (New York City time)
on the date of this Agreement.

 

Any reference to the Preliminary Offering Memorandum, the Pricing Disclosure
Package or the Offering Memorandum shall be deemed to refer to and include each
of the Company’s and GeoResources’ most recent Annual Report on Form 10-K and
all subsequent documents filed with the United States Securities and Exchange
Commission (the “Commission”) pursuant to Section 13(a), 13(c) or 15(d) of the
United States Securities Exchange Act of 1934, as amended (the “Exchange Act”),
on or prior to the date of the Preliminary Offering Memorandum, the Pricing
Disclosure Package or the Offering Memorandum, as the case may be that are
incorporated by reference therein.  Any reference to the Preliminary Offering
Memorandum, Pricing Disclosure Package or the Offering Memorandum, as the case
may be, as amended or supplemented, as of any specified date, shall be deemed to
include any documents filed with the Commission by the Company pursuant to
Section 13(a), 13(c) or 15(d) of the Exchange Act after the date of the
Preliminary Offering Memorandum, Pricing Disclosure Package or the Offering
Memorandum, as the case may be, and prior to such specified date.  All documents
filed under the Exchange Act that are incorporated by reference therein shall be
deemed to be included in the Preliminary Offering Memorandum, Pricing Disclosure
Package or the Offering Memorandum, as the case may be, or any amendment or
supplement thereto are hereinafter called the “Exchange Act Reports.”

 

You have advised the Company that you will offer and resell (the “Exempt
Resales”) the Notes purchased by you hereunder on the terms set forth in each of
the Pricing Disclosure Package and the Offering Memorandum, as amended or
supplemented, solely to (i) persons whom you reasonably believe to be “qualified
institutional buyers” as defined in Rule 144A under the Securities Act (“QIBs”),
and (ii) outside the United States to certain persons who are not U.S. Persons
(as defined in Regulation S under the Securities Act (“Regulation S”)) (such
persons, “Non-U.S. Persons”) in offshore transactions in reliance on Regulation
S.  As used herein, the terms “offshore transaction” and “United States” have
the meanings assigned to them in Regulation S.  Those persons specified in
clauses (i) and (ii) are referred to herein as “Eligible Purchasers.”

 

The Notes are being issued to finance a portion of the consideration for the
acquisition of all the issued and outstanding shares of GeoResources, Inc.
(“GeoResources”) common stock pursuant to the Merger Agreement (the “Merger
Agreement”) between the Company and GeoResources, effective April 24, 2012 which
provides, among other things, for the merger of GeoResources with a wholly-owned
subsidiary of the Company (the “GeoResources Merger”).  On or prior to the
Closing Date, the Company and U.S. Bank Trust National Association, as escrow
agent (the “Escrow Agent”) will execute an escrow agreement, in form and
substance to be agreed between the Escrow Agent, the Trustee and the Initial
Purchasers, which shall conform in all material respects with the description
thereof included in the Pricing Disclosure Package and the Offering Memorandum
(the “Escrow Agreement”), and will direct the deposit in an

 

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escrow account (the “Escrow Account”) with the Escrow Agent, of the aggregate
purchase price of the Notes.  The Escrow Agreement shall provide that the
escrowed funds shall only be released and paid out pursuant to the terms of the
Escrow Agreement.

 

In addition, immediately following the consummation of the GeoResources Merger,
the Representative and each entity acquired in the GeoResources Merger that will
become a Guarantor under the Indenture pursuant to the terms thereof (the
“Acquired Guarantors”) shall execute and deliver a joinder agreement in the form
attached hereto as Exhibit A (the “Joinder Agreement”) whereby each such
Acquired Guarantor will agree to observe and fully perform all of the rights,
obligations and liabilities contemplated herein as if it were an original
signatory hereto.

 

Holders (including subsequent transferees) of the Notes will have the
registration rights set forth in the registration rights agreement in a form
satisfactory to the Initial Purchasers (the “Registration Rights Agreement”)
between the Company, the Guarantors and the Initial Purchasers to be dated the
Closing Date (as defined herein), for so long as such Notes constitute “Transfer
Restricted Securities” (as defined in the Registration Rights Agreement). 
Pursuant to the Registration Rights Agreement, the Company and the Guarantors
will agree to file with the Commission under the circumstances set forth
therein, a registration statement under the Securities Act relating to the
Company’s 9.75% Senior Notes due 2020 (the “Exchange Notes”) and the Guarantors’
Exchange Guarantees (the “Exchange Guarantees” to be offered in exchange for the
Notes and the Guarantees.  Such portion of the offering is referred to as the
“Exchange Offer”.

 

2.

 

(A)          Representations, Warranties and Agreements of the Company and the
Guarantors.  The Company and each of the Guarantors, jointly and severally,
represent, warrant and agree as follows:

 

(a)           When the Notes and Guarantees are issued and delivered pursuant to
this Agreement, such Notes and Guarantees will not be of the same class (within
the meaning of Rule 144A under the Securities Act) as securities of the Company
or the Guarantors that are listed on a national securities exchange registered
under Section 6 of the Exchange Act or that are quoted in a United States
automated inter-dealer quotation system.

 

(b)           Neither the Company nor any subsidiary of the Company is or, after
giving effect to the offer and sale of the Notes and the application of the
proceeds therefrom as described under “Use of Proceeds” in each of the Pricing
Disclosure Package and the Offering Memorandum, will be an “investment company”
or a company “controlled” by an “investment company” within the meaning of the
Investment Company Act of 1940, as amended, and the rules and regulations of the
Commission thereunder.

 

(c)           Assuming the accuracy of your representations and warranties in
Section 3(b), the purchase and resale of the Notes pursuant hereto (including
pursuant to the Exempt Resales) are exempt from the registration requirements of
the Securities Act.  No form of general solicitation or general advertising
within the meaning of Regulation D (including, but not limited

 

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to, advertisements, articles, notices or other communications published in any
newspaper, magazine or similar medium or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising) was used by the Company, the Guarantors, or
any person acting on behalf of the Company or the Guarantors (other than you, as
to whom the Company and the Guarantors make no representation) in connection
with the offer and sale of the Notes.

 

(d)           No directed selling efforts within the meaning of Rule 902 under
the Securities Act were used by the Company, the Guarantors, any affiliate of
the Company or the Guarantors or any person acting on behalf of the Company or
the Guarantors (other than you, as to whom the Company and the Guarantors make
no representation) with respect to Notes sold outside the United States to
Non-U.S. Persons, and the Company and any person acting on its behalf (other
than you, as to whom the Company and the Guarantors make no representation) has
complied with and will implement the “offering restrictions” required by
Rule 902 under the Securities Act.

 

(e)           Each of the Preliminary Offering Memorandum, the Pricing
Disclosure Package and the Offering Memorandum, each as of its respective date,
contains all the information specified in, and meeting the requirements of,
Rule 144A(d)(4) under the Securities Act.

 

(f)            The Preliminary Offering Memorandum, the Pricing Disclosure
Package and the Offering Memorandum have been prepared by the Company and the
Guarantors for use by the Initial Purchasers in connection with the Exempt
Resales.  No order or decree preventing the use of the Preliminary Offering
Memorandum, the Pricing Disclosure Package or the Offering Memorandum, or any
order asserting that the transactions contemplated by this Agreement are subject
to the registration requirements of the Securities Act has been issued, and no
proceeding for that purpose has commenced or is pending or, to the knowledge of
the Company or any of the Guarantors is contemplated.

 

(g)           The Pricing Disclosure Package did not, as of the Applicable Time,
and will not, as of the Closing Date, contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided that no representation or warranty is made as to
information contained in or omitted from the Pricing Disclosure Package in
reliance upon and in conformity with written information furnished to the
Company through the Representatives by or on behalf of any Initial Purchaser
specifically for inclusion therein, which information is specified in
Section 8(e).

 

(h)           The Offering Memorandum will not, as of its date or as of the
Closing Date, contain an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that no
representation or warranty is made as to information contained in or omitted
from the Offering Memorandum in reliance upon and in conformity with written
information furnished to the Company through the Representatives by or on behalf
of any Initial Purchaser specifically for inclusion therein, which information
is specified in Section 8(e).

 

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(i)            Neither the Company nor any Guarantor has made any offer to sell
or solicitation of an offer to buy the Notes that would constitute a “free
writing prospectus” (if the offering of the Notes was made pursuant to a
registered offering under the Securities Act), as defined in Rule 405 under the
Securities Act (a “Free Writing Offering Document”) without the prior consent of
the Representatives; any such Free Writing Offering Document the use of which
has been previously consented to by the Initial Purchasers is listed on Schedule
IV.

 

(j)            The Pricing Disclosure Package, when taken together with each
Free Writing Offering Document listed in Schedule IV(B) hereto, did not, as of
the Applicable Time, and will not, as of the Closing Date, contain an untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; provided that no representation or warranty is made as to
information contained in or omitted from the Pricing Disclosure Package (or Free
Writing Offering Document listed in Schedule IV(B) hereto) in reliance upon and
in conformity with written information furnished to the Company through the
Representatives by or on behalf of any Initial Purchaser specifically for
inclusion therein, which information is specified in Section 8(e).

 

(k)           The Company’s Exchange Act Reports, when they were or are filed
with the Commission, conformed or will conform in all material respects to the
applicable requirements of the Exchange Act and the applicable rules and
regulations of the Commission thereunder.  The Company’s Exchange Act Reports
did not and will not, when filed with the Commission, contain an untrue
statement of material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.

 

(l)            The statistical and market-related data relating to the Company
included in the Pricing Disclosure Package and the Offering Memorandum and the
consolidated financial statements of the Company and its subsidiaries and the
financial statements of the East Texas Assets included and incorporated by
reference in the Pricing Disclosure Package and the Offering Memorandum are
based on or derived from sources that the Company believes to be reliable in all
material respects.

 

(m)          The Company has been duly incorporated, is validly existing and is
in good standing under the laws of State of Delaware, with corporate power and
authority to own, lease and operate its properties and conduct its business as
described in the Pricing Disclosure Package and the Offering Memorandum; the
Company is duly qualified as a foreign corporation to transact business and is
in good standing in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to qualify or to be in good
standing would not have a material adverse effect on the business, properties,
prospects, financial condition, stockholders’ equity or results of operations of
the Company and its subsidiaries taken as a whole (a “Material Adverse Effect”);
each subsidiary of the Company other than those subsidiaries which would not,
individually or in the aggregate, constitute a “significant subsidiary” as
defined in Item 1-02(w) of Regulation S-X (each such “significant subsidiary,” a
“Subsidiary”) is a corporation, partnership, limited liability company or
business trust duly incorporated or organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or

 

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organization, with the requisite entity power and authority to own, lease and
operate its properties.  The Company does not own or control, directly or
indirectly, any corporation, association or other corporate entity that,
individually or in the aggregate would constitute a Subsidiary, other than the
subsidiaries listed on Schedule II hereof.  On a consolidated basis, the Company
and its subsidiaries conduct their business as described in the Preliminary
Offering Memorandum and the Pricing Disclosure Package and each Subsidiary is
duly qualified as a foreign corporation, partnership, limited liability company,
business trust or other organization to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except where the failure to qualify or to be in good standing would not result
in a Material Adverse Effect.

 

(n)           The Company has the authorized equity capitalization as set forth
in the Preliminary Offering Memorandum and the Pricing Disclosure Package, and
all of the issued and outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid and non-assessable. 
Except as otherwise disclosed in the Preliminary Offering Memorandum and the
Pricing Disclosure Package, all of the issued and outstanding capital stock or
other ownership interests of each subsidiary of the Company (i) have been duly
authorized and validly issued, (ii) are fully paid and non-assessable and
(iii) are owned by the Company directly or through subsidiaries, free and clear
of any security interest, mortgage, pledge, lien, encumbrance, claim or equity
except as described in the Preliminary Offering Memorandum and the Pricing
Disclosure Package and except for such security interests, mortgages, pledges,
liens, encumbrances, claims or equities that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

 

(o)           The Company and each Guarantor has all requisite corporate power,
partnership or limited liability company and authority, as applicable, to
execute, deliver and perform its obligations under the Indenture.  The Indenture
has been duly and validly authorized by the Company and the Guarantors, and upon
its execution and delivery and, assuming due authorization, execution and
delivery by the Trustee, will constitute the valid and binding agreement of the
Company and the Guarantors, enforceable against the Company and the Guarantors
in accordance with its terms, except as such enforceability may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and
other laws relating to or affecting creditors’ rights generally and by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).  No qualification of the Indenture under the
Trust Indenture Act of 1939 (the “Trust Indenture Act”) is required in
connection with the offer and sale of the Notes contemplated hereby or in
connection with the Exempt Resales.  The Indenture will conform to the
description thereof in each of the Pricing Disclosure Package and the Offering
Memorandum.

 

(p)           The Company has all requisite corporate power and authority to
execute, issue, sell and perform its obligations under the Notes.  The Notes
have been duly authorized by the Company and, when duly executed by the Company
in accordance with the terms of the Indenture, assuming due authentication of
the Notes by the Trustee, upon delivery to the Initial Purchasers against
payment therefor in accordance with the terms hereof, will be validly issued and
delivered and will constitute valid and binding obligations of the Company
entitled to the benefits of the Indenture, enforceable against the Company in
accordance with their terms,

 

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except as such enforceability may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other laws relating to
or affecting creditors’ rights generally and by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).  The Notes will conform in all material respects to the
description thereof in each of the Pricing Disclosure Package and the Offering
Memorandum.

 

(q)           The Company has all requisite corporate power and authority to
execute, issue and perform its obligations under the Exchange Notes.  The
Exchange Notes have been duly and validly authorized by the Company and if and
when issued and authenticated in accordance with the terms of the Indenture and
delivered in accordance with the Exchange Offer provided for in the Registration
Rights Agreement, will be validly issued and delivered and will constitute valid
and binding obligations of the Company entitled to the benefits of the
Indenture, enforceable against the Company in accordance with their terms,
except as such enforceability may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other laws relating to
or affecting creditors’ rights generally and by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

 

(r)            Each Guarantor has all requisite corporate, partnership or
limited liability company power and authority, as applicable, to execute, issue
and perform its obligations under the Guarantees.  The Guarantees have been duly
and validly authorized by the Guarantors and when the Indenture is duly executed
and delivered by the Guarantors in accordance with its terms and upon the due
execution, authentication and delivery of the Notes in accordance with the
Indenture and the issuance of the Notes in the sale to the Initial Purchasers
contemplated by this Agreement, will constitute valid and binding obligations of
the Guarantors, enforceable against the Guarantors in accordance with their
terms, except as such enforceability may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other laws relating to
or affecting creditors’ rights generally and by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).  The Guarantees will conform in all material respects to the
description thereof in each of the Pricing Disclosure Package and the Offering
Memorandum.

 

(s)            Each Guarantor has all requisite corporate, partnership or
limited liability company power and authority, as applicable, to execute, issue
and perform its obligations under the Exchange Guarantees.  The Exchange
Guarantees have been duly and validly authorized by the Guarantors and if and
when executed and delivered by the Guarantors in accordance with the terms of
the Indenture and upon the due execution and authentication of the Exchange
Notes in accordance with the Indenture and the issuance and delivery of the
Exchange Notes in the Exchange Offer contemplated by the Registration Rights
Agreement, will be validly issued and delivered and will constitute valid and
binding obligations of the Guarantors entitled to the benefits of the Indenture,
enforceable against the Guarantors in accordance with their terms, except as
such enforceability may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium, and other laws relating to or affecting
creditors’ rights generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

 

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(t)            The Company and each Guarantor has all requisite corporate,
partnership or limited liability company power and authority, as applicable, to
execute, deliver and perform its obligations under the Registration Rights
Agreement.  The Registration Rights Agreement has been duly authorized by the
Company and each Guarantor and, when executed and delivered by the Company and
each Guarantor in accordance with the terms hereof and thereof, will be validly
executed and delivered and (assuming the due authorization, execution and
delivery thereof by you) will be the legally valid and binding obligation of the
Company and each Guarantor in accordance with the terms thereof, enforceable
against the Company and each Guarantor in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditor’s rights
generally, by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and, as to
rights of indemnification and contribution, by principles of public policy.  The
Registration Rights Agreement will conform in all material respects to the
description thereof in each of the Pricing Disclosure Package and the Offering
Memorandum.

 

(u)           The Company has all requisite corporate, partnership or limited
liability company power and authority, as applicable, to execute, deliver and
perform its obligations under the Escrow Agreement.  The Escrow Agreement has
been duly authorized by the Company and, when executed and delivered by the
Company in accordance with the terms hereof and thereof, will be validly
executed and delivered and (assuming the due authorization, execution and
delivery thereof by the Escrow Agent and the Trustee) will be the legally valid
and binding obligation of the Company in accordance with the terms thereof,
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditor’s rights
generally, by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).  The Escrow
Agreement will conform in all material respects to the description thereof in
each of the Pricing Disclosure Package and the Offering Memorandum.

 

(v)           Prior to or contemporaneously with the consummation of the
GeoResources Merger, the Joinder Agreement will have been duly authorized,
executed and delivered by each Acquired Guarantor and, when executed and
delivered by such Acquired Guarantors, will be a valid and binding agreement of
such Acquired Guarantors, enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditor’s rights
generally, by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

 

(w)          The Company and each Guarantor has all requisite corporate power to
execute, deliver and perform its obligations under this Agreement.  This
Agreement has been duly and validly authorized, executed and delivered by the
Company and each of the Guarantors.

 

(x)           The issue and sale of the Notes and the Guarantees, the execution,
delivery and performance by the Company and the Guarantors of the Notes, the
Guarantees, the Exchange Notes, the Exchange Guarantees, the Indenture, the
Registration Rights Agreement, the Escrow Agreement, the Joinder Agreement and
this Agreement, the application of the proceeds from the

 

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sale of the Notes as described under “Use of Proceeds” in each of the Pricing
Disclosure Package and the Offering Memorandum, the consummation of the
transactions contemplated hereby and thereby and the execution, delivery and
performance of the Merger Agreement (assuming the satisfaction of all conditions
to closing set forth therein), will not (i) conflict with or result in a breach
or violation of any of the terms or provisions of, impose any lien, charge or
encumbrance upon any property or assets of the Company, the Guarantors or their
respective subsidiaries, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement, license, lease or other agreement or instrument
to which the Company, the Guarantors or any of their respective subsidiaries is
a party or by which the Company, the Guarantors or any of their respective
subsidiaries is bound or to which any of the property or assets of the Company,
the Guarantors or any of their respective subsidiaries is subject, (ii) result
in any violation of the provisions of the charter or by-laws (or similar
organizational documents) of the Company, the Guarantors or any of their
respective subsidiaries, or (iii) result in any violation of any statute or any
judgment, order, decree, rule or regulation of any court or governmental agency
or body having jurisdiction over the Company, the Guarantors or any of their
respective subsidiaries or any of their properties or assets, except, with
respect to clauses (i) and (iii), conflicts or violations that would not
reasonably be expected to have a Material Adverse Effect.

 

(y)           No consent, approval, authorization or order of, or filing,
registration or qualification with, any court or governmental agency or body,
domestic or foreign, having jurisdiction over the Company is required for the
offering and sale of the Notes or the consummation by the Company of the other
transactions contemplated by this Agreement or the Registration Rights
Agreement, except for the filing of the registration statement by the Company
with the Commission pursuant to the Securities Act, as required by the
Registration Rights Agreement, and such consents, approvals, authorizations,
orders, registrations, filings or qualifications which shall have been obtained
or made prior to the Closing Date as described in this Agreement or as may be
required by the securities or blue sky laws of the various states, the
Securities Act and the securities laws of any jurisdiction outside the United
States in which the Notes are offered.

 

(z)           Except for the Registration Rights Agreement and as disclosed in
the Preliminary Offering Memorandum and the Pricing Disclosure Package, there
are no contracts, agreements or understandings between the Company, any
Guarantor and any person granting such person the right to require the Company
or any Guarantor to file a registration statement under the Securities Act with
respect to any securities of the Company or any Guarantor owned or to be owned
by such person or to require the Company or any Guarantor to include such
securities in the securities registered pursuant to the Registration Rights
Agreement or in any securities being registered pursuant to any other
registration statement filed by the Company or any Guarantor under the
Securities Act.

 

(aa)         To the knowledge of the Company, there is no condition under the
Merger Agreement that is not expected to be satisfied prior to the Termination
Date (as defined in the Merger Agreement).

 

(bb)         To the knowledge of the Company, there is no material breach of any
representation under the Merger Agreement by GeoResources.

 

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(cc)         Neither the Company, any Guarantor nor any other person acting on
behalf of the Company or any Guarantor has sold or issued any securities that
would be integrated with the offering of the Notes contemplated by this
Agreement pursuant to the Securities Act, the rules and regulations thereunder
or the interpretations thereof by the Commission.

 

(dd)         Neither the Company, the Guarantors nor any of their respective
subsidiaries has sustained, since the date of the latest audited financial
statements included and incorporated by reference in the Pricing Disclosure
Package and the Offering Memorandum, any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, and, since such date, there has not been any change in the capital
stock, partnership or limited liability interests, as applicable, or long-term
debt, of the Company, the Guarantors or any of their respective subsidiaries or
any adverse change, or any development involving a prospective adverse change,
in or affecting the business, properties, prospects, financial condition,
stockholders’ equity or results of operations of the Company and its
subsidiaries, taken as a whole, in each case except as could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.

 

(ee)         The historical financial statements (including the related notes
and supporting schedules) of each of the Company, GeoResources and the East
Texas Assets included and incorporated by reference in the Pricing Disclosure
Package and the Offering Memorandum present fairly in all material respects the
financial condition, results of operations and cash flows of the entities
purported to be shown thereby, at the dates and for the periods indicated, and
have been prepared in conformity with accounting principles generally accepted
in the United States applied on a consistent basis throughout the periods
involved.

 

(ff)          The pro forma financial statements included in the Pricing
Disclosure Package and the Offering Memorandum include assumptions that provide
a reasonable basis for presenting the significant effects directly attributable
to the transactions and events described therein, the related pro forma
adjustments give appropriate effect to those assumptions, and the pro forma
adjustments reflect the proper application of those adjustments to the
historical financial statement amounts in the pro forma financial statements
included in the Pricing Disclosure Package.  The pro forma financial statements
included in the Pricing Disclosure Package have been prepared in accordance with
the Commission’s rules and guidance with respect to pro forma financial
information.  The pro forma financial statements included in the Pricing
Disclosure Package and the Offering Memorandum have been prepared on the basis
consistent with such historical financial statements, except for the pro forma
adjustments specified therein, and include all material adjustments to the
historical financial data required by Rule 11-02 of Regulation S-X to reflect
the GeoResources Merger and the acquisition of the East Texas Assets (as defined
in the Pricing Disclosure Package and the Offering Memorandum) and to give
effect to the offering of the Notes, and give effect to assumptions made on a
reasonable basis and in good faith and present fairly in all material respects
the historical and proposed transactions reflected therein. The other financial
information and data included and incorporated by reference in the Offering
Memorandum, historical and pro forma, are, in all material respects, accurately
presented and prepared on a basis consistent with such financial statements and
the books and records of the Company.

 

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(gg)         Deloitte & Touche LLP, who have delivered the initial letter
referred to in Section 7(f) hereof, are independent registered public
accountants as required by the Securities Act and the rules and regulations
thereunder and the rules and regulations of the Public Company Accounting
Oversight Board (the “PCAOB”) during the periods covered by the financial
statements on which they reported contained in and incorporated by reference in
the Pricing Disclosure Package and the Offering Memorandum.

 

(hh)         UHY LLP, who have certified certain financial statements of the
Company and the East Texas Assets, whose reports appear in the Pricing
Disclosure Package and the Offering Memorandum or are incorporated by reference
therein and who have delivered the initial letter referred to in
Section 7(f) hereof, are independent registered public accountants as required
by the Securities Act and the rules and regulations thereunder and the rules and
regulations of the PCAOB during the periods covered by the financial statements
on which they reported contained in and incorporated by reference in the Pricing
Disclosure Package and the Offering Memorandum.

 

(ii)           The Company and its subsidiaries have defensible title to all of
their interests in oil and gas properties (other than interests earned under
farm-out, participation or similar agreements in which an assignment or transfer
is pending) and all their interests in other real property and good title to all
other properties owned by them, in each case, free and clear of all mortgages,
pledges, liens, security interests, claims, restrictions or encumbrances of any
kind except such as (i) are described in the Preliminary Offering Memorandum and
the Pricing Disclosure Package, (ii) liens and encumbrances under operating
agreements, unitization and pooling agreements, production sales contracts,
farm-out agreements and other oil and gas exploration participation and
production agreements, in each case that secure payment of amounts not yet due
and payable for the performance of other unmatured obligations and are of a
scope and nature customary in the oil and gas industry or arise in connection
with drilling and production operations, or (iii) would not have a Material
Adverse Effect; except as described in the Preliminary Offering Memorandum or
the Pricing Disclosure Package or as would not have a Material Adverse Effect,
all of the leases and subleases of real property of the Company or any of its
subsidiaries and under which the Company or any of its subsidiaries holds
properties described in the Preliminary Offering Memorandum and the Pricing
Disclosure Package, are in full force and effect.

 

(jj)           Forrest A. Garb & Associates (the “Company Reservoir Engineer),
whose report dated February 7, 2012, is summarized or excerpted in reports
incorporated by reference, or included, in the Preliminary Offering Memorandum
and the Pricing Disclosure Package, was, as of the date of such report, and is,
as of the date hereof, an independent petroleum engineer with respect to the
Company.  The written engineering report prepared by the Company Reservoir
Engineer dated February 7, 2012 setting forth the proved reserves attributed to
the oil and gas properties of the Company and its subsidiaries accurately
reflects in all material respects the interests of the Company its subsidiaries
in the properties therein as of December 31, 2011 and was prepared in accordance
with the SEC’s rules and regulations relating to the reporting of oil and
natural gas reserves; the information furnished by the Company to the Company
Reservoir Engineer for purposes of preparing its report, including, without
limitation, production, costs of operation and development, current prices for
production, agreements relating to current and future operations and sales of
production, was true, correct and complete

 

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in all material respects on the date supplied and was prepared in accordance
with customary industry practices, as indicated in the letter of the Company
Reservoir Engineer dated February 7, 2012. The estimates of proved reserves and
related information relating to the East Texas Assets prepared by the Company’s
internal reserve engineering staff as of April 1, 2012 accurately reflect in all
material respects the interests that the Company expects to acquire therein
following closing of such acquisition and were prepared in a manner consistent
with the rules and regulations of the SEC relating to the reporting of oil and
gas reserves; the information used by the Company’s internal reserve engineers
for purposes of preparing such estimates of proved reserves, including, without
limitation, production, costs of operation and development, current prices for
production, agreements relating to current and future operations and sales of
production, was true, correct and complete in all material respects as of the
date of such reserves.

 

(kk)         The Company and each of its subsidiaries have such permits,
licenses, patents, franchises, certificates of need and other approvals or
authorizations of governmental or regulatory authorities (“Permits”) as are
necessary under applicable law to own their properties and conduct their
businesses in the manner described in the Pricing Disclosure Package and the
Offering Memorandum, except for any of the foregoing that could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect; each of the
Company and its subsidiaries has fulfilled and performed all of its obligations
with respect to the Permits, and no event has occurred that allows, or after
notice or lapse of time would allow, revocation or termination thereof or
results in any other impairment of the rights of the holder or any such Permits,
except for any of the foregoing that could not reasonably be expected to have a
Material Adverse Effect.

 

(ll)           The Company and each of its subsidiaries own or possess adequate
rights to use all material patents, patent applications, trademarks, service
marks, trade names, trademark registrations, service mark registrations,
copyrights, licenses, know-how, software, systems and technology (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) necessary for the conduct of
their respective businesses and have no reason to believe that the conduct of
their respective businesses will conflict with, and have not received any notice
of any claim of conflict with, any such rights of others.

 

(mm)      Other than as set forth in the Preliminary Offering Memorandum and the
Pricing Disclosure Package, there are no legal or governmental proceedings
pending to which the Company or any of its subsidiaries is a party or of which
any property of the Company or any of its subsidiaries is the subject which if
determined adversely to the Company, or such subsidiary, would individually or
in the aggregate, have a Material Adverse Effect or which would materially and
adversely affect the consummation of the transactions contemplated under this
Agreement, the Registration Rights Agreement, the Escrow Agreement, the Joinder
Agreement, the Merger Agreement or the performance by the Company or any
Guarantor of their obligations hereunder or thereunder; and, to the Company’s
and the Guarantors’ knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.

 

(nn)         There are no contracts or other documents that would be required to
be described in a registration statement filed under the Securities Act or filed
as exhibits to a registration statement of the Company pursuant to Item
601(10) of Regulation S-K that have not

 

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been described in the Pricing Disclosure Package and the Offering Memorandum. 
The statements made in the Pricing Disclosure Package and the Offering
Memorandum, insofar as they purport to constitute summaries of the terms of the
contracts and other documents that are so described, constitute accurate
summaries of the terms of such contracts and documents in all material
respects.  Neither the Company, the Guarantors nor any of their respective
subsidiaries has knowledge that any other party to any such contract or other
document has any intention not to render full performance as contemplated by the
terms thereof.

 

(oo)         The statements made in the Pricing Disclosure Package and the
Offering Memorandum under the captions “Business” (as incorporated by reference
from the Company’s Exchange Act Reports), “Certain U.S. Federal Income Tax
Considerations” and “Certain ERISA Considerations,” insofar as they purport to
constitute summaries of the terms of statutes, rules or regulations, legal or
governmental proceedings or contracts and other documents, constitute accurate
summaries of the terms of such statutes, rules and regulations, legal and
governmental proceedings and contracts and other documents in all material
respects.

 

(pp)         No relationship, direct or indirect, that would be required to be
described in a registration statement of the Company pursuant to Item 404 of
Regulation S-K, exists between or among the Company or any Guarantor and their
respective subsidiaries, on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or any Guarantor and their
respective subsidiaries, on the other hand, that has not been described in the
Pricing Disclosure Package and the Offering Memorandum.

 

(qq)         No labor disturbance by or dispute with the employees of the
Company or any of its subsidiaries exists or, to the knowledge of the Company or
any Guarantor, is imminent that could reasonably be expected to have a Material
Adverse Effect.

 

(rr)           (i) Each “employee benefit plan” (within the meaning of
Section 3(3) of the Employee Retirement Security Act of 1974, as amended
(“ERISA”)) for which the Company or any member of its “Controlled Group”
(defined as any organization which is a member of a controlled group of
corporations within the meaning of Section 414 of the Internal Revenue Code of
1986, as amended (the “Code”)) would have any liability (each a “Plan”) has been
maintained in compliance with its terms and with the requirements of all
applicable statutes, rules and regulations including ERISA and the Code;
(ii) with respect to each Plan subject to Title IV of ERISA (a) no “reportable
event” (within the meaning of Section 4043(c) of ERISA) has occurred or is
reasonably expected to occur, (b) no “accumulated funding deficiency” (within
the meaning of Section 302 of ERISA or Section 412 of the Code), whether or not
waived, has occurred or is reasonably expected to occur, (c) the fair market
value of the assets under each Plan exceeds the present value of all benefits
accrued under such Plan (determined based on those assumptions used to fund such
Plan) and (d) neither the Company or any member of its Controlled Group has
incurred, or reasonably expects to incur, any liability under Title IV of ERISA
(other than contributions to the Plan or premiums to the PBGC in the ordinary
course and without default) in respect of a Plan (including a “multiemployer
plan”, within the meaning of Section 4001(c)(3) of ERISA); and (iii) each Plan
that is intended to be qualified under Section 401(a) of the Code is so
qualified and nothing has occurred, whether by action or by failure to act,
which would cause the loss of such qualification.

 

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(ss)          The Company and each of its subsidiaries has filed all federal,
state, local and foreign income and franchise tax returns required to be filed
through the date hereof, subject to permitted extensions, and paid all taxes due
thereon, and (i) no tax deficiency has been determined adversely to the Company,
the Guarantors or any of their respective subsidiaries, nor (ii) does the
Company or any Guarantor have any knowledge of any tax deficiencies that could,
in the case of clause (i) or (ii) in the aggregate, reasonably be expected to
have a Material Adverse Effect.

 

(tt)           There are no transfer taxes or other similar fees or charges
under Federal law or the laws of any state, or any political subdivision
thereof, required to be paid in connection with the execution and delivery of
this Agreement or the issuance by the Company or sale by the Company of the
Notes.

 

(uu)         Since the date as of which information is given in the Pricing
Disclosure Package and the Offering Memorandum and except as may otherwise be
described in the Pricing Disclosure Package and the Offering Memorandum, neither
the Company nor any Guarantor has (i) incurred any liability or obligation,
direct or contingent, other than liabilities and obligations that were incurred
in the ordinary course of business, (ii) entered into any material transaction
not in the ordinary course of business or (iii) declared or paid any dividend on
its capital stock.

 

(vv)         Neither the Company nor any of its subsidiaries (i) is in violation
of its charter or by-laws (or similar organizational documents), (ii) is in
default, and no event has occurred that, with notice or lapse of time or both,
would constitute such a default, in the due performance or observance of any
term, covenant, condition or other obligation contained in any indenture,
mortgage, deed of trust, loan agreement, license or other agreement or
instrument to which it is a party or by which it is bound or to which any of its
properties or assets is subject, or (iii) is in violation of any statute or any
order, rule or regulation of any court or governmental agency or body having
jurisdiction over it or its property or assets or has failed to obtain any
license, permit, certificate, franchise or other governmental authorization or
permit necessary to the ownership of its property or to the conduct of its
business, except in the case of clauses (ii) and (iii), to the extent any such
conflict, breach, violation or default could not, in the aggregate, reasonably
be expected to have a Material Adverse Effect or would not materially impair the
ability of the Company or any Guarantor to perform their obligations under this
Agreement or the transactions contemplated by the Merger Agreement.

 

(ww)       Neither the Company nor any of its subsidiaries, nor, to the
knowledge of the Company and the Guarantors, any director, officer, agent,
employee or other person associated with or acting on behalf of the Company, the
Guarantors or any of their respective subsidiaries, has (i) used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful
expense relating to political activity; (ii) made any direct or indirect
unlawful payment to any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977; or (iv) made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.

 

(xx)         The Company and each of its subsidiaries (i) are, and at all times
prior hereto were, in compliance with all laws, regulations, ordinances, rules,
orders, judgments, decrees, permits or other legal requirements of any
governmental authority, including without

 

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limitation any international, national, state, provincial, regional, or local
authority, relating to the protection of human health or safety, the
environment, or natural resources, or to hazardous or toxic substances or
wastes, pollutants or contaminants (“Environmental Laws”) applicable to such
entity, which compliance includes, without limitation, obtaining, maintaining
and complying with all permits and authorizations and approvals required by
Environmental Laws to conduct their respective businesses, and (ii) have not
received notice of any actual or alleged violation of Environmental Laws, or of
any potential liability for or other obligation concerning the presence,
disposal or release of hazardous or toxic substances or wastes, pollutants or
contaminants, except in the case of clause (i) or (ii) where such
non-compliance, violation, liability, or other obligation could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.  Except as
described in the Pricing Disclosure Package, (A) there are no proceedings that
are pending, or known to be contemplated, against the Company or any of its
subsidiaries under Environmental Laws in which a governmental authority is also
a party, other than such proceedings regarding which it is reasonably believed
no monetary sanctions of $100,000 or more will be imposed, (B) the Company, the
Guarantors and their respective subsidiaries are not aware of any issues
regarding compliance with Environmental Laws, or liabilities or other
obligations under Environmental Laws or concerning hazardous or toxic substances
or wastes, pollutants or contaminants, that could reasonably be expected to have
a Material Adverse Effect, and (C) none of the Company, the Guarantors,
GeoResources and their respective subsidiaries anticipates material capital
expenditures other than in the ordinary course of business relating to
Environmental Laws.

 

(yy)         None of the transactions contemplated by this Agreement (including,
without limitation, the use of the proceeds from the sale of the Notes), will
violate or result in a violation of Section 7 of the Exchange Act, or any
regulation promulgated thereunder, including, without limitation, Regulations T,
U and X of the Board of Governors of the Federal Reserve System.

 

(zz)         The statements contained in the Pricing Disclosure Package and the
Preliminary Offering Memorandum under the caption “Description of the Notes,”
insofar as they purport to constitute a summary of the terms of the Indenture,
the Notes, the Registration Rights Agreement, the Escrow Agreement and the
Guarantees and under the captions “Description of Other Indebtedness” and “Plan
of Distribution” insofar as they purport to describe the provisions of the
documents referred to therein, are accurate in all material respects.

 

(aaa)      The Company and its affiliates have not taken, directly or
indirectly, any action designed to or that has constituted or that could
reasonably be expected to cause or result in the stabilization or manipulation
of the price of any security of the Company or the Guarantors in connection with
the offering of the Notes.

 

(bbb)      The Company and each of its subsidiaries maintain a system of
internal control over financial reporting (as such term is defined in
Rule 13a-15(f) of the Exchange Act) that complies with the requirements of the
Exchange Act and that has been designed by, or under the supervision of, the
Company’s principal executive and principal financial officers, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles in the United States.  The Company and
each of its subsidiaries maintains internal

 

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accounting controls that are sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s general or
specific authorization, (ii) transactions are recorded as necessary to permit
preparation of the Company’s financial statements in conformity with accounting
principles generally accepted in the United States and to maintain
accountability for its assets, (iii) access to the Company’s assets is permitted
only in accordance with management’s general or specific authorization, and
(iv) the recorded accountability for the Company’s assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

 

(ccc)       (i) The Company and each of its subsidiaries have established and
maintain disclosure controls and procedures (as such term is defined in
Rule 13a-15 under the Exchange Act), (ii) such disclosure controls and
procedures are designed to ensure that the information required to be disclosed
by the Company in the reports they file or submit under the Exchange Act
(assuming the Company was required to file or submit such reports under the
Exchange Act) is accumulated and communicated to management of the Company and
its subsidiaries, including their respective principal executive officers and
principal financial officers, as appropriate, to allow timely decisions
regarding required disclosure to be made; and (iii) such disclosure controls and
procedures are effective in all material respects to perform the functions for
which they were established.

 

(ddd)      Since the date of the most recent balance sheet of the Company and
its consolidated subsidiaries audited by UHY LLC and reviewed by the audit
committee of the board of directors of the Company, (i) the Company has not been
advised of by its auditors, nor has it identified (A) any significant
deficiencies in the design or operation of internal controls, that would
adversely affect the ability of the Company or any of its subsidiaries to
record, process, summarize and report financial data, or any material weaknesses
in internal controls, and (B) any fraud, whether or not material, that involves
management or other employees who have a significant role in the internal
controls of the Company and each of its subsidiaries; and (ii) there have been
no changes in internal controls or in other factors that have materially
affected or are reasonably likely to materially affect internal controls,
including any corrective actions with regard to significant deficiencies and
material weaknesses.

 

(eee)       No subsidiary of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such subsidiary’s capital stock, from repaying to the Company
any loans or advances to such subsidiary from the Company or from transferring
any of such subsidiary’s property or assets to the Company or any other
subsidiary of the Company, except as described in the Pricing Disclosure Package
and the Offering Memorandum.

 

(fff)        There is and has been no failure on the part of the Company and any
of the Company’s directors or officers, in their capacities as such, to comply
with the provisions of the Sarbanes-Oxley Act of 2002 and the rules and
regulations promulgated in connection therewith.

 

(ggg)       The section entitled “Management’s Discussion and Analysis of
Financial Condition and Results of Operations—Critical Accounting Policies and
Estimates” as incorporated by reference from the Company’s Exchange Act Reports
in the Pricing Disclosure Package and the Offering Memorandum accurately and
fully describes in all material respects

 

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(A) the accounting policies that the Company believed as of the date thereof
were the most important in the portrayal of the Company’s financial condition
and results of operations and that required management’s most difficult,
subjective or complex judgments; (B) the judgments and uncertainties affecting
the application of critical accounting policies; and (C) the likelihood that
materially different amounts would be reported under different conditions or
using different assumptions and an explanation thereof.

 

(hhh)      The operations of the Company and its subsidiaries are and have been
conducted at all times in compliance with applicable financial recordkeeping and
reporting requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, the money laundering statutes of all jurisdictions, the
rules and regulations thereunder and any related or similar rules, regulations
or guidelines, issued, administered or enforced by any governmental agency
(collectively, the “Money Laundering Laws”) and no action, suit or proceeding by
or before any court or governmental agency, authority or body or any arbitrator
involving the Company or any of its subsidiaries with respect to the Money
Laundering Laws is pending or, to the knowledge of the Company or any Guarantor,
threatened, except, in each case, as would not reasonably be expected to have a
Material Adverse Effect.

 

(iii)          Neither the Company nor any of its subsidiaries nor, to the
knowledge of the Company or any Guarantor, any director, officer, agent,
employee or affiliate of the Company or any of its subsidiaries is currently
subject to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department (“OFAC”); and the Company will not
directly or indirectly use the proceeds of the offering, or lend, contribute or
otherwise make available such proceeds to any subsidiary, joint venture partner
or other person or entity, for the purpose of financing the activities of any
person currently subject to any U.S. sanctions administered by OFAC.

 

(jjj)         The Company has not taken any action or omitted to take any action
(such as issuing any press release relating to any Notes without an appropriate
legend) which may result in the loss by any of the Initial Purchasers of the
ability to rely on any stabilization safe harbor provided by the Financial
Services Authority under the Financial Services and Markets Act 2000 (the
“FSMA”). The Company has been informed of the guidance relating to stabilization
provided by the Financial Services Authority, in particular in Section MAR 2
Annex 2G of the Financial Services Handbook.

 

(kkk)      Immediately after the consummation of the issuance and sale of the
Notes in accordance with the terms of this Agreement and the consummation of the
GeoResources Merger, each of the Company and each of the Guarantors will be
Solvent. As used in this paragraph, the term “Solvent” means, with respect to a
particular date, that on such date (i) the present fair market value (or present
fair saleable value) of the assets of the Company and its subsidiaries and the
Guarantors and their subsidiaries are not less than the total amount required to
pay the probable liabilities of the Company and its subsidiaries and the
Guarantors and their subsidiaries on their total existing debts and liabilities
(including contingent liabilities) as they become absolute and matured, (ii) the
Company and its subsidiaries and the Guarantors and their subsidiaries are able
to realize upon their assets and pay their debts and other liabilities,
contingent obligations and commitments as they mature and become due in the
normal course of business, (iii) assuming the sale of the Notes as contemplated
by this Agreement and the

 

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consummation of the GeoResources Merger, the Pricing Disclosure Package and the
Offering Memorandum, the Company and its subsidiaries and the Guarantors and
their subsidiaries are not incurring debts or liabilities beyond their ability
to pay as such debts and liabilities mature and (iv) the Company and its
subsidiaries and the Guarantors and their subsidiaries are not engaged in any
business or transaction, and are not about to engage in any business or
transaction, for which their property would constitute unreasonably small
capital after giving due consideration to the prevailing practice in the
industry in which the Company and its subsidiaries and the Guarantors and their
subsidiaries are engaged. In computing the amount of such contingent liabilities
at any time, it is intended that such liabilities will be computed at the amount
that, in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.

 

(lll)          As of the date hereof, (i) all royalties, rentals, deposits and
other amounts owed under the oil and gas leases constituting the oil and gas
properties of the Company, the Guarantors and their respective subsidiaries have
been properly and timely paid (other than amounts held in suspense accounts
pending routine payments or related to disputes about the proper identification
of royalty owners), and no amount of proceeds from the sale or production
attributable to the oil and gas properties of the Company, the Guarantors and
their respective subsidiaries are currently being held in suspense by any
purchaser thereof, except where such amounts due could not, individually or in
the aggregate, have a Material Adverse Effect, and (ii) there are no claims
under take-or-pay contracts pursuant to which natural gas purchasers have any
make-up rights affecting the interests of the Company, the Guarantors or their
respective subsidiaries in their oil and gas properties, except where such
claims could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.

 

(mmm)  Neither the Company nor any of its subsidiaries is a party to any
contract, agreement or understanding with any person (other than this Agreement)
that could give rise to a valid claim against the Initial Purchasers for a
brokerage commission, finder’s fee or like payment in connection with the
offering and sale of the Notes.

 

(nnn)      Neither the Company nor any of its subsidiaries is in violation of or
has received notice of any violation with respect to any federal or state law
relating to discrimination in the hiring, promotion or pay of employees, nor any
applicable federal or state wage and hour laws, the violation of any of which
could reasonably be expected to have a Material Adverse Effect.

 

(ooo)      Any certificate signed by any officer of the Company or any Guarantor
and delivered to the Representatives or counsel for the Initial Purchasers in
connection with the offering of the Notes shall be deemed a representation and
warranty by the Company or any such Guarantor, jointly and severally, as to
matters covered thereby, to each Initial Purchaser.

 

(B)          Certain Representations, Warranties and Agreements of the Company
and the Guarantors with Respect to GeoResources and its Subsidiaries.  The
Company and each of the Guarantors, jointly and severally, represent, warrant
and agree, that to their knowledge after due inquiry of the executive officers
of GeoResources:

 

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(a)           GeoResources’ Exchange Act Reports, when they were filed with the
Commission, conformed in all material respects to the applicable requirements of
the Exchange Act and the applicable rules and regulations of the Commission
thereunder, and the GeoResources Exchange Act Reports did not, when filed with
the Commission, contain an untrue statement of material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.

 

(b)           The statistical and market-related data relating to GeoResources
included in the Pricing Disclosure Package and the Offering Memorandum are based
on or derived from sources that GeoResources believes to be reliable in all
material respects, and the consolidated financial statements of GeoResources and
its subsidiaries included and incorporated by reference in the Pricing
Disclosure Package and the Offering Memorandum are based on or derived from
sources that GeoResources believes to be reliable in all material respects.

 

(c)           GeoResources has been duly incorporated, is validly existing and
is in good standing under the laws of State of Colorado, with corporate power
and authority to own, lease and operate its properties and conduct its business
as described in the Pricing Disclosure Package and the Offering Memorandum;
GeoResources is duly qualified as a foreign corporation to transact business and
is in good standing in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to qualify or to be in good
standing would not have a material adverse effect on the business, properties,
prospects, financial condition, stockholders’ equity or results of operations of
the Company and its subsidiaries and GeoResources and its subsidiaries taken as
a whole (a “Pro Forma Material Adverse Effect”). Each subsidiary of GeoResources
other than those subsidiaries which would not, individually or in the aggregate,
constitute a “significant subsidiary” as defined in Item 1-02(w) of Regulation
S-X (each such “significant subsidiary,” a “GeoResources Subsidiary”) is a
corporation, partnership, limited liability company or business trust duly
incorporated or organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization, with the requisite
entity power and authority to own, lease and operate its properties, except
where the failure to be duly incorporated or organized, validly existing or to
be in good standing would not result in a Pro Forma Material Adverse Effect. 
GeoResources and its subsidiaries conduct their business as described in the
Preliminary Offering Memorandum and the Pricing Disclosure Package and each
GeoResources Subsidiary is duly qualified as a foreign corporation, partnership,
limited liability company, business trust or other organization to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to qualify or to
be in good standing would not result in a Pro Forma Material Adverse Effect.

 

(d)           Grant Thornton LLP, who have certified certain financial
statements of GeoResources, whose reports appear in the Pricing Disclosure
Package and the Offering Memorandum or are incorporated by reference therein and
who have delivered the initial letter referred to in Section 7(f) hereof, are
independent registered public accountants of GeoResources as required by the
Securities Act and the rules and regulations thereunder and the rules and
regulations of the PCAOB during the periods covered by the financial statements
on which they

 

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reported contained in and incorporated by reference in the Pricing Disclosure
Package and the Offering Memorandum

 

(e)           GeoResources and its subsidiaries have defensible title to all of
their interests in oil and gas properties (other than interests earned under
farm-out, participation or similar agreements in which an assignment or transfer
is pending) and all their interests in other real property and good title to all
other properties owned by them, in each case, free and clear of all mortgages,
pledges, liens, security interests, claims, restrictions or encumbrances of any
kind except such as (i) are described in the Preliminary Offering Memorandum and
the Pricing Disclosure Package, (ii) liens and encumbrances under operating
agreements, unitization and pooling agreements, production sales contracts,
farm-out agreements and other oil and gas exploration participation and
production agreements, in each case that secure payment of amounts not yet due
and payable for the performance of other unmatured obligations and are of a
scope and nature customary in the oil and gas industry or arise in connection
with drilling and production operations, or (iii) would not have a Pro Forma
Material Adverse Effect; except as described in the Preliminary Offering
Memorandum or the Pricing Disclosure Package or as would not have a Pro Forma
Material Adverse Effect, all of the leases and subleases of real property of
GeoResoures or any of its subsidiaries and under which GeoResources or any of
its subsidiaries holds properties described in the Preliminary Offering
Memorandum and the Pricing Disclosure Package, are in full force and effect.

 

(f)            Cawley, Gillespie & Associates, Inc. (the “GeoResources Reservoir
Engineer”), whose report dated February 27, 2012, is summarized or excerpted in
reports incorporated by reference, or included, in the Preliminary Offering
Memorandum and the Pricing Disclosure Package, was, as of the date of such
report, and is, as of the date hereof, an independent petroleum engineer with
respect to GeoResources.  The written engineering report prepared by the
GeoResources Reservoir Engineer dated February 27, 2012 setting forth the proved
reserves attributed to the oil and gas properties of GeoResources and its
subsidiaries accurately reflects in all material respects the interests of
GeoResources and its subsidiaries in the properties therein as of December 31,
2011 and was prepared in accordance with the SEC’s rules and regulations
relating to the reporting of oil and natural gas reserves; the information
furnished by GeoResources to the GeoResources Reservoir Engineer for purposes of
preparing its report, including, without limitation, production, costs of
operation and development, current prices for production, agreements relating to
current and future operations and sales of production, was true, correct and
complete in all material respects on the date supplied and was prepared in
accordance with customary industry practices, as indicated in the letter of the
GeoResources Reservoir Engineer dated February 27, 2012.  The estimates of
proved reserves and related information relating to the Brookeland fields
prepared by GeoResources’ internal reserve engineering staff as of December 31,
2011 accurately reflect in all material respects the interests that GeoResources
has therein and were prepared in a manner consistent with the rules and
regulations of the SEC relating to the reporting of oil and gas reserves; the
information used by GeoResources’ internal reserve engineers for purposes of
preparing such estimates of proved reserves, including, without limitation,
production, costs of operation and development, current prices for production,
agreements relating to current and future operations and sales of production,
was true, correct and complete in all material respects as of the date of such
reserves.

 

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(g)           GeoResources and each of its subsidiaries have such permits,
licenses, patents, franchises, certificates of need and other approvals or
authorizations of governmental or regulatory authorities (“GeoResources
Permits”) as are necessary under applicable law to own their properties and
conduct their businesses in the manner described in the Pricing Disclosure
Package and the Offering Memorandum, except for any of the foregoing that could
not, in the aggregate, reasonably be expected to have a Pro Forma Material
Adverse Effect; each of GeoResources and its subsidiaries has fulfilled and
performed all of its obligations with respect to the GeoResources Permits, and
no event has occurred that allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other impairment of the
rights of the holder or any such GeoResources Permits, except for any of the
foregoing that could not reasonably be expected to have a Pro Forma Material
Adverse Effect.

 

(h)           GeoResources and each of its subsidiaries own or possess adequate
rights to use all material patents, patent applications, trademarks, service
marks, trade names, trademark registrations, service mark registrations,
copyrights, licenses, know-how, software, systems and technology (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) necessary for the conduct of
their respective businesses and have no reason to believe that the conduct of
their respective businesses will conflict with, and have not received any notice
of any claim of conflict with, any such rights of others, except as could not
reasonably be expected to have a Pro Forma Material Adverse Effect.

 

(i)            Other than as set forth in the Preliminary Offering Memorandum
and the Pricing Disclosure Package, there are no legal or governmental
proceedings pending to which GeoResources or any of its subsidiaries is a party
or of which any property of GeoResources or any of its subsidiaries is the
subject which if determined adversely to GeoResources, or such subsidiary, would
individually or in the aggregate, have a Pro Forma Material Adverse Effect or
which would materially and adversely affect the consummation of the transactions
contemplated under this Agreement, the Registration Rights Agreement, the Escrow
Agreement, the Joinder Agreement, the Merger Agreement or the performance by the
Company or any Guarantor or GeoResources or any of its subsidiaries of their
obligations hereunder or thereunder; and, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.

 

(j)            The statements made in the Pricing Disclosure Package and the
Offering Memorandum, insofar as they purport to constitute summaries of the
terms of the contracts and other documents relating to GeoResources and its
subsidiaries that are so described, constitute accurate summaries of the terms
of such contracts and documents in all material respects.  Neither GeoResources
nor any of its subsidiaries has knowledge that any other party to any such
contract or other document has any intention not to render full performance as
contemplated by the terms thereof.

 

(k)           No labor disturbance by or dispute with the employees of
GeoResources or any of its subsidiaries exists or is imminent that would
reasonably be expected to have a Pro Forma Material Adverse Effect.

 

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(l)            GeoResources and each of its subsidiaries has filed all federal,
state, local and foreign income and franchise tax returns required to be filed
through the date hereof, subject to permitted extensions, and paid all taxes due
thereon, and (i) no tax deficiency has been determined adversely to the
GeoResources or its subsidiaries, nor (ii) are there any tax deficiencies
relating to GeoResources and its subsidiaries that would, in the case of
clause (i) or (ii) in the aggregate, reasonably be expected to have a Pro Forma
Material Adverse Effect.

 

(m)          Since the date as of which information is given in the Pricing
Disclosure Package and the Offering Memorandum and except as may otherwise be
described in the Pricing Disclosure Package and the Offering Memorandum, neither
GeoResources nor any of its subsidiaries has (i) issued or granted any material
amount of securities, except (A) pursuant to the exercise of outstanding options
described therein, (B) as permitted or contemplated by the Merger Agreement as
of the date of this Agreement or (C)  as would not reasonably be expected to
have a Pro Forma Material Adverse Effect, (ii) incurred any material liability
or obligation, direct or contingent, other than liabilities and obligations that
were incurred in the ordinary course of business or (iii) entered into any
material transaction not in the ordinary course of business.  Since the date as
of which information is given in the Pricing Disclosure Package and the Offering
Memorandum and except as may otherwise be described in the Pricing Disclosure
Package and the Offering Memorandum, GeoResources has not declared or paid any
dividend on its capital stock.

 

(n)           Neither GeoResources nor any GeoResources Subsidiary is in
violation of its charter (or similar organizational documents). Neither
GeoResources nor any of its subsidiaries (i) is in default, and no event has
occurred that, with notice or lapse of time or both, would constitute such a
default, in the due performance or observance of any term, covenant, condition
or other obligation contained in any indenture, mortgage, deed of trust, loan
agreement, license or other agreement or instrument to which it is a party or by
which it is bound or to which any of its properties or assets is subject, or
(ii) is in violation of any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over it or its property
or assets or has failed to obtain any license, permit, certificate, franchise or
other governmental authorization or permit necessary to the ownership of its
property or to the conduct of its business, except in the case of clauses
(i) and (ii), to the extent any such conflict, breach, violation or default
would not, in the aggregate, reasonably be expected to have a Pro Forma Material
Adverse Effect or would not materially impair the ability of the Company or any
Guarantor to perform their obligations under this Agreement or the transactions
contemplated by the Merger Agreement.

 

(o)           Neither GeoResources nor any of its subsidiaries, nor any
director, officer, agent, employee or other person associated with or acting on
behalf of GeoResources or any of its subsidiaries, has (i) used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful
expense relating to political activity; (ii) made any direct or indirect
unlawful payment to any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977; or (iv) made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.

 

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(p)           GeoResources and each of its subsidiaries (i) are, and at all
times prior hereto were, in compliance with all laws, regulations, ordinances,
rules, orders, judgments, decrees, permits or other legal requirements of any
governmental authority, including without limitation any international,
national, state, provincial, regional, or local authority, relating to the
protection of human health or safety, the environment, or natural resources, or
to hazardous or toxic substances or wastes, pollutants or contaminants
(“Environmental Laws”) applicable to such entity, which compliance includes,
without limitation, obtaining, maintaining and complying with all permits and
authorizations and approvals required by Environmental Laws to conduct their
respective businesses, and (ii) have not received notice of any actual or
alleged violation of Environmental Laws, or of any potential liability for or
other obligation concerning the presence, disposal or release of hazardous or
toxic substances or wastes, pollutants or contaminants, except in the case of
clause (i) or (ii) where such non-compliance, violation, liability, or other
obligation would not, in the aggregate, reasonably be expected to have a Pro
Forma Material Adverse Effect.  Except as described in the Pricing Disclosure
Package, there are no issues regarding compliance with Environmental Laws, or
liabilities or other obligations under Environmental Laws or concerning
hazardous or toxic substances or wastes, pollutants or contaminants, that would
reasonably be expected to have a Pro Forma Material Adverse Effect.

 

(q)           GeoResources and each of its subsidiaries maintain a system of
internal control over financial reporting (as such term is defined in
Rule 13a-15(f) of the Exchange Act) that complies with the requirements of the
Exchange Act and that has been designed by, or under the supervision of,
GeoResources’ principal executive and principal financial officers, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles in the United States.  GeoResources and
each of its subsidiaries maintains internal accounting controls that are
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management’s general or specific authorization,
(ii) transactions are recorded as necessary to permit preparation of
GeoResources’ financial statements in conformity with accounting principles
generally accepted in the United States and to maintain accountability for its
assets, (iii) access to GeoResources’ assets is permitted only in accordance
with management’s general or specific authorization, and (iv) the recorded
accountability for GeoResources’ assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

 

(r)            (i) GeoResources and each of its subsidiaries have established
and maintain disclosure controls and procedures (as such term is defined in
Rule 13a-15 under the Exchange Act), (ii) such disclosure controls and
procedures are designed to ensure that the information required to be disclosed
by the GeoResources in the reports they file or submit under the Exchange Act
(assuming GeoResources was required to file or submit such reports under the
Exchange Act) is accumulated and communicated to management of GeoResources and
its subsidiaries, including their respective principal executive officers and
principal financial officers, as appropriate, to allow timely decisions
regarding required disclosure to be made; and (iii) such disclosure controls and
procedures are effective in all material respects to perform the functions for
which they were established, except in each case as would not reasonably be
expected to have a Pro Forma Material Adverse Effect.

 

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(s)            Since the date of the most recent balance sheet of GeoResources
and its consolidated subsidiaries audited by Grant Thornton and reviewed by the
audit committee of the board of directors of GeoResources, (i) GeoResources has
not been advised of by its auditors nor has it identified (A) any material
weaknesses in internal controls, and (B) any fraud, whether or not material,
that involves management or other employees who have a significant role in the
internal controls of GeoResources and each of its subsidiaries; and (ii) there
have been no changes in internal controls or in other factors that have
materially affected or are reasonably likely to materially affect internal
controls, including any corrective actions with regard to significant
deficiencies and material weaknesses, except in each case as would not
reasonably be expected to have a Pro Forma Material Adverse Effect.

 

(t)            No subsidiary of GeoResources is currently prohibited, directly
or indirectly, from paying any dividends to the GeoResources, from making any
other distribution on such subsidiary’s capital stock, from repaying to
GeoResources any loans or advances to such subsidiary from GeoResources or from
transferring any of such subsidiary’s property or assets to GeoResources or any
other subsidiary of GeoResources, except as described in the Pricing Disclosure
Package and the Offering Memorandum.

 

(u)           There is and has been no failure on the part of GeoResources and
any of its directors or officers, in their capacities as such, to comply with
the provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations
promulgated in connection therewith.

 

(v)           The operations of GeoResources and its subsidiaries are and have
been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the money laundering statutes of
all jurisdictions, the rules and regulations thereunder and any related or
similar rules, regulations or guidelines, issued, administered or enforced by
any governmental agency (collectively, the “Money Laundering Laws”) and no
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving GeoResources or any of its
subsidiaries with respect to the Money Laundering Laws is pending or threatened,
except, in each case, as would not reasonably be expected to have a Pro Forma
Material Adverse Effect.

 

(w)          Neither GeoResources nor any of its subsidiaries nor any director,
officer, agent, employee or affiliate of the GeoResources or any of its
subsidiaries is currently subject to any U.S. sanctions administered by OFAC.

 

(x)           As of the date hereof, (i) all royalties, rentals, deposits and
other amounts owed under the oil and gas leases constituting the oil and gas
properties of GeoResources and its subsidiaries have been properly and timely
paid (other than amounts held in suspense accounts pending routine payments or
related to disputes about the proper identification of royalty owners), and no
amount of proceeds from the sale or production attributable to the oil and gas
properties of GeoResources and its subsidiaries are currently being held in
suspense by any purchaser thereof, except where such amounts due would not,
individually or in the aggregate, have a Pro Forma Material Adverse Effect, and
(ii) there are no claims under take-or-pay contracts pursuant to which natural
gas purchasers have any make-up rights affecting the interests of GeoResources
or its subsidiaries in their oil and gas properties, except where such

 

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claims would not, individually or in the aggregate, reasonably be expected to
have a Pro Forma Material Adverse Effect.

 

(y)           Neither GeoResources nor any of its subsidiaries is in violation
of or has received notice of any violation with respect to any federal or state
law relating to discrimination in the hiring, promotion or pay of employees, nor
any applicable federal or state wage and hour laws, the violation of any of
which would reasonably be expected to have a Pro Forma Material Adverse Effect.

 

3.                                      Purchase of the Notes by the Initial
Purchasers, Agreements to Sell, Purchase and Resell.

 

(a)           The Company and the Guarantors, jointly and severally hereby
agree, on the basis of the representations, warranties, covenants and agreements
of the Initial Purchasers contained herein and subject to all the terms and
conditions set forth herein, to issue and sell to the Initial Purchasers and,
upon the basis of the representations, warranties and agreements of the Company
and the Guarantors herein contained and subject to all the terms and conditions
set forth herein, each Initial Purchaser agrees, severally and not jointly, to
purchase from the Company, at a purchase price of 96.646% of the principal
amount thereof, the total principal amount of Notes set forth opposite the name
of such Initial Purchaser in Schedule I hereto.  The Company and the Guarantors
shall not be obligated to deliver any of the securities to be delivered
hereunder except upon transfer of immediately available funds to the Escrow
Account for all of the securities to be purchased as provided herein.

 

(b)           Each of the Initial Purchasers, severally and not jointly hereby
represents and warrants to the Company that it will offer the Notes for sale
upon the terms and conditions set forth in this Agreement and in the Pricing
Disclosure Package.  Each of the Initial Purchasers, severally and not jointly,
hereby represents and warrants to, and agrees with, the Company, on the basis of
the representations, warranties and agreements of the Company and the
Guarantors, that such Initial Purchaser: (i) is a QIB with such knowledge and
experience in financial and business matters as are necessary in order to
evaluate the merits and risks of an investment in the Notes; (ii) in connection
with the Exempt Resales, will solicit offers to buy the Notes only from, and
will offer to sell the Notes only to, the Eligible Purchasers in accordance with
this Agreement and on the terms contemplated by the Pricing Disclosure Package;
and (iii) will not offer or sell the Notes, nor has it offered or sold the Notes
by, or otherwise engaged in, any form of general solicitation or general
advertising (within the meaning of Regulation D, including, but not limited to,
advertisements, articles, notices or other communications published in any
newspaper, magazine, or similar medium or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising) and will not engage in any directed selling
efforts within the meaning of Rule 902 under the Securities Act, in connection
with the offering of the Notes.  The Initial Purchasers have advised the Company
that they will offer the Notes to Eligible Purchasers at a price initially equal
to 98.646% of the principal amount thereof, plus accrued interest, if any, from
the date of issuance of the Notes.  Such price may be changed by the Initial
Purchasers at any time without notice.

 

(c)           Each of the Initial Purchasers, severally and not jointly,
represents and warrants to the Company that:

 

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(i)                                     it has complied and will comply with all
applicable provisions of the FSMA with respect to anything done by it in
relation to the Notes in, from or otherwise involving the United Kingdom, and it
has only communicated or caused to be communicated and it will only communicate
or cause to be communicated any invitation or inducement to engage in investment
activity (within the meaning of section 21 of the FSMA) received by it in
connection with the issue or sale of any Notes, in circumstances in which
section 21(1) of the FSMA does not apply to the Company; and

 

(ii)                                  in relation to each Member State of the
European Economic Area which has implemented the Prospectus Directive (each, a
Relevant Member State), with effect from and including the date on which the
Prospectus Directive is implemented in that Relevant Member State (the “Relevant
Implementation Date”), it has not made and will not make an offer of the Notes
to the public in that Relevant Member State prior to the publication of a
prospectus in relation to the Notes which has been approved by the competent
authority in that Relevant Member State or, where appropriate, approved in
another Relevant Member State and notified to the competent authority in that
Relevant Member State, all in accordance with the Prospectus Directive, except
that it may, with effect from and including the Relevant Implementation Date,
make an offer of the Notes to the public in that Relevant Member State at any
time:

 

(A)                               to legal entities which are authorized or
regulated to operate in the financial markets or, if not so authorized or
regulated, whose corporate purpose is solely to invest in securities;

 

(B)                               to any legal entity which has two or more of
(1) an average of at least 250 employees during the last financial year; (2) a
total balance sheet of more than €43,000,000 and (3) an annual net turnover of
more than €50,000,000, as shown in its last annual or consolidated accounts;

 

(C)                               to fewer than 100, or if the Relevant Member
State has implemented the relevant provision of the 2010 Prospectus Directive
Amending Directive 150, natural or legal persons (other than qualified
investors) subject to obtaining the prior consent of the representatives for any
offer; or

 

(D)                               in any other circumstances which do not
require the publication by the issuer of a prospectus pursuant to Article 3 of
the Prospectus Directive;

 

For the purposes of this representation, the expression an “offer of securities
to the public” in any Relevant Member State means the

 

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communication in any form and by any means of sufficient information on the
terms of the offer and the Notes to be offered so as to enable an investor to
decide to purchase or subscribe the Notes, as the same may be varied in that
Relevant Member State by any measure implementing the Prospectus Directive in
that Relevant Member State and the expression “Prospectus Directive” means
Directive 2003/71/EC (and amendments thereto, including the 2010 Prospectus
Directive Amendment Directive to the extent implemented in the Relevant Member
State) and includes any relevant implementing measure in each Relevant Member
State.

 

(d)           The Initial Purchasers have not nor, prior to the later to occur
of (A) the Closing Date and (B) completion of the distribution of the Notes,
will not, use, authorize use of, refer to or distribute any material in
connection with the offering and sale of the Notes other than (i) the
Preliminary Offering Memorandum, the Pricing Disclosure Package, the Offering
Memorandum, (ii) any written communication that contains no “issuer information”
(as defined in Rule 433(h)(2) under the Act) that was not included (including
through incorporation by reference) in the Preliminary Offering Memorandum or
any Free Writing Offering Document listed on Schedule IV hereto, (iii) the Free
Writing Offering Documents listed on Schedule IV hereto, (iv) any written
communication prepared by such Initial Purchaser and approved by the Company in
writing, or (v) any written communication relating to or that contains the terms
of the Notes and/or other information that was included (including through
incorporation by reference) in the Preliminary Offering Memorandum, the Pricing
Disclosure Package or the Offering Memorandum.

 

Each of the Initial Purchasers understands that the Company and, for purposes of
the opinions to be delivered to the Initial Purchasers pursuant to Sections
7(c) and 7(d) hereof, counsel to the Company and counsel to the Initial
Purchasers, will rely upon the accuracy and truth of the foregoing
representations, warranties and agreements, and the Initial Purchasers hereby
consents to such reliance.

 

4.             Delivery of the Notes and Payment Therefor.  Delivery to the
Initial Purchasers of and payment for the Notes shall be made at the office of
Vinson & Elkins LLP, at 10:00 A.M., New York City time, on July 16, 2012 (the
“Closing Date”).  The place of closing for the Notes and the Closing Date may be
varied by agreement between the Initial Purchasers and the Company.

 

The Notes will be delivered to the Initial Purchasers, or the Trustee as
custodian for The Depository Trust Company (“DTC”), against payment by or on
behalf of the Initial Purchasers of the purchase price therefor by wire transfer
in immediately available funds in accordance with the terms of the Escrow
Agreement, by causing DTC to credit the Notes to the account of the Initial
Purchasers at DTC.  The Notes will be evidenced by one or more global securities
in definitive form (the “Global Notes”) and will be registered, in the case of
the Global Notes, in the name of Cede & Co. as nominee of DTC, and in the other
cases, in such names and in such denominations as the Initial Purchasers shall
request prior to 10:00 A.M., New York City time, on the second business day
preceding the Closing Date.  The Notes to be delivered to the Initial Purchasers
shall be made available to the Initial Purchasers in New York City for

 

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inspection and packaging not later than 10:00 A.M., New York City time, on the
business day next preceding the Closing Date.

 

5.             Agreements of the Company and the Guarantors.  The Company and
the Guarantors (in the case of the Acquired Guarantors, upon execution of the
Joinder Agreement), jointly and severally, agree with each of the Initial
Purchasers as follows:

 

(a)           The Company and the Guarantors will furnish to the Initial
Purchasers, without charge, within one business day of the date of the Offering
Memorandum, such number of copies of the Offering Memorandum as may then be
amended or supplemented as they may reasonably request.

 

(b)           The Company and the Guarantors will not make any amendment or
supplement to the Pricing Disclosure Package or to the Offering Memorandum of
which the Initial Purchasers shall not previously have been advised or to which
they shall reasonably object after being so advised.

 

(c)           The Company and each of the Guarantors consents to the use of the
Pricing Disclosure Package and the Offering Memorandum in accordance with the
securities or Blue Sky laws of the jurisdictions in which the Notes are offered
by the Initial Purchasers and by all dealers to whom Notes may be sold, in
connection with the offering and sale of the Notes.

 

(d)           If, at any time prior to completion of the distribution of the
Notes by the Initial Purchasers to Eligible Purchasers, any event occurs or
information becomes known that, in the judgment of the Company or any of the
Guarantors or in the opinion of counsel for the Initial Purchasers, should be
set forth in the Pricing Disclosure Package or the Offering Memorandum so that
the Pricing Disclosure Package or the Offering Memorandum, as then amended or
supplemented, does not include any untrue statement of material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or if it
is necessary to supplement or amend the Pricing Disclosure Package or the
Offering Memorandum in order to comply with any law, the Company and the
Guarantors will forthwith prepare an appropriate supplement or amendment
thereto, and will expeditiously furnish to the Initial Purchasers and dealers a
reasonable number of copies thereof.

 

(e)           None of the Company nor any Guarantor will make any offer to sell
or solicitation of an offer to buy the Notes that would constitute a Free
Writing Offering Document without the prior consent of the Representatives,
which consent shall not be unreasonably withheld or delayed.  If at any time
following issuance of a Free Writing Offering Document any event occurred or
occurs as a result of which such Free Writing Offering Document conflicts with
the information in the Preliminary Offering Memorandum, the Pricing Disclosure
Package or the Offering Memorandum or, when taken together with the information
in the Preliminary Offering Memorandum, the Pricing Disclosure Package or the
Offering Memorandum, includes an untrue statement of a material fact or omits to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances then prevailing, not misleading, as promptly as
practicable after becoming aware thereof, the Company will give notice thereof
to the Initial Purchasers through the Representatives and, if requested by the
Representatives, will

 

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prepare and furnish without charge to each Initial Purchaser a Free Writing
Offering Document or other document which will correct such conflict, statement
or omission.

 

(f)            Promptly from time to time to take such action as the Initial
Purchasers may reasonably request to qualify the Notes for offering and sale
under the securities or Blue Sky laws of such jurisdictions as the Initial
Purchasers may request and to comply with such laws so as to permit the
continuance of sales and dealings therein in such jurisdictions for as long as
may be necessary to complete the distribution of the Notes; provided that in
connection therewith the Company shall not be required to (i) qualify as a
foreign corporation in any jurisdiction in which it would not otherwise be
required to so qualify, (ii) file a general consent to service of process in any
such jurisdiction, or (iii) subject itself to taxation in any jurisdiction in
which it would not otherwise be subject.

 

(g)           For a period commencing on the date hereof and ending on the
90th day after the date of the Offering Memorandum, the Company and the
Guarantors agree not to, directly or indirectly, (i) offer for sale, sell, or
otherwise dispose of (or enter into any transaction or device that is designed
to, or would be expected to, result in the disposition by any person at any time
in the future of) any debt securities of the Company substantially similar to
the Notes or securities convertible into or exchangeable for such debt
securities of the Company, or sell or grant options, rights or warrants with
respect to such debt securities of the Company or securities convertible into or
exchangeable for such debt securities of the Company, (ii) enter into any swap
or other derivatives transaction that transfers to another, in whole or in part,
any of the economic benefits or risks of ownership of such debt securities of
the Company, whether any such transaction described in clause (i) or (ii) above
is to be settled by delivery of debt securities of the Company or other
securities, in cash or otherwise, (iii) file or cause to be filed a registration
statement, including any amendments, with respect to the registration of debt
securities of the Company substantially similar to the Notes or securities
convertible, exercisable or exchangeable into debt securities of the Company
substantially similar to the Notes, or (iv) publicly announce an offering of any
debt securities of the Company substantially similar to the Notes or securities
convertible or exchangeable into debt securities substantially similar to the
Notes, in each case without the prior written consent of Barclays Capital Inc.,
on behalf of the Initial Purchasers, except in exchange for the Exchange Notes
and the Exchange Guarantees in connection with the Exchange Offer.

 

(h)           Upon request, so long as any of the Notes are outstanding, the
Company and the Guarantors will, furnish at their expense to the Initial
Purchasers and to the holders of the Notes the information required by
Rule 144A(d)(4) under the Securities Act (if any).

 

(i)            The Company and the Guarantors will apply the net proceeds from
the sale of the Notes to be sold by it hereunder substantially in accordance
with the description set forth in the Pricing Disclosure Package and the
Offering Memorandum under the caption “Use of Proceeds.”

 

(j)            The Company, the Guarantors and their respective affiliates will
not take, directly or indirectly, any action designed to or that has constituted
or that reasonably could be expected to cause or result in the stabilization or
manipulation of the price of any security of the Company or the Guarantors in
connection with the offering of the Notes.

 

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(k)           The Company and the Guarantors will use their best efforts to
permit the Notes to be eligible for clearance and settlement through DTC.

 

(l)            The Company and the Guarantors will not, and will not permit any
of their respective affiliates (as defined in Rule 144 under the Securities Act)
to, resell any of the Notes that have been acquired by any of them, except for
Notes purchased by the Company, the Guarantors or any of their respective
affiliates and resold in a transaction registered under the Securities Act.

 

(m)          The Company and the Guarantors will take precautions designed to
insure that any offer or sale, direct or indirect, in the United States or to
any U.S. person (as defined in Rule 902 under the Securities Act), of any Notes
or any substantially similar security issued by the Company or any Guarantor,
within six months subsequent to the date on which the distribution of the Notes
has been completed (as notified to the Company by the Initial Purchasers), is
made under restrictions and other circumstances reasonably designed not to
affect the status of the offer and sale of the Notes in the United States and to
U.S. persons contemplated by this Agreement as transactions exempt from the
registration provisions of the Securities Act, including any sales pursuant to
Rule 144A under, or Regulations D or S of, the Securities Act.

 

(n)           None of the Company or any of the Guarantors or any other person
on its or their behalf (other than the Initial Purchasers, as to which no
covenant is given) will (i) solicit offers for, or offer or sell, the Notes by
means of any form of general solicitation or general advertising within the
meaning of Rule 502(c) of Regulation D or in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act or (ii) engage
in any directed selling efforts within the meaning of Regulation S, and all such
persons will comply with the offering restrictions requirement of Regulation S.

 

(o)           The Company and the Guarantors agree to comply with all the terms
and conditions of the Registration Rights Agreement and all agreements set forth
in the representation letters of the Company and the Guarantors to DTC relating
to the approval of the Notes by DTC for “book entry” transfer.

 

(p)           Concurrent with the closing of the GeoResources Merger, the
Company and the Guarantors shall cause the Acquired Guarantors to (i) execute
and deliver the Joinder Agreement and (ii) execute and deliver supplemental
indentures to the Indenture and/or take all necessary actions to become
Guarantors under the Indenture.

 

(q)           The Company and the Guarantors will use their best efforts to
(i) do and perform all things required or necessary to be done and performed
under this Agreement by them prior to the Closing Date, and (ii) satisfy all
conditions precedent to the Initial Purchasers’ obligations hereunder to
purchase the Notes.

 

6.             Expenses.  Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company and the
Guarantors, jointly and severally, agree, to pay all expenses, costs, fees and
taxes incident to and in connection with: (a) the preparation, printing, filing
and distribution of the Preliminary Offering Memorandum, the Pricing Disclosure
Package and the Offering Memorandum (including, without limitation,

 

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financial statements and exhibits) and all amendments and supplements thereto
(including the fees, disbursements and expenses of the Company’s and the
Guarantors’ accountants and counsel, but not, however, legal fees and expenses
of the Initial Purchasers’ counsel incurred in connection therewith); (b) the
preparation, printing (including, without limitation, word processing and
duplication costs) and delivery of this Agreement, the Indenture, the
Registration Rights Agreement, the Joinder Agreement, all Blue Sky memoranda and
all other agreements, memoranda, correspondence and other documents printed and
delivered in connection therewith and with the Exempt Resales (but not, however,
legal fees and expenses of the Initial Purchasers’ counsel incurred in
connection with any of the foregoing other than fees of such counsel plus
reasonable disbursements incurred in connection with the preparation, printing
and delivery of such Blue Sky memoranda); (c) the issuance and delivery by the
Company of the Notes and by the Guarantors of the Guarantees and any taxes
payable in connection therewith; (d) the qualification of the Notes and Exchange
Notes for offer and sale under the securities or Blue Sky laws of the several
states and any foreign jurisdictions as the Initial Purchasers may designate
(including, without limitation, the reasonable fees and disbursements of the
Initial Purchasers’ counsel relating to such registration or qualification);
(e) the furnishing of such copies of the Preliminary Offering Memorandum, the
Pricing Disclosure Package and the Offering Memorandum, and all amendments and
supplements thereto, as may be reasonably requested for use in connection with
the Exempt Resales; (f) the preparation of certificates for the Notes
(including, without limitation, printing and engraving thereof); (g) the
approval of the Notes by DTC for “book-entry” transfer (including fees and
expenses of counsel for the Initial Purchasers reasonably incurred in connection
therewith); (h) the rating of the Notes and the Exchange Notes; (i) the
obligations of the Trustee, any agent of the Trustee and the counsel for the
Trustee in connection with the Indenture, the Notes and the Guarantees, the
Exchange Notes; and the Exchange Guarantees; (j) the performance by the Company
and the Guarantors of their other obligations under this Agreement; and (k) all
travel expenses (including expenses related to chartered aircraft) of each
Initial Purchaser and the Company’s officers and employees and any other
expenses of each Initial Purchaser and the Company in connection with attending
or hosting meetings with prospective purchasers of the Notes, and expenses
associated with any electronic road show.

 

7.             Conditions to Initial Purchasers’ Obligations.  The respective
obligations of the Initial Purchasers hereunder are subject to the accuracy,
when made and on and as of the Closing Date, of the representations and
warranties of the Company and the Guarantors contained herein, to the
performance by the Company and the Guarantors of their respective obligations
hereunder, and to each of the following additional terms and conditions:

 

(a)           The Initial Purchasers shall not have discovered and disclosed to
the Company on or prior to the Closing Date that the Pricing Disclosure Package
or the Offering Memorandum, or any amendment or supplement thereto, contains an
untrue statement of a fact which, in the opinion of Vinson & Elkins LLP, counsel
to the Initial Purchasers, is material or omits to state a fact which, in the
opinion of such counsel, is material and is necessary in order to make the
statements therein, in the light of the circumstances then prevailing, not
misleading.

 

(b)           All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Notes, the Guarantees,
the Exchange Notes, the Exchange Guarantees, the Registration Rights Agreement,
the Escrow Agreement, the

 

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Indenture, the Pricing Disclosure Package and the Offering Memorandum, and all
other legal matters relating to this Agreement and the transactions contemplated
hereby shall be reasonably satisfactory in all material respects to counsel for
the Initial Purchasers, and the Company and the Guarantors shall have furnished
to such counsel all documents and information that they may reasonably request
to enable them to pass upon such matters.

 

(c)           Thompson & Knight LLP shall have furnished to the Initial
Purchasers its written opinion, as counsel to the Company and the Guarantors,
addressed to the Initial Purchasers and dated the Closing Date, in form and
substance reasonably satisfactory to the Initial Purchasers, substantially in
the form of Exhibit B hereto.

 

(d)           David Elkouri, General Counsel of the Company, shall have
furnished to the Initial Purchasers his written opinion, as counsel to the
Company and the Guarantors and dated the Closing Date, in form and substance
reasonably satisfactory to the Initial Purchasers, substantially in the form of
Exhibit C hereto.

 

(e)           The Initial Purchasers shall have received from Vinson & Elkins
LLP, counsel for the Initial Purchasers, such opinion or opinions, dated the
Closing Date, with respect to the issuance and sale of the Notes, the Pricing
Disclosure Package, the Offering Memorandum and other related matters as the
Initial Purchasers may reasonably require, and the Company shall have furnished
to such counsel such documents and information as such counsel reasonably
requests for the purpose of enabling them to pass upon such matters.

 

(f)            At the time of execution of this Agreement, the Initial
Purchasers shall have received from each of (a) Deloitte & Touche LLP, (b) UHY
LLC and (c) Grant Thornton LLP a letter, in form and substance satisfactory to
the Initial Purchasers, addressed to the Initial Purchasers and dated the date
hereof (i) confirming that they are independent public accountants within the
meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission and (ii) stating, as of the date hereof (or,
with respect to matters involving changes or developments since the respective
dates as of which specified financial information is given in the Pricing
Disclosure Package, as of a date not more than three days prior to the date
hereof), the conclusions and findings of such firm with respect to the financial
information and (iii) covering such other matters as are ordinarily covered by
accountants’ “comfort letters” to underwriters in connection with registered
public offerings.

 

(g)           With respect to the letters of each of (a) Deloitte & Touche LLP,
(b) UHY LLC and (c) Grant Thorton LLP referred to in the preceding paragraph and
delivered to the Initial Purchasers concurrently with the execution of this
Agreement (the “initial letter”), the Company shall have furnished to the
Initial Purchasers a “bring-down letter” of such accountants, addressed to the
Initial Purchasers and dated the Closing Date (i) confirming that they are
independent public accountants within the meaning of the Securities Act and are
in compliance with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission, (ii) stating,
as of the Closing Date (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in each of the Pricing Disclosure Package or the Offering
Memorandum, as of a date not more than three days prior to the date of the
Closing Date), the

 

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conclusions and findings of such firm with respect to the financial information
and other matters covered by the initial letter, and (iii) confirming in all
material respects the conclusions and findings set forth in the initial letter.

 

(h)           Except as described in the Pricing Disclosure Package and the
Offering Memorandum, (i) neither the Company, any Guarantor nor any of their
respective subsidiaries shall have sustained, since the date of the latest
audited financial statements included and incorporated by reference in the
Pricing Disclosure Package and the Offering Memorandum, any loss or interference
with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, or (ii) since such date, there shall not have been any change
in the capital stock or long-term debt of the Company, any Guarantor or any of
their respective subsidiaries or any change, or any development involving a
prospective change, in or affecting the business, properties, prospects,
financial condition, stockholders’ equity or results of operations of the
Company, the Guarantors and their respective subsidiaries, taken as a whole, the
effect of which, in any such case described in clause (i) or (ii), is,
individually or in the aggregate, in the judgment of the Representatives, so
material and adverse as to make it impracticable or inadvisable to proceed with
the offering or the delivery of the Notes being delivered on the Closing Date on
the terms and in the manner contemplated in the Pricing Disclosure Package and
the Offering Memorandum.

 

(i)            Except as described in the Pricing Disclosure Package and the
Offering Memorandum, (i) neither GeoResources nor any of its subsidiaries shall
have sustained, since the date of the latest audited financial statements
included and incorporated by reference in the Pricing Disclosure Package and the
Offering Memorandum, any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, or
(ii) since such date, there shall not have been any change in the capital stock
or long-term debt of GeoResources or any of its subsidiaries or any change, or
any development involving a prospective change, in or affecting the business,
properties, prospects, financial condition, stockholders’ equity or results of
operations of the Company, GeoResources and their respective subsidiaries, taken
as a whole, the effect of which, in any such case described in clause (i) or
(ii), is, individually or in the aggregate, in the judgment of the
Representatives, so material and adverse as it relates to the Company,
GeoResources and their respective subsidiaries, taken as a whole, as to make it
impracticable or inadvisable to proceed with the offering or the delivery of the
Notes being delivered on the Closing Date on the terms and in the manner
contemplated in the Pricing Disclosure Package and the Offering Memorandum.

 

(j)            At the time of execution of this Agreement, the Initial
Purchasers shall have received from each of (a) Forrest A. Garb & Associates and
(b) Cawley Gillespie & Associates, Inc. an initial letter (the “initial expert
letter”), in form and substance satisfactory to the Initial Purchasers,
addressed to the Initial Purchasers and dated the date hereof and a subsequent
letter dated as of the Closing Date, which such letter shall cover the period
from any initial expert letter to the Closing Date, confirming that they are
independent with respect to the Company and stating the conclusions and findings
of such firm with respect to matters pertaining to the Company’s use of the
reports of proved reserves from Forrest A. Garb & Associates and

 

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GeoResources’ use of the reports of proved reserves from Cawley Gillespie &
Associates, Inc. as is customary to initial purchasers in connection with
similar transactions.

 

(k)           The Company and each Guarantor shall have furnished or caused to
be furnished to the Initial Purchasers dated as of the Closing Date a
certificate of the Chief Executive Officer and Chief Financial Officer of the
Company and each Guarantor, or other officers satisfactory to the Initial
Purchasers, as to such matters as the Representatives may reasonably request,
including, without limitation, a statement that:

 

(i)            The representations, warranties and agreements of the Company and
the Guarantors in Section 2 are true and correct on and as of the Closing Date,
and the Company and the Guarantors have complied with all its agreements
contained herein and satisfied all the conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date; and

 

(ii)           They have examined the Pricing Disclosure Package and the
Offering Memorandum, and, in their opinion, (A) the Pricing Disclosure Package,
as of the Applicable Time and as of the Closing Date, and the Offering
Memorandum, as of its date and as of the Closing Date, did not and do not
contain any untrue statement of a material fact and did not and do not omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading and (B) since the
date of the Pricing Disclosure Package and the Offering Memorandum, no event has
occurred which should have been set forth in a supplement or amendment to the
Pricing Disclosure Package and the Offering Memorandum.

 

(l)            Subsequent to the earlier of the Applicable Time and the
execution and delivery of this Agreement (i) no downgrading shall have occurred
in the rating accorded the Company’s debt securities by any “nationally
recognized statistical rating organization,” as such term is used in Section 15E
of the Exchange Act, and (ii) no such organization shall have publicly announced
that it has under surveillance or review, or has changed its outlook with
respect to, its rating of the Notes or of any other debt securities issued or
guaranteed by the Company or any of the Guarantors (in each case, other than an
announcement with positive implications of a possible upgrading).

 

(m)          The Notes shall be eligible for clearance and settlement through
DTC.

 

(n)           The Company and the Guarantors shall have executed and delivered
the Registration Rights Agreement, and the Initial Purchasers shall have
received an original copy thereof, duly executed by the Company and the
Guarantors.

 

(o)           The Company, the Escrow Agent and the Trustee shall have executed
and delivered the Escrow Agreement, and the Initial Purchasers shall have
received an original copy thereof, duly executed by the Company, the Escrow
Agent and the Trustee.

 

(p)           The Company, the Guarantors and the Trustee shall have executed
and delivered the Indenture, and the Initial Purchasers shall have received an
original copy thereof, duly executed by the Company, the Guarantors and the
Trustee.

 

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(q)           Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following:  (i) trading in securities
generally on the New York Stock Exchange or the NYSE Amex Equities or in the
over-the-counter market, or trading in any securities of the Company or
GeoResources on any exchange or in the over-the-counter market, shall have been
suspended or materially limited or the settlement of such trading generally
shall have been materially disrupted or minimum prices shall have been
established on any such exchange or such market by the Commission, by such
exchange or by any other regulatory body or governmental authority having
jurisdiction, (ii) a general moratorium on commercial banking activities shall
have been declared by federal or state authorities, (iii) the United States
shall have become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States, (iv) a material disruption
in commercial banking or securities settlement or clearance services in the
United States, or (v) there shall have occurred such a material adverse change
in general economic, political or financial conditions, including, without
limitation, as a result of terrorist activities after the date hereof (or the
effect of international conditions on the financial markets in the United States
shall be such), as to make it, in the judgment of the Representatives,
impracticable or inadvisable to proceed with the offering or delivery of the
Notes being delivered on the Closing Date on the terms and in the manner
contemplated in the Offering Memorandum or that, in the judgment of the
Representatives, could materially and adversely affect the financial markets or
the markets for the Notes and other debt securities.

 

(r)            There shall exist at and as of the Closing Date no condition that
would constitute a default (or an event that with notice or the lapse of time,
or both, would constitute a default) under the Indenture or a material breach
under the Merger Agreement as in effect at the Closing Date (or an event that
with notice or lapse of time, or both, would constitute such a default or
material breach).

 

All opinions, letters, evidence and certificates mentioned above or elsewhere in
this Agreement shall be deemed to be in compliance with the provisions hereof
only if they are in form and substance reasonably satisfactory to counsel for
the Initial Purchasers.

 

8.             Indemnification and Contribution.

 

(a)           The Company and each Guarantor (in the case of the Acquired
Guarantors, upon execution and delivery of the Joinder Agreement), hereby
agrees, jointly and severally, to indemnify and hold harmless each Initial
Purchaser, its affiliates, directors, officers and employees and each person, if
any, who controls any Initial Purchaser within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or action
relating to purchases and sales of Notes), to which that Initial Purchaser,
affiliate, director, officer, employee or controlling person may become subject,
under the Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained (A) in any Free Writing
Offering Document, the Preliminary Offering Memorandum, the Pricing Disclosure
Package or the Offering Memorandum or in any amendment or supplement thereto,
(B) in any Blue Sky application or other document prepared or executed by the
Company or any Guarantor (or based upon any

 

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written information furnished by the Company or any Guarantor) specifically for
the purpose of qualifying any or all of the Notes under the securities laws of
any state or other jurisdiction (any such application, document or information
being hereinafter called a “Blue Sky Application”), or (C) in any materials or
information provided to investors by, or with the approval of, the Company or
any Guarantor in connection with the marketing of the offering of the Notes
(“Marketing Materials”), including any road show or investor presentations made
to investors by the Company (whether in person or electronically) or any
materials prepared for the purpose of compliance with the Canadian securities
laws, or (ii) the omission or alleged omission to state in any Free Writing
Offering Document, the Preliminary Offering Memorandum, the Pricing Disclosure
Package or the Offering Memorandum, or in any amendment or supplement thereto,
or in any Blue Sky Application or in any Marketing Materials, any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and shall reimburse
each Initial Purchaser and each such affiliate, director, officer, employee or
controlling person promptly upon demand for any legal or other expenses
reasonably incurred by that Initial Purchaser, affiliate, director, officer,
employee or controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that the Company and the
Guarantors shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of, or is based upon, any
untrue statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Offering Memorandum, the Pricing Disclosure Package or
Offering Memorandum, or in any such amendment or supplement thereto, or in any
Blue Sky Application or in any Marketing Materials, in reliance upon and in
conformity with written information concerning such Initial Purchaser furnished
to the Company through the Representatives by or on behalf of any Initial
Purchaser specifically for inclusion therein, which information consists solely
of the information specified in Section 8(e).  The foregoing indemnity agreement
is in addition to any liability that the Company or the Guarantors may otherwise
have to any Initial Purchaser or to any affiliate, director, officer, employee
or controlling person of that Initial Purchaser.

 

(b)           Each Initial Purchaser, severally and not jointly, hereby agrees
to indemnify and hold harmless the Company, each Guarantor (in the case of the
Acquired Guarantors, only upon execution and delivery of the Joinder Agreement),
their respective officers and employees, each of their respective directors, and
each person, if any, who controls the Company or any Guarantor within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which the Company, any Guarantor or any such
director, officer, employee or controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in any Free Writing Offering
Document, Preliminary Offering Memorandum, the Pricing Disclosure Package or the
Offering Memorandum or in any amendment or supplement thereto, (B) in any Blue
Sky Application, or (C) in any Marketing Materials, or (ii) the omission or
alleged omission to state in any Free Writing Offering Document, Preliminary
Offering Memorandum, the Pricing Disclosure Package or the Offering Memorandum,
or in any amendment or supplement thereto, or in any Blue Sky Application or in
any Marketing Materials any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, but in each case only to the extent that the untrue
statement or alleged

 

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untrue statement or omission or alleged omission was made in reliance upon and
in conformity with written information concerning such Initial Purchaser
furnished to the Company through the Representatives by or on behalf of that
Initial Purchaser specifically for inclusion therein, which information is
limited to the information set forth in Section 8(e).  The foregoing indemnity
agreement is in addition to any liability that any Initial Purchaser may
otherwise have to the Company, any Guarantor or any such director, officer,
employee or controlling person.

 

(c)           Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability that it may have under this Section 8 except to the extent it has been
materially prejudiced (through the forfeiture of substantive rights or defenses)
by such failure and; provided, further, that the failure to notify the
indemnifying party shall not relieve it from any liability that it may have to
an indemnified party otherwise than under this paragraph (a) or (b) of this
Section 8.  If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party.  After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 8 for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided,
however, that the Initial Purchasers shall have the right to employ counsel to
represent jointly the Initial Purchasers and their respective affiliates,
directors, officers, employees and controlling persons who may be subject to
liability arising out of any claim in respect of which indemnity may be sought
by the Initial Purchasers against the Company or any Guarantor under this
Section 8, if (i) the Company, the Guarantors and the Initial Purchasers shall
have so mutually agreed; (ii) the Company and the Guarantors have failed within
a reasonable time to retain counsel reasonably satisfactory to the Initial
Purchasers; (iii) the Initial Purchasers and their respective affiliates,
directors, officers, employees and controlling persons shall have reasonably
concluded, based on the advice of counsel, that there may be legal defenses
available to them that are different from or in addition to those available to
the Company and the Guarantors; or (iv) the named parties in any such proceeding
(including any impleaded parties) include both the Initial Purchasers or their
respective affiliates, directors, officers, employees or controlling persons, on
the one hand, and the Company and the Guarantors, on the other hand, and
representation of both sets of parties by the same counsel would present a
conflict due to actual or potential differing interests between them, and in any
such event the fees and expenses of such separate counsel shall be paid by the
Company and the Guarantors.  No indemnifying party shall (x) without the prior
written consent of the indemnified parties (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding and does not include a
statement as to, or an admission

 

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of fault, culpability or a failure to act by or on behalf of any indemnified
party, or (y) be liable for any settlement of any such action effected without
its written consent (which consent shall not be unreasonably withheld), but if
settled with the consent of the indemnifying party or if there be a final
judgment of the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.

 

(d)           If the indemnification provided for in this Section 8 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a) or 8(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company and the Guarantors, on the one hand, and the Initial
Purchasers, on the other, from the offering of the Notes, or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Guarantors, on the one hand, and the Initial Purchasers, on the other, with
respect to the statements or omissions that resulted in such loss, claim, damage
or liability, or action in respect thereof, as well as any other relevant
equitable considerations.  The relative benefits received by the Company and the
Guarantors, on the one hand, and the Initial Purchasers, on the other, with
respect to such offering shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Notes purchased under this Agreement
(before deducting expenses) received by the Company and the Guarantors, on the
one hand, and the total discounts and commissions received by the Initial
Purchasers with respect to the Notes purchased under this Agreement, on the
other hand, bear to the total gross proceeds from the offering of the Notes
under this Agreement as set forth on the cover page of the Offering Memorandum. 
The relative fault shall be determined by reference to whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company, the
Guarantors, or the Initial Purchasers, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such statement or omission.  For purposes of the preceding two sentences, the
net proceeds deemed to be received by the Company shall be deemed to be also for
the benefit of the Guarantors, and information supplied by the Company shall
also be deemed to have been supplied by the Guarantors.  The Company, the
Guarantors, and the Initial Purchasers agree that it would not be just and
equitable if contributions pursuant to this Section 8(d) were to be determined
by pro rata allocation (even if the Initial Purchasers were treated as one
entity for such purpose) or by any other method of allocation that does not take
into account the equitable considerations referred to herein.  The amount paid
or payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this
Section 8(d) shall be deemed to include, for purposes of this Section 8(d), any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim. 
Notwithstanding the provisions of this Section 8(d), no Initial Purchaser shall
be required to contribute any amount in excess of the amount by which the net
proceeds from the sale to Eligible Purchasers of the Notes initially purchased
by it exceeds the amount of any damages that such Initial Purchaser has
otherwise paid or become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission.  No person

 

38

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

 

guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.  The Initial Purchasers’
obligations to contribute as provided in this Section 8(d) are several in
proportion to their respective purchase obligations and not joint.

 

(e)           The Initial Purchasers severally confirm and the Company and the
Guarantors acknowledge and agree that the statements contained in the second
sentence under the heading “Plan of Distribution—Rule 144A and Regulation S” in
the Pricing Disclosure Package and the Offering Memorandum are correct and
constitute the only information concerning such Initial Purchasers furnished in
writing to the Company or any Guarantor by or on behalf of the Initial
Purchasers specifically for inclusion in any Free Writing Offering Document, the
Preliminary Offering Memorandum, the Pricing Disclosure Package, the Offering
Memorandum, or in any amendment or supplement thereto or in any Blue Sky
Application or in any Marketing Materials.

 

9.             Defaulting Initial Purchasers.

 

(a)           If, on the Closing Date, any Initial Purchaser defaults in its
obligations to purchase the Notes that it has agreed to purchase under this
Agreement, the remaining non-defaulting Initial Purchasers may in their
discretion arrange for the purchase of such Notes by the non-defaulting Initial
Purchasers or other persons satisfactory to the Company on the terms contained
in this Agreement.  If, within 36 hours after any such default by any Initial
Purchaser, the non-defaulting Initial Purchasers do not arrange for the purchase
of such Notes, then the Company shall be entitled to a further period of 36
hours within which to procure other persons satisfactory to the non-defaulting
Initial Purchasers to purchase such Notes on such terms.  In the event that
within the respective prescribed periods, the non-defaulting Initial Purchasers
notify the Company that they have so arranged for the purchase of such Notes, or
the Company notifies the non-defaulting Initial Purchasers that it has so
arranged for the purchase of such Notes, either the non-defaulting Initial
Purchasers or the Company may postpone the Closing Date for up to seven full
business days in order to effect any changes that in the opinion of counsel for
the Company or counsel for the Initial Purchasers may be necessary in the
Pricing Disclosure Package, the Offering Memorandum or in any other document or
arrangement, and the Company agrees to promptly prepare any amendment or
supplement to the Pricing Disclosure Package or the Offering Memorandum that
effects any such changes.  As used in this Agreement, the term “Initial
Purchaser” includes, for all purposes of this Agreement unless the context
requires otherwise, any party not listed in Schedule I hereto that, pursuant to
this Section 9, purchases Notes that a defaulting Initial Purchaser agreed but
failed to purchase.

 

(b)           If, after giving effect to any arrangements for the purchase of
the Notes of a defaulting Initial Purchaser or Initial Purchasers by the
non-defaulting Initial Purchasers and the Company as provided in paragraph
(a) above, the aggregate principal amount of such Notes that remains unpurchased
does not exceed one-eleventh of the aggregate principal amount of all the Notes,
then the Company shall have the right to require each non-defaulting Initial
Purchaser to purchase the principal amount of Notes that such Initial Purchaser
agreed to purchase hereunder plus such Initial Purchaser’s pro rata share (based
on the principal amount of Notes that such Initial Purchaser agreed to purchase
hereunder) of the Notes of such defaulting Initial Purchaser or Initial
Purchasers for which such arrangements have not been made; provided that

 

39

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

 

the non-defaulting Initial Purchasers shall not be obligated to purchase more
than 110% of the aggregate principal amount of Notes that it agreed to purchase
on the Closing Date pursuant to the terms of Section 3.

 

(c)           If, after giving effect to any arrangements for the purchase of
the Notes of a defaulting Initial Purchaser or Initial Purchasers by the
non-defaulting Initial Purchasers and the Company as provided in paragraph
(a) above, the aggregate principal amount of such Notes that remains unpurchased
exceeds one-eleventh of the aggregate principal amount of all the Notes, or if
the Company shall not exercise the right described in paragraph (b) above, then
this Agreement shall terminate without liability on the part of the
non-defaulting Initial Purchasers.  Any termination of this Agreement pursuant
to this Section 9 shall be without liability on the part of the Company or the
Guarantors, except that the Company and each of the Guarantors will continue to
be liable for the payment of expenses as set forth in Sections 6 and 11 to the
non-defaulting Initial Purchasers and except that the provisions of Section 8
shall not terminate and shall remain in effect.

 

(d)           Nothing contained herein shall relieve a defaulting Initial
Purchaser of any liability it may have to the Company, the Guarantors or any
non-defaulting Initial Purchaser for damages caused by its default.

 

10.          Termination.  The obligations of the Initial Purchasers hereunder
may be terminated by the Initial Purchasers by notice given to and received by
the Company prior to delivery of and payment for the Notes if, prior to that
time, any of the events described in Sections 7(h), (i), (l) or (q) shall have
occurred or if the Initial Purchasers shall decline to purchase the Notes for
any reason permitted under this Agreement.

 

11.          Reimbursement of Initial Purchasers’ Expenses.  If (a) the Company
for any reason fails to tender the Notes for delivery to the Initial Purchasers,
or (b) the Initial Purchasers shall decline to purchase the Notes for any reason
permitted under this Agreement, the Company and the Guarantors shall jointly and
severally reimburse the Initial Purchasers for all reasonable out-of-pocket
expenses (including fees and disbursements of counsel for the Initial
Purchasers) incurred by the Initial Purchasers in connection with this Agreement
and the proposed purchase of the Notes, and upon demand the Company and the
Guarantors shall pay the full amount thereof to the Initial Purchasers.  If this
Agreement is terminated pursuant to Section 9 by reason of the default of one or
more Initial Purchasers, the Company and the Guarantors shall not be obligated
to reimburse any defaulting Initial Purchaser on account of those expenses.

 

12.          Notices, etc.  All statements, requests, notices and agreements
hereunder shall be in writing, and:

 

(a)           if to any Initial Purchasers, shall be delivered or sent by hand
delivery, mail, telex, overnight courier or facsimile transmission to Barclays
Capital Inc., 745 Seventh Avenue, New York, New York 10019, Attention: Syndicate
Registration with a copy to Vinson & Elkins LLP, 1001 Fannin Street, Suite 2500,
Houston, Texas 77002, Attention: Kathryn Wilson (Fax: (713) 615-5792), and with
a copy, in the case of any notice pursuant to Section 8(c), to the Director of
Litigation, Office of the General Counsel, Barclays Capital Inc., 745 Seventh
Ave., New York, New York 10019;

 

40

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

 

(b)           if to the Company or any Guarantor, shall be delivered or sent by
mail, telex, overnight courier or facsimile transmission to Halcón Resources
Corporation, 1000 Louisiana Street, Suite 6700, Houston, Texas 77002, Attention:
Floyd Wilson, with a copy to Thompson & Knight LLP, 333 Clay Street, Suite 3300,
Houston, Texas 77002, Attention: William T. Heller IV;

 

provided, however, that any notice to an Initial Purchaser pursuant to
Section 8(c) shall be delivered or sent by hand delivery, mail, telex or
facsimile or electronic transmission to such Initial Purchaser at its address
set forth in its acceptance telex to Barclays Capital Inc., which address will
be supplied to any other party hereto by Barclays Capital Inc. upon request. Any
such statements, requests, notices or agreements shall take effect at the time
of receipt thereof. The Company shall be entitled to act and rely upon any
request, consent, notice or agreement given or made on behalf of the Initial
Purchasers by Barclays Capital Inc.

 

(c)           In accordance with the requirements of the USA Patriot Act (Title
III of Pub. L. 107-56 (signed into law October 26, 2001)), the Initial
Purchasers are required to obtain, verify and record information that identifies
their respective clients, including the Company, which information may include
the name and address of their respective clients, as well as other information
that will allow  the Initial Purchasers to properly identify their respective
clients.

 

13.          Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Initial Purchasers, the Company,
the Guarantors and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except that
the representations, warranties, indemnities and agreements of the Company and
the Guarantors contained in this Agreement shall also be deemed to be for the
benefit of the affiliates, directors, officers and employees of the Initial
Purchasers and each person or persons, if any, controlling any Initial Purchaser
within the meaning of Section 15 of the Securities Act. Nothing in this
Agreement is intended or shall be construed to give any person, other than the
persons referred to in this Section 13, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.

 

14.          Survival. The respective indemnities, rights of contribution,
representations, warranties and agreements of the Company, the Guarantors and
the Initial Purchasers contained in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement, shall survive the delivery of
and payment for the Notes and shall remain in full force and effect, regardless
of any termination of this Agreement or any investigation made by or on behalf
of any of them or any person controlling any of them.

 

15.          Definition of the Terms “Business Day”, “Affiliate”, and
“Subsidiary”. For purposes of this Agreement, (a) “business day” means any day
on which the New York Stock Exchange, Inc. is open for trading, and
(b) “affiliate” and “subsidiary” have the meanings set forth in Rule 405 under
the Securities Act.

 

16.          Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.

 

41

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

 

17.          Waiver of Jury Trial. The Company and each of the Initial
Purchasers hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby.

 

18.          No Fiduciary Duty. The Company and the Guarantors acknowledge and
agree that in connection with this offering, or any other services the Initial
Purchasers may be deemed to be providing hereunder, notwithstanding any
preexisting relationship, advisory or otherwise, between the parties or any oral
representations or assurances previously or subsequently made by the Initial
Purchasers: (a) no fiduciary or agency relationship between the Company, any
Guarantor and any other person, on the one hand, and the Initial Purchasers, on
the other, exists; (b) the Initial Purchasers are not acting as advisors, expert
or otherwise, to the Company or the Guarantors, including, without limitation,
with respect to the determination of the purchase price of the Notes, and such
relationship between the Company and the Guarantors, on the one hand, and the
Initial Purchasers, on the other, is entirely and solely commercial, based on
arms-length negotiations; (c) any duties and obligations that the Initial
Purchasers may have to the Company and the Guarantors shall be limited to those
duties and obligations specifically stated herein; (d) the Initial Purchasers
and their respective affiliates may have interests that differ from those of the
Company and the Guarantors; and (e) the Company and the Guarantors have
consulted their own legal and financial advisors to the extent they deemed
appropriate. The Company and the Guarantors hereby waive any claims that the
Company and the Guarantors may have against the Initial Purchasers with respect
to any breach of fiduciary duty in connection with the Notes.

 

19.          Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.

 

20.          Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.

 

42

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

 

If the foregoing correctly sets forth the agreement between the Company, the
Guarantors, and the Initial Purchasers, please indicate your acceptance in the
space provided for that purpose below.

 

 

Very truly yours,

 

 

 

 

HALCÓN RESOURCES CORPORATION

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

Name:

Floyd C. Wilson

 

 

Title:

Chief Executive Officer

 

 

 

 

 

 

 

GREAT PLAINS PIPELINE COMPANY

 

HALCÓN ENERGY PROPERTIES, INC.

 

HALCÓN FIELD SERVICES, LLC

 

HALCÓN HOLDINGS, INC.

 

HALCÓN OPERATING CO., INC.

 

HALCÓN RESOURCES OPERATING, INC.

 

HALCÓN LOUISIANA OPERATING, L.P.

 

 

By

HLP GULF STATES, LLC,

 

 

its General Partner

 

HLP GULF STATES, LLC

 

HRC ENERGY HOLDINGS (LA), INC.

 

HRC ENERGY LOUISIANA, LLC

 

HRC ENERGY RESOURCES (LAFOURCHE), INC.

 

HRC ENERGY RESOURCES (WV), INC.
LEOPARD SUB I, INC.

 

LEOPARD SUB II, LLC

 

PONTOTOC PRODUCTION COMPANY, INC.

 

 

 

 

 

 

 

 

 

 

By:

/s/ Floyd C. Wilson

 

 

 

Name:

Floyd C. Wilson

 

 

 

Title:

Chief Executive Officer

 

43

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

 

Accepted:

 

 

 

BARCLAYS CAPITAL INC.

 

For itself and as Representative of the several

 

Initial Purchasers named on Schedule I hereto.

 

 

 

By:

/s/ Paul Cugano

 

 

Authorized Signatory

 

 

44

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

 

SCHEDULE I

 

 

 

Principal

 

 

 

Amount of

 

 

 

Notes

 

 

 

to be

 

Initial Purchasers

 

Purchased

 

Barclays Capital Inc.

 

$

281,250,000

 

Goldman, Sachs & Co.

 

105,000,000

 

J.P. Morgan Securities LLC

 

105,000,000

 

Wells Fargo Securities, LLC

 

75,000,000

 

BMO Capital Markets Corp.

 

67,500,000

 

RBC Capital Markets, LLC

 

37,500,000

 

Capital One Southcoast, Inc.

 

37,500,000

 

SunTrust Robinson Humphrey, Inc.

 

33,750,000

 

Global Hunter Securities, LLC

 

7,500,000

 

Total

 

$

750,000,000

 

 

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

 

SCHEDULE II

 

LIST OF GUARANTORS

 

 

 

State of Incorporation

Subsidiary

 

or Organization

 

 

 

Halcón Resources Operating, Inc.

 

 

Delaware

 

 

 

 

Halcón Holdings, Inc.

 

 

Delaware

 

 

 

 

HRC Energy Resources (WV), Inc.

 

 

Delaware

 

 

 

 

HRC Energy Holdings (LA), Inc.

 

 

Delaware

 

 

 

 

HRC Energy Resources (Lafourche), Inc.

 

 

Louisiana

 

 

 

 

HRC Energy Louisiana, LLC

 

 

Delaware

 

 

 

 

Pontotoc Production Company, Inc.

 

 

Texas

 

 

 

 

Halcón Energy Properties, Inc.

 

 

Delaware

 

 

 

 

Halcón Operating Co., Inc.

 

 

Texas

 

 

 

 

HLP Gulf States, LLC

 

 

Oklahoma

 

 

 

 

Great Plains Pipeline Company

 

 

Delaware

 

 

 

 

Leopard Sub I, Inc.

 

 

Colorado

 

 

 

 

Leopard Sub II, LLC

 

 

Delaware

 

 

 

 

Halcón Field Services, LLC

 

 

Delaware

 

 

 

 

Halcón Louisiana Operating, L.P.

 

 

Delaware

 

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

 

SCHEDULE III

 

[g281313kg09i001.jpg]

 

HALCÓN RESOURCES CORPORATION

 

$750,000,000 9.75% Senior Notes due 2020

 

June 29, 2012

 

Pricing Supplement

 

Pricing Supplement dated June 29, 2012 to the Preliminary Offering Memorandum
dated June 25, 2012 of Halcón Resources Corporation. This Pricing Supplement is
qualified in its entirety by reference to the Preliminary Offering Memorandum.
The information in this Pricing Supplement supplements the Preliminary Offering
Memorandum and supersedes the information in the Preliminary Offering Memorandum
to the extent it is inconsistent with the information in the Preliminary
Offering Memorandum. Capitalized terms used in this Pricing Supplement but not
defined have the meanings given them in the Preliminary Offering Memorandum.

 

Issuer

 

Halcón Resources Corporation

 

 

 

Guarantors

 

The notes will be guaranteed on a senior unsecured basis by the Issuer’s current
subsidiaries and by any future restricted subsidiaries that guarantee the
Issuer’s indebtedness under a credit facility.

 

 

 

Title of Securities

 

9.75% Senior Notes due 2020 (the “Notes”)

 

 

 

Aggregate Principal Amount

 

$750,000,000

 

 

 

Distribution

 

144A / Regulation S with Registration Rights

 

 

 

Maturity Date

 

July 15, 2020

 

 

 

Issue Price

 

98.646%

 

 

 

Coupon

 

9.75%

 

 

 

Yield to Maturity

 

10.00%

 

 

 

Interest Payment Dates

 

January 15 and July 15 of each year, beginning on January 15, 2013

 

 

 

Record Dates

 

January 1 and July 1 of each year

 

 

 

Ratings*

 

B3 (Moody’s) / CCC+ (S&P)

 

 

 

Trade Date

 

June 29, 2012

 

 

 

Settlement Date

 

July 16, 2012 (T+10)

 

We expect that delivery of the Notes will be made against payment therefor on or
about the 10th business day following the date of confirmation of orders with
respect to the Notes (this settlement cycle being referred to as “T+10”). Under
Rule 15c6-1 of the Commission under the Exchange Act, trades in the secondary
market generally are required to settle in three business days, unless the
parties to any such trade expressly agree otherwise. Accordingly, purchasers who
wish to trade the Notes on the trade date or the following six trading days will
be required, by virtue of the fact that the Notes initially will settle in T+10,
to specify an alternative settlement cycle at the time of any such trade to
prevent a failed settlement. Purchasers of the Notes who wish to trade the Notes
before their delivery should

 

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

 

 

 

consult their own advisor.

 

 

 

Optional Redemption

 

On or after July 15, 2016, at the following redemption prices (expressed as a
percentage of principal amount), plus accrued and unpaid interest, if any, on
the Notes redeemed during the twelve-month period indicated beginning on July 15
of the years indicated below:

 

 

 

 

 

 

 

Year

 

 Price

 

 

 

 

 

 

 

 

 

2016

 

104.875

%

 

 

 

 

 

 

 

 

2017

 

102.438

%

 

 

 

 

 

 

 

 

2018 and thereafter

 

100.000

%

 

 

 

 

Equity Clawback

 

Up to 35% at 109.750% prior to July 15, 2015

 

 

 

Make-Whole Redemption

 

Make-whole redemption at Treasury Rate + 50 basis points prior to July 15, 2016

 

 

 

Change of Control Put

 

101% plus accrued and unpaid interest (following a Rating Decline)

 

 

 

Joint Book-Running Managers

 

Barclays Capital Inc. Goldman, Sachs & Co. J.P. Morgan Securities LLC Wells
Fargo Securities, LLC BMO Capital Markets Corp. RBC Capital Markets, LLC

 

 

 

Co-Managers

 

Capital One Southcoast, Inc. SunTrust Robinson Humphrey, Inc. Global Hunter
Securities, LLC

 

 

 

CUSIP Numbers

 

Rule 144A: 40537Q AA8 Regulation S: U4057P AA3

 

 

 

ISIN Numbers

 

Rule 144A: US40537QAA85 Regulation S: USU4057PAA31

 

 

 

Denominations

 

Minimum denominations of $2,000 and integral multiples of $1,000 in excess
thereof

 

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

*Note: A securities rating is not a recommendation to buy, sell or hold
securities and may be subject to revision or withdrawal at any time.

 

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

 

Additional Changes to the Preliminary Offering Memorandum:

 

Covenant Changes

 

The following changes will be made to the covenants described under the heading
“Description of the Notes” on the specified pages in the Preliminary Offering
Memorandum:

 

·                  On page 63, deleting the third paragraph under “— Optional
Redemption,” which provided for optional redemption of the notes at 110% of par
plus accrued interest in the event of specified change of control events.

 

·                  On page 71, changing the ACNTA percentage in clause (1)(b) of
the definition of Permitted Indebtedness from 25.0% to 30.0%.

 

·                  On page 72, changing the ACNTA percentage in clause (14) of
the definition of Permitted Indebtedness from 1.5% to 2.0%.

 

2

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

 

·                  On page 73, changing the ACNTA percentage in clause (15) of
the definition of Permitted Indebtedness from 1.5% to 2.0%.

 

·                  On page 100, changing the ACNTA percentage in clause (16) of
the definition of Permitted Investments from 1.5% to 2.0%.

 

·                  On page 102, changing the ACNTA percentage in clause (17) of
the definition of Permitted Liens from 0.5% to 1.0%.

 

Use of Proceeds

 

We estimate the net proceeds of this offering will be approximately $725 million
after deducting the initial purchasers’ discounts and commissions and before
estimated offering expenses. We intend to use the net proceeds from this
offering to fund the cash consideration for the GeoResources Merger and for
general corporate purposes, including to fund acquisitions and capital
expenditures.

 

Capitalization

 

The “Capitalization” table on page 42 of the Preliminary Offering Memorandum is
amended to read as follows:

 

 

 

As of March 31, 2012

 

 

 

Historical

 

Pro Forma

 

 

 

(In millions)

 

 

 

 

 

 

 

Cash and cash equivalents (1)(2)

 

$

685.8

 

$

539.7

 

 

 

 

 

 

 

Long-term debt

 

 

 

 

 

Revolving credit facility (3)

 

$

—

 

$

—

 

8.0% senior unsecured convertible note due 2017 (4)

 

235.5

 

235.5

 

9.75% senior notes due 2020 offered hereby

 

—

 

739.8

 

Total long-term debt

 

$

235.5

 

$

975.3

 

 

 

 

 

 

 

Stockholders’ Equity

 

 

 

 

 

Preferred stock (5)

 

$

298.2

 

$

298.2

 

Common stock, $0.0001 par value, 99.4 million shares outstanding actual and
171.6 million shares outstanding pro forma

 

—

 

—

 

Additional paid-in capital

 

633.6

 

1,427.6

 

Treasury stock

 

(9.3

)

(9.3

)

Accumulated deficit

 

(249.6

)

(276.4

)

Total stockholders’ equity

 

$

672.9

 

$

1,440.2

 

 

 

 

 

 

 

Total capitalization

 

$

908.3

 

$

2,415.5

 

 

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

 

 

This material is strictly confidential and has been prepared by the Issuer
solely for use in connection with the proposed offering of the securities
described in the Preliminary Offering Memorandum. This material is personal to
each offeree and does not constitute an offer to any other person or the public
generally to subscribe for or otherwise acquire the securities. Please refer to
the Preliminary Offering Memorandum for a complete description.

 

The securities have not been registered under the Securities Act of 1933, as
amended (the “Securities Act”), and are being offered only to (1) “qualified
institutional buyers” as defined in Rule 144A under the Securities Act and
(2) outside the United States to non-U.S. persons in compliance with Regulation
S under the Securities Act, and this communication is only being distributed to
such persons.

 

This communication is not an offer to sell the securities and it is not a
solicitation of an offer to buy the securities in any jurisdiction to any person
to whom it is unlawful to make such offer or soliciation in such jurisdiction.

 

Any disclaimers or notices that may appear on this Pricing Supplement below the
text of this legend are not applicable to this Pricing Supplement and should be
disregarded. Such disclaimers may have been electronically generated as a result
of this Pricing Supplement having been sent via, or posted on, Bloomberg or
another electronic mail system.

 

3

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

 

SCHEDULE IV

 

A.                                    Insert list of each document provided as
an amendment or supplement to the Preliminary Offering Memorandum.

 

B.                                    Insert list of any “road show” materials
that are Free Writing Offering Documents.

 

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